Document:

Exhibit 4.2

 

GEOKINETICS HOLDINGS USA,
INC.,

 

 

GEOKINETICS INC.,

 

 

THE SUBSIDIARY GUARANTORS
NAMED HEREIN

 

and

 

U.S. BANK NATIONAL
ASSOCIATION,

AS TRUSTEE

 

 

SUPPLEMENTAL INDENTURE NO.
1

 

Dated as of February 12,
2010

 

to

 

INDENTURE

 

Dated as of December 23,
2009

 

among

 

GEOKINETICS HOLDINGS USA,
INC.,

 

 

GEOKINETICS INC.,

 

 

and

 

U.S. BANK NATIONAL
ASSOCIATION,

AS TRUSTEE

 

 

$300,000,000

 

9.75% Senior Secured Notes
due 2014

 

 

SUPPLEMENTAL INDENTURE NO. 1, dated as of February 12, 2010,
among Geokinetics Holdings USA, Inc., a Delaware Corporation (the “Company”), Geokinetics Inc. (the “Parent”),
the subsidiaries of the Parent named on the signature pages hereto (the “Subsidiary Guarantors” and, together with the Parent, the “Guarantors”), and U.S. Bank National Association, as trustee
(the “Trustee”) under the hereafter defined
Indenture.

 

WHEREAS the Company and the Parent heretofore executed and
delivered to the Trustee an Indenture dated as of December 23, 2009 (the “Indenture”), providing for the issuance of up to
$300,000,000 aggregate principal amount of the Company’s 9.75% Senior Secured Notes due 2014 (the “Notes”); and

 

WHEREAS, pursuant to the terms of the Pledge Agreement, the
Company has deposited an amount equal to 101% of the gross proceeds from the
sale of the Notes, plus an additional amount of cash equivalent to accrued
interest from, and including, the date of issuance of the Notes to, but
excluding, March 15, 2010 (the “Pledged Funds”),
into the Escrow Account pending the consummation of the Acquisition; and

 

WHEREAS, on the Acquisition Closing Date, the Pledged Funds
have been released in accordance with the Pledge Agreement; and

 

WHEREAS, pursuant to Section 4.18 of the Indenture, the
Parent and the Subsidiary Guarantors are each required to provide a Note
Guarantee by executing this Supplemental Indenture on the Acquisition Closing
Date; and

 

WHEREAS, the execution and delivery of this Supplemental
Indenture has been duly and validly authorized by the Company and each of the
Subsidiary Guarantors and the Parent; and

 

WHEREAS, pursuant to Section 9.01 of the Indenture, the
Trustee is authorized to execute and deliver this Supplemental Indenture; and

 

WHEREAS, all the conditions and requirements necessary to
make this Supplemental Indenture a valid, binding and legal instrument in
accordance with its terms have been performed and fulfilled by the parties
hereto and the execution and delivery thereof have been in all respects duly
authorized by the parties hereto.

 

NOW, THEREFORE, in consideration of the above premises, each party
agrees, for the benefit of the others and for the equal and ratable benefit of
the Holders of the Notes, as follows:

 

ARTICLE ONE

 

REAFFIRMATION AND ACCESSION

 

SECTION 1.01.  Reaffirmation.  Each of Company and the Parent hereby
expressly and unconditionally reaffirms each and every covenant, agreement and
undertaking of such party in the Indenture.

 

 

SECTION 1.02.  Parent Guarantee.  The Parent hereby fully and unconditionally
guarantees, on a secured, senior, joint and several basis, the Obligations to
the extent provided in, and subject to the limitations set forth in, Article 11
of the Indenture.

 

SECTION 1.03.  Subsidiary Guarantees and Accession of
Subsidiary Guarantees.  Each
Subsidiary Guarantor hereby fully and unconditionally guarantees, on a secured,
senior, joint and several basis, the Obligations to the extent provided in, and
subject to the limitations set forth in, Article 11 of the Indenture, and
further expressly and unconditionally agrees to be bound by each and every
other covenant, agreement and undertaking of such Subsidiary Guarantor in the
Indenture.

 

ARTICLE TWO

 

MISCELLANEOUS PROVISIONS

 

SECTION 2.01.    Terms Defined. For all purposes of
this Supplemental Indenture, except as otherwise defined or unless the context
otherwise requires, terms used in capitalized form in this Supplemental
Indenture and defined in the Indenture have the meanings specified in the
Indenture.

 

SECTION 2.02.    Indenture. Except as amended hereby,
the Indenture and the Notes are in all respects ratified and confirmed and all
the terms shall remain in full force and effect.

 

SECTION 2.03.    Governing Law. THIS SUPPLEMENTAL
INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

 

SECTION 2.04.    Successors. All agreements of the
Company and any Guarantor in this Supplemental Indenture and the Notes shall
bind their respective successors.

 

SECTION 2.05.    Multiple Counterparts. This
Supplemental Indenture may be signed in any number of counterparts each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same Supplemental Indenture.

 

SECTION 2.06.    Effectiveness. The provisions of this
Supplemental Indenture will take effect immediately upon its execution and
delivery by the Trustee in accordance with the provisions of the Indenture.

 

SECTION 2.07.    Trustee Disclaimer. The Trustee
accepts the amendment of the Indenture effected by this Supplemental Indenture
and agrees to execute the trust created by the Indenture as hereby amended, but
only upon the terms and conditions set forth in the Indenture, including the
terms and provisions defining and limiting the liabilities and responsibilities
of the Trustee, which terms and provisions shall in like manner define and
limit its liabilities and responsibilities in the performance of the trust
created by the Indenture as hereby amended, and without limiting the generality
of the foregoing, the Trustee shall not be responsible in any manner whatsoever
for or with respect to any of the recitals or statements contained herein, all
of 

 

 

which recitals or
statements are made solely by the Company, the Parent and the Subsidiary
Guarantors, or for or with respect to (i) the validity or sufficiency of
this Supplemental Indenture or any of the terms or provisions hereof, (ii) the
proper authorization hereof by the Company and each Guarantor by corporate
action or otherwise, (iii) the due execution hereof by the Company and
each Guarantor and (iv) the consequences (direct or indirect and whether
deliberate or inadvertent) of any amendment herein provided for, and the
Trustee makes no representation with respect to any such matters.

 

SECTION 2.08.    Jurisdiction. The Company and each
Guarantor agree that any legal suit, action or proceeding arising out of or
based upon this Supplemental Indenture, the Note Guarantee or the Notes or the
transactions contemplated hereby or thereby may be instituted in the federal
courts of the United States of America located in The City of New York or the
courts of the State of New York in each case located in The City of New York
(collectively, the “Specified Courts”),
and each party irrevocably submits to the non-exclusive jurisdiction of such
courts in any such suit, action or proceeding. 
Service of any process, summons, notice or document by mail to such
party’s address set forth above shall be effective service of process for any
suit, action or other proceeding brought in any such court.  The parties (to the fullest extent permitted
by applicable law) irrevocably and unconditionally waive any objection to the
laying of venue of any suit, action or other proceeding in the Specified Courts
and irrevocably and unconditionally waive and agree not to plead or claim in any
such court that such suit, action or proceeding has been brought in an
inconvenient forum.

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture No. 1  to be duly executed as of the date first
written above.

 

	
   

  	
  GEOKINETICS HOLDINGS
  USA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scott A. McCurdy

  
	
   

  	
  Name: Scott A. McCurdy

  
	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GEOKINETICS INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scott A. McCurdy

  
	
   

  	
  Name: Scott A. McCurdy

  
	
   

  	
  Title: Vice President
  and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ADVANCED SEISMIC
  TECHNOLOGY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scott A. McCurdy

  
	
   

  	
  Name: Scott A. McCurdy

  
	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GEOKINETICS ACQUISITION
  COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scott A. McCurdy

  
	
   

  	
  Name: Scott A. McCurdy

  
	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  GEOKINETICS MANAGEMENT,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scott A. McCurdy

  
	
   

  	
  Name: Scott A. McCurdy

  
	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GEOKINETICS PROCESSING,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scott A. McCurdy

  
	
   

  	
  Name: Scott A. McCurdy

  
	
   

  	
  Title: Vice President

  

 

Supplemental Indenture

 

 

	
   

  	
  GEOKINETICS SERVICES
  CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scott A. McCurdy

  
	
   

  	
  Name: Scott A. McCurdy

  
	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  GEOKINETICS USA, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scott A. McCurdy

  
	
   

  	
  Name: Scott A. McCurdy

  
	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GEOKINETICS
  INTERNATIONAL HOLDINGS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scott A. McCurdy

  
	
   

  	
  Name: Scott A. McCurdy

  
	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GEOKINETICS
  INTERNATIONAL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scott A. McCurdy

  
	
   

  	
  Name: Scott A. McCurdy

  
	
   

  	
  Title: Vice President

  

 

Supplemental Indenture

 

 

	
   

  	
  TRUSTEE

  
	
   

  	
   

  	
   

  
	
   

  	
  U.S. BANK NATIONAL
  ASSOCIATION,

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steve Finklea

  
	
   

  	
  Name: Steve Finklea

  
	
   

  	
  Title: Vice President

  

 

Supplemental IndentureExhibit
4.3

 

EXECUTION
VERSION

 

SECOND
AMENDED AND RESTATED

REGISTRATION
RIGHTS AGREEMENT

 

This SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
(this “Agreement”) dated February 12,
2010, is among Geokinetics Inc., a Delaware corporation (including its
successors, the “Company”), Avista Capital
Partners, L.P., a Delaware limited partnership, Avista Capital Partners
(Offshore), L.P., a Bermuda limited partnership (together with Avista Capital
Partners, L.P., the “Avista Holders”),
Levant America S.A., a Liberian corporation (“Levant”), and Petroleum
Geo-Services ASA, a Norwegian corporation (“PGS,”
and collectively with the Avista Holders and Levant, the “Security
Holders”).  This Agreement
supersedes the Amended and Restated Registration Rights Agreement dated as of July 28,
2008 among the Company, the Avista Holders and Levant (the “Prior Registration Rights Agreement”).

 

RECITALS

 

WHEREAS, the Company, the Avista Holders and Levant  were parties to that certain Registration
Rights Agreement dated as of September 8, 2006 (the “Original  Registration Rights Agreement”);

 

WHEREAS, the Company and the Avista Holders were parties to
the Series B-2 and Warrant Purchase Agreement dated July 28, 2008 (the “Purchase Agreement”);

 

WHEREAS, under the Purchase Agreement, certain of the
Security Holders purchased shares of Series B-2 Senior Convertible Preferred
Stock, par value $10.00 per share, of the Company (the “Series B-2
Preferred Stock”),
and warrants (the “2008 Warrants”) to purchase
shares of Common Stock, par value $0.01 per share, of the Company (the “Common Stock”);

 

WHEREAS, the Series B-2 Preferred Stock and
the Company’s Series B-1 Senior Convertible Preferred Stock, par value
$10.00 per share (the “Series B-1 Preferred
Stock”),  were
convertible into shares of Common Stock;

 

WHEREAS, in order to induce the Avista Holders
to enter into the Purchase Agreement, and to purchase the Series B-2
Preferred Stock and the 2008 Warrants, the parties agreed to amend and restate
the Original Registration Rights Agreement and enter into the Prior
Registration Rights Agreement;

 

WHEREAS, PGS, certain subsidiaries of PGS, the
Company and certain subsidiaries of the Company have entered into that certain
Purchase Agreement dated December 3, 2009 (the “Acquisition
Agreement”) related to the acquisition of PGS’s onshore seismic
business and related multi-client library by the Company and certain of its
subsidiaries (the “Acquisition”);

 

WHEREAS, as partial consideration for the
transactions contemplated by the Acquisition Agreement, PGS will receive shares
of Common Stock;

 

WHEREAS, concurrent with the execution of the
Acquisition Agreement, PGS, the Company and the Avista Holders entered into
that certain Agreement Regarding Registration Rights, pursuant to which, among
other things, such parties agreed that PGS would become a party to the Prior
Registration Rights Agreement; and

 

 

WHEREAS, in connection with the Acquisition, the
Avista Holders, Levant and the Company have entered into that certain Amendment
and Exchange Agreement, dated December 2, 2009, pursuant to which, among
other things, concurrently with the execution of this Agreement certain changes
are being made to the terms of the Series B-1 Preferred Stock (and the Series
B-1 Preferred Stock is being renamed “Series B Preferred Stock”) and the Series B-2
Preferred Stock is being exchanged for a new class of Series C Preferred Stock
and 750,000 shares of Common Stock (the “Acquisition Common Stock”).

 

NOW, THEREFORE, in consideration of the premises, mutual covenants
and agreements hereinafter contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:

 

ARTICLE I
- DEFINITIONS

 

1.1                               Definitions.

 

(a)                                 For purposes of this Agreement, defined
terms used herein which are not otherwise defined herein shall have the same
respective meanings as such terms have in the Purchase Agreement, and in
addition, the following terms shall have the meanings specified in this Section 1.1.

 

“Affiliate”
means, with respect to any Person, any Person who, directly or indirectly
through one or more intermediaries, controls, is controlled by or is under
common control with any Person.

 

“Business Day”
means a day other than a Saturday, Sunday or other day on which commercial
banks are authorized or required to close under the laws of the United States
or the State of New York.

 

“Common Stock Equivalents”
means, without duplication with any other Common Stock or Common Stock
Equivalents, any rights, warrants, options, convertible securities or
indebtedness, exchangeable securities or indebtedness, or other rights,
exercisable for or convertible or exchangeable into, directly or indirectly,
Common Stock and securities convertible or exchangeable into Common Stock,
whether at the time of issuance or upon the passage of time or the occurrence
of any future event.

 

“Exchange Act”
means the Securities Exchange Act of 1934, as amended, or any similar federal
statute, and the rules and regulations promulgated by the SEC thereunder.

 

“Excluded Registration”
means a registration under the Securities Act of (i) securities registered
on Form S-8 or any similar successor form and (ii) securities
registered to effect the acquisition of or combination with another Person.

 

“Holder”
means (i) a Security Holder and (ii) any direct or indirect
transferee of any such Security Holder, including any Security Holder that
receives shares of Common Stock upon a distribution or liquidation of a Holder,
who has been assigned the rights of the transferor Holder under this Agreement
in accordance with Section 2.3.

 

2

 

“Person” or “person” means any individual,
corporation, partnership, limited liability company, joint venture, association,
joint-stock company, trust, unincorporated organization or government or other
agency or political subdivision thereof.

 

“register,” “registered” and “registration” refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.

 

“Registrable Shares”
means, at any time, the Common Stock (including, but not limited to, the Common
Stock acquired upon conversion of the Series B-1 Preferred Stock, or
exercise of the 2008 Warrants or the Acquisition Common Stock) and the Series B-1  Preferred Stock owned by the Holders, whether
owned on the date hereof or acquired hereafter; provided, however,
to the extent any determination of the number or percentage of aggregate
Registrable Shares is made under the terms of this Agreement, all Series B-1
Preferred Stock shall be included with all Common Stock on an as-converted
basis for the purpose of any such determination; provided, further,
that Registrable Shares shall not include any shares (i) the sale of which
has been registered pursuant to the Securities Act and which shares have been
sold pursuant to such registration or (ii) which have been sold pursuant
to Rule 144 under the Securities Act.

 

“Required Holders”
means Holders who then own beneficially more than 50% of the aggregate number
of shares of Registrable Shares subject to this Agreement.

 

“SEC” means
the Securities and Exchange Commission or any other federal agency at the time
administering the Securities Act.

 

“Securities Act”
means the Securities Act of 1933, as amended, or any similar Federal statute,
and the rules and regulations promulgated by the SEC thereunder.

 

“Subsidiary”
means any entity with respect to which a specified Person (or a Subsidiary
thereof) owns or has the power to vote 50% or more of the equity interests in
such entity, having general voting power to participate in the election of the
governing body of such entity.

 

(a)                                 For purposes of this Agreement, the
following terms have the meanings set forth in the sections indicated:

 

	
  Term

  	
   

  	
  Section

  
	
   

  	
   

  	
   

  
	
  Acquisition

  	
   

  	
  Recitals

  
	
  Acquisition Agreement

  	
   

  	
  Recitals

  
	
  Acquisition Common
  Stock

  	
   

  	
  Recitals

  
	
  Advice

  	
   

  	
  2.6

  
	
  Agreement

  	
   

  	
  Introductory Paragraph

  
	
  Avista Holders

  	
   

  	
  Introductory Paragraph

  
	
  Common Stock

  	
   

  	
  Recitals

  
	
  Company

  	
   

  	
  Introductory Paragraph

  
	
  Company Shelf

  	
   

  	
  2.1(i)

  

 

3

 

	
  Company Shelf Shares

  	
   

  	
  2.1(i)

  
	
  Demand Registration

  	
   

  	
  2.1(a)

  
	
  Demand Request

  	
   

  	
  2.1(a)

  
	
  Inspectors

  	
   

  	
  2.5(j)

  
	
  Levant

  	
   

  	
  Introductory Paragraph

  
	
  Material Adverse Effect

  	
   

  	
  2.1(e)

  
	
  FINRA

  	
   

  	
  2.5(n)

  
	
  PGS

  	
   

  	
  Introductory Paragraph

  
	
  Preferred Stock

  	
   

  	
  1.1(a)

  
	
  Purchase Agreement

  	
   

  	
  Recitals

  
	
  Records

  	
   

  	
  2.5(j)

  
	
  Registration Expenses

  	
   

  	
  2.7

  
	
  Requesting Holders

  	
   

  	
  2.1(a)

  
	
  Required Filing Date

  	
   

  	
  2.1(b)

  
	
  Security Holders

  	
   

  	
  Introductory Paragraph

  
	
  Seller Affiliates

  	
   

  	
  2.8(a)

  
	
  Series B-1
  Preferred Stock

  	
   

  	
  Recitals

  
	
  Series B-2
  Preferred Stock

  	
   

  	
  Recitals

  
	
  Shelf Offering

  	
   

  	
  2.1(f)

  
	
  Suspension Notice

  	
   

  	
  2.6

  
	
  Underwritten Offering

  	
   

  	
  2.1(d)

  

 

1.2                               Other Definitional and
Interpretive Matters.  Unless otherwise expressly
provided or the context otherwise requires, for purposes of this Agreement the
following rules of interpretation apply.

 

(a)                                 When calculating the period of time
before which, within which or following which any act is to be done or step
taken pursuant to this Agreement, the date that is the reference date in
calculating such period is excluded.  If
the last day of such period is a non-Business Day, the period in question ends
on the next succeeding Business Day.

 

(b)                                 Any reference in this Agreement to $
means U.S. dollars.

 

(c)                                  The Schedules to this Agreement are
hereby incorporated and made a part hereof as if set forth in full in this
Agreement and are an integral part of this Agreement.  Any capitalized terms used in any Schedule
but not otherwise defined therein are defined as set forth in this Agreement.

 

(d)                                 Any reference in this Agreement to gender
includes all genders, and words imparting the singular number also include the
plural and vice versa.

 

(e)                                  The division of this Agreement into
Articles, Sections and other subdivisions and the insertion of headings are for
convenience of reference only and do not affect, and should not be utilized in,
the construction or interpretation of this Agreement.

 

(f)                                   All references in this Agreement to any “Article,” “Section,”
or “Schedule” are to the corresponding
Article, Section or Schedule of this Agreement.

 

4

 

(g)                                  The words “herein,”
“hereinafter,” “hereof,”
and “hereunder” refer to this Agreement
as a whole and not merely to a subdivision in which such words appear unless
the context otherwise requires.

 

(h)                                 The word “including”
or any variation thereof means “including, but not limited
to,” and does not limit any general statement that it follows to
the specific or similar items or matters immediately following it.

 

ARTICLE
II - REGISTRATION RIGHTS

 

2.1                               Demand
Registration.

 

(a)                                 At any time after the Closing Date, any
Avista Holder or PGS may request, in writing (a “Demand
Request”), that the Company effect the registration under the
Securities Act of all or part of its or their Registrable Shares (a “Demand Registration”).  Notwithstanding the foregoing, no Demand
Request will be effective hereunder unless the Registrable Shares proposed to
be sold by the Holder or Holders requesting the Demand Registration (the “Requesting Holders,” which term
shall include parties deemed “Requesting Holders” pursuant to Section 2.1(g) hereof)
represent, in the aggregate, more than 25% of the total number of Registrable
Shares held by all Avista Holders or PGS, as the case may be.

 

(b)                                 Each Demand Request shall specify the
number of Registrable Shares proposed to be sold and the intended method of
disposition of the Registrable Shares (including an Underwritten Offering
pursuant to Section 2.1(d) or a Shelf Registration pursuant to
Section 2.1(f)).  Subject to Section 2.1(h),
the Company shall file the Demand Registration within 90 days after receiving a
Demand Request (the “Required Filing Date”)
and shall use all commercially reasonable efforts to cause the same to be
declared effective by the SEC as promptly as practicable after such filing; provided,
however, that the Company shall not be required to effect (i) more than
four (4) Demand Registrations pursuant to Demand Requests made by the
Avista Holders and (ii) more than four (4) Demand Registrations pursuant
to Demand Requests made by PGS, each pursuant to Section 2.1(a); provided,
further, that if any Registrable Shares requested to be registered
pursuant to a Demand Request are excluded from the applicable Demand
Registration pursuant to Section 2.1(e) below, the applicable
Holders shall each have the right, with respect to each such exclusion, to
request one additional Demand Registration.

 

(c)                                  A registration will not count as a Demand
Registration until it has become effective (unless the Requesting Holders
withdraw all their Registrable Shares and the Company has performed its
obligations hereunder in all material respects, in which case such demand will
count as a Demand Registration unless the Requesting Holders pay all
Registration Expenses, as hereinafter defined, in connection with such
withdrawn registration); provided, however, that if, after it has
become effective, an offering of Registrable Shares pursuant to a registration
is interfered with by any stop order, injunction or other order or requirement
of the SEC or other governmental agency or court, such registration will be
deemed not to have been effected and will not count as a Demand Registration.

 

(d)                                 The Requesting Holders may provide in the
Demand Request that the offering of Registrable Shares pursuant to a Demand
Registration shall be in the form of a “firm commitment” underwritten offering
(an “Underwritten Offering”).  The Requesting Holders of a

 

5

 

majority of the Registrable Shares to be registered in
a Demand Registration shall select the investment banking firm or firms to
manage the Underwritten Offering, provided that such selection shall be
subject to the consent of the Company, which consent shall not be unreasonably
withheld.  No Person may participate in
any registration pursuant to Section 2.1(a) unless such Person
(i) agrees to sell such Person’s Registrable Shares on the basis provided
in any underwriting arrangements described above and (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements; provided, however, that no such Person
shall be required to make any representations or warranties in connection with
any such registration other than representations and warranties as to (A) such
Person’s ownership of his or its Registrable Shares to be transferred free and
clear of all liens, claims and encumbrances, (B) such Person’s power and
authority to effect such transfer and (C) such matters pertaining to
compliance with securities laws as may be reasonably requested; provided,
further, however, that the obligation of such Person to indemnify
pursuant to any such underwriting arrangements shall be several, not joint and
several, among such Persons selling Registrable Shares, and the liability of
each such Person will be in proportion to the number of Registrable Shares
included in such Demand Registration, and provided, further, that
such liability will be limited to the net amount received by such Person from
the sale of his or its Registrable Shares pursuant to such registration.

 

(e)                                  No securities to be sold for the account
of any Person (including the Company) other than a Requesting Holder shall be
included in a Demand Registration for an Underwritten Offering unless the
managing underwriter or underwriters shall advise the Company or the Requesting
Holders in writing that the inclusion of such securities will not materially
and adversely affect the price or success of the Underwritten Offering (a “Material Adverse Effect”).  Furthermore, in the event the managing
underwriter or underwriters shall advise the Company or the Requesting Holders
that even after exclusion of all securities of other Persons pursuant to the
immediately preceding sentence, the amount of Registrable Shares proposed to be
included in such Demand Registration by Requesting Holders is sufficiently
large to cause a Material Adverse Effect, the Registrable Shares of the
Requesting Holders to be included in such Demand Registration shall equal the
number of shares which the Company is so advised can be sold in such offering
without a Material Adverse Effect and such shares shall be allocated pro rata
among the Requesting Holders on the basis of the number of Registrable Shares
owned by each such Requesting Holder.

 

(f)                                   The Requesting Holders may provide in the
Demand Request that the offering of Registrable Shares pursuant to a Demand
Registration shall be in the form of a “shelf offering” under the Securities
Act to be made on a continuous basis pursuant to Rule 415 under the Securities
Act, or any similar rule that may be adopted by the SEC (such offering, a “Shelf Offering”).  The Shelf Offering shall be on Form S-1
(or on Form S-3 or any similar successor form, if the Company is eligible
to utilize such Form to register its shares). 
Subject to the terms of this Agreement, the Company shall use its best
efforts to cause the Shelf Offering to be declared effective under the
Securities Act as promptly as possible after the filing thereof and shall use
its best efforts to keep such Shelf Offering continuously effective under the
Securities Act until all Registrable Shares covered by such Shelf Offering have
been sold or may be sold at one time pursuant to Rule 144 as determined by
the counsel to the Company pursuant to a written opinion letter to such effect,
addressed and acceptable to the Company’s transfer agent and the affected
Avista Holders or the affected PGS Holders, as the case may be.

 

6

 

(g)                                  Upon receipt of any Demand Request
(including a Demand Request pursuant to Section 2.1(i)), the
Company shall promptly (but in any event within 10 days) give written notice of
such proposed Demand Registration to all other Holders (which notice shall
include the number of Registrable Shares of the Requesting Holder proposed to
be included in the Demand Registration and a description of the proposed
disposition of such Registrable Shares), who shall have the right, exercisable
by written notice to the Company within 20 days of their receipt of the Company’s
notice, to elect to include in such Demand Registration (including a Shelf
Funded Repurchase pursuant to Section 2.1(i)) such portion of their
Registrable Shares as they may request. 
All Holders requesting to have all or any part of their Registrable
Shares included in a Demand Registration in accordance with the preceding
sentence shall be deemed to be “Requesting Holders”
for purposes of this Agreement.

 

(h)                                 The Company may defer the filing (but not
the preparation) of a registration statement required by Section 2.1(a) until
a date not later than 90 days after the Required Filing Date (or, if longer, 90
days after the effective date of the registration statement contemplated by
clause (ii) below) if (i) at the time the Company receives the Demand
Request, the Company or any of its Subsidiaries are engaged in confidential
negotiations or other confidential business activities, disclosure of which
would be required in such registration statement (but would not be required if
such registration statement were not filed), and the Board of Directors of the
Company determines in good faith that such disclosure would be materially
detrimental to the Company and its stockholders or (ii) prior to receiving
the Demand Request, the Board of Directors had determined to effect a
registered underwritten public offering of the Company’s securities for the
Company’s account and the Company had taken substantial steps (including, but
not limited to, selecting a managing underwriter for such offering) and is
proceeding with reasonable diligence to effect such offering.  A deferral of the filing of a registration
statement pursuant to this Section 2.1(h) shall be lifted, and
the requested registration statement shall be filed forthwith, if, in the case
of a deferral pursuant to clause (i) of the preceding sentence, the
negotiations or other activities are disclosed or terminated, or, in the case
of a deferral pursuant to clause (ii) of the preceding sentence, the
proposed registration for the Company’s account is abandoned.  In order to defer the filing of a
registration statement pursuant to this Section 2.1(h), the Company
shall promptly (but in any event within ten days), upon determining to seek
such deferral, deliver to each Requesting Holder a certificate signed by an
executive officer of the Company stating that the Company is deferring such
filing pursuant to this Section 2.1(h) and a general statement
of the reason for such deferral and an approximation of the anticipated
delay.  Within 20 days after receiving
such certificate, the holders of a majority of the Registrable Shares held by
the Requesting Holders and for which registration was previously requested may
withdraw such Demand Request by giving notice to the Company; if withdrawn, the
Demand Request shall be deemed not to have been made for all purposes of this
Agreement.  The Company may defer the
filing of a particular registration statement pursuant to this Section 2.1(h) only
once.

 

(i)                                     In lieu of any of the Demand
Registrations and if the Company has established a “shelf offering” of newly
issued shares of Common Stock (the “Company Shelf Shares”)
under the Securities Act to be made on a continuous basis pursuant to Rule 415
on Form S-3 (the “Company Shelf”),
each of the Avista Holders and PGS may issue a Demand Request for the Company
to sell Company Shelf Shares and use the proceeds from such sale to purchase
all or any portion of the Registrable Shares held by such Requesting Holder
(the “Shelf Funded Repurchase”) at
a price equal to the price at which the Company Shelf Shares were sold

 

7

 

less any underwriting discounts and commissions.  Subject to the terms of this Agreement, the
Company shall use its best efforts to keep such Company Shelf continuously
effective under the Securities Act until all Registrable Shares included in the
applicable Demand Request have been purchased by the Company or may be sold at
one time pursuant to Rule 144 as determined by the counsel to the Company
pursuant to a written opinion letter to such effect, addressed and acceptable
to the Company’s transfer agent and the affected Avista Holders or PGS, as the
case may be.   The Company will not
be responsible for any fees or expenses incurred by the Avista Holders or PGS
in connection with the Shelf Funded Repurchase other than as provided in Section 2.7
hereto.

 

2.2                               Piggyback Registrations.

 

(a)                                 Each time the Company proposes to
register any of its equity securities (other than pursuant to an Excluded
Registration) under the Securities Act for sale to the public (whether for the
account of the Company or the account of any securityholder of the Company) and
the form of registration statement to be used permits the registration of
Registrable Shares, the Company shall give prompt written notice to each Holder
of Registrable Shares (which notice shall be given not less than 30 days prior
to the effective date of such registration statement), which notice shall offer
each such Holder the opportunity to include any or all of its or his
Registrable Shares in such registration statement, subject to the limitations
contained in Section 2.2(b) hereof.  Each Holder who desires to have its or his
Registrable Shares included in such registration statement shall so advise the
Company in writing (stating the number of shares desired to be included in such
registration statement) within 20 days after receipt of such notice from the
Company.  Any Holder shall have the right
to withdraw such Holder’s request for inclusion of such Holder’s Registrable
Shares in any registration statement pursuant to this Section 2.2(a) by
giving written notice to the Company of such withdrawal.  Subject to Section 2.2(b) below, the
Company shall include in such registration statement all such Registrable Shares
so requested to be included therein; provided, however, that the
Company may at any time withdraw or cease proceeding with any such registration
if it shall at the same time withdraw or cease proceeding with the registration
of all other equity securities originally proposed to be registered.

 

(b)                                 If the managing underwriter advises the
Company in writing that the inclusion of Registrable Shares requested to be
included in the registration statement would cause a Material Adverse Effect,
the Company will be obligated to include in the registration statement, as to
each Requesting Holder, only a portion of the shares such Holder has requested
be registered with the maximum number of shares that the managing underwriter
advises may be sold in an offering covered by the registration statement
without a Material Adverse Effect, allocated pro rata among the Requesting
Holders on the basis of the number of Registrable Shares requested to be
included in such registration statement by each such Requesting Holders.  If as a result of the provisions of this Section 2.2(b)
any Holder shall not be entitled to include all Registrable Shares in a
registration that such Holder has requested to be so included, such Holder may
withdraw such Holder’s request to include Registrable Shares in such
registration statement.  No Person may
participate in any registration statement hereunder unless such Person (i) agrees
to sell such person’s Registrable Shares on the basis provided in any
underwriting arrangements approved by the Company and (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents, each in customary form, reasonably required
under the terms of such underwriting arrangements; provided, however,
that no such

 

8

 

Person shall be required to make any representations
or warranties in connection with any such registration other than
representations and warranties as to (A) such Person’s ownership of his or
its Registrable Shares to be sold or transferred free and clear of all liens,
claims and encumbrances, (B) such Person’s power and authority to effect
such transfer and (C) such matters pertaining to compliance with
securities laws as may be reasonably requested; provided, further,
however, that the obligation of such Person to indemnify pursuant to any such
underwriting arrangement shall be several, not joint and several, among such
Persons selling Registrable Shares, and the liability of each such Person will
be in proportion to the number of Registrable Shares sold pursuant to such
underwriting arrangement, and provided, further, that such
liability will be limited, to the net amount received by such Person from the
sale of his or its Registrable Shares pursuant to such registration.

 

2.3                               Transfer of Registration
Rights.  The rights of each Holder under this
Agreement may be assigned to a transferee or assignee holding, after such
transfer or assignment, at least 50,000  shares of
Common Stock (on a fully diluted basis as adjusted for stock splits, stock
dividends, recapitalizations and the like) of a Holder’s Registrable Shares not
sold to the public; provided, however, that the Company is given:
(a) written notice by such Holder at or within a reasonable time after
said transfer, stating the name and address of such transferee or assignee and
identifying the securities with respect to which such registration rights are
being transferred or assigned; and (b) a joinder agreement, in a form
reasonably satisfactory to the Company, executed by such assignee pursuant to
which such assignee agrees to be bound by the terms of this Agreement.  Notwithstanding the foregoing, any Holder may
transfer rights to a transferee holding, after such transfer, fewer than 50,000
shares (on a fully diluted basis as adjusted for stock splits, stock dividends,
recapitalizations and the like) of a Holder’s Registrable Shares if such
transferee is (a) any affiliate, control person, controlled person,
partner or retired partner of any Holder or (b) any family member or trust
for the benefit of any individual Holder.

 

2.4                               Holdback Agreement.  Unless the
managing underwriter otherwise agrees, each of the Company and the Holders
agrees (and the Company agrees, in connection with any underwritten
registration, to use its commercially reasonable efforts to cause its
Affiliates to agree) not to effect any public sale or private offer or
distribution of any Common Stock or Common Stock Equivalents during the ten
Business Days prior to the effectiveness under the Securities Act of any
underwritten registration and during such time period (not to exceed 90 days)
after the effectiveness under the Securities Act of any underwritten
registration as the Company and the managing underwriter may agree.  Notwithstanding the foregoing, this Section 2.4
shall not apply unless all then officers and directors of the Company enter
into similar agreements.  Any
discretionary waiver or termination of the requirements under the foregoing
provisions made by the managing underwriter shall apply to each seller of
Registrable Shares on a pro rata basis in accordance with the number of
Registrable Shares held by each seller.

 

2.5                               Registration Procedures.  Whenever any
Holder has requested that any Registrable Shares be registered pursuant to this
Agreement, the Company will use its commercially reasonable efforts to effect
the registration and the sale of such Registrable Shares in accordance with the
intended method of disposition thereof, and pursuant thereto the Company will
as expeditiously as possible:

 

9

 

(a)                                 prepare and file with the SEC a
registration statement on any appropriate form under the Securities Act with
respect to such Registrable Shares and use its commercially reasonable efforts
to cause such registration statement to become effective;

 

(b)                                 prepare and file with the SEC such
amendments, post-effective amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be necessary
to keep such registration statement effective until all of the shares subject
to such offering have been sold (or such lesser period as is necessary for the
underwriters in an Underwritten Offering to sell unsold allotments) and comply
with the provisions of the Securities Act with respect to the disposition of
all securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the sellers thereof set
forth in such registration statement;

 

(c)                                  furnish to each seller of Registrable
Shares and the underwriters of the securities being registered such number of
copies of such registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including each
preliminary prospectus), any documents incorporated by reference therein and
such other documents as such seller or underwriters may reasonably request in
order to facilitate the disposition of the Registrable Shares owned by such
seller or the sale of such securities by such underwriters (it being understood
that, subject to Section 2.6 and the requirements of the Securities
Act and applicable state securities laws, the Company consents to the use of
the prospectus and any amendment or supplement thereto by each seller and the
underwriters in connection with the offering and sale of the Registrable Shares
covered by the registration statement of which such prospectus, amendment or
supplement is a part);

 

(d)                                 use its commercially reasonable efforts
to register or qualify the Registrable Shares under the other securities or
blue sky laws of the jurisdictions as the managing underwriter reasonably
requests (or, in the event the registration statement does not relate to an
Underwritten Offering, as the holders of a majority of the Registrable Shares
may reasonably request); use its commercially reasonable efforts to keep each
such registration or qualification (or exemption therefrom) effective during
the period in which the registration statement is required to be kept
effective; and do any and all other acts and things which may be reasonably
necessary or advisable to enable each seller to consummate the disposition of
the Registrable Shares owned by such seller in such jurisdictions (provided,
however, that the Company will not be required to (i) qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this subparagraph or (ii) consent to general
service of process in any such jurisdiction);

 

(e)                                  promptly notify each seller and each
underwriter and if requested by any such Person, confirm such notice in writing
(i) when a prospectus or any prospectus supplement or post-effective
amendment has been filed and, with respect to a registration statement or any
post-effective amendment, when the same has become effective, (ii) of the
issuance by any state securities or other regulatory authority of any order
suspending the qualification or exemption from qualification of any of the Registrable
Shares under state securities or “blue sky” laws or the initiation of any
proceedings for that purpose and (iii) of the happening of any event which
makes any statement made in a registration statement or related prospectus
untrue or which requires the making of any changes in such registration
statement, prospectus or documents so that they will not contain any untrue
statement of a material fact or omit to state any material fact

 

10

 

required to be stated therein or necessary to make the
statements therein not misleading, and, as promptly as practicable thereafter,
prepare and file with the SEC and furnish a supplement or amendment to such
prospectus so that, as thereafter deliverable to the purchasers of such
Registrable Shares, such prospectus will not contain any untrue statement of a
material fact or omit a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;

 

(f)                                   make generally available to the Company’s
securityholders an earnings statement satisfying the provisions of Section 11(a) of
the Securities Act no later than 30 days after the end of the 12 month period
beginning with the first day of the Company’s first fiscal quarter commencing
after the effective date of a registration statement, which earnings statement
shall cover said 12 month period, and which requirement will be deemed to be
satisfied if the Company timely files complete and accurate information on Forms
10-Q, 10-K and 8-K under the Exchange Act and otherwise complies with Rule 158
under the Securities Act;

 

(g)                                  if requested by the managing underwriter
or any seller, promptly incorporate in a prospectus supplement or
post-effective amendment such information as the managing underwriter or any
seller reasonably requests to be included therein, including, without
limitation, with respect to the Registrable Shares being sold by such seller,
the purchase price being paid therefor by the underwriters and with respect to
any other terms of the Underwritten Offering of the Registrable Shares to be
sold in such offering, and promptly make all required filings of such
prospectus supplement or post-effective amendment;

 

(h)                                 as promptly as practicable after filing
with the SEC of any document which is incorporated by reference into a
registration statement (in the form in which it was incorporated), deliver a
copy of each such document to each seller;

 

(i)                                     cooperate with the sellers and the
managing underwriter to facilitate the timely preparation and delivery of
certificates (which shall not bear any restrictive legends unless required
under applicable law) representing securities sold under any registration
statement, and enable such securities to be in such denominations and
registered in such names as the managing underwriter or such sellers may
request and keep available and make available to the Company’s transfer agent
prior to the effectiveness of such registration statement a supply of such
certificates;

 

(j)                                    promptly make available for inspection by
any seller, any underwriter participating in any disposition pursuant to any
registration statement, and any attorney, accountant or other agent or
representative retained by any such seller or underwriter (collectively, the “Inspectors”), all financial and
other records, pertinent corporate documents and properties of the Company
(collectively, the “Records”), as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company’s officers, directors and employees to
supply all information requested by any such Inspector in connection with such
registration statement; provided, however, that, unless the
disclosure of such Records is necessary to avoid or correct a misstatement or
omission in the registration statement or the release of such Records is
ordered pursuant to a subpoena or other order from a court of competent
jurisdiction, the Company shall not be required to provide any information
under this subparagraph (j) if (i) the Company believes, after
consultation with counsel for the Company, that to do so would cause the
Company to forfeit an attorney-client privilege that was applicable

 

11

 

to such information or (ii) if either (A) the
Company has requested and been granted from the SEC confidential treatment of
such information contained in any filing with the SEC or documents provided
supplementally or otherwise or (B) the Company reasonably determines in
good faith that such Records are confidential and so notifies the Inspectors in
writing unless prior to furnishing any such information with respect to (i) or (ii)
such Holder of Registrable Shares requesting such information agrees to enter
into a confidentiality agreement in customary form and subject to customary
exceptions; and provided, further, that each Holder of
Registrable Shares agrees that it will, upon learning that disclosure of such
Records is sought in a court of competent jurisdiction, give notice to the
Company and allow the Company, at its expense, to undertake appropriate action
and to prevent disclosure of the Records deemed confidential;

 

(k)                                 furnish to each seller and underwriter a
signed counterpart of (i) an opinion or opinions of counsel to the Company
and (ii) a comfort letter or comfort letters from the Company’s
independent public accountants, each in customary form and covering such
matters of the type customarily covered by opinions or comfort letters, as the
case may be, as the sellers or managing underwriter reasonably requests;

 

(l)                                     cause the Registrable Shares included in
any registration statement to be listed on each securities exchange, if any, on
which similar securities issued by the Company are then listed;

 

(m)                             provide a transfer agent and registrar
for all Registrable Shares registered hereunder and provide a CUSIP number for
the Registrable Shares included in any registration statement not later than
the effective date of such registration statement;

 

(n)                                 cooperate with each seller and each
underwriter participating in the disposition of such Registrable Shares and
their respective counsel in connection with any filings required to be made
with the Financial Industry Regulatory Authority (“FINRA”);

 

(o)                                 during the period when the prospectus is
required to be delivered under the Securities Act, promptly file all documents
required to be filed with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act;

 

(p)                                 notify each seller of Registrable Shares
promptly of any request by the SEC for the amending or supplementing of such
registration statement or prospectus or for additional information;

 

(q)                                 prepare and file with the SEC promptly
any amendments or supplements to such registration statement or prospectus which,
in the opinion of counsel for the Company or the managing underwriter, is
required in connection with the distribution of the Registrable Shares;

 

(r)                                    enter into such agreements (including
underwriting agreements in the managing underwriter’s customary form) as are
customary in connection with an underwritten registration; and

 

(s)                                   advise each seller of such Registrable
Shares, promptly after it shall receive notice or obtain knowledge thereof, of
the issuance of any stop order by the SEC suspending the effectiveness of such
registration statement or the initiation or threatening of any

 

12

 

proceeding for such purpose and promptly use its best
efforts to prevent the issuance of any stop order or to obtain its withdrawal
at the earliest possible moment if such stop order should be issued.

 

2.6                               Suspension of Dispositions.  Each Holder
agrees by acquisition of any Registrable Shares that, upon receipt of any
notice (a “Suspension Notice”) from the
Company of the happening of any event of the kind described in Section 2.5(e)(iii) such
Holder will forthwith discontinue disposition of Registrable Shares until such
Holder’s receipt of the copies of the supplemented or amended prospectus, or
until it is advised in writing (the “Advice”) by
the Company that the use of the prospectus may be resumed, and has received
copies of any additional or supplemental filings which are incorporated by
reference in the prospectus, and, if so directed by the Company, such Holder
will deliver to the Company all copies, other than permanent file copies then
in such Holder’s possession, of the prospectus covering such Registrable Shares
current at the time of receipt of such notice. 
In the event the Company shall give any such notice, the time period
regarding the effectiveness of registration statements set forth in Section 2.5(b) hereof
shall be extended by the number of days during the period from and including
the date of the giving of the Suspension Notice to and including the date when
each seller of Registrable Shares covered by such registration statement shall
have received the copies of the supplemented or amended prospectus or the
Advice.  The Company shall use its
commercially reasonable efforts and take such actions as are reasonably
necessary to render the Advice as promptly as practicable.

 

2.7                               Registration Expenses. 
All expenses incident to the Company’s performance of or compliance with
this Article II including, without limitation, all registration and
filing fees, all fees and expenses associated with filings required to be made
with FINRA (including, if applicable, the fees and expenses of any “qualified
independent underwriter” as such term is defined in Rule 2720 (or any successor
rule) of the NASD Rules in FINRA Manual, and of its counsel), as may be
required by the rules and regulations of FINRA, fees and expenses of
compliance with securities or “blue sky” laws (including reasonable fees and
disbursements of counsel in connection with “blue sky” qualifications of the
Registrable Shares), rating agency fees, printing expenses (including expenses
of printing certificates for the Registrable Shares in a form eligible for
deposit with Depository Trust Company and of printing prospectuses if the
printing of prospectuses is requested by a holder of Registrable Shares),
messenger and delivery expenses, the Company’s internal expenses (including
without limitation all salaries and expenses of its officers and employees
performing legal or accounting duties), the fees and expenses incurred in
connection with any listing of the Registrable Shares, fees and expenses of
counsel for the Company and its independent certified public accountants
(including the expenses of any special audit or “cold comfort” letters required
by or incident to such performance), securities acts liability insurance (if
the Company elects to obtain such insurance), the fees and expenses of any
special experts retained by the Company in connection with such registration,
and the fees and expenses of other persons retained by the Company and
reasonable fees and expenses of one firm of counsel for the sellers (which
shall be selected by the holders of a majority of the Registrable Shares being
included in any particular registration statement) (all such expenses being
herein called “Registration  Expenses”) will be borne by
the Company whether or not any registration statement becomes effective; provided,
however, that in no event shall Registration Expenses include any
underwriting discounts, commissions or fees attributable to the sale of the
Registrable Shares or any counsel (except as provided above), accountants or
other persons retained or employed by the Holders.

 

13

 

2.8                               Indemnification.

 

(a)                                 The Company agrees to indemnify and
reimburse, to the fullest extent permitted by law, each seller of Registrable
Shares, and each of its employees, advisors, agents, representatives, partners,
officers, and directors and each Person who controls such seller (within the
meaning of the Securities Act or the Exchange Act) and any agent or investment
advisor thereof (collectively, the “Seller Affiliates”)
(i) against any and all losses, claims, damages, liabilities and expenses,
joint or several (including, without limitation, attorneys’ fees and
disbursements except as limited by Section 2.8(c)) based upon,
arising out of, related to or resulting from any untrue or alleged untrue
statement of a material fact contained in any registration statement,
prospectus or preliminary prospectus or any amendment thereof or supplement
thereto (including without limitation any “issuer free writing prospectus” as
defined in Rule 433 under the Securities Act), or any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein not misleading, (ii) against any and all losses,
liabilities, claims, damages and expenses whatsoever, as incurred, to the
extent of the aggregate amount paid in settlement of any litigation or
investigation or proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon, arising out of, related to
or resulting from any such untrue statement or omission or alleged untrue
statement or omission, and (iii) against any and all costs and expenses
(including reasonable fees and disbursements of counsel) as may be reasonably
incurred in investigating, preparing or defending against any litigation,
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon, arising out of, related to or
resulting from any such untrue statement or omission or alleged untrue
statement or omission, or such violation of the Securities Act or Exchange Act,
to the extent that any such expense or cost is not paid under subparagraph (i) or
(ii) above; except insofar as any such statements are made in reliance upon
and in strict conformity with information furnished in writing to the Company
by such seller or any Seller Affiliate for use therein or arise from such
seller’s or any Seller Affiliate’s failure to deliver a copy of the
registration statement or prospectus or any amendments or supplements thereto
after the Company has furnished such seller or Seller Affiliate with a
sufficient number of copies of the same. 
The reimbursements required by this Section 2.8(a) will
be made by periodic payments during the course of the investigation or defense,
as and when bills are received or expenses incurred.

 

(b)                                 In connection with any registration
statement in which a seller of Registrable Shares is participating, each such
seller will furnish to the Company in writing such information and affidavits
as the Company reasonably requests for use in connection with any such
registration statement or prospectus and, to the fullest extent permitted by
law, each such seller will indemnify the Company and its directors and officers
and each Person who controls the Company (within the meaning of the Securities
Act or the Exchange Act) against any and all losses, claims, damages,
liabilities and expenses (including, without limitation, reasonable attorneys’
fees and disbursements except as limited by Section 2.8(c))
resulting from any untrue statement or alleged untrue statement of a material
fact contained in the registration statement, prospectus or any preliminary
prospectus or any amendment thereof or supplement thereto (including without
limitation any “issuer free writing prospectus” as defined in Rule 433
under the Securities Act) or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, but only to the extent that such untrue statement or alleged
untrue statement or omission or alleged omission is contained in

 

14

 

any information or affidavit so furnished in writing
by such seller or any of its Seller Affiliates specifically for inclusion in
the registration statement; provided that the obligation to indemnify
will be several, not joint and several, among such sellers of Registrable
Shares, and the liability of each such seller of Registrable Shares will be in
proportion to the number of Registrable Shares sold pursuant to such
registration statement, and, provided, further, that such
liability will be limited to, the net amount received by such seller from the
sale of Registrable Shares pursuant to such registration statement; provided,
however, that such seller of Registrable Shares shall not be liable in
any such case to the extent that prior to the filing of any such registration
statement or prospectus or amendment thereof or supplement thereto, such seller
has furnished in writing to the Company information expressly for use in such
registration statement or prospectus or any amendment thereof or supplement
thereto which corrected or made not misleading information previously furnished
to the Company.

 

(c)                                  Any Person entitled to indemnification
hereunder will (i) give prompt written notice to the indemnifying party of
any claim with respect to which it seeks indemnification (provided that
the failure to give such notice shall not limit the rights of such Person) and (ii) unless
in such indemnified party’s reasonable judgment a conflict of interest between
such indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party; provided, however,
that any person entitled to indemnification hereunder shall have the right to
employ separate counsel and to participate in the defense of such claim, but
the fees and expenses of such counsel shall be at the expense of such person
unless (A) the indemnifying party has agreed to pay such fees or expenses
or (B) the indemnifying party shall have failed to assume the defense of
such claim and employ counsel reasonably satisfactory to such person.  If such defense is not assumed by the
indemnifying party as permitted hereunder, the indemnifying party will not be
subject to any liability for any settlement made by the indemnified party without
its consent (but such consent will not be unreasonably withheld).  If such defense is assumed by the
indemnifying party pursuant to the provisions hereof, such indemnifying party
shall not settle or otherwise compromise the applicable claim unless (i) such
settlement or compromise contains a full and unconditional release of the
indemnified party or (ii) the indemnified party otherwise consents in
writing.  An indemnifying party who is
not entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in
the reasonable judgment of any indemnified party, a conflict of interest may
exist between such indemnified party and any other of such indemnified parties
with respect to such claim, in which event the indemnifying party shall be
obligated to pay the reasonable fees and disbursements of such additional
counsel or counsels.

 

(d)                                 Each party hereto agrees that, if for any
reason the indemnification provisions contemplated by Section 2.8(a) or Section
2.8(b) are unavailable to or insufficient to hold harmless an indemnified
party in respect of any losses, claims, damages, liabilities or expenses (or
actions in respect thereof) referred to therein, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, liabilities or expenses (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and the indemnified party in connection with the actions
which resulted in the losses, claims, damages, liabilities or expenses as well
as any other relevant equitable considerations. 
The relative fault of such indemnifying party and

 

15

 

indemnified party shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by such indemnifying party or indemnified party, and
the parties’ relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.  The parties hereto agree that it would not be
just and equitable if contribution pursuant to this Section 2.8(d) were
determined by pro rata allocation (even if the Holders or any underwriters or
all of them were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to in this Section 2.8(d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, liabilities or
expenses (or actions in respect thereof) referred to above shall be deemed to
include any legal or other fees or expenses reasonably incurred by such
indemnified party in connection with investigating or, except as provided in Section
2.8(c), defending any such action or claim. 
Notwithstanding the provisions of this Section 2.8(d), no
Holder shall be required to contribute an amount greater than the dollar amount
by which the net proceeds received by such Holder with respect to the sale of
any Registrable Shares exceeds the amount of damages which such Holder has
otherwise been required to pay by reason of any and all untrue or alleged
untrue statements of material fact or omissions or alleged omissions of
material fact made in any registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto related to such sale
of Registrable Shares.  No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.  The Holders’ obligations in this Section 2.8(d) to
contribute shall be several in proportion to the amount of Registrable Shares
registered by them and not joint.

 

If
indemnification is available under this Section 2.8, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in Section 2.8(a) and Section 2.8(b) without
regard to the relative fault of said indemnifying party or indemnified party or
any other equitable consideration provided for in this Section 2.8(d) subject,
in the case of the Holders, to the limited dollar amounts set forth in Section 2.8(b).

 

(e)                                  The indemnification and contribution
provided for under this Agreement will remain in full force and effect regardless
of any investigation made by or on behalf of the indemnified party or any
officer, director or controlling Person of such indemnified party and will
survive the transfer of securities.

 

2.9                               Current Public Information. 
With a view to making available to the Holders the benefits of certain rules and
regulations of the SEC that may at any time permit the sale of securities to
the public without registration, the Company agrees to use its best efforts to:

 

(a)                                 disclose and keep available adequate current
public information in accordance with Rule 144(c) under the
Securities Act;

 

(b)                                 file with the SEC in a timely manner all
reports and other documents required of the Company under the Securities Act
and the Exchange Act; and

 

(c)                                  furnish to any Holder, so long as such
Holder owns any Registrable Shares, upon request by such Holder, (i) a written
statement by the Company that it has complied with the reporting requirements
of Rule 144 and of the Securities Act and the Exchange Act, (ii) a
copy of the most recent annual or quarterly report of the Company and (iii) such
other reports

 

16

 

and documents of the Company and other information in
the possession of or reasonably obtainable by the Company as a Holder may
reasonably request in availing itself of any rule or regulation of the SEC
allowing a Holder to sell any such securities without registration.

 

2.10                        No Inconsistent Agreements.  Neither the
Company nor any of its Subsidiaries has entered, as of the date hereof, nor
shall the Company or any of its Subsidiaries, on of after the date of this
Agreement, enter into any agreement with respect to its securities, that would
have the effect of impairing the rights granted to the Holders under this
Agreement or otherwise conflicts with provisions thereof.  Except as set forth on Schedule 2.10,
neither the Company nor any of its Subsidiaries has previously entered into any
agreement granting any registration rights with respect to any of its
securities to any Person that have not been satisfied in full.

 

ARTICLE
III - TERMINATION

 

3.1                               Termination. 
The provisions of this Agreement shall terminate on the seventh
anniversary hereof.

 

ARTICLE
IV - MISCELLANEOUS

 

4.1                               Notices. 
Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand delivery,
by telex, by telecopier or registered or certified mail, postage prepaid,
return receipt requested, addressed as follows (or at such other address as may
be substituted by notice given as herein provided):

 

If to the Company:

 

Geokinetics
Inc.

1500 City West Blvd., Suite 800

Houston, TX 77042

Attention:  Richard F. Miles

Facsimile:  (713) 850-7330

 

With copies to (which shall not constitute notice):

 

Haynes and Boone, LLP

1221 McKinney Street, Suite 2100

Houston, Texas 77010

Attention:  Guy Young

Facsimile:  (713) 636-5699

 

If to
any Holder, at its address listed on the signature pages hereof, with a
copy to the Person identified on such signature page (which shall not
constitute notice).

 

Any
notice or communication hereunder shall be deemed to have been given or made as
of the date so delivered if personally delivered; when answered back, if
telexed; when receipt is acknowledged, if telecopied; and five calendar days
after mailing if sent by registered or certified

 

17

 

mail (except that a notice of change of address shall
not be deemed to have been given until actually received by the addressee).

 

Failure
to transmit a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders.  If a notice or communication is given or made
in the manner provided above, it is duly given, whether or not the addressee
receives it.

 

4.2                               Governing Law.  THIS AGREEMENT,
THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT, AND ANY CLAIM
OR CONTROVERSY DIRECTLY OR INDIRECTLY BASED UPON OR ARISING OUT OF THIS
AGREEMENT (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY), INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, SHALL IN ALL RESPECTS BE
GOVERNED BY AND INTERPRETED, CONSTRUED AND DETERMINED EXCLUSIVELY IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW THAT WOULD REQUIRE THE APPLICATION OF THE LAW OF ANY OTHER
JURISDICTION.

 

4.3                               Jurisdiction. 
EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO SUBMIT TO
THE EXCLUSIVE JURISDICTION OF FEDERAL OR STATE COURT OF COMPETENT JURISDICTION
IN THE SOUTHERN DISTRICT OF NEW YORK AND ANY APPELLATE COURT THEREFROM, FOR THE
RESOLUTION OF ANY AND ALL DISPUTES, CONTROVERSIES, CONFLICTS, LITIGATION OR
ACTIONS ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE SUBJECT MATTER
HEREOF AND AGREES NOT TO COMMENCE ANY LITIGATION OR ACTIONS ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND THE SUBJECT MATTER HEREOF IN ANY OTHER COURT.

 

4.4                               Successors and Assigns. 
Except as otherwise expressly provided herein, this Agreement shall be
binding upon and benefit the Company, each Holder and their respective
successors and assigns.

 

4.5                               Duplicate Originals.  All parties
may sign any number of copies of this Agreement.  Each signed copy shall be an original, but
all of them together shall represent the same agreement.

 

4.6                               Severability. 
In case any provision in this Agreement shall be held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and the remaining
provisions shall not in any way be affected or impaired thereby.

 

4.7                               No Waivers; Amendments.

 

(a)                                 No failure or delay on the part of the
Company or any Holder in exercising any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy.  The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the Company or
any Holder at law or in equity or otherwise.

 

18

 

(b)                                 Any provision of this Agreement may be
amended or waived if, but only if, such amendment or waiver is in writing and
is signed by the Company and the Required Holders; provided however, any
amendment or waiver that adversely affects the rights of any of the Avista
Holders or of PGS shall also require the consent of the Avista Holders or PGS,
as the case may be.

 

4.8                               Negotiated Agreement.  This Agreement
was negotiated by the parties with the benefit of legal representation, and any
rule of construction or interpretation otherwise requiring this Agreement to be
construed or interpreted against any party shall not apply to the construction
or interpretation hereof.

 

4.9                               Prior Registration Rights. 
In consideration of the inclusion of shares of Common Stock owned by the
Avista Holders within the definition of Registrable Shares herein, the Avista
Holders hereby waive their right to have any of their shares of Common stock
included within the definition of Registrable Securities under the Registration
Rights Agreement dated as of May 2, 2003 (the “2003
Registration Rights Agreement”), among the Company and the
parties named therein and acknowledge that they shall not be entitled to any
rights under the 2003 Registration Rights Agreement.

 

[THE
REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

19

 

IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized signatories as of the date first
written above.

 

	
   

  	
  GEOKINETICS INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard F. Miles

  
	
   

  	
  Name: 

  	
  Richard F. Miles

  
	
   

  	
  Title:

  	
  President

  

 

SECOND AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT

 

 

	
   

  	
  PETROLEUM GEO-SERVICES ASA

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jostein Ueland

  
	
   

  	
  Name: 

  	
  Jostein Ueland

  
	
   

  	
  Title:

  	
  Authorized Signatory

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
  Strandveien 4

  
	
   

  	
  P.O. Box 89

  
	
   

  	
  N-1325 Lysaker

  
	
   

  	
  Norway

  
	
   

  	
  Attention:  General
  Counsel

  
	
   

  	
  Facsimile:  +47 67
  53 68 83

  
	
   

  	
   

  	
   

  
	
  Copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
  Baker Botts L.L.P.

  
	
   

  	
  One Shell Plaza

  
	
   

  	
  910 Louisiana

  
	
   

  	
  Houston, Texas 77002

  
	
   

  	
  Attention: Joe S. Poff

  
	
   

  	
  Facsimile: (713) 229-7710

  

 

SECOND AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT

 

 

	
   

  	
  AVISTA CAPITAL PARTNERS, L.P.

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ben Silbert

  
	
   

  	
  Ben Silbert,

  
	
   

  	
  Authorized Signatory

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
  1000
  Louisiana Street, Suite 1200

  
	
   

  	
  Houston,
  Texas 77002

  
	
   

  	
  Telecopy:
  (713) 328-1097

  
	
   

  	
  Attention:
  Steve Webster

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  AVISTA CAPITAL PARTNERS
  (OFFSHORE), L.P.

  
	
   

  	
   

  	
   

  
	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ben Silbert

  
	
   

  	
  Ben Silbert,

  
	
   

  	
  Authorized Signatory

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
  1000
  Louisiana Street, Suite 1200

  
	
   

  	
  Houston,
  Texas 77002

  
	
   

  	
  Telecopy:
  (713) 328-1097

  
	
   

  	
  Attention: Steve
  Webster

  
	
   

  	
   

  	
   

  
	
  Copy
  to:

  
	
   

  	
   

  	
   

  
	
   

  	
  King & Spalding
  LLP

  
	
   

  	
  1100 Louisiana,
  Suite 4000

  
	
   

  	
  Houston, TX 77002

  
	
   

  	
  Facsimile: (713) 751-3290

  
	
   

  	
  Attention: Steve Rubin, Esq.

  

 

SECOND AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT

 

 

	
   

  	
  LEVANT AMERICA S.A.

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ K. H.
  Hannan, Jr.

  
	
   

  	
  K. H. Hannan, Jr.

  
	
   

  	
  Attorney in Fact

  
	
   

  	
   

  	
   

  
	
   

  	
  Colonial Navigation
  Company, Inc.

  
	
   

  	
  750 Lexington Ave. 26th
  Floor

  
	
   

  	
  New York, New York,
  10022

  
	
   

  	
  Telecopy: (212)
  319-2826

  
	
   

  	
  Attention: K. H.
  Hannan, Jr.

  

 

SECOND AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT

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