Document:

Exhibit 10.34

 

GLOBAL GEOPHYSICAL SERVICES, INC.
 2006 INCENTIVE COMPENSATION PLAN

 

 

(Amended and Restated, effective as of February 5, 2010)

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
SECTION 1. 
    	
GENERAL PROVISIONS RELATING TO PLAN GOVERNANCE, COVERAGE   AND BENEFITS
    	
1
    
	
 
    	
1.1
    	
 
    	
Background and Purpose
    	
1
    
	
 
    	
1.2
    	
 
    	
Definitions
    	
1
    
	
 
    	
 
    	
 
    	
(a)
    	
Authorized Officer
    	
1
    
	
 
    	
 
    	
 
    	
(b)
    	
Board
    	
1
    
	
 
    	
 
    	
 
    	
(c)
    	
Cause
    	
2
    
	
 
    	
 
    	
 
    	
(d)
    	
CEO
    	
2
    
	
 
    	
 
    	
 
    	
(e)
    	
Change in Control
    	
2
    
	
 
    	
 
    	
 
    	
(f)
    	
Code
    	
2
    
	
 
    	
 
    	
 
    	
(g)
    	
Committee
    	
2
    
	
 
    	
 
    	
 
    	
(h)
    	
Common Stock
    	
2
    
	
 
    	
 
    	
 
    	
(i)
    	
Company
    	
2
    
	
 
    	
 
    	
 
    	
(j)
    	
Consultant
    	
2
    
	
 
    	
 
    	
 
    	
(k)
    	
Covered Employee
    	
2
    
	
 
    	
 
    	
 
    	
(l)
    	
Disability
    	
3
    
	
 
    	
 
    	
 
    	
(m)
    	
Employee
    	
3
    
	
 
    	
 
    	
 
    	
(n)
    	
Employment
    	
3
    
	
 
    	
 
    	
 
    	
(o)
    	
Exchange Act
    	
3
    
	
 
    	
 
    	
 
    	
(p)
    	
Fair Market Value
    	
3
    
	
 
    	
 
    	
 
    	
(q)
    	
Grantee
    	
3
    
	
 
    	
 
    	
 
    	
(r)
    	
Immediate Family
    	
4
    
	
 
    	
 
    	
 
    	
(s)
    	
Incentive Agreement
    	
4
    
	
 
    	
 
    	
 
    	
(t)
    	
Incentive Award
    	
4
    
	
 
    	
 
    	
 
    	
(u)
    	
Incentive Stock Option or ISO
    	
4
    
	
 
    	
 
    	
 
    	
(v)
    	
Insider
    	
4
    
	
 
    	
 
    	
 
    	
(w)
    	
Nonstatutory Stock Option
    	
4
    
	
 
    	
 
    	
 
    	
(x)
    	
Option Price
    	
4
    
	
 
    	
 
    	
 
    	
(y)
    	
Other Stock-Based Award
    	
4
    
	
 
    	
 
    	
 
    	
(z)
    	
Outside Director
    	
4
    
	
 
    	
 
    	
 
    	
(aa)
    	
Parent
    	
4
    
	
 
    	
 
    	
 
    	
(bb)
    	
Performance-Based Award
    	
4
    
	
 
    	
 
    	
 
    	
(cc)
    	
Performance-Based Exception
    	
4
    
	
 
    	
 
    	
 
    	
(dd)
    	
Performance Criteria
    	
4
    
	
 
    	
 
    	
 
    	
(ee)
    	
Performance Period
    	
4
    
	
 
    	
 
    	
 
    	
(ff)
    	
Plan
    	
5
    
	
 
    	
 
    	
 
    	
(gg)
    	
Plan Year
    	
5
    
	
 
    	
 
    	
 
    	
(hh)
    	
Publicly Held Corporation
    	
5
    
	
 
    	
 
    	
 
    	
(ii)
    	
Restricted Stock
    	
5
    
	
 
    	
 
    	
 
    	
(jj)
    	
Restricted Stock Award
    	
5
    
	
 
    	
 
    	
 
    	
(kk)
    	
Restricted Stock Unit
    	
5
    
	
 
    	
 
    	
 
    	
(ll)
    	
Restriction Period
    	
5
    
	
 
    	
 
    	
 
    	
(mm)
    	
Retirement
    	
5
    
	
 
    	
 
    	
 
    	
(nn)
    	
Share
    	
5
    
	
 
    	
 
    	
 
    	
(oo)
    	
Share Pool
    	
5
    
	
 
    	
 
    	
 
    	
(pp)
    	
Spread
    	
5
    
	
 
    	
 
    	
 
    	
(qq)
    	
Stock Appreciation Right or SAR
    	
5
    
	
 
    	
 
    	
 
    	
(rr)
    	
Stock Option or Option
    	
5
    
	
 
    	
 
    	
 
    	
(ss)
    	
Subsidiary
    	
5
    
	
 
    	
 
    	
 
    	
(tt)
    	
Supplemental Payment
    	
5
    
	
 
    	
1.3
    	
 
    	
Plan Administration
    	
5
    
								

 

i

 

	
 
    	
 
    	
 
    	
(a)
    	
Authority of the Committee
    	
5
    
	
 
    	
 
    	
 
    	
(b)
    	
Meetings
    	
6
    
	
 
    	
 
    	
 
    	
(c)
    	
Decisions Binding
    	
6
    
	
 
    	
 
    	
 
    	
(d)
    	
Modification of Outstanding Incentive Awards
    	
6
    
	
 
    	
 
    	
 
    	
(e)
    	
Delegation of Authority
    	
6
    
	
 
    	
 
    	
 
    	
(f)
    	
Expenses of Committee
    	
6
    
	
 
    	
 
    	
 
    	
(g)
    	
Surrender of Previous Incentive Awards
    	
6
    
	
 
    	
 
    	
 
    	
(h)
    	
Indemnification
    	
7
    
	
 
    	
1.4
    	
 
    	
Shares of Common Stock Available for Incentive Awards
    	
7
    
	
 
    	
1.5
    	
 
    	
Share Pool Adjustments for Awards and Payouts
    	
7
    
	
 
    	
1.6
    	
 
    	
Common Stock Available
    	
8
    
	
 
    	
1.7
    	
 
    	
Participation
    	
8
    
	
 
    	
 
    	
 
    	
(a)
    	
Eligibility
    	
8
    
	
 
    	
 
    	
 
    	
(b)
    	
Incentive Stock Option Eligibility
    	
8
    
	
 
    	
1.8
    	
 
    	
Types of Incentive Awards
    	
8
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
SECTION 2. 
    	
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
    	
9
    
	
 
    	
2.1
    	
 
    	
Grant of Stock Options
    	
9
    
	
 
    	
2.2
    	
 
    	
Stock Option Terms
    	
9
    
	
 
    	
 
    	
 
    	
(a)
    	
Written Agreement
    	
9
    
	
 
    	
 
    	
 
    	
(b)
    	
Number of Shares
    	
9
    
	
 
    	
 
    	
 
    	
(c)
    	
Exercise Price
    	
9
    
	
 
    	
 
    	
 
    	
(d)
    	
Term
    	
9
    
	
 
    	
 
    	
 
    	
(e)
    	
Exercise
    	
9
    
	
 
    	
 
    	
 
    	
(f)
    	
$100,000 Annual Limit on Incentive Stock Options
    	
9
    
	
 
    	
2.3
    	
 
    	
Stock Option Exercises
    	
10
    
	
 
    	
 
    	
 
    	
(a)
    	
Method of Exercise and Payment
    	
10
    
	
 
    	
 
    	
 
    	
(b)
    	
Restrictions on Share Transferability
    	
10
    
	
 
    	
 
    	
 
    	
(c)
    	
Notification of Disqualifying Disposition of Shares from   Incentive Stock Options
    	
11
    
	
 
    	
 
    	
 
    	
(d)
    	
Proceeds of Option Exercise
    	
11
    
	
 
    	
2.4
    	
 
    	
Stock Appreciation Rights
    	
11
    
	
 
    	
 
    	
 
    	
(a)
    	
Grant
    	
11
    
	
 
    	
 
    	
 
    	
(b)
    	
General Provisions
    	
11
    
	
 
    	
 
    	
 
    	
(c)
    	
Exercise
    	
11
    
	
 
    	
 
    	
 
    	
(d)
    	
Settlement
    	
11
    
	
 
    	
2.5
    	
 
    	
Supplemental Payment on Exercise of Nonstatutory Stock   Options
    	
11
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
SECTION 3. 
    	
RESTRICTED STOCK
    	
12
    
	
 
    	
3.1
    	
 
    	
Award of Restricted Stock
    	
12
    
	
 
    	
 
    	
 
    	
(a)
    	
Grant
    	
12
    
	
 
    	
 
    	
 
    	
(b)
    	
Immediate Transfer Without Immediate Delivery of Restricted   Stock
    	
12
    
	
 
    	
3.2
    	
 
    	
Restrictions
    	
13
    
	
 
    	
 
    	
 
    	
(a)
    	
Forfeiture of Restricted Stock
    	
13
    
	
 
    	
 
    	
 
    	
(b)
    	
Issuance of Certificates
    	
13
    
	
 
    	
 
    	
 
    	
(c)
    	
Removal of Restrictions
    	
13
    
	
 
    	
3.3
    	
 
    	
Delivery of Shares of Common Stock
    	
13
    
	
 
    	
3.4
    	
 
    	
Supplemental Payment on Vesting of Restricted Stock
    	
13
    
	
 
    	
 
    	
 
    
	
SECTION 4. 
    	
OTHER STOCK-BASED AWARDS
    	
14
    
	
 
    	
4.1
    	
 
    	
Grant of Other Stock-Based Awards
    	
14
    
	
 
    	
4.2
    	
 
    	
Other Stock-Based Award Terms
    	
14
    
	
 
    	
 
    	
 
    	
(a)
    	
Written Agreement
    	
14
    
	
 
    	
 
    	
 
    	
(b)
    	
Purchase Price
    	
14
    
	
 
    	
 
    	
 
    	
(c)
    	
Performance Criteria and Other Terms
    	
14
    
	
 
    	
4.3
    	
 
    	
Supplemental Payment on Other Stock-Based Awards
    	
14
    

 

ii

 

	
SECTION 5. 
    	
PERFORMANCE-BASED AWARDS AND PERFORMANCE CRITERIA
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 6. 
    	
PROVISIONS RELATING TO PLAN PARTICIPATION
    	
16
    
	
 
    	
6.1
    	
 
    	
Incentive Agreement
    	
16
    
	
 
    	
6.2
    	
 
    	
No Right to Employment
    	
16
    
	
 
    	
6.3
    	
 
    	
Securities Requirements
    	
17
    
	
 
    	
6.4
    	
 
    	
Transferability
    	
17
    
	
 
    	
6.5
    	
 
    	
Rights as a Shareholder
    	
18
    
	
 
    	
 
    	
 
    	
(a)
    	
No Shareholder Rights
    	
18
    
	
 
    	
 
    	
 
    	
(b)
    	
Representation of Ownership
    	
18
    
	
 
    	
6.6
    	
 
    	
Change in Stock and Adjustments
    	
18
    
	
 
    	
 
    	
 
    	
(a)
    	
Changes in Law or Circumstances
    	
18
    
	
 
    	
 
    	
 
    	
(b)
    	
Exercise of Corporate Powers
    	
18
    
	
 
    	
 
    	
 
    	
(c)
    	
Recapitalization of the Company
    	
18
    
	
 
    	
 
    	
 
    	
(d)
    	
Issue of Common Stock by the Company
    	
19
    
	
 
    	
 
    	
 
    	
(e)
    	
Assumption under the Plan of Outstanding Stock Options
    	
19
    
	
 
    	
 
    	
 
    	
(f)
    	
Assumption of Incentive Awards by a Successor
    	
19
    
	
 
    	
6.7
    	
 
    	
Termination of Employment, Death, Disability and Retirement
    	
20
    
	
 
    	
 
    	
 
    	
(a)
    	
Termination of Employment
    	
20
    
	
 
    	
 
    	
 
    	
(b)
    	
Termination of Employment for Cause
    	
20
    
	
 
    	
 
    	
 
    	
(c)
    	
Retirement
    	
20
    
	
 
    	
 
    	
 
    	
(d)
    	
Disability or Death
    	
21
    
	
 
    	
 
    	
 
    	
(e)
    	
Continuation
    	
21
    
	
 
    	
6.8
    	
 
    	
Change in Control
    	
21
    
	
 
    	
6.9
    	
 
    	
Exchange of Incentive Awards
    	
23
    
	
 
    	
6.10
    	
 
    	
Financing
    	
23
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 7. 
    	
GENERAL
    	
23
    
	
 
    	
7.1
    	
 
    	
Effective Date and Grant Period
    	
23
    
	
 
    	
7.2
    	
 
    	
Funding and Liability of Company
    	
23
    
	
 
    	
7.3
    	
 
    	
Withholding Taxes
    	
23
    
	
 
    	
 
    	
 
    	
(a)
    	
Tax Withholding
    	
23
    
	
 
    	
 
    	
 
    	
(b)
    	
Share Withholding
    	
24
    
	
 
    	
 
    	
 
    	
(c)
    	
Incentive Stock Options
    	
24
    
	
 
    	
 
    	
 
    	
(d)
    	
Loans
    	
24
    
	
 
    	
7.4
    	
 
    	
No Guarantee of Tax Consequences
    	
24
    
	
 
    	
7.5
    	
 
    	
Designation of Beneficiary by Participant
    	
24
    
	
 
    	
7.6
    	
 
    	
Deferrals
    	
24
    
	
 
    	
7.7
    	
 
    	
Amendment and Termination
    	
24
    
	
 
    	
7.8
    	
 
    	
Requirements of Law
    	
25
    
	
 
    	
 
    	
 
    	
(a)
    	
Governmental Entities and Securities Exchanges
    	
25
    
	
 
    	
 
    	
 
    	
(b)
    	
Securities Act Rule 701
    	
26
    
	
 
    	
7.9
    	
 
    	
Rule 16b-3 Securities Law Compliance for Insiders
    	
26
    
	
 
    	
7.10
    	
 
    	
Compliance with Code Section 162(m) for Publicly   Held Corporation
    	
26
    
	
 
    	
7.11
    	
 
    	
Compliance with Code Section 409A
    	
26
    
	
 
    	
7.12
    	
 
    	
Notices
    	
27
    
	
 
    	
 
    	
 
    	
(a)
    	
Notice From Insiders to Secretary of Change in Beneficial   Ownership
    	
27
    
	
 
    	
 
    	
 
    	
(b)
    	
Notice to Insiders and Securities and Exchange Commission
    	
27
    
	
 
    	
7.13
    	
 
    	
Pre-Clearance Agreement with Brokers
    	
27
    
	
 
    	
7.14
    	
 
    	
Successors to Company
    	
27
    
	
 
    	
7.15
    	
 
    	
Miscellaneous Provisions
    	
27
    
	
 
    	
7.16
    	
 
    	
Severability
    	
27
    
	
 
    	
7.17
    	
 
    	
Gender, Tense and Headings
    	
28
    
	
 
    	
7.18
    	
 
    	
Governing Law
    	
28
    

 

iii

 

GLOBAL GEOPHYSICAL SERVICES, INC.

2006 INCENTIVE COMPENSATION PLAN

 

SECTION 1.

 

GENERAL PROVISIONS RELATING TO
 PLAN GOVERNANCE, COVERAGE AND BENEFITS

 

1.1                               Background and Purpose

 

Global Geophysical Services, Inc., a Delaware corporation (the “Company”) has adopted this plan document, entitled “Global Geophysical Services, Inc. 2006 Incentive Compensation Plan” (the “Plan”), effective as of July 11, 2006 (the “Effective Date”).

 

The purpose of the Plan is to foster and promote the long-term financial success of the Company and to increase stockholder value by: (a) encouraging the commitment of selected key Employees, Consultants and Outside Directors, (b) motivating superior performance of key Employees, Consultants and Outside Directors by means of long-term performance related incentives, (c) encouraging and providing key Employees, Consultants and Outside Directors with a program for obtaining ownership interests in the Company which link and align their personal interests to those of the Company’s stockholders, (d) attracting and retaining key Employees, Consultants and Outside Directors by providing competitive compensation opportunities, and (e) enabling key Employees, Consultants and Outside Directors to share in the long-term growth and success of the Company.

 

The Plan provides for payment of various forms of compensation. It is not intended to be a plan that is subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The Plan will be interpreted, construed and administered consistent with its status as a plan that is not subject to ERISA.

 

The Plan will remain in effect, subject to the right of the Board to amend or terminate the Plan at any time pursuant to Section 7.7, until all Shares subject to the Plan have been purchased or acquired according to its provisions. However, in no event may an Incentive Stock Option be granted under the Plan after the expiration of ten (10) years from the Effective Date to the extent required by Code Section 422(b)(2).

 

1.2                               Definitions

 

The following terms shall have the meanings set forth below:

 

(a)           Authorized Officer.  The President of the Company (the “President”) or any other officer of the Company to whom the Board or CEO delegates the authority to execute any Incentive Agreement for and on behalf of the Company. No officer or director shall be an Authorized Officer with respect to any Incentive Agreement for himself.

 

(b)           Board.  The Board of Directors of the Company.

 

(c)           Cause.  When used in connection with the termination of a Grantee’s Employment, shall mean the termination of the Grantee’s Employment by the Company or any Subsidiary by reason of (i) the conviction of the Grantee by a court of competent jurisdiction as to which no further appeal can be taken of a crime involving moral turpitude or a felony; (ii) the commission by the Grantee of a material act of fraud upon the Company or any Subsidiary, or any customer or supplier thereof; (iii) the misappropriation of any funds or property of the Company or any Subsidiary, or any customer or supplier thereof; (iv) the willful and continued failure by the Grantee to perform the material duties assigned to him that is not cured to the reasonable satisfaction of the Company within 30 days after written notice of such failure is provided to Grantee by the Board or CEO (or by another officer of the Company or a Subsidiary who has been designated by the Board or CEO for such purpose); (v) the engagement by the Grantee in any direct and material conflict of interest with the Company or any Subsidiary without compliance with the Company’s

 

 

or Subsidiary’s conflict of interest policy, if any, then in effect; or (vi) the engagement by the Grantee, without the written approval of the Board or CEO, in any material activity which competes with the business of the Company or any Subsidiary or which would result in a material injury to the business, reputation or goodwill of the Company or any Subsidiary.

 

(d)           CEO.  The President of the Company.

 

(e)           Change in Control.  Any of the events described in and subject to Section 6.8.

 

(f)            Code.  The Internal Revenue Code of 1986, as amended, and the regulations and other authority promulgated thereunder by the appropriate governmental authority. References herein to any provision of the Code shall refer to any successor provision thereto.

 

(g)           Committee.  The committee appointed by the Board to administer the Plan.  If the Company is a Publicly Held Corporation, the Plan shall be administered by the Committee appointed by the Board consisting of not less than two directors who fulfill the “nonemployee director” requirements of Rule 16b-3 under the Exchange Act and the “outside director” requirements of Code Section 162(m). In either case, the Committee may be the Compensation Committee of the Board, or any subcommittee of the Compensation Committee, provided that the members of the Committee satisfy the requirements of the previous provisions of this paragraph.

 

The Board shall have the power to fill vacancies on the Committee arising by resignation, death, removal or otherwise. The Board, in its sole discretion, may allocate the powers and duties of the Committee among one or more separate committees, or retain all powers and duties of the Committee in a single Committee. The members of the Committee shall serve at the discretion of the Board.

 

Notwithstanding the preceding paragraphs of this Section 1.2(g), the term “Committee” as used in the Plan with respect to any Incentive Award for an Outside Director shall refer to the entire Board.  In the case of an Incentive Award for an Outside Director, the Board shall have all the powers and responsibilities of the Committee hereunder as to such Incentive Award, and any actions as to such Incentive Award may be acted upon only by the Board (unless it otherwise designates in its discretion). When the Board exercises its authority to act in the capacity as the Committee hereunder with respect to an Incentive Award for an Outside Director, it shall so designate with respect to any action that it undertakes in its capacity as the Committee.

 

(h)           Common Stock.  The common stock of the Company, $.01 par value per share, and any class of common stock into which such common shares may hereafter be converted, reclassified or recapitalized.

 

(i)            Company.  Global Geophysical Services, Inc., a corporation organized under the laws of the state of Delaware, and any successor in interest thereto.

 

(j)            Consultant.  An independent agent, consultant, attorney, an individual who has agreed to become an Employee within the next six months, or any other individual who is not an Outside Director or employee of the Company (or any Parent or Subsidiary) and who, in the opinion of the Committee, (i) is in a position to contribute to the growth or financial success of the Company (or any Parent or Subsidiary), (ii) is a natural person and (iii) provides bona fide services to the Company (or any Parent or Subsidiary), which services are not in connection with the offer or sale of securities in a capital raising transaction, and do not directly or indirectly promote or maintain a market for the Company’s securities.

 

(k)           Covered Employee.  A named executive officer who is one of the group of covered employees, as defined in Code Section 162(m) and Treasury Regulation Section 1.162-27(c) (or its successor), during any period that the Company is a Publicly Held Corporation.

 

2

 

(l)            Disability.  As determined by the Committee in its discretion exercised in good faith, a physical or mental condition of the Grantee that would entitle him to payment of disability income payments under the Company’s long term disability insurance policy or plan for employees, as then effective, if any; or in the event that the Grantee is not covered, for whatever reason, under the Company’s long-term disability insurance policy or plan, “Disability” means a permanent and total disability as defined in Code Section 22(e)(3). A determination of Disability may be made by a physician selected or approved by the Committee and, in this respect, the Grantee shall submit to any reasonable examination(s) required in the opinion of such physician.

 

(m)          Employee.  Any employee of the Company (or any Parent or Subsidiary) within the meaning of Code Section 3401(c) who, in the opinion of the Committee, is in a position to contribute to the growth, development or financial success of the Company (or any Parent or Subsidiary), including, without limitation, officers who are members of the Board.

 

(n)           Employment.  Employment means that the individual is employed  as an Employee, or engaged as a Consultant or Outside Director, by the Company (or any Parent or Subsidiary), or by any corporation issuing or assuming an Incentive Award in any transaction described in Code Section 424(a), or by a parent corporation or a subsidiary corporation of such corporation issuing or assuming such Incentive Award, as the parent-subsidiary relationship shall be determined at the time of the corporate action described in Code Section 424(a). In this regard, neither the transfer of a Grantee from Employment by the Company to Employment by any Parent or Subsidiary, nor the transfer of a Grantee from Employment by any Parent or Subsidiary to Employment by the Company, shall be deemed to be a termination of Employment of the Grantee. Moreover, the Employment of a Grantee shall not be deemed to have been terminated because of an approved leave of absence from active Employment on account of temporary illness, authorized vacation or granted for reasons of professional advancement, education, or health, or during any period required to be treated as a leave of absence by virtue of any applicable statute, Company personnel policy or written agreement.

 

The term “Employment” for purposes of the Plan shall include (i) active performance of agreed services by a Consultant for the Company (or any Parent or Subsidiary) or (ii) current membership on the Board by an Outside Director.

 

All determinations regarding Employment, and termination of Employment, shall be made by the Committee in its discretion.

 

(o)           Exchange Act.  The Securities Exchange Act of 1934, as amended.

 

(p)           Fair Market Value.  If the Company is a Publicly Held Corporation, the Fair Market Value of one Share on the date in question shall be the closing sales price on the immediately preceding business day of a Share as reported on the Nasdaq National Market System or other principal securities exchange on which Shares are then listed or admitted to trading.  If there was no public trade of Common Stock on the date in question, Fair Market Value shall be determined by reference to the last preceding date on which such a trade was so reported.

 

If the Company is not a Publicly Held Corporation at the time a determination of the Fair Market Value of the Common Stock is required to be made hereunder, the determination of Fair Market Value for purposes of the Plan shall be made by the Committee in its discretion. In this respect, the Committee may rely on such financial data, appraisals, valuations, experts, and other sources as, in its sole and absolute discretion, it deems advisable under the circumstances.  With respect to Stock Options, SARs, and other Incentive Awards subject to Code Section 409A, such Fair Market Value shall be determined by the Committee consistent with the requirements of Section 409A in order to satisfy the exception under Section 409A for stock rights.

 

(q)           Grantee.  Any Employee, Consultant or Outside Director who is granted an Incentive Award under the Plan.

 

3

 

(r)            Immediate Family.  With respect to a Grantee, the Grantee’s child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships.

 

(s)           Incentive Agreement.  The written agreement entered into between the Company and the Grantee setting forth the terms and conditions pursuant to which an Incentive Award is granted under the Plan, as such agreement is further defined in Section 6.1.

 

(t)            Incentive Award.  A grant of an award under the Plan to a Grantee, including any Nonstatutory Stock Option, Incentive Stock Option (ISO), Stock Appreciation Right (SAR), Restricted Stock Award, Restricted Stock Unit or Other Stock-Based Award, as well as any Supplemental Payment with respect thereto.

 

(u)           Incentive Stock Option or ISO.  A Stock Option granted by the Committee to an Employee under Section 2 which is designated by the Committee as an Incentive Stock Option and intended to qualify as an Incentive Stock Option under Code Section 422.

 

(v)           Insider.  If the Company is a Publicly Held Corporation, an individual who is, on the relevant date, an officer, director or ten percent (10%) beneficial owner of any class of the Company’s equity securities that is registered pursuant to Section 12 of the Exchange Act, all as defined under Section 16 of the Exchange Act.

 

(w)          Nonstatutory Stock Option.  A Stock Option granted by the Committee to a Grantee under Section 2 that is not designated by the Committee as an Incentive Stock Option.

 

(x)            Option Price.  The exercise price at which a Share may be purchased by the Grantee of a Stock Option.

 

(y)           Other Stock-Based Award.  An award granted by the Committee to a Grantee under Section 4.1 that is valued in whole or in part by reference to, or is otherwise based upon, Common Stock.

 

(z)            Outside Director.  A member of the Board who is not, at the time of grant of an Incentive Award, an employee of the Company or any Parent or Subsidiary.

 

(aa)         Parent.  Any corporation (whether now or hereafter existing) which constitutes a “parent” of the Company, as defined in Code Section 424(e).

 

(bb)         Performance-Based Award.  A grant of an Incentive Award under the Plan pursuant to Section 5 that is intended to satisfy the Performance-Based Exception.

 

(cc)         Performance-Based Exception.  The performance-based exception from the tax deductibility limitations of Code Section 162(m), as prescribed in Code Section 162(m) and Treasury Regulation Section 1.162-27(e) (or its successor), which is applicable during such period that the Company is a Publicly Held Corporation.

 

(dd)         Performance Criteria.  The business criteria that are specified by the Committee pursuant to Section 5 for an Incentive Award that is intended to qualify for the Performance-Based Exception; the satisfaction of such business criteria during the Performance Period being required for the grant and/or vesting of the particular Incentive Award to occur, as specified in the particular Incentive Agreement.

 

(ee)         Performance Period.  A period of time determined by the Committee over which performance is measured for the purpose of determining a Grantee’s right to, and the payment value of, any Incentive Award that is intended to qualify for the Performance-Based Exception.

 

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(ff)           Plan.  Global Geophysical Services, Inc. 2006 Incentive Compensation Plan, as effective on the Effective Date, which is set forth herein and as it may be amended from time to time.

 

(gg)         Plan Year.  The calendar year.

 

(hh)         Publicly Held Corporation.  A corporation issuing any class of common equity securities required to be registered under Section 12 of the Exchange Act.

 

(ii)           Restricted Stock.  Common Stock that is issued or transferred to a Grantee pursuant to Section 3.

 

(jj)           Restricted Stock Award.  An authorization by the Committee to issue or transfer Restricted Stock to a Grantee pursuant to Section 3.

 

(kk)         Restricted Stock Unit.  A unit granted to a Grantee pursuant to Section 4.1 which entitles him to receive a Share or cash on the vesting date, as specified in the Incentive Agreement.

 

(ll)           Restriction Period.  The period of time determined by the Committee and set forth in the Incentive Agreement during which the transfer of Restricted Stock by the Grantee is restricted.

 

(mm)       Retirement.  The voluntary termination of Employment from the Company or any Parent or Subsidiary constituting retirement for age on any date after the Employee attains the normal retirement age of 65 years, or such other age as may be designated by the Committee in the Employee’s Incentive Agreement.

 

(nn)         Share.  A share of the Common Stock of the Company.

 

(oo)         Share Pool.  The number of shares authorized for issuance under Section 1.4, as adjusted for (i) awards and payouts under Section 1.5 and (ii) changes and adjustments as described in Section 6.6.

 

(pp)         Spread.  The difference between the exercise price per Share specified in a SAR grant and the Fair Market Value of a Share on the date of exercise of the SAR.

 

(qq)         Stock Appreciation Right or SAR.  A Stock Appreciation Right as described in Section 2.4.

 

(rr)           Stock Option or Option.  Pursuant to Section 2, (i) an Incentive Stock Option granted to an Employee, or (ii) a Nonstatutory Stock Option granted to an Employee, Consultant or Outside Director, whereunder such option the Grantee has the right to purchase Shares of Common Stock. In accordance with Code Section 422, only an Employee may be granted an Incentive Stock Option.

 

(ss)         Subsidiary.  Any company (whether a corporation, partnership, joint venture or other form of entity) in which the Company or a corporation in which the Company owns a majority of the shares of capital stock, directly or indirectly, owns a greater than 50% equity interest except that, with respect to the issuance of Incentive Stock Options, the term “Subsidiary” shall have the same meaning as the term “subsidiary corporation” as defined in Code Section 424(f) as required by Code Section 422.

 

(tt)           Supplemental Payment.  Any amount, as described in Sections 2.5, 3.4 and/or 4.3, that is dedicated to payment of income taxes which are payable by the Grantee resulting from an Incentive Award.

 

1.3                               Plan Administration

 

(a)           Authority of the Committee.  Except as may be limited by law and subject to the provisions herein, the Committee shall have the complete power and authority to (i) select Grantees who shall participate in the Plan; (ii) determine the sizes, duration and types of Incentive Awards; (iii) determine

 

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the terms and conditions of Incentive Awards and Incentive Agreements; (iv) determine whether any Shares subject to Incentive Awards will be subject to any restrictions on transfer; (v) construe and interpret the Plan and any Incentive Agreement or other agreement entered into under the Plan; and (vi) establish, amend, or waive rules for the Plan’s administration. Further, the Committee shall make all other determinations which may be necessary or advisable for the administration of the Plan.

 

(b)           Meetings.  The Committee shall designate a chairman from among its members who shall preside at its meetings, and shall designate a secretary, without regard to whether that person is a member of the Committee, who shall keep the minutes of the proceedings and all records, documents, and data pertaining to its administration of the Plan. Meetings shall be held at such times and places as shall be determined by the Committee and the Committee may hold telephonic meetings. The Committee may take any action otherwise proper under the Plan by the affirmative vote, taken with or without a meeting, of a majority of its members. The Committee may authorize any one or more of its members or any officer of the Company to execute and deliver documents on behalf of the Committee.

 

(c)           Decisions Binding.  All determinations and decisions of the Committee shall be made in its discretion pursuant to the provisions of the Plan, and shall be final, conclusive and binding on all persons including the Company, its shareholders, Employees, Grantees, and their estates and beneficiaries. The Committee’s decisions and determinations with respect to any Incentive Award need not be uniform and may be made selectively among Incentive Awards and Grantees, whether or not such Incentive Awards are similar or such Grantees are similarly situated.

 

(d)           Modification of Outstanding Incentive Awards.  Subject to the shareholder approval requirements of Section 7.7 if applicable, the Committee may, in its discretion, provide for the extension of the exercisability of an Incentive Award, accelerate the vesting or exercisability of an Incentive Award, eliminate or make less restrictive any restrictions contained in an Incentive Award, waive any restriction or other provisions of an Incentive Award, or otherwise amend or modify an Incentive Award in any manner that  (i) is not adverse to the Grantee to whom such Incentive Award was granted, (ii) is consented to by such Grantee, (iii) does not cause the Incentive Award to provide for the deferral of compensation in a manner that does not comply with Code Section 409A (unless otherwise determined by the Committee), or (iv) does not contravene the requirements of the Performance-Based Exception under Code Section 162(m).  With respect to an Incentive Award that is an ISO, no adjustment thereto shall be made to the extent constituting a “modification” within the meaning of Code Section 424(h)(3) unless otherwise agreed to by the Grantee in writing.  Notwithstanding the above provisions of this subsection, no amendment or modification of an Incentive Award shall be made to the extent such modification results in any Stock Option with an exercise price less than 100% of the Fair Market Value per Share on the date of grant (110% for Grantees of ISOs who are 10% or greater shareholders pursuant to Section 1.7(b)).

 

(e)           Delegation of Authority.  The Committee may delegate to designated officers or other employees of the Company any of its duties and authority under the Plan pursuant to such conditions or limitations as the Committee may establish from time to time; provided, however, the Committee may not delegate to any person the authority (i) to grant Incentive Awards or (ii) if the Company is a Publicly Held Corporation, to take any action which would contravene the requirements of Rule 16b-3 under the Exchange Act, the Performance-Based Exception under Code Section 162(m), or the Sarbanes-Oxley Act of 2002.

 

(f)            Expenses of Committee.  The Committee may employ legal counsel, including, without limitation, independent legal counsel and counsel regularly employed by the Company, and other agents as the Committee may deem appropriate for the administration of the Plan. The Committee may rely upon any opinion or computation received from any such counsel or agent. All expenses incurred by the Committee in interpreting and administering the Plan, including, without limitation, meeting expenses and professional fees, shall be paid by the Company.

 

(g)           Surrender of Previous Incentive Awards.  The Committee may, in its discretion, grant Incentive Awards to Grantees on the condition that such Grantees surrender to the Committee for cancellation such other Incentive Awards (including, without limitation, Incentive Awards with higher

 

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exercise prices) as the Committee directs. Incentive Awards granted on the condition precedent of surrender of outstanding Incentive Awards shall not count against the limits set forth in Section 1.4 until such time as such previous Incentive Awards are surrendered and cancelled.  No surrender of Incentive Awards shall be made under this Section 1.3(g) if such surrender causes any Incentive Award to provide for the deferral of compensation in a manner that is subject to taxation under Code Section 409A (unless otherwise determined by the Committee).

 

(h)           Indemnification.  Each person who is or was a member of the Committee shall be indemnified by the Company against and from any damage, loss, liability, cost and expense that may be imposed upon or reasonably incurred by  him in connection with or resulting from any claim, action, suit, or proceeding to which he may be a party or in which he may be involved by reason of any action taken or failure to act under the Plan, except for any such act or omission constituting willful misconduct or gross negligence. Each such person shall be indemnified by the Company for all amounts paid by him in settlement thereof, with the Company’s approval, or paid by him in satisfaction of any judgment in any such action, suit, or proceeding against him, provided he shall give the Company an opportunity, at its own expense, to handle and defend the same before he undertakes to handle and defend it on his own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled (i) under the Company’s Articles or Certificate of Incorporation or Bylaws, or (ii) pursuant to any separate indemnification or hold harmless agreement with the Company, (iii) as a matter of law, or otherwise, or (iv) any power that the Company may have to indemnify them or hold them harmless.

 

1.4                               Shares of Common Stock Available for Incentive Awards

 

(a)           Subject to adjustment under Section 6.6, there shall be available for Incentive Awards that are granted wholly or partly in Common Stock (including rights or Stock Options that may be exercised for or settled in Common Stock) 9,203,058 Shares of Common Stock. The number of Shares that are the subject of Incentive Awards under this Plan, which are forfeited or terminated, expire unexercised, are settled in cash in lieu of Common Stock or in a manner such that all or some of the Shares covered by an Incentive Award are not issued to a Grantee or are exchanged for Incentive Awards that do not involve Common Stock, shall again immediately become available for Incentive Awards hereunder. The aggregate number of Shares which may be issued upon exercise of ISOs shall be 9,203,058 of the Shares reserved pursuant to the first sentence of this paragraph.  For purposes of counting Shares against the ISO maximum number of reserved Shares, the net number of Shares issued pursuant to the exercise of an ISO shall be counted.  The Committee may from time to time adopt and observe such procedures concerning the counting of Shares against the Plan maximum as it may deem appropriate.

 

(b)          With respect to any Stock Option or SAR granted to a Covered Employee that is canceled or repriced, the number of Shares subject to such Stock Option or SAR shall continue to count against the maximum number of Shares that may be the subject of Stock Options or SARs granted to such Covered Employee hereunder and, in this regard, such maximum number shall be determined in accordance with Code Section 162(m).

 

(c)           The limitations of subsections (a) and (b) above shall be construed and administered so as to comply with the Performance-Based Exception.

 

1.5                               Share Pool Adjustments for Awards and Payouts

 

The following Incentive Awards and payouts shall reduce, on a one Share for one Share basis, the number of Shares authorized for issuance under the Share Pool:

 

(a)           Stock Option;

 

(b)           SAR;

 

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(c)                                  Restricted Stock Award; and

 

(d)                                 A payout of a Restricted Stock Unit or Other Stock-Based Award in Shares.

 

The following transactions shall restore, on a one Share for one Share basis, the number of Shares authorized for issuance under the Share Pool:

 

(a)                                  A payout of a Restricted Stock Award, Restricted Stock Unit, SAR, or Other Stock-Based Award in the form of cash and not Shares (but not the “cashless” exercise of a Stock Option as provided in Section 2.3(a));

 

(b)                                 A cancellation, termination, expiration, forfeiture, or lapse for any reason of any Shares subject to an Incentive Award; and

 

(c)                                  Payment of an Option Price by withholding Shares which otherwise would be acquired on exercise (i.e., the Share Pool shall be increased by the number of Shares withheld in payment of the Option Price).

 

1.6                               Common Stock Available

 

The Common Stock available for issuance or transfer under the Plan shall be made available from Shares now or hereafter (a) held in the treasury of the Company, (b) authorized but unissued shares, or (c) Shares to be purchased or acquired by the Company. No fractional shares shall be issued under the Plan; payment for fractional shares shall be made in cash.

 

1.7                               Participation

 

(a)                                  Eligibility.  The Committee shall from time to time designate those Employees, Consultants and/or Outside Directors, if any, to be granted Incentive Awards under the Plan, the type of Incentive Awards granted, the number of Shares, Stock Options, rights or units, as the case may be, which shall be granted to each such person, and any other terms or conditions relating to the Incentive Awards as it may deem appropriate to the extent consistent with the provisions of the Plan. A Grantee who has been granted an Incentive Award may, if otherwise eligible, be granted additional Incentive Awards at any time.

 

No Insider shall be eligible to be granted an Incentive Award that is subject to Rule 16a-3 under the Exchange Act unless and until such Insider has granted a limited power of attorney to those officers of the Company who have been designated by the Committee for purposes of future required filings under the Exchange Act.

 

(b)                                 Incentive Stock Option Eligibility.  No Consultant or Outside Director shall be eligible for the grant of any Incentive Stock Option. In addition, no Employee shall be eligible for the grant of any Incentive Stock Option who owns or would own immediately before the grant of such Incentive Stock Option, directly or indirectly, stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company, or any Parent or Subsidiary. This restriction does not apply if, at the time such Incentive Stock Option is granted, the Incentive Stock Option exercise price is at least one hundred and ten percent (110%) of the Fair Market Value on the date of grant and the Incentive Stock Option by its terms is not exercisable after the expiration of five (5) years from the date of grant. For the purpose of the immediately preceding sentence, the attribution rules of Code Section 424(d) shall apply for the purpose of determining an Employee’s percentage ownership in the Company or any Parent or Subsidiary. This paragraph shall be construed consistent with the requirements of Code Section 422.

 

1.8                               Types of Incentive Awards

 

The types of Incentive Awards under the Plan are Stock Options, Stock Appreciation Rights and Supplemental Payments as described in Section 2, Restricted Stock Awards and Supplemental Payments as 

 

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described in Section 3, Restricted Stock Units and Other Stock-Based Awards and Supplemental Payments as described in Section 4, or any combination of the foregoing.

 

SECTION 2.

 

STOCK OPTIONS AND STOCK APPRECIATION RIGHTS

 

2.1                               Grant of Stock Options

 

The Committee is authorized to grant (a) Nonstatutory Stock Options to Employees, Consultants and/or Outside Directors and (b) Incentive Stock Options to Employees only, in accordance with the terms and conditions of the Plan, and with such additional terms and conditions, not inconsistent with the Plan, as the Committee shall determine in its discretion. Successive grants may be made to the same Grantee regardless whether any Stock Option previously granted to such person remains unexercised.

 

2.2                               Stock Option Terms

 

(a)                                  Written Agreement.  Each grant of a Stock Option shall be evidenced by a written Incentive Agreement. Among its other provisions, each Incentive Agreement shall set forth the extent to which the Grantee shall have the right to exercise the Stock Option following termination of the Grantee’s Employment. Such provisions shall be determined in the discretion of the Committee, shall be included in the Grantee’s Incentive Agreement, and need not be uniform among all Stock Options issued pursuant to the Plan.

 

(b)                                 Number of Shares.  Each Stock Option shall specify the number of Shares of Common Stock to which it pertains.

 

(c)                                  Exercise Price.  The exercise price per Share of Common Stock under each Stock Option shall be (i) not less than 100% of the Fair Market Value per Share on the date the Stock Option is granted and (ii) specified in the Incentive Agreement; provided, however, if the Grantee of an ISO is a 10% or greater shareholder pursuant to Section 1.7(b), the exercise price for the ISO shall not be less than 110% of the Fair Market Value on the date of grant.  Each Stock Option shall specify the method of exercise which shall be consistent with Section 2.3(a).

 

(d)                                 Term.  In the Incentive Agreement, the Committee shall fix the term of each Stock Option which shall not be more than (i) ten (10) years from the date of grant, or (ii) five (5) years from the date of grant for an ISO granted to a 10% or greater shareholder pursuant to Section 1.7(b).

 

(e)                                  Exercise.  The Committee shall determine the time or times at which a Stock Option may be exercised, in whole or in part. Each Stock Option may specify the required period of continuous Employment and/or the Performance Criteria to be achieved before the Stock Option or portion thereof will become exercisable. Each Stock Option, the exercise of which, or the timing of the exercise of which, is dependent, in whole or in part, on the achievement of designated Performance Criteria, may specify a minimum level of achievement in respect of the specified Performance Criteria below which no Stock Options will be exercisable and a method for determining the number of Stock Options that will be exercisable if performance is at or above such minimum but short of full achievement of the Performance Criteria. All such terms and conditions shall be set forth in the Incentive Agreement.

 

(f)                                    $100,000 Annual Limit on Incentive Stock Options.  Notwithstanding any contrary provision in the Plan, a Stock Option designated as an ISO shall be an ISO only to the extent that the aggregate Fair Market Value (determined as of the time the ISO is granted) of the Shares of Common Stock with respect to which ISOs are exercisable for the first time by the Grantee during any single calendar year (under the Plan and any other stock option plans of the Company and its Subsidiaries or Parent) does not exceed $100,000.  This limitation shall be applied by taking ISOs into account in the order in which they were granted and shall be construed in accordance with Section 422(d) of the Code.  To the extent that a

 

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Stock Option intended to constitute an ISO exceeds the $100,000 limitation (or any other limitation under Code Section 422), the portion of the Stock Option that exceeds the $100,000 limitation (or violates any other limitation under Code Section 422) shall be deemed a Nonstatutory Stock Option.  In such event, all other terms and provisions of such Stock Option grant shall remain unchanged.

 

2.3                               Stock Option Exercises

 

(a)                                  Method of Exercise and Payment.  Stock Options shall be exercised by the delivery of a signed written notice of exercise to the Company as of a date set by the Company in advance of the effective date of the proposed exercise. The notice shall set forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares.

 

The Option Price upon exercise of any Stock Option shall be payable to the Company in full either: (i) in cash or its equivalent; or (ii) subject to prior approval by the Committee in its discretion, by tendering previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the Option Price, (iii) subject to prior approval by the Committee in its discretion, by withholding Shares which otherwise would be acquired on exercise having an aggregate Fair Market Value at the time of exercise equal to the total Option Price; or (iv) subject to prior approval by the Committee in its discretion, by a combination of (i), (ii), and (iii) above.

 

Any payment in Shares shall be effected by the surrender of such Shares to the Company in good form for transfer and shall be valued at their Fair Market Value on the date when the Stock Option is exercised. Unless otherwise permitted by the Committee in its discretion, the Grantee shall not surrender, or attest to the ownership of, Shares in payment of the Option Price if such action would cause the Company to recognize compensation expense (or additional compensation expense) with respect to the Stock Option for financial accounting reporting purposes.

 

The Committee, in its discretion, also may allow the Option Price to be paid with such other consideration as shall constitute lawful consideration for the issuance of Shares (including, without limitation, effecting a “cashless exercise” with a broker of the Option), subject to applicable securities law restrictions and tax withholdings, or by any other means which the Committee determines to be consistent with the Plan’s purpose and applicable law.  At the direction of the Grantee, the broker will either (i) sell all of the Shares received when the Option is exercised and pay the Grantee the proceeds of the sale (minus the Option Price, withholding taxes and any fees due to the broker); or (ii) sell enough of the Shares received upon exercise of the Option to cover the Option Price, withholding taxes and any fees due the broker and deliver to the Grantee (either directly or through the Company) a stock certificate for the remaining Shares. Dispositions to a broker effecting a cashless exercise are not exempt under Section 16 of the Exchange Act if the Company is a Publicly Held Corporation.  Moreover, in no event will the Committee allow the Option Price to be paid with a form of consideration, including a loan or a “cashless exercise,” if such form of consideration would violate the Sarbanes-Oxley Act of 2002 as determined by the Committee.

 

As soon as practicable after receipt of a written notification of exercise and full payment, the Company shall deliver, or cause to be delivered, to or on behalf of the Grantee, in the name of the Grantee or other appropriate recipient, evidence of ownership for the number of Shares purchased under the Stock Option.

 

Subject to Section 6.4, during the lifetime of a Grantee, each Option granted to the Grantee shall be exercisable only by the Grantee (or his legal guardian in the event of his Disability) or by a broker-dealer acting on his behalf pursuant to a cashless exercise under the foregoing provisions of this Section 2.3(a).

 

(b)                                 Restrictions on Share Transferability.  The Committee may impose such restrictions on any grant of Stock Options or on any Shares acquired pursuant to the exercise of a Stock Option as it may deem advisable, including, without limitation, restrictions under (i) any shareholders’ agreement, buy/sell agreement, right of first refusal, non-competition, and any other agreement between the Company and any

 

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of its securities holders or employees; (ii) any applicable federal securities laws; (iii) the requirements of any stock exchange or market upon which such Shares are then listed and/or traded; or (iv) any blue sky or state securities law applicable to such Shares. Any certificate issued to evidence Shares issued upon the exercise of an Incentive Award may bear such legends and statements as the Committee shall deem advisable to assure compliance with applicable federal and state laws and regulations.

 

Any Grantee or other person exercising an Incentive Award shall be required, if requested by the Committee, to give a written representation that the Incentive Award and the Shares subject to the Incentive Award will be acquired for investment and not with a view to public distribution; provided, however, that the Committee, in its discretion, may release any person receiving an Incentive Award from any such representations either prior to or subsequent to the exercise of the Incentive Award.

 

(c)                                  Notification of Disqualifying Disposition of Shares from Incentive Stock Options.  Notwithstanding any other provision of the Plan, a Grantee who disposes of Shares acquired upon the exercise of an Incentive Stock Option by a sale or exchange either (i) within two (2) years after the date of the grant of the Incentive Stock Option under which the Shares were acquired or (ii) within one (1) year after the transfer of such Shares to him pursuant to exercise, shall promptly notify the Company of such disposition, the amount realized and his adjusted basis in such Shares.

 

(d)                                 Proceeds of Option Exercise.  The proceeds received by the Company from the sale of Shares pursuant to Stock Options exercised under the Plan shall be used for general corporate purposes.

 

2.4                               Stock Appreciation Rights

 

(a)                                  Grant.  The Committee may grant Stock Appreciation Rights to any Employee, Consultant or Outside Director.  Any SARs granted under the Plan are intended to satisfy the requirements under Code Section 409A to the effect that such SARs do not provide for the deferral of compensation that is subject to taxation under Code Section 409A.

 

(b)                                 General Provisions.  The terms and conditions of each SAR shall be evidenced by an Incentive Agreement. The exercise price per Share shall not be less than one hundred percent (100%) of the Fair Market Value of a Share on the grant date of the SAR. The term of the SAR shall be determined by the Committee but shall not be greater than ten (10) years from the date of grant.  The Committee cannot include any feature for the deferral of compensation other than the deferral of recognition of income until exercise of the SAR.

 

(c)                                  Exercise.  SARs shall be exercisable subject to such terms and conditions as the Committee shall specify in the Incentive Agreement for the SAR grant.  No SAR granted to an Insider may be exercised prior to six (6) months from the date of grant, except in the event of his death or Disability which occurs prior to the expiration of such six-month period if so permitted under the Incentive Agreement.

 

(d)                                 Settlement.  Upon exercise of the SAR, the Grantee shall receive an amount equal to the Spread. The Spread, less applicable withholdings, shall be payable only in cash or in Shares, or a combination of both, as specified in the Incentive Agreement, within 30 calendar days of the exercise date.  In addition, the Incentive Agreement under which such SARs are awarded, or any other agreements or arrangements, shall not provide that the Company will purchase any Shares delivered to the Grantee as a result of the exercise or vesting of a SAR.

 

2.5                               Supplemental Payment on Exercise of Nonstatutory Stock Options

 

The Committee, either at the time of grant or exercise of any Nonstatutory Stock Option, may provide in the Incentive Agreement for a Supplemental Payment by the Company to the Grantee with respect to the exercise of any Nonstatutory Stock Option. The Supplemental Payment shall be in the amount specified by the Committee, which amount shall not exceed the amount necessary to pay the federal and state income tax payable with respect to

 

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both the exercise of the Nonstatutory Stock Option and the receipt of the Supplemental Payment, assuming the holder is taxed at either the maximum effective income tax rate applicable thereto or at a lower tax rate as deemed appropriate by the Committee in its discretion.  No Supplemental Payments will be made with respect to any SARs or ISOs.

 

SECTION 3.

 

RESTRICTED STOCK

 

3.1                               Award of Restricted Stock

 

(a)                                  Grant.  With respect to a Grantee who is an Employee, Consultant or Outside Director, Shares of Restricted Stock, which may be designated as a Performance-Based Award in the discretion of the Committee, may be awarded by the Committee with such restrictions during the Restriction Period as the Committee shall designate in its discretion.  Any such restrictions may differ with respect to a particular Grantee. Restricted Stock shall be awarded for no additional consideration or such additional consideration as the Committee may determine, which consideration may be less than, equal to or more than the Fair Market Value of the shares of Restricted Stock on the grant date. The terms and conditions of each grant of Restricted Stock shall be evidenced by an Incentive Agreement and, during the Restriction Period, such Shares of Restricted Stock must remain subject to a “substantial risk of forfeiture” within the meaning given to such term under Code Section 83.  Any Restricted Stock Award may, at the time of grant, be designated by the Committee as a Performance-Based Award that is intended to qualify for the Performance-Based Exception.

 

(b)                                 Immediate Transfer Without Immediate Delivery of Restricted Stock.  Unless otherwise specified in the Grantee’s Incentive Agreement, each Restricted Stock Award shall constitute an immediate transfer of the record and beneficial ownership of the Shares of Restricted Stock to the Grantee in consideration of the performance of services as an Employee, Consultant or Outside Director, as applicable, entitling such Grantee to all voting and other ownership rights in such Shares.

 

As specified in the Incentive Agreement, a Restricted Stock Award may limit the Grantee’s dividend rights during the Restriction Period in which the shares of Restricted Stock are subject to a “substantial risk of forfeiture” (within the meaning given to such term under Code Section 83) and restrictions on transfer. In the Incentive Agreement, the Committee may apply any restrictions to the dividends that the Committee deems appropriate. Without limiting the generality of the preceding sentence, if the grant or vesting of Shares of a Restricted Stock Award granted to a Covered Employee, is designed to comply with the requirements of the Performance-Based Exception, the Committee may apply any restrictions it deems appropriate to the payment of dividends declared with respect to such Shares of Restricted Stock, such that the dividends and/or the Shares of Restricted Stock maintain eligibility for the Performance-Based Exception. In the event that any dividend constitutes a derivative security or an equity security pursuant to the rules under Section 16 of the Exchange Act, if applicable, such dividend shall be subject to a vesting period equal to the remaining vesting period of the Shares of Restricted Stock with respect to which the dividend is paid.

 

Shares awarded pursuant to a grant of Restricted Stock, whether or not under a Performance-Based Award, may be issued in the name of the Grantee and held, together with a stock power endorsed in blank, by the Committee or Company (or their delegates) or in trust or in escrow pursuant to an agreement satisfactory to the Committee, as determined by the Committee, until such time as the restrictions on transfer have expired. All such terms and conditions shall be set forth in the particular Grantee’s Incentive Agreement. The Company or Committee (or their delegates) shall issue to the Grantee a receipt evidencing the certificates held by it which are registered in the name of the Grantee.

 

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3.2                               Restrictions

 

(a)                                  Forfeiture of Restricted Stock.  Restricted Stock awarded to a Grantee may be subject to the following restrictions until the expiration of the Restriction Period: (i) a restriction that constitutes a “substantial risk of forfeiture” (as defined in Code Section 83), and a restriction on transferability; (ii) unless otherwise specified by the Committee in the Incentive Agreement, the Restricted Stock that is subject to restrictions which are not satisfied shall be forfeited and all rights of the Grantee to such Shares shall terminate; and (iii) any other restrictions that the Committee determines in advance are appropriate, including, without limitation, rights of repurchase or first refusal in the Company or provisions subjecting the Restricted Stock to a continuing substantial risk of forfeiture in the hands of any transferee. Any such restrictions shall be set forth in the particular Grantee’s Incentive Agreement.

 

(b)                                 Issuance of Certificates.  Reasonably promptly after the date of grant with respect to Shares of Restricted Stock, the Company shall cause to be issued a stock certificate, registered in the name of the Grantee to whom such Shares of Restricted Stock were granted, evidencing such Shares; provided, however, that the Company shall not cause to be issued such a stock certificate unless it has received a stock power duly endorsed in blank with respect to such Shares. Each such stock certificate shall bear the following legend or any other legend approved by the Company:

 

The transferability of this certificate and the shares of stock represented hereby are subject to the restrictions, terms and conditions (including forfeiture and restrictions against transfer) contained in the Global Geophysical Services, Inc. 2006 Incentive Compensation Plan and an Incentive Agreement entered into between the registered owner of such shares and Global Geophysical Services, Inc.  A copy of the Plan and Incentive Agreement are on file in the main corporate office of Global Geophysical Services, Inc.

 

Such legend shall not be removed from the certificate evidencing such Shares of Restricted Stock unless and until such Shares vest pursuant to the terms of the Incentive Agreement.

 

(c)                                  Removal of Restrictions.  The Committee, in its discretion, shall have the authority to remove any or all of the restrictions on the Restricted Stock if it determines that, by reason of a change in applicable law or another change in circumstance arising after the grant date of the Restricted Stock, such action is necessary or appropriate.

 

3.3                               Delivery of Shares of Common Stock

 

Subject to withholding taxes under Section 7.3 and to the terms of the Incentive Agreement, a stock certificate evidencing the Shares of Restricted Stock with respect to which the restrictions in the Incentive Agreement have been satisfied shall be delivered to the Grantee or other appropriate recipient free of restrictions.

 

3.4                               Supplemental Payment on Vesting of Restricted Stock

 

The Committee, either at the time of grant or vesting of Restricted Stock, may provide for a Supplemental Payment by the Company to the holder in an amount specified by the Committee, which amount shall not exceed the amount necessary to pay the federal and state income tax payable with respect to both the vesting of the Restricted Stock and receipt of the Supplemental Payment, assuming the Grantee is taxed at either the maximum effective income tax rate applicable thereto or at a lower tax rate as deemed appropriate by the Committee in its discretion.

 

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SECTION 4.

 

OTHER STOCK-BASED AWARDS

 

4.1                               Grant of Other Stock-Based Awards

 

Other Stock-Based Awards may be awarded by the Committee to Grantees that are payable in Shares or in cash, as determined in the discretion of the Committee to be consistent with the goals of the Company. Other types of Stock-Based Awards that are payable in Shares include, without limitation, purchase rights, Shares awarded that are not subject to any restrictions or conditions, Shares awarded subject to the satisfaction of specified Performance Criteria, convertible or exchangeable debentures, other rights convertible into Shares, Incentive Awards valued by reference to the performance of a specified Subsidiary, division or department of the Company, and settlement in cancellation of rights of any person with a vested interest in any other plan, fund, program or arrangement that is or was sponsored, maintained or participated in by the Company (or any Parent or Subsidiary). As is the case with other types of Incentive Awards, Other Stock-Based Awards may be awarded either alone or in addition to or in conjunction with any other Incentive Awards.  Other Stock-Based Awards that are payable in Shares are not intended to be deferred compensation subject to taxation under Code Section 409A, unless otherwise determined by the Committee at the time of grant.

 

In addition to Other Stock-Based Awards that are payable in Shares, the Committee may award Restricted Stock Units to a Grantee that are payable in Shares or cash, or in a combination thereof.  Restricted Stock Units are not intended to be deferred compensation that is subject to Code Section 409A.  During the period beginning on the date such Incentive Award is granted and ending on the payment date specified in the Incentive Agreement, the Grantee’s right to payment under the Incentive Agreement must remain subject to a “substantial risk of forfeiture” within the meaning of such term under Code Section 409A.  In addition, payment to the Grantee under the Incentive Agreement shall be made within two and one-half months (2 1⁄2) months following the end of the calendar year in which the substantial risk of forfeiture lapses unless an earlier payment date is specified in the Incentive Agreement.

 

4.2                              Other Stock-Based Award Terms

 

(a)                                  Written Agreement.  The terms and conditions of each grant of an Other Stock-Based Award shall be evidenced by an Incentive Agreement.

 

(b)                                 Purchase Price.  Except to the extent that an Other Stock-Based Award is granted in substitution for an outstanding Incentive Award or is delivered upon exercise of a Stock Option, the amount of consideration required to be received by the Company shall be either (i) no consideration other than services rendered (in the case of authorized and unissued shares), or to be rendered, by the Grantee, or (ii) as otherwise specified in the Incentive Agreement.

 

(c)                                  Performance Criteria and Other Terms.  The Committee may specify Performance Criteria for (i) vesting in Other Stock-Based Awards and (ii) payment thereof to the Grantee, as it may determine in its discretion.  The extent to which any such Performance Criteria have been met shall be determined and certified by the Committee in accordance with the requirements to qualify for the Performance-Based Exception under Code Section 162(m).  All terms and conditions of Other Stock-Based Awards shall be determined by the Committee and set forth in the Incentive Agreement.

 

4.3                               Supplemental Payment on Other Stock-Based Awards

 

The Committee, either at the time of grant or vesting of an Other Stock-Based Award, may provide for a Supplemental Payment by the Company to the holder in an amount specified by the Committee, which amount shall not exceed the amount necessary to pay the federal and state income tax payable with respect to both the vesting of the Other Stock-Based Award and receipt of the Supplemental Payment, assuming the Grantee is taxed at either the maximum effective income tax rate applicable thereto or at a lower tax rate as deemed appropriate by the Committee in its discretion.

 

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SECTION 5.

 

PERFORMANCE-BASED AWARDS AND PERFORMANCE CRITERIA

 

As determined by the Committee at the time of grant, Performance-Based Awards may be granted subject to performance objectives relating to one or more of the following within the meaning of Code Section 162(m) (the “Performance Criteria”) in order to qualify for the Performance-Based Exception:

 

(a)                                  profits (including, but not limited to, profit growth, net operating profit or economic profit);

 

(b)                                 profit-related return ratios;

 

(c)                                  return measures (including, but not limited to, return on assets, capital, equity, investment or sales);

 

(d)                                 cash flow (including, but not limited to, operating cash flow, free cash flow or cash flow return on capital or investments);

 

(e)                                  earnings (including but not limited to, total shareholder return, earnings per share or earnings before or after taxes);

 

(f)                                    net sales growth;

 

(g)                                 net earnings or income (before or after taxes, interest, depreciation and/or amortization);

 

(h)                                 gross, operating or net profit margins;

 

(i)                                     productivity ratios;

 

(j)                                     share price (including, but not limited to, growth measures and total shareholder return);

 

(k)                                  turnover of assets, capital, or inventory;

 

(l)                                     expense targets;

 

(m)                               margins;

 

(n)                                 measures of health, safety or environment;

 

(o)                                 operating efficiency;

 

(p)                                 customer service or satisfaction;

 

(q)                                 market share;

 

(r)                                    credit quality;

 

(s)                                  debt ratios (e.g., debt to equity and debt to total capital); and

 

(t)                                    working capital targets.

 

Performance Criteria may be stated in absolute terms or relative to comparison companies or indices to be achieved during a Performance Period.  In the Incentive Agreement, the Committee shall establish one or more Performance Criteria for each Incentive Award that is intended to qualify for the Performance-Based Exception on its grant date.

 

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In establishing the Performance Criteria for each applicable Incentive Award, the Committee may provide that the effect of specified extraordinary or unusual events will be included or excluded (including, but not limited to, items of gain, loss or expense determined to be extraordinary or unusual in nature or infrequent in occurrence, or related to the disposal of a segment of business or a change in accounting principle, each as determined in accordance with the standards under Opinion No. 30 of the Accounting Principles Board (APB Opinion 30) or any successor or other authoritative financial accounting standards, as determined by the Committee).  The terms of the stated Performance Criteria for each applicable Incentive Award, whether for a Performance Period of one (1) year or multiple years, must preclude the Committee’s discretion to increase the amount payable to any Grantee that would otherwise be due upon attainment of the Performance Criteria, but may permit the Committee to reduce the amount otherwise payable to the Grantee in the Committee’s discretion.

 

The Performance Criteria specified in any Incentive Agreement need not be applicable to all Incentive Awards, and may be particular to an individual Grantee’s function or business unit.  The Committee may establish the Performance Criteria of the Company (or any entity which is affiliated by common ownership with the Company) as determined and designated by the Committee, in its discretion, in the Incentive Agreement.

 

Performance-Based Awards will be granted in the discretion of the Committee and will be (a) sufficiently objective so that an independent person or entity having knowledge of the relevant facts could determine the amount payable to Grantee, if applicable, and whether the pre-determined goals have been achieved with respect to the Incentive Award, (b) established at a time when the performance outcome is substantially uncertain, (c) established in writing no later than ninety (90) days after the commencement of the Performance Period to which they apply, and (d) based on operating earnings, performance against peers, earnings criteria or such other criteria as provided in this Section 5.

 

SECTION 6.

 

PROVISIONS RELATING TO PLAN PARTICIPATION

 

6.1                               Incentive Agreement

 

Each Grantee to whom an Incentive Award is granted shall be required to enter into an Incentive Agreement with the Company, in such a form as is provided by the Committee. The Incentive Agreement shall contain specific terms as determined by the Committee, in its discretion, with respect to the Grantee’s particular Incentive Award. Such terms need not be uniform among all Grantees or any similarly situated Grantees. The Incentive Agreement may include, without limitation, vesting, forfeiture and other provisions particular to the particular Grantee’s Incentive Award, as well as, for example, provisions to the effect that the Grantee (a) shall not disclose any confidential information acquired during Employment with the Company, (b) shall abide by all the terms and conditions of the Plan and such other terms and conditions as may be imposed by the Committee, (c) shall not interfere with the employment or other service of any employee, (d) shall not compete with the Company or become involved in a conflict of interest with the interests of the Company, (e) shall forfeit an Incentive Award if terminated for Cause, (f) shall not be permitted to make an election under Code Section 83(b) when applicable, and (g) shall be subject to any other agreement between the Grantee and the Company regarding Shares that may be acquired under an Incentive Award including, without limitation, a shareholders’ agreement, buy-sell agreement, or other agreement restricting the transferability of Shares by Grantee. An Incentive Agreement shall include such terms and conditions as are determined by the Committee, in its discretion, to be appropriate with respect to any individual Grantee. The Incentive Agreement shall be signed by the Grantee to whom the Incentive Award is made and by an Authorized Officer.

 

6.2                               No Right to Employment

 

Nothing in the Plan or any instrument executed pursuant to the Plan shall create any Employment rights (including without limitation, rights to continued Employment) in any Grantee or affect the right of the Company to terminate the Employment of any Grantee at any time without regard to the existence of the Plan.

 

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6.3                               Securities Requirements

 

The Company shall be under no obligation to effect the registration of any Shares to be issued hereunder pursuant to the Securities Act of 1933, or to effect similar compliance under any state laws. Notwithstanding anything herein to the contrary, the Company shall not be obligated to cause to be issued or delivered any certificates evidencing Shares pursuant to the Plan unless and until the Company is advised by its counsel that the issuance and delivery of such certificates is in compliance with all applicable laws, regulations of governmental authorities, and the requirements of any securities exchange on which Shares are traded. The Committee may require, as a condition of the issuance and delivery of certificates evidencing Shares pursuant to the terms hereof, that the recipient of such Shares make such covenants, agreements and representations, and that such certificates bear such legends, as the Committee, in its discretion, deems necessary or desirable.

 

The Committee may, in its discretion, defer the effectiveness of any exercise of an Incentive Award in order to allow the issuance of Shares to be made pursuant to registration or an exemption from registration or other methods for compliance available under federal or state securities laws. The Committee shall inform the Grantee in writing of its decision to defer the effectiveness of the exercise of an Incentive Award. During the period that the effectiveness of the exercise of an Incentive Award has been deferred, the Grantee may, by written notice to the Committee, withdraw such exercise and obtain the refund of any amount paid with respect thereto.

 

If the Shares issuable on exercise of an Incentive Award are not registered under the Securities Act of 1933, the Company may imprint on the certificate for such Shares the following legend or any other legend which counsel for the Company considers necessary or advisable to comply with the Securities Act of 1933:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“ACT”), OR THE SECURITIES LAWS OF ANY STATE. THE SECURITIES MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO ANY APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS OR PURSUANT TO A WRITTEN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

 

6.4                               Transferability

 

Incentive Awards granted under the Plan shall not be transferable or assignable other than: (a) by will or the laws of descent and distribution or (b) pursuant to a qualified domestic relations order (as defined under Code Section 414(p)); provided, however, only with respect to Incentive Awards consisting of Nonstatutory Stock Options, the Committee may, in its discretion, authorize all or a portion of the Nonstatutory Stock Options to be granted on terms which permit transfer by the Grantee to (i) the members of the Grantee’s Immediate Family, (ii) a trust or trusts for the exclusive benefit of Immediate Family members, (iii) a partnership in which such Immediate Family members are the only partners, or (iv) any other entity owned solely by Immediate Family members; provided that (A) there may be no consideration for any such transfer, (B) the Incentive Agreement pursuant to which such Nonstatutory Stock Options are granted must be approved by the Committee, and must expressly provide for transferability in a manner consistent with this Section 6.4, (C) subsequent transfers of transferred Nonstatutory Stock Options shall be prohibited except in accordance with clauses (a) and (b) (above) of this sentence, and (D) there may be no transfer of any Incentive Award in a listed transaction as described in IRS Notice 2003-47.  Following any permitted transfer, the Nonstatutory Stock Option shall continue to be subject to the same terms and conditions as were applicable immediately prior to transfer, provided that the term “Grantee” shall be deemed to refer to the transferee. The events of termination of employment, as set out in Section 6.7 and in the Incentive Agreement, shall continue to be applied with respect to the original Grantee, and the Incentive Award shall be exercisable by the transferee only to the extent, and for the periods, specified in the Incentive Agreement.

 

Except as may otherwise be permitted under the Code, in the event of a permitted transfer of a Nonstatutory Stock Option hereunder, the original Grantee shall remain subject to withholding taxes upon exercise. In addition,

 

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the Company and the Committee shall have no obligation to provide any notices to any Grantee or transferee thereof, including, for example, notice of the expiration of an Incentive Award following the original Grantee’s termination of employment.

 

The designation by a Grantee of a beneficiary of an Incentive Award shall not constitute transfer of the Incentive Award. No transfer by will or by the laws of descent and distribution shall be effective to bind the Company unless the Committee has been furnished with a copy of the deceased Grantee’s enforceable will or such other evidence as the Committee deems necessary to establish the validity of the transfer. Any attempted transfer in violation of this Section 6.4 shall be void and ineffective. All determinations under this Section 6.4 shall be made by the Committee in its discretion.

 

6.5                               Rights as a Shareholder

 

(a)                                  No Shareholder Rights.  Except as otherwise provided in Section 3.1(b) for grants of Restricted Stock, a Grantee of an Incentive Award (or a permitted transferee of such Grantee) shall have no rights as a shareholder with respect to any Shares until the issuance of a stock certificate or other record of ownership for such Shares.

 

(b)                                 Representation of Ownership.  In the case of the exercise of an Incentive Award by a person or estate acquiring the right to exercise such Incentive Award by reason of the death or Disability of a Grantee, the Committee may require reasonable evidence as to the ownership of such Incentive Award or the authority of such person. The Committee may also require such consents and releases of taxing authorities as it deems advisable.

 

6.6                               Change in Stock and Adjustments

 

(a)                                  Changes in Law or Circumstances.  Subject to Section 6.8 (which only applies in the event of a Change in Control), in the event of any change in applicable law or any change in circumstances which results in or would result in any dilution of the rights granted under the Plan, or which otherwise warrants an equitable adjustment because it interferes with the intended operation of the Plan, then, if the Board or Committee should so determine, in its absolute discretion, that such change equitably requires an adjustment in the number or kind of shares of stock or other securities or property theretofore subject, or which may become subject, to issuance or transfer under the Plan or in the terms and conditions of outstanding Incentive Awards, such adjustment shall be made in accordance with such determination. Such adjustments may include changes with respect to (i) the aggregate number of Shares that may be issued under the Plan, (ii) the number of Shares subject to Incentive Awards, and (iii) the Option Price or other price per Share for outstanding Incentive Awards, but shall not result in the grant of any Stock Option with an exercise price less than 100% of the Fair Market Value per Share on the date of grant.  The Board or Committee shall give notice to each applicable Grantee of such adjustment which shall be effective and binding.

 

(b)                                 Exercise of Corporate Powers.  The existence of the Plan or outstanding Incentive Awards 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, recapitalization, reorganization or other changes in the Company’s capital structure or its business or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stocks ahead of or affecting the Common Stock or the rights thereof, 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.

 

(c)                                  Recapitalization of the Company.  Subject to Section 6.8 (which only applies in the event of a Change in Control), if while there are Incentive Awards outstanding, the Company shall effect any subdivision or consolidation of Common Stock or other capital readjustment, the payment of a stock dividend, stock split, combination of Shares, recapitalization or other increase or reduction in the number of Shares outstanding, without receiving compensation therefor in money, services or property, then the number of Shares available under the Plan and the number of Incentive Awards which may thereafter be

 

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exercised shall (i) in the event of an increase in the number of Shares outstanding, be proportionately increased and the Option Price or Fair Market Value of the Incentive Awards awarded shall be proportionately reduced; and (ii) in the event of a reduction in the number of Shares outstanding, be proportionately reduced, and the Option Price or Fair Market Value of the Incentive Awards awarded shall be proportionately increased. The Board or Committee shall take such action and whatever other action it deems appropriate, in its discretion, so that the value of each outstanding Incentive Award to the Grantee shall not be adversely affected by a corporate event described in this Section 6.6(c).

 

(d)                                 Issue of Common Stock by the Company.  Except as hereinabove expressly provided in this Section 6.6 and subject to Section 6.8 in the event of a Change in Control, the issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, for cash or property, or for labor or services, either upon direct sale or upon the exercise of rights or warrants to subscribe therefor, or upon any conversion of shares or obligations of the Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of, or Option Price or Fair Market Value of, any Incentive Awards then outstanding under previously granted Incentive Awards; provided, however, in such event, outstanding Shares of Restricted Stock shall be treated the same as outstanding unrestricted Shares of Common Stock.

 

(e)                                  Assumption under the Plan of Outstanding Stock Options.  Notwithstanding any other provision of the Plan, the Board or Committee, in its discretion, may authorize the assumption and continuation under the Plan of outstanding and unexercised stock options or other types of stock-based incentive awards that were granted under a stock option plan (or other type of stock incentive plan or agreement) that is or was maintained by a corporation or other entity that was merged into, consolidated with, or whose stock or assets were acquired by, the Company as the surviving corporation. Any such action shall be upon such terms and conditions as the Board or Committee, in its discretion, may deem appropriate, including provisions to preserve the holder’s rights under the previously granted and unexercised stock option or other stock-based incentive award; such as, for example, retaining an existing exercise price under an outstanding stock option. Any such assumption and continuation of any such previously granted and unexercised incentive award shall be treated as an outstanding Incentive Award under the Plan and shall thus count against the number of Shares reserved for issuance pursuant to Section 1.4. In addition, any Shares issued by the Company through the assumption or substitution of outstanding grants from an acquired company shall reduce the Shares available for grants under Section 1.4.

 

(f)                                    Assumption of Incentive Awards by a Successor.  Subject to the accelerated vesting and other provisions of Section 6.8 that apply in the event of a Change in Control, in the event of a Corporate Event (defined below), each Grantee shall be entitled to receive, in lieu of the number of Shares subject to Incentive Awards, such shares of capital stock or other securities or property as may be issuable or payable with respect to or in exchange for the number of Shares which Grantee would have received had he exercised the Incentive Award immediately prior to such Corporate Event, together with any adjustments (including, without limitation, adjustments to the Option Price and the number of Shares issuable on exercise of outstanding Stock Options). For this purpose, Shares of Restricted Stock shall be treated the same as unrestricted outstanding Shares of Common Stock. A “Corporate Event” means any of the following: (i) a dissolution or liquidation of the Company, (ii) a sale of all or substantially all of the Company’s assets, or (iii) a merger, consolidation or combination involving the Company (other than a merger, consolidation or combination (A) in which the Company is the continuing or surviving corporation and (B) which does not result in the outstanding Shares being converted into or exchanged for different securities, cash or other property, or any combination thereof). The Board or Committee shall take whatever other action it deems appropriate to preserve the rights of Grantees holding outstanding Incentive Awards.

 

Notwithstanding the previous paragraph of this Section 6.6(f), but subject to the accelerated vesting and other provisions of Section 6.8 that apply in the event of a Change in Control, in the event of a Corporate Event (described in the previous paragraph), the Board or Committee, in its discretion, shall have the right and power to:

 

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(i)                                     cancel, effective immediately prior to the occurrence of the Corporate Event, each outstanding Incentive Award (whether or not then exercisable) and, in full consideration of such cancellation, pay to the Grantee an amount in cash equal to the excess of (A) the value, as determined by the Board or Committee, of the property (including cash) received by the holders of Common Stock as a result of such Corporate Event over (B) the exercise price of such Incentive Award, if any; provided, however, this subsection (i) shall be inapplicable to an Incentive Award granted within six (6) months before the occurrence of the Corporate Event if the Grantee is an Insider and such disposition is not exempt under Rule 16b-3 (or other rules preventing liability of the Insider under Section 16(b) of the Exchange Act) and, in that event, the provisions hereof shall be applicable to such Incentive Award after the expiration of six (6) months from the date of grant; or

 

(ii)                                  provide for the exchange or substitution of each Incentive Award outstanding immediately prior to such Corporate Event (whether or not then exercisable) for another award with respect to the Common Stock or other property for which such Incentive Award is exchangeable and, incident thereto, make an equitable adjustment as determined by the Board or Committee, in its discretion, in the Option Price or exercise price of the Incentive Award, if any, or in the number of Shares or amount of property (including cash) subject to the Incentive Award; or

 

(iii)                               provide for assumption of the Plan and such outstanding Incentive Awards by the surviving entity or its parent.

 

The Board or Committee, in its discretion, shall have the authority to take whatever action it deems to be necessary or appropriate to effectuate the provisions of this Section 6.6(f).

 

6.7                               Termination of Employment, Death, Disability and Retirement

 

(a)                                  Termination of Employment.  Unless otherwise expressly provided in the Grantee’s Incentive Agreement or the Plan, if the Grantee’s Employment is terminated for any reason other than due to his death, Disability, Retirement or for Cause, any non-vested portion of any Stock Option or other Incentive Award at the time of such termination shall automatically expire and terminate and no further vesting shall occur after the termination date. In such event, except as otherwise expressly provided in his Incentive Agreement, the Grantee shall be entitled to exercise his rights only with respect to the portion of the Incentive Award that was vested as of his termination of Employment date for a period that shall end on the earlier of (i) the expiration date set forth in the Incentive Agreement or (ii) ninety (90) days after the date of his termination of Employment.

 

(b)                                 Termination of Employment for Cause.  Unless otherwise expressly provided in the Grantee’s Incentive Agreement or the Plan, in the event of the termination of a Grantee’s Employment for Cause, all vested and non-vested Stock Options and other Incentive Awards granted to such Grantee shall immediately expire, and shall not be exercisable to any extent, as of 12:01 a.m. (CST) on the date of such termination of Employment.

 

(c)                                  Retirement.  Unless otherwise expressly provided in the Grantee’s Incentive Agreement or the Plan, upon the termination of Employment due to the Grantee’s Retirement:

 

(i)                                     any non-vested portion of any outstanding Option or other Incentive Award shall immediately terminate and no further vesting shall occur; and

 

(ii)                                  any vested Option or other Incentive Award shall expire on the earlier of (A) the expiration date set forth in the Incentive Agreement for such Incentive Award; or (B) the expiration of (1) six (6) months after the date of his termination of Employment due to Retirement

 

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in the case of any Incentive Award other than an Incentive Stock Option or (2) three months after his termination date in the case of an Incentive Stock Option.

 

(d)                                 Disability or Death.  Unless otherwise expressly provided in the Grantee’s Incentive Agreement or the Plan, upon termination of Employment as a result of the Grantee’s Disability or death:

 

(i)                                     any non-vested portion of any outstanding Option or other Incentive Award shall immediately terminate upon termination of Employment and no further vesting shall occur; and

 

(ii)                                  any vested Incentive Award shall expire on the earlier of either (A) the expiration date set forth in the Incentive Agreement or (B) the one year anniversary date of the Grantee’s termination of Employment date.

 

In the case of any vested Incentive Stock Option held by an Employee following termination of Employment, notwithstanding the definition of “Disability” in Section 1.2, whether the Employee has incurred a “Disability” for purposes of determining the length of the Option exercise period following termination of Employment under this Section 6.7(d) shall be determined by reference to Code Section 22(e)(3) to the extent required by Code Section 422(c)(6). The Committee shall determine whether a Disability for purposes of this Section 6.7(d) has occurred.

 

(e)                                  Continuation.  Subject to the conditions and limitations of the Plan and applicable law and regulation in the event that a Grantee ceases to be an Employee, Outside Director or Consultant, as applicable, for whatever reason, the Committee and Grantee may mutually agree with respect to any outstanding Option or other Incentive Award then held by the Grantee (i) for an acceleration or other adjustment in any vesting schedule applicable to the Incentive Award; (ii) for a continuation of the exercise period following termination for a longer period than is otherwise provided under such Incentive Award; or (iii) to any other change in the terms and conditions of the Incentive Award. In the event of any such change to an outstanding Incentive Award, a written amendment to the Grantee’s Incentive Agreement shall be required.  No amendment to a Grantee’s Incentive Award shall be made to the extent compensation payable pursuant thereto as a result of such amendment would be considered deferred compensation subject to taxation under Code Section 409A, unless otherwise determined by the Committee.

 

6.8                               Change in Control

 

Notwithstanding any contrary provision in the Plan, in the event of a Change in Control (as defined below), the following actions shall automatically occur as of the day immediately preceding the Change in Control date unless expressly provided otherwise in the individual Grantee’s Incentive Agreement:

 

(a)                                  all of the Stock Options and Stock Appreciation Rights then outstanding shall become 100% vested and immediately and fully exercisable;

 

(b)                                 all of the restrictions and conditions of any Restricted Stock Awards, Restricted Stock Units and any Other Stock-Based Awards then outstanding shall be deemed satisfied, and the Restriction Period with respect thereto shall be deemed to have expired, and thus each such Incentive Award shall become free of all restrictions and fully vested; and

 

(c)                                  all of the Performance-Based Awards shall become fully vested, deemed earned in full, and promptly paid within thirty (30) days to the affected Grantees without regard to payment schedules and notwithstanding that the applicable performance cycle, retention cycle or other restrictions and conditions have not been completed or satisfied.

 

For all purposes of this Plan, a “Change in Control” of the Company means the occurrence of any one or more of the following events:

 

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(a)                                  The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a “Person”)) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of fifty percent (50%) or more of either (i) the then outstanding shares of common stock of the Company (the “Outstanding Company Stock”) or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that the following acquisitions shall not constitute a Change in Control: (i) any acquisition directly from the Company or any Subsidiary, (ii) any acquisition by the Company or any Subsidiary or by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary, or (iii) any acquisition by any corporation pursuant to a reorganization, merger, consolidation or similar business combination involving the Company (a “Merger”), if, following such Merger, the conditions described in Section 6.8(c) (below) are satisfied;

 

(b)                                 Individuals who, as of the Effective Date, constitute the Board of Directors of the Company (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, provided that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall not be considered a member of the Incumbent Board;

 

(c)                                  Approval by the shareholders of the Company of a Merger, unless immediately following such Merger, (i) the holders of the Outstanding Company Voting Securities immediately prior to Merger beneficially own, directly or indirectly, more than 50% of the common stock of the corporation resulting from such Merger (or its parent corporation) in substantially the same proportions as their ownership of Outstanding Company Voting Securities immediately prior to such Merger and (ii) at least a majority of the members of the board of directors of the corporation resulting from such Merger (or its parent corporation) were members of the Incumbent Board at the time of the execution of the initial agreement providing for such Merger;

 

(d)                                 The sale or other disposition of all or substantially all of the assets of the Company, unless immediately following such sale or other disposition, (i) the holders of the Outstanding Company Voting Securities immediately prior to the consummation of such sale or other disposition beneficially own, directly or indirectly, more than 50% of the common stock of the corporation acquiring such assets in substantially the same proportions as their ownership of Outstanding Company Voting Securities immediately prior to the consummation of such sale or disposition, and (ii) at least a majority of the members of the board of directors of such corporation (or its parent corporation) were members of the Incumbent Board at the time of execution of the initial agreement or action of the Board providing for such sale or other disposition of assets of the Company; or

 

(e)                                  The adoption of any plan or proposal for the liquidation or dissolution of the Company.

 

Notwithstanding the occurrence of any of the foregoing events set out in this Section 6.8 which would otherwise result in a Change in Control, the Board may determine in its discretion, if it deems it to be in the best interest of the Company, that an event or events otherwise constituting or reasonably leading to a Change in Control shall not be deemed a Change in Control hereunder. Such determination shall be effective only if it is made by the Board (i) prior to the occurrence of an event that otherwise would be, or reasonably lead to, a Change in Control, or (ii) after such event only if made by the Board a majority of which is composed of directors who were members of the Board immediately prior to the event that otherwise would be, or reasonably lead to, a Change in Control.

 

Notwithstanding the foregoing provisions of this Section 6.8, to the extent that any payment or acceleration hereunder is subject to Code Section 409A for deferred compensation, then the term Change in Control hereunder shall be construed to have the meaning as set forth in Code Section 409A(2)(A)(v), but only to the extent

 

22

 

inconsistent with the foregoing provisions of the Change in Control definition (above) as determined by the Committee.

 

6.9                               Exchange of Incentive Awards

 

The Committee may, in its discretion, permit any Grantee to surrender outstanding Incentive Awards in order to exercise or realize his rights under other Incentive Awards or in exchange for the grant of new Incentive Awards, or require holders of Incentive Awards to surrender outstanding Incentive Awards (or comparable rights under other plans or arrangements) as a condition precedent to the grant of new Incentive Awards.  No exchange of Incentive Awards shall be made under this Section 6.9 if such surrender causes any Incentive Award to provide for the deferral of compensation in a manner that is subject to taxation under Code Section 409A unless otherwise determined by the Committee.

 

6.10                        Financing

 

Subject to the requirements of the Sarbanes-Oxley Act of 2002, the Company may extend and maintain, or arrange for and guarantee, the extension and maintenance of financing to any Grantee to purchase Shares pursuant to exercise of an Incentive Award upon such terms as are approved by the Committee in its discretion.

 

SECTION 7.

 

GENERAL

 

7.1                               Effective Date and Grant Period

 

The Plan shall be subject to the approval of the shareholders of the Company within twelve (12) months after the Effective Date.  Incentive Awards may be granted under the Plan at any time prior to receipt of such shareholder approval; provided, however, if the requisite shareholder approval is not obtained within such 12-month period, any Incentive Awards granted hereunder shall automatically become null and void and of no force or effect.  Notwithstanding the foregoing, any Incentive Award that is intended to satisfy the Performance-Based Exception shall not be granted until the terms of the Plan are disclosed to, and approved by, shareholders of the Company in accordance with the requirements of the Performance-Based Exception.

 

7.2                               Funding and Liability of Company

 

No provision of the Plan shall require the Company, for the purpose of satisfying any obligations under the Plan, to purchase assets or place any assets in a trust or other entity to which contributions are made, or otherwise to segregate any assets. In addition, the Company shall not be required to maintain separate bank accounts, books, records or other evidence of the existence of a segregated or separately maintained or administered fund for purposes of the Plan. Although bookkeeping accounts may be established with respect to Grantees who are entitled to cash, Common Stock or rights thereto under the Plan, any such accounts shall be used merely as a bookkeeping convenience. The Company shall not be required to segregate any assets that may at any time be represented by cash, Common Stock or rights thereto. The Plan shall not be construed as providing for such segregation, nor shall the Company, the Board or the Committee be deemed to be a trustee of any cash, Common Stock or rights thereto. Any liability or obligation of the Company to any Grantee with respect to an Incentive Award shall be based solely upon any contractual obligations that may be created by this Plan and any Incentive Agreement, and no such liability or obligation of the Company shall be deemed to be secured by any pledge or other encumbrance on any property of the Company.  The Company, Board, and Committee shall not be required to give any security or bond for the performance of any obligation that may be created by the Plan.

 

7.3                               Withholding Taxes

 

(a)                                  Tax Withholding.  The Company shall have the power and the right to deduct or withhold, or require a Grantee to remit to the Company, an amount sufficient to satisfy federal, state, and

 

23

 

local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of the Plan or an Incentive Award hereunder. Upon the lapse of restrictions on Restricted Stock, the Committee, in its discretion, may elect to satisfy the tax withholding requirement, in whole or in part, by having the Company withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum withholding taxes which could be imposed on the transaction as determined by the Committee.

 

(b)                                 Share Withholding.  With respect to tax withholding required upon the exercise of Stock Options or SARs, upon the lapse of restrictions on Restricted Stock, or upon any other taxable event arising as a result of any Incentive Awards, Grantees may elect, subject to the approval of the Committee in its discretion, to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum withholding taxes which could be imposed on the transaction as determined by the Committee. All such elections shall be made in writing, signed by the Grantee, and shall be subject to any restrictions or limitations that the Committee, in its discretion, deems appropriate.

 

(c)                                  Incentive Stock Options.  With respect to Shares received by a Grantee pursuant to the exercise of an Incentive Stock Option, if such Grantee disposes of any such Shares within (i) two years from the date of grant of such Option or (ii) one year after the transfer of such shares to the Grantee, the Company shall have the right to withhold from any salary, wages or other compensation payable by the Company to the Grantee an amount sufficient to satisfy the minimum withholding taxes which could be imposed with respect to such disqualifying disposition.

 

(d)                                 Loans.  To the extent permitted by the Sarbanes-Oxley Act of 2002 or other applicable law, the Committee may provide for loans, on either a short term or demand basis, from the Company to a Grantee who is an Employee or Consultant to permit the payment of taxes required by law.

 

7.4                               No Guarantee of Tax Consequences

 

Neither the Company nor the Committee makes any commitment or guarantee that any federal, state, local or foreign tax treatment will apply or be available to any person participating or eligible to participate hereunder.

 

7.5                               Designation of Beneficiary by Participant

 

Each Grantee may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of his death before he receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Grantee, shall be in a form prescribed by the Committee, and will be effective only when filed by the Grantee in writing with the Committee (or its delegate), and received and accepted during the Grantee’s lifetime.  In the absence of any such designation, benefits remaining unpaid at the Grantee’s death shall be paid to the Grantee’s estate.

 

7.6                               Deferrals

 

The Committee shall not permit a Grantee to defer such Grantee’s receipt of the payment of cash or the delivery of Shares under the terms of his Incentive Agreement that would otherwise be due and payable by virtue of the lapse or waiver of restrictions with respect to Restricted Stock or another form of Incentive Award, or the satisfaction of any requirements or goals with respect to any Incentive Awards.

 

7.7                               Amendment and Termination

 

The Board shall have the power and authority to terminate or amend the Plan at any time; provided, however, the Board shall not, without the approval of the shareholders of the Company within the time period required by applicable law:

 

24

 

(a)                                  except as provided in Section 6.6, increase the maximum number of Shares which may be issued under the Plan pursuant to Section 1.4;

 

(b)                                 amend the requirements as to the class of Employees eligible to purchase Common Stock under the Plan;

 

(c)                                  extend the term of the Plan; or,

 

(d)                                 if the Company is a Publicly Held Corporation (i) increase the maximum limits on Incentive Awards to Covered Employees as set for compliance with the Performance-Based Exception or (ii) decrease the authority granted to the Committee under the Plan in contravention of Rule 16b-3 under the Exchange Act to the extent Section 16 of the Exchange Act is applicable to the Company.

 

No termination, amendment, or modification of the Plan shall adversely affect in any material way any outstanding Incentive Award previously granted to a Grantee under the Plan, without the written consent of such Grantee or other designated holder of such Incentive Award.

 

In addition, to the extent that the Committee determines that (a) the listing for qualification requirements of any national securities exchange or quotation system on which the Company’s Common Stock is then listed or quoted, if applicable, or (b) the Code (or regulations promulgated thereunder), require shareholder approval in order to maintain compliance with such listing requirements or to maintain any favorable tax advantages or qualifications, then the Plan shall not be amended in such respect without approval of the Company’s shareholders.

 

7.8                               Requirements of Law

 

(a)                                  Governmental Entities and Securities Exchanges.  The granting of Incentive Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. Certificates evidencing Shares delivered under the Plan (to the extent that such shares are so evidenced) may be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules and regulations of the Securities and Exchange Commission, any securities exchange or transaction reporting system upon which the Common Stock is then listed or to which it is admitted for quotation, and any applicable federal or state securities law or regulation. The Committee may cause a legend or legends to be placed upon such certificates (if any) to make appropriate reference to such restrictions.

 

The Company shall not be required to sell or issue any Shares under any Incentive Award if the sale or issuance of such Shares would constitute a violation by the Grantee or any other individual exercising the Incentive Award, or the Company, of any provision of any law or regulation of any governmental authority, including without limitation, any federal or state securities law or regulation.  If at any time the Company shall determine, in its discretion, that the listing, registration or qualification of any Shares subject to an Incentive Award upon any securities exchange or under any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the issuance or purchase of Shares hereunder, no Shares may be issued or sold to the Grantee or any other individual pursuant to an Incentive Award unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Company, and any delay caused thereby shall in no way affect the date of termination of the Incentive Award.  The Company shall not be obligated to take any affirmative action in order to cause the exercise of an Incentive Award or the issuance of Shares pursuant to the Plan to comply with any law or regulation of any governmental authority.  As to any jurisdiction that expressly imposes the requirement that an Incentive Award shall not be exercisable until the Shares covered thereby are registered or are exempt from registration, the exercise of such Incentive Award (under circumstances in which the laws of such jurisdiction apply) shall be deemed conditioned upon the effectiveness of such registration or the availability of such an exemption.

 

25

 

(b)                                 Securities Act Rule 701.  If no class of the Company’s securities is registered under Section 12 of the Exchange Act, then unless otherwise determined by the Committee, grants of Incentive Awards to “Rule 701 Grantees” (as defined below) and issuances of the underlying shares of Common Stock, if any, on the exercise or conversion of such Incentive Awards are intended to comply with all applicable conditions of Securities Act Rule 701 (“Rule 701”), including, without limitation, the restrictions as to the amount of securities that may be offered and sold in reliance on Rule 701, so as to qualify for an exemption from the registration requirements of the Securities Act. Any ambiguities or inconsistencies in the construction of an Incentive Award or the Plan shall be interpreted to give effect to such intention. In accordance with Rule 701, each Grantee shall receive a copy of the Plan on or before the date an Incentive Award is granted to him, as well as the additional disclosure required by Rule 701 (e) if the aggregate sales price or amount of securities sold during any consecutive 12-month period exceeds $5,000,000 as determined under Rule 701(e). If Rule 701 (or any successor provision) is amended to eliminate or otherwise modify any of the requirements specified in Rule 701, then the provisions of this Section 7.8(b) shall be interpreted and construed in accordance with Rule 701 as so amended. For purposes of this Section 7.8(b), as determined in accordance with Rule 701, “Rule 701 Grantees” shall mean any Grantee other than a director of the Company, the Company’s chairman, CEO, President, chief financial officer, controller and any vice president of the Company, and any other key employee of the Company who generally has access to financial and other business related information and possesses sufficient sophistication to understand and evaluate such information.

 

7.9                               Rule 16b-3 Securities Law Compliance for Insiders

 

If the Company is a Publicly Held Corporation, transactions under the Plan with respect to Insiders are intended to comply with all applicable conditions of Rule 16b-3 under the Exchange Act to the extent Section 16 of the Exchange Act is applicable to the Company.  Any ambiguities or inconsistencies in the construction of an Incentive Award or the Plan shall be interpreted to give effect to such intention, and to the extent any provision of the Plan or action by the Committee fails to so comply, it shall be deemed null and void to the extent permitted by law and deemed advisable by the Committee in its discretion.

 

7.10                        Compliance with Code Section 162(m) for Publicly Held Corporation

 

If the Company is a Publicly Held Corporation, unless otherwise determined by the Committee with respect to any particular Incentive Award, it is intended that the Plan shall comply fully with the applicable requirements so that any Incentive Awards subject to Section 162(m) that are granted to Covered Employees shall qualify for the Performance-Based Exception, except for grants of Nonstatutory Stock Options with an Option Price set at less than the Fair Market Value of a Share on the date of grant. If any provision of the Plan or an Incentive Agreement would disqualify the Plan or would not otherwise permit the Plan or Incentive Award to comply with the Performance-Based Exception as so intended, such provision shall be construed or deemed to be amended to conform to the requirements of the Performance-Based Exception to the extent permitted by applicable law and deemed advisable by the Committee; provided, however, no such construction or amendment shall have an adverse effect on the prior grant of an Incentive Award or the economic value to a Grantee of any outstanding Incentive Award.

 

7.11                        Compliance with Code Section 409A

 

It is intended that Incentive Awards granted under the Plan shall be exempt from, or in compliance with, Code Section 409A, unless otherwise determined by the Committee at the time of grant.  In that respect, the Board reserves the right to amend the Plan, and the Committee reserves the right to amend any outstanding Incentive Agreement, to the extent deemed necessary either to exempt such Incentive Award from Section 409A or to comply with the requirements of Section 409A, as applicable.  Further, Grantees who are “Specified Employees” (as defined under Section 409A), shall be required to delay payment of an Incentive Award for six (6) months after separation from service, but only to the extent such Incentive Award is governed by Section 409A and such delay is required thereunder.

 

26

 

7.12                        Notices

 

(a)                                  Notice From Insiders to Secretary of Change in Beneficial Ownership.  To the extent Section 16 of the Exchange Act is applicable to the Company, at least two business days prior to the date of a change in beneficial ownership of the Common Stock issued or delivered pursuant to this Plan, an Insider should report to the Secretary of the Company any such change to the beneficial ownership of Common Stock that is required to be reported with respect to such Insider under Rule 16(a)-3 promulgated pursuant to the Exchange Act.

 

(b)                                 Notice to Insiders and Securities and Exchange Commission.  To the extent applicable, the Company shall provide notice to any Insider, as well as to the Securities and Exchange Commission, of any “blackout period,” as defined in Section 306(a)(4) of the Sarbanes-Oxley Act of 2002, in any case in which Insider is subject to the requirements of Section 304 of said Act in connection with such “blackout period.”

 

7.13                        Pre-Clearance Agreement with Brokers

 

Notwithstanding anything in the Plan to the contrary, no Shares issued pursuant to the Plan will be delivered to a broker or dealer that receives such Shares for the account of an Insider unless and until the broker or dealer enters into a written agreement with the Company whereby such broker or dealer agrees to report immediately to the Secretary of the Company (or other designated person) a change in the beneficial ownership of such Shares.

 

7.14                        Successors to Company

 

All obligations of the Company under the Plan with respect to Incentive Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.

 

7.15                       Miscellaneous Provisions

 

(a)                                  No Employee, Consultant, Outside Director, or other person shall have any claim or right to be granted an Incentive Award under the Plan. Neither the Plan, nor any action taken hereunder, shall be construed as giving any Employee, Consultant, or Outside Director any right to be retained in the Employment or other service of the Company or any Parent or Subsidiary.

 

(b)                                 The expenses of the Plan shall be borne by the Company.

 

(c)                                  By accepting any Incentive Award, each Grantee and each person claiming by or through him shall be deemed to have indicated his acceptance of the Plan.

 

(d)                                 The proceeds received from the sale of Common Stock pursuant to the Plan shall be used for general corporate purposes of the Company.

 

7.16                        Severability

 

In the event that any provision of this Plan shall be held illegal, invalid or unenforceable for any reason, such provision shall be fully severable, but shall not affect the remaining provisions of the Plan, and the Plan shall be construed and enforced as if the illegal, invalid, or unenforceable provision was not included herein.

 

27

 

7.17                        Gender, Tense and Headings

 

Whenever the context so requires, words of the masculine gender used herein shall include the feminine and neuter, and words used in the singular shall include the plural. Section headings as used herein are inserted solely for convenience and reference and constitute no part of the interpretation or construction of the Plan.

 

7.18                        Governing Law

 

The Plan shall be interpreted, construed and constructed in accordance with the laws of the state of Texas without regard to its conflicts of law provisions, except as may be superseded by applicable laws of the United States.

 

[Signature page follows]

 

28

 

IN WITNESS WHEREOF, the Company has caused this Plan to be duly executed in its name and on its behalf by its duly authorized officer, effective as of the Effective Date.

 

 

	
 
    	
GLOBAL   GEOPHYSICAL SERVICES, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Richard A. Degner
    
	
 
    	
 
    	
Richard   A. Degner
    
	
 
    	
 
    	
President   and Chief Executive Officer
    

 

29Exhibit 10.38

[Execution Version]

 

SECURITY AGREEMENT

 

Dated as of April 30, 2010

 

among

 

GLOBAL GEOPHYSICAL SERVICES, INC.

 

and the other Debtors parties hereto

 

in favor of

 

BANK OF AMERICA, N.A.,
  as Administrative Agent

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 1.
    	
 
    	
DEFINITIONS
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 2.
    	
 
    	
GRANT   OF SECURITY INTEREST
    	
6
    
	
 
    	
 
    	
 
    	
 
    
	
2.1
    	
 
    	
Grant   of Security Interest
    	
6
    
	
 
    	
 
    	
 
    	
 
    
	
2.2
    	
 
    	
Avoidance   Limitation
    	
6
    
	
 
    	
 
    	
 
    	
 
    
	
2.3
    	
 
    	
Debtors   Remain Liable
    	
6
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 3.
    	
 
    	
REPRESENTATIONS   AND WARRANTIES
    	
7
    
	
 
    	
 
    	
 
    	
 
    
	
3.1
    	
 
    	
Title;   No Other Liens
    	
7
    
	
 
    	
 
    	
 
    	
 
    
	
3.2
    	
 
    	
Perfected   First Priority Liens
    	
7
    
	
 
    	
 
    	
 
    	
 
    
	
3.3
    	
 
    	
Debtor’s   Legal Name; Jurisdiction of Organization; Chief Executive Office
    	
7
    
	
 
    	
 
    	
 
    	
 
    
	
3.4
    	
 
    	
Certain   Collateral
    	
7
    
	
 
    	
 
    	
 
    	
 
    
	
3.5
    	
 
    	
Investment   Property, Chattel Paper, and Instruments
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
3.6
    	
 
    	
Receivables
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
3.7
    	
 
    	
Intellectual   Property
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
3.8
    	
 
    	
Deposit   Accounts
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 4.
    	
 
    	
COVENANTS   AND AGREEMENTS
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
4.1
    	
 
    	
Covenants   in Credit Agreement
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
4.2
    	
 
    	
Maintenance   of Insurance
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
4.3
    	
 
    	
Maintenance   of Perfected Security Interest; Further Documentation; Filing Authorization;   Further Assurances; Power of Attorney
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
4.4
    	
 
    	
Changes   in Name, etc
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
4.5
    	
 
    	
Delivery   of Instruments, Chattel Paper, and Documents
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
4.6
    	
 
    	
Investment   Property
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
4.7
    	
 
    	
Deposit   Accounts
    	
12
    
	
 
    	
 
    	
 
    	
 
    
	
4.8
    	
 
    	
Modifications   of Receivables, Chattel Paper, Instruments and Payment Intangibles
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
4.9
    	
 
    	
Intellectual   Property
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
4.10
    	
 
    	
Actions   With Respect to Certain Collateral
    	
14
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 5.
    	
 
    	
LIMITATION   ON PERFECTION OF SECURITY INTEREST
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
5.1
    	
 
    	
Chattel   Paper and Instruments
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
5.2
    	
 
    	
Documents
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
5.3
    	
 
    	
Letter   of Credit Rights
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
5.4
    	
 
    	
Fixtures
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
5.5
    	
 
    	
Vehicles;   Mobile Goods
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 6.
    	
 
    	
REMEDIAL   PROVISIONS
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
6.1
    	
 
    	
General   Interim Remedies
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
6.2
    	
 
    	
Receivables,   Chattel Paper, Instruments and Payment Intangibles
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
6.3
    	
 
    	
Contracts
    	
16
    

 

i

 

TABLE OF CONTENTS
 (CONTINUED)

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
6.4
    	
 
    	
Pledged   Securities
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
6.5
    	
 
    	
Foreclosure
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
6.6
    	
 
    	
Application   of Proceeds
    	
18
    
	
 
    	
 
    	
 
    	
 
    
	
6.7
    	
 
    	
Waiver   of Certain Rights
    	
18
    
	
 
    	
 
    	
 
    	
 
    
	
6.8
    	
 
    	
Remedies   Cumulative
    	
18
    
	
 
    	
 
    	
 
    	
 
    
	
6.9
    	
 
    	
Reinstatement
    	
18
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 7.
    	
 
    	
MISCELLANEOUS
    	
19
    
	
 
    	
 
    	
 
    	
 
    
	
7.1
    	
 
    	
Amendments
    	
19
    
	
 
    	
 
    	
 
    	
 
    
	
7.2
    	
 
    	
Notices
    	
19
    
	
 
    	
 
    	
 
    	
 
    
	
7.3
    	
 
    	
No   Waiver by Course of Conduct; Cumulative Remedies; No Duty
    	
19
    
	
 
    	
 
    	
 
    	
 
    
	
7.4
    	
 
    	
Enforcement   Expenses; Indemnification
    	
19
    
	
 
    	
 
    	
 
    	
 
    
	
7.5
    	
 
    	
Successors   and Assigns
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
7.6
    	
 
    	
Set-Off
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
7.7
    	
 
    	
Counterparts
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
7.8
    	
 
    	
Severability
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
7.9
    	
 
    	
Section Headings
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
7.10
    	
 
    	
Integration
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
7.11
    	
 
    	
GOVERNING   LAW ETC
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
7.12
    	
 
    	
Additional   Debtors
    	
21
    
	
 
    	
 
    	
 
    	
 
    
	
7.13
    	
 
    	
Termination;   Releases
    	
21
    

 

ii

TABLE OF CONTENTS
 (CONTINUED)

 

	
SCHEDULES
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Schedule 3.3
    	
 
    	
-
    	
Organization Information
    
	
Schedule 3.4
    	
 
    	
-
    	
Certain Collateral
    
	
Schedule 3.5(a)
    	
 
    	
-
    	
Pledged Securities
    
	
Schedule 3.5(c)
    	
 
    	
-
    	
Instruments
    
	
Schedule 3.7
    	
 
    	
-
    	
Intellectual Property
    
	
Schedule 3.8
    	
 
    	
-
    	
Deposit Accounts
    
	
 
    	
 
    	
 
    	
 
    
	
ANNEXES
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Annex I
    	
-
    	
Security Agreement Supplement
    
	
Annex II
    	
-
    	
Patent Security Agreement Supplement
    
	
Annex III
    	
-
    	
Trademark Security Agreement Supplement
    
	
Annex IV
    	
-
    	
Copyright Security Agreement Supplement
    

 

iii

 

SECURITY AGREEMENT

 

This SECURITY AGREEMENT dated as of April 30, 2010 (this “Agreement”), is among GLOBAL GEOPHYSICAL SERVICES, INC., a Delaware corporation (the “Borrower”), the undersigned subsidiaries of the Borrower (the Borrower and such undersigned subsidiaries collectively being the “Debtors”), and BANK OF AMERICA, N.A., in its capacity as administrative agent (in such capacity, the “Administrative Agent”) for the benefit of the holders of the Secured Obligations (as defined below).

 

INTRODUCTION

 

Reference is made to the Credit Agreement dated as of April 30, 2010 (as amended, amended and restated, supplemented, extended,  or otherwise modified from time to time, the “Credit Agreement”), among the Borrower, certain financial institutions which are or may become parties thereto, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer.  Pursuant to the Guaranty dated as of April 30, 2010 (as amended, amended and restated, supplemented, extended, or otherwise modified from time to time, the “Guaranty”), made by the  Debtors (other than the Borrower) in favor of the Administrative Agent, such Debtors have agreed to guarantee, among other things, the full payment and performance of all of the Borrower’s obligations under the Credit Agreement.  It is a condition precedent to the effectiveness of the Credit Agreement and the making of credit extensions thereunder that the Debtors shall have entered into this Agreement in order to secure the Borrower’s obligations under the Credit Agreement, the Debtors’ obligations under the Guaranty, and all other Secured Obligations (as defined below).

 

The Debtors share an identity of interest as members of a combined group of companies and will derive substantial direct and indirect economic and other benefits from the extensions of credit under the Credit Agreement.  Therefore, in consideration of the credit expected to be received in connection with the Credit Agreement, the Debtors jointly and severally agree with the Administrative Agent as follows:

 

SECTION 1.

 

DEFINITIONS

 

1.1                                 Terms defined above and elsewhere in this Agreement shall have their specified meanings.  Capitalized terms used herein but not defined herein shall have the meanings specified by the Credit Agreement.  All terms used herein and defined in the UCC shall have the same definitions herein as specified therein.

 

1.2                                 Where the context requires, terms relating to the Collateral or any part thereof, when used in relation to a Debtor, shall refer to such Debtor’s Collateral or the relevant part thereof.

 

1.3                                 The following terms shall have the following meanings:

 

“Chattel Paper” means all of each Debtor’s present and future chattel paper, including electronic chattel paper.

 

“Collateral” has the meaning specified in Section 2.1.

 

“Collateral Account” means any deposit account with the Administrative Agent which is designated, maintained, and under the sole control of the Administrative Agent and is pledged to the Administrative Agent which has been established pursuant to the provisions of this Agreement for the purposes described in this Agreement including collecting, holding, disbursing, or applying certain funds, all in accordance with this Agreement.

 

“Contracts” shall mean all contracts, undertakings, or agreements (other than rights evidenced by Chattel Paper, Documents or Instruments) to which any Debtor now is, or hereafter will be, bound, or a party, beneficiary or assignee, in any event, including all contracts, undertakings, or agreements in or under which any Debtor may now

 

 

or hereafter have any right, title or interest, including any agreement relating to the terms of payment or the terms of performance of any Receivable.

 

 

“Copyrights” means all of the following now owned or hereafter acquired by any Debtor:  (a) all copyright rights in any work subject to the copyright laws of the United States or any other country, whether as author, assignee, transferee or otherwise, and (b) all registrations and applications for registration of any such copyright in the United States or any other country and all extensions and renewals thereof, including registrations, recordings, supplemental registrations and pending applications for registration in the United States Copyright Office, including, without limitation, those listed in Schedule 3.7.

 

“Copyright Licenses” means any written agreement naming any Debtor as licensor or licensee (including, without limitation, those listed in Schedule 3.7), granting any right under any Copyright, including, without limitation, the grant of rights to manufacture, distribute, exploit and sell materials derived from any Copyright.

 

“Copyright Security Agreement Supplement” means a supplement to this Agreement by each applicable Debtor in favor of the Administrative Agent, substantially in the form of Annex IV hereto.

 

“Deposit Accounts” means all deposit accounts now or hereafter held in the name of any Debtor.

 

“Document” means any document including, without limitation, a bill of lading, dock warrant, dock receipt, warehouse receipt or order for the delivery of goods, and also any other document which in the regular course of business or financing is treated as adequately evidencing that the person in possession of it is entitled to receive, hold and dispose of the document and the goods it covers.

 

“Equipment” means all of each Debtor’s present or future owned or leased fixtures and equipment wherever located, including without limitation airguns, receiving and recording equipment (including without limitation geophones, recording channels and recording hardware), and other equipment used by any Debtor for the provision of seismic data collection services or other services, Vehicles, trenchers, rolling stock, vessels, aircraft, and any manuals, instructions, blueprints, computer software (including software that is imbedded in and part of the equipment) and similar items which relate to the above, together with all parts thereof and all accessions and additions thereto.

 

“Event of Default” means any “Event of Default” under the Credit Agreement.

 

“Excluded Perfection Assets” shall mean, collectively, and without limitation of the Debtors’ obligations under Section 6.12 of the Credit Agreement, any property of a type not otherwise addressed in Section 5 hereof (a) in which a security interest cannot be perfected by the filing of a financing statement under the UCC or registration with the United States Patent and Trademark Office or United States Copyright Office and (b) with respect to which the Administrative Agent has determined, and continues to maintain, in its sole discretion that the cost of perfecting a security interest in such property outweighs any benefit that would be received by the Secured Parties therefrom; provided that, if at any time the Administrative Agent determines in its sole discretion that the cost of perfecting a security interest in any such property no longer outweighs the benefit that would be received by the Secured Parties therefrom, or at any time when an Event of Default is continuing, (i) the Administrative Agent may provide written notice to the Grantors specifying the property which shall no longer constitute “Excluded Perfection Assets” and (ii) upon perfection of the Administrative Agent’s security interest in such property, such property shall no longer constitute “Excluded Perfection Assets” (it being understood that, upon receipt of such notice from the Administrative Agent, the Debtors shall comply with Section 4.3 as if such property did not constitute “Excluded Perfection Assets”).

 

“Excluded Property” means any of the following property or assets of any Debtor:

 

(a)                                  any property or assets to the extent that the Debtors are prohibited from granting a security interest in, pledge of, or charge, mortgage or lien upon any such property or assets by reason of (x) an existing and enforceable negative pledge provision or (y) applicable law or regulation to which such Debtors are subject, except

 

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(in the case of either of the foregoing clauses (x) and (y)) to the extent such prohibition is ineffective under the UCC;

 

(b)                                 General Intangibles, Contracts, and Investment Property which by their respective express terms prohibit the grant of a security interest, except to the extent such prohibition is ineffective under the UCC;

 

(c)                                  any United States intent-to-use trademark applications to the extent that, and solely during the period in which, the grant of a security interest therein would impair the validity or enforceability of such intent-to-use trademark applications under applicable federal law;

 

(d)                                 permits and licenses to the extent the grant of a security interest therein is prohibited under applicable law or regulation or by their express terms, except to the extent such prohibition is ineffective under the UCC;

 

(e)                                  any deposit accounts (i) exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of any Debtor’s employees or (ii) maintained in, and under the laws of, a jurisdiction other than the United States or any State thereof; and

 

(f)                                    Excluded Stock.

 

“Excluded Stock” means 34% of the capital stock, membership interests or other equity or ownership interests in each direct Foreign Subsidiary of the Debtors that is a “controlled foreign corporation” under the Code.

 

“Fixtures” means any fixture or fixtures now or hereafter owned or leased by any of the Debtors, or in which any of the Debtors holds or acquires any other right, title or interest, constituting “fixtures” under the UCC.

 

“General Intangibles” means all general intangibles now owned or hereafter acquired by any Debtor, including all right, title and interest that such Debtor may now or hereafter have in or under any Contract, all payment intangibles, customer lists, Licenses, Copyrights, Trademarks, Patents, and all applications therefor and reissues, extensions or renewals thereof, rights in Intellectual Property, interests in partnerships, joint ventures and other business associations, licenses, permits, copyrights, trade secrets, software, data bases, data, processes, models, drawings, materials and records, goodwill (including the goodwill associated with any Trademark or Trademark License), all rights and claims in or under insurance policies (including insurance for fire, damage, loss and casualty, whether covering personal property, real property, tangible rights and intangible rights, all liability, life, key man and business interruption insurance, and all unearned premiums), uncertificated securities, rights to receive dividends, distributions, cash, Instruments and other property in respect of or in exchange for pledged stock and Investment Property, rights or indemnification.

 

“Instruments” means all of each Debtor’s instruments, including all promissory notes and other evidences of indebtedness, including intercompany instruments, other than instruments that constitute, or are a part of a group of writings that constitute, Chattel Paper.

 

“Intellectual Property” means all intellectual and similar property of any Debtor of every kind and nature now owned or hereafter acquired by any Debtor, including inventions, designs, Patents, Patent Licenses, Trademarks, Trademark Licenses, Copyrights, Copyright Licenses, domain names and domain name registrations, trade secrets, confidential or proprietary technical and business information, know-how or other data or information, software and databases (including without limitation the Seismic Data Libraries) and all embodiments or fixations thereof and related documentation, registrations and franchises, licenses for any of the foregoing and all license rights, and all additions, improvements and accessions to, and books and records describing or used in connection with, any of the foregoing.

 

“Investment Property” shall mean, other than any shares or equity interests constituting Excluded Property or Excluded Stock, all investment property now owned or hereafter acquired by any Debtor, wherever located, including (i) all securities, whether certificated or uncertificated, including stocks, bonds, interests in limited liability companies, partnership interests, treasuries, certificates of deposit, and mutual fund shares; (ii) all securities

 

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entitlements of any Debtor, including the rights of any Debtor to any securities account and the financial assets held by a securities intermediary in such securities account and any free credit balance or other money owing by any securities intermediary with respect to that account; (iii) all securities accounts of any Debtor; (iv) all commodity contracts of any Debtor; and (v) all commodity accounts held by any Debtor.

 

“Inventory” means all of each Debtor’s present and future inventory, wherever located, including inventory, merchandise, goods and other personal property that are held by or on behalf of any Debtor for sale or lease or are furnished or are to be furnished under a contract of service, or that constitute raw materials, work in process, finished goods, returned goods, or materials or supplies of any kind, nature or description used or consumed or to be used or consumed in such Debtor’s business or in the processing, production, packaging, promotion, delivery or shipping of the same, including all supplies, and embedded software.  “Inventory” shall also include inventory in joint production with another person, inventory in which any Debtor has an interest as consignor, and inventory that is returned to or stopped in transit by any Debtor, and all combinations and products thereof.

 

“Letter-of-Credit Rights” shall mean all letter-of-credit rights now owned or hereafter acquired by any Debtor, including rights to payment or performance under a letter of credit, whether or not such Debtor, as beneficiary, has demanded or is entitled to demand payment or performance.

 

“Licenses” shall mean any Patent License, Trademark License, Copyright License, license related to seismic data or other license or sublicense to which any Debtor is a party, including any franchises, permits, certificates, licenses, authorizations and the like and any other requirements of any government or any commission, board, court, agency, instrumentality or political subdivision thereof.

 

“Liquid Assets” shall mean all cash and cash equivalents at any time held by any of the Debtors, including all amounts from time to time held in any checking, savings, deposit or other account of any of the Debtors, all monies, proceeds or sums due or to become due therefrom or thereon and all documents (including, but not limited to passbooks, certificates and receipts) evidencing all funds and investments held in such accounts.

 

“Patents” means all of the following now owned or hereafter acquired by any Debtor:  (a) all letters patent of the United States or any other country, all registrations and recordings thereof, and all applications for letters patent of the United States or any other country, including registrations, recordings and pending applications in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof, or any other country, including, without limitation, any of the foregoing referred to in Schedule 3.7, and (b) all reissues, continuations, divisions, continuations-in-part, renewals or extensions thereof, and the inventions disclosed or claimed therein, including the right to make, use and/or sell the inventions disclosed or claimed therein.

 

“Patent License” means all agreements, whether written or oral, providing for the grant by or to any Debtor of any right to manufacture, use or sell any invention covered in whole or in part by a Patent, including, without limitation, any of the foregoing referred to in Schedule 3.7).

 

“Patent Security Agreement Supplement” means a supplement to this Agreement by each applicable Debtor in favor of the Administrative Agent, substantially in the form of Annex II hereto.

 

“Pledged Securities” means, with respect to each Debtor, (a) other than the Excluded Stock or any shares or equity interests constituting Excluded Property, all shares or other equity interests held by such Debtor in any corporations or other entities (including, without limitation, those corporations or other entities described in Schedule 3.5(a) that are directly held by such Debtor), together with all warrants to purchase, all depositary shares and all other rights of such Debtor in respect of such equity interests, (b) all certificates, instruments or other documents evidencing same and registered or held in the name of, or otherwise in the possession of, such Debtor, and (c) all present and future payments, dividend distributions, instruments, compensation, property, assets, interests and rights in connection with or related to the equity interests described in clause (a) above, and all monies due or to become due and payable to such Debtor in connection with or related to such equity interests or otherwise paid, issued or distributed in respect of or in exchange therefor (including, without limitation, all proceeds of dissolution or liquidation).

 

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“Permitted Liens” means any Liens permitted by Section 7.01 of the Credit Agreement.

 

“Permitted Prior Liens” means the following:  (i) with respect to Equity Interests, instruments, and deposit accounts, Liens permitted by clauses (c) and (h) of Section 7.01 of the Credit Agreement and, solely with respect to applicable Deposit Accounts, Liens permitted by clause (f) of Section 7.01 of the Credit Agreement, and (ii) with respect to all other property, Liens permitted by Section 7.01 of the Credit Agreement.

 

“Proceeds” means all of each Debtor’s present and future (a) proceeds of the Collateral, whether arising from the collection, sale, lease, exchange, assignment, licensing, or other disposition of the Collateral, (b) any and all payments (in any form whatsoever) made or due and payable from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Collateral by any Governmental Authority (or any person acting under color of governmental authority), (c) claims against third parties for impairment, loss, damage, or impairment of the value of such property, and (d) any and all proceeds of, and all claims for, any insurance, indemnity, warranty or guaranty payable from time to time with respect to any of the Collateral, including any credit insurance with respect to Receivables, in each case whether represented as money, deposit accounts, accounts, general intangibles, securities, instruments, documents, chattel paper, inventory, equipment, fixtures, or goods.

 

“Receivables” means all of each Debtor’s present and future accounts, accounts from governmental agencies, instruments, and general intangibles, including those arising from the provision of services to the customers of any Debtor, and rights to payment under all Contracts, income tax refunds, and other rights to the payment of money, together with all of the right, title and interest of any of the Debtors in and to (a) all security pledged, assigned, hypothecated or granted to or held by any of the Debtors to secure the foregoing, (b) all of any of the Debtors’ right, title and interest in and to any goods or services, the sale of which gave rise thereto, (c) all guarantees, endorsements and indemnifications on, or of, any of the foregoing, (d) all powers of attorney granted to any of the Debtors for the execution of any evidence of indebtedness or security or other writing in connection therewith, (e) all credit information, reports and memoranda relating thereto, and (f) all other writings related in any way to the foregoing.

 

“Records” means all of each Debtor’s present and future books, accounting records, files, computer files, computer programs, correspondence, credit files, records, ledger cards, invoices, and other records primarily related to any other items of Collateral, including without limitation all similar information stored on a magnetic medium or other similar storage device and other papers and documents in the possession or under the control of any of the Debtors or any computer bureau from time to time acting for any of the Debtors.

 

“Secured Obligations” means (a) the Obligations and (b) any increases, extensions, renewals, replacements, and rearrangements of the foregoing obligations under any amendments, supplements, and other modifications of the agreements creating the foregoing obligations, in each case, whether direct or indirect, absolute or contingent.

 

“Seismic Data Libraries” means all of the following now owned or hereafter acquired by any Debtor: two dimensional (2D), three dimensional (3D), and other seismic data including, without limitation, all storage media and support data, films, mylar, black-lines, sections, maps, coordinates, derivatives, invoices and licensing information held by the Debtors in connection with such data, including without limitation the Multi-Client Data.

 

“State of Organization” means the jurisdiction of organization of each of the Debtors as listed on Schedule 3.3.

 

“Supporting Obligations” shall mean all supporting obligations, including letters of credit and guaranties issued in support of Accounts, Chattel Paper, Documents, General Intangibles, Instruments, or Investment Property.

 

“Trademarks” means all of the following now owned or hereafter acquired by any Debtor:  all trademarks, service marks, trade names, corporate names, company names, business names, fictitious business names, trade styles, trade dress, logos, other source or business identifiers, designs and general intangibles of like nature, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all registration and recording applications filed in connection therewith, including registrations and registration applications in the United States

 

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Patent and Trademark Office, any State of the United States or any similar offices in any other country or any political subdivision thereof, and all extensions or renewals thereof, including, without limitation, any of the foregoing referred to in Schedule 3.7.

 

“Trademark License” means any agreement, whether written or oral, providing for the grant by or to any Debtor of any right to use any Trademark, including, without limitation, any of the foregoing referred to in Schedule 3.7.

 

“Trademark Security Agreement Supplement” shall mean a supplement to this Agreement, by each applicable Debtor in favor of the Administrative Agent, substantially in the form of Annex III hereto.

 

“UCC” means the Uniform Commercial Code as in effect on the date hereof in the State of New York, as amended from time to time, and any successor statute.

 

“Vehicles” means  all cars, trucks, trailers, construction and earth moving equipment, vibrator trucks and other vehicles covered by a certificate of title under the laws of any state, all tires and all other appurtenances to any of the foregoing.

 

SECTION 2.

 

GRANT OF SECURITY INTEREST

 

2.1                                 Grant of Security Interest.  Each Debtor hereby grants to the Administrative Agent, for the benefit of the holders of the Secured Obligations, a security interest in all of such Debtor’s right, title, and interest in and to the following property (the “Collateral”) to secure the payment and performance of the Secured Obligations:  (a) all Chattel Paper, all Collateral Accounts, all commercial tort claims described on Schedule 3.4 hereto or notified to the Administrative Agent pursuant to Section 4.10(b) hereof, all Contracts, all Deposit Accounts, all Documents, all Equipment, all Fixtures, all General Intangibles, all Instruments, all Intellectual Property, all Inventory, all Investment Property (including without limitation the Pledged Securities), all Letter of Credit Rights, all Liquid Assets, all Receivables, all Records, and all Supporting Obligations, (b) any and all additions, accessions and improvements to, all substitutions and replacements for and all products of or derived from the foregoing, and (c) all Proceeds of the foregoing; provided, however, that notwithstanding anything to the contrary contained herein or in any other Loan Document, this Agreement shall not constitute nor evidence a grant of a security interest, collateral assignment or any other type of Lien in Excluded Property.  The Proceeds of Excluded Property shall not constitute Excluded Property solely by virtue of being Proceeds thereof but only to the extent that such Proceeds otherwise independently constitute Excluded Property hereunder.

 

To the extent that the Collateral is not subject to the UCC, each Debtor collaterally assigns all of such Debtor’s right, title, and interest in and to such Collateral to the Administrative Agent for the benefit of the holders of the Secured Obligations to secure the payment and performance of the Secured Obligations to the full extent that such a collateral assignment is possible under the relevant law.

 

2.2                                 Avoidance Limitation.  Notwithstanding Section 2.1 above, the amount of any Debtor’s Secured Obligations that are secured by its rights in Collateral subject to a Lien in favor of the Administrative Agent hereunder or under any other Security Document shall be limited to the extent, if any, required so that the Liens it has granted under this Security Agreement shall not be subject to avoidance under Section 548 of the Bankruptcy Code of the United States or to being set aside or annulled under any applicable Law relating to fraud on creditors.  In determining the limitations, if any, on the amount of any Debtor’s Secured Obligations that are subject to the Lien on such Debtor’s Collateral hereunder pursuant to the preceding sentence, it is the intention of the parties hereto that any rights of subrogation or contribution which such Debtor may have under the Guaranty, any other agreement or applicable Law shall be taken into account.

 

2.3                                 Debtors Remain Liable.  Anything herein to the contrary notwithstanding:  (a) each Debtor shall remain liable under the Contracts included in the Collateral to the extent set forth therein to perform such Debtor’s obligations thereunder to the same extent as if this Agreement had not been executed; (b) the exercise by the

 

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Administrative Agent of any rights hereunder shall not release any Debtor from any obligations under the Contracts included in the Collateral; and (c) the Administrative Agent shall not have any obligation under the Contracts included in the Collateral by reason of this Agreement, nor shall the Administrative Agent be obligated to perform or fulfill any of the obligations of any Debtor thereunder, including any obligation to make any inquiry as to the nature or sufficiency of any payment any Debtor may be entitled to receive thereunder, to present or file any claim, or to take any action to collect or enforce any claim for payment thereunder.

 

SECTION 3.

 

REPRESENTATIONS AND WARRANTIES

 

To induce the Lenders to make Credit Extentions to the Borrower under the Credit Agreement, each Debtor hereby represents and warrants to the Administrative Agent, for the benefit of the holders of the Secured Obligations, that:

 

3.1                                 Title; No Other Liens.  Except for the security interests granted to the Administrative Agent for the benefit of the holders of the Secured Obligations pursuant to this Agreement and the other Permitted Liens, such Debtor owns each item of the Collateral free and clear of any and all Liens or claims of others.  No financing statement or other public notice with respect to all or any part of the Collateral is on file or of record in any public office, except such as have been filed in favor of the Administrative Agent, for the ratable benefit of the holders of the Secured Obligations, pursuant to this Agreement or as are permitted by the Credit Agreement.

 

3.2                                 Perfected First Priority Liens.  The security interests granted pursuant to this Agreement (a) upon completion of the filing of financing statements describing the Collateral in the offices located in the jurisdictions listed on Schedule 3.3, the recording in the United States Patent and Trademark Office of the Trademark Security Agreement Supplement and the Patent Security Agreement Supplement and in the United States Copyright Office of the Copyright Security Agreement Supplement, as applicable, the taking of all applicable actions in respect of perfection contemplated by Sections 4.5, 4.6, 4.7 and 4.10 in respect of Collateral (in which a security interest cannot be perfected by the filing of a financing statement or such recordings in the United States Patent and Trademark Office or the United States Copyright Office), will constitute valid perfected security interests in all of the Collateral (other than Excluded Perfection Assets) in favor of the Administrative Agent, for the benefit of the holders of the Secured Obligations, as collateral security for such Debtor’s Obligations, enforceable in accordance with the terms hereof against all creditors of such Debtor and any Persons purporting to purchase any Collateral from such Debtor and (b) are prior to all other Liens on the Collateral except for Permitted Prior Liens; provided that no representations are made herein with respect to the requirements of any laws of any jurisdiction other than the United States or any State thereof.

 

3.3                                 Debtor’s Legal Name; Jurisdiction of Organization; Chief Executive Office.  Each Debtor’s exact legal name is set forth on the signature page hereof, and from and after an amendment or modification thereto, on a written notification delivered to the Administrative Agent pursuant to Section 4.4.  On the date hereof, such Debtor’s jurisdiction of organization, type of organization, identification number from the jurisdiction of organization (if any), and the location of such Debtor’s chief executive office or sole place of business or principal residence, as the case may be, are specified on Schedule 3.3.

 

3.4                                 Certain Collateral.  None of the Collateral constitutes, or is the Proceeds of, farm products and none of the Collateral has been purchased for, or will be used by any Debtor primarily for personal, family or household purposes.  Except as set forth on Schedule 3.4 or otherwise notified to the Administrative Agent pursuant to Sections 4.9 or 4.10, respectively:

 

(a)                                  none of the account debtors or other persons obligated on any of the Collateral of such Debtor is a governmental authority subject to the Federal Assignment of Claims Act or like federal or state statute or rule in respect of such Collateral of the type described in Section 4.10(a);

 

(b)                                 such Debtor holds no commercial tort claims where the reasonably expected amount to be recovered from such claim exceeds $500,000;

 

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(c)                                  such Debtor holds no interest in, title to or power to transfer, any Patents, Trademarks or Copyrights;

 

(d)                                 such Debtor holds no interest in, title to or power to transfer any Intellectual Property that is registered or for which an application has been filed in the United States Patent and Trademark Office or the United States Copyright Office;

 

(e)                                  such Debtor owns no vessels, rolling stock, or aircraft.

 

3.5                                 Investment Property, Chattel Paper, and Instruments.

 

(a)                                  Each Debtor is the legal and beneficial owner of the Pledged Securities as set forth on Schedule 3.5(a).  The Pledged Securities have been duly authorized, validly issued and are fully paid and non-assessable and are not subject to any limitations to purchase similar rights by any person, and none of the Pledged Securities constitutes margin stock (within the meaning of Regulation U issued by the FRB).  Except as set forth on Schedule 3.5(a), the Pledged Securities constitute all of the issued and outstanding shares of stock or other equity interests of each of the respective issuers thereof and no such issuer has any obligation to issue any additional shares of stock or other equity interests or rights or options thereto.  As of the date hereof, all Investment Property of the Debtors (including without limitation securities accounts) is listed on Schedule 3.5(a).

 

(b)                                 Except as may be required in connection with any disposition of any portion of the Pledged Securities by laws affecting the offering and sale of securities generally, no consent of any Person and no license, permit, approval or authorization of, exemption by, notice or report to, or registration, filing or declaration with, any Governmental Authority is required in connection with (i) the execution, delivery, performance, validity or enforceability of this Agreement, (ii) the perfection or maintenance of the security interest created hereby (including the first priority nature thereof), or (iii) the exercise by the Administrative Agent of the rights provided for in this Agreement.

 

(c)                                  Each of the Instruments and Chattel Paper pledged by such Debtor hereunder constitutes the legal, valid and binding obligation of the obligor with respect thereto, enforceable in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally, and general principles of equity. Schedule 3.5(c) lists all of the Instruments issued to or held by each Debtor as of the Closing Date.

 

(d)                                 Such Debtor is the record and beneficial owner of, and has good title to the Investment Property pledged by it hereunder, free of any and all Liens or options in favor of, or claims of, any other Person, except the security interest created by this Agreement and other Permitted Liens.

 

3.6                                 Receivables.

 

(a)                                  No amount payable to such Debtor under or in connection with any Receivable is evidenced by any Instrument or Chattel Paper which has not been delivered to the Administrative Agent to the extent required by Section 5.

 

(b)                                 The amounts represented by such Debtor to the Secured Parties from time to time as owing to such Debtor in respect of the Receivables will at such times be accurate in all material respects.

 

(c)                                  All Receivables of such Debtor existing on the Closing Date arise from bona fide sales or leases by such Debtor of goods and services.

 

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3.7                                 Intellectual Property.

 

(a)                                  Schedule 3.7 lists all Intellectual Property necessary for the conduct of such Debtor’s business as currently conducted that is owned by such Debtor in its own name on the date hereof.

 

(b)                                 On the date hereof, all material Intellectual Property of such Debtor described on Schedule 3.7 is valid, subsisting, unexpired and enforceable, has not been abandoned and does not infringe the intellectual property rights of any other Person in any material respect.

 

(c)                                  Except as set forth in Schedule 3.7, on the date hereof, none of such Intellectual Property is the subject of any licensing or franchise agreement pursuant to which such Debtor is the licensor or franchisor.

 

(d)                                 No holding, decision or judgment has been rendered by any Governmental Authority which would limit, cancel or question the validity of, or such Debtor’s rights in, any such Intellectual Property in any respect that could reasonably be expected to have a Material Adverse Effect.

 

(e)                                  No action or proceeding is pending, or, to the knowledge of such Debtor, threatened, on the date hereof (i) seeking to limit, cancel or question the validity of any such Intellectual Property or such Debtor’s ownership interest therein, or (ii) which, if adversely determined, would reasonably be expected to have a Material Adverse Effect.

 

3.8                                 Deposit Accounts.  As of the date hereof, all Deposit Accounts of the Debtors are listed on Schedule 3.8.

 

SECTION 4.

 

COVENANTS AND AGREEMENTS

 

Each Debtor covenants and agrees with the Administrative Agent and the holders of the Secured Obligations that, from and after the date of this Agreement until this Agreement terminates in accordance with Section 7.13(a):

 

4.1                                 Covenants in Credit Agreement.  Such Debtor shall take, or shall refrain from taking, as the case may be, each action that is necessary to be taken or not taken, as the case may be, so that no Default or Event of Default is caused by the failure to take such action or to refrain from taking such action by such Debtor or any of its Subsidiaries.

 

4.2                                 Maintenance of Insurance.  Such Debtor will comply with the provisions of the Credit Agreement governing the maintenance of insurance for any of its assets constituting Collateral.

 

4.3                                 Maintenance of Perfected Security Interest; Further Documentation; Filing Authorization; Further Assurances; Power of Attorney.

 

(a)                                  Such Debtor shall maintain the security interest created by this Agreement as a perfected first priority security interest subject only to Permitted Liens (and the limitations on perfection and method of perfection provided in Section 5) and shall defend such security interest against the claims and demands of all Persons whomsoever.

 

(b)                                 Such Debtor will furnish to the Administrative Agent from time to time statements and schedules further identifying and describing the assets and property of such Debtor and such other reports in connection with the Collateral as the Administrative Agent may reasonably request, all in reasonable detail.

 

(c)                                  Subject in each case to Section 5, each Debtor further agrees to take any other action reasonably requested by the Administrative Agent to insure the attachment, perfection and priority of, and the ability

 

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of the Administrative Agent to enforce, the security interest in any and all of the Collateral (except as otherwise permitted with respect to Excluded Perfection Assets) including, without limitation, (i) executing, delivering and, where appropriate, filing financing statements and amendments relating thereto under the UCC, to the extent, if any, that any Debtor’s signature thereon is required therefor; (ii) causing the Administrative Agent’s name to be noted as secured party on any certificate of title for a titled good if such notation is a condition to attachment, perfection or priority of, or ability of the Administrative Agent to enforce, the security interest in such Collateral; (iii) complying with any provision of any statute, regulation or treaty of the United States or any other country as to any Collateral if compliance with such provision is a condition to the attachment, perfection or priority of, or the ability of the Administrative Agent to enforce, the security interest in such Collateral; and (iv) taking all actions required by the UCC or by other law, as applicable in any relevant Uniform Commercial Code jurisdiction, or by other law as applicable in any foreign jurisdiction.

 

(d)                                 Each Debtor hereby irrevocably authorizes the Administrative Agent at any time and from time to time to file in any jurisdiction in which the Uniform Commercial Code has been adopted any initial financing statements and amendments thereto that (a) indicate the Collateral (i) as all assets of each Debtor or words of similar effect, or (ii) as being of an equal or lesser scope or with greater detail, and (b) contain any other information required by the UCC for the sufficiency or filing office acceptance of any initial financing statement or amendment.  Each Debtor agrees to furnish any such information to the Administrative Agent promptly upon request.  Each Debtor also ratifies its authorization for the Administrative Agent to have filed in any Uniform Commercial Code jurisdiction any like initial financing statements or amendments thereto if filed prior to the date hereof.

 

(e)                                  During the existence of an Event of Default,

 

(i)                                     No Debtor shall initiate any action with respect to remedy such Event of Default without granting Administrative Agent advance written notice of such Debtor’s intent to initiate such actions and the opportunity to consult with such Debtor regarding such Debtor’s proposed actions (unless immediate action is reasonably necessary to prevent loss to such Debtor);

 

(ii)                                  At Administrative Agent’s request, each Debtor shall take any actions reasonably requested by Administrative Agent with respect to such Event of Default, including diligently endeavoring to cure any material defect existing or claimed, and taking all reasonably necessary and desirable steps for the defense of any legal proceedings, including the employment of counsel, the prosecution or defense of litigation, and the release or discharge of all adverse claims;

 

(iii)                               Administrative Agent, whether or not named as a party to any legal proceedings, is authorized to take any additional steps as Administrative Agent deems reasonably necessary or desirable for the defense of any such legal proceedings or the protection of the validity or priority of this Agreement and the liens, security interests, and assignments created hereunder, including the employment of independent counsel, the prosecution or defense of litigation, the compromise or discharge of any adverse claims made with respect to any Collateral and the payment or removal of prior liens or security interests, and the reasonable expenses of Administrative Agent in taking such action shall be paid by the Debtors; and

 

(iv)                              Each Debtor agrees that, if such Debtor fails to perform under this Agreement or any other Loan Document, Administrative Agent may, but shall not be obligated to, perform such Debtor’s obligations under this Agreement or such other Loan Document, and any reasonable expenses incurred by Administrative Agent in performing such Debtor’s obligations shall be paid by such Debtor.  Any such performance by Administrative Agent may be made by Administrative Agent in reasonable reliance on any statement, invoice, or claim, without inquiry into the validity or accuracy thereof.  The amount and nature of any expense of Administrative Agent hereunder shall be conclusively established by a certificate of any officer of Administrative Agent absent manifest error.

 

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(f)                                    Debtor irrevocably appoints Administrative Agent as Debtor’s attorney in fact, with full authority to act during the existence of an Event of Default for Debtor and in the name of Debtor, to take any action and execute any agreement which Administrative Agent deems reasonably necessary or advisable to accomplish the purposes of this Agreement, including the matters that Administrative Agent is expressly authorized to take pursuant to this Agreement (including the matters described in paragraph (c) above), and instituting proceedings Administrative Agent deems reasonably necessary or desirable to enforce the rights of Administrative Agent with respect to this Agreement.

 

4.4                                 Changes in Name, etc.  Such Debtor will not, except upon 30 days’ prior written notice to the Administrative Agent (or such longer period as the Administrative Agent may consent to in its sole discretion) and delivery to the Administrative Agent of all additional approved or executed financing statements and other executed documents reasonably requested by the Administrative Agent to maintain the validity, perfection and priority of the security interests provided for herein:  (a) change its type of organization, jurisdiction of organization or other legal structure from that referred to in Section 3.3, (b) change its organizational number if it has one, or (c) change its name.

 

4.5                                 Delivery of Instruments, Chattel Paper, and Documents.  If any amount payable under or in connection with any of the Collateral is or becomes evidenced by any Instrument or Chattel Paper, such Instrument or Chattel Paper shall, to the extent required by Section 5, be immediately delivered to the Administrative Agent, duly indorsed in a manner reasonably satisfactory to the Administrative Agent, to be held as Collateral pursuant to this Agreement.  If any goods are or become covered by a negotiable Document, such Document shall, to the extent required by Section 5, be immediately delivered to the Administrative Agent to be held as Collateral pursuant to this Agreement.

 

4.6                                 Investment Property.  With respect to Investment Property (other than Excluded Stock) and Pledged Securities:

 

(a)                                  If any Debtor shall at any time hold or acquire any Pledged Securities which are certificated securities, whether as a stock split, stock dividend, or other distribution with respect to Pledged Securities, or otherwise, such Debtor shall promptly, and in any event within ten (10) Business Days after receipt thereof (or such longer period as the Administrative Agent may consent to in its sole discretion), deliver the same to the Administrative Agent, accompanied by such instruments of transfer or assignment duly executed in blank as the Administrative Agent may from time to time specify.  If any Pledged Securities now owned or hereafter acquired by any Debtor are uncertificated securities and are issued to such Debtor or its nominee directly by the issuer thereof, such Debtor shall promptly notify the Administrative Agent thereof, and shall take any actions requested by the Administrative Agent to enable the Administrative Agent to obtain “control” (within the meaning of Section 8-106 of the UCC) with respect thereto.  If any Pledged Securities, whether certificated securities or uncertificated securities, or other Investment Property now or hereafter acquired by any Debtor are held or acquired by such Debtor or its nominee through a securities intermediary or commodity intermediary, such Debtor shall promptly notify the Administrative Agent thereof and, shall take any actions reasonably requested by the Administrative Agent to enable the Administrative Agent to obtain “control” (within the meaning of Section 8-106 and/or Section 9-106 of the UCC, as applicable) with respect thereto.  To the extent that the Administrative Agent has the right pursuant to the foregoing to give entitlement orders or instructions or directions to any issuer, securities intermediary or commodity intermediary or to withhold its consent to the exercise of any withdrawal or dealing rights by any Debtor, the Administrative Agent agrees with each Debtor that the Administrative Agent shall not give any such entitlement orders or instructions or directions to any such issuer, securities intermediary or commodity intermediary, and shall not withhold its consent to the exercise of any withdrawal or dealing rights by any Debtor, unless an Event of Default has occurred and is continuing.

 

(b)                                 So long as no Event of Default has occurred and is continuing, each Debtor shall be entitled:

 

(i)                                     to exercise, in a manner not inconsistent with the terms hereof, the voting power with respect to the Pledged Securities of such Debtor, and for that purpose the Administrative Agent shall

 

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(if any Pledged Securities shall be registered in the name of the Administrative Agent or its nominee) execute or cause to be executed from time to time, at the expense of the Borrower, such proxies or other instruments in favor of such Debtor or its nominee, in such form and for such purposes as shall be reasonably requested by such Debtor, to enable it to exercise such voting power with respect to the Pledged Securities; and

 

(ii)                                  except as otherwise provided herein or in the Credit Agreement, to receive and retain for its own account any and all payments, proceeds, dividends, distributions, property, assets, or rights to the extent such are permitted pursuant to the terms of the Credit Agreement, other than (x) stock or liquidating dividends or (y) other dividends or other amounts payable under or in connection with any recapitalization, restructuring, or other non-ordinary course event (the dividends and amounts in this clause (y) being “Extraordinary Payments”), paid, issued or distributed from time to time in respect of the Pledged Securities.  If any Extraordinary Payment is paid or payable, then such sum shall be paid by each such Debtor to the Administrative Agent promptly, and in any event within ten (10) Business Days after receipt thereof (or such longer period as the Administrative Agent may consent to in its sole discretion), to be held by the Administrative Agent as additional collateral hereunder.

 

(c)                                  Upon the occurrence and during the continuance of any Event of Default, all rights of each Debtor to exercise or refrain from exercising the voting and other consensual rights that it would otherwise be entitled to exercise pursuant to Section 4.6(b) and to receive the payments, proceeds, dividends, distributions, property, assets, or rights that the Debtor would otherwise be authorized to receive and retain pursuant to Section 4.6(b) shall cease, and thereupon the Administrative Agent shall be entitled to exercise all voting power with respect to the Pledged Securities and to receive and retain, as additional collateral hereunder, any and all payments, proceeds, dividends, distributions, property, assets, or rights at any time declared or paid upon any of the Pledged Securities during such an Event of Default and otherwise to act with respect to the Pledged Securities as outright owner thereof.

 

(d)                                 All payments, proceeds, dividends, distributions, property, assets, instruments or rights that are received by each Debtor contrary to the provisions of this Section 4.6 shall be received and held in trust for the benefit of the Administrative Agent, shall be segregated by each Debtor from other funds of such Debtor and shall be forthwith paid over to the Administrative Agent as Pledged Securities in the same form as so received (with any necessary endorsement).

 

(e)                                  If such Debtor is an issuer of Pledged Securities, such Debtor agrees that (i) it will be bound by the terms of this Agreement relating to the Pledged Securities issued by it and will comply with such terms insofar as such terms are applicable to it and (ii) it will comply with instructions received by it pursuant to the terms of Section 4.6(f) with respect to the Pledged Securities issued by it.  In addition, if any such Debtor is a partnership or a limited liability company, such Debtor (i) confirms that none of the terms of any equity interest issued by it provides that such equity interest is a “security” within the meaning of the UCC, (ii) agrees that it will take no action to cause or permit any such equity interest to become a security, (iii) agrees that it will not issue any certificate representing any such equity interest and (iv) agrees that if, notwithstanding the foregoing, any such equity interest shall be or become a security, such Debtor will (and the Debtor that holds such equity interest hereby instructs such issuing Debtor to) comply with instructions originated by the Administrative Agent without further consent by such Debtor.

 

(f)                                    Each Debtor hereby authorizes and instructs each issuer of any Pledged Securities pledged by such Debtor hereunder to (i) comply with any instruction received by it from the Administrative Agent in writing that (x) states that an Event of Default has occurred and is continuing and (y) is otherwise in accordance with the terms of this Agreement, without any other or further instructions from such Debtor, and each Debtor agrees that each such issuer shall be fully protected in so complying, and (ii) unless otherwise expressly permitted hereby including as permitted in Section 4.6(b)(ii) herein, pay any dividends or other payments with respect to the Pledged Securities directly to the Administrative Agent.

 

4.7                                 Deposit Accounts.  If any Debtor shall at any time establish any new Deposit Account (other than any Deposit Account that constitutes Excluded Property), such Debtor shall promptly, and in any event within ten

 

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(10) Business Days after establishment thereof (or such longer period as the Administrative Agent may consent to in its sole discretion), notify the Administrative Agent of such Deposit Account.  All United States Deposit Accounts of the Debtors shall be maintained with depositories that are Lenders in accordance with Section 6.12 of the Credit Agreement.

 

4.8                                 Modifications of Receivables, Chattel Paper, Instruments and Payment Intangibles.  No Debtor will, without the Administrative Agent’s prior written consent (which consent shall not be unreasonably withheld or delayed):  (a) compromise or grant any extension of the time of payment of any of the Collateral consisting of Receivables, Chattel Paper, Instruments or payment intangibles, (b) settle the same for less than the full amount thereof, (c) release, wholly or partly, any obligor liable for the payment thereof or (d) allow any credit or discount whatsoever thereon; provided, that so long as no Event of Default has occurred and is continuing, this Section 4.8 shall not restrict any extensions, credits, discounts, compromises or settlements (i) granted or made by any Debtor with respect to Receivables, Chattel Paper, Instruments or payment intangibles with individually or in the aggregate are not material to such Debtor, or (ii) granted or made by any Debtor in the ordinary course of such Debtor’s business and consistent with such prudent practices used in industries that are the same as or similar to those which such Debtor is engaged.

 

4.9                                 Intellectual Property.  With respect to Intellectual Property:

 

(a)                                  Such Debtor (either itself or through licensees) will (i) continue to use each Trademark necessary to the conduct of its business in order to maintain such Trademark in full force free from any claim of abandonment for non-use, (ii) use such Trademark with the appropriate notice of registration and substantially all other notices and legends required by applicable Laws, (iii) not knowingly adopt or use any mark which is confusingly similar or a colorable imitation of such Trademark unless the Administrative Agent, for the ratable benefit of the Secured Parties, shall obtain a perfected security interest in such mark pursuant to this Agreement, and (iv) not (and not knowingly permit any licensee or sublicensee thereof to) do any act or knowingly omit to do any act whereby such Trademark may become invalidated or impaired in any way;

 

(b)                                 Such Debtor (either itself or through licensees) will not do any act, or omit to do any act, whereby any Patent necessary for the conduct of its business may become forfeited, abandoned or dedicated to the public;

 

(c)                                  Such Debtor (either itself or through licensees) (i) will employ each Copyright necessary for the conduct of its business and (ii) will not (and will not knowingly permit any licensee or sublicensee thereof to) do any act or knowingly omit to do any act whereby any material portion of such Copyrights may become invalidated or otherwise impaired.  Such Debtor will not (either itself or through licensees) do any act whereby any material portion of such Copyrights may fall into the public domain;

 

(d)                                 Such Debtor (either itself or through licensees) will not do any act that knowingly uses any Intellectual Property necessary for the conduct of its business to materially infringe the intellectual property rights of any other Person;

 

(e)                                  Such Debtor will notify the Agents and the Lenders promptly if it knows, or has reason to know, that any application or registration relating to any Intellectual Property necessary for the conduct of its business may become forfeited, abandoned or dedicated to the public, or of any adverse determination or development (including, without limitation, the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, the United States Copyright Office) regarding such Debtor’s ownership of, or the validity of, any such Intellectual Property or such Debtor’s right to register the same or to own and maintain the same;

 

(f)                                    Whenever such Debtor, either by itself or through any agent, employee, licensee or designee, shall file an application for the registration of any Intellectual Property necessary for the conduct of its business with the United States Patent and Trademark Office, the United States Copyright Office, such Debtor shall report such filing to the Administrative Agent within 30 days after the date on which such filing occurs (or such

 

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longer period as the Administrative Agent may consent to in its sole discretion).  Upon request of the Administrative Agent, such Debtor shall promptly execute and deliver, and have recorded, any and all agreements, instruments, documents, and papers as the Administrative Agent may request to evidence the security interest granted hereunder to the Administrative Agent for the benefit of the holders of the Secured Obligations in any Copyright, Patent or Trademark necessary for the conduct of its business and the goodwill and general intangibles of such Debtor relating thereto or represented thereby;

 

(g)                                 Such Debtor will take all reasonable and necessary steps, including, without limitation, in any proceeding before the United States Patent and Trademark Office, the United States Copyright Office, to maintain and pursue each application relating to any Intellectual Property necessary for the conduct of its business (and to obtain the relevant registration) and to maintain each registration of such Intellectual Property, including, without limitation, filing of applications for renewal, affidavits of use and affidavits of incontestability;

 

(h)                                 In the event that any Intellectual Property necessary for the conduct of its business is infringed, misappropriated or diluted by a third party, such Debtor shall (i) take such actions as such Debtor shall reasonably deem appropriate under the circumstances to protect such Intellectual Property and (ii) if such Intellectual Property is of material economic value, promptly notify the Administrative Agent after it learns thereof and take such actions as such Debtor shall reasonably deem appropriate under the circumstances, including filing suit for infringement, misappropriation or dilution, to seek injunctive relief where appropriate and to recover any and all damages for infringement, misappropriation or dilution; and

 

(i)                                     One copy of the Seismic Data Library shall be kept at all times at 13927 South Gessner Road, Missouri City, Texas 77489.  The Debtors shall provide the Administrative Agent all rights and information necessary to access such copy, and shall not at any time remove or impair the Administrative Agent’s access to such copy.

 

4.10                           Actions With Respect to Certain Collateral.

 

(a)                                  If any of the account debtors or other Persons obligated on any of the Receivables, Chattel Paper, Instruments or payment intangibles with a value in excess of $500,000, or on any Contract with a value in excess of $500,000  in any twelve month period, is or becomes a governmental authority subject to the Federal Assignment of Claims Act or like federal or state statute or rule in respect of such Collateral, Debtor shall promptly (i) notify the Administrative Agent in a writing signed by such Debtor that such account debtor or other Person obligated on such Collateral is a governmental authority subject to the Federal Assignment of Claims Act or like federal or state statute or rule and (ii) take all actions reasonably required by the Administrative Agent to insure the attachment, perfection or priority of, or the ability of the Administrative Agent to enforce, the security interest in such Collateral.

 

(b)                                 If any Debtor shall at any time hold or acquire a commercial tort claim with a value in excess of $500,000, such Debtor shall promptly notify the Administrative Agent in a writing signed by such Debtor of the brief details thereof and grant to the Administrative Agent in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Security Agreement, with such writing to be in form and substance satisfactory to the Administrative Agent.

 

(c)                                  If any Debtor shall at any time hold or acquire any vessel or aircraft, such Debtor shall promptly notify the Administrative Agent in a writing signed by such Debtor, and shall take all actions reasonably requested by the Administrative Agent to insure the attachment, perfection and priority of, and the ability of the Administrative Agent to enforce, a security interest therein.

 

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SECTION 5.

 

LIMITATION ON PERFECTION OF SECURITY INTEREST

 

5.1                                 Chattel Paper and Instruments.  The perfection of the security interest granted in Section 2 above in, respectively, Chattel Paper (whether tangible or electronic) and Instruments (other than intercompany obligations owing by the Borrower or any of its Subsidiaries to any Debtor) will, prior to the occurrence of an Event of Default (and after the occurrence of an Event of Default unless the Administrative Agent has required that further actions are taken with respect to the perfection thereof), be effected solely by filing an appropriate financing statement under the applicable Uniform Commercial Code so long as (a) with respect to all Chattel Paper and Instruments, the aggregate face amount of all such Chattel Paper and Instruments does not exceed $2,000,000 and (b) with respect to any individual Chattel Paper or Instrument, the face amount thereof does not exceed $500,000.

 

5.2                                 Documents.  The perfection of the security interest granted in Section 2 above in Documents will, prior to the occurrence of an Event of Default (and after the occurrence of an Event of Default unless the Administrative Agent has required that further actions are taken with respect to the perfection thereof), be effected solely by filing an appropriate financing statement under the applicable Uniform Commercial Code so long as (a) the aggregate value of the goods covered by all such Documents does not exceed $2,000,000 and (b) the value of the goods covered by any individual Document does not exceed $500,000.

 

5.3                                 Letter of Credit Rights.  The perfection of the security interest granted in Section 2 above in Letter-of-Credit Rights will be required only with respect to (a) solely following the occurrence of an Event of Default and request by the Administrative Agent, any individual Letter-of-Credit Right the face amount of which exceeds $500,000 and (b) any Letter of Credit Rights constituting Supporting Obligations.

 

5.4                                 Fixtures.  The perfection of the security interest granted in Section 2 above in Fixtures (other than Fixtures related to owned or leased real property of any Debtor which is subject to a Mortgage) will, prior to the occurrence of an Event of Default (and after the occurrence of an Event of Default unless the Administrative Agent has required that further actions are taken with respect to the perfection thereof), be effected solely by filing an appropriate financing statement under the applicable Uniform Commercial Code.

 

5.5                                 Vehicles; Mobile Goods.  The perfection of the security interest granted in Section 2 above in Vehicles will be required only following the occurrence of an Event of Default and request by the Administrative Agent.  Following the occurrence of an Event of Default and request by the Administrative Agent, with respect to any Vehicle now or hereafter owned by a Debtor, such Debtor agrees to take such action (or cause its Subsidiaries to take such action), including endorsing certificates of title or executing applications for transfer of title, as is reasonably required by the Administrative Agent to enable it to properly perfect and protect its Lien on such Vehicles and to transfer the same.

 

SECTION 6.

 

REMEDIAL PROVISIONS

 

During the existence of an Event of Default, the Administrative Agent may, at the Administrative Agent’s option, exercise one or more of the remedies specified elsewhere in this Agreement or the following remedies:

 

6.1                                 General Interim Remedies.

 

(a)                                  To the extent permitted by law, the Administrative Agent may exercise all the rights and remedies of a secured party under the UCC.

 

(b)                                 The Administrative Agent may prosecute actions in equity or at law for the specific performance of any covenant or agreement herein contained or in aid of the execution of any power herein granted or for the enforcement of any other appropriate legal or equitable remedy.

 

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(c)           The Administrative Agent may require any Debtor to promptly assemble any tangible Collateral of such Debtor and make it available to the Administrative Agent at a place to be designated by the Administrative Agent.  The Administrative Agent may occupy any premises owned or leased by any Debtor where the Collateral is assembled for a reasonable period in order to effectuate the Administrative Agent’s rights and remedies hereunder or under law, without obligation to any Debtor with respect to such occupation.

 

6.2           Receivables, Chattel Paper, Instruments and Payment Intangibles.  During the existence of an Event of Default, the Administrative Agent may establish Collateral Accounts for the purpose of collecting the payments due to the Debtors under any Contracts or otherwise with respect to the Receivables, Chattel Paper, Instruments and/or payment intangibles and holding the proceeds thereof, and may, or may direct the Debtors to, instruct all makers and/or all obligors with respect thereto to make all payments with respect to such Collateral directly to the Administrative Agent for deposit into such Collateral Account.  After such direction to the Debtors, all payments, whether of principal, interest, or other amounts, under any Contracts or otherwise with respect to the Receivables, Chattel Paper, Instruments and/or payment intangibles shall be directed to such Collateral Accounts.  All such payments which may from time to time come into the possession of any Debtor shall be held in trust for the Administrative Agent, segregated from the other funds of such Debtor, and delivered to the Administrative Agent immediately in the form received with any necessary endorsement for deposit into such Collateral Account, such delivery in no event to be later than one Business Day after receipt thereof by the applicable Debtor.  Each Debtor agrees to execute any documents reasonably requested by the Administrative Agent to create any Collateral Account and pledge it to the Administrative Agent.  In connection with the foregoing, the Administrative Agent shall have the right at any time during the existence of an Event of Default to take any of the following actions, in the Administrative Agent’s own name or in the name of the applicable Debtor:  compromise or extend the time for payment of any payments due with respect to any Instrument or Chattel Paper upon such terms as the Administrative Agent may reasonably determine; endorse the name of the applicable Debtor, on checks, instruments, or other evidences of payment with respect to any such Collateral; make written or verbal requests for verification of amount owing on any such Collateral from the maker thereof or obligor thereunder; open mail addressed to such Debtor which the Administrative Agent reasonably believes relates to any such Collateral, and, to the extent of checks or other payments with respect to any such Collateral, dispose of same in accordance with this Agreement; take action in the Administrative Agent’s name or the applicable Debtor’s name, to enforce collection; and take all other action necessary to carry out this Agreement and give effect to the Administrative Agent’s rights hereunder.  Costs and expenses incurred by the Administrative Agent in collection and enforcement of amounts owed under any Contracts or otherwise with respect to the Receivables, Chattel Paper, Instruments and/or payment intangibles, including attorneys’ fees and out-of-pocket expenses, shall be reimbursed by the applicable Debtor to the Administrative Agent on demand.

 

6.3           Contracts.  During the existence of an Event of Default, the Administrative Agent may, at its option, exercise one or more of the following remedies with respect to the Contracts that constitute Collateral:

 

(a)           (i) take any action permitted under Section 6.2 and (ii) in the place and stead of the applicable Debtor, exercise any other rights of such Debtor under the Contracts in accordance with the terms thereof.  Without limitation of the foregoing, each Debtor agrees that under the foregoing circumstances, the Administrative Agent may give notices, consents and demands and make elections under the Contracts, modify or waive the terms of the Contracts and enforce the Contracts, in each case, to the same extent and on the same terms as such Debtor might have done.  It is understood and agreed that notwithstanding the exercise of such rights and/or the taking or such actions by the Administrative Agent, such Debtor shall remain liable for performance of its obligations under the Contracts;

 

(b)           upon receipt by the Administrative Agent of notice from any counterparty to any Contract of such Person’s intent to terminate such Contract, the Administrative Agent shall be entitled to (i) cure or cause to be cured the condition giving rise to such Person’s right of termination of such Contract, or (ii) acquire and assume (or assign and cause the assumption by a third party of) the rights and obligations of the applicable Debtor under such Contract; and

 

(c)           upon termination of any Contract by operation of law or otherwise, the Administrative Agent shall be entitled to enter into a new agreement (“Successor Agreement”) with the counterparty to such

 

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terminated Contract, on the same terms and with the same provisions as such terminated Contract.  Each Debtor agrees that such Debtor shall have no rights whatsoever with respect to any Successor Agreement.

 

6.4           Pledged Securities.

 

(a)           If the Administrative Agent shall determine to exercise the right to sell any or all of the Pledged Securities pursuant to this Section 6.4, and if in the opinion of the Administrative Agent it is necessary to have the Pledged Securities, or that portion thereof to be sold, registered under the provisions of the Securities Act of 1933 (the “Securities Act”), as amended, the relevant Debtor will cause the issuer thereof to (i) execute and deliver, and cause the directors and officers of such issuer to execute and deliver, all such instruments and documents, and do or cause to be done all such other acts as may be, in the opinion of the Administrative Agent, necessary to register the Pledged Securities, or that portion thereof to be sold, under the provisions of the Securities Act, (ii) use its best efforts to cause the registration statement relating thereto to become effective and to remain effective for a period of one year from the date of the first public offering of the Pledged Securities, or that portion thereof to be sold, and (iii) make all amendments thereto and/or to the related prospectus which, in the opinion of the Administrative Agent, are necessary, all in conformity with the requirements of the Securities Act and the rules and regulations of the Securities and Exchange Commission applicable thereto.  Each Debtor agrees to cause such issuer to comply with the provisions of the securities or “Blue Sky” laws of any and all jurisdictions which the Administrative Agent shall designate and to make available to its security holders, as soon as practicable, an earnings statement (which need not be audited) which will satisfy the provisions of Section 11(a) of the Securities Act.

 

(b)           Each Debtor recognizes that the Administrative Agent may be unable to effect a public sale of any or all the Pledged Securities, by reason of certain prohibitions contained in the Securities Act and applicable state securities laws or otherwise, and may be compelled to resort to one or more private sales thereof to a restricted group of purchasers which will be obliged to agree, among other things, to acquire such securities for their own account for investment and not with a view to the distribution or resale thereof.  Each Debtor acknowledges and agrees that any such private sale may result in prices and other terms less favorable than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner.  The Administrative Agent shall be under no obligation to delay a sale of any of the Pledged Securities for the period of time necessary to permit the issuer thereof to register such securities for public sale under the Securities Act, or under applicable state securities laws, even if such issuer would agree to do so.

 

(c)           Each Debtor agrees to use its best efforts to do or cause to be done all such other acts as may be necessary to make such sale or sales of all or any portion of the Pledged Securities pursuant to this Section 6.4 valid and binding and in compliance with any and all other applicable Laws.  Each Debtor further agrees that a breach of any of the covenants contained in this Section 6.4 will cause irreparable injury to the Administrative Agent and the holders of the Secured Obligations, that the Administrative Agent and the holders of the Secured Obligations have no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section 6.4 shall be specifically enforceable against such Debtor, and such Debtor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no Event of Default has occurred.

 

6.5           Foreclosure.

 

(a)           The Administrative Agent may foreclose on the Collateral in any manner permitted by the courts of or in the State of New York or the jurisdiction in which any Collateral is located.  If the Administrative Agent should institute a suit for the collection of the Secured Obligations and for the foreclosure of this Agreement, the Administrative Agent may at any time before the entry of a final judgment dismiss the same, and take any other action permitted by this Agreement.

 

(b)           To the extent permitted by law, the Administrative Agent may exercise all the foreclosure rights and remedies of a secured party under the UCC.  In connection therewith, the Administrative Agent may sell

 

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any Collateral at public or private sale, at the office of the Administrative Agent or elsewhere, for cash or credit and upon such other terms as the Administrative Agent deems commercially reasonable.  The Administrative Agent may sell any Collateral at one or more sales, and the security interest granted hereunder shall remain in effect as to the unsold portion of the Collateral.  Each Debtor agrees that to the extent permitted by law such sales may be made without notice.  If notice is required by law, each Debtor hereby deems ten days advance notice of the time and place of any public or private sale reasonable notification, recognizing that if any portion of the Collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, shorter notice may be reasonable.  The Administrative Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given.  The Administrative Agent may adjourn any sale by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was adjourned.  In the event that any sale hereunder is not completed or is defective in the opinion of the Administrative Agent, the Administrative Agent shall have the right to cause subsequent sales to be made hereunder.  Any statements of fact or other recitals made in any bill of sale, assignment, or other document representing any sale hereunder, including statements relating to the occurrence of an Event of Default, acceleration of the Secured Obligations, notice of the sale, the time, place, and terms of the sale, and other actions taken by the Administrative Agent in relation to the sale may be conclusively relied upon by the purchaser at any sale hereunder.  The Administrative Agent may delegate to any agent the performance of any acts in connection with any sale hereunder, including the sending of notices and the conduct of the sale.

 

6.6           Application of Proceeds.

 

(a)           Unless otherwise specified herein, any cash proceeds received by the Administrative Agent from the sale of, collection of, or other realization upon any part of the Collateral or any other amounts received by the Administrative Agent hereunder may be, at the reasonable discretion of the Administrative Agent (i) held by the Administrative Agent in one or more Collateral Accounts as cash collateral for the Secured Obligations or (ii) applied to the Secured Obligations.

 

(b)           Amounts applied to the Secured Obligations shall be applied in the following order:

 

First, to the payment of the costs and expenses of exercising the Administrative Agent’s rights hereunder, whether expressly provided for herein or otherwise; and

 

Second, to the payment of the Secured Obligations in the order set forth in Section 8.03 of the Credit Agreement.

 

Any surplus cash collateral or cash proceeds held by the Administrative Agent after payment in full of the Secured Obligations and the termination of any commitments of the Administrative Agent to any Debtor shall be paid over to such Debtor or to whomever may be lawfully entitled to receive such surplus.

 

6.7           Waiver of Certain Rights.  To the full extent each Debtor may do so, such Debtor shall not insist upon, plead, claim, or take advantage of any law providing for any appraisement, valuation, stay, extension, or redemption, and such Debtor hereby waives and releases the same, and all rights to a marshaling of the assets of such Debtor, including the Collateral of such Debtor, or to a sale in inverse order of alienation in the event of foreclosure of the liens and security interests hereby created.  Such Debtor shall not assert any right under any law pertaining to the marshaling of assets, sale in inverse order of alienation, the administration of estates of decedents or other matters whatever to defeat, reduce, or affect the right of the Administrative Agent under the terms of this Agreement.

 

6.8           Remedies Cumulative.  The Administrative Agent’s remedies under this Agreement and the Loan Documents to which any Debtor is a party shall be cumulative, and no delay in enforcing this Agreement and the Loan Documents to which any Debtor is a party shall act as a waiver of the Administrative Agent’s rights hereunder.

 

6.9           Reinstatement.  The obligations of each Debtor under this Agreement shall continue to be effective or automatically be reinstated, as the case may be, if at any time payment of any of the Secured Obligations

 

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is rescinded or otherwise must be restored or returned by the Administrative Agent upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of any Debtor or any other obligor or otherwise, all as though such payment had not been made.

 

SECTION 7.

 

MISCELLANEOUS

 

7.1           Amendments.  None of the terms or provisions of this Agreement may be waived, amended, supplemented or otherwise modified except in accordance with Section 10.01 of the Credit Agreement.  No consent of any Hedge Bank or any Cash Management Bank (except in such Person’s capacity as a Lender, if applicable) shall be required for any waiver, amendment, supplement or other modification to this Agreement.

 

7.2           Notices.  All notices, requests and demands to or upon the Administrative Agent or any Debtor hereunder shall be effected in the manner provided for in Section 10.02 of the Credit Agreement.  All notices, requests and demands hereunder to any Debtor shall be given to it at its address or telecopy number provided in Schedule 10.02 of the Credit Agreement.

 

7.3           No Waiver by Course of Conduct; Cumulative Remedies; No Duty.  No failure to exercise, nor any delay in exercising, on the part of the Administrative Agent, any right, power or privilege hereunder shall operate as a waiver thereof.  No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  A waiver by the Administrative Agent of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy that the Administrative Agent would otherwise have on any future occasion.  The rights and remedies provided herein and in the other Loan Documents are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law.  The powers conferred on Administrative Agent under this Agreement are solely to protect Administrative Agent’s rights under this Agreement and shall not impose any duty upon it to exercise any such powers.  Except as elsewhere provided hereunder, Administrative Agent shall have no duty as to any of the Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to the Collateral.

 

7.4           Enforcement Expenses; Indemnification.

 

(a)           Each Debtor agrees to pay all costs and expenses incurred in connection with the enforcement, attempted enforcement, exercise, or preservation of any rights or remedies under this Agreement or the other Loan Documents to which such Debtor is a party (including all such costs and expenses incurred during any “workout” or restructuring in respect of the Obligations and during any legal proceeding, including any proceeding under any Debtor Relief Law), including all attorneys’ fees.

 

(b)           Each Debtor agrees to pay, and to indemnify and hold the Administrative Agent and each holder of the Secured Obligations harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable with respect to any of the Collateral or in connection with any of the transactions contemplated by this Agreement.

 

(c)           Each Debtor agrees to pay, and to indemnify and hold the Administrative Agent, each holder of the Secured Obligations, and their respective Affiliates, directors, officers, employees, counsel, agents and attorneys-in-fact (collectively the “Indemnitees”) harmless from, any and all liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses and disbursements (including attorneys’ fees) of any kind or nature whatsoever which may at any time be imposed on, incurred by or asserted against any such Indemnitee in any way relating to or arising out of or in connection with the execution, delivery, enforcement, performance or administration of any Guaranty, this Agreement, or any Loan Document to which such Debtor is a party, in all cases, whether or not caused by or arising, in whole or in part, out of the negligence of the Indemnitee; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses or

 

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disbursements (i) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee, or (ii) result from a claim brought by any Debtor against an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under any other Loan Document, if such Debtor has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction.

 

(d)           All amounts due under this Section 7.4 shall be payable upon demand therefor. The agreements in this Section shall survive repayment of the Obligations and all other amounts payable under the Credit Agreement and the other Loan Documents.

 

7.5           Successors and Assigns.  This Agreement shall be binding upon the successors and assigns of each Debtor and shall inure to the benefit of the Administrative Agent and the holders of the Secured Obligations and their successors and assigns; provided that no Debtor may assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the Administrative Agent.

 

7.6           Set-Off.  Each Debtor hereby irrevocably authorizes the Administrative Agent and each Lender at any time and from time to time upon the occurrence and during the continuance of any Event of Default, without prior notice to such Debtor or any other Loan Party, any such notice being waived by such Debtor to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by, and other indebtedness at any time owing by, such Lender to or for the credit or the account of the respective Debtor against any and all Obligations owing to such Lender under the Credit Agreement, any Guaranty, or under any other Loan Document, now or hereafter existing, irrespective of whether or not the Administrative Agent or such Lender shall have made demand for payment and although such Obligations may be contingent or unmatured or denominated in a currency different from that of the applicable deposit or indebtedness.  Any such set-off shall be subject to the notice requirements of Section 10.08 of the Credit Agreement; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application.

 

7.7           Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

7.8           Severability.  If any provision of this Agreement is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions.  The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

7.9           Section Headings.  The Section headings used in this Agreement are included for convenience of reference only and shall not affect the interpretation of this Agreement.

 

7.10         Integration.  This Agreement, together with the other Loan Documents, comprises the complete and integrated agreement of the parties on the subject matter hereof and thereof and supersedes all prior agreements, written or oral, on such subject matter.

 

7.11         GOVERNING LAW ETC.

 

(a)           GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

(b)           SUBMISSION TO JURISDICTION.  EACH DEBTOR IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK CITY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR

 

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RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.  EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT, ANY LENDER OR THE L/C ISSUER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

(c)           WAIVER OF VENUE.  EACH DEBTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

(d)           SERVICE OF PROCESS.  EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 7.2.  NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

 

(e)           WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

7.12         Additional Debtors.  Each Subsidiary of the Borrower that is required to become a party to this Agreement after the date hereof pursuant to Section 6.12 of the Credit Agreement shall become a Debtor for all purposes of this Agreement upon execution and delivery by such Subsidiary of an instrument in the form of Annex I hereto.

 

7.13         Termination; Releases.

 

(a)           This Security Agreement and the security interest created hereby shall terminate when the Aggregate Commitments have been fully and finally terminated and all the Secured Obligations have been indefeasibly paid in full (other than contingent indemnification obligations and obligations and liabilities under Secured Cash Management Agreements and Secured Hedge Agreements as to which arrangements satisfactory to the applicable Cash Management Bank or Hedge Bank shall have been made) and all Letters of Credit have expired or terminated (other than Letters of Credit as to which other arrangements satisfactory to the Administrative Agent and the L/C Issuer shall have been made), at which time the Administrative Agent shall execute and deliver to the Debtors or the Debtors’ designee, at the Debtors’ expense, all Uniform Commercial Code termination statements and similar documents which the Debtors shall reasonably request from time to time to evidence such termination.  Any

 

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execution and delivery of termination statements or documents pursuant to this Section 7.13(a) shall be without recourse to or warranty by the Administrative Agent.

 

(b)           In the event that all the Equity Interests of any Debtor shall be sold, transferred or otherwise disposed of to a person that is not an Affiliate of the Borrower in accordance with the terms of the Credit Agreement, at the request and sole expense of such Debtor,  the Administrative Agent shall promptly execute and deliver to such Debtor all releases or other documents reasonably necessary or desirable for the release of such Debtor from its obligations hereunder and of the security interests created hereby on such Equity Interests and in the Collateral of such Debtor; provided  that, to the extent required by the Credit Agreement, the Required Lenders or, if required by the terms of the Credit Agreement, such other requisite number of Lenders, shall have consented to such sale, transfer or other disposition and the terms of such consent did not provide otherwise.  If any of the Collateral shall be sold, transferred or otherwise disposed of by any Debtor in a transaction permitted by the Credit Agreement, at the request and sole expense of such Debtor,  the Administrative Agent shall promptly execute and deliver to such Debtor all releases or other documents reasonably necessary or desirable for the release of the security interest created hereby on such Collateral; provided  that, to the extent required by the Credit Agreement, the Required Lenders or, if required by the terms of the Credit Agreement, such other requisite number of Lenders, shall have consented to such sale, transfer or other disposition and the terms of such consent did not provide otherwise; provided, further, that such security interest will continue to attach to all proceeds of such sales or other dispositions.  Any execution and delivery of termination statements or documents pursuant to this Section 7.13(b) shall be without recourse to or warranty by the Administrative Agent.

 

(c)           No consent of any Hedge Bank or any Cash Management Bank (except in such Person’s capacity as a Lender, if applicable) shall be required for any release of Collateral or Debtors pursuant to this Section.

 

(d)           Each Debtor acknowledges that it is not authorized to file any financing statement or amendment or termination statement with respect to any financing statement originally filed in connection herewith without the prior written consent of the Administrative Agent subject to such Debtor’s rights under Section 9-509(d)(2) of the UCC.

 

[Signature pages follow.]

 

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EXECUTED as of the date first above written.

 

 

	
 
    	
BANK OF AMERICA, N.A., as   Administrative Agent
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Antonikia L. Thomas
    
	
 
    	
 
    
	
 
    	
Name: Antonikia L. Thomas
    
	
 
    	
Title: Assistant Vice President
    

 

 

	
 
    	
GLOBAL GEOPHYSICAL SERVICES, INC., a Delaware corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ P. Mathew Verghese
    
	
 
    	
 
    
	
 
    	
Name: P. Mathew Verghese
    
	
 
    	
Title: Senior VP and Chief Finacial Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
AUTOSEIS, INC., a Texas   corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ P. Mathew Verghese
    
	
 
    	
 
    
	
 
    	
Name: P. Mathew Verghese
    
	
 
    	
Title: Senior VP and Chief Finacial Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
GGS INTERNATIONAL HOLDINGS, INC., a Texas corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ P. Mathew Verghese
    
	
 
    	
 
    
	
 
    	
Name: P. Mathew Verghese
    
	
 
    	
Title: Senior VP and Chief Finacial Officer

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