EXHIBIT 10.27
CONSULTING AGREEMENT
This Consulting Agreement (the "Agreement") is entered into effective
this 31st day of January, 2003 ("Effective Date"), by and between INPUT/OUTPUT,
INC., a Delaware corporation ("Company") and Xxxxxxx X. Xxxx ("Consultant").
RECITALS
Consultant has previously served as an executive of the Company; and
The parties, having terminated the employment relationship between
Consultant and Company pursuant to the terms of that certain Separation
Agreement and General Release which became effective on January 24, 2003 (the
"Separation Agreement"), now wish to engage Consultant to serve as a consultant
to Company commencing as of the Effective Date hereof upon an subject to the
terms and conditions set forth in this Agreement.
AGREEMENT
1. Definitions. The following terms shall have the meanings ascribed to
them below, the following definitions to be equally applicable to both the
singular and plural form of the terms:
1.1. "Affiliate" shall mean when used with reference to a
specified Person (defined below): (i) any Person that directly or
indirectly through one or more intermediaries controls or is controlled
by or is under common control with the specified Person; and (ii) any
Person that is an officer of, partner in, or serves in a similar
capacity to, the specified Person or of which the specified Person
serves in a similar capacity; and (iii) any Person owning or
controlling ten percent (10%) or more of the outstanding voting
securities of such other entity; and (iv) any member of the immediate
family of the specified Person or any legal representative or trustee
for the benefit of such member.
1.2. "Person" shall mean an individual, partnership,
corporation, trust or other entity.
1.3. "Term" shall mean the term of this Agreement, commencing
on February 15, 2003 and continuing for the lesser of two (2) years;
or, unless earlier terminated pursuant to Section 6 hereof.
2. Engagement. Notwithstanding any provision contained herein to the
contrary, this Agreement is subject to the execution, delivery and effectiveness
of the Separation Agreement and its terms and conditions. Company, during the
Term, shall appoint and engage the Consultant as consultant and advisor as of
the Effective Date hereof with respect to the matters specified in, subject to
the terms and conditions of, and for the compensation provided in, this
Agreement. The Consultant accepts this appointment and engagement effective as
of such date as a consultant and advisor to Company, subject to the terms and
conditions of this Agreement.
3. Duties of Consultant. Consultant will assist the Company in
marketing its VectorSeis(R) product line, securing sales in China and otherwise
supporting the sales and marketing department of Company.
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The Consultant agrees that he will serve the Company to the best of his ability,
projecting a positive and professional image on behalf of Company and its
Affiliates.
4. Non-Disclosure. Consultant acknowledges, understands and agrees that
he will be furnished confidential information concerning the business of Company
and its subsidiaries, including information relating to its customers and to the
design, construction and operation of Company's products and services
("Confidential Information"). Consultant further acknowledges that all
Confidential Information, whether developed by Consultant, Company, their
Affiliates or other Persons while carrying out the terms and provisions of this
Agreement (or previously developed by Company, its Affiliates or other Persons,
either during the term of this Agreement or prior thereto), shall be the
exclusive and confidential property of Company or its Affiliates, as the case
may be, and shall be regarded, treated and protected as such. Consultant shall
not use, in any way, or disclose any of the Confidential Information, directly
or indirectly, or permit any other person, firm or entity to avail himself or
itself of the benefit or use of the Confidential Information, or any aspect
thereof, either during the term of this Agreement or otherwise, or at any time
thereafter, except as may be necessary to perform his obligations with respect
to his consulting services hereunder.
4.1. All files, records, documents, information, data and
similar items and documentation relating to the business of Company and
its subsidiaries and that of Company's and its subsidiaries' customers,
whether prepared by Consultant or otherwise coming into his possession,
shall remain the exclusive property of Company and its subsidiaries, as
the case may be, and Consultant agrees to return all such files,
records, documents, information, data and similar items and
documentation to Company immediately upon the termination of this
Agreement for any reason.
4.2. The parties hereto stipulate that as between them, the
Confidential Information is important, material and confidential, and
gravely affects the effective and successful conduct of the business of
Company and its subsidiaries and their goodwill, and that Company would
suffer irreparable injury if this information were divulged to any
Person in competition with Company or any of its subsidiaries.
Consultant agrees to disclose, fully and promptly, and only to Company,
all ideas, methods, plans, improvements or patentable inventions of any
kind, which are (i) made or discovered, in whole or in part, by
Consultant during the performance of Consultant's job duties, (ii) the
result of any aid, support or assistance by Company or its
subsidiaries, or (iii) created during his work time with Company or its
subsidiaries.
4.3. The obligations of Consultant set forth in this Section 4
are continuous and shall survive the termination, for any reason
whatsoever, of this Agreement.
4.4. When used or referred to in this Agreement, Confidential
Information shall not include information which is in the public domain
or information generally known in the oil and gas exploration and
production services industry or the seismic detection, data
acquisition, or information processing or interpretation equipment
industries.
5. Covenant Not to Compete. Consultant hereby agrees that Consultant
will not for two years following the date of this Agreement, directly or
indirectly, for himself or on behalf of or in conjunction with any other person:
(i) engage, as an officer, director, shareholder, owner, partner, joint venturer
or in a managerial capacity, whether as an employee, independent contractor,
consultant or advisor or as a sales representative, in any business that
competes with the products and services offered by Company on the date of this
Agreement; (ii) call upon any person which is, at that time, or which has been,
within one (1)
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year prior to that time, a customer of Company (including the direct or indirect
subsidiaries thereof) for the purpose of soliciting or selling products or
services in direct competition with the Company or any subsidiary of the
Company; or (iii) call upon any prospective acquisition candidate, on
Consultant's own behalf or behalf of any competitor, which candidate was, to
Consultant's actual knowledge after due inquiry, either called upon by the
Company (including the direct or indirect subsidiaries thereof) or for which the
Company made an acquisition analysis, for the purpose of acquiring such entity.
Notwithstanding the foregoing, this Section 5 shall not be deemed to prohibit
Consultant from acquiring as an investment not more than two percent (2%) of the
capital stock of a competing business, whose stock is traded on a national
securities exchange or over-the-counter.
5.1. Consultant acknowledges and agrees that failure to comply
with this Section 5 shall constitute a material breach of this
Agreement which shall entitle the Company to withhold all benefits and
other consideration specified herein.
5.2. The covenants in this Section 5 are severable and
separate, and the unenforceability of any specific covenant shall not
affect the provisions of any other covenant. Moreover, in the event any
court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the
intention of the parties that such restrictions be enforced to the
fullest extent which the court deems reasonable, and the Agreement
shall be reformed in accordance therewith.
5.3. All of the covenants in this Section 5 shall be construed
as an agreement independent of any other provision in this Agreement,
and the existence of any claim or cause of action of Consultant against
the Company, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by the Company of such
covenants.
5.4. It is agreed by the parties that the foregoing covenants
in this Section 5 impose a reasonable restraint on Consultant in light
of the activities and business of the Company (including the Company's
direct and indirect subsidiaries) and the past and current duties of
Consultant. It is further agreed by the parties hereto that, in the
event that Consultant shall enter into a business or pursue other
activities not in violation of this Section 5, Consultant shall not be
chargeable with a violation of this Section 5 if the Person conducting
such business or activities shall thereafter enter into a business or
course of activities that is competitive with the Company, provided
that Consultant does not actively participate in any way in the
business or course of activities that competes with the Company. It is
further agreed by the parties hereto that, in the event Consultant
shall enter into a business or pursue other activities not in
competition with the Company (including the Company's direct and
indirect subsidiaries), and such new business or activities are not in
violation of this Section 5 or of Consultant's obligations under this
Section 5, Employee shall not be chargeable with a violation of this
Section 5 if the Company (including the Company's direct and indirect
subsidiaries) shall thereafter enter the same, similar or a competitive
business or course of activities.
6. Innovations. As used in this Agreement, the term "Innovations" means
all processes, machines, manufactures, compositions of matter, improvements,
inventions (whether or not protectable under patent laws), works of authorship,
information fixed in any tangible medium of expression (whether or not
protectable under copyright laws), moral rights, mask works, trademarks, trade
names, trade dress, trade secrets, know-how, ideas (whether or not protectable
under trade secret laws), and all other subject matter protectable under patent,
copyright, moral right, mask work, trademark, trade secret or other laws, and
includes without limitation all new or useful art, combinations, discoveries,
formulae, manufacturing
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techniques, technical developments, discoveries, artwork, software and designs.
"Innovations" includes "Inventions", which is defined to mean any inventions
protected under patent laws.
6.1. Consultant has identified on Exhibit A attached hereto
all Innovations, applicable to the business of Company or relating in
anyway to Company's business or demonstrably anticipated research and
development of business, which Consultant conceived, reduced to
practice, created, derived, developed or made by Consultant prior to
the Effective Date (collectively, the "Prior Innovations") and
Consultant represents that such list is complete. Consultant
acknowledges and agrees that Consultant has no rights in any such
Innovations other than those Prior Innovations specified in Exhibit A.
If there is not list on Exhibit A Consultant represents that Consultant
has neither conceived, reduced to practice, created, derived, developed
nor made any such Prior Innovations at the time of signing of this
Agreement.
6.2. Consultant hereby agrees promptly to disclose and
describe to Company, and Consultant hereby does and will assign to
Company or Company's designee Consultant's entire right, title, and
interest in and to (a) each of the Innovations (including Inventions),
and any associated intellectual property rights, which Consultant may
solely or jointly conceive, reduce to practice, create, derive, develop
or make while providing services to the Company, which either (i)
relate, at the time of conception, reduction to practice, creation,
derivation, development, or making of such Innovation, to Company's
business or actual or demonstrably anticipated research or development,
or (ii) were developed on any amount of Company's time or with the use
of any of Company's equipment, supplies, facilities or trade secret
information, or (iii) resulted from any work Consultant performed for
the Company, and (b) each of the Innovations which is not an Invention
and any associated intellectual property rights, which Consultant may
solely or jointly conceive, develop, reduce to practice, create,
derive, develop, or make while providing services to the Company, which
are applicable to the business of the Company (collectively, the
Innovations identified in clauses (a) and (b) are hereinafter the
"Company Innovations"). To the extent any of the rights, title and
interest in and to Company Innovations cannot be assigned by Consultant
to the Company, Consultant hereby grants to the Company an exclusive,
royalty-free, transferable, irrevocable, worldwide license (with rights
to sublicense through multiple tiers of sublicensees) to practice such
non-assignable rights, title and interest. To the extent any of the
rights, title and interest in and to Company Innovations can neither be
assigned or licensed by Consultant to the Company, Consultant hereby
irrevocable waives and agrees never to assert such non-assignable and
non-licensable rights, title and interest against the Company or any of
the Company's successor in interest to such non-assignable and
non-licensable rights. Consultant hereby grants to the Company or the
Company's designees a royalty free, irrevocable, worldwide license
(with rights to sublicense through multiple tiers of sublicensees) to
practice all applicable patent, copyright, moral right, mask work,
trade secret and other intellectual property rights relating to any
Prior Innovations which Consultant incorporates, or permits to be
incorporated, in any Company Innovations. Notwithstanding the
foregoing, Consultant agrees that Consultant will not incorporate, or
permit to be incorporated, any Prior Innovations in any Company
Innovations without the Company's prior written consent.
6.3. Consultant agrees to perform, during and after providing
services to the Company, all acts deemed necessary or desirable by the
Company to permit and assist the Company, at Company's expense, in
obtaining and enforcing the full benefits, enjoyment, rights and title
throughout the world in the Proprietary Information and Innovations
assigned or licensed to, or whose rights are irrevocably waived and
shall not be asserted against, the Company under this Agreement. Such
acts may include, but are not limited to, execution of documents and
assistance or cooperation (i) in filing, prosecution, registration, and
memorialization of assignment of any patents, copyrights, mask work,
moral rights,
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trade secrets, or other proprietary rights, (ii) in the enforcement of
any applicable patents, copyrights, mask work, moral rights, trade
secrets, or other proprietary rights, and (iii) in other legal
proceedings related to the Proprietary Information or Innovations.
7. Covenant Not to Solicit. Consultant acknowledges that the Company's
employees are valuable to the Company's business and that information regarding
the Company's employees, including without limitation information as to their
background, training and compensation, is Confidential Information. Consultant
agrees that for a period of twenty-four (24) months from the Effective Date of
this Agreement (whether or not this Agreement is terminated sooner than the 24
month period), he will not directly or indirectly solicit or otherwise induce or
encourage any person in the employment of the Company or any consultant to the
Company to terminate such employment or consulting arrangement or to accept
employment or enter into any consulting agreement with anyone other than the
Company.
8. Early Termination. Notwithstanding any other provision of this
Agreement, at any time during the Term, Consultant's engagement hereunder shall
terminate upon his death or Disability, or by Company upon Consultant's material
breach or material violation of any of his agreements contained herein or in the
Separation Agreement. As used herein, "Disability" shall mean a physical or
mental impairment that renders Consultant unable to perform the essential
functions of his position with or without reasonable accommodation.
9. Injunctive Relief. Because of the unique nature of the Confidential
Information, Consultant acknowledges, understands and agrees that Company will
suffer immediate and irreparable harm if Consultant fails to comply with any of
his obligations under Sections 4, 5, 6 and 7 of this Agreement, and that
monetary damages will be inadequate to compensate Company for such breach.
Accordingly, Consultant agrees that Company shall, in addition to any other
remedies available to them at law or in equity, be entitled to temporary,
preliminary, and permanent injunctive relief to enforce the terms of Sections 4,
5, 6 and 7 without the necessity of proving inadequacy of legal remedies or
irreparable harm.
10. Compensation. Subject to the terms and conditions hereof, in
consideration of the consulting services to be rendered by Consultant to Company
hereunder, and in consideration of the covenants of Consultant set forth in
Sections 4, 5, 6 and 7 herein, Company agrees to pay Consultant: (i) $50,000 on
each of October 15, 2003 and January 15, 2004, provided that Consultant assists
in at least three VectorSeis presentations at the 2003 SEG tradeshow and
Consultant assists the Company in closing a minimum of $10 million in sales to
customers in China, and (ii) $4,167 on the 1st and 15th of each month beginning
on February 15, 2003 and continuing for 24 months, provided that this amount
will be reduced after March 1, 2004 by up to $6,249.75 per month by the amount
of any other compensation Consultant receives from parties unaffiliated with
Company for services as an employee or independent contractor. In addition, all
payments pursuant to this Section 10 are contingent being available to Company
for up to at least 50 hours per month for the first twelve months of this
Agreement and up to 25 hours per month for the remaining Term.
11. Independent Contractor. While serving as Consultant, the Consultant
shall at all times be an independent contractor rather than a co-venturer,
agent, employee or representative of Company or its Affiliates. It is understood
and agreed that Contractor shall pay all taxes, licenses, and fees levied or
assessed on Contractor in connection with or incident to the performance of this
Agreement by any governmental agency, including, without limitation,
unemployment compensation insurance, old age benefits, social security, or any
other taxes upon wages of Contractor, its agents, employees, and
representatives. Contractor agrees to require the same agreements of its
subcontractors and to be liable for any breach of any such agreements by any of
its subcontractors. Contractor agrees to reimburse Company
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on demand for all such taxes or governmental charges, state or federal, which
the Company may be required or deem it necessary to pay on account of employees
of the Contractor or its subcontractors. Contractor agrees to furnish the
Company with the information required to enable it to make the necessary reports
and pay such taxes or charges. If statutorily required, the Company is
authorized to deduct all sums required to be paid for such taxes and
governmental charges from any amounts that may be or become due to Contractor.
12. Governing Law. This Agreement shall be governed by the internal
laws (without giving effect to principles of conflict of laws) of the State of
Texas and the internal laws (without giving effect to principles of conflict of
laws) of the United States of America.
13. Notice. Any notice provided or permitted to be given under this
Agreement must be in writing, but may be served by deposit in the mail,
addressed to the party to be notified, postage prepaid, and registered or
certified, with a return receipt requested. Notice given by registered mail
shall be deemed delivered and effective on the date of delivery shown on the
return receipt. Notice may be served in any other manner, including telex,
telecopy, telegram, etc., but shall be deemed delivered and effective as of the
time of actual delivery. For purposes of notice the addresses of the parties
shall be as follows:
If to Company:
Input/Output, Inc.
00000 Xxxx Xxxxx Xxxxx
Xxxxxxxx, XX 00000
Attn: General Counsel
If to Consultant:
Xxxxxxx X. Xxxx
-------------------
--------------------
Each party may change its address for notice by giving written notice of such
address to the other party.
14. Entire Agreement. Except as specifically contemplated under Section
2 hereof, this Agreement, which incorporates all prior understandings relating
to its subject matter, contains the entire agreement of the parties with respect
to its subject matter and shall not be modified except by written instrument
executed by each party.
15. Waiver. The failure of a party to insist upon strict performance of
any provision of this Agreement shall not constitute a waiver of, or estoppel
against asserting, the right to require performance in the future. A waiver or
estoppel in any one instance shall not constitute a waiver or estoppel with
respect to a later breach.
16. Severability. If any of the terms and conditions of this Agreement
are held by any court of competent jurisdiction to contravene, or to be invalid
under, the laws of any political body having jurisdiction over this subject
matter, that contravention or invalidity shall not invalidate the entire
Agreement. Instead, this Agreement shall be construed as it if did not contain
the particular provision or provisions held to be invalid, the rights and
obligations of the parties shall be construed and enforced accordingly, and this
Agreement shall remain in full force and effect.
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17. Construction. The headings in this Agreement are inserted for
convenience and identification only and are not intended to describe, interpret,
define, or limit the scope, extent, or intent of this Agreement or any other
provisions hereof. Whenever the context requires, the gender of all words used
in this Agreement shall include the masculine, feminine, and neuter, and the
number of all words shall include the singular and the plural. In the event of a
conflict among this Agreement and any Exhibit, this Agreement shall control.
18. Counterpart Execution. This Agreement may be executed in any number
of counterparts with the same effect as if all the parties had signed the same
document. All counterparts shall be construed together and shall constitute one
and the same instrument.
19. Successors and Assigns. Except as otherwise provided, this
Agreement shall apply to, and shall be binding upon, the parties hereto, their
respective successors and assigns, and all persons claiming by, through or under
any of these persons. This Agreement is personal to Consultant and cannot be
assigned or delegated by Consultant.
20. Cumulative Rights. The rights and remedies provided by this
Agreement are cumulative, and the use of any right or remedy by any party shall
not preclude or waive its right to use any or all other remedies. These rights
and remedies are given in addition to any other rights a party may have by law,
statute, in equity or otherwise.
21. No Third Party Beneficiary. Any agreement to pay an amount or any
assumption of liability herein contained, express or implied, shall be only for
the benefit of the undersigned parties and their permitted successors and
assigns, and such agreements and assumption shall not inure to the benefit of
the obligees of any other party whomsoever, it being the intention of the
undersigned that, except as otherwise expressly contemplated herein, no one
shall be deemed to be a third party beneficiary of this Agreement.
22. Drafting Party. This Agreement expresses the mutual intent of the
parties to this Agreement. Accordingly, regardless of the party preparing any
document, the rule of construction against the drafting party shall have no
application to this Agreement.
23. Reliance. All covenants, agreements, representations and warranties
made in this Agreement shall be conclusively considered to have been relied upon
by the parties in entering into this Agreement.
24. Dispute Resolution. Subject to Company 's right to seek legal or
equitable relief in court as provided in Section 9 of this Agreement, any
dispute, controversy or claim arising out of or in relation to or connection to
this Agreement, including without limitation any dispute as to the construction,
validity, interpretation, enforceability or breach of this Agreement, shall be
exclusively and finally settled by arbitration, and either party may submit such
dispute, controversy or claim, including a claim for indemnification under this
Section 24, to arbitration.
24.1 Arbitrators. The arbitration shall be heard and
determined by one arbitrator, who shall be impartial and who shall be
selected by mutual agreement of the parties; provided, however, that if
the dispute involves more than $ 25,000, then the arbitration shall be
heard and determined by three (3) arbitrators. If three (3) arbitrators
are necessary as provided above, then (i) each side shall appoint an
arbitrator of its choice within thirty (30) days of the submission of a
notice of arbitration and (ii) the party-appointed arbitrators shall in
turn appoint a presiding arbitrator of the tribunal within thirty (30)
days following the appointment of the last party-appointed arbitrator.
If (x) the parties cannot agree on
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the sole arbitrator, (y) one party refuses to appoint its
party-appointed arbitrator within said thirty (30) day period or (z)
the party-appointed arbitrators cannot reach agreement on a presiding
arbitrator of the tribunal, then the appointing authority for the
implementation of such procedure shall be the Senior United States
District Judge for the Southern District of Texas, who shall appoint an
independent arbitrator who does not have any financial interest in the
dispute, controversy or claim. If the Senior United States District
Judge for the Southern District of Texas refuses or fails to act as the
appointing authority within ninety (90) days after being requested to
do so, then the appointing authority shall be the Chief Executive
Officer of the American Arbitration Association, who shall appoint an
independent arbitrator who does not have any financial interest in the
dispute, controversy or claim. All decisions and awards by the
arbitration tribunal shall be made by majority vote.
24.2 Proceedings. Unless otherwise expressly agreed in writing
by the parties to the arbitration proceedings:
i. The arbitration proceedings shall be held in Houston,
Texas, or Stafford, Texas, at a site chosen by mutual
agreement of the parties, or if the parties cannot
reach agreement on a location within thirty (30) days
of the appointment of the last arbitrator, then at a
site chosen by the arbitrators;
ii. The arbitrators shall be and remain at all times
wholly independent and impartial;
iii. The arbitration proceedings shall be conducted in
accordance with the Commercial Arbitration Rules of
the American Arbitration Association, as amended from
time to time;
iv. Any procedural issues not determined under the
arbitral rules selected pursuant to item (iii) above
shall be determined by the law of the place of
arbitration, other than those laws which would refer
the matter to another jurisdiction;
v. The costs of the arbitration proceedings (including
attorneys' fees and costs) shall be borne in the
manner determined by the arbitrators;
vi. The decision of the arbitrators shall be reduced to
writing; final and binding without the right of
appeal; the sole and exclusive remedy regarding any
claims, counterclaims, issues or accounting presented
to the arbitrators; made and promptly paid in United
States dollars free of any deduction or offset; and
any costs or fees incident to enforcing the award
shall, to the maximum extent permitted by law, be
charged against the party resisting such enforcement;
vii. The award shall include interest from the date of any
breach or violation of this Agreement, as determined
by the arbitral award, and from the date of the award
until paid in full, at 6% per annum; and
viii. Judgment upon the award may be entered in any court
having jurisdiction over the person or the assets of
the party owing the judgment or application may be
made to such court for a judicial acceptance of the
award and an order of enforcement, as the case may
be.
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25. Acknowledgment Of Parties. Each party acknowledges that he or she
or it has voluntarily and knowingly entered into an agreement to arbitration
under this Section by executing this Agreement.
EXECUTED effective as of the date written above.
COMPANY:
INPUT/OUTPUT, INC.
By: /s/ Xxxx Xxxxxxx
-------------------------------------
Name: Xxxx Xxxxxxx
Title: Vice President & Chief
Administrative Officer
CONSULTANT:
/s/ Xxxxxxx X. Xxxx
---------------------------------------
Xxxxxxx X. Xxxx
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