ION Geophysical Corporation
Employment Inducement Stock Option Agreement
THIS EMPLOYMENT
INDUCEMENT STOCK OPTION AGREEMENT (the “Agreement”) is
made effective as of the GrantDay day of GrantMonth ,
2008 (the “Date of Grant”) by and between ION
Geophysical Corporation, a Delaware corporation (the
“Company”), and FName LName (the
“Optionee”).
WHEREAS, pursuant
to that certain Share Purchase Agreement dated as of July 8,
2008 and amended and restated as of ___, 2008 (as amended and
restated, the “Purchase Agreement”), among the Company,
the Sellers named therein, ARAM Systems Ltd. (“ARAM”)
and the other Acquired Entity named therein, a subsidiary of the
Company has purchased from the Sellers all of the issued and
outstanding shares of ARAM and the other Acquired Entity (the
“Acquisition”); and
WHEREAS, Optionee
was an employee of ARAM or its Affiliates prior to the Acquisition,
and, as a material inducement to the Optionee’s agreement to
be retained as an employee of ARAM or such Affiliate within the
Company’s corporate group after the Acquisition, the Company
desires to grant the Optionee an option to purchase shares of
common stock, $0.01 par value, of the Company, subject to the terms
of this Agreement;
NOW, THEREFORE
, in consideration of the premises and the mutual covenants
and agreements herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Optionee hereby agree as follows
:
1. Except as
defined elsewhere herein, the words and phrases defined in this
Section 1 shall have the meaning set out in these definitions
throughout this Agreement, unless the context in which any such
word or phrase appears reasonably requires a broader, narrower, or
different meaning.
(a)
“Affiliate” means any parent corporation and any
subsidiary corporation. The term “parent corporation”
means any corporation or other entity (other than the Company) in
an unbroken chain of corporations or entities ending with the
Company if, at the time of the action or transaction, each of the
corporations or entities other than the Company owns stock or
voting equity possessing 50 percent (50%) or more of the total
combined voting power of all classes of stock or voting equity in
one of the other corporations or entities in the chain. The term
“subsidiary corporation” means any corporation or other
entity (other than the Company) in an unbroken chain of
corporations or entities beginning with the Company if, at the time
of the action or transaction, each of the corporations or entities
other than the last corporation or entity in the unbroken chain
owns stock or voting equity possessing 50 percent (50%) or
more of the total combined voting power of all classes of stock or
voting equity in one of the other corporations or entities in the
chain.
(b)
“Board” means the board of directors of the
Company.
(c)
“Change in Control” shall mean the occurrence of
any of the following after the Date of Grant:
(i) The
acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a
“Person”)) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of forty
percent (40%) or more of either (A) the then outstanding
shares of common stock of the Company (the “Outstanding
Company Stock”) or (B) the combined voting power of the
then outstanding voting securities of the Company entitled to vote
generally in the election of
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directors (the
“Outstanding Company Voting Securities”); provided,
however, that the following acquisitions shall not constitute a
Change in Control: (x) any acquisition directly from the
Company or any Subsidiary, (y) any acquisition by the Company
or any Subsidiary or by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any Subsidiary, or
(z) any acquisition by any corporation pursuant to a
reorganization, merger, consolidation or similar business
combination involving the Company (a “Merger”), if,
following such Merger, the conditions described in clauses
(A) and (B) of subparagraph (c)(iii) below are
satisfied;
(ii) Individuals
who, as of the Date of Grant, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute
at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the Date of Grant
whose election, or nomination for election by the Company’s
stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered
as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of either an actual or
threatened election contest (a solicitation by any person or group
of persons for the purpose of opposing a solicitation of proxies or
consents by the Board with respect to the election or removal of
Directors at any annual or special meeting of stockholders) or
other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board;
(iii) Approval by
the stockholders of the Company of a Merger, unless immediately
following such Merger, (A) substantially all of the holders of
the Outstanding Company Voting Securities immediately prior to such
Merger beneficially own, directly or indirectly, more than 50% of
the common stock of the corporation resulting from such Merger (or
its parent corporation) in substantially the same proportions as
their ownership of Outstanding Company Voting Securities
immediately prior to such Merger and (B) at least a majority
of the members of the board of directors of the corporation
resulting from such Merger (or its parent corporation) were members
of the Incumbent Board at the time of the execution of the initial
agreement providing for such Merger; or
(iv) The sale or
other disposition of all or substantially all of the assets of the
Company.
(d)
“Code” means the U.S. Internal Revenue Code of
1986, as amended.
(e)
“Committee” means the Compensation Committee of
the Board or such other committee designated by the
Board.
(f)
“Company” has the meaning set forth in the
preamble of this Agreement.
(g) “
Disability ” means a mental or physical disability as
determined under the then-established policies of the
Company.
(h)
“Exchange Act” means the U.S. Securities
Exchange Act of 1934, as amended from time to time.
(i)
“Expiration Date” has the meaning set forth in
Section 3 hereof.
(j) “Fair
Market Value” of a share of Stock is the closing sales
price per share on the New York Stock Exchange, or such reporting
service as the Committee may select, on the Date of
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Grant, or in
the absence of reported sales on such day, the most recent previous
day for which sales were reported.
(k)
“Option” has the meaning set forth in Section
3(a) of this Agreement.
(l) “
Optionee” has the meaning set forth in the preamble of
this Agreement.
(m) “
Retire ” or “ Retirement ” means
retirement in good standing from the employ of the Company and all
of its Affiliates for reason of age under then-established policies
of the Company and its Affiliates.
(n)
“Stock” means the common stock of the Company,
$0.01 par value or, in the event that the outstanding shares of
common stock are later changed into or exchanged for a different
class of stock or securities of the Company or another corporation,
that other stock or security.
(a) Subject to the
terms and conditions of this Agreement, on this day, the Date of
Grant, the Company hereby grants to the Optionee an option (the
“Option”) to purchase OptionsGranted shares of
the Stock of the Company, at an exercise price of
$OptionPrice per share, subject to any adjustments provided
for in this Agreement. The Option shall vest and be exercisable
according to the following schedule, but subject to
Sections 3, 4 and 5 below:
(i) On the first
anniversary of the Date of Grant, the Option shall vest and then be
exercisable with respect to 25% of the total number of shares
subject to the Option;
(ii) On the second
anniversary of the Date of Grant, the Option shall vest and then be
exercisable with respect to an additional 25% of the total number
of shares subject to the Option;
(iii) On the third
anniversary of the Date of Grant, the Option shall vest and then be
exercisable with respect to an additional 25% of the total number
of shares subject to the Option; and
(iv) On the fourth
anniversary of the Date of Grant, the Option shall vest and then be
exercisable with respect to the remaining 25% of the total number
of shares subject to the Option.
To the extent not
previously exercised, installments of vested Options shall be
cumulative and may be exercised in whole or in part.
Notwithstanding
the foregoing, in the event of the termination of the
Optionee’s employment with ARAM, the Company and any of the
other Affiliates of the Company for any reason prior to the
Expiration Date, the Option shall not continue to vest after such
termination of employment and any unvested Options shall be
forfeited effective as of such date of termination.
(b) In addition,
notwithstanding any provision contained in this Agreement to the
contrary, in the event of a Change in Control this Option shall
thereupon be fully vested and shall be immediately exercisable in
full.
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3.
Expiration. The Option evidenced by this Agreement, to the
extent such rights with respect thereto shall not previously have
been exercised or sooner terminated, shall expire and be rendered
null and void at 5:00 p.m., Houston, Texas time, on
Expiration (the “Expiration Date”).
(a) Death,
Disability and Retirement. Upon the death or Disability of the
Optionee while in the employ of ARAM , the Company or any
Affiliate of the Company, or upon his Retirement, the Optionee, or,
if applicable, his executors, administrators or any person or
persons to whom his Option may be transferred by will or by the
laws of descent and distribution, shall have the right for one year
following the date of such death, Disability, or Retirement of the
Optionee, but in any event, not later than the Expiration Date, to
exercise the Option to the extent it was vested at the date of such
death, Disability, or Retirement.
(b) Severance
of Employment . Unless expressly provided otherwise in this
Agreement, Options shall (a) terminate six months after
severance of employment with ARAM, the Company and all Affiliates
of the Company for any reason other than for reasons of death,
Retirement, or Disability and (b) be exercisable only to the
extent such Options are exercisable at the time of the
Optionee’s severance of employment;
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