SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
February 23, 2000
GEOKINETICS INC.
(Exact name of Registrant as specified in charter)
DELAWARE 0-9268 94-1690082
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(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) Identification No.)
8401 WESTHEIMER, SUITE 150, HOUSTON, TEXAS 77063
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (713) 850-7600
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ITEM 5. OTHER EVENTS
On February 23, 2000, the Registrant sold all of the outstanding
capital stock of its subsidiary, Reliable Exploration, Incorporated,
a Montana corporation ("Reliable"), to RNS, LLC, a Montana limited
liability company ("RNS"). RNS is wholly owned by Allen Rein, Kim
Nordberg and Scott Schmitt (the "Former Shareholders"), the persons
from whom Registrant had previously acquired such Reliable stock in
January 1998. The transaction (the "Reliable Sale") was completed
pursuant to the terms of a Stock Purchase Agreement (the "Stock
Purchase Agreement"), by and among the Registrant, RNS, and the
Former Shareholders.
The consideration received by Registrant in the Reliable Sale
consisted of (i) a $250,000 promissory note, payable in 36 monthly
installments and bearing interest at a fixed rate of 8% per annum,
and (ii) 375,000 shares of the Registrant's common stock, $.01 par
value per share. The consideration for the Reliable Sale was
determined as a result of arms-length negotiations among the parties
to the Stock Purchase Agreement. In addition, as a condition to the
closing of the Reliable Sale, Registrant obtained a release of its
guaranty of Reliable's indebtedness to a former shareholder of
Reliable.
The description contained herein of the Reliable Sale is qualified
in its entirety by reference to the Stock Purchase Agreement, a copy
of which is filed herewith as Exhibit 2.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
Not Applicable.
(b) PRO FORMA FINANCIAL INFORMATION.
Not Applicable.
(c) EXHIBITS.
(2) Stock Purchase Agreement, dated January 1, 2000, among
Geokinetics Inc., RNS, LLC, and Allen Rein, Kim Nordberg
and Scott Schmitt (Registrant hereby agrees to furnish
supplementally to the Securities and Exchange Commission
upon request a copy of any omitted Exhibit to the Stock
Purchase Agreement).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: March 8, 2000
GEOKINETICS INC.
By: /s/ THOMAS J. CONCANNON
Name: Thomas J. Concannon
Title: Vice President and Chief
Financial Officer
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STOCK PURCHASE AGREEMENT
AMONG
GEOKINETICS INC.,
AND
RNS, LLC,
ALLEN REIN,
KIM NORDBERG
AND
SCOTT SCHMITT
EFFECTIVE JANUARY 1, 2000
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "AGREEMENT") is made and entered into
as of January 1, 2000, by and among Geokinetics Inc., a Delaware corporation
(the "SELLER"), and the holder of all of the outstanding capital stock of
Reliable Exploration, Inc., a Montana corporation (the "Company"), RNS, LLC, a
Montana limited liability company ("BUYER"), and Allen Rein, Kim Nordberg and
Scott Schmitt (the "FORMER SHAREHOLDERS"). The Buyer, the Former Shareholders
and the Seller are sometimes referred to collectively herein as the "PARTIES."
The Company is engaged in the business of conducting 2-D and 3-D seismic
surveys of oil and gas prospects (the "BUSINESS").
The Seller owns 600 shares of the issued and outstanding common stock of
the Company, $.10 par value per share (the "COMMON STOCK"), representing all of
the issued and outstanding capital stock of the Company.
This Agreement contemplates a transaction in which the Buyer will purchase
from the Seller, and the Seller will sell to the Buyer all of the shares of the
Common Stock in return for a $250,000 promissory note (the "BUYER'S NOTE") and
375,000 shares of the Seller's common stock, $.01 par value per share ("SELLER
COMMON STOCK") to be transferred to the Seller by the Former Shareholders.
The Former Shareholders are the sole owners of the Buyer, and each of them
finds it advantageous and in their respective best interest to enter into this
Agreement and complete the transactions contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.
ARTICLE I.
GENERAL
1.1 DEFINITIONS. Unless otherwise stated in this Agreement, capitalized
terms shall have the following meanings:
"ACQUIRED SHARES" means 600 shares of Common Stock of the Company owned by
the Seller, representing one hundred percent (100%) of the total issued and
outstanding shares of the capital stock of the Company.
"ADVERSE CONSEQUENCES" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and attorneys' fees and expenses.
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"AFFILIATE" has the meaning set forth in Rule 12-2 of the regulations
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act.
"AGREEMENT" has the meaning set forth in the first paragraph above.
"BUYER" has the meaning set forth in the first paragraph above.
"CLOSING" has the meaning set forth in Section 1.5 below.
"CLOSING DATE" has the meaning set forth in Section 1.5 below.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMON STOCK" means the common stock, $.10 par value per share, of the
Company.
"COMPANY" has the meaning set forth in the first paragraph above.
"CONFIDENTIAL INFORMATION" has the meaning set forth in Section 3.6 below.
"DLJ GUARANTY" has the meaning set forth in Section 5.1(e) below.
"ESCROW AGREEMENT" has the meaning set forth in Section 1.6 below.
"FORMER SHAREHOLDERS" has the meaning set forth in the first paragraph
above.
"INDEMNIFIED PARTY" has the meaning set forth in Section 6.4 below.
"INDEMNIFYING PARTY" has the meaning set forth in Section 6.4 below.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"PARTY" has the meaning set forth in the first paragraph above.
"PERSON" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"PROCESS AGENT" has the meaning set forth in Section 7.17 below.
"PURCHASE PRICE" has the meaning set forth in Section 1.3 below.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
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"SECURITY INTEREST" means any mortgage, deed of trust, pledge, lien,
encumbrance, charge, or other security interest, other than (a) mechanic's,
materialmen's, and similar liens, (b) liens for Taxes not yet due and payable,
(c) purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"SELLER" has the meaning set forth in the first paragraph above.
"SELLER COMMON STOCK" has the meaning set forth in Section 1.4 below.
"SELLER GUARANTY" means the common stock $.001 par value per share, of the
Seller.
"TAX" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Sec. 59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"TAX RETURN" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"THIRD PARTY CLAIM" has the meaning set forth in Section 6.4(a) below.
1.2 AGREEMENT TO PURCHASE AND SELL ACQUIRED SHARES. On and subject to the
terms and conditions of this Agreement, the Buyer agrees to purchase from the
Seller, and the Seller agrees to sell to the Buyer, all of the Acquired Shares
for the consideration specified below in Section 1.3.
1.3 PURCHASE PRICE. In consideration for the delivery of the Acquired
Shares, Buyer and the Former Shareholders agree to pay and deliver to the Seller
at the Closing the aggregate consideration (the "PURCHASE PRICE") consisting of
(i) $250,000 payable to the Seller by delivery of a promissory note ("BUYER'S
NOTE") in the form attached as Exhibit 1.3 and (ii) 375,000 shares of validly
issued, fully paid and nonassessable shares of Seller Common Stock.
1.4 RELEASE OF GUARANTY. Concurrently with and as a condition to the
Closing, the Buyer and the Former Shareholders shall cause the Company to obtain
a release of the Seller's Guaranty Agreement dated January 26, 1998 (the
"SELLER'S GUARANTY") of the Company's debt obligations to Roland L. Burke on
terms and conditions satisfactory to the Seller.
1.5 THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "CLOSING") shall take place at the offices of the Company in
Billings, Montana, commencing at 9:00 a.m. local time on February 23, 2000, or
if later, the second business day following the satisfaction or waiver of all
conditions to the obligations of the Parties to consummate the
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transactions contemplated hereby (other than conditions with respect to actions
the respective Parties will take at the Closing itself) or such other date as
the Buyer and the Seller may mutually determine (the "CLOSING DATE"); provided,
however, that the Closing Date shall be no later than February 25, 2000. The
Closing shall be effective as of the commencement of business on January 1,
2000.
1.6 DELIVERIES AT THE CLOSING. At the Closing, (i) the Seller will deliver
to the Buyer the various certificates, instruments, and documents referred to in
Section 5.1 below, (ii) the Buyer and the Former Shareholders will deliver to
the Seller the various certificates, instruments, and documents referred to in
Section 5.2 below, (iii) the Seller will deliver to the Buyer stock certificates
representing all of the Acquired Shares, endorsed in blank or accompanied by
duly executed assignment documents, (iv) the Buyer and the Former Shareholders
will deliver to the Seller the Purchase Price as specified in Section 1.3 above,
and (v) the Parties will execute an instrument terminating the Escrow Agreement
dated January 26, 1998 among Seller, the Former Shareholders and William G.
Small, as Escrow Agent (the "ESCROW AGREEMENT"), and (v) the Parties will
execute a Mutual Release of Claims in the form attached as Exhibit 1.6 hereto.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller represents
and warrants to the Buyer, that the statements contained in this Section 2.1 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section 2.1
with respect to Seller).
(a) AUTHORIZATION OF TRANSACTION. The Seller has full power and
authority to execute and deliver this Agreement and to perform his
obligations hereunder. This Agreement constitutes the valid and legally
binding obligation of the Seller, enforceable in accordance with its terms
and conditions. The Seller need not give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any government
or governmental agency in order to consummate the transactions
contemplated by this Agreement.
(b) NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby,
will (A) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Seller is subject
or, or (B) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to
which the Seller is a party or by which it is bound or to which any of
Seller's assets is subject.
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(c) BROKERS' FEES. The Seller has no Liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement for which the Buyer could
become liable or obligated.
(d) ACQUIRED SHARES. The Seller holds of record and owns
beneficially the Acquired Shares, free and clear of any restrictions on
transfer (other than any restrictions under the Securities Act and state
securities laws), Taxes, Security Interests, options, warrants, purchase
rights, contracts, commitments, equities, claims, and demands. The Seller
is not a party to any option, warrant, purchase right, or other contract
or commitment that could require the Seller to sell, transfer, or
otherwise dispose of any capital stock of the Company (other than as
contemplated in this Agreement). The Seller is not a party to any voting
trust, proxy, or other agreement or understanding with respect to the
voting of any capital stock of the Company.
(e) TAXES. The Company has filed all Tax Returns that it was
required to file since January 26, 1998. All such Tax Returns were
materially correct and complete in all respects. All Taxes owed by the
Company (whether or not shown on any Tax Return) have been paid commencing
on January 26, 1998. The Company currently is not the beneficiary of any
extension of time in which to file any Tax Return. There are no Security
Interests on any of the assets of the Company that arose in connection
with any failure (or alleged failure) to pay any Tax. Since January 26,
1998, the Company has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other third
party. Neither the Seller nor any officer (or employee responsible for Tax
Matters) of the Seller expects any authority to assess any additional
Taxes against the Company for any period for which Tax Returns have been
filed. Except for (i) the matter described in the Escrow Agreement and
(ii) certain sales taxes related to operations of the Company conducted
prior to January 26, 1998, there is no dispute or claim concerning any Tax
Liability of the Company either (A) claimed or raised by any authority in
writing or (B) as to which any of the Seller or its officers (and
employees responsible for Tax Matters) has knowledge, based upon personal
contact with any agent of such authority. The Company has not waived any
statute of limitations in respect of Taxes or agreed to any extension of
time with respect to a Tax Assessment or deficiency.
2.2 REPRESENTATIONS AND WARRANTIES OF THE BUYER AND THE FORMER
SHAREHOLDERS. Each of the Former Shareholders and Buyer represents and warrants
to the Seller that the statements contained in this Section 2.2 are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 2.2).
(a) AUTHORIZATION OF TRANSACTION. The Buyer is a limited liability
company duly organized, validly existing and in good standing under the
laws of the State of Montana. The Buyer and each of the Former
Shareholders have full power and authority to execute and deliver this
Agreement and to perform their respective obligations hereunder. The
execution and delivery by the Buyer of this Agreement and the consummation
by the Buyer of the
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transactions contemplated hereby have been duly authorized by the
[MEMBERS] of the Buyer. No other corporate proceedings on the part of the
Buyer are necessary to authorize the execution and delivery of this
Agreement or the performance by the Buyer of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by the Buyer
and the Former Shareholders and constitutes the valid and legally binding
obligation of the Buyer and each of the Former Shareholders, enforceable
against each of them in accordance with its terms and conditions. Neither
the Buyer nor any of the Former Shareholders needs to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of
any government or governmental agency in order to consummate the
transactions contemplated by this Agreement.
(b) NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby,
will (A) violate any provision of the Buyer's charter or other
organizational documents, (B) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or
other restriction of any government, governmental agency, or court to
which the Buyer is subject or any provision of its charter or bylaws or
(C) conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to
which the Buyer or any of the Former Shareholders is a party or by which
any of their respective assets is subject.
(c) BROKERS' FEES. None of the Buyer nor any of the Former
Shareholders has any Liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Seller could
become liable or obligated.
(d) INVESTMENT. Buyer is purchasing the Acquired Shares for its own
account with the present intention of holding the Acquired Shares for
investment purposes and not with a view to or for sale in connection with
any distribution of the Acquired Shares in violation of any applicable
securities law. Buyer will refrain from transferring or otherwise
disposing of any of the Acquired Shares, or any interest therein, in such
manner as to cause Seller to be in violation of the registration
requirements of the Securities Act of 1933, as amended, or applicable
state securities or state blue sky law.
(e) RESTRICTED SECURITIES.
(i) The Buyer has the knowledge and experience in financial
and business matters to enable him to evaluate the merits and risks
of approving this Agreement and the transactions contemplated
herein.
(ii) The Buyer is able to bear the economic risks of his
investment in the Acquired Shares Buyer Common Stock.
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(iii) The Buyer has been represented by legal counsel in this
transaction and the Buyer and its advisors, including such counsel,
have been given the opportunity to ask questions of, and receive
answers from, the officers of the Seller concerning the terms of the
transactions contemplated by this Agreement and the affairs and the
business and financial condition of the Company, including the
matters described in Section 2.1(e) above..
(iv) The Buyer has made such inquiries by itself and through
his advisors in making a decision to approve this Agreement and the
transactions contemplated herein as the Buyer has deemed necessary
and advisable.
ARTICLE III.
CONDUCT AND TRANSACTIONS PRIOR TO CLOSING
3.1 GENERAL. The Parties agree that with respect to the period between the
execution of this Agreement and the Closing, each of the Parties will use his or
its best efforts to take all action and to do all things necessary, proper, or
advisable in order to consummate and make effective the transactions
contemplated by this Agreement (including satisfaction, but not waiver, of the
closing conditions set forth in Article V below).
3.2 OPERATION OF BUSINESS. The Seller covenants and agrees that, prior to
the Closing, unless Buyer and the Former Shareholders shall otherwise agree and
except as otherwise expressly contemplated or permitted by this Agreement, the
Seller will not cause or permit the Company to engage in any practice, take any
action, or enter into any transaction outside the Ordinary Course of Business.
Without limiting the generality of the foregoing, the Seller will not cause or
permit the Company to declare, set aside, or pay any dividend or make any
distribution with respect to its capital stock or redeem, purchase, or otherwise
acquire any of its capital stock.
3.3 PRESERVATION OF BUSINESS. The Seller will (i) cause the Company to
keep its Business and properties substantially intact, keep in full force and
effect all rights, licenses, permits and authorizations relating to its Business
or properties, keep available the services of its officers and employees as a
group and maintain satisfactory relationships with suppliers, distributors,
customers and others having business relationships with the Company; (ii) notify
Buyer and the Former Shareholders of any emergency or other change in the normal
course of its Business or in the operation of its properties and of any tax
audits, tax claims, governmental or third party complaints, investigation or
hearings (or communications indicating that the same may be contemplated) if
such emergency, change, audit, claim, complaint, investigation or hearing would
reasonably be material, individually or in the aggregate, to the financial
condition, results of operations or Business of the Company, or to the Buyer's
or the Former Shareholder's ability to consummate the transactions contemplated
by this Agreement.
3.4 FULL ACCESS. The Seller will permit, and the Seller will cause the
Company to permit, representatives of the Buyer and the Former Shareholders to
have full access, at all reasonable times,
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to all premises, properties, personnel, books, records (including Tax records),
contracts, and documents of or pertaining to the Company.
3.5 EXCLUSIVITY. The Seller will not (and the Seller will not cause or
permit the Company to) (i) solicit, initiate, or encourage the submission of any
proposal or offer from any Person relating to the acquisition of any capital
stock or other voting securities, or any substantial portion of the assets of,
the Company (including any acquisition structured as a merger, consolidation, or
share exchange) or (ii) participate in any discussions or negotiations
regarding, furnish any information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any Person to do or seek
any of the foregoing. The Seller will notify the Buyer and the Former
Shareholders immediately if any Person makes any proposal, offer, inquiry, or
contact with respect to any of the foregoing.
3.6 CONFIDENTIALITY.
(a) All Confidential Information (as hereafter defined), acquired by
any Party with respect to any other Party shall be (i) maintained in
strict confidence, (ii) used only for the purpose of and in connection
with evaluating the transactions contemplated by this Agreement, and (iii)
disclosed only to employees and duly authorized agents and representatives
of receiving Party who have been informed of the obligations of such
Party's under this Section 3.6. The Party will take all reasonable
measures to restrain its representatives and agents from prohibited or
unauthorized disclosure of Confidential Information. Notwithstanding any
of the foregoing, Seller may make filings and other public disclosures of
the transactions contemplated by this Agreement as Seller deems
appropriate pursuant to applicable securities laws. For purposes of this
Agreement, "CONFIDENTIAL INFORMATION" shall mean all information acquired
by a Party from another Party with respect to such Party, other than
information generally available to the public, other than as a result of
disclosure by the receiving Party in violation of this Section 3.6 and
information which is rightfully disclosed to receiving Party on a
nonconfidential basis from a source other than the other Party or its
representatives, provided such source is not known by the receiving Party
to be bound by a confidentiality agreement with, or other obligation of
secrecy to, another Party. If the transactions contemplated by this
Agreement are not consummated, all Confidential Information in written or
printed or other tangible form (either copies or originals) shall be
returned to disclosing Party.
(b) In the event that a receiving Party is requested or required (by
oral question or request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand, or
similar process) to disclose any Confidential Information, the receiving
Party will notify the Seller promptly of the request or requirement so
that the Seller may seek an appropriate protective order or waive
compliance with the provisions of this Section 3.8. If, in the absence of
a protective order or the receipt of a waiver hereunder, the receiving
Party is, on the advice of counsel, compelled to disclose any Confidential
Information to any tribunal or else stand liable for contempt, the
receiving Party may disclose the Confidential Information to the tribunal;
provided, however, that the disclosing Party shall use his or its
reasonable best efforts to obtain, at the request of the disclosing Party,
an
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order or other assurance that confidential treatment will be accorded to
such portion of the Confidential Information required to be disclosed as
the Sellers shall designate.
ARTICLE IV.
POST-CLOSING COVENANTS
4.1 GENERAL. If, at any time after the Closing, any further action is
necessary or desirable to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and delivery of
such further instruments and documents) as any other Party reasonably may
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under Article VI
below). The Seller acknowledges and agrees that from and after the Closing, the
Buyer will be entitled to possession of all documents, books, records (including
Tax records), agreements, and financial data of any sort relating to the Company
and the Seller shall have reasonable access to such documents, books, records
(including Tax records), agreements, and financial data of any sort relating to
the Company, during normal business hours. Notwithstanding the foregoing to the
contrary, the Parties agree that Seller shall cause the Company to file all
sales tax returns required for the period of the Company's operation through
December 31, 1999.
4.2 LITIGATION SUPPORT. In the event and for so long as any Party actively
is contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand in connection with (i) any
transaction contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction on or prior to the Closing Date
involving the Company, each of the other Parties will cooperate with him or it
and his or its counsel in the contest or defense, make available their
personnel, and provide such testimony and access to their books and records as
shall be necessary in connection with the contest or defense, all at the sole
cost and expense of the contesting or defending Party (unless the contesting or
defending Party is entitled to indemnification therefor under Article VI below).
4.3 TRANSITION. The Seller will not take any action that is designed or
intended to have the effect of discouraging any lessor, licensor, customer,
supplier, or other business associate of the Company from maintaining the same
business relationships with the Company and after the Closing as it maintained
with the Company prior to the Closing.
ARTICLE V.
CONDITIONS OF CLOSING
5.1 CONDITIONS OF OBLIGATIONS OF THE BUYER. The obligations of the Buyer
and the Former Shareholders to consummate the transactions to be performed by
each of them in connection with the Closing are subject to satisfaction of the
following conditions:
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(a) the representations and warranties set forth in Section 2.1
above shall be true and correct in all material respects at and as of the
Closing Date;
(b) the Seller shall have performed all obligations and agreements
and complied with all of their covenants in this Agreement in all material
respects at or before the Closing;
(c) no action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator
wherein an unfavorable injunction, judgment, order, decree, ruling, or
charge would (A) prevent consummation of any of the transactions
contemplated by this Agreement, (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation, (C)
affect adversely the right of the Buyer to own the Acquired Shares and to
control the Company, or (D) affect adversely the right of the Company to
own its assets and to operate the Business (and no such injunction,
judgment, order, decree, ruling, or charge shall be in effect);
(d) the Seller shall have delivered to the Buyer and the Former
Shareholders a certificate dated as of the Closing Date and executed by
the Seller to the effect that each of the conditions specified above in
Sections 5.1(a) to 5.1(c) is satisfied in all respects;
(e) the Seller shall have arranged for the Company's liability under
the terms of its guaranty (the "DLJ GUARANTY") of certain indebtedness of
the Seller to be released, and the Seller shall provide the Buyer with
such documents or information as the Buyer may reasonably request to
evidence the release of the DLJ Guaranty; and
(f) the Seller and the Former Shareholders shall have terminated the
Escrow Agreement and all funds in escrow shall have been distributed to
Former Shareholders, net of any escrow fees.
The Buyer and the Former Shareholders may waive any condition specified in this
Section 5.1 if they execute a writing so stating at or prior to the Closing.
5.2 CONDITIONS OF OBLIGATIONS OF THE SELLER. The obligation of the Seller
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(a) the representations and warranties set forth in Section 2.2
above shall be true and correct in all material respects at and as of the
Closing Date;
(b) the Buyer and the Former Shareholders shall have performed and
complied with all of their covenants hereunder in all material respects
through the Closing;
(c) no action, suit, or proceeding shall be pending before any court
or quasi-judicial or administrative agency of any federal, state, local,
or foreign jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge
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would (A) prevent consummation of any of the transactions contemplated by
this Agreement, (B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation (and no such injunction,
judgment, order, decree, ruling, or charge shall be in effect), or (C)
affect adversely the right of the Seller to own the Seller Common Stock;
and
(d) the Buyer and the Former Shareholders shall have delivered to
the Seller a certificate to the effect that each of the conditions
specified above in Sections 5.2(a) to 5.2(c) is satisfied in all respects;
The Seller may waive any condition specified in this Section 5.2 if it executes
a writing so stating at or prior to the Closing.
ARTICLE VI.
REMEDIES FOR BREACHES OF AGREEMENT
6.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the representations
and warranties of the Parties contained in this Agreement shall survive the
Closing hereunder (even if the damaged Party knew or had reason to know of any
misrepresentation or breach of warranty at the time of Closing) and continue in
full force and effect for a period of eighteen (18) months thereafter, except
for representations regarding the Company's Tax Liabilities, which
representations will expire and be terminated on the date of expiration of the
statute of limitations for collection of such Tax Liability in question.
6.2 INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE BUYER.
(a) In the event the Seller breaches (or in the event any third
party alleges facts that, if true, would mean the Seller has breached) any
of its representations, warranties, and covenants contained herein and,
provided that the Buyer makes a written claim for indemnification against
the Seller pursuant to Section 7.9 below within the survival period
specified in Section 6.1 hereof, then the Seller agrees to indemnify the
Buyer from and against the entirety of any Adverse Consequences the Buyer
may suffer through and after the date of the claim for indemnification
(including any Adverse Consequences the Buyer may suffer after the end of
the survival period) resulting from, arising out of, relating to, in the
nature of, or caused by the breach (or the alleged breach).
Notwithstanding the foregoing to the contrary, none of the Seller shall be
required to indemnify the Buyer from any Adverse Consequences pursuant to
this Section 6.2(a) until the Buyer has suffered Adverse Consequences in
excess of a $10,000 aggregate threshold (at which point the Seller will be
obligated to indemnify the Buyer from and against all such Adverse
Consequences in excess of such threshold).
(b) The Seller agrees to indemnify the Buyer from and against the
entirety of any Adverse Consequences the Buyer may suffer resulting from,
arising out of, relating to, in the nature of, or caused by any Liability
of the Company for the unpaid Taxes of any Person
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(other than the Company) under Treas. Reg. Section 1.1502-6 (or any
similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
6.3 INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE SELLER. In the event the
Buyer or any of the Former Shareholders breaches (or in the event any third
party alleges facts that, if true, would mean the Buyer or any of the Former
Shareholders has breached) any of its representations, warranties, and covenants
contained herein, provided that the Seller makes a written claim for
indemnification against the Buyer or any of the Former Shareholders pursuant to
Section 7.9 below within the survival period specified in Section 6.1 hereof,
then the Buyer and the Former Shareholders agree, jointly and severally, to
indemnify the Seller from and against the entirety of any Adverse Consequences
the Seller may suffer through and after the date of the claim for
indemnification (including any Adverse Consequences the Seller may suffer after
the end of the survival period) resulting from, arising out of, relating to, in
the nature of, or caused by the breach (or the alleged breach). In addition to
the other indemnification obligations of the Buyer contained in this Agreement,
the Former Shareholders, jointly and not severally, agree to indemnify the
Seller from and against a maximum of $225,000, in the aggregate, of Adverse
Consequences (including the Seller's attorneys' fees) which the Seller may
suffer resulting from, arising out of, relating to, in the nature of, or caused
by (x) a claim asserted by the Internal Revenue Service for certain taxes,
penalties and interest regarding the Company's alleged obligation to file Forms
1099 (and pay backup withholding taxes) in connection with the amounts that the
Company pays to landowners in order to conduct operations on their properties or
(y) the claim asserted by any state or local taxing authority for certain sales
taxes, penalties and interest regarding the operations that the Company
conducted prior to January 26, 1998.
6.4 MATTERS INVOLVING THIRD PARTIES.
(a) If any third party shall notify any Party (the "INDEMNIFIED
PARTY") with respect to any matter (a "THIRD PARTY CLAIM") which may give
rise to a claim for indemnification against any other Party (the
"INDEMNIFYING PARTY") under this Article VI, then the Indemnified Party
shall promptly notify each Indemnifying Party thereof in writing;
provided, however, that no delay on the part of the Indemnified Party in
notifying any Indemnifying Party shall relieve the Indemnifying Party from
any obligation hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is prejudiced.
(b) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (A) the
Indemnifying Party notifies the Indemnified Party in writing within
fifteen (15) days after the Indemnified Party has given notice of the
Third Party Claim that the Indemnifying Party will indemnify the
Indemnified Party from and against the entirety of any Adverse
Consequences the Indemnified Party may suffer resulting from, arising out
of, relating to, in the nature of, or caused by the Third Party Claim, (B)
the Indemnifying Party provides the Indemnified Party with evidence
reasonably acceptable to the Indemnified Party that the Indemnifying Party
will have the financial resources to defend against the Third Party Claim
and fulfill its indemnification obligations hereunder, (C) the Third Party
Claim involves only money damages and does not seek an injunction or other
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equitable relief, (D) settlement of, or an adverse judgment with respect
to, the Third Party Claim is not, in the good faith judgment of the
Indemnified Party, likely to establish a precedential custom or practice
materially adverse to the continuing business interests of the Indemnified
Party, and (E) the Indemnifying Party conducts the defense of the Third
Party Claim actively and diligently.
(c) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with Section 6.4(b) above, (A) the
Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim, (B) the
Indemnified Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnifying Party (not to be withheld
unreasonably), and (C) the Indemnifying Party will not consent to the
entry of any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the Indemnified
Party (not to be withheld unreasonably).
(d) In the event any of the conditions in Section 6.4(b) above is or
becomes unsatisfied, however, (A) the Indemnified Party may defend
against, and consent to the entry of any judgment or enter into any
settlement with respect to, the Third Party Claim in any manner it
reasonably may deem appropriate (and the Indemnified Party need not
consult with, or obtain any consent from, any Indemnifying Party in
connection therewith), (B) the Indemnifying Parties will reimburse the
Indemnified Party promptly and periodically for the costs of defending
against the Third Party Claim (including reasonable attorneys' fees and
expenses), and (C) the Indemnifying Parties will remain responsible for
any Adverse Consequences the Indemnified Party may suffer resulting from,
arising out of, relating to, in the nature of, or caused by the Third
Party Claim to the fullest extent provided in this Article VI.
6.5 OTHER INDEMNIFICATION PROVISIONS. The foregoing indemnification
provisions are in addition to, and not in derogation of, any statutory,
equitable, or common law remedy any Party may have for breach of representation,
warranty, or covenant.
ARTICLE VII.
MISCELLANEOUS
7.1 TERMINATION OF AGREEMENT. Certain of the Parties may terminate this
greement as provided below:
(a) the Buyer, the Former Shareholders and the Seller may terminate
this Agreement by mutual written consent at any time prior to the Closing;
(b) the Buyer and the Former Shareholders may terminate this
Agreement by giving written notice to the Seller at any time prior to the
Closing in the event the Seller has breached any material representation,
warranty, or covenant contained in this Agreement in
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any material respect, the Buyer have notified the Seller of the breach,
and the breach has continued without cure for a period of ten (10) days
after the notice of breach; and
(c) the Seller may terminate this Agreement by giving written notice
to the Buyer and the Former Shareholders at any time prior to the Closing
in the event the Buyer or the Former Shareholders has breached any
material representation, warranty, or covenant contained in this Agreement
in any material respect, the Seller has notified the Buyer and the Former
Shareholders of the breach, and the breach has continued without cure for
a period of ten (10) days after the notice of breach.
7.2 EFFECT OF TERMINATION. If any Party terminates this Agreement pursuant
to Section 7.1 above, all rights and obligations of the Parties hereunder shall
terminate without any Liability of any Party to any other Party (except for any
Liability of any Party then in breach).
7.3 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement prior to the Closing without the prior written approval of the
Buyer and the Seller; provided, however, that any Party may make any public
disclosure it believes in good faith is required by applicable law or any
listing or trading agreement concerning its publicly-traded securities (in which
case the disclosing Party will use its reasonable best efforts to advise the
other Parties prior to making the disclosure).
7.4 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
7.5 ENTIRE AGREEMENT. This Agreement (including the documents referred to
herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements, or representations by or among the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
7.6 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of his
or its rights, interests, or obligations hereunder without the prior written
approval of the other Parties.
7.7 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
7.8 HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
7.9 NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
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IF TO THE BUYER OR THE RELIABLE EXPLORATION, INC.
FORMER SHAREHOLDERS: 868 PARKWAY LANE
BILLINGS, MT 59101
ATTENTION: ALLEN REIN, KIM NORDBERG AND
SCOTT SCHMITT
COPY TO: THE PARKER LAW FIRM
401 NORTH 31ST STREET
BILLINGS, MONTANA 59103
ATTENTION: MR. MARK D. PARKER
IF TO SELLER: GEOKINETICS INC.
8401 WESTHEIMER, SUITE 150
HOUSTON, TEXAS 77063
ATTENTION: LYNN A. TURNER
COPY TO: CHAMBERLAIN, HRDLICKA, WHITE,
WILLIAMS & MARTIN
1200 SMITH STREET, SUITE 1400
HOUSTON, TEXAS 77002
ATTENTION: JAMES J. SPRING, III
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
7.10 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas without giving effect to any
choice or conflict of law provision or rule (whether of the State of Montana or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Texas.
7.11 AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Requisite Sellers. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
7.12 SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the
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remaining terms and provisions hereof or the validity or enforceability of the
offending term or provision in any other situation or in any other jurisdiction.
7.13 EXPENSES. Each of the Parties will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby. The Seller agrees that the Seller will
bear the Seller's costs and expenses (including Seller's legal fees and
expenses) in connection with this Agreement or any of the transactions
contemplated hereby.
7.14 CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
7.15 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
7.16 SPECIFIC PERFORMANCE. Each of the Parties acknowledges and agrees
that the other Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Parties shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter (subject to the provisions set forth in Section 7.17
below), in addition to any other remedy to which they may be entitled, at law or
in equity.
7.17 ATTORNEYS' FEES. In the event that the employment of counsel by any
party becomes necessary to enforce this Agreement, the non-prevailing party
agrees to pay the prevailing party's reasonable attorneys' fees, court costs,
and all other reasonable costs and expenses incurred by the prevailing party as
a result of enforcing its rights under this Agreement.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on as
of the date first above written.
SELLER:
GEOKINETICS INC.
/s/ THOMAS J. CONCANNON
Thomas J. Concannon, Vice President
BUYER:
RNS, LLC
BY: /s/ ALLEN REIN
NAME: Allen Rein
TITLE Member
FORMER SHAREHOLDERS:
/s/ ALLEN REIN
Allen Rein (Individually)
/s/ SCOTT SCHMITT
Scott Schmitt (Individually)
/s/ KIM NORDBERG
Kim Nordberg (Individually)
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