EXHIBIT XI(a)
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REGISTRATION RIGHTS AGREEMENT
By and Among
BLACKHAWK INVESTORS, L.L.C.,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
and
GEOKINETICS INC.
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Common Stock, par value $.20 per share
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Dated as of July 18, 1997
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Page 180 of 241 Pages
TABLE OF CONTENTS
Page
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1. Registration Under Securities Act, etc..........................................................1
1.1 Registration on Request................................................................1
1.2 Piggy-Back Registration................................................................3
1.3 Registration Procedures................................................................4
1.4 Underwritten Offerings.................................................................7
1.5 Preparation: Reasonable Investigation..................................................8
1.6 Qualification to Obligations under Registration Covenants..............................8
1.7 Indemnification........................................................................8
2. Definitions....................................................................................11
3. Rule 144 and Rule 144A.........................................................................13
4. Amendments and Waivers.........................................................................13
5. Nominees for Beneficial Owners.................................................................14
6. Notices........................................................................................14
7. Assignment.....................................................................................14
8. Calculation of Percentage Interests in Registrable Securities..................................15
9. No Inconsistent Agreements.....................................................................15
10. Remedies.......................................................................................15
11. Severability...................................................................................15
12. Entire Agreement...............................................................................15
13. Descriptive Headings...........................................................................15
14. Governing Law..................................................................................15
15. Counterparts...................................................................................15
Page 181 of 241 Pages
REGISTRATION RIGHTS AGREEMENT, dated as of July 18, 1997,
among Geokinetics Inc., a Delaware corporation (the "Company"), Blackhawk
Investors, L.L.C., a Delaware limited liability company ("Blackhawk"), ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇") and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇").
This Agreement is being entered into in connection with a
Securities Purchase and Exchange Agreement, of even date herewith (the "Purchase
Agreement"), among the Company, Blackhawk, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ (Blackhawk,
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ being sometimes hereinafter individually referred to as a
"Purchaser" and collectively as the "Purchasers"), providing for (i) the
issuance and sale to Blackhawk of (A) 5,041,667 shares of Common Stock, (B)
171,875 shares of Series A Preferred Stock and (C) a Shadow Warrant to purchase
up to an aggregate of 6,512,095 shares of Common Stock, subject to adjustment
(the "Blackhawk Shadow Warrant") and (ii) the issuance to the ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ of an aggregate of (A) 458,333 shares of Common Stock, (B) 15,625 shares
of Series A Preferred Stock and (C) Shadow Warrants to purchase up to an
aggregate of 592,009 shares of Common Stock, subject to adjustment (the
"▇▇▇▇▇▇▇/▇▇▇▇▇▇▇ Shadow Warrants"), in the individual amounts set forth opposite
such Purchaser's name on Schedule 1.1 to the Purchase Agreement, in exchange for
the surrender of the Senior Notes, in the aggregate principal amount of
$500,000. It is a condition precedent to the obligations of the Company and the
Purchasers to consummate the transactions contemplated by the Purchase Agreement
that the Company and the Purchasers enter into this Agreement. Capitalized terms
used herein but not otherwise defined shall have the meanings given them in the
Purchase Agreement.
1. Registration Under Securities Act, etc.
1.1 Registration on Request.
(a) Request. At any time, or from time to
time, upon the written request of one or more holders (the "Initiating Holders")
of Registrable Securities representing not less than 25% of the Registrable
Securities (exclusive of any shares of Common Stock issued or issuable pursuant
to the Bridge Financing Warrants) that the Company effect the registration under
the Securities Act of all or part of such Initiating Holders' Registrable
securities, the Company promptly will give written notice of such requested
registration to all registered holders of Registrable Securities, and thereupon
the Company will use its best efforts to effect, at the earliest possible date,
the registration under the Securities Act of (i) the Registrable Securities
which the Company has been so requested to register by such Initiating Holders,
and (ii) all other Registrable Securities which the Company has been requested
to register by the holders thereof (such holders together with the Initiating
Holders hereinafter are referred to as the "Selling Holders") by written request
given to the Company within 30 days after the giving of such written notice by
the Company, all to the extent requisite to permit the disposition of the
Registrable Securities so to be registered.
(b) Registration of Other Securities.
Whenever the Company shall effect a registration pursuant to this Section 1.1,
no securities other than Registrable Securities shall be included among the
securities covered by such registration unless Initiating Holders of greater
than 51% of the Registrable Securities to be included in such registration shall
have consented in writing to the inclusion of such other securities, which
consent shall not be unreasonably withheld
Page 182 of 241 Pages
or delayed; provided however, that the foregoing limitation shall not apply to
any securities of the Company that were subject to registration rights that were
granted by the Company prior to the date hereof and identified on Schedule
1.1(b) attached hereto (collectively, the "Existing Registration Rights"), but
provided further, that in the event that any notice is given pursuant to Section
1.1(f) below with respect to such registration, the Registrable Securities
hereunder shall be given absolute priority over any other securities subject to
Existing Registration Rights with respect to inclusion in such registration.
(c) Registration Statement Form.
Registrations under this Section 1.1 shall be on such appropriate registration
form of the Commission as shall be reasonably selected by the Company.
(d) Effective Registration Statement. A
registration requested pursuant to this Section 1.1 shall not be deemed to have
been effected unless a registration statement with respect thereto has become
effective and remained effective in compliance with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities
covered by such registration statement for a period of at least 120 days.
(e) Selection of Underwriters. If the
Selling Holders of at least 50% of all Registrable Securities to be covered by a
registration so elect, the offering of such Registrable Securities pursuant to
this Section 1.1 shall be in the form of an underwritten offering. The
underwriter or underwriters of each underwritten offering of the Registrable
Securities so to be registered shall be selected by the Selling Holders of at
least 50% of the Registrable Securities to be included in such registration and
shall be reasonably acceptable to the Company.
(f) Priority in Requested Registration. If
the managing underwriter of an underwritten offering shall advise the Company in
writing (and the Company shall so advise each Selling Holder of Registrable
Securities requesting registration of such advice) that, in its opinion, the
number of securities requested to be included in such registration is
sufficiently large to materially adversely affect the success of the offering,
the Company, except as provided in the following sentence, will include in such
registration, to the extent of the number and type which the Company is so
advised can be sold in such offering, Registrable Securities requested to be
included in such registration, pro rata among the Selling Holders requesting
such registration on the basis of the estimated gross proceeds from the sale
thereof. To the extent Registrable Securities so requested to be registered are
excluded from the offering, the holders of such Registrable Securities shall be
deemed not to have used a demand registration pursuant to this Section 1.1.
(g) Limitations on Registration on Request.
Notwithstanding anything in this Section 1.1 to the contrary, the Company shall
not be required to take any action to file a registration statement pursuant to
this Section 1.1:
(i) within 120 days following the effective date of
any subsequent registered offering of the Company's securities to the general
public;
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(ii) in any registration having an aggregate sales
price (before deduction of underwriting discounts and expenses of sale) of less
than $1,500,000;
(iii) any registration having an aggregate sales
price (before deduction of underwriting discounts and expenses of sale) of more
than $5,000,000 unless such registration is firmly underwritten; or
(iv) after the Company has effected an aggregate of
three such registrations.
(h) Expenses. The Company will pay all
Registration Expenses in connection with any registration requested pursuant to
this Section 1.1 and each Selling Holder shall pay all underwriting discounts or
commissions with respect to the Registrable Securities sold by such Selling
Holder in such registration.
1.2 Piggy-Back Registration.
(a) Right to Include Registrable Securities. If
the Company at any time proposes to file a registration statement to register
any of its equity securities (or any security convertible into or exchangeable
for any equity security of the Company) under the Securities Act (except for
registration on Form S-4 or S-8 or any successor or similar forms), whether or
not for sale for its own account, it will each such time give prompt written
notice to all registered holders of Registrable Securities of its intention to
do so and of such holders' rights under this Section 1.2. Upon the written
request of any such holder (a "Requesting Holder") (which request shall specify
the amount of Registrable Securities intended to be disposed of by such
Requesting Holder) made as promptly as practicable and in any event within 30
days after the receipt of any such notice (20 days if the Company states in such
written notice or gives telephonic notice to all registered holders of
Registrable Securities, with written confirmation to follow promptly thereafter,
stating that (i) such registration will be on Form S-3 and (ii) such shorter
period of time is required because of a planned filing date), the Company will
use its best efforts to effect the registration under the Securities Act of all
Registrable Securities which the Company has been so requested to register by
the Requesting Holders thereof. No registration effected under this Section 1.2
shall relieve the Company of its obligation to effect any registration upon
request under Section 1.1.
(b) Priority in Incidental Registrations. If the
managing underwriter of any underwritten offering shall deliver a written
opinion to the holders of Registrable Securities that the total amount of
Registrable Securities requested to be included in such registration would have
a material adverse effect on such offering, then the Company will include in
such registration, to the extent of the number which the Company is so advised
can be sold in (or during the time of) such offering, first, all securities
proposed by the Company to be sold for its own account, and second, such
Registrable Securities requested to be included in such registration pursuant to
this Agreement, pro rata among Requesting Holders on the basis of the estimated
gross proceeds from the sale thereof; provided that if securities are being
offered for the account of other persons or entities as well as the Company,
such reduction shall not represent a greater fraction of the number of
securities
-3- Page 184 of 241 Pages
intended to be offered by holders of Registrable Securities than the fraction of
similar reductions imposed on such other persons or entities over the amount of
securities they intended to offer.
(c) Expenses. The Company will pay all
Registration Expenses in connection with any registration effected pursuant to
this Section 1.2 and each Selling Holder shall pay all underwriting discounts or
commissions with respect to the Registrable Securities sold by such Selling
Holder in such registration.
1.3 Registration Procedures. If and whenever the Company is
required to effect the registration of any Registrable Securities under the
Securities Act as provided in Sections 1.1 and 1.2, the Company will, as
expeditiously an possible use its best efforts to:
(i) prepare and (within 90 days after the end of
the period within which requests for registration may be given
to the Company or in any event as soon thereafter as
practicable) file with the Commission the requisite
registration statement to effect such registration and
thereafter use its best efforts to cause such registration
statement to become effective;
(ii) prepare and file with the Commission such
amendments and supplements to such 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 Registrable Securities covered by
such registration statement for a period of at least 120 days;
(iii) furnish to each seller of Registrable
Securities covered by such registration statement such number
of conformed copies of such registration statement and of each
such amendment and supplement thereto (in each case including
all exhibits), such number of copies of the prospectus
contained in such registration statement (including each
preliminary prospectus and any summary prospectus) and any
other prospectus filed under Rule 424 under the Securities
Act, in conformity with the requirements of the Securities
Act, and such other documents, as such seller may reasonably
request;
(iv) register or qualify all Registrable
Securities and other securities covered by such registration
statement under such other securities or blue sky laws of such
States of the United States of America where an exemption is
not available and as the sellers of Registrable Securities
covered by such registration statement shall reasonably
request; keep such registration or qualification in effect for
so long as such registration statement remains in effect; and
take any other action which may be reasonably necessary or
advisable to enable such sellers to consummate the disposition
in such jurisdictions of the securities to be sold by such
sellers, 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 would not
but for
-4- Page 185 of 241 Pages
the requirements of this subdivision (iv) be obligated to be
so qualified or to consent to general service of process in
any such jurisdiction;
(v) cause all Registrable Securities covered by
such registration statement to be registered with or approved
by such other federal or state governmental agencies or
authorities as may be necessary in the opinion of counsel to
the Company and counsel to the seller or sellers of
Registrable Securities to enable the seller or sellers thereof
to consummate the disposition of such Registrable Securities;
(vi) furnish at the effective date of such
registration statement and, if applicable, the date of the
closing under the underwriting agreement, to each seller of
Registrable Securities, and each such seller's underwriters,
if any, a signed counterpart of (x) an opinion of counsel for
the Company, dated the effective date of such registration
statement and (y) a "comfort" letter signed by the independent
public accountants who have certified the Company's financial
statements included or incorporated by reference in such
registration statement, covering substantially the same
matters with respect to such registration statement (and the
prospectus included therein) and, in the case of the
accountants' comfort letter, with respect to events subsequent
to the date of such financial statements, as are customarily
covered in opinions of issuer's counsel and in accountants'
comfort letters delivered to the underwriters in underwritten
public offerings of securities and, in the case of the
accountants' comfort letter, such other financial matters,
and, in the case of the legal opinion, such other legal
matters, as the sellers of the Registrable Securities covered
by such registration statement, or the underwriters, may
reasonably request;
(vii) notify each seller of Registrable Securities
covered by such registration statement at any time when a
prospectus relating thereto is required to be delivered under
the Securities Act, upon discovery that, or upon 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 the light of
the circumstances under which they were made, and at the
request of any such seller promptly prepare and furnish to it
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 under which they
were made;
(viii) otherwise comply with all applicable rules
and regulations of the Commission, and, if required, 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 full calendar month after the
effective date of such registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule
-5- Page 186 of 241 Pages
158 promulgated thereunder, and promptly furnish to each such
seller of Registrable Securities a copy of any amendment or
supplement to such registration statement or prospectus;
(ix) keep each Selling Holder and each Requesting
Holder advised in writing as to the initiation and progress of
any registration under Section 1.1 or 1.2 hereunder, as the
case may be;
(x) provide and cause to be maintained a
transfer agent and registrar (which, in each case, may be the
Company) for all Registrable Securities covered by such
registration statement from and after a date not later than
the effective date of such registration; and
(xi) list all Registrable Securities covered by
such registration statement on any national securities
exchange on which Registrable Securities of the same class
and, if applicable, series, covered by such registration
statement (the "Comparable Securities") are then listed, or on
the National Market System (the "National Market System") of
the National Association of Securities Dealers Automated
Quotations System ("Nasdaq") if such Comparable Securities are
then listed or traded on such system, or on the Nasdaq
Bulletin Board if such Comparable Securities are then listed,
traded or quoted on such bulletin board, as the case may be.
The Company may require each seller of Registrable Securities as to which any
registration is being effected to furnish the Company such information regarding
such seller and the distribution of such securities, as is required by law or
the Commission to be included within the registration statement or as the
company may from time to time reasonably request in writing.
Each holder of Registrable Securities agrees by acquisition of
such Registrable Securities that, upon receipt of any notice from the Company of
the happening of any event of the kind described in subdivision (vii) of this
Section 1.3 , such holder will forthwith discontinue such holder's disposition
of Registrable Securities pursuant to the registration statement relating to
such Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subdivision (vii) of this
Section 1.3 and, if so directed by the Company, 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 relating to such Registrable
Securities current at the time of receipt of such notice.
1.4 Underwritten Offerings.
(a) Requested Underwritten Offerings. If
requested by the underwriters for any underwritten offering by holders of
Registrable Securities pursuant to a registration requested under Section 1.1,
the Company will use all reasonable efforts to enter into an underwriting
agreement with such underwriters for such offering, such agreement to be
reasonably satisfactory in substance and form to each such holder and the
underwriters and to contain such representations and warranties by the Company
and such other terms as are generally prevailing in agreements of
-6- Page 187 of 241 Pages
that type, including, without limitation, indemnities to the effect and to the
extent provided in Section 1.7. The holders of the Registrable Securities
proposed to be sold by such underwriters will reasonably cooperate with the
Company in the negotiation of the underwriting agreement. Such holders of
Registrable Securities to be sold 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 shall also be made to and
for the benefit of such holders of Registrable Securities and that any or all of
the conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of such
holders of Registrable Securities. Any such holder of Registrable Securities
shall not be required to make any representations or warranties to or agreements
with the Company other than representations, warranties or agreements regarding
such holder, such holder's Registrable Securities and such holder's intended
method of distribution or any other representations required by applicable law.
(b) Incidental Underwritten Offerings. If the
Company proposes to register any of its securities under the Securities Act as
contemplated by Section 1.2 and such securities are to be distributed by or
through one or more underwriters, the Company will, if requested by any
Requesting Holder of Registrable Securities, use its best efforts to arrange for
such underwriters to include all the Registrable Securities to be offered and
sold by such Requesting Holder among the securities of the Company to be
distributed by such underwriters. The holders of Registrable Securities to be
distributed by such underwriters shall be parties to the underwriting agreement
between the Company and such underwriters 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 shall also
be made to and for the benefit of such holders of Registrable Securities and
that any or all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement be conditions precedent to the
obligations of such holders of Registrable Securities. Any such Requesting
Holder of Registrable Securities shall not 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
Requesting Holder, such Requesting Holder's Registrable Securities and such
Requesting Holder's intended method of distribution or any other representations
required by applicable law.
1.5 Preparation: Reasonable Investigation. In connection with
the preparation and filing of each registration statement under the Securities
Act pursuant to this Agreement, the Company (i) shall give the holders of
Registrable Securities registered under such registration statement, their
underwriters, if any, and their respective counsel and accountants the
reasonable opportunity to participate (at the expense of such holder or holders)
in the preparation of such registration statement, each prospectus included
therein or filed with the Commission, and each amendment thereof or supplement
thereto, (ii) shall give each of them such reasonable access to its books and
records and such opportunities to discuss the business of the Company with its
officers and the independent public accountants who have certified its financial
statements as shall be necessary, in the opinion of such holders' and such
underwriters' respective counsel, to conduct a reasonable investigation within
the meaning of the Securities Act and (iii) shall promptly notify the registered
holders of Registrable Securities and their counsel of any stop order issued or
threatened
-7- Page 188 of 241 Pages
by the Commission and take all reasonable actions required to prevent the entry
of such stop order or to remove it if entered.
1.6 Qualification to Obligations under Registration Covenants.
The Company shall be entitled to postpone for a reasonable period of time (but
not exceeding 90 days) the filing of any registration statement otherwise
required to be prepared and filed by it pursuant to Section 1.1 if the Company
determines, in its reasonable judgment, that such registration and offering
would interfere with any financing, acquisition, corporate reorganization or
other material transaction involving the Company or any of its affiliates and
promptly gives the holders of Registrable Securities requesting registration
thereof pursuant to Section 1.1 written notice of such determination, containing
a general statement of the reasons for such postponement and an approximation of
the anticipated delay. If the Company shall so postpone the filing of a
registration statement, holders of Registrable Securities requesting
registration thereof pursuant to Section 1.1 and representing not less than 50%
of the Initiating Holders shall have the right to withdraw the request for
registration by giving written notice to the Company within 30 days after
receipt of the notice of postponement and, in the event of such withdrawal, such
request shall not be counted for purposes of the requests for registration to
which holders of Registrable Securities are entitled pursuant to Section 1.1
hereof.
1.7 Indemnification.
(a) Indemnification by the Company. The Company
will, and hereby does, indemnify and hold harmless, in the case of any
registration statement filed pursuant to Section 1.1 or 1.2, each seller of any
Registrable Securities covered by such registration statement and each other
Person who participates as an underwriter in the offering or sale of such
securities and each other Person, if any, who controls such seller or any such
underwriter within the meaning of the Securities Act, and their respective
directors, officers, partners, employees and affiliates against any losses,
claims, damages or liabilities, joint or several, to which such seller or
underwriter or any such director, officer, partner, employee, affiliate or
controlling person may become subject under the Securities Act or otherwise,
including, without limitation, the reasonable fees and expenses of legal
counsel, insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein in light of the circumstances in which they were made not misleading,
and the Company will reimburse such seller or underwriter and each such
director, officer, partner, employee, affiliate and controlling Person for any
legal or any other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, liability, action or
proceeding; provided, that the Company shall not be liable in any such case to
the extent that any such loss, claim, damage, liability (or action or proceeding
in respect thereof) or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
such registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in conformity
with written information
-8- Page 189 of 241 Pages
furnished to the Company through an instrument duly executed by or on behalf of
such seller or underwriter, as the case may be, specifically stating that it is
for use in the preparation thereof. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of such seller
or any such director, officer, employee, affiliate, partner or controlling
Person and shall survive the transfer of such securities by such seller.
(b) Indemnification by the Sellers. As a
condition to including any Registrable Securities in any registration statement,
the Company shall have received an undertaking satisfactory to it from the
prospective seller of such Registrable Securities, to indemnify and hold
harmless (in the same manner and to the same extent as set forth in subdivision
(a) of this Section 1.7) the Company, and each director of the Company, each
officer of the Company and each other Person, if any, who participates as an
underwriter in the offering or sale of such securities and each other Person who
controls the Company or any such underwriter within the meaning of the
Securities Act, with respect to any statement or alleged statement in or
omission or alleged omission from such registration statement, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, if such statement or alleged statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company through an instrument duly executed
by such seller specifically stating that it is for use in the preparation of
such registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement; provided, however, that the liability of
such indemnifying party under this Section 1.7(b) shall be limited to the amount
of proceeds received by such indemnifying party in the offering giving rise to
such liability. Such indemnity shall remain in full force and effect, regardless
of any investigation made by or on behalf of the Company or any such director,
officer or controlling person and shall survive the transfer of such securities
by such seller.
(c) Notices of Claims, etc. Promptly after
receipt by an indemnified party of notice of the commencement of any action or
proceeding involving a claim referred to in the preceding subdivisions of this
Section 1.7, such indemnified party will, if a claim in respect thereof is to be
made against an indemnifying party, give written notice to the latter of the
commencement of such action; provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subdivisions of this
Section 1.7, except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such action is brought
against an indemnified party, the indemnifying party shall be entitled to
participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified, to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof other than reasonable costs of
investigation, provided, however, that if the indemnified party reasonably
believes it is advisable for it to be represented by separate counsel because
there exists a conflict of interest between its interests and those of the
indemnifying party with respect to such claim, or there exist defenses available
to such indemnified party which may not be available to the indemnifying party,
or if the indemnifying party shall fail to assume responsibility for such
defense, the indemnified party may retain counsel
-9- Page 190 of 241 Pages
satisfactory to it and the indemnifying party shall pay all reasonable fees and
expenses of such counsel. No indemnifying party shall be liable for any
settlement of any action or proceeding effected without its written consent. No
indemnifying party shall, without the consent of the indemnified party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation or which requires action other than the payment of money by the
indemnifying party.
(d) Contribution. If the indemnification
provided for in this Section 1.7 shall for any reason be held by a court to be
unavailable to an indemnified party under subparagraph (a) or (b) hereof in
respect of any loss, claim, damage or liability, or any action in respect
thereof, then, in lieu of the amount paid or payable under subparagraph (a) or
(b) hereof, the indemnified party and the indemnifying party under subparagraph
(a) or (b) hereof shall contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in connection
with investigating the same), (i) in such proportion as is appropriate to
reflect the relative fault of the Company and the prospective sellers of
Registrable Securities covered by the registration statement which resulted in
such loss, claim, damage or liability, or action in respect thereof, with
respect to the statements or omissions which resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any other relevant
equitable considerations or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as shall be appropriate
to reflect the relative benefits received by the Company and such prospective
sellers from the offering of the securities covered by such registration
statement. 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. Such
prospective sellers' obligations to contribute as provided in this subparagraph
(d) are several in proportion to the relative value of their respective
Registrable Securities covered by such registration statement and not joint. In
addition, no Person shall be obligated to contribute hereunder any amounts in
payment for any settlement of any action or claim effected without such Person's
consent, which consent shall not be unreasonably withheld or delayed.
(e) Other Indemnification. Indemnification and
contribution similar to that specified in the preceding subdivisions of this
section 1.7 (with appropriate modifications) shall be given by the Company and
each seller of Registrable Securities with respect to any required registration
or other qualification of securities under any federal or state law or
regulation of any governmental authority other than the Securities Act.
(f) Indemnification Payments. The
indemnification and contribution required by this Section 1.7 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or expense, loss, damage or liability
is incurred.
2. Definitions. As used herein, unless the context
otherwise requires, the following terms have the following respective meanings:
-10- Page 191 of 241 Pages
"Affiliate" means any person that directly or indirectly
controls or is controlled by or is under common control with any Purchaser. For
purposes of this definition, an Affiliate of any Purchaser shall be deemed to
include any corporation, partnership, limited liability company or other entity
in which such Purchaser (whether directly, or indirectly through any other
Person that is an Affiliate) is an officer or director, general partner,
managing member or otherwise holds a significant equity interest.
"Blackhawk Shadow Warrant" is defined in the second
introductory paragraph on page 1.
"Bridge Financing Warrants" means those certain warrants to
purchase shares of Common Stock issued by the Company to ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
contemporaneously with the issuance of the Senior Notes, as the same may be
modified from time to time.
"Commission" means the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"Common Stock" is defined in the second introductory paragraph
on page 1.
"Company" is defined in the first introductory paragraph on
page 1.
"Comparable Securities" is defined in Section 1.3(xi).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time. Reference
to a particular section of the Securities Exchange Act of 1934, as amended,
shall include a reference to the comparable section, if any, of any such similar
Federal statute.
"Existing Registration Rights" is defined in Section 1.1(b).
"Initiating Holder" is defined in Section 1.1.
"LLC Agreement" means that certain Limited Liability Company
Agreement of Blackhawk, dated July , 1997, as the same may be amended from time
to time.
"Nasdaq" is defined in Section 1.3(xi).
"National Market System" is defined in Section 1.3(xi).
"Person" means any individual, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, government (or an agency or political subdivision thereof) or other
entity of any kind.
-11- Page 192 of 241 Pages
"Purchaser" and "Purchasers" are defined in the first
introductory paragraph on page 1.
"Purchase Agreement" is defined in the second introductory
paragraph on page 1.
"Registrable Securities" means (i) the shares of Common Stock
acquired by the Purchasers pursuant to the Purchase Agreement, (ii) any shares
of Common Stock issued upon conversion of the Series A Preferred Stock acquired
by the Purchasers pursuant to the Purchase Agreement, (iii) any shares of Common
Stock issued from time to time upon exercise of the Shadow Warrants, (iv) any
shares of Common Stock acquired from time by any Purchaser or any Affiliate
thereof, and (v) any Related Registrable Securities. 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
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 public distribution of them shall not require registration of them
under the Securities Act, or (d) they shall have ceased to be outstanding. All
references to percentages of Registrable Securities shall be calculated pursuant
to Section 8.
"Registration Expenses" means all expenses incident to the
Company's performance of or compliance with Section 1, including, without
limitation, all registration, filing and NASD fees, all fees and expenses of
complying with securities or blue sky laws, all word processing, duplicating and
printing expenses, messenger and delivery expenses, the fees and disbursements
of counsel for the Company and of its independent public accountants, including
the expenses of "cold comfort" letters required by or incident to such
performance and compliance, any fees and disbursements of underwriters
customarily paid by issuers or sellers of securities (excluding any underwriting
discounts or commissions with respect to the Registrable Securities) with
respect to an underwritten offering.
"Related Registrable Securities" means any securities of the
Company issued or issuable with respect to the securities by way of a dividend
or stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization or otherwise.
"Requesting Holder" is defined in Section 1.2.
"Securities Act" means the Securities Act of 1933, or any
similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. References to a
particular section of the Securities Act of 1933 shall include a reference to
the comparable section, if any, of any such similar statute.
"Selling Holder" is defined in Section 1.1.
-12- Page 193 of 241 Pages
"Senior Notes" means those certain 12% Senior Secured
Promissory Notes of the Company and certain of its subsidiaries issued in favor
of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇, in the aggregate principal amount of $500,000.
"Series A Preferred Stock" means that series of Preferred
Stock of the Company created and designated pursuant to the Certificate of
Designation of Series A Convertible Preferred Stock of the Company, in the form
of Exhibit A attached to the Purchase Agreement.
"Shadow Warrants" means the Blackhawk Shadow Warrant and the
▇▇▇▇▇▇▇/▇▇▇▇▇▇▇ Shadow Warrants, inclusive of any warrant or warrants issued in
replacement thereof, whether pursuant to Section 1.4 or 4 of the initial Shadow
Warrants.
"▇▇▇▇▇▇▇/▇▇▇▇▇▇▇ Shadow Warrants" is defined in the second
introductory paragraph on page 1.
3. Rule 144 and Rule 144A. The Company shall take all actions
reasonably necessary to enable holders of Registrable Securities to sell such
securities without registration under the Securities Act within the limitation
of the exemptions provided by (a) Rule 144 under the Securities Act, as such
Rule may be amended from time to time, (b) Rule 144A under the Securities Act,
as such Rule may be amended from time to time, or (c) any similar rules or
regulations hereafter adopted by the Commission, including, without limiting the
generality of the foregoing, filing on a timely basis all reports required to be
filed by the Exchange Act. Upon the request of any holder of Registrable
Securities, the Company will deliver to such holder a written statement as to
whether the Company has complied with such requirements.
4. Amendments and Waivers. This Agreement may be amended with
the written consent of the Company 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 shall have obtained the written consent to such amendment,
action or omission to act of the holder or holders of at least 50% of the
Registrable Securities affected by such amendment, action or omission to act.
Each holder of any Registrable Securities at the time or thereafter outstanding
shall be bound by any consent authorized by this Section 4, whether or not such
Registrable Securities shall have been marked to indicate such consent.
5. Nominees for Beneficial Owners. In the event that any
Registrable Securities are held by a nominee for the beneficial owner thereof,
the beneficial owner thereof may, at its election in writing delivered to the
Company, be treated as the holder of such Registrable Securities for purposes of
any request or other action by any holder or holders of Registrable Securities
pursuant to this Agreement or any determination of any number or percentage of
shares of Registrable Securities hold by any holder or holders of Registrable
Securities contemplated by this Agreement. If the beneficial owner of any
Registrable Securities so elects, the Company may require assurances reasonably
satisfactory to it of such owner's beneficial ownership of such Registrable
Securities.
-13- Page 194 of 241 Pages
6. Notices. All notices, demands and other communications
provided for or permitted hereunder shall be made in writing and shall be by
registered or certified first-class mail, return receipt requested, telex,
telegram, telecopier, reputable courier service or personal delivery:
(a) if to the Purchasers, addressed to them in the
manner set forth in the Purchase Agreement, or at such other
address as it shall have furnished to the Company in writing;
(b) if to any other holder of Registrable Securities,
at the address that such holder shall have furnished to the
Company in writing, or, until any such other holder so
furnishes to the Company an address, then to and at the
address of the last holder of such Registrable Securities who
has furnished an address to the Company; or
(c) if to the Company, addressed to it in the manner
set forth in the Purchase Agreement, or at such other address
as the Company shall have furnished to each holder of
Registrable Securities at the time outstanding.
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; one business
day after being sent by reputable courier service; three business days after
being deposited in the mail, postage prepaid, if mailed; when answered back, if
telexed; and when receipt is acknowledged, if telecopied.
7. Assignment. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the parties hereto and, with respect to
the Company, its respective successors and assigns and, with respect to each
Purchaser, any holder who is an affiliate or successor entity to such Purchaser
(which, with respect to Blackhawk, shall include any member thereof to whom
shares of Registrable Securities may be distributed pursuant to the LLC
Agreement and any person to whom the managing member of Blackhawk shall have
agreed or shall hereafter agree to distribute shares of Registrable Securities
that such managing member may become entitled to receive under the terms of the
LLC Agreement) or a transferee therefrom of any Registrable Securities, subject
to the provisions respecting the minimum numbers of percentages of shares of
Registrable Securities required in order to be entitled to certain rights, or
take certain actions, contained herein. The Purchasers named on the signature
page of this Agreement (and not any other holder of Registrable Securities or
any other Person) shall be permitted, in connection with a transfer or
disposition of Registrable Securities, to eliminate or impose conditions or
constraints on the ability of the transferee, as a holder of Registrable
Securities, to request a registration pursuant to Sections 1.1 and 1.2 and shall
provide the Company with copies of such conditions or constraints and the
identity of such transferees.
8. Calculation of Percentage Interests in Registrable
Securities. For purposes of this Agreement, all references to a percentage of
the Registrable Securities shall be calculated based upon the number of shares
of Registrable Securities outstanding at the time such calculation is made.
-14- Page 195 of 241 Pages
9. No Inconsistent Agreements. The Company will not hereafter
enter into any agreement with respect to its securities which is inconsistent
with the rights granted to the holders of Registrable Securities in this
Agreement.
10. Remedies. Each holder of Registrable Securities, is
entitled to exercise all rights granted by law, including recovery of damages;
such rights not to extend to incidental or consequential damages.
11. Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
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 contained herein shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the
Purchaser shall be enforceable to the fullest extent permitted by law.
12. Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein and therein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
13. Descriptive Headings. The descriptive headings of the
several sections and paragraphs of this Agreement are inserted for reference
only and shall not limit or otherwise affect the meaning hereof.
14. Governing Law. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the laws of the State of New York applicable to agreements made and to be
performed entirely within such State.
15. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their respective officers thereunto duly authorized
as of the date first above written.
GEOKINETICS INC.
By:/s/ ▇▇▇ ▇. ▇▇▇▇▇
______________________________________
Name: ▇▇▇ ▇. ▇▇▇▇▇
Title: President
-15- Page 196 of 241 Pages
PURCHASERS:
BLACKHAWK INVESTORS, L.L.C.
By: Blackhawk Capital Partners, Managing Member
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
____________________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Partner
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_______________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Individually
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_______________________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Individually
-16- Page 197 of 241 Pages