1997 STOCK OPTION PLAN



 



EXHIBIT 4.1






COMPAGNIE GÉNÉRALE DE GÉOPHYSIQUE


O P T I O N    P L A N


M A Y    5 , 1997


EXPLANATORY LEAFLET


 






 


CONTENTS




	 	 	 	 	 
	I.
	 	What is the stock option plan ?
	 
	 	 	 	 
	II.
	 	When should this option be exercised ?
	 
	 	 	 	 
	III.
	 	Conditions of Employment
	 
	 	 	 	 
	IV.
	 	How does one exercise the option ?
	 
	 	 	 	 
	V.
	 	What is the price of the option ?
	 
	 	 	 	 
	VI.
	 	Suspension Period
	 
	 	 	 	 
	VII.
	 	How are the new stocks quoted ?
	 
	 	 	 	 
	 
	 	-    new stocks not assimilated to existing ordinary stocks
	 
	 	 	 	 
	 
	 	-    new stocks assimilated to existing ordinary stocks
	 
	 	 	 	 
	VIII.
	 	How does one give the order for sale ?
	 
	 	 	 	 
	IX.
	 	What are the financial advantages of the stock option plan ?
	 
	 	 	 	 
	 
	 	. gain on the purchase price
	 
	 	 	 	 
	 
	 	. gain on the price of sale
	 
	 	 	 	 
	X.
	 	How is taxation applied to these advantages ?
	 
	 	 	 	 
	XI.
	 	Declaration commitments
	 
	 	 	 	 
	Appendices :
	 	 
	 
	 	 	 	 
	 
	 	Form no. 1 = Exercise of option
	 
	 	 	 	 
	 
	 	Form no. 2 = Subscription form



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I – What is the stock option plan ?



French Company Law enables French companies to grant to all or part of their
staff the right to subscribe to stock options.


The Extraordinary General Meeting dated May 5, 1997 has authorized the Board of
Directors to issue stock options.


The Company is taking advantage of this possibility to set into place a stock
option plan.


A stock option provides the right, applicable only on request from the
beneficiary, to subscribe to new stocks which are purchased at a predetermined
price.


The Board of Directors of the Company designated you on May 5, 1997 as a
beneficiary of this plan and you have already received a letter informing you
of the number of stocks offered to you and of the price at which you may
subscribe them.


This leaflet details the various clauses of the stock option plan, as it
concerns you.


II – When should this option be exercised ?



II.1 – Subject to “freeze periods” hereunder, options may be exercised until
the end of an eight-year period as from the date of attribution by the Board,
after which date any options not exercised will expire. Options may be
exercised in one or more steps.


Attribution of the options was decreed by the Board of Directors of the Company
on May 5, 1997, so beneficiaries will be able to exercise their option at any
time up to and including May 4, 2005.


Options are exercised on request from the beneficiaries, who make their
decision to do so as a function of their individual financial resources and
movements of the CGG stock price.


II.2 – Freeze period


From May 5, 1998 and at the term of any subsequent twelve months period,
beneficiaries may exercise one fifth of their option, it being understood that
the whole option cannot be exercised before 4 May, 2002.


Any portion of the option so exercisable may then be used at any time before
May 4th, 2005 included.


II.3 – Exceptions


Beneficiaries will be allowed to exercise their option (“freeze portions”
included) upon the occurrence of any of the following event during the freeze
period :


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	–	 	retirement provided that the beneficiary exercises his option before leaving the Company
	 
	–	 	dismissal (except in case of dismissal for gross negligence or serious offence) provided that the beneficiary exercices his
option before leaving the Company
	 
	–	 	death
	 
	–	 	take over bid or public offer of exchange related to the securities of the Company provided that the Chairman and CEO
notify the beneficiaries the waiver of the freeze period.



III – CONDITIONS OF EMPLOYMENT



The option which is herein granted is strictly linked to your status of
employee of the Group.


Employee is defined as any person having a long term service contract and at
least three months length of services.


Any beneficiary who ceases to be employed by the Group automatically loses the
right to exercise any remaining options.



Beneficiaries shall be deemed to have lost the status of employee of CGG or of
an Affiliate (subsidiary in which CGG holds, directly or indirectly, at least
30% of the capital) on the date of:



	–	 	termination of the service contract i.e. at the end of the required
notice, whatever the cause or the author of the termination,
	 
	–	 	receipt of a letter from the Chairman and C.E.O. that CGG does not held
anymore at least 30% in a Subsidiary.



Exceptions


The heirs of a deceased beneficiary will be entitled to exercise all or part of
the option within a six months period from the date of beneficiary death.


Following this six months period, the option will expire.


IV – How does one exercise the option ?



IV.1 – In order to exercise an option, the following documents must be sent to
the Legal Division at CGG (JL – Valérie FERY):



	–	 	exercise of option duly fulfilled and signed (Form n°1 attached)
	–	 	subscription form duly fulfilled and signed (Form n°2)
	–	 	complete payment of the sum corresponding to the number of stocks, in the
form of a cheque made to the order of the BANQUE NEUFLIZE SCHLUMBERGER
MALLET (NSM).



Your stocks will be issued as registered stock in your name. Stocks will be
registered in an account opened with the Bank charged to manage the registered
stocks (NSM).


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IV.2 – Within a eight days period from receipt of the exercise of option form,
the subscription form and the complete payment, all formalities will be made in
order that the employee acquire the status of CGG’s shareholder.


The option shall be deemed to be exercised on the date of receipt by CGG of the
complete file, provided however that conditions related to the Freeze Period
and the Status of Employee are fulfilled.


V – What is the price of the option ?



The price of the option has been determined on the basis of 95% of the average
opening rates quoted at the twenty sessions of the Paris Stock Exchange
preceding May 5, 1997. After rounding, this sum amounts to 453 French francs.


This unit price cannot be modified for the term of the validity of the options;
it may only be adjusted if the Company were to proceed with financial
operations affecting its capital. Adjustments affecting both the unit price and
the number of stocks under option will however have no effect on the overall
value of the option for each beneficiary.


Beneficiaries will be informed in good time of the new subscription price and
the new number of stocks that they are entitled to subscribe.


VI – Suspension period



VI.1 – Conditions


CGG Board of Directors may suspend for a period which shall not exceed three
months, any exercise of option in case of:



	–	 	Financial operation requiring a prior and strict knowledge of the number of
CGG’s shares.
	 
	–	 	Adjustment affecting the unit price as provided by French Company law.



VI.2 – Notice


Within five (5) days from the Board of Director deciding the Suspension,
beneficiaries will receive a notice stating:



	–	 	that a Suspension period has been instituted in accordance with point VI.1
above;
	 
	–	 	the duration of the Suspension;
	 
	–	 	should that be the case, new subscription price and new number of stock
that beneficiaries are entitled to subscribe.



VI.3 – Transitory Period


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From the date of receipt by beneficiary of the above notice, each beneficiary
will have a five days period if he is French resident or a fifteen days period
if he is a foreign resident, to exercise his option, in whole or part, provided
however that the applicable Freeze Period is terminated.


At the end of this Transitory Period Beneficiaries shall not be entitled to
exercise their option until expiry of the Suspension Period.


VI.4 – Confidentiality


Beneficiaries undertake to no divulge any information related to the Suspension
and the cause thereof.


VII – How are the new stocks quoted ?



New CGG stocks acquired under the stock option plan are freely transferable at
any time.


The new stocks are issued with the right to dividend on 1 January of the year
in progress. However, there is no right to dividend with respect to profit from
the previous financial year. For this reason, two cases may be envisaged:


VII.1 – The stocks acquired are not assimilated to existing stocks


From 1 January until the date on which dividend is paid or, if no dividend is
paid, until the date of the Ordinary General Meeting of Stockholders, the new
stocks will not be quoted at the same rate as existing stocks, but at a
different rate on the Cash Market (separate index).


Whenever an option is exercised, NSM will request that these stocks be quoted
on the Cash Market of the Société des Bourses Françaises (Association of French
Stock Exchanges). Quotation becomes possible following an announcement in the
official bulletin (fortnight delay).


Finally, it should be noted that non-assimilated new stocks (Cash Market)
usually have a below par rating compared with stocks sold on the Forward Market
(this is on account of low trading levels even when no dividend is due from the
preceding financial year).


VII.2 – The stocks acquired are assimilated to existing stocks


From the date on which dividend is paid or, if no dividend is paid, the date of
the Ordinary General Meeting of Stockholders, until 31 December of that year,
the new stocks will be quoted on the Paris Stock Exchange at the same rate as
existing stocks on the Forward Market.


Date of dividend payment or

Ordinary General Meeting of Stockholders




	 	 	 
	1.01	 	
31.12
	 
	Stocks quoted on the Cash Market	 	
Stocks quoted on the Forward Market



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VIII – How does one give the order for sale ?



The order for sale must be communicated directly to NSM.


In addition to indicating the number of stocks to be sold, certain details may
be given to NSM concerning the order for sale on the stock market:



	–	 	discretionary order. This order bears no instructions. It is carried out
at the following opening session of the Paris Stock Exchange (which is
generally when the greatest number of stocks are exchanged).
	 
	–	 	limited price order. This order sets a minimum rate at which the seller
agrees to transfer his stocks. It will therefore be carried out only if
the quoted rate is equal or superior to this limit. CGG stocks are quoted
continuously and there may be fairly substantial differences between the
rates applied to various transactions carried out during the same session.
Limited price orders therefore tend to be more reliable.



The order for sale on the Forward market is issued on the day indicated by the
seller (discretionary or limited sale) but settlement takes place at the end of
the month. However the beneficiary may require that his order be issued on the
Cash Market in which additional charges will be incurred.


When beneficiaries decide to sell stocks, they will also take into account the
Stock Exchange price of CGG stocks (attempting to make a gain on the sale with
respect to the purchase price) and the effects of their decisions on taxation.


IX – What are the financial advantages of the stock option plan ?



In addition to the advantage of being associated with the expansion of the
Company, beneficiaries who exercise their options can make profits in two ways
when selling the stocks at a later date:



	–	 	gain on the purchase price equal to the difference between the price
quoted on the Stock Exchange, the day the option is actually exercised,
and the actual subscription price of the option.
	 
	–	 	and gain on the price of sale equal to the difference between the price
at which the stocks are sold and the price quoted on the Stock Exchange
the day the option is exercised.



X – How is taxation applied to these advantages ?



This applies only to French residents who, as such, are subject to French Tax
legislation. Further information will be given to other residents on the
relevant foreign tax rules.


Taxation on gains on the purchase price


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Taxation on gains on the purchase price varies depending on whether or not the
beneficiary respects the following conditions:



	–	 	they are not sold before the end of a five-year period starting from
the date of attribution of the option, i.e. not before May 4, 2002
(included);
	 
	–	 	and, in any case, the stocks acquired are registered.



If the stocks are transferred from registered stocks to bearer stocks, they
will be considered as sold.


Failure to respect the minimum holding period


In this case the gain on purchase price is considered as additional salary and
as such is subject to the application of income tax. It is added to the revenue
for the year during which the stocks are sold and not the year in which the
option is exercised. However, after deductions applicable to salaries, tax is
spread according to the “quotient” system so as to take into account the length
of time for which the stocks have been held.


Moreover, if the acquired stocks are simply transferred from registered stock
to bearer stock, without being sold, during the minimum holding period, the
gain is likewise subject to the application of income tax.


Furthermore, in such cases, the gain on purchase price will also be subject to
all French social security charges (i.e. about 25 %).


Exceptions:


As an exception, tax exemption on the gain on the purchase price applies if the
beneficiary sells his stocks or transfers them from registered stock to bearer
stock before expire of the minimum holding period, in the following cases:



	–	 	dismissal   ) the options must have been acquired by the beneficiary at least.
	–	 	retirement  ) 3 months before date of the event in question.
	–	 	invalidity corresponding to classification in the second or third category defined in Article 310 of the “Code de la
Sécurité Sociale”.
	–	 	decease.
	 
	•	Respect of minimum holding period



In this case, gain on the purchase price is at the Beneficiary’s option, either
taxed on the basis of income tax or taxed under the common law concerning gains
on transferable property at the specific rate of 30%.


The gain on purchase price is taxed for the year during which the stocks are
sold.


Furthermore, The beneficiary must enclose a memorandum with his tax declaration
for the year during which the option was exercised. This memorandum will
detail:



	–	 	the corporate name and headquarters of the Company
	–	 	the date of attribution and the date of exercising the option
	–	 	the number of stocks acquired.



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	•	Taxation on gains made on the sale of stocks



The gain made on the sale of stocks is taxed as transferable property. The rate
of taxation is therefore 16.0% (for fiscal 1997) plus additional tax if the
total value of sales made by the beneficiary during the year of the transfer
exceeds the threshold determined on an annual basis by the Public Authorities
(100 000 French francs for fiscal 1997).


XI – Declaration commitments



X.1  – Company’s obligations


The year during which the option is exercised, the Company has to declare on
a annual basis to tax authorities, the name of beneficiaries who have
exercised the option, the dates of the option exercise, the number of
stocks acquired and the subscription price.


The year during which stocks are sold or transferred from registered stocks
to bearer stocks, before expire of the minimum holding period, the Company
has to declare dates of sale or of transfer to bearer stock, date of
attribution and the date of option exercise, the number of relevant
stocks, the subscription price and the price quoted on the Stock Exchange
the day the option is exercised.


X.2  – Beneficiary obligation


The year during which the option is exercised, the beneficiary shall append
to his tax declaration the memorandum that will be communicated to him by
the Company.


The year during which the stocks are sold or are transferred from registered
stocks to bearer stocks before expire of the minimum holding period the
beneficiary will mention on his tax declaration :



	–	 	the difference between the price quoted on the Stock Exchange the day the
option is exercised and the actual subscription price,
	 
	–	 	the gain made on the sale of stocks equals to the difference between the
price at which the stocks are sold and the price quoted on the Stock
Exchange the day the option is exercised, only if the total annual value
of stocks and shares sale exceeds the threshold determined by the Public
authorities.



*

* *


 






 


Form no. 1



EXERCISE OF OPTION



I the undersigned



	 	 	 	 	 	 	 	 	 
	NAME:
                              
                              
                              
                              
	FIRST NAME:
                                                  

	 
	ADDRESS: No
              
	STREET
                              
                   
                              
                                          
                                
          
	 
	ZIP CODE:
                                          

	CITY:
                                        
                                      
                              
                              




hereby declare that I wish to purchase
                    
           stocks, exercising my option to
subscribe to                     
           nominal 10 franc stocks at a subscription price of 453 FRF
each, as granted to me on May 5, 1997, in compliance with the decision taken by
the Extraordinary General Meeting on May 5, 1997 and with the deliberations of
the Board of Directors on May 5, 1997.


In pursuance whereof, I hereby
subscribe to           
                    
stocks by means of the
subscription form enclosed herewith and undertake to pay the sum of
                    
           FRF which represents the total cost of issuing the stocks
subscribed.


Signed in                     
           on
                    
          


Date

(two copies, one of which remains in my possession)


Signature


 






 


Form no. 2



SUBSCRIPTION FORM



I the undersigned



	 	 	 	 	 	 	 	 	 
	NAME:
                              
                              
                              
                              
	FIRST NAME:
                                                  

	 
	ADDRESS: No
              
	STREET
                              
                   
                              
                                          
                                
          
	 
	ZIP CODE:
                                          

	CITY:
                                        
                                      
                              
                              




hereby declare that I empower the Bank
                    
           to subscribe
for my account                     
           stocks in the COMPAGNIE GENERALE DE GEOPHYSIQUE.


These stocks will be registered in my name with the Bank NEUFLIZE SCHLUMBERGER
MALLET.


In support of my subscription, I am paying by cheque, to the order of the
NEUFLIZE SCHLUMBERGER MALLET, the sum of FRF           
                    
which is equal to
the price of issuing the stocks to which I am subscribing.


Signed in                     
           on                     
          


Date

(two copies, one of which remains in my possession)


Signature (*)


(*) The signature must be preceded by the wording “Bon pour souscription à
                    
          
actions” – Signature for subscription to           
                    
stocks (with the number
written out in French and in full).