SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
[Amendment No. ___________]
Filed by the Registrant [ ]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary proxy statement
[ ] Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
GEOKINETICS INC.
(Name of Registrant as Specified in Its Charter)
_______________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) or Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
____________________________________________________________________
(2) Aggregate number of securities to which transactions applies:
____________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
____________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
____________________________________________________________________
(5) Total fee paid:
$125
____________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
____________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
____________________________________________________________________
(3) Filing party:
____________________________________________________________________
(4) Date filed:
____________________________________________________________________
<PAGE>
GEOKINETICS INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 24, 1996
Notice is hereby given that the Annual Meeting of Stockholders of
Geokinetics Inc., a Delaware corporation (the "Company"), will be held at the
Marathon Oil Tower, 5555 San Felipe, 10th Floor, Conference Center, Houston,
Texas 77056, at 10:00 a.m. on October 24, 1996, for the following purposes:
1. To elect four directors;
2. To authorize an amendment to the Company's Certificate of
Incorporation to authorize an aggregate of 2,500,000 shares of a
new class of preferred stock of the Company ( the "Preferred
Stock");
3. To ratify the appointment of Tsakopulos, Brown, Schott & Anchors
as the Company's independent public accountants; and
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board recommends election of the nominees for directors named in the
accompanying Proxy Statement, approval of the proposed amendment to the
Certificate of Incorporation, and ratification of the appointment of Tsakopulos,
Brown, Scott & Anchors as the Company's independent public accountants.
Stockholders of record at the close of business on September 26, 1996
are entitled to notice of and to vote at the meeting or any adjournment thereof.
All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed Proxy as promptly as possible in the envelope
enclosed for that purpose. Any stockholder attending the meeting may vote in
person even if he or she previously returned a Proxy.
By Order of the Board of Directors
MICHAEL D. HALE
SECRETARY
Houston, Texas
September 26, 1996
PLEASE COMPLETE, DATE, SIGN, AND RETURN THE ENCLOSED PROXY WITHOUT DELAY
IN THE ENCLOSED POSTAGE PRE-PAID ENVELOPE. IF YOU ATTEND THE MEETING AND
SO DESIRE, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON.
PRELIMINARY COPY
GEOKINETICS INC.
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PROXY STATEMENT
1996 ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 24, 1996
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SOLICITATION, EXERCISE AND REVOCATION OF PROXIES
GENERAL
The accompanying proxy is solicited on behalf of the Board of Directors
(the "Board") of Geokinetics Inc. (the "Company"), to be voted at the 1996
Annual Meeting of Stockholders of the Company (the "Annual Meeting") to be held
at the time, place and for the purposes set forth in the foregoing Notice. This
Proxy Statement and the accompanying proxy are being mailed to stockholders
beginning on or about September 30, 1996.
RECORD DATE; OUTSTANDING SHARES
Only stockholders of record at the close of business on September 26,
1996 (the "Record Date"), are entitled to receive notice of and to vote at the
meeting. The outstanding voting securities of the Company as of such date
consisted of 4,953,288 shares of Common Stock, $.20 par value ("Common Stock").
For information regarding holders of more than 5% of the outstanding Common
Stock, see "Security Ownership Of Certain Beneficial Owners and Management."
REVOCABILITY OF PROXIES
Any stockholder giving a proxy has the power to revoke the proxy at any
time prior to its exercise by executing a subsequent proxy, by written notice to
the President of the Company or by attending the meeting and withdrawing the
proxy in person. All written notices of revocation or other communications with
respect to the revocation of proxies should be addressed to the Company's
principal executive offices as follows: Geokinetics Inc., 5555 San Felipe, Suite
780, Houston, Texas 77056, Attention: Jay D. Haber, President. Shares
represented by a duly executed proxy received prior to the Annual Meeting will
be voted in accordance with the instructions indicated on the proxy.
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VOTING; QUORUM; ABSTENTIONS; BROKER NON-VOTES
Every stockholder of record on the Record Date is entitled to vote on
each proposal or item that comes before the meeting. Stockholders are entitled
to one vote, in person or by proxy, for each share of Common Stock held in their
name on the Record Date. Stockholders representing a majority of the Common
Stock outstanding and entitled to vote on the Record Date must be present or
represented by proxy to constitute a quorum. Abstentions will be counted for
purposes of determining both (i) the presence or non-presence of a quorum for
the transaction of business, and (ii) the total number of votes cast with
respect to a proposal. Thus, abstentions will have the same effect as a vote
against a proposal. Broker non-votes will be counted for purposes of determining
the presence or absence of a quorum for the transaction of business, but will
not be counted for purposes of determining the number of votes cast with respect
to a proposal.
SOLICITATION
The cost of soliciting proxies in the accompanying form will be borne by
the Company. In addition to the solicitation by mail, certain regular employees
of the Company may solicit proxies by telephone or telecopy or in person. No
specially engaged employees or solicitors will be retained by the Company for
proxy solicitation purposes. The Company may request brokerage houses, nominees,
custodians and fiduciaries to forward the soliciting material to the beneficial
owners of stock held of record and will reimburse such persons for forwarding
this material.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company which are intended to be
presented by such stockholders at the 1997 Annual Meeting must be received by
the Company no later than December 31, 1996 in order that they may be included
in the proxy statement and form of proxy relating to that meeting.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
SECURITY OWNERSHIP SUMMARY
The following table sets forth, as of September 10, 1996, the number of
shares of the Company's Common Stock beneficially owned by (i) each person known
by the Company (based on filings under Section 13(d) or 13(g) of the Exchange
Act) to be the holder of more than five percent of its voting securities, (ii)
each director or nominee for election as a director, and (iii) all of the
Company's directors and officers as a group. Unless otherwise indicated, each
holder has sole voting and investment power with respect to the shares of Common
Stock owned by such holder.
NAME AND ADDRESS
OF BENEFICIAL OWNER Amount and Nature of Percent of
OR GROUP BENEFICIAL OWNERSHIP CLASS (1)
Jay D. Haber (2) 1,124,266 shares (2) 17.0 %
5555 San Felipe, Suite 780
Houston, TX 77056
Michael D. Hale (3) 832,054 shares (3) 12.6%
5555 San Felipe, Suite 780
Houston, TX 77056
Henry H. Patton 600,000 shares 9.3%
1308 The Great Road
Princeton, NJ 08540
William H. Murphy 147,764 shares (4) 2.3%
2200 Post Oak Boulevard,
Suite 514
Houston, TX 77056
Herbert H. Hedick 33,119 shares (5) .5%
Box 249, 720 Town Hill
New Hartford, CT 06057
Robert M. Stafford(6) 607,834 shares (6) 9.4%
c/o Stafford Capital
Management
222 Kearny Street,
Suite 204
San Francisco, CA 94108
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NAME AND ADDRESS
OF BENEFICIAL OWNER AMOUNT AND NATURE OF PERCENT OF
OR GROUP BENEFICIAL OWNERSHIP CLASS (1)
All Directors and Execu
Officers as a group tive
(four persons) 2,137,203 shares 32.3%
(1) These percentages are calculated on the basis of 4,953,288 shares of
Common Stock outstanding at August 28, 1996, plus 1,653,490 shares of Common
Stock currently purchasable pursuant to options, warrants, conversion privileges
or other rights.
(2) Includes 65,000 shares of Common Stock purchasable pursuant to
options granted to Mr. Haber under the 1995 Stock Option Plan.
(3) Includes 65,000 shares of Common Stock purchasable pursuant to
options granted to Mr. Hale under the 1995 Stock Option Plan.
(4) Refers to warrants entitling Mr. Murphy to purchase 147,764 shares
of Common Stock. These warrants are exercisable (i) after the earlier of (a)
July 31, 1997 or (b) 30 days after the Company has deducted and utilized the
federal income tax net operating loss carryforwards in existence as of August 1,
1994, and (ii) before July 31, 1999. The exercise prices range from $1.00 to
$1.75 per share.
(5) Refers to warrants entitling Mr. Hedick to purchase 33,119 shares of
Common Stock. Such shares may be issued upon the exercise of such warrants which
are exercisable before September 30, 1999 at a purchase price of $1.50 per
share.
(6) Refers to 458,167 shares owned by Robert M. Stafford and certain
affiliated entities and warrants entitling Mr. Stafford and such affiliated
entities to purchase an aggregate of 149,667 shares of Common Stock.
ELECTION OF DIRECTORS
(PROPOSAL 1)
GENERAL INFORMATION
At the meeting, four directors (each of whom is currently a director)
will be elected to serve until the next Annual Meeting of Stockholders or until
his successor shall have been elected and qualified.
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The names and certain information about the Company's nominees are set
forth below:
OFFICE
NAME AGE POSITION WITH THE COMPANY HELD SINCE
Jay D. Haber 51 President, Chief Executive Officer 1994
and Director
Michael D. Hale 38 Vice President, Secretary and 1994
Director
William H. Murphy 55 Director 1994
Herbert H. Hedick 65 Director 1995
There are no family relationships among any of the directors or
executive officers of the Company.
JAY D. HABER, age 51, has served as a director and as the Company's
President and Chief Executive Officer since August 1, 1994, when the Company
acquired the Haber/Hale oil and gas properties. See "Certain Transactions." For
more than the past five years, Mr. Haber has served as the President of certain
privately-owned oil and gas exploration and production companies, including
Haber Resources Corporation and HOC Operating Co., Inc.
MICHAEL D. HALE, age 38, has served as a Director and Vice President for
the Company since August 1, 1994. On April 4, 1995, Mr. Hale was appointed
Secretary of the Company. For more than the past five years, Mr. Hale has served
as the Vice President of certain privately-owned oil and gas exploration and
production companies, including Haber Resources Corporation and HOC Operating
Co., Inc., and as President of Hale Exploration Corporation.
WILLIAM H. MURPHY, age 55, has served as a director of the Company since
August 1, 1994. For more than the past five years, Mr. Murphy has been the
President and sole shareholder of Wm. H. Murphy & Co., Inc., an investment
banking and financial advisory concern located in Houston, Texas.
HERBERT H. HEDICK, age 65, has served as a director of the Company since
April 4, 1995. In 1990, Mr. Hedick founded Long Distance Services, Inc., a low
cost communications provider, and has served as its President since that time.
Since 1993, Mr. Hedick has been Senior Managing Director and Principal of T. O.
Richardson Company, an investment advisory concern located in Farmington,
Connecticut. From 1954 to 1990, Mr. Hedick was employed by Merrill Lynch,
serving in various capacities, including District Manager of its offices in
Fairfield County, Connecticut, Group
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Vice President in charge of nationwide Operation Centers, and Senior Vice
President of the Merrill Lynch Trust Company.
CERTAIN TRANSACTIONS
ACQUISITION OF OIL & GAS PROPERTIES. Effective August 1, 1994, the
Company acquired certain oil and gas properties from Jay D. Haber and Michael D.
Hale. The properties consisted primarily of leases and other agreements for the
operation of producing oil and gas wells, and working interests in certain oil
and gas properties. The acquisition was completed pursuant to the merger of HOC
Operating Co., Inc. and Hale Exploration Corporation, each Texas corporations,
with and into two newly-formed subsidiaries of the Company. The Company acquired
the properties from Mr. Haber by acquiring all of the issued and outstanding
capital stock of HOC Operating Co., Inc., and acquired the properties from Mr.
Hale by acquiring all of the issued and outstanding capital stock of Hale
Exploration Corporation. In consideration for the acquisition of these
properties, the Company issued (i) 951,734 shares of the Company's Common Stock
to Mr. Haber and (ii) 689,186 shares of the Company's Common Stock to Mr. Hale.
In addition, effective August 31, 1995, the Company issued 107,868 shares to Mr.
Haber and 77,868 shares to Mr. Hale as a post-closing adjustment of the
consideration paid for these properties. Mr. Haber currently serves as the
President and Chairman of Board of Directors of the Company. Mr. Hale serves as
the Company's Vice President and Secretary and as a member of the Board of
Directors of the Company.
FINANCIAL ADVISORY AGREEMENT. Effective May 12, 1994, the Company
entered into a Financial Advisory Agreement (the "Advisory Agreement") with Wm.
H. Murphy & Co., Inc., an investment banking firm wholly-owned by William H.
Murphy ("Murphy & Co."). Mr. Murphy currently serves as a director of the
Company. Under the terms of the Advisory Agreement, Murphy & Co. agreed to
render certain advisory and investment banking services to the Company. As
consideration for these services, the Company paid $100,000 and issued warrants,
entitling Murphy & Co. to purchase an aggregate of 443,492 shares of Common
Stock. In addition, the Company agreed to pay Murphy & Co. a monthly retainer
fee of $3,000. At the present time, Mr. Murphy holds warrants entitling Mr.
Murphy to purchase an aggregate of 147,764 shares of the Company's Common Stock:
(i) after the earlier of (a) July 31, 1997 or (b) the date which is 30 days
after the end of the calendar month in which the Company's Chief Financial
Officer certifies to the Board of Directors of the Company that the Company has
deducted and utilized the federal income tax net operating loss and tax credit
carryforwards which were in existence on August 1, 1994, and (ii) before the
close of business on July 31, 1999. The exercise price of each warrant ranges
between $1.00 per share to $1.75 per share. The Company has also granted Murphy
& Co. certain registration rights with respect to the Common Stock for which the
warrants are exercisable. No fees were paid to Murphy & Co. during the 1995
fiscal year under the Advisory Agreement and the company has terminated the
Advisory Agreement.
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PURCHASE OFFER TRANSACTION.
Effective September 30, 1994, the Company acquired certain working
interests in oil and gas properties located within the State of Texas from
Herbert H. Hedick and Weowna Well Associates, a New York general partnership, of
which Mr. Hedick holds a forty percent (40%) partnership interest. Mr. Hedick
currently serves as a member of the Company's Board of Directors. The properties
acquired by the Company consisted of working interests in oil and gas properties
located within the State of Texas. In consideration for the acquisition of these
properties, the Company (through one of its subsidiaries) issued to Mr. Hedick
and the partnership certain five-year promissory notes, aggregating $49,678,
which are guaranteed by the Company and warrants entitling Mr. Hedick to
purchase an aggregate of 33,119 shares of the Company's Common Stock at an
exercise price of $1.50 per share at any time prior to September 30, 1999.
POST-CLOSING ADJUSTMENT.
The Company entered into a Post-Closing Adjustment Agreement dated as of
August 31, 1995, by and among the Company, Jay D. Haber and Michael Hale (the
"Post-Closing Agreement"), pursuant to which the Company issued 107,532 shares
of Common Stock to Mr. Haber and 77,868 shares of Common Stock to Mr. Hale as an
adjustment to the consideration paid to Messrs. Haber and Hale in connection
with the Company's August 1, 1994 acquisition of the Haber/Hale oil and gas
properties. The Post-Closing Adjustment Agreement was approved unanimously by
the disinterested members of the Board of Directors of the Company.
OFFICER ADVANCES
During the fiscal year ended December 31, 1995, the Company received
working capital advances totaling $101,722 from Jay D. Haber, the Company's
President and Chairman of the Board of Directors. These advances are payable on
demand. Interest on such advances is based on the prime rate as of the first day
of each fiscal quarter, plus four per cent (4%), and is payable quarterly.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Company under Rule 16(a)-3(d) of the Securities and Exchange
Commission during the Company's three-month transition period ended December 31,
1994 and the fiscal year ended December 31, 1995, and Forms 5 and amendments
thereto furnished to the Company with respect to the fiscal year ended December
31, 1995, the Company is not aware of any director, officer, or beneficial owner
of more than 10% of any class of equity securities of the Company registered
pursuant to Section 12 of the Securities Exchange Act of 1934 (the "Exchange
Act") that has failed to file on a timely basis, as disclosed in the above
forms, reports required by Section 16(a) of the Exchange Act during the
Company's most recent fiscal year.
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COMMITTEES; MEETINGS
There were five meetings of the Board (including regular and special
meetings) held during the three month transition period ended December 31, 1994
and the fiscal year ended December 31, 1995. None of the nominees to the Board
attended fewer than 75% of the total number of meetings of the Board during the
period he has been a director. The Company does not have separate audit,
nominating or compensation committees of the Board of Directors. The Board has
dissolved the executive committee formed in 1994.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table reflects all forms of compensation for (i) each of
the fiscal years ended September 30, 1994 and 1993, (ii) the three-month
transition period ended December 31, 1994, and (iii) the fiscal year ended
December 31, 1995, for Mitchell A. Lekas' services to the Company prior to
August 1, 1994, as well as the compensation paid to Jay D. Haber for his
services since August 1, 1994, and Michael Hale for his services since January
1, 1995. No other director or executive officer had salary and bonus which
exceeded $100,000 during such periods.
<TABLE>
<CAPTION>
Annual compensation Long term compensation
----------------------------------------- -----------------------------------------------------
Awards Payouts
------------------------ --------------------------
Other Restricted Securities
Name and annual Stock underlying All other
principal position Year Salary Bonus compensation Awards options/SARs LTIP payouts compensation
($) ($) ($) ($) (#) ($) ($)
(a) (b) (c) (d) (e) (f) (g) (h) (i)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Jay D. Haber, 1995 $140,000 $31,994 (2) $ -- $ -- 15,000 (3) $ -- $ --
President and Chief
Executive Officer
Michael Hale, 1995 $98,000 $31,994 (2) $ -- $ -- 15,000 (3) $ __ $ __
Secretary and Vice
President
Jay D. Haber, 1994 (from $23,333 $2,456 (2) $ -- $ 0 15,000 (3) $ -- $ --
President, Chief 8/1/94,
Executive Officer including
3-month
transition
period
ended
Mitchell A. Lekas, 1994 (until $12,000 $ -- $ -- $ -- -- $ -- $ --
President and Chief 8/1/94)
Executive Officer
Mitchell A. Lekas,
President and Chief
Executive Officer 1993 $13,320 $ -- $ -- $ -- -- $ -- $ __
============ ======== ======== ============ ====== ======== ============== ========
</TABLE>
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(1) Transition period resulting from the Company's change of its fiscal year
end from September 30 to December 31.
(2) Bonus reflects share of net proceeds from sales of oil and gas
prospects. Messrs. Haber and Hale are entitled to this bonus pursuant to
their respective employment agreements (described under "Employment
Contracts" below) with the Company.
(3) Refers to non-incentive stock options to purchase the Company's Common
Stock granted to Messrs. Haber and Hale under the 1995 Stock Option
Plan. Messrs. Haber and Hale are each entitled to receive such options
pursuant to their respective employment agreements (described under
"Employment Contracts" below) with the Company.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Number of
securities Percent of total
underlying options/SARs
options/SARs granted to Exercise or
granted employees in fiscal base price Expiration
Name (#) year ($/Sh) Market Price at date
(a) (b) (c) (d) date of Grant (e)
<S> <C> <C> <C> <C> <C>
Jay D. Haber 15,000(1) 28.2% $1.875(2) $1.875(2) July 31, 2000
Michael Hale 15,000(1) 28.2% $1.875(2) $1.875(2) July 31, 2000
============ ====== ====== ====== =============
</TABLE>
(1) Messrs. Haber and Hale are each entitled to receive non-incentive stock
options under the 1995 Stock Option Plan pursuant to their respective
employment agreements (described under "Employment Contracts" below)
with the Company.
(2) The price of the stock covered by the options equals the average of the
closing high bid and low asked quotations for the Company's Common Stock
on the first day of each twelve months of employment.
The Company entered into employment agreements dated as of August 1,
1994, with its President, Jay D. Haber, and its Vice President and Secretary,
Michael Hale (see "Employment Contracts" below). Under the terms of the
Employment Agreements, Mr. Haber and Mr. Hale are each entitled to receive
grants of non-incentive stock options covering 15,000 shares of the Company's
Common Stock on August 1 of each year of service rendered to the Company.
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AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
During the fiscal year ended December 31, 1995, and the three-month
transition period ended December 31, 1994, none of the Company's executive
officers exercised any options. The Company had not issued any SARs during the
fiscal year ended December 31, 1995.
LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Estimated Future Payouts under
Non-Stock Price-Based Plans
-----------------------------------------------------------------
(a) (b) (c) (d) (e) (f)
<S> <C> <C> <C> <C> <C>
Name Number of Performance or Threshold Target Maximum
shares, units other period ($ or #) ($ or #) ($ or #)
or other until maturation
rights (#) or payout
Jay D. Haber 15,000 The options are N/A N/A N/A
exercisable
after August 1,
1996. (2)
Michael Hale(1) 15,000 The options are
exercisable
after August 1,
1996. (2) N/A N/A N/A
</TABLE>
(1) Messrs. Haber and Hale each received non-incentive stock options
covering 15,000 shares of the Company's Common Stock under the terms of their
respective Employment Agreements with the Company.
(2) The exercise price of the options is equal to the average of the
closing high bid and low asked quotations for the Company's Common Stock on the
date the options were granted.
COMPENSATION OF DIRECTORS
Non-employee directors of the Company receive $2,500 per year for their
services as directors and $250 per meeting attended. Directors who are not
employees or officers of the Company are reimbursed for their actual expenses
incurred in attending meetings of the Board of Directors.
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EMPLOYMENT CONTRACTS
Effective August 1, 1994, the Company entered into an Employment
Agreement with Jay D. Haber, pursuant to which Mr. Haber serves as the President
and Chief Executive Officer of the Company. The compensation payable to Mr.
Haber under his Employment Agreement consists of: (i) a base salary of $140,000
per year, (ii) an incentive cash bonus from profits derived from the Company's
sales of oil and gas prospects, (iii) the Company's agreement to grant on August
1 of each year of Mr. Haber's services, non-incentive stock options covering
15,000 shares of the Company's Common Stock under the 1995 Stock Option Plan,
and (iv) eligibility to participate in the Company's employee benefit plans
which may be adopted. Mr. Haber's employment agreement has a term of three years
and is terminable by the Company upon its good faith determination that there
has been a willful violation of the terms of the agreement. During 1995, Mr.
Haber received a bonus of $31,994 reflecting Mr. Haber's share of net proceeds
from the Company's sale of oil and gas prospects for the period October 1, 1994
to July 31, 1995.
Effective August 1, 1994, the Company entered into an Employment
Agreement with Michael Hale, pursuant to which Mr. Hale serves as Vice President
of the Company. Mr. Hale also serves as Secretary of the Company. The
compensation payable to Mr. Hale consists of (i) a base salary of $98,000 per
year, (ii) an incentive cash bonus from profits derived from the Company's sales
of oil and gas prospects, (iii) the Company's agreement to grant, on August 1 of
each year of Mr. Hale's services, non-incentive stock options covering 15,000
shares of the Company's Common Stock under the 1995 Stock Option Plan, and (iv)
eligibility to participate in the Company's employee benefit plans which may be
adopted. Mr. Hale's employment agreement has a term of three years and is
terminable by the Company upon its good faith determination that there has been
a willful violation of the terms of the agreement. During 1995, Mr. Hale
received a bonus of $31,994 reflecting Mr. Hale's share of net proceeds from the
Company's sale of oil and gas prospects for the period October 1, 1994 to July
31, 1995.
VOTES REQUIRED; BOARD RECOMMENDATION
The four nominees receiving the highest number of affirmative votes of
the shares represented in person or represented by proxy at the meeting and
entitled to vote shall be elected to the Board. The Board believes that the
election of the nominees listed above as directors of the Company is in the best
interest of the Company and its stockholders. The Board, therefore, recommends a
FOR vote for the nominees and it is intended that proxies not marked to the
contrary will be so voted.
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AMENDMENT TO CERTIFICATE OF INCORPORATION
(PROPOSAL 2)
The Board believes it is in the best interest of the Company and its
shareholders to amend the Certificate of Incorporation of the Company to
authorize 2,500,000 shares, $10.00 par value per share, of "blank check"
preferred stock (the "Preferred Stock"). The text of the proposed amendment (the
"Amendment") to the Certificate of Incorporation is attached hereto as Exhibit A
to this Proxy Statement.
The Board has determined that the creation of the Preferred Stock is in
the best interest of the Company and its stockholders, and believes it advisable
to authorize such shares to have them available for, among other things,
possible issuance in connection with acquisitions and other general corporate
purposes, including public or private offerings of shares for cash, stock
dividends, stock splits, financings, and employee benefit plans. The Company has
no present commitments, arrangements or plans which would require the issuance
of such additional shares in connection with an equity offering, merger or
acquisition.
The term "blank check" preferred stock refers to stock for which the
board of directors of a corporation may fix or change: the division of such
shares into series; the dividend or distribution rate; the dates of payment of
dividends or distributions and the dates from which they are cumulative;
liquidation price; redemption rights and price; sinking fund requirements;
conversion rights; and restrictions on the issuance of shares of any class or
series. As such, the Board of the Company will, in the event of the approval of
this proposal by the stockholders, be entitled to authorize the creation of and
issuance of up to 2,500,000 shares of Preferred Stock in one or more series with
such limitations and restrictions as may be determined in the Board's sole
discretion subject to applicable law, with no further authorization by the
Company's stockholders required for the creation and issuance thereof.
To the extent the Preferred Stock is convertible into Common Stock, the
holders of Preferred Stock would have the same voting rights as holders of
Common Stock, except as otherwise provided by law, and would not have any
preemptive rights to subscribe for or to purchase any shares of the Company of
any class (whether now authorized or authorized in the future). The holders of
Preferred Stock would vote on all matters (except as may be otherwise required
by law) with the holders of Common Stock as a single class and would be entitled
to a number of votes equal to the number of shares of Common Stock into which
their Preferred Stock could be converted. The Preferred Stock would rank senior
to Common Stock in respect of dividends and other distributions and in the event
of voluntary or involuntary liquidation until satisfaction of any liquidation ,
dissolution or winding up of the affairs of the Company.
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It is not possible to state the effect of the authorization of the
Preferred Stock upon the rights of holders of Common Stock until the Board
determines the terms relating to one or more series of Preferred Stock. However,
such effect might include: (i) reduction of the amounts otherwise available for
payment of dividends on Common Stock, to the extent dividends are payable on any
issued shares of Preferred Stock, and restrictions on dividends on Common Stock
if dividends on Preferred Stock are in arrears, (ii) dilution of the voting
power of the Common Stock, and (iii) the holders of Common Stock not being
entitled to share in the Company's assets upon liquidation until satisfaction of
any liquidation preference granted to shares of Preferred Stock.
The Board of Directors proposes that the shareholders adopt and approve
a resolution adopting the Amendment in its entirety in the form of Exhibit A to
this Proxy Statement. The affirmative vote of the holders of a majority of the
Company's outstanding shares of Common Stock represented in person or
represented by proxy at the meeting and entitled to vote is required for the
adoption of the Amendment. If the Amendment is adopted by the Company's
stockholders, the Amendment will become effective on the date a certificate of
amendment is filed with the Secretary of State of the State of Delaware, the
Company's state of incorporation.
BOARD RECOMMENDATION
The Board has determined that the authorization of the Preferred Stock
and the Amendment is in the best interest of the Company and recommends a vote
FOR the approval of the Amendment, and it is intended that proxies not marked to
the contrary will be so voted. The affirmative vote of a majority of the
outstanding shares of Common Stock of the Company represented in person or
represented by proxy at the meeting and entitled to vote is required for
authorization of the Amendment.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
(PROPOSAL 3)
The Board has appointed the firm of Tsakopulos, Brown, Schott & Anchors
of San Antonio, Texas, as independent public accountants to examine the
Company's consolidated financial statements for the fiscal year ending December
31, 1996, subject to the approval of such appointment by the Company's
stockholders at the Annual Meeting. Tsakopulos, Brown, Schott & Anchors has
audited the Company's financial statements for the three-month transition period
ended December 31, 1994 and the fiscal year ended December 31, 1995.
Representatives of Tsakopulos, Brown, Schott & Anchors are expected to be
present at the Annual Meeting, and will have an opportunity to make a statement,
if they so desire, and to respond to appropriate questions from those attending
the meeting.
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RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The audit reports of Tsakopulos, Brown, Schott & Anchors on the
consolidated financial statements of the Company during the three-month
transition period ended December 31, 1994 and the fiscal year ended December 31,
1995 did not contain any adverse opinion or disclaimer of opinion, nor were they
modified as to uncertainty, audit scope, or accounting principles.
In connection with Tsakopulos, Brown, Schott & Anchors' audits of the
three-month transition period ended December 31, 1994 and the fiscal year ended
December 31, 1995, there were no disagreements with Tsakopulos, Brown, Schott &
Anchors on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedures, which disagreements if not resolved
to its satisfaction would have caused Tsakopulos, Brown, Schott & Anchors to
make reference to the subject matter of the disagreement in connection with its
opinion.
BOARD RECOMMENDATION
The Board recommends a vote FOR the ratification of the appointment of
Tsakopulos, Brown, Schott & Anchors as the Company's independent public
accountants for the fiscal year ending December 31, 1996. The ratification of
the appointment of Tsakopulos, Brown, Schott and Anchors will be determined by
the vote of the holders of a majority of the shares present in person or
represented by proxy at the Annual Meeting.
OTHER BUSINESS
Management knows of no other business to be brought before the Annual
Meeting other than (i) the election of directors, (ii) the authorization of the
Amendment and (iii) ratification of the Company's independent public
accountants. If any other proposals come before the meeting, it is intended that
the shares represented by proxies shall be voted in accordance with the judgment
of the person or persons exercising the authority conferred by the proxies.
By Order of the Board of Directors
MICHAEL D. HALE
SECRETARY
Houston, Texas
September, 1996
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EXHIBIT A
GEOKINETICS INC.
AMENDMENT TO CERTIFICATE OF INCORPORATION
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FORM OF
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF GEOKINETICS INC.
GEOKINETICS INC., a corporation organized and existing under the laws of
the State of Delaware (the "Corporation"), does hereby certify that, in
accordance with Section 151 of the General Corporation Law of the State of
Delaware, the Board of Directors of the Corporation adopted the following
resolutions establishing a new class of capital stock consisting of 2,500,000
shares of Preferred Stock, $10.00 par value per share (the "Preferred Stock"):
FIRST: That by the unanimous written consent of the Board of Directors
of the Corporation, the directors adopted resolutions setting
forth, among other things, a proposed amendment to the
Certificate of Incorporation of the Corporation and declaring
such amendment to be advisable and calling a meeting of the
stockholders of the Corporation for consideration thereof. The
resolution setting forth the proposed amendment is as follows:
FURTHER RESOLVED, that it is in the best interest of the
Corporation that the Certificate of Incorporation of the
Corporation be amended by changing the fourth Article thereof
pursuant to the authority conferred on the Board of Directors of
this Corporation by Section 151 of the Delaware General
Corporation Act, such that, as amended, Article Four shall read
as follows:
"The total number of shares of stock which the corporation shall
have authority to issue is Seventeen Million Five Hundred
Thousand (17,500,000) shares, consisting of Two Million Five
Hundred (2,500,000) shares of Preferred Stock, $10.00 par value
per share (the "PREFERRED STOCK"), and Fifteen Million
(15,000,000) shares of Common Stock, $.20 par value per share
(the "COMMON STOCK"). A description of the designations,
preferences, and relative rights of each class is as follows:
PREFERRED STOCK
Section 1. The Preferred Stock may be issued from time to
time in one or more series. All shares of Preferred Stock shall
be of equal rank and shall be identical, except in respect of the
matters that may be fixed by the Corporation's directors as
hereinafter provided, and each share of each series shall be
identical with all other shares of such series, except that in
the case of series on which dividends are cumulative the dates
from which dividends are cumulative may vary to reflect
differences in the date of issue. Subject to the
1
provisions of this Section, which provisions shall apply to all
Preferred Stock, the directors hereby are authorized to cause
such shares to be issued in one or more series and with respect
to each such series prior to the issuance thereof to fix:
(a) The designation of the series which may be by
distinguishing number, letter or title.
(b) The number of shares of the series, which
number the directors may (except where otherwise provided
in the creation of the series) increase or decrease (but
not below the number of shares thereof then outstanding).
(c) The dividend rate of the series.
(d) The dates at which dividends, if declared,
shall be payable, whether such dividends shall be
cumulative or non-cumulative and, if cumulative, the dates
from which dividends shall be cumulative.
(e) The redemption rights and price or prices, if
any, for shares of the series.
(f) The terms and amount of any sinking fund
provided for the purchase or redemption of shares of the
series.
(g) The amounts payable on shares of the series in
the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the
Corporation.
(h) Whether the shares of the series shall be
convertible into shares of any other class or series of
the Corporation, and, if so, the specification of such
other class or series, the conversion price or prices, any
adjustments thereof, the date or dates as of which such
shares shall be convertible, and other terms and
conditions upon which such conversion may be made.
(i) Restrictions on the issuance of shares of the
same series or of any other class or series.
The Corporation's directors are authorized to adopt from
time to time amendments to this Article Four fixing, with respect
to each such series, the matters described in clauses (a) to (i),
inclusive, of this Section.
2
Section 2. The holders of Preferred Stock of each series,
in preference to the holders of Common Stock and of any other
class of shares ranking junior to the Preferred Stock, shall be
entitled to receive out of any funds legally available and when
and as declared by the Corporation's directors, dividends in cash
at the rate for such series fixed in accordance with the
provisions of Section 1 of this Article Four and no more, payable
on the dates fixed for such series. In the event dividends for a
series are determined to be cumulative in accordance with the
provisions of Section 1 of this Article Four, such dividends
shall be cumulative, in the case of shares of each particular
series, from and after the date or dates fixed with respect to
such series. No dividends may be paid upon or declared or set
apart for any of the Preferred Stock for any dividend period
unless:
(a) as to each series of Preferred Stock entitled
to cumulative dividends, dividends for all past dividend
periods shall have been paid or shall have been declared
and a sum sufficient for the payment thereof set apart;
and
(b) as to all series of Preferred Stock, dividends
for the current dividend period shall have been paid or be
or have been declared and a sum sufficient to the payment
thereof set apart ratably in accordance with the amounts
which would be payable as dividends on the shares of the
respective series for the current dividend period if all
dividends for the current dividend period were declared
and paid in full.
No dividend in respect of past dividend periods shall be
paid upon or declared and set apart for payment on any of the
Preferred Stock entitled to cumulative dividends unless there
shall be or have been declared and set apart for payment on all
outstanding shares of Preferred Stock entitled to cumulative
dividends, dividends for past dividend periods ratably in
accordance with the amounts which would be payable on the shares
of the series entitled to cumulative dividends if all dividends
due for all past dividend periods were declared and paid in full.
Section 3. In no event, so long as any Preferred Stock
shall be outstanding, shall any dividends, except a dividend
payable in Common Stock or other shares ranking junior to the
Preferred Stock, be paid or declared or any distribution be made
except as aforesaid on the Common Stock or any other shares
ranking junior to the Preferred Stock, nor shall any Common Stock
or any other shares ranking junior to the Preferred Stock be
purchased, retired or otherwise acquired by the Corporation
unless in each case:
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(a) all accrued and unpaid dividends on Preferred
Stock, including the full dividends for the current
dividend period, shall have been declared and paid or a
sum sufficient for payment thereof set apart; and
(b) there shall be no arrearage with respect to the
redemption of Preferred Stock of any series from any
sinking fund provided for shares of such series in
accordance with the provisions of Section 1 of this
Article Four.
Section 4.
(a) The holders of Preferred Stock of any series,
in the event of voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the
Corporation, shall be entitled to receive in full out of
the assets of the Corporation, including its capital,
before any amount shall be paid or distributed among the
holders of the Common Stock or any other shares ranking
junior to the Preferred Stock, the amounts fixed with
respect to such series in accordance with Section 1 of
this Article Four, plus an amount equal to all dividends
accrued and unpaid thereon to the date of payment of the
amount due pursuant to such liquidation, dissolution or
winding up of the affairs of the Corporation. In case the
net assets of the Corporation legally available therefor
are insufficient to permit the payment upon all
outstanding shares of Preferred Stock of the full
preferential amount to which they are respectively
entitled, then such net assets shall be distributed
ratably upon outstanding shares of Preferred Stock in
proportion to the full preferential amount to which each
such share is entitled.
After payment to holders of Preferred Stock of the
full preferential amounts as aforesaid, holders of
Preferred Stock as such shall have no right or claim to
any of the remaining assets of the Corporation.
(b) The merger or consolidation of the Corporation
into or with any other corporation, or the merger of any
other corporation into the Corporation, or the sale, lease
or conveyance of all or substantially all of the property
or business as of the Corporation shall not be deemed to
be a dissolution, liquidation or winding up, voluntary or
involuntary, for the purposes of this Section 4.
Section 5. Except as otherwise expressly provided herein
or as
4
required by law, the holders of Preferred Stock shall be entitled
to vote on all matters upon which holders of Common Stock have
the right to vote and, with respect to such right to vote, shall
be entitled to notice of any stockholders' meeting in accordance
with the Corporation's Bylaws, and shall be entitled to a number
of votes equal to the number of shares of Common Stock into which
such shares of Preferred Stock could then be converted, at the
record date for the determination of stockholders entitled to
vote on such matters or, if no such record date is established,
at the date such vote is taken or any written consent of
stockholders is solicited. Except as otherwise expressly provided
herein, or to the extent class or series voting is otherwise
required by law or agreement, the holders of Preferred Stock or
Common Stock shall vote together as a single class and not as
separate classes.
Section 6. For the purpose of this Article Four, whenever
reference is made to shares "ranking junior to the Preferred
Stock," such reference shall mean and include all shares of the
Corporation in respect of which the rights of the holders thereof
as to the payment of dividends and as to distributions in the
event of a voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Corporation are junior and
subordinate to the rights of the holders of Preferred Stock.
COMMON STOCK
The Common Stock shall be subject to the express terms of
the Preferred Stock and of any series thereof. The terms and
provisions of each share of Common Stock shall be identical to
every other share of Common Stock. The holders of shares of
Common Stock shall be entitled to one vote for each share of such
stock upon all matters presented to the stockholders."
5
SECOND: That, thereafter, pursuant to resolution of the Board of
Directors of the Corporation, the annual meeting of stockholders
of the Corporation was duly called and held, upon notice in
accordance with Section 222 of the General Corporation Law of the
State of Delaware at which meeting the necessary number of shares
as required by statute were voted in favor of the amendment.
THIRD: That the amendment was duly adopted in accordance with the
applicable provisions of Section 242 of the General Corporation
Law of the State of Delaware.
IN WITNESS WHEREOF, GEOKINETICS INC. has caused this certificate to be
signed by JAY D. HABER, its President, this day of __________, 1996.
GEOKINETICS INC.
By: ________________________________
Jay D. Haber, President
STATE OF TEXAS ss.
ss.
COUNTY OF HARRIS ss.
This instrument was acknowledged before me on the ______ day of
_______________, 19___, by JAY D. HABER, President of GEOKINETICS INC., a
corporation, on behalf of said corporation.
---------------------------------
Notary Public in and for
the State of TEXAS
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GEOKINETICS INC.
5555 SAN FELIPE, SUITE 780
HOUSTON, TEXAS 77056
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Jay D. Haber and Michael D. Hale as
proxies, each with full power of substitution, and authorizes them to vote as
designated below, all the shares of common stock of Geokinetics Inc. held on
record by the undersigned on September 26, 1996, at the annual meeting of
stockholders to be held at the Marathon Oil Tower, 5555 San Felipe, 10th Floor
Conference Center, Houston, Texas 77056, at 10:00 a.m. (local time) on October
24, 1996, or any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR ALL NOMINEES" IN ITEM 1 AND "FOR"
ITEMS 2 AND 3.
1. ELECTION OF DIRECTORS OF THE COMPANY
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote
(except as marked to the for all nominees listed
contrary below). below.
Jay D. Haber William H. Murphy
Michael D. Hale Herbert H. Hedick
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THE
NOMINEE'S NAME ON THE SPACE PROVIDED BELOW:
2. APPROVAL OF THE AMENDMENT TO THE CERTIFICATE OF INCORPORATION of the
Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. RATIFICATION OF THE APPOINTMENT OF TSAKOPULOS, BROWN, SCHOTT &
ANCHORS as independent public accountants of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the proxies are authorized to vote upon any other
matter that properly may come before the meeting or any adjournment
thereof.
This Proxy, when properly executed, will be voted in the manner directed herein
by the stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2, AND 3.
[NAME OF STOCKHOLDER]
DATED: October ___, 1996 ________________________________
signature
________________________________
signature if held jointly
Please date, sign exactly as your name appears hereon and mail this proxy card
in the enclosed envelope. No postage is required. Where there is more than one
owner, each should sign. When signing as an attorney, administrator, executor,
guardian or trustee, please add your title as such. If executed by a
corporation, this proxy should be signed by a duly authorized officer.
[ ] Please check this box if you plan on attending the Annual Meeting.
