Document:

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EXHIBIT 10.4

MITCHAM INDUSTRIES, INC.

INCENTIVE STOCK OPTION AGREEMENT

(1998 STOCK AWARDS PLAN)

     THIS INCENTIVE STOCK OPTION AGREEMENT (“Option Agreement”) is between
Mitcham Industries, Inc., a Texas corporation (the “Company”), and
           (the “Optionee”), which parties agree as follows:

     1. Introduction. The Company has adopted the Mitcham Industries, Inc.
1998 Stock Awards Plan (the “Plan”) to provide employees upon whom the
responsibilities of the successful administration and management of the Company
rest additional incentive and reward opportunities designed to advance the
Company’s profitable growth. The Company, acting through the Committee, has
determined that its interests will be advanced by issuing the Optionee an
Incentive Stock Option under the Plan. All capitalized terms in this Option
Agreement not defined in this Option Agreement will have the meanings given to
them in the Plan.

     2. Option Grant. The Company hereby irrevocably grants to the Optionee
the right and option (the “Option”) to purchase from the Company
          shares of the Company’s common stock, $   par value
(“Stock”), at a price of $  per share (the “Exercise Price”), which is
not less than the Fair Market Value of the Stock at the grant date of this
Option.

     3. Option Period and Exercisability. The Optionee may exercise the Option
in whole or in part at any time during a 10-year period (the “Option Period”)
beginning on            (the “Date of Grant”), except that the Option shall
not be exercised (a) at any time before the expiration of six months from the
Date of Grant, or (b) for more than a percentage of the aggregate number of
shares underlying the Option determined by the number of full years of
employment with the Company or its Affiliates from the Date of Grant to the
exercise date, as follows:

	 	 	 
	Number of

Full Years

	 	Percentage of Shares

Purchasable

Notwithstanding anything in this Option Agreement to the contrary, the
Committee, in its sole discretion, may waive the foregoing schedule of vesting
and, upon written notice to the Optionee, accelerate the earliest date or dates
on which the Option is exercisable.

     4. [Performance Criteria. Notwithstanding the vesting schedule in Section
3, the Option may be exercised sooner if the Company attains the following
performance criteria over the following periods of time:

 

 

	 	 	 	 	 
	Performance Periods

	 	Performance Criteria

	 	Percentage of

Shares Purchasable

However, the Option may not be exercised before the expiration of six months
from the date of Grant.]

     5. Procedure for Exercise. The Optionee may exercise the Option by
delivering written notice to the Secretary of the Company including the number
of shares of Stock with respect to which the Option is being exercised and the
address to which the certificates for such shares are to be mailed. The notice
shall be accompanied by, at the Optionee’s choice, cash, cashier’s check, bank
draft, or postal or express money order payable to the order of the Company,
certificates representing shares of Stock already owned by the Optionee, duly
endorsed for transfer to the Company, or any combination of the preceding,
equal in value to the aggregate Exercise Price. The Committee, in its sole
discretion, may allow the Optionee to exercise the Option under a “cashless
exercise” arrangement as described in Section VII(d) of the Plan. The Optionee
may deliver the notice by telecopy, provided that the Company receives the
Exercise Price of such shares via wire transfer on the same day it receives the
telecopy transmission of the notice. The Option shall be deemed to have been
exercised immediately before the close of business on the date the Company
receives (i) written notice of such exercise and (ii) payment in full of the
Exercise Price for the number of shares for which Options are being exercised,
and the Optionee shall be treated for all purposes as the record holder of such
shares of Stock as of such date.

     As promptly as practicable after receipt of such written notice and
payment, the Company shall deliver to the Optionee certificates for the number
of shares with respect to which the Option has been exercised, issued in the
Optionee’s name or such other name as the Optionee directs. Delivery shall be
deemed effected when the Company’s stock transfer agent deposits such
certificates in the United States mail, addressed to the Optionee at the
address specified in the exercise notice.

     6. Termination of Employment. If the Optionee ceases to be employed by
the Company or its Affiliates for any reason other than death or disability,
the Option shall expire upon the date of such termination of employment.
However, the Committee may allow the Optionee to exercise all or a portion of
the Option granted but unexercised for a period of time (not to exceed three
months) after the Optionee’s termination of employment.

     7. Death or Disability. If the Optionee dies or is determined to be
disabled while employed by the Company or its Affiliates, then the Optionee,
the guardian of the Optionee’s estate, the executor or administrator of the
Optionee’s estate or the person or persons to whom the Optionee’s rights under
this Option Agreement pass by will or the laws of descent and distribution, may
exercise the Option (to the extent the Optionee would have been entitled to do
so at the date of death or the determination of disability) at any time and
from time to time, within a one-year period after such death or determination
of disability. However, the Option may not be exercised after the expiration
of the Option Period. The Optionee shall be deemed to

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be disabled if, in the opinion of a physician selected by the Committee,
the Optionee is incapable of performing for the Company services of the kind he
was performing at the time the disability occurred, due to any medically
determinable physical or mental impairment that can be expected to result in
death or to continue indefinitely. The date of determination of disability for
purposes hereof shall be the date of such physician’s determination.

     8. Transferability. The Optionee may not transfer this Option other than
by will or by the laws of descent and distribution. During the Optionee’s
lifetime, only he or his authorized legal representative may exercise the
Option. Any heir or legatee of the Optionee shall take rights herein granted
subject to the terms and conditions of this Option Agreement. No such transfer
of this Option Agreement to the Optionee’s heirs or legatees shall bind the
Company unless the Company is furnished with written notice of transfer and a
copy of such evidence as the Committee considers necessary to establish the
validity of the transfer and the acceptance by the transferee or transferees of
the terms and conditions of this Option Agreement.

     9. No Rights as Shareholder. The Optionee shall have no rights as a
shareholder with respect to any shares of Stock covered by this Option
Agreement until the Option is exercised by written notice and accompanied by
payment as provided in Section 5 of this Option Agreement.

     10. Extraordinary Corporate Transactions. If, after the execution of this
Option Agreement, the Company is recapitalized, changes its capital structure,
or the number of issued and outstanding shares of Stock changes as a result of
a share dividend or a subdivision or consolidation of shares without the
Company receiving consideration, the Option shall be appropriately adjusted as
provided under the Plan. If there is a Change of Control, the Option shall
immediately vest and be fully exercisable. [SEE ARTICLE XII OF THE PLAN -
COMMITTEE MAY PROVIDE FOR ALTERNATIVE TREATMENT OF OPTIONS].

     11. Cashing Out Option. On receipt of written notice of exercise, the
Committee may elect to cash out all or part of the portion of the shares of
Stock for which the Option is being exercised by paying the Optionee an amount,
in cash or Stock, equal to the excess of the Fair Market Value of the Stock
over the Exercise Price, multiplied by the number of shares of Stock for which
the Option is being exercised on the effective date of such cash-out.

     12. Compliance With Securities Laws. When the Optionee acquires any
shares pursuant to the exercise of the Option, the Optionee (or any person
acting under Section 8) will enter into such written representations,
warranties and agreements as the Company reasonably requests in order to comply
with applicable securities laws or with this Option Agreement.

     13. Compliance With Laws. Notwithstanding any of the provisions hereof,
the Optionee agrees that he will not exercise the Option, and that the Company
will not be obligated to issue any shares under this Option Agreement, if the
exercise of the Option or the issuance of such shares of Stock would violate
any provision of any law or regulation of any governmental authority.

     14. No Right to Employment. The Optionee shall be considered to be in the
employment of the Company so long as he or she remains an employee of the
Company or its

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Affiliates. The Committee shall determine whether and when there has been
a termination of such employment and the cause of such termination, and its
determination shall be final. Nothing contained in this Option Agreement shall
be construed as conferring upon the Optionee the right to continue in the
employ of the Company or its Affiliates, nor shall anything contained herein be
construed to limit the “employment at will” relationship between the Optionee
and the Company or its Affiliates.

     15. Resolution of Disputes. As a condition of the granting of the Option,
the Optionee and the Optionee’s heirs, personal representatives and successors
agree that the Committee shall determine and resolve in its sole discretion and
judgment, any dispute or disagreement that arises under this Option Agreement,
and that any such determination and any resolution of the terms of this Option
Agreement shall be final, binding and conclusive upon the Company, the
Optionee, and the Optionee’s heirs, personal representatives and successors.

     16. Legends on Certificate. The certificates representing the shares of
Stock purchased by the exercise of the Option will be stamped or otherwise
imprinted with legends in such form as the Company or its counsel may require
with respect to any applicable restrictions on sale or transfer and the stock
transfer records of the Company will reflect stop-transfer instructions with
respect to such shares.

     17. Notices. Every notice hereunder must be in writing and shall be given
by registered or certified mail. All notices of the exercise of the Option
shall be directed to Mitcham Industries, Inc., 44000 Highway 75 South, P.O. Box
1175, Huntsville, Texas 77342. Attention: Secretary. Any notice the Company
gives to the Optionee shall be directed to the Optionee at the address on file
with the Company and shall bind the Optionee and any other person who acquires
rights hereunder. The Company has no obligation to advise the Optionee of the
existence, maturity or termination of any of the Optionee’s rights hereunder.
The Optionee shall be deemed to have familiarized himself with all matters in
this Option Agreement and in the Plan that may affect any of the Optionee’s
rights or privileges hereunder.

     18. Construction and Interpretation. Whenever the term “Optionee” is used
herein under circumstances that apply to any other person or persons to whom
this award may be transferred under Section 8, the word “Optionee” shall be
deemed to include such person or persons.

     19. Notice of Disposition. If the Optionee disposes of any shares of
Stock acquired pursuant to the exercise of the Option before the earlier of
two years from the Date of Grant or one year from the date the shares of Stock
were acquired, the Optionee shall notify the Company of such disposition within
10 days of its occurrence and deliver to the Company any amount of federal or

state income tax withholding required by law. If the Optionee fails to pay the
withholding tax, the Company is authorized to withhold such tax from any cash
remuneration then or thereafter payable to the Optionee.

     20. Agreement Subject to Plan. This Option Agreement is subject to the
Plan. The terms and provisions of the Plan (including any amendments thereto)
are incorporated in this Option Agreement by reference thereto. If there is a
conflict between any term or provision of

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this Option Agreement and a term or provision of the Plan, the terms and
provisions of the Plan will govern.

     21. Binding Effect. This Option Agreement shall be binding upon and inure
to the benefit of any successors to the Company and all persons lawfully
claiming under the Optionee as provided herein.

     22. Governing Law. This Option Agreement shall be governed by and
construed in accordance with the laws of the State of Texas.

     DATED                    ,                    .

	 	 	 	 
	 	 	MITCHAM INDUSTRIES, INC.
	 
	 	 	 
	

	 	By:	 
	

	 	 	

	

	 	Name:	 
	

	 	 	

	

	 	Title:	 
	

	 	 	

	 
	 	 	 
	 	 	OPTIONEE
	 
	 	 	 
	 	 	

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EXHIBIT 10.5

MITCHAM INDUSTRIES, INC.

PHANTOM STOCK AWARD AGREEMENT

(1998 STOCK AWARDS PLAN)

     THIS PHANTOM STOCK AWARD AGREEMENT (the “Agreement”) is between Mitcham
Industries, Inc., a Texas corporation (the “Company”), and           
(the “Employee”).

     1. Introduction. The Company has adopted the Mitcham Industries, Inc.
1998 Stock Awards Plan (the “Plan”) to provide the employees upon whom the
responsibilities of the successful administration and management of the Company
rest additional incentive and reward opportunities designed to advance the
Company’s profitable growth. The Company, acting through the Committee, has
determined that its interests will be advanced by issuing the Employee a
Phantom Stock Award under the Plan. All capitalized terms in this Agreement
not defined in this Agreement will have the meanings given to them in the Plan.

     2. Grant of Award. The Company hereby grants to the Employee the right to
receive    Phantom Stock Units, [contingent on the vesting schedule in
Section 4 below and on the satisfaction of the “Performance Criteria” set forth
in Exhibit A] during the “Performance Period” set forth in Section 3. A
“Phantom Stock Unit” is the right to receive one share of common stock, $.01
par value (the “Stock”) of the Company. The Company shall maintain an account
for the Employee that reflects the current number of Phantom Stock Units
maintained on his behalf at any time.

     3. Performance Period. The Performance Period shall begin on    ,
   (the “Date of Grant”) and end on           ,    .

     4. Vesting. The Phantom Stock Units will vest (“Vested Units”) as
determined by the number of full years of the Employee’s employment with the
Company or its Affiliates from the Date of Grant, as follows:

	 	 	 
	Number of

Full Years

	 	Percentage

Vested

     5. Payment of Phantom Stock Units. The Company shall pay the Employee,
within 30 days after the date on which the Phantom Stock Units would become
fully Vested under Section 4 [or, if sooner, in accordance with Exhibit A], an
amount equal to the portion of the Vested Units to which the Employee is
entitled. Such payment will be made, in the Committee’s discretion, in (a)
cash, (b) shares of Stock with a Fair Market Value equal to the amount of the
payment, or (c) a combination of cash and shares of Stock, and shall be made
either in one lump sum or in installments, in the Committee’s discretion.

 

 

     6. Termination of Employment. If the Employee ceases to be employed by
the Company or its Affiliates before the expiration of the Performance Period
for any reason, the Phantom Stock Units shall expire upon such termination of
employment and the Employee shall have no right to receive any portion of the
Phantom Stock Units. Notwithstanding anything in this Agreement to the
contrary, the Committee, in its sole discretion, may waive the foregoing
schedule of vesting and, upon written notice to the Employee, accelerate the
earliest date or dates on which the Phantom Stock Units vest.

     7. Extraordinary Corporate Transactions. Solely for purposes of the Plan
and this Agreement, each Phantom Stock Unit has been equated with one share of
Stock as constituted on the execution date of this Agreement. If, after the
execution of this Agreement, the Company is recapitalized or otherwise changes
its capital structure or the number of issued and outstanding shares of Stock
as a result of a share dividend or a subdivision or consolidation of shares
without receipt of consideration by the Company, the number of Phantom Stock
Units previously granted to the Employee shall be appropriately adjusted as
provided under this Plan. If there is a Change of Control, the Phantom Stock
Units shall become fully Vested [and all Performance Criteria set forth on
Exhibit A shall no longer be required.] The Phantom Stock Units shall be
immediately payable to the Employee.

     8. Requirements of Law. The granting of the Phantom Stock Units shall be
subject to all applicable laws, rules, and regulations, and to such approvals
by any governmental agencies or national securities exchanges as may be
required.

     9. Withholding of Tax. To the extent that the Phantom Stock Units result
in compensation income to the Employee for federal or state income tax
purposes, the Employee shall pay to the Company at the time of vesting or the
Employee’s recognition of income such amount of money as the Company may
require to meet its obligations under applicable tax laws or regulations. If
the Employee fails to do so, the Company is authorized to withhold any such tax
from any cash remuneration then or thereafter payable to the Employee, or may
otherwise refuse to issue or transfer any shares otherwise required to be
issued or transferred under this Agreement.

     10. No Right to Employment. The Employee shall be considered to be in the
employment of the Company or its Affiliates as long as he remains employed on a
full-time basis by the Company or its Affiliates, or any corporation to which
substantially all of the assets and business of the Company are transferred.
The Committee shall determine whether and when there has been a termination of
the Employee’s employment and the cause of such termination, and its
determination shall be final. Nothing in this Agreement or the granting of the
Phantom Stock Units shall confer on the Employee the right to continued
employment by the Company or its Affiliates or affect in any way the right of
the Company or its Affiliates to terminate such employment at any time.

     11. Resolution of Disputes. As a condition of the granting of the Phantom
Stock Units, the Employee and his heirs and successors agree that the Committee
shall determine and resolve any dispute or disagreement that arises hereunder,
and that any such determination and any resolution of the terms of this
Agreement shall be final and shall be binding and conclusive upon the Company,
the Employee, his heirs, personal representatives and successors.

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     12. Prohibition Against Assignment or Encumbrance. Except as provided in
Section 13, no right, title, interest or benefit hereunder shall ever be
transferable or liable for or charged with any of the torts or obligations of
the Employee or any person claiming under the Employee, or be subject to
seizure by any creditor of the Employee or any person claiming under the
Employee. Neither the Employee nor any person claiming under the Employee may
anticipate or dispose of any right, title, interest or benefit to be derived
under this Agreement until the same is distributed under the terms of this
Agreement.

     13. Beneficiary Designation. The Employee may name, from time to time,
any beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit under this Agreement is to be paid in the
case of the death of the Employee before he receives any or all of such
benefit. Each designation will revoke all prior designations by the Employee,
shall be in a form prescribed by the Committee, and will be effective only when
filed by the Employee in writing with the Committee during his lifetime. In
the absence of any such designation, benefits remaining unpaid at the
Employee’s death shall be paid to his estate.

     14. Notices. Every notice hereunder shall be in writing and shall be
given by registered or certified mail. All notices required of the Employee
shall be directed to Mitcham Industries, Inc., 44000 Highway 75 South, P. O.
Box 1175, Huntsville, Texas 77342. Attention: Secretary. Any notice given by
the Company to the Employee directed to him at his address on file with the
Company shall be effective to bind him and any other person who shall acquire
rights hereunder. The Company has no obligation to advise the Employee of the
existence, maturity or termination of any of the Employee’s rights hereunder.
The Employee shall be deemed to have familiarized himself with all matters in
this Agreement and in the Plan which may affect any of the Employee’s rights or
privileges hereunder.

     15. Agreement Subject to Plan. This Agreement is subject to the Plan.
The terms and provisions of the Plan (including any amendments thereto) are
hereby incorporated in this Agreement by reference thereto. If there is a
conflict between any term or provision contained in this Agreement and a term
or provision of the Plan, the terms and provisions of the Plan will govern.

     16. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of any successors to the Company and all persons lawfully claiming
under the Employee.

     17. The Employee’s Rights Unsecured. The right of the Employee to receive
payment under this Agreement shall be an unsecured claim against the general
assets of the Company. The Employee shall have no right in or against any
assets of the Company.

     18. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.

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DATED                    ,                    .

	 	 	 	 
	 	 	MITCHAM INDUSTRIES, INC.
	 
	 	 	 
	

	 	By:	 
	

	 	 	

	

	 	Name:	 
	

	 	 	

	

	 	Title:	 
	

	 	 	

	 
	 	 	 
	 	 	OPTIONEE
	 
	 	 	 
	 	 	

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EXHIBIT A

PERFORMANCE CRITERIA

[To be established by the Committee]

A-i

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