Kelman Technologies Inc. convertible secured debenture financing

CALGARY , Oct. 23 /CNW/ - Kelman Technologies Inc. ("Kelman") announced today that it has reached an agreement with Epstein Enterprises Inc. ("EEI"), a corporation controlled by Seymour Epstein , Chairman of the Board of Directors and major shareholder of Kelman, to refinance a CDN$500,000 promissory note due on October 30, 2009 with a CDN$500,000 principal amount convertible debenture.

Kelman will issue to EEI a CDN$500,000 principal amount convertible debenture, which will bear interest at the Prime Rate of the Royal Bank of Canada in effect from time to time plus ten (10%) percent due in four years that will be used for general working capital purposes, in exchange for cancellation of a CDN$500,000 principal amount promissory note dated September 30, 2009 and a cash payment of the outstanding and accrued interest on such note (the "Financing"). All or any portion of the original principal amount of the debenture will be convertible, at the option of EEI, into common shares in the capital of Kelman at a conversion price of $2.50 per common share, at any time, on or prior to maturity. Kelman may elect to pay up to 5% of the interest on the debenture in kind by adding such annual interest to the principal amount of the debenture.

This Financing is a related party transaction under Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI-61-101"). Kelman is relying on the exemptions for the valuation and minority shareholder approval requirements set forth in sections 5.5(b) and 5.7(b) of MI 61-101.

The Financing is subject to the final acceptance of the TSX Venture Exchange.

Kelman Technologies Inc. is a publicly traded Canadian company listed on the TSX Venture Exchange under the trading symbol "KTI". With offices in Calgary and Toronto , Canada , Denver , Houston , and Oklahoma City , United States , and Tripoli , Libya KTI services oil and gas exploration companies with a full suite of seismic processing and on-line data management and data archival services.

To the extent this press release includes forecasts or forward looking statements about future performance of the company such forecasts or statements are believed to be reasonable by the company but are based upon assumptions in respect of commodity pricing and oil and gas exploration activity levels over the next couple of years. The risks associated with future events are mitigated where possible by Kelman but are uncontrollable and no guarantee of the accuracy of the forecasts or future financial performance of the company is offered.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

For further information: please visit our web site at http://www.kelman.com/or contact Mr. Rene VandenBrand, President and CEO at [phone], or by email to [email protected]