EXHIBIT 10.13
August ___, 1998
Mr. __________________
Program Manager
Input/Output, Inc.
00000 X. Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxx 00000
RE: SEVERANCE AND CHANGE OF CONTROL AGREEMENT
Dear Mr. ________:
Input/Output, Inc., a Delaware corporation (the "Company"), has determined that
it will make available to you and certain of the Company's other managers and
directors special severance payments and benefits in the event that your
employment terminates under certain conditions. The Company is pleased to offer
these severance arrangements to you on the terms set forth in this Severance and
Change of Control Agreement (the "Agreement").
1. DEFINITIONS: As used in this Agreement, the following terms are defined as
set forth in this paragraph:
(a) "Base Salary": means an amount equal to the greater of your
annual base salary (excluding any bonus or incentive payments)
on (i) the effective date of a Change of Control or (ii) the
date your employment terminates.
(b) "Board" means the Company's Board of Directors.
(c) "Change of Control" shall mean the occurrence of any of the
following events: (i) the consummation of any merger or
consolidation pursuant to which shares of common stock of the
Company, $.01 par value ("Common Stock"), would be converted
into cash, securities or other property, or any sale, lease,
exchange or other disposition (excluding disposition by way of
mortgage, pledge or hypothecation), in one transaction or a
series of related transactions, of all or substantially all of
the assets of the Company (a "Business Combination"), in each
case unless, following such Business Combination, the holders
of the outstanding Common Stock immediately prior to such
Business Combination beneficially own, directly or indirectly,
more than 51% of the outstanding common stock or equivalent
equity interests of the corporation or entity resulting from
such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the
Company or all or substantially all of the Company's assets
either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the
outstanding Common Stock, (ii) the stockholders of the Company
approve any plan or proposal for the complete liquidation or
dissolution of the Company, (iii) any "person" (as such term
is defined in Section 3(a)(9) or Section 13(d)(3) under the
Securities Exchange Act of 1934 (the "1934 Act") or any
"group" (as such term is used in Rule 13d-5 promulgated under
the 1934 Act), other than the Company, any successor of the
Company or any Subsidiary or any employee benefit plan of the
Company or any Subsidiary (including such plan's trustee),
becomes a beneficial owner for purposes of Rule 13d-3
promulgated under the 1934 Act, directly or indirectly, of
securities of the Company representing 40% or more of the
Company's then outstanding securities having the right to vote
in the election of directors, or (iv) during any period of two
consecutive years, individuals who, at the beginning of such
period constituted the entire Board, cease for any reason
(other than death) to constitute a majority of the directors,
unless the election, or the nomination for election by the
Company's stockholders, of each new director was approved by a
vote of at least a majority of the directors then still in
office who were directors at the beginning of the period. In
the event of a Change of Control, the surviving, continuing,
successor or purchasing corporation or parent corporation
thereof, as the case may be, shall assume the Company's rights
and obligations under this Agreement.
(d) "Change in Duties" means:
(i) a significant reduction in the nature or scope of
your authority or the duties that you perform;
(ii) a reduction in your annual base salary;
(iii) a significant diminution in your employee benefits,
perquisites or incentive bonus opportunity (other
than changes made as part of a program or plan
modification that applies to you and your peers);
(iv) a change of more than 30 miles in the location of
your principal place of employment (not including
business travel or temporary assignments); or
(v) a determination by the Board that you are unable to
exercise your authority or perform your duties as a
result of a Change of Control.
(e) "Company" means Input/Output, Inc., a Delaware corporation,
and any of its Successors.
(f) "Covered Period" means the 18-month period following the
effective date of a Change of Control (i.e., corresponding to
the same day of the eighteenth month following the effective
date of the Change of Control). Therefore, if the effective
date of the Change of Control is November 5, 1998, the Covered
Period will extend through and terminate on May 5, 2000.
(g) "For Cause"; you are terminated for cause if you are
terminated for any of the following reasons:
(i) theft, dishonesty or falsification of any employment
or Company records;
(ii) improper disclosure of the Company's confidential or
proprietary information;
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(iii) any action by you which has a material detrimental
effect on the Company's reputation or business;
(iv) your failure or inability to perform any reasonable
assigned duties after written notice of, and a
reasonable opportunity to cure, such failure or
inability; or
(v) your conviction of any criminal act which impairs
your ability to perform your duties for the Company.
(h) "Severance" means an amount equal to the sum of your Base
Salary plus your Target Incentive Bonus.
(i) "Successor" means the Company and any successor or assign
(whether directly or indirectly, by purchase, merger,
consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company.
(j) "Target Incentive Bonus" means the amount of your then
applicable "Target bonus" as determined under the Company's
1999 Management Incentive program (or any successor plan then
in effect); if your Target Bonus has not yet been determined
with respect to a Company fiscal year, the Target Bonus shall
be your Target Bonus amount for the immediately preceding
fiscal year.
2. AT WILL EMPLOYMENT: Except as otherwise set forth in any employment agreement
between you and the Company, the Company and you hereby agree that your
employment with the Company is for no specified term and may be terminated by
you or the Company at any time, with or without cause. Upon the termination of
your employment, neither you nor the Company shall have any further obligation
or liability to the other, except as set forth in this Agreement or in any such
employment agreement or any other written agreement between you and the Company.
3. ACCELERATION UPON NON-ASSUMPTION IN A CHANGE OF CONTROL.
(a) Non-Assumption of Options and Restricted Stock. If there is a
Change of Control of the Company in which the outstanding
stock options granted and restricted stock issued by the
Company prior to such Change of Control (and the Company's
obligations in connection therewith) are not fully assumed by
the Successor, or replaced by fully equivalent substitute
options or restricted stock, then (1) all such options and
restricted stock shall have their vesting fully accelerated to
be 100% vested as of the effective date of the Change of
Control and (2) the Company shall provide reasonable prior
written notice to you of (a) the date such unexercised options
will terminate and (b) the period during which you may
exercise the fully vested options.
(b) Assumption of Options and Restricted Stock. If there is a
Change of Control of the Company in which the outstanding
stock options granted and restricted stock issued by the
Company prior to such Change of Control (and the Company's
obligations in connection therewith) are fully assumed by the
Successor, or replaced by fully equivalent substitute options
or restricted stock, then notwithstanding the terms and
provisions of any stock option plan or agreement, restricted
stock plan or agreement or any other plan
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or agreement adopted or dated prior to the date hereof, no
acceleration of vesting of any outstanding stock options
granted or restricted stock issued by the Company shall occur,
except to the extent permitted pursuant to Section 5(a)(iii)
herein.
The parties hereto agree that to the extent any of the
preceding provisions of this paragraph 3 conflicts with the
terms of any stock option plan or agreement, restricted stock
plan or agreement or other plan or agreement adopted or dated
prior to the date hereof of the Company or to which you are a
party or a participant, the terms and provisions of this
paragraph 3 shall take precedence over and supersede the terms
of such plan or agreement; in addition, the parties hereto
agree that the conflicting terms and provisions of any such
agreement are hereby amended to conform to the provisions of
this paragraph 3.
4. TERMINATION WITHOUT SEVERANCE BENEFITS: If at any time (i) you voluntarily
resign or retire from your employment with the Company, (ii) your employment
terminates as a result of your death or disability, or (iii) your employment is
terminated by the Company For Cause, you shall receive no compensation or
benefits from the Company under this Agreement. You agree that if you resign or
retire from your employment with the Company for any reason, you shall provide
the Company with not less than one month's written notice of your termination
(or such longer time period as may be specified in any employment agreement or
any other agreement between you and the Company). The Company may, in its sole
discretion, elect to waive all or any part of such notice period and accept your
resignation or retirement at an earlier date.
5. TERMINATION WITH SEVERANCE BENEFITS: In the event your employment is
terminated by the Company for the reasons set forth below, you shall receive the
following severance benefits.
(a) Termination Within Covered Period: If your employment is
terminated by the Company within a Covered Period for any
reason other than those described in paragraph 4, you will
receive the following benefits:
(i) the Severance, which amount shall be paid in one lump
sum installment, less applicable withholding, on or
before the thirtieth (30th) day following the date of
your termination;
(ii) to the extent permitted by law and the Company's
insurance carriers, continued medical, dental, vision
and group life insurance coverage for you and your
dependents (to the extent that those dependents were
covered by such insurance immediately prior to your
termination) under the Company's applicable insurance
plans until the earlier of one year after the date of
your termination or the date on which you first
became eligible to obtain comparable insurance
coverage from a subsequent employer (the "Coverage
Period"). Such continued coverage shall be subject to
your payment of any portion of the premiums for that
coverage that is normally paid by the Company's
employees. In the event that the Company or its
Successor is unable to provide you with this
continued insurance coverage, it shall reimburse you
for the difference between the COBRA premiums that
you incur to obtain continued medical, dental and/or
vision insurance coverage during the Coverage Period
and the amount of any
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premiums that would be paid by you if you were
eligible for such continued insurance coverage
through the Company or its Successor; and
(iii) Notwithstanding any provision to the contrary
contained in any stock option plan or agreement or
restricted stock plan or agreement between the
Company and you, to the extent such stock options and
restricted stock have not already become fully vested
pursuant to paragraph 3(a), all outstanding stock
options granted and restricted stock issued by the
Company to you or for your benefit prior to the
Change of Control shall, without further action by
either party, immediately have their vesting
accelerated as to one year of additional vesting as
of the date of such termination of employment.
(b) Resignation Within Covered Period: If you are subject to a
Change in Duties during a Covered Period and you then resign
from your employment with the Company during that Covered
Period, you shall receive the severance benefits described in
subparagraphs 5(a)(i), (ii) and (iii) above.
6. SEVERANCE REDUCTION:
Notwithstanding paragraph 5 above, in the event that any payment or
distribution made, or benefit provided under this Agreement, together with any
other payment or distribution made, or benefit provided under this Agreement, by
the Company to or for the benefit of you, would constitute an "excess parachute
payment" as defined in Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code"), then the Company may reduce or eliminate any payments or
benefits provided herein so that the aggregate present value of all payments in
the nature of compensation to you which are contingent on a change of control is
One Dollar ($1.00) less than the amount which you could receive without being
considered to have received any excess parachute payment. The determination of
the amount of any reduction required or permitted by this paragraph 6 shall be
made by an independent accounting firm selected by the Company and acceptable to
you, and that determination shall be conclusive and binding on you and the
Company.
7. EXCLUSIVE CONTRACTUAL RIGHTS: The Company and you agree that, in addition to
any benefits to which you may be entitled under any pension, profit, or welfare
benefit plan maintained for the general benefit of the Company's officers and
employees, the severance payments and benefits described in this Agreement shall
be your sole and exclusive contractual rights in the event that the Company
terminates your employment, and the terms of this Agreement shall take
precedence over and supersede any previous contractual rights granted to you by
the Company regarding the subject matter of this Agreement.
8. CONFIDENTIALITY AND ASSIGNMENT OF INVENTIONS AGREEMENT: In the event that
your employment with the Company terminates for any reason, you agree that you
shall continue to be bound by and comply with the terms and conditions of any
confidentiality, non-competition or assignment of inventions agreements between
you and the Company.
9. TERM: This Agreement shall become effective on the date it is signed by you
below. The term of this Agreement shall end on August __, 2001; however,
commencing on August __, 2001 and on each annual anniversary of that date (that
date and each annual anniversary date thereafter are hereinafter
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referred to individually as a "Renewal Date"), the term of this Agreement shall
be automatically extended so as to terminate three years from such Renewal Date,
unless at least 60 days prior to the Renewal Date you or the Company give
written notice that the term of the Agreement shall not be so extended. In
addition, and notwithstanding the foregoing, after a Change of Control of the
Company during the term of this Agreement, this Agreement shall remain in effect
until all of the obligations of the Company and you under this Agreement are
satisfied.
10. DISPUTE RESOLUTION: In the event of any dispute or claim relating to or
arising out of this Agreement, your employment relationship with the Company, or
the termination of that relationship, the Company and you hereby agree that all
such disputes or claims shall be submitted to binding arbitration under the
Federal Arbitration Act in Houston, Texas. Any arbitration shall be conducted
under the auspices of, and the rules of, the American Arbitration Association,
or such other procedures as you and the Company may agree to at the time, before
a tribunal of three arbitrators, one of which shall be selected by you and the
Company and the third shall be selected by the two arbitrators previously
elected. Any award issued as a result of such arbitration shall be final and
binding on you and the Company, and shall be enforceable by any court having
jurisdiction over the party against whom enforcement is sought. You and the
Company will each be deemed to have voluntarily and knowingly entered into an
agreement to arbitration pursuant to under this paragraph by entering into this
Agreement.
11. ATTORNEYS' FEES: The prevailing party shall be entitled to recover from the
losing party its attorneys' fees and costs incurred in any action brought to
enforce any right arising out of this Agreement.
12. INTERPRETATION AND SEVERABILITY: This Agreement shall be interpreted in
accordance with and governed by the laws of the State of Texas. The invalidity
or unenforceability of any provisions(s) of this Agreement shall not affect the
validity or enforceability of any other provision(s) of this Agreement, which
shall remain in full force and effect.
13. SUCCESSORS: This Agreement shall be binding upon any legal Successor to the
Company in the same manner and to the same extent that it is binding upon the
Company.
14. ENTIRE AGREEMENT; NON-EXCLUSIVITY OF RIGHTS: This Agreement constitutes the
entire agreement between you and the Company regarding the subject matter
herein; provided, however, nothing contained herein shall prevent or limit your
continuing or future participation in any benefit, bonus, incentive or other
plans, practices, policies or programs provided by the Company and for which you
may qualify, nor shall anything herein limit or otherwise affect such rights as
you may have under any restricted stock plan or agreement, stock option plan or
agreement, employment agreement or other written agreements with the Company,
unless and to the extent such rights are expressly modified or affected by the
terms hereof. Except as otherwise expressly provided hereunder, amounts which
are vested benefits or which you are otherwise entitled to receive under any
plan, practice, policy or program of the Company at or subsequent to the date of
termination of your employment with the Company shall continue to be payable in
accordance with such plan, practice, policy or program.
15. MODIFICATION: This Agreement may only be modified or amended by a
supplemental written agreement signed by you and an authorized member of the
Board.
(signature page follows)
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Thank you for your ongoing service to Input/Output, Inc. Please sign and date
this letter on the spaces provided below to acknowledge your acceptance of this
Agreement.
Sincerely,
INPUT/OUTPUT, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
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I AGREE TO AND ACCEPT THE TERMS AND CONDITIONS OF THIS SEVERANCE AND CHANGE OF
CONTROL AGREEMENT.
Date:
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