EXHIBIT 10.4
SEITEL, INC.
EMPLOYMENT AGREEMENT AMENDMENT NO. 2
THIS EMPLOYMENT AGREEMENT AMENDMENT NO. 2 (this "Agreement") is between
Seitel, Inc. (the "Company"), a Delaware corporation with its principal place of
business in Houston, Texas, and Xxxxx X. Xxxx (the "Employee," and collectively
with the Company, the "Parties"), and is an amendment to that certain Employment
Agreement between the Company and the Employee dated effective January 1, 1991
(the "Original Employment Agreement", as amended by that certain Employment
Agreement Amendment dated effective as of January 1, 1998 (the Original
Employment Agreement, as so amended, is referred to herein as the "Employment
Agreement").
Recitals
WHEREAS, the Company and the Employee entered into the Original
Employment Agreement effective as of January 1, 1991 to govern the terms of the
Employee's employment by the Company;
WHEREAS, the Company and the Employee entered into an amendment to the
Original Employment Agreement effective January 1, 1998 to amend certain terms
of the Original Employment Agreement;
WHEREAS, the Company gave notice to Employee on or about October 27,
1999 that the Company was not renewing the term of the Employment Agreement, so
that the Termination Date (as such term is defined in Section 2 of the
Employment Agreement) will occur on December 31, 2003;
WHEREAS, the Employee and the Company are entering into this Agreement
to further amend the Employment Agreement as set forth herein;
NOW, THEREFORE, the Parties do hereby agree as follows:
1. Resignation of Employee as Officer and Director. Immediately prior
to the execution of this Agreement, Employee shall have delivered to the Company
his written resignation as an officer and director of the Company and all of its
subsidiaries, which resignation shall have been effective upon delivery to the
Company.
2. Compensation. Section 2 of the Employment Agreement is hereby
amended by deleting the following sentence:
"If the Employment Period reaches the Termination Date, Employer will
pay Employee for two (2) additional years the compensation then
applicable, which shall include for purposes of this payment the Base
Salary, together with the average of all bonus payments paid to
Employee for the prior three (3) years (the Severance Payment)."
and replacing such sentence with the following sentence:
"If the Employment Period reaches the Termination Date, Employer will
pay Employee for two (2) additional years the compensation then
applicable, which shall include for purposes of this payment the Base
Salary in effect on such date (the Severance Payment)."
In addition, Section 2 of the Employment Agreement is further amended by
deleting the following sentence:
"If Employee terminates this Agreement during any renewal period,
Employer will pay Employee 100% of his then current Base Salary
(including bonus and/or commissions) for two additional years, provided
Employee performs the Consulting Services (the Termination Payment)."
and replacing such sentence with the following sentence:
"If Employee terminates this Agreement during any renewal period,
Employer will pay Employee 100% of his then current Base Salary for two
additional years, provided Employee performs the Consulting Services
(the Termination Payment)."
3. Compensation. Section 3 of the Employment Agreement is hereby
amended to eliminate the Pre-Tax Profits Bonus payable thereunder for the year
ending December 31, 2000 and subsequent years during the term of the Agreement
by deleting the existing Section 3 and replacing it with the following:
"3. Compensation:
(a) Base Salary. For services rendered by the
Employee under this Agreement, the Company shall pay the Employee an
annual base salary of $214,217 in twenty-four (24) bi-monthly
installments (the "Base Salary").
(b) Bonus in Lieu of Pre-Tax Profits Bonus. In
consideration of Employee's agreement to the amendments to the
Employment Agreement set forth in Amendment No. 2 to this Employment
Agreement, the Company shall pay Employee a bonus in the aggregate
amount of $3,728,367, which shall be payable as follows:
(i) The Company shall issue Employee 125,000 shares
of restricted common stock of the Company on the date hereof,
which shall be valued at $6.5875 per share, or a total of
$823,438 (which is approximately 15% less than the current
market value of freely tradable common stock to reflect the
transfer restrictions applicable to such shares of restricted
stock), and shall pay to Employee on the date hereof the sum
of $751,082, subject to withholding as specified in paragraph
(vii) below, for a net cash payment of $200,000.
(ii) The Company shall pay Employee on January 2,
2001 the sum of $615,385, subject to withholding as specified
in paragraph (vii) below, for a net cash payment of $400,000.
(iii) The Company shall pay Employee on January 2,
2002 the sum of $615,385, subject to withholding as specified
in paragraph (vii) below, for a net cash payment of $400,000.
(iv) The Company shall pay Employee on January 2,
2003 the sum of $615,385, subject to withholding as specified
in paragraph (vii) below, for a net cash payment of $400,000.
(v) The Company shall pay Employee on January 2, 2004
the sum of $307,692, subject to withholding as specified in
paragraph (vii) below, for a net cash payment of $200,000.
(vi) The payments in paragraphs (i) through (v) above
shall be contingent on Employee continuing to be an employee
of the Company on the date such payments are due, and the
right to receive such payments shall not vest until such
dates; provided, however, that if Employee is not an employee
of the Company on any such date due to termination of his
employment prior to such date as a result of his death or
disability, the Company shall continue to make such payments
to Employee or his estate on such dates.
(vii) The payments in paragraphs (i) through (v)
above shall be subject to federal and state tax withholding at
the aggregate rate of 35% (comprised of the minimum required
for federal income tax, Medicare and Social Security
withholding, and any balance of the 35% being withheld for New
York State income tax and Connecticut State income tax as
directed by Employee). For the purpose of paragraph (a) above,
the withholding shall be based on the amount of the cash
payment and the $823,438 value attributed to the stock issued
to Employee.
(c) Salary Continuation Benefits. The Company will
pay, so long as the Employee's Employment Agreement, as amended, is in
full force and effect on the date of his death, a monthly salary
continuation amount to the Employee's estate or his designee, for
twelve months beginning on the date of his death. The annual salary
continuation amount will equal the Employee's base salary at his date
of death."
4. Duties. Paragraph (a) of Section 5 of the Employment Agreement
is hereby amended by deleting the existing paragraph (a) and replacing it with
the following:
"(a) The Employee is employed as an assistant to the
Chairman of the Board and the Chief Executive Officer of the Company.
His duties shall be to advise and counsel the Chairman of the Board and
the Chief Executive Officer regarding such matters as the Chairman of
the Board or the Chief Executive Officer may request, and to perform
such other duties as the Chairman of the Board or the Chief Executive
Officer may reasonably request, such as (but not limited to) analyzing
financing proposals, analyzing market data, analyzing proposed
acquisitions, analyzing business plans, and investor relations.
Employee shall not be required to relocate his residence to perform his
duties under this Agreement."
5. Fringe Benefits. Section 9 of the Employment Agreement is hereby
amended by deleting the existing Section 9 and replacing it with the following:
"9. Fringe Benefits. The Employee shall be entitled to
participate on the same bases, except where stated otherwise in this
Agreement, and subject to the same qualifications as other employees of
the Employer, in any pension, profit sharing, stock purchase, savings,
hospitalization, sick leave and other fringe benefit plans in effect
from time to time with respect to employees of Employer (the "Fringe
Benefits"). Employer agrees that each of the Fringe Benefits of the
Employer in effect on the date hereof, or at any time during the
Employment Period shall not be terminated or modified in any manner
which reduces the benefits of the Employee without first obtaining the
written consent of the Employee.
6. Termination. Paragraph (b) of Section 13 of the Employment
Agreement is hereby amended by deleting the existing paragraph (b) and replacing
it with the following:
A(b) Termination for Employer's Breach: Employee shall have
the right to terminate this Agreement if the Employer materially
breaches any of the provisions hereof and such breach is not cured
within thirty (30) days after the Employer receives written notice from
Employee thereof. In such event, or in the event of a wrongful
termination of Employee, all monies due to Employee through the term of
this Agreement, including the Severance Payment, shall be paid by
Employer in a lump sum amount within thirty (30) days of Employee's
termination. Employee shall have no obligation to mitigate his loss or
any occasioned damages as a result of such termination, or perform any
services to receive such payments.
7. Restriction on Transfer of Stock, Registration Rights. Employee
agrees that he will not sell, assign or otherwise transfer the shares received
pursuant to Section 3(b)(i) of the Employment Agreement as amended hereby for a
period of one year from the date of this Agreement. The Employee shall have the
right to demand that the Company use its best efforts to effect an effective
registration under the Securities Act of 1933, as amended, of Employee's resale
of such shares on one occasion not sooner than nine months after the date hereof
or later than December 31, 2003. The Company may grant similar registration
rights to other stockholders, and upon any demand by any other such stockholder
for the registration of his shares, the Company may also include Employee's
shares in such registration and such inclusion shall constitute the one required
registration hereunder. If requested by the Company, Employee and the Company
shall enter into a customary form of registration agreement relating thereto.
The Company may include other shares and selling shareholders in any such
registration in its sole discretion.
8. Loans. Contemporaneously with the execution and delivery of this
Agreement, the Company has made a loan to Employee in the amount of $500,000
bearing interest at the prime rate (the "New Loan"), and has released the
security previously granted by Employee to the Company (75,000 shares of Company
common stock) for amounts due under that certain promissory note dated October
2, 1998, executed in connection with the Company's 1998 Employee Stock Purchase
Plan, the balance of which as of the date hereof (including interest through
such date) was $665,778 (the "ESPP Loan"). The principal of the New Loan,
pursuant to the terms thereof, is payable $100,000 on January 2, 2001 and
$400,000 on January 2, 2002. The payment terms of the ESPP Loan have been
modified as of the date hereof to provide that the principal thereof is payable
$65,778 on January 2, 2001, $400,000 on January 2, 2003, and the remaining
principal balance of $200,000 on January 2, 2004. As security for the New Loan
and as replacement security for the ESPP Loan, Employee hereby grants the
Company an express contractual right of offset against payments due by the
Company to Employee hereunder, and the Company shall withhold from the amounts
payable to Employee hereunder the amounts of such loan payments (including
interest).
9. Representations and Warranties of Employee Relating to Stock
Issuance. In connection with the issuance of common stock of the Company to
Employee hereunder, Employee represents and warrants to the Company as follows:
(a) Acquisition for Own Account. Employee is acquiring the
common stock for his own account, for investment and not with a view
to the sale or distribution thereof or with any present intention of
distributing or selling the same, or dividing the common stock with
other persons.
(b) Securities Law Restrictions. Employee will not sell,
assign, transfer, pledge or otherwise dispose of any of the shares of
common stock except in accordance with the provisions of applicable
state and federal securities laws.
(c) Investment Risk. Employee has such knowledge and
experience in financial and business matters as to be capable of
evaluating the merits and risks of investment in the shares of common
stock.
(d) Accredited Investor. Employee is an "accredited investor"
as said term is defined in Rule 501 of Regulation D under the
Securities Act, in that he is an individual and either (i) has an
individual net worth, or joint net worth with his spouse, in excess of
$1,000,000, or (ii) had an individual income in excess of $200,000 in
each of the two most recent years or joint income with his spouse of
$300,000 in each of those years and has a reasonable expectation of
reaching the same level in the current year.
(e) Legends, Etc. Employee acknowledges and agrees that (i)
the certificates representing the shares of common stock will contain
a legend substantially in the form of the following, (ii) the shares
of common stock are not registered under the Securities Act or any
other Federal or state law, and (iii) Employee must bear the economic
risks of his investment for an indefinite period of time and is
capable of bearing such risk.
"The securities represented hereby have not been registered
under the Securities Act of 1933 and may not be sold,
assigned, transferred, pledged or otherwise disposed of except
in compliance with the requirements of such Act and until the
Corporation shall have received the written opinion of counsel
to the holder of this certificate, reasonably satisfactory to
the Corporation, to that effect."
(f) Information Provided. Employee has had access to the
Company's most recent publicly filed Annual Report on Form 10-K and
Quarterly Report on Form 10-Q and has had the opportunity to ask
questions of, and receive satisfactory answers from the executive
management of the Company regarding the Company's business and
prospects. He has had the opportunity to obtain the information
necessary to satisfy himself concerning the answers so obtained.
10. Extension of Term of Agreement. The term of the Agreement is
hereby extended by two days so that the Termination Date will be January 2,
2004.
11. Amendment of Employment Agreement. This Agreement is executed as
and shall constitute an amendment to the Employment Agreement, and shall be
construed in connection with and as a part of the Employment Agreement. Except
as specifically amended by this Agreement, all of the terms and provisions of
the Employment Agreement shall remain in full force and effect. In the event of
any conflict between the terms of the Employment Agreement and the terms of this
Agreement, the terms of this Agreement shall apply.
12. Miscellaneous.
(a) Controlling Law. The execution, validity interpretation
and performance of this Agreement shall be determined and governed by
the laws of the State of Texas, and, in any action by the Company to
enforce this Agreement, venue may be had in Xxxxxx County, Texas.
(b) Entire Agreement. The Employment Agreement, as amended by
this Agreement, contains the entire agreement of the Parties. The
Employment Agreement and this Agreement may not be changed orally or by
action or inaction, but only by an agreement in writing signed by the
Party against whom enforcement of any waiver, change, modification,
extension or discharge is sought.
(c) Severability, Reinstatement of Bonus. If any provision of
this Agreement is rendered or declared illegal or unenforceable by
reason of any existing or subsequently enacted legislation or by decree
of a court of last resort, the Parties shall promptly meet and
negotiate substitute provisions for those rendered or declared illegal
or unenforceable, but all remaining provisions of this Agreement shall
remain in full force and effect. If the payment of the Bonus to
Employee under Section 3(b) of the Employment Agreement as amended
hereby is successfully challenged by the Company, any person acting on
behalf of the Company, or any third party and the effect of such
challenge is that Employee is required to return the amount of such
Bonus to the Company, then the bonus provisions under Paragraphs (b)
and (c) of Section 3 of the Employment Agreement as in effect prior to
this Agreement shall be reinstated.
(d) Execution. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of
which shall constitute one instrument.
EXECUTED to be effective as of the 26th day of June, 2000.
SEITEL, INC.
By: /s/ Xxxx X. Frame
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Xxxx X. Frame
President and CEO
/s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx
