AMENDMENT NO. 1 TO
INPUT/OUTPUT, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
WHEREAS, effective June 4, 1992, the Input/Output, Inc. Supplemental
Executive Retirement Plan (the "Supplemental Retirement Plan" or the "Plan") was
established by Input/Output, Inc. (the "Company") to provide for the payment of
certain pension and pension-related benefits to a select group of management and
highly compensated employees who contribute materially to the continued growth,
development and further business success of the Company; and
WHEREAS, the Company retained the power to amend the Supplemental
Retirement Plan pursuant to Section 10.1 of the Plan; and
WHEREAS, the Company desires to amend the Supplemental Retirement Plan to
clarify and correct certain provisions to ensure that the Company's purpose is
carried out;
NOW, THEREFORE, in consideration of the premises and pursuant to the
amendment authority reserved thereunder, effective as of January 17, 1997, the
Plan is hereby amended as hereinafter set forth:
I.
Section 1.1(a) is amended by adding the following sentence at the end of
the definition of "Actuarial Equivalent":
"PROVIDED, HOWEVER, that in the event that a Change of Control occurs, the
following mortality table and interest rate shall be used to determine the
Actuarial Equivalent for any form of benefit with respect to (i) any
Participant whose employment terminates within 24 months after such Change
of Control and (ii) any Participant or Beneficiary who is receiving
payments in the form of an annuity under Article III, Section 4.1, Section
4.3, or Section 4.4 at the time of a Change of Control; and, PROVIDED
FURTHER, that this provision may not be amended at any time prior to that
date which is two years following such Change of Control:
Interest: the prevailing interest rate on 30-year Treasury
securities for the month ended immediately prior to the
date of the Change of Control;
Mortality: 1971 Group Annuity Mortality Table for Males set back
one year."
II.
Section 4.6 is hereby amended in its entirety to read as follows:
"4.6 LUMP SUM SETTLEMENT. A Participant who becomes entitled to
payment of his Vested Deferred Benefit due to Normal Retirement or Early
Retirement, or who terminates employment after a Change of Control, may
upon thirty (30) days written notice to the Company, receive a settlement
of his Deferred Benefit in a single lump sum payment. If the Participant
becomes entitled to payment of his Vested Deferred Benefit due to (i)
Normal Retirement, (ii) Early Retirement, or (iii) involuntary termination
of his employment by the Company after a Change of Control, the lump sum
amount which the Participant shall be entitled to receive shall be equal
to the present value of the portion of his Vested Deferred Benefit which
has not been paid. In addition, if a Participant or a Participant's
Beneficiary is receiving payments in the form of an annuity under Article
III, Section 4.1, Section 4.3, or Section 4.4 of this Plan, then upon a
Change of Control, the Participant or Beneficiary (as applicable) may, upon
thirty (30) days written notice to the Company, require that payment of
benefits shall be accelerated and paid as a lump sum in an amount equal to
the present value of the portion of the Participant's Vested Deferred
Benefit which has not been paid. If the Participant becomes entitled to
payment of his Vested Deferred Benefit due to voluntary termination of
employment by the Participant after a Change of Control, the amount which
the Participant receives shall be equal to the present value of the portion
of his Vested Deferred Benefit which has not been paid REDUCED BY a penalty
in the amount of twenty percent (20%) of such present value. In all such
cases, such present value shall be equal to the Actuarial Equivalent of the
Vested Deferred Benefit which has not been paid. After receiving such
notice from a Participant who is currently receiving periodic payments, the
Company shall thereupon cease making such payments. The Company shall make
any lump sum payment required under this Section 4.6 in one payment to the
Participant within sixty (60) days after the Company's receipt of the
applicable notice. In the event the Participant dies before the lump sum
is paid, the Company shall pay the lump sum amount to the Participant's
Beneficiary, or if no Beneficiary of the Participant is then living, such
amount shall be paid to the Participant's estate."
III.
Section 4.7 is amended in its entirety to read as follows:
"4.7 GOLDEN PARACHUTE EXCISE TAX. In addition to the Participant's
Vested Deferred Benefit payable under the Plan, the Company hereby agrees
to indemnify and hold harmless, on a net after-tax basis, the Participant
from
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and against any excise tax liability arising under Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"), or any successor
provision thereto, including any federal, state or local income or other
tax liability arising from the payment by the Company pursuant to such
indemnity and/or any additional federal excise taxes arising under Section
4999 of the Code related thereto (collectively, the "Excise Tax Protection
Amounts") with respect to the Participant 's receipt of any payments and
benefits under the Plan. Such indemnity shall include (A) any and all
interest, penalties, or other assessments incurred by the Company or the
Participant for the failure to have timely paid any of the Excise Tax
Protection Amounts to any governmental authority, and (B) any and all
claims, losses, damages, including interest and penalties, costs or
reasonable expenses (including reasonable attorneys' and professional fees)
incurred by the Company or the Participant from, in connection with, or
arising out of, the challenge by the Company, either on its own behalf or
for and on behalf of the Participant, of any governmental authority's right
to collect from the Company or the Participant all or any portion of the
Excise Tax Protection Amounts; PROVIDED, HOWEVER, that the Participant's
attorneys shall be selected by the Company and be reasonably acceptable to
the Participant and, PROVIDED, FURTHER, that the Company will not be liable
to the Participant for any penalty or other assessment or interest
attributable to such penalty or other assessment if the Company has
requested the Participant to disclose any item indemnified hereunder on any
tax return filed by the Participant and the Participant has failed to
disclose such item on such return in the manner requested by the Company.
In the case of any claims, losses, damages, fees, costs, or expenses billed
to the Participant that are subject to the Company's indemnification
obligation under this SECTION 4.7, the Company hereby agrees to pay any and
all such amounts within the later to occur of the due date provided by law
or as soon as practicable after receipt of the invoice for such amounts,
and the Company hereby agrees to indemnify and hold the Participant
harmless from and against any and all claims, damages (including interest
and penalties), fees, costs (including costs of collection) and expenses
paid by the Participant or charged to the Participant that relate to or
arise out of the Company's failure to timely pay any and all such amounts."
IV.
Except as expressly amended by the terms of this Amendment No. 1, the
remaining terms of the Plan shall remain in full force and effect.
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EXECUTED this 26th day of March, 1997, effective as of January 17, 1997.
INPUT/OUTPUT, INC.
By: /s/ Gary D. Owens
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Its: President and Chief Executive Officer
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