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UNITED
STATES
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SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
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SCHEDULE 14A
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Proxy
Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant
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Filed by a Party other than the
Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for
Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to
§240.14a-12
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GEOKINETICS
INC.
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(Name
of Registrant as Specified In Its Charter)
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(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check the
appropriate box):
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x
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No fee required.
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Fee computed on table below per
Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to
which transaction applies:
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(2)
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Aggregate number of securities to
which transaction applies:
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(3)
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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):
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(4)
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Proposed maximum aggregate value of
transaction:
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(5)
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Total fee paid:
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Fee paid previously with preliminary
materials.
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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.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration
Statement No.:
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(3)
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Filing Party:
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Date Filed:
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Table
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Dear Geokinetics
Stockholder:
We cordially invite you
to attend our 2010 Annual Meeting of Stockholders. The Annual Meeting will be
held on Tuesday, April 27, 2010, beginning at 4:00 p.m. (Central
Daylight Time) at the Hilton Westchase, 9999 Westheimer Road, Houston, Texas
77042.
At this years Annual
Meeting, you will be asked to vote on the election of directors, approval of
the adoption of the Geokinetics 2010 Stock Awards Plan, and the ratification
of the appointment of UHY LLP as Geokinetics independent registered public
accounting firm.
I urge you to vote for
your Boards recommendations. Your vote is important. I hope you will be able
to attend the meeting, but if you cannot, please vote your proxy as soon as
possible.
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Very
truly yours,
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/s/
RICHARD F. MILES
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Richard
F. Miles
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President
and Chief Executive Officer
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Houston,
Texas
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March 26,
2010
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Table of
Contents
GEOKINETICS INC.
NOTICE OF 2010 ANNUAL MEETING OF STOCKHOLDERS
April 27, 2010
Notice is hereby given
that the 2010 Annual Meeting of Stockholders (the
Annual
Meeting
) of Geokinetics Inc., a Delaware corporation (
Geokinetics
or
the Company
),
will be held at the Hilton Westchase, 9999 Westheimer Road, Houston, Texas
77042, at 4:00 p.m. (Central Daylight Time) on Tuesday, April 27,
2010.
Only Geokinetics
stockholders of record who owned shares of voting securities at the close of
business on Tuesday, March 2, 2010 (the
Record Date
),
are entitled to notice of and can vote at this Annual Meeting or any
adjournment or postponement that may take place. At the Annual Meeting, you
will be asked to take the following actions:
1.
Elect nine
directors to Geokinetics nine-member Board of Directors, each to hold office
for a term of one year;
2.
Vote on the
approval of the adoption of the Geokinetics 2010 Stock Awards Plan; and
3.
Vote on the
approval of the appointment of UHY LLP as Geokinetics independent public
accountants.
We will also transact
such other business as may properly come before the meeting or any adjournment
or postponement thereof. The Board of
Directors is not aware of any other matters to be presented at the Annual
Meeting.
All stockholders are
cordially invited to attend the meeting in person. However, to assure your
representation at the meeting, you are urged to complete, sign, date and return
the enclosed proxy card as promptly as possible in the envelope enclosed for
that purpose. Alternatively, you may submit your proxy by telephone or over the
internet. If you attend the meeting, you may withdraw your proxy and vote in
person by ballot.
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By
Order of the Board of Directors
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/s/
WILLIAM L. MOLL, JR.
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William
L. Moll, Jr.
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Corporate
Secretary
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Houston, Texas
March 26, 2010
IMPORTANT NOTICE
REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDERS MEETING TO
BE HELD ON APRIL 27, 2010.
The proxy statement and annual
report to security holders may be requested by calling 1-800-390-5530 or by
email at corporatesecretary@geokinetics.com. They are also available at
http://bnymellon.mobular.net/bnymellon/gok and the Companys website at
www.geokinetics.com
under Investor Relations. For
the Boards recommendations regarding the matters to be voted upon at the 2010
Annual Meeting, please refer to Proposal 1 Election of Directors, Proposal
2 Approval of Adoption of Geokinetics 2010 Stock Awards Plan and Proposal
3 Appointment of Independent Registered Public Accountants. For information on directions to attend the
meeting and vote in person, please visit the Companys website at
www.geokinetics.com
under Investor Relations and then under 2010 Annual Meeting of
Stockholders.
Table of Contents
GEOKINETICS INC.
1500
CityWest Blvd., Suite 800
Houston,
TX 77042
PROXY
STATEMENT
2010
Annual Meeting of Stockholders
April 27, 2010
This Proxy Statement and
the accompanying Notice of 2010 Annual Meeting of Stockholders (
Annual Meeting
) and proxy card are being furnished in
connection with the solicitation by the Board of Directors (the
Board
) of Geokinetics Inc. of
proxies to be voted at the 2010 Annual Meeting scheduled to be held at the
time, place and for the purposes set forth in the Notice. This Proxy Statement
and the enclosed proxy card are being mailed to stockholders beginning on or
about March 29, 2010. A copy of Geokinetics Annual Report on Form 10-K
for the fiscal year ended December 31, 2009, accompanies this Proxy
Statement.
GENERAL INFORMATION ABOUT THE ANNUAL MEETING AND
VOTING
1.
Who can vote?
Stockholders holding
shares of Geokinetics Common Stock, $0.01 par value (the
Common Stock
) and Series B Senior
Convertible Preferred Stock, $10.00 par value (the
Series B
Preferred Stock
) as of the close of business on March 2, 2010
(the
Record Date
), are entitled
to receive notice of and to vote at the Annual Meeting, or any adjournments or
postponements of the Annual Meeting. Stockholders have one vote for each share
of Common Stock and fourteen and one-third (14.34) votes for each share of Series B
Preferred Stock held as of the Record Date, which may be voted on each proposal
presented at the Annual Meeting.
2.
How many shares of Geokinetics voting securities were outstanding on
the Record Date?
The outstanding voting
securities of Geokinetics on the Record Date consisted of 17,657,655 shares of
Geokinetics Common Stock and 4,160,888 shares of Common Stock issuable upon
the conversion of 290,197 shares of the Series B Preferred Stock. The
holders of the Common Stock and the Series B Preferred Stock vote together
as a single class and not as separate classes. For information regarding holders
of more than 5% of the outstanding voting securities of Geokinetics, see Security
Ownership of Certain Beneficial Owners and Management on page 23.
3.
How do I vote?
Every stockholder of
record on the Record Date is entitled to one vote for each share of Common
Stock held in his or her name and fourteen and one-third (14.34) votes for each
share of Series B Preferred Stock on each proposal or item that comes
before the meeting. If you are a stockholder of record and you do not cast your
vote, no votes will be cast on your behalf on any of the items of business at
the Annual Meeting. A stockholder of
record can vote in person at the Annual Meeting or by proxy in one of the
following three ways:
1. Mail: to vote by mail, sign, date and
return your proxy card in the enclosed postage-paid envelope.
2. Telephone: to vote by telephone, call
1-866-540-5760. Use any touch tone telephone to vote your proxy. You will need
to provide the control number printed on your proxy card and follow the
instructions on your proxy card and the voice prompts.
3. Internet: to vote over the internet,
access the website
www.proxyvoting.com/gok
.
You will need to provide the control number printed on your proxy card and
follow the instructions on your proxy card and the website.
If
you vote by telephone or over the internet, do not return your proxy card.
If you change your mind on any
issue, you may revoke your proxy at any time before the close of voting at the
Annual Meeting. 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 Corporate Secretary of Geokinetics 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: Geokinetics Inc., 1500 CityWest Blvd., Suite 800, Houston,
Texas 77042; Attention: Corporate 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. If you properly sign
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and
return your proxy card, but do not specify your choices, your shares will be
voted by the proxy holders as specified by the Board.
4.
How do I vote if my shares are held in street name?
If
your shares of Common Stock are held in the name of your broker, a bank or
other nominee, only your broker, bank or other nominee may execute a proxy and
vote your shares. Please sign, date and promptly return the instruction card
you received from your broker, bank or other nominee, in accordance with the
instructions on the card. You may vote by the Internet or telephone if your
bank or broker makes those methods available, in which case you can follow the
instructions on the card. If you wish to vote your street name shares
directly, you will need to obtain a document known as a legal proxy from your
broker, bank or other nominee. Please contact your broker, bank or other
nominee if you wish to do so.
If
you hold your shares in street name, it is critical that you cast your vote if
you want it to count in the election of Directors (Proposal 1 of this Proxy
Statement). In the past, if you held your shares in street name and you did not
indicate how you wanted your shares voted in the election of Directors, your
bank or broker was allowed to vote those shares on your behalf in the election
of Directors as they felt appropriate.
Recent changes to the NYSE Amex and SEC regulations were made to
eliminate the ability of your bank or broker to vote your uninstructed shares
in the election of Directors on a discretionary basis. Thus, if you hold your
shares in street name and you do not instruct your bank or broker how to vote
in the election of Directors, no votes will be cast on your behalf. In
addition, your bank or broker may not vote your uninstructed shares for the adoption
of the Geokinetics 2010 Stock Awards Plan (Proposal 2 of this Proxy Statement).
Your bank or broker will, however, continue to have discretion to vote any
uninstructed shares on the ratification of the appointment of the Companys
independent registered public accounting firm (Proposal 3 of this Proxy
Statement).
If you are a stockholder
of record and you do not cast your vote, no votes will be cast on your behalf
on any of the items of business at the Annual Meeting.
5.
Do I have to vote?
No. However,
we strongly urge you to vote. You may vote FOR or AGAINST or ABSTAIN from
voting for all, some or none of Geokinetics director nominees, the approval of
the adoption of the Geokinetics 2010 Stock Awards Plan and appointment of the
independent registered accounting firm.
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 considered present at the Annual Meeting for a
proposal so a broker non-vote will have the practical effect of reducing the
number of affirmative votes required to achieve a majority vote by reducing the
total number of shares from which a majority is calculated. A broker non-vote occurs when a nominee
holding shares for a beneficial owner does not vote on one or more proposals
because the nominee does not have discretionary voting power and has not
received instructions from the beneficial owner.
6.
What is a quorum?
A quorum is a majority
of the aggregate voting power of the outstanding voting securities and its
presence is required to hold the Annual Meeting. A quorum is determined by
counting the votes represented by all outstanding voting securities present in
person at the Annual Meeting or represented by proxy. If you submit a properly
executed proxy, you will be considered part of the quorum even if you abstain
from voting. Stockholders representing more than a majority of the voting
securities entitled to vote on the Record Date must be present or represented
by proxy to constitute a quorum.
7.
How can I view the stockholder list?
A complete list of
stockholders entitled to vote at the Annual Meeting will be available to view
during the Annual Meeting. You may review this list at Geokinetics corporate
offices at 1500 CityWest Blvd., Suite 800, Houston, Texas 77042 during
ordinary business hours for a period of ten (10) calendar days before the
Annual Meeting.
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8.
How many votes must each proposal receive to be adopted?
Directors are elected by
a majority vote of the shares present in person or represented by proxy at the
Annual Meeting and entitled to vote. The
number of votes cast for a nominees election must exceed the number of votes
cast against and abstentions on such nominees election in order for the
nominee to be elected to the Board of Directors. The affirmative vote of the holders of a
majority of shares present in person or represented by proxy at the Annual
Meeting and entitled to vote is required to approve the adoption of the
Geokinetics 2010 Stock Awards Plan and the appointment of the independent
registered accounting firm.
9. What happens if a proposal is not approved
at the Annual Meeting?
If the votes for a
director nominee are less than the sum of the votes against the nominee and
abstentions, the director nominee will not be elected to the board of
directors. If the votes for the approval
of the adoption of the Geokinetics 2010 Stock Awards Plan are less than the
sum of the votes against such proposal and abstentions, the Plan will not be
approved. If the votes for the approval
of UHY as the Companys auditors are less than the sum of the votes against the
proposal and abstentions, the audit committee will re-consider its
selection. Even if the selection is
ratified, the audit committee in its discretion may direct the appointment of a
different independent auditing firm at any time during the year if the audit
committee believes that such a change would be in the best interest of the
Company and stockholders.
10.
How are votes counted?
Votes are counted in
accordance with Geokinetics Bylaws and Delaware law. If a stockholder returns
an executed proxy card but does not indicate how his or her shares are to be
voted, the shares covered by such proxy card will be included in determining if
there is a quorum and will also be counted as votes FOR the election of
Geokinetics board nominees, the approval of the adoption of the Geokinetics
2010 Stock Awards Plan and the appointment of the independent registered
accounting firm. Shares will not be voted at the Annual Meeting if no properly
executed proxy card covering those shares has been returned and the holder does
not cast votes with respect to those shares in person at the Annual Meeting. A
broker non-vote will not be counted in determining the election of directors,
the approval of the adoption of the Geokinetics 2010 Stock Awards Plan or
appointment of the independent registered accounting firm.
11.
Who will count the votes?
A representative of
Geokinetics Office of the Corporate Secretary will count the votes and serve
as the Inspector of Election. The Inspector of Election shall have the
authority to receive, inspect, electronically tally and determine the validity
of the proxies received.
12.
What happens if I do not specify a choice for a proposal when returning
a proxy?
You should specify your
choice for each proposal on the proxy card. If no instructions are given, proxy
cards that are signed and returned will be voted FOR the election of all
director nominees, the approval of the adoption of the Geokinetics 2010 Stock
Awards Plan and the appointment of the independent registered accounting firm.
13.
What happens if other matters come up at the Annual Meeting?
The
matters described in the notice of Annual Meeting are the only matters the
Company is aware of that will be voted on at the Annual Meeting. If any other matters are submitted at the
meeting, the persons appointed as proxies will have the authority to vote your
shares for or against such proposal in their discretion.
14.
Who pays for the proxy solicitation related to the Annual Meeting?
The
cost of soliciting proxies will be borne by Geokinetics. In addition to the
solicitation by mail, the directors and certain regular employees of
Geokinetics may solicit proxies by telephone, telecopy or in person. Such
persons will not receive any fees or other compensation for such solicitation.
No specially engaged employees or solicitors will be retained by Geokinetics
for proxy solicitation purposes. Geokinetics 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.
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15.
How can I obtain a copy of the Annual Report on Form 10-K?
Pursuant
to rules promulgated by the Securities and Exchange Commission (SEC), the
Company has elected to provide access to the Companys proxy materials
(including a copy of the Companys 2009 Annual Report on Form 10-K) both
by sending stockholders the full set of proxy materials, including a proxy
card, and by notifying stockholders of the availability of the proxy material
on the Internet.
If you did not receive a
copy of the proxy materials, you may obtain one free of charge by writing or
calling Corporate Secretary, at Geokinetics Inc., 1500 CityWest Blvd., Suite 800,
Houston, Texas 77042, telephone (713) 850-7600 or (800) 390-5530, facsimile
(713) 850-7330, or by email at corporatesecretary@geokinetics.com. Additionally, the Annual Report on Form 10-K
is available on the internet at http://bnymellon.mobular.net/bnymellon/gok and
on the Companys website at www.geokinetics.com under Investor Relations and
then under 2010 Annual Meeting of Stockholders.
16.
If I want to submit a stockholder proposal for the 2011 Annual Meeting,
when is it due?
Any proposal or
proposals by a stockholder intended to be included in the proxy statement and
form of proxy relating to the 2011 Annual Meeting of Stockholders must be
received by Geokinetics no later than 120 days before the anniversary of
mailing date, for the meeting scheduled to be held in April 2011, pursuant
to the proxy solicitation rules of the Securities and Exchange
Commission. However, if the date of the
2011 Annual Meeting is changed by more than 30 days from the scheduled
date, then the deadline will be a reasonable time before Geokinetics begins to
print and mail the 2011 proxy materials. Your proposals should be sent by
certified mail, return receipt requested, to Corporate Secretary,
Geokinetics Inc., 1500 CityWest Blvd., Suite 800, Houston, Texas
77042. Geokinetics is not required to include in its proxy statement and proxy
card relating to the 2011 Annual Meeting of Stockholders any stockholder
proposal which may be omitted from the proxy materials pursuant to applicable
regulations of the Securities and Exchange Commission in effect at the time
such proposal is received.
The
persons named in our form of proxy for the 2011 Annual Meeting will have
discretionary authority to vote any proxies they hold at such meeting on any
matter for which we do not receive notice by 45 days before the anniversary of
mailing date, unless we change the date of the 2011 Annual Meeting of
Stockholders by more than 30 days from the date of the 2010 Annual Meeting of
Stockholders, in which case such persons will be able to exercise discretionary
authority if notice of the matter has not been received in a reasonable time
before we mail our proxy materials for the 2011 Annual Meeting of Stockholders.
If
the date of the 2011 Annual Meeting of Stockholders is advanced or delayed by
more than 30 calendar days from the date of the 2010 Annual Meeting, we shall,
in a timely manner, inform stockholders of such change, by including a notice
under Item 5 in our earliest possible quarterly report on Form 10-Q. The
notice will include the new deadline for submitting proposals to be included in
our proxy statement and the new date for determining whether we may exercise
discretionary voting authority because it has not received timely notice of a
matter.
In order to avoid
controversy as to the date on which we receive any such proposal, it is
suggested that stockholders submit their proposals by certified mail, return
receipt requested, or other means that permit them to prove the date of
delivery. Notices of intention to
present proposals at the 2011Annual Meeting should be addressed to Corporate
Secretary, Geokinetics Inc., 1500 CityWest Blvd., Suite 800, Houston,
Texas 77042.
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PROPOSAL 1ELECTION OF DIRECTORS
Information about the
Board of Directors and Committees
You
will have the opportunity to elect Geokinetics entire Board of Directors at
the Annual Meeting. All of the incumbent directors are standing for
re-election. Pursuant to Geokinetics Bylaws, the Board has determined that the
Board will consist of nine directors and has nominated the nine persons named
below for election as directors at the Annual Meeting. Each nominee has
consented to being named as a nominee for election as a director and has agreed
to serve as a director if elected. All directors are elected annually and serve
one-year terms or until a successor has been duly elected and shall qualify.
The
Board of Directors recommends that you vote FOR the election of each of the
nominees named below.
Director Nominees
Set forth below are the
names, ages and positions of the nominees for directors. Seven of the Companys directors named below were
elected at the 2009 Annual Meeting of Stockholders for a term of one year or
until his successor was elected. Two of the Companys directors named below, Mr. Gottfred
Langseth and Mr. Anthony Tripodo, were appointed by the Board of Directors
on March 22, 2010 for a term ending at the Annual Meeting of
Stockholders. Each of the Companys
incumbent directors named is being nominated at the Annual Meeting of
Stockholders to serve on Geokinetics Board of Directors for additional one
year terms or until his successor is elected.
On December 3,
2009, Geokinetics entered into a definitive purchase agreement with Petroleum
Geo-Services ASA (PGS) under which Geokinetics acquired the onshore seismic
data acquisition and multi-client data library business of PGS. The transaction closed on February 12,
2010. Pursuant to the terms of the
purchase agreement, Geokinetics was obligated to cause two individuals
designated by PGS to be appointed as members of Geokinetics Board of Directors
(the PGS nominees). Mr. Langseth
and Mr. Tripodo are the PGS nominees.
Name
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Age
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Position with Geokinetics
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Director
Since
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William R. Ziegler
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67
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Chairman
(non-executive) and Director
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1997
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Richard F. Miles
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61
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President,
Chief Executive Officer and Director
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2007
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Christopher M. Harte
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62
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Director
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1997
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Steven A. Webster
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58
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Director
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1997
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Gary M. Pittman
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46
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Director
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2006
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Robert L. Cabes, Jr.
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40
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Director
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2006
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Christopher D. Strong
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51
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Director
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2007
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Gottfred Langseth
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43
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Director
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2010
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Anthony Tripodo
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57
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Director
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2010
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There are no family
relationships among any of the director nominees or between such nominees and
any executive officers of Geokinetics.
William R. Ziegler,
age 67, has served as a member of the Board of Directors since August 1,
1997 and has served as the Chairman (non-executive) since February 2,
1999. Since January 2001, Mr. Ziegler has been of counsel at the law
firm of Satterlee Stephens Burke & Burke, LLP, located in New York,
NY. Mr. Ziegler is currently a
private investor, a General Partner of Somerset Capital Partners and a director
of several corporations. Mr. Zieglers
legal background, board and corporate governance experience, and familiarity
with the seismic industry are beneficial to the Board and his duties as
Chairman.
Richard F. Miles
, age 61,
has served as the President and Chief Executive Officer since August 15,
2007. Prior to that, Mr. Miles was
Chief Operating Officer since March 5, 2007. Prior to joining the Company in September 2006
as President International Operations, Mr. Miles served as President and
Chief Executive Officer of Grant Geophysical, Inc. since January 2001.
During the period 1990 to 2000, he was employed by Tech-Sym Corporation
primarily as President and Chief Executive Officer of its subsidiary
Syntron Inc. but also within that same period, he was Chief Executive
Officer and Director of GeoScience Corporation, Chairman of CogniSeis, Syntron
and Symtronix, all subsidiaries of Tech-Sym Corporation. Prior to that, he was
Manager of North and South America
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Marine and Worldwide
Marine Support for Halliburton Geophysical Services. From 1984 to 1988, he was
General Manager at Geosource Marine, Inc. and from 1966 to 1984, he held a
variety of positions with Geophysical Service, Inc. with increasing
responsibilities. Mr. Miles has over 40 years of experience in the
seismic services industry and, as President and CEO of the Company, Mr. Miles
brings important knowledge of the Companys operations to Board discussions.
Christopher M. Harte,
age 62, has served as a member of the Board of Directors since August 1,
1997. He was publisher of the
Minneapolis
Star Tribune
from 2007 to 2009 and has
been a private investor for more than the past five years. He is a director of Harte Hanks, Inc. (a
direct marketing and shopper publishing company). Mr. Hartes experience as a chief
executive officer, his experience in marketing and public policy, and his
public company director experience are beneficial to the Board.
Steven A. Webster,
age 58, has served as a member of the Board of Directors since August 1,
1997. Since co-founding the firm in July 2005, Mr. Webster has served
as Co-Managing Partner of Avista Capital Partners, Inc., which makes
private equity investments in energy, healthcare and media. Mr. Webster
serves as Chairman of Carrizo Oil & Gas, Inc. and Basic Energy
Services, Inc. He also serves on the boards of Seacor Holdings and
Hercules Offshore, Inc. Mr. Webster
serves as Trust Manager of Camden Property Trust. He is also a General Partner
of Somerset Capital Partners. From 2000 to 2005, Mr. Webster served as
Chairman of Global Energy Partners, an affiliate of Credit Suisse. He was a
founder and served as Chief Executive Officer of Falcon Drilling Company, Inc.
and its successor, R&B Falcon Corporation from January 1988 to June 1999.
Mr. Websters extensive financial, analytical and investment banking
experiences are useful to the Board, as is his experience as a Board chairman,
director and senior executive of multiple publicly traded oilfield service
companies and oil and gas exploration companies, our customers.
Gary M. Pittman
, age 46, has been a private investor for more than the past five years and
has served as a member of the Board of Directors since March 8, 2006. From
1987 to 1995, Mr. Pittman was Vice President of the Energy Recovery Fund,
a $180 million private equity fund focused on the energy industry. Mr. Pittman
is a director and Chairman of PostRock Energy, a natural gas exploration and
production and interstate pipeline company.
Mr. Pittman has served as a Director of Quest Energy, an E&P
MLP; Director and Compensation Committee Chair of Flotek Industries, an
oilfield service company; Director and Audit Committee member of Czar
Resources, Ltd., a public Canadian exploration and production company; Secretary,
Vice President and Director of Sub Sea International, an offshore robotics and
diving company; and owned and operated an oil and gas production and gas
gathering company in Montana. Mr. Pittmans energy industry and
public company governance experience are beneficial to the Board as Geokinetics
continues to grow and manage its business as a public company.
Robert L. Cabes, Jr.,
age 40, has served as a member of the
Board of Directors since November 2, 2006. Mr. Cabes has been a
Partner of Avista Capital Holdings, L.P., a private equity firm focused on
investments in the energy, healthcare and media sectors, since June 2005.
From April 2001 to June 2005, Mr. Cabes served as Principal of
Global Energy Partners, or GEP, a specialty group within Credit Suisses asset
management business that made investments in energy companies. Mr. Cabes
currently serves as a Director of Spartan Offshore Drilling; ACP II Marcellus;
Celtique Energie, Limited; Hansa Hydrocarbons; Laramie Energy; Laredo Energy;
Manti Exploration; Pinnacle Gas Resources, Inc. and Royal Offshore. Prior to joining GEP, Mr. Cabes was with
Credit Suisses and Donaldson, Lufkin and Jenrettes Investment Banking
Division (prior to its acquisition by Credit Suisse in 2000) where he worked on
debt and equity securities underwriting and mergers and acquisitions for energy
companies. Before joining Donaldson, Lufkin and Jenrette, Mr. Cabes spent
six years with Prudential Securities in its energy corporate finance group in
Houston and New York. Mr. Cabes holds a B.B.A. from Southern Methodist
University and is a CFA charterholder. Mr. Cabes brings to the Board
financial and analytical expertise in the energy sector, including experience
as a director of numerous oilfield services companies.
Christopher
D. Strong
, age 51, has served as a member of the Board of
Directors since May 15, 2007. Mr. Strong is the President and Chief
Executive Officer of Union Drilling, Inc., an operator of land-based
drilling rigs based in Fort Worth, TX, and has served in that capacity since April 2004.
From June 1, 2003 to April 1, 2004, Mr. Strong served as Union
Drillings President and Treasurer. From May 1999 to June 1,
2003, he served as Union Drillings Vice President and Chief Financial Officer.
Mr. Strong has over 15 years experience in the oil and natural
gas industry. From 1994 until he joined Union, he served in various capacities
at Hvide Marine, a marine oilfield service company, most recently as Vice
President-Finance and Treasurer. From 1990 through 1994, Mr. Strong was
Treasurer of Port Everglades, a seaport with one of the largest non-refinery
petroleum tank farms in the country. Mr. Strong also served as an officer
in the U.S. Navy.
Mr. Strongs oil
and gas industry experience and position as
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President
and Chief Executive Officer of Union Drilling provide him with insight into the
domestic E&P industry, which is beneficial to the Board. Additionally, Mr. Strong brings
financial and accounting expertise to the Board, having previously served in
various finance and treasury positions including as a chief financial officer.
Gottfred
Langseth
, age 43, has served as a member of the Board of
Directors since March 22, 2010. Mr. Langseth
is the Executive Vice President and Chief Financial Officer of Petroleum
Geo-Services ASA since as of January 1, 2004. Before joining PGS, he was
Chief Financial Officer at the information technology company Ementor ASA from
2000 to 2003 and was Senior Vice President of Finance and Control at the
offshore construction company Aker Maritime ASA from 1997 to 2000. He served
with Arthur Andersen Norway from 1991 to 1997, qualifying as a Norwegian state authorized
Public Accountant in 1993.
Mr. Langseth brings to the Board experience in the seismic industry,
as well as financial and international experience in his role as Chief
Financial Officer of PGS.
Anthony
Tripodo
, age 57, has served as a member of the Board of
Directors since March 22, 2010. Mr. Tripodo
joined Helix Energy Solutions Group as Executive Vice President and Chief
Financial Officer in June 2008, having served on its Board of Directors
since February 2003. From 2007 to 2008, he served as Executive Vice
President & Chief Financial Officer of Tesco Corporation, a technology
based oilfield services company. From
2003 to 2007, he served as Managing Director of Arch Creek Advisors LLC, a
Houston based investment banking firm. From 1997 to 2003, Mr. Tripodo was
Executive Vice President of Veritas DGC, Inc., an international oilfield
service company specializing in geophysical services. Previously, Mr. Tripodo
served 16 years in various executive capacities with Baker Hughes, including
serving as Chief Financial Officer of both the Baker Performance Chemicals and
the Baker Oil Tools divisions. Mr. Tripodo also served as a director of
Petroleum Geo-Services, a Norwegian based oilfield services company
specializing in geophysical services, Vetco International Ltd., a London based
oilfield services company and TXCO Resources, an independent oil and gas
exploration company.
Mr. Tripodo brings to the Board many years of experience both as an
officer of publicly traded companies and a member of audit committees of
various publicly traded companies overseeing finance and accounting functions.
Votes Required; Board
Recommendation
Geokinetics
Bylaws provide for the election of directors by the majority vote of the shares
present in person or represented by proxy at the Annual Meeting and entitled to
vote. The number of votes cast for a
nominees election must exceed the number of votes cast against or abstentions
on such nominees election in order for him to be elected to the Board of
Directors. If the votes for a director
are less than the votes against the director and abstentions, the director will
not be elected to the board of directors.
The Board believes that the election of the nominees listed above as directors
of Geokinetics is in the best interest of Geokinetics and its stockholders. The
Board recommends a vote FOR the nominees and proxies not marked to the contrary
will be so voted. Should any of the nominees become unable to serve, the
persons acting under the proxy will vote for the election, in the nominees
stead, of such other person as the Board of Geokinetics may recommend.
Director
Independence
As of
the date of this proxy statement, Geokinetics Board of Directors consists of Messrs. Ziegler,
Miles, Pittman, Harte, Webster, Cabes, Strong, Langseth and Tripodo. The Board
has determined that Messrs. Pittman, Harte, Cabes, Strong and Tripodo are
independent as defined under the NYSE Amex (formerly American Stock Exchange)
rules. Messrs. Ziegler, Webster, Miles and Langseth are not independent.
Code of Ethics
On December 28,
2006, our Board adopted a Code of Business Conduct and Ethics which applies to
all of our directors, officers and employees. The Board has not granted any
waivers to the Code of Business Conduct and Ethics. The Geokinetics Code of
Business Conduct and Ethics is available on the Geokinetics website at
www.geokinetics.com. You may also request a copy of the Code of Business
Conduct and Ethics at no cost by making a written or telephone request for
copies to Geokinetics Inc., 1500 CityWest Blvd., Suite 800, Houston, Texas
77042; Attention: Corporate Secretary. Any amendments to or waivers of the Code
of Conduct and Business Ethics will also be posted on our website.
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Meetings
and Committees of the Board
Geokinetics
Board of Directors met formally four (4) times during the fiscal year
ended December 31, 2009. The Board
of Directors also conducted six (6) special meetings by telephone to
discuss various financing alternatives throughout the year. Each director of the Company attended at
least 75% of such Board of Directors meetings.
The
members of the three standing committeesthe Audit Committee, the Compensation
Committee and the Corporate Governance and Nominating Committee as of the
date of this proxy statement are as follows:
Audit Committee
|
|
Compensation Committee
|
|
Corporate Governance and
Nominating Committee
|
|
|
|
|
|
Christopher D. Strong
(Chairman)
|
|
Gary M. Pittman
(Chairman)
|
|
Christopher M. Harte
(Chairman)
|
Christopher M. Harte
|
|
Christopher M. Harte
|
|
Gary M. Pittman
|
Gary M. Pittman
|
|
Robert L. Cabes, Jr.
|
|
Robert L. Cabes, Jr.
|
Attendance
at Annual Stockholders Meetings
Although
the Company does not have a formal policy regarding attendance by members of
the Board at its annual meeting of stockholders, directors are invited to
attend annual meetings of Geokinetics stockholders. Five directors attended the 2009 annual
meeting of stockholders.
Stockholder Communications with the Board of
Directors
In order to provide the
Companys stockholders and other interested parties with a direct and open line
of communication to the Board of Directors, the Board of Directors has adopted
procedures for communications to directors.
Geokinetics stockholders and other interested persons may communicate
with the Chairman of the Companys Audit Committee, or with the non-management
directors of the Company as a group, by written communications addressed to
Geokinetics Inc., 1500 CityWest Blvd., Suite 800, Houston, Texas 77042;
Attention: Corporate Secretary.
All communications
received in accordance with these procedures will be reviewed initially by
senior management of the Company. Senior management will relay all such
communications to the appropriate director or directors unless it is determined
that the communication:
·
does not
relate to the business or affairs of the Company or the functioning or
constitution of the Board of Directors or any of its committees;
·
relates to
routine or insignificant matters that do not warrant the attention of the Board
of Directors;
·
is an
advertisement or other commercial solicitation or communication;
·
is frivolous
or offensive; or
·
is otherwise
not appropriate for delivery to directors.
The director or
directors who receive any such communication will have discretion to determine
whether the subject matter of the communication should be brought to the
attention of the full Board of Directors or one or more of its committees and
whether any response to the person sending the communication is
appropriate. Any such response will be
made only in accordance with applicable law and regulations relating to the
disclosure of information.
The
Corporate Secretary will retain copies of all communications received pursuant
to these procedures for a period of at least one year. The Board of Directors will review the
effectiveness of these procedures from time to time and, if appropriate, recommend
changes. As of the record date, no such
communications have been received.
Board Leadership Structure and Role in Risk Oversight
The Board does not have
a formal policy as to whether the role of the Chairman and the Chief Executive
Officer (CEO) should be separate; rather the Board evaluates its leadership
structure on an ongoing basis. The decision on whether to combine or
separate the Chairman and CEO role is determined on the basis of what the
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Board considers to be
best for the Company at any given point in time. Geokinetics current
Board leadership structure separates the role of Chairman and CEO. Presently, the Board believes that the
separation of the two roles is appropriate because it, among other things,
provides an important balance of responsibilities with the Chairman directing
Board operations and leading the Board in its oversight of management, and the
CEO focusing on developing and implementing the Companys board-approved
strategies and managing its day-to-day business. Further, the Board believes this structure
provides for increased independence between the Board and management.
The
Board has an active role in overseeing the Companys risk management. The
Board regularly reviews information presented by management regarding the
Companys business and operations risks, including those relating to financial,
safety, compliance and security risks, and monitors risk areas through Board
reports and discussions regarding risk areas at Board meetings. The Board
also reviews and approves corporate goals and capital budgets on an annual
basis. Further, pursuant to its charter, the Audit Committee reviews with
the Board any issues that may arise in the performance of its duties, including
those relating to the quality or integrity of the Companys financial
statements, the Companys compliance with legal or regulatory requirements and
its Code of Ethics and Business Conduct, the Companys compliance with its risk
management policies and procedures, and the performance of the internal audit,
ethics and compliance functions.
Corporate
Governance and Nominating Committee
The
Corporate Governance and Nominating Committee held one meeting during the
fiscal year ended December 31, 2009 and all of the members were in
attendance. The Board has determined
that Messrs. Harte, Pittman and Cabes are independent under the NYSE Amex
rules.
Geokinetics
has adopted a Corporate Governance and Nominating Committee charter which
outlines the Corporate Governance and Nominating Committees primary duties to
include, among other things:
·
establishing standards
for service on the Board and nominating guidelines and principles;
·
identifying individuals
qualified to become members of the Board and recommending director candidates
for election to the Board;
·
considering and making
recommendations to the Board regarding its size and composition, committee composition
and structure and procedures affecting directors;
·
establishing policies
regarding the consideration of any director candidates recommended by
Geokinetics stockholders, and the procedures to be followed by stockholders in
submitting such recommendations;
·
evaluating and
reviewing the performance of existing directors; and
·
monitoring Geokinetics
corporate governance principles and practices and making recommendations to the
Board regarding governance matters, including Geokinetics certificate of
incorporation, bylaws and charters of the Board committees.
The
Corporate Governance and Nominating Committee considers factors such as
independence, diversity, Board and governance experience, age, integrity,
skill, expertise and industry knowledge when considering director
candidates. Although the Corporate
Governance and Nominating Committee does not have a stand-alone policy with
regard to consideration of diversity in identifying director nominees, it considers
diversity in professional background, experience, expertise (including as to
financial matters) and perspective (including as to age, gender and ethnicity)
with respect to the Board composition as a whole when evaluating a director
nominee.
The
Corporate Governance and Nominating Committee permits stockholders to submit
director candidates for the committees consideration. Each year the proxy
statement released to stockholders in connection with the previous years
annual meeting provides instructions regarding the dates by which stockholders
must submit proposals for consideration at the following years annual meeting.
The Corporate Governance and Nominating Committee charter is
available on the Geokinetics website at www.geokinetics.com. You may also request a copy of the Corporate Governance
and Nominating Committee charter at no cost by making a written or telephone
request for copies to Geokinetics Inc., 1500 CityWest Blvd., Suite 800,
Houston, TX 77042; Attention: Corporate Secretary.
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Audit
Committee
The
Audit Committee conducted nine (9) meetings in person and by telephone
during the fiscal year ended December 31, 2009, at which all of the Audit
Committee members were in attendance except one member who attended eight (8) meetings. The Audit Committee consists of three
directors, Messrs. Strong (Chairman), Harte and Pittman. Messrs. Strong, Harte and Pittman are
independent as defined under the NYSE Amex rules.
The
Audit Committees charter requires the committee to oversee Geokinetics
financial reporting process and report the results of its activities to the
Board. The primary duties of the Audit Committee consist of, among other things:
·
approving auditing services and permitted
non-audit services (including the fees and terms thereof) to be performed for
the Company by its independent auditors;
·
appointing an independent registered
public accounting firm engaged for the purpose of preparing or issuing an audit
report or performing other audit review or attest services for the Company, subject to Board and stockholder approval;
·
reviewing and approving
all related party transactions for amounts exceeding $120,000; and
·
establishing procedures
for the receipt, retention and treatment of complaints received by Geokinetics
regarding financial controls, accounting or auditing matters.
The
Companys principal independent auditor, UHY LLP, reports directly to the Audit
Committee. In addition, the Audit
Committee provides an open line of communication between the internal auditors,
the independent auditor and the Board.
For
the fiscal year ended December 31, 2009, the Audit Committee met to review
Geokinetics audited financial statements, to discuss with independent
registered public accountants matters required under the statement on Auditing
Standards No. 61, and to review the written disclosures and letters from
the independent registered public accountants.
The Audit Committee charter is available on the Geokinetics
website at www.geokinetics.com. You may
also request a copy of the Audit Committee charter at no cost by making a
written or telephone request for copies to Geokinetics Inc., 1500 CityWest
Blvd., Suite 800, Houston, TX 77042; Attention: Corporate Secretary.
Policy for Approval of Audit and Non-Audit Fees
The
Audit Committees Policy on the Engagement of the Independent Auditor
requires the Audit Committee to approve all types of audit and permitted
non-audit services to be performed by the Companys independent auditors during
the year, as required under applicable law.
The
Audit Committee pre-approves annually proposed audit and permitted non-audit
services to be provided by the independent auditors for the fiscal year. The Audit Committee also considers for
pre-approval annually the maximum amount of fees and the manner in which the
fees are determined for each type of pre-approved audit and non-audit services
proposed to be provided by the independent auditors for the fiscal year. The Audit Committee separately pre-approves
any service that is not included in the approved list of services or any
proposed services exceeding pre-approved cost levels. The Audit Committee has delegated
pre-approval authority to the Chairman of the Audit Committee for services that
need to be addressed between Audit Committee meetings. The Audit Committee is then informed of these
pre-approval decisions, if any, at the next meeting of the Audit Committee. Refer to Principal Accountant Fees and
Services on page 21 of this proxy statement for the aggregate fees paid
to UHY LLP for the years ended December 31, 2009 and 2008.
Audit
Committee Financial Expert
The
Audit Committee plays an important role in promoting effective accounting,
financial reporting, risk management and compliance procedures and controls. As
such, it is imperative that members of the Audit Committee have requisite
financial literacy and expertise. All members of the Audit Committee meet the
financial literacy standard required by the NYSE Amex rules. In addition, as
required by the Sarbanes-Oxley Act of 2002, the Securities and Exchange
Commission requires that the Company disclose whether or not the Audit
Committee has an Audit Committee financial expert as a member. An Audit
Committee financial expert is defined as a person who, based on his or her
experience, satisfies all of the following attributes:
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·
An understanding of
generally accepted accounting principles and financial statements.
·
An ability to assess
the general application of such principles in connection with the accounting
for estimates, accruals and reserves.
·
Experience preparing,
auditing, analyzing or evaluating financial statements that present a breadth
and level of complexity of accounting issues that are generally comparable to
the breadth and level of complexity of issues that can reasonably be expected
to be raised by Geokinetics financial statements, or experience actively
supervising one or more persons engaged in such activities.
·
An understanding of
internal controls and procedures for financial reporting.
·
An understanding of
Audit Committee functions.
The
Board of Directors has determined that Messrs. Strong (Chairman of the
Audit Committee) and Pittman each satisfy the definition of Audit Committee
financial expert, and has designated each of them as an Audit Committee
financial expert.
Audit Committee Report
The Audit Committee
assists the Board in fulfilling its responsibility to oversee managements
execution of our financial reporting process.
In discharging its oversight role, the Audit Committee reviewed and
discussed the audited financial statements contained in the 2009 Annual Report
on Form 10-K with management and its independent registered public
accounting firm. Management is responsible for the financial statements and the
reporting process, including the system of disclosure controls and internal
control over financial reporting. The independent registered public accounting
firm is responsible for expressing an opinion on:
·
the fair
presentation of our financial statements in conformity with accounting
principles generally accepted in the United States in all material
respects; and
·
the
effectiveness of our internal control over financial reporting.
The Audit Committee met
privately with the independent registered public accounting firm and discussed
issues deemed significant by the accounting firm, including those required by
Statements on Auditing Standard No. 61 as adopted by the Public Company
Accounting Oversight Board in Rule 3200T. In addition, the Audit Committee
discussed with the independent registered public accounting firm its
independence from Geokinetics and its management and received the written
disclosures and the letter required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees) as adopted by the Public
Company Accounting Oversight Board in Rule 3600T and considered whether
the provision of non-audit services was compatible with maintaining the
accounting firms independence.
In reliance on the
reviews and discussions outlined above, the Audit Committee recommended to the
Board that the audited financial statements be included in our Annual Report on
Form 10-K for the year ended December 31, 2009, as filed with the
SEC.
The undersigned members of
the Audit Committee have submitted this report to the Board of Directors on March 12,
2010.
Audit
Committee,
Christopher D. Strong (
Chairman
)
Christopher M. Harte
Gary M. Pittman
Compensation
Committee
The
Compensation Committee held six (6) meetings during the fiscal year ended December 31,
2009, at which all members of the Compensation Committee were in
attendance. The Compensation Committee
consists of three directors, Messrs. Pittman (Chairman), Cabes and Harte.
Each of these directors qualifies as a non-employee director. The Board has determined the Messrs. Pittman,
Cabes and Harte are independent as defined under the
NYSE Amex rules.
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Geokinetics
has adopted a Compensation Committee charter which outlines the Compensation
Committees primary duties to include among other things:
·
approving the total remuneration and employment agreements for Geokinetics
executive officers;
·
reviewing the compensation, benefit and equity-based plans, programs and
payments for all employees;
·
reviewing and approving
the goals and objectives relevant to the compensation of Geokinetics CEO; and
·
reviewing and setting the compensation package for the Board of Directors.
The
Compensation Committee may form and delegate its authority to subcommittees as
appropriate. Additionally, the CEO may make recommendations to the Compensation
Committee relating to executive and director compensation.
Refer
to the Compensation Discussion and Analysis beginning on page 26 of this
proxy statement for a discussion of the Compensation Committees process for determining
total compensation for executive officers and the role of executive management
in determining executive compensation.
The
Compensation Committee charter is available on the Geokinetics website at
www.geokinetics.com. You may also
request a copy of the Compensation Committee charter at no cost by making a
written or telephone request for copies to Geokinetics Inc., 1500 CityWest
Blvd., Suite 800, Houston, TX 77042; Attention: Corporate Secretary.
Compensation
Committee Interlocks and Insider Participation
No
member of the Compensation Committee has ever been an executive officer or
employee of Geokinetics. None of Geokinetics executive officers currently
serves, or has served during the last completed fiscal year, on the
Compensation Committee or Board of any other entity that has one or more
executive officers serving as a member of Geokinetics Board or Compensation
Committee.
Compensation Policies and
Practices as They Relate to Risk Management
The Compensation Committee reviewed the elements of
executive compensation during 2009 to determine whether any portion of
executive compensation encouraged excessive risk taking. Management of the Company conducted a similar
risk assessment with respect to other employees. Management and the Compensation Committee
believe that risks arising from our compensation policies and practices for our
executive officers and other employees are not reasonably likely to have a
material adverse effect on the Company.
In addition, we believe that the mix and design of the elements of
compensation do not encourage management to assume excessive risks.
Certain
Relationships and Related Party Transactions
Geokinetics
written Code of Business Conduct and Ethics states the Companys policies and
procedures for the Boards review, approval and/or ratification of any
transaction with Geokinetics directors, officers or employees which gives rise
to a personal or professional conflict of interest.
The
Audit Committee of the Board is responsible for the review and approval of all
related-party transactions for amounts exceeding $120,000 that involve
Geokinetics or a subsidiary and related persons with a direct or indirect
material interest. Management determines whether a transaction meets the
requirements of a related-party transaction requiring review by the Audit
Committee. Transactions that fall within this definition will be referred to
the Audit Committee for approval, ratification or other action. Based on its
consideration of all of the relevant facts and circumstances, the Audit
Committee will decide whether or not to approve such transactions and will
approve only those transactions that are in the best interests of the Company.
If management becomes aware of an existing related-party transaction which has
not been approved by the Audit Committee, the matter will be referred to the
Audit Committee to evaluate all available options including ratification,
revision or termination of such transaction.
Below
are the transactions that occurred during the past fiscal year in which, to
Geokinetics knowledge, the Company was or is a party, and in which any
director, director nominee, executive officer, holder of more than 5% of our
common stock or any member of their immediate family had or will have a direct
or indirect material interest.
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Mr. Webster, a director
on the Companys Board of Directors, is a managing partner of Avista Capital
Partners. On December 18, 2009, in
connection with the Companys acquisition of PGS Onshore, the Company
restructured the Series B-1 preferred stock to reduce the conversion price
and increase the dividend, among other things.
As part of the transaction, the Company agreed to exchange the Series B-2
preferred stock for a new series of preferred stock, Series C, plus the
issuance of additional shares of common stock. The Series C preferred
stock is not convertible but it does accrue dividends.
As of December 31, 2009, Avista and an affiliate
of Avista held 290,197 shares of the Companys Series B-1 preferred stock
and 133,982 shares of the Companys Series C preferred stock.
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PROPOSAL 2APPROVAL OF ADOPTION OF GEOKINETICS
2010 STOCK AWARDS PLAN
On March 22,
2010, the Compensation Committee of the Board of Directors adopted the
Geokinetics 2010 Stock Awards Plan (the
Plan
).
The shares available under the Plan are used primarily to grant stock options,
restricted stock and other stock-based awards to certain employees, members of
the Board or consultants. A total of 1,600,000 shares of Common Stock are
originally reserved for issuance under the Plan.
Reasons for the Plan
The
purposes of the Plan are to promote the long-term financial success of
Geokinetics and to increase shareholder value by providing incentives to
individuals who are responsible for the conduct and management of the Companys
business with an inducement to acquire ownership interests in the Company, thus
enabling the Company to attract and retain the services of outstanding
individuals upon whose judgment, interest and special effort the successful
conduct of its operations largely depend.
In February 2010,
we completed the acquisition of the on-shore seismic acquisition and
multi-client library business of PGS.
This acquisition significantly increased the number of our employees
eligible to participate in the Plan. We
have agreed to issue approximately 173,000 shares of restricted stock to our
employees who were previously employed by PGS if the Plan is approved by
stockholders.
Summary of the Plan
As of
the date of this proxy statement, no awards have been made under the Plan. The
following is a summary of the material terms of the Plan and is qualified in
its entirety by reference to the Plan. A copy of the Plan is attached as Exhibit A
to this Proxy Statement.
Administration.
The Plan is to be administered by the Board or, at the discretion of the
Board, a committee appointed by the Board (the
Committee
). Subject to the provisions of the Plan, the
Committee shall have the sole authority to (i) determine which persons
shall receive an award and participate in the Plan; (ii) determine the
time or times when such award shall be made; (iii) determine the types of
awards; (iv) determine the number of shares which may be issued under each
award or the value of such award; and (v) determine the terms and
conditions of awards and the agreements with respect thereto (Incentive
Agreements). In making the foregoing
determinations, the Committee may take into account the nature of the services
rendered by the respective grantees under the Plan (Holders), their present
and potential contributions to the Companys success and such other factors as
the Committee shall deem relevant. Subject to the express provisions of the
Plan, the Committee is authorized to construe the Plan and the Incentive
Agreements executed thereunder, to prescribe such rules and regulations
relating to the Plan as it may deem advisable to carry out the Plan, and to
determine the terms, restrictions and provisions of each award, and to make all
other determinations necessary or advisable for administering the Plan.
Eligible
Participants.
Awards may be granted only to persons
who, at the time of grant, are employees, non-employee members of the Board or
consultants providing services to the Company or its subsidiaries. Awards may be granted on more than one
occasion to the same person.
Shares
Available for Awards.
The aggregate number of shares
of Common Stock that may be issued under the Plan shall be 1,600,000. The Common Stock to be offered pursuant to
the grant of an award may be authorized but unissued Common Stock or Common
Stock previously issued and outstanding and reacquired by the Company. Shares shall be deemed to have been issued
under the Plan only to the extent actually issued and delivered pursuant to an
award. To the extent that an award lapses or the rights of its Holder
terminate, or if the award is paid in cash or is exchange for an award that
does not involve Common Stock, any shares subject to such award shall again be
available for the grant of an award under the Plan.
Types of
Awards and Terms and Conditions.
The Plan provides for granting
Nonqualified Stock Options, Incentive Stock Options (ISOs), Stock
Appreciation Rights (SARs), Restricted Stock Awards, Restricted Stock Units,
Phantom Stock Awards and Other Stock-Based Awards, as well as any Supplemental
Payments with respect to certain of the foregoing.
Stock
Options.
Each Stock Option will be evidenced by an option
agreement in such form as the Committee shall approve, including provisions to
qualify as an Incentive Stock Option under Code Section 422. Among its
other provisions, each option agreement will provide that the Stock Option may
not be exercised earlier
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than 30 days from the
date of grant and shall set forth the extent to which the Holder shall have the
right to exercise the Stock Option following termination of the Holders
employment. Such option agreement may
also include, provisions relating to (i) vesting of Stock Options, (ii) tax
matters, and (iii) any other matters not inconsistent with the terms and
provisions of the Plan. The terms and conditions of the respective option
agreements need not be identical.
The option price at which
a share of Common Stock may be purchased upon exercise of a Stock Option shall
be determined by the Committee, provided that the option price shall be (i) not
less than 100% of the fair market value per share of Common Stock on the date
the Stock Option is granted and (ii) specified in the option agreement;
provided, however, if the Holder of an ISO is a 10% or greater stockholder, the
Option Price for the ISO may not be less than 110% of the fair market value on
the date of grant.
Supplemental
Payments.
The
Committee, either at the time of grant or exercise of any Nonqualified Stock
Option, or at the time of grant or vesting of a Nonqualified Stock Option,
Restricted Stock or Other Stock-Based Awards, may provide in the Incentive
Agreement for a Supplemental Payment by the Company to the Holder with respect
to the exercise of any Nonqualified Stock Option or the vesting of any
Restricted Stock or Other Stock-Based Award. The Supplemental Payment may not
exceed the amount necessary to pay the federal and state income tax payable
with respect to both the exercise of the Nonqualified Stock Option (or vesting
of the Restricted Stock or other Stock-Based Award) and the receipt of the
Supplemental Payment, assuming the holder is taxed at either the maximum
effective income tax rate applicable thereto.
No Supplemental Payments will be made with respect to any SARs or ISOs.
Stock
Appreciations Rights (SARs).
A SAR is the right to receive an amount
equal to the difference between the fair market value of a share of Common
Stock on the date of exercise and the exercise price of the SAR. SARs may be granted in connection with the
grant of a Stock Option, in which case the option agreement will provide that
the SAR shall be cancelled when and to the extent the related Stock Option is
exercised and that exercise of the SAR will result in the surrender of the
right to purchase the share under the related Stock Option. Alternatively, SARs may be granted independently
of Stock Options in which case each award of SARs shall be evidenced by a stock
appreciation rights agreement which contains such terms and conditions as may
be approved by the Committee.
The exercise price per
share may not be less than 100% of the fair market value of a share on the date
of grant of the SAR (or such greater exercise price as may be required if such
SAR is granted in connection with an Incentive Stock Option that must have an
exercise price equal to 110% of the fair market value of a share on the date of
grant). The term of the SAR may not be
greater than ten (10) years from the date of grant. Each stock appreciation rights agreement
shall provide that the SARs may not be exercised earlier than thirty (30) days
from the date of grant and shall set forth the extent to which the Holder shall
have the right to exercise the SARs following termination of the Holders
employment. In addition, stock
appreciation rights agreements may also include provisions relating to (i) vesting
of awards, (ii) tax matters, and (iii) any other matters not
inconsistent with the terms and provisions of the Plan. The terms and
conditions of the respective stock appreciation rights agreements need not be
identical. The Committee cannot include
any feature for the deferral of compensation other than the deferral of
recognition of income until exercise of the SAR.
Restricted
Stock.
Shares of
Restricted Stock, which may be designated as a Performance-Based Award, may be
awarded by the Committee with such restrictions during the restriction period
as the Committee shall designate. Any
such restrictions may differ with respect to a particular Holder. Restricted
Stock shall be awarded for no additional consideration or such additional
consideration as the Committee may determine.
The terms and conditions of each grant of Restricted Stock shall be
evidenced by a restricted stock agreement and, during the restriction period,
such shares of Restricted Stock must remain subject to a substantial risk of
forfeiture within the meaning given to such term under Code Section 83. Such restricted stock agreement may also
include provisions relating to (i) vesting of awards, (ii) tax
matters, and (iii) any other matters not inconsistent with the terms and
provisions of the Plan. The terms and conditions of the respective restricted
stock agreements need not be identical.
A breach of the terms and conditions established by the Committee
pursuant to the restricted stock agreement shall cause a forfeiture of the
Restricted Stock Award.
Other
Stock-Based Awards.
Other Stock-Based Awards (including awards of Restricted Stock Units and
Phantom Stock Awards, as described below) may be awarded by the Committee to
Holders that are payable in shares or in cash, as determined by the Committee
to be consistent with the goals of the Company. Other types of Stock-Based
Awards that are payable in shares include purchase rights, shares awarded that
are not subject to any
15
Table of Contents
restrictions or
conditions, shares awarded subject to the satisfaction of specified Performance
Criteria (defined below), convertible or exchangeable debentures, other rights
convertible into shares, awards valued by reference to the performance of a
specified subsidiary, division or department of the Company, and settlement in
cancellation of rights of any person with a vested interest in any other plan,
fund, program or arrangement that is or was sponsored, maintained or
participated in by the Company.
Restricted
Stock Units.
The Committee may award Restricted Stock Units
to a Holder that are payable in shares or cash, or in a combination thereof.
During the period beginning on the date such award is granted and ending on the
payment date specified in the restricted stock unit agreement, the Holders
right to payment under the restricted stock unit agreement must remain subject
to a substantial risk of forfeiture within the meaning of such term under
Code Section 409A. In addition,
payment to the Holder under the restricted stock unit agreement must be made
within 2½ months following the end of the calendar year in which the
substantial risk of forfeiture lapses unless an earlier payment date is
specified in the restricted stock unit agreement.
Phantom
Stock Awards.
The Committee may grant Phantom Stock
Awards to a Holder that are payable in shares or cash, or in a combination
thereof. Phantom Stock Awards are rights
to receive an amount equal to the fair market value of shares over a specified
period of time, which vest over a period of time or upon the occurrence of an
event as established by the Committee, without payment of any amounts by the
Holder thereof. Each Phantom Stock Award
may have a maximum value established by the Committee at the time of such
award.
The Committee must
establish, with respect to and at the time of each Phantom Stock Award, a
period (no longer than ten years) over which, or in the event upon which, the
award shall vest. Following the end of
the vesting period for a Phantom Stock Award, the Holder of a Phantom Stock
Award will be entitled to receive payment of an amount based on the then vested
value of the award. Payment must be made
in a lump sum within 2½ months following the end of the calendar year in which
the Phantom Stock Award (or a portion thereof) vests, unless an earlier payment
date or installment payments are specified in the phantom stock award
agreement. Any payment to be made in
Common Stock must be based on the fair market value of the Common Stock on the
payment date. Cash dividend equivalents may be paid during or after the vesting
period with respect to a Phantom Stock Award, as determined by the Committee. If a payment of cash is to be made on a
deferred basis, the Committee must establish whether interest shall be
credited, the rate thereof and any other terms and conditions applicable
thereto.
Performance-Based
Awards.
Performance-Based Awards may be granted subject to performance objectives
relating to one or more of the following within the meaning of Code Section 162(m) (the
Performance Criteria) in order
to qualify for the performance-based exception from the tax deductibility
limitations of Code Section 162(m) (Performance Based Exception):
(i) profits (including, but not limited to, profit growth,
net operating profit or economic profit);
(ii) profit-related return ratios;
(iii) return measures (including, but not limited to, return on
assets, capital, equity, investment or sales);
(iv) cash flow (including, but not limited to, operating cash
flow, free cash flow or cash flow return on capital or investments);
(v) earnings (including but not limited to, total stockholder
return, earnings per share or earnings before or after taxes);
(vi) net sales growth;
(vii) net earnings or income (before or after taxes, interest,
depreciation and/or amortization);
(viii) gross, operating or net profit margins;
(ix) productivity ratios;
(x) share price (including, but not limited to, growth
measures and total stockholder return);
(xi) turnover of assets, capital, or inventory;
(xii) expense targets;
16
Table of Contents
(xiii) margins;
(xiv) measures of health, safety or environment;
(xv) operating efficiency;
(xvi) customer service or satisfaction;
(xvii) market share;
(xviii) credit quality;
(xix) debt ratios (
e.g.
,
debt to equity and debt to total capital); and
(xx) working capital targets.
In
establishing the Performance Criteria for each applicable award, the Committee
may provide that the effect of specified extraordinary or unusual events will
be included or excluded. The terms of
the stated Performance Criteria for each applicable award, whether for a
performance period of one year or multiple years, must preclude the Committees
discretion to increase the amount payable to any Holder that would otherwise be
due upon attainment of the Performance Criteria, but may permit the Committee
to reduce the amount otherwise payable to the Holder. The Performance Criteria specified in any
Incentive Agreement need not be applicable to all awards, and may be particular
to an individual Holders function or business unit. The Committee may establish the Performance
Criteria of the Company (or any entity which is affiliated by common ownership
with the Company) as determined and designated by the Committee in the
Incentive Agreement.
Change of
Control
. Notwithstanding any contrary provision in the
Plan, in the event of a Change in Control (as defined in the Plan), the
following actions shall automatically occur as of the day immediately preceding
the Change in Control date but only if expressly provided in the individual
Holders Incentive Agreement or in his individual employment agreement, if any:
(a) all of
the Stock Options and Stock Appreciation Rights then outstanding shall become
100% vested and immediately and fully exercisable;
(b) all of
the restrictions and conditions of any Restricted Stock Awards, Restricted
Stock Units, Phantom Stock Awards, and any Other Stock-Based Awards then
outstanding shall be deemed satisfied, and the restriction period with respect
thereto shall be deemed to have expired, and thus each such award shall become
free of all restrictions and fully vested; and
(c) all of
the Performance-Based Awards shall become fully vested, deemed earned in full,
and promptly paid within 30 days to the affected Holders without regard to
payment schedules and notwithstanding that the applicable performance cycle,
retention cycle or other restrictions and conditions have not been completed or
satisfied.
If the
Holders Incentive Agreement or his individual employment agreement, if any,
does not provide for any of the foregoing actions in the event of a Change in
Control, then the Incentive Agreement (and awards thereunder) will not be
affected by the Change in Control.
Prohibition
on Repricing Awards.
Stockholder action is required to adjust
the grant or exercise price with respect to any award.
Duration,
Termination and Amendment
. The Plan shall remain in
effect until all awards granted under the Plan have been satisfied or
expired. No awards may be granted under
the Plan on or after the date which is ten years following the effective date
of the Plan. The Board may terminate the Plan at any time with respect to any
shares for which awards have not theretofore been granted. The Board shall have
the power and authority to terminate or amend the Plan at any time; provided,
however, the Board may not, without the approval of the stockholders of the
Company within the time period required by applicable law:
(a) increase the maximum number of shares
that may be issued under the Plan;
(b) amend the requirements as to the
class of Employees eligible to purchase Common Stock under the Plan;
(c) extend the term of the Plan; or,
17
Table of Contents
(d) for so long as the Company is a
publicly held corporation (i) increase the maximum limits on awards to
Covered Employees as set for compliance with the Performance-Based Exception or
(ii) decrease the authority granted to the Committee under the Plan in
contravention of Rule 16b-3 to the extent Section 16 of the 1934 Act
is applicable to the Company.
Transferability
of Awards.
Awards granted under the Plan will not be
transferable or assignable other than: (a) by will or the laws of descent
and distribution or (b) pursuant to a qualified domestic relations order;
provided, however, only with respect to Nonqualified Stock Options, the
Committee may authorize the transfer by the Holder to (i) the members of the
Holders immediate family, (ii) a trust or trusts for the exclusive
benefit of immediate family members, (iii) a partnership in which such
immediate family members are the only partners, or (iv) any other entity
owned solely by immediate family members.
U.S.
Federal Income Tax Consequences
The following briefly
describes the U.S. federal income tax consequences of the Plan generally
applicable to the Company and to employees, officers and directors who are U.S.
citizens or otherwise subject to U.S. federal income taxation. The discussion is general in nature and does
not address issues relating to the tax circumstances of any individual partner,
officer or director. The discussion is
based on the Internal Revenue Code, applicable treasury Regulations and
administrative and judicial interpretations thereof, each as in effect on the
date of this proxy statement. The
description is therefore subject to future changes in the law; possible with
retroactive effect. The description does
not address the consequences of state, local or foreign tax laws.
Nonqualified
Stock Options.
The tax consequences to an optionee of the
initial grant of a Nonqualified Stock Option depend upon whether or not a readily
ascertainable fair market value for the stock option is determinable at the
time the option is granted. It is contemplated that the Nonqualified Stock
Options will not have a readily ascertainable fair market value. Accordingly, a
grantee of a Nonqualified Stock Option will not recognize taxable income on the
grant of the option. Upon a grantees exercise of a Nonqualified Stock Option, (i) the
grantee will recognize ordinary income in an amount equal to the difference
between the exercise price of the shares purchased pursuant to the Nonqualified
Stock Option and their fair market value on the exercise date, and (ii) Geokinetics
will be entitled to a tax deduction in an amount equal to such difference. An
optionees tax basis in the stock acquired pursuant to the exercise of a
Nonqualified Stock Option will be equal to the sum of the amount of cash paid
and the amount of ordinary income recognized on such exercise. Upon the
subsequent sale or other disposition of shares of Common Stock, any amount
received in excess of the optionees tax basis in such shares will be treated
as short-term or long-term capital gain, depending on the holding period.
Nonqualified Stock Options with Stock Appreciation
Rights
. A grant of Stock Appreciation Rights is not a
taxable event. The Stock Appreciation Rights may be paid in cash or shares of
Common Stock or both. If cash is given upon exercise of the Stock Appreciation
Rights, the grantee will recognize ordinary income in the amount of cash
received. If Common Stock is given upon the exercise of the Stock Appreciation
Rights, generally the fair market value of the Common Stock will be recognized
as ordinary income by the grantee (subject to potential delay in taxation in
the event the Common Stock is subject to certain restrictions). Geokinetics
will be entitled to a tax deduction to the extent that the grantee recognizes
ordinary income upon the exercise of the Stock Appreciation Rights.
Incentive Stock Options
.
A grantee of Incentive Stock Options generally does not recognize
taxable income either on the date of grant or on the date of exercise. Upon the
exercise of the Incentive Stock Option, however, the difference between the
fair market value of the Common Stock received and the option price may be
subject to the alternative minimum tax. Upon disposition of shares of Common
Stock acquired from the exercise of an Incentive Stock Option, long-term
capital gain or loss is generally recognized in an amount equal to the
difference between the amount realized on the sale or disposition and the
exercise price. However, if a grantee disposes of the shares of Common Stock
within two years of the date of grant or within one year of the date of
exercise, the grantee will recognize ordinary income equal to the lesser of (i) the
amount realized at the disposition, or (ii) the difference between the
fair market value of the shares of the Common Stock received on the date of
exercise and the exercise price. Any remaining gain or loss is treated as a
short-term or long-term capital gain or loss, depending on the period of time
the shares are held. Geokinetics is not entitled to a tax deduction on either
exercise of an Incentive Stock Option or disposition of shares of Common Stock
acquired pursuant to such exercise, except to the extent that a grantee
recognizes ordinary income on the disposition of such shares.
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Table of Contents
Incentive Stock Options with Stock Appreciation
Rights
. A grant of Stock Appreciation Rights is not a
taxable event. The Stock Appreciation Rights may be paid in cash or shares of
Stock or both. If cash is given upon exercise of the Stock Appreciation Rights,
the grantee will recognize ordinary income in the amount of cash received. If Stock
is given upon the exercise of the Stock Appreciation Rights, generally the fair
market value of the Common Stock will be recognized as ordinary income by the
Grantee (subject to potential delay in taxation in the event the Common Stock
is subject to certain restrictions).
Geokinetics will be entitled to a tax deduction to the extent that the
grantee recognizes ordinary income upon the exercise of a Stock Appreciation
Rights.
Restricted Stock Awards
.
The tax consequences to a recipient of Restricted Stock are governed by Section 83
of the Code. Typically, an award of Restricted Stock will be subject to a
substantial risk of forfeiture and non-transferability restrictions so that
there will be no tax consequences at the time of the award of Restricted Stock.
However, at such time as the stock becomes transferable or is no longer subject
to a substantial risk of forfeiture, then the recipient will recognize ordinary
income based on the fair market value of such stock and Geokinetics will be
entitled to a tax deduction in the same amount. Alternatively, a recipient can
make an election under Section 83(b) of the Code within 30 days
following receipt of Restricted Stock, the effect of which is to accelerate the
taxable event so that the recipient will recognize ordinary income equal to the
fair market value of the Restricted Stock as of the date of the award.
Thereafter, a recipient will not recognize any further gain until the stock is
sold. The recipients basis in the stock will be sum of the amount paid for the
stock, if any, and any amount included in income as a result of the Section 83(b) election.
Supplemental Payments.
At the time the recipient is paid a
supplemental payment, the recipient will recognize ordinary income equal to the
amount of the cash payment received, and Geokinetics will be entitled to a tax
deduction in the same amount at that time.
Restricted Stock Units and Other Stock-Based
Awards.
A
recipient of restricted stock units or other stock-based awards will not have
taxable income upon grant. Instead, the
recipient will have ordinary income at the time of vesting equal to the fair
market value on the vesting date of the shares, or the amount of cash received,
minus the amount paid for the shares, if any, and Geokinetics will be entitled
to a tax deduction in the same amount at that time. Upon the disposition of any shares received,
the gain or loss is recognized by the recipient is treated as a capital gain or
loss, and the capital gain or loss will be short-term or long-term depending on
whether the recipient held the share for more than one year following payment.
Phantom Stock Awards.
A
grant of Phantom Stock is not a taxable event. At the time that the recipient
is ultimately paid the amount of Phantom Stock (whether in cash or Common Stock
of Geokinetics) the Recipient will recognize ordinary income based on the value
of the amount received and Geokinetics will be entitled to a tax deduction in
the same amount at that time.
Tax
Consequences to the Company
. In the
foregoing cases, the Company generally will be entitled to a deduction at the
same time and in the same amount as a participant recognizes ordinary income,
subject to the limitations imposed under the Internal Revenue Code.
Tax
Withholding
. The Company shall have the right to deduct in
connection with all awards any taxes required by law to be withheld and to
require any payments required to enable it to satisfy its withholding
obligations.
Plan
Benefits
All awards to employees,
officers, consultants or directors under the Plan are made at the discretion of
the Compensation Committee. Therefore,
the benefits and amounts that will be received or allocated under the Plan are
not determinable at this time. Please
refer to the description of grants made to our named executive officers in the
last fiscal year described in the Fiscal 2009 Grants of Plan-Based Awards
table on page 33. Grants made to
our non-employee directors in the last fiscal year are described under the
heading Compensation of Directors starting on page 35.
Votes
Required; Board Recommendation
Approval
of the adoption of the Geokinetics 2010 Stock Awards Plan will be determined
by the affirmative vote of a majority of the shares present in person or
represented by proxy at the Annual Meeting and entitled to vote. The number of votes cast for the approval of
the adoption of the Geokinetics 2010 Stock Awards Plan must exceed the number
of votes cast against such Stock Awards Plan.
Abstentions will be counted for
19
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purposes of determining
the total number of votes cast with respect to this proposal and abstentions
will have the same effect as a vote against this proposal. Broker non-votes
will not be considered present at the Annual Meeting for this proposal so a
broker non-vote will have the practical effect of reducing the number of
affirmative votes required to achieve a majority vote by reducing the total
number of shares from which a majority is calculated. The Board recommends a
vote FOR approval of the adoption of the Geokinetics 2010 Stock Awards Plan,
and proxies not marked to the contrary will be so voted.
20
Table of Contents
PROPOSAL 3APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTANTS
The Board of Directors,
at the request of the Audit Committee, is seeking stockholder ratification of
the appointment of UHY LLP, 12 Greenway Plaza, 8th Floor, Houston, TX 77046-1291, as Geokinetics independent
registered public accounting firm for fiscal year 2010.
The firm of UHY LLP (
UHY
) served as independent registered public accountants,
to examine Geokinetics consolidated financial statements for the fiscal years
ending December 31, 2009, 2008 and 2007.
Through and as of March 26, 2010, UHY had a continuing relationship
with UHY Advisors, Inc. (Advisors) from which it leased auditing staff
who were full time, permanent employees of Advisors and through which UHYs
partners provide non-audit services. UHY
has few full time employees. Therefore, few, if any, of the audit services
performed were provided by permanent full-time employees of UHY. UHY manages
and supervises the audit services and audit staff, and is exclusively
responsible for the opinion rendered in connection with its examination.
Principal Accountant
Fees and Services
UHY completed a review
of Geokinetics unaudited condensed quarterly financial statements for the
quarters ended March 31, 2009, June 30, 2009 and September 30,
2009 and audited the financial statements of the Company for the fiscal years
ended December 31, 2009 and 2008. Aggregate fees for professional services
rendered to Geokinetics by UHY LLP for the years ended December 31, 2009
and 2008, were as follows (in thousands):
|
|
Year Ended
|
|
|
|
December 31,
|
|
|
|
2009
|
|
2008
|
|
Audit Fees
|
|
$
|
800
|
|
$
|
875
|
|
Audit-Related Fees
|
|
276
|
|
105
|
|
Tax Fees
|
|
19
|
|
61
|
|
All Other Fees
|
|
0
|
|
0
|
|
Total
|
|
$
|
1,095
|
|
$
|
1,041
|
|
Audit Fees
The
Audit fees for the years ended December 31, 2009 and 2008, respectively,
were for professional services rendered for the audits of Geokinetics
consolidated financial statements, the review of documents filed with the SEC,
consents, and the issuance of comfort letters.
Audit-Related Fees
The
Audit-related fees for the years ended December 31, 2009 and 2008,
respectively, were for professional services rendered for the reviews of
Geokinetics quarterly consolidated financial statements, due diligence, merger
and acquisition assistance, and consultations concerning financial accounting
and reporting standards.
Tax Fees
The
Tax fees for the years ended December 31, 2009 and 2008, respectively,
were for professional services rendered for tax compliance and tax reviews in
conjunction with the audit.
All Other Fees
There
were no other fees for the years ended December 31, 2009 and 2008,
respectively.
Pre-Approval Policies and Procedures
The
Audit Committees Policy on the Engagement of the Independent Auditor
requires the Audit Committee to approve all types of audit and permitted
non-audit services to be performed by the Companys independent auditors during
the year, as required under applicable law.
The
Audit Committee pre-approves annually proposed audit and permitted non-audit
services to be provided by the independent auditors for the fiscal year. The Audit Committee also considers for
pre-approval annually the maximum amount of fees and the manner in which the
fees are determined for each type of pre-approved audit and
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Table
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non-audit
services proposed to be provided by the independent auditors for the fiscal
year. The Audit Committee separately
pre-approves any service that is not included in the approved list of services
or any proposed services exceeding pre-approved cost levels. The Audit Committee has delegated
pre-approval authority to the Chairman of the Audit Committee for services that
need to be addressed between Audit Committee meetings. The Audit Committee is then informed of these
pre-approval decisions, if any, at the next meeting of the Audit Committee.
All audit-related
services, tax services and other services were pre-approved by the Audit
Committee in accordance with the Audit Committees pre-approval policies
described above. The Audit Committee has
considered whether the provision of the non-audit services by UHY LLP described
above is compatible with maintaining auditor independence and has determined
that auditor independence has not been compromised.
While stockholder
ratification is not required by our Bylaws or otherwise, the Board of Directors
will present a proposal to the stockholders to approve and ratify as part of
good corporate governance principles, the engagement of UHY. If the
stockholders fail to ratify the selection, the Audit Committee may, but is not
required to, reconsider whether to retain UHY. Even if the selection is
ratified, the Audit Committee in its discretion may direct the appointment of a
different independent registered public accounting firm at any time during the
year if it determines that such a change would be in our best interests. Representatives of UHY LLP 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.
Votes Required; Board
Recommendation
The approval of the
appointment of UHY LLP will be determined by the affirmative vote of the
holders of a majority of the shares present in person or represented by proxy
at the Annual Meeting and entitled to vote. The number of votes cast for the appointment
must exceed the number of votes cast against such appointment. Abstentions will be counted for purposes of
determining the total number of votes cast with respect to this proposal and
abstentions will have the same effect as a vote against this proposal. Broker
non-votes will not be considered present at the Annual Meeting for this
proposal so a broker non-vote will have the practical effect of reducing the
number of affirmative votes required to achieve a majority vote by reducing the
total number of shares from which a majority is calculated. The Board recommends a vote FOR approval of
the appointment of UHY LLP as Geokinetics independent registered public
accountants for the fiscal year ending December 31, 2010, and proxies not
marked to the contrary will be so voted.
22
Table of Contents
Executive
Officers
Set forth below are the
names, ages, and positions of the Companys executive officers as of December 31,
2009.
Name
|
|
Age
|
|
Position With Company
|
|
Office
Held Since
|
Richard
F. Miles
|
|
61
|
|
President, Chief Executive Officer and Director
|
|
2007
|
Scott
A. McCurdy
|
|
34
|
|
Vice President and Chief Financial Officer
|
|
2006
|
Lee
Parker
|
|
41
|
|
Executive Vice President - Operations
|
|
2007
|
James
C. White
|
|
50
|
|
Executive Vice President - Business Development & Technology
|
|
2007
|
There are no family
relationships between any of the Companys executive officers.
Scott A. McCurdy, age
34, has served as the Vice President and Chief Financial Officer (CFO) since September 8,
2006. Prior to joining the Company, Mr. McCurdy served as Vice
PresidentFinance, Chief Financial Officer, Treasurer and Corporate Secretary
of Grant Geophysical, Inc. (
Grant
) since October 2003.
He served as Controller of Grant from July 2001 until he was promoted in October 2003.
Prior to that, he served as a senior auditor with Arthur Andersen, LLP focusing
on public companies in the oil field services industry, including the seismic
industry. Mr. McCurdy is a Certified Public Accountant in the State of
Texas. Mr. McCurdy is a member of the Texas Society of Certified Public
Accountants and the American Institute of CPAs.
Lee
Parker, age 41, has served as Executive Vice President Operations since March 1,
2009 and was appointed Executive Vice President International Operations
effective September 1, 2007. Mr. Parker
previously served as the Vice President Acquisition Technology &
Support for the Company since September 8, 2006. Prior to joining the Company, Mr. Parker
served as Vice President - Technology of Grant since March 2001. During
the period September 1993 through March 2001, he served in various
technical and managerial roles
for Grant
in Europe, Africa,
South America and the United States. Mr. Parker worked for Southtrim
Autoclaves Ltd, a pharmaceutical equipment manufacturer, for five years
prior to joining Grant.
James
C. White, age 50, resigned from the Company effective February 15,
2010. Prior to his resignation, he
served as Executive Vice President Business Development & Technology
since March 1, 2009, as Executive Vice President since March 5, 2007,
and Executive Vice President North American Operations effective September 1,
2007. Prior to that he was the
PresidentNorth American Seismic Operations since the acquisition of Trace
Energy Services, Inc. (
Trace
) on December 1,
2005. Prior to joining the Company, Mr. White served as President and CEO
of Trace since February 2004. Prior to that, Mr. White spent
25 years with WesternGeco, a leading seismic company, in a variety of
operational roles. Most recently he served as Vice President of WesternGeco for
North and South America, where he was responsible for all aspects of that
companys operations in North and South America.
Security
Ownership of Certain Beneficial Owners and Management
The
following table sets forth, as of March 2, 2010, the number of shares of
Geokinetics common stock beneficially owned by (i) each person known by
Geokinetics (based on filings under Section 13(d) or 13(g) of
the Exchange Act) to be the holder of more than five percent of Geokinetics
voting securities, (ii) each director, (iii) each named executive
officer, and (iv) all of Geokinetics directors and officers as a group.
None of the directors or named executive officers individually own any of
Geokinetics Series B Preferred Stock. Unless otherwise indicated, each
holder has sole voting and investment power with respect to the shares of
common stock owned by such holder.
Name and Address of
Directors and Executive Officers
|
|
Title of
Class
|
|
Amount and Nature of
Beneficial Ownership
|
|
Percent of
Class(1)
|
|
|
|
|
|
|
|
|
|
Steven A. Webster
|
|
Common
|
|
952,226
|
(2)(3)
|
4.20
|
%
|
1000 Louisiana, Suite 1200
Houston, TX 77002
|
|
|
|
|
|
|
|
William R. Ziegler
|
|
Common
|
|
504,566
|
(3)(4)
|
2.22
|
%
|
230 Park Avenue
New York, Suite 1130
New York, NY 10169
|
|
|
|
|
|
|
|
23
Table of Contents
Name and Address of
Directors and Executive Officers
|
|
Title of
Class
|
|
Amount and Nature of
Beneficial Ownership
|
|
Percent of
Class(1)
|
|
|
|
|
|
|
|
|
|
Christopher M. Harte
|
|
Common
|
|
125,617
|
(3)(5)
|
0.55
|
%
|
327 Congress Ave., Suite 350
Austin, TX 78701
|
|
|
|
|
|
|
|
Gary M. Pittman
|
|
Common
|
|
11,490
|
(3)(12)
|
0.05
|
%
|
8110 Georgetown Pike
McLean, VA 22102
|
|
|
|
|
|
|
|
Robert L. Cabes, Jr.
|
|
Common
|
|
12,500
|
(3)(6)
|
0.06
|
%
|
1000 Louisiana, Suite 1200
Houston, TX 77002
|
|
|
|
|
|
|
|
Christopher D. Strong
|
|
Common
|
|
11,075
|
(3)(7)
|
0.05
|
%
|
4055 International Plaza, Suite 610
Ft. Worth, TX 76109
|
|
|
|
|
|
|
|
Gottfred Langseth
|
|
Common
|
|
-0-
|
|
0.00
|
%
|
Strandveien 4, P.O. Box 89
N-1375 Lysaker, Norway
|
|
|
|
|
|
|
|
Anthony Tripodo
|
|
Common
|
|
-0-
|
|
0.00
|
%
|
400 N. Sam Houston Parkway East, Suite 400
Houston, TX 77060
|
|
|
|
|
|
|
|
Richard F. Miles
|
|
Common
|
|
118,256
|
(8)
|
0.52
|
%
|
1500 CityWest Blvd., Suite 800
Houston, TX 77042
|
|
|
|
|
|
|
|
Scott A. McCurdy
|
|
Common
|
|
50,628
|
(9)
|
0.22
|
%
|
1500 CityWest Blvd., Suite 800
Houston, TX 77042
|
|
|
|
|
|
|
|
James C. White
|
|
Common
|
|
18,334
|
(10)
|
0.08
|
%
|
1500 CityWest Blvd., Suite 800
Houston, TX 77042
|
|
|
|
|
|
|
|
Lee Parker
|
|
Common
|
|
52,137
|
(11)
|
0.23
|
%
|
1500 CityWest Blvd., Suite 800
Houston, TX 77042
|
|
|
|
|
|
|
|
All Directors and Executive
Officers as a Group
|
|
Common
|
|
1,856,829
|
|
8.19
|
%
|
Beneficial Owners
Name and Address of
Beneficial Owners
|
|
Title of
Class
|
|
Amount and Nature of
Beneficial Ownership
|
|
Percent of
Class(1)
|
|
|
|
|
|
|
|
|
|
Andreeff Equity Advisor, L.L.C.
|
|
Common
|
|
1,603,430
|
(13)
|
7.07
|
%
|
450 Laurel Street, Suite 2105
Baton Rouge, LA 70801
|
|
|
|
|
|
|
|
Avista Capital Partners GP, LLC
|
|
Common
|
|
7,006,867
|
(6)(14)(15)
|
30.89
|
%
|
65 E. 55th Street, 18th Floor
New York, NY 10022
|
|
|
|
|
|
|
|
Petroleum Geo-Services ASA
|
|
Common
|
|
2,153,616
|
(16)
|
9.49
|
%
|
Strandveien 4, P.O. Box 89
N-1326 Lysaker, Norway
|
|
|
|
|
|
|
|
24
Table of Contents
(1)
|
In accordance with Rule 13d-3 promulgated by the SEC
under the Exchange Act, each person listed in this table is deemed to
beneficially own shares of common stock issuable to such person upon exercise
of options or warrants or upon conversion of convertible securities if such
exercise or conversion may be effected within 60 days. However, shares of
common stock issuable upon exercise or conversion of securities held by other
persons are not deemed to be outstanding for purposes of determining the
percentage of the class of voting securities held by such person. In addition,
certain shares may be deemed beneficially owned by more than one person or
entity listed in the table. On the record date there were issued and
outstanding 17,933,008 shares of common stock, warrants to purchase 428,000
shares of common stock, shares of preferred stock convertible into 4,160,888
shares of common stock, and 163,570 shares of unvested restricted stock.
|
|
|
(2)
|
Includes (i) 711,341 shares owned of record by
Mr. Webster, (ii) 28,000 shares of common stock, purchasable within
60 days upon the exercise of warrants owned of record by Mr. Webster,
(iii) 110,702 shares of common stock owned of record by Kestrel Capital,
L.P., since Mr. Webster is President of Peregrine Management, LLC, the
sole General Partner of Kestrel Capital, L.P., (iv) 4,000 shares of
common stock, purchasable within 60 days upon the exercise of the warrants
owned by Kestrel Capital, L.P., and (v) 88,298 shares of common stock
owned of record by Cerrito Partners, since Mr. Webster is the Managing
Partner of Cerrito Partners.
|
|
|
(3)
|
Includes an award of 8,595 shares of unvested restricted
common stock and vested stock options to purchase 1,290 shares of common
stock for all non-executive directors. Does not include unvested stock
options to purchase 3,012 shares of common stock issuable pursuant to options
that have not vested.
|
|
|
(4)
|
Includes (i) 482,681 shares owned of record by
Mr. Ziegler, and (ii) 12,000 shares of common stock, purchasable
within 60 days upon the exercise of warrants owned of record by
Mr. Ziegler.
|
|
|
(5)
|
Includes (i) 4,220 shares owned of record by
Mr. Harte, (ii) 75,298 shares of common stock owned of record by
Spicewood Investment Partners 2004 L.P., of which Mr. Harte is the
general partner, (iii) 4,000 shares of common stock, purchasable within
60 days upon the exercise of warrants owned of record by Spicewood Investment
Partners 2004 L.P., (iv) 4,745 shares of common stock owned of record by
Spicewood Family Partners of which Mr. Harte is the general partner, and
(v) 27,469 shares owned of record by the Christopher M. Harte 1992
Family Trust.
|
|
|
(6)
|
Mr. Cabes is obligated under his employment
arrangement with Avista Capital Partners, L.P. to disclaim all rights of
ownership to any Geokinetics capital stock he is awarded by the Company and
must transfer any shares he receives in his capacity as a director of the
Company to Avista. Includes 2,615 shares of common stock owned of record by
Mr. Cabes.
|
|
|
(7)
|
Includes 1,190 shares of common stock owned of record by
Mr. Strong.
|
|
|
(8)
|
Includes (i) 48,000 shares of common stock owned of
record by Mr. Miles, (ii) 58,000 shares of unvested restricted
stock and (iii) 12,256 shares of vested stock options. Does not include
unvested stock options to purchase 25,024 shares of common stock issuable pursuant
to options that have not vested.
|
|
|
(9)
|
Includes (i) 17,500 shares of common stock owned of
record by Mr. McCurdy, (ii) 27,000 shares of unvested restricted
stock, and (iii) 6,128 shares of vested stock options. Does not include
unvested stock options to purchase 12,512 shares of common stock issuable
pursuant to options that have not vested.
|
|
|
(10)
|
Includes (i) 12,206 shares owned of record by
Mr. White, and (ii) vested stock options to purchase 6,128 shares
of common stock held by the named executive.
|
|
|
(11)
|
Includes (i) 19,009 shares of common stock owned of
record by Mr. Parker, (ii) 27,000 shares of unvested restricted
stock and (iii) 6,128 shares of vested stock options. Does not include
unvested stock options to purchase 12,512 shares of common stock issuable
pursuant to options that have not vested.
|
|
|
(12)
|
Includes 1,605 shares of common stock owned of record by
Mr. Pittman.
|
|
|
(13)
|
Includes
(i) 818,547 shares which include shares owned of record by Maple Leaf
Partners, L.P., and 81,178 shares of common stock purchasable within 60
days upon the exercise of warrants owned of record by Maple Leaf Partners,
L.P., (ii) 531,683 shares which include shares owned of record by Maple
Leaf Offshore, Ltd. and 53,664 shares of common stock, purchasable within 60
days upon the exercise of
|
25
Table
of Contents
|
warrants
owned by Maple Leaf Offshore, Ltd., (iii) 59,179 shares which include shares
owned of record by Maple Leaf Partners I L.P. and 5,158 shares of common
stock, purchasable within 60 days upon the exercise of warrants owned by
Maple Leaf Partners I, L.P.
|
|
|
(14)
|
Includes
(i) 2,266,340 shares owned of record by Avista Capital Partners LP and
(ii) 597,614 shares owned of record by Avista Capital Partners
(Offshore), L.P., a company whose general partner is Avista Capital Partners
GP, LLC. Avista Capital Partners GP, LLC is also the general partner of
Avista.
|
|
|
(15)
|
Includes
3,088,505 shares of common stock issuable upon conversion of 208,771 shares
of Series B Preferred Stock held by Avista and 814,408 shares of common
stock issuable upon conversion of 55,049 shares of the Companys
Series B Preferred Stock held by Avista Capital Partners
(Offshore), L.P. Also includes
189,920 shares of common stock, purchasable within 60 days upon the exercise
of warrants owned by Avista and 50,080 shares of common stock, purchasable
within 60 days upon the exercise of warrants owned by Avista Capital Partners
(Offshore), L.P.
|
|
|
(16)
|
Includes
2,153,616 shares issued as part of the acquisition of PGS.
|
Compliance
With Section 16(a) of the Exchange Act
Section 16(a) of
the Exchange Act requires Geokinetics directors, executive officers and persons
who own more than ten percent of a registered class of Geokinetics equity
securities, to file with the SEC initial reports of ownership and reports of
changes in ownership of the common stock and other equity securities of the
Company. Officers, directors, and greater than ten percent beneficial owners
are required by SEC regulation to furnish Geokinetics with copies of all Section 16(a) reports
they file.
Based solely upon information furnished to Geokinetics and
contained in reports filed with the SEC, as well as any written representations
that no other reports were required, Geokinetics believes that all SEC
reporting obligations of its directors, executive officers and beneficial
owners of greater than ten percent were satisfied in compliance with Section 16
of the Exchange Act, during the fiscal year ended December 31, 2009.
COMPENSATION DISCUSSION AND
ANALYSIS
The
Compensation Committee is responsible for determining and approving, on an
annual basis, the total compensation level of the CEO and other senior
executives, based on its evaluation of Company performance, divisional
performance, and the executives individual performance relative to
pre-established performance goals. The
Senior Executive Incentive Program for the 2009 Plan year provides that:
minimum levels of performance must be achieved before bonuses are earned, the
amounts of bonus that can be earned in any year are capped, and bonus payouts
will accelerate after certain targets are reached to encourage continuing and
over achievement.
After reviewing the budget, the Compensation Committee
approved the corporate and business unit financial and non-financial
performance goals. The Compensation
Committee also established the annual base salaries and minimum target and
maximum annual cash incentive bonus levels for each of the executive
officers. After the audited financial
and non-financial results are available for the year, the Compensation
Committee determines the appropriate funding of the annual cash incentive pool
for payment of annual incentive bonuses and the funding of the equity pool for
grants of long-term incentive awards.
The Compensation Committee then takes into account the executives
individual performance to determine the amount of each executives annual
incentive bonus and the value of his or her long-term incentive awards. The Compensation Committee will also consider
recommendations from the CEO regarding the compensation levels for those
executives reporting directly to him. As
required, the Compensation Committee will meet periodically to review, among
other things, the compensation programs and recommended changes, the Companys
peer group, proxy and survey benchmarking data, internal pay disparity trends,
total compensation profiles for the Companys CEO and other executive officers,
CEO and senior management accountabilities and general compensation trends.
This
Compensation Discussion and Analysis provides an explanation of Geokinetics
compensation philosophy, policies and practices with respect to the Companys
chief executive officer, chief financial officer, and the other two most highly
compensated executive officers, who are collectively referred to as the named
executive officers (NEOs). These named executives include the following
individuals:
·
Richard F. Miles,
President and Chief Executive Officer (CEO)
·
Scott A. McCurdy,
Vice President and Chief Financial Officer (CFO)
26
Table of Contents
·
Lee Parker, Executive
Vice President Operations
·
James C. White,
Executive
Vice President Business
Development & Technology
Objectives
of Geokinetics Executive Compensation Program
Geokinetics
executive compensation philosophy is based on pay-for-performance. Geokinetics
performance-based incentive compensation programs provide a cash, or cash and
equity, payment to executives when certain Company, business segment and/or
individual goals and objectives are achieved.
Geokinetics
executive compensation programs are designed to achieve the following
objectives:
·
Attract and retain
talented and experienced executives in the highly competitive seismic industry;
·
Provide a total
compensation package which encourages pay-for-performance by aligning the
interests of Company executive officers and stockholders to increase
stockholder value and reward executive officers when stockholder value
increases;
·
Motivate and reward
executives whose knowledge, skills and performance are critical to Geokinetics
success;
·
Ensure fairness among
the executive management team by recognizing the contributions each executive
makes to Geokinetics success;
·
Foster a shared
commitment among executives by coordinating Company, team and individual goals
and objectives; and
·
Compensate Geokinetics
executives to manage the business to meet Geokinetics long-range objectives.
Executive
Officer Compensation
Principal Components of Compensation of Named Executive
Officers
The
compensation package offered to Geokinetics executive officers consists of:
·
Base salary, paid in
cash;
·
Incentive compensation
under the terms of the Senior Executive Incentive Program established for
senior executive officers, paid in cash, or cash and equity; and
·
Long-term incentive
equity compensation in the form of stock options or grants of restricted stock.
Geokinetics
current compensation package is designed to provide a balance between achieving
Company business objectives and providing competitive compensation to
executives. The cash componentsbase salary and cash incentive
compensationprovide a strong link between Geokinetics operational management
and financial performance and the compensation that is earned by executives.
The equity compensation component is designed to closely align Geokinetics
executives pay with the interests of Company stockholders and foster employee
retention.
The
Board of Directors, by and through the Compensation Committee, makes the
compensation decisions for the CEO.
Richard F. Miles, Geokinetics President and CEO, participates in
deliberations with the Compensation Committee with respect to compensation
decisions affecting other members of the senior executive management team.
Allocation of Compensation Among the Principal Components
The
Compensation Committee strives to offer a competitive base salary, severance
and bonus opportunity, and equity awards to the senior executive officers.
Geokinetics historical practice has been that a greater percentage of the
compensation of the most senior members of the management team should be
performance-based, which aligns the interests of the executive officers with
those of the stockholders. The base salaries of Geokinetics executives are
determined by evaluating individual performance and contributions as well as
comparison to internal peers and external market data for similar roles. An
executives actual base salary recognizes individual skills, experience,
sustained job performance and the individuals contributions to the
organization. Cash incentives link Company and
27
Table
of Contents
individual
performance based upon the achievement of various financial and safety goals
and objectives. Historically, equity grants have generally been an
event-driven, negotiated process based upon an executives involvement and
contribution to a major corporate event, such as an acquisition. Currently,
Geokinetics does not have a formal program to grant equity awards annually to
all executives. Additionally, Geokinetics does not currently have in place any
type of equity ownership requirements or guidelines specifying amounts or forms
of ownership of Company equity by members of the executive management team.
The
Compensation Committee has adopted compensation policies and programs designed
to attract, retain and motivate individuals with the skills and experience
necessary for Geokinetics to achieve its business objectives. These policies
will also serve to link pay with measurable performance, which in turn, should
help to align the interests of the executive management team with those of
Geokinetics stockholders.
Base Salary
Historically,
the Company utilizes salary survey data for benchmark positions for which pay
data is readily available from service companies to the oil and gas industry
located in Texas and the southwestern United States with annual revenue between
$100 million and $1 billion. For each
named executive officer, the Company typically reviews the relevant benchmark
position and the salary data from major sources, including from time to time: (1) a
national energy industry survey which includes exploration and production
companies, oil field service companies, and seismic companies; (2) a
confidential seismic industry compensation survey conducted through an industry
liaison group in which the Company has participated; and (3) publicly
available reports, including from the Economic Research Institute to supplement
the Companys compensation data. This
data is then reviewed by job title, and benchmark salary ranges are established
for each position. Each executives years of service, years of relevant
experience and time in position are evaluated in comparison to the external
benchmark ranges to establish the appropriate salary level in comparison to the
external data. Following a review of this data, the CEO makes recommendations
to the Compensation Committee regarding the base salary of the named executive
officers. Due to the economic circumstances existing at the beginning of 2009, the
Compensation Committee reviewed the base salaries of the named executive
officers and determined that there would be no adjustments for 2009.
Chief
Executive Officer
Richard F. Miles has been Geokinetics CEO
since August 2007. When Mr. Miles
was appointed CEO, the Company did not enter into a new employment agreement
with him but maintained his existing agreement.
The Company entered into a two-year employment agreement with Mr. Miles
on October 22, 2008, to formalize the employment relationship in his role
as CEO. Mr. Miles employment agreement provides for an annual base salary
of $375,000, which is to be reviewed annually.
Mr. Miles base salary was increased to $450,000 effective January 1,
2010.
Chief
Financial Officer
Scott A. McCurdy has been Geokinetics CFO since the Grant
acquisition in September 2006. Mr. McCurdys three-year employment
agreement, effective on September 8, 2006, provided for an annual base
salary of $200,000, which was reviewed and increased to $225,280 in April 2008
as part of the annual performance evaluation process. The agreement expired in 2009 and the Company
entered into a new employment agreement with Mr. McCurdy on March 22,
2010. The new agreement provides for an
annual base salary of $275,040 effective January 1, 2010, which is to be
reviewed annually.
Other Officers
Lee Parker has served as Executive Vice President since September 2007. Mr. Parkers three-year employment
agreement effective on September 8, 2006, provided an initial annual
salary of $160,000 and in August 2007, Mr. Parkers base salary was
increased to $210,000 annually, in conjunction with his promotion to Executive
Vice President International Operations.
Mr. Parkers salary was increased to $227,688 in April 2008 as
part of the annual performance evaluation process. On March 1, 2009, Mr. Parker was
appointed to the position of Executive Vice President Operations and no
salary adjustment was made at that time.
The agreement expired in 2009 and the Company entered into a new
employment agreement with Mr. Parker on March 22, 2010. The new agreement provides for an annual base
salary of $285,000 effective January 1, 2010, which is to be reviewed
annually.
28
Table of Contents
James C. White served
as Geokinetics Executive Vice President since March 5, 2007. Mr. Whites three-year employment
agreement executed in December 2005 provided for an annual base salary of
$220,000, which was reviewed annually. On September 20, 2006, Mr. Whites
base salary was increased to $260,000 as part of the Grant acquisition. Mr. Whites
salary was increased to $300,000 in April 2008 as part of the annual
performance evaluation process. On March 1, 2009, Mr. White was
appointed to the position of Executive Vice President Business Development &
Technology and no salary adjustment was made at that time. On August 25, 2009, Mr. White
resigned from the Company effective February 15, 2010.
Bonus Compensation
In
2009, the Company utilized a performance-based variable compensation program
for all key staff, management and executives.
Under this program, a bonus pool is created annually based on a target
percentage of each employees salary in accordance with the provisions
described in the Companys total compensation program. The bonus targets are
distributed in accordance with each employees organizational grade. The achievement of targets is based on
corporate performance, business unit performance and personal performance. Bonus eligible employees are measured on at
least two, but no more than three, of these components.
Historically
in the first quarter of each year, Executive Management presents key
performance indicators (KPIs) for the Company and for each strategic business
unit to the Compensation Committee for approval and recommendation to the Board
of Directors. These KPIs may include,
but are not limited to, annual revenue targets, annual Earnings before Income
Taxes, Depreciation and Amortization (EBITDA) targets, earnings per share (EPS)
targets, return on investment (ROI) for capital expenditures, annual safety
metrics, or other annual business goals as defined by the Board of
Directors. However, the Company retains
discretion to compensate certain key executives to adjust for unusual business
circumstances such as a significant change in business climate after the KPIs
were established or to retain critically skilled individuals. This exception notwithstanding, these
payments must be approved by the Compensation Committee and must fall within
the individuals compensation target range.
For
2009, the Compensation Committee established three KPIs: (a) 2009 annual
EBITDA of $88,844,000, (b) 2009 annual revenues of $572,819,000, and (c) 2009
total recordable incident rate of less than 3.7. For 2009, the KPIs for
Executive Management were weighted 50% for EBITDA, 25% for revenues, and 25%
for safety. The Company must reach at
least 75% of its target KPIs before any compensation may be paid out under the
plan. If the Company reaches 125% of the
target KPIs, the executives will be paid 200% of their target compensation,
respectively. The 2009 target compensation for Mr. Miles, McCurdy, Parker
and White was set at 75%, 60%, 60% and 60%, respectively of their 2009 base
compensation.
Additionally,
each named executive officer sets personal goals and objectives with his
supervisor. The CEO sets his personal
goals with the Compensation Committee, and he also reviews the goals of his
direct reports with the Compensation Committee. These personal goals will vary
for each individual but may include specific objectives around business
development, human capital management, safety, key project management,
training, or organizational change implementation. The bonus payable based on the achievement of
the KPIs described above may be increased or decreased by the Compensation
Committee within the executives target range based upon the achievement of the
executives personal goals.
Geokinetics has not historically paid guaranteed bonuses to
its executive officers except in unusual circumstances. The Company has from time to time paid
signing or retention bonuses in connection with the initial hiring or
appointment of an executive officer, or a change in an individuals position
and responsibilities. The bonus
compensation payments for fiscal 2009 shown in the Summary Compensation Table
were paid out in accordance with the 2009 plan.
Equity Compensation
The
historical practice of Geokinetics Board has been to grant equity-based awards
to attract, retain, motivate and reward employees, particularly executive
officers, and to encourage their ownership of an equity interest in
Geokinetics. To date, such grants have consisted of incentive stock options,
non-qualified stock options and restricted stock. Generally, the Board has
granted awards of stock options or restricted stock to executive officers upon
their appointment as executive officers, with the Companys obligation to grant
the awards typically memorialized in an offer letter, employment agreement or
an addendum to an employment agreement, entered into with the applicable
executive officer. On July 29, 2009, Mr. Miles received a grant of
42,000 shares of restricted
29
Table
of Contents
stock
which will vest equally over three years.
Also on July 29, 2009, Mr. McCurdy and Mr. Parker
received grants of 24,000 shares, respectively, of restricted stock which will
vest equally over three years.
Geokinetics has not historically had a plan that requires the Company to
grant equity-based awards to executive management on specified dates.
At the request of
the Compensation Committee, in 2009 we sought stockholder approval of a
one-time stock option repricing and exchange program (Option Exchange). Under
the Option Exchange, all our employees, including executive officers but
not Directors, who received incentive stock options in December 2007 with
an exercise price of $28.00 (ISOs), were eligible to
participate. As of March 31, 2009, our common stock closed at a
market price of $3.27, resulting in all of these ISOs being underwater.
The Compensation Committee
believed that these underwater ISOs no longer served as an effective incentive
to motivate and retain our employees. We believe our employees
currently considered these options as having little or no value.
Continuing to retain these ISOs would deliver minimal retention or incentive
value to the option holders and provided limited opportunity to recapture value
from the associated compensation expense unless the ISOs are surrendered or
cancelled.
At our Annual Meeting of Stockholders in 2009, our shareholders
approved the Option Exchange and on June 26, 2009, the Company commenced
the Option Exchange. Eligible employees (including executive
officers, but excluding Directors) were provided the opportunity to surrender
ISOs with an exercise price of $28.00 in exchange for a lesser amount of
replacement incentive stock options with a lower exercise price. The
Option Exchange expired at 5:00 p.m., Central, on July 27,
2009. Pursuant to the Option Exchange, 238,850 eligible ISOs were
tendered, representing 99.3% of the total ISOs eligible for exchange in the
Option Exchange. On July 27, 2009, the Company granted an
aggregate of 218,178 new stock options in exchange for eligible ISOs
surrendered in the Option Exchange. The exchange ratio for options was
0.92 replacement options to 1 eligible ISO. The exercise price of the new
stock option is $14.73, which was the closing price of Geokinetics common stock
on July 27, 2009, as reported by the NYSE Amex market. Under the
Option Exchange, Mr. Miles exchanged 34,000 eligible incentive stock
options for 31,280 replacement options, and Messrs. McCurdy, Parker and
White each exchanged 17,000 eligible incentive stock options for 15,640
replacement options.
Historically, Geokinetics has not made grants of equity-based
awards that were timed to precede or follow the release or withholding of
material non-public information but were made in conjunction with key
acquisitions and corporate actions designed to retain key personnel. It is
possible that Geokinetics may establish programs or policies regarding the
timing of equity-based awards in the future. The authority to make equity-based
awards to executive officers rests with the Compensation Committee, which may
consider the recommendations of the CEO, an independent compensation consultant
and other executive officers.
Severance and Change of Control Payments
Geokinetics
Board believes that in certain instances it should provide reasonable severance
benefits to Company employees, recognizing that it may be difficult for them to
find comparable employment within a short period of time. Further, in certain instances the Company may
provide reasonable severance benefits to a Company employee in consideration
for a noncompetition agreement The Board
also believes it prudent that the Company should disentangle itself as soon as
practicable from employees whose employment terminates. The Companys
historical practice for employees has been to make the termination of an
employee effective at the expiration of a required advance notice period. In
some situations, the termination of an employee is effective immediately upon
the communication of the termination. In such cases, Geokinetics has continued
to pay, on a post-termination basis, base salary compensation to the terminated
employee under his or her employment agreement, if any, for the specified
advance notice period.
Geokinetics
employment agreements with the named executives provide for substantial
payments in the event of termination of their respective employment agreements
or, in some instances, if Geokinetics undergoes a change of control. The
compensation due to the specific executive officer in the event of the
termination varies depending on the nature of the termination and the type and
timing of the termination. Additionally, the compensation due to the specific
executive officer in the event of a change in control varies depending on the
nature of the change in control and the resulting material impact to such
executives title, duties or a negative impact on overall compensation. For
additional information regarding the termination and change in control
provisions of an individual executives employment agreement, refer to Potential
Payments Upon Termination or Change in
30
Table
of Contents
Control
discussed later. In 2009 and 2010, the
Company moved towards removing Change of Control provisions from most executive
employment agreements and/or requiring a double trigger for severance payments.
Other Benefits
Geokinetics believes that establishing competitive benefit
packages for its employees is an important factor in attracting and retaining
highly qualified personnel. Executive officers are eligible to participate in
all of the employee benefit plans, including Company-paid medical, dental,
vision, group life and accidental death and dismemberment insurance and the 401(k) plan,
on the same basis as other employees.
Additionally, Geokinetics currently provides a matching contribution up
to 4.5% on a 6.0% employee contribution under its 401(k) and international
retirement plans. Geokinetics does not offer pension or retirement benefits.
International officers and employees may have slightly different employee
benefit plans than those offered domestically, typically based on certain legal
requirements in that specific country.
Perquisites
Geokinetics
does not have a formal process for its Board or Compensation Committee to regularly
review the perquisites received by members of senior management as it has tried
to eliminate most perquisites. Generally, perquisites are minimized and limited
to items that support business development or allow for efficient time and
resource management to enhance the productivity of the executive management
team. The perquisites received by each senior executive are determined by his
individual employment agreement. The specific perquisites which certain members
of the executive management team are currently receiving or have received in
the past include:
·
Reimbursement for all
reasonable travel, entertainment and other expenses incurred in connection with
the performance of his duties and obligations under his employment agreement;
·
Effective January 1,
2008, Geokinetics eliminated the monthly automobile allowance and added this
amount to each executives base salary; and
·
Effective December 31,
2008, Geokinetics eliminated paid membership in a lunch or country club of the
executives choice.
Board Process
For
the 2009 Plan year, Mr. Miles participated in deliberations with the
Compensation Committee concerning executive officer compensation. The Compensation Committee approves all
compensation and awards to the CEO, CFO, the CEOs direct reports, and certain
Vice Presidents of the various business segments. With respect to equity
compensation awarded to other employees, the Compensation Committee grants
awards generally based on the recommendation of the CEO or other executive
officers.
Compensation Committee
Report
We
have reviewed and discussed with management certain Compensation Discussion and
Analysis provisions to be included in the Companys 2010 proxy statement filed
pursuant to Section 14(a) of the Securities Exchange Act of 1934. Based
on the reviews and discussions referred to above, we recommend to the Board of
Directors that the Compensation Discussion and Analysis referred to above be
included in the Companys proxy statement.
Compensation Committee,
Gary M. Pittman (
Chairman
)
Robert L. Cabes, Jr.
Christopher M. Harte
31
Table of Contents
Summary
Compensation Table
The following table sets forth
information regarding compensation earned in or with respect to the last three
fiscal years by:
·
each person who served
as the chief executive officer in 2009;
·
each person who served
as the chief financial officer in 2009; and
·
the two most highly
compensated executive officers, other than the chief executive officer and
chief financial officer, who were serving as an executive officer at the end of
2009.
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
All Other
|
|
|
|
|
|
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Total
|
|
Name and Principal Position
|
|
Year
|
|
($)
|
|
($)
|
|
($)(1)(2)(3)
|
|
($)(4)
|
|
($)(5)
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard F. Miles,
|
|
2009
|
|
$
|
375,000
|
|
$
|
220,000
|
|
$
|
657,480
|
|
$
|
398,507
|
|
$
|
|
|
$
|
1,650,987
|
|
President and CEO
|
|
2008
|
|
$
|
366,618
|
|
$
|
230,000
|
|
$
|
67,200
|
|
$
|
|
|
$
|
104,140
|
|
$
|
767,958
|
|
|
|
2007
|
|
$
|
336,672
|
|
$
|
180,978
|
|
$
|
|
|
$
|
|
|
$
|
4,800
|
|
$
|
522,450
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott A. McCurdy,
|
|
2009
|
|
$
|
225,281
|
|
$
|
125,000
|
|
$
|
372,090
|
|
$
|
199,254
|
|
$
|
|
|
$
|
921,625
|
|
Vice President and CFO
|
|
2008
|
|
$
|
220,160
|
|
$
|
155,000
|
|
$
|
|
|
$
|
|
$
|
34,346
|
|
$
|
409,506
|
|
|
|
2007
|
|
$
|
200,000
|
|
$
|
115,489
|
|
$
|
|
|
$
|
|
$
|
4,800
|
|
$
|
320,289
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James C. White,
|
|
2009
|
|
$
|
300,000
|
|
$
|
102,000
|
|
$
|
|
|
$
|
199,254
|
|
$
|
|
|
$
|
601,254
|
|
Executive Vice President
|
|
2008
|
|
$
|
291,000
|
|
$
|
175,000
|
|
$
|
|
|
$
|
|
$
|
20,015
|
|
$
|
486,015
|
|
|
|
2007
|
|
$
|
260,000
|
|
$
|
200,000
|
|
$
|
|
|
$
|
|
$
|
15,600
|
|
$
|
475,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lee Parker,
|
|
2009
|
|
$
|
227,688
|
|
$
|
155,000
|
|
$
|
372,090
|
|
$
|
199,254
|
|
$
|
|
|
$
|
954,032
|
|
Executive Vice President
|
|
2008
|
|
$
|
224,466
|
|
$
|
175,000
|
|
$
|
|
|
$
|
|
$
|
23,524
|
|
$
|
422,990
|
|
|
|
2007
|
|
$
|
190,000
|
|
$
|
130,000
|
|
$
|
|
|
$
|
|
$
|
4,800
|
|
$
|
324,800
|
|
(1) These amounts reflect the aggregate grant date fair
value computed in accordance with FASB ASC Topic 718. As part of the 2009 bonus, the named
executives received restricted stock awards in place of a portion of the cash
bonus. Mr. Miles received 6,000
shares; Mr. McCurdy received 3,000 shares; and Mr. Parker received 3,000
shares. Mr. White only received a
cash bonus. The restricted stock, which
has an effective date of March 2, 2010 will vest equally on May 15,
2011 and May 15, 2012. The value of
the award is based on the closing stock price of $8.43 for March 1, 2010.
(2) On
July 29, 2009, the Board awarded 42,000 shares of restricted stock to Mr. Miles,
24,000 shares of restricted stock to Mr. McCurdy and 24,000 shares of
restricted stock to Mr. Parker. The
restricted stock award will vest equally on November 15, 2010, 2011 and
2012. The value of the award is based on the closing stock price of $14.45 for July 29,
2009.
(3)
On October 21, 2008, the Board awarded 10,000 shares of restricted stock to Mr. Miles.
The restricted stock award will vest equally over a three year period following
the completion of certain performance-based criteria. Geokinetics stock closed at $6.72 on October 21,
2008. The value of the stock award is determined by multiplying the number of
shares awarded at the $6.72 closing price. Mr. Miles paid $0.01 per share
of stock received for a total of $100.
(4)
On July 27,
2009, the Company granted replacement incentive stock options in exchange for
eligible incentive stock options as part of an option repricing. Mr. Miles was granted 31,280 ISOs, Mr. McCurdy
15,640 ISOs; Mr. White 15,640 ISOs and Mr. Parker 17,000 ISOs with a
fair market value of $12.74 per share.
The exercise price of the new stock option is $14.73, which was the
closing price of Geokinetics common stock on July 27, 2009, as reported by
the NYSE Amex market. The replacement stock options have a
replacement three-year vesting schedule, such that 20% vested on November 15,
2009, 35% will vest on November 15, 2010, and 45% will vest on November 15,
2011. These options replaced grants of incentive stock options to executives and
key employees on December 10, 2007 to vest ratably in the following
increments 15%, 15%, 30% and 40% over a four year period starting on November 15,
2008 and ending on November 15, 2011.
(5) Additional benefits received by the executive may
include 401(k) Company match, paid life insurance and country club
membership. No amounts of executive
compensation are deferred under the 401(k) plan. In 2008, Messrs. Miles, McCurdy and
Parker received $78,816, $25,820 and $15,763, respectively, as final payments
related to the Grant acquisition upon the release of funds from escrow. Under
the 401(k) match, Messrs. Miles, McCurdy, White and Parker received
$17,144, $8,286, $12,615, and $7,461, respectively. In 2008, Messrs. Miles and White
received reimbursement in the amount of approximately $6,200 and $6,900,
respectively, for country club memberships. Premiums are paid by the Company for life insurance
that exceeds $50,000, are taxable by the IRS and appear on an employees
earning statement. In 2008, the amount
of taxable premiums for Messrs. Miles, McCurdy, White and Parker were
$1,980, $240, $500, and $300, respectively. In 2007, Mr. White received
reimbursement of $3,600 for life insurance and $7,200 for country club
membership.
32
Table
of Contents
Executive Employment Arrangements
Geokinetics
is a party to the following employment agreements with the named executive
officers as of December 31, 2009. Various provisions of these employment
agreements have been discussed in previous sections. The cash component, which
consists of the base salary and the incentive bonus, represent the largest
proportion of the overall compensation package for each executive.
Geokinetics
is a party to a two-year employment agreement dated October 22, 2008, with
Richard F. Miles, pursuant to which Mr. Miles agreed to serve as the
President and Chief Executive Officer. The compensation payable to Mr. Miles
under the employment agreement consists of: (i) an annual base salary of
$375,000 per year (reviewed annually) and (ii) participation in the
Companys bonus program with a limit of 150% of base salary. Mr. Miles is also entitled to a lump sum
payment equal to two times his current base salary if Geokinetics terminates Mr. Miles
employment for any reason other than for cause, and two times his highest
historical base salary and most recent annual bonus in the event that the
Company terminates his employment or he is asked to take a lesser position as a
result of a change in control. The employment agreement also provides that Mr. Miles
will not compete in the seismic services industry globally during his
employment and for two years after a voluntary termination of employment by Mr. Miles.
Geokinetics
was a party to a three-year employment agreement, dated August 16, 2006
and effective September 8, 2006, with Scott A. McCurdy, pursuant to which Mr. McCurdy
agreed to serve as the Vice President and Chief Financial Officer of the
Company. The compensation payable to Mr. McCurdy under the employment
agreement consisted of: (i) an annual base salary of $200,000 per year
(reviewed annually), (ii) participation in the Senior Executive Incentive
Program up to an annual bonus limit of two times base salary and (iii) an
award of 17,500 restricted shares of Geokinetics Common Stock, which
restrictions will be lifted in three equal annual installments beginning September 8,
2007. Mr. McCurdy also was entitled to a lump sum payment equal to one
times his current base salary plus his most recent annual non-zero cash bonus
if Geokinetics terminated his employment for any reason other than for cause.
The employment agreement also provided that Mr. McCurdy will not compete
in the seismic services industry during his employment and for one year after a
voluntary termination of employment by Mr. McCurdy. Pursuant to its terms, Mr. McCurdys
employment agreement terminated on September 8, 2009. Geokinetics and Mr. McCurdy entered into
a new employment agreement on March 22, 2010, which provides for an annual
base salary of $275,040 effective January 1, 2010, to be reviewed
annually.
Geokinetics
was a party to a three year employment agreement dated August 10, 2006 and
effective September 8, 2006, with Lee Parker, pursuant to which Mr. Parker
agreed to serve as Vice PresidentTechnology.
The compensation payable to Mr. Parker consisted of: (i) an
annual base salary of $160,000 per year (reviewed annually) and (ii) participation
in an executive incentive program up to an annual bonus limit of two times base
salary. Mr. Parker also was entitled to compensation equal to one times
his current base salary plus his most recent bonus if Geokinetics severed his
employment for any reason other than for cause. The employment agreement also
provided that Mr. Parker will not compete in the seismic services industry
during his employment and for 12 months after a voluntary termination of
employment by Mr. Parker. Pursuant
to its terms, Mr. Parkers employment agreement terminated on September 8,
2009. Geokinetics and Mr. Parker
entered into a new employment agreement on March 22, 2010, which provides
for an annual base salary of $285,000 effective January 1, 2010, to be
reviewed annually.
Equity-Related
Compensation
2009 Grants of Plan-Based Awards
Set
forth in the table below is information regarding:
·
Cash amounts that could
have been received in 2009 by the named executive officers under the terms of
the senior management incentive compensation plans or individual employment
agreements; and
·
Stock option or
restricted stock awards granted by the Compensation Committee to the named
executive officers in 2009, reflected on an individual grant basis.
33
Table of Contents
All
awards were granted under the 2007 Plan.
These grants represent all of the awards to the named executive officers
under any plan during or with respect to 2007, 2008 and 2009.
Equity Related Compensation
Name and Principal Position
|
|
Grant Date
|
|
All Other Stock
Awards: Number of
Shares of Stock or
Units
|
|
All Other Option
Awards: Number of
Securities
Underlying Options
|
|
Exercise or Base
Price of Option
Awards ($/Sh)
|
|
Closing Market
Price on Grant
Date
|
|
Richard F. Miles,
|
|
3/2/2010
|
|
6,000
|
|
|
|
$
|
|
|
$
|
8.43
|
|
President and CEO
|
|
7/29/2009
|
|
42,000
|
|
|
|
$
|
|
|
$
|
14.45
|
|
|
|
7/29/2009
|
|
|
|
31,280
|
|
$
|
14.73
|
|
$
|
12.74
|
|
|
|
10/21/2008
|
|
10,000
|
|
|
|
$
|
|
|
$
|
6.72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott A. McCurdy,
|
|
3/2/2010
|
|
3,000
|
|
|
|
$
|
|
|
$
|
8.43
|
|
Vice President and CFO
|
|
7/29/2009
|
|
|
|
15,640
|
|
$
|
14.73
|
|
$
|
12.74
|
|
|
|
7/29/2009
|
|
24,000
|
|
|
|
$
|
|
|
$
|
14.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James C. White,
|
|
7/29/2009
|
|
|
|
15,640
|
|
$
|
14.73
|
|
$
|
12.74
|
|
Executive Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lee Parker,
|
|
3/2/2010
|
|
3,000
|
|
|
|
$
|
|
|
$
|
8.43
|
|
Executive Vice President
|
|
7/29/2009
|
|
|
|
15,640
|
|
$
|
14.73
|
|
$
|
12.74
|
|
|
|
7/29/2009
|
|
24,000
|
|
|
|
$
|
|
|
$
|
14.45
|
|
Outstanding Equity Awards as of December 31, 2009
The
following table provides information as of December 31, 2009, regarding
vested and unvested stock options and restricted stock awards held by each of
the named executive officers.
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
Name
|
|
Grant Date
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
Option
Exercise Price
($)
|
|
Option
Expiration Date
|
|
Number of
Shares or
Units of
Stock That
Have Not
Vested (#)
|
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested (1)
|
|
Richard
F. Miles,
|
|
7/29/2009
|
|
12,256
|
|
25,024
|
|
$
|
14.73
|
|
12/10/2013
|
|
|
|
|
|
President
and CEO
|
|
7/29/2009
|
|
|
|
|
|
|
|
|
|
42,000
|
|
$
|
404,040
|
|
|
|
10/21/2008
|
|
|
|
|
|
|
|
|
|
10,000
|
|
$
|
96,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott
A. McCurdy,
|
|
7/29/2009
|
|
6,128
|
|
12,512
|
|
$
|
14.73
|
|
12/10/2013
|
|
|
|
$
|
|
|
Vice
President and CFO
|
|
7/29/2009
|
|
|
|
|
|
|
|
|
|
24,000
|
|
$
|
230,880
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
C. White,
|
|
7/29/2009
|
|
6,128
|
|
12,512
|
|
$
|
14.73
|
|
12/10/2013
|
|
|
|
$
|
|
|
Executive
Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lee
Parker,
|
|
7/29/2009
|
|
6,128
|
|
12,512
|
|
$
|
14.73
|
|
12/10/2013
|
|
|
|
$
|
|
|
Executive
Vice President
|
|
7/29/2009
|
|
|
|
|
|
|
|
|
|
24,000
|
|
$
|
230,880
|
|
(1) The market value is determined by the closing stock
price of $9.62 on December 31, 2009.
With respect to the 10,000 shares of restricted stock granted to Mr. Miles
on October 21, 2008, those shares will vest in three installments: the
first installment of 3,333 shares will vest on the first Company vesting date (November 15
th
or May 15
th
) following a period of 90 consecutive trading days within which the
average closing price of the Companys stock is $18.00 per share or higher; the
second installment of 3,333 shares will vest 12 months after the first
installment vesting date; and the final installment of 3,334 shares will vest
24 months after the first installment vesting date.
34
Table of Contents
Options Exercised and Stock Vested as of December 31, 2009
The
following table provides information as of December 31, 2009, regarding
options exercised and vested stock awards held by each of the named executive
officers.
|
|
Option Awards
|
|
Stock Awards
|
|
Name
|
|
Number of
Shares
Acquired on
Exercise
(#)
|
|
Value
Realized on
Exercise
($)
|
|
Number of
Shares
Acquired on
Vesting
(#)
|
|
Value
Realized
on Vesting
($) (1)
|
|
Richard
F. Miles, President and CEO
|
|
|
|
$
|
|
|
6,667
|
|
$
|
114,672
|
|
Scott
A. McCurdy, Vice President and CFO
|
|
|
|
$
|
|
|
5,834
|
|
$
|
100,345
|
|
James
C. White, Executive Vice President
|
|
|
|
$
|
|
|
3,334
|
|
$
|
57,345
|
|
Lee
Parker, Executive Vice President
|
|
|
|
$
|
|
|
3,334
|
|
$
|
57,345
|
|
(1) The final
one-third of the restricted stock awards vested on September 8, 2009. The
closing stock price on September 8, 2009 was $17.20.
Pension
Benefits
None
of the named executive officers are covered by a pension plan or other similar
benefit plan that provides for payments or other benefits at, following, or in
connection with retirement.
Nonqualified
Deferred Compensation
None
of the named executive officers are covered by a defined contribution or other
plan that provides for the deferral of compensation on a basis that is not
tax-qualified.
As previously discussed, although the Company does not have any formal
deferred compensation arrangements, to address the application of Section 409A
of the Internal Revenue Code of 1986 and to ensure compliance therewith, the
Company reviewed its compensation plans to identify any potential deferred
compensation issues.
Potential Payments Upon Termination or Change in Control
Geokinetics
has entered into an employment agreement with Richard F. Miles that requires
the Company to make payments upon the severance of employment or a change in
control of the Company. The specific payment amount and the benefit levels
received by Mr. Miles is determined under the provisions of his particular
employment agreement. As discussed above, at previous times, Geokinetics has
been a party to effective employment agreements with other named executive
officers. However, at this time, Mr. Miles
is the only named executive office party to an effective employment agreement
with Geokinetics.
Chief
Executive OfficerRichard F. Miles
Under
his employment agreement effective October 22, 2008, if his employment is
severed for any reason other than for cause, Mr. Miles is entitled to
receive as compensation a sum equal to two times his annual base salary. In the event his employment was severed on December 31,
2009, Mr. Miles would have received $750,000, payable over 24 months. Additionally, Geokinetics would have
continued to pay for his medical insurance coverage at the existing level for
two years following his termination date, which had an estimated value of
$6,000.
Geokinetics
employment agreement with Mr. Miles prohibits him from competing in the
seismic services industry during the term of his employment and for a period of
two years after the termination of his employment either at the Companys election
or if he voluntarily leaves. The non-compete is global. His employment
agreement also includes an executed non-disclosure and confidentiality
agreement with respect to disclosure of Geokinetics proprietary or
confidential information.
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Director
Compensation
For
2009, each incumbent non-employee director received an annual retainer of
$25,000 and each director is also entitled to receive $1,000 per Board meeting
attended in person or by telephone. An
additional stipend of $15,000 was received by the Chairman; $15,000 for the
Audit Committee Chairman; $15,000 for the Compensation Committee Chairman;
$5,000 for the Nominating and Governance Committee Chairman; and each Committee
member is entitled to receive $500 per Committee meeting attended in person or
by telephone. An additional stipend of
$45,000 was earned by Mr. Pittman for service on an Independent Special
Committee of the Board of Directors related to the financing of the acquisition
of the
on-shore seismic acquisition and multi-client library
business of PGS.
The
Board grants future equity awards to directors on an annual basis in an amount
recommended by the Compensation Committee and approved by the full Board. In June 2009, the Compensation Committee
recommended an award of 4,000 shares of restricted stock to the directors for
2009. The value of the restricted stock
price was based on the closing stock price of $13.17 on June 29,
2009. The restricted stock will vest
equally over four years on May 15, 2010, 2011, 2011 and 2012.
There
is no deferred compensation for directors.
Name
|
|
Fees Earned
or Paid in
Cash
($)
|
|
Stock
Awards
($)
|
|
Total
($)
|
|
William R. Ziegler
Chairman of the Board;
|
|
$
|
50,500
|
|
$
|
52,680
|
|
$
|
103,180
|
|
Gary M. Pittman
Chairman of Compensation Committee
|
|
$
|
102,500
|
|
$
|
52,680
|
|
$
|
155,180
|
|
Christopher M. Harte
Chairman of Corporate Governance and Nominating
Committee
|
|
$
|
40,000
|
|
$
|
52,680
|
|
$
|
92,680
|
|
Steven A. Webster,
Director
|
|
$
|
35,000
|
|
$
|
52,680
|
|
$
|
87,680
|
|
Robert L. Cabes, Jr.,
Director (1)
|
|
$
|
37,000
|
|
$
|
52,680
|
|
$
|
89,680
|
|
Christopher D. Strong
Chairman of Audit Committee
|
|
$
|
53,000
|
|
$
|
52,680
|
|
$
|
105,680
|
|
(1) Mr. Cabes
is obligated under his employment arrangement with Avista Capital Holdings LP
to transfer any remuneration he receives as a director of the Company to
Avista.
OTHER BUSINESS
The Board of Directors
knows of no other business to be brought before the Annual Meeting other than
the proposals set forth in this proxy statement. If any other proposals come
before the meeting, 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
|
|
|
|
/s/
WILLIAM L. MOLL, JR.
|
|
William
L. Moll, Jr.
|
|
Corporate
Secretary
|
Houston, Texas
March 26, 2010
36
Table of
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EXHIBIT A
GEOKINETICS INC.
2010 STOCK AWARDS PLAN
(As Effective April 1, 2010)
Table of
Contents
GEOKINETICS INC.
2010 STOCK AWARDS PLAN
SECTION 1.
GENERAL PROVISIONS RELATING TO
PLAN GOVERNANCE, COVERAGE AND BENEFITS
1.1
Bac
kground and Purpose
Geokinetics Inc., a Delaware corporation (the Company), has adopted
this plan document, entitled Geokinetics Inc. 2010 Stock Awards Plan (the Plan),
effective as of April 1, 2010 (the Effective Date).
The
purpose of the Plan is to foster and promote the long-term financial success of
the Company and to increase stockholder value by: (a) encouraging the
commitment of selected key Employees, Consultants and Outside Directors, (b) motivating
superior performance of key Employees, Consultants and Outside Directors by
means of long-term performance related incentives, (c) encouraging and
providing key Employees, Consultants and Outside Directors with a program for
obtaining ownership interests in the Company which link and align their
personal interests to those of the Companys stockholders, (d) attracting
and retaining key Employees, Consultants and Outside Directors by providing
competitive compensation opportunities, and (e) enabling key Employees,
Consultants and Outside Directors to share in the long-term growth and success
of the Company.
The
Plan provides for payment of various forms of compensation. It is not intended
to be a plan that is subject to the Employee Retirement Income Security Act of
1974, as amended (
ERISA
). The
Plan will be interpreted, construed and administered consistent with its status
as a plan that is not subject to ERISA.
The
Plan will remain in effect, subject to the right of the Board to amend or
terminate the Plan at any time pursuant to
Section 7.7
, until all
Shares subject to the Plan have been purchased or acquired according to its
provisions. However, in no event may an Incentive Stock Option be granted under
the Plan after the expiration of ten (10) years from the Effective Date to
the extent required by Code Section 422(b)(2).
1.2
Definitions
The
following terms shall have the meanings set forth below:
(a)
1934 A
ct. The
Securities Exchange Act of 1934, as amended.
(b)
Affiliate.
Any person
or entity that is a member of the same controlled group of corporations or
other entities with the Company, as determined under Code Section 414.
(c)
Authorized
Officer.
The Chairman of the Board, the CEO or any other senior officer of the
Company to whom either of them delegate the authority to execute any Incentive
Agreement for and on behalf of the Company. No officer or director shall be an
Authorized Officer with respect to any Incentive Agreement for himself.
(d)
Award.
A grant of an
award under the Plan to a Holder, individually or collectively, including any
Nonqualified Stock Option, Incentive Stock Option (ISO), Stock Appreciation
Right (SAR), Restricted Stock Award, Restricted Stock Unit, Phantom Stock Award
or Other Stock-Based Award, as well as any Supplemental Payment with respect
thereto.
(e)
Board.
The
then-current Board of Directors of the Company.
(f)
Cause
. When used in
connection with the termination of a Holders Employment, shall mean any of the
following: (1) a failure by Holder to carry out, or malfeasance or
insubordination in carrying out, reasonably assigned duties or instructions
consistent with Holders position; (2) Holders
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conviction by a court of competent jurisdiction of a crime involving
moral turpitude or a felony or entering the plea of nolo contendere to such
crime by the Holder; (3) the commission by the Holder of a demonstrable
act of fraud, or a demonstrable misappropriation of funds or property, of or
upon the Company or any Affiliate; (4) the knowing engagement by the
Holder, without the written approval of the Board, in any material activity
that competes with the business of the Company or any Affiliate, or which would
result in a material injury to the business or reputation of the Company or any
Affiliate; for purposes of this definition, no act or failure to act on
Employees part shall be deemed willful or knowing unless it is done or
omitted by Employee without the Employees reasonable belief that such action
or omission was in the best interest of the Company or an Affiliate (assuming
disclosure of the pertinent facts, any action or omission by Holder after
consultation with, and in accordance with the advice of, legal counsel reasonably
acceptable to the Company shall be deemed to have been taken in good faith and
to not be willful or knowing for purposes of this Agreement).
(g)
CEO.
The then-current
Chief Executive Officer of the Company.
(h)
Change in
Control
.
Any of the events described in and subject to
Section 6.8
.
(i)
Change in
Control Value.
(i) The per
Share price offered to stockholders of the Company in any merger,
consolidation, reorganization, sale of assets or dissolution transaction, (ii) the
per Share price offered to stockholders of the Company in any tender offer or
exchange offer whereby a Change in Control takes place, or (iii) if a
Change in Control occurs other than pursuant to clauses (i) or (ii) above,
the Fair Market Value per Share of the Shares into which Awards are
exercisable, as determined by the Committee, whichever is applicable. In the event that the consideration offered
to stockholders of the Company consists of anything other than cash, the
Committee shall determine the fair cash equivalent of the portion of the
consideration offered which is other than cash.
(j)
Code.
The Internal
Revenue Code of 1986, as amended. Reference in the Plan to any section of the
Code shall be deemed to include any amendments or successor provisions to any
section and any regulations under such section.
(k)
Committee.
The Board
or any committee appointed by the Board to administer the Plan. If the Company is a Publicly Held
Corporation, the Plan shall be administered by the Committee appointed by the
Board consisting of not less than two directors who fulfill the nonemployee
director requirements of Rule 16b-3 and the outside director
requirements of Code Section 162(m). In either case, the Committee may be
the Compensation Committee of the Board, or any subcommittee of the
Compensation Committee, provided that the members of the Committee satisfy the
requirements of the previous provisions of this paragraph.
The Board shall have the power to fill vacancies on
the Committee arising by resignation, death, removal or otherwise. The Board,
in its sole discretion, may bifurcate the powers and duties of the Committee
among one or more separate committees, or retain all powers and duties of the
Committee in a single Committee. The members of the Committee shall serve at
the discretion of the Board.
Notwithstanding the preceding paragraphs of this
Section 1.2(j)
,
the term Committee as used in the Plan with respect to any Award for an
Outside Director shall refer to the entire Board. In the case of an Award for an Outside
Director, the Board shall have all the powers and responsibilities of the
Committee hereunder as to such Award, and any actions as to such Award may be
acted upon only by the Board (unless it otherwise designates in its
discretion). When the Board exercises its authority to act in the capacity as
the Committee hereunder with respect to an Award for an Outside Director, it
shall so designate with respect to any action that it undertakes in its
capacity as the Committee.
(l)
Common Stock.
The
common stock of the Company, $0.001 par value per share, and any class of
common stock into which such common shares may hereafter be converted,
reclassified or recapitalized.
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(m)
Company.
Geokinetics
Inc., a corporation organized under the laws of the State of Delaware, and any
successor in interest thereto.
(n)
Consultant.
An
independent agent, consultant, attorney, or any other individual who is not an
Outside Director or an Employee and who, in the opinion of the Committee, is (i) in
a position to contribute to the growth or financial success of the Company (or
any Parent or Subsidiary), (ii) is a natural person and (iii) provides
bona fide
services to the Company
(or any Parent or Subsidiary), which services are not in connection with the
offer or sale of securities in a capital raising transaction, and does not
directly or indirectly promote or maintain a market for the Companys
securities.
(o)
Covered
Employee.
A named executive officer who is one of the
group of covered employees, as defined in Code Section 162(m) and
Treasury Regulation Section 1.162-27(c) (or its successor), during
any period that the Company is a Publicly Held Corporation.
(p)
Director.
An
individual elected to the Board by the stockholders of the Company or by the
Board under applicable corporate law who is serving on the Board on the date
the Plan is adopted by the Board or is elected to the Board after such date.
(q)
Disability.
As
determined by the Committee in its discretion exercised in good faith, a
physical or mental condition of the Holder that would entitle him to payment of
disability income payments under the Companys long term disability insurance
policy or plan for employees, as then effective, if any; or in the event that
the Holder is not covered, for whatever reason, under the Companys long-term
disability insurance policy or plan, Disability means a permanent and total disability
as defined in Code Section 22(e)(3). A determination of Disability may be
made by a physician selected or approved by the Committee and, in this respect,
the Holder shall submit to any reasonable examination(s) required in the
opinion of such physician.
(r)
Employee.
Any
employee of the Company (or any Parent or Subsidiary) within the meaning of
Code Section 3401(c) including, without limitation, officers who are
Directors.
(s)
Employment.
Employment means that the individual is employed as an Employee, or
engaged as a Consultant or Outside Director, by the Company (or any Parent or
Subsidiary), or by any corporation issuing or assuming an Award in any
transaction described in Code Section 424(a), or by a parent corporation
or a subsidiary corporation of such corporation issuing or assuming such Award,
as the parent-subsidiary relationship shall be determined at the time of the
corporate action described in Code Section 424(a). In this regard, neither
the transfer of a Holder from Employment by the Company to Employment by any
Parent or Subsidiary, nor the transfer of a Holder from Employment by any
Parent or Subsidiary to Employment by the Company, shall be deemed to be a
termination of Employment of the Holder. Moreover, the Employment of a Holder
shall not be deemed to have been terminated because of an approved leave of
absence from active Employment on account of temporary illness, authorized
vacation or granted for reasons of professional advancement, education, or
health, or during any period required to be treated as a leave of absence by
virtue of any applicable statute, Company personnel policy or written
agreement.
The term Employment for purposes of the Plan shall
include (i) active performance of agreed services by a Consultant for the
Company (or any Parent or Subsidiary) or (ii) current membership on the
Board by an Outside Director.
All determinations hereunder regarding Employment,
and termination of Employment, shall be made by the Committee in its
discretion.
(t)
Fair Market
Value.
While the Company is a Publicly Held
Corporation, the Fair Market Value of one Share on the date in question shall
be (i) the mean of the high and low sales prices on such day for a Share
as quoted on the American Stock Exchange, the National Association of
Securities Dealers Automated Quotation System (NASDAQ) or the national
securities exchange on which Shares are then
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principally listed or admitted to trading, or (ii) if not quoted
on a national securities exchange, the average between the reported high and
low or the closing bid and asked prices for a Share as quoted by the National
Quotation Bureaus Pink Sheets or the National Association of Securities
Dealers OTC Bulletin Board System. If
there was no public trade of Common Stock on the date in question, Fair Market
Value shall be determined by reference to the last preceding date on which such
a trade was so reported.
If the Company is not a Publicly Held Corporation at
the time a determination of the Fair Market Value of the Common Stock is
required to be made hereunder, the determination of Fair Market Value for
purposes of the Plan shall be made by the Committee in its discretion as it
deems appropriate. In this respect, the
Committee may rely on such financial data, appraisals, valuations, experts, and
other sources as, in its sole and absolute discretion, it deems advisable under
the circumstances. With respect to Stock
Options, SARs, and other Awards subject to Code Section 409A, such Fair
Market Value shall be determined by the Committee consistent with the
requirements of Section 409A in order to satisfy the exception under Section 409A
for stock rights.
(u)
Holde
r. Any
Employee, Consultant or Outside Director who has been granted an Award under
the Plan.
(v)
Immediate Famil
y.
With respect to a Holder, the Holders child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, former spouse, sibling, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law,
including adoptive relationships.
(w)
Incentive
Agreemen
t. The written agreement entered into between
the Company and the Holder setting forth the terms and conditions pursuant to
which an Award is granted under the Plan, as such agreement is further defined
in
Section 6.1
, including an Option Agreement, Phantom Stock Award
Agreement, Restricted Stock Agreement, Restricted Stock Unit Agreement, and
Stock Appreciation Rights Agreement.
(x)
Incentive Stock
Option or IS
O. A Stock Option granted by the Committee to an
Employee under
Section 2
which is designated by the Committee as an
Incentive Stock Option and intended to qualify as an Incentive Stock Option
under Code Section 422.
(y)
Insider.
If the
Company is a Publicly Held Corporation, an individual who is, on the relevant
date, an officer, director or ten percent (10%) beneficial owner of any class
of the Companys equity securities that is registered pursuant to Section 12
of the 1934 Act, all as defined under Section 16 of the 1934 Act.
(z)
Nonqualified
Stock
Option. A Stock Option granted by the Committee to a
Holder under
Section 2
that is not designated by the Committee as an
Incentive Stock Option.
(aa)
Option
Agreement
. A written Incentive Agreement between the
Company and a Holder with respect to a Stock Option.
(bb)
Option Price
. The
exercise price at which a Share may be purchased by the Holder of a Stock
Option.
(cc)
Other Stock-B
ased Award.
An award granted by the Committee to a Holder under
Section 4.1
that is valued in whole or in part by reference to, or is otherwise based upon,
Common Stock.
(dd)
Outside Direct
or. A
Director who is not, at the time of grant of an Award, an Employee of the
Company or any Parent or Subsidiary.
(ee)
Paren
t. Any
corporation (other than the Company) in an unbroken chain of corporations
ending with the Company if, at the time of grant of the Award, each of the
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in
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one of the other corporations in such chain. A corporation that attains the status of a
Parent on a date after the adoption of the Plan shall be considered a Parent
commencing as of such date.
(ff)
Performan
ce-Based Award.
A grant of an Award under the Plan pursuant to
Section 5
that is intended to satisfy the Performance-Based Exception.
(gg)
Performanc
e-Based Exception. The performance-based exception from the tax
deductibility limitations of Code Section 162(m), as prescribed in Code Section 162(m) and
Treasury Regulation Section 1.162-27(e) (or its successor), which is
applicable during such period that the Company is a Publicly Held Corporation.
(hh)
Performanc
e Criteria.
The business criteria that are specified by the Committee pursuant to
Section 5
for an Award that is intended to qualify for the Performance-Based Exception;
the satisfaction of such business criteria during the Performance Period being
required for the grant and/or vesting of the particular Award to occur, as
specified in the particular Incentive Agreement.
(ii)
Performance Pe
riod.
A period of time determined by the Committee over which performance is
measured for the purpose of determining a Holders right to, and the payment
value of, any Award that is intended to qualify for the Performance-Based
Exception.
(jj)
Phantom Stoc
k Award.
An award granted by the Committee to a Holder under
Section 4.1
that is valued in whole or in part by reference to, or is otherwise based upon,
Common Stock.
(kk)
Phantom
Stock Award Agreement. A written Incentive Agreement between the
Company and a Holder with respect to a Phantom Stock Award.
(ll)
Plan
. Geokinetics
Inc. 2010 Stock Awards Plan, as effective on the Effective Date, which is set
forth herein and as it may be amended from time to time.
(mm)
Plan Ye
ar. The
calendar year.
(nn)
Publi
cly Held Corporation.
A corporation issuing any class of common equity securities required to
be registered under Section 12 of the 1934 Act.
(oo)
Restri
cted Stock.
Common Stock that is issued or transferred to a Holder pursuant to
Section 3
.
(pp)
Restricted
Stock
Agreement. A written Incentive Agreement between the
Company and a Holder with respect to a Restricted Stock Award.
(qq)
Restricted Sto
ck Award.
An authorization by the Committee to issue or transfer Restricted Stock
to a Holder pursuant to
Section 3
.
(rr)
Restricted
Stock U
nit. A unit granted to a Holder pursuant to
Section 4.1
which entitles him to receive a Share or cash on the vesting date, as specified
in the Restricted Stock Unit Agreement.
(ss)
Restricted
Stock
Unit Agreement. A written Incentive Agreement between the
Company and a Holder with respect to an Award of Restricted Stock Unit(s).
(tt)
Restriction Pe
riod.
The period of time determined by the Committee and set forth in the
Incentive Agreement during which the transfer of Restricted Stock by the Holder
is restricted.
(uu)
Retireme
nt. The
voluntary termination of Employment from the Company or any Parent or
Subsidiary constituting retirement for age on any date after the Employee
attains the normal retirement
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age of 65 years, or such other age as may be designated by the
Committee in the Employees Incentive Agreement.
(vv)
Rule 16b-
3. Rule 16b-3
promulgated by the Securities and Exchange Commission under the 1934 Act, as
such may be amended from time to time, and any successor rule, regulation or
statute fulfilling the same or a similar function.
(ww)
Shar
e. A share of
the Common Stock of the Company, par value, $.01 per share.
(xx)
Share
Pool. The
number of Shares authorized for issuance under
Section 1.4
, as
adjusted for (i) Awards and payouts under
Section 1.5
and (ii) changes
and adjustments as described in
Section 6.6
.
(yy)
Spre
ad. In the case
of a Stock Appreciation Right, an amount equal to the excess, if any, of the
Fair Market Value of a Share on the date such right is exercised over the
exercise price per Share designated in such Stock Appreciation Right.
(zz)
Stock Apprecia
tion Right or SAR. A Stock Appreciation Right as described in
Section 2.5
.
(aaa)
Stock Appr
eciation Rights Agreement. A written Incentive Agreement between the
Company and a Holder with respect to an Award of Stock Appreciation Rights.
(bbb)
Stock Op
tion or Option.
Pursuant to
Section 2
, (i) an Incentive Stock Option
granted to an Employee, or (ii) a Nonqualified Stock Option granted to an
Employee, Consultant or Outside Director, whereunder such option the Holder has
the right to purchase Shares of Common Stock. In accordance with Code Section 422,
only an Employee may be granted an Incentive Stock Option.
(ccc)
Subsidia
ry. Any
company (whether a corporation, partnership, joint venture or other form of
entity) in which the Company or a corporation in which the Company owns a
majority of the shares of capital stock, directly or indirectly, owns a greater
than 50% equity interest except that, with respect to the issuance of Incentive
Stock Options, the term Subsidiary shall have the same meaning as the term subsidiary
corporation as defined in Code Section 424(f) as required by Code Section 422.
(ddd)
Supplement
al Payment.
Any amount, as described in
Sections 2.4, 3.4 and/or 4.3
,
that is dedicated to payment of income taxes which are payable by the Holder
resulting from an Award.
1.3
Plan
Administration
(a)
Authori
ty of the Committee.
The Plan shall be administered by the Board or by the Committee as
authorized by the Board (hereinafter where the term
Committee
is used, the term
Board
shall be substituted
if no Committee has been established or is not in effect at such time). Subject to the provisions of the Plan, the
Committee shall have the sole authority, in its discretion, to (i) determine
which Holders shall receive an Award and participate in the Plan; (ii) determine
the time or times when such Award shall be made; (iii) determine the types
of Awards; (iv) determine the number of Shares which may be issued under each
Award or the value of such Award; and (v) determine the terms and
conditions of Awards and Incentive Agreements.
In making the foregoing determinations, the Committee may take into
account the nature of the services rendered by the respective Holders, their
present and potential contributions to the Companys success and such other
factors as the Committee in its discretion shall deem relevant. The Committee shall have such additional
powers as are delegated to it by the other provisions of the Plan. Subject to the express provisions of the
Plan, the Committee is authorized to construe the Plan and the Incentive
Agreements executed thereunder, to prescribe such rules and regulations
relating to the Plan as it may deem advisable to carry out the Plan, and to
determine the terms, restrictions and provisions of each Award, and to make all
other determinations necessary or advisable for administering the Plan. The Committee may correct any defect or
supply any omission or reconcile any inconsistency in any
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Incentive Agreement relating to an Award in the manner and to the
extent it shall deem expedient to carry it into effect.
(b)
Me
etings. The
Committee shall designate a chairman from among its members who shall preside
at its meetings, and shall designate a secretary, without regard to whether
that person is a member of the Committee, who shall keep the minutes of the
proceedings and all records, documents, and data pertaining to its
administration of the Plan. Meetings shall be held at such times and places as
shall be determined by the Committee and the Committee may hold telephonic
meetings. The Committee may take any action otherwise proper under the Plan by
the affirmative vote, taken with or without a meeting, of a majority of its
members. The Committee may authorize any one or more of its members or any
officer of the Company to execute and deliver documents on behalf of the
Committee.
(c)
Decis
ions Binding.
All determinations and decisions of the Committee shall be made in its
discretion pursuant to the provisions of the Plan, and shall be final,
conclusive and binding on all persons including the Company, its stockholders,
Employees, Holders, and their estates and beneficiaries. The Committees
decisions and determinations with respect to any Award need not be uniform and
may be made selectively among Awards and Holders, whether or not such Awards
are similar or such Holders are similarly situated.
(d)
Modific
ation of Outstanding Awards. Subject to the stockholder approval
requirements of
Section 7.7
if applicable, the Committee may, in
its discretion, provide for the extension of the exercisability of an Award,
accelerate the vesting or exercisability of an Award, eliminate or make less
restrictive any restrictions contained in an Award, waive any restriction or
other provisions of an Award, or otherwise amend or modify an Award in any
manner that (i) is not adverse to
the Holder to whom such Award was granted, (ii) is consented to by such
Holder, (iii) does not cause the Award to provide for the deferral of
compensation in a manner that does not comply with Code Section 409A or is
not exempt from Section 409A (unless otherwise determined by the
Committee), or (iv) does not contravene the requirements of the
Performance-Based Exception under Code Section 162(m), if applicable. With respect to an Award that is an ISO, no
adjustment thereto shall be made to the extent constituting a modification
within the meaning of Code Section 424(h)(3) unless otherwise agreed
to by the Holder in writing.
Notwithstanding the above provisions of this subsection, no amendment or
modification of an Award shall be made to the extent such modification results
in any Stock Option with an exercise price less than 100% of the Fair Market
Value per Share on the date of grant (110% for Holders of ISOs who are 10% or
greater stockholders pursuant to
Section 1.7(b)
). Except in
connection with a corporate transaction or event described in Section 6.6
of the Plan, the terms of outstanding Stock Options or SARs may not be amended
to (i) reduce the exercise price of outstanding Stock Options or SARs, or (ii) cancel
outstanding Stock Options or SARs in exchange for other Stock Options or SARs
with an exercise that is less than the exercise price of the original Stock
Option or SAR, without, in either case, stockholder approval. The intent of foregoing sentence is to
prohibit the repricing of underwater Stock Options and SARS.
(e)
Delegatio
n of Authority.
The Committee may delegate to designated officers or other employees of
the Company any of its duties and authority under the Plan pursuant to such
conditions or limitations as the Committee may establish from time to time,
including, without limitation, the authority to recommend Holders and the forms
and terms of their Awards; provided, however, the Committee may not delegate to
any person the authority (i) to grant Awards or (ii) if the Company
is a Publicly Held Corporation, to take any action which would contravene the
requirements of Rule 16b-3, the Performance-Based Exception under Code Section 162(m),
or the Sarbanes-Oxley Act of 2002.
(f)
Expense
s of Committee.
The Committee may employ legal counsel, including, without limitation,
independent legal counsel and counsel regularly employed by the Company, and
other agents as the Committee may deem appropriate for the administration of
the Plan. The Committee may rely upon any opinion or computation received from
any such counsel or agent. All expenses incurred by the Committee in
interpreting and administering the Plan, including, without limitation, meeting
expenses and professional fees, shall be paid by the Company.
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(g)
Surrender
of Previous Awards. The Committee may, in its discretion, grant
Awards to Holders on the condition that such Holders surrender to the Committee
for cancellation such other Awards (including, without limitation, Awards with
higher exercise prices) as the Committee directs. Awards granted on the
condition precedent of surrender of outstanding Awards shall not count against
the limits set forth in
Section 1.4
until such time as such
previous Awards are surrendered and cancelled.
No surrender of Awards shall be made under this
Section 1.3(g)
if
such surrender causes any Award to provide for the deferral of compensation in
a manner that is subject to taxation under Code Section 409A (unless
otherwise determined by the Committee).
(h)
Indemnificat
ion.
Each person who is or was a member of the Committee shall be indemnified
by the Company against and from any damage, loss, liability, cost and expense
that may be imposed upon or reasonably incurred by him in connection with or
resulting from any claim, action, suit, or proceeding to which he may be a
party or in which he may be involved by reason of any action taken or failure
to act under the Plan, except for any such act or omission constituting willful
misconduct or gross negligence. Each such person shall be indemnified by the
Company for all amounts paid by him in settlement thereof, with the Companys
approval, or paid by him in satisfaction of any judgment in any such action,
suit, or proceeding against him, provided he shall give the Company an
opportunity, at its own expense, to handle and defend the same before he
undertakes to handle and defend it on his own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification
to which such persons may be entitled (i) under the Companys Articles or
Certificate of Incorporation or Bylaws, (ii) pursuant to any separate
indemnification or hold harmless agreement with the Company, (iii) as a
matter of law, contract or otherwise, or (iv) any power that the Company
may have to indemnify them or hold them harmless.
1.4
Shares of
Common
Stock Available for Awards
Subject
to adjustment under
Section 6.6
, there shall be available for
Awards that are granted wholly or partly in Common Stock (including rights or
Stock Options that may be exercised for or settled in Common Stock) One Million
Six Hundred Thousand (1,600,000) Shares of Common Stock. The aggregate number of Shares which may be
issued upon exercise of ISOs shall be One Million (1,000,000) of the Shares
reserved pursuant to the first sentence of this paragraph. For purposes of counting Shares against the
ISO maximum number of reserved Shares, the net number of Shares issued pursuant
to the exercise of an ISO shall be counted.
The Committee may from time to time adopt and observe such procedures
concerning the counting of Shares against the Plan maximum as it may deem appropriate.
Pursuant
to
Section 1.5
, Shares shall be deemed to have been issued under
the Plan only to the extent actually issued and delivered pursuant to an Award.
To the extent that an Award lapses or the rights of its Holder terminate, or if
the Award is paid in cash or is exchange for an Award that does not involve
Common Stock, any Shares subject to such Award shall again be available for the
grant of an Award hereunder.
During
any period that the Company is a Publicly Held Corporation, then unless the
Committee determines that a particular Award granted to a Covered Employee is
not intended to comply with the Performance-Based Exception, the following rules shall
apply to grants of Awards to Covered Employees:
(a)
Subject to
adjustment as provided in
Section 6.6
, the maximum aggregate number
of Shares of Common Stock attributable to Awards paid out in Shares that may be
granted (in the case of Stock Options and SARs) or that may vest (in the case
of Restricted Stock, Restricted Stock Units or Other Stock-Based Awards), as
applicable, in any calendar year pursuant to any Award held by any individual
Covered Employee shall be Five Hundred Thousand (500,000) Shares.
(b)
The maximum
aggregate cash payout (with respect to any SAR, Phantom Stock Award or other
Award paid out in cash) in any calendar year which may be made to any Covered
Employee shall be Five Million dollars ($5,000,000).
(c)
With respect to
any Stock Option or SAR granted to a Covered Employee that is canceled or
repriced, the number of Shares subject to such Stock Option or SAR shall
continue to count against the
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maximum number of Shares that may be the subject of Stock Options or SARs
granted to such Covered Employee hereunder and, in this regard, such maximum
number shall be determined in accordance with Code Section 162(m).
(d)
The limitations
of subsections (a), (b) and (c) above shall be construed and
administered so as to comply with the Performance-Based Exception.
1.5
Share Pool A
djustments for Awards and Payouts
The
following Awards shall reduce, on a one Share for one Share basis, the number
of Shares authorized for issuance under the Share Pool:
(a)
Stock Option;
(b)
SAR;
(c)
Restricted
Stock Award;
(d)
Phantom Stock
Award; and
(e)
A Restricted
Stock Unit or Other Stock-Based Award in Shares.
The
following transactions shall restore, on a one Share for one Share basis, the
number of Shares authorized for issuance under the Share Pool:
(a)
A payout of a
Restricted Stock Award, Restricted Stock Unit, SAR, Phantom Stock Award or
Other Stock-Based Award in the form of cash and not Shares (but not the cashless
exercise of a Stock Option with a broker, as provided in
Section 2.3(a)
);
(b)
A cancellation,
termination, expiration, forfeiture, or lapse for any reason of any Shares
subject to an Award; and
(c)
Payment of an
Option Price by withholding Shares which otherwise would be acquired on
exercise (
i.e
., the Share Pool
shall be increased by the number of Shares withheld in payment of the Option
Price).
1.6
Common
Stock Available
The
Common Stock available for issuance or transfer under the Plan shall be made
available from Shares now or hereafter (a) held in the treasury of the
Company, (b) authorized but unissued shares, or (c) Shares to be
purchased or acquired by the Company. No
fractional shares shall be issued under the Plan; payment for fractional shares
shall be made in cash.
1.7
Participat
ion
(a)
Eligi
bility. Awards
may be granted only to persons who, at the time of grant, are Employees,
Consultants, and/or Outside Directors.
The Committee shall from time to time designate those Employees,
Consultants and/or Outside Directors, if any, to be granted Awards under the
Plan, the type of Awards granted, the number of Shares, Stock Options, rights
or units, as the case may be, which shall be granted to each such person, and
any other terms or conditions relating to the Awards as it may deem appropriate
to the extent consistent with the provisions of the Plan. A Holder who has been granted an Award may,
if otherwise eligible, be granted additional Awards at any time.
(b)
Incentiv
e Stock Option Eligibility. Incentive Stock Options may only be granted
to Employees. No Consultant or Outside
Director shall be eligible for the grant of any Incentive Stock
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Option. In addition, no
Incentive Stock Option shall be granted to an Employee if, at the time the
Option is granted, such Employee owns stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company or of its
Parent or Subsidiary, within the meaning of Code Section 422(b)(6), unless
(i) at the time such Option is granted the exercise price is at least 110%
of the Fair Market Value of the Shares subject to the Option on the date of
grant, and (ii) such Option by its terms is not exercisable after the
expiration of five (5) years from the date of grant. For the purpose of the immediately preceding
sentence, the attribution rules of Code Section 424(d) shall
apply for the purpose of determining an Employees percentage ownership in the
Company or any Parent or Subsidiary. This paragraph shall be construed
consistent with the requirements of Code Section 422.
1.8
Types of A
wards
The
types of Awards under the Plan are Stock Options, Stock Appreciation Rights and
Supplemental Payments as described in
Section 2
, Restricted Stock
Awards and Supplemental Payments as described in
Section 3
,
Restricted Stock Units, Phantom Stock Awards, and Other Stock-Based Awards and
Supplemental Payments as described in
Section 4
, or any combination
of the foregoing.
SECTION 2.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
2.1
Grant of Sto
ck Options
The
Committee is authorized to grant (a) Nonqualified Stock Options to
Employees, Consultants and/or Outside Directors and (b) Incentive Stock
Options to Employees only, in accordance with the terms and conditions of the
Plan, and with such additional terms and conditions, not inconsistent with the
Plan, as the Committee shall determine in its discretion. Successive grants may
be made to the same Holder regardless whether any Stock Option previously
granted to such person remains unexercised.
2.2
Stock Optio
n Terms
(a)
Written Agree
ment.
Each Stock Option shall be evidenced by an Option Agreement in such form
and containing such provisions not inconsistent with the provisions of the Plan
as the Committee from time to time shall approve, including, without
limitation, provisions to qualify as an Incentive Stock Option under Code Section 422. Among its other provisions, each Option
Agreement shall provide that the Stock Option may not be exercised earlier than
thirty (30) days from the date of grant and shall set forth the extent to which
the Holder shall have the right to exercise the Stock Option following
termination of the Holders Employment.
Such Option Agreement may also include, without limitation, provisions
relating to (i) vesting of Stock Options, subject to the provisions hereof
accelerating such vesting on a Change in Control, (ii) tax matters
(including provisions (y) permitting the delivery of additional shares of
Stock or the withholding of shares of Stock from those acquired upon exercise
to satisfy federal, state or local income tax withholding requirements and (z) dealing
with any other applicable employee wage withholding requirements), and (iii) any
other matters not inconsistent with the terms and provisions of this Plan that
the Committee shall, in its sole discretion, determine. The terms and
conditions of the respective Option Agreements need not be identical.
(b)
Numb
er of Shares. Each
Stock Option shall specify the number of Shares of Common Stock to which it
pertains.
(c)
Option
Price. The
Option Price at which a Share of Common Stock may be purchased upon exercise of
a Stock Option shall be determined by the Committee, provided that the Option
Price per Share of Common Stock under each Stock Option shall be (i) not
less than 100% of the Fair Market Value per Share on the date the Stock Option
is granted and (ii) specified in the Option Agreement; provided, however,
if the Holder of an ISO is a 10% or greater stockholder pursuant to
Section 1.7(b)
),
the Option
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Price for the ISO shall not be less than 110% of the Fair Market Value
on the date of grant. Each Stock Option
shall specify the method of exercise which shall be consistent with
Section 2.3(a)
.
(d)
Term
. In the Option
Agreement, the Committee shall fix the term of each Stock Option which shall
not be more than (i) ten (10) years from the date of grant, or (ii) five
(5) years from the date of grant for an ISO granted to 10% or greater
stockholder pursuant to
Section 1.7(b)
).
(e)
Exe
rcise. The
Committee shall determine the time or times at which a Stock Option may be
exercised, in whole or in part. Each
Stock Option may specify the required period of continuous Employment and/or
the Performance Criteria to be achieved before the Stock Option or portion
thereof will become exercisable. Each
Stock Option, the exercise of which, or the timing of the exercise of which, is
dependent, in whole or in part, on the achievement of designated Performance
Criteria, may specify a minimum level of achievement in respect of the
specified Performance Criteria below which no Stock Options will be exercisable
and a method for determining the number of Stock Options that will be
exercisable if performance is at or above such minimum but short of full
achievement of the Performance Criteria.
All such terms and conditions shall be set forth in the Option
Agreement.
(f)
$100,000
Annual Limit on Incentive Stock Options. To the extent that the aggregate Fair Market
Value (determined at the time the respective Incentive Stock Option is granted)
of the Shares of Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by a Holder during any calendar year (under the
Plan and any other incentive stock option plan of the Company and any Parent
or Subsidiary) exceeds $100,000, the Incentive Stock Options covering Shares in
excess of $100,000 (but not Incentive Stock Options covering Shares up to
$100,000) shall be treated as Nonqualified Stock Options as determined by the
Committee. The Committee shall
determine, in accordance with applicable provisions of the Code, Treasury
Regulations and other administrative pronouncements, which of a Holders
Incentive Stock Options will not constitute Incentive Stock Options because of
such limitation and shall notify the Holder of such determination as soon as
practicable after such determination. In
such event, all other terms and provisions of the Stock Option grant shall
remain unchanged.
2.3
Stock Option
Exercises
(a)
Meth
od of Exercise and Payment. Stock Options shall be exercised by the
delivery of a signed written notice of exercise to the Company, which must be
received as of a date set by the Company in advance of the effective date of
the proposed exercise. The notice shall
set forth the number of Shares with respect to which the Option is to be
exercised, accompanied by full payment for the Shares.
The Option Price upon exercise of any Stock Option
shall be payable to the Company in full either: (i) in cash or its
equivalent; or (ii) subject to prior approval by the Committee in its
discretion, by tendering previously acquired Shares having an aggregate Fair
Market Value at the time of exercise equal to the Option Price, (iii) subject
to prior approval by the Committee in its discretion, by withholding Shares
which otherwise would be acquired on exercise having an aggregate Fair Market
Value at the time of exercise equal to the total Option Price; or (iv) subject
to prior approval by the Committee in its discretion, by a combination of (i),
(ii), and (iii) above.
Any payment in Shares shall be effected by the
surrender of such Shares to the Company in good form for transfer and shall be
valued at their Fair Market Value on the date when the Stock Option is
exercised. Unless otherwise permitted by the Committee in its discretion, the
Holder shall not surrender, or attest to the ownership of, Shares in payment of
the Option Price if such action would cause the Company to recognize
compensation expense (or additional compensation expense) with respect to the
Stock Option for financial accounting reporting purposes.
The Committee, in its discretion, also may allow the
Option Price to be paid with such other consideration as shall constitute
lawful consideration for the issuance of Shares (including, without limitation,
effecting a cashless exercise with a broker of the Option), subject to
applicable securities law restrictions and tax withholdings, or by any other
means which the Committee determines to be consistent
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with
the Plans purpose and applicable law.
At the direction of the Holder, the broker will either (i) sell all
of the Shares received when the Option is exercised and pay the Holder the
proceeds of the sale (minus the Option Price, withholding taxes and any fees
due to the broker); or (ii) sell enough of the Shares received upon
exercise of the Option to cover the Option Price, withholding taxes and any
fees due the broker and deliver to the Holder (either directly or through the
Company) a stock certificate for the remaining Shares. Dispositions to a broker
effecting a cashless exercise are not exempt under Section 16 of the 1934
Act if the Company is a Publicly Held Corporation. Moreover, in no event will the Committee
allow the Option Price to be paid with a form of consideration, including a
loan or a cashless exercise, if such form of consideration would violate the
Sarbanes-Oxley Act of 2002 as determined by the Committee.
As soon as practicable after receipt of a written
notification of exercise and full payment, the Company shall deliver, or cause
to be delivered, to or on behalf of the Holder, in the name of the Holder or
other appropriate recipient, evidence of ownership for the number of Shares
purchased under the Stock Option.
Subject to
Section 6.4
, during the
lifetime of a Holder, each Option granted to the Holder shall be exercisable
only by the Holder (or his legal guardian in the event of his Disability) or by
a broker-dealer acting on his behalf pursuant to a cashless exercise under the
foregoing provisions of this
Section 2.3(a)
.
(b)
Restricti
ons on Share Transferability. The Committee may impose such restrictions on
any grant of Stock Options or on any Shares acquired pursuant to the exercise
of a Stock Option as it may deem advisable, including, without limitation,
restrictions under (i) any stockholders agreement, buy/sell agreement,
right of first refusal, non-competition, and any other agreement between the
Company and any of its securities holders or employees; (ii) any
applicable federal securities laws; (iii) the requirements of any stock
exchange or market upon which such Shares are then listed and/or traded; or (iv) any
blue sky or state securities law applicable to such Shares. Any certificate issued to evidence Shares
issued upon the exercise of an Award may bear such legends and statements as
the Committee shall deem advisable to assure compliance with applicable federal
and state laws and regulations.
Any Holder or other person exercising an Award shall
be required, if requested by the Committee, to give a written representation
that the Award and the Shares subject to the Award will be acquired for
investment and not with a view to public distribution; provided, however, that
the Committee, in its discretion, may release any person receiving an Award
from any such representations either prior to or subsequent to the exercise of
the Award.
(c)
Notificatio
n of Disqualifying Disposition of Shares from
Incentive Stock Options. Notwithstanding
any other provision of the Plan, a Holder who disposes of Shares of Common
Stock acquired upon the exercise of an Incentive Stock Option by a sale or
exchange either (i) within two (2) years after the date of the grant
of the Incentive Stock Option under which the Shares were acquired or (ii) within
one (1) year after the transfer of such Shares to him pursuant to
exercise, shall promptly notify the Company of such disposition, the amount
realized and his adjusted basis in such Shares.
(d)
Proceeds of Op
tion Exercise.
The proceeds received by the Company from the sale of Shares pursuant to
Stock Options exercised under the Plan shall be used for general corporate
purposes.
2.4
Supplemental P
ayment on Exercise of Nonqualified Stock
Options
The
Committee, either at the time of grant or exercise of any Nonqualified Stock
Option, may provide in the Option Agreement for a Supplemental Payment by the
Company to the Holder with respect to the exercise of any Nonqualified Stock
Option. The Supplemental Payment shall be in the amount specified by the
Committee, which amount shall not exceed the amount necessary to pay the
federal and state income tax payable with respect to both the exercise of the
Nonqualified Stock Option and the receipt of the Supplemental Payment, assuming
the holder is taxed at either the maximum effective income tax rate applicable
thereto or at a lower tax rate as deemed appropriate by the Committee in its
discretion. No Supplemental Payments
will be made with respect to any SARs or ISOs.
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2.5
Stock Ap
preciation Rights
(a)
Gra
nt. The Committee
may grant Stock Appreciation Rights to any Employee, Consultant or Outside
Director. A SAR is the right to receive
an amount equal to the Spread with respect to a Share upon the exercise of such
SAR. SARs may be granted in connection
with the grant of a Stock Option, in which case the Option Agreement will
provide that the SAR shall be cancelled when and to the extent the related
Stock Option is exercised and that exercise of the SAR will result in the
surrender of the right to purchase the Share under the Stock Option as to which
the SAR was exercised. Alternatively,
SARs may be granted independently of Stock Options in which case each Award of
SARs shall be evidenced by a Stock Appreciation Rights Agreement which contains
such terms and conditions as may be approved by the Committee. Any SARs granted under the Plan are intended
to satisfy the requirements under Code Section 409A to the effect that
such SARs do not provide for the deferral of compensation that is subject to
taxation under Code Section 409A.
(b)
Gener
al Provisions.
The terms and conditions of each SAR shall be evidenced by a Stock
Appreciation Rights Agreement. The
exercise price per Share shall not be less than 100% of the Fair Market Value
of a Share on the date of grant of the SAR (or such greater exercise price as
may be required if such SAR is granted in connection with an Incentive Stock
Option that must have an exercise price equal to 110% of the Fair Market Value
of a Share on the date of grant). The
term of the SAR shall be determined by the Committee but shall not be greater
than ten (10) years from the date of grant. Each Stock Appreciation Rights Agreement
shall provide that the SARs may not be exercised earlier than thirty (30) days
from the date of grant and shall set forth the extent to which the Holder shall
have the right to exercise the SARs following termination of the Holders
Employment. In addition, Stock
Appreciation Rights Agreements may also include, without limitation, provisions
relating to (i) vesting of Awards, subject to the provisions hereof
accelerating vesting on a Change in Control, (ii) tax matters (including
provisions covering applicable wage withholding requirements), and (iii) any
other matters not inconsistent with the terms and provisions of this Plan, that
the Committee shall determine in its sole discretion. The terms and conditions
of the respective Stock Appreciation Rights Agreements need not be
identical. The Committee cannot include
any feature for the deferral of compensation other than the deferral of
recognition of income until exercise of the SAR.
(c)
Ex
ercise. SARs shall
be exercisable subject to such terms and conditions as the Committee shall
specify in the Stock Appreciation Rights Agreement for the SAR grant. No SAR granted to an Insider may be exercised
prior to six (6) months from the date of grant, except in the event of his
death or Disability which occurs prior to the expiration of such six-month
period if so permitted under the Stock Appreciation Rights Agreement.
(d)
Settle
ment. Upon
exercise of the SAR, the Holder shall receive an amount equal to the Spread.
The Spread, less applicable withholdings, shall be payable only in cash or in
Shares, or a combination of both, as specified in the Stock Appreciation Rights
Agreement, within 30 calendar days of the exercise date. In addition, the Stock Appreciation Rights
Agreement under which such SARs are awarded, or any other agreements or
arrangements, shall not provide that the Company will purchase any Shares
delivered to the Holder as a result of the exercise or vesting of a SAR.
SECTION 3.
RESTRICTED STOCK
3.1
Award
of Restricted Stock
(a)
Gra
nt. With respect
to a Holder who is an Employee, Consultant or Outside Director, Shares of
Restricted Stock, which may be designated as a Performance-Based Award in the
discretion of the Committee, may be awarded by the Committee with such
restrictions during the Restriction Period as the Committee shall designate in
its discretion. Any such restrictions
may differ with respect to a particular Holder. Restricted Stock shall be
awarded for no additional consideration or such additional consideration as the
Committee may determine, which consideration may be less than, equal to or more
than the Fair
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Market Value of the shares of Restricted Stock on the grant date. The terms and conditions of each grant of
Restricted Stock shall be evidenced by a Restricted Stock Agreement and, during
the Restriction Period, such Shares of Restricted Stock must remain subject to
a substantial risk of forfeiture within the meaning given to such term under
Code Section 83. Such Restricted
Stock Agreement may also include, without limitation, provisions relating to (i) subject
to the provisions hereof accelerating vesting on a Change in Control, vesting
of Awards, (ii) tax matters (including provisions (y) covering any
applicable employee wage withholding requirements and (z) an election by
the Holder under Section 83(b) of the Code), and (iii) any other
matters not inconsistent with the terms and provisions of this Plan that the
Committee shall determine in its sole discretion. The terms and conditions of
the respective Restricted Stock Agreements need not be identical. Any Restricted Stock Award may, at the time
of grant, be designated by the Committee as a Performance-Based Award that is
intended to qualify for the Performance-Based Exception.
(b)
Imme
diate Transfer Without Immediate Delivery of Restricted
Stock. Unless otherwise specified in the
Holders Incentive Agreement, each Restricted Stock Award shall constitute an
immediate transfer of the record and beneficial ownership of the Shares of Restricted
Stock to the Holder in consideration of the performance of services as an
Employee, Consultant or Outside Director, as applicable, entitling such Holder
to all voting and other ownership rights in such Shares.
The Holder shall have the right to receive dividends
with respect to Shares subject to a Restricted Stock Award unless otherwise
provided in the Restricted Stock Agreement; provided, however, as specified in
the Restricted Stock Agreement, a Restricted Stock Award may limit the Holders
dividend rights during the Restriction Period in which the Shares of Restricted
Stock are subject to a substantial risk of forfeiture (within the meaning
given to such term under Code Section 83) and restrictions on
transfer. In the Restricted Stock Agreement,
the Committee may apply any restrictions to the dividends that the Committee
deems appropriate. Without limiting the
generality of the preceding sentence, if the grant or vesting of Shares of a
Restricted Stock Award granted to a Covered Employee, is designed to comply
with the requirements of the Performance-Based Exception, the Committee may
apply any restrictions it deems appropriate to the payment of dividends
declared with respect to such Shares of Restricted Stock, such that the
dividends and/or the Shares of Restricted Stock maintain eligibility for the
Performance-Based Exception. In the
event that any dividend constitutes a derivative security or an equity security
pursuant to the rules under Section 16 of the 1934 Act, if
applicable, such dividend shall be subject to a vesting period equal to the
remaining vesting period of the Shares of Restricted Stock with respect to
which the dividend is paid.
Shares awarded pursuant to a grant of Restricted
Stock, whether or not under a Performance-Based Award, may be issued in the
name of the Holder and held, together with a stock power endorsed in blank, by
the Committee or Company (or their delegates) or in trust or in escrow pursuant
to an agreement satisfactory to the Committee, as determined by the Committee,
until such time as the restrictions on transfer have expired. All such terms
and conditions shall be set forth in the particular Holders Restricted Stock
Agreement. The Company or Committee (or their delegates) shall issue to the
Holder a receipt evidencing the certificates held by it which are registered in
the name of the Holder.
3.2
Restricti
ons
(a)
Forfeit
ure of Restricted Stock. Restricted Stock awarded to a Holder may be
subject to the following restrictions until the expiration of the Restriction
Period: (i) a restriction that constitutes a substantial risk of
forfeiture (as defined in Code Section 83), and a restriction on
transferability; (ii) unless otherwise specified by the Committee in the
Restricted Stock Agreement, the Restricted Stock that is subject to
restrictions which are not satisfied shall be forfeited and all rights of the
Holder to such Shares shall terminate; and (iii) any other restrictions
that the Committee determines in advance are appropriate, including, without
limitation, rights of repurchase or first refusal in the Company or provisions
subjecting the Restricted Stock to a continuing substantial risk of forfeiture
in the hands of any transferee. Any such
restrictions shall be set forth in the particular Holders Restricted Stock
Agreement. The Holder may not sell,
transfer, pledge, exchange, hypothecate or otherwise dispose of the Shares
until the Restriction Period
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shall have expired, and a breach of the terms and conditions
established by the Committee pursuant to the Restricted Stock Agreement, shall
cause a forfeiture of the Restricted Stock Award.
(b)
Issuance
of Certificates.
Reasonably promptly after the date of grant with respect to Shares of
Restricted Stock, the Company shall cause to be issued a stock certificate,
registered in the name of the Holder to whom such Shares of Restricted Stock
were granted, evidencing such Shares; provided, however, that the Company shall
not cause to be issued such a stock certificate unless it has received a stock
power duly endorsed in blank with respect to such Shares. Each such stock certificate shall bear the
following legend or any other legend approved by the Company:
The transferability of this certificate and the shares of stock
represented hereby are subject to the restrictions, terms and conditions
(including forfeiture and restrictions against transfer) contained in the
Geokinetics Inc. 2010 Stock Awards Plan and a Restricted Stock Agreement
entered into between the registered owner of such shares and Geokinetics
Inc. A copy of the Plan and the
Restricted Stock Agreement are on file in the main corporate office of
Geokinetics Inc.
Such
legend shall not be removed from the certificate evidencing such Shares of
Restricted Stock unless and until such Shares vest pursuant to the terms of the
Incentive Agreement.
(c)
Removal o
f Restrictions.
The Committee, in its discretion, shall have the authority to remove any
or all of the restrictions on the Restricted Stock if it determines that, by
reason of a change in applicable law or another change in circumstance arising
after the grant date of the Restricted Stock, such action is necessary or
appropriate.
3.3
Delivery of Sha
res of Common Stock
Subject
to withholding taxes under
Section 7.3
and to the terms of the
Restricted Stock Agreement, a stock certificate evidencing the Shares of
Restricted Stock with respect to which the restrictions in the Restricted Stock
Agreement have been satisfied shall be delivered to the Holder or other
appropriate recipient free of restrictions.
3.4
Supplement
al Payment on Vesting of Restricted Stock
The
Committee, either at the time of grant or vesting of Restricted Stock, may
provide for a Supplemental Payment by the Company to the holder in an amount
specified by the Committee, which amount shall not exceed the amount necessary
to pay the federal and state income tax payable with respect to both the
vesting of the Restricted Stock and receipt of the Supplemental Payment,
assuming the Holder is taxed at either the maximum effective income tax rate
applicable thereto or at a lower tax rate as deemed appropriate by the
Committee in its discretion.
SECTION 4.
OTHER STOCK-BASED AWARDS
4.1
Grant of Other
Stock-Based Awards
Other
Stock-Based Awards (including Awards of Restricted Stock Units and Phantom
Stock Awards, as described below) may be awarded by the Committee to Holders
that are payable in Shares or in cash, as determined in the discretion of the
Committee to be consistent with the goals of the Company. Other types of
Stock-Based Awards that are payable in Shares include, without limitation,
purchase rights, Shares awarded that are not subject to any restrictions or
conditions, Shares awarded subject to the satisfaction of specified Performance
Criteria, convertible or exchangeable debentures, other rights convertible into
Shares, Awards valued by reference to the performance of a specified
Subsidiary, division or department of the Company, and settlement in
cancellation of rights of any person with a vested interest in any other plan,
fund, program or arrangement that is or was sponsored, maintained or
participated in by the Company (or any Parent or Subsidiary). As is the case
with other types of Awards, Other Stock-Based Awards may be awarded either
alone, or in addition to or in conjunction with, any other
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Awards. Other Stock-Based Awards that are payable in
Shares are not intended to be deferred compensation subject to taxation under
Code Section 409A, unless otherwise determined by the Committee at the
time of grant.
(a)
Restric
ted Stock Units. In addition to Other Stock-Based Awards that
are payable in Shares, the Committee may award Restricted Stock Units to a
Holder that are payable in Shares or cash, or in a combination thereof. Restricted Stock Units are not intended to be
deferred compensation that is subject to Code Section 409A. During the period beginning on the date such
Award is granted and ending on the payment date specified in the Restricted
Stock Unit Agreement, the Holders right to payment under the Restricted Stock
Unit Agreement must remain subject to a substantial risk of forfeiture within
the meaning of such term under Code Section 409A. In addition, payment to the Holder under the
Restricted Stock Unit Agreement shall be made within two and one-half months
(2½) months following the end of the calendar year in which the substantial
risk of forfeiture lapses unless an earlier payment date is specified in the
Restricted Stock Unit Agreement.
(b)
Phantom Stock
Awards.
In addition to the foregoing, the Committee may grant Phantom Stock
Awards to a Holder that are payable in Shares or cash, or in a combination
thereof. Phantom Stock Awards are rights
to receive an amount equal to the Fair Market Value of Shares over a specified
period of time, which vest over a period of time or upon the occurrence of an
event (including without limitation a Change in Control) as established by the
Committee, without payment of any amounts by the Holder thereof (except to the
extent otherwise required by law). Each
Phantom Stock Award may have a maximum value established by the Committee at
the time of such Award.
The Committee shall establish, with respect to and
at the time of each Phantom Stock Award, a period (which in no event shall be
longer than ten (10) years) over which, or in the event upon which, the
Award shall vest with respect to the Holder.
Following the end of the vesting period for a Phantom Stock Award, the
Holder of a Phantom Stock Award shall be entitled to receive payment of an
amount, not exceeding the maximum value of the Phantom Stock Award, based on
the then vested value of the Award.
Payment shall be made in a lump sum within two and one-half months (2½)
months following the end of the calendar year in which the Phantom Stock Award
(or a portion thereof) vests, unless an earlier payment date or installment
payments are specified in the Phantom Stock Award Agreement. Any payment to be made in Stock shall be
based on the Fair Market Value of the Stock on the payment date. Cash dividend
equivalents may not be paid during the vesting period with respect to a Phantom
Stock Award, but may be paid following the vesting period as determined by the
Committee and as provided in the Phantom Stock Award Agreement. If a payment of cash is to be made on a
deferred basis, the Committee shall establish whether interest shall be
credited, the rate thereof and any other terms and conditions applicable
thereto.
4.2
Other Sto
ck-Based Award Terms
(a)
Writte
n Agreement. The
terms and conditions of each grant of an Other Stock-Based Award (including an
Award of Restricted Stock Units and a Phantom Stock Award) shall be evidenced
by an Incentive Agreement.
(b)
Purchase
Price.
Except to the extent that an Other Stock-Based Award is granted in
substitution for an outstanding Award or is delivered upon exercise of a Stock
Option, the amount of consideration required to be received by the Company
shall be either (i) no consideration other than services rendered (in the
case of authorized and unissued shares), or to be rendered, by the Holder, or (ii) as
otherwise specified in the Incentive Agreement.
(c)
Performance
Criteria and Other Terms. The Committee may specify Performance
Criteria for (i) vesting in Other Stock-Based Awards and (ii) payment
thereof to the Holder, as it may determine in its discretion. The extent to which any such Performance
Criteria have been met shall be determined and certified by the Committee in
accordance with the requirements to qualify for the Performance-Based Exception
under Code Section 162(m). All
terms and conditions of Other Stock-Based Awards shall be determined by the
Committee and set forth in the Incentive Agreement.
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4.3
Supplem
ental Payment on Other Stock-Based Awards
The
Committee, either at the time of grant or vesting of an Other Stock-Based
Award, may provide for a Supplemental Payment by the Company to the holder in
an amount specified by the Committee, which amount shall not exceed the amount
necessary to pay the federal and state income tax payable with respect to both
the vesting of the Other Stock-Based Award and receipt of the Supplemental
Payment, assuming the Holder is taxed at either the maximum effective income
tax rate applicable thereto or at a lower tax rate as deemed appropriate by the
Committee in its discretion.
SECTION 5.
PERFORMANCE-BASED AWARDS AND PERFORMANCE CRITERIA
As
determined by the Committee at the time of grant, Performance-Based Awards may
be granted subject to performance objectives relating to one or more of the
following within the meaning of Code Section 162(m) (the
Performance Criteria
) in order to qualify
for the Performance-Based Exception:
(a)
profits
(including, but not limited to, profit growth, net operating profit or economic
profit);
(b)
profit-related
return ratios;
(c)
return measures
(including, but not limited to, return on assets, capital, equity, investment
or sales);
(d)
cash flow
(including, but not limited to, operating cash flow, free cash flow or cash
flow return on capital or investments);
(e)
earnings
(including but not limited to, total stockholder return, earnings per share or
earnings before or after taxes);
(f)
net sales
growth;
(g)
net earnings or
income (before or after taxes, interest, depreciation and/or amortization);
(h)
gross,
operating or net profit margins;
(i)
productivity
ratios;
(j)
share price
(including, but not limited to, growth measures and total stockholder return);
(k)
turnover of
assets, capital, or inventory;
(l)
expense
targets;
(m)
margins;
(n)
measures of
health, safety or environment;
(o)
operating
efficiency;
(p)
customer
service or satisfaction;
(q)
market share;
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(r)
credit quality;
(s)
debt ratios (
e.g.
, debt to equity and debt to total
capital); and
(t)
working capital
targets.
Performance
Criteria may be stated in absolute terms or relative to comparison companies or
indices to be achieved during a Performance Period. In the Incentive Agreement, the Committee
shall establish one or more Performance Criteria for each Award that is
intended to qualify for the Performance-Based Exception on its grant date.
In
establishing the Performance Criteria for each applicable Award, the Committee
may provide that the effect of specified extraordinary or unusual events will
be included or excluded (including, but not limited to, items of gain, loss or
expense determined to be extraordinary or unusual in nature or infrequent in
occurrence, or related to the disposal of a segment of business or a change in
accounting principle, each as determined in accordance with the standards under
Opinion No. 30 of the Accounting Principles Board (APB Opinion 30) or any
successor or other authoritative financial accounting standards, as determined
by the Committee). The terms of the
stated Performance Criteria for each applicable Award, whether for a
Performance Period of one (1) year or multiple years, must preclude the
Committees discretion to increase the amount payable to any Holder that would
otherwise be due upon attainment of the Performance Criteria, but may permit
the Committee to reduce the amount otherwise payable to the Holder in the
Committees discretion.
The
Performance Criteria specified in any Incentive Agreement need not be
applicable to all Awards, and may be particular to an individual Holders
function or business unit. The Committee
may establish the Performance Criteria of the Company (or any entity which is
affiliated by common ownership with the Company) as determined and designated
by the Committee, in its discretion, in the Incentive Agreement.
Performance-Based
Awards will be granted in the discretion of the Committee and will be (a) sufficiently
objective so that an independent person or entity having knowledge of the
relevant facts could determine the amount payable to Holder, if applicable, and
whether the pre-determined goals have been achieved with respect to the Award, (b) established
at a time when the performance outcome is substantially uncertain, (c) established
in writing no later than ninety (90) days after the commencement of the
Performance Period to which they apply (or no later than the date that 25% of
the Performance Period has elapsed in the case of a Performance Period of less
than a year), and (d) based on operating earnings, performance against
peers, earnings criteria or such other criteria as provided in this
Section 5
.
SECTION 6.
PROVISIONS RELATING TO PLAN PARTICIPATION
6.1
Incentive
Agreement
Each
Holder to whom an Award is granted shall be required to enter into an Incentive
Agreement with the Company, in such a form as is provided by the Committee. The Incentive Agreement shall contain
specific terms as determined by the Committee, in its discretion, with respect
to the Holders particular Award. Such
terms need not be uniform among all Holders or any similarly situated Holders.
The Incentive Agreement may include, without limitation, vesting, forfeiture
and other provisions particular to the particular Holders Award, as well as,
for example, provisions to the effect that the Holder (a) shall not
disclose any confidential information acquired during Employment with the
Company, (b) shall abide by all the terms and conditions of the Plan and
such other terms and conditions as may be imposed by the Committee, (c) shall
not interfere with the employment or other service of any employee, (d) shall
not compete with the Company or become involved in a conflict of interest with
the interests of the Company, (e) shall forfeit an Award if terminated for
Cause, (f) shall not be permitted to make an election under Code Section 83(b) when
applicable, and (g) shall be subject to any other agreement between the
Holder and the Company regarding Shares that may be acquired under an Award
including, without limitation, a stockholders agreement, buy-sell agreement,
or other agreement restricting the transferability of Shares by Holder. An Incentive
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Agreement
shall include such terms and conditions as are determined by the Committee, in
its discretion, to be appropriate with respect to any individual Holder. The Incentive Agreement shall be signed by
the Holder to whom the Award is made and by an Authorized Officer.
6.2
No Emp
loyment Rights Conferred
Nothing
in the Plan or any instrument executed pursuant to the Plan shall create any
Employment rights (including without limitation, rights to continued
Employment) in any Holder or affect the right of the Company to terminate the
Employment of any Holder at any time without regard to the existence of the
Plan.
6.3
Securities
Requirements
The
Company shall be under no obligation to effect the registration of any Shares
to be issued hereunder pursuant to the Securities Act of 1933 or to effect
similar compliance under any state securities laws. Notwithstanding anything herein to the
contrary, the Company shall not be obligated to cause to be issued or delivered
any certificates evidencing Shares pursuant to the Plan unless and until the
Company is advised by its counsel that the issuance and delivery of such
certificates is in compliance with all applicable laws, regulations of
governmental authorities, and the requirements of any securities exchange on
which Shares are traded. The Committee may require, as a condition of the
issuance and delivery of certificates evidencing Shares pursuant to the terms
hereof, that the recipient of such Shares make such covenants, agreements and
representations, and that such certificates bear such legends, as the
Committee, in its discretion, deems necessary or desirable.
The
Committee may, in its discretion, defer the effectiveness of any exercise of an
Award in order to allow the issuance of Shares to be made pursuant to
registration or an exemption from registration or other methods for compliance
available under federal or state securities laws. The Committee shall inform the Holder in
writing of its decision to defer the effectiveness of the exercise of an Award. During the period that the effectiveness of
the exercise of an Award has been deferred, the Holder may, by written notice
to the Committee, withdraw such exercise and obtain the refund of any amount
paid with respect thereto.
If
the Shares issuable on exercise of an Award are not registered under the
Securities Act of 1933, the Company may imprint on the certificate for such
Shares the following legend or any other legend which counsel for the Company
considers necessary or advisable to comply with the Securities Act of 1933:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (ACT), OR THE SECURITIES LAWS OF ANY
STATE. THE SECURITIES MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES
LAWS OR PURSUANT TO ANY APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF SUCH ACT AND SUCH LAWS OR PURSUANT TO A WRITTEN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
6.4
Transfe
rability
Awards
granted under the Plan shall not be transferable or assignable other than: (a) by
will or the laws of descent and distribution or (b) pursuant to a
qualified domestic relations order (as defined under Code Section 414(p));
provided, however, only with respect to Awards consisting of Nonqualified Stock
Options, the Committee may, in its discretion, authorize all or a portion of
the Nonqualified Stock Options to be granted on terms which permit transfer by
the Holder to (i) the members of the Holders Immediate Family, (ii) a
trust or trusts for the exclusive benefit of Immediate Family members, (iii) a
partnership in which such Immediate Family members are the only partners, or (iv) any
other entity owned solely by Immediate Family members; provided that (A) there
may be no consideration for any such transfer, (B) the Incentive Agreement
pursuant to which such Nonqualified Stock Options are granted must be approved
by the Committee, and must expressly provide for transferability in a manner
consistent with this
Section 6.4
, (C) subsequent transfers of
transferred Nonqualified Stock Options shall be
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prohibited
except in accordance with clauses (a) and (b) (above) of this
sentence, and (D) there may be no transfer of any Award in a listed
transaction as described in IRS Notice 2003-47.
Following any permitted transfer, the Nonqualified Stock Option shall continue
to be subject to the same terms and conditions as were applicable immediately
prior to transfer, provided that the term Holder shall be deemed to refer to
the transferee. The events of termination of employment, as set out in
Section 6.7
and in the Incentive Agreement, shall continue to be applied with respect to
the original Holder, and the Award shall be exercisable by the transferee only
to the extent, and for the periods, specified in the Incentive Agreement.
Except
as may otherwise be permitted under the Code, in the event of a permitted
transfer of a Nonqualified Stock Option hereunder, the original Holder shall
remain subject to withholding taxes upon exercise. In addition, the Company and
the Committee shall have no obligation to provide any notices to any Holder or
transferee thereof, including, for example, notice of the expiration of an
Award following the original Holders termination of employment.
The
designation by a Holder of a beneficiary of an Award shall not constitute
transfer of the Award. No transfer by will or by the laws of descent and
distribution shall be effective to bind the Company unless the Committee has
been furnished with a copy of the deceased Holders enforceable will or such
other evidence as the Committee deems necessary to establish the validity of
the transfer. Any attempted transfer in violation of this
Section 6.4
shall be void and ineffective. All determinations under this
Section 6.4
shall be made by the Committee in its discretion.
6.5
Rights
as a Stockholder
(a)
No Stockholde
r Rights.
Except as otherwise provided in
Section 3.1(b)
for
grants of Restricted Stock, a Holder of an Award (or a permitted transferee of
such Holder) shall have no rights as a stockholder with respect to any Shares
of Common Stock until the issuance of a stock certificate or other record of
ownership for such Shares.
(b)
Representatio
n of Ownership. In the case of the exercise of an Award by a
person or estate acquiring the right to exercise such Award by reason of the
death or Disability of a Holder, the Committee may require reasonable evidence
as to the ownership of such Award or the authority of such person. The Committee may also require such consents
and releases of taxing authorities as it deems advisable.
6.6
Change in
Stock and Adjustments
(a)
Changes
in Law or Circumstances. Subject to
Section 6.8
(which
only applies in the event of a Change in Control), in the event of any change
in applicable law or any change in circumstances which results in or would
result in any dilution of the rights granted under the Plan, or which otherwise
warrants an equitable adjustment because it interferes with the intended
operation of the Plan, then, if the Board or Committee should so determine, in
its absolute discretion, that such change equitably requires an adjustment in
the number or kind of shares of stock or other securities or property
theretofore subject, or which may become subject, to issuance or transfer under
the Plan or in the terms and conditions of outstanding Awards, such adjustment
shall be made in accordance with such determination. Such adjustments may
include changes with respect to (i) the aggregate number of Shares that
may be issued under the Plan, (ii) the number of Shares subject to Awards,
and (iii) the Option Price or other price per Share for outstanding
Awards, but shall not result in the grant of any Stock Option with an exercise
price less than 100% of the Fair Market Value per Share on the date of
grant. The Board or Committee shall give
notice to each applicable Holder of such adjustment which shall be effective
and binding.
(b)
Exercise of
Corporate Powers. The existence of the Plan or outstanding
Awards hereunder shall not affect in any way the right or power of the Company
or its stockholders to make or authorize any or all adjustments,
recapitalization, reorganization or other changes in the Companys capital
structure or its business or any merger or consolidation of the Company, or any
issue of bonds, debentures, preferred or prior preference stocks ahead of or
affecting the Common Stock or the rights thereof, or the
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dissolution or liquidation of the Company, or any sale or transfer of
all or any part of its assets or business, or any other corporate act or
proceeding whether of a similar character or otherwise.
(c)
Recapi
talization of the Company. Subject to
Section 6.8
(which
only applies in the event of a Change in Control), if while there are Awards
outstanding, the Company shall effect any subdivision or consolidation of
Shares of Common Stock or other capital readjustment, the payment of a stock
dividend, stock split, combination of Shares, recapitalization or other
increase or reduction in the number of Shares outstanding, without receiving
compensation therefor in money, services or property, then the number of Shares
available under the Plan and the number of Awards which may thereafter be exercised
shall (i) in the event of an increase in the number of outstanding Shares,
be proportionately increased and the Option Price or Fair Market Value of the
Awards awarded shall be proportionately reduced; and (ii) in the event of
a reduction in the number of outstanding Shares, be proportionately reduced,
and the Option Price or Fair Market Value of the Awards awarded shall be
proportionately increased. The Board or Committee shall take such action and
whatever other action it deems appropriate, in its discretion, so that the
value of each outstanding Award to the Holder shall not be adversely affected
by a corporate event described in this
Section 6.6(c)
.
(d)
Issue of Co
mmon Stock by the Company. Except as hereinabove expressly provided in
this
Section 6.6
and subject to
Section 6.8
in the
event of a Change in Control, the issue by the Company of shares of stock of
any class, or securities convertible into shares of stock of any class, for
cash or property, or for labor or services, either upon direct sale or upon the
exercise of rights or warrants to subscribe therefor, or upon any conversion of
shares or obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number of, or Option Price or Fair Market Value of, any
Awards then outstanding under previously granted Awards; provided, however, in
such event, outstanding Shares of Restricted Stock shall be treated the same as
outstanding unrestricted Shares of Common Stock.
(e)
Assumption
under the Plan of Outstanding Stock Options. Notwithstanding any other provision of the
Plan, the Board or Committee, in its discretion, may authorize the assumption
and continuation under the Plan of outstanding and unexercised stock options or
other types of stock-based incentive awards that were granted under a stock
option plan (or other type of stock incentive plan or agreement) that is or was
maintained by a corporation or other entity that was merged into, consolidated
with, or whose stock or assets were acquired by, the Company as the surviving
corporation. Any such action shall be
upon such terms and conditions as the Board or Committee, in its discretion,
may deem appropriate, including provisions to preserve the holders rights
under the previously granted and unexercised stock option or other stock-based
incentive award; such as, for example, retaining an existing exercise price
under an outstanding stock option. Any such assumption and continuation of any
such previously granted and unexercised incentive award shall be treated as an
outstanding Award under the Plan and shall thus count against the number of
Shares reserved for issuance pursuant to
Section 1.4
. In addition,
any Shares issued by the Company through the assumption or substitution of
outstanding grants from an acquired company shall reduce the Shares available
for grants under
Section 1.4
.
(f)
Assumptio
n of Awards by a Successor. Subject to the accelerated vesting and other
provisions of
Section 6.8
that apply in the event of a Change in
Control, in the event of a Corporate Event (defined below), each Holder shall
be entitled to receive, in lieu of the number of Shares subject to Awards, such
shares of capital stock or other securities or property as may be issuable or
payable with respect to or in exchange for the number of Shares which Holder
would have received had he exercised the Award immediately prior to such
Corporate Event, together with any adjustments (including, without limitation, adjustments
to the Option Price and the number of Shares issuable on exercise of
outstanding Stock Options). For this purpose, Shares of Restricted Stock shall
be treated the same as unrestricted outstanding Shares of Common Stock. A
Corporate Event
means any of the following: (i) a
dissolution or liquidation of the Company, (ii) a sale of all or
substantially all of the Companys assets, or (iii) a merger,
consolidation or combination involving the Company (other than a merger,
consolidation or combination (A) in which the Company is the continuing or
surviving corporation and (B) which does not result in the outstanding
Shares being converted into or exchanged for different securities, cash or
other property, or any
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combination thereof). The Board or Committee shall take whatever other
action it deems appropriate to preserve the rights of the Holders of outstanding
Awards.
Notwithstanding the previous paragraph of this
Section 6.6(f)
,
but subject to the accelerated vesting and other provisions of
Section 6.8
that apply in the event of a Change in Control, in the event of a Corporate
Event (described in the previous paragraph), the Board or Committee, in its
discretion, shall have the right and power to effectuate one or more of the
following alternatives with respect to outstanding Awards, other than
Restricted Stock Awards, which may vary among individual Holders and which may
vary among Awards held by any individual Holder:
(i)
cancel,
effective immediately prior to the occurrence of the Corporate Event, each
outstanding Award (whether or not then exercisable) and, in full consideration
of such cancellation, pay to the Holder an amount in cash equal to the excess
of (A) the value, as determined by the Board or Committee, of the property
(including cash) received by the holders of Common Stock as a result of such
Corporate Event over (B) the exercise price of such Award, if any;
provided, however, this subsection (i) shall be inapplicable to an Award
granted within six (6) months before the occurrence of the Corporate Event
if the Holder is an Insider and such disposition is not exempt under Rule 16b-3
(or other rules preventing liability of the Insider under Section 16(b) of
the Exchange Act) and, in that event, the provisions hereof shall be applicable
to such Award after the expiration of six (6) months from the date of
grant; or
(ii)
provide for the
exchange or substitution of each Award outstanding immediately prior to such
Corporate Event (whether or not then exercisable) for another award with
respect to the Common Stock or other property for which such Award is
exchangeable and, incident thereto, make an equitable adjustment as determined
by the Board or Committee, in its discretion, in the Option Price or exercise
price of the Award, if any, or in the number of Shares or amount of property
(including cash) subject to the Award; or
(iii)
provide that
thereafter upon the exercise of an Award that was previously granted, the
Holder shall be entitled to purchase or receive under such Awards, in lieu of
the number of Shares then covered by such Awards, the number and class of
shares of stock or other securities or property (including, without limitation,
cash) to which the Holder would have been entitled pursuant to the terms of the
agreement of the Corporate Event if, immediately prior to such Corporate Event,
the Holder has been the holder of record of the number of Shares then covered
by such Awards; provided, however, that if such consideration is not solely
common stock of the successor corporation, the Committee may, with the consent
of the successor corporation, provide for the consideration to be received to
be solely common stock of the successor corporation that is equal to the Fair
Market Value of the per Share consideration received by the holders of Shares
as the result of the Corporate Event; or
(iv)
provide for
assumption of the Plan and such outstanding Awards by the surviving entity or
its parent.
The Board or Committee, in its discretion, shall
have the authority to take whatever action it deems to be necessary or
appropriate to effectuate the provisions of this
Section 6.6(f)
.
6.7
Termination
of Employment, Death, Disability and
Retirement
(a)
Termination of
Employment.
Unless otherwise expressly provided in the Holders Incentive Agreement
or this Plan, if the Holders Employment is terminated for any reason other
than due to his death, Disability, Retirement or for Cause, any non-vested
portion of any Stock Option or other Award at the time of such termination
shall automatically expire and terminate and no further vesting shall occur
after the termination date. In such
event, except as otherwise expressly provided in his Incentive Agreement, the
Holder shall be entitled to exercise his rights only with respect to the
portion of the Award
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that was vested as of his termination of Employment date for a period
that shall end on the expiration date set forth in the Incentive Agreement.
(b)
Termination of
Employment for Cause. Unless otherwise expressly provided in the
Holders Incentive Agreement or this Plan, in the event of the termination of a
Holders Employment for Cause, all vested and non-vested Stock Options and any
other Awards granted to such Holder shall immediately expire, and shall not be
exercisable to any extent, as of 12:01 a.m. (CST) on the date of such
termination of Employment.
(c)
Retirement. U
nless
otherwise expressly provided in the Holders Incentive Agreement or this Plan,
upon the termination of Employment due to the Holders Retirement:
(i)
any non-vested
portion of any outstanding Option or other Award shall immediately terminate
and no further vesting shall occur; and
(ii)
any vested
Option or other Award shall expire on (A) the expiration date set forth in
the Incentive Agreement for such Award in the case of any Award other than an
Incentive Stock Option or (B) three (3) months after his termination
date in the case of an Incentive Stock Option.
(d)
Disab
ility or Death.
Unless otherwise expressly provided in the Holders Incentive Agreement
or the Plan, upon termination of Employment as a result of the Holders
Disability or death:
(i)
any non-vested
portion of any outstanding Option or other Award shall immediately terminate
upon termination of Employment and no further vesting shall occur; and
(ii)
any vested
Award shall expire on (A) the expiration date set forth in the Incentive
Agreement for any Award other than an Incentive Stock Option or (B) one (1) year
after his termination date in the case of an Incentive Stock Option.
In the case of any vested Incentive Stock Option
held by an Employee following termination of Employment, notwithstanding the
definition of Disability in
Section 1.2
, whether the Employee has
incurred a Disability for purposes of determining the length of the Option
exercise period following termination of Employment under this
Section 6.7(d)
shall
be determined by reference to Code Section 22(e)(3) to the extent
required by Code Section 422(c)(6).
The Committee shall determine whether a Disability for purposes of this
Section 6.7(d)
has
occurred.
(e)
Contin
uation.
Subject to the conditions and limitations of the Plan and applicable law
and regulation in the event that a Holder ceases to be an Employee, Outside
Director or Consultant, as applicable, for whatever reason, the Committee and
Holder may mutually agree with respect to any outstanding Option or other Award
then held by the Holder (i) for an acceleration or other adjustment in any
vesting schedule applicable to the Award; (ii) for a continuation of the
exercise period following termination for a longer period than is otherwise
provided under such Award; or (iii) to any other change in the terms and
conditions of the Award. In the event of
any such change to an outstanding Award, a written amendment to the Holders
Incentive Agreement shall be required.
No amendment to a Holders Incentive Agreement shall be made to the
extent compensation payable pursuant thereto as a result of such amendment
would be considered deferred compensation subject to taxation under Code Section 409A,
unless otherwise determined by the Committee.
6.8
Change in
Control
Notwithstanding
any contrary provision in the Plan, in the event of a Change in Control (as
defined below), the following actions shall automatically occur as of the day
immediately preceding the Change in Control date but
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only
if, and to the extent, expressly provided in the individual Holders Incentive
Agreement or in his individual employment agreement, if any:
(a)
all of the
Stock Options and Stock Appreciation Rights then outstanding shall become 100%
vested and immediately and fully exercisable;
(b)
all of the
restrictions and conditions of any Restricted Stock Awards, Restricted Stock
Units, Phantom Stock Awards, and any Other Stock-Based Awards then outstanding
shall be deemed satisfied, and the Restriction Period with respect thereto
shall be deemed to have expired, and thus each such Award shall become free of
all restrictions and fully vested; and
(c)
all of the
Performance-Based Awards shall become fully vested, deemed earned in full, and
promptly paid within thirty (30) days to the affected Holders without regard to
payment schedules and notwithstanding that the applicable performance cycle,
retention cycle or other restrictions and conditions have not been completed or
satisfied.
For
the sake of clarity, if the Holders Incentive Agreement or his individual
employment agreement, if any, does not provide for any of the foregoing actions
in the event of a Change in Control, then the Incentive Agreement (and Awards
thereunder) will not be affected by the Change in Control.
For
all purposes of this Plan, a
Change in
Control
of the Company means the occurrence of any one or more of
the following events:
(a)
the Company
shall not be the surviving entity in any merger, consolidation or other
reorganization (or survives only as a Subsidiary of an entity other than a
previously wholly-owned Subsidiary of the Company);
(b)
the Company
sells, leases or exchanges all or substantially all of its assets to any other
person or entity (other than a wholly-owned Subsidiary of the Company);
(c)
the Company is
to be dissolved and liquidated;
(d)
any person or
entity, including a group as contemplated by Section 13(d)(3) of
the 1934 Act, acquires or gains ownership or control (including, without
limitation, power to vote) of more than 50% of the outstanding Shares of the
Companys voting stock (based upon voting power); or
(e)
as a result of
or in connection with a contested election of Directors, the persons who were
Directors of the Company before such election shall cease to constitute a
majority of the Board.
Notwithstanding the foregoing, a Change in Control shall not include
any transaction or series of related transactions in which a stockholder or any
group (as contemplated by Section 13(d)(3) of the 1934 Act) of
which such stockholder is a member that, as of the date of approval of the Plan
by the Board, owns more than 25% of the outstanding shares of the Companys
voting stock (based upon the voting power of all shares of the Companys
capital stock, the holders of which are entitled to vote for the election of
Directors) acquires, directly or indirectly, more than 50% of the outstanding
shares of the Companys voting stock, but less than 75% of the outstanding
shares of the Companys voting stock (based, in either such case, upon the
voting power of all shares of the Companys capital stock, the holders of which
are entitled to vote for the election of Directors).
Notwithstanding
the foregoing provisions of this
Section 6.8
, to the extent that
any payment (or acceleration of payment) hereunder is considered to be deferred
compensation that is subject to, and not exempt under, Code Section 409A,
then the term Change in Control hereunder shall be construed to have the
meaning as set forth in Code Section 409A with respect to the payment (or
acceleration of payment) of such deferred compensation, but only to the extent
inconsistent with the foregoing provisions of the Change in Control definition
(above) as determined by the Board as it was constituted immediately prior to
the Change in Control event.
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6.9
Exc
hange of Awards
The
Committee may, in its discretion, permit any Holder to surrender outstanding
Awards in order to exercise or realize his rights under other Awards or in
exchange for the grant of new Awards, or require holders of Awards to surrender
outstanding Awards (or comparable rights under other plans or arrangements) as
a condition precedent to the grant of new Awards. No exchange of Awards shall be made under
this
Section 6.9
if such surrender causes any Award to provide for
the deferral of compensation in a manner that is subject to taxation under Code
Section 409A unless otherwise determined by the Committee.
SECTION 7.
GENERAL
7.1
Effectiv
e Date and Grant Period
The
Plan shall be effective upon the Effective Date, provided that the Plan has
been or is approved by the stockholders of the Company within twelve (12) months
of its adoption by the Board. Awards may
be granted under the Plan at any time prior to receipt of such stockholder
approval; provided, however, if the requisite stockholder approval is not
obtained within such 12-month period, any Awards granted hereunder shall
automatically become null and void and of no force or effect. Notwithstanding the foregoing, any Award that
is intended to satisfy the Performance-Based Exception shall not be granted
until the terms of the Plan are disclosed to, and approved by, stockholders of
the Company in accordance with the requirements of the Performance-Based
Exception. No Awards may be granted
under the Plan on or after the date which is ten (10) years following the
Effective Date. The Plan shall remain in
effect until all Awards granted under the Plan have been satisfied or expired.
7.2
Funding a
nd Liability of Company
No
provision of the Plan shall require the Company, for the purpose of satisfying
any obligations under the Plan, to purchase assets or place any assets in a
trust or other entity to which contributions are made, or otherwise to
segregate any assets. In addition, the Company shall not be required to
maintain separate bank accounts, books, records or other evidence of the
existence of a segregated or separately maintained or administered fund for
purposes of the Plan. Although bookkeeping accounts may be established with
respect to Holders who are entitled to cash, Common Stock or rights thereto
under the Plan, any such accounts shall be used merely as a bookkeeping
convenience. The Company shall not be required to segregate any assets that may
at any time be represented by cash, Common Stock or rights thereto. The Plan
shall not be construed as providing for such segregation, nor shall the
Company, the Board or the Committee be deemed to be a trustee of any cash,
Common Stock or rights thereto. Any liability or obligation of the Company to
any Holder with respect to an Award shall be based solely upon any contractual
obligations that may be created by this Plan and any Incentive Agreement, and
no such liability or obligation of the Company shall be deemed to be secured by
any pledge or other encumbrance on any property of the Company. The Company, Board, and Committee shall not
be required to give any security or bond for the performance of any obligation
that may be created by the Plan.
7.3
Withholdin
g Taxes
(a)
Tax Wi
thholding. The
Company shall have the power and the right to deduct or withhold, or require a
Holder to remit to the Company, an amount sufficient to satisfy federal, state,
and local taxes, domestic or foreign, required by law or regulation to be
withheld with respect to any taxable event arising as a result of the Plan or
an Award hereunder. Upon the lapse of restrictions on Restricted Stock, the
Committee, in its discretion, may elect to satisfy the tax withholding
requirement, in whole or in part, by having the Company withhold Shares having
a Fair Market Value on the date the tax is to be determined equal to the
minimum withholding taxes which could be imposed on the transaction as
determined by the Committee.
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(b)
Share
Withholding.
With respect to tax withholding required upon the exercise of Stock
Options or SARs, upon the lapse of restrictions on Restricted Stock, or upon
any other taxable event arising as a result of any Awards, Holders may elect,
subject to the approval of the Committee in its discretion, to satisfy the
withholding requirement, in whole or in part, by having the Company withhold
Shares having a Fair Market Value on the date the tax is to be determined equal
to the minimum withholding taxes which could be imposed on the transaction as
determined by the Committee. All such elections shall be made in writing,
signed by the Holder, and shall be subject to any restrictions or limitations
that the Committee, in its discretion, deems appropriate.
(c)
Ince
ntive Stock Options.
With respect to Shares received by a Holder pursuant to the exercise of
an Incentive Stock Option, if such Holder disposes of any such Shares within (i) two
years from the date of grant of such Option or (ii) one year after the
transfer of such shares to the Holder, the Company shall have the right to
withhold from any salary, wages or other compensation payable by the Company to
the Holder an amount sufficient to satisfy the minimum withholding taxes which
could be imposed with respect to such disqualifying disposition.
7.4
No Guar
antee of Tax Consequences
The
Company, Board and the Committee do not make any commitment or guarantee that
any federal, state, local or foreign tax treatment will apply or be available
to any person participating or eligible to participate hereunder.
7.5
Designatio
n of Beneficiary by Participant
Each
Holder may, from time to time, name any beneficiary or beneficiaries (who may
be named contingently or successively) to whom any benefit under the Plan is to
be paid in case of his death before he receives any or all of such
benefit. Each such designation shall
revoke all prior designations by the same Holder, shall be in a form prescribed
by the Committee, and will be effective only when filed by the Holder in
writing with the Committee (or its delegate), and received and accepted during
the Holders lifetime. In the absence of
any such designation, benefits remaining unpaid at the Holders death shall be
paid to the Holders estate.
7.6
Deferr
als
Subject
to the requirements for compliance with, or exemption under, Code Section 409A,
if applicable, the Committee shall not permit a Holder to defer such Holders
receipt of the payment of cash or the delivery of Shares under the terms of his
Incentive Agreement that would otherwise be due and payable by virtue of the
lapse or waiver of restrictions with respect to Restricted Stock or another
form of Award, or the satisfaction of any requirements or goals with respect to
any Awards.
7.7
Amend
ment and
Termination
The
Board shall have the power and authority to terminate or amend the Plan at any
time in its discretion; provided, however, the Board shall not, without the
approval of the stockholders of the Company within the time period required by
applicable law:
(a)
except as
provided in
Section 6.6,
increase the maximum number of Shares that
may be issued under the Plan pursuant to
Section 1.4
;
(b)
amend the
requirements as to the class of Employees eligible to purchase Common Stock
under the Plan;
(c)
extend the term
of the Plan; or,
(d)
if the Company
is a Publicly Held Corporation (i) increase the maximum limits on Awards
to Covered Employees as set for compliance with the Performance-Based Exception
or (ii)
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decrease the authority granted to the Committee under the Plan in
contravention of Rule 16b-3 to the extent Section 16 of the 1934 Act
is applicable to the Company.
No
termination, amendment, or modification of the Plan shall adversely affect in
any material way any outstanding Award previously granted to a Holder under the
Plan, without the written consent of such Holder or other designated holder of
such Award.
In
addition, to the extent that the Committee determines that (a) the listing
for qualification requirements of any national securities exchange or quotation
system on which the Companys Common Stock is then listed or quoted, if
applicable, or (b) the Code (or regulations promulgated thereunder),
require stockholder approval in order to maintain compliance with such listing
requirements or to maintain any favorable tax advantages or qualifications,
then the Plan shall not be amended in such respect without approval of the
Companys stockholders.
7.8
Requir
ements of Law
(a)
Governmental
Entities and Securities Exchanges. The granting of Awards and the issuance of
Shares under the Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
Certificates evidencing Shares delivered under the Plan (to the extent
that such shares are so evidenced) may be subject to such stop transfer orders
and other restrictions as the Committee may deem advisable under the rules and
regulations of the Securities and Exchange Commission, any securities exchange
or transaction reporting system upon which the Common Stock is then listed or
to which it is admitted for quotation, and any applicable federal or state
securities law or regulation. The Committee may cause a legend or legends to be
placed upon such certificates (if any) to make appropriate reference to such
restrictions.
The Company shall not be required to sell or issue any
Shares under any Award if the sale or issuance of such Shares would constitute
a violation by the Holder or any other individual exercising the Award, or the
Company, of any provision of any law or regulation of any governmental
authority, including without limitation, any federal or state securities law or
regulation. If at any time the Company
shall determine, in its discretion, that the listing, registration or
qualification of any Shares subject to an Award upon any securities exchange or
under any governmental regulatory body is necessary or desirable as a condition
of, or in connection with, the issuance or purchase of Shares hereunder, no
Shares may be issued or sold to the Holder or any other individual pursuant to
an Award unless such listing, registration, qualification, consent or approval
shall have been effected or obtained free of any conditions not acceptable to
the Company, and any delay caused thereby shall in no way affect the date of
termination of the Award. The Company
shall not be obligated to take any affirmative action in order to cause the
exercise of an Award or the issuance of Shares pursuant to the Plan to comply
with any law or regulation of any governmental authority. As to any jurisdiction that expressly imposes
the requirement that an Award shall not be exercisable until the Shares covered
thereby are registered or are exempt from registration, the exercise of such
Award (under circumstances in which the laws of such jurisdiction apply) shall
be deemed conditioned upon the effectiveness of such registration or the
availability of such an exemption.
(b)
Securities Act
Rule 701.
If no class of the Companys securities is registered under Section 12
of the 1934 Act, then unless otherwise determined by the Committee, grants of
Awards to Rule 701 Holders (as defined below) and issuances of the
underlying shares of Common Stock, if any, on the exercise or conversion of
such Awards are intended to comply with all applicable conditions of Securities
Act Rule 701 (
Rule 701
),
including, without limitation, the restrictions as to the amount of securities
that may be offered and sold in reliance on Rule 701, so as to qualify for
an exemption from the registration requirements of the Securities Act. Any
ambiguities or inconsistencies in the construction of an Award or the Plan
shall be interpreted to give effect to such intention. In accordance with Rule 701, each Holder
shall receive a copy of the Plan on or before the date an Award is granted to
him, as well as the additional disclosure required by Rule 701 (e) if
the aggregate sales price or amount of securities sold during any consecutive
12-month period exceeds $5,000,000 as determined under Rule 701(e). If Rule 701 (or any successor provision)
is amended to eliminate or otherwise modify any of the requirements specified
in Rule 701, then the provisions of this
Section 7.8(b)
shall
be interpreted and construed in accordance with Rule 701 as so
amended. For purposes of this
Section 7.8(b)
,
as determined in accordance with Rule 701, Rule
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701 Holders shall mean any Holder other than a director of the
Company, the Companys chairman, CEO, president, chief financial officer,
controller and any vice president of the Company, and any other key employee of
the Company who generally has access to financial and other business related
information and possesses sufficient sophistication to understand and evaluate
such information.
7.9
Rule 16b-
3 Securities Law Compliance for Insiders
If
the Company is a Publicly Held Corporation, transactions under the Plan with
respect to Insiders are intended to comply with all applicable conditions of Rule 16b-3
to the extent Section 16 of the 1934 Act is applicable to the
Company. Any ambiguities or
inconsistencies in the construction of an Award or the Plan shall be
interpreted to give effect to such intention, and to the extent any provision of
the Plan or action by the Committee fails to so comply, it shall be deemed null
and void to the extent permitted by law and deemed advisable by the Committee
in its discretion.
7.10
Compliance wit
h Code Section 162(m) for
Publicly Held Corporation
If
the Company is a Publicly Held Corporation, unless otherwise determined by the
Committee with respect to any particular Award, it is intended that the Plan
shall comply fully with the applicable requirements so that any Awards subject
to Section 162(m) that are granted to Covered Employees shall qualify
for the Performance-Based Exception. If
any provision of the Plan or an Incentive Agreement would disqualify the Plan
or would not otherwise permit the Plan or Award to comply with the
Performance-Based Exception as so intended, such provision shall be construed
or deemed to be amended to conform to the requirements of the Performance-Based
Exception to the extent permitted by applicable law and deemed advisable by the
Committee; provided, however, no such construction or amendment shall have an
adverse effect on the prior grant of an Award or the economic value to a Holder
of any outstanding Award.
7.11
Compliance
with Code Section 409A
It
is intended that Awards granted under the Plan shall be exempt from, or if not so
exempt, in compliance with, the applicable requirements to preclude taxation
under Code Section 409A, unless otherwise determined by the Committee at
the time of grant. In that respect, the
Company, by action of its Board, reserves the right to amend the Plan, and the
Board and the Committee each reserve the right to amend any outstanding
Incentive Agreement, to the extent deemed necessary or appropriate, in its
discretion, either to exempt such Award from taxation under Section 409A
or to comply with the requirements of Section 409A to preclude taxation
thereunder. Further, Holders who are Specified
Employees (as defined under Section 409A), shall be required to delay
payment under an Award for six (6) months after separation from service
(as defined under Section 409A), but only to the extent such Award is
subject to taxation under Section 409A and such delay is required to avoid
taxation under Section 409A.
7.12
Notices
(a)
N
otice From Insiders to Secretary of Change in Beneficial
Ownership. To the extent Section 16
of the 1934 Act is applicable to the Company, within two business days after
the date of a change in beneficial ownership of the Common Stock issued or
delivered pursuant to this Plan, an Insider should report to the Secretary of
the Company any such change to the beneficial ownership of Common Stock that is
required to be reported with respect to such Insider under Rule 16(a)-3
promulgated pursuant to the 1934 Act.
Whenever reasonably feasible, Insiders will provide the Committee with
advance notification of such change in beneficial ownership.
(b)
Notice to
Insiders and Securities and Exchange
Commission. To the extent applicable,
the Company shall provide notice to any Insider, as well as to the Securities
and Exchange Commission, of any blackout period, as defined in Section 306(a)(4) of
the Sarbanes-Oxley Act of 2002, in any case in which Insider is subject to the
requirements of Section 304 of said Act in connection with such blackout
period.
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Table of Contents
7.13
Pre-Cle
arance Agreement with Brokers
Notwithstanding
anything in the Plan to the contrary, no Shares issued pursuant to the Plan
will be delivered to a broker or dealer that receives such Shares for the
account of an Insider unless and until the broker or dealer enters into a
written agreement with the Company whereby such broker or dealer agrees to
report immediately to the Secretary of the Company (or other designated person)
a change in the beneficial ownership of such Shares.
7.14
Successors
to Company
All
obligations of the Company under the Plan with respect to Awards granted
hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the
business and/or assets of the Company.
7.15
Miscellaneo
us Provisions
(a)
No Employee,
Consultant, Outside Director, or other person shall have any claim or right to
be granted an Award under the Plan. Neither the Plan, nor any action taken
hereunder, shall be construed as giving any Employee, Consultant, or Outside
Director any right to be retained in the Employment or other service of the
Company or any Parent or Subsidiary.
(b)
The expenses of
the Plan shall be borne by the Company.
(c)
By accepting
any Award, each Holder and each person claiming by or through him shall be
deemed to have indicated his acceptance of the Plan.
(d)
The proceeds
received from the sale of Common Stock pursuant to the Plan shall be used for
general corporate purposes of the Company.
7.16
Sever
ability
In
the event that any provision of this Plan shall be held illegal, invalid or
unenforceable for any reason, such provision shall be fully severable, but
shall not affect the remaining provisions of the Plan, and the Plan shall be
construed and enforced as if the illegal, invalid, or unenforceable provision
was not included herein.
7.17
Gender, T
ense and Headings
Whenever
the context so requires, words of the masculine gender used herein shall
include the feminine and neuter, and words used in the singular shall include
the plural. Section headings as used herein are inserted solely for
convenience and reference and constitute no part of the interpretation or
construction of the Plan.
7.18
Governin
g Law
The
Plan shall be interpreted, construed and constructed in accordance with the
laws of the State of Delaware without regard to its conflicts of law
provisions, except as may be superseded by applicable laws of the United
States.
[Signature page follows.]
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IN
WITNESS WHEREOF, the Company has caused this Plan to be duly executed in its
name and on its behalf by its duly authorized officer, on this 23rd day of
March, 2010, to be effective as of the Effective Date.
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GEOKINETICS INC.
|
|
|
|
|
|
By:
|
/s/
Richard F. Miles
|
|
President
and Chief Executive Officer
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A-30
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68547 FOLD AND
DETACH HERE YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY. We encourage you to
take advantage of Internet or telephone voting. Both are available 24 hours a
day, 7 days a week. Internet and telephone voting is available through 11:59
PM Eastern Time the day prior to the shareholder meeting date. OR If you vote
your proxy by Internet or by telephone, you do NOT need to mail back your
proxy card. To vote by mail, mark, sign and date your proxy card and return
it in the enclosed postage-paid envelope. Your Internet or telephone vote
authorizes the named proxies to vote your shares in the same manner as if you
marked, signed and returned your proxy card. INTERNET
http://www.proxyvoting.com/gok Use the Internet to vote your proxy. Have your
proxy card in hand when you access the web site. TELEPHONE 1-866-540-5760 Use
any touch-tone telephone to vote your proxy. Have your proxy card in hand
when you call. GEOKINETICS INC. Mark Here for Address Change or Comments SEE
REVERSE Please mark your votes as indicated in this example X THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 THROUGH 3. FOR AGAINST ABSTAIN
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN 1. ELECTION OF DIRECTORS Signature
Signature Date NOTE: Please sign as name appears hereon. Joint owners should
each sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. 2. APPROVAL OF ADOPTION OF
GEOKINETICS 2010 STOCK AWARDS PLAN 3. RATIFICATION OF APPOINTMENT OF UHY LLP
as independent public accountants of the Company 4. In their discretion, the
proxies are authorized to vote upon any other matter that properly may come
before the meeting or any adjournment thereof. 1.1 William R. Ziegler 1.2
Richard F. Miles 1.3 Christopher M. Harte 1.4 Steven A. Webster 1.5 Gary M.
Pittman 1.6 Robert L. Cabes, Jr. 1.7 Christopher D. Strong 1.8 Gottfred
Langseth 1.9 Anthony Tripodo
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68547 You can
now access your Geokinetics Inc. account online. Access your Geokinetics Inc.
account online via Investor ServiceDirect® (ISD). BNY Mellon Shareowner
Services, the transfer agent for Geokinetics Inc., now makes it easy and
convenient to get current information on your shareholder account. View
account status View payment history for dividends View certificate history
Make address changes View book-entry information Obtain a duplicate
1099 tax form Visit us on the web at http://www.bnymellon.com/shareowner/isd
For Technical Assistance Call 1-877-978-7778 between 9am-7pm Monday-Friday
Eastern Time Investor ServiceDirect ® Available 24 hours per day, 7 days per
week TOLL FREE NUMBER: 1-800-370-1163 Important notice regarding the Internet
availability of proxy materials for the Annual Meeting of shareholders. The
Proxy Statement and the 2009 Annual Report to Stockholders are available at:
http://bnymellon.mobular.net/bnymellon/gok GEOKINETICS INC. THIS PROXY IS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appoints
Richard F. Miles, Scott A. McCurdy and William L. Moll, Jr. as proxies, each with
full power of substitution, and authorizes them to vote as designated on the
reverse side, all the shares of common stock and Series B Preferred Stock of
Geokinetics Inc. (the Company) held on record by the undersigned on
Tuesday, March 2, 2010 (the Record Date) and in their discretion, to vote
upon such other business as may properly come before the Annual Meeting of
Stockholders of the Company to be held at the Hilton Westchase,
9999Westheimer Rd., Houston, TX 77042 at 4:00 p.m. on Tuesday, April 27,
2010, or any adjournment thereof, with all powers which the undersigned would
possess if present at the meeting. Address Change/Comments (Mark the
corresponding box on the reverse side) BNY MELLON SHAREOWNER SERVICES P.O.
BOX 3550 SOUTH HACKENSACK, NJ 07606-9250 Choose MLinkSM for fast, easy and
secure 24/7 online access to your future proxy materials, investment plan
statements, tax documents and more. Simply log on to Investor ServiceDirect®
at www.bnymellon.com/shareowner/isd where step-by-step instructions will
prompt you through enrollment. FOLD AND DETACH HERE (Continued and to be
marked, dated and signed, on the other side)
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