AMENDMENT NO. 1
This AMENDMENT NO. 1 (this "AMENDMENT NO. 1") is made as of
April 9, 2001 between GeoLease Partners, L.P., a Delaware limited partnership
(the "PARTNERSHIP"), and Geokinetics Inc., a Delaware corporation (the
"COMPANY"). This Amendment No. 1 is made with reference to that certain Lease
Agreement dated as of October 1, 1999 (the "LEASE AGREEMENT") between the
Company and Input/Output, Inc., a Delaware corporation ("I/O"). All capitalized
terms used herein and not otherwise defined shall have the meanings assigned to
such terms in the Lease Agreement.
WHEREAS, concurrently with the execution hereof, the
Partnership is purchasing the Equipment from I/O, and I/O is assigning its
rights under the Lease Agreement to the Partnership;
WHEREAS, the Company desires to defer Basic Rent under the
Lease Agreement;
WHEREAS, the Company, the Partnership and the holders of the
Company's 13 1/2% Senior Secured Notes outstanding on the date hereof (the
"NOTEHOLDERS") have entered into that certain Subordination and Amendment
Agreement on the date hereof (the "SUBORDINATION AGREEMENT");
WHEREAS, as consideration for the Noteholders to enter into
the Subordination Agreement, the Lease Agreement, as amended by this Amendment
No. 1, shall be subject to certain of the provisions contained in the
Subordination Agreement;
WHEREAS, as consideration for the Partnership purchasing the
Equipment from I/O, for becoming the Lessor under the Lease Agreement, for
providing the Company with the option to defer the payment of Basic Rent and for
other good and valuable consideration contained herein, the Company has agreed
to pay the Partnership Deferred Rent (as defined in Section 1.5 below); and
WHEREAS, the Company and the Partnership desire to amend
certain provisions of the Lease Agreement;
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
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SECTION 1. AMENDMENT
1.1 Section 6.2 of the Lease Agreement (BASIC RENT) is hereby
amended by replacing the second sentence of Section 6.2 with the following:
"Each monthly payment is due on the first day of each month;
PROVIDED, that payments of Basic Rent may, at the option of Lessee, be
deferred until the earlier of the Basic Term Expiration Date or upon
the occurrence of a Lease Event of Default which shall not have been
cured or waived; PROVIDED, FURTHER, that for the purposes of Section
6.3, all amounts of Basic Rent that are deferred pursuant to this
Section 6.2 or are unpaid on the effective date of Amendment No. 1 to
this Lease shall be deemed to be installments of Basic Rent not paid
when due."
1.2 Section 6.3 of the Lease Agreement (SUPPLEMENTAL RENT) is
hereby amended by replacing the second sentence of Section 6.3 with the
following:
"Lessee will also pay, as Supplemental Rent, but without
duplication, to the extent permitted by applicable law, an amount equal
to interest at the Late Rate on (x) any part of any installment of
Basic Rent not paid when due for any period for which the same shall be
overdue on the earlier of the Basic Term Expiration Date or upon the
occurrence of a Lease Event of Default which shall not have been cured
or waived, and (y) any other payment of Supplemental Rent not paid when
due or ten days after demanded, as the case may be, for the period from
such date or ten days after demanded, as the case may be, until the
same shall be paid, on demand. For the avoidance of doubt, amounts of
Basic Rent which are unpaid on the effective date of Amendment No. 1 to
this Lease shall accrue interest at the Late Rate."
1.3 Section 6.4 of the Lease Agreement (MANNER OF PAYMENTS) is
hereby amended by inserting the following sentence at the end of Section 6.4:
"Lessee shall give notice of its intent to make payments of
Rent in cash five (5) Business Days prior to such date of payment and
shall make such payment by wire transfer from its account in the State
of Delaware into Lessor's account in the State of Delaware upon the
receipt of wire instructions from Lessor."
1.4 Section 6.5 of the Lease Agreement (SALES TAX) is hereby
amended by replacing Section 6.5 in its entirety with the following:
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"Whether or not Lessee pays Basic Rent in cash, Lessee shall
remit to Lessor, in the manner set forth in Section 6.4 above in the
lawful currency of the United States of America, all sales and other
similar taxes applicable to any Rent payments hereunder pursuant to
Texas Tax Code Section 151.051 and Section 151.052."
1.5 The following shall be added as Section 6.6 (DEFERRED
RENT) to the Lease Agreement:
"SECTION 6.6. DEFERRED RENT. The Company shall pay the
Partnership the sum of $1.9 million as deferred rent ("DEFERRED RENT")
on the Note Maturity Date by 12:00 noon (Houston, Texas time) in the
lawful currency of the United States of America. Any portion of
Deferred Rent not paid in cash shall accrue interest at the Late Rate
from the Note Maturity Date through such date all obligations in
respect of Deferred Rent are paid in full."
1.6 Section 16 of the Lease Agreement (LEASE EVENTS OF
DEFAULT) is hereby amended as follows:
(i) clause (a) thereof is hereby amended by replacing it in
its entirety with "[Intentionally Omitted]";
(ii) clause (b) thereof is hereby amended by replacing it in
its entirety with the following:
"Lessee shall fail to (i) make any payment of Supplemental
Rent (other than Supplemental Rent owing in respect of Basic Rent as
provided in Section 6.3) to be paid by Lessee pursuant to this Lease
after the same shall have become due and such failure shall continue
unremedied for ten days after receipt by Lessee of the original demand
from Lessor, or (ii) pay all outstanding Rent (other than Deferred
Rent), including Supplemental Rent owing in respect of Basic Rent as
provided in Section 6.3, upon the earlier of the Basic Term Expiration
Date or upon the occurrence of another Lease Event of Default which
shall not have been cured or waived; or";
(iii)clause (j) thereof is amended by replacing the period at
the end of clause (j) with "; or"; and
(iv) the following shall be added as clause (k):
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"(k) Deferred Rent is not paid on the Note Maturity Date by
12:00 noon (Houston, Texas time) or there is an acceleration of any of
the indebtedness represented by the 13 1/2% Senior Secured Notes of
Geokinetics Inc."
1.7 Section 23 of the Lease Agreement (NOTICES) is hereby
amended by replacing the notice addresses set forth in Section 23 in their
entirety with the following:
"If to the Lessor:
GeoLease Partners, L.P.
c/o DLJ Merchant Banking Partners II, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Telecopy: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxx, Esq.
Telecopy: (000) 000-0000"
If to the Geokinetics Entities:
Geokinetics Inc.
0000 Xxxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Chief Financial Officer
Telecopy: (000) 000-0000
with a copy to:
Chamberlain, Hrdlicka, White, Xxxxxxxx & Xxxxxx
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxx X. Spring III, Esq.
Telecopy: (000) 000-0000."
1.8 Section 25.3 of the Lease Agreement (GOVERNING LAW,
SEVERABILITY) is hereby amended by replacing the first sentence of Section 25.3
with the following:
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"This Lease and any extensions, amendments, modifications,
renewals or supplements hereto or thereto shall be governed by and
construed in accordance with the internal laws and decisions of the
State of Delaware."
1.9 APPENDIX A to the Lease Agreement--Definitions--Defined
Terms, is hereby amended by replacing the following definitions in their
entirety as follows:
"`CHANGE OF CONTROL' shall mean any Person or two or more
Persons (other than holders of the Lessee's 13 1/2% Senior Secured
Notes) acting in concert, acquires beneficial ownership (within the
meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as
amended), directly or indirectly, of securities of Lessee (or other
securities convertible into such securities) representing forty percent
(40%) or more of the combined voting power of all outstanding
securities of the Lessee entitled to vote in the election of
directors."
"`FAIR MARKET VALUE' or `FAIR MARKET SALES VALUE' with respect
to any Unit of Equipment shall mean the cash rent or cash price,
respectively, obtainable for such Unit in an arm's length lease or
sale, respectively, between an informed and willing lessee or
purchaser, respectively, under no compulsion to lease or purchase, as
the case may be, and an informed and willing lessor or seller, under no
compulsion to lease or sell, as the case may be, as the same shall be
(i) determined by The X. X. Xxxxx Companies Inc. or another nationally
or industry-wide (with respect to the oil and gas exploration industry)
recognized independent appraisal firm in the practice of regularly
appraising equipment similar to the Equipment selected by Lessor and
reasonably acceptable to a majority in interest of the Non-Affiliated
Noteholders or (ii) as otherwise agreed with the approval of a majority
in interest of the Non-Affiliated Noteholders."
1.10 APPENDIX A to the Lease Agreement--Definitions--Defined
Terms, is hereby amended by adding the following definitions:
"`DEFERRED RENT' shall have the meaning set forth in Section
6.6 of this Lease."
"`NON-AFFILIATED NOTEHOLDER' shall mean any holder of 13 1/2%
Senior Secured Notes due 2002 of Geokinetics Inc. who (i) is not an
Affiliate of the Lessor or the Lessee and (ii) owns at least $300,000
of such notes; PROVIDED, that each of DLJ Investment Partners, L.P.,
DLJ Investment Funding, Inc. and DLJ ESC II L.P. or any of their
respective Affili-
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ates, so long as it shall be a holder of at least $300,000 of the 13
1/2% Senior Secured Notes due 2002 of Geokinetics Inc., shall be deemed
to be an Affiliate of the Lessor."
"`NOTE MATURITY DATE' shall mean one Business Day after the
later of (x) September 15, 2003 and (y) the date that the 13 1/2%
Senior Secured Notes due 2002 of Geokinetics Inc. are paid in full. For
the purposes of calculating interest accruing at the Late Rate pursuant
to Section 6.6 of this Lease (DEFERRED RENT), the Note Maturity Date
shall be deemed to be the Business Day after September 15, 2003."
SECTION 2. RATIFICATION OF the lease AGREEMENT
To induce the Partnership to enter into this Amendment No. 1,
the Company represents and warrants that, after giving effect to this Amendment
No. 1, no violation of the terms of the Lease Agreement exists and all
representations and warranties contained in the Lease Agreement are true,
correct and complete in all material respects on and as of the date hereof
except to the extent such representations and warranties specifically relate to
an earlier date in which case they were true, correct and complete in all
material respects on and as of such earlier date.
SECTION 3. COUNTERPARTS; EFFECTIVENESS
This Amendment No. 1 may be executed in any number of
counterparts, and all such counterparts taken together shall be deemed to
constitute one and the same instrument. Signature pages may be detached from
counterpart documents and reassembled to form duplicate executed originals. This
Amendment No. 1 shall become effective as of the date hereof upon the execution
of the counterparts hereof by the Company and the Partnership.
SECTION 4. GOVERNING LAW
THIS AMENDMENT NO. 1 SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW.
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 1 to the Lease Agreement to be duly executed, all as of the date
first written above.
Company:
GEOKINETICS INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
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Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
Partnership:
GEOLEASE PARTNERS, L.P.
By: GEOLEASE GP, INC.,
its general partner
By: /s/ Xxxxxxx Xxxx Xxxxxx
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Name: Xxxxxxx Xxxx Xxxxxx
Title: President