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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported): MARCH 31, 2003
INPUT/OUTPUT, INC.
(Exact name of registrant as specified in its charter)
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<Caption>
DELAWARE 1-13402 22-2286646
(State or other jurisdiction (Commission File Number) (IRS Employer Identification No.)
of incorporation)
12300 PARC CREST DR.
STAFFORD, TX 77477
(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code: (281) 933-3339
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ITEM 5. OTHER EVENTS.
On March 31, 2003, Input/Output, Inc. (the "Company") announced that Robert
P. Peebler had been appointed the Company's President and Chief Executive
Officer, effective that date. In addition, the Company announced that it would
invest $3.0 million in Series B Preferred securities in Energy Virtual Partners,
LP and its affiliated corporation (together, "EVP").
EVP is a company formed in 2001 that provides asset management services to
large oil and gas companies to enhance the value of their oil and gas
properties. After consummation of the investment, the Company will own
approximately 22% of the outstanding ownership interests of EVP and 11% of the
outstanding voting interest in EVP. The closing of the investment, which is
subject to customary closing conditions, is scheduled to occur in April 2003.
Mr. Peebler founded EVP in April 2001 and, prior to his employment with the
Company, Mr. Peebler was President and Chief Executive Officer of EVP. Mr.
Peebler intends to continue his association with EVP as its chairman.
Mr. Peebler will continue as a director of the Company, having served as a
director since 1999.
The Company has entered into an Employment Agreement with Mr. Peebler
effective March 31, 2003 (the "Employment Agreement"). Under the Employment
Agreement, Mr. Peebler will serve as its President and Chief Executive Officer.
The Employment Agreement also recognizes Mr. Peebler's involvement with EVP and
its related entities and states that he must devote at least 80% of his time to
the Company. Mr. Peebler's base salary during the term of the Employment
Agreement is $400,000 per annum, which may be increased, but not decreased, from
time to time by the Compensation Committee of the Company's Board of Directors.
The Employment Agreement does not provide for the payment of any bonus to Mr.
Peebler. In addition, Mr. Peebler will be granted a nonqualified stock option
(the "Option") effective March 31, 2003 to purchase 1,325,000 shares of common
stock of the Company at an exercise price of $6.00 per share under the Company's
proposed 2003 Stock Option Plan (the "Plan"). On March 28, 2003, the closing
sales price per share of the Company's common stock on the New York Stock
Exchange was $3.80. The Option will vest in equal monthly installments over a
three-year period beginning on the first anniversary of the date of grant and
will have a term of ten years. The granting of the Option is subject to the
approval of the Plan by the Company's stockholders at the Company's 2003 annual
meeting of stockholders. If the Plan is not approved by the stockholders, the
Company is required under the Employment Agreement to provide Mr. Peebler with a
substitute incentive compensation arrangement that will have substantially
equivalent value to the Option. Mr. Peebler will also be entitled to paid
vacation of not less than four weeks per year, and to participate in all
insurance and retirement plans, incentive compensation plans and other benefit
plans or programs as made available to senior management employees of the
Company.
The term of the Employment Agreement is for five years unless earlier
terminated pursuant to the Employment Agreement. If the Employment Agreement is
terminated by the Company for cause or by Mr. Peebler for no reason or other
than good reason (defined in the Employment Agreement as a reduction in his
status, pay or benefits; a demotion to a lesser position with the Company or
reduction of his duties and responsibilities; or a change of his principal place
of employment by more than 30 miles), Mr. Peebler will only be entitled to
receive compensation through the date of termination. If the Employment
Agreement is terminated by the Company for no reason or without cause or by Mr.
Peebler for good reason, Mr. Peebler will be entitled to receive a lump sum
equal to 0.99 times his base salary, an amount equal to two times his base
salary payable in twenty-four monthly installments following the termination
date, and all incentive compensation then due him under the terms of the
relevant incentive compensation arrangements then in effect and applicable to
him.
The Employment Agreement contains provisions relating to protection of the
Company's confidential information and intellectual property and restricts Mr.
Peebler from soliciting the Company's employees and customers or competing with
the Company during the term of his employment and for a
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period of two years following termination. If Mr. Peebler violates these
covenants, under the Employment Agreement the Company can suspend further
payment of the termination payment that would otherwise be due to him. In the
event of a change of control of the Company, if Mr. Peebler remains with the
Company or with the Company's successor for a period of 18 months following the
change of control, Mr. Peebler can then voluntarily resign for any reason or no
reason at all, and be entitled to receive his termination payments under the
Employment Agreement. If any payment or benefit under the Employment Agreement
is determined to be subject to the excise tax for "excess parachute payments"
under U.S. federal income tax rules, the Company has agreed to pay to Mr.
Peebler an additional amount to adjust for the incremental tax costs to Mr.
Peebler for those payments. The Company also agreed to indemnify Mr. Peebler to
the fullest extent permitted by the Company's certificate of incorporation and
bylaws, and to provide Mr. Peebler coverage under the Company's directors' and
officers' liability insurance policies to the same extent as the Company's other
executive officers.
The foregoing description of the Employment Agreement is qualified by
reference to the terms of the Employment Agreement, a copy of which is filed as
Exhibit 10.1 to this Current Report on Form 8-K and is incorporated by reference
herein.
On March 31, 2003, the Company issued a press release, which is filed as
Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by
reference, announcing the hiring of Mr. Peebler and its investment in EVP.
ADDITIONAL INFORMATION
The Company will file a proxy statement with the Securities and Exchange
Commission relating to the Company's solicitation of proxies from its
stockholders to approve, among other matters, the Plan, at the Company's 2003
annual meeting of shareholders. The Company urges its stockholders to read its
proxy statement when it becomes available, because it will contain important
information. The Company's proxy statement and other relevant documents will be
available for free at www.sec.gov or at the Company's website at www.i-o.com. A
free copy of the Company's proxy statement, when it becomes available, may also
be obtained by writing to the Company at 12300 Parc Crest Dr., Stafford,
Texas 77477. The Company and its directors may be considered participants in the
solicitation of proxies in connection with the Company's 2003 annual meeting.
Information regarding the names, affiliation and interests of persons who may be
deemed participants in the solicitation of proxies of the Company's stockholders
will be available in the definitive proxy statement to be filed by the Company
with the Securities and Exchange Commission.
The Company has filed contemporaneously herewith with the Securities and
Exchange Commission a Schedule 14A under Rule 14a-12 under the Securities
Exchange Act of 1934.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
10.1 Employment Agreement effective as of March 31, 2003, between
Input/Output, Inc. and Robert P. Peebler.
99.1 Press Release issued on March 31, 2003 by Input/Output, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Date: March 31, 2003
Input/Output, Inc.
(Registrant)
By: /s/ Brad Eastman
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Name: Brad Eastman
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Title: Chief Administrative Officer
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INDEX TO EXHIBITS
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EXHIBIT NUMBER DESCRIPTION
10.1 Employment Agreement effective as of March 31, 2003, between
Input/Output, Inc. and Robert P. Peebler.
99.1 Press Release issued on March 31, 2003 by Input/Output, Inc.
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