EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into by and between INPUT/OUTPUT, INC.
(the "Company"), having a business address at 00000 Xxxx Xxxxxxx Xxxxxxxxx,
Xxxxxxxx, Xxxxx 00000-0000, and XXXXXXX X. XXXXXXXX ("Executive"), having a
mailing address at 00 Xxxxxx Xxxxxxx Xxxxxxx, Xxxx Xxxxx, Xxxxxxx 00000.
WHEREAS, the Company wishes to employ the Executive and to assure itself of
the services of the Executive for the period provided in this Agreement, and the
Executive wishes to be employed by the Company for such period on the terms and
conditions hereinafter provided.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the Company and the Executive hereby agree as follows:
1. EMPLOYMENT. Upon the terms and subject to the conditions contained in
this Agreement, the Executive agrees to provide services as provided herein for
the Company during the term of this Agreement. The Executive agrees to devote
his best efforts to the business of the Company, and shall perform his duties in
a diligent and business-like manner, all for the purpose of advancing the
business of the Company.
2. DUTIES. The duties of the Executive shall be those duties which can
reasonably be expected to be performed by a person with the title of Chairman of
the Board, President and Chief Executive Officer of Input/Output, Inc. The
Executive shall report directly to the Board of Directors of the Company. The
Executive's duties may, from time to time, be changed or modified at the
discretion of Board of Directors of the Company.
3. EMPLOYMENT TERM. Subject to the terms and conditions hereof, the
Company agrees to employ the Executive for a term commencing as of May 16, 1997
(the "Effective Date") and continuing until December 15, 1997, unless renewed in
accordance with this SECTION 3. Beginning December 15, 1997, this Agreement
shall be automatically renewed for successive six-month terms, unless either the
Company or the Executive provides written notice of election not to renew, at
least 30 days before the applicable renewal date.
4. SALARY AND BENEFITS.
(a) BASE SALARY. The Company shall, during the term of this
Agreement, pay the Executive a monthly base salary of $40,000 beginning on
June 1, 1997. Such salary shall be paid in bi-monthly installments less
applicable withholding and salary deductions. The Base Salary may be
reviewed and adjusted by the Company upon any renewal of this Agreement
under SECTION 3. The Company may not, however, reduce the Executive's Base
Salary at any time during the term of this Agreement.
(b) INITIAL FEE. The Company shall pay the Executive an initial fee
of $150,000, payable on June 1, 1997. Such amount shall be paid in a lump
sum, less applicable withholding and salary deductions.
(c) BONUS. The Company shall pay the Executive a bonus in accordance
with the following schedule. The amount of the bonus shall be paid in a
lump sum, less applicable withholding and salary deductions, no later than
five days after December 15, 1997, irrespective of whether the Executive is
employed by the Company through December 15, 1997.
AVERAGE STOCK PRICE BONUS
------------------- ----------
Less than $20 $ 300,000
At least $20 but less than $25 $ 600,000
At least $25 but less than $30 $1,200,000
At least $30 but less than $35 $2,400,000
$35 or greater $3,600,000
For purposes of this SECTION 3(c), the "Average Stock Price" shall be the
average of the closing price of a share of common stock of the Company, par
value $.01 per share ("Common Stock"), as reported on the New York Stock
Exchange Composite Transactions for the ten consecutive trading days
immediately preceding December 15, 1997. In the event of any increase or
decrease in the number of issued and outstanding shares of Common Stock
through the declaration of a stock dividend or through any recapitalization
resulting in a stock split-up, combination or exchange of shares of Common
Stock, the Average Stock Price shall be adjusted proportionally.
Notwithstanding any provision contained in this Agreement to the contrary,
in the event the Executive's employment terminates prior to December 15,
1997 for any reason other than for Cause, the amount of the bonus payable
shall be equal to the amount as determined according to the preceding
schedule multiplied by a fraction calculated as follows: the numerator
shall equal the total number of days between May 16, 1997 and December 15,
1997 during which the Executive is employed by the Company, and the
denominator shall equal the total number of days between May 16, 1997 and
December 15, 1997. In the event the Executive's employment is terminated
for Cause, no bonus will be payable.
(d) SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. The amount and payment
of any benefit the Executive is receiving or is entitled to receive under
any supplemental executive retirement plan established by the Company shall
-2-
be unchanged and unaffected by this Agreement and any amounts paid to the
Executive hereunder.
(e) STOCK OPTIONS. The Executive shall be granted a nonqualified
stock option effective as of June 4, 1997, to purchase 200,000 shares of
Common Stock under the Input/Output, Inc. Amended and Restated 1990 Stock
Option Plan, at an exercise price of $17.50 per share. Such option shall
become 100% vested on the earlier to occur of (i) the Executive's
termination of employment for any reason or (ii) June 4, 1998. The option
shall be exercisable from the date of such termination of employment
through that date which is one year thereafter.
(f) LIVING EXPENSES. The living expenses of the Executive and his
spouse in Houston, Texas shall be paid by the Company, as well as travel
expenses by the Executive and his spouse to and from his permanent
residence outside of Texas.
(g) REIMBURSEMENT OF EXPENSES. The Company shall reimburse the
Executive for all reasonable out-of-pocket expenses incurred by the
Executive in the course of his duties, in accordance with normal policies.
(h) EMPLOYEE BENEFITS. As of June 1, 1997, the Executive shall be
entitled to participate in all employee benefit programs generally
available to employees of the Company and to receive all normal perquisites
provided to senior executive officers of the Company, without respect to
any waiting or eligibility period otherwise required for participation in
such programs or entitlement to such perquisites.
(i) BENEFITS NOT IN LIEU OF COMPENSATION. No benefit or perquisite
provided to the Executive shall be deemed to be in lieu of base salary,
bonus, or other compensation.
5. TERMINATION OF EMPLOYMENT. The Board of Directors of the Company may
terminate the employment of the Executive at any time as it deems appropriate.
(a) DEATH; DISABILITY; TERMINATION WITHOUT CAUSE; RESIGNATION FOR
GOOD REASON. If, during the term of this Agreement, the Executive's
employment terminates due to death or disability or without Cause (as
defined in SECTION 5(b)), or the Executive voluntarily terminates his
employment, the Company shall pay to the Executive (or, in the event of the
Executive's death, his designee under SECTION 10(b) hereunder) the amount
of Base Salary accrued but unpaid to the Executive through the date of such
termination of employment. In addition, the Executive (or his designee)
shall be entitled to receive a severance benefit equal to the product of
$360,000 multiplied by a
-3-
fraction, where the numerator is the total number of days between May 16,
1997 and December 15, 1997 during which the Executive is not employed by
the Company, and the denominator is the total number of days between
May 16, 1997 and December 15, 1997. The amount of any such Base Salary
payable and severance benefit shall be paid in a lump sum, less applicable
withholding and salary deductions, as soon as practicable following such
termination. The Executive (or his designee) shall also be entitled to
receive a bonus, in such amount and payable at such time as described in
SECTION 3(c) above. Finally, the Executive and his spouse as of the date
of his termination of employment shall be entitled to receive medical
benefits for the lifetimes of both, with the total premium cost of such
benefits to be borne by the Company. The Company may terminate the
Executive's employment for disability if the Executive is incapacitated
and absent from his duties hereunder on a full-time basis for four
consecutive months or for at least 120 days during any six-month period.
(b) TERMINATION FOR CAUSE. If the Company shall discharge the
Executive for Cause, the Executive shall be entitled to receive only the
amount of Base Salary accrued by but unpaid to the Executive through the
date of such termination of employment, and the Company shall have no
further obligation to make any payment under this Agreement, except as may
otherwise be provided under the terms of any employee benefit programs in
which the Executive is participating.
For the purposes of this Agreement, the Company shall have "Cause" to
terminate the Executive's employment hereunder upon (A) the willful and
continued failure by the Executive to perform his duties with the Company
(other than any such failure resulting from incapacity due to physical or
mental illness), after a demand for substantial performance is delivered to
the Executive by the Board which specifically identifies the manner in
which the Board believes that he has not substantially performed his
duties, or (B) the willful engaging by the Executive in gross misconduct
materially and demonstrably injurious to the Company. For purposes of this
paragraph, no act, or failure to act, on the Executive's part shall be
considered "willful" unless done, or omitted to be done, by him not in good
faith and without reasonable belief that his action or omission was not in
the best interest of the Company. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for Cause unless and
until there shall have been delivered to him a copy of a resolution duly
adopted by the affirmative vote of not less than two-thirds (2/3) of the
entire authorized membership of the Board at a meeting of the Board called
and held for the purpose (after reasonable notice and an opportunity for
the Executive, together with counsel, to be heard before the Board),
finding that in the good faith opinion of the Board he was guilty of
-4-
conduct set forth above in clauses (A) or (B) of the first sentence of this
paragraph and specifying the particulars thereof in detail.
(c) MITIGATION OF AMOUNTS PAYABLE HEREUNDER. The Executive shall
not be required to mitigate the amount of any payment provided for in this
SECTION 5 by seeking other employment or otherwise, nor shall the amount of
any payment provided for in this SECTION 5 be reduced by any compensation
earned by the Executive as the result of employment by another employer
after the date of termination, or otherwise.
6. CONFIDENTIAL INFORMATION. The Company shall provide to the Executive
initial and ongoing information of members of the Company Group (as defined
below), which information is confidential and constitutes valuable, special and
unique property of such members of the Company Group. In return, the Executive
agrees that he shall not at any time, either during or subsequent to the term of
this Agreement, disclose to others, use, copy or permit to be copied, except in
pursuance of his duties for and on behalf of the Company, its successors,
assigns or nominees, any Confidential Information of any member of the Company
Group (regardless of whether developed by the Executive) without the prior
written consent of the Company.
As used herein, "Company Group" means the Company, and any entity that
directly or indirectly controls, is controlled by, or is under common control
with, the Company, and for purposes of this definition "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such entity, whether through the
ownership of voting securities, by contract or otherwise.
The term "Confidential Information" with respect to any person means any
secret or confidential information or know-how and shall include, but shall not
be limited to, the plans, customers, costs, prices, uses, and applications of
products and services, results of investigations, studies or experiments owned
or used by such person, and all apparatus, products, processes, compositions,
samples, formulas, computer programs, computer hardware designs, computer
firmware designs, and servicing, marketing or manufacturing methods and
techniques at any time used, developed, investigated, made or sold by such
person, before or during the term of this Agreement, that are not readily
available to the public or that are maintained as confidential by such person.
The Executive shall maintain in confidence any Confidential Information of third
parties received as a result of his employment with the Company in accordance
with the Company's obligations to such third parties and the policies
established by the Company.
-5-
7. INTELLECTUAL PROPERTY. The Executive shall hold in trust for the
benefit of the Company, and shall disclose promptly and fully to the Company in
writing, and hereby assigns, and binds his heirs, executors, and administrators
to assign, to the Company any and all inventions, discoveries, ideas, concepts,
improvements, copyrightable works, and other developments (the "Developments")
conceived, made, discovered or developed by him, solely or jointly with others,
during the term of his employment by the Company, whether during or outside of
usual working hours and whether on the Company's premises or not, that relate in
any manner to the past, present or anticipated business of any member of the
Company Group. All works of authorship created by the Executive, solely or
jointly with others, shall be considered works made for hire under the Copyright
Act of 1976, as amended, and shall be owned entirely by the Company. Any and
all such Developments shall be the sole and exclusive property of the Company,
whether patentable, copyrightable, or neither, and the Executive shall assist
and fully cooperate in every way, at the Company's expense, in securing,
maintaining, and enforcing, for the benefit of the Company or its designee,
patents, copyrights or other types of proprietary or intellectual property
protection for such Developments in any and all countries. Within one year
following the end of the term of this Agreement and without limiting the
generality of the foregoing, any Development of the Executive relating to any
subject matter on which the Executive worked or was informed during his
employment by the Company shall be conclusively presumed to have been conceived
and made prior to the termination of his employment (unless the Executive
clearly proves that such Development was conceived and made following the
termination of his employment), and shall accordingly belong and be assigned to
the Company and shall be subject to this Agreement. At the request of the
Company (but without additional compensation from the Company during his
employment by the Company) the Executive shall execute any and all papers and
perform all lawful acts that the Company may deem necessary or appropriate to
further evidence or carry out the transactions contemplated hereunder,
including, without limitation, such acts as may be necessary for the
preparation, filing, prosecution, and maintenance of applications for United
States letters patent and foreign letters patent, or for United States and
foreign copyright, on the Developments.
8. NO TAMPERING. Throughout the term of the Agreement and through the
second anniversary of the expiration thereof, the Executive shall not (a)
request, induce or attempt to influence any distributor or supplier of goods or
services to any member of the Company Group to curtail or cancel any business
they may transact with any member of the Company Group; (b) request, induce or
attempt to influence any customers of any member of the Company Group that have
done business with or potential customers which have been in contact with any
member of the Company Group to curtail or cancel any business they may transact
with any member of the Company Group; or (c) request, induce or attempt to
influence any employee of any member of the Company Group to terminate his or
her employment with such member of the Company Group.
-6-
9. REMEDIES. The Executive acknowledges that a remedy at law for any
breach or attempted breach of the Executive's obligations under SECTIONS 6
THROUGH 8 may be inadequate, agrees that the Company may be entitled to specific
performance and injunctive and other equitable remedies in case of any such
breach or attempted breach, and further agrees to waive any requirement for the
securing or posting of any bond in connection with the obtaining of any such
injunctive or other equitable relief. The Company shall have the right to
offset against amounts to be paid to the Executive pursuant to the terms hereof
any amounts from time to time owing by the Executive to the Company. The
termination of the Agreement pursuant to SECTION 3, 5(a) OR 5(b) shall not be
deemed to be a waiver by the Company of any breach by the Executive of this
Agreement or any other obligation owed the Company.
10. MISCELLANEOUS PROVISIONS.
(a) SUCCESSORS OF THE COMPANY. 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/or assets of
the Company, by agreement in form and substance satisfactory to the
Executive, expressly to 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. Failure of the Company
to obtain such agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle the Executive to
compensation from the Company in the same amount and on the same terms as
the Executive would be entitled hereunder if the Company terminated the
Executive's employment without Cause, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which executes and
delivers the agreement provided for in this SECTION 10 or which otherwise
becomes bound by all the terms and provisions of this Agreement by
operation of law.
(b) EXECUTIVE'S HEIRS, ETC. The Executive may not assign his rights
or delegate his duties or obligations hereunder without the written consent
of the Company. This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amounts would still be
payable to him hereunder as if he had continued to live, all such amounts,
unless other provided herein, shall be paid in accordance with the terms of
this Agreement to his designee or, if there be no such designee, to his
estate.
-7-
(c) NOTICE. For the purposes of this Agreement, notices and all
other communications provide 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 or certified mail, return receipt requested, postage
prepaid, addressed to the respective addresses set forth on the first page
of this Agreement, provided that all notices to the Company shall be
directed to the attention of the Executive Vice President of the Company
with a copy to the Secretary of the Company, or to such other in writing in
accordance herewith, except that notices of change of address shall be
effective only upon receipt.
(d) AMENDMENT; WAIVER. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by the Executive and such officer
as may be designated by the Board of Directors of the Company. No waiver
by either party hereto at any time of any breach by the other party hereto
of, or 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. No agreements 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.
(e) INVALID PROVISIONS. Should any portion of this Agreement be
adjudged or held to be invalid, unenforceable or void, such holding shall
not have the effect of invalidating or voiding the remainder of this
Agreement and the parties hereby agree that the portion so held invalid,
unenforceable or void shall, if possible, be deemed amended or reduced in
scope, or otherwise be stricken from this Agreement to the extent required
for the purposes of validity and enforcement thereof.
(e) SURVIVAL OF THE EXECUTIVE'S OBLIGATIONS. The Executive's
obligations under this Agreement shall survive regardless of whether the
Executive's employment by the Company is terminated, voluntarily or
involuntarily, by the Company or the Executive, with or without Cause.
(f) 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.
(g) GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of Texas.
-8-
(h) CAPTIONS. The use of captions and Section headings herein is for
purposes of convenience only and shall not effect the interpretation or
substance of any provisions contained herein.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement on the 24
day of June, 1997, but effective as of May 16, 1997.
INPUT/OUTPUT, INC.
By: /s/ XXXXXX X. XXXXXXXX
-------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Executive Vice President
/s/ XXXXXXX X. XXXXXXXX
----------------------------------
Xxxxxxx X. Xxxxxxxx
-9-
