Exhibit
4.1


2006 Stock Awards Plan


of


TGC Industries, Inc.















TABLE OF
CONTENTS


	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  
	
  ARTICLE 1 PURPOSE

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 2 DEFINITIONS

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Award

  	
   

  	
  1

  
	
   

  	
  2.2

  	
  Award Agreement

  	
   

  	
  1

  
	
   

  	
  2.3

  	
  Award Period

  	
   

  	
  1

  
	
   

  	
  2.4

  	
  Board

  	
   

  	
  2

  
	
   

  	
  2.5

  	
  Change in Control

  	
   

  	
  2

  
	
   

  	
  2.6

  	
  Code

  	
   

  	
  2

  
	
   

  	
  2.7

  	
  Committee

  	
   

  	
  2

  
	
   

  	
  2.8

  	
  Common Stock

  	
   

  	
  2

  
	
   

  	
  2.9

  	
  Company

  	
   

  	
  2

  
	
   

  	
  2.10

  	
  Consultant

  	
   

  	
  3

  
	
   

  	
  2.11

  	
  Corporation

  	
   

  	
  3

  
	
   

  	
  2.12

  	
  Date of Grant

  	
   

  	
  3

  
	
   

  	
  2.13

  	
  Employee

  	
   

  	
  3

  
	
   

  	
  2.14

  	
  Fair Market Value

  	
   

  	
  3

  
	
   

  	
  2.15

  	
  Incentive Stock Option

  	
   

  	
  3

  
	
   

  	
  2.16

  	
  Nonqualified Stock Option

  	
   

  	
  3

  
	
   

  	
  2.17

  	
  Option Price

  	
   

  	
  3

  
	
   

  	
  2.18

  	
  Outside Director

  	
   

  	
  3

  
	
   

  	
  2.19

  	
  Participant

  	
   

  	
  3

  
	
   

  	
  2.20

  	
  Plan

  	
   

  	
  3

  
	
   

  	
  2.21

  	
  Performance Goal

  	
   

  	
  4

  
	
   

  	
  2.22

  	
  Reload Stock Option

  	
   

  	
  4

  
	
   

  	
  2.23

  	
  Reporting Participant

  	
   

  	
  4

  
	
   

  	
  2.24

  	
  Restricted Stock

  	
   

  	
  4

  
	
   

  	
  2.25

  	
  Retirement

  	
   

  	
  4

  
	
   

  	
  2.26

  	
  Stock Option

  	
   

  	
  4

  
	
   

  	
  2.27

  	
  Subsidiary

  	
   

  	
  4

  
	
   

  	
  2.28

  	
  Termination of Service

  	
   

  	
  4

  
	
   

  	
  2.29

  	
  Total and Permanent Disability

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 3 ADMINISTRATION  

  	
   

  	
  5

  
	
   

  	
  3.1

  	
  General Administration; Establishment of Committee

  	
   

  	
  5

  
	
   

  	
  3.2

  	
  Designation of Participants and Awards

  	
   

  	
  5

  
	
   

  	
  3.3

  	
  Authority of the Committee

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 4 ELIGIBILITY  

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 5 SHARES SUBJECT TO PLAN  

  	
   

  	
  6

  
	
   

  	
  5.1

  	
  Number Available for Awards

  	
   

  	
  6

  
	
   

  	
  5.2

  	
  Reuse of Shares

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 6 GRANT OF AWARDS

  	
   

  	
  7

  
	
   

  	
  6.1

  	
  In General

  	
   

  	
  7

  
	
   

  	
  6.2

  	
  Option Price

  	
   

  	
  8

  
	
   

  	
  6.3

  	
  Maximum ISO Grants

  	
   

  	
  8

  
	
   

  	
  6.4

  	
  Restricted Stock

  	
   

  	
  8

  
	
   

  	
  6.5

  	
  Performance Goals

  	
   

  	
  9

  
												



 



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  ARTICLE 7 AWARD PERIOD; VESTING

  	
   

  	
  10

  
	
   

  	
  7.1

  	
  Award Period

  	
   

  	
  10

  
	
   

  	
  7.2

  	
  Vesting

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 8 EXERCISE OR CONVERSION OF AWARDS  

  	
   

  	
  11

  
	
   

  	
  8.1

  	
  In General

  	
   

  	
  11

  
	
   

  	
  8.2

  	
  Securities Law and Exchange Restrictions

  	
   

  	
  11

  
	
   

  	
  8.3

  	
  Exercise of Stock Option

  	
   

  	
  11

  
	
   

  	
  8.4

  	
  Disqualifying Disposition of Incentive Stock Option

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 9 AMENDMENT OR DISCONTINUANCE  

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 10 TERM  

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 11 CAPITAL ADJUSTMENTS  

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 12 RECAPITALIZATION, MERGER, AND
  CONSOLIDATION  

  	
   

  	
  14

  
	
   

  	
  12.1

  	
  No Effect on Company’s Authority

  	
   

  	
  14

  
	
   

  	
  12.2

  	
  Conversion of Awards Where Company Survives

  	
   

  	
  14

  
	
   

  	
  12.3

  	
  Exchange or Cancellation of Awards Where Company
  Does Not Survive

  	
   

  	
  15

  
	
   

  	
  12.4

  	
  Cancellation of Awards

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 13 LIQUIDATION OR DISSOLUTION  

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 14 AWARDS IN SUBSTITUTION FOR AWARDS
  GRANTED BY OTHER ENTITIES  

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 15 MISCELLANEOUS PROVISIONS  

  	
   

  	
  16

  
	
   

  	
  15.1

  	
  Investment Intent

  	
   

  	
  16

  
	
   

  	
  15.2

  	
  No Right to Continued Employment

  	
   

  	
  16

  
	
   

  	
  15.3

  	
  Indemnification of Board and Committee

  	
   

  	
  16

  
	
   

  	
  15.4

  	
  Effect of the Plan

  	
   

  	
  17

  
	
   

  	
  15.5

  	
  Compliance With Other Laws and Regulations

  	
   

  	
  17

  
	
   

  	
  15.6

  	
  Tax Requirements

  	
   

  	
  17

  
	
   

  	
  15.7

  	
  Assignability

  	
   

  	
  18

  
	
   

  	
  15.8

  	
  Use of Proceeds

  	
   

  	
  18

  
	
   

  	
  15.9

  	
  Execution of Receipts and Releases

  	
   

  	
  18

  
	
   

  	
  15.10

  	
  Legend

  	
   

  	
  18

  
																



 



 ii














2006 STOCK AWARDS PLAN


OF


TGC
INDUSTRIES, INC.


The
2006 Stock Awards Plan (the “Plan”) of TGC Industries, Inc., a Texas corporation (the
“Company”),
was adopted by the Company’s Board of Directors effective as of March 30, 2006,
subject to approval by the Company’s shareholders.


ARTICLE 1


PURPOSE


The
purpose of the Plan is to attract and retain the services of key employees, key
consultants and outside directors of the Company and its Subsidiaries and to
provide such persons with a proprietary interest in the Company through the
granting of incentive stock options, nonqualified stock options, common stock
and restricted stock, that will


(a)                                  increase
the interest of such persons in the Company’s welfare;


(b)                                 furnish
an incentive to such persons to continue their services for the Company; and


(c)                                  provide
a means through which the Company may attract able persons as Employees,
Consultants, and Outside Directors.


With
respect to Reporting Participants (see definition contained in Article 2), the
Plan and all transactions under the Plan are intended to comply with all
applicable conditions of Rule 16b-3 promulgated under the Securities Exchange
Act of 1934 (the “1934
Act”).  To the extent that
any provision of the Plan or action by the Committee fails to so comply, such
provision or action shall be deemed null and void ab initio
to the extent permitted by law and deemed advisable by the Committee.


ARTICLE 2


DEFINITIONS


For
the purpose of the Plan, unless the context requires otherwise, the following
terms shall have the meanings indicated:


2.1                               “Award” means the
grant of any Incentive Stock Option, Nonqualified Stock Option, Reload Option,
Common Stock or Restricted Stock.


2.2                               “Award Agreement”
means a written agreement between a Participant and the Company which sets out
the terms of the grant of an Award.


2.3                               “Award Period” means
the period set forth in the Award Agreement during which one or more Awards may
be exercised.



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2.4                               “Board” means the
board of directors of the Company.


2.5                               “Change in Control”
means any of the following, except as otherwise provided herein:  (i) any consolidation, merger, or share
exchange of the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company’s Common Stock would be
converted into cash, securities, or other property, other than a consolidation,
merger, or share exchange of the Company in which the holders of the Company’s
Common Stock immediately prior to such transaction have the same proportionate
ownership of Common Stock of the surviving corporation immediately after such
transaction; (ii) any sale, lease, exchange, or other transfer (excluding
transfer by way of pledge or hypothecation) in one transaction or a series of
related transactions, of all or substantially all of the assets of the Company;
(iii) the shareholders of the Company approve any plan or proposal for the
liquidation or dissolution of the Company; (iv) the cessation of control
(by virtue of their not constituting a majority of directors) of the Board by
the individuals (the “Continuing
Directors”) who (x) at the date of this Plan were directors
or (y) become directors after the date of this Plan and whose election or
nomination for election by the Company’s shareholders was approved by a vote of
at least two-thirds of the directors then in office who were directors at the
date of this Plan or whose election or nomination for election was previously
so approved; (v) the acquisition of beneficial ownership (within the
meaning of Rule 13d-3 under the 1934 Act) of an aggregate of 50% or more of the voting power of the
Company’s outstanding voting securities by any person or group (as such term is
used in Rule 13d-5 under the 1934 Act) who beneficially owned less than 50% of the voting power of the Company’s
outstanding voting securities on the date of this Plan; provided, however,
that notwithstanding the foregoing, an acquisition shall not constitute a
Change in Control hereunder if the acquirer is (x) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company and acting in
such capacity, (y) a Subsidiary of the Company or a corporation owned, directly
or indirectly, by the shareholders of the Company in substantially the same
proportions as their ownership of voting securities of the Company or
(z) any other person whose acquisition of shares of voting securities is
approved in advance by a majority of the Continuing Directors; or (vi) in a
Title 11 bankruptcy proceeding, the appointment of a trustee or the conversion
of a case involving the Company to a case under Chapter 7.


Notwithstanding
the foregoing provisions of this Section 2.5, in the event an Award
issued under the Plan is subject to Section 409A of the Code, then, in lieu of
the foregoing definition and to the extent necessary to comply with the
requirements of Section 409A of the Code, the definition of “Change in Control”
for purposes of such Award shall be the definition provided for under Section
409A of the Code and the regulations or other guidance issued thereunder.


2.6                               “Code” means the
Internal Revenue Code of 1986, as amended.


2.7                               “Committee” means the
committee appointed or designated by the Board to administer the Plan in
accordance with Article 3 of this Plan.


2.8                               “Common Stock” means
the common stock, par value $0.01 per share, which the Company is currently
authorized to issue or may in the future be authorized to issue, or any
securities into which or for which the common stock of the Company may be
converted or exchanged, as the case may be, pursuant to the terms of this Plan.


2.9                               “Company” means TGC
Industries, Inc., a Texas corporation, and any successor entity.



 2
 








2.10                        “Consultant” means any
person, who is not an Employee, performing advisory or consulting services for
the Company or a Subsidiary, with or without compensation, provided that bona fide services must be rendered by
such person, and such services shall not be rendered in connection with the
offer or sale of securities in a capital raising transaction.


2.11                        “Corporation” means
any entity that (i) is defined as a corporation under Section 7701 of the Code
and (ii) is the Company or is in an unbroken chain of corporations (other than
the Company) beginning with the Company, if each of the corporations other than
the last corporation in the unbroken chain owns stock possessing a majority of
the total combined voting power of all classes of stock in one of the other
corporations in the chain.  For purposes
of clause (ii) hereof, an entity shall be treated as a “corporation” if it
satisfies the definition of a corporation under Section 7701 of the Code.


2.12                        “Date of Grant” means
the effective date on which an Award is made to a Participant as set forth in
the applicable Award Agreement; provided, however, that solely for purposes of
Section 16 of the 1934 Act and the rules and regulations promulgated
thereunder, the Date of Grant of an Award shall be the date of shareholder approval of the Plan if
such date is later than the effective date of such Award as set forth in the
Award Agreement.


2.13                        “Employee” means
common law employee (as defined in accordance with the Regulations and Revenue
Rulings then applicable under Section 3401(c) of the Code) of the Company or
any Subsidiary of the Company.


2.14                        
“Fair Market Value”
means, if the Common Stock is traded on one or more established markets or
exchanges, the mean of the opening and closing prices of the Common Stock on
the primary market or exchange on which the Common Stock is traded, and if the
Common Stock is not so traded or the Common Stock does not trade on the
relevant date, the value determined in good faith by the Board of Directors
using a reasonable valuation method in accordance with the provisions of
Section 409A of the Code.  For purposes
of valuing Incentive Stock Options, the Fair Market Value of the Common Stock
shall be determined without regard to any restriction other than one which, by
its terms, will never lapse.


2.15                        “Incentive Stock Option”
means an incentive stock option, within the meaning of Section 422 of the Code,
granted pursuant to this Plan.


2.16                        “Nonqualified Stock Option”
means a nonqualified stock option, granted pursuant to this Plan, which is not
an Incentive Stock Option.


2.17                        “Option Price” means
the price which must be paid by a Participant upon exercise of a Stock Option
to purchase a share of Common Stock.


2.18                        “Outside Director” means a director of the Company who
is not an Employee.


2.19                        “Participant” means an
Employee, Consultant, or Outside Director of the Company or a Subsidiary to
whom an Award is granted under this Plan.


2.20                        “Plan” means this 2006
Stock Awards Plan of TGC Industries, Inc., as amended from time to time.



 3
 








2.21                        “Performance Goal”
means any of the goals set forth in Section 6.5 hereof.


2.22                        “Reload Stock Option”
means a Nonqualified Stock Option or an Incentive Stock Option granted pursuant
to Section 8.3(c) hereof.


2.23                        “Reporting Participant”
means a Participant who is subject to the reporting requirements of Section 16
of the 1934 Act.


2.24                        “Restricted Stock”
means shares of Common Stock issued or transferred to a Participant pursuant to
Section 6.4 of this Plan which are subject to restrictions or
limitations set forth in this Plan and in the related Award Agreement.


2.25                        “Retirement” means any
Termination of Service solely due to retirement upon or after attainment of age
sixty-five (65), or permitted early retirement as determined by the Committee.


2.26                        “Stock Option” means a
Nonqualified Stock Option, a Reload
Stock Option, or an Incentive Stock Option.


2.27                        “Subsidiary” means (i)
any corporation in an unbroken chain of corporations beginning with the
Company, if each of the corporations other than the last corporation in the
unbroken chain owns stock possessing a majority of the total combined voting
power of all classes of stock in one of the other corporations in the chain,
(ii) any limited partnership, if the Company or any corporation described
in item (i) above owns a majority of the general partnership interest and
a majority of the limited partnership interests entitled to vote on the removal
and replacement of the general partner, and (iii) any partnership or
limited liability company, if the partners or members thereof are composed only
of the Company, any corporation listed in item (i) above, or any limited
partnership listed in item (ii) above.  “Subsidiaries”
means more than one of any such corporations, limited partnerships,
partnerships or limited liability companies.


2.28                        “Termination of Service”
occurs when a Participant who is (i) an Employee of the Company or any
Subsidiary ceases to serve as an Employee of the Company and its Subsidiaries,
for any reason; (ii) an Outside Director of the Company or a Subsidiary ceases
to serve as a director of the Company and its Subsidiaries for any reason; or
(iii) a Consultant of the Company or a Subsidiary ceases to serve as a
Consultant of the Company and its Subsidiaries for any reason.  Except as may be necessary or desirable to
comply with applicable federal or state law, a “Termination of Service” shall
not be deemed to have occurred when a Participant who is an Employee becomes an
Outside Director or Consultant or vice versa. 
If, however, a Participant who is an Employee and who has an Incentive
Stock Option ceases to be an Employee but does not suffer a Termination of
Service, and if that Participant does not exercise the Incentive Stock Option
within the time required under Section 422 of the Code upon ceasing to be an
Employee, the Incentive Stock Option shall thereafter become a Nonqualified
Stock Option.  Notwithstanding the
foregoing provisions of this Section 2.28, in the event an Award issued
under the Plan is subject to Section 409A of the Code, then, in lieu of the
foregoing definition and to the extent necessary to comply with the
requirements of Section 409A of the Code, the definition of “Termination of
Service” for purposes of such Award shall be the definition of “separation from
service” provided for under Section 409A of the Code and the regulations or
other guidance issued thereunder.


2.29                        “Total and Permanent Disability”
means a Participant is qualified for long-term disability benefits under the
Company’s or Subsidiary’s disability plan or insurance policy; or, if no such
plan or policy is then in existence or if the Participant is not eligible to
participate in such plan



 4
 








or policy, that
the Participant, because of a physical or mental condition resulting from
bodily injury, disease, or mental disorder is unable to perform his or her
duties of employment for a period of six (6) continuous months, as determined
in good faith by the Committee, based upon medical reports or other evidence
satisfactory to the Committee; provided  that, with respect to any
Incentive Stock Option, Total and Permanent Disability shall have the meaning
given it under the rules governing Incentive Stock Options under the Code.
Notwithstanding the foregoing provisions of this Section 2.29, in the
event an Award issued under the Plan is subject to Section 409A of the Code,
then, in lieu of the foregoing definition and to the extent necessary to comply
with the requirements of Section 409A of the Code, the definition of “Total and
Permanent Disability” for purposes of such Award shall be the definition of “disability”
provided for under Section 409A of the Code and the regulations or other
guidance issued thereunder.


ARTICLE 3


ADMINISTRATION


3.1                               General Administration;
Establishment of Committee.  Subject
to the terms of this Article 3, the Plan shall be administered by
the Board or such committee (the “Committee”) of the Board as is designated by
the Board to administer the Plan. The Committee shall consist of between three
and six persons.  Any member of the
Committee may be removed at any time, with or without cause, by resolution of
the Board. Any vacancy occurring in the membership of the Committee may be
filled by appointment by the Board.  At
any time there is no Committee to administer the Plan, any references in this
Plan to the Committee shall be deemed to refer to the Board.


In
the event the Board decides that Awards shall constitute “performance-based
compensation” (within the meaning of Section 162(m) of the Code), membership on
the Committee shall be limited to those members of the Board who are “outside
directors” under Section 162(m) of the Code and “non-employee directors” as
defined in Rule 16b-3 promulgated under the 1934 Act.  The Committee shall select one of its members
to act as its Chairman.  A majority of
the Committee shall constitute a quorum, and the act of a majority of the
members of the Committee present at a meeting at which a quorum is present
shall be the act of the Committee.


3.2                               Designation
of Participants and Awards.  The
Committee or the Board shall determine and designate from time to time the
eligible persons to whom Awards will be granted and shall set forth in each related
Award Agreement, where applicable, the Award Period, the Date of Grant, and
such other terms, provisions, limitations, and performance requirements, as are
approved by the Committee, but not inconsistent with the Plan.  Although the members of the Committee shall
be eligible to receive Awards, all decisions with respect to any Award, and the
terms and conditions thereof, to be granted under the Plan to any member of the
Committee shall be made solely and exclusively by the other members of the
Committee, or if such member is the only member of the Committee, by the Board.


3.3                               Authority of the
Committee.  The Committee, in its
discretion, shall (i) interpret the Plan, (ii) prescribe, amend, and rescind
any rules and regulations necessary or appropriate for the administration of
the Plan, (iii) establish performance goals for an Award and certify the extent
of their achievement, and (iv) make such other determinations or certifications
and take such other action as it deems necessary or advisable in the administration
of the Plan.  Any interpretation,
determination, or other action made or taken by the Committee shall be final,
binding, and conclusive on all interested parties.  The Committee’s discretion set forth herein
shall not be limited



 5
 








by any provision
of the Plan, including any provision which by its terms is applicable
notwithstanding any other provision of the Plan to the contrary.


The
Committee may delegate to officers of the Company, pursuant to a written
delegation, the authority to perform specified functions under the Plan.  Any actions taken by any officers of the
Company pursuant to such written delegation of authority shall be deemed to
have been taken by the Committee.


With
respect to restrictions in the Plan that are based on the requirements of Rule
16b-3 promulgated under the 1934 Act, Section 422 of the Code, Section
162(m) of the Code, the rules of any exchange or inter-dealer quotation system
upon which the Company’s securities are listed or quoted, or any other
applicable law, rule, or restriction (collectively, “applicable law”), to
the extent that any such restrictions are no longer required by applicable law,
the Committee shall have the sole discretion and authority to grant Awards that
are not subject to such mandated restrictions and/or to waive any such mandated
restrictions with respect to outstanding Awards.


ARTICLE 4


ELIGIBILITY


Any
Employee (including an Employee who is also a director or an officer),
Consultant or Outside Director of the Company whose judgment, initiative, and
efforts contributed or may be expected to contribute to the successful
performance of the Company is eligible to participate in the Plan; provided
that only Employees of a corporation shall be eligible to receive Incentive
Stock Options.  The Committee, upon its
own action, may grant, but shall not be required to grant, an Award to any
Employee, Consultant or Outside Director of the Company or any Subsidiary.  Awards may be granted by the Committee at any
time and from time to time to new Participants, or to then Participants, or to
a greater or lesser number of Participants, and may include or exclude previous
Participants, as the Committee shall determine. 
Except as required by this Plan, Awards granted at different times need
not contain similar provisions.  The
Committee’s determinations under the Plan (including without limitation
determinations of which Employees, Consultants or Outside Directors, if any,
are to receive Awards, the form, amount and timing of such Awards, the terms
and provisions of such Awards and the agreements evidencing same) need not be
uniform and may be made by it selectively among Participants who receive, or
are eligible to receive, Awards under the Plan.


ARTICLE 5


SHARES
SUBJECT TO PLAN


5.1                               Number
Available for Awards.  Subject to
adjustment as provided in Articles 11 and 12, the maximum number of
shares of Common Stock that may be delivered pursuant to Awards granted under
the Plan is 1,000,000 shares, 100% of which may be delivered pursuant to
Incentive Stock Options.  Subject to
adjustment pursuant to Articles 11 and 12, no Participant may receive in
any calendar year (i) Stock Options relating to more than 50,000 shares of
Common Stock, or (ii) Common Stock or Restricted Stock relating to more than
30,000 shares of Common Stock; provided, however, that all such Awards to any
Participant during any calendar year shall not exceed an aggregate of more than
80,000 shares of Common Stock.  Shares to
be issued may be made available from authorized but unissued Common Stock, Common
Stock held by the Company in its treasury, or Common Stock purchased by the
Company on the open market or otherwise. During the term of



 6
 








this Plan, the
Company shall at all times reserve and keep available the number of shares of
Common Stock that will be sufficient to satisfy the requirements of this Plan.


5.2                               Reuse
of Shares.  To the extent that any
Award under this Plan is forfeited, expires, or is canceled, in whole or in
part, then the number of shares of Common Stock covered by the Award or stock option
so forfeited, expired, or canceled may again be awarded pursuant to the
provisions of this Plan.  In the event
that previously acquired shares of Common Stock are delivered to the Company in
full or partial payment of the exercise price for the exercise of a Stock
Option granted under this Plan, the number of shares of Common Stock available
for future Awards under this Plan shall be reduced only by the net number of
shares of Common Stock issued upon the exercise of the Stock Option.  Awards that may be satisfied either by the
issuance of shares of Common Stock or by cash or other consideration shall be
counted against the maximum number of shares of Common Stock that may be issued
under this Plan only during the period that the Award is outstanding or to the
extent the Award is ultimately satisfied by the issuance of shares of Common
Stock.  Notwithstanding any provisions of
the Plan to the contrary, only shares forfeited back to the Company, shares
canceled on account of termination, expiration or lapse of an Award, shares
surrendered in payment of the exercise price of an option, or shares withheld
for payment of applicable employment taxes and/or withholding obligations
resulting from the exercise of an option shall again be available for grant of Incentive
Stock Options under the Plan, but shall not increase the maximum  number of shares described in Section 5.1
above as the maximum number of shares of Common Stock that may be delivered
pursuant to Incentive Stock Options.


ARTICLE 6


GRANT OF AWARDS


6.1                               In
General.


(a)                                  The
grant of an Award shall be authorized by the Committee and shall be evidenced
by an Award Agreement setting forth the Award or Awards being granted, the
total number of shares of Common Stock subject to the Award(s), the Option Price
(if applicable), the Award Period, the Date of Grant, and such other terms,
provisions, limitations, and performance objectives, as are approved by the
Committee, but (i) not inconsistent with the Plan and (ii) to the extent an
Award issued under the Plan is subject to Section 409A of the Code, in
compliance with the applicable requirements of Section 409A of the Code and the
regulations or other guidance issued thereunder.  The Company shall execute an Award Agreement
with a Participant after the Committee approves the issuance of an Award.  Any Award granted pursuant to this Plan must
be granted within ten (10) years of the date of adoption of this Plan. The Plan
shall be submitted to the Company’s shareholders  for approval; however, the Committee may grant Awards under
the Plan prior to the time of shareholder  approval.  Any such Award granted prior to such
shareholder  approval shall be made
subject to such shareholder  approval.
The grant of an Award to a Participant shall not be deemed either to entitle
the Participant to, or to disqualify the Participant from, receipt of any other
Award under the Plan.


(b)                                 If
the Committee establishes a purchase price for an Award, the Participant must
accept such Award within a period of thirty (30) days (or such shorter period
as the Committee may specify) after the Date of Grant by executing the
applicable Award Agreement and paying such purchase price (if applicable).



 7
 








6.2                               Option
Price.  The Option Price for any
share of Common Stock which may be purchased under a Nonqualified Stock Option
for any share of Common Stock may be equal to or greater than the Fair Market
Value of the share on the Date of Grant. 
The Option Price for any share of Common Stock which may be purchased under
an Incentive Stock Option must be at least equal to the Fair Market Value of
the share on the Date of Grant; if an Incentive Stock Option is granted to an
Employee who owns or is deemed to own (by reason of the attribution rules of
Section 424(d) of the Code) more than ten percent (10%) of the combined voting
power of all classes of stock of the Company (or any parent or Subsidiary), the
Option Price shall be at least 110% of the Fair Market Value of the Common
Stock on the Date of Grant.


6.3                               Maximum
ISO Grants.  The Committee may not
grant Incentive Stock Options under the Plan to any Employee which would permit
the aggregate Fair Market Value (determined on the Date of Grant) of the Common
Stock with respect to which Incentive Stock Options (under this and any other
plan of the Company and its Subsidiaries) are exercisable for the first time by
such Employee during any calendar year to exceed $100,000.  To the extent any Stock Option granted under
this Plan which is designated as an Incentive Stock Option exceeds this limit
or otherwise fails to qualify as an Incentive Stock Option, such Stock Option
(or any such portion thereof) shall be a Nonqualified Stock Option.  In such case, the Committee shall designate
which stock will be treated as Incentive Stock Option stock by causing the
issuance of a separate stock certificate and identifying such stock as
Incentive Stock Option stock on the Company’s stock transfer records.


6.4                               Restricted
Stock.  If Restricted Stock is
granted to or received by a Participant under an Award, the Committee shall set
forth in the related Award Agreement: (i) the number of shares of Common Stock
awarded, (ii) the price, if any, to be paid by the Participant for such
Restricted Stock and the method of payment of the price, (iii) the time or
times within which such Award may be subject to forfeiture, (iv) specified
Performance Goals of the Company, a Subsidiary, any division thereof or any
group of Employees of the Company, or other criteria, which the Committee
determines must be met in order to remove any restrictions (including vesting)
on such Award, and (v) all other terms, limitations, restrictions, and
conditions of the Restricted Stock, which shall be consistent with this Plan
and to the extent a Restricted Stock granted under the Plan is subject to
Section 409A of the Code, in compliance with the applicable requirements of
Section 409A of the Code and the regulations or other guidance issued
thereunder.  The provisions of Restricted
Stock need not be the same with respect to each Participant.


(a)                                  Legend
on Shares.  Each Participant who is
awarded or receives Restricted Stock shall be issued a stock certificate or
certificates in respect of such shares of Common Stock.  Such certificate(s) shall be registered in
the name of the Participant, and shall bear an appropriate legend referring to
the terms, conditions, and restrictions applicable to such Restricted Stock,
substantially as provided in Section 15.10 of the Plan.


(b)                                  Restrictions
and Conditions.  Shares of Restricted
Stock shall be subject to the following restrictions and conditions:


(i)                                     Subject
to the other provisions of this Plan and the terms of the particular Award
Agreements, during such period as may be determined by the Committee commencing
on the Date of Grant or the date of exercise of an Award (the “Restriction Period”),
the Participant shall not be permitted to sell, transfer, pledge, or assign
shares of Restricted Stock. Except for these limitations, the Committee may, in
its sole discretion, remove any or all of the restrictions on such Restricted
Stock whenever it may determine that, by reason of changes in applicable



 8
 








laws or other changes in circumstances arising after
the date of the Award, such action is appropriate.


(ii)                                  Except
as provided in sub-paragraph (i) above or in the applicable Award Agreement,
the Participant shall have, with respect to his or her Restricted Stock, all of
the rights of a shareholder of
the Company, including the right to vote the shares and the right to receive
any dividends thereon.  Certificates for
shares of Common Stock free of restriction under this Plan shall be delivered
to the Participant promptly after, and only after, the Restriction Period has
expired without forfeiture in respect of such shares of Common Stock or after
any other restrictions imposed on such shares of Common Stock by the applicable
Award Agreement or other agreement have expired.  Certificates for the shares of Common Stock
forfeited under the provisions of the Plan and the applicable Award Agreement shall
be promptly returned to the Company by the forfeiting Participant.  Each Award Agreement shall require that each Participant, in connection with the
issuance of a certificate for Restricted Stock, shall endorse such certificate
in blank or execute a stock power in form satisfactory to the Company in blank
and deliver such certificate and executed stock power to the Company.


(iii)                               The
Restriction Period of Restricted Stock shall commence on the Date of Grant, as
specified in the Award Agreement, and, subject to Article 12 of the
Plan, unless otherwise established by the Committee in the Award Agreement
setting forth the terms of the Restricted Stock, shall expire upon satisfaction
of the conditions set forth in the Award Agreement; such conditions may provide
for vesting based on such Performance Goals as may be determined by the
Committee in its sole discretion.


(iv)                              Except
as otherwise provided in the particular Award Agreement, upon Termination of
Service for any reason during the Restriction Period, the nonvested shares of
Restricted Stock shall be forfeited by the Participant.  In the event a Participant has paid any
consideration to the Company for such forfeited Restricted Stock, the Committee
shall specify in the Award Agreement that either (i) the Company shall be
obligated to, or (ii) the Company may, in its sole discretion, elect to, pay to
the Participant, as soon as practicable after the event causing forfeiture, in
cash, an amount equal to the lesser of the total consideration paid by the
Participant for such forfeited shares or the Fair Market Value of such
forfeited shares as of the date of Termination of Service, as the Committee, in
its sole discretion shall select. Upon any forfeiture, all rights of a
Participant with respect to the forfeited shares of the Restricted Stock shall
cease and terminate without any further obligation on the part of the Company.


6.5                               Performance Goals.  Awards of Common Stock or Restricted
Stock under the Plan may be made subject to the attainment of Performance Goals
relating to one or more business criteria which, where applicable, shall be
within the meaning of Section 162(m) of the Code and consist of one or more or
any combination of the following criteria: cash flow; cost; revenues;  sales; ratio of debt to debt plus equity; net
borrowing, credit quality or debt ratings; profit before tax; economic profit;
earnings before interest and taxes; earnings before interest, taxes,
depreciation and amortization; gross margin; earnings per share (whether on a
pre-tax, after-tax, operational or other basis); operating earnings; capital
expenditures; expenses or expense levels; economic value added; ratio of
operating earnings to capital spending or any other operating ratios; free cash
flow; net profit;



 9
 








net sales; net
asset value per share; the accomplishment of mergers, acquisitions,
dispositions, public offerings or similar extraordinary business transactions;
sales growth; price of the Company’s Common Stock; return on assets, equity, or
shareholders’ equity; market share; inventory levels; inventory turn or
shrinkage; or total return to shareholders (“Performance Criteria”).  Any Performance Criteria may be used to
measure the performance of the Company as a whole or any business unit of the
Company and may be measured relative to a peer group or index.  Any Performance Criteria may include or
exclude (i) extraordinary, unusual, and/or non-recurring items of gain or loss,
(ii) gains or losses on the disposition of a business, (iii) changes in tax or
accounting regulations or laws, or (iv) the effect of a merger or acquisition,
as identified in the Company’s quarterly and annual earnings releases.  In all other respects, Performance Criteria
shall be calculated in accordance with the Company’s financial statements,
under generally accepted accounting principles, or under a methodology
established by the Committee prior to the issuance of an Award which is
consistently applied and identified in the audited financial statements,
including footnotes, or the Management Discussion and Analysis section of the
Company’s annual report.  However, to the
extent Section 162(m) of the Code is applicable, the Committee may not in any
event increase the amount of compensation payable to an individual upon the
attainment of a Performance Goal.


ARTICLE 7


AWARD PERIOD; VESTING


7.1                               Award
Period.  Subject to the other
provisions of this Plan, the Committee may, in its discretion, provide that an
Award may not be exercised in whole or in part for any period or periods of
time or beyond any date specified in the Award Agreement.  Except as provided in the Award Agreement, a
vested Award may be exercised in whole or in part at any time during its
term.  The Award Period for an Award
shall be reduced or terminated upon Termination of Service.  No Award granted under the Plan may be exercised
at any time after the end of its Award Period. 
No portion of any Award may be exercised after the expiration of ten
(10) years from its Date of Grant. 
However, if an Employee owns or is deemed to own (by reason of the
attribution rules of Section 424(d) of the Code) more than ten percent (10%) of
the combined voting power of all classes of stock of the Company (or any parent
or Subsidiary) and an Incentive Stock Option is granted to such Employee, the
term of such Incentive Stock Option (to the extent required by the Code at the
time of grant) shall be no more than five (5) years from the Date of
Grant.  Notwithstanding the foregoing and
unless the applicable Award Agreement provides otherwise, (i) in the event an
Outside Director suffers a Termination of Service, such Outside Director shall
have a period of ninety (90) days following such Termination of Service to
exercise his then unexercised (but vested) Nonqualified Stock Options; and (ii)
in the event an Employee or Consultant suffers a Termination of Service, the
Committee shall have the full power and authority, but shall not be
obligated,  to extend (either at the time
the Award is granted or at any time while the Award remains outstanding) the
period of time for which an Award is to remain exercisable following the
Employee’s or Consultant’s Termination of Service from the period set forth in
the applicable Award Agreement, provided, however, in not event shall the
Committee extend such exercise period if such extension would cause the Award to
be subject to the requirements of Section 409A of the Code.


7.2                               Vesting.  The Committee, in its sole discretion, may
determine that an Award will be immediately vested in whole or in part, or that
all or any portion may not be vested until a date, or dates, subsequent to its
Date of Grant, or until the occurrence of one or more specified events, subject
in any case to the terms of the Plan.  If
the Committee imposes conditions upon vesting, then, subsequent to the Date of
Grant, the Committee may, in its sole discretion, accelerate the date on which
all or any portion of the Award may be vested. 
Notwithstanding the foregoing, (i) upon the



 10
 








effective date of
a Change in Control, all Awards shall be immediately vested, in whole; and (ii)
upon the Participant’s death or Total and Permanent Disability, the portion of
the Participant’s Awards that would have vested had the Participant remained
employed through the vesting date immediately following the date of such death
or Total and Permanent Disability (or, in the event vesting is based upon the
attainment of one or more Performance Goals, the pro-rata portion of the
Participant’s Awards that would have vested had the Participant remained
employed through the vesting date immediately following  the date of such death or Total and Permanent
Disability, or such other date as may be determined by the Committee, in its
sole discretion), shall be immediately vested.


ARTICLE 8


EXERCISE OR CONVERSION OF AWARDS


8.1                               In General.  A vested Award may be exercised or converted,
during its Award Period, subject to limitations and restrictions set forth in
the Award Agreement


8.2                               Securities
Law and Exchange Restrictions.  In no
event may an Award be exercised or shares of Common Stock be issued pursuant to
an Award if a necessary listing or quotation of the shares of Common Stock on a
stock exchange or inter-dealer quotation system or any registration under state
or federal securities laws required under the circumstances has not been
accomplished.


8.3                               Exercise
of Stock Option.


(a)                                  In
General.  If the Committee imposes
conditions upon exercise, then subsequent to the Date of Grant, the Committee
may, in its sole discretion, accelerate the date on which all or any portion of
the Stock Option may be exercised.  No
Stock Option may be exercised  for a
fractional share of Common Stock.  The
granting of a Stock Option shall impose no obligation upon the Participant to
exercise that Stock Option.


(b)                                  Notice
and Payment.  Subject to such
administrative regulations as the Committee may from time to time adopt, a
Stock Option may be exercised by the delivery of written notice to the
Committee setting forth the number of shares of Common Stock with respect to
which the Stock Option is to be exercised and the date of exercise thereof (the
“Exercise Date”)
which shall be at least three (3) days after giving such notice unless an
earlier time shall have been mutually agreed upon.  On the Exercise Date, the Participant shall
deliver to the Company consideration with a value equal to the total Option
Price of the shares to be purchased, payable as provided in the Award
Agreement, which may provide for payment in any one or more of the following
ways:  (a) cash or check, bank draft, or
money order payable to the order of the Company; (b) Common Stock (including
Restricted Stock) owned by the Participant on the Exercise Date, valued at its
Fair Market Value on the Exercise Date, and which the Participant has not
acquired from the Company within six (6) months prior to the Exercise Date (“stock-for-stock
exercise”); (c) with the consent of the Committee, by delivery (including by
FAX) to the Company or its designated agent of an executed irrevocable option
exercise form together with irrevocable instructions from the Participant to a
broker or dealer, reasonably acceptable to the Company, to sell certain of the
shares of Common Stock purchased upon exercise of the Stock Option or to pledge
such shares as collateral for a loan and promptly deliver to the Company the
amount of sale or loan proceeds necessary to pay such purchase price (“cashless
exercise method”);  and/or (d) in any
other form of valid consideration that is acceptable to the Committee in its
sole



 11
 








discretion.  In the event that shares of Restricted Stock
are tendered as consideration for the exercise of a Stock Option, a number of
shares of Common Stock issued upon the exercise of the Stock Option equal to
the number of shares of Restricted Stock used as consideration therefor shall
be subject to the same restrictions and provisions as the Restricted Stock so
tendered.


(c)                                  Reload Stock Options.  In the event that shares of
Common Stock are delivered by a Participant in payment of all or a portion of
the exercise price of a Stock Option as set forth in Section 8.3(b)
above and/or shares of Common Stock are delivered to or withheld by the Company
in satisfaction of the Company’s tax withholding obligations upon exercise in
accordance with Section 15.6 hereof, then, subject to Article 10
hereof, then, if and to the extent authorized by the Committee, such
Participant may be eligible for the grant of a replacement Nonqualified Stock
Option (or if the Participant is exercising an Incentive Stock Option, a
replacement Incentive Stock Option) (in either case, a “Reload Stock Option”), to purchase that number of shares so delivered to or withheld by the
Company, as the case may be, at an option exercise price equal to the Fair
Market Value per share of the Common Stock on the date of exercise of the
original Stock Option (subject to the provisions of the Plan regarding
Incentive Stock Options and, in any event not less than the par value per share
of the Common Stock). The option period for a Reload Stock Option will commence
on its Date of Grant and expire on the expiration date of the original Stock Option
it replaces (subject to the provisions of the Plan regarding Incentive Stock
Options), after which period the Reload Stock Option cannot be exercised.  The Date of Grant of a Reload Stock Option
shall be the date that the Stock Option it replaces is exercised.  A Reload Stock Option cannot be exercised by
the Participant until the later of: (i) the exercise dates specified in the
original Stock Option or (ii) six (6) months after the Date of Grant of the
Reload Stock Option.  It shall be a
condition to the grant of a Reload Stock Option that promptly after its Date of
Grant, a stock option agreement shall be delivered to the Participant and
executed by the Participant and the Company which sets forth the total number
of shares subject to the Reload Stock Option, the option exercise price, the
option period of the Reload Stock Option, and such other terms and provisions
as are consistent with the Plan.


(d)                                  Issuance
of Certificate.  Except as otherwise
provided in Section 6.4 hereof (with respect to shares of Restricted
Stock) or in the applicable Award Agreement, upon payment of all amounts due
from the Participant, the Company shall cause certificates for the Common Stock
then being purchased to be delivered as directed by the Participant (or the
person exercising the Participant’s Stock Option in the event of his death) at
its principal business office promptly after the Exercise Date; provided that
if the Participant has exercised an Incentive Stock Option, the Company may at
its option retain physical possession of the certificate evidencing the shares
acquired upon exercise until the expiration of the holding periods described in
Section 422(a)(1) of the Code. The obligation of the Company to deliver shares
of Common Stock shall, however, be subject to the condition that, if at any
time the Committee determines in its discretion that the listing, registration,
or qualification of the Stock Option or the Common Stock upon any securities
exchange or inter-dealer quotation system or under any state or federal law, or
the consent or approval of any governmental regulatory body, is necessary as a
condition of, or in connection with, the Stock Option or the issuance or
purchase of shares of Common Stock thereunder, the Stock Option may not be
exercised in whole or in part unless such listing, registration, qualification,
consent, or approval shall have been effected or obtained free of any
conditions not reasonably acceptable to the Committee.



 12
 








(e)                                  Failure
to Pay.  Except as may otherwise be
provided in an Award Agreement, if the Participant fails to pay for any of the
Common Stock specified in such notice or fails to accept delivery thereof, that
portion of the Participant’s Stock Option and right to purchase such Common
Stock may be forfeited by the Company.


8.4                               Disqualifying
Disposition of Incentive Stock Option. 
If shares of Common Stock acquired upon exercise of an Incentive Stock
Option are disposed of by a Participant prior to the expiration of either two
(2) years from the Date of Grant of such Stock Option or one (1) year from the
transfer of shares of Common Stock to the Participant pursuant to the exercise
of such Stock Option, or in any other disqualifying disposition within the
meaning of Section 422 of the Code, such Participant shall notify the Company
in writing of the date and terms of such disposition.  A disqualifying disposition by a Participant
shall not affect the status of any other Stock Option granted under the Plan as
an Incentive Stock Option within the meaning of Section 422 of the Code.


ARTICLE 9


AMENDMENT OR DISCONTINUANCE


Subject
to the limitations set forth in this Article 9, the Board may at any
time and from time to time, without the consent of the Participants, alter,
amend, revise, suspend, or discontinue the Plan in whole or in part; provided,
however, that no amendment for which shareholder
approval is required either (i) by any securities exchange or
inter-dealer quotation system on which the Common Stock is listed or traded or
(ii) in  order for the Plan and Awards
awarded under the Plan to continue to comply with Sections 162(m), 421, and 422
of the Code, including any successors to such Sections;  shall be effective unless such amendment
shall be approved by the requisite vote of the shareholders of the Company entitled to vote thereon.  Any such amendment shall, to the extent
deemed necessary or advisable by the Committee, be applicable to any
outstanding Awards theretofore granted under the Plan, notwithstanding any
contrary provisions contained in any Award Agreement.  In the event of any such amendment to the
Plan, the holder of any Award outstanding under the Plan shall, upon request of
the Committee and as a condition to the exercisability thereof, execute a
conforming amendment in the form prescribed by the Committee to any Award
Agreement relating thereto. 
Notwithstanding anything contained in this Plan to the contrary, unless
required by law, no action contemplated or permitted by this Article 9
shall adversely affect any rights of Participants or obligations of the Company
to Participants with respect to any Award theretofore granted under the Plan
without the consent of the affected Participant.


ARTICLE 10


TERM


The Plan shall be effective from the date that
this Plan is approved by the Board. 
Unless sooner terminated by action of the Board, the Plan will terminate
on  March
29, 2016, but Awards granted before that date will continue to be
effective in accordance with their terms and conditions.



 13
 








ARTICLE 11


CAPITAL ADJUSTMENTS


In
the event that the Committee determines that any dividend or other distribution
(whether in the form of cash, Common Stock, other securities, or other
property), recapitalization, stock split, reverse stock split, rights offering,
reorganization, merger, consolidation, split-up, spin-off, split-off,
combination, subdivision, repurchase, or exchange of Common Stock or other
securities of the Company, issuance of warrants or other rights to purchase
Common Stock or other securities of the Company, or other similar corporate
transaction or event affects the Common Stock such that an adjustment is
determined by the Committee to be appropriate to prevent the dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan, then the Committee shall, in such manner as it may deem
equitable, adjust any or all of the (i) the number of shares and type of Common
Stock (or the securities or property) which thereafter may be made the subject
of Awards, (ii) the number of shares and type of Common Stock (or other securities
or property) subject to outstanding Awards, (iii) the Option Price of each
outstanding Award, and (iv) the amount, if any, the Company pays for forfeited
shares of Common Stock in accordance with Section 6.4; provided however,
that the number of shares of Common Stock (or other securities or property)
subject to any Award shall always be a whole number.  In lieu of the foregoing, if deemed
appropriate, the Committee may make provision for a cash payment to the holder
of an outstanding Award.  Notwithstanding
the foregoing, no such adjustment or cash payment shall be made or authorized
to the extent that such adjustment or cash payment would cause the Plan or any
Stock Option to violate Section 422 of the Code.  Such adjustments shall be made in accordance
with the rules of any securities exchange, stock market, or stock quotation
system to which the Company is subject.


Upon
the occurrence of any such adjustment or cash payment, the Company shall
provide notice to each affected Participant of its computation of such
adjustment or cash payment which shall be conclusive and shall be binding upon
each such Participant.


ARTICLE 12


RECAPITALIZATION, MERGER, AND
CONSOLIDATION


12.1                        No
Effect on Company’s Authority.  The
existence of this Plan and Awards granted hereunder shall not affect in any way
the right or power of the Company or its shareholders to make or authorize any or all adjustments,
recapitalizations, reorganizations, or other changes in the Company’s capital
structure and its business, or any Change in Control, or any merger or
consolidation of the Company, or any issuance of bonds, debentures, preferred
or preference stocks ranking prior to or otherwise affecting the Common Stock
or the rights thereof (or any rights, options, or warrants to purchase same),
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.


12.2                        Conversion
of Awards Where Company Survives. 
Subject to any required action by the shareholders and except as otherwise provided by Section 12.4
hereof or as may be required to comply with Section 409A of the Code and the
regulations or other guidance issued thereunder, if the Company is the
surviving or resulting corporation in any merger, consolidation, or share
exchange, any Award granted hereunder shall pertain to and apply to the
securities or rights (including cash, property, or assets) to which a holder of
the number of shares of Common Stock subject to the Award would have been
entitled.



 14
 








12.3                        Exchange
or Cancellation of Awards Where Company Does Not Survive.  Except as otherwise provided by Section
12.4 hereof or as may be required to comply with Section 409A of the Code
and the regulations or other guidance issued thereunder, in the event of any
merger, consolidation, or share exchange pursuant to which the Company is not
the surviving or resulting corporation, there shall be substituted for each
share of Common Stock subject to the unexercised portions of outstanding
Awards, that number of shares of each class of stock or other securities or
that amount of cash, property, or assets of the surviving, resulting, or
consolidated company which were distributed or distributable to the shareholders of the Company in respect
to each share of Common Stock held by them, such outstanding Awards to be
thereafter exercisable for such stock, securities, cash, or property in
accordance with their terms.


12.4                        Cancellation of Awards.  Notwithstanding the provisions of Sections
12.2 and 12.3 hereof,  and except as
may be required to comply with Section 409A of the Code and the regulations or
other guidance issued thereunder, all Awards granted hereunder may be canceled
by the Company, in its sole discretion, as of the effective date of any Change
in Control, merger, consolidation, or share exchange, or any issuance of bonds,
debentures, preferred or preference stocks ranking prior to or otherwise
affecting the Common Stock or the rights thereof (or any rights, options, or
warrants to purchase same), or of any proposed sale of all or substantially all
of the assets of the Company, or of any dissolution or liquidation of the
Company, by either:


(a)                                  giving
notice to each holder thereof or his or her personal representative of its
intention to cancel those Awards for which the issuance of shares of Common
Stock involved payment by the Participant for such shares and, permitting the
purchase during the thirty (30) day period next preceding such effective date of
any or all of the shares of Common Stock subject to such outstanding Awards,
including in the Board’s discretion some or all of the shares as to which such
Awards would not otherwise be vested and exercisable; or


(b)                                 in
the case of Awards that are either (i) settled only in shares of Common Stock,
or (ii) at the election of the Participant, settled in shares of Common Stock,
paying the holder thereof an amount equal to a reasonable estimate of the
difference between the net amount per share payable in such transaction or as a
result of such transaction, and the price per share of such Award to be paid by
the Participant (hereinafter the “Spread”), multiplied by the number of shares
subject to the Award. In cases where the shares constitute, or would after exercise
constitute, Restricted Stock, the Company, in its discretion may include some
or all of those shares in the calculation of the amount payable hereunder.  In estimating the Spread, appropriate
adjustments to give effect to the existence of the Awards shall be made, such
as deeming the Awards to have been exercised, with the Company receiving the
exercise price payable thereunder, and treating the shares receivable upon
exercise of the Awards as being outstanding in determining the net amount per share.  In cases where the proposed transaction
consists of the acquisition of assets of the Company, the net amount per share
shall be calculated on the basis of the net amount receivable with respect to
shares of Common Stock upon a distribution and liquidation by the Company after
giving effect to expenses and charges (including but not limited to taxes
payable by the Company before such liquidation could be completed).


(c)                                  An
Award that by its terms would be fully vested or exercisable upon a Change in
Control will be considered vested or exercisable for purposes of Section
12.4(a) hereof.



 15
 








ARTICLE
13


LIQUIDATION OR DISSOLUTION


Subject
to Section 12.4 hereof, in case the Company shall, at any time while any
Award under this Plan shall be in force and remain unexpired, (i) sell all
or substantially all of its property, or (ii) dissolve, liquidate, or wind
up its affairs, then each Participant shall be entitled to receive, in lieu of
each share of Common Stock of the Company which such Participant would have been
entitled to receive under the Award, the same kind and amount of any securities
or assets as may be issuable, distributable, or payable upon any such sale,
dissolution, liquidation, or winding up with respect to each share of Common
Stock of the Company. If the Company shall, at any time prior to the expiration
of any Award, make any partial distribution of its assets, in the nature of a
partial liquidation, whether payable in cash or in kind (but excluding the
distribution of a cash dividend payable out of earned surplus and designated as
such), and an adjustment is determined by the Committee to be appropriate to
prevent the dilution of the benefits or potential benefits intended to be made
available under the Plan, then the Committee shall, in such manner as it may
deem equitable, make such adjustment in accordance with the provisions of Article
11 hereof.


ARTICLE 14


AWARDS IN SUBSTITUTION FOR


AWARDS GRANTED BY OTHER ENTITIES


Awards may be granted under the Plan from time
to time in substitution for similar instruments held by employees, consultants
or directors of a corporation, partnership, or limited liability company who
become or are about to become Employees, Consultants or Outside Directors of
the Company or any Subsidiary as a result of a merger or consolidation of the
employing corporation with the Company, the acquisition by the Company of
equity of the employing entity, or any other similar transaction pursuant to
which the Company becomes the successor employer.  The terms and conditions of the substitute
Awards so granted may vary from the terms and conditions set forth in this Plan
to such extent as the Committee at the time of grant may deem appropriate to
conform, in whole or in part, to the provisions of the Awards in substitution
for which they are granted.


ARTICLE 15


MISCELLANEOUS PROVISIONS


15.1                        Investment
Intent.  The Company may
require that there be presented to and filed with it by any Participant under
the Plan, such evidence as it may deem necessary to establish that the Awards
granted or the shares of Common Stock to be purchased or transferred are being
acquired for investment and not with a view to their distribution.


15.2                        No Right to
Continued Employment.  Neither
the Plan nor any Award granted under the Plan shall confer upon any Participant
any right with respect to continuance of employment by the Company or any
Subsidiary.


15.3                        Indemnification
of Board and Committee.  No
member of the Board or the Committee, nor any officer or Employee of the
Company acting on behalf of the Board or the



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Committee, shall
be personally liable for any action, determination, or interpretation taken or
made in good faith with respect to the Plan, and all members of the Board and
the Committee, each officer of the Company, and each Employee of the Company
acting on behalf of the Board or the Committee shall, to the extent permitted
by law, be fully indemnified and protected by the Company in respect of any
such action, determination, or interpretation.


15.4                        Effect
of the Plan.  Neither the adoption of
this Plan nor any action of the Board or the Committee shall be deemed to give
any person any right to be granted an Award or any other rights except as may
be evidenced by an Award Agreement, or any amendment thereto, duly authorized
by the Committee and executed on behalf of the Company, and then only to the
extent and upon the terms and conditions expressly set forth therein.


15.5                        Compliance
With Other Laws and Regulations. 
Notwithstanding anything contained herein to the contrary, the Company
shall not be required to sell or issue shares of Common Stock under any Award
if the issuance thereof would constitute a violation by the Participant or the
Company of any provisions of any law or regulation of any governmental
authority or any national securities exchange or inter-dealer quotation system
or other forum in which shares of Common Stock are quoted or traded (including
without limitation Section 16 of the 1934 Act and Section 162(m) of the Code);
and, as a condition of any sale or issuance of shares of Common Stock under an
Award, the Committee may require such agreements or undertakings, if any, as
the Committee may deem necessary or advisable to assure compliance with any
such law or regulation.  The Plan, the
grant and exercise of Awards hereunder, and the obligation of the Company to
sell and deliver shares of Common Stock, shall be subject to all applicable
federal and state laws, rules, and regulations and to such approvals by any
government or regulatory agency as may be required.


15.6                        Tax Requirements.  The Company or, if applicable, any Subsidiary
(for purposes of this Section 15.6, the term “Company” shall be
deemed to include any applicable Subsidiary), shall have the right to deduct
from all amounts paid in cash or other form in connection with the Plan, any
Federal, state, local, or other taxes required by law to be withheld in
connection with an Award granted under this Plan.  The Company may, in its sole discretion, also
require the Participant receiving shares of Common Stock issued under the Plan
to pay the Company the amount of any taxes that the Company is required to
withhold in connection with the Participant’s income arising with respect to
the Award.  Such payments shall be
required to be made when requested by Company and may be required to be made
prior to the delivery of any certificate representing shares of Common
Stock.  Such payment may be made (i) by
the delivery of cash to the Company in an amount that equals or exceeds (to
avoid the issuance of fractional shares under (iii) below) the required tax
withholding obligations of the Company; (ii) if the Company, in its sole
discretion, so consents in writing, the actual delivery by the exercising
Participant to the Company of shares of Common Stock that the Participant has
not acquired from the Company within six (6) months prior to the date of
exercise, which shares so delivered have an aggregate Fair Market Value that
equals or exceeds (to avoid the issuance of fractional shares under (iii)
below) the required tax withholding payment; (iii) if the Company, in its sole
discretion, so consents in writing, the Company’s withholding of a number of
shares to be delivered upon the exercise of the Stock Option, which shares so
withheld have an aggregate Fair Market Value that equals (but does not exceed)
the required tax withholding payment; or (iv) any combination of (i), (ii), or
(iii).  The Company may, in its sole
discretion, withhold any such taxes from any other cash remuneration otherwise paid
by the Company to the Participant.  The
Committee may in the Award Agreement impose any additional tax requirements or
provisions that the Committee deems necessary or desirable.



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15.7                        Assignability.  Incentive Stock Options may not be
transferred, assigned, pledged, hypothecated, or otherwise conveyed or
encumbered other than by will or the laws of descent and distribution and may
be exercised during the lifetime of the Participant only by the Participant or
the Participant’s legally authorized representative, and each Award Agreement
in respect of an Incentive Stock Option shall so provide. The designation by a
Participant of a beneficiary will not constitute a transfer of a Stock
Option.  The Committee may waive or
modify any limitation contained in the preceding sentences of this Section 15.7
that is not required for compliance with Section 422 of the Code.


Except
as otherwise provided herein, Nonqualified Stock Options may not be
transferred, assigned, pledged, hypothecated, or otherwise conveyed or
encumbered other than by will or the laws of descent and distribution.  The Committee may, in its discretion,
authorize all or a portion of a Nonqualified Stock Option to be granted to a
Participant on terms which permit transfer by such Participant to (i) the
spouse (or former spouse), children, or grandchildren of the Participant (“Immediate Family Members”),
(ii) a trust or trusts for the exclusive benefit of such Immediate Family
Members, (iii) a partnership in which the only partners are (1) such
Immediate Family Members and/or (2) entities which are controlled by Immediate
Family Members, (iv) an entity exempt from federal income tax pursuant to
Section 501(c)(3) of the Code or any successor provision, or (v) a split
interest trust or pooled income fund described in Section 2522(c)(2) of the
Code or any successor provision, provided that (x) there shall be
no consideration for any such transfer, (y) the Award Agreement pursuant
to which such Nonqualified Stock Option is granted must be approved by the
Committee and must expressly provide for transferability in a manner consistent
with this Section, and (z) subsequent transfers of transferred
Nonqualified Stock Options shall be prohibited except those by will or the laws
of descent and distribution.


Following
any transfer, any such Nonqualified Stock Option shall continue to be subject
to the same terms and conditions as were applicable immediately prior to
transfer, provided that for purposes of Articles 8, 9, 11, 13 and 15
hereof the term “Participant” shall be deemed to include the transferee.  The events of Termination of Service shall
continue to be applied with respect to the original Participant, following
which the Nonqualified Stock Options shall be exercisable or convertible by the
transferee only to the extent and for the periods specified in the Award
Agreement.  The Committee and the Company
shall have no obligation to inform any transferee of a Nonqualified Stock
Option of any expiration, termination, lapse, or acceleration of such Stock
Option.  The Company shall have no
obligation to register with any federal or state securities commission or
agency any Common Stock issuable or issued under a Nonqualified Stock Option
that has been transferred by a Participant under this Section 15.7.


15.8                        Use
of Proceeds.  Proceeds from the sale
of shares of Common Stock pursuant to Awards granted under this Plan shall
constitute general funds of the Company.


15.9                        Execution
of Receipts and Releases.  Any payment of cash or any issuance or
transfer of Common Stock to a Participant, or his or her legal representative,
heir, legatee, or distributee, shall, to the extent thereof, be in full
satisfaction of all claims of such persons hereunder.  The Committee may require any Participant,
legal representative, heir, legatee, or distributee, as a condition precedent
to such payment, issuance, or transfer, to execute a release and receipt
therfor in such form as the Committee may determine, in its sole discretion.


15.10                 Legend.  Each certificate representing shares of
Restricted Stock issued to a Participant shall bear the following legend, or a
similar legend deemed by the Company to constitute



 18
 








an appropriate
notice of the provisions hereof (any such certificate not having such legend
shall be surrendered upon demand by the Company and so endorsed):


On the face of the certificate:


“Transfer of this stock
is restricted in accordance with conditions printed on the reverse of this
certificate.”


On the reverse:


“The shares of stock evidenced by this
certificate are subject to, and transferable only in accordance with, that
certain 2006 Stock Awards Plan of TGC Industries, Inc., a copy of which is on
file at the principal office of the Company in Plano, Texas.  No transfer or pledge of the shares evidenced
hereby may be made except in accordance with and subject to the provisions of
said Plan.  By acceptance of this
certificate, any holder, transferee, or pledgee hereof agrees to be bound by
all of the provisions of said Plan.”


The
following legend shall be inserted on a certificate evidencing Common Stock
issued under the Plan if the shares were not issued in a transaction registered
under the applicable federal and state securities laws:


“Shares of stock
represented by this certificate have been acquired by the holder for investment
and not for resale, transfer, or distribution, have been issued pursuant to
exemptions from the registration requirements of applicable state and federal
securities laws, and may not be offered for sale, sold, or transferred other
than pursuant to effective registration under such laws, or in transactions
otherwise in compliance with such laws, and upon evidence satisfactory to the
Company of compliance with such laws, as to which the Company may rely upon an
opinion of counsel satisfactory to the Company.”


A copy of this Plan shall be kept on file
in the principal office of the Company in Plano, Texas.



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IN
WITNESS WHEREOF, the Company has caused this instrument to be executed as
of  March 30, 2006, by its President and
Secretary pursuant to prior action taken by the Board.


	
   

  	
  TGC INDUSTRIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Wayne A.
  Whitener

  
	
   

  	
   

  	
  Wayne A. Whitener, President

  
	
   

  	
   

  
	
   

  	
   

  
	
  Attest:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/

  	
  Kenneth W.
  Uselton

  	
   

  
	
   

  	
  Kenneth W. Uselton, Secretary

  	
   

  



 



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