SUBORDINATION AND AMENDMENT AGREEMENT
This SUBORDINATION AND AMENDMENT AGREEMENT (this "AGREEMENT")
is entered into as of April 9, 2001, by and among GEOKINETICS INC., a Delaware
corporation, and its subsidiaries listed on the signature pages hereof
(collectively, the "COMPANY"), the holders of the Company's 13 1/2% Senior
Secured Notes listed on the signature pages hereof (the "JUNIOR CREDITORS") and
GEOLEASE PARTNERS, L.P., a Delaware limited partnership ("LESSOR").
RECITALS
A. Concurrently with the execution hereof, (i) Lessor is
purchasing the equipment leased to the Company under the Lease Agreement between
Input/Output, Inc., as lessor ("IO"), and the Company, as lessee, dated October
1, 1999, as amended to date (the "LEASE AGREEMENT"), from IO, (ii) IO is
assigning its rights under the Lease Agreement to Lessor, (iii) Lessor and the
Company are entering into Amendment No. 1 to the Lease Agreement attached hereto
as EXHIBIT A ("AMENDMENT NO. 1") and (iv) MHR Capital Partners LP ("MHR") is
selling and transferring all of its 2002 Notes (as defined below) and 2002
Warrants (as defined below) to IO.
B. As an inducement to and as one of the conditions
precedent to the acquisition of IO's interest, Lessor requires the execution and
delivery of this Agreement by the Junior Creditors and the Company.
NOW, THEREFORE, in order to induce Lessor to acquire IO's
interest in the Lease Agreement, and for other good and valuable consideration,
the receipt and sufficiency of which hereby are acknowledged, the parties hereto
hereby agree as follows:
1. DEFINITIONS. The following terms shall have the
following meanings in this Agreement:
COLLECTION ACTION shall mean (a) to demand, xxx for, take or
receive (other than as permitted hereunder) from or on behalf of the Company by
set-off or in any other manner, the whole or any part of any moneys which may
now or hereafter be owing by the Company with respect to the Junior Debt, (b) to
initiate or participate with others in any suit, action or proceeding against
the Company to (i) enforce payment of or to collect the whole or any part of the
Junior Debt or (ii) commence judicial enforcement of any of the rights and
remedies under the Junior Debt Documents or applicable law with respect to the
Junior Debt or the Junior Debt Documents, or (c) to accelerate any Junior Debt.
DISQUALIFIED CAPITAL STOCK shall mean that portion of any
capital stock of the Company which, by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable), or upon
the happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or is redeemable at the sole option of the
holder thereof on or prior to the maturity date for payment of the Senior
Obligations.
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INDENTURE shall have the meaning ascribed to such term in the
Junior Notes.
JUNIOR DEBT shall mean all of the obligations of the Company
to the Junior Creditors evidenced by the Junior Debt Documents.
JUNIOR DEBT DOCUMENTS shall mean the Junior Notes and all
other documents and instruments pertaining to all or any portion of the Junior
Debt.
JUNIOR DEFAULT shall mean an "Event of Default" as defined in
the Junior Notes, as the same may be amended, supplemented or otherwise modified
from time to time as permitted hereunder.
JUNIOR DEFAULT NOTICE shall mean a written notice from the
Junior Creditors to Lessor pursuant to which Lessor is notified of the
occurrence of a Junior Default, which notice incorporates a reasonably detailed
description of such Junior Default.
JUNIOR NOTES shall mean the Company's 2002 Notes and 2005
Notes.
JUNIOR SECURITY shall mean any capital stock (other than
Disqualified Capital Stock), any Qualified Rights and any indebtedness of the
Company that (i) is subordinated in right of payment to the Senior Obligations
at least to the same extent as the Junior Debt, (ii) has no scheduled
installment of principal due, by redemption, sinking fund payment or otherwise,
on or prior to (a) the last scheduled date for payment of the Senior Obligations
(other than in respect of Deferred Rent (as defined in Amendment No. 1)) and (b)
with respect to Junior Debt representing obligations relating to 2005 Notes, the
scheduled date for payment of the Deferred Rent, and (iii) has no terms more
beneficial in the aggregate to the holders thereof other than those in effect
with respect to the Junior Debt on the date of this Agreement, including but not
limited to the obligation of the Company to pay interest in cash or additional
securities prior to the 2005 Maturity Date (as defined in the Indenture).
NON-AFFILIATED NOTEHOLDER shall mean any holder of 2002 Notes
who (i) is not an Affiliate (as defined in the Lease Agreement) of the Lessor or
the Lessee and (ii) owns at least $300,000 of the 2002 Notes; PROVIDED, that
each of DLJ Investment Partners, L.P., DLJ Investment Funding, Inc. and DLJ ESC
II L.P. or any of their respective Affiliates, so long as it shall be a holder
of at least $300,000 of the 2002 Notes, shall be deemed to be an Affiliate of
the Lessor.
PERSON shall mean an individual, partnership, corporation,
unincorporated organization, trust or joint venture, or a governmental agency or
political subdivision thereof.
PROCEEDING shall mean any voluntary or involuntary insolvency,
bankruptcy, receivership, custodianship, liquidation, dissolution,
reorganization, assignment for the benefit of creditors, appointment of a
custodian, receiver, trustee or other officer with similar powers or any other
proceeding for the liquidation, dissolution or other winding up of a Person.
QUALIFIED RIGHTS shall mean options, warrants or other rights
to purchase capital stock (other than Disqualified Capital Stock), other than
any such rights that, by their terms or upon
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the happening of any event, are mandatorily redeemable or redeemable at the sole
option of the holder thereof on or prior to the last scheduled date for payment
of the Senior Obligations.
SENIOR COVENANT DEFAULT shall mean any "Lease Event of
Default" described in the Lease Agreement other than a Senior Payment Default.
SENIOR DEFAULT shall mean any Senior Payment Default or Senior
Covenant Default.
SENIOR DEFAULT NOTICE shall mean a written notice from Lessor
to the Company pursuant to which the Company is notified of the occurrence of a
Senior Covenant Default, which notice incorporates a reasonably detailed
description of such Senior Covenant Default.
SENIOR OBLIGATIONS shall mean (a) with respect to the Junior
Notes, all obligations for "Rent" and "Supplemental Rent" described in the Lease
Agreement, and all interest, penalties, fees, indemnifications, reimbursements,
damages and other liabilities payable thereunder, together with (i) all complete
or partial refinancings of the Senior Obligations and any amendments,
modifications, renewals or extensions of any of the foregoing consistent with
the terms of this Agreement and (ii) any interest accruing on the foregoing
after the commencement of a Proceeding, without regard to whether or not such
interest is an allowed claim, and (b) with respect to the 2005 Notes, all
obligations for Deferred Rent (as defined in Amendment No. 1), as such
obligations shall be amended, modified, renewed or extended, and all interest,
penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable thereunder (but subject to Section 3).
SENIOR OBLIGATIONS DOCUMENTS shall mean the Lease Agreement
and all other documents and instruments evidencing or pertaining to all or any
portion of the Senior Obligations.
SENIOR PAYMENT DEFAULT shall mean any default in payment of
Senior Obligations (whether before or after acceleration thereof).
THIRD PARTY HOLDERS shall mean holders of Junior Debt and
Warrants, as applicable, other than IO and MHR.
2002 NOTES shall mean the Company's 13 1/2% Senior Secured
Notes due 2002 in thE aggregate principal amount of up to $6,837,338, which term
shall include the guarantees annexed thereto.
2002 WARRANTS shall mean warrants issued in connection with
the issuance of the 2002 Notes.
2005 NOTES shall mean the Company's 13 1/2% Senior Secured
Notes due 2005 in the aggregate principal amount of up to $51,687,993, which
term shall include the guarantees annexed thereto.
2005 WARRANTS shall mean warrants issued in connection with
the issuance of the 2005 Notes.
VOTING RIGHTS shall have the meaning ascribed to such term in
Section 10.
WARRANT AGREEMENT shall mean the Amended and Restated Warrant
Agreement among Geokinetics, Inc. and the Junior Creditors dated as of April 30,
1998 and Amended and Restated as of October 1, 1999 pursuant to which the
Warrants were issued.
WARRANTS shall mean the 2002 Warrants and the 2005 Warrants.
2. SUBORDINATION.
2.1 SUBORDINATION OF JUNIOR DEBT TO SENIOR
OBLIGATIONS. The Company covenants and agrees, and each Junior Creditor by its
execution of this Agreement or its acceptance of the Junior Notes upon transfer
or assignment, likewise covenants and agrees that the payment of any and all of
the Junior Debt shall be subordinate and subject in right of payment, to the
extent and in the manner hereinafter set forth, to the prior payment in full of
the Senior Obligations, and that each holder of Senior Obligations, whether now
outstanding or hereafter created, incurred, assumed or guaranteed, shall be
deemed to have acquired Senior Obligations in reliance upon the provisions
contained in this Agreement.
2.2 PROCEEDINGS. In the event of any Proceeding
involving the Company, (a) all Senior Obligations first shall be paid in full in
cash before any payment of or with respect to the Junior Debt shall be made, (b)
any payment or distribution, whether in cash, property or securities which, but
for the terms hereof, otherwise would be payable or deliverable in respect of
the Junior Debt (other than Junior Securities), shall be paid or delivered
directly to Lessor (to be held and/or applied by Lessor in accordance with the
terms of the Lease Agreement) until all Senior Obligations are paid in full, and
each Junior Creditor irrevocably authorizes, empowers and directs all receivers,
trustees, liquidators, custodians, conservators and others having authority in
the premises to effect all such payments and distributions, and each Junior
Creditor also irrevocably authorizes, empowers and directs Lessor to demand, xxx
for, collect and receive every such payment or distribution, (c) each Junior
Creditor agrees to execute and deliver to Lessor or its representatives all such
further instruments confirming the authorization referred to in the foregoing
clause (b), (d) each Junior Creditor agrees not to initiate or prosecute or
encourage any other person to initiate or prosecute any claim, action or other
proceeding challenging the enforceability of the Senior Obligations or any liens
and security interests securing the Senior Obligations, and (e) each Junior
Creditor agrees to execute, verify, deliver and file any proofs of claim in
respect of the Junior Debt requested by Lessor in connection with any such
Proceeding and hereby irrevocably authorizes, empowers and appoints Lessor its
agent and attorney-in-fact to (i) execute, verify, deliver and file such proofs
of claim in respect of the Junior Debt in connection with such proceeding upon
the failure of such Junior Creditor to do so prior to 30 days before the
expiration of the time to file any such proof of claim and (ii) vote such claim
in any such Proceeding upon the failure of such Junior Creditor to do so prior
to 5 business days before the expiration of the time to vote any such claim;
PROVIDED, that Lessor shall have no obligation to execute, verify, deliver, file
and/or vote any such proof of claim. In the event that Lessor votes any claim in
accordance with the authority granted hereby, such Junior Creditor shall not be
entitled to change or withdraw such vote. The Senior Obligations shall continue
to be treated as Senior Obligations and the provi-
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sions of this Agreement shall continue to govern the relative rights and
priorities of Lessor and Junior Creditors even if all or part of the Senior
Obligations or the security interests securing the Senior Obligations are
subordinated, set aside, avoided or disallowed in connection with any such
Proceeding and this Agreement shall be reinstated if at any time any payment of
any of the Senior Obligations is rescinded or must otherwise be returned by any
holder of Senior Obligations or any representative of such holder.
2.3 PAYMENT UPON SENIOR DEFAULT. The Company may
not make and no Junior Creditor may receive any payment of principal, interest
or any other amount due with respect to the Junior Debt (other than Junior
Securities) if, at the time of such payment:
(a) A Senior Payment Default exists and such Senior
Payment Default shall not have been cured or waived in accordance with
the terms of the Senior Obligations Documents, or
(b) Subject to subsection 2.3(d), (i) the Company shall
have received a Senior Default Notice from Lessor stating that a Senior
Covenant Default exists or would be created by the making of such
payment, (ii) each such Senior Covenant Default shall not have been
cured or waived in accordance with the terms of the Senior Obligations
Documents, and (iii) 180 days shall not have elapsed since the date
such Senior Default Notice was received. Lessor and the Company agree
to furnish each Junior Creditor any Senior Default Notice within five
business days of the delivery thereof to the Company; PROVIDED, that
the failure to provide such notice shall not affect the validity of the
provisions of this subsection 2.3.
(c) The Company may resume payments (and may make any
payments missed due to the application of clause (a) or (b) of this
subsection 2.3) in respect of the Junior Debt or any judgment with
respect thereto:
(1) In the case of a Senior Payment Default
referred to in clause (a) of this subsection 2.3, upon a cure
or waiver thereof in accordance with the terms of the Senior
Obligations Documents; or
(2) In the case of a Senior Covenant Default
referred to in clause (b) of this subsection 2.3, upon the
earlier to occur of (x) the cure or waiver thereof in
accordance with the terms of the Senior Obligations Documents
or (y) the expiration of such 180-day period described in
subsection 2.3(b)(iii).
(d) Notwithstanding any provision of this subsection 2.3
to the contrary:
(1) The Company shall not be prohibited from
making, and the Junior Creditors shall not be prohibited from
receiving, payments under clause (b) of this subsection 2.3
for more than an aggregate of 180 days within any period of
360 consecutive days;
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(2) No Senior Covenant Default existing on the
date any notice is given pursuant to clause (b)(i) of this
subsection 2.3 shall, unless the same shall have ceased to
exist for a period of at least 30 consecutive days, be used as
a basis for any subsequent such notice; and
(3) The failure of the Company to make any
payment with respect to the Junior Debt by reason of the
operation of this subsection 2.3 shall not be construed as
preventing the occurrence of a Junior Default under the
applicable Junior Debt Documents.
The provisions of this subsection 2.3 shall not apply to any payment with
respect to which subsection 2.2 would be applicable.
2.4 PAYMENTS OTHERWISE PERMITTED. Nothing
contained in this Section 2 or elsewhere in this Agreement or in the Junior Debt
Documents shall prevent the Company at any time, except during the pendency of
any Proceeding referred to in subsection 2.2 or under the conditions referred to
in subsection 2.3, from making, or Junior Creditors from receiving, (i)
scheduled payments of accrued interest on the Junior Notes, (ii) payments of
principal and accrued interest on the Junior Notes at maturity and (iii) other
payments (excluding payments of principal or interest on the Junior Notes) with
respect to the Junior Debt when and as due under the Junior Debt Documents.
2.5 RESTRICTION ON ACTION BY JUNIOR CREDITOR.
(a) Until the Senior Obligations are paid in full in
cash, no Junior Creditor shall, without the prior written consent of Lessor,
take any Collection Action with respect to the Junior Debt, except as permitted
in the following sentence. Upon the earliest to occur of:
(i) acceleration of the Senior Obligations; or
(ii) a Proceeding involving the Company; or
(iii) the passage of 90 days from the date Lessor receives
written notice of the occurrence of any Junior Default if such Junior
Default shall not have been cured or waived within such period;
Junior Creditors owning twenty-five percent of the Junior Debt may, upon five
business days' prior written notice to Lessor, accelerate the Junior Debt or
take any other Collection Action which is not inconsistent with or in
contravention of the enforcement actions taken by the holders of the Senior
Obligations and the provisions of this Agreement; PROVIDED, HOWEVER, that if
following the acceleration of the Senior Obligations as described in clause (i)
above, such acceleration is rescinded, then all Collection Actions taken by
Junior Creditor shall likewise be rescinded if such Collection Action is based
solely on clause (i) above; PROVIDED, FURTHER, no Collection Action may be taken
with respect to a payment blockage period under subsection 2.3(a) or (b), prior
to the earlier to occur of the cure or waiver of the event giving rise to such
payment blockage period under this Agreement or the expira-
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tion of 90 days after the commencement of such payment blockage period
(although, in each instance, notice of the Junior Creditors' intent to exercise
legal remedies may be given during such period). Such five business day notice
may be given during the 90-day period described in clause (iii) above.
(b) Until the Senior Obligations are paid in full in cash
and notwithstanding anything contained in the Junior Debt Documents, the Lease
Agreement or the other Senior Obligations Documents to the contrary, the Junior
Creditors shall not, without the prior written consent of Lessor, agree to any
amendment, modification or supplement to the Junior Debt Documents which (i)
increases the maximum principal amount of the Junior Debt or rate of interest on
any of the Junior Debt, (ii) makes more restrictive or adds any event of default
or any covenant with respect to the Junior Debt, (iii) changes the redemption or
prepayment provisions of the Junior Debt, (iv) alters the subordination
provisions with respect to the Junior Debt, including, without limitation,
subordinating the Junior Debt to any other debt, (v) changes the maturity date
of any of the Junior Debt or otherwise alters the repayment terms of the Junior
Debt, (vi) grants any liens or security interests in any assets of the Company
(other than any such liens or security interests in effect on the date hereof)
or (vii) changes or amends any other term of the Junior Debt Documents if such
change or amendment would result in a "Lease Default" or "Lease Event of
Default" under the Lease Agreement, materially increase the obligations of the
Company or confer additional material rights on the Junior Creditors or any
other holder of the Junior Debt in a manner adverse to the Company or Lessor.
2.6 INCORRECT PAYMENTS. If any payment or
distribution on account of the Junior Debt not permitted to be made by the
Company or received by any Junior Creditor under this Agreement is received by
such Junior Creditor before all Senior Obligations are paid in full such payment
or distribution shall not be commingled with any asset of such Junior Creditor,
shall be held in trust by such Junior Creditor for the benefit of Lessor and
shall be promptly paid over to Lessor, or Lessor's designated representative,
for application (in accordance with the Lease Agreement) to the payment of the
Senior Obligations then remaining unpaid, until all of the Senior Obligations
are paid in full.
2.7 SALE, TRANSFER, ETC. No Junior Creditor
shall sell, assign, pledge, dispose of or otherwise transfer all or any portion
of the Junior Debt (a) without giving prior written notice of such action to
Lessor, (b) unless prior to the consummation of any such action, the transferee
thereof shall execute and deliver to Lessor an agreement substantially identical
to this Agreement, providing for the continued subordination and forbearance of
the Junior Debt to the Senior Obligations as provided herein and for the
continued effectiveness of all of the rights of Lessor arising under this
Agreement and (c) unless such sale, assignment, pledge, disposition or other
transfer is permitted under the terms of the Junior Debt Documents.
Notwithstanding the failure to execute or deliver any such agreement, the
subordination effected hereby shall survive any sale, assignment, pledge,
disposition or other transfer of all or any portion of the Junior Debt, and the
terms of this Agreement shall be binding upon the successors and assigns of the
Junior Creditors, as provided in Section 15 below.
2.8 LEGENDS. Until the Senior Obligations are
paid in full in cash, at the option of Lessor, the Junior Notes shall contain in
a conspicuous manner the following legend:
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"This Note and the indebtedness evidenced hereby are subordinate, in
the manner and to the extent set forth in the Subordination and
Amendment Agreement dated as of April 6, 2001 among Geokinetics Inc.
and the other parties thereto. Each holder of this Note, by its
acceptance hereof, shall be bound by the provisions of the
Subordination and Amendment Agreement."
2.9 NO CONTEST BY JUNIOR CREDITORS. Each Junior
Creditor agrees that it will not at any time contest the validity, perfection,
priority or enforceability of the Senior Obligations, the Senior Obligations
Documents, or the liens and security interests of Lessor in the collateral
securing the Senior Obligations.
3. MODIFICATIONS TO SENIOR OBLIGATIONS. Lessor may at
any time from time to time without the consent of or notice to the Junior
Creditors, without incurring liability to the Junior Creditors and without
impairing or releasing the obligations of the Junior Creditors under this
Agreement, change the manner or place of payment or extend the time of payment
of or renew or alter any Senior Obligations in respect of the Lease Agreement,
or amend in any manner any agreement, note, guaranty or other instrument
evidencing or securing or otherwise relating to any Senior Obligations in
respect of the Lease Agreement; PROVIDED, that any such amendment that (i)
increases the maximum amount of the Senior Obligations, (ii) shortens the
maturity date for payment of the Senior Obligations or (iii) amends any of the
other economic terms of the Lease Agreement in a manner which could reasonably
be expected to be adverse to the Junior Creditors, shall require the consent of
the majority in interest of the Non-Affiliated Noteholders.
4. CONTINUED EFFECTIVENESS OF THIS AGREEMENT. The terms
of this Agreement, the subordination effected hereby, and the rights and the
obligations of the Junior Creditors or Lessor arising hereunder, shall not be
affected, modified or impaired in any manner or to any extent by: (a) any
amendment or modification of or supplement to the Lease Agreement, any of the
other Senior Obligations Documents or any of the Junior Debt Documents made in
accordance with this Agreement; (b) the validity or enforceability of any of
such documents; or (c) any exercise or non-exercise of any right, power or
remedy under or in respect of the Senior Obligations or the Junior Debt or any
of the instruments or documents referred to in clause (a) above. The Junior
Creditors and each holder of Junior Debt hereby acknowledge that the provisions
of this Agreement are intended to be enforceable at all times, whether before
the commencement of, after the commencement of, in connection with or premised
on the occurrence of a Proceeding.
5. REPRESENTATIONS AND WARRANTIES OF JUNIOR CREDITORS.
Each Junior Creditor, as to itself, hereby severally represents and warrants to
Lessor as follows:
5.1 EXISTENCE AND POWER. If not a natural
person, such Junior Creditor is a corporation, partnership or limited liability
company duly organized, validly existing and in good standing under the laws of
the state of its organization.
5.2 AUTHORITY. Such Junior Creditor has full
power and authority to enter into, execute, deliver and carry out the terms of
this Agreement, all of which have been duly authorized by all proper and
necessary action and are not prohibited by its constituent documents.
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5.3 BINDING AGREEMENTS. This Agreement, when
executed and delivered, will constitute the valid and legally binding obligation
of such Junior Creditor enforceable in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by equitable principles.
5.4 CONFLICTING AGREEMENTS; LITIGATION. No
provisions of any mortgage, indenture, contract, agreement, statute, rule,
regulation, judgment, decree or order binding on such Junior Creditor conflicts
with, or requires any consent, which has not already been obtained under, or
would in any way prevent the execution, delivery or performance of the terms of
this Agreement by such Junior Creditor.
5.5 TITLE. Such Junior Creditor is the current
owner and holder of the Junior Notes set forth on SCHEDULE 1 hereto free
and clear of any liens, security interests or other encumbrances (other than the
provisions of this Agreement).
6. REPRESENTATIONS AND WARRANTIES OF LESSOR. Lessor,
hereby represents and warrants to the Junior Creditors, as follows:
6.1 EXISTENCE AND POWER. Lessor is a limited
partnership duly organized, validly existing and in good standing under the laws
of the State of Delaware.
6.2 AUTHORITY. Lessor has full power and
authority to enter into, execute, deliver and carry out the terms of this
Agreement, all of which have been duly authorized by all proper and necessary
action and are not prohibited by its constituent documents.
6.3 BINDING AGREEMENTS. This Agreement, when
executed and delivered, will constitute the valid and legally binding obligation
of Lessor enforceable in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by equitable principles.
6.4 CONFLICTING AGREEMENTS; LITIGATION. No
provisions of any mortgage, indenture, contract, agreement, statute, rule,
regulation, judgment, decree or order binding on Lessor conflicts with, or
requires any consent, which has not already been obtained under, or would in any
way prevent the execution, delivery or performance of the terms of this
Agreement by Lessor.
6.5 TITLE. Lessor is the current owner and
holder of the Senior Obligations free and clear of any liens, security interests
or other encumbrances (other than the provisions of this Agreement).
7. AMENDMENT AND WAIVER.
7.1 JUNIOR NOTES AND INDENTURE. The Junior
Creditors hereby waive all Defaults or Events of Default (as such terms are
defined in the Indenture), if any, which have occurred
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under the Junior Notes or the Indenture through the date of this Agreement, and
the Junior Creditors and the Company hereby (i) amend the Indenture to delete
Section 4.27 (Cash Maintenance) in its entirety, (ii) amend the 2002 Notes and
the Indenture by changing the 2002 Maturity Date (as defined in the Indenture)
to September 15, 2003, (iii) amend the 2002 Notes, the 2005 Notes and the
Indenture to permit the Company to pay interest on each Interest Payment Date
(as defined in the Indenture) to but not including the applicable Maturity Date
(as defined in the Indenture) in the form of Cash Interest (as defined in the
Indenture) or PIK Interest (as defined in the Indenture) under Section 2.12
(Payment of Interest; Defaulted Interest) of the Indenture and Paragraph 2
(Interest) of each of the Junior Notes, and (iv) amend the Junior Notes and the
Indenture by replacing Section 9.02 of the Indenture (incorporated in paragraph
12 of the Junior Notes) in its entirety with the following:
"SECTION 9.02.WITH CONSENT OF HOLDERS.
(a) Subject to Section 6.07, the Company and the
Guarantors, when authorized by a Board Resolution, and the Trustee,
together, with the written consent of the Holder or Holders of at least
a majority in aggregate principal amount of the outstanding Notes, may
amend or supplement this Indenture, the Notes, any Guarantee or any
Security Document, without notice to any other Holders. Subject to
Section 6.07, the Holder or Holders of a majority in aggregate
principal amount of the outstanding Notes may waive compliance by the
Company or the Guarantors with any provision of this Indenture, the
Notes, the Guarantees or the Security Documents without notice to any
other Holder.
(b) No amendment, supplement or waiver, including a
waiver pursuant to Section 6.04, shall, without the consent of each
Holder of each Note affected thereby other than MHR Capital Partners LP
and its Affiliates ("MHR") (PROVIDED that the consent of MHR under this
Section 9.02(b) shall be required (i) if (a) MHR is then a Holder of
2005 Notes and (b) such amendment, supplement or waiver could
reasonably be expected to (x) adversely affect MHR's rights or
liabilities in a manner materially different than the rights of other
Holders of 2005 Notes (except with respect to the voting rights/consent
provisions contained in any instruments into which 2005 Notes may be
converted, exercised or exchanged for or into or this Indenture or the
2005 Notes, as such may be amended or supplemented, which in all cases
may be similar or no less favorable to MHR in all material respects to
those set forth in this Section 9.02(b)) or (y) create an obligation
for MHR to contribute additional funds, or (ii) to the extent otherwise
required by the TIA if this Indenture is then required to be qualified
under the TIA):
(1) reduce the amount of Notes whose Holders
must consent to an amendment;
(2) reduce the rate of or change or have the
effect of changing the time for payment of interest, including
defaulted interest, on any Notes;
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(3) reduce the principal of or change or have
the effect of changing the fixed maturity of any Notes, or
change the date on which any Notes may be subject to
redemption or repurchase, or reduce the redemption or
repurchase price therefor;
(4) make any Notes payable in money other than
that stated in the Notes;
(5) make any change in provisions of this
Indenture protecting the right of each Holder to receive
payment of principal of and interest on such Note or Guarantee
on or after the due date thereof or to bring suit to enforce
such payment, or permitting Holders of a majority in principal
amount of Notes to waive Defaults or Events of Default, other
than ones with respect to the payment of principal of or
interest on the Notes;
(6) amend, modify, change or waive any provision
of this Section 9.02;
(7) amend, modify or change in any material
respect the obligation of the Company to make or consummate a
Change of Control Offer in the event of a Change of Control or
make and consummate a Net Proceeds Offer in respect of any
Asset Sale that has been consummated or modify any of the
provisions or definitions with respect thereto after a Change
of Control has occurred or the subject Asset Sale has been
consummated;
(8) release any Guarantor from any of its
obligations under its Guarantee or this Indenture otherwise
than in accordance with the terms hereof;
(9) modify Article Eleven or the definitions
used in Article Eleven to adversely affect the Holders of the
Notes in any material respect;
(10) after the original issuance date of the
Notes, amend, modify, change or waive the priority in right of
payment of the Holders of the 2002 Notes set forth in Sections
3.02, 4.15, 4.16 and 6.10; or
(11) effect a recapitalization of securities of
the Company or a merger, including but not limited to the
conversion or exchange of the 2005 Notes into or for equity or
other debt securities of the Company or a successor thereto or
any other Person.
It shall not be necessary for the consent of the
Holders under this Section 9.02 to approve the particular form of any
proposed amendment, supplement or waiver, but it shall be sufficient if
such consent approves the substance thereof.
-12-
After an amendment, supplement or waiver under this
Section 9.02 becomes effective, the Company shall mail to the Holders
affected thereby a notice briefly describing the amendment, supplement
or waiver. Any failure of the Company to mail such notice, or any
defect therein, shall not, however, in any way impair or affect the
validity of any such supplemental indenture."
7.2 WARRANT AGREEMENT. The Junior Creditors and
Geokinetics, Inc. hereby amend the Warrant Agreement by replacing Section 15
(Supplements and Amendments) in its entirety with the following:
"SECTION 15. SUPPLEMENTS AND AMENDMENTS. The Company may
from time to time supplement or amend this Agreement without the
approval of any holders of Warrant Certificates in order to cure any
ambiguity or to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provision herein,
or to make any other provisions in regard to matters or questions
arising hereunder which the Company may deem necessary or desirable and
which shall not in any way adversely affect the interests of the
holders of Warrant Certificates. Any amendment or supplement to this
Agreement that has an adverse effect on the interests of holders shall
require the written consent of registered holders of two-thirds of the
then outstanding Warrant Shares issued or issuable upon exercise of the
Warrants (excluding Warrant Shares held by the Company or any of its
Affiliates). The consent of each holder of a Warrant affected other
than MHR Capital Partners LP and its Affiliates ("MHR") (PROVIDED that
the consent of MHR under this Section 15 shall be required if (a) MHR
is then a holder of 2005 Warrants and (b) such amendment or supplement
could reasonably be expected to (x) adversely affect MHR's rights or
liabilities in a manner materially different than the rights of other
holders of 2005 Warrants (except with respect to the voting
rights/consent provisions contained in any instruments into which 2005
Warrants may be converted, exercised or exchanged for or into or this
Agreement or the 2005 Warrants, as such may be amended or supplemented,
which in all cases may be similar or no less favorable to MHR in all
material respects to those set forth in this Section 15) or (y) create
an obligation for MHR to contribute additional funds (other than the
payment of the Exercise Price applicable to all holders of 2005
Warrants)) shall be required for any amendment pursuant to which the
number of Warrant Shares purchasable upon exercise of Warrants would be
decreased (other than in accordance with Section 10 or 11 hereof)."
8. CUMULATIVE RIGHTS, NO WAIVERS. Each and every right,
remedy and power granted to Lessor hereunder shall be cumulative and in addition
to any other right, remedy or power specifically granted herein, in the Lease
Agreement or the other Senior Obligations Documents or now or hereafter existing
in equity, at law, by virtue of statute or otherwise, and may be exercised by
Lessor, from time to time, concurrently or independently and as often and in
such order as Lessor may deem expedient. Any failure or delay on the part of
Lessor in exercising any such right, remedy or power, or abandonment or
discontinuance of steps to enforce the same, shall not operate as a waiver
-13-
thereof or affect the rights of Lessor thereafter to exercise the same, and any
single or partial exercise of any such right, remedy or power shall not preclude
any other or further exercise thereof or the exercise of any other right, remedy
or power, and no such failure, delay, abandonment or single or partial exercise
of the rights of Lessor hereunder shall be deemed to establish a custom or
course of dealing or performance among the parties hereto.
9. MODIFICATION. Any modification or waiver of any
provision of this Agreement shall not be effective in any event unless the same
is in writing and signed by Lessor and the majority in interest of the Junior
Creditors (including the majority in interest of such Junior Creditors that are
Non-Affiliated Noteholders), and then such modification or waiver shall be
effective only in the specific instance and for the specific purpose given. Any
notice to or demand on the Junior Creditors in any event not specifically
required of Lessor hereunder shall not entitle the Junior Creditors to any other
or further notice or demand in the same, similar or other circumstances unless
specifically required hereunder.
10. VOTING RIGHTS. IO agrees that upon any vote of
holders of Junior Debt and/or Warrants it shall vote all of its interests in
such Junior Debt and/or Warrants in accordance with the votes cast by at least
66-2/3% of the interests in such Junior Debt and/or Warrants voted by Third
Party Holders (the "VOTING RIGHTS"); PROVIDED, that IO shall not be required to
vote its interests under this Section 10 in any manner that would materially
adversely affect its rights as a holder of 2002 Notes relative to the rights of
other holders of 2002 Notes. IO agrees that the grant of the Voting Rights is
irrevocable and deemed coupled with an interest.
11. ADDITIONAL DOCUMENTS AND ACTIONS. The Junior
Creditors at any time, and from time to time, after the execution and delivery
of this Agreement, promptly will execute and deliver such documents and do such
further acts and things as Lessor reasonably may request that may be necessary
in order to effect fully the purposes of this Agreement.
12. SUBROGATION TO RIGHTS OF LESSOR. Subject to the
payment in full of all Senior Obligations, the Junior Creditors shall be
subrogated to the rights of Lessor to receive payments and distributions of
cash, property and securities applicable to the Senior Obligations to the extent
that distributions otherwise payable to the Junior Creditors have been applied
to the Senior Obligations, until all amounts payable under the Junior Debt shall
have been paid in full. For purposes of such subrogation, no payments or
distributions to Lessor of any cash, property or securities to which the Junior
Creditors would be entitled except for the provisions of this Agreement, and no
payments over pursuant to the provisions of this Agreement to Lessor by the
Junior Creditors shall, as among the Company, its creditors other than Lessor
and the Junior Creditors, be deemed to be a payment or distribution by the
Company to or on account of the Senior Obligations.
13. NOTICES. Unless otherwise specifically provided
herein, any notice or other communication required or permitted to be given
shall be in writing addressed to the respective party as set forth below and may
be personally served, telecopied or sent by overnight courier service or United
States mail certified or registered and shall be deemed to have been given (a)
if delivered in person, when delivered; (b) if delivered by telecopy, on the
date of transmission if transmitted on a
-14-
business day before 4:00 p.m. (New York time) or, if not, on the next succeeding
business day; (c) if delivered by overnight courier, two business days after
delivery to such courier properly addressed; or (d) if by United States mail,
four business days after deposit in the United States mail, postage prepaid and
properly addressed.
Notices shall be addressed as follows:
(a) If to the Junior Creditors, to their addresses set
forth on SCHEDULE 1 hereto:
(b) If to the Company:
Geokinetics Inc.
0000 Xxxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Chief Financial Officer
Telecopy: (000) 000-0000
with a copy to:
Chamberlain, Hrdlicka, White, Xxxxxxxx & Xxxxxx
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxx X. Spring III, Esq.
Telecopy: (000) 000-0000
(c) If to Lessor:
GeoLease Partners, L.P.
c/o DLJ Merchant Banking Partners II, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Telecopy: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxx, Esq.
Telecopy: (000) 000-0000
or in any case, to such other address as the party addressed shall have
previously designated by written notice to the serving party, given in
accordance with this Section 13. A notice not given as pro-
-15-
vided above shall, if it is in writing, be deemed given if and when actually
received by the party to whom given.
14. SEVERABILITY. In the event that any provision of this
Agreement is deemed to be invalid, illegal or unenforceable by reason of the
operation of any law or by reason of the interpretation placed thereon by any
court or governmental authority, the validity, legality and enforceability of
the remaining provisions of this Agreement shall not in any way be affected or
impaired thereby, and the affected provision shall be modified to the minimum
extent permitted by law so as most fully to achieve the intention of this
Agreement.
15. SUCCESSORS AND ASSIGNS. This Agreement shall inure to
the benefit of the successors and assigns of Lessor and shall be binding upon
the successors and assigns of the Junior Creditors and the Company.
16. COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be an original, but all of which taken
together shall be one and the same instrument.
17. DEFINES RIGHTS OF CREDITORS. The provisions of this
Agreement are solely for the purpose of defining the relative rights of the
Junior Creditors and Lessor and shall not be deemed to create any rights or
priorities in favor of any other Person, including, without limitation, the
Company. Nothing contained in this Agreement or in the Junior Debt Documents or
elsewhere is intended to or shall (a) impair, as among the Company, its
creditors other than Lessor and the Junior Creditors, the obligation of the
Company, which is absolute and unconditional, to pay to each Junior Creditor the
Junior Debt as and when the same shall become due and payable, all in accordance
with the terms hereof, or (b) affect the relative rights against the Company of
the Junior Creditors and other creditors of the Company, or (c) prevent the
Junior Creditors from exercising all remedies otherwise permitted by applicable
law upon default under the Junior Notes, subject to the limitations upon such
rights set forth under this Agreement for the benefit of Lessor.
18. CONFLICT. In the event of any conflict between any
term, covenant or condition of this Agreement and any term, covenant or
condition of any of the Junior Notes or the Junior Debt Documents, the
provisions of this Agreement shall control and govern.
19. HEADINGS. The paragraph headings used in this
Agreement are for convenience only and shall not affect the interpretation of
any of the provisions hereof.
20. TERMINATION. This Agreement shall terminate upon the
indefeasible payment in full in cash of the Senior Obligations and the
termination of the Lease Agreement.
21. APPLICABLE LAW. This Agreement shall be governed by,
and be construed and interpreted in accordance with, the internal laws (as
opposed to conflict of laws provisions) of the State of New York.
-16-
22. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. EACH
JUNIOR CREDITOR AND THE COMPANY HEREBY CONSENT TO THE JURISDICTION OF ANY STATE
OR FEDERAL COURT LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK AND
IRREVOCABLY AGREE THAT, SUBJECT TO ELECTION BY LESSOR, ALL ACTIONS OR
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE JUNIOR NOTES, THE
JUNIOR DEBT DOCUMENTS OR THE SENIOR OBLIGATIONS DOCUMENTS SHALL BE LITIGATED IN
SUCH COURTS. EACH JUNIOR CREDITOR AND THE COMPANY ACCEPTS FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS, AND, SUBJECT TO ITS RIGHT TO APPEAL, IRREVOCABLY AGREES TO BE BOUND
BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT, THE JUNIOR
NOTES, THE JUNIOR DEBT DOCUMENTS OR THE SENIOR OBLIGATIONS DOCUMENTS. NOTHING
HEREIN SHALL LIMIT THE RIGHT OF LESSOR TO BRING PROCEEDINGS AGAINST THE JUNIOR
CREDITORS OR THE COMPANY IN THE COURTS OF ANY OTHER JURISDICTION.
23. WAIVER OF JURY TRIAL. EACH JUNIOR CREDITOR, THE
COMPANY AND LESSOR HEREBY WAIVES ITS RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE JUNIOR DEBT
DOCUMENTS OR SENIOR OBLIGATIONS DOCUMENTS, OR ANY DEALINGS AMONG THE PARTIES TO
THIS AGREEMENT RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT, THE SENIOR OBLIGATIONS DOCUMENTS AND THE JUNIOR DEBT
DOCUMENTS. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY
AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT
MATTER OF THIS TRANSACTION, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.
EACH JUNIOR CREDITOR, LESSOR AND THE COMPANY ACKNOWLEDGES THAT THIS WAIVER IS A
MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY
RELIED ON THIS WAIVER IN ENTERING INTO THE SENIOR OBLIGATIONS DOCUMENTS AND THIS
AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED
DEALINGS. EACH JUNIOR CREDITOR, LESSOR AND THE COMPANY FURTHER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING (UNLESS SUCH WRITING MAKES SPECIFIC
REFERENCE TO THIS SECTION 23), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, THE SENIOR
OBLIGATIONS DOCUMENTS, THE JUNIOR NOTES, THE JUNIOR DEBT DOCUMENTS, OR TO ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE SENIOR OBLIGATIONS OR THE JUNIOR
DEBT. IN THE
-17-
EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL
BY THE COURT.
[Remainder of this page intentionally left blank]
IN WITNESS WHEREOF, Junior Creditors, the Company and Lessor
have caused this Agreement to be executed as of the date first above written.
JUNIOR CREDITORS:
DLJ INVESTMENT PARTNERS, L.P.
By: DLJ INVESTMENT PARTNERS, INC.,
its General Partner
By:
-------------------------------------------
Name:
Title:
DLJ INVESTMENT FUNDING, INC.
By:
-------------------------------------------
Name:
Title:
DLJ ESC II L.P.
By: DLJ LBO PLANS MANAGEMENT
CORPORATION, its General Partner
By:
-------------------------------------------
Name:
Title:
SPINDRIFT PARTNERS, L.P.
By: WELLINGTON MANAGEMENT
COMPANY, LLP, its Investment Advisor
By:
-------------------------------------------
Name:
Title:
SPINDRIFT INVESTORS (BERMUDA) L.P.
By: WELLINGTON MANAGEMENT
COMPANY, LLP, its Investment Advisor
By:
-------------------------------------------
Name:
Title:
X.X. XXXXXX (BHCA), L.P. (as successor to
CHASE EQUITY ASSOCIATES, L.P.)
By: JPMP MASTER FUND MANAGER, L.P.,
its General Partner
By: JPMP CAPITAL CORP., its General Partner
By:
-------------------------------------------
Name:
Title:
INPUT/OUTPUT, INC.
By:
-------------------------------------------
Name:
Title:
MHR CAPITAL PARTNERS LP
By: MHR ADVISORS LLC
By:
-------------------------------------------
Name:
Title:
Xxxx X. Xxxx, Xx.
By:
-------------------------------------------
Name: Xxxx X. Xxxx, Xx.
WHITTIER VENTURES LLC
By:
-------------------------------------------
Name: Xxxxx X. Xxxx
Title: President
SOMERSET CAPITAL PARTNERS
By:
-------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: General Partner
Xxxxxx X. Xxxxxxx
By:
-------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
By:
-------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
LEVANT AMERICA S.A.
By:
-------------------------------------------
Name:
Title:
ANS LTD.
By:
-------------------------------------------
Name:
Title:
SPICEWOOD FAMILY PARTNERS
By:
-------------------------------------------
Name:
Title:
Xxxxxxx X. Xxxxxx, Xx.
By:
-------------------------------------------
Name: Xxxxxxx X. Xxxxxx, Xx.
Xxxxxx Xxxxxxxx
By:
-------------------------------------------
Name: Xxxxxx Xxxxxxxx
Xxxxx Xxxxxxxx
By:
-------------------------------------------
Name: Xxxxx Xxxxxxxx
Xxx & Xxxxxx Xxxxxxxxx Joint Tenant
By:
-------------------------------------------
Name: Xxx Xxxxxxxxx
By:
-------------------------------------------
Name: Xxxxxx Xxxxxxxxx
Xxxxxxxx Xxxxxxxxx
By:
-------------------------------------------
Name: Xxxxxxxx Xxxxxxxxx
Xxxx Xxxxxx
By:
-------------------------------------------
Name: Xxxx Xxxxxx
Xxxx X. Xxxx
By:
-------------------------------------------
Name: Xxxx X. Xxxx
Xxxxx Xxxx
By:
-------------------------------------------
Name: Xxxxx Xxxx
THE COMPANY:
GEOKINETICS INC.
By:
-------------------------------------------
Name:
Title:
GEOPHYSICAL DEVELOPMENT
CORPORATION
By:
--------------------------------------------
Name:
Title:
QUANTUM GEOPHYSICAL, INC.
By:
-------------------------------------------
Name:
Title:
GEOKINETICS PRODUCTION CO.,
INC.
By:
--------------------------------------------
Name:
Title:
GEOSCIENCE SOFTWARE SOLUTIONS,
INC.
By:
--------------------------------------------
Name:
Title:
SIGNATURE GEOPHYSICAL SERVICES,
INC.
By:
--------------------------------------------
Name:
Title:
LESSOR:
GEOLEASE PARTNERS, L.P.
By: GEOLEASE GP, INC.,
its General Partner
By:
--------------------------------------------
Name: Xxxxxxx Xxxx Xxxxxx
Title: President
