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Amended And Restated Executive Employment Agreement

Executive Employment Agreement

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SAEXPLORATION HOLDINGS, INC. | SAExploration Holdings, Inc

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Title: AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
Date: 8/9/2016
Industry: Oil Well Services and Equipment     Sector: Energy

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Exhibit 10.4

AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (the “ Agreement ”), effective as of the Effective Date (as defined below), is entered into by and between SAExploration Holdings, Inc., a Delaware corporation (the “ Employer ” or the “ Company ”), and Mike Scott , an individual residing in the Province of Alberta, Canada (the “ Executive ”) and amends, restates and replaces in its entirety the Executive Employment Agreement dated as of October 1st 2012, other than the provisions of the Non-Disclosure Agreement (as such term is defined herein) (the “ Original Employment Agreement ”). The Employer and the Executive may be referred to singularly as “ Party ” or collectively as “ Parties .” Unless otherwise specified, capitalized terms have the meanings set forth herein.

RECITALS

WHEREAS, the Company and certain of its subsidiaries and such other parties identified therein entered into that certain Restructuring Support Agreement dated as of June 13, 2016, whereby the parties thereto have agreed to enter into certain transactions that will have the effect of restructuring and recapitalizing the Company (the “ RSA ”) effective upon the Closing Date (as such term is defined in the RSA);

WHEREAS, prior to the Effective Date, the Employer has employed the Executive as Executive Vice President—Operations of the Company;

WHEREAS, in connection with and pursuant to the provisions of the RSA, the Parties have agreed to amend the Original Employment Agreement on the terms and conditions contained herein effective immediately upon the date of approval (the “ Effective Date ”) by the Board of Directors of the Company (the “ Board ”);

WHEREAS, effective immediately upon the Effective Date, the Company will employ the Executive as the Senior Vice President of the Company, and the Executive desires to be employed by the Employer on the terms and conditions contained herein;

WHEREAS, the Employer acknowledges and rewards the value and loyalty of the Executive and seeks to build and protect the Company’s stability, growth, customer base, technology and other competitive advantages; and

WHEREAS, the Executive wishes to evidence his commitment to the Company and its objectives.

NOW, THEREFORE, in consideration of the foregoing premises and the respective agreements hereinafter set forth and the mutual benefits to be derived hereinafter, the Employer and the Executive hereby agree as follows:

AGREEMENTS

1. Employment Term . The Employer hereby agrees to continue to employ the Executive commencing on the Effective Date and ending on the third anniversary thereafter (the “ Initial Term ”); provided , however , that at the end of the Initial Term, the Executive’s


employment and this Agreement shall automatically renew or extend for consecutive terms of one (1) year on each succeeding anniversary of the Effective Date (each such renewal or extension a “ Renewal Term ”), unless either Party gives prior written notice to the other Party of its desire to terminate the Agreement at least 90 days prior to the expiration of the Initial Term or any Renewal Term, as applicable (the Initial Term and each Renewal Term, collectively, the “ Term ”). Notwithstanding the foregoing, the Parties shall have the termination rights as set forth in Section 5 of this Agreement. Termination of this Agreement for any reason whatsoever by any Party shall have no effect on the continued enforceability of any ancillary agreement, specifically including the Non-Disclosure Agreement executed by the Executive in favor of the Employer concurrently with the Original Employment Agreement, (the “ Non-Disclosure Agreement ”). The obligations of the Parties under Sections 5 through 27 shall survive according to the terms of each provision. The Executive accepts such continued employment and agrees to continue to perform the services specified herein, all upon the terms and conditions hereinafter stated.

2. Duties . During the Term, the Executive shall serve in the position of Senior Vice President of the Company and shall report to and be subject to the general direction and control of the Chief Executive Officer of the Company (the “ CEO ”) or the CEO’s designee. In such capacity he shall be responsible for the supervision of the day to day operations of the Company and the implementation of its business plans and strategies, in each case, subject to the CEO and in accordance with and subject to budgets approved from time to time by such CEO. The Executive shall perform such duties consistent with the Executive’s position, as well as other duties from time to time assigned to the Executive by the CEO. The Executive further agrees to perform, without additional compensation, such other services for the Employer and for any of its affiliates as the Board shall from time to time specify, if such services are of the nature commonly associated with or similar to that of the Executive’s position with a company engaged in activities similar to the activities engaged in by the Employer at the time of execution of this Agreement. For purposes of the Non-Disclosure Agreement and Sections 5 through 27, the term “Employer” shall be deemed to include and refer to any and all affiliates of the Employer. The Executive acknowledges and agrees that the Non-Disclosure Agreement executed simultaneously with the Original Employment Agreement is hereby incorporated by reference herein and made a part hereof and that the Non-Disclosure Agreement constitutes a material part of this Agreement.

3. Extent of Service . The Executive shall devote his full business time, attention, and energy to the business of the Employer, and shall not be engaged in any other business activity that competes with or detracts from the business of the Employer during the Term of this Agreement. The foregoing shall not be construed as preventing the Executive from making passive investments in other businesses or enterprises, if (i) such investments will not require services on the part of the Executive which would in any material way impair the performance of his duties under this Agreement, or (ii) such other businesses or enterprises are not engaged in any business competitive with the business of the Employer or any of its affiliates. The Executive shall be based in the vicinity of the Calgary metropolitan area (or such other area as may be agreed upon by the Parties) and, subject to travel requirements as reasonably necessary to support successful business development efforts and management of the business, shall perform his services from a mutually agreed location in that area.

 

Amended and Restated Executive Employment Agreement

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4. Compensation and Benefits . As payment for the services to be rendered by the Executive hereunder during the Term of this Agreement, the Executive shall be entitled to the following:

(a) receive payment of the Executive’s annual base salary at the rate of not less than US$333,716.00 a year (the “ Base Salary ”), less deductions required by law, payable in accordance with the Employer’s standard payroll schedule, but not less frequently than monthly; provided , that commencing with the Company’s 2017 fiscal year, the Executive’s Base Salary may be increased annually (but not decreased without the written consent of the Executive) in the discretion of the Board;

(b) a monthly automobile allowance of US$1,750 per month payable in accordance with the Employer’s standard payroll schedule, and which shall be subject to customary deductions and withholding;

(c) continue to be eligible to participate in any short-term and long-term incentive compensation plans, annual bonus plans and such other management incentive programs or arrangements of the Company approved by the Board that are generally available to the Company’s senior executives and continue to be eligible to receive annual performance cash awards (“ Annual Cash Awards ”) at the rate of 25% to 75% of Base Salary (the “ Target Percentage ”), and the Executive will be entitled to a guaranteed 25% annual performance cash award and as much as 75% if certain executive goals (the “ Executive Goals ”) are reached as identified and approved by the Compensation Committee of the Board (the “ Compensation Committee ”), but not to exceed the maximum award permissible under the applicable long-term incentive plan for such annual award; provided , that, at the option of the Compensation Committee, up to 50% of any Annual Cash Award payable to the Executive may be paid in shares of the Company’s common stock (which is in addition to any shares of the Company’s common stock reserved for issuance under the SAExploration Holdings, Inc. 2016 Long-Term Incentive Plan, as may be amended, restated and supplemented from time to time (the “ Equity Incentive Plan ”)); provided , further , that such Target Percentage will be applied to twelve (12) times the highest paid monthly base salary within the applicable calendar year. Commencing with the Company’s 2017 fiscal year, the Executive Goals will be set by the Compensation Committee under the applicable long-term incentive plan for such annual award but in any event shall not exceed the maximum award permissible under such applicable plan;

(d) the Executive will be entitled to participate, on the same basis generally as other similarly situated employees of the Company, in all benefits as may be offered by the Company from time to time;

(e) reimbursement of reasonable expenses incurred by the Executive in accordance with such expense reimbursement policies of the Company; and

(f) paid vacation of six (6) weeks per year.

(g) Equity Compensation . The Executive shall be eligible to participate in the Equity Incentive Plan and such other equity incentive programs or arrangements of the Company approved by the Board that are generally available to the Company’s senior executives. The

 

Amended and Restated Executive Employment Agreement

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Board or the Compensation Committee, as applicable, pursuant to written corporate action taken or at a meeting held, in either case, shall, effective on September 26, 2016 (the “ Grant Date ”), subject to the Executive’s employment on such Grant Date, award to the Executive the following:

(i) Stock Units . 33,743 Stock Units (as such term is defined in the Equity Incentive Plan) under the Equity Incentive Plan (the “ MIP RSU Grant ”) pursuant to a Stock Units Agreement (as such term is defined in the Equity Incentive Plan) that will provide for vesting of the MIP RSU Grant in equal installments, subject to the Executive’s continued employment, except as otherwise specified, as follows:

 

 

(A)

one-third (1/3) of the MIP RSU Grant on the earliest to occur of: (1) the date that occurs after the Grant Date on which the Company shall have received Oil and Gas Production Tax Credit Certificates under AS 43.55.023 or AS 43.55.025 assigned to the Company by Alaska Seismic Ventures, LLC and issued by the Tax Division of the State of Alaska, together with all such certificates received after the Closing Date, that are in an aggregate face amount of not less than US$25 million (the “ Tax Credits ”); (2) to the extent the Tax Credits have been received on or prior to the Grant Date, the Grant Date; or (3) the first anniversary of the Closing Date;

 

 

(B)

one-third (1/3) of the MIP RSU Grant on the second anniversary of the Closing Date; and

 

 

(C)

the remaining one-third (1/3) of the MIP RSU Grant on the third anniversary of the Closing Date;

(ii) Stock Options . 33,743 Options that are NSOs under the Equity Incentive Plan (the “ MIP Option Grant ”) pursuant to a Stock Option Agreement (as such term is defined in the Equity Incentive Plan) with an Exercise Price equal to the VWAP (as such term is defined in the Equity Incentive Plan) per Common Share (as such term is defined in the Equity Incentive Plan) for the 30-day period that ends on the Grant Date, and will provide for vesting of the MIP Option Grant in equal installments, subject to the Executive’s continued employment, except as otherwise specified, as follows:

 

 

(A)

one-third (1/3) of the MIP Option Grant on the earliest to occur of: (1) the date that occurs after the Grant Date on which the Company shall have received the Tax Credits; (2) to the extent the Tax Credits have been received on or prior to the Grant Date, the Grant Date; or (3) the first anniversary of the Closing Date;

 

 

(B)

one-third (1/3) of the MIP Option Grant on the second anniversary of the Closing Date; and

 

Amended and Restated Executive Employment Agreement

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(C)

the remaining one-third (1/3) of the MIP Option Grant on the third anniversary of the Closing Date;

provided , however , that if the Executive’s employment is terminated by reason of the Executive’s: (i) death; (ii) Permanent Disability; (iii) termination by the Company other than for Cause; or (iv) termination for Good Reason, all unvested portions of the Executive’s MIP RSU Grant and the MIP Option Grant shall become fully vested upon such termination.

(iii) For the avoidance of doubt, the vesting of any awards granted to the Executive under the Equity Incentive Plan shall not be conditioned on any financial, operating or other performance metrics.

(h) Notwithstanding any other provisions in this Agreement to the contrary, any incentive-based compensation, or any other compensation, paid to the Executive pursuant to this Agreement or any other agreement or arrangement with the Company which is subject to recovery under any law, governmental regulation or stock exchange listing requirement or policy of the Company adopted to comply with any such law, regulation, or listing requirement, will be subject to such deductions and requirements for repayment (“ Clawback ”) as may be required to be made pursuant to such law, governmental regulation, stock exchange listing requirement, or policy.

(i) Notwithstanding any provisions in this Agreement, the Equity Incentive Plan or any award agreement evidencing the grants set forth in Section 4(g) above to the contrary, if the Executive terminates his employment for any reason other than Good Reason prior to the first anniversary of the Closing Date, any awards granted pursuant to Section 4(g) (whether vested or unvested) will be automatically forfeited, and the Executive will be required to return and/or repay any shares or cash proceeds received in respect of such awards.

5. Termination . This Agreement and the Executive’s employment with the Company may be terminated in accordance with this Section 5. The date upon which any such termination becomes effective shall be deemed the “Termination Date.”

(a) Termination by the Company for Cause . The Company may terminate this Agreement and Executive’s employment with the Company at any time without notice and without any payment to the Executive whatsoever, save and except for the payment of any Base Salary, vacation accrued but unpaid up to the Termination Date and out of pocket expenses in accordance with Section 4(e), if the Executive engages in any of the following conduct (termination for “Cause”):

(i) the breaching of any material provision of this Agreement after Company has given the Executive reasonable notice of such breach and a reasonable opportunity to correct, or cause to be corrected, such breach;

(ii) knowing and intentional misappropriation of funds or property of the Company or its affiliates;

 

Amended and Restated Executive Employment Agreement

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(iii) engaging in conduct, even if not in connection with the performance of the duties hereunder, which might be reasonably expected to result in any effect materially adverse to the interests of the Company or any of its affiliates, such as fraud, dishonesty, conviction (or a judicial finding of evidence sufficient to convict) of any felony;

(iv) failing to fulfill and perform the duties assigned to the Executive in accordance with the terms hereto after the Company has given the Executive reasonable notice of such failure and a reasonable opportunity to correct, or cause to be corrected, such failure;

(v) failing to comply with corporate policies of the Company or any of its affiliates that are promulgated from time to time by the Company, provided , however , that the Company shall not be unreasonably arbitrary in its enforcement of corporate policies with respect to the Executive;

(vi) death of the Executive; and

(vii) disability of the Executive which prevents the Executive from performing the essential functions of the position assigned under this Agreement, with or without reasonable accommodation. Disability status under this Agreement will be consistent with the disability and leave procedures promulgated from time to time by the Company.

(b) Termination by the Executive for Good Reason . The Executive shall have good reason (“ Good Reason ”) as defined below to resign his employment within sixty (60) days following notice and receive the payments as provided under Section 6 (and subject to the same release requirement), provided the Executive has first provided written notice to the Employer of conduct warranting termination of the Executive’s employment for Good Reason and provided the Employer a period of not less than thirty (30) days to cure such conduct, without the written consent of the Executive:

(i) a material diminution in the nature and scope of the Executive’s authorities or duties, including but not limited to a change in the Executive’s reporting relationship, a required move of more than a 50-mile radius of the Executive’s employment prior to any such relocation, except for reasonably required travel on the Company’s business or a reduction in pay (which shall not be triggered by the Company’s setting of the Executive Goals, beginning with the Company’s 2017 fiscal year, pursuant Section 4(c) above, even if the Executive’s Annual Cash Award payout decreases as a result); or

(ii) a material breach of this Agreement by the Employer.

(c) Termination by the Executive Without Good Reason . The Executive may terminate his employment with the Company at any time, for any reason, by providing 60 days’ advance written notice to the Company, which may be waived in whole or in part by the Company. If the Company waives the notice period in whole or in part, the Company shall pay the Base Salary for the portion of the notice period that has been waived. The Executive shall only be entitled to payment of any accrued but unpaid Base Salary, accrued but unpaid out of pocket expenses in accordance with Section 4(e) hereof and vacation pay accrued but unpaid up to the Termination Date. The Executive shall not be entitled to any accrued annual bonus or other benefits.

 

Amended and Restated Executive Employment Agreement

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(d) Termination by the Company Without Cause . The Company may terminate the Executive’s employment without Cause.

(e) Termination by Change of Control .

(i) Subject to Section 5(e)(ii) below, within six (6) months following a Change of Control of the Company, should the Company not renew or replace this Agreement with an Agreement containing substantially the sam


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