Document:

Exhibit 10.1

SECURITIES
PURCHASE AGREEMENT

among

Geokinetics Inc.,

Avista Capital
Partners, L.P.,

Avista Capital
Partners (Offshore), L.P.,

and

Levant America
S.A.

Dated as of
September 8, 2006,

Relating to:

Series B Senior
Convertible Preferred Stock

 

TABLE OF CONTENTS

	
  SECTION 1.

  	
  DEFINITIONS AND
  ACCOUNTING TERMS

  	
  2

  
	
  1.1

  	
  Definitions

  	
  2

  
	
  1.2

  	
  Computation of Time Periods

  	
  6

  
	
  1.3

  	
  Terms Generally

  	
  7

  
	
  1.4

  	
  Accounting Terms

  	
  7

  
	
   

  	
   

  	
   

  
	
  SECTION 2.

  	
  AUTHORIZATION
  AND ISSUANCE OF PREFERRED STOCK

  	
  7

  
	
  2.1

  	
  Authorization of Issue

  	
  7

  
	
  2.2

  	
  Sale and Purchase of the Preferred Stock

  	
  7

  
	
  2.3

  	
  Closing

  	
  7

  
	
  2.4

  	
  Stock Certificates

  	
  7

  
	
   

  	
   

  	
   

  
	
  SECTION 3.

  	
  CONDITIONS TO
  CLOSING

  	
  8

  
	
  3.1

  	
  Representations and Warranties

  	
  8

  
	
  3.2

  	
  Performance; No Default under Other Agreements

  	
  8

  
	
  3.3

  	
  Compliance Certificate

  	
  8

  
	
  3.4

  	
  Acquisition

  	
  8

  
	
  3.5

  	
  Avista Facilities

  	
  8

  
	
  3.6

  	
  Material Adverse Effect

  	
  9

  
	
  3.7

  	
  Consents, Authorizations and Filings, Etc.

  	
  9

  
	
  3.8

  	
  Payment of Expenses

  	
  9

  
	
  3.9

  	
  Legal Opinion

  	
  9

  
	
  3.10

  	
  Management Rights Agreement

  	
  9

  
	
   

  	
   

  	
   

  
	
  SECTION 4.

  	
  REPRESENTATIONS
  AND WARRANTIES

  	
  10

  
	
  4.1

  	
  Due Organization; Power and Authority

  	
  10

  
	
  4.2

  	
  Capitalization

  	
  10

  
	
  4.3

  	
  Subsidiaries

  	
  11

  
	
  4.4

  	
  Due Authorization, Execution and Delivery

  	
  11

  
	
  4.5

  	
  Non-Contravention; Authorizations and Approvals

  	
  11

  
	
  4.6

  	
  Financial Statements; Securities Filings

  	
  12

  
	
  4.7

  	
  Absence of Undisclosed Liabilities or Events

  	
  14

  

 

 i
 

 

 

	
  4.8

  	
  No Actions or Proceedings

  	
  14

  
	
  4.9

  	
  Title to Properties

  	
  14

  
	
  4.10

  	
  Intellectual Property Rights

  	
  14

  
	
  4.11

  	
  Taxes

  	
  16

  
	
  4.12

  	
  Employee Benefit Plans

  	
  17

  
	
  4.13

  	
  Investment Company Act

  	
  17

  
	
  4.14

  	
  Insurance

  	
  17

  
	
  4.15

  	
  Compliance with Laws; Permits; Environmental
  Liabilities

  	
  18

  
	
  4.16

  	
  Labor and Employment Matters

  	
  19

  
	
  4.17

  	
  Brokerage Fees

  	
  19

  
	
  4.18

  	
  Solvency and Related Matters

  	
  19

  
	
   

  	
   

  	
   

  
	
  SECTION 5.

  	
  REPRESENTATIONS,
  WARRANTIES AND AGREEMENTS OF THE PURCHASERS

  	
  19

  
	
  5.1

  	
  Purchase for Investment

  	
  19

  
	
  5.2

  	
  Access to Information

  	
  20

  
	
  5.3

  	
  Corporate Power; Authorization; Enforceability

  	
  20

  
	
  5.4

  	
  No Actions or Proceedings

  	
  20

  
	
   

  	
   

  	
   

  
	
  SECTION 6.

  	
  OTHER
  AFFIRMATIVE COVENANTS

  	
  21

  
	
  6.1

  	
  Foreign Subsidiaries

  	
  21

  
	
  6.2

  	
  Foreign Subsidiaries

  	
  21

  
	
  6.3

  	
  Director Representation

  	
  21

  
	
   

  	
   

  	
   

  
	
  SECTION 7.

  	
  EXPENSES,
  INDEMNIFICATION AND CONTRIBUTION; TERMINATION

  	
  21

  
	
  7.1

  	
  Expenses

  	
  21

  
	
  7.2

  	
  Indemnification

  	
  22

  
	
  7.3

  	
  Survival

  	
  22

  
	
  7.4

  	
  Tax Treatment of Indemnification Payments

  	
  22

  
	
   

  	
   

  	
   

  
	
  SECTION 8.

  	
  MISCELLANEOUS

  	
  22

  
	
  8.1

  	
  Notices

  	
  22

  
	
  8.2

  	
  Benefit of Agreement and Assignments

  	
  23

  
	
  8.3

  	
  No Waiver; Remedies Cumulative

  	
  23

  
	
  8.4

  	
  Amendments, Waivers and Consents

  	
  23

  

 

 ii
 

 

 

	
  8.5

  	
  Counterparts

  	
  23

  
	
  8.6

  	
  Headings

  	
  23

  
	
  8.7

  	
  Survival of Covenants and Indemnities

  	
  24

  
	
  8.8

  	
  Governing Law; Submission to Jurisdiction; Venue

  	
  24

  
	
  8.9

  	
  Severability

  	
  24

  
	
  8.10

  	
  Entirety

  	
  25

  
	
  8.11

  	
  Survival of Representations and Warranties

  	
  25

  
	
  8.12

  	
  Construction

  	
  25

  
	
  8.13

  	
  Incorporation

  	
  25

  
	
  8.14

  	
  Non-Recourse

  	
  25

  
	
  8.15

  	
  Further Assurances

  	
  25

  

 

 iii
 

 

 

	
  EXHIBITS:

  	
   

  	
   

  
	
  Exhibit A

  	
  –

  	
  Form of Certificate of Designation

  
	
  Exhibit B

  	
  –

  	
  Form of Registration Rights Agreement

  
	
  Exhibit C

  	
   

  	
  Form of Opinion

  
	
  Exhibit D

  	
   

  	
  Form of Management Rights Agreement

  
	
   

  	
   

  	
   

  
	
  SCHEDULES:

  	
   

  	
   

  
	
  Schedule 2.2

  	
  –

  	
  Information relating to the Purchasers

  
	
  Schedule 4.2

  	
  –

  	
  Primary and fully diluted ownership of Capital Stock

  
	
  Schedule 4.3

  	
  –

  	
  Company and Subsidiaries

  
	
  Schedule 4.8

  	
   

  	
  Actions or Proceedings

  
	
  Schedule 4.10

  	
  –

  	
  Intellectual Property

  
	
  Schedule 4.12(a)

  	
  –

  	
  Employee Benefit Plans

  
	
  Schedule 4.12(b)

  	
  –

  	
  Multi Employer Plans

  
	
  Schedule 4.12(c)

  	
  –

  	
  Retiree Health and Life Benefits

  
	
  Schedule 4.16

  	
  –

  	
  Labor Matters

  
	
  Schedule 4.17

  	
  –

  	
  Brokerage Fees

  

 

 iv

SECURITIES
PURCHASE AGREEMENT

This SECURITIES PURCHASE
AGREEMENT (this “Agreement”), dated as of September
8, 2006, among Geokinetics Inc. a Delaware corporation (the “Company”), Avista Capital Partners,
L.P., a Delaware limited partnership (“Avista”),
Avista Capital Partners (Offshore), L.P., a Delaware limited partnership (“Avista Offshore” and together with
Avista the “Avista Purchasers”), and
Levant America, S.A., a Liberian corporation (“Levant and together with the
Avista Purchasers the “Purchasers”).

RECITALS

WHEREAS, concurrently
with the execution of this Agreement the Company and the owners of all the
capital stock of Grant Geophysical, Inc. (the “Acquired
Business”) have executed that certain Stock Purchase Agreement
(the “Acquisition Agreement”),
dated September 7, 2006, pursuant to which the Company will acquire 100%
of the issued and outstanding capital stock of the Acquired Business (the “Acquisition”);

WHEREAS, concurrently
with the execution of this Agreement, for the purposes of financing the
Acquisition, Geokinetics Holdings, Inc., a Delaware corporation and
wholly-owned subsidiary of the Company, the Purchasers and the Royal Bank of
Canada have executed that certain Credit Agreement, dated as of
September 8, 2006 (the “Senior Credit Agreement”)
and the Company and the Purchasers have executed that certain Subordinated
Credit Agreement dated as of August    , 2006 (the “Subordinated Credit Agreement” and
together with the Senior Credit Agreement and the respective ancillary documents
related thereto the “Avista Facilities”);

WHEREAS, in connection
with the transactions contemplated hereby, the Company desires to amend its
Certificate of Incorporation, dated January 31, 1980, as amended (the “Charter”), in accordance with the
General Corporation Law of the State of Delaware (the “DGCL”),
to create a new class of preferred stock of the Company designated as The
Series B Senior Convertible Preferred Stock, par value $10.00 per share,
having a liquidation preference of $250.00 per share, (the “Preferred Stock”), by filing a
Certificate of Designation of the Preferred Stock (the “Certificate
of Designation”), on the date hereof and in the form attached
hereto as Exhibit A, with the office of the Secretary of State of the State of
Delaware;

WHEREAS, on the terms and
subject to the conditions hereinafter set forth, for the purposes of financing
the Acquisition, the Company desires to issue and sell the Preferred Stock to
Purchasers, and Purchasers desire to purchase and acquire the Preferred Stock
from the Company; and

WHEREAS, the Purchasers
and the Company intend to enter into that certain Registration Rights Agreement
(as defined herein) which will set forth certain registration rights with
respect to the Preferred Stock.

NOW, THEREFORE, the
parties hereto agree as follows:

 

SECTION 1.

DEFINITIONS AND ACCOUNTING TERMS

1.1                                 Definitions.  As used herein, defined terms used herein
which are defined in the Senior Credit Agreement shall have, except where
otherwise expressly set forth herein, the same respective meanings as such
defined terms have in the Senior Credit Agreement, and in addition terms shall
have the meanings specified herein unless the context otherwise requires:

“Accredited
Investor” means any Person that is an “accredited investor”
within the meaning of Rule 501(a) under the Securities Act.

“Acquired
Business” is defined in the recitals.

“Acquisition”
is defined in the recitals.

“Acquisition
Agreement” is defined in the recitals.

“Applicable
Law” means all laws, statutes, treaties, rules, codes (including
building codes), ordinances, regulations, certificates, orders and licenses of,
and interpretations by, any Governmental Authority and judgments, decrees,
injunctions, writs, permits, orders or like governmental action of any Governmental
Authority (including environmental laws and those pertaining to health or
safety) applicable to the Company or any of its Subsidiaries or any of their
property or operations.

“Audit
Date” is defined in Section 4.6(a).

“Avista
Facilities” is defined in the recitals.

“Capital
Stock” means (i) in the case of a corporation, corporate or
capital stock, (ii) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) of corporate or capital stock, (iii) in the case of a limited
liability company, membership units (whether common or preferred), (iv) in the
case of a partnership, partnership interests (whether general or limited) and
(v) any other equivalent ownership interest or participation that confers on a
Person the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.

“Certificate
of Designation” is defined in the recitals.

“Charter”
is defined in the recitals.

“Closing”
is defined in Section 2.3.

“Closing
Date” is defined in Section 2.3.

“Closing
Payment” shall mean 2% of the Purchase Price.

 2
 

 

“Code”
means the Internal Revenue Code of 1986, as amended, and the Treasury
Regulations promulgated thereunder.

“Common
Stock” is defined in Section 4.2.

“Convert
Shares” means the shares of the Company’s Common Stock issuable
upon conversion of the Preferred Stock.

“DGCL”
is defined in the recitals.

“Enforceability
Exceptions” means, with respect to any specified obligation, any
limitations on the enforceability of such obligation due to applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance, fraudulent
transfer, moratorium, and other similar laws of general applicability relating
to or affecting creditors’ rights or general equity principles (including
public policies) or except as rights to indemnification or contribution may be
limited by Federal, state, provincial or territorial securities laws.

“Environmental
Permits” is defined in Section 4.15(b) (i).

“Exchange
Act” is defined in Section 4.6(b).

“ERISA
Affiliate” is defined in Section 4.12(b).

“Financial
Statements” is defined in Section 4.6(a).

“Financing
Documents” means collectively, this Agreement, the Certificate
of Designation, the Registration Rights Agreement, the Senior Credit Agreement
and the Subordinated Credit Agreement, and all certificates, instruments and
other documents made or delivered in connection herewith and therewith.

“HSR
Act” is defined in Section 3.7(a).

“Indemnitees”
is defined in Section 7.2.

“Intellectual
Property” means (a) all inventions and discoveries (whether
patentable or unpatentable and whether or not reduced to practice), and all
patents, patent applications and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, corporate names and domain names, together with all translations,
adaptations and combinations thereof and including all goodwill associated
therewith, (c) all copyrights and all applications, registrations and renewals
in connection therewith, (d) all mask works and all applications, registrations
and renewals in connection therewith, (e) all know-how, trade secrets and
confidential business information, whether patentable or unpatentable and
whether or not reduced to practice (including ideas, research and development,
know-how, formulas, compositions and manufacturing and production process and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information and business and marketing plans
and proposals), (f) all computer software (including data and related
documentation), (g) all other proprietary rights, (h) all copies and tangible
embodiments

 3
 

 

thereof (in whatever form
or medium) and (i) all licenses and agreements in connection therewith.

“IRS”
means the Internal Revenue Service.

“Legal
Proceeding” means any judicial, administrative or arbitral actions,
suits, mediation, investigation, inquiry, proceedings or claims (including
counterclaims) by or before a Governmental Authority.

“Material”
means material in relation to the business, condition (financial or otherwise),
properties or results of operation of the Company and its Subsidiaries taken as
a whole.

“Material
Adverse Effect” shall mean (a) a material adverse effect on
the business, assets, liabilities, operations, prospects or condition
(financial or otherwise) or operating results of the Company and the
Subsidiaries, taken as a whole, (b) a material impairment of the ability
of any party to perform any of its obligations under any Financing Document to
which it is or will be a party or (c) a material impairment of any rights
of or benefits available to the Purchasers under any Financing Document.

“Order”
means any order, injunction, judgment, doctrine, decree, ruling, writ,
assessment or arbitration award of a Governmental Authority.

“Ordinary
Course of Business” means the ordinary and usual course of
day-to-day operations of the business of the Company and the Subsidiaries
through the date hereof consistent with past practice.

“Permits”
means any approvals, authorizations, consents, licenses, permits or
certificates of a Governmental Authority.

“Permitted
Exceptions” means (i) all defects, exceptions, restrictions,
easements, rights of way and encumbrances disclosed in policies of title
insurance which have been delivered to Avista; (ii) statutory liens for current
Taxes, assessments or other governmental charges not yet delinquent or the
amount or validity of which is being diligently contested in good faith by
appropriate proceedings, provided an appropriate reserve has been established
therefor in the Financial Statements in accordance with GAAP; (iii) mechanics’,
carriers’, workers’, and repairers’ Liens arising or incurred in the Ordinary
Course of Business that are not material to the business, operations and
financial condition of the Company Property so encumbered and that are not
resulting from a breach, default or violation by the Company or any of the
Subsidiaries of any contract or law; (iv) zoning, entitlement and other land
use and environmental regulations by any Governmental Authority, provided that
such regulations have not been violated; and (v) liens and security interests
created or permitted by the senior most indebtedness of the Company or the
Subsidiaries in existence as of the Closing Date.

“Plan”
is defined in Section 4.12(a).

“Preferred
Stock” is defined in the recitals.

 4
 

 

“Property”
is defined in Section 4.15(b)(iii).

“Purchase
Price” is defined in Section 2.2.

“Purchasers”
is defined in the preamble to this Agreement.

“Registration
Rights Agreement” means the Registration Rights Agreement, dated
as of the date hereof, among Company and the Purchasers, in the form attached
hereto as Exhibit B as amended, supplemented, restated or otherwise
modified from time to time.

“Responsible
Officer” means (i) with respect to the Company, the chairman,
the chief executive officer, the president, the chief operating officer or the
chief accounting officer thereof, and (ii) with respect to the Company or any
Subsidiary (other than the Company), any duly authorized officer thereof.

“Rule
144” means Rule 144 under the Securities Act (or any successor
provision), as it may be amended from time to time.

“SEC”
is defined in Section 4.6(b).

“SEC
Documents” is defined in Section 4.6(b).

“Securities
Act” means the Securities Act of 1933, as amended.

“Senior
Credit Agreement” is defined in the recitals.

“Software”
means any and all computer programs, whether in source code or object code;
databases and compilations, whether machine readable or otherwise;
descriptions, flow-charts and other work product used to design, plan, organize
and develop any of the foregoing; and all documentation including user manuals
and other training documentation related to any of the foregoing.

“Solvent”
means, with respect to any Person as of the date of any determination, that on
such date (a) such Person as of such date generally is able to pay its debts
and other liabilities, contingent obligations and other commitments as they
become absolute and mature in the normal course of business, (b) such Person
does not intend to, and does not believe that it will, Incur debts or
liabilities beyond such Person’s ability to pay as such debts and liabilities
mature and (c) such Person is not engaged in a business or a transaction, and
is not about to engage in a business or a transaction, for which such Person’s
property would constitute unreasonably small capital with which to conduct the
business in which it is engaged as such business is now conducted and is
proposed to be conducted following the Closing Date.  In computing the amount of contingent
liabilities at any time, such liabilities shall be computed as the amount that,
in light of the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured
liability.

“Subsidiary”
means any Person of which (i) a majority of the outstanding share capital,
voting securities or other equity interests are owned, directly or indirectly,
by the

 5
 

 

Company or (ii) the
Company is entitled, directly or indirectly, to appoint a majority of the board
of directors, board of managers or comparable body of such Person.

“Subordinated
Credit Agreement” is defined in the recitals.

“Tax”
or “Taxes” shall mean (i) any and
all federal, state, local or foreign taxes, charges, fees, imposts, levies or
other assessments, including all net income, gross receipts, capital, sales,
use, ad valorem, value added, transfer, franchise, profits, inventory, capital
stock, license, withholding, payroll, employment, social security,
unemployment, excise, severance, stamp, occupation, property and estimated
taxes, customs duties, fees, assessments and charges of any kind whatsoever;
(ii) all interest, penalties, fines, additions to tax or additional
amounts imposed by any Taxing Authority in connection with any item described
in clause (i); and (iii) any liability in respect of any items
described in clauses (i) and/or (ii) payable by reason of Contract,
assumption, transferee liability, operation of law, Treasury Regulation section
1.1502-6(a) (or any predecessor or successor thereof or any analogous or similar
provision under law) or otherwise.

“Tax
Return” means any return, report or statement (whether federal,
state, local or foreign) required to be filed with respect to any Tax
(including any elections, declarations, schedules or attachments thereto, and
any amendment thereof) including any information return, claim for refund,
amended return or declaration of estimated Tax, and including, where permitted
or required, combined, consolidated or unitary returns for any group of
entities that includes the Company, any of the Subsidiaries, or any of their
Affiliates.

“Taxing
Authority” means the IRS and any other governmental authority
responsible for the administration of any Tax.

“Technology”
means, collectively, designs, formulae, algorithms, procedures, methods,
techniques, ideas, know-how, results of research and development, Software,
tools, data, inventions, apparatus, creations, improvements, works of
authorship and other similar materials, and all recordings, graphs, drawings,
reports, analyses, and other writings, and any other embodiments of the above,
in any form whether or not specifically listed herein, and all related
technology, that are used, incorporated, or embodied in or displayed by any of
the foregoing or used in the design, development, reproduction, sale,
marketing, maintenance or modification of any of the foregoing

“Transaction
Documents” means, collectively, this Agreement, the Acquisition
Agreement and all documents related to the Acquisition and the Avista
Facilities.

“Transactions”
means the Acquisition, and all other transactions provided for in, or
contemplated by, the Transaction Documents as being transactions to be
completed on the Closing Date or promptly thereafter.

1.2                                 Computation
of Time Periods.  For purposes of
computation of periods of time hereunder, the word “from” means “from and
including” and the words “to” and “until” each mean “to but excluding.”

 6
 

 

1.3                                 Terms
Generally.  Unless the context
requires otherwise (a) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person’s successors and
assigns, and (c) the word “including” shall mean “including without limitation.”

1.4                                 Accounting
Terms.  Accounting terms used but not
otherwise defined herein shall have the meanings provided, and be construed in
accordance with, GAAP.

SECTION 2.

AUTHORIZATION AND ISSUANCE OF PREFERRED STOCK

2.1                                 Authorization
of Issue.  On or prior to the
execution and delivery of this Agreement: (i) the Company will authorize the
issue and sale of the Preferred Stock; and (ii) adopt and file the Certificate
of Designations with the Secretary of State of Delaware.

2.2                                 Sale
and Purchase of the Preferred Stock. 
Subject to the terms and conditions of this Agreement, the Company will
issue and sell to each of the Purchasers, and each of the Purchasers will
purchase from the Company, at the Closing provided for in Section 2.3,
the Preferred Stock, for an aggregate purchase price equal to $55,000,000 (the “Purchase Price”), in such
proportions and for the number of shares as set forth on Schedule 2.2.  The
Purchase Price shall be paid by the Purchasers, allocated in such amounts as
shall be determined by Avista in its absolute discretion, via the following
methods: (a) a wire transfer of immediately available funds to an account
designated by the Company; and/or (b) an offset of some (if any) or all of the
remaining principal balance due to the Purchasers under the Subordinated Credit
Agreement. To the extent any interest is due to the Purchasers under the
Subordinated Credit Agreement, the Purchasers may elect to receive one
additional share of Preferred Stock in lieu of every $250.00 of such interest
outstanding as of the Closing Date or may elect to receive all of such interest
in cash.  At the Closing the Company
shall pay each Purchaser its proportionate share of the Closing Payment as set
forth on Schedule 2.2, via wire transfer of immediately available funds
pursuant to the instructions set forth on Schedule 2.2.

2.3                                 Closing.  The sale and purchase of the Preferred Stock
shall occur at the offices of Chamberlain, Hrdlicka, White, Williams &
Martin, 1200 Smith Street, 14th Floor, Houston, Texas 77002, at 10:00 a.m.
local time, at a closing (the “Closing”)
on the latter of (i) October 26, 2006 and (ii) the earlier of (x) the first
date upon which the Purchasers hold no Indebtedness of the Company under the
Senior Facility (whether as a result of prepayment, assignment or otherwise) or
(y) the second day following the day in which Avista provides written notice to
the Company of its desire to consummate the Closing.  The date upon which the Closing occurs shall
be referred to herein as the “Closing Date”.

2.4                                 Stock
Certificates.  At the Closing, the
Company shall deliver to the Purchasers duly endorsed certificates representing
the Preferred Stock with such number of shares allocated to each Purchaser as
set forth on Schedule 2.2.

 7
 

 

SECTION 3.

CONDITIONS TO CLOSING

Each Purchaser’s
obligation to purchase and pay for the Preferred Stock to be purchased by it at
the Closing is subject to the reasonable satisfaction or waiver by it prior to
or at the Closing of each of the conditions specified below in this Section 3:

3.1                                 Representations
and Warranties.  Each of the
representations and warranties of the Company in this Agreement that are
qualified as to materiality or Material Adverse Effect shall be true and
correct and each of the representations and warranties of the Company in this
Agreement that are not so qualified shall be true and correct in all material
respects on or as of the Closing Date as if made on and as of the Closing Date
(unless stated to relate to a specific earlier date, in which case such
representations and warranties qualified as to materiality or Material Adverse
Effect shall be true and correct and those not qualified shall be true and
correct in all material respects as of such earlier date).

3.2                                 Performance;
No Default under Other Agreements. 
The Company shall have performed and complied in all material respects
with all agreements and covenants contained herein required to be performed or
complied with by it prior to or at the Closing (or such compliance shall have
been waived on terms and conditions reasonably satisfactory to each Purchaser)
and no default or event of default shall have occurred and be continuing under
any of the Avista Facilities.

3.3                                 Compliance
Certificate.

(a)                                  Officers’
Certificate.  The Company shall have
delivered to each Avista an Officers’ Certificate, dated as of the Closing Date,
in a form reasonably satisfactory to Avista, certifying as to Company’s
certificate of incorporation and bylaws, the incumbency and signatures of
certain officers of the Company and other corporate proceedings of the Company
relating to the authorization, execution, delivery and performance of this
Agreement and the other Financing Documents to which the Company is a party and
that the conditions specified in Section 3 (other than Sections 3.3
and 3.4) have been fulfilled, except as to matters which require the
approval or satisfaction of the Purchasers.

(b)                                 Solvency
Certification.  The Company shall
have delivered to Avista a certificate from the chief financial officer of the
Company, in form reasonably satisfactory to Avista, certifying on behalf of the
Company to the effect that the Company and its Subsidiaries, on a consolidated
basis are and, immediately after giving effect to the Transactions, will be
Solvent.

3.4                                 Acquisition.  Prior to the Closing, (i) no provision of the
Acquisition Agreement shall have been waived, amended, supplemented or
otherwise modified in a manner materially adverse to the Purchasers without the
written consent of the Purchasers, and (ii) the Acquisition shall have been
consummated in conformity with the Acquisition Agreement.

3.5                                 Avista
Facilities.  The financing under the
Avista Facilities for the Acquisition shall have been consummated concurrently
with the closing of the Acquisition on

 8
 

 

the terms and conditions
set forth in the Senior Credit Agreement and the Subordinated Credit Agreement.

3.6                                 Material
Adverse Effect.  There shall not have
occurred or become known to the Purchasers any event, development or
circumstance with respect to the Company or its Subsidiaries since June 30,
2006 that has caused or could reasonably be expected to cause a Material
Adverse Effect.

3.7                                 Consents,
Authorizations and Filings, Etc.

(a)                                  All
material governmental and third party approvals necessary in connection with
the Acquisition, the Financing Documents, and the continuing operations of the
Company and its Subsidiaries shall have been obtained and be in full force and
effect (including any required filings pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the “HSR Act”)
made with the Federal Trade Commission and the United States Department of
Justice), and all applicable waiting periods shall have expired without any
action being taken or threatened by any competent authority that would
restrain, prevent or otherwise impose material adverse conditions on the
Acquisition or the financing thereof.

(b)                                 There
shall be no inquiry, injunction, restraining order, action, suit or proceeding
instituted or entered or any statute or rule proposed, enacted or promulgated
by any Governmental Authority or any other Person which, in the reasonable
opinion of the Purchasers, individually or in the aggregate, has or would
reasonably be expected to have a Material Adverse Effect or which seeks to
enjoin or seek substantial damages against the Company or its Subsidiaries or
any of the Purchasers as a result of the Transactions, including the issuance
and sale of the Preferred Stock.

(c)                                  The
Board of Directors of the Company shall have granted all necessary approvals to
the transactions contemplated by this Agreement and the conversion of the Preferred
Stock into Convert Shares in order to satisfy DGCL Section 203 with respect to
such transactions.

3.8                                 Payment
of Expenses.  At the Closing, each
Purchaser and one counsel for the Avista Purchasers and one counsel for Levant
shall have received from the Company all other fees required to be paid, and,
in accordance with Section 7, all reasonable costs and expenses for
which invoices have been presented.

3.9                                 Legal
Opinion.  At the Closing,
Chamberlain, Hrdlicka, White, Williams & Martin shall have delivered to the
Purchasers an opinion, dated as of the Closing Date, in the form of Exhibit
3.9.

3.10                           Management
Rights Agreement.  At the Closing,
the Company shall have delivered to Avista a Management Rights Agreement dated
as of the Closing Date, in the form of Exhibit 3.10. 

 9
 

 

SECTION 4.

REPRESENTATIONS AND WARRANTIES

The Company represents
and warrants (after giving effect to the Acquisition) to the Purchasers that:

4.1                                 Due
Organization; Power and Authority. 
The Company and each domestic Subsidiary of the Company (a) is a
corporation or a 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 the 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 each of the Financing
Documents to which it is a party.

4.2                                 Capitalization.  After giving effect to the Transactions, at
the Closing, (i) the authorized number of shares of Capital Stock of the
Company will consist only of 100,000,000 common shares (the “Common Stock”), of which 53,736,426
shares have been issued and are outstanding, (ii) 2,500,000 preferred shares,
of which only the Preferred Stock sold to the Purchasers pursuant to this
Agreement will have been issued and outstanding as of the Closing Date, and (iii)
no shares of any class of the Capital Stock of the Company will be held by the
Company in its treasury or by the Company’s Subsidiaries.  Upon the consummation of the Transactions,
all of the issued and outstanding shares of Capital Stock of the Company 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 consummation of the
Transactions, except as set forth on Schedule 4.2 and other than the
Preferred Stock and employee stock options under the 2002 Incentive Plan of the
Company, there shall be no securities of the Company or any of its Subsidiaries
that will be convertible into or exchangeable for shares of any Capital Stock of
the Company or any of its Subsidiaries, and no options, Preferred Stock, calls,
subscriptions, convertible securities, or other rights, agreements or
commitments which will obligate the Company or any of its Subsidiaries to
issue, transfer or sell any shares of Capital Stock of, or other interests in,
the Company or any of its Subsidiaries. 
Except as set forth on Schedule 4.2, upon consummation of the
Transactions, there shall be no outstanding obligations of the Company or any
of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of
Capital Stock of the Company or any of its Subsidiaries and none of the Company
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 4.2 and
other than the Preferred Stock, none of the Company or any of its Subsidiaries
will have any obligation to issue, transfer or sell any shares of Capital Stock
of the Company or its Subsidiaries. 
Except as set forth on Schedule 4.2, there are no voting trusts or other
agreements or understandings to which the Company or any of its Subsidiaries is
a party with respect to the holding, voting or disposing of Capital Stock of
the Company or any of its Subsidiaries. 
Except as set forth on Schedule 4.2, none of the Company or any
of its Subsidiaries has any outstanding bonds,

 10
 

 

debentures, notes or
other obligations or other securities that entitle the holders thereof to vote
with the shareholders of the Company or any of its Subsidiaries on any matter
or which are convertible into or exercisable for securities having such a right
to vote.

4.3                                 Subsidiaries.  Schedule 4.3 correctly states, after
giving effect to the Transactions, (a) the name of each of the Company’s direct
and indirect Subsidiaries, and (b) the name of each registered holder of each
class of outstanding Capital Stock or other securities of each of the Company’s
respective direct and indirect Subsidiaries and the nature and number of such
securities held by such holder.  Each
issued and outstanding share of Capital Stock of each direct and indirect
Subsidiary of the Company (a) has been duly authorized and validly issued and
is fully paid and nonassessable and free of preemptive rights and (b) except
for any Equity Interests not owned directly or indirectly by the Company as
shown on Schedule 4.3 is owned by the Company, directly or through
its direct and indirect Subsidiaries, free and clear of any Lien other than the
liens established under the Financing Documents and other Permitted Exceptions.

4.4                                 Due
Authorization, Execution and Delivery.

(a)                                  Agreement.  This Agreement has been duly authorized,
executed and delivered by the Company and, when duly executed and delivered by
the Purchasers in accordance with its terms, will constitute a valid and
legally binding obligation of the Company, enforceable against the Company in
accordance with its terms, subject to the Enforceability Exceptions.

(b)                                 Preferred
Stock and the Convert Shares.  The
Preferred Stock has been duly authorized and, when issued as provided herein,
will be validly issued, free of preemptive rights and free from all taxes,
liens, charges and security interests known to or created by the Company and no
personal liability will attach to the ownership thereof.  When the Convert Shares are issued pursuant
to a conversion of the Preferred Stock, the Convert Shares will be validly
issued, fully paid and nonassessable, free of preemptive rights and free from
all taxes, liens, charges and security interests known to or created by the
Company and no personal liability will attach to the ownership thereof.

(c)                                  Financing
Documents.  Each of the Financing
Documents has been duly authorized, executed and delivered by the Company and,
when duly executed and delivered by the other parties thereto in accordance
with their terms, will constitute a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, subject
to the Enforceability Exceptions.

4.5                                 Non-Contravention;
Authorizations and Approvals.  None
of (a) the execution and delivery by the Company or any Subsidiary of the
Company of any of the Financing Documents to which it is a party, (b) the
performance by any of them of their respective obligations thereunder, (c) the
consummation of the transactions contemplated thereby or (d) the issuance and
delivery of the Preferred Stock under the Financing Documents will: (i) violate,
conflict with or result in a breach of any provisions of the articles of
incorporation or any amendment thereto or bylaws (or comparable constituent or
governing documents) of the Company or any Subsidiary of the Company; (ii)
violate, conflict with, result in a breach of any provision of, constitute a
default (or an event which, with notice, lapse of time or both, would

 11
 

 

constitute a default)
under, result in the termination or in a right of termination of, accelerate
the performance required by or benefit obtainable under, result in the
triggering of any payment or other obligations (including any repurchase or
repayment obligations) pursuant to, result in the creation of any Lien upon any
of the properties of the Company or any Subsidiary of the Company under, or
result in there being declared void, voidable, subject to withdrawal, or
without further binding effect, any of the terms, conditions or provisions of
any contract, except for any such violations, conflicts, breaches, defaults,
accelerations, terminations or other matters which, in the aggregate, could not
reasonably be expected to be Material to the Company; (iii) require any
consent, approval or authorization of, or declaration, filing or registration
with, any Governmental Authority, except for those consents, approvals,
authorizations, declarations, filings or registrations which have been obtained
or made, or the failure of which to obtain or make, in the aggregate, could not
be reasonably expected to have a Material Adverse Effect; or (iv) violate any
Applicable Laws, except for violations which, in the aggregate, could not
reasonably be expected to be Material to the Company.

4.6                                 Financial
Statements; Securities Filings.

(a)                                  The
Company has heretofore furnished to the Purchaser its consolidated balance
sheets and related statements of income, stockholder’s equity and cash flows
(the “Financial Statements”) (i) as
of and for the fiscal year ended December 31, 2005 (the “Audit
Date”), audited by and accompanied by the report of Fitts Roberts & Co., P.C.,
independent public accountants, and (ii) as of and for the fiscal quarters
ended March 31, 2006 and June 30, 2006, and each month ended after June 30,
2006 and at least 30 days before the Closing Date, each certified by its chief
financial officer.  Such Financial
Statements present fairly in all material respects the financial condition and
results of operations and cash flows of the Company and its Subsidiaries as of
such dates and for such periods.  Such
balance sheets and the notes thereto disclose all material liabilities, direct
or contingent, of the Company and its Subsidiaries as of the dates
thereof.  Such Financial Statements were
prepared in accordance with GAAP consistently applied throughout the period
covered thereby, except as otherwise noted therein and, subject, in the case of
unaudited financial statements, to year-end audit adjustments and the absence
of footnotes.

(b)                                 The Company has heretofore delivered to each
Purchaser its unaudited pro forma consolidated balance sheet and related pro
forma statements of income, stockholder’s equity and cash flows as of the
fiscal quarter ended June 30, 2006, prepared giving effect to the Transactions
as if they had occurred, with respect to such balance sheet, on such date and,
with respect to such other financial statements, on the first day of the
four-fiscal quarter period ending on such date. Such pro forma financial
statements have been prepared in good faith by the Company, based on the
assumptions believed by the Company on the Closing Date to be reasonable, are
based in all material respects on the information reasonably available to the
Company as of the date of delivery thereof, reflect in all material respects
the adjustments required to be made to give effect to the Transactions and
present fairly in all material respects on a pro forma basis the estimated
consolidated financial position of the Company and its Subsidiaries as of such
date and for such period, assuming that the Transactions had actually occurred
at such date or at the beginning of such period, as the case may be.

 12
 

 

(c)                                  The
Company has filed with the Securities and Exchange Commission (the “SEC”) all forms, reports, schedules,
statements, exhibits and other documents required to be filed under the
Exchange Act of 1934, as amended (the “Exchange Act”),
or the Securities Act, (collectively, the “SEC Documents”).  As of its filing date or, if amended, as of
the date of the last such amendment, each SEC Document fully complied with the
applicable requirements of the Exchange Act and the Securities Act, as the case
may be, and the applicable rules and regulations of the SEC thereunder.  As of its filing date, or, if amended, as of
the date of the last such amendment, each SEC Document filed pursuant to the
Exchange Act did not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading.  Each SEC Document that is a registration
statement, as amended or supplemented, if applicable, filed pursuant to the
Securities Act, as of the date such registration statement or amendment became
effective, did not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading.  None
of the Subsidiaries is or has been required to file any forms, reports or other
documents with the SEC.  All of the
audited consolidated financial statements and unaudited consolidated interim
financial statements included in the SEC Documents (i) have been prepared from,
are in accordance with and accurately reflect the books and records of the
Company and its consolidated Subsidiaries, (ii) fully comply with the
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto (including Regulation S-X), (iii) were prepared
in accordance with GAAP applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto and except, in the
case of the unaudited interim statements, as may be permitted under the
Exchange Act with respect to Quarterly Reports on Form 10-Q and (iv) fairly
present, in all material respects, the consolidated financial position and the
consolidated results of operations and cash flows (subject, in the case of
unaudited interim financial statements, to normal year end adjustments) of the
Company and its consolidated Subsidiaries as of the dates and for the periods
referred to therein.  The reports of the
Company’s independent auditors regarding the Company’s consolidated financial
statements in the SEC filings have not been withdrawn, supplemented or
modified, and none of the Company or any of the Subsidiaries has received any
communication from its independent auditors concerning any such withdrawal,
supplement or modification.

(d)                                 The
Company’s principal executive officer and its principal financial officer have
disclosed, based on their most recent evaluation, to the Company’s auditors and
the audit committee of the Board of Directors of the Company (i) all
significant deficiencies in the design or operation of internal controls which
could adversely affect the Company’s ability to record, process, summarize and
report financial data and have identified for the Company’s auditors any
material weaknesses in internal controls and (ii) any fraud, whether or not
material, that involves management or other employees who have a significant
role in the Company’s internal controls.

(e)                                  The
Company has established and maintains disclosure controls and procedures (as
such term is defined in Rule 13a-15 under the Exchange Act); such disclosure
controls and procedures are designed to ensure that material information relating
to the Company, including the Subsidiaries, is made known to the Company’s
principal executive officer and its principal financial officer by others
within those entities, and, to the knowledge of

 13
 

 

the Company, such
disclosure controls and procedures are effective in timely alerting the Company’s
principal executive officer and its principal financial officer to material
information.

4.7                                 Absence
of Undisclosed Liabilities or Events.

(a)                                  Neither
the Company nor any Subsidiary has any Indebtedness or liabilities (whether or
not required under GAAP to be reflected on a balance sheet or the notes
thereto) other than those (i) specifically reflected on and fully reserved
against in the Financial Statements, (ii) incurred in the Ordinary Course of
Business since the Audit Date or (iii) that are immaterial to the Company or
any Subsidiary.

(b)                                 The
Financing Documents, taken as a whole, do not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made as
of the date the same were made, not materially misleading.  Since the Audit Date, there has been no
event, development or circumstance that has caused or could reasonably be
expected to cause a Material Adverse Effect.

4.8                                 No
Actions or Proceedings.  Except as
set forth on Schedule 4.8, there are no legal or governmental actions, suits or
proceedings pending or, to the Company’s knowledge, threatened against or
affecting the Company or any Subsidiary of the Company, or any of their
respective properties or assets which, if adversely determined, in the
aggregate, could reasonably be expected to be Material to the Company.  No Governmental Authority has notified the
Company or any Subsidiary of the Company in writing of an intention to conduct
any audit, investigation or other review with respect to the Company or any
Subsidiary of the Company.

4.9                                 Title
to Properties.  Each of the Company
and each Subsidiary of the Company has (a) good title to, or a valid and
subsisting leasehold interest in, all of its material real property and (b)
good title to, or a valid and subsisting leasehold interest in, all of its
material equipment and other personal property, in each case free and clear of
all Liens, except Permitted Exceptions.

4.10                           Intellectual
Property Rights.

(a)                                  Except
as set forth on Schedule 4.10, the Company and its Subsidiaries own all
right, title and interest in and to, or have valid and continuing rights to
use, sell and license, all Intellectual Property, Software and other Technology
used in the conduct of the business and operations of the Company and its
Subsidiaries as presently conducted and as currently proposed to be conducted,
free and clear of all Liens or obligations to others.  All such owned Intellectual Property is
subsisting, and all necessary registration, maintenance, renewal, and other
relevant filing fees due through the date hereof in connection therewith have
been timely paid and all necessary documents and certificates in connection
therewith have been timely filed with the relevant patent, copyright,
trademark, or other authorities in the United States or foreign jurisdictions,
as the case may be, for the purposes of maintaining such registered
Intellectual Property in full force and effect. 
The business and operations of the Company and its Subsidiaries, their
Technology, their products and services and the designing, development,
manufacturing, reproduction, use, marketing, sale, distribution, maintenance
and

 14
 

 

modification of any of
the foregoing as presently performed and as currently contemplated to be
performed does not infringe upon, misappropriate or otherwise violate any
Intellectual Property of any third party. 
All of the material Intellectual Property owned by the Company or any of
its Subsidiaries is valid and enforceable.

(b)                                 Except
as set forth in Schedule 4.10, there is no action, suit, proceeding,
hearing, investigation, notice or complaint pending or, to the Company’s
knowledge, threatened, by any third party before any court or tribunal
(including, without limitation, the United States Patent and Trademark Office
or equivalent authority anywhere in the world) relating to any of Company’s or
any of its Subsidiaries’ Intellectual Property or Technology, nor has any claim
or demand been made by any third party that (i) challenges the validity,
enforceability, use or exclusive ownership of any Intellectual Property or
Technology owned by the Company or any of its Subsidiaries or (ii) alleges any
infringement, misappropriation, violation, or unfair competition or trade
practices by the Company or any of its Subsidiaries of any Intellectual
Property or Technology of any third party, nor is the Company aware of any
basis for any such claim or demand.

(c)                                  There
are no agreements between the Company or any of its Subsidiaries and any third
party relating to any Intellectual Property of the Company or any of its
Subsidiaries or any third party under which there is, as of the date of this
Agreement, or, to the Company’s knowledge, is expected, as of the date of this
Agreement, to be, any Material dispute regarding the scope or performance of
such agreement.

(d)                                 None
of the Company’s or any of its Subsidiaries’ Technology or Intellectual
Property are subject to any outstanding injunction, decree, order, judgment,
agreement or stipulation that restricts in any manner the use, transfer or
licensing thereof by the Company or any of its Subsidiaries or affects the
validity, use or enforceability of any such Technology or Intellectual
Property.

(e)                                  The
Company and the Subsidiaries have taken reasonable measures to protect the
confidentiality of all Material trade secrets owned by the Company or any of
its Subsidiaries that are material to their businesses as currently conducted and
as proposed to be conducted.  The Company
and its Subsidiaries have executed valid written agreements with certain of
their past and present employees who have contributed to the development of
Material Technology and Intellectual Property pursuant to which such employees
have assigned to the Company or its Subsidiaries all their rights in and to all
Material Technology and Intellectual Property they may develop in the course of
their employment and agreed to hold all trade secrets and confidential information
of the Company and its Subsidiaries in confidence both during and after their
employment.  The Company and its
Subsidiaries have executed valid written agreements with certain past and
present consultants and independent contractors who have been retained in
connection with the development of Material Technology and Intellectual
Property by which the consultants and independent contractors have assigned to
the Company or its Subsidiaries all their rights in and to such Material
Technology and Intellectual Property and agreed to hold all trade secrets and
confidential information of the Company and its Subsidiaries in confidence both
during and after the term of their engagements. 
No Material trade secrets or other Material confidential information owned
by the Company or any of its Subsidiaries that is material to their businesses
as currently conducted and as proposed to be conducted have been

 15
 

 

disclosed or authorized
to be disclosed by the Company or any of its Subsidiaries to any of their
employees or any third party other than pursuant to a written non-disclosure or
confidentiality agreement.  To the
knowledge of the Company and its Subsidiaries, no employee, consultant or
independent contractor of the Company or any Subsidiary is, as a result of or
in the course of such employee’s, consultant’s or independent contractor’s
engagement by the Company or any Subsidiary, in default or breach of any
Material term of any employment agreement, non-disclosure agreement, assignment
of invention agreement or similar agreement.

4.11                           Taxes.

(a)                                  (i)
All Tax Returns required to be filed by or on behalf of each of the Company,
any Subsidiary and any affiliated group of which the Company or any Subsidiary
is or was a member have been duly and timely filed with the appropriate Taxing
Authority in all jurisdictions in which such Tax Returns are required to be
filed (after giving effect to any valid extensions of time in which to make
such filings), and all such Tax Returns are true, complete and correct in all
material respects; and (ii) all Taxes payable by or on behalf of each of the
Company, any Subsidiary and any affiliated group of which the Company or any
Subsidiary is or was a member have been fully and timely paid.  With respect to any period for which Tax
Returns have not yet been filed or for which Taxes are not yet due or owing,
the Company has made due and sufficient accruals for such Taxes in the
Financial Statements and its books and records. 
All required estimated Tax payments sufficient to avoid any underpayment
penalties or interest have been made by or on behalf of the Company and each
Subsidiary.

(b)                                 The
Company and each Subsidiary has complied in all material respects with all
applicable Laws relating to the payment and withholding of Taxes and has duly
and timely withheld and paid over to the appropriate Taxing Authority all
amounts required to be so withheld and paid under all applicable Laws.

(c)                                  All
deficiencies asserted or assessments made as a result of any examinations by
any Taxing Authority of the Tax Returns of, or including, the Company or any
Subsidiary have been fully paid, and there are no other audits or
investigations by any Taxing Authority in progress, nor has the Company or any
of the Subsidiaries received any written notice from any Taxing Authority that
it intends to conduct such an audit or investigation.  No issue has been raised by a Taxing
Authority in any prior examination of the Company or any Subsidiary which, by
application of the same or similar principles, could reasonably be expected to
result in a proposed deficiency for any subsequent taxable period.

(d)                                 There
are no Liens for Taxes on any of the assets of the Company or any of its
Subsidiaries other than Liens for Taxes not yet due and payable or which are
being contested in good faith by appropriate proceedings and for which adequate
reserves have been provided to the extent required by GAAP.

(e)                                  The
Company is not a “United States Real Property Holding Corporation” within the
meaning of Section 897 of the Code.

 16

 

(f)                                    The
Company and the Subsidiaries have disclosed on their federal income Tax Returns
all positions taken therein that could give rise to substantial understatement
of federal income tax within the meaning of Section 6662 of the Code.

4.12                           Employee
Benefit Plans.

(a)                                  Schedule
4.12(a) lists all “employee benefit plans”, within the meaning of Section
3(3) of ERISA, and all other material employee benefit plans, arrangements and
policies with respect to employees or former employees maintained by or
contributed to by the Company or any of its Subsidiaries (each, a “Plan”).  There has been no failure by any Plan to
comply with the applicable requirements of ERISA and the Code.  There is no pending or, to the knowledge of
the Company, threatened, litigation relating to the Plans.  None of the Company or any of its
Subsidiaries has engaged in a transaction with respect to any Plan that could
subject the Company or any of its Subsidiaries to a tax or penalty imposed by
either Section 4975 of the Code or Section 502(i) of ERISA.  The Company is not aware, after due inquiry,
of any item of non-compliance which could reasonably be expected to result in
the loss of Plan qualification or tax-exempt status.  To the knowledge of the Company, all required
contributions have been made in accordance with the provisions of each Plan.

(b)                                 Within
the past six years, no liability under Title IV of ERISA has been incurred by
the Company or any of its Subsidiaries with respect to any ongoing, frozen or
terminated “single-employer plan,” within the meaning of Section 4001(a)(15) of
ERISA, or “multi employer plan,” within the meaning of Section 3(37) of ERISA,
currently or formerly maintained by any of them, or the single-employer plan or
multi-employer plan of any entity which is considered to be a single employer
with the Company or any of its Subsidiaries under Section 4001(b)(1) of ERISA
or Section 414(b) or (c) of the Code (an “ERISA Affiliate”).  Except as set forth on Schedule 4.12(b),
none of the Company or any of its Subsidiaries has contributed to a “multi
employer plan,” within the meaning of Section 3(37) of ERISA, at any time after
June 30, 1997.

(c)                                  Except
as set forth on Schedule 4.12(c), neither the Company nor any of its
Subsidiaries has any material obligations for retiree health and life benefits
under any Plan, except as required by Applicable Law.

4.13                           Investment
Company Act.  Neither the Company nor
any of its Subsidiaries is or, immediately after receipt of payment for the
Preferred Stock and the consummation of the other Transactions, will be (a) an “investment
company” registered or required to be registered under the Investment Company
Act of 1940, as amended.

4.14                           Insurance.  The Company and the Subsidiaries of the
Company are insured with policies in such amounts and with such deductibles and
covering such risks as are generally deemed adequate for their businesses
including, but not limited to, policies covering real and personal property
owned or leased by the Company and the Subsidiaries of the Company against
theft, damage, destruction and acts of vandalism.

 17
 

 

4.15                           Compliance
with Laws; Permits; Environmental Liabilities.

(a)                                  Each
of the Company and the Subsidiaries of the Company is in compliance, in all
Material respects with all Applicable Laws and has all Permits Material to and
necessary in, the conduct of its business as currently conducted and all such
Permits are in full force and effect.  No
violations have been recorded in respect of any such Permits, and no proceeding
is pending or, to the knowledge of the Company, threatened to revoke or limit
any Permit.  Neither the Company nor any
Subsidiary is subject to any Order, and neither the Company nor any Subsidiary
is in breach or violation of any Order. 
Neither the Company nor any Subsidiary is engaged in any legal action to
recover monies due it or for damages sustained by it.  There are no Legal Proceedings pending or, to
the knowledge of the Company or the Subsidiaries, threatened against the
Company or to which the Company is otherwise a party relating to this Agreement
or, any Financing Document or the transactions contemplated hereby or thereby.

(b)                                 With
regard to each of the following, except any matters that in the aggregate,
could not reasonably be expected to be Material to the Company:

(i)                                     Each
of the Company and each Subsidiary of the Company is currently in Material
compliance with all Environmental Laws, has obtained and is currently in
Material compliance with all permits, licenses, registrations and consents
which are required with respect to any of its facilities or operations under
any applicable Environmental Laws (the “Environmental Permits”),
and all such Environmental Permits are in full force and effect;

(ii)                                  None
of the Company or any Subsidiaries of the Company has received any written
notice of any claims, civil, criminal or administrative actions, suits,
hearings, investigations, or proceedings which are pending or, to its
knowledge, threatened against it, in each case, on the basis of, any
Environmental Liability, or indicating that such Person is or may be a
potentially responsible party or otherwise liable under Environmental Laws in
connection with any location which has experienced the release or threatened
release of any Hazardous Materials;

(iii)                               To
the knowledge of the Company, Hazardous Materials have not been transported or
disposed of from any real property owned, leased or operated by the Company or
any Subsidiary of the Company (“Property”)
in violation of, or in a manner or to a location which could give rise to
liability under any Environmental Law, nor have any Hazardous Materials been
generated, treated, stored or disposed of at, on or under any Property in
violation of, or in a manner that could give rise to liability under, any
applicable Environmental Laws;

(iv)                              No
judicial proceeding or governmental or administrative action is pending or, to
the knowledge of the Company, threatened, under any Environmental Laws to which
the Company or any Subsidiary of the Company is or will be named as a party,
nor are there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative or judicial
requirements outstanding under

 18
 

 

any Environmental
Laws with respect to the Company and any Subsidiary of the Company; and

(v)                                 To
the knowledge of the Company, there has been no release or threat of release of
Hazardous Materials at or from the Properties, or arising from or related to
the operations of the Company or any Subsidiary of the Company, in violation of
or in amounts or in a manner that could give rise to liability under
Environmental Laws.

4.16                           Labor
and Employment Matters.  Except as
set forth on Schedule 4.16, (i) none of the Company or any of its
Subsidiaries is a party to, or bound by, any collective bargaining agreement or
other contracts with a labor union or labor organization; and (ii) there is no
(A) Material unfair labor practice, labor dispute (other than routine
individual grievances) or labor arbitration proceeding pending or, to the
knowledge of the Company, threatened against the Company or its Subsidiaries,
(B) to the knowledge of the Company or its Subsidiaries, activity or proceeding
by a labor union or representative thereof to organize any employees of the
Company or any of its Subsidiaries, or (C) lockout, strike, slowdown, work
stoppage or, to the knowledge of the Company or its Subsidiaries, written
threat thereof by or with respect to any such employees.

4.17                           Brokerage
Fees.  Except as set forth on Schedule
4.17, none of the Company or any Subsidiary of the Company has paid, or is
obligated to pay, to any Person any brokerage or finder’s fees in connection
with the transactions contemplated hereby or by any other Transaction
Documents.

4.18                           Solvency
and Related Matters.  Prior to and
immediately following the Closing, the Company will be Solvent after giving
effect to (A) the Transactions and (B) any other transactions contemplated by
the Company on or after such date which would be taken into account in
determining whether any of the transactions contemplated hereby are invalid or
illegal under, in violation of, or can be set aside or give rise to any award
or damages, sanctions or other liability against any of the Purchasers or any
of their Affiliates or representatives under applicable bankruptcy, fraudulent
conveyance, fraudulent transfer or other Applicable Laws.

SECTION 5.

REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE
PURCHASERS

Each Purchaser, severally
and not jointly, represents and warrants to the Company as of the date hereof
as follows:

5.1                                 Purchase
for Investment.

(a)                                  Such
Purchaser is acquiring the Preferred 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.

(b)                                 Such
Purchaser understands that the Preferred Stock has not been and, except as
provided in the Registration Rights Agreement with respect to the Convert
Shares, will

 19
 

 

not be registered under
the Securities Act or any state or other securities law, that the Preferred
Stock is being issued by the Company in transactions exempt from the
registration requirements of the Securities Act, that it must hold the
Preferred Stock indefinitely and not offer or sell the Preferred 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 laws.

(c)                                  Such
Purchaser further understands that the exemption from registration afforded by
Rule 144 (the provisions of which are known to such Purchaser) 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)                                 Such
Purchaser did not employ any broker or finder in connection with the
transactions contemplated in this Agreement and no fees or commissions are
payable to the Purchasers except as otherwise provided for in this Agreement.

(e)                                  Such
Purchaser is an Accredited Investor.

(f)                                    The
source of funds to be used by such Purchaser to pay the purchase price of the
Preferred Stock purchased by such Purchaser hereunder does not include assets
of any employee benefit plan (other than a plan exempt from the coverage of
ERISA) or plan or any other entity the assets of which consist of “plan assets”
of employee benefit plans or plans as defined in Department of Labor regulation
Section 2510.3-101.  As used in this Section
5.1(f), the term “employee benefit plan” shall have the meaning assigned to
such term in Section 3 of ERISA, and the term “plan” shall have the meaning
assigned thereto in Section 4975(e)(1) of the Code.

5.2                                 Access
to Information.  Such Purchaser has
been furnished with or has had access to the information it has requested from
the Company and its Subsidiaries and has had an opportunity to discuss with the
management of the Company and its Subsidiaries the business and financial
affairs of the Company 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 an investment
decision with respect thereto, and is capable of bearing the economic risks of
such investment.

5.3                                 Corporate
Power; Authorization; Enforceability. 
The execution, delivery and performance of this Agreement and the other
Financing Documents to which such Purchaser is a party are 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 Purchaser, do not conflict with
or result in a breach of or violate any of such Purchaser’s governing documents
or any contract to which such Purchaser is a party or by which its assets are
bound or any Applicable Laws and constitute legal, valid and binding agreements
of such Purchaser enforceable against it in accordance with their respective
terms, subject to the Enforceability Exceptions.

5.4                                 No
Actions or Proceedings.  There are no
legal or governmental actions, suits or proceedings pending or, to any
Purchaser’s knowledge, threatened against or affecting

 20
 

 

such Purchaser, or any of
their respective properties or assets which, if adversely determined, in the
aggregate, could reasonably be expected to materially and adversely affect the
ability of such Purchaser to consummate any of the transactions contemplated by
the Financing Documents.

SECTION 6.

OTHER AFFIRMATIVE COVENANTS

6.1                                 Foreign
Subsidiaries.  As soon as practical
after the Closing, the Company shall take such necessary action so that each
foreign Subsidiary of the Company (a) is 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 to
transact business and is in good standing in each jurisdiction in which such
qualification is required, (c) has full power and authority to own, lease and
operate its properties and to conduct its businesses as they are currently
conducted, and (d) has full power and authority to enter into and perform its
obligations under each of the Financing Documents to which it is a party.

6.2                                 Director
Representation.  At such time as the
Avista Purchasers do not hold of record a sufficient number of shares of
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 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 the Avista Purchasers hold a number of shares of Common Stock
and/or Preferred Stock (calculated assuming the conversion of any 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 Preferred Stock
purchased by the Avista Purchasers pursuant to this Agreement.  

SECTION 7.

EXPENSES, INDEMNIFICATION AND CONTRIBUTION; TERMINATION

7.1                                 Expenses.  The Company will, upon Closing, after
presentation of a reasonable summary invoice therefore, reimburse the
Purchasers for all reasonable expense (including reasonable and documented
attorney’s and accountant’s fees and disbursements) incurred by the Purchasers
in connection with the transactions contemplated by this Agreement and the
other Financing Documents and in connection with any amendments, waivers or
consents under or in respect of this Agreement or the other Financing Documents
(whether or not such amendment, waiver or consent becomes effective), including,
without limitation: (a) the Purchaser’s reasonable and documented out-of-pocket
expenses in connection with the Purchaser’s examinations and appraisals of the
Company’s properties, books and records; (b) the reasonable and documented
out-of-pocket costs and expenses incurred in enforcing, defending or declaring
(or determining whether or how to enforce, defend or declare) any rights or
remedies under this Agreement or the other Financing Documents or in responding
to any subpoena or other legal process or informal investigative demand issued
in connection with this Agreement or the other Financing Documents; and any
fees incurred by the Purchasers in connection with any

 21
 

 

governmental consents or
filings (including any fees incurred in connection with any HSR Act
filing).  The Company will pay, and will
hold the Purchasers harmless from, all claims in respect of any fees, costs or
expenses if any, of brokers and finders in relation to the Transactions.

7.2                                 Indemnification.  The Company shall indemnify and hold harmless
the Purchasers and each of their respective Affiliates, partners, stockholders,
members, directors, agents, employees and controlling persons (collectively,
the “Indemnitees”) from and against any
and all actual losses, claims, damages or liabilities to any such Indemnitee in
connection with or as a result of any misrepresentation or breach of warranty,
covenant or agreement made or to be performed by the Company pursuant to this
Agreement.

7.3                                 Survival.  The obligations of the Company and the Guarantors
under this Section 7 will survive the payment or transfer of any
Preferred Stock, the enforcement, amendment or waiver of any provision of this
Agreement and the termination of this Agreement.

7.4                                 Tax
Treatment of Indemnification Payments. 
Any indemnification payment pursuant to this Agreement shall be treated
for federal, state, local and foreign Tax purposes as an adjustment to the
Purchase Price.

SECTION 8.

MISCELLANEOUS

8.1                                 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 below, or at such other address as such party may specify by
written notice to the other party hereto:

(a)                                  if
to a Purchaser or its nominee, to the Purchaser or its nominee at the address
specified for such communications in Schedule 2.2, with a copy to Weil,
Gotshal & Manges LLP, 700 Louisiana, Suite 1600, Houston, Texas 77002, Attention:  Steve Rubin, Esq., or at such other address
as the Purchaser or its nominee shall have specified to the Company in writing;

(b)                                 if
to the Company, to Geokinetics Inc., One Riverway, Suite 2100 Houston, Texas
77056, Attention: David A. Johnson, with a copy to Chamberlain, Hrdlicka,
White, Williams & Martin, 1200 Smith Street, 14th Floor, Houston, Texas
77002 Attention: James J. Spring, III, Esq.

 22
 

 

8.2                                 Benefit
of Agreement and Assignments.

(a)                                  Nothing
in this Agreement or any other Financing Document, express or implied, shall
give to any Person other than the parties hereto or thereto (not including
successors or assigns) any benefit or any legal or equitable right, remedy or
claim under this Agreement.

(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;
provided, however, that the Purchasers may assign the rights to purchase all or
any portion of the Preferred Stock allocated to such Purchaser pursuant to Schedule
2.2 to any, direct or indirect, wholly owned subsidiary of such Purchaser,
subject to the ability of such subsidiary to make the representations and
warranties set forth in Section 5, and each such Person shall be
entitled to the full benefit of this Agreement as if such Person were a
Purchaser hereunder.

8.3                                 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 Company and any
other party shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or under the Certificate of
Designation 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 and
in the Certificate of Designation are cumulative and not exclusive of any
rights or remedies that the parties would otherwise have.  No notice to or demand on the Company in any
case shall entitle the Company 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.

8.4                                 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 Company and
the other parties hereto.  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.

8.5                                 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.  For the purposes of the
Closing, signatures transmitted via telecopy (or other facsimile device) will
be accepted as original signatures if the sender on the same day sends a
manually executed signature page by a recognized overnight delivery service
(charges prepaid).

8.6                                 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.

 23
 

 

8.7                                 Survival
of Covenants and Indemnities.  All
covenants and indemnities set forth herein shall survive the execution and
delivery of this Agreement, the issuance of the Preferred Stock and Convert
Shares and, except as otherwise expressly provided herein with respect to
covenants and any other obligations hereunder.

8.8                                 Governing
Law; Submission to Jurisdiction; Venue.

(a)                                  THIS
AGREEMENT AND THE SECURITIES 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 Purchaser in order
to enforce any right or remedy under this Agreement or the Preferred Stock, the
Company hereby consents and will submit, and will cause its Subsidiaries to
submit, to the jurisdiction of any state or federal court of competent
jurisdiction sitting within the area comprising the Southern District of New
York on the date of this Agreement.  The
Company 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 Company further agrees that it shall not,
and shall cause its Subsidiaries not to, bring any action, proceeding or
litigation arising out of this Agreement or the Preferred Stock in any state or
federal court other than any state or federal court of competent jurisdiction
sitting within the area comprising the Southern District of New York on the
date of this Agreement.

(c)                                  The
Company 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 Company at its address set forth in Section 8.1, such service to
become effective thirty (30) days after such mailing.

(d)                                 Nothing
herein shall affect the right of any Purchaser to serve process in any other
manner permitted by law or to commence legal proceedings or otherwise proceed
against the Company 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
COMPANY AND EACH PURCHASER 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 OR THE
PREFERRED STOCK.

8.9                                 Severability.  If any provision of this Agreement is
determined to be illegal, invalid or unenforceable, such provision shall be
fully severable to the extent of such illegality, invalidity or
unenforceability and the remaining provisions shall remain in full force

 24
 

 

and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.

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

8.11                           Survival
of Representations and Warranties. 
All representations and warranties made by the Company herein shall
survive the execution and delivery of this Agreement, the issuance and transfer
of all or any portion of the Preferred Stock and the issuance of the Convert
Shares in accordance with the Certificate of Designation, and any other
obligations hereunder, regardless of any investigation made at any time by or
on behalf of the Purchasers.

8.12                           Construction.  Each covenant contained herein shall be
construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. 
Where any provision herein refers to action to be taken by any Person,
or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person,
whether or not expressly specified in such provision.

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

8.14                           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 Company or the Purchasers shall in such capacity have any
liability for any obligations or liabilities of the Company or any Purchaser,
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.

8.15                           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.

 25
 

 

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/ David A. Johnson

  	
   

  
	
   

  	
  Name: David A.
  Johnson

  
	
   

  	
  Title: President

  

 

 26
 

 

 

	
  

  	
  AVISTA CAPITAL PARTNERS, L.P.

  
	
   

  	
   

  
	
   

  	
  By: AVISTA CAPITAL PARTNERS GP, LLC, its

  general partner

  
	
   

  
	
   

  	
  By:

  	
  /s/ Ben Silbert

  	
   

  
	
   

  	
  Ben Silbert

  
	
   

  	
  General Counsel

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AVISTA CAPITAL PARTNERS (OFFSHORE),

  L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By: AVISTA CAPITAL PARTNERS GP, LLC, its

  general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ben Silbert

  	
   

  
	
   

  	
  Ben Silbert

  
	
   

  	
  General Counsel

  

 

 27
 

 

 

	
  

  	
  LEVANT AMERICA S.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ K. H. Hannan, Jr.

  	
   

  
	
   

  	
  Kenneth H. Hannan, Jr.

  
	
   

  	
  Attorney-in-Fact

  

 

 28

 

Schedule 2.2

INFORMATION
RELATING TO PURCHASERS

	
   

  	
   

  	
  Aggregate purchase amount of Preferred Stock

  	
   

  
	
  Purchaser Name and Address

  	
   

  	
  Shares of Preferred Stock

  	
   

  	
  Allocation of the Closing

  Payment

  	
   

  
	
  Avista Capital Partners, L.P.

  1000 Louisiana Street, Suite 1200

  Houston, Texas 77002

  Telecopy: (713) 328-1097

  Attention: Steve Webster

  	
   

  	
  187,500

  	
   

  	
  $

  	
  937,500

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Avista Capital Partners (Offshore), L.P.

  1000 Louisiana Street, Suite 1200

  Houston, Texas 77002

  Telecopy: (713) 328-1097

  Attention: Steve Webster

  	
   

  	
  12,500

  	
   

  	
  $

  	
  62,500

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Levant America S.A.

  c/o Byzantine Maritime Corporation

  8, Korytsas and Grammou Streets

  Kifisia 14561

  Athens, Greece

  Attention: Mr. Mario Stafilopatis

  

  with a copy to:

  

  Colonial Navigation Company, Inc.

  750 Lexington Avenue, 26th Floor

  New York, New York 10022

  Attention: Kenneth H. Hannan, Jr.

  	
   

  	
  20,000

  	
   

  	
  $

  	
  100,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  220,000

  	
   

  	
  $

  	
  1,100,000Exhibit
10.2

REGISTRATION RIGHTS AGREEMENT

GEOKINETICS INC.

Dated as of September 8,
2006

  
  
  

 

TABLE OF
CONTENTS

	
  

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I -

  	
  DEFINITIONS

  	
  1

  
	
  1.1

  	
  Definitions

  	
  1

  
	
  1.2

  	
  Other Definitional and Interpretive Matters

  	
  4

  
	
   

  	
   

  	
   

  
	
  ARTICLE II -

  	
  REGISTRATION
  RIGHTS

  	
  4

  
	
  2.1

  	
  Demand Registration

  	
  4

  
	
  2.2

  	
  Piggyback Registrations

  	
  8

  
	
  2.3

  	
  Transfer of Registration Rights

  	
  9

  
	
  2.4

  	
  Holdback Agreement

  	
  10

  
	
  2.5

  	
  Registration Procedures

  	
  10

  
	
  2.6

  	
  Suspension of Dispositions

  	
  14

  
	
  2.7

  	
  Registration Expenses

  	
  14

  
	
  2.8

  	
  Indemnification

  	
  15

  
	
  2.9

  	
  Current Public Information

  	
  18

  
	
  2.10

  	
  No Inconsistent Agreements

  	
  19

  
	
   

  	
   

  	
   

  
	
  ARTICLE III -

  	
  TERMINATION

  	
  19

  
	
  3.1

  	
  Termination

  	
  19

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV -

  	
  MISCELLANEOUS

  	
  19

  
	
  4.1

  	
  Notices

  	
  19

  
	
  4.2

  	
  Governing Law

  	
  20

  
	
  4.3

  	
  Jurisdiction

  	
  21

  
	
  4.4

  	
  Successors and Assigns

  	
  21

  
	
  4.5

  	
  Duplicate Originals

  	
  21

  
	
  4.6

  	
  Severability

  	
  21

  
	
  4.7

  	
  No Waivers; Amendments

  	
  21

  
	
  4.8

  	
  Negotiated Agreement

  	
  21

  

 

 i

REGISTRATION RIGHTS AGREEMENT

This REGISTRATION
RIGHTS AGREEMENT (this “Agreement”)
dated September 8, 2006, 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.  (together with
Avista Capital Partners, L.P., the “Avista Holders”)
and Levant America S.A., a Liberian corporation (collectively, with the Avista
Holders, the “Security Holders”).

RECITALS

WHEREAS,
the Company and the Security Holders are parties to the Securities Purchase
Agreement of even date herewith (the “Purchase Agreement”);

WHEREAS,
under the Securities Purchase Agreement, the Security Holders will purchase
shares of Series B Senior Convertible Preferred Stock, par value $10.00 per
share (the “Preferred Stock”),
of the Company; and

WHEREAS, the
Preferred Stock is convertible into shares of the Company’s Common Stock, par
value $0.01 per share (the “Common Stock”).

WHEREAS, in
order to induce the Security Holders to enter into the Purchase Agreement, and
to purchase the Preferred Stock, the parties desire to grant to the Security
Holders certain rights as provided herein.

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 of the Company and securities convertible or exchangeable into
Common Stock of the Company, 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 Holders listed on the signature page hereof 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.

“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 (acquired upon conversion of Preferred
Stock of the Company) and Preferred Stock of the Company 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 Registrable
Shares is made under the terms of this Agreement, all Preferred Stock shall be
included with all Common Stock on 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

 2
 

 

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.

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

	
  Term

  	
   

  	
  Section

  
	
   

  	
   

  	
   

  
	
  Advice

  	
   

  	
  2.6

  
	
  Agreement

  	
   

  	
  Introductory Paragraph

  
	
  Avista Holders

  	
   

  	
  Recitals

  
	
  Common Stock

  	
   

  	
  Recitals

  
	
  Company

  	
   

  	
  Introductory Paragraph

  
	
  Company Shelf

  	
   

  	
  2.1(i)

  
	
  Company Shelf
  Shares

  	
   

  	
  2.1(i)

  
	
  Demand
  Registration

  	
   

  	
  2.1(a)

  
	
  Demand Request

  	
   

  	
  2.1(a)

  
	
  Inspectors

  	
   

  	
  2.5(j)

  
	
  Material Adverse
  Effect

  	
   

  	
  2.1(e)

  
	
  NASD

  	
   

  	
  2.5(l)

  
	
  Preferred Stock

  	
   

  	
  Recitals

  
	
  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)

  
	
  Shelf Offering

  	
   

  	
  2.1(f)

  
	
  Suspension
  Notice

  	
   

  	
  2.6

  
	
  Underwritten
  Offering

  	
   

  	
  2.1(d)

  

 

 3
 

 

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
provision of a Table of Contents, 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, Schedule or Exhibit of this
Agreement.

(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 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

 4
 

 

(a “Demand
Registration”). 
Notwithstanding the foregoing, no Demand Request will be effective
hereunder unless the Registrable Shares proposed to be sold by the Avista
Holders requesting the Demand Registration (the “Requesting
Holders,” which term shall include parties deemed “Requesting
Holders” pursuant to Section 2.1(f) hereof) represent, in the
aggregate, more than 25% of the total number of Registrable Shares held by all
Avista Holders.

(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 need effect only three (3) Demand
Registrations pursuant to Demand Requests made by Avista Holders of Registrable
Shares 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 Avista Holders shall 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 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

 5
 

 

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 thereto, 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
requested to be included in such registration 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 (a “Shelf Offering”).  The
Shelf Offering shall be on Form S-1 (or on Form S-3, 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 Securities covered by
such Shelf Offering have been sold or may be sold without volume restrictions
pursuant to Rule 144(k) as determined by the counsel to the Company
pursuant to a written opinion letter to

 6
 

 

such effect, addressed
and acceptable to the Company’s transfer agent and the affected Avista Holders.

(g)                                 Upon
receipt of any Demand Request, the Company shall promptly (but in any event
within 10 days) give written notice of such proposed Demand Registration to all
other Avista Holders, 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 such portion of their Registrable
Shares as they may request.  All Avista
Holders requesting to have 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 Section 2.1(g).

(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.

 7
 

 

(i)                                     In
lieu of any of the three 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”), the Avista
Holders may issue a Demand Request for the Company to sell Company Shelf Shares
and use the proceeds from such sales to purchase the Registrable Shares held by
the Requesting Holders (the “Shelf Funded Repurchase”)
at a price (determined on a fully diluted basis) equal to the price at which
the Company Shelf Shares were sold 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
Securities included in the applicable Demand Request have been purchased by the
Company or may be sold without volume restrictions pursuant to Rule 144(k)
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.  The
Company will not be responsible for any fees or expenses incurred by the Avista
Holders 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 Security
Holders 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 the Company’s
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 registered) within 20 days after the date 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.

 8
 

 

(b)                                 If
the managing underwriter advises the Company 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 equal to the product of: (i) the
ratio which such Holder’s requested shares bears to the total number of shares
requested to be included in such registration statement by all Persons
(including Requesting Holders) who have requested (pursuant to contractual
registration rights) that their shares be included in such registration
statement; and (ii) 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.  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 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 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, 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
of at least 50,000 shares (on a
fully 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 of fewer than
50,000 shares (on a fully basis as adjusted for stock

 9
 

 

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 after the effectiveness under the Securities Act of any
underwritten registration (not to exceed 90 days) 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 and each holder of
securities representing 1% or more of the outstanding securities 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:

(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

 10
 

 

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 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;

 11
 

 

(f)                                    make
generally available to the Company’s Security Holders 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

 12
 

 

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 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 (i) listed
on each securities exchange, if any, on which similar securities issued by the
Company are then listed or (ii) authorized to be quoted and/or listed (to the
extent applicable) on the National Association of Securities Dealers, Inc. (“NASD”).  Automated Quotation System or the Nasdaq
National Market if the Registrable Shares so qualify;

(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 NASD;

(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;

 13
 

 

(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 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 the NASD (including,
if applicable, the fees and expenses of any “qualified independent underwriter”
as such term is defined in Schedule E of the By-Laws of the NASD, and of its
counsel), as may be required by the rules and regulations of the NASD, 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

 14
 

 

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.

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, 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

 15
 

 

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 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 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, 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.

 16

 

(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 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.

 17
 

 

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)           make and keep public information
available, as those terms are defined in Rule 144 under the Securities Act, at
all times after the effective date that the Company becomes subject to the
reporting requirements of the Securities Act or the Exchange Act;

 18
 

 

(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 (at any time after it has become subject to such
reporting requirements); 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 (at any time after 90 days after the effective date of
the first registration statement filed by the Company for an offering of its
securities to the general public), and of the Securities Act and the Exchange
Act (at any time after it has become subject to such reporting requirements),
(ii) a copy of the most recent annual or quarterly report of the Company and
(iii) such other reports 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 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):

 19
 

 

If to the Company:

Geokinetics Inc.

One Riverway,

Suite 2100 Houston,

Texas 77056

Telecopy #: (713)
850-7730

Attention:  David A. Johnston

With copies to (which
shall not constitute notice):

Chamberlain,
Hrdlicka, White, Williams & Martin

1200
Smith Street, Suite 1400

Houston,
Texas 77002

Telecopy
#:  (713) 658-2553

Attention:  James J. Spring, III

If to any Holder, at its
address listed on the signature pages hereof.

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 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.

 20
 

 

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.

(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.

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.

[THE REMAINDER OF THIS
PAGE IS INTENTIONALLY LEFT BLANK]

 21
 

 

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

	
   

  	
  GEOKINETICS INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ David A.
  Johnson

  	
   

  
	
   

  	
   

  	
  David A. Johnson

  
	
   

  	
   

  	
  President and Chief Executive Officer

  

 

 22

 

 

	
  

  	
  AVISTA
  CAPITAL PARTNERS, L.P.

  
	
   

  	
   

  
	
   

  	
  By: AVISTA CAPITAL PARTNERS GP,

  LLC, its general partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Ben
  Silbert

  	
   

  
	
   

  	
  Ben Silbert

  
	
   

  	
  General Counsel

  
	
   

  	
   

  
	
   

  	
  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

  
	
   

  	
  General Counsel

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
  1000 Louisiana Street, Suite 1200

  
	
   

  	
  Houston, Texas 77002

  
	
   

  	
  Telecopy: (713) 328-1097

  
	
   

  	
  Attention: Steve Webster

  

 

 

 

	
  Copy to:

  
	
   

  	
   

  
	
   

  	
  Weil, Gotshal & Manges LLP,

  
	
   

  	
  700 Louisiana, Suite 1600

  
	
   

  	
  Houston, Texas 77002

  
	
   

  	
  Telecopy: (713) 224-9511

  
	
   

  	
  Attention: Steve Rubin, Esq.,

  

 

 

 

	
  

  	
  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: 1-212-319-2826

  
	
   

  	
  Attention: K. H. Hannan, Jr.

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