EXHIBIT VII
STOCK OPTION AGREEMENT
This Stock Option Agreement (the "Agreement") is made effective as of
July 18, 1997, by and between Geokinetics Inc., a Delaware corporation (the
"Corporation") and Xxxxxxx X. Xxxxxxx, an individual resident of the State of
New York ("Optionee").
RECITALS:
WHEREAS, Optionee is currently a consultant to the Corporation pursuant
to the terms of the Consulting and Engagement Agreement dated as of April 25,
1997, between the Corporation and Optionee ("Consulting Agreement"); and
WHEREAS, the Corporation desires to grant Optionee a non-qualified
stock option to purchase shares of Common Stock in accordance with the terms of
the Consulting Agreement as partial compensation for Optionee's contributions
and continued services as a consultant to the Corporation.
NOW, THEREFORE, in consideration of the recitals and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Corporation and Optionee agree as follows:
1. GRANT OF STOCK OPTION. The Corporation hereby grants an option
("Option"') to Optionee, under the terms and conditions hereinafter specified,
to acquire an aggregate of 50,000 shares of Common Stock (the "Option Shares")
pursuant to the terms of this Agreement.
2. PURCHASE PRICE. The purchase price per share of the Option Shares
(the "Purchase Price") shall be equal to $0.75 per share and shall be paid to
the Corporation in cash or a combination of cash and Common Stock.
3. EXERCISE OF OPTION.
(a) The Option is fully vested as of the date hereof and may be
exercised, in whole or in part, at any time or times during the Term (as defined
below).
(b) The Option shall be exercised by giving written notice to the
Corporation pursuant to Section 12 of this Agreement. Such notice shall state
the number of Option Shares with respect to which the Option is being exercised
and shall specify a date which shall not be less than fifteen (15) nor more than
thirty (30) days after the date of such notice, as the date on which the
purchase of the specified Option Shares will be completed. If any law or
regulation requires the Corporation to take any action with respect to the
Option Shares specified in such notice prior to their transfer, then the date of
the payment for and delivery of such Option Shares shall be extended for the
period necessary to take such action. In the event of any failure by Optionee to
be prepared to complete the purchase of the number of Option Shares specified in
such notice on the date set
Page 172 of 241 Pages
forth therein, as the same may be extended as provided above, the exercise of
the Option shall become void and the Corporation may terminate the Option with
respect to the number of shares specified in such notice.
(c) In connection with the purchase of Option Shares, the Optionee
will acknowledge that (i) the purchase of the Option Shares will not be
registered under the Securities Act of 1933, as amended ("1933 Act"), or
applicable state securities laws pursuant to exemptions therefrom, (ii) the
Option Shares are not being acquired with a view to the distribution thereof, as
defined in the 1933 Act, and (iii) any subsequent sale of the Option Shares will
be in connection with a transaction registered under applicable securities laws
or pursuant to an exemption from registration. In addition, the Optionee shall
represent to the Corporation that he has had available for review all
information, books and records, and other material of the Corporation relating
to its business and a description of the capital stock of the Corporation as he
has requested and has had the opportunity to ask questions and receive
satisfactory answers from the Corporation with respect to the business and
condition of the Corporation and its capital stock.
(d) The purchase of the Option Shares shall take place at the
principal offices of the Corporation upon delivery of the notice of exercise, at
which time the total Purchase Price for the Option Shares shall be paid in full
by any of the following methods or any combination of the following methods:
(i) In cash or by certified or cashier's check payable to the
Corporation;
(ii) The delivery to the Corporation of certificates representing
the number of shares of Common Stock then owned by the
Optionee, the fair market value of which equals the Purchase
Price of the Option Shares purchased pursuant to the Option,
properly endorsed for transfer to the Corporation; provided,
however, that no Option may be exercised by delivery to the
Corporation of certificates representing Common Stock,
unless such Common Stock has been held by the Optionee for
more than six months. (For purposes of this Agreement, the
fair market value of any shares of Common Stock delivered in
payment of the Purchase Price upon exercise of the Option
shall be the fair market value as of the exercise date, and
the exercise date shall be the day of delivery of the
certificates for the Common Stock used as payment of the
Purchase Price); or
(iii) By delivery to the Corporation of a properly executed notice
of exercise together with irrevocable instructions to a
broker to deliver promptly to the Corporation, in payment of
the Purchase Price, the amount of the cash proceeds of the
sale of shares of Common Stock or a loan from the broker to
the Optionee sufficient, in each case, to pay the Purchase
Price, and in a form satisfactory to the Secretary of the
Corporation.
Upon such notice to the Secretary of the Corporation and payment of the
total Purchase Price, the exercise of the Option shall be deemed to be
effective, and a properly executed certificate or
- 2 - Page 173 of 241 Pages
certificates representing the Option Shares so purchased shall be issued by the
Corporation and delivered to the Optionee.
4. TERM AND TERMINATION OF OPTION. The term of the Option (the "Term")
shall commence as of the effective date hereof and shall expire upon the earlier
of (a) the expiration of the five-year period commencing as of the effective
date hereof or (b) that date which is ninety (90) days after the date Optionee
ceases to serve as a member of the Board of Directors of the Corporation or a
consultant under the terms of the Consulting Agreement.
5. ADJUSTMENTS. In the event that the outstanding shares of the Common
Stock are hereafter increased or decreased or changed into or exchanged for a
different number or kind of shares or other securities of the Corporation or of
another corporation, by reason of a recapitalization, stock split, merger,
consolidation, reorganization, combination, liquidation, stock dividend or
similar transaction involving the Corporation, appropriate adjustment shall be
made in the number and kind of shares as to which this Option, or the portion
thereof then unexercised, shall be exercisable, to the end that, to the extent
practicable, the proportionate interest of the Optionee shall be maintained as
before the occurrence of such event. Such adjustment in the Option shall be made
without change in the total price applicable to the unexercised portion of the
Option but with a corresponding adjustment in the Purchase Price per share.
6. EFFECT UPON EMPLOYMENT. This Agreement shall not have any effect on
the consulting relationship between the Corporation and Optionee under the
Consulting Agreement or otherwise.
7. RESTRICTION ON ISSUANCE OF SHARES. The Corporation shall not be
obligated to sell any of the Option Shares hereunder unless the transaction in
which the Option Shares are to be sold is registered or exempt from registration
under the 1933 Act, and applicable state securities laws. Optionee shall make
such investment representations to the Corporation and shall consent to the
imposition of such legends on the stock certificates as are necessary, in the
opinion of the Corporation, to secure to the Corporation an appropriate
exemption from applicable securities laws.
8. SUCCESSORS. This Agreement shall be binding upon any executor or
legal representative of the Corporation.
9. VESTING OF SHAREHOLDER RIGHTS. Optionee shall have no rights as a
shareholder by reason of this Agreement until the certificates evidencing the
Option Shares purchased are properly issued in Optionee's name.
10. TRANSFERABILITY. The Option shall be transferable by Optionee,
subject to complying with applicable federal and state securities laws to the
reasonable satisfaction of the Corporation and its counsel; provided, however,
that any attempted transfer of the Option contrary to the provisions hereof will
be null and void and without effect.
- 3 - Page 174 of 241 Pages
11. WITHHOLDING.
(a) The Optionee hereby agrees to make appropriate
arrangements with the Corporation to provide for the amount of additional tax
withholding under Sections 3102 and 3402 of the Internal Revenue Code and
applicable state income tax laws resulting from the exercise of the Option. If
such arrangements are not made, the Corporation may refuse to issue any Option
Shares to the Optionee.
(b) The Optionee may elect to pay all such amounts of tax
withholding, or any part thereof, by electing to transfer to the Corporation, or
to have the Corporation withhold from shares otherwise issuable to the Optionee,
Option Shares having a value equal to the amount required to be withheld or such
lesser amount as may be elected by the Optionee. All elections shall be subject
to the approval or disapproval of the Board of Directors of the Corporation. The
value of the Option Shares to be withheld shall be based on the fair market
value of the Stock on the date that the amount of tax to be withheld is to be
determined (the "Tax Date"'). Any such election by the Optionee to have Option
Shares withheld for this purpose will be subject to the following restrictions:
(i) All elections must be made prior to the Tax Date;
(ii) All elections shall be irrevocable; and
(iii) If the Optionee is an officer or director of the
Corporation within the meaning of Section 16 of the
Securities Exchange Act of 1934, as amended,
("Section 16"), the Optionee must satisfy the
requirements of such Section 16 and any applicable
rules thereunder with respect to the use of the
Option Shares to satisfy such tax withholding
obligation.
12. NOTICES. Any notice or request herein required or permitted to be
given to any party hereunder shall be given in writing and shall be personally
delivered or sent to such party by United States mail at the address set forth
below the signature of such party or at such other address as such party may
designate by written communication to the other party to this Agreement. Each
notice given in accordance with this Section shall be deemed to have been given,
if personally delivered, on the date personally delivered, or, if mailed, on the
fifth day following the day on which it is deposited in the United States mail,
certified or registered mail, return receipt requested, with postage prepaid, to
the address last given in accordance with this Section.
13. AMENDMENTS. This Agreement may be amended only by a writing
executed by the Corporation and Optionee.
14. GOVERNING LAW. This Agreement shall be governed by, construed under
and enforced in accordance with the laws of the State of Texas.
15. SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws effective during
the term hereof, such provision shall be
- 4 - Page 175 of 241 Pages
fully severable and this Agreement and each separate provision hereof shall be
construed and enforced as if such illegal, invalid, or unenforceable provision
had never comprised a part of this Agreement, and the remaining provisions of
this Agreement shall remain in full force and effect and shall not be affected
by the illegal, invalid, or unenforceable provision or by its severance from
this Agreement. In addition, in lieu of such illegal, invalid, or unenforceable
provision, there shall be added automatically as a part of this Agreement a
provision as similar in terms to such illegal, invalid, or unenforceable
provision as may be possible and be legal, valid, and enforceable.
16. HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning,
interpretation, or scope of this Agreement.
17. WAIVER OF DEFAULT. Any waiver by either party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver by
such party of any subsequent breach of this Agreement.
18. ENTIRE AGREEMENT. This Agreement embodies the entire Agreement and
understanding between the Corporation and Optionee relating to the subject
matter of this Agreement and supersedes any prior negotiations and agreements
between the parties concerning the same subject matter, except as expressly
provided or allowed by the terms of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective on the date first set forth above.
GEOKINETICS INC.
By:/s/ XXX X. XXXXX
_________________________________________
Xxx X. Xxxxx, President
Address: 0000 Xxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
OPTIONEE
/s/ XXXXXXX X. XXXXXXX
_________________________________________
Xxxxxxx X. Xxxxxxx
Address: c/x Xxxxxx & Xxxxx LLP
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
- 5 - Page 176 of 241 Pages
