ex4-21



Table of Contents




Exhibit 4.21



	 	 	 	 	 
	
		 	
	COMPAGNIE GENERALE DE GEOPHYSIQUE	 	 





STOCK OPTION PLAN



MARCH 14 2001



REGULATIONS













TABLE OF CONTENTS




									
	I -- Definition of the stock option plan
	II -- The option price
	III -- Vesting period and exercise period
	IV -- Obligation to keep the stocks
	V -- Conditions of employment
	VI -- Exercise of the option
	VII -- Suspension period
	VIII -- Quotation of the new stocks
	IX -- Order for sale
	X -- The financial advantages of the stock option plan
	XI -- Taxation of the advantages
	English Translation of the By-Laws
	Registration Rights Agreement Feb 8, 2002
	2001 Stock Option Plan
	Purchase Agreement
	Statement Re Computation of Ratios
	Subsidiaries of the Registrant
	Letter of CGG to the SEC








Table of Contents




CONTENTS



	 	 	 	 	 	 
			Page
			

	
	
	I.     Definition of
	the stock option plan

		 	 	A-2	 
	 
	
	
	II.    The option
	price

		 	 	A-2	 
	 
	
	
	III.   Vesting period and
	exercise period

		 	 	A-2	 
	 
	
	
	IV.    Obligation to keep
	the stocks

		 	 	A-3	 
	 
	
	
	V.     Conditions of
	employment

		 	 	A-4	 
	 
	
	
	VI.    Exercise of the
	option

		 	 	A-5	 
	 
	
	
	VII.   Suspension
	period

		 	 	A-5	 
	 
	
	
	VIII.  Quotation of the new
	stocks

		 	 	A-6	 
	 
	
	
	IX.    Order for
	sale

		 	 	A-6	 
	 
	
	
	X.     The financial
	advantages of the stock option plan

		 	 	A-7	 
	 
	 	
	
	•   gain on the purchase
	price

		 	 	A-7	 
	 	
	
	•   gain on the sale
	price

		 	 	A-7	 
	 
	
	
	XI.    Taxation of the
	advantages

		 	 	A-7	 
	 
	
	
	Appendices :

		 	 	 	 
	 
	 	
	
	Form no. 1 = Exercise of
	option

		 	 	 	 
	 
	 	
	
	Form no. 2 = Subscription
	form

		 	 	 	 
	 
	 	
	
	Form no.
	3 = Undertaking

		 	 	 	 
	 
	 	
	
	Form no. 4 = Authorization to
	deduct charges from gross proceeds

		 	 	 	 
	 
	 	
	
	Form no. 5 = Sale
	Order

		 	 	 	 




A-1








Table of Contents








I — Definition of 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 17, 2000 authorized the Board of Directors to issue
stock options.



     
The Company took advantage of this possibility to
put in place a new 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 March 14, 2001 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.



     
Theses regulations details the various clauses,
governing the stock option plan, as it concerns you.








II — The option price


     
The price of the option has been determined on
the basis of the average opening rates quoted at the twenty
sessions of the Paris Stock Exchange preceding March 14, 2001.
After rounding, this amounts to 71,2 Euros.



     
This unit price cannot be modified for the term
of the validity of the options; it may only be adjusted,
according to the law, 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 to which
they are entitled to subscribe.








III — Vesting period and exercise
period



III.1 — Vesting period


     
Options accrue rights by fifth every year during
a five year period starting from March 14, 2001. The rights
so accrued are definitively acquired and may not be lost for any
reason whatsoever, included in case of departure from the Group.



     
The accrued rights are calculated for each ended
year and remain subject to the freeze period as hereunder
defined.




		
	 	
	As an example, a beneficiary of an option
	giving right to acquire 1000 shares who would leave the Group in
	June 2001 will have no accrued rights and would not be entitled
	to acquire any stock. In June 2002, he would be able to acquire
	200 shares, the remaining 800 options being expired.





III.2 — Duration of the
options


     
Attribution of the options was decreed by the
Board of Directors of the Company on March 14, 2001,
so beneficiaries will be able to exercise their options at any
time up to and including March 17, 2008, subject to
the freeze period and to accrued rights.



     
Options are exercised in one or several occasions
for the accrued part on request from the beneficiaries, who
decide to do so in their own discretion, in function of their
individual financial resources and movements of the CGG stock
price, subject however to insiders rules.



A-2








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III.3 — Freeze period


     
A three year freeze period has been instituted
until March 13, 2004.



     
Any portion of the accrued and vested part of the
option may consequently be exercised at any time between
March 14, 2004 and March 13, 2009 included.



     
Taking into account the vesting period, a
beneficiary at the end of the Freeze period will be allowed to
exercise three-fifth of its option. The two remaining fifth may
only be exercised from respectively March 2005 and March 2006
until March, 13, 2009.




III.3 — Exceptions


     
Beneficiaries will be allowed to exercise their
whole option during the freeze period upon the occurrence of any
of the following events :




			
	 	•	
	redundancy or lay off, corresponding to the
	French concept of “Licenciement économique”.
	
	 
	 	•	
	death, provided that the heirs of the deceased
	beneficiary exercise the option within a six month period from
	the date of death.
	
	 
	 	•	
	take over bid or public offer of exchange related
	to the securities of the Company.
	





			
	 	—	
	In this case, exercise of option will be allowed
	only until the end of the take over and will be limited to 75%
	of the total amount of the stocks allocated to each beneficiary
	(whether or not accrued).
	
	 
	 	—	
	In consequence thereof, after the termination of
	the take over, the beneficiaries will not be authorized to
	exercise their options before March 14, 2004.
	









IV — Obligation to keep the
stocks



IV.1 — Obligation to keep


     
Beneficiaries who have an option giving right to
acquire 1000 stocks or more are committed to keep their stocks
under the registered form from the acquisition date until
March 14, 2006 included.




		
	 	
	 As an example, a beneficiary who exercises
	his option on March 15, 2004, i.e immediately after the end
	of the freeze period, would not be entitled to sell or transfer
	his stocks to the bearer form before March 15, 2006. A
	beneficiary who exercises his option on March 15, 2006
	would be free to sell the stocks on the same day.
	




     
Taking into account a law under discussion in
France which contemplates the diminution of the fiscal period of
“unavailability” from 5 to 4 years, beneficiaries
of option giving right to acquire 1000 shares or more will have
the opportunity, notwithstanding the above, to sell their shares
from March 14, 2005. This faculty will be opened to the
beneficiary if and only if the law, as it will be promulgated
and applicable to this stock option plan, does not submit the
capital gains with respect to a sale made after the four year
fiscal period to social security charges ( either due by the
employee or the employer).




IV.2 — Exceptions


     
However, the above obligation to keep stock will
not apply to beneficiaries who have an employment agreement
governed by a law other than French law and who work outside
France, these two conditions being cumulative. A beneficiary
who, on March 14, 2001 meets these two conditions but who
on the date of option exercise and/or on the date of the
contemplated sale or transfer no longer meets them must keep the
stocks until March 14, 2006 or March 2005 if the above
mentioned law is promulgated.



A-3








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Furthermore, would no be subject to the
obligation to keep the stock under the registered form
beneficiaries who may exercise their whole option during the
freeze period for one of the occurrence listed i.e:




			
	 	•	
	lay off or redundancy
	
	 
	 	•	
	death
	
	 
	 	•	
	in the event of take over bid or public offer of
	exchange, any beneficiary of an option giving right to acquire
	1000 stocks or more will not be obligated to keep the stocks
	acquired before or during the take over.
	





		
	 	
	 In case of a take over bid during the freeze
	period, a beneficiary of an option to acquire 1000 stocks or
	more and who would acquire 500 stocks from the 750
	exercisable during the take over period shall be allowed to sell
	only the 500 stocks, the remaining 250 must not be sold
	before March 14, 2006.









V — 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.



     
However the accrued rights will be maintained
whatever the reason of departure from the Group. All the terms
and conditions of this Plan such as but not limited to the
freeze period, the obligation to keep will remain applicable.




		
	 	
	 A beneficiary of an option giving right to
	acquire 1000 stocks who will leave the Group in June 2003 will
	keep his right to acquire 400 stock but will be entitled to
	acquire them only from March 2004 and will not be allowed to
	sell them before March 2006. A beneficiary who leave the Group
	in February 2002 will have no accrued rights and can not
	purchase any stock.




     
Beneficiaries shall be deemed to have lost the
status of employee of CGG or an affiliate (a company in which
CGG holds directly or indirectly 30% of the capital) on the date
of termination of the service contract, i.e. at the end of the
required notice period, regardless the cause or the author of
the termination.




Exceptions


     
If a beneficiary ceases to be employee of the
Group for one of the following reason the options and the
conditions of exercise will be treated as follows :




			
	 	•	
	Death: 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’s death. At the end of this six months period,
	the option will expire.
	
	 
	 	•	
	Lay off: Options may
	be exercised entirely at any time from the date of the lay off
	until March 13, 2009 without obligation to comply with the
	freeze period and/or the obligation to keep the stocks.
	
	 
	 	•	
	retirement, early
	retirement (“pre retraite”
	as such term is construed under French Law): Beneficiaries will
	continue to benefit from their options but remain subject to all
	the terms and conditions of the plan such as but not limited to
	the vesting period and accrual of rights, the freeze period or
	obligation to keep.
	
	 
	 	•	
	Affiliate leaving the
	Group: the beneficiaries, employees of
	such affiliate, will continue to benefit from their options but
	remain subject to all the terms and conditions of the plan such
	as but not limited to the vesting period and accrual of rights,
	the freeze period or obligation to keep.
	




     
However, as mentioned above, only death and
redundancy (lay off) will allow the exercise of the option
during the Freeze period; beneficiaries leaving the group for
the other reasons listed above will not be entitled to acquire
the stocks before termination of the three year Freeze period.



     
Furthermore, in the case of a beneficiary leaving
the Group under a mutual arrangement with the employer, the
Company may contemplate, on a case by case basis, maintaining
the beneficiary’s right to the stock options. Such
pursuance of the rights will follow the rules applicable for a
retirement.



A-4








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VI — Exercise of the
option


     
VI.1 — In
order to exercise an option, the following documents must be
sent to the Legal Division at CGG (Valérie FERY/ Anick
DUCHEMIN):




			
	 	•	
	exercise of option form accurately completed and
	signed (Form no. 1 attached)
	
	 
	 	•	
	subscription form accurately completed and signed
	(Form no. 2 attached)
	
	 
	 	•	
	payment in full of the sum corresponding to the
	number of stocks, in the form of a cheque made to the order of
	NSMD.
	
	 
	 	•	
	undertaking to keep the stocks under the
	registered form for the beneficiary holding an option for 1000
	stocks or more (Form no. 3 attached);
	
	 
	 	•	
	authorization given to the Bank to deduct from
	the sale proceeds an amount for payment of the social security
	charges. (Form no. 4 attached). While this question
	concerns only French Tax resident, each beneficiary will be
	required to fulfill it. It may be used only when a foreign
	beneficiary becomes French Tax resident on the date he sells his
	stocks.
	




     
Your stocks will be issued as registered stock in
your name. Stocks will be registered in an account opened with
the Bank entrusted with the management of the registered stocks
(NSMD).



     
VI.2 —
Within eight days from the date of
receipt of the all documents listed in VI.1 above, CGG
will execute all formalities in order for you to 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 Vesting Period, the Freeze Period
and the Status of Employee are fulfilled.








VII — Suspension period



VII.1 — Conditions


     
CGG’s Board of Directors or, upon delegation
from the Board, the Chairman and CEO 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 stocks.
	
	 
	 	•	
	Adjustment affecting the unit price as provided
	by French Company law.
	





VII.2 — Notice


     
Within five (5) days from the Suspension
decision of the Board of Directors or of the Chairman and
C.E.O., beneficiaries will be informed by internal memorandum,
general or individual:




			
	 	•	
	that a Suspension period has been instituted in
	accordance with point VII.1 above;
	
	 
	 	•	
	the duration of the Suspension; If applicable,
	beneficiaries will be informed of the new subscription price and
	new number of stock to which they are entitled to subscribe.
	





VII.3 — Transitory Period


     
To the extent possible, the beneficiaries will be
allowed a reasonable time period between the receipt of the
above mentioned notice and the entry into effect of the
suspension period during which they may exercise their options,
in whole or in part, provided of course that the freeze period
has expired.



     
Each beneficiary hereby expressly acknowledges
that the allowed time period, if any, may be extremely reduced
if so required by the envisaged financial operations.



     
At the end of this transitory period,
Beneficiaries shall not be entitled to exercise their options
until expiry of the Suspension Period.



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VII.4 — Confidentiality


     
Beneficiaries undertake not to divulge any
information related to the Suspension and the cause thereof.








VIII — Quotation of the new
stocks


     
New CGG stocks acquired under the stock option
plan are freely transferable at any time, except where the
obligation to keep applies in accordance with paragraph IV
above.



     
The new stocks are issued with the right to
dividend on 1st 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
during the year of exercise:




VIII.1 — 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 Annual Ordinary Meeting of Stockholders, until
31 December of that year, the new stocks will be quoted on
the regular line of the Premier Marché of the Paris
Stock Exchange at the same rate as existing stocks (Index
SICOVAM: 12016).




VIII.2 — 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 Annual Ordinary Meeting of
Stockholders, the new stocks will not be quoted at the same rate
as existing stocks, but on a separate line (separate index).
After the date on which dividend is paid or, if no dividend is
paid, after the date of the Annual Ordinary Meeting of
Stockholders, the stocks will be transferred to the regular line
(index SICOVAM: 12016) and assimilated to existing stocks.




		
	 	
	 For example: The last Annual Ordinary Meeting
	of Stockholders took place on May 17, 2000. All stocks
	purchased by the exercise of stock options between
	January 1,2000 and May 17, 2000 were quoted on a
	separate line until May 17, 2000, at which date they were
	transferred to Index 12016 and assimilated to existing stocks.
	On the other hand, stocks subscribed by the exercise of stock
	options between May 17, 2000 and December 31, 2000
	were quoted directly on the 12016 line.
	




     
Finally, it should be
noted that non-assimilated new stocks
usually have a below par rating compared with stocks sold on the
12016 line (this is on account of low trading levels even when
no dividend is due from the preceding financial year).








IX — Order for sale


     
The order for sale must be communicated directly
to the Bank.



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




			
	 	•	
	discretionary order.
	This order bears no instructions. It is carried out at the
	opening of the next 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 minimum. 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 tend
	therefore to be more reliable than discretionary orders.
	




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X — The financial advantages of the
stock option plan


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




			
	 	•	
	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 subscription price of the option, and;
	
	 
	 	•	
	gain on the sale
	price 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.
	





Examples



	 	 	 	 	 	 	 	 	 
			
			Hypothesis
			

			T1		T2
	(On the basis of a subscription price of 70 €)		
		

	
	
	Stock subscription price (a)
	

		 	 	70	 	 	 	70	 
	
	
	Value on the Stock market of the the CGG Stock on
	the date of option exercise (b)
	

		 	 	80	 	 	 	91	 
	
	
	Gain on the purchase price (b –
	a)
	

		 	 	10	 	 	 	21	 
	
	
	Sale price (c)
	

		 	 	83	 	 	 	95	 
	
	
	Gain on the sale price (c –
	b)
	

		 	 	3	 	 	 	4	 





T1: Exercise of the
option and sale of the stock on the same day




T2: Exercise of the
option on March 14, 2004 and sale of the stock on
May 6, 2006.








XI — Taxation of the
advantages


     
The summary hereunder applies only to French
tax residents who, as such, are subject to French Tax
legislation. General information may be provided to other
residents, upon request, on the relevant foreign tax rules.
However, foreign beneficiary should revert to his tax
advisor.



XI.1 — Taxation on gains on the
purchase price


     
Taxation on gains on the purchase price varies
depending on whether or not the beneficiary sell his stocks
before the end of a five-year period starting from the date of
attribution of the option, i.e. not before March 14,
2006 (included).



     
It should be noted that if the stocks are
transferred from registered stocks to bearer stocks, they are
considered as sold.



 


		
	     •	
	Failure to respect the fiscal five year
	period



     
In this case, the gain on the purchase price is
considered as additional salary and as such is subject to income
tax. The gain is added to the revenues for the year during which
the stocks are sold and not for 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 options have
been held.



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



     
It is again noted that if, during the fiscal five
year period, the acquired stocks are simply transferred from
registered stock to bearer stock, without being sold the gain is
likewise subject to income tax and social security contributions.




Exceptions:


     
As an exception, tax exemption on the gain on the
purchase price applies if the stocks are sold or transferred
from registered stock to bearer stock before the expiry of the
fiscal five year period in the following cases:



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	 	—	
	dismissal
	
	 
	 	—	
	retirement
	





		
	 	
	In the above two cases, the options must have
	been acquired by the beneficiary at least 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
	French “Code de la Sécurité Sociale”.
	
	 
	 	—	
	death.
	




 


		
	     •	
	Respect of the fiscal five year
	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 capital
gains at the special rate of 30% (for fiscal 2000) plus 10% with
respect to social security contributions.



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



     
Furthermore, the beneficiary must enclose a
statement with his tax declaration for the year during which the
option was exercised, which specifies:




			
	 	—	
	the corporate name and headquarters of the Company
	
	 
	 	—	
	the date of attribution and the date of exercise
	of the option
	
	 
	 	—	
	the number of stocks acquired.
	





XI.2 — Taxation on gains made on the
sale of stocks


     
The gain made on the sale of stocks is taxed at
the regular rate for capital gains. The tax rate is therefore
16.0% (for fiscal 2000) plus around 10% with respect to social
security contributions, if the total value of sales (including
stock sales unrelated to the present stock option plan) made by
the beneficiary during the year of the sale or transfer exceeds
the threshold determined on an annual basis by the taxation
authorities (50 000 French Francs for fiscal 2000).




XI.3 — Declaration
commitments



Company’s obligations


     
Each year, the Company has to provide tax
authorities with a certificate including the name of
beneficiaries who have exercised options during the preceding
year, the dates of the exercise, the number of stocks acquired
and the subscription price.



     
Each year until the expiry of the fiscal five
year period during which stocks are sold or transferred from
registered stocks to bearer stocks, the Company has to declare,
dates of sale or of transfer to bearer stock, date of
attribution and the date of the option exercise, the number of
stocks, the subscription price and the price quoted on the Stock
Exchange the day the option is exercised.




Beneficiary’s obligation


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



     
The year during which the stocks are sold or are
transferred from registered stocks to bearer stocks before the
expiry of the fiscal five year period, the beneficiary will
state on his tax declaration:




			
	 	—	
	the difference between the price quoted on the
	Stock Exchange the day the option is exercised and the
	subscription price,
	




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	 	—	
	the gain made on the sale of stocks, 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, only if the total annual value of stocks sales
	(including stock sales unrelated to the present stock option
	plan) exceeds the threshold determined by the taxation
	authorities (50 000 French Francs for fiscal 2000).
	




A-9