SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission Only (as Permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction
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:
[ ] 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
MAY 27, 1998
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 May 27, 1998, for the following purposes:
1. To elect four directors;
2. To ratify the appointment of Tsakopulos Brown Schott & Anchors as
the Company's independent public accountants; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board recommends the election of the nominees for directors named in
the accompanying Proxy Statement 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 April 17, 1998 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 HALE
SECRETARY
Houston, Texas
April 30, 1998
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.
<PAGE>
GEOKINETICS INC.
----------
PROXY STATEMENT
1998 ANNUAL MEETING OF STOCKHOLDERS
MAY 27, 1998
-----------
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 1998
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 April 30, 1998.
RECORD DATE; OUTSTANDING SHARES
Only stockholders of record at the close of business on April 17, 1998
(the "Record Date"), are entitled to receive notice of and to vote at the
meeting. The outstanding voting securities of the Company as of April 17, 1998
consisted of 18,326,816 shares of the Company's Common Stock, $.01 par value
(the "Common Stock"). For information regarding holders of more than 5% of the
outstanding voting securities of the Company, 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 Secretary 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: Michael Hale, Secretary. 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.
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 of Common
Stock 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 votes represented by 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 absence 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.
<PAGE>
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 1999 Annual Meeting must be received by
the Company no later than December 31, 1998 in order that they may be included
in the proxy statement and form of proxy relating to that meeting.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
SECURITY OWNERSHIP SUMMARY
The following table sets forth, as of March 31, 1998, 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.
<TABLE>
<CAPTION>
NAME AND ADDRESS
OF BENEFICIAL OWNER AMOUNT AND NATURE OF PERCENT OF
OF GROUP TITLE OF CLASS BENEFICIAL OWNERSHIP CLASS (1)
-------- -------------- -------------------- ---------
<S> <C> <C> <C>
Jay D. Haber
5555 San Felipe, Suite 780
Houston, TX 77056 Common 1,129,602 shares (2) 6.14%
- --------------------------- ------------------ -------------------------- ----------------------
Steven A. Webster
R&B Falcon Corporation
901 Threadneedle, Suite 200
Houston, TX 77079 Common 16,365,311 (3) 63.70%
- --------------------------- ------------------ -------------------------- ----------------------
William R. Ziegler
Parson & Brown LLP
666 Third Avenue
New York, NY 10017 Common 16,415,334 (4) 63.77%
- --------------------------- ------------------ -------------------------- ----------------------
Christopher M. Harte
364 Spring Street
Portland, ME 04102 Common 85,500 shares (5) .46%
- --------------------------- ------------------ -------------------------- ----------------------
Blackhawk Investors, L.L.C.
3662 Piping Rock
Houston, TX 77027 Common 14,331,596 shares (6) 59.74%
- --------------------------- ------------------ -------------------------- ----------------------
Blackhawk Capital Partners
3662 Piping Rock
Houston, TX 77027 Common 14,331,596 shares (7) 59.74%
- --------------------------- ------------------ -------------------------- ----------------------
All Directors and
Executive Officers as a
Group Common 20,704,505 shares (8) 74.24 %
- --------------------------- ------------------ -------------------------- ----------------------
</TABLE>
(1) These percentages are calculated on the basis of 18,326,816
shares of Common Stock, that were issued and outstanding on March
31, 1998, plus, with respect to each person or entity listed,
such number of shares of Common Stock as such person or entity
has the right to acquire within 60 days pursuant to options,
warrants, conversion privileges or other rights held by such
person
<PAGE>
or entity. Certain shares are deemed beneficially owned by
more than one person or entity listed in the table.
(2) Includes 80,000 shares of Common Stock purchasable pursuant to
options granted to Mr. Haber under the 1995 Stock Option Plan;
excludes an aggregate of 600,000 shares of Common Stock
purchasable pursuant to options granted to Mr. Haber under the
1995 Stock Option Plan which are subject to vesting requirements
that have not yet been satisfied.
(3) Includes (i) 1,482,512 shares of Common Stock issuable pursuant
to the warrants held by Mr. Webster, (ii) 333,326 shares owned of
record by Mr. Webster, (iii) (A) 8,666,667 shares of Common Stock
owned of record by Blackhawk Investors, L.L.C. (ABlackhawk@) and
(B) 5,664,929 shares of Common Stock presently exercisable
pursuant to the Shadow Warrant issued to Blackhawk, since Mr.
Webster is one of two partners of Blackhawk Capital Partners
(ABCP@), the managing member of Blackhawk, and (iv) 217,877
shares of Common Stock presently exercisable pursuant to the
Shadow Warrant issued to Mr. Webster; excludes 1,320,173 shares
of Common Stock not presently exercisable under the Shadow
Warrant issued to Blackhawk and 50,775 shares not presently
exercisable under the Shadow Warrant issued to Mr. Webster.
(4) Includes (i) 1,482,512 shares of Common Stock issuable pursuant
to the warrants held by Mr. Ziegler, (ii) 333,340 shares owned of
record by Mr. Ziegler, (iii) (A) 8,666,667 shares of Common Stock
owned of record by Blackhawk (B) 5,664,929 shares of Common Stock
presently exercisable pursuant to the Shadow Warrant issued to
Blackhawk, since Mr. Ziegler is one of two partners of BCP, the
managing member of Blackhawk, (iv) 50,000 shares of Common Stock
issuable pursuant to stock options held by Mr. Ziegler, and (v)
217,886 shares of Common Stock presently exercisable pursuant to
the Shadow Warrant issued to Mr. Ziegler; excludes 1,320,173
shares of Common Stock not presently exercisable under the Shadow
Warrant issued to Blackhawk and 50,777 shares not presently
exercisable under the Shadow Warrant issued to Mr.
Ziegler.
(5) Includes 85,500 shares of Common Stock issuable pursuant to
warrants held by Mr. Harte, which warrants were issued in
accordance with the terms of that certain promissory note dated
March 24, 1998 of the Company payable to Mr. Harte.
(6) Includes (i) 8,666,667 shares owned of record by Blackhawk and
(ii) 5,664,929 shares of Common Stock presently exercisable
pursuant to the Shadow Warrant issued to Blackhawk; excludes
1,320,173 shares of Common Stock not presently exercisable under
the Shadow Warrant issued to Blackhawk.
(7) Includes (i) 8,666,667 shares owned of record by Blackhawk and
(ii) 5,664,929 shares of Common Stock presently exercisable
pursuant to the Shadow Warrant issued to Blackhawk, which are
deemed beneficially owned by BCP as the managing member of
Blackhawk; excludes 1,320,173 shares of Common Stock not
presently exercisable under the Shadow Warrant issued to
Blackhawk.
(8) Includes an aggregate of (i) 11,143,289 issued and outstanding
shares beneficially owned by the directors and executive officers
as a group, (ii) 9,561,216 shares of Common Stock that such
persons have the right to acquire within 60 days pursuant to
options, warrants, conversion privileges or other rights held by
such persons (inclusive of 6,100,692 shares of Common Stock
presently exercisable pursuant to the Shadow Warrants issued to
Blackhawk and Messrs.
4
<PAGE>
Webster and Ziegler); excludes 1,421,725
shares of Common Stock not presently exercisable under the Shadow
Warrants issued to Blackhawk and Messrs. Webster and Ziegler.
ELECTION OF DIRECTORS
(PROPOSAL 1)
GENERAL INFORMATION
The Board has nominated the four directors named below for election as
directors at the Annual Meeting. Each nominee has consented to being named in
the Proxy Statement as a nominee for election as director and has agreed to
serve as director if elected. Set forth below are the names, ages and positions
of the directors and executive officers of the Company:
DIRECTOR
NAME AGE POSITION WITH THE COMPANY SINCE
---- --- ------------------------- -----
Chief Executive Officer,
Jay D. Haber 52 Chairman of the Board and Director 1994
Lynn A. Turner 48 President and Chief Operating
48 Officer -
Michael A. Dunn 43 Vice President and
Chief Technology Officer -
Thomas J. Concannon 44 Vice President and
Chief Financial Officer -
Michael Hale 40 Vice President - Exploration and
Production and Secretary -
Christopher M. Harte 49 Director 1997
Steven A. Webster 45 Director 1997
William R. Ziegler 55 Director 1997
There are no family relationships between any of the directors or
executive officers of the Company.
JAY D. HABER, age 52, has served as a director and as the Company's
Chief Executive Officer since August 1, 1994, when the Company acquired certain
oil and gas properties from a corporation owned by Mr. Haber. 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 Oil Company, Inc., Haber Resources Corporation and HOC Operating Co., Inc.
On August 1, 1997, Mr. Haber was elected Chairman of the Board of Directors of
the Company.
LYNN A. TURNER, age 48, has served as the President and Chief Operating
Officer of the Company since July 28, 1997. For more than the past five years,
Mr. Turner was employed by Fairfield Industries, Inc., a
5
<PAGE>
provider of seismic acquisition services, most recently as Senior Vice President
and Manager of Data Acquisition. Mr. Turner has more than 20 years of experience
in the seismic data acquisition business.
MICHAEL A. DUNN, age 43, has served as a Vice President and the Chief
Technology Officer of the Company since August 18, 1997. For more than the past
five years, Mr. Dunn was employed by Shell Oil Company, most recently as
Technology Manager at its Exploration and Production Center. Mr. Dunn has over
18 years background in all aspects of geoscience, including seismic acquisition,
seismic processing, exploration and research.
THOMAS J. CONCANNON, age 44, has served as a Vice President and the
Chief Financial Officer of the Company since July 15, 1997. For the past five
years, he has worked as a private consultant for various energy companies. Prior
to that time, he served as President of NJR Energy, an exploration company and
as a director of its parent company, NJ Resources, Inc. Mr. Concannon has over
12 years of energy industry experience.
MICHAEL HALE, age 40, has served as the Vice President of the Company
since August 1, 1994, when the Company acquired certain oil and gas properties
from a corporation owned by Mr. Hale. 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.
CHRISTOPHER M. HARTE, age 49, is a private investor. From 1992 to 1994,
Mr. Harte was the President of Portland Newspapers, Inc. Mr. Harte is a director
of several corporations, including Harte-Hanks Communications, Inc. (a direct
marketing and shopper publishing company), Wildfire Fire Equipment Inc. (a
forest fire pump manufacturer) and Hi-Port Inc. (a petroleum product contract
packaging company), and is an investor member of Blackhawk Investors, L.L.C. Mr.
Harte was appointed a member of the Board of Directors on August 1, 1997.
STEVEN A. WEBSTER, age 45, is the Chief Executive Officer of R&B Falcon
Corporation, a marine oil and gas drilling contractor, and from November of 1991
through December 31, 1997, was the Chairman, Chief Executive Officer and
Treasurer of Falcon Drilling Company, Inc., a marine oil and gas drilling
contractor that, prior to becoming a wholly-owned subsidiary of R&B Falcon
Corporation on January 1, 1998, was listed on the New York Stock Exchange. Mr.
Webster serves as a director of Grey Wolf, Inc. (formerly DI Industries, Inc.)
(an international land drilling company), Ponder Industries, Inc. (an oilfield
service and rental tool company), Crown Resources Corporation (a mining
company), Carrizo Oil & Gas, Inc. (an independent oil and gas company), and as a
trust manager of Camden Property Trust (a real estate investment trust). Mr.
Webster is also a general partner of Equipment Asset Recovery Fund (an
investment fund), a general partner of Somerset Capital Partners, a principal
stockholder of Grey Wolf, Inc., a general partner of White Owl Capital Partners,
the managing member of White Owl Investors, LLC, a principal stockholder of
Ponder Industries and a general partner of Blackhawk Capital Partners, the
managing member of Blackhawk Investors, L.L.C. Mr. Webster was appointed a
member of the Board of Directors on August 1, 1997.
WILLIAM R. ZIEGLER, age 55, is a partner of the law firm of Parson &
Brown, L.L.P., located in New York, New York, where he has served as Chairman of
that firm since June of 1994. Mr. Ziegler was formerly a partner of Whitman
Breed Abbott & Morgan, located in New York, New York (1993 - May 1994), and a
predecessor law firm, Whitman & Ransom (since 1976), where he was Co-Chairman of
its Corporate Department. Mr. Ziegler is a director of R&B Falcon Corporation, a
director and Vice Chairman of Grey Wolf, Inc., a director of Ponder Industries,
Inc., a director of Flotek Industries Inc. (an oil services equipment supplier),
a general partner of Somerset Capital Partners, a general partner of White Owl
Capital Partners, the managing member of Marlin Investors, LLC, a principal
stockholder of Flotek Industries, and a general partner of Blackhawk Capital
Partners,
6
<PAGE>
the managing member of Blackhawk Investors, L.L.C. Mr. Ziegler was appointed a
member of the Board on August 1, 1997.
CERTAIN TRANSACTIONS
OFFICER ADVANCES
During the fiscal years ended December 31, 1995 and December 31, 1996,
the Company received working capital advances aggregating $141,722 from Jay D.
Haber, the Company's President at that time and a member of the Company's Board
of Directors. 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. During 1997, the Company made payments of $52,847 to Mr. Haber in
partial repayment of such working capital advances. The remaining indebtedness
will be paid to Mr. Haber in equal monthly installments over the next 19 months.
FINANCIAL ADVISORY COMPENSATION
On October 23, 1996, the Company issued a promissory note in the
principal amount of $104,521 to William H. Murphy, a former member of the
Company's Board of Directors. The note was issued as compensation to Mr. Murphy
as a result of the termination of the Financial Advisory Agreement, dated May
12, 1994, between the Company and Wm. H. Murphy & Co., Inc. The principal
balance of this note was payable in full on June 30, 1997. Interest accrued
based on the prime rate, plus four percent (4%) and was payable monthly until
maturity. The Company paid this obligation in full on July 18, 1997.
LOAN FROM DIRECTOR
On October 23, 1996, the Company received a working capital advance of
$65,960 from William H. Murphy, a former member of the Company's Board of
Directors. This loan was evidenced by a promissory note payable to Mr. Murphy.
The principal balance of this note was payable in full on June 30, 1997.
Interest accrued based on the prime rate, plus four percent (4%), and was
payable monthly until maturity. The Company paid this obligation in full on July
18, 1997.
BRIDGE FINANCING AND CONSULTING AGREEMENTS
On April 25, 1997, the Company borrowed an aggregate of $500,000 in
short-term financing, evidenced by 12% senior notes, from William R. Ziegler and
Steven A. Webster. Messrs. Ziegler and Webster were subsequently elected
directors of the Company on August 1, 1997 and re-elected as directors at the
1997 Annual Meeting of Stockholders held on November 20, 1997. On July 18, 1997,
the notes were exchanged for 458,333 shares of the Company's Common Stock,
15,625 shares of Series A Preferred Stock and 592,009 Shadow Warrants. As part
of this transaction, the Company entered into a consulting agreement with Mr.
Ziegler to provide certain strategic planning and other consulting services to
the Company and its subsidiaries. As of December 31, 1997, the Company owed Mr.
Ziegler $63,207 in consulting fees under the terms of the consulting agreement.
As additional consideration for the services to be rendered by Mr. Ziegler under
the consulting agreement, the Company granted Mr. Ziegler a non-qualified option
to purchase 50,000 shares of Common Stock of the Company at a price of $.75 per
share.
On March 24, 1998, the Company borrowed an aggregate of $1,500,000 on a
short-term basis from a group of lenders consisting of three present directors
of the Company and/or their affiliates and certain investor members of Blackhawk
Investors, L.L.C., a principal stockholder of the Company. These loans have a
term of 60-days, bear interest at an annual rate of prime plus 2% (which
interest rate increases to prime plus 4% if the
7
<PAGE>
loans are not repaid at maturity), have detachable warrants to acquire an
aggregate of 300,000 shares of Common Stock at an exercise price of $2.50 per
share (subject to adjustment), and accrue additional warrants to acquire an
aggregate of 75,000 shares of Common Stock for each 30-day period that the loans
remain unpaid beyond the 60-day term.
PRIVATE PLACEMENT OFFERINGS
On July 18, 1997, the Company entered into a Securities Purchase and
Exchange Agreement (the "Purchase Agreement") with Blackhawk Investors, L.L.C.
and Messrs. Webster and Ziegler Pursuant to the Purchase Agreement, the Company
received $5,500,000 in cash and the exchange of certain indebtedness in the
principal amount of $500,000 owed by the Company to Messrs. Webster and Ziegler
for the issuance of the following securities to (i) Blackhawk Investors, L.L.C.:
(A) 5,041,667 newly-issued shares of the Company's Common Stock, par value $.20
per share, (B) 171,875 newly-issued shares of the Company's Series A Preferred
Stock, which were converted into an aggregate of 2,291,667 shares of Common
Stock on November 20, 1997, and (C) Shadow Warrants to purchase up to an
additional 7,104,103 shares of Common Stock (subject to adjustment) at a price
of $0.20 per share; and (ii) Messrs. Webster and Ziegler: (A) an aggregate of
458,333 shares of Common Stock, (B) 15,625 shares of Series A Preferred Stock,
which were converted into an aggregate of 208,333 shares of Common Stock and (C)
592,009 Shadow Warrants to purchase up to an additional 592,009 shares of Common
Stock (subject to adjustment). As a result of the Purchase Agreement, Messrs.
Ziegler and Webster, the general partners of Blackhawk Capital Partners (the
managing member of Blackhawk Investors, L.L.C.), were subsequently elected
directors of the Company on August 1, 1997 and re-elected as directors at the
1997 Annual Meeting of Stockholders held on November 20, 1997. On July 24, 1997,
Blackhawk Investors, L.L.C. invested an additional $1,000,000 in cash in the
Company in exchange for (i) 100,000 shares of Series B Preferred Stock of the
Company, which were subsequently converted into an aggregate of 1,333,333 shares
of Common Stock, and (ii) another Shadow Warrant to purchase up to an additional
1,100,255 shares of Common Stock (subject to adjustment). Blackhawk Capital
Partners will oversee the investments of Blackhawk Investors, L.L.C. in the
Company pursuant to an Investment Monitoring Agreement with the Company. The
Company owed Blackhawk Capital Partners $12,500 as of December 31, 1997 under
the terms of such monitoring agreement.
SPECIAL COUNSEL TO THE COMPANY
From time to time, the Company has retained the law firm of Parson &
Brown LLP in New York, New York, as special counsel. William R. Ziegler, a
director of the Company, is a partner of the law firm of Parson & Brown LLP.
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(e) of the Securities and Exchange
Commission during the Company's fiscal year ended December 31, 1997, and Forms 5
and amendments thereto furnished to the Company with respect to the fiscal year
ended December 31, 1997, the Company believes that each of Blackhawk Investors,
L.L.C., Blackhawk Capital Partners and Messrs. Webster and Ziegler failed to
file on a timely basis a Form 4 to report the conversion of shares of Series A
Preferred Stock into shares of Common Stock in November, 1997. The Company is
not aware of any other 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 and reports required
by Section 16(a) of the Exchange Act, during the Company's most recent fiscal
year.
8
<PAGE>
MEETINGS; COMMITTEES
The Company's Board of Directors met twice during the fiscal year ended
December 31, 1997. The Company does not have separate audit, nominating or
compensation committees of the Board of Directors.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table reflects all forms of compensation for each of the
Company's last three completed fiscal years. No other director or executive
officer had salary and bonus which exceeded $100,000 during any of such periods.
<TABLE>
<CAPTION>
Annual compensation Long term compensation
Awards Payouts
Other Restricted Securities
Name and annual Stock underlying All other
principal position Year Salary Bonus compensation Awards options/SAR LTIP payouts compensation
($) ($) ($) ($) (#) ($) ($)
(a) (b) (c) (d) (e) (f) (g) (h) (i)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Jay D. Haber, 1997 $156,250 - - - 600,000(1) - -
President and
Chief Executive
Officer through
August 1, 1997;
Chairman and
Chief Executive
Officer since
August 1, 1997
- -----------------------------------------------------------------------------------------------------
Lynn A. Turner,
President and 1997 $58,125 $156,780(2) $1,200 - 500,000(3) - -
Chief Operating
Officer since
July 28, 1997
- -----------------------------------------------------------------------------------------------------
Michael A. Dunn, 1997 $56,250 $90,000 - 550,000(4) - -
Vice President
and Chief
Technology
Officer since
August 18, 1997
- -----------------------------------------------------------------------------------------------------
Michael Hale, 1997 $111,249 - - 300,000(5) - -
Vice President
and Secretary
- -----------------------------------------------------------------------------------------------------
Jay D. Haber, 1996 $140,000 - - 50,000(6) - -
President and
Chief Executive
Officer
- -----------------------------------------------------------------------------------------------------
Michael Hale, 1996 $98,000 - - 50,000(6) - -
Vice President
and Secretary
- -----------------------------------------------------------------------------------------------------
Jay D. Haber, 1995 $140,000(7) $31,994 - - 15,000(8) - -
President and
Chief Executive
Officer
- -----------------------------------------------------------------------------------------------------
Michael Hale, 1995 $98,000(7) $31,994 - - 15,000(8) - -
Vice President
and Secretary
- -----------------------------------------------------------------------------------------------------
</TABLE>
(1) Refers to incentive stock options to purchase 600,000 shares of Common
Stock granted to Mr. Haber under the Company's 1995 Stock Option Plan,
in accordance with the new employment agreement between Mr. Haber and
the Company (see AEmployment Agreements@ below).
(2) Includes a $156,780 bonus paid to Mr. Turner on February 13, 1998, in
accordance with the employment agreement between Mr. Turner and the
Company (see "Employment Agreements" below).
9
<PAGE>
(3) Refers to non-incentive stock options to purchase 500,000 shares of
Common Stock granted to Mr. Turner under the Company's 1995 Stock Option
Plan, in accordance with the employment agreement between Mr. Turner and
the Company (see AEmployment Agreements@ below).
(4) Refers to non-incentive stock options to purchase 550,000 shares of
Common Stock granted to Mr. Dunn under the Company's 1995 Stock Option
Plan, in accordance with the employment agreement between Mr. Dunn and
the Company (see "Employment Agreements" below).
(5) Refers to incentive stock options to purchase 300,000 shares of Common
Stock granted to Mr. Hale under the Company's 1995 Stock Option Plan, in
accordance with the new employment agreement between Mr. Hale and the
Company (see "Employment Agreements" below).
(6) Refer to non-incentive stock options to purchase 15,000 shares of Common
Stock granted to Mr. Haber and Mr. Hale under the 1995 Stock Option Plan
adopted by the Company's stockholders at the 1995 Annual Meeting of
Stockholders, in accordance with the terms of their respective
employment agreements with the Company dated August 1, 1994 (the
"Initial Employment Agreements"). In addition, Mr. Haber and Mr. Hale
were each awarded incentive stock options to purchase 35,000 shares of
Common Stock as compensation in connection with the successful funding
of a loan obtained by a subsidiary of the Company.
(7) Bonus reflects share of net proceeds from sales of oil and gas
prospects. Mr. Haber and Mr. Hale were entitled to these bonuses
pursuant to the terms of their respective Initial Employment Agreements.
(8) Refers to non-incentive stock options to purchase 15,000 shares of
Common Stock granted to Mr. Haber and Mr. Hale under the 1995 Stock
Option Plan, in accordance with the terms of their respective Initial
Employment Agreements.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table reflects all stock options granted to the indicated
individuals during the fiscal year ended December 31, 1997:
<TABLE>
<CAPTION>
Number of Percent of
securities total
underlying options/SARs
options/SARs granted to Exercise or
granted employees in base price Market Price Expiration
Name (#) fiscal year ($/Sh) at date of date
(a) (b) (c) (d) Grant (e)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Jay D. Haber 600,000(1) 22.3% $1.00 $0.75(2) July 15, 2004
- -----------------------------------------------------------------------------------------------------
Lynn A. Turner 500,000(3) 18.6% $0.75 $2.13 (4) July 15, 2004
- -----------------------------------------------------------------------------------------------------
Michael Hale 300,000(1) 11.2% $1.00 $0.75(2) August 1, 2002
- -----------------------------------------------------------------------------------------------------
Michael A. Dunn 550,000(3) 20.5% $0.75 $2.13(4) July 15, 2004
- -----------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
(1) Mr. Haber and Mr. Hale were each granted incentive stock options under
the 1995 Stock Option Plan pursuant to their respective employment
agreements with the Company (see "Employment Agreements" below).
(2) The exercise price of the incentive stock option was more than or equal
to 100% of the fair market value of the Common Stock on the date such
option was granted.
(3) Mr. Turner and Mr. Dunn were each granted non-incentive stock options
under the 1995 Stock Option Plan pursuant to their respective employment
agreements with the Company (see "Employment Agreements" below).
(4) The exercise price of the non-incentive stock option was less than the
fair market value of the Common Stock on the date such option was
granted.
The Company has not issued any stock appreciation rights ("SARs").
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/
SAR VALUES
During the fiscal year ended December 31, 1997, none of the Company's
executive officers exercised any options. The Company has not issued any SARs.
LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
During the fiscal year ended December 31, 1997, none of the Company's
executive officers were granted awards under any long-term incentive plan.
COMPENSATION OF DIRECTORS
Directors of the Company who are not employees receive $2,500 per year
for their services as directors. Directors also receive $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.
EMPLOYMENT AGREEMENTS
Under the terms of their Initial Employment Agreements, Mr. Haber and
Mr. Hale were 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.
Effective June 19, 1997, the Company entered into a new employment
agreement with Mr. Haber, pursuant to which Mr. Haber serves as the Chief
Executive Officer of the Company. The agreement requires Mr. Haber to devote
substantially all of his business time, attention, skill, and energy exclusively
to the business of the Company, and to use his best efforts to promote the
success of the Company's business. In exchange, Mr. Haber is entitled to (i)
receive an annual salary, commencing August 1, 1997, of $165,000 (subject to
annual review by the Board of Directors), (ii) earn an incentive bonus in
accordance with the Company's bonus plan to be established for its senior
executives, (iii) receive options to purchase an aggregate of 600,000 shares of
Common Stock at a price of $1.00 per share which vest over a five-year period,
and (iv) participate in the Company's other employee benefit plans. Mr. Haber's
employment agreement is terminable by the Company at any time for "cause," as
specified in the agreement, and in certain other events.
11
<PAGE>
Effective June 19, 1997, the Company entered into a new employment
agreement with Michael Hale, pursuant to which Mr. Hale serves as a Vice
President and the Secretary of the Company. The agreement requires Mr. Hale to
devote substantially all of his business time, attention, skill, and energy
exclusively to the business of the Company, and to use his best efforts to
promote the success of the Company's business. In exchange, Mr. Hale is entitled
to (i) receive an annual salary, commencing August 1, 1997, of $120,000, (ii)
earn an incentive bonus in accordance with the Company's bonus plan to be
established for its senior executives, (iii) receive options to purchase an
aggregate of 300,000 shares of Common Stock at a price of $1.00 per share which
vest over a three-year period, and (iv) participate in the Company's other
employee benefit plans. Mr. Hale's employment agreement is terminable by the
Company at any time for Acause@, as specified in the Agreement, and in certain
other events.
The Company is a party to an employment agreement with Lynn A. Turner,
dated July 15, 1997, pursuant to which Mr. Turner serves as the President and
Chief Operating Officer of the Company, with overall responsibility for
geophysical operations. The compensation payable to Mr. Turner under the
employment agreement consists of: (i) a "sign-on" bonus of $156,780 paid on
February 13, 1998, (ii) an annual base salary of $135,000 per year, (iii) an
annual incentive cash bonus equal to 100% of base salary if the Company's
geophysical operations meet certain goals set forth in a plan to be established
by the Board of Directors after consultation with Mr. Turner, plus an additional
bonus in excess of annual base salary if the financial results of the Company's
geophysical operations exceed such goals, and (iv) an option to acquire 500,000
shares of Common Stock, at an exercise price of $0.75 per share, which option
vests in equal one-fifth increments of 100,000 shares each on each of July 15,
1998, 1999, 2000, 2001 and 2002, provided that he continues to be employed by
the Company on such dates, and he exercises such option prior to or on July 15,
2004. Mr. Turner's employment agreement has a term of five 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 and in certain other events.
The Company is a party to an employment agreement with Michael A. Dunn,
dated July 15, 1997, pursuant to which Mr. Dunn serves as a Vice President and
the Chief Technical Officer of the Company. The compensation payable to Mr. Dunn
under the employment agreement consists of: (i) a "sign on" bonus of $90,000,
paid upon commencement of employment, (ii) an annual base salary of $150,000 per
year, (iii) an annual incentive cash bonus commensurate with his position at the
Company in accordance with a plan to be established by the Board of Directors
after consultation with Mr. Dunn, and (iv) stock options to acquire (A) 50,000
shares of Common Stock, at an exercise price of $0.75 per share, which option
became exercisable on August 18, 1997 and has an expiration date of July 15,
2002, and (B) an additional 500,000 shares of Common Stock, at an exercise price
of $0.75 per share, which option vests in equal one-fifth increments of 100,000
shares each on each of July 15, 1998, 1999, 2000, 2001 and 2002, provided that
he continues to be employed by the Company on such dates, and he exercises such
option prior to or on July 15, 2004. Mr. Dunn's employment agreement has a term
of five 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 and in
certain other events.
<PAGE>
The Company is a party to an employment agreement with Thomas J.
Concannon dated July 15, 1997, pursuant to which Mr. Concannon serves as a Vice
President and the Chief Financial Officer of the Company. The compensation
payable to Mr. Concannon under the employment agreement consists of: (i) an
annual base salary of $120,000 per year, (ii) participation in any and all
current and future employee/officer incentive plans, employee/officer stock
plans, employee/officer stock option plans and any and all other
employee/officer benefit/compensation plans of the Company, (iii) stock options
to acquire (A) an aggregate of 150,000 shares of Common Stock, at an exercise
price of $0.75 per share, which option became exercisable on July 15, 1997 and
has an expiration date of July 15, 2002, and (B) an additional 150,000 shares of
Common Stock, at an exercise price of $0.75 per share, which option vests in
equal one-third increments of 50,000 shares each on each of July 15, 1998, 1999,
and 2000, provided that he continues to be employed by the Company on such
dates, and he exercises such option prior to or on July 15, 2002. Mr.
Concannon's employment agreement has a term of three
12
<PAGE>
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 and in certain
other events.
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
vote FOR the nominees and it is intended that proxies not marked to the contrary
will be so voted.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
(PROPOSAL 2)
Subject to the approval of the stockholders, 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, 1998. Tsakopulos Brown Schott & Anchors
has audited the Company's financial statements for the fiscal years ended
December 31, 1996 and 1997. 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.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The audit reports of Tsakopulos Brown Schott & Anchors on the
consolidated financial statements of the Company during the fiscal years ended
December 31, 1996 and 1997 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
fiscal years ended December 31, 1996 and 1997, 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.
VOTES REQUIRED BOARD RECOMMENDATION
The Board recommends a vote FOR the ratification and appointment of
Tsakopulos Brown Schott & Anchors as the Company's independent public
accountants for the fiscal year ending December 31, 1998, and it is intended
that proxies not marked to the contrary will be so voted. The ratification and
appointment of Tsakopulos Brown Schott & 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 the election of directors and the ratification and
appointment of the Company's independent public accountants. If any other
13
<PAGE>
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 HALE
SECRETARY
Houston, Texas
April 30, 1998
<PAGE>
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 Hale as
proxies, each with full power of substitution, and authorizes them to vote as
designated below, all the shares of voting stock of Geokinetics Inc. held on
record by the undersigned on May 27, 1998, 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 May 27, 1998, or any
adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR ALL NOMINEES" IN ITEM 1 AND
"FOR" ITEM 2.
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 Steven A. Webster
Christopher M. Harte William R. Ziegler
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THE
NOMINEE'S NAME ON THE SPACE PROVIDED BELOW:
2. RATIFICATION OF THE APPOINTMENT OF TSAKOPULOS BROWN SCHOTT & ANCHORS as
independent public accountants of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. 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 and 2.
[NAME OF STOCKHOLDER]
DATED: ____________ ___, 1998
____________________________________
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. 9 Please
check this box if you plan on attending the Annual Meeting.
