UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: (Date of earliest event reported): November 5, 2010
ION Geophysical Corporation
(Exact name of registrant as specified in its charter)
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Delaware
(State or other jurisdiction of
incorporation)
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1-12691
(Commission file number)
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22-2286646
(I.R.S. Employer Identification
No.) |
2105 CityWest Blvd, Suite 400
Houston, Texas 77042-2839
(Address of principal executive offices, including Zip Code)
(281) 933-3339
(Registrants telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
Item 8.01 Other Events.
As previously disclosed in its periodic reports filed by ION Geophysical Corporation (the
Company) with the Securities and Exchange Commission, the Company is involved in two lawsuits
filed in Delaware with Fletcher International, Ltd. (Fletcher), the holder of the Companys
outstanding shares of Series D Preferred Stock. Please refer to Part II, Item 1 of the Companys
Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2010 for additional
information regarding the Companys ongoing litigation with Fletcher.
Under a February 2005 agreement between Fletcher and the Company, the aggregate number of
shares of the Companys common stock that could be issued or issuable to Fletcher upon conversion
of its Series D Preferred Stock could not exceed a designated maximum number of shares (the
Maximum Number), and such Maximum Number could be increased by Fletcher providing the Company
with a 65-day notice of increase. In November 2008, Fletcher exercised its right to increase the
Maximum Number from 7,669,434 shares to 9,669,434 shares. On September 15, 2009, Fletcher
delivered a second notice to the Company, intending to increase the Maximum Number of shares of
common stock issuable upon conversion of the Series D Preferred Stock from 9,669,434 shares to
11,669,434 shares.
The Companys interpretation of its February 2005 agreement with Fletcher was that Fletcher
had the right to issue only one notice to increase the Maximum Number (which Fletcher had exercised
in November 2008). On November 6, 2009, the Company filed an action in the Court of Chancery of the
State of Delaware, styled ION Geophysical Corporation v. Fletcher International, Ltd., seeking a
declaratory judgment that, under the agreement, Fletcher was permitted to deliver only one notice
to increase the Maximum Number and that its second notice was legally invalid. Fletcher filed an
answer and counterclaim, seeking specific performance and reimbursement and indemnification for its
costs and expenses that it claimed it was entitled to under the 2005 agreement. Both parties filed
motions for summary judgment.
On November 5, 2010, the Court of Chancery issued its opinion in the matter, and held that
Fletcher was entitled to a summary judgment, finding that Fletcher is entitled to deliver multiple
notices to increase the Maximum Number of shares of common stock (but not beyond 15,724,306
shares). The Court also granted the Companys motion for summary judgment, finding that the Company
is not required to indemnify Fletcher for its fees, costs and expenses incurred in connection with
these proceedings. The Company currently expects to appeal the Courts ruling.