Exhibit 10.2

 

AMENDMENT AND

EXCHANGE AGREEMENT

 

This Amendment and Exchange Agreement, dated December 2, 2009, by and among
Geokinetics Inc., (the “Corporation”), Avista Capital Partners, L.P. (“Avista
Domestic”), Avista Capital Partners (Offshore), L.P. (“Avista Offshore” and
together with Avista Domestic, “Avista”), and Levant America S.A. (“Levant,” and
together with Avista, the “Holders”).  Capitalized terms not otherwise defined
herein shall have the meanings specified for such terms in the Second Amended
Certificate of Designation of Series B Senior Convertible Preferred Stock of
Geokinetics Inc. filed with the Secretary of State of the State of Delaware
February 23, 2009 (the “Certificate of Designation”).

 

WHEREAS, simultaneous with the execution and delivery of this Agreement the
Company is entering an agreement to acquire the world-wide, on-shore seismic
business and on-shore multi-client library business of Petroleum Geo-Services
ASA and certain of its subsidiaries (collectively, “Pegasus”) (the
“Acquisition”); and

 

WHEREAS, as partial payment for the purchase price in the Acquisition, the
Company has agreed to issue shares of Common Stock (as hereinafter defined)
pursuant to the definitive agreement for the Acquisition to Pegasus;

 

WHEREAS, in connection with the financing of the Acquisition and for other good
and valid reasons, the Company is contemplating making a public offering (the
“Public Offering”) of shares of its common stock, par value $0.01 per share (the
“Common Stock”) ; and

 

WHEREAS, in order to consummate the Acquisition and the Public Offering, the
Company has requested that (a) the Holders agree to certain changes to the terms
of the Series B-1 Senior Convertible Preferred Stock of the Corporation held by
them, as reflected in the Certificate of Designation and (b) that Avista agree
to exchange (the “Exchange”) the outstanding shares of Series B-2 Senior
Convertible Preferred Stock of the Corporation for newly issued shares of a new
series of preferred stock designated “Series C Preferred Stock” (“Series C
Preferred Stock”); and

 

WHEREAS, subject to the terms and conditions set forth herein, the Holders have
agreed to consent to the changes in the terms of the Series B-1 Convertible
Preferred Stock of the Corporation as requested by the Corporation and Avista
has agreed to exchange the shares of Series B-2 Convertible Preferred Stock it
holds; and

 

WHEREAS, in consideration for the Holders (or, in the case of Avista, Avista
Capital Holdings, L.P.) consenting to the aforementioned changes in terms of the
Series B-1 Convertible Preferred Stock and the Exchange, the Corporation has
agreed to pay the Holders an aggregate fee equal to 2% of (a) Liquidation
Preference Amount of the outstanding Series B Preferred Shares and (b) accrued
but unpaid dividends at the time of such payment (the “Consent Fee”), and has
agreed to issue 750,000 shares of Common Stock to Avista; and

 

NOW THEREFOR, in consideration of the foregoing, the Corporation and the Holders
agree as follows:

 

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1.             CONSENT.

 

EACH OF THE HOLDERS HEREBY CONSENTS TO:

 

(A)           THE AMENDMENT AND RESTATEMENT OF THE CERTIFICATE OF DESIGNATION IN
THE FORM ATTACHED HERETO AS EXHIBIT 1 (THE “AMENDMENT”), AND THE FILING OF THE
AMENDMENT AS PART OF THE CERTIFICATE OF INCORPORATION OF THE CORPORATION WITH
THE SECRETARY OF STATE OF THE STATE OF DELAWARE, SUBJECT TO THE SATISFACTION OF
THE CONDITIONS SET FORTH IN PARAGRAPH 2 HEREOF.

 

(B)           THE ADOPTION BY THE COMPANY OF A NEW CLASS OF A NEW CLASS OF
SHARES, THE SERIES C PREFERRED STOCK, OR THE TERMS SET FORTH ON THE CERTIFICATE
OF DESIGNATION OF SERIES C PREFERRED STOCK OF GEOKINETICS, INC. SET FORTH AS
EXHIBIT 2 HERETO (THE “SERIES C CERTIFICATE”).

 

(C)           THIS CONSENT SHALL EXPIRE IF THE CONDITIONS SET FORTH IN SECTION 2
HAVE NOT BEEN FULLY SATISFIED AND THE AMENDMENT AND THE SERIES C CERTIFICATE
HAVE NOT BEEN FILED WITH THE SECRETARY OF STATE OF THE STATE OF DELAWARE, AS
AMENDMENTS TO THE CERTIFICATE OF INCORPORATION OF THE CORPORATION IN DELAWARE BY
FEBRUARY 15, 2010.

 

2.             CONDITIONS.

 

(A)           THE CONSENT OF THE HOLDERS SET FORTH IN SECTION 1 IS SUBJECT TO
SATISFACTION OF THE FOLLOWING CONDITIONS: (A) THE CONSUMMATION OF EITHER (I) THE
PUBLIC OFFERING (AS HEREINAFTER DEFINED), OR (II) THE ACQUISITION HAS OCCURRED;
(B) THE PAYMENT OF THE CONSENT FEE BY THE CORPORATION TO THE HOLDERS SUCH FEE TO
BE PAID TO EACH OF THE HOLDERS IN THE PERCENTAGES SET FORTH IN EXHIBIT 3, BY
WIRE TRANSFER TO THE ACCOUNTS SPECIFIED IN EXHIBIT 3 OR OTHERWISE DESIGNATED IN
WRITING BY ANY HOLDER TO THE CORPORATION AND (C) THE ISSUANCE TO AVISTA OF AN
AGGREGATE OF 750,000 SHARES OF COMMON STOCK (OF WHICH 156,500 SHARES OF COMMON
STOCK SHALL BE ISSUED TO AVISTA OFFSHORE AND 593,500 SHARES SHALL BE ISSUED TO
AVISTA DOMESTIC, UNLESS AVISTA INSTRUCTS THE CORPORATION TO SUCH SHARES OF
COMMON STOCK IN DIFFERENT PROPORTIONS) (THE “AVISTA COMMON STOCK”) AS
CONSIDERATION FOR THE EXCHANGE.  FOR ALL PURPOSES OF THIS AGREEMENT, THE TERM
“PUBLIC OFFERING” SHALL BE DEEMED TO INCLUDE ANY SALE, OFFER OR ISSUANCE OF
SHARES OF COMMON STOCK BY THE CORPORATION, IN AN OFFERING REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR EXEMPT FROM
REGISTRATION UNDER THE SECURITIES ACT PURSUANT TO SECTION 4 THEREOF, OR
RULE 144A OR REGULATION D PROMULGATED UNDER THE SECURITIES ACT (OTHER THAN THE
ISSUANCE OF SHARES OF COMMON STOCK PURSUANT TO OPTIONS, WARRANTS, CONVERTIBLE
SECURITIES OR SIMILAR SECURITIES OUTSTANDING AS OF THE DATE THE AMENDMENT IS
FILED WITH THE SECRETARY OF STATE OF THE STATE OF DELAWARE OR SHARES ISSUED AS
CONSIDERATION IN THE ACQUISITION) WHICH OCCURS AT ANY TIME ON OR PRIOR TO
JUNE 30, 2010.

 

(B)           NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH HEREIN, IN NO
EVENT SHALL (I) THE AGGREGATE NUMBER OF SHARES OF COMMON STOCK ISSUED IN
CONNECTION WITH THE ACQUISITION AND THE PUBLIC OFFERING EXCEED EIGHT MILLION
SEVEN HUNDRED FIFTY THOUSAND (8,750,000)  OR (II) THE AGGREGATE NUMBER OF SHARES
OF COMMON STOCK ISSUED IN CONNECTION WITH THE PUBLIC OFFERING (INCLUDING ANY
SHARES OF COMMON STOCK ISSUED PURSUANT TO ANY, “OVER-ALLOTMENT” OR “GREEN SHOE”
OPTION) EXCEED FIVE MILLION SEVEN HUNDRED FIFTY THOUSAND (5,750,000).

 

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3.             CLOSING.

 

(A)           THE CLOSING OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT
(THE “CLOSING”), INCLUDING THE EXCHANGE OF THE SERIES B-2 PREFERRED STOCK FOR
SERIES C PREFERRED STOCK AND THE ISSUANCE OF THE AVISTA COMMON STOCK SHALL OCCUR
SIMULTANEOUSLY WITH THE EARLIER TO OCCUR OF THE CONSUMMATION OF THE ACQUISITION
OR THE PUBLIC OFFERING.  THE CLOSING SHALL OCCUR AT THE OFFICES OF HAYNES AND
BOONE, ONE HOUSTON CENTER, 1221 MCKINNEY STREET, SUITE 2100, HOUSTON, TEXAS
77002, AT 10:00 A.M. LOCAL TIME, SIMULTANEOUS WITH THE CLOSING OF THE [PEGASUS
TRANSACTION].  THE DATE UPON WHICH THE CLOSING OCCURS SHALL BE REFERRED TO
HEREIN AS THE “CLOSING DATE”.

 

(B)           AT THE CLOSING, THE COMPANY SHALL DELIVER TO AVISTA DULY ENDORSED
CERTIFICATES REPRESENTING A NUMBERED SHARES OF SERIES C PREFERRED STOCK EQUAL TO
THE NUMBERED SHARES OF SERIES B-2 PREFERRED STOCK OWNED BY AVISTA, PLUS ACCRUED
BUT UNPAID DIVIDENDS DIVIDED BY $250, AND THE AVISTA COMMON STOCK IN
CONSIDERATION FOR THE EXCHANGE.  AT THE CLOSING, AVISTA SHALL DELIVER TO THE
CORPORATION CERTIFICATES REPRESENTING ALL OF THE SHARES OF SERIES B-2 PREFERRED
STOCK OWNED BY IT, DULY ENDORSED OR WITH STOCK POWERS DULY ENDORSED BY IT IN
BLANK.

 

(C)           AT THE CLOSING, THE CORPORATION SHALL PAY THE CONSENT FEES TO THE
HOLDERS  (OR, IN THE CASE OF AVISTA, AVISTA CAPITAL HOLDINGS, L.P.) IN THE
PROPORTIONS SPECIFIED ON SCHEDULE 3 IN CONSIDERATION FOR THE AMENDMENTS TO THE
SERIES B-1 PREFERRED STOCK REFLECTED IN THE AMENDMENT.

 

(D)           THE CERTIFICATES REPRESENTING THE AVISTA COMMON STOCK AND THE
SERIES C PREFERRED STOCK SHALL SET FORTH IN A PROMINENT PLACE THE FOLLOWING
LEGEND:

 

THE SECURITIES REPRESENTED HEREBY MAY NOT BE TRANSFERRED UNLESS (I) SUCH
SECURITIES HAVE BEEN REGISTERED FOR SALE PURSUANT TO THE SECURITIES ACT OF 1933,
AS AMENDED, (II) SUCH SECURITIES ARE SOLD PURSUANT TO RULE 144 UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR (III) THE COMPANY HAS RECEIVED AN OPINION
OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH TRANSFER MAY LAWFULLY BE MADE
WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933 OR QUALIFICATION UNDER
APPLICABLE STATE SECURITIES LAWS.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY THE
SECURITIES.

 

4.             WAIVER AND CONSENT.

 

(A)           EACH OF THE HOLDERS HEREBY WAIVES ANY AND ALL PREEMPTIVE RIGHTS IT
HAS UNDER SECTION (H) OF THE CERTIFICATE OF DESIGNATION WITH RESPECT TO THE
SHARES OF COMMON STOCK TO BE ISSUED IN CONNECTION (I) WITH THE ACQUISITION AND
(II) THIS AGREEMENT.

 

(B)           EACH OF THE HOLDERS HEREBY CONSENTS TO THE INCREASE IN THE NUMBER
OF MEMBERS OF THE BOARD OF DIRECTORS OF THE CORPORATION FROM SEVEN (7) TO NINE
(9) IN CONNECTION WITH THE ACQUISITION.

 

(C)           EACH OF THE HOLDERS HEREBY CONSENTS TO THE FORMATION OF A DELAWARE
CORPORATION (“HOLDINGS”) AS A WHOLLY OWNED SUBSIDIARY OF THE COMPANY AND THE
CONTRIBUTION TO

 

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HOLDINGS OF THE CAPITAL STOCK OF THE SUBSIDIARIES OF THE COMPANY DIRECTLY OWNED
BY THE COMPANY.

 

(D)           EACH OF THE HOLDERS HEREBY AGREES TO TAKE ALL ACTION WITHIN ITS
POWER (INCLUDING, BUT NOT LIMITED TO, (I) ATTENDING ALL STOCKHOLDER MEETINGS OF
THE CORPORATION FOR THE PURPOSES OF ENSURING THAT A QUORUM IS OBTAINED AND
(II) VOTING ALL SHARES OF COMMON STOCK AND SERIES B PREFERRED STOCK OWNED OR
HELD BY SUCH HOLDER AT ANY STOCKHOLDER MEETING OF THE CORPORATION OR, IF UNDER
APPLICABLE LAW STOCKHOLDERS OF THE CORPORATION ARE PERMITTED TO TAKE ACTION BY
WRITTEN RESOLUTION OR CONSENT IN LIEU OF A MEETING, EXECUTING ANY WRITTEN
RESOLUTION OR CONSENT WITH RESPECT TO ALL VOTING SHARES OF COMMON STOCK AND
SERIES B PREFERRED STOCK OWNED OR HELD BY SUCH HOLDER) TO CAUSE THE NOMINEES OF
PEGASUS, WHICH SHALL NOT EXCEED TWO NOMINEES, AS DIRECTORS OF THE COMPANY
NOMINATED IN ACCORDANCE WITH THE DEFINITIVE AGREEMENT FOR THE ACQUISITION (THE
“DIRECTOR NOMINEES”) TO BE ELECTED OR APPOINTED AS MEMBERS OF THE BOARD OF
DIRECTORS OF THE CORPORATION AT EACH OF THE ANNUAL MEETINGS OF STOCKHOLDERS OF
THE CORPORATION TO BE HELD IN 2010 AND 2011 FOLLOWING THE CLOSING DATE OF THE
ACQUISITION.  IN ADDITION, EACH OF THE HOLDERS HEREBY AGREES TO VOTE ALL SHARES
OF COMMON STOCK AND SERIES B PREFERRED STOCK OWNED OR HELD BY SUCH HOLDER AND
THAT SUCH HOLDER IS ENTITLED TO VOTE AGAINST ANY RESOLUTION THAT MAY BE PROPOSED
AT ANY SUCH MEETING TO REMOVE ANY DIRECTOR NOMINEE THAT IS SERVING AS A MEMBER
OF THE BOARD OF DIRECTORS OF THE CORPORATION, UNLESS PEGASUS OTHERWISE REQUESTS
IN WRITING.

 

(E)           THE WAIVERS AND CONSENTS SPECIFIED IN SECTION 4(A)(I), 4(B) AND
4(D) SHALL ONLY BE EFFECTIVE UPON, AND ARE CONDITIONED UPON, THE CONSUMMATION OF
THE ACQUISITION.  THE WAIVER AND CONSENT SET FORTH IN SECTION 4(A)(II) SHALL
ONLY BE EFFECTIVE UPON, AND ARE CONDITIONED UPON, THE CONSUMMATION OF EITHER THE
ACQUISITION OR THE PUBLIC OFFERING. THE WAIVER AND CONSENT IN SECTION 4(C) SHALL
ONLY BE EFFECTIVE UPON, AND ARE CONDITIONED UPON, THE CONSUMMATION OF EITHER THE
ACQUISITION OR AN OFFERING OF SENIOR SECURED NOTES BY HOLDINGS PURSUANT TO
RULE 144A UNDER THE SECURITIES ACT, THE PROCEEDS OF WHICH ARE USED TO PAY OR ARE
PLACED IN ESCROW TO PAY THE CASH PORTION OF THE PURCHASE PRICE OF THE
ACQUISITION; AND PROVIDED THAT IF THE ACQUISITION DOES NOT OCCUR ON OR BEFORE
FEBRUARY 15, 2010, THE COMPANY SHALL PROMPTLY MERGE HOLDING INTO THE COMPANY.

 

5.             POST-CLOSING COVENANT.  IN THE EVENT THE PUBLIC OFFERING IS
CONSUMMATED PRIOR TO THE CONSUMMATION OF THE ACQUISITION, IF THE ACQUISITION IS
THEREAFTER CONSUMMATED, (A) THE SERIES C CERTIFICATE (AS FILED WITH THE
SECRETARY OF STATE OF THE STATE OF DELAWARE) SHALL BE AMENDED SUBSTANTIALLY
SIMULTANEOUSLY WITH THE CONSUMMATION OF THE ACQUISITION, AS NECESSARY, TO
CHANGE, RETROACTIVELY TO THE DATE OF ISSUANCE OF THE SERIES C PREFERRED STOCK,
THE DIVIDEND RATE TO THE HY RATE (AS DEFINED IN FOOTNOTE 1  TO THE SERIES C
CERTIFICATE ATTACHED AS EXHIBIT 2 TO THIS AGREEMENT), (II) TO CHANGE THE DATE IN
SECTION 1(A) OF THE SERIES C CERTIFICATE IN ACCORDANCE WITH THE PRINCIPLES SET
FORTH IN FOOTNOTE 2 TO THE SERIES C CERTIFICATE ATTACHED AS EXHIBIT 2 TO THIS
AGREEMENT AND (III) TO ADJUST THE REDEMPTION DATE SPECIFIED IN SECTION 1(C) OF
THE SERIES C CERTIFICATE IN ACCORDANCE WITH THE PRINCIPLES SET FORTH IN FOOTNOTE
3 TO THE SERIES C CERTIFICATE ATTACHED AS EXHIBIT 2 TO THIS AGREEMENT AND
(B) THE AMENDMENT (AS FILED WITH THE SECRETARY OF STATE OF THE STATE OF
DELAWARE) SHALL BE AMENDED SUBSTANTIALLY SIMULTANEOUSLY WITH THE CONSUMMATION OF
THE ACQUISITION, AS NECESSARY, TO (I) CHANGE THE DATES IN SECTION 1(A)(I) OF THE
AMENDMENT IN ACCORDANCE WITH THE PRINCIPLES SET FORTH IN FOOTNOTES 1 AND 2,
RESPECTIVELY, IN THE AMENDMENT SET FORTH AS EXHIBIT 1 TO THIS AGREEMENT AND
(II) TO CHANGE THE DATE IN SECTION 1(C) OF THE AMENDMENT IN ACCORDANCE WITH THE
PRINCIPLES SET FORTH IN FOOTNOTE 3 TO THE AMENDMENT SET

 

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FORTH AS EXHIBIT 1 TO THIS AGREEMENT.  ALL OF THE PARTIES HERETO ACKNOWLEDGE,
AGREE AND CONSENT TO THE CORPORATION MAKING THE AMENDMENTS AND CHANGES REFERRED
TO IN THIS SECTION 5, AND THE CORPORATION REPRESENTS AND WARRANTS THAT IT HAS
DULY AUTHORIZED AND APPROVED THE MAKING OF SUCH AMENDMENTS AND CHANGES.

 

6.             THE COMPANY REPRESENTS AND WARRANTS TO THE HOLDERS THAT:

 

(A)           DUE ORGANIZATION; POWER AND AUTHORITY.  THE COMPANY AND EACH
DOMESTIC SUBSIDIARY OF THE COMPANY (A) IS A CORPORATION OR LIMITED PARTNERSHIP
DULY INCORPORATED OR FORMED, AS THE CASE MAY BE, VALIDLY EXISTING AND IN GOOD
STANDING UNDER THE LAWS OF ITS JURISDICTION OF INCORPORATION OR ORGANIZATION,
(B) IS DULY QUALIFIED AS A FOREIGN CORPORATION OR EXTRA PROVINCIAL PARTNERSHIP
OR A FOREIGN PARTNERSHIP, AS THE CASE MAY BE, TO TRANSACT BUSINESS AND IS IN
GOOD STANDING IN EACH JURISDICTION IN WHICH SUCH QUALIFICATION IS REQUIRED,
(C) HAS FULL CORPORATE OR PARTNERSHIP, AS HE CASE MAY BE, POWER AND AUTHORITY TO
OWN, LEASE AND OPERATE ITS PROPERTIES AND TO CONDUCT ITS BUSINESSES AS THEY ARE
CURRENTLY CONDUCTED, AND (D) HAS FULL CORPORATE OR PARTNERSHIP, AS THE CASE MAY
BE, POWER AND AUTHORITY TO ENTER INTO AND PERFORM ITS OBLIGATIONS UNDER THIS
AGREEMENT.

 

(B)           AS OF THE DATE HEREOF (I) THE AUTHORIZED NUMBER OF SHARES OF
CAPITAL STOCK OF THE COMPANY WILL CONSISTS OF 100,000,000 COMMON SHARES (THE
“COMMON STOCK”), OF WHICH 10,822,192 SHARES HAVE BEEN ISSUED AND ARE
OUTSTANDING, (II) 2,500,000 PREFERRED SHARES, OF WHICH ONLY (X) SHARES OF
SERIES B PREFERRED STOCK PREVIOUSLY ISSUED TO AVISTA AND LEVANT HAVE BEEN ISSUED
AND ARE OUTSTANDING, AND (III) NO SHARES OF ANY CLASS OF HE CAPITAL STOCK OF THE
COMPANY WILL BE HELD BY THE COMPANY IN ITS TREASURY OF BY THE COMPANY’S
SUBSIDIARIES.  ALL OF THE ISSUED AND OUTSTANDING SHARES OF CAPITAL STOCK OF THE
CORPORATION SHALL HAVE BEEN DULY AUTHORIZED AND VALIDLY ISSUED, FULLY PAID AND
NONASSESSABLE AND SHALL BE FREE OF PREEMPTIVE RIGHTS EXCEPT AS SET FORTH IN THE
CERTIFICATE OF DESIGNATION.  UPON THE CLOSING THE SHARES OF SERIES C PREFERRED
STOCK AND THE AVISTA SHARES WILL BE DULY AUTHORIZED, VALIDLY ISSUED, FULLY PAID
AND NONASSESSABLE.  UPON ISSUANCE OF THE SERIES C PREFERRED STOCK TO THE
PURCHASERS, EXCEPT AS SET FORTH ON SCHEDULE 5, THERE SHALL BE NO SECURITIES OF
HE CORPORATION OR ANY OF ITS SUBSIDIARIES THAT WILL BE CONVERTIBLE INTO OR
EXCHANGEABLE FOR SHARES OF ANY CAPITAL STOCK OF THE CORPORATION OR ANY OF ITS
SUBSIDIARIES, AND NO OPTIONS, CALLS, SUBSCRIPTIONS, CONVERTIBLE SECURITIES, OR
OTHER RIGHTS, AGREEMENTS OR COMMITMENTS WHICH WILL OBLIGATE THE CORPORATION OR
ANY OF ITS SUBSIDIARIES TO ISSUE, TRANSFER OR SELL ANY SHARES OF CAPITAL STOCK
OF, OR OTHER INTERESTS IN, THE CORPORATION OR ANY OF ITS SUBSIDIARIES.  EXCEPT
AS SET FORTH ON SCHEDULE 5, UPON CONSUMMATION OF THE CLOSING, THERE SHALL BE NO
OUTSTANDING OBLIGATIONS OF THE CORPORATION OR ANY OF ITS SUBSIDIARIES TO
REPURCHASE, REDEEM OR OTHERWISE ACQUIRE ANY SHARES OF CAPITAL STOCK OF THE
CORPORATION OR ANY OF ITS SUBSIDIARIES AND NONE OF THE CORPORATION OR ANY OF ITS
SUBSIDIARIES SHALL HAVE ANY AWARDS OR OPTIONS OUTSTANDING UNDER ANY STOCK OPTION
PLANS OR AGREEMENTS OR ANY OTHER OUTSTANDING STOCK-RELATED AWARDS.  AS OF THE
CLOSING DATE AND IMMEDIATELY AFTER THE CLOSING, EXCEPT AS SET FORTH ON SCHEDULE
5, NONE OF THE CORPORATION OR ANY OF ITS SUBSIDIARIES WILL HAVE ANY OBLIGATION
TO ISSUE, TRANSFER OR SELL ANY SHARES OF CAPITAL STOCK OF THE CORPORATION OR ITS
SUBSIDIARIES.  EXCEPT AS SET FORTH ON SCHEDULE 5, THERE ARE NO VOTING TRUSTS OR
OTHER AGREEMENTS OR UNDERSTANDINGS TO WHICH THE CORPORATION OR ANY OF ITS
SUBSIDIARIES IS A PARTY WITH RESPECT TO THE HOLDING, VOTING OR DISPOSING OF
CAPITAL STOCK OF THE CORPORATION OR ANY OF ITS SUBSIDIARIES.  EXCEPT AS SET
FORTH ON SCHEDULE 5, NONE OF THE CORPORATION OR ANY OF ITS SUBSIDIARIES HAS ANY
OUTSTANDING BONDS, DEBENTURES, NOTES OR OTHER OBLIGATIONS OR OTHER SECURITIES
THAT ENTITLE THE HOLDERS THEREOF TO VOTE

 

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WITH THE SHAREHOLDERS OF THE CORPORATION OR ANY OF ITS SUBSIDIARIES ON ANY
MATTER OR WHICH ARE CONVERTIBLE INTO OR EXERCISABLE FOR SECURITIES HAVING SUCH A
RIGHT TO VOTE.

 

7.             AVISTA REPRESENTS AND WARRANTS TO THE CORPORATION AS OF THE DATE
HEREOF AS FOLLOWS:

 

(A)           AVISTA IS ACQUIRING THE SERIES C PREFERRED STOCK AND THE AVISTA
COMMON STOCK FOR ITS OWN ACCOUNT, FOR INVESTMENT PURPOSES ONLY AND NOT WITH A
VIEW TO ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”).

 

(B)           AVISTA UNDERSTANDS THAT THE SERIES C PREFERRED STOCK AND THE
AVISTA COMMON STOCK HAVE NOT BEEN AND, EXCEPT AS PROVIDED IN THE REGISTRATION
RIGHTS AGREEMENT, WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OR ANY STATE
OR OTHER SECURITIES LAW, THAT THE SERIES C PREFERRED STOCK AND THE AVISTA COMMON
STOCK ARE BEING ISSUED BY THE COMPANY IN TRANSACTIONS EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, THAT IT MUST HOLD THE SERIES C
PREFERRED STOCK INDEFINITELY AND NOT OFFER OR SELL THE SERIES C PREFERRED STOCK
OR THE AVISTA COMMON STOCK EXCEPT PURSUANT TO EFFECTIVE REGISTRATION STATEMENTS
UNDER THE SECURITIES ACT OR PURSUANT TO APPLICABLE EXEMPTIONS FROM REGISTRATION
UNDER THE SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES
LAWS.

 

(C)           AVISTA FURTHER UNDERSTANDS THAT THE EXEMPTION FROM REGISTRATION
AFFORDED BY RULE 144 (THE PROVISIONS OF WHICH ARE KNOWN TO AVISTA) PROMULGATED
UNDER THE SECURITIES ACT DEPENDS ON THE SATISFACTION OF VARIOUS CONDITIONS, AND
THAT, IF APPLICABLE, RULE 144 MAY AFFORD THE BASIS FOR SALES ONLY IN LIMITED
AMOUNTS.

 

(D)           AVISTA DID NOT EMPLOY ANY BROKER OR FINDER IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED IN THIS AGREEMENT AND NO FEES OR COMMISSIONS ARE
PAYABLE TO AVISTA EXCEPT AS OTHERWISE PROVIDED FOR IN THIS AGREEMENT.

 

(E)           AVISTA IS AN ACCREDITED INVESTOR (AS DEFINED UNDER THE
RULES PROMULGATED UNDER THE SECURITIES ACT).

 

(F)            AVISTA HAS BEEN FURNISHED WITH OR HAS HAD ACCESS TO THE
INFORMATION IT HAS REQUESTED FROM THE CORPORATION AND ITS SUBSIDIARIES AND HAS
HAD AN OPPORTUNITY TO DISCUSS WITH THE MANAGEMENT OF THE CORPORATION AND ITS
SUBSIDIARIES THE BUSINESS AND FINANCIAL AFFAIRS OF THE CORPORATION AND ITS
SUBSIDIARIES, AND HAS GENERALLY SUCH KNOWLEDGE AND EXPERIENCE IN BUSINESS AND
FINANCIAL MATTERS AND WITH RESPECT TO INVESTMENTS IN SECURITIES OF PRIVATELY
HELD COMPANIES SO AS TO ENABLE IT TO UNDERSTAND AND EVALUATE THE RISKS OF SUCH
INVESTMENT AND FORM OF INVESTMENT DECISION WITH RESPECT THERETO, AND IS CAPABLE
OF BEARING THE ECONOMIC RISKS OF SUCH INVESTMENT.

 

8.             AVISTA AND LEVANT, SEVERALLY AND NOT JOINTLY, EACH REPRESENTS AND
WARRANTS AS FOLLOWS:  THE EXECUTION, DELIVERY AND PERFORMANCE OF THIS AGREEMENT
TO WHICH SUCH HOLDER IS A PARTY WITHIN ITS CORPORATE OR LIMITED PARTNERSHIP, AS
THE CASE MAY BE, POWER AND AUTHORITY AND HAVE BEEN DULY AUTHORIZED BY ALL
NECESSARY ACTION OF SUCH HOLDER, DO NOT CONFLICT WITH OR RESULT IN A BREACH OF
OR VIOLATE ANY SUCH HOLDER’S GOVERNING DOCUMENTS OR ANY CONTRACT TO WHICH SUCH
HOLDER IS A PARTY OR BY WHICH ITS ASSETS ARE BOUND OR ANY APPLICABLE LAWS AND
CONSTITUTE LEGAL, VALID AND BINDING AGREEMENTS OF SUCH HOLDER ENFORCEABLE
AGAINST IT IN ACCORDANCE WITH THEIR RESPECTIVE TERMS.

 

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9.             AT SUCH TIME AS THE AVISTA PURCHASERS DO NOT HOLD OF RECORD A
SUFFICIENT NUMBER OF SHARES OF SERIES B PREFERRED STOCK (WITHOUT THE VOTE OF ANY
OTHER STOCKHOLDER) TO ELECT A DIRECTOR TO THE BOARD OF DIRECTORS OF THE COMPANY
TO REPRESENT THE HOLDERS OF SERIES B PREFERRED STOCK AS A SEPARATE CLASS
PURSUANT TO THE TERMS OF THE CERTIFICATE OF DESIGNATION, THE BOARD OF DIRECTORS
SHALL NOMINATE AND SLATE FOR ELECTION AT EACH OF THE COMPANY’S ANNUAL MEETINGS
OF STOCKHOLDERS ONE DIRECTOR DESIGNATED BY AVISTA IF AVISTA HOLDS A NUMBER OF
SHARES OF COMMON STOCK AND/OR SERIES B PREFERRED STOCK (CALCULATED ASSUMING THE
CONVERSION OF ANY SERIES B PREFERRED STOCK HELD BY THE AVISTA PURCHASERS INTO
COMMON STOCK) EQUAL TO OR GREATER THAN (I) 10% OF THE THEN OUTSTANDING COMMON
STOCK OR (II) 25% OF THE COMMON STOCK THE AVISTA PURCHASERS ARE ENTITLED TO UPON
CONVERSION OF THE SERIES B PREFERRED STOCK PURCHASED BY THE AVISTA PURCHASERS.

 

10.           NO LATER THAN (90) DAYS FOLLOWING THE CLOSING, THE COMPANY AND THE
HOLDERS WILL MUTUALLY AGREE ON AN ALLOCATION OF THE PURCHASE PRICE BETWEEN THE
SERIES C PREFERRED STOCK AND THE AVISTA COMMON STOCK ISSUED TO THE HOLDERS
PURSUANT TO THE TERMS OF THIS AGREEMENT.

 

11.           EXPENSES.  THE CORPORATION WILL, FOLLOWING THE EXECUTION AND
DELIVERY THIS AGREEMENT, AFTER PRESENTATION OF A SUMMARY INVOICE THEREFORE,
PROMPTLY REIMBURSE THE HOLDERS FOR ALL EXPENSES (INCLUDING ATTORNEY’S AND
ACCOUNTANT’S FEES AND DISBURSEMENTS) INCURRED BY THE HOLDERS IN CONNECTION WITH
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND IN CONNECTION WITH ANY
AMENDMENTS, WAIVERS OR CONSENTS UNDER OR IN RESPECT OF THIS AGREEMENT.

 

12.           NOTICES.  EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, ALL
NOTICES AND OTHER COMMUNICATIONS SHALL HAVE BEEN DULY GIVEN AND SHALL BE
EFFECTIVE (A) WHEN DELIVERED, B) WHEN TRANSMITTED VIA TELECOPY (OR OTHER
FACSIMILE DEVICE) TO THE NUMBER SET OUT BELOW IF THE SENDER ON THE SAME DAY
SENDS A CONFIRMING COPY OF SUCH NOTICE BY A RECOGNIZED OVERNIGHT DELIVERY
SERVICE (CHARGES PREPAID), (C) THE DAY FOLLOWING THE DAY (EXCEPT IF NOT A
BUSINESS DAY THEN THE NEXT BUSINESS DAY) ON WHICH THE SAME HAS BEEN DELIVERED
PREPAID TO A REPUTABLE NATIONAL OVERNIGHT AIR COURIER SERVICE OR (D) THE THIRD
BUSINESS DAY FOLLOWING THE DAY ON WHICH THE SAME IS SENT BY CERTIFIED OR
REGISTERED MAIL, POSTAGE PREPAID, IN EACH CASE TO THE RESPECTIVE PARTIES AT THE
ADDRESS SET FORTH ON THE SIGNATURE PAGES HERETO, OR AT SUCH OTHER ADDRESS AS
SUCH PARTY MAY SPECIFY BY WRITTEN NOTICE TO THE OTHER PARTY HERETO.

 

13.           BENEFIT OF AGREEMENT AND ASSIGNMENTS.

 

(A)           NOTHING IN THIS AGREEMENT, EXPRESS OR IMPLIED, SHALL GIVE TO ANY
PERSON OTHER THAN THE PARTIES HERETO AND PEGASUS ANY BENEFIT OR ANY LEGAL OR
EQUITABLE RIGHT, REMEDY OR CLAIM UNDER THIS AGREEMENT, IT BEING EXPRESSLY AGREED
BY THE PARTIES HERETO THAT PEGASUS IS A THIRD-PARTY BENEFICIARY SOLELY TO ENABLE
IT TO ENFORCE THE PROVISIONS OF SECTIONS 4(D) AND 15 HEREOF IN ACCORDANCE WITH
THEIR RESPECTIVE TERMS AND FOR NO OTHER PURPOSE.  THE PARTIES HERETO ACKNOWLEDGE
THAT THE AGREEMENT OF THE HOLDERS PURSUANT TO SECTION 4(D) IS A MATERIAL PART OF
THE CONSIDERATION FOR THE AGREEMENTS OF PEGASUS IN THE DEFINITIVE AGREEMENT FOR
THE ACQUISITION.

 

(B)           NO PARTY HERETO MAY ASSIGN OR OTHERWISE TRANSFER ANY OF ITS RIGHTS
OR OBLIGATIONS HEREUNDER WITHOUT THE PRIOR WRITTEN CONSENT OF THE OTHER PARTIES
HERETO.

 

14.           NO WAIVER REMEDIES CUMULATIVE.     NO FAILURE OR DELAY ON THE PART
OF ANY PARTY HERETO IN EXERCISING ANY RIGHT, POWER OR PRIVILEGE HEREUNDER AND NO
COURSE OF DEALING BETWEEN THE

 

7

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CORPORATION AND ANY OTHER PARTY SHALL OPERATE AS A WAIVER THEREOF; NOR SHALL ANY
SINGLE OR PARTIAL EXERCISE OF ANY RIGHT, POWER OR PRIVILEGE HEREUNDER PRECLUDE
ANY OTHER OR FURTHER EXERCISE THEREOF OR THE EXERCISE OF ANY OTHER RIGHT, POWER
OR PRIVILEGE HEREUNDER OR THEREUNDER.  THE RIGHTS AND REMEDIES PROVIDED HEREIN
ARE CUMULATIVE AND NOT EXCLUSIVE OF ANY RIGHTS OR REMEDIES THAT THE PARTIES
WOULD OTHERWISE HAVE.  NO NOTICE TO OR DEMAND ON THE CORPORATION IN ANY CASE
SHALL ENTITLE THE CORPORATION TO ANY OTHER OR FURTHER NOTICE OR DEMAND IN
SIMILAR OR OTHER CIRCUMSTANCES OR CONSTITUTE A WAIVER OF THE RIGHTS OF THE OTHER
PARTIES HERETO TO ANY OTHER OR FURTHER ACTION IN ANY CIRCUMSTANCES WITHOUT
NOTICE OR DEMAND.

 

15.           AMENDMENTS, WAIVERS AND CONSENTS.  THIS AGREEMENT MAY BE AMENDED,
AND THE OBSERVANCE OF ANY TERM HEREOF MAY BE WAIVED (EITHER RETROACTIVELY OR
PROSPECTIVELY), WITH THE WRITTEN CONSENT OF THE CORPORATION AND EACH OF THE
HOLDERS; PROVIDED THAT ANY AMENDMENT OR WAIVER OF SECTION 4(D), SECTION 13(A) OR
THIS SECTION 15 SHALL ALSO REQUIRE THE WRITTEN CONSENT OF PEGASUS.  NO AMENDMENT
OR WAIVER OF THIS AGREEMENT WILL EXTEND TO OR AFFECT ANY OBLIGATION, COVENANT,
AGREEMENT NOT EXPRESSLY AMENDED OR WAIVED OR THEREBY IMPAIR ANY RIGHT CONSEQUENT
THEREON.  AS USED HEREIN, THE TERM THIS “AGREEMENT” AND REFERENCES THERETO SHALL
MEAN THIS AGREEMENT, AS IT MAY FROM TIME TO TIME BE AMENDED, SUPPLEMENTED OR
MODIFIED.

 

16.           COUNTERPARTS.  THIS AGREEMENT MAY BE EXECUTED IN ANY NUMBER OF
COUNTERPARTS, EACH OF WHICH WHEN SO EXECUTED AND DELIVERED SHALL BE AN ORIGINAL,
BUT ALL OF WHICH SHALL CONSTITUTE ONE AND THE SAME INSTRUMENT.  IT SHALL NOT BE
NECESSARY IN MAKING PROOF OF THIS AGREEMENT TO PRODUCE OR ACCOUNT FOR MORE THAN
ONE SUCH COUNTERPART.  EACH COUNTERPART MAY CONSIST OF A NUMBER OF COPIES
HEREOF, EACH SIGNED BY LESS THAN ALL, BUT TOGETHER SIGNED BY ALL, OF THE PARTIES
HERETO.  SIGNATURES TRANSMITTED VIA TELECOPY (OR OTHER FACSIMILE DEVICE) WILL BE
ACCEPTED AS ORIGINAL SIGNATURES.

 

17.           HEADINGS.  THE HEADINGS OF THE SECTIONS AND SUBSECTIONS HEREOF ARE
PROVIDED FOR CONVENIENCE ONLY AND SHALL NOT IN ANY WAY AFFECT THE MEANING OR
CONSTRUCTION OF ANY PROVISION OF THIS AGREEMENT.

 

18.           GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE.

 

(A)             THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE
OF NEW YORK, EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT
WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH
STATE.

 

(B)             IF ANY ACTION, PROCEEDING OR LITIGATION SHALL BE BROUGHT BY ANY
PARTY HERETO IN ORDER TO ENFORCE ANY RIGHT OR REMEDY UNDER THIS AGREEMENT THE
PARTIES HEREBY CONSENTS AND WILL SUBMIT, TO THE JURISDICTION OF ANY STALE OR
FEDERAL COURT OF COMPETENT JURISDICTION SITTING WITHIN THE AREA COMPRISING THE
SOUTHERN DISTRICT OF NEW YORK ON THE DATE OF THIS AGREEMENT.  THE CORPORATION
HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, BUT NOT LIMITED TO, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION, PROCEEDING, OR LITIGATION IN SUCH JURISDICTION.  THE CORPORATION FURTHER
AGREES THAT IT SHALL NOT BRING ANY ACTION, PROCEEDING OR LITIGATION ARISING OUT
OF THIS AGREEMENT IN ANY STATE OR FEDERAL COURT OTHER THAN ANY STATE OR

 

8

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FEDERAL COURT OF COMPETENT JURISDICTION SITTING WITHIN THE AREA COMPRISING THE
SOUTHERN DISTRICT OF NEW YORK ON THE DATE OF THIS AGREEMENT

 

(C)             THE CORPORATION IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION, PROCEEDING OR LITIGATION
BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE
PREPAID, TO THE CORPORATION AT ITS ADDRESS SET FORTH ON ITS SIGNATURE
PAGE HERETO, SUCH SERVICE TO BECOME EFFECTIVE TEN (10) DAYS AFTER SUCH MAILING.

 

(D)             NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY HOLDER TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE CORPORATION IN ANY OTHER JURISDICTION.  IF SERVICE
OF PROCESS IS MADE ON A DESIGNATED AGENT IT SHOULD BE MADE BY EITHER
(I) PERSONAL DELIVERY OR (II) MAILING A COPY OF SUMMONS AND COMPLAINT TO THE
AGENT VIA REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED.

 

(E)             THE CORPORATION AND EACH HOLDER HEREBY WAIVES ANY AND ALL RIGHTS
IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH,
THIS AGREEMENT.

 

19.           ENTIRETY.  THIS AGREEMENT REPRESENTS THE ENTIRE AGREEMENT OF THE
PARTIES HERETO AND THERETO, AND SUPERSEDES ALL PRIOR AGREEMENTS AND
UNDERSTANDINGS, ORAL OR WRITTEN, IF ANY, RELATING TO TRANSACTIONS CONTEMPLATED
HEREIN OR THEREIN.

 

20.           INCORPORATION.  ALL EXHIBITS ATTACHED HERETO ARE INCORPORATED AS
PART OF THIS AGREEMENT AS IF FULLY SET FORTH HEREIN.

 

21.           NON-RECOURSE.  EXCEPT AS EXPLICITLY PROVIDED IN THIS AGREEMENT, NO
PAST, PRESENT OR FUTURE DIRECTOR, OFFICER, EMPLOYEE, INCORPORATOR, MEMBER,
PARTNER, STOCKHOLDER, AFFILIATE, AGENT) ATTORNEY OR REPRESENTATIVE OF THE
CORPORATION OR THE HOLDERS SHALL IN SUCH CAPACITY HAVE ANY LIABILITY FOR ANY
OBLIGATIONS OR LIABILITIES OF THE CORPORATION OR ANY HOLDER, RESPECTIVELY, UNDER
THIS AGREEMENT OR FOR ANY CLAIM (UNDER TORT OR CONTRACT LAW) BASED ON, IN
RESPECTIVE OF, OR BY REASON OF, THE TRANSACTIONS CONTEMPLATED HEREBY.

 

22.           FURTHER ASSURANCES.  EACH OF THE PARTIES HERETO SHALL, UPON
REASONABLE REQUEST OF ANY OTHER PARTY HERETO, DO, MAKE AND EXECUTE ALL SUCH
DOCUMENTS, ACTS, MATTERS AND THINGS AS MAY BE REASONABLY REQUIRED IN ORDER TO
GIVE EFFECT TO THE TRANSACTIONS CONTEMPLATED HEREBY.

 

9

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IN WITNESS WHEREOF, EACH OF THE PARTIES HERETO HAS CAUSED A COUNTERPART OF THIS
AGREEMENT TO BE DULY EXECUTED AND DELIVERED AS OF THE DATE FIRST ABOVE WRITTEN.

 

 

 

GEOKINETICS INC.

 

 

 

 

 

By:

/s/ Scott McCurdy

 

 

Name: Scott McCurdy

 

 

Title: Vice President & CFO

 

 

 

1500 Citywest Blvd #800

 

Houston, Texas 77042-2380

 

Telephone: (713) 850-7600

 

Signature page to the Amendment and Exchange Agreement

 

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AVISTA CAPITAL PARTNERS, LP.

 

 

 

 

By: AVISTA CAPITAL PARTNERS GP, LLC, its general partners

 

 

 

 

By:

/s/ Ben Silbert

 

 

Name: Ben Silbert

 

 

Title: General Counsel

 

 

 

 

AVISTA CAPITAL PARTNERS (OFFSHORE), L.P.

 

 

 

 

 

 

 

By: AVISTA CAPITAL PARTNERS GP, LLC, its general partners

 

 

 

 

By:

/s/ Ben Silbert

 

 

Name: Ben Silbert

 

 

Title: General Counsel

 

 

 

 

 

 

 

Address for each of the Avista Holders:

 

 

 

65 E. 55th St., 18th Floor

 

New York, NY 10022

 

Attn: General Counsel

 

Telephone: (212) 593-6900

 

Signature page to the Amendment and Exchange Agreement

 

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LEVANT AMERICA S.A.

 

 

 

 

By:

/s/ Kenneth H. Harman, Jr.

 

 

Name: Kenneth H. Harman, Jr.

 

 

Title: Attorney-in-Fact

 

 

 

 

c/o Colonial Navigation Company, Inc.

 

750 Lexington Ave. - 26th Floor

 

New York, NY 10022

 

Telephone:

212-319-2828

 

Signature page to the Amendment and Exchange Agreement

 

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EXHIBIT 1

 

THIRD AMENDED

 

CERTIFICATE OF DESIGNATION OF

 

SERIES B SENIOR CONVERTIBLE PREFERRED STOCK

 

OF

 

GEOKINETICS INC.

 

PURSUANT TO SECTION 151(g) OF THE

 

GENERAL CORPORATION LAW OF THE STATE OF DELAWARE

 

Geokinetics Inc (the “Corporation”), a corporation organized and existing under
the laws of the State of Delaware, hereby certifies that:

 

ONE:                  The Certificate of Designation of Series B Senior
Convertible Preferred Stock of the Corporation was filed with the Secretary of
State of the State of Delaware on September 8, 2006.

 

TWO:             The Certificate of Designation of Series B Senior Convertible
Preferred Stock of the Corporation was amended by that certain Amended
Certificate of Designation of Series B Senior Convertible Preferred Stock of the
Corporation, filed with the Secretary of State of the State of Delaware on
July 28, 2008 and which provided that: (i) the Series B Senior Convertible
Preferred Stock of the Corporation be designated Series B-1 Senior Convertible
Preferred Stock (the “Series B-1 Preferred Stock”) and (ii) a new series of
preferred stock of the Corporation, par value $10.00 per share, be created out
of the authorized but unissued shares of capital stock of the Corporation and be
authorized to be issued, with such series to be designated Series B-2 Senior
Convertible Preferred Stock (the “Series B-2 Preferred Stock”), and consist of
350,000 shares, par value $10.00 per share, of which the powers, preferences and
relative, participating, optional and other rights, and the qualifications,
limitations, and restrictions of the Series B-1 Preferred Stock and the
Series B-2 Preferred Stock (collectively, (the “Series B Preferred Stock”),
shall be, in addition to those set forth in the Corporation’s Certificate of
Incorporation, all in accordance with the provisions of Section 151(g) of the
General Corporation Law of the State of Delaware, as set forth therein.

 

THREE:    The Certificate of Designation of Series B Senior Convertible
Preferred Stock of the Corporation was further amended by the Second Amended
Certificate of Designation of Series B Senior Convertible Preferred Stock of the
Corporation, filed with the Secretary of State of the State of Delaware on
February 23, 2009.

 

FOUR:          Pursuant to the authority expressly granted to and vested in the
Board of Directors of the Corporation by Article FOURTH of the Corporation’s
Certificate of Incorporation (the “Certificate of Incorporation”), the Board of
Directors for the Corporation, at a meeting duly and properly called and held
                              2009, duly adopted a resolution

 

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providing that the Second Amended Certificate of Designation of Series B Senior
Convertible Preferred Stock of the Corporation be amended in its entirety, as
follows:

 

FIVE:                 The shares of Preferred Stock previously designated
“Series B-1 Preferred Stock” shall for all purposes of this Third Amended
Certificate of Series B Convertible Preferred Stock of the Corporation shall be
renamed and designated “Series B Preferred Stock.”

 

SIX:                       The share of Preferred Stock previously designated
“Series B-2 Preferred Stock” shall be cancelled.

 

(1)                                  Series B Preferred Stock.

 

(a)                                  Dividends.

 

(i)                                     The holders of Series B Preferred Stock,
prior and in preference to any declaration or payment of any dividend on any
class or series of capital stock of this Corporation, shall be entitled to
receive cumulative dividends at the applicable Dividend Rate (as defined
below).  For purposes of this Section 1(a)(i), “Dividend Rate” shall mean 9.75%
per annum, compounded quarterly, of the Original Issue Price (defined in
Section 1(b)(i) below) for each share of Series B Preferred Stock.  At the
option of the Corporation, all or any portion of dividends payable on shares of
Series B Preferred Stock on any quarterly dividend payment date through and
including                                (1) may be paid in additional shares of
Series B Stock, instead of cash.  The value of each share of Series B Preferred
Stock paid in lieu of cash shall be equal to the Original Issue Price.  After
                       (2), all dividends shall be paid in cash when, and if
declared. All unpaid dividends on Series B Preferred Stock shall be cumulative
and shall accrue, compounding annually, regardless of whether or not the
Corporation shall have funds legally available for the payment of such
dividends.

 

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

 

(b)                                 Liquidation Preference.

 

(i)                                     The holders of Series B Preferred Stock,
in the event of any Liquidation Event (as defined below), either voluntary or
involuntary, shall be entitled to receive,

 

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(1) Date to be October 31, 2011, unless the Acquisition is consummated in which
event the date shall be the earlier of (a) the maturity date of the HY
Securities plus one year and one day and (b) March 31, 2016.

 

(2) Date to be October 31, 2011, unless the Acquisition is consummated in which
event the date shall be the earlier of (a) the maturity date of the HY
Securities plus one year and one day and (b) March 31, 2016.

 

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

 

(ii)                                  After the payment of the Liquidation
Preference Amount with respect to each share of Series B Preferred Stock, the
holders of Series B Preferred Stock will have the right following a Liquidation
Event to receive an additional distribution for each share of Series B Preferred
Stock equal to the excess, if any, of (i) the aggregate amount distributable
with respect to each share of Common Stock following the Liquidation Event
multiplied times the number of shares of Common Stock into which each share of
Series B Preferred Stock is convertible at the Conversion Rate effective at the
time of the Liquidation Event over (ii) the Liquidation Preference Amount.  As a
result, the total amount distributed with respect to each share of Series B
Preferred Stock following a Liquidation Event will be not less than the amount
determined as if all shares of Series B Preferred Stock had been converted to
Common Stock at the conversion rate applicable at the time of the Liquidation
Event.  In view of this additional distribution right, the Corporation and the
holders of the Series B Preferred Stock expect that the Series B Preferred Stock
will not be treated as “preferred stock” for federal income tax purposes under
Treasury Regulation § 1.305-5(a).

 

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

 

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(iv)                              In any Liquidation Event, if Proceeds received
by the Corporation or its stockholders are other than cash, their value will be
deemed their fair market value. The determination of such fair market value
shall be made by the Board of Directors of the Corporation or as otherwise may
be set forth in the definitive agreements governing such Liquidation Event.

 

(c)                                  Redemption Rights.

 

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

 

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

 

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

 

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

 

(i)                                     Right to Convert. Each share of Series B
Preferred Stock shall be convertible, at the option of the holder thereof, at
any time after the date of issuance of such share, at the office of the
Corporation or any transfer agent for such stock, into such number of fully paid
and nonassessable shares of Common Stock as is determined by dividing the
Liquidation Preference Amount for the Series B Preferred Stock by the applicable
Conversion Price (as defined below) for the Series B Preferred Stock (the
conversion rate for Series B Preferred Stock into Common Stock is referred to
herein as the “Conversion Rate”), determined as hereafter provided, in effect on
the date the certificate is surrendered for conversion. The “Conversion Price”
per share for Series B Preferred Stock shall be $20.00 (which amount takes into
account the 1-for-10 stock split of the Corporation effective as of November 3,
2006);

 

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(3) Date to be March 31, 2014, unless the Acquisition is consummated in which
event the date shall be the earlier of (a) the maturity date of the HY
Securities plus one year and one day and (b) March 31, 2016.

 

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provided, however, that the Conversion Price for the Series B Preferred Stock
shall be subject to adjustment as set forth in subsection 1(e)(iv).

 

(ii)                                  Corporation Conversion Election. At the
election of the Corporation, each share of Series B Preferred Stock shall be
converted into shares of Common Stock at the Conversion Rate at the time in
effect for Series B Preferred Stock immediately upon the Corporation’s sale of
its Common Stock in an underwritten public offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the
“Securities Act”), covering the offer and sale of Common Stock (A) at an
offering price per share of not less than $35.00 (as adjusted for any stock
splits, stock dividends, combinations, subdivisions or the like), (B) which
results in net proceeds to the Corporation and the selling stockholders, if any,
of not less than $75,000,000, and (C) after which the Common Stock is listed on
the NYSE, AMEX or the NASDAQ National Market (a “Qualified Public Offering”).

 

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

 

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

 

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(A)                              Conversion Price Adjustments.

 

1.               If the Corporation shall issue, on or after the date upon which
this Third Amended Certificate of Designation is accepted for filing by the
Secretary of State of the State of Delaware (the “Filing Date”), any Additional
Stock (as defined below) for a consideration per share less than the Conversion
Price applicable to the Series B Preferred Stock in effect immediately prior to
the issuance of such Additional Stock, and if the aggregate dollar amount of
(A) all previous issuances of Additional Stock since the Filing Date and (B) all
issuances of Additional Stock as consideration in the Acquisition or pursuant to
the Public Offering, as such terms are defined in that certain Amended and
Exchange Agreement dated December       , 2009, by and among the Corporation,
Avista Capital Partners, L.P., Avista Capital Partners (Offshore), L.P. and
Levant America S.A., is less than $50,000,000 (determined by aggregating all
issuances of Additional Stock made after the Filing Date and as consideration in
the Acquisition or pursuant to the Public Offering) the Conversion Price for the
Series B Preferred Stock in effect immediately prior to each such issuance shall
forthwith be adjusted to a price equal to the per share consideration paid or
given for such Additional Stock; provided, however, if the Corporation shall
issue, on or after the Filing Date, any Additional Stock after the aggregate
amount of previous issuances made after the Filing Date are in excess of
$50,000,000 (determined by aggregating all previous issuances of Additional
Stock made after the Filing Date and as consideration in the Acquisition or
pursuant to the Public Offering) for a consideration per share less than the
Conversion Price applicable to the Series B Preferred Stock in effect
immediately prior to the issuance of such Additional Stock, the Conversion Price
for the Series B Preferred Stock in effect immediately prior to each such
issuance shall forthwith be adjusted to a price determined by multiplying such
Conversion Price by a fraction, the numerator of which shall be the number of
shares of Common Stock Outstanding (as defined below) immediately prior to such
issuance plus the number of shares of Common Stock that the aggregate
consideration received by the Corporation for such issuance would purchase at
such Conversion Price; and the denominator of which shall be the number of
shares of Common Stock Outstanding (as defined below) immediately prior to such
issuance plus the number of shares of such Additional Stock.  For purposes of
this Section 1(d)(iv)(A), the term “Common Stock Outstanding” shall mean and
include the following: (1) outstanding Common Stock, (2) Common Stock issuable
upon exercise of outstanding stock options, (3) Common Stock issuable upon
exercise of outstanding warrants to purchase Common Stock, (4) Common Stock
issuable upon conversion of the Series B Preferred Stock, and (5) Common Stock
issuable upon the conversion of any other series or class of equity securities
issued after the date hereof which is convertible into shares of Common Stock. 
Shares described in (1) through (3) above shall be included whether vested or
unvested, whether contingent or non-contingent and whether exercisable or not
yet exercisable.

 

2.               Notwithstanding anything to the contrary set forth in this
Certificate of Designation: (x) no adjustment of the Conversion Price for the
Series B Preferred Stock shall be made in respect of the Acquisition or the
Public Offering (as long as the price per share for shares of Common Stock sold
in the Public Offering, net of underwriting discounts and commissions, equals or
exceed $10 per share) and (y) in the event the price per share for shares of
Common Stock sold in the Public Offering, net of underwriting discounts and
commissions, is less than $10 per share, then the Conversion Price shall be
adjusted, upon the consummation of any such offering, to an amount equal to
(i) two

 

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multiplied by (ii) the price per share of Common Stock sold in the Public
Offering, net of underwriting discounts and commissions.

 

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

 

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

 

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

 

6.               In the case of the issuance of options to purchase or rights to
subscribe for Common Stock, securities by their terms convertible into or
exchangeable for Common Stock or options to purchase or rights to subscribe for
such convertible or exchangeable securities, the following provisions shall
apply for purposes of determining the number of shares of Additional Stock
issued and the consideration paid therefor:

 

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

 

b.                                      The aggregate maximum number of shares
of Common Stock deliverable upon conversion or, or in exchange (assuming the
satisfaction of any conditions to convertibility or exchangeability, including,
without limitation, the passage of time, but without taking into account
potential antidilution adjustments) for, any such convertible or exchangeable
securities or upon the exercise of options to purchase or rights to subscribe
for such convertible or exchangeable securities and subsequent conversion or
exchange thereof shall be deemed to have been issued at the time such securities
were issued or such options or rights were issued and for a consideration equal
to the consideration, if any, received by the Corporation for any such

 

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securities and related options or rights (excluding any cash received on account
of accrued interest or accrued dividends), plus the minimum additional
consideration, if any, to be received by the Corporation (without taking into
account potential antidilution adjustments) upon the conversion or exchange of
such securities or the exercise of any related options or rights (the
consideration in each case to be determined in the manner provided in
subsections 1(d)(iv)(A)(3) and 1(d)(iv)(A)(4).

 

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

 

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

 

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

 

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

 

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

 

3.               Common Stock or other securities convertible into shares of
Common Stock that are issued with the approval of the holders of not less than a
majority of the then-outstanding shares of Series B-1 Preferred Stock and a
majority of the then-outstanding shares of Series B-2 Preferred Stock; and

 

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

 

(v)                                 In the event the Corporation should at any
time or from time to time after the Filing Date fix a record date for the
effectuation of a split or subdivision of the outstanding shares of Common Stock
or the determination of holders of Common Stock entitled to receive a dividend
or other distribution payable in additional shares of Common Stock or other
securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly, additional shares of Common Stock (hereinafter
referred to as “Common Stock Equivalents”) without payment of any consideration
by such holder for the additional shares of Common Stock or the Common Stock
Equivalents (including the additional shares of Common Stock issuable upon
conversion or exercise thereof), then, as of such record date (or the date of

 

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such dividend distribution, split or subdivision if no record date is fixed),
the Conversion Price of the Series B Preferred Stock shall be appropriately
decreased so that the number of shares of Common Stock issuable on conversion of
each share of such series shall be increased in proportion to such increase of
the aggregate of shares of Common Stock outstanding and those issuable with
respect to such Common Stock Equivalents.

 

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

 

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

 

(e)                                  Election and Removal of Directors by
Series B Preferred Stock.  Subject to Section 1(f)(ii), the holders of record of
the shares of Series B Preferred Stock, exclusively, shall be entitled to
nominate and elect one (1) director of the Corporation (the “Series B
Director”).  At each regularly scheduled meeting of the Corporation’s
stockholders which is called for the purpose of electing members of the Board of
Directors, the presence in person or by proxy of the holders of a majority of
the shares of Series B Preferred Stock then outstanding shall constitute a
quorum of the Series B Preferred Stock for the purpose of electing the director
by holders of the Series B Preferred Stock.  A vacancy in said directorship
filled by the holders of Series B Preferred Stock shall be filled only by vote
or written consent in lieu of a meeting of the holders of the Series B Preferred
Stock.  The Series B Director may be removed, with our without cause, by the
holders of Series B Preferred Stock in the same manner as such director may be
elected hereunder.

 

(f)                                    Voting Rights.

 

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

 

(ii)                                  So long as at least 125,000 shares of
Series B Preferred Stock remain outstanding, the Corporation shall not, without
first obtaining the approval (by vote or

 

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written consent, as provided by law) of not less than a majority of the
then-outstanding shares of the Series B Preferred Stock, as determined on a
fully diluted and as-converted basis:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(i)                                     within 90 days after the end of each
fiscal year, its consolidated balance sheet and related statements of income,
stockholders’ equity and cash flows showing the financial condition of the
Corporation and its consolidated subsidiaries as of the close of such fiscal
year and the results of its operations and the operations of such persons during
such year, together with comparative figures for the immediately preceding
fiscal year, all in reasonable

 

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detail and prepared in accordance with United States generally accepted
accounting principles (“GAAP”), all audited by UHY, LLP or other independent
public accountants of recognized national standing and accompanied by an opinion
of such accountants (which opinion shall be without any qualification or
exception as to the scope of such audit) to the effect that such consolidated
financial statements fairly present the financial condition and results of
operations of the Corporation and its consolidated subsidiaries on a
consolidated basis in accordance with GAAP;

 

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

 

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

 

[SIGNATURES ON FOLLOWING PAGE]

 

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IN WITNESS WHEREOF, Geokinetics Inc. has caused this Third Amended Certificate
of Designation to its Certificate of Incorporation to be signed by Richard F.
Miles, its President and Chief Executive Officer, this      day of
               , 20      .

 

 

 

GEOKINETICS INC.

 

 

 

 

 

By:

 

 

 

Richard F. Miles, President and

 

 

Chief Executive Officer

 

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EXHIBIT 2

 

CERTIFICATE OF DESIGNATION OF

 

SERIES C SENIOR PREFERRED STOCK

 

OF

 

GEOKINETICS INC.

 

PURSUANT TO SECTION 151(g) OF THE

 

GENERAL CORPORATION LAW OF THE STATE OF DELAWARE

 

Geokinetics Inc. (the “Corporation”), a corporation organized and existing under
the laws of the State of Delaware, hereby certifies that:

 

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

 

RESOLVED, that pursuant to the authority expressly granted to and vested in the
Board of Directors of the Corporation by Article FOURTH of the Corporation’s
Certificate of Incorporation (the “Certificate of Incorporation”), a series of
Preferred Stock of the Corporation be, and hereby is, created out of the
authorized but unissued shares of capital stock of the Corporation and
authorized to be issued, such series to be designated Series C Senior Preferred
Stock (the “Series C Preferred Stock”), to consist of 450,000 shares, par value
$10.00 per share, of which the powers, preferences and relative, participating,
optional and other rights, and the qualifications, limitations, and restrictions
thereof, shall be, in addition to those set forth in the Corporation’s
Certificate of Incorporation, as follows:

 

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(1)                                  [NOTE:  Avista to elect between PIK and
accrual of Series C Dividend prior to the filing of this Certificate] Series C
Preferred Stock.

 

(a)                                  Dividends.             The holders of
Series C Preferred Stock, prior and in preference to any declaration or payment
of any dividend on any class or series of capital stock of this Corporation,
shall be entitled to receive dividends, cumulative and compounded, at the
applicable Dividend Rate (as defined below).  [All dividends will accumulate
until paid in cash, whether or not declared, and whether or not there are any
funds legally available for the payment of such dividends] For purposes of this
Section 1(a)(i), “Dividend Rate” shall mean 12% per annum(1), compounded
quarterly effective as of the date of issuance of the Series C Preferred Stock,
of the Original Issue Price (defined in Section 1(b)(i) below) for each share of
Series C Preferred Stock.  [At the option of the Corporation, dividends payable
on shares of Series C Preferred Stock on any quarterly dividend payment date
through and including                                       (2), may be paid in
additional shares of Series C Preferred Stock, instead of cash.  The value of
each share of Series C Preferred Stock paid in lieu of cash shall be equal to
the Original Issue Price.]  After                                       (2), all
dividends shall be paid in cash on each quarterly dividend payment date. All
unpaid dividends on Series C Preferred Stock shall be cumulative and shall
accrue, compounding quarterly, regardless of whether or not the Corporation
shall have funds legally available for the payment of such dividends.

 

(b)                                 Liquidation Preference.

 

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

 

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(1) 12% except that if the  Acquisition is consummated simultaneously with or
prior to the Public Offering, the interest rate shall be the yield on the high
yield securities (the “HY Securities”) issued in connection with the
Acquisition, as of the date of the pricing of such securities, plus (1.5%) (the
“HY Rate”).  If the Public Offering is consummated prior to the consummation of
the Acquisition, then this Certificate of Designation shall be amended to change
the dividend, rate to the HY Rate, as required under Section 5 of the Amendment
and Exchange Agreement.

 

(2) Date to be October 31, 2011, unless the Acquisition is consummated in which
event the date shall be the earlier of (a) the maturity date of the HY
Securities plus one year and one day and (b) March 31, 2016.

 

2

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any stock splits, stock dividends, combinations, subdivisions, recapitalizations
or the like with respect to the Series C Preferred Stock).

 

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

 

(iii)                               In any Liquidation Event, if Proceeds
received by the Corporation or its stockholders are other than cash, their value
will be deemed their fair market value. The determination of such fair market
value shall be made by the Board of Directors of the Corporation or as otherwise
may be set forth in the definitive agreements governing such Liquidation Event.

 

(c)                                  Redemption.

 

The Corporation shall redeem all outstanding shares of Series C Preferred Stock
on [                          ](3).  Each share of Series C Preferred Stock to
be redeemed hereunder shall be redeemed by payment by the Corporation in cash of
the Redemption Price (as defined below). For purposes hereof, the term
“Redemption Price” shall mean, with respect to each share of Series C Preferred
Stock, an amount equal to the Liquidation Preference Amount.

 

(d)                                 Approval Rights.  So long as at least
100,000 shares of Series C Preferred Stock remain outstanding, the Corporation
shall not, without first obtaining the approval (by vote or written consent, as
provided by law) of not less than a majority of the then-outstanding shares of
the Series C Preferred Stock:

 

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(3) The earlier of (a) the maturity date of the HY Securities plus one year and
one day and (b) March 31, 2016.

 

3

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(i)                                     within 90 days after the end of each
fiscal year, its consolidated balance sheet and related statements of income,
stockholders’ equity and cash flows showing the financial condition of the
Corporation and its consolidated subsidiaries as of the close of such fiscal
year and the results of its operations and the operations of such persons during
such year, together with comparative figures for the immediately preceding
fiscal year, all in reasonable detail and prepared in accordance with United
States generally accepted accounting principles (“GAAP”), all audited by UHY,
LLP or other independent public accountants of recognized national standing and
accompanied by an opinion of such accountants (which opinion shall be

 

4

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without any qualification or exception as to the scope of such audit) to the
effect that such consolidated financial statements fairly present the financial
condition and results of operations of the Corporation and its consolidated
subsidiaries on a consolidated basis in accordance with GAAP;

 

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

 

[SIGNATURES ON FOLLOWING PAGE]

 

5

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IN WITNESS WHEREOF, Geokinetics Inc. has caused this Certificate of Designation
to its Certificate of Incorporation to be signed by Richard F. Miles, its
President and Chief Executive Officer, this         day of                 ,
20        .

 

 

 

GEOKINETICS INC.

 

 

 

 

 

By:

 

 

 

Richard F. Miles, President and

 

 

Chief Executive Officer

 

6

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