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EXHIBIT 10.16
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of August
11, 1997, by and between EAGLE GEOPHYSICAL, INC., a Delaware corporation (the
"Company"), and XXX X. XXXXXXXXX (the "Executive").
The Company desires to employ the Executive and the Executive desires to
accept employment with the Company, on the terms and conditions of this
Agreement.
Accordingly, the parties agree as follows:
1. Employment, Duties and Acceptance.
1.1 Employment by the Company and Duties. The Company hereby agrees
to employ the Executive for a term commencing on the effective date (the "IPO
Date") of the initial public offering of the Company's common stock (the
"IPO"), and expiring at the end of the day three (3) years from the IPO Date
(such date, or later date to which this Agreement is extended in accordance
with the terms hereof, the "Termination Date"), unless earlier terminated as
provided in Section 4 or unless extended as provided herein (the "Term"). The
Term shall be automatically extended commencing on the Termination Date and on
each Termination Date thereafter (each such date being a "Renewal Date"), so as
to terminate one (1) year from such Renewal Date, unless and until at least
ninety (90) days prior to a Renewal Date either party hereto gives written
notice to the other that the Term should not be further extended after the next
Renewal Date, in which event the Termination Date shall be the Renewal Date
following such notice. Notwithstanding the foregoing or anything herein to the
contrary, this Agreement shall terminate and the parties shall have no further
rights or obligations with respect hereto if the IPO is not effective on or
before December 31, 1997. During the Term, the Executive shall serve in the
capacity of President of the Company, and shall also serve in those offices and
directorships of subsidiary corporations or entities of the Company to which he
may from time to time be appointed or elected. During the Term, the Executive
shall devote all reasonable efforts and all of his business time and services
to the Company, subject to the direction of the Board of Directors of the
Company (the "Board"). The Executive shall not engage in any other business
activities except for passive investments in corporations or partnerships not
engaged in the Company Business (as hereinafter defined) pursuant to Section 3
hereof.
1.2 Acceptance of Employment by the Executive. The Executive hereby
accepts such employment and shall render the services and perform the duties
described above.
2. Compensation and Other Benefits.
2.1 Annual Salary. The Company shall pay to the Executive an annual
salary at a rate of not less than two hundred sixty thousand dollars ($260,000)
per year (the "Annual Salary"),
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subject to increase at the sole discretion of the Board; provided, however,
that the Annual Salary shall be increased effective as of January 1 of each
year during the Term at a minimum by a percentage equal to the percentage
increase in the Consumer Price Index (Urban - Houston Metropolitan Area) for
the previous calendar year. The Annual Salary shall be payable in accordance
with the payroll policies of the Company as from time to time in effect, but in
no event less frequently than once each month, less such deductions as shall be
required to be withheld by applicable law and regulations.
2.2 Incentive Bonuses.
2.2.1 Base Incentive Bonus. The Executive shall receive an
incentive bonus, if earned, with respect to each fiscal quarter ending during
the Term (the "Base Incentive Bonus"), equal to twenty-five percent (25%) of
the Annual Salary in effect during such quarter; provided, however, that the
Base Incentive Bonus for a fiscal quarter shall only be payable if the Gross
Margin (as hereinafter defined) for such fiscal quarter equals or exceeds 17%.
2.2.2 Additional Incentive Bonus. The Executive shall receive
an additional incentive bonus, if earned, with respect to the fiscal years
ending during the Term (the "Additional Incentive Bonus"); provided, however,
that an Additional Incentive Bonus for a fiscal year shall only be payable if
the Company earns Pre-Tax Profits (as hereinafter defined) for such fiscal
year. The Base Incentive Bonus and Additional Incentive Bonus are hereinafter
collectively referred to as the "Incentive Bonuses."
2.2.3 Definitions.
"Chief Financial Officer" means the chief financial
officer of the Company.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Gross Margin" means the amount of revenues less all
expenses except for depreciation, amortization, interest, taxes and overhead of
the Onshore Business calculated by the Chief Financial Officer applying such
accounting principles and assumptions as may be reasonable.
"Pre-Tax Profits" means the amount of pre-tax profits of
the Company calculated by the Chief Financial Officer applying generally
accepted accounting principles and such other accounting principles and
assumptions as may be reasonable.
"Onshore Business" means the onshore seismic data
acquisition business conducted by the Company and any company or other entity
that is a direct or indirect wholly owned subsidiary of the Company (including
any profits allocated to the Company or any such subsidiary through its
participation in or ownership of an interest in a partnership, venture,
corporation or other entity).
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2.2.4 Calculation of Additional Incentive Bonus. If the Company
earns Pre-Tax Profits for a fiscal year, the Executive shall receive an
Additional Incentive Bonus equal to the Applicable Percentage set forth in the
table below of the Pre-Tax Profits.
Pre-Tax Profits
(percent of gross revenues) Applicable Percentage
--------------------------- ---------------------
greater than 0%, but less than 10% 4%
equal to or greater than 10% 5%
2.2.5 Payment of Incentive Bonuses. The Chief Financial Officer
shall calculate the Gross Margin and Pre-Tax Profits, if any, and any Base
Incentive Bonus and Additional Incentive Bonus payable to the Executive in
connection therewith, shall certify such calculations and shall deliver such
calculations to the Executive and the Chairman of the Compensation Committee of
the Company (for his review and approval) as soon as reasonably practicable
after the end of each fiscal quarter, in the case of the Base Incentive Bonus,
and the end of each fiscal year, in the case of the Base Incentive Bonus and
Additional Incentive Bonus, but in any event within seventy-five (75) days
following the end of the applicable fiscal period. Any Base Incentive Bonus
and Additional Incentive Bonus payable hereunder shall be paid by the Company
to the Executive within fifteen (15) days of delivery of such calculations by
the Chief Financial Officer and in any event within ninety (90) days following
the end of the applicable fiscal period.
2.2.6 Proration of Bonuses.
2.2.6.1 For purposes of determining the Base Incentive
Bonus payable to Executive hereunder attributable to the Company's fiscal
quarter ending September 30, 1997, the amount of such bonus will equal twenty-
five percent (25%) of the Annual Salary in effect during such quarter
multiplied by a fraction, the numerator of which is the number of days during
the period beginning on the IPO Date and ending on the last day of such quarter
(such period being referred to herein as the "Calculation Period") and the
denominator of which is the total number of days in such quarter; provided,
however, that the Base Incentive Bonus for the fiscal quarter ending September
30, 1997 shall only be payable if the Gross Margin during the Calculation
Period equals or exceeds 17%.
2.2.6.2 Executive shall be entitled to a payment of a
Base Incentive Bonus for the fiscal quarter of the Company during which the
Termination Date occurs (the "Termination Quarter"), calculated in accordance
with this subsection 2.2.6.2. For purposes of determining the Base Incentive
Bonus payable to Executive hereunder attributable to the Termination Quarter,
the amount of such bonus will equal twenty-five percent (25%) of the Annual
Salary in effect at the beginning of the Termination Quarter multiplied by a
fraction, the numerator of which is the number of days during the period
beginning on the first day of the Termination Quarter and ending on the
Termination Date and the denominator of which is the number of days in the
Termination Quarter; provided, however, that the Base Incentive Bonus for the
Termination
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Quarter shall only be payable if the Gross Margin during the Termination
Quarter equals or exceeds 17%.
2.2.6.3 For purposes of determining the Additional
Incentive Bonus payable to Executive hereunder attributable to the Company's
fiscal year ending December 31, 1997, the amount of Pre-Tax Profits and gross
revenues used for the calculation pursuant to subsection 2.2.4 above will be
only those Pre-Tax Profits and gross revenues attained by the Company during
the period beginning on the IPO Date and ending on December 31, 1997.
2.2.6.4 Executive shall be entitled to a payment of an
Additional Incentive Bonus for any fiscal year of the Company during which the
Termination Date occurs (the "Termination Year"), calculated in accordance with
this subsection 2.2.6.4. For purposes of determining the Additional Incentive
Bonus payable to Executive hereunder attributable to the Termination Year, the
amount of the Additional Incentive Bonus will be equal to the amount otherwise
determined pursuant to subsection 2.2.4 for the Termination Year multiplied by
a fraction, the numerator of which is the number of days from the beginning of
the Termination Year to the Termination Date and the denominator of which is
365.
2.3 Grant of Option. The Company agrees to grant the Executive,
pursuant to the terms of the Company's Option Plan (the "Option Plan") created
in connection with the IPO, options to acquire one hundred fifty thousand
(150,000) shares of the Company's common stock (the "Options"), at an exercise
price equal to the offering price of the common stock of the Company sold
pursuant to the IPO (the "IPO Price"). The options shall vest over a period of
three years, with Options to acquire 50,000 shares vesting on each of the first
three anniversaries of the IPO Date, subject to the terms of the Option Plan.
The Company agrees to use all reasonable efforts, consistent with the
foregoing, to ensure that the maximum number of Options permitted by applicable
law meet all requirements for treatment as Incentive Stock Options under the
Code, and that the grant of the Options meets the requirements of Rule 16b-3,
promulgated under Section 16 of the Securities Exchange Act of 1934, as
amended.
2.4 Vacation Policy. The Executive shall be entitled to a paid
vacation of four weeks during each year of the Term.
2.5 Participation in Employee Benefit Plans. The Company agrees to
permit the Executive during the Term, if and to the extent eligible, to
participate in any group life, hospitalization or disability insurance plan,
health program, pension plan, similar benefit plan or other so called "fringe
benefits" of the Company (collectively, "Benefits") which may be available to
other executives of the Company on terms no less favorable to the Executive
than the terms offered to such other executives. The Company agrees to use its
best efforts to obtain immediate coverage for the Executive upon the
commencement of the Term under its existing or newly adopted medical expense
and hospitalization plan for employees without premium surcharge and without
exclusions for disclosed preexisting conditions. The Company shall obtain a
ten year level term life insurance policy insuring the life of the Executive in
the amount of one million dollars, with beneficiaries designated pursuant to
the Executive's instructions. The Company also shall provide
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disability insurance for the Executive, which shall provide for payments based
on 60% of the total compensation paid to the Executive for the prior fiscal
year upon his disability. For purposes of the foregoing sentence, the total
compensation of the Executive shall be no less than the Annual Salary and no
more than one million dollars. The Executive shall cooperate with the Company
in applying for such coverage, including submitting to a physical exam and
providing all relevant health and personal data.
2.6 General Business Expenses. The Company shall pay or reimburse the
Executive for all expenses reasonably and necessarily incurred by the Executive
during the Term in the performance of the Executive's services under this
Agreement. Such payment shall be made upon presentation of ve employees prior
to making such payments or reimbursements.
2.7 Company Car and Cellular Telephone. The Company shall pay the
Executive a car allowance of nine hundred and no/100 Dollars ($900.00) per
month, which the Executive may apply, in his discretion, to the cost associated
with purchasing or leasing and insuring an automobile of the Executive's
choice. The Executive may use the automobile for personal as well as business
purposes. The Company shall also furnish the Executive with a cellular
telephone of his choice and the Company shall pay all charges in connection
with the use thereof, other than charges for calls not related to the
Executive's duties hereunder.
2.8 Company Loan to the Executive.
2.8.1 Loan and Purchase of Shares. The Executive shall purchase
twenty-five thousand (25,000) shares of the Company's common stock (the
"Executive Shares") at the IPO Price (as estimated by the Company) prior to the
IPO. The Company shall loan (the "Loan") to the Executive an amount equal to
the total purchase price of such shares (25,000 multiplied by the estimated IPO
Price) (the "Loan Amount"). After the IPO, the purchase price of the Executive
Shares shall be adjusted to the actual IPO Price, and the Loan Amount shall be
adjusted to reflect such IPO Price. The Loan Amount shall accrue interest at
the rate of 6% per annum, which interest shall be payable quarterly by the
Executive to the Company as such interest accrues. The principal of the Loan
shall be payable in sixty (60) equal monthly payments beginning on the third
anniversary of the date of the Loan. All amounts payable in connection with
the Loan shall be payable by the Executive to the Company on or before the
fifth day of the month in which such payment is due. In any event, all
outstanding principal and interest payable pursuant to the Loan shall be
payable by the Executive to the Company on or before the eighth anniversary of
the date of the Loan. The Company shall have a contractual right of set-off of
any amounts payable by the Company to the Executive for any and all liabilities
or obligations of the Executive to the Company.
2.8.2 Pledge and Acceleration. The Loan shall be secured by a
pledge of the Executive Shares, and the Executive shall deliver to the Company
an executed Security Agreement - Pledge (in a form reasonably satisfactory to
the Company and the Executive), an executed Stock Power and the Executive
Shares contemporaneously with the Loan and the acquisition of the Executive
Shares. The Loan shall be fully recourse against the Executive;
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provided, however, that if the Executive is terminated by the Company without
Cause (as hereinafter defined), including constructive termination without
Cause pursuant to Section 4.6 hereof, the Loan shall become recourse only to
the Executive Shares, and upon any default by the Executive in repayment of the
Loan, any proceeds from the sale of the Executive Shares in excess of the
amounts owed by the Executive to the Company shall be paid by the Company to
the Executive, pursuant to the terms of the Security Agreement - Pledge.
Notwithstanding the payment terms set forth in Section 2.8.1 hereof, all unpaid
principal and accrued and unpaid interest under the Loan shall become
immediately due and payable upon the occurrence of (i) the termination of the
Executive's employment hereunder with Cause pursuant to Section 4.2 hereof, or
(ii) the termination of this Agreement by the Executive pursuant to Section 4.4
hereof.
2.9 Section 162(m) Compensation Deferral. Notwithstanding anything
herein to the contrary, if the total compensation payable to the Executive by
the Company during any year would cause the Company to lose the federal income
tax deduction for any portion of such compensation under Section 162(m) of the
Code: (a) the amount of compensation payable by the Company to the Executive
during such year shall be reduced to the maximum amount for which the Company
may receive a current deduction under Section 162(m) of the Code, and (b) the
excess of such compensation shall be deferred and paid by the Company to the
Executive (without interest) at such time (whether during the Term or after the
expiration of the Term) as the Company may pay such deferred compensation to
the Executive and receive a corresponding federal income tax deduction under
Section 162(m) of the Code.
2.10 Excess Parachute Savings Clause. Notwithstanding anything
herein to the contrary, if any portion of the amount payable to the Executive
by the Company under this Section 2 or any other provision of this Agreement,
or any other amount payable to the Executive pursuant to any other agreement
with or plan of the Company that would constitute a "parachute payment" (in the
aggregate, the "Total Payments"), would constitute an "excess parachute
payment," then the payments to be made to the Executive under this Agreement
shall be reduced, without any further action by the Company or the Executive,
such that the value of the Total Payments that Executive is entitled to receive
shall be One Dollar ($1.00) less than the maximum amount which the Executive
may receive without becoming subject to the tax imposed by Section 4999 of the
Code, or which the Company may pay without loss or deduction under Section
280G(a) of the Code. For purposes of this Agreement, the terms "excess
parachute payment" and "parachute payment" shall have the meanings assigned to
them in Section 280G of the Code, and such "parachute payments" shall be valued
as provided therein.
2.11 Increase of Executive's Responsibilities. If, by virtue of
merger, consolidation or acquisition, (i) there is a substantial increase in
the assets or revenues of the Company and a corresponding substantial increase
in the responsibilities of the Executive or (ii) there is a direct and material
adverse effect on the bonuses otherwise payable to Executive pursuant to this
agreement, the Company agrees to evaluate whether an adjustment to the
compensation payable to the Executive pursuant to this Agreement is appropriate
to properly compensate the Executive.
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3. Non-Competition, Confidentiality and Company Property.
3.1 Covenants Against Competition. The Executive acknowledges that
(i) the Company is currently engaged in the business of owning, managing and
operating seismic data acquisition equipment and hiring and managing crews to
operate such equipment, which equipment and crews are contracted or hired for
the purpose of performing geological surveys and acquiring seismic data onshore
and offshore (the "Company Business"); (ii) his work for the Company will give
him access to trade secrets of and confidential information concerning the
Company; and (iii) the agreements and covenants contained in this Agreement are
essential to protect the business and goodwill of the Company. Accordingly,
the Executive covenants and agrees as follows:
3.1.1 Non-Compete. As an independent covenant, and in order to
enforce the provision of Sections 3.1.2 through 3.1.6 hereof and the other
provisions of this Agreement, the Executive agrees that he shall not during the
Restricted Period (as hereinafter defined) within a two hundred (200) mile
radius of any office maintained by the Company within one year prior to the end
of the Term, including, without limitation, the office address specified from
time to time pursuant to Section 7.2 hereof and any field offices, directly or
indirectly (except in the Executive's capacity as an officer of the Company),
(i) engage or participate in the Company Business; (ii) enter the employ of, or
render any other services to, any person engaged in the Company Business except
as permitted hereunder; or (iii) become interested in any such person in any
capacity, including, without limitation, as an individual, partner,
shareholder, lender, officer, director, principal, agent or trustee except as
permitted hereunder; provided, however, that the Executive may own, directly or
indirectly, solely as an investment, securities of any person traded on any
national securities exchange or listed on the National Association of
Securities Dealers Automated Quotation System if the Executive is not a
controlling person of, or a member ofve does not, directly or indirectly, own
5% or more of any class of equity securities, or securities convertible into or
exercisable or exchangeable for 5% or more of any class of equity securities,
of such person. As used herein, and in Sections 3.1.2 and 3.1.6 the
"Restricted Period" shall mean a period commencing on the date hereof and
terminating upon the first to occur of (a) the date on which the Company
terminates or is deemed to terminate the Executive's employment without Cause
(as hereinafter defined), (b) the date the Executive terminates or is deemed to
terminate his employment pursuant to Section 4.6 hereof or (c) the date of
termination of this Agreement; provided, however, that if the Company shall
have terminated the Executive's employment for Cause and such Cause in fact
exists or if the Executive shall have terminated his employment with the
Company in breach of the terms of this Agreement, the Restricted Period shall
end one (1) year following the termination of the Executive's employment
hereunder.
3.1.2 Customers. As an independent covenant, the Executive also
agrees to refrain during the Restricted Period, without written permission from
the Company, from diverting, taking, soliciting and/or accepting on his own
behalf or on the behalf of another person, firm, or company, the business of
any past or present customer of the Company, its divisions, subsidiaries and/or
other affiliated entities, or any identified prospective or potential customer
of the Company, its divisions, subsidiaries and/or affiliated entities, whose
identity became known to the Executive through his employment by the Company.
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3.1.3 Confidential Information.
3.1.3.1 The Executive acknowledges that the Company has a
legitimate and continuing proprietary interest in the protection of its
confidential information and that it has invested substantial sums and will
continue to invest substantial sums to develop, maintain and protect
confidential information. The Company agrees to provide the Executive access
to confidential information in conjunction with the Executive's duties,
including, without limitation, information of a technical and business nature
regarding the Company's past, current or anticipated business that may
encompass financial information, financial figures, trade secrets, customer
lists, details of client or consultant contracts, pricing policies, operational
methods, marketing plans or strategies, product development techniques or
plans, business acquisition plans, Company employee information, organizational
charts, new personnel acquisition plans, technical processes, designs and
design projects, inventions and research projects, ideas, discoveries,
inventions, improvements, trade secrets, design specifications, writings and
other works of authorship. In exchange, as an independent covenant, the
Executive agrees not to make any unauthorized use, publication, or disclosure,
during or subsequent to his employment by the Company, of any Intellectual
Property of a confidential or trade secret nature, generated or acquired by him
during the course of his employment, except to the extent that the disclosure
of Intellectual Property Information is necessary to fulfill his
responsibilities as an employee of the Company. The Executive understands that
confidential matters and trade secrets include information not generally known
by or available to the public about or belonging to the Company, its divisions,
subsidiaries, and related affiliates, or belonging to other companies to whom
the Company, its divisions, subsidiaries, and related affiliates, may have an
obligation to maintain information ine may only be obtained through the
Company's written consent.
3.1.3.2 The Executive further agrees not to disclose to
the Company, or induce any personnel of the Company to use, any confidential
information, trade secret, or confidential material belonging to others.
3.1.3.3 The Executive agrees that the covenants set forth
in Sections 3.1.3.1 and 3.1.3.2 are independent covenants and indefinite
obligations binding upon the Executive both during and after the termination of
the Executive's relationship with the Company.
3.1.4 Property of the Company. All memoranda, notes, lists,
records, engineering drawings, technical specifications and related documents
and other documents or papers (and all copies thereof) relating to the Company,
including such items stored in computer memories, microfiche or by any other
means, made or compiled by or on behalf of the Executive after the date hereof,
or made available to the Executive after the date hereof relating to the
Company, its affiliates or any entity which may hereafter become an affiliate
thereof, shall be the property of the Company, and shall be delivered to the
Company promptly upon the termination of the Executive's employment with the
Company or at any other time upon request; provided, however, that the
Executive's address books, diaries, chronological correspondence files and
rolodex files shall be deemed to be property of the Executive.
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3.1.5 Original Material. The Executive agrees that any
inventions, discoveries, improvements, ideas, concepts or original works of
authorship relating directly to the Company Business, including without
limitation information of a technical or business nature such as ideas,
discoveries, designs, inventions, improvements, trade secrets, know-how,
manufacturing processes, product formulae, design specifications, writings and
other works of authorship, computer programs, financial figures, marketing
plans, customer lists and data, business plans or methods and the like, which
relate in any manner to the actual or anticipated business or the actual or
anticipated areas of research and development of the Company and its divisions,
subsidiaries, affiliates, or related entities, whether or not protectable by
patent or copyright, that have been originated, developed or reduced to
practice by the Executive alone or jointly with others during the Executive's
employment with the Company shall be the property of and belong exclusively to
the Company. The Executive shall promptly and fully disclose to the Company
the origination or development by the Executive of any such material and shall
provide the Company with any information that it may reasonably request about
such material. Either during the subsequent to the Executive's employment,
upon the request and at the expense of the Company or its nominee, and for no
remuneration in addition to that due the Executive pursuant to his employment
by the Company, but at no expense to him, the Executive agrees to execute,
acknowledge, and deliver to the Company or its attorneys any and all
instruments which, in the judgment of the Company or its attorneys, may be
necessary or desirable to secure or maintain for the benefit of the Company
adequate patent, copyright, and other property rights in the United States and
foreign countries with respect to any such inventions, improvements, ideas,
concepts, or original works of authorship embraced within this Agreement.
3.1.6 Employees of the Company and its Affiliates. As an
independent covenant, the Executive agrees to refrain during the restricted
Period from inducing or attempting to influence any employee of the Company,
its divisions, subsidiaries and/or affiliated entities to terminate his
employment.
3.1.7ees that these covenants are made to protect the legitimate business
interests of the Company, including interests in the Company's property
described in and pursuant to Section 3.1.4 and Section 3.1.5, and not to
restrict his mobility or to prevent him from utilizing his general technical
skills. The Executive understands as a part of these covenants that the
Company intends to exercise whatever legal recourse against him for any breach
of this Agreement and, in particular, for any breach of these covenants.
3.2 Rights and Remedies Upon Breach. If the Executive breaches, any
of the provisions contained in Section 3.1 of this Agreement (the "Restrictive
Covenants"), the Company shall have the following rights and remedies, each of
which rights and remedies shall be independent of the others and severally
enforceable, and each of which is in addition to, and not in lieu of, any other
rights and remedies available to the Company under law or in equity:
3.2.1 Specific Performance. The right and remedy to have the
Restrictive Covenants specifically enforced by any court of competent
jurisdiction, it being agreed that any
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breach of the Restrictive Covenants would cause irreparable injury to the
Company and that money damages would not provide an adequate remedy to the
Company.
3.2.2 Accounting. The right and remedy to require the Executive
to account for and pay over to the Company all compensation, profits, monies,
accruals, increments or other benefits derived or received by the Executive as
the result of any action constituting a breach of the Restrictive Covenants.
3.3 Severability of Covenants. The Executive acknowledges and agrees
that the Restrictive Covenants are reasonable and valid in duration and
geographical scope and in all other respects. If any court determines that any
of the Restrictive Covenants, or any part thereof, is invalid or unenforceable,
the remainder of the Restrictive Covenants shall not thereby be affected and
shall be given full effect without regard to the invalid portions.
3.4 Court Review. If any court determines that any of the Restrictive
Covenants, or any part thereof, is unenforceable because of the duration or
geographical scope of, or scope of activities restrained by, such provision,
such court shall have the power to reduce the duration or scope of such
provision, as the case may be, and, in its reduced form, such provision shall
then be enforceable.
3.5 Enforceability in Jurisdictions. The Company and the Executive
intend to and hereby confer jurisdiction to enforce the Restrictive Covenants
upon the courts of any jurisdiction within the geographical scope of such
Restrictive Covenants. If the courts of any one or more of such jurisdictions
hold the Restrictive Covenants unenforceable by reason of the breadth of such
scopof any other jurisdiction within the geographical scope of such Restrictive
Covenants, as to breaches of such Restrictive Covenants in such other
respective jurisdictions, such Restrictive Covenants as they relate to each
jurisdiction being, for this purpose, severable into diverse and independent
covenants.
4. Termination.
4.1 Termination Upon Death. If the Executive dies during the Term,
this Agreement shall terminate; provided, however, that in any such event, the
Company shall pay to the Executive's estate any portion of the Annual Salary
and any fully-earned Incentive Bonuses that shall have been earned by the
Executive prior to the termination but not yet paid, any Benefits that have
vested in the Executive at the time of such termination as a result of his
participation in any of the Company's benefit plans shall be paid to the
Executive, or to his estate or designated beneficiary, in accordance with the
provisions of such plan; and the Company shall reimburse the Executive, or his
estate, for any expenses with respect to which the Executive is entitled to
reimbursement pursuant to Section 2.6 of this Agreement, and the Executive's
right to indemnification, payment or reimbursement pursuant to Section 6 of
this Agreement shall not be affected by such termination and shall continue in
full force and effect, both with respect to proceedings that are threatened,
pending
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or completed at the date of such termination and with respect to proceedings
that are threatened, pending or completed after that date.
4.2 Termination With Cause. The Company has the right, at any time
during the Term, subject to all of the provisions hereof, exercisable by
serving notice, effective on or after the date of service of such notice as
specified therein, to terminate the Executive's employment under this Agreement
and discharge the Executive with Cause. If such right is exercised, the
Company's obligation to the Executive shall be limited solely to the payment of
unpaid Annual Salary accrued, together with earned but unpaid Incentive
Bonuses, if any, and Benefits vested up to the effective date specified in the
Company's notice of termination. As used in this Agreement, the term "Cause"
shall mean and include (i) chronic alcoholism or controlled substance abuse as
determined by a doctor mutually acceptable to the Company and the Executive,
(ii) an act of proven fraud or dishonesty on the part of the Executive with
respect to the Company or its subsidiaries; (iii) knowing and material failure
by the Executive to comply with materiao the business of the Company or its
subsidiaries; (iv) the Executive's material and continuing failure to perform
(as opposed to unsatisfactory performance) his duties hereunder or a material
breach by the Executive of this Agreement except, in each case, where such
failure or breach is caused by the illness or other similar incapacity or
disability of the Executive; or (v) conviction of a crime involving moral
turpitude or a felony. Prior to the effectiveness of termination for Cause
under subclause (i), (ii), (iii) or (iv) above, the Executive shall be given 30
days' prior notice from the Board specifically identifying the reasons which
are alleged to constitute Cause for any termination hereunder and an
opportunity to be heard by the Board in the event the Executive disputes such
allegations.
4.3 Termination Without Cause. The Company has the right, at any time
during the Term, subject to all of the provisions hereof, exercisable by
serving notice, effective on or after the date of service of such notice as
specified therein, to terminate the Executive's employment under this Agreement
and discharge the Executive without Cause. If the Executive is terminated
during the Term without Cause (including any termination which is deemed to be
a constructive termination without Cause under Section 4.6 hereof), the
Company's obligation to the Executive shall be limited solely to (i) loss of
the Company's recourse against the Executive for amounts owed in connection
with the Loan (pursuant to Section 2.8 hereof), (ii) vesting of all stock
options granted to the Executive by the Company, and (iii) the payment, at the
times and upon the terms provided for herein, of (a) two times the average of
the total compensation paid by the Company to the Executive for the three
previous years (or, if this Agreement has been in effect for less than three
years at the time of such termination, the total compensation earned by the
Executive during such period divided by the number of) and (b) any unpaid
Incentive Bonuses and Benefits awarded or accrued up to the date of
termination. In the event of a termination by the Company without Cause within
180 days after a Change of Control (as hereinafter defined), including a
constructive termination without Cause pursuant to Section 4.6, the amounts due
to the Executive pursuant to this Section 4.3 shall be due and payable in one
lump-sum payment within 60 days after such termination. In all other cases,
any amounts due to the Executive pursuant to this Section 4.3 shall be due and
payable in twenty-four (24) equal monthly payments beginning thirty (30) days
after the date of termination.
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4.4 Termination by the Executive. Any termination of this Agreement
by the Executive during the Term, except such termination as is deemed to be a
constructive termination without Cause by the Company under Section 4.6 of this
Agreement, shall be deemed to be a breach of the terms of this Agreement for
the purposes of Section 3.1.1 hereof and shall entitle the Company to
discontinue payment of all Annual Salary, Incentive Bonuses and Benefits not
earned and payable prior to the date of such termination.
4.5 Termination upon Disability. If during the Term the Executive
becomes physically or mentally disabled, whether totally or partially, as
evidenced by the written statement of a competent physician licensed to
practice medicine in the United States who is mutually acceptable to the
Company and the Executive or his closest relative if he is not then able to
make such a choice, so that the Executive is unable substantially to perform
his services hereunder for (i) a period of four consecutive months, or (ii) for
shorter periods aggregating six months during any twelve-month period, the
Company may at any time after the last day of the four consecutive months of
disability or the day on which the shorter periods of disability equal an
aggregate of six months, by written notice to the Executive, terminate the
Executive's employment hereunder and discontinue payments of the Annual Salary,
Incentive Bonuses and Benefits accruing from and after the date of such
termination. The Executive shall be entitled to the full compensation payable
to him hereunder for periods of disability shorter than the periods specified
in clauses (i) and (ii) of the previous sentence.
4.6 Constructive Termination Without Cause. Notwithstanding any other
provision of this Agreement, the Executive's employment under this Agreement
may be terminated during the Term by the Executive, which shall be deemed to be
constructive termination by the Company without Cause, if one of the following
events shall occur without the consent of the Executive: (i) a failure to elect
or reelect or to appoint or reappoint the Executive to the office of President
of the Company or other material change by the Company of the Executive's
functions, duties or responsibilities which change would reduce the ranking or
level, dignity, responsibility, importance or scope of the Executive's position
with the Company from the position and attributes thereof described in Section
1 above; (ii) the assignment or reassignment by the Company of the Executive to
a location not within 35 miles of the Company's current location; (iii) the
liquidation, Company, or transfer of all or substantially all of its assets,
other than a transaction in which a successor corporation with a net worth
substantially the same as or greater than that of the Company assumes this
Agreement and all obligations and undertakings of the Company hereunder; (iv) a
reduction in the Executive's fixed salary or change by the Company without the
consent of the Executive in the method of determining the Executive's annual
bonus that results in a reduction of such annual bonus; (v) the failure of the
Company to continue to provide the Executive with office space, related
facilities and secretarial assistance that are commensurate with the
Executive's responsibilities to and position with the Company; (vi) the
notification by the Company of the Company's intention not to observe or
perform one or more of the obligations of the Company under this Agreement;
(vii) the failure by the Company to indemnify, pay or reimburse the Executive
at the time and under the circumstances required by Section 6 of this
Agreement; or (viii) the occurrence of any other material breach of this
Agreement by the Company or any of its subsidiaries. Any such termination
shall be made by written notice
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to each member of the Board, specifying the event relied upon for such
termination and given within 60 days after such event. Any constructive
termination shall be effective 60 days after the date the Chairman of the Board
has been given such written notice setting forth the grounds for such
termination with specificity; provided, however, that the Executive shall not
be entitled to terminate this Agreement in respect of any of the grounds set
forth above if within 60 days after such notice the action constituting such
ground for termination has been cured and is no longer continuing. A
constructive termination by the Company without Cause shall terminate the
Restrictive Period hereunder.
4.7 Change of Control. For the purposes hereof, a "Change of Control
of the Company" shall be deemed to have occurred if after the IPO Date (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the Act) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Act,
directly or indirectly, of securities of the Company representing 50% or more
of the combined voting power of the Company's then outstanding securities
without the prior approval of at least a majority of the members of the Board
in office immediately prior to such person attaining such percentage interest;
(ii) there occurs a proxy contest or a consent solicitation, or the Company is
a party to a merger, consolidation, sale of assets, plan of liquidation or
other reorganization not approved by at least a majority of the members of the
Board in office, as a consequence of which members of the Board in office
immediately prior to such transaction or event constitute less than a majority
of the Board thereafter; or (iii) during any period of two consecutive years,
other than as a result of an event described in clause (ii) of this Section
4.7, individuals who at the beginning of such period constituted the Board
(including for this purpose any new director whose election or nomination for
election by the Company's stockholders was approved by a vote of at least a
majority of the directors then still in office who were directors at the
beginning of such period) cease for any reason to constitute at least a
majority of the Board.
5. Insurance. The Company may, from time to time, apply for and take
out, in its own name and at its own expense, naming itself or one or more of
its affiliates as the designated beneficiary (which it may change from time to
time), policies for life, health, accident, disability or other insurance upon
the Executive in any amount or amounts that it may deem necessary or
appropriate to protect its interest. The Executive agreto medical examinations
and by filling out, executing and delivering such applications and other
instruments in writing as may reasonably be required by an insurance company or
companies to which any application or applications for insurance may be made by
or for the Company.
6. Indemnification.
6.1 The Company shall, to the maximum extent not prohibited by law,
indemnify the Executive if he is made, or threatened to be made, a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, including an action by or in the
right of the Company to procure a judgment in its favor (collectively, a
"Proceeding"), by reason of the fact that the Executive is or was a director or
officer of the Company, or is or was serving in any capacity at the request of
the Company for any other
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corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against judgments, fines, penalties, excise taxes, amounts paid in
settlement and costs, charges and expenses (including attorneys' fees and
disbursements) paid or incurred in connection with any such Proceeding.
6.2 The Company shall, from time to time, reimburse or advance to the
Executive the funds necessary for payment of expenses, including attorneys'
fees and disbursements, incurred in connection with any Proceeding in advance
of the final disposition of such Proceeding; provided, however, that, if
required by the Texas Business Corporation Act, such expenses incurred by or on
behalf of the Executive may be paid in advance of the final disposition of a
Proceeding only upon receipt by the Company of an undertaking, by or on behalf
of the Executive, to repay any such amount so advanced if it shall ultimately
be determined by final judicial decision from which there is no further right
of appeal that the Executive is not entitled to be indemnified for such
expenses.
6.3 The right to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Section 6 shall not be
deemed exclusive of any other rights which the Executive may now or hereafter
have under any law, by law, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office.
6.4 The right to indemnification and reimbursemenontinue as to the
Executive after he has ceased to be a director or officer and shall inure to
the benefit of the heirs, executors and administrators of the Executive.
6.5 The Company shall purchase and maintain director and officer
liability insurance on such terms and providing such coverage as the Board
determines is appropriate, and the Executive shall be covered by such insurance
on the same basis as the other directors and executive officers of the Company.
6.6 The right to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Section 6 shall be
enforceable by the Executive in any court of competent jurisdiction. The
burden of proving that such indemnification or reimbursement or advancement of
expenses is not appropriate shall be on the Company. Neither the failure of
the Company (including its board of directors, independent legal counsel, or
its stockholders) to have made a determination prior to the commencement of
such action that such indemnification or reimbursement or advancement of
expenses is proper in the circumstances nor an actual determination by the
Company (including its board of directors, independent legal counsel, or its
stockholders) that the Executive is not entitled to such indemnification or
reimbursement or advancement of expenses shall constitute a defense to the
action or create a presumption that the Executive is not so entitled. The
Executive shall also be indemnified for any expenses incurred in connection
with successfully establishing his right to such indemnification or
reimbursement or advancement of expenses, in whole or in part, in any such
proceeding.
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6.7 If the Executive serves (i) another corporation of which a
majority of the shares entitled to vote in the election of its directors is
held by the Company, or (ii) any employee benefit plan of the Company or any
corporation referred to in clause (i), in any capacity, then he shall be deemed
to be doing so at the request of the Company.
6.8 The right to indemnification or reimbursement or advancement of
expenses shall be interpreted on the basis of the applicable law in effect at
the time of the occurrence of the event or events giving rise to the applicable
Proceeding.
7. Other Provisions.
7.1 Certain Definitions. As used in this Agreement, the following
terms have the following meanings unless the context otherwise requires:
(i) "affiliate" with respect to the Company means any other person
controlled by or under common control with the Company but shall not
include any stockholder or director of the Company, as such.
(ii) "person" means any individual, corporation, partnership,
firm, joint Company, association, joint-stock company, trust,
unincorporated organization, governmental or regulatory body or other
entity.
(iii) "subsidiary" means any corporation 50% or more of the voting
securities of which are owned directly or indirectly by the Company.
7.2 Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, telegraphed,
telexed, sent by facsimile transmission or sent by certified, registered or
express mail, postage prepaid. Any such notice shall be deemed given when so
delivered personally, telegraphed, telexed or sent by facsimile transmission
or, if mailed, on the date of actual receipt thereof, as follows:
(i) if to the Company, to:
Eagle Geophysical, Inc.
00 Xxxxx Xxxxxx Xxxx
Xxxx Xxxxxxxx, 0xx Floor
Xxxxxxx, Xxxxx 00000
Attention: Chairman, Board of Directors
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with a copy to:
Gardere Xxxxx Xxxxxx & Xxxxx, L.L.P.
000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: X. X. Xxxxxxx III
(ii) if to the Executive, to:
Xxx X. Xxxxxxxxx
00 Xxxxx Xxxxxx Xxxx
Xxxx Xxxxxxxx, 0xx Floor
Xxxxxxx, Xxxxx 00000
Any party may change its address for notice hereunder by notice to the other
party hereto.
7.3 Entire Agreement. This Agreement contains the entire agreement
between the parties with respect to the subject matter hereof and supersedes
all prior agreements, written or oral, with respect thereto.
7.4 Waivers and Amendments. This Agreement may be amended,
superseded, canceled, renewed or extended, and the terms and conditions hereof
may be waived, only by a written instrument signed by the parties or, in the
case of a waiver, by the party waiving compliance. No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof Nor shall any waiver on the part of any party of any such right,
power or privilege hereunder, nor any single or partial exercise of any right,
power or privilege hereunder, preclude any other or further exercise thereof or
the exercise of any other right, power or privilege hereunder.
7.5 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas (without giving effect to the
choice of law provisions thereof) where the employment of the Executive shall
be deemed, in part, to be performed and enforcement of this Agreement or any
action taken or held with respect to this Agreement shall be taken in the
courts of appropriate jurisdiction in Houston, Texas.
7.6 Assignment. This Agreement, and any rights and obligations
hereunder, may not be assigned by the Executive and may be assigned by the
Company (subject to Section 4.6 (iii) hereof) only to a successor by merger or
purchasers of substantially all of the assets of the Company.
7.7 Counterparts. This Agreement may be executed in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
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7.8 Headings. The headings in this Agreement are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
7.9 No Presumption Against Interest. This Agreement has been
negotiated, drafted, edited and reviewed by the respective parties, and
therefore, no provision arising directly or indirectly herefrom shall be
construed against any party as being drafted by said party.
7.10 Validity Contest. The Company shall promptly pay any and all
legal fees and expenses incurred by the Executive from time to time as a direct
result of the Company's contesting the due execution, authorization, validity
or enforceability of this Agreement.
7.11 Dispute Resolution. If any dispute arises out of or relates to
this Agreement, or the breach thereof, Executive and the Company agree to
promptly negotiate in good faith to resolve such dispute. If the dispute
cannot be settled by the parties through negotiation, Executive and the Company
agree to try in good faith to settle the dispute by mediation under the
Commercial Mediation Rules of the American Arbitration Association before
resorting to arbitration, litigation or any other dispute resolution procedure.
If the parties are unable to settle the dispute by mediation as provided in the
preceding sentence, any claim, controversy or dispute arising out of or
relating to this Agreement, or the breach thereof, shall be settled by binding
arbitration before a panel of three arbitrators in accordance with the
Commercial Arbitration Rules of the American Arbitration Association. The
arbitration shall be conducted in Houston, Xxxxxx County, Texas, or such other
location to which the parties mutually agree. The decision of the
arbitrator(s) shall be final and binding and judgment upon the award rendered
may be entered in any court having jurisdiction thereof. The costs of
mediation and arbarties.
7.12 Binding Agreement. This Agreement shall inure to the benefit of
and be binding upon the Company and its respective successors and assigns and
the Executive and his legal representatives.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
EXECUTIVE
/s/ Xxx X. Xxxxxxxxx
------------------------------------------
Xxx X. Xxxxxxxxx
COMPANY
EAGLE GEOPHYSICAL, INC.
By: /s/ Xxxxxxx X. XxXxxxx
---------------------------------------
Xxxxxxx X. XxXxxxx, Vice President -
Chief Financial Officer
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