As filed with the Securities and Exchange Commission on
November 14, 2008
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ION GEOPHYSICAL CORPORATION
(Exact name of registrant as specified in its charter)
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DELAWARE
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22-2286646
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(State or other jurisdiction
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(I.R.S. Employer Identification No.)
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of incorporation or organization)
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2105 CITYWEST BLVD., SUITE 400
HOUSTON, TEXAS 77042-2839
(Address, including zip code, of principal executive offices)
FOURTH AMENDED AND RESTATED 2004 LONG-TERM INCENTIVE PLAN
and
ARAM SYSTEMS EMPLOYEE INDUCEMENT STOCK OPTION PROGRAM
(Full title of the plan)
DAVID L. ROLAND, ESQ.
SENIOR VICE PRESIDENT, GENERAL COUNSEL
AND CORPORATE SECRETARY
ION GEOPHYSICAL CORPORATION
2105 CITYWEST BLVD., SUITE 400
HOUSTON, TEXAS 77042-2839
(281) 933-3339
(Name, address and telephone number of agent for service)
With copies to:
MAYER BROWN LLP
700 LOUISIANA, SUITE 3400
HOUSTON, TEXAS 77002
ATTENTION: MARC H. FOLLADORI
(713) 238-3000
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated
filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
(Check one):
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Non-accelerated filer
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Large accelerated filer
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Accelerated filer
¨
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(Do not check if a smaller reporting company)
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Smaller reporting company
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CALCULATION OF REGISTRATION FEE:
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Proposed maximum
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Proposed maximum
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Title of securities
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Amount to be
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offering price per
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aggregate offering
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Amount of
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to be registered
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registered
(1)(2)
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share
(3)
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price
(3)
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registration fee
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Common Stock $0.01 par value
(1)
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1,410,000 shares
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$
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4.10
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$
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5,781,000
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$
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227.19
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(1)
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This registration statement also covers an indeterminate number of shares that may become
issuable pursuant to certain anti-dilution adjustment provisions under the registrant’s Fourth
Amended and Restated 2004 Long-Term Incentive Plan (the “2004 Plan”) and under the option
agreements entered into between the registrant and individual participants in the ARAM Systems
Employee Inducement Stock Option Program, pursuant to Rule 416(a) under the Securities Act of
1933 (the “Securities Act”).
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(2)
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The shares registered under this registration statement consist of (i) an additional
1,000,000 shares issuable pursuant to the 2004 Plan and (ii) 410,000 shares issuable pursuant
to the ARAM Systems Employee Inducement Stock Option Program.
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(3)
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The offering price per share and the aggregate offering price have been estimated solely for
purposes of calculating the registration fee pursuant to Rule 457(c) and Rule 457(h) under the
Securities Act on the basis of the average high and low sale prices for the registrant’s shares
of common stock as reported on the New York Stock Exchange on November 12, 2008.
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INTRODUCTORY STATEMENT
This Registration Statement on Form S-8 (this “Registration Statement”) is being filed by ION
Geophysical Corporation (the “Company,” or the “Registrant”) pursuant to General Instruction E to
Form S-8 to register an additional 1,000,000 shares of the Company’s common stock, par value $0.01
per share, issuable pursuant to the Fourth Amended and Restated 2004 Long-Term Incentive Plan (the
“2004 Plan”). On February 14, 2008, the Company’s Board of Directors approved, and on May 27, 2008,
the stockholders of the Company approved, the amendment of such plan as previously in effect, to
increase by 1,000,000 the total number of shares of common stock of the Company available for
issuance under such plan. The contents of the earlier registration statements on Form S-8
previously filed by the Company with the Securities and Exchange Commission (the “SEC”)
and
relating to the registration of shares and additional shares, respectively, of common stock for
issuance under the 2004 Plan (Form S-8 filed on June 9, 2005, File No. 333-125655; Form
S-8 filed on July 14, 2006, File No. 333-135775; and Form S-8 filed on August 9, 2007, File No.
333-145274), are hereby incorporated by reference in this Registration Statement in accordance with
General Instruction E to Form S-8.
This Registration Statement is also being filed to register 410,000 shares of the Company’s
common stock for issuance upon the exercise of employment inducement stock option awards granted to
certain employees of ARAM Systems Ltd. and its affiliates, under a program known as the ARAM
Systems Employee Inducement Stock Option Program, as a material inducement to their joining the
Registrant.
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The information required by Part I of Form S-8 to be contained in a Section 10(a) prospectus
is omitted from this Registration Statement in accordance with Rule 428 of the Securities Act and
the Note to Part I of Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents have been filed by the Registrant with the SEC and are incorporated
into this Registration Statement by reference:
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The Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007,
filed with the SEC on February 27, 2008 pursuant to Section 13(a) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), which Form 10-K was amended by the Registrant’s
Form 10-K/A filed with the SEC on March 4, 2008;
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The Registrant’s Quarterly Reports on Form 10-Q for the quarterly periods ended March 31,
2008, June 30, 2008 and September 30, 2008, filed with the SEC on May 7, 2008, August 7, 2008
and November 7, 2008, respectively, pursuant to Section 13(a) of the Exchange Act;
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The Registrant’s Current Reports on Form 8-K filed with the SEC on February 15, 2008,
February 22, 2008, February 28, 2008, March 3, 2008, July 8, 2008, July 9, 2008 (as amended by
Form 8-K/A filed with the SEC on July 10, 2008), August 18, 2008, August 22, 2008 and
September 23, 2008 (as amended by Form 8-K/A filed with the SEC on November 3, 2008), to the
extent “filed” and not “furnished” pursuant to Section 13(a) of the Exchange Act; and
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The description of the Registrant’s common stock contained in the Registrant’s Registration
Statement on Form 8-A filed with the SEC in October 1994, as amended by the Registrant’s
Current Report on Form 8-K filed with the SEC on March 8, 2002, its Current Report on Form 8-K
filed with the SEC on December 20, 2007 and its Current Report on Form 8-K filed with the SEC
on February 28, 2008.
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All documents filed by the Registrant with the SEC pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Exchange Act subsequent to the filing date of this Registration Statement and prior to
the filing of a post-effective amendment to this Registration Statement which indicates that all
securities offered have been sold or which deregisters all securities then remaining unsold, shall
be
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deemed to be incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of each such document.
Nothing in this Registration Statement shall be deemed to incorporate information furnished by
the Registrant to, but not filed with, the SEC pursuant to Items 2.02 or 7.01 of Form 8-K. Any
statements contained in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or replaced for purposes hereof to the extent that a statement
contained herein, or in any subsequently filed document which is also incorporated or deemed to be
incorporated by reference herein, modifies or replaces such statement. Any statement so modified or
replaced shall not be deemed to constitute a part of this Registration Statement, except as so
modified or replaced.
Item 4. Description of Securities.
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
Not Applicable.
Item 6. Indemnification of Directors and Officers.
The General Corporation Law of the State of Delaware (the “DGCL”) permits the Registrant and
its stockholders to limit directors’ exposure to liability for certain breaches of the directors’
fiduciary duty, either in a lawsuit on behalf of the Registrant or in an action by stockholders of
the Registrant. The Restated Certificate of Incorporation of the Registrant provides that a
director of the Registrant shall not be personally liable to the Registrant or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for liability (i) for any
breach of the director’s duty of loyalty to the Registrant or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the DGCL or (iv) for any transaction from which the director derived an
improper personal benefit.
The Amended and Restated Bylaws (the “Bylaws”) of the Registrant provide that the Registrant
shall, to the full extent permitted by applicable laws (including the DGCL), indemnify its
directors, officers, employees and agents with respect to expenses (including counsel fees),
judgments, fines, penalties, other liabilities and amounts incurred by any such person in
connection with any threatened, pending or completed action, suit or proceeding to which such
person is or was a party, or is or was threatened to be made a party, by reason of the fact that
such person is or was serving as a director, officer, employee or agent of the Registrant or any of
its subsidiaries, or is or was serving at the request of the Registrant or any of its subsidiaries
as a director, officer, employee, agent or trustee of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise. The Bylaws provide that the
indemnification provided pursuant to the Bylaws is not exclusive of any other rights to which those
seeking indemnification may be entitled under any provision of law, certificate of incorporation,
bylaws, governing documents, agreement, vote of stockholders or disinterested directors or
otherwise. The Registrant has entered into indemnification agreements with certain of its officers
and directors, under which the Registrant has agreed to indemnify its officers and directors
against certain liabilities.
The Registrant maintains a standard form of officers’ and directors’ liability insurance
policy which provides coverage to the officers and directors of the Registrant for certain
liabilities, including certain liabilities which may arise out of this Registration Statement.
Item 7. Exemption From Registration Claimed.
Not Applicable.
Item 8. Exhibits.
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4.1
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Restated Certificate of Incorporation dated September 24, 2007 filed on September 24, 2007 as
Exhibit 3.4 to the Registrant’s Current Report on Form 8-K and incorporated herein by
reference.
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4.2
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Amended and Restated Bylaws of ION Geophysical Corporation filed on September 24, 2007 as
Exhibit 3.5 to the Registrant’s Current Report on Form 8-K and incorporated herein by
reference.
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4.3
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Fourth Amended and Restated 2004 Long-Term Incentive Plan, filed as Appendix A to the
definitive proxy statement for the 2008 Annual Meeting of Stockholders of ION Geophysical
Corporation, filed with the SEC on April 21, 2008, and incorporated herein by reference.
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4.4*
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Form of Employee Stock Option Award Agreement pursuant to which participants in the ARAM
Systems Employee Inducement Stock Option Program are to be granted employment inducement stock
options to acquire shares of common stock of the Registrant.
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5.1*
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Opinion of Mayer Brown LLP.
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23.1*
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Consent of Ernst & Young LLP.
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23.2*
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Consent of PricewaterhouseCoopers LLP.
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23.3
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Consent of Mayer Brown LLP (included in the opinion of Mayer Brown LLP filed as Exhibit 5.1
hereto).
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24.1
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Power of Attorney (included on the signature page hereto).
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Item 9. Undertakings.
A. Undertaking to update.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective
amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events arising after the effective date of
this Registration Statement (or the most recent post-effective amendment hereof) which,
individually or in the aggregate, represent a fundamental change in the information set forth in
this Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no more than a 20 percent change in
the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in
this Registration Statement; and
(iii) To include any material information with respect to the plan of distribution not
previously disclosed in this Registration Statement or any material change to such information in
this Registration Statement;
provided
,
however
, that paragraphs (i) and (ii) above do not apply if the
information required to be included in a post-effective amendment by those paragraphs is
contained in reports filed with or furnished to the SEC by the Registrant pursuant to Section 13
or 15(d) of the Exchange Act that are incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the Securities Act, each such
post-effective amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities
being registered which remain unsold at the termination of the offering.
B. Filings incorporating subsequent Exchange Act documents by reference.
The undersigned Registrant hereby undertakes that, for purposes of determining any liability
under the Securities Act, each filing of the Registrant’s annual report pursuant to Section 13(a)
or 15(d) of the Exchange Act that is incorporated by reference in this
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Registration Statement shall be deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
C. Undertaking with respect to indemnification.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted
to directors, officers and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with the securities being registered,
the Registrant will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it
has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and
has duly caused this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Houston, State of Texas, on November 14, 2008.
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ION GEOPHYSICAL CORPORATION
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By:
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/s/ Robert P. Peebler
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Robert P. Peebler
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President and Chief Executive Officer
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POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears below constitutes
and appoints R. Brian Hanson and David L. Roland, and each of them, his true and lawful
attorneys-in-fact and agents, with full power of substitution and resubstitution for him and in his
name, place and stead, in any and all capacities, to sign, execute and file this Registration
Statement under the Securities Act of 1933 and any and all amendments (including, without
limitation, post-effective amendments and any amendment or amendments or additional registration
statement filed pursuant to Rule 462 under the Securities Act of 1933 increasing the amount of
securities for which registration is being sought) to this Registration Statement, and to file the
same, with all exhibits thereto, and any and all other documents in connection therewith, with the
SEC, to sign any and all applications, registration statements, notices or other documents
necessary or advisable to comply with the applicable state securities laws, and to file the same,
together with other documents in connection therewith, with the appropriate state securities
authorities, granting unto said attorneys-in-fact and agents full power and authority to do and
perform each and every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has
been signed by the following persons in the capacities and on the dates indicated.
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SIGNATURE
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TITLE
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DATE
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/s/ Robert P. Peebler
Robert P. Peebler
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President and Chief Executive Officer and Director
(Principal Executive Officer)
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November 14, 2008
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/s/ R. Brian Hanson
R. Brian Hanson
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Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
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November 14, 2008
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/s/ Michael L. Morrison
Michael L. Morrison
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Vice President and Corporate Controller
(Principal Accounting Officer)
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November 14, 2008
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/s/ James M. Lapeyre, Jr.
James M. Lapeyre, Jr.
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Chairman of the Board of Directors and Director
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November 14, 2008
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/s/ Bruce S. Appelbaum
Bruce S. Appelbaum
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Director
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November 14, 2008
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/s/ Theodore H. Elliott, Jr.
Theodore H. Elliott, Jr.
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Director
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November 14, 2008
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/s/ Franklin Myers
Franklin Myers
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Director
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November 14, 2008
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/s/ S. James Nelson, Jr.
S. James Nelson, Jr.
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Director
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November 14, 2008
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/s/ John N. Seitz
John N. Seitz
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Director
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November 14, 2008
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INDEX TO EXHIBITS
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4.1
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Restated Certificate of Incorporation dated September 24, 2007 filed on September 24, 2007 as
Exhibit 3.4 to the Registrant’s Current Report on Form 8-K and incorporated herein by
reference.
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4.2
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Amended and Restated Bylaws of ION Geophysical Corporation filed on September 24, 2007 as
Exhibit 3.5 to the Registrant’s Current Report on Form 8-K and incorporated herein by
reference.
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4.3
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Fourth Amended and Restated 2004 Long-Term Incentive Plan, filed as Appendix A to the
definitive proxy statement for the 2008 Annual Meeting of Stockholders of ION Geophysical
Corporation, filed with the SEC on April 21, 2008, and incorporated herein by reference.
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4.4*
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Form of Employee Stock Option Award Agreement pursuant to which participants in the ARAM
Systems Employee Inducement Stock Option Program are to be granted employment inducement stock
options to acquire shares of common stock of the Registrant.
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5.1*
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Opinion of Mayer Brown LLP.
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23.1*
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Consent of Ernst & Young LLP.
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23.2*
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Consent of PricewaterhouseCoopers LLP.
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23.3
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Consent of Mayer Brown LLP (included in the opinion of Mayer Brown LLP filed as Exhibit 5.1 hereto).
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24.1
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Power of Attorney (included on the signature page hereto).
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Exhibit 4.4
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
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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.
2.
Grant; Vesting.
(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”).
4.
Termination.
(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; provided, however, that
in no event will the Option be exercisable after the Expiration Date. Whether authorized
leave of absence or absence on military or government service shall constitute severance of
the employment of the Optionee shall be determined by the Committee at that time.
5.
Forfeiture.
Notwithstanding any other provisions of this Agreement, if Optionee’s
employment with the Company, ARAM or any Affiliate shall be terminated for any of the following
reasons, the Optionee shall forfeit all outstanding vested and unvested Options, including all
exercised Options pursuant to which the Company has not yet delivered a stock certificate: (i) the
conviction of the Optionee by a court of competent jurisdiction as to which no further appeal can
be taken of a crime involving moral turpitude or a felony; (ii) the commission by the Optionee of a
material act of fraud upon the Company or any Subsidiary, or any customer or supplier thereof;
(iii) the willful misappropriation of any funds or property of the Company or any Subsidiary, or
any customer or supplier thereof; (iv) the willful, continued and unreasonable failure by the
Optionee to perform the material duties assigned to him which is not cured to the reasonable
satisfaction of the Company within 30 days after written notice of such failure is provided to
Optionee by the Board or by a designated officer of the Company or a Subsidiary; (v) the knowing
engagement by the Optionee in any direct and material conflict of interest with the Company or any
Subsidiary without compliance with the Company’s or Subsidiary’s conflict of interest policy, if
any, then in effect; or (vi) the knowing engagement by the Optionee, without the written approval
of the Board, in any material activity which competes with the business of the Company or any
Subsidiary or which would result in a material injury to the business, reputation or goodwill of
the Company or any Subsidiary; or (vii) the material breach by a Consultant of such Optionee’s
contract with the Company. The decision of the Company as to the reason for Optionee’s termination
of employment and the damage done to ARAM, the Company or such Affiliate shall be final. No
decision of the Company, however, shall affect the finality of the discharge of the Optionee by
ARAM, the Company or such Affiliate in any manner.
6.
Changes in the Company’s Capital Structure.
The existence of outstanding Options shall not
affect in any way the right or power of the Company or its stockholders to make or authorize any
and all adjustments, recapitalizations, reorganizations or other changes in the Company’s capital
structure or its business, or any merger or consolidation of the Company, or any issue of bonds,
debentures, preferred or prior preference stock ahead of or affecting the Stock or its rights, or
the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a similar character or
otherwise.
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If the Company shall effect a subdivision or consolidation of shares or other capital
readjustment, the payment of a stock dividend, or other increase or reduction of the number of
shares of the Stock outstanding, without receiving compensation for it in money, services or
property, then the number, class, and per share price of shares of Stock subject to the Option
shall be appropriately adjusted in such a manner so as to entitle Optionee to receive upon exercise
of the Option, for the same aggregate cash consideration, the equivalent total number and class of
shares Optionee would have received had Optionee exercised his Option in full immediately prior to
the event requiring the adjustment.
If, while the Option remains outstanding and unexercised, (i) the Company shall not be the
surviving entity in any merger, consolidation or other reorganization (or survives only as a
subsidiary of an entity other than an entity that was directly or indirectly wholly-owned by the
Company immediately prior to such merger, consolidation or other reorganization), (ii) the Company
sells, leases or exchanges or agrees to sell, lease or exchange all or substantially all of its
assets to any other person or entity (other than an entity that is wholly-owned by the Company),
(iii) the Company is to be dissolved, or (iv) the Company is a party to any other corporate
transaction (as defined under section 424(a) of the Code and applicable U.S. Treasury Regulations)
that is not described in clauses (i), (ii) or (iii) of this sentence (each such event is referred
to herein as a “Corporate Change”), then (x) except as otherwise expressly provided in this
Agreement or as a result of the effectuation of one or more of the alternatives described below,
there shall be no acceleration of the time at which the Option then outstanding may be exercised,
and (y) no later than ten (10) days after the approval by the stockholders of the Company of such
Corporate Change, the Board or the Committee, acting in their sole and absolute discretion without
the consent or approval of Optionee, shall act to effect one or more of the following alternatives:
(1) accelerate the time at which the Option then outstanding may be exercised so
that the Option may be exercised in full for a limited period of time on or before a
specified date (before or after such Corporate Change) fixed by the Committee or the
Board of Directors, after which specified date the Option then remaining unexercised
and all rights of Optionee thereunder shall terminate;
(2) require the mandatory surrender to the Company by Optionee of the Option
(regardless of whether the Option is then exercisable under the provisions of this
Agreement) as of a date, before or after such Corporate Change, specified by the
Committee or the Board of Directors, in which event the Committee or the Board shall
thereupon cancel such Option and the Company shall pay to Optionee an amount of cash
per share equal to the excess, if any, of the per share price offered to stockholders
of the Company in connection with such Corporate Change over the exercise price under
this Option for such shares;
(3) with respect to Optionee, have some or all of this Option (whether vested or
unvested) assumed or have a new option substituted for some or all of this Option
(whether vested or unvested) by an entity that is a party to the transaction
resulting in such Corporate Change and that is then employing him, or a parent or
subsidiary of such entity, provided that (A) such assumption or substitution is on a
basis in which the excess of the aggregate fair market value of the shares subject to
such new option immediately after the assumption or substitution over the aggregate
exercise price of such shares hereunder is equal to the excess of the aggregate fair
market value of all shares subject to the Option immediately before such assumption
or substitution over the aggregate exercise price of such shares, and (B) the assumed
rights under the existing Option or the substituted rights under such new option, as
the case may be, will have the same terms and conditions as the rights under the
existing Option assumed or substituted for, as the case may be;
(4) provide that the number and class of shares of Stock covered by the Option
(whether vested or unvested) theretofore granted shall be adjusted so that the Option
when
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exercised shall thereafter cover the number and class of shares of stock or
other securities or property (including, without limitation, cash) to which the
Optionee would have been entitled pursuant to the terms of the agreement or plan (or
both) relating to such Corporate Change if, immediately prior to such Corporate
Change, the Optionee had been the holder of record of the number of shares of Stock
then covered by the Option; or
(5) make such adjustments to this Option, if any, as the Committee or the Board
deems appropriate to reflect such Corporate Change.
In effecting one or more of alternatives (3), (4) or (5) above, and except as otherwise may be
provided in this Agreement, the Committee or the Board of Directors, in their sole and absolute
discretion and without the consent or approval of the Optionee, may accelerate the time at which
some or all Options then outstanding may be exercised.
If changes occur in the outstanding Stock by reason of recapitalizations, reorganizations,
mergers, consolidations, combinations, exchanges or other changes in capitalization occurring after
the Date of Grant and not otherwise provided for by this Section 6, then the Option and this
Agreement shall be subject to adjustment by the Committee or the Board in their sole and absolute
discretion as to the number and price of shares of stock or other consideration subject to this
Option.
7.
Forms of Consideration Authorized.
The exercise of the Option shall be made only by
delivery of a properly executed notice of exercise together with irrevocable instructions to a
broker or dealer providing for the assignment to the Company of the proceeds of a sale or loan
arranged by the Optionee with respect to the shares being acquired upon the exercise of the Option
(a “Cashless Exercise”), or by such other terms and conditions as may be approved by the Committee
to the extent permitted by applicable law.
8.
Non-Events.
The issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, for cash or property, or for labor or services
either upon direct sale or upon the exercise of rights or warrants to subscribe for them, or upon
conversion of shares or obligations of the Company convertible into shares or other securities,
shall not affect, and no adjustment by reason of such issuance shall be made with respect to, the
number, class, or price of shares of Stock then subject to this Option.
9.
Tax Withholding.
(a) ARAM, the Company or any Affiliate shall be entitled to deduct from other
compensation payable to Optionee any sums required by any applicable law to be withheld with
respect to the grant or exercise of the Option. In the alternative, ARAM, the Company or
such Affiliate may require the Optionee (or other person exercising the Option) to pay the
sum directly to the employer. If the Optionee is required to pay the sum directly, payment
in cash or by check of such sums for taxes shall be delivered within ten days after the date
of grant or exercise, as the case may be. In satisfaction of the payment of such sum to the
Company or Affiliate, the Optionee may make a written election, which may be accepted or
rejected in the discretion of the Chief Financial Officer of the Company, to have withheld a
portion of the shares of Stock issuable to him or her upon exercise of the Option having an
aggregate Fair Market Value, on the date of exercise, equal to or less than the amount
required to be withheld, provided that the Fair Market Value of the shares held back shall
not exceed the Company’s or Affiliate’s minimum statutory withholding tax obligations.
(b) The Company and its Affiliates shall have no obligation upon exercise of the Option
to issue any shares of Stock until the Company has received payment sufficient to cover all
sums due with respect to that exercise. The Company and its Affiliates shall not be
obligated to advise Optionee of the existence of the tax or the amount which the employer
will be required to withhold.
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10.
Requirements of Law.
The Company shall not be required to sell or issue any Stock under
the Option if issuing that Stock would constitute or result in a violation by the Optionee or the
Company of any provision of any law, statute, or regulation of any governmental authority.
Specifically, in connection with any applicable statute or regulation relating to the registration
of securities, upon exercise of the Option, the Company shall not be required to issue any Stock
unless the Committee has received evidence satisfactory to it to the effect that the holder of the
Option will not transfer the Stock except in accordance with applicable law, including receipt of
an opinion of counsel satisfactory to the Company to the effect that any proposed transfer complies
with applicable law. The determination by the Committee on this matter shall be final, binding and
conclusive. The Company may, but shall in no event be obligated to, register any Stock issuable
upon exercise of the Option pursuant to applicable securities laws of any country or any political
subdivision. In the event the Stock issuable on exercise of the Option is not registered under
applicable U.S. and foreign securities law, the Company may (i) require as a condition to the
issuance of the shares of Stock hereunder that Optionee make such representations as may be
required by law in order for the shares to be issued and sold to Optionee in compliance with an
applicable exemption from registration under the Securities Act of 1933, as amended, and applicable
state, foreign and local law, and (ii) imprint on the certificate evidencing the Stock the
following legend or any other legend that counsel for the Company considers necessary or advisable
to comply with applicable law:
The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933 or under the securities laws of any
State and may not be sold or transferred except upon such registration or upon
receipt by the Corporation of an opinion of counsel satisfactory to the Corporation,
in form and substance satisfactory to the Corporation, that registration is not
required for such sale or transfer.
11.
Transferability.
The Option granted to the Optionee under this Agreement shall not be
transferable or assignable by the Optionee other than by will or the laws of descent and
distribution, and shall be exercisable during the Optionee’s lifetime only by him.
12.
Amendment.
This Agreement may not be changed or terminated orally but only by an
agreement in writing signed by the party against whom enforcement of any such change or termination
is sought.
13.
No Obligation to Retain Services.
Neither ARAM, the Company nor any Affiliate thereof
shall be deemed by the grant of this Option to be required to retain the services of the Optionee
for any period.
14.
Stockholder Rights.
The Optionee shall not have any rights as a stockholder with respect
to any shares of Stock covered by the Option until the date of the issuance of the stock
certificate or certificates to him for such shares following his exercise of this Option pursuant
to the terms and conditions hereof and his payment for the shares. No adjustment shall be made for
dividends or other rights for which the record date is prior to the date such certificate or
certificates are issued.
15.
Interpretation.
In the event of any difference of opinion concerning the meaning or
effect of this Agreement, such difference shall be resolved by the Committee.
16.
Governing Law.
The validity, construction and performance of this agreement shall be
governed by the laws of the State of Texas. Any invalidity of any provision of this Agreement
shall not affect the validity of any other provision.
17.
Notices.
All offers, notices, demands, requests, acceptances or other communications
hereunder shall be in writing and shall be deemed to have been duly made or given if mailed by
registered or certified mail, return receipt requested. Any such notice mailed to the Company
shall be addressed to its
-7-
principal executive offices, and any notice mailed to the Optionee shall be addressed to the
Optionee’s residence address as it appears on the books and records of the Company, or to such
other address as either party may hereafter designate in writing to the other.
18.
Successors.
This Agreement shall, except as herein stated to the contrary, inure to the
benefit of and bind the legal representatives, heirs, successors and assigns of the parties hereto.
19.
Nonqualified Option.
The Option evidenced by this Agreement is a nonqualified stock
option which is not intended to be governed by Section 422 of the Code.
20.
Gender
. If the context requires, words of one gender when used in this Agreement shall
include the others, and words used in the singular or plural shall include the other.
21.
Headings
. Headings of Sections are included for convenience of reference only and do not
constitute part of this Agreement and shall not be used in construing the terms of this Agreement.
IN WITNESS WHEREOF
, this Agreement has been duly executed and delivered to be effective as of
the Date of Grant.
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ION GEOPHYSICAL CORPORATION
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David L. Roland
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Senior Vice President, General Counsel
and Corporate Secretary
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OPTIONEE
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Name
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