Exhibit 10.2


 


AMENDMENT
AND


EXCHANGE
AGREEMENT


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 

















 


1.             Consent.


 


Each of the Holders hereby consents to:


 


(a)           The amendment and restatement of the
Certificate of Designation in the form attached hereto as Exhibit 1 (the “Amendment”),
and the filing of the Amendment as part of the Certificate of Incorporation of
the Corporation with the Secretary of State of the State of Delaware, subject
to the satisfaction of the conditions set forth in Paragraph 2 hereof.


 


(b)           The adoption by the Company of a new
class of a new class of shares, the Series C Preferred Stock, or the terms
set forth on the Certificate of Designation of Series C Preferred Stock of
Geokinetics, Inc. set forth as Exhibit 2 hereto (the “Series C
Certificate”).


 


(c)           This Consent shall expire if the
conditions set forth in Section 2 have not been fully satisfied and the
Amendment and the Series C Certificate have not been filed with the
Secretary of State of the State of Delaware, as amendments to the Certificate
of Incorporation of the Corporation in Delaware by February 15, 2010.


 


2.             Conditions.


 


(a)           The consent of the Holders set forth in Section 1
is subject to satisfaction of the following conditions: (A) the
consummation of either (i) the Public Offering (as hereinafter defined),
or (ii) the Acquisition has occurred; (B) the payment of the Consent
Fee by the Corporation to the Holders such fee to be paid to each of the
Holders in the percentages set forth in Exhibit 3, by wire transfer to the
accounts specified in Exhibit 3 or otherwise designated in writing by any
Holder to the Corporation and (C) the issuance to Avista of an aggregate
of 750,000 shares of Common Stock (of which 156,500 shares of Common Stock
shall be issued to Avista Offshore and 593,500 shares shall be issued to Avista
Domestic, unless Avista instructs the Corporation to such shares of Common Stock
in different proportions) (the “Avista Common Stock”) as consideration for the
Exchange.  For all purposes of this
Agreement, the term “Public Offering” shall be deemed to include any sale,
offer or issuance of shares of Common Stock by the Corporation, in an offering
registered under the Securities Act of 1933, as amended (the “Securities Act”)
or exempt from registration under the Securities Act pursuant to Section 4
thereof, or Rule 144A or Regulation D promulgated under the Securities Act
(other than the issuance of shares of Common Stock pursuant to options,
warrants, convertible securities or similar securities outstanding as of the
date the Amendment is filed with the Secretary of State of the State of
Delaware or shares issued as consideration in the Acquisition) which occurs at
any time on or prior to June 30, 2010.


 


(b)           Notwithstanding anything to the contrary
set forth herein, in no event shall (i) the aggregate number of shares of
Common Stock issued in connection with the Acquisition and the Public Offering
exceed eight million seven hundred fifty thousand (8,750,000)  or (ii) the aggregate number of shares
of Common Stock issued in connection with the Public Offering (including any
shares of Common Stock issued pursuant to any, “over-allotment” or “green shoe”
option) exceed five million seven hundred fifty thousand (5,750,000).


 


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3.             Closing.


 


(a)           The closing of the transactions
contemplated by this Agreement (the “Closing”), including the exchange of the Series B-2
preferred stock for Series C Preferred Stock and the issuance of the
Avista Common Stock shall occur simultaneously with the earlier to occur of the
consummation of the Acquisition or the Public Offering.  The Closing shall occur at the offices of
Haynes and Boone, One Houston Center, 1221 McKinney Street, Suite 2100,
Houston, Texas 77002, at 10:00 a.m. local time, simultaneous with the
closing of the [Pegasus Transaction]. 
The date upon which the Closing occurs shall be referred to herein as
the “Closing Date”.


 


(b)           At the Closing, the Company shall deliver
to Avista duly endorsed certificates representing a numbered shares of Series C
Preferred Stock equal to the numbered shares of Series B-2 Preferred Stock
owned by Avista, plus accrued but unpaid dividends divided by $250, and the
Avista Common Stock in consideration for the Exchange.  At the Closing, Avista shall deliver to the
Corporation certificates representing all of the shares of Series B-2
Preferred Stock owned by it, duly endorsed or with stock powers duly endorsed
by it in blank.


 


(c)           At the Closing, the Corporation shall pay
the Consent Fees to the Holders  (or, in
the case of Avista, Avista Capital Holdings, L.P.) in the proportions specified
on Schedule 3 in consideration for the amendments to the Series B-1
Preferred Stock reflected in the Amendment.


 


(d)           The certificates representing the Avista
Common Stock and the Series C Preferred Stock shall set forth in a
prominent place the following legend:


 


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


 


4.             Waiver and Consent.


 


(a)           Each of the Holders hereby waives any and
all preemptive rights it has under Section (h) of the Certificate of
Designation with respect to the shares of Common Stock to be issued in
connection (i) with the Acquisition and (ii) this Agreement.


 


(b)           Each of the Holders hereby consents to
the increase in the number of members of the Board of Directors of the
Corporation from seven (7) to nine (9) in connection with the
Acquisition.


 


(c)           Each of the Holders hereby consents to
the formation of a Delaware corporation (“Holdings”) as a wholly owned
subsidiary of the Company and the contribution to 


 


3

















 


Holdings of the
capital stock of the subsidiaries of the Company directly owned by the Company.


 


(d)           Each of the Holders hereby agrees to take
all action within its power (including, but not limited to, (i) attending
all stockholder meetings of the Corporation for the purposes of ensuring that a
quorum is obtained and (ii) voting all shares of Common Stock and Series B
Preferred Stock owned or held by such Holder at any stockholder meeting of the
Corporation or, if under applicable law stockholders of the Corporation are
permitted to take action by written resolution or consent in lieu of a meeting,
executing any written resolution or consent with respect to all voting shares
of Common Stock and Series B Preferred Stock owned or held by such Holder)
to cause the nominees of Pegasus, which shall not exceed two nominees, as
directors of the Company nominated in accordance with the definitive agreement
for the Acquisition (the “Director Nominees”) to be elected or appointed as
members of the board of directors of the Corporation at each of the annual
meetings of stockholders of the Corporation to be held in 2010 and 2011
following the closing date of the Acquisition. 
In addition, each of the Holders hereby agrees to vote all shares of
Common Stock and Series B Preferred Stock owned or held by such Holder and
that such Holder is entitled to vote against any resolution that may be
proposed at any such meeting to remove any Director Nominee that is serving as
a member of the board of directors of the Corporation, unless Pegasus otherwise
requests in writing.


 


(e)           The waivers and consents specified in Section 4(a)(i),
4(b) and 4(d) shall only be effective upon, and are conditioned upon,
the consummation of the Acquisition.  The
waiver and consent set forth in Section 4(a)(ii) shall only be
effective upon, and are conditioned upon, the consummation of either the
Acquisition or the Public Offering. The
waiver and consent in Section 4(c) shall only be effective upon, and
are conditioned upon, the consummation of either the Acquisition or an offering
of senior secured notes by Holdings pursuant to Rule 144A under the
Securities Act, the proceeds of which are used to pay or are placed in escrow
to pay the cash portion of the purchase price of the Acquisition; and provided
that if the Acquisition does not occur on or before February 15, 2010, the
Company shall promptly merge Holding into the Company.


 


5.             Post-Closing Covenant.  In the event
the Public Offering is consummated prior to the consummation of the Acquisition,
if the Acquisition is thereafter consummated, (a) the Series C
Certificate (as filed with the Secretary of State of the State of Delaware)
shall be amended substantially simultaneously with the consummation of the
Acquisition, as necessary, to change, retroactively to the date of issuance of
the Series C Preferred Stock, the dividend rate to the HY Rate (as defined
in footnote 1  to the Series C
Certificate attached as Exhibit 2 to this Agreement), (ii) to change
the date in Section 1(a) of the Series C Certificate in
accordance with the principles set forth in footnote 2 to the Series C
Certificate attached as Exhibit 2 to this Agreement and (iii) to
adjust the redemption date specified in Section 1(c) of the Series C
Certificate in accordance with the principles set forth in footnote 3 to the Series C
Certificate attached as Exhibit 2 to this Agreement and (b) the
Amendment (as filed with the Secretary of State of the State of Delaware) shall
be amended substantially simultaneously with the consummation of the
Acquisition, as necessary, to (i) change the dates in Section 1(a)(i) of
the Amendment in accordance with the principles set forth in footnotes 1 and 2,
respectively, in the Amendment set forth as Exhibit 1 to this Agreement
and (ii) to change the date in Section 1(c) of the Amendment in
accordance with the principles set forth in footnote 3 to the Amendment set 


 


4

















 


forth as Exhibit 1
to this Agreement.  All of the parties
hereto acknowledge, agree and consent to the Corporation making the amendments
and changes referred to in this Section 5, and the Corporation represents
and warrants that it has duly authorized and approved the making of such
amendments and changes.


 


6.             The Company represents and warrants to the Holders
that:


 


(a)           Due Organization; Power and Authority. 
The Company and each domestic subsidiary of the Company (a) is a
corporation or limited partnership duly incorporated or formed, as the case may
be, validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization, (b) is duly qualified as a foreign
corporation or extra provincial partnership or a foreign partnership, as the
case may be, to transact business and is in good standing in each jurisdiction
in which such qualification is required, (c) has full corporate or
partnership, as he case may be, power and authority to own, lease and operate
its properties and to conduct its businesses as they are currently conducted,
and (d) has full corporate or partnership, as the case may be, power and
authority to enter into and perform its obligations under this Agreement.


 


(b)           As of the date hereof (i) the
authorized number of shares of Capital Stock of the Company will consists of
100,000,000 common shares (the “Common Stock”), of which 10,822,192 shares have
been issued and are outstanding, (ii) 2,500,000 preferred shares, of which
only (x) shares of Series B Preferred Stock previously issued to
Avista and Levant have been issued and are outstanding, and (iii) no
shares of any class of he capital stock of the Company will be held by the
Company in its treasury of by the Company’s Subsidiaries.  All of the issued and outstanding shares of
capital stock of the Corporation shall have been duly authorized and validly
issued, fully paid and nonassessable and shall be free of preemptive rights
except as set forth in the Certificate of Designation.  Upon the Closing the shares of Series C
Preferred Stock and the Avista Shares will be duly authorized, validly issued,
fully paid and nonassessable.  Upon
issuance of the Series C Preferred Stock to the Purchasers, except as set
forth on Schedule 5, there shall be no securities of he Corporation or any of
its subsidiaries that will be convertible into or exchangeable for shares of
any capital stock of the Corporation or any of its subsidiaries, and no
options, calls, subscriptions, convertible securities, or other rights,
agreements or commitments which will obligate the Corporation or any of its
subsidiaries to issue, transfer or sell any shares of capital stock of, or
other interests in, the Corporation or any of its subsidiaries.  Except as set forth on Schedule 5,
upon consummation of the Closing, there shall be no outstanding obligations of
the Corporation or any of its subsidiaries to repurchase, redeem or otherwise
acquire any shares of capital stock of the Corporation or any of its
Subsidiaries and none of the Corporation or any of its subsidiaries shall have
any awards or options outstanding under any stock option plans or agreements or
any other outstanding stock-related awards. 
As of the Closing Date and immediately after the Closing, except as set
forth on Schedule 5, none of the Corporation or any of its subsidiaries
will have any obligation to issue, transfer or sell any shares of capital stock
of the Corporation or its subsidiaries. 
Except as set forth on Schedule 5, there are no voting trusts or other
agreements or understandings to which the Corporation or any of its
subsidiaries is a party with respect to the holding, voting or disposing of
capital stock of the Corporation or any of its subsidiaries.  Except as set forth on Schedule 5,
none of the Corporation or any of its subsidiaries has any outstanding bonds,
debentures, notes or other obligations or other securities that entitle the
holders thereof to vote 


 


5

















 


with the
shareholders of the Corporation or any of its subsidiaries on any matter or
which are convertible into or exercisable for securities having such a right to
vote.


 


7.             Avista represents and warrants to the Corporation as
of the date hereof as follows:


 


(a)           Avista is acquiring the Series C
Preferred Stock and the Avista Common Stock for its own account, for investment
purposes only and not with a view to any distribution thereof within the
meaning of the Securities Act of 1933, as amended (the “Securities Act”).


 


(b)           Avista understands that the Series C
Preferred Stock and the Avista Common Stock have not been and, except as
provided in the Registration Rights Agreement, will not be registered under the
Securities Act or any state or other securities law, that the Series C
Preferred Stock and the Avista Common Stock are being issued by the Company in
transactions exempt from the registration requirements of the Securities Act,
that it must hold the Series C Preferred Stock indefinitely and not offer
or sell the Series C Preferred Stock or the Avista Common Stock except
pursuant to effective registration statements under the Securities Act or
pursuant to applicable exemptions from registration under the Securities Act
and in compliance with applicable state securities laws.


 


(c)           Avista further understands that the
exemption from registration afforded by Rule 144 (the provisions of which
are known to Avista) promulgated under the Securities Act depends on the
satisfaction of various conditions, and that, if applicable, Rule 144 may
afford the basis for sales only in limited amounts.


 


(d)           Avista did not employ any broker or
finder in connection with the transactions contemplated in this Agreement and
no fees or commissions are payable to Avista except as otherwise provided for
in this Agreement.


 


(e)           Avista is an Accredited Investor (as
defined under the rules promulgated under the Securities Act).


 


(f)            Avista has been furnished with or has had
access to the information it has requested from the Corporation and its
subsidiaries and has had an opportunity to discuss with the management of the
Corporation and its subsidiaries the business and financial affairs of the
Corporation and its Subsidiaries, and has generally such knowledge and
experience in business and financial matters and with respect to investments in
securities of privately held companies so as to enable it to understand and
evaluate the risks of such investment and form of investment decision with
respect thereto, and is capable of bearing the economic risks of such
investment.


 


8.             Avista and Levant, severally and not jointly, each
represents and warrants as follows:  The
execution, delivery and performance of this Agreement to which such Holder is a
party within its corporate or limited partnership, as the case may be, power
and authority and have been duly authorized by all necessary action of such
Holder, do not conflict with or result in a breach of or violate any such
Holder’s governing documents or any contract to which such Holder is a party or
by which its assets are bound or any applicable laws and constitute legal,
valid and binding agreements of such Holder enforceable against it in
accordance with their respective terms.


 


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9.             At such time as the Avista Purchasers do not hold of
record a sufficient number of shares of Series B Preferred Stock (without
the vote of any other stockholder) to elect a director to the Board of
Directors of the Company to represent the holders of Series B Preferred
Stock as a separate class pursuant to the terms of the Certificate of
Designation, the Board of Directors shall nominate and slate for election at
each of the Company’s annual meetings of stockholders one director designated
by Avista if Avista holds a number of shares of Common Stock and/or Series B
Preferred Stock (calculated assuming the conversion of any Series B
Preferred Stock held by the Avista Purchasers into Common Stock) equal to or
greater than (i) 10% of the then outstanding Common Stock or (ii) 25%
of the Common Stock the Avista Purchasers are entitled to upon conversion of
the Series B Preferred Stock purchased by the Avista Purchasers.


 


10.           No later than (90) days following the Closing, the
Company and the Holders will mutually agree on an allocation of the purchase
price between the Series C Preferred Stock and the Avista Common Stock
issued to the Holders pursuant to the terms of this Agreement.


 


11.           Expenses.  The Corporation will, following the
execution and delivery this Agreement, after presentation of a summary invoice
therefore, promptly reimburse the Holders for all expenses (including attorney’s
and accountant’s fees and disbursements) incurred by the Holders in connection
with the transactions contemplated by this Agreement and in connection with any
amendments, waivers or consents under or in respect of this Agreement.


 


12.           Notices.  Except as otherwise expressly provided
herein, all notices and other communications shall have been duly given and
shall be effective (a) when delivered, b) when transmitted via telecopy
(or other facsimile device) to the number set out below if the sender on the
same day sends a confirming copy of such notice by a recognized overnight
delivery service (charges prepaid), (c) the day following the day (except
if not a business day then the next business day) on which the same has been
delivered prepaid to a reputable national overnight air courier service or (d) the
third business day following the day on which the same is sent by certified or
registered mail, postage prepaid, in each case to the respective parties at the
address set forth on the signature pages hereto, or at such other address as
such party may specify by written notice to the other party hereto.


 


13.           Benefit of Agreement and Assignments.


 


(a)           Nothing in this Agreement, express or implied, shall
give to any person other than the parties hereto and Pegasus any benefit or any
legal or equitable right, remedy or claim under this Agreement, it being
expressly agreed by the parties hereto that Pegasus is a third-party
beneficiary solely to enable it to enforce the provisions of Sections 4(d) and
15 hereof in accordance with their respective terms and for no other
purpose.  The parties hereto acknowledge
that the agreement of the Holders pursuant to Section 4(d) is a
material part of the consideration for the agreements of Pegasus in the
definitive agreement for the Acquisition.


 


(b)           No party hereto may assign or otherwise transfer any
of its rights or obligations hereunder without the prior written consent of the
other parties hereto.


 


14.           No Waiver Remedies Cumulative.     No failure or delay on the part of any party hereto in
exercising any right, power or privilege hereunder and no course of dealing
between the 


 


7

















 


Corporation and
any other party shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege hereunder or thereunder.  The
rights and remedies provided herein are cumulative and not exclusive of any
rights or remedies that the parties would otherwise have.  No notice to or demand on the Corporation in
any case shall entitle the Corporation to any other or further notice or demand
in similar or other circumstances or constitute a waiver of the rights of the
other parties hereto to any other or further action in any circumstances
without notice or demand.


 


15.           Amendments, Waivers and Consents. 
This Agreement may be amended, and the observance of any term hereof may
be waived (either retroactively or prospectively), with the written consent of
the Corporation and each of the Holders; provided that any amendment or waiver
of Section 4(d), Section 13(a) or this Section 15 shall
also require the written consent of Pegasus. 
No amendment or waiver of this Agreement will extend to or affect any
obligation, covenant, agreement not expressly amended or waived or thereby
impair any right consequent thereon.  As
used herein, the term this “Agreement” and references thereto shall mean this
Agreement, as it may from time to time be amended, supplemented or modified.


 


16.           Counterparts.  This Agreement
may be executed in any number of counterparts, each of which when so executed
and delivered shall be an original, but all of which shall constitute one and
the same instrument.  It shall not be necessary
in making proof of this Agreement to produce or account for more than one such
counterpart.  Each counterpart may
consist of a number of copies hereof, each signed by less than all, but
together signed by all, of the parties hereto. 
Signatures transmitted via telecopy (or other facsimile device) will be
accepted as original signatures.


 


17.           Headings.  The headings
of the sections and subsections hereof are provided for convenience only and
shall not in any way affect the meaning or construction of any provision of
this Agreement.


 


18.           Governing Law; Submission to Jurisdiction; Venue.


 


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


 


(b)             If any action, proceeding or litigation
shall be brought by any party hereto in order to enforce any right or remedy
under this Agreement the parties hereby consents and will submit, to the
jurisdiction of any stale or federal court of competent jurisdiction sitting
within the area comprising the Southern District of New York on the date of
this Agreement.  The Corporation hereby
irrevocably waives any objection, including, but not limited to, any objection
to the laying of venue or based on the grounds of forum non conveniens, which
it may now or hereafter have to the bringing of any such action, proceeding, or
litigation in such jurisdiction.  The
Corporation further agrees that it shall not bring any action, proceeding or
litigation arising out of this Agreement in any state or federal court other
than any state or 


 


8

















 


federal court of
competent jurisdiction sitting within the area comprising the Southern District
of New York on the date of this Agreement


 


(c)             The Corporation irrevocably consents to
the service of process of any of the aforementioned courts in any such action,
proceeding or litigation by the mailing of copies thereof by registered or
certified mail, postage prepaid, to the Corporation at its address set forth on
its signature page hereto, such service to become effective ten (10) days
after such mailing.


 


(d)             Nothing herein shall affect the right of
any Holder to serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against the Corporation in any other
jurisdiction.  If service of process is
made on a designated agent it should be made by either (i) personal
delivery or (ii) mailing a copy of summons and complaint to the agent via
registered or certified mail, return receipt requested.


 


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


 


19.           Entirety.  This Agreement represents the entire
agreement of the parties hereto and thereto, and supersedes all prior
agreements and understandings, oral or written, if any, relating to
transactions contemplated herein or therein.


 


20.           Incorporation.  All Exhibits attached hereto are
incorporated as part of this Agreement as if fully set forth herein.


 


21.           Non-Recourse.  Except as explicitly provided in this
Agreement, no past, present or future director, officer, employee,
incorporator, member, partner, stockholder, affiliate, agent) attorney or
representative of the Corporation or the Holders shall in such capacity have
any liability for any obligations or liabilities of the Corporation or any
Holder, respectively, under this Agreement or for any claim (under tort or
contract law) based on, in respective of, or by reason of, the transactions
contemplated hereby.


 


22.           Further Assurances.  Each of the parties hereto shall, upon
reasonable request of any other party hereto, do, make and execute all such
documents, acts, matters and things as may be reasonably required in order to
give effect to the transactions contemplated hereby.


 


9

















 


IN WITNESS
WHEREOF, each of the parties hereto has caused a counterpart of this agreement
to be duly executed and delivered as of the date first above written.


 


 


	
   

  	
  GEOKINETICS INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scott McCurdy

  
	
   

  	
   

  	
  Name: Scott McCurdy

  
	
   

  	
   

  	
  Title: Vice President
  & CFO

  
	
   

  	
   

  
	
   

  	
  1500 Citywest Blvd #800

  
	
   

  	
  Houston, Texas
  77042-2380

  
	
   

  	
  Telephone: (713) 850-7600

  



 


Signature page to the Amendment
and Exchange Agreement


 

















 


	
   

  	
  AVISTA CAPITAL
  PARTNERS, LP.

  
	
   

  	
   

  	
   

  
	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ben Silbert

  
	
   

  	
   

  	
  Name: Ben Silbert

  
	
   

  	
   

  	
  Title: General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
  AVISTA CAPITAL PARTNERS
  (OFFSHORE), L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ben Silbert

  
	
   

  	
   

  	
  Name: Ben Silbert

  
	
   

  	
   

  	
  Title: General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address for each of the
  Avista Holders:

  
	
   

  	
   

  
	
   

  	
  65 E. 55th St., 18th Floor

  
	
   

  	
  New York, NY 10022

  
	
   

  	
  Attn: General Counsel

  
	
   

  	
  Telephone: (212)
  593-6900

  



 


Signature page to the Amendment
and Exchange Agreement


 

















 


	
   

  	
  LEVANT AMERICA S.A.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kenneth H. Harman,
  Jr.

  
	
   

  	
   

  	
  Name: Kenneth H. Harman, Jr.

  
	
   

  	
   

  	
  Title: Attorney-in-Fact

  
	
   

  	
   

  	
   

  
	
   

  	
  c/o Colonial Navigation
  Company, Inc.

  
	
   

  	
  750 Lexington Ave. - 26th Floor

  
	
   

  	
  New York, NY 10022

  
	
   

  	
  Telephone:

  	
  212-319-2828

  
				



 


Signature page to the Amendment
and Exchange Agreement


 
















 


EXHIBIT 1


 


THIRD AMENDED


 


CERTIFICATE OF DESIGNATION OF


 


SERIES B SENIOR CONVERTIBLE PREFERRED STOCK


 


OF


 


GEOKINETICS INC.


 


PURSUANT TO SECTION 151(g) OF THE


 


GENERAL CORPORATION LAW OF THE STATE OF DELAWARE


 


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


 


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


 


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


 


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


 


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


 

















 


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


 


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


 


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


 


(1)                                  Series B Preferred Stock.


 


(a)                                  Dividends.


 


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


 


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


 


(b)                                 Liquidation Preference.


 


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


 






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


 


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


 

















 


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


 


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


 


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


 

















 


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


 


(c)                                  Redemption Rights.


 


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


 


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


 


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


 


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


 


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


 






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


 

















 


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


 


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


 


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


 


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


 

















 


(A)                              Conversion Price Adjustments.


 


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


 


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


 

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 

















 


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


 


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


 


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


 


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


 


(f)                                    Voting Rights.


 


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


 


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


 

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 
















 


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


 


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


 


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


 


[SIGNATURES ON FOLLOWING PAGE]


 

















 


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


 


 


	
   

  	
  GEOKINETICS INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Richard F. Miles, President
  and

  
	
   

  	
   

  	
  Chief Executive Officer

  



 

















 


EXHIBIT 2


 


CERTIFICATE OF DESIGNATION OF


 


SERIES C SENIOR PREFERRED STOCK


 


OF


 


GEOKINETICS INC.


 


PURSUANT TO SECTION 151(g) OF THE


 


GENERAL CORPORATION LAW OF THE STATE OF DELAWARE


 


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


 


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


 


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


 

















 


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


 


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


 


(b)                                 Liquidation Preference.


 


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


 






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


 


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


 


2

















 


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


 


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


 


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


 


(c)                                  Redemption.


 


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


 


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


 






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


 


3

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


4

















 


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


 


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


 


[SIGNATURES ON FOLLOWING PAGE]


 


5

















 


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


 


 


	
   

  	
  GEOKINETICS INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Richard F. Miles,
  President and

  
	
   

  	
   

  	
  Chief Executive Officer

  



 


6