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EXHIBIT 10.44
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 Xxxxxxx (the "Executive"),
having a mailing address at 00000 Xxxxxxxxxxx Xxxxx, Xxxxxxx, Xxxxx 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 and fulltime 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 President and
Chief Executive Officer of Input/Output, Inc. The Executive shall report
directly to the 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 March 1,
2000 (the "Effective Date") and continuing until February 28, 2004 (the
"Primary Term"), unless renewed in accordance with the terms of this Section 3.
Beginning February 28, 2004, this Agreement shall be automatically renewed each
February 28 for successive one-year terms, unless either the Company or the
Executive provides written notice of election not to renew, at least 60 days
before the applicable renewal date. The "term of this Agreement" includes the
Primary Term together with any renewal periods.
4. SALARY AND BENEFITS.
(a) Base Salary. The Company shall, during the Primary Term
of this Agreement, pay the Executive an annual base salary of $300,000
beginning on March 1, 2000. Such salary shall be paid in bi-monthly
installments, minus applicable withholding and authorized salary
deductions. The base salary will be reviewed annually by the Board of
Directors. The Company may not,
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however, reduce the Executive's base salary at any time during the
Primary Term.
(b) Bonus. The Executive shall be eligible to participate in
the Input/Output, Inc. Annual Incentive Plan (the "Plan") for the
Company's fiscal year commencing June 1, 2000. For the fiscal year
ending May 31, 2001, Executive shall be entitled to receive a minimum
bonus under the Plan in the amount of 50% of his annual base salary
reduced by the value of any restricted stock grants (valued for the
purposes of this subparagraph (b) at the closing price per share on
the New York Stock Exchange composite transactions tape on the date of
grant) provided that Executive is still so employed on the bonus
payment date, but in any case no later than July 31, 2001.
(c) Stock Options. The Executive shall be granted a
nonqualified stock option effective March 1, 2000, to purchase 150,000
shares of common stock of the Company under the Input/Output, Inc.
1990 Stock Option Plan (the "Option Plan") having an exercise price
equal to the fair market value of the stock on the date of grant. The
option grant will be evidenced by the Company's standard stock option
agreement. This option will vest in equal annual installments over a
four-year period beginning on the date of grant. This option will have
a term of ten years and will otherwise be subject to the standard
terms and conditions of the Option Plan and as follows: (i) if the
Executive's employment is terminated by the Company for any reason or
Executive resigns or otherwise terminates his employment for any
reason prior to a "change of control" (as defined in the Option Plan
as of the date hereof) the option shall be vested and exercisable in
accordance with the terms of the Option Plan as of the date hereof and
the option agreement to be entered into between Company and Executive;
(ii) if the Executive's employment is terminated by the Company for
any reason other than for "Cause," or Executive resigns for Good
Reason, in either event, within eighteen (18) months after a change of
control all unvested installments of option shares under such option
shall thereupon automatically accelerate and become fully vested
(provided, however, that if Executive resigns for a Good Reason as
defined in Section 5(b)(i)(A) below and has not remained employed with
the Company for a period of at least one (1) year after the change of
control date any unvested installment option shares shall vest in
accordance with the Option Plan and the option agreement between the
Company and Executive) ; and (iii) if Executive becomes entitled to an
Employment Payment as defined under Section 5(b), any unvested
installments of option shares under such option shall upon such
resignation of Executive automatically accelerate and become fully
vested; (iv) except as provided in (iii), if the Executive's
employment is not terminated within eighteen (18) months after such
change of control date, the terms of the Option Plan and option
agreement entered into
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between Company and Executive shall thereafter be controlling with
respect to vesting and the exercise of option rights.
(d) Stock Purchase Incentive. With respect to each share of
Company stock purchased by the Executive or a family trust (in which
Executive is a beneficiary or has investment control and discretion)
between March 22, 2000 and April 14, 2000 on the open market or
otherwise, but not pursuant to the Option Plan or any other equity
compensation or benefit plan of the Company, the Company shall grant
an option under the Option Plan effective April 14, 2000 pursuant to
an option agreement to be entered into between the Company and the
Executive to purchase three (3) shares of Company stock at an exercise
price which is equivalent to the closing sales price per share of the
Company's common stock on the New York Stock Exchange on April 14,
2000, as reported on the composite transactions tape for that date.
The maximum number of shares to be purchased by the Executive between
March 22, 2000 and April 14, 2000 that are eligible for this matching
option shall be 50,000. For example, if the Executive purchases 50,000
shares on March 30, 2000, the Company will grant the Executive an
option to purchase 150,000 shares of common stock and no more options
will be granted under this Section 4(d). In order to receive a grant
under this Section 4(d), the Executive must present written evidence
to the Company of the Executive's purchases of shares no later than
April 20, 2000 and the Executive must undertake to hold the shares so
purchased for a period of at least six (6) months. Any such purchases
shall be subject to the Executive's obtaining prior consent from the
Company's appropriate compliance officer with respect to securities
transactions by employees, and his compliance with all other
applicable laws and regulations. Any option shares granted under this
Section 4(d) shall vest in equal annual installments over a four-year
period beginning on the effective date of the grant. All options to be
granted in accordance with this Subsection (d) shall have identical
features respecting vesting and acceleration as defined in Subsection
(c) above.
(e) Reimbursement of Expenses. The Company shall reimburse
the Executive for all out-of-pocket expenses incurred by the Executive
in the course of his duties, in accordance with normal Company
policies.
(f) Employee Benefits. 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 subject to the
terms and conditions of the plans or programs. Executive shall be
entitled to a minimum of twenty (20) vacation days annually.
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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) Termination Without Cause or Good Reason. If, during the
term of this Agreement, the Company terminates the Executive's
employment for any reason other than for Cause (as defined in Section
5(c) of this Agreement) or Executive terminates his employment for
Good Reason, in either event, prior to a "Change of Control" (as
defined in Section 5(b)(ii) hereof), the Company shall pay to the
Executive an amount (the "Severance Payment") equal to the sum of (i)
plus (ii), where (i) is the Executive's base salary as in effect on
his date of termination multiplied by two (2) and (ii) is two (2)
multiplied by Executive's average annual bonus payments for the three
(3) most recently completed fiscal years of the Company (or, in the
event that the Executive has not been employed by the Company for at
least three (3) fiscal years as of the date of his termination, the
average sum of Executive's annual bonus payments during Executive's
employment with the Company); in the event that the Executive is
employed less than one (1) year, this annual bonus amount shall be
deemed to be fifty percent (50%) of his annual base salary as in
effect on his termination date. For the purposes of this Section 5(a)
and Section 5(b) below, the bonus relating to any fiscal year shall be
deemed to have been paid in such fiscal year even if the bonus is
actually paid in a different fiscal year. If the Executive terminates
his employment for Good Reason pursuant to this Section 5(a), he must
notify the Board of Directors of the Company in writing of his intent
to terminate his employment for Good Reason describing the Good Reason
event within forty-five (45) days of the occurrence of the Good Reason
event in order to receive a Severance Payment hereunder. If no such
written notice is provided by Executive within forty-five (45) days of
a Good Reason event, the Executive's consent to the event shall be
presumed and no Severance Payment shall be payable on account of the
occurrence of the Good Reason event. The amount of any such Severance
Payment shall be paid in substantially equal bi-monthly amounts over a
period of two (2) years following his date of termination, less any
applicable withholding; provided however, that in the event that the
Executive becomes employed by any employer, whether as a consultant,
employee or otherwise, at any time during such two-year period
following his termination of employment, whether or not such
employment is comparable in duties and compensation to his position
with the Company, the amount payable to the Executive under this
Section 5(a) subsequent to any such employment shall be reduced by the
amount of salary and bonus payable to the Executive on account of such
employment on a dollar for dollar basis, but such reduction shall not
exceed 50% of the amount of the Severance Payment.
(b) Termination After a Change of Control. If, within
eighteen (18) months following the date of a "Change of Control" of
the Company (as defined
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below), the Company terminates the Executive's employment for any
reason other than for "Cause" (as defined in Section 5(c) of this
Agreement) or the Executive terminates his employment with the Company
for "Good Reason" (as defined below), the Company shall pay to the
Executive an amount (the "Change of Control Payment") equal to (i)
plus (ii) where (i) is three (3), multiplied by the Executive's annual
base salary as in effect on his termination date and where (ii) is
three (3) multiplied by the average of the annual bonus payments for
the three (3) most recently completed fiscal years of the Company (or,
in the event that the Executive has not been employed by the Company
for at least three (3) fiscal years as of the date of his termination,
the average of the sum of the Executive's annual bonus payments during
the Executive's employment with the Company); in the event that
Executive is employed less than one (1) year, this annual bonus amount
shall be deemed to be fifty (50%) percent of his base salary as in
effect on his termination date. In order to receive any Change in
Control Payment on account of a Good Reason resignation, Executive
must provide written notice to the Board of his intent to resign for
Good Reason within forty-five (45) days after the effective date of
his resignation. Notwithstanding the foregoing, if the Executive
terminates his employment for a Good Reason event described in Section
5(b)(i)(A) below and has not remained employed with the Company for a
period of at least one (1) year from and after the Change of Control
date, the number two (2) shall be substituted for the number three (3)
multiplier in the preceding formula contained in this subparagraph (b)
in order to calculate the Change of Control Payment that may become
payable to Executive upon his termination of employment. The amount of
any such Change of Control Payment shall be paid in a lump sum, less
applicable withholding, as soon as practicable following such
termination, and shall be paid in lieu of any Severance Payment
otherwise payable under Section 5(a) above. In lieu of the Change of
Control Payment in this Subsection (b) and the Severance Payment in
Section 5(a) payable on account of Good Reason termination, Executive
shall be entitled to an "Employment Payment" if Executive remains
employed for a period of at least twelve (12) months following the
date of a Change of Control and Executive resigns on account of a Good
Reason which occurs anytime after the date of a Change of Control,
calculated as an amount equal to (i) plus (ii) where (i) is three (3),
multiplied by the Executive's annual base salary as in effect on his
termination date and where (ii) is three (3) multiplied by the average
of the annual bonus payments for the three (3) most recently completed
fiscal years of the Company (or, in the event that the Executive has
not been employed by the Company for at least three (3) fiscal years
as of the date of his termination, the average of the sum of the
Executive's annual bonus payments during the Executive's employment
with the Company). Executive must provide written notice of his intent
to resign for Good Reason to the Board within 45 days after the
effective date of his
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resignation. The Employment Payment shall be paid in the same manner
as provided for the Change of Control Payment provided herein.
(i) For purposes of this Agreement, "Good Reason"
shall mean:
(A) Without his express written consent,
the assignment to the Executive of any duties
inconsistent with his positions, duties,
responsibilities and status with the Company
immediately prior to a Change of Control, or a
change in his reporting responsibilities, titles or
offices as in effect immediately prior to a Change
of Control, or any removal of the Executive from or
any failure to re-elect the Executive to any of such
positions, except in connection with the termination
of his employment for Cause, death, permanent and
total disability (as such term is defined in Section
22(e)(3) of the Internal Revenue Code of 1986, as
amended (the "Code")) or retirement in accordance
with normal Company policies or by the Executive
other than for Good Reason;
(B) A reduction by the Company in the
Executive's base salary as in effect on the date of
a Change of Control or as the same may be increased
from time to time thereafter;
(C) The Company's requiring the Executive
to be based anywhere other than either the Company's
offices at which he was based immediately prior to a
Change of Control or the Company's offices which are
no more than 50 miles from the offices at which the
Executive was based immediately prior to a Change of
Control, except for required travel on the Company's
business to an extent substantially consistent with
his business travel obligations immediately prior to
the Change of Control (excluding, however, any
travel obligations prior to the Change of Control
that are associated with or caused by the Change of
Control events or circumstances), or, in the event
the Executive consents to any relocation beyond such
50-mile radius, the failure by the Company to pay
(or reimburse the Executive) for all reasonable
moving expenses incurred by him relating to a change
of his principal residence in connection with such
relocation; or
(D) Any failure of the Company to obtain
the assumption of, or the agreement to perform, this
Agreement by any successor as contemplated in
Section 7(a).
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(ii) For purposes of this Section 5(b), a "Change of
Control" of the Company shall mean the occurrence of any of
the following events: (A) there shall be consummated any
merger or consolidation pursuant to which shares of the
Company's 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 of the Company, (B) the
stockholders of the Company approve any plan or proposal for
the complete liquidation or dissolution of the Company, (C)
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 (D) 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.
(iii) Excise Taxes and Gross-Up Payments.
(1) The following benefits of this
Subsection 5(b)(iii) shall only
apply if the aggregate payments and
distributions to the Executive or
for the Executive's benefit
(whether paid or payable or
distributed or
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distributable) pursuant to the
terms of this Agreement (the
"Payment") exceeds 2.99 multiplied
by the Executive's "base amount"
(as defined under Section
280G(b)(3) of the Code) by 12.5% or
greater. Only if the Payment to the
Executive satisfies or exceeds such
threshold, then the Executive (i)
shall be entitled to the benefits
and payments set forth in this
Subsection, and (ii) shall be
referred to in this Subsection as
"Tax Eligible Executive."
(2) If it shall be determined that the
Executive is a Tax Eligible
Executive and any or all of the
Payment would be subject to the
excise tax imposed by Section 4999
of the Code (the "Excise Tax"),
then Tax Eligible Executive shall
be entitled to receive from the
Company an additional payment (the
"Gross-Up Payment") in an amount
such that the net amount of the
Payment and the Gross-Up Payment
retained by Tax Eligible Executive
shall be equal to the Payment after
the calculation and deduction of
all Excise Taxes (including any
interest or penalties imposed with
respect to such taxes) on the
Payment and all federal, state and
local income tax, employment tax
and Excise Tax (including any
interest or penalties imposed with
respect to such taxes) on the
Gross-Up Payment provided for in
this Subsection, and taking into
account any lost or reduced tax
deductions on account of the
Gross-Up Payment.
(3) All determinations required to be
made under this Subsection,
including whether the Executive is
a Tax Eligible Executive and
whether and when the Gross-Up
Payment is required and the amount
of such Gross-Up Payment, and the
assumptions to be utilized in
arriving at such determinations
(consistent with the provisions of
this Subsection), shall be made by
the Company's independent certified
public accountants (the
"Accountants"). The Accountants
shall provide Tax Eligible
Executive and the Company with
detailed supporting calculations
with respect to such Gross-Up
Payment within fifteen (15)
business days of the receipt of
notice from the Executive or the
Company that the Executive has
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received or will receive a Payment.
In the event that the Accountants
are also serving as accountant or
auditor for the individual, entity
or group effecting the Change of
Control, Tax Eligible Executive
shall appoint another nationally
recognized public accounting firm
to make the determination required
hereunder (which accounting firm
shall then be referred to as the
Accountants hereunder). All fees
and expenses of the Accountants
shall be borne solely by the
Company. All determinations by the
Accountants shall be binding upon
the Company and Tax Eligible
Executive.
(4) For the purposes of determining
whether any of the Payments will be
subject to the Excise Tax and the
amount of such Excise Tax, such
Payments will be treated as
"parachute payments" within the
meaning of Section 280G of the
Code, and all "parachute payments"
in excess of the "base amount" (as
defined under Section 280G(b)(3) of
the Code) shall be treated as
subject to the Excise Tax, unless
and except to the extent that in
the opinion of the Accountants such
Payments (in whole or in part)
either do not constitute "parachute
payments" or represent reasonable
compensation for services actually
rendered (within the meaning of
Section 280G(b)(4) of the Code) in
excess of the "base amount" or such
"parachute payments" are otherwise
not subject to such Excise Tax. For
purposes of determining the amount
of the Gross-Up Payment, Tax
Eligible Executive shall be deemed
to pay federal income taxes at the
highest applicable marginal rate of
federal income taxation for the
calendar year in which the Gross-Up
Payment is to be made and to pay
any applicable state and local
income taxes at the highest
applicable marginal rate of
taxation for the calendar year in
which the Gross-Up Payment is to be
made, net of the maximum reduction
in federal income taxes that could
be obtained from the deduction of
such state or local taxes if paid
in such year (determined without
regard to limitations on deductions
based upon the amount of Tax
Eligible Executive's adjusted gross
income); and to have
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otherwise allowable deductions for
federal, state and local income tax
purposes at least equal to those
disallowed because of the inclusion
of the Gross-Up Payment in Tax
Eligible Executive's adjusted gross
income.
(5) To the extent practicable, any
Gross-Up Payment with respect to
any Payment shall be paid by the
Company at the time Tax Eligible
Executive is entitled to receive
the Payment and in no event will
any Gross-Up Payment be paid later
than thirty (30) days after the
receipt by Tax Eligible Executive
of the Accountant's determination.
As a result of uncertainty in the
application of Section 4999 of the
Code at the time of the initial
determination by the Accountants
hereunder, it is possible that the
Gross-Up Payment made will have
been an amount less than the
Corporation should have paid
pursuant to this Subsection (the
"Underpayment"). In the event that
the Corporation exhausts its
remedies pursuant to this
Subsection and Tax Eligible
Executive is required to make a
payment of any Excise Tax, the
Underpayment shall be promptly paid
by the Company to or for the
benefit of Tax Eligible Executive.
(6) The Executive shall notify the
Company in writing of any claim by
the Internal Revenue Service that,
if successful, would require the
payment by the Company of the
Gross-Up Payment. Such notification
shall be given as soon as
practicable after the Executive is
informed in writing of such claim
and shall apprise the Company of
the nature of such claim and the
date on which such claim is
requested to be paid. Tax Eligible
Executive shall not pay such claim
prior to the expiration of the
thirty (30) day period following
the date on which Tax Eligible
Executive gives such notice to the
Company (or such shorter period
ending on the date that any payment
of taxes, interest and/or penalties
with respect to such claim is due).
If the Company notifies Tax
Eligible Executive in writing prior
to the expiration
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of such thirty (30) day period that
it desires to contest such claim,
Tax Eligible Executive shall:
(A) give the Company any
information reasonably
requested by the Company
relating to such claim;
(B) take such action in
connection with contesting
such claim as the Company
shall reasonably request
in writing from time to
time, including without
limitation, accepting
legal representation with
respect to such claim by
an attorney reasonably
selected by the Company;
(C) cooperate with the Company
in good faith in order to
effectively contest such
claim; and
(D) permit the Company to
participate in any
proceedings relating to
such claims; provided,
however, that the Company
shall bear and pay
directly all costs and
expenses (including
additional interest and
penalties) incurred in
connection with such
contest and shall
indemnify Tax Eligible
Executive for, advance
expenses to Tax Eligible
Executive for, defend Tax
Eligible Executive against
and hold him harmless
from, on an after-tax
basis, any Excise Tax or
income tax (including
interest and penalties
with respect thereto)
imposed as a result of
such representation and
payment of all related
costs and expenses.
Without limiting the
foregoing provisions of
this Subsection, the
Company shall control all
proceedings taken in
connection with such
contest and, at its sole
option, may pursue or
forego any and all
administrative appeals,
proceedings, hearings and
conferences with the
taxing authority in
respect of such claim and
may, at its sole option,
either direct Tax Eligible
Executive to pay the tax
claimed and xxx for a
refund or contest the
claim in any permissible
manner, and Tax Eligible
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Executive agrees to
prosecute such contest to
a determination before any
administrative tribunal,
in a court of initial
jurisdiction and in one or
more appellate courts, as
the Company shall
determine; provided,
however, that if the
Company directs Tax
Eligible Executive to pay
such claim and xxx for a
refund, the Company shall
advance the amount of such
payment to Tax Eligible
Executive, on an
interest-free basis, and
shall indemnify Tax
Eligible Executive for,
advance expenses to Tax
Eligible Executive for,
defend Tax Eligible
Executive against and hold
Tax Eligible Executive
harmless from, on an
after-tax basis, any
Excise Tax or income tax
(including interest or
penalties with respect
thereto) imposed with
respect to such advance or
with respect to any
imputed income with
respect to such advance
(including as a result of
any forgiveness by the
Company of such advance);
provided, further, that
any extension of the
statute of limitations
relating to the payment of
taxes for the taxable year
of Tax Eligible Executive
with respect to which such
contested amount is
claimed to be due is
limited solely to such
contested amount.
Furthermore, the Company's
control of the contest
shall be limited to issues
with respect to which a
Gross-Up Payment would be
payable hereunder and Tax
Eligible Executive shall
be entitled to settle or
contest, as the case may
be, any other issue raised
by the Internal Revenue
Service or any other
taxing authority.
(c) Termination for Cause; Termination by Executive. If (i)
the Company shall discharge the Executive for Cause at any time, or
(ii) the Executive's employment with the Company shall terminate as a
result of his death or permanent and total disability (as defined in
Section 5(b)(i) above) or (iii) the Executive shall terminate his
employment with the Company prior to or after a Change of Control for
any reason other than for Good Reason, 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, plus the
amount of any contractual bonus earned and unpaid,
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prorated through the date of his 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 then
participating.
For the purposes of this Agreement, the Company shall have
"Cause" to terminate the Executive's employment hereunder upon (i) the
willful and continued failure by the Executive to perform his duties
with the Company (other than any such failure resulting from permanent
and total disability as defined in Section 5(b)(i) above), after a
written 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 and if Executive does not cure such failure to the reasonable
satisfaction of the Board within two (2) weeks after such written
demand is delivered to Executive, or (ii) 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.
(d) Mitigation of Amounts Payable Hereunder. Except as
specifically provided in Section 5(a), 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. CONFIDENTIALITY; NON-SOLICITATION; NON-COMPETITION AND NON-
DISPARAGEMENT. In consideration of the stock options granted and to be granted
described in Sections 4(c) and (d), the Company's provision of knowledge and
Confidential Information (as defined in Section 6.1) initially and on an
ongoing basis to Executive, and the Company's provision of initial and ongoing
specialized training to Executive, the Executive acknowledges and agrees to the
following:
6.1 Confidential Information. Company will provide the
Executive with initial and on an ongoing basis specialized training,
confidential information, and knowledge regarding the Company, its affiliates
and its subsidiaries (the "Companies") and their business. The Executive
acknowledges that the Companies have incurred significant time and expense in
developing proprietary and confidential information related to their business
and operations. The Executive agrees that he will not divulge, communicate, use
to the detriment of the Companies or for the benefit of any other
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person, firm or entity, or misappropriate in any way, any confidential
information or trade secrets relating to the Companies or any of their
businesses, including, without limitation, business strategies, operating
plans, acquisition strategies (including the identities of and any other
information concerning possible acquisition candidates), pro forma financial
information, market analyses, acquisition terms and conditions, personnel
information, trade processes, manufacturing methods, know-how, customer lists
and relationships, supplier lists, all apparatus, products, processes,
compositions, samples, formulas, computer programs, computer hardware designs,
firmware designs, and servicing, marketing or manufacturing methods or
techniques at any time used, developed, investigated, made or sold by the
Companies, or other non-public proprietary and confidential information
relating to the Companies (collectively, "Confidential Information"). None of
the provisions of this Section 6.1 shall apply to disclosures of Confidential
Information which (i) was publicly known at the time of its disclosure to the
Executive, (ii) becomes publicly known or available thereafter other than by
means in violation of this Agreement or any other duty owed to the Companies by
the Executive or any other person or entity, or (iii) is lawfully disclosed to
the Executive by a third party not in violation of any obligation of any
confidentiality owed to any of the Companies. Notwithstanding the foregoing,
the Executive shall be permitted to disclose Confidential Information (i) if
required to do so to comply with any subpoena or other order issued by or in
connection with any legal or administrative proceeding or (ii) to the extent
required to enforce the Executive's rights hereunder in any litigation arising
under, or pertaining to, this Agreement, provided the Executive shall give
prior written notice to the Companies of any such disclosure so that the
Companies may have an opportunity to protect the confidentiality of such
Confidential Information. The Executive's obligations pursuant to this Section
6.1 are in addition to and cumulative of any other obligation of the Executive
to hold in confidence Confidential Information of the Companies and their
customers, suppliers or agents pursuant to contract or otherwise.
6.2 Non-solicitation. From and after the date hereof and
until twenty-four (24) months after the date of the Executive's termination
for any reason, including termination after a Change of Control, as defined
herein, the Executive shall not, directly or indirectly, for himself or on
behalf of any other person, firm or entity, solicit the employment, engagement
or retention of any person who at the time of the Executive's termination was
an employee of any of the Companies or at any time during the preceding three
(3) month period shall have been an employee of any of the Companies.
6.3 Non-competition. If the Executive's employment with the
Company is terminated by the Company for any reason, including termination
after a Change of Control then until that date which is twelve (12) months
after the date of the Executive's termination, the Executive shall not, as a
principal, partner, joint venturer, member, manager, trustee, agent,
stockholder, director, officer or employee of, or consultant or advisor to, or
in any manner own, control, manage, operate, or otherwise
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15
participate, invest, or have any interest in, any person, firm or
entity that engages, directly or indirectly, in the business of performing
services or developing, manufacturing or selling products or services
competitive with the proprietary business of the Company or the Companies (or
any of them) in connection with the development and use of seismic equipment
and/or technology within the United States of America and any other
geographical area served by the Companies during the twelve (12) month period
immediately preceding the Executive's date of termination, nor will the
Executive engage, within this time period and geographical area, in the design,
development, distribution, manufacture, assembly or sale of a product or
service in competition with any product or service currently marketed or
planned by the Companies, or any of them. The foregoing shall not pertain to
the mere ownership of securities in any such enterprise and the exercise of any
rights appurtenant solely to that ownership, so long as the Executive's
ownership interest is less than five percent (5%) of the outstanding voting
securities of such enterprise.
6.4 Non-disparagement. The Executive agrees that he will not
disclose, communicate or publish any disparaging information concerning the
Company or any of the Companies or any of their affiliates, subsidiaries,
successors, assigns or their employees, officers or directors.
6.5 Consideration. The Executive acknowledges that his
agreements contained in this Section 6 are reasonable as to time, geographical
area and scope of activities to be restrained and do not impose a greater
restraint than is necessary to protect the Companies' goodwill, proprietary
information and other business interests and are a material inducement to the
Company's entering into this Agreement. In addition, the Executive agrees that
the amounts payable under Sections 4(c) and (d), Section 5, and the Companies'
provision of initial and ongoing confidential information and specialized
training to the Executive are sufficient consideration to support the covenants
in this Section 6. The Executive shall be bound by the provisions of this
Section 6 to the maximum extent permitted by law, it being the intent and
spirit of the parties that the foregoing shall be fully enforceable. However,
the parties further agree that, if any of the provisions hereof shall for any
reason be held to be excessively broad as to duration, geographical scope,
property or subject matter, such provision shall be construed by limiting and
reducing it so as to be enforceable to the extent compatible with applicable
law as it shall herein pertain.
6.6 Remedies. The Executive acknowledges that if he violates
any of the provisions of this Section 6, the Company, in addition to any other
rights and remedies available under this Agreement or otherwise, shall be
entitled to an injunction to be issued or specific enforcement to be required
(without the necessity of any bond) restricting the Executive from committing
or continuing any such violation.
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6.7 Survival. The provisions of this Section 6 shall survive
termination of this Agreement.
7. 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 Executive's 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 7(a)
or which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law.
(b) Special Representations of Executive. The Executive may
not assign his rights or delegate his duties or obligations hereunder
without the written consent of the Company. The Executive represents
to the Company that no previous employer has imposed any contractual
restriction which would, if enforced, have a material adverse effect
on 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 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.
(c) Notice. For the purposes 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 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
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17
Company, or to such other person in writing in accordance herewith,
except that notices of change of address shall be effective only upon
receipt.
(d) Amendment; Waiver. No provision 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. Except as provided in Section 6,
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.
(f) Survival of the Parties' Obligations. The obligations of
the Company and the Executive 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 or Good Reason.
(g) 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.
(h) Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Texas.
(i) 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.
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IN WITNESS WHEREOF, the parties hereto have signed this Agreement on
the _____ day of February, 2000, but except as otherwise set forth in this
Agreement, effective as of March 1, 2000.
INPUT/OUTPUT, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
-----------------------------------------
Xxxxxxx Xxxxxxx
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