Exhibit 10.1

 

FORM OF WARRANT

 

ION GEOPHYSICAL CORPORATION

 

WARRANT TO PURCHASE COMMON STOCK

 

Warrant No.:

Number of Shares of Common Stock:

Date of Issuance:  February 21, 2018 (“Issuance Date”)

 

Ion Geophysical Corporation, a company organized under the laws of Delaware (the
“Company”), hereby certifies that, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, [HOLDER], the
registered holder hereof or its permitted assigns (the “Holder”), is entitled,
subject to the terms set forth below, to purchase from the Company, at the
Exercise Price (as defined below) then in effect, at any time or times on or
after February 21, 2018 (the “Initial Exercisability Date”), but not after 11:59
p.m., New York time, on the Expiration Date, (as defined below),               
(             )fully paid non-assessable shares of Common Stock (as defined
below), subject to adjustment as provided herein (the “Warrant Shares”).  Except
as otherwise defined herein, capitalized terms in this Warrant to Purchase
Common Stock (including any Warrants to Purchase Common Stock issued in
exchange, transfer or replacement hereof, this “Warrant”), shall have the
meanings set forth in Section 16.  This Warrant is one of the Warrants to
Purchase Common Stock (the “Warrants”) issued pursuant to (i) that certain
Underwriting Agreement, dated as of February 16, 2018 (the “Subscription Date”)
by and between the Company and Oppenheimer & Co. Inc., as representative of the
underwriters named therein (ii) the Company’s Registration Statement on Form S-3
(File number 333-213769) (the “Registration Statement”) and (iii) the Company’s
prospectus supplement dated as of February 16, 2018.

 

1.                                      EXERCISE OF WARRANT.

 

(a)         Mechanics of Exercise.  Subject to the terms and conditions hereof
(including, without limitation, the limitations set forth in Section 1(f)), this
Warrant may be exercised by the Holder at any time or times on or after the
Initial Exercisability Date, in whole or in part, by delivery (whether via
facsimile, electronic mail or otherwise) of a written notice, in the form
attached hereto as Exhibit A (the “Exercise Notice”), of the Holder’s election
to exercise this Warrant.  Within one (1) Trading Day following the delivery of
the Exercise Notice, the Holder shall make payment to the Company of an amount
equal to the Exercise Price in effect on the date of such exercise multiplied by
the number of Warrant Shares as to which this Warrant is being exercised (the
“Aggregate Exercise Price”) in cash by wire transfer of immediately available
funds or, if the provisions of Section 1(d) are applicable, by notifying the
Company that this Warrant is being exercised pursuant to a Cashless Exercise (as
defined in Section 1(d)).  The Holder shall not be required to deliver the
original Warrant in order to effect an exercise hereunder, nor shall any
ink-original signature or medallion guarantee (or other type of guarantee or
notarization) with respect to any Exercise Notice be required.  Execution and
delivery of the Exercise Notice with respect to less than all of the Warrant
Shares shall have the

 

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same effect as cancellation of the original Warrant and issuance of a new
Warrant evidencing the right to purchase the remaining number of Warrant Shares
and the Holder shall not be required to physically surrender this Warrant to the
Company until the Holder has purchased all of the Warrant Shares available
hereunder and the Warrant has been exercised in full, in which case, the Holder
shall surrender this Warrant to the Company for cancellation within three
(3) Trading Days of the date on which the final Notice of Exercise is delivered
to the Company.  On or before the first (1st) Trading Day following the date on
which the Holder has delivered the applicable Exercise Notice, the Company shall
transmit by facsimile or electronic mail an acknowledgment of confirmation of
receipt of the Exercise Notice, in the form attached to the Exercise Notice, to
the Holder and the Company’s transfer agent (the “Transfer Agent”).  So long as
the Holder delivers the Aggregate Exercise Price (or notice of a Cashless
Exercise) on or prior to the first (1st) Trading Day following the date on which
the Exercise Notice has been delivered to the Company, then on or prior to the
earlier of (i) the second (2nd) Trading Day and (ii) the number of Trading Days
comprising the Standard Settlement Period, in each case following the date on
which the Exercise Notice has been delivered to the Company, or, if the Holder
does not deliver the Aggregate Exercise Price (or notice of a Cashless Exercise)
on or prior to the first (1st) Trading Day following the date on which the
Exercise Notice has been delivered to the Company, then on or prior to the first
(1st) Trading Day following the date on which the Aggregate Exercise Price (or
notice of a Cashless Exercise) is delivered (such earlier date, the “Share
Delivery Date”), the Company shall (X) provided that the Transfer Agent is
participating in The Depository Trust Company (“DTC”) Fast Automated Securities
Transfer Program, credit such aggregate number of Warrant Shares to which the
Holder is entitled pursuant to such exercise to the Holder’s or its designee’s
balance account with DTC through its Deposit / Withdrawal At Custodian system,
or (Y) if the Transfer Agent is not participating in the DTC Fast Automated
Securities Transfer Program, issue and dispatch by overnight courier to the
address as specified in the Exercise Notice, a certificate, registered in the
name of the Holder or its designee, for the number of Warrant Shares to which
the Holder is entitled pursuant to such exercise.  The Company shall be
responsible for all fees and expenses of the Transfer Agent and all fees and
expenses with respect to the issuance of Warrant Shares via DTC, if any,
including without limitation for same day processing.  Upon delivery of the
Exercise Notice, the Holder shall be deemed for all corporate purposes to have
become the holder of record and beneficial owner of the Warrant Shares with
respect to which this Warrant has been exercised, irrespective of the date such
Warrant Shares are credited to the Holder’s DTC account or the date of delivery
of the certificates evidencing such Warrant Shares, as the case may be.  If this
Warrant is physically delivered to the Company in connection with any exercise
pursuant to this Section 1(a) and the number of Warrant Shares represented by
this Warrant submitted for exercise is greater than the number of Warrant Shares
being acquired upon an exercise, then the Company shall as soon as practicable
and in no event later than three (3) Trading Days after any exercise and at its
own expense, issue and deliver to the Holder (or its designee) a new Warrant (in
accordance with Section 7(d)) representing the right to purchase the number of
Warrant Shares issuable immediately prior to such exercise under this Warrant,
less the number of Warrant Shares with respect to which this Warrant is
exercised.  No fractional Warrant Shares are to be issued upon the exercise of
this Warrant, but rather the number of Warrant Shares to be issued shall be
rounded to the nearest whole number.  The Company shall pay any and all
transfer, stamp, issuance and similar taxes, costs and expenses (including,
without limitation, fees and

 

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expenses of the Transfer Agent) which may be payable with respect to the
issuance and delivery of Warrant Shares upon exercise of this Warrant.  The
Company’s obligations to issue and deliver Warrant Shares in accordance with the
terms and subject to the conditions hereof are absolute and unconditional,
irrespective of any action or inaction by the Holder to enforce the same, any
waiver or consent with respect to any provision hereof, the recovery of any
judgment against any Person or any action to enforce the same, or any setoff,
counterclaim, recoupment, limitation or termination; provided, however, that the
Company shall not be required to deliver Warrant Shares with respect to an
exercise prior to the Holder’s delivery of the Aggregate Exercise Price (or
notice of a Cashless Exercise) with respect to such exercise.

 

(b)         Exercise Price.  For purposes of this Warrant, “Exercise Price”
means $33.60 per share, subject to adjustment as provided herein.

 

(c)          Company’s Failure to Timely Deliver Securities.  If either (I) the
Company shall fail for any reason or for no reason on or prior to the applicable
Share Delivery Date, (x) if the Transfer Agent is not participating in the DTC
Fast Automated Securities Transfer Program, to issue to the Holder a certificate
for the number of shares of Common Stock to which the Holder is entitled and
register such Common Stock on the Company’s share register or (y) if the
Transfer Agent is participating in the DTC Fast Automated Securities Transfer
Program, to credit the Holder’s balance account with DTC, for such number of
shares of Common Stock to which the Holder is entitled upon the Holder’s
exercise of this Warrant or (II) a registration statement (which may be the
Registration Statement) covering the issuance or resale of the Warrant Shares
that are the subject of the Exercise Notice (the “Exercise Notice Warrant
Shares”) is not available for the issuance or resale, as applicable, of such
Exercise Notice Warrant Shares and (x) the Company fails to promptly, but in no
event later than one (1) Business Day after such registration statement becomes
unavailable, to so notify the Holder and (y) the Company is unable to deliver
the Exercise Notice Warrant Shares electronically without any restrictive legend
by crediting such aggregate number of Exercise Notice Warrant Shares to the
Holder’s or its designee’s balance account with DTC through its Deposit /
Withdrawal At Custodian system (the event described in the immediately foregoing
clause (II) is hereinafter referred to as a “Notice Failure” and, together with
the event described in clause (I) above, an “Exercise Failure”), then, in
addition to all other remedies available to the Holder, if on or prior to the
applicable Share Delivery Date either (I) if the Transfer Agent is not
participating in the DTC Fast Automated Securities Transfer Program, the Company
shall fail to issue and deliver a certificate to the Holder and register such
shares of Common Stock on the Company’s share register or, if the Transfer Agent
is participating in the DTC Fast Automated Securities Transfer Program, credit
the Holder’s balance account with DTC for the number of shares of Common Stock
to which the Holder is entitled upon the Holder’s exercise hereunder or pursuant
to the Company’s obligation pursuant to clause (ii) below or (II) a Notice
Failure occurs, and if on or after such Trading Day the Holder purchases (in an
open market transaction or otherwise) Common Stock to deliver in satisfaction of
a sale by the Holder of shares of Common Stock issuable upon such exercise that
the Holder anticipated receiving from the Company (a “Buy-In”), then the Company
shall, within three (3) Trading Days after the Holder’s request and in the
Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the
Holder’s total purchase price (including brokerage commissions and other
out-of-pocket expenses, if any) for

 

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the shares of Common Stock so purchased (the “Buy-In Price”), at which point the
Company’s obligation to deliver such certificate (and to issue such shares of
Common Stock) or credit such Holder’s balance account with DTC for such shares
of Common Stock shall terminate, or (ii) promptly honor its obligation to
deliver to the Holder a certificate or certificates representing such shares of
Common Stock or credit such Holder’s balance account with DTC, as applicable,
and pay cash to the Holder in an amount equal to the excess (if any) of the
Buy-In Price over the product of (A) such number of shares of Common Stock,
times (B) any trading price of the Common Stock selected by the Holder in
writing as in effect at any time during the period beginning on the applicable
Exercise Date and ending on the applicable Share Delivery Date. Nothing shall
limit the Holder’s right to pursue any other remedies available to it hereunder,
at law or in equity, including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Company’s failure to
timely deliver certificates representing Warrant Shares (or to electronically
deliver such Warrant Shares) upon the exercise of this Warrant as required
pursuant to the terms hereof.  While this Warrant is outstanding, the Company
shall cause its transfer agent to participate in the DTC Fast Automated
Securities Transfer Program.  In addition to the foregoing rights, (i) if the
Company fails to deliver the applicable number of Warrant Shares upon an
exercise pursuant to Section 1 by the applicable Share Delivery Date, then the
Holder shall have the right to rescind such exercise in whole or in part and
retain and/or have the Company return, as the case may be, any portion of this
Warrant that has not been exercised pursuant to such Exercise Notice; provided
that the rescission of an exercise shall not affect the Company’s obligation to
make any payments that have accrued prior to the date of such notice pursuant to
this Section 1(c) or otherwise, and (ii) if a registration statement (which may
be the Registration Statement) covering the issuance or resale of the Warrant
Shares that are subject to an Exercise Notice is not available for the issuance
or resale, as applicable, of such Exercise Notice Warrant Shares and the Holder
has submitted an Exercise Notice prior to receiving notice of the
non-availability of such registration statement and the Company has not already
delivered the Warrant Shares underlying such Exercise Notice electronically
without any restrictive legend by crediting such aggregate number of Warrant
Shares to which the Holder is entitled pursuant to such exercise to the Holder’s
or its designee’s balance account with DTC through its Deposit / Withdrawal At
Custodian system, the Holder shall have the option, by delivery of notice to the
Company, to (x) rescind such Exercise Notice in whole or in part and retain or
have returned, as the case may be, any portion of this Warrant that has not been
exercised pursuant to such Exercise Notice; provided that the rescission of an
Exercise Notice shall not affect the Company’s obligation to make any payments
that have accrued prior to the date of such notice pursuant to this
Section 1(c) or otherwise, and/or (y) switch some or all of such Exercise Notice
from a cash exercise to a Cashless Exercise.

 

(d)         Cashless Exercise.  Notwithstanding anything contained herein to the
contrary, if a registration statement (which may be the Registration Statement)
covering the issuance or resale of the Exercise Notice Warrant Shares is not
available for the issuance or resale, as applicable, of such Exercise Notice
Warrant Shares, the Holder may, in its sole discretion, exercise this Warrant in
whole or in part and, in lieu of making the cash payment otherwise contemplated
to be made to the Company upon such exercise in payment of the Aggregate
Exercise Price, elect instead to receive upon such exercise the “Net Number” of
shares of Common Stock determined according to the following formula (a
“Cashless Exercise”):

 

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Net Number = (A x B) - (A x C)

B

 

For purposes of the foregoing formula:

 

A= the total number of shares with respect to which this Warrant is then being
exercised.

 

B= as applicable: (i) the Closing Sale Price of the Common Stock on the Trading
Day immediately preceding the date of the applicable Exercise Notice if such
Exercise Notice is (1) both executed and delivered pursuant to
Section 1(a) hereof on a day that is not a Trading Day or (2) both executed and
delivered pursuant to Section 1(a) hereof on a Trading Day prior to the opening
of “regular trading hours” (as defined in Rule 600(b)(64) of Regulation NMS
promulgated under the federal securities laws) on such Trading Day, (ii) at the
option of the Holder, either (y) the Weighted Average Price on the Trading Day
immediately preceding the date of the applicable Notice of Exercise or (z)   the
Bid Price of the Common Stock as of the time of the Holder’s execution of the
applicable Exercise Notice if such Exercise Notice is executed during “regular
trading hours” on a Trading Day and is delivered within two (2) hours thereafter
(including until two (2) hours after the close of “regular trading hours” on a
Trading Day) pursuant to Section 1(a) hereof or (iii) the Closing Sale Price of
the Common Stock on the date of the applicable Exercise Notice if the date of
such Exercise Notice is a Trading Day and such Exercise Notice is both executed
and delivered pursuant to Section 1(a) hereof after the close of “regular
trading hours” on such Trading Day.

 

C= the Exercise Price then in effect for the applicable Warrant Shares at the
time of such exercise.

 

If Warrant Shares are issued in such a cashless exercise, the Company
acknowledges and agrees that in accordance with Section 3(a)(9) of the
Securities Act of 1933, as amended, the Warrant Shares shall take on the
registered characteristics of the Warrants being exercised, and the holding
period of the Warrants being exercised may be tacked on to the holding period of
the Warrant Shares.  The Company agrees not to take any position contrary to
this Section 1(d).

 

(e)          Disputes.  In the case of a dispute as to the determination of the
Exercise Price or the arithmetic calculation of the Warrant Shares, the Company
shall promptly issue to the Holder the number of Warrant Shares that are not
disputed and resolve such dispute in accordance with Section 11.

 

(f)           Beneficial Ownership.  Notwithstanding anything to the contrary
contained herein, the Company shall not effect the exercise of any portion of
this Warrant, and

 

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the Holder shall not have the right to exercise any portion of this Warrant,
pursuant to the terms and conditions of this Warrant and any such exercise shall
be null and void and treated as if never made, to the extent that after giving
effect to such exercise, the Holder together with the other Attribution Parties
collectively would beneficially own in excess of [4.99][9.99]% (the “Maximum
Percentage”) of the number of shares of Common Stock outstanding immediately
after giving effect to such exercise.  For purposes of the foregoing sentence,
the aggregate number of shares of Common Stock beneficially owned by the Holder
and the other Attribution Parties shall include the number of shares of Common
Stock held by the Holder and all other Attribution Parties plus the number of
shares of Common Stock issuable upon exercise of this Warrant with respect to
which the determination of such sentence is being made, but shall exclude the
number of shares of Common Stock which would be issuable upon (A) exercise of
the remaining, unexercised portion of this Warrant beneficially owned by the
Holder or any of the other Attribution Parties and (B) exercise or conversion of
the unexercised or unconverted portion of any other securities of the Company
(including, without limitation, any convertible notes or convertible preferred
stock or warrants, including the other Warrants) beneficially owned by the
Holder or any other Attribution Party subject to a limitation on conversion or
exercise analogous to the limitation contained in this Section 1(f).  For
purposes of this Section 1(f), beneficial ownership shall be calculated in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended
(the “1934 Act”).  For purposes of this Warrant, in determining the number of
outstanding shares of Common Stock the Holder may acquire upon the exercise of
this Warrant without exceeding the Maximum Percentage, the Holder may rely on
the number of outstanding shares of Common Stock as reflected in (x) the
Company’s most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q
and Current Reports on Form 8-K or other public filing with the Securities and
Exchange Commission (the “SEC”), as the case may be, (y) a more recent public
announcement by the Company or (3) any other written notice by the Company or
the Transfer Agent setting forth the number of shares of Common Stock
outstanding (the “Reported Outstanding Share Number”).  If the Company receives
an Exercise Notice from the Holder at a time when the actual number of
outstanding shares of Common Stock is less than the Reported Outstanding Share
Number, the Company shall (i) notify the Holder in writing of the number of
shares of Common Stock then outstanding and, to the extent that such Exercise
Notice would otherwise cause the Holder’s beneficial ownership, as determined
pursuant to this Section 1(f), to exceed the Maximum Percentage, the Holder must
notify the Company of a reduced number of Warrant Shares to be purchased
pursuant to such Exercise Notice (the number of shares by which such purchase is
reduced, the “Reduction Shares”) and (ii) as soon as reasonably practicable, the
Company shall return to the Holder any exercise price paid by the Holder for the
Reduction Shares.  For any reason at any time, upon the written or oral request
of the Holder, the Company shall within one (1) Business Day confirm orally and
in writing or by electronic mail to the Holder the number of shares of Common
Stock then outstanding.  In any case, the number of outstanding shares of Common
Stock shall be determined after giving effect to the conversion or exercise of
securities of the Company, including this Warrant, by the Holder and any other
Attribution Party since the date as of which the Reported Outstanding Share
Number was reported.  In the event that the issuance of Common Stock to the
Holder upon exercise of this Warrant results in the Holder and the other
Attribution Parties being deemed to beneficially own, in the aggregate, more
than the Maximum Percentage of the number of outstanding shares of Common Stock
(as determined under Section

 

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13(d) of the 1934 Act), the number of shares so issued by which the Holder’s and
the other Attribution Parties’ aggregate beneficial ownership exceeds the
Maximum Percentage (the “Excess Shares”) shall be deemed null and void and shall
be cancelled ab initio, and the Holder shall not have the power to vote or to
transfer the Excess Shares.  As soon as reasonably practicable after the
issuance of the Excess Shares has been deemed null and void, the Company shall
return to the Holder the exercise price paid by the Holder for the Excess
Shares.  Upon delivery of a written notice to the Company, the Holder may from
time to time increase or decrease the Maximum Percentage to any other percentage
not in excess of [4.99][9.99]% as specified in such notice; provided that
(i) any such increase in the Maximum Percentage will not be effective until the
sixty-first (61st) day after such notice is delivered to the Company and
(ii) any such increase or decrease will apply only to the Holder and the other
Attribution Parties and not to any other holder of Warrants that is not an
Attribution Party of the Holder.  For purposes of clarity, the shares of Common
Stock issuable pursuant to the terms of this Warrant in excess of the Maximum
Percentage shall not be deemed to be beneficially owned by the Holder for any
purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the 1934
Act.  No prior inability to exercise this Warrant pursuant to this paragraph
shall have any effect on the applicability of the provisions of this paragraph
with respect to any subsequent determination of exercisability.  The provisions
of this paragraph shall be construed and implemented in a manner otherwise than
in strict conformity with the terms of this Section 1(f) to the extent necessary
to correct this paragraph or any portion of this paragraph which may be
defective or inconsistent with the intended beneficial ownership limitation
contained in this Section 1(f) or to make changes or supplements necessary or
desirable to properly give effect to such limitation.  The limitation contained
in this paragraph may not be waived and shall apply to a successor holder of
this Warrant.

 

(g)          Required Reserve Amount.  So long as this Warrant remains
outstanding, the Company shall at all times keep reserved for issuance under
this Warrant a number of shares of Common Stock at least equal to 100% of the
maximum number of shares of Common Stock as shall be necessary to satisfy the
Company’s obligation to issue shares of Common Stock under the Warrants then
outstanding (without regard to any limitations on exercise) (the “Required
Reserve Amount”); provided that at no time shall the number of shares of Common
Stock reserved pursuant to this Section 1(g) be reduced other than in connection
with any exercise of Warrants or such other event covered by
Section 2(c) below.  The Required Reserve Amount (including, without limitation,
each increase in the number of shares so reserved) shall be allocated pro rata
among the holders of the Warrants based on the number of shares of Common Stock
issuable upon exercise of Warrants held by each holder thereof on the Issuance
Date (without regard to any limitations on exercise) (the “Authorized Share
Allocation”).  In the event that a holder shall sell or otherwise transfer any
of such holder’s Warrants, each transferee shall be allocated a pro rata portion
of such holder’s Authorized Share Allocation.  Any shares of Common Stock
reserved and allocated to any Person which ceases to hold any Warrants shall be
allocated to the remaining holders of Warrants, pro rata based on the number of
shares of Common Stock issuable upon exercise of the Warrants then held by such
holders thereof (without regard to any limitations on exercise).

 

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(h)         Insufficient Authorized Shares.  If at any time while this Warrant
remains outstanding the Company does not have a sufficient number of authorized
and unreserved shares of Common Stock to satisfy its obligation to reserve for
issuance the Required Reserve Amount (an “Authorized Share Failure”), then the
Company shall promptly take all action reasonably necessary to increase the
Company’s authorized shares of Common Stock to an amount sufficient to allow the
Company to reserve the Required Reserve Amount for this Warrant then
outstanding.  Without limiting the generality of the foregoing sentence, as soon
as practicable after the date of the occurrence of an Authorized Share Failure,
but in no event later than ninety (90) days after the occurrence of such
Authorized Share Failure, the Company shall hold a meeting of its stockholders
for the approval of an increase in the number of authorized shares of Common
Stock.  In connection with such meeting, the Company shall provide each
stockholder with a proxy statement and shall use its reasonable best efforts to
solicit its stockholders’ approval of such increase in authorized shares of
Common Stock and to cause its board of directors to recommend to the
stockholders that they approve such proposal.  Notwithstanding the foregoing, if
any such time of an Authorized Share Failure, the Company is able to obtain the
written consent of a majority of the shares of its issued and outstanding shares
of Common Stock to approve the increase in the number of authorized shares of
Common Stock, the Company may satisfy this obligation by obtaining such consent
and submitting for filing with the SEC an Information Statement on Schedule 14C.

 

2.                                      ADJUSTMENT OF EXERCISE PRICE AND NUMBER
OF WARRANT SHARES.  The Exercise Price and the number of Warrant Shares shall be
adjusted from time to time as follows:

 

(a)         Intentionally omitted.

 

(b)         Voluntary Adjustment By Company.  The Company may at any time during
the term of this Warrant reduce the then current Exercise Price to any amount
and for any period of time deemed appropriate by the Board of Directors of the
Company.

 

(c)          Adjustment Upon Subdivision or Combination of Common Stock.  If the
Company at any time on or after the Subscription Date subdivides (by any stock
split, stock dividend, recapitalization or otherwise) one or more classes of its
outstanding shares of Common Stock into a greater number of shares, the Exercise
Price in effect immediately prior to such subdivision will be proportionately
reduced and the number of Warrant Shares will be proportionately increased.  If
the Company at any time on or after the Subscription Date combines (by
combination, reverse stock split or otherwise) one or more classes of its
outstanding shares of Common Stock into a smaller number of shares, the Exercise
Price in effect immediately prior to such combination will be proportionately
increased and the number of Warrant Shares will be proportionately decreased. 
Any adjustment under this Section 2(c) shall become effective at the close of
business on the date the subdivision or combination becomes effective.

 

(d)         Other Events.  If any event occurs of the type contemplated by the
provisions of this Section 2 but not expressly provided for by such provisions
(including, without limitation, the granting of stock appreciation rights,
phantom stock rights or other rights with

 

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equity features), then the Company’s Board of Directors will make an appropriate
adjustment in the Exercise Price and the number of Warrant Shares, as mutually
determined by the Company’s Board of Directors and the Required Holders, so as
to protect the rights of the Holder; provided that no such adjustment pursuant
to this Section 2(d) will increase the Exercise Price or decrease the number of
Warrant Shares as otherwise determined pursuant to this Section 2.

 

3.                                      RIGHTS UPON DISTRIBUTION OF ASSETS.  In
addition to any adjustments pursuant to Section 2 above, if, on or after the
Subscription Date and on or prior to the Expiration Date, the Company shall
declare or make any dividend or other distribution of its assets (or rights to
acquire its assets) to holders of shares of Common Stock, by way of return of
capital or otherwise (including, without limitation, any distribution of cash,
stock or other securities, property, options, evidence of indebtedness or any
other assets by way of a dividend, spin off, reclassification, corporate
rearrangement, scheme of arrangement or other similar transaction) (a
“Distribution”), at any time after the issuance of this Warrant, then, in each
such case, the Holder shall be entitled to participate in such Distribution to
the same extent that the Holder would have participated therein if the Holder
had held the number of shares of Common Stock acquirable upon complete exercise
of this Warrant (without regard to any limitations or restrictions on exercise
of this Warrant, including without limitation, the Maximum Percentage)
immediately before the date on which a record is taken for such Distribution,
or, if no such record is taken, the date as of which the record holders of
shares of Common Stock are to be determined for the participation in such
Distribution (provided, however, that to the extent that the Holder’s right to
participate in any such Distribution would result in the Holder and the other
Attribution Parties exceeding the Maximum Percentage, then the Holder shall not
be entitled to participate in such Distribution to such extent (and shall not be
entitled to beneficial ownership of such shares of Common Stock as a result of
such Distribution (and beneficial ownership) to such extent) and the portion of
such Distribution shall be held in abeyance for the benefit of the Holder until
such time or times as its right thereto would not result in the Holder and the
other Attribution Parties exceeding the Maximum Percentage, at which time or
times the Holder shall be granted such Distribution (and any Distributions
declared or made on such initial Distribution or on any subsequent Distribution
held similarly in abeyance) to the same extent as if there had been no such
limitation).

 

4.                                      PURCHASE RIGHTS; FUNDAMENTAL
TRANSACTIONS.

 

(a)                                 Purchase Rights.  In addition to any
adjustments pursuant to Section 2 above, if at any time on or after the
Subscription Date and on or prior to the Expiration Date the Company grants,
issues or sells any Options, Convertible Securities or rights to purchase stock,
warrants, securities or other property pro rata to the record holders of any
class of Common Stock (the “Purchase Rights”), then the Holder will be entitled
to acquire, upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which the Holder could have acquired if the Holder had held the
number of shares of Common Stock acquirable upon complete exercise of this
Warrant (without regard to any limitations or restrictions on exercise of this
Warrant, including without limitation, the Maximum Percentage) immediately
before the date on which a record is taken for the grant, issuance or sale of
such Purchase Rights, or, if no such record is taken, the date as of which the
record holders of Common Stock are to be

 

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determined for the grant, issuance or sale of such Purchase Rights (provided,
however, that to the extent that the Holder’s right to participate in any such
Purchase Right would result in the Holder and the other Attribution Parties
exceeding the Maximum Percentage, then the Holder shall not be entitled to
participate in such Purchase Right to such extent (and shall not be entitled to
beneficial ownership of such Common Stock as a result of such Purchase Right
(and beneficial ownership) to such extent) and such Purchase Right to such
extent shall be held in abeyance for the benefit of the Holder until such time
or times as its right thereto would not result in the Holder and the other
Attribution Parties exceeding the Maximum Percentage, at which time or times the
Holder shall be granted such right (and any Purchase Right granted, issued or
sold on such initial Purchase Right or on any subsequent Purchase Right to be
held similarly in abeyance) to the same extent as if there had been no such
limitation).

 

(b)                                 Fundamental Transaction.  The Company shall
not enter into or be party to a Fundamental Transaction unless the Successor
Entity assumes in writing all of the obligations of the Company under this
Warrant in accordance with the provisions of this Section 4(b), including
agreements to deliver to the Holder in exchange for this Warrant a security of
the Successor Entity evidenced by a written instrument substantially similar in
form and substance to this Warrant, including, without limitation, which is
exercisable for a corresponding number of shares of capital stock equivalent to
the shares of Common Stock acquirable and receivable upon exercise of this
Warrant (without regard to any limitations on the exercise of this Warrant)
prior to such Fundamental Transaction, and with an exercise price which applies
the exercise price hereunder to such shares of capital stock (but taking into
account the relative value of the shares of Common Stock pursuant to such
Fundamental Transaction and the value of such shares of capital stock, such
adjustments to the number of shares of capital stock and such exercise price
being for the purpose of protecting the economic value of this Warrant
immediately prior to the consummation of such Fundamental Transaction).  Upon
the consummation of each Fundamental Transaction, the Successor Entity shall
succeed to, and be substituted for the Company (so that from and after the date
of the applicable Fundamental Transaction, the provisions of this Warrant and
the other Transaction Documents referring to the “Company” shall refer instead
to the Successor Entity), and may exercise every right and power of the Company
and shall assume all of the obligations of the Company under this Warrant with
the same effect as if such Successor Entity had been named as the Company
herein. Upon consummation of each Fundamental Transaction, the Successor Entity
shall deliver to the Holder confirmation that there shall be issued upon
exercise of this Warrant at any time after the consummation of the applicable
Fundamental Transaction, in lieu of the shares of Common Stock (or other
securities, cash, assets or other property (except such items still issuable
under Sections 3 and 4(a) above, which shall continue to be receivable
thereafter)) issuable upon the exercise of this Warrant prior to the applicable
Fundamental Transaction, such shares of common stock (or its equivalent) of the
Successor Entity (including its Parent Entity) which the Holder would have been
entitled to receive upon the happening of the applicable Fundamental Transaction
had this Warrant been exercised immediately prior to the applicable Fundamental
Transaction (without regard to any limitations on the exercise of this Warrant),
as adjusted in accordance with the provisions of this Warrant. Notwithstanding
the foregoing, and without limiting Section 1(f) hereof, the Holder may elect,
at its sole option, by delivery of written notice to the Company to waive this
Section 4(b) to permit the Fundamental Transaction without the

 

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assumption of this Warrant.  In addition to and not in substitution for any
other rights hereunder, prior to the consummation of each Fundamental
Transaction pursuant to which holders of shares of Common Stock are entitled to
receive securities or other assets with respect to or in exchange for shares of
Common Stock (a “Corporate Event”), the Company shall make appropriate provision
to insure that the Holder will thereafter have the right to receive upon an
exercise of this Warrant at any time after the consummation of the applicable
Fundamental Transaction but prior to the Expiration Date, in lieu of the shares
of the Common Stock (or other securities, cash, assets or other property (except
such items still issuable under Sections 3 and 4(a) above, which shall continue
to be receivable thereafter)) issuable upon the exercise of the Warrant prior to
such Fundamental Transaction, such shares of stock, securities, cash, assets or
any other property whatsoever (including warrants or other purchase or
subscription rights) (collectively, the “Corporate Event Consideration”) which
the Holder would have been entitled to receive upon the happening of the
applicable Fundamental Transaction had this Warrant been exercised immediately
prior to the applicable Fundamental Transaction (without regard to any
limitations on the exercise of this Warrant). The provision made pursuant to the
preceding sentence shall be in a form and substance reasonably satisfactory to
the Holder. The provisions of this Section 4(b) shall apply similarly and
equally to successive Fundamental Transactions and Corporate Events.
Notwithstanding the foregoing, in the event of a Change of Control, at the
request of the Holder delivered before the 30th day after such Change of
Control, the Company (or the Successor Entity) shall purchase this Warrant from
the Holder by paying to the Holder, within five (5) Business Days after such
request (or, if later, on the effective date of the Change of Control), an
amount equal to the Black Scholes Value of the remaining unexercised portion of
this Warrant on the effective date of such Change of Control, payable in cash;
provided, however, that, if the Change of Control is not within the Company’s
control, including not approved by the Company’s Board of Directors, Holder
shall only be entitled to receive from the Company or any Successor Entity, as
of the date of consummation of such Change of Control, the same type or form of
consideration (and in the same proportion), at the Black Scholes Value of the
unexercised portion of this Warrant, that is being offered and paid to the
holders of Common Stock of the Company in connection with the Change of Control,
whether that consideration be in the form of cash, stock or any combination
thereof, or whether the holders of Common Stock are given the choice to receive
from among alternative forms of consideration in connection with the Change of
Control.

 

5.              NONCIRCUMVENTION.  The Company hereby covenants and agrees that
the Company will not, by amendment of its Certificate of Incorporation or
Bylaws, or through any reorganization, transfer of assets, consolidation,
merger, scheme of arrangement, dissolution, issuance or sale of securities, or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, and will at all times in good faith carry
out all of the provisions of this Warrant and take all action as may be required
to protect the rights of the Holder.  Without limiting the generality of the
foregoing, the Company (i) shall not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the Exercise
Price then in effect, (ii) shall take all such actions as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock upon the exercise of this Warrant, and
(iii) shall, so long as any of the Warrants are outstanding, take all action
necessary to reserve and keep available

 

11

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out of its authorized and unissued shares of Common Stock, solely for the
purpose of effecting the exercise of the Warrants, the number of shares of
Common Stock as shall from time to time be necessary to effect the exercise of
the Warrants then outstanding (without regard to any limitations on exercise).

 

6.                                      WARRANT HOLDER NOT DEEMED A
STOCKHOLDER.  Except as otherwise specifically provided herein, the Holder,
solely in such Person’s capacity as a holder of this Warrant, shall not be
entitled to vote or receive dividends or be deemed the holder of capital stock
of the Company for any purpose, nor shall anything contained in this Warrant be
construed to confer upon the Holder, solely in such Person’s capacity as the
Holder of this Warrant, any of the rights of a stockholder of the Company or any
right to vote, give or withhold consent to any corporate action (whether any
reorganization, issue of stock, reclassification of stock, consolidation,
merger, conveyance or otherwise), receive notice of meetings, receive dividends
or subscription rights, or otherwise, prior to the issuance to the Holder of the
Warrant Shares which such Person is then entitled to receive upon the due
exercise of this Warrant.  In addition, nothing contained in this Warrant shall
be construed as imposing any liabilities on the Holder to purchase any
securities (upon exercise of this Warrant or otherwise) or as a stockholder of
the Company, whether such liabilities are asserted by the Company or by
creditors of the Company.  Notwithstanding this Section 6, the Company shall
provide the Holder with copies of the same notices and other information given
to the stockholders of the Company generally, contemporaneously with the giving
thereof to the stockholders.

 

7.                                      REISSUANCE OF WARRANTS.

 

(a)         Transfer of Warrant.  If this Warrant is to be transferred, the
Holder shall surrender this Warrant to the Company, whereupon the Company will
forthwith issue and deliver upon the order of the Holder a new Warrant (in
accordance with Section 7(d)), registered as the Holder may request,
representing the right to purchase the number of Warrant Shares being
transferred by the Holder and, if less than the total number of Warrant Shares
then underlying this Warrant is being transferred, a new Warrant (in accordance
with Section 7(d)) to the Holder representing the right to purchase the number
of Warrant Shares not being transferred.

 

(b)         Lost, Stolen or Mutilated Warrant.  Upon receipt by the Company of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant, and, in the case of loss, theft or destruction,
of any indemnification undertaking by the Holder to the Company in customary
form (but without the obligation to post a bond) and, in the case of mutilation,
upon surrender and cancellation of this Warrant, the Company shall execute and
deliver to the Holder a new Warrant (in accordance with Section 7(d))
representing the right to purchase the Warrant Shares then underlying this
Warrant.

 

(c)          Exchangeable for Multiple Warrants.  This Warrant is exchangeable,
upon the surrender hereof by the Holder at the principal office of the Company,
for a new Warrant or Warrants (in accordance with Section 7(d)) representing in
the aggregate the right to purchase the number of Warrant Shares then underlying
this Warrant, and each such new

 

12

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Warrant will represent the right to purchase such portion of such Warrant Shares
as is designated by the Holder at the time of such surrender.

 

(d)         Issuance of New Warrants.  Whenever the Company is required to issue
a new Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall
be of like tenor with this Warrant, (ii) shall represent, as indicated on the
face of such new Warrant, the right to purchase the Warrant Shares then
underlying this Warrant (or in the case of a new Warrant being issued pursuant
to Section 7(a) or Section 7(c), the Warrant Shares designated by the Holder
which, when added to the number of shares of Common Stock underlying the other
new Warrants issued in connection with such issuance, does not exceed the number
of Warrant Shares then underlying this Warrant), (iii) shall have an issuance
date, as indicated on the face of such new Warrant which is the same as the
Issuance Date, and (iv) shall have the same rights and conditions as this
Warrant.

 

8.                                      NOTICES.  Whenever notice is required to
be given under this Warrant, including, without limitation, an Exercise Notice,
unless otherwise provided herein, such notice shall be given in writing, (i) if
delivered (a) from within the domestic United States, by first-class registered
or certified airmail, or nationally recognized overnight express courier,
postage prepaid, electronic mail or by facsimile or (b) from outside the United
States, by International Federal Express, electronic mail or facsimile, and
(ii) will be deemed given (A) if delivered by first-class registered or
certified mail domestic, three (3) Business Days after so mailed, (B) if
delivered by nationally recognized overnight carrier, one (1) Business Day after
so mailed, (C) if delivered by International Federal Express, two  (2) Business
Days after so mailed and (D) on the time of transmission, if delivered by
electronic mail to each of the email addresses specified in this Section 8 prior
to 5:00 p.m. (New York time) on a Trading Day, (E) the next Trading Day after
the date of transmission, if delivered by electronic mail to each of the email
addresses specified in this Section 8 on a day that is not a Trading Day or
later than 5:00 p.m. (New York time) on any Trading Day and (E) if delivered by
facsimile, upon electronic confirmation of receipt of such facsimile, and will
be delivered and addressed as follows:

 

(i)                                     if to the Company, to:

 

Ion Geophysical Corporation
2105 CityWest Blvd., Suite 100
Attention: General Counsel

Email:   matt.powers@iongeo.com

 

(ii)                                  if to the Holder, at such address or other
contact information delivered by the Holder to Company or as is on the books and
records of the Company.

 

The Company shall provide the Holder with prompt written notice of all actions
taken pursuant to this Warrant, including in reasonable detail a description of
such action and the reason therefor.  Without limiting the generality of the
foregoing, the Company will give written notice

 

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to the Holder (i) immediately upon any adjustment of the Exercise Price, setting
forth in reasonable detail, and certifying, the calculation of such adjustment
and (ii) at least fifteen (15) days prior to the date on which the Company
closes its books or takes a record (A) with respect to any dividend or
distribution upon the shares of Common Stock, (B) with respect to any grants,
issuances or sales of any Options, Convertible Securities or rights to purchase
stock, warrants, securities or other property to holders of shares of Common
Stock or (C) for determining rights to vote with respect to any Fundamental
Transaction, dissolution or liquidation; provided in each case that such
information shall be made known to the public prior to or in conjunction with
such notice being provided to the Holder.  It is expressly understood and agreed
that the time of exercise specified by the Holder in each Exercise Notice shall
be definitive and may not be disputed or challenged by the Company.

 

9.                                      AMENDMENT AND WAIVER.  Except as
otherwise provided herein, the provisions of this Warrant may be amended or
waived and the Company may take any action herein prohibited, or omit to perform
any act herein required to be performed by it, only if the Company has obtained
the written consent of the Holder.

 

10.                               GOVERNING LAW; JURISDICTION; JURY TRIAL.  This
Warrant shall be governed by and construed and enforced in accordance with, and
all questions concerning the construction, validity, interpretation and
performance of this Warrant shall be governed by, the internal laws of the State
of New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of New York. The Company hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in The City of New York,
Borough of Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper.  The Company hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to the Company at the address set forth in
Section 8(i) above or such other address as the Company subsequently delivers to
the Holder and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law. 
Nothing contained herein shall be deemed or operate to preclude the Holder from
bringing suit or taking other legal action against the Company in any other
jurisdiction to collect on the Company’s obligations to the Holder, to realize
on any collateral or any other security for such obligations, or to enforce a
judgment or other court ruling in favor of the Holder.  If either party shall
commence an action, suit or proceeding to enforce any provisions of this
Warrant, the prevailing party in such action, suit or proceeding shall be
reimbursed by the other party for their reasonable attorneys’ fees and other
costs and expenses incurred with the investigation, preparation and prosecution
of such action or proceeding.  THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT
IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE

 

14

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HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY
TRANSACTION CONTEMPLATED HEREBY.

 

11.                               DISPUTE RESOLUTION.  In the case of a dispute
as to the determination of the Exercise Price or the arithmetic calculation of
the Warrant Shares, the Company shall submit the disputed determinations or
arithmetic calculations via facsimile or electronic mail within two (2) Business
Days of receipt of the Exercise Notice or other event giving rise to such
dispute, as the case may be, to the Holder.  If the Holder and the Company are
unable to agree upon such determination or calculation of the Exercise Price or
the Warrant Shares within three (3) Business Days of such disputed determination
or arithmetic calculation being submitted to the Holder, then the Company shall,
within two (2) Business Days submit via facsimile or electronic mail (a) the
disputed determination of the Exercise Price to an independent, reputable
investment bank selected by the Company and approved by the Holder  or (b) the
disputed arithmetic calculation of the Warrant Shares to the Company’s
independent, outside accountant.  The Company shall cause at its expense the
investment bank or the accountant, as the case may be, to perform the
determinations or calculations and notify the Company and the Holder of the
results no later than ten (10) Business Days from the time it receives the
disputed determinations or calculations.  Such investment bank’s or accountant’s
determination or calculation, as the case may be, shall be binding upon all
parties absent demonstrable error.

 

12.                               REMEDIES, OTHER OBLIGATIONS, BREACHES AND
INJUNCTIVE RELIEF.  The remedies provided in this Warrant shall be cumulative
and in addition to all other remedies available under this Warrant and any other
Transaction Documents, at law or in equity (including a decree of specific
performance and/or other injunctive relief), and nothing herein shall limit the
right of the Holder to pursue actual damages for any failure by the Company to
comply with the terms of this Warrant.  The Company acknowledges that a breach
by it of its obligations hereunder will cause irreparable harm to the Holder and
that the remedy at law for any such breach may be inadequate.  The Company
therefore agrees that, in the event of any such breach or threatened breach, the
holder of this Warrant shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach, without the necessity of
showing economic loss and without any bond or other security being required.

 

13.                               TRANSFER.  This Warrant and the Warrant Shares
may be offered for sale, sold, transferred, pledged or assigned without the
consent of the Company.

 

14.                               SEVERABILITY; CONSTRUCTION; HEADINGS.  If any
provision of this Warrant is prohibited by law or otherwise determined to be
invalid or unenforceable by a court of competent jurisdiction, the provision
that would otherwise be prohibited, invalid or unenforceable shall be deemed
amended to apply to the broadest extent that it would be valid and enforceable,
and the invalidity or unenforceability of such provision shall not affect the
validity of the remaining provisions of this Warrant so long as this Warrant as
so modified continues to express, without material change, the original
intentions of the parties as to the subject matter hereof and the prohibited
nature, invalidity or unenforceability of the provision(s) in question does not
substantially impair the respective expectations or reciprocal obligations of
the parties or the practical realization of the benefits that would otherwise be

 

15

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conferred upon the parties.  The parties will endeavor in good faith
negotiations to replace the prohibited, invalid or unenforceable
provision(s) with a valid provision(s), the effect of which comes as close as
possible to that of the prohibited, invalid or unenforceable provision(s).  This
Warrant shall be deemed to be jointly drafted by the Company and the Holder and
shall not be construed against any Person as the drafter hereof.  The headings
of this Warrant are for convenience of reference and shall not form part of, or
affect the interpretation of, this Warrant.

 

15.                               DISCLOSURE.  Upon receipt or delivery by the
Company of any notice in accordance with the terms of this Warrant, unless the
Company has in good faith determined that the matters relating to such notice do
not constitute material, nonpublic information relating to the Company or its
subsidiaries, the Company shall contemporaneously with any such receipt or
delivery publicly disclose such material, nonpublic information on a Current
Report on Form 8-K or otherwise.  In the event that the Company believes that a
notice contains material, nonpublic information relating to the Company or its
subsidiaries, the Company so shall indicate to such Holder contemporaneously
with delivery of such notice, and in the absence of any such indication, the
Holder shall be allowed to presume that all matters relating to such notice do
not constitute material, nonpublic information relating to the Company or its
subsidiaries.

 

16.                               CERTAIN DEFINITIONS.  For purposes of this
Warrant, the following terms shall have the following meanings:

 

(a)         “Affiliate” means, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by, or is under common control
with, such Person, it being understood for purposes of this definition that
“control” of a Person means the power directly or indirectly either to vote 10%
or more of the stock having ordinary voting power for the election of directors
of such Person or direct or cause the direction of the management and policies
of such Person whether by contract or otherwise.

 

(b)         “Attribution Parties” means, collectively, the following Persons and
entities: (i) any investment vehicle, including, any funds, feeder funds or
managed accounts, currently, or from time to time after the Subscription Date,
directly or indirectly managed or advised by the Holder’s investment manager or
any of its Affiliates or principals, (ii) any direct or indirect Affiliates of
the Holder or any of the foregoing, (iii) any Person acting or who could be
deemed to be acting as a Group together with the Holder or any of the foregoing
and (iv) any other Persons whose beneficial ownership of the Company’s Common
Stock would or could be aggregated with the Holder’s and the other Attribution
Parties for purposes of Section 13(d) of the 1934 Act.  For clarity, the purpose
of the foregoing is to subject collectively the Holder and all other Attribution
Parties to the Maximum Percentage.

 

(c)          “Bid Price” means, for any security as of the particular time of
determination, the bid price for such security on the Principal Market as
reported by Bloomberg as of such time of determination, or, if the Principal
Market is not the principal securities exchange or trading market for such
security, the bid price of such security on the principal securities exchange or
trading market where such security is listed or traded as reported by Bloomberg
as of such time of determination, or if the foregoing does not apply, the bid
price of such security in the over-the-counter market on the electronic bulletin
board for such security as

 

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reported by Bloomberg as of such time of determination, or, if no bid price is
reported for such security by Bloomberg as of such time of determination, the
average of the bid prices of any market makers for such security as reported in
the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC) as of
such time of determination.  If the Bid Price cannot be calculated for a
security as of the particular time of determination on any of the foregoing
bases, the Bid Price of such security as of such time of determination shall be
the fair market value as mutually determined by the Company and the Holder.  If
the Company and the Holder are unable to agree upon the fair market value of
such security, then such dispute shall be resolved in accordance with the
procedures in Section 11. All such determinations shall be appropriately
adjusted for any stock dividend, stock split, stock combination or other similar
transaction during such period.

 

(d)         “Black Scholes Value” means the value of this Warrant based on the
Black-Scholes Option Pricing Model obtained from the “OV” function on Bloomberg
determined as of the day immediately following the first public announcement of
the applicable Change of Control, or, if the Change of Control is not publicly
announced, the date the Change of Control is consummated, for pricing purposes
and reflecting (i) a risk-free interest rate corresponding to the U.S. Treasury
rate for a period equal to the remaining term of this Warrant as of such date of
request, (ii) an expected volatility equal to the lesser of 75% and the 90-day
volatility obtained from the HVT function on Bloomberg as of the Trading Day
immediately following the public announcement of the applicable Change of
Control,  (iii) the underlying price per share used in such calculation shall be
the greater of (a) the highest Weighted Average Price during the five
(5) Trading Days prior to the closing of the Change of Control and (b) the sum
of the price per share being offered in cash, if any, plus the value of any
non-cash consideration, if any, being offered in such Change of Control, (iv) a
zero cost of borrow and (v) a 360 day annualization factor.

 

(e)          “Bloomberg” means Bloomberg Financial Markets.

 

(f)           “Business Day” means any day other than Saturday, Sunday or other
day on which commercial banks in The City of New York are authorized or required
by law to remain closed.

 

(g)          “Change of Control” means any Fundamental Transaction other than
(i) any reorganization, recapitalization or reclassification of the Common Stock
in which holders of the Company’s voting power immediately prior to such
reorganization, recapitalization or reclassification continue after such
reorganization, recapitalization or reclassification to hold publicly traded
securities and, directly or indirectly, are, in all material respect, the
holders of the voting power of the surviving entity (or entities with the
authority or voting power to elect the members of the board of directors (or
their equivalent if other than a corporation) of such entity or entities) after
such reorganization, recapitalization or reclassification, (ii) pursuant to a
migratory merger effected solely for the purpose of changing the jurisdiction of
incorporation of the Company or (iii) a merger in connection with a bona fide
acquisition by the Company of any Person in which (x) the gross consideration
paid, directly or indirectly, by the Company in such acquisition is not greater
than 20% of the Company’s market capitalization as calculated on the date of the
consummation of such merger and (y) such merger does not contemplate a change to

 

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the identity of a majority of the board of directors of the Company.
Notwithstanding anything herein to the contrary, any transaction or series of
transaction that, directly or indirectly, results in the Company or the
Successor Entity not having Common Stock or common stock, as applicable,
registered under the 1934 Act and listed on an Eligible Market shall be deemed a
Change of Control.

 

(h)         “Closing Bid Price” and “Closing Sale Price” means, for any security
as of any date, the last closing bid price and last closing trade price,
respectively, for such security on the Principal Market, as reported by
Bloomberg, or, if the Principal Market begins to operate on an extended hours
basis and does not designate the closing bid price or the closing trade price,
as the case may be, then the last bid price or the last trade price,
respectively, of such security prior to 4:00:00 p.m., New York time, as reported
by Bloomberg, or, if the Principal Market is not the principal securities
exchange or trading market for such security, the last closing bid price or last
trade price, respectively, of such security on the principal securities exchange
or trading market where such security is listed or traded as reported by
Bloomberg, or if the foregoing do not apply, the last closing bid price or last
trade price, respectively, of such security in the over-the-counter market on
the electronic bulletin board for such security as reported by Bloomberg, or, if
no closing bid price or last trade price, respectively, is reported for such
security by Bloomberg, the average of the bid prices, or the ask prices,
respectively, of any market makers for such security as reported in the OTC Link
or “pink sheets” by OTC Markets Group Inc. (formerly Pink OTC Markets Inc.).  If
the Closing Bid Price or the Closing Sale Price cannot be calculated for a
security on a particular date on any of the foregoing bases, the Closing Bid
Price or the Closing Sale Price, as the case may be, of such security on such
date shall be the fair market value as mutually determined by the Company and
the Holder.  If the Company and the Holder are unable to agree upon the fair
market value of such security, then such dispute shall be resolved pursuant to
Section 11.  All such determinations to be appropriately adjusted for any stock
dividend, stock split, stock combination, reclassification or other similar
transaction during the applicable calculation period.

 

(i)             “Common Stock” means (i) the Company’s Common Stock, par value
$.01 per share, and (ii) any capital stock into which such Common Stock shall
have been changed or any capital stock resulting from a reclassification of such
Common Stock.

 

(j)            “Convertible Securities” means any stock or securities (other
than Options) directly or indirectly convertible into or exercisable or
exchangeable for shares of Common Stock.

 

(k)         “Eligible Market” means The NASDAQ Capital Market, the NYSE American
LLC, The NASDAQ Global Select Market, The NASDAQ Global Market or The New York
Stock Exchange, Inc.

 

(l)             “Expiration Date” means March 21, 2019.

 

(m)     “Fundamental Transaction” means (A) that the Company shall, directly or
indirectly, including through subsidiaries, Affiliates or otherwise, in one or
more related transactions, (i) consolidate or merge with or into (whether or not
the Company is the

 

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surviving corporation) another Subject Entity, or (ii) sell, assign, transfer,
convey or otherwise dispose of all or substantially all of the properties or
assets of the Company or any of its “significant subsidiaries” (as defined in
Rule 1-02 of Regulation S-X) to one or more Subject Entities, or (iii) make, or
allow one or more Subject Entities to make, or allow the Company to be subject
to or have its shares of Common Stock be subject to or party to one or more
Subject Entities making, a purchase, tender or exchange offer that is accepted
by the holders of at least either (x) 50% of the outstanding shares of Common
Stock, (y) 50% of the outstanding shares of Common Stock calculated as if any
shares of Common Stock held by all Subject Entities making or party to, or
Affiliated with any Subject Entities making or party to, such purchase, tender
or exchange offer were not outstanding; or (z) such number of shares of Common
Stock such that all Subject Entities making or party to, or Affiliated with any
Subject Entity making or party to, such purchase, tender or exchange offer,
become collectively the beneficial owners (as defined in Rule 13d-3 under the
1934 Act) of at least 50% of the outstanding shares of Common Stock, or
(iv) consummate a stock purchase agreement or other business combination
(including, without limitation, a reorganization, recapitalization, spin-off or
scheme of arrangement) with one or more Subject Entities whereby all such
Subject Entities, individually or in the aggregate, acquire, either (x) at least
50% of the outstanding shares of Common Stock, (y) at least 50% of the
outstanding shares of Common Stock calculated as if any shares of Common Stock
held by all the Subject Entities making or party to, or Affiliated with any
Subject Entity making or party to, such stock purchase agreement or other
business combination were not outstanding; or (z) such number of shares of
Common Stock such that the Subject Entities become collectively the beneficial
owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the
outstanding shares of Common Stock, or (v) reorganize, recapitalize or
reclassify its shares of Common Stock, (B) that the Company shall, directly or
indirectly, including through subsidiaries, Affiliates or otherwise, in one or
more related transactions, allow any Subject Entity individually or the Subject
Entities in the aggregate to be or become the “beneficial owner” (as defined in
Rule 13d-3 under the 1934 Act), directly or indirectly, whether through
acquisition, purchase, assignment, conveyance, tender, tender offer, exchange,
reduction in outstanding shares of Common Stock, merger, consolidation, business
combination, reorganization, recapitalization, spin-off, scheme of arrangement,
reorganization, recapitalization or reclassification or otherwise in any manner
whatsoever, of either (x) at least 50% of the aggregate ordinary voting power
represented by issued and outstanding shares of Common Stock, (y) at least 50%
of the aggregate ordinary voting power represented by issued and outstanding
shares of Common Stock not held by all such Subject Entities as of the
Subscription Date calculated as if any shares of Common Stock held by all such
Subject Entities were not outstanding, or (z) a percentage of the aggregate
ordinary voting power represented by issued and outstanding shares of Common
Stock or other equity securities of the Company sufficient to allow such Subject
Entities to effect a statutory short form merger or other transaction requiring
other stockholders of the Company to surrender their Common Stock without
approval of the stockholders of the Company or (C) directly or indirectly,
including through subsidiaries, Affiliates or otherwise, in one or more related
transactions, the issuance of or the entering into any other instrument or
transaction structured in a manner to circumvent, or that circumvents, the
intent of this definition in which case this definition shall be construed and
implemented in a manner otherwise than in strict conformity with the terms of
this definition to the extent

 

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necessary to correct this definition or any portion of this definition which may
be defective or inconsistent with the intended treatment of such instrument or
transaction.

 

(n)         “Group” means a “group” as that term is used in Section 13(d) of the
1934 Act and as defined in Rule 13d-5 thereunder.

 

(o)         “Options” means any rights, warrants or options to subscribe for or
purchase shares of Common Stock or Convertible Securities.

 

(p)         “Parent Entity” of a Person means an entity that, directly or
indirectly, controls the applicable Person, including such entity whose common
stock or equivalent equity security is quoted or listed on an Eligible Market
(or, if so elected by the Holder, any other market, exchange or quotation
system), or, if there is more than one such Person or such entity, the Person or
such entity designated by the Holder or in the absence of such designation, such
Person or entity with the largest public market capitalization as of the date of
consummation of the Fundamental Transaction.

 

(q)         “Person” means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization, any other entity and a government or any department or agency
thereof.

 

(r)            “Principal Market” means the New York Stock Exchange.

 

(s)           “Required Holders” means the holders of the Warrants representing
at least a majority of the shares of Common Stock underlying the Warrants then
outstanding.

 

(t)            “Standard Settlement Period” means the standard settlement
period, expressed in a number of Trading Days, for the Company’s primary trading
market or quotation system with respect to the Common Stock that is in effect on
the date of receipt of an applicable Exercise Notice.

 

(u)         “Subject Entity” means any Person, Persons or Group or any Affiliate
or associate of any such Person, Persons or Group.

 

(v)         “Successor Entity” means one or more Person or Persons (or, if so
elected by the Holder, the Company or Parent Entity) formed by, resulting from
or surviving any Fundamental Transaction or one or more Person or Persons (or,
if so elected by the Holder, the Company or the Parent Entity) with which such
Fundamental Transaction shall have been entered into.

 

(w)       “Trading Day” means any day on which the Common Stock is traded on the
Principal Market, or, if the Principal Market is not the principal trading
market for the Common Stock, then on the principal securities exchange or
securities market on which the Common Stock is then traded.

 

(x)         “Transaction Documents” means any agreement entered into by and
between the Company and the Holder, as applicable.

 

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(y)         “Weighted Average Price” means, for any security as of any date, the
dollar volume-weighted average price for such security on the Principal Market
during the period beginning at 9:30:01 a.m., New York time (or such other time
as the Principal Market publicly announces is the official open of trading), and
ending at 4:00:00 p.m., New York time (or such other time as the Principal
Market publicly announces is the official close of trading), as reported by
Bloomberg through its “Volume at Price” function or, if the foregoing does not
apply, the dollar volume-weighted average price of such security in the
over-the-counter market on the electronic bulletin board for such security
during the period beginning at 9:30:01 a.m., New York time (or such other time
as such market publicly announces is the official open of trading), and ending
at 4:00:00 p.m., New York time (or such other time as such market publicly
announces is the official close of trading), as reported by Bloomberg, or, if no
dollar volume-weighted average price is reported for such security by Bloomberg
for such hours, the average of the highest Closing Bid Price and the lowest
closing ask price of any of the market makers for such security as reported in
the OTC Link or “pink sheets” by OTC Markets Group Inc. (formerly Pink OTC
Markets Inc.).  If the Weighted Average Price cannot be calculated for a
security on a particular date on any of the foregoing bases, the Weighted
Average Price of such security on such date shall be the fair market value as
mutually determined by the Company and the Holder.  If the Company and the
Holder are unable to agree upon the fair market value of such security, then
such dispute shall be resolved pursuant to Section 11 with the term “Weighted
Average Price” being substituted for the term “Exercise Price.” All such
determinations shall be appropriately adjusted for any stock dividend, stock
split, stock combination, reclassification or other similar transaction during
the applicable calculation period.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock
to be duly executed as of the Issuance Date set out above.

 

 

 

ION GEOPHYSICAL CORPORATION

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

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EXHIBIT A

 

EXERCISE NOTICE

 

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

WARRANT TO PURCHASE COMMON STOCK

 

ION GEOPHYSICAL CORPORATION

 

The undersigned holder hereby exercises the right to purchase                  
shares of Common Stock (“Warrant Shares”) of Ion Geophysical Corporation, a
company organized under the laws of Delaware (the “Company”), evidenced by the
attached Warrant to Purchase Common Stock (the “Warrant”).  Capitalized terms
used herein and not otherwise defined shall have the respective meanings set
forth in the Warrant.

 

1.  Form of Exercise Price.  The Holder intends that payment of the Exercise
Price shall be made as:

 

            a “Cash Exercise” with respect to                   Warrant Shares;
and/or

 

            a “Cashless Exercise” with respect to                 Warrant
Shares.

 

2.  Payment of Exercise Price.  In the event that the holder has elected a Cash
Exercise with respect to some or all of the Warrant Shares to be issued pursuant
hereto, the holder shall pay the Aggregate Exercise Price in the sum of
$                    to the Company in accordance with the terms of the Warrant.

 

3.  Delivery of Warrant Shares.  The Company shall deliver to the holder
           Warrant Shares in accordance with the terms of the Warrant.

 

Date:                   ,

 

 

 

Name of Registered Holder

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

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ACKNOWLEDGMENT

 

The Company hereby acknowledges this Exercise Notice and hereby directs
Computershare Investor Service to issue the above indicated number of shares of
Common Stock on or prior to the applicable Share Delivery Date.

 

 

 

 

 

ION GEOPHYSICAL CORPORATION

 

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

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