Exhibit 10.1
EXECUTION COPY
Geokinetics Inc.
and
The Guarantors listed on Schedule B hereto
$110,000,000
Second Priority Senior Secured Floating Rate Notes due 2012
PURCHASE AGREEMENT
dated December 11, 2006
RBC Capital Markets Corporation

 

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PURCHASE AGREEMENT
December 11, 2006
RBC Capital Markets Corporation
1211 Avenue of the Americas, 32nd Floor
New York, NY 10036
  As Initial Purchaser
     Ladies and Gentlemen:
     Introductory. Geokinetics Inc., a Delaware corporation (the “Company”), on
the terms and subject to the condition set forth herein, proposes to issue and
sell to RBC Capital Markets Corporation (the “Initial Purchaser”) $110,000,000
aggregate principal amount of the Company’s Second Priority Senior Secured
Floating Rate Notes due 2012 (the “Notes”). RBC Capital Markets Corporation has
agreed to act as the Initial Purchaser in connection with the offering and sale
of the Notes.
     The Securities (as defined below) will be issued pursuant to an indenture,
to be dated as of December 15, 2006 (the “Indenture”), between the Company and
Wells Fargo Bank, National Association, as trustee (the “Trustee”). Notes issued
in book-entry form will be issued in the name of Cede & Co., as nominee of The
Depository Trust Company (the “Depositary”).
     The Company’s payment of principal of, premium and interest and Additional
Interest (as defined in the Indenture), if any, under the Notes, the Exchange
Notes (as defined below) and the Indenture will be unconditionally guaranteed
(the “Guarantees,” and together with the Notes, the “Securities”), jointly and
severally, on a senior secured basis, by (i) each of the Company’s domestic
subsidiaries as of the date hereof, which are listed on Schedule B hereto, and
(ii) any domestic subsidiary of the Company formed or acquired on or after the
Closing Date (as defined below) that executes a supplemental indenture setting
forth an additional guarantee in accordance with the terms of the Indenture, and
their respective successors and assigns (collectively, the “Guarantors”). The
Exchange Notes (as defined below) and the Guarantees thereof are herein
collectively referred to as the “Exchange Securities.”
     The holders of the Securities will be entitled to the benefits of a
registration rights agreement, to be dated as of December 15, 2006 (the
“Registration Rights Agreement”), among the Company and the Initial Purchaser,
pursuant to which the Company and each of the

 

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Guarantors will agree to file with the Securities and Exchange Commission (the
“Commission”) a registration statement under the Securities Act of 1933 (as
amended, the “Securities Act,” which term, as used herein, includes the rules
and regulations of the Commission promulgated thereunder), relating to an offer
(the “Exchange Offer”) to exchange another series of debt securities of the
Company with terms substantially identical to the Notes (the “Exchange Notes”)
and to have it declared effective by the Commission on or prior to 270 days
after the Closing Date, and, to the extent required by the Registration Rights
Agreement, a shelf registration statement pursuant to Rule 415 of the Securities
Act relating to the resale by certain holders of the Notes.
     The Company understands that the Initial Purchaser proposes to make an
offering of the Securities on the terms and in the manner set forth herein and
in the Pricing Disclosure Package (as defined below) and the Final Offering
Memorandum (as defined below) and agrees that the Initial Purchaser may resell,
subject to the conditions set forth herein, all or a portion of the Securities
to purchasers (the “Subsequent Purchasers”) at any time after the date of this
Agreement. The “Time of Execution” means 3:48 p.m. (New York City time) on
December 11, 2006, which is the time of the first sale of the Notes by the
Initial Purchaser to the public. The Securities are to be offered and sold to or
through the Initial Purchaser without being registered with the Commission under
the Securities Act, in reliance upon exemptions therefrom. The terms of the
Securities and the Indenture will require that investors that acquire Securities
expressly agree that Securities may only be resold or otherwise transferred,
after the date hereof, if such Securities are registered for sale under the
Securities Act or if an exemption from the registration requirements of the
Securities Act is available (including the exemptions afforded by Rule 144A
(“Rule 144A”) or Regulation S (“Regulation S”) thereunder).
     Pursuant to the Notes Security Documents (as defined in the Indenture) to
be entered into between the Company, the Guarantors and the Trustee, the
obligations of the Company under the Securities and of each Guarantor under its
Guarantee will be secured by Second Priority Liens (as defined in the Indenture)
over substantially all assets of the Company and the Guarantors over which any
First Priority Lien (as defined in the Indenture) exists, subject to certain
exceptions (all assets subject to the Second Priority Liens, hereinafter
collectively referred to as the “Collateral”). The Second Priority Liens will be
junior to the First Priority Liens and to any other liens having priority or
otherwise ranking senior to the Second Priority Liens. The Collateral has been
pledged to PNC Bank, National Association, as agent (the “Collateral Agent”),
for the benefit of the lenders under the Revolving Credit, Term Loan and
Security Agreement, dated as of June 12, 2006, between the Agent, the Company
and certain of its subsidiaries as borrowers, as amended by Joinder and
Amendment No. 1, dated as of September 8, 2006 (the “PNC Credit Facility”), as
holders of the First Priority Liens, and will be granted to the Trustee for the
benefit of the holders of the Securities as holders of the Second Priority
Liens. The Trustee will enter into an intercreditor agreement (the
“Intercreditor Agreement”) with the Agent with respect to the Collateral, which
will govern the relative ranking of the Second Priority Liens and the First
Priority Liens.
     As used herein, the term “Operative Documents” refers to this Agreement,
the Registration Rights Agreement, the Indenture, the Notes Security Documents
(as defined below), the Securities, the Exchange Securities and the
Intercreditor Agreement.

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     The Company has prepared and delivered to the Initial Purchaser copies of a
preliminary offering memorandum, dated December 1, 2006 (the “Preliminary
Offering Memorandum”), and have prepared and delivered to the Initial Purchaser
copies of a pricing supplement, dated December 11, 2006 (in the form attached
hereto as Exhibit A, the “Pricing Supplement”), describing the terms of the
Securities, each for use by the Initial Purchaser in connection with its
solicitation of offers to purchase the Securities. The Preliminary Offering
Memorandum and the Pricing Supplement are herein referred to as the “Pricing
Disclosure Package.” Promptly after the Time of Execution, the Company will
prepare and deliver to the Initial Purchaser a final offering memorandum dated
the date hereof (the “Final Offering Memorandum”).
     The Company and the Guarantors hereby confirm their agreements with the
Initial Purchaser as follows:
SECTION 1. Representations and Warranties. The Company and the Guarantors,
jointly and severally, hereby represent, warrant and covenant to the Initial
Purchaser as follows:
          (a) No Registration Required. Subject to compliance by the Initial
Purchaser with the representations and warranties set forth in Section 2 hereof
and with the procedures set forth in Section 7 hereof, it is not necessary in
connection with the offer, sale and delivery of the Securities to the Initial
Purchaser and to each Subsequent Purchaser in the manner contemplated by this
Agreement, the Pricing Disclosure Package and the Final Offering Memorandum to
register under the Securities Act the offer and sale of the Securities hereunder
or the initial resale of Securities to Subsequent Purchasers or, until such time
as the Exchange Securities are issued pursuant to an effective registration
statement, to qualify the Indenture under the Trust Indenture Act of 1939 (the
“Trust Indenture Act,” which term, as used herein, includes the rules and
regulations of the Commission promulgated thereunder).
          (b) No Integration of Offerings or General Solicitation. Neither the
Company nor any Guarantor has, directly or indirectly, solicited any offer to
buy or offered to sell, and will not, directly or indirectly, solicit any offer
to buy or offer to sell, in the United States or to any United States citizen or
resident, any security which is or would be integrated with the sale of the
Securities in a manner that would require the Securities to be registered under
the Securities Act. None of the Company, the Guarantors, their respective
affiliates (as such term is defined in Rule 501 under the Securities Act (each,
an “Affiliate”), or any person acting on its or any of their behalf (other than
the Initial Purchaser, as to whom neither the Company nor any Guarantor makes
any representation or warranty) has engaged or will engage, in connection with
the offering of the Securities, in any form of general solicitation or general
advertising within the meaning of Rule 502 under the Securities Act. With
respect to those Securities sold in reliance upon Regulation S, (i) none of the
Company, the Guarantors, their respective Affiliates or any person acting on its
or their behalf (other than the Initial Purchaser, as to whom neither the
Company nor any Guarantor makes any representation or warranty) has engaged or
will engage in any directed selling efforts within the meaning of Regulation S
and (ii) each of the Company, the Guarantors and their respective Affiliates and
any person acting on its or their behalf (other than the Initial Purchaser, as
to whom neither the Company nor any Guarantor makes any representation or
warranty) has complied and will comply with the offering restrictions set forth
in Regulation S and, in connection therewith, the Pricing Disclosure Package and
the Final Offering Memorandum will contain the disclosure required by Rule 902
of the Securities Act, and (iii) the sale of the Securities

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pursuant to Regulation S is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
          (c) Eligibility for Resale under Rule 144A. The Securities are
eligible for resale pursuant to Rule 144A and will not be, at the Closing Date,
of the same class as securities listed on a national securities exchange
registered under Section 6 of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), or quoted in a U.S. automated interdealer quotation
system.
          (d) The Pricing Disclosure Package and the Final Offering Memorandum.
Neither the Pricing Disclosure Package (as defined below), as of the Time of
Execution, nor the Final Offering Memorandum, as of its date or (as amended or
supplemented in accordance with Section 3(a), as applicable) as of the Closing
Date, contains or will contain an untrue statement of a material fact or omits
or will omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided that this representation, warranty and agreement shall not
apply to statements in or omissions from the Pricing Disclosure Package, the
Final Offering Memorandum or any amendment or supplement thereto made in
reliance upon and in conformity with information furnished to the Company in
writing by the Initial Purchaser expressly for use in the Pricing Disclosure
Package, the Final Offering Memorandum or any amendment or supplement thereto,
as the case may be. The Pricing Disclosure Package contains, and the Final
Offering Memorandum will contain, all the information specified in, and meeting
the information requirements of, Rule 144A(d)(4). The Company has not
distributed and will not distribute, prior to the later of the Closing Date and
the completion of the Initial Purchaser’s distribution of the Securities, any
offering material in connection with the offering and sale of the Securities
other than the Pricing Disclosure Package and the Final Offering Memorandum or
any amendment or supplement thereto in accordance with Section 3(a).
          (e) The Purchase Agreement. This Agreement has been duly authorized,
executed and delivered by, and is a valid and binding agreement of, the Company
and each Guarantor, enforceable in accordance with its terms, except as rights
to indemnification hereunder may be limited by applicable law and except as the
enforcement hereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles.
          (f) The Registration Rights Agreement. At the Closing Date, the
Registration Rights Agreement will be duly authorized, executed and delivered
by, and will be a valid and binding agreement of, the Company and each
Guarantor, enforceable in accordance with its terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting the rights and remedies of creditors
or by general equitable principles covered by equity and except as rights to
indemnification under the Registration Rights Agreement may be limited by
applicable law.
          (g) The Intercreditor Agreement. At the Closing Date, the
Intercreditor Agreement will be duly authorized, executed and delivered by, and
will be a valid and binding agreement of, the Company and each Guarantor,
enforceable in accordance with its terms, except as the enforcement thereof may
be limited by bankruptcy, insolvency, reorganization,

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moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles covered by equity.
          (h) Authorization of the Securities and the Exchange Securities. The
Notes to be purchased by the Initial Purchaser from the Company are in the form
contemplated by the Indenture, have been duly authorized for issuance and sale
pursuant to this Agreement and the Indenture and, at the Closing Date, will have
been duly executed by the Company and, when authenticated in the manner provided
for in the Indenture and delivered against payment of the purchase price
therefor, will constitute valid and binding agreements of the Company,
enforceable in accordance with their terms, except as the enforcement thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights and remedies of creditors or by
general equitable principles and will be entitled to the benefits of the
Indenture. The Exchange Notes have been duly and validly authorized for issuance
by the Company, and when issued and authenticated in accordance with the terms
of the Indenture, the Registration Rights Agreement and the Exchange Offer, will
constitute valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium, or similar laws
relating to or affecting enforcement of the rights and remedies of creditors or
by general principles of equity and will be entitled to the benefits of the
Indenture. The Guarantees of the Notes are in the form contemplated by the
Indenture, have been duly authorized for issuance and sale pursuant to this
Agreement and the Indenture and, at the Closing Date, will have been duly
executed by each of the Guarantors and, when the Notes have been authenticated
in the manner provided for in the Indenture and delivered against payment of the
purchase price therefor, will constitute valid and binding agreements of the
Guarantors, enforceable in accordance with their terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles and will be entitled to
the benefits of the Indenture. The Guarantees of the Exchange Notes are in the
form contemplated by the Indenture, have been duly authorized for issuance and
sale pursuant to this Agreement and the Indenture and, at the time the Exchange
Notes are authenticated in the manner provided for in the Indenture and
delivered against payment of the purchase price therefor, will have been duly
executed by each of the Guarantors and will constitute valid and binding
agreements of the Guarantors, enforceable in accordance with their terms, except
as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable principles and will be
entitled to the benefits of the Indenture.
          (i) Authorization of the Indenture. The Indenture has been duly
authorized by the Company and each Guarantor and, at the Closing Date, will have
been duly executed and delivered by the Company and will constitute a valid and
binding agreement of the Company, enforceable against the Company and each
Guarantor in accordance with its terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting the rights and remedies of creditors or by general
equitable principles.
          (j) Authorization of the Notes Security Documents. The Notes Security
Documents have been duly authorized by the Company and each of the Guarantors
and, on the

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Closing Date, will have been duly executed and delivered by the Company and each
of the Guarantors. When the Notes Security Documents have been duly executed and
delivered by each of the parties thereto, the Notes Security Documents will
(i) create a valid, binding and enforceable security interest in the Collateral
in favor of the Trustee for the benefit of the holders of the Securities, and
all material agreements which are part of the Collateral and to which the
Company or any Guarantor is a party or by which it is bound will be valid,
binding and enforceable against the Company or such Guarantor and (ii) be valid
and binding obligations of the Company and each of the Guarantors, enforceable
against the Company and each Guarantor in accordance with their terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’ rights
and to general equity principles and except that any rights to indemnity and
contributions may be limited by applicable laws and public policy
considerations. On the Closing Date, the Notes Security Documents and the
Collateral will conform in all material respects to the statements relating
thereto contained in the Pricing Disclosure Package and the Final Offering
Memorandum.
          (k) Collateral. The Company and the Guarantors own the Collateral free
and clear of any security interests, mortgages, liens, encumbrances, equities,
claims and other defects (“Liens”), other than Permitted Liens.
          (l) Perfection of the Collateral. Upon the filing of all necessary
Uniform Commercial Code (“UCC”) financing statements in the proper filing
offices and all other actions necessary or desirable to perfect a security
interest in the Collateral (to the extent a security interest in the Collateral
is capable of being perfected by filing), the security interests in the
Collateral granted to the Trustee, for the benefit of the holders of the
Securities, will constitute valid and perfected second priority security
interests in the Collateral, securing the obligations of the Company and the
Guarantors under the Indenture, subject only to Permitted Liens and other Liens
expressly permitted under the Indenture. As of the Closing Date, the filing of
all necessary Uniform Commercial Code financing statements in the proper filing
offices and other filings and actions contemplated by the Notes Security
Documents and the Indenture, and all other filings and other actions necessary
or desirable to perfect the security interest in the Collateral will have been
duly made or taken and will be in full force and effect.
          (n) Description of the Operative Documents. The Operative Documents
will conform in all material respects to the respective statements relating
thereto contained in the Pricing Disclosure Package and the Final Offering
Memorandum.
          (o) No Material Adverse Change. Except as disclosed in the Pricing
Disclosure Package and the Final Offering Memorandum, subsequent to the
respective dates as of which information is given in the Pricing Disclosure
Package: (i) there has been no material adverse change, or any development that
could reasonably be expected to result in a material adverse change, in the
condition, financial or otherwise, or in the earnings, business, operations or
prospects, whether or not arising from transactions in the ordinary course of
business, of the Company and its subsidiaries, considered as one entity (any
such change is called a “Material Adverse Change”); (ii) the Company and its
subsidiaries, considered as one entity, have not incurred any material liability
or obligation, indirect, direct or contingent, not in the ordinary course of
business nor entered into any material transaction or agreement not in the
ordinary

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course of business; and (iii) there has been no dividend or distribution of any
kind declared, paid or made by the Company or, except for dividends paid to the
Company or other subsidiaries, any of its subsidiaries on any class of capital
stock or repurchase or redemption by the Company or any of its subsidiaries of
any class of capital stock.
          (p) Independent Accountants. Fitts Roberts & Co., P.C., UHY, LLP and
UHY Mann Frankfort Stein & Lipp CPAs, LLP, which have expressed their opinions
with respect to the financial statements (which term as used in this Agreement
includes the related notes thereto) filed with the Commission included in the
Pricing Disclosure Package and the Final Offering Memorandum are each a
registered public accounting firm and independent public or certified public
accountants, within the meaning of Regulation S-X under the Securities Act and
the Exchange Act.
          (q) Preparation of the Financial Statements. The historical financial
statements, together with the related schedules and notes, included in the
Pricing Disclosure Package and the Final Offering Memorandum present fairly the
consolidated financial position of the Company and its subsidiaries and Grant
Geophysical, Inc. and its subsidiaries, as applicable, as of and at the dates
indicated and the results of their operations and cash flows for the periods
specified. Such financial statements have been prepared in conformity with
generally accepted accounting principles, as applied in the United States,
applied on a consistent basis throughout the periods involved, except as may be
expressly stated in the related notes thereto. The financial data set forth in
the Pricing Disclosure Package and the Final Offering Memorandum under the
captions “Offering Memorandum Summary – Summary Historical Consolidated and Pro
Forma Combined Financial Information” and “Selected Historical Consolidated
Financial Information” and elsewhere in the Pricing Disclosure Package and the
Final Offering Memorandum fairly present the information set forth therein on a
basis consistent with that of the audited financial statements contained in the
Pricing Disclosure Package and the Final Offering Memorandum. The pro forma
consolidated financial statements of the Company and its subsidiaries and the
related notes thereto included under the caption “Offering Memorandum Summary –
Summary Historical Consolidated and Pro Forma Combined Financial Information”,
“Unaudited Pro Forma Combined Financial Information” and elsewhere in the
Pricing Disclosure Package and the Final Offering Memorandum present fairly the
information contained therein, have been prepared in accordance with the
Commission’s rules and guidelines with respect to pro forma financial statements
and have been properly presented on the bases described therein, and the
assumptions used in the preparation thereof are reasonable and the adjustments
used therein are appropriate to give effect to the transactions and
circumstances referred to therein.
          (r) Incorporation and Good Standing of the Company and its
Subsidiaries. Each of the Company and its subsidiaries has been duly
incorporated or organized and is validly existing as a corporation or limited
liability company in good standing under the laws of the jurisdiction of its
incorporation or organization and has corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Pricing Disclosure Package and the Final Offering Memorandum and, in the case of
the Company and the Guarantors, to enter into and perform its obligations under
each of the Operative Documents. Each of the Company and its subsidiaries is
duly qualified as a foreign corporation or limited liability company to transact
business and is in good standing in each jurisdiction in which such

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qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except for such jurisdictions where the
failure to so qualify or to be in good standing would not, individually or in
the aggregate, result in a Material Adverse Change. All of the issued and
outstanding capital stock or membership interests of each subsidiary has been
duly authorized and validly issued, is fully paid and nonassessable and is owned
by the Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance or claim except for Liens under
the PNC Credit Facility (“Permitted Liens”). The Company does not own or
control, directly or indirectly, any corporation, association or other entity
other than the subsidiaries listed in Schedule B hereto.
          (s) Capitalization and Other Capital Stock Matters. At September 30,
2006, on a consolidated basis, after giving pro forma effect to the issuance and
sale of the Securities pursuant hereto, the Company would have an authorized and
outstanding capitalization as set forth in the Pricing Disclosure Package and
the Final Offering Memorandum under the caption “Capitalization” (other than for
subsequent issuances of capital stock, if any, pursuant to employee benefit
plans described in the Pricing Disclosure Package and the Final Offering
Memorandum or upon exercise of outstanding options or warrants described in the
Pricing Disclosure Package and the Final Offering Memorandum). All of the
outstanding shares of Common Stock have been duly authorized and validly issued,
are fully paid and nonassessable and have been issued in compliance with federal
and state securities laws. None of the outstanding shares of Common Stock were
issued in violation of any preemptive rights, rights of first refusal or other
similar rights to subscribe for or purchase securities of the Company. There are
no authorized or outstanding options, warrants, preemptive rights, rights of
first refusal or other rights to purchase, or equity or debt securities
convertible into or exchangeable or exercisable for, any capital stock of the
Company or any of its subsidiaries other than those accurately described in the
Pricing Disclosure Package and the Final Offering Memorandum. The description of
the Company’s stock option, stock bonus and other stock plans or arrangements,
and the options or other rights granted thereunder, set forth in the Pricing
Disclosure Package and the Final Offering Memorandum accurately and fairly
describes such plans, arrangements, options and rights.
          (t) Non-Contravention of Existing Instruments; No Further
Authorizations or Approvals Required. Neither the Company nor any of its
subsidiaries is in violation of its charter or by-laws or is in default (or,
with the giving of notice or lapse of time, would be in default) (“Default”)
under any indenture, mortgage, loan or credit agreement, note, contract,
franchise, lease or other instrument to which the Company or any of its
subsidiaries is a party or by which it or any of them may be bound, or to which
any of the property or assets of the Company or any of its subsidiaries is
subject (each, an “Existing Instrument”), except for such Defaults as would not,
individually or in the aggregate, result in a Material Adverse Change. The
Company’s and each Guarantor’s execution, delivery and performance of the
Operative Documents, and the issuance and delivery of the Securities or the
Exchange Securities, and consummation of the transactions contemplated hereby
and thereby and by the Pricing Disclosure Package and the Final Offering
Memorandum (i) have been duly authorized by all necessary corporate or limited
liability company action and will not result in any violation of the provisions
of the charter or by-laws or organization documents of the Company or any
subsidiary, (ii) will not conflict with or constitute a breach of, or Default or
a Debt Repayment Triggering Event (as defined below) under, or result in the
creation or imposition of any lien,

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charge or encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, or require the consent of any other party to, any
Existing Instrument, except for such conflicts, breaches, Defaults, liens,
charges or encumbrances as would not, individually or in the aggregate, result
in a Material Adverse Change and (iii) will not result in any violation of any
law, administrative regulation or administrative or court decree applicable to
the Company or any subsidiary. No consent, approval, authorization or other
order of, or registration or filing with, any court or other governmental or
regulatory authority or agency, is required for the Company’s or each
Guarantor’s execution, delivery and performance of the Operative Documents, or
the issuance and delivery of the Securities or the Exchange Securities, or
consummation of the transactions contemplated hereby and thereby and by the
Pricing Disclosure Package and the Final Offering Memorandum, except such as
have been obtained or made by the Company or the Guarantors and are in full
force and effect under the Securities Act, applicable state securities or blue
sky laws and except such as may be required by federal and state securities laws
with respect to the Company’s obligations under the Registration Rights
Agreement, and filings necessary to perfect the secured interests in the
Collateral. As used herein, a “Debt Repayment Triggering Event” means any event
or condition which gives, or with the giving of notice or lapse of time would
give, the holder of any note, debenture or other evidence of indebtedness (or
any person acting on such holder’s behalf) the right to require the repurchase,
redemption or repayment of all or a portion of such indebtedness by the Company
or any of its subsidiaries.
          (u) No Material Actions or Proceedings. There are no legal or
governmental actions, suits or proceedings pending or, to the best of the
Company’s and each Guarantor’s knowledge, threatened (i) against or affecting
the Company or any of its subsidiaries, (ii) which has as the subject thereof
any property owned or leased by the Company or any of its subsidiaries, where in
any such case any such action, suit or proceeding, if determined adversely,
would reasonably be expected to result in a Material Adverse Change or adversely
affect the consummation of the transactions contemplated by this Agreement. No
material labor dispute with the employees of the Company or any of its
subsidiaries, or with the employees of any principal supplier of the Company,
exists or, to the best of the Company’s knowledge, is threatened or imminent.
          (v) Intellectual Property Rights. The Company and its subsidiaries own
or possess sufficient trademarks, trade names, patent rights, copyrights,
licenses, approvals, trade secrets and other similar rights (collectively,
“Intellectual Property Rights”) reasonably necessary to conduct their businesses
as now conducted; and the expected expiration of any of such Intellectual
Property Rights, if not renewed or replaced, would not result in a Material
Adverse Change. Neither the Company nor any of its subsidiaries has received any
notice of infringement or conflict with asserted Intellectual Property Rights of
others, which infringement or conflict, if the subject of an unfavorable
decision, would result in a Material Adverse Change.
          (w) All Necessary Permits, etc. The Company and each subsidiary
possess such valid and current certificates, authorizations or permits issued by
the appropriate state, federal or foreign regulatory agencies or bodies
necessary to conduct their respective businesses, and neither the Company nor
any subsidiary has received any notice of proceedings relating to the revocation
or modification of, or non-compliance with, any such certificate, authorization
or

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permit which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, could result in a Material Adverse Change.
          (x) Title to Properties. The Company and each of its subsidiaries has
good and marketable title to all the properties and assets reflected as owned in
the financial statements referred to in Section 1(q) above (or elsewhere in the
Pricing Disclosure Package and the Final Offering Memorandum), in each case free
and clear of any security interests, mortgages, liens, encumbrances, equities,
claims and other defects, except such as do not materially and adversely affect
the value of such property and do not materially interfere with the current or
currently proposed use of such property by the Company or such subsidiary and
Permitted Liens. The real property, improvements, equipment and personal
property held under lease by the Company or any subsidiary are held under valid
and enforceable leases, with such exceptions as are not material and do not
materially interfere with the current or currently proposed use of such real
property, improvements, equipment or personal property by the Company or such
subsidiary.
          (y) Tax Law Compliance. The Company and its consolidated subsidiaries
have filed all necessary federal, state and foreign income and franchise tax
returns and have paid all taxes required to be paid by any of them and, if due
and payable, any related or similar assessment, fine or penalty levied against
any of them. The Company has made adequate charges, accruals and reserves in the
applicable financial statements referred to in Section 1(q) above in respect of
all federal, state and foreign income and franchise taxes for all periods as to
which the tax liability of the Company or any of its consolidated subsidiaries
has not been finally determined.
          (z) Company and Guarantors Each Not an “Investment Company”. The
Company has been advised of the rules and requirements under the Investment
Company Act of 1940, as amended (the “Investment Company Act”). Neither the
Company nor any Guarantor is, and after receipt of payment for the Securities
and the use of proceeds thereof as described in the Pricing Disclosure Package
and the Final Offering Memorandum each will not be, an “investment company”
within the meaning of Investment Company Act and the Company and each Guarantor
intends to conduct its business in a manner so that it will not become subject
to the Investment Company Act.
          (aa) Insurance. Each of the Company and its subsidiaries are insured
by recognized, financially sound institutions with policies in such amounts and
with such deductibles and covering such risks as are generally deemed adequate
and customary for their businesses including, but not limited to, policies
covering real and personal property owned or leased by the Company and its
subsidiaries against theft, damage, destruction, acts of vandalism and
earthquakes. The Company has no reason to believe that it or any subsidiary will
not be able (i) to renew its existing insurance coverage as and when such
policies expire or (ii) to obtain comparable coverage from similar institutions
as may be necessary or appropriate to conduct its business as now conducted and
at a cost that would not result in a Material Adverse Change. Neither of the
Company nor any subsidiary has been denied any insurance coverage which it has
sought or for which it has applied.
          (bb) No Price Stabilization or Manipulation. The Company has not taken
and will not take, directly or indirectly, any action designed to or that might
be reasonably expected

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to cause or result in stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of the Securities.
          (cc) Solvency. The Company and each Guarantor is, and immediately
after the Closing Date will be, Solvent. As used herein, the term “Solvent”
means, with respect to the Company and each Guarantor on a particular date, that
on such date (i) the fair market value of its assets is greater than the total
amount of its liabilities (including contingent liabilities), (ii) the present
fair salable value of its assets is greater than the amount that will be
required to pay the probable liabilities on its debts as they become absolute
and matured, (iii) it is able to realize upon its assets and pay its debts and
other liabilities, including contingent obligations, as they mature and (iv) it
does not have unreasonably small capital to carry on its business as conducted
and as proposed to be conducted, as set forth in the Pricing Disclosure Package
and the Final Offering Memorandum.
          (dd) No Unlawful Contributions or Other Payments. Neither the Company
nor any of its subsidiaries nor, to the best of the Company’s knowledge, any
employee or agent of the Company or any subsidiary, has made any contribution or
other payment to any official of, or candidate for, any federal, state or
foreign office in violation of any law or of the character necessary to be
disclosed in the Pricing Disclosure Package and the Final Offering Memorandum in
order to make the statements therein not misleading.
          (ee) Company’s Internal Control over Financial Reporting. The Company
maintains a system of internal controls over financial reporting sufficient to
provide reasonable assurances that (i) transactions are executed in accordance
with management’s general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of reliable financial statements in
conformity with generally accepted accounting principles as applied in the
United States and to maintain accountability for assets; (iii) records are
maintained in sufficient detail to accurately and fairly reflect the
transactions and dispositions of the Company’s assets (iv) access to assets is
permitted only in accordance with management’s general or specific
authorization; and (v) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. The Company is not aware of (a) any significant
deficiency in the design or operation of internal control over financial
reporting which could adversely affect the Company’s ability to record, process,
summarize and report financial data or any material weaknesses in internal
controls or (b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Company’s internal controls.
There have been no significant changes in internal controls or in other factors
that could significantly affect internal controls since December 31, 2005.
          (ff) Compliance with Environmental Laws. Except as would not,
individually or in the aggregate, result in a Material Adverse Change:
(i) neither the Company nor any of its subsidiaries is in violation of any
federal, state, local or foreign law or regulation relating to pollution or
protection of human health or the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata) or
wildlife, including without limitation, laws and regulations relating to
emissions, discharges, releases or threatened releases of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum and
petroleum products (collectively, “Materials of Environmental Concern”), or

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otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Materials of Environmental Concern
(collectively, “Environmental Laws”), which violation includes, but is not
limited to, noncompliance with any permits or other governmental authorizations
required for the operation of the business of the Company or its subsidiaries
under applicable Environmental Laws, or noncompliance with the terms and
conditions thereof, nor has the Company or any of its subsidiaries received any
written communication, whether from a governmental authority, citizens group,
employee or otherwise, that alleges that the Company or any of its subsidiaries
is in violation of any Environmental Law; (ii) there is no claim, action or
cause of action filed with a court or governmental authority, no investigation
with respect to which the Company has received written notice, and no written
notice by any person or entity alleging potential liability for investigatory
costs, cleanup costs, governmental responses costs, natural resources damages,
property damages, personal injuries, attorneys’ fees or penalties arising out
of, based on or resulting from the presence, or release into the environment, of
any Material of Environmental Concern at any location owned, leased or operated
by the Company or any of its subsidiaries, now or in the past (collectively,
“Environmental Claims”), pending or, to the best of the Company’s knowledge,
threatened against the Company or any of its subsidiaries or any person or
entity whose liability for any Environmental Claim the Company or any of its
subsidiaries has retained or assumed either contractually or by operation of
law; and (iii) to the best of the Company’s knowledge, there are no past or
present actions, activities, circumstances, conditions, events or incidents,
including, without limitation, the release, emission, discharge, presence or
disposal of any Material of Environmental Concern, that reasonably could result
in a violation of any Environmental Law or form the basis of a potential
Environmental Claim against the Company or any of its subsidiaries or against
any person or entity whose liability for any Environmental Claim the Company or
any of its subsidiaries has retained or assumed either contractually or by
operation of law.
          (gg) ERISA Compliance. The Company and its subsidiaries and any
“employee benefit plan” (as defined under the Employee Retirement Income
Security Act of 1974, as amended, and the regulations and published
interpretations thereunder (collectively, “ERISA”)) established or maintained by
the Company, its subsidiaries or their “ERISA Affiliates” (as defined below) are
in compliance in all material respects with ERISA. “ERISA Affiliate” means, with
respect to the Company or a subsidiary, any member of any group of organizations
described in Sections 414(b), (c), (m), or (o) of the Internal Revenue Code of
1986, as amended, and the regulations and published interpretations thereunder
(the “Code”) of which the Company or such subsidiary is a member. No “reportable
event” (as defined under ERISA) has occurred or is reasonably expected to occur
with respect to any “employee benefit plan” established or maintained by the
Company, its subsidiaries or any of their ERISA Affiliates. No “employee benefit
plan” established or maintained by the Company, its subsidiaries or any of their
ERISA Affiliates, if such “employee benefit plan” were terminated, would have
any “amount of unfunded benefit liabilities” (as defined under ERISA). Neither
the Company, any of its subsidiaries nor any of their ERISA Affiliates has
incurred or reasonably expects to incur any liability under (i) Title IV of
ERISA with respect to termination of, or withdrawal from, any “employee benefit
plan” or (ii) Sections 412, 4971, 4975 or 4980B of the Code. Each “employee
benefit plan” established or maintained by the Company, its subsidiaries or any
of their ERISA Affiliates that is intended to be qualified under Section 401 of
the Code is so qualified and nothing has occurred, whether by action or failure
to act, which would cause the loss of such qualification.

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          (hh) Regulation S. The Company and its affiliates, the Guarantors and
their respective affiliates and all persons acting on their behalf (other than
the Initial Purchaser, as to whom the Company and the Guarantors make no
representation) have complied with and will comply with the offering
restrictions requirements of Regulation S in connection with the offering of the
Securities outside the United States and, in connection therewith, the Pricing
Disclosure Package and the Final Offering Memorandum will contain the disclosure
required by Rule 902. The Company is a “reporting issuer,” as defined in
Rule 902 under the Securities Act.
          (ii) Sarbanes-Oxley Act. The Company is in compliance in all material
respects with provisions of the Sarbanes-Oxley Act of 2002 that are applicable
to it.
          (jj) Disclosure Controls and Procedures. Except as disclosed in the
Pricing Disclosure Package and the Final Offering Memorandum, the Company has
established and maintains “disclosure controls and procedures” (as defined in
Rules 13a-15(e) and 15d-15(e) of the Exchange Act) that are reasonably designed
to ensure that all information (both financial and non-financial) required to be
disclosed by the Company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the rules and regulations thereunder, and that all such
information is accumulated and communicated to the Company’s management as
appropriate to allow timely decisions regarding required disclosure and to make
the certifications of the Chief Executive Officer and Chief Financial Officer of
the Company required under the Exchange Act with respect to such reports.
Without limiting the generality of the foregoing, as disclosed in the Pricing
Disclosure Package and the Final Offering Memorandum, the Company’s disclosure
controls and procedures are effective to enable it to record, process,
summarize, and report information required to be included in our SEC filings
within the required time period, and to ensure that such information is
accumulated and communicated to its management, including its Chief Executive
Officer and Chief Financial Officer, to allow timely decisions regarding
required disclosure.
          (kk) Payment of Dividends by Subsidiaries. No subsidiary of the
Company is currently prohibited, directly or indirectly, from paying any
dividends to the Company or any other subsidiary, from making any other
distribution on such subsidiary’s capital stock, from repaying to the Company or
any other subsidiary any loans or advances to such subsidiary from the Company
or any other subsidiary or from transferring any of such subsidiary’s property
or assets to the Company or any other subsidiary of the Company, except as
described in or contemplated in the Pricing Disclosure Package and the Final
Offering Memorandum
          (ll) Forward-Looking Statements. No forward-looking statement (within
the meaning of Section 27A of the Act and Section 21E of the Exchange Act) or
presentation of market-related or statistical data contained in either the
Pricing Disclosure Package or the Final Offering Memorandum has been made or
reaffirmed without a reasonable basis or has been disclosed in other than good
faith.
          (mm) Statistical and Market-Related Data. Any statistical and
market-related data included in the Pricing Disclosure Package and the Final
Offering Memorandum are based on or derived from sources that the Company
believes to be reliable and accurate, and the

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Company has obtained the written consent to the use of such data from such
sources to the extent such written consent is required.
          (nn) Foreign Corrupt Practices Act. Neither the Company nor any
Guarantor, nor, to the knowledge of the Company or such Guarantor, any of their
respective directors, officers, agents, employees, affiliates or other persons
acting on behalf of the Company or the Guarantors or their respective
subsidiaries is aware of or has taken any action, directly or indirectly, that
would result in a violation by such persons of the Foreign Corrupt Practices Act
of 1977, as amended, and the rules and regulations thereunder (the “FCPA”),
including, without limitation, making use of the mails or any means or
instrumentality of interstate commerce corruptly in furtherance of an offer,
payment, promise to pay or authorization of the payment of any money, or other
property, gift, promise to give, or authorization of the giving of anything of
value to any “foreign official” (as such term is defined in the FCPA) or any
foreign political party or official thereof or any candidate for foreign
political office, in contravention of the FCPA and the Company and, to the
knowledge of the Company, its Affiliates have conducted their businesses in
compliance with the FCPA and have instituted and maintain policies and
procedures designed to ensure, and which are reasonably expected to continue to
ensure, continued compliance therewith.
          (oo) Money Laundering Laws. The operations of the Company are and have
been conducted at all times in material compliance with applicable financial
recordkeeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, the money laundering statutes of
all jurisdictions, the rules and regulations thereunder and any related or
similar rules, regulations or guidelines, issued, administered or enforced by
any governmental agency (collectively, the “Money Laundering Laws”) and no
action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company with respect to the
Money Laundering Laws is pending or, to the knowledge of the Company,
threatened.
          (pp) Related Parties. No relationship, direct or indirect, that would
be required to be described under Item 404 of Regulation S-K if such Item were
applicable, exists that is not described in the Pricing Disclosure Package or
the Final Offering Memorandum.
          (qq) OFAC. Neither the Company nor any Guarantor, nor, to the
knowledge of either the Company or the Guarantor, any director, officer, agent,
employee, affiliate or person acting on behalf of the Company is currently
subject to any U.S. sanctions administered by the Office of Foreign Assets
Control of the U.S. Treasury Department (“OFAC”); and the Company will not
directly or indirectly use the proceeds of the offering, or lend, contribute or
otherwise make available such proceeds to any subsidiary, joint venture partner
or other person or entity, for the purpose of financing the activities of any
person currently subject to any U.S. sanctions administered by OFAC.
     Any certificate signed by an officer of the Company and delivered to the
Initial Purchaser or to counsel for the Initial Purchaser shall be deemed to be
a representation and warranty by the Company to the Initial Purchaser as to the
matters set forth therein.
SECTION 2. Purchase, Sale and Delivery of the Securities.

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          (a) The Securities. The Company agrees to issue and sell to the
Initial Purchaser all of the Securities upon the terms herein set forth. On the
basis of the representations, warranties and agreements herein contained, and
upon the terms but subject to the conditions herein set forth, the Initial
Purchaser agrees to purchase from the Company the aggregate principal amount of
Securities set forth on Schedule A, at a purchase price of 97% of the principal
amount thereof, payable on the Closing Date.
          (b) The Closing Date. Delivery of certificates for the Securities in
definitive form to be purchased by the Initial Purchaser and payment therefor
shall be made at the offices of Shearman & Sterling LLP (or such other place as
may be agreed to by the Company and the Initial Purchaser) at 9:30 a.m. New York
City time, on December 15, 2006, or such other time and date as may be agreed to
by the Initial Purchaser and the Company (the time and date of such closing are
called the “Closing Date”). The Company hereby acknowledges that circumstances
under which the Initial Purchaser may provide notice to postpone the Closing
Date as originally scheduled include, but are in no way limited to, any
determination by the Company or the Initial Purchaser to recirculate to
investors copies of an amended or supplemented Final Offering Memorandum or a
delay as contemplated by the provisions of Section 16.
          (c) Delivery of the Securities. The Company shall deliver, or cause to
be delivered, to the Initial Purchaser certificates for the Securities at the
Closing Date against the irrevocable release of a wire transfer of immediately
available funds for the amount of the purchase price therefor. The certificates
for the Securities shall be in such denominations and registered in the name of
Cede & Co., as nominee of the Depository, and shall be made available for
inspection on the business day preceding the Closing Date at a location in New
York City, as the Initial Purchaser may designate. Time shall be of the essence,
and delivery at the time and place specified in this Agreement is a further
condition to the obligations of the Initial Purchaser.
          (d) Delivery of Offering Memorandum to the Initial Purchaser. Not
later than 12:00 p.m. on the second business day following the date of this
Agreement, the Company shall deliver or cause to be delivered copies of the
Pricing Disclosure Package and the Final Offering Memorandum in such quantities
and at such places as the Initial Purchaser shall reasonably request.
          (e) Initial Purchaser as Qualified Institutional Buyers. The Initial
Purchaser represents and warrants to, and agrees with, the Company that it is a
“qualified institutional buyer” within the meaning of Rule 144A under the
Securities Act (a “Qualified Institutional Buyer”).
SECTION 3. Additional Covenants. The Company, and as applicable, the Guarantors,
jointly and severally, further covenant and agree with the Initial Purchaser as
follows:
          (a) Initial Purchaser’s Review of Proposed Amendments and Supplements.
Until the later of (i) the completion of the placement of the Securities by the
Initial Purchaser with the Subsequent Purchasers and (ii) the Closing Date,
prior to amending or supplementing the Pricing Disclosure Package or the Final
Offering Memorandum, the Company shall furnish to the Initial Purchaser for
review a copy of each such proposed amendment or supplement, and

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the Company shall not use any such proposed amendment or supplement to which the
Initial Purchaser reasonably objects.
          (b) Amendments and Supplements to the Offering Memorandum and Other
Securities Act Matters. If, prior to the completion of the placement of the
Securities by the Initial Purchaser with the Subsequent Purchasers, any event
shall occur or condition exist as a result of which it is necessary to amend or
supplement the Pricing Disclosure Package or the Final Offering Memorandum in
order to make the statements therein, in the light of the circumstances under
which they were made or then prevailing, as the case may be, not misleading, or
if, in the opinion of the Initial Purchaser or counsel for the Initial
Purchaser, it is otherwise necessary to amend or supplement the Pricing
Disclosure Package or the Final Offering Memorandum to comply with law, the
Company agrees to promptly prepare (subject to Section 3 hereof), furnish at its
own expense to the Initial Purchaser, amendments or supplements to the Pricing
Disclosure Package or the Final Offering Memorandum so that the statements in
the Pricing Disclosure Package or the Final Offering Memorandum as so amended or
supplemented will not be, in the light of the circumstances under which they
were made or then prevailing, as the case may be, misleading or so that the
Pricing Disclosure Package or the Final Offering Memorandum, as amended or
supplemented, will comply with law.
     Following the consummation of the Exchange Offer or the effectiveness of an
applicable shelf registration statement and for so long as the Securities are
outstanding if, in the reasonable judgment of the Initial Purchaser, the Initial
Purchaser or any of its affiliates (as such term is defined in the rules and
regulations under the Securities Act) are required to deliver a prospectus in
connection with sales of, or market-making activities with respect to, such
securities, to periodically amend the applicable registration statement so that
the information contained therein complies with the requirements of Section 10
of the Securities Act, to amend the applicable registration statement or
supplement the related prospectus or the documents incorporated therein when
necessary to reflect any material changes in the information provided therein so
that the registration statement and the prospectus will not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances existing
as of the date the prospectus is so delivered, not misleading and to provide the
Initial Purchaser with copies of each amendment or supplement filed and such
other documents as the Initial Purchaser may reasonably request.
     The Company hereby expressly acknowledges that the indemnification and
contribution provisions of Sections 8 and 9 hereof are specifically applicable
and relate to each offering memorandum, registration statement, prospectus,
amendment or supplement referred to in this Section 3.
          (c) Copies of the Offering Memorandum. The Company agrees to furnish
the Initial Purchaser, without charge, as many copies of the Preliminary
Offering Memorandum and the Final Offering Memorandum and any amendments and
supplements thereto as it shall have reasonably requested.
          (d) Blue Sky Compliance. The Company shall cooperate with the Initial
Purchaser and counsel for the Initial Purchaser to qualify or register the
Securities for sale under (or obtain exemptions from the application of) the
Blue Sky or state securities laws of those

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jurisdictions designated by the Initial Purchaser, shall comply with such laws
and shall continue such qualifications, registrations and exemptions in effect
so long as required for the distribution of the Securities. Neither the Company
nor any Guarantor shall be required to qualify as a foreign corporation or to
take any action that would subject it to general service of process in any such
jurisdiction where it is not presently qualified or where it would be subject to
taxation as a foreign corporation. The Company will advise the Initial Purchaser
promptly of the suspension of the qualification or registration of (or any such
exemption relating to) the Securities for offering, sale or trading in any
jurisdiction or any initiation or threat of any proceeding for any such purpose,
and in the event of the issuance of any order suspending such qualification,
registration or exemption, the Company shall use its best efforts to obtain the
withdrawal thereof at the earliest possible moment.
          (e) Use of Proceeds. The Company shall apply the net proceeds from the
sale of the Securities sold by it in the manner described under the caption “Use
of Proceeds” in the Pricing Disclosure Package and the Final Offering
Memorandum.
          (f) The Depositary. The Company will cooperate with the Initial
Purchaser and use its best efforts to permit the Securities to be eligible for
clearance and settlement through the facilities of the Depositary.
          (g) Additional Issuer Information. Prior to the completion of the
placement of the Securities by the Initial Purchaser with the Subsequent
Purchasers, the Company shall file, on a timely basis, with the Commission all
reports and documents required to be filed under Section 13 or 15 of the
Exchange Act. Additionally, at any time when the Company is not subject to
Section 13 or 15 of the Exchange Act, for the benefit of holders and beneficial
owners from time to time of Securities, the Company shall furnish, at its
expense, upon request, to holders and beneficial owners of Securities and
prospective purchasers of Securities information (“Additional Issuer
Information”) satisfying the requirements of subsection d(4) of Rule 144A.
          (h) No Integration. The Company agrees that it will not and will cause
its Affiliates not to make any offer or sale of securities of the Company of any
class if, as a result of the doctrine of “integration” referred to in Rule 502
under the Securities Act, such offer or sale would render invalid (for the
purpose of (i) the sale of the Securities by the Company to the Initial
Purchaser, (ii) the resale of the Securities by the Initial Purchaser to
Subsequent Purchasers or (iii) the resale of the Securities by such Subsequent
Purchasers to others) the exemption from the registration requirements of the
Securities Act provided by Section 4 thereof or by Rule 144A or by Regulation S
thereunder or otherwise.
          (i) Legended Securities. Each certificate for a Note will bear the
legend contained in “Notice to Investors” in the Pricing Disclosure Package and
the Final Offering Memorandum for the time period and upon the other terms
stated in the Pricing Disclosure Package and the Final Offering Memorandum.
          (j) Agreement Not to Offer or Sell Additional Securities. During the
period beginning on the date hereof and ending on the day that is 90 days
following the date of the Final Offering Memorandum, none of the Company or any
Guarantor will, without the prior written consent of the Initial Purchaser
(which consent may be withheld at the sole discretion of the

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Initial Purchaser), directly or indirectly, sell, offer, contract or grant any
option to sell, pledge, transfer or establish an open “put equivalent position”
within the meaning of Rule 16a-1 under the Exchange Act, or otherwise dispose of
or transfer, or announce the offering of, or file any registration statement
under the Securities Act in respect of, any debt securities of the Company or
any Guarantor substantially similar to the Securities or securities exchangeable
for or convertible into debt securities of the Company or any Guarantor
substantially similar to the Securities (other than as contemplated by this
Agreement and to register the Exchange Securities).
          (k) Rating of Securities. The Company and the Guarantors shall take
all commercially reasonable action necessary to enable Standard & Poor’s Rating
Services, a division of The McGraw-Hill, Inc. Companies, and Moody’s Investor
Services, Inc. to provide their respective credit ratings to the Securities at
or prior to the time of their initial issuance.
          (l) PORTAL(m) . The Company will use its best efforts to cause such
Notes to be eligible for the National Association of Securities Dealers, Inc.
PORTAL market (the “PORTAL market”).
     The Initial Purchaser may in its sole discretion, waive in writing the
performance by the Company of any one or more of the foregoing covenants or
extend the time for their performance.
SECTION 4. Payment of Expenses. The Company and the Guarantors, jointly and
severally, agree to pay all costs, fees and expenses incurred in connection with
the performance of its obligations hereunder and in connection with the
transactions contemplated hereby, including without limitation (i) all expenses
incident to the issuance and delivery of the Securities (including all printing
and engraving costs), (ii) all necessary issue, transfer and other stamp taxes
in connection with the issuance and sale of the Securities to the Initial
Purchaser, (iii) all fees and expenses of the Company’s and the Guarantors’
counsel, independent registered public accounting firms or independent certified
public accountants and other advisors, (iv) all costs and expenses incurred in
connection with the preparation, printing, filing, shipping and distribution of
each Preliminary Offering Memorandum and the Final Offering Memorandum
(including financial statements and exhibits), and all amendments and
supplements thereto, the Operative Documents, all filing fees, attorneys’ fees
and expenses incurred by the Company or the Initial Purchaser in connection with
qualifying or registering (or obtaining exemptions from the qualification or
registration of) all or any part of the Securities for offer and sale under the
Blue Sky laws and, if requested by the Initial Purchaser, preparing and printing
a “Blue Sky Survey” or memorandum, and any supplements thereto, advising the
Initial Purchaser of such qualifications, registrations and exemptions, (vi) the
fees and expenses of the Trustee, including the fees and disbursements of
counsel for the Trustee in connection with the Indenture, the Securities, the
Exchange Securities, the Notes Security Documents and the Intercreditor
Agreement, (vii) any fees payable in connection with the rating of the
Securities or the Exchange Securities with the ratings agencies and the listing
of the Securities with the PORTAL market, (viii) any filing fees incident to,
and any reasonable fees and disbursements of counsel to the Initial Purchaser in
connection with the review by the National Association of Securities Dealers,
Inc., if any, of the terms of the sale of the Securities or the Exchange
Securities, (ix) all fees and expenses (including reasonable fees and expenses
of counsel) of the Company and the

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Guarantors in connection with approval of the Securities by the transportation
and other expenses incurred by or on behalf of the representatives of the
Company in connection with presentations to prospective purchasers of the
Securities, including, but not limited to, the cost of any chartered aircraft,
and (xi) all other costs and expenses incident to the performance by the Company
and the Guarantors of their respective other obligations under this Agreement.
Except as provided in this Section 4, Section 6, Section 8 and Section 9 hereof,
the Initial Purchaser shall pay their own expenses, including the fees and
disbursements of their counsel.
SECTION 5. Conditions of the Obligations of the Initial Purchaser. The
obligations of the Initial Purchaser to purchase and pay for the Securities as
provided herein on the Closing Date shall be subject to the accuracy of the
representations and warranties on the part of the Company and the Guarantors set
forth in Section 1 hereof as of the date hereof and as of the Closing Date as
though then made and to the timely performance by the Company and the Guarantors
of their covenants and other obligations hereunder, and to each of the following
additional conditions:
          (a) Accountants’ Comfort Letter. On the date hereof, the Initial
Purchaser shall have received from each of Fitts Roberts & Co., P.C., UHY, LLP
and UHY Mann Frankfort Stein & Lipp CPAs, LLP, a letter dated the date hereof
addressed to the Initial Purchaser, in form and substance satisfactory to the
Initial Purchaser, containing statements and information of the type ordinarily
included in accountant’s “comfort letters” to the Initial Purchaser, delivered
according to Statement of Auditing Standards Nos. 71, 72 and 76 (or any
successor bulletins), with respect to the audited and unaudited and pro forma
financial statements and certain financial information contained in the Pricing
Disclosure Package and the Final Offering Memorandum.
          (b) No Material Adverse Change or Ratings Agency Change. For the
period from and after the date of this Agreement and prior to the Closing Date:
     (i) in the reasonable judgment of the Initial Purchaser there shall not
have occurred any Material Adverse Change; and
     (ii) there shall not have occurred any downgrading, nor shall any notice
have been given of any intended or potential downgrading or of any review for a
possible change that does not indicate the direction of the possible change, in
the rating accorded any securities of the Company or any of its subsidiaries by
any “nationally recognized statistical rating organization” as such term is
defined for purposes of Rule 436 under the Securities Act.
          (c) Note Security Documents. On the Closing Date, the Company, each
Guarantor, the Trustee, the Agent and other parties thereto shall have executed
and delivered each of the Notes Security Documents, and the Notes Security
Documents shall be in full force and effect, and the Trustee, for the benefit of
the holders of the Securities, shall have a valid and perfected security
interest in respect of the Collateral securing the obligations of the Company
under the Indenture and such security interest of the holders will not be
subject to or subordinated to any Liens other than Permitted Liens.
          (d) Opinion of Counsel for the Company. On the Closing Date the
Initial Purchaser shall have received the favorable opinion of Chamberlain,
Hrdlicka, White, Williams

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          & Martin, counsel for the Company, dated as of such Closing Date, the
form of which is attached as Exhibit B.
          (e) Opinion of New York Counsel for the Company(f) . On the Closing
Date the Initial Purchaser shall have received the favorable opinion of
Satterlee Stephens Burke & Burke, LLP, New York counsel for the Company, dated
as of such Closing Date, the form of which is attached as Exhibit C.
          (f) Opinion of Counsel for the Initial Purchaser. On the Closing Date
the Initial Purchaser shall have received the favorable opinion of Shearman and
Sterling LLP, counsel for the Initial Purchaser, dated as of such Closing Date,
with respect to such matters as may be reasonably requested by the Initial
Purchaser.
          (g) Officers’ Certificate. On the Closing Date the Initial Purchaser
shall have received a written certificate executed by the Chairman of the Board,
Chief Executive Officer or President of the Company and the Chief Financial
Officer or Chief Accounting Officer of the Company, dated as of the Closing
Date, to the effect set forth in subsection (b) of this Section 5, and further
to the effect that:
     (i) for the period from and after the date of this Agreement and prior to
the Closing Date there has not occurred any Material Adverse Change;
     (ii) the representations, warranties and covenants of the Company and the
Guarantors set forth in Section 1 of this Agreement are true and correct with
the same force and effect as though expressly made on and as of the Closing
Date; and
     (iii) the Company and the Guarantors have complied with all the agreements
and satisfied all the conditions on its part to be performed or satisfied at or
prior to the Closing Date.
          (h) Bring-down Comfort Letter. On the Closing Date the Initial
Purchaser shall have received from each of Fitts Roberts & Co., P.C., UHY, LLP
and UHY Mann Frankfort Stein & Lipp CPAs, LLP, a letter dated such date, in form
and substance satisfactory to the Initial Purchaser, to the effect that they
reaffirm the statements made in the letter furnished by them pursuant to
subsection (a) of this Section 5, except that the specified date referred to
therein for the carrying out of procedures shall be no more than three business
days prior to the Closing Date and that their procedures shall extend to
financial information in the Final Offering Memorandum not contained in the
Pricing Disclosure Package.
          (i) PORTAL Listing. At the Closing Date the Notes shall have been
designated for trading on the PORTAL market.
          (j) Registration Rights Agreement. The Company and each of the
Guarantors shall have entered into the Registration Rights Agreement and the
Initial Purchaser shall have received executed counterparts thereof.

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          (k) Security Agreement and Intercreditor Agreement. The security
granted to The CIT Group/Equipment Financing, Inc. (“CIT”) pursuant to the
security agreements listed as numbers 2, 7, 8, 9 and 10 on Exhibit A to the
release agreement (the “Release Agreement”), to be dated prior to the Closing
Date, among CIT, Quantum Geophysical, Inc., Geophysical Development Corporation,
Trace Energy Services, Ltd., Trace Energy Services, Inc. and the Company, has
been released pursuant to the Release Agreement, and the intercreditor
agreement, dated as of July 28, 2006, by and among PNC Bank, National
Association, as agent, the Lenders as defined therein, CIT and the Borrowers, as
defined therein, shall have been terminated.
          (l) Dissolution of Certain Subsidiaries. The Company shall have
dissolved its two subsidiaries, Quantum Geophysical Services, Inc. and Grant
Services, Inc.
          (m) Additional Documents. On or before the Closing Date, the Initial
Purchaser and counsel for the Initial Purchaser shall have received such
information, documents and opinions as they may reasonably require for the
purposes of enabling them to pass upon the issuance and sale of the Securities
as contemplated herein, or in order to evidence the accuracy of any of the
representations and warranties, or the satisfaction of any of the conditions or
agreements, herein contained.
     If any condition specified in this Section 5 is not satisfied when and as
required to be satisfied, this Agreement may be terminated by the Initial
Purchaser by notice to the Company at any time on or prior to the Closing Date,
which termination shall be without liability on the part of any party to any
other party, except that Section 4, Section 6, Section 8 and Section 9 shall at
all times be effective and shall survive such termination.
SECTION 6. Reimbursement of Initial Purchaser’s Expenses. If this Agreement is
terminated by the Initial Purchaser pursuant to Section 5, or if the sale to the
Initial Purchaser of the Securities on the Closing Date is not consummated
because of any refusal, inability or failure on the part of the Company or any
Guarantor to perform any agreement herein or to comply with any provision
hereof, the Company and the Guarantors, jointly and severally, agree to
reimburse the Initial Purchaser, upon demand, for all out-of-pocket expenses
that shall have been reasonably incurred by the Initial Purchaser in connection
with the proposed purchase and the offering and sale of the Securities,
including but not limited to fees and disbursements of counsel, printing
expenses, travel expenses, postage, facsimile and telephone charges.
SECTION 7. Offer, Sale and Resale Procedures. The Initial Purchaser, on the one
hand, and the Company and each of the Guarantors, on the other hand, hereby
establish and agree to observe the following procedures in connection with the
offer and sale of the Securities:
     (A) Offers and sales of the Securities will be made only by the Initial
Purchaser or its Affiliates qualified to do so in the jurisdictions in which
such offers or sales are made. Each such offer or sale shall only be made to
persons whom the offeror or seller reasonably believes to be qualified
institutional buyers (as defined in Rule 144A under the Securities Act), or
non-U.S. persons outside the United States to whom the offeror or seller
reasonably believes offers and sales of the Securities may be made in reliance
upon Regulation S under the Securities Act, upon the terms and conditions set
forth in Annex I hereto, which Annex I is hereby expressly made a part hereof.

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     (B) The Securities will be offered by approaching prospective Subsequent
Purchasers on an individual basis. No general solicitation or general
advertising (within the meaning of Rule 502 under the Securities Act) will be
used in the United States in connection with the offering of the Securities.
     (C) Upon original issuance by the Company, and until such time as the same
is no longer required under the applicable requirements of the Securities Act,
the Securities (and all securities issued in exchange therefor or in
substitution thereof, other than the Exchange Securities) shall bear the legend
set forth in the Pricing Disclosure Package and the Final Offering Memorandum
under the caption “Notice to Investors.”
     Following the sale of the Securities by the Initial Purchaser to Subsequent
Purchasers pursuant to the terms hereof, the Initial Purchaser shall not be
liable or responsible to the Company or any Guarantor for any losses, damages or
liabilities suffered or incurred by the Company, including any losses, damages
or liabilities under the Securities Act, arising from or relating to any resale
or transfer of any Security.
SECTION 8. Indemnification.
          (a) Indemnification of the Initial Purchaser. Each of the Company and
the Guarantors, jointly and severally, agrees to indemnify and hold harmless the
Initial Purchaser, its directors, officers and employees, and each person, if
any, who controls the Initial Purchaser within the meaning of the Securities Act
and the Exchange Act against any loss, claim, damage, liability or expense, as
incurred, to which the Initial Purchaser or such controlling person may become
subject, under the Securities Act, the Exchange Act or other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of the Company, and/or the Guarantors), insofar as such loss, claim,
damage, liability or expense (or actions in respect thereof as contemplated
below) arises out of or is based: (i) upon any untrue statement or alleged
untrue statement of a material fact contained in the Pricing Disclosure Package
or the Final Offering Memorandum (or any amendment or supplement thereto), or
the omission or alleged omission therefrom of a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; or (ii) in whole or in part upon any inaccuracy
in the representations and warranties of the Company or any Guarantor contained
herein; or (iii) in whole or in part upon any failure of the Company or any
Guarantor to perform its obligations hereunder or under law; or (iv) any act or
failure to act or any alleged act or failure to act by the Initial Purchaser in
connection with, or relating in any manner to, the offering contemplated hereby,
and which is included as part of or referred to in any loss, claim, damage,
liability or action arising out of or based upon any matter covered by clause
(i) above, provided that the Company shall not be liable under this clause (iv)
to the extent that a court of competent jurisdiction shall have determined by a
final judgment that such loss, claim, damage, liability or action resulted
directly from any such acts or failures to act undertaken or omitted to be taken
by the Initial Purchaser through its gross negligence or willful misconduct; and
to reimburse the Initial Purchaser and each such controlling person for any and
all expenses (including the fees and disbursements of counsel chosen by the
Initial Purchaser) as such expenses are reasonably incurred by the Initial
Purchaser or such controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or

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action; provided, however, that the foregoing indemnity agreement shall not
apply to any loss, claim, damage, liability or expense to the extent, but only
to the extent, arising out of or based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in reliance upon and in
conformity with written information furnished to the Company by the Initial
Purchaser expressly for use in the Pricing Disclosure Package or the Final
Offering Memorandum (or any amendment or supplement thereto). The indemnity
agreement set forth in this Section 8(a) shall be in addition to any liabilities
that the Company or the Guarantors may otherwise have.
          (b) Indemnification of the Company, the Guarantors and their
respective Directors and Officers. The Initial Purchaser agrees to indemnify and
hold harmless the Company, the Guarantors, and each of their respective
directors and each person, if any, who controls the Company or any Guarantor
within the meaning of the Securities Act or the Exchange Act, against any loss,
claim, damage, liability or expense, as incurred, to which the Company or any
Guarantor or any such director, or controlling person may become subject, under
the Securities Act, the Exchange Act, or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Initial Purchaser), insofar as such loss, claim, damage, liability or expense
(or actions in respect thereof as contemplated below) arises out of or is based
upon any untrue or alleged untrue statement of a material fact contained in the
Pricing Disclosure Package or the Final Offering Memorandum (or any amendment or
supplement thereto), or arises out of or is based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Pricing Disclosure
Package or the Final Offering Memorandum (or any amendment or supplement
thereto), in reliance upon and in conformity with written information furnished
to the Company by the Initial Purchaser expressly for use therein; and to
reimburse the Company, the Guarantors, or any such director or controlling
person for any legal and other expenses reasonably incurred by the Company, the
Guarantors, or any such director or controlling person in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action. The Company and each Guarantor hereby
acknowledges that the only information that the Initial Purchaser has furnished
to the Company expressly for use in the Pricing Disclosure Package and the Final
Offering Memorandum (or any amendment or supplement thereto) are the statements
set forth in the tenth paragraph, concerning stabilization by the Initial
Purchaser, under the caption “Plan of Distribution” in the Pricing Disclosure
Package and the Final Offering Memorandum; and the Initial Purchaser confirms
that such statements are correct. The indemnity agreement set forth in this
Section 8(b) shall be in addition to any liabilities that the Initial Purchaser
may otherwise have.
          (c) Notifications and Other Indemnification Procedures. Promptly after
receipt by an indemnified party under this Section 8 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 8, notify
the indemnifying party in writing of the commencement thereof, but the omission
so to notify the indemnifying party will not relieve it from any liability which
it may have to any indemnified party for contribution or otherwise than under
the indemnity agreement contained in this Section 8 or to the extent it is not
prejudiced as

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a proximate result of such failure. In case any such action is brought against
any indemnified party and such indemnified party seeks or intends to seek
indemnity from an indemnifying party, the indemnifying party will be entitled to
participate in and, to the extent that it shall elect, jointly with all other
indemnifying parties similarly notified, by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party; provided, however, if the defendants in
any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that a conflict may
arise between the positions of the indemnifying party and the indemnified party
in conducting the defense of any such action or that there may be legal defenses
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on behalf of
such indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of such indemnifying party’s election so to
assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified party
under this Section 8 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (together with local counsel), approved by the indemnifying
party, representing the indemnified parties who are parties to such action) or
(ii) the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action, in each of which cases the fees and
expenses of counsel shall be at the expense of the indemnifying party.
          (d) Settlements. The indemnifying party under this Section 8 shall not
be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
against any loss, claim, damage, liability or expense by reason of such
settlement or judgment. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement, compromise or consent
to the entry of judgment in any pending or threatened action, suit or proceeding
in respect of which any indemnified party is or could have been a party and
indemnity was or could have been sought hereunder by such indemnified party,
unless such settlement, compromise or consent includes an unconditional release
of such indemnified party from all liability on claims that are the subject
matter of such action, suit or proceeding.
SECTION 9. Contribution. If the indemnification provided for in Section 8 is for
any reason held to be unavailable to or otherwise insufficient to hold harmless
an indemnified party in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then (i) each indemnifying party shall contribute
to the aggregate amount paid or payable by such indemnified party, as incurred,
as a result of any losses, claims, damages, liabilities or expenses referred to
therein in such proportion as is appropriate to reflect the relative benefits
received by the Company, on the one hand, and the Initial Purchaser, on the
other hand, from the offering of the Securities pursuant to this Agreement or
(ii) if the allocation provided by clause (i) above is not

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permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company and the Guarantors, on the one hand, and the Initial
Purchaser, on the other hand, in connection with the statements or omissions or
inaccuracies in the representations and warranties herein which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Guarantors, on the one hand, and the Initial Purchaser, on the other hand, in
connection with the offering of the Securities pursuant to this Agreement shall
be deemed to be in the same respective proportions as the total net proceeds
from the offering of the Securities pursuant to this Agreement (before deducting
expenses) received by the Company or the Guarantors, and the total discount
received by the Initial Purchaser bear to the aggregate initial offering price
of the Securities. The relative fault of the Company and the Guarantors, on the
one hand, and the Initial Purchaser, on the other hand, shall be determined by
reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact or any such inaccurate or alleged inaccurate representation or warranty
relates to information supplied by the Company or the Guarantors, on the one
hand, or the Initial Purchaser, on the other hand, and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
     The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Section 8, any legal or other fees or
expenses reasonably incurred by such party in connection with investigating or
defending any action or claim. The provisions set forth in Section 8 with
respect to notice of commencement of any action shall apply if a claim for
contribution is to be made under this Section 9; provided, however, that no
additional notice shall be required with respect to any action for which notice
has been given under Section 8 for purposes of indemnification.
     The Company, the Guarantors and the Initial Purchaser agree that it would
not be just and equitable if contribution pursuant to this Section 9 were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in this
Section 9.
     Notwithstanding the provisions of this Section 9, the Initial Purchaser
shall not be required to contribute any amount in excess of the discount
received by the Initial Purchaser in connection with the Securities distributed
by it. No person guilty of fraudulent misrepresentation (within the meaning of
Section 11 of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 9, each director, officer and employee of the Initial Purchaser and
each person, if any, who controls an Initial Purchaser within the meaning of the
Securities Act and the Exchange Act shall have the same rights to contribution
as the Initial Purchaser, and each director of the Company or any Guarantor, and
each person, if any, who controls the Company or any Guarantor within the
meaning of the Securities Act and the Exchange Act shall have the same rights to
contribution as the Company or any Guarantor.
SECTION 10. Termination of this Agreement. Prior to the Closing Date, this
Agreement may be terminated by the Initial Purchaser by notice given to the
Company if at any time: (i) trading

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in securities generally on either the Nasdaq Stock Market or the New York Stock
Exchange shall have been suspended or limited, or minimum or maximum prices
shall have been generally established on any of such stock exchanges by the
Commission or the NASD; (ii) a general banking moratorium shall have been
declared by any of federal, New York or California authorities; (iii) there has
been a material disruption in commercial banking or securities settlement,
payment or clearance services in the United States; (iv) there shall have
occurred any outbreak or escalation of national or international hostilities or
any crisis or calamity, or any change in the United States or international
financial markets, or any substantial change or development involving a
prospective substantial change in United States’ or international political,
financial or economic conditions, as in the reasonable judgment of the Initial
Purchaser is material and adverse and makes it impracticable to market the
Securities in the manner and on the terms described in the Pricing Disclosure
Package and the Final Offering Memorandum or to enforce contracts for the sale
of securities; (v) in the reasonable judgment of the Initial Purchaser there
shall have occurred any Material Adverse Change; or (vi) the Company or any
Guarantor shall have sustained a loss by strike, fire, flood, earthquake,
accident or other calamity of such character as in the reasonable judgment of
the Initial Purchaser may interfere materially with the conduct of the business
and operations of the Company regardless of whether or not such loss shall have
been insured. Any termination pursuant to this Section 10 shall be without
liability on the part of (i) the Company or any Guarantor to any Initial
Purchaser, except that the Company and the Guarantors shall be obligated to
reimburse the expenses of the Initial Purchaser pursuant to Sections 4 and 6
hereof, (ii) the Initial Purchaser to the Company or any Guarantor, or (iii) any
party hereto to any other party except that the provisions of Section 8 and
Section 9 shall at all times be effective and shall survive such termination.
SECTION 11. Representations and Indemnities to Survive Delivery. The respective
indemnities, agreements, representations, warranties and other statements of the
Company and the Guarantors, of their respective officers and of the Initial
Purchaser set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation made by or on behalf of the
Initial Purchaser or the Company or the Guarantors or any of its or their
respective partners, officers or directors or any controlling person, as the
case may be, and will survive delivery of and payment for the Securities sold
hereunder and any termination of this Agreement.
SECTION 12. Notices. All communications hereunder shall be in writing and shall
be mailed, hand delivered or telecopied and confirmed to the parties hereto as
follows:
If to the Initial Purchaser:
RBC Capital Markets Corporation
1211 Avenue of the Americas, 32nd Floor
New York, NY 10036
Facsimile: 212-703-2295
Attention: High Yield Capital Markets
with a copy to:
Shearman & Sterling LLP

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599 Lexington Avenue
New York, NY 10022
Facsimile: 646-848-7835
Attention: Bruce Czachor, Esq.
If to the Company or the Guarantors:
Geokinetics, Inc.
One Riverway, Suite 2100
Houston, Texas 77056
Facsimile: 281-398-9996
Attention: Scott A. McCurdy, Vice President and Chief Financial Officer
with a copy to:
Chamberlain, Hrdlicka, White, Williams & Martin
1200 Smith Street, Suite 1400
Houston, Texas 77002
Facsimile: (713) 658-2553
Attention: James J. Spring, III
     Any party hereto may change the address for receipt of communications by
giving written notice to the others.
SECTION 13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto, including any substitute Initial Purchaser or
Initial Purchasers pursuant to Section 16 hereof, and to the benefit of the
employees, officers and directors and controlling persons referred to in
Section 8 and Section 9, and in each case their respective successors, and no
other person will have any right or obligation hereunder. The term “successors”
shall not include any purchaser of the Securities as such from the Initial
Purchaser merely by reason of such purchase.
SECTION 14. Partial Unenforceability. The invalidity or unenforceability of any
Section, paragraph or provision of this Agreement shall not affect the validity
or enforceability of any other Section, paragraph or provision hereof. If any
Section, paragraph or provision of this Agreement is for any reason determined
to be invalid or unenforceable, there shall be deemed to be made such minor
changes (and only such minor changes) as are necessary to make it valid and
enforceable.
SECTION 15. Governing Law Provisions. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.
     (a) Consent to Jurisdiction. Any legal suit, action or proceeding arising
out of or based upon this Agreement or the transactions contemplated hereby
(“Related Proceedings”) may be instituted in the federal courts of the United
States of America located in the City and County of New York or the courts of
the State of New York in each case located in the City and County of New York
(collectively, the “Specified Courts”), and each party irrevocably submits to
the non-

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exclusive jurisdiction (except for proceedings instituted in regard to the
enforcement of a judgment of any such court (a “Related Judgment”), as to which
such jurisdiction is non-exclusive) of such courts in any such suit, action or
proceeding. Service of any process, summons, notice or document by mail to such
party’s address set forth above shall be effective service of process for any
suit, action or other proceeding brought in any such court. The parties
irrevocably and unconditionally waive any objection to the laying of venue of
any suit, action or other proceeding in the Specified Courts and irrevocably and
unconditionally waive and agree not to plead or claim in any such court that any
such suit, action or other proceeding brought in any such court has been brought
in an inconvenient forum.
     (b) Waiver of Immunity. With respect to any Related Proceeding, each party
irrevocably waives, to the fullest extent permitted by applicable law, all
immunity (whether on the basis of sovereignty or otherwise) from jurisdiction,
service of process, attachment (both before and after judgment) and execution to
which it might otherwise be entitled in the Specified Courts, and with respect
to any Related Judgment, each party waives any such immunity in the Specified
Courts or any other court of competent jurisdiction, and will not raise or claim
or cause to be pleaded any such immunity at or in respect of any such Related
Proceeding or Related Judgment, including, without limitation, any immunity
pursuant to the United States Foreign Sovereign Immunities Act of 1976, as
amended.
SECTION 16. No Fiduciary Duty. The Company and each Guarantor hereby
acknowledges that the Initial Purchaser is acting solely as an initial purchaser
in connection with the purchase and sale of the Securities. The Company further
acknowledges that the Initial Purchaser is acting pursuant to a contractual
relationship created solely by this Agreement entered into on an arm’s length
basis and in no event do the parties intend that the Initial Purchaser act or be
responsible as a fiduciary to the Company or any Guarantor, their management,
stockholders, creditors or any other person in connection with any activity that
the Initial Purchaser may undertake or has undertaken in furtherance of the
purchase and sale of the Securities, either before or after the date hereof. The
Initial Purchaser hereby expressly disclaims any fiduciary or similar
obligations to the Company or any Guarantor, either in connection with the
transactions contemplated by this Agreement or any matters leading up to such
transactions, and the Company and each Guarantor hereby confirms its
understanding and agreement to that effect. The Company, each Guarantor and the
Initial Purchaser agree that they are each responsible for making their own
independent judgments with respect to any such transactions, and that any
opinions or views expressed by the Initial Purchaser to the Company or any
Guarantor regarding such transactions, including but not limited to any opinions
or views with respect to the price or market for the Securities, do not
constitute advice or recommendations to the Company or any Guarantor. The
Company and each Guarantor hereby waives and releases, to the fullest extent
permitted by law, any claims that the Company or any Guarantor may have against
the Initial Purchaser with respect to any breach or alleged breach of any
fiduciary or similar duty to the Company or any Guarantor in connection with the
transactions contemplated by this Agreement or any matters leading up to such
transactions.
SECTION 17. General Provisions. This Agreement constitutes the entire agreement
of the parties to this Agreement and supersedes all prior written or oral and
all contemporaneous oral agreements, understandings and negotiations with
respect to the subject matter hereof. This Agreement may be executed in two or
more counterparts, each one of which shall be an original,

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with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement may not be amended or modified unless in writing by
all of the parties hereto, and no condition herein (express or implied) may be
waived unless waived in writing by each party whom the condition is meant to
benefit. The Table of Contents and the section headings herein are for the
convenience of the parties only and shall not affect the construction or
interpretation of this Agreement.

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     If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to the Company the enclosed copies hereof, whereupon this
instrument, along with all counterparts hereof, shall become a binding agreement
in accordance with its terms.

            Very truly yours,

Geokinetics Inc.
      By:    /s/ Scott A. McCurdy       Scott A. McCurdy, Vice President       
        Geokinetics Holdings, Inc.
      By:    /s/ Scott A. McCurdy       Scott A. McCurdy, Vice President       
        Quantum Geophysical, Inc.
      By:    /s/ Scott A. McCurdy       Scott A. McCurdy, Vice President       
        Geophysical Development Corporation
      By:    /s/ Scott A. McCurdy       Scott A. McCurdy, Vice President       
     

Purchase Agreement

 

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            Trace Energy Services, Inc.
      By:    /s/ Scott A. McCurdy       Scott A. McCurdy, Vice President       
        Grant Geophysical, Inc.
      By:    /s/ Scott A. McCurdy       Scott A. McCurdy, Vice President       
        Grant Geophysical Corp.
      By:    /s/ Scott A. McCurdy       Scott A. McCurdy, Vice President       
        Grant Geophysical (Int’l), Inc.
      By:    /s/ Scott A. McCurdy       Scott A. McCurdy, Vice President       
        Advanced Seismic Technology, Inc.
      By:    /s/ Scott A. McCurdy       Scott A. McCurdy, Vice President       
     

Purchase Agreement

 

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     The foregoing Purchase Agreement is hereby confirmed and accepted by the
Initial Purchaser as of the date first above written.

          RBC Capital Markets Corporation    
 
       
By:
       
 
 
 
Name: David Capaldi    
 
  Title: Director    

Purchase Agreement

 

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SCHEDULE A

              Aggregate       Principal       Amount of       Securities to be  
Initial Purchaser   Purchased  
RBC Capital Markets Corporation
  $ 110,000,000  
 
       
Total
  $ 110,000,000  
 
     

Schedule A-1

 

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SCHEDULE B
Advanced Seismic Technology, Inc.
Geokinetics Holdings, Inc.
Geophysical Development Corporation
Grant Geophysical Corp.
Grant Geophysical, Inc.
Grant Geophysical (Int’l), Inc.
Quantum Geophysical, Inc.
Trace Energy Services, Inc.
Exhibit B-1

 

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EXHIBIT A
Exhibit A-1

 

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EXHIBIT B
     Opinion of counsel for the Company to be delivered pursuant to Section 5(d)
of the Purchase Agreement.
     (i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.
     (ii) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the Pricing
Disclosure Package and the Final Offering Memorandum and to enter into and
perform its obligations under the Purchase Agreement, the Registration Rights
Agreement, the Indenture, the Securities and the Exchange Securities.
     (iii) The Company is duly qualified as a foreign corporation to transact
business and is in good standing in each other jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except for such jurisdictions where the
failure to so qualify or to be in good standing would not, individually or in
the aggregate, result in a Material Adverse Change.
     (iv) Each Guarantor has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Pricing Disclosure
Package and the Final Offering Memorandum and, to the best knowledge of such
counsel, is duly qualified as a foreign corporation to transact business and is
in good standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except for such jurisdictions where the failure to so qualify or to be
in good standing would not, individually or in the aggregate, result in a
Material Adverse Change.
     (v) The Purchase Agreement has been duly authorized, executed and delivered
by the Company and each Guarantor.
     (vi) The Registration Rights Agreement has been duly authorized, executed
and delivered by the Company.
     (vii) The Indenture has been duly authorized, executed and delivered by the
Company and each Guarantor.
     (viii) The Notes are in the form contemplated by the Indenture, have been
duly authorized by the Company for issuance and sale pursuant to this Agreement
and the Indenture.
     (ix) The Exchange Notes have been duly and validly authorized for issuance
by the Company.
     (x) The Guarantees of the Notes and the Exchange Notes are in the
respective forms contemplated by the Indenture, have been duly authorized for
issuance and sale pursuant to this
Exhibit B-1

 

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Agreement and the Indenture and, at the Closing Date, will have been duly
executed by each of the Guarantors.
     (xi) The Securities and the Indenture conform in all material respects to
the descriptions thereof contained in the Pricing Disclosure Package and the
Final Offering Memorandum.
     (xii) The statements in the Pricing Disclosure Package and the Final
Offering Memorandum under the captions “Description of Other Indebtedness,”
“Description of the Notes,” “Material U.S. Federal Income Tax Considerations”
and “Notice to Investors,” insofar as such statements constitute matters of law,
summaries of legal matters, the Company’s charter or by-law provisions,
documents or legal proceedings, or legal conclusions, have been reviewed by such
counsel and fairly present and summarize, in all material respects, the matters
referred to therein.
     (xiii) No consent, approval, authorization or other order of, or
registration or filing with, any court or other governmental or regulatory
authority or agency, is required for the Company’s execution, delivery and
performance of the Operative Documents, or the issuance and delivery of the
Securities or the Exchange Securities, or consummation of the transactions
contemplated hereby and thereby and by the Pricing Disclosure Package and the
Final Offering Memorandum, except such as have been obtained or made by the
Company and are in full force and effect under the Securities Act, applicable
state securities or blue sky laws and except such as may be required by federal
and state securities laws with respect to the Company’s obligations under the
Registration Rights Agreement, and filings necessary to perfect the secured
interests in the Collateral.
     (xiv) The execution and delivery of the Operative Documents by the Company
and the performance by the Company of its obligations thereunder: (i) have been
duly authorized by all necessary corporate action on the part of the Company;
(ii) will not result in any violation of the provisions of the charter or
by-laws of the Company or any subsidiary; (iii) will not constitute a breach of,
or Default or a Debt Repayment Triggering Event under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property or assets of
the Company or any of its subsidiaries pursuant to, the PNC Credit Facility, or
to the best knowledge of such counsel, any other material Existing Instrument;
or (iv) to the best knowledge of such counsel, will not result in any violation
of any law, administrative regulation or administrative or court decree
applicable to the Company or any subsidiary.
     (xv) The Company is not, and after receipt of payment for the Securities
will not be, an “investment company” within the meaning of Investment Company
Act.
     (xvi) To the best knowledge of such counsel, neither the Company nor any
subsidiary is in violation of its charter or by-laws or any law, administrative
regulation or administrative or court decree applicable to the Company or any
subsidiary or is in Default in the performance or observance of any obligation,
agreement, covenant or condition contained in any material Existing Instrument,
except in each such case for such violations or Defaults as would not,
individually or in the aggregate, result in a Material Adverse Change.
Exhibit B-2

 

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     (xvii) Assuming the accuracy of the representations, warranties and
covenants of the Company and the Initial Purchaser contained herein, no
registration of the Notes or the Guarantees under the Securities Act, and no
qualification of an indenture under the Trust Indenture Act with respect
thereto, is required in connection with the purchase of the Securities by the
Initial Purchaser or the initial resale of the Securities by the Initial
Purchaser to Qualified Institutional Buyers in the manner contemplated by this
Agreement and the Pricing Disclosure Package and the Final Offering Memorandum
other than any registration or qualification that may be required in connection
with the Exchange Offer contemplated by the Pricing Disclosure Package and the
Final Offering Memorandum or in connection with the Registration Rights
Agreement. Such counsel need express no opinion, however, as to when or under
what circumstances any Initial Notes initially sold by the Initial Purchaser may
be reoffered or resold.
     In addition, such counsel shall deliver opinions relating to the Notes
Security Documents substantially similar in all material respects to the
opinions such counsel delivered to PNC in June.
     In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company,
representatives of the independent public or certified public accountants for
the Company and with representatives of the Initial Purchaser at which the
contents of the Pricing Disclosure Package and the Final Offering Memorandum,
and any supplements or amendments thereto, and related matters were discussed
and, although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Pricing Disclosure Package and the Final Offering Memorandum
(other than as specified above), and any supplements or amendments thereto, on
the basis of the foregoing, nothing has come to their attention which would lead
them to believe that (i) the Pricing Disclosure Package (other than the
financial statements and other financial data contained therein or omitted
therefrom, as to which they are not requested to comment), as of the Time of
Execution, contained an untrue statement of a material fact or omitted to state
a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading, or (ii) the
Final Offering Memorandum (other than the financial statements and other
financial data contained therein or omitted therefrom, as to which they are not
requested to comment), as of its date or the Closing Date, contained or contains
an untrue statement of a material fact or omitted or omits to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
     In rendering such opinion, such counsel may rely as to matters involving
the application of laws of any jurisdiction other than the General Corporation
Law of the State of Delaware, the laws of the State of New York or the federal
law of the United States, to the extent they deem proper and specified in such
opinion, upon the opinion (which shall be dated the Closing Date shall be
satisfactory in form and substance to the Initial Purchaser, shall expressly
state that the Initial Purchaser may rely on such opinion as if it were
addressed to it and shall be furnished to the Initial Purchaser) of other
counsel of good standing whom they believe to be reliable and who are
satisfactory to counsel for the Initial Purchaser; provided, however, that such
counsel shall further state that they believe that they and the Initial
Purchaser is justified in relying upon such opinion of other counsel, and as to
matters of fact, to the extent they deem proper, on certificates of responsible
officers of the Company and public officials.
Exhibit B-3

 

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EXHIBIT C
Opinion of New York counsel for the Company to be delivered pursuant to Section
5(e) of the Purchase Agreement.
     (i) The Purchase Agreement is enforceable in accordance with its terms,
except as rights to indemnification thereunder may be limited by applicable law
and except as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable principles.
     (ii) The Registration Rights Agreement is enforceable in accordance with
its terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting the rights and remedies of creditors or by general equitable
principles and except as rights to indemnification may be limited by applicable
law.
     (iii) The Intercreditor Agreement is enforceable in accordance with its
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting the rights and remedies of creditors or by general equitable
principles and except as rights to indemnification may be limited by applicable
law.
     (iv) The Note Security Documents are enforceable in accordance with their
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting the rights and remedies of creditors or by general equitable
principles and except as rights to indemnification may be limited by applicable
law
     (v) The Indenture (assuming due authorization, execution and delivery
thereof by the Trustee) constitutes a valid and binding agreement of the Company
and each Guarantor, enforceable against the Company and each Guarantor in
accordance with its terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by general
principles of equity.
     (vi) The Notes are in the form contemplated by the Indenture and, when
executed by the Company and authenticated by the Trustee in the manner provided
in the Indenture (assuming the due authorization, execution and delivery of the
Indenture by the Trustee) and delivered against payment of the purchase price
therefor, will constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium, or similar laws relating to or affecting enforcement of the rights
and remedies of
Exhibit C-1

 

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creditors or by general principles of equity and will be entitled to the
benefits of the Indenture.
     (vii) The Exchange Notes, when issued and authenticated in accordance with
the terms of the Indenture, the Registration Rights Agreement and the Exchange
Offer, will constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium, or
similar laws relating to or affecting enforcement of the rights and remedies of
creditors or by general principles of equity and will be entitled to the
benefits of the Indenture.
     (viii) The Guarantees of the Notes and the Exchange Notes are in the
respective forms contemplated by the Indenture and, when the Notes and Exchange
Notes have been authenticated in the manner provided in the Indenture and
delivered against payment of the purchase price therefor, will constitute valid
and binding agreements of the Guarantors, enforceable in accordance with their
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting the rights and remedies of creditors or by general equitable
principles and will be entitled to the benefits of the Indenture.
Exhibit C-2

 

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ANNEX I
     Resale Pursuant to Regulation S or Rule 144A. The Initial Purchaser
understands that:
     The Initial Purchaser agrees that it has not offered or sold and will not
offer or sell the Securities in the United States or to, or for the benefit or
account of, a U.S. Person (other than a distributor), in each case, as defined
in Rule 902 under the Securities Act (i) as part of its distribution at any time
and (ii) otherwise until 40 days after the later of the commencement of the
offering of the Securities pursuant hereto and the Closing Date, other than in
accordance with Regulation S of the Securities Act or another exemption from the
registration requirements of the Securities Act. The Initial Purchaser agrees
that, during such 40-day restricted period, it will not cause any advertisement
with respect to the Securities (including any “tombstone” advertisement) to be
published in any newspaper or periodical or posted in any public place and will
not issue any circular relating to the Securities, except such advertisements as
are permitted by and include the statements required by Regulation S.
     The Initial Purchaser agrees that, at or prior to confirmation of a sale of
Securities by it to any distributor, dealer or person receiving a selling
concession, fee or other remuneration during the 40-day restricted period
referred to in Rule 903 under the Securities Act, it will send to such
distributor, dealer or person receiving a selling concession, fee or other
remuneration a confirmation or notice to substantially the following effect:
“The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933, as amended (the “Securities Act”), and may not be
offered and sold within the United States or to, or for the account or benefit
of, U.S. persons (i) as part of your distribution at any time or (ii) otherwise
until 40 days after the later of the date the Notes were first offered to
persons other than “distributors” (as defined in Regulation S) in reliance upon
Regulation S and the Closing Date, except in either case in accordance with
Regulation S under the Securities Act (or Rule 144A or to Accredited
Institutions in transactions that are exempt from the registration requirements
of the Securities Act), and in connection with any subsequent sale by you of the
Notes covered hereby in reliance on Regulation S during the period referred to
above to any distributor, dealer or person receiving a selling concession, fee
or other remuneration, you must deliver a notice to substantially the foregoing
effect. Terms used above have the meanings assigned to them in Regulation S.”
Annex I-1