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EXHIBIT 10.4
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is by and between Xxxxx X.
Xxxxxxx, Xx. (the "Executive") and Mitcham Industries, Inc., a Texas
corporation (the "Company"), which parties agree as follows:
1. EMPLOYMENT. The Company hereby agrees to employ the Executive
and the Executive hereby accepts employment by the Company, upon the terms and
subject to the conditions hereinafter set forth.
2. DUTIES. The Executive shall serve as the Chairman of the
Board of Directors (the "Board"), President and Chief Executive Officer of the
Company. The Executive will perform the duties attendant to his executive
position with the Company under the direction of the Board. The Executive
agrees to (a) devote his full time and best efforts to the performance of his
duties to the Company, (b) devote his best efforts to promote the success of
the Company's business, and (c) cooperate fully with the Board in the
advancement of the best interests of the Company. The Executive shall
faithfully adhere to, execute and fulfill all policies established by the
Board, from time to time. If the Executive is elected as a director or officer
of any of the Company's affiliates, the Executive will fulfill his duties as
such director or officer without additional compensation.
3. COMPENSATION. In consideration for the services of the
Executive hereunder, commencing on the date hereof and, unless terminated
sooner, continuing for the term hereof, the Company will pay the Executive an
annual salary of $150,000 (the "Salary"), which will be payable in equal
periodic installments according to the Company's customary payroll practices
but no less frequently than monthly. In addition, the Company may, in the sole
discretion of the Board, pay the Executive a bonus or other incentive
compensation. Such bonus or other incentive compensation, if any, would
generally be payable following the end of the Company's fiscal year in
recognition of the Executive's services for such year.
Furthermore, during the term of the Executive's employment, the
Company shall provide to the Executive group hospitalization, major medical,
long-term disability, life insurance coverages and pension, profit sharing,
vacation, bonus and other employee benefit plans on the same terms and
conditions these benefits are made available to the Company's other executive
officers. In addition, during the term of this Agreement, the Company shall
use its reasonable efforts to maintain a term life insurance policy on the life
of the Executive, for beneficiaries to be named by the Executive in an amount
equal to at least three times the Salary of the Executive.
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4. TERM AND TERMINATION. The term of the Executive's employment
shall commence on the date hereof and shall continue until the fifth
anniversary hereof (the "Initial Term") and shall continue thereafter on a
year-to-year basis on the same terms and conditions contained herein unless
either party gives to the other written notice of termination no fewer than 30
days prior to the expiration of any such term. However, the Executive's
employment pursuant to this Agreement shall also terminate earlier in any one
of the following ways:
(i) upon the death of the Executive;
(ii) upon the disability of the Executive immediately upon
notice from either party to the other;
(iii) upon three months prior notice of resignation by the
Executive to the Company;
(iv) upon notice by the Company to the Executive of
termination "without cause";
(v) upon notice by the Company to the Executive of
termination "for cause"; or
(vi) at the Executive's option, upon notice by the Executive
to the Company within 60 days following a Constructive Termination.
DEFINITION OF DISABILITY. For purposes of Section 4(ii), the
Executive will be deemed to have a "disability" if, for physical or mental
reasons, the Executive is unable to perform the Executive's duties under this
Agreement for 120 consecutive days, or 180 days during any twelve month period,
as determined herein. The disability of the Executive will be determined by a
medical doctor selected by written agreement of the Company and the Executive
upon the request of either party by notice to the other. If the Company and
the Executive cannot agree on the selection of a medical doctor, each of them
will select a medical doctor and the two medical doctors will select a third
medical doctor who will determine whether the Executive has a disability. The
determination of the medical doctor selected under this Section 4 will be
binding on both parties. The Executive must submit to a reasonable number of
examinations by the medical doctor making the determination of disability under
this Section 4, and the Executive hereby authorizes the disclosure and release
to the Company of such determination and all supporting medical records. If
the Executive is not legally competent, the Executive's legal guardian or duly
authorized attorney-in-fact will act in the Executive's stead under this
Section 4, for the purposes of submitting the Executive to the examinations,
and providing the authorization of disclosure, required under this Section 4.
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DEFINITION OF TERMINATION FOR CAUSE. For purposes of Section 4(v),
the Executive's termination "for cause" shall be defined to mean: (a) the
Executive's material breach of this Agreement, including, without limitation,
his failure to perform his obligations hereunder in a reasonably satisfactory
manner (other than any such failure resulting from incapacity due to physical
or mental illness); (b) the appropriation (or attempted appropriation) of a
material business opportunity of the Company, including attempting to secure or
securing a personal profit in connection with any transaction entered into on
behalf of the Company; or (c) the Executive's fraud or dishonesty with respect
to the business or affairs of the Company or if the Executive is convicted of,
indicted for (or its procedural equivalent) or pleads nolo contendere or guilty
to, any felony criminal offense or any civil offense involving fraud or moral
turpitude, the equivalent thereof, or any crime with respect to which
imprisonment is a possible punishment.
DEFINITION OF CONSTRUCTIVE TERMINATION. For purposes of Section
4(vi), the term "Constructive Termination" shall be defined to mean (i) a
material reduction in the Executive's duties and responsibilities without the
Executive's consent; or (ii) a reduction in or the failure by the Company to
pay when due, any portion of the Salary.
COMPENSATION IF TERMINATED BY DEATH. If the Executive's employment is
terminated because of the Executive's death, the Executive will be entitled to
receive the portion of the Salary that is due at the end of the calendar month
in which his death occurs.
COMPENSATION IF TERMINATED BY DISABILITY. If the Executive's
employment is terminated by either party as a result of the Executive's
disability, the Company will pay the Executive the portion of the Salary that
is due at the end of the calendar month during which such termination is
effective and for the lesser of (a) six consecutive months thereafter, or (b)
the period until disability insurance benefits commence under any disability
insurance coverage furnished by the Company to the Executive.
COMPENSATION IF TERMINATED WITHOUT CAUSE OR BY CONSTRUCTIVE
TERMINATION. In the event the Executive's employment with the Company is
terminated by the Executive within 60 days following a Constructive
Termination, the Company will pay the Executive, as the Executive's sole remedy
in connection with such termination, a severance payment in an amount equal to
$450,000 (the "Severance Payment"). The Severance Payment shall be payable to
the Executive in equal monthly payments over a period of 24 months following
the date of termination. The Company will also pay the Executive the portion
of the Salary that is accrued but unpaid from the last payment date to the date
of termination.
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COMPENSATION IF TERMINATED BY EXECUTIVE'S RESIGNATION OR FOR CAUSE.
If the Company terminates the Executive's employment for cause or if the
Executive resigns his employment with the Company, the Executive will be
entitled to receive the portion of the Salary that is due through the date such
termination is effective.
5. ACCRUED BENEFITS. The Executive's accrual of, or participation in
plans providing for, benefits will cease at the effective date of the
termination of the Executive's employment and the Executive will be entitled to
accrued benefits pursuant to such plans only as provided in such plans.
Notwithstanding anything herein to the contrary, the Executive will not
receive, as part of his termination pay pursuant to this Section 4, any payment
or other compensation for any vacation, holiday, sick leave, or other leave
unused on the date any notice of termination is given under this Agreement.
6. EFFECT OF TERMINATION ON OPTIONS. Any options to purchase the
Company's Common Stock held by the Executive will automatically expire if the
Executive's employment with the Company is terminated "for cause" or if the
Executive voluntarily leaves the employment of the Company. If the Executive's
employment with the Company ends for any reason other than termination for
cause, voluntary departure or due to death, the Executive's options will remain
exercisable and will vest and expire in accordance with the terms of the
applicable option agreements. If the Executive dies while employed by the
Company, his options shall become fully exercisable on the date of his death
and shall expire twelve months thereafter.
7. CONFIDENTIALITY. The Executive acknowledges that he will have
access to confidential information regarding the Company and its business. The
Executive agrees that he will not, during or subsequent to his employment,
divulge, furnish, or make accessible to any person (other than with the prior
written consent of the Company) any information or plans of the Company.
However, confidential information or plans shall exclude information or plans
which: (a) at the time of disclosure already is in the public domain or which,
after disclosure, is published or otherwise becomes part of the public domain
through no fault of the Executive; (b) the Executive can show was in his
possession at the time of the Company's disclosure and was not acquired,
directly or indirectly, from the Company or from a third party under an
obligation of confidence; or (c) the Executive can show was received by the
Executive after the time of the Company's disclosure from a third party who did
not require the Executive to hold it in confidence; or (d) is developed by or
for the Executive independent of the confidential information or plans in
question.
8. NONCOMPETITION. For two years after termination of the
Executive's employment hereunder, the Executive will not (i) engage directly or
indirectly, alone or as a shareholder, partner,
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officer, director, employee or consultant of any other business organization,
in any business activities which (a) relate to the ownership or operation of a
business owned or to be owned by Company (the "Designated Business"), and (b)
were either conducted by the Company prior to the Executive's termination or
proposed to be conducted by the Company at the time of such termination, (ii)
divert to any competitor of the Company in the Designated Business any customer
of the Company, or (iii) solicit or encourage any officer, employee, or
consultant of the Company to leave its employ for employment by or with any
competitor of the Company in the Designated Business.
The parties hereto acknowledge that the Executive's noncompetition
obligations hereunder will not preclude the Executive from owning less than 1%
of the common stock of any publicly traded corporation conducting business
activities in the Designated Business. The Executive will continue to be bound
by the provisions of this Section 7 until their expiration and will not be
entitled to any compensation from the Company with respect thereto. If at any
time the provisions of this Section 7 are determined to be invalid or
unenforceable, by reason of being vague or unreasonable as to area, duration or
scope of activity, this Section 7 will be considered divisible and will become
and be immediately amended to only such area, duration and scope of activity as
will be determined to be reasonable and enforceable by the court or other body
having jurisdiction over the matter; and the Executive agrees that this Section
7 as so amended will be valid and binding as though any invalid or
unenforceable provision had not been included herein.
9. REIMBURSEMENT OF EXPENSES. The Company will reimburse the
Executive for all reasonable out-of-pocket costs and expenses incurred by him
in connection with his employment hereunder (the "Reimbursable Expenses").
Such Reimbursable Expenses shall include the Executive's out-of-pocket costs
and expenses for travel, hotel rooms, long- distance telephone calls, delivery
charges, parking fees and copying charges. On or about the last day of each
month, the Executive will submit an invoice to the Company describing in
reasonable detail the Reimbursable Expenses to be reimbursed. All such
invoices shall include adequate supporting documentation, including receipts
where appropriate. All such invoices will be reimbursed by the Company within
45 days of the Company's receipt of the invoice.
10. ARBITRATION. Any dispute between the Company and the
Executive arising out of or related to this Agreement or breach thereof, shall
be settled by binding arbitration in accordance with the rules of the American
Arbitration Association. The arbitration shall be conducted by three neutral
arbitrators who shall sit in Houston, Texas. Any award made by such
arbitrators shall be binding and conclusive for all purpose thereof, may
include injunctive relief, as well as orders for specific performance and
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may be entered as a final judgment in any court of competent jurisdiction. No
arbitration arising out of or relating to this Agreement shall include, by
consolidation or joinder or in any other manner, parties other than the Company
or the Executive and other persons substantially involved in common question of
fact or law whose presence is required if complete relief is to be afforded in
arbitration. The cost and expenses of such arbitration shall be borne in
accordance with the determination of the arbitrators and may include reasonable
attorneys' fees. Each party hereby further agrees that service of process may
be made upon it by registered or certified mail or personal service at the
address provided for herein.
11. RETURN OF DOCUMENTS. The Executive agrees that all documents,
plans, records, computer programs, notes, drawings, models and other materials
(whether or not secret or confidential) that he receives, prepares or otherwise
acquires during his employment with the Company, and which pertain to the
business or affairs of the Company, are the property of the Company. The
Executive will deliver to the Company all copies of such materials in his
possession or under his control whenever the Company requests. In the event of
his termination of employment with the Company for whatever reason, the
Executive shall produce to the Company for its inspection all such materials
then in his possession or under his control.
12. EQUITABLE RELIEF. In the event of a breach by the Executive
of any of the provisions of Sections 6 or 7, the Company shall, in addition to
any other rights and remedies existing in its favor, be entitled to receive
from any court of law or equity of competent jurisdiction for specific
performance and injunctive or other relief in order to enforce or prevent any
violations of the provisions hereof.
13. SURVIVAL. The rights and obligations of the parties hereto
shall survive the term of the Executive's employment under this Agreement to
the extent that any performance is required under this Agreement after the
expiration of the Executive's employment.
14. MISCELLANEOUS.
14.1 ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement between the parties with respect to the subject matter hereof.
This Agreement supersedes all letters, memoranda and term sheets previously
prepared in connection with the negotiations surrounding the execution of this
Agreement. The terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective successors and assigns of the
parties. Nothing in this Agreement, express or implied, is intended to confer
upon any third party any rights, remedies, obligations or liabilities under or
by reason of this Agreement, except as expressly provided in this Agreement.
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14.2 NOTICES. Any notices permitted or required to be
given under the terms of this Agreement shall be in writing and shall be deemed
given if delivered to the party to be notified at the address specified below,
by first class mail, overnight courier or fax with hard copy being sent by
first class mail or overnight courier. Such notice shall be deemed received 24
hours after it is sent via fax (with receipt confirmed) or overnight courier.
Any notice given in any other manner shall be effective only if and when
received.
The Executive: Xxxxx X. Xxxxxxx, Xx.
000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxx 00000
Telephone No.: (000) 000-0000
The Company: Mitcham Industries, Inc.
00000 Xxxxxxx 00 Xxxxx
P. O. Xxx 0000
Xxxxxxxxxx, Xxxxx 00000
Attention: Board of Directors
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
The address of any party may be changed by notice given in the manner provided
in this Section 14.2.
14.3 GOVERNING LAW. THE VALIDITY, CONSTRUCTION AND
ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
TEXAS WITHOUT GIVING EFFECT TO CHOICE OF LAW OR CONFLICTS OF LAWS PRINCIPLES.
14.4 WITHHOLDING. All payments required to be made by the
Company under this Agreement to the Executive will be subject to the
withholding of such amounts, if any, relating to federal, state and local taxes
as may be required by law.
14.5 PRESERVATION OF BUSINESS; FIDUCIARY RESPONSIBILITY.
The Executive shall use his best efforts to preserve the business and
organization of the Company, to keep available to the Company the services of
its present employees and to preserve the business relations of the Company
with suppliers, customers and others. The Executive shall not commit any act
which would injure the Company. The Executive shall observe and fulfill proper
standards of fiduciary responsibility attendant upon his service and office.
14.6 SEVERABILITY. If a provision of this Agreement is
declared unenforceable by a court of last resort, such provision shall be
enforced to the greatest extent permitted by law, and such declaration shall
not affect the validity of any other provision of this Agreement.
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14.7 REPRESENTATION BY SEPARATE COUNSEL. The Executive
acknowledges that he has been advised to retain separate legal counsel to
represent his interests under this Agreement and he has done so.
14.8 AMENDMENTS AND WAIVERS. This Agreement may be
amended only by a written instrument designated as an "amendment" to this
Agreement and signed by the parties hereto, and the observance of any term of
this Agreement may be waived (either generally or in a particular instance and
either retroactively or prospectively) only by a written instrument signed by
the person specifically waiving such observance.
14.9 MULTIPLE COUNTERPARTS. This Agreement may be
executed in multiple counterparts, each of which shall be deemed an original
but all of which shall be deemed one instrument.
Executed this the 15th day of January, 1997.
THE EXECUTIVE:
/s/ XXXXX X. XXXXXXX, XX.
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Xxxxx X. Xxxxxxx, Xx.
THE COMPANY:
MITCHAM INDUSTRIES, INC.
By: /s/ XXXXXX XXXX
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Xxxxxx Xxxx, Vice President-Finance
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(Name Printed) (Title)
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