Prepared By R.R. Donnelley Financial -- Form 8-K

Exhibit No.		Description
EX-10.1		Fifth Amendment to Loan Agreement dated March 12, 2008, among Borrowers and Regions Bank (f/k/a Union Planters Bank, N.A.)
EX-10.2		Promissory Note dated March 13, 2008, made by OYOG Operations, LP payable to Compass Bank
EX-10.3		Deed of Trust, Security Agreement, Assignment of Rents and Financing Statement, dated March 13, 2008, by and between OYOG Operations, LP and Compass Bank
EX-10.4		Guaranty Agreement dated March 13, 2008, by and between OYO Geospace Corporation and Compass Bank
EX-10.5		Guaranty Agreement dated March 13, 2008, by and between Geospace Technologies, LP, and Compass Bank

EX-10.1 2 rrd199709_23681.htm FIFTH AMENDMENT TO LOAN AGREEMENT DATED MARCH 12, 2008, AMONG BORROWERS AND REGIONS BANK (F/K/A UNION PLANTERS BANK, N.A.) Fulbright & Jaworski Document

FIFTH AMENDMENT TO LOAN AGREEMENT

THIS FIFTH AMENDMENT TO LOAN AGREEMENT (this "Amendment"), dated as of March ____, 2008, is between CONCORD TECHNOLOGIES, L.P., a Texas limited partnership ("Concord"), GEOSPACE ENGINEERING RESOURCES INTERNATIONAL, LP, a Texas limited partnership ("Engineering"), GEOSPACE TECHNOLOGIES, LP, a Texas limited partnership ("Geospace"), OYO INSTRUMENTS, LP, a Texas limited partnership ("Instruments"), and OYOG OPERATIONS, LP, a Texas limited partnership ("Operations", and together with Concord, Engineering, Geospace and Instruments, the "Borrowers"), jointly and severally, and REGIONS BANK (F/K/A UNION PLANTERS BANK, N.A.) ("Lender").

RECITALS:

Borrowers and Lender entered into that certain Loan Agreement dated as of November 22, 2004, as amended by First Amendment to Loan Agreement dated as of September 19, 2005, Second Amendment to Loan Agreement dated as of June 16, 2006, Third Amendment to Loan Agreement dated as of January 10, 2007, and Fourth Amendment to Loan Agreement dated as of October 12, 2007 (as amended, the "Agreement").

Pursuant to the Agreement, OYO Geospace Corporation, OYOG, LLC and OYOG Limited Partner, LLC ("Guarantors") executed those certain Guaranty Agreements dated as of January 10, 2007 (the "Guaranty Agreements") pursuant to which Guarantors guaranteed to Lender the payment and performance of the Obligations (as defined in the Agreement).

Borrowers and Lender now desire to amend the Agreement as herein set forth.

NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE

Definitions

Section Definitions. Capitalized terms used in this Amendment, to the extent not otherwise defined herein, shall have the meanings given to such terms in the Agreement, as amended hereby.

ARTICLE

Amendments

Section Amendment to Certain Definitions. Effective as of date hereof, the definition of each of the following terms contained in Section 1.1 of the Agreement is amended to read in its respective entirety as follows:

"Guarantors" means GFC, General Partner, Limited Partner and Parent.

"Guaranty Agreements" means the Guaranty-GFC, the Guaranty-General Partner, the Guaranty-Limited Partner and the Guaranty-Parent.

"Security Agreements" means the Security Agreement-GFC, the Security Agreement-Concord, the Security Agreement-Engineering, the Security Agreement-Geospace, the Security Agreement-Instruments and the Security Agreement-Operations.

Effective as of the date hereof, the following definitions shall be added to Section 1.1 of the Agreement in proper alphabetical order:

"GFC" means Geospace Finance Corp., a Texas corporation, and its successors and assigns.

"Guaranty-GFC" means the Guaranty Agreement executed by GFC in favor of Lender in substantially the form of Exhibit "N" hereto, as the same may be amended, supplemented or modified.

"Security Agreement-GFC" means the Security Agreement executed by GFC in favor of Lender in substantially the form of Exhibit "O" hereto, as the same may be amended, supplemented or modified.

Section Amendment to Section 4.1. Effective as of the date hereof, paragraph (c) shall be added to Section 4.1 of the Agreement and shall read in its entirety as follows:

(c) GFC shall grant to Lender a first priority security interest in (i) all of its accounts, accounts receivable, general intangibles (but excluding patents, trademarks, trade names and other intellectual property), inventory, chattel paper, documents, instruments, deposit accounts, equipment, machinery and furniture, and (ii) all of its investment property, cash and financial assets arising therefrom, whether now owned or hereafter acquired, and all products and proceeds thereof, pursuant to the Security Agreement-GFC executed by GFC.

Section Amendment to Section 6.14. Effective as of the date hereof, Section 6.14 of the Agreement is amended to read in its entirety as follows:

Section 6.14. Subsidiaries. Neither any Borrower nor any Guarantor has any Subsidiaries except as shown on the OYO Geospace Corporation Entity Structure As of December 31, 2007 (the "Corporate Chart") delivered by Borrowers to Lender. Each Borrower and each Guarantor owns the percentage of ownership interests in its Subsidiaries shown on the Corporate Chart.

Section Amendment to Section 8.12. Effective as of the date hereof, Section 8.12 of the Agreement is amended to read in its entirety as follows:

Section 8.12. Capital Expenditures. No Borrower will permit the aggregate capital expenditures of Borrowers, Guarantors and their Subsidiaries (other than GFC) to exceed (a) $18,000,000.00 during the fiscal year ending September 30, 2008 and (b) $18,000.000.00 for the fiscal year ending September 30, 2009 and any fiscal year thereafter.

Section Amendment to Section 8.1. Effective as of the date hereof, Section 8.1 of the Agreement is amended to read in its entirety as follows:

Section 8.1. Debt. No Borrower will incur, create, assume or permit to exist, nor will it permit any Guarantor or any Subsidiary to incur, create, assume, or permit to exist, any Debt, except Debt to Lender, Debt described in Schedule 8.1(c), Subordinated Debt, accounts payable in the ordinary course of business, Debt arising from the endorsement of instruments for collection in the ordinary course of business, Debt to local Russian Bank (consisting of an overdraft line of credit) in an aggregate principal amount which does not exceed $500,000.00 at any time, and in addition to Debt otherwise permitted by this Section 8.1, Debt of Borrowers, Guarantors and their Subsidiaries in an aggregate principal amount which does not exceed $3,000,000.00 outstanding at any time.

Section Amendment to Exhibits and Schedules. Effective as of the date hereof, (a) Exhibit "N" shall be added to the Agreement (Guaranty-GFC) in substantially the form of Annex "A" to this Amendment, (b) Exhibit "O" shall be added to the Agreement (Security Agreement-GFC) in substantially the form of Annex "B" to this Amendment and (c) Schedule 8.1(c) is amended to read in its entirety as set forth in Annex "C" to this Amendment.

ARTICLE

Conditions Precedent

Section Conditions. The effectiveness of this Amendment is subject to the receipt by Lender of the following in form and substance satisfactory to Lender:

Certificate - Each Borrower. For each Borrower, a certificate of an officer of such Borrower acceptable to Lender certifying (i) resolutions of the General Partner which authorize the execution, delivery and performance by such Borrower of this Amendment and the other Loan Documents executed or delivered or to be executed or delivered in connection therewith to which such Borrower is or is to be a party, and (ii) the names of the officers of such Borrower authorized to sign this Amendment and each of the other Loan Documents to which such Borrower is or is to be a party together with specimen signatures of such Persons.

Governmental Certificates - Each Borrower. A certificate issued by the appropriate government official of the state of organization of each Borrower as to the existence of such Borrower.

Certificate-GFC. A certificate of the Secretary or another officer of GFC acceptable to Lender certifying (i) resolutions of the board of directors of GFC which authorize the execution, delivery and performance by GFC of the Guaranty-GFC and the other Loan Documents to which GFC is or is to be a party and (ii) the names of the officers of GFC authorized to sign the Guaranty-GFC and each of the other Loan Documents to which GFC is or is to be party together with specimen signatures of such officers.

Organizational Documents-GFC. The Certificate of Formation and the Bylaws of GFC certified by the Secretary or another officer of GFC acceptable to Lender.

Governmental Certificates-GFC. Certificates issued by the appropriate government officials of the state of incorporation of GFC as to the existence and good standing of GFC.

Security Agreement-GFC. The Security Agreement-GFC executed by GFC.

Guaranty-GFC. The Guaranty-GFC executed by GFC.

Financing Statements. Uniform Commercial Code financing statements showing GFC as debtor.

UCC Search. A Uniform Commercial Code search showing all financing statements and other documents or instruments on file against GFC in the office of the Secretary of State of Texas.

Additional Information. Such additional documents, instruments and information as Lender may reasonably request.

Section Additional Conditions. The effectiveness of this Amendment is also subject to the satisfaction of the additional conditions precedent that the representations and warranties contained herein and in all other Loan Documents, as amended hereby, shall be true and correct as of the date hereof as if made on the date hereof, all proceedings, corporate or otherwise, taken in connection with the transactions contemplated by this Amendment and all documents, instruments and other legal matters incident thereto shall be satisfactory to Lender, and no Event of Default or Unmatured Event of Default shall have occurred and be continuing.

ARTICLE

Ratifications, Representations, and Warranties

Section Ratifications. The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions set forth in the Agreement and except as expressly modified and superseded by this Amendment, the terms and provisions of the Agreement are ratified and confirmed and shall continue in full force and effect. Borrowers and Lender agree that the Agreement as amended hereby shall continue to be the legal, valid and binding obligation of such Persons enforceable against such Persons in accordance with its terms.

Section Representations, Warranties and Agreements. Each Borrower hereby represents and warrants to Lender that the execution, delivery, and performance of this Amendment and any and all other Loan Documents executed or delivered in connection herewith have been authorized by all requisite action on the part of such Borrower and will not violate the Organizational Documents of such Borrower, the representations and warranties contained in the Agreement as amended hereby, and all other Loan Documents are true and correct on and as of the date hereof as though made on and as of the date hereof, no Event of Default or Unmatured Event of Default has occurred and is continuing, such Borrower is in full compliance with all covenants and agreements contained in the Agreement as amended hereby, such Borrower is indebted to Lender pursuant to the terms of the Note, as the same may have been renewed, modified, extended and rearranged, including, without limitation, renewals, mo difications and extensions made pursuant to this Amendment, the liens, security interests, encumbrances and assignments created and evidenced by the Loan Documents are, respectively, valid and subsisting liens, security interests, encumbrances and assignments and secure the Note as the same may have been renewed, modified or rearranged, including, without limitation, renewals, modifications and extensions made pursuant to this Amendment, and such Borrower has no claims, credits, offsets, defenses or counterclaims arising from the Loan Documents or Lender's performance under the Loan Documents.

Section Corporate Entity Structure. Borrower agrees that attached hereto as Annex "D" is a true and correct copy of the OYO Geospace Corporation Entity Structure As of December 31, 2007.

ARTICLE

Miscellaneous

Section Survival of Representations and Warranties. All representations and warranties made in this Amendment or any other Loan Documents including any Loan Document furnished in connection with this Amendment shall fully survive the execution and delivery of this Amendment and the other Loan Documents, and no investigation by Lender or any closing shall affect the representations and warranties or the right of Lender to rely on them.

Section Reference to Agreement. Each of the Loan Documents, including the Agreement and any and all other agreements, documents, or instruments now or hereafter executed and delivered pursuant to the terms hereof or pursuant to the terms of the Agreement, as amended hereby, are hereby amended so that any reference in such Loan Documents to the Agreement shall mean a reference to the Agreement, as amended hereby.

Section Expenses of Lender. As provided in the Agreement, Borrowers agree to pay on demand all reasonable costs and expenses incurred by Lender in connection with the preparation, negotiation and execution of this Amendment and the other documents and instruments executed pursuant hereto and any and all amendments, modifications and supplements thereto, including, without limitation, the costs and fees of Lender's legal counsel, and all reasonable costs and expenses incurred by Lender in connection with the enforcement or preservation of any rights under the Agreement, as amended hereby, or any other Loan Document, including, without limitation, the costs and fees of Lender's legal counsel.

Section Severability. Any provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Amendment and the effect thereof shall be confined to the provision so held to be invalid or unenforceable.

Section APPLICABLE LAW. THIS AMENDMENT AND ALL OTHER LOAN DOCUMENTS EXECUTED PURSUANT HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE IN HOUSTON, HARRIS COUNTY, TEXAS AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.

Section Successors and Assigns. This Amendment is binding upon and shall inure to the benefit of Lender and Borrower and their respective successors and assigns, except Borrower may not assign or transfer any of its rights or obligations hereunder without the prior written consent of Lender.

Section Counterparts. This Amendment may be executed in one or more counterparts, each of which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same instrument.

Section Effect of Waiver. No consent or waiver, express or implied, by Lender to or for any breach of or deviation from any covenant, condition or duty by any Borrower under this Amendment shall be deemed a consent or waiver to or of any other breach of the same or any other covenant, condition or duty.

Section Headings. The headings, captions, and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment.

Section ENTIRE AGREEMENT. THIS AMENDMENT AND ALL OTHER INSTRUMENTS, DOCUMENTS, AND AGREEMENTS EXECUTED AND DELIVERED IN CONNECTION WITH THIS AMENDMENT EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THIS AMENDMENT AND THE OTHER INSTRUMENTS, DOCUMENTS AND AGREEMENTS EXECUTED AND DELIVERED IN CONNECTION WITH THIS AMENDMENT, AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO.

[[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]]

Executed as of the date first written above.

BORROWERS:

CONCORD TECHNOLOGIES, LP

By: OYOG, LLC,

its general partner

By:

Thomas T. McEntire

Vice President and

Chief Financial Officer

GEOSPACE ENGINEERING RESOURCES

INTERNATIONAL, LP

By: OYOG, LLC,

its general partner

By:

Thomas T. McEntire

Vice President and

Chief Financial Officer

GEOSPACE TECHNOLOGIES, LP

By: OYOG, LLC,

its general partner

By:

Thomas T. McEntire

Vice President and

Chief Financial Officer

OYO INSTRUMENTS, LP

By: OYOG, LLC,

its general partner

By:

Thomas T. McEntire

Vice President and

Chief Financial Officer

OYOG OPERATIONS, LP

By: OYOG, LLC,

its general partner

By:

Thomas T. McEntire

Vice President and

Chief Financial Officer

LENDER:

REGIONS BANK

By:

Keith S. Page

Senior Vice President

Each of the undersigned Guarantors hereby consents and agrees to this Amendment and agrees that the Guaranty Agreement executed by such Person shall remain in full force and effect and shall continue to be the legal, valid and binding obligations of such Guarantor, enforceable against such Guarantor in accordance with its terms and shall evidence such Guarantor's guaranty of the Note as renewed and extended from time to time.

OYOG, LLC

By:

Thomas T. McEntire

Vice President and Chief Financial Officer

OYOG LIMITED PARTNER, LLC

By:

Thomas T. McEntire

Manager

OYO GEOSPACE CORPORATION

By:

Thomas T. McEntire

Vice President and Chief Financial Officer

LIST OF ANNEXES

Annex Document

A Guaranty-GFC

B Security Agreement-GFC

C Schedule 8.1(c)

D OYO Geospace Corporation Entity Structure As of December 31, 2007

Annex "A"

Guaranty-GFC

Annex "B"

Security Agreement-GFC

Annex "C"

Schedule 8.1(c)

Annex "D"

OYO Geospace Corporation Entity Structure As of December 31, 2007

EX-10.2 3 rrd199709_23682.htm PROMISSORY NOTE DATED MARCH 13, 2008, MADE BY OYOG OPERATIONS, LP PAYABLE TO COMPASS BANK

PROMISSORY NOTE

$8,800,000.00 Houston, Texas March 13, 2008

FOR VALUE RECEIVED, the undersigned, OYOG OPERATIONS, LP, a Texas limited partnership ("Borrower"), hereby promises to pay to the order of COMPASS BANK an Alabama state banking corporation ("Lender"), at its designated office, in lawful money of the United States of America, the principal sum of EIGHT MILLION EIGHT HUNDRED THOUSAND AND NO/100 DOLLARS ($8,800,000.00), together with interest thereon at the rate set forth below.

The outstanding principal balance hereof shall bear interest prior to maturity at a varying rate per annum which shall from day to day be equal to the lesser of (a) the Maximum Rate (hereinafter defined) or (b) the sum of the Libor Rate (hereinafter defined) in effect from day to day plus one and one-half percent (1.50%), and each change in the rate of interest charged hereunder shall become effective, without notice to Borrower, on the effective date of such change in the Libor Rate or the Maximum Rate, as the case may be; provided, however, if at any time the rate of interest specified in clause (b) preceding shall exceed the Maximum Rate, thereby causing the interest rate hereon to be limited to the Maximum Rate, then any subsequent reduction in the Libor Rate will not reduce the rate of interest hereon below the Maximum Rate until the total amount of interest accrued hereon equals the amount of interest which would have accrued hereon if the rate specified in clause (b) preceding had a t all times been in effect. If an Event of Default (hereinafter defined) has occurred and is existing, the principal hereof shall bear interest at the Default Rate (hereinafter defined).

Interest on the indebtedness evidenced by this Note shall be computed on the basis of a year of 360 days and the actual number of days elapsed (including the first day but excluding the last day) unless such calculation would result in a usurious rate in which case interest shall be calculated on the basis of a year of 365 or 366 days, as the case may be.

Principal of and interest on this Note shall be due and payable in two hundred forty (240) installments as follows:

(a) Two Hundred Thirty-Nine (239) monthly installments each in the principal amount of Thirty-Six Thousand Six Hundred Sixty-Six and 66/100 Dollars ($36,666.66), plus accrued and unpaid interest, shall be due and payable on the first day of each month, commencing April 1, 2008 until and including February 1, 2028; and

(b) A final installment in the amount of all outstanding principal, plus accrued and unpaid interest, shall be due and payable on March 13, 2028.

This Note is (i) secured as provided in the Deed of Trust (hereinafter defined) and (ii) the Assignment of Rents (hereinafter defined).

Borrower may prepay the principal of and accrued interest on this Note at any time without premium or penalty, provided that all such prepayments of principal shall be applied to the principal payments due hereon in inverse order of their maturities.

As used in this Note, the following terms shall have the respective meanings indicated below:

"Assignment of Rents" means the Absolute Assignment of Rents (with License Back) dated of even date herewith, executed by Borrower for the benefit of Lender, as the same may be amended, supplemented, or modified from to time.

"Cooper Indemnity" means that certain Environmental Indemnity and Remediation Agreement dated as of September 10, 2003 among Cooper Industries, Inc., Borrower and Cooper Power Tools, Inc.

"Debt" means for any Person (a) all indebtedness, whether or not represented by bonds, debentures, notes, securities or other evidences of indebtedness, for the repayment of money borrowed, including, with respect to Borrower, the indebtedness evidenced by this Note, and all other indebtedness of Borrower to Lender, (b) Rate Management Transaction Obligations, (c) all indebtedness representing deferred payment of the purchase price of property or assets, (d) all indebtedness under any lease which, in conformity with GAAP, is required to be capitalized for balance sheet purposes, (e) all indebtedness under guaranties, endorsements, assumptions or other contingent obligations, in respect of, or to purchase or otherwise acquire, indebtedness of others, (f) all indebtedness secured by a lien existing on property owned, subject to such lien, whether or not the indebtedness secured thereby shall have been assumed by the owner thereof, and (g) any obligation to redeem or repurchase any of such Person's capital stock, partnership or membership interests or other ownership interests as applicable.

"Deed of Trust" means the Deed of Trust, Security Agreement, Assignment of Rents and Financing Statement dated of even date herewith, executed by Borrower for the benefit of Lender, as the same may be amended, supplemented, or modified from to time.

"Default Rate" means the lesser of (a) the greater of (i) the sum of the Libor Rate plus five percent (5%) or (ii) eight percent (8%), or (b) the Maximum Rate.

"Event of Default" each of the following shall constitute and be deemed an "Event of Default":

(a) Borrower shall fail to pay this Note or any installment of this Note, whether principal or interest, within three (3) days of when due.

(b) Any material representation or warranty made or deemed made by Borrower, any Guarantor or any of their respective officers in any certificate, report, notice, or financial statement furnished at any time in connection with this Note or any Loan Document shall be false, misleading, or erroneous in any material respect when made or deemed to have been made.

(c) Borrower or any Guarantor, as applicable, shall fail to perform, observe, or comply with any covenant, agreement or term contained in this Note or any Loan Document and the same shall remain unremedied for thirty (30) days after the earlier of (i) knowledge of such failure by Borrower or any Guarantor, as applicable or (ii) notice of such failure from Lender.

(d) Borrower or any Guarantor, as applicable, shall commence a voluntary proceeding seeking liquidation, reorganization, or other relief with respect to itself or its debts under any bankruptcy, insolvency, or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian, or other similar official of it or a substantial part of its property or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it or shall make a general assignment for the benefit of creditors or shall generally fail to pay its debts as they become due or shall take any corporate action to authorize any of the foregoing.

(e) An involuntary proceeding shall be commenced against Borrower or any Guarantor seeking liquidation, reorganization, or other relief with respect to it or its debts under any bankruptcy, insolvency, or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official for it or a substantial part of its property, and such involuntary proceeding shall remain undismissed and unstayed for a period of sixty (60) days.

(f) Borrower or any Guarantor shall fail to pay when due any principal of or interest on any debt for borrowed money (other than the obligations hereunder), or the maturity of any such debt shall have been accelerated, or any such debt shall have been required to be prepaid prior to the stated maturity thereof, or any event shall have occurred that permits (or, with the giving of notice or lapse of time or both, would permit) any holder or holders of such debt or any person acting on behalf of such holder or holders to accelerate the maturity thereof or require any such prepayment.

(g) The occurrence or the existence of any default, Event of Default or similar condition or event (however described) with respect to any Rate Management Transaction.

(h) Any default, Event of Default or similar condition or event (however described) under the Cooper Indemnity.

(i) This Note or any other Loan Document shall cease to be in full force and effect or shall be declared null and void or the validity or enforceability thereof shall be contested or challenged by Borrower, or Borrower shall deny that it has any further liability or obligation hereunder prior to payment in full of all obligations hereunder, or the lien created by the Deed of Trust shall cease to be a first priority lien.

(j) Borrower or any Guarantor shall fail to discharge within a period of thirty (30) days after the commencement thereof any attachment, sequestration, or similar proceeding or proceedings involving an aggregate amount in excess of $50,000.00 against any of its assets or properties.

(k) Borrower or any Guarantor shall fail to satisfy and discharge promptly any final judgement against it for the payment of money in an aggregate amount in excess of $50,000.00.

A GAAP@ means generally accepted accounting principles in the United States of America consistently applied.

"Guarantors" means OYO Geospace Corporation, a Delaware corporation (A Parent@ ) and Geospace Technologies, LP, a Texas limited partnership (A Geospace Technologies@ ).

"Guaranty" means each Guaranty Agreement respectively executed by each Guarantor in favor of Lender, as the same may be amended, supplemented, or modified from time to time.

"Libor Rate" means, on any day, the London Interbank Offered Rate (Libor) for a one (1) month period as published in The Wall Street Journal on that day under the section "Money Rates." If such section of The Wall Street Journal reflects more than one rate as being the London Interbank Offered Rate (Libor) for a one (1) month period, then the highest rate shall be the Libor Rate. On days when The Wall Street Journal is not published, the Libor shall be the London Interbank Offered Rate (Libor) for a one (1) month period stated in the most recently published edition of The Wall Street Journal. In the event The Wall Street Journal ceases to be published altogether, or ceases to publish the London Interbank Offered Rate (Libor) for a one (1) month period, then Lender or its successors or assigns shall establish and use a new Libor Rate, in the exercise of its sole discretion, without any notice to the Borrower or any person being required. The Lib or Rate shall automatically fluctuate, upward and downward, without notice to Borrower or any other person, as and in the amount the said published London Interbank Offered Rate (Libor) for a one (1) month period shall fluctuate. The Libor Rate is a reference rate and does not necessarily represent Lender's best or lowest rate or a favored rate, and Lender disclaims any statement, representation or warranty to the contrary.

"Loan Documents" means this Note and all security agreements, deeds of trust, pledge agreements, assignments, letters of credit, guaranties, certificates and other instruments, documents, and agreements, if any, executed and delivered pursuant to or in connection with this Note, as such instruments, documents, and agreements may be amended, modified, renewed, extended, or supplemented from time to time.

"Maximum Rate" means the maximum rate of nonusurious interest permitted from day to day by applicable law, including Chapter 303 of the Texas Finance Code (the "Code") (and as the same may be incorporated by reference in other Texas statutes). To the extent that Chapter 303 of the Code is relevant to any holder of this Note for the purposes of determining the Maximum Rate, each such holder elects to determine such applicable legal rate pursuant to the "weekly ceiling," from time to time in effect, as referred to and defined in Chapter 303 of the Code; subject, however, to the limitations on such applicable ceiling referred to and defined in the Code, and further subject to any right such holder may have subsequently, under applicable law, to change the method of determining the Maximum Rate.

"Obligations" means all obligations, indebtedness, and liabilities of Borrower to Lender under this Note (including the payment of principal and interest hereon), the Rate Management Transaction Obligations and the other Loan Documents and all interest accruing thereon and all attorneys' fees and other expenses incurred in the enforcement or collection thereof.

"Person" means any individual, corporation, limited liability company, business trust, association, company, partnership, joint venture, governmental authority, or other entity.

"Rate Management Transaction" means any transaction (including an agreement with respect thereto) now existing or hereafter entered into between Borrower and Lender which is a rate swap, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, forward transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of these transactions) or any combination thereof, whether linked to one or more interest rates, foreign currencies, commodity prices, equity prices or other financial measures.

"Rate Management Transaction Obligations" means any and all obligations, contingent or otherwise, whether now existing or hereafter arising, of Borrower to Lender arising under or in connection with any Rate Management Transaction.

"Real Property" means the real property and interests in real property described in the Deed of Trust, and all improvements and fixtures thereon and all appurtenances thereto.

The proceeds of this Note shall be used for the refinance of land and building located at 7007 Pinemont, Houston, Texas for use in operations of Borrower. Borrower may not use the proceeds of this Note for any other purpose without first obtaining the consent of Lender.

Borrower agrees to deliver to Lender:

Financial Statements for Borrower and Geospace Technologies. If requested by Lender within one hundred five (105) days after the end of each fiscal year of Borrower and Geospace Technologies beginning with the fiscal year ending September 30, 2008, a copy of the annual company prepared financial statements of Borrower and Geospace Technologies for such fiscal year containing balance sheets and statements of income as at the end of such fiscal year and for the 12-month period then ended, all in reasonable detail, prepared in accordance with generally accepted accounting principals consistently applied, and certified by an officer of Borrower and Geospace Technologies, as applicable, acceptable to Lender.

(b) Financial Statements for Parent. As soon as available, and in any event within one hundred five (105) days after the end of each fiscal year of Parent, beginning with the fiscal year ending September 30, 2008, a copy of the annual consolidated audit report of Parent for such fiscal year containing balance sheets, statements of income and statements of cash flows as at the end of such fiscal year and for the 12-month period then ended, in each case setting forth in comparative form the figures for the preceding fiscal year, all in reasonable detail, prepared in accordance with generally accepted accounting principals consistently applied, and audited and certified without qualification by independent certified public accountants of recognized standing acceptable to Lender.

(c) Quarterly Financial Statements for Parent. As soon as available, and in any event within sixty (60) days after the end of each quarter of each fiscal year of Parent, a copy of the consolidated financial statements of Parent as of the end of such fiscal quarter and for the portion of the fiscal year then ended, containing balance sheets, statements of income and statements of cash flows in each case setting forth in comparative form the figures for the corresponding period of the preceding fiscal year, all in reasonable detail and certified by an officer of Parent acceptable to Lender to fairly and accurately present the financial condition and results of operations of Parent at the date and for the periods indicated therein.

Borrower agrees with Lender that Borrower will not, without Lender= s prior written consent, (a) become a party to a merger, consolidation, partnership or joint venture or purchase or otherwise acquire all or a substantial part of the assets of any Person or any shares or other evidence of beneficial ownership of any Person, (b) dissolve or liquidate, (c) sell, lease, assign, transfer or otherwise dispose of substantially all of its assets, or (d) enter into any agreement to do any of the foregoing.

Borrower agrees with Lender that promptly after the commencement thereof, Borrower will give Lender notice of all actions, suits and proceedings before any court or governmental department, commission, board, agency or instrumentality, domestic or foreign, affecting Borrower which could have a material adverse effect on the financial condition of Borrower.

Borrower agrees with Lender that Borrower will maintain with financially sound and reputable insurance companies workmen's compensation insurance, liability insurance and insurance on its property, assets and business, all at least in such amounts and against such risks as are usually insured against by Persons engaged in similar businesses and as required by the Deed of Trust. Each insurance policy covering the Real Property shall name Lender as lender loss payee and provide that such policy will not be cancelled without thirty (30) days prior written notice to Lender. Borrower will deliver to Lender copies of all insurance policies required by this paragraph, together with loss payable endorsements in favor of Lender with respect to all insurance policies covering the Real Property.

Borrower agrees with Lender that Borrower will comply in all material respects with all laws and regulations and all agreements, contracts and instruments binding on it or affecting its properties or business except where the failure to comply could not reasonably be expected to have a material adverse effect on the business or financial condition of Borrower.

Borrower agrees with Lender that Borrower will pay or discharge at or before maturity or before becoming delinquent (a) all taxes, levies, assessments and governmental charges imposed on it or its income or profits or any of its property and (b) all lawful claims for labor, material and supplies, which, if unpaid, might become a Lien upon any of its property.

Borrower agrees with Lender that Borrower will execute and deliver such further instruments as may be requested by Lender to carry out the provisions and purposes of this Note and the other Loan Documents and to preserve and perfect the Liens of Lender in the collateral for this Note.

In the event that an Event of Default exists and Lender decides to waive such Event of Default or to forbear from taking action with respect to such Event of Default, Borrower shall pay to Lender, immediately upon demand by Lender, a waiver fee in an amount determined by Lender in its sole discretion. The decision by Lender to waive any Event of Default shall be made by Lender in its sole and absolute discretion, and Lender has no obligation whatsoever to waive any Event of Default. The provisions of this paragraph shall not affect Lender's other rights or remedies.

If any payment of principal or interest on this Note is made ten (10) or more days past the date when due, Borrower will pay, immediately upon demand by Lender, and in addition to regularly accruing interest, a delinquency charge in an amount equal to five percent (5.0%) of the amount which was not paid when due. The provisions of this paragraph shall not affect Borrower's rights and remedies arising as a result of such late payment or otherwise.

Borrower represents and warrants to Lender that (a) Borrower is a Texas limited partnership, duly organized and validly existing under the laws of the state of Texas, (b) the execution, delivery and performance of this Note and the other Loan Documents are within Borrower's powers, have been duly authorized by all requisite action, and do not and will not contravene its partnership agreement, other organizational document, any law or any agreement or undertaking to which it is a party or by which it is bound, (c) this Note is a legal, binding obligation of Borrower, enforceable against Borrower in accordance with its terms, (d) there are no claims pending, or to Borrower's knowledge threatened, which, if adversely determined, would have a material adverse effect on the financial condition, operations or properties of Borrower, and (e) except as may have been already obtained, no authorization or consent of, and no filing or registration with, any court, governmental authority or third part y is or will be necessary for the execution, delivery or performance by Borrower of this Note and the other Loan Documents.

All notices and other communications provided for in this Note and the other Loan Documents shall be in writing and may be telecopied (faxed), mailed by certified mail return receipt requested, or delivered to the intended recipient at the addresses specified below or at such other address as shall be designated by any party listed below in a notice to the other parties listed below given in accordance with this paragraph.

If to Borrower: OYOG Operations, LP

7007 Pinemont Drive

Houston, Texas 77040

Attention: Thomas McEntire

Telephone No.: 281-494-8282

Fax No.: 281-494-8310

If to Lender: Compass Bank

24 Greenway Plaza, Suite 1601

Houston, Texas 77046

Attention: Cindy Young

Telephone No.: 713.499.8632

Fax No.: 713.966.2388

Except as otherwise provided in this Note or any Loan Document, all such communications shall be deemed to have been duly given when transmitted by telecopy (fax), subject to confirmation of receipt, when personally delivered or, in the case of a mailed notice, when duly deposited in the mails, in each case given or addressed as aforesaid.

Notwithstanding anything to the contrary contained herein, no provisions of this Note shall require the payment or permit the collection of interest in excess of the Maximum Rate. If any excess of interest in such respect is herein provided for, or shall be adjudicated to be so provided, in this Note or otherwise in connection with this loan transaction, the provisions of this paragraph shall govern and prevail, and neither Borrower nor the sureties, guarantors, successors or assigns of Borrower shall be obligated to pay the excess amount of such interest, or any other excess sum paid for the use, forbearance or detention of sums loaned pursuant hereto. If for any reason interest in excess of the Maximum Rate shall be deemed charged, required or permitted by any court of competent jurisdiction, any such excess shall be applied as a payment and reduction of the principal of indebtedness evidenced by this Note; and, if the principal amount hereof has been paid in full, any remaining excess shall forthwith be paid to Borrower. In determining whether or not the interest paid or payable exceeds the Maximum Rate, Borrower and Lender shall, to the extent permitted by applicable law, (a) characterize any non-principal payment as an expense, fee, or premium rather than as interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the entire contemplated term of the indebtedness evidenced by this Note so that the interest for the entire term does not exceed the Maximum Rate.

Upon the occurrence of any Event of Default, the holder hereof may, at its option, (a) declare the entire unpaid principal of and accrued interest on this Note immediately due and payable without notice, demand or presentment, all of which are hereby waived, and upon such declaration, the same shall become and shall be immediately due and payable, (b) foreclose or otherwise enforce any Lien granted to Lender to secure payment and performance of the Obligations, (c) offset against this Note any sum or sums owed by the holder hereof to Borrower and (d) take any and all other actions available to Lender under this Note, at law, in equity or otherwise. Failure of the holder hereof to exercise any of the foregoing options shall not constitute a waiver of the right to exercise the same upon the occurrence of a subsequent Event of Default.

If the holder hereof expends any effort in any attempt to enforce payment of all or any part or installment of any sum due the holder hereunder, or if this Note is placed in the hands of an attorney for collection, or if it is collected through any legal proceedings, Borrower agrees to pay all reasonable costs, expenses, and fees incurred by the holder, including all reasonable attorneys' fees.

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THIS NOTE IS PERFORMABLE IN HARRIS COUNTY, TEXAS.

Borrower and each surety, guarantor, endorser, and other party ever liable for payment of any sums of money payable on this Note jointly and severally waive (except as otherwise expressly provided herein or in any other Loan Document) notice, presentment, demand for payment, protest, notice of protest and non-payment or dishonor, notice of acceleration, notice of intent to accelerate, notice of intent to demand, diligence in collecting, grace, and all other formalities of any kind, and consent to all extensions without notice for any period or periods of time and partial payments, before or after maturity, and any impairment of any collateral securing this Note, all without prejudice to the holder. The holder shall similarly have the right to deal in any way, at any time, with one or more of the foregoing parties without notice to any other party, and to grant any such party any extensions of time for payment of any of said indebtedness, or to release or substitute part or all of the colla teral securing this Note, or to grant any other indulgences or forbearances whatsoever, without notice to any other party and without in any way affecting the personal liability of any party hereunder.

THIS NOTE, AND THE OTHER LOAN DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT BETWEEN BORROWER AND LENDER WITH RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF BORROWER AND LENDER. THERE ARE NO ORAL AGREEMENTS BETWEEN BORROWER AND LENDER.

Borrower agrees not to send Lender payments marked "paid in full", "without recourse", or with similar language. If Borrower sends a payment, Lender may accept it without losing any of Lender's rights under this Note, and Borrower will remain obligated to pay any further amounts owed or that may become owed to Lender. All written communications concerning disputed amounts, including any check or other payment instrument that indicates that the payment constitutes "payment in full" of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount, must be mailed or delivered to: Compass Bank, P.O. Box 3096, Birmingham, Alabama 35202.

OYOG OPERATIONS, LP

By: OYOG, LLC, its general partner

By: OYO Geospace Corporation, its sole member

By:_________________________________

Thomas T. McEntire

Chief Financial Officer

EX-10.3 4 rrd199709_23683.htm DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF RENTS AND FINANCING STATEMENT, DATED MARCH 13, 2008, BY AND BETWEEN OYOG OPERATIONS, LP AND COMPASS BANK NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE ANY OR ALL OF THE FOLLOWING INFORMATIO

NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE ANY OR ALL OF THE FOLLOWING INFORMATION FROM ANY INSTRUMENT THAT TRANSFERS AN INTEREST IN REAL PROPERTY BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER'S LICENSE NUMBER.

After recording return to:

William Johnson

Nathan Sommers Jacobs

2800 Post Oak Blvd., 61st Floor

Houston, Texas 77056

DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF RENTS

AND FINANCING STATEMENT

STATE OF TEXAS '

' KNOW ALL MEN BY THESE PRESENTS:

COUNTY OF HARRIS '

THIS DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF RENTS AND FINANCING STATEMENT is dated as of March 13, 2008, by OYOG OPERATIONS, LP, a Texas limited partnership, whose address is 7007 Pinemont, Houston, Texas 77040, to Ben H. Riggs of Harris County, Texas, as Trustee, for the benefit of COMPASS BANK, with offices at 24 Greenway Plaza, 16^th Floor, Houston, Texas, 77046, as follows:

A. DEFINITIONS. The following terms shall have the defined meaning ascribed to such terms, as set forth below:

"Beneficiary" shall mean Compass Bank, as well as any subsequent holder or holders of the Note (as defined below).

"Claims" shall mean all liabilities, actions, demands, penalties, losses, costs or expenses (including reasonable consultants' fees, reasonable investigation and reasonable laboratory fees, reasonable attorneys' fees, expenses and remedial costs), suits, costs of any settlement or judgment and claims of any kind.

"Code" shall mean the Texas Business and Commerce Code, as now written or as hereafter amended or succeeded.

"Deed of Trust" shall mean this Deed of Trust, Security Agreement, Assignment of Rents and Financing Statement, as the same may be amended, modified or supplemented from time to time.

"Event of Default" shall mean the occurrence at any time and from time to time of any Event of Default as defined in the Note.

"Fixtures" shall mean all materials, supplies, equipment, apparatus and other items now or hereafter attached to, installed in or used (temporarily or permanently) in connection with any of the Improvements (as defined below) or the Land (as defined below), and all renewals, replacements, and substitutions thereof and additions thereto, including, without limitation, any and all partitions, ducts, shafts, pipes, radiators, conduits, wiring, window screens and shades, drapes, rugs and other floor coverings, awnings, motors, engines, boilers, stokers, pumps, dynamos, transformers, generators, fans, blowers, vents, switchboards, elevators, mail conveyors, escalators, compressors, furnaces, cleaning, call and sprinkler systems, fire extinguishing apparatus, water tanks, heating, ventilating, plumbing, laundry, incinerating, air conditioning and air cooling systems, water, gas and electric equipment, disposals, dishwashe rs, washers, dryers, refrigerators and ranges, cafeteria equipment, and recreational equipment and facilities of all kinds, all of which property and things are hereby declared to be permanent accessions to the Land, excluding, however, trade fixtures not necessary for the use and enjoyment of the Improvements.

"Governmental Authority" shall mean any and all governmental or quasi-governmental entities of any nature whatsoever, whether federal, state, county, district, city or otherwise, and whether now or hereafter in existence.

"Grantor" shall mean the party or parties, whether one or more, who execute this Deed of Trust and who are identified first in the initial paragraph of this Deed of Trust, as well as the successors, assigns, heirs and legal representatives of such party or parties.

"Impositions" shall mean all rates and charges (including deposits), insurance, taxes (both realty and personalty), water, gas, sewer, electricity, telephone and other utilities any easement, license or agreement maintained for the benefit of the Property, and all other charges, and any interest, costs or penalties with respect thereto, of any nature whatsoever which may now or hereafter be assessed, levied or imposed upon the Property or the Rents (as defined below) or the ownership, use, occupancy or enjoyment thereof.

"Improvements" shall mean any and all buildings, parking areas and other improvements, and any and all additions, alterations, or appurtenances thereto, now or at any time hereafter placed or constructed upon the Land or any part thereof.

"Land" shall mean the real estate (or interest therein) described in Exhibit "A", attached hereto and incorporated herein by this reference, all Improvements and Fixtures, and all rights, titles and interests appurtenant thereto.

"Leases" shall mean all leases (including, oil, gas and other mineral leases), subleases, licenses, concessions, contracts or other agreements (written or oral, now or hereafter in effect) which grant a possessory interest in and to, or the right to use, any portion of the Property, or which relate to the use or construction of the Improvements.

"Legal Requirements" shall mean any and all of the following that may now or hereafter be applicable to Grantor or the Property: judicial decisions, statutes, rulings, rules, regulations, permits, certificates or ordinances of any Governmental Authority; Grantor's Bylaws and Articles of Incorporation, Agreement of Partnership, Limited Partnership, or Joint Venture, Trust Declarations or other agreements pertaining to Grantor's business entity; restrictions of record; and other written agreements or promises enforceable by Governmental Authority of any nature.

"Loan Documents" shall mean the Note, this Deed of Trust and all promissory notes, security agreements, deeds of trust, assignments, guaranties, and other instruments, documents, and agreements executed and delivered pursuant to or in connection with the Note, or this Deed of Trust, as such instruments, documents, and agreements may be amended, modified, renewed, extended, or supplemented from time to time.

"Note" shall mean collectively that certain promissory note, dated March 13, 2008, in the original principal amount of $8,800,000.00, maturing on March 13, 2028, executed by Grantor and payable to the order of Beneficiary, and all extensions, renewals and modifications thereof and all other notes given in substitution therefor.

"Obligations" shall mean: (a) the obligations and indebtedness of Grantor to Beneficiary evidenced by the Note;

(b) the obligations and indebtedness of Grantor to Beneficiary under the Loan Documents;

(d) all reasonable costs and expenses, including, without limitation, all reasonable attorneys' fees and legal expenses, incurred by Beneficiary to preserve and maintain the lien created hereby, collect the obligations herein described, and enforce this Deed of Trust; and

(e) all extensions, renewals, and modifications of any of the foregoing and all promissory notes given in renewal, extension, modification or substitution of any of the foregoing.

"Obligated Party" shall mean any guarantor, surety, endorser, partner of Grantor or other person that guarantees or secures payment or performance of any portion of the Obligations or otherwise directly or indirectly is obligated, primarily or secondarily, for the payment or performance of any portion of the Obligations.

"Permitted Encumbrances" shall mean those encumbrances listed on Exhibit "B" hereto.

"Property" shall mean the Land, Improvements, and Fixtures, together with all or any part of, and any interest in, the following: rights, privileges, tenements, hereditaments, rights-of-way, easements, appendages, and appurtenances in any way pertaining thereto, and rights, titles, and interests of Grantor in and to any streets, ways, alleys, strips of land adjoining the Land or any part thereof; additions, substitutions, replacements and revisions thereof and thereto and all reversions and remainders therein; and other security and collateral of any nature whatsoever, now or hereafter given for the payment, performance and discharge of the Obligations.

"Rents" shall mean all consideration, whether money or otherwise, paid or payable for the use or occupancy of the Property, including, without limitation, the proceeds of all hydrocarbons or other minerals produced from the Property and all delay rentals and bonuses from any oil, gas or other mineral lease.

"Trustee" shall mean the party identified second in the initial paragraph of this Deed of Trust, and his or its substitutes, successors and assigns.

B. GRANT. To secure the full and timely payment and performance of the Obligations, and in consideration of the sum of TEN AND NO/100 DOLLARS ($10.00) and other valuable consideration in hand paid by Beneficiary to Grantor, the receipt and legal sufficiency of which are hereby acknowledged, Grantor has GRANTED, BARGAINED, ASSIGNED, SOLD and CONVEYED, and by these presents does GRANT, BARGAIN, ASSIGN, SELL and CONVEY, unto Trustee the Property in trust hereunder, for the use and benefit of Beneficiary, TO HAVE AND TO HOLD the Property unto Trustee forever.

C. WARRANTIES, REPRESENTATIONS, COVENANTS AND OTHER AGREEMENTS. Grantor unconditionally warrants, represents, covenants and agrees that:

The Loan Documents to which Grantor is a party are legal, valid and binding obligations of Grantor, enforceable against Grantor in accordance with their terms, and the execution and delivery of, and performance under, the Loan Documents: are within Grantor's powers and have been duly authorized by all requisite action (corporate, partnership, trust or otherwise); have received all requisite approval by applicable Governmental Authorities; and will not violate, conflict with, breach or constitute a default under, any Legal Requirement or result in the imposition of any lien, charge or encumbrance of any nature upon any of Grantor's assets, except as contemplated in the Loan Documents.

Grantor has good and indefeasible title to the Land, Improvements and Fixtures, free and clear of any liens, encumbrances, security interests or adverse claims except for Permitted Encumbrances. This Deed of Trust shall constitute a valid, subsisting, first lien on the Land, Improvements and Fixtures and a valid, subsisting, perfected and prior security interest in and to the Personalty and Leases subject only to Permitted Encumbrances, all in accordance with the terms hereof.

The Property forms no part of any property owned, used or claimed by Grantor as a residence or business homestead, is not exempt from forced sale under the laws of the State of Texas, and Grantor hereby disclaims and renounces all and every claim to the Property as a homestead.

Grantor is now solvent, and no bankruptcy or insolvency proceedings are pending or contemplated by or against any of them, and all reports, statements, cost estimates and other data, furnished by or on behalf of it are true and correct.

Grantor will promptly and fully comply with all present and future Legal Requirements and Leases, and all Improvements included or to be included in the Property comply or will comply with all Legal Requirements.

Grantor will duly and punctually: pay and perform the Obligations, as and when called for in the Loan Documents; and cause each of the Impositions to be paid and discharged not later than the due dates thereof and furnish Beneficiary with evidence of such payment.

Grantor will cause the Property to be maintained and operated in first-class order and condition, and will make all interior and exterior repairs, replacements, additions, improvements and alterations thereof and thereto, both structural and non-structural, which are reasonably appropriate to keep same in such first-class order and condition.

Grantor will keep the Property insured against fire, tornado, flood (if the Property is located in an identified "flood hazard area", in which flood insurance has been made available, pursuant to the National Flood Insurance Act of 1968), hail, explosion and such other risks, and in such amounts and with such companies, all as may be acceptable to Beneficiary, with loss made payable to Beneficiary by mortgage clauses of standard form. Such policies of insurance shall be delivered to Beneficiary promptly as issued, containing written undertakings from such insurance companies to provide Beneficiary with at least thirty (30) days written notice prior to cancellation of any such policy. All renewal and substitute policies of insurance shall be delivered at the office of Beneficiary, with evidence of premiums paid, at least fifteen (15) days before termination of any existing policies. In case of loss, Beneficiary, at its o ption, shall be entitled to receive and retain the proceeds of the insurance policies, applying the same against the Obligations or to apply such proceeds to the repair or restoration of the Improvements. If any loss shall occur at any time when Grantor shall be in default as to the performance of this covenant, Beneficiary shall nonetheless be entitled to the benefit of all insurance held by or for Grantor, to the same extent as if it had been made payable to Beneficiary.

Upon request from time to time and at any time during the existence of an Event of Default, Grantor will deposit with Beneficiary each month in advance a monetary sum estimated by Beneficiary to equal on a monthly basis all or such portion of the Impositions as Beneficiary may require. At least thirty (30) days prior to the date on which any tax or insurance premium must be paid to prevent delinquency thereof, Grantor will, on the request of Beneficiary, deliver to Beneficiary a statement or statements showing the amount of tax or premium required to be paid and the concern or authority to which same is payable and will, at the same time, deposit with Beneficiary such amount as will, when added to the amount of such deposits previously made and then remaining available for the purpose, be sufficient to pay such insurance or tax obligations. Beneficiary shall have the right (but not the obligation) to apply any or all of the foregoing deposits in payment of such insurance, tax and other Impositions.

Grantor will duly and punctually perform and comply with all representations, warranties, covenants and agreements binding upon it under the Leases, not voluntarily terminate or waive its rights under any of the Leases, use all reasonable efforts to maintain each of the Leases in force and effect during the full term thereof, and appear in and defend any action or proceeding in any manner connected with any of the Leases.

Grantor will permit Trustee or Beneficiary, and their agents, attorneys, representatives and employees, to enter upon and inspect the Property at all reasonable times and intervals.

Grantor will indemnify, defend and hold Beneficiary harmless from any action, proceeding or Claim affecting the Property or the Loan Documents or the lien or security interests created thereby. Further, Grantor will notify Beneficiary, in writing, promptly of the commencement of any legal proceedings affecting the Property, or any part thereof, and will take such action as necessary to preserve Beneficiary's rights affected thereby; and Beneficiary may, at its election, take such action in behalf of and in the name of Grantor, and at Grantor's expense if Grantor fails to promptly do so.

Grantor will promptly pay all debts and liabilities of any character, including, without limitation, all debts and liabilities for labor, material and equipment incurred in the construction, operation or development of the Property, and will complete in a good and workmanlike manner any Improvements that may be constructed or repaired thereon.

Upon reasonable request from time to time and at any time, Grantor will promptly correct any defect, error or omission, which may be discovered in the contents of this Deed of Trust or the Loan Documents, and will execute and deliver any and all additional instruments as may be reasonably requested by Beneficiary to correct such defect, error or omission or to identify any additional properties which are or become subject to this Deed of Trust.

Grantor will give immediate written notice to Beneficiary of any condemnation proceeding or casualty loss affecting the Property and in each such instance, afford Beneficiary an opportunity to participate in any such proceeding or in the settlement of any awards thereunder.

Grantor will not use or occupy, or permit any use or occupancy of, the Property in any manner which violates any Legal Requirements, may be dangerous, constitutes a public or private nuisance, or makes void or voidable any of the Leases or any insurance on the Property.

Grantor will not permit any waste or deterioration of any part of the Property, any alterations or additions to the Property of a material nature, or any of the Fixtures or Personalty to be removed at any time from the Land or Improvements unless the removed item is removed temporarily for maintenance and repair or, if removed permanently, is replaced by an article of at least equal suitability and value, and owned by Grantor free and clear of any other lien or security interest.

Grantor will not, without the prior written consent of Beneficiary create, place or permit to be created or placed, or allow to remain, any mortgage, pledge, lien (statutory, constitutional or contractual), security interest, encumbrance or charge, or conditional sale or other title retention agreement other than Permitted Encumbrances, regardless of whether same are expressly subordinate to the liens and security interests of the Loan Documents, with respect to the Property, or sell, lease, exchange, assign, convey, transfer possession of or otherwise dispose of all or any portion of the Property, or any interest therein, but if ownership of the Property or any part thereof or interest therein becomes vested in any person or entity other than Grantor, Beneficiary or any other holder of the Obligations may, without notice to Grantor, deal with such successor or successors in interest with reference to this Deed of Trust an d the Obligations in the same manner as with Grantor without in any way discharging Grantor or any Obligated Party from the Obligations. Without limiting the right of Beneficiary to withhold its consent or to make other requirements prior to granting its consent, Beneficiary may require evidence satisfactory to Beneficiary that transferee is creditworthy and has such management ability as Beneficiary shall deem in its sole discretion to be necessary and may require transferee to execute such written modification and assumption agreements with regard to the Loan Documents as Beneficiary shall deem necessary or desirable, including, without limitation, provisions increasing the interest rate on the Note. No transfer of the Property, no forbearance by Beneficiary and no extension of the time for the payment or performance of the Obligations granted by Beneficiary shall release, discharge or affect in any way Grantor's or any Obligated Party's liability hereunder.

Environmental representations and notification requirements are contained in the Environmental Indemnity Agreement between Beneficiary and Grantor, attached hereto as Exhibit A C@ (the A Environmental Indemnity@ ).

D. DEFAULT AND FORECLOSURE. To the fullest extent permitted in equity or at law, by statute or otherwise:

If an Event of Default shall occur, Beneficiary may, at Beneficiary's sole election and by or through Trustee or otherwise, exercise any or all of the following:

Declare all unpaid amounts under the Note and any other unpaid portion of the Obligations immediately due and payable, without further notice, presentment, protest, demand or action of any nature whatsoever (each of which is hereby expressly waived by Grantor), whereupon the same shall become immediately due and payable.

Enter upon the Property and take exclusive possession thereof and of all books, records and accounts relating thereto, and, if necessary to obtain such possession, Beneficiary may invoke any and all legal remedies to dispossess Grantor, including specifically one or more actions for forcible entry and detainer, trespass to try title and writ of restitution.

Hold, lease, manage, operate or otherwise use or permit the use of the Property, either itself or by other persons, firms or entities, in such manner, for such time and upon such other terms as Beneficiary may deem prudent under the circumstances (making such repairs, alterations, additions and improvements thereto and taking such other action from time to time as Beneficiary shall deem necessary or desirable), and apply all Rents collected in connection therewith in accordance with the provisions of Paragraph 7 of this Section D.

Sell or offer for sale the Property in such portions, order and parcels as Beneficiary may determine, with or without having first taken possession of same, to the highest bidder for cash at public auction. Such sale shall be made at the location designated by the commissioner's court of the county where the Land is situated pursuant to V.T.C.A. Property Code Section 51.002 or if no such designation has been made, at the courthouse door of the county where the Land is situated (or if the Land is situated in more than one county, then the Property shall be sold at the designated location or the courthouse door of any of such counties as designated in the notices of sale provided for herein) on the first Tuesday of any month between 10:00 A.M. and 4:00 P.M. after giving adequate legal notice of the time, place and terms of sale, by posting or causing to be posted written or printed notices thereof for at least twenty-one (2 1) consecutive days preceding the date of said sale at the courthouse door of the foregoing county, and if the Land is situated in more than one county, one notice shall be posted at the courthouse door of each county in which the Land is situated, and by Beneficiary serving written notice of such proposed sale on each debtor obligated to pay the Obligations, at least twenty-one (21) days preceding the date of said sale by certified mail at the most recent address for such parties in the records of Beneficiary, or by accomplishing all or any of the aforesaid in such manner as permitted or required by V.T.C.A. Property Code Section 51.002 (as now written or as hereafter amended or succeeded) relating to the sale of real estate and/or by Chapter 9 of the Code relating to the sale of collateral after default by a debtor, or by any other present or subsequent laws. At any such sale (i) Trustee shall not be required to have physically present, or to have constructive possession of, the Property (Grantor hereby c ovenants and agrees to deliver to Trustee any portion of the Property not actually or constructively possessed by Trustee immediately upon demand by Trustee) and the title to and right of possession of any such property shall pass to the purchaser thereof as completely as if the same had been actually present and delivered to purchaser at such sale; (ii) each instrument of conveyance executed by Trustee shall contain a general warranty of title, binding upon Grantor; (iii) each and every recital contained in any instrument of conveyance made by Trustee shall conclusively establish the truth and accuracy of the matters recited therein, including, without limitation, nonpayment of the Obligations, advertisement and conduct of such sale in the manner provided herein and otherwise by law and by appointment of any successor Trustee hereunder; (iv) any and all prerequisites to the validity of such sale shall be conclusively presumed to have been performed; (v) the receipt of Trustee or of such other party making t he sale shall be a sufficient discharge to the purchaser for his purchase money and no such purchaser, or his assigns or personal representatives, shall thereafter be obligated to see to the application of such purchase money or be in any way answerable for any loss, misapplication or nonapplication thereof; (vi) Grantor shall be completely and irrevocably divested of all of its right, title, interest, claim and demand whatsoever, either at law or in equity, in and to the property sold and such sale shall be a perpetual bar both at law and in equity against Grantor, and against any and all other persons claiming or to claim the property sold or any part thereof; and (vii) Beneficiary may be a purchaser at any such sale.

Upon, or at any time after, commencement of foreclosure of the lien and security interest provided for herein, or any legal proceedings hereunder, make application to a court of competent jurisdiction as a matter of strict right and without notice to Grantor or regard to the adequacy of the Property for the repayment of the Obligations, for appointment of a receiver of the Property and Grantor does hereby irrevocably consent to such appointment. Any such receiver shall have all the usual powers and duties of receivers in similar cases.

Exercise any and all other rights, remedies and recourses granted under the Loan Documents or as may be now or hereafter existing in equity or at law, by virtue of statute or otherwise.

Should the Property be sold in one or more parcels as permitted by Paragraph l(d) of this Section D, the right of sale arising out of any Event of Default shall not be exhausted by any one or more such sales, but other and successive sales may be made until all of the Property has been sold or until the Obligations have been fully satisfied.

All rights, remedies and recourses of Beneficiary granted in the Loan Documents or otherwise available at law or equity shall be cumulative and concurrent, may be pursued separately, successively or concurrently against Grantor or any Obligated Party, or against the Property, or against any one or more of them, at the sole discretion of Beneficiary, may be exercised as often as occasion therefor shall arise, it being agreed by Grantor that the exercise or failure to exercise any of same shall in no event be construed as a waiver or release thereof or of any other right, remedy or recourse, and shall be non-exclusive.

4. Beneficiary may release, regardless of consideration, any part of the Property without, as to the remainder, in any way impairing, affecting, subordinating or releasing the lien or security interests evidenced by the Loan Documents or affecting the obligations of Grantor or any Obligated Party to pay or perform, as their interests may appear, the Obligations. For payment of the Obligations, Beneficiary may resort to any of the security therefor in such order and manner as Beneficiary may elect. No security heretofore, herewith or subsequently taken by Beneficiary shall in any manner impair or affect the security given by the Loan Documents, and all security shall be taken, considered and held as cumulative.

5. Grantor hereby irrevocably and unconditionally waives and releases all benefits that might accrue to Grantor by virtue of any present or future law exempting the Property from attachment, levy or sale on execution or providing for any appraisement, valuation, stay of execution, exemption from civil process, redemption or extension of time for payment, all notices of any Event of Default or of Trustee's exercise of any right, remedy or recourse provided for under the Loan Documents, and any right to a marshalling of assets or a sale in inverse order of alienation.

6. In case Beneficiary shall have proceeded to invoke any right, remedy or recourse permitted under the Loan Documents and shall thereafter elect to discontinue or abandon same for any reason, Beneficiary shall have the unqualified right so to do and, in such event, Grantor and Beneficiary shall be restored to their former positions with respect to the Obligations, the Loan Documents, the Property and otherwise, and the rights, remedies, recourses and powers of Beneficiary shall continue as if same had never been invoked.

7. Any proceeds of any sale of, and any Rents, except as otherwise provided in Paragraph 2 of Section G, or other amounts generated by the holding, leasing, operation or other use of, the Property shall be applied in the following orders of priority: first, to the payment of all costs and expenses of taking possession of the Property and of holding, leasing, operating, using, repairing, improving and selling the same, including, without limitation, reasonable fees of the Trustee and attorneys retained by Beneficiary or Trustee; reasonable fees of any receiver or accountants; recording and filing fees; court costs; costs of advertisement, and the payment of any and all Impositions, liens, security interests or other rights, titles or interests equal or superior to the lien and security interest of this Deed of Trust (except those to which the Property has been sold subject to and without in any way implying Beneficiary's consent to the creation thereof); second, to the payment of all ac crued and unpaid interest due on the Note; third, to the payment of the unpaid principal balance of the Note; fourth, to the payment of all amounts, other than unpaid principal and accrued interest on the Note, which may be due to Beneficiary under the Loan Documents, together with interest thereon as provided therein; fifth, to the payment of the unpaid Obligations; sixth, to Grantor.

8. In addition to the remedies set forth in this Section D, upon the occurrence of an Event of Default the Beneficiary and Trustee shall, in addition, have available to them the remedies set forth in Sections F and G herein, as well as all other remedies available to them at law or in equity.

E. CONDEMNATION AND OTHER AWARDS. All judgments, decrees or awards now or hereafter made for injury or damage to the Property, or awards, settlements or other compensation now or hereafter made by any Governmental Authority, including those for any variation of, or change of grade in, any streets affecting the Land or the Improvements, are hereby assigned in their entirety to Beneficiary, who may apply the same to the Obligations in such manner as Beneficiary may elect and Beneficiary is hereby authorized, in the name of Grantor, to execute and deliver valid acquittances for, and to appeal from, any such award, judgment or decree.

F. SECURITY AGREEMENT. Grantor hereby grants to Beneficiary a security interest in and to certain property as follows:

This Deed of Trust shall also constitute and serve as a "Security Agreement" on personal property within the meaning of, and shall constitute a first and prior security interest under Chapter 9 of the Code, with respect to the Fixtures and Leases, subject only to Permitted Encumbrances. To this end, Grantor has granted, bargained, conveyed, assigned, transferred and set over, and by these presents does grant, bargain, convey, assign, transfer and set over, unto Trustee, for the benefit of Beneficiary as a secured party, a first and prior security interest (subject only to Permitted Encumbrances) and all of Grantor's right, title and interest in, to and under the Fixtures and Leases, in trust, to secure the full and timely payment and performance of the Obligations.

Grantor agrees to execute and deliver to Beneficiary, in form and substance reasonably satisfactory to Beneficiary, such financing statements and such further assurances as Beneficiary may, from time to time, consider necessary to create, perfect, and preserve the security interest herein granted, and Beneficiary may cause such statements and assurances to be recorded and filed, at such times and places as may be required or permitted by law to create, perfect and preserve such security interest.

Beneficiary, as well as Trustee on Beneficiary's behalf, shall have all the rights, remedies and recourses with respect to the Fixtures and Leases afforded a "Secured Party" by Chapter 9 of the Code, in addition to, and not in limitation of, the other rights, remedies and recourses afforded Beneficiary or Trustee by the Loan Documents.

The security interest herein granted shall not be deemed or construed to constitute Trustee or Beneficiary as a party in possession of the Property, to obligate Trustee or Beneficiary to lease the Property, or to take any action, incur any expenses or perform any obligation whatsoever under any of the Leases or otherwise.

Upon the occurrence of an Event of Default and at any time thereafter:

Trustee or Beneficiary shall have, with regard to the Fixtures and Leases the remedies provided in this Deed of Trust and in the Code (no such remedy granted by the Code being excepted, modified or waived herein). Trustee or Beneficiary may use his or its discretion in exercising the rights and electing the remedies; provided, however, all acts shall be in compliance with the standards of the Code, where applicable and required. For purposes of the notice requirements of the Code and this Section F, it is agreed that notice sent or given not less than ten (10) calendar days prior to the taking of the action to which the notice relates, is reasonable notice.

Trustee or Beneficiary shall be entitled, acting in his or its sole discretion, to apply the proceeds of any disposition of the Fixtures and Leases in the order set forth in Chapter 9 of the Code, or, if allowed by the Code, in the order set forth in Paragraph 7 of Section D hereof.

Notwithstanding anything herein to the contrary, Beneficiary, or the Trustee acting on Beneficiary's behalf, may at its or his option, dispose of the Fixtures and other items of personal property covered by this Deed of Trust in accordance with Beneficiary's rights and remedies in respect of the Land pursuant to the provisions of this Deed of Trust, in lieu of proceeding under the Code.

Beneficiary may require Grantor to assemble the Fixtures and Leases and make them available to Beneficiary or Trustee at a place to be designated by Beneficiary that is reasonably convenient to both parties. All expenses of retaking, holding, preparing for sale, lease or other use or disposition, selling, leasing or otherwise using or disposing of the Fixtures and Leases and the like which are incurred or paid by Beneficiary as authorized or permitted hereunder, including also all attorneys' fees, legal expenses and costs, shall be added to the Obligations and Grantor shall be liable therefor.

As to the Fixtures and Leases, this Deed of Trust shall be effective as a financing statement when filed for record in the Deed of Trust Records of any county in which any portion of the Land is located. The record owner of the Land is Grantor, whose mailing address for purposes of such financing statement is set forth in the opening recital hereinabove. Information concerning the security interest created by this instrument may be obtained from Beneficiary at its address similarly set forth in such opening recital.

G. ASSIGNMENT OF RENTS. Grantor does hereby absolutely and unconditionally assign, transfer and convey to Beneficiary, as well as to Trustee on Beneficiary's behalf, all Rents under the following provisions:

Grantor reserves the right, unless and until an Event of Default occurs, to collect the Rents as a trustee for the benefit of Beneficiary, and Grantor shall apply the Rents so collected in the order set forth in Paragraph 7 of Section D hereof.

Beneficiary, or Trustee on Beneficiary's behalf, may at any time, and without notice, either in person, by agent, or by receiver to be appointed by a court, enter and take possession of the Property or any part thereof, and in its own name, sue for or otherwise collect such Rents. Grantor hereby agrees with Beneficiary that the other parties under the Leases may, upon notice from Trustee or Beneficiary of the occurrence of an Event of Default, thereafter pay directly to Beneficiary the Rents due and to become due under the Leases and attorn to all other obligations thereunder direct to Beneficiary, or Trustee on Beneficiary's behalf, without any obligation on their part to determine whether an Event of Default does in fact exist or has in fact occurred. All Rents collected by Beneficiary, or Trustee acting on Beneficiary's behalf, shall be applied as provided for in Paragraph 7 of Section D above; provided, however, that if the reasonable costs, expenses and reasonable attorneys' fees shall exceed the amount of Rents collected, the excess shall be added to the Obligations, shall bear interest as provided in Paragraph 5 of Section L below and shall be immediately due and payable. The entering upon and taking possession of the Property, the collection of Rents, and the application thereof as aforesaid shall not cure or waive any Event of Default or notice of default, if any, hereunder nor invalidate any act done pursuant to such notice, except to the extent any such default is fully cured. Failure or discontinuance of Beneficiary, or Trustee on Beneficiary's behalf, at any time or from time to time, to collect said Rents shall not in any manner impair the subsequent enforcement by Beneficiary, or Trustee on Beneficiary's behalf, of the right, power and authority herein conferred upon it. Nothing contained herein, nor the exercise of any right, power or authority herein granted to Beneficiary, or Trustee on Beneficiary's be half, shall be or be construed to be, an affirmation by it of any tenancy, lease, or option, nor an assumption of liability under nor the subordination of the lien or charge of this Deed of Trust, to any such tenancy, lease, or option.

Grantor will not execute an assignment of any of its right, title or interest in the Rents, or except where the lessee is in default thereunder, terminate or consent to the cancellation or surrender of any Lease affecting the Property or any part thereof, now or hereafter existing, having an unexpired term of one year or more except that any Lease may be cancelled, provided that promptly after the cancellation or surrender thereof a new Lease is entered into with a new lessee acceptable to Beneficiary in its sole judgment, on substantially the same terms as the terminated or cancelled Lease, or modify any Lease affecting the Property or any part thereof so as to shorten the unexpired term thereof or so as to decrease the amount of the Rents, or accept prepayments of any Rents in excess of sixty (60) days, except prepayments in the nature of security for the performance of the lessee under any Lease, or in any other ma nner impair the value of the Property or the security of this Deed of Trust. Grantor will not execute any Lease of all or any substantial portion of the Property except for actual occupancy by the lessee thereunder, and will at all times promptly and faithfully perform, or cause to be performed, each covenant, condition and agreement contained in each Lease affecting the Property now or hereafter existing on the part of lessor thereunder to be kept and performed. Grantor shall furnish to Beneficiary, within ten (10) days after a request by Beneficiary to do so, a written statement containing the names of all lessees of the Property, the terms of their respective Leases, the spaces occupied and the rentals payable thereunder.

H. THE TRUSTEE. The following provisions shall govern with respect to the Trustee:

Trustee shall not be liable for any error of judgment or act done by Trustee in good faith, or be otherwise responsible or accountable to Grantor under any circumstances whatsoever, nor shall Trustee be personally liable in case of entry by him, or anyone entering by virtue of the powers herein granted, upon the Property for debts contracted or liability or damages incurred in the management or operation of the Property. Trustee shall have the right to rely on any instrument, document or signature authorizing or supporting any action taken or proposed to be taken by him hereunder, believed by him in good faith to be genuine. Trustee shall be entitled to reimbursement for expenses incurred by him in the performance of his duties hereunder and to reasonable compensation for such of his services hereunder as shall be rendered. Grantor will, from time to time, pay the compensation due to Trustee hereunder and reimburse Trus tee for, and save him harmless against, any and all liability and expenses which may be incurred by him in the performance of his duties.

All moneys received by Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated in any manner from any other moneys (except to the extent required by law), and Trustee shall be under no liability for interest on any money received by him hereunder.

Trustee may resign at any time with or without notice. If Trustee shall die, resign or become disqualified from acting in the execution of this trust or shall fail or refuse to execute the same when requested by Beneficiary so to do, or if, for any reason, Beneficiary shall prefer to appoint a substitute trustee to act instead of the forenamed Trustee, Beneficiary shall have full power to appoint a substitute trustee and, if preferred several substitute trustees who shall succeed to all the estates rights, powers and duties of the forenamed Trustee.

Any new Trustee or Trustees appointed pursuant to any of the provisions hereof shall, without any further act, deed or conveyance, become vested with all the estates, properties, rights, powers and trusts of its, his or their predecessor in the rights hereunder with like effect as if originally named as Trustee herein; but nevertheless, upon the written request of Beneficiary or of the successor Trustee(s), the Trustee ceasing to act shall execute and deliver an instrument transferring to such successor Trustee(s), upon the trusts herein expressed, all the estates, properties, rights, powers and trusts of the Trustee so ceasing to act, and shall duly assign, transfer and deliver any of the property and money held by such Trustee to the successor Trustee(s) so appointed in his place.

I. ENVIRONMENTAL MATTERS. Beneficiary= s right to conduct site assessments and remove Hazardous Substances shall be governed by the terms of the Environmental Indemnity.

J. INDEMNIFICATION. Grantor= s obligations to indemnify Beneficiary shall be governed by the terms of the Environmental Indemnity.

K. MISCELLANEOUS. The following provisions shall also apply to and govern this Deed of Trust and the interpretation hereof:

Each and all of the representations, warranties, covenants and other obligations made or undertaken by Grantor hereunder shall survive the execution and delivery of the Loan Documents and the consummation of the loan called for therein, and shall continue in full force and effect until the Obligations shall have been paid in full.

Grantor, upon the request of Trustee or Beneficiary will execute, acknowledge, deliver and record or file such further instruments and do such further acts as may be reasonably necessary, desirable or proper to carry out more effectively the purposes of the Loan Documents and to subject to the liens and security interests thereof any property intended by the terms thereof to be covered thereby, including specifically, but without limitation, any renewals, additions, substitutions, replacements, or appurtenances to the then Property. Grantor will pay all such recording, filing, re-recording and re-filing taxes, fees and other charges, including those for security interest searches.

All notices or other communications required or permitted to be given pursuant to this Deed of Trust (except for notices of a foreclosure sale which shall be given in the manner set forth in Paragraph l(d) of Section D hereof) shall be given as provided in the Note.

Any failure by Trustee or Beneficiary to insist, or any election by Trustee or Beneficiary not to insist, upon strict performance by Grantor of any of the terms, provisions or conditions of the Loan Documents shall not be deemed to be a waiver of same or of any other term, provision or condition thereof, and Trustee or Beneficiary shall have the right at any time or times thereafter to insist upon strict performance by Grantor of any and all of such terms, provisions and conditions.

If Grantor shall fail, refuse or neglect to make any payment or perform any act required by the Loan Documents, then at any time thereafter, and without notice to or demand upon Grantor and without waiving or releasing any other right, remedy or recourse Beneficiary may have because of same, Beneficiary may (but shall not be obligated to) make such payment or perform such act for the account of and at the expense of Grantor, and shall have the right to enter the Land and Improvements for such purpose and to take all such action thereon and with respect to the Property as it may deem necessary or appropriate. Grantor shall indemnify Beneficiary for all Claims incurred or accruing by reason of any acts performed by Beneficiary pursuant to this Paragraph 5 of Section L or by reason of any other provision in the Loan Documents. All sums paid by Beneficiary pursuant to this Paragraph 5 of this Section L and all other sums exp ended by Beneficiary to which it shall be entitled to be indemnified, together with interest thereon at the Default Rate (as defined in the Note) shall constitute additional Obligations secured by this Deed of Trust.

All of the covenants and other obligations made or undertaken by Grantor pursuant to this Deed of Trust are intended by the parties to be, and shall be construed as, covenants running with the Property.

All of the terms of the Loan Documents shall apply to, be binding upon and inure to the benefit of the parties thereto, their respective successors, assigns, heirs and legal representatives, and all other persons claiming by, through or under them.

The Loan Documents are intended to be performed in accordance with, and only to the extent permitted by, all applicable Legal Requirements. If any provision of any of the Loan Documents or the application thereof to any person or circumstance shall, for any reason and to any extent, be invalid or unenforceable, neither the remainder of the instrument in which such provision is contained nor the application of such provision to other persons or circumstances nor the other instruments referred to hereinabove shall be affected thereby, but rather shall be enforced to the greatest extent permitted by law. It is hereby expressly stipulated and agreed to be the intent of Grantor and Beneficiary at all times to comply with the usury, and all other laws relating to the Loan Documents. If, at any time, the applicable Legal Requirements render usurious any amount called for in any Loan Document, then it is Grantor's, Trustee's an d Beneficiary's express intent that such document be immediately deemed reformed and the amounts collectible reduced or spread, without the necessity of the execution of any new document, so as to comply with the then applicable law but so as to permit the recovery of the fullest amount otherwise called for in such Loan Documents.

This Deed of Trust may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute but one instrument.

If any or all of the proceeds of the Note have been used to extinguish, extend or renew any indebtedness heretofore existing against the Property, then, to the extent of such funds so used, the Obligations and this Deed of Trust shall be subrogated to all of the rights, claims, liens, titles and interests heretofore existing against the Property to secure the indebtedness so extinguished, extended or renewed and the former rights, claims, liens, titles and interests, if any, are not waived but rather are continued in full force and effect in favor of Beneficiary and are merged with the lien and security interest created herein as cumulative security for the repayment of the Obligations and the satisfaction of the Obligations.

THIS DEED OF TRUST SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAWS OF THE STATE OF TEXAS AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.

Whenever the context hereof requires, references herein to the singular number shall include the plural, and likewise the plural shall include the singular; words denoting gender shall be construed to include the masculine, feminine and neuter, where appropriate; and specific enumeration shall not exclude the general, but shall be considered as cumulative.

All obligations of Grantor hereunder to indemnify Beneficiary against Claims shall apply to Claims which arise as a result of the negligence (sole, joint or contributory) of Beneficiary, but shall not apply to Claims which arise as a result of the gross negligence or willful misconduct of Beneficiary.

THIS DEED OF TRUST EMBODIES THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO.

EXECUTED and effective as of, although not necessarily on, the day and year first above written.

GRANTOR:

OYOG OPERATIONS, LP

By: OYOG, LLC, its general partner

By: OYO Geospace Corporation, its

sole member

By:

Thomas T. McEntire

Chief Financial Officer

STATE OF TEXAS '

COUNTY OF HARRIS '

This instrument was acknowledged before me on the ______ day of March, 2008, by Thomas T. McEntire, Chief Financial Officer of OYO Geospace Corporation, a Delaware corporation, sole member of OYOG, LLC, a Delaware limited liability company, general partner of OYOG Operations, LP, a Texas limited partnership, on behalf of said limited partnership.

___________________________________

Notary Public in and for

The State of T E X A S

EXHIBIT "A"

Real Property

EXHIBIT "B"

Permitted Encumbrances

Easement(s) for electric distribution facilities granted to Houston Lighting and Power Co. as reflected on plat recorded under Film Code No. 602059 of the Map Records of Harris County, Texas and in instrument(s) recorded in Volume 6410, Page 576, Volume 6410, Page 592, Volume 7563, Page 45, all of the Deed Records of Harris County, Texas.

Easement for electric distribution and communications facilities granted to CenterPoint Energy Houston Electric, LLC as reflected in instrument recorded under Clerk= s File No. 20070086576 of the Official Public Records of Real Property, Harris County, Texas.

Storm sewer easement twenty (20) feet in width located along the north property line as reflected on plat recorded under File Code No. 602059 of the Map Records of Harris County, Texas and in instrument recorded under Clerk= s File No. G956077 of the Official Public Records of Real Property, Harris County, Texas.

Notice of Prescriptive Easement as reflected in instrument recorded under Clerk= s File No. T760560 of the Official Public Records of Real Property, Harris County, Texas.

Easement for sanitary sewer purposes granted to the City of Houston as reflected in instrument recorded under Clerk= s File No. 20070233389 of the Official Public Records of Real Property, Harris County, Texas.

Drainage easement fifteen (15) feet in width located on each side of the center lines of all natural drainage courses as reflected on plat recorded under Film Code No. 602059 of the Map Records of Harris County, Texas.

Building set back line twenty-five (25) feet in width located along the north property line as reflected on plat recorded under Film Code No. 602059 of the Map Records of Harris County, Texas.

Terms, conditions and stipulations of that certain Notice of Storm Water Quality Requirements as reflected in instrument recorded under Clerk= s File No. Z416455 of the Official Public Records of Real Property, Harris County, Texas.

2 non-participating royalty interest in all of the oil, gas and other minerals in and under the herein described property as reserved in instrument recorded under Clerk= s File No. E135299 of the Official Public Records of Real Property, Harris County, Texas.

EX-10.4 5 rrd199709_23687.htm GUARANTY AGREEMENT DATED MARCH 13, 2008, BY AND BETWEEN OYO GEOSPACE CORPORATION AND COMPASS BANK Fulbright & Jaworski Document

GUARANTY AGREEMENT

WHEREAS, the execution of this Guaranty Agreement is a condition to COMPASS BANK, an Alabama state banking corporation ("Lender") making certain loans to OYOG OPERATIONS, LP, a Texas limited partnership ("Borrower"), pursuant to that certain Promissory Note in the principal amount of $8,800,000.00, dated March 13, 2008, executed by Borrower and payable to the order of Lender (such Promissory Note, as it may hereafter be renewed, extended or modified from time to time, and all promissory notes executed in renewal, extension, modification or substitution thereof, is hereinafter referred to as the "Note");

NOW, THEREFORE, for valuable consideration, the receipt and adequacy of which are hereby acknowledged, the undersigned, OYO GEOSPACE CORPORATION, a Delaware corporation (the "Guarantor"), hereby irrevocably and unconditionally guarantees to Lender the full and prompt payment and performance of the Guaranteed Indebtedness (hereinafter defined). This Guaranty Agreement shall be upon the following terms:

The term "Guaranteed Indebtedness", as used herein means all of the "Obligations" (as defined in the Note), and shall include, without limitation, all principal of and interest on the Note and all renewals, extensions, increases, decreases or other modifications of any of the foregoing and all promissory notes given in renewal, extension, increase, decrease or other modification thereof. The term "Guaranteed Indebtedness" shall include any and all post-petition interest and expenses (including attorneys' fees) whether or not allowed under any bankruptcy, insolvency, or other similar law.

This instrument shall be an absolute, continuing, irrevocable, and unconditional guaranty of payment and performance, and not a guaranty of collection, and Guarantor shall remain liable on its obligations hereunder until the payment and performance in full of the Guaranteed Indebtedness. No set-off, counterclaim, recoupment, reduction, or diminution of any obligation, or any defense of any kind or nature which Borrower may have against Lender or any other party, or which Guarantor may have against Borrower, Lender, or any other party, shall be available to, or shall be asserted by, Guarantor against Lender or any subsequent holder of the Guaranteed Indebtedness or any part thereof or against payment of the Guaranteed Indebtedness or any part thereof.

If Guarantor becomes liable for any indebtedness owing by Borrower to Lender by endorsement or otherwise, other than under this Guaranty Agreement, such liability shall not be in any manner impaired or affected hereby, and the rights of Lender hereunder shall be cumulative of any and all other rights that Lender may ever have against Guarantor. The exercise by Lender of any right or remedy hereunder or under any other instrument, or at law or in equity, shall not preclude the concurrent or subsequent exercise of any other right or remedy.

In the event of default by Borrower in payment or performance of the Guaranteed Indebtedness, or any part thereof, when such Guaranteed Indebtedness becomes due, whether by its terms, by acceleration, or otherwise, Guarantor shall promptly pay the amount due thereon to Lender without notice or demand in lawful currency of the United States of America and it shall not be necessary for Lender, in order to enforce such payment by Guarantor, first to institute suit or exhaust its remedies against Borrower or others liable on such Guaranteed Indebtedness, or to enforce any rights against any collateral which shall ever have been given to secure such Guaranteed Indebtedness. Until the Guaranteed Indebtedness is paid in full and a period of ninety (90) days has passed following such payment, Guarantor waives any and all rights it may now or hereafter have under any agreement or at law or in equity (including, without limitation, any law subrogating the Guarantor to the rights of Lender) to a ssert any claim against or seek contribution, indemnification or any other form of reimbursement from Borrower or any other party liable for payment of any or all of the Guaranteed Indebtedness for any payment made by Guarantor under or in connection with this Guaranty Agreement or otherwise.

If acceleration of the time for payment of any amount payable by Borrower under the Guaranteed Indebtedness is stayed upon the insolvency, bankruptcy, or reorganization of Borrower, all such amounts otherwise subject to acceleration under the terms of the Guaranteed Indebtedness shall nonetheless be payable by Guarantor hereunder forthwith on demand by Lender.

Guarantor hereby agrees that its obligations under this Guaranty Agreement shall not be released, discharged, diminished, impaired, reduced, or affected for any reason or by the occurrence of any event, including, without limitation, one or more of the following events, whether or not with notice to or the consent of Guarantor: (a) the taking or accepting of collateral as security for any or all of the Guaranteed Indebtedness or the release, surrender, exchange, or subordination of any collateral now or hereafter securing any or all of the Guaranteed Indebtedness; (b) any partial release of the liability of Guarantor hereunder, or the full or partial release of any other guarantor from liability for any or all of the Guaranteed Indebtedness; (c) any disability of Borrower, or the dissolution, insolvency, or bankruptcy of Borrower, Guarantor, or any other party at any time liable for the payment of any or all of the Guaranteed Indebtedness; (d) any renewal, extension, modification, waiv er, amendment, or rearrangement of any or all of the Guaranteed Indebtedness or any instrument, document, or agreement evidencing, securing, or otherwise relating to any or all of the Guaranteed Indebtedness; (e) any adjustment, indulgence, forbearance, waiver, or compromise that may be granted or given by Lender to Borrower, Guarantor, or any other party ever liable for any or all of the Guaranteed Indebtedness; (f) any neglect, delay, omission, failure, or refusal of Lender to take or prosecute any action for the collection of any of the Guaranteed Indebtedness or to foreclose or take or prosecute any action in connection with any instrument, document, or agreement evidencing, securing, or otherwise relating to any or all of the Guaranteed Indebtedness; (g) the unenforceability or invalidity of any or all of the Guaranteed Indebtedness or of any instrument, document, or agreement evidencing, securing, or otherwise relating to any or all of the Guaranteed Indebtedness; (h) any payment by Borrower or any oth er party to Lender is held to constitute a preference under applicable bankruptcy or insolvency law or if for any other reason Lender is required to refund any payment or pay the amount thereof to someone else (i) the settlement or compromise of any of the Guaranteed Indebtedness; (j) the non-perfection of any security interest or lien securing any or all of the Guaranteed Indebtedness; (k) any impairment of any collateral securing any or all of the Guaranteed Indebtedness; (l) the failure of Lender to sell any collateral securing any or all of the Guaranteed Indebtedness in a commercially reasonable manner or as otherwise required by law; (m) any change in the corporate existence, structure, or ownership of Borrower; or (n) any other circumstance which might otherwise constitute a defense available to, or discharge of, Borrower or Guarantor.

Guarantor represents and warrants to Lender as follows:

Guarantor is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation, is qualified to do business in all jurisdictions in which the nature of the business conducted by it makes such qualification necessary and where failure to so qualify would have a material adverse effect on its business, financial condition, or operations.

Guarantor has the corporate power, authority and legal right to execute, deliver, and perform its obligations under this Guaranty Agreement and this Guaranty Agreement constitutes the legal, valid, and binding obligation of Guarantor, enforceable against Guarantor in accordance with its respective terms, except as limited by bankruptcy, insolvency, or other laws of general application relating to the enforcement of creditor's rights.

The execution, delivery, and performance by Guarantor of this Guaranty Agreement have been duly authorized by all requisite action on the part of Guarantor and do not and will not violate or conflict with the articles of incorporation or bylaws of Guarantor or any law, rule, or regulation or any order, writ, injunction or decree of any court, governmental authority or agency, or arbitrator and do not and will not conflict with, result in a breach of, or constitute a default under, or result in the imposition of any lien upon any assets of Guarantor pursuant to the provisions of any indenture, mortgage, deed of trust, security agreement, franchise, permit, license, or other instrument or agreement to which Guarantor or its properties is bound.

No authorization, approval, or consent of, and no filing or registration with, any court, governmental authority, or third party, except which has already been obtained by Guarantor, is necessary for the execution, delivery or performance by Guarantor of this Guaranty Agreement or the validity or enforceability thereof.

The value of the consideration received and to be received by Guarantor as a result of Lender making the loan to Borrower evidenced by the Note and Guarantor executing and delivering this Guaranty Agreement is reasonably worth at least as much as the liability and obligation of Guarantor hereunder, and such liability and obligation and the Note have benefitted and may reasonably be expected to benefit Guarantor directly or indirectly.

Guarantor represents and warrants to Lender that Guarantor is not insolvent, Guarantor's liabilities do not exceed its assets, and Guarantor will not be rendered insolvent by the execution and performance of this Guaranty Agreement and the Loan Documents.

Guarantor covenants and agrees that, as long as the Guaranteed Indebtedness or any part thereof is outstanding or Lender has any commitment under the Note:

Guarantor will deliver to Lender the financial statements of Guarantor described in the Note at the times required by the Note.

Guarantor will furnish promptly to Lender written notice of the occurrence of any default under this Guaranty Agreement or an Event of Default as defined in the Note of which Guarantor has knowledge.

Guarantor will furnish promptly to Lender such additional information concerning Guarantor as Lender may reasonably request.

Guarantor will not become a party to a merger, consolidation or other business combination or acquire all or a substantial part of the assets of any Person (as defined in the Note) or any shares or other evidence of beneficial ownership of any Person unless guarantor is the surviving Person to such transaction, dissolve or liquidate, or (iii) sell, lease, assign, transfer or otherwise dispose of substantially all of its assets, except dispositions of inventory in the ordinary course of business.

Guarantor will comply with all of the covenants contained in the Note with which Borrower agrees to in the Note to cause Guarantor to comply.

Guarantor will comply with the financial covenants contained on Exhibit A A@ attached hereto.

Upon the occurrence of an Event of Default (as defined in the Note) Lender shall have the right to set off and apply against this Guaranty Agreement or the Guaranteed Indebtedness or both, at any time and without notice to Guarantor, any and all deposits (general or special, time or demand, provisional or final) or other sums at any time credited by or owing from Lender to Guarantor whether or not the Guaranteed Indebtedness is then due and irrespective of whether or not Lender shall have made any demand under this Guaranty Agreement. In addition to Lender's right of setoff and as further security for this Guaranty Agreement and the Guaranteed Indebtedness, Guarantor hereby grants Lender a security interest in all deposits (general or special, time or demand, provisional or final) and all other accounts of Guarantor now or hereafter on deposit with or held by Lender and all other sums at any time credited by or owing from Lender to Guarantor. The rights and remedies of Lender hereund er are in addition to other rights and remedies (including, without limitation, other rights of setoff) which Lender may have.

Guarantor hereby agrees that the Subordinated Indebtedness shall be subordinate and junior in right of payment to the prior payment in full of all Guaranteed Indebtedness, and Guarantor hereby assigns the Subordinated Indebtedness to Lender as security for the Guaranteed Indebtedness. If any sums shall be paid to Guarantor by Borrower or any other person or entity on account of the Subordinated Indebtedness, such sums shall be held in trust by Guarantor for the benefit of Lender and shall forthwith be paid to Lender without affecting the liability of Guarantor under this Guaranty Agreement. For purposes of this Guaranty Agreement, the term "Subordinated Indebtedness" means all indebtedness, liabilities, and obligations of Borrower to Guarantor, whether such indebtedness, liabilities, and obligations now exist or are hereafter incurred or arise, or whether the obligations of Borrower thereon are direct, indirect, contingent, primary, secondary, several, joint and several, or otherwise , and irrespective of the person or persons in whose favor such indebtedness, obligations, or liabilities may, at their inception, have been, or may hereafter be created, or the manner in which they have been or may hereafter be acquired by Guarantor.

No amendment or waiver of any provision of this Guaranty Agreement or consent to any departure by the Guarantor therefrom shall in any event be effective unless the same shall be in writing and signed by Lender. No failure on the part of Lender to exercise, and no delay in exercising, any right, power, or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power, or privilege. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

This Guaranty Agreement is for the benefit of Lender and its successors and assigns, and in the event of an assignment of the Guaranteed Indebtedness, or any part thereof, the rights and benefits hereunder, to the extent applicable to the indebtedness so assigned, may be transferred with such indebtedness. This Guaranty Agreement is binding not only on Guarantor, but on Guarantor's successors and assigns.

Guarantor recognizes that Lender is relying upon this Guaranty Agreement and the undertakings of Guarantor hereunder in making extensions of credit to Borrower under the Note and further recognizes that the execution and delivery of this Guaranty Agreement is a material inducement to Lender in entering into the Note. Guarantor hereby acknowledges that there are no conditions to the full effectiveness of this Guaranty Agreement.

This Guaranty Agreement is executed and delivered as an incident to a lending transaction negotiated, consummated, and performable in Harris County, Texas, and shall be governed by and construed in accordance with the laws of the State of Texas. Any action or proceeding against Guarantor under or in connection with this Guaranty Agreement may be brought in any state or federal court in Harris County, Texas, and Guarantor hereby irrevocably submits to the nonexclusive jurisdiction of such courts, and waives any objection it may now or hereafter have as to the venue of any such action or proceeding brought in such court. Guarantor agrees that service of process upon it may be made by certified or registered mail, return receipt requested, at its address specified in the Note. Nothing herein shall affect the right of Lender to serve process in any other matter permitted by law or shall limit the right of Lender to bring any action or proceeding against Guarantor or with respect to any of Guarantor's property in courts in other jurisdictions. Any action or proceeding by Guarantor against Lender shall be brought only in a court located in Harris County, Texas.

Guarantor shall pay on demand all reasonable attorneys' fees and all other reasonable costs and expenses incurred by Lender in connection with the preparation, administration, enforcement, or collection of this Guaranty Agreement.

Guarantor hereby waives promptness, diligence, notice of any default under the Guaranteed Indebtedness, demand of payment, notice of acceptance of this Guaranty Agreement, presentment, notice of protest, notice of dishonor, notice of the incurring by Borrower of additional indebtedness, and all other notices and demands with respect to the Guaranteed Indebtedness and this Guaranty Agreement.

The Note, and all of the terms thereof, are incorporated herein by reference, the same as if stated verbatim herein, and Guarantor agrees that Lender may exercise any and all rights granted to it under the Note and the other Loan Documents (as defined in the Note) without affecting the validity or enforceability of this Guaranty Agreement. Any notices given hereunder shall be given in the manner provided by and to the addresses set forth in the Note.

Guarantor hereby represents and warrants to Lender that Guarantor has adequate means to obtain from Borrower on a continuing basis information concerning the financial condition and assets of Borrower and that Guarantor is not relying upon Lender to provide (and Lender shall have no duty to provide) any such information to Guarantor either now or in the future.

This notice is being supplied in compliance with 12 C.F.R. 227, Regulation AA, promulgated by the Federal Reserve Board and applies to any Guaranteed Indebtedness which may be a consumer credit obligation as defined in such Regulation AA. You are being asked to guarantee the debt of Borrower now existing or hereafter arising. There is no limit as to the amount unless this Guaranty expressly provides for such limitation. Think carefully before you guarantee the existing and future debts of Borrower. If Borrower doesn't pay any of such debts, you will have to. Be sure that you can afford to pay all such debts if you have to and that you want to accept this responsibility. You may have to pay up to the full amount of all Borrower's debts if Borrower does not pay. You may also have to pay late fees or collection costs, which increase this amount. Lender can collect such debts from you without first trying to collect from Borrower. Lender can use the same collection methods against you that can be used against Borrower, such as suing you, etc. If any such debts is ever in default, that fact may become part of your credit record. This notice is not the contract that makes you liable for Borrower's debts. The Guaranty that is set forth in this instrument is however, a contract that makes you liable for Borrower's debts.

THIS GUARANTY AGREEMENT EMBODIES THE FINAL, ENTIRE AGREEMENT OF GUARANTOR AND LENDER WITH RESPECT TO GUARANTOR'S GUARANTY OF THE GUARANTEED INDEBTEDNESS AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY NATURE. THERE ARE NO ORAL AGREEMENTS BETWEEN GUARANTOR AND LENDER. THIS GUARANTY AGREEMENT MAY NOT BE AMENDED EXCEPT IN WRITING BY GUARANTOR AND LENDER.

DATED AND EXECUTED as of March 13, 2008.

GUARANTOR:

OYO GEOSPACE CORPORATION

By:

Thomas T. McEntire

Chief Financial Officer

EXHIBIT A A@

Financial Covenants

OYO Geospace Corporation, a Delaware corporation (A Guarantor@ ) covenants and agrees that, as long as the Guaranteed Indebtedness (as defined in the foregoing Guaranty Agreement) or any part thereof is outstanding, Guarantor will observe and perform the following financial covenants set forth below, unless Lender (as defined in the foregoing Guaranty Agreement) shall otherwise consent in writing.

Section A. Ratio of Total Liabilities to Tangible Net Worth. Guarantor will at all times maintain a Ratio of Total Liabilities to Tangible Net Worth of not greater than 1.00 to 1.00 from and after December 31, 2007.

Section B. Fixed Charge Coverage Ratio. Guarantor will at all times maintain a Fixed Charge Coverage Ratio of not less than 1.50 to 1.00. The Fixed Charge Coverage Ratio shall be calculated and tested quarterly as of the last day of each fiscal quarter of Guarantor, commencing on December 31, 2007, on a cumulative basis for the four quarters ended as of such date.

As used in this Exhibit A A@ , the following terms are defined as follows:

"Current Maturities of Long Term Debt" means for Guarantor and its Subsidiaries on a consolidated basis, the required principal payments and mandatory prepayments for the next succeeding twelve month period on Debt of Guarantor and its Subsidiaries for borrowed money which has a final maturity more than twelve months from the date of payment.

"Debt" means for any Person (a) all indebtedness, whether or not represented by bonds, debentures, notes, securities, or other evidences of indebtedness, for the repayment of money borrowed, (b) all indebtedness representing deferred payment of the purchase price of property or assets, (c) all indebtedness under any lease which, in conformity with GAAP, is required to be capitalized for balance sheet purposes, (d) all indebtedness under guaranties, endorsements, assumptions, or other contingent obligations, in respect of, or to purchase or otherwise acquire, indebtedness of others, (e) all indebtedness secured by a lien existing on property owned, subject to such lien, whether or not the indebtedness secured thereby shall have been assumed by the owner thereof, and (f) any obligation to redeem or repurchase any of such Person's capital stock, partnership or membership interests or other ownership interests as applicable.

"EBITDA" means for Guarantor and its Subsidiaries, on a consolidated basis, the sum of (a) Net Income, plus (b) depreciation, amortization and other non cash charges, plus (c) Interest Expense, plus (d) extraordinary losses, minus (e) extraordinary gains.

Fixed Charge Coverage Ratio" means for Guarantor and its Subsidiaries, on a consolidated basis, as of any date (a) EBITDA for the period ended on such date, minus non-financed capital expenditures, minus distributions, divided by (b) the sum of (i) Current Maturities of Long Term Debt for the period ended on such date, plus (ii) Interest Expense for the period ended on such date.

"GAAP" means generally accepted accounting principles in the United States of America consistently applied.

"Net Income" means, for Guarantor and its Subsidiaries for any period, the consolidated net income (or loss) of Guarantor and its Subsidiaries for such period, calculated in accordance with GAAP.

"Person" means any individual, corporation, limited liability company, business trust, association, company, partnership, joint venture, governmental authority, or other entity.

"Ratio of Total Liabilities to Tangible Net Worth" means, as of any date, (a) (i) Total Liabilities minus (ii) Subordinated Debt divided by (b) Tangible Net Worth.

"Subordinated Debt" collectively means Debt of Guarantor the payment of which is subordinated to the payment of the Guaranteed Indebtedness in a manner acceptable to Lender.

"Tangible Net Worth" means, at any particular time, all amounts which, in conformity with GAAP, would be included as stockholders' equity on a consolidated balance sheet of Guarantor and its Subsidiaries, plus Subordinated Debt; provided, however, there shall be excluded therefrom (a) goodwill, including any amounts, however designated, that represent the excess of the purchase price paid for assets or stock over the value assigned thereto, (b) patents, trademarks, trade names, and copyrights, (c) deferred expenses, (d) loans and advances to any stockholder, director, officer, or employee of Guarantor or any Subsidiary or any affiliate of Guarantor, and (e) all other assets which are properly classified as intangible assets.

"Total Liabilities" means, as of any date, all amounts (excluding deferred revenues) which, in accordance with GAAP, would be classified as liabilities on a consolidated balance sheet of Guarantor and its Subsidiaries.

EX-10.5 6 rrd199709_23688.htm GUARANTY AGREEMENT DATED MARCH 13, 2008, BY AND BETWEEN GEOSPACE TECHNOLOGIES, LP, AND COMPASS BANK

GUARANTY AGREEMENT

NOW, THEREFORE, for valuable consideration, the receipt and adequacy of which are hereby acknowledged, the undersigned, GEOSPACE TECHNOLOGIES, LP, a Texas limited partnership (the "Guarantor"), hereby irrevocably and unconditionally guarantees to Lender the full and prompt payment and performance of the Guaranteed Indebtedness (hereinafter defined). This Guaranty Agreement shall be upon the following terms:

Guarantor represents and warrants to Lender as follows:

The execution, delivery, and performance by Guarantor of this Guaranty Agreement have been duly authorized by all requisite action on the part of Guarantor and do not and will not violate or conflict with the certification of formation or limited partnership agreement of Guarantor or any law, rule, or regulation or any order, writ, injunction or decree of any court, governmental authority or agency, or arbitrator and do not and will not conflict with, result in a breach of, or constitute a default under, or result in the imposition of any lien upon any assets of Guarantor pursuant to the provisions of any indenture, mortgage, deed of trust, security agreement, franchise, permit, license, or other instrument or agreement to which Guarantor or its properties is bound.

Guarantor covenants and agrees that, as long as the Guaranteed Indebtedness or any part thereof is outstanding or Lender has any commitment under the Note:

Guarantor will deliver to Lender the financial statements of Guarantor described in the Note at the times required by the Note.

Guarantor will furnish promptly to Lender written notice of the occurrence of any default under this Guaranty Agreement or an Event of Default as defined in the Note of which Guarantor has knowledge.

Guarantor will furnish promptly to Lender such additional information concerning Guarantor as Lender may reasonably request.

Guarantor will comply with all of the covenants contained in the Note with which Borrower agrees to in the Note to cause Guarantor to comply.

DATED AND EXECUTED as of March 13, 2008.

GUARANTOR:

GEOSPACE TECHNOLOGIES, LP

By: OYOG, LLC, its General Partner

By: OYO Geospace Corporation, its sole member

By:

Thomas T. McEntire

Chief Financial Officer

-----END PRIVACY-ENHANCED MESSAGE-----

DE		76-0447780
(State or other jurisdiction of		(IRS Employer
incorporation)		Identification No.)

		OYO GEOSPACE CORPORATION


Date: March 17, 2008	By:	/s/ Thomas T. McEntire
		Thomas T. McEntire
		Chief Financial Officer