EXHIBIT 10.4
 
Joint Venture Agreement
Dated as of March 24, 2010
by and between
BGP Inc., China National Petroleum Corporation,
and
ION Geophysical Corporation
 

 

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TABLE OF CONTENTS

              Page
ARTICLE I
 
       
DEFINITIONS
 
       
Section 1.1 Specific Definitions
    1  
Section 1.2 Other Terms
    8  
Section 1.3 Other Definitional Provisions
    9  
 
       
ARTICLE II
 
       
THE COMPANY
 
       
Section 2.1 Name
    9  
Section 2.2 Limited Liability
    9  
Section 2.3 Principles and Goals
    9  
Section 2.4 Business Scope
    9  
Section 2.5 Total Investment
    9  
Section 2.6 Registered Capital
    9  
Section 2.7 Equity Interest of the Parties
    10  
Section 2.8 Investment Certificates
    10  
Section 2.9 Additional Capital Contributions
    10  
 
       
ARTICLE III
 
       
CORPORATE GOVERNANCE OF THE COMPANY
 
       
Section 3.1 Articles of Association
    10  
Section 3.2 Governance Structure
    10  
Section 3.3 Board of Directors
    11  
Section 3.4 Board Committees
    13  
Section 3.5 Supervisors
    13  
Section 3.6 Executive Management
    14  
 
       
ARTICLE IV
 
       
OPERATIONAL MATTERS
 
       
Section 4.1 Business Plan and Annual Operating Plan
    15  
Section 4.2 Financial, Accounting and Auditing System
    15  
Section 4.3 Taxes
    16  
Section 4.4 Foreign Exchange Management
    16  
Section 4.5 Distribution
    16  
Section 4.6 Related Party Transactions
    16  
Section 4.7 Labor and Trade Union
    17  
Section 4.8 Insurance
    17  
Section 4.9 Branding
    17  

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TABLE OF CONTENTS
(Continued)

              Page
ARTICLE V
 
       
REPRESENTATIONS AND WARRANTIES
 
       
Section 5.1 Legal and Corporate Status
    18  
Section 5.2 Power and Authority; Authorization; Enforceability
    18  
Section 5.3 No Conflicts
    18  
Section 5.4 Consents
    18  
Section 5.5 No Regulatory Investigation
    18  
 
       
ARTICLE VI
 
       
COVENANTS
 
       
Section 6.1 Non-Compete
    18  
Section 6.2 Compliance with U.S. Export Control Laws
    19  
Section 6.3 Notice of Changes
    19  
Section 6.4 Financial Records, Information and Inspection Rights
    19  
Section 6.5 Cooperation with the Parties
    20  
Section 6.6 Service Arrangement
    20  
Section 6.7 Intellectual Property Arrangement
    20  
Section 6.8 Employee Related Matters
    21  
Section 6.9 Confidentiality
    21  
Section 6.10 Expenses
    22  
Section 6.11 Further Assurance
    22  
Section 6.12 Indemnification
    22  
 
       
ARTICLE VII
 
       
COMPLIANCE WITH LAWS
 
       
Section 7.1 Compliance with Applicable Law
    25  
Section 7.2 Compliance Policies
    25  
Section 7.3 Compliance Advisor
    26  
 
       
ARTICLE VIII
 
       
TRANSFER RESTRICTIONS
 
       
Section 8.1 Transfer Restriction
    26  
Section 8.2 Permitted Transfers
    26  
Section 8.3 Condition to the Permitted Transfer
    27  
Section 8.4 Right of First Refusal
    27  
Section 8.5 Deadlock Resolution and Put Right of ION
    28  
Section 8.6 Sale upon Material Breach
    30  

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TABLE OF CONTENTS
(Continued)

              Page
ARTICLE IX
 
       
TERM; TERMINATION, DISSOLUTION AND LIQUIDATION
 
       
Section 9.1 Term and Extension
    30  
Section 9.2 Withdrawals, Termination and Dissolution
    30  
Section 9.3 Liquidation Procedures
    31  
 
       
ARTICLE X
 
       
MISCELLANEOUS
 
       
Section 10.1 Amendments and Modifications
    32  
Section 10.2 No Waiver; Cumulative Rights
    32  
Section 10.3 Assignments and Transfers
    32  
Section 10.4 Parties in Interest; No Third-Party Beneficiaries
    32  
Section 10.5 Entire Agreement
    32  
Section 10.6 Counterparts
    32  
Section 10.7 Language
    32  
Section 10.8 Section Headings
    32  
Section 10.9 Notices
    33  
Section 10.10 Dispute Resolution
    33  
Section 10.11 No Strict Construction
    34  
Section 10.12 Governing Law
    34  
Section 10.13 Severability
    34  
Section 10.14 Survival
    34  
Section 10.15 Force Majeure
    34  
Section 10.16 The Company’s Obligations
    34  
 
       
ANNEX A Initial Dividend and Distribution Policy
       
ANNEX B Form of Export Controls and Sanctions Compliance Plan
       

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          THIS JOINT VENTURE AGREEMENT (the “Agreement”), dated as of March 24,
2010, based on the principles of equality and mutual benefit, in accordance with
the Law of the PRC on the Sino-foreign Equity Joint Ventures, the Implementing
Regulations issued thereunder (collectively the “Joint Venture Regulations”) and
other applicable PRC Law, is made by and between:
          (1) BGP Inc., China National Petroleum Corporation (Company
Registration Number: 1000001003414(4-1), Legal Representative: Wang Tiejun), a
company organized and existing under the laws of the PRC with its registered
office at No. 189 Fanyang Xi Road, Zhuozhou City, Baoding, Hebei Province, the
PRC (together with its successors and Permitted Transferees, “BGP”); and
          (2) ION Geophysical Corporation, a company organized under the laws of
the State of Delaware, the U.S., with its registered office at 2105 CityWest
Blvd, Suite 400, Houston, Texas 77042-2839 (together with its successors and
Permitted Transferees, “ION”).
          BGP, ION and any other Equityholders are each referred to herein as a
“Party” and collectively as the “Parties”.
RECITALS
          WHEREAS, BGP and ION have entered into a Term Sheet dated October 23,
2009 (the “Transaction Term Sheet”) pursuant to which BGP and ION have agreed to
establish INOVA Geophysical Equipment Limited, a limited liability company
organized and existing under the laws of the PRC, (the “Company”) as a joint
venture;
          WHEREAS, BGP and ION have entered into a Share Purchase Agreement,
dated as of March 24, 2010 (the “Share Purchase Agreement”), pursuant to which,
BGP agreed to purchase from ION 51% of the Equity Interest in the Company on the
Closing Date;
          WHEREAS, pursuant to the Share Purchase Agreement, the Seller has
taken, or has caused its Affiliates to take, the actions necessary for the
Restructuring and the Purchaser has taken, or caused its Affiliates to take, the
actions necessary for the Purchaser Restructuring;
          WHEREAS, as a result of the consummation of the transactions
contemplated under the Share Purchase Agreement, which is occurring
simultaneously herewith, BGP owns 51% of the Equity Interest in the Company and
ION owns 49% of the Equity Interest in the Company; and
          WHEREAS, the Parties have agreed that the Company and related joint
venture arrangements shall be established in accordance with the terms and
conditions of this Agreement and the Parties shall cause the Company to comply
with applicable provisions in this Agreement.
          NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements, undertakings and obligations
set forth herein and other consideration the sufficiency and adequacy of which
are hereby acknowledged, and intending to be legally bound hereby, the Parties
and the Company hereto agree as follows:
Article I
Definitions
          Section 1.1 Specific Definitions. As used in this Agreement, the
following terms shall have the meanings set forth or referenced below:

 

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          “Action” means any civil, criminal or administrative claim, action,
suit, proceeding, arbitration, controversy or investigation by or before any
Governmental Entity or any other Person acting on behalf of a Governmental
Entity, whether brought by a Governmental Entity or any other Person.
          “Acquirer” has the meaning set forth in Section 6.1.
          “Additional Capital Contribution” means a proportional mandatory
additional capital contribution by the Parties.
          “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. For purposes of this Agreement, neither ION nor BGP shall be
considered as an Affiliate of the Company, and the Company shall not be
considered as an Affiliate of either ION or BGP.
          “Agreement” has the meaning set forth in the preamble.
          “Annual Operating Plan” means the annual operating budget and plan of
the Company based on the then-effective Business Plan.
          “Anti-boycott Laws” has the meaning set forth in Section 7.1.
          “Anti-bribery Laws” has the meaning set forth in Section 7.1.
          “ARAM Rental Business” means the ARAM equipment rental business owned
and operated through two wholly-owned subsidiaries of ION: ARAM Rentals
Corporation and ARAM Seismic Rentals, Inc.
          “Articles of Association” means the articles of association of the
Company as amended from time to time and in force for the time being.
          “Bankruptcy Event” with respect to any Person, shall mean any of the
following actions by or with respect to such Person: (a) the commencement by it
of a voluntary case or proceeding under any applicable bankruptcy, insolvency,
winding-up, reorganization, rehabilitation or other similar Law or of any other
case or proceeding to be adjudicated bankrupt or insolvent, or the consent by it
to the entry of a decree or order for relief in respect of it in an involuntary
case or proceeding under any applicable bankruptcy, insolvency, winding-up,
reorganization, rehabilitation or other similar Law, or to the commencement of
any bankruptcy or insolvency case or proceeding against it, (or an involuntary
petition under any such Law is filed against such Person and has not been
dismissed in ninety (90) days) or the filing by it of a petition or answer or
consent seeking reorganization or relief under any such Law, or the consent by
it to the filing of such petition or to the appointment of or taking possession
by a custodian, receiver, liquidator, assignee, trustee, sequestrator, planner,
plan administrator or other similar official of such Person or of any
substantial part of its properties or assets, or the making by it of an
assignment for the benefit of its creditors, or the admission by it in writing
of its inability to pay its debts generally as they become due, or the taking of
any action by it in furtherance of any such action; or (b) the entry by a court
having jurisdiction in the premises of (i) a decree or order for relief in
respect of such Person in an involuntary case or proceeding under any applicable
bankruptcy, insolvency, reorganization, rehabilitation or other similar Law, or
(ii) a decree or order adjudging such Person bankrupt or insolvent, or approving
as properly filed a petition seeking reorganization, arrangement or composition
of or in respect of such Person under such Law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator, planner, plan
administrator or other similar official of such Person or of any substantial
part of its properties or assets, or ordering the winding-up or liquidation of
its affairs.
          “BGP” has the meaning set forth in the preamble.
          “BGP Directors” has the meaning set forth in Section 3.3(a).

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          “Big Four Accounting Firms” means each of KPMG LLP, Deloitte & Touche
Tohmatsu, Ernst & Young LLP, PricewaterhouseCoopers LLP and their respective
Affiliates or their successors in different geographic regions.
          “Board of Directors” or “Board” means the board of directors of the
Company.
          “Business” has the meaning set forth in Section 2.4(a).
          “Business Day” shall mean any day except a Saturday, Sunday or any
other day on which commercial banks in the U.S. or the PRC are required or
authorized by Law to close.
          “Business Intellectual Property” has the meaning set forth in the
Share Purchase Agreement.
          “Business Plan” means each of the Initial Business Plan and any
validly adopted subsequent business plans.
          “Capital Advance” has the meaning set forth in Section 2.9.
          “CEO” means the chief executive officer of the Company.
          “Chairman” has the meaning set forth in Section 3.3(e) hereof.
          “Change of Control” means, the (i) acquisition, directly or
indirectly, by a third party or group consisting of third parties of beneficiary
ownership in excess of 50% of the voting equity interest of a Party whether in
the form of outstanding shares of common stock or otherwise or (ii) consummation
of a merger, consolidation, amalgamation or similar business combination between
a Party and any other third party, other than a merger, consolidation,
amalgamation or similar business combination in which the holders of the voting
equity interest of the Party continue to hold immediately following such event
in excess of 50% of the voting equity interest.
          “Claim Notice” has the meaning set forth in Section 6.12(b)(i).
          “Closing” has the meaning set forth in the Share Purchase Agreement.
          “Closing Date” has the meaning set forth in the Share Purchase
Agreement.
          “Company” has the meaning set forth in the preamble.
          “Competing Business” means a business that competes directly with the
businesses that are within the scope of the Business.
          “Confidential Information” means, (a) any information concerning the
organization, business, technology, finance, transactions or affairs of any
Party or the Company, any Affiliate of such Party or the Company, or any of
their respective directors, officers or employees (whether conveyed in written,
oral or in any other form and whether such information is furnished before, on
or after the date of this Agreement); and (b) any information or materials
prepared by a Party or the Company or such Party or the Company’s
Representatives that contains or otherwise reflects, or is generated from,
Confidential Information.
          “Consent” means any consent, approval, authorization, waiver, permit,
grant, franchise, concession, agreement, license, certificate, exemption, order,
registration, declaration, filing, report or notice of, with or to any Person.

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          “Control”, “Controlled”, “Controlling” or “under common Control with”
with respect to any Person means the possession, directly or indirectly, of the
ability or power to direct the management and affairs of such Person, whether
through the ownership of equity interests, by contract or otherwise, and such
ability shall be deemed to exist when any Person holds a majority of the
outstanding equity interests of such Person.
          “Deadlock” has the meaning set forth in Section 8.5(b).
          “Deadlock Notice” means a written notice delivered by ION to BGP and
the Company following the occurrence of a Deadlock.
          “Deadlock Sale” has the meaning set forth in Section 8.5(b).
          “Decision Not To Proceed” has the meaning set forth in Section 8.4(c).
          “Defaulted Capital Contribution Amount” has the meaning set forth in
Section 2.9.
          “Defaulting Contribution Party” has the meaning set forth in
Section 2.9.
          “Director” means a director on the Board of Directors.
          “Dividend and Distribution Policy” means the dividend and distribution
policy of the Company providing for the policy with respect to dividends and
distributions to Equityholders of earnings and profits, returns of capital or
other available profits, initially attached as Annex A, and as further validly
amended and replaced from time to time.
          “Drafting Period” has the meaning set forth in Section 8.4(a).
          “Equity Interest” means the equity interest of the Company.
          “Equityholder” means a holder of the Equity Interest of the Company.
          “ECSCP” has the meaning set forth in Section 7.2.
          “Examination and Approval Authority” means the Ministry of Commerce of
the PRC and/or its authorized local branch thereof, or any other authority
competent to approve the execution, delivery and performance of this Agreement,
the annexes attached hereto and the Articles of Association in accordance with
applicable PRC Law.
          “Excluded Business” has the meaning set forth in the Share Purchase
Agreement.
          “Executive Management” means the executive management of the Company
as set forth in the then-effective Business Plan.
          “Export Control Laws” has the meaning set forth in Section 7.1.
          “FCPA” means the U.S. Foreign Corrupt Practices Act, as amended, or
any successor statute of similar import (15 U.S.C. §§ 78dd-1, et seq.).
          “Fiscal Quarter” means a fiscal quarter of any Fiscal Year.
          “Fiscal Year” means the fiscal year of the Company.
          “Force Majeure” means acts of God, acts of any Governmental Entity
beyond the control of the Party claiming Force Majeure, changes in Law beyond
the control of the Party claiming Force

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Majeure, riots, wars, embargoes, strikes, lockouts, accidents in transportation,
port congestion or other similar causes beyond the control of any Party.
          “Fundamental Matter” has the meaning set forth in Section 3.3(f)(v).
          “Governmental Authorization” means any Consent of, with or to any
Governmental Entity.
          “Governmental Entity” means any central, national, territorial,
foreign, international, multinational, federal, state, provincial, local,
municipal, county or other governmental, administrative or regulatory authority,
body, agency, commission or other similar entity (including any branch,
department or official thereof). For the avoidance of doubt, the Parties
acknowledge and agree that neither BGP nor its Affiliates shall be deemed a
“Governmental Entity.”
          “HKIAC” means the Hong Kong International Arbitration Centre.
          “Hong Kong” means the Hong Kong Special Administrative Region of the
PRC.
          “IFRS” means the International Financial Reporting Standards, as
adopted by the International Accounting Standards Board and endorsed by the
European Union.
          “Indemnified Party” has the meaning set forth in Section 6.12(a).
          “Indemnifying Party” has the meaning set forth in Section 6.12(a).
          “Independent Auditor” has the meaning set forth in Section 4.2(d).
          “Initial Business Plan” means the initial five-year business plan for
the Company.
          “ION” has the meaning set forth in the preamble.
          “ION Business Field” means ION’s businesses that are outside the scope
of the Business.
          “ION Directors” has the meaning set forth in Section 3.3(a).
          “ITAR” means the International Traffic in Arms Regulations, as
amended, or any successor statute of similar import (22 C.F.R. § 120 et seq.).
          “Joint Venture Regulations” has the meaning set forth in the preamble.
          “JV Group” means the Company and its Subsidiaries.
          “Law” means any central, national, territorial, foreign,
international, multinational, federal, state, provincial, local, municipal,
county or other (i) law, statute, code, ordinance, treaty, rule, regulation,
order, decree, judgment or ruling of any Governmental Entity or (ii) common laws
or rules of law.
          “Liquidation Committee” means a liquidation committee established by
the Board when the dissolution of the Company occurs.
          “Losses” has the meaning set forth in Section 6.12(a).
          “Material Adverse Effect”, (a) with respect to the Company, means any
event, occurrence, fact, condition, change, development or effect that has been
or would be reasonably expected to be materially adverse to the business,
operations, prospects, results of operations, condition (financial or

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otherwise), properties (including intangible properties), assets (including
intangible assets) or liabilities of such Person, taken as a whole; or (b) with
respect to any Party, means any material impairment of the ability of such
Person to perform its obligations hereunder.
          “Mitigation Actions” has the meaning set forth in Section 6.12(f).
          “Non-Ordinary Course Related-Party Transaction” means any
Related-Party Transaction other than those in the Ordinary Course of Business.
          “Notice Period” has the meaning set forth in Section 6.12(b)(i).
          “OFAC” means the Office of Foreign Assets Control of the U.S.
Department of the Treasury.
          “OFAC Regulations” means any of the economic sanctions of the United
States administered by OFAC, including the Foreign Assets Control Regulations
(31 C.F.R. §§ 500-598), as amended, or any successor regulations of similar
import.
          “Offer” means an offer made by the Offering Party to the Receiving
Party or Parties to acquire the Offered Interest.
          “Offer Notice” means a written notice of the Offering Party’s desire
to consummate a Transfer.
          “Offer Price” means a cash amount specified by the Offering Party at
which price the Offering Party makes an Offer to the Receiving Party or Parties
to acquire the Offered Interest.
          “Offered Interest” means the Equity Interest for which the Offering
Party makes an Offer to the Receiving Party or Parties to acquire.
          “Offering Party” means any Party that offers a Proposed Transfer of
any Equity Interest of the Company pursuant to Section 8.2(b) and
Section 8.2(c).
          “Ordinary Course of Business” means the conduct of business in
accordance with normal day-to-day customs, practices and procedures and
consistent with past practice of the Company or the relevant Party.
          “Party” or “Parties” has the meaning set forth in the preamble.
          “Percentage Interest” means the Parties’ respective percentage of
Equity Interest in the Company.
          “Permitted Transfer” means a Transfer permitted under the terms and
conditions of Section 8.2.
          “Permitted Transferee” means a transferee of a Permitted Transfer.
          “Person” means any individual, Governmental Entity, corporation,
partnership, joint venture, joint stock company, limited partnership,
proprietorship, association, limited liability company, firm, trust, estate,
unincorporated organization or other enterprise or entity.
          “PRC” means the People’s Republic of China, excluding, solely for the
purposes of this Agreement, Hong Kong, Macau and Taiwan.

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          “PRC GAAP” means the Generally Accepted Accounting Principles
applicable in the PRC.
          “Prime Rate” means the interest rate announced by the People’s Bank of
China for one-year term loans.
          “Proposed Transfer” means a bona fide Transfer of any Equity Interest
of the Company proposed by an Offering Party.
          “Proposed Transferee” means the proposed transferee for a Proposed
Transfer.
          “Receiving Party” means each of the other Parties who receive an Offer
from the Offering Party to acquire the Offered Interest.
          “Receiving Party Agreement” means a binding agreement for the
Receiving Party or Parties to purchase the Offered Interest from the Offering
Party.
          “Related-Party Transaction” has the meaning set forth in
Section 4.6(a).
          “Representatives” means, with respect to any Person, such Person’s and
such Person’s Affiliates’ respective directors, officers, general partners,
limited partners, financing sources, equity holders, members, managers,
employees, agents, consultants, accountants, advisors, including financial
advisors, or other representatives.
          “Reserved Matter” has the meaning set forth in Section 3.3(f)(iv).
          “Right of First Refusal” has the meaning set forth in Section 8.4
hereof.
          “RMB” means Renminbi, the lawful currency of the PRC.
          “ROFR Completion” means the conveyance of the Offered Interest.
          “ROFR Completion Regulatory Requirements” means all requirements
necessary or advisable under applicable Law in order to effect the ROFR
Completion and any applicable requirements with respect to the ROFR Completion
(in each case, including submission to a regulatory process that is voluntary if
the regulatory process could result in conditions being placed upon or a
prohibition on completion of the Proposed Transfer).
          “ROFR Option Period” means twenty (20) Business Days after the
Receiving Party or Parties receive the Offer.
          “Sanctioned Country” means any country that is the target of
comprehensive country-based sanctions under the OFAC Regulations.
          “Sanctions Target” means a person or entity with whom transactions or
dealings would be prohibited for U.S. persons to engage in under any of the OFAC
Regulations.
          “Share Purchase Agreement” has the meaning as set forth in the
preamble.
          “Subsidiary” means, with respect to any Person, any other Person of
which (i) at least a majority of the securities or ownership interests, having
by their terms ordinary voting power to elect a majority of the board of
directors or elect or appoint other Persons performing similar functions, is
directly or indirectly owned or controlled by such Person and/or by one or more
of its Subsidiaries or (ii) more than half of the board of directors, or similar
governing body, is controlled by such Person, by equity interest or otherwise.

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          “Support and Transition Agreements” has the meaning set forth in the
Share Purchase Agreement (as such Support and Transition Agreements may be
amended from time to time).
          “Target ROFR Completion Date” means a proposed completion date, which
shall be no more than six (6) months after the date on which the Offering Party
made a Transfer Election.
          “Taxes” means, as to any Person, central, national, territorial,
foreign, federal, state, provincial, local, municipal, county or other income,
profits, gains, receipts, windfall or excess profits, salaries, severance,
interest, property, production, sales, service, value added, consumption,
business, use, license, customs, excise, franchise, stamp, documentary,
employment, withholding, deduction or similar taxes, together with any interest,
additions, surcharges, or penalties with respect thereto and any interest in
respect of such additions, surcharges or penalties, and central, national,
territorial, foreign, federal, state, provincial, local, municipal, county or
other impositions, duties, contributions and levies required by applicable Laws.
          “Term” has the meaning set forth in Section 9.1 hereof.
          “Termination Event” has the meaning set forth in Section 9.2(b)
hereof.
          “Third-Party Acquisition Agreement” means, in the event of a Decision
Not To Proceed, a binding agreement entered into by the Offering Party to
Transfer the Offered Interest to a Third-Party Buyer.
          “Third-Party Buyer” means, in the event of a Decision Not To Proceed,
another Person to whom the Offering Party may enter into a Third-Party
Acquisition Agreement to Transfer the Offered Interest.
          “Third-Party Claim” has the meaning set forth in Section 6.12(b).
          “Transaction Term Sheet” has the meaning set forth in the preamble.
          “Transfer” means transfer, assign, sublicense, pledge, charge,
hypothecate, encumber or otherwise legally or beneficially devolve, part with,
dispose of, alienate or otherwise transfer, in each case whether or not for
value.
          “Transfer Election” means a Proposed Transfer of any Equity Interest
of the Company.
          “Transferred Business Assets” has the meaning set forth in the Share
Purchase Agreement.
          “Triggering Event” has the meaning set forth in Section 8.6.
          “US$” means U.S. dollar, the lawful currency of the U.S.
          “U.S.” means the United States of America.
          “U.S. GAAP” means the United States Generally Accepted Accounting
Principles.
          “Vice Chairman” has the meaning set forth in Section 3.3(e).
          Section 1.2 Other Terms. Other terms may be defined elsewhere in the
text of this Agreement and, unless otherwise indicated, shall have such meaning
indicated throughout this Agreement. Terms not otherwise defined in the text of
this Agreement shall have the respective meanings ascribed to them in the Share
Purchase Agreement.

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          Section 1.3 Other Definitional Provisions. Unless a provision hereof
expressly provides otherwise: (a) the term “or” is not exclusive; (b) words in
the singular include the plural, and words in the plural include the singular;
(c) the terms “herein”, “hereof”, and other similar words refer to this
Agreement as a whole and not to any particular section, subsection, paragraph,
clause, or other subdivision; (d) the term “including” will be deemed to be
followed by ”, but not limited to,”; (e) the masculine, feminine, and neuter
genders will each be deemed to include the others; (f) the terms “shall”, “will”
and “agree” are mandatory, and the term “may” is permissive; and (g) the term
“day” means “calendar day”.
Article II
the Company
          Section 2.1 Name. The initial name of the Company shall be (CHINESE
CHARACTER) [h71863h7186303.gif] (CHINESE CHARACTER) [h71863h7186304.gif] in
Chinese and “INOVA Geophysical Equipment Limited” in English. The registered
address of the Company shall be Room 612, Sixth Floor, E5-C1 Building, Finance
Street, No.20 Guangchang East Road, TEDA, Tianjin, the PRC.
          Section 2.2 Limited Liability. The Company shall be a limited
liability company. The liability of each Party with respect to the Company shall
be limited to the Equity Interest in the Company. None of the Parties shall have
any liability to any third party in respect of the debts or obligations of the
Company by virtue of its ownership of the Equity Interest in the Company.
          Section 2.3 Principles and Goals. The principles and goals of the
Company shall be: (a) to strengthen economic cooperation among the Parties;
(b) to improve the management of the Company; and (c) to maximize its value and
economic profits for its Equityholders.
          Section 2.4 Business Scope.
               (a) Subject to the approval of the Examination and Approval
Authority, the scope of the Company shall be the business of designing,
developing, engineering, manufacturing, research and development, distribution,
sales and marketing and field support of land-based equipment used in seismic
data acquisition for the energy and petroleum industry, including any and all
existing products and technologies comprising ION’s Scorpion®, Aries®, FireFly®,
Pelton™, vibroseis, eVib, Connex™ and land VectorSeis® product lines and
businesses and any research and development of, improvements of and new products
by the Company based on any of the forgoing products including the ARAM Rental
Business, but excluding any Excluded Business (collectively, the “Business”).
Subject to the approval of the Examination and Approval Authority, the Parties
agree that the Company itself may conduct the Business or may be engaged solely
in the business of holding investments in its Subsidiaries, which Subsidiaries
may engage in the Business.
               (b) The scope of the Business may be revised by mutual agreement
of the Parties subject to the approval of the Examination and Approval
Authority.
          Section 2.5 Total Investment. The total investment amount of the
Company shall be US$293.1 million.
          Section 2.6 Registered Capital.
               (a) The registered capital of the Company shall be
US$280.1 million. As of the date of this Agreement, ION has made contributions
in cash of an amount of US$1,607,262 and in shares of US$278,492,738 to the
registered capital of the Company free from any mortgage, encumbrance and/or any
third party rights.

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               (b) As of the date of this Agreement, ION has agreed to transfer
and BGP has agreed to purchase from ION, for cash and 49% equity interest in the
Purchaser Holdco, 51% (fifty-one percent) of the Equity Interest in the Company,
subject to the approval of the Examination and Approval Authority. Following
such transfer, each of BGP and ION shall transfer their respective proportional
equity interest in the Purchaser Holdco to the registered capital of the
Company.
          Section 2.7 Equity Interest of the Parties. Effective as of the
Closing Date, the Parties’ respective percentage of Equity Interest in the
Company (the “Percentage Interest”) shall be as follows:
               (a) BGP shall own 51% (fifty-one percent) of the Equity Interest
in the Company; and
               (b) ION shall own 49% (forty-nine percent) of the Equity Interest
in the Company.
          Section 2.8 Investment Certificates. The Company shall request that an
accountant registered in the PRC verify each Party’s total contributions and
issue a final certificate of verification. Upon receipt of such certificate of
verification from the accountant, the Company shall promptly issue an investment
certificate to each Party setting forth the aggregate amount of such Party’s
contributions.
          Section 2.9 Additional Capital Contributions. From time to time, the
Board of Directors may determine that the Company shall require additional
equity to fund the then-effective Business Plan. In such event, subject to the
approval of the Examination and Approval Authority, the Board shall have the
right to require the Parties to make an Additional Capital Contribution. If any
Party fails to make all or any of its portion of an Additional Capital
Contribution in full within thirty (30) days of the Board’s determination (such
Party, the “Defaulting Contribution Party” and such amount of Additional Capital
Contribution not made, the “Defaulted Capital Contribution Amount”), subject to
the approval of the Examination and Approval Authority, the Percentage Interest
representing the Equity Interest of the Company shall be adjusted and determined
with respect to the then fair market value of the Company as agreed to by the
Parties or as determined by a mutually acceptable, reputable international
independent valuation firm retained by the Company, and then the other Party
shall have the right to make the Defaulted Capital Contribution Amount instead
of the Defaulting Contribution Party (and the Defaulting Contribution Party
shall be deemed to have waived any rights it may have to make such Defaulted
Capital Contribution Amount).
Article III
corporate governance of the Company
          Section 3.1 Articles of Association. The Parties hereby acknowledge
and agree that the Parties shall take all necessary corporate actions to adopt
or amend the Articles of Association, and that the Articles of Association shall
contain provisions to the effect of Section 3.2 through Section 3.6 below.
          Section 3.2 Governance Structure.
               (a) The Equityholders shall appoint Directors in accordance with
Section 3.3 and appoint Supervisors in accordance with Section 3.5.
               (b) Except as required by applicable PRC Law or otherwise
expressly set forth in this Agreement or the Articles of Association, the Board
shall be responsible for approving all matters related to the Company, including
the appointment of the Executive Management. Subject to applicable PRC Law, all
decisions and actions that may be legally taken by the Board shall be within the
Board’s sole jurisdiction.

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               (c) The Executive Management shall be established pursuant to
Section 3.6. The Board may pursuant to one or more resolutions delegate its
powers with respect to the management and operation of the Company to the
Executive Management. The Executive Management shall report to the Board and be
responsible for the day-to-day operations of the Company as set forth in
Section 3.6.
          Section 3.3 Board of Directors.
               (a) Composition. The Board shall consist of seven (7) Directors
(including the Chairman and Vice Chairman, as defined below), of which:
     (i) Four (4) Directors shall be appointed by BGP (the “BGP Directors”); and
     (ii) Three (3) Directors shall be appointed by ION (the “ION Directors”).
          The number of BGP Directors and ION Directors shall be equitably
adjusted following changes in their Percentage Interest.
               (b) Term, Removal and Replacement.
     (i) The term of office of each Director shall be three (3) years, renewable
upon reappointment by the appointing Party.
     (ii) Each appointing Party shall have the right, at any time, to remove
with or without cause and replace any Director appointed by it before the
expiration of his or her term.
     (iii) If a Director is removed, becomes incapacitated, dies, resigns or
otherwise ceases to be a Director, the Party that appoints such Director shall,
as soon as practical, appoint a new Director to serve for the remainder of the
term of office of such former Director; provided that (A) in the case of the
removal of a Director, the relevant appointing Party shall appoint a replacement
Director effective as of the date of such removal and (B) in all other cases,
the appointing Party shall appoint the replacement Director within five
(5) Business Days (or as soon as practical under the circumstances) after the
date on which the relevant Director ceases to be a Director.
               (c) Directors’ Access. Each Director shall be entitled to examine
the books and accounts of, and have free access, during normal business hours,
to any and all properties and facilities of, the Company and its Subsidiaries.
The Company shall provide such information relating to its business and
financial position or those of any of its Subsidiaries as any Director may
reasonably request.
               (d) No Personal Liability; Indemnification; Insurance.
     (i) Unless otherwise required by applicable PRC Law, no Director shall be
personally liable to the Company for monetary damages for any breach of
fiduciary or other duties as a Director.
     (ii) Each Person who was or is made a party to or otherwise involved in any
Action by reason of the fact that such Person is or was a Director, whether the
basis of such Action is alleged action in an official capacity as a Director or
any other capacity while serving as Director, shall, to the fullest extent
permitted by applicable PRC Law, be indemnified by the Company and held harmless
against all expense, cost, liability and loss (including reasonable attorneys’
fees, judgments, fines, amounts paid or to be paid in settlement, court costs,
and any other expense, cost or liability of any nature or kind) incurred or
suffered by such Person, and the Company shall maintain insurance, at its
expense, to protect each Director against such

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expense, cost, liability or loss, whether or not the Company would have the
power to indemnify such person against such expense, cost, liability or loss
under applicable PRC Law.
               (e) Chairman. The Board shall have one (1) chairman (the
“Chairman”) who shall be appointed by BGP; and one (1) vice chairman (the “Vice
Chairman”), who shall be appointed by ION. BGP and ION shall provide details of
their respective initial appointees to the Company at the signing of this
Agreement. The Chairman shall be the legal representative of the Company and
shall act only in accordance with the specific decisions, resolutions and
instructions of the Board of Directors. Whenever the Chairman is unable to
discharge his duties, the Vice Chairman or another Director authorized by the
Chairman shall represent the Company.
               (f) Meetings of the Board of Directors.
     (i) Frequency. Regular meetings of the Board of Directors shall take place
as frequently as required to operate the business in an efficient manner but in
any case shall take place not less than one (1) time per quarter, as convened by
the Chairman or in his absence or failure to perform his duties, by the Vice
Chairman or by the Director so designated by the Chairman. At each regular
quarterly meeting, the Board shall determine when the next quarterly meeting
shall be convened.
     (ii) Quorum. All meetings of the Board of Directors shall require a quorum
of two thirds (2/3) of the Directors, which shall be five (5) based on the
current number of Directors. If such a quorum is not present within one (1) hour
from the time appointed for the Board meeting, the Directors present shall
adjourn the meeting and promptly give notice of when the next Board meeting will
be reconvened. In the event a quorum is not present for two (2) consecutive
times upon due notice, any action or resolution of the Board shall be validly
adopted so long as four (4) Directors are present with their unanimous
affirmative vote, except in the case of Board meetings held for the purpose of
approving resolutions in respect of Reserved Matters as described in subsection
(iv) or a Fundamental Matter as described in subsection (v) below.
     (iii) Notice and Video-Conference Availability. Not less than ten (10)
Business Days’ prior written notice should be made to all the Directors for a
Board meeting, which notice period may be reduced or waived with the written
consent of all the Directors. The notice shall be written in both English and
Chinese and shall specify the date, time, venue, agenda, and business to be
discussed and shall include copies of accompanying materials for such meeting.
The notice shall be transmitted by registered post, facsimile or e-mail to the
addresses or numbers of the Directors as they may provide to the Company from
time to time. At the request of any Director given at least two (2) Business
Days in advance of the meeting date, the Company shall provide
video-conferencing for the conduct of such meeting.
     (iv) Voting. At any Board meeting, each Director has one (1) vote. Any
Director may, by written notice to the Company, authorize another Director as
his or her representative to attend and vote by proxy for such Director at any
Board meeting. The minutes of the Board, any resolutions adopted by the Board
and information provided to the Board shall be in both Chinese and English and
copies shall be circulated to all Directors.
          Unless as otherwise provided herein, the adoption of any resolution of
the Board of Directors shall require the affirmative vote of a simple majority
of the Directors present at a duly constituted Board meeting; provided that the
adoption of any resolution in respect of the matters set forth herein below
(each, a “Reserved Matter”) shall require the approval of at least five
(5) Directors:
     (1) conducting any material business that is not within the scope of the
Business, subject to further approval of the Examination and Approval Authority;

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     (2) any change of the financial reporting standard or the Independent
Auditor of the Company;
     (3) material changes to the Initial Business Plan;
     (4) approving or amending the Dividend and Distribution Policy;
     (5) approving or changing the Company’s policies and practices applicable
to Related-Party Transactions or approving any Non-Ordinary Course Related-Party
Transaction, unless it has been previously approved in accordance with this
Agreement;
     (6) the admission of any new Equityholder of the Company resulting from
issuances of new Equity Interest of the Company (except for the issuance of new
Equity Interest to Affiliates of BGP or ION pursuant to the terms of this
Agreement); and
     (7) any action that would increase the indebtedness of the Company beyond
that contemplated within the then-effective Business Plan or such other amount
as may be approved by the Board in compliance with the voting requirements of
this subsection.
     (v) Unanimous Voting. Any action taken or resolution passed by the Board of
Directors in respect of any of the following matters (each, a “Fundamental
Matter”) shall require the affirmative vote of all the then current Directors
present at a duly constituted Board meeting:
     (1) amending or waiving any terms of the Articles of Association or other
organizational documents of the Company (other than mere technical amendments
having no effect on the rights or obligations of Equityholders);
     (2) termination, dissolution, winding up or liquidating or adopting a plan
to effect the dissolution of the Company;
     (3) any increase or decrease of the Company’s registered capital;
     (4) a sale of all or substantially all assets of the Company;
     (5) a change in the size or function of the Board; and
     (6) mergers, statutory share exchanges, amalgamations, consolidations or
separation of the Company.
     (vi) Action by Written Resolution. Any action that may be taken by the
Directors at a duly convened Board meeting may be taken by a written resolution
in lieu of meeting of the Board; provided that, such written resolution is
circulated to all Directors and signed by the simple majority of the Directors,
except in the case of a Fundamental Matter, which consent must be signed by all
of the Directors, or Reserved Matter, which consent must be signed by at least
five (5) Directors, at least ten (10) Business Days prior to the adoption of
such resolution, subject to any bona fide exigent circumstances that demand more
prompt action.
          Section 3.4 Board Committees. The Board may establish board committees
such as audit committee, nomination and governance committee, compensation
committee, etc. and may delegate certain responsibilities to such committees;
provided that any such committees shall have at least one ION Director and one
BGP Director; and provided further that the Board shall not delegate to any
committee the responsibility or authority to make a decision relating to any
Reserved Matter or Fundamental Matter.
          Section 3.5 Supervisors.

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               (a) The Company shall have two (2) Supervisors, of whom one
(1) shall be appointed by BGP and one (1) shall be appointed by ION. Each Party
shall notify in writing to the other Party the details of its appointee.
               (b) Each Supervisor shall be appointed for a term of three
(3) years and may serve consecutive terms if reappointed by the Party originally
appointing that Supervisor. A Supervisor shall serve and may be removed at the
discretion of the Party which appointed that Supervisor. If the office of a
Supervisor is vacated by the retirement, resignation, illness, disability or
death or by removal, the Party having originally appointed such Supervisor shall
appoint a successor to serve out such Supervisor’s remaining term.
               (c) No Director or member of the Executive Management may
concurrently serve as a Supervisor.
               (d) To supervise the management of the Company, the Supervisors
may take the following actions:
     (i) inspect accounting records, vouchers, books and statements of the
Company;
     (ii) supervise the duty-related acts of the Directors and Executive
Management, put forward proposals for the removal of any Director or members of
the Executive Management who violates applicable Law;
     (iii) request the Directors and members of the Executive Management to
rectify any conduct which is prejudicial to the interests of the Company;
     (iv) attend meetings of the Board and to make queries or suggestions
regarding matters to be resolved by the Board;
     (v) conduct investigation in respect of any abnormal operations relating to
the Company or its business; and
     (vi) initiate actions against Directors or members of the Executive
Management according to PRC Company Law.
               (e) Each Supervisor shall serve in such capacity without any
remuneration, but all reasonable costs incurred by the Supervisors in the
performance of their duties as Supervisor of the Company shall be borne by the
Company.
          Section 3.6 Executive Management.
               (a) The Executive Management of the Company shall be set forth in
the then-effective Business Plan, including one (1) General Manager as the CEO
and several Deputy General Managers. Unless otherwise required by the Board, all
the members of the Executive Management (other than the CEO) shall be under the
leadership of, and report to, the CEO.
               (b) The Parties agree that members of the Executive Management of
the Company shall be appointed by the Board for such terms as it desires. The
Board may appoint additional members of Executive Management in its discretion.
Each member of the Executive Management shall be removed or replaced by the
Board of Directors, but any such removal or replacement shall not affect any
contractual rights that any such member may have with respect to such member’s
employment.

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               (c) In recognition of the importance of management continuity and
stability to the Company, the Board shall give considerable weight to
maintaining the appointment of the members of the Executive Management to retain
talent for the long-term.
               (d) The Executive Management shall be responsible for the
day-to-day operations of the Company, including:
     (i) Executing the then-effective Business Plan, including marketing,
development and pricing strategies;
     (ii) Providing monthly management reports on key commercial, financial,
technological and/or marketing developments and such other reports as the Board
may request; and
     (iii) Such other matters as may be appropriate or as may be requested or
delegated by the Board.
Article IV
operational matters
          Section 4.1 Business Plan and Annual Operating Plan.
               (a) BGP and ION shall present the Initial Business Plan to the
Board and procure their respective representatives on the Board to vote for the
approval and adoption of the Initial Business Plan.
               (b) Subsequent five-year Business Plans for the Company will be
prepared by the Executive Management for approval by the Board.
               (c) The Parties shall not cause the Company or any of its
Subsidiaries to operate outside the parameters set forth in the then-effective
Business Plan.
               (d) The Executive Management shall prepare an Annual Operating
Plan for each Fiscal Year for approval by the Board.
          Section 4.2 Financial, Accounting and Auditing System.
               (a) System. The financial and accounting system of the Company
shall be in accordance with the provisions of relevant officially published PRC
Law and PRC GAAP. To the extent required by applicable Law, the financial and
accounting system of the Company and changes thereto shall be filed with the
relevant Governmental Entities.
               (b) Financial Statements. The Company shall prepare and maintain
their accounts and financial statements in Chinese and English, and maintain
internal controls, in accordance with, and otherwise comply with the applicable
provisions of U.S. GAAP and Regulation S-X promulgated by the U.S. Securities
and Exchange Commission, and until the end of the year ending December 31, 2013,
shall produce financial statements in accordance with both U.S. GAAP (and
Regulation S-X, if it is then so required) and IFRS, after which the Company
shall only be required to produce financial statements in accordance with IFRS,
unless otherwise agreed to by the Parties.
               (c) Reporting Currency. The Company shall adopt RMB as its
reporting currency, but may also adopt US$ as an additional bookkeeping
currency. Any currency conversion or transaction necessary for the preparation
of the Company’s books and

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accounts, contributions to the registered capital, distribution of profits and
other purposes, shall be translated into the reporting currency based on the
official foreign exchange rate announced by the People’s Bank of China on the
transaction date or contribution date.
               (d) Independent Auditor. The Company shall have its accounts
audited annually by one of the Big Four Accounting Firms, registered in the PRC
(the “Independent Auditor”). The Independent Auditor shall be determined,
removed and replaced by the Board of Directors. The Company shall submit the
annual financial statements and the annual audit report of the Company to the
finance and taxation authorities and to such other Governmental Entities as may
be required under applicable PRC Law.
               (e) Fiscal Year. The Fiscal Year of the Company shall begin on
January 1 and end on December 31 of each year.
               (f) Records. All accounting vouchers, receipts, statements and
account books of the Company or its Subsidiaries shall be maintained at the
Company’s or its Subsidiaries’ legal addresses and shall be written in their
respective local language(s).
          Section 4.3 Taxes. The Company shall pay Taxes in accordance with
applicable Law.
          Section 4.4 Foreign Exchange Management. The Company’s foreign
exchange transactions shall be handled in accordance with applicable PRC Law
relating to foreign exchange control. The Company will seek to maintain a
balance in its foreign exchange receipts and expenditures through its normal
business operations and will obtain foreign currency through other methods
permitted by Law.
          Section 4.5 Distribution.
               (a) Profits and losses of the Company (for financial, accounting
and tax purposes) shall be attributable to each Party pro rata in proportion to
its Percentage Interest.
               (b) Distributions to the Parties shall be made to each Party on a
pro rata basis in proportion to its Percentage Interest and shall be made by the
Company to the Parties when and as declared by the Board.
               (c) The Company may not distribute profits until the losses of
the previous Fiscal Years have been made up.
               (d) The Company shall make distributions in accordance with the
Dividend and Distribution Policy. The initial Dividend and Distribution Policy
is attached herein in Annex A and such initial Dividend and Distribution Policy
may only be modified by the Board as provided for in Section 3.3(f)(iv)(4).
          Section 4.6 Related Party Transactions.
               (a) General Policy. Neither the Company nor any of its
Subsidiaries shall engage in any transaction with either of BGP or ION or any of
its Affiliates (each, a “Related-Party Transaction”), unless the Company or its
Subsidiary, as applicable, receives terms (including potential customary volume
discounts) no less favorable to the Company than those that would have prevailed
in a transaction with an independent third party in an arm’s-length transaction
under similar circumstances and market positions, provided that in all
transactions the Company or its Subsidiary, as applicable, shall be obligated to
provide to BGP or ION, as applicable, terms that are at least as favorable as
those provided to independent third parties including with respect to quality,
payment terms, price and delivery terms. The forgoing policy and practice with
respect to Related-Party Transactions may only be modified as a Reserved Matter
pursuant to Section 3.3(f)(iv).

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               (b) Ordinary Course Related-Party Transactions. Related-Party
Transactions that are in the Ordinary Course of Business, including the purchase
of products or services by BGP from the Company and the supply of products or
services by ION to the Company, shall be approved by the Board or the Executive
Management (if so delegated by the Board) consistent with its policies and
practices with respect to Related-Party Transactions, including those set forth
in Section 4.6(a) above.
               (c) Non-Ordinary Course Related-Party Transactions. All
Non-Ordinary Course Related-Party Transactions shall be approved by the Board in
the manner required by Section 3.3(f)(iv)(5), unless such Related-Party
Transaction has previously been approved. The following Related-Party
Transactions shall be deemed to have been validly approved by the Board and on
arm’s-length terms:
     (i) licenses of certain intellectual property by ION and BGP to the Company
and by the Company to the Parties as stipulated in the Purchaser Intellectual
Property Agreement and the Seller Intellectual Property Agreement;
     (ii) collaboration agreement among the Company, BGP and ION as stipulated
in the Joint Venture Collaboration Agreement;
     (iii) support and transition agreements, including secondment arrangements
of employees, with respect to other support functions to be provided by ION or
BGP to the Company, as stipulated in the Support and Transition Agreements.
               (d) Each quarter, a written summary of all material Related-Party
Transactions and purchases by each Party from the Company performed during the
preceding quarter, including a description of the pricing, payment and other
principal terms of such transactions, shall be provided to the Board.
               (e) If a Party or its Affiliate offers terms and conditions
(including as to quality and reliability) to the Company that are at least as
favorable to the Company as terms and conditions that are or would be offered by
an independent third party, the Company and the Board shall give preference to
dealing with such Party or its Affiliate.
          Section 4.7 Labor and Trade Union.
               (a) Labor Contracts. Such matters as the employment, transfer,
dismissal, resignation, wages, welfare benefits, labor insurance, labor
protection and labor discipline of the staff and workers of the Company shall be
determined by the Board and handled in accordance with applicable PRC Law. The
Company may enter into individual labor contracts with each of its employees,
including members of the Executive Management and other key employees, as the
Board may determine to be appropriate.
               (b) Trade Union. For so long as required by applicable PRC Law,
the staff and workers of the Company shall have the right to establish a trade
union organization and conduct trade union activities in accordance with
applicable PRC Law.
          Section 4.8 Insurance. The Company shall carry insurance with insurers
of recognized financial responsibility in such amounts and covering such risks
as are adequate for the conduct of the Business and the value of its properties
and as is customary for companies in the land seismic equipment industry in
similar markets.
          Section 4.9 Branding. The Company shall have ownership of and right to
use all brands and trade names of the existing products of the Parties
contributed to the Company and such rights shall be provided for in the
Purchaser Intellectual Property Agreement and the Seller Intellectual Property

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Agreement. The Company shall determine the brands and trade names of its new
products and product lines developed and operated by the Business.
Article V
Representations and warranties
          Each Party represents and warrants to each other Party, with respect
to itself, as follows:
          Section 5.1 Legal and Corporate Status. Such Party is duly organized,
validly existing and in good standing under the Laws of its jurisdiction of
incorporation or establishment.
          Section 5.2 Power and Authority; Authorization; Enforceability. Such
Party has the requisite corporate power and authority and has taken all
corporate action necessary in order to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. When executed and delivered by all other Parties hereto,
this Agreement, constitutes the legal, valid and binding obligations of such
Party, enforceable against such Party in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditor’s rights
and to general equity principles.
          Section 5.3 No Conflicts. The execution and delivery by such Party of
this Agreement, the performance of its obligations hereunder and the
consummation of the transactions contemplated hereby do not and will not
(i) violate, conflict with or result in the breach of any provision of its
organizational or governance documents; (ii) in any material respect, conflict
with or violate any Law applicable to it or any of its material assets or
properties; or (iii) in any material respect, conflict with, or result in a
violation or breach of or constitute a default under, any material contract to
which it is a party or by which its assets, rights and properties are bound.
          Section 5.4 Consents. Except for the approval from the National
Development and Reform Commission of the PRC, the approval from the Ministry of
Commerce of the PRC, the clearance from the Committee on Foreign Investment in
the United States and the approval from the Examination and Approval Authority,
no Governmental Authorization is required to be obtained or made by such Party
in connection with the execution and delivery of this Agreement, its performance
of the obligations hereunder, other than those (i) previously obtained or
(ii) that would not be reasonably expected to have or result in a Material
Adverse Effect on the Company.
          Section 5.5 No Regulatory Investigation. No regulatory investigation
or other legal proceeding (other than those arising from the transactions
contemplated under this Agreement) against any Party shall have been initiated
or threatened against such Party.
Article VI
Covenants
          Section 6.1 Non-Compete.
          Each Party agrees that during the Term of the Company, it and its
Subsidiaries shall not compete anywhere in the world directly in the businesses
that are within the scope of the Business other than any Excluded Business
(provided that, with respect to the Excluded Business consisting of respective
minority owned businesses Colibrys, Xi’an Sercel Petroleum Exploration
Instrument Co. Ltd. and Hebei Serceljunfeng Geophysical Prospecting Equipment
Co., Ltd, each such Excluded Business shall be excluded only so long as such
interest held by the respective Party does not constitute Control of such
minority owned business (it being further understood that BGP is in the process
of divesting its Controlling interest in Xi’an Sercel Petroleum Exploration
Instrument Co. Ltd.)). In the event a Party (the “Acquirer”) acquires,
incidentally as part of a larger transaction, a Competing Business, the Acquirer
shall undertake to dispose of such Competing Business within a reasonable period
of time. Subject to the foregoing, the

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Parties acknowledge and agree that each Party shall be permitted to conduct its
businesses in the ordinary course with competitors of the Company and that any
Party may conduct businesses with competitors of the other Parties.
          Each Party agrees that in furtherance of the Company, the Parties
shall cooperate on such matters outside the scope of the Business from time to
time as may be agreed between the Parties.
          Section 6.2 Compliance with U.S. Export Control Laws. To the extent
necessary for the JV Group’s compliance with Export Control Laws and the OFAC
Regulations, each Party shall and shall cause their respective Affiliates to
comply with the Export Controls and Sanctions Compliance Plan, a form of which
is set forth in Annex B, as may be modified from time to time by the Board.
          Section 6.3 Notice of Changes. Each Party shall, and shall cause the
Company to, promptly notify the other Parties, in writing, (i) with respect to
itself, of: (a) any breach of any covenant or obligation under this Agreement;
(b) any Material Adverse Effect; (c) any Bankruptcy Event; or (ii) any change,
event, circumstance, condition or effect which could reasonably be expected to
result in a Material Adverse Effect on the Company.
          Section 6.4 Financial Records, Information and Inspection Rights.
               (a) Financial Records. The Company shall keep full, complete and
accurate books of account, record and information with respect to its affairs
and the same shall be maintained at the principal office of the Company. Entries
shall be made in such books of account and records of all such matters,
transactions and things as are usually written and entered in books of account
and records kept by Persons engaged in businesses similar to the business of the
Company or required by applicable Law.
               (b) Delivery of Documents.
     (i) Annual Financial Statements. The Company shall deliver to the Parties
within forty-five (45) days after the end of each Fiscal Year of the Company
beginning with 2010, a consolidated statement of operations and a consolidated
statement of cash flows for such Fiscal Year and a consolidated balance sheet as
of the end of such Fiscal Year, audited and certified by the Independent
Auditor.
     (ii) Quarterly Financial Statements. The Company shall deliver to the
Parties within twenty-five (25) days after the end of each Fiscal Quarter of the
Company beginning with the second Fiscal Quarter after the Closing, a
consolidated unaudited statement of operations and a consolidated unaudited
statement of cash flows for such Fiscal Quarter and a consolidated unaudited
balance sheet as of the end of such Fiscal Quarter, and a management report
including a comparison of the financial results of such Fiscal Quarter with the
corresponding quarterly budget.
     (iii) Other Information. The Company shall make available the following
documents promptly upon their becoming available and upon the request of any
Party hereto, copies of (i) all regular and periodic reports and all
registrations and filings of the Company with any Governmental Entity, (ii) all
press releases and other statements made available generally by the Company to
the public concerning material developments in the business of the Company and
(iii) such other material information and data with respect to the Company.
               (c) Inspection. The Company shall permit each Party to visit and
inspect and audit, at its respective expense, during normal business hours
following reasonable notice by such Party to the Company and only in a manner so
as not to interfere with the normal business operations of the Company and its
Subsidiaries, any of the properties of the Company and its Subsidiaries, examine
the books of account and records of the Company and its Subsidiaries, and
discuss the affairs, finances and accounts of the Company and its

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Subsidiaries with the directors, officers, management employees, accountants,
legal counsel and investment bankers of such companies; provided that such Party
agrees to keep confidential any information so obtained; provided, further, that
such Party may be excluded from access to any material, records or other
information if making such disclosure is restricted pursuant to a bona fide
agreement with a third party or if such disclosure would violate the
attorney-client privilege or would violate Export Control Laws or OFAC
Regulations.
          Section 6.5 Cooperation with the Parties.
               (a) The Company shall keep the Parties informed, on a current
basis, of any events, discussions, notices or changes with respect to any
criminal or regulatory investigation or action involving the Company or any of
its Subsidiaries, so that the Parties will have the opportunity to take
appropriate steps to avoid or mitigate any regulatory consequences to them that
might arise from such criminal or regulatory investigation or action and the
Company shall reasonably cooperate with the Parties and their respective
Affiliates in an effort to avoid or mitigate any cost or regulatory consequences
that might arise from such investigation or action (including by reviewing
written submissions in advance, attending meetings with authorities,
coordinating and providing assistance in meeting with regulators and, if
requested by any Party, making a public announcement of such matters).
               (b) The Company and the Parties shall use their reasonable
efforts to co-operate with each other in order for each Party to be able to
prepare their respective financial statements.
          Section 6.6 Service Arrangement.
               (a) Each Party shall provide the Company with certain services
following the Closing pursuant to the Support and Transition Agreements.
               (b) Each Equityholder shall and shall cause its Affiliates to
render additional technical assistance and support services requested by the
Company to the Company on an arms-length basis, on mutually acceptable terms and
conditions but not less favorable to the Company than those provided by other
Persons for identical or similar technical assistance and support services and
in accordance with the Company’s policy and practice with respect to
Related-Party Transactions; provided that, such Equityholder or its Affiliates
determines in good faith that it has the capability and capacity to provide such
services.
          Section 6.7 Intellectual Property Arrangement. According to the
Purchaser Group Intellectual Property Agreement and the Seller Group
Intellectual Property Agreement, the Company shall acquire ownership of any
intellectual property developed by it or its Subsidiaries after the Closing in
the course of its business, including any improvements it makes to any
intellectual property licensed from any Party, as described in the Intellectual
Property Agreement. Each of ION and BGP shall grant an irrevocable, perpetual,
royalty-free license to the Company (for use solely in the Business) for all ION
Derivative Works (as defined in the Seller Group Intellectual Property
Agreement) or BGP Derivative Works (as defined in the Purchaser Group
Intellectual Property Agreement), respectively. The Company shall (i) grant an
irrevocable, perpetual, royalty-free license to ION (for use solely in the ION
Business Field) to the Transferred Owned Intellectual Property, the Transferred
Licensed Intellectual Property and the Newco Derivative Works (as each term is
defined in the Seller Group Intellectual Property Agreement) and (ii) when
requested by BGP, grant an irrevocable, perpetual, royalty-free license to BGP
(for use solely in the BGP Business Field) to the Transferred Owned Intellectual
Property, the Transferred Licensed Intellectual Property (if any) and the Newco
Derivative Works (as each term is defined the Purchaser Group Intellectual
Property Agreement). In the event of any discrepancy between this Section 6.7
and the Purchaser Group Intellectual Property Agreement or the Seller Group
Intellectual Property Agreement, the Purchaser Group Intellectual Property
Agreement and the Seller Group Intellectual Property Agreement shall prevail.

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          Section 6.8 Employee Related Matters.
               (a) The Parties shall endeavor to maintain the stability and
continuity of the Company’s employees to ensure the smooth operation of the
Business.
               (b) Unless otherwise agreed by the Parties, new employees of the
Company shall be employed by the Company, as the Board may determine to be
appropriate. At the request of the Company, the Parties shall provide additional
available human resources support functions, including, if necessary, available
and permissible under applicable benefits plans, secondment arrangements and/or
benefits and insurance, for such employees. If any Party provides such services,
the Company shall reimburse such Party all costs it incurs as a result of such
services.
               (c) Without the Board’s prior approval, from the Closing until
the fifth (5th) anniversary of the Closing, no Party may directly or indirectly
(i) solicit or accept the employment of any current or former employees of the
Company or its Subsidiary or (ii) hire, re-hire, agree to have as a contractor
or otherwise employ such employees of the Company or its Subsidiary.
               (d) All intellectual property developed by employees of the
Company after the Closing shall belong to the Company.
          Section 6.9 Confidentiality.
               (a) General Obligations. Each Party and the Company (the
“Receiving Party”) undertakes to the other Parties and/or the Company (the
“Disclosing Party”) that it shall, and shall procure that their respective
Representatives shall, treat as confidential and not reveal to any third party
Confidential Information, without the prior written consent of the Disclosing
Party, or use any Confidential Information of any Disclosing Party in such
manner other than for the benefit of, or for the provision of services to, such
Disclosing Party.
               (b) Exceptions. The Parties and the Company acknowledge and agree
that the confidentiality obligations set forth herein shall not extend to:
     (i) Confidential Information that (x) is publicly available or (y) becomes
publicly available through no act or omission of the Receiving Party, or
(z) becomes available on a non-confidential basis from a source (other than the
Receiving Party) so long as such source is not known by such Receiving Party to
be prohibited from disclosing such information to such Receiving Party by a
legal, contractual or fiduciary obligation to the Disclosing Parties or any of
their Representatives;
     (ii) Confidential Information that is required to be disclosed to any
Governmental Entity or to the public in accordance with applicable Law; provided
that in the event a Receiving Party (or its Affiliates or its or their
respective Representatives) becomes legally compelled to disclose any
information, knowledge or data that is subject to the confidentiality provisions
of this Section 6.9, such compelled Receiving Party shall provide the Disclosing
Parties with prompt written notice of such requirement so that the Disclosing
Parties may seek, at their expense, a protective order, injunction or other
remedy and, if such protective order, injunction or other remedy is not
obtained, the compelled Receiving Party shall use its best efforts to disclose
only that portion of the Confidential Information that is required by the
applicable Law and to obtain assurances that confidential treatment will be
afforded to such disclosed material; and
     (iii) Confidential Information that is disclosed to a Representative, so
long as such Representative (i) is under a substantially similar obligation of
confidentiality and (ii) such disclosure is on a need-to-know basis.

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               (c) Other Information. The provisions of this Section 6.9 shall
be in addition to, and not in substitution for, the provisions of any separate
nondisclosure agreement executed by any Party or the Company with respect to the
contemplated transactions under this Agreement.
               (d) Notices. All notices required under this Section 6.9 shall be
made pursuant to Section 10.9 of this Agreement.
          Section 6.10 Expenses. Except as otherwise expressly provided herein,
all costs and expenses incurred in connection with the preparation and execution
of this Agreement shall be paid by the Party incurring such expense. Without
limiting the generality of the foregoing, each Party shall pay all legal,
accounting and investment banking fees and other fees to consultants and
advisors incurred by it relating to this Agreement and the transactions
contemplated herein.
          Section 6.11 Further Assurance. At any time and from time to time
after the Closing Date, each Party hereby agrees and covenants that it shall
(i) use its reasonable best efforts to ensure the due performance and observance
by the Company of its obligations under this Agreement; (ii) assist the Company
in obtaining Governmental Authorizations and all other relevant approvals,
certificates or registrations in various jurisdictions and communicating with
Governmental Entities as necessary to explore business opportunities, conduct
business transactions or engage in other activities in such jurisdictions (at
the sole expense of the Company); (iii) cause its representatives on the Board
to implement the Board resolutions and act in the Company’s best interests in
accordance with this Agreement; and (iv) do all such further acts and things,
all as the other Parties may reasonably request for the purpose of carrying out
the intent of this Agreement.
          Section 6.12 Indemnification.
               (a) Indemnification. Each Party and/or the Company (the
“Indemnifying Party”), agrees to indemnify, defend and hold harmless the other
Parties and/or the Company, such other Parties’ and/or the Company’s Affiliates
and their respective directors, officers, shareholders, partners, agents and
employees and their successors and assigns (each, an “Indemnified Party”), from,
against and in respect of any damages, claims, losses, charges, actions, suits,
penalties and reasonable costs and expenses (including reasonable attorney’s
fees), to the extent determined by the final judgment or award of a court of
competent jurisdiction or arbitration tribunal or in connection with a
settlement entered into in accordance with the terms and conditions of this
Agreement (collectively, the “Losses”), imposed on, sustained, incurred or
suffered by or asserted against any of the Indemnified Parties, relating to or
arising out of:
     (i) any breach or inaccuracy of any representation or warranty made by the
Indemnifying Party in this Agreement, other than those, if any, that have been
waived in writing by the other Parties and/or the Company; or
     (ii) the breach of any covenant or agreement of the Indemnifying Party
contained in this Agreement, other than those, if any, that have been waived in
writing by the other Parties and/or the Company.
The Indemnifying Party shall not be liable to the Indemnified Parties for any
Losses arising out of or resulting from any corrective or remedial action taken
or permitted to be taken by the Indemnified Parties unless the Indemnifying
Party shall have consented to such corrective or remedial action (such consent
not to be unreasonably withheld). In determining whether a proposed corrective
or remedial action is reasonable, the Parties and/or the Company shall take into
account, among other relevant factors, (A) the requirements of Law, (B) what is
reasonably advisable in order to avoid a material potential liability, (C) the
industry standards and practices in respect of similar facts and circumstances
and (D) the monetary costs and benefits of such action (as opposed to no action
or alternative possible actions) to the Indemnified

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Parties (without regard to the existence of any indemnification obligation of
the Indemnifying Party under this Section 6.12).
For the avoidance of doubt, the obligation of an Indemnifying Party to indemnify
an Indemnified Party hereunder shall not be duplicative of any obligation of
such Indemnifying Party to indemnify such Indemnified Party under another
Transaction Document.
               (b) Third-Party Claim Indemnification Procedures.
     (i) In the event that any written claim or demand for which the
Indemnifying Party may have liability to any Indemnified Party hereunder is
asserted against or sought to be collected from any Indemnified Party by a third
party (a “Third-Party Claim”), such Indemnified Party shall promptly, but in no
event more than ten (10) calendar days following such Indemnified Party’s
receipt of a Third-Party Claim, notify the Indemnifying Party in writing of such
Third-Party Claim, the amount or the estimated amount of damages sought
thereunder to the extent then ascertainable (which estimate shall not be
conclusive of the final amount of such Third-Party Claim), any other remedy
sought thereunder, any relevant time constraints relating thereto and, to the
extent practicable, any other material details pertaining thereto (a “Claim
Notice”). The Indemnifying Party shall have thirty (30) calendar days (or such
lesser number of days set forth in the Claim Notice as may be required by court
proceeding in the event of a litigated matter) after receipt of the Claim Notice
(the “Notice Period”) to notify the Indemnified Party that it desires to defend
the Indemnified Party against such Third-Party Claim.
     (ii) In the event that the Indemnifying Party notifies the Indemnified
Party within the Notice Period that it desires to defend the Indemnified Party
against a Third-Party Claim, the Indemnifying Party shall have the right to
defend the Indemnified Party by appropriate proceedings and shall have the sole
power to direct and control such defense at its expense. Once the Indemnifying
Party has duly assumed the defense of a Third-Party Claim, the Indemnified Party
shall have the right, but not the obligation, to participate in any such defense
and to employ separate counsel of its choosing. The Indemnified Party shall
participate in any such defense at its own expense unless the Indemnifying Party
and the Indemnified Party are both named parties to the proceedings and the
Indemnified Party shall have reasonably concluded that representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. The Indemnifying Party shall not, without the
prior written consent of the Indemnified Party, settle, compromise or offer to
settle or compromise any Third-Party Claim on a basis that would result in
(i) the imposition of a consent order, injunction or decree that would restrict
the future activity or conduct of the Indemnified Party or any of its
Affiliates, (ii) a finding or admission of a violation of Law or violation of
the rights of any Person by the Indemnified Party or any of its Affiliates, or
(iii) any monetary liability of the Indemnified Party that will not be paid or
reimbursed by the Indemnifying Party.
     (iii) If the Indemnifying Party elects not to defend the Indemnified Party
against a Third-Party Claim, whether by not giving the Indemnified Party timely
notice of its desire to so defend or otherwise, the Indemnified Party shall have
the right but not the obligation to assume its own defense; it being understood
that the Indemnified Party’s right to indemnification for a Third-Party Claim
shall not be adversely affected by assuming the defense of such Third-Party
Claim. The Indemnified Party shall not settle a Third-Party Claim without the
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld.
     (iv) The Indemnified Party and the Indemnifying Party shall cooperate in
order to ensure the proper and adequate defense of a Third-Party Claim,
including by providing access to each other’s relevant business records and
other documents and employees; it being

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understood that the costs and expenses of the Indemnified Party relating thereto
shall be Losses for purposes of Section 6.12(a).
     (v) The Indemnified Party and the Indemnifying Party shall use reasonable
best efforts to avoid production of Confidential Information (consistent with
applicable Law), and to cause all communications among employees, counsel and
others representing any party to a Third-Party Claim to be made so as to
preserve any applicable attorney-client or work-product privileges.
               (c) No Consequential Damages. Notwithstanding anything to the
contrary contained in this Agreement or provided for under any applicable Law,
in no event shall the parties hereto have any liability as against any
Indemnified Party for any indirect, incidental, consequential, special,
exemplary or punitive damages whether based on breach of contract, tort
(including negligence) or otherwise, or any loss of future revenue, income or
profits or any diminution of value relating to the breach or alleged breach
hereof, whether or not the possibility of such damages has been disclosed to the
other parties in advance or could have been reasonably foreseen by such other
parties; and any such damages in the foregoing shall not be included in the
Losses hereunder.
               (d) Adjustments to Losses.
     (i) Insurance. In calculating the amount of any Losses, the proceeds
actually received by the Indemnified Party or any of its Affiliates under any
insurance policy or pursuant to any claim, recovery, settlement or payment by or
against any other Person, net of any actual costs, expenses or premiums incurred
in connection with securing or obtaining such proceeds, shall be deducted
therefrom. In the event that an Indemnified Party has any rights against a third
party with respect to any occurrence, claim or loss that results in a payment by
an Indemnifying Party under this Section 6.12, such Indemnifying Party shall be
subrogated to such rights to the extent of such payment; provided that until the
Indemnified Party recovers full payment of the Losses related to any such claim,
any and all claims of the Indemnifying Party against any such third party on
account of said indemnity payment are hereby expressly made subordinate and
subject in right of payment to the Indemnified Party’s rights against such third
party. Without limiting the generality or effect of any other provision hereof,
each Indemnified Party and Indemnifying Party shall duly execute upon request
all instruments reasonably necessary to evidence and perfect the subrogation and
subordination rights detailed herein, and otherwise cooperate in the prosecution
of such claims.
     (ii) Taxes. In calculating the amount of any Losses, there shall be
deducted an amount equal to any net Tax benefit actually realized (including the
utilization of a Tax loss or Tax credit carried forward but ignoring the effect
of any shortfall in payment or provision for Tax payable) as a result of such
Losses by the party claiming such Losses.
     (iii) Reimbursement. If an Indemnified Party recovers an amount from a
third party in respect of any Losses that is the subject of indemnification
hereunder after all or a portion of such Losses has been paid by an Indemnifying
Party pursuant to this Section 6.12, the Indemnified Party shall promptly remit
to the Indemnifying Party the excess (if any) of (i) the amount paid by the
Indemnifying Party in respect of such Losses, plus the amount received from the
third party in respect thereof, less (ii) the full amount of Losses. For the
avoidance of doubt, no Indemnified Party shall be entitled to recover damages or
obtain payment, reimbursement, restitution or indemnity more than once in
respect of any one fact, matter, event or circumstance that gives rise to more
than one claim.
               (e) Payments. The Indemnifying Party shall pay all amounts
payable pursuant to this Section 6.12, by wire transfer of immediately available
funds, promptly following receipt from an Indemnified Party of a bill, together
with all accompanying reasonably detailed back-up documentation, for any Losses
that are the subject

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of indemnification hereunder, unless the Indemnifying Party in good faith
disputes such Losses, in which event it shall so notify the Indemnified Party.
In any event, the Indemnifying Party shall pay to the Indemnified Party, by wire
transfer of immediately available funds, the amount of any Losses for which it
is liable hereunder no later than ten (10) days following any final
determination of such Losses and the Indemnifying Party’s liability therefor or
a settlement entered into in accordance with the terms and conditions of this
Agreement. A “final determination” shall exist when (i) the parties to the
dispute have reached an agreement in writing, or (ii) an arbitration panel shall
have rendered a final non-appealable determination with respect to disputes the
parties have agreed to submit thereto pursuant to Section 10.10.
               (f) Mitigation. Each Indemnified Party shall use its commercially
reasonable efforts to mitigate any indemnifiable Losses. In the event an
Indemnified Party fails to so mitigate any indemnifiable Losses, the
Indemnifying Party shall have no liability for any portion of such Losses that
reasonably could have been avoided had the Indemnified Party made such efforts.
Without limiting the foregoing, after any Indemnified Party acquires knowledge
of any fact or circumstance that results in or would be reasonably expected to
result in any indemnifiable Losses or Third-Party Claim hereunder, the
Indemnified Party shall notify the Indemnifying Party promptly and implement,
and cause each other Indemnified Party to implement, such commercially
reasonable actions as the Indemnified Party shall request in writing for the
purposes of mitigating the possible Losses arising therefrom (such actions,
“Mitigation Actions”). In determining whether a proposed Mitigation Action is
reasonable, the parties will take into account, among other relevant factors,
(i) the requirements of Law, (ii) what is reasonably advisable in order to avoid
a material potential liability, (iii) the industry standards and practices in
respect of similar facts and circumstances and (iv) the monetary costs and
benefits of such action (as opposed to no action or alternative possible
actions), without regard to the existence of any indemnification obligation of
the parties under this Section 6.12.
Article VII
compliance with laws
          Section 7.1 Compliance with Applicable Law. The Company shall at all
times be in compliance in all material respects with applicable Law, including
applicable PRC Law. For the avoidance of doubt, the Company shall at all times
comply with the applicable requirements of the FCPA and as well as applicable
non-U.S. law implementing the OECD Convention on Combating Bribery of Foreign
Public Officials in International Business or other non-U.S. anti-bribery
conventions and anti-corruption and anti-bribery laws (collectively, the
“Anti-bribery Laws”); the OFAC Regulations; all U.S. statutory and regulatory
requirements and export and import control Laws and regulations related to the
export or transfer of commodities, software and technology, including the Arms
Export Control Act, as amended or any successor statute of similar import (22
U.S.C. § 2778), ITAR, the Export Administration Regulations, as amended or any
successor regulations of similar import (15 C.F.R. § 730 et seq.) and associated
executive orders (collectively the “Export Control Laws”); and anti-boycott
laws, regulations and guidelines of the U.S., including Section 999 of the
Internal Revenue Code and the regulations and guidelines issued pursuant thereto
and the Export Administration Regulations administered by the U.S. Department of
Commerce, as relating to anti-boycott matters (the “Anti-boycott Laws”).
          Section 7.2 Compliance Policies. Without limiting the foregoing, the
Parties shall cause the JV Group to maintain and enforce an Export Controls and
Sanctions Compliance Plan (“ECSCP”). The Company’s ECSCP as of the date hereof
is set forth in Annex B, which the Company may amend from time to time. The
ECSCP will include compliance policies and procedures designed to prevent, and
not to engage in, any business relationships or transactions between the JV
Group and (i) any Sanctioned Country, (ii) any Sanctions Target, or any entity
or individual directly or indirectly owned or controlled by any Sanctions Target
or (iii) any of the Parties or their Affiliates that would further activities of
those Parties or Affiliates in a Sanctioned Country or with a Sanctions Target.
In addition, the ECSCP will include compliance policies and procedures designed
to ensure compliance with (i) the FCPA and the

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Anti-bribery Laws and (ii) all Export Control Laws, especially with respect to
the assets contributed to the JV Group by ION or BGP and any products, services
or technologies that make use of such contributed assets. The Parties shall
cause the Company to appoint an “Export Control Administrator,” who will be a
U.S. citizen or U.S. permanent resident, to be responsible for the
implementation of and monitoring compliance with the ECSCP.
          Section 7.3 Compliance Advisor. The Parties also agree that they shall
cause the Board, consistent with their duties as directors, to appoint, as an
advisor to the Board, an individual with extensive experience in compliance with
U.S. economic sanctions, export and re-export control laws, the FCPA and
Anti-boycott Laws. This advisor will assist the Board in overseeing the
Company’s compliance with such Laws.
Article VIII
Transfer Restrictions
          Section 8.1 Transfer Restriction.
          Except as provided in Section 8.2, no Party may, at any time, directly
or indirectly, by Change of Control or operation of Law, Transfer any of its
Equity Interest (unless expressly superseded by express terms hereof) to any
Person without the prior written consent of the other Parties and the approval
of the Examination and Approval Authority and such Transfers shall be deemed
void.
          Section 8.2 Permitted Transfers.
          Notwithstanding the provisions of Section 8.1 hereof, the following
Transfers shall be permitted (it being agreed by the Parties that the prior
written consent of the other Parties shall be deemed to have been obtained to
effect the following Transfers), subject to the approval of the same by the
Examination and Approval Authority and/or other applicable Government Entity:
               (a) BGP may Transfer all or any part of its Equity Interest in
the Company as required under applicable Law, regulation or government policy
where such Law, regulation or government policy mandates that BGP shall no
longer be the holder of such Equity Interest, provided that such Permitted
Transferee agrees to be bound by all terms applicable to the ownership of the
Company including becoming a Party to this Agreement and all other applicable
agreements, subject to applicable Law;
               (b) Each Party may Transfer its Equity Interest pursuant to a
Change of Control provided (i) that it complies with the procedures for a Right
of First Refusal to the other Parties as set forth in Section 8.4 as to its
Equity Interest and (ii) that the Permitted Transferee is not a competitor of
the Company or of the other Parties;
               (c) On or after the fifth (5th) anniversary of the Closing,
following compliance with the procedures for a Right of First Refusal to the
other Parties as set forth in Section 8.4, each Party may Transfer its Equity
Interest to a Permitted Transferee other than a competitor of the Company or of
the other Parties; provided that such Permitted Transferee agrees to abide by
all terms applicable to the ownership of the Company including becoming a Party
to this Agreement and all other applicable agreements; and
               (d) ION is permitted to pledge its Equity Interest to China
Merchants Bank Co., Ltd., New York Branch (“CMB”), agent, as security for the
repayment of obligations under the Credit Agreement dated as of March ___, 2010,
among ION, ION International S.à.r.l., the guarantors party thereto, the lenders
party thereto and CMB, or to any successor agent pursuant to any refinancing of
such credit agreement.

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          Section 8.3 Condition to the Permitted Transfer. Any Permitted
Transferee shall have executed and delivered to the other Parties an instrument
in form and substance reasonably satisfactory to the other Parties confirming
that such Permitted Transferee agrees to become a Party to this Agreement and to
assume and be liable for the obligations of the transferring Party and accept
such a Transfer subject to all of the terms and conditions hereof and thereof.
          Section 8.4 Right of First Refusal.
               (a) In the event that an Offering Party makes a Transfer Election
pursuant to Section 8.2(b) or Section 8.2(c) (it is agreed and acknowledged by
the Parties that the Equity Interest transferred in any Transfer Election shall
not be less than the total Equity Interest held by such Party as of the date of
the Offer Notice), the Offering Party shall make an Offer to the Receiving Party
or Receiving Parties to acquire the Offered Interest at the Offer Price (the
“Right of First Refusal”). An Offer Notice shall be delivered to each Receiving
Party.
               The Offer Notice shall specify (i) the Offered Interest, (ii) the
Offer Price, (iii) the identity of the Proposed Transferee, and (iv) all other
material terms and conditions of the Proposed Transfer. The Offer Notice shall
constitute an irrevocable offer to sell all of the Offered Interest at a
purchase price equal to the Offer Price, and on the same terms and conditions as
set forth in the Offer Notice.
               In the event that any Receiving Party notifies the Offering Party
within the ROFR Option Period that such Receiving Party wishes to accept the
Offer, the Offering Party and such Receiving Party and any other Receiving
Parties wishing to accept the Offer shall, for a period of one (1) month (the
“Drafting Period”), negotiate in good faith and use all reasonable efforts to
enter into a Receiving Party Agreement, provided, that the Receiving Party
Agreement shall provide that such purchase shall be made for the Offer Price and
in the event more than one Receiving Parties enter into the Receiving Party
Agreement, such Receiving Parties shall purchase the Offered Interest pro rata
based on their respective Percentage Interest unless otherwise agreed to among
the Receiving Parties. The failure of a Receiving Party to respond within the
ROFR Option Period shall be deemed to be a waiver of its rights under this
Section 8.4 with respect to such Proposed Transfer only.
               (b) In the event that the Offering Party and any Receiving Party
enter into the Receiving Party Agreement:
     (i) the Offering Party and the Receiving Party or Parties shall agree on a
Target ROFR Completion Date, for the ROFR Completion, provided, that the
interval between the date on which the Offering Party and such Receiving Party
or Parties enter into the Receiving Party Agreement and the Target ROFR
Completion Date be sufficient to allow the Offering Party and such Receiving
Party or Parties to, and the Offering Party and such Receiving Party or Parties
shall agree to, use all reasonable efforts to (x) satisfy the ROFR Completion
Regulatory Requirements; and (y) fulfill as promptly as practicable the other
conditions that might be applicable to the ROFR Completion and take such other
actions (including promptly preparing and filing all necessary documentation and
executing any necessary agreements, instruments and documents) required to
consummate the ROFR Completion. Notwithstanding the foregoing, the Parties agree
that no Receiving Party shall be required to sell or hold separate, or agree to
sell or hold separate, any assets, businesses or interest in any assets or
businesses or to agree to any changes or restrictions in either the operations
of any such assets or businesses or the rights of such Receiving Party;
     (ii) in the event that any Receiving Party has not, after use of all
reasonable efforts, satisfied all of the ROFR Completion Regulatory Requirements
by the Target ROFR Completion Date, the Target ROFR Completion Date shall be
extended by two (2) months to allow such Receiving Party additional time to
satisfy the ROFR Completion Regulatory

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Requirements (unless such requirements are incapable of being satisfied on
reasonably satisfactory terms pursuant to clause (iv) below);
     (iii) on the ROFR Completion Date, the Receiving Party or Parties shall
transmit the Offer Price, by wire transfer of immediately available funds, to
the account as reasonably designated by the Offering Party; and
     (iv) if one or more ROFR Completion Regulatory Requirements are reasonably
incapable of being satisfied on reasonably satisfactory terms despite compliance
by the Receiving Party or Parties with the terms of clause (i) of this
Section 8.4(b), the Receiving Party or Parties shall inform the Offering Party
of the details and shall not be required to effect the ROFR Completion, and the
Offering Party shall retain its Equity Interest on the same terms as such Equity
Interest were held at the time it made such Offer. For the avoidance of doubt,
if the ROFR Completion is not effected pursuant to this clause (iv) of
Section 8.4(b), the Receiving Party or Parties shall not be required to make any
payment to the Offering Party.
               (c) In the event that (w) all Receiving Parties notify the
Offering Party that such Receiving Party or Parties do not wish to accept the
Offer or (x) all Receiving Parties fail to notify the Offering Party prior to
the expiration of the Offer Period that the Receiving Party or Parties wish to
accept the Offer or (y) the Offering Party and the Receiving Party or Parties
fail to enter into a Receiving Party Agreement due to any Receiving Party’s
breach of this Agreement or (z) the Offering Party and the Receiving Party or
Parties fail to consummate the ROFR Completion due to any Receiving Party’s
breach of this Agreement or the Receiving Party Agreement (each of the
foregoing, a “Decision Not To Proceed”), the Offering Party may enter into a
Third-Party Acquisition Agreement to Transfer the Offered Interest to a
Third-Party Buyer, provided, that:
     (i) the Third-Party Acquisition Agreement shall be executed and consummated
by no later than six (6) months after date of the Decision Not To Proceed; and
     (ii) the Third-Party Acquisition Agreement shall provide that the
Third-Party Buyer will purchase the Offered Interest for an up-front amount in
cash equal to no less than the Offer Price, and on terms and conditions not less
favorable to the Offering Party than those set forth in the Offer Notice.
          Section 8.5 Deadlock Resolution and Put Right of ION.
               (a) In the event of any dispute between the Parties related to
the Company (including a disagreement related to the operation or governance of
the Company as contemplated hereunder or a breach by a Party or the Company of
its obligations) or the consistent and repeated failure (on at least two
separate occasions) by the Board or Parties to resolve any matter (or obtaining
quorum on such matter), in addition to any other remedies required by applicable
Law:
     (i) The chief executive officers of BGP and ION shall discuss the dispute
in good faith on a regular basis for a period of thirty (30) days (or a lesser
period if both Parties agree that a resolution is not forthcoming) following the
occurrence of the dispute, in an effort to resolve the dispute;
     (ii) If no agreement is reached by the end of the discussion period
described above, then the dispute will be referred to non-binding mediation for
a period of not greater than sixty (60) days after the conclusion of the
discussion period described above (provided that if the nature of the dispute is
not conducive to resolution by mediation, the Parties may mutually agree to
forego the mediation process); and

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     (iii) If no resolution is reached at the conclusion of the mediation
process described above, then each Party may refer the dispute to arbitration as
provided in Section 10.10.
               (b) Notwithstanding anything contrary in this Agreement, at any
time after the fifth (5th) anniversary of the Closing and prior to the eighth
(8th) anniversary of the Closing, following the occurrence of (i) any failure to
resolve as to any Fundamental Matter or Reserved Matter, (ii) a dispute over a
material breach of the terms of this Agreement or (iii) a fundamental
disagreement by the ION Directors or ION with respect to any significant
management or operational matter concerning the Company that has been raised and
discussed at least once at a meeting of the Board and has not been resolved;
provided that, in each case, such dispute has undergone the procedures set forth
in Section 8.5(a) above but prior to arbitration (a “Deadlock”), ION shall have
the right to elect to require BGP to purchase all of its Equity Interest for the
then fair market value of such Equity Interest as of the date of the Deadlock
Notice (such a sale, the “Deadlock Sale”). The Deadlock Sale right and fair
market value of such Equity Interest shall be as follows:
               (c) If ION elects to exercise its Deadlock Sale right as
described above, it shall deliver a Deadlock Notice to BGP and the Company
within twenty (20) Business Days following the occurrence of a Deadlock.
               (d) For a period of ten (10) Business Days following delivery of
the Deadlock Notice, ION and BGP shall attempt in good faith to reach agreement
on the fair market value of ION’s Equity Interest. If the Parties fail to agree
on such value within the designated time period, ION and BGP shall, within ten
(10) Business Days afterwards, agree upon two internationally recognized
investment banking firms with expertise in valuing companies engaged in
businesses similar or related to the Business. The Parties shall jointly be
responsible for the fees and expenses of the selected investment banks.
               (e) Within twenty (20) Business Days of the selection of the
investment banks pursuant to Section 8.5(d) above, each such investment bank
shall independently determine, by using commonly accepted valuation techniques,
the enterprise value of the entire Company on a 100% (one hundred percent)
basis. The Company shall provide the investment banks with prompt access to such
information of the Company as the investment banks may reasonably request to
enable them to prepare their appraisal. On the thirtieth (30th) Business Day (or
earlier or later if reasonably requested by such investment banks) following the
selection of the two investment banks, each investment bank shall deliver its
valuation report of the Company to the Parties and the enterprise value of the
Company shall be equal to the average (mean) of the valuations determined by the
two investment banks. The Parties shall then derive the fair market value of
ION’s Equity Interest by subtracting the Company’s net debt from the Company’s
enterprise value and multiplying the resulting value by ION’s Percentage
Interest.
               (f) The Parties shall use their best efforts to obtain all
Governmental Authorizations and other approvals and make all notifications
necessary to complete the Deadlock Sale. In the event BGP fails to obtain
necessary PRC approvals to complete the Deadlock Sale, it shall use its best
efforts to designate a third party to purchase all of ION’s Equity Interest and
such third party shall agree to be bound by and assume BGP’s obligations
hereunder with respect to such Deadlock Sale. The Deadlock Sale shall be
completed within twenty (20) Business Days after determination of the fair
market value for ION’s Equity Interest as described above (whether by investment
banks or by agreement of the Parties) or, if all necessary approvals are not
obtained or if BGP has insufficient funds to acquire such Equity Interest in the
Company in a Deadlock Sale by such date, within ten (10) Business Days after the
receipt of all such approvals or expiration of an additional ninety (90) day
grace period during which BGP may raise additional funding. Upon completion of
the Deadlock Sale, all of ION’s Equity Interest shall be transferred to BGP,
free and clear of all

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encumbrances, and BGP shall pay the purchase price to ION in US$ by wire
transfer of immediately available funds.
               (g) During the process of the Deadlock Sale, the Parties and the
Company shall use their best efforts to continue to operate the Company in the
Ordinary Course of Business of the Company.
          Section 8.6 Sale upon Material Breach.
          Upon a material breach by any Party of the terms of this Agreement
that materially impedes in the conduct of the Business by the Company which is
not cured within a period of two (2) months following written notice of such
breach to such Party (a “Triggering Event”), the other Parties shall at their
sole discretion have the right to buy all of the Equity Interest in the Company
held by the Party undergoing the Triggering Event and those held by Affiliates
of such Party for 80% (eighty percent) of the then fair market value of such
Equity Interest determined in accordance with applicable procedures for a
Deadlock Sale, as set forth in Section 8.5. In the event that more than one of
the other Parties exercise their right according to this Section 8.6, such other
Parties shall purchase the Equity Interest held by the Party undergoing the
Triggering Event and those held by Affiliates of such Party pro rata based on
such other Parties’ respective Percentage Interest unless otherwise agreed to
among such other Parties.
Article IX
Term; termination, Dissolution and liquidation
          Section 9.1 Term and Extension. This Agreement shall become effective
upon the Closing and shall continue in effect until the earlier of the
following: (a) the thirtieth (30th) anniversary of the Closing; provided that
the term of this Agreement shall automatically extend for additional five
(5) year terms, subject to the approval of the Examination and Approval
Authority, unless one Party notifies the other Parties in writing of its intent
not to renew at least 180 (one hundred and eighty) days prior to the expiration
of such term, and (b) the occurrence of a Termination Event as set forth in
Section 9.2(b) below (collectively, the “Term”).
          Section 9.2 Withdrawals, Termination and Dissolution.
               (a) No Party shall withdraw from the Company or take any action
to dissolve, terminate or liquidate the Company or to require apportionment or
appraisal of the Company or any of its assets except as expressly permitted by
the terms of this Agreement and each Party shall waive any rights to take such
actions under applicable Law.
               (b) The Company may be dissolved and this Agreement shall
terminate if one of the following events (each, a “Termination Event”) shall
have occurred and the relevant approval of the Examination and Approval
Authority shall have been obtained:
     (i) the unanimous written agreement of all the Parties to dissolve the
Company or terminate this Agreement;
     (ii) the sale of all or substantially all of the assets of the Company;
     (iii) at the election of any other Party, in the case of a Bankruptcy Event
of a Party; and
     (iv) such other events pursuant to applicable Law.
               (c) Consequences of Termination. If this Agreement is terminated
pursuant to Section 9.2(b), this Agreement shall become null and void and of no
further force and effect, except that the Parties shall continue to be bound by
the provisions of this Section

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9.2(c), Section 6.9 (Confidentiality), Section 6.12 (Indemnification), Section
10.10 (Dispute Resolution), Section 10.12 (Governing Law) and Section 10.14
(Survival). Nothing in this Section 9.2(c) shall be deemed to release any Party
from any liability for any breach of this Agreement prior to such termination.
               Upon dissolution of the Company, all the business and affairs of
the Company will be promptly liquidated and wound up and the remaining assets of
the Company shall be distributed to the Equityholders of the Company in
accordance with their respective Percentage Interest.
          Section 9.3 Liquidation Procedures.
               (a) Dissolution of the Company. Upon the adoption by the Board of
Directors of a resolution to dissolve the Company and approval of the same by
the Examination and Approval Authority, the Board of Directors shall immediately
take steps to dissolve the Company and liquidate its assets in accordance with
applicable PRC Law, the provisions of this Agreement and the Articles of
Association.
               (b) Liquidation Committee. When the dissolution of the Company
occurs, the Board of Directors shall formulate liquidation procedures and
principles, and establish a Liquidation Committee within fifteen (15) days as of
the occurrence of the Termination Event. The Liquidation Committee shall provide
written notice of the liquidation to creditors of the Company within ten
(10) days as of its establishment and publish a public announcement within sixty
(60) days as of its establishment. The Liquidation Committee shall be composed
of three (3) members, with two (2) member appointed by BGP and one (1) member
appointed by ION. All decisions of the Liquidation Committee shall be adopted by
unanimous vote.
               (c) Responsibilities of the Liquidation Committee. The
responsibilities of the Liquidation Committee shall be to conduct a thorough
survey of the property, claims and debts of the Company, draw up a balance sheet
and inventory of the Company’s properties and assets, propose a basis for the
valuation of the Company and formulate a liquidation plan, all of which shall be
implemented after it having been submitted to and adopted by the Board of
Directors and, if required by the applicable PRC Law, shall also be submitted to
relevant Governmental Entity. During the period of liquidation, the Liquidation
Committee shall represent the Company in any legal proceeding.
               (d) Expenses. The expenses of liquidation and the remuneration of
the members of the Liquidation Committee shall be paid, with priority, from the
existing assets of the Company.
               (e) Distribution of Proceeds. After repayment of all debts of the
Company in accordance with applicable PRC Law, the Company’s remaining assets
(or the sales proceeds therefrom) shall be distributed to the Parties in
proportion to their Percentage Interest in the Company pursuant to Section 2.7.
               (f) Completion. After the liquidation of the Company is
completed, the Liquidation Committee shall promptly submit a report thereon at
or during a Board meeting for approval and submission to relevant Governmental
Entity. The Liquidation Committee shall then carry out the procedures for
turning in the Company’s business license and canceling its registration, and at
the same time, make a public announcement of such actions.
Article X
Miscellaneous

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          Section 10.1 Amendments and Modifications. Any provision of this
Agreement may be amended or waived if, and only if, such amendment or waiver is
in writing and signed, in the case of amendment, by each Party and the Company,
or, in the case of a waiver, by the Party or the Company against whom the waiver
is to be effective. Any amendment or waiver in accordance with this Section 10.1
shall be binding on the Parties and the Company hereto, including all of their
successors and Permitted Transferees, even if they do not execute any consent
with respect to such amendment or waiver. Any such amendments or modifications
shall become effective upon the approval of the same by the Examination and
Approval Authority.
          Section 10.2 No Waiver; Cumulative Rights. No waiver of any provision
of this Agreement shall be effective unless set forth in a written instrument
signed by the Party or the Company waiving such provision. No failure or delay
by a Party in exercising any right, power or remedy under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or remedy hereunder preclude any further exercise thereof or the
exercise of any other right, power or remedy. Without limiting the foregoing, no
waiver by a Party or the Company of any breach by any other Party or the Company
of any provision hereof shall be deemed to be a waiver of a subsequent breach of
that or any other provision hereof. Each and all of the various rights, powers
and remedies of a Party or the Company hereto will be considered to be
cumulative with and in addition to any other rights, powers and remedies which
such Party or the Company may have at law or in equity in the event of the
breach of any of the terms of this Agreement.
          Section 10.3 Assignments and Transfers. Unless expressly permitted by
Article VIII of this Agreement, no Party or the Company may, whether by
contract, operation of law or otherwise, assign any of its rights or delegate
any of its obligations under this Agreement without the prior written consent of
each of the other Parties or the Company hereto, and any purported assignment
without such consent shall be void and without effect.
          Section 10.4 Parties in Interest; No Third-Party Beneficiaries. This
Agreement shall inure to the benefit of and be binding upon the Parties and the
Company hereto and their respective successors and Permitted Transferees.
Nothing in this Agreement, express or implied, is intended to confer upon any
Person other than the Parties or the Company hereto, the Indemnified Parties, or
their respective successors or Permitted Transferees, any rights or remedies
under or by reason of this Agreement.
          Section 10.5 Entire Agreement. This Agreement, and any other
applicable Transaction Documents referenced herein, together with all schedules
and annexes attached hereto and thereto, shall constitute the entire agreement
between the Parties and the Company hereto with respect to the subject matter
hereof and supersede all previous covenants, agreements, undertakings, promises,
obligations, representations, warranties, arrangements, communications,
negotiations and understandings, oral or written, of any nature among the
Parties and the Company relating to such subject matter, including Article
(D)(5) through Article (D)(32) of the Transaction Term Sheet. This Section 10.5
shall not operate to limit a Party’s or the Company’s liability for any
misrepresentation fraudulently made by it.
          Section 10.6 Counterparts. This Agreement (or any agreement that
amends, modifies or supplements this Agreement) may be executed in any number of
counterparts and by the Parties and the Company in separate counterparts,
including counterparts transmitted by telecopier or facsimile or email, each of
which when so executed shall be deemed to be an original and all of which when
taken together shall constitute one and the same agreement.
          Section 10.7 Language. This Agreement shall be in Chinese and English.
The Chinese version and the English version shall be given equal weight in the
interpretation of this Agreement and shall have equal validity and legal effect.
          Section 10.8 Section Headings. The section and paragraph headings and
table of contents contained in this Agreement are for reference purposes only
and shall not in any way affect the meaning or interpretation of this Agreement.

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          Section 10.9 Notices. All notices or other communications required or
permitted to be given under this Agreement shall be in writing in both English
and Chinese and shall be deemed to have been fully given on the date delivered
by hand or by a generally recognized international courier service (with
relevant fees prepaid), or by other messenger (or, if delivery is refused, upon
presentment) or upon receipt by facsimile transmission (provided, that the
confirmation of such facsimile transmission is delivered by hand or by a
generally recognized courier service to the addressee of the facsimile within
five (5) days of the delivery of the facsimile), or upon delivery by registered
or certified mail (return receipt requested), postage prepaid, to the Parties
and the Company at the following addresses as shown below (or at such other
address as such Party and the Company may designate by fifteen (15) days’
advance written notice to the other Parties or the Company to this Agreement
given in accordance with this Section 10.9):

         
 
  (a) if to the Company:   INOVA Geophysical Equipment Limited
 
      Address: Room 612, Sixth Floor, E5-C1 Building,
 
      Finance Street, No.20 Guangchang East Road,
 
      TEDA, Tianjin
 
      Attention: Mr. Zhu Qiang
 
      Telephone: 86 312 3821463
 
      Facsimile: 86 10 81201392
 
 
  (b) if to BGP:   BGP Inc., China National Petroleum Corporation
 
      Address: No. 189, West Fanyang Street,
 
      Zhuo Zhou 072751, Hebei
 
      People’s Republic of China
 
      Attention: Mr. Zhu Qiang
 
      Telephone: 86 312 3821463
 
      Facsimile: 86 10 81201392
 
 
  (c) if to ION:   ION Geophysical Corporation
 
      Address: 2105 CityWest Blvd. Suite 400
 
      Houston, Texas 77042-2839
 
      United States of America
 
      Attention: David L. Roland
 
      Telephone: 1 281 5523308
 
      Facsimile: 1 281 8793600

          Section 10.10 Dispute Resolution.
               (a) In the event of any dispute, controversy or claim arising out
of or relating to this Agreement, or the performance, breach, termination, or
invalidity hereof, such dispute, controversy or claim shall be finally settled
by the HKIAC pursuant to UNCITRAL Rules with BGP, on the one hand, being
entitled to designate one arbitrator, and with ION, on the other hand, being
entitled to designate one arbitrator, while the third arbitrator will be
selected by agreement between the two designated arbitrators or, failing such
agreement, within ten (10) calendar days of initial consultation between the two
arbitrators, by the HKIAC pursuant to its arbitration rules.
               (b) If any Party fails to designate its arbitrator within twenty
(20) calendar days after the designation of the first of the three arbitrators,
the HKIAC shall have the authority to designate any person whose interests are
neutral to the Parties as the second of the three arbitrators.
               (c) The arbitration shall be conducted in both Chinese and
English.
               (d) Each Party agrees that service of process, arbitration
pleadings, and other written communications to such party at the address so
provided in Section 10.9

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hereof shall be deemed in every respect effective service of process or
notification upon such party in any such arbitration or related proceeding.
          Section 10.11 No Strict Construction. The Parties have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises under any provision of
this Agreement, this Agreement shall be construed as if drafted jointly by the
Parties, and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any provision of this
Agreement.
          Section 10.12 Governing Law. This Agreement will be governed by and
construed in accordance with the laws of the PRC, without giving effect to the
conflict of laws principles thereof.
          Section 10.13 Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable: (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
          Section 10.14 Survival. The agreements contained in Section 6.9
(Confidentiality), Section 6.12 (Indemnification), Section 10.10 (Dispute
Resolution), Section 10.12 (Governing Law) and this Section 10.14 shall continue
to survive after the expiration or termination of this Agreement and the
dissolution of the Company.
          Section 10.15 Force Majeure.
               (a) The failure or delay by any Party or the Company hereto to
perform any obligation under this Agreement solely by reason of Force Majeure
shall not be deemed to be a breach of this Agreement; provided, however, that
the Party or the Company so prevented from complying herewith shall not have
procured such Force Majeure, shall have used reasonable diligence to avoid such
Force Majeure and mitigate its effects, and shall continue to take all actions
within its power to comply as fully as possible with the terms of this
Agreement.
               (b) Except where the nature of the event shall prevent it from
doing so, the Party or the Company suffering such Force Majeure shall notify the
other Parties or the Company in writing within fourteen (14) days after the
occurrence of such Force Majeure and shall in every instance, to the extent
reasonable and lawful under the circumstances, use its best efforts to remove or
remedy such cause with all reasonable dispatch.
          Section 10.16 The Company’s Obligations. The Parties shall cause the
Company to comply with all applicable provisions in this Agreement.
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          IN WITNESS WHEREOF, the Parties have caused their respective
representatives to execute this Agreement as of the date first above written.

            BGP INC., CHINA NATIONAL PETROLEUM CORPORATION
      By:   \s\ Wang Tiejun         Name:   Wang Tiejun        Title:  
President & Executive Director        ION GEOPHYSICAL CORPORATION
      By:   \s\ Robert P. Peebler         Name:   Robert P. Peebler       
Title:   Chief Executive Officer