CONSULTING AGREEMENT
This is a Consulting Agreement ("AGREEMENT") between INPUT/OUTPUT,
Inc., a Delaware corporation with corporate offices at 11104 W. Airport
Blvd., Suite 143, Stafford, Texas 77477, referred to in this Agreement as
"COMPANY", and SAM K. SMITH, residing at 6811 Midcrest, Dallas, Texas 75240,
referred to in this Agreement as "CONSULTANT".
1. SERVICES. Consultant agrees to provide services to the Company as
interim Chief Executive Officer as directed by the Board of Directors, or as
otherwise authorized and funded by the Company (the "WORK"). Company agrees
to retain Consultant's services under the terms and conditions of this
Agreement. Consultant shall use his best efforts to preserve the business of
Company and the goodwill of all employees, contractors, customers, suppliers,
and other persons having business relations with Company. Consultant further
agrees to render services under this Agreement in a professional and
business-like manner and in full accordance with the standards and practices
recognized in the industry.
2. TERM. JAMES M. LAPEYRE, Chairman of the Board, shall act as the
COMPANY REPRESENTATIVE for all purposes of this Agreement unless and until
the identity of the Company Representative is changed by written notice. THIS
AGREEMENT GOVERNS ALL WORK PERFORMED BY CONSULTANT FOR THE COMPANY FROM JUNE
01, 1999 THROUGH MAY 30, 2000. Either party may terminate this Agreement in
the event that the other party materially breaches or fails to comply with
any provision of this Agreement and such breach or failure is not cured
within 10 days after written notice of such breach or failure. Otherwise,
either party upon 30 day written notice may terminate this Agreement. This
Agreement may be renewed upon written agreement of the parties.
3. PAYMENT. Company agrees to pay Consultant for the Work as
agreed in ATTACHMENT A.
4. CONFIDENTIALITY. Consultant, during the term of this Agreement,
shall have access to and become familiar with various trade secrets and
confidential information of Company including, but not limited to, hardware,
software, firmware, design data, customer lists, invoices, customer
requirements, sales procedures, research data, marketing and pricing
information and data, marketing plans, financial information of Company
and/or its customers, and other technical, marketing and/or business
information. This information shall collectively be referred to as the
"CONFIDENTIAL INFORMATION" of Company, and Consultant recognizes and
acknowledges that this confidential Information gives Company a competitive
advantage in the industry. Consultant agrees to not use in any way or
disclose to any person or entity any of the Company's Confidential
Information, either directly or indirectly, either during the term of this
agreement and at any time thereafter, except as required in the course of
performing services under this Agreement. Consultant shall further take
reasonable precautions and act in such a manner as to ensure against
unauthorized disclosure or use of the Confidential Information.
5. ASSIGNMENT OF RIGHTS. All patents, formulae, inventions,
processes, copyrights, proprietary information, trademarks or trade names, or
future improvements to patents, formulae, inventions, processes, copyrights,
proprietary information, trademarks or trade names, developed or completed by
the Consultant during the term of this Agreement in connection with the Work
(collectively, the "ITEMS") shall be promptly disclosed to Company, and the
Consultant shall execute
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such instruments of assignment of the Items to Company as Company shall
request. Consultant agrees that all copyrightable works created by Consultant
or under Consultant's direction in connection with the Work are "works made
for hire" and shall be the sole and complete property of Company and that any
and all copyrights to such works shall belong to Company. To the extent such
works are not deemed to be "works made for hire," Consultant hereby assigns
all proprietary rights, including copyright, in these works to Company
without further compensation. Company hereby acknowledges and agrees,
however, that the Items shall not include any Consultant owned proprietary
program, or any part thereof, or the ideas, concepts, know-how or techniques
employed by Consultant in rendering services and delivering the Items to
Company, or to any modifications of or enhancements to such Consultant owned
proprietary information or material of Consultant is embodied in any Item,
Consultant hereby grants Company a perpetual, irrevocable license to use such
proprietary information or material in conjunction with the Item.
6. PRE-EXISTING INTELLECTUAL PROPERTY. "PRE-EXISTING INTELLECTUAL
PROPERTY" means any trade secret, invention, idea, concept, know-how,
technique, work of authorship, source code or protectable design that has
already been conceived or developed by anyone other than Company before
Consultant renders any services under this Agreement. Consultant will not use
any Pre-Existing Intellectual Property in connection with this Agreement
unless the Consultant has the right to use it for Company's benefit. If
Consultant is not the owner of such Pre-Existing Intellectual Property,
Consultant will obtain from the owner any rights necessary to enable
Consultant to comply with this Agreement.
7. RETURN OF MATERIALS. Any and all files, records, documents,
information, data, and similar items relating to the business of Company or
any of Company's customers or suppliers, whether prepared by Consultant or
otherwise, coming into Consultant's possession as a result of performing
services for Company, shall remain the exclusive property of Company and
shall not be removed from the premises of Company under any circumstances
without the prior written consent of Company (except in the ordinary course
of business during Consultant's active service under this Agreement), and in
any event shall be promptly delivered to Company (without Consultant
retaining any copies) upon termination of this Agreement.
8. CONSULTANT WARRANTIES. Consultant warrants that: (a) the
performance of the Work pursuant to this agreement does not violate any
agreement or obligation between Consultant and a third party, including but
not limited to, any disclosure obligation that Consultant may have to a third
party employer; (b) the Work, as delivered to Company, will not infringe on
any copyright, patent, trade secret, or other proprietary right held by any
third party; and (c) the services provided by Consultant shall be performed
in a professional manner, shall be of a high grade, nature, and quality and
shall conform to any specifications provided by Company.
9. RELATIONSHIP OF PARTIES. Consultant is an independent contractor
for Company. Nothing in this Agreement shall be construed as creating an
employer-employee relationship, as a guarantee of future employment, or as a
limitation upon Company's rights to terminate this Agreement in accordance
with its terms. Consultant further agrees to be responsible for all of
Consultant's federal and state taxes, withholding, social security,
insurance, and other benefits and shall indemnify and hold harmless Company
from any such claims.
10. OTHER ACTIVITIES. During the term of this Agreement, Consultant
is free to engage in other independent contracting activities, provided that
Consultant does not engage in any such activities which are inconsistent with
or in conflict with any provisions hereof, or that so occupy Consultant's
attention as to interfere with the proper and efficient performance of
Consultant's services hereunder.
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Consultant may not provide similar independent consulting services to a
direct competitor of Company, unless Company provides a written waiver of
this conflict.
11. ASSIGNMENT AND SUBCONTRACTORS. Consultant shall not assign this
Agreement or subcontract or any work required to be performed by it without
the prior written consent of Company.
12. PARTIAL INVALIDITY. If any provision of this Agreement is held
to be unenforceable, such provision shall be fully severable and this
Agreement shall be construed and enforced as if such unenforceable provision
never compromised part of this Agreement. The remaining provisions of this
Agreement shall remain in full force and effect.
13. NOTICE. This Agreement supersedes any and all other agreements,
either oral or written, between Company and Consultant with respect to the
subject matter hereof, and contains all of the covenants and agreements
between the parties relating in any way to Consultant's services for Company.
No change or modification of this Agreement shall be valid or binding upon
the parties hereto unless such change or modification shall be in writing and
signed by Company and Consultant. No course of dealing between Company and
Consultant, or any waiver by Company of a breach of any provision of this
Agreement, or delay in exercising any right under this Agreement, shall
operate or be construed as a waiver of any subsequent breach by Consultant.
15. INJUNCTIVE RELIEF. The parties recognize that a remedy at law
for a breach of the provisions of this Agreement relating to Confidential
Information, use of Company's trademark, copyright, an other intellectual
property rights will not be adequate for Company's protection, and
accordingly Company shall have the right to obtain, in addition to any other
relief and remedies available to it, injunctive relief to enforce the
provisions of this Agreement.
16. GOVERING LAW. THIS AGREEMENT, AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HERETO, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS.
17. SURVIVAL. Sections 4, 5, 6, and 7 shall survive the
termination or expiration of this Agreement.
18. NO THIRD PARTY BENEFICIARY. Any agreement to pay an amount or
any assumption of liability herein contained, expressed 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 obligee of any other party, whomsoever, it being the
intention of the undersigned that to one shall be deemed to be a third party
beneficiary of this Agreement.
19. DRAFTING PARTY. This Agreement expresses the mutual intent of
the parties to this Agreement. Accordingly, the rule of construction against
the drafting party shall have no application to this Agreement.
20. GOOD FAITH DISPUTE RESOLUTION PROCEDURES. Any dispute or
controversy arising or in connection with this Agreement shall be settled
exclusively by arbitration in Houston, Texas (in accordance with the rules of
the American Arbitration Association then in effect). Notwithstanding the
pendency of any such dispute or controversy, the Company will continue to pay
Employee his full compensation in effect when the notice giving rise to the
dispute was given and continue Employee as a participant in all compensation,
benefit and insurance plans in which he was participating when the notice
giving rise to the dispute was given, until the dispute is finally resolved.
Amounts paid under this
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paragraph are in addition to all other amounts due under this Agreement and
shall not be offset against or reduce any other amounts due under this
Agreement. Judgement may be entered on the arbitrator's award in any court
having jurisdiction; provided, however, that Employee shall be entitled to
seek specific performance of his right to be paid until the Date of
Termination during the pendency or any dispute or controversy arising under
or in connection with this Agreement.
IN WITNESS WHEREOF the undersigned authorized representatives of the
parties have executed this Agreement as of the day and year last stated below
(the "EFFECTIVE DATE").
INPUT/OUTPUT, INC.: CONSULTANT:
Signature: /s/ Jay Lapeyre Signature: /s/ Sam K. Smith
---------------------------- ------------------------
Printed Name: Jay Lapeyre Printed Name: Sam K. Smith
Title: Chairman of the Board
Date: August 10, 1999 Date: August 7, 1999
Address: 11104 W. Airport Blvd Address: 6811 Midcrest
Stafford, Texas 77477 Dallas, Texas 75240
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ATTACHMENT A
SAM SMITH COMPENSATION PACKAGE
1. Monthly salary - $20,000.00
- One-third of compensation ($6,667.00) to be paid monthly - all diverted
to IRS.
- Two-thirds of compensation to be paid in I/O stock as follows:
- Stock to be issued quarterly
- Current market price - $7.75 per share.
- Two-thirds monthly compensation - $13,333.00 * 12 months =
$159,996.00
- Yearly total ($159,996.00)/Current share price ($7.75) = 20,645
shares. Round to 21,000 shares = 1750 shares per month.
- Buy off the market the number of shares needed for one year
projected allocation at today's price.
- Hold shares in treasury and issue quarterly. Subject to Rule 144.
- Simplifies accounting and disclosure verbiage.
- If assignment ends prior to the month end, partial monthly
allocation will be issued based on number of days worked.
2. Stock Options
- Non-employee Director Stock Options - 20,000 shares with three year
vesting based on market close price on the day elected to the Board.
- Additional grant - 30,000 shares at $10.00 with one year vesting.
- Grant will be issued under 1990 Stock Option Plan using Consulting
Agreement.
- Language will be added to Agreement for acceleration id removed
from the Board, but not if Sam elects to leave.
3. Provide a company vehicle
4. Miscellaneous Expenses
- Per Diem - $50/day for days in Stafford Office for meals, laundry,
etc
- Additional company expenses covered by receipt and expense report.
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