Exhibit 10.12


 


AMENDMENT
NO. 2


 


This AMENDMENT
NO. 2 (this “Amendment No. 2”) is made as of May 1, 2004 among
GeoLease Partners, L.P., a Delaware limited partnership (the “Partnership”),
the undersigned Guarantors (“Guarantors”) and Geokinetics Inc., a Delaware
corporation (the “Company”). 
This Amendment No. 2 is made with reference to that Lease
Agreement, dated October 1, 1999 as Amended and Restated as of May 2, 2003, as
amended by Amendment No. 1 as of May 2, 2003, among the Company, the Guarantors
and the Partnership (collectively, the “Lease Agreement”).  All capitalized terms used herein and not
otherwise defined shall have the meanings assigned to such terms in the Lease
Agreement.


 


WHEREAS, the
Company, the Guarantors and the Partnership desire to amend certain provisions
of the Lease Agreement in order to, among other things, extend the term of the
Lease Agreement and restructure the Company’s payment obligations under the
Lease Agreement;


 


NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:


 


SECTION
1.  AMENDMENTS TO LEASE AGREEMENT


 


1.1                                 Section
5.2(b) of the Lease Agreement (Covenants – Information) is hereby amended by
deleting the word “and” at the end of clause (ii), inserting the word “and” at
the end of clause (iii) and adding the following as a new clause (iv):


 


“(iv) receipt
by any Obligor of any net proceeds arising out of a Qualified Offering or an
Extraordinary Asset Sale, such notice to set forth the amount of the net
proceeds.”


 


1.2                                 Section
6.2 of the Lease Agreement (BASIC RENT) is hereby amended by replacing the
first sentence thereof in its entirety with the following:


 


“Lessee hereby
agrees to pay the Lessor the following amounts as basic rent (the “Basic Rent”)
until the later of the Basic Term Expiration Date or return of all of the Lease
Equipment pursuant to Section 9: (A) $31,200 per month for the period beginning
May 1, 2004 until October 31, 2004, (B) $21,200 per month for the period
beginning November 1, 2004 until April 30, 2005, (C) $11,200 per month for the
period beginning May 1, 2005 until April 30, 2007, and (D) $5,600 per month for
the period beginning May 1, 2007 until April 30, 2008; provided, however, that at
any time after the Accrued Lease Obligation has been reduced to 0, Lessee may,
upon reasonable advance notice to Lessor, pay Lessor an amount equal to the
present value (calculated using a discount rate of 8% per annum) of  all (but not part) of the


 

















 


remaining scheduled Basic Rent payments payable through April 30, 2008,
and such payment will constitute full and final payment of the Basic Rent
payable under this Lease.”


 


1.3                                 Section
6.2 of the Lease Agreement (BASIC RENT) is hereby amended by adding the
following as the second sentence thereof:


 


“The Basic
Rent for each month during the Basic Term shall be paid in advance at the
beginning of each such month.”


 


1.4                                 The
section cross reference currently contained in the last sentence of Section 6.2
is hereby amended by replacing “Section 6.2” with “Section 6.3.”


 


1.5                                 Section
6.3 of the Lease Agreement (SUPPLEMENTAL RENT) is hereby amended by replacing
the second sentence thereof in its entirety with the following:


 


“Lessee will
also pay, as Supplemental Rent, but without duplication, to the extent
permitted by applicable law, a late fee calculated at the Late Rate on
(x) any part of any installment of Basic Rent not paid when initially due
for any period for which the same shall be overdue on the earlier of the Basic Term
Expiration Date or upon the occurrence of a Lease Event of Default which shall
not have been cured or waived, (y) the Accrued Lease Obligation if not paid
when due or upon the occurrence of a Lease Event of Default which shall not
have been cured or waived and (z) any other payment of Supplemental Rent
not paid when due or ten days after demanded, as the case may be, for the
period from such date or ten days after demanded, as the case may be, until the
same shall be paid, on demand.  Lessee
shall notify Lessor to the extent Lessee becomes aware of any Supplemental Rent
due and payable under this Lease and will furnish Lessor monthly calculations
of any such Supplemental Rent.


 


1.6                                 Section
6.4 of the Lease Agreement (MANNER OF PAYMENTS) is hereby amended by replacing
the first sentence thereof in its entirety with the following:


 


“All Rent
(other than Supplemental Rent payable to Persons other than Lessor, which shall
be payable to such other Persons in accordance with written instructions
furnished to Lessee by such Persons) and the Accrued Lease Obligation shall be
paid by Lessee to Lessor by wire transfer of immediately available funds in
accordance with wire transfer instructions provided in writing by Lessor to
Lessee from time to time.”


 


1.7                                 Section
6.6 of the Lease Agreement (RESTRUCTURING OF OLD EQUIPMENT LEASE) is hereby
deleted and replaced in its entirety with the following:


 


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“Section 6.6                             Restructuring
of Accrued Lease Balance.


 


(a)                                  As
of May 1, 2004, the accrued lease balance owed by Lessee under the Lease
Agreement is hereby agreed to be an aggregate principal amount of $4,170,491.17
(the “Accrued
Lease Balance”), with interest at 8% per annum accruing on the
Accrued Lease Balance (such Accrued Lease Balance to the extent outstanding
from time to time, plus accrued but unpaid interest thereon, being the “Accrued
Lease Obligation”). Lessee shall pay Lessor the Accrued Lease
Obligation according to the schedule of installments attached hereto as Exhibit
A, as revised from time to time pursuant to Section 6.6(d) below.


 


(b)                                 Subject
to the terms and provisions of this Section 6.6(b), Lessee shall prepay the
Accrued Lease Obligation as follows (each such prepayment being, an “Annual
Accrued Lease Obligation Prepayment”): (A) an amount equal to
thirty-seven and one half percent (37.5%) of Lessee’s Free Cash Flow for the
calendar year ending December 31, 2004, (B) an amount equal to 50% of Lessee’s
Free Cash Flow for the calendar year ending December 31, 2005, (C) an amount
equal to 50% of Lessee’s Free Cash Flow for the calendar year ending December
31, 2006 and (D) an amount equal to 50% of Lessee’s Free Cash Flow for the
calendar year ending December 31, 2007. The amount of each Annual Accrued Lease
Obligation Prepayment shall be determined and paid as follows:


 


(i)                                     Within
thirty (30) days after the end of each calendar year ending during the Basic
Term, Lessee shall cause to be prepared and delivered to Lessor an annual
prepayment statement (each, an “Estimated Annual Prepayment Statement”)
based on the unaudited consolidated financial statements of Lessee prepared in
accordance with GAAP and showing a calculation of the amount of Lessee’s Free
Cash Flow, if any, during the most recently completed calendar year. Lessee
shall deliver to Lessor the Estimated Annual Prepayment Statement, together
with a payment equal to 80% of the Annual Accrued Lease Obligation Prepayment
shown thereon (each, an “Estimated Annual Prepayment”), such amount
being an acceptable estimate of 80% of the Annual Accrued Lease Obligation
Prepayment.


 


(ii)                                  Within
ninety (90) days after the end of each calendar year ending during the Basic
Term, Lessee shall cause to be prepared and delivered to Lessor a final annual
prepayment statement (each, a “Final  Annual Prepayment Statement”) based on the
audited consolidated financial statements of Lessee prepared in accordance with
GAAP and showing a calculation of the amount of Lessee’s Free Cash Flow, if
any, during the most recently completed calendar year.


 


(iii)                               The
Final Annual Prepayment Statement shall be deemed to be accepted by Lessor and
shall be conclusive for the purposes of this Section 6.6(b) upon the fifteenth
(15) day after the date on which the Final Annual Prepayment Statement is
delivered to the Lessor, unless Lessor shall have delivered to Lessee, prior to
such


 


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fifteenth (15) day, a written notice stating
each and every item to which the Lessor takes exception as not being in
accordance with GAAP or otherwise being incorrect, specifying in reasonable
detail the nature and extent of any such exception (it being understood that
any amounts not disputed shall be deemed accepted). If a change proposed by
Lessor is disputed by Lessee, then Lessee and Lessor shall negotiate in good
faith to resolve such dispute for a period of thirty (30) days following the
date Lessee notifies Lessor of such dispute. 
Any dispute involving this Section 6.6(b) which cannot be resolved by
agreement within such thirty (30) day period will be referred to an independent
third party acceptable to Lessor and Lessee, or if Lessor and Lessee are not
able to agree on such third party, the disputed matters shall be referred to an
arbitrator chosen in accordance with the rules and procedures of the American
Arbitration Association for commercial arbitrations, and the good faith
determination of such third party or arbitrator will be final.  The party who does not win any such dispute
shall be responsible for all of the fees and expenses of the third party or
arbitrator.


 


(iv)                              If
the amount of the Annual Accrued Lease Obligation Prepayment as shown on the
Final Annual Prepayment Statement as finally determined in accordance with
Section 6(b)(iii) exceeds the Estimated Annual Prepayment, Lessee will pay to
Lessor the amount of such excess within three (3) business days after the date
on which the Final Annual Prepayment Statement is accepted pursuant to Section
6.6(b)(iii). If the amount of the Estimated Annual Prepayment exceeds the
amount of the Annual Accrued Lease Obligation Prepayment as shown on the Final
Annual Prepayment Statement, Lessor will pay Lessee the amount of such excess
by wire transfer of immediately available funds within ten (10) business days
after the date on which the Final Annual Prepayment Statement is accepted
pursuant to this Section 6.6(b). For purposes of this Section 6.6:


 


(A)                              The
term “Asset
Sale” means any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary
course of business), assignment or other transfer for value by Lessee or any of
its Subsidiaries to any Person other than Lessee or a Subsidiary of Lessee of
(i) any Equity Interest of any Subsidiary of the Company or (ii) any other
property or assets of Lessee or any Subsidiary of Lessee other than in the
ordinary course of business.


 


(B)                                The
term “Capitalized
Lease Obligation” means, as to any Person, the obligations of such
Person under a lease that are required to be classified and accounted for as
capital lease obligations under GAAP and, for purposes of this definition, the
amount of such obligations at any date shall be the capitalized amount of such
obligations that is included on a balance sheet of such Person at such date,
determined in accordance with GAAP.


 


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(C)                                The
term “Consolidated
EBITDA” means, with respect to Lessee, for any period, the sum
(without duplication) of (i) Consolidated Net Income and (ii) to the extent
Consolidated Net Income has been reduced thereby, (a) all income Taxes of
Lessee and its Subsidiaries paid or accrued in accordance with GAAP for such
period, (b) Consolidated Interest Expense and (c) Consolidated Non-cash Charges
less any non-cash items increasing Consolidated Net Income for such
period, all as determined on a consolidated basis for Lessee and its
Subsidiaries in accordance with GAAP.


 


(D)                               The
term “Consolidated
Interest Expense” means, with respect to Lessee for any period, the
sum of, without duplication:  (i) the
aggregate of the interest expense of Lessee and its Subsidiaries for such
period determined on a consolidated basis in conformity with GAAP, including,
without limitation, (a) any amortization of debt discount and amortization or
write-off of deferred financing costs, (b) the net costs under Interest Swap
Obligations, (c) all capitalized interest and (d) the interest portion of any
deferred payment obligation; and (ii) without duplication of any amount in clause
(i), the interest component of Capitalized Lease Obligations paid, accrued
and/or scheduled to be paid or accrued (in each case, without duplication) by
Lessee and its Subsidiaries during such period as determined on a consolidated
basis in accordance with GAAP.


 


(E)                                 The
term “Consolidated
Net Income” means, with respect to Lessee, for any period, the
aggregate net income (or loss) of Lessee and its Subsidiaries for such period
on a consolidated basis, determined in accordance with GAAP; provided that there
shall be excluded therefrom (i) after-tax gains and losses from Asset Sales,
(ii) after-tax items classified as extraordinary or non-recurring gains, (iii)
the net income of any Person acquired in a “pooling of interests” transaction
accrued prior to the date it becomes a Subsidiary of Lessee or is merged or
consolidated with Lessee or any Subsidiary of Lessee, (iv) the net income (but
not loss) of any Subsidiary of Lessee to the extent that the declaration of
dividends or similar distributions by that Subsidiary of that income is
restricted by contract, operation of law or otherwise, except to the extent of
cash dividends or distributions paid to Lessee or a Subsidiary of Lessee by
such Subsidiary, (v) the net income of any Person, other than a Subsidiary of
Lessee, except to the extent of cash dividends or distributions paid to Lessee
or a Subsidiary of Lessee by such Person, (vi) any restoration to income of any
contingency reserve, except to the extent that provision for such reserve was
made out of Consolidated Net Income accrued at any time following May 1, 2004,
(vii) income or loss attributable to discontinued operations (including,
without limitation, operations disposed of during such period whether or not
such operations were classified as discontinued) and (viii) in the case of a
successor to Lessee by consolidation or


 


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merger or as a transferee of Lessee’s assets,
the aggregate net income (or loss) of the successor corporation prior to such consolidation,
merger or transfer of assets.


 


(F)                                 The
term, “Consolidated
Non-cash Charges” means, with respect to Lessee, for any period, the
aggregate depreciation, amortization and other non-cash expenses of Lessee and
its Subsidiaries reducing Consolidated Net Income of Lessee and its
Subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP (excluding any such non-cash charge which requires an accrual of or a
reserve for cash charges for any future period).


 


(G)                                The
term “Current
Assets” means with respect to Lessee, all current assets of Lessee
and its Subsidiaries on a consolidated basis as of any date of determination
calculated in accordance with GAAP, but excluding cash and cash equivalents.


 


(H)                               The
term “Current
Liabilities” means, with respect to Lessee, all liabilities of
Lessee and its Subsidiaries on a consolidated basis that should, in accordance
with GAAP, be classified as current liabilities, and in any event shall include
all indebtedness payable on demand or within one year from any date of
determination without any option on the part of the obligor to extend or renew
beyond such year, all accruals for federal or other Taxes based on or measured
by income and payable within such year, but excluding the current portion of
long-term debt.


 


(I)                                    The
term “Free
Cash Flow” for any applicable period means the amount, if any, by
which Lessee’s Consolidated EBITDA exceeds zero (1) minus the following,
without duplication: (i) amounts of Lessee’s scheduled payments made in
connection with any Permitted Indebtedness, (ii) amounts Lessee paid in
satisfaction of the Accrued Lease Obligation, (iii) amounts of Lessee’s
interest obligations, (iv) amounts of Lessee’s Tax obligations, (v) amounts
paid by Lessee for capital expenditures during the year covered by the Final
Annual Prepayment Statement solely to the extent such capital expenditures in
the aggregate for an applicable period are less than or equal to 33.33% of
Lessee’s Consolidated EBITDA for such period (or such higher percentage as
Lessor and Lessee may mutually agree), (vi) payments made in satisfaction of
Lessee’s GDC stay bonus obligations existing on the date hereof (totaling
$845,763.68 as of March 31, 2004), and (vii) the amount, if any, by which
Lessee’s Working Capital increased during the calendar year covered by the
Final Annual Prepayment Statement, and (2) plus  the amount, if any, by which Lessee’s Working Capital decreased
during the calendar year covered by the Final Annual Prepayment Statement; provided
however, that notwithstanding the foregoing, in the event that
Lessee’s Free Cash Flow for an applicable period is greater than or equal to
Lessee’s Consolidated


 


6

















 


EBITDA for such period, then the Free Cash
Flow shall be automatically reduced to equal the Consolidated EBITDA for such
period.


 


(J)                                   The
term “Interest
Rate Swap Obligation” means the obligations of any Person, pursuant
to any arrangement with any other Person, whereby, directly or indirectly, such
Person is entitled to receive from time to time periodic payments calculated by
applying either a floating or a fixed rate of interest on a stated notional
amount in exchange for periodic payments made by such other Person calculated
by applying a fixed or a floating rate of interest on the same notional amount
and shall include, without limitation, interest rate swaps, caps, floors,
collars and similar agreements.


 


(K)                               The
term “Working
Capital” means Current Assets minus Current Liabilities.


 


(c)                                  Lessee
shall also prepay the Accrued Lease Obligation in an amount (“Accrued
Lease Obligation Transaction Prepayment”) equal to 100% of the cash
proceeds (after deducting transaction expenses) received by Lessee pursuant to
any Qualified Financing (defined below) or any Extraordinary Asset Sale
(defined below).   For purposes of this
Section 6.6:


 


(i)                                     “Qualified
Financing” shall mean any public or private offering of Equity
Interests or convertible debt securities of Lessee or any of its Subsidiaries
in a single transaction or series of related transactions from one or more
sources in which Lessee or any of its Subsidiaries receives cash proceeds
(after deducting all transaction expenses) pursuant to either (A) a
registration statement filed under the Securities Act of 1933 as amended or (B)
an offering in reliance on an exemption from registration under the Securities
Act of 1933 as amended; provided, however, that the term “Qualified
Financing” shall not include a transaction (i) relating to any
capital stock options, warrants or other rights to acquire any such Equity
Interests issued or to be issued to directors, officers, employees, consultants
or other service providers of Lessee or any of its Subsidiaries, (ii) relating
to any employee benefit plan or interests therein, (iii) issuance of Equity
Interests or convertible debt securities in connection with a bona fide
business acquisition of or by Lessee or any of its Subsidiaries, whether by
merger, consolidation, sale of assets, sale or exchange of stock or otherwise
approved by Lessee’s board of directors or (iv) any other non-cash issuances of
Lessee’s securities.


 


(ii)                                  “Extraordinary
Asset Sale” shall mean any sale, transfer or other disposition of
the assets or properties of Lessee or any of its Subsidiaries in which Lessee
or any of its Subsidiaries receives cash proceeds (after deducting all
transaction expenses); provided that any transaction occurring in the Ordinary
Course of Business shall not constitute an Extraordinary Asset Sale. An action
shall be deemed to be taken in the “Ordinary Course of Business” only if (A)
such action is consistent with the past


 


7

















 


practices of Lessee or its Subsidiary and is
taken in the ordinary course of the normal day to day operations of Lessee or
such Subsidiary, and (B) such action is not required to be authorized by the
board of directors of Lessee or such Subsidiary.


 


(d)                                 All
Annual Accrued Lease Obligation Prepayments and Transaction Accrued Lease
Obligation Prepayments made by Lessee under this Section 6.6 shall be applied
first to accrued and unpaid Supplemental Rent, if any, and then to the last
installments of the Accrued Lease Obligation. Upon each such prepayment, Lessee
shall  promptly revise and attach the Schedule
of Installments attached hereto as Exhibit A stating the then current
balance of the Accrued Lease Obligation reflecting the application of such
prepayment; provided,
however, that except for the remaining balance, if any, of the
Accrued Lease Obligation after giving effect to the application of such
prepayment, nothing in the Schedule of Installments shall change as a result of
any prepayments including, without limitation, the interest rate and the
monthly payment amounts (including the $500,000 scheduled payments) stated on
the Schedule of Installments attached hereto.”


 


1.8                                 Subsection
(b) of Section 16 of the Lease Agreement (LEASE EVENTS OF DEFAULT) is hereby
amended by replacing the subsection in its entirety with the following:


 


“(b)                           Lessee
shall fail to (i) make any payment of any Supplemental Rent (excluding
Supplemental Rent covered by clause (a) preceding) to be paid by Lessee
pursuant to this Lease after the same shall have become due and such failure
shall continue unremedied for ten days after receipt by Lessee of the original
demand therefor from Lessor, or (ii) make any payment of the Accrued Lease
Obligation when due as provided in Section 6.6; or”


 


1.9                                 Section
17(e) is hereby amended by deleting the phrase “Prior Accrued Balance” and inserting
the phrase “Accrued Lease Balance” in the ninth line thereof.


 


1.10                           Section
24.1 of the Lease Agreement (Election to Retain or Return Equipment at End of
Basic Term) hereby amended by replacing the section in its entirety
with the following:


 


“Section 24.1  Election to Retain or Return Equipment at End of Basic Term. At
or prior to the end of the Basic Term, Lessee shall give Lessor irrevocable
written notice of its decision to return or retain all of the Units at the end
of the Basic Term.  If Lessee fails to
timely give the notice required by this Section 24.1, Lessee shall be deemed to
have irrevocably elected to return all of the Units at the end of the Basic
Term.  Any notice given by Lessee
pursuant to this Section 24.1 shall be irrevocable.”


 


1.11                           Section
25.15 of the Lease Agreement (PREPAYMENT) is hereby amended by replacing the
section in its entirety with the following:


 


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“Section 25.15  Prepayment.  Lessee
may prepay, in whole or in part, the Accrued Lease Obligation without any
penalty or premium.  Lessee shall
provide reasonable advance notice to Lessor of any such prepayment.”


 


1.12                           Appendix
A to the Lease Agreement is hereby amended by deleting the definition of “Prior
Accrued Balance” in its entirety.


 


1.13                           Appendix
A to the Lease Agreement (DEFINITIONS) is hereby amended by replacing the
following definitions in their entirety as follows:


 


“BACK RENT”
shall mean (x) 5,317,803, representing 28% of shares of Common Stock, (y) the
Residual Amount and (z) an amount equal to $62,000 (inclusive of any applicable
taxes) for each calendar month (or portion thereof) from April 1, 2002 through
the Effective Date in satisfaction of the Basic Rent accrued under the Old
Equipment Lease and owed by Lessee through the Effective Date.


 


“ ‘BASIC TERM
EXPIRATION DATE’ shall mean the earliest of (i) April 30, 2008, (ii)
the date on which the Obligations are paid in full, (iii) a Subsidiary
Sale by Lessee or (iv) the declaration of such pursuant to Section 17.


 


“
‘OBLIGATIONS’ means Lessee’s obligations to pay Basic Rent, the Accrued Lease
Obligation and Supplemental Rent, if any.


 


“
‘SUPPLEMENTAL RENT’ shall mean all amounts, liabilities and obligations (other
than Basic Rent and the Accrued Lease Obligation) which Lessee assumes or
agrees to pay under this Lease to or on behalf of any of the other parties
thereto.”


 


“ ‘FAIR MARKET
RENTAL VALUE’  or ‘FAIR MARKET SALES VALUE’ with respect to any Unit of
Lease Equipment shall mean the cash rent or cash price, respectively, obtainable
for such Unit in an arm’s length lease or sale, respectively, between an
informed and willing lessee or purchaser, respectively, under no compulsion to
lease or purchase, as the case may be, and an informed and willing lessor or seller,
under no compulsion to lease or sell, as the case may be, as the same shall be
determined by a nationally or industry-wide (with respect to the oil and gas
exploration industry) recognized independent appraisal firm in the practice of
regularly appraising equipment similar to the Lease Equipment selected by
Lessor and reasonably acceptable to Lessor and Lessee; provided, however, that
notwithstanding anything in this Lease to the contrary, the aggregate Fair
Market Sales Value with respect to Units purchased by Lessee pursuant to
Section 24.2 of this Lease following the discounted present value payment of


 


9

















 


Basic Rent as
provided in the proviso at the end of the first sentence of Section 6.2 of this
Lease shall be deemed to be $1.00 in the aggregate.


 


1.14                           Appendix
A to the Lease Agreement (DEFINITIONS) is hereby amended by adding the
following definitions in their entirety as follows:


 


“ ‘ACCRUED
LEASE BALANCE’ shall have the meaning set forth in Section 6.6 of this Lease
Agreement.


 


“ ‘ACCRUED
LEASE OBLIGATION’ shall have the meaning set forth in Section 6.6 of this Lease
Agreement.


 


“ ‘ANNUAL
ACCRUED LEASE OBLIGATION PREPAYMENT’ shall have the meaning set forth in
Section 6.6 of this Lease Agreement.


 


“ ‘ASSET SALE’
shall have the meaning set forth in Section 6.6. of this Lease Agreement.


 


“ ‘CAPITALIZED
LEASE OBLIGATIONS’ shall have the meaning set forth in Section 6.6. of this
Lease Agreement.


 


“
‘CONSOLIDATED EBITDA’ shall have the meaning set forth in Section 6.6. of this
Lease Agreement.


 


“
‘CONSOLIDATED INTEREST EXPENSE’ shall have the meaning set forth in Section 6.6
of this Lease Agreement.


 


“
‘CONSOLIDATED NET INCOME’ shall have the meaning set forth in Section 6.6 of
this Lease Agreement.


 


“ ‘CONSOLIDATED
NON-CASH CHARGES’ shall have the meaning set forth in Section 6.6 of this Lease
Agreement.


 


“ ‘CURRENT
ASSETS’ shall have the meaning set forth in Section 6.6 of this Lease
Agreement.


 


“ ‘CURRENT
LIABILITIES’ shall have the meaning set forth in Section 6.6 of this Lease
Agreement.


 


“ ‘ESTIMATED
ANNUAL PREPAYMENT’ shall have the meaning 
set forth in Section 6.6 of this Lease Agreement.


 


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“ ‘ESTIMATED
ANNUAL PREPAYMENT STATEMENT’ shall have the meaning set forth in Section 6.6 of
this Lease Agreement.


 


“
‘EXTRAORDINARY ASSET SALE’ shall have the meaning set forth in Section 6.6 of
this Lease.


 


“ ‘FINAL
ANNUAL PREPAYMENT STATEMENT’ shall have the meaning set forth in Section 6.6 of
this Lease Agreement.


 


“ ‘FREE CASH
FLOW’ shall have the meaning set forth in Section 6.6 of this Lease Agreement.


 


“ ‘INTEREST
SWAP OBLIGATIONS’ shall have the meaning set forth in Section 6.6. of this
Lease Agreement.


 


“ ‘ORDINARY
COURSE OF BUSINESS” shall have the meaning set forth in Section 6.6 of this
Lease Agreement.


 


“ ‘QUALIFIED
FINANCING’ shall have the meaning set forth in Section 6.6 of this Lease
Agreement.


 


“ ‘TRANSACTION
ACCRUED LEASE OBLIGATION PREPAYMENT’ shall have the meaning set forth in
Section 6.6 of this Lease Agreement.


 


“ ‘WORKING
CAPITAL’ shall have the meaning set forth in this Lease Agreement.”


 


SECTION 2.                            RATIFICATION
OF THE LEASE AGREEMENT


 


To induce the
Partnership to enter into this Amendment No. 2, the Company represents and
warrants that, after giving effect to this Amendment No. 2, no violation of the
terms of the Lease Agreement exists and all representations and warranties
contained in the Lease Agreement are true, correct and complete in all material
respects on and as of the date hereof except to the extent such representations
and warranties specifically relate to an earlier date in which case they were
true, correct and complete in all material respects on and as of such earlier
date.


 


SECTION 3.                            COUNTERPARTS;
EFFECTIVENESS


 


This Amendment
No. 2 may be executed in any number of counterparts, and all such
counterparts taken together shall be deemed to constitute one and the same
instrument.  Signature pages may be
detached from counterpart documents and reassembled to form duplicate


 


11

















 


executed originals.  This
Amendment No. 2 shall become effective as of the date hereof upon the
execution of the counterparts hereof by the Company and the Partnership.


 


SECTION 4.                            GOVERNING
LAW


 


THIS AMENDMENT
NO. 2 SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAW.


 


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blank]


 


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SIGNATURES


 


IN WITNESS
WHEREOF, the parties hereto have caused this Amendment No. 2 to the Lease
Agreement to be duly executed, all as of the date first written above.


 


	
   

  	
  Company:

  
	
   

  	
   

  
	
   

  	
  GEOKINETICS INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Thomas J. Concannon

  	
   

  
	
   

  	
  Name:

  	
  Thomas J. Concannon

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
						



 


13

















 


 


	
   

  	
  Partnership:

  
	
   

  	
   

  
	
   

  	
  GEOLEASE PARTNERS, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  GEOLEASE GP, INC.,

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Douglas Ladden

  	
   

  
	
   

  	
  Name:

  	
  Douglas Ladden

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  
								



 


14

















 


	
   

  	
  Guarantors:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GEOKINETICS PRODUCTION CO., INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Thomas J. Concannon

  	
   

  
	
   

  	
  Name:

  	
  Thomas J. Concannon

  	
   

  
	
   

  	
  Title:

  	
  Treasurer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GEOPHYSICAL DEVELOPMENT CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Thomas J. Concannon

  	
   

  
	
   

  	
  Name:

  	
  Thomas J. Concannon

  	
   

  
	
   

  	
  Title:

  	
  Treasurer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  QUANTUM GEOPHYSICAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Thomas J. Concannon

  	
   

  
	
   

  	
  Name:

  	
  Thomas J. Concannon

  	
   

  
	
   

  	
  Title:

  	
  Treasurer

  	
   

  
						



 


15

















 


EXHIBIT
A


 


Schedule
of Installments for Accrued Lease Obligation


 


16

















 


Geolease Restructuring Payment Proposal


Compound Period Monthly


 


	
  Nominal Annual Rate

  	
   

  	
  8.000

  	
  %

  
	
  Effective Annual Rate

  	
   

  	
  8.300

  	
  %

  
	
  Periodic Rate

  	
   

  	
  0.6667

  	
  %

  
	
  Daily Rate

  	
   

  	
  0.02192

  	
  %

  



 


	
  Event

  	
   

  	
  Start Date

  	
   

  	
  Amount

  	
   

  	
  Number

  	
   

  	
  Period

  	
   

  	
  End Date

  	
   

  
	
  1

  	
   

  	
  Loan

  	
   

  	
  01-May-04

  	
   

  	
  4,170,491.15

  	
   

  	
  1

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2

  	
   

  	
  Payment

  	
   

  	
  01-May-04

  	
   

  	
  500,000.00

  	
   

  	
  1

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3

  	
   

  	
  Payment

  	
   

  	
  01-Jun-04

  	
   

  	
  72,350.03

  	
   

  	
  11

  	
   

  	
  Monthly

  	
   

  	
  04/01/2005

  	
   

  
	
  4

  	
   

  	
  Payment

  	
   

  	
  01-May-05

  	
   

  	
  500,000.00

  	
   

  	
  1

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5

  	
   

  	
  Payment

  	
   

  	
  01-Jun-05

  	
   

  	
  72,350.03

  	
   

  	
  11

  	
   

  	
  Monthly

  	
   

  	
  04/01/2006

  	
   

  
	
  6

  	
   

  	
  Payment

  	
   

  	
  01-May-06

  	
   

  	
  500,000.00

  	
   

  	
  1

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7

  	
   

  	
  Payment

  	
   

  	
  01-Jun-06

  	
   

  	
  72,350.03

  	
   

  	
  23

  	
   

  	
  Monthly

  	
   

  	
  04/01/2008

  	
   

  



 


AMORTIZATION SCHEDULE - Normal Amortization


 


	
  #

  	
   

  	
  Date

  	
   

  	
  Payment

  	
   

  	
  Interest

  	
   

  	
  Principal

  	
   

  	
  Balance

  	
   

  
	
  Loan

  	
   

  	
  01-May-04

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  4,170,491.15

  	
   

  
	
  1

  	
   

  	
  01-May-04

  	
   

  	
  500,000.00

  	
   

  	
  0.00

  	
   

  	
  500,000.00

  	
   

  	
  3,670,491.15

  	
   

  
	
  2

  	
   

  	
  01-Jun-04

  	
   

  	
  72,350.03

  	
   

  	
  24,469.94

  	
   

  	
  47,880.09

  	
   

  	
  3,622,611.06

  	
   

  
	
  3

  	
   

  	
  01-Jul-04

  	
   

  	
  72,350.03

  	
   

  	
  24,150.74

  	
   

  	
  48,199.29

  	
   

  	
  3,574,411.77

  	
   

  
	
  4

  	
   

  	
  01-Aug-04

  	
   

  	
  72,350.03

  	
   

  	
  23,829.41

  	
   

  	
  48,520.62

  	
   

  	
  3,525,891.15

  	
   

  
	
  5

  	
   

  	
  01-Sep-04

  	
   

  	
  72,350.03

  	
   

  	
  23,505.94

  	
   

  	
  48,844.09

  	
   

  	
  3,477,047.06

  	
   

  
	
  6

  	
   

  	
  01-Oct-04

  	
   

  	
  72,350.03

  	
   

  	
  23,180.31

  	
   

  	
  49,169.72

  	
   

  	
  3,427,877.34

  	
   

  
	
  7

  	
   

  	
  01-Nov-04

  	
   

  	
  72,350.03

  	
   

  	
  22,852.52

  	
   

  	
  49,497.51

  	
   

  	
  3,378,379.83

  	
   

  
	
  8

  	
   

  	
  01-Dec-04

  	
   

  	
  72,350.03

  	
   

  	
  22,522.53

  	
   

  	
  49,827.50

  	
   

  	
  3,328,552.33

  	
   

  
	
  2004 
  Totals

  	
   

  	
   

  	
   

  	
  1,006,450.21

  	
   

  	
  164,511.39

  	
   

  	
  841,938.82

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9

  	
   

  	
  01-Jan-05

  	
   

  	
  72,350.03

  	
   

  	
  22,190.35

  	
   

  	
  50,159.68

  	
   

  	
  3,278,392.65

  	
   

  
	
  10

  	
   

  	
  01-Feb-05

  	
   

  	
  72,350.03

  	
   

  	
  21,855.95

  	
   

  	
  50,494.08

  	
   

  	
  3,227,898.57

  	
   

  
	
  11

  	
   

  	
  01-Mar-05

  	
   

  	
  72,350.03

  	
   

  	
  21,519.32

  	
   

  	
  50,830.71

  	
   

  	
  3,177,067.86

  	
   

  
	
  12

  	
   

  	
  01-Apr-05

  	
   

  	
  72,350.03

  	
   

  	
  21,180.45

  	
   

  	
  51,169.58

  	
   

  	
  3,125,898.28

  	
   

  
	
  13

  	
   

  	
  01-May-05

  	
   

  	
  500,000.00

  	
   

  	
  20,839.32

  	
   

  	
  479,160.68

  	
   

  	
  2,646,737.60

  	
   

  
	
  14

  	
   

  	
  01-Jun-05

  	
   

  	
  72,350.03

  	
   

  	
  17,644.92

  	
   

  	
  54,705.11

  	
   

  	
  2,592,032.49

  	
   

  
	
  15

  	
   

  	
  01-Jul-05

  	
   

  	
  72,350.03

  	
   

  	
  17,280.22

  	
   

  	
  55,069.81

  	
   

  	
  2,536,962.68

  	
   

  
	
  16

  	
   

  	
  01-Aug-05

  	
   

  	
  72,350.03

  	
   

  	
  16,913.08

  	
   

  	
  55,436.95

  	
   

  	
  2,481,525.73

  	
   

  
	
  17

  	
   

  	
  01-Sep-05

  	
   

  	
  72,350.03

  	
   

  	
  16,543.50

  	
   

  	
  55,806.53

  	
   

  	
  2,425,719.20

  	
   

  
	
  18

  	
   

  	
  01-Oct-05

  	
   

  	
  72,350.03

  	
   

  	
  16,171.46

  	
   

  	
  56,178.57

  	
   

  	
  2,369,540.63

  	
   

  



 


17

















 


	
  19

  	
   

  	
  01-Nov-05

  	
   

  	
  72,350.03

  	
   

  	
  15,796.94

  	
   

  	
  56,553.09

  	
   

  	
  2,312,987.54

  	
   

  
	
  20

  	
   

  	
  01-Dec-05

  	
   

  	
  72,350.03

  	
   

  	
  15,419.92

  	
   

  	
  56,930.11

  	
   

  	
  2,256,057.43

  	
   

  
	
  2005 
  Totals

  	
   

  	
   

  	
   

  	
  1,295,850.33

  	
   

  	
  223,355.43

  	
   

  	
  1,072,494.90

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  21

  	
   

  	
  01-Jan-06

  	
   

  	
  72,350.03

  	
   

  	
  15,040.38

  	
   

  	
  57,309.65

  	
   

  	
  2,198,747.78

  	
   

  
	
  22

  	
   

  	
  01-Feb-06

  	
   

  	
  72,350.03

  	
   

  	
  14,658.32

  	
   

  	
  57,691.71

  	
   

  	
  2,141,056.07

  	
   

  
	
  23

  	
   

  	
  01-Mar-06

  	
   

  	
  72,350.03

  	
   

  	
  14,273.71

  	
   

  	
  58,076.32

  	
   

  	
  2,082,979.75

  	
   

  
	
  24

  	
   

  	
  01-Apr-06

  	
   

  	
  72,350.03

  	
   

  	
  13,886.53

  	
   

  	
  58,463.50

  	
   

  	
  2,024,516.25

  	
   

  
	
  25

  	
   

  	
  01-May-06

  	
   

  	
  500,000.00

  	
   

  	
  13,496.78

  	
   

  	
  486,503.22

  	
   

  	
  1,538,013.03

  	
   

  
	
  26

  	
   

  	
  01-Jun-06

  	
   

  	
  72,350.03

  	
   

  	
  10,253.42

  	
   

  	
  62,096.61

  	
   

  	
  1,475,916.42

  	
   

  
	
  27

  	
   

  	
  01-Jul-06

  	
   

  	
  72,350.03

  	
   

  	
  9,839.44

  	
   

  	
  62,510.59

  	
   

  	
  1,413,405.83

  	
   

  
	
  28

  	
   

  	
  01-Aug-06

  	
   

  	
  72,350.03

  	
   

  	
  9,422.71

  	
   

  	
  62,927.32

  	
   

  	
  1,350,478.51

  	
   

  
	
  29

  	
   

  	
  01-Sep-06

  	
   

  	
  72,350.03

  	
   

  	
  9,003.19

  	
   

  	
  63,346.84

  	
   

  	
  1,287,131.67

  	
   

  
	
  30

  	
   

  	
  01-Oct-06

  	
   

  	
  72,350.03

  	
   

  	
  8,580.88

  	
   

  	
  63,769.15

  	
   

  	
  1,223,362.52

  	
   

  
	
  31

  	
   

  	
  01-Nov-06

  	
   

  	
  72,350.03

  	
   

  	
  8,155.75

  	
   

  	
  64,194.28

  	
   

  	
  1,159,168.24

  	
   

  
	
  32

  	
   

  	
  01-Dec-06

  	
   

  	
  72,350.03

  	
   

  	
  7,727.79

  	
   

  	
  64,622.24

  	
   

  	
  1,094,546.00

  	
   

  
	
  2006 
  Totals

  	
   

  	
   

  	
   

  	
  1,295,850.33

  	
   

  	
  134,338.90

  	
   

  	
  1,161,511.43

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  33

  	
   

  	
  01-Jan-07

  	
   

  	
  72,350.03

  	
   

  	
  7,296.97

  	
   

  	
  65,053.06

  	
   

  	
  1,029,492.94

  	
   

  
	
  34

  	
   

  	
  01-Feb-07

  	
   

  	
  72,350.03

  	
   

  	
  6,863.29

  	
   

  	
  65,486.74

  	
   

  	
  964,006.20

  	
   

  
	
  35

  	
   

  	
  01-Mar-07

  	
   

  	
  72,350.03

  	
   

  	
  6,426.71

  	
   

  	
  65,923.32

  	
   

  	
  898,082.88

  	
   

  
	
  36

  	
   

  	
  01-Apr-07

  	
   

  	
  72,350.03

  	
   

  	
  5,987.22

  	
   

  	
  66,362.81

  	
   

  	
  831,720.07

  	
   

  
	
  37

  	
   

  	
  01-May-07

  	
   

  	
  72,350.03

  	
   

  	
  5,544.80

  	
   

  	
  66,805.23

  	
   

  	
  764,914.84

  	
   

  
	
  38

  	
   

  	
  01-Jun-07

  	
   

  	
  72,350.03

  	
   

  	
  5,099.43

  	
   

  	
  67,250.60

  	
   

  	
  697,664.24

  	
   

  
	
  39

  	
   

  	
  01-Jul-07

  	
   

  	
  72,350.03

  	
   

  	
  4,651.09

  	
   

  	
  67,698.94

  	
   

  	
  629,965.30

  	
   

  
	
  40

  	
   

  	
  01-Aug-07

  	
   

  	
  72,350.03

  	
   

  	
  4,199.77

  	
   

  	
  68,150.26

  	
   

  	
  561,815.04

  	
   

  
	
  41

  	
   

  	
  01-Sep-07

  	
   

  	
  72,350.03

  	
   

  	
  3,745.43

  	
   

  	
  68,604.60

  	
   

  	
  493,210.44

  	
   

  
	
  42

  	
   

  	
  01-Oct-07

  	
   

  	
  72,350.03

  	
   

  	
  3,288.07

  	
   

  	
  69,061.96

  	
   

  	
  424,148.48

  	
   

  
	
  43

  	
   

  	
  01-Nov-07

  	
   

  	
  72,350.03

  	
   

  	
  2,827.66

  	
   

  	
  69,522.37

  	
   

  	
  354,626.11

  	
   

  
	
  44

  	
   

  	
  01-Dec-07

  	
   

  	
  72,350.03

  	
   

  	
  2,364.17

  	
   

  	
  69,985.86

  	
   

  	
  284,640.25

  	
   

  
	
  2007 
  Totals

  	
   

  	
   

  	
   

  	
  868,200.36

  	
   

  	
  58,294.61

  	
   

  	
  809,905.75

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  45

  	
   

  	
  01-Jan-08

  	
   

  	
  72,350.03

  	
   

  	
  1,897.60

  	
   

  	
  70,452.43

  	
   

  	
  214,187.82

  	
   

  
	
  46

  	
   

  	
  01-Feb-08

  	
   

  	
  72,350.03

  	
   

  	
  1,427.92

  	
   

  	
  70,922.11

  	
   

  	
  143,265.71

  	
   

  
	
  47

  	
   

  	
  01-Mar-08

  	
   

  	
  72,350.03

  	
   

  	
  955.10

  	
   

  	
  71,394.93

  	
   

  	
  71,870.78

  	
   

  
	
  48

  	
   

  	
  01-Apr-08

  	
   

  	
  72,350.03

  	
   

  	
  479.25

  	
   

  	
  71,870.78

  	
   

  	
  0.00

  	
   

  
	
  2008 
  Totals

  	
   

  	
   

  	
   

  	
  289,400.12

  	
   

  	
  4,759.87

  	
   

  	
  284,640.25

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Grand Totals

  	
   

  	
   

  	
   

  	
  4,755,751.35

  	
   

  	
  585,260.20

  	
   

  	
  4,170,491.15

  	
   

  	
   

  	
   

  



 


Last
interest amount increased by 0.11 due to rounding.


 


18