exv10w53






EXHIBIT 10.53




 




Warrant Issuance Agreement




Dated as of October 23, 2009



between



ION Geophysical Corporation,



and



BGP Inc., China National Petroleum Corporation



 














 








TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	Recitals 
	 	 	1	 
	 
	 	 	 	 
	Article I


Issuance; Closing
	 
	 	 	 	 
	1.1 Issuance
	 	 	1	 
	1.2 Terms of Warrant
	 	 	1	 
	1.3 Closing
	 	 	1	 
	1.4 Interpretation
	 	 	3	 
	 
	 	 	 	 
	Article II


Representations and Warranties
	 
	 	 	 	 
	2.1 Disclosure
	 	 	3	 
	2.2 Representations and Warranties of Company
	 	 	3	 
	2.3 Representations and Warranties of Investor
	 	 	7	 
	 
	 	 	 	 
	Article III


Covenants
	 
	 	 	 	 
	3.1 Certain Actions by Company
	 	 	8	 
	3.2 SEC Reports; NYSE Listing; Registration Statement
	 	 	8	 
	3.3 Use of Proceeds
	 	 	8	 
	3.4 Sufficiency of Common Shares
	 	 	8	 
	3.5 Change of Control
	 	 	9	 
	 
	 	 	 	 
	Article IV


Additional Agreements
	 
	 	 	 	 
	4.1 Expenses
	 	 	9	 
	4.2 Best Efforts
	 	 	9	 
	4.3 Transfers
	 	 	9	 
	4.4 Investor Filings
	 	 	10	 
	 
	 	 	 	 
	Article V


Indemnity
	 
	 	 	 	 
	5.1 Indemnification of Investor
	 	 	10	 
	5.2 Conduct of Claims
	 	 	10	 






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	 	 	Page	 
	Article VI


Miscellaneous
	6.1 Termination
	 	 	11	 
	6.2 Amendment
	 	 	11	 
	6.3 Waiver of Conditions
	 	 	11	 
	6.4 Counterparts and Facsimile
	 	 	11	 
	6.5 Governing Law; Submission to Jurisdiction, Etc.
	 	 	12	 
	6.6 Notices
	 	 	12	 
	6.7 Entire
Agreement, Etc.
	 	 	13	 
	6.8 Definitions of “Subsidiary”, “affiliate” and “person”
	 	 	13	 
	6.9 Assignment
	 	 	13	 
	6.10 Severability
	 	 	13	 
	6.11 No Third Party Beneficiaries
	 	 	14	 
	6.12 Further Assurances
	 	 	14	 






- ii -









 





LIST OF ANNEXES AND SCHEDULES




	 	 	 
	ANNEX A:

	 	FORM OF WARRANT
	 
	 	 
	ANNEX B:

	 	FORM OF REGISTRATION RIGHTS AGREEMENT
	 
	 	 
	ANNEX C:

	 	CHIEF FINANCIAL OFFICER’S CERTIFICATE
	 
	 	 
	ANNEX D:

	 	FORM OF LEGAL OPINION
	 
	 	 
	SCHEDULE 2.2(b):

	 	COMPANY’S CAPITAL STRUCTURE
	 
	 	 
	SCHEDULE 4.3(a):

	 	PERSONS TO WHOM WARRANT SHALL NOT BE TRANSFERRED






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INDEX OF DEFINED TERMS




	 	 	 
	 	 	Location of
	        
        Term	 	Definition
	affiliate
	 	6.8(b)
	Agreement
	 	Preamble
	Bankruptcy Exceptions
	 	2.2(d)(i)
	Beneficial Ownership
	 	3.5
	Board
	 	2.2(l)
	Bridge Funding
	 	Recital A
	Business Day
	 	1.4
	Change of Control
	 	3.5
	Closing
	 	1.3(a)
	Closing Date
	 	1.3(a)
	Commission
	 	2.1(a)
	Common Shares
	 	Recital B
	Company
	 	Preamble
	Company’s Knowledge
	 	2.2(l)
	control
	 	6.8(b)
	Convertible Notes
	 	1.3(c)
	Credit Agreement
	 	Recital A
	Exchange Act
	 	2.1(a)
	GAAP
	 	2.2(e)(i)
	Governmental Entities
	 	2.2(d)(iii)
	HKIAC
	 	6.5(b)
	Indemnified Party
	 	5.1
	Indemnifying Party
	 	5.2(a)
	Investor
	 	Preamble
	Investor Material Adverse Effect
	 	1.3(c)
	ION International
	 	Recital A
	Issuance
	 	1.1
	Material Adverse Effect
	 	1.3(d)(i)
	New Lender
	 	Recital A
	NYSE
	 	2.2(k)
	person
	 	6.8(c)
	Previously Disclosed
	 	2.1(a)
	Proceeding
	 	5.1
	Registration Rights Agreement
	 	Recital D
	SEC Reports
	 	2.1(a)
	Securities Act
	 	Recital C
	Subsidiary
	 	6.8(a)
	Transaction Documents
	 	2.1(b)
	Transaction Term Sheet
	 	2.2(l)
	Transfer
	 	4.3(a)
	Warrant
	 	Recital B
	Warrant Shares
	 	Recital B






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          This Warrant Issuance Agreement, dated October 23, 2009 (this “Agreement”),
between ION Geophysical Corporation, a corporation organized under the laws of the State of
Delaware (the “Company”), and BGP Inc., China National Petroleum Corporation, a company
organized under the laws of the People’s Republic of China (the “Investor”).




Recitals:




WHEREAS:




          A. The Investor has (i) arranged for Bank of China, New York Branch (the “New Lender”)
to provide certain financing to the Company and (ii) provided assurance to the New Lender for the
benefit of the Company ((i) and (ii) collectively, the “Bridge Funding”) as evidenced in
(x) the Amended and Restated Credit Agreement dated as of July 3, 2008 (as amended, modified and
supplemented from time to time (including by the Sixth Amendment to the Amended and Restated Credit
Agreement), the “Credit Agreement”), among the Company, ION International S.À.R.L., a
Luxembourg private limited company (société à responsabilité limitée) (“ION
International”), the guarantors, HSBC Bank USA, N.A., ABN AMRO Incorporated, as Joint Lead
Arranger and Joint Bookrunner and the lenders named therein and (y) an agreement between the
Investor and the New Lender;




          B. In consideration for the Bridge Funding, the Company agrees to issue to the Investor a
warrant (the “Warrant”), in substantially the form of warrant attached hereto as Annex
A, to purchase such number of shares of the Common Stock of the Company, par value US$0.01 per
share (“Common Shares”), as specified in the Warrant (such Common Shares issuable pursuant
to the Warrant, the “Warrant Shares”);




          C. The Warrant shall be issued to the Investor without being registered under the United
States Securities Act of 1933, as amended (the “Securities Act”), in reliance upon
exemptions from the registration requirements thereunder; and




          D. Resales of the Warrant Shares shall be registered under the Securities Act, pursuant to a
Registration Rights Agreement (the “Registration Rights Agreement”) in substantially the
form attached hereto as Annex B.




          NOW, THEREFORE, in consideration of the premises, and of the representations, warranties,
covenants and agreements set forth herein, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:




Article I




Issuance; Closing



          1.1 Issuance. On the terms and subject to the conditions set forth in this Agreement,
the Company agrees to issue to the Investor at the Closing, the Warrant (the “Issuance”).




          1.2 Terms of Warrant. After the Issuance, the rights and obligations of the holder of
the Warrant shall be governed by the terms set forth in the Warrant.




          1.3 Closing.





          (a) On the terms and subject to the conditions set forth in this Agreement, the closing
of the Issuance (the “Closing”) will take place at the offices of Sullivan & Cromwell
LLP, 28th Floor, Nine Queen’s Road Central, Hong Kong, at 9:30 p.m., Hong Kong
time, October 27, 2009



 









 







or as soon as practicable thereafter, or at such other place, time and date as shall be
agreed between the Company and the Investor. The time and date on which the Closing occurs
is referred to in this Agreement as the “Closing Date”.




          (b) Subject to the fulfillment or waiver of the conditions to the Closing in this
Section 1.3, at the Closing, the Company will deliver the Warrant, as evidenced by one or
more certificates dated the Closing Date and bearing appropriate legends as hereinafter
provided for, in consideration for the Bridge Funding.




          (c) The obligation of the Company to consummate the Closing is also subject to the
fulfillment (or waiver by the Company) at or prior to the Closing of the following
conditions: (i) the representations and warranties of the Investor set forth in this
Agreement shall be true and correct as though made on and as of the Closing Date (other than
representations and warranties that by their terms speak as of another date, which
representations and warranties shall be true and correct as of such date), except to the
extent that the failure of such representations and warranties to be so true and correct,
individually or in the aggregate, does not have and would not be reasonably likely to have an
Investor Material Adverse Effect and (ii) the simultaneous execution of the documentation for
the Bridge Funding (including, but not limited to, certain convertible promissory note(s)
issued by the Company and/or ION International pursuant to the Credit Agreement (such
convertible promissory notes issued upon the execution of the documentation for the Bridge
Funding and other similar convertible promissory notes issued after such time collectively,
the “Convertible Notes”)). “Investor Material Adverse Effect” means a
material adverse effect on the ability of the Investor to consummate the Issuance and the
other transactions contemplated by the Transaction Documents.




          (d) The obligation of the Investor to consummate the Closing is also subject to the
fulfillment (or waiver by the Investor) at or prior to the Closing of each of the following
conditions:




     (i) the representations and warranties of the Company set forth in this Agreement
shall be true and correct as though made on and as of the Closing Date (other than
representations and warranties that by their terms speak as of another date, which
representations and warranties shall be true and correct as of such date), except to the
extent that the failure of such representations and warranties to be so true and correct,
individually or in the aggregate, does not have and would not be reasonably likely to have
a Material Adverse Effect. “Material Adverse Effect” means a material adverse
effect on (i) the business, results of operation or financial condition of the Company and
its consolidated Subsidiaries taken as a whole or (ii) the ability of the Company to timely
consummate the Issuance and the other transactions contemplated by the Transaction
Documents;




     (ii) the Company shall have duly executed and delivered the Warrant in substantially
the form attached hereto as Annex A to the Investor or its designee(s);




     (iii) the Company shall have duly executed and delivered to the Investor or its
designee(s) the Registration Rights Agreement in substantially the form attached hereto as
Annex B;




     (iv) the chief financial officer of the Company shall have duly executed and delivered
the certificate, dated as of the Closing Date, certifying the representation and warranties
of the Company in Section 2.2(l) and substantially in the form attached hereto as Annex
C; and



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     (v) the company shall, or shall cause its legal counsel to, have delivered to the
Investor a customary validity and “no registration” opinion, dated as of the Closing Date,
reasonably satisfactory to the Investor, in substantially the form attached hereto as
Annex D.



          1.4 Interpretation. When a reference is made in this Agreement to “Recitals”,
“Articles”, “Sections” or “Annexes”, such reference shall be to a Recital, Article or Section of,
or Annex to, this Agreement unless otherwise indicated. The terms defined in the singular have a
comparable meaning when used in the plural, and vice versa. References to “herein”, “hereof”,
“hereunder” and the like refer to this Agreement as a whole and not to any particular section or
provision, unless the context requires otherwise. The table of contents and headings contained in
this Agreement are for reference purposes only and are not part of this Agreement. Whenever the
words “include”, “includes” or “including” are used in this Agreement, they shall be deemed
followed by the words “without limitation”. No rule of construction against the draftsperson shall
be applied in connection with the interpretation or enforcement of this Agreement, as this
Agreement is the product of negotiation between sophisticated parties advised by counsel. All
references to “US$” mean the lawful currency of the United States of America. Except as expressly
stated in this Agreement, all references to any statute, rule or regulation are to the statute,
rule or regulation as amended, modified, supplemented or replaced from time to time (and, in the
case of any statute, include any rules and regulations promulgated under such statute) and to any
section of any statute, rule or regulation include any successor to the section. References to a
“Business Day” shall mean any day except Saturday, Sunday and any day which shall be a
legal holiday or a day on which banking institutions in the City of New York, New York, United
States of America, or Beijing, People’s Republic of China generally are authorized or required by
law or other governmental actions to close.




Article II




Representations and Warranties



          2.1 Disclosure.





          (a) “Previously Disclosed” means information set forth or incorporated in the
Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008 or its other
reports and forms filed with the United States Securities and Exchange Commission (the
“Commission”) (such reports and forms, the “SEC Reports”) under
Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) on or after December 31, 2008 but prior to the date hereof.




          (b) For purposes of this Agreement, the term “Transaction Documents” refers
collectively to this Agreement, the Registration Rights Agreement and the Warrant, in each
case, as amended, modified or supplemented from time to time in accordance with their
respective terms.



          2.2 Representations and Warranties of Company. Except as Previously Disclosed, the
Company represents and warrants to the Investor that as of the date hereof:





          (a) Organization, Authority and Subsidiaries. The Company has been duly
incorporated and is validly existing as a corporation in good standing under the laws of the
State of Delaware, with corporate power and authority to own its properties and conduct its
business in all material respects as currently conducted, and, has been duly qualified as a
foreign corporation for the transaction of business and is in good standing under the laws of
each other jurisdiction in which it owns or leases properties, or conducts any business so as
to require such qualification (except where the failure to be so qualified would not be
reasonably likely to have a Material Adverse Effect). Each



3









 









Subsidiary of the Company has been duly organized and is validly existing in good
standing under the laws of its jurisdiction of organization.




          (b) Capitalization. Set forth in Schedule 2.2(b) is the Company’s capital
structure immediately prior to the Closing Date. All of the outstanding Common Shares are,
and all shares of capital stock which may be issued pursuant to outstanding stock options,
warrants or other convertible rights will be, when issued and paid for in accordance with the
respective terms thereof, duly authorized, validly issued, fully paid and non-assessable,
free of any preemptive rights in respect thereof and issued in compliance with all applicable
state and federal laws concerning issuance of securities. As of the date hereof, except as
set forth in Schedule 2.2(b), and except for Common Shares or other securities issued upon
conversion, exchange, exercise or purchase associated with the securities, options, warrants,
rights and other instruments referenced in Schedule 2.2(b), no shares of capital stock or
other voting securities of the Company were outstanding, no equity equivalents, interests in
the ownership or earnings of the Company or other similar rights were outstanding, and there
were no existing options, warrants, calls, subscriptions or other rights or agreements or
commitments relating to the capital stock of the Company or any of its Subsidiaries or
obligating the Company or any of its Subsidiaries to issue, transfer, sell or redeem any
 shares of capital stock, or other equity interest in, the Company or any of its Subsidiaries
or obligating the Company or any of its Subsidiaries to grant, extend or enter into any such
option, warrant, call, subscription or other right, agreement or commitment.




          (c) Warrant and Warrant Shares. The Warrant has been duly authorized and, when
executed and delivered as contemplated hereby, will constitute a valid and legally binding
obligation of the Company in accordance with its terms, and the Warrant Shares have been duly
authorized and when issued upon exercise of the Warrant against payment therefor in
accordance with the terms of the Warrant will be validly issued, fully paid and
non-assessable.




          (d) Authorization, Enforceability.




     (i) The Company has the corporate power and authority to execute and deliver this
Agreement and the other Transaction Documents and to carry out its obligations hereunder
and thereunder. The execution, delivery and performance by the Company of this Agreement
and the other Transaction Documents to which it is a party and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of the Company, and no further approval or authorization is
required on the part of the Company in connection herewith and therewith. This Agreement
and the other Transaction Documents are or will be valid and binding obligations of the
Company enforceable against the Company in accordance with their respective terms, except
as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the enforcement of creditors’ rights generally and general
equitable principles, regardless of whether such enforceability is considered in a
proceeding at law or in equity (“Bankruptcy Exceptions”).




     (ii) The execution, delivery and performance by the Company of this Agreement and the
other Transaction Documents and the consummation of the transactions contemplated hereby
and thereby and compliance by the Company with any of the provisions hereof and thereof,
will not (i) violate, conflict with, or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the performance
required by, or result in a right of termination or acceleration of, or result in the
creation of, any lien, security interest, charge or encumbrance upon any of the properties
or assets of the Company or any Subsidiary under any of the terms, conditions or provisions
of (A) its certificate of incorporation and by-laws or (B) any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement, contract or other instrument or
obligation to



4









 







which the Company or any Subsidiary is a party or by which it or any Subsidiary may be
bound, or to which the Company or any Subsidiary or any of the properties or assets of the
Company or any Subsidiary may be subject, or (ii) violate any law, statute, rule or
regulation or any judgment, ruling, order, writ, injunction, business license, decree or
other regulatory restriction applicable to the Company or any Subsidiary or any of their
respective properties or assets.




     (iii) Except as contemplated in the Transaction Term Sheet, the Warrant and/or the
Convertible Notes, no notice to, filing with, exemption or review by, or authorization,
consent or approval of, any United States of America, People’s Republic of China or other
national, state, provincial, local and other governmental or regulatory authorities
(collectively, “Governmental Entities”), is required to be made or obtained by the
Company in connection with the consummation by the Company of the Issuance.




          (e) Company Financial Statements.




     (i) The consolidated financial statements of the Company and its consolidated
Subsidiaries included or incorporated by reference in the SEC Reports filed prior to the
Closing, present fairly in all material respects the consolidated financial position of the
Company and its consolidated Subsidiaries as of the dates indicated therein and the
consolidated results of their operations for the periods specified therein; and such
financial statements were prepared in conformity with generally accepted accounting
principles in the United States of America (“GAAP”) applied on a consistent basis
(except as may be noted therein).




     (ii) Ernst & Young LLP is an independent registered public accounting firm of the
Company as required by the Exchange Act and the rules and regulations of the Commission and
the Public Company Accounting Oversight Board.




          (f) Reports.




     (i) Since December 31, 2008, the Company has complied in all material respects with
the filing requirements of Sections 13(a) and 15(d) of the Exchange Act.




     (ii) The SEC Reports filed by the Company prior to the Closing, when they became
effective or were filed with the Commission, as the case may be, conformed in all material
respects to the requirements of the Securities Act or the Exchange Act, as applicable, and
the rules and regulations of the Commission thereunder, and none of such documents, when
they became effective or were filed with the Commission, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances in which they
were made, not misleading.




     (iii) The Company is in compliance with the applicable requirements of the
Sarbanes-Oxley Act of 2002 that are effective as of the date hereof. The financial
statements of the Company included in the SEC Reports comply in all material respects with
applicable accounting requirements and rules and regulations of the Commission with respect
thereto as in effect at the time of filing.




          (g) No Material Adverse Effect. Since the most recent SEC Report, no fact,
circumstance, event, change, occurrence, condition or development has occurred that,
individually or in the aggregate, has had or would be reasonably likely to have a material
adverse effect.



5









 






          (h) Exemption from Registration. An exemption from registration under the
Securities Act (including the exemption under Regulation S, Section 4(2), and/or Regulation D
of the Securities Act) is available for the issuance of the Warrant and the Warrant Shares.




          (i) Solvency. The sum of the assets of the Company, both at a fair valuation
and at present fair salable value, exceeds its liabilities, including contingent liabilities.
The Company has sufficient capital or access to capital with which to conduct its business as
presently conducted and as proposed to be conducted. The Company has not incurred debt, and
does not intend to incur debt, beyond its ability to pay such debt as it matures. For
purposes of this paragraph, “debt” means any liability on a claim, and “claim” means (x) a
right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or
unsecured, or (y) a right to an equitable remedy for breach of performance if such breach
gives rise to a payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured, or unsecured.
With respect to any such contingent liabilities, such liabilities are computed at the amount
which, in light of all the facts and circumstances existing at the time, represents the
amount which can reasonably be expected to become an actual or matured liability. In
addition, no assignment for the benefit of creditors or bona fide proceeding has been
instituted by or against the Company or its Subsidiaries seeking to adjudicate any of them as
bankrupt or insolvent or seeking their liquidation, winding up or reorganization and no other
relief from creditors has been sought.




          (j) Form S-3. The Company is eligible to use Form S-3 to register securities
under the Securities Act.




          (k) NYSE. The Company satisfies all continued listing criteria of the New York
Stock Exchange (the “NYSE”) in respect of the Common Shares. No present set of facts
or circumstances will (with the passage of time or the giving of notice or both or neither)
cause any of the Common Shares to be delisted from the NYSE. All of the Warrant Shares will,
when issued, be duly listed and admitted for trading on all of the markets where Common
Shares are traded, including the NYSE.




          (l) Certain Certifications. To the best of the Company’s Knowledge, (i) there
is no current or threatened investigation or proceeding (other than those arising from the
transactions contemplated by the Term Sheet, dated as of October 23, 2009 between the Company
and Investor (the “Transaction Term Sheet”)) against the Company by any Governmental
Entities; (ii) there is no current or threatened shareholder lawsuit against the Company
alleging a violation of fiduciary duties or applicable securities laws (other than those in
existence at the time of the execution of the Transaction Term Sheet and disclosed to the
Investor); (iii) the Company, as a publicly listed company on the NYSE, complies in all
material respects with all applicable U.S. securities laws and regulations and all NYSE
rules; (iv) no representation or warranty by the Company for itself or on behalf of its
Subsidiaries in Section 2.2 of this Agreement contains any untrue statement of a material
fact or omits to state a material fact necessary to make any statement in any such
representation or warranty not misleading; (v) the Company has reserved for issuance, free of
preemptive or similar rights, a sufficient number of shares of authorized and unissued
Warrant Shares to effectuate the exercise of the Warrant at the initial exercise price of
such Warrant and (vi) except as set forth in the SEC Reports, each of the Company and its
Subsidiaries has complied in all material respects with each applicable law, rule or
regulation to which the Company or any such Subsidiary or its respective business,
operations, assets or properties is or has been subject and no event has occurred and no
circumstance exists that constitutes a violation of, conflict with or failure on the part of
the Company or any of its Subsidiaries to comply with, any law, rule or regulation.
“Company’s Knowledge” means the actual knowledge, after due inquiry, of the executive
management and the board of directors (the “Board”) of the Company, as of the date
hereof



6









 





          2.3 Representations and Warranties of Investor. The Investor hereby represents and
warrants to the Company that as of the date hereof:





          (a) Authorization, Enforceability.




     (i) The Investor has the power and authority, corporate or otherwise, to execute and
deliver this Agreement and the Registration Rights Agreement and to carry out its
obligations hereunder and thereunder. The execution, delivery and performance by the
Investor of this Agreement and the Registration Rights Agreement and the consummation of
the transactions contemplated hereby and thereby have been duly authorized by all necessary
action on the part of the Investor, and no further approval or authorization is required on
the part of the Investor or any other party for such authorization to be effective. This
Agreement and the Registration Rights Agreement are or will be valid and binding
obligations of the Investor enforceable against the Investor in accordance with their
respective terms, except as the same may be limited by Bankruptcy Exceptions.




     (ii) Other than such as have been made or obtained, no notice to, filing with,
exemption or review by, or authorization, consent or approval of, any Governmental Entity
is required to be made or obtained by the Investor in connection with the consummation by
the Investor of the Issuance except for any such notices, filings, exemptions, reviews,
authorizations, consents and approvals the failure of which to make or obtain would not be
reasonably likely to have an Investor Material Adverse Effect.




          (b) Investment Purposes. The Investor acknowledges that the Warrant and the
Warrant Shares have not been registered under the Securities Act or under any state
securities laws. The Investor (i) is acquiring the Warrant pursuant to an exemption or
exception from registration under the Securities Act solely for investment purposes for its
own account with no present intention to distribute them to any person in violation of the
Securities Act or any applicable state securities laws; (ii) will not sell or otherwise
dispose of any of the Warrant or the Warrant Shares, except in compliance with the
registration requirements or exemption provisions of the Securities Act and any applicable
state securities laws; (iii) has such knowledge and experience in financial and business
matters and in investments of this type that it is capable of evaluating the merits and risks
of the Issuance and of making an informed investment decision, and has conducted a review of
the business and affairs of the Company that it considers sufficient and reasonable for
purposes of making the Issuance, (iv) is able to bear the economic risk of the Issuance and
at the present time is able to afford a complete loss of such investment and (v) is an
“accredited investor” (as that term is defined by Rule 501 of Regulation D under the
Securities Act).




          (c) Legend. The Investor agrees that all certificates or other instruments
representing the Warrant and the Warrant Shares will bear a legend substantially to the
following effect:




“THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION
STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR
SUCH LAWS. THIS INSTRUMENT IS ISSUED PURSUANT TO A WARRANT ISSUANCE AGREEMENT,
DATED OCTOBER 23, 2009, BETWEEN THE ISSUER OF THE WARRANT AND THE INVESTOR
REFERRED TO THEREIN, A COPY OF WHICH IS ON FILE WITH THE



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ISSUER. THE SECURITIES REPRESENTED BY THIS INSTRUMENT MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS OF THIS INSTRUMENT. ANY
SALE OR OTHER TRANSFER NOT IN COMPLIANCE WITH THE TERMS OF THIS INSTRUMENT WILL BE
VOID.”


In the event that (i) the Warrant or the Warrant Shares become registered under the Securities Act
or (ii) the Warrant Shares are eligible to be transferred without restriction in accordance with
Rule 144 under the Securities Act, the Company shall issue new certificates or other instruments
representing the Warrant or Warrant Shares, which shall not contain such portion of the above
legend that is no longer applicable; provided that the Investor surrenders to the Company
the previously issued certificates or other instruments.




Article III




Covenants



          3.1 Certain Actions by Company. From the date of the Closing, as long as (i) the
Investor holds the Warrant or (ii) any principal amount, whether or not then outstanding, under
the Bridge Funding is capable of being converted to Common Shares in accordance the Convertible
Notes, the Company shall not make any recommendation to the Company’s shareholders or take other
actions through the Board that would materially and adversely affect the rights of the Investor or
its permitted assignees or transferees under the terms of the Warrant (or the Warrant Shares),
subject to applicable laws, including laws governing the fiduciary duties of the Board, and the
certificate of incorporation and by-laws of the Company.




          3.2 SEC Reports; NYSE Listing; Registration Statement. For so long as the Warrant has
not been fully exercised or expired, the Company shall (i) file with the Commission in a timely
manner all reports and other documents required to be filed by the Company pursuant to the Exchange
Act; (ii) maintain the eligibility of the Common Shares for listing on the NYSE; (iii) regain the
eligibility of the Common Shares for listing or quotation on all markets and exchanges including
the NYSE in the event that the Common Shares are delisted by the NYSE or any other applicable
market or exchange; (iv) obtain a listing on another national securities exchange or Nasdaq’s
National Market System if the Common Shares are delisted by the NYSE and NYSE eligibility cannot be
regained; (v) cause the representations and warranties contained in Section 2.2 to be and remain
true and correct, except those representations and warranties which address matters only as of a
particular date, which shall be true and correct as of such date and (vi) (x) file with the
Commission a registration statement for the purpose of registering the resales of the Warrant
Shares, (y) use its best efforts to cause such registration statement to be declared effective by
the Commission and (z) continuously maintain thereafter the effectiveness of such registration
statement.




          3.3 Use of Proceeds. If any part of the Warrant is exercised prior to the closing of
the transactions contemplated by the Transaction Term Sheet between the Company and the Investor,
the Company shall use the proceeds it receives from such exercise for working capital needs and
shall not use such proceeds for the prepayment of any indebtedness (except to the extent required
by Section 2.09(d) of the Credit Agreement).




          3.4 Sufficiency of Common Shares. During the period from the Closing Date until the
date on which the Warrant has been fully exercised or expired, the Company shall at all times have
reserved for issuance, free of preemptive or similar rights, a sufficient number of shares of
authorized and unissued Warrant Shares to effectuate such exercise. If, at any time for any
reason, insufficient Common Shares are authorized, the Company shall use its best efforts to amend
its certificate of incorporation to permit the exercise in full of the Warrant. Nothing in this
Section 3.4 shall preclude the Company from satisfying its obligations in respect of the exercise
of the Warrant by delivery of the Common Shares which




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are held in the treasury of the Company. As
soon as practicable, the Company shall, at its expense, cause the


 Warrant Shares to be listed on the NYSE no later than the time at which they become freely
transferable in the public market under the Securities Act, subject to official notice of issuance.




          3.5 Change of Control. The Company agrees that it shall not enter into an agreement
which would result in a Change of Control unless such agreement expressly obligates the person(s)
acquiring control to assume all of the Company’s obligations under this Agreement and the other
Transaction Documents. A “Change of Control” means the (i) acquisition, directly or
indirectly, by a third party or group consisting of third parties of Beneficial Ownership in excess
of 50% of the outstanding shares of the Common Shares or voting power of outstanding voting
securities entitled to vote in the election of directors of the Board or (ii) consummation of a
merger, consolidation, amalgamation or similar business combination between the Company and any
third party. “Beneficial Ownership” shall be determined in accordance with Rules 13d-3 and
13d-5 under the Exchange Act, including the provision that any member of a “group” shall be deemed
to have Beneficial Ownership of all securities Beneficially Owned by other members of the group,
and except that the exclusion in Rule 13d-3(d)(1)(i) for rights to acquire securities that are not
exercisable “within 60 days” shall not apply.




Article IV




Additional Agreements



          4.1 Expenses. Unless otherwise provided in any Transaction Document executed by the
Company and the Investor, each of the parties hereto will bear and pay all costs and expenses
incurred by it or on its behalf in connection with the transactions contemplated under the
Transaction Documents, including fees and expenses of its own financial or other consultants,
investment bankers, accountants and counsel.




          4.2 Best Efforts. Subject to the terms and conditions of this Agreement, each of the
parties will use its best efforts in good faith to take, or cause to be taken, all actions, and to
do, or cause to be done, all things necessary, proper or desirable, or advisable under applicable
laws, so as to permit consummation of the Issuance as promptly as practicable and otherwise to
enable consummation of the transactions contemplated hereby and shall use commercially reasonable
efforts to cooperate with the other party to that end.




          4.3 Transfers.





          (a) The Investor shall be able to directly or indirectly transfer, sell, contract to
sell, assign, pledge, convey, lend, hypothecate, grant any option to purchase, purchase any
option to sell, make any short sale or otherwise encumber or dispose of (including entering
into any swap or other arrangement that transfers to another, in whole or in part, any of the
economic consequence of ownership interests) all or parts of the Warrant, the Warrant Shares
and the rights and obligations of the Investor under this Agreement in connection with a
Transfer of the Warrant, without any consent from, but with notice to (it being understood
that such notice shall not be construed as a condition to the effectiveness of the Transfer),
the Company. Each transaction referenced in the previous sentence is called a
“Transfer”. Notwithstanding the foregoing, the Investor shall not Transfer any part
of the Warrant or any Warrant Share to the Company’s competitors identified in Schedule
4.3(a).




          (b) Person(s) to whom the Investor Transfers parts or all of the Warrant shall (x)
assume the rights and obligations of the Investor under this Agreement and (y) be able to
exercise the Warrant according to the terms of the Warrant.



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          (c) Notwithstanding Section 4.3(a) above, the Warrant and the Warrant Shares will be,
when issued, restricted securities under the Securities Act and may not be offered or sold
except pursuant to an effective registration statement or an available exemption from
registration under the Securities Act. Accordingly, the Investor shall not, directly or
through others, offer or sell the Warrant or any Warrant Share except pursuant to a
registration statement or an exemption from registration under the Securities Act, if
available.


          4.4
Investor Filings. The Investor shall make such filings with the Commission as may
be required or as the Investor may deem necessary or advisable in connection with the transactions
contemplated in this Agreement, including any filing under Sections 13(d) and 16(a), as may be
applicable, of the Exchange Act and the rules and regulations promulgated thereunder.



Article V




Indemnity



          5.1 Indemnification of Investor. The Company hereby agrees to indemnify the Investor
and each of its officers, directors, employees, consultants, agents, attorneys, accountants,
advisors and affiliates and each person that controls any of the foregoing persons (each an
“Indemnified Party”) against any claim, demand, action, liability, damages, loss, cost or
expense (including reasonable legal fees and expenses incurred by such Investor Indemnified Party
in investigating or defending any such proceeding) (all of the foregoing, including associated
costs and expenses being referred to herein as a “Proceeding”), that it may incur directly
or indirectly in connection with or as a result of any of the transactions contemplated hereby
arising out of or based upon:





          (a) any untrue or alleged untrue statement of a material fact in a SEC Report by the
Company or any of its affiliates or any person acting in its or their behalf or omission or
alleged omission to state therein any material fact necessary in order to make the
statements, in the light of the circumstances under which they were made, not misleading by
the Company or any of its affiliates or any person acting on its or their behalf;




          (b) any of the representations or warranties made by the Company herein being untrue,
incorrect or misleading at the time such representation or warranty was made; and




          (c) any breach or non-performance by the Company of any of its covenants, agreements or
obligations under this Agreement.



          5.2 Conduct of Claims.





          (a) Whenever a claim for indemnification shall arise under Section 5.1, the Indemnified
Party shall notify the Company in writing of the Proceeding and the facts constituting the
basis for such claim in reasonable detail;




          (b) The Company shall have the right to retain the counsel of its choice in connection
with such Proceeding and to participate at its own expense in the defense of any such
Proceeding; provided, however, that counsel to the Company shall not (except with the consent
of the relevant Indemnified Party) also be counsel to such Indemnified Party. In no event
shall the Company be liable for fees and expenses of more than one counsel (in addition to
any local counsel) separate from its own counsel for the Indemnified Party in connection with
any one action or separate but similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances; and



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          (c) The Company shall not, without the prior written consent of the Indemnified Party
(which consent shall not be unreasonably withheld), settle or compromise or consent to the
entry of any judgment with respect to any litigation, or any investigation or proceeding by
any Governmental Entity, commenced or threatened, or any claim whatsoever in respect of which
indemnification could be sought under this Article V unless such settlement, compromise or
consent (A) includes an unconditional release of each Indemnified Party from all liability
arising out of such litigation, investigation, proceeding or claim and (B) does not include a
statement as to or an admission of fault, culpability or a failure to act by or on behalf of
any Indemnified Party.



Article VI




Miscellaneous



          6.1 Termination. This Agreement may be terminated at any time prior to the Closing:





          (a) by the Investor if the Closing shall not have occurred by the fifth
(5th) calendar day following the date of this Agreement;
provided that in the event the Closing has not occurred by such fifth
(5th) calendar day, the parties shall consult in good faith to
determine whether to extend the term of this Agreement; provided further, that the
right to terminate this Agreement under this Section 6.1(a) shall not be available to the
Investor if its breach of any representation or warranty or failure to perform any obligation
under this Agreement shall have caused or resulted in the failure of the Closing to occur on
or prior to such fifth (5th) calendar day;




          (b) by the Investor if an assignment for the benefit of creditors or a bona fide
proceeding has been instituted by or against the Company or its Subsidiaries seeking to
adjudicate any of them as bankrupt or insolvent or seeking their liquidation, winding up or
reorganization or any other relief from creditors has been sought;




          (c) by either the Investor or the Company in the event that any Governmental Entity
shall have issued an order, decree or ruling or taken any other action restraining, enjoining
or otherwise prohibiting the transactions contemplated by this Agreement and such order,
decree, ruling or other action shall have become final and nonappealable; or




          (d) by the mutual written consent of the Investor and the Company.


In the event of termination of this Agreement as provided in this Section 6.1, this Agreement shall
forthwith become void and there shall be no liability on the part of either party hereto, except
that nothing herein shall relieve either party from liability for any breach of this Agreement.




          6.2 Amendment. No amendment of any provision of this Agreement will be effective
unless made in writing and signed by a duly authorized officer or representative of each party
hereto.




          6.3 Waiver of Conditions. The conditions to each party’s obligation to consummate the
Issuance are for the sole benefit of such party and may be waived by such party in whole or in part
to the extent permitted by applicable laws. No waiver will be effective unless it is in a writing
signed by a duly authorized officer or representative of the waiving party that makes express
reference to the provision or provisions subject to such waiver.




          6.4 Counterparts and Facsimile. For the convenience of the parties hereto, this
Agreement may be executed in any number of separate counterparts, each such counterpart being
deemed to be an original instrument, and all such counterparts will together constitute the same
agreement. Executed


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signature pages to this Agreement may be delivered by facsimile and such facsimiles will be
deemed as sufficient as if actual signature pages had been delivered.




          6.5 Governing Law; Submission to Jurisdiction, Etc.





          (a) This Agreement will be governed by and construed in accordance with the laws of the
State of New York, without giving effect to the conflict of laws principles thereof.




          (b) Each of the parties hereto agrees all disputes arising among the parties in
connection with the Transaction Documents, or the breach, termination, interpretation or
validity thereof, shall be finally settled by the Hong Kong International Arbitration Centre
(the “HKIAC”) pursuant to UNCITRAL Rules with the Company, on the one hand, being
entitled to designate one arbitrator, and with the Investor, 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 10
calendar days of initial consultation between the two arbitrators, by the HKIAC pursuant to
its arbitration rules. If any party fails to designate its arbitrator within 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. The arbitration shall be conducted in English. To the extent
consistent with UNCITRAL Rules, each of the parties hereto shall cooperate with the others in
provision of information during any discovery process relating to arbitrations in connection
with the Transaction Documents. The parties hereto further agree that, to the extent
consistent with UNCITRAL Rules, the parties shall be entitled to seek temporary and permanent
injunctive relief from the arbitrators without the necessity of proving actual damages and
without posting a bond or other security.




          (c) Each of the parties hereto agrees that notice may be served upon such party at the
address and in the manner set forth for such party in Section 6.6.




          (d) To the extent permitted by applicable laws, each of the parties hereto hereby
unconditionally waives trial by jury in any legal action or proceeding relating to the
Transaction Documents or the transactions contemplated hereby or thereby.



          6.6 Notices. Any notice, request, instruction or other document to be given hereunder
by any party to the other will be in writing and will be deemed to have been duly given (a) on the
date of delivery if delivered personally, or by facsimile, upon confirmation of receipt, or (b) on
the second Business Day following the date of dispatch if delivered by a recognized next-day
courier service. All notices hereunder shall be delivered as set forth below, or pursuant to such
other instructions as may be designated in writing by the party to receive such notice.





	 	(A)	 	If to the Investor:






BGP Inc., China National Petroleum Corporation

No. 189, West Fanyang Street,

Zhou Zhou 072751, Hebei

People’s Republic of China

Attention: Mr. Yueliang Guo

Facsimile: (+86-10) 8120 1636




with a copy to:




Sullivan & Cromwell, LLP

28th Floor



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Nine Queen’s Road

Hong Kong

Attention: Chun Wei

Facsimile: (+852) 2522 2280




	 	(B)	 	If to the Company:






ION Geophysical Corporation

2105 CityWest Blvd.

Suite 400

Houston, Texas 77042-2839

United States of America

Attention: Mr. David L. Roland

Facsimile: (+001-281) 879 3600



          6.7 Entire Agreement, Etc. This Agreement (including the Annexes and Schedules
hereto) and the other Transaction Documents constitute the entire agreement, and supersede all
other prior agreements, understandings, representations and warranties, both written and oral,
among the parties, with respect to the subject matter hereof.




          6.8 Definitions of “Subsidiary”, “affiliate” and “person”. (a) Unless otherwise
stated, when a reference is made in this Agreement to a Subsidiary of a person, the term
“Subsidiary” means those entities of which such person owns or controls more than 50% of
the outstanding equity securities either directly or through an unbroken chain of entities as to
each of which more than 50% of the outstanding equity securities is owned directly or indirectly by
its parent.





          (b) The term “affiliate” means, with respect to any person, any person directly
or indirectly controlling, controlled by or under common control with, such other person.
For purposes of this definition, “control” when used with respect to any person,
means the possession, directly or indirectly, of the power to cause the direction of
management and policies of such person, whether through the ownership of voting securities,
by contract or otherwise.




          (c) The term “person” means any individual, corporation, trust, association,
company, partnership, joint venture, limited liability company, joint stock company,
Governmental Entities or other entity.



          6.9 Assignment. Neither this Agreement nor any right, remedy, obligation nor
liability arising hereunder or by reason hereof shall be assignable by any party hereto without the
prior written consent of the other parties, and any attempt to assign any right, remedy, obligation
or liability hereunder without such consent shall be void, except (i) an assignment, in the case of
a merger or consolidation where such party is not the surviving entity, or a sale of substantially
all of its assets, to the entity which is the survivor of such merger or consolidation or the
purchaser in such sale or (ii) a Transfer by Investor in accordance with Section 4.3 hereof.




          6.10 Severability. If any provision of this Agreement or a Transaction Document, or
the application thereof to any person or circumstance, is determined by a court of competent
jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the
application of such provision to persons or circumstances other than those as to which it has been
held invalid or unenforceable, will remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby, so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially adverse to any party.
Upon such determination, the parties shall negotiate in good faith in an effort to agree upon a
suitable and equitable substitute provision to effect the original intent of the parties.







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          6.11 No Third Party Beneficiaries. Nothing contained in this Agreement, expressed or
implied, is intended to confer upon any person or entity other than the Company and the Investor
(and the transferees to which an assignment is made in accordance with this Agreement), any
benefits, rights, or remedies.




          6.12 Further Assurances. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as any other party may reasonably request in
order to carry out the intent and accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.




[Remainder of page intentionally left blank]






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     In
Witness Whereof, this Agreement has been duly executed and delivered by the duly
authorized officers of the parties hereto as of the date first herein above written.




	 	 	 	 	 
	 	ION GEOPHYSICAL CORPORATION

 	 
	 	By:  	/s/ David L. Roland
 	 
	 	 	Name:  	David L. Roland 	 
	 	 	Title:  	Senior Vice President, General Counsel and
	 
	 	 	Corporate Secretary 	 
	 
	 	BGP INC., CHINA NATIONAL PETROLEUM CORPORATION

 	 
	 	By:  	/s/ Wang Tiejun
 	 
	 	 	Name:  	Wang Tiejun 	 
	 	 	Title:  	President 	 
	 




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