Exhibit 10.3

 

REGISTRATION RIGHTS AGREEMENT

 

This REGISTRATION RIGHTS AGREEMENT, dated as of August 12, 2011 (this
“Agreement”), is made by and among Geokinetics Holdings USA, Inc., a Delaware
corporation, with headquarters located at 1500 City West Blvd., Suite 800,
Houston, Texas 77042 (the “Company”), Geokinetics Inc. (the “Parent”) and the
investors named on the signature pages hereto (the “Investors”).

 

RECITALS:

 

A.                                   Pursuant to the Amended and Restated Credit
Agreement dated as of the date hereof (the “Credit Agreement”) by and among the
Company, as Borrower, the Investors, as Lenders, and Whitebox Advisors LLC, as
Administrative Agent, the Parent has agreed, upon the terms and subject to the
conditions of the Credit Agreement, to issue to the Investors shares of the
Parent’s common stock (the “Common Stock”), as an advisory fee (the “Advisory
Shares”).

 

B.                                     In order to induce the Investors to
execute and deliver the Credit Agreement, the Company has agreed to provide
certain registration rights under the Securities Act of 1933, as amended (the
“Securities Act”) and applicable state securities laws with respect to the
Advisory Shares.

 

In consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company, Parent and the Investors hereby agree as
follows:

 

ARTICLE I
DEFINITIONS

 

Capitalized terms used and not otherwise defined herein have the respective
meanings given them set forth in the Credit Agreement.  In addition, as used in
this Agreement, the following terms have the following meanings:

 

1.1                                 “Equity Interests” means, with respect to
any Person, shares of capital stock of (or other ownership or profit interests
in) such Person, warrants, options or other rights for the purchase or other
acquisition from such Person of shares of capital stock of (or other ownership
or profit interests in) such Person, securities convertible into or exchangeable
for shares of capital stock of (or other ownership or profit interests in) such
Person or warrants, rights or options for the purchase or other acquisition from
such Person of such shares (or such other interests), and other ownership or
profit interests in such Person (including, without limitation, partnership,
member or trust interests therein), whether voting or nonvoting, and whether or
not such shares, warrants, options, rights or other interests are authorized or
otherwise existing on any date of determination.

 

1.2                                 “Exchange Act” means the Securities Exchange
Act of 1934, as amended.

 

1.3                                 “FINRA” means the Financial Industry
Regulatory Authority, Inc.

 

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1.4                                 “Investors” means the investors named on the
signature pages hereto and any of their transferees or assignees who agree to
become bound by the provisions of this Agreement in accordance with Article IX
hereof.

 

1.5                                 “National Securities Exchange” means any
national securities exchange under Section 12(b) of the Exchange Act.

 

1.6                                 “OTC Bulletin Board” means the OTC Bulletin
Board service of broker-dealers admitted the membership in FINRA and their
associated person.

 

1.7                                 “Registrable Securities” means the Advisory
Shares.

 

1.8                                 “Registration Period” means the period
between the date of the Credit Agreement and the earlier of (i) the date on
which all of the Advisory Shares have been sold under a Registration Statement,
or (ii) the date on which all of the Advisory Shares (in the opinion of the
Investors’ counsel) may be immediately sold without registration and without
restriction (including without limitation as to volume by each holder thereof)
as to the number of the Advisory Shares to be sold, pursuant to Rule 144 or
otherwise.

 

1.9                                 “Registration Statement” means a
Registration Statement of the Company filed under the Securities Act.

 

1.10                           The terms “register,” “registered,” and
“registration” refer to a registration effected by preparing and filing a
Registration Statement or statements in compliance with the Securities Act and
pursuant to Rule 415 and the declaration or ordering of effectiveness of such
Registration Statement by the SEC.

 

1.11                           “Required Filing Date” means the date that is 15
business days following the closing of the Credit Agreement.

 

1.12                           “Rule 415” means Rule 415 under the Securities
Act, or any successor Rule providing for offering securities on a continuous
basis, and applicable rules and regulations thereunder.

 

1.13                           “SEC” means the United States Securities and
Exchange Commission.

 

ARTICLE II
REGISTRATION

 

2.1                                 Mandatory Registration.

 

(a)                                  The Parent will file with the SEC a
Registration Statement on Form S-3 registering the Advisory Shares and no
securities other than additional securities held by Investors for resale no
later than the Required Filing Date.  If Form S-3 is not available at that time,
then the Parent will file a Registration Statement on such form as is then
available to effect a registration of the Advisory Shares by such date, subject
to the consent of the Investors, which consent will not be unreasonably
withheld.

 

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(b)                                 Notwithstanding anything to the contrary
contained in this Agreement, but subject to the payment of the Late Payments
pursuant to Section 2.4 hereof, if the staff of the SEC (the “Staff”) or the SEC
seeks to characterize any offering pursuant to a Registration Statement filed
pursuant to this Agreement as constituting an offering of securities by or on
behalf of the Parent, or in any other manner, such that the Staff or the SEC do
not permit such Registration Statement to become effective and used for resales
in a manner that does not constitute such an offering and that permits the
continuous resale at the market by the Investors participating therein (or as
otherwise may be acceptable to each Investor) without being named therein as
“underwriters,” then the Parent shall reduce the amount of Registrable
Securities to be included in such Registration Statement by all Investors to
such amount as the Staff and the SEC will permit for such Registration Statement
to become effective without such Investors being so named.  In making such
reduction, the Parent shall reduce the amount of Registrable Securities to be
included by all Investors on a pro rata basis (based upon the number of
Registrable Securities otherwise required to be included for each Investor)
unless the inclusion of Registrable Securities by a particular Investor or a
particular set of Investors are resulting in the Staff or the SEC’s “by or on
behalf of the Parent” offering position, in which event the Registrable
Securities held by such Investor or set of Investors shall be the only
Registrable Securities subject to reduction (and if by a set of Investors on a
pro rata basis by such Investors or on such other basis as would result in the
exclusion of the least amount of Registrable Securities by all such Investors). 
In addition, if the Staff or the SEC requires any Investor seeking to sell
Registrable Securities under a Registration Statement filed pursuant to this
Agreement to be specifically identified as an “underwriter” in order to permit
such Registration Statement to become effective, and such Investor does not
consent to being so named in such Registration Statement, then, in each such
case, the Parent shall reduce the total amount of Registrable Securities to be
registered on behalf of such Investor, to such amount as the Staff or the SEC
will permit without requiring such identification.  In the event of
any reduction in Registrable Securities pursuant to this paragraph, an affected
Investor shall have the right to require, upon delivery of a written request to
the Parent signed by such Investor, the Parent to file a Registration Statement
within 30 days of such request (subject to any restrictions imposed by Rule 415
or required by the Staff or the SEC) for resale of Registrable Securities by
such Investor in a manner reasonably acceptable to such Investor, and the Parent
shall following such request cause to be and keep effective such Registration
Statement in the same manner as otherwise contemplated in this Agreement
for Registration Statements hereunder, in each case until such time as: (i) all
Registrable Securities held by such Investor have been registered and sold
pursuant to an effective Registration Statement in a manner acceptable to such
Investor, or (ii) the Registrable Securities may be immediately sold without
registration and without restriction (including without limitation as to manner
of sale volume by each holder thereof) as to the number of Registrable
Securities to be sold, pursuant to Rule 144 or otherwise (it being understood
that the special demand right under this sentence may be exercised by an
Investor multiple times and with respect to limited amounts of Registrable
Securities in order to permit the resale thereof by such Investor as
contemplated above).

 

2.2                                 Effectiveness of the Registration Statement.

 

(a)                                  The Parent and Company will use their best
efforts to cause each Registration Statement contemplated by Section 2.1 to be
declared effective by the SEC as soon as practicable

 

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after filing, and in any event no later than the 150th day after the closing of
the Credit Agreement (the “Required Effective Date”).  If the SEC takes the
position that under Rule 415 of the Securities Act, the amount of Registrable
Securities needs to be reduced to clear the SEC review, the Investors shall
agree to reduce their Registrable Securities to be registered pro rata to meet
the SEC requirement with the understanding the Parent shall promptly file
another Registration Statement to register the Registrable Securities not
registered at a time when such Registration Statement is allowed.

 

(b)                                 The Parent’s best efforts will include, but
not be limited to, promptly responding to all comments received from the staff
of the SEC.  If the Parent receives notification from the SEC that a
Registration Statement will receive no action or review from the SEC, then the
Parent will cause such Registration Statement to become effective as soon as
practicable after such SEC notification.

 

(c)                                  Once a Registration Statement is declared
effective by the SEC, the Parent will cause such Registration Statement to
remain effective throughout the Registration Period, in each case except as
permitted under Section 3.1.

 

2.3                                 Payments by the Parent and Company.  If
(i) at any time after effectiveness of a Registration Statement, sales cannot be
made thereunder during the applicable Registration Period for any reason
(including any suspension of the use of a Registration Statement under
Section 3.6 hereof) for a period of more than 10 consecutive business days, or
30 days in the aggregate, during any 12-month period or (ii) the Common Stock is
not listed on a National Securities Exchange or included for quotation on the
OTC Bulletin Board for more than an aggregate of 10 business days in any
12-month period, then the Parent or Company will thereafter make a payment (by
wire transfer or check) to each Investor as partial compensation for such
delay.  The amount of the payment made to each Investor will be equal to its pro
rata portion (based on the number of Advisory Shares held by such Investor at
such time) of $20,000 for each month that sales cannot be made under the
effective Registration Statement or the Common Stock is not listed on a National
Securities Exchange or included for quotation on the OTC Bulletin Board
continuing through the date that sales can be made under the effective
Registration Statement or the Common Stock is listed on a National Securities
Exchange or included for quotation on the OTC Bulletin Board.  Such payments
will be prorated on a daily basis for partial months and will be paid to each
Investor by wire transfer or check within five business days following the end
of each month.

 

2.4                                 Effect of Late Filing or Effectiveness.  If
(a) the Parent fails to file any Registration Statement by the time required by
Section 2.1 (a “Filing Failure”); (b) any Registration Statement required
pursuant to Section 2.1 above has not been declared effective by the Required
Effective Date for any reason, including, without limitation, by reason of the
inability of the Parent to utilize a particular registration statement form that
would provide for a shorter time to effectiveness, the failure by the Parent to
file its reports required under the Exchange Act or the Parent’s failure to
fulfill its obligations under Section 2.1(a) (an “Effectiveness Failure”), then
the Parent or Company shall pay to each Investor an amount equal to its pro rata
portion (based on the number of Advisory Shares held by such Investor at such
time) of $20,000 for each month of such Filing Failure or Effectiveness Failure
(the “Late

 

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Payments”).  The Late Payments will be prorated on a daily basis for partial
months and will be paid to the Investors by wire transfer or check within five
business days after the earlier of (i) the end of each month following the
Required Filing Date or Required Effective Date or (ii) the effective date of
the applicable Registration Statement.  Nothing herein limits any Investor’s
right to pursue actual damages for the Parent’s failure to file a Registration
Statement on or prior to the Required Filing Date or to have it declared
effective by the SEC on or prior to the Required Effective Date in accordance
with the terms of this Agreement.

 

2.5                                 Piggyback Registrations.

 

(a)                                  If, at any time prior to the expiration of
a Registration Period, a Registration Statement is not effective with respect to
all of the Registrable Securities and the Parent decides to register any of its
securities for its own account or for the account of others, then the Parent
will promptly give the Investors written notice thereof and will use its best
efforts to include in such registration all or any part of the Registrable
Securities requested by such Investors to be included therein (excluding any
Registrable Securities previously included in a Registration Statement).  This
requirement does not apply to Parent registrations on Form S-4 or S-8 or their
equivalents relating to equity securities to be issued solely in connection with
an acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans.  Each Investor
must give its request for registration under this paragraph to the Parent in
writing within 15 days after receipt from the Parent of notice of such pending
registration.  If the registration for which the Parent gives notice is a public
offering involving an underwriting, the Parent will so advise the Investors as
part of the above-described written notice.  In that event, if the managing
underwriter(s) of the public offering impose a limitation (which may be a
complete exclusion) on the number of shares of Common Stock that may be included
in a Registration Statement because, in such underwriter(s)’ judgment, such
limitation would be necessary to effect an orderly public distribution or reduce
the number of securities which could be sold by the Parent, then the Parent will
be obligated to include only such limited portion, if any, of the Registrable
Securities with respect to which such Investors have requested inclusion
hereunder.  Any exclusion of Registrable Securities will be made pro rata among
all holders of the Parent’s securities seeking to include shares of Common Stock
in proportion to the number of shares of Common Stock sought to be included by
those holders.  However, the Parent will not exclude any Registrable Securities
unless the Parent has first excluded all outstanding securities the holders of
which are not entitled by right to inclusion of securities in such Registration
Statement or are not entitled pro rata inclusion with the Registrable
Securities.  If any Investor or other person does not agree to the terms of such
underwriting or otherwise fails to comply with the terms of this Agreement, such
Investor or other person shall be excluded therefrom upon written notice from
the Parent or underwriter.  Any Registrable Securities or other securities
excluded or withdrawn from such underwriting shall be withdrawn from such
registration.

 

(b)                                 No right to registration of Registrable
Securities under this Section 2.5 limits in any way the registration required
under Section 2.1 above.  The obligations of the Parent and Company under this
Section 2.5 expire upon the earliest of (i) after the Parent has afforded the
opportunity for the Investors to exercise registration rights under this
Section 2.5 for two registrations (provided, however, that any Investor that has
had any Registrable Securities

 

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excluded from any Registration Statement in accordance with this Section 2.5 may
include in any additional Registration Statement filed by the Company the
Registrable Securities so excluded), or (ii) expiration of the Registration
Period.

 

(c)                                The Parent shall have the right to terminate
or withdraw any registration initiated by it under this Section 2.5 prior to the
effectiveness of such registration whether or not any Investor has elected to
include securities in such registration.  The expenses of such withdrawn
registration shall be borne by the Parent.

 

2.6                                 Eligibility to use Form S-3.  The Parent
represents and warrants that it meets the requirements for the use of Form S-3
for registration of the resale by the Investors of the Registrable Securities. 
The Parent will file all reports required to be filed by the Parent with the SEC
in a timely manner so as to preserve its eligibility for the use of Form S-3.

 

ARTICLE III
ADDITIONAL OBLIGATIONS OF THE COMPANY

 

3.1                                 Continued Effectiveness of Registration
Statements.  The Parent will keep each Registration Statement covering the
Registrable Securities effective under Rule 415 at all times during the
applicable Registration Period.  In the event that the number of shares
available under a Registration Statement filed pursuant to this Agreement is
insufficient to cover all of the Registrable Securities, the Parent will (if
permitted) amend such Registration Statement or file a new Registration
Statement (on the short form available therefor, if applicable), or both, so as
to cover all of the Registrable Securities.  The Parent will file such amendment
or new Registration Statement as soon as practicable, but in no event later than
20 business days after the necessity therefor arises (based upon the market
price of the Common Stock and other relevant factors on which the Parent
reasonably elects to rely).  The Parent will use its best efforts to cause such
amendment or new Registration Statement to become effective as soon as is
practicable after the filing thereof, but in no event later than 90 days after
the date on which the Parent reasonably first determines (or reasonably should
have determined) the need therefor.

 

3.2                                 Accuracy of Registration Statement.  Any
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein) filed by the Parent covering Registrable
Securities will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein, or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading.  The Parent will promptly prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to each
Registration Statement and the prospectus used in connection with such
Registration Statement as may be necessary to permit sales pursuant to such
Registration Statement at all times during the Registration Period, and, during
such period, will comply with the provisions of the Securities Act with respect
to the disposition of all Registrable Securities of the Parent covered by such
Registration Statement until the termination of such Registration Period, or if
earlier, until such time as all of such Registrable Securities have been
disposed of in accordance with the intended methods of disposition by the seller
or sellers thereof as set forth in such Registration Statement.

 

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3.3                                 Furnishing Documentation.  The Parent will
furnish to each Investor whose Registrable Securities are included in a
Registration Statement, and to its legal counsel, (a) promptly after each
document is prepared and publicly distributed, filed with the SEC or received by
the Parent, one copy of any Registration Statement filed pursuant to this
Agreement and any amendments thereto, each preliminary prospectus and final
prospectus and each amendment or supplement thereto; and, in the case of a
Registration Statement filed under Section 2.1 above, each letter written by or
on behalf of the Parent to the SEC and each item of correspondence from, or
order issued by, the SEC or the staff of the SEC, in each case relating to such
Registration Statement (other than any portion of any item thereof which
contains information for which the Parent has sought confidential treatment);
and (b) a number of copies of a prospectus, including a preliminary prospectus
(if any), and all amendments and supplements thereto, and such other documents
as the Investor may reasonably request in order to facilitate the disposition of
the Registrable Securities owned by the Investor.  The Parent will promptly
notify in writing each Investor whose Registrable Securities are included in any
Registration Statement of the effectiveness of such Registration Statement and
any post-effective amendment.

 

3.4                                 Additional Obligations.  The Parent will use
its best efforts to (a) register and qualify the Registrable Securities covered
by a Registration Statement under such other securities or blue sky laws of such
jurisdictions as each Investor who holds (or has the right to hold) Registrable
Securities being offered reasonably requests, (b) prepare and file in those
jurisdictions any amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain their effectiveness during the Registration Period, (c) take any other
actions necessary to maintain such registrations and qualifications in effect at
all times during the Registration Period, and (d) take any other actions
reasonably necessary or advisable to qualify the Registrable Securities for sale
in such jurisdictions.  Notwithstanding the foregoing, the Parent or Company is
not required, in connection such obligations, to (i) qualify to do business in
any jurisdiction where it would not otherwise be required to qualify but for
this Section 3.4, (ii) subject itself to general taxation in any such
jurisdiction, (iii) file a general consent to service of process in any such
jurisdiction, (iv) provide any undertakings that cause material expense or
burden to the Parent or Company, or (v) make any change in its charter or
bylaws, which in each case the Board of Directors of the Parent or Company
determines to be contrary to the best interests of the Parent or Company and its
stockholders.

 

3.5                                 Underwritten Offerings.  If the Investors
who hold a majority in interest of the Registrable Securities being offered in
an offering pursuant to a Registration Statement or any amendment or supplement
thereto under this Agreement select underwriters reasonably acceptable to the
Parent for such offering, the Parent will enter into and perform its obligations
under an underwriting agreement in usual and customary form including, without
limitation, customary indemnification and contribution obligations, with the
managing underwriter of such offering, but the Parent or Company will not be
obligated to pay any fees or expenses of such underwriters related to the
offering.

 

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3.6                                 Suspension of Registration.

 

(a)                                  The Parent will notify (by telephone and
also by facsimile and reputable overnight courier) each Investor who holds
Registrable Securities being sold pursuant to a Registration Statement of the
happening of any event of which the Parent has knowledge as a result of which
the prospectus included in a Registration Statement as then in effect includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.  The
Parent will make such notification as promptly as practicable after the Parent
becomes aware of the event (but in no event will the Parent disclose to any
Investor any of the facts or circumstances regarding the event), will promptly
(but in no event more than ten business days) prepare a supplement or amendment
to such Registration Statement to correct such untrue statement or omission, and
will deliver a number of copies of such supplement or amendment to each Investor
as such Investor may reasonably request.  The Parent will use its best efforts
to keep the length of any such suspension to as short a period as is practicable
given the then existing circumstances and may so defer or suspend the use of a
Registration Statement no more than two times in any 18-month period, and
provided, further, that, after deferring or suspending the use of a Registration
Statement, the Parent may not again defer or suspend the use of such
Registration Statement until a period of thirty days has elapsed after
resumption of the use of such Registration Statement.  Notwithstanding anything
to the contrary contained herein or in the Exchange Agreement, if the use of a
Registration Statement is suspended by the Parent, the Parent will promptly give
notice of the suspension to all Investors whose securities are covered by such
Registration Statement, and will promptly notify each such Investor as soon as
the use of such Registration Statement may be resumed.  Notwithstanding anything
to the contrary contained herein or in the Credit Agreement, the Parent will
cause the Transfer Agent to deliver unlegended shares of Common Stock to a
transferee of an Investor in connection with any sale of Registrable Securities
with respect to which such Investor has entered into a contract for sale prior
to receipt of notice of such suspension and for which such Investor has not yet
settled unless, in the opinion of Parent’s legal counsel, such delivery without
legends would be in violation of applicable securities laws and/or otherwise
subject the Parent to liability.

 

(b)                                 Notwithstanding anything to the contrary
herein (but subject to the last sentence of this Section 3.6(b)), at any time
after the Effective Date of the applicable Registration Statement, the Parent
may delay the disclosure of material, non-public information concerning the
Parent or any of its Subsidiaries the disclosure of which at the time is not, in
the good faith opinion of the Board of Directors of the Parent, in the best
interest of the Parent and, in the opinion of counsel to the Parent, otherwise
required (a “Grace Period”); provided, that the Parent shall promptly (i) notify
the Investors in writing of the existence of material, non-public information
giving rise to a Grace Period (provided that in each notice the Parent will not
disclose the content of such material, non-public information to the Investors)
and the date on which the Grace Period will begin, and (ii) notify the Investors
in writing of the date on which the Grace Period ends; and, provided further,
that no Grace Period shall exceed ten (10) consecutive days and during any three
hundred sixty five (365) day period such Grace Periods shall not exceed an
aggregate of thirty (30) days and the first day of any Grace Period must be at
least five (5) Trading Days

 

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after the last day of any prior Grace Period; provided, that no Grace Period may
exist during the first sixty (60) Business Days after the Effective Date of the
applicable Registration Statement.  For purposes of determining the length of a
Grace Period above, the Grace Period shall begin on and include the date the
Investors receive the notice referred to in clause (i) and shall end on and
include the later of the date the Investors receive the notice referred to in
clause (ii) and the date referred to in such notice.  The provisions of
Section 3.6(a) hereof shall not be applicable during any Grace Period.  Upon
expiration of the Grace Period, the Parent shall again be bound by
Section 3.6(a) with respect to the information giving rise thereto unless such
material, nonpublic information is no longer applicable.

 

(c)                                  Subject to the Parent’s rights under
Section 3.1, the Parent will use its best efforts to prevent the issuance of any
stop order or other suspension of effectiveness of a Registration Statement and,
if such an order is issued, will use its best efforts to obtain the withdrawal
of such order at the earliest possible time and will promptly notify each
Investor that holds Registrable Securities being sold (or, in the event of an
underwritten offering, the managing underwriters) of the issuance of such order
and the resolution thereof.

 

3.7                                 Review by the Investors.  The Parent and
Company will permit each Investor’s legal counsel to review each Registration
Statement and all amendments and supplements thereto (as well as all requests
for acceleration or effectiveness thereof) a reasonable period of time prior to
their filing with the SEC, and will not file any document in a form to which
such counsel reasonably objects unless such counsel fails to notify the Parent
or Company of his or her objection within 3 business days after receipt of the
proposed Registration Statement, and unless otherwise required by law in the
opinion of the Parent’s counsel.  The sections of any such Registration
Statement including information with respect to the Investors, the Investors’
beneficial ownership of securities of the Parent or the Investors’ intended
method of disposition of Registrable Securities must conform to the information
provided to the Parent by each of the Investors.

 

3.8                                 Information.  The Parent will make generally
available to its security holders as soon as practicable, but not later than 90
days after the close of the period covered thereby, an earnings statement (in a
form complying with the provisions of Rule 158 under the Securities Act)
covering a 12-month period beginning not later than the first day of the
Parent’s fiscal quarter next following the effective date of a Registration
Statement.

 

3.9                                 Comfort Letter; Legal Opinion.  If the
Investors request an underwritten offering in accordance with Section 3.5 above,
then, at the request of the underwriters for the offering, on the date that
Registrable Securities are delivered to the underwriters for sale in connection
with a Registration Statement, the Parent will furnish to the Investors and the
underwriters (i) a letter, dated such date, from the Parent’s independent
certified public accountants, in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten
public offering, addressed to the underwriters; and (ii) an opinion, dated such
date, from counsel representing the Parent for purposes of such Registration
Statement, in form and substance as is customarily given in an underwritten
public offering, addressed to the underwriters and Investors.

 

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3.10                           Due Diligence; Confidentiality.

 

(a)                                  The Parent will make available for
inspection by any Investor whose Registrable Securities are being sold pursuant
to a Registration Statement, any underwriter participating in any disposition
pursuant to such Registration Statement, and any attorney or accountant retained
by any such Investor or underwriter (collectively, the “Inspectors”), all
pertinent financial and other records, pertinent corporate documents and
properties of the Parent (collectively, the “Records”), as each Inspector
reasonably deems necessary to enable the Inspector to exercise its due diligence
responsibility in connection with or related to the contemplated offering.  The
Parent will cause its officers, directors and employees to supply all
information that any Inspector may reasonably request for purposes of performing
such due diligence.

 

(b)                                 Each Inspector will hold in confidence, and
will not make any disclosure (except to an Investor) of, any Records or other
information that the Parent determines in good faith to be confidential, and of
which determination the Inspectors are so notified, unless (i) the disclosure of
such Records is necessary to avoid or correct a misstatement or omission in any
Registration Statement, (ii) the release of such Records is ordered pursuant to
a subpoena or other order from a court or government body of competent
jurisdiction, (iii) the information in such Records has been made generally
available to the public other than by disclosure in violation of this or any
other agreement (to the knowledge of the relevant Inspector), (iv) the Records
or other information was developed independently by an Inspector without breach
of this Agreement, (v) the information was known to the Inspector before receipt
of such information from the Parent, or (vi) the information was disclosed to
the Inspector by a third party not under an obligation of confidentiality.  The
Parent is not required to disclose any confidential information in the Records
to any Inspector unless and until such Inspector has entered into a
confidentiality agreement (in form and substance satisfactory to the Parent)
with the Parent with respect thereto, substantially in the form of this
Section 3.10.  Each Investor will, upon learning that disclosure of Records
containing confidential information is sought in or by a court or governmental
body of competent jurisdiction or through other means, give prompt notice to the
Parent and allow the Parent, at the Parent’s expense, to undertake appropriate
action to prevent disclosure of, or to obtain a protective order for, the
Records deemed confidential.  Nothing herein will be deemed to limit the
Investor’s ability to sell Registrable Securities in a manner that is otherwise
consistent with applicable laws and regulations.

 

(c)                                  The Parent will hold in confidence, and
will not make any disclosure of, information concerning an Investor provided to
the Parent under this Agreement unless (i) disclosure of such information is
necessary to comply with federal or state securities laws, or any exchange
listing or similar rules and regulations, (ii) the disclosure of such
information is necessary to avoid or correct a misstatement or omission in any
Registration Statement, (iii) the release of such information is ordered
pursuant to a subpoena or other order from a court or governmental body of
competent jurisdiction, (iv) such information has been made generally available
to the public other than by disclosure in violation of this Agreement or any
other agreement or (v) such Investor consents to the form and content of any
such disclosure.  If the Parent learns that disclosure of such information
concerning an Investor is sought in or by a court or governmental body of
competent jurisdiction or through other means, the Parent will give

 

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prompt notice to such Investor prior to making such disclosure and allow such
Investor, at its expense, to undertake appropriate action to prevent disclosure
of, or to obtain a protective order for, such information.

 

3.11                           Listing.  The Parent will (i) cause all of the
Advisory Shares covered by each Registration Statement to be listed on each
National Securities Exchange on which the Common Stock is then listed, if any,
if the listing of such Advisory Shares is then permitted under the rules of such
exchange, or (ii) to the extent the Common Stock is not then listed on a
National Securities Exchange, secure the quotation of all of the Advisory Shares
covered by each Registration Statement on the OTC Bulletin Board and, without
limiting the generality of the foregoing, arrange for at least two market
makers, meeting the applicable FINRA requirements, to display two-sided markets
for the Common Stock.

 

3.12                           Transfer Agent; Registrar.  The Parent will
provide a transfer agent and registrar, which may be a single entity, for the
Registrable Securities not later than the effective date of each Registration
Statement.

 

3.13                           Share Certificates.  The Parent will cooperate
with the Investors who hold Registrable Securities being sold and with the
managing underwriter(s), if any, to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legends) representing
Registrable Securities to be offered pursuant to a Registration Statement and
will enable such certificates to be in such denominations or amounts as the case
may be, and registered in such names as the Investors or the managing
underwriter(s), if any, may reasonably request.

 

3.14                           Plan of Distribution.  Subject to Section 3.17
hereof, at the request of an Investor holding an interest of the Registrable
Securities registered pursuant to a Registration Statement, the Parent will
promptly prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to a Registration Statement, and the prospectus used
in connection with a Registration Statement, as may be necessary in order to
change the plan of distribution set forth in such Registration Statement.

 

3.15                           Securities Laws Compliance.  The Parent will
comply with all applicable laws related to any Registration Statement relating
to the sale of Registrable Securities and to offering and sale of securities and
with all applicable rules and regulations of governmental authorities in
connection therewith (including, without limitation, the Securities Act, the
Exchange Act and the rules and regulations promulgated by the SEC).

 

3.16                           Further Assurances.  The Parent will take all
other reasonable actions as any Investor or the underwriters, if any, may
reasonably request to expedite and facilitate disposition by such Investor of
the Registrable Securities pursuant to a Registration Statement.

 

3.17                           No Additional Selling Securityholders.  The
Parent will not, and will not agree to, allow the holders of any securities of
the Parent to include any of their securities in any Registration Statement
under Section 2.1 hereof, or any amendment or supplement thereto under
Section 3.2 hereof, without the consent of all of the holders of the Registrable
Securities.

 

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ARTICLE IV
OBLIGATIONS OF THE INVESTORS

 

4.1           Investor Information.  As a condition to the obligations of the
Parent to complete any registration pursuant to this Agreement with respect to
the Registrable Securities of each Investor, such Investor will furnish to the
Parent such information regarding itself, the Registrable Securities held by it
and the intended method of disposition of the Registrable Securities held by it
as is reasonably required by the Parent to effect the registration of the
Registrable Securities.  At least 10 business days prior to the first
anticipated filing date of a Registration Statement for any registration under
this Agreement, the Parent will notify each Investor of the information the
Parent requires from that Investor if the Investor elects to have any of its
Registrable Securities included in such Registration Statement.  If, within
three business days prior to the filing date, the Parent has not received the
requested information from an Investor, then the Parent may file such
Registration Statement without including Registrable Securities of that
Investor.  Any and all information provided by the Investor pursuant to this
Section 4.1 shall be true, accurate, correct and complete in all material
respects.

 

4.2           Further Assurances.  Each Investor will cooperate with the Parent,
as reasonably requested by the Parent, in connection with the preparation and
filing of any Registration Statement hereunder, unless such Investor has
notified the Parent in writing of such Investor’s election to exclude all of
such Investor’s Registrable Securities from such Registration Statement.

 

4.3           Suspension of Sales.  Upon receipt of any notice from the Parent
of the happening of any event of the kind described in Section 3.6, each
Investor will immediately discontinue disposition of Registrable Securities
pursuant to the applicable Registration Statement covering such Registrable
Securities until (i) it receives copies of a supplemented or amended prospectus
contemplated by Section 3.6 or (ii) the Parent advises the Investor that a
suspension of sales under Section 3.6 has terminated.  If so directed by the
Parent, each Investor will deliver to the Parent (at the expense of the Parent)
or destroy (and deliver to the Parent a certificate of destruction) all copies
in the Investor’s possession (other than a limited number of file copies) of the
prospectus covering such Registrable Securities that is current at the time of
receipt of such notice.

 

4.4           Underwritten Offerings.

 

(a)           If Investors holding a majority in interest of the Registrable
Securities being registered (with the approval of a majority in interest of the
Investors) elect to engage the services of an underwriter, each Investor will
enter into and perform such Investor’s obligations under an underwriting
agreement, in usual and customary form, including, without limitation, customary
indemnification and contribution obligations, with the managing underwriter of
such offering, and will take such other actions as are reasonably required in
order to expedite or facilitate the disposition of the Registrable Securities,
unless such Investor has notified the Parent in writing of such Investor’s
election to exclude all of its Registrable Securities from such Registration
Statement.

 

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(b)           Without limiting any Investor’s rights under Section 2.1 hereof,
no Investor may participate in any underwritten distribution hereunder unless
such Investor (i) agrees to sell such Investor’s Registrable Securities on the
basis provided in any underwriting arrangements approved by the Investors
entitled hereunder to approve such arrangements, (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements, and (iii) agrees to pay its pro rata share of all underwriting
discounts and commissions and other fees and expenses of investment bankers and
any manager or managers of such underwriting, and legal expenses of the
underwriter, applicable with respect to its Registrable Securities, in each case
to the extent not payable by the Parent under the terms of this Agreement.

 

ARTICLE V
EXPENSES OF REGISTRATION

 

The Parent will bear all reasonable expenses, other than underwriting discounts
and commissions, incurred in connection with registrations, filings or
qualifications pursuant to Articles II and III of this Agreement, including,
without limitation, all registration, listing and qualifications fees, printers
and accounting fees, the fees and disbursements of counsel for the Parent, and
the reasonable fees and disbursements of each Investor’s legal counsel to review
each Registration Statement and all amendments and supplements thereto pursuant
to Section 3.7 hereof.

 

ARTICLE VI
INDEMNIFICATION

 

In the event that any Registrable Securities are included in a Registration
Statement under this Agreement:

 

6.1           To the extent permitted by law, the Parent will indemnify and hold
harmless each Investor that holds such Registrable Securities, any underwriter
(as defined in the Securities Act) for the Investors, any directors, officers or
advisors of such Investor or such underwriter and any person who controls such
Investor or such underwriter within the meaning of the Securities Act or the
Exchange Act (each, an “Indemnified Person”) against any losses, claims,
damages, expenses or liabilities (joint or several) (collectively, and together
with actions, proceedings or inquiries by any regulatory or self-regulatory
organization, whether commenced or threatened in respect thereof, “Claims”) to
which any of them become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such Claims arise out of or are based upon any of the
following statements, omissions or violations in a Registration Statement filed
pursuant to this Agreement, any post-effective amendment thereof or any
prospectus included therein:  (a) any untrue statement or alleged untrue
statement of a material fact contained in such Registration Statement or any
post-effective amendment thereof or 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, (b) any untrue statement or alleged untrue
statement of a material fact contained in the prospectus (as it may be amended
or supplemented) or the omission or alleged omission to state therein any
material fact necessary to make the statements made therein, in light of the

 

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circumstances under which the statements therein were made, not misleading, or
(c) any violation or alleged violation by the Parent of the Securities Act, the
Exchange Act or any other law, including without limitation any state securities
law or any rule or regulation thereunder (the matters in the foregoing clauses
(a) through (c) being, collectively, “Violations”).  The Parent will reimburse
the Investors and each such underwriter or controlling person and each such
other Indemnified Person, promptly as such expenses are incurred and are due and
payable, for any legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any Claim.  Notwithstanding anything
to the contrary contained herein, the indemnification agreement contained in
this Section 6.1 (i) does not apply to Claims arising out of or based upon a
Violation that occurs in reliance upon and in conformity with information
furnished in writing to the Parent by an Indemnified Person expressly for use in
connection with the preparation of a Registration Statement or any such
amendment thereof or supplement thereto, if such prospectus was timely made
available by the Parent pursuant to Section 3.3 hereof; and (ii) does not apply
to amounts paid in settlement of any Claim if such settlement is made without
the prior written consent of the Parent, which consent will not be unreasonably
withheld. This indemnity obligation will remain in full force and effect
regardless of any investigation made by or on behalf of the Indemnified Persons
and will survive the transfer of the Registrable Securities by the Investors
under Article IX of this Agreement.

 

6.2           In connection with any Registration Statement in which an Investor
is participating, each such Investor will indemnify and hold harmless, to the
same extent and in the same manner set forth in Section 6.1 above, the Parent,
each of its directors, each of its officers who signs such Registration
Statement, each person, if any, who controls the Parent within the meaning of
the Securities Act or the Exchange Act, and any other shareholder selling
securities pursuant to such Registration Statement and any of its directors and
officers and any person who controls such shareholder within the meaning of the
Securities Act or the Exchange Act (each an “Indemnified Person”) against any
Claim to which any of them may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such Claim arises out of or is based upon
any Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished to the Parent by such Investor expressly for use in connection with
such Registration Statement.  Subject to the restrictions set forth in
Section 6.3, such Investor will promptly reimburse the Parent and each such
other Indemnified Person, any legal or other expenses (promptly as such expenses
are incurred and due and payable) reasonably incurred by them in connection with
investigating or defending any such Claim. However, the indemnity agreement
contained in this Section 6.2 does not apply to amounts paid in settlement of
any Claim if such settlement is effected without the prior written consent of
such Investor, which consent will not be unreasonably withheld, and no Investor
will be liable under this Agreement (including this Section 6.2 and Article VII)
for the amount of any Claim that exceeds the net proceeds actually received by
such Investor as a result of the sale of Registrable Securities pursuant to such
Registration Statement.  This indemnity will remain in full force and effect
regardless of any investigation made by or on behalf of an Indemnified Party and
will survive the transfer of the Registrable Securities by the Investors under
Article IX of this Agreement.

 

6.3           Promptly after receipt by an Indemnified Person under this
Article VI of notice of the commencement of any action (including any
governmental action), such Indemnified Person

 

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will, if a Claim in respect thereof is to be made against any indemnifying party
under this Article VI, deliver to the indemnifying party a written notice of the
commencement thereof.  The indemnifying party may participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly given notice, assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying parties and the Indemnified Person. 
In that case, the indemnifying party will diligently pursue such defense.  If,
in the reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person and the indemnifying
party would be inappropriate due to actual or potential conflicts of interest
between the Indemnified Person and any other party represented by such counsel
in such proceeding or the actual or potential defendants in, or targets of, any
such action including the Indemnified Person, and such Indemnified Person
reasonably determines that there may be legal defenses available to such
Indemnified Person that are different from or in addition to those available to
the indemnifying party, then the Indemnified Person is entitled to assume such
defense and may retain its own counsel, with the fees and expenses to be paid by
the indemnifying party (subject to the restrictions on settlement under
Section 6.1 or Section 6.2, as applicable).  The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action does not relieve an indemnifying party of any liability to an
Indemnified Person under this Article VI, except to the extent that the
indemnifying party is prejudiced in its ability to defend such action.  The
indemnification required by this Article VI will be made by periodic payments of
the amount thereof during the course of the investigation or defense, as such
expense, loss, damage or liability is incurred and is due and payable. Each
Indemnified Person shall furnish such information regarding itself or the claim
in question as an Indemnifying Person may reasonably request in writing and
shall be reasonably required in connection with the defense of such claim and
litigation resulting therefrom.

 

ARTICLE VII
CONTRIBUTION

 

To the extent that any indemnification provided for herein is prohibited or
limited by law, the indemnifying party will make the maximum contribution with
respect to any amounts for which it would otherwise be liable under Article VI
to the fullest extent permitted by law.  However, (a) no contribution will be
made under circumstances where the maker would not have been liable for
indemnification under the fault standards set forth in Article VI, (b) no seller
of Registrable Securities guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled to contribution
from any seller of Registrable Securities who was not guilty of such fraudulent
misrepresentation, and (c) contribution (together with any indemnification or
other obligations under this Agreement) by any seller of Registrable Securities
will be limited in amount to the net amount of proceeds received by such seller
from the sale of such Registrable Securities.

 

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ARTICLE VIII
EXCHANGE ACT REPORTING

 

In order to make available to the Investors the benefits of Rule 144 or any
similar rule or regulation of the SEC that may at any time permit the Investors
to sell securities of the Parent to the public without registration, the Parent
will:

 

(a)           File with the SEC in a timely manner, and make and keep available,
all reports and other documents required of the Parent under the Securities Act
and the Exchange Act so long as the Parent remains subject to such requirements
and the filing and availability of such reports and other documents is required
for the applicable provisions of Rule 144; and

 

(b)           Furnish to each Investor who so requests, so long as such Investor
holds Registrable Securities, promptly upon the Investor’s request, (i) a
written statement by the Parent that it has complied with the reporting
requirements of Rule 144, the Securities Act and the Exchange Act, (ii) a copy
of the most recent annual or quarterly report of the Parent and such other
reports and documents filed by the Parent with the SEC and (iii) such other
information as may be reasonably requested to permit the Investors to sell such
securities pursuant to Rule 144 without registration.

 

ARTICLE IX
ASSIGNMENT OF REGISTRATION RIGHTS

 

The rights of the Investors hereunder, including the right to have the Parent
register Registrable Securities pursuant to this Agreement, will be
automatically assigned by the Investors to transferees or assignees of all or
any portion of the Investors interests in the Registrable Securities, but only
if (a) the Investor agrees in writing with the transferee or assignee to assign
such rights, and a copy of such agreement is furnished to the Parent within a
reasonable time after such assignment, (b) the Parent is, within a reasonable
time after such transfer or assignment, furnished with written notice of the
name and address of such transferee or assignee and the securities with respect
to which such registration rights are being transferred or assigned, (c) after
such transfer or assignment, the further disposition of such securities by the
transferee or assignee is restricted under the Securities Act and applicable
state securities laws, (d) at or before the time the Parent received the written
notice contemplated by clause (b) of this sentence, the transferee or assignee
agrees in writing with the Parent to be bound by all of the provisions contained
herein, and (e) the transferee is an “accredited investor” as that term is
defined in Rule 501 under the Exchange Act.  Any transferee or assignee of an
Investor under this Article IX shall be deemed an “Investor” for all purposes of
this Agreement, and shall be entitled to all rights of, and subject to all
obligations (including indemnification obligations) of, an Investor hereunder;
provided, however, that such a transferee will not be eligible to be named in a
Registrations Statement or an amendment thereto until such transferee has
completed a Questionnaire of Selling Securityholders in the form of Exhibit A
and delivered it to the Parent.

 

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ARTICLE X
AMENDMENT OF REGISTRATION RIGHTS

 

This Agreement may be amended and the obligations hereunder may be waived
(either generally or in a particular instance, and either retroactively or
prospectively) only with the written consent of the Parent and each Investor
(but not including any Investor who is not affected by such amendment or
waiver).  Any amendment or waiver effected in accordance with this Article X is
binding upon each Investor (and each future holder of all such Registrable
Securities) and the Parent.  Notwithstanding the foregoing, no amendment or
waiver will retroactively affect any Investor without its consent, or will
prospectively adversely affect any Investor who no longer owns any Registrable
Securities without its consent.  Neither Article VI nor Article VII hereof may
be amended or waived in a manner adverse to an Investor without its consent.

 

ARTICLE XI

REPRESENTATIONS AND WARRANTIES

 

Each of the Company and the Parent represents and warrants to the Investors
that:

 

11.1         Capitalization.  The authorized and outstanding Equity Interests of
the Parent as of the date hereof are as described on Schedule 11.01.  All issued
and outstanding Equity Interests of the Parent are duly authorized and validly
issued, fully paid and nonassessable, and such Equity Interests were issued in
material compliance with all applicable state, federal and foreign laws
concerning the issuance of securities.  No Equity Interests of the Parent, other
than those described above, are issued and outstanding.  Except as set forth on
Schedule 11.01, as of the date hereof, there are no preemptive or other
outstanding rights, options, warrants, conversion rights or similar agreements
or understandings for the purchase or acquisition from the Parent of any Equity
Interests of the Parent.  Except as set forth on Schedule 11.01, there are no
anti-dilution or price adjustment provisions, co-sale rights, registration
rights, rights of first refusal or other similar rights contained in the terms
governing any outstanding security of the Parent that will be triggered by the
issuance of the Advisory Shares.

 

11.2         Valid Issuance of Securities.  The Advisory Shares are duly
authorized and, when issued and delivered in accordance with the terms of the
Credit Agreement, will be duly and validly issued, fully paid and nonassessable,
free from all Taxes and Liens with respect to the issue thereof.  The issuance
and delivery of the Advisory Shares is not subject to preemptive rights of
stockholders of the Parent that have not been fully waived.  The issuance of the
Advisory Shares does not require approval of the stockholders of the Parent,
including without limitation pursuant to the rules of the NYSE Amex.

 

11.3         Form S-3 Eligibility; Registration Rights.  The Parent is eligible
to register the Advisory Shares for resale under the Securities Act by the
Investors using a Registration Statement on Form S-3. Other than as disclosed in
the Parent’s documents filed with the SEC, the Parent has not agreed to register
any of its authorized or outstanding securities under the Securities Act.

 

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11.4         Exchange Act Compliance.  The common stock of the Parent is
registered pursuant to Section 12(b) of the Exchange Act and is listed on the
NYSE Amex.  The Parent has taken no action designed to terminate, or likely to
have the effect of terminating, the registration of its common stock under the
Exchange Act or designed to delist, or likely to have the effect of delisting,
its common stock from the NYSE Amex.   The Parent is in compliance with all of
the presently applicable requirements for continued listing of its common stock
on the NYSE Amex.

 

11.5         Private Offering.  No form of general solicitation or general
advertising has been or will be used by the Parent or any representative thereof
in connection with the offer or sale of the Advisory Shares.  Assuming the
accuracy and validity of representations of the Investors in Section 12.17(a),
no registration or qualification of the Advisory Shares pursuant to the
provisions of the Securities Act or any state securities or “blue sky” laws will
be required by the offer, sale or issuance of the Advisory Shares pursuant to
this Agreement and the Credit Agreement.  The Parent will not, and will cause
each Person acting on its behalf not to, offer or sell the Advisory Shares or
any other security so as to require the registration of the Advisory Shares
pursuant to the provisions of the Securities Act or any state securities or
“blue sky” laws, unless the Advisory Shares are so registered and qualified.

 

11.6         Application of Takeover Protections; Rights Agreement.  The Parent
and its board of directors have taken all necessary action, if any, in order to
render inapplicable any control share acquisition, business combination, poison
pill (including distribution under a rights agreement) or similar anti-takeover
provision under its charter or the Laws of the jurisdiction of its formation
which is or could be applicable to any Lender as a result of the issuance of the
Advisory Shares.  The Parent has not adopted a shareholder rights plan or
similar arrangement relating to accumulations of beneficial ownership of its
common stock or a change in control of the Parent.

 

11.7         Transfer Taxes.  On the date of issuance of the Advisory Shares,
all stock transfer or other Taxes that are required to be paid in connection
with the issuance of the Advisory Shares under this Agreement will have been
fully paid or provided for by the Parent.

 

ARTICLE XII
MISCELLANEOUS

 

12.1         Conflicting Instructions.  A person or entity is deemed to be a
holder of Registrable Securities whenever such person or entity owns of record
such Registrable Securities.  If the Parent receives conflicting instructions,
notices or elections from two or more persons or entities with respect to the
same Registrable Securities, the Parent will act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.

 

12.2         Notices.  Any notices required or permitted to be given under the
terms of this Agreement will be given and deemed received as set forth in
Section 11.02 of the Credit Agreement.

 

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12.3         Waiver.  Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, does not operate as a waiver thereof.

 

12.4         Governing Law.  This Agreement will be governed by and interpreted
in accordance with the laws of the State of New York without regard to the
principles of conflict of laws that would require the application of the law of
any other jurisdiction.

 

12.5         Severability.  If any provision of this Agreement is invalid or
unenforceable under any applicable statute or rule of law, then such provision
will be deemed modified in order to conform to such statute or rule of law.  Any
provision hereof that may prove invalid or unenforceable under any law will not
affect the validity or enforceability of any other provision hereof.

 

12.6         Entire Agreement.  This Agreement and the Credit Agreement
(including all schedules and exhibits thereto) (the “Transaction Documents”)
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof and thereof.  There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein or
therein.  This Agreement supersedes all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof.

 

12.7         Successors and Assigns.  Subject to the requirements of Article IX
hereof, this Agreement inures to the benefit of and is binding upon the
successors and assigns of each of the parties hereto.  Notwithstanding anything
to the contrary herein, including, without limitation, Article IX, the rights of
an Investor hereunder are assignable to and exercisable by a bona fide pledgee
of the Registrable Securities in connection with an Investor’s margin or
brokerage accounts.

 

12.8         Use of Pronouns.  All pronouns refer to the masculine, feminine or
neuter, singular or plural, as the context may require.

 

12.9         Headings.  The headings of this Agreement are for convenience of
reference only, are not part of this Agreement and do not affect its
interpretation.

 

12.10       Counterparts.  This Agreement may be executed in two or more
counterparts, each of which is deemed an original but all of which constitute
one and the same agreement. This Agreement, once executed by a party, may be
delivered to the other party hereto by facsimile transmission, and facsimile
signatures are binding on the parties hereto.

 

12.11       Further Assurances.  Each party will do and perform, or cause to be
done and performed, all such further acts and things, and will execute and
deliver all other agreements, certificates, instruments and documents, as
another party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

 

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12.12       Consents.  All consents and other determinations to be made by the
Investors pursuant to this Agreement will be made by the Investors holding a
majority in interest of the then-outstanding Registrable Securities.

 

12.13       No Strict Construction.  The language used in this Agreement is
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.

 

12.14  No Third-Party Beneficiaries.  Other than as specifically provided
herein, this Agreement is intended to inure to the benefit of the parties hereto
only, and no other party shall have any rights, express or implied, by reason of
this Agreement.

 

12.15         Saturdays, Sundays, Holidays, Etc.  If the last or appointed day
for the taking of any action required or permitted hereby shall be a Saturday,
Sunday, a nationally recognized holiday, or a state holiday in the State of New
York, then such action may be taken on the next succeeding business day.

 

12.16         Independent Nature of Investors’ Obligations and Rights.  The
obligations of each Investor under any of the Transaction Documents are several
and not joint with the obligations of any other Investor, and no Investor shall
be responsible in any way for the performance of the obligations of any other
Investor under any Transaction Document.  Nothing contained herein or in any
Transaction Document, and no action taken by any Investor pursuant thereto,
shall be deemed to constitute the Investors as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Investors are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Document.  Each
Investor shall be entitled to independently protect and enforce its rights,
including without limitation the rights arising out of this Agreement or out of
the other Transaction Documents, and it shall not be necessary for any other
Investor to be joined as an additional party in any proceeding for such
purpose.  The Parent and the Company has elected to provide all Investors with
the same terms and Transaction Documents for the convenience of the Parent and
the Company and not because it was required or requested to do so by the
Investors.

 

12.17       Advisory Shares.

 

(a)           In connection with the issuance of the Advisory Shares, each
Investor, for itself and no other Investor, makes the following representations:

 

(i)            Such Investor is acquiring the Advisory Shares for its own
account, not as nominee or agent, and not with a view to, or for resale in
connection with, any distribution or public offering thereof within the meaning
of the Securities Act; provided that by, making the representations herein, such
Investor does not agree to hold any of the Advisory Shares for any minimum or
specific term and reserves the right to dispose of the Advisory Shares at any
time in accordance with, or pursuant to, a registration statement or an
exemption from the registration requirements of the Securities Act.

 

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(ii)           Such Investor understands that (A) the Advisory Shares have not
been registered under the Securities Act; (B) the Advisory Shares are being
issued pursuant to an exemption from registration, based in part upon the
Parent’s reliance upon the statements and representations made by the Investors
in this Agreement, and the Advisory Shares must be held by such Investor
indefinitely, and such Investor must, therefore, bear the economic risk of such
investment indefinitely, unless a subsequent disposition thereof is registered
under the Securities Act or is exempt from such registration; (C) each
certificate representing the Advisor Shares will be endorsed with the following
legend, and each book entry evidencing the Advisory Shares shall contain the
following notation, until the earlier of (1) the time at which the Advisory
Shares have been sold under a registration statement under the Securities Act,
or (2) the date on which the Advisory Shares may be immediately sold without
registration and without restriction (including without limitation as to sales
volume by the holder thereof) as to the number of Advisory Shares to be sold
pursuant to Rule 144 under the Securities Act or otherwise:

 

THESE SHARES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE FORM AND SUBSTANCE OF WHICH SHALL BE
REASONABLY ACCEPTABLE TO THE ISSUER, THE REGISTRAR AND THE TRANSFER AGENT. 
THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
WITH A REGISTERED BROKER-DEALER OR OTHER FINANCIAL INSTITUTION THAT IS AN
“ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT.

 

and (D) the Parent will instruct any transfer agent not to register any transfer
of the Advisory Shares (or any portion thereof) until the applicable time set
forth in clause (C) above unless the conditions specified in the foregoing
legend are satisfied or if the opinion of counsel referred to above is to the
further effect that such legend is not required in order to establish compliance
with any provisions of the Securities Act or this Agreement, or other
satisfactory assurances of such nature are given to the Parent.

 

(iii)          Such Investor has such knowledge and experience in financial or
business matters that it is capable of evaluating the merits and risks of the
investment in connection with the transactions contemplated in the Credit
Agreement and this Agreement.

 

(iv)          Such Investor is an “accredited investor” as such term is defined
in Rule 501(a) under the Securities Act.

 

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(v)           Such Investor is organized under the laws of the state set forth
beneath such Investor’s name on Schedule 2.01 to the Credit Agreement and its
principal place of operations is in the state set forth beneath such Investor’s
name on Schedule 2.01 to the Credit Agreement.

 

(b)           The Parent acknowledges and agrees that any holder of Advisory
Shares may from time to time pledge and/or grant a security interest in some or
all of the Advisory Shares pursuant to a bona fide margin agreement in
connection with a bona fide margin account with a financial institution that is
an “accredited investor,” as defined in Rule 501(a) under the Securities Act,
and, if required under the terms of such agreement or account, such holder may
transfer pledged or secured Advisory Shares to the pledgees or secured parties. 
Such a pledge or transfer shall not be subject to approval or consent of the
Parent and no legal opinion of legal counsel to the pledgee, secured party or
pledgor shall be required in connection with the pledge, but such legal opinion
may be required in connection with a subsequent transfer following default by
such holder in respect of the pledge.  No notice shall be required of such
pledge.  At the applicable holder’s expense, the Parent will execute and deliver
such reasonable documentation as a pledgee or secured party of Advisory Shares
may reasonably request in connection with a pledge or transfer of the Advisory
Shares including the preparation and filing of any required prospectus
supplement under Rule 424(b)(3) of the Securities Act or other applicable
provision of the Securities Act to appropriately amend the list of selling
stockholders thereunder.

 

(c)           Book entries evidencing, and certificates representing, the
Advisory Shares shall not contain any notation or legend (including the notation
and legend set forth in this Section 12.17): (i) following a sale of such
Advisory Shares pursuant to an effective registration statement; (ii) following
a sale of such Advisory Shares pursuant to Rule 144 under the Securities Act, or
(iii) while such Advisory Shares are eligible for sale under Rule 144 without
volume or manner of sale limitations, or (iv) if such notation or legend is not
required under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the SEC).  Following
such time as restrictive notations are not required to be made relative to any
book entry evidencing, or legends are not required to be placed on certificates
representing, the Advisory Share, the Parent will (A) promptly upon a request by
a holder of Advisory Shares, instruct the transfer agent for the Parent to
remove the restrictive notation from book entries evidencing such Advisory
Shares; and (B) no later than three Business Days following the delivery by a
holder of Advisory Shares to the Parent or the Parent’s transfer agent of a
certificate representing such Advisory Shares containing a restrictive legend,
deliver or cause to be delivered to such holder a certificate representing such
Advisory Shares that is free from all restrictive and other legends.

 

(d)           The Parent shall direct Parent’s transfer agent to remove, and
cause its counsel to issue a legal opinion to the Parent’s transfer agent
promptly after the date that is six months after the original issuance of the
Advisory Shares if required by the Parent’s transfer agent to effect the removal
of, any notation on the book entries evidencing, or legend on the certificates
representing, the Advisory Shares; provided, however, that with respect to any
Advisory Shares held by an affiliate of the Parent, the time period to cause the
delivery of such direction and legal opinion shall be extended to the date that
is 90 days after such person is no longer an affiliate of the Parent.  The
Parent may not make any notation on its records or

 

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give instructions to any transfer agent of the Parent that enlarge the
restrictions on transfer set forth in this Section 12.17.  Certificates for the
Advisory Shares subject to legend removal hereunder shall be transmitted by the
transfer agent of the Parent to a holder by crediting the account of the
holder’s prime broker with the Depository Trust Company system.

 

(e)           Each holder of Advisory Shares, severally and not jointly with the
other holders, agrees that the removal of the restrictive notation on the book
entries evidencing, or legend from certificates representing, the Advisory
Shares, as set forth in this Section 12.17, is predicated upon the Parent’s
reliance that such holder will sell its Advisory Shares pursuant to either the
registration requirements of the Securities Act, including any applicable
prospectus delivery requirements, or an exemption therefrom.

 

(f)            So long as a Investor or any Affiliate or Approved Funds thereof
owns any Advisory Shares, the Parent will use its reasonable best efforts to
maintain the automated quotation of its common stock, including the Advisory
Shares, on the NYSE Amex or an alternative listing on the NASDAQ Stock Market
or, if such quotation on the NYSE Amex or the NASDAQ Stock Market is not
possible, qualification for trading on the OTCBB, and will comply in all
material respects with the Parent’s reporting, filing and other obligations
under the bylaws or rules of the Financial Industry Regulatory Authority, Inc.
and such exchange or listing, if applicable.

 

(g)           If applicable, the Parent will file with the SEC a Notice of Sale
of Securities on Form D with respect to the Advisory Shares, as required by
Regulation D under the Securities Act, no later than fifteen (15) days after the
date of issuance of the Advisory Shares.  The Parent will promptly and timely
file all documents and pay all filing fees required by any states’ securities
laws in connection with the issuance of the Advisory Shares.

 

(h)           For so long as the Advisory Shares remain outstanding and are
“restricted securities” within the meaning of Rule 144(a)(3) under the
Securities Act, the Parent will furnish to the holders of the Advisory Shares
and prospective purchasers of the Advisory Shares designated by such holders,
upon request of such holders or such prospective purchasers, the information
required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act,
unless the Parent is then subject to and in compliance with Section 13 or
15(d) of the Exchange Act.

 

(i)              With a view to making available to the holders of the Advisory
Shares the benefits of certain rules and regulations of the SEC which may permit
the sale of the Advisory Shares to the public without registration, the Parent
agrees to use its best efforts to file with the SEC, in a timely manner, all
reports and other documents required by the Parent under the Exchange Act.  The
Parent will otherwise take such further action as any holder of Advisory Shares
may reasonably request, all to the extent required from time to time to enable
such holder to sell the Advisory Shares without registration under the
Securities Act.

 

[signature pages follow]

 

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IN WITNESS WHEREOF, the undersigned Investors, the Company and Parent have
caused this Agreement to be duly executed as of the date first above written.

 

 

COMPANY:

 

 

 

GEOKINETICS HOLDINGS USA, INC.

 

 

 

 

 

 

By:

/s/ Gary L. Pittman

 

 

Name: Gary L. Pittman

 

 

Title: Executive Vice President and Chief Financial Officer

 

 

 

 

 

PARENT:

 

 

 

GEOKINETICS INC.

 

 

 

 

 

 

By:

/s/ Gary L. Pittman

 

 

Name: Gary L. Pittman

 

 

Title: Executive Vice President and Chief Financial Officer

 

[Signatures continued on next page]

 

[Signature Page to Registration Rights Agreement]

 

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INVESTORS:

 

 

 

WB SEISMIC, LTD.

 

 

 

 

 

 

By:

/s/ Mark Strefling

 

 

Name: Mark Strefling

 

 

Title: Director

 

 

 

ADDRESS:

 

 

 

 

c/o Whitebox Advisors, LLC

 

 

3033 Excelsior Blvd., Suite 300

 

 

Minneapolis, MN 55416

 

 

Attention: Jake Mercer

 

 

Facsimile: 612-253-6149

 

 

 

(any notice hereunder to this Investor shall include a copy to):

 

 

 

 

Faegre & Benson LLP

 

 

2200 Wells Fargo Center

 

 

90 South Seventh Street

 

 

Minneapolis, Minnesota 55402

 

 

Attn: Michael K. Coddington

 

 

Facsimile: 612-766-1600

 

 

[Signature Page to Registration Rights Agreement]

 

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ECF VALUE FUND, L.P.

 

 

 

By:

Gates Capital Partners, L.P.

 

Its:

General Partner

 

 

 

 

By:

Gates Capital Management, Inc.

 

Its:

General Partner

 

 

 

 

 

 

By:

/s/ Jeffrey L. Gates

 

 

Name: Jeffrey L. Gates

 

 

Title: President

 

 

 

ECF VALUE FUND II, L.P.

 

 

 

By:

Gates Capital Partners, L.P.

 

Its:

General Partner

 

 

 

By:

Gates Capital Management, Inc.

 

Its:

General Partner

 

 

 

 

 

 

By:

/s/ Jeffrey L. Gates

 

 

Name: Jeffrey L. Gates

 

 

Title: President

 

 

 

ECF VALUE FUND INTERNATIONAL LTD.

 

 

 

By:

Gates Capital Management, Inc.

 

Its:

Investment Advisor

 

 

 

 

 

 

By:

/s/ Jeffrey L. Gates

 

 

Name: Jeffrey L. Gates

 

 

Title: President

 

 

 

 

 

 

ADDRESS FOR EACH OF THE FOREGOING INVESTORS:

 

 

 

 

c/o Gates Capital Management, Inc.

 

 

1177 Ave. of Americas, 32nd Floor

 

 

New York, NY 10036

 

 

Attention: Jeff Gates

 

 

[Signature Page to Registration Rights Agreement]

 

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(any notice hereunder to this Investor shall include a copy to):

 

 

 

 

Faegre & Benson LLP

 

 

2200 Wells Fargo Center

 

 

90 South Seventh Street

 

 

Minneapolis, Minnesota 55402

 

 

Attn: Michael K. Coddington

 

 

Facsimile: 612-766-1600

 

 

[Signature Page to Registration Rights Agreement]

 

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EXHIBIT A

GEOKINETICS INC.

(the “Company”)

 

QUESTIONNAIRE TO THE SELLING SECURITYHOLDERS

 

This Questionnaire is to be completed, signed and faxed or emailed to
                                     at                                     or
                             , by the person or entity indicated on the cover of
this Questionnaire (the “Selling Securityholder”) whose securities of the
Company are being registered pursuant to a Registration Statement on Form S-3. 
Retain a duplicate copy for your files.  If you do not return the Questionnaire
by the foregoing deadline, your shares may not be included in the Registration
Statement.

 

If you are uncertain about any of the following questions as they apply to your
situation, please supply all relevant facts.  Include separate sheets with
details if necessary.  If you have any questions, please call the Company’s
counsel,                                , at (        )
                           .

 

Please notify me immediately if any of the information disclosed in your answers
changes.  Please answer all questions.  Indicate “none” or “not applicable” when
appropriate.  Information should be given as of the date of this Questionnaire,
even if previously reported to the Company.

 

IN ANSWERING THESE QUESTIONS, PLEASE REFER TO THE INSTRUCTIONS AT THE BEGINNING
OF THIS QUESTIONNAIRE.

 

 

Name of Selling Securityholder:

 

 

 

A-1

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Instructions and Definitions

 

The following instructions and definitions are furnished to aid you in preparing
your answers to this Questionnaire.

 

1.             For purposes of this Questionnaire the term “Company” means
Geokinetics Holdings USA, Inc.

 

2.             “Beneficial” ownership.  Beneficial ownership shall have the
meaning ascribed to it in Section 13(d) of the Securities Exchange Act of 1934,
as amended.  The SEC has taken the position that if you have sole or shared
voting power or dispositive power or the ability to acquire either sole or
shared voting or dispositive power of a security within 60 days, you are the
beneficial owner of that security, even though that security is not registered
in your name.  Thus, for example, you could be the beneficial owner of
securities in a trust or estate of which you are a trustee or executor, or of
which you are one of the trustees or executors, or you could be the beneficial
owner of securities which you have a right to purchase.

 

3.             The term “affiliate” for purposes of this Questionnaire means any
person directly or indirectly controlling, controlled by, or under common
control with the Selling Securityholder.

 

A-2

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1.             Broker-Dealer Status.

 

(a)           Are you, or are you an affiliate of, a broker-dealer registered
under the Securities Exchange Act of 1934?

 

Yes  o

 

No  o

 

 

If “yes,” please give details below.

 

(b)           Please confirm the following statement:  The Company’s equity
securities that are being issued to you were acquired in the ordinary course of
your business, and at the time the securities were issued to you, you did not
have any agreement or understanding, directly or indirectly, with any person to
distribute the securities.

 

Confirmed  o

 

Cannot Confirm  o

 

 

If “cannot confirm,” please give details below.

 

2.             Relationships with the Company.

 

(a)           Have you held any position or office with the Company, its
predecessors or affiliates within the last three years?

 

Yes  o

 

No  o

 

 

If “yes,” please give details below.

 

(b)           Have you had any other material relationship with the Company, its
predecessors or affiliates within the last three years?

 

Yes  o

 

No  o

 

 

If “yes,” please give details below.

 

A-3

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3.             Equity Securities Beneficially Owned By You.

 

(a)           Please state the number and type of equity securities of the
Company  beneficially owned (please see instructions and definitions on page 2)
by you as of the date of this Questionnaire, including securities which are
exercisable or convertible into equity securities within 60 days of the date of
this Questionnaire.

 

Class

 

Number of Shares

of Security

 

Beneficially Owned

 

 

 

 

 

 

 

 

 

 

(b)           If any natural person or entity other than you holds or shares
voting power or dispositive power with respect to the Company’s equity
securities listed in response to Question 3(a), please provide the names of the
natural persons (including titles) or entities that hold or share such voting
power or dispositive power and indicate the number of the Company’s equity
securities covered thereby.

 

(c)           With respect to the Company’s equity securities listed in response
to Questions 3(a) and 3(b) for which an entity holds or shares voting power or
dispositive power, please provide the names of the natural persons (including
titles) or entities that control the entity or entities listed in response to
Questions 3(a) and 3(b).

 

(d)           Please continue to list the natural persons or entities that
control the entities listed in response to Question 3(c) and the entities listed
in response to this Question 3(d) until you have listed only natural persons
(including titles) that control the applicable entity or entities.

 

(e)           If any person or entity disclaims beneficial ownership of any of
the equity securities you have listed in response to Question 3, please so
indicate:

 

A-4

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