MITCHAM INDUSTRIES INC, DEF 14A, 1998-06-01

MITCHAM INDUSTRIES INC
DEF 14A, 1998-06-01
EQUIPMENT RENTAL & LEASING, NEC

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<PAGE>

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12

MITCHAM INDUSTRIES, INC.
(Name of Registrant as Specified In Its Charter)

------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

1) Title of each class of securities to which transaction applies:

------------------------------------------------------------------------

2) Aggregate number of securities to which transaction applies:

------------------------------------------------------------------------

3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing is calculated and state how it was determined):

------------------------------------------------------------------------

4) Proposed maximum aggregate value of transaction:

------------------------------------------------------------------------

<PAGE>

5) Total fee paid:

------------------------------------------------------------------------

[ ] Fee paid previously with preliminary materials

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.

1) Amount Previously Paid:

------------------------------------------------------------------------

2) Form, Schedule or Registration Statement No.:

------------------------------------------------------------------------

3) Filing Party:

------------------------------------------------------------------------

4) Date Filed:

------------------------------------------------------------------------

<PAGE>

MITCHAM INDUSTRIES, INC.
POST OFFICE BOX 1175
44000 HIGHWAY 75 SOUTH
HUNTSVILLE, TEXAS 77342

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 9, 1998

To our Shareholders:

The Annual Meeting of the Shareholders (the "Annual Meeting") of Mitcham
Industries, Inc., a Texas corporation (the "Company"), will be held on July
9, 1998, at the Houston Marriott North, 255 North Sam Houston Parkway East,
Houston, Texas at 10:00 a.m. for the purpose of considering and voting on the
following matters:

1. The election of six directors to serve until the next Annual
Meeting and until their successors are elected and qualify.

2. The approval of the Company's 1998 Stock Awards Plan.

3. The approval of the selection of Hein + Associates LLP as the
Company's independent auditors for the fiscal year ended January 31, 1999.

4. The transaction of such other business as may properly come
before the meeting and any adjournment thereof.

The Board of Directors has established the close of business on May 12,
1998, as the record date for determining the shareholders entitled to notice
and to vote at the Annual Meeting and any adjournment thereof.

YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. TO ASSURE YOUR
REPRESENTATION AT THE ANNUAL MEETING, EVEN IF YOU PLAN TO ATTEND, PLEASE
COMPLETE, SIGN AND MAIL THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE AS
PROMPTLY AS POSSIBLE.

By Order of the Board of Directors,

Roberto Rios
SECRETARY

May 31, 1998

<PAGE>

-----------------------------------------------

MITCHAM INDUSTRIES, INC.
POST OFFICE BOX 1175
44000 HIGHWAY 75 SOUTH
HUNTSVILLE, TEXAS 77342

-----------------------------------------------

PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 9, 1998
------------------------------------------

SOLICITATION OF PROXIES

This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of the Company of proxies from the holders of record
of the common stock, par value $.01 per share (the "Common Stock"), at the
close of business on May 12, 1998, for use at the Annual Meeting to be held
at 10:00 a.m., Houston, Texas time, on July 9, 1998, and any adjournments
thereof. This Proxy Statement, the attached proxy and the Company's Annual
Report for the fiscal year ended January 31, 1998 are being mailed together
on or about June 8, 1998 to shareholders entitled to notice of and to vote at
the Annual Meeting. The principal executive office of the Company is Post
Office Box 1175, 44000 Highway 75 South, Huntsville, Texas 77342.

Properly executed proxies will be voted as directed. If no direction is
indicated therein, proxies received pursuant to this solicitation will be
voted FOR: (i) the election of the six nominees for director; (ii) the
approval of the Company's 1998 Stock Awards Plan; (iii) the ratification of
the indicated independent public accountants; and (iv) as recommended by the
Board of Directors with regard to any other matters or if no recommendation
is given, in their own discretion.

A proxy on the enclosed form may be revoked by the shareholder at any
time before it is voted by filing with the Secretary of the Company a written
revocation, by voting in person at the meeting, or by delivering a proxy
bearing a later date. Attendance at the Annual Meeting will not, in itself,
constitute revocation of the proxy.

All costs of this Proxy Statement and the proxy and the cost of
soliciting proxies relating to the Annual Meeting will be borne by the
Company. It is anticipated that the solicitation of proxies for the Annual
Meeting will be made only by use of the mails. However, the Company may use
the services of its directors, officers and employees to solicit proxies
personally or by telephone, without additional salary or compensation to
them. The Company will request that the brokerage houses, custodians,
nominees, and fiduciaries forward the proxy soliciting materials to the
beneficial owners of the Company's shares held of record for such persons,
and the Company will reimburse such persons for their related reasonable
out-of-pocket expenses.

<PAGE>

VOTING OF SECURITIES

At the close of business on May 12, 1998, the record date for the
determination of shareholders entitled to notice of and to vote at the Annual
Meeting, there were 9,512,829 issued and outstanding shares of Common Stock,
each of which share is entitled to one vote. Common Stock is the only class
of outstanding securities of the Company entitled to notice of and to vote at
the Annual Meeting.

The Company's Bylaws provide that the presence, either in person or by
proxy, of the holders of a majority of the outstanding shares of Common Stock
entitled to vote at the Annual Meeting is necessary to constitute a quorum
for the transaction of business. Assuming such a majority is present, the
election of directors will require a plurality of the votes cast at the
Annual Meeting. Abstentions from and broker non-votes on the proposal to
elect directors will be counted for purposes of determining the presence of a
quorum, but will not be included in the total shares voted for or against any
nominee. A broker non-vote occurs if a broker or other nominee holding
shares for a beneficial owner votes on one proposal, but does not vote on
another proposal because he does not have discretionary authority to vote
shares and has not received instructions from the beneficial owner with
respect to such proposal. The approval of the Company's 1998 Stock Awards
Plan and the ratification of the selected independent public accountants will
require the affirmative vote of a majority of the shares entitled to vote and
that voted or abstained at the Annual Meeting. Thus, abstentions from the
proposals will have the same legal effect as a vote against the proposals,
but a broker non-vote will not be counted for purposes of determining whether
a majority is achieved.

<PAGE>

PRINCIPAL HOLDERS OF SECURITIES AND SECURITY OWNERSHIP
OF MANAGEMENT

PRINCIPAL HOLDERS OF SECURITIES. The following table sets forth the
beneficial ownership of Common Stock as of May 12, 1998 with respect to each
person known by the Company to be the beneficial owners of 5% or more of the
Company's shares of outstanding Common Stock. All persons listed have sole
disposition and voting power with respect to the indicated shares except as
otherwise noted.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED
NAME AND ADDRESS ---------------------------------------------------------
OF BENEFICIAL OWNER NUMBER OF SHARES PERCENT OF CLASS
------------------- ---------------- ----------------
<S> <C> <C>

Billy F. Mitcham, Jr . . . . . . . 636,062(1) 6.6%
P. O. Box 1175
Huntsville, Texas 77342

Wellington Management Company, LLP 667,000(2) 7.0%
75 State Street
Boston, Massachusetts 02109

R. Chaney & Partners IV L.P. . . . 495,000(3) 5.2%
909 Fannin, Suite 1275
Two Houston Center
Houston, Texas 77010
</TABLE>

- ---------------------
(1) Includes an aggregate of 239,490 shares of Common Stock owned by Billy
F. Mitcham, Sr. (95,040 shares), Paul C. Mitcham (89,930 shares), and
two trusts established for the benefit of Mr. Mitcham, Jr.'s sons (the
"Mitcham Childrens' Trusts") (54,520 shares), as to which Mr. Mitcham,
Jr. has sole voting rights under a Voting Agreement. Also includes
shares underlying currently exercisable options to purchase an
aggregate of 142,572 shares of Common Stock, as follows: Billy F.
Mitcham, Jr. (38,880 shares), Billy F. Mitcham, Sr. (45,750 shares),
Paul C. Mitcham (39,500 shares), and the two trusts (17,442 shares).

(2) As of December 31, 1997, based upon information contained in a
Schedule 13G, dated January 14, 1998, filed by Wellington Management
Company, LLP ("Wellington") with the Securities and Exchange
Commission ("SEC"). All securities reported in Wellington's Schedule
13G are owned by certain of its clients. Wellington has shared
disposition power with respect to all of these shares and shared
voting power with respect to 367,000 of these shares.

(3) As of February 27, 1998, based upon information contained in a
Schedule 13G, dated March 3, 1998, filed jointly by R. Chaney &
Partners IV L.P. ("Fund IV"), R. Chaney & Partners III L.P. ("Fund
III"), R. Chaney Investments, Inc. ("Investments") and R. Chaney &
Partners, Inc. ("Partners") with the SEC. The Schedule 13G indicates
that Fund IV beneficially owns and has sole disposition and voting
power over 230,000 shares and Fund III beneficially owns and has sole
disposition and voting power over 265,000 shares. Investments is the
sole general partner of Fund IV, Partners is the sole general partner
of Fund III and Robert H. Chaney is the sole shareholder of
Investments and Partners.

<PAGE>

SECURITY OWNERSHIP OF MANAGEMENT. The following table sets forth the
beneficial ownership of Common Stock as of May 12, 1998, by (i) the Named
Executive (as defined on page 8) and each of the other executive officers of
the Company; (ii) each director and nominee; and (iii) all directors and
executive officers as a group. All persons listed have sole disposition and
voting power with respect to the indicated shares except as otherwise noted.

<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED
NAME AND ADDRESS ----------------------------------------
OF BENEFICIAL OWNER(1) NUMBER OF SHARES PERCENT OF CLASS
---------------------- ---------------- ----------------
<S> <C> <C>
Billy F. Mitcham, Jr. . . . . . . . . 636,062(2) 6.6%
Paul C. Mitcham . . . . . . . . . . . 129,430(3) 1.4%
Roberto Rios . . . . . . . . . . . . 34,422(4) *
William J. Sheppard . . . . . . . . . 32,422(5) *
Gordon M. Greve . . . . . . . . . . . 2,000(6) *
Randal Dean Lewis . . . . . . . . . . 1,000(6) *
John F. Schwalbe . . . . . . . . . . 3,000(6) *
All directors and executive officers 708,906(7) 7.3%
as a group (7 persons)
</TABLE>
- ---------------------
* Less than 1%

(1) The business address of each shareholder is the same as that of the
Company's principal executive offices.

(2) Includes an aggregate of 239,490 shares of Common Stock owned by Billy
F. Mitcham, Sr. (95,040 shares); Paul C. Mitcham (89,930 shares); and
the Mitcham Childrens' Trusts (54,520 shares), as to which Mr.
Mitcham, Jr. has sole voting rights under a Voting Agreement. Also
includes shares underlying currently exercisable options to purchase
an aggregate of 141,572 shares of Common Stock, as follows: Billy F.
Mitcham, Jr. (38,880 shares), Billy F. Mitcham, Sr. (45,750 shares),
Paul C. Mitcham (39,500 shares), and the two trusts (17,442 shares).

(3) Includes shares underlying currently exercisable options to purchase
39,500 shares of Common Stock.

(4) Includes shares underlying currently exercisable options to purchase
30,000 shares and a currently exercisable warrant to purchase 2,422
shares.

(5) Represents shares underlying currently exercisable options and
warrants.

(6) Represents shares underlying currently exercisable options.

(7) Includes shares underlying currently exercisable options and warrants
to purchase an aggregate of 212,416 shares of Common Stock, as
follows: the 141,572 shares referred to in footnote (2) above,
Roberto Rios (32,422 shares), William J. Sheppard (32,422 shares),
Gordon M. Greve (2,000 shares), Randal Dean Lewis (1,000 shares) and
John F. Schwalbe (3,000 shares).

<PAGE>

ELECTION OF DIRECTORS

Six directors will be elected at the Annual Meeting. Shares or proxies
may not be voted for more than six nominees for directors. Each director so
elected will hold office until the next Annual Meeting and until his
successor is elected and qualified. All director nominees are currently
directors of the Company. Mr. Greve will not stand for re-election as a
director.

The persons named as proxies in the proxy have been designated by the
Board of Directors and intend to vote such proxy "FOR" the persons named
below in the election of the Board of Directors, except to the extent
authority to vote is withheld from one or more nominees. If any such nominee
is unable to serve as a director, it is intended that the shares represented
by proxies will be voted in the absence of contrary indication for any
substitute nominee that the Board of Directors designates.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES
NAMED BELOW.

NOMINEES FOR DIRECTOR. Set forth below is certain information as of May
12, 1998, with respect to each nominee of the Board of Directors, including
the business experience of each during at least the past five years and the
age of each on May 12, 1998. The nominees have consented to be named in this
Proxy Statement and to serve as directors if elected.
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION AGE DIRECTOR SINCE
---- -------------------- --- --------------
<S> <C> <C> <C>
BILLY F. MITCHAM, JR. Chairman of the Board, President and Chief 50 1987
Executive Officer. Mr. Mitcham has more than 20
years of experience in the geophysical industry.
From 1979 to 1987, he served in various management
capacities with Mitcham Associates, an unrelated
equipment leasing company. From 1975 to 1979, Mr.
Mitcham served in various capacities with
Halliburton Services, primarily in oilfield
services.

PAUL C. MITCHAM Vice President-Operations and a director of the 33 1994
Company. Mr. Mitcham has been employed by the
Company in various management positions since
1989. Prior to 1989, he worked in various field
positions in the geophysical industry. Paul C.
Mitcham is the brother of Billy F. Mitcham, Jr.

<PAGE>

NAME PRINCIPAL OCCUPATION AGE DIRECTOR SINCE
---- -------------------- --- --------------
<S> <C> <C> <C>
ROBERTO RIOS Vice President - Finance, Secretary and Treasurer 40 September 1994
and a director of the company. From 1990 until
joining the Company in September 1994, Mr. Rios
held several senior-level positions, including
Vice-President and General Manager, with ADVO,
Incorporated, a publicly-traded nationwide direct
mail distribution company. From 1980 to 1989, he
held several financial positions, including
Controller, of The Shoppers' Guide, a company that
produces a direct mail advertising guide and that
is a subsidiary of Harte-Hanks Communications,
Inc., a multimedia company. Mr. Rios is a
Certified Public Accountant and a member of the
American Institute of Certified Public
Accountants.

WILLIAM J. SHEPPARD Vice President-International Operations and a 50 October 1994
director of the Company. Mr. Sheppard has more
than 25 years of experience in the geophysical
industry. From 1987 until October 1994, Mr.
Sheppard was the President of Alberta Supply
Company, a Canadian seismic equipment sales and
services company.

RANDALL DEAN LEWIS Mr. Lewis is the interim Dean of the Business 54 June 1995
School at Sam Houston University and he has served
in this capacity since October 1995. From 1987 to
October 1995, Mr. Lewis was the Associate Dean and
Professor of Marketing at Sam Houston State
University. Prior to 1987, Mr. Lewis held a
number of executive positions in the banking and
finance industries.

JOHN F. SCHWALBE Mr. Schwalbe has been a Certified Public 54 November 1994
Accountant in private practice since 1978, with
primary emphasis on tax planning, consultation,
and compliance.
</TABLE>
6

<PAGE>

MEETINGS AND COMMITTEES OF THE BOARD

During the fiscal year ended January 31, 1998, the Board of Directors of
the Company held 11 meetings. The Board of Directors has two standing
committees: the Audit Committee and the Compensation Committee. The Board
does not have a Nominating Committee.

AUDIT COMMITTEE. The Audit Committee, which is comprised of Messrs.
Schwalbe, Lewis and Greve, held three meetings during the fiscal year ended
January 31, 1998. Its functions are to: (1) recommend the appointment of
independent public accountants; (2) review the scope of the audit by the
independent public accountants; (3) review the independence of the
independent public accountants; (4) consider the adequacy of the system of
internal controls and review any proposed corrective actions; (5) review and
monitor the Company's policies regarding business ethics and conflicts of
interest; and (6) discuss with management and the independent public
accountants the Company's draft of annual financial statements and key
accounting and/or reporting matters.

COMPENSATION COMMITTEE. The Compensation Committee, which is composed
of Messrs. Schwalbe, Lewis and Greve, held two meetings during the fiscal
year ended January 31, 1998. Its functions are to: (1) review the Company's
general compensation strategy; (2) establish the salaries and bonuses of the
Company's executive officers; and (3) review and administer the Company's
1994 Stock Option Plan.

During the fiscal year ended January 31, 1998, no incumbent director
attended less than 75% of the aggregate number of meetings of the Board of
Directors and the total number of meetings of the committees on which he
served.

<PAGE>

EXECUTIVE COMPENSATION

The following table shows all compensation earned during the fiscal
years ended January 31, 1996, 1997 and 1998 by the Chairman of the Board,
Chief Executive Officer and President of the Company (the "Named Executive").
No other executive officer of the Company received total salary and bonus
in any of those fiscal years that exceeded $100,000.

SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------- ------------
FISCAL YEAR AWARDS OF ALL OTHER
NAME AND ENDED STOCK COMPENSATION
PRINCIPAL POSITION JANUARY 31, SALARY($) BONUS($) OPTIONS (#) ($)
------------------- ----------- --------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Billy F. Mitcham, Jr. 1998 $153,000 $ 0 15,000 $ 0
Chairman of the Board, 1997 $115,833 $38,670(1) 9,000 $ 0
President and Chief 1996 $100,000 $42,261(1) 9,000 $ 0
Executive Officer
</TABLE>
- -------------
(1) Bonus actually paid in the subsequent fiscal year.

OPTION GRANTS. The following provides information as to grants of stock
options made by the Company during the fiscal year ended January 31, 1998 to
the Named Executive. The Company has not granted any stock appreciation
rights.

OPTION GRANTS IN 1998 FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------------------------------
% OF TOTAL OPTIONS
NUMBER OF SECURITIES GRANTED TO EMPLOYEES
UNDERLYING OPTIONS GRANTED IN 1998 EXERCISE EXPIRATION
NAME (#) FISCAL YEAR PRICE ($/sh) DATE
---- -------------------------- -------------------- ------------ ----------
<S> <C> <C> <C>
Billy F. Mitcham, Jr. 15,000(1) 23% $ 22(1) October 3, 2007
</TABLE>
- -------------
(1) Incentive stock option granted on October 3, 1997 under the 1994 Stock
Option Plan. The option may be exercised to purchase the total number
of shares on October 3, 1998. The option price was set at the fair
market value of the Company's Common Stock. The fair market value of a
share of the Company's Common Stock is the closing price at which the
Common Stock was sold on the date of grant. To the extent the option
is not vested on the optionee's retirement, death or disability, it is
forfeited.

OPTION EXERCISES AND YEAR-END OPTION VALUES. The following table
provides information as to options exercised by the Named Executive in the
1998 fiscal year and year-end value of unexercised options held by the Named
Executive.

<PAGE>

AGGREGATE OPTION EXERCISES IN 1998 FISCAL YEAR AND
JANUARY 31, 1998 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
JANUARY 31, 1998(#) JANUARY 31, 1998($)
------------------- -------------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($)(1) UNEXERCISABLE UNEXERCISABLE
---- --------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
Billy F. Mitcham, Jr. 45,120 $663,990 38,880/15,000 $501,120(2)/$0
</TABLE>
- ----------------------
(1) Market value on the date of the exercise of shares covered by options
exercised, minus the exercise price.
(2) Market value of shares covered by in-the-money options on January 31,
1998 (18 1/16), minus the exercise price.

EMPLOYMENT AGREEMENT. Billy F. Mitcham, Jr.'s employment agreement with
the Company is for a term of five years, beginning January 15, 1997, which
term is automatically extended for successive one-year periods unless either
party gives written notice of termination at least 30 days prior to the end
of the current term. The Employment Agreement replaced his previous
employment agreement. The Employment Agreement provides for an annual salary
of $150,000 (increased to $187,000 effective November 1, 1997) and a bonus
at the discretion of the Board of Directors. It may be terminated prior to
the end of the initial term or any extension thereof if Mr. Mitcham dies; if
it is determined that Mr. Mitcham has become disabled (as defined); if Mr.
Mitcham gives three months prior notice of resignation; if the Company gives
Mr. Mitcham notice of termination "without cause"; or if the Board of
Directors determines that Mr. Mitcham has breached the Employment Agreement
in any material respect, has appropriated a material business opportunity of
the Company or has engaged in fraud or dishonesty with respect to the
Company's business or is convicted of or indicted for any felony criminal
offense or any crime punishable by imprisonment. If Mr. Mitcham terminates
his employment within 60 days following (i) a material reduction in his
duties and responsibilities (without his consent) or (ii) a reduction in, or
failure by the Company to pay when due, any portion of his salary, he will be
entitled to payments equal to $450,000, payable ratably over the 24 months
following such termination. For a period of two years after the termination
of the Employment Agreement, Mr. Mitcham is prohibited from engaging in any
business activities which are competitive with the Company's business and
from diverting any of the Company's customers to a competitor. The Company
has no employment agreements with any of its other executive officers.

COMPENSATION OF DIRECTORS. The Company pays directors who are not
employees of the Company $500 for every meeting attended and reimburses their
expenses incurred in attending board and committee meetings. In addition,
under the 1994 Non-Employee Director Stock Option Plan, each non-employee
director will receive an option to purchase 5,000 shares upon becoming a
director and on the date of each annual meeting of shareholders at which he
is re-elected as a director.

<PAGE>

CERTAIN TRANSACTIONS AND RELATIONSHIPS

Effective September 20, 1993, the Company and Billy F. Mitcham, Jr.
entered into a Voting Agreement (the "Voting Agreement") with Billy F.
Mitcham, Sr., Paul C. Mitcham and two trusts established for the benefit of
Mr. Mitcham, Jr.'s sons. Under the Voting Agreement, the holders of shares
subject thereto have agreed that Mr. Mitcham, Jr. has the authority to vote
an additional 239,490 shares, or 2.5% of the Company's outstanding Common
Stock. Mr. Mitcham, Jr. has voting control of an aggregate of 636,062
shares, or 6.6%, of the Company's Common Stock, as of May 12, 1998. The
Voting Agreement will terminate on the earlier of the agreement of the
parties, the transfer by the parties thereto of their shares or the
expiration of 25 years. See "Principal Holders of Securities and Security
Ownership of Management."

Since April 1994, the Company has engaged Billy F. Mitcham, Sr. as a
consultant under a consulting agreement. Mr. Mitcham, Sr. has been involved
in the energy industry since 1952 and was formerly the owner and the
President of Mitcham Associates, Inc., which was also engaged in the leasing
and sale of peripheral seismic equipment. Mr. Mitcham, Sr. has served as an
industry expert and consultant for the Company since 1987 and was engaged on
terms similar to those in his present consulting agreement during that time,
though not pursuant to a written agreement. The agreement calls for monthly
payments to Mr. Mitcham, Sr. of $5,500. The Company paid Mr. Mitcham, Sr. a
total of $66,000 under the agreement in the 1998 fiscal year. The consulting
agreement prohibits Mr. Mitcham, Sr. from providing consulting services to,
and from contacting or soliciting in an effort to provide services to, any
competitor of the Company for two years after the termination of his
engagement. The current term of the agreement expires January 31, 1999,
subject to earlier termination on the occurrence of certain stated events,
and is renewable for successive one-year terms at the Company's option. The
Company believes Mr. Mitcham, Sr. could successfully compete with the
Company, given his contacts and extensive knowledge of the seismic leasing
industry. For the above reasons, the Company believes the terms of Mr.
Mitcham, Sr.'s consulting agreement are no less favorable than could be
obtained from an unaffiliated third party with similar experience.

PROPOSAL TO APPROVE THE
1998 STOCK AWARDS PLAN

On April 30, 1998, the Board of Directors adopted the Company's 1998
Stock Awards Plan (the "1998 Stock Awards Plan") subject to approval by the
Company's shareholders at the Annual Meeting. The 1998 Stock Awards Plan
supplements the Company's 1994 Stock Option Plan (the "1994 Plan"), which the
shareholders of the Company approved on May 2, 1994. All 350,000 options
authorized for issuance under the 1994 Stock Option Plan have been granted
and as of May 12, 1998, 262,880 options remained unexercised. The 1994 Plan
only provides for the grant of stock options to the Company's employees. In
addition to stock options, the 1998 Stock Awards Plan provides for the grant
of stock appreciation rights, restricted stock awards, performance awards,
and phantom stock awards to the Company's employees. Rather than authorizing
an issuance of additional options under the 1994 Stock Option Plan, the Board
determined to make available to the Company's employees a variety of awards.
The principal advantage to the Company of the 1998 Stock Awards Plan is to
enable the Company to better attract, retain, and develop a top-quality
management team. In addition, the 1998 Stock Awards Plan will provide the
Company with a broad stock-based incentive plan which will align the
participants' interests to the profitability of the Company's business.

<PAGE>

The following discussion is a summary of certain key provisions of the
1998 Stock Awards Plan and is subject to qualification by reference to the
1998 Stock Awards Plan, a copy of which is attached to this Proxy Statement
as EXHIBIT A.

ADMINISTRATION

The 1998 Stock Awards Plan will be administered by the Compensation
Committee of the Board of Directors. The Compensation Committee will have
the power to determine which employees will receive an award, the time or
time when such award will be made, the type of the award and the number of
shares of Common Stock to be issued under the award or the value of the award.
Only persons who at the time of the award are employees of the Company or of
any subsidiary of the Company will be eligible to receive awards under the
1998 Stock Awards Plan.

TYPES OF AWARDS

The 1998 Stock Awards Plan provides for the grant of incentive and
non-qualified stock options, restricted stock awards, stock appreciation
rights, and performance and phantom stock awards. Prior to the grant of any
award, the Committee may establish performance goals that are based on the
attainment of specified corporate objectives.

OPTIONS. The 1998 Stock Awards Plan provides for two types of options:
incentive stock options and nonqualified stock options. The Compensation
Committee will designate the key employees to receive the options, the number
of shares subject to the options, and the terms and conditions of each option
granted under the 1998 Stock Awards Plan. The term of any option granted
under the 1998 Stock Awards Plan shall be determined by the Compensation
Committee, except that the term of any incentive stock option cannot exceed
10 years from the date of the grant and any incentive stock option granted to
an employee who possesses more than 10% of the total combined voting power of
all classes of shares of the Company or of its subsidiaries will not be
exercisable after the expiration of five years from the date of grant. No
option may be exercised sooner than six months from the date of grant. The
exercise price per share of Common Stock for options granted under the 1998
Stock Awards Plan will be determined by the Compensation Committee, except
that the exercise price of an incentive stock option cannot be less than the
fair market value of a share of Common Stock on the date the option is
granted. Further, the exercise price of any incentive stock option granted
to an employee who possesses more than 10% of the total combined voting power
of all classes of shares of the Company or of its subsidiaries must be at
least 110% of the fair market value of the share at the time such option is
granted. The exercise price of options granted under the 1998 Stock Awards
Plan will be paid in full in a manner prescribed by the Compensation
Committee. The 1998 Stock Awards Plan permits holders of options, with
approval of the Compensation Committee, to relinquish all or any part of the
unexercised portion thereof in exchange for replacement under certain
circumstances.

RESTRICTED STOCK AWARDS. Under a restricted stock award, Common Stock
will be issued or delivered to the employee at any time the award is made
without any cash payment to the Company, except to the extent otherwise
provided by the Compensation Committee or required by law. Shares will be
subject to certain restrictions on the disposition thereof and certain
obligations to forfeit such shares to the Company as the Compensation
Committee determines in its discretion. The restrictions on disposition may
lapse based upon (a) the Company's attainment of specific performance targets
established by the Compensation Committee that are based on (i) the price of
a share of Common Stock, (ii) the Company's earnings per share, (iii) the
Company's revenue, or (iv) the Company's pre-tax cash flow from operations,
(b) the grantee's tenure with the Company, or (c) a combination of both
factors. The Company will retain

<PAGE>

custody of the Common Stock issued pursuant to a restricted stock award until
the disposition restrictions lapse. An employee may not sell, transfer,
pledge, exchange, hypothecate, or otherwise dispose of such shares until the
expiration of the restriction period. However, upon the issuance to the
employee of Common Stock pursuant to a restricted share award, except for the
foregoing restrictions, such employee will have all the rights of a
shareholder of the Company with respect to such shares, including the right
to vote such shares and to receive all dividends and other distributions paid
with respect to such shares.

STOCK APPRECIATION RIGHTS. A stock appreciation right permits the
holder thereof to receive an amount (in cash, Common Stock, or a combination
thereof) equal to the number of stock appreciation rights exercised by the
holder multiplied by the excess of the fair market value of Common Stock on
the exercise date over the stock appreciation rights' exercise price. Stock
appreciation rights may or may not be granted in connection with the grant of
an option and no stock appreciation right may be exercised sooner than six
months from the date of grant. The exercise price of the stock appreciation
right may not be less than the fair market value of a share of Common Stock
on the date the Stock Appreciation Right is granted (or 110% of such fair
market value if granted in connection with an incentive stock option). A
stock appreciation right may be exercised in whole or in such installments
and at such time as determined by the Compensation Committee.

PERFORMANCE AND PHANTOM STOCK AWARDS. The 1998 Stock Awards Plan will
permit grants of performance awards and phantom stock awards, which may be
paid in cash, Common Stock or a combination thereof, as determined by the
Compensation Committee. Performance awards granted under the 1998 Stock
Awards Plan will have a maximum value established by the Compensation
Committee at the time of the grant. A grantee's receipt of such amount will
be contingent upon satisfaction by the Company, or any subsidiary, division
or department thereof of future performance conditions established by the
Compensation Committee prior to the beginning of the performance period.
Such performance awards, however, are subject to later revisions as the
Compensation Committee deems appropriate to reflect significant unforeseen
events or changes. A performance award will terminate if the grantee's
employment with the Company terminates during the applicable performance
period, except as otherwise provided by the Compensation Committee at the
time of grant. Phantom stock awards granted under the 1998 Stock Awards Plan
are awards of Common Stock or rights to receive amounts equal to stock
appreciation over a specified period of time. Such awards vest over a period
of time or upon the occurrence of specific events established by the
Compensation Committee, without payment of any amounts by the holder thereof
(except to the extent required by law) or satisfaction of any performance
criteria or objectives. A phantom stock award will terminate if the
grantee's employment with the Company terminates during the applicable
vesting period or, if applicable, the occurrence of a specific event, except
as otherwise provided by the Compensation Committee at the time of grant. In
determining the value of performance awards or phantom stock awards, the
Compensation Committee must take into account the employee's responsibility
level, performance, potential, other awards under the 1998 Stock Awards Plan,
and other such consideration as it deems appropriate. Such payment may be
made in a lump sum or in installments as prescribed by the Compensation
Committee. Any payment made in Common Stock will be based upon the fair
market value of the Common Stock on the payment date.

CHANGE OF CONTROL PROVISIONS

If there is a "Change of Control" (as defined in the 1998 Stock Awards
Plan), all outstanding Awards shall immediately vest and become exercisable
or satisfiable, as applicable. The Committee in its discretion may determine
that a Change of Control, each Award (other than an Option) shall terminate
within a specified number of days after notice to the holder, and each holder
shall receive cash in the amount equal to the excess of the "Change of
Control Value", as defined in the plan. With respect to

<PAGE>

options, the Committee may effect any one of the following alternatives: (i)
determine a limited period of time on or before a specified date (before or
after the change in control) after which the specified date all unexercised
options shall terminate, (ii) require the mandatory surrender to the Company
by the holders of some or all of the outstanding options held by the holders
as of the date of the Change of Control specified by the Committee, in which
case the Committee shall cancel the options and the Company shall pay the
excess of the Change of Control Value of the share subject to such option
over the exercise prices under such options for such shares, (iii) make such
adjustments to options then outstanding as the Committee deems appropriate to
reflect such Change of Control, or (iv) provided that thereafter upon any
exercise of an option the holder shall be entitled to purchase under such
option, in lieu of the number of shares of stock then covered by such option
the number and class of shares stock or other securities or property to which
the holder would have been entitled under the agreement of merger,
consolidation, or sale of assets and dissolution if, immediately prior to
such merger, consolidation or sale of assets and dissolution, the holder has
been the holder of record of the number of shares of stock then covered by
such option.

FEDERAL INCOME TAX CONSEQUENCES

NONQUALIFIED STOCK OPTIONS. Nonqualified stock options granted under
the 1998 Stock Awards Plan are not taxable to an employee when granted but
result in taxation at exercise, at which time the employee will recognize
ordinary income in an amount equal to the difference between the option
exercise price and the fair market value of the shares on the exercise date.
The Company will be entitled to deduct a corresponding amount as a business
expense in the year the employee recognizes this income.

INCENTIVE STOCK OPTIONS. An employee will generally not recognize
income on receipt or exercise of an incentive stock option ("ISO") so long as
he or she has been an employee of the Company or its subsidiaries from the
date the option was granted until three months before the date of exercise;
however, the amount by which the fair market value of the stock at the time
of exercise exceeds the option price is a required adjustment for purposes of
the alternative minimum tax applicable to the employee. If the employee holds
the stock received on exercise of the option for one year after exercise (and
for two years from the date of grant of the option), any difference between
the amount realized upon the disposition of the stock and the amount paid for
the stock will be treated as long-term capital gain (or loss, if applicable)
to the employee. If the employee exercises an ISO and satisfies these holding
period requirements, the Company may not deduct any amount in connection with
the ISO.

In contrast, if an employee exercises an ISO but does not satisfy the
holding period requirements with respect to the stock acquired on exercise,
the employee generally will recognize ordinary income in the year of the
disposition equal to the excess, if any, of the fair market value of the
stock on the date of exercise over the option price; and any excess of the
amount realized on the disposition over the fair market value on the date of
exercise will be taxed as long- or short-term capital gain (as applicable).
If, however, the fair market value of the stock on the date of disposition is
less than on the date of exercise, the employee will recognize ordinary
income equal only to the difference between the amount realized on
disposition and the exercise price. In either event, the Company will be
entitled to deduct an amount equal to the amount constituting ordinary income
to the employee in the year of the premature disposition.

STOCK APPRECIATION RIGHTS. There are no immediate tax consequences to
an employee when a stock appreciation right is granted. When an employee
exercises the right to the appreciation in fair market value of stock
represented by a stock appreciation right, payments made, whether in cash or
stock, are includible in the employee's gross income. The Company will be
entitled to deduct the same amount as

<PAGE>

a business expense at the time. When payments are made in stock, the
includible amount and corresponding deduction equal the fair market value of
the stock on the date of exercise.

RESTRICTED STOCK. The federal income tax consequences of restricted
stock awards depend on the restrictions imposed on the stock. Generally, the
fair market value of the stock received will be includible in the employee's
gross income at receipt unless the property is subject to a substantial risk
of forfeiture (and is either nontransferable or after transfer remains
subject to such risk of forfeiture). In this case, taxation will be deferred
until the first taxable year the stock is no longer subject to substantial
risk of forfeiture. The employee may, however, make a tax election to
include the value of the stock in gross income in the year of receipt despite
such restrictions. Generally, the Company will be entitled to deduct the fair
market value of the stock transferred to the employee as a business expense
in the year the employee includes the compensation in income.

OTHER STOCK-BASED AWARDS/INCENTIVE AWARDS. Any cash payments or the
fair market value of any Common Stock or other property an employee receives
in connection with other stock-based awards, incentive awards, or as
unrestricted payments equivalent to dividends on unfunded awards or on
restricted stock are includible in income in the year received or made
available to the employee without substantial limitations or restrictions.
Generally, the Company will be entitled to deduct the amount the employee
includes in income as a business expense in the year of payment.

Section 162(m) of the Code places a $1 million annual limit on the
deductible compensation of certain executives of publicly traded
corporations. The limit, however, does not apply to "qualified
performance-based compensation." The Company believes that awards of
options, SARs and certain other "performance-based compensation" awards under
the 1998 Stock Awards Plan will quality for the performance-based
compensation exception to the deductibility limit, assuming that the 1998
Stock Awards Plan is approved by shareholders.

State tax consequences may in some cases differ from those described
above. Awards under the 1998 Stock Awards Plan will in some instances be made
to employees who are subject to tax in jurisdictions other than the United
States and may result in tax consequences differing from those described
above.

PLAN AMENDMENT AND TERMINATION

The Board may alter or amend the 1998 Stock Awards Plan from time to
time but no change in any Award may be made which would impair the rights of
the holder without the consent of the holder and the Board may not, without
approval of the shareholders, amend the 1998 Stock Awards Plan to (a)
increase the maximum number of shares which may be issued on exercise or
surrender of Award (except in certain cases of Changes in Control as more
fully set forth in the 1998 Stock Awards Plan), (b) change the Option price,
(c) change the class of employees eligible to receive Awards, (d) extend the
maximum period during which awards may be granted under the 1998 Stock Awards
Plan, (e) materially modify the requirements as to eligibility for
participation in the 1998 Stock Awards Plan, or (f) or decrease any authority
granted to the Committee in contravention of Rule 16b-3 under the Exchange
Act. No grants may be made under the 1998 Stock Awards Plan after April 30,
2008. The 1998 Stock Awards Plan shall remain in effect until all Awards
granted have been satisfied or expired.

TRANSFER AND RESALE RESTRICTIONS

The Awards are not transferrable except in the event of the
participant's death or under a "qualified domestic relations order" as
defined under applicable law. The key employees of the Company may not

<PAGE>

offer or resell shares acquired under the 1998 Stock Awards Plan without
registration under the Securities Act, or compliance with Rule 144. On May
28, 1998, the closing price of the Common Stock as reported in The Wall
Street Journal for Nasdaq National Market transactions was $10 3/4.

The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock entitled to vote at the Annual Meeting will be
necessary to approve the 1998 Stock Awards Plan.

The Board of Directors recommends a vote "FOR" the adoption of the 1998
Stock Awards plan.

RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS

THE BOARD OF DIRECTORS HAS SELECTED HEIN + ASSOCIATES LLP, WHICH HAS
SERVED AS INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY SINCE 1993, AS
INDEPENDENT PUBLIC ACCOUNTANTS TO AUDIT THE BOOKS, RECORDS AND ACCOUNTS OF
THE COMPANY FOR THE FISCAL YEAR ENDED JANUARY 31, 1999. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF SUCH SELECTION. A
REPRESENTATIVE OF HEIN + ASSOCIATES LLP IS EXPECTED TO BE PRESENT AT THE
ANNUAL MEETING AND WILL HAVE THE OPPORTUNITY TO MAKE A STATEMENT, IF SUCH
REPRESENTATIVE CHOOSES TO DO SO, AND WILL BE AVAILABLE TO RESPOND TO
APPROPRIATE QUESTIONS.

ANNUAL REPORT

THE COMPANY'S ANNUAL REPORT COVERING THE FISCAL YEAR ENDED JANUARY 31,
1998 ACCOMPANIES THIS PROXY STATEMENT. EXCEPT FOR THE FINANCIAL STATEMENTS
INCLUDED IN THE ANNUAL REPORT THAT ARE SPECIFICALLY INCORPORATED BY REFERENCE
HEREIN, THE ANNUAL REPORT IS NOT INCORPORATED IN THIS PROXY STATEMENT AND IS
NOT TO BE DEEMED PART OF THIS PROXY SOLICITING MATERIAL. ADDITIONAL COPIES
OF THE ANNUAL REPORT ARE AVAILABLE UPON REQUEST.

FORM 10-KSB

THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS
BEING SOLICITED, UPON THE REQUEST OF ANY SUCH PERSON, A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED JANUARY 31, 1998, AS
FILED WITH THE SEC (EXCLUDING EXHIBITS), INCLUDING THE FINANCIAL STATEMENTS
AND SCHEDULES THERETO. REQUESTS FOR COPIES OF SUCH REPORT SHOULD BE DIRECTED
IN WRITING TO THE SECRETARY, MITCHAM INDUSTRIES, INC., POST OFFICE BOX 1175,
44000 HIGHWAY 75 SOUTH, HUNTSVILLE, TEXAS 77342.

OTHER MATTERS

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT. Section 16(a) of the
Exchange Act requires the Company's directors, executive officers and persons
who own more than 10% of a registered class of the Company's Common Stock to
file initial reports of ownership and changes in ownership with the SEC and
to furnish the Company with copies of all Section 16(a) forms they file.
Based upon a review of such forms and any amendments thereto furnished to the
Company during the fiscal year ended January 31,

<PAGE>

1998, the Company believes that all filings required to be made under Section
16(a) were timely made, except that each of Billy F. Mitcham, Jr., Roberto
Rios, William J. Sheppard and Randall Dean Lewis filed a Form 4 reporting his
sale of Common Sock in September 1997 one day later than the due date.

OTHER MATTERS. At the date hereof, the Board of Directors does not know
of any other business to be presented at the Annual Meeting of Shareholders.
If any other matter properly comes before the meeting, however, it is
intended that the persons named in the accompanying proxy will vote such
proxy in accordance with the discretion and instructions of the Board of
Directors.

SUBMISSION OF SHAREHOLDER PROPOSALS

Shareholders wishing to submit proposals for consideration by the
Company's Board of Directors at the Company's 1999 Annual Meeting of
Shareholders should submit them in writing to the attention of the Secretary
of the Company no later than February 7, 1999, so that it may be considered
by the Company for inclusion in its proxy statement and form of proxy for
that meeting.

By Order of the Board of Directors,

Roberto Rios
Secretary

May 31, 1998

<PAGE>

EXHIBIT A

MITCHAM INDUSTRIES, INC.
1998 STOCK AWARDS PLAN

I. PURPOSE

The purpose of the MITCHAM INDUSTRIES, INC. 1998 STOCK AWARDS PLAN (the
"PLAN") is to provide a means through which Mitcham Industries, Inc., a Texas
corporation (the "COMPANY"), and its subsidiaries, may attract able persons
to enter the employ of the Company and to provide a means whereby those
employees upon whom the responsibilities of the successful administration and
management of the Company rest, and whose present and potential contributions
to the welfare of the Company are of importance, can acquire and maintain
stock ownership, thereby strengthening their concern for the welfare of the
Company and their desire to remain in its employ. A further purpose of the
Plan is to provide employees with additional incentive and rewards
opportunities designed to enhance the profitable growth of the Company.
Therefore, the Plan provides for granting Incentive Stock Options, options
which do not constitute Incentive Stock Options, Stock Appreciation Rights,
Restricted Stock Awards, Performance Awards, Phantom Stock Awards, or any
combination of the foregoing, as is best suited to the circumstances of the
particular employee as provided herein.

II. DEFINITIONS

The following definitions shall be applicable throughout the Plan unless
specifically modified by any paragraph:

(a) "AFFILIATES" means any Parent corporation of the Company and any
"subsidiary" of the Company within the meaning of Code Section 424(e) and
(f), respectively.

(b) "AWARD" means, individually or collectively, any Option, Restricted
Stock Award, Phantom Stock Award, Performance Award Agreement or Stock
Appreciation Right.

(c) "AWARD AGREEMENT" means any Option Agreement, Restricted Stock
Agreement, Phantom Stock Award Agreement, Performance Award Agreement or
Stock Appreciation Rights Agreement.

(d) "BOARD" means the Board of Directors of the Company.

(e) "CHANGE OF CONTROL" means the occurrence of any of the following
events: (i) the Company is not the surviving entity in any merger,
consolidation or other reorganization (or survives only as a subsidiary of an
entity other than a previously wholly-owned subsidiary of the Company), (ii)
the Company sells, leases or exchanges all or substantially all of its assets
to any other person or entity (other than a wholly-owned subsidiary of the
Company), (iii) the Company is dissolved and liquidated, (iv) any person or
entity, including a "group" as contemplated by Section 13(d)(3) of the 1934
Act, provides or gains ownership or control (including, without limitation,
power to vote) or more than 50% of the outstanding shares of the Company's
voting stock (based upon voting power), or (v) as a result of or in
connection with a contested election of directors, the persons who were
directors of the Company before such election cease to constitute a majority
of the Board.

(f) "CHANGE OF CONTROL VALUE" means (i) the per share price offered to
shareholders of the Company in any such merger, consolidation,
reorganization, sale of assets or dissolution transaction, (ii)

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the price per share offered to shareholders of the Company in any tender
offer or exchange offer whereby a Change of Control takes place, or (iii) if
such Change of Control occurs other than pursuant to a tender or exchange
offer, the fair market value per share of the shares into which Awards are
exercisable, as determined by the Committee, whichever is applicable. If the
consideration offered to shareholders of the Company consists of anything
other than cash, the Committee shall determine the fair cash equivalent of
the portion of the consideration offered which is other than cash.

(g) "CODE" means the Internal Revenue Code of 1986, as amended.
Reference in the Plan to any section of the Code shall be deemed to include
any amendments or successor provisions to any section and any regulations
under such section.

(h) "COMMITTEE" means the Compensation Committee of the Board which
shall be (i) constituted so as to permit the Plan to comply with Rule 16b-3
and (ii) constituted solely of "outside directors," within the meaning of
section 162(m) of the Code and applicable interpretive authority thereunder.

(i) "COMPANY" means Mitcham Industries, Inc. and any of its Affiliates.

(j) "DIRECTOR" means an individual elected to the Board by the
shareholders of the Company or by the Board under applicable corporate law
who is serving on the Board on the date the Plan is adopted by the Board or
is elected to the Board after that date.

(k) An "EMPLOYEE" means any person (including an officer or a Director)
in an employment relationship with the Company or any parent or subsidiary
corporation (as defined in Section 424 of the Code).

(l) "1934 ACT" means the Securities Exchange Act of 1934, as amended.

(m) "FAIR MARKET VALUE" means, as of any specified date, the mean of
the high and low sales prices of the Stock (i) reported by the any
interdealer quotation system on which the Stock is quoted on that date or
(ii) if the Stock is listed on a national stock exchange, reported on the
stock exchange composite tape on that date; or, in either case, if no prices
are reported on that date, on the last preceding date on which such prices of
the Stock are so reported. If the Stock is traded over the counter at the
time a determination of its fair market value is required to be made
hereunder, its fair market value shall be deemed to be equal to the average
between the reported high and low or closing bid and asked prices of Stock on
the most recent date on which Stock was publicly traded. If Stock is not
publicly traded at the time a determination of its value is required to be
made hereunder, the determination of its fair market value shall be made by
the Committee in the manner as it deems appropriate.

(n) "HOLDER" means an employee who has been granted an Award.

(o) "INCENTIVE STOCK OPTION" means an incentive stock option within the
meaning of Section 422(b) of the Code.

(p) "NONQUALIFIED STOCK OPTION" means an option granted under Paragraph
VII of the Plan to purchase Stock that is not an Incentive Stock Option.

(q) "OPTION" means an Award granted under Paragraph VII of the Plan and
includes both Incentive Stock Options to purchase Stock and Nonqualified
Stock Options to purchase Stock.

A-2
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(r) "OPTION AGREEMENT" means a written agreement between the Company
and a Holder with respect to an Option.

(s) "PERFORMANCE AWARD" means an Award granted under Paragraph X of the
Plan.

(t) "PERFORMANCE AWARD AGREEMENT" means a written agreement between the
Company and a Holder with respect to a Performance Award.

(u) "PHANTOM STOCK AWARD" means an Award granted under Paragraph XI of
the Plan.

(v) "PHANTOM STOCK AWARD AGREEMENT" means a written agreement between
the Company and a Holder with respect to a Phantom Stock Award.

(w) "PLAN" means the Mitcham Industries, Inc. 1998 Stock Awards Plan,
as amended from time to time.

(x) "RESTRICTED STOCK AGREEMENT" means a written agreement between the
Company and a Holder with respect to a Restricted Stock Award.

(y) "RESTRICTED STOCK AWARD" means an Award granted under Paragraph IX
of the Plan.

(z) "RULE 16B-3" means SEC Rule 16b-3 promulgated under the 1934 Act,
as such may be amended from time to time, and any successor rule, regulation
or statute fulfilling the same or a similar function.

(aa) "SPREAD" means, in the case of a Stock Appreciation Right, an
amount equal to the excess, if any, of the Fair Market Value of a share of
Stock on the date such right is exercised over the exercise price of such
Stock Appreciation Right.

(bb) "STOCK" means the common stock, $0.01 par value, of the Company.

(cc) "STOCK APPRECIATION RIGHT" means an Award granted under Paragraph
VIII of the Plan.

(dd) "STOCK APPRECIATION RIGHTS AGREEMENT" means a written agreement
between the Company and a Holder with respect to an Award of Stock
Appreciation Rights.

III. EFFECTIVE DATE AND DURATION OF THE PLAN

The Plan shall be effective upon the date of its adoption by the Board,
provided that the Plan is approved by the shareholders of the Company within
12 months thereafter. No further Awards may be granted under the Plan after
the expiration of 10 years from the date of its adoption by the Board. The
Plan shall remain in effect until all Awards granted under the Plan have been
satisfied or expired.

IV. ADMINISTRATION

(a) COMMITTEE. The Plan shall be administered by the Committee.

(b) POWERS. Subject to the provisions of the Plan, the Committee shall
have sole authority, in its discretion, to determine which employees shall
receive an Award, the time or times when such

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<PAGE>

Award shall be made, whether an Incentive Stock Option, Nonqualified Option
or Stock Appreciation Right shall be granted, the number of shares of Stock
which may be issued under each Option, Stock Appreciation Right or Restricted
Stock Award, and the value of each Performance Award and Phantom Stock Award.
In making such determinations, the Committee may take into account the
nature of the services rendered by the respective employees, their present
and potential contributions to the Company's success and such other factors
as the Committee in its discretion shall deem relevant.

(c) ADDITIONAL POWERS. The Committee shall have such additional powers
as are delegated to it by the other provisions of the Plan. Subject to the
express provisions of the Plan, the Committee is authorized to construe the
Plan and the respective agreements executed thereunder, to prescribe such
rules and regulations relating to the Plan as it may deem advisable to carry
out the Plan, and to determine the terms, restrictions and provisions of each
Award, including such terms, restrictions and provisions as shall be
requisite in the judgment of the Committee to cause designated Options to
qualify as Incentive Stock Options, and to make all other determinations
necessary or advisable for administering the Plan. The Committee may correct
any defect or supply any omission or reconcile any inconsistency in any
agreement relating to an Award in the manner and to the extent it shall deem
expedient to carry it into effect. The determinations of the Committee on the
matters referred to in this Article IV shall be conclusive.

V. GRANT OF OPTIONS, STOCK APPRECIATION RIGHTS,
RESTRICTED STOCK AWARDS, PERFORMANCE AWARDS
AND PHANTOM STOCK AWARDS; SHARES SUBJECT TO THE PLAN

(a) STOCK GRANT AND AWARD LIMITS. The Committee may from time to grant
Awards to one or more employees determined by it to be eligible for
participation in the Plan in accordance with the provisions of Paragraph VI.
Subject to Paragraph XII, the aggregate number of shares of Stock that may be
issued under the Plan shall not exceed 350,000 shares. Shares of Stock shall
be deemed to have been issued under the Plan only to the extent actually
issued and delivered pursuant to an Award. To the extent that an Award
lapses or the rights of its Holder terminate or the Award is paid in cash,
any shares of Stock subject to such Award shall again be available for the
grant of an Award. To the extent that an Award lapses or the rights of its
Holder terminate, any shares of Stock subject to such Award shall again be
available for the grant of an Award. Separate stock certificates shall be
issued by the Company for those shares acquired pursuant the exercise of an
Incentive Stock Option and for those shares acquired pursuant to the exercise
of a Nonqualified Stock Option.

(b) STOCK OFFERED. The stock to be offered pursuant to the grant of an
Award may be authorized but unissued Stock or Stock previously issued and
outstanding and reacquired by the Company.

VI. ELIGIBILITY

Awards may be granted only to persons who are employees at the time of
grant. Awards may not be granted to any Director who is not an employee. An
Award may be granted on more than one occasion to the same person, and,
subject to the limitations set forth in the Plan, such Award may include an
Incentive Stock Option or a Nonqualified Stock Option, a Stock Appreciation
Right, a Restricted Stock Award, a Performance Award, a Phantom Stock Award
or any combination thereof.

VII. STOCK OPTIONS

(a) OPTION PERIOD. The term of each Option shall be as specified by
the Committee at the date of grant.

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<PAGE>

(b) LIMITATIONS ON EXERCISE OF OPTION. An Option shall be exercisable
in whole or in such installments and at such times as determined by the
Committee.

(c) SPECIAL LIMITATIONS ON INCENTIVE STOCK OPTIONS. To the extent that
the aggregate Fair Market Value (determined at the time the respective
Incentive Stock Option is granted) of Stock with respect to which Incentive
Stock Options are exercisable for the first time by an individual during any
calendar year under all incentive stock option plans of the Company and its
parent and subsidiary corporations exceeds $100,000, such Incentive Stock
Options shall be treated as Nonqualified Stock Options as determined by the
Committee. The Committee shall determine, in accordance with applicable
provisions of the Code, Treasury Regulations and other administrative
pronouncements, which of an optionee's Incentive Stock Options will not
constitute incentive Stock Options because of such limitation and shall
notify the optionee of such determination as soon as practicable after such
determination. No Incentive Stock Options shall be granted to an individual
if, at the time the Option is granted, such individual owns stock possessing
more than 10% of the total combined voting power of all classes of stock of
the Company or of its parent or subsidiary corporation, within the meaning of
Section 422(b)(6) of the Code, unless (i) at the time such Option is granted
the option price is at least 110% of the Fair Market Value of the Stock
subject to the Option and (ii) such Option by its terms is not exercisable
after the expiration of five years from the date of grant.

(d) OPTION AGREEMENT. Each Option shall be evidenced by an Option
Agreement in such form and containing such provisions not inconsistent with
the provisions of the Plan as the Committee from time to time shall approve,
including, without limitation, provisions to qualify an Incentive Stock
Option under Section 422 of the Code. An Option Agreement may provide for
the payment of the option price, in whole or in part, by the delivery of a
number of shares of Stock (plus cash if necessary) having a Fair Market Value
equal to such option price. Each Option Agreement shall provide that the
Option may not be exercised earlier than six months from the date of grant
and shall specify the effect of termination of employment on the
exercisability of the Option. Moreover, an Option Agreement may provide for a
"cashless exercise" of the Option by establishing procedures whereby the
Holder, by a properly-executed written notice, directs (i) an immediate
market sale or margin loan respecting all or a part of the shares of Stock to
which he is entitled upon exercise pursuant to an extension of credit by the
Company to the Holder of the option price, (ii) the delivery of the shares of
Stock from the Company directly to a brokerage firm and (iii) the delivery of
the option price from the sale or margin loan proceeds from the brokerage
firm directly to the Company. Such Option Agreement may also include,
without limitation, provisions relating to (i) vesting of Options, subject to
the provisions hereof accelerating such vesting on a Change of Control, (ii)
tax matters (including provisions (y) permitting the delivery of additional
shares of Stock or the withholding of shares of Stock from those acquired
upon exercise to satisfy federal or state income tax withholding requirements
and (z) dealing with any other applicable employee wage withholding
requirements), and (iii) any other matters not inconsistent with the terms
and provisions of this Plan that the Committee shall in its sole discretion
determine. The terms and conditions of the respective Option Agreements need
not be identical.

(e) OPTION PRICE AND PAYMENT. The price at which a share of Stock may
be purchased upon exercise of an Option shall be determined by the Committee,
but (i) such purchase price shall not be less than the Fair Market Value of
Stock subject to an Incentive Stock Option on the date immediately preceding
the date the Incentive Stock Option is granted and (ii) such purchase price
shall be subject to adjustment as provided in Paragraph XII. The Option or
portion thereof may be exercised by delivery of an irrevocable notice of
exercise to the Company. The purchase price of the Option or portion thereof
shall be paid in full in the manner prescribed by the Committee.

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(f) SHAREHOLDER RIGHTS AND PRIVILEGES. The Holder shall be entitled to
all the privileges and rights of a shareholder only with respect to such
shares of Stock as have been purchased under the Option and for which
certificates of stock have been registered in the Holder's name.

(g) OPTIONS AND RIGHTS IN SUBSTITUTION FOR STOCK OPTIONS GRANTED BY
OTHER CORPORATIONS. Options and Stock Appreciation Rights may be granted
under the Plan from time to time in substitution for stock options held by
individuals employed by corporations who become employees as a result of a
merger or consolidation of the employing corporation with the Company or any
subsidiary, or the acquisition by the Company or a subsidiary of the assets
of the employing corporation, or the acquisition by the Company or a
subsidiary of stock of the employing corporation with the result that such
employing corporation becomes a subsidiary.

VIII. STOCK APPRECIATION RIGHTS

(a) STOCK APPRECIATION RIGHTS. A Stock Appreciation Right is the right
to receive an amount equal to the Spread with respect to a share of Stock
upon the exercise of such Stock Appreciation Right. Stock Appreciation
Rights may be granted in connection with the grant of an Option, in which
case the Option Agreement will provide that exercise of Stock Appreciation
Rights will result in the surrender of the right to purchaser the shares
under the Option as to which the Stock Appreciation Rights were exercised.
Alternatively, Stock Appreciation Rights may be granted independently of
Options in which case each Award of Stock Appreciation Rights shall be
evidenced by a Stock Appreciation Rights Agreement which shall contain such
terms and conditions as may be approved by the Committee. The Spread with
respect to a Stock Appreciation Right may be payable either in cash, shares
of Stock with a Fair Market Value equal to the Spread or in a combination of
cash and shares of Stock. With respect to Stock Appreciation Rights that are
subject to Section 16 of the 1934 Act, however, the Committee shall, except
as provided in Paragraph XII(c), retain sole discretion (i) to determine the
form in which payment of the Stock Appreciation Right will be made (I.E.,
cash, securities or any combination thereof) or (ii) to approve an election
by a Holder to receive cash in full or partial settlement of Stock
Appreciation Rights. Each Stock Appreciation Rights Agreement shall provide
that the Stock Appreciation Rights may not be exercised earlier than six
months from the date of grant and shall specify the effect of termination of
employment on the exercisability of the Stock Appreciation Rights.

(b) OTHER TERMS AND CONDITIONS. At the time of such Award, the
Committee, may in its sole discretion, prescribe additional terms, conditions
or restrictions relating to Stock Appreciation Rights, including, but not
limited to rules pertaining to termination of employment (by retirement,
disability, death or otherwise) of a Holder prior to the expiration of such
Stock Appreciation Rights. Such additional terms, conditions or restrictions
shall be set forth in the Stock Appreciation Rights Agreement made in
conjunction with the Award. Such Stock Appreciation Rights Agreement may
also include, without limitation, provisions relating to (i) vesting of
Awards, subject to the provisions hereof accelerating vesting on a Change of
Control, (ii) tax matters (including provisions covering applicable wage
withholding requirements), and (iii) any other matters not inconsistent with
the terms and provisions of this Plan, that the Committee shall in its sole
discretion determine. The terms and conditions of the respective Appreciation
Rights Agreements need not be identical.

(c) EXERCISE PRICE. The exercise price of each Stock Appreciation
Right shall be determined by the Committee, but such exercise price (i)
shall not be less than the Fair Market Value of a share of Stock on the date
the Stock Appreciation Right is granted (or such greater exercise price as
may be required if such Stock Appreciation Right is granted in connection
with an Incentive Stock Option that

A-6
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must have an exercise price qual to 110% of the Fair Market Value of the
Stock on the date of grant pursuant to Paragraph VII(c)), and (ii) shall be
subject to adjustment as provided in Paragraph XII.

(d) EXERCISE PERIOD. The term of each Stock Appreciation Right shall
be as specified by the Committee at the date of grant.

(e) LIMITATIONS ON EXERCISE OF STOCK APPRECIATION RIGHT. A Stock
Appreciation Right shall be exercisable in whole or in such installments and
at such times as determined by the Committee.

IX. RESTRICTED STOCK AWARDS

(a) FORFEITURE RESTRICTIONS TO BE ESTABLISHED BY THE COMMITTEE. Shares
of Stock that are the subject of a Restricted Stock Award shall be subject to
restrictions disposition by the Holder and an obligation of the Holder to
forfeit and surrender the shares to the Company under certain circumstances
(the "FORFEITURE RESTRICTIONS"). The Forfeiture Restrictions shall be
determined by the Committee in its sole discretion, and the Committee may
provide that the Forfeiture Restrictions shall lapse upon (i) the attainment
of targets established by the Committee that are based on (1) the price of a
share of Stock, (2) the Company's earnings per share, (3) the Company's
revenue, or (4) the Company's pre-tax cash flow from operations, (ii) the
Holder's continued employment with the Company for a specified period of
time, or (iii) a combination of any two or more of the factors listed in
clauses (i) and (ii) of this sentence. Each Restricted Stock Award may have
different Forfeiture Restrictions, in the discretion of the Committee. The
Forfeiture Restrictions applicable to a particular Restricted Stock Award
shall not be changed except as permitted by Paragraph IX(b) or Paragraph XII.

(b) OTHER TERMS AND CONDITIONS. Stock awarded pursuant to a Restricted
Stock Award shall be represented by a stock certificate registered in the
name of the Holder of such Restricted Stock Award. The Holder shall have the
right to receive dividends which respect to Stock subject to a Restricted
Stock Award, to vote Stock subject thereto and to enjoy all other shareholder
rights, except that (i) the Holder shall not be entitled to delivery of the
stock certificate until the Forfeiture Restrictions shall have expired, (ii)
the Company shall retain custody of the Stock until the Forfeiture
Restrictions shall have expired, (iii) the Holder may not sell, transfer,
pledge, exchange, hypothecate or otherwise dispose of the stock until the
Forfeiture Restrictions shall have expired, and (iv) a breach of the terms
and conditions established by the Committee pursuant to the Restricted Stock
Agreement, shall cause a forfeiture of the Restricted Stock Award. At the
time of such Award, the Committee may, in its sole discretion, prescribe
additional terms, conditions or restrictions relating to Restricted Stock
Awards, including, but not limited to, rules pertaining to the termination of
employment (by retirement, disability, death or otherwise) of a Holder prior
to expiration of the Forfeiture Restrictions. Such additional terms,
conditions or restrictions shall be set forth in a Restricted Stock Agreement
made in conjunction with the Award. Such Restricted Stock Agreement may also
include, without limitation, provisions relating to (i) subject to the
provisions hereof accelerating vesting on a Change of Control, vesting of
Awards, (ii) tax matters (including provisions (y) covering any applicable
employee wage withholding requirements and (z) prohibiting an election by the
Holder under section 83(b) of the Code), and (iii) any other matters not
inconsistent with the terms and provisions of this Plan that the Committee in
its sole discretion shall determine.

(c) PAYMENT FOR RESTRICTED STOCK. The Committee shall determine the
amount and form of any payment for Stock received pursuant to a Restricted
Stock Award, provided that in the absence of such a determination, a Holder
shall not be required to make any payment for Stock received pursuant to a
Restricted Stock Award, except to the extent otherwise required by law.

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<PAGE>

(d) AGREEMENTS. At the time any Award is made under this Paragraph IX,
the Company and the Holder shall enter into a Restricted Stock Agreement
setting forth each of the matters as the Committee may determine to be
appropriate. The terms and provisions of the respective Restricted Stock
Agreements need not be identical.

X. PERFORMANCE AWARDS

(a) PERFORMANCE PERIOD. The Committee shall establish, with respect to
and at the time of each Performance Award, a performance period over which
the performance of the Holder shall be measured.

(b) PERFORMANCE AWARDS. Each Performance Award shall have a maximum
value established by the Committee at the time of such Award.

(c) PERFORMANCE MEASURES. A Performance Award shall be awarded to an
employee contingent upon future performance of the employee, the Company or
any subsidiary, division or department thereof by or in which is he employed
during the performance period. The Committee shall establish the performance
measures applicable to such performance prior to the beginning of the
performance period but subject to such later revisions as the Committee shall
deem appropriate to reflect significant, unforeseen events or changes.

(d) AWARDS CRITERIA. In determining the value of Performance Awards,
the Committee shall take into account an employee's responsibility level,
performance, potential, other Awards and such other considerations as it
deems appropriate.

(e) PAYMENT. Following the end of the performance period, the Holder
of a Performance Award shall be entitled to receive payment of an amount, not
exceeding the maximum value of the Performance Award, based on the
achievement of the performance measures for such performance period, as
determined by the Committee. Payment of a Performance may be made in cash,
Stock or a combination thereof, as determined by the Committee. Payment
shall be made in a lump sum or in installments as prescribed by the
Committee. Any payment to be made in Stock shall be based on the Fair Market
Value of the Stock on the payment date. If a payment of cash is to be made on
a deferred basis, the Committee shall establish whether interest shall be
credited, the rate thereof and any other terms and conditions applicable
thereto.

(f) TERMINATION OF EMPLOYMENT. A Performance Award shall terminate if
the Holder does not remain continuously in the employ of the Company at all
times during the applicable performance period, except as may be determined
by the Committee or as may otherwise be provided in the Award at the time
granted.

(g) AGREEMENTS. At the time any Award is made under this Paragraph X,
the Company and the Holder shall enter into a Performance Award Agreement
setting forth each of the matters contemplated hereby, and, in addition such
matters are set forth in Paragraph IX(b) as the Committee may determine to be
appropriate. The terms and provisions of the respective agreements need not
be identical.

XI. PHANTOM STOCK AWARDS

(a) PHANTOM STOCK AWARDS. Phantom Stock Awards are rights to receive
shares of Stock (or cash in an amount equal to the Fair Market Value
thereof), or rights to receive an amount equal to any

A-8
<PAGE>

appreciation in the Fair Market Value of Stock (or portion thereof) over a
specified period of time, which vest over a period of time or upon the
occurrence of an event (including without limitation a Change of Control) as
established by the Committee, without payment of any amounts by the Holder
thereof (except to the extent otherwise required by law) or satisfaction of
any performance criteria or objectives. Each Phantom Stock Award shall have
a maximum value established by the Committee at the time of such Award.

(b) AWARD PERIOD. The Committee shall establish, with respect to and
at the time of each Phantom Stock Award, a period over which or the event
upon which the Award shall vest with respect to the Holder.

(c) AWARDS CRITERIA. In determining the value of Phantom Stock Awards,
the Committee shall take into account an employee's responsibility level,
performance, potential, other Awards and such other considerations as it
deems appropriate.

(d) PAYMENT. Following the end of the vesting period for a Phantom
Stock Award, the Holder of a Phantom Stock Award shall be entitled to receive
payment of an amount, not exceeding the maximum value of the Phantom Stock
Award, based on the then vested value of the Award. Payment of a Phantom
Stock Award may be made in cash, Stock or a combination thereof as determined
by the Committee. Payment shall be made in a lump sum or in installments as
prescribed by the Committee in its sole discretion. Any payment to be made
in Stock shall be based on the Fair Market Value of the Stock on the payment
date. Cash dividend equivalents may be paid during or after the vesting
period with respect to a Phantom Stock Award, as determined by the Committee.
If a payment of cash is to be made on a deferred basis, the Committee shall
establish whether interest shall be credited, the rate thereof and any other
terms and conditions applicable thereto.

(e) TERMINATION OF EMPLOYMENT. A Phantom Stock Award shall terminate
if the Holder does not remain continuously in the employ of the Company at
all times during the applicable vesting period, except as may be otherwise
determined by the Committee or as set forth in the Award at the time of grant.

(f) AGREEMENTS. At the time any Award is made under this Paragraph XI,
the Company and the Holder shall enter into a Phantom Stock Award Agreement
setting forth each of the matters contemplated hereby and, in addition such
matters as are set forth in Paragraph IX(b) as the Committee may determine to
be appropriate. The terms and provisions of the respective agreements need
not be identical.

XII. RECAPITALIZATION OR REORGANIZATION

(a) The shares with respect to which Awards may be granted are shares
of Stock as presently constituted, but if and whenever, prior to the
expiration of an Award theretofore granted, the Company shall effect a
subdivision or consolidation by the Company, the number of shares of Stock
with respect to which such Award may thereafter be exercised or satisfied, as
applicable, (i) in the event of an increase in the number of outstanding
shares shall be proportionately increased, and the purchase price per share
shall be proportionately reduced, and (ii) in the event of a reduction in the
number of outstanding shares shall be proportionately reduced, and the
purchase price per share shall be proportionately increased.

(b) If the Company recapitalizes or otherwise changes its capital
structure, thereafter upon any exercise or satisfaction, as applicable, of an
Award theretofore granted the Holder shall be entitled to (or entitled to
purchase, if applicable) under such Award, in lieu of the number of shares of
Stock then covered by such Award, the number and class of shares of stock and
securities to which the Holder would

A-9
<PAGE>

have been entitled pursuant to the terms of the recapitalization if,
immediately prior to such recapitalization, the Holder had been the holder of
record of the number of shares of Stock then covered by such Award.

(c) In the event of a Change of Control, all outstanding Awards shall
immediately vest and become exercisable or satisfiable, as applicable. The
Committee, in its discretion, may determine that upon the occurrence of a
Change of Control, each Award other than an Option outstanding hereunder
shall terminate within a specified number of days after notice to the Holder,
and such Holder shall receive, with respect to each share of Stock subject to
such Award, cash in an amount equal to the excess, if any, of the Change of
Control Value. Further, in the event of a Change of Control, the Committee,
in its discretion shall act to effect one or more of the following
alternatives with respect to outstanding Options, which may vary among
individual Holders and which may vary among Options held by any individual
Holder: (i) determine a limited period of time on or before a specified date
(before or after such Change of Control) after which specified date all
unexercised Options and all rights of Holders thereunder shall terminate, (2)
require the mandatory surrender to the Company by selected Holders of some or
all of the outstanding Options held by such Holders (irrespective of whether
such Options are then exercisable under the provisions of the Plan) as of a
date, before or after such Change of Control, specified by the Committee, in
which event the Committee shall thereupon cancel such Options and the Company
shall pay to each Holder an amount of cash per share equal to the excess, if
any, of the Change of Control Value of the shares subject to such Option over
the exercise price(s) under such Options for such shares, (3) make such
adjustments to Options then outstanding as the Committee deems appropriate to
reflect such Change of Control (PROVIDED, HOWEVER, that the Committee may
determine in its sole discretion that no adjustment is necessary to Options
then outstanding) or (4) provide that thereafter upon any exercise of an
Option theretofore granted the Holder shall be entitled to purchase under
such Option, in lieu of the number of shares of Stock then covered by such
Option the number and class of shares of stock or other securities or
property (including, without limitation, cash) to which the Holder would have
been entitled pursuant to the terms of the agreement of merger, consolidation
or sale of assets and dissolution if, immediately prior to such merger,
consolidation or sale of assets and dissolution the Holder has been the
holder of record of the number of shares of Stock then covered by such
Option. The provisions contained in this paragraph shall be inapplicable to
an Award granted within six (6) months before the occurrence of a Change of
Control if the Holder of such Award is subject to the reporting requirements
of Section 16(a) of the 1934 Act. The provisions contained in this paragraph
shall not terminate any rights of the Holder to further payments pursuant to
any other agreements with the Company after a Change of Control.

(d) If there are changes in the outstanding Stock by reason of
recapitalization, reorganizations, mergers, consolidations, combinations,
exchanges or other relevant changes in capitalization occurring after the
date of the grant of any Award and not otherwise provided for by this
Paragraph XII, any outstanding Awards and any agreements evidencing such
Awards shall be subject to adjustment by the Committee at its discretion as
to the number and price of shares of Stock or other consideration subject to
such Awards. If there is any change in the outstanding Stock, the aggregate
number of shares available under the Plan may be appropriately adjusted by
the Committee, whose determination shall be conclusive.

(e) The existence of the Plan and the Awards granted hereunder shall
not affect in any way the right or power of the Board or the shareholders of
the Company to make or authorize any adjustment, recapitalization,
reorganization or other change in the Company's capital structure or its
business, any merger or consolidation of the Company, any issue of debt or
equity securities ahead of or affecting Stock or the rights thereof the
dissolution or liquidation of the Company or any sale, lease, exchange or
other disposition of all or any part of its assets or business or any other
corporate act or proceeding.

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<PAGE>

(f) Any adjustment provided for in Subparagraphs (a), (b), (c) or (d)
above shall be subject to any required shareholder action.

(g) Except as hereinbefore expressly provided, the issuance by the
Company of shares of stock of any class or securities convertible into shares
of stock of any class, for cash, property, labor or services, upon direct
sale, upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares of obligations of the Company convertible into such
shares or other securities, and in any case whether or not for fair value,
shall not affect, and no adjustment by reason thereof shall be made with
respect to, the number of shares of Stock subject to Awards theretofore
granted or the purchase price per share, if applicable.

XIII. AMENDMENT AND TERMINATION OF THE PLAN

The Board in its discretion may terminate the Plan at any time with
respect to any shares for which Awards have not theretofore been granted.
The Board shall have the right to alter or amend the Plan or any part thereof
from time to time; provided that no change in any Award previously granted
may be made that would impair the rights of the Holder without the consent of
the Holder (unless such change is required in order to cause the benefits
under the Plan to qualify as performance-based compensation within the
meaning of section 162(m) of the Code and applicable interpretive authority
thereunder), and provided, further, that the Board may not, without approval
of the shareholders, amend the Plan to:

(a) increase the maximum number of shares which may be issued on
exercise or surrender of an Award, except as provided in Paragraph XII;

(b) change the Option price;

(d) decrease any authority granted to the Committee hereunder in
contravention of Rule 16b-3.

XIV. MISCELLANEOUS

(a) NO RIGHT TO AN AWARD. Neither the adoption of the Plan by the
Company nor any action of the Board or the Committee shall be deemed to give
an employee any right to be granted an Award to purchase Stock, a right to a
Stock Appreciation Right, a Restricted Stock Award, a Performance Award or a
Phantom Stock Award or any of the rights hereunder except as may be evidenced
by an Award or by an Option Agreement, Stock Appreciation Rights Agreement,
Restricted Stock Agreement, Performance Award Agreement or Phantom Stock
Award Agreement on behalf of the Company, and then only to the extent and on
the terms and conditions expressly set forth therein. The Plan shall be
unfunded. The Company shall not be required to establish any special or
separate fund or to make any other segregation of funds or assure the payment
of any Award.

(b) NO EMPLOYMENT RIGHTS CONFERRED. Nothing contained in the Plan
shall (i) confer upon any employee any right with respect to continuation of
employment with the Company or any subsidiary or (ii) interfere in any way
with the right of the Company or any subsidiary to terminate his or her
employment at any time.

(c) OTHER LAWS; WITHHOLDING. The Company shall not be obligated to
issue any Stock pursuant to any Award granted under the Plan at any time when
the shares covered by such Award have

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<PAGE>

not been registered under the Securities Act of 1933 and such other state and
federal laws, rules or regulations as the Company or the Committee deems
applicable and, in the opinion of legal counsel for the Company, there is no
exemption from the registration requirements of such laws, rules or
regulations available for the issuance and sale of such shares. No
fractional shares of Stock shall be delivered, nor shall any cash in lieu of
fractional shares be paid. The Company shall have the right to deduct in
connection with all Awards any taxes required by law to be withheld and to
require any payments required to enable it to satisfy its withholding
obligations.

(d) NO RESTRICTION ON CORPORATE ACTION. Nothing contained in the Plan
shall be construed to prevent the Company or any subsidiary from taking any
corporate action which is deemed by the Company or such subsidiary to be
appropriate or in its best interest, whether or not such action would have an
adverse effect on the Plan or any Award made under the Plan. No employee,
beneficiary or other person shall have any claim against the Company or any
subsidiary as a result of any such action.

(e) RESTRICTIONS ON TRANSFER. An Award shall not be transferable
otherwise than by will or the laws of descent and distribution or pursuant to
a "qualified domestic relations order" as defined by the Code or Title I of
the Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder, and shall be exercisable during the Holder's lifetime only by
such Holder or the Holder's guardian or legal representative.

(f) RULE 16B-3. It is intended that the Plan and any grant of an Award
made to a person subject to Section 16 of the 1934 Act meet all of the
requirements of Rule 16b-3. If any provision of the Plan or any such Award
would disqualify the Plan or such Award under, or would otherwise not comply
with, Rule 16b-3, such provision or Award shall be construed or deemed
amended to conform to Rule 16b-3.

(g) SECTION 162(M). It is intended that the Plan comply fully with and
meet all the requirements of Section 162(m) of the Code so that Options and
Stock Appreciation Rights granted hereunder and, if determined by the
Committee, Restricted Stock Awards, shall constitute "performance-based"
compensation within the meaning of such section. If any provision of the
Plan would disqualify the Plan or would not otherwise permit the Plan to
comply with Section 162(m) as so intended, such provision shall be construed
or deemed amended to conform to the requirements or provisions of Section
162(m); provided that no such construction or amendment shall have an adverse
effect on the economic value to a Holder of any Award previously granted
hereunder.

(h) GOVERNING LAW. This Plan shall be construed in accordance with the
laws of the State of Texas.

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<PAGE>

MITCHAM INDUSTRIES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING TO BE HELD JULY 9, 1998

P The proxies are directed to vote as specified below and in their discretion
on all other matters coming before the meeting. If no direction is made,
the proxy will vote FOR all nominees listed below, and the approval of
independent public accountants. This proxy is solicited by the Board of
Directors.

R 1. ELECTION OF DIRECTORS - Billy F. Mitcham, Jr., Randal Dean Lewis, Paul
C. Mitcham, Roberto Rios, John F. Schwalbe and William J. Sheppard.

[ ] Vote FOR from all nominees listed above, except vote withheld
from (to withhold authority to vote for any individual nominee,
write in the names on the line below:)

O ----------------------------------------------------------------------

[ ] Vote WITHHELD from all nominees

X 2. APPROVAL OF THE 1998 STOCK AWARDS PLAN

[ ] FOR [ ] AGAINST [ ] ABSTAIN

3. APPROVAL OF INDEPENDENT PUBLIC ACCOUNTANTS
Y
[ ] FOR [ ] AGAINST [ ] ABSTAIN

[ ] I plan to attend the meeting.

PLEASE SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY, USING THE ENCLOSED ENVELOPE.
<PAGE>

MITCHAM INDUSTRIES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING TO BE HELD JULY 9, 1998

The undersigned appoints Billy F. Mitcham, Jr. and Roberto Rios, and
each of them, as attorneys and proxies of the undersigned, with power
of substitution, to represent the undersigned at the Annual Meeting of
Shareholders of Mitcham Industries, Inc. (the "Company") to be held July 9,
1998, and at any adjournments thereof, and to vote all shares of Common
Stock of the Company which the undersigned is entitled to vote on all
matters coming before said meeting.

Dated: , 1998
------------------------

----------------------------------------
Signature

----------------------------------------
Signature if held jointly

THIS PROXY MUST BE SIGNED EXACTLY
AS NAME APPEARS HEREON. Executors,
administrators, trustees, etc., should give
full title as such. If the signer is a
corporation, please sign full corporate name
by duly authorized officer. If signer is a
partnership, please sign partnership name by
authorized person.