TAG-ALONG DRAG-ALONG AGREEMENT
This Tag-Along Drag-Along Agreement (this "AGREEMENT") is made and entered
into as of April 30, 1998, among Geokinetics Inc., a Delaware corporation (the
"COMPANY"), Blackhawk Investors, L.L.C., a Delaware limited liability company
("BLACKHAWK"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇")
(Blackhawk, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ being sometimes referred to collectively as the
"BLACKHAWK GROUP") and the Warrant Holders (as defined below).
WHEREAS, (i) Blackhawk is the record and beneficial owner of
8,666,667shares of Common Stock, $0.01 par value per share ("Common Stock"), of
the Company, representing approximately 44.8% of the 19,326,816 shares of Common
Stock of the Company issued and outstanding as of the date hereof and (ii)
Blackhawk is the record and beneficial owner of certain Shadow Warrants that
currently represent the right to acquire up to a maximum of 6,998,311 shares of
Common Stock (subject to adjustment as provided therein), at an exercise price
of $0.20 per share, which Shadow Warrants are presently exercisable for an
aggregate of 5,664,929 shares of Common Stock, with the exercisability of the
remaining Shadow Warrants to acquire up to 1,333,382 shares of Common Stock
(subject to adjustment) being subject to the satisfaction of conditions that are
not within the control of Blackhawk;
WHEREAS, (i) ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ are the record and beneficial owners of
333,326 and 333,340 shares of Common Stock, respectively, each representing
approximately 1.7% (and collectively representing approximately 3.4%), of the
19,326,816 shares of Common Stock of the Company issued and outstanding as of
the date hereof and (ii) (A) ▇▇▇▇▇▇▇ is the record and beneficial owner of
certain (x) warrants to purchase 1,482,512 shares of Common Stock and (y) Shadow
Warrants that currently represent the right to acquire up to a maximum of
269,160 shares of Common Stock (subject to adjustment as provided therein), at
an exercise price of $0.20 per share, which Shadow Warrants are presently
exercisable for an aggregate of 217,877 shares of Common Stock, with the
exercisability of the remaining Shadow Warrants to acquire up to 51,283 shares
of Common Stock (subject to adjustment) being subject to the satisfaction of
conditions that are not within the control of ▇▇▇▇▇▇▇ and (B) ▇▇▇▇▇▇▇ is the
record and beneficial owner of certain (x) options to acquire 50,000 shares of
Common Stock, (y) warrants to purchase 1,482,512 shares of Common Stock and (z)
Shadow Warrants that currently represent the right to acquire up to a maximum of
269,171 shares of Common Stock (subject to adjustment as provided therein), at
an exercise price of $0.20 per share, which Shadow Warrants are presently
exercisable for an aggregate of 217,886 shares of Common Stock, with the
exercisability of the remaining Shadow Warrants to acquire up to 51,285 shares
of Common Stock (subject to adjustment) being subject to the satisfaction of
conditions that are not within the control of ▇▇▇▇▇▇▇;
WHEREAS, the Company has agreed to issue warrants entitling DLJ Investment
Partners, L.P., together with its successors and assigns ("DLJ") and certain
other warrant holders to purchase up to 7,618,594 shares of Common Stock
pursuant to the terms and conditions of that certain Warrant Agreement, of even
date herewith (the "WARRANT AGREEMENT"), between the Company and the Warrant
Holders, in connection with a private placement of an aggregate of $40,000,000
principal amount of the Company's 12% Senior Subordinated Notes due in 2005;
WHEREAS, it is a material inducement and a precondition to the entering
into of the Warrant Agreement by the Warrant Holders that the Company and the
Blackhawk Group enter into this Agreement;
NOW, THEREFORE, in consideration of the premises, and the mutual
agreements set forth herein, the parties hereto agree as follows:
Section 1. CERTAIN DEFINITIONS.
(a) Capitalized terms not otherwise defined herein, shall have the
meanings assigned to them in the Warrant Agreement.
(b) As used herein:
"CONTROL DISPOSITION" means a Disposition which would have the
effect of transferring to any transferee or a "group" of persons (as "group" is
defined for purposes of Section 13(d)(3) of the Exchange Act and the rules and
regulations thereunder ("GROUP")) beneficial ownership (as defined in Rule 13d-3
of the Exchange Act) of a number of shares of outstanding Common Stock held by
the Blackhawk Group constituting, in the aggregate, at least 80 percent of the
then outstanding shares of Common Stock held by the Blackhawk Group.
"DISPOSITION" means any direct or indirect transfer,
assignment, sale, gift, pledge, hypothecation or other encumbrance, or any
disposition of Common Stock (or any interest therein or right thereto) or of all
or part of the voting power associated with the Common Stock (or any interest
therein) whatsoever, or any other transfer of beneficial ownership of Common
Stock whether voluntary or involuntary; PROVIDED, that (i) the transfer of
Common Stock by Blackhawk to its members shall not be deemed a Disposition
hereunder, (ii) all public sales properly conducted by the Blackhawk Group or
any of the Warrant Holders pursuant to Rule 144 under the Securities Act shall
not be deemed Dispositions hereunder, (iii) no transfer by either Blackhawk,
▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ of less than 10% of their respective holdings of Common Stock
in a single transaction or series of related transactions shall be deemed a
Disposition hereunder, and (iv) the participation by the Blackhawk Group or any
of the Warrant Holders in a proposed underwritten public offering of Common
Stock (including the entering into an underwriting agreement, a custody
agreement and other agreements customarily executed by selling shareholders in
connection therewith) or the participation by the Blackhawk Group or any of the
Warrant Holders in any other registration pursuant to any demand or piggyback
registration rights that any of them may have pursuant to any registration
rights or similar agreement with the Company and the consummation thereof, shall
not constitute a Disposition, it being understood that, if such proposed
underwritten public offering is terminated or abandoned prior to consummation or
is not consummated or such other registration is terminated or abandoned prior
to consummation or its not consummated, the Common Stock, Warrants and Warrant
Shares held by the parties hereto shall remain subject to this Agreement. The
term Disposition shall include a Control Disposition.
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"WARRANT HOLDERS" shall mean each of the persons identified as
Warrant Holders on EXHIBIT A hereto, and any other persons or entities who
become parties to this Agreement as "Warrant Holders" pursuant to the terms of
this Agreement, and their respective heirs, legal representatives,
administrators and successors.
Section 2. TAG-ALONG DISPOSITIONS. Subject to the provisions of Section 3,
if either Blackhawk, ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ desires to effect a Disposition (or a
series of related Dispositions to a single transferee or Group) of at least 25%
of the issued and outstanding shares of Common Stock owned by such entity or
person to any transferee or Group (a "TAG-ALONG DISPOSITION"), such entity or
person shall give written notice to the Warrant Holders describing the material
terms of the proposed Tag-Along Disposition and identifying the contemplated
transferee or Group (a "TAG-ALONG NOTICE"). Each such Warrant Holder may, by
written notice to Blackhawk, ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇, as the case may be, delivered
within 15 days following the date of the Tag-Along Notice (each such Warrant
Holder delivering such notice being a "TAG-ALONG WARRANT HOLDER"), elect to
participate in the Tag-Along Disposition, and require, as a condition to the
closing of the Tag-Along Disposition, that the proposed transferee or Group
purchase, at the same price per share and on the same terms and conditions as
are described in the Tag-Along Notice, a portion of the total number of Warrant
Shares then held or obtainable by each Warrant Holder equal to a fraction
thereof, the numerator of which is the total number of shares of Common Stock
held by either Blackhawk, ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇, as the case may be, to be
transferred in the Tag-Along Disposition and the denominator of which is the
total number of shares of Common Stock then held by either Blackhawk, ▇▇▇▇▇▇▇ or
▇▇▇▇▇▇▇, as the case may be, (the "TAG-ALONG SHARES"). If any Warrant Holder
receiving the Tag-Along Notice timely elects to be a Tag-Along Warrant Holder,
neither Blackhawk, ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇, as the case may be, shall effect the
Tag-Along Disposition described in the Tag-Along Notice unless the proposed
transferee or Group agrees to purchase all of the Tag-Along Shares of all of the
Tag-Along Warrant Holders at the same price and on the same terms and conditions
described in the Tag-Along Notice, except that to the extent the transferee or
Group purchases any Warrant, the Exercise Price shall be deducted from the price
payable for the Warrant. Upon the closing of the sale of any sale of the Warrant
or the Warrant Shares pursuant to this Section, each Tag-Along Warrant Holder
shall deliver at such closing, against payment of the purchase price therefor,
certificates representing the Warrant or Warrant Shares, as the case may be, to
be sold, duly endorsed for transfer or accompanied by duly endorsed stock
powers, and evidence of good title to the Warrant or Warrant Shares to be sold
and the absence of liens, encumbrances and adverse claims with respect thereto
and such other matters as are deemed necessary by the Company for the proper
transfer of such Warrant or Warrant Shares on the books of the Company.
Section 3. DRAG-ALONG IN CONTROL DISPOSITIONS. If the Blackhawk Group
desires to effect a Control Disposition, then, in lieu of complying with the
requirements of Section 2, the Blackhawk Group at its option (the "DRAG-ALONG
OPTION"), shall have the right to require all of the Warrant Holders to sell the
same percentage of such holder's Warrant and/or the Warrant Shares as the shares
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being disposed by the Blackhawk Group to such transferee or Group selected by
the Blackhawk Group at the same price and on the same terms and conditions as
apply to the shares of Common Stock sold by the Blackhawk Group in the Control
Disposition, except that to the extent the transferee or Group purchases any
Warrant, the Exercise Price shall be deducted from the price payable for the
Warrant. Upon the closing of the sale of any Warrant or Warrant Shares pursuant
to this paragraph, each Warrant Holder shall deliver at such closing, against
payment of the purchase price therefor, certificates representing the Warrant or
Warrant Shares, as the case may be, to be sold, duly endorsed for transfer or
accompanied by duly endorsed stock powers, and evidence of good title to the
shares to be sold and the absence of liens, encumbrances and adverse claims with
respect thereto and such other matters as are deemed necessary by the Company
for the proper transfer of such Warrants or Warrant Shares on the books of the
Company provided that in connection with any such transaction (x) each Warrant
Holder shall not be required to make any representations or warranties except
those relating to (i) its own due organization and execution and delivery of the
relevant agreement, (ii) the enforceability of the relevant agreement against it
and absence of conflicts with agreements and laws applicable to it and (iii) its
ownership of securities being sold by it and (y) the Warrant Holders shall not
be required to provide any post-closing indemnities except as provided in clause
(z) below and (z) in the event that a portion of the purchase price is placed in
escrow to support purchase price adjustment obligations post-closing (including
indemnification for breaches of representations or warranties relating to the
Company and its subsidiaries), the Warrant Holders will have a pro rata portion
of their purchase price placed in such escrow to be utilized to pay any such
indemnification obligations.
Section 4. LEGEND ON CERTIFICATES. The Company will cause to appear on all
certificates representing the Warrant or the Warrant Shares a conspicuous legend
in such form as the Company's Board of Directors may determine, stating that
such securities are subject to an agreement which restricts the transferability
thereof and otherwise circumscribes the rights which may be exercised by the
holder thereof.
Section 5. SPECIFIC ENFORCEMENT. In view of the inadequacy of money
damages, if either the Blackhawk Group or any Warrant Holder (a "BREACHING
PARTY") or other person shall fail to comply with the provisions of Section 2 or
3 hereof, the Company and the other non-breaching parties shall be entitled, to
the extent permitted by applicable law, to injunctive relief in the case of the
violation, or attempted or threatened violation, by a Breaching Party or other
person of any of the provisions of such Sections, or to a decree compelling
specific performance by a Breaching Party or other person of any such
provisions, or to any other remedy legally allowed to them.
Section 6. VOID TRANSFERS. If the Warrant, the Warrant Shares or any
shares of Common Stock subject to the terms of this Agreement shall be
transferred in a Disposition in violation of the terms and conditions of this
Agreement, such Disposition shall be void. In addition to, and without prejudice
to, any and all other rights or remedies which may be available to the parties
hereto, the Blackhawk Group and each of the Warrant Holders agree that the
Company may, but shall have no obligation to, hold and refuse to recognize a
Disposition of any such securities (or any certificate therefor) tendered to it
for transfer if the Disposition violates the provisions of this Agreement.
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Section 7. NOTICES. All notices, offers, requests, consents and
communications required or permitted to be given or made under this Agreement
shall be given or made in writing and shall be deemed to have been duly given or
made when sent by mail, postage prepaid,
a. if to the Company, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, Attention: Chief Financial Officer; and
b. if to Blackhawk or ▇▇▇▇▇▇▇, c/▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇; and
c. if to ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇; and
d. if to any Warrant Holder, to the address as last shown on the
stock record books of the Company.
Any such notice shall be effective and deemed received three days after
proper deposit in the mails, but actual notice shall be effective however and
whenever received. The Company, Blackhawk, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ or any Warrant
Holder may effect a change of address for purposes of this Agreement by giving
notice of such change to the other parties, with specific reference to this
Section.
Section 8. AMENDMENT, SEVERABILITY, SUBSEQUENT PARTIES.
a. Except as expressly provided herein, neither this Agreement nor
any term hereof may be amended, waived, discharged or terminated other than by a
written instrument signed by the Company, the Blackhawk Group and a majority of
the holders of Warrant Shares issued or issuable upon exercise of the Warrants.
In the event that any provisions hereof are held to be invalid, illegal or
against public policy, the remaining provisions hereof shall not be affected
thereby. In such event, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible with respect to those provisions which were held to be
invalid, illegal or against public policy.
b. Notwithstanding anything herein to the contrary, the parties
hereto agree that this Agreement shall be amended to include any person or
entity that acquires a Warrant or Warrant Shares or otherwise becomes entitled
to purchase the Warrant Shares of the Company pursuant to the Warrant Agreement.
In such instance, such persons or entities, the Blackhawk Group and the Company
shall execute an Adoption Agreement in the form of EXHIBIT B hereto adding such
persons or entities. Each Warrant Holder hereby constitutes and appoints
Blackhawk as such Warrant Holder's agent and attorney-in-fact with full power
and authority, in the name, place and stead of such Warrant Holder to execute
such Adoption Agreement on behalf of such Warrant Holder to evidence such
Warrant Holder's approval of such additional parties to this Agreement. The
foregoing power of attorney is hereby declared to be irrevocable and a power
coupled with an interest. Upon execution by the Company, the Blackhawk Group and
the additional party of such Adoption
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Agreement, the additional party shall be considered a Warrant Holder hereunder,
and the Warrant and the Warrant Shares acquired by such additional party shall
be deemed to be subject to the terms of this Agreement, and legended
accordingly, for all purposes of this Agreement.
Section 9. AGREEMENTS BY COMPANY. The Company, insofar as is proper or
required, consents to this Agreement. It shall not issue, transfer or reissue
any of its shares of stock, warrants or other securities in violation of this
Agreement or without requiring proof of compliance with this Agreement.
Section 10. EFFECTIVENESS; TERMINATION. This Agreement shall become
effective at such time as it is executed by the Company, the Blackhawk Group
and, with respect to a Warrant Holder, by such Warrant Holder. Except as
otherwise provided herein, this Agreement shall terminate upon the earlier to
occur of (i) the dissolution of the Company; (ii) the written approval of the
Company, the Blackhawk Group and a majority of the holders of Warrant Shares
issued or issuable upon exercise of the Warrants; (iii) the date on which the
Warrant Holders, in the aggregate, hold less than 25% of the number of Warrant
Shares originally purchasable under the Warrant Agreement; (iv) the date on
which the Blackhawk Group no longer owns any shares of Common Stock, whether
pursuant to a Disposition or otherwise pursuant to one or more transactions that
do not constitute Dispositions hereunder; (v) the first date on which the Common
Stock is traded on the NASDAQ system or any nationally registered securities
exchange, or (vi) 5:00 P.M. New York City time on April 30, 2005.
Any Warrant Holder who disposes of all of its Warrant or Warrant Shares in
conformity with the terms of this Agreement shall cease to be a party to this
Agreement and shall have no further rights hereunder.
Section 11. CONSTRUCTION. Each party to this Agreement has had the
opportunity to review this Agreement with legal counsel. This Agreement shall
not be construed or interpreted against any party on the basis that such party
drafted or authored a particular provision, parts of or the entirety of this
Agreement.
Section 12. MISCELLANEOUS. This Agreement (a) constitutes the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof, (b) may
be executed in several counterparts, each of which shall be deemed an original,
and all of which shall constitute one and the same instrument, (c) shall inure
to the benefit of and be binding upon, the successors, assigns, legatees,
distributees, legal representatives and heirs of each party and is not intended
to confer upon any person, other than the parties and their permitted successors
and assigns, any rights or remedies hereunder, and (d) SHALL BE GOVERNED IN ALL
RESPECTS, INCLUDING VALIDITY, INTERPRETATION AND EFFECT, BY THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES. The captions
in this Agreement are for convenience of reference only and shall not affect its
interpretation in any respect.
Section 13. SPOUSAL CONSENT. The spouses, if applicable, of the Warrant
Holders fully consent and agree to the provisions of this Agreement and its
binding effect upon any community property interest, if any, they may now or
hereafter own. The spouses hereby acknowledge the
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fairness of this Agreement and that it is in such spouse's best interests to
bind such spouse's community interest, if any, in the Warrant and the Warrant
Shares, to the terms of this Agreement.
[SIGNATURES APPEAR ON THE FOLLOWING THREE PAGES]
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IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of
the day and year first above written.
COMPANY:
GEOKINETICS INC.
By: _______________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇, President
BLACKHAWK GROUP:
BLACKHAWK INVESTORS, L.L.C.
By: Blackhawk Capital Partners,
its Managing Member
By: _______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, General Partner
___________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Individually
___________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Individually
WARRANT HOLDERS:
DLJ INVESTMENT PARTNERS, L.P.
By: _______________________________
▇▇▇ ▇▇▇▇▇,_____________________
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CHASE EQUITY ASSOCIATES, L.P.
By: _______________________________
▇▇▇▇ ▇'▇▇▇▇▇▇, General Partner
DLJ INVESTMENT FUNDING, INC.
By: _______________________________
▇▇▇ ▇▇▇▇▇,_____________________
DLJ ESC II, L.P.
By: DLJ LBO PLANS Management Corporation,
its General Partner
By: _______________________________
▇▇▇ ▇▇▇▇▇,_____________________
SPINDRIFT PARTNERS, L.P.
BY: Wellington Management Company, LLP, its
Investment Advisor
By: ___________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President
SPINDRIFT INVESTORS (BERMUDA) L.P.
BY: Wellington Management Company, LLP, its
Investment Advisor
By: ___________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President
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MHR CAPITAL PARTNERS, LP
BY: MHR Advisors LLC, General Partner
By: _______________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇, Manager
WHITTIER VENTURES, L.L.C.
By: _______________________________
▇▇▇▇▇ ▇▇▇▇, President
___________________________________
▇▇▇▇ ▇. ▇▇▇▇, ▇▇. (individually)
_______________________________
(spouse, if applicable)
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EXHIBIT A
List of Warrant Holders
DLJ Investment Partners, L.P.
DLJ Investment Funding, Inc.
DLJ ESC II, ▇.▇.
▇▇▇▇▇ Equity Associates, L.P.
Spindrift Partners, L.P.
Spindrift Investors (Bermuda) L.P.
MHR Capital Partners ▇▇
▇▇▇▇▇▇▇▇ Ventures, L.L.C.
▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
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EXHIBIT B
Adoption Agreement
This Adoption Agreement ("ADOPTION") is executed pursuant to the terms of
that certain Tag-Along Drag-Along Agreement dated as of April 30, 1998
("TAG-DRAG AGREEMENT"), by and among Geokinetics Inc., a Delaware corporation,
Blackhawk Investors, L.L.C,, a Delaware limited liability company ("BLACKHAWK"),
and the Warrant Holders (as defined therein) (the "WARRANT HOLDERS"). By the
execution of this Adoption Agreement, the undersigned agrees as follows:
1. ACKNOWLEDGMENT. The undersigned acknowledges that it is acquiring
certain Warrants to purchase shares of the Common Stock, par value $0.01, of the
Company and/or Warrant Shares, subject to the terms and conditions of the
Tag-Drag Agreement.
2. AGREEMENT. The undersigned (i) agrees that the Warrant Shares and the
Warrants to purchase the shares of the Common Stock of the Company acquired by
it shall be bound by and subject to the terms of the Tag-Drag Agreement, and
(ii) hereby adopts the Tag-Drag Agreement with the same force and effect as if
it were originally a party thereto and named as a Warrant Holder therein.
3. NOTICE. Any notice required as permitted by the Tag-Drag Agreement
shall be given to the undersigned at the address listed beside the undersigned's
signature below.
4. JOINDER. The spouse of the undersigned, if applicable, executes this
Adoption Agreement to acknowledge its fairness and that it is in such spouse's
best interests to bind such spouse's community interest, if any, in the Warrant
and/or the Warrant Shares, to the terms of the Tag-Drag Agreement.
EXECUTED and DATED as of ______________, 19___.
PURCHASER OR TRANSFEREE:
By:
Name:
Address:
SPOUSE (IF APPLICABLE):
By:
Name:
Address:
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Agreed to on behalf of the Company, Blackhawk, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and all
Warrant Holders pursuant to Section 8b. of the Tag-Drag Agreement.
GEOKINETICS INC.
By: ___________________________
_______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (individually)
_______________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (individually)
BLACKHAWK INVESTORS, L.L.C.
(for itself-and as Attorney-in-Fact for the Warrant
Holders)
By: ______________________
Name: ____________________
Title: ___________________
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