Document:

Exhibit 10.5

JOINDER
AND AMENDMENT NO. 1

TO

REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT

THIS JOINDER AND AMENDMENT NO. 1 (this “Amendment”)
is entered into as of September 8, 2006, by and among GEOKINETICS INC., a
Delaware corporation (“Geokinetics”), GEOPHYSICAL DEVELOPMENT
CORPORATION, a Texas corporation (“GDC”), QUANTUM GEOPHYSICAL, INC., a Texas
corporation (“Quantum”), TRACE ENERGY SERVICES LTD., an entity organized
under the laws of Canada (“Trace Energy (Canada)”), and TRACE ENERGY
SERVICES, INC., a Texas corporation (“Trace Energy (U.S.)”)
(Geokinetics, GDC, Quantum, Trace Energy (Canada) and Trace Energy (U.S.), each
an “Existing Borrower,” and collectively, the “Existing Borrowers”),
GEOKINETICS HOLDINGS, INC., a Delaware corporation (“Geokinetics Holdings”),
GRANT GEOPHYSICAL, INC., a Delaware corporation (“Grant Geophysical”), GRANT
GEOPHYSICAL (INT’L), INC., a Texas corporation (“Grant Geophysical
International”), GRANT GEOPHYSCAL CORP., a Texas corporation (“Grant
Corp”), GRANT SERVICES, INC., a Texas corporation (“Grant Services”),
ADVANCED SEISMIC TECHNOLOGY, INC. (“Advanced Seismic” and together with
Geokinetics Holdings, Grant Geophysical, Grant Geophysical International, Grant
Corp and Grant Services, each a “New Borrower” and collectively, the “New
Borrowers”),  PNC BANK, NATIONAL
ASSOCIATION (“PNC”), the various financial institutions named therein or
which hereafter become a party thereto, (together with PNC, collectively, “Lenders”)
and PNC, as agent for the Lenders (in such capacity, “Agent”).  The New Borrowers and the Existing Borrowers,
individually a “Borrower” and collectively, the “Borrowers”.

BACKGROUND

WHEREAS, Existing Borrowers, Agent and
Lenders are parties to a Revolving Credit, Term Loan and Security Agreement
dated as of June 12, 2006 (as amended, restated, supplemented or otherwise
modified from time to time, the “Loan Agreement”) pursuant to which
Agent and Lenders provide Borrowers with certain financial accommodations.

WHEREAS, in connection with the foregoing, Existing
Borrowers have requested that Agent and Lenders amend certain provisions of the
Loan Agreement as hereafter provided, and Agent and Lenders are willing to do
so on the terms and conditions hereafter set forth.

NOW, THEREFORE, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto hereby agree as follows:

1.             Definitions. 
All capitalized terms not otherwise defined herein shall have the
meanings given to them in the Loan Agreement.

2.             Amendments to Loan Agreement.

(a)         The definition of “Purchasing
Lender” set forth in Section 1.2 of the Loan Agreement is hereby amended by
deleting the text “Section 16.3” contained therein and inserting the text “Section
16.3(c)” in lieu thereof.

 

(b)         The definition of “Transferee”
set forth in Section 1.2 of the Loan Agreement is hereby amended by deleting
the text “Section 16.3(c)” contained therein and inserting the text “Section
16.3(d)” in lieu thereof.

(c)         Section 1.2 of the
Loan Agreement is hereby further amended by inserting the following defined
terms in appropriate alphabetical order:

“Advanced Seismic” shall mean Advanced Seismic
Technology, Inc., a Texas corporation.

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

“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 Grant 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 Grant 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.

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“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.

“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) all Capital
Lease Obligations and Synthetic Lease Obligations of such person and all
obligations of such person as an account party in respect of letters of credit
or letters of guaranty, in each case, to the extent functioning as indebtedness
for borrowed money.

“Geokinetics Holdings” shall mean Geokinetics
Holdings, Inc., a Delaware corporation, a wholly owned subsidiary of
Geokinetics.

“Grant Acquisition” shall mean the acquisition
of all of the outstanding capital stock of Grant Geophysical, Inc., a Delaware
corporation, and its subsidiaries pursuant to the Grant Acquisition Agreement.

“Grant Acquisition Agreement” shall mean that
certain Stock Purchase Agreement including all exhibits and schedules thereto
dated as of September 8, 2006 by and among Geokinetics Holdings, as buyer, and
Elliot Associates, L.P., a Delaware limited partnership and Elliot
International, L.P., a Cayman Islands limited partnership, as sellers.

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“Grant Corp” shall mean Grant Geophysical
Corp., a Texas corporation.

“Grant Entities” shall mean individually and
collectively, Grant Geophysical, Grant Geophysical International, Grant Corp,
Grant Services and Advanced Seismic.

“Grant Geophysical” shall mean Grant
Geophysical, Inc., a Delaware corporation.

“Grant Geophysical International” shall mean
Grant Geophysical (Int’l), Inc., a Texas corporation.

“Grant Services” shall mean Grant Services,
Inc., a Texas corporation.

“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.

“Modified Commitment Transfer Supplement” shall
have the meaning set forth in Section 16.3(d).

“Net Worth” shall
mean, at a particular date, (a) the aggregate amount of all assets of
Geokinetics 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 Geokinetics and its consolidated Subsidiaries.

“Purchasing CLO” shall have the meaning set
forth in Section 16.3(d) hereof.

“Register” shall have the meaning set forth in
Section 16.3(e).

“Senior Bridge Debt” shall mean the loans in
the original principal amount of $100,000,000 made by Royal Bank of Canada, as
agent, and certain other lenders to Geokinetics Holdings pursuant to that
certain Credit Agreement dated as of September 8, 2006.

“Senior Subordination Agreement” shall mean
those certain subordination provisions contained in the document evidencing the
Subordinated Debt.

“Subordinated Debt” shall mean the loans in the
original principal amount of $55,000,000 made by lenders party thereto to
Geokinetics pursuant to that certain Senior Subordinated Loan Agreement dated
as of September 8, 2006.

 4
 

 

“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).

(d)         Section 1.2 of the
Loan Agreement is hereby further amended by amending and restating the
following definitions to read as follows:

“Acquisition Agreement” shall mean
collectively, (a) the Stock Purchase Agreement including all exhibits and
schedules thereto dated as of July 29, 2005 between SCF-III, L.P., a Delaware
limited partnership and James White, and individual resident of Texas, as
sellers  (individually and collectively, “Seller”)
and Geokinetics as buyer and (b) the Grant Acquisition Agreement.

“Capital Expenditures” shall mean, for any
period, (a) the aggregate amount of additions to property, plant and
equipment and other capital expenditures of Geokinetics and its Subsidiaries
that are (or should be) set forth in a consolidated statement of cash flows of
Geokinetics for such period prepared in accordance with GAAP, and
(b) Capitalized Lease Obligations or Synthetic Lease Obligations incurred
by Geokinetics 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 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.

“Capitalized 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.

“Collateral” shall mean and include:

(a)           all Receivables;

(b)           all Equipment;

(c)           all General Intangibles;

(d)           all Inventory;

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(e)           all Investment Property;

(f)            all Subsidiary Stock;

(g)           all of each Borrower’s right, title
and interest in and to, whether now owned or hereafter acquired and wherever
located, (i) its respective goods and other property including, but not
limited to, all merchandise returned or rejected by Customers, relating to or
securing any of the Receivables; (ii) all of each Borrower’s rights as a
consignor, a consignee, an unpaid vendor, mechanic, artisan, or other lienor,
including stoppage in transit, setoff, detinue, replevin, reclamation and
repurchase; (iii) all additional amounts due to any Borrower from any
Customer relating to the Receivables; (iv) other property, including
warranty claims, relating to any goods securing the Obligations; (v) all
of each Borrower’s contract rights, rights of payment which have been earned
under a contract right, instruments (including promissory notes), documents,
chattel paper (including electronic chattel paper), warehouse receipts, deposit
accounts, letters of credit and money; (vi) all commercial tort claims
(whether now existing or hereafter arising); (vii) if and when obtained by
any Borrower, all real and personal property of third parties in which such
Borrower has been granted a lien or security interest as security for the
payment or enforcement of Receivables; (viii) all letter of credit rights
(whether or not the respective letter of credit is evidenced by a writing);
(ix) all supporting obligations; (x)  all licenses and permits to the
extent Borrowers may grant a security interest in the same in accordance with
Applicable Laws and (xi) any other goods, personal property or real
property now owned or hereafter acquired in which any Borrower has expressly
granted a security interest or may in the future grant a security interest to
Agent hereunder, or in any amendment or supplement hereto or thereto, or under
any other agreement between Agent and any Borrower;

(h)           all of each Borrower’s ledger sheets,
ledger cards, files, correspondence, records, books of account, business
papers, computers, computer software (owned by any Borrower or in which it has
an interest), computer programs, tapes, disks and documents relating to (a),
(b), (c), (d), (e), (f), or (g) of this Paragraph; and

(i)            all
proceeds and products of (a), (b), (c), (d), (e), (f), (g), or (h) in whatever
form, including, but not limited to: 
cash, deposit accounts (whether or not comprised solely of proceeds),
certificates of deposit, insurance proceeds (including hazard, flood and credit
insurance), negotiable instruments and other instruments for the payment of
money, chattel paper, security agreements, documents, eminent domain proceeds,
condemnation proceeds and tort claim proceeds.

Notwithstanding the foregoing, with respect to each
Grant Entity, the term “Collateral” shall mean, whether now owned or hereafter
acquired, (i) all

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Receivables of such Grant Entity, (ii) all Subsidiary Stock, (iii) all
additional amounts due to such Grant Entity from any Customer relating to the
Receivables of such Grant Entity, (iv) all of such Grant Entity’s ledger
sheets, ledger cards, files, correspondence, records, books of account,
business papers, computers, computer software (owned by such Grant Entity or in
which it has an interest), computer programs, tapes, disks and documents
relating to (i), (ii), or (iii) of this Paragraph and (iv) all proceeds and
products of (i), (ii), (iii) or (iv) of this Paragraph in whatever form,
including, but not limited to:  cash,
deposit accounts (whether or not comprised solely of proceeds), certificates of
deposit, insurance proceeds (including hazard, flood and credit insurance),
negotiable instruments and other instruments for the payment of money, chattel
paper, security agreements, documents, eminent domain proceeds, condemnation
proceeds and tort claim proceeds.”

“Collateral Assignment of Acquisition Agreement”
shall mean collectively, (a) that certain Collateral Assignment of Acquisition
Agreement dated as of the Closing Date, executed by Geokinetics in favor of
Agent and acknowledged by Seller and (b) that certain Collateral Assignment of
Acquisition Agreement dated as of September 8, 2006, executed by Geokinetics
Holdings in favor of Agent and acknowledged by the sellers under the Grant
Acquisition Agreement.

“Commitment Percentage” of any Lender shall
mean the percentage set forth below such Lender’s name on the signature page
hereof as same may be adjusted upon any assignment by a Lender pursuant to
Section 16.3(c) or (d) hereof.

“Other Documents” shall mean the Note, the
Negative Pledge, the Questionnaire, the Pledge Agreement, the Collateral Assignment
of Acquisition Agreement, the Senior Subordination Agreement, the Guaranty, the
Guarantor Security Agreement, the Intellectual Property Security Agreement, any
Lender-Provided Interest Rate Hedge and any and all other agreements,
instruments and documents, including guaranties, pledges, powers of attorney,
consents, interest or currency swap agreements or other similar agreements and
all other writings heretofore, now or hereafter executed by any Borrower or any
Guarantor and/or delivered to Agent or any Lender in respect of the
transactions contemplated by this Agreement.

“Test Period” shall mean, at any time, the four
consecutive fiscal quarters of Geokinetics 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 9.7 or Section 9.8.

(e)         Section 2.21(a) of the
Loan Agreement is hereby amended and restated to read as follows:

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“(a)         Subject
to Section 4.3 hereof and excluding the exceptions set forth therein,
when Borrower (i) sells or otherwise disposes of any Collateral other than
Inventory in the Ordinary Course of Business, (ii) other than conversion
of the Subordinated Debt to Equity Interests, issues or sells any equity
securities, capital stock or other ownership interests, or receives any capital
contributions, (iii) incurs any Indebtedness (other than as permitted by Section 7.8
hereof), or (iv) receives any proceeds payable in connection with (A) any
condemnation proceedings affecting any of the foregoing or any rights thereto
or any interest in or to any Collateral or (B) any damage to or taking of any
of the foregoing or any rights in any Collateral or any interest therein
arising from or otherwise relating to any exercise of the power of eminent
domain, or any conveyance in lieu of or under threat of any such taking, then
Borrower shall repay the Advances in an amount equal to the net cash proceeds
of the foregoing (i.e., gross proceeds less the reasonable costs of such sales,
issuances, contributions or other dispositions), such repayments to be made
promptly but in no event more than one (1) Business Day following receipt of
such net proceeds, and until the date of payment, such proceeds shall be held
in trust for Agent.  The foregoing shall
not be deemed to be implied consent to any such sale or transaction otherwise
prohibited by the terms and conditions hereof. 
Such repayments shall be applied (x) first, to the outstanding
principal installments of the Term Loan in the inverse order of the maturities
thereof and (y) second, to the remaining Advances in such order as Agent
may determine, subject to Borrower’s ability to reborrow Revolving Advances in
accordance with the terms hereof.”

(f)          Section 5.21 of the
Loan Agreement is hereby amended and restated to read as follows:

“5.21       Business
and Property of Borrowers.  Upon and
after the Closing Date, Borrowers do not propose to engage in any business
other than the acquisition and processing of high resolution seismic data for
the petroleum industry and activities necessary to conduct the foregoing.  On the Closing Date, each Borrower will own
all the property and possess all of the rights and Consents necessary for the
conduct of the business of such Borrower.”

(g)         Section 6.5 of the
Loan Agreement is hereby amended and restated to read as follows:

“6.5         Financial
Covenants.

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

(b)           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.

(c)           Leverage
Ratio.  Maintain as at the last day
of each Test

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Period a Leverage Ratio of not more than 3.25:1.00.”

(h)         Section 7.1 of the
Loan Agreement is hereby amended and restated to read as follows:

“7.1         Merger,
Consolidation, Acquisition and Sale of Assets.

(a)           Except
for the Grant Acquisition, enter into any merger, consolidation or other
reorganization with or into any other Person or acquire all or a substantial
portion of the assets or Equity Interests of any Person or permit any other
Person to consolidate with or merge with it.

(b)           Sell,
lease, transfer or otherwise dispose of any of its properties or assets, except
(i) dispositions of Inventory and Equipment to the extent expressly permitted
by Section 4.3 and (ii) any other sales or dispositions expressly permitted by
this Agreement.”

(i)          Section 7.3 of the
Loan Agreement is hereby amended and restated to read as follows:

“7.3         Guarantees.  Become liable upon the obligations or
liabilities of any Person by assumption, endorsement or guaranty thereof or
otherwise (other than to Lenders) except (a) as disclosed on Schedule 7.3,
(b) for any guaranty of the Senior Bridge Debt, and (c) the endorsement of
checks in the Ordinary Course of Business.”

(j)          Section 7.4 of the
Loan Agreement is hereby amended and restated to read as follows:

“7.4         Investments.  Except for the Grant Acquisition, purchase or
acquire obligations or Equity Interests of, or any other interest in, any
Person, except (a) obligations issued or guaranteed by the United States
of America or any agency thereof, (b) commercial paper with maturities of
not more than 270 days and a published rating of not less than A-1 or P-1 (or
the equivalent rating), (c) certificates of time deposit and bankers’
acceptances having maturities of not more than 180 days and repurchase
agreements backed by United States government securities of a commercial bank
if (i) such bank has a combined capital and surplus of at least
$500,000,000, or (ii) its debt obligations, or those of a holding company
of which it is a Subsidiary, are rated not less than A (or the equivalent
rating) by a nationally recognized investment rating agency, and (d) U.S.
money market funds that invest solely in obligations issued or guaranteed by
the United States of America or an agency thereof.”

(k)         Section 7.6 of the
Loan Agreement is hereby amended and restated to read as follows:

“7.6         Capital
Expenditures.   Permit the aggregate
amount of Capital Expenditures made by Geokinetics and its Subsidiaries in any
fiscal year set forth

 9
 

 

below to exceed the amount set forth below for such fiscal year:

	
  Fiscal Year

  	
   

  	
  Amount

  	
   

  
	
  2006

  	
   

  	
  $

  	
  25,000,000

  	
   

  
	
  2007

  	
   

  	
  $

  	
  25,000,000

  	
   

  

 

(l)          Section 7.8 of the
Loan Agreement is hereby amended and restated to read as follows:

“7.8         Indebtedness.  Create, incur, assume or suffer to exist any
Indebtedness (exclusive of trade debt) except in respect of (i) Indebtedness to Lenders; (ii) Indebtedness incurred for the
Permitted Capital Lease Facility and Capital Expenditures permitted under
Section 7.6 hereof; (iii) Indebtedness
listed on Schedule 7.8 hereto; and (iv) the Senior Bridge Debt and the
Subordinated Debt so long as such Subordinated Debt is subject to the Senior
Subordination Agreement.

(m)        Section 7.17 of the
Loan Agreement is hereby amended and restated to read as follows:

“7.17       Prepayment
of Indebtedness.  At any time, (i)
other than the conversion of the Subordinated Debt to Equity Interests,
directly or indirectly, prepay, repurchase, redeem, retire or otherwise acquire
any subordinated Indebtedness, (ii) use the proceeds of any Indebtedness to
prepay, repurchase, redeem, retire or otherwise acquire any other Indebtedness
(including subordinated Indebtedness), (iii) make or receive any payments
whatsoever with respect to any Intercompany Note without the prior written
consent of Agent, except,  that, a Borrower may make or receive
payments in satisfaction of such Intercompany Note in the form of the Equity
Interests of the debtor with respect to such Intercompany Note and (iv) upon
the occurrence and during the continuation of a Default or Event of Default or
if a Default or Event of Default would result from such payment or transaction,
or if Undrawn Availability shall be less than $6,000,000 after giving effect to
such prepayment or transaction, prepay, repurchase, redeem, retire or otherwise
acquire any Indebtedness of any Borrower.”

(n)         Section 7.22 of the
Loan Agreement is hereby added after Section 7.21 to read as follows:

“7.22       Senior
Bridge Debt and Subordinated Debt. 
(a) Other than the conversion of the Subordinated Debt to Equity
Interests, make any payment or distribution with respect to the Subordinated
Debt except as expressly permitted by the terms of the Senior Subordination
Agreement, (b) permit any waiver, supplement, modification, amendment,
termination, release, refinancing or refunding of any document evidencing the
Senior Bridge Debt except to the extent such waiver, supplement, modification,
amendment, termination, release,

 10
 

 

refinancing or refunding do not materially affect the rights and
privileges of Geokinetics Holdings or any Subsidiary under such documents and
that do not materially affect the interests of the Agent or Lenders under the
this Agreement or the Other Documents, or (c) 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 (i)
increase the interest rate on the Subordinated Debt, (ii) change the dates upon
which payments of principal or interest are due on the Subordinated Debt other
than to extend such dates, (iii) 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, (iv) change the
subordination provisions of the Subordinated Debt, (v) 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 (vi)
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 Agent or
Lenders.”

(o)         Section 13.1 of the
Loan Agreement is hereby amended and restated to read as follows:

“13.1       Term.  This Agreement, which shall inure to the
benefit of and shall be binding upon the respective successors and permitted
assigns of each Borrower, Agent and each Lender, shall become effective on the
date hereof and shall continue in full force and effect until the earlier of
(i) September 8, 2007 (the “Term”), (ii) the date upon which any portion of the
Senior Bridge Debt is refinanced, or (iii) or upon any earlier date if
terminated as herein provided.  Borrowers
may terminate this Agreement at any time upon ninety (90) days’ prior written
notice upon payment in full of the Obligations. 
In the event the Obligations are prepaid in full and all commitments to
lend hereunder are terminated prior to the last day of the Term (the date of
such prepayment hereinafter referred to as the “Early Termination Date”),
Borrowers shall pay to Agent for the benefit of Lenders an early termination
fee in an amount equal to (x) $180,000.00 if the Early Termination Date
occurs on or after the Closing Date to and including the date immediately
preceding the first anniversary of the Closing Date, or (y) $120,000.00 if
the Early Termination Date occurs on or after the first anniversary of the
Closing Date.”

(p)         Section 16.3(c) of the
Loan Agreement is hereby amended by deleting the text “, and together with each
Participant, each a “Transferee” and collectively, the “Transferees” appearing
within the parenthetical therein.

(q)         Section 16.3 is hereby
further amended by (i) re-designating sub-clauses (d) and (e) thereof, as
sub-clause (e) and (f), respectively, (ii) inserting the following text as new
sub-clause (d):

“(d)         Any
Lender, with the consent of Agent which shall not be

 11
 

 

unreasonably withheld or delayed, may directly or indirectly sell,
assign or transfer all or any portion of its rights and obligations under or
relating to Revolving Advances and/or Term Loans under this Agreement and the
Other Documents to an entity, whether a corporation, partnership, trust,
limited liability company or other entity that (i) is engaged in making,
purchasing, holding or otherwise investing in bank loans and similar extensions
of credit in the ordinary course of its business and (ii) is administered,
serviced or managed by the assigning Lender or an Affiliate of such Lender (a “Purchasing
CLO” and together with each Participant and Purchasing Lender, each a “Transferee”
and collectively the “Transferees”), pursuant to a Commitment Transfer
Supplement modified as appropriate to reflect the interest being assigned (“Modified
Commitment Transfer Supplement”), executed by any intermediate purchaser, the
Purchasing CLO, the transferor Lender, and Agent as appropriate and delivered
to Agent for recording.  Upon such
execution and delivery, from and after the transfer effective date determined
pursuant to such Modified Commitment Transfer Supplement, (i) Purchasing CLO
thereunder shall be a party hereto and, to the extent provided in such Modified
Commitment Transfer Supplement, have the rights and obligations of a Lender
thereunder and (ii) the transferor Lender thereunder shall, to the extent
provided in such Modified Commitment Transfer Supplement, be released from its
obligations under this Agreement, the Modified Commitment Transfer Supplement
creating a novation for that purpose. 
Such Modified Commitment Transfer Supplement shall be deemed to amend
this Agreement to the extent, and only to the extent, necessary to reflect the
addition of such Purchasing CLO.  Each
Borrower hereby consents to the addition of such Purchasing CLO.  Borrowers shall execute and deliver such further
documents and do such further acts and things in order to effectuate the foregoing.”

; and (iii) restating new sub-clause (e) to read in
its entirety as set forth below:

“(e)         Agent
shall maintain at its address a copy of each Commitment Transfer Supplement and
Modified Commitment Transfer Supplement delivered to it and a register (the “Register”)
for the recordation of the names and addresses of each Lender and the
outstanding principal, accrued and unpaid interest and other fees due
hereunder.  The entries in the Register
shall be conclusive, in the absence of manifest error, and each Borrower, Agent
and Lenders may treat each Person whose name is recorded in the Register as the
owner of the Advance recorded therein for the purposes of this Agreement.  The Register shall be available for inspection
by Borrowers or any Lender at any reasonable time and from time to time upon
reasonable prior notice.  Agent shall
receive a fee in the amount of $3,500 payable by the applicable Purchasing
Lender and/or Purchasing CLO upon the effective date of each transfer or
assignment (other than to an intermediate purchaser) to such Purchasing Lender
and/or Purchasing CLO.”

3.             Conditions of Effectiveness of
Amendment.  The effectiveness of this
Amendment is subject to the satisfaction of the following conditions precedent,
unless

 12
 

 

specifically waived in
writing by the Agent:

(a)         The
Agent shall have received the following documents or items, each in form and
substance satisfactory to the Agent and its legal counsel:

(1)           this Amendment duly executed by each Borrower;

(2)           the Consent Ratification and Release, as attached to this
Amendment, duly executed by each Guarantor;

(3)           an Amended and Restated Revolving Credit Note, duly
executed by each Borrower;

(4)           a Pledge Agreement pledging all stock or equity interests
held by Geokinetics Holdings, duly executed by Geokinetics Holdings;

(5)           a Pledge Agreement pledging all stock or equity interests
held by Grant Geophysical, duly executed by Grant Geophysical;

(6)           an amendment to the Pledge Agreement between Geokinetics
and Agent, duly executed by Geokinetics;

(7)           a Trademark Security Agreement duly executed by each of
the Grant Entities and Geokinetcs Holdings;

(8)           a Collateral Assignment of the Grant Acquisition
Agreement, duly executed by the seller thereunder and Geokinetics Holdings;

(9)           a Negative Pledge Agreement duly executed by each of the
Grant Entities and Geokinetcs Holdings;

(10)         a Financial Condition Certificate duly executed by the
Borrowers;

(11)         an Accountant’s Letter duly executed by each of the Grant
Entities and Geokinetcs Holdings;

(12)         a Closing Certificate duly executed by the Borrowers;

(13)         a Secretary’s Certificate of each Borrower, duly executed by
each Borrower, together with certified article of incorporation, bylaws,
resolutions, incumbency and good standing certificates for each Borrower;

(14)         a legal opinion from Borrowers’ counsel covering such
matters as determined by Agent;

 13
 

 

(15)         payoff letters duly executed by each creditor of Grant
Geophysical and Grant Geophysical International indicating that all obligations
have been paid in full and all liens against each entity’s assets have been
released;

(16)         certified copies of each Grant Entity’s casualty insurance
policies, together with loss payable endorsements on Agent’s standard form of
loss payee endorsement naming Agent as loss payee, and certified copies of each
Grant Entity’s liability insurance policies, together with endorsements naming
Agent as a co-insured;

(17)         a transaction certificate duly executed by Borrowers, which
includes copies of all documents executed in connection with the Grant
Acquisition (including, without limitation, documents evidencing the Senior
Bridge Debt and Subordinated Debt);

(18)         Post-Closing Agreement duly executed by the Borrowers;

(19)         Pro forma financial statements of Borrowers as of the date
hereof after giving effect the Grant Acquisition; and

(20)         all other documents Agent may reasonably request with
respect to any matter relevant to this Amendment or the transactions
contemplated hereby.

(b)         The
Agent shall have received payment in cash of an amendment fee from Borrowers in
the amount of $180,000 in immediately available funds.

(c)         The
Agent shall have received payment of all accrued interest on, fees and
outstanding principal of the Term Loan in immediately available funds.

(d)         The
representations and warranties contained herein and in the Loan Agreement and
the Other Documents, as each is amended hereby, shall be true and correct in
all material respects as of the date hereof, as if made on the date hereof;

(e)         The
Grant Acquisition shall have been consummated in accordance with the Grant
Acquisition Agreement;

(f)          Each
document (including any Uniform Commercial Code financing statement) required
by the Loan Agreement, any related agreement or under law or reasonably
requested by the Agent to be filed, registered or recorded in order to create,
in favor of Agent, a perfected security interest in or lien upon the Collateral
shall have been properly filed, registered or recorded in each jurisdiction in
which the filing, registration or recordation thereof is so required  or requested, and Agent shall have received
an acknowledgment copy, or other evidence satisfactory to it, of each such
filing, registration or recordation and satisfactory evidence of the payment of
any necessary fee, tax or expense relating thereto;

(g)         No
Default or Event of Default shall have occurred and be continuing; and

 14
 

 

(h)         All
corporate proceedings taken in connection with the transactions contemplated by
this Amendment and all documents, instruments and other legal matters incident
thereto shall be satisfactory to the Agent and its legal counsel.

4.             Joinder and Assumption.  Each New Borrower hereby joins in, assumes,
adopts and becomes a co-debtor and a co-obligor with respect to all Obligations
under the Loan Agreement and all of the Other Documents, and each New Borrower
hereby joins in, assumes, adopts and becomes a co-debtor and a co-obligor with
respect to all Obligations under the Loan Agreement and all of the Other
Documents with respect to the Existing Borrowers.  Without limiting the foregoing, each New
Borrower hereby agrees to (i) all of the terms and conditions contained in the
Loan Agreement and the Other Documents with the same legal effect as if it was
an original signatory thereto, including, without limitation, the grant to
Agent, for the benefit of itself and the Lenders, a continuing general lien
upon, and security interest in, all of the Collateral in which such New
Borrower has rights as security for the Obligations, and (ii) be, together with
the other Borrowers, jointly and severally liable for all present and future
Obligations.

5.             Assets of Grant Entities.  The parties hereto agree and acknowledge that
the assets of the Grant Entities will not be considered Eligible Domestic
Receivables until such time as Agent has deemed such assets to be eligible in
its sole credit judgment for purposes of being included in the borrowing base
and then only to the extent such assets meet the other requirements set forth
in the Loan Agreement.

6.             Representations and Warranties.  The parties hereto represent and warrant that
this Amendment and the Loan Agreement, as amended hereby, constitute legal,
valid and binding obligations of the parties hereto and are enforceable against
such party in accordance with their respective terms.

7.             Effect on the Agreement.

(a)         Upon
the effectiveness of Section 2 hereof, each reference in the Loan Agreement to “this
Agreement,” “hereunder,” “hereof,” “herein” or words of like import shall mean
and be a reference to the Loan Agreement as amended hereby.

(b)         Except
as specifically amended herein, the Loan Agreement, and all other documents,
instruments and agreements executed and/or delivered in connection therewith,
shall remain in full force and effect, and are hereby ratified and confirmed.

(c)         The
execution, delivery and effectiveness of this Amendment shall not operate as a
waiver of any right, power or remedy of Agent or Lenders, nor constitute a
waiver of any provision of the Loan Agreement, or any other documents,
instruments or agreements executed and/or delivered under or in connection
therewith.

8.             Governing Law.  This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns and shall be governed by and construed in accordance with the laws of
the State of Texas, without regard to any conflicts of laws principles thereto
that would call for the application of the laws of another jurisdiction.

 15
 

 

9.             Headings.  Section headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose.

10.           Counterparts; Facsimile.  This Amendment may be executed by the parties
hereto in one or more counterparts, each of which shall be deemed an original
and all of which when taken together shall constitute one and the same
agreement. Any signature delivered by a party by facsimile transmission shall
be deemed to be an original signature hereto.

 16

 

IN WITNESS WHEREOF, this Amendment has been
duly executed as of the day and year first written above.

	
  

  	
  PNC BANK, NATIONAL ASSOCIATION,

  
	
   

  	
  as Agent and Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Douglas Motl

  	
   

  
	
   

  	
  Name:

  	
  Douglas Motl

  	
   

  
	
   

  	
  Title: 

  	
   

  	
  Vice President

  	
   

  
						

 

 

 

	
  ACKNOWLEDGED AND AGREED:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  GEOKINETICS INC.,

  	
   

  
	
  as Borrowing Agent and as a Borrower

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ David A. Johnson

  	
   

  
	
  Name:

  	
  David A. Johnson

  	
   

  
	
  Title:

  	
   

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  GEOPHYSICAL DEVELOPMENT CORPORATION,

  
	
  as a Borrower

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ David A. Johnson

  	
   

  
	
  Name:

  	
  David A. Johnson

  	
   

  
	
  Title:

  	
   

  	
  Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  QUANTUM GEOPHYSICAL, INC.,

  	
   

  
	
  as a Borrower

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ David A. Johnson

  	
   

  
	
  Name:

  	
  David A. Johnson

  	
   

  
	
  Title:

  	
   

  	
  Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  TRACE ENERGY SERVICES LTD.,

  	
   

  
	
  as a Borrower

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ David A. Johnson

  	
   

  
	
  Name:

  	
  David A. Johnson

  	
   

  
	
  Title:

  	
   

  	
  Vice President

  	
   

  
						

 

 

 

	
  TRACE ENERGY SERVICES, INC.,

  	
   

  
	
  as a Borrower

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ David A. Johnson

  	
   

  
	
  Name:

  	
  David A. Johnson

  	
   

  
	
  Title:

  	
   

  	
  Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  GEOKINETICS HOLDINGS, INC.,

  	
   

  
	
  as a Borrower

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ David A. Johnson

  	
   

  
	
  Name:

  	
  David A. Johnson

  	
   

  
	
  Title:

  	
   

  	
  Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  GRANT GEOPHYSICAL, INC.,

  	
   

  
	
  as a Borrower

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ David A. Johnson

  	
   

  
	
  Name:

  	
  David A. Johnson

  	
   

  
	
  Title:

  	
   

  	
  Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  GRANT GEOPHYSICAL (INT’L), INC.,

  	
   

  
	
  as a Borrower

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ David A. Johnson

  	
   

  
	
  Name:

  	
  David A. Johnson

  	
   

  
	
  Title:

  	
   

  	
  Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  GRANT GEOPHYSICAL CORP.,

  	
   

  
	
  as a Borrower

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ David A. Johnson

  	
   

  
	
  Name:

  	
  David A. Johnson

  	
   

  
	
  Title:

  	
   

  	
  Vice President

  	
   

  
						

 

 

 

	
  GRANT SERVICES, INC.,

  	
   

  
	
  as a Borrower

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ David A. Johnson

  	
   

  
	
  Name:

  	
  David A. Johnson

  	
   

  
	
  Title:

  	
   

  	
  Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  ADVANCED SEISMIC TECHNOLOGY, INC.,

  	
   

  
	
  as a Borrower

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ David A. Johnson

  	
   

  
	
  Name:

  	
  David A. Johnson

  	
   

  
	
  Title:

  	
   

  	
  Vice PresidentExhibit
10.6

 

 

SENIOR SUBORDINATED LOAN AGREEMENT

dated as of

September 8, 2006,

among

GEOKINETICS INC.,

as the Borrower

and

THE LENDERS PARTY HERETO

 

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

  	
   

  	
  22

  
	
  Section 1.04.

  	
  Rounding

  	
   

  	
  22

  
	
  Section 1.05.

  	
  References to Agreements and Laws

  	
   

  	
  22

  
	
  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

  	
   

  	
  23

  
	
  Section 2.04.

  	
  Evidence of Debt; Repayment of Loans

  	
   

  	
  23

  
	
  Section 2.05.

  	
  Fees

  	
   

  	
  24

  
	
  Section 2.06.

  	
  Interest on Loans

  	
   

  	
  25

  
	
  Section 2.07.

  	
  Default Interest

  	
   

  	
  25

  
	
  Section 2.08.

  	
  Alternate Rate of Interest

  	
   

  	
  25

  
	
  Section 2.09.

  	
  Repayment

  	
   

  	
  26

  
	
  Section 2.10.

  	
  Conversion and Continuation of Borrowings

  	
   

  	
  26

  
	
  Section 2.11.

  	
  Termination of Commitments

  	
   

  	
  27

  
	
  Section 2.12.

  	
  Optional Prepayment

  	
   

  	
  27

  
	
  Section 2.13.

  	
  Mandatory Prepayments

  	
   

  	
  28

  
	
  Section 2.14.

  	
  Reserve Requirements; Change in Circumstances

  	
   

  	
  28

  
	
  Section 2.15.

  	
  Change in Legality

  	
   

  	
  29

  
	
  Section 2.16.

  	
  Indemnity

  	
   

  	
  30

  
	
  Section 2.17.

  	
  Pro Rata Treatment

  	
   

  	
  30

  
	
  Section 2.18.

  	
  Sharing of Setoffs

  	
   

  	
  31

  
	
  Section 2.19.

  	
  Payments

  	
   

  	
  31

  
	
  Section 2.20.

  	
  Taxes

  	
   

  	
  31

  
	
  Section 2.21.

  	
  Assignment of Commitments Under Certain
  Circumstances; Duty to Mitigation

  	
   

  	
  34

  
						

 

 i
 

 

	
  

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  Representations and Warranties

  	
   

  	
  35

  
	
  Section 3.01.

  	
  Organization; Powers

  	
   

  	
  35

  
	
  Section 3.02.

  	
  Authorization

  	
   

  	
  35

  
	
  Section 3.03.

  	
  Enforceability

  	
   

  	
  35

  
	
  Section 3.04.

  	
  Governmental Approvals

  	
   

  	
  35

  
	
  Section 3.05.

  	
  Financial Statements

  	
   

  	
  36

  
	
  Section 3.06.

  	
  No Material Adverse Change

  	
   

  	
  36

  
	
  Section 3.07.

  	
  Title to Properties; Possession Under Leases

  	
   

  	
  36

  
	
  Section 3.08.

  	
  Subsidiaries

  	
   

  	
  37

  
	
  Section 3.09.

  	
  Litigation; Compliance with Laws

  	
   

  	
  37

  
	
  Section 3.10.

  	
  Agreements

  	
   

  	
  37

  
	
  Section 3.11.

  	
  Federal Reserve Regulations

  	
   

  	
  37

  
	
  Section 3.12.

  	
  Investment Company Act

  	
   

  	
  37

  
	
  Section 3.13.

  	
  Tax Returns

  	
   

  	
  38

  
	
  Section 3.14.

  	
  No Material Misstatements

  	
   

  	
  38

  
	
  Section 3.15.

  	
  Employee Benefit Plans

  	
   

  	
  38

  
	
  Section 3.16.

  	
  Environmental Matters

  	
   

  	
  38

  
	
  Section 3.17.

  	
  Location of Real Property and Leased Premises

  	
   

  	
  39

  
	
  Section 3.18.

  	
  Labor Matters

  	
   

  	
  39

  
	
  Section 3.19.

  	
  Solvency

  	
   

  	
  39

  
	
  ARTICLE IV

  	
  Conditions of Lending

  	
   

  	
  39

  
	
  ARTICLE V

  	
  Affirmative Covenants

  	
   

  	
  42

  
	
  Section 5.01.

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

  	
   

  	
  42

  
	
  Section 5.02.

  	
  Insurance

  	
   

  	
  43

  
	
  Section 5.03.

  	
  Taxes

  	
   

  	
  43

  
	
  Section 5.04.

  	
  Financial Statements, Reports, etc

  	
   

  	
  43

  
	
  Section 5.05.

  	
  Litigation and Other Notices

  	
   

  	
  45

  
	
  Section 5.06.

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

  	
   

  	
  45

  
	
  Section 5.07.

  	
  Use of Proceeds

  	
   

  	
  46

  
	
  ARTICLE VI

  	
  Negative Covenants

  	
   

  	
  46

  
						

 

 ii
 

 

	
  

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.01.

  	
  Indebtedness

  	
   

  	
  46

  
	
  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

  	
   

  	
  50

  
	
  Section 6.06.

  	
  Restricted Payments; Restrictive Agreements

  	
   

  	
  51

  
	
  Section 6.07.

  	
  Transactions with Affiliates

  	
   

  	
  52

  
	
  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

  	
   

  	
  53

  
	
  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

  	
  Subordination

  	
   

  	
  55

  
	
  Section 8.01.

  	
  Agreement of Subordination

  	
   

  	
  55

  
	
  Section 8.02.

  	
  Payments to Lenders

  	
   

  	
  56

  
	
  Section 8.03.

  	
  Subrogation of Loans

  	
   

  	
  58

  
	
  Section 8.04.

  	
  Notice to Lenders

  	
   

  	
  59

  
	
  Section 8.05.

  	
  No Impairment of Subordination

  	
   

  	
  59

  
	
  Section 8.06.

  	
  Article VIII Not to Prevent Events of Default

  	
   

  	
  59

  
	
  Section 8.07.

  	
  Continuing Effect

  	
   

  	
  59

  
	
  Section 8.08.

  	
  Bankruptcy Avoidance

  	
   

  	
  59

  
	
  Section 8.09.

  	
  Individual Rights of Senior Lenders

  	
   

  	
  59

  
	
  Section 8.10.

  	
  Instrument Legend and Notation

  	
   

  	
  59

  
	
  ARTICLE IX

  	
  Miscellaneous

  	
   

  	
  60

  
	
  Section 9.01.

  	
  Notices

  	
   

  	
  60

  
	
  Section 9.02.

  	
  Survival of Agreement

  	
   

  	
  60

  
						

 

 iii
 

 

	
  

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 9.03.

  	
  Binding Effect

  	
   

  	
  61

  
	
  Section 9.04.

  	
  Successors and Assigns

  	
   

  	
  61

  
	
  Section 9.05.

  	
  Expenses; Indemnity

  	
   

  	
  64

  
	
  Section 9.06.

  	
  Right of Setoff

  	
   

  	
  65

  
	
  Section 9.07.

  	
  Applicable Law

  	
   

  	
  65

  
	
  Section 9.08.

  	
  Waivers; Amendment

  	
   

  	
  65

  
	
  Section 9.09.

  	
  Interest Rate Limitation

  	
   

  	
  66

  
	
  Section 9.10.

  	
  Entire Agreement

  	
   

  	
  66

  
	
  Section 9.11.

  	
  WAIVER OF JURY TRIAL

  	
   

  	
  66

  
	
  Section 9.12.

  	
  Severability

  	
   

  	
  67

  
	
  Section 9.13.

  	
  Counterparts

  	
   

  	
  67

  
	
  Section 9.14.

  	
  Headings

  	
   

  	
  67

  
	
  Section 9.15.

  	
  Jurisdiction; Consent to Service of Process

  	
   

  	
  67

  
	
  Section 9.16.

  	
  Confidentiality

  	
   

  	
  68

  
	
  Section 9.17.

  	
  USA PATRIOT Act Notice

  	
   

  	
  68

  
						

 

	
  SCHEDULES

  	
   

  	
   

  
	
  Schedule 1.01

  	
  –

  	
  Existing Debt to be Repaid

  
	
  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 Borrowing Request

  
	
  Exhibit B

  	
  –

  	
  Form of Non-Bank Certificate

  

 

 iv

SENIOR SUBORDINATED LOAN AGREEMENT dated as of
September 8, 2006 (this “Agreement”),
among GEOKINETICS INC., a Delaware corporation (“Borrower”)
and the LENDERS (as defined herein).

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 $55,000,000.

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.

“Agents” shall
mean RBC and PNC and “Agent”
shall mean any of them.

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

(1)  Subject to further review of
underlying documentation.

 

“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 Required Lenders 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
Required Lenders 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, 7.50%
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

  	
   

  	
  8.50

  	
  %

  
	
  March 1, 2007
  through and including May 30, 2007

  	
   

  	
  9.50

  	
  %

  
	
  June 1, 2007 and
  thereafter

  	
   

  	
  10.50

  	
  %

  

 

and (b) with respect to any ABR Loan, (i) on
the Closing Date to, but excluding, December 1, 2006, 6.00% 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

  	
   

  	
  7.00

  	
  %

  
	
  March 1, 2007 through and including May 30, 2007

  	
   

  	
  8.00

  	
  %

  
	
  June 1, 2007 and thereafter

  	
   

  	
  9.00

  	
  %

  

 

 2
 

 

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

“Assignment and Acceptance”
shall mean an assignment and acceptance entered into by a Lender and an
assignee, in such form as shall be reasonably approved by the Lenders.

“Base Rate”
shall mean corporate base rate of interest publicly announced by such generally
available and recognizable source as the Required Lenders may select 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 Lender.

“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 Borrower
and its Subsidiaries that are (or should be) set forth in a consolidated
statement of cash flows of the Borrower for such period prepared in accordance
with GAAP, and (b) Capital Lease Obligations or Synthetic Lease Obligations
incurred by the Borrower 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 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

 3
 

 

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 Borrower 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 35% of outstanding Equity Interests of the Borrower having ordinary voting
power;

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

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

“Charges”
shall have the meaning assigned to such term in Section 9.09.

“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

 4
 

 

(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 9.04.

“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.

“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,

 5
 

 

(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.

“Conversion Date”
shall mean the date each Lender converts all or any of its portion of the
outstanding principal amount of the Loans as an offset of the “Purchase Price”
(as defined in the Securities Purchase Agreement) upon the consummation of the
sale and purchase of the Series B Preferred Stock in accordance with the
Securities Purchase Agreement.

“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).

“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.

 6
 

 

“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.

“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

 7
 

 

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 Borrower, 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 Borrower, any of its Subsidiaries or any of its ERISA
Affiliates from any Plan or Multiemployer Plan; (e) the receipt by the
Borrower, 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 Borrower, any of its Subsidiaries or any of its
ERISA Affiliates of any notice, or the receipt by any Multiemployer Plan from
the Borrower, 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 Borrower or any of the Subsidiaries is a “disqualified
person” (within the meaning of Section 4975 of the Code) or with respect to
which the Borrower 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 Borrower 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 Borrower 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

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

(b)           the
sum of:

 8
 

 

(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 Borrower
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 Borrower and its Subsidiaries during such period,
the amount of such net increase plus

(iv)          the
aggregate amount of Capital Expenditures of the Borrower 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 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).

“Existing Debt”
shall mean all Indebtedness listed on Schedule 1.01.

“Existing Credit Agreement”
shall mean the Revolving Credit, Term Loan and Security Agreement, dated as of
June 12, 2006, among the Borrower, Geophysical Development

 9
 

 

Corporation, Quantum Geophysical, Inc., Trace Energy
Services Ltd., Trace Energy Services, Inc., the financial institutions which
are a party thereto and PNC.

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

“Existing
Senior Debt” means the “Obligations” (as defined in the Existing
Credit Agreement) of the Borrower or any other obligations payable by the
Borrower under or in respect of 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 Required Lenders 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 Borrower 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.

“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,

 10
 

 

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 9.04(h).

“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.

“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
and on account of services provided by current or former directors, officers,
members of management, employees or consultants of the Borrower 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

 11
 

 

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 9.05(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.

“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).

 12
 

 

“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 as of the last day of such Test Period to (b) Consolidated EBITDA
for such Test Period, in each case as determined for the Borrower 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 Required Lenders 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 Required Lenders 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 Required Lenders equal to
the average (rounded upward to the next 1/100th of 1%) of the respective rates
notified to the Required Lenders by major financial institutions reasonably
acceptable to the Required Lenders, as the rate of interest 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 Lenders and with a term equivalent to such Interest Period
would be offered by such banks in the London interbank market 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.

“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 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.

 13
 

 

“Loan Parties”
shall mean the Borrower and such other person that is or becomes a party to
this Agreement.

“Loans”
shall mean the term loans made by the Lenders to the Borrower pursuant to Section
2.01, together with any PIK Interest Amounts which have been added thereto.

“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 Borrower 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 Borrower 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 Borrower 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 Borrower, 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 9.09.

“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
Borrower 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 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

 14
 

 

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 Borrower and the Subsidiaries in connection
therewith.

“Net Worth”
shall mean, at a particular date, (a) the aggregate amount of all assets
of the Borrower 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 Borrower 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.

“Participant Register”
shall have the meaning described to such term in Section 9.04(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
shall be owned directly by the Borrower or a Subsidiary, (d) 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 Borrower 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

 15

 

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 Borrower 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 (the “New
Indebtedness”) is not greater than the principal amount of such
Refinanced Indebtedness, (b) if such Refinanced Indebtedness is 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 

 16
 

 

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 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 Borrower 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 that refinances, refunds or replaces
any other Indebtedness of a Subsidiary.

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

“PIK Interest Amount”
shall mean the amount of interest accrued on a Loan that, in accordance with Section
2.06(c), increases the principal amount of such Loan.

“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 Borrower, 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.

“PNC” shall
mean PNC Bank, National Association, as agent to the Existing Credit Agreement.

“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 with the definition of “Consolidated EBITDA” and may take into account reasonably
identifiable

 17
 

 

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.

“RBC” shall
mean Royal Bank of Canada, as administrative agent to the Senior Credit
Agreement.

“Register”
shall have the meaning assigned to such term in Section 2.04(e).

“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 Senior
Credit Agreement, the Senior Credit 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, 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 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 Borrower or any Subsidiary or any option, warrant or other
right to acquire any such Equity Interests in the Borrower or any Subsidiary.

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

 18
 

 

“Securities Purchase
Agreement” shall mean that certain Securities Purchase
Agreement, dated as of September 8, 2006, among the Borrower and the purchasers
party thereto.

“Senior Credit Agreement”
shall mean that certain Credit Agreement, dated as of September 8, 2006, among
Geokinetics Holdings, Inc., the Borrower and the Subsidiaries of the Borrower
party thereto as guarantors, RBC and the lenders party thereto.

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

“Senior
Debt” means the “Obligations” (as defined in the Senior Credit
Agreement) or any other obligations payable under or in respect of the Senior
Credit Agreement and shall also include any amount payable by the Borrower
under its guaranty of any such Senior Debt (the “Senior
Debt Guaranty” and all obligations pursuant to the Senior Debt Guaranty,
“Senior Debt Guaranty Obligations”).

“Senior Debt Payments”
shall mean and include all cash actually expended by the Borrower 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.

“Senior Lenders”
shall mean (i) the several banks and other lenders from time to time party to
the Senior Credit Agreement and (ii) the several banks and other lenders from
time to time party to the Existing Credit Agreement.

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

“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 9.04(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”.

 19
 

 

“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 “Borrower”), any corporation,
partnership, limited liability company, association or other business entity of
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 Borrower, one or more subsidiaries of the Borrower or a combination
thereof.

“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 Borrower
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 Senior Credit 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.

 20
 

 

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

“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 Lenders 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 Required
Lenders notify the Borrower that the Required Lenders wish to amend Article VI
or any related definition for such purpose), then the Borrower and the Required
Lenders 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.

 21
 

 

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”).

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).

 22
 

 

(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 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.

(d)           Subject to and in accordance with the
terms and conditions contained in the Securities Purchase Agreement, the
Lenders shall have the right to convert the Loan into Series B Preferred Stock.

SECTION 2.03.      Borrowing Procedure.  In order to request a Loan, the Borrower
shall notify the Lenders 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.

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

 23
 

 

(d)           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
Lenders.  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 9.04) be represented by one or more promissory notes payable
to the payee named therein or its registered assigns.

(e)           Loan Register.

(i)            This Agreement is a registered
agreement, and any Note issued hereunder shall be a registered instrument.  A manually signed copy of this Agreement and
any promissory note issued hereunder to a Lender shall be evidence of such
Lender’s rights hereunder and thereunder and shall not be a bearer
instrument.  Avista Capital Partners,
L.P., acting as agent for the Borrower for the purpose of this Section 2.04(e)
(the “Registration Agent”) will
establish and maintain at its office a record of ownership (the “Register”) in which the Registration
Agent hereby covenants and agrees to register by book entry each Lender’s
interest in the Loans, this Agreement and any promissory note issued to such
Lender, and in the right to receive any payments hereunder or thereunder and
any transfer of any such interest or rights.

(ii)           (b)           No
transfer by a Lender  of any interest in
the Loans, this Agreement or any promissory note or in the rights to receive
any payments hereunder or thereunder shall be effective unless a book entry of
such transfer is made upon the Register and such transfer is effected in
compliance with the terms of this Agreement. 
The Borrower agrees that the Registration Agent may provide any
transferee of such interest with a counterpart or true copy of this Agreement.  No such transfer shall be effective until,
and such transferee shall succeed to the rights of the transferor Lender only
upon, final acceptance and entry into the Register of the transfer pursuant
hereto.

(iii)          (c)           Prior
to the entry into the Register of any transfer by the transferring Lender, the
Borrower and each other Person shall deem and treat each Person reflected in
the Register as owner of a portion of the Loan, this Agreement or any Note, or
the right to receive any payments hereunder or thereunder, as the owner thereof
for all purposes.  The Borrower agrees
that the Register referred to in this Section 2.04(e) shall be conclusive
and binding on the Borrower absent manifest error.  The Borrower irrevocably instructs the
Registration Agent to enter into the Register any such transfer if all of the
requirements set forth in this Agreement for an effective transfer by the
Lender of any interest in the Loans shall then have been satisfied.  The Registration Agent shall, upon the
request of the Borrower, provide the Borrower with a confirmation notice upon
the making of any such entry.  Any such
entry by the Registration Agent shall be effective for the purposes of
determining the effectiveness of any transfer notwithstanding any revocation of
the agency granted and appointed herein.

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

 24
 

 

(i)            the Fees payable to Avista Capital
Partners, L.P. (“Avista”), for its own
account, in the amounts and at the times separately agreed upon between the
Borrower and Avista; and

(ii)           on the Closing Date, a funding fee of
$825,000 to the Lenders ratably in accordance with their Commitments.

(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 Lenders shall refund to the Borrower fifty percent (50%) 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) from the Closing Date
(or, in the case of any PIK Interest Amount that is added to the Loans, from
the date such PIK Interest Amount increases the principal amount of the Loans
as contemplated by clause (c) below) until the date of repayment in full
or the Conversion Date 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
automatically be paid through an increase of the principal amount of the Loan
on the Interest Payment Date applicable to such Loan.  The Adjusted LIBO Rate for each Interest
Period or day within an Interest Period, as the case may be, shall be
determined by the Required Lenders, 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 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
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

 25
 

 

Loan the Lenders 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 Lenders 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 Lenders 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 Lenders under this Section 2.08 shall be conclusive
absent manifest error.

SECTION 2.09.      Repayment.  The principal amount of the Loan 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
Lenders (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;

(iii)          each conversion shall be effected by
each Lender 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;

 26
 

 

(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.  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 Lenders before 11:00 a.m., New
York 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 Lenders  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

 27
 

 

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 Lenders; 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 and the Senior Credit Agreement.

(b)           No later than the fifth Business Day
following the receipt by the Borrower 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 Borrower 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 Borrower 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 Borrower 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
Lenders, 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 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

 28
 

 

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 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:

(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

 29
 

 

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 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).

 30

 

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
9.01).  All payments hereunder and
under the other Loan Documents shall be made in dollars.

(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 Lender receives an amount equal to the sum
it would have received had no such deductions or withholdings been made,
(ii) the

 31
 

 

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 each Lender
within 30 days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes paid by the Lender 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 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 Lenders
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 Lenders.

(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, 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 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 D
together with a Form W-8BEN. 
Notwithstanding any other

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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 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 Borrower
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, (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 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 out-of-pocket expenses of 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 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 such Lender in the
event such Lender is required to repay such refund to such Governmental
Authority.  This paragraph shall not be
construed to require 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

 33
 

 

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 Mitigation.  (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, require such Lender to
transfer and assign (in accordance with and subject to the restrictions
contained in Section 9.04, 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
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 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.

(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.

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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 each of the
Lenders that:

SECTION 3.01.      Organization; Powers.  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 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 Borrower 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 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

 35
 

 

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 each of the Lenders its 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 Borrower
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 Borrower 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 each Lender an unaudited pro forma consolidated balance sheet and related
pro forma statements of income, stockholders’ equity and cash flows of the
Borrower 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 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 Borrower 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 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.

 36
 

 

(c)           The Borrower has not 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 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 Borrower does not have any Subsidiaries
other than the Subsidiaries of the Borrower. 
Schedule 3.08 sets forth as of the Closing Date a list of all
Subsidiaries of the Borrower and the percentage ownership interest of the
Borrower 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 Borrower, 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 Borrower, threatened against 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 determined,
could reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect.

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

 37
 

 

SECTION 3.13.      Tax Returns.  Each of 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 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 Borrower to
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 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 projections, and represented, at the time of delivery thereof,
a reasonable good faith estimate of future financial performance by the
Borrower.

SECTION 3.15.      Employee Benefit Plans.  Each of the Borrower and its 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 Borrower, any
Subsidiary or the Acquired Business incurring material Environmental
Liabilities:

(i)            the operations of 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 Borrower, any Subsidiary,
or the Acquired Business is a party to and no real property currently or, to
the knowledge of the Borrower, previously owned, leased, operated or otherwise
occupied by the Borrower, any Subsidiary or the Acquired

 38
 

 

Business is subject to or
the subject of a contractual obligation or a pending or, to the knowledge of
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 Borrower, any Subsidiary,
or the Acquired Business has caused or suffered to occur a release of Hazardous
Materials.

(b)           None of the Borrower, any Subsidiary,
or the Acquired Business knows of any facts, circumstances of conditions with
respect to past or present operations of 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 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 owned by the Borrower and the
Subsidiaries and the addresses thereof. 
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
Borrower and the Subsidiaries and the addresses thereof.  Except as otherwise provided on Schedule
3.17(b), 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 Borrower or any Subsidiary pending
or, to the knowledge of the Borrower, threatened, (b) the hours worked by
and payments made to employees of 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 Borrower or any Subsidiary, or for which any claim may be
made against 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 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 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:

 39
 

 

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

(e)           The Lenders shall have received
(i) a copy of the certificate or articles of incorporation or
organization, including all amendments thereto, of each Loan Party, 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 each Loan Party as of a recent
date, from such Secretary of State; (ii) a certificate of the Secretary or
Assistant Secretary of each Loan Party 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 Loan Party 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 such Loan Party 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 Loan Party 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 Loan Party; 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 Lenders 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 Lenders 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 Borrower, its Subsidiaries,
the Acquired Business and the Transactions shall be satisfactory to the
Lenders.

 40
 

 

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

(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
Lenders.  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 Senior Credit 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 $100,000,000 from the borrowing of loans under the
Senior Credit 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
Borrower 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 and (iii) the
revolving credit facility under the Existing Credit Agreement.

(n)           The Lenders 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 Borrower by a Responsible Officer.

(o)           The Lenders shall have received a
certificate from the chief financial officer (or officer with reasonably
equivalent responsibilities) of the Borrower certifying that the Borrower 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.

 41
 

 

(q)           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
Borrower 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 Borrower’s
Financial Officers as fairly presenting in all material respects the financial
condition and results of operations of the Borrower and its consolidated
subsidiaries on a consolidated basis in 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 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 Borrower 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.

(u)           The board of directors of the
Borrower shall include at least one member designated by Avista Capital
Partners, L.P.

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),

 42
 

 

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.

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 Lenders promptly upon request therefor; deliver to
the Lenders, 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 Lenders) together with
evidence reasonably satisfactory to the Lenders of payment of the premium
therefor.

SECTION 5.03.      Taxes.  (a)             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.

(b)           Use its best efforts to comply with all information
reporting requirements of the Code and the regulations promulgated thereunder
with respect to the issuance of the Indebtedness hereunder and all payments of
principal and interest thereon, including the issuance of a Form 1099-OID to
each Lender hereunder in accordance with applicable law.

SECTION 5.04.      Financial Statements,
Reports, etc.  In the case
of the Borrower, furnish 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
Borrower 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
Borrower and its consolidated Subsidiaries on a consolidated basis in
accordance with GAAP;

 43
 

 

(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 Borrower 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 of operations of the Borrower 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 Borrower 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
Borrower 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 Borrower (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 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 Borrower, 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 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

 44
 

 

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 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;

(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 Borrower or any Subsidiary, or compliance with the terms of
any Loan Document, as the Lender may reasonably request.

SECTION 5.05.      Litigation and Other
Notices.  Promptly upon
any Responsible Officer of the Borrower or any Subsidiary becoming aware
thereof, furnish to 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 Senior Credit 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 Borrower or any Affiliate thereof that
could reasonably be expected to result in liability of 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 Borrower and its Subsidiaries in an aggregate
amount exceeding $500,000;

(d)           the receipt by 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 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 any Lender to visit and inspect the financial records and the
properties of the Borrower or the

 45

 

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 any Lender to discuss the
affairs, finances and condition of such person with the officers thereof and
independent accountants therefor.

SECTION 5.07.      Use of Proceeds.  The proceeds of the Loans, together with the
loans under the Senior Credit 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 Senior Credit Agreement in an aggregate principal amount not to
exceed $100,000,000 and any refinancing, substitution, extension, replacement
or restructuring of the foregoing that is not prohibited by hereunder;

(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
$2,500,000 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;

(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 $2,500,000 at any time outstanding; provided further that,
the aggregate amount of

 46
 

 

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
acquired after the Closing Date pursuant to a Permitted Acquisition or
(ii) the Borrower and its Subsidiaries 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 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 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
Borrower 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,

 47
 

 

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 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;

 48
 

 

(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
$550,000.

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.

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 the Borrower
and any Subsidiary in any Domestic Subsidiary of the Borrower shall not exceed
$2,500,000 at any time outstanding and (ii) Investments by Borrower and
any Subsidiary in Foreign Subsidiaries of the Borrower not to exceed $550,000;

(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

 49
 

 

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
$550,000 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 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;

 50
 

 

(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 Borrower 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

(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 any Loan Document, the Senior Credit Agreement or the Existing
Credit Agreement,

(2)           customary restrictions and conditions
contained in agreements relating to an Asset Sale of a Subsidiary or any

 51
 

 

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)  Except as permitted in Section 9.02(f), permit any
waiver, supplement, modification, amendment, termination, release, refinancing
or refunding of any Related Document (except to the extent such waiver,
supplement, modification, amendment, termination, release, refinancing 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 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.

 52
 

 

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 or
(b) fiscal year.

SECTION 6.13.      Capital Expenditures.  Permit the aggregate amount of Capital
Expenditures made by the Borrower 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

  	
   

  	
  $

  	
  30,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2007 until Maturity

  	
   

  	
  $

  	
  30,000,000

  	
   

  

 

SECTION 6.14.      Net Worth.  Maintain at all times a Net Worth in an
amount not less than $35,000,000.

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 1.20 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 3.50:1.00.

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 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;

 53
 

 

(e)           default shall be made in the due
observance or performance by the 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 Required Lenders to the Borrower or
(ii) the Borrower’s knowledge of such default;

(f)            (i) the Borrower or any
Subsidiary shall fail to pay any principal or interest, regardless of amount,
due in respect of any Material Indebtedness (other than the Senior Debt and the
Existing Senior Debt), 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 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)           the Senior Debt or the Existing Senior
Debt shall have been accelerated;

(h)           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 Borrower or any
Subsidiary, or of a substantial part of the property or assets of 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 Borrower or any Subsidiary or for a substantial part of the property or
assets of the Borrower or a Subsidiary or (iii) the winding-up or
liquidation of 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;

(i)            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 (h) above,
(iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the Borrower or
any Subsidiary or for a substantial part of the property or assets of 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;

(j)            one or more judgments for the
payment of money in an aggregate amount exceeding $1,100,000 (except to the
extent fully covered by insurance pursuant to which the insurer has accepted
liability therefor in writing) shall be rendered against the Borrower, any
Subsidiary or any combination thereof and the same shall remain undischarged
for a period of 30

 54
 

 

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 Borrower or any Subsidiary to enforce
any such judgment;

(k)           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 Borrower and its ERISA Affiliates in an
aggregate amount exceeding $1,100,000;

(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 (including without limitation Article VIII) 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 (h) or (i)
above), and at any time thereafter during the continuance of such event, the
Required Lenders may by notice to the Borrower, take either or both of the
following actions, at the same or different times, (A) if there shall no longer
be any Senior Debt or Existing Senior Debt, immediately or (B) so long as the
Senior Debt or Existing Senior Debt shall not have been paid in cash or
terminated, not earlier than five (5) Business Days after an Agent’s receipt of
written notice of such Lender’s intention to take any such enforcement action,
provided that such notice shall not be required in the event that the Senior
Debt or Existing Senior Debt shall have been accelerated at the time that such
Lender intends to take such enforcement action: 
(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. 
Notwithstanding the foregoing, if an Event of Default with respect to
the Borrower described in paragraph (h) or (i) above occurs, 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.

 55
 

 

ARTICLE
VIII

Subordination

SECTION 8.01.      Agreement of Subordination.  (a)  The Borrower covenants and
agrees, and each Lender likewise covenants and agrees, that the Loans shall be
subject to the provisions of this Article VIII.

(b)           The payment of the principal of and
interest and any other amount due on all the Loans, to the extent and in the
manner hereinafter set forth, shall be subordinated and subject in right of
payment to the prior payment in full in cash or termination of all commitments to
lend or otherwise advance credit of (i) all Senior Debt Guaranty Obligations
and (ii) all Existing Senior Debt (including, in each case, post-petition
interest in any proceeding under any bankruptcy or insolvency laws, whether or
not allowed as a claim), whether outstanding at the date hereof or hereafter
incurred.

SECTION
8.02.      Payments
to Lenders.

(a)           Until the prior payment in full in
cash or termination of all commitments to lend or otherwise advance credit of
all Senior Debt Guaranty Obligations and all Existing Senior Debt, the Borrower
shall not make any optional prepayment (other than the conversion of the Loans
into Equity Interests) to any Lender upon or in respect of the Loans.

(b)           In the event and during the
continuation of any default in the payment of principal of, premium, if any, or
interest on or any other payment due under Senior Debt Guaranty Obligations or
the Existing Senior Debt, then, unless and until such default shall have been
cured or waived, no payment or distribution shall be made by or on behalf of
the Borrower with respect to the principal of or interest or any other payment
due on or with respect to the Loans.

(c)           In the event and during the
continuation of any default (other than a default of any payment due) with
respect to Senior Debt Guaranty Obligations or Existing Senior Debt, then,
unless and until such default shall have been cured or waived, no payment or
distribution shall be made by or on behalf of the Borrower with respect to the
principal of or premium, if any, interest or any other payment due on or with
respect to the Loans, if written notice of such default shall have been given
to the Borrower by an Agent, during the period commencing on the date on which
such notice is received by the Borrower and ending on the earlier to occur of
(a) the 179th day thereafter or (b) the day on which such default is
cured or waived; provided, however, that this
sentence shall not prohibit any payment due on the Loans for more than 179 days
in any 365-day period and provided, further,
that no default that once formed the basis for any such notice by an Agent
shall form the basis of any subsequent notice under this paragraph.  For purposes of the preceding sentence, “default”
shall mean any default or failure to observe or perform any provision of the
Senior Debt Guaranty, other Senior Debt Guaranty Obligations or the Existing
Senior Debt after the giving of notice, the expiration of any grace periods, or
both, so that the Senior Lenders are entitled to accelerate the maturity thereof.

(d)           Upon any payment by the Borrower, or
distribution of assets or securities of the Borrower of any kind or character,
whether in cash, property or securities, to creditors upon any

 56
 

 

dissolution, winding-up, total or partial liquidation
or reorganization of the Borrower or its property, whether voluntary or
involuntary, or any assignment for the benefit of creditors or any marshaling
of assets and liabilities, or in bankruptcy, insolvency, receivership or other
proceedings, all amounts due or to become due with respect to all Senior Debt
Guaranty Obligations and all Existing Senior Debt first shall be paid in full
in cash, or payment thereof provided for in cash in accordance with its terms,
before any payment is made on account of the principal of or interest or any
other amount due on or with respect to the Loans; and upon any such
dissolution, winding-up, liquidation, reorganization, assignment, marshaling or
proceedings:

(i)            the Senior Lenders shall be entitled
to receive payment in full in cash of all Senior Debt Guaranty Obligations and
all Existing Senior Debt before the Lenders and the Lenders shall be entitled
to receive any payment of principal or interest on or other amounts payable
with respect to the Loans; and

(ii)           any payment by the Borrower, or
distribution of assets or securities of the Borrower of any kind or character,
whether in cash, property or securities, to which the Lenders would be entitled
except for the provisions of this Article VIII, shall be paid by
the Borrower or by any custodian, agent or other Person making such payment or
distribution, or by any Lender, any paying agent or any depositary if received
by it, directly to the Senior Lenders or their representative or
representatives, as their respective interests may appear, to the extent
necessary to pay all such Senior Debt Guaranty Obligations or Existing Senior
Debt, as the case may be, in full in cash, after giving effect to any
concurrent payment or distribution to or for the Senior Lenders.

(e)           In the event that, notwithstanding
the foregoing, any payment by or distribution of assets or securities of the
Borrower of any kind or character, whether in cash, property or securities,
prohibited by the foregoing, shall be received by the Lenders before all such
Senior Debt Guaranty Obligations or Existing Senior Debt, as the case may be,
is paid in full in cash, such payment or 
distribution shall be held in trust for the benefit of and shall be paid
over or delivered to the Senior Lenders or their representative or representatives,
as their respective interests may appear, for application to the payment of all
such Senior Debt Guaranty Obligations or Existing Senior Debt remaining unpaid
to the extent necessary to pay all such Senior Debt Guaranty Obligations or
Existing Senior Debt in full in cash in accordance with its terms, after giving
effect to any concurrent payment or distribution to or for the benefit of the
Senior Lenders.

(f)            The consolidation of the Borrower
with or the merger of the Borrower into another corporation, or the liquidation
or dissolution of the Borrower following the conveyance or transfer of its
property or assets as an entirety or substantially as an entirety to another
corporation shall not be deemed a dissolution, winding-up, liquidation or
reorganization for the purposes of this Section 8.02 if such other
corporation, as a part of such consolidation, merger, conveyance or transfer,
shall comply with the following conditions stated below:

(i)            the Borrower is the surviving entity
or the Person formed by or surviving any such consolidation or merger (if other
than the Borrower) or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made is an

 57
 

 

entity organized or
existing under the laws of the United States, any state thereof or the District
of Columbia;

(ii)           the Person formed by or surviving any
such consolidation or merger (if other than the Borrower) or the Person to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made assumes all the obligations of the Borrower under the
Loans; and

(iii)          immediately after such transaction no
Event of Default exists.

(g)           The Senior Lenders, at any time and
from time to time, without the consent of or notice to the Lenders, without
incurring responsibility to the Lenders and without impairing or releasing the
obligations of the Lenders hereunder to the Senior Lenders, may:  (i) change the manner, place or terms of
payment or change or extend the time of payment of, or renew or alter, the
Senior Debt Guaranty Obligations or the Existing Senior Debt, or otherwise
amend in any manner Senior Debt Guaranty Obligations, the Existing Senior Debt
or any instrument evidencing the same or any agreement under which the Senior
Debt Guaranty Obligations are outstanding; provided, however,
that (A) Senior Debt Guaranty Obligations for the purposes of this Agreement
shall not exceed the principal amount of $100 million in the aggregate, which
cap shall be decreased by an amount equal to the aggregate re-payments of term
loans and the permanent reduction in other loans or commitments under the
Senior Credit Agreement and (B) the Existing Senior Debt for the purposes of
this Agreement shall not exceed the principal amount of $12 million in the
aggregate, which cap shall be decreased by an amount equal to the permanent
reduction in other loans or commitments under the Existing Credit Agreement;
(ii) release any Person liable in any manner for the collection or payment
of the Senior Debt Guaranty Obligations or Existing Senior Debt; and
(iii) exercise or refrain from exercising any rights against the Borrower
or any other Person.

(h)           For purposes of this Article VIII,
“payment” of or with respect to the Loans includes any payment, redemption,
acquisition, deposit, segregation, retirement, sinking fund payment and
defeasance of or with respect to the Loans.

SECTION 8.03.      Third-Party Beneficiaries;
Subrogation of Loans. 
(a)  This Article VIII is not intended to benefit or
confer any rights upon any Person other than the parties hereto, the Senior
Lenders and their respective successors and assigns, as specified herein.

(b)           Subject to the payment in full in
cash and termination of all commitments to lend or otherwise advance credit of
all Senior Debt Guaranty Obligations or the Existing Senior Debt at the time
outstanding, the Lenders shall be subrogated to the rights of the Senior
Lenders to receive payments or distributions of cash, property or securities of
the Borrower applicable to the Senior Debt Guaranty Obligations and the
Existing Senior Debt until the principal of and interest on the Loans shall be
paid in full in cash; and, for the purposes of such subrogation, no payments or
distributions to the Senior Lenders of any cash, property or securities to which
the Lenders would be entitled except for the provisions of this Article VIII,
and no payment over pursuant to the provisions of this Article VIII to
or for the benefit of the Senior  Lenders
by the Lenders, shall, as between the Borrower, its creditors other than the
Senior Lenders and the Lenders, be deemed to be a payment by the Borrower to or
on account of the Loans.  It is
understood that the

 58
 

 

provisions of this Article VIII are and are
intended solely for the purpose of defining the relative rights of the Lenders
on the one hand and the Senior Lenders, on the other hand.

(c)           Nothing contained in this Article
VIII or elsewhere herein is intended to or shall impair, as between the
Borrower, its creditors other than the Senior Lenders and the Lenders, the
obligation of the Borrower, which is absolute and unconditional, to pay to the
Lenders the principal of and interest on the Loans as and when the same shall
become due and payable in accordance with their terms, or is intended to or
shall affect the relative rights of the Lenders and creditors of the Borrower
other than the Senior Lenders, nor shall anything herein or therein prevent any
Lender from exercising all remedies otherwise permitted by applicable law upon
default under any Loan, subject to the rights, if any, under this Article
VIII of the Senior Lenders in respect of cash, property or securities of
the Borrower received upon the exercise of any such remedy.

(d)           Upon any payment or distribution of
assets or securities of the Borrower referred to in this Article VIII,
the Lenders shall be entitled to rely upon any order or decree made by any
court of competent jurisdiction in which such dissolution, winding-up,
liquidation, reorganization, assignment, marshaling or proceedings are pending,
or a certificate of any custodian, agent or other Person making such payment or
distribution, delivered to the Lenders, for the purpose of ascertaining the
Persons entitled to participate in such payment or distribution, the Senior
Lenders and the holders of other indebtedness of the Borrower, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article VIII.

SECTION 8.04.      Notice to Lenders.  The Borrower shall give prompt written notice
to the Lenders of any fact known to the Borrower that would prohibit the making
of any payment or distribution in respect of the Lenders pursuant to the
provisions of this Article VIII.

SECTION 8.05.      No Impairment of
Subordination.  No right
of any present or future Senior Lender to enforce subordination as herein
provided at any time in any way shall be prejudiced or impaired by any act or
failure to act on the part of the Borrower or by any act or failure to act, in
good faith, by any such Senior Lender, or by any noncompliance by the Borrower
with the terms, provisions and covenants of any Loan, regardless of any
knowledge thereof which any such Senior Lender may have or otherwise be charged
with.

SECTION 8.06.      Article VIII Not to
Prevent Events of Default. 
The failure to make a payment on account of principal, interest or any
other amount due hereunder by reason of any provision in this Article VIII
shall not be construed as preventing the occurrence of an Event of Default
under Article VII hereof but the remedies in respect thereof are
limited as set forth in Article VII hereof and any amounts realized
through the exercise of such remedies shall be subject to the provisions of
this Article VIII.

SECTION 8.07.      Continuing Effect.  The foregoing provisions constitute a
continuing offer to all Persons who become, or continue to be, Senior Lenders;
and such provisions are made for the benefit of the Senior Lenders, and such
Senior Lenders are hereby made obligees hereunder the same as if their names were
written herein as such, and they and/or each of them may proceed to enforce
such provisions and need not prove reliance thereon.

 59
 

 

SECTION 8.08.      Bankruptcy Avoidance.  To the extent that Senior Lenders receive
payments on Senior Debt Guaranty Obligations or the Existing Senior Debt which
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or required to be repaid to a trustee, receiver or any other party under
any bankruptcy law, state or federal law, common law, or equitable cause, then,
to the extent of such payment invalidated, declared to be fraudulent of
preferential, set aside or required to be repaid, the Senior Debt Guaranty
Obligations, the Existing Senior Debt, or any part thereof, intended to be
satisfied shall be revived and continue in full force and effect as if such
payments or proceeds had not been received by Senior Lenders.

SECTION 8.09.      Individual Rights of
Senior Lenders.  A Senior
Lender in its individual or any other capacity may become the owner or pledgee
of the Loans and may otherwise deal with the Borrower or any Subsidiary or
Affiliate of the Borrower with the same rights as if it were not a Senior
Lender.

SECTION 8.10.      Amendment to Article VIII.  Until the prior payment in full in cash or
termination of all commitments to lend or otherwise advance credit of all
Senior Debt Guaranty Obligations and all Existing Senior Debt, no amendment,
modification, or waiver of any provision of this Article VIII shall in
any event be effective without the prior written consent of the Agents.  Without the prior consent of PNC, the Lenders
shall not request, take or retain any liens, security interests, mortgages or
any other form of collateral security from the Borrower to secure all or any
portion of the Loans.

SECTION 8.11.      Instrument Legend and
Notation.  Any instrument
at any time evidencing the Loans, or any portion thereof, shall be permanently
marked on its face with a legend conspicuously indicating that payment thereof
is subordinate in right of payment to the Senior Debt Guaranty Obligations and
the Existing Senior Debt and subject to the terms and conditions of this Article
VIII, and after being so marked certified copies thereof shall be delivered
to the Agents.  No specific legend,
further assignment or endorsement or delivery of notes, guarantees or
instruments shall be necessary to subject the Loans to the subordination
thereof contained in this Article VIII.

ARTICLE
IX

Miscellaneous

SECTION 9.01.      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 Borrower, to it at Geokinetics Inc., One Riverway, Suite 2100, Houston,
Texas  77056, Attention of:  President (Fax No. 713-850-7330), cc:  James J. Spring, III, Chamberlain,
Hrdlicka, White, Williams & Martin, 1200 Smith Street, Suite 1400,
Houston , Texas  77002 (Fax No.
713-658-2553); and

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(b)           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 9.01 or in accordance with the latest unrevoked direction
from such party given in accordance with this Section 9.01.  As agreed to among the Borrower 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
Lenders; 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 9.02.      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 9.05
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 any Lender.

SECTION 9.03.      Binding Effect.  This Agreement shall become effective when it
shall have been executed by the Borrower and the Lenders and when the Lenders
shall have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto.

SECTION 9.04.      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 Borrower or the Lenders that are
contained in this Agreement shall bind and inure to the benefit of their respective
successors and assigns.

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(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 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, (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 Lender) 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 and (iii) the
parties to each such assignment shall execute and deliver to the assigning
Lender and the Borrower an Assignment and Acceptance.  Upon delivery and acceptance and recording
pursuant to paragraph (d) of this Section 9.04, 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 9.05,
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 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

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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
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; and
(vi) 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 Registration Agent, shall
maintain at its offices a copy of each Assignment and Acceptance delivered to
it and shall record each such assignment in the Register in accordance with
Section 2.04(e).  The Lenders may treat
each person whose name is recorded in the Register pursuant to the terms of
Section 2.04(e) 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)           Each Lender may without the consent
of the Borrower 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 9.04(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 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)).

(f)            Any Lender or participant may, in
connection with any assignment or participation or proposed assignment or
participation pursuant to this Section 9.04, disclose to the assignee or
participant or proposed assignee or participant any information relating to the

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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 9.16.

(g)           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.

(h)           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 writing from time to time by the Granting Lender to 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 9.04,
any SPC may (i) with notice to, but without the prior written consent of,
the Borrower 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) 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.

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

SECTION 9.05.      Expenses; Indemnity.  (a)  The Borrower agrees to pay all
out-of-pocket expenses incurred by the 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 any Lender in connection

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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 Lenders, and, in connection with any such enforcement or
protection, fees, disbursements and other charges of counsel as any Lender
determines to be reasonably necessary.

(b)           The Borrower agrees to indemnify 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 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
9.05 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 Lender.  All amounts due under this Section 9.05
shall be payable on written demand therefor.

SECTION 9.06.      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 against any of and all the obligations of
the Borrower 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 9.06 are in addition
to other rights and remedies (including other rights of setoff) which such
Lender may have.

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SECTION 9.07.      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 9.08.      Waivers; Amendment.  (a)  No failure or delay of 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 power. 
The rights and remedies of 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, without the prior written consent of each Lender,
(iv) modify the protections afforded to an SPC pursuant to the provisions
of Section 8.04(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).

SECTION 9.09.      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
9.09 shall be cumulated and the interest and Charges payable to such Lender
in respect of other Loans or periods shall be

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increased (but not above the Maximum Rate therefor) until
such cumulated amount shall have been received by such Lender.

SECTION 9.10.      Entire Agreement.  This Agreement and the other Loan Documents
constitute the entire contract between the parties relative to the subject
matter hereof.  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 Lenders) any rights, remedies, obligations or liabilities
under or by reason of this Agreement or the other Loan Documents.

SECTION 9.11.      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 9.11.

SECTION 9.12.      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 9.13.      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
9.03.  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 9.14.      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.

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SECTION 9.15.      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 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 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 9.01.  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 9.16.      Confidentiality.  The Lenders agree 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
9.16, 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, (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 9.16.  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
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 9.16 shall be considered to have complied with its
obligation to do so if

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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.

SECTION 9.17.      USA PATRIOT Act Notice.  Each Lender hereby notifies the Borrower that
pursuant to the requirements of the USA PATRIOT Act, it is required to obtain,
verify and record information that identifies the Borrower, which information
includes the name and address of the Borrower and other information that will
allow such Lender, as applicable, to identify the Borrower in accordance with
the USA PATRIOT Act.

[Remainder of this
page intentionally left blank]

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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 INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David A. Johnson

  
	
   

  	
   

  	
  Name: David A. Johnson

  
	
   

  	
   

  	
  Title: President

  

 

 i
 

 

 

	
  

  	
  AVISTA CAPITAL PARTNERS, L.P.,

  
	
   

  	
  as Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ben Silber

  
	
   

  	
   

  	
  Name: Ben Silber

  
	
   

  	
   

  	
  Title: General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  AVISTA CAPITAL PARTNERS (OFFSHORE),

  L.P.,

  
	
   

  	
  as Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ben Silber

  
	
   

  	
   

  	
  Name: Ben Silber

  
	
   

  	
   

  	
  Title: General Counsel

  

 

 ii

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"}]]