-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KTmOgQzWN7L6iCTvI1l/Dkwx6MQgzbH7fO2t8yqEPr/NtTsQl02JWV9RzDone1bf Ctx8cVaMU1aaJaY8RQaXuQ== 0000890566-99-001353.txt : 19991020 0000890566-99-001353.hdr.sgml : 19991020 ACCESSION NUMBER: 0000890566-99-001353 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19991001 ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19991018 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GEOKINETICS INC CENTRAL INDEX KEY: 0000314606 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 941690082 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-09268 FILM NUMBER: 99730257 BUSINESS ADDRESS: STREET 1: MARATHON OIL TOWER STREET 2: 5555 SAN FELIPE SUITE 780 CITY: HOUSTON STATE: TX ZIP: 77056 BUSINESS PHONE: 7138507600 MAIL ADDRESS: STREET 1: MARATHON OIL TOWER STREET 2: 5555 SAN FELIPE, ST 780 CITY: HOUSTON STATE: TX ZIP: 77056 8-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 - -------------------------------------------------------------------------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): October 1, 1999 GEOKINETICS INC. (Exact name of Registrant as specified in charter) DELAWARE 0-9268 94-1690082 - -------------------------------------------------------------------------------- (State or other jurisdiction of (Commission (IRS Employer incorporation) File Number) Identification No.) 5555 SAN FELIPE, SUITE 780, HOUSTON, TEXAS 77056 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number including area code: (713) 850-7600 ITEM 1. CHANGES IN CONTROL OF REGISTRANT. On October 1, 1999, Registrant entered into a Securities Purchase Agreement (the "PURCHASE AGREEMENT") with DLJ Investment Partners, L.P. ("DLJ") and certain additional investors (collectively, the "PURCHASERS"), pursuant to which Registrant (i) completed a restructuring of its $40,000,000 in 12% Senior Subordinated Notes Due April 2005 (the "PRIOR NOTES"), and (ii) received $4,000,000 in additional senior secured debt financing from the Purchasers and $1,000,000 from three other investors, including Steven A. Webster and William R. Ziegler, two of the Registrant's directors (the "SECURED LOAN"). Pursuant to the Purchase Agreement, Registrant (A) exchanged the Prior Notes for its 13.5% Senior Secured Notes due 2005 in the aggregate principal amount of $45,358,000 issued to the Purchasers (the "2005 NOTES"), (B) issued the Purchasers its 13.5% Senior Secured Notes due 2002 in the aggregate principal amount of up to $6,000,000 (the "2002 NOTES"), (C) granted security interests covering substantially all of the Company's assets as security for the 2005 Notes and the 2002 Notes, (D) caused certain of the Corporation's wholly-owned subsidiaries to execute guarantees of the 2005 Notes and the 2002 Notes, (E) issued warrants to the Purchasers of the 2002 Notes (the "2002 WARRANTS") to purchase 23,250,000 shares of Registrant's Common Stock, $0.01 par value per share (the "COMMON STOCK") at a price of $0.56 per share, and (F) issued warrants to the Purchasers of the 2005 Notes (the "2005 WARRANTS") to purchase 26,818,594 shares of Common Stock at a price of $0.56 per share (the 2005 Warrants, together with the 2002 Warrants, being the "WARRANTS"). Registrant issued 7,618,594 of the 2005 Warrants in exchange for 7,618,594 warrants issued to the Purchasers of the Prior Notes in April 1998. The Warrants were issued in accordance with an Amended and Restated Warrant Agreement executed among the Registrant and the Purchasers. As a result of the issuance of the Warrants, the Purchasers, collectively, have the right to acquire 51.6% of Registrant's outstanding Common Stock on a fully diluted basis. ITEM 5. OTHER EVENTS. Concurrently with the transactions contemplated by the Purchase Agreement, (i) Registrant completed a refinancing of its debt obligations to the principal equipment supplier for Registrant's seismic acquisition operations, and (ii) Steven A. Webster was elected non-executive Chairman of the Executive Committee of the Registrant's Board of Directors. -2- ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL STATEMENTS AND EXHIBITS. (a) Financial Statements of Business Acquired None Required. (b) Pro Forma Financial Information None Required. (c) Exhibits 4.1 Securities Purchase Agreement dated as of October 1, 1999, among Registrant, DLJ Investment Partners, L.P. and certain additional investors. 4.2 Amended and Restated Warrant Agreement dated as of October 1, 1999, among Registrant, DLJ Investment Partners, L.P. and certain additional investors. 4.3 Indenture dated as of October 1, 1999, executed by the Registrant, Geokinetics Production Co., Inc., Quantum Geophysical, Inc., Geoscience Software Solutions, Inc., Signature Geophysical Services, Inc., Reliable Exploration, Incorporated, and Geophysical Development Corporation. 4.4 Amended and Restated Tag Along-Drag Along Agreement dated as of September 30, 1999, among Registrant, DLJ Investment Partners, L.P. and certain additional investors. 99 Restructure Agreement dated October 1, 1999, among Registrant, Geophysical Services, Inc., Quantum Geophysical Services, Inc., Input/Output, Inc. and Global Charter Corporation. -3- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned herein to duly authorized. Dated: October 18, 1999 GEOKINETICS INC. By: /s/ THOMAS J. CONCANNON Thomas J. Concannon, Vice President and Chief Financial Officer -4- EX-4.1 2 EXHIBIT 4.1 ================================================================================ GEOKINETICS INC., THE GUARANTORS NAMED HEREIN and THE PURCHASERS NAMED HEREIN SECURITIES PURCHASE AGREEMENT Senior Secured Notes Warrants to Purchase Common Stock Dated as of October 1, 1999 ================================================================================ TABLE OF CONTENTS (Not Part of Agreement) PAGE ---- PARAGRAPH 1. AUTHORIZATION OF ISSUE OF SECURITIES.....................1 PARAGRAPH 2. ACQUISITION OF SECURITIES................................2 PARAGRAPH 3. CONDITIONS PRECEDENT.....................................3 PARAGRAPH 4. COVENANTS................................................6 PARAGRAPH 5. REPRESENTATIONS AND WARRANTIES..........................10 PARAGRAPH 6. REPRESENTATIONS AND AGREEMENT OF THE PURCHASERS..............................................18 PARAGRAPH 7. DEFINITIONS.............................................19 PARAGRAPH 8. MISCELLANEOUS...........................................24 Schedule I - Subsidiaries EXHIBITS - -------- Exhibit A-1 - Form of 2005 Note Exhibit A-2 - Form of 2002 Note Exhibit B - Form of Warrant Agreement Exhibit C-1 - Certificate of Incorporation Exhibit C-2 - Tag-Drag Agreement Exhibit D-1 - Closing Documents Exhibit D-2 - Forms of Opinion of Counsel Exhibit E - Capitalization of the Company -i- GEOKINETICS INC. SECURITIES PURCHASE AGREEMENT Ladies and Gentlemen: Each of undersigned, Geokinetics Inc., a Delaware corporation (the "Company"), and each of the Guarantors listed on the signature pages hereto, hereby agrees with the parties named on the signature pages hereto (collectively, the "Purchasers") as follows: PARAGRAPH 1. AUTHORIZATION OF ISSUE OF SECURITIES. 1A. GENERAL. The 2005 Notes and 26,818,594 Warrants are being issued in connection with a "plan of reorganization" under Section 368(a)(1)(E) of the Internal Revenue Code of 1986, as amended, in exchange for all of the Senior Subordinated Notes (including accrued and unpaid interest) and the 1998 Warrants. The 2002 Notes and 23,250,000 Warrants are being issued and sold in connection with (i) the funding of the tax payment of Geophysical Development Corporation, a Texas corporation ("GDC"), of approximately $800,000; (ii) the funding of GDC's employee stay bonuses of approximately $1.1 million; and (iii) the provision of funds for working capital and general corporate purposes. Capitalized terms used herein and not otherwise defined have the meanings specified in Paragraph 7. 1B. AUTHORIZATION OF NOTES. The Company has authorized the issuance of (i) its 13 1/2% Senior Secured Notes due 2005 (the "2005 Notes") in tHe aggregate principal amount of up to $45,358,000 originally issued, to be dated the date of issuance thereof, to mature on September 15, 2005, and to be in the form of EXHIBIT A-1 attached hereto, and (ii) its 13 1/2% Senior Secured Notes duE 2002 (the "2002 Notes" and, together with the 2005 Notes, the "Notes") in the aggregate principal amount of up to $6,000,000 originally issued, to be dated the date of issuance thereof, to mature on September 15, 2002, and to be in the form of EXHIBIT A-2 attached hereto. The term "Notes" as used in this agreement (the "Agreement") shall include the promissory notes delivered pursuant to this Agreement, addi- -2- tional Notes which may be issued as interest in accordance with the terms thereof, and each such promissory note delivered in substitution or exchange for any other Note pursuant to any such provision hereof, of such Note or of the Indenture governing such Note. 1C. AUTHORIZATION OF WARRANTS. In connection with the transactions described in Paragraph 1A, the Company has authorized the issuance and delivery to the Purchasers of the 2002 Notes an aggregate of 23,250,000 warrants (the "2002 Warrants"), and to the Purchasers of the 2005 Notes an aggregate of 26,818,594 warrants (the "2005 Warrants" and, together with the 2002 Warrants, the "Warrants"), each Warrant to purchase one share (collectively, the "Warrant Shares") of its common stock, par value $.01 per share (the "Common Stock"), at an exercise price of $.56 per share, such Warrants to be in the form contained in the Warrant Agreement attached hereto as EXHIBIT B and such Common Stock having the rights, restrictions, privileges and preferences set forth in the Certificate of Incorporation of the Company in the form of EXHIBIT C-1 attached hereto (the "Certificate of Incorporation") and being subject to the provisions of the agreement among the Company, Blackhawk Investors, L.L.C., Steven A. Webster, William R. Ziegler and the Holders (the "Tag/Drag Agreement") in the form of EXHIBIT C-2 attached hereto. The Warrants will have the benefit of the registration rights set forth in the Warrant Agreement. 1D. AUTHORIZATION OF GUARANTEES. In connection with the transactions described in Paragraph 1A, each of the Guarantors has authorized the issuance of its unconditional senior guarantee of the 2005 Notes and the 2002 Notes, and in the form of Guarantee attached to EXHIBIT A-1 and EXHIBIT A-2 hereto, respectively (collectively, the "Guarantees"). PARAGRAPH 2. ACQUISITION OF SECURITIES. 2A. ACQUISITION OF SECURITIES. Subject to and upon the terms and conditions herein set forth, each Purchaser agrees, severally and not jointly, to (i) exchange with the Company the Senior Subordinated Notes (including rights to accrued but unpaid interest thereunder) and 1998 Warrants held by such Purchaser, if any, for the principal amount of 2005 Notes and number of 2005 Warrants and (ii) purchase from the Company -3- the principal amount of 2002 Notes and number of 2002 Warrants for an aggregate purchase price equal to the principal amount of such 2002 Notes, in each case as set forth on the signature page hereto of such Purchaser, on October 1, 1999 (the "Date of Closing"). 2B. PURCHASE PRICE ALLOCATION. The Company and the Purchasers agree that the issue prices of the 2002 Notes and the 2002 Warrants for U.S. federal income tax purposes are $628.00 per $1,000 principal amount of 2002 Notes and $.08 per Warrant. 2C. TAG/DRAG AGREEMENT. Each Purchaser by executing its signature page hereto shall be deemed to have executed the Tag/Drag Agreement. PARAGRAPH 3. CONDITIONS PRECEDENT. 3. CONDITIONS TO CLOSING. The obligation of each Purchaser to purchase and pay for the Notes and Warrants to be purchased by it is subject to the satisfaction of the following conditions: 3A. DOCUMENTS TO BE DELIVERED. On or before the Date of Closing, the Purchasers shall have received all of the following, duly executed and delivered: (i) the Notes being exchanged and/or purchased by each Purchaser in the name and denomination set forth on the signature page hereto of such Purchaser; (ii) the Warrants being exchanged and/or purchased by each Purchaser in the name and denomination set forth on the signature page hereto of such Purchaser; (iii) certificates of the Secretary and of the Chairman of the Board or President of the Company and each Guarantor dated the Date of Closing, which shall contain the names and signatures of the officers of the Company and each Guarantor authorized to execute this Agreement and which shall certify to the truth, correctness and completeness of the following exhibits attached hereto as EXHIBIT D-1: (a) a copy of resolutions duly adopted by the Board of Directors of the Company and each Guarantor, in -4- each case in full force and effect at the time this Agreement is entered into, authorizing the execution of this Agreement and the other Transaction Documents delivered or to be delivered in connection herewith on the part of the Company and the Guarantors and the consummation of the transactions contemplated herein and therein, (b) a copy of the charter documents of the Company and each Guarantor and all amendments thereto, certified by the appropriate official of the state of organization, and (c) a copy of the bylaws of the Company and each Guarantor in effect on the Date of Closing; (iv) a certificate (or certificates) as to the valid existence and good standing of the Company and each Guarantor in its respective state of organization, issued by the appropriate authorities of such jurisdiction; (v) a certificate of the President of the Company dated the Date of Closing, in which such officer certifies to the satisfaction of the conditions set out in subsections (i) and (ii) of Paragraph 3B; (vi) favorable opinions of (x) Chamberlain, Hrdlicka, White, Williams & Martin, counsel to the Company, (y) The Bayard Firm, special Delaware counsel to the Company, and (z) local counsel to the Company each dated the Date of Closing and substantially in the form set forth in EXHIBIT D-2, subject only to such qualifications, limitations or exceptions as may be acceptable to each of the Purchasers; and (vii) certificates of the Company's and the Guarantors' good standing and due qualification to do business, issued by appropriate officials in any states where the Company's and the Guarantors' ownership or leasing of their respective properties or the conduct of their respective business requires such qualification. On or before the Date of Closing, the Purchasers and Cahill Gordon & Reindel, counsel for the Purchasers, shall have received such further documents, opinions, certificates and schedules or instruments relating to the business, corporate, legal and financial affairs of the Company and its Subsidiaries as they shall reasonably request. -5- 3B. REPRESENTATIONS; NO DEFAULT. (i) All representations and warranties made by the Company in this Agreement shall be true and correct on and as of the Date of Closing as if such representations and warranties had been made on and as of such date, unless such representation and warranty expressly indicates that it is being made as of any other specific date in which case on and as of such other date. (ii) The Company shall have performed and complied with all agreements and conditions required in this Agreement to be performed or complied with by it on or prior to the Date of Closing. 3C. PURCHASE PERMITTED BY APPLICABLE LAWS. On the Date of Closing, the offer by the Company of, and the purchase of and payment for, the Warrants and the Notes, respectively, on the terms and conditions herein provided (including the use of the proceeds of the sale of such Securities by the Company) shall not violate any applicable law or governmental regulation (including, without limitation, section 5 of the Securities Act or Regulation U, T or X of the Board of Governors of the Federal Reserve System) and shall not subject any Purchaser to any tax, penalty, liability or other onerous condition under or pursuant to any applicable law or governmental regulation. 3D. PROCEEDINGS. On the Date of Closing, all corporate and other proceedings taken or to be taken in connection with the transactions contemplated hereby and all documents incident thereto shall be reasonably satisfactory in substance and form to the Purchasers, and the Purchasers shall have received all such counterpart originals or certified or other copies of such documents as they or their counsel may reasonably request. 3E. OBLIGATIONS. The Company shall have satisfied any other obligations to the Purchasers required to be paid or complied with by it on or prior to the Date of Closing. 3F. IO AGREEMENT. The Company shall have received from Input Output, Inc. ("IO") an agreement on terms and in form and substance satisfactory to the Purchasers to refinance the obligations of the Company to IO. -6- 3G. BOARD OF DIRECTORS. Steven Webster shall have been elected Chairman of the Executive Committee of the Board of the Company and shall have agreed to become Chairman of the Executive Committee the Board of the Company on terms in form and substance satisfactory to the Purchasers. 3H. SECURITY DOCUMENTS. The Company and the Guarantors shall have duly authorized, executed and delivered the General Security Agreement and all other Security Documents and shall have delivered to the collateral agent thereunder, all of the collateral referred to therein and all annotations and all other documents necessary to grant such security interest in such collateral pursuant to the terms of the Security Documents; the Holders shall have a perfected security interest on the collateral pledged under the Security Documents with such priority in interest on such collateral as required thereunder. PARAGRAPH 4. COVENANTS. 4. COVENANTS. To induce the Purchasers to enter into this Agreement and acquire the Notes and the Warrants, the Company warrants, covenants and agrees as follows: 4A. FINANCIAL INFORMATION, REPORTS, NOTICES, ETC. The Company will furnish, or will cause to be furnished, to the Holders copies of the following financial statements, reports, notices and information, at the Company's expense: (i) as soon as available and in any event within 45 days after the end of each Fiscal Quarter of each Fiscal Year of the Company, consolidated balance sheets of the Company as of the end of such Fiscal Quarter and consolidated statements of operations and cash flow of the Company for such Fiscal Quarter and for the period commencing at the end of the previous Fiscal Year and ending with the end of such Fiscal Quarter (which may be the Company's Form 10-QSB), certified by the chief financial officer of the Company, in each case with prior period comparisons and a management's discussion and analysis of financial condition and results of operations; (ii) as soon as available and in any event within 90 days after the end of each Fiscal Year, a copy of the -7- annual audit report for such Fiscal Year for the Company and its Subsidiaries, including therein consolidated balance sheets of the Company as of the end of such Fiscal Year and consolidated statements of operations and cash flow of the Company for such Fiscal Year (which may be the Company's Form 10-KSB), certified in a manner reasonably acceptable to the Holders by Fitts, Roberts & Co., Inc., P.C. or other independent public accountants acceptable to the Holders, with a management's discussion and analysis of financial condition and results of operations; (iii) promptly after (a) the sending or filing thereof, copies of all reports which the Company or any of its Subsidiaries send to any lenders and (b) the sending or filing thereof, all reports and registration statements which the Company or any of its Subsidiaries file with the Securities and Exchange Commission or any national securities exchange; and (iv) upon request by any Holder, as soon as available and in any event within 30 days after the end of each month, monthly financial reports and such other information respecting the condition or operations, financial or otherwise, of the Company and each of its Subsidiaries as such Holder may reasonably request. In the event that, pursuant to the terms of the Notes, an indenture is qualified under the Trust Indenture Act of 1939, as amended, with respect to the Notes, the information required to be furnished pursuant to this Paragraph 4A shall be provided pursuant hereto only to Holders of Warrants. 4B. INFORMATION REQUIRED BY RULE 144A. The Company will, upon the request of any Holder, provide such Holder, and any qualified institutional buyer designated by such Holder, such financial and other information as such Holder may reasonably determine to be necessary in order to permit compliance with the information requirements of Rule l44A under the Securities Act in connection with the resale of Notes or Warrants. For the purpose of this Paragraph 4B, the term "qualified institutional buyer" shall have the meaning specified in Rule l44A under the Securities Act. At the request of holders of 25% or more of the aggregate principal amount of the Notes, the Company will use its best efforts to cause the Notes to be eligible for participation in the book-entry system of The Depository Trust Company. -8- 4C. INDEMNITY. The Company agrees to indemnify each of the Purchasers, as debtholders, shareholders, directors and officers of the Company, as the case may be, upon demand, from and against any and all liabilities, obligations, claims, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements (including reasonable fees of attorneys, accountants, experts and advisors) of any kind or nature whatsoever (in this section collectively called "liabilities and costs") which to any extent (in whole or in part) may be imposed on, incurred by, or asserted against any of the Purchasers arising out of, resulting from or in any other way associated with the execution, delivery or performance of the Transaction Documents or such Purchaser's being a debtholder, shareholder, director or officer of the Company. The foregoing indemnification shall apply whether or not such liabilities and costs are in any way or to any extent caused, in whole or in part, by any negligent act or omission of any kind by such holder, provided only that no Purchaser shall be entitled under this Paragraph 4C to receive indemnification for that portion, if any, of any liabilities and costs which is proximately caused by such Purchaser's willful misconduct. If any Person (including the Company or any of its Affiliates) ever alleges such willful misconduct by a Purchaser, the indemnification provided for in this Paragraph 4C shall nonetheless be paid upon demand, subject to later adjustment or reimbursement, until such time as a court of competent jurisdiction enters a final judgment as to the extent and effect of the alleged willful misconduct. As used in this section the term "Purchaser" shall refer also to each director, officer, agent, attorney, employee, representative and Affiliate of such Purchaser. 4D. OBSERVER RIGHTS OF HOLDERS. From and after the Date of Closing, the Company shall take all such action as may be necessary so as to allow two designees selected by the majority of the Noteholders (as determined by the principal amount of the Notes held by such Noteholders) to serve as observers for the Noteholders to attend each meeting of the Company's Board of Directors and its committees (except when in executive session) as nonvoting observers. 4E. PREEMPTIVE RIGHTS OF HOLDERS. -9- (a) If the Company proposes to issue or sell any equity securities (including but not limited to securities convertible into or exchangeable for Common Stock) at any time, the Company shall give the Holders written notice of such proposal, describing the type of equity securities and the price and the terms upon which the Company proposes to issue the same. For a period of twenty (20) days following the delivery of such notice by the Company, the Company shall be deemed to have irrevocably offered to sell a PRO RATA portion of such equity securities to the Holders, as a group, for the price and upon the terms specified in the notice. Each Holder may exercise its right to purchase such equity securities by giving written notice to the Company within such twenty (20) day period and stating the quantity of equity securities to be purchased by such Holder. Each Holder's PRO RATA portion, for purposes of this Paragraph 4E, is the ratio of the number of Warrants (and Warrant Shares) which such Holder then owns to the total number of shares of Common Stock plus the number of Warrants (and Warrant Shares) then outstanding. As used herein, "issue" includes sales or transfers by the Company of treasury shares. This Paragraph 4E shall not apply to: (i) equity securities issued in a Public Equity Offering, (ii) the issuance of Common Stock pursuant to convertible securities (including warrants and stock options) of the Company outstanding on the Date of Closing, (iii) stock options (and Common Stock issuable upon exercise thereof) that may be granted to the Company's employees under the Company's plans so long as the sum of (x) the number of options outstanding on the Date of Closing, (y) such additional number of options granted after the Date of Closing and (z) the number of options referred to in clauses (x) and (y) above which expire unexercised, shall not exceed 11,633,775 options outstanding at any time (subject to adjustment for stock splits, stock dividends, recapitalization, etc.) and (iv) Common Stock (or securities convertible into Common Stock) issued by the Company to the securityholders of another Person in connection with the acquisition of such Person (whether the acquisition is of stock or assets of such Person or a Subsidiary of such Person). (b) Each Holder will have the right to transfer its rights under the immediately preceding paragraph so long as such Holder transfers at least 250,000 Warrants or Warrant Shares to a single Person in the transaction pursuant to which such rights would be transferred. -10- (c) The preemptive rights set forth in paragraph (a) of this Paragraph 4E shall terminate at such time as (i) (x) the Company consummates a Public Equity Offering with gross proceeds of at least $35,000,000 and (y) the Common Stock is traded on the NASDAQ System or any nationally registered securities exchange, (ii) the Warrants or Warrant Shares shall have been disposed of in accordance with a registration statement that has become effective under the Securities Act or (iii) the Warrants or Warrant Shares shall have been distributed to the public pursuant to Rule 144 (or any successor provision) under the Securities Act. 4F. REISSUANCE OF RETURNED WARRANTS. Upon the receipt by the Company of Warrants returned to it pursuant to Paragraph 6C hereof, the Company will reissue, execute and deliver replacement Warrants to the Purchasers in such amounts as are required pursuant to Paragraph 6C. 4G. AMENDMENT TO CHARTER. The Company will use its best efforts to propose at the next shareholders' meeting of the Company an amendment to the charter of the Company to allow for the preemptive rights described in Paragraph 4E. The Company will use its best efforts to cause its Board of Directors to recommend such amendment for approval. Each Holder agrees to vote any Common Stock it owns in favor of such amendment. PARAGRAPH 5. REPRESENTATIONS AND WARRANTIES. 5. REPRESENTATIONS AND WARRANTIES. To induce the Purchasers to enter into this Agreement and to purchase the Securities, the Company represents and warrants as follows: 5A. ORGANIZATION AND GOOD STANDING. Each of the Company and its Subsidiaries is duly incorporated, validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation, and each has the corporate power and authority to carry on its business as it is currently being conducted and to own, lease and operate its properties, and each is duly qualified and is in good standing as a foreign corporation authorized to do business in each jurisdiction in which the nature of its business or its ownership or leasing of property requires such qualification, except where the failure to be so qualified, individually or in the aggregate, could not -11- reasonably be expected to result in a Material Adverse Effect. Each of the Company's Subsidiaries that is a partnership has been duly formed and is currently existing under the laws of its jurisdiction of formation and has the partnership power and authority to carry on its business as it is currently being conducted and to own, lease and operate its properties, and each is duly qualified to do business in each jurisdiction in which the nature of its business or its ownership or leasing of property requires such qualification, except where the failure to be so qualified, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. 5B. AUTHORIZATION. The Company has taken all corporate action necessary to authorize the execution and delivery by it of each of this Agreement and the other Transaction Documents to which it is a party and to authorize the consummation of the transactions contemplated hereby and thereby and the performance of its obligations hereunder and thereunder. 5C. NO CONFLICTS OR CONSENTS. The execution, delivery and performance of the Transaction Documents, compliance by the Company with all the provisions hereof and thereof and the consummation of the transactions contemplated hereby and thereby will not require any consent, approval, authorization or other order of any court, regulatory body, administrative agency or other governmental body (except as such may be required under the securities or Blue Sky laws of the various states) and will not conflict with or constitute a breach of any of the terms or provisions of, or a default under, the charter or bylaws of the Company or any of its Subsidiaries or any agreement, indenture or other instrument to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries or their respective property is bound, or violate or conflict with any laws, administrative regulations or rulings or court decrees applicable to the Company or any of its Subsidiaries or their respective property. 5D. ENFORCEABLE OBLIGATIONS. Each of the Transaction Documents constitutes a valid and legally binding agreement of the Company, enforceable against it in accordance with its terms (assuming due authorization, execution and delivery of each Transaction Document by any other party thereto), except that enforcement thereof may be subject to (a) bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights gener- -12- ally and (b) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity) and the discretion of any court before which any proceeding therefor may be brought. 5E. WARRANTS. The Warrants have been duly and validly authorized by the Company and, when executed by the Company in accordance with the provisions of the Warrant Agreement, and delivered to and paid for by the Purchasers in accordance with the terms hereof, will be entitled to the benefits of the Warrant Agreement and will constitute valid and binding obligations of the Company enforceable in accordance with their terms, except that the enforcement thereof may be subject to (a) bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights generally and (b) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity) and the discretion of any court before which any proceeding therefor may be brought. 5F. WARRANT SHARES. When issued and paid for in accordance with the terms and conditions contained in the Warrant Agreement, upon exercise of the Warrants, the Warrant Shares will be duly authorized, validly issued, fully paid and non-assessable and will not be subject to any preemptive or similar rights. The Warrant Shares have been duly reserved for issuance in accordance with the terms of the Warrants and the Warrant Agreement. The capitalization of the Company on the Date of Closing is set forth on EXHIBIT E hereto. 5G. NOTES. The Notes have been duly and validly authorized by the Company and, when executed by the Company in accordance with the provisions thereof, and delivered to and paid for by the Purchasers in accordance with the terms hereof (including Notes issued in lieu of cash interest as provided therein), will be entitled to the benefits thereof and will constitute valid and binding obligations of the Company enforceable in accordance with their terms, except that the enforcement thereof may be subject to (a) bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights generally and (b) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity) and the discretion of any court before which any proceeding therefor may be brought. -13- 5H. GUARANTEES. The Guarantees have been duly and validly authorized by each of the Guarantors and, when executed by each Guarantor and affixed to the Notes (including Notes issued in lieu of cash interest as provided therein), will be entitled to the benefits thereof and will constitute valid and binding obligations of each such Guarantor enforceable in accordance with their terms, except that the enforcement thereof may be subject to (a) bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights generally and (b) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity) and the discretion of any court before which any proceeding therefor may be brought. 5I. NO CONFLICT. Neither the Company nor any of its Subsidiaries is in violation of its respective charter or bylaws or in default in the performance of any obligation, agreement or condition contained in any bond, debenture, note or any other evidence of indebtedness or in any other agreement, indenture or instrument material to the conduct of the business of the Company and its Subsidiaries, taken as a whole, to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries or property is bound except for such violations or defaults which, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. 5J. FINANCIAL STATEMENTS. The financial statements, together with related schedules and notes contained in the Exchange Act Reports, present fairly the consolidated financial position, results of operations and changes in financial position of the Company on the basis stated in the Exchange Act Reports at the respective dates or for the respective periods to which they apply; such statements and related schedules and notes have been prepared in accordance with GAAP consistently applied throughout the periods involved, except as disclosed therein; and the other financial and statistical information and data set forth in the Exchange Act Reports is, in all material respects, accurately presented and prepared on a basis consistent with such financial statements and the books and records of the Company. 5K. NO UNDISCLOSED LIABILITIES. Except as fully reflected or reserved against in the financial statements and the notes thereto referred to in Paragraph 5J, there are no li- -14- abilities or obligations with respect to the Company or any of its Subsidiaries of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether or not due) which, either individually or in the aggregate, would be material to the Company and its Subsidiaries, taken as a whole. The Company does not know of any basis for the assertion against the Company or any of its Subsidiaries of any liability or obligation of any nature whatsoever that is not fully reflected in such financial statements which, either individually or in the aggregate, could reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole. 5L. FULL DISCLOSURE. No certificate, statement or other information delivered herewith or heretofore by the Company to the Purchasers in connection with the negotiation of this Agreement or in connection with any transaction contemplated hereby (including without limitation the Exchange Act Reports) contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements contained herein or therein not misleading as of the date made or deemed made. There is no fact known to the Company that has not been disclosed to the Purchasers which, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. 5M. LITIGATION. There are no legal or governmental proceedings pending to which the Company or any of its Subsidiaries is a party or of which any of their respective property is the subject which could reasonably be expected to result in a Material Adverse Effect, and, to the best knowledge of the Company, no such proceedings are threatened or contemplated. 5N. ENVIRONMENTAL AND OTHER LAWS. Neither the Company nor any of its Subsidiaries has violated any foreign, federal, state or local law or regulation relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants ("Environmental Laws"), nor any federal or state law relating to discrimination in the hiring, promotion or pay of employees nor any applicable federal or state wages and hours laws, nor any provisions of the Employee Retirement Income Security Act or the rules and regulations promulgated thereunder, which in each case could reasonably be expected to result in any Material Adverse Effect. -15- 5O. PERMITS. Each of the Company and its Subsidiaries has such permits, licenses, franchises, consents, approvals, orders, certificates and authorizations of governmental or regulatory authorities ("permits"), including, without limitation, under any applicable Environmental Laws, as are necessary to own, lease and operate its respective properties and to conduct its business except for those the absence of which, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect; each of the Company and its Subsidiaries has fulfilled and performed all of its obligations with respect to such permits and no event has occurred which allows, or after notice or lapse of time would allow, revocation or termination thereof or results in any other impairment of the rights of the holder of any such permit, in each case where the same, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect; each permit is in full force and effect; each of the Company and its Subsidiaries is operating in compliance with its permits, and there are no proceedings pending or, to the Company's knowledge, threatened against the Company or any of its Subsidiaries that seek to cause any permit of any of them to be revoked, withdrawn, canceled, suspended or not renewed, except where the failure of a permit to be in full force or effect or noncompliance with a permit could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. 5P. TITLE TO PROPERTIES. Except as otherwise set forth in the Exchange Act Reports or such as are not material to the business, prospects, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole, each of the Company and its Subsidiaries has good and marketable title, free and clear of all Liens, claims, encumbrances and restrictions, to all property and assets described in the Exchange Act Reports as being owned by them. All leases to which the Company or any of its Subsidiaries is a party are valid and binding and no default has occurred or is continuing thereunder, which, individually or in the aggregate, could reasonably be expected to result in any Material Adverse Effect; and the Company and its Subsidiaries enjoy peaceful and undisturbed possession under all such leases to which any of them is a party as lessee other than such exceptions that, individually or in the aggregate, could not reasonably be expected to result in any Material Adverse Effect. -16- 5Q. INSURANCE. Each of the Company and its Subsidiaries maintains reasonably adequate insurance. 5R. REPORTS. Except that the Company's Form 10-KSB for the fiscal year ended December 31, 1998 did not contain the required financial statements and management's discussion and analysis of financial condition and results of operations, each of the Company and its Subsidiaries has timely filed all material reports, data and other information required by any other regulatory agency with authority to regulate the Company or its Subsidiaries, or the business of any of them in any manner; and each of the Company and its Subsidiaries is in compliance with all rules, regulations and requirements of all regulatory agencies, except where such noncompliance, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. 5S. INVESTMENT COMPANY. Neither the Company nor any of its Subsidiaries is, or upon application of the proceeds from the sale of the Securities will be, an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended. 5T. INTELLECTUAL PROPERTY. Each of the Company and its Subsidiaries owns and possesses all material licenses, patents, patent rights, patent applications, inventions, trade secrets, know-how, proprietary information and techniques, including processes, trademarks, service marks, trade names, computer software and copyrights described or referred to in the Exchange Act Reports or owned or used by it or that are necessary for and/or used in the conduct of its business as described in the Exchange Act Reports. Any registrations covering such patents, trademarks, service marks, trade names or copyrights owned by, or licensed to the Company or any of its Subsidiaries are valid and subsisting, have not been cancelled, abandoned or otherwise terminated and, if applicable, have been duly issued or filed. Neither the Company nor any of its Subsidiaries is aware of or has received any notice of infringement of, or conflict or claimed conflict with, asserted rights of others with respect to any licenses, patents, patent rights, patent applications, inventions, trade secrets, know-how, proprietary information or techniques, including processes, trademarks, service marks, trade names, computer software or copyrights. -17- 5U. OFFERING OF NOTES OR WARRANTS. Except for solicitations to offerees reasonably believed by the Company to be "accredited investors" as such term is defined in Regulation D of the Securities Act, neither the Company nor any agent acting on its behalf has, directly or indirectly, offered the Notes or Warrants or any similar security of the Company for sale to, or solicited any offers to buy the Notes or Warrants or any similar security of the Company from, or otherwise approached or negotiated with respect thereto with, any Person other than the Purchasers, and neither the Company nor any agent acting on its behalf has taken or will take any action which would subject the issuance or sale of the Notes or Warrants to the provisions of section 5 of the Securities Act or to the registration provisions of any securities or Blue Sky law of any applicable jurisdiction in such a manner as to require that the Notes or Warrants actually be registered. 5V. USE OF PROCEEDS. Neither the Company nor any of its Subsidiaries owns or has any present intention of acquiring any "margin stock" as defined in Regulation U of the Board of Governors of the Federal Reserve System ("margin stock"). The proceeds of sale of the Notes and Warrants will be used as set forth in Paragraph 1A. None of such proceeds will be used, directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of purchasing or carrying any margin stock or for the purpose of maintaining, reducing or retiring any indebtedness which was originally incurred to purchase or carry any stock that is currently a margin stock or for any other purpose which might constitute this transaction a "purpose credit" within the meaning of such Regulation U. Neither the Company nor any agent acting on its behalf has taken or will take any action which could reasonably be expected to cause this Agreement or the Notes to violate Regulation U, Regulation T or any other regulation of the Board of Governors of the Federal Reserve System or to violate the Exchange Act, in each case as in effect now or as the same may hereafter be in effect. Any certificate signed by any officer of the Company and delivered to any Purchaser or to counsel for the Purchasers shall be deemed a representation and warranty by the Company to each Purchaser as to the matters covered thereby. -18- PARAGRAPH 6. REPRESENTATIONS AND AGREEMENT OF THE PURCHASERS. 6A. ACKNOWLEDGMENTS OF THE PURCHASERS. Each Purchaser understands and acknowledges to the Company that: (i) the offering and sale of the Notes and Warrants is intended to be exempt from registration under the Securities Act by virtue of the provisions of Section 4(2) of the Securities Act; (ii) there is no existing public or other market for the Notes and Warrants and there can be no assurance that such Purchaser will be able to sell or dispose of such Purchaser's Notes and Warrants; (iii) the Notes and Warrants have not been registered under the Securities Act and must be held indefinitely unless they are subsequently registered under the Securities Act or such sale is permitted pursuant to an available exemption from such registration requirement; (iv) if any transfer of the Notes and Warrants is to be made in reliance on an exemption under the Securities Act, the Company may require an opinion of counsel reasonably satisfactory to it that such transfer may be made pursuant to an exemption under the Securities Act; and (v) that the Securities will have the legends contained on the forms thereof attached as exhibits hereto. 6B. REPRESENTATIONS OF THE PURCHASERS. Each Purchaser, severally and not jointly, represents and warrants to the Company that: (i) the Securities to be acquired by it pursuant to this Agreement are being acquired for its own account, not as a nominee or agent for any other Person, and without a view to the distribution of such Notes and Warrants or any interest therein in violation of the Securities Act; (ii) it is an "Accredited Investor" as such term is defined in Regulation D under the Securities Act and has such knowledge and experience in financial and business matters so as to be capable of evaluating the merits and -19- risks of its investment in the Securities, and such Purchaser is capable of bearing the economic risks of such investment and is able to bear a complete loss of its investment in the Securities; (iii) it has been provided, to its satisfaction, the opportunity to ask questions concerning the terms and conditions of the offering and sale of the Securities, has had all such questions answered to its satisfaction and has been supplied all additional information as it has requested; and (iv) the execution, delivery, and performance of this Agreement is within such Purchaser's powers (corporate or otherwise) and has been duly authorized by all requisite action (corporate or otherwise). 6C. RETURN AND REALLOCATION OF WARRANTS UPON ADDITIONAL Investment. The Purchasers agree that if within 60 days after the Date of Closing Blackhawk or its designees shall purchase additional 2002 Notes yielding gross cash proceeds to the Company of up to $1,000,000, (i) the PRO RATA allocation of the 2002 Warrants issued to the Purchasers pursuant to this Agreement shall be adjusted to reflect such additional investment and (ii) each Purchaser will return the 2002 Warrants that it received on the Date of Closing to the Company in order that the Company may issue, execute and deliver replacement Warrants in such amounts as are required pursuant to clause (i) above. 6D. TERMINATION OF 2005 WARRANTS. The Purchasers of the 2005 Notes agree that 4,800,000 of the 2005 Warrants shall be terminated, on a PRO RATA basis for each Purchaser of 2005 Notes, on each Interest Payment Date (as defined in the 2005 Notes) through and including September 15, 2000 on which the Company pays all interest due on the 2005 Notes on such Interest Payment Date in cash. PARAGRAPH 7. DEFINITIONS. 7. DEFINITIONS. For the purpose of this Agreement, the terms defined in the indenture attached as part of EXHIBIT A-1 hereto (the "Indenture") shall have the respective meanings set forth in the Indenture, except that terms defined -20- in this Agreement shall have the respective meanings specified herein, and the following terms shall have the meanings specified with respect thereto below (such meanings to be equally applicable to both the singular and plural forms of the terms defined): "1998 WARRANTS" means the warrants to purchase up to 7,618,594 shares of Common Stock of the Company issued to the Original Purchasers pursuant to the Original Purchase Agreement. "2002 NOTES" has the meaning set forth in Paragraph 1B. "2002 WARRANTS" has the meaning set forth in Paragraph 1C. "2005 NOTES" has the meaning set forth in Paragraph 1B. "2005 WARRANTS" has the meaning set forth in Paragraph 1C. "ALL OR SUBSTANTIALLY ALL" shall have the meaning given such phrase in the Revised Model Business Corporation Act. "BLACKHAWK" means Blackhawk Investors, L.L.C. or affiliates thereof. "COMMON STOCK" has the meaning set forth in Paragraph 1C. "DATE OF CLOSING" has the meaning set forth in Paragraph 2A. "DLJ HOLDERS" means DLJ Investment Partners, L.P. and any Affiliate thereof holding Notes or Warrants. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "EXCHANGE ACT REPORTS" means Form 10-QSB filed on August 16, 1999 for the fiscal quarter ended June 30, 1999, Form 8-K filed on August 12, 1999, Form 10-QSB filed on May 17, -21- 1999 for the fiscal quarter ended March 31, 1999, the Company's Annual Report on Form 10-KSB (as supplemented by the Notification of Late Filing filed on Form NT 10-K) for the year ended December 31, 1998 and Form 8-K filed on March 4, 1999, in each case as filed with the Securities and Exchange Commission, and any other reports filed by the Company with the Commission and delivered to the Purchasers prior to the Date of Closing. "FISCAL QUARTER" shall mean a three-month period ending on March 31, June 30, September 30 or December 31 of any year. "FISCAL YEAR" means a twelve-month period ending on December 31 of any year. "GENERAL SECURITY AGREEMENT" means the Security Agreement executed and delivered by the Company and each Guarantor substantially in the form of EXHIBIT C to the Indenture, except for such changes as shall have been approved by the trustee under the Indenture, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms and the terms of the Indenture. "GUARANTEES" has the meaning set forth in Paragraph 1D. "GUARANTORS" means, collectively, each Person named as such on the signature pages hereto and each Person executing a Guarantee under any Transaction Document now or hereafter. "HOLDER" means any holder of Notes, Warrants or Warrant Shares from time to time. "LIEN" means, with respect to any property or assets, any right or interest therein of a creditor to secure Indebtedness owed to such Person or any other arrangement with such creditor which provides for the payment of such Indebtedness out of such property or assets or which allows such Person to have such Indebtedness satisfied out of such property or assets prior to the general creditors of any owner thereof, including without limitation any lien, mortgage, security interest, pledge, deposit, production payment, rights of a vendor under any title retention or conditional sale agreement or lease substantially equivalent thereto, or any other charge or encumbrance for security purposes, whether arising by law or agree- -22- ment or otherwise, but excluding any right of offset which arises without agreement in the ordinary course of business. "MATERIAL ADVERSE EFFECT" means a material adverse effect to the business, condition (financial or otherwise), assets, liabilities or results of operations or prospects of the Company and its Subsidiaries, taken as a whole, or the ability or obligation of the Company to perform on a timely basis its obligations under this Agreement or the other Transaction Documents. "NOTES" has the meaning set forth in Paragraph 1B. "ORIGINAL PURCHASE AGREEMENT" means the Securities Purchase Agreement dated April 30, 1998 among the Company and the Original Purchasers relating to the issuance of and sale by the Company to the Original Purchasers of $40,000,000 aggregate principal amount of the 12% Senior Subordinated Notes of the Company due 2005 and warrants to purchase up to 7,618,594 shares of Common Stock of the Company. "ORIGINAL PURCHASERS" means the parties purchasing the 1998 Warrants and the Senior Subordinated Notes named on the signature pages of the Original Purchase Agreement. "SECURITIES" means the Notes and the Warrants. "SECURITIES ACT" means the Securities Act of 1933, as amended. "SECURITY AGREEMENTS" means and includes the General Security Agreement and any other general security agreements delivered pursuant to Section 4.25 or 4.26 of the Indenture. "SECURITY DOCUMENTS" means each of the Security Agreements and any other documents utilized to pledge as collateral for the obligations owing to the trustee under the Indenture or any Holder pursuant to the terms of this Indenture, the Notes, the Guarantees and each Security Document or secured by any of the Security Documents, any property or assets of whatever kind or nature. "SENIOR SUBORDINATED NOTES" means the 12% Senior Subordinated Notes due 2005 of the Company issued to the Original Purchasers pursuant to the Original Purchase Agreement. -23- "SUBSIDIARIES" means, collectively, each direct and indirect subsidiary of the Company, as set forth on SCHEDULE I attached hereto (each, a "Subsidiary"). "TAG/DRAG AGREEMENT" has the meaning set forth in Paragraph 1C. "TRANSACTION DOCUMENTS" means this Agreement, the Notes, the Guarantees, the Warrants, the Warrant Agreement, the Security Documents, the Tag/Drag Agreement, and all other agreements, certificates, documents, instruments and writings at any time delivered in connection herewith or therewith. "TRANSFEREE" means any direct or indirect transferee of all or any part of any Security purchased under this Agreement. "WARRANT" has the meaning set forth in Paragraph 1C. "WARRANT AGREEMENT" means the Amended and Restated Warrant Agreement by and among, inter alia, the Company and the Purchasers dated the Date of Closing, in the form of EXHIBIT B hereto, as amended or supplemented from time to time. "WARRANT SHARES" has the meaning set forth in Paragraph 1C. 7A. TERMS AND DETERMINATIONS. Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all determinations with respect to accounting matters hereunder shall be made, and all unaudited financial statements and certificates and reports as to financial matters required to be furnished hereunder shall be prepared in accordance with GAAP as in effect from time to time, applied on a basis consistent with the most recent financial statements contained in the Company's Exchange Act Reports, except as set forth in such unaudited statements. -24- PARAGRAPH 8. MISCELLANEOUS. 8. MISCELLANEOUS. 8A. EXPENSES. The Company agrees, whether or not the transactions contemplated hereby or the other Transaction Documents shall be consummated, to pay, and save the Purchasers and any Transferee harmless against liability for the payment of, all reasonable out-of-pocket expenses arising in connection with such transactions promptly (and, in any event, within 30 days after any invoice or other statement or notice), including (i) all reasonable fees and expenses of Cahill Gordon & Reindel, special counsel to the Purchasers, in connection with this Agreement, the other Transaction Documents and the transactions contemplated hereby and thereby, (ii) all document production and duplication charges and the reasonable fees and expenses of one counsel engaged by the Purchasers or such Transferees in connection with any subsequent proposed modification of, or proposed consent under, this Agreement or the other Transaction Documents whether or not such proposed modification shall be effected or proposed consent granted, and (iii) the costs and expenses, including reasonable attorneys' fees, incurred by the Purchasers or such Transferee in enforcing (or determining whether or how to enforce) any rights under this Agreement or the other Transaction Documents or in responding to any subpoena or other legal process or informal investigative demand issued in connection with this Agreement, the other Transaction Documents or the transactions contemplated hereby or thereby or by reason of the Purchasers' or such Transferee's having acquired any Security, including without limitation costs and expenses incurred in any bankruptcy case. The obligations of the Company this Paragraph 8A shall survive the transfer of any Security or portion thereof or interest therein by any Purchaser or any Transferee, and the payment of any Security. 8B. CONSENT TO AMENDMENTS. Except as otherwise expressly provided herein, the provisions of this Agreement may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of each of the holders of Notes and/or Warrants, as the case may be, purchased hereunder. -25- 8C. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT. All representations and warranties contained herein or made in writing by or on behalf of the Company in connection herewith shall survive the execution and delivery of this Agreement, the Notes, the transfer by any Purchaser of any Note or Warrant or portion thereof or interest therein, the payment of any Note and the exercise of any Warrant, and may be relied upon by any Transferee, regardless of any investigation made at any time by or on behalf of any Purchaser or any Transferee. Subject to the preceding sentence, this Agreement and the other Transaction Documents embody the entire agreement and understanding between each Purchaser and the Company and supersede all prior agreements and understandings relating to the subject matter hereof, including, without limitation, the provisions of Paragraph 4 (Covenants) of the Original Purchase Agreement other than Paragraph 4C thereof. 8D. SUCCESSORS AND ASSIGNS. All covenants and other agreements in this Agreement contained by or on behalf of any of the parties hereto shall bind and inure to the benefit of the respective successors and assigns of the parties hereto (including, without limitation, any Transferee) whether so expressed or not. 8E. NOTICES. All notices or other communications provided for hereunder shall be in writing and sent by telecopy or nationwide overnight delivery service (with charges prepaid) and (i) if to any Purchaser, addressed to it at the address specified for such communications on the signature pages hereof, or at such other address as such Purchaser shall have specified to the Company in writing, (ii) if to any other Holder, addressed to such other Holder at such address as such other Holder shall have specified to Company in writing or, if any such other Holder shall not have so specified an address to the Company, then addressed to such other Holder in care of the last Holder which shall have so specified an address to the Company and (iii) if to the Company or the Guarantors, addressed to Geokinetics Inc. at 8401 Westheimer, Suite 150, Houston, Texas 77063, Attention: Chairman of the Board, or at such other address as the Company shall have specified to the holder of each Security in writing. 8F. SATISFACTION REQUIREMENT. If any agreement, certificate or other writing, or any action taken or to be taken, is by the terms of this Agreement required to be satis- -26- factory to the Holders, the determination of such satisfaction shall be made by the Holders in the sole and exclusive judgment (exercised in good faith) of the Person or Persons making such determination. 8G. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF DELAWARE WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. Any legal action or proceeding with respect to this Agreement or any other Transaction Document may be brought in the courts of the State of New York, of the State of Delaware, of the United States for the Southern District of New York or of the United States for the District of Delaware, and, by execution and delivery of this Agreement, each of the Company and the Guarantors hereby irrevocably accepts for itself and in respect of its property, generally and unconditionally, the non-exclusive jurisdiction of the aforesaid courts. Each of the Company and the Guarantors further irrevocably consents to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to it at its address for notices pursuant to Paragraph 8E, such service to become effective 5 days after such mailing. Each of he Company and the Guarantors hereby irrevocably appoints CT Corporation System and such other persons as may hereafter be selected by CT Corporation System irrevocably agreeing in writing to serve as its agent for service of process in respect of any such action or proceeding. Nothing herein shall affect the right of any Holder to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against the Company in any other jurisdiction. The Company hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Agreement or any other Transaction Document brought in the courts referred to above and hereby further irrevocably waive and agree not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum. 8H. SEVERABILITY. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the re- -27- maining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 8I. DESCRIPTIVE HEADINGS. The descriptive headings of the several paragraphs of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. 8J. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument. If you are in agreement with the foregoing, please sign the form of acceptance on the enclosed counterpart of this letter and return the same to the Company whereupon this letter shall become a binding agreement by and among the Company, the Guarantors and each of you. Very truly yours, THE COMPANY: GEOKINETICS INC. By: /s/ THOMAS J. CONCANNON Name: Thomas J. Concannon Title: Vice President THE GUARANTORS: GEOPHYSICAL DEVELOPMENT CORPORATION By: /s/ MICHAEL A. DUNN Name: Michael A. Dunn Title: President QUANTUM GEOPHYSICAL, INC. By: /s/ LYNN A. TURNER Name: Lynn A. Turner Title: President GEOKINETICS PRODUCTION CO., INC. By: /s/ THOMAS J. CONCANNON Name: Thomas J. Concannon Title: Treasurer GEOSCIENCE SOFTWARE SOLUTIONS, INC. By: /s/ MICHAEL A. DUNN Name: Michael A. Dunn Title: President RELIABLE EXPLORATION, INCORPORATED By: /s/ LYNN A. TURNER Name: Lynn A. Turner Title: President SIGNATURE GEOPHYSICAL SERVICES, INC. By: /s/ THOMAS J. CONCANNON Name: Thomas J. Concannon Title: Treasurer SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT Accepted and Agreed as of the date first above written: DLJ INVESTMENT PARTNERS, L.P. Principal Amount of 2005 Notes Exchanged: $19,243,132 By: DLJ INVESTMENT PARTNERS, INC., Its General Partner Number of 2005 Warrants Exchanged: 11,377,789 By: /s/ Principal Amount of 2002 Name: Notes Purchased: $1,697,000 Title: Number of 2002 Warrants Purchased: 7,891,050 Address of Purchaser: Mr. John Moriarty DLJ Investment Funding, Inc. 277 Park Avenue New York, NY 10172 Telecopy No.: (212) 892-7552 Designated Bank: Citibank, N.A. ABA Number: 021-000-089 Address: 111 Wall Street New York, NY 10005 Account No.: 4061-0209 Attention: Fran Argento Taxpayer I.D. Number: 13-3887953 (if registered in the name of a nominee, the nominee Taxpayer I.D. Number) Nominee (name in which Notes are to be registered, if different than name of Purchaser) SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT Accepted and Agreed as of the date first above written: DLJ INVESTMENT FUNDING, INC. Principal Amount of 2005 Notes Exchanged: $2,741,891 By: /s/ Number of 2005 Warrants Name: Exchanged: 1,621,184 Title: Principal Amount of 2002 Notes Purchased: $242,000 Number of 2002 Warrants Purchased: 1,125,300 Address of Purchaser: Mr. John Moriarty DLJ Investment Funding, Inc. 277 Park Avenue New York, NY 10172 Telecopy No.: (212) 892-7552 Designated Bank: Citibank, N.A. ABA Number: 021-000-089 Address: 111 Wall Street New York, NY 10005 Account No.: 4061-0209 Attention: Fran Argento Taxpayer I.D. Number: 13-3887953 (if registered in the name of a nominee, the nominee Taxpayer I.D. Number) Nominee (name in which Notes are to be registered, if different than name of Purchaser) __________________________________ SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT Accepted and Agreed as of the date first above written: DLJ ESC II L.P. Principal Amount of 2005 Notes Exchanged: $1,827,927 By: DLJ LBO PLANS MANAGEMENT CORPORATION, its Number of 2005 Warrants General Partner Exchanged: 1,080,789 Principal Amount of 2002 By: /s/ Notes Purchased: $161,000 Name: Title: Number of 2002 Warrants Purchased: 748,650 Address of Purchaser: Mr. John Moriarty DLJ ESC II L.P. 277 Park Avenue New York, NY 10172 Telecopy No.: (212) 892-7552 Designated Bank: Citibank, N.A. ABA Number: 021-000-089 Address: 111 Wall Street New York, NY 10005 Account No.: 4061-0209 Attention: Fran Argento Taxpayer I.D. Number: 13-3887953 (if registered in the name of a nominee, the nominee Taxpayer I.D. Number) Nominee (name in which Notes are to be registered, if different than name of Purchaser) __________________________________ SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT Accepted and Agreed as of the date first above written: SPINDRIFT PARTNERS, L.P. Principal Amount of 2005 Notes Exchanged: $4,252,312.50 By: WELLINGTON MANAGEMENT COMPANY, LLP, its Number of 2005 Warrants Investment Advisor Exchanged: 2,514,243 Principal Amount of 2002 By: /s/ CYNTHIA M. CLARKE Notes Purchased: $375,000 Name: Cynthia M. Clarke Title: Vice President, General Counsel Number of 2002 Warrants Purchased: 1,743,750 Address of Purchaser: 75 State Street Boston, MA 02109 Attention: Jonathan Ashe Telephone No. (617) 790-8637 Telecopy No.: (617) 310-1864 Designated Bank: Citibank, New York ABA Number: 021000089 Address: One Pierrepont Plaza Brooklyn, NY 11201 Account No.: Attention: Taxpayer I.D. Number: 04-3263949 (if registered in the name of a nominee, the nominee Taxpayer I.D. Number) Nominee (name in which Notes are to be registered, if different than name of Purchaser) __________________________________ SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT Accepted and Agreed as of the date first above written: SPINDRIFT INVESTORS (BERMUDA) Principal Amount of 2005 L.P. Notes Exchanged: $1,417,437.50 By: WELLINGTON MANAGEMENT Number of 2005 Warrants COMPANY, LLP, its Exchanged: 838,081 Investment Advisor Principal Amount of 2002 Notes Purchased: $125,000 By: /s/ CYNTHIA M. CLARKE Name: Cynthia M. Clarke Number of 2002 Warrants Title: Vice President, General Counsel Purchased: 581,250 Address of Purchaser: 75 State Street Boston, MA 02109 Attention: Jonathan Ashe Telephone No. (617) 790-8637 Telecopy No.: (617) 310-1864 Designated Bank: Citibank, New York ABA Number: 021000089 Address: One Pierrepont Plaza Brooklyn, NY 11201 Account No.: Attention: Taxpayer I.D. Number: (if registered in the name of a nominee, the nominee Taxpayer I.D. Number) Nominee (name in which Notes are to be registered, if different than name of Purchaser) __________________________________ SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT Accepted and Agreed as of the date first above written: CHASE EQUITY ASSOCIATES, L.P. Principal Amount of 2005 Notes Exchanged: $11,339,500 By: CHASE CAPITAL PARTNERS, its General Partner Number of 2005 Warrants Exchanged: 6,704,649 By: /s/ Principal Amount of 2002 Name: Notes Purchased: $1,000,000 Title: Number of 2002 Warrants Purchased: 4,650,000 Address of Purchaser: Chase Equity Associates Direct 380 Madison Avenue, 12th Floor New York, New York 10017 Telecopy No.: Designated Bank: Chase Manhattan Bank ABA Number: 021 000 021 Address: 401 Madison Avenue New York, New York 10017 Account No.: Attention: Taxpayer I.D. Number: 13-3371826 (if registered in the name of a nominee, the nominee Taxpayer I.D. Number) Nominee (name in which Notes are to be registered, if different than name of Purchaser) __________________________________ SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT Accepted and Agreed as of the date first above written: MHR CAPITAL PARTNERS LP Principal Amount of 2005 Notes Exchanged: $3,401,850 By: MHR ADVISORS LLC Number of 2005 Warrants Exchanged: 2,011,395 By: /s/ Name: Principal Amount of 2002 Title: Manager Notes Purchased: $300,000 Number of 2002 Warrants Purchased: 1,395,000 Address of Purchaser: 40 West 57th Street New York, New York 10019 Telecopy No.: (212) 262-9356 Designated Bank: Chase Manhattan Bank ABA Number: 021-000-021 Address: 401 Madison Avenue New York, New York 10017 Account No.: Attention: Taxpayer I.D. Number: 13-3923564 (if registered in the name of a nominee, the nominee Taxpayer I.D. Number) Nominee (name in which Notes are to be registered, if different than name of Purchaser) __________________________________ SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT Accepted and Agreed as of the date first above written: Principal Amount of 2005 Notes Exchanged: $566,975 Number of 2005 Warrants /s/ PAUL B. LOYD, JR. Exchanged: 335,232 Name: Paul B. Loyd, Jr. Principal Amount of 2002 Notes Purchased: $50,000 Number of 2002 Warrants Purchased: 232,500 Address of Purchaser: Telecopy No.: Designated Bank: Chase Manhattan Bank ABA Number: 021 000 021 Address: 401 Madison Avenue New York, New York 10017 Account No.: Attention: Taxpayer I.D. Number: ###-##-#### (if registered in the name of a nominee, the nominee Taxpayer I.D. Number) Nominee (name in which Notes are to be registered, if different than name of Purchaser) __________________________________ SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT Accepted and Agreed as of the date first above written: WHITTIER VENTURES LLC Principal Amount of 2005 Notes Exchanged: $566,975 Number of 2005 Warrants By: /s/ DAVID A. DAHL Exchanged: 335,232 Name: David A. Dahl Title: President Principal Amount of 2002 Notes Purchased: $50,000 Number of 2002 Warrants Purchased: 232,500 Address of Purchaser: Whittier Ventures LLC c/o Whittier Trust Co. 1600 Huntington Drive So. Pasadena, CA 91030 Telecopy No.: (626) 441-0420 Designated Bank: Union Bank of California ABA Number: 122-000-496 Address: 445 N. Figueroa Los Angeles, CA Account No.: Attention: Taxpayer I.D. Number: (if registered in the name of a nominee, the nominee Taxpayer I.D. Number) Nominee (name in which Notes are to be registered, if different than name of Purchaser) __________________________________ SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT Accepted and Agreed as of the date first above written: SOMERSET CAPITAL PARTNERS Principal Amount of 2002 Notes Purchased: $700,000 Number of 2002 Warrants By: /s/ WILLIAM R. ZIEGLER Purchased: 3,255,000 Name: William R. Ziegler Title: General Partner Address of Purchaser: Somerset Capital Partners 254 Franklin Street Buffalo, New York 14202 Telecopy No.: (716) 842-2514 Designated Bank: ABA Number: Address: Account No.: Attention: Taxpayer I.D. Number: 16-1506952 (if registered in the name of a nominee, the nominee Taxpayer I.D. Number) Nominee (name in which Notes are to be registered, if different than name of Purchaser) __________________________________ SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT Accepted and Agreed as of the date first above written: Steven A. Webster Principal Amount of 2002 Notes Purchased: $150,000 Number of 2002 Warrants By: /s/ STEVEN A. WEBSTER Purchased: 697,500 Name: Steven A. Webster Address of Purchaser: Steven A. Webster 1908 River Oaks Blvd. Houston, Texas 77019 Telecopy No.: (713) 520-0362 Designated Bank: ABA Number: Address: Account No.: Attention: Taxpayer I.D. Number: ###-##-#### (if registered in the name of a nominee, the nominee Taxpayer I.D. Number) Nominee (name in which Notes are to be registered, if different than name of Purchaser) __________________________________ SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT Accepted and Agreed as of the date first above written: William R. Ziegler Principal Amount of 2002 Notes Purchased: $150,000 Number of 2002 Warrants By: /s/ WILLIAM R. ZIEGLER Purchased: 697,500 Name: William R. Ziegler Individually Address of Purchaser: William R. Ziegler 20 Pine Brook Road Bedford, New York 10506 Telecopy No.: (914) 234-0103 Designated Bank: ABA Number: Address: Account No.: Attention: Taxpayer I.D. Number: ###-##-#### (if registered in the name of a nominee, the nominee Taxpayer I.D. Number) Nominee (name in which Notes are to be registered, if different than name of Purchaser) __________________________________ EX-4.2 3 EXHIBIT 4.2 AMENDED AND RESTATED WARRANT AGREEMENT AMONG GEOKINETICS INC. and the parties named herein Dated as of April 30, 1998 and Amended and Restated as of October 1, 1999 TABLE OF CONTENTS(1) PAGE ---- SECTION 1. Warrant Certificates.................................... 2 SECTION 2. Execution of Warrant Certificates....................... 2 SECTION 3. Registration............................................ 3 SECTION 4. Registration of Transfers and Exchanges................. 3 SECTION 5. Warrants; Exercise of Warrants.......................... 6 SECTION 6. Payment of Taxes........................................ 8 SECTION 7. Mutilated or Missing Warrant Certificates............... 9 SECTION 8. Reservation of Warrant Shares........................... 9 SECTION 9. Obtaining Stock Exchange Listings....................... 10 SECTION 10. Adjustment of Number of Warrant Shares Issuable.............................................. 10 SECTION 11. Fractional Interests.................................... 22 SECTION 12. Notices to Warrant Holders.............................. 22 SECTION 13. Registration Rights..................................... 24 SECTION 14. Notices to Company and Warrant Holder................... 37 SECTION 15. Supplements and Amendments.............................. 34 SECTION 16. Successors.............................................. 34 SECTION 17. Termination of 2005 Warrants............................ 34 SECTION 18. Termination............................................. 34 SECTION 19. Governing Law........................................... 34 SECTION 20. Benefits of This Agreement.............................. 34 SECTION 21. Counterparts............................................ 35 Exhibit A Form of Warrant - ------------------------ (1) This Table of Contents does not constitute a part of this Agreement of have any bearing upon the interpretation of any of its items or provisions. WARRANT AGREEMENT (the "Warrant Agreement" or this "Agreement") dated as of April 30, 1998 (the "Original Issue Date"), as amended and restated as of October 1, 1999 (the "Second Issue Date"), among Geokinetics Inc., a Delaware corporation (the "Company"), and the parties named herein (together with their successors and assigns, the "Holders"). Unless defined herein, terms defined in the Securities Purchase Agreement dated as of October 1, 1999 among the Company, the Guarantors named therein and the purchasers named therein (the "Purchasers") (the "Securities Purchase Agreement") are used as therein defined. For purposes of this Warrant Agreement, "Original Warrants" shall mean the warrants to purchase common stock of the Company ("Common Stock") (the Common Stock issuable upon exercise of the Original Warrants referred to herein as "Original Warrant Shares") issued pursuant to the Securities Purchase Agreement dated as of April 30, 1998 among the Company and the purchasers named therein (the "Original Purchasers") and "Warrants" shall mean the warrants to purchase Common Stock (the Common Stock issuable upon exercise of the Warrants referred to herein as "Warrant Shares") issued pursuant to the Securities Purchase Agreement. WHEREAS, in connection with the issuance of 12% Senior Subordinated Notes due 2005 of the Company (the "Subordinated Notes") on the Original Issue Date the Company issued 7,618,594 Original Warrants to purchase Original Warrant Shares to the Original Purchasers; WHEREAS, as provided in the Securities Purchase Agreement, the Company proposes to exchange the Original Warrants and the Subordinated Notes held by the Original Purchasers for 26,818,594 Warrants and 13 1/2% Senior Secured Notes due 2005 of the Company (the "2005 Notes") on thE Second Issue Date, pro rata to each Original Purchaser (in proportion to the number of Original Warrants exchanged by such Original Purchaser); WHEREAS, as provided in the Securities Purchase Agreement, 9,600,000 of the 2005 Warrants acquired by the Purchasers of the 2005 Notes on the Second Issue Date are subject to termination as provided in the Securities Purchase Agreement; and WHEREAS, as provided in the Securities Purchase Agreement, in connection with the issuance of 13 1/2% Senior Se- -2- cured Notes due 2002 of the Company (the "2002 Notes"), the Company proposes to issue 23,250,000 Warrants on the Second Issue Date, pro rata to each Purchaser of 2002 Notes (in proportion to such Purchaser's purchase of 2002 Notes) under the Securities Purchase Agreement, which Warrants are subject to re-allocation as provided in the Securities Purchase Agreement. NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereto agree as follows: SECTION 1. WARRANT CERTIFICATES. The certificates evidencing the Warrants (the "Warrant Certificates") delivered and to be delivered pursuant to this Agreement shall be in registered form only and shall be substantially in the form set forth in EXHIBIT A attached hereto. SECTION 2. EXECUTION OF WARRANT CERTIFICATES. Warrant Certificates shall be signed on behalf of the Company by its Chairman of the Board or its President or a Vice President and by its Secretary or an Assistant Secretary under its corporate seal. Each such signature upon the Warrant Certificates may be in the form of a facsimile signature of the present or any future President, Vice President, Secretary or Assistant Secretary and may be imprinted or otherwise reproduced on the Warrant Certificates and for that purpose the Company may adopt and use the facsimile signature of any person who shall have been Chairman of the Board, President, Vice President, Secretary or Assistant Secretary, notwithstanding the fact that at the time the Warrant Certificates shall be delivered or disposed of he shall have ceased to hold such office. The seal of the Company may be in the form of a facsimile thereof and may be impressed, affixed, imprinted or otherwise reproduced on the Warrant Certificates. In case any officer of the Company who shall have signed any of the Warrant Certificates shall cease to be such officer before the Warrant Certificates so signed shall have been disposed of by the Company, such Warrant Certificates nevertheless may be delivered or disposed of as though such person had not ceased to be such officer of the Company; and any Warrant Certificate may be signed on behalf of the Company by any person who, at the actual date of the execution of such Warrant Certificate, shall be a proper officer of the Company to sign such Warrant Certificate, although at the date of the execution -3- of this Warrant Agreement any such person was not such an officer. SECTION 3. REGISTRATION. The Company shall number and register the Warrant Certificates in a register as they are issued. Warrants shall be issued in accordance with Paragraph 1B of the Securities Purchase Agreement. The Company may deem and treat the registered holder(s) of the Warrant Certificates as the absolute owner(s) thereof (notwithstanding any notation of ownership or other writing thereon made by anyone), for all purposes, and shall not be affected by any notice to the contrary. The Company shall act as the registrar for the Warrants. SECTION 4. REGISTRATION OF TRANSFERS AND EXCHANGES. The Company shall from time to time register the transfer of any outstanding Warrant Certificates in a Warrant register to be maintained by the Company upon surrender thereof accompanied by a written instrument or instruments of transfer in form satisfactory to the Company, duly executed by the registered holder or holders thereof or by the duly appointed legal representative thereof or by a duly authorized attorney together with (if such transfer is pursuant to clause (1)(w)(III) of the next paragraph) the opinion of counsel specified therein. Upon any such registration of transfer, a new Warrant Certificate shall be issued to the transferee(s) and the surrendered Warrant Certificate shall be cancelled and disposed of by the Company. Each Holder, severally and not jointly, acknowledges and affirms its respective representations in Paragraph 6 of the Securities Purchase Agreement. The Warrant holders and all holders of Warrant Shares, by their acceptance of Warrant Certificates or certificates evidencing Warrant Shares, agree that any proposed resale, pledge or other transfer (including any transfer by issuance of Warrant Shares upon exercise of a Warrant evidenced by a Warrant Certificate in a name other than the name in which such Warrant Certificate is registered) of any Warrant or Warrant Shares may be effected only (1) (w) inside the United States (I) to a person who the seller reasonably believes is a qualified institutional buyer within the meaning of Rule 144A under the Securities Act in a transaction meeting the requirements of Rule 144A, (II) in accordance with Rule 144 under the Securities Act or (III) pursuant to another exemption from the registration requirements of the Secu- -4- rities Act (and based upon an opinion of counsel reasonably satisfactory to the Company to such effect), (x) to the Company, (y) outside the United States to a foreign person in a transaction meeting the requirements of Rule 904 under the Securities Act or (z) pursuant to an effective registration statement under the Securities Act and (2) in each case, in accordance with the applicable securities laws of any state of the United States or any other applicable jurisdiction. Each holder of Warrant Certificates or certificates evidencing Warrant Shares, by acceptance thereof, agrees to, and each subsequent holder is required to, notify any purchaser thereof of the resale restrictions set forth above. Prior to any proposed resale, pledge or other transfer (including any transfer by issuance of Warrant Shares upon exercise of a Warrant evidenced by a Warrant Certificate in a name other than the name in which such Warrant Certificate is registered) of any Warrant or Warrant Shares, the Holder thereof shall give written notice to the Company of such Holder's intention to effect such transfer and the names and circumstances thereof and, if the proposed transfer is pursuant to clause (1)(w)(III) of the second preceding sentence, will, if requested by the Company, deliver to the Company: (1) an investment covenant reasonably satisfactory to the Company signed by the proposed transferee; (2) an agreement by such transferee to the impression of the restrictive investment legend set forth below on the Warrant or the Warrant Shares; (3) an agreement by such transferee that the Company may place a notation in the stock books of the Company or a "stop transfer order" with any transfer agent or registrar with respect to the Warrant Shares; and (4) an agreement by such transferee to be bound by the provisions of this Section 4 relating to the transfer of such Warrant or Warrant Shares. The Warrant holders agree that each Warrant Certificate and any certificate representing the Warrant Shares will bear the following legend: THE SECURITY REPRESENTED BY THIS CERTIFICATE (AND ANY PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED -5- STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY (AND, IF SUCH SECURITY EVIDENCES A WARRANT, THE WARRANT SHARES ISSUABLE PURSUANT THERETO) MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (W) INSIDE THE UNITED STATES (I) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, OR (II) IN ACCORDANCE WITH RULE 144 UNDER THE SECURITIES ACT, OR (III) PURSUANT TO ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL, IF THE COMPANY SO REQUESTS), (X) TO THE COMPANY, (Y) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (Z) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (2) IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE. THE SECURITY REPRESENTED BY THIS CERTIFICATE IS ALSO SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFERABILITY CONTAINED IN THE AMENDED AND RESTATED TAG-ALONG DRAG-ALONG AGREEMENT DATED AS OF SEPTEMBER 30, 1999, A COPY OF WHICH IS ON FILE AT THE COMPANY'S PRINCIPAL EXECUTIVE OFFICES. Subject to the foregoing provisions, Warrant Certificates may be exchanged at the option of the holder(s) thereof, when surrendered to the Company at its office for another Warrant Certificate or other Warrant Certificates of like tenor and representing in the aggregate a like number of Warrants. Warrant Certificates surrendered for exchange shall be cancelled and disposed of by the Company. On delivery of the Warrants by the Company to the Warrant holder or holders pursuant to the Securities Purchase Agreement, each Warrant holder will have registration rights -6- with respect to the Warrant Shares set forth in Section 13 hereof. Every Holder of a Warrant Certificate, by accepting the same, consents and agrees with the Company and with every subsequent holder of such Warrant Certificate that, prior to due presentment of such Warrant Certificate for registration of transfer, the Company may treat the person in whose name the Warrant Certificate is registered as the owner thereof for all purposes and as the person entitled to exercise the rights granted under the Warrants, and neither the Company nor any agent thereof shall be affected by any notice to the contrary. SECTION 5. WARRANTS; EXERCISE OF WARRANTS. Subject to the terms of this Agreement, each Warrant holder shall have the right, which may be exercised commencing at the opening of business on the Second Issue Date and until 5:00 p.m., New York City time on the expiration date (the "Expiration Date") which is set forth in the form of Warrant Certificate attached hereto as Exhibit A to receive from the Company the number of fully paid and nonassessable Warrant Shares which the holder may at the time be entitled to receive on exercise of such Warrants and payment of the Exercise Price then in effect for such Warrant Shares. Each Warrant not exercised prior to 5:00 p.m., New York City time, on the Expiration Date shall become void and all rights thereunder and all rights in respect thereof under this agreement shall cease as of such time. No adjustments as to dividends will be made upon exercise of the Warrants. A Warrant may be exercised upon surrender to the Company at its office designated for such purpose (the address of which is set forth in Section 14 hereof) of the Warrant Certificate or Certificates evidencing the Warrants to be exercised with the form of election to purchase on the reverse thereof duly filled in and signed, which signature shall be guaranteed by a bank or trust company having an office or correspondent in the United States or a broker or dealer which is a member of a registered securities exchange or the National Association of Securities Dealers, Inc., together with (if such exercise involves a transfer pursuant to clause (1)(w)(III) of the second paragraph of Section 4) the opinion of counsel specified therein, and upon payment to the Company of the exercise price (the "Exercise Price") which is set forth in the form of Warrant Certificate attached hereto as Exhibit A as adjusted as herein provided, for the number of Warrant Shares in -7- respect of which such Warrants are then exercised. Payment of the aggregate Exercise Price shall be made in cash or by certified or official bank check to the order of the Company. In lieu of exercising this Warrant by paying in full the Exercise Price plus transfer taxes (if applicable pursuant to Section 6), if any, the Warrant holder may, from time to time, convert this Warrant, in whole or in part, into a number of shares of Common Stock determined by dividing (a) the aggregate current market price of the number of shares of Common Stock represented by the Warrants converted, minus the aggregate Exercise Price for such shares of Common Stock, minus transfer taxes, if any, by (b) the current market price of one share of Common Stock. The current market price shall be determined pursuant to Section 10(f). Subject to the provisions of Section 6 hereof, upon such surrender of Warrant Certificates and payment of the Exercise Price the Company shall issue and cause to be delivered with all reasonable dispatch (and in any event within 10 Business Days after such receipt) to or upon the written order of the holder and, subject to Section 4, in such name or names as the Warrant holder may designate, a certificate or certificates for the number of full Warrant Shares issuable upon the exercise of such Warrants together with cash as provided in Section 11; PROVIDED, HOWEVER, that if any consolidation, merger or lease or sale of assets is proposed to be effected by the Company as described in subsection (l) of Section 10 hereof, or a tender offer or an exchange offer for shares of Common Stock of the Company shall be made, upon such surrender of Warrant Certificates and payment of the Exercise Price as aforesaid, the Company shall, as soon as possible, but in any event not later than two business days thereafter, issue and cause to be delivered the full number of Warrant Shares issuable upon the exercise of such Warrants in the manner described in this sentence together with cash as provided in Section 11. Such certificate or certificates shall be deemed to have been issued and any person so designated to be named therein shall be deemed to have become a holder of record of such Warrant Shares as of the date of the surrender of such Warrant Certificates and payment of the Exercise Price. Prior to the exercise of the Warrants, except as may be specifically provided for herein, (i) no Holder of a Warrant Certificate, as such, shall be entitled to any of the rights of a holder of Common Stock of the Company, including, without -8- limitation, the right to vote at or to receive any notice of any meetings of stockholders; (ii) the consent of any such Holder shall not be required with respect to any action or proceeding of the Company; (iii) except as provided in Section 10(i), no such Holder, by reason of the ownership or possession of a Warrant or the Warrant Certificate representing the same, shall have any right to receive any cash dividends, stock dividends, allotments or rights or other distributions paid, allotted or distributed or distributable to the stockholders of the Company prior to, or for which the relevant record date preceded, the date of the exercise of such Warrant; and (iv) no such Holder shall have any right not expressly conferred by the Warrant or Warrant Certificate held by such Holder. The Warrants shall be exercisable, at the election of the holders thereof, either in full or from time to time in part and, in the event that a Warrant Certificate is exercised in respect of fewer than all of the Warrant Shares issuable on such exercise at any time prior to the date of expiration of the Warrants, a new Warrant Certificate evidencing the remaining Warrant or Warrants will be issued and delivered pursuant to the provisions of this Section and of Section 2 hereof. All Warrant Certificates surrendered upon exercise of Warrants shall be cancelled and disposed of by the Company. the Company shall keep copies of this Agreement and any notices given or received hereunder available for inspection by the holders during normal business hours at its office. SECTION 6. PAYMENT OF TAXES. The Company will pay all documentary stamp taxes attributable to the initial issuance of Warrant Shares upon the exercise of Warrants; PROVIDED, HOWEVER, that the Company shall not be required to pay any tax or taxes which may be payable in respect of any transfer involved in the issue of any Warrant Certificates or any certificates for Warrant Shares in a name other than that of the registered holder of a Warrant Certificate surrendered for registration of transfer or upon the exercise of a Warrant, and the Company shall not be required to issue or deliver such Warrant Certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the reasonable satisfaction of the Company that such tax has been paid. -9- SECTION 7. MUTILATED OR MISSING WARRANT CERTIFICATES. In case any of the Warrant Certificates shall be mutilated, lost, stolen or destroyed, the Company may in its discretion issue, in exchange and substitution for and upon cancellation of the mutilated Warrant Certificate, or in lieu of and substitution for the Warrant Certificate lost, stolen or destroyed, a new Warrant Certificate of like tenor and representing an equivalent number of Warrants, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction of such Warrant Certificate and indemnity, if requested, also reasonably satisfactory to it. Applicants for such substitute Warrant Certificates shall also comply with such other reasonable regulations and pay such other reasonable charges as the Company may prescribe. SECTION 8. RESERVATION OF WARRANT SHARES. The Company will at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued Common Stock or its authorized and issued Common Stock held in its treasury, for the purpose of enabling it to satisfy any obligation to issue Warrant Shares upon exercise of Warrants, the maximum number of shares of Common Stock which may then be deliverable upon the exercise of all outstanding Warrants. The Company or, if appointed, the transfer agent for the Common Stock (the "Transfer Agent") and every subsequent transfer agent for any shares of the Company's capital stock issuable upon the exercise of any of the rights of purchase aforesaid will be irrevocably authorized and directed at all times to reserve such number of authorized shares as shall be required for such purpose. The Company will keep a copy of this Agreement on file with the Transfer Agent and with every subsequent transfer agent for any shares of the Company' capital stock issuable upon the exercise of the rights of purchase represented by the Warrants. The Company will furnish such Transfer Agent a copy of all notices of adjustments and certificates related thereto, transmitted to each holder pursuant to Section 13 hereof. Before taking any action which would cause an adjustment pursuant to Section 10 hereof to reduce the Exercise Price below the then par value (if any) of the Warrant Shares, the Company will take any corporate action which may, in the opinion of its counsel (which may be counsel employed by the Com- -10- pany), be necessary in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares at the Exercise Price as so adjusted. The Company covenants that all Warrant Shares which may be issued upon exercise of Warrants will, upon issue, be fully paid, nonassessable, free of preemptive rights and, subject to Section 6, free from all taxes, liens, charges and security interests with respect to the issue thereof. The Company further covenants, represents and warrants that, (a) as of the date of issuance of any of the Warrants, no form of general solicitation or general advertising was used by the Company or, to the best of its knowledge, any other Person acting on behalf of the Company, in respect of the Warrants or the Warrant Shares or in connection with the issuance of the Warrants; (b) as of the date of issuance of any of the Warrants, neither the Company nor any Person acting on behalf of the Company has, either directly or indirectly, sold or offered for sale to any Person any of the Warrants, the Warrant Shares or any other similar security of the Company except as contemplated by this Agreement; and (c) neither the Company nor any Person acting on its behalf will sell or offer for sale any such security to or solicit any offers to buy any such security from, or otherwise approach or negotiate in respect thereof with, any Person or Persons so as thereby to bring the issuance or sale of any of the Warrants within the provisions of Section 5 of the Securities Act. SECTION 9. OBTAINING STOCK EXCHANGE LISTINGS. The Company will from time to time take all action which may be necessary so that the Warrant Shares, immediately upon their issuance upon the exercise of Warrants, will be listed on the principal securities exchanges and markets within the United States of America, if any, on which other shares of Common Stock are then listed. SECTION 10. ADJUSTMENT OF NUMBER OF WARRANT SHARES ISSUABLE. The number of Warrant Shares issuable upon the exercise of each Warrant are subject to adjustment from time to time upon the occurrence of the events enumerated in this Section 10. For purposes of this Section 10, "Common Stock" means shares now or hereafter authorized of any class of common stock of the Company and any other stock of the Company, however designated, that has the right (subject to any prior rights of any class or series of preferred stock) to participate in any dis- -11- tribution of the assets or earnings of the Company without limit as to per share amount. (a) ADJUSTMENT FOR CHANGE IN CAPITAL STOCK. If the Company: (1) pays a dividend or makes a distribution on its Common Stock in shares of its Common Stock; (2) subdivides its outstanding shares of Common Stock into a greater number of shares; (3) combines its outstanding shares of Common Stock into a smaller number of shares; (4) makes a distribution on its Common Stock in shares of its capital stock other than Common Stock; or (5) issues by reclassification of its Common Stock any shares of its capital stock; then the number and kind of shares of its capital stock issuable upon exercise of any Warrant in effect immediately prior to such action shall be proportionately adjusted so that the holder of any Warrant thereafter exercised may receive the aggregate number and kind of shares of capital stock of the Company which he or she would have owned immediately following such action if such Warrant had been exercised immediately prior to such action. The adjustment shall become effective immediately after the record date in the case of a dividend or distribution and immediately after the effective date in the case of a subdivision, combination or reclassification. If, after an adjustment, a holder of a Warrant upon exercise of it may receive shares of two or more classes of capital stock of the Company, the exercise privilege of each class of capital stock shall thereafter be subject to adjustment on terms comparable to those applicable to Common Stock in this Section. Such adjustment shall be made successively whenever any event listed above shall occur. -12- (b) ADJUSTMENT FOR RIGHTS ISSUE. If the Company distributes any rights, options or warrants to all holders of its Common Stock entitling them to purchase shares of Common Stock or securities directly or indirectly convertible into or exchangeable for Common Stock (or options or rights with respect to such securities) at a price per share less than the current market price per share on that record date, the number of Warrant Shares issuable upon exercise of one Warrant shall be adjusted in accordance with the formula: N' = N x (O + A) ------------- (O + (A x P/M)) where: N' = the adjusted number of Warrant Shares issuable upon exercise of one Warrant. N = the current number of Warrant Shares issuable upon exercise of one Warrant. O = the number of shares of Common Stock outstanding on the record date. A = the number of additional shares of Common Stock offered pursuant to such rights issuance. P = the offering price per share of the additional shares. M = the current market price per share of Common Stock on the record date. The adjustment shall be made successively whenever any such rights, options or warrants are issued and shall become effective immediately after the record date for the determination of stockholders entitled to receive the rights, options or warrants. If at the end of the period during which such rights, options or warrants are exercisable, not all rights, options or warrants shall have been exercised, the number of Warrant Shares issuable upon exercise of the Warrants -13- shall be immediately readjusted to what it would have been if "A" in the above formula had been the number of shares actually issued. (c) ADJUSTMENT FOR OTHER DISTRIBUTIONS. If the Company distributes to all holders of its Common Stock any of its assets (including but not limited to cash), debt securities, preferred stock, or any rights or warrants to purchase debt securities, preferred stock, assets or other securities of the Company, the number of Warrant Shares issuable upon exercise of one Warrant shall be adjusted in accordance with the formula: N' = N x M --- M-F where: N' = the adjusted number of Warrant Shares issuable upon exercise of one Warrant. N = the current number of Warrant Shares issuable upon exercise of one Warrant. M = the current market price per share of Common Stock on the record date mentioned below. F = the fair market value on the record date of the assets, securities, rights or warrants applicable to one share of Common Stock. The Board of Directors shall determine the fair market value in good faith. The adjustment shall be made successively whenever any such distribution is made and shall become effective immediately after the record date for the determination of stockholders entitled to receive the distribution. This subsection does not apply to rights, options or warrants referred to in subsection (b) of this Section 10. -14- (d) ADJUSTMENT FOR COMMON STOCK ISSUE. If the Company issues shares of Common Stock for a consideration per share less than the current market price per share on the date the Company fixes the offering price of such additional shares, the number of Warrant Shares issuable upon exercise of one Warrant shall be adjusted in accordance with the formula: N' = N x A ------- O + P/M where: N' = the adjusted number of Warrant Shares issuable upon exercise of one Warrant. N = the then current number of Warrant Shares issuable upon exercise of one Warrant. O = the number of shares outstanding immediately prior to the issuance of such additional shares. P = the aggregate consideration received for the issuance of such additional shares. M = the current market price per share on the date of sale of such additional shares. A = the number of shares outstanding immediately after the issuance of such additional shares. The adjustment shall be made successively whenever any such issuance is made, and shall become effective immediately after such issuance. This subsection (d) does not apply to: (1) any of the transactions described in subsections (b) and (c) of this Section 10, (2) the exercise of Warrants, or the conversion or exchange of other securities convertible or exchangeable for Common Stock, -15- (3) Common Stock issued to employees of the Company and its Wholly Owned Subsidiaries under bona fide employee benefit plans adopted by the Board of Directors and approved by the holders of Common Stock when required by law, if such Common Stock would otherwise be covered by this subsection (d) (but only to the extent that the aggregate number of shares excluded hereby and issued on or after the Original Issue Date shall not exceed 11,633,775 shares of Common Stock or options exercisable into shares of Common Stock outstanding at any time (subject to adjustment for stock splits, stock dividends, recapitalization, etc.)). (4) Common Stock issued upon the exercise of warrants and stock options outstanding on the Second Issue Date, or (5) Common Stock issued in a bona fide public offering pursuant to a firm commitment underwriting. (e) ADJUSTMENT FOR CONVERTIBLE SECURITIES ISSUE. If the Company issues any securities convertible into or exchangeable for Common Stock (other than securities issued in transactions described in subsections (b) and (c) of this Section 10) for a consideration per share of Common Stock initially deliverable upon conversion or exchange of such securities less than the current market price per share on the date of issuance of such securities, the number of Warrant Shares issuable upon exercise of one Warrant shall be adjusted in accordance with this formula: N' = N x O + D ------- O + P/M where: N' = the adjusted number of Warrant Shares issuable upon exercise of one Warrant. N = the then current number of Warrant Shares issuable upon exercise of one Warrant. -16- O = the number of shares outstanding immediately prior to the issuance of such securities. P = the aggregate consideration received for the issuance of such securities. M = the current market price per share on the date of sale of such securities. D = the maximum number of shares deliverable upon conversion or in exchange for such securities at the initial conversion or exchange rate. The adjustment shall be made successively whenever any such issuance is made, and shall become effective immediately after such issuance. If all of the Common Stock deliverable upon conversion or exchange of such securities have not been issued when such securities are no longer outstanding, then the number of Warrant Shares issuable upon exercise of one Warrant shall promptly be readjusted to the number of Warrant Shares issuable upon exercise of one Warrant which would then be in effect had the adjustment upon the issuance of such securities been made on the basis of the actual number of shares of Common Stock issued upon conversion or exchange of such securities. This subsection (e) does not apply to: (1) convertible securities issued in a bona fide public offering pursuant to a firm commitment underwriting, or (2) convertible securities issued to employees of the Company and its Wholly Owned Subsidiaries under bona fide employee benefit plans adopted by the Board of Directors and approved by the holders of Common Stock when required by law, if such convertible securities would otherwise be covered by this subsection (e) (but only to the extent that the aggregate number of convertible securities excluded hereby and issued on or after the Original Issue Date shall not exceed 11,633,775 shares of Common Stock or options exercisable into shares of Common Stock outstanding at any time (subject to adjustment for stock splits, stock dividends, recapitalization, etc.)). -17- (f) CURRENT MARKET PRICE. In Sections 5 and 11 and in subsections (b), (c), (d) and (e) of this Section 10 the current market price per share of Common Stock on any date is the average of the Quoted Prices of the Common Stock for 30 consecutive trading days commencing 45 trading days before the date in question. The "Quoted Price" of the Common Stock is the last reported sales price of the Common Stock as reported by NASDAQ, National Market System, or if the Common Stock is listed on a securities exchange, the last reported sales price of the Common Stock on such exchange which shall be for consolidated trading if applicable to such exchange, or if neither so reported or listed, the last reported bid price of the Common Stock. In the absence of one or more such quotations, the Board of Directors of the Company shall determine the current market price (i) based on the most recently completed arm's-length transaction between the Company and a person other than an Affiliate of the Company and the closing of which occurs on such date or shall have occurred within the six months preceding such date, (ii) if no such transaction shall have occurred on such date or within such six-month period, the value of the security most recently determined as of a date within the six months preceding such date by a nationally recognized investment banking firm or appraisal firm which is not an Affiliate of the Company (an "Independent Financial Advisor") or (iii) if neither clause (i) nor (ii) is applicable, the value of the security determined as of such date by an Independent Financial Advisor. (g) CONSIDERATION RECEIVED. For purposes of any computation respecting consideration received pursuant to subsections (d) and (e) of this Section 10, the following shall apply: (1) in the case of the issuance of shares of Common Stock for cash, the consideration shall be the amount of such cash, PROVIDED that in no case shall any deduction be made for any commissions, discounts or other expenses incurred by the Company for any underwriting of the issue or otherwise in connection therewith; (2) in the case of the issuance of shares of Common Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to -18- be the fair market value thereof as determined in good faith by the Board of Directors (irrespective of the accounting treatment thereof), whose determination shall be conclusive, and described in a Board resolution; (3) in the case of the issuance of securities convertible into or exchangeable for shares, the aggregate consideration received therefor shall be deemed to be the consideration received by the Company for the issuance of such securities plus the additional minimum consideration, if any, to be received by the Company upon the conversion or exchange thereof (the consideration in each case to be determined in the same manner as provided in clauses (1) and (2) of this subsection). (h) WHEN DE MINIMIS ADJUSTMENT MAY BE DEFERRED. No adjustment in the number of Warrant Shares issuable upon exercise of one Warrant need be made unless the adjustment would require an increase or decrease of at least 1% in the number of Warrant Shares issuable upon exercise of one Warrant. Any adjustments that are not made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section shall be made to the nearest 1/100th of a share. (i) WHEN NO ADJUSTMENT REQUIRED. No adjustment need be made for rights to purchase Common Stock pursuant to a Company plan for reinvestment of dividends or interest. No adjustment need be made for a change in the par value or no par value of the Common Stock. To the extent the Warrants become convertible into cash, no adjustment need be made thereafter as to the cash. Interest will not accrue on the cash. (j) NOTICE OF ADJUSTMENT. Whenever the number of Warrant Shares issuable upon exercise of one Warrant is adjusted, the Company shall provide the notices required by Section 12 hereof. -19- (k) NOTICE OF CERTAIN TRANSACTIONS. If: (1) The Company takes any action that would require an adjustment in the number of Warrant Shares issuable upon exercise of one Warrant pursuant to subsection (a), (b), (c), (d) or (e) of this Section 10 and if the Company does not arrange for Warrant holders to participate pursuant to subsection (i) of this Section 10; (2) The Company takes any action that would require a supplemental Warrant Agreement pursuant to subsection (l) of this Section 10; or (3) there is a liquidation or dissolution of the Company, The Company shall mail to Warrant holders a notice stating the proposed record date for a dividend or distribution or the proposed effective date of a subdivision, combination, reclassification, consolidation, merger, transfer, lease, liquidation or dissolution. The Company shall mail the notice at least 15 days before such date. Failure to mail the notice or any defect in it shall not affect the validity of the transaction. (l) REORGANIZATION OF COMPANY. If the Company consolidates or merges with or into, or transfers or leases all or substantially all its assets to, any person, upon consummation of such transaction the Warrants shall automatically become exercisable for the kind and amount of securities, cash or other assets which the holder of a Warrant would have owned immediately after the consolidation, merger, transfer or lease if the holder had exercised the Warrant immediately before the effective date of the transaction. Concurrently with the consummation of such transaction, the corporation formed by or surviving any such consolidation or merger if other than the Company, or the person to which such sale or conveyance shall have been made, shall enter into a supplemental Warrant Agreement so providing and further providing for adjustments which shall be as nearly equivalent as may be practical to the adjustments provided for in this Section. The successor company shall mail to Warrant holders a notice describing the supplemental Warrant Agreement. -20- If the issuer of securities deliverable upon exercise of Warrants under the supplemental Warrant Agreement is an affiliate of the formed, surviving, transferee or lessee corporation, that issuer shall join in the supplemental Warrant Agreement. If this subsection (l) applies, subsections (a), (b), (c), (d) and (e) of this Section 10 do not apply. (m) COMPANY DETERMINATION FINAL. Any determination that the Company or the Board of Directors must make pursuant to subsection (a), (c), (d), (e), (f), (g) or (i) of this Section 10 which is made in good faith shall be conclusive. (n) WHEN ISSUANCE OR PAYMENT MAY BE DEFERRED. In any case in which this Section 10 shall require that an adjustment in the number of Warrant Shares issuable upon exercise of one Warrant be made effective as of a record date for a specified event, the Company may elect to defer until the occurrence of such event (i) issuing to the holder of any Warrant exercised after such record date the Warrant Shares and other capital stock of the Company, if any, issuable upon such exercise over and above the Warrant Shares and other capital stock of the Company, if any, issuable upon such exercise on the basis of the current number of Warrant Shares issuable upon exercise of one Warrant and (ii) paying to such holder any amount in cash in lieu of a fractional share pursuant to Section 11; PROVIDED, HOWEVER, that the Company shall deliver to such holder a due bill or other appropriate instrument evidencing such holder's right to receive such additional Warrant Shares, other capital stock and cash upon the occurrence of the event requiring such adjustment. (o) ADJUSTMENT IN EXERCISE PRICE. Upon each adjustment of the number of Warrant Shares pursuant to this Section 10, the Exercise Price for each Warrant outstanding prior to the making of the adjustment in the number of Warrant Shares shall thereafter be adjusted to the Exercise Price (calculated to the nearest hundredth) obtained from the following formula: -21- E'= E x N/N' where: E' = the adjusted Exercise Price. E = the Exercise Price prior to adjustment. N' = the adjusted number of Warrant Shares issuable up on exercise of a Warrant. N = the number or Warrant Shares previously issuable upon exercise of a Warrant prior to adjustment. (p) FORM OF WARRANTS. Irrespective of any adjustments in the number or kind of shares purchasable upon the exercise of the Warrants, Warrants theretofore or thereafter issued may continue to express the same price and number and kind of shares as are stated in the Warrants initially issuable pursuant to this Agreement. (q) NO DILUTION OR IMPAIRMENT. If any event shall occur as to which the provisions of this Section 10 are not strictly applicable but the failure to make any adjustment would adversely affect the purchase rights represented by the Warrants in accordance with the essential intent and principles of this Section, then, in each such case, the Company shall appoint an investment banking firm of recognized national standing, or any other financial expert that does not (or whose directors, officers, employees, affiliates or stockholders do not) have a direct or material indirect financial interest in the Company or any of its subsidiaries, who has not been, and, at the time it is called upon to give independent financial advice to the Company, is not (and none of its directors, officers, employees, affiliates or stockholders are) a promoter, director or officer of the Company or any of its subsidiaries, which shall give their opinion upon the adjustment, if any, on a basis consistent with the essential intent and principles established in this Section 10, necessary to preserve, without dilution, the purchase rights represented by this Warrant. Upon receipt of such opinion, the Company will promptly mail a copy thereof to the holders of the Warrants and shall make the adjustments described therein. -22- The Company will not, by amendment of its certificate of incorporation or through any consolidation, merger, reorganization, transfer of assets, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of the Warrants, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the holder of the Warrants against dilution or other impairment. Without limiting the generality of the foregoing, the Company (1) will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock on the exercise of the Warrants from time to time outstanding and (2) will not take any action which results in any adjustment of the number of Warrant Shares issuable upon exercise of one Warrant if the total number of Warrant Shares issuable after the action upon the exercise of all of the Warrants would exceed the total number of shares of Common Stock then authorized by the Company's certificate of incorporation and available for the purposes of issue upon such exercise. A consolidation, merger, reorganization or transfer of assets involving the Company covered by Section 10(l) shall not be prohibited by or require any adjustment under this subsection (q). SECTION 11. FRACTIONAL INTERESTS. Any one Warrant may be exercised only in full and not in part. The Company shall not be required to issue fractional Warrant Shares on the exercise of Warrants. If more than one Warrant shall be presented for exercise at the same time by the same holder, the number of full Warrant Shares which shall be issuable upon the exercise thereof shall be computed on the basis of the aggregate number of Warrant Shares purchasable on exercise of the Warrants so requested to be exercised. If any fraction of a Warrant Share would, except for the provisions of this Section 11, be issuable on the exercise of any Warrants (or specified portion thereof), the Company shall pay an amount in cash equal to the product of (i) such fraction of a Warrant Share and (ii) the difference between the current market price of a share of Common Stock and the Exercise Price. SECTION 12. NOTICES TO WARRANT HOLDERS. Upon any adjustment of the number of Warrant Shares issuable upon exercise of one Warrant pursuant to Section 10, the Company shall promptly thereafter (i) cause to be filed with the Company a -23- certificate which includes the report of a firm of independent public accountants of recognized standing selected by the Board of Directors of the Company (who may be the regular auditors of the Company) setting forth the number of Warrant Shares issuable upon exercise of one Warrant after such adjustment and setting forth in reasonable detail the method of calculation and the facts upon which such calculations are based, which certificate shall be conclusive evidence of the correctness of the matters set forth therein, and (ii) cause to be given to each of the registered holders of the Warrant Certificates at his or her address appearing on the Warrant register written notice of such adjustments by first-class mail, postage prepaid. Where appropriate, such notice may be given in advance and included as a part of the notice required to be mailed under the other provisions of this Section 12. In case: (a) the Company shall authorize the issuance to all holders of shares of Common Stock of rights, options or warrants to subscribe for or purchase shares of Common Stock or of any other subscription rights or warrants; or (b) the Company shall authorize the distribution to all holders of shares of Common Stock of evidences of its indebtedness or assets (other than cash dividends or cash distributions payable out of consolidated earnings or earned surplus or dividends payable in shares of Common Stock or distributions referred to in subsection (a) of Section 10 hereof); or (c) of any consolidation or merger to which the Company is a party and for which approval of any shareholders of the Company is required, or of the conveyance or transfer of the properties and assets of the Company substantially as an entirety, or of any reclassification or change of Common Stock issuable upon exercise of the Warrants (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), or a tender offer or exchange offer for shares of Common Stock; or (d) of the voluntary or involuntary dissolution, liquidation or winding up of the Company; or -24- (e) the Company proposes to take any action (other than actions of the character described in Section 10(a)) which would require an adjustment of the number of Warrant Shares issuable upon exercise of one Warrant pursuant to Section 10; then the Company shall cause to be given to each of the registered holders of the Warrant Certificates at his or her address appearing on the Warrant register, at least 20 days (or 10 days in any case specified in clauses (a) or (b) above) prior to the applicable record date hereinafter specified, or promptly in the case of events for which there is no record date, by first class mail, postage prepaid, a written notice stating (i) the date as of which the holders of record of shares of Common Stock to be entitled to receive any such rights, options, warrants or distribution are to be determined, or (ii) the initial expiration date set forth in any tender offer or exchange offer for shares of Common Stock, or (iii) the date on which any such consolidation, merger, conveyance, transfer, dissolution, liquidation or winding up is expected to become effective or consummated, and the date as of which it is expected that holders of record of shares of Common Stock shall be entitled to exchange such shares for securities or other property, if any, deliverable upon such reclassification, consolidation, merger, conveyance, transfer, dissolution, liquidation or winding up. The failure to give the notice required by this Section 12 or any defect therein shall not affect the legality or validity of any distribution, right, option, warrant, consolidation, merger, conveyance, transfer, dissolution, liquidation or winding up, or the vote upon any action. Nothing contained in this Agreement or in any of the Warrant Certificates shall be construed as conferring upon the holders thereof the right to vote or to consent or to receive notice as shareholders in respect of the meetings of shareholders or the election of Directors of the Company or any other matter, or any rights whatsoever as shareholders of the Company. SECTION 13. REGISTRATION RIGHTS. (a) DEMAND REGISTRATION. (1) REQUEST FOR REGISTRATION. At any time the Holder or Holders of in excess of 25% of the outstanding Warrant Shares issued or issuable upon exercise of the Warrants -25- may make a written request for registration under the Securities Act ("Demand Registration") of all or part of its or their Registrable Securities; PROVIDED that the Company shall not be obligated to effect more than three Demand Registrations in respect of the Registrable Securities. Such request will specify the number of Registrable Securities proposed to be sold and will also specify the intended method of disposition thereof. Within 10 Business Days after receipt of such request, the Company will give written notice of such registration request to all other Holders of the Warrants and include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein from the Holders thereof within 15 Business Days after receipt by the applicable Holder of the Company's notice. Each such request will also specify the aggregate number of Registrable Securities to be registered and the intended method of disposition thereof. (2) EFFECTIVE REGISTRATION AND EXPENSES. A registration will not count as a Demand Registration until it has become effective (unless the Holders demanding such registration withdraw the Registrable Securities, in which case such demand will count as a Demand Registration unless the Holders of such Warrants agree to pay all Registration Expenses (as hereinafter defined) relating to such registration). Except as provided above, the Company will pay all Registration Expenses in connection with any registration initiated as a Demand Registration, whether or not it becomes effective. (3) PRIORITY ON DEMAND REGISTRATIONS. If the Holders of a majority of the Registrable Securities to be registered in a Demand Registration so elect, the offering of such Registrable Securities pursuant to such Demand Registration shall be in the form of an underwritten offering. In such event, if the managing underwriter or underwriters (the "Underwriters") of such offering advise the Company and the Holders in writing that in their opinion the Registrable Securities requested to be included in such offering is sufficiently large to materially and adversely affect the success of such offering, then (i) the Holders of Registrable Securities shall be entitled to participate in such Demand Registration (PRO RATA on the basis of the amount of Registrable Securities requested to be included in such registration by each such Holder) first; and (ii) the Company and other equity security holders of the Company entitled to participate will be entitled to participate in such registration (with the holders of such securities being -26- entitled to participate in accordance with the relative priorities, if any, as shall exist among them), in each case with further PRO RATA allocations to the extent any such person has requested registration of fewer securities than such person is entitled to have registered so that the number of securities to be included in such registration will not exceed that amount that can, in the opinion of such Managing Underwriter or Underwriters, be sold without any such material adverse effect. To the extent Registrable Securities so requested to be registered are excluded from the offering, the Holders of Registrable Securities, as a group, shall have the right to one additional Demand Registration under this section with respect to Registrable Securities for the number of shares so excluded (but in no event shall such additional Demand Registration be for less than 250,000 shares). (4) SELECTION OF UNDERWRITERS. If any Demand Registration is in the form of an underwritten offering, the Holders of a majority of the aggregate number of the outstanding Registrable Securities shall designate the Underwriter or a group of Underwriters to be utilized in connection with the public offering of such Registrable Securities, which selection shall be reasonably acceptable to the Company. The Company shall enter into an underwriting agreement in customary form with such Underwriter or Underwriters, which shall include, among other provisions, indemnities to the effect and to the extent provided in Section 13(d). The holders of Registrable Securities to be distributed by such Underwriters shall be parties to such underwriting agreement and may, at their option, require that any or all of the representations and warranties by, and the other agreements on the part of, the Company to and for the benefit of such Underwriters also be made to and for their benefit and that any and all of the conditions precedent to the obligations of such Underwriters under such underwriting agreement also be conditions precedent to their obligations. No holder of Registrable Securities shall be required to make any representations or warranties to or agreements with the Company or the Underwriters other than representations, warranties or agreements regarding such holder and its ownership of the Registrable Securities being registered on its behalf and such holder's intended method of distribution and any other representation required by law. (5) DEFERRAL. Notwithstanding anything to the contrary contained herein, the Company shall not be obligated to -27- prepare and file, or cause to become effective, any registration statement pursuant to this Section 13(a) hereof at any time when, in the good faith judgment of its Board of Directors, the filing thereof at the time requested or the effectiveness thereof after filing should be delayed to permit the Company to include in the registration statement the Company's financial statements (and any required audit opinion thereon) for the then immediately preceding fiscal year or fiscal quarter, as the case may be. The filing of a registration statement by the Company cannot be deferred pursuant to the provisions of the immediately preceding sentence beyond the time that such financial statements (or any required audit opinion thereon) would be required to be filed with the Commission as part of the Company's Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as the case may be, if the Company were then obligated to file such reports. Notwithstanding anything to the contrary contained herein, the Company shall not be obligated to cause a registration statement previously filed pursuant to this Section 13 to become effective, and may suspend sales by the Holders of Registrable Securities under any registration that has previously become effective, at any time when, in the good faith judgment of its Board of Directors, it reasonably believes that the effectiveness of such registration statement or the offering of securities pursuant thereto would materially adversely affect a pending or proposed acquisition, merger, recapitalization, consolidation, reorganization or similar transaction or negotiations, discussions or pending proposals with respect thereto; PROVIDED that deferrals pursuant to this sentence shall not exceed, in the aggregate, 180 days in any calendar year. The filing of a registration statement, or any amendment or supplement thereto, by the Company cannot be deferred, and the rights of Holders of Registrable Securities to make sales pursuant to an effective registration statement cannot be suspended, pursuant to the provisions of the immediately preceding sentence for more than 15 days after the abandonment or 30 days after the consummation of any of the foregoing proposals or transactions or, in any event, for more than 30 days after the date of the Board's determination pursuant to the immediately preceding sentence of this Section 13(a)(5). (6) FURTHER DEMANDS. The Company agrees that after the Second Issue Date, it shall not grant any Person registration rights of the type set forth in Section 13(a) hereof with respect to any equity securities of the Company without the -28- consent of the Holders of a majority of the Registrable Securities, which consent shall not be unreasonably withheld. The Company and the Holders agree that the Holders shall be entitled to the consent right set forth in the immediately preceding sentence so long as the Holders continue to hold 25% of the Warrants (or Warrant Shares) held by them on the Second Issue Date. (b) PIGGY-BACK REGISTRATION. (1) If the Company proposes to file a registration statement under the Securities Act with respect to an offering by the Company for its own account or for the account of any of its security holders of any class of equity security (other than a registration statement on Form S-4 or S-8 (or any substitute form that may be adopted by the Commission) or a registration statement in connection with an exchange offer or offering to the Company's existing security holders), then the Company shall give written notice of such proposed filing to the Holders of Registrable Securities as soon as practicable (but in no event less than 20 Business Days before the anticipated filing date), and such notice shall offer such Holders the opportunity to register such number of Registrable Securities as each such Holder may request (a "Piggy-Back Registration"). (2) The Company shall use its best efforts to cause the managing Underwriter or Underwriters of a proposed underwritten offering to permit the Registrable Securities requested to be included in the registration statement for such offering to be included on the same terms and conditions as any similar securities of the Company or of such other security holders included therein. Notwithstanding the foregoing, if the managing Underwriter or Underwriters of such offering deliver a written opinion to the Company that either because of (i) the kind or combination of securities which the Holders, the Company and any other persons or entities intend to include in such offering or (ii) the size of the offering which the Holders, the Company and such other persons intend to make, are such that the success of the offering would be materially and adversely affected by inclusion of the Registrable Securities requested to be included, then (a) in the event that the size of the offering is the basis of such managing Underwriter's opinion, the amount of securities to be offered for the accounts of Non-Priority Persons (as defined below) shall be reduced pro rata -29- (according to the Registrable Securities and other securities proposed for registration by Persons ("Non-Priority Persons") other than the Company (if such registration was initially to be filed for the account of the Company) or the other Persons for whose account such registration was initially to be filed) to the extent necessary to reduce the total amount of securities to be included in such offering to the amount recommended by such managing Underwriter or Underwriters; PROVIDED that if securities are being offered for the account of Non-Priority Persons other than holders of Registrable Securities, then with respect to the Registrable Securities intended to be offered by Holders, the proportion by which the amount of such class of securities intended to be offered by Holders is reduced shall not exceed the proportion by which the amount of such class of securities intended to be offered by Non-Priority Persons other than holders of Registrable Securities is reduced; and (b) in the event that the kind (or combination) of securities to be offered is the basis of such managing Underwriter's opinion, (x) the Registrable Securities to be included in such offering shall be reduced as described in clause (a) above (subject to the proviso in clause (a)) or (y) if the actions described in clause (x) would, in the judgment of the managing Underwriter, be insufficient to substantially eliminate the adverse effect that inclusion of the Registrable Securities requested to be included would have on such offering, such Registrable Securities will be excluded from such offering. The Company will pay all Registration Expenses (as defined herein) in connection with each registration of Registrable Securities. (c) REGISTRATION PROCEDURES. If and whenever the Company is required to use its best efforts to effect the registration of any Registrable Securities under the Securities Act, the Company will promptly: (1) prepare and file with the Securities and Exchange Commission a registration statement with respect to such securities, make all required filings with the NASD and use commercially reasonable efforts to cause such registration statement to become effective; (2) prepare and file with the Securities and Exchange Commission such amendments and supplements to such -30- registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective and to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement until such time as all of such securities have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such registration statement, but in no event for a period of more than one year after such registration statement becomes effective; (3) furnish to counsel (if any) elected by holders of a majority (by number of shares) of the Registrable Securities covered by such registration statement copies of all documents proposed to be filed with the Securities and Exchange Commission in connection with such registration, which documents will be subject to the review of such counsel; (4) furnish to each seller of such securities such number of conformed copies of such registration statement and of each such amendment and supplement thereto (in each case including all exhibits, except that the Company shall not be obligated to furnish any seller of securities with more than two copies of such exhibits), such number of copies of the prospectus included in such registration statement (including such preliminary prospectus and any summary prospectus), in conformity with the requirements of the Securities Act, and such other documents, as such seller may reasonably request in order to facilitate the disposition of the securities owned by such seller; (5) use its commercially reasonable efforts to register or qualify such securities covered by such registration statement under such other securities or Blue Sky Laws of such jurisdictions as each seller shall request, and do any and all other acts and things which may be necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the securities owned by such seller, except that the Company shall not for any such purpose be required to qualify generally to do business as a foreign corporation in any jurisdiction wherein it is not so qualified, or to consent to general service of process in any such jurisdiction; -31- (6) furnish to each seller a signed counterpart, addressed to the sellers, of (i) an opinion of counsel for the Company, dated the effective date of the registration statement, reasonably satisfactory in form and substance to such holders' counsel referred to in Section 13(c)(3), and (ii) subject to the accountants obtaining the necessary representations as specified in Statement on Auditing Standards No. 72, a "comfort" letter signed by the independent public accountants who have certified the Company's financial statements included in the registration statement, covering substantially the same matters with respect to the registration statement (and the prospectus included therein) and, in the case of such accountants' letter, with respect to changes subsequent to the date of such financial statements, as are customarily covered in opinions of issuer's counsel and in accountants' letters delivered to the Underwriters in underwritten public offerings of securities; (7) notify each seller of any securities covered by such registration statement, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing, and at the request of any such seller prepare and furnish to such seller a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing; -32- (8) otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the Securities and Exchange Commission, and make available to its Security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months, but not more than eighteen months, beginning with the first month after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act; (9) use its best efforts to list such securities on any securities exchange on which the Common Stock is then listed, if such securities are not already so listed and if such listing is then permitted under the rules of such exchange, and to provide a transfer agent and registrar for such Registrable Securities not later than the effective date of such registration statement; (10) in any underwritten offering, use its best efforts to cause the indemnity and contribution terms between the sellers and the Underwriters to be no more burdensome to the sellers than the indemnity and contribution terms between the sellers and the Company set forth in Section 13(d) hereof; and (11) promptly notify each holder and the Underwriter or Underwriters, if any: (i) when such registration statement or any prospectus used in connection therewith, or any amendment or supplement thereto, has been filed and, with respect to such registration statement or any post-effective amendment thereto, when the same has become effective; (ii) of any written comments from the Securities and Exchange Commission with respect to any filing referred to in clause (i) and of any written request by the Securities and Exchange Commission for amendments or supplements to such registration statement or prospectus; (iii) of the notification to the Company by the Securities and Exchange Commission of its initiation of any proceeding with respect to the issuance by the -33- Securities and Exchange Commission of, or of the issuance by the Securities and Exchange Commission of, any stop order suspending the effectiveness of such registration statement; and (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of any Registrable Securities for sale under the applicable securities or blue sky laws of any jurisdiction. The Company may require each seller of any securities as to which any registration is being effected to furnish to the Company such information regarding such seller and the distribution of such securities as the Company may from time to time reasonably request in writing and as shall be required by law in connection therewith. Each such holder agrees to furnish promptly to the Company all information required to be disclosed in order to make the information previously furnished to the Company by such holder not materially misleading. By acquisition of Registrable Securities, each holder of such Registrable Securities shall be deemed to have agreed that upon receipt of any notice from the Company of the happening of any event of the kind described in Section 13(c)(7) hereof, such holder will promptly discontinue such holder's disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until such holder's receipt of the copies of the supplemented or amended prospectus contemplated by Section 13(c)(7) hereof. If so directed by the Company, each holder of Registrable Securities will deliver to the Company (at the Company's expense) all copies, other than permanent file copies, then in such holder's possession of the prospectus covering such Registrable Securities current at the time of receipt of such notice. In the event the Company shall give any such notice, the period mentioned in Section 13(c)(2) hereof shall be extended by the number of days during the period from and including the date of the giving of such notice to and including the date when each seller of any Registrable Securities covered by such registration statement shall have received the copies of the supplemented or amended prospectus contemplated by Section 13(c)(7) hereof. -34- In connection with any underwritten offering, all Registrable Securities to be included in such registration shall be subject to the related underwriting agreement and no person may participate in such registration unless such person agrees to sell such person's securities on the basis provided in the underwriting arrangement approved by the persons for whose account such underwritten registration is initially filed and completes and executes all customary questionnaires, indemnities, underwriting agreements and other reasonable documents which must be executed under the terms of such underwriting arrangements. (d) INDEMNIFICATION. (1) INDEMNIFICATION. The Company agrees to indemnify and hold harmless each Holder of Registrable Securities, its officers, directors, employees and agents and each Person who controls such Holder within the meaning of either Section 15 of the Securities Act or Section 20(a) of the Exchange Act (each such person being sometimes hereinafter referred to as an "Indemnified Holder") from and against all losses, claims, damages, liabilities and expenses (including reasonable costs of investigation and legal expenses) arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any registration statement or prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except insofar as such losses, claims, damages, liabilities or expenses arise out of or are based upon any such untrue statement or omission or allegation thereof based upon information relating to such Indemnified Holder and furnished in writing to the Company by such Indemnified Holder expressly for use therein. This indemnity will be in addition to any liability which the Company may otherwise have. If any action or proceeding (including any governmental investigation or inquiry) shall be brought or asserted against an Indemnified Holder in respect of which indemnity may be sought from the Company, such Indemnified Holder shall promptly notify the Company in writing, and the Company shall assume the defense thereof, including the employment of counsel reasonably satisfactory to such Indemnified Holder and the pay- -35- ment of all expenses. Such Indemnified Holder shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Holder except that the Company shall be responsible for the reasonable fees and expenses of such counsel if (but only if) (a) the Company has agreed to pay such fees and expenses or (b) the Company shall have failed to assume the defense of such action or proceeding and has failed to employ counsel reasonably satisfactory to such Indemnified Holder in any such action or proceeding or (c) the named parties to any such action or proceeding (including any impleaded parties) include both such Indemnified Holder and the Company, and there are one or more legal defenses available to such Indemnified Holder which are different from or additional to those available to the Company (in which case, if such Indemnified Holder notifies the Company in writing that it elects to employ separate counsel at the expense of the Company, the Company shall not have the right to assume the defense of such action or proceeding on behalf of such Indemnified Holder, it being understood, however, that the Company shall not, in connection with any one such action or proceeding or separate but substantially similar or related actions or proceedings in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys at any time for such Indemnified Holder and any other Indemnified Holders, which firm shall be designated in writing by such Indemnified Holders). The Company shall not be liable for any settlement of any such action or proceeding effected without its written consent, but if settled with its written consent, or if there be a final judgment for the plaintiff in any such action or proceeding, the Company agrees to indemnify and hold harmless such Indemnified Holders from and against any loss or liability by reason of such settlement or judgment. (2) CONTRIBUTION. If the indemnification provided for in Section 13(d)(1) is unavailable to an Indemnified Holder in respect of any losses, claims, damages, liabilities or expenses referred to therein, then the Company, in lieu of indemnifying such Indemnified Holder, shall contribute to the amount paid or payable by such Indemnified Holder as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the Company on the one hand and of the Indemnified Holder on the other in connection with the statements or omissions which re- -36- sulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of the Company on the one hand and of the Indemnified Holder on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or by the Indemnified Holder and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in the second paragraph of Section 1(d)(1), any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The Company and each Holder of Registrable Securities agree that it would not be just and equitable if contribution pursuant to this Section 1(d)(2) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 13(d)(2), an Indemnified Holder shall not be required to contribute any amount in excess of the amount by which the total net proceeds received by such Indemnified Holder or its affiliated Indemnified Holders from the sale to the public of Registrable Securities exceeds the amount of any damages which such Indemnified Holder, or its affiliated Indemnified Holders, has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. 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. (3) CERTAIN DEFINITIONS. (i) The term "Registrable Securities" shall mean the Warrant Shares and any other securities issued or issuable upon exercise of the Warrants. As to any particular Registrable Securities, once issued such securities shall cease to be Registrable Securities when (A) a registration statement with respect to the sale of such securities shall have become effective under the Securities Act and -37- such securities shall have been disposed of in accordance with such registration statement, (B) they shall have been distributed to the public pursuant to Rule 144 (or any successor provision) under the Securities Act, (C) they shall have been otherwise transferred, new certificates for them not bearing a legend restricting further transfer shall have been delivered by the Company and subsequent disposition of them shall not require registration or qualification of them under the Securities Act or any similar state law then in force, or (D) they shall have ceased to be outstanding. (ii) The term "Registration Expenses" shall mean all expenses incident to the Company's performance of or compliance with Section 13 hereof, including, without limitation, all registration and filing fees, all fees and expenses of complying with securities or blue sky laws, fees and other expenses associated with filings with the National Association of Securities Dealers, Inc. (including, if required, the reasonable fees and expenses of any "qualified independent underwriter" and its counsel), all printing expenses, the reasonable fees and disbursements of counsel for the Company and of its independent public accountants, the fees and disbursements of one counsel retained by the holders of Registrable Securities, the expenses of any special audits made by such accountants required by or incident to such performance and compliance, but not including (a) fees and disbursements of more than one counsel retained by the holders of Registrable Securities, or (b) such holders' proportionate share of underwriting discounts and commissions. SECTION 14. NOTICES TO COMPANY AND WARRANT HOLDER. Any notice or demand authorized by this Agreement to be given or made by the registered holder of any Warrant Certificate to or on the Company shall be sufficiently given or made when and if deposited in the mail, first class or registered, postage prepaid, addressed to the office of the Company expressly designated by the Company at its office for purposes of this Agreement (until the Warrant holders are otherwise notified in accordance with this Section by the Company), as follows: -38- Geokinetics Inc. 8401 Westheimer Suite 150 Houston, Texas 77063 Attention: Chairman of the Board Any notice pursuant to this Agreement to be given by the Company to the registered holder(s) of any Warrant Certificate shall be sufficiently given when and if deposited in the mail, first class or registered, postage prepaid, addressed (until the Company is otherwise notified in accordance with this Section by such holder) to such holder at the address appearing on the Warrant register of the Company. 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 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). SECTION 16. SUCCESSORS. All the covenants and provisions of this Agreement by or for the benefit of the Company shall bind and inure to the benefit of its respective successors and assigns hereunder. SECTION 17. TERMINATION OF 2005 WARRANTS. Pursuant to Paragraph 6D of the Securities Purchase Agreement, 9,600,000 2005 Warrants are subject to termination. Warrants subject to termination will contain a reference to the possible termination thereof on the face of each warrant certificate representing such Warrants. -39- SECTION 18. TERMINATION. This Agreement (except for Section 13(d) and for the restrictions on transfer of Warrant Shares specified in Section 4) shall terminate at 5:00 p.m., New York City time on September 15, 2006. SECTION 19. GOVERNING LAW. THIS AGREEMENT AND EACH WARRANT CERTIFICATE ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF DELAWARE AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF SAID STATE. THE COMPANY AND EACH GUARANTOR AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF DELAWARE IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE. THE COMPANY AND EACH GUARANTOR IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT ITS ADDRESS FOR NOTICES PURSUANT TO SECTION 14, SUCH SERVICE TO BECOME EFFECTIVE 5 DAYS AFTER SUCH MAILING. SECTION 20. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be construed to give to any person or corporation other than the Company and the registered holders of the Warrant Certificates or Warrant Shares any legal or equitable right, remedy or claim under this Agreement; but this Agreement shall be for the sole and exclusive benefit of the Company and the registered holders of the Warrant Certificates and the Warrant Shares. Nothing herein shall prohibit or limit the Company from entering into an agreement providing holders of securities which may hereafter be issued by the Company with such registration rights exercisable at such time or times and in such manner as the Board of Directors shall deem in the best interests of the Company so long as the performance by the Company of its obligations under such other agreement will not cause the Company to breach its obligations hereunder to the Holders. SECTION 21. COUNTERPARTS. This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. [Signature Page Follows] [Signature Page of Warrant Agreement] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, as of the day and year first above written. GEOKINETICS INC. By:THOMAS J. CONCANNON Name: Thomas J. Concannon Title:Vice President DLJ INVESTMENT PARTNERS, L.P. By: DLJ INVESTMENT PARTNERS, INC. Managing General Partner By:/s/ Name: Title: DLJ INVESTMENT FUNDING, INC. By:/s/ Name: Title: DLJ ESC II L.P. By: DLJ LBO PLANS MANAGEMENT CORPORATION, its General Partner By:/s/ Name: Title: -2- [Signature Page of Warrant Agreement] SPINDRIFT PARTNERS, L.P. By: WELLINGTON MANAGEMENT COMPANY, its Investment Advisor By: /s/ CYNTHIA M. CLARK Name: Cynthia M. Clark Title: Vice President, General Counsel SPINDRIFT INVESTORS (BERMUDA) L.P. By: WELLINGTON MANAGEMENT COMPANY, its Investment Advisor By: /s/ CYNTHIA M. CLARK Name: Cynthia M. Clark Title: Vice President, General Counsel CHASE EQUITY ASSOCIATES, L.P. By: CHASE CAPITAL PARTNERS, its General Partner By: /s/ Name: Title: MHR CAPITAL PARTNERS LP By: MHR ADVISORS LLC By: /s/ -3- Name: Title: -4- [Signature Page of Warrant Agreement] WHITTIER VENTURES LLC By: /s/ DAVID A. DAHL Name: David A. Dahl Title: President PAUL B. LOYD, JR. By: /s/ Paul B. Loyd, Jr. Name: Paul B. Loyd, Jr. By:________________________________ Name: Title: EXHIBIT A [Form of Warrant Certificate] [Face] THE WARRANTS REPRESENTED BY THIS CERTIFICATE (AND ANY PREDECESSOR) WERE ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF GEOKINETICS INC. (THE "COMPANY") THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (W) INSIDE THE UNITED STATES (I) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, OR (II) IN ACCORDANCE WITH RULE 144 UNDER THE SECURITIES ACT, OR (III) PURSUANT TO ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL, IF THE COMPANY SO REQUESTS), (X) TO THE COMPANY, (Y) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (Z) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (2) IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE. THE WARRANTS REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFERABILITY CONTAINED IN THE AMENDED AND RESTATED TAG-ALONG DRAG-ALONG AGREEMENT DATED AS OF SEPTEMBER 30, 1999, A COPY OF WHICH IS ON FILE AT THE COMPANY'S PRINCIPAL EXECUTIVE OFFICES. [THIS WARRANT IS SUBJECT TO TERMINATION AS PROVIDED IN PARAGRAPH 6D OF THE SECURITIES PURCHASE AGREEMENT DATED AS OF OCTOBER 1, 1999, A COPY OF WHICH IS ON FILE AT THE COMPANY'S PRINCIPAL EXECUTIVE OFFICES.] A-1 EXERCISABLE ON OR BEFORE 5:00 P.M. NEW YORK CITY TIME ON SEPTEMBER 15, 2006 No. ____ Warrants Warrant Certificate Geokinetics Inc. This Warrant Certificate certifies that _____________, or registered assigns, is the registered holder of Warrants (the "Warrants") expiring September 15, 2006 (the "Expiration Date") to purchase Common Stock, $.0l par value (the "Common Stock"), of Geokinetics Inc., a Delaware corporation (the "Company"). Each Warrant entitles the holder upon exercise to receive from the Company on or before 5:00 p.m. New York City Time on the Expiration Date, one fully paid and nonassessable share of Common Stock (a "Warrant Share") at the exercise price (the "Exercise Price") of $.56 payable in lawful money of the United States of America upon surrender of this Warrant Certificate and payment of the Exercise Price at the office of the Company designated for such purpose, but only subject to the conditions set forth herein and in the Warrant Agreement referred to on the reverse hereof. In lieu of exercising this Warrant by paying in full the Exercise Price minus transfer taxes (if applicable pursuant to Section 6 of the Warrant Agreement), if any, the Warrant holder may, from time to time, convert this Warrant, in whole or in part, into a number of shares of Common Stock determined by dividing (a) the aggregate current market price of the number of shares of Common Stock represented by the Warrants converted, minus the aggregate Exercise Price for such shares of Common Stock, minus transfer taxes, if any, by (b) the current market price of one share of Common Stock. The current market price shall be determined pursuant to Section 10(f) of the Warrant Agreement. The number of Warrant Shares issuable upon exercise of the Warrants is subject to adjustment upon the occurrence of certain events set forth in the Warrant Agreement. No Warrant may be exercised after 5:00 p.m., New York City Time on the Expiration Date, and to the extent not exercised by such time such Warrants shall become void. A-2 Reference is hereby made to the further provisions of this Warrant Certificate set forth on the reverse hereof and such further provisions shall for all purposes have the same effect as though fully set forth at this place. IN WITNESS WHEREOF, Geokinetics Inc. has caused this Warrant Certificate to be signed by the officers set forth below, each by a facsimile of his signature, and has caused a facsimile of its corporate seal to be affixed hereunto or imprinted hereon. Dated: GEOKINETICS INC. By: ____________________________ Name: Title: By: ____________________________ Name: Title: A-3 [Form of Warrant Certificate] [Reverse] The Warrants evidenced by this Warrant Certificate are part of a duly authorized issue of Warrants expiring September 15, 2006, entitling the holder on exercise to receive shares of Common Stock, $.0l par value, of the Company (the "Common Stock"), and are issued or to be issued pursuant to a Warrant Agreement dated as of April 30, 1998, as amended and restated as of October 1, 1999 (the "Warrant Agreement"), duly executed and delivered by the Company, which Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Company and the holders (the words "holders" or "holder" meaning the registered holders or registered holder) of the Warrants. A copy of the Warrant Agreement may be obtained by the holder hereof upon written request to the Company. Warrants may be exercised at any time on or before the Expiration Date. The holder of Warrants evidenced by this Warrant Certificate may exercise them by surrendering this Warrant Certificate, with the form of election to purchase set forth hereon properly completed and executed, together with payment of the Exercise Price in cash at the office of the Company designated for such purpose. In lieu of exercising this Warrant by paying in full the Exercise Price and transfer taxes (if applicable pursuant to Section 6 of the Warrant Agreement), if any, the Warrant holder may, from time to time, convert this Warrant, in whole or in part, into a number of shares of Common Stock determined by dividing (a) the aggregate current market price of the number of shares of Common Stock represented by the Warrants converted, minus the aggregate Exercise Price for such shares of Common Stock and transfer taxes, if any, by (b) the current market price of one share of Common Stock. The current market price shall be determined pursuant to Section 10(f) of the Warrant Agreement. In the event that upon any exercise of Warrants evidenced hereby the number of Warrants exercised shall be less than the total number of Warrants evidenced hereby, there shall be issued to the holder hereof or his assignee a new Warrant Certificate evidencing the number of Warrants not exercised. No adjustment shall be made for any dividends on any Common Stock issuable upon exercise of this Warrant. A-4 The Warrant Agreement provides that upon the occurrence of certain events the number of Warrant Shares issuable upon exercise of one Warrant set forth on the face hereof may, subject to certain conditions, be adjusted. No fractions of a share of Common Stock will be issued upon the exercise of any Warrant, but the Company will pay the cash value thereof determined as provided in the Warrant Agreement. The holders of the Warrants are entitled to certain registration rights with respect to the Common Stock purchasable upon exercise thereof. Said registration rights are set forth in Section 13 of the Warrant Agreement. Warrant Certificates, when surrendered at the office of the Company by the registered holder thereof in person or by legal representative or attorney duly authorized in writing, may be exchanged, in the manner and subject to the limitations provided in the Warrant Agreement, but without payment of any service charge, for another Warrant Certificate or Warrant Certificates of like tenor evidencing in the aggregate a like number of Warrants. Upon due presentation for registration of transfer of this Warrant Certificate at the office of the Company a new Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee(s) in exchange for this Warrant Certificate, subject to the limitations provided in the Warrant Agreement, without charge except for any tax or other governmental charge imposed in connection therewith. The Company may deem and treat the registered holder(s) thereof as the absolute owner(s) of this Warrant Certificate (notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof, of any distribution to the holder(s) hereof, and for all other purposes, and the Company shall not be affected by any notice to the contrary. Neither the Warrants nor this Warrant Certificate entities any holder hereof to any rights of a stockholder of the Company. A-5 ASSIGNMENT FORM If you the Holder want to assign this Warrant, fill in the form below and have your signature guaranteed: I or we assign and transfer this Warrant to: ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type name, address and zip code and social security or tax ID number of assignee) and irrevocably appoint___________________________________________, agent to transfer this Warrant on the books of the Company. The agent may substitute another to act for him. Date: _____________________ Signed: ___________________ (Signed exactly as your name appears on the other side of this Warrant) Signature Guarantee: ____________________________ In connection with any transfer of this Warrant occurring prior to the date which is the earlier of (i) the date of the declaration by the SEC of the effectiveness of a registration statement under the Securities Act of 1933, as amended (the "Securities Act"), covering resales of this Warrant (which effectiveness shall not have been suspended or terminated at the date of the transfer) and (ii) October 1, 2001, the undersigned confirms that it has not utilized any general solicitation or general advertising in connection with the transfer and that this Warrant is being transferred: A-6 [CHECK ONE] (1) __ to the Company or a subsidiary thereof; or (2) __ pursuant to and in compliance with Rule 144A under the Securities Act; or (3) __ to an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) that has furnished to the Company a signed letter containing certain representations and agreements (the form of which appears below); or (4) __ outside the United states to a "foreign person" in compliance with Rule 904 of Regulation S under the Securities Act; or (5) __ pursuant to the exemption from registration provided by Rule 144 under the Securities Act; or (6) __ pursuant to another available exemption from the registration requirements of the Securities Act. Unless one of the boxes is checked, the Company will refuse to register any of the Warrants evidenced by this certificate in the name of any person other than the registered Holder thereof; PROVIDED that if box (3), (4), (5) or (6) is checked, the Company may require, prior to registering any such transfer of the Notes, in its sole discretion, such legal opinions, certifications (including an investment letter in the case of box (3) or (4)) and other information as the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. If none of the foregoing boxes is checked, the Company shall not be obligated to register this Note in the name of any person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein shall have been satisfied. Date: _____________________ Signed: ___________________ (Signed exactly as your name appears on the other side of this Note) Signature Guarantee: ______________________________________ A-7 [TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED] The undersigned represents and warrants that it is purchasing this Warrant for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Date: _____________________ _____________________________ NOTICE: To be executed by an executive officer A-8 [FORM OF LETTER TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED] Ladies and Gentlemen: 1. The undersigned understands that any subsequent transfer of the Warrants is subject to certain restrictions and conditions set forth in the Warrants and in the Warrant Agreement and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Warrants except in compliance with, such restrictions and conditions and the Securities Act. 2. The undersigned understands that the offer and sale of the Warrants have not been registered under the Securities Act, and that the Warrants may not be offered or sold except as permitted in the following sentence. The undersigned agrees, on its own behalf and on behalf of any accounts for which it is acting as hereinafter stated, that if it should sell, pledge or otherwise transfer any Warrants it will do so only (1) (w) inside the United States to a person who the seller reasonably believes is a qualified institutional buyer within the meaning of Rule 144A under the Securities Act in a transaction meeting the requirements of Rule 144A, or in accordance with Rule 144 under the Securities Act, or pursuant to another exemption from the registration requirements of the Securities Act (and based upon an opinion of counsel, if the company so requests), (x) to the Company, (y) outside the United States to a foreign person in a transaction meeting the requirements of Rule 904 under the Securities Act or (z) pursuant to an effective registration statement under the Securities Act and (2) in each case, in accordance with the applicable securities laws of any state of the United States or any other applicable jurisdiction, and the undersigned further agrees to provide to any person purchasing any of the Warrants from us a notice advising such purchaser that resales of the Warrants are restricted as stated herein. 3. The undersigned understands that, on any proposed resale of any Warrants, it may be required to furnish the Company such certification and other information as the Company may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. The undersigned further understands that the Warrants purchased by it will bear a legend to the foregoing effect. A-9 4. The undersigned is an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) and (7) under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Warrants, and the undersigned and any accounts for which it is acting are each able to bear the economic risk of our or its investment, as the case may be. 5. The undersigned is acquiring the Warrants purchased by us for our account or for one or more accounts (each of which is an institutional "accredited investor") as to each of which the undersigned exercises sole investment discretion. Date:________________________________ _____________________________________ NOTICE: To be signed by an executive officer A-10 [Form of Election to Purchase] (To Be Executed Upon Exercise Of Warrant) The undersigned hereby irrevocably elects to exercise the Warrant, represented by this Warrant Certificate, to receive __________shares of Common Stock and herewith (check item) (i) tenders payment for such shares to the order of Geokinetics Inc. in the amount of $ _________ in accordance with the terms hereof; or (ii) converts this Warrant, in whole or in part, into a number of shares of Common Stock determined by dividing (a) the aggregate current market price of the number of shares of Common Stock represented by this Warrant, minus the aggregate Exercise Price for such shares of Common Stock and transfer taxes, if any, by (b) the current market price of one Share. The undersigned requests that a certificate for such shares be registered in the name of __________, whose address is ___________, and that such shares be delivered to ____________, whose address is ___________________ __________ . If said number of shares is less than all of the shares of Common Stock purchasable hereunder, the undersigned requests that a new Warrant Certificate representing the remaining balance of such shares be registered in the name of __________,whose address is,________________________________________ and that such Warrant Certificate be delivered to, _____________________________ __________ whose address is __________________________________________________. Signature:______________________________ Date: Signature Guaranteed: A-11 EX-4.3 4 EXHIBIT 4.3 [Exhibit A to Senior Secured Notes due 2005 and Senior Secured Notes due 2002 of Geokinetics Inc. issued on October 1, 1999] ================================================================================ GEOKINETICS INC., as Issuer, THE GUARANTORS PARTY HERETO and [ ], as Trustee ------------------------- INDENTURE Dated as of [ ] ------------------------- up to $51,358,000 Originally Issued Senior Secured Notes due 2005 Senior Secured Notes due 2002 ================================================================================ TABLE OF CONTENTS PAGE ---- ARTICLE ONE DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01. Definitions............................................1 SECTION 1.02. Incorporation by Reference of TIA.....................27 SECTION 1.03. Rules of Construction.................................27 ARTICLE TWO THE NOTES SECTION 2.01. Form and Dating.......................................28 SECTION 2.02. Execution and Authentication; Aggregate Principal Amount..........................28 SECTION 2.03. Registrar and Paying Agent............................29 SECTION 2.04. Paying Agent To Hold Assets in Trust..................30 SECTION 2.05. Noteholder Lists......................................31 SECTION 2.06. Transfer and Exchange.................................31 SECTION 2.07. Replacement Notes.....................................32 SECTION 2.08. Outstanding Notes.....................................32 SECTION 2.09. Treasury Notes........................................33 SECTION 2.10. Temporary Notes.......................................33 SECTION 2.11. Cancellation..........................................33 SECTION 2.12. Payment of Interest; Defaulted Interest...............34 SECTION 2.13. CUSIP Number..........................................34 SECTION 2.14. Deposit of Moneys.....................................35 SECTION 2.15. Persons Deemed Owners.................................35 ARTICLE THREE REDEMPTION SECTION 3.01. Notices to Trustee....................................35 SECTION 3.02. Selection of Notes To Be Redeemed.....................36 SECTION 3.03. Notice of Redemption..................................36 SECTION 3.04. Effect of Notice of Redemption........................37 SECTION 3.05. Deposit of Redemption Price...........................38 SECTION 3.06. Notes Redeemed in Part................................38 -ii- ARTICLE FOUR COVENANTS SECTION 4.01. Payment of Notes......................................38 SECTION 4.02. Maintenance of Office or Agency.......................39 SECTION 4.03. Corporate Existence...................................39 SECTION 4.04. Payment of Taxes and Other Claims.....................40 SECTION 4.05. Maintenance of Properties and Insurance...............40 SECTION 4.06. Compliance Certificate; Notice of Default.............41 SECTION 4.07. Compliance with Laws..................................42 SECTION 4.08. SEC Reports...........................................42 SECTION 4.09. Waiver of Stay, Extension or Usury Laws...............43 SECTION 4.10. Limitation on Restricted Payments.....................43 SECTION 4.11. Limitation on Transactions with Affiliates............46 SECTION 4.12. Limitation on Incurrence of Additional Indebtedness and Issuance of Disqualified Capital Stock.......................................47 SECTION 4.13. Limitation on Dividend and Other Payment Restrictions Affecting Subsidiaries.................48 SECTION 4.14. Payments on 2002 Notes................................49 SECTION 4.15. Change of Control.....................................49 SECTION 4.16. Limitation on Asset Sales.............................50 SECTION 4.17. Limitation on Preferred Stock of Subsidiaries.........54 SECTION 4.18. Limitation on Liens...................................54 SECTION 4.19. Additional Guarantors.................................55 SECTION 4.20. Limitation on Issuance of Shares of Subsidiaries......55 SECTION 4.21. Non-Guarantor Subsidiary..............................56 SECTION 4.22. Conduct of Business...................................56 SECTION 4.23. Limitation on Seismic Operations......................56 SECTION 4.24. Equal Security for Notes and Guarantees; No Further Negative Pledges............................56 SECTION 4.25. Pledge of Additional Collateral.......................57 SECTION 4.26. Security Interests....................................58 SECTION 4.27. Cash Maintenance......................................58 ARTICLE FIVE SUCCESSOR CORPORATION SECTION 5.01. Merger, Consolidation and Sale of Assets..............59 -iii- SECTION 5.02. Successor Corporation Substituted.....................61 ARTICLE SIX DEFAULT AND REMEDIES SECTION 6.01. Events of Default.....................................62 SECTION 6.02. Acceleration..........................................64 SECTION 6.03. Other Remedies........................................65 SECTION 6.04. Waiver of Past Defaults...............................65 SECTION 6.05. Control by Majority...................................65 SECTION 6.06. Limitation on Suits...................................66 SECTION 6.07. Rights of Holders To Receive Payment..................67 SECTION 6.08. Collection Suit by Trustee............................67 SECTION 6.09. Trustee May File Proofs of Claim......................67 SECTION 6.10. Priorities............................................68 SECTION 6.11. Undertaking for Costs.................................69 ARTICLE SEVEN TRUSTEE SECTION 7.01. Duties of Trustee.....................................69 SECTION 7.02. Rights of Trustee.....................................70 SECTION 7.03. Individual Rights of Trustee..........................72 SECTION 7.04. Trustee's Disclaimer..................................72 SECTION 7.05. Notice of Default.....................................73 SECTION 7.06. Reports by Trustee to Holders.........................73 SECTION 7.07. Compensation and Indemnity............................73 SECTION 7.08. Replacement of Trustee................................75 SECTION 7.09. Successor Trustee by Merger, Etc......................76 SECTION 7.10. Eligibility; Disqualification.........................76 SECTION 7.11. Preferential Collection of Claims Against the Company.............................................77 ARTICLE EIGHT DISCHARGE OF INDENTURE; DEFEASANCE SECTION 8.01. Termination of the Company's Obligations..............77 SECTION 8.02. Legal Defeasance and Covenant Defeasance..............79 SECTION 8.03. Conditions to Legal Defeasance or Covenant Defeasance..........................................80 SECTION 8.04. Application of Trust Money............................83 SECTION 8.05. Repayment to the Company..............................83 SECTION 8.06. Reinstatement.........................................84 -iv- ARTICLE NINE AMENDMENTS, SUPPLEMENTS AND WAIVERS SECTION 9.01. Without Consent of Holders............................84 SECTION 9.02. With Consent of Holders...............................85 SECTION 9.03. Releases of Collateral................................87 SECTION 9.04. Compliance with TIA...................................87 SECTION 9.05. Revocation and Effect of Consents.....................87 SECTION 9.06. Notation on or Exchange of Notes......................88 SECTION 9.07. Trustee To Sign Amendments, Etc.......................88 ARTICLE TEN [INTENTIONALLY OMITTED] ARTICLE ELEVEN GUARANTEES SECTION 11.01. Unconditional Guarantee...............................89 SECTION 11.02. [Intentionally Omitted]...............................90 SECTION 11.03. Severability..........................................90 SECTION 11.04. [Intentionally Omitted]...............................90 SECTION 11.05. Limitation of Guarantor's Liability...................90 SECTION 11.06. Guarantors May Consolidate, Etc. on Certain Terms...............................................91 SECTION 11.07. Contribution..........................................92 SECTION 11.08. Waiver of Subrogation.................................92 SECTION 11.09. Execution of Guarantee................................93 ARTICLE TWELVE MISCELLANEOUS SECTION 12.01. TIA Controls..........................................94 SECTION 12.02. Notices...............................................94 SECTION 12.03. Communications by Holders with Other Holders..........95 SECTION 12.04. Certificate and Opinion as to Conditions Precedent...........................................95 SECTION 12.05. Statements Required in Certificate or Opinion.........96 SECTION 12.06. Rules by Trustee, Paying Agent, Registrar.............96 -v- SECTION 12.07. Legal Holidays........................................96 SECTION 12.08. GOVERNING LAW.........................................97 SECTION 12.09. No Adverse Interpretation of Other Agreements.........97 SECTION 12.10. No Recourse Against Others............................97 SECTION 12.11. Successors............................................97 SECTION 12.12. Duplicate Originals...................................98 SECTION 12.13. Severability..........................................98 Signatures Schedule I - Existing Debt Schedule II - Permitted Transactions Schedule III - Budget Exhibit A - Form of Note due 2005........................................A-1 Exhibit B - Form of Note due 2002........................................B-1 Exhibit C - Form of General Security Agreement...........................C-1 Exhibit D - Form of Collateral Agency Agreement..........................D-1 Note: This Table of Contents shall not, for any purpose, be deemed to be part of the Indenture. INDENTURE, dated as of October 1, 1999, between Geokinetics Inc., a Delaware corporation (the "Company"), as issuer, the Guarantors signatory hereto (the "Guarantors") and [ ], a [ ], as Trustee (the "Trustee"). The Company has duly authorized the creation of an issue of 13 1/2% Senior Secured Notes due 2002 (the "2002 Notes") and an issue of 13 1/2% Senior Secured Notes due 2005 (the "2005 Notes" and, together with thE 2002 Notes, the "Notes"), and to provide therefor, the Company has duly authorized the execution and delivery of this Indenture. All things necessary to make the Notes, when duly issued and executed by the Company, and authenticated and delivered hereunder, the valid obligations of the Company, and to make this Indenture a valid and binding agreement of the Company, have been done. Each party hereto agrees as follows for the benefit of the other party and for the equal and ratable benefit of the Holders of the Notes. ARTICLE ONE DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01. DEFINITIONS. "2002 MATURITY DATE" means September 15, 2002. "2005 MATURITY DATE" means September 15, 2005. "2002 NOTE" has the meaning provided in the preamble to this Indenture, and shall be substantially in the form of EXHIBIT B attached hereto. "2005 NOTE" has the meaning provided in the preamble to this Indenture, and shall be substantially in the form of EXHIBIT A attached hereto. "ACCELERATION NOTICE" has the meaning provided in Section 6.02(a). -2- "ACCELERATION NOTICE" has the meaning provided in Section 6.02(a). "ACQUIRED INDEBTEDNESS" means Indebtedness of a Person or any of its Subsidiaries (a) existing at the time such Person becomes a Subsidiary of the Company or at the time it merges or consolidates with the Company or any of its Subsidiaries or (b) assumed in connection with the acquisition of assets from such Person and in each case not incurred by such Person in connection with, or in anticipation or contemplation of, such Person becoming a Subsidiary of the Company or such acquisition, merger or consolidation. "ADDITIONAL COLLATERAL" has the meaning provided in Section 4.25. "AFFILIATE" means, with respect to any specified Person, any other Person who directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified Person. The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative of the foregoing. For the purposes of this Indenture, none of the Institutional Purchasers (as defined in the Securities Purchase Agreement) will be deemed Affiliates of the Company or its Subsidiaries. "AFFILIATE TRANSACTION" has the meaning provided in Section 4.11. "AGENT" means any Registrar, Paying Agent or co-Registrar. "ASSET ACQUISITION" means (a) an Investment by the Company or any Subsidiary of the Company in any other Person pursuant to which such Person shall become a Subsidiary of the Company or any Subsidiary of the Company or shall be merged with or into the Company or any Subsidiary of the Company, or (b) the acquisition by the Company or any Subsidiary of the Company of the assets of any Person (other than a Subsidiary of the Company) which constitute all or substantially all of the assets of such Person or comprise any division or line of business of such Person or any other properties or assets of such Person other than in the ordinary course of business. -3- "ASSET SALE" means any direct or indirect sale, issuance, conveyance, transfer, lease (other than operating leases entered into in the ordinary course of business), assignment or other transfer for value by the Company or any of its Subsidiaries (including any Sale and Leaseback Transaction) to any Person other than the Company or a Wholly Owned Subsidiary of the Company of (a) any Capital Stock of any Subsidiary of the Company or (b) any other property or assets of the Company or any Subsidiary of the Company other than in the ordinary course of business; PROVIDED, HOWEVER, that Asset Sales shall not include (i) a transaction or series of related transactions for which the Company or its Subsidiaries receive aggregate consideration of less than $1,000,000, (ii) the sale, lease, conveyance, disposition or other transfer of all or substantially all of the assets of the Company as permitted under Section 5.01, and (iii) the creation (but not the foreclosure) of any Lien not prohibited by Section 4.18. "AUTHENTICATING AGENT" has the meaning provided in Section 2.02. "BANKRUPTCY LAW" means Title 11, U.S. Code or any similar Federal, state or foreign law for the relief of debtors. "BOARD OF DIRECTORS" means, as to any Person, the board of directors of such Person or any duly authorized committee thereof. "BOARD RESOLUTION" means, with respect to any Person, a copy of a resolution certified by the Secretary or an Assistant Secretary of such Person to have been duly adopted by the Board of Directors of such Person and to be in full force and effect on the date of such certification, and delivered to the Trustee. "BUSINESS DAY" means a day that is not a Legal Holiday. "CAPITALIZED LEASE OBLIGATION" means, as to any Person, the obligations of such Person under a lease that are required to be classified and accounted for as capital lease obligations under GAAP and, for purposes of this definition, the amount of such obligations at any date shall be the capitalized amount of such obligations that is included on a balance sheet -4- of such Person at such date, determined in accordance with GAAP. "CAPITAL STOCK" means (i) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether or not voting) of such Person's corporate stock, including each class of Common Stock and Preferred Stock of such Person and (ii) with respect to any Person that is not a corporation, any and all partnership or other equity interests of such Person. "CASH EQUIVALENTS" means (i) marketable direct obligations issued by, or unconditionally guaranteed by, the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition thereof; (ii) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either Standard & Poor's Ratings Service ("S&P") or Moody's Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more than one year from the date of creation thereof and, at the time of acquisition, having a rating of at least A-1 from S&P or at least P-1 from Moody's; (iv) certificates of deposit or bankers' acceptances maturing within one year from the date of acquisition thereof issued by any bank organized under the laws of the United States of America or any state thereof or the District of Columbia or any U.S. branch of a foreign bank having at the date of acquisition thereof combined capital and surplus of not less than $250,000,000; (v) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clause (i) above entered into with any bank meeting the qualifications specified in clause (iv) above; and (vi) investments in money market funds which invest substantially all their assets in securities of the types described in clauses (i) through (v) above. "CASH INTEREST" means cash interest payable on (i) all outstanding 2002 Notes at a rate of 13 1/2% per annum, and (ii) all outstanding 2005 Notes at a rate of 13 1/2% per annum. "CHANGE OF CONTROL" means the occurrence of one or more of the following events: (i) any sale, lease, exchange or -5- other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company to any Person or group of related Persons for purposes of Section 13(d) of the Exchange Act (a "Group"), together with any Affiliates thereof (whether or not otherwise in compliance with the provisions of this Indenture); (ii) the approval by the holders of Capital Stock of the Company of any plan or proposal for the liquidation or dissolution of the Company (whether or not otherwise in compliance with the provisions of this Indenture); (iii) any Person or Group (other than the Permitted Holders) shall become the owner, directly or indirectly, beneficially or of record, of shares representing more than 40% of the aggregate ordinary voting power represented by the issued and outstanding Capital Stock (the "Voting Stock") of the Company; (iv) either Steven A. Webster or William R. Ziegler ceases to beneficially own, directly or indirectly, in the aggregate at least 80% of the Capital Stock of the Company owned by such Person as of the Issue Date (other than Capital Stock owned of record by Blackhawk Capital Partners or Blackhawk Investors, L.L.C.); (v) either Steven A. Webster or William R. Ziegler ceases to be a member of the Board of Directors of the Company other than by reason of death or disability; or (vi) the replacement of a majority of the Board of Directors of the Company over a two-year period from the directors who constituted the Board of Directors of the Company at the beginning of such period, and such replacement shall not have been approved by a vote of at least a majority of the Board of Directors of the Company then still in office who either were members of such Board of Directors at the beginning of such period or whose election as a member of such Board of Directors was previously so approved or who were nominated by, or designees of, any of the Permitted Holders. "CHANGE OF CONTROL DATE" has the meaning provided in Section 4.15. "CHANGE OF CONTROL OFFER" has the meaning provided in Section 4.15. "COLLATERAL" means all of the Pledged Collateral, (including all Pledged Securities) and any Mortgaged Real Property. "COLLATERAL AGENCY AGREEMENT" means the Collateral Agency Agreement by and among the Collateral Agent and the initial Holders substantially in the form of EXHIBIT D hereto, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. -6- "COLLATERAL AGENT" means Firstar Bank, N.A., in its capacity as collateral agent for the Holders. "COMMON STOCK" of any Person means any and all shares, interests or other participations in, and other equivalents (however designated and whether voting or non-voting) of such Person's common stock, whether outstanding on the Issue Date or issued after the Issue Date, and includes, without limitation, all series and classes of such common stock. "COMPANY" means the party named as such in this Indenture until a successor replaces it pursuant to this Indenture and thereafter means such successor. "CONSOLIDATED EBITDA" means, with respect to any Person, for any period, the sum (without duplication) of (i) Consolidated Net Income and (ii) to the extent Consolidated Net Income has been reduced thereby, (A) all income taxes of such Person and its Subsidiaries paid or accrued in accordance with GAAP for such period, (B) Consolidated Interest Expense and (C) Consolidated Non-cash Charges LESS any non-cash items increasing Consolidated Net Income for such period, all as determined on a consolidated basis for such Person and its Subsidiaries in accordance with GAAP. "CONSOLIDATED FIXED CHARGE COVERAGE RATIO" means, with respect to any Person, the ratio of Consolidated EBITDA of such Person during the four full fiscal quarters (the "Four Quarter Period") ending on or prior to the date of the transaction giving rise to the need to calculate the Consolidated Fixed Charge Coverage Ratio (the "Transaction Date") to Consolidated Fixed Charges of such Person for the Four Quarter Period. In addition to and without limitation of the foregoing, for purposes of this definition, "Consolidated EBITDA" and "Consolidated Fixed Charges" shall be calculated after giving effect on a PRO FORMA basis for the period of such calculation to (i) the incurrence or repayment of any Indebtedness of such Person or any of its Subsidiaries (and the application of the proceeds thereof) giving rise to the need to make such calculation and any incurrence or repayment of other Indebtedness (and the application of the proceeds thereof), other than the incurrence or repayment of Indebtedness in the ordinary course of business for working capital purposes pursuant to working capital facilities, occurring during the Four Quarter Period or at any time subsequent to the last day of the Four Quarter Period -7- and on or prior to the Transaction Date, as if such incurrence or repayment, as the case may be (and the application of the proceeds thereof), occurred on the first day of the Four Quarter Period and (ii) any Asset Sales or Asset Acquisitions (including, without limitation, any Asset Acquisition giving rise to the need to make such calculation as a result of such Person or one of its Subsidiaries (including any Person who becomes a Subsidiary as a result of the Asset Acquisition) incurring, assuming or otherwise becoming liable for Acquired Indebtedness and also including any Consolidated EBITDA (including any PRO FORMA expense and cost reductions calculated on a basis consistent with Regulation S-X under the Securities Act) attributable to the assets which are the subject of the Asset Acquisition or Asset Sale during the Four Quarter Period) occurring during the Four Quarter Period or at any time subsequent to the last day of the Four Quarter Period and on or prior to the Transaction Date, as if such Asset Sale or Asset Acquisition (including the incurrence, assumption or becoming liable for any such Indebtedness or Acquired Indebtedness) occurred on the first day of the Four Quarter Period. Furthermore, in calculating "Consolidated Fixed Charges" for purposes of determining the denominator (but not the numerator) of this "Consolidated Fixed Charge Coverage Ratio," (1) interest on outstanding Indebtedness determined on a fluctuating basis as of the Transaction Date and which will continue to be so determined thereafter shall be deemed to have accrued at a fixed rate per annum equal to the rate of interest on such Indebtedness in effect on the Transaction Date and (2) notwithstanding clause (1) above, interest on Indebtedness determined on a fluctuating basis, to the extent such interest is covered by agreements relating to Interest Swap Obligations, shall be deemed to accrue at the rate per annum resulting after giving effect to the operation of such agreements. "CONSOLIDATED FIXED CHARGES" means, with respect to any Person for any period, the sum, without duplication, of (i) Consolidated Interest Expense (excluding amortization of debt discount or amortization or write-off of deferred financing costs), plus (ii) the product of (x) the amount of all dividend payments on any Preferred Stock of such Person (other than dividends paid in Qualified Capital Stock) paid in cash or, without duplication and with respect to Disqualified Capital Stock, accrued during such period times (y) a fraction, the numerator of which is one -8- and the denominator of which is one minus the then current effective consolidated federal, state and local tax rate of such Person, expressed as a decimal. "CONSOLIDATED INTEREST EXPENSE" means, with respect to any Person for any period, the sum of, without duplication: (i) the aggregate of the cash and non-cash interest expense of such Person and its Subsidiaries for such period determined on a consolidated basis in conformity with GAAP, including, without limitation, (a) any amortization of debt discount and amortization or write-off of deferred financing costs, (b) the net costs under Interest Swap Obligations, (c) all capitalized interest and (d) the interest portion of any deferred payment obligation; and (ii) without duplication of any amount in clause (i), the interest component of Capitalized Lease Obligations paid, accrued and/or scheduled to be paid or accrued (in each case, without duplication) by such Person and its Subsidiaries during such period as determined on a consolidated basis in accordance with GAAP. "CONSOLIDATED NET INCOME" means, with respect to any Person, for any period, the aggregate net income (or loss) of such Person and its Subsidiaries for such period on a consolidated basis, determined in accordance with GAAP; PROVIDED that there shall be excluded therefrom (a) after-tax gains and losses from Asset Sales (without regard to the exclusions set forth in the proviso to the definition thereof), (b) after-tax items classified as extraordinary or non-recurring gains, (c) the net income of any Person acquired in a "pooling of interests" transaction accrued prior to the date it becomes a Subsidiary of the referent Person or is merged or consolidated with the referent Person or any Subsidiary of the referent Person, (d) the net income (but not loss) of any Subsidiary of the referent Person to the extent that the declaration of dividends or similar distributions by that Subsidiary of that income is restricted by contract, operation of law or otherwise, except to the extent of cash dividends or distributions paid to the referent Person or a Wholly Owned Subsidiary of the referent Person by such Person, (e) the net income of any Person, other than a Subsidiary of the referent Person, except to the extent of cash dividends or distributions paid to the referent Person or a Wholly Owned Subsidiary of the referent Person by such Person, (f) any restoration to income of any contingency reserve, except to the extent that provision for such reserve was made out of Consolidated Net Income accrued at any time following the Issue Date, (g) income or loss attributable to discon- -9- tinued operations (including, without limitation, operations disposed of during such period whether or not such operations were classified as discontinued) and (h) in the case of a successor to the referent Person by consolidation or merger or as a transferee of the referent Person's assets, the aggregate net income (or loss) of the successor corporation prior to such consolidation, merger or transfer of assets. "CONSOLIDATED NET WORTH" means, with respect to any Person for any date of determination, the sum of (i) stated capital with respect to Capital Stock of such Person and additional paid-in capital, and (ii) retained earnings (or minus accumulated deficit) of such Person and its Subsidiaries, less, to the extent included in the foregoing, amounts attributable to Disqualified Capital Stock, each item determined on a consolidated basis in accordance with GAAP. "CONSOLIDATED NON-CASH CHARGES" means, with respect to any Person, for any period, the aggregate depreciation, amortization and other non-cash expenses of such Person and its Subsidiaries reducing Consolidated Net Income of such Person and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP (excluding any such non-cash charge which requires an accrual of or a reserve for cash charges for any future period). "COVENANT DEFEASANCE" has the meaning provided in Section 8.02. "CURRENCY AGREEMENT" means any foreign exchange contract, currency swap agreement or other similar agreement or arrangement designed to protect the Company or any Subsidiary of the Company against fluctuations in currency values. "CUSTODIAN" means any receiver, trustee, assignee, liquidator, sequestrator or similar official under any Bankruptcy Law. "DEFAULT" means an event or condition the occurrence of which is, or with the lapse of time or the giving of notice or both would be, an Event of Default. "DEPOSITORY" means The Depository Trust Company, its nominees and successors. -10- "DISQUALIFIED CAPITAL STOCK" means that portion of any Capital Stock 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 final maturity date of the Notes. "EVENT OF DEFAULT" has the meaning provided in Section 6.01. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, or any successor statute or statutes thereto. "EXISTING DEBT" means Indebtedness of the Company and its Subsidiaries outstanding on the Issue Date, as set forth on SCHEDULE I hereto. "FAIR MARKET VALUE" means, with respect to any asset or property, the price which could be negotiated in an arm's-length, free market transaction, for cash, between a willing seller and a willing and able buyer, neither of whom is under undue pressure or compulsion to complete the transaction. Fair market value shall be determined by the Board of Directors of the Company acting reasonably and in good faith and shall be evidenced by a Board Resolution of the Board of Directors of the Company delivered to the Trustee. "FUNDING GUARANTOR" has the meaning provided in Section 11.07. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as approved by a significant segment of the accounting profession of the United States, which are in effect as of December 31, 1998. "GDC" means Geophysical Development Corporation, a Texas corporation. "GENERAL SECURITY AGREEMENT" means the Security Agreement executed and delivered by the Company and each Guarantor substantially in the form of EXHIBIT C hereto, except for -11- such changes as shall have been approved by the Trustee, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms and the terms hereof. "GUARANTEE" means, with respect to any Person, any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Indebtedness of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such other Person (whether by agreement to keep-well or to maintain financial condition or otherwise); PROVIDED that the term "guarantee" shall not include endorsements for collection or deposit in the ordinary course of business. "GUARANTEE" means the guarantee of the Company's Obligations hereunder made by a Guarantor in favor of the Holders pursuant to the terms of Article 11 hereof. "GUARANTORS" means all of the Subsidiaries of the Company (other than (x) Quantum Geophysical Services, Inc. and (y) in the Company's discretion, any Subsidiary the assets of which have a book value of not more than $1,000,000) existing on the date hereof and any Person who becomes a Guarantor pursuant to Section 4.19. "HOLDER" or "NOTEHOLDER" means the Person in whose name a Note is registered on the Registrar's books. "INCUR" has the meaning provided in Section 4.12. "INDEBTEDNESS" means with respect to any Person, without duplication, (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all Capitalized Lease Obligations of such Person, (iv) all obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations and all obligations under any title retention agreement, (v) all obligations for the reimbursement of any obligor on any letter of credit, banker's acceptance or similar credit transaction, (vi) guarantees and other contingent obligations in respect of Indebtedness referred to in clauses (i) through -12- (v) above and clause (viii) below, (vii) all obligations of any other Person of the type referred to in clauses (i) through (vi) which are secured by any lien on any property or asset of such Person, the amount of such obligation being deemed to be the lesser of the fair market value of such property or asset or the amount of the obligation so secured, (viii) all net obligations under Currency Agreements and Interest Swap Obligations of such Person and (ix) all Disqualified Capital Stock issued by such Person with the amount of Indebtedness represented by such Disqualified Capital Stock being equal to the greater of its voluntary or involuntary liquidation preference and its maximum fixed repurchase price, but excluding accrued dividends, if any. Indebtedness shall in any event exclude trade accounts payable and other accrued liabilities arising in the ordinary course of business that are not overdue by 90 days or more or are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted. For purposes hereof, the "maximum fixed repurchase price" of any Disqualified Capital Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Capital Stock as if such Disqualified Capital Stock were purchased on any date on which Indebtedness shall be required to be determined pursuant to this Indenture, and if such price is based upon, or measured by, the fair market value of such Disqualified Capital Stock, such fair market value shall be determined reasonably and in good faith by the Board of Directors of the issuer of such Disqualified Capital Stock. "INDENTURE" means this Indenture, as amended or supplemented from time to time in accordance with the terms hereof. "INDEPENDENT FINANCIAL ADVISOR" means a firm (i) which does not, and whose directors, officers and employees or Affiliates do not, have a direct or indirect material financial interest in the Company and (ii) which, in the judgment of the Board of Directors of the Company, is otherwise independent and qualified to perform the task for which it is to be engaged. "INTEREST PAYMENT DATE" means the stated maturity of an installment of interest on the Notes. "INTEREST SWAP OBLIGATIONS" means the obligations of any Person, pursuant to any arrangement with any other Person, whereby, directly or indirectly, such Person is entitled to receive from time to time periodic payments calculated by apply- -13- ing either a floating or a fixed rate of interest on a stated notional amount in exchange for periodic payments made by such other Person calculated by applying a fixed or a floating rate of interest on the same notional amount and shall include, without limitation, interest rate swaps, caps, floors, collars and similar agreements. "INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as amended to the date hereof and from time to time hereafter. "INVESTMENT" means, with respect to any Person, any direct or indirect loan or other extension of credit (including, without limitation, a guarantee) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition by such Person of any Capital Stock, bonds, notes, debentures or other securities or evidences of Indebtedness issued by, any Person. "Investment" shall exclude (i) extensions of trade credit by the Company and its Subsidiaries on commercially reasonable terms in accordance with normal trade practices of the Company or such Subsidiary, as the case may be, and (ii) any transaction involving the purchase or other acquisition (including by way of merger) of Capital Stock of any Person by the Company and its Subsidiaries to the extent such purchase or other acquisition is in exchange for Qualified Capital Stock of the Company. For the purposes of Section 4.10, the amount of any Investment shall be the original cost of such Investment plus the cost of all additional Investments by the Company or any of its Subsidiaries, without any adjustments for increases or decreases in value, or write-ups, write-downs or write-offs with respect to such Investment, reduced by any repayment of principal or a return of capital, as the case may be, and by the payment of dividends or distributions in connection with such Investment or any other amounts received in respect of such Investment; PROVIDED that no such repayment of principal, return of capital, payment of dividends or distributions or receipt of any such other amounts shall reduce the amount of any Investment if such repayment of principal, return of capital, payment of dividends or distributions or receipt of any such amounts would be included in Consolidated Net Income. If the Company or any Subsidiary of the Company sells or otherwise disposes of any Common Stock of any direct or indirect Subsidiary of the Company such that, after giving effect to any such sale or dispo- -14- sition, the Company no longer owns, directly or indirectly, 100% of the outstanding Common Stock of such Subsidiary, the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Common Stock of such Subsidiary not sold or disposed of. "ISSUE DATE" means October 1, 1999. "LEGAL DEFEASANCE" has the meaning provided in Section 8.02. "LEGAL HOLIDAY" has the meaning provided in Section 11.07. "LIEN" means, with respect to any property, any lien, mortgage, deed of trust, pledge, security interest, charge or encumbrance of any kind thereon (including any conditional sale or other title retention agreement, any lease in the nature thereof and any agreement to give any security interest) and any assignment or other conveyance of a right to receive income or profits therefrom. "MATURITY DATE" means the 2002 Maturity Date and the 2005 Maturity Date, as either may be applicable. "MORTGAGE" means a term loan and revolving credit mortgage or deed of trust, assignment of rents, security agreement and fixture filing creating and evidencing a Lien on each Mortgaged Real Property, which shall be in form and substance reasonably acceptable to the Collateral Agent, in any event containing such schedules and including such additional provisions and other deviations as shall be necessary to conform such document to applicable or local law or as shall be customary under local law and made and which shall be dated the date of delivery thereof by the owner of the Mortgaged Real Property described therein for the benefit of the Collateral Agent, as mortgagee, assignee and secured party, as the same may at any time be amended or supplemented or otherwise modified from time to time in accordance with the terms thereof and hereof. "MORTGAGED REAL PROPERTY" means each Real Property pledged pursuant to Section 4.25 and all other mortgaged property under each Mortgage. "NET CASH PROCEEDS" means, with respect to any Asset Sale, the proceeds in the form of cash or Cash Equivalents in- -15- cluding payments in respect of deferred payment obligations when received in the form of cash or Cash Equivalents (other than the portion of any such deferred payment constituting interest) received by the Company or any of its Subsidiaries from such Asset Sale net of (a) reasonable out-of-pocket expenses and fees relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees and sales commissions), (b) taxes paid or payable after taking into account any reduction in consolidated tax liability due to available tax credits or deductions and any tax sharing arrangements, (c) repayment of Indebtedness secured by such asset that is required to be repaid in connection with such Asset Sale, (d) appropriate amounts to be provided by the Company or any Subsidiary, as the case may be, as a reserve, in accordance with GAAP, against any liabilities associated with such Asset Sale and retained by the Company or any Subsidiary, as the case may be, after such Asset Sale, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale, and (e) all distributions and other payments made to minority interest holders in Subsidiaries or joint ventures as a result of such Asset Sale. "NET PROCEEDS OFFER" has the meaning provided in Section 4.16. "NET PROCEEDS OFFER PAYMENT DATE" has the meaning provided in Section 4.16. "NET PROCEEDS OFFER TRIGGER DATE" has the meaning provided in Section 4.16. "NOTES" has the meaning provided in the preamble to this Indenture. "OBLIGATIONS" means all obligations for principal, premium, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing or otherwise relating to any Indebtedness, including with respect to any rights to rescission. "OFFICER" means, with respect to any Person, the Chief Executive Officer, the President, any Vice President, the Chief Financial Officer, the Treasurer, the Controller, or the -16- Secretary of such Person, or any other officer designated by the Board of Directors serving in a similar capacity. "OFFICERS' CERTIFICATE" means, with respect to any Person, a certificate signed by two Officers or by an Officer and either an Assistant Treasurer or an Assistant Secretary of such Person and otherwise complying with the requirements of Sections 12.04 and 12.05, as they relate to the making of an Officers' Certificate. "OPINION OF COUNSEL" means a written opinion from legal counsel, who may be counsel for the Company, and who is reasonably acceptable to the Trustee and not rendered by any employee of the Company or any of its Affiliates or Subsidiaries complying with the requirements of Sections 12.04 and 12.05, as they relate to the giving of an Opinion of Counsel. "PAYING AGENT" has the meaning provided in Section 2.03. "PERMITTED HOLDERS" means Steven A. Webster, William R. Ziegler, Blackhawk Capital Partners, Blackhawk Investors, L.L.C., the initial institutional Purchasers (as defined in the Securities Purchase Agreement) and their respective Affiliates. "PERMITTED INDEBTEDNESS" means, without duplication, each of the following: (i) Indebtedness under the Notes, Guarantees and this Indenture; (ii) Interest Swap Obligations of the Company covering Indebtedness of the Company or any of its Subsidiaries and Interest Swap Obligations of any Subsidiary of the Company covering Indebtedness of such Subsidiary; PROVIDED, HOWEVER, that such Interest Swap Obligations are entered into to protect the Company and its Subsidiaries from fluctuations in interest rates on Indebtedness incurred in accordance with this Indenture to the extent the notional principal amount of such Interest Swap Obligation does not exceed the principal amount of the Indebtedness to which such Interest Swap Obligation relates; (iii) Indebtedness of a Wholly Owned Subsidiary of the Company to the Company or to a Subsidiary of the Company for so long as such Indebtedness is held by the Company or -17- a Wholly Owned Subsidiary of the Company, in each case subject to no Lien held by a Person other than the Company or a Wholly Owned Subsidiary of the Company; PROVIDED that if as of any date any Person other than the Company or a Wholly Owned Subsidiary of the Company owns or holds any such Indebtedness or holds a Lien in respect of such Indebtedness, such date shall be deemed the incurrence of Indebtedness not constituting Permitted Indebtedness by the issuer of such Indebtedness; (iv) Indebtedness of the Company to a Wholly Owned Subsidiary of the Company for so long as such Indebtedness is held by a Wholly Owned Subsidiary of the Company, in each case subject to no Lien; PROVIDED that (a) any Indebtedness of the Company to any Wholly Owned Subsidiary of the Company is unsecured and subordinated, pursuant to a written agreement, to the Company's obligations under this Indenture and the Notes and (b) if as of any date any Person other than a Wholly Owned Subsidiary of the Company owns or holds any such Indebtedness or any Person holds a Lien in respect of such Indebtedness, such date shall be deemed the incurrence of Indebtedness not constituting Permitted Indebtedness by the Company; (v) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (including in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; PROVIDED, HOWEVER, that such Indebtedness is extinguished within five Business Days of incurrence; (vi) Indebtedness of the Company or any of its Subsidiaries represented by letters of credit for the account of the Company or such Subsidiary, as the case may be, in order to provide security for workers' compensation claims, payment obligations in connection with self-insurance, performance bonds, surety bonds or similar requirements in the ordinary course of business; (vii) Refinancing Indebtedness; (viii) Purchase Money Indebtedness and Capitalized Lease Obligations incurred to acquire property in the ordinary course of business which Purchase Money Indebted- -18- ness and Capitalized Lease Obligations do not in the aggregate exceed $500,000; (ix) guarantees by the Company and its Wholly Owned Subsidiaries of each other's Indebtedness; PROVIDED that such Indebtedness is permitted to be incurred under this Indenture; (x) Existing Debt; (xi) Indebtedness of the Company or any Wholly-Owned Subsidiary under insurance premium finance contracts (with terms of twelve months or less) incurred in the ordinary course of business which Indebtedness does not in the aggregate exceed $500,000; and (xii) additional Indebtedness of the Company in an aggregate principal amount not to exceed $500,000 at any one time outstanding. For the purpose of determining compliance with Section 4.12, (A) in the event that an item of Indebtedness meets the criteria of more than one of the types of Indebtedness described in the above clauses, the Company, in its sole discretion, shall classify such item of Indebtedness and only be required to include the amount and type of such Indebtedness in one of such clauses, (B) the amount of Indebtedness issued at a price which is less than the principal amount thereof shall be equal to the amount of the liability in respect thereof determined in accordance with GAAP and (C) so as to avoid duplication in determining the amount of Permitted Indebtedness under any clause of this definition, guarantees of, or obligations in respect of letters of credit supporting, Indebtedness otherwise included in the determination of such amount shall not also be included. "PERMITTED INVESTMENTS" means: (i) Investments by the Company or any Subsidiary of the Company in any Person that is or will become immediately after such Investment a Wholly Owned Subsidiary of the Company or that will merge or consolidate into the Company or a Wholly Owned Subsidiary of the Company, PROVIDED that such Wholly Owned Subsidiary is not restricted from making dividends or similar distributions by contract, operation of law or otherwise; (ii) Investments in the Company by any Subsidiary of the Company; PROVIDED that any Indebtedness evidencing such Investment is unsecured and subordinated, pursuant to a written agreement, to the Company's obli- -19- gations under the Notes and this Indenture; (iii) Investments in cash and Cash Equivalents; (iv) loans and advances to employees and officers of the Company and its Subsidiaries in the ordinary course of business for BONA FIDE business purposes not in excess of $250,000 at any one time outstanding; (v) Currency Agreements and Interest Swap Obligations entered into in the ordinary course of the Company's or its Subsidiaries' businesses and otherwise in compliance with this Indenture; (vi) Investments (x) constituting accounts receivable if credited or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms, PROVIDED that nothing in this clause shall prevent the Company or any Subsidiary from providing such concessionary trade terms as management deems reasonable in the circumstances, (y) resulting from settlements or compromises of accounts receivable or trade payables in the ordinary course of business, and (z) in securities of trade creditors or customers received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers; and (vii) Investments consisting of non-cash proceeds, or made by the Company or its Subsidiaries as a result of consideration, received in connection with an Asset Sale made in compliance with Section 4.16. "PERMITTED LIENS" means the following types of Liens: (i) Liens for taxes, assessments or governmental charges or claims either (a) not delinquent or (b) contested in good faith by appropriate proceedings and as to which the Company or its Subsidiaries shall have set aside on its books such reserves as may be required pursuant to GAAP; (ii) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens imposed by law incurred in the ordinary course of business for sums not yet delinquent or being contested in good faith, if such reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made in respect thereof; (iii) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and -20- return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money), including, in any such case, any Lien securing letters of credit issued in the ordinary course of business consistent with past practice in connection therewith; (iv) judgment Liens not giving rise to an Event of Default so long as such Lien is adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment shall not have been finally terminated or the period within which such proceedings may be initiated shall not have expired; (v) easements, rights-of-way, zoning restrictions and other similar charges or encumbrances in respect of real property or minor irregularities of title incident thereto in each case not interfering in any material respect with the ordinary conduct of the business of the Company or any of its Subsidiaries; (vi) any interest or title of a lessor under any Capitalized Lease Obligation; PROVIDED that such Liens do not extend to any property or assets which is not leased property subject to such Capitalized Lease Obligation; (vii) Liens securing Capitalized Lease Obligations and Purchase Money Indebtedness which may be incurred under clause (viii) of the definition of "Permitted Indebtedness"; PROVIDED, HOWEVER, that in the case of Purchase Money Indebtedness (A) the Indebtedness shall not exceed the cost of such property or assets being acquired or constructed and shall not be secured by any property or assets of the Company or any Subsidiary of the Company other than the property and assets being acquired or constructed and (B) the Lien securing such Indebtedness shall be created within 180 days of such acquisition or construction; (viii) Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person's obligations in respect of bankers' acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods; (ix) Liens securing reimbursement obligations with respect to commercial letters of credit which encumber documents and other property relating to such letters of credit and products and proceeds thereof; -21- (x) Liens encumbering deposits made to secure obligations arising from statutory, regulatory, contractual, or warranty requirements of the Company or any of its Subsidiaries, including rights of offset and set-off; (xi) Liens securing Interest Swap Obligations which Interest Swap Obligations relate to Indebtedness that is otherwise permitted under this Indenture; (xii) Liens securing Indebtedness under Currency Agreements; (xiii) Liens securing Acquired Indebtedness incurred in accordance with Section 4.12; PROVIDED that (A) such Liens secured such Acquired Indebtedness at the time of and prior to the incurrence of such Acquired Indebtedness by the Company or a Subsidiary of the Company and were not granted in connection with, or in anticipation of, the incurrence of such Acquired Indebtedness by the Company or a Subsidiary of the Company and (B) such Liens do not extend to or cover any property or assets of the Company or of any of its Subsidiaries other than the property or assets that secured the Acquired Indebtedness prior to the time such Indebtedness became Acquired Indebtedness of the Company or a Subsidiary of the Company and are no more favorable to the lienholders than those securing the Acquired Indebtedness prior to the incurrence of such Acquired Indebtedness by the Company or a Subsidiary of the Company; and (xiv) Liens securing obligations pursuant to the Security Documents. "PERSON" means an individual, partnership, corporation, unincorporated organization, trust or joint venture, or a governmental agency or political subdivision thereof. "PIK INTEREST" means pay-in-kind interest payable on all outstanding Notes for which Cash Interest is not paid pursuant to Section 2.12 in the form of the issuance of (x) with respect to the 2002 Notes, additional 2002 Notes at the rate of 13 1/2% per annum, and (y) with respect to the 2005 Notes, additional 2005 Notes at the rate of 13 1/2% per annum, in each case payable semi-annually, on the principal amount of such outstanding Notes. "PLEDGED COLLATERAL" means all the Pledged Collateral as defined in each of the Security Agreements. -22- "PLEDGED SECURITIES" means all Pledged Securities as defined in each of the Security Agreements. "PREFERRED STOCK" of any Person means any Capital Stock of such Person that has preferential rights to any other Capital Stock of such Person with respect to dividends or redemptions or upon liquidation. "PRINCIPAL" of any Indebtedness (including the Notes) means the principal amount of such Indebtedness plus the premium, if any, on such Indebtedness. "PROCEEDS PURCHASE DATE" has the meaning provided in Section 4.16. "PRO FORMA" means, with respect to any calculation made or required to be made pursuant to the terms of this Indenture, a calculation in accordance with Article 11 of Regulation S-X under the Securities Act, as determined by the Board of Directors of the Company. "PUBLIC EQUITY OFFERING" means an underwritten public offering of Qualified Capital Stock of the Company pursuant to a registration statement filed with the SEC in accordance with the Securities Act. "PURCHASE MONEY INDEBTEDNESS" means Indebtedness of the Company and its Subsidiaries incurred in the normal course of business for the purpose of financing all or any part of the purchase price, or the cost of installation, construction or improvement, of property. "QUALIFIED CAPITAL STOCK" means any Capital Stock that is not Disqualified Capital Stock. "QUALIFIED RIGHTS" means 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 the happening of any event, are mandatorily redeemable or redeemable at the sole option of the holder thereof on or prior to the final maturity date of the Notes. "QUARTER" means, with respect to any Person, a fiscal quarterly period of such Person. If during the 45-day period immediately following the completion of any Quarter (or, if the Quarter is the last Quarter of the fiscal year, then the 90-day -23- period immediately following the completion of such Quarter), a calculation is required to be made under Article Four and financial statements of such Person for such Quarter are unavailable, any calculation for the immediately preceding four Quarters (or, if fewer, all Quarters as shall have ended after the Issue Date and prior to the Quarter for which such financial statements are unavailable) required under Article Four shall be based instead upon the four Quarters (or, if fewer, all Quarters as shall have ended after the Issue Date and prior to the Quarter for which such financial statements are unavailable) immediately preceding the Quarter for which such financial statements are not available (giving effect to all adjustments required under Article Four in respect of events occurring subsequent to the close of such Quarters on which such calculation is to be based). "REAL PROPERTY" means all right, title and interest of the Company or any Guarantor or its respective Subsidiaries (including, without limitation, any leasehold estate) in and to a parcel of real property acquired by the Company or any Guarantor together with, in each case, all improvements and appurtenant fixtures, equipment, personal property, easements and other property and rights incidental to the ownership, lease or operation thereof. "RECORD DATE" means the Record Dates specified in the Notes, whether or not a Legal Holiday. "REDEMPTION DATE," when used with respect to any Note to be redeemed, means the date fixed for such redemption pursuant to this Indenture and the Notes. "REDEMPTION PRICE," when used with respect to any Note to be redeemed, means the price fixed for such redemption pursuant to this Indenture and the Notes. "REFERENCE DATE" has the meaning provided in Section 4.10. "REFINANCE" means, in respect of any security or Indebtedness, to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue a security or Indebtedness in exchange or replacement for, such security or Indebtedness in whole or in part. "Refinanced" and "Refinancing" shall have correlative meanings. -24- "REFINANCING INDEBTEDNESS" means any Refinancing by the Company or any Subsidiary of the Company of Indebtedness incurred in accordance with Section 4.12 (other than pursuant to clauses (ii)-(ix), clause (xi) and clause (xii) of the definition of "Permitted Indebtedness"), in each case that does not (1) result in an increase in the aggregate principal amount of Indebtedness of such Person as of the date of such proposed Refinancing (plus the amount of any premium required to be paid under the terms of the instrument governing such Indebtedness and plus the amount of reasonable expenses incurred by the Company in connection with such Refinancing) or (2) create Indebtedness with (A) a Weighted Average Life to Maturity that is less than the Weighted Average Life to Maturity of the Indebtedness being Refinanced or (B) a final maturity earlier than the final maturity of the Indebtedness being Refinanced; PROVIDED that (x) if such Indebtedness being Refinanced is Indebtedness of the Company, then such Refinancing Indebtedness shall be Indebtedness solely of the Company and (y) if such Indebtedness being Refinanced is subordinate or junior to the Notes, then such Refinancing Indebtedness shall be subordinate to the Notes at least to the same extent and in the same manner as the Indebtedness being Refinanced. "REGISTRAR" has the meaning provided in Section 2.03. "REPLACEMENT ASSETS" has the meaning provided in Section 4.16. "RESTRICTED PAYMENT" has the meaning provided in Section 4.10. "RESTRICTED SECURITY" has the meaning assigned to such term in Rule 144(a)(3) under the Securities Act; PROVIDED that the Trustee shall be entitled to request and conclusively rely on an Opinion of Counsel with respect to whether any Note constitutes a Restricted Security. "SALE AND LEASEBACK TRANSACTION" means any direct or indirect arrangement with any Person or to which any such Person is a party, providing for the leasing to the Company or a Subsidiary of the Company of any property, whether owned by the Company or any Subsidiary of the Company at the Issue Date or later acquired, which has been or is to be sold or transferred by the Company or such Subsidiary to such Person or to any other Person from whom funds have been or are to be advanced by such Person on the security of such Property. -25- "SEC" means the Securities and Exchange Commission. "SECURITIES ACT" means the Securities Act of 1933, as amended, or any successor statute or statutes thereto. "SECURITIES PURCHASE AGREEMENT" means the Securities Purchase Agreement dated October 1, 1999 among the Company, the Guarantors and the parties named therein, as the same may be amended or modified from time to time in accordance with the terms thereof. "SECURITY AGREEMENTS" means and includes the General Security Agreement and any other general security agreements delivered pursuant to Section 4.25 or 4.26. "SECURITY DOCUMENTS" means each of the Security Agreements, the Mortgages and any other documents utilized to pledge as Collateral for the Obligations owing to the Trustee or any Holder pursuant to the terms of this Indenture, the Notes, the Guarantees and each Security Document or secured by any of the Security Documents any property or assets of whatever kind or nature. "SEISMIC OPERATIONS" means the seismic acquisition services of the Company and its Subsidiaries, as described in the Company's Exchange Act Reports. "SIGNIFICANT SUBSIDIARY" shall have the meaning set forth in Rule 1.02(w) of Regulation S-X under the Securities Act; PROVIDED that GDC shall be a Significant Subsidiary. "SUBSIDIARY," with respect to any Person, means (i) any corporation of which the outstanding Capital Stock having at least a majority of the votes entitled to be cast in the election of directors under ordinary circumstances shall at the time be owned, directly or indirectly, by such Person or (ii) any other Person of which at least a majority of the voting interest under ordinary circumstances is at the time, directly or indirectly, owned by such Person. "SURVIVING ENTITY" has the meaning provided in Section 5.01. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb), as amended, as in effect on the -26- date of this Indenture, except as otherwise provided in Section 9.04. "TRUST OFFICER" means any officer of the Trustee assigned by the Trustee to administer this Indenture, or in the case of a successor trustee, an officer assigned to the department, division or group performing the corporation trust work of such successor and assigned to administer this Indenture. "TRUSTEE" means the party named as such in this Indenture until a successor replaces it in accordance with the provisions of this Indenture and thereafter means such successor. "U.S. GOVERNMENT OBLIGATIONS" means direct obligations of, and obligations guaranteed by, the United States of America for the payment of which the full faith and credit of the United States of America is pledged. "U.S. LEGAL TENDER" means such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts. "WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness or Disqualified Capital Stock, as the case may be, at any date, the number of years obtained by dividing (a) the then outstanding aggregate principal amount of such Indebtedness into (b) the sum of the total of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payment of principal, including payment at final maturity, in respect thereof, by (ii) the number of years (calculated to the nearest one-twelfth) which will elapse between such date and the making of such payment. "WHOLLY OWNED SUBSIDIARY" of any Person means any Subsidiary of such Person of which all the outstanding voting securities (other than in the case of a foreign Subsidiary, directors' qualifying shares or an immaterial amount of shares required to be owned by other Persons pursuant to applicable law) are owned by such Person or any Wholly Owned Subsidiary of such Person. -27- SECTION 1.02. INCORPORATION BY REFERENCE OF TIA. Whenever this Indenture refers to a provision of the TIA, such provision is incorporated by reference in, and made a part of, this Indenture. The following TIA terms used in this Indenture have the following meanings: "indenture securities" means the Notes. "indenture security holder" means a Holder or a Noteholder. "indenture to be qualified" means this Indenture. "indenture trustee" or "institutional trustee" means the Trustee. "obligor" on the indenture securities means the Company or any other obligor on the Notes. All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule and not otherwise defined herein have the meanings assigned to them therein. SECTION 1.03. RULES OF CONSTRUCTION. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP as in effect on the date hereof; (3) "or" is not exclusive; (4) words in the singular include the plural, and words in the plural include the singular; and (5) "herein," "hereof" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. -28- ARTICLE TWO THE NOTES SECTION 2.01. FORM AND DATING. The Notes and the Trustee's certificate of authentication shall be substantially in the form of EXHIBIT A and EXHIBIT B hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rule or depository rule or usage. The Company and the Trustee shall approve the form of the Notes and any notation, legend or endorsement on them. Each Note shall be dated the date of its issuance and shall show the date of its authentication. The terms and provisions contained in the 2005 Notes and the 2002 Notes, annexed hereto as EXHIBIT A and EXHIBIT B, respectively, shall constitute, and are hereby expressly made, a part of this Indenture and, to the extent applicable, the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. SECTION 2.02. EXECUTION AND AUTHENTICATION; AGGREGATE PRINCIPAL AMOUNT. Two Officers, or an Officer and an Assistant Secretary, shall sign, or one Officer shall sign and one Officer or an Assistant Secretary (each of whom shall, in each case, have been duly authorized by all requisite corporate actions) shall attest to, the Notes for the Company by manual or facsimile signature. The Company's seal shall also be reproduced on the Notes. Each Guarantor, if any, shall execute the Guarantee in the manner set forth in Section 11.09. If an Officer or Assistant Secretary whose signature is on a Note was an Officer or Assistant Secretary at the time of such execution but no longer holds that office or position at the time the Trustee authenticates the Note, the Note shall nevertheless be valid. A Note shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Note. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture. -29- The Trustee shall authenticate Notes for original issue, upon written orders of the Company in the form of an Officers' Certificate in an aggregate principal amount not to exceed $58,525,331; PROVIDED that, except as provided in Section 2.07, (a) (i) the sum of the aggregate principal amount of (x) 2002 Notes issued on the Issue Date and (y) 2002 Notes issued pursuant to an additional investment in the 2002 Notes of up to $1,000,000 made on or prior to the 60th day after the Issue Date, shall not exceed $6,000,000 and (ii) additional 2002 Notes issued as PIK Interest pursuant to Section 2.12 in lieu of Cash Interest shall not exceed $837,338 and (b) additional 2005 Notes issued as PIK Interest pursuant to Section 2.12 in lieu of Cash Interest shall not exceed $6,329,993. The Officers' Certificate shall specify the amount of Notes to be authenticated, the date on which the Notes are to be authenticated and the aggregate principal amount of Notes outstanding on the date of authentication. The Trustee shall not be required to authenticate Notes if the issuance of such Notes pursuant to this Indenture will affect the Trustee's own rights, duties or immunities under the Notes and this Indenture in a manner which is not reasonably acceptable to the Trustee. The Trustee may appoint an authenticating agent (the "Authenticating Agent") reasonably acceptable to the Company to authenticate Notes. Unless otherwise provided in the appointment, an Authenticating Agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such Authenticating Agent. An Authenticating Agent has the same rights as an Agent to deal with the Company and Affiliates of the Company. The Notes shall be issuable in fully registered form only, without coupons. SECTION 2.03. REGISTRAR AND PAYING AGENT. The Company shall maintain an office or agency (which shall be located in the Borough of Manhattan in The City of New York, State of New York) where (a) Notes may be presented or surrendered for registration of transfer or for exchange ("Registrar"), (b) Notes may be presented or surrendered for payment ("Paying Agent") and (c) notices and demands to or upon the Company in respect of the Notes and this Indenture may be -30- served. The Registrar shall keep a register of the Notes and of their transfer and exchange. The Company, upon prior written notice to the Trustee, may have one or more co-Registrars and one or more additional paying agents reasonably acceptable to the Trustee. The term "Paying Agent" includes any additional Paying Agent. Neither the Company nor any Affiliate of the Company may act as Paying Agent. The Company shall enter into an appropriate agency agreement with any Agent not a party to this Indenture, which agreement shall incorporate the provisions of the TIA and implement the provisions of this Indenture that relate to such Agent. The Company shall notify the Trustee, in advance, of the name and address of any such Agent. If the Company fails to maintain a Registrar or Paying Agent, or fails to give the foregoing notice, the Trustee shall act as such. The Company initially appoints the Trustee as Registrar, Paying Agent and agent for service of demands and notices in connection with the Notes, until such time as the Trustee has resigned or a successor has been appointed. The Paying Agent or Registrar may resign upon 30 days notice to the Company. SECTION 2.04. PAYING AGENT TO HOLD ASSETS IN TRUST. The Company shall require each Paying Agent other than the Trustee to agree in writing that each Paying Agent shall hold in trust for the benefit of the Holders or the Trustee all assets held by the Paying Agent for the payment of principal of, or interest on, the Notes (whether such assets have been distributed to it by the Company or any other obligor on the Notes), and the Company and the Paying Agent shall notify the Trustee of any Default by the Company (or any other obligor on the Notes) in making any such payment. The Company at any time may require a Paying Agent to distribute all assets held by it to the Trustee and account for any assets disbursed and the Trustee may at any time during the continuance of any payment Default, upon written request to a Paying Agent, require such Paying Agent to distribute all assets held by it to the Trustee and to account for any assets distributed. Upon distribution to the Trustee of all assets that shall have been delivered by the Company to the Paying Agent, the Paying Agent shall have no further liability for such assets. -31- SECTION 2.05. NOTEHOLDER LISTS. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of the Holders. If the Trustee is not the Registrar, the Company shall furnish or cause the Registrar to furnish to the Trustee before each Record Date and at such other times as the Trustee may request in writing a list as of such date and in such form as the Trustee may reasonably require of the names and addresses of the Holders, which list may be conclusively relied upon by the Trustee. SECTION 2.06. TRANSFER AND EXCHANGE. When Notes are presented to the Registrar or a co-Registrar with a request to register the transfer of such Notes or to exchange such Notes for an equal principal amount of the same series of Notes of other authorized denominations, the Registrar or co-Registrar shall register the transfer or make the exchange as requested if its requirements for such transaction are met; PROVIDED, HOWEVER, that the Notes presented or surrendered for registration of transfer or exchange shall be duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Company and the Registrar or co-Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing. To permit registrations of transfer and exchanges, the Company shall execute and the Trustee shall authenticate Notes at the Registrar's or co-Registrar's request. No service charge shall be made for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchanges or transfers pursuant to Sections 2.10, 3.06, 4.15, 4.16 or 9.06, in which event the Company shall be responsible for the payment of such taxes). The Registrar or co-Registrar shall not be required to register the transfer of or exchange of any Note (i) during a period beginning at the opening of business 15 days before the mailing of a notice of redemption of Notes and ending at the close of business on the day of such mailing and (ii) selected for redemption in whole or in part pursuant to Article Three, except the unredeemed portion of any Note being redeemed in part. -32- SECTION 2.07. REPLACEMENT NOTES. If a mutilated Note is surrendered to the Trustee or if the Holder of a Note claims that the Note has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement Note of the same series if the Trustee's requirements are met. If required by the Trustee or the Company, such Holder must provide an affidavit of lost certificate and an indemnity bond or other indemnity, sufficient in the judgment of the Company and the Trustee, to protect the Company, the Trustee or any Agent from any loss which any of them may suffer if a Note is replaced. The Company may charge such Holder for its reasonable, out-of-pocket expenses in replacing a Note, including reasonable fees and expenses of counsel. Every replacement Note shall constitute an additional obligation of the Company, and shall be entitled to the benefits of this Indenture. SECTION 2.08. OUTSTANDING NOTES. Notes outstanding at any time are all the Notes that have been authenticated by the Trustee except those canceled by it, those delivered to it for cancellation and those described in this Section 2.08 as not outstanding. Subject to the provisions of Section 2.09, a Note does not cease to be outstanding because the Company or any of its Affiliates holds the Note. If a Note is replaced pursuant to Section 2.07 (other than a mutilated Note surrendered for replacement), it ceases to be outstanding unless the Trustee receives an Opinion of Counsel that the replaced Note is held by a BONA FIDE purchaser. A mutilated Note ceases to be outstanding upon surrender of such Note and replacement thereof pursuant to Section 2.07. If on a Redemption Date or the Maturity Date the Paying Agent holds U.S. Legal Tender or U.S. Government Obligations sufficient to pay all of the principal and interest due on the Notes payable on that date and is not prohibited from paying such money to the Holders thereof pursuant to the terms of this Indenture, then on and after that date such Notes cease to be outstanding and interest on them ceases to accrue. -33- SECTION 2.09. TREASURY NOTES. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver, consent or notice, Notes owned by the Company or any of its Affiliates shall be considered as though they are not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes which a Trust Officer of the Trustee actually knows are so owned shall be so considered. The Company shall notify the Trustee, in writing, when it or any of its Affiliates repurchases or otherwise acquires Notes, of the aggregate principal amount of such Notes so repurchased or otherwise acquired. SECTION 2.10. TEMPORARY NOTES. Until definitive Notes are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Notes upon receipt of a written order of the Company in the form of an Officers' Certificate. Such Officers' Certificate shall specify the amount of temporary Notes to be authenticated and the date on which the temporary Notes are to be authenticated. Temporary Notes shall be substantially in the form of definitive Notes but may have variations that the Company considers appropriate for temporary Notes. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate upon receipt of a written order of the Company pursuant to Section 2.02 definitive Notes in exchange for temporary Notes. SECTION 2.11. CANCELLATION. The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Notes surrendered to them for transfer, exchange or payment. The Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent, and no one else, shall cancel and, at the written direction of the Company, shall dispose of all Notes surrendered for transfer, exchange, payment or cancellation. Subject to Section 2.07, the Company may not issue new Notes to replace Notes that they have paid or delivered to the Trustee for cancellation. If the Company shall acquire any of the Notes, such acquisition shall not operate as a redemption or satisfaction of the Indebtedness represented by such Notes unless and until the same are surren- -34- dered to the Trustee for cancellation pursuant to this Section 2.11. SECTION 2.12. PAYMENT OF INTEREST; DEFAULTED INTEREST. Interest on any Note which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Note is registered in the register maintained by the Registrar at the close of business on the Record Date for such interest. On each Interest Payment Date through and including September 15, 2000, the Company, at its option, may pay interest on the Notes in the form of Cash Interest or PIK Interest; thereafter the Company shall pay Cash Interest on each Interest Payment Date. If the Company defaults in a payment of interest on the Notes, such interest shall forthwith cease to be payable to the Holder on the relevant Record Date by virtue of having been such Holder, and the Company shall pay the defaulted interest, plus (to the extent lawful) any interest payable on the defaulted interest to the Persons who are Holders on a subsequent special record date, which date shall be the fifteenth day next preceding the date fixed by the Company for the payment of defaulted interest or the next succeeding Business Day if such date is not a Business Day. At least 15 days before the subsequent special record date, the Company shall mail to each Holder, as of a recent date selected by the Company, with a copy to the Trustee, a notice that states the subsequent special record date, the payment date and the amount of defaulted interest, and interest payable on such defaulted interest, if any, to be paid. SECTION 2.13. CUSIP NUMBER. The Company in issuing the Notes may use a "CUSIP" number, and if so, the Trustee shall use the CUSIP number in notices of redemption or exchange as a convenience to Holders; PROVIDED that no representation is hereby deemed to be made by the Trustee as to the correctness or accuracy of the CUSIP number printed in the notice or on the Notes, and that reliance may be placed only on the other identification numbers printed on the Notes. The Company shall promptly notify the Trustee of any change in the CUSIP number. -35- SECTION 2.14. DEPOSIT OF MONEYS. Prior to 11:00 a.m. New York City time on each Interest Payment Date that Cash Interest is paid or due and on the Maturity Date, the Company shall have deposited with the Paying Agent in immediately available funds money sufficient to make cash payments, if any, due on such Interest Payment Date or Maturity Date, as the case may be, in a timely manner which permits the Paying Agent to remit payment to the Holders on such Interest Payment Date or Maturity Date, as the case may be. SECTION 2.15. PERSONS DEEMED OWNERS. Prior to due presentment of a Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Note is registered in the register maintained by the Registrar as the owner of such Note for the purpose of receiving payment of principal of and (subject to Section 2.12) interest on such Note and for all other purposes whatsoever, whether or not such Note be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. ARTICLE THREE REDEMPTION SECTION 3.01. NOTICES TO TRUSTEE. If the Company elects to redeem Notes pursuant to Paragraph 6 of the Notes, it shall notify the Trustee and the Paying Agent in writing of the Redemption Date and the principal amount of the Notes to be redeemed. The Company shall give each notice provided for in this Section 3.01 at least 60 days before the Redemption Date (unless a shorter notice period shall be satisfactory to the Trustee, as evidenced in a writing signed on behalf of the Trustee), together with an Officers' Certificate of the Company stating that such redemption shall comply with the conditions contained herein and in the Notes. -36- SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED. If fewer than all of the Notes are to be redeemed, selection of the Notes to be redeemed will be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed or, if the Notes are not then listed on a national securities exchange, on a PRO RATA basis, by lot or in such other fair and reasonable manner chosen at the discretion of the Trustee; PROVIDED, HOWEVER, that if a partial redemption is made with the proceeds of a Public Equity Offering, selection of the Notes or portion thereof for redemption shall be made by the Trustee only on a PRO RATA basis, unless such method is otherwise prohibited; PROVIDED, FURTHER, HOWEVER, that all 2002 Notes must be redeemed before any 2005 Notes may be redeemed without the prior written consent of all Holders of 2002 Notes. The Company shall promptly notify the Trustee and the Paying Agent in writing of the date of listing and the name of the securities exchange if and when the Notes are listed on a principal national securities exchange. The Trustee shall make the selection from the Notes outstanding and not previously called for redemption and shall promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Note selected for partial redemption, the principal amount thereof to be redeemed. Provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption. SECTION 3.03. NOTICE OF REDEMPTION. At least 30 days but not more than 60 days before a Redemption Date, the Company shall mail or cause to be mailed a notice of redemption by first class mail, postage prepaid, to each Holder whose Notes are to be redeemed, with a copy to the Trustee and any Paying Agent. At the Company's written request, the Trustee shall give the notice of redemption in the Company's name and at the Company's expense. Each notice for redemption shall identify the Notes to be redeemed and shall state: (1) the Redemption Date; (2) the Redemption Price and the amount of accrued interest, if any, to be paid; -37- (3) the name and address of the Paying Agent; (4) the subparagraph of the Notes pursuant to which such redemption is being made; (5) that Notes called for redemption must be surrendered to the Paying Agent to collect the Redemption Price plus accrued interest, if any; (6) that, unless the Company defaults in making the redemption payment, interest on Notes called for redemption ceases to accrue on and after the Redemption Date, and the only remaining right of the Holders of such Notes is to receive payment of the Redemption Price plus accrued interest, if any, to the Redemption Date, upon surrender to the Paying Agent of the Notes redeemed; (7) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the Redemption Date, and upon surrender of such Note, a new Note or Notes in the aggregate principal amount equal to the unredeemed portion thereof will be issued; and (8) if fewer than all the Notes are to be redeemed, the identification of the particular Notes (or portion thereof) to be redeemed, as well as the aggregate principal amount of Notes to be redeemed and the aggregate principal amount of Notes to be outstanding after such partial redemption. SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION. Once notice of redemption is mailed in accordance with Section 3.03, Notes called for redemption become due and payable on the Redemption Date and at the Redemption Price plus accrued interest, if any. Upon surrender to the Trustee or Paying Agent, such Notes called for redemption shall be paid at the Redemption Price (which shall include accrued interest thereon to the Redemption Date), but installments of interest, the maturity of which is on or prior to the Redemption Date, shall be payable to Holders of record at the close of business on the relevant record dates referred to in Section 2.12. -38- SECTION 3.05. DEPOSIT OF REDEMPTION PRICE. On or before 11:00 a.m. New York City time on the Redemption Date, the Company shall deposit with the Paying Agent U.S. Legal Tender sufficient to pay the Redemption Price plus accrued interest, if any, of all Notes to be redeemed on that date. The Paying Agent shall promptly return to the Company any U.S. Legal Tender so deposited which is not required for that purpose, except with respect to moneys owed as obligations to the Trustee pursuant to Article Seven. If the Company complies with the preceding paragraph, then, unless the Company defaults in the payment of such Redemption Price plus accrued interest, if any, interest on the Notes to be redeemed will cease to accrue on and after the applicable Redemption Date, whether or not such Notes are presented for payment. SECTION 3.06. NOTES REDEEMED IN PART. Upon surrender of a Note that is to be redeemed in part, the Company shall execute and the Trustee shall authenticate for the Holder a new Note or Notes of the same series equal in principal amount to the unredeemed portion of the Note surrendered. ARTICLE FOUR COVENANTS SECTION 4.01. PAYMENT OF NOTES. The Company shall pay the principal of and interest on the Notes on the dates and in the manner provided in the Notes and in this Indenture. An installment of principal of or interest on the Notes shall be considered paid on the date it is due if the Trustee or Paying Agent (other than the Company or an Affiliate of the Company) holds on that date (i) U.S. Legal Tender designated for and sufficient to pay the installment in full and is not prohibited from paying such money to the Holders pursuant to the terms of this Indenture or (ii) additional Notes representing PIK Interest in accordance with Section 2.12 hereof. -39- The Company shall pay, to the extent such payments are lawful, interest on overdue principal and on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the rate borne by the Notes plus 2% per annum. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY. The Company shall maintain the office or agency required under Section 2.03. The Company shall give prior written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the address of the Trustee set forth in Section 12.02. SECTION 4.03. CORPORATE EXISTENCE. Except as otherwise permitted by Article Five and Section 4.16, the Company shall do or cause to be done, at its own cost and expense, all things necessary to preserve and keep in full force and effect its corporate existence and the corporate existence of each of its Subsidiaries in accordance with the respective organizational documents of each such Subsidiary and the material rights (charter and statutory) and franchises of the Company and each such Subsidiary; PROVIDED, HOWEVER, that the Company shall not be required to preserve any such right or franchise, or the corporate, partnership or other existence of the Company or any Subsidiary of the Company, if the Board of Directors of the Company shall determine in good faith (which such determination shall be evidenced by a Board Resolution) that the preservation thereof is no longer desirable in the conduct of the business of the Company and its respective Subsidiaries taken as a whole and the loss thereof is not adverse in any material respect to the Holders; and PROVIDED FURTHER that any Subsidiary of the Company may consolidate with, merge into, or transfer or distribute all or part of its properties and assets to, the Company or any Wholly Owned Subsidiary of the Company. -40- SECTION 4.04. PAYMENT OF TAXES AND OTHER CLAIMS. The Company shall pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (i) all taxes, assessments and governmental charges (including withholding taxes and any penalties, interest and additions to taxes) levied or imposed upon it or any of its Subsidiaries or properties of it or any of its Subsidiaries and (ii) all lawful claims for labor, materials and supplies that, if unpaid, might by law become a Lien upon the property of it or any of its Subsidiaries; PROVIDED, HOWEVER, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim (y) whose amount, applicability or validity is being contested in good faith by appropriate proceedings properly instituted and diligently conducted for which adequate reserves have been taken or (z) the failure to pay or discharge, or cause to be paid or discharged such tax, assessment, charge or claim would not reasonably be expected to result in a material adverse effect on the business operations or financial condition of the Company. SECTION 4.05. MAINTENANCE OF PROPERTIES AND INSURANCE. (a) The Company shall, and shall cause each of its Subsidiaries to, maintain its material properties in good working order and condition (subject to ordinary wear and tear) and make all necessary repairs, renewals, replacements, additions, betterments and improvements thereto and actively conduct and carry on its business; PROVIDED, HOWEVER, that nothing in this Section 4.05 shall prevent the Company or any of its Subsidiaries from discontinuing the operation and maintenance of any of its properties, if such discontinuance is, in the good faith judgment of the Board of Directors of the Company or such Subsidiary, as the case may be, desirable in the conduct of their respective businesses and is not disadvantageous in any material respect to the Holders. (b) The Company shall provide or cause to be provided, for itself and each of its Subsidiaries, insurance against loss or damage of the kinds that, in the good faith judgment of the Board of Directors of the Company, are adequate and appropriate for the conduct of the business of the Company and such Subsidiaries in a prudent manner, with reputable insurers or with the government of the United States of America -41- or an agency or instrumentality thereof, in such amounts, with such deductibles, and by such methods as shall be customary, in the good faith judgment of the Board of Directors of the Company, for companies similarly situated in the industry. SECTION 4.06. COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT. (a) The Company shall deliver to the Trustee, within 90 days after the end of the Company's fiscal year, an Officers' Certificate stating that a review of their activities and the activities of its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture and further stating, as to each such Officer signing such certificate, that to the best of such Officer's knowledge the Company during such preceding fiscal year has kept, observed, performed and fulfilled each and every such covenant and no Default or Event of Default occurred during such year and at the date of such certificate there is no Default or Event of Default that has occurred and is continuing or, if such signers do know of such Default or Event of Default, the certificate shall describe the Default or Event of Default and its status with particularity. The Officers' Certificate shall also notify the Trustee should the Company elect to change the manner in which it fixes its fiscal year end. (b) The annual financial statements delivered pursuant to Section 4.08 shall be accompanied by a written report of the Company's independent accountants (who shall be a firm of established national reputation) that in conducting their audit of such financial statements nothing has come to their attention that would lead them to believe that the Company has violated any provisions of Article Four, Five or Six of this Indenture insofar as they relate to accounting matters or, if any such violation has occurred, specifying the nature and period of existence thereof. (c) (i) If any Default or Event of Default has occurred and is continuing or (ii) if any Holder seeks to exercise any remedy hereunder with respect to a claimed Default under this Indenture or the Notes, the Company shall deliver to the Trustee, at its address set forth in Section 12.02 hereof, by registered or certified mail or by telegram, telex or fac- -42- simile transmission followed by hard copy by registered or certified mail an Officers' Certificate specifying such event, notice or other action within five Business Days of its becoming aware of such occurrence. SECTION 4.07. COMPLIANCE WITH LAWS. The Company shall comply, and shall cause each of its Subsidiaries to comply, with all applicable statutes, rules, regulations, orders and restrictions of the United States of America, all states and municipalities thereof, and of any governmental department, commission, board, regulatory authority, bureau, agency and instrumentality of the foregoing, in respect of the conduct of their respective businesses and the ownership of their respective properties, except for such noncompliances as are not in the aggregate reasonably likely to have a material adverse effect on the financial condition or results of operations of the Company and its Subsidiaries, taken as a whole. SECTION 4.08. SEC REPORTS. (a) So long as the Notes are outstanding, if the Company is required to file annual or quarterly reports with the SEC under Section 13 or 15(d) of the Exchange Act, the Company (at its own expense) shall file with the SEC and shall file with the Trustee within 15 days after it files them with the SEC copies of the quarterly and annual reports and of the information, documents, and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) required to be filed pursuant to Section 13 or 15(d) of the Exchange Act. Upon qualification of this Indenture under the TIA, the Company shall also comply with the provisions of TIA ss. 314(a). (b) At the Company's expense, the Company shall cause an annual report, if furnished by it to its stockholders generally and each quarterly or other financial report if furnished by it to its stockholders generally to be filed with the Trustee and mailed to the Holders at their addresses appearing in the register of Notes maintained by the Registrar at the time of such mailing or furnishing to stockholders. (c) If the Company is not required to file annual or quarterly reports with the SEC under Section 13 or 15(d) of the Exchange Act for any fiscal period ending after the Issue Date, -43- the Company shall cause its consolidated financial statements, including any notes thereto (and, in the case of a fiscal year end, an auditor's report by an accounting firm of nationally established reputation), and a "Management's Discussion and Analysis of Financial Condition and Results of Operations" comparable to that which would have been required to appear in annual or quarterly reports filed under Section 13 or 15(d) of the Exchange Act if the Company had a class of securities listed on a national securities exchange, to be so filed with the Trustee and mailed to the Holders at their addresses appearing in the register of Notes maintained by the Registrar within 90 days after the end of each fiscal year and within 45 days after the end of each of the Company's first three fiscal quarters in each fiscal year. (d) The Company shall provide to any Holder any information reasonably requested by such Holder concerning the Company (including financial statements) necessary in order to permit such Holder to sell or transfer Notes in compliance with Rule 144A under the Securities Act. SECTION 4.09. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Company and each Guarantor covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law or other law that would prohibit or forgive the Company or any such Guarantor, as the case may be, from paying all or any portion of the principal of or interest on the Notes or performing its Guarantee, as the case may be, and as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture; and (to the extent that it may lawfully do so) the Company and each Guarantor, if any, hereby expressly waives all benefit or advantage of any such law, and covenants that it shall not hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law had been enacted. SECTION 4.10. LIMITATION ON RESTRICTED PAYMENTS. The Company shall not, and shall not cause or permit any of its Subsidiaries to, directly or indirectly, (a) declare -44- or pay any dividend or make any distribution (other than dividends or distributions payable (y) to the Company or a Wholly Owned Subsidiary of the Company or (z) in Qualified Capital Stock or Qualified Rights of the Company) on or in respect of shares of its Capital Stock to holders of such Capital Stock, (b) purchase, redeem or otherwise acquire or retire for value any Capital Stock of the Company or any warrants, rights or options to purchase or acquire shares of any class of such Capital Stock, (c) make any principal payment on, purchase, defease, redeem, prepay, decrease or otherwise acquire or retire for value, prior to any scheduled final maturity, scheduled repayment or scheduled sinking fund payment, any Indebtedness of the Company that is subordinate or junior in right of payment to the Notes or (d) make any Investment (other than Permitted Investments) (each of the foregoing actions set forth in clauses (a), (b) (c) and (d) being referred to as a "Restricted Payment"), if at the time of such Restricted Payment or immediately after giving effect thereto, (i) a Default or an Event of Default shall have occurred and be continuing or (ii) the Company is not able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in compliance with Section 4.12 or (iii) the aggregate amount of Restricted Payments (including such proposed Restricted Payment) made subsequent to the Issue Date (the amount expended for such purposes, if other than in cash, being the fair market value of such property) shall exceed the sum of: (x) 50% of the cumulative Consolidated Net Income (or if cumulative Consolidated Net Income shall be a loss, minus 100% of such loss) of the Company earned subsequent to the Issue Date and on or prior to the date the Restricted Payment occurs (the "Reference Date") (treating such period as a single accounting period); plus (y) 100% of (1) the aggregate net cash proceeds received by the Company from any Person (other than a Subsidiary of the Company) from the issuance and sale subsequent to the Issue Date and on or prior to the Reference Date of Qualified Capital Stock of the Company and (2) the aggregate net proceeds (as defined below) received by the Company from any Person (other than a Subsidiary of the Company) from the issuance subsequent to the Issue Date and on or prior to the Reference Date of Qualified Capital Stock of the Company upon conversion or exchange of Indebtedness of the Company (other than such Indebtedness that is subordinate or junior in right of payment to the Notes); plus (z) without duplication and to the extent amounts would not be included in Consolidated Net Income, the sum of (1) the aggregate amount returned in cash on or with respect to Investments -45- (other than Permitted Investments) made subsequent to the Issue Date, and (2) the net cash proceeds received by the Company or any Subsidiary from the disposition of all or any portion of such Investments (other than to the Company or a Subsidiary of the Company), PROVIDED, HOWEVER, that with respect to all Investments, the sum of clauses (1) and (2) above with respect to such Investments shall not exceed the aggregate amount of all such Investments made subsequent to the Issue Date. For the purposes of this Section 4.10, the net proceeds from the issuance of shares of Qualified Capital Stock of the Company upon conversion or exchange of Indebtedness shall be deemed to be an amount equal to the net book value of such Indebtedness (plus the additional amount required to be paid upon such conversion, if any), less any cash payment on account of fractional shares; the "net book value" of Indebtedness shall be the amount received by the Company on the incurrence of such Indebtedness, as adjusted on the books of the Company to the date of conversion or exchange. Notwithstanding the foregoing, clauses (ii) and (iii) set forth in the first paragraph of this Section do not prohibit: (1) the payment of any dividend within 60 days after the date of declaration of such dividend if the dividend would have been permitted on the date of declaration; (2) the acquisition or retirement for value of any shares of Capital Stock of the Company or warrants, rights or options to purchase or acquire shares of any class of such Capital Stock, either (i) solely in exchange for shares of Qualified Capital Stock or Qualified Rights of the Company or (ii) through the application of net proceeds of a substantially concurrent sale for cash (other than to a Subsidiary of the Company) of shares of Qualified Capital Stock or Qualified Rights of the Company; (3) the acquisition or retirement for value of any Indebtedness of the Company that is subordinate or junior in right of payment to the Notes solely in exchange for shares of Qualified Capital Stock or Qualified Rights of the Company; (4) the purchase, redemption, acquisition or other retirement for value of shares of Capital Stock of the Company held by directors, officers or employees of the Company or options on any such shares or related stock appreciation rights or similar securities owned by such directors, officers or employees upon death, disability, retirement, termination of employment or pursuant to the terms of such stock option plan or any other agreement under which such shares of Capital Stock, options, related rights or similar securities were issued in an aggregate amount not to exceed $2,000,000 in the aggregate or (5) Restricted Payments not to exceed $25,000 in the aggregate. In determining the aggregate amount of Restricted Payments made subsequent to the Issue Date in accordance with clause (iii) of the first paragraph of this Section, (y) amounts expended pursuant to clauses (1), (2)(ii), (4) and (5) shall be included in such calculation and (z) amounts expended pursuant to clauses (2)(i) and (3) shall be excluded from such calculation. Not later than the date of making any Restricted Payment, the Company shall deliver to the Trustee an Officers' Certificate stating that such Restricted Payment complies with this Indenture and setting forth in reasonable detail the basis upon which the required calculations were computed, which calculations may be based upon the Company's latest available internal quarterly financial statements. SECTION 4.11. LIMITATION ON TRANSACTIONS WITH AFFILIATES. (a) The Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction or series of related transactions (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service) with, or for the benefit of, any of its Affiliates (each an "Affiliate Transaction"), other than (x) Affiliate Transactions permitted under paragraph (b) below and (y) Affiliate Transactions conducted in good faith, the terms of which are fair and reasonable to the Company or such Subsidiary and which are no less favorable to the Company or such Subsidiary than those that might reasonably have been obtained in a comparable transaction at such time on an arm's-length basis from a Person that is not an Affiliate of the Company or such Subsidiary; PROVIDED, HOWEVER, that notwithstanding anything to the contrary contained herein, the transactions set forth on SCHEDULE II hereto are hereby permitted. All Affiliate Transactions (and each series of related Affiliate Transactions which are similar or part of a common plan) involving aggregate payments or other property with a fair market value in excess of $250,000 shall be approved by the Board of Directors of the Company or such Subsidiary, as the case may be, including a majority of the disinterested Directors, if any, such approval to be evidenced by a Board Resolution stating that such Board of Directors has determined that such transaction complies with the foregoing provisions. If the Company or any Subsidiary of the Company enters into an Affiliate Transaction (or a series of related -47- Affiliate Transactions related to a common plan) that involves an aggregate fair market value or payments to an Affiliate, as the case may be, of more than $1,000,000, the Company or such Subsidiary, as the case may be, shall, prior to the consummation thereof, obtain a favorable opinion as to the fairness of such transaction or series of related transactions to the Company or the relevant Subsidiary, as the case may be, from a financial point of view, from an Independent Financial Advisor and file the same with the Trustee. (b) The foregoing restrictions shall not apply to (i) reasonable fees, compensation and out-of-pocket expenses paid to and indemnity provided on behalf of, officers, directors, employees or consultants of the Company or any Subsidiary of the Company as determined in good faith by the Company's Board of Directors or senior management; (ii) transactions between or among the Company and any of its Subsidiaries or exclusively between or among such Subsidiaries, PROVIDED that such transactions are not otherwise prohibited by this Indenture; (iii) Restricted Payments and Permitted Investments permitted by this Indenture; and (iv) the issuance of Notes and warrants in connection with the transaction described in the Securities Purchase Agreement. SECTION 4.12. LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED CAPITAL STOCK. The Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, create, incur, assume, guarantee, acquire, become liable, contingently or otherwise, with respect to, or otherwise become responsible for payment of (collectively, "incur") any Indebtedness (other than Permitted Indebtedness) nor issue any shares of Disqualified Capital Stock, nor permit any of its Subsidiaries to issue any shares of Disqualified Capital Stock; PROVIDED, HOWEVER, that if no Default or Event of Default shall have occurred and be continuing at the time or as a consequence of the incurrence of any such Indebtedness, the Company may incur Indebtedness (including, without limitation, Acquired Indebtedness) or issue shares of Disqualified Capital Stock and the Subsidiaries of the Company may incur Acquired Indebtedness in each case if on the date of the incurrence of such Indebtedness or the issuance of such Disqualified Stock, after giving effect to the incur- -48- rence thereof, the Consolidated Fixed Charge Coverage Ratio of the Company is greater than 2.50 to 1.0. SECTION 4.13. LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES. The Company shall not, and shall not cause or permit any of its Subsidiaries to, directly or indirectly, create or otherwise cause or permit to exist or become effective any encumbrance or restriction on the ability of any Subsidiary of the Company to (a) pay dividends or make any other distributions on or in respect of its Capital Stock; (b) make loans or advances or to pay any Indebtedness or other obligation owed to the Company or any other Subsidiary of the Company; or (c) transfer any of its property or assets to the Company or any other Subsidiary of the Company, except for such encumbrances or restrictions existing under or by reason of: (1) applicable law; (2) this Indenture; (3) customary non-assignment provisions of any contract or lease governing a leasehold or ownership interest of any Subsidiary of the Company; (4) any instrument governing Acquired Indebtedness, which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person or the properties or assets of the Person so acquired or relating to any property acquired by the Company or any of its Subsidiaries after the Issue Date, PROVIDED that such encumbrance or restriction exists of the time such property is acquired, relates only to the property which is acquired and was not incurred in connection with, or in anticipation or contemplation of, such acquisition; (5) agreements existing on the Issue Date to the extent and in the manner such agreements are in effect on the Issue Date; (6) an agreement governing Indebtedness incurred to Refinance the Indebtedness issued, assumed or incurred pursuant to an agreement referred to in clause (2), (4) or (5) above; PROVIDED, HOWEVER, that the provisions relating to such encumbrance or restriction contained in any such Indebtedness are no less favorable to the Company in any material respect than the provisions relating to such encumbrance or restriction contained in agreements referred to in such clause (2), (4) or (5) above; or (7) agreements restricting the sale or other disposition of any property securing Indebtedness which constitutes a Permitted Lien on such property. -49- SECTION 4.14. PAYMENTS ON 2002 NOTES. The Company shall not pay Cash Interest on the 2002 Notes on an Interest Payment Date if the Company does not concurrently pay Cash Interest on all outstanding 2005 Notes on such Interest Payment Date. SECTION 4.15. CHANGE OF CONTROL. The Company shall make an offer to purchase no later than the date upon which a Change of Control occurs (the "Change of Control Date") all outstanding Notes (the "Change of Control Offer") at a purchase price equal to 101% of the principal amount of all outstanding Notes plus accrued interest thereon, if any, to the date of purchase, but installments of interest, the maturity of which is on or prior to the Change of Control Date, shall be payable to Holders of record at the close of business on the relevant record dates referred to in Section 2.12. The Company may utilize such procedures in connection with the Change of Control Offer as the Company' Board of Directors deems appropriate; PROVIDED, HOWEVER, that at least 10 Business Days prior to the Change of Control Date, the Holders shall have received all information concerning such Change of Control as is reasonably available to the Company. On or before the Change of Control Date, the Company shall (i) accept for payment Notes or portions thereof tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent U.S. Legal Tender sufficient to pay the purchase price plus accrued interest, if any, of all Notes so tendered and (iii) forward to the Trustee Notes so accepted together with an Officers' Certificate stating the Notes or portions thereof being purchased by the Company. The Paying Agent shall promptly mail to the Holders of Notes so accepted payment in an amount equal to the purchase price plus accrued interest, if any, and the Trustee shall promptly authenticate and mail to such Holders new Notes equal in principal amount to any unpurchased portion of the Notes surrendered; PROVIDED that no 2005 Notes may be so purchased until all 2002 Notes so tendered have been purchased. Any Notes not so accepted shall be promptly mailed by the Company to the Holder thereof. For purposes of this Section 4.15, the Trustee shall act as the Paying Agent. -50- Any amounts remaining after the purchase of Notes pursuant to a Change of Control Offer shall be returned by the Trustee to the Company. The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes pursuant to a Change of Control Offer. To the extent the provisions of any securities laws or regulations conflict with this Section 4.15, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 4.15 by virtue thereof. The Company's obligation to purchase the Notes pursuant to the Change of Control Offer is conditioned upon the Change of Control being effected. SECTION 4.16. LIMITATION ON ASSET SALES. (a) The Company shall not, and shall not permit any of its Subsidiaries to, consummate an Asset Sale unless (i) the Company or the applicable Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the fair market value of the assets sold or otherwise disposed of (as determined in good faith by the Company's Board of Directors); (ii) at least 75% of the consideration received by the Company or such Subsidiary, as the case may be, from such Asset Sale shall be in the form of cash or Cash Equivalents (PROVIDED that the amount of any liabilities (as shown on the Company's or such Subsidiary's most recent balance sheet) of the Company or any such Subsidiary (other than liabilities that are by their terms subordinated to the Notes) that are assumed by the transferee of any such assets shall be deemed to be cash for the purposes of this provision); and (iii) upon the consummation of an Asset Sale, the Company shall apply, or cause such Subsidiary to apply, the Net Cash Proceeds relating to such Asset Sale within 365 days of receipt thereof to make an investment in properties and assets that replace the properties and assets that were the subject of such Asset Sale or in properties and assets that will be used in the business of the Company and its Subsidiaries as existing on the Issue Date or in businesses the same, similar or reasonably related thereto ("Replacement Assets"). Subject to the last sentence of this paragraph, on the 366th day after an Asset Sale or such earlier date, if any, as the Board of Directors of the Company or of -51- such Subsidiary determines not to apply the Net Cash Proceeds relating to such Asset Sale as set forth in the next preceding sentence (each, a "Net Proceeds Offer Trigger Date"), such aggregate amount of Net Cash Proceeds which have not been applied on or before such Net Proceeds Offer Trigger Date as permitted in the next preceding sentence (each a "Net Proceeds Offer Amount") shall be applied by the Company or such Subsidiary to make an offer to purchase (the "Net Proceeds Offer") on a date (the "Net Proceeds Offer Payment Date") not less than 30 nor more than 45 days following the applicable Net Proceeds Offer Trigger Date, from all Holders on a PRO RATA basis, that amount of Notes equal to the Net Proceeds Offer Amount at a price equal to 100% of the principal amount of the Notes to be purchased, plus accrued interest thereon, if any, to the date of purchase, but installments of interest, the maturity of which is on or prior to the Proceeds Purchase Date, shall be payable to Holders of record at the close of business on the relevant record dates referred to in Section 2.12; PROVIDED, HOWEVER, that if at any time any non-cash consideration received by the Company or any Subsidiary of the Company, as the case may be, in connection with any Asset Sale is converted into or sold or otherwise disposed of for cash (other than interest received with respect to any such non-cash consideration), then such conversion or disposition shall be deemed to constitute an Asset Sale hereunder and the Net Cash Proceeds thereof shall be applied in accordance with this covenant. The Company may defer the Net Proceeds Offer until there is an aggregate unutilized Net Proceeds Offer Amount equal to or in excess of $1,000,000 resulting from one or more Asset Sales (at which time, the entire unutilized Net Proceeds Offer Amount, and not just the amount in excess of $1,000,000, shall be applied as required pursuant to the preceding paragraph). In the event of the transfer of substantially all (but not all) of the property and assets of the Company and its Subsidiaries as an entirety to a Person in a transaction permitted under Section 5.01, the successor entity shall be deemed to have sold such portion, if any, of the properties and assets of the Company and its Subsidiaries not so transferred the fair market value of which exceeds the fair market value (as determined in good faith by the Company's Board of Directors) of the property and assets of such successor entity immediately prior to consummation of such transaction for purposes of this cove- -52- nant, and shall comply with the provisions of this covenant with respect to such deemed sale as if it were an Asset Sale. In addition, the fair market value of such properties and assets of the Company or its Subsidiaries deemed to be sold as aforesaid shall be deemed to be Net Cash Proceeds for purposes of this Section 4.16. Each Net Proceeds Offer will be mailed to the record Holders as shown on the register of Holders within 25 days following the Net Proceeds Offer Trigger Date, with a copy to the Trustee, and shall comply with the procedures set forth in this Indenture. Upon receiving notice of the Net Proceeds Offer, Holders may elect to tender their Notes in whole or in part in integral multiples of $1,000 in exchange for cash. To the extent Holders properly tender Notes in an amount exceeding the Net Proceeds Offer Amount, Notes of tendering Holders will be purchased on a PRO RATA basis (based on amounts tendered). To the extent that the aggregate amount of Notes tendered pursuant to a Net Proceeds Offer is less than the Net Proceeds Offer Amount, the Company may use such excess Net Proceeds Offer Amount for general corporate purposes or for any other purpose not prohibited by this Indenture. Upon completion of any such Net Proceeds Offer, the Net Proceeds Offer Amount shall be reset at zero. A Net Proceeds Offer shall remain open for a period of 20 Business Days or such longer period as may be required by law. (b) Subject to the deferral of the Net Proceeds Offer Trigger Date contained in the second paragraph of subsection (a) above, each notice of a Net Proceeds Offer pursuant to this Section 4.16 shall be mailed or caused to be mailed, by first class mail, by the Company not more than 25 days after the Net Proceeds Offer Trigger Date to all Holders at their last registered addresses as of a date within 15 days of the mailing of such notice, with a copy to the Trustee. The notice shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Net Proceeds Offer and shall state the following terms: (1) that the Net Proceeds Offer is being made pursuant to Section 4.16 and that all Notes tendered will be accepted for payment; PROVIDED, HOWEVER, that if the aggregate principal amount of Notes tendered in a Net Proceeds Offer exceeds the aggregate amount of the Net Proceeds Offer, the Company shall select the Notes to be pur- -53- chased on a PRO RATA basis (with such adjustments as may be deemed appropriate by the Company so that only Notes in denominations of $1,000 or multiples thereof shall be purchased); (2) the purchase price (including the amount of accrued interest) and the purchase date (which shall be 20 Business Days from the date of mailing of notice of such Net Proceeds Offer, or such longer period as required by law) (the "Proceeds Purchase Date"); (3) that any Note not tendered will continue to accrue interest; (4) that, unless the Company defaults in making payment therefor, any Note accepted for payment pursuant to the Net Proceeds Offer shall cease to accrue interest after the Proceeds Purchase Date; (5) that Holders electing to have a Note purchased pursuant to a Net Proceeds Offer will be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, to the Paying Agent at the address specified in the notice prior to the close of business on the third Business Day prior to the Proceeds Purchase Date; (6) that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than two Business Days prior to the Proceeds Purchase Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Notes the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased; and (7) that Holders whose Notes are purchased only in part will be issued new Notes in a principal amount equal to the unpurchased portion of the Notes surrendered; PROVIDED that each Note purchased and each new Note issued shall be in an original principal amount of $1,000 or integral multiples thereof. On or before the Proceeds Purchase Date, the Company shall (i) accept for payment Notes or portions thereof tendered pursuant to the Net Proceeds Offer which are to be purchased in -54- accordance with item (b)(1) above, (ii) deposit with the Paying Agent U.S. Legal Tender sufficient to pay the purchase price plus accrued interest, if any, of all Notes to be purchased and (iii) deliver to the Trustee Notes so accepted together with an Officers' Certificate stating the Notes or portions thereof being purchased by the Company; PROVIDED that no 2005 Notes may be so purchased until all 2002 Notes so tendered have been purchased. The Paying Agent shall promptly mail to the Holders of Notes so accepted payment in an amount equal to the purchase price plus accrued interest, if any. For purposes of this Section 4.16, the Trustee shall act as the Paying Agent. Any amounts remaining after the purchase of Notes pursuant to a Net Proceeds Offer shall be returned by the Trustee to the Company. The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that the provisions of any securities laws or regulations conflict with this Section 4.16, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 4.16 by virtue thereof. SECTION 4.17. LIMITATION ON PREFERRED STOCK OF SUBSIDIARIES. The Company shall not permit any of its Subsidiaries to issue any Preferred Stock (other than to the Company or to a Wholly Owned Subsidiary of the Company) or permit any Person (other than the Company or a Wholly Owned Subsidiary of the Company) to own any Preferred Stock of any Subsidiary of the Company. SECTION 4.18. LIMITATION ON LIENS. The Company shall not, and shall not permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Liens of any kind against or upon any of its property or assets of the Company or any of its Subsidiaries whether owned on the Issue Date or acquired after the Issue Date, or any proceeds therefrom, unless, except in the case of Liens securing Indebtedness that is subordinate or junior in right of payment -55- to the Notes which shall not be permitted, the Notes are equally and ratably secured, except for (i) Liens existing as of the Issue Date to the extent and in the manner such Liens are in effect as of the Issue Date; (ii) Liens securing the Notes or the Guarantees; (iii) Liens of the Company or a Wholly Owned Subsidiary of the Company on assets of any Subsidiary of the Company; (iv) Liens securing Refinancing Indebtedness which is incurred to Refinance Indebtedness which has been secured by a Lien permitted under this Indenture and which has been incurred in accordance with the provisions of this Indenture; PROVIDED, HOWEVER, that such Liens (y) are no less favorable to the Holders and are no more favorable to the lienholders with respect to such Liens than the Liens in respect of the Indebtedness being Refinanced and (z) do not extend to or cover any property or assets of the Company or any of its Subsidiaries not securing the Indebtedness so Refinanced; and (v) with respect to items of Collateral, Liens permitted by the applicable Security Document and with respect to all other property, Permitted Liens. SECTION 4.19. ADDITIONAL GUARANTORS. The Company shall cause any Subsidiary (other than Quantum Geophysical Services, Inc.) with a net book value greater than $1,000,000 to execute and deliver (i) a supplemental indenture to this Indenture providing for the guarantee of payment of the Notes by such Subsidiary pursuant to the terms of Article Eleven hereof and (ii) a guarantee in the form attached to the Note hereto. SECTION 4.20. LIMITATION ON ISSUANCE OF SHARES OF SUBSIDIARIES. The Company shall not permit any of its Subsidiaries to issue shares of Capital Stock (other than director's qualifying shares) to any Person other than the Company or a Wholly Owned Subsidiary of the Company; PROVIDED that (i) if the issuing Subsidiary is not a Wholly Owned Subsidiary, the issuing Subsidiary may also simultaneously issue additional shares of Capital Stock of the same class to other shareholders of the issuing Subsidiary so long as such issuance will not reduce the percentage of Capital Stock of the issuing Subsidiary which was owned by the Company or its Subsidiaries immediately prior to such issuance; and (ii) a Subsidiary may issue Capital Stock to any Person to the extent that and subject to the conditions un- -56- der which the Company or another Subsidiary of the Company holding the Capital Stock of such issuing Subsidiary would be permitted to sell, transfer or otherwise dispose of such Capital Stock in an Asset Sale pursuant to Section 4.16. SECTION 4.21. NON-GUARANTOR SUBSIDIARY. The Company shall not permit Quantum Geophysical Services, Inc. to engage in any business other than the leasing of equipment owned or leased by it on the Issue Date to the Company or a Guarantor. SECTION 4.22. CONDUCT OF BUSINESS. The Company shall not, and shall not permit its Subsidiaries to, engage in any businesses which are not the same as, similar or reasonably related to the businesses in which the Company and its Subsidiaries are engaged on the Issue Date. SECTION 4.23. LIMITATION ON SEISMIC OPERATIONS. The Company shall, and shall cause its Subsidiaries to, (a) cease entering into new contracts to provide, and proceed to complete or terminate (if termination can be effected without material monetary penalty) all existing contracts to provide, Seismic Acquisition Services within 10 Business Days following the end of any period the Consolidated EBITDA of the Company resulting from Seismic Operations as of the last day of any calendar month ending during such period, commencing October 1, 1999, on a cumulative basis, is at least $100,000 less than the amount for such period shown on Schedule III hereto, and (b) terminate all businesses relating to Seismic Operations as soon as practicable thereafter. SECTION 4.24. EQUAL SECURITY FOR NOTES AND GUARANTEES; NO FURTHER NEGATIVE PLEDGES. (a) If the Company or any Guarantor shall create or assume any Lien upon any of its property or assets, whether now owned or hereafter acquired and whether or not such property or assets constitutes Collateral, other than Liens permitted by the applicable Security Document (unless prior written consent to the creation or assumption thereof shall have been obtained from the majority of the Holders), the Company shall, and shall cause GDC or any applicable Guarantor to, make or cause to be -57- made effective provisions whereby the Obligations owing to the Trustee (if at the time there is a Trustee) or any Holder pursuant to the terms of this Indenture, the Notes, the Guarantees and each Security Document will be secured by such Lien equally and ratably with any and all other Indebtedness thereby secured as long as any such Indebtedness shall be secured; PROVIDED that this covenant shall not be construed as consent by the majority of the Holders to any violation by the Company of the provisions of Section 4.18. (b) Except with respect to prohibitions against other encumbrances on specific property encumbered to secure payment of particular Indebtedness permitted hereunder (which Indebtedness relates solely to the acquisition or improvement of such specific property), neither the Company nor any Guarantor shall take or omit to take any action which action or omission would have the result of adversely affecting or impairing the security interest granted under any Security Documents, or shall enter into any agreement prohibiting the creation or assumption of any Lien upon its properties or assets, whether now owned or hereafter acquired. SECTION 4.25. PLEDGE OF ADDITIONAL COLLATERAL. Subject to Section 4.24(b), and in any event within 30 days after the acquisition by the Company or any Guarantor of (i) Real Property, (ii) assets of the type that would have constituted Collateral pursuant to the appropriate Security Document on the Issue Date or (iii) capital stock or other equity interests of any Guarantor (whether by capital contribution or acquisition) (collectively, the property described in clauses (i), (ii), (iii) above and the assets of any Guarantor described in clause (iii) above, the "Additional Collateral"), the Company will, and will cause each Guarantor to, take all necessary action, including the filing of appropriate financing statements under the provisions of the UCC, applicable foreign, domestic or local laws, rules or regulations in each of the offices where such filing is necessary or appropriate, entering into or amending Security Documents or, in the case the Company or any Guarantor creates or acquires a Subsidiary, entering into such additional pledge agreements and security agreements in form and substance satisfactory to the Collateral Agent to grant to the Collateral Agent a perfected first priority Lien in such Collateral pursuant to and to the full extent required by the Security Documents, this Indenture, the Notes and the -58- Guarantees. All actions taken by the parties in connection with the pledge of Additional Collateral, including, without limitation, costs of counsel for the Collateral Agent, shall be for the account of the Company, which shall pay all sums due on demand. SECTION 4.26. SECURITY INTERESTS. The Company will, and will cause the Guarantors to, perform any and all acts and execute any and all documents (including, without limitation, the execution, amendment or supplementation of any financing statement and continuation statement) for filing in any appropriate jurisdiction under the provisions of the UCC, local law or any statute, rule or regulation of any applicable jurisdiction which are necessary in order to maintain or confirm in favor of the Collateral Agent for the benefit of the Holders a valid and perfected Lien on the Collateral and any Additional Collateral, subject to no Liens except for Liens expressly permitted by the applicable Security Document. The Company shall, as promptly as practicable after the filing of any financing statements, deliver or cause to be delivered to the Trustee acknowledgment copies of, or copies of lien search reports confirming the filing of, financing statements duly filed under the UCC in all jurisdictions as may be necessary or, in the reasonable judgment of the Collateral Agent, desirable to perfect the Lien created, or purported or intended to be created, by each Security Document. SECTION 4.27. CASH MAINTENANCE. The Company shall maintain cash or Cash Equivalents balances of at least the amount set forth below during each calendar month ending on each date listed below: Minimum Cash or Cash Calendar Month Equivalents Balance - -------------- -------------------- October 31, 1999 ..................................... $2,064,000 November 30, 1999 .................................... $1,834,000 December 31, 1999 .................................... $1,650,000 January 31, 2000 ..................................... $1,355,000 February 29, 2000 .................................... $1,095,000 March 31, 2000 ....................................... $848,000 April 30, 2000 ....................................... $601,000 May 31, 2000 ......................................... $439,000 -59- June 30, 2000 ........................................ $334,000 July 31, 2000 ........................................ $459,000 August 31, 2000 ...................................... $584,000 September 30, 2000 ................................... $569,000 October 31, 2000 ..................................... $554,000 November 30, 2000 .................................... $539,000 December 31, 2000 .................................... $524,000 ARTICLE FIVE SUCCESSOR CORPORATION SECTION 5.01. MERGER, CONSOLIDATION AND SALE OF ASSETS. (a) The Company shall not, in a single transaction or a series of related transactions, consolidate with or merge with or into any Person (other than the merger of a Wholly Owned Subsidiary of the Company into the Company), or sell, assign, transfer, lease, convey or otherwise dispose of (or cause or permit any Subsidiary of the Company to sell, assign, transfer, lease, convey or otherwise dispose of) all or substantially all of the Company's properties and assets (determined on a consolidated basis for the Company and its Subsidiaries) to any Person whether as an entirety or substantially as an entirety unless: (1) either (A) the Company shall be the surviving or continuing corporation or (B) the Person (if other than the Company) formed by such consolidation or into which the Company is merged or the Person which acquires by sale, assignment, transfer, lease, conveyance or other disposition the properties and assets of the Company and its Subsidiaries substantially as an entirety (the "Surviving Entity") (x) shall be a corporation, partnership, limited liability company or business trust organized and validly existing under the laws of the United States or any State thereof or the District of Columbia and (y) shall expressly assume, by supplemental indenture (in form and substance reasonably satisfactory to the Trustee), executed and delivered to the Trustee, the due and punctual payment of the principal of and premium, if any, and interest on all of the Notes and the performance of every covenant of the Notes, this Indenture and the Secu- -60- rity Documents on the part of the Company to be performed or observed; (2) immediately after giving effect to such transaction and the assumption contemplated by clause (1)(B)(y) above (including giving effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred in connection with or in respect of such transaction), (i) the Company or the Surviving Entity, as the case may be, shall be able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in compliance with Section 4.12 and (ii) the Company or the Surviving Entity, as the case may be, shall have a Consolidated Net Worth at least equal to the Consolidated Net Worth of the Company immediately prior to such transaction; (3) immediately before and immediately after giving effect to such transaction and the assumption contemplated by clause (1)(B)(y) above (including, without limitation, giving effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred and any Lien granted in connection with or in respect of the transaction), no Default or Event of Default shall have occurred and be continuing; and (4) the Company or the Surviving Entity, as the case may be, shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, sale, assignment, transfer, lease, conveyance or other disposition and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with the applicable provisions of this Indenture and that all conditions precedent in this Indenture relating to such transaction have been satisfied. (b) For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of transactions) of all or substantially all of the properties and assets of one or more Subsidiaries of the Company, the Capital Stock of which constitutes all or substantially all of the properties and assets of the Company, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company. -61- (c) Each Guarantor (other than any Guarantor whose Guarantee is to be released in accordance with the terms of the Guarantee and this Indenture in connection with any transaction complying with the provisions of Section 4.16) shall not, and the Company shall not cause or permit any Guarantor to, consolidate with or merge with or into any Person other than the Company or any other Guarantor unless: (i) the entity formed by or surviving any such consolidation or merger (if other than the Guarantor) or to which such sale, lease, conveyance or other disposition shall have been made is a corporation organized and existing under the laws of the United States or any State thereof or the District of Columbia; (ii) such entity expressly assumes by supplemental indenture all of the obligations of the Guarantor on the Guarantee; (iii) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing; and (iv) immediately after giving effect to such transaction and the use of any net proceeds therefrom on a PRO FORMA basis, the Company could satisfy the provisions of clause (2) of Section 5.01(a). Any merger or consolidation of a Guarantor with and into the Company (with the Company being the surviving entity) or another Guarantor that is a Wholly Owned Subsidiary of the Company need only comply with clause (4) of Section 5.01(a). Notwithstanding the foregoing, this Section 5.01 shall not prohibit a transaction, the principal purpose of which is (as determined in good faith by the Board of Directors of the Company) to change the state of incorporation of the Company and such transaction does not have as one of its purposes the evasion of the limitations imposed by this Section. When a successor assumes all of the obligations of the Company under the Notes and this Indenture in a transaction permitted by this Section 5.01, the Company will be deemed to be released from those obligations. SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED. Upon any consolidation, combination or merger or any transfer of all or substantially all of the assets of the Company in accordance with the foregoing, in which the Company is not the continuing corporation, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, lease or transfer is made shall succeed -62- to, and be substituted for, and may exercise every right and power of, the Company under this Indenture and the Notes with the same effect as if such surviving entity had been named as such. ARTICLE SIX DEFAULT AND REMEDIES SECTION 6.01. EVENTS OF DEFAULT. Each of the following constitutes an "Event of Default": (1) failure to pay interest on any Notes when the same becomes due and payable and the Default continues for a period of five days; or (2) failure to pay the principal on any Notes when such principal becomes due and payable, at maturity, upon redemption or otherwise (including the failure to make a payment to purchase Notes tendered pursuant to a Change of Control Offer or a Net Proceeds Offer); or (3) a default in the observance or performance of any other covenant or agreement contained in this Indenture which default continues for a period of 10 days after the Company receives written notice specifying the default (and demanding that such default be remedied) from the Trustee or the Holders of at least 25% of the outstanding principal amount of the Notes (except in the case of a failure to comply with Section 4.10, Section 4.12, Section 4.15, Section 4.23, Section 4.24, Section 4.25, Section 4.26, Section 4.27 or Section 5.01, which shall constitute Events of Default upon notice but without passage of time); or (4) the Company fails to pay at final stated maturity (giving effect to any applicable grace periods and any extensions thereof) the principal amount of any Indebtedness for borrowed money of the Company or any Subsidiary of the Company or interest thereon, or the acceleration of the final stated maturity of any such Indebtedness if the aggregate principal amount of such Indebtedness, together -63- with the principal amount of any other such Indebtedness not paid at final stated maturity or which has been accelerated aggregates $500,000 or more at any time; or (5) one or more judgments for the payment of money in an aggregate amount in excess of $500,000 shall have been rendered against the Company or any of its Subsidiaries and such judgments remain undischarged, unpaid or unstayed for a period of 30 days after such judgment or judgments become final and non-appealable; or (6) the Company or any Significant Subsidiary of the Company (A) commences a voluntary case or proceeding under any Bankruptcy Law with respect to itself, (B) consents to the entry of a judgment, decree or order for relief against it in an involuntary case or proceeding under any Bankruptcy Law, (C) consents to the appointment of a Custodian of it or for substantially all of its property, (D) consents to or acquiesces in the institution of a bankruptcy or an insolvency proceeding against it, (E) makes a general assignment for the benefit of its creditors, or (F) takes any corporate action to authorize or effect any of the foregoing; or (7) a court of competent jurisdiction enters a judgment, decree or order for relief in respect of the Company or any Significant Subsidiary of the Company in an involuntary case or proceeding under any Bankruptcy Law, which shall (A) approve as properly filed a petition seeking reorganization, arrangement, adjustment or composition in respect of the Company or any such Significant Subsidiary, (B) appoint a Custodian of the Company or any such Significant Subsidiary or for substantially all of its property or (C) order the winding-up or liquidation of its affairs; and such judgment, decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or (8) any Guarantee ceases to be in full force and effect or any Guarantee is declared to be null and void and unenforceable or any Guarantee is found to be invalid or any guarantor denies its liability under its Guarantee (other than by reason of release of a Guarantee in accordance with Section 11.06); or -64- (9) any material breach by the Company of a representation or warranty (as of the Issue Date) or covenant contained in the Securities Purchase Agreement. SECTION 6.02. ACCELERATION. (a) If an Event of Default (other than an Event of Default specified in Section 6.01(6) or (7) with respect to the Company) occurs and is continuing and has not been waived pursuant to Section 6.04, then the Trustee or the Holders of at least 25% in principal amount of outstanding Notes may declare the principal of and accrued interest on all the Notes to be due and payable by notice in writing to the Company and the Trustee specifying the respective Event of Default and that it is a "notice of acceleration" (the "Acceleration Notice"), and the same shall become immediately due and payable. Upon any such declaration, but subject to the immediately preceding sentence, such amount shall be immediately due and payable. (b) If an Event of Default specified in Section 6.01(6) or (7) occurs and is continuing with respect to the Company, all unpaid principal of and premium, if any, and accrued and unpaid interest on all of the outstanding Notes shall IPSO FACTO become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. (c) At any time after a declaration of acceleration with respect to the Notes in accordance with Section 6.02(a), the Holders of a majority in principal amount of the Notes may, on behalf of the Holders of all of the Notes, rescind and cancel such declaration and its consequences (i) if the rescission would not conflict with any judgment or decree, (ii) if all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of the acceleration, (iii) to the extent the payment of such interest is lawful, interest on overdue installments of interest and overdue principal, which has become due otherwise than by such declaration of acceleration, has been paid, (iv) if the Company has paid the Trustee its reasonable compensation and reimbursed the Trustee for its expenses, disbursements and advances and (v) in the event of the cure or waiver of an Event of Default of the type described in Section 6.01(6) or (7), the Trustee shall have received an Officers' Certificate and an Opinion of Counsel from the Company that such Event -65- of Default has been cured or waived. No such rescission shall affect any subsequent Default or impair any right consequent thereto. The Holders of a majority in principal amount of the Notes may waive any existing Default or Event of Default under this Indenture, and its consequences, except a default in the payment of the principal of or interest on any Notes. SECTION 6.03. OTHER REMEDIES. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy by proceeding at law or in equity to collect the payment of principal of or interest on the Notes or to enforce the performance of any provision of the Notes, this Indenture or the Security Documents. The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative to the extent permitted by law. Each Holder, by accepting a Note, acknowledges that the exercise of remedies by the Collateral Agent with respect to the Collateral is subject to the terms and conditions of the Security Documents and the proceeds received upon realization of the Collateral shall be applied by the Collateral Agent in accordance with Section 6.10 hereof. SECTION 6.04. WAIVER OF PAST DEFAULTS. Subject to Sections 2.09, 6.07 and 9.02, the Holders of a majority in principal amount of the outstanding Notes by notice to the Trustee may waive an existing Default or Event of Default and its consequences, except a Default in the payment of principal (other than principal due by reason of acceleration) of or interest on any Note as specified in clauses (1) and (2) of Section 6.01. When a Default or Event of Default is waived, it is cured and ceases. SECTION 6.05. CONTROL BY MAJORITY. Subject to Section 2.09, the Holders of a majority in principal amount of the outstanding Notes may direct the time, -66- method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on it, including, without limitation, any remedies provided for in Section 6.03. Subject to Section 7.01, however, the Trustee may refuse to follow any direction that the Trustee reasonably believes conflicts with any law or this Indenture, that the Trustee determines may be unduly prejudicial to the rights of another Holder, or that may involve the Trustee in personal liability; PROVIDED that the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction; and PROVIDED further that this provision shall not affect the rights of the Trustee set forth in Section 7.01(d). SECTION 6.06. LIMITATION ON SUITS. A Holder, other than a state of the United States of America or a political subdivision thereof, may not pursue any remedy with respect to this Indenture or the Notes unless: (1) the Holder gives to the Trustee written notice of a continuing Event of Default; (2) Holders of at least 25% in principal amount of the outstanding Notes make a written request to the Trustee to pursue the remedy; (3) such Holders offer to the Trustee indemnity in its sole discretion satisfactory to the Trustee against any loss, liability or expense to be incurred in compliance with such request, PROVIDED, that this Section 6.06(3) shall not apply to a Holder that is a State of the United States of America or a political subdivision thereof; (4) the Trustee does not comply with the request within 45 days after receipt of the request and the offer of satisfactory indemnity; and (5) during such 45-day period the Holders of a majority in principal amount of the outstanding Notes do not give the Trustee a direction which, in the opinion of the Trustee, is inconsistent with the request. -67- A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over such other Holder. SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT. Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of principal of and interest on a Note, on or after the respective due dates expressed in such Note, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. SECTION 6.08. COLLECTION SUIT BY TRUSTEE. If an Event of Default in payment of principal or interest specified in clause (1) or (2) of Section 6.01 occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company, GDC, any Guarantor, if any, or any other obligor on the Notes for the whole amount of principal and accrued interest remaining unpaid, together with interest on overdue principal and, to the extent that payment of such interest is lawful, interest on overdue installments of interest at the rate set forth in Section 4.01 and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents, consultants and counsel. SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, taxes, disbursements and advances of the Trustee, its agents and counsel) and the Holders allowed in any judicial proceedings relating to the Company or any other obligor upon the Notes, any of their respective creditors or any of their respective property and shall be entitled and empowered to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same, and any Custodian in any such judicial proceedings is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, -68- to pay to the Trustee any amount due to it for the reasonable compensation, expenses, taxes, disbursements and advances of the Trustee, its agents, consultants and counsel, and any other amounts due the Trustee under Section 7.07. The Company's payment obligations under this Section 6.09 shall be secured in accordance with the provisions of Section 7.07 hereunder. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. SECTION 6.10. PRIORITIES. If the Trustee collects any money or property pursuant to this Article Six, it shall pay out the money in the following order: First: to the Trustee and the Collateral Agent for amounts due under Section 7.07 and for amounts due under the Security Documents; Second: if the Holders are forced to proceed against the Company directly without the Trustee, to Holders for their collection costs; Third: to Holders of 2002 Notes until all 2002 Notes are repaid for amounts due and unpaid on 2002 Notes for principal and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on 2002 Notes for principal and interest, respectively; Fourth: to Holders of 2005 Notes until all 2005 Notes are repaid for amounts due and unpaid on 2005 Notes for principal and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on 2005 Notes for principal and interest, respectively; and Fifth: to the Company, the Guarantors, if any, or any other obligor on the Notes, as their interests may appear, or as a court of competent jurisdiction may direct. -69- The Trustee, upon prior notice to the Company, may fix a record date and payment date for any payment to Holders pursuant to this Section 6.10. SECTION 6.11. UNDERTAKING FOR COSTS. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. Such costs shall not apply to, and such costs shall not be assessed in connection with, a suit by the Trustee, a suit by a Holder pursuant to Section 6.07, or a suit by a Holder or Holders of more than 10% in principal amount of the outstanding Notes. ARTICLE SEVEN TRUSTEE SECTION 7.01. DUTIES OF TRUSTEE. (a) If a Default or an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and use the same degree of care and skill in its exercise thereof as a prudent person would exercise or use under the circumstances in the conduct of his own affairs. (b) Except during the continuance of a Default or an Event of Default: (1) The Trustee need perform only those duties as are specifically set forth in this Indenture and no covenants or obligations shall be implied in this Indenture against the Trustee. (2) In the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed -70- therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (c) Notwithstanding anything to the contrary herein contained, the Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (1) This paragraph does not limit the effect of paragraph (b) of this Section 7.01. (2) The Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts. (3) The Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.02, 6.04 or 6.05. (d) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (e) Whether or not herein expressly provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 7.01. (f) The Trustee shall not be liable for interest on any money or assets received by it except as the Trustee may agree in writing with the Company. Assets held in trust by the Trustee need not be segregated from other assets except to the extent required by law. SECTION 7.02. RIGHTS OF TRUSTEE. Subject to Section 7.01: -71- (a) The Trustee may rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note or other paper or document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may consult with counsel and may require an Officers' Certificates, Opinions of Counsel or both, which shall conform to Sections 12.04 and 12.05. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificates or Opinions of Counsel. (c) The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or indirectly or by or through agents or attorneys and the Trustee shall not be responsible for the misconduct or negligence of any agent or attorney appointed with due care. (d) The Trustee shall not be liable for any action that it takes or omits to take in good faith which it reasonably believes to be authorized or within its rights or powers. (e) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, notice, request, direction, consent, order, bond, debenture, or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled, upon reasonable notice to the Company, to examine the books, records, and premises of the Company, personally or by agent or attorney and to consult with the officers and representatives of the Company, including the Company's accountants and attorneys. (f) The Collateral Agent may (but shall not be obligated to) without the consent of the Holders, give any -72- waiver or approval required under the Security Documents or by the terms hereof with respect to the Collateral, but shall not without the consent of the Holders of not less than a majority in aggregate principal amount of the Notes at the time outstanding (i) give any consent, waiver or approval or (ii) agree to any amendment or modification of the Security Documents, in each case, that shall have a material adverse effect on the interests of any Holder. The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture or the Security Documents at the request, order or direction of any of the Holders pursuant to the provisions of this Indenture, unless such Holders shall have offered to the Trustee security or indemnity satisfactory to the Trustee in its sole discretion against the costs, expenses and liabilities which may be incurred by it in compliance with such request, order or direction. (g) The Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder. SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company, any Subsidiary of the Company, or their respective Affiliates with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11. SECTION 7.04. TRUSTEE'S DISCLAIMER. The recitals contained herein and in the Notes shall be taken as statements of the Company and the Trustee assumes no responsibility for their correctness. The Trustee makes no representation as to the validity or adequacy of this Indenture, the Notes or the Security Documents, and it shall not be accountable for the Company's use of the proceeds from the Notes, and it shall not be responsible for any statement of the Company in this Indenture or the Notes other than the Trustee's certificate of authentication. The Trustee shall not be responsible for and makes no representation as to the value or condition of the Collateral or any part thereof, or as to the title of the Company or any Guarantor thereto, or as to the security afforded thereby or hereby, or as to the validity or -73- genuineness of any Collateral pledged and deposited with the Collateral Agent. The Trustee makes no representation with respect to the validity or perfection, if any, of Liens granted under this Indenture or the Security Documents. SECTION 7.05. NOTICE OF DEFAULT. If a Default or an Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to each Holder notice of the uncured Default or Event of Default within 90 days after such Default or Event of Default occurs. Except in the case of a Default or an Event of Default in payment of principal of, or interest on, any Note, including an accelerated payment and the failure to make payment on the Change of Control Date pursuant to a Change of Control Offer or on the Proceeds Purchase Date pursuant to a Net Proceeds Offer and, except in the case of a failure to comply with Article Five hereof, the Trustee may withhold the notice if and so long as its Board of Directors, the executive committee of its Board of Directors or a committee of its directors and/or Trust Officers in good faith determines that withholding the notice is in the interest of the Holders. SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS. Within 60 days after each December 15, the Trustee shall, to the extent that any of the events described in TIA ss. 313(a) occurred within the previous twelve months, but not otherwise, mail to each Holder a brief report dated as of such date that complies with TIA ss. 313(a). The Trustee also shall comply with TIA ss.ss. 313(b), (c) and (d). A copy of each report at the time of its mailing to Holders shall be mailed to the Company and filed with the SEC and each stock exchange, if any, on which the Notes are listed. The Company shall promptly notify the Trustee if the Notes become listed on any stock exchange and the Trustee shall comply with TIA ss. 313(d). SECTION 7.07. COMPENSATION AND INDEMNITY. The Company shall pay to the Trustee from time to time reasonable compensation for its services. The Trustee's compensation shall not be limited by any law on compensation of -74- a trustee of an express trust. The Company shall reimburse the Trustee upon request for all reasonable fees and expenses, including reasonable out-of-pocket expenses incurred or made by it in connection with the performance of its duties under this Indenture. Such expenses shall include the reasonable fees and expenses of the Trustee's agents, consultants and counsel. The Company shall indemnify the Trustee and its agents, employees, stockholders and directors and officers for, and hold them harmless against, any loss, liability or expense incurred by them except for such actions to the extent caused by any negligence, bad faith or willful misconduct on their part, arising out of or in connection with the administration of this trust and its duties under this Indenture and the Security Documents including the reasonable costs and expenses of defending themselves against any claim or liability in connection with the exercise or performance of any of their rights, powers or duties hereunder. The Trustee shall notify the Company promptly of any claim asserted against the Trustee for which it may seek indemnity. At the Trustee's sole discretion, the Company shall defend the claim and the Trustee shall cooperate and may participate in the defense; PROVIDED that any settlement of a claim shall be approved in writing by the Trustee. Alternatively, the Trustee may at its option have separate counsel of its own choosing and the Company shall pay the reasonable fees and expenses of such counsel; PROVIDED that the Company will not be required to pay such fees and expenses if it assumes the Trustee's defense and there is no conflict of interest between the Company and the Trustee in connection with such defense as reasonably determined by the Trustee. The Company need not pay for any settlement made without their written consent. The Company need not reimburse any expense or indemnify against any loss or liability to the extent incurred by the Trustee through its negligence, bad faith or willful misconduct. To secure the Company' payment obligations in this Section 7.07, the Trustee shall have a lien prior to the Notes on all assets or money held or collected by the Trustee, in its capacity as Trustee, except assets or money held in trust to pay principal of or interest on particular Notes. The Trustee's right to receive payment of any amounts due under this Section 7.07 shall not be subordinate to any other liability or indebtedness of the Company (even though the Notes may be subordinate to such other liability or indebtedness). -75- When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(6) or (7) occurs, such expenses and the compensation for such services are intended to constitute expenses of administration under any Bankruptcy Law; PROVIDED, HOWEVER, that this shall not affect the Trustee's rights as set forth in the preceding paragraph or Section 6.10. SECTION 7.08. REPLACEMENT OF TRUSTEE. A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section 7.08. The Trustee may resign by so notifying the Company. The Holders of a majority in principal amount of the outstanding Notes may remove the Trustee by so notifying the Company and the Trustee and may appoint a successor Trustee. The Company may remove the Trustee if: (1) the Trustee fails to comply with Section 7.10; (2) the Trustee is adjudged bankrupt or insolvent; (3) a receiver or other public officer takes charge of the Trustee or its property; or (4) the Trustee becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall notify each Holder of such event and shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Immediately after that, the retiring Trustee shall transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided in Section 7.07, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, pow- -76- ers and duties of the Trustee under this Indenture. A successor Trustee shall mail notice of its succession to each Holder. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of at least 10% in principal amount of the outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee fails to comply with Section 7.10, any Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Company's obligations under Section 7.07 hereof shall continue for the benefit of the retiring Trustee in connection with the rights and duties hereunder prior to such replacement. SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the resulting, surviving or transferee corporation without any further act shall, if such resulting, surviving or transferee corporation is otherwise eligible hereunder, be the successor Trustee; PROVIDED that such corporation shall be otherwise qualified and eligible under this Article Seven. SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. This Indenture shall always have a Trustee who satisfies the requirement of TIA ss.ss. 310(a)(1), (2) and (5). The Trustee (or, in the case of a corporation included in a bank holding company system, the related bank holding company) shall have a combined capital and surplus of at least $100 million as set forth in its most recent published annual report of condition. In addition, if the Trustee is a corporation included in a bank holding company system, the Trustee, independently of such bank holding company, shall meet the capital requirements of TIA ss. 310(a)(2). The Trustee shall comply with TIA ss. 310(B); PROVided, however, that there shall be excluded from the operation of TIA ss. 310(b)(1) any indenture or indentures -77- under which other securities, or certificates of interest or participation in other securities, of the Company are outstanding, if the requirements for such exclusion set forth in TIA ss. 310(b)(1) are met. The provisions of TIA ss. 310 shall apply to the Company, as obligor of the Notes. SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY. The Trustee, in its capacity as Trustee hereunder, and the Collateral Agent, in its capacity as Collateral Agent under the Security Documents, each shall comply with TIA ss. 311(a), excluding any creditor relationship listed in TIA ss. 311(b). A Trustee who has resigned or been removed shall be subject to TIA ss. 311(a) to the extent indicated therein. The provisions of TIA ss. 311 shall apply to the Company, as obligor on the Notes. ARTICLE EIGHT DISCHARGE OF INDENTURE; DEFEASANCE SECTION 8.01. TERMINATION OF THE COMPANY'S OBLIGATIONS. The Company may terminate its obligations under the Notes and this Indenture, except those obligations referred to in the penultimate paragraph of this Section 8.01, if all Notes previously authenticated and delivered (other than destroyed, lost or stolen Notes which have been replaced or paid or Notes for whose payment U.S. Legal Tender has theretofore been deposited with the Trustee or the Paying Agent in trust or segregated and held in trust by the Company and thereafter repaid to the Company, as provided in Section 8.05) have been delivered to the Trustee for cancellation and the Company has paid all sums payable by it hereunder, or if: (a) either (i) pursuant to Article Three, a notice of redemption to each Holder of the redemption of all of the Notes shall be given within three months under arrangements satisfactory to the Trustee for the giving of such notice or (ii) all Notes have otherwise become due and payable hereunder; -78- (b) the Company shall have irrevocably deposited or caused to be deposited with the Trustee or a trustee satisfactory to the Trustee, under the terms of an irrevocable trust agreement in form and substance satisfactory to the Trustee, as trust funds in trust solely for the benefit of the Holders for that purpose, U.S. Legal Tender in such amount as is sufficient without consideration of reinvestment of such interest, U.S. Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with their terms, will provide, not later than one day before the due date of any payment on the Notes, U.S. Legal Tender, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay principal of, premium, if any, and interest on the outstanding Notes, on the dates on which such payments are due and payable in accordance with the terms of this Indenture, to maturity or redemption; PROVIDED that the Trustee shall have been irrevocably instructed to apply such U.S. Legal Tender to the payment of said principal, premium, if any, and interest with respect to the Notes; (c) no Default or Event of Default with respect to this Indenture or the Notes shall have occurred and be continuing on the date of such deposit or shall occur as a result of such deposit and such deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Company is a party or by which it is bound; (d) the Company shall have paid all other sums payable by it hereunder; and (e) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent providing for or relating to the termination of the Issuers' obligations under the Notes and this Indenture have been complied with. Such Opinion of Counsel shall also state that such satisfaction and discharge does not result in a default under any agreement or instrument then known to such counsel that binds or affects the Company. -79- Notwithstanding the foregoing paragraph, the Company's obligations in Sections 2.05, 2.06, 2.07, 2.08, 4.01, 4.02, 7.07, 8.05 and 8.06 shall survive until the Notes are no longer outstanding pursuant to the last paragraph of Section 2.08. After the Notes are no longer outstanding, the Company's obligations in Sections 7.07, 8.05 and 8.06 shall survive. After such delivery or irrevocable deposit, the Trustee upon request shall acknowledge in writing the discharge of the Company's obligations under the Notes and this Indenture except for those surviving obligations specified above. SECTION 8.02. LEGAL DEFEASANCE AND COVENANT DEFEASANCE. (a) The Company may, at its option by Board Resolution of its Board of Directors, at any time, elect to have either paragraph (b) or (c) below be applied to all outstanding Notes upon compliance with the conditions set forth in Section 8.03. (b) Upon the Company's exercise under paragraph (a) hereof of the option applicable to this paragraph (b), the Company shall, subject to the satisfaction of the conditions set forth in Section 8.03, be deemed to have been discharged from its obligations with respect to all outstanding Notes on the date the conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance means that the Company shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes, which shall thereafter be deemed to be "outstanding" only for the purposes of Section 8.04 hereof and the other Sections of this Indenture referred to in (i) and (ii) below, and to have satisfied all its other obligations under such Notes and this Indenture (and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following provisions, which shall survive until otherwise terminated or discharged hereunder: (i) the rights of Holders of outstanding Notes to receive solely from the trust fund described in Section 8.04 hereof, and as more fully set forth in such Section, payments in respect of the principal of and interest on such Notes when such payments are due, (ii) the Company's obligations with respect to such Notes under Article Two and Section 4.02 hereof, (iii) the rights, powers, trusts, duties and immunities of the Trustee hereunder -80- and the Company' obligations in connection therewith and (iv) this Article Eight. Subject to compliance with this Article Eight, the Company may exercise its option under this paragraph (b) notwithstanding the prior exercise of their option under paragraph (c) hereof. (c) Upon the Company's exercise under paragraph (a) hereof of the option applicable to this paragraph (c), the Company shall, subject to the satisfaction of the conditions set forth in Section 8.03 hereof, be released from their obligations under the covenants contained in Sections 4.03 through 4.27 and Article Five hereof with respect to the outstanding Notes on and after the date the conditions set forth below are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter be deemed not "outstanding" for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed "outstanding" for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes). For this purpose, such Covenant Defeasance means that, with respect to the outstanding Notes, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event or Default under Section 6.01(3) hereof, but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby. In addition, upon the Company's exercise under paragraph (a) hereof of the option applicable to this paragraph (c), subject to the satisfaction of the conditions set forth in Section 8.03 hereof, Sections 6.01(3), 6.01(4), 6.01(5), 6.01(6) (solely with respect to Persons other than the Company) or 6.01(7) (solely with respect to Persons other than the Company) shall not constitute Defaults or Events of Default. SECTION 8.03. CONDITIONS TO LEGAL DEFEASANCE OR COVENANT DEFEASANCE. The following shall be the conditions to the application of either Section 8.02(b) or 8.02(c) hereof to the outstanding Notes: -81- In order to exercise either Legal Defeasance or Covenant Defeasance: (a) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders, U.S. Legal Tender or U.S. Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with their terms, will provide, not later than one day before the due date of any payment on the Notes, U.S. Legal Tender, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest on the Notes on the stated date for payment thereof or on the applicable redemption date, as the case may be, of such principal or installment of principal of or interest on the Notes; PROVIDED that the Trustee shall have received an irrevocable written order from the Company instructing the Trustee to apply such U.S. Legal Tender or the proceeds of such U.S. Government Obligations to said payments with respect to the Notes; (b) in the case of an election under Section 8.02(b) hereof, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (c) in the case of an election under Section 8.02(c) hereof, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that the Holders of the Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the -82- same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (d) no Default or Event of Default or event which with notice or lapse of time or both would become a Default or an Event of Default with respect to the Notes shall have occurred and be continuing (x) on the date of such deposit (other than a Default or Event of Default resulting from the incurrence of Indebtedness all or a portion of the proceeds of which will be used to defease the Notes pursuant to this Article Eight concurrently with such incurrence) or (y) insofar as Sections 6.01(6) and 6.01(7) hereof are concerned, at any time in the period ending on the 91st day after the date of such deposit; (e) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of or constitute a default under this Indenture or any other material agreement or instrument to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound; (f) the Company shall have delivered to the Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders over any other creditors of the Company or with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company or others; (g) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with (other than the condition in clause (d)(y)); and (h) the Company shall have delivered to the Trustee an Opinion of Counsel substantially to the effect that, assuming no intervening bankruptcy or insolvency of the Company between the date of deposit and the 91st day following the deposit and that no Holder is an insider of the Company, after the 91st day following the deposit, the trust funds will not be subject to the effect of any applicable Bankruptcy Law. -83- SECTION 8.04. APPLICATION OF TRUST MONEY. The Trustee or Paying Agent shall hold in trust U.S. Legal Tender or U.S. Government Obligations deposited with it pursuant to Article Eight, and shall apply the deposited U.S. Legal Tender and the money from U.S. Government Obligations in accordance with this Indenture to the payment of principal of and interest on the Notes. The Trustee shall be under no obligation to invest said U.S. Legal Tender or U.S. Government Obligations except as it may agree with the Company. The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the U.S. Legal Tender or U.S. Government Obligations deposited pursuant to Section 8.03 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes. Anything in this Article Eight to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon the Company's request any U.S. Legal Tender or U. S. Government Obligations held by it as provided in Section 8.03 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance. SECTION 8.05. REPAYMENT TO THE COMPANY. Subject to Article Eight, the Trustee and the Paying Agent shall promptly pay to the Company, or if deposited with the Trustee by any Guarantor, to such Guarantor, upon request any excess U.S. Legal Tender or U.S. Government Obligations held by them at any time and thereupon shall be relieved from all liability with respect to such money. The Trustee and the Paying Agent shall pay to the Company, or if deposited with the Trustee by any Guarantor, to such Guarantor, upon request any money held by them for the payment of principal or interest that remains unclaimed for two years; PROVIDED that the Trustee or such Paying Agent, before being required to make any payment, may at the expense of the Company cause to be published once in a newspaper of general circulation in The City of New York or mail to each Holder entitled to such money notice that -84- such money remains unclaimed and that after a date specified therein which shall be at least 30 days from the date of such publication or mailing any unclaimed balance of such money then remaining will be repaid to the Company or such Guarantor. After payment to the Company or such Guarantor, Holders entitled to such money must look to the Company for payment as general creditors unless an applicable law designates another Person. SECTION 8.06. REINSTATEMENT. If the Trustee or Paying Agent is unable to apply any U.S. Legal Tender or U.S. Government Obligations in accordance with Article Eight by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Article Eight until such time as the Trustee or Paying Agent is permitted to apply all such U.S. Legal Tender or U.S. Government Obligations in accordance with Article Eight; PROVIDED that if the Company has made any payment of interest on or principal of any Notes because of the reinstatement of their obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the U.S. Legal Tender or U.S. Government Obligations held by the Trustee or Paying Agent. ARTICLE NINE AMENDMENTS, SUPPLEMENTS AND WAIVERS SECTION 9.01. WITHOUT CONSENT OF HOLDERS. The Company and the Guarantors, when authorized by a Board Resolution, and the Trustee, together, may amend or supplement this Indenture or the Notes without notice to or consent of any Holder: (1) to cure any ambiguity, defect or inconsistency; PROVIDED that such amendment or supplement does not, in the opinion of the Trustee, adversely affect the rights of any Holder in any material respect; (2) to comply with Article Five; -85- (3) to provide for uncertificated Notes in addition to or in place of certificated Notes; (4) to comply with any requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA; (5) to make any change that would provide any additional benefit or rights to the Holders or that does not adversely affect the rights of any Holder; (6) to make any other change that does not, in the opinion of the Trustee, adversely affect in any material respect the rights of any Holders hereunder or under the Security Documents; or (7) to reflect a Guarantor ceasing to be liable on the Guarantees because it is no longer a Subsidiary of the Company or to reflect additional Guarantors; PROVIDED that Company has delivered to the Trustee an Opinion of Counsel stating that such amendment or supplement complies with the provisions of this Section 9.01. 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: (1) reduce the amount of Notes whose Holders must consent to an amendment; -86- (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; (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; or (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. -87- It shall not be necessary for the consent of the Holders under this Section to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such consent approves the substance thereof. 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. SECTION 9.03. RELEASES OF COLLATERAL. (a) None of the Collateral under any Security Document or this Indenture may be released without the consent of Holders of 662/3% of the aggregate principal amount of Notes then outstanding, except as set forth in Section 9.03(b). (b) Collateral may be released or otherwise disposed without the consent of the Holders if such releases or dispositions are permitted under the terms of this Indenture. (c) If Collateral or proceeds from the sale of Collateral is paid or delivered to Holders of 2005 Notes in contravention of the priority provisions of Sections 3.02, 4.15, 4.16 or 6.10, such Holders will be deemed to hold such Collateral or proceeds in trust for the benefit of Holders of 2002 Notes. SECTION 9.04. COMPLIANCE WITH TIA. Every amendment, waiver or supplement of this Indenture or the Notes shall, except as may otherwise be provided in any order of the SEC pursuant to TIA ss. 304(d), comply with the TIA as then in effect. SECTION 9.05. REVOCATION AND EFFECT OF CONSENTS. Until an amendment, waiver or supplement becomes effective, a consent to it by a Holder is a continuing consent by the Holder and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent is not made on any Note. Subject to the following paragraph, any such Holder or subse- -88- quent Holder may revoke the consent as to such Holder's Note or portion of such Note by notice to the Trustee or Company received before the date on which the Trustee receives an Officers' Certificate certifying that the Holders of the requisite principal amount of Notes have consented (and not theretofore revoked such consent) to the amendment, supplement or waiver. The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to consent to any amendment, supplement or waiver, which record date shall be at least 30 days prior to the first solicitation of such consent. If a record date is fixed, then notwithstanding the last sentence of the immediately preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to revoke any consent previously given, whether or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 90 days after such record date. After an amendment, supplement or waiver becomes effective, it shall bind every Holder, unless it makes a change described in any of clauses (1) through (10) of Section 9.02(b), in which case, the amendment, supplement or waiver shall bind only each Holder of a Note who has consented to it and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note. SECTION 9.06. NOTATION ON OR EXCHANGE OF NOTES. If an amendment, supplement or waiver changes the terms of a Note, the Trustee may require the Holder of such Note to deliver it to the Trustee. The Trustee may place an appropriate notation on the Note about the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Note shall issue and the Trustee shall authenticate a new Note that reflects the changed terms. Any such notation or exchange shall be made at the sole cost and expense of the Company. SECTION 9.07. TRUSTEE TO SIGN AMENDMENTS, ETC. The Trustee shall execute any amendment, supplement or waiver authorized or permitted pursuant to this Article Nine; PROVIDED that the Trustee may, but shall not be obligated -89- to, execute any such amendment, supplement or waiver which affects the Trustee's own rights, duties or immunities under this Indenture. The Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel and an Officers' Certificate each stating that the execution of any amendment, supplement or waiver authorized pursuant to this Article Nine is authorized or permitted by this Indenture. Such Opinion of Counsel shall not be an expense of the Trustee. ARTICLE TEN [INTENTIONALLY OMITTED] ARTICLE ELEVEN GUARANTEES SECTION 11.01. UNCONDITIONAL GUARANTEE. Each Guarantor hereby unconditionally, jointly and severally, guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns that: (i) the principal of and interest on the Notes will be promptly paid in full when due, subject to any applicable grace period, whether at maturity, by acceleration or otherwise and interest on the overdue principal, if any, and interest on any interest, to the extent lawful, of the Notes and all other obligations of the Company to the Holders or the Trustee hereunder or thereunder will be promptly paid in full, all in accordance with the terms hereof and thereof; and (ii) in case of any extension of time of payment or renewal of any Notes or of any such other obligations, the same will be promptly paid in full when due in accordance with the terms of the extension or renewal, subject to any applicable grace period, whether at stated maturity, by acceleration or otherwise, subject, however, in the case of clauses (i) and (ii) above, to the limitations set forth in Section 11.05. Each Guarantor hereby agrees that its Obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, -90- the recovery of any judgment against the Company, any action to enforce the same or any other circumstances which might otherwise constitute a legal or equitable discharge or defense of a guarantor. Each Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenants that this Guarantee will not be discharged except by complete performance of the obligations contained in the Notes, this Indenture and in this Guarantee. If any Noteholder or the Trustee is required by any court or otherwise to return to the Company, any Guarantor, or any custodian, trustee, liquidator or other similar official acting in relation to the Company or any Guarantor, any amount paid by the Company or any Guarantor to the Trustee or such Noteholder, this Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect as to such amount only. Each Guarantor further agrees that, as between each Guarantor, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the Obligations guaranteed hereby may be accelerated as provided in Article Six for the purposes of this Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Obligations guaranteed hereby, and (y) in the event of any acceleration of such obligations as provided in Article Six, such Obligations (whether or not due and payable) shall forthwith become due and payable by each Guarantor for the purpose of this Guarantee. SECTION 11.02. [Intentionally Omitted]. SECTION 11.03. SEVERABILITY. In case any provision of this Guarantee shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 11.04. [Intentionally Omitted]. SECTION 11.05. LIMITATION OF GUARANTOR'S LIABILITY. Each Guarantor and by its acceptance hereof each Holder hereby confirms that it is the intention of all such -91- parties that the guarantee by such Guarantor pursuant to its Guarantee not constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar Federal or state law. To effectuate the foregoing intention, the Holders and such Guarantor hereby irrevocably agree that the Obligations of such Guarantor under its Guarantee shall be limited to the maximum amount as will, after giving effect to all other contingent and fixed liabilities of such Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under its Guarantee or pursuant to Section 11.07, result in the Obligations of such Guarantor under its Guarantee not constituting such fraudulent transfer or conveyance. SECTION 11.06. GUARANTORS MAY CONSOLIDATE, ETC. ON CERTAIN TERMS. (a) Nothing contained in this Indenture or in any of the Notes shall prevent any consolidation or merger of a Guarantor with or into the Company or another Guarantor or shall prevent any sale or conveyance of the assets of a Guarantor to the Company or another Guarantor. Upon any such consolidation, merger, sale or conveyance, the Guarantee given by such Guarantor shall no longer have any force or effect. (b) Except as set forth in Article Four, nothing contained in this Indenture or in any of the Notes shall prevent any consolidation or merger of a Guarantor with or into a corporation or corporations other than the Company or another Guarantor (whether or not affiliated with the Guarantor), or successive consolidations or mergers in which a Guarantor or its successor or successors shall be a party or parties, or shall prevent any sale or conveyance of all or substantially all of the assets of a Guarantor to a corporation other than the Company or another Guarantor (whether or not affiliated with the Guarantor); PROVIDED, HOWEVER, that, subject to Sections 11.06(a), either (x) the transaction is an Asset Sale consummated in accordance with Section 4.16, or (y) (i) immediately after such transaction, and giving effect thereto, no Default or Event of Default shall have occurred as a result of such transaction and be continuing, and (ii) each Guarantor hereby covenants and agrees that, upon any such consolidation, merger, sale or conveyance, the Guarantee of such Guarantor set -92- forth in this Article Eleven, and the due and punctual performance and observance of all of the covenants and conditions of this Indenture to be performed by such Guarantor, shall be expressly assumed (in the event that the Guarantor is not the surviving corporation in such transaction), by supplemental indenture satisfactory in form to the Trustee, executed and delivered to the Trustee, together with an Officers' Certificate of the Company and an Opinion of Counsel stating that the transaction and such supplemental indenture comply with this Indenture, by the corporation formed by such consolidation, or into which the Guarantor shall have merged, or by the corporation that shall have acquired such property. In the case of any such consolidation, merger, sale or conveyance that is not an Asset Sale consummated in accordance with Section 4.16, upon the assumption by the successor corporation, by supplemental indenture executed and delivered to the Trustee and satisfactory in form to the Trustee of the due and punctual performance of all of the covenants and conditions of this Indenture to be performed by the Guarantor, such successor corporation shall succeed to and be substituted for the Guarantor with the same effect as if it had been named herein as a Guarantor. SECTION 11.07. CONTRIBUTION. In order to provide for just and equitable contribution among the Guarantors, the Guarantors agree, INTER SE, that in the event any payment or distribution is made by any Guarantor (a "Funding Guarantor") under this Guarantee, such Funding Guarantor shall be entitled to a contribution from all other Guarantors in a PRO RATA amount based on the Consolidated Net Worth of each Guarantor (including the Funding Guarantor) for all payments, damages and expenses incurred by that Funding Guarantor in discharging the Company's obligations with respect to the Notes or any other Guarantor's Obligations with respect to this Guarantee. SECTION 11.08. WAIVER OF SUBROGATION. Each Guarantor hereby irrevocably waives any claim or other rights which it may now or hereafter acquire against the Company that arise from the existence, payment, performance or enforcement of such Guarantor's Obligations under this Guarantee and this Indenture, including, without limitation, any right of subrogation, reimbursement, exoneration, indemnification, and any right to participate in any claim or remedy of -93- any Holder of Notes against the Company, whether or not such claim, remedy or right arises in equity, or under contract, statute or common law, including, without limitation, the right to take or receive from the Company, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim or other rights. If any amount shall be paid to any Guarantor in violation of the preceding sentence and the Notes shall not have been paid in full, such amount shall have been deemed to have been paid to such Guarantor for the benefit of, and held in trust for the benefit of, the Holders of the Notes, and shall forthwith be paid to the Trustee for the benefit of such Holders to be credited and applied upon the Notes, whether matured or unmatured, in accordance with the terms of this Indenture. Each Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by this Indenture and that the waiver set forth in this Section 11.08 is knowingly made in contemplation of such benefits. SECTION 11.09. EXECUTION OF GUARANTEE. To evidence their guarantee to the Noteholders specified in Section 11.01, the Guarantors hereby agree to execute the Guarantee in substantially the form of EXHIBIT A recited to be endorsed on each Note ordered to be authenticated and delivered by the Trustee. Each Guarantor hereby agrees that its Guarantee set forth in Section 11.01 shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Guarantee. Each such Guarantee shall be signed on behalf of each Guarantor by one Officer (each of whom shall, in each case, have been duly authorized by all requisite corporate actions) prior to the authentication of the Note on which it is endorsed, and the delivery of such Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of such Guarantee on behalf of such Guarantor. Such signatures upon the Guarantee may be by manual or facsimile signature of such officers and may be imprinted or otherwise reproduced on the Guarantee, and in case any such officer who shall have signed the Guarantee shall cease to be such officer before the Note on which such Guarantee is endorsed shall have been authenticated and delivered by the Trustee or disposed of by the Company, such Note nevertheless may be authenticated and delivered or disposed of as though the person who signed the Guarantee had not ceased to be such officer of the Guarantor. -94- ARTICLE TWELVE MISCELLANEOUS SECTION 12.01. TIA CONTROLS. Except as may otherwise be provided in any order of the SEC pursuant to TIA ss. 304(d), if any provision of this Indenture limits, qualifies, or conflicts with another provision which is required to be included in this Indenture by the TIA, the required provision shall control. SECTION 12.02. 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 commercial courier service, by telex, by telecopier or registered or certified mail, postage prepaid, return receipt requested, addressed as follows: if to the Company or any Guarantor: Geokinetics Inc. 8401 Westheimer Suite 150 Houston, Texas 77063 Facsimile No.: (713) 850-7330 Attn: Chairman of the Board if to the Trustee: [ ] Facsimile No.: [ ] Attn: Corporate Trust Department The Company, the Guarantors, if any, and the Trustee by written notice to each other such Person may designate additional or different addresses for notices to such Person. Any notice or communication to the Company, the Guarantors, if any, or the Trustee shall be deemed to have been given or made as of the date so delivered if personally delivered; when receipt is confirmed if delivered by commercial courier service; when answered back, if telexed; when receipt is acknowledged, if -95- faxed; and five (5) calendar days after mailing if sent by registered or certified mail, postage prepaid (except that a notice of change of address shall not be deemed to have been given until actually received by the addressee). Any notice or communication mailed to a Holder shall be mailed to him by first class mail or other equivalent means at his address as it appears on the registration books of the Registrar and shall be sufficiently given to him if so mailed within the time prescribed. Failure to mail 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 mailed in the manner provided above, it is duly given, whether or not the addressee receives it. SECTION 12.03. COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS. Holders may communicate pursuant to TIA ss. 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Guarantors, if any, the Trustee, the Registrar and any other Person shall have the protection of TIA ss. 312(c). SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee: (1) an Officers' Certificate of the Company, in form and substance satisfactory to the Trustee, stating that, in the opinion of the signers, all conditions precedent to be performed by the Company, if any, provided for in this Indenture relating to the proposed action have been complied with; and (2) an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent to be performed by the Company, if any, provided for in this Indenture relating to the proposed action have been complied with. -96- SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture, other than the Officers' Certificate required by Section 4.06, shall include: (1) a statement that the Person making such certificate or opinion has read such covenant or condition and the definitions relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such Person, he has made such examination or investigation as is reasonably necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of each such Person, such condition or covenant has been complied with. SECTION 12.06. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR. The Trustee may make reasonable rules in accordance with the Trustee's customary practices for action by or at a meeting of Holders. The Paying Agent or Registrar may make reasonable rules for its functions. SECTION 12.07. LEGAL HOLIDAYS. A "Legal Holiday" used with respect to a particular place of payment is a Saturday, a Sunday or a day on which banking institutions in New York, New York or at such place of payment are not required to be open. If a payment date is a Legal Holiday at such place, payment may be made at such place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. -97- SECTION 12.08. GOVERNING LAW. THIS INDENTURE, THE NOTES AND THE GUARANTEES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF DELAWARE, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. THE COMPANY AND EACH GUARANTOR AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF DELAWARE IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE. THE COMPANY AND EACH GUARANTOR IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT ITS ADDRESS FOR NOTICES PURSUANT TO SECTION 12.02. SECTION 12.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company or any of their Subsidiaries. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. SECTION 12.10. NO RECOURSE AGAINST OTHERS. A director, officer, employee, stockholder or incorporator, as such, of the Company, the Guarantors, if any, or the Trustee shall not have any liability for any obligations of the Company under the Notes or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. Such waiver and release are part of the consideration for the issuance of the Notes. SECTION 12.11. SUCCESSORS. All agreements of the Company and the Guarantors, if any, in this Indenture, the Notes and the Guarantees, if any, shall bind their successors. All agreements of the Trustee in this Indenture shall bind its successors. -98- SECTION 12.12. DUPLICATE ORIGINALS. All parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together shall represent the same agreement. SECTION 12.13. SEVERABILITY. In case any one or more of the provisions in this Indenture or in the Notes or the Guarantees, if any, 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 of the remaining provisions shall not in any way be affected or impaired thereby, it being intended that all of the provisions hereof shall be enforceable to the full extent permitted by law. S-1 SIGNATURES IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, all as of the date first written above. Company: GEOKINETICS INC. By:____________________ Name: Title: Guarantors: GEOKINETICS PRODUCTION CO., INC. By:___________________ Name: Title: QUANTUM GEOPHYSICAL, INC. By:___________________ Name: Title: GEOSCIENCE SOFTWARE SOLUTIONS, INC. By:___________________ Name: Title: S-2 SIGNATURE GEOPHYSICAL SERVICES, INC. By:___________________ Name: Title: RELIABLE EXPLORATION, INCORPORATED By:___________________ Name: Title: GEOPHYSICAL DEVELOPMENT CORPORATION By:____________________ Name: Title: S-3 Trustee: [ ], as Trustee By:____________________ Name: Title: SCHEDULE I [Existing Debt] SCHEDULE II [Permitted Transactions] SCHEDULE III [Budget] CUSIP No.: GEOKINETICS INC. GEOPHYSICAL DEVELOPMENT CORPORATION 13 1/2% SENIOR SECURED NOTE DUE 2005 No. $ GEOKINETICS INC., a Delaware corporation (the "Company," which term includes any successor entity), for value received promises to pay to or registered assigns, the principal sum of Dollars ($ ) on September 15, 2005. Interest Payment Dates: March 15 and September 15 Record Dates: March 1 and September 1 Reference is made to the further provisions of this Note contained on the reverse hereof or elsewhere herein, which will for all purposes have the same effect as if set forth at this place. A-1 IN WITNESS WHEREOF, the Company has caused this Note to be signed manually or by facsimile by its duly authorized officers and a facsimile of its corporate seal to be affixed hereto or imprinted hereon. GEOKINETICS INC. By:________________________________ Name: Title: By:________________________________ Name: Title: A-2 CERTIFICATE OF AUTHENTICATION This is one of the 13 1/2% Senior Secured Notes due 2005 referred to in the within-mentioned Indenture. [ ], as Trustee Dated: [ ] By:_________________________________ Authorized Signatory A-3 (REVERSE OF SECURITY) 13 1/2% SENIOR SECURED NOTE DUE 2005 1. INCORPORATION BY REFERENCE OF PROVISIONS OF THE Indenture. Capitalized terms used herein and not otherwise defined herein shall have the meanings set forth in the Indenture referred to below. 2. INTEREST. GEOKINETICS INC., a Delaware corporation (the "Company," which term includes any successor entity), promises to pay interest on the principal amount of this 13 1/2% Senior Secured Note due 2005 (i) on each Interest Payment Date through and including September 15, 2000, at the option of the Company, in the form of Cash Interest or PIK Interest and (ii) on each Interest Payment Date thereafter, in the form of Cash Interest. Interest on the Notes will accrue from the most recent date on which interest has been paid or, if no interest has been paid, from October 1, 1999. The Company will pay interest semi-annually in arrears on each Interest Payment Date, commencing March 15, 2000. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay interest on overdue principal and on overdue installments of interest from time to time on demand at the rate borne by the Notes plus 2% per annum and on overdue installments of interest (without regard to any applicable grace periods) to the extent lawful. 3. METHOD OF PAYMENT. The Company shall pay interest on the Notes (except defaulted interest) to the Persons who are the registered Holders at the close of business on the Record Date immediately preceding the Interest Payment Date even if the Notes are canceled on registration of transfer or registration of exchange after such Record Date. Holders must surrender Notes to a Paying Agent to collect principal payments. The Company shall pay principal and Cash Interest in money of the United States that at the time of payment is legal tender for payment of public and private debts ("U.S. Legal Tender"). However, the Company may pay principal and Cash Interest by its check payable (in immediately available funds) in U.S. Legal Tender or, at the request of a Holder, by wire transfer in immediately available funds to an account specified in writing by a Holder. The Company may deliver any such interest payment to the Holder's registered address or such other address or account as the Holder may designate in writing. A-4 4. PAYING AGENT AND REGISTRAR. Initially, [ ], a [ ] (the "Trustee"), will act as Paying Agent and Registrar. The Company may change any Paying Agent, Registrar or co-Registrar without notice to the Holders. 5. INDENTURE. The Company issued the Notes and up to $6,837,338 aggregate principal amount of 13 1/2% Senior Secured Notes due 2002 under an Indenture, dated as of [ ] (the "Indenture"), between the Company, the Guarantors and the Trustee. This Note is one of a duly authorized issue of Notes of the Company designated as the 13 1/2% Senior Secured Notes due 2005 of the Company. The Notes are limited in aggregate principal amount to $51,687,993; PROVIDED that (a) the aggregate principal amount of Notes issued on the Issue Date shall be limited to $45,358,000 and (b) the aggregate principal amount of additional Notes issued as PIK Interest shall be limited to $6,329,993. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the TIA as in effect on the date of the Indenture. Notwithstanding anything to the contrary herein, the Notes are subject to all such terms, and Holders of Notes are referred to the Indenture and said Act for a statement of them. The Notes are secured obligations of the Company and are entitled to the benefit of the Security Documents and the Collateral. 6. REDEMPTION. (a) OPTIONAL REDEMPTION. The Notes will be redeemable, subject to Section 3.02 of the Indenture, at the Company's option, in whole at any time or in part from time to time after September 15, 2001, at the following redemption prices (expressed as percentages of the principal amount thereof) if redeemed during the twelve-month period commencing on September 15 of the year set forth below, plus, in each case, accrued interest thereon to the date of redemption: YEAR PERCENTAGE ---- ---------- 2001................................... 106.750% 2002................................... 105.063% 2003................................... 103.375% 2004................................... 101.680% 2005 and thereafter.................... 100.000% (b) OPTIONAL REDEMPTION UPON PUBLIC EQUITY OFFERINGS. At any time, or from time to time prior to September 15, 2001, the Company may, at its option, use the net cash proceeds A-5 of one or more Public Equity Offerings (as defined in the Indenture) to redeem up to 100% but not less than 50% of the aggregate principal amount of Notes originally issued at a redemption price equal to 113.5% of the principal amount thereof, plus, in each case, accrued interest to the date of redemption. In order to effect the foregoing redemption with the proceeds of any Public Equity Offering, the Company shall make such redemption not more than 60 days after the consummation of any such Public Equity Offering. 7. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30 days but not more than 60 days before the Redemption Date to each Holder of Notes to be redeemed at such Holder's registered address. Notes in denominations larger than $1,000 may be redeemed in part. Except as set forth in the Indenture, if moneys for the redemption of the Notes called for redemption shall have been deposited with the Paying Agent for redemption on such Redemption Date, then, unless the Company defaults in the payment of such Redemption Price plus accrued and unpaid interest, if any, the Notes called for redemption will cease to bear interest from and after such Redemption Date and the only right of the Holders of such Notes will be to receive payment of the Redemption Price plus accrued and unpaid interest, if any. 8. OFFERS TO PURCHASE. Sections 4.15 and 4.16 of the Indenture provide that, after certain Asset Sales (as defined in the Indenture) and prior to the occurrence of a Change of Control (as defined in the Indenture), and subject to further limitations contained therein, the Company will make an offer to purchase certain amounts of the Notes in accordance with the procedures set forth in the Indenture; PROVIDED that no Notes may be so purchased until all 2002 Notes so tendered have been purchased. 9. DENOMINATIONS; TRANSFER; EXCHANGE. The Notes are in registered form, without coupons. A Holder shall register the transfer of or exchange Notes in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay certain transfer taxes or similar governmental charges payable in connection therewith as permitted by the Indenture. The Registrar need not register the transfer of or exchange of any Notes or portions thereof selected for redemption. A-6 10. PERSONS DEEMED OWNERS. The registered Holder of a Note shall be treated as the owner of it for all purposes. 11. DISCHARGE PRIOR TO REDEMPTION OR MATURITY. If the Company at any time deposits with the Trustee U.S. Legal Tender or U.S. Government Obligations sufficient to pay the principal of and interest on the Notes to redemption or maturity and complies with the other provisions of the Indenture relating thereto, the Company will be discharged from certain provisions of the Indenture and the Notes (including certain covenants, but excluding its obligation to pay the principal of and interest on the Notes). 12. AMENDMENT; SUPPLEMENT; WAIVER. Subject to certain exceptions set forth in Section 9.02(b) of the Indenture, the Indenture or the Notes may be amended or supplemented with the written consent of the Holders of at least a majority in aggregate principal amount of the Notes and 2002 Notes (collectively, the "Notes Issue") then outstanding, and any existing Default or Event of Default or noncompliance with any provision may be waived with the written consent of the Holders of a majority in aggregate principal amount of the Notes Issue then outstanding. Without notice to or consent of any Holder, the Company, and the Guarantors, when authorized by a Board Resolution, may amend or supplement the Indenture or the Notes to cure any ambiguity, defect or inconsistency, provide for uncertificated Notes in addition to or in place of certificated Notes, or comply with Article Five of the Indenture, comply with any requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA, make any change that would provide any additional benefit or rights to the Holders, make any other change that does not adversely affect in any material respect the rights of any Holder of a Note or add or remove Guarantors as provided in the Indenture. 13. RESTRICTIVE COVENANTS. The Indenture imposes certain limitations on the ability of the Company and its Subsidiaries to, among other things, incur additional Indebtedness, make payments in respect of its Capital Stock or certain Indebtedness, enter into transactions with Affiliates, create dividend or other payment restrictions affecting Subsidiaries, merge or consolidate with any other Person, sell, assign, transfer, lease, convey, otherwise dispose of all or substantially all of its assets or adopt a plan of liquidation, or continue its Seismic Operations. The Indenture also requires the Company to maintain certain levels of cash or Cash Equivalents. Such limitations are subject to a number of important A-7 qualifications and exceptions. The Company must annually report on compliance with such limitations. 14. SUCCESSORS. When a successor assumes, in accordance with the Indenture, all the obligations of its predecessor under the Notes and the Indenture, the predecessor will be released from those obligations. 15. DEFAULTS AND REMEDIES. Events of Default shall be as set forth in the Indenture. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of Notes Issue then outstanding may declare all the Notes to be due and payable in the manner, at the time and with the effect provided in the Indenture, except that in the case of an Event of Default arising from certain events of bankruptcy or insolvency, all outstanding Notes become due and payable immediately without further action or notice. Holders of Notes may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee is not obligated to enforce the Indenture or the Notes unless it has received indemnity reasonably satisfactory to it. The Indenture permits, subject to certain limitations therein provided, Holders of a majority in aggregate principal amount of the Notes Issue then outstanding to direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of Notes notice of any continuing Default or Event of Default (except a Default in payment of principal or interest) if it determines that withholding notice is in their interest. 16. TRUSTEE DEALINGS WITH COMPANY. The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Company, its Subsidiaries or its respective Affiliates as if it were not the Trustee. 17. NO RECOURSE AGAINST OTHERS. No stockholder, director, officer, employee or incorporator, as such, of the Company shall have any liability for any obligation of the Company under the Notes or the Indenture or for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of a Note by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. 18. GOVERNING LAW. THE LAWS OF THE STATE OF DELAWARE SHALL GOVERN THIS NOTE AND THE INDENTURE, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. A-8 19. ABBREVIATIONS AND DEFINED TERMS. Customary abbreviations may be used in the name of a Holder of a Note or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 20. PROVISIONS OF INDENTURE, THE GENERAL SECURITY AGREEMENT AND THE COLLATERAL AGENCY AGREEMENT. Each Holder, by accepting a Note, agrees to be bound by all of the terms and provisions of each of the Indenture, the General Security Agreement and the Collateral Agency Agreement, as the same may be amended from time to time. 21. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes as a convenience to the Holders of the Notes. No representation is made as to the accuracy of such numbers as printed on the Notes and reliance may be placed only on the other identification numbers printed hereon. 22. AUTHENTICATION. This Note shall not be valid until the Trustee or Authenticating Agent manually signs the certificate of authentication on this Note. 23. PRIORITIES UPON ACCELERATION AND LIQUIDATION. Pursuant to Section 6.10 of the Indenture, holders of 2002 Notes have priority in right of payment to Holders of Notes upon acceleration of principal and accrued interest on the Notes and upon liquidation of the Company so long as any 2002 Notes are outstanding. 24. UNCLAIMED MONEY. If money for the payment of principal or interest remains unclaimed for two years, the Trustee and the Paying Agent will pay the money back to the Company. After that, all liability of the Trustee and such Paying Agent with respect to such money shall cease. The Company will furnish to any Holder of a Note upon written request and without charge a copy of the Indenture, which has the text of this Note in larger type. Requests may be made to: Geokinetics Inc., 8401 Westheimer, Suite 150, Houston, Texas 77063, Attn: President. A-9 ASSIGNMENT FORM If you the Holder want to assign this Note, fill in the form below and have your signature guaranteed: I or we assign and transfer this Note to: ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type name, address and zip code and social security or tax ID number of assignee) and irrevocably appoint_____________________________________ , agent to transfer this Note on the books of the Company. The agent may substitute another to act for him. Date:.________________ Signed: _________________________ (Sign exactly as your name appears on the other side of this Note) Signature Guarantee: ____________________________ In connection with any transfer of this Note occurring prior to the date which is the earlier of (i) the date of the declaration by the SEC of the effectiveness of a registration statement under the Securities Act of 1933, as amended (the "Securities Act"), covering resales of this Note (which effectiveness shall not have been suspended or terminated at the date of the transfer) and (ii) October 1, 2001, the undersigned confirms that it has not utilized any general solicitation or general advertising in connection with the transfer and that this Note is being transferred: A-10 [CHECK ONE] (1) __ the Company or a subsidiary thereof; or (2) __ pursuant to and in compliance with Rule 144A under the Securities Act; or (3) __ to an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) that has furnished to the Company a signed letter containing certain representations and agreements (the form of which is attached below); or (4) __ outside the United states to a "foreign person" in compliance with Rule 904 of Regulation S under the Securities Act; or (5) __ pursuant to the exemption from registration provided by Rule 144 under the Securities Act; or (6) __ pursuant to another available exemption from the registration requirements of the Securities Act. Unless one of the boxes is checked, the Company will refuse to register any of the Notes evidenced by this certificate in the name of any person other than the registered Holder thereof; PROVIDED that if box (3), (4), (5) or (6) is checked, the Company may require, prior to registering any such transfer of the Notes, in its sole discretion, such legal opinions, certifications (including an investment letter in the case of box (3) or (4)) and other information as the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. If none of the foregoing boxes is checked, the Company shall not be obligated to register this Note in the name of any person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein shall have been satisfied. Date: _____________________ Signed: ___________________ (Sign exactly as your name appears on the other side of this Note) Signature Guarantee: ______________________________________ A-11 TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Date: _____________________ _____________________________ NOTICE: To be executed by an executed officer A-12 [FORM OF LETTER TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED] Ladies and Gentlemen: 1. The undersigned understands that any subsequent transfer of the Notes is subject to certain restrictions and conditions set forth in the Notes and in the Indenture and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes except in compliance with, such restrictions and conditions and the Securities Act. 2. The undersigned understands that the offer and sale of the Notes have not been registered under the Securities Act, and that the Notes may not be offered or sold except as permitted in the following sentence. The undersigned agrees, on its own behalf and on behalf of any accounts for which it is acting as hereinafter stated, that if it should sell, pledge or otherwise transfer any Notes it will do so only (1) (w) inside the United States to a person who the seller reasonably believes is a qualified institutional buyer within the meaning of Rule 144A under the Securities Act in a transaction meeting the requirements of Rule 144A, or in accordance with Rule 144 under the Securities Act, or pursuant to another exemption from the registration requirements of the Securities Act (and based upon an opinion of counsel, if the Company so requests), (x) to the Company, (y) outside the United States to a foreign person in a transaction meeting the requirements of Rule 904 under the Securities Act or (z) pursuant to an effective registration statement under the Securities Act and (2) in each case, in accordance with the applicable securities laws of any state of the United States or any other applicable jurisdiction, and the undersigned further agrees to provide to any person purchasing any of the Notes from us a notice advising such purchaser that resales of the Notes are restricted as stated herein. 3. The undersigned understands that, on any proposed resale of any Notes, it may be required to furnish the Company such certification and other information as the Company may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. The undersigned further understands that the Notes purchased by it will bear a legend to the foregoing effect. 4. The undersigned is an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) and (7) under the Securities Act) and has such knowledge and experience in A-13 financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and the undersigned and any accounts for which it is acting are each able to bear the economic risk of our or its investment, as the case may be. 5. The undersigned is acquiring the Notes purchased by us for our account or for one or more accounts (each of which is an institutional "accredited investor") as to each of which the undersigned exercises sole investment discretion. Date:________________________________ _____________________________________ NOTICE: To be executed by an executed officer A-14 [OPTION OF HOLDER TO ELECT PURCHASE] If you want to elect to have this Note purchased by the Company pursuant to Section 4.15 or Section 4.16 of the Indenture, check the appropriate box: Section 4.15 [ ] Section 4.16 [ ] If you want to elect to have only part of this Note purchased by the Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state the amount you elect to have purchased: $___________________ Dated: __________________ ____________________________________ NOTICE: The signature on this assignment must correspond with the name as it appears upon the face of the within Note in every particular without alteration or enlargement or any change whatsoever and be guaranteed by the endorser's bank or broker. Signature Guarantee: ____________________________________ A-15 SENIOR SECURED GUARANTEE Geokinetics Production Co., Inc., Quantum Geophysical, Inc., Geoscience Software Solutions, Inc., Signature Geophysical Services, Inc., Reliable Exploration, Incorporated and Geophysical Development Corporation (the "Guarantors") have unconditionally guaranteed on a senior secured basis (such guarantee by each Guarantor being referred to herein as the "Guarantee") (i) the due and punctual payment of the principal of and interest on the Notes, whether at maturity, by acceleration or otherwise and the due and punctual payment of interest on the overdue principal and interest, if any, on the Notes, to the extent lawful, all in accordance with the terms set forth in Article Eleven of the Indenture and (ii) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. The obligations of each Guarantor to the Holders and to the Trustee pursuant to the Guarantee, the Indenture and the Security Documents are expressly set forth in Article Eleven of the Indenture and the Security Documents, and reference is hereby made to such Indenture and the Security Documents for the precise terms of the Guarantee therein made. This Guarantee is limited under the Indenture and the Security Documents to the extent necessary not to constitute a fraudulent conveyance. No past, present or future stockholder, officer, director, employee or incorporator, as such, of any of the Guarantors shall have any liability under the Guarantees by reason of such person's status as stockholder, officer, director, employee or incorporator. Each holder of a Note by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Guarantees. A-16 The Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication on the Notes upon which the Guarantee is noted shall have been executed by the Trustee under the Indenture by the manual signature of one of its authorized officers. GEOKINETICS PRODUCTION CO., INC. By:___________________ Name: Title: QUANTUM GEOPHYSICAL, INC. By:___________________ Name: Title: GEOSCIENCE SOFTWARE SOLUTIONS, INC. By:___________________ Name: Title: SIGNATURE GEOPHYSICAL SERVICES, INC. By:___________________ Name: Title: A-17 RELIABLE EXPLORATION, INCORPORATED By:___________________ Name: Title: GEOPHYSICAL DEVELOPMENT CORPORATION By:____________________ Name: Title: A-18 FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, AND THE RULES AND REGULATIONS THEREUNDER, THIS SECURITY IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT; FOR EACH $1,000 PRINCIPAL AMOUNT OF THIS SECURITY, (1) THE ISSUE PRICE IS $628.00; (2) THE AMOUNT OF ORIGINAL ISSUE DISCOUNT IS $372.00; (3) THE ISSUE DATE IS OCTOBER 1, 1999; AND (4) THE YIELD TO MATURITY (COMPOUNDED SEMI-ANNUALLY) IS 28.382%. CUSIP No.: GEOKINETICS INC. 13 1/2% SENIOR SECURED NOTE DUE 2002 No. $ GEOKINETICS INC., a Delaware corporation (the "Company," which term includes any successor entity), for value received promises to pay to or registered assigns, the principal sum of Dollars ($ ) on September 15, 2002. Interest Payment Dates: March 15 and September 15 Record Dates: March 1 and September 1 Reference is made to the further provisions of this Note contained on the reverse hereof or elsewhere herein, which will for all purposes have the same effect as if set forth at this place. B-1 IN WITNESS WHEREOF, the Company has caused this Note to be signed manually or by facsimile by its duly authorized officers and a facsimile of its corporate seal to be affixed hereto or imprinted hereon. GEOKINETICS INC. By: _____________________________ Name: Title: By: _____________________________ Name: Title: B-2 CERTIFICATE OF AUTHENTICATION This is one of the 13 1/2% Senior Secured Notes due 2002 referred to in the within-mentioned Indenture. [ ], as Trustee Dated: [ ] By:_____________________________________ Authorized Signatory B-3 (REVERSE OF SECURITY) 13 1/2% SENIOR SECURED NOTE DUE 2002 1. INCORPORATION BY REFERENCE OF PROVISIONS OF THE Indenture. Capitalized terms used herein and not otherwise defined herein shall have the meanings set forth in the Indenture referred to below. 2. INTEREST. GEOKINETICS INC., a Delaware corporation (the "Company," which term includes any successor entity), promises to pay interest on the principal amount of this 13 1/2% Senior Secured Note due 2002 (i) on each Interest Payment Date through and including September 15, 2000, at the option of the Company, in the form of Cash Interest or PIK Interest and (ii) on each Interest Payment Date thereafter, in the form of Cash Interest; PROVIDED that any payment of Cash Interest will be subject to Section 4.14 of the Indenture. Interest on the Notes will accrue from the most recent date on which interest has been paid or, if no interest has been paid, from October 1, 1999. The Company will pay interest semi-annually in arrears on each Interest Payment Date, commencing March 15, 2000. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay interest on overdue principal and on overdue installments of interest from time to time on demand at the rate borne by the Notes plus 2% per annum and on overdue installments of interest (without regard to any applicable grace periods) to the extent lawful. 3. METHOD OF PAYMENT. The Company shall pay interest on the Notes (except defaulted interest) to the Persons who are the registered Holders at the close of business on the Record Date immediately preceding the Interest Payment Date even if the Notes are canceled on registration of transfer or registration of exchange after such Record Date. Holders must surrender Notes to a Paying Agent to collect principal payments. All payments of Cash Interest on the Notes are subject to Section 4.14 of the Indenture. The Company shall pay principal and Cash Interest in money of the United States that at the time of payment is legal tender for payment of public and private debts ("U.S. Legal Tender"). However, the Company may pay principal and Cash Interest by its check payable (in immediately available funds) in U.S. Legal Tender or, at the request of a Holder, by wire transfer in immediately available funds to B-4 an account specified in writing by a Holder. The Company may deliver any such interest payment to the Holder's registered address or such other address or account as the Holder may designate in writing. 4. PAYING AGENT AND REGISTRAR. Initially, [ ], a [ ] (the "Trustee"), will act as Paying Agent and Registrar. The Company may change any Paying Agent, Registrar or co-Registrar without notice to the Holders. 5. INDENTURE. The Company issued the Notes and up to $51,687,993 aggregate principal amount of 13 1/2% Senior Secured Notes due 2005 under an Indenture, dated as of [ ] (the "Indenture"), between the Company, the Guarantors and the Trustee. This Note is one of a duly authorized issue of Notes of the Company designated as the 13 1/2% Senior Secured Notes due 2002 of the Company. The Notes are limited in aggregate principal amount to $6,837,338; PROVIDED that (a) the sum of the aggregate principal amount of (x) Notes issued on the Issue Date and (y) Notes issued pursuant to an additional investment of in the Notes of up to $1,000,000 made on or prior to the 60th day after the Issue Date, shall be limited in aggregate principal amount to $6,000,000 and (b) the aggregate principal amount of additional Notes issued as PIK Interest shall be limited to $837,338. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the TIA as in effect on the date of the Indenture. Notwithstanding anything to the contrary herein, the Notes are subject to all such terms, and Holders of Notes are referred to the Indenture and said Act for a statement of them. The Notes are secured obligations of the Company and are entitled to the benefit of the Security Documents and the Collateral. 6. REDEMPTION. (a) OPTIONAL REDEMPTION. The Notes will be redeemable, subject to Section 3.02 of the Indenture, at the Company' option, in whole at any time or in part from time to time after September 15, 2001, at redemption price equal to 113.5% of the principal amount thereof plus, in each case, accrued interest to the date of redemption. (b) OPTIONAL REDEMPTION UPON PUBLIC EQUITY OFFERINGS. At any time, or from time to time prior to September 15, 2001, the Company may, at its option, use the net cash proceeds of one or more Public Equity Offerings (as defined in the In- B-5 denture) to redeem up to 100% but not less than 50% of the aggregate principal amount of Notes originally issued at a redemption price equal to 113.5% of the principal amount thereof plus, in each case, accrued interest to the date of redemption. In order to effect the foregoing redemption with the proceeds of any Public Equity Offering, the Company shall make such redemption not more than 60 days after the consummation of any such Public Equity Offering. 7. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30 days but not more than 60 days before the Redemption Date to each Holder of Notes to be redeemed at such Holder's registered address. Notes in denominations larger than $1,000 may be redeemed in part. Except as set forth in the Indenture, if moneys for the redemption of the Notes called for redemption shall have been deposited with the Paying Agent for redemption on such Redemption Date, then, unless the Company defaults in the payment of such Redemption Price plus accrued and unpaid interest, if any, the Notes called for redemption will cease to bear interest from and after such Redemption Date and the only right of the Holders of such Notes will be to receive payment of the Redemption Price plus accrued and unpaid interest, if any. 8. OFFERS TO PURCHASE. Sections 4.15 and 4.16 of the Indenture provide that, after certain Asset Sales (as defined in the Indenture) and prior to the occurrence of a Change of Control (as defined in the Indenture), and subject to further limitations contained therein, the Company will make an offer to purchase certain amounts of the Notes in accordance with the procedures set forth in the Indenture. 9. DENOMINATIONS; TRANSFER; EXCHANGE. The Notes are in registered form, without coupons. A Holder shall register the transfer of or exchange Notes in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay certain transfer taxes or similar governmental charges payable in connection therewith as permitted by the Indenture. The Registrar need not register the transfer of or exchange of any Notes or portions thereof selected for redemption. 10. PERSONS DEEMED OWNERS. The registered Holder of a Note shall be treated as the owner of it for all purposes. B-6 11. DISCHARGE PRIOR TO REDEMPTION OR MATURITY. If the Company at any time deposits with the Trustee U.S. Legal Tender or U.S. Government Obligations sufficient to pay the principal of and interest on the Notes to redemption or maturity and complies with the other provisions of the Indenture relating thereto, the Company will be discharged from certain provisions of the Indenture and the Notes (including certain covenants, but excluding its obligation to pay the principal of and interest on the Notes). 12. AMENDMENT; SUPPLEMENT; WAIVER. Subject to certain exceptions set forth in Section 9.02(b) of the Indenture, the Indenture or the Notes may be amended or supplemented with the written consent of the Holders of at least a majority in aggregate principal amount of the Notes and 2005 Notes (collectively, the "Notes Issue") then outstanding, and any existing Default or Event of Default or noncompliance with any provision may be waived with the written consent of the Holders of a majority in aggregate principal amount of the Notes Issue then outstanding. Without notice to or consent of any Holder, the Company, and the Guarantors, when authorized by a Board Resolution, may amend or supplement the Indenture or the Notes to cure any ambiguity, defect or inconsistency, provide for uncertificated Notes in addition to or in place of certificated Notes, or comply with Article Five of the Indenture, comply with any requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA, make any change that would provide any additional benefit or rights to the Holders, make any other change that does not adversely affect in any material respect the rights of any Holder of a Note or add or remove Guarantors as provided in the Indenture. 13. RESTRICTIVE COVENANTS. The Indenture imposes certain limitations on the ability of the Company and its Subsidiaries to, among other things, incur additional Indebtedness, make payments in respect of its Capital Stock or certain Indebtedness, enter into transactions with Affiliates, create dividend or other payment restrictions affecting Subsidiaries, merge or consolidate with any other Person, sell, assign, transfer, lease, convey, otherwise dispose of all or substantially all of its assets or adopt a plan of liquidation, or continue its Seismic Operations. The Indenture also requires the Company to maintain certain levels of cash or Cash Equivalents. Such limitations are subject to a number of important qualifications and exceptions. The Company must annually report on compliance with such limitations. B-7 14. SUCCESSORS. When a successor assumes, in accordance with the Indenture, all the obligations of its predecessor under the Notes and the Indenture, the predecessor will be released from those obligations. 15. DEFAULTS AND REMEDIES. Events of Default shall be as set forth in the Indenture. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of Notes Issue then outstanding may declare all the Notes to be due and payable in the manner, at the time and with the effect provided in the Indenture, except that in the case of an Event of Default arising from certain events of bankruptcy or insolvency, all outstanding Notes become due and payable immediately without further action or notice. Holders of Notes may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee is not obligated to enforce the Indenture or the Notes unless it has received indemnity reasonably satisfactory to it. The Indenture permits, subject to certain limitations therein provided, Holders of a majority in aggregate principal amount of the Notes Issue then outstanding to direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of Notes notice of any continuing Default or Event of Default (except a Default in payment of principal or interest) if it determines that withholding notice is in their interest. 16. TRUSTEE DEALINGS WITH COMPANY. The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Company, its Subsidiaries or its respective Affiliates as if it were not the Trustee. 17. NO RECOURSE AGAINST OTHERS. No stockholder, director, officer, employee or incorporator, as such, of the Company shall have any liability for any obligation of the Company under the Notes or the Indenture or for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of a Note by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. 18. GOVERNING LAW. THE LAWS OF THE STATE OF DELAWARE SHALL GOVERN THIS NOTE AND THE INDENTURE, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. 19. ABBREVIATIONS AND DEFINED TERMS. Customary abbreviations may be used in the name of a Holder of a Note or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= B-8 tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 20. PROVISIONS OF INDENTURE, THE GENERAL SECURITY AGREEMENT AND THE COLLATERAL AGENCY AGREEMENT. Each Holder, by accepting a Note, agrees to be bound by all of the terms and provisions of each of the Indenture, the General Security Agreement and the Collateral Agency Agreement, as the same may be amended from time to time. 21. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes as a convenience to the Holders of the Notes. No representation is made as to the accuracy of such numbers as printed on the Notes and reliance may be placed only on the other identification numbers printed hereon. 22. AUTHENTICATION. This Note shall not be valid until the Trustee or Authenticating Agent manually signs the certificate of authentication on this Note. 23. UNCLAIMED MONEY. If money for the payment of principal or interest remains unclaimed for two years, the Trustee and the Paying Agent will pay the money back to the Company. After that, all liability of the Trustee and such Paying Agent with respect to such money shall cease. The Company will furnish to any Holder of a Note upon written request and without charge a copy of the Indenture, which has the text of this Note in larger type. Requests may be made to: Geokinetics Inc., 8401 Westheimer, Suite 150, Houston, Texas 77063, Attn: President. B-9 ASSIGNMENT FORM If you the Holder want to assign this Note, fill in the form below and have your signature guaranteed: I or we assign and transfer this Note to: ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type name, address and zip code and social security or tax ID number of assignee) and irrevocably appoint_______________________________________________________, agent to transfer this Note on the books of the Company. The agent may substitute another to act for him. Date: ________________ Signed: ________________________ (Sign exactly as your name appears on the other side of this Note) Signature Guarantee: ____________________________ In connection with any transfer of this Note occurring prior to the date which is the earlier of (i) the date of the declaration by the SEC of the effectiveness of a registration statement under the Securities Act of 1933, as amended (the "Securities Act"), covering resales of this Note (which effectiveness shall not have been suspended or terminated at the date of the transfer) and (ii) October 1, 2001, the undersigned confirms that it has not utilized any general solicitation or general advertising in connection with the transfer and that this Note is being transferred: B-10 [CHECK ONE] (1) __ the Company or a subsidiary thereof; or (2) __ pursuant to and in compliance with Rule 144A under the Securities Act; or (3) __ to an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) that has furnished to the Company a signed letter containing certain representations and agreements (the form of which is attached below); or (4) __ outside the United states to a "foreign person" in compliance with Rule 904 of Regulation S under the Securities Act; or (5) __ pursuant to the exemption from registration provided by Rule 144 under the Securities Act; or (6) __ pursuant to another available exemption from the registration requirements of the Securities Act. Unless one of the boxes is checked, the Company will refuse to register any of the Notes evidenced by this certificate in the name of any person other than the registered Holder thereof; PROVIDED that if box (3), (4), (5) or (6) is checked, the Company may require, prior to registering any such transfer of the Notes, in its sole discretion, such legal opinions, certifications (including an investment letter in the case of box (3) or (4)) and other information as the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. If none of the foregoing boxes is checked, the Company shall not be obligated to register this Note in the name of any person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein shall have been satisfied. Date: _____________________ Signed: ___________________ (Sign exactly as your name appears on the other side of this Note) Signature Guarantee: ______________________________________ B-11 TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Date: _____________________ _____________________________ NOTICE: To be executed by an executive officer B-12 [FORM OF LETTER TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED] Ladies and Gentlemen: 1. The undersigned understands that any subsequent transfer of the Notes is subject to certain restrictions and conditions set forth in the Notes and in the Indenture and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes except in compliance with, such restrictions and conditions and the Securities Act. 2. The undersigned understands that the offer and sale of the Notes have not been registered under the Securities Act, and that the Notes may not be offered or sold except as permitted in the following sentence. The undersigned agrees, on its own behalf and on behalf of any accounts for which it is acting as hereinafter stated, that if it should sell, pledge or otherwise transfer any Notes it will do so only (1) (w) inside the United States to a person who the seller reasonably believes is a qualified institutional buyer within the meaning of Rule 144A under the Securities Act in a transaction meeting the requirements of Rule 144A, or in accordance with Rule 144 under the Securities Act, or pursuant to another exemption from the registration requirements of the Securities Act (and based upon an opinion of counsel, if the Company so requests), (x) to the Company, (y) outside the United States to a foreign person in a transaction meeting the requirements of Rule 904 under the Securities Act or (z) pursuant to an effective registration statement under the Securities Act and (2) in each case, in accordance with the applicable securities laws of any state of the United States or any other applicable jurisdiction, and the undersigned further agrees to provide to any person purchasing any of the Notes from us a notice advising such purchaser that resales of the Notes are restricted as stated herein. 3. The undersigned understands that, on any proposed resale of any Notes, it may be required to furnish the Company such certification and other information as the Company may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. The undersigned further understands that the Notes purchased by it will bear a legend to the foregoing effect. 4. The undersigned is an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) and (7) under the Securities Act) and has such knowledge and experience in B-13 financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and the undersigned and any accounts for which it is acting are each able to bear the economic risk of our or its investment, as the case may be. 5. The undersigned is acquiring the Notes purchased by us for our account or for one or more accounts (each of which is an institutional "accredited investor") as to each of which the undersigned exercises sole investment discretion. Date:________________________________ _____________________________________ NOTICE: To be signed by an executive officer B-14 [OPTION OF HOLDER TO ELECT PURCHASE] If you want to elect to have this Note purchased by the Company pursuant to Section 4.15 or Section 4.16 of the Indenture, check the appropriate box: Section 4.15 [ ] Section 4.16 [ ] If you want to elect to have only part of this Note purchased by the Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state the amount you elect to have purchased: $_________________ Dated: __________________ ____________________________________ NOTICE: The signature on this assignment must correspond with the name as it appears upon the face of the within Note in every particular without alteration or enlargement or any change whatsoever and be guaranteed by the endorser's bank or broker. Signature Guarantee: ____________________________________ B-15 SENIOR SECURED GUARANTEE Geokinetics Production Co., Inc., Quantum Geophysical, Inc., Geoscience Software Solutions, Inc., Signature Geophysical Services, Inc., Reliable Exploration, Incorporated and Geophysical Development Corporation (the "Guarantors") have unconditionally guaranteed on a senior secured basis (such guarantee by each Guarantor being referred to herein as the "Guarantee") (i) the due and punctual payment of the principal of and interest on the Notes, whether at maturity, by acceleration or otherwise and the due and punctual payment of interest on the overdue principal and interest, if any, on the Notes, to the extent lawful, all in accordance with the terms set forth in Article Eleven of the Indenture and (ii) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. The obligations of each Guarantor to the Holders and to the Trustee pursuant to the Guarantee, the Indenture and the Security Documents are expressly set forth in Article Eleven of the Indenture and the Security Documents, and reference is hereby made to such Indenture and the Security Documents for the precise terms of the Guarantee therein made. This Guarantee is limited under the Indenture and the Security Documents to the extent necessary not to constitute a fraudulent conveyance. No past, present or future stockholder, officer, director, employee or incorporator, as such, of any of the Guarantors shall have any liability under the Guarantees by reason of such person's status as stockholder, officer, director, employee or incorporator. Each holder of a Note by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Guarantees. B-16 The Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication on the Notes upon which the Guarantee is noted shall have been executed by the Trustee under the Indenture by the manual signature of one of its authorized officers. GEOKINETICS PRODUCTION CO., INC. By:___________________ Name: Title: QUANTUM GEOPHYSICAL, INC. By:___________________ Name: Title: GEOSCIENCE SOFTWARE SOLUTIONS, INC. By:___________________ Name: Title: SIGNATURE GEOPHYSICAL SERVICES, INC. By:___________________ Name: Title: B-17 RELIABLE EXPLORATION, INCORPORATED By:___________________ Name: Title: GEOPHYSICAL DEVELOPMENT CORPORATION By:____________________ Name: Title: B-18 EX-4.4 5 EXHIBIT 4.4 AMENDED AND RESTATED TAG-ALONG DRAG-ALONG AGREEMENT This Amended and Restated Tag-Along Drag-Along Agreement (this "AGREEMENT") is made and entered into as of September 30, 1999, among Geokinetics Inc., a Delaware corporation (the "COMPANY"), Blackhawk Investors, L.L.C., a Delaware limited liability company ("BLACKHAWK"), William R. Ziegler ("ZIEGLER") and Steven A. Webster ("WEBSTER") (Blackhawk, Ziegler and Webster being sometimes referred to collectively as the "BLACKHAWK GROUP") and the Warrant Holders (as defined below), and amends, replaces and restates the Agreement executed among the parties hereto as of April 30, 1998 (the "ORIGINAL AGREEMENT"). WHEREAS, as of September 30, 1999 (i) Blackhawk is the record and beneficial owner of 8,666,667 shares of Common Stock, $0.01 par value per share ("Common Stock"), of the Company, representing approximately 44.7% of the 19,367,156 shares of Common Stock of the Company issued and outstanding and (ii) Blackhawk is the record and beneficial owner of certain Shadow Warrants that currently represent the right to acquire up to a maximum of 6,359,990 shares of Common Stock (subject to adjustment as provided therein), at an exercise price of $0.20 per share, which Shadow Warrants are presently exercisable for an aggregate of 5,735,511 shares of Common Stock, with the exercisability of the remaining Shadow Warrants to acquire up to 624,479 shares of Common Stock (subject to adjustment) being subject to the satisfaction of conditions that are not within the control of Blackhawk; WHEREAS, as of September 30, 1999 (i) Webster and Ziegler are the record and beneficial owners of 333,326 and 333,340 shares of Common Stock, respectively, each representing approximately 1.7% (and collectively representing approximately 3.4%), of the 19,367,156 shares of Common Stock of the Company issued and outstanding and (ii) (A) Webster is the record and beneficial owner of certain (x) warrants to purchase 1,482,512 shares of Common Stock and (y) Shadow Warrants that currently represent the right to acquire up to a maximum of 244,610 shares of Common Stock (subject to adjustment as provided therein), at an exercise price of $0.20 per share, which Shadow Warrants are presently exercisable for an aggregate of 220,592 shares of Common Stock, with the exercisability of the remaining Shadow Warrants to acquire up to 24,018 shares of Common Stock (subject to adjustment) being subject to the satisfaction of conditions that are not within the control of Webster and (B) Ziegler is the record and beneficial owner of certain (x) options to acquire 50,000 shares of Common Stock, (y) warrants to purchase 1,482,512 shares of Common Stock and (z) Shadow Warrants that currently represent the right to acquire up to a maximum of 244,619 shares of Common Stock (subject to adjustment as provided therein), at an exercise price of $0.20 per share, which Shadow Warrants are presently exercisable for an aggregate of 220,601 shares of Common Stock, with the exercisability of the remaining Shadow Warrants to acquire up to 24,018 shares of Common Stock (subject to adjustment) being subject to the satisfaction of conditions that are not within the control of Ziegler; WHEREAS, pursuant to the transactions contemplated by that certain Securities Purchase Agreement of even date herewith (the "SECURITIES PURCHASE AGREEMENT") among the Company and the Warrant Holders, the Company has agreed to issue warrants entitling the Warrant Holders to purchase up to an aggregate of 50,068,594 shares of Common Stock subject to the terms and conditions set forth in that certain Amended and Restated Warrant Agreement, of even date herewith (the RESTATED WARRANT AGREEMENT"), among the Company and the Warrant Holders; WHEREAS, members of Blackhawk, including Blackhawk Capital Partners, Webster and Ziegler and their affiliates, may acquire warrants to purchase up to 7,750,000 shares of Common Stock pursuant to the Securities Purchase Agreement; WHEREAS, it is a material inducement and a precondition to the entering into of the Securities Purchase Agreement and the Restated Warrant Agreement by the Warrant Holders that the Company and the Blackhawk Group enter into this Agreement; NOW, THEREFORE, in consideration of the premises, and the mutual agreements set forth herein, the parties hereto agree as follows: Section 1. CERTAIN DEFINITIONS. (a) Capitalized terms not otherwise defined herein, shall have the meanings assigned to them in the Restated Warrant Agreement. (b) As used herein: "CONTROL DISPOSITION" means a Disposition which would have the effect of transferring to any transferee or a "group" of persons (as "group" is defined for purposes of Section 13(d)(3) of the Exchange Act and the rules and regulations thereunder ("GROUP")) beneficial ownership (as defined in Rule 13d-3 of the Exchange Act) of a number of shares of outstanding Common Stock held by the Blackhawk Group constituting, in the aggregate, at least 80 percent of the then outstanding shares of Common Stock held by the Blackhawk Group. "DISPOSITION" means any direct or indirect transfer, assignment, sale, gift, pledge, hypothecation or other encumbrance, or any disposition of Common Stock (or any interest therein or right thereto) or of all or part of the voting power associated with the Common Stock (or any interest therein) whatsoever, or any other transfer of beneficial ownership of Common Stock whether voluntary or involuntary; PROVIDED, that (i) no transfer of the Warrants or the Warrant Shares issued to Ziegler or Webster pursuant to the Securities Purchase Agreement shall be deemed a Disposition hereunder, (ii) the transfer of Common Stock by Blackhawk to its members shall not be deemed a Disposition hereunder, (iii) all public sales properly conducted by the Blackhawk Group or any of the Warrant Holders pursuant to Rule 144 under the Securities Act shall not be deemed Dispositions hereunder, (iv) no transfer by either Blackhawk, Ziegler or Webster of less than 10% of their respective holdings of Common Stock in a single transaction or series of related transactions shall be deemed a Disposition hereunder, and (v) the participation by the Blackhawk Group or any of the Warrant Holders in a proposed underwritten public offering of Common Stock (including the entering into an underwriting agreement, a custody agreement and other agreements customarily executed by selling shareholders in connection therewith) or the participation by the Blackhawk Group or any of the Warrant Holders in any other registration pursuant to any demand or piggyback registration rights that any of them may have pursuant to any registration rights or similar agreement with the Company and the consummation thereof, shall not constitute a Disposition, it being understood that, if such proposed underwritten public offering is terminated or abandoned prior to consummation or is not consummated or such other registration is terminated or abandoned prior to consummation or its not consummated, the Common Stock, Warrants and Warrant Shares held by -2- the parties hereto shall remain subject to this Agreement. The term Disposition shall include a Control Disposition. "WARRANT HOLDERS" shall mean each of the persons (including Webster and Ziegler) identified as Warrant Holders on EXHIBIT A hereto, and any other persons or entities who become parties to this Agreement as "Warrant Holders" pursuant to the terms of this Agreement, and their respective heirs, legal representatives, administrators and successors. Section 2. RESTATEMENT OF ORIGINAL AGREEMENT. The Original Agreement executed as of April 30, 1998 is hereby terminated pursuant to Section 10 thereof, it being understood and agreed that this Agreement amends, replaces and restates the Original Agreement. Section 3. TAG-ALONG DISPOSITIONS. Subject to the provisions of Section 4, if either Blackhawk, Ziegler or Webster desires to effect a Disposition (or a series of related Dispositions to a single transferee or Group) of at least 25% of the issued and outstanding shares of Common Stock owned by such entity (excluding the Warrants and Warrant Shares issued to Webster and Ziegler pursuant to the Securities Purchase Agreement) to any transferee or Group (a "TAG-ALONG DISPOSITION"), such entity or person shall give written notice to the Warrant Holders describing the material terms of the proposed Tag-Along Disposition and identifying the contemplated transferee or Group (a "TAG-ALONG NOTICE"). Each such Warrant Holder may, by written notice to Blackhawk, Ziegler or Webster, as the case may be, delivered within 15 days following the date of the Tag-Along Notice (each such Warrant Holder delivering such notice being a "TAG-ALONG WARRANT HOLDER"), elect to participate in the Tag-Along Disposition, and require, as a condition to the closing of the Tag-Along Disposition, that the proposed transferee or Group purchase, at the same price per share and on the same terms and conditions as are described in the Tag-Along Notice, a portion of the total number of Warrant Shares then held or obtainable by each Warrant Holder equal to a fraction thereof, the numerator of which is the total number of shares of Common Stock held by either Blackhawk, Ziegler or Webster, as the case may be, to be transferred in the Tag-Along Disposition and the denominator of which is the total number of shares of Common Stock then held by either Blackhawk, Ziegler or Webster, as the case may be, (the "TAG-ALONG SHARES"). If any Warrant Holder receiving the Tag-Along Notice timely elects to be a Tag-Along Warrant Holder, neither Blackhawk, Ziegler or Webster, as the case may be, shall effect the Tag-Along Disposition described in the Tag-Along Notice unless the proposed transferee or Group agrees to purchase all of the Tag- Along Shares of all of the Tag-Along Warrant Holders at the same price and on the same terms and conditions described in the Tag-Along Notice, except that to the extent the transferee or Group purchases any Warrant, the Exercise Price shall be deducted from the price payable for the Warrant. Upon the closing of the sale of any sale of the Warrant or the Warrant Shares pursuant to this Section, each Tag-Along Warrant Holder shall deliver at such closing, against payment of the purchase price therefor, certificates representing the Warrant or Warrant Shares, as the case may be, to be sold, duly endorsed for transfer or accompanied by duly endorsed stock powers, and evidence of good title to the Warrant or Warrant Shares to be sold and the absence of liens, encumbrances and adverse claims with respect thereto and such other matters as are deemed necessary by the Company for the proper transfer of such Warrant or Warrant Shares on the books of the Company. Section 4. DRAG-ALONG IN CONTROL DISPOSITIONS. If the Blackhawk Group desires to effect a Control Disposition, then, in lieu of complying with the requirements of Section 3, the Blackhawk Group at its option (the "DRAG-ALONG OPTION"), shall have the right to require all of the Warrant -3- Holders to sell the same percentage of such holder's Warrant and/or the Warrant Shares as the shares being disposed by the Blackhawk Group to such transferee or Group selected by the Blackhawk Group at the same price and on the same terms and conditions as apply to the shares of Common Stock sold by the Blackhawk Group in the Control Disposition, except that to the extent the transferee or Group purchases any Warrant, the Exercise Price shall be deducted from the price payable for the Warrant. Upon the closing of the sale of any Warrant or Warrant Shares pursuant to this paragraph, each Warrant Holder shall deliver at such closing, against payment of the purchase price therefor, certificates representing the Warrant or Warrant Shares, as the case may be, to be sold, duly endorsed for transfer or accompanied by duly endorsed stock powers, and evidence of good title to the shares to be sold and the absence of liens, encumbrances and adverse claims with respect thereto and such other matters as are deemed necessary by the Company for the proper transfer of such Warrants or Warrant Shares on the books of the Company provided that in connection with any such transaction (x) each Warrant Holder shall not be required to make any representations or warranties except those relating to (i) its own due organization and execution and delivery of the relevant agreement, (ii) the enforceability of the relevant agreement against it and absence of conflicts with agreements and laws applicable to it and (iii) its ownership of securities being sold by it and (y) the Warrant Holders shall not be required to provide any post-closing indemnities except as provided in clause (z) below and (z) in the event that a portion of the purchase price is placed in escrow to support purchase price adjustment obligations post-closing (including indemnification for breaches of representations or warranties relating to the Company and its subsidiaries), the Warrant Holders will have a pro rata portion of their purchase price placed in such escrow to be utilized to pay any such indemnification obligations. Section 5. LEGEND ON CERTIFICATES. The Company will cause to appear on all certificates representing the Warrant or the Warrant Shares a conspicuous legend in such form as the Company's Board of Directors may determine, stating that such securities are subject to an agreement which restricts the transferability thereof and otherwise circumscribes the rights which may be exercised by the holder thereof. Section 6. SPECIFIC ENFORCEMENT. In view of the inadequacy of money damages, if either the Blackhawk Group or any Warrant Holder (a "BREACHING PARTY") or other person shall fail to comply with the provisions of Section 3 or 4 hereof, the Company and the other non-breaching parties shall be entitled, to the extent permitted by applicable law, to injunctive relief in the case of the violation, or attempted or threatened violation, by a Breaching Party or other person of any of the provisions of such Sections, or to a decree compelling specific performance by a Breaching Party or other person of any such provisions, or to any other remedy legally allowed to them. Section 7. VOID TRANSFERS. If the Warrant, the Warrant Shares or any shares of Common Stock subject to the terms of this Agreement shall be transferred in a Disposition in violation of the terms and conditions of this Agreement, such Disposition shall be void. In addition to, and without prejudice to, any and all other rights or remedies which may be available to the parties hereto, the Blackhawk Group and each of the Warrant Holders agree that the Company may, but shall have no obligation to, hold and refuse to recognize a Disposition of any such securities (or any certificate therefor) tendered to it for transfer if the Disposition violates the provisions of this Agreement. -4- Section 8. NOTICES. All notices, offers, requests, consents and communications required or permitted to be given or made under this Agreement shall be given or made in writing and shall be deemed to have been duly given or made when sent by mail, postage prepaid, a. if to the Company, 8401 Westheimer, Suite 150, Houston, Texas 77063, Attention: Chief Financial Officer; and b. if to Blackhawk or Ziegler, c/o Saterlee Stephens Burke & Burke LLP, 230 Park Avenue, New York, New York 10169-0079, Attention: William R. Ziegler; and c. if to Webster, 1908 River Oaks Blvd., Houston, Texas 77019; and d. if to any Warrant Holder, to the address as last shown on the stock record books of the Company. Any such notice shall be effective and deemed received three days after proper deposit in the mails, but actual notice shall be effective however and whenever received. The Company, Blackhawk, Ziegler, Webster or any Warrant Holder may effect a change of address for purposes of this Agreement by giving notice of such change to the other parties, with specific reference to this Section. Section 9. AMENDMENT, SEVERABILITY, SUBSEQUENT PARTIES. a. Except as expressly provided herein, neither this Agreement nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the Company, the Blackhawk Group and a majority of the holders of Warrant Shares issued or issuable upon exercise of the Warrants. In the event that any provisions hereof are held to be invalid, illegal or against public policy, the remaining provisions hereof shall not be affected thereby. In such event, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible with respect to those provisions which were held to be invalid, illegal or against public policy. b. Notwithstanding anything herein to the contrary, the parties hereto agree that this Agreement shall be amended to include any person or entity that acquires a Warrant or Warrant Shares or otherwise becomes entitled to purchase the Warrant Shares of the Company pursuant to the Warrant Agreement. In such instance, such persons or entities, the Blackhawk Group and the Company shall execute an Adoption Agreement in the form of EXHIBIT B hereto adding such persons or entities. Each Warrant Holder hereby constitutes and appoints Blackhawk as such Warrant Holder's agent and attorney-in-fact with full power and authority, in the name, place and stead of such Warrant Holder to execute such Adoption Agreement on behalf of such Warrant Holder to evidence such Warrant Holder's approval of such additional parties to this Agreement. The foregoing power of attorney is hereby declared to be irrevocable and a power coupled with an interest. Upon execution by the Company, the Blackhawk Group and the additional party of such Adoption Agreement, the additional party shall be considered a Warrant Holder hereunder, and the Warrant and the Warrant Shares acquired by such additional party shall be deemed to be subject to the terms of this Agreement, and legended accordingly, for all purposes of this Agreement. -5- Section 10. AGREEMENTS BY COMPANY. The Company, insofar as is proper or required, consents to this Agreement. It shall not issue, transfer or reissue any of its shares of stock, warrants or other securities in violation of this Agreement or without requiring proof of compliance with this Agreement. Section 11. EFFECTIVENESS; TERMINATION. This Agreement shall become effective at such time as it is executed by the Company, the Blackhawk Group and, with respect to a Warrant Holder, by such Warrant Holder. Except as otherwise provided herein, this Agreement shall terminate upon the earlier to occur of (i) the dissolution of the Company; (ii) the written approval of the Company, the Blackhawk Group and a majority of the holders of Warrant Shares issued or issuable upon exercise of the Warrants; (iii) the date on which the Warrant Holders, in the aggregate, hold less than 25% of the number of Warrant Shares originally purchasable under the Restated Warrant Agreement; (iv) the date on which the Blackhawk Group no longer owns any shares of Common Stock, whether pursuant to a Disposition or otherwise pursuant to one or more transactions that do not constitute Dispositions hereunder; (v) the first date on which the Common Stock is traded on the NASDAQ system or any nationally registered securities exchange, or (vi) 5:00 P.M. New York City time on the Expiration Date. Any Warrant Holder who disposes of all of its Warrant or Warrant Shares in conformity with the terms of this Agreement shall cease to be a party to this Agreement and shall have no further rights hereunder. Section 12. CONSTRUCTION. Each party to this Agreement has had the opportunity to review this Agreement with legal counsel. This Agreement shall not be construed or interpreted against any party on the basis that such party drafted or authored a particular provision, parts of or the entirety of this Agreement. Section 13. MISCELLANEOUS. This Agreement (a) constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof, (b) may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same instrument, (c) shall inure to the benefit of and be binding upon, the successors, assigns, legatees, distributees, legal representatives and heirs of each party and is not intended to confer upon any person, other than the parties and their permitted successors and assigns, any rights or remedies hereunder, and (d) SHALL BE GOVERNED IN ALL RESPECTS, INCLUDING VALIDITY, INTERPRETATION AND EFFECT, BY THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES. The captions in this Agreement are for convenience of reference only and shall not affect its interpretation in any respect. Section 14. SPOUSAL CONSENT. The spouses, if applicable, of the Warrant Holders fully consent and agree to the provisions of this Agreement and its binding effect upon any community property interest, if any, they may now or hereafter own. The spouses hereby acknowledge the fairness of this Agreement and that it is in such spouse's best interests to bind such spouse's community interest, if any, in the Warrant and the Warrant Shares, to the terms of this Agreement. [SIGNATURES APPEAR ON THE FOLLOWING THREE PAGES] -6- IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of the day and year first above written. COMPANY: GEOKINETICS INC. By: /s/ THOMAS J. CONCANNON Name: Thomas J. Concannon Title: Vice President BLACKHAWK GROUP: BLACKHAWK INVESTORS, L.L.C. By: Blackhawk Capital Partners, its Managing Member By: /s/ WILLIAM R. ZIEGLER William R. Ziegler, General Partner /s/ WILLIAM R. ZIEGLER William R. Ziegler, Individually /s/ STEVEN A. WEBSTER Steven A. Webster, Individually WARRANT HOLDERS: DLJ INVESTMENT PARTNERS, L.P. By: /s/ Name: Title: -7- DLJ INVESTMENT FUNDING, INC. By: /s/ Name: Title: DLJ ESC II, L.P. By: DLJ LBO PLANS Management Corporation, its General Partner By: /s/ Name: Title: SPINDRIFT PARTNERS, L.P. BY: Wellington Management Company, LLP, its Investment Advisor By: /s/ DONNA M. BROWN Name: Donna M. Brown Title: Assistant Vice President SPINDRIFT INVESTORS (BERMUDA) L.P. BY: Wellington Management Company, LLP, its Investment Advisor By: /s/ DONNA M. BROWN Name: Donna M. Brown Title: Assistant Vice President -8- CHASE EQUITY ASSOCIATES, L.P. By: Chase Capital Partners, its General Partner By: /s/ Name: Title: MHR CAPITAL PARTNERS, LP BY: MHR Advisors LLC, General Partner By: /s/ Name: Title: WHITTIER VENTURES, L.L.C. By: /s/ DAVID A. DAHL Name: David A. Dahl Title: President /s/ PAUL B. LOYD, JR. PAUL B. LOYD, JR. (individually) _____________________________________ (spouse, if applicable) SOMERSET CAPITAL PARTNERS By: /s/ WILLIAM R. ZIEGLER Name: William R. Ziegler Title: Partner /s/ STEVEN A. WEBSTER Steven A. Webster, Individually /s/ WILLIAM R. ZIEGLER William R. Ziegler, Individually -9- EXHIBIT A List of Warrant Holders DLJ Investment Partners, L.P. DLJ Investment Funding, Inc. DLJ ESC II, L.P. Spindrift Partners, L.P. Spindrift Investors (Bermuda) L.P. Chase Equity Associates, L.P. MHR Capital Partners LP Whittier Ventures, L.L.C. Paul B. Loyd, Jr. Somerset Capital Partners Steven A. Webster William R. Ziegler EXHIBIT B Adoption Agreement This Adoption Agreement ("ADOPTION") is executed pursuant to the terms of that certain Amended and Restated Tag-Along Drag-Along Agreement dated as of September __, 1999 ("TAG-DRAG AGREEMENT"), by and among Geokinetics Inc., a Delaware corporation, Blackhawk Investors, L.L.C., a Delaware limited liability company ("BLACKHAWK"), and the Warrant Holders (as defined therein) (the "WARRANT HOLDERS"). By the execution of this Adoption Agreement, the undersigned agrees as follows: 1. ACKNOWLEDGMENT. The undersigned acknowledges that it is acquiring certain Warrants to purchase shares of the Common Stock, par value $0.01, of the Company and/or Warrant Shares, subject to the terms and conditions of the Tag-Drag Agreement. 2. AGREEMENT. The undersigned (i) agrees that the Warrant Shares and the Warrants to purchase the shares of the Common Stock of the Company acquired by it shall be bound by and subject to the terms of the Tag-Drag Agreement, and (ii) hereby adopts the Tag-Drag Agreement with the same force and effect as if it were originally a party thereto and named as a Warrant Holder therein. 3. NOTICE. Any notice required as permitted by the Tag-Drag Agreement shall be given to the undersigned at the address listed beside the undersigned's signature below. 4. JOINDER. The spouse of the undersigned, if applicable, executes this Adoption Agreement to acknowledge its fairness and that it is in such spouse's best interests to bind such spouse's community interest, if any, in the Warrant and/or the Warrant Shares, to the terms of the Tag-Drag Agreement. EXECUTED and DATED as of ______________, 19___. PURCHASER OR TRANSFEREE: By:_____________________________________ Name:___________________________________ Address:________________________________ SPOUSE (IF APPLICABLE): By:_____________________________________ Name:___________________________________ Address:________________________________ Agreed to on behalf of the Company, Blackhawk, Ziegler, Webster and all Warrant Holders pursuant to Section 9b. of the Tag-Drag Agreement. GEOKINETICS INC. By:______________________________ _________________________________ William R. Ziegler (individually) _________________________________ Steven A. Webster (individually) BLACKHAWK INVESTORS, L.L.C. (for itself-and as Attorney-in-Fact for the Warrant Holders) By:__________________________________ Name:________________________________ Title:_______________________________ EX-99 6 EXHIBIT 99 RESTRUCTURE AGREEMENT THIS RESTRUCTURE AGREEMENT ("Agreement") is entered into this 1st day of October, 1999, by and between GEOKINETICS INC., a Delaware corporation, and its subsidiaries, SIGNATURE GEOPHYSICAL SERVICES, INC. (a Michigan corporation) and QUANTUM GEOPHYSICAL, INC. (a Texas corporation), collectively the "Geokinetics Entities," and INPUT/OUTPUT, INC. (a Delaware corporation) and its subsidiary Global Charter Corporation (a Delaware corporation), collectively the "I/O Entities." RECITALS: WHEREAS, Geokinetics Inc. ("Geokinetics") and Input/Output, Inc. ("I/O") are parties to that certain Conditional Sales Agreement No. 970915 executed by Geokinetics and I/O on or about September 26, 1997 and September 29, 1997, respectively ("CSA I"), whereby I/O agreed to sell certain equipment to Geokinetics; WHEREAS, Signature Geophysical Services, Inc. ("Signature"), and I/O are parties to that certain Conditional Sales Agreement No. 970916 executed by Signature and I/O on or about September 26, 1997 and September 29, 1997, respectively ("CSA II"), whereby I/O agreed to sell certain equipment to Signature; WHEREAS, I/O is the owner and holder of that certain Promissory Note dated November 11, 1998 in the principal sum of $1,621,782.02 between Quantum Geophysical, Inc. ("Quantum"), and Geokinetics, as makers, and I/O, as payee ("Note"); WHEREAS, I/O has assigned to Global Charter Corporation ("Global"), all of its rights, title and interest to the Sales Price and any interest payable under CSA I and CSA II and has thereafter assigned to Global all of I/O's right, title and interest in CSA I, CSA II, the Note and any related security and other documents signed herewith; WHEREAS, subsidiaries or affiliated companies of Geokinetics, Signature or Quantum may have used equipment that is the subject of or represents collateral under CSA I, CSA II or the Note; WHEREAS, the Geokinetics Entities, being in default and unable to perform under CSA I, CSA II and the Note, have requested I/O to restructure their obligations thereunder; WHEREAS, I/O has agreed to such restructure with Geokinetics, Signature and Quantum whereby the parties, among other things, will enter contemporaneously herewith into an assignment in lieu of foreclosure and a leaseback transaction involving equipment subject to, covered by or pledged to I/O as collateral under CSA I, CSA II or the Note (defined below as the "Equipment".) WHEREAS, the parties hereto agree and acknowledge that the principal outstanding as of the date hereof on CSA I, CSA II and the Note is $2,127,323.85, $6,174,430.47 and $1,621,782.02, respectively; and WHEREAS, the parties to this Restructure Agreement have contemporaneously herewith entered into or will enter into various agreements, including but not limited to a Lease Agreement between I/O and Geokinetics of this same date, to accommodate and effect the restructure described above (collectively, all such agreements including this Agreement are referred to as the "Transaction Documents"); NOW, THEREFORE, for and in consideration of the premises herein set forth and the warranties, representations, covenants and agreements herein contained, the parties to this Agreement hereby warrant, represent, covenant and agree as follows: ARTICLE 1 ASSIGNMENT IN LIEU OF FORECLOSURE 1.1 ASSIGNMENT IN LIEU OF FORECLOSURE. On the terms and conditions contained in this Agreement, the Geokinetics Entities shall assign, convey and transfer to I/O at the Closing all of the Geokinetics Entities' right, title and interest in and to the assets more particularly described in CSA I, CSA II, the Note and the related documents signed therewith (collectively, the "Equipment") in lieu of I/O's exercising its rights of foreclosure on the Equipment. ARTICLE 2 ADDITIONAL CONSIDERATION 2.1 ADDITIONAL CONSIDERATION. As additional consideration to I/O, Geokinetics, for itself and the other Geokinetics Entities, agrees to pay to the I/O Entities at Closing all non-default interest accrued to date under CSA I, CSA II and the Note, and all attorney's fees (and expenses) incurred by I/O negotiating, documenting and otherwise accomplishing this restructuring transaction, which payments are conditions precedent to I/O's commitment to lease the Equipment back to Geokinetics. ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE GEOKINETICS ENTITIES The Geokinetics Entities represent and warrant to I/O as follows: 3.1 AUTHORITY. The Geokinetics Entities have the full right and power to execute, deliver and perform this Agreement. This Agreement is a valid and legally binding obligation of the Geokinetics Entities enforceable against them in accordance with its terms, subject, however, to bankruptcy, insolvency, reorganization, and other laws affecting creditors' rights generally and, with regard to any equitable remedies, to the discretion of the court before which proceedings to obtain such remedies may be pending. The Geokinetics Entities have obtained all requisite director approval and have performed all other corporate action required in connection with the execution and delivery of this Agreement and the consummation of transactions contemplated hereby. -2- 3.2 DUE INCORPORATION AND GOOD STANDING. Each Geokinetics Entity is duly organized, validly existing and in good standing under the laws of its State of incorporation. 3.3 EQUIPMENT. The Geokinetics Entities own and hold title to the Equipment, free and clear of any and all liens, security interests, encumbrances, options, charges or assessments, except liens in favor of Input/Out, Inc. The Equipment is in good repair and working condition and has been designed, installed and maintained in accordance with good industry standards and all applicable legal requirements, subject to ordinary wear and tear. 3.4 NO DEFAULTS OR OTHER VIOLATIONS. The execution and delivery of this Agreement by the Geokinetics Entities and the consummation of the restructuring transaction contemplated by this Agreement will not result in the breach of or default under (i) any of the Geokinetics Entities' certificates of incorporation, bylaws or other constituent documents and (ii) any indenture, mortgage, material agreement, law, rule, regulation or any order, judgment or decree to which any of the Geokinetics Entities is a party or to which any of the Geokinetics Entities may be subject. 3.5 LITIGATION AND CLAIMS. No claim, demand, filing, cause of action, administrative proceeding, lawsuit or other litigation is pending or, to the best knowledge of the Geokinetics Entities, threatened that could now or hereafter affect the ownership or operation of any of the Equipment. 3.6 COMPLIANCE WITH LAWS. The Equipment has been operated in accordance with all laws, orders, rules and regulations of all governmental authorities having or asserting jurisdiction relating to the ownership and operation thereof. All necessary governmental certificates, consents, permits, licenses or other authorizations with regard to the ownership or operation of the Equipment have been obtained and no violations exist or have been recorded in respect of such licenses, permits or authorizations. 3.7 ENVIRONMENTAL. The Geokinetics Entities warrant that the Geokinetics Entities have not, and to the Geokinetics Entities' knowledge and belief no third party operator has received notice of, and the Geokinetics Entities do not know of, any violation of or investigation relating to any federal, state or local laws with respect to pollution or protection of the environment relating to the Equipment. The Geokinetics Entities have furnished I/O copies of any and all environmental studies and reports prepared or obtained by the Geokinetics Entities relating to the Equipment. 3.8 BROKERS. No broker or finder is entitled to any brokerage or finder's fee, or to any commission, based in any way on agreements, arrangements or understandings made by or on behalf of the Geokinetics Entities for which I/O has or will have any liabilities or obligations (contingent or otherwise). ARTICLE 4 CONDITIONS TO OBLIGATIONS OF I/O The obligations of I/O to consummate the transactions provided for herein are subject to the fulfillment on or prior to the Closing Date of each of the following conditions, unless waived by I/O: -3- 4.1 ACCURACY OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE GEOKINETICS ENTITIES. All representations and warranties of the Geokinetics Entities contained herein or in any document delivered pursuant hereto shall be true and correct in all material respects. 4.2 PERFORMANCE. The Geokinetics Entities shall have performed all material obligations, covenants and agreements contained in this Agreement to be performed or complied with by any of them at or prior to the Closing. 4.3 PENDING MATTERS. No suit, action or other proceeding shall be pending or threatened that seeks to restrain, enjoin or otherwise prohibit the consummation of the transactions contemplated by this Agreement. ARTICLE 5 REPRESENTATIONS OF I/O 5.1 AUTHORITY. I/O has the full right and power to execute, deliver and perform this Agreement. This Agreement is a valid and legally binding obligation of I/O enforceable against it in accordance with its terms, subject, however, to bankruptcy, insolvency, reorganization, and other laws affecting creditors' rights generally and, with regard to any equitable remedies, to the discretion of the court before which proceedings to obtain such remedies may be pending. I/O has obtained all requisite director approval to execute this Agreement and perform its obligations hereunder and has performed all other corporate action required in connection with the execution and delivery of this Agreement and the consummation of transactions contemplated hereby. 5.2 DUE INCORPORATION AND GOOD STANDING. I/O is duly organized, validly existing and in good standing under the laws of the State of Delaware. 5.3 NO DEFAULTS OR OTHER VIOLATIONS. The execution and delivery of this Agreement by I/O and the consummation of the transaction contemplated by this Agreement will not result in the breach of or default under (i) I/O's articles of incorporation, bylaws or other constituent documents and (ii) any indenture, mortgage, material agreement, law, rule, regulation or any order, judgment or decree to which I/O is a party or to which I/O may be subject. 5.4 BROKERS. No broker or finder is entitled to any brokerage or finder's fee, or to any commission, based in any way on agreements, arrangements or understandings made by or on behalf of I/O for which the Geokinetics Entities have or will have any liabilities or obligations (contingent or otherwise). ARTICLE 6 CONDITIONS TO OBLIGATIONS OF THE GEOKINETICS ENTITIES The obligations of the Geokinetics Entities to consummate the transaction provided for herein are subject to the fulfillment on or prior to the Closing Date of each of the following conditions, unless waived by the Geokinetics Entities: -4- 6.1 REPRESENTATIONS. The covenants and representations of I/O herein contained shall be true and correct in all material respects. 6.2 PERFORMANCE. The Geokinetics Entities shall have performed all material obligations, covenants and agreements contained in this Agreement to be performed or complied with by it at or prior to the Closing. 6.3 PENDING MATTERS. No suit, action or other proceeding shall be pending or threatened that seeks to restrain, enjoin, or otherwise prohibit the consummation of the transactions contemplated by this Agreement. ARTICLE 7 CLOSING DOCUMENTS AND DELIVERIES 7.1 TIME AND PLACE OF CLOSING. The transactions contemplated by this Agreement (the "Closing") shall take place at the offices of Vinson & Elkins L.L.P., by September 24, 1999 (the "Closing Date"). 7.2 DELIVERY. At the Closing, the Geokinetics Entities shall deliver to I/O a Bill of Assignment in substantially the form of Exhibit "B" attached hereto executed by the Geokinetics Entities conveying the Equipment to I/O. At the Closing, the Geokinetics Entities shall deliver to I/O by wire transfer to an account designated by I/O to the Geokinetics Entities in writing, the sums of money due at closing under any of the Transaction Documents. ARTICLE 8 SURVIVAL, INDEMNITIES 8.1 SURVIVAL. The representations, warranties, covenants and agreements contained herein shall survive the Closing and the consummation of the assignment and leaseback of the Equipment as herein provided. 8.2 INDEMNIFICATION BY I/O. I/O agrees to indemnify, release, defend and hold harmless the Geokinetics Entities, its officers, directors, employees, owners, agents, representatives, affiliates, subsidiaries, successors and assigns (collectively, the "Geokinetics Entities Indemnitees") from and against any and all Claims (as hereinafter defined) (including, without limitation, damage to property, or injury to persons or death, and court costs and reasonable attorneys' fees) caused by, arising from, or attributable to (1) the ownership of the Equipment, from and after the Closing Date, subject, however to the certain Lease Agreement between Input/Output, Inc. and Geokinetics Inc. dated as of this same date, or (2) the breach by I/O of any of its representations, warranties, covenants or agreements hereunder. The term "Claims" as used in this Agreement shall mean all claims, liabilities, losses, damages, costs and expenses. 8.3 INDEMNIFICATION BY THE GEOKINETICS ENTITIES. The Geokinetics Entities agree to indemnify, release, defend and hold harmless I/O, its officers, directors, employees, owners, agents, -5- representatives, affiliates, subsidiaries and successors from and against any and all Claims (including, without limitation, damage to property or injury to persons or death, and court costs and reasonable attorneys' fees) caused by, arising from or attributable to (1) the ownership and operation of the Equipment prior to the Closing Date, or (2) the breach by any of the Geokinetics Entities of any of their representations, warranties, covenants or agreements hereunder. 8.4 EXCLUSIVE REMEDY. Each of the parties hereto acknowledges and agrees that its sole and exclusive remedy with respect to (i) any and all Claims, (ii) any other claims pursuant to or in connection with this Agreement or the transactions contemplated thereby, or (iii) any other claims relating to the Equipment and the assignment of same by I/O and the Geokinetics Entities, respectively, shall be limited to the provisions set forth in this Agreement and the Transaction Documents. 8.5 NEGLIGENCE AND FAULT. AN INDEMNIFIED PARTY SHALL BE ENTITLED TO INDEMNIFICATION HEREUNDER IN ACCORDANCE WITH THE TERMS HEREOF WITH RESPECT TO THE EQUIPMENT, REGARDLESS OF WHETHER THE LOSS OR CLAIM GIVING RISE TO SUCH INDEMNIFICATION OBLIGATION IS THE RESULT OF THE SOLE, CONCURRENT OR COMPARATIVE NEGLIGENCE, STRICT LIABILITY OR VIOLATION OF ANY LAW OF OR BY SUCH INDEMNIFIED PARTY. THE PARTIES AGREE THAT THIS PARAGRAPH CONSTITUTES A CONSPICUOUS LEGEND. ARTICLE 9 RELEASES 9.1 RELEASE OF I/O AND GLOBAL. In consideration for I/O entering into the restructure as evidenced by the Transaction Documents and hereby agreeing to the restructure and the release granted herein, the Geokinetics Entities do hereby release, remise, relinquish and forever discharge I/O and Global and their respective beneficiaries, employees, agents, representatives, attorneys, directors, officers, owners, successors and assigns from any and all claims, rights, demands, debts, liabilities, controversies, or causes of action, known or unknown, asserted or unasserted, liquidated or unliquidated, fixed or contingent, of any nature whatsoever arising out of or in connection with (i) the transactions evidenced by CSA I, CSA II or the Note and this restructuring thereof or (ii) the use by any entity of the Equipment, which claims, causes of action, etc., any of the Geokinetics Entities, their affiliates, subsidiaries, successors or assigns, or any person, firm, agency, body, entity, company, or corporation claiming by, through or under any of them, directly or indirectly, presently have or have ever owned, claimed, or may be entitled to the benefit of, but excepted from this release of I/O and Global, are the obligations created under the Transaction Documents. 9.2 RELEASE OF GEOKINETICS, SIGNATURE AND QUANTUM. Subject to the following provisions of this Section 9.2, I/O and Global hereby do release, remise, relinquish, and forever discharge Geokinetics, Signature and Quantum and their respective beneficiaries, employees, agents, representatives, attorneys, directors, officers, owners, successors and assigns, from any and all claims, rights, demands, debts, liabilities, controversies or causes of action, known or unknown, asserted or unasserted, liquidated or unliquidated, fixed or contingent, of any nature whatsoever arising out of CSA I, CSA II or the Note. The parties hereto agree and acknowledge that, pursuant to the Transaction Documents, the Equipment will be assigned to I/O encumbered by and subject to -6- the liens and security interests securing the amounts and obligations owed under CSA I, CSA II and the Note, and under any security documents creating or perfecting such liens and security interests; thus, the preceding provision of this Section 9.2 shall not constitute termination of such liens, security interests, or security documents. The obligations of any of the Geokinetics Entities under the Transaction Documents shall be excepted from the release granted herein. ARTICLE 10 MISCELLANEOUS 10.1 OWNERSHIP OF CLAIMS. By execution hereof, each of the parties hereby represents, covenants, and warrants that no claim released herein has previously been conveyed, assigned, or in any manner transferred, in whole or in part, to any individual or entity that is not a party to this Restructure Agreement. 10.2 EXPENSES. Each of the parties hereto shall bear and pay all costs, expenses and fees incurred by him or it or on his or its behalf in the preparation and execution of this Agreement and compliance herewith, whether or not the transaction herein provided for shall, in fact, be effectuated, including, without limiting the generality of the foregoing, fees and expenses of financial consultants, accountants, and counsel, unless otherwise expressly provided herein. 10.3 NOTICES. All notices, requests, demands or other communications pursuant to this Agreement shall be in writing, and shall be deemed to have been duly given if delivered personally or sent by registered or certified mail, postage prepaid, to the parties as follows: IF TO THE I/O ENTITIES: Input/Output, Inc. 11104 W. Airport Boulevard Stafford, Texas 77477 Attention: Rex Reavis WITH A COPY TO: D. Bobbitt Noel, Jr. Vinson & Elkins L.L.P. 1001 Fannin Street 2300 First City Tower Houston, Texas 77002-6760 -7- IF TO THE GEOKINETICS ENTITIES: Geokinetics Inc. Marathon Oil Tower 5500 San Felipe, Suite 780 Houston, Texas 77056 Attention: Chief Financial Officer WITH A COPY TO: Chamberlain, Hrdlicka, White, Williams & Martin 1400 Two Allen Center 1200 Smith Street Houston, Texas 77002-4310 Attention: James J. Spring, III or to such other addresses as may have been furnished in writing by such party to the other parties to this Agreement. 10.4 PRIOR AGREEMENTS, MODIFICATIONS AND WAIVERS. This Agreement shall supersede any and all other prior negotiations, agreements, documents or other instruments with respect to the restructure matters covered hereby. This Agreement may be amended or modified at any time only by agreement in writing signed by the parties hereto. No waiver of any provision of this Agreement shall be deemed to be a continuing waiver of such provision in the event the same or similar conditions giving rise to such waiver thereafter occur. 10.5 BINDING EFFECT. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective legal representatives, successors and assigns. 10.6 GOVERNING LAW. This Agreement shall be governed by the laws of the State of Texas. 10.7 ATTORNEY FEES. If either party breaches this Agreement as determined by a court of competent jurisdiction, the breaching party shall be obligated to reimburse the non-breaching party for the reasonable attorney fees incurred as a result of such breach. 10.8 FURTHER COOPERATION. After the Closing Date, each Party at the request of the other and without additional consideration, shall execute and deliver, or shall cause to be executed and delivered from time to time such further instruments of conveyance and transfer and shall take such other action as the other Party may reasonably request to convey and deliver the Equipment to I/O and to accomplish the orderly transfer of the Equipment to I/O in the manner contemplated by this Agreement. 10.9 CONFIDENTIALITY. Except as required by law, regulation, financial accounting or reporting requirements, or order of a court or other governmental authority, or upon written consent of the other parties hereto, each party and its respective agents, employees, affiliates, officers, -8- directors, and attorneys shall keep and maintain this Restructure Agreement and the Lease Agreement referenced herein, and the terms and provisions thereof, in strict confidence, and shall not transmit, reveal, disclose or otherwise communicate any of the terms or provisions of this Restructure Agreement and the Lease Agreement referenced herein to any person or otherwise publish same. This subsection 10.9 shall not be construed to prevent the parties from disclosing to any court or otherwise as necessary in any litigation or resolution of disputes under this Restructure Agreement or the Lease Agreement referenced herein. IN WITNESS WHEREOF, each of the parties to this Agreement has caused this Agreement to be executed as of the date set forth in the first sentence hereof. "THE GEOKINETICS ENTITIES" GEOKINETICS INC. By: /s/ THOMAS J. CONCANNON Name: Thomas J. Concannon Title: Vice President SIGNATURE GEOPHYSICAL SERVICES, INC. By: /s/ THOMAS J. CONCANNON Name: Thomas J. Concannon Title: Treasurer QUANTUM GEOPHYSICAL, INC. By: /s/ LYNN A. TURNER Name: Lynn A. Turner Title: President "THE I/O ENTITIES" INPUT/OUTPUT, INC. By: /s/ REX K. REAVIS Name: Rex K. Reavis Title: V-P Land Division GLOBAL CHARTER CORPORATION By: /s/ AXEL M. SIGMAR Name: Axel M. Sigmar Title: Director -9- -----END PRIVACY-ENHANCED MESSAGE-----