<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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 Rule 14a-12
</TABLE>
MITCHAM INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the 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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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 fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(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.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
MITCHAM INDUSTRIES, INC.
POST OFFICE BOX 1175
44000 HIGHWAY 75 SOUTH
HUNTSVILLE, TEXAS 77342
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 19, 2000
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 19, 2000, at the Houston Marriott North, 225 North Sam Houston Parkway
East, Houston, Texas at 10:00 a.m., CST for the purpose of considering and
voting on the following matters:
1. The election of seven directors to serve until the next Annual
Meeting and until their successors are elected and qualified.
2. The approval of the Company's 2000 Stock Option Plan.
3. The approval of the selection of Hein + Associates LLP as the
Company's independent public accountants for the fiscal year ending January 31,
2001.
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 25,
2000 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 AS PROMPTLY AS POSSIBLE IN THE
ACCOMPANYING ENVELOPE.
Sincerely,
P. Blake Dupuis
Secretary
May 26, 2000
<PAGE> 3
-----------------------------------------------
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 19, 2000
-----------------------------------------------
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 25, 2000, for use at the Annual Meeting to be held at 10:00
a.m., CST, on July 19, 2000, and any adjournment thereof. This Proxy Statement,
the attached proxy and the Company's Annual Report for the fiscal year ended
January 31, 2000 are being mailed together on or about May 26, 2000, 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 in response to this solicitation will be
voted FOR: (i) the election of the seven nominees for director; (ii) the
approval of the Company's 2000 Stock Option 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.
The Company will bear all costs of this Proxy Statement and the proxy
and the cost of soliciting proxies relating to the Annual Meeting. It is
anticipated that the solicitation of proxies for the Annual Meeting will be made
only by use of the mails and will cost approximately $13,000. 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> 4
VOTING OF SECURITIES
At the close of business on May 25, 2000, the record date for the
determination of shareholders entitled to notice of and to vote at the Annual
Meeting, there were 9,276,712 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.
The adoption of the 2000 Stock Option Plan and 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. 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 does not vote on a 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. 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.
2
<PAGE> 5
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 25, 2000, 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 ................................... 671,888(1) 7.1%
P. O. Box 1175
Huntsville, Texas 77342
Wellington Management Company, LLP...................... 895,000(2) 9.6%
75 State Street
Boston, Massachusetts 02109
R. Chaney & Partners IV L.P. ........................... 1,274,300(3) 13.7%
909 Fannin, Suite 1275
Two Houston Center
Houston, Texas 77010
</TABLE>
- -----------------------
(1)Includes an aggregate of 245,638 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 Children's Trusts") (60,668 shares), as to which Mr.
Mitcham, Jr. has sole voting rights under a Voting Agreement. Also
includes shares underlying currently exercisable options, and options
that will become exercisable within 60 days after May 25, 2000, to
purchase an aggregate of 171,250 shares of Common Stock, as follows:
Billy F. Mitcham, Jr. (47,500 shares), Billy F. Mitcham, Sr. (45,750
shares) and Paul C. Mitcham (78,000 shares).
(2) As of December 31, 1999, based upon information contained in a
Schedule 13G/A, dated February 13, 2000, filed by Wellington Management
Company, LLP ("Wellington") with the Securities and Exchange Commission
("SEC"). All securities reported in Wellington's Schedule 13G/A 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 595,000 of these shares.
(3) As of November 6, 1998, based upon information contained in a Form
4, 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 Form 4 indicates that Fund IV beneficially owns and has sole
disposition and voting power over 1,009,300 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.
3
<PAGE> 6
SECURITY OWNERSHIP OF MANAGEMENT. The following table sets forth the
beneficial ownership of Common Stock as of May 25, 2000, by (i) the executive
officers whose total annual salary and bonus exceeded $100,000 in the fiscal
year ended January 31, 2000 (the "Named Executives"), 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...................................... 671,888(2) 7.1%
Paul C. Mitcham........................................... 167,930(3) 1.8%
William J. Sheppard....................................... 68,927(4) *
P. Blake Dupuis........................................... 23,500(5) *
R. Dean Lewis............................................. 12,000(5) *
John F. Schwalbe.......................................... 14,000(5) *
Peter H. Blum............................................. 34,379 *
All directors and executive officers...................... 790,315(6) 8.3%
as a group (6 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 245,638 shares of Common Stock owned by
Billy F. Mitcham, Sr. (95,040 shares); Paul C. Mitcham (89,930 shares);
and the Mitcham Children's Trusts (60,668 shares), as to which Mr.
Mitcham, Jr. has sole voting rights under a Voting Agreement. Also
includes shares underlying currently exercisable options, and options
that will become exercisable within 60 days from May 25, 2000, to
purchase an aggregate of 171,250 shares of Common Stock, as follows:
Billy F. Mitcham, Jr. (47,500 shares), Billy F. Mitcham, Sr. (45,750
shares) and Paul C. Mitcham (78,000 shares).
(3) Includes shares underlying currently exercisable options, and
options that will become exercisable within 60 days from May 25, 2000,
to purchase 78,000 shares of Common Stock.
(4) Includes shares underlying currently exercisable options to
purchase 68,500 shares of Common Stock.
(5) Represents shares underlying currently exercisable options and
options that will become exercisable within 60 days from May 25, 2000.
(6) Includes shares underlying currently exercisable options, and
options that will become exercisable within 60 days from May 25, 2000,
to purchase an aggregate of 289,250 shares of Common Stock, as follows:
the 171,250 shares referred to in footnote (2) above, William J.
Sheppard (68,500 shares), P. Blake Dupuis (23,500 shares), R. Dean
Lewis (12,000 shares) and John F. Schwalbe (14,000 shares).
4
<PAGE> 7
ELECTION OF DIRECTORS
Seven directors will be elected at the Annual Meeting. Shares or
proxies may not be voted for more than seven nominees for directors. Each
director so elected will hold office until the next Annual Meeting and until his
successor is elected and qualified.
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.
INFORMATION ABOUT NOMINEES FOR DIRECTOR AND EXECUTIVE OFFICERS. The
following states each director or nominee's and each executive officer's present
position with the Company, principal occupation, age, and the year in which each
director was first elected a director (each serving continuously since first
elected). 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 Executive 52 1987
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 35 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.
William J. Sheppard Vice President-International Operations and a director 52 1994
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.
P. Blake Dupuis Vice President - Finance, Secretary and Treasurer, and 46 --
a director nominee. From September 1996 to July 1998,
Mr. Dupuis served as Chief Financial Officer of UTI
Energy Corp. From April 1996 to September 1996, Mr.
Dupuis served as Chief Financial Officer of
Adcor-Nicklos Drilling Company and from December 1993
to April 1996, he served as Chief Financial Officer of
Coastwide Energy Services, Inc. Mr. Dupuis is a
Certified Public Accountant.
</TABLE>
5
<PAGE> 8
<TABLE>
NAME PRINCIPAL OCCUPATION AGE DIRECTOR SINCE
- ------------------------------ -------------------------------------------------------- -------- -------------------
<S> <C> <C> <C>
R. Dean Lewis Mr. Lewis is the Dean of the Business School at Sam 56 1995
Houston State 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 Accountant in 56 1994
private practice since 1978, with primary emphasis on
tax planning, consultation, and compliance.
Peter H. Blum Since January 1999, Mr. Blum has been President of 42 --
Bear Ridge Capital, L.L.C., a private investment
banking firm. During 1997 and 1998, Mr. Blum served
as Senior Managing Director of GBI Capital Management,
Inc. From December 1996 through 1997, Mr. Blum was a
Managing Director and head of the energy group at
Rodman & Renshaw. From 1992 until December 1996, Mr.
Blum was a Managing Director and head of the energy
group at Mabon Securities. Mr. Blum serves as a
director of Mallon Resources Corporation, an oil and
gas exploration and production company.
</TABLE>
MEETINGS AND COMMITTEES OF THE BOARD
During the fiscal year ended January 31, 2000, the Board of Directors
of the Company held two meetings. The Board of Directors has two standing
committees: the Audit Committee and the Compensation Committee. The Board does
not have a Nominating Committee. Each director participated in at least 75% of
all meetings of the Board of Directors and all meetings of committees on which
he served.
AUDIT COMMITTEE. The Audit Committee, which is comprised of Messrs.
Schwalbe and Lewis, held two meetings during the fiscal year ended January 31,
2000. 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 comprised
of Messrs. Schwalbe and Lewis, held one meeting during the fiscal year ended
January 31, 2000. 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 stock option
plans.
COMPENSATION OF DIRECTORS
The Company pays directors who are not employees of the Company $1,500
for every board meeting and $500 for every committee meeting attended and
reimburses their expenses incurred in attending board and committee meetings. In
addition, under the 1994 Non-Employee Director Stock Option Plan, each
non-employee director will receive an option to purchase 5,000 shares upon
becoming a director and on the date of each annual meeting of shareholders at
which he is re-elected as a director.
6
<PAGE> 9
EXECUTIVE COMPENSATION
The following table shows all compensation paid by the Company during
the fiscal years ended January 31, 1998, 1999 and 2000 to the Chairman of the
Board, President and Chief Executive Officer of the Company and the Company's
other Named Executives.
<TABLE>
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------- -------------
<CAPTION>
SHARES
FISCAL YEAR UNDERLYING
NAME AND ENDED OPTIONS ALL OTHER
PRINCIPAL POSITION JANUARY 31, SALARY($) BONUS($) GRANTED (#) COMPENSATION ($)
- ------------------- ----------- --------- -------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Billy F. Mitcham, Jr 2000 187,820 0(1) 70,500 0
Chairman of the Board, 1999 187,500 30,625 0 0
President and Chief 1998 153,000 44,549 15,000 0
Executive Officer
Paul C. Mitcham 2000 101,275 0(1) 70,500 0
Vice President - 1999 100,000 12,500 0 0
Operations 1998 83,333 22,749 15,000 0
William J. Sheppard 2000 100,482 0(1) 70,500 0
Vice President - 1999 100,000 12,500 0 0
International 1998 83,333 22,749 15,000 0
Operations
P. Blake Dupuis(2) 2000 118,600 0(1) 10,500 0
Vice President - 1999 40,902 30,650 60,000 0
Finance, Secretary 1998 -- -- -- --
and Treasurer
</TABLE>
(1) Fiscal year 2000 bonuses have not yet been determined.
(2) Mr. Dupuis began his employment with the Company in September 1998.
7
<PAGE> 10
OPTION GRANTS IN LAST FISCAL YEAR. The following table sets forth
information concerning stock option grants made in the fiscal year ended January
31, 2000 to the Named Executives named in the Summary Compensation Table. There
were no grants of stock appreciation rights to said individuals during the year.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
NUMBER OF RATE OF STOCK PRICE
SECURITIES % OF TOTAL APPRECIATION FOR OPTION
UNDERLYING OPTIONS GRANTED EXERCISE OR TERM (2)
OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION -----------------------
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
---- --------------- --------------- --------------- ------------ ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Billy F. Mitcham, Jr. 70,500(1) 24.4 3.56 02/23/09 157,840 399,997
Paul C. Mitcham 70,500(1) 24.4 3.56 02/23/09 157,840 399,997
William J. Sheppard 70,500(1) 24.4 3.56 02/23/09 157,840 399,997
P. Blake Dupuis 10,500(1) 3.6 3.56 02/23/09 23,508 59,574
</TABLE>
- -----------------
(1) The options terminate on the earlier of their expiration date or 10
years after grant or, generally, immediately on termination for reasons
other than retirement, disability, death or without cause; three months
after termination of employment or retirement; 12 months after
termination for disability, death or without cause; or unless the
Compensation Committee determines otherwise, on the consummation of a
specified change of control transaction. The options become exercisable
in three equal annual installments beginning one year after the grant
date, but vesting is accelerated on the consummation of a specified
change of control.
(2) The indicated 5% and 10% rates of appreciation are provided to
comply with Securities and Exchange Commission regulations and do not
necessarily reflect the views of the Company as to the likely trend in
the stock price. Actual gains, if any, on stock option exercises and
the sale of Common Stock holdings will depend on, among other things,
the future performance of the Common Stock and overall stock market
conditions.
8
<PAGE> 11
OPTION EXERCISES AND YEAR-END OPTION VALUES. The following table
provides information as to options exercised by the Named Executives in the 2000
fiscal year and year-end value of unexercised options held by the Named
Executives.
AGGREGATE OPTION EXERCISES IN 2000 FISCAL YEAR AND
JANUARY 31, 2000 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
JANUARY 31, JANUARY 31,
2000(#) 2000($)
------------- ----------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE(1)
---- --------------- ------------ -------------- ----------------
<S> <C> <C> <C> <C>
Billy F. Mitcham, Jr 0 0 47,500/47,000 1,528/3,055
Paul C. Mitcham 0 0 78,000/47,000 4,542/3,055
William J. Sheppard 0 0 68,500/47,000 1,528/3,055
P. Blake Dupuis 0 0 23,500/47,000 228/ 455
</TABLE>
- ----------------------
(1) Market value of shares covered by in-the-money options on January
31, 2000 ($3 5/8), 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 $187,500 effective February 1, 1998) 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.
CHANGE OF CONTROL AND TERMINATION AGREEMENTS. In February 1999, the
Company entered into severance and change of control agreements with Messrs.
Paul Mitcham, Sheppard and Dupuis. Under the terms of the severance and change
of control agreements, if a covered executive officer's employment terminates
during the 24-month period after a "change of control" of the Company (as
defined in the agreements) (such period, the "Protection Period") other than the
officer's voluntary resignation (except as stated below) or retirement or a
termination of employment for "cause" (as defined in the agreements) or by
reason of death or disability, the
9
<PAGE> 12
officer will be entitled to receive certain severance payments and other
benefits. The officer's voluntary resignation for "good reason" (as defined in
the agreements) will also entitle the officer to the severance benefits and
other benefits. The severance payment amount, payable monthly over the 24 months
after termination, will be equal to two times such officer's annual base salary
on the effective date of the change of control or the date of the termination of
employment. In addition, the officer under those circumstances will be entitled
to receive continued medical and dental coverage under the Company's applicable
plans (to the extent permitted by law or by the plan carriers) for the period of
time remaining in the Protection Period after his termination is effective, or
until the officer becomes eligible to obtain comparable coverage from a
subsequent employer. In addition, any stock options and restricted stock that
have not fully vested shall accelerate and immediately become fully vested. Each
agreement terminates on January 1, 2002, but will automatically renew for
additional one-year terms absent prior written notice from the Company that it
is terminating the agreements.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION. The Company's
executive compensation program is designed to attract, motivate and retain
talented management personnel and to reward management for the Company's
successful financial performance and for increasing shareholder value. The
Company's executive compensation has three components: base salaries, annual
performance bonuses and long-term incentive stock-based awards.
BASE SALARIES. We determine the salary ranges for the Company's
executive officers based upon their responsibilities and the salary levels of
similarly positioned officers in comparable companies. Our philosophy has been
to establish base salaries in the median-to-low end of the range of such
salaries at comparable companies, because long-term stock based compensation is
considered more important than annual base salaries in aligning the executive's
financial rewards to the shareholders' financial interests for the long term. In
fiscal 2000, as part of the Company's continuing efforts to optimize its capital
resources, none of the Company's executive officers received an increase in
their base salaries.
ANNUAL PERFORMANCE BONUS. Annual bonuses are awarded on a discretionary
basis. In making our determination of whether to award an annual bonus and the
amount of the bonus, we consider several factors, including financial
performance of the Company in relation to planned expectations and performance
of the Company in relation to industry conditions, each executive officer's
performance, level of responsibility or duties, successful completion of
particular projects or acquisition and implementation of new technical
knowledge. We have not yet determined bonuses for executive officers for fiscal
2000, and expect to do so at our meeting immediately following the Annual
Meeting.
LONG-TERM STOCK-BASED COMPENSATION. We believe that a substantial
percentage of executive compensation should be directly related to improvement
in shareholder value. In determining the number of options to grant, we make a
subjective determination based on the same factors as we do in determining
bonuses, giving special consideration to the Chief Executive Officer's
recommendation in awarding options to executive officers other than himself. In
fiscal 2000, we approved the grant to executive officers of the options shown in
the Summary Compensation Table for that fiscal year, with a three-year vesting
period. However, we soon realized that the Company did not have sufficient
options remaining available for option grants in the future. Since we believe
that the grant of stock options is an important component of our ability to keep
our management team in place, we recommended to the Board that it either adopt
another stock option plan or authorize additional shares under an existing plan,
and present it to shareholders for approval.
JOHN F. SCHWALBE
R. DEAN LEWIS
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
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<PAGE> 13
PERFORMANCE GRAPH. The graph below compares the cumulative total return of the
Company's Common Stock to the S&P's Smallcap 600 stock index and to the S&P's
Oil and Gas (Drilling & Equipment) index for the period from January 31, 1995 to
January 31, 2000. The graph assumes that the value of an investment in the
Company's Common Stock and each index was $100 at January 31, 1995, and that all
dividends were reinvested.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1/31/95 1/31/96 1/31/97 1/31/98 1/31/99 1/31/00
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Mitcham Industries, Inc. $100 $204.76 $328.57 $688.08 $154.74 $138.10
S&P Smallcap 600 $100 $132.11 $162.59 $196.93 $195.73 $215.90
S&P Oil & Gas (Drilling & Equipment) $100 $137.73 $209.47 $257.76 $167.38 $232.20
</TABLE>
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
245,638 shares, or 2.6%, of the Company's outstanding Common Stock. Mr. Mitcham,
Jr. had voting control of an aggregate of 671,888 shares, or 7.1%, of the
Company's Common Stock, as of May 25, 2000. 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."
PROPOSAL TO APPROVE THE 2000 STOCK OPTION PLAN
On May 22, 2000, the Board of Directors adopted the Company's 2000
Stock Option Plan (the "2000 Stock Option Plan") subject to approval by the
Company's shareholders at the Annual Meeting. The 2000 Stock Option Plan
supplements the Company's 1998 Incentive Stock Plan (the "1998 Plan"), which the
Company's shareholders approved on July 9, 1998, and the 1994 Stock Option Plan,
which the Company's shareholders approved on May 1, 1994. As of May 25, 2000,
348,500 of the 350,000 options authorized for issuance under the 1998 Plan have
been granted, all of which options remained unexercised, and 319,820 of the
350,000 options authorized for issuance under the 1994 Plan have been granted,
191,700 of which remained unexercised. The 1998 Plan and the 1994 Plan provide
for the grant of stock options only to the Company's employees. The 2000 Stock
Option Plan covers an aggregate of up to 500,000 shares of Common Stock (subject
to certain adjustments) and provides for grant of stock options to employees,
consultants and non-employee directors. The principal advantage to the Company
of the 2000 Stock Option Plan is to enable the Company to better attract,
retain, and develop a top-quality management team.
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<PAGE> 14
The following discussion is a summary of certain key provisions of the
2000 Stock Option Plan and is subject to qualification by reference to the 2000
Stock Option Plan, a copy of which is attached to this Proxy Statement as
EXHIBIT A.
Administration
The 2000 Stock Option 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 times 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, consultants or non-employee
directors of the Company or of any subsidiary of the Company will be eligible to
receive awards under the 2000 Stock Option Plan.
Types of Awards
The 2000 Stock Option Plan provides for the grant of incentive and
non-qualified stock options. Prior to the grant of any award, the Committee may
establish performance goals that are based on the attainment of specified
corporate objectives. The Compensation Committee will designate the key
employees, consultants or non-employee directors to receive the options, the
number of shares subject to the options, and the terms and conditions of each
option granted under the 2000 Stock Option Plan. The term of any option granted
under the 2000 Stock Option 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
optionee 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 2000 Stock Option 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
2000 Stock Option Plan will be paid in full in a manner prescribed by the
Compensation Committee. The 2000 Stock Option 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.
Change of Control Provisions
If there is a "Change of Control" (as defined in the 2000 Stock Option
Plan), all outstanding options shall immediately vest and become exercisable or
satisfiable, as applicable. The Committee in its discretion may determine that
on 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 2000 Stock Option Plan. With respect to 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 of Control)
after which 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) provide 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
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<PAGE> 15
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
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.
NONQUALIFIED STOCK OPTIONS. Nonqualified stock options granted under
the 2000 Stock Option Plan are not taxable to an employee when granted but
result in taxation at exercise, at which time the optionee 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 optionee recognizes this income.
Plan Amendment and Termination
The Board may alter or amend the 2000 Stock Option 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 2000 Stock Option 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
2000 Stock Option 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 2000 Stock Option Plan, (e) materially modify
the requirements as to eligibility for participation in the 2000 Stock Option
Plan, or (f) or decrease any authority granted to the Committee in contravention
of Rule 16b-3 under the Securities Exchange Act of 1934 (the "Exchange Act"). No
grants may be made under the 2000 Stock Option Plan after May 22, 2010. The 2000
Stock Option Plan shall remain in effect until all Awards granted have been
satisfied or expired.
Transfer and Resale Restrictions
The options 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 employees of the Company may not offer or resell
shares acquired under the 2000 Stock Option Plan without registration under the
Securities Act of 1933, or compliance with Rule 144. On May 25, 2000, the
closing price of the Common Stock as reported in The Wall Street Journal for
Nasdaq National Market transactions was $5 9/16.
13
<PAGE> 16
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ADOPTION OF THE 2000
STOCK OPTION 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, 2001. 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,
2000 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-K
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-K for the fiscal year ended January 31, 2000, 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, 2000, Billy F. Mitcham, Jr. and William
J. Sheppard did not timely report exercises of warrants in May 1999 to purchase
3,074 and 427 shares of common stock, respectively. The Company believes that
all other filings required to be made under Section 16(a) were timely made.
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.
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<PAGE> 17
SUBMISSION OF SHAREHOLDER PROPOSALS
Shareholders wishing to submit proposals for consideration by the
Company's Board of Directors at the Company's 2001 Annual Meeting of
Shareholders should submit them in writing to the attention of the Secretary of
the Company no later than January 30, 2001, so that it may be considered by the
Company for inclusion in its proxy statement and form of proxy for that meeting.
A shareholder who wishes to make a proposal at the 2001 Annual Meeting
of Shareholders without complying with the requirements of Rule 14a-8 (and
therefore without including the proposal in the Company's proxy materials) must
notify the Company of that proposal by April 15, 2001. If a shareholder fails to
timely give notice, then the persons named as proxies in the proxy cards
solicited by the Company's Board of Directors for that meeting will be entitled
to vote the proxy cards held by them regarding that proposal, if properly raised
at the meeting, in their discretion or as directed by the Company's management.
By Order of the Board of Directors,
P. Blake Dupuis
Secretary
May 26, 2000
15
<PAGE> 18
EXHIBIT A
MITCHAM INDUSTRIES, INC.
2000 STOCK OPTION PLAN
1. PURPOSES OF THE PLAN. The purposes of this Stock Option Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees, Consultants and
Non-Employee Directors of the Company and its Subsidiaries and to promote the
success of the Company's business. Options granted under this Plan may be
incentive stock options (as defined under Section 422 of the Code) or
nonqualified stock options, as determined by the Administrator at the time of
grant of an option and subject to the applicable provisions of Section 422 of
the Code, as amended, and the regulations promulgated thereunder. No Incentive
Stock Options may be granted under this Plan unless this Plan has been approved
by the shareholders of the Company within 12 months after its adoption by the
Board of Directors.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "ADMINISTRATOR" means the Board or any of its Committees,
as applicable, that is administering the Plan pursuant to Section 4 of
the Plan.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CHANGE OF CONTROL" shall have the meaning provided in
Section 12 hereof.
(d) "CODE" means the Internal Revenue Code of 1986, as
amended.
(e) "COMMITTEE" means the Committee appointed by the Board of
Directors under paragraph (a) of Section 4 of the Plan.
(f) "COMPANY" means Mitcham Industries, Inc., a Texas
corporation.
(g) "CONSULTANT" means any consultant or advisor to the
Company or any Parent or Subsidiary.
(h) "CONTINUOUS STATUS AS AN EMPLOYEE OR NON-EMPLOYEE
DIRECTOR" means, for an Employee, the absence of any interruption or
termination of the employment relationship by the Company or any
Subsidiary and for a Non-Employee Director, the absence of any
interruption or termination of service as a Non-Employee Director.
Continuous Status as an Employee shall not be considered interrupted in
the case of: (i) any leave of absence approved by the Board, including
sick leave, military leave, or any other personal leave; provided,
however, that for purposes of Incentive Stock Options, such leave is
for a period of not more than 90 days, unless reemployment upon the
expiration of such leave is guaranteed by contract or statute, or
unless provided otherwise under Company policy adopted from time to
time; or (ii) in the case of transfers between locations of the Company
or between the Company, its Subsidiaries or its successor.
(i) "EMPLOYEE" means any person, including officers and
directors, employed by the Company or any Parent or Subsidiary of the
Company. The payment of a director's fee by the Company shall not be
sufficient to constitute "employment" by the Company.
(j) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
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(k) "FAIR MARKET VALUE" means, as of any date, the value of
Stock determined as follows:
(i) If the Stock is listed on any established stock
exchange or a national market system, including
without limitation The Nasdaq National Market, its
Fair Market Value shall be the closing sales price
for such stock (or the closing bid, if no sales were
reported, as quoted on such system or exchange or the
exchange with the greatest volume of trading in Stock
for the last market trading day prior to the time of
determination) as reported in the Wall Street Journal
or such other source as the Administrator deems
reliable;
(ii) If the Stock is quoted on The Nasdaq Stock
Market (but not on The Nasdaq National Market) or
regularly quoted by a recognized securities dealer
but selling prices are not reported, its Fair Market
Value shall be the mean between the high and low
asked prices for the Stock; or
(iii) If there is no established market for the
Stock, the Fair Market Value shall be determined in
good faith by the Administrator.
(l) "INCENTIVE STOCK OPTION" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422
of the Code.
(m) "NONQUALIFIED STOCK OPTION" means an Option not intended
to qualify as an Incentive Stock Option.
(n) "NON-EMPLOYEE DIRECTOR" means a member of the Board who is
not an employee.
(o) "OPTION" means a stock option granted under the Plan.
(p) "OPTIONED STOCK" means the Stock subject to an Option.
(q) "OPTIONEE" means an Employee or Consultant who receives an
Option.
(r) "PARENT" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(s) "PLAN" means this 2000 Stock Option Plan.
(t) "PERSON" means any individual entity or group (within the
meaning of Section 13(d) or 14(d)(2) of the Securities Act.
(u) "SHARE" means a share of the Stock, as adjusted in
accordance with Section 12 of the Plan.
(v) "STOCK" means the Common Stock, par value $.01 per share,
of the Company;
(w) "SUBSIDIARY" means a "subsidiary corporation," whether now
or hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 12
of the Plan, the maximum number of shares of Stock which may be optioned and
sold under the Plan is 500,000 shares. The shares may be authorized, but
unissued, or reacquired Stock. If an Option expires or becomes unexercisable for
any reason
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without having been exercised in full, the unpurchased Shares which were subject
thereto shall, unless the Plan has been terminated, become available for future
grant under the Plan.
4. ADMINISTRATION OF THE PLAN.
(a) PROCEDURE.
(i) ADMINISTRATION WITH RESPECT TO DIRECTORS AND
OFFICERS OR TO NON-EMPLOYEE DIRECTORS. With respect to grants
of Options to Employees who are also officers or directors of
the Company, or to Non-Employee Directors, the Plan shall be
administered by (A) the Board or (B) a Committee designated by
the Board to administer the Plan, which Committee shall be
constituted in such a manner as to permit the Plan to comply
with Rule 16b-3 promulgated under the Exchange Act or any
successor thereto ("Rule 16b-3") with respect to a plan
intended to qualify thereunder as a discretionary plan. Once
appointed, such Committee shall continue to serve in its
designated capacity until otherwise directed by the Board.
From time to time the Board may increase the size of the
Committee and appoint additional members, remove members (with
or without cause) and appoint new members in substitution
therefor, fill vacancies, however caused, and remove all
members of the Committee and thereafter directly administer
the Plan, all to the extent permitted by Rule 16b-3 with
respect to a plan intended to qualify thereunder as a
discretionary plan. Notwithstanding the foregoing, the Plan
shall not be administered by the Board if (a) the Company and
its officers and directors are then subject to the
requirements of Section 16 of the Exchange Act and (b) the
Board's administration of the Plan would prevent the Plan from
complying with Rule 16b-3.
(ii) ADMINISTRATION WITH RESPECT TO CONSULTANTS AND
OTHER EMPLOYEES. With respect to grants of Options to
Employees or Consultants who are neither directors nor
officers of the Company, the Plan shall be administered by (A)
the Board or (B) a Committee designated by the Board, which
Committee shall be constituted in such a manner as to satisfy
the legal requirements relating to the administration of
incentive stock option plans, if any, of corporate and
securities laws applicable to the Company and of the Code (the
"Applicable Laws"). Once appointed, such Committee shall
continue to serve in its designated capacity until otherwise
directed by the Board. From time to time the Board may
increase the size of the Committee and appoint additional
members thereof, remove members (with or without cause) and
appoint new members in substitution therefor, fill vacancies,
however caused, and remove all members of the Committee and
thereafter directly administer the Plan, all to the extent
permitted by the Applicable Laws.
(b) POWERS OF THE ADMINISTRATOR. Subject to the provisions of
the Plan and in the case of a Committee, the specific duties delegated
by the Board to such Committee, the Administrator shall have the
authority, in its discretion:
(i) to determine the Fair Market Value of the Stock,
in accordance with Section 2(j) of the Plan;
(ii) to select the officers, Consultants and
Employees to whom Options may from time to time be granted
hereunder;
(iii) to determine whether and to what extent Options
are granted hereunder;
(iv) to determine the number of shares of Stock to be
covered by each such award granted hereunder;
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(v) to approve forms of agreement for use under the
Plan;
(vi) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted
hereunder (including, but not limited to, the per share
exercise price for the Shares to be issued pursuant to the
exercise of an Option and any restriction or limitation, or
any vesting acceleration or waiver of forfeiture restrictions
regarding any Option or other award and/or the shares of Stock
relating thereto, based in each case on such factors as the
Administrator shall determine, in its sole discretion);
(vii) to determine whether and under what
circumstances an Option may be bought-out for cash under
subsection 9(f);
(viii) to determine whether, to what extent and under
what circumstances Stock and other amounts payable with
respect to an award under this Plan shall be deferred either
automatically or at the election of the participant (including
providing for and determining the amount, if any, of any
deemed earnings on any deferred amount during any deferral
period); and
(ix) to reduce the exercise price of any Option to
the then current Fair Market Value if the Fair Market Value of
the Stock covered by such Option shall have declined since the
date the Option was granted.
(c) EFFECT OF COMMITTEE'S DECISION. All decisions,
determinations and interpretations of the Administrator shall be final
and binding on all Optionees and any other holders of any Options.
Neither the Board, the Committee nor any member thereof shall be liable
for any act, omission, interpretation, construction or determination
made in connection with the Plan in good faith, and the members of the
Board and of the Committee shall be entitled to indemnification and
reimbursement by the Company in respect of any claim, loss, damage or
expense (including counsel fees) arising therefrom to the full extent
permitted by law.
5. ELIGIBILITY.
(a) Nonqualified Stock Options may be granted to Employees,
Consultants and Non-Employee Director. Incentive Stock Options may be
granted only to Employees.
(b) Each Option shall be designated in the written option
agreement as either an Incentive Stock Option or a Nonqualified Stock
Option. However, notwithstanding such designations, to the extent that
the aggregate Fair Market Value of the Shares with respect to which
Options designated as Incentive Stock Options are exercisable for the
first time by any Optionee during any calendar year (under all plans of
the Company or any Parent or Subsidiary) exceeds $100,000, such excess
Options shall be treated as Nonqualified Stock Options.
(c) For purposes of Section 5(b), Incentive Stock Options
shall be taken into account in the order in which they were granted,
and the Fair Market Value of the Shares shall be determined as of the
time the Option with respect to such Shares is granted.
(d) The Plan shall not confer upon any Optionee any right with
respect to continuation of employment or consulting relationship with
the Company, nor shall it interfere in any way with his right or the
Company's right to terminate his employment or consulting relationship
at any time, with or without cause, unless otherwise agreed in writing
by the Company and such Optionee.
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6. TERM OF PLAN. The Plan shall become effective upon its adoption by
the Board of Directors. It shall continue in effect until May 22, 2010 unless
extended by the Board or sooner terminated under Section 14 of the Plan. No
grants of Options will be made under the Plan after May 22, 2010.
7. TERM OF OPTION. The term of each Option shall be the term stated in
the Option Agreement; provided, however, that in the case of an Incentive Stock
Option, the term shall be no more than 10 years from the date of grant thereof
or such shorter term as may be provided in the Option Agreement. However, in the
case of an Incentive Stock Option granted to an Optionee who, at the time the
Option is granted, owns Stock representing more than 10% of the voting power of
all classes of stock of the Company or any Parent or Subsidiary, the term of the
Option shall be five years from the date of grant thereof or such shorter term
as may be provided in the Option Agreement.
8. OPTION EXERCISE PRICE AND CONSIDERATION.
(a) The per share exercise price for the Shares to be issued
pursuant to exercise of an Option shall be such price as is determined
by the Administrator, provided that, in the case of an Incentive Stock
Option:
(i) granted to an Employee who, at the time of the
grant of such Incentive Stock Option, owns stock representing
more than ten percent (10%) of the voting power of all classes
of stock of the Company or any Parent or Subsidiary, the per
Share exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of grant.
(ii) granted to any Employee, the per Share exercise
price shall be no less than 100% of the Fair Market Value per
Share on the date of grant.
(b) The consideration to be paid for the Shares to be issued
upon exercise of an Option, including the method of payment, shall be
determined by the Administrator (and, in the case of an Incentive Stock
Option, shall be determined at the time of grant) and may consist
entirely of (1) cash, (2) check, (3) promissory note, (4) other shares
of the Company's capital stock which (x) in the case of shares of the
Company's capital stock acquired upon exercise of an Option either have
been owned by the Optionee for more than six months on the date of
surrender or were not acquired, directly or indirectly, from the
Company, and (y) have a Fair Market Value on the date of surrender
equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised, (5) authorization for the Company to retain
from the total number of Shares as to which the Option is exercised
that number of Shares having a Fair Market Value on the date of
exercise equal to the exercise price for the total number of Shares as
to which the Option is exercised, (6) delivery of a properly executed
exercise notice together with irrevocable instructions to a broker to
promptly deliver to the Company the amount of sale or loan proceeds
required to pay the exercise price, (7) any combination of the
foregoing methods of payment, or (8) such other consideration and
method of payment for the issuance of Shares to the extent permitted
under applicable laws.
9. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any
Option granted hereunder shall be exercisable at such times and under
such conditions as determined by the Administrator, including
performance criteria with respect to the Company and/or the Optionee,
and as shall be permissible under the terms of the Plan. An Option may
not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised, and the Optionee
deemed to be a shareholder of the Shares being purchased upon exercise,
when written notice of such exercise has been given to the
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Company in accordance with the terms of the Option by the person
entitled to exercise the Option and full payment for the Shares with
respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Board, consist of any
consideration and method of payment allowable under Section 8(b) of the
Plan.
Exercise of an Option in any manner shall result in a decrease
in the number of Shares which thereafter may be available, both for
purposes of the Plan and for sale under the Option, by the number of
Shares as to which the Option is exercised.
(b) TERMINATION OF EMPLOYMENT. In the event of termination of
an Optionee's relationship as a Consultant (unless such termination is
for purposes of becoming an Employee of the Company) or Continuous
Status as an Employee with the Company (as the case may be), such
Optionee may, but only within ninety (90) days (or such other period of
time as is determined by the Board, with such determination in the case
of an Incentive Stock Option being made at the time of grant of the
Option after the date of such termination (but in no event later than
the expiration date of the term of such Option as set forth in the
Option Agreement)), exercise his Option to the extent that an Optionee
was entitled to exercise it at the date of such termination. To the
extent that an Optionee was not entitled to exercise the Option at the
date of such termination, or if Optionee does not exercise such Option
to the extent so entitled within the time specified herein, the Option
shall terminate.
(c) DISABILITY OF OPTIONEE. Notwithstanding the provisions of
Section 9(b) above, in the event of termination of an Optionee's
relationship as a Consultant or Continuous Status as an Employee as a
result of his total and permanent disability (as defined in Section
22(e)(3) of the Code), Optionee may, but only within twelve (12) months
from the date of such termination (but in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), exercise the Option to the extent otherwise entitled to
exercise it at the date of such termination. To the extent that
Optionee was not entitled to exercise the Option at the date of
termination, or if Optionee does not exercise such Option to the extent
so entitled within the time specified herein, the Option shall
terminate.
(d) DEATH OF OPTIONEE. In the event of the death of an
Optionee, the Option may be exercised, at any time within twelve (12)
months following the date of death (but in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), by the Optionee's estate or by a person who acquired the
right to exercise the Option by bequest or inheritance, but only to the
extent the Optionee was entitled to exercise the Option at the date of
death. To the extent that Optionee was not entitled to exercise the
Option at the date of termination, or if the Optionee's estate (or such
other person who acquired the right to exercise the Option) does not
exercise such Option to the extent so entitled within the time
specified herein, the Option shall terminate.
(e) RULE 16b-3. Options granted to persons subject to Section
16(b) of the Exchange Act must comply with Rule 16b-3 and shall contain
such additional conditions or restrictions as may be required
thereunder to qualify for the maximum exemption from Section 16 of the
Exchange Act with respect to Plan transactions.
(f) BUYOUT PROVISIONS. The Administrator may at any time offer
to buy out for a payment in cash or Shares, an Option previously
granted, based on such terms and conditions as the Administrator shall
establish and communicate to the Optionee at the time that such offer
is made.
10. NON-TRANSFERABILITY OF OPTIONS. The Option may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner other
than by will or by the laws of descent or distribution and may be exercised,
during the lifetime of the Optionee, only by the Optionee.
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<PAGE> 24
11. STOCK WITHHOLDING TO SATISFY WITHHOLDING TAX OBLIGATIONS. At the
discretion of the Administrator, Optionees may satisfy withholding obligations
as provided in this paragraph. When an Optionee incurs tax liability in
connection with an Option, which tax liability is subject to tax withholding
under applicable tax laws, and the Optionee is obligated to pay the Company an
amount required to be withheld under applicable tax laws, the Optionee may
satisfy the withholding tax obligation by electing to have the Company withhold
from the Shares to be issued upon exercise of the Option, that number of Shares
having a Fair Market Value equal to the amount required to be withheld. The Fair
Market Value of the Shares to be withheld shall be determined on the date that
the amount of tax to be withheld is to be determined (the "Tax Date").
All elections by an Optionee to have Shares withheld for this purpose
shall be made in writing in a form acceptable to the Administrator and shall be
subject to the following restrictions:
(a) the election must be made on or prior to the applicable
Tax Date;
(b) once made, the election shall be irrevocable as to the
particular Shares of the Option as to which the election is made;
(c) all elections shall be subject to the consent or
disapproval of the Administrator; and
(d) if the Optionee is subject to Rule 16b-3, the election
must comply with the applicable provisions of Rule 16b-3 and shall be
subject to such additional conditions or restrictions as may be
required thereunder to qualify for the maximum exemption from Section
16 of the Exchange Act with respect to Plan transactions.
In the event the election to have Shares withheld is made by an
Optionee and the Tax Date is deferred under Section 83 of the Code because no
election is filed under Section 83(b) of the Code, the Optionee shall receive
the full number of Shares with respect to which the Option is exercised but such
Optionee shall be unconditionally obligated to tender back to the Company the
proper number of Shares on the Tax Date.
12. CHANGES IN THE COMPANY'S CAPITAL STRUCTURE. The existence of
outstanding Options shall not affect in any way the right or power of the
Company or its shareholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business, or any merger or consolidation of the Company, or any
issue of bonds, debentures, preferred or prior preference stock ahead of or
affecting the Stock or the rights thereof, or the dissolution or liquidation of
the Company, or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding, whether of a similar
character or otherwise.
If the Company shall effect a subdivision or consolidation of shares or
other capital readjustment, the payment of a stock dividend, or other increase
or reduction of the number of shares of the Stock outstanding, without receiving
compensation therefor in money, services or property, then (a) the number,
class, and per share price of shares of Stock subject to outstanding Options
hereunder shall be appropriately adjusted in such a manner as to entitle an
Optionee to receive upon exercise of an Option, for the same aggregate cash
consideration, the same total number and class of shares as he would have
received had he exercised his Option in full immediately prior to the event
requiring the adjustment; and (b) the number and class of shares of Stock then
reserved for issuance under the Plan shall be adjusted by substituting for the
total number and class of shares of Stock then reserved that number and class of
shares of stock that would have been received by the owner of an equal number of
outstanding shares of each class of Stock as the result of the event requiring
the adjustment.
If the Company is a party to a merger or a similar reorganization after
which the Company is not the surviving corporation, or if there is a sale of all
or substantially all the Common Stock or a sale of all or substantially all of
the assets of the Company, or if the Company is to be liquidated or dissolved
(any of which events shall constitute a "Significant Transaction"), then,
subject to the provisions hereof, the Administrator, in
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<PAGE> 25
its discretion, may accelerate the vesting of all outstanding Options or take
such other action with respect to outstanding Options as it deems appropriate,
including, without limitation, canceling such outstanding Options and paying the
Optionees an amount equal to the value of such Options, as determined by the
Board.
Notwithstanding the foregoing, if a Significant Transaction shall occur
in connection with or following a Change in Control (as defined below), in
connection with which Significant Transaction the holder of any Option that is
not fully vested shall not receive, in respect of such Option, a substitute
award of stock options containing substantially similar terms to and having an
equal or greater fair market value than such Option, then the Administrator
shall either:
(a) accelerate the vesting of such Option within a reasonable
time prior to the completion of such Significant Transaction (such that
the holder of such Option would have the opportunity to participate in
the Significant Transaction on the same basis as holders of Stock,
subject to such holder's exercise of such Option) or
(b) cancel such Option in consideration of the payment to the
holder thereof of an amount (in cash) equal to the fair market value of
such Option. For purposes of the foregoing, the fair market value
attributable to Options shall be determined by the Administrator
either, at its election, (x) in accordance with the Black-Scholes
method (for purposes of which volatility shall be measured over the
preceding one year period and the risk-free interest rate shall be the
rate of U.S. treasury bills with a maturity corresponding to the
remaining term of such Option) or (y) to be an amount equal to the fair
market value of the Stock subject to such Option less the exercise
price thereof and (ii) the fair market value of (A) any Options shall
be determined as of the date, either of the Change in Control or of the
Significant Transaction, that results in the greater fair market value
of such Options, and (B) any substitute award shall be determined as of
the date of the Significant Transaction.
A "Change in Control" shall be deemed to occur if:
(a) any Person becomes (directly or indirectly) the beneficial
owner (within the meaning of Rule 13d-3 promulgated under such Act) of
more than 25% of the combined voting power of the then-outstanding
voting securities of the Company entitled to vote generally in the
election of directors ("Outstanding Company Voting Securities"); or
(b) the Company's shareholders approve a merger or
consolidation, sale or disposition of all or substantially all of the
Company's assets or a plan of liquidation or dissolution of the
Company, unless, immediately thereafter:
(i) more than 60% of the combined voting power of the
then-outstanding voting securities of the resulting
corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly,
by all or substantially all of the individuals and entities
who were the beneficial owners of the Outstanding Company
Voting Securities immediately before the Reorganization, in
substantially the same proportions of the Outstanding Company
Voting Securities as their ownership immediately before such
Reorganization;
(ii) no Person beneficially owns, directly or
indirectly, 25% or more of the then- outstanding voting
securities of such corporation entitled to vote generally in
the election of directors; and
(iii) at least a majority of the members of the board
of directors of the corporation resulting from the
Reorganization were members of the Incumbent Board at the time
the initial agreement providing for the Reorganization was
entered into.
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<PAGE> 26
Notwithstanding the foregoing, a Change in Control shall not
occur if any corporation or entity the majority interest of
which is held, directly or indirectly, by the Company,
acquires 25% or more of the Outstanding Company Voting
Securities.
Except as expressly provided herein, the issue by the Company of shares of stock
of any class, or securities convertible into shares of stock of any class, for
cash or property, or for labor or services either upon direct sale or upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number, class, or price of shares of Stock then subject to
outstanding Options.
13. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for
all purposes, be the date on which the Administrator makes the determination
granting such Option, or such other date as is determined by the Administrator.
Notice of the determination shall be given to each Employee, Consultant or
Non-Employee Director to whom an Option is so granted within a reasonable time
after the date of such grant.
14. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may at any time
amend, alter, suspend or discontinue the Plan, but no amendment,
alteration, suspension or discontinuation shall be made which would
impair the rights of any Optionee under any grant theretofore made,
without his or her consent. In addition, to the extent necessary and
desirable to comply with Rule 16b-3 under the Exchange Act or with
Section 422 of the Code (or any other applicable law or regulation,
including the applicable requirements of The Nasdaq Stock Market or an
established stock exchange), the Company shall obtain shareholder
approval of any Plan amendment in such a manner and to such a degree as
required.
(b) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or
termination of the Plan shall not affect Options already granted and
such Options shall remain in full force and effect as if this Plan had
not been amended or terminated, unless mutually agreed otherwise
between the Optionee and the Board, which agreement must be in writing
and signed by the Optionee and the Company.
15. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the Shares may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
16. RESERVATION OF SHARES. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan. The inability of the Company
to obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.
17. AGREEMENTS. Options shall be evidenced by written agreements
("Option Agreement") in such form as the applicable Administrator shall approve
from time to time.
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<PAGE> 27
18. INFORMATION TO OPTIONEES. The Company shall provide to each
Optionee, during the period for which such Optionee has one or more Options
outstanding, copies of all annual reports and other information which are
generally provided to all shareholders of the Company. The Company shall not be
required to provide such information to persons whose duties in connection with
the Company assure their access to equivalent information.
19. GOVERNING LAW; CONSTRUCTION. All rights and obligations under the
Plan shall be governed by, and the Plan shall be construed in accordance with,
the laws of the State of Texas without regard to the principles of conflicts of
laws. Titles and headings to Sections herein are for purposes of reference only,
and shall in no way limit, define or otherwise affect the meaning or
interpretation of any provisions of the Plan.
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<PAGE> 28
PROXY
MITCHAM INDUSTRIES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING TO BE HELD JULY 19, 2000
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, the approval of the Company's 2000
Stock Option Plan, and the approval of independent public accountants. This
proxy is solicited by the Board of Directors.
1. ELECTION OF DIRECTORS - Billy F. Mitcham, Jr., Paul C. Mitcham, William
J. Sheppard, P. Blake Dupuis, R. Dean Lewis, John F. Schwalbe and Peter
H. Blum.
[ ] 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:)
-------------------------------------------------------------------
[ ] Vote WITHHELD from all nominees
2. APPROVAL OF 2000 STOCK OPTION PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. APPROVAL OF INDEPENDENT PUBLIC ACCOUNTANTS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
[ ] I plan to attend the meeting.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY, USING THE ENCLOSED ENVELOPE.
<PAGE> 29
MITCHAM INDUSTRIES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING TO BE HELD JULY 19, 2000
The undersigned appoints Billy F. Mitcham, Jr. and P. Blake Dupuis, 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 19, 2000, and at any
adjournment 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:________________________, 2000
----------------------------------------
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.
