EXHIBIT XIV
FORM OF PROFIT SHARING AGREEMENT
PROFIT SHARING AGREEMENT (hereinafter referred to as this
"Agreement"), dated as of July 24, 1997, by and among BLACKHAWK CAPITAL
PARTNERS, a Texas general partnership (the "Managing Member"), and [NAME OF
SPECIAL PARTICIPANT] (the "Special Participant").
W I T N E S S E T H:
WHEREAS, the Managing Member is the managing member of
Blackhawk Investors, L.L.C, a Delaware limited liability company ("Blackhawk")
that was formed for the purpose of acquiring certain securities of Geokinetics
Inc. ("GEOK"), consisting of shares of the Common Stock, par value $0.20 per
share (the "Common Stock"), certain shares of Series A Convertible Preferred
Stock, and certain shares of Series B Convertible Preferred Stock, each par
value $10.00 per share (collectively, the "Preferred Stock") and certain shadow
warrants to acquire shares of Common Stock that are only exercisable to the
extent that certain other warrants held by third parties are exercised (the
"Shadow Warrants");
WHEREAS, pursuant to the terms of that certain Limited
Liability Company Agreement of Blackhawk dated as of July 18, 1997 (as the same
may be amended from time to time, the "LLC Agreement"), the Managing Member will
be entitled to receive 25% of all distributions made by Blackhawk of cash and/or
securities of GEOK to its Members, after the Members have received distributions
of cash and/or securities equal to their capital contributions to Blackhawk plus
the specified Priority Return thereon; and
WHEREAS, the parties hereto desire to provide for the sharing
by the Managing Member with the Special Participant of a specified percentage of
the net distributions to be received by the Managing Member under the LLC
Agreement.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
Section 1. Definitions. As used in this Agreement, the
following terms shall have the following meanings:
"Adjusted Invested Capital" (with respect to each Member)
means, at any time, the sum of all Capital Contributions made by such Member
pursuant to Article III of the LLC Agreement less distributions previously made
to that Member pursuant to Section 5.1 (ii) of the LLC Agreement.
"Agreement" means this agreement, as it may be amended from
time to time.
"Allocation Percentage" means [ ]
Page 236 of 241 Pages
"Available Cash Flow" means, with respect to any Fiscal Year
or other period, the sum of all cash receipts of Blackhawk from any and all
sources, less all cash disbursements (including loan repayments, capital
improvements and replacements) and a reasonable allowance for reserves,
contingencies and anticipated obligations as determined by the Managers.
"Capital Contribution" means, with respect to each Member, the
total amount of money and fair market value of any property contributed to
Blackhawk by such Member.
"Current Market Value" of any Security means the value of such
security as of the date of distribution of same to the Managing Member (or, in
the event such date is a holiday or other day which is not a business day, as of
the next preceding business day), determined as follows: (i) a security which is
listed on a recognized securities exchange or the National Market System will be
valued at its last sales price or, if no sale occurred on such date, at the last
"bid" price; (ii) a security which is traded on the Nasdaq Bulletin Board will
be valued at its last sales price or, if no sale occurred on such date, at the
last "bid" price; (iii) a security which is traded over-the-counter (other than
on the National Market System or the Nasdaq Bulletin Board) will be valued at
the last "bid" price; and (iv) all other securities will be valued on such date
by the Managing Member at fair market value in such manner as it may reasonably
determine.
"Distribution" means any distribution of Available Cash Flow
(other than any distribution with respect to or on account of estimated taxes
and withholding made under Section 5.2 of the LLC Agreement) or Securities under
the LLC Agreement.
"Fiscal Year" means the fiscal year of Blackhawk as determined
the Managers. As used in this Agreement, a Fiscal Year shall include any partial
Fiscal Year at the beginning and end of Blackhawk's term.
"GEOK" has the meaning set forth in the preambles.
"LLC Agreement" has the meaning set forth in the preambles.
"Managers" means the Managing Member or any other Persons who
or which succeed the Managing Member or are added as Managers pursuant to the
LLC Agreement.
"Members" means the members of Blackhawk signatory to the LLC
Agreement.
"Net Proceeds" means cash or the Current Market Value of
Securities, net of transaction costs and taxes (inclusive of income taxes
imposed upon the Managing Member on account of any such Distribution) [and less
any reimbursed expenses of the Managing Member], received or to be received by
the Managing Member on account of a Distribution.
"Payout Amount" means such amount as shall equal the sum of
all Capital Contributions made by the Members and the aggregate Priority Return.
-2- Page 237 of 241 Pages
"Person" means an individual, trust, estate, tax-exempt
entity, partnership, joint venture, association, company, corporation, limited
liability company, government or agency thereof, or other entity.
"Priority Return" means, with respect to a Member, a sum
equivalent to the Priority Return Rate, cumulative but not compounded (pro rated
for any partial year), of the amount of the Adjusted Invested Capital of such
Member from time to time, calculated from time to time during the period to
which the Priority Return relates, commencing on the date the Member is admitted
to Blackhawk.
"Priority Return Rate" means six percent (6%) per annum for
the first one-year period to which the Priority Return Relates; nine percent
(9%) for the second one-year period; twelve percent (12%) for the third one-year
period; fifteen percent (15%) for the fourth one-year period; and eighteen
percent (18%) for the fifth one-year period.
"Securities" means any shares of Common Stock or Preferred
Stock of GEOK that may be distributed to the Members under the LLC Agreement.
Section 2. Sharing in Distributions. The Special Participant
shall be entitled to the Allocation Percentage of the Net Proceeds of any and
all Distributions made by Blackhawk to the Managing Member after the Members
have received or been credited with receipt of the Payout Amount. The Managing
Member shall make any payment due to the Special Participant in accordance with
the Allocation Percentage within ten (10) business days after receipt of the
applicable Distribution.
Section 3. Payment in Respect of Securities. Notwithstanding
anything contained herein to the contrary, the Managing Member shall not be
obligated to make any distribution to the Special Participant of any Securities
that it may receive under the LLC Agreement. With respect to any Distribution
that consists of Securities, the Managing Member, in its sole and absolute
discretion, may elect to either (i) effect the sale of such securities in the
open market and then distribute to the Special Participant the Allocation
Percentage of the Net Proceeds of such sale of Securities or (ii) pay to the
Special Participant an amount equal to the Special Participant's Allocation
Percentage of Net Proceeds, in either case, in lieu of transferring Securities
to such Special Participant.
Section 4. Notices. All notices, demands, and other
communications required or permitted hereunder shall be made in writing or by
telecopy, and shall be deemed to have been duly given when delivered by hand,
or, if mailed, five (5) business days after deposit in the mail, with postage
prepaid for first-class mail, or, when telecopied, when sent, and, regardless of
method, addressed to the party at the address set forth below, or such other
address as the party shall furnish to the other party in accordance with this
section:
If to the Managing Member:
-3- Page 238 of 241 Pages
Blackhawk Capital Partners
c/o Xxxxxxx X. Xxxxxxx
Xxxxxx & Xxxxx
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
If to the Special Participant:
[Name]
[Street Address]
[City, State, Zip]
Telecopy No.: ( ) -
Section 5. Invalid Provision. The invalidity or
unenforceability of any particular provision of this Agreement shall not affect
the other provisions hereof, and this Agreement shall be construed in all
respects as if any such invalid or unenforceable provision or provisions had
been omitted.
Section 6. Entire Agreement; Amendment and Waiver; Governing
Law. (a) This Agreement contains the entire understanding of the parties and
supersedes any prior agreements and understandings between the parties with
respect to its subject matter.
(b) No modification or waiver of this Agreement, or any part
hereof, shall be valid or effective unless in writing and signed by the party or
parties sought to be charged therewith.
(c) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to choice of
law or conflicts of law principles.
Section 7. Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, executors, administrators, successors and permitted assigns.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
MANAGING MEMBER:
BLACKHAWK CAPITAL PARTNERS
By:
______________________________________
Xxxxxxx X. Xxxxxxx, Partner
-4- Page 239 of 241 Pages
SPECIAL PARTICIPANT:
______________________________________
[NAME]
-5- Page 240 of 241 Pages
EXHIBIT XIV (con't)
SCHEDULE OF SPECIAL PARTICIPANTS
Indirect Percentage Interest Allocation Percentage of
in Total Distributions by Distributions by Blackhawk
Blackhawk Investors, LLC to Blackhawk Capital
Name ("Blackhawk") After Payout Partners After Payout
---- ---------------------------- ---------------------------
Xxxxxxxx X. Xxxxxxxxx .0037 .0148
Xxxxx X. Xxxxxxx .0037 .0148
Xxxxxxx A.M. Xxxxxxx .0037 .0148
Xxxx Xxxxxx .0037 .0148
Xxxx X. Xxxxxx .0037 .0148
Xxx X. Xxxxxx, Xx. .0037 .0148
Xxxxxx X. X'Xxxxx, Xx. .00000 .0000
Xxxxxxx Partners, L.P. .001475 .0059
Winston Partners II LLC .001475 .0059
Winston Partners II LDC .00295 .0118
Xxxxxxx X. Xxxxxxx .00167 .0067
TOTALS: .05 .20
Page 241 of 241 Pages
