STOCK PURCHASE AND RESTRICTION AGREEMENT
AGREEMENT, dated as of November 9, 1993, by and between 3DX TECHNOLOGIES
INC. (formerly Novera Energy Inc.), a Delaware corporation (the "Company"), and
Xxxxx X. Xxxxxx (the "Stockholder").
WHEREAS, the Company desires to sell and Stockholder desires to purchase
shares of the Company's common stock, $.01 par value (the "Common Stock"), on
the terms and conditions hereinafter set forth;
WHEREAS, the parties hereto deem it in their best interests to impose
certain restrictions upon such shares; and
WHEREAS, such parties desire to provide for certain other matters relating
to the Common Stock;
NOW, THEREFORE, in consideration of the mutual covenants and
representations herein set forth, it is hereby agreed as follows:
1. PURCHASE AND SALE OF SHARES OF STOCK. Subject to the terms and
conditions of this Agreement, the Company hereby agrees to sell to
Stockholder and Stockholder agrees to purchase from the Company on the date
hereof the number of shares of Common Stock listed opposite Stockholder's
name in SCHEDULE 1, at the purchase price per share listed in SCHEDULE 1 (the
"Initial Purchase Price"). (Such number of shares of Stockholder, and any
shares of capital stock of the Company acquired by Stockholder as a result of
any subdivision, combination or reclassification of outstanding shares of
Common Stock into a greater or smaller number of shares, recapitalization,
reorganization, reclassification of shares, stock dividend or like event
(collectively, "Recapitalization Events"), are hereinafter referred to as the
"Shares".) At least one percent (1%) of such purchase price shall be paid in
cash and ninety-nine percent (99%) of such purchase price may be paid by
Stockholder's full recourse promissory note (the "Purchase Note") in the form
attached hereto as Annex A. As security for the payment of the Purchase Note
and any renewal or modification thereof, the Stockholder hereby grants to the
Company a security interest in, and pledges with and delivers to the Company,
the Shares, to be held pursuant to the escrow referred to in Section 3(b)
hereof. Upon the occurrence of a default in the payment of the Purchase Note
when due, the Company shall be entitled to immediate possession of such
Shares and all rights and remedies of a secured party under the Uniform
Commercial Code of the State of Texas. In the event that Stockholder prepays
a portion of the Purchase Note, Stockholder intends that the Shares
represented by the portion of the Purchase Note so repaid, including annual
interest thereon, shall continue to be held pursuant to the escrow described
in Section 3(b), to serve as independent collateral for the outstanding
portion of the Purchase Note, for the
purpose of commencing the holding period set forth in Rule 144(d) promulgated
under the Securities Act of 1933, as amended (the "Act").
2. INVESTMENT REPRESENTATIONS.
(a) REPRESENTATIONS OF STOCKHOLDER. Stockholder
acknowledges that the purchase of the Shares is a highly speculative
investment. This Agreement is made in reliance upon the express
representations and warranties of Stockholder that: (l) he is able, without
impairing his financial condition, to hold the Shares for an indefinite
period of time and to suffer a complete loss on his investment; (2) he has
discussed the Company and its plans, operations and financial condition with
its officers and he has received all such information as he deems necessary
and appropriate to enable him to evaluate the financial risk inherent in
making an investment in the Shares, and has received and had access to
satisfactory and complete information concerning the business and financial
condition of the Company in response to his inquiries in respect thereof; (3)
the Shares are being acquired for his own account for investment and not with
a view to, or for sale in connection with, the distribution thereof, nor with
any present intention of distributing or selling the Shares; (4) Stockholder
either (A) has a pre-existing business or personal relationship with the
Company or any of its officers, directors or controlling persons or (B) could
be reasonably assumed to have the capacity to evaluate the merits and risks
of an investment in the Company and to protect Stockholder's own interests in
connection with this transaction by reason of Stockholder's business or
financial experience or the business or financial experience of Stockholder's
professional advisors who are unaffiliated with and who are not compensated
by the Company or any affiliate or selling agent of the Company, directly or
indirectly; (5) Stockholder's principal residence is within the State of
Texas and is located at the address indicated on Schedule 1 hereto; and (6)
the Shares will not be sold without registration under the Securities Act of
1933, as amended (the "Act"), or exemption therefrom.
Stockholder understands and acknowledges that the Shares
are unregistered and may not be sold publicly unless they are subsequently
registered under the Act, or unless an exemption from such registration is
available; that the exemption from registration under Rule 144 promulgated
under the Act will not be available in any event for at least two years from
the date of purchase and payment of the Shares (AND THAT PAYMENT BY A NOTE IS
NOT DEEMED PAYMENT UNLESS IT IS SECURED BY ASSETS OTHER THAN THE SHARES), and
even then will not be available unless (i) a public trading market then
exists for the Common Stock of the Company, (ii) adequate current information
concerning the Company is then available to the public, and (iii) other terms
and conditions of Rule 144 are complied with; and that any sale of the Shares
may be made only in limited amounts in accordance with such terms and
conditions. Stockholder further understands and acknowledges that: (i)
there is not presently available, and may not be available at the time he
wishes to sell the Shares, adequate current public information with respect
to the Company that would permit offers or sales of the Shares pursuant to
Rule 144 promulgated under the Act, and, therefore, compliance with
Regulation A of the Act or some other exemption from the registration and
prospectus delivery requirements of the Act will be
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required for any such offer or sale; and (ii) the Company is under no
obligation to register the Shares or to make Rule 144 available.
(b) SECURITIES LEGEND. Until such time as the Shares
shall have been registered under the Act, or shall have been transferred in
accordance with an opinion of counsel satisfactory to the Company that such
registration is not required, stop transfer instructions shall be issued to
the Company's transfer agent, if any, or, if the Company transfers its own
securities, a notation shall be made in the appropriate records of the
Company with respect to the Shares, and so long as required under the Act or
the regulations promulgated thereunder, the certificate(s) representing the
Shares shall bear substantially the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. THESE SHARES HAVE NOT BEEN
ACQUIRED WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD,
EXCHANGED, MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SHARES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE LAWS, OR AN
OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT REGISTRATION IS NOT
REQUIRED UNDER SUCH ACT OR UNDER APPLICABLE STATE LAWS. MOREOVER, THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFER AND MAY NOT BE SOLD, EXCHANGED, MORTGAGED, PLEDGED, HYPOTHECATED
OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH AND SUBJECT TO ALL THE
TERMS AND CONDITIONS OF A CERTAIN STOCK PURCHASE AND RESTRICTION AGREEMENT
DATED AS OF NOVEMBER 9, 1993, A COPY OF WHICH THE CORPORATION WILL FURNISH
TO THE HOLDER OF THIS CERTIFICATE UPON REQUEST AND WITHOUT CHARGE.
3. RESTRICTIONS ON TRANSFER AND ESCROW.
(a) RESTRICTIONS ON TRANSFER. During the term of this
Agreement, Stockholder may not sell, assign, transfer, pledge, hypothecate,
mortgage or dispose of, by gift or otherwise, or in any way encumber all or
any of the Shares, except in accordance with the terms hereof. Any permitted
transferee of the Shares shall be subject to the terms of Section 2 without
any further action being required on the part of the Company or any other
person. As a precondition to such transfer, the Company, at its option, may
require that such transferee acknowledge in writing that such transferee is
subject to the terms of Section 2.
(b) ESCROW. Stockholder shall, simultaneously with the
execution hereof, deliver to and deposit with the Secretary of the Company
(herein referred to as the "Escrow Agent"), as Escrow Agent in this
transaction, the certificate(s) evidencing the
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Shares together with a stock transfer power executed in blank; said documents
are to be held by the Escrow Agent and delivered by the Escrow Agent pursuant
to the joint escrow instructions of the Company and Stockholder set forth in
Annex B annexed hereto and incorporated herein by this reference. Subject to
the provisions of Paragraph 3 of such escrow instructions, Stockholder shall
exercise all rights and privileges of a stockholder of the Company while the
Shares are held by him.
4. REPURCHASE UPON EMPLOYMENT TERMINATION.
(a) CIRCUMSTANCES AND PRICE OF REPURCHASE. If
Stockholder shall cease to be employed by the Company for any reason or no
reason (including, without limitation, for Stockholder's death or
disability), the Company shall have the right to purchase (the "Repurchase
Right"), and Stockholder or his heirs, assigns, executors, administrators or
other legal representatives (collectively, "Legal Representatives") shall, at
the election of the Company, be obligated to sell, all or any part of the
Unvested Shares (as that term is defined in Section 4(d)) at the Initial
Purchase Price (as appropriately adjusted for Recapitalization Events) and on
the terms provided in Section 4(b).
(b) MECHANICS OF COMPANY'S REPURCHASE. The Company may
exercise its Repurchase Right at any time within 30 days after the
termination of such employment by written notice (the "Employment Repurchase
Notice") to Stockholder (or, if known, to his Legal Representatives) stating
that it is exercising such Right and specifying the number of Unvested Shares
to be repurchased. In addition, the Employment Repurchase Notice shall
specify a closing date and time for such repurchase, which date shall not be
less than five (5) nor more than thirty (30) days from the date of the
Employment Repurchase Notice. Such repurchase shall take place at the
principal office of the Company. At the closing, Stockholder (or his Legal
Representatives) or the Escrow Agent shall deliver to the Company the
certificate(s) representing all of such Shares to be repurchased, duly
endorsed, against delivery by the Company of the purchase price by check or
in cash.
(c) RELEASE OF SHARES FROM REPURCHASE RIGHTS. (i) On
the date of this Agreement, that number of Shares as is equal to 100% of the
total number of Shares listed opposite Stockholder's name in Schedule (i)
shall be subject to the Company's Repurchase Right. Subject to Section
4(c)(ii) below, so long as Stockholder continues to be employed by the
Company (x) on January 1, 1994, one-fourth (1/4) of the total number of
Shares shall automatically be released from such Repurchase Right and (y) on
January 1, 1995 (the "Anniversary Date"), an additional one-fourth (1/4) of
the total number of Shares shall automatically be released from such
Repurchase Right. Subject to Section 4(c)(ii) below, after the Anniversary
Date, one-forty eighth (1/48) of the total number of Shares shall
automatically be released from the Repurchase Right on the last day of each
month beginning one month after the Anniversary Date and culminating
twenty-four (24) months after the Anniversary Date, unless Stockholder is no
longer employed by the Company for any reason, PROVIDED that in the event
that after January 1, 1994, the Company shall adopt a plan of merger,
consolidation or other business combination (other than one pursuant to which
the Company is the surviving entity), or adopt a plan or enter into an
agreement providing for
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the sale or disposition of substantially all of the business or assets of the
Company, the total number of Shares subject to the Company's Repurchase Right
shall automatically be released from such Rights concurrently with the
consummation of such merger, consolidation or sale.
(ii) Notwithstanding anything to the contrary contained
in Section 4(c)(i), upon the occurrence and during the continuance of an
Event of Noncompliance (as defined in Article Fourth, Section B.4(b) of the
Company's Restated Certificate of Incorporation), as evidenced by a written
notice from holders of 66-2/3% in interest of the Company's Redeemable
Preferred Stock, Series B, par value $.01 per share, specifying in detail the
applicable Event of Noncompliance, the release of Unvested Shares (as defined
in Section 4(d) hereof) from the Company's Repurchase Right shall be
suspended until the date upon which the Board of Directors determines, by
affirmative vote or consent of 66-2/3% of its members, that the Event of
Non-Compliance has been cured, on which date the release of such Unvested
Shares from the Company's Repurchase Right shall resume.
(iii) The number of Shares so released under such
vesting schedule shall be appropriately adjusted for Recapitalization Events.
(d) VESTED AND UNVESTED SHARES. Shares that have been
released from the Company's Repurchase Right are referred to herein as
"Vested Shares". Any Shares that remain subject to the Company's Repurchase
Right at any point in time are referred to herein as "Unvested Shares".
Unvested Shares shall not be transferable. Any Shares with respect to which
the Company fails to exercise its Repurchase Right shall become Vested Shares
upon the expiration of such rights.
5. REFUSAL RIGHTS.
(a) COMPANY'S RIGHT OF FIRST REFUSAL. If Stockholder
desires to sell all or any part of the Vested Shares and he has received in
writing an irrevocable and unconditional bona fide offer (the "Bona Fide
Offer") for the purchase thereof in cash from a party (the "Offeror"),
Stockholder shall give written notice (the "BFO Option Notice") to the
Company setting forth Stockholder's desire to sell such Shares, which BFO
Option Notice shall be accompanied by a photocopy of the original executed
Bona Fide Offer and shall set forth at least the name and address of the
Offeror and the price and terms of the Bona Fide Offer. Upon receipt of the
BFO Option Notice, the Company shall have an option to purchase any or all of
such Shares specified in the BFO Option Notice, such option to be exercised
by giving, within 30 days after receipt of the BFO Option Notice, a written
counter-notice to Stockholder. If the Company elects to purchase any or all
of such Shares, it shall be obligated to purchase, and Stockholder shall be
obligated to sell to the Company, such Shares at the price and in accordance
with the terms indicated in the Bona Fide Offer within 60 days from the date
of receipt by the Company of the BFO Option Notice (the "Company Exclusive
Period").
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(b) SUBSEQUENT SALE OF SHARES. Stockholder may sell any
or all of such Shares that the Company has not so elected to purchase during
the 30 days following the expiration of the exercise period for such purchase
by the Company, provided that such sale is made only pursuant to the terms of
the Bona Fide Offer. If, however, any or all such Shares are not sold
pursuant to the Bona Fide Offer within such 30 days, the unsold Shares shall
remain subject to the terms of this Agreement.
(c) RESTRICTIONS ON OFFEROR. Any Offeror purchasing
Shares from Stockholder under Section 5(b) shall not be subject to the terms
of this Agreement other than Section 2 as to such Shares; PROVIDED, HOWEVER,
that such Offeror shall be subject to the terms of Section 2 without any
further action being required on the part of the Company or any other person.
As a precondition to such purchase, the Company, at its option, may require
that such Offeror acknowledge in writing that such Offeror is subject to the
terms of Section 2.
6. EXEMPTED SHARE TRANSFERS. Anything in this Agreement to the
contrary notwithstanding, Stockholder shall be permitted to transfer Vested
Shares owned by him without complying with the provisions of Section 5 in the
following situations: (i) any inter vivos transfer by Stockholder to any
member of his immediate family (spouse, parents, children or grandchildren);
(ii) to any trust for the benefit of any such immediate family member or
himself; or (iii) any transfer upon the death of Stockholder to his Legal
Representatives; PROVIDED that any permitted transferee referred to above
shall have delivered to the Company the written agreement of such transferee
to be bound by all of the provisions of this Agreement to the same extent as
his transferor, and until such delivery is made no such transferee shall,
with respect to the Shares being transferred, be a stockholder and the
Company shall not recognize any such transferee as a stockholder for any
purpose. It is understood and agreed that, in the event of a permitted
transfer of Shares pursuant to this Section 6, the calculation of Vested
Shares under Sections 4(c) and (d) shall nonetheless continue to depend upon
the continued employment by the Company of Stockholder named on page 1 hereof.
7. SPECIFIC PERFORMANCE. Because the Shares cannot be readily
purchased or sold in the open market, and for other reasons deemed sufficient
by them, the parties hereto acknowledge that they will be irreparably damaged
in the event that this Agreement is not specifically enforced. Upon a breach
or threatened breach of the terms, covenants and/or conditions of this
Agreement by either of the parties hereto, the other, in addition to all
other remedies, shall be entitled, without showing any actual damage, to a
temporary or permanent injunction and/or a decree for specific performance,
in accordance with the provisions hereof.
8. CONTINUATION OF EMPLOYMENT. The Company is not by reason of this
Agreement or the issuance of any Shares obligated to continue Stockholder in
its employment.
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9. GOVERNING LAW. This Agreement shall be construed under and governed
by the internal laws of the State of Texas, without regard to principles of
conflicts of law, and will, to the maximum extent practicable, be deemed to
call for performance in Xxxxxx County, Texas.
10. NOTICE. All notices or other communications required or otherwise
with respect to this Agreement shall be deemed to have been duly given and
delivered if in writing (i) when delivered personally (by courier service or
otherwise), (ii) on the business day after the date sent by a nationally
recognized overnight courier service, or (iii) three (3) days after being
mailed by first-class registered or certified mail, postage prepaid and
return receipt requested, if to the Company at its office at 00000 Xxxx Xxx
Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000-0000, or if to Stockholder at his
address set forth in Schedule A (or at such other addresses as the parties
may notify each other in accordance with the provisions of this Section 10).
11. TERM. This Agreement shall remain in effect until the consummation
of a firm underwriting for sale of stock to the public by the Company at a
public offering price not less than $5.00 per share, adjusted for any splits,
with gross proceeds of that public offering to the Company not less than
$5,000,000.
12. ENTIRE AGREEMENT; AMENDMENT. This Agreement supersedes all prior
written and oral agreements and understandings among the parties as to its
subject matter and constitutes the entire agreement of the parties with
respect to the subject matter hereof. This Agreement may not be modified,
amended, terminated or any provision thereof waived in whole or in part
except by a written agreement signed by the Company and Stockholder.
13. VALUATION OF COMMON STOCK AND RELATED TAX CONSIDERATIONS.
Stockholder understands that the Shares have been valued by Stockholder and
the board of directors of the Company and that the Company believes this
valuation represents a fair attempt at reaching an accurate appraisal of
their worth; Stockholder understands, however, that the Company can give no
assurances that such price is in fact the fair market value of the Shares and
that it is possible that, with the benefit of hindsight, the Internal Revenue
Service (the "Service") would successfully assert that the value of the
Shares on the date of purchase is greater than so determined.
If the Service were to succeed in a tax determination that the Shares
received had value greater than that upon which the transaction was based,
the additional value would constitute ordinary income as of the date of its
receipt. The additional taxes (and interest) and any related costs, expenses
or penalties due would be payable by Stockholder and there is no provision
for the Company to reimburse him for that tax liability, and Stockholder
assumes all responsibility for such potential liability and related costs.
In the event such additional value would represent more than 25 percent of
Stockholder's gross income for the year in which the value of the Shares were
taxable, the Service would have six years from the due date for filing the
return (or the actual filing date of the return if filed thereafter) within
which to assess Stockholder the additional tax and interest that would then
be due.
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The Company would have the benefit, in any such transaction, if a
determination was made prior to the three-year statute of limitations period
affecting the Company, of an increase in its deduction for compensation paid,
which would offset its operating profits, or, if not profitable, would create
net operating loss carry forward arising from operations in that year.
14. SECTION 83(b) ELECTION. Stockholder understands that Section 83 of
the Internal Revenue Code of 1986, as amended (the "Code"), taxes as ordinary
income the difference between the amount paid for the Shares and the fair
market value of the Shares as of the date any restrictions on the Shares
lapse. In this context, "restriction" means the right of the Company to buy
back the Shares as provided in Section 4. In the event the Company has
registered its securities under the Securities Exchange Act of 1934, as
amended, "restriction" with respect to officers, directors and 10%
shareholders also means the six-month period after the closing during which
such officers, directors and 10% shareholders are subject to suit under
Section 16(b) of such Exchange Act.
Stockholder understands that if Code Section 83 is applicable to him, he
may elect to be taxed at the time the Shares are purchased rather than when
and as the Shares vest or when the six-month Section 16(b) period expires by
filing with the Service an election under Section 83(b) of the Code
(hereinafter the "Election"). Stockholder understands that he must file such
an Election within thirty (30) days from the date of purchase. Even if the
fair market value of the Shares equals the amount paid for the Shares, the
Election must be made to avoid adverse tax consequences in the future, I.E.
the obligation to report as income the difference between the value of the
Shares at the time such Shares vest and the amount paid. The form for making
this election (and related form of transmittal letter to the Service) are
attached as Annex C hereto. Stockholder understands that failure to make this
filing on a timely basis will result in the recognition of ordinary income by
Stockholder, as the Shares vest, or after the lapse of the six month Section
16(b) period, on the difference between the purchase price and the fair
market value of the Shares at the time such Shares vest.
STOCKHOLDER ACKNOWLEDGES THAT IT IS STOCKHOLDER'S SOLE RESPONSIBILITY
AND NOT THE COMPANY'S TO TIMELY FILE THE ELECTION UNDER INTERNAL REVENUE CODE
SECTION 83(b) AND UNDER ANY CORRESPONDING PROVISIONS OF STATE TAX LAW, EVEN
IF THE PURCHASER REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS
FILING ON STOCKHOLDER'S BEHALF.
15. WAIVERS. No waiver hereunder shall be deemed a waiver of any
subsequent breach or default of the same or a similar nature.
16. SEVERABILITY; REFORMATION. If any provision of this Agreement
shall be determined by a court of law to be unenforceable for any reason,
such unenforceability shall not affect the enforceability of any of the
remaining provisions hereof; and this Agreement, to the fullest extent
lawful, shall be reformed and construed as if such unenforceable
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provision, or part of a provision, had never been contained herein, and such
provision or part reformed so that it would be enforceable to the maximum
extent legally possible.
17. HEADINGS. Headings are for convenience only and are not deemed to be
part of this Agreement.
18. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together, shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
IN WITNESS WHEREOF, this Agreement has been executed by the undersigned as
of the date and year first above written.
3DX TECHNOLOGIES INC.
By /s/ C. XXXXXX XXXXX
-----------------------------------
President
STOCKHOLDER:
/s/ XXXXX X. XXXXXX
-------------------------------------
Xxxxx X. Xxxxxx
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