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Exhibit 6.2
Stock Restriction Agreement
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STOCK RESTRICTION AGREEMENT
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Xxxxx Xxxxx, Xxxxxx X. Xxxxxxx, Xxxxxxx Xxxxxxx and Xxxxxx Xxxxx
(individually, a "Named Shareholder" and collectively, "Named Shareholders") and
Hydro-Air Technologies, Inc. ("Corporation") agree:
1. Recitals: Named Shareholders are the record owners of shares
of stock of Corporation. Other persons or entities, such as the spouses or heirs
of Named Shareholders, may now or later have legal or beneficial interests in
such stock. The Corporation and Named Shareholders want to provide for certain
restrictions on such stock, whether owned by Named Shareholders or other
Shareholders of Corporation. This Stock Restriction Agreement ("Agreement") is
intended to provide the Corporation and Named Shareholders with certain rights
to require the sale of stock if a restriction is violated or if a Shareholder's
legal or employment status changes.
2. Definitions: In addition to the other definitions in this
Agreement, the following capitalized terms are defined as follows:
A. "Stock" means all shares of the Corporation (or any
other successor entity to the extent it represents the financial interest
originally derived from the HARPS Technology) now owned or later acquired by a
Named Shareholder or a Spouse of the Named Shareholder.
B. "Shareholder" means any record, legal or beneficial
owner of Stock, whether or not a signatory to this Agreement. If this Agreement
renders void an attempted transfer or encumbrance to a person or entity, that
person or entity is not a "Shareholder" for purposes of this Agreement.
C. "Spouse" means the person married to a Shareholder on
the date of giving Notice or the occurrence of an Event, whichever happens
first.
D. "Divorce" means any settlement between a Named
Shareholder and Spouse of their property interest, by agreement or operation of
law, as provided in a legal separation or a dissolution of marriage.
E. "Bankruptcy" or "Bankrupt" means the filing of a
petition commencing a case under the Bankruptcy Code covering a Shareholder.
F. "Death" or "Deceased" means death as determined under
the New Mexico Probate Code, and includes a presumed death as determined under
the New Mexico Probate Code.
G. "Incapacity" or "Incapacitated" means the inability of
a Shareholder, in the opinion of a doctor chosen by the Corporation, to engage
in any substantial, gainful activity for Corporation by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or to be of long, continued and indefinite duration.
I. "Notice" means the notice given to Corporation in
connection with its right to require the sale of Stock as provided in this
Agreement.
J. "Obligation" means the obligations of a buyer to a
seller of Stock when a buyer buys Stock as provided in this Agreement.
K. "Permitted Encumbrance" means a security interest
securing an Obligation arising as provided in this Agreement.
L. "Permitted Transfer" means (i) a transfer of record,
legal or beneficial ownership of Stock to a Named Shareholder by the Spouse of
Named Shareholder, and (ii) a transfer after compliance with this Agreement.
M. "Representative" means the personal representative,
trustee, heir, devisee, surviving joint tenant, or conservator of a Shareholder.
3. Restrictions: The following are restrictions that apply
to Stock:
A. No Shareholder may transfer Stock during the life of
the Shareholder except in a Permitted Transfer (the "Transfer Restriction").
B. No Stock may be encumbered except by a Permitted
Encumbrance (the "Encumbrance Restriction").
C. All Stock is subject to this Agreement.
D. A Named Shareholder will have sole authority to vote,
manage, control, dispose of, or encumber any Stock owned by the Named
Shareholder and the Spouse of the Named Shareholder.
4. Events: The following are events upon the occurrence of which
the right to require the sale of Stock as provided in this Agreement may be
exercised (individually "Event" and collectively "Events"):
A. The transfer of Stock in violation of the Transfer
Restriction.
B. The encumbrance of Stock in violation of the
Encumbrance Restriction, if the encumbrance is not removed within fifteen days
after the encumbrance attaches.
C. The Death, Bankruptcy or Incapacity of a Shareholder.
D. A Divorce as a result of which any record, legal or
beneficial ownership of Stock is retained or acquired by the Spouse of Named
Shareholder, if that Spouse is not also a Named Shareholder.
5. Notice: Upon the occurrence of an Event:
A. If the Event is (i) the Death, Bankruptcy or
Incapacity of the Spouse of a Named Shareholder, or (ii) a Divorce pursuant to
which the Spouse of a Named Shareholder retains or acquires Stock, that Named
Shareholder will have the sole right for sixty days after that Event to elect to
acquire the Stock of the Spouse as if the Spouse, or the Representative of the
Spouse, gave Notice on the date of the Event. If the Named Shareholder does not
so acquire the Stock of the Spouse, the Spouse or the Representative of the
Spouse will give Notice within sixty-five days after that Event covering all
Stock owned by the Spouse.
B. If the Event is any other Event, the Shareholder, or
the Representative of the Shareholder if the Shareholder is Deceased, Bankrupt
or Incapacitated, will give Notice within thirty days after the Event, covering
all Stock owned by the Shareholder and any Spouse of the Shareholder.
C. Notice will be given by personal service or by prepaid
registered or certified mail, return receipt requested, to Corporation at its
registered office and to each other Named Shareholder at the addresses shown on
the Shareholder records of Corporation. If Corporation or another Named
Shareholder knows of the occurrence of an Event that requires a Notice to be
given and that the person responsible for doing so has not given the appropriate
Notice, Corporation or the other Named Shareholder may give the Notice on behalf
of the person responsible. The Notice is given when served or mailed, will
recite the Event for which Notice is being given, will state the mailing address
of the person giving the Notice, will recite all the terms of any proposed
transfer, and will constitute an irrevocable offer to sell all Stock covered by
the Notice.
6. Right to Buy: Corporation and the other Named Shareholders
will have, as the result of an Event, the right to buy Stock as follows:
A. Corporation will have thirty days from the date Notice
is given within which to elect to buy any or all of the offered Stock. The
offeror will not participate in any capacity in Corporation's decision whether
or not to elect to buy the offered Stock.
B. If Corporation does not elect within the thirty-day
period to buy all the offered Stock, then the Named Shareholders, other than the
offeror, will have an additional twenty days within which to elect to buy any
unbought offered Stock in the proportion of their then shareholdings in
Corporation.
C. If any Named Shareholder does not elect within the
twenty-day period to buy that Named Shareholder's portion of the unbought
offered Stock, then the remaining Named Shareholders, not including the offeror,
will have an additional ten days within which to elect to buy such portion in
the proportion of their then shareholdings in Corporation; if only one such
Named Shareholder wants to buy all or part of the unbought offered Stock, that
Named Shareholder may do so.
D. If Corporation or the Named Shareholders do not elect
within the sixty-day period to buy all the offered Stock, the unbought offered
Stock may either (i) be transferred in accordance with all the terms of any
proposed inter vivos transfer as recited in the Notice, if done within sixty
days after the expiration of the sixty-day period, (ii) be transferred by a
deceased Shareholder's estate to the distributee thereof, (iii) pass by
operation of law, or (iv) be retained, whether or not encumbered, as the case
may be; however, in any event, the unbought offered Stock will continue to be
subject to this Agreement.
E. An election to buy offered Stock may be made only by
giving written notification of that election to the offeror, by personal service
or by prepaid registered or certified mail, return receipt requested; the
election to buy is effective when the written notification is served or mailed.
The proportion of shareholdings of the purchasing Shareholder will be of the
class or series of Stock being offered, and each purchasing Shareholder's
shareholdings will include those of the purchasing Shareholder's Spouse unless
the Spouse is a purchasing Shareholder.
7. Purchase Price and Closing: The purchase price for any Stock
bought as provided in this Agreement by Corporation or a Shareholder as
appropriate will be the Value of the Stock as of either the day preceding the
date of the Event, or the date of giving Notice, whichever is earlier. The
initial Value for each share of Stock is $1.00 Hereafter, annually, at the time
of the Annual Meeting of Shareholders, and the Annual Meeting of Directors of
the Corporation, Corporation and any Named Shareholders will fix the Value for
each share of Stock, and as evidence of having fixed the Value, will execute a
Certificate of Value. If on the date a determination of Value is required
because of the happening of any of the contingencies giving rise to the purchase
and sale of Stock, Corporation and any Named Shareholders have failed to fix the
Value for a period of more than one year, then the latest fixed Value will be
increased or decreased by the proportionate increase or decrease in the book
value of the Stock since the last Value was fixed, and the latest fixed Value as
adjusted will be the Value. If since the latest Value
was fixed, Corporation paid a Stock dividend on, split or combined its
outstanding Stock, then the latest fixed Value will be adjusted appropriately.
The independent public accountant then servicing the Corporation books will
determine book value in accordance with the method of accounting then being used
by Corporation in preparing its federal income tax return, and that
determination will be conclusive; in making the determination, goodwill, leases,
contract rights, and the like, will be valued in the aggregate at $1.00 unless a
different figure has been consistently shown on the Corporation books. Closing
will be at 10:00 a.m. at Corporation's registered office on the 20th banking day
after the end of the last period during which an election to buy unbought
offered Stock may be made.
8. Payment of Purchase Price: At closing the seller of the Stock
will deliver certificates representing the Stock, properly endorsed for
registration of transfer, and the buyer will, at the option of the buyer, either
pay in cash the entire purchase price of the Stock sold to the buyer or pay a
down payment of 25% of the purchase price in cash and the balance in ten equal
semiannual installments beginning one hundred eighty days after closing. This
unpaid balance is the Obligation. The Obligation will be evidenced by a
negotiable promissory note which is accelerable upon default, prepayable without
penalty, and will provide for interest from closing on the unpaid balance
payable semiannually at 10% a year. While an Obligation is unpaid, Corporation
will give the seller reasonable access to the books, financial statements and
records of the Corporation. Corporation is the irrevocable attorney-in-fact for
the seller of Stock to execute any documents appropriate to evidence the
transaction.
9. Security: The seller of the Stock will have a security
interest in Stock sold to a buyer other than Corporation until the obligation of
the buyer is paid. After registration of transfer of the Stock sold to a buyer
other than Corporation, the certificates representing that Stock will be
delivered, endorsed in blank, to a mutually acceptable escrow agent who will
hold the Stock to perfect the security interest of the seller.
10. Subchapter S Election: If Corporation is or becomes an
"electing small business corporation" as provided in Subchapter S of the
Internal Revenue Code, each Shareholder will consent to the elective status
until Corporation and the owners of the majority of the outstanding shares of
Corporation agree to the contrary. No Shareholder may transfer any Stock in any
way that will cause Corporation to lose its status as an "electing small
business corporation." Before any valid transfer of any Stock as provided in
this Agreement, any undistributed Subchapter S earnings will be distributed to
all Shareholders according to their pretransfer pro rata share.
11. Legend: All certificates representing Stock will be marked
"Transfer and encumbrance of the securities represented by this Certificate are
restricted by an Agreement on file at the Corporation office." The restrictions
imposed by this Agreement are those of Corporation as issuer as well as those of
the Shareholders. Transfer or encumbrance of Stock without compliance with this
Agreement is void. Corporation will not register a transfer of Stock without
proof of compliance with this Agreement. This Agreement is a stop transfer
order.
12. Binding Effect: Every person or entity who is the record,
legal or beneficial owner of Stock, whether by issue or transfer, including
without limitation any Spouse, Representative, transferees, donees, nominees,
grantees, successors and assigns of a Shareholder will be bound by and entitled
to the benefits of the terms of this Agreement. This Agreement supersedes any
other stock restriction agreement among the parties, is specifically
enforceable, constitutes the entire agreement of Corporation and Named
Shareholders with respect to its subject matter, is governed by and construed in
accordance with the laws of New Mexico and may be modified only in writing.
DATED:_______________, 19__.
NAMED SHAREHOLDERS: CORPORATION:
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Hydro-Air Technologies, Inc.
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Xxxxx Xxxxx
By____________________
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Xxxxxx X. Xxxxxxx
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Xxxxxxx Xxxxxxx
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Xxxxxx Xxxxx
