EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into effective as of
August 17, 1999 ("Effective Date") by and between Input/Output, Inc., a Delaware
corporation ("Company"), and Axel M. Sigmar ("Employee").
WHEREAS, the Company employs Employee and in recognition of Employee's
significant past and future services, the Company desires to provide certain
benefits to Employee;
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties, and agreements contained herein, and for other
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:
1. POSITION. Employee shall serve as the Executive Vice
President and Chief Technology Officer of the Company, with such customary
duties and responsibilities as may from time to time be assigned to him by
the Chief Executive Officer of the Company or the Board of Directors of the
Company (the "Board"), provided that such duties are consistent with the past
duties and responsibilities of such position. Employee agrees to devote his
full attention and time during normal business hours to the business and
affairs of the Company and to use reasonable best efforts to perform
faithfully and efficiently such duties and responsibilities. Notwithstanding
the foregoing, Employee may engage in the following activities so long as
they do not interfere in any material respect with the performance of
Employee's duties and responsibilities hereunder: (i) serve on corporate,
civic or charitable boards or committees, (ii) deliver lectures, fulfill
speaking engagements or teach on a part-time basis at educational
institutions, and (iii) manage his personal investments; provided, however,
in no event shall the conduct of any of such activities by Employee be deemed
to materially interfere with Employee's duties hereunder until Employee has
been notified in writing thereof by the Board and given a reasonable period
in which to cure such violation.
In addition, the Company shall use its reasonable best efforts
to cause Employee to be elected or reelected to the Board during the six year
period following the Effective Date.
2. COMPENSATION AND BENEFITS.
(a) For services rendered by Employee under this Agreement, the
Company shall pay to Employee a base salary ("Base Compensation") of $300,000
per annum payable in accordance with the Company's customary payroll practice
for its executive officers. The amount of Base Compensation shall be reviewed
periodically by the Board and may be increased from time to time as the Board
may deem appropriate.
(b) In addition to the Base Compensation, Employee shall be
eligible to receive each year a cash incentive payment under the Company's
Management Incentive Plan (or any successor) in
an amount determined by the Compensation Committee of the Board based on
Employee's individual performance and the performance by the Company.
(c) Effective with the Effective Date Employee shall be 100%
vested under the Company's Supplemental Executive Retirement Plan ("SERP").
(d) Employee shall be entitled to participate in such incentive
compensation plans and to receive such fringe benefits and perquisites as
determined from time to time by the Board, including, without limitation,
participation in the various employee benefit plans or programs provided to
the employees of the Company in general, subject to the regular eligibility
requirements with respect to each of such benefit plans or programs;
provided, however, the aggregate value of the Base Compensation, bonus and
other benefits provided to Employee shall be at least as favorable to
Employee as the aggregate value of the base compensation, bonus and other
benefits provided to any other comparable-level executive officer of the
Company.
(e) On the Effective Date, the Company shall (i) grant to
Employee a nonqualified stock option under the Company's Amended and Restated
1990 Stock Option Plan to acquire 100,000 shares of the Company's common
stock, $.01 par value ("Company Stock"), which option (the "Current Grant")
shall have an exercise price per share of $8.02, a 10-year term and shall
become vested and exercisable as to 25% of the shares of Company Stock on
each anniversary of the Effective Date, (ii) vest one-half of the stock
options granted to Employee on March 14, 1999 (the "March >99 Option"), being
200,000 of such 400,000 option shares, and (iii) purchase from Employee (and
the Board shall approve such purchase in advance) 100,000 shares of
Employee's Company Stock at $8.02 per share.
(f) The Company shall provide Employee, without cost to
Employee, executive development courses as reasonably requested by Employee.
(g) The Company shall assign Xxxxxx Xxxxxx to be Employee's
assistant, for as long as she remains an employee of the Company; provided,
however, nothing herein shall alter her status as an "at will" employee of
the Company. The Company shall provide Xx. Xxxxxx with compensation and
benefits that are reasonably competitive for such position as determined by
the Company in its good faith judgment.
3. TERMINATION BY EMPLOYEE PRIOR TO THIRD ANNIVERSARY OF
EFFECTIVE DATE. If Employee's employment with the Company is terminated by
Employee prior to the third anniversary of the Effective Date for any reason,
including, without limitation, his death or Disability (as defined in Section
7), the Company shall pay to Employee (or his estate as the case may be) by
certified or bank cashier's check or wire transfer the amounts specified
below and shall provide Employee (or his surviving spouse) the continued
benefits as provided below:
(A) within ten days after the date of termination, a lump
sum amount equal to 100% of the Base Compensation and cash
bonuses paid Employee during the 24
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month period preceding his termination date (the "Cash
Compensation"); provided, however, notwithstanding the
foregoing, if Employee terminates his employment within
eighteen (18) months of the Effective Date for any reason
other than a Good Reason (as defined below), death or
Disability, Employee shall instead be paid within ten days
after his date of termination of employment a lump sum
amount equal to 50% of such Cash Compensation and the
remaining 50% of such Cash Compensation amount (the
"Escrow Amount") shall be immediately paid by the Company
to an escrow agent, as provided in Section 25;
(B) within ten days after the date of termination, an amount
equal to that portion of Employee's Base Compensation earned
but unpaid, and accrued vacation pay, to the date of
termination, and as soon as reasonably practical after such
termination all other amounts previously deferred by Employee
or earned but not paid as of such date under all Company
bonus, incentive or pay plans or programs for performance
periods that have ended; provided, further, for any incentive
compensation performance period not completed as of the date
of Employee's termination, Employee shall be deemed to have
remained employed until the end of such performance period,
and to the extent bonuses are paid to comparable-level
executives in general with respect to such performance period,
Employee shall be paid a comparable bonus pro rated based on
his days of employment during such performance period over the
number of days in such performance period;
(C) for 24 months following Employee's termination (the
"Continuation Period") Employee and his dependents shall be
eligible to continue their participation in the Company's
group health plan(s) that includes comparable-level
executives, provided that Employee's continued participation
is possible under the general terms and provisions of such
plan(s), and provided further that Employee pays the regular
active employee contribution, if any, required by such plan(s)
for comparable-level executives. However, nothing herein shall
prevent the Company from amending or terminating such group
health plan(s). In the event that participation by Employee in
any such plan(s) after the date of termination is barred
pursuant to the terms thereof, the Company shall obtain
comparable coverage under individual insurance policies with
Employee paying an amount of the premium not greater than that
which he would have been required to pay under the Company's
group program. At the end of the Continuation Period, the
Company shall arrange to make available to Employee and his
dependents comparable insurance coverage by taking all action
necessary to enable Employee to convert his coverage under the
group plans or programs to an individual insurance policy for
the benefit of Employee and his dependents, or to assume any
individual insurance policies, with Employee paying the full
premiums after the end of the Continuation Period; provided,
however, in the event Employee becomes covered by another
employer's group plan or programs during the Continuation
Period, the Company's plans or programs shall be liable for
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benefits only to the extent such benefits are not covered
by the subsequent employer's plans or programs;
(D) within ten days after the date of termination the
Company shall pay Employee a lump sum amount equal to the
present value of Employee's Vested Deferred Benefit
accrued as of the date of termination under the SERP. For
this purpose, "present value" shall be calculated pursuant
to the provision of Section 417(e)(3)(A) of the Internal
Revenue Code of 1986, as amended (or any successor
thereto) (the "Code"), with the applicable interest rate
being the rate in effect under said section for the
calendar month that is two months prior to the termination
of employment date;
(E) on the date of termination all outstanding Company stock
options of Employee (other than the Current Grant and grants
made after the Effective Date ("New Grants")) to the extent
vested and exercisable on such date shall remain exercisable
for the longer of five years from the Effective Date or three
years from the termination of employment date (but not beyond
their 10-year term) (the "Extended Period");
(F) The Current Grant and any New Grants shall be governed
by their respective terms; and
(G) the Company shall provide Employee outplacement services
by a nationally recognized firm, with the cost to the Company
of such services utilized by Employee not to exceed $15,000.
4. TERMINATION BY EMPLOYEE ON AND AFTER THIRD ANNIVERSARY. If
Employee's employment with the Company is terminated by Employee on or after the
third anniversary of the Effective Date for a Good Reason (as defined below),
Disability or death, Employee (or his surviving spouse or estate, as the case
may be) shall be entitled to receive the payments and benefits provided by
Section 3 (except that Employee shall be paid on termination of employment only
75% of the Cash Compensation amount in Section 3(A)) plus (i) the remainder of
the March >99 Option shall be immediately vested and exercisable in full and
shall remain exercisable for the Extended Period and (ii) Employee shall be paid
a lump sum amount equal to 25% of such Section 3(A) Cash Compensation amount
(determined as of his termination of employment date) on the first anniversary
of his date of termination if Employee has not commenced full-time employment
with another employer during such one-year period (such that the total of lump
sum payments will equal 100% of the Cash Compensation).
"Good Reason" shall mean (1) the breach of any of the
Company's or the Board's obligations under this Agreement without Employee's
express written consent or (2) the occurrence of any of the following
circumstances without Employee's express written consent:
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(i) the assignment to Employee of any duties that are
inconsistent with the position in the Company that Employee
held immediately prior thereto, or an adverse alteration (as
determined in good faith by Employee) in the nature or status
of Employee's office, title, responsibilities, including
reporting responsibilities, or the conditions of Employee's
employment from those in effect immediately prior thereto;
(ii) the failure by the Company to pay to Employee
any portion of Employee's current compensation or to pay to
Employee any portion of an installment of deferred
compensation under any deferred compensation program of the
Company within seven days of the date such compensation is
due;
(iii) the failure by the Company to continue in
effect an incentive compensation plan or plans, which in the
aggregate, provide Employee with substantially the same level
of incentive compensation opportunities as those provided as
of the Effective Date, or the failure by the Company to
continue Employee's participation therein on a basis not
materially less favorable, both in terms of the amount of
benefits provided and the level of Employee's participation
relative, on an aggregate basis, to other comparable-level
participants;
(iv) the failure by the Company to continue to
provide Employee with benefits that in the aggregate are
substantially comparable to those enjoyed by Employee under
the Company's life insurance, health and accident, and
disability plans in which Employee is participating on the
Effective Date, the SERP, and other plans in which Employee is
participating, including any material fringe benefit then
enjoyed by Employee (provided, however, nothing herein shall
prevent the Company from amending or terminating the SERP); or
the taking of any action by the Company which would directly
or indirectly materially reduce, in the aggregate, such
benefits or the failure by the Company to provide Employee
with the number of paid vacation days to which Employee is
entitled on the basis of years of service with the Company
(and its predecessors) in accordance with the Company's normal
vacation policy in effect at the time of this Agreement;
(v) the failure of the Company to obtain a
satisfactory agreement from any successor to assume and agree
to perform this Agreement, as contemplated in Section 18
hereof;
(vi) the relocation of the Company's principal
executive offices to a location outside the greater Houston,
Texas metropolitan area, or the Company's requiring Employee
to relocate anywhere other than the location of the Company's
principal executive offices, except for required travel on the
Company's business to an extent substantially consistent with
Employee's past business travel obligations; or
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(vii) any breach of a Company obligation under this
Agreement.
However, Employee may not terminate his employment for a Good
Reason unless he has given written notice of such circumstance to the Company
and the Company has failed to cure such circumstance within thirty (30) days of
such notice. During the thirty (30) day period following such notice, the
Company may not terminate Employee's employment. Employee's continued employment
following any event, act or omission, regardless of the length of such continued
employment shall not constitute Employee's consent to, or a waiver of Employee's
rights with respect to, such event, act or omission constituting a Good Reason
circumstance hereunder, until that date which is twelve (12) months following
such event, act or omission.
5. TERMINATION BY THE COMPANY DURING THE CURRENT PERIOD. If
Employee's employment is terminated by the Company for any reason prior to
the earlier of the date the Company selects a Chief Executive Officer to
replace Xxx X. Xxxxx (other than with a current member of the Board as of the
Effective Date) or (ii) nine months from the Effective Date (the "Current
Period"), Employee shall be entitled to receive the payments and benefits
provided in Section 3.
6. TERMINATION BY THE COMPANY ON OR AFTER THE END OF THE CURRENT
PERIOD. If Employee's employment is terminated by the Company on or after the
end of the Current Period, Employee shall be entitled to receive the payments
and benefits provided by Section 3, plus the remainder of the March >99 Options
shall be immediately vested and exercisable and shall remain exercisable for the
Extended Period.
7. DISABILITY. For purposes of this Agreement, Employee shall
be under a "Disability" if he is "permanently and totally disabled", within
the meaning of Section 22(e)(3) of the Code, as determined by Employee's
physician. If Employee's employment is terminated and it is determined by
Employee's physician that he is under a Disability on such date, or he is
determined by his physician at a later date within six (6) months of his
termination of employment date to be under a Disability as a consequence of a
mental or physical condition that existed on such termination of employment
date, then for purposes of this Agreement Employee shall be deemed to have
terminated due to such Disability.
8. NO MITIGATION. Employee shall not be required to mitigate
the amount of any payment or benefit provided for in this Agreement by
seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided for in this Agreement be reduced by any compensation or
benefit earned by Employee as a result of employment by another employer,
self-employment earnings, by retirement benefits, except as provided in
Section 25, by offset against any amount claimed to be owing by Employee to
the Company, or otherwise.
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9. GROSS-UP OF PARACHUTE PAYMENTS. If any payment, including
without limitation any imputed income, made or benefit provided to or on
behalf of Employee in connection with a "change in control" of the Company,
as defined in Section 280G of the Code, whether or not made or provided
pursuant to this Agreement, results in Employee being subject to the excise
tax imposed by Section 4999 of the Code, the Company shall pay Employee an
additional amount of cash (the "Additional Amount") such that the net amount
of all payments and benefits received by Employee after paying all applicable
taxes thereon and on such Additional Amount shall be equal to the net
after-tax amount of payments and benefits that Employee would have received
had Section 4999 not been applicable.
10. CONFIDENTIALITY. Employee understands and acknowledges that
during Employee's employment with the Company Employee has had access to and
has learned, and that during Employee's employment by the Company Employee
will have access to and will learn (i) information proprietary to the Company
that concerns the operation and methodology of the businesses conducted by
the Company and as the same are hereafter conducted by the Company (the
"Business") or (ii) other information proprietary to the Company, including,
without limitation, trade secrets, processes, patent and trademark
applications, product development, price, customer and supply lists, pricing
and marketing plans, policies and strategies, details of client and
consultant contracts, operations methods, product development techniques,
business acquisition plans, new personnel acquisition plans and all other
confidential information with respect to the Business (collectively,
"Proprietary Information"); provided, however, Proprietary Information shall
not include any such information, methods, etc. that is common knowledge to
others outside of the Company who are engaged in the Business. Employee
agrees that Employee will keep confidential and will not disclose directly or
indirectly any such Proprietary Information to any third party, except as
required to fulfill Employee's duties as an employee of the Company, and will
not misuse, misappropriate or exploit such Proprietary Information in any
way. The restrictions contained herein shall not apply to any information
which (a) was already available to the public at the time of disclosure, or
subsequently becomes available to the public, otherwise than by breach of
this Agreement, or (b) was disclosed due to a requirement of law, provided
that Employee shall have given prompt notice of such requirement to the
Company to enable the Company to seek an appropriate protective order with
respect to such disclosure. Upon termination of the employment Employee shall
return to the Company all documents, computer disks, records, notebooks and
similar repositories of any Proprietary Information in Employee's possession,
including copies thereof.
11. RESTRICTIONS ON COMPETITIVE EMPLOYMENT AND SOLICITATION. If
Employee voluntarily terminates his employment within three years of the
Effective Date for other than a Good Reason, death or disability, then during
the two-year period following such termination of Employee's employment (the
"Restricted Period"), Employee shall not (as principal, agent, employee,
consultant or otherwise) engage in activities for, or render services to
(including, without limitation, sales or product development), any firm or
business engaged in direct competition with the Company in the Business.
Notwithstanding the foregoing, (i) Employee may have an interest consisting of
securities
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constituting less than two percent of any class of securities of any public
company engaged in the Business so long as Employee is not employed by and
does not consult with, or become a director of or otherwise engage in any
activities for, such company and (ii) Employee may, at any time on or after
termination of employment, waive his right to further payments and benefits
under this Agreement, including any then remaining amounts held in escrow
pursuant to Section 25, if applicable, and upon such waiver Employee shall
cease to be subject to the foregoing noncompetition restrictions.
Employee agrees that Employee shall not, at any time during
the Restricted Period (x) deliberately take any action which would interfere
with (A) any contractual or customer relationships of the Company in respect of
the Business, or (B) any relationship with the employees of, or vendors or
contractors to, the Company in respect of the Business, (y) deliberately take
any action which would result in a diminution of business to the Company in
respect of the Business or (z) directly or indirectly solicit any person who is
an employee of the Company engaged in the Business to terminate such employee's
relationship with the Company.
12. CONSULTING. Employee agrees that during the two (2) year
period following his termination of employment he shall perform such
consulting services as may be reasonably requested by the Board from time to
time, subject to the following:
(a) The consulting services to be performed by Employee shall
not require skills which are inconsistent with Employee's qualifications and
experience. Employee shall use his best skills and judgment to accomplish the
assigned tasks, and under no circumstances shall the Board or the Company
exercise any control over the manner in which, or location where Employee
performs his services hereunder.
(b) The Company understands and agrees that Employee may have
other obligations to perform services, including other employment
obligations, and Employee shall not be required to provide the requested
consulting services if, in Employee's good faith determination, providing
those services would significantly interfere with Employee's other service or
employment obligations.
(c) Employee shall not be obligated to render any consulting
services during any period of Disability.
(d) The parties understand and agree that Employee shall report
directly and only to the Chief Executive Officer of the Company.
(e) During any of the first twelve (12) months following
Employee's termination, Employee shall not be required to provide more than
ten (10) hours of consulting services during any such month ("unused" hours
shall not carryover to the next month) and in the second twelve (12) month
period, Employee shall not be required to provide more than five (5) hours of
consulting services during any such month. However, if requested by the
Company, Employee agrees to
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reasonably consider such request and may agree to provide additional services
on a basis mutually agreed upon by the parties.
(f) If the Company breaches any obligations of this Agreement
during the consulting period, Employee shall no longer be obligated to render
consulting services.
13. REMEDIES. Employee acknowledges and agrees that damages for a
breach or threatened breach of any of the covenants set forth in Section 10, 11
or 12 will be difficult to determine and will not afford a full and adequate
remedy, and therefore agrees that the Company, in addition to seeking actual
damages in connection therewith, may seek specific enforcement of any such
covenant in any court of competent jurisdiction, including, without limitation,
by the issuance of a temporary or permanent injunction.
14. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
prevent or limit Employee's continuing or future participation in any
benefit, bonus, incentive or other plan or program provided by the Company or
any of its affiliated companies and for which Employee may qualify, nor shall
anything herein limit or otherwise adversely affect such rights as Employee
may have under any stock option or other agreements with the Company or any
of its affiliated companies.
15. ASSIGNABILITY. The obligations of Employee hereunder are
personal and may not be assigned or delegated by him or transferred in any
manner whatsoever, nor are such obligations subject to involuntary
alienation, assignment or transfer. The Company shall have the right to
assign this Agreement and to delegate all rights, duties and obligations
hereunder, either in whole or in part, to any parent, affiliate, successor or
subsidiary organization or company of the Company, in a form reasonably
satisfactory to Employee, so long as the Company also continues to remain
liable for the obligations under this Agreement.
16. NOTICE. For the purpose of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed
to the Company at its principal office address, directed to the attention of
the Board with a copy to the Secretary of the Company, and to Employee at
Employee's residence address on the records of the Company or to such other
address as either party may have furnished to the other in writing in
accordance herewith except that notice of change of address shall be
effective only upon receipt.
17. VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force
and effect.
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18. SUCCESSORS; BINDING AGREEMENT.
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used herein, the term "Company" shall include any
successor to its business and assets as aforesaid which executes and delivers
the Agreement provided for in this Section or which otherwise becomes bound
by all terms and provisions of this Agreement by operation of law.
(b) This Agreement and all rights of Employee hereunder shall
inure to the benefit of and be enforceable by Employee's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
19. INDEMNIFICATION. During Employee's employment with the
Company and for a period of six years thereafter, the Company shall cause
Employee to be covered by and named as an insured under any policy or
contract of insurance obtained by it to insure its directors and officers
against personal liability for acts or omissions in connection with service
as an officer or director of the Company or service in other capacities at
the request of the Company. The coverage provided to Employee pursuant to
this Section shall be of a scope and on terms and conditions at least as
favorable as the coverage provided to any other officer or director of the
Company.
In addition, to the maximum extent permitted under applicable
law, during such period, the Company shall indemnify Employee against and hold
Employee harmless from any costs, liabilities, losses and exposures to the
fullest extent and on the most favorable terms and conditions that similar
indemnification is provided to any director or officer of the Company.
20. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by Employee and such officer as may be specifically
authorized by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or in compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. This Agreement is an integration of the parties
agreement; no agreement or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Texas.
21. ATTORNEYS' FEES. The Company shall pay the reasonable
attorneys' fees and expenses Employee has incurred in the negotiation of this
Agreement.
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22. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
23. ARBITRATION. Employee shall be permitted (but not required) to
elect that any dispute or controversy arising under or in connection with this
Agreement be settled by arbitration in Houston, Texas in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction. The Company
shall be solely responsible for all legal fees and costs incurred by the Company
in connection with the resolution of any dispute or controversy under or in
connection with this Agreement and the Company shall promptly pay the legal fees
and costs incurred by Employee in such dispute or controversy, to the extent
awarded by the arbitrator.
24. PRIOR AGREEMENTS. This Agreement supersedes and replaces in
full any previously existing employment agreement (written or oral) between
the parties.
25. ESCROW. The Escrow Amount, net of any taxes thereon that the
Company is required to withhold by applicable law, shall be placed in escrow by
the Company with a person mutually acceptable to the parties. If the parties
cannot agree upon the person to serve as the escrow agent, such person shall be
selected by an arbitrator pursuant to Section 23. The terms of the escrow
agreement shall provide, inter alia, (i) that Employee shall be the owner of the
escrowed assets, i.e., they shall not be subject to the creditors of the
Company, (ii) Employee shall have the authority to direct the escrow agent as to
the investment of the escrowed assets, (iii) the Company shall pay the fees and
expenses of the escrow agent (other than investment related expenses), and (iv)
beginning with the first monthly anniversary of the date of Employee's
termination of employment and continuing on each monthly anniversary thereafter,
the escrow agent shall pay directly to Employee 1/12th, 1/11th, 1/10th, and so
on of the amount then held in escrow until such escrow account has been paid in
full to Employee on the first anniversary of his termination of employment date.
In addition, it is recognized by the parties that Employee will recognize
taxable income immediately on the Escrow Amount when it is placed in escrow and
on the earnings and income of the escrowed assets. Promptly upon receipt from
Employee of reasonable evidence as to Employee's federal, state or other tax
liability with respect to the Escrow Amount (net of any taxes withheld thereon
by the Company) and any earnings or income on the escrowed funds during the
escrow period, the escrow agent shall pay Employee a lump sum amount equal to
his tax liability. For this purpose, such tax liability shall be at the highest
individual marginal tax rate applicable to Employee. Employee shall be solely
responsible for any losses, and shall be solely entitled to all gains and
earnings, due to the investment of the escrowed property.
If during the escrow period, the parties have a dispute as to whether
Employee has violated the noncompetition provisions of Section 11, no further
payments shall be made to Employee from the escrow (except for taxes as provided
above) until such dispute is resolved by an arbitrator pursuant to Section 23.
It is agreed that the Company shall have the burden of proving such breach.
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Upon resolution of such dispute, payment shall be made and/or recommence in
accordance with the arbitrator's award.
26. BOARD APPROVAL. This Agreement is subject to the approval
of the Board. The Chairman shall recommend approval of this Agreement to the
Board and shall use his reasonable best efforts to have such approval
obtained as soon as reasonably practical following the date this Agreement is
executed by the parties.
27. SURVIVABILITY. Sections 10, 11, 12, 13, 19, 23 and 25
shall survive the termination of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the Effective Date upon approval by the Board.
INPUT/OUTPUT, INC.
By: /S/ X. X. Xxxxxxx, Xx.
--------------------------------
Name: X. X. Xxxxxxx, Xx.
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Title: Chairman of the Board
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Dated: 20 - Aug. - 99
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EMPLOYEE
/s/ Axel M. Sigmar
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Axel M. Sigmar
Dated: 20 August, 1999
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