VIA MESSENGER/OVERNIGHT DELIVERY
March 26, 1997
Mr. Richard W. Harbin Mr. Michael A. Kimmel
306 Cinnamon Oak Lane 1101 Thornblade Blvd.
Houston, Texas 77079 Greer, South Carolina 29650-4513
Mrs. Elinor T. Harbin Mr. William H. Murphy
5522 Woodway 2200 Post Oak Blvd., Suite 514
Houston, Texas 77056 Houston, Texas 77056
Elinor T. Harbin Trust
c/o Mrs. Elinor T. Harbin
5522 Woodway
Houston, Texas 77056
Re: WAIVER OF DEFAULTS UNDER OUTSTANDING PROMISSORY NOTES
Gentlemen and Lady:
After my meeting with Mr. Harbin and Mr. Murphy, I believe it is in our
collective interest to resolve the pending defaults under the terms of the
promissory notes which have been issued to each of you. Resolution of the
defaults is critical to continuing the interest of William R. Ziegler in
financing the ongoing operations of Geokinetics and its subsidiaries. The
following proposal is intended to incorporate the initial proposal made by our
counsel, Mr. Spring, to Mr. Houghton, by letter dated March 20, 1997; the
suggestions made by Mr. Houghton in his letter to Mr. Spring dated March 20; and
the discussions held yesterday.
Geokinetics proposes to resolve the outstanding indebtedness due to you as
follows:
1. Geokinetics is ready to pay all accrued interest on the outstanding notes
(at the predefault rate) through March 14, 1997, immediately upon your
execution of this letter agreement.
2. Geokinetics is ready to reimburse you for the reasonable attorney's fees
incurred by you in connection with the defaults under the notes and
preparation of the foreclosure notices.
3. Geokinetics will modify your outstanding warrants to continue their
existence through December 31, 1997. Additionally, the warrants will be
amended as follows immediately below. The remaining terms of the warrants
will remain the same, including their exercise price.
The warrants issued in conjunction with the promissory notes will be
amended to provide that the following paragraph be inserted as Article
5.(a)(ii):
"(ii) if the Company shall issue more than ten percent (10%) of its
then outstanding shares of Common Stock, whether pursuant to a
merger, consolidation or an acquisition of the stock or assets of
another corporation or entity, or otherwise, then the number of
shares purchasable under this Warrant immediately prior to the issue
of such additional Common Stock shall immediately be increased so
that the number of shares purchasable under this Warrant shall bear
the same ratio to the number of shares of Common Stock outstanding
immediately after the issuance of such additional Common Stock as
the number of shares purchasable under this Warrant immediately
prior to the issuance of such additional Common Stock bears to the
number of shares of Common Stock outstanding immediately prior to
the issuance of such additional Common Stock."
4. On a monthly basis, Geokinetics would furnish each of you a monthly,
unaudited financial statement for Geokinetics and a statement of
gross and net revenues from the wells pledged to you.
5. Geokinetics will agree to modify the terms of each of the
outstanding promissory notes as follows:
a) The maturity date of each such note will be extended to June
30, 1997, or such earlier date as Geokinetics funds a private
placement of not less than $4,000,000;
b) Interest would be paid on a current basis on each of April 30,
May 31, and June 30 (or the date of funding the private
placement referred to in subparagraph (a) above, if earlier);
and
c) The notes would be modified to eliminate the thirty-day notice
required to be given by the holders in the event of a monetary
default.
6. The modified or amended terms of the instruments referred to above
would be reflected by appropriate documentation, satisfactory to you
and your counsel.
In consideration for the foregoing, each of you agrees to waive all
existing defaults under the notes AB INITIO and agree to withdraw the pending
foreclosure actions and remove the posted foreclosure notices.
Mr. Ziegler has told us that he is not interested in a thirty-day
solution, and we have made the foregoing proposal with his position in mind. The
matter must be resolved immediately. If this proposal is acceptable to you,
please indicate by each of you signing a copy of this letter in the space
provided below and returning it to me by facsimile by noon tomorrow.
Sincerely,
GEOKINETICS INC.
/s/ JAY D. HABER
Jay D. Haber
President
/s/ RICHARD W. HARBIN
Richard W. Harbin
/s/ ELINOR T. HARBIN
Elinor T. Harbin
/s/ ELINOR T. HARBIN
Elinor T. Harbin, Trustee
/s/ MICHAEL A. KIMMEL
Michael A. Kimmel
/s/ WILLIAM H. MURPHY
William H. Murphy
cc: Mr. James J. Spring
Mr. Thomas Houghton