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
Xxxxxxx 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".) The
purchase price shall be paid by cash or check.
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 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 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
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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 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 A 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).
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(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 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.
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(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").
(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
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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.
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.
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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.
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
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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 B 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 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.
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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/ XXXXXXX X. XXXXXX
-----------------------------------
Xxxxxxx X. Xxxxxx
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