UNDERWRITING AGREEMENT



 



UNDERWRITING AGREEMENT



This underwriting agreement (the “Agreement”) is made and entered into on 25
July 2003 by and among:



	(i)	 	the entities identified in Schedule 1 hereto (each individually, an
“Equity Investor”, and collectively the “Equity Investors”), who are all
shareholders (or affiliated with shareholders) in Petroleum Geo-Services
ASA (“PGS”) as of the date hereof, and
	 
	(ii)	 	PGS.
	 
	1.	 	Definitions



All capitalized terms in this Agreement not defined herein shall have the
same meaning as set forth in that certain plan of reorganisation for
Petroleum Geo-Services ASA, to be filed with the United States Bankruptcy
Court, Southern District of New York, on or about the date of this Agreement
(the “Plan”).


In this Agreement, the following terms shall have the following meanings:



	 	 	 
	ad hoc Committee	 	
Has the meaning set forth in the Plan Support
Agreement; in the event that the Creditors’
Committee (as defined in the Plan Support
Agreement), is substituted for the ad hoc
Committee in accordance with the terms of the
Plan Support Agreement, then the term “ad hoc
Committee”, as used herein, shall be deemed
to refer to the Creditors’ Committee
	 	 	 
	Allowed Rights Holders	 	
Any holder (including each Equity Investor)
of more than [     ] Allowed Existing
Ordinary Shares as of the Effective Date or
such other date as designated in the Plan
	 	 	 
	Business Day	 	
Means any day other than a Saturday, Sunday,
or a “legal holiday,” as defined in
Bankruptcy Rule 9006(a)
	 	 	 
	Commitment	 	
The maximum amount of funds set forth in the
column entitled “Commitment” on Schedule 1,
attached hereto and made a part hereof, which
maximum amount represents the amount an
Equity Investor has committed itself
hereunder
	 	 	 
	Equity Investor Amount	 	
With respect to an individual Equity
Investor, immediately available funds in an
amount equal to the product of such Equity
Investor’s Total Commitment Percentage
multiplied by $21.25 million
	 	 	 
	Excess Rights Offering

Shares	 	
The Rights Offering Shares not purchased by
the Allowed Rights Holders pursuant to the
Plan
	 	 	 
	Forfeited Shares	 	
Has the meaning set forth in Section 9.1.



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	Major Event	 	
As used herein, (A) a Force Majeure
occasioned exclusively by the following: (i)
forces of nature without interference of any
person, and (ii) acts of war, including acts
of terrorism; or (B) an industrial accident
caused by forces outside of the control of
the parties to this Agreement.
	 	 	 
	Material Adverse Change	 	
An adverse change in the consolidated
business, assets, operations, or earnings of
PGS and its consolidated subsidiaries which
cause the enterprise value of PGS as of the
date that an Equity Investor alleges such
Material Adverse Change occurred to be equal
to or less than 80% of the mid-point of the
range of enterprise values of PGS as set
forth in the Disclosure Statement filed with
the Bankruptcy Court on the Commencement Date
	 	 	 
	Offer Period	 	
The period during which the Rights Offering
Shares (excluding any Reserved Rights
Offering Shares purchased by the Equity
Investors) are offered to the Allowed Rights
Holders, such offer being made in compliance
with the Plan and any applicable securities
laws
	 	 	 
	Package B Holders	 	
Those holders of Class 4 Allowed Claims under
the Plan (i) that elected or were deemed to
elect to receive their Pro Rata Share of the
Package B Distribution, and (ii) whose New
PGS Ordinary Shares became Offered Shares in
accordance with the terms of the Plan
	 	 	 
	Reserved Rights Offering

Shares	 	
25% of the Rights Offering Shares reserved
for purchase by the Equity Investors pursuant
to the terms of the Plan and this Agreement
	 	 	 
	Rights Offering Shares	 	
30% of the New PGS Ordinary Shares
	 	 	 
	Term Sheet	 	
The Petroleum Geo-Services ASA Summary of
Proposed Terms for Balance Sheet
Restructuring attached as Exhibit A to the
Plan Support Agreement
	 	 	 
	Total Commitment	 	
The sum of the Commitments
	 	 	 
	Total Commitment Percentage	 	
The percentage set forth in the column
entitled “Percentage of Total Commitment” on
Schedule 1 attached hereto and made a part
hereof




	2.	 	Background and Purpose; Relationship with Plan Support Agreement
	 
	2.1	 	On 18 June 2003, PGS entered into the Plan Support Agreement. Subject
to the reservations and qualifications set forth in the Plan Support
Agreement, the parties thereto agreed to support the implementation of
the Plan which, among other



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	 	 	things, would provide for a resolution,
settlement and treatment of the claims and causes of action of the
Bondholders, the Banks, the Existing Junior Debentureholders, the
Allowed Rights Holders, and the Equity Investors as set forth in the
Term Sheet and Plan.
	 
	 	 	Part of the consideration for the execution of the Plan Support
Agreement was that the Equity Investors and the Allowed Rights Holders
would, pursuant to the terms of the Plan, be entitled to participate in
the Rights Offering pursuant to this Agreement and the Plan. In
exchange for such an opportunity to purchase Rights Offering Shares,
the Equity Investors agreed to support the Plan and to be bound by the
terms set forth in this Agreement.
	 
	2.2	 	The purpose of this Agreement is to define the rights and obligations of
the Equity Investors, PGS and the Package B Holders with respect to the
purchase and sale of the Reserved Rights Offering Shares and the Excess
Rights Offering Shares, if any.
	 
	3.	 	Nature of this Agreement
	 
	3.1	 	This Agreement shall be binding upon the parties hereto immediately upon
execution by all parties.




	 	 	 	 
	3.2	 	
(a)
	It is expressly agreed and understood that (i) this Agreement is
entered into by PGS for the benefit of each of the Package B Holders; (ii)
PGS shall act in compliance with the terms of the Plan; (iii) the Package
B Holders are intended third party beneficiaries of this Agreement; and
(iv) this Agreement constitutes a “third party agreement”
(‘tredjemannsløfte’) for the purposes of Norwegian law, creating binding
obligations on the Equity Investors to the Package B Holders.
	 	 
	 	 	
(b)
	Consequently, each Package B Holder (or any agent appointed
for them by the Bankruptcy Court or pursuant to the Plan) shall,
subject to Section 12.8 (so long as the remedies set forth in such
Section 12.8 are valid, binding and enforceable in full), have the
right to sue, for specific performance and/or damages, any Equity
Investor (i) who fails to comply with its obligations hereunder or
(ii) if such Equity Investor’s Commitment cannot be met in whole or
in part on account of contravention of the representations and
warranties set forth below.




	4.	 	Representations and Warranties of Equity Investors
	 
	4.1	 	Each Equity Investor represents and warrants that:




	 	(a)	 	it has sufficient knowledge and experience in financial and
business matters to evaluate the merits and risks of its investment
in Rights Offering Shares and its execution of this Agreement;

	 
	 	(b)	 	it is a shareholder of PGS or affiliated with a shareholder
of PGS and, in the case of Umoe Invest AS only, was actively
involved in the negotiation of the Term Sheet;




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	 	(c)	 	it is an “accredited investor” within the meaning of Rule
501(a) of Regulation D promulgated under the U.S. Securities Act of
1933, as amended (the “Securities Act”);
	 
	 	(d)	 	it will acquire Rights Offering Shares solely for its own
account and for investment and not with a view to, or for sale in
connection with, the distribution of such Rights Offering Shares in
the United States;
	 
	 	(e)	 	it understands that the Rights Offering Shares have not been
and may not be registered under the Securities Act or any applicable
U.S. state securities laws, and that the Securities may be resold,
pledged, hypothecated, transferred or otherwise disposed of only if
registered under the Securities Act and applicable U.S. state
securities laws, or if an exemption from such registration
requirements is available, including pursuant to any “offshore
transaction” under Regulation S under the Securities Act (provided,
that the New PGS Ordinary Shares will be registered with the Oslo
Stock Exchange and will be tradeable on such exchange subject to any
restrictions or limitations imposed thereby) ; and
	 
	 	(f)	 	it is sufficiently capitalised to undertake the obligations
set forth in this Agreement.




	4.2	 	Each party to this Agreement represents and warrants that:




	 	(a)	 	it is duly authorised to enter into this Agreement; and
	 
	 	(b)	 	compliance with the terms set forth in this Agreement does
not require any consent, approval or other authorisation from any
entity, including any governmental authority (other than the
Bankruptcy Court), and shall not violate any laws, rules, or other
regulations or such Equity Investor’s own memorandum and articles of
association.




	5.	 	Rights Offering and Commitment
	 
	5.1	 	Pursuant to the Plan, the Rights Offering Shares (not including the
Reserved Rights Offering Shares purchased by the Equity Investors) shall
be offered to the Allowed Rights Holders.
	 
	5.2	 	In addition to any subscription it may make under Section 5.1, in
accordance with this Agreement and the Plan, each Equity Investor hereby
covenants and agrees that it shall:




	 	(a)	 	as consideration for the applicable Reserved Rights Offering
Shares to be subscribed to pursuant to Section 5.2(b) below, on or
prior to the Effective Date, deposit its Equity Investor Amount with
the Rights Agent, for payment to the Package B Holders in accordance
with the Plan.
	 
	 	(b)	 	subscribe for a number of Reserved Rights Offering Shares
equal to the product of (i) its Total Commitment Percentage,
multiplied by (ii) the number



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	 	 	 	of Reserved Rights Offering Shares,
and purchase such Reserved Rights Offering Shares on the Effective
Date (or such other date as prescribed in the Plan).
	 
	 	(c)	 	purchase and pay for a number of Excess Rights Offering
Shares equal to, but not to exceed, the product of (a) its Total
Commitment Percentage, multiplied by (b) the number of Excess Rights
Offering Shares.




	5.3	 	The settlement of the purchase and sale of the Reserved Rights Offering
Shares and the Excess Rights Offering Shares shall be made pursuant to the
Plan. The parties hereto recognize that the settlement of the Excess
Rights Offering Shares may be delayed if the sale of the Rights Offering
Shares (excluding the Reserved Rights Offering Shares purchased by the
Equity Investors) to the Allowed Rights Holders can only be made on a
registered basis under US securities laws. Such delay shall not affect
the obligations of the Equity Investors set forth herein. PGS shall take
all reasonable steps to ensure that the registration is completed as soon
as reasonably practical, as set forth in Section [6.11] of the Plan.
	 
	5.4	 	The parties hereto agree that, on or prior to the Voting Deadline, the
Equity Investors may, by separate agreement amongst themselves, and after
written notice to PGS and the ad hoc Committee, agree to redistribute the
Commitments, provided that the Total Commitment shall not be increased or
decreased as a result thereof.
	 
	6.	 	Validity of the Commitments
	 
	6.1	 	Subject to 6.2 below, the Commitments shall immediately lapse upon the
termination of the Plan Support Agreement (other than for reasons set
forth in Sections 10(i) of the Plan Support Agreement) in accordance with
the terms thereof, provided that, notwithstanding the termination of the
Plan Support Agreement on the Effective Date of the Plan, if the sale of
the Rights Offering Shares (excluding the Reserved Rights Offering Shares
purchased by the Equity Investors) to the Allowed Rights Holders can only
be made on a registered basis under US securities laws, this Agreement
shall only terminate on the earlier to occur of the Rights Offering
Distribution Date or March 31, 2004.




	6.2	(a)	 	Following the execution of this Agreement and prior to the last day
of the Offer Period, any Equity Investor that is not in breach of the
terms of this Agreement or the Plan may, by motion to the Bankruptcy
Court, seek the Bankruptcy Court’s determination that a Major Event has
occurred and that such Major Event directly caused a Material Adverse
Change. If the Bankruptcy Court, after a hearing, determines that a Major
Event has occurred and that such Major Event directly caused a Material
Adverse Change, the Commitments of each such non-breaching Equity Investor
shall
immediately lapse. If the Bankruptcy Court, following notice and a
hearing, determines that no Major Event has occurred or that an
existing Major Event was not the direct cause of any Material
Adverse Change, the Equity Investors obligations under this
Agreement and the Plan shall continue. During the duration of any
such Bankruptcy Court hearings pursuant to this Section 6.2(a), the
obligations of the Equity Investors that are a party to such
proceedings shall be stayed.



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	 	(b)	 	If any Bankruptcy Court proceedings are initiated pursuant to
Section [6.2](a), the moving Equity Investor(s) shall provide notice
to each Package B Holder, PGS and to the Disbursing Agent (or such
agent appointed by the Bankruptcy Court or the pursuant to the Plan)
for the Package B Distribution.
	 
	 	(c)	 	The moving Equity Investor(s) shall, at all times, carry the
burden of proving the existence of a Major Event and that such Major
Event directly caused the alleged Material Adverse Change.




	6.3	 	This Agreement may be terminated on 10 Business Days written notice to
PGS and the Creditors’ Committee, if, at a time when the Equity Investors
are the registered holders of either any of the Allowed Existing Ordinary
Shares or the New PGS Ordinary Shares, such shares are not listed on the
Oslo Stock Exchange and are not so listed at the end of such 10 Business
Day notice period.
	 
	6.4	 	Upon termination of this Agreement, all obligations hereunder shall
terminate and shall be of no further force and effect; provided, however,
that the rights of the Package B Holders set forth in Section 3.2 above
shall survive the termination of this Agreement.
	 
	7.	 	Information Relating to the Company



In signing this Agreement, each Equity Investor confirms, represents and
warrants that it has received, and had the opportunity to review the Plan
Support Agreement, the Term Sheet, the Plan, and all publicly available
information pertaining to PGS, its business, operations, and financial
information as it has deemed necessary. In the case of Umoe Invest AS only, it
acknowledges that its majority shareholder, Mr. Jens Ulltveit-Moe, is involved
in the management of PGS and participated in the negotiation of the Term Sheet.



	8.	 	Fees, Costs and Commissions



The right of the Equity Investors to purchase the Reserved Rights Offering
Shares and to participate in the Rights Offering as an Allowed Rights Holder
represents the consideration the Equity Investors receive in return for (i) the
Equity Investors underwriting the purchase of the Rights Offering Shares for
US$85 million, the proceeds of which are payable to the Package B Holders, and
(ii) the undertakings given by the Equity Investors in the Plan Support
Agreement. No Equity Investor shall be entitled to any fee, commission or
other consideration from PGS, the ad hoc Committee, the Package B Holders or
any other party in respect of their Commitments and this Agreement.


All parties to this Agreement shall pay their own costs and expenses incurred
in connection herewith; provided, however, that PGS has agreed, pursuant to
other agreements, to pay the reasonable fees and expenses of the ad hoc
Committee (including its reasonable attorneys’ and financial advisor fees and
expenses). PGS confirms that it has not and will not agree to pay to any
person any compensation in respect of the Commitments or the purchase of Rights
Offering Shares hereunder.


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	9.	 	Failure to Honour Commitments
	 
	9.1	 	If any Equity Investors fails to comply with the terms of this Agreement
or the Plan, with respect to the purchase of any Reserved Rights Offering
Shares or Excess Rights Offering Shares, then:




	 	(a)	 	such defaulting Equity Investor shall immediately forfeit its
right to receive such shares (the “Forfeited Shares”) but shall
still be entitled to participate in the Rights Offering as an
Allowed Rights Holder;
	 
	 	(b)	 	at the time of each such default, the Rights Agent shall send
a written notice (the “Forfeited Shares Notice”) to any
non-defaulting Equity Investor informing it of the number of
Forfeited Shares available for sale, and the price payable in
respect therefore;
	 
	 	(c)	 	if a Forfeited Shares Notice is sent by the Rights Agent,
each non-defaulting Equity Investor shall have the right, but not
the obligation, to purchase any or all of the Forfeited Shares for
the purchase price payable by the defaulting Equity Investor (if two
non-defaulting Equity Investors desire to purchase such shares, and
they cannot agree amongst themselves to the amount that each such
Equity Investor shall purchase, such shares shall be evenly divided
between each such Equity Investor);
	 
	 	(d)	 	if any non-defaulting Equity Investor elects to purchase
Forfeited Shares pursuant to a Forfeited Shares Notice, within five
(5) business days of the date on such notice, it shall deposit, in
immediately available funds, the applicable purchase price with the
Rights Agent and the Forfeited Shares so purchased shall be
transferred to the purchasing non-defaulting Equity Investor as soon
as practicable thereafter. Any such purchase shall reduce the
Commitment of the defaulting Equity Investor to the Package B
Holders as if the defaulting Equity Investor had made such purchase
when due;
	 
	 	(e)	 	if, after a Forfeited Shares Notice is sent by the Rights
Agent, any Forfeited Shares are not purchased by a non-defaulting
Equity Investor then, with respect to Forfeited Shares consisting of
Reserved Rights Offering Shares, such Forfeited Shares shall be
included as Rights Offering Shares as part of the Rights Offering,
and, with respect to Forfeited Shares consisting of Excess Rights
Offering Shares, such shares shall be distributed pro rata to the
Package B Holders (if such pro rata distribution is not practicable,
the Rights Agent shall sell such Forfeited Shares in the market and
distribute the proceeds therefrom pro rata to the Package B
Holders); and
	 
	 	(f)	 	subject to Section 12.8 (so long as the remedies set forth in
such Section 12.8 are valid, binding and enforceable in full), the
defaulting Equity Investor will remain liable for its Commitments to
the Package B Holders for any Forfeited Shares not purchased by the
defaulting Equity Investor, the non-defaulting Equity Investors, or
other Allowed Rights Holders, and the Package B Holders shall have
the right to exercise any and all remedies available to them under
this Agreement and under applicable law and in equity.



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	10.	 	Notices



All notices to be given hereunder shall be given in writing, by courier
service, registered mail or telefax, all such notices being deemed to be
effective upon receipt within normal business hours at the recipient.


If to PGS:



	 	Strandveien 4

1324 Lysaker

Norway

fax: + 47                              



If to the Equity Investors:



	 	Umoe Invest AS

Strandveien18

Postboks 60

324 Lysaker, Norway

fax: + 47                              




	 	Compagnie Générale de Géophysique

Corporate Headquarters

Tour Maine Montparnasse

33, avenue du Maine

B.P. 191

75755 Paris cedex 15

France

Attn : C. Pettenati-Auzière

fax: 33 1 64 47 34 31




	 	TS Industri Invest AS

Postboks 2017

5501 Haugesund, Norway

fax: + 47                              



If to the ad hoc Committee:



	 	Bingham McCutchen LLP

One State Street

Hartford, CT 06103

Attention: Anthony J. Smits

Fax: 860-240-2800;



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The address details can be changed by giving notice thereof to all parties to
this Agreement, and the ad hoc Committee.



	11.	 	Governing Law; Disputes



THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY CONFLICTS OF
LAW PROVISION WHICH WOULD REQUIRE THE APPLICATION OF THE LAW OF ANY OTHER
JURISDICTION.


By its execution and delivery of this Agreement, each of the parties hereto
hereby irrevocably and unconditionally agrees for itself that any legal
action, suit or proceeding against it with respect to any matter under or
arising out of or in connection with this Agreement or for recognition or
enforcement of any judgment rendered in any such action, suit or proceeding,
may be brought in the United States District Court for the Southern District
of New York. By execution and delivery of this Agreement, each of the
parties hereto irrevocably accepts and submits itself to the nonexclusive
jurisdiction of such court, generally and unconditionally, with respect to
any such action, suit or proceeding, and waives any objection it may have to
venue or the convenience of the forum. Notwithstanding the foregoing consent
to New York jurisdiction, upon the commencement of the Chapter 11 Case, each
of the parties hereto hereby agrees that the Bankruptcy Court shall have
exclusive jurisdiction of all matters arising out of or in connection with
this Agreement. The foregoing shall not limit the ability of each Package B
Holder to enforce its rights in the courts in the Kingdom of Norway.



	12.	 	Miscellaneous
	 
	12.1	 	This Agreement may not be amended except with the express written consent
of the parties hereto and the majority of the Package B Holders.
	 
	12.2	 	For the sake of clarity, the liability of the Equity Investors hereunder
is several, but not joint.
	 
	12.3	 	The rights and obligations of each Equity Investor set forth herein shall
not be sold, assigned or otherwise transferred without the express written
consent of the majority of the Package B Holders and PGS.
	 
	12.4	 	This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original and all of which shall constitute one and the
same Agreement. Delivery of an executed signature page of this Agreement
by facsimile shall be effective as delivery of a manually executed
signature page of this Agreement.
	 
	12.5	 	This Agreement is intended to bind and inure to the benefit of the
parties and their respective successors, assigns, heirs, executors,
administrators and representatives.
	 
	12.6	 	Together with the Plan, this Agreement and the schedule attached hereto
constitutes the entire agreement between the Parties and supersedes all
prior and contemporaneous agreements, representations, warranties and
understandings of the Parties, whether oral, written or implied, as to the
subject matter hereof.



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	12.7	 	Time is of the essence with respect to all of the terms of this
Agreement.
	 
	12.8	 	PGS and each Equity Investor agree that, for the benefit of the holders
of the Package B Distribution, should an Equity Investor default in the
performance of its obligations under this Agreement to take up the Offered
Shares (and should such shares not be purchased in full by any other
Equity Investor or Allowed Rights Holder pursuant to this Agreement), then
on the earlier to occur of the Rights Offering Distribution Date or March
31, 2004 (as applicable, the “Payment Date”), the Disbursing Agent for the
Package B Distribution (or such other entity appointed by the Bankruptcy
Court or pursuant to the Plan) shall be entitled to demand payment of an
amount of liquidated damages, which amount shall be determined by
multiplying the number of Offered Shares not subscribed to and purchased
by such Equity Investor in accordance with its obligations under this
Agreement or by any other Equity Investor or Allowed Rights Holder,
multiplied by the difference between the Rights Exercise Price and the
market price of the New PGS Ordinary Shares as at the Payment Date,
together with interest on such amount from the Payment Date to the date of
payment thereof at 10% per annum, together with the costs of collection
thereof, including attorneys fees and expenses. In agreeing to the
aforementioned sum, the parties acknowledge and confirm that the injury to
the Package B Holders which would result from such a breach would be
difficult or impossible of accurate estimation but that such sum will be a
reasonable pre-estimate of the probable loss from such a breach. The
parties agree to accept said sum as full and complete payment for any and
all claims the Package B Holders may have for the Equity Investors’
breaches of the Agreement and, upon such a breach by an Equity Investor,
the Package B Holders shall not be entitled to sue or initiate any action
against such breaching Equity Investor to recover damages other than the
Package B Holders’ right to receive the foregoing liquidated damages..
	 
	 	 	 
	 
	 	 	 




	 	 	 	[Remainder of page intentionally blank; remaining pages are signature pages.]



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	Umoe Invest AS	 	
Petroleum Geo-Services ASA
	 	 	 
	 	 	 
	
	 	


	By:	 	
By:
	 	 	 
	 	 	 
	 	 	 
	Compagnie Générale de Géophysique	 	
TS Industri Invest AS
	 	 	 
	 	 	 
	
	 	


	By: Christophe PETTENATI-AUZIERE	 	
By:
	 	 	 



On behalf of the ad hoc Committee, the undersigned attorney for the ad hoc
Committee, acknowledges and agrees that this Underwriting Agreement is in
form and substance satisfactory to the ad hoc Committee.


BINGHAM MCCUTCHEN LLP


 





Anthony J. Smits

Partner



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SCHEDULE 1




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Percentage of Total
	Equity Investor	 	Address	 	Commitment	 	Commitment
	
	 	
	 	
	 	

	Umoe Invest AS
	 	 	 	 	 	USD 60,000,000	 	 	70.59	%
	Compagnie Générale de Géophysique
	 	 	 	 	 	USD 22,000,000	 	 	25.88	%
	TS Industri Invest AS
	 	 	 	 	 	USD   3,000,000	 	 	3.53	%
	 
	 	 	 	 	 	
	 	 	
	 
	SUM
	 	 	 	 	 	USD 85,000,000	 	 	100.00	%
	 
	 	 	 	 	 	
	 	 	
	 




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