<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
3DX TECHNOLOGIES INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE>
3DX TECHNOLOGIES INC.
- ---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 13, 1997
TO THE STOCKHOLDERS OF 3DX TECHNOLOGIES INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of 3DX
Technologies Inc., a Delaware Corporation (the "Company"), will be held on
Friday, June 13, 1997, at 11:00 a.m., local time, at the Company's business
address at 12012 Wickchester, Suite 250, Houston, Texas 77079-1218, for the
following purposes:
1. To amend the Company's Restated Certificate of Incorporation (the
"Certificate of Incorporation") and the Company's Second Amended and
Restated By-Laws (the "By-Laws") to eliminate the classification of the
Company's Board of Directors and provide that all directors of the
Company shall be elected annually by the stockholders entitled to vote
thereon;
2. To elect directors to hold office until their respective successors
have been elected and qualified, or until their earlier resignation or
removal;
3. To amend the Company's 1994 Stock Option Plan to increase the number of
shares of Common Stock reserved for issuance under such plan by 500,000
shares;
4. To ratify the selection of Arthur Andersen LLP as independent
accountants to audit the books and records of the Company for its
fiscal year ending December 31, 1997; and
5. To transact such other business as may properly come before the meeting
or any adjournments or postponements thereof.
A record of stockholders has been taken as of the close of business on May
19, 1997, and only those stockholders of record on that date are entitled to
notice of and to vote at the meeting and any adjournments or postponements
thereof.
By Order of the Board of Directors
/s/ Douglas C. Nester
Douglas C. Nester
Vice President and Secretary
Houston, Texas
May 20, 1997
- --------------------------------------------------------------------------------
IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED
TO COMPLETE AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED.
IF YOU ATTEND THE MEETING, YOU MAY VOTE YOUR SHARES IN PERSON IF YOU WISH,
EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY. 3DX TECHNOLOGIES INC.
- --------------------------------------------------------------------------------
<PAGE>
3DX TECHNOLOGIES INC.
12012 Wickchester, Suite 250
Houston, Texas 77079-1218
------------------
PROXY STATEMENT
------------------
GENERAL
This proxy statement is furnished to the stockholders of 3DX Technologies
Inc., a Delaware corporation (the "Company"), for solicitation of proxies on
behalf of the Board of Directors of the Company for use at the 1997 Annual
Meeting of Stockholders (the "Annual Meeting") to be held on Friday, June 13,
1997, at 11:00 a.m., local time, and at any and all adjournments or
postponements thereof, for the purposes set forth in the accompanying notice.
The Annual Meeting will be held at the Company's business address at 12012
Wickchester, Suite 250, Houston, Texas 77079. The Proxy Statement and
accompanying proxy card are being mailed on or about May 21, 1997 together with
the Company's 1996 Annual Report, to all stockholders of the Company entitled to
vote at the Annual Meeting.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use. A proxy may be revoked (i) by delivering
to the Secretary of the Company a written notice of revocation, (ii) by a duly
executed proxy bearing a later date or time than the proxy being revoked or
(iii) by attending the Annual Meeting and voting in person. Mere attendance at
the Annual Meeting will not serve to revoke the proxy.
VOTING AND SOLICITATION
Only holders of record of the Company's Common Stock, par value $.01 per
share (the "Common Stock") as of the close of business on May 19, 1997 (the
"Record Date") are entitled to notice of, and to vote at, the Annual Meeting and
any adjournments or postponements thereof. At the close of business on such
date, the Company had 7,216,177 shares of Common Stock issued and outstanding.
Each share of the Common Stock entitles the holder to one vote on each matter
presented at the Annual Meeting. Shares of Common Stock represented by a
properly executed proxy, if such proxy is timely received and not revoked will
be voted in accordance with the directions indicated in such proxy. If no
instructions are indicated, the shares represented by such proxy will be voted
"FOR" approval of the amendment to the Company's Restated Certificate of
Incorporation (the "Certificate of Incorporation") and the Company's Second
Amended and Restated By-laws (the "By-laws") to eliminate the classification of
the Company's Board of Directors, "FOR" the election, as directors of the
Company, of the nominees named in the proxy, "FOR" approval of the amendment to
the Company's 1994 Stock Option Plan, as amended (the "Stock Option Plan"),
"FOR" the ratification of the appointment of Arthur Andersen LLP as independent
accountants for the Company for fiscal year ending December 31, 1997 and in the
discretion of the proxy holders as to any other matter which may properly be
presented at the Annual Meeting or any adjournments or postponements thereof.
The cost of soliciting proxies will be borne by the Company. The Company
may retain the services of a proxy solicitation firm to aid in the solicitation
of proxies from brokers, banks, nominees and other institutional owners, on
terms customary for such services. In addition, the Company may reimburse
brokerage firms and other persons representing beneficial owners of shares for
their expenses in forwarding solicitation material to such beneficial owners.
Proxies may also be solicited by certain of the Company's directors, officers
and regular employees, without additional compensation, personally or by
telephone.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
Abstentions and broker non-votes will be counted in determining if a quorum
is present. With regard to the election of directors, votes that are withheld
will be excluded entirely from the vote and will have no effect.
1
<PAGE>
Abstentions may be specified on all proposals other than the election of
directors and will be counted as present for purposes of the matter for which
the abstention is noted. Abstentions on a proposal will have the same legal
effect as a vote against such matter. Brokers holding shares in street name for
customers who are the beneficial owners of such shares are prohibited, unless
such broker has received specific instruction from the customer, from giving a
proxy to vote shares held for such customers with respect to the approval of the
amendments to the Certificate of Incorporation and By-laws and the approval of
the amendment to the Stock Option Plan.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of April 25, 1997, there were 7,216,177 shares of Common Stock
outstanding and entitled to vote. The following table sets forth certain
information regarding the beneficial ownership of Common Stock, as of April 25,
1997, by (i) each person known to the Company to own beneficially 5% or more of
the Company's outstanding shares of Common Stock, (ii) each director of the
Company, (iii) each of the Named Executive Officers, as defined in "Executive
Compensation", below, and (iv) all executive officers and directors of the
Company as a group. All information with respect to beneficial ownership has
been furnished to the Company by the respective stockholders of the Company.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
BENEFICIAL OWNERSHIP
-------------------------------
<S> <C> <C>
NAME AND ADDRESS (1) NUMBER OF SHARES (2) PERCENT
- -------------------- ---------------- -------
C. Eugene Ennis......................... 503,670 7.0%
Peter M. Duncan......................... 373,495 5.2%
Douglas C. Nester....................... 373,495 5.2%
Joseph Schuchardt III................... 172,282 2.3%
Robert J. Bacon, Jr. ................... 50,408 *
Jon W. Bayless.......................... 773,158 (3) 10.7%
Robert H. Chaney........................ 386,279 (4) 5.4%
Charles E. Edwards...................... 20,787 (5) *
Douglas C. Williamson................... 724,488 (6) 10.0%
All directors and executive officers as 3,378,062 45.3%
a group (10 persons)...................
Citi Growth Fund L.P.................... 727,477 10.1%
c/o CitiGrowth Funds, Sycamore
Partners
989 Lenox Drive
Lawrenceville, New Jersey 08648
NationsBanc Capital Corporation......... 721,903 10.0%
901 Main Street
Dallas, Texas 75202
Robertson, Stephens & Company, Inc...... 384,400 (7) 5.3%
555 California Street, Suite 2600
San Francisco, California 94104
R. Chaney & Co., Inc.................... 383,694 (4) 5.3%
909 Fannin, Suite 1275
Houston, Texas 77010
Metropolitan Life Insurance Company..... 370,714 (8) 5.1%
c/o State Street Research
One Financial Center
Boston, Massachusetts 02111
- --------------------------------------------------------------------------------
</TABLE>
- -----------
* Represents beneficial ownership of less than 1% of the outstanding shares
of Common Stock.
2
<PAGE>
(1) Unless otherwise indicated, the address of each stockholder identified in
the table is at the principal executive offices of the Company at 12012
Wickchester, Houston, Texas 77079.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission ("Commission"). In computing the number
of shares of Common Stock beneficially owned by a person and the percentage
ownership of that person, shares of Common Stock subject to options and
warrants held by that person that are currently exercisable or exercisable
within 60 days of April 25, 1997 are deemed outstanding. Such shares,
however, are not deemed outstanding for the purposes of computing the
percentage ownership of any other person. Shares of Common Stock issuable
upon exercise of stock options granted pursuant to the Stock Option Plan,
which are currently exercisable or exercisable within 60 days of April 25,
1997, include 18,046 shares for Mr. Ennis, 18,046 shares for Dr. Duncan,
18,046 shares for Mr. Nester, 145,583 shares for Mr. Schuchardt, 36,190
shares for Mr. Bacon, 2,585 shares for Mr. Bayless, 2,585 shares for Mr.
Chaney, 2,585 shares for Mr. Edwards, 2,585 shares for Mr. Williamson, and
246,251 shares for all directors and executive officers as a group. Except
as indicated in the footnotes hereto, each stockholder named in the table
has sole voting and investment power with respect to the shares set forth
opposite such stockholder's name.
(3) Includes 727,477 shares beneficially owned by Citi Growth Fund L.P. Mr.
Bayless is the controlling stockholder and sole director of Jon W. Bayless
Inc., the general partner of Atlantic Partners L.P., the general partner of
Citi Growth Fund L.P.
(4) Includes 338,240 shares held by R. Chaney and Partners-1993 L.P. and 45,454
shares held by R. Chaney & Partners II L.P. R. Chaney & Co., Inc., a
corporation of which Mr. Chaney is the Chairman of the Board, Chief
Executive Officer and sole stockholder, is the general partner of R. Chaney
& Partners-1993 L.P. and R. Chaney & Partners II L.P.
(5) Includes 1,200 shares of Common Stock owned by Mr. Edwards' spouse.
(6) Includes 721,903 shares of Common Stock held by NationsBanc Capital
Corporation. Mr. Williamson is a Managing Director in the Venture Capital
Group of NationsBanc Capital Corporation.
(7) Includes 188,400 shares of Common Stock held by the Robertson Stephens
Orphan Fund, 156,000 shares held by the Robertson Stephens Global Natural
Resources Fund and 40,000 shares held by the Robertson Stephens Orphan
Offshore Fund, each of which are managed by affiliates of Robertson
Stephens & Company, Inc.
(8) State Street Research & Management Company, a wholly-owned subsidiary of
Metropolitan Life Insurance Company, has the power to vote and dispose of
these shares which are held by it on behalf of Metropolitan Life Insurance
Company.
PROPOSAL ONE
------------
PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION AND BY-LAWS TO ELIMINATE THE
CLASSIFICATION OF THE COMPANY'S BOARD OF DIRECTORS
GENERAL
- -------
The Certificate of Incorporation and By-laws currently provide for a
classified Board of Directors, dividing into three classes the total number of
directors on the Board. Each class, after an initial phase-in period, will
serve staggered three year terms. The By-Laws further provide that directors
may be removed with or without cause by the holders of 67% of the issued and
outstanding shares of the Company entitled to vote for the election of
directors.
REASONS AND PRINCIPAL EFFECTS OF THE PROPOSAL
- ---------------------------------------------
The Board of Directors believes that it is in the best interest of the
Company and its stockholders to eliminate the classified Board of Directors
thereby permitting the Company's stockholders to elect all members of the
3
<PAGE>
Board of Directors annually. If the classified Board of Directors is eliminated,
Delaware law provides that any director or the entire Board may be removed, with
or without cause, by the holders of a majority of the shares of the Company
entitled to vote for the election of directors. The Board believes that
elimination of the classified Board of Directors will promote greater
accountability of each director to all stockholders and will allow the Company's
stockholders an opportunity to annually register their views on the collective
performance of the Board of Directors and the performance of each director
individually. The proposal to eliminate the classification of the Board of
Directors is not the result of any effort to unseat incumbent directors, or to
the knowledge of the Board of Directors, any effort by any person to take
control of the Board.
STOCKHOLDER VOTE REQUIRED
- -------------------------
The resolutions to be considered by the stockholders in connection with
this Proposal are attached to this Proxy Statement as Exhibit A. Amendment of
the provisions of the Certificate of Incorporation and By-Laws establishing the
classified Board of Directors and governing the election of directors requires
the approval of holders of at least a majority of the outstanding shares of
Common Stock. If this Proposal is approved, the amendments to the Certificate
of Incorporation and By-Laws shall become effective immediately upon the filing
of all necessary documents with the Secretary of State of the State of Delaware.
The Company intends to make such filings promptly after the Annual Meeting. If
approved, this proposal will determine the manner in which directors are to be
elected in connection with Proposal 2.
RECOMMENDATION OF THE BOARD
- ---------------------------
FOR THE REASONS SET FORTH ABOVE, THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE IN
FAVOR OF THIS PROPOSAL.
PROPOSAL TWO
------------
ELECTION OF DIRECTORS
(A) ELECTION OF DIRECTORS IF PROPOSAL 1 IS APPROVED.
------------------------------------------------
If Proposal 1 is approved by the stockholders, five directors are to be
elected by a plurality of the votes cast by the stockholders at the Annual
Meeting, to serve until the 1998 Annual Meeting of Stockholders and until their
successors shall be elected and qualified. All such nominees are members of the
present Board of Directors. The following persons have been nominated for
election as a director and it is the intention of the persons named in the proxy
to vote for the following nominees:
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
- ---- --- -------------------- --------------
<S> <C> <C> <C>
Jon W. Bayless (1)......... 57 Chairman of the Board of the 1993
Company and general partner
of Sevin Rosen Funds
C. Eugene Ennis............ 53 President and Chief Executive 1992
Officer of the Company
Robert H. Chaney (1)....... 38 Chairman and Chief Executive 1993
Officer of R. Chaney & Co.,
Inc.
Charles E. Edwards (2)..... 71 Petroleum technology
consultant and geophysicist 1995
Douglas C. Williamson (2).. 46 Managing Director, (Dallas) 1995
Venture Capital Group,
NationsBanc Capital
Corporation
</TABLE>
- -----------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
4
<PAGE>
Jon W. Bayless. Mr. Bayless has been Chairman of the Board of the Company
since October 1996 and a director since November 1993. Since 1983, Mr. Bayless
has been a general partner of Sevin Rosen Funds, a venture capital investment
firm. Mr. Bayless is also the controlling stockholder and sole director of Jon
W. Bayless, Inc., the general partner of Atlantic Partners L.P., which is the
general partner of Citi Growth Fund L.P., a venture capital investment firm, and
serves as a director of a number of privately held companies. In addition to the
Company, Mr. Bayless currently serves as Chairman of the Board of Directors of
both Ciena Corporation and Shared Resource Exchange, Inc. Shared Resource
Exchange, Inc. filed for reorganization under Chapter 11 of the Federal
Bankruptcy Code in August 1996. A plan of reorganization under Chapter 11 has
been approved.
C. Eugene Ennis. Mr. Ennis, who co-founded the Company with Peter M. Duncan
and Douglas C. Nester, has served as the Company's President and Chief Executive
Officer and as a director since the Company's inception in December 1992. From
September 1984 to December 1992, Mr. Ennis was President, Chief Executive
Officer and a director and from October 1990 to December 1992 was Chairman of
the Board of Directors of Landmark Graphics Corporation ("Landmark Graphics"), a
provider of interdisciplinary interpretation tools for the petroleum industry.
Mr. Ennis holds a Bachelor of Science in electrical engineering from the
University of Houston and began his career in 1969 as a design engineer in the
Geophysical Products Division of Texas Instruments where he was employed until
1984.
Robert H. Chaney. Mr. Chaney has served as a director of the Company since
November 1993. Mr. Chaney is Chairman and Chief Executive Officer of R. Chaney &
Co., Inc., an investment firm specializing in equity investments in emerging
energy technology companies. Mr. Chaney was a co-founder of Paramount Petroleum
Company, an independent oil and gas company, and served as its President and
Chief Executive Officer from 1986 to July 1993. Mr. Chaney also currently serves
as a director of North American Technologies Corp.
Charles E. Edwards. Mr. Edwards has served as a director of the Company
since August 1995. Since August 1985 to present, Mr. Edwards has acted as a
consultant in petroleum technologies. Prior to August 1985, Mr. Edwards was
employed by Chevron Corp. for a period in excess of 37 years and most recently
served as Chief Geophysicist with responsibility for global exploration
activities. Mr. Edwards has also served as a director for Digicon Inc. and
Landmark Graphics.
Douglas C. Williamson. Mr. Williamson has served as a director to the
Company since July 1995. Mr. Williamson is a Managing Director in the Venture
Capital Group in the Dallas, Texas office of NationsBanc Capital Corporation.
(B) ELECTION OF DIRECTORS IF PROPOSAL 1 IS REJECTED.
------------------------------------------------
If Proposal 1 is not approved by the stockholders, the Company will
continue to have a classified Board of Directors, and the stockholders will
elect two Class A directors at the Annual Meeting by a plurality of the votes
cast. In this event, Robert H. Chaney and Douglas C. Williamson have been
nominated as Class A directors, to serve until the 2000 Annual Meeting of
Stockholders and until their successors are elected and qualified.
Mr. Edwards serves as a Class B director. The initial term of Class B
directors expires at the 1998 Annual Meeting of Stockholders. Messrs. Ennis and
Bayless serve as Class C directors. The initial term of Class C directors
expires at the 1999 Annual Meeting of Stockholders.
Each of the persons nominated as a director has consented to being named a
nominee in this Proxy Statement and has agreed to serve as a director, if
elected at the Annual Meeting. Whether or not Proposal 1 is approved by the
stockholders, the Board of Directors knows of no reason why any of the foregoing
nominees will be unavailable or unwilling to serve, but, in the event of any
such unavailability or unwillingness, the proxies received will be voted for
such substitute nominees as the Board of Directors may recommend.
RECOMMENDATION OF THE BOARD
- ---------------------------
FOR THE REASONS SET FORTH ABOVE, THE BOARD RECOMMENDS THAT STOCKHOLDERS
VOTE IN FAVOR OF PROPOSAL 2(A) IF PROPOSAL 1 IS APPROVED OR PROPOSAL 2(B) IF
PROPOSAL 1 IS REJECTED.
5
<PAGE>
GENERAL INFORMATION RELATING TO THE BOARD OF DIRECTORS
BOARD ORGANIZATION AND MEETINGS
During 1996, the Board of Directors held 12 meetings. No director attended
fewer than 75% of the total number of meetings of the Board of Directors and the
committees of which he was a member. The Board of Directors currently has two
committees, a Compensation Committee and an Audit Committee. The Compensation
Committee consists of Mr. Bayless and Mr. Chaney, each of whom are independent
directors. The Compensation Committee reviews general policy matters relating to
compensation and benefits of officers and employees of the Company and
administers the Stock Option Plan. The Compensation Committee held seven
meetings in 1996. The Audit Committee, established in October 1996, is
responsible for recommending to the Board of Directors the annual engagement of
a firm of independent accountants and for reviewing with the independent
accountants the scope and results of audits, the internal accounting controls of
the Company and audit practices and professional services rendered to the
Company by the independent accountants. The Audit Committee, which did not meet
in 1996, consists of Mr. Edwards and Mr. Williamson.
COMPENSATION OF DIRECTORS
In 1997, independent directors will receive a fee in the amount of $750 for
every meeting of the Board of Directors which such director attends in person or
by telephone and a fee of $500 for each meeting of a committee of the Board of
Directors held separately which such director attends in person or by telephone.
No fees were payable to independent directors prior to the consummation of the
Company's initial public offering of Common Stock in December 1996 and no
meetings of the Board of Directors or any committee thereof were held in
December 1996. As a result, no fees were paid in 1996. All non-employee
directors are reimbursed for out-of-pocket expenses. Under the Stock Option
Plan, the Company may, from time to time, and in the discretion of the Board of
Directors, grant stock options to directors. In January 1996, the Company
granted each of the four non-employee directors - Mr. Bayless, Mr. Chaney, Mr.
Edwards and Mr. Williamson, an option to purchase 5,170 shares of Common Stock
at an exercise price of $.58 per share. Fifty percent of such options vested on
the first anniversary of the date of grant and 25% of such options will vest on
each of the second and third anniversaries of the date of grant.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the last fiscal year of the Company, Mr. Bayless and Mr. Chaney
served on the Compensation Committee of the Board of Directors of the Company.
No member of the Compensation Committee has ever served as an officer of the
Company.
EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
The following table provides information regarding the executive officers
and/or significant employees of the Company. The officers of the Company serve
at the discretion of the Board of Directors of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
C. Eugene Ennis........ 53 President, Chief Executive Officer and Director
Peter M. Duncan........ 44 Vice President of Technology; Treasurer
Douglas C. Nester...... 39 Vice President of Exploration; Secretary
Joseph Schuchardt III.. 45 Vice President of Business Development
Robert J. Bacon, Jr.... 42 Vice President of Joint Ventures
Randall D. Keys........ 37 Vice President of Finance
Herbert R. Rohloff..... 40 Senior Reservoir Engineer
Douglas W. Beckman..... 40 Project Leader
Gene Colgan............ 36 Project Leader
Eric B. Gardner........ 33 Project Leader
Jeffrey K. Owens....... 37 Project Leader
</TABLE>
- -----------
6
<PAGE>
C. Eugene Ennis. Mr. Ennis, who co-founded the Company with Peter M. Duncan
and Douglas C. Nester, has served as the Company's President and Chief Executive
Officer and as a director since the Company's inception in December 1992. From
September 1984 to December 1992, Mr. Ennis was President, Chief Executive
Officer and a director and from October 1990 to December 1992 was Chairman of
the Board of Directors of Landmark Graphics, a provider of interdisciplinary
interpretation tools for the petroleum industry. Mr. Ennis holds a Bachelor of
Science in electrical engineering from the University of Houston and began his
career in 1969 as a design engineer in the Geophysical Products Division of
Texas Instruments where he was employed until 1984.
Peter M. Duncan. Dr. Duncan, a co-founder of the Company, has served as
the Company's Vice President of Technology and Treasurer since the Company's
inception. Prior to joining the Company, Dr. Duncan was employed by Landmark
Concurrent Solutions Inc., an affiliate of Landmark Graphics, that merged with
ExploiTech, as Vice President from July 1991 until December 1992. Dr. Duncan was
a founder in 1987 of ExploiTech, a company specializing in integrated multi-
disciplinary reservoir description studies for exploration and exploitation that
merged with Landmark Graphics in 1989. From 1986 to 1987, Dr. Duncan served as
Vice President of Marine Operations and Chief Geophysicist of North America for
Digicon Inc., a major geophysical contractor. From 1984 to 1986, Dr. Duncan was
employed as Chief Geophysicist of Pulsonic Geophysical of Calgary Inc., a former
subsidiary of Digicon Inc. From 1978 to 1984, Dr. Duncan held various positions
with Shell Canada Resources Inc. ("Shell"), including Party Chief for Shell's
offshore seismic programs. Dr. Duncan holds a Ph.D in geophysics from the
University of Toronto.
Douglas C. Nester. Mr. Nester, a co-founder of the Company, has served as
the Company's Vice President of Exploration and Secretary since the Company's
inception. Prior to joining the Company, Mr. Nester was employed by Landmark
Concurrent Solutions Inc., an affiliate of Landmark Graphics that merged with
ExploiTech, as Director of Technology from June 1988 to December 1992. From 1981
to 1988, Mr. Nester was employed in various geophysical positions by Pennzoil
Corp., and held the position of Geophysical Specialist at the time of his
departure. Mr. Nester began his career as an engineering geologist for Bechtel
Corporation. Mr. Nester holds a Bachelor of Science in Geology from Indiana
University of Pennsylvania and a Masters in Business Administration in Finance
from the University of St. Thomas.
Joseph Schuchardt III. Mr. Schuchardt has served as the Company's Vice
President of Business Development since November 1993. Prior to his employment
with the Company, Mr. Schuchardt served as Vice President of Land for Great
Western Resources Inc. from April 1992 to November 1993. Mr. Schuchardt also
served as Vice President of Land for Paramount Petroleum Company from 1991 to
1992. Mr. Schuchardt was employed as Land Manager of Horizon Exploration Company
from 1980 to 1991 and has held positions with Texas Oil & Gas Corporation,
Coastal States Oil and Gas Corporation and Texaco Inc. Mr. Schuchardt holds a
B.B.A. in Management from the University of Texas.
Robert J. Bacon, Jr. Mr. Bacon has been Vice President of Joint Ventures
since September 1995. Prior to joining the Company, Mr. Bacon was Manager of
Business Development for Scientific Software-Intercomp, Inc., a software
company, from May 1994 to June 1995 and served as Vice President of Sales and
Marketing for JetFax Inc., a manufacturer of facsimile machines and facsimile
peripherals, from September 1990 to May 1994. From 1988 to 1990, Mr. Bacon was
employed by ExploiTech as the Director of Marketing for consulting services.
From 1985 to 1987, Mr. Bacon held positions in key account management at
Landmark Graphics. Mr. Bacon is a founder and currently serves on the Board of
Directors of Innovative Transducers Inc., a privately held designer and
manufacturer of solid towed hydrophonic arrays for the military and geophysical
marine markets. Mr. Bacon holds a Bachelor of Science in Advertising from the
University of Texas.
Randall D. Keys. Mr. Keys has served as the Company's Vice President of
Finance and Chief Financial Officer since April 1, 1997. Prior to joining the
Company, Mr. Keys was Treasurer for Norcen Explorer, Inc. in Houston, Texas from
February 1994 to February 1997. Norcen Explorer, Inc. is the U.S. subsidiary of
Norcen Energy Resources Limited, an international exploration and production
company located in Calgary, Alberta. From November 1987 through January 1994,
Mr. Keys served in various financial management roles with Santa Fe Energy
Resources, Inc. and one of its predecessor companies, Adobe Resources
Corporation. Mr. Keys is a Certified Public Accountant and graduated with a
B.B.A. in Accounting from the University of Texas. He began his career with the
public accounting firm of KPMG Peat Marwick LLP.
7
<PAGE>
Herbert R. Rohloff. Mr. Rohloff has served as a Senior Reservoir Engineer
since joining the Company in January 1995. He is a registered professional
engineer in the State of Texas. Prior to joining the Company, Mr. Rohloff was
employed by Amoco Production Company from 1979 to 1993 in various engineering,
economic and supervisory positions beginning in 1979 and served most recently as
Project Manager-Production New Ventures. Mr. Rohloff holds a Bachelor of Science
in Chemical Engineering from Texas A&M University.
Douglas W. Beckman. Mr. Beckman has served as a Senior Explorationist and
Project Leader since joining the Company in September 1994. Mr. Beckman has over
15 years of experience in the oil and gas industry. Prior to joining the
Company, Mr. Beckman was employed by Exxon Corp. from May 1982 to August 1994,
and served most recently as a seismic applications specialist. Mr. Beckman holds
a Bachelor of Arts in Geology from Wittenberg University.
R. Gene Colgan. Mr. Colgan joined the Company as a Senior Explorationist
and Project Leader in March 1997. He spent the previous seven years as an
exploration and development geologist with Vastar Resources (formerly Arco Oil
and Gas) working principally in the Gulf of Mexico. He holds a Master of Science
in Geology from Southern Methodist University and a Bachelor of Science in
Geology from Midwestern State University.
Eric B. Gardner. Mr. Gardner has served as Senior Explorationist and
Project Leader since joining the Company in September 1994. Mr. Gardner has over
12 years of industry experience and has worked in many geoscience areas,
including production, exploration, seismic technology, and research. Mr. Gardner
began his career with Amoco Production Company in 1985 as a technical
geophysicist and served most recently as a staff geophysicist. Mr. Gardner holds
a Bachelor of Science in Engineering Physics from Colorado School of Mines.
Jeffrey K. Owens. Mr. Owens has served as a Senior Explorationist and
Project Leader since joining the Company in August 1994. Prior to joining the
Company, Mr. Owens was employed by Amoco Production Company where he began his
career in 1984 as a production and reservoir engineer and served most recently
as a staff geophysicist. Mr. Owens holds a Bachelor of Science in Petroleum
Engineering from Mississippi State University.
EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation for
services in all capacities awarded to, earned by or paid to, the Company's Chief
Executive Officer and each of the Company's four other most highly compensated
executive officers (the "Named Executive Officers") with respect to the last two
fiscal years. The table also identifies the principal capacity in which each of
the Named Executive Officers served the Company at the end of 1996.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------- -------------------------------------
RESTRICTED SECURITIES ALL OTHER
STOCK UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) AWARDS ($) OPTIONS (#) ($)
- --------------------------- ---- ---------- --------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
C. Eugene Ennis 1996 150,000 - - - -
President and Chief 1995 150,000 - - - -
Executive Officer
Peter M. Duncan 1996 103,920 - - - -
Vice President of 1995 103,920 12,000 - - -
Technology; Treasurer
Douglas C. Nester 1996 95,000 - - - -
Vice President of 1995 95,000 - - - -
Exploration
Joseph Schuchardt III 1996 95,000 11,875 - - -
Vice President of 1995 95,000 - - - -
Business Development
Robert J. Bacon, Jr. 1996 95,000 11,875 - - -
Vice President of 1995 95,000 - - 144,760 -
Joint Ventures
- -----------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
CASH BONUS PLAN
In 1996 the Company adopted the 1996 Incentive Compensation Plan (the
"Bonus Plan") which provides for the payment of annual cash bonuses, in an
amount up to 40% of the participant's base salary, if certain pre-established
Company-based performance criteria are satisfied. All full-time employees of the
Company are eligible to participate in the Bonus Plan, with the exception of the
Chief Executive Officer. Bonuses are awarded if the Company achieves at least
80% of its targeted performance criteria. The bonuses are then prorated
accordingly. The bonus of the Chief Executive Officer is separately determined
at the discretion of the Board of Directors. The 1996 bonuses for Mr.
Schuchardt and Mr. Bacon were paid pursuant to the Bonus Plan upon partial
satisfaction of performance targets.
STOCK OPTION GRANTS
During the year ended December 31, 1996, no stock options were granted to
the Named Executive Officers.
OPTION EXERCISES AND YEAR-END OPTION VALUES
The following table sets forth information regarding the exercise of stock
options during fiscal 1996 and the number and year-end value of unexercised
options held at December 31, 1996, by each of the Named Executive Officers. No
stock options or stock appreciation rights were exercised by the Named Executive
Officers during fiscal 1996.
AGGREGATE OPTION EXERCISES IN FISCAL 1996
AND FISCAL 1996 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
SHARES ACQUIRED UNEXERCISED OPTIONS AT "IN-THE-MONEY" OPTIONS AT
ON EXERCISED VALUE REALIZED DECEMBER 31, 1996 DECEMBER 31, 1996
NAME (#) DURING 1996 ON EXERCISE ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE (1)
- --------------------------- --------------- --------------- ------------------------------ -----------------------------
<S> <C> <C> <C> <C> <C> <C>
C. Eugene Ennis............ - - 15,947 4,197 $ 172,335 $ 45,351
Peter M. Duncan............ - - 15,947 4,197 $ 172,335 $ 45,351
Douglas C. Nester.......... - - 15,947 4,197 $ 172,335 $ 45,351
Joseph Schuchardt III...... - - 128,252 38,129 $1,385,965 $ 412,044
Robert J. Bacon, Jr........ - - 36,190 108,570 $ 377,090 $1,131,270
</TABLE>
- -----------
(1) Options are "in-the-money" if the fair market value of the underlying
securities exceeds the exercise price of the options. The amounts set forth
represent the difference between the exercise price of the options and
$11.00, the closing price for the Common Stock on December 31, 1996 on the
Nasdaq National Market, multiplied by the applicable number of options.
STOCK OPTION PLAN
In January 1994, the Company adopted the Stock Option Plan under which
"non-qualified" stock options ("NQSOs") to acquire shares of Common Stock may be
granted to directors of and consultants to the Company and "incentive" stock
options ("ISOs") to acquire shares of Common Stock may be granted to employees
and directors who are also employees of the Company.
Currently, the Stock Option Plan provides for the issuance of up to a
maximum of 1,504,937 shares of Common Stock and is administered by the
Compensation Committee. The Board of Directors has approved an amendment to the
Stock Option Plan which would increase the number of shares reserved for
issuance pursuant to the Stock Option Plan by 500,000 shares, from 1,504,937
shares to 2,004,937 shares of Common Stock. See "Proposal Three - Proposal to
Approve an Amendment to Increase the Number of Shares of Common Stock Reserved
for Issuance Pursuant to the Company's 1994 Stock Option Plan." Under the Stock
Option Plan, the option price of any ISO may not be less than the fair market
value of a share of Common Stock on the date on which the option is granted.
The option
9
<PAGE>
price of an NQSO may be less than the fair market value on the date the NQSO is
granted if the Compensation Committee so determines, but may not in any event be
less than 85% of such fair market value. An ISO may not be granted to a "ten
percent stockholder" (as such term is defined in Section 422A of the Internal
Revenue Code of 1986, as amended) unless the exercise price is at least 110% of
the fair market value of the Common Stock at the time of grant and the option
must be exercised within five years. Options granted pursuant to the Stock
Option Plan are evidenced by a written agreement executed by the Company and the
grantee, containing the terms, provisions and conditions of the grant. Stock
options may not be assigned or transferred during the lifetime of the holder
except as may be required by law or pursuant to a qualified domestic relations
order. The maximum term of each stock option is ten years from the date of
grant.
In order for the options to qualify as ISOs, the aggregate fair market
value, determined on the date of grant, of the shares with respect to which the
ISOs are exercisable for the first time by the grantee during any calendar year
may not exceed $100,000. Payment by option holders upon exercise of an option
may be made (i) in cash, (ii) by tender to the Company of shares of the
Company's stock owned by the optionee having a fair market value, as determined
by the Compensation Committee (but without regard to any restrictions on
transferability applicable to such stock by reason of federal or state
securities laws or agreements with an underwriter for the Company), not less
than the exercise price, (iii) by delivery of a promissory note made by the
optionee in a form approved by the Company, (iv) by the assignment of the
proceeds of a sale of some or all of the shares being acquired upon the exercise
of the option, (v) by the withholding of shares being acquired upon exercise of
the option bearing a fair market value, as determined by the Compensation
Committee (but without regard to any restrictions on transferability applicable
to such stock by reason of federal or state securities laws or agreements with
an underwriter for the Company), not less than the exercise price, or (vi) by
any combination thereof. The Compensation Committee may at any time or from
time to time grant options which do not permit all of the foregoing forms of
consideration to be used in payment of the exercise price and/or which otherwise
restrict the use of one or more forms of consideration. In addition, the
Compensation Committee, in its sole discretion, may authorize the surrender by
an optionee of all or part of an unexercised stock option and authorize a
payment in consideration thereof of an amount equal to the difference between
the aggregate fair market value of the Common Stock subject to such stock option
and the aggregate option price of such Common Stock. In the Compensation
Committee's discretion, such payment may be made in cash, shares of Common Stock
with a fair market value on the date of surrender equal to the payment amount or
some combination thereof.
The Stock Option Plan provides that outstanding options vest in their
entirety and become exercisable in the event of certain mergers, consolidations
or sales of all or substantially all of the assets of the Company, unless the
successor corporation assumes such options. As of May 19, 1996, options to
purchase 1,098,465 shares of Common Stock were outstanding under the Stock
Option Plan at exercise prices ranging from $0.19 to $11.875 per share.
During 1997, the Company expects to file with the Securities and Exchange
Commission a Registration Statement on Form S-8 covering the shares of Common
Stock issued pursuant to the Stock Option Plan and the shares of Common Stock
underlying options granted under the Stock Option Plan.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board of Directors oversees the
compensation policies applicable to all employees of the Company, including its
executive officers. The Compensation Committee also has primary responsibility
for administering stock-based compensation plans of the Company.
The Company seeks to provide a compensation program which will allow it to
attract and retain highly qualified and motivated employees. Its compensation
program is also designed to enhance stockholder value by providing significant
incentives for employees to achieve the Company's goals. The Company is striving
to promote an entrepreneurial environment which encourages all employees to
focus on the continuing long-term growth of the Company. Specifically, the
compensation plan includes the following components:
Base Salary. It is the goal of the Compensation Committee that the primary
element of compensation result from the achievement of performance-based
objectives which contribute in a meaningful way to long-term stockholder value.
However, the Company must also provide a base salary and employee benefits which
are competitive with compensation offered by other oil and gas exploration
companies similar to the Company. The Compensation Committee expects that base
salary will not exceed the average paid by the Company's peers.
10
<PAGE>
Incentive Compensation. The Company has annual incentive compensation
programs, as described under "Executive Compensation - Cash Bonus Plan." During
1996, the Company did not achieve its targets for oil and gas production or
additions to proved reserves. However, two officers, Mr. Schuchardt and Mr.
Bacon, achieved Company performance targets for business development activities
and were awarded partial bonuses for 1996.
Stock Option Plan. The Stock Option Plan is a broad-based stock option
plan covering all employees which is designed to motivate and retain employees
and allow all employees to benefit from performance which enhances long-term
stockholder value. All stock options granted to employees have exercise prices
which equal the fair market value of the Common Stock on the date of grant and
vest at the rate of 25% per year over a period of four years. Accordingly, the
options provide a significant incentive for superior long-term performance and
continued retention of employees by the Company. No stock options were awarded
to any executive officer in 1996.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
As discussed above, the Company's compensation philosophy for all
employees, including the Chief Executive Officer, is to provide a competitive
base salary and incentive compensation based on the Company's performance. The
base salary paid to Mr. Ennis in 1996 in his capacity as President and Chief
Executive Officer was $150,000. In February 1997, Mr. Ennis' salary was
increased to $175,000 to reflect the added responsibilities of serving as the
Chief Executive Officer of a public company. Mr. Ennis did not receive a bonus
for 1996. The bonus for the Chief Executive Officer is discretionary under the
Bonus Plan and reflects factors in addition to the objective performance
measures in the Bonus Plan.
Members of the Compensation Committee: Jon W. Bayless
Robert H. Chaney
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
Common Stock with the cumulative total return of (i) the Media General Industry
Group Index No. 353, "Oil, Natural Gas Exploration" ("MG Group Index") and (ii)
the NASDAQ Market Value Index from the first day of trading of the Common Stock,
December 20, 1996 through March 31, 1997. The graph assumes that the value of an
investment in the Common Stock and each index was $100 at December 20, 1996 and
that any dividends were reinvested. Numerical values used for the month-end
plot points in the graph are set forth in the table under the graph.
Comparison of Cumulative Total Return for 3DX Technologies Inc.,
NASDAQ Market Index and MG Group Index
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
12/20/96 12/31/96 1/31/97 2/28/97 3/31/97
-------- -------- ------- ------- -------
3DX Technologies Inc. 100.00 100.00 117.05 93.18 100.00
NASDAQ Market Index 100.00 100.00 107.31 101.49 94.94
MG Group Index 100.00 100.00 101.54 90.18 90.99
</TABLE>
11
<PAGE>
PROPOSAL THREE
--------------
PROPOSAL TO APPROVE AN AMENDMENT TO INCREASE THE NUMBER OF SHARES OF COMMON
STOCK RESERVED FOR ISSUANCE PURSUANT TO THE COMPANY'S 1994 STOCK OPTION PLAN
GENERAL
- -------
The Stock Option Plan was adopted by the Board of Directors on January 4,
1994 and approved by the Company's stockholders on November 17, 1994. The Stock
Option Plan provides for the grant of incentive stock options (which satisfy the
requirements of Section 422(b) of the Internal Revenue Code of 1986, as amended
(the "Code")) to employees of the Company and for the grant of non-qualified
stock options (which do not satisfy such requirements) to non-employee directors
and consultants to the Company.
At the time the Company's stockholders approved the Stock Option Plan,
852,719 shares of Common Stock were reserved for issuance under the Stock Option
Plan. Though subsequent amendments, the total number of shares reserved for
issuance was increased to 1,504,937 shares. At a meeting of the Board of
Directors in May 1997, the Board of Directors adopted an amendment to the Stock
Option Plan increasing the number of shares of Common Stock reserved for
issuance thereunder from 1,504,937 shares to 2,004,937 shares. A copy of the
Stock Option Plan, as amended by the Board of Directors, is attached hereto as
Exhibit B. The material features of the Plan as currently in effect are
described above in "Executive Compensation - Stock Option Plan."
REASONS AND PRINCIPAL EFFECTS OF THE PROPOSAL
- ---------------------------------------------
As of May 19, 1997, options to purchase 1,098,465 shares of Common Stock
had been granted to and were held by 32 persons. Additionally, the Company had
issued an aggregate of 3,124 shares in connection with the exercise of options
granted pursuant to the Stock Option Plan. As a result 403,348 shares of Common
Stock remain available for future awards under the Stock Option Plan. The Board
believes that the availability of an adequate number of shares reserved for
issuance pursuant to the Stock Option Plan is an important factor in its ability
to attract, retain and motivate qualified employees, officers, directors and
consultants. If the proposal to amend the Stock Option Plan is approved, then
employees, officers, directors and other persons who render services to the
Company as consultants, advisors or other independent contractors, may receive
benefits under the Stock Option Plan which would not otherwise be available if
the proposal is not adopted.
STOCKHOLDER VOTE REQUIRED
- -------------------------
The proposal to amend the Stock Option Plan to increase the number of
shares of Common Stock reserved for issuance thereunder is subject to approval
by the holders of a majority of the outstanding shares of Common Stock.
RECOMMENDATION OF THE BOARD
- ---------------------------
FOR THE REASONS SET FORTH ABOVE, THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE IN
FAVOR OF THIS PROPOSAL.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Commission and the Nasdaq National
Market. Officers, directors and greater than 10% stockholders are required by
the regulations of the Commission to furnish the Company with copies of all
Section 16(a) reports such persons file. Based solely on a review of copies of
such reports received by it and written representation from certain reporting
persons that no Forms 5 were required for those persons, the Company believes
that, during the period from the effective date of the Registration Statement
12
<PAGE>
relating to the initial public offering of the Common Stock to December 31, 1996
all filing requirements applicable to its officers, directors and greater than
10% stockholders were complied with, except for Nationsbanc Capital Corporation,
which was late in filing one report on Form 4.
TRANSACTIONS WITH RELATED PARTIES
AGREEMENTS WITH LANDMARK GRAPHICS
In connection with its initial capitalization, the Company entered into a
Technical Services Agreement with Landmark Graphics pursuant to which Landmark
Graphics agreed to grant to the Company ongoing licenses to use Landmark
Graphics software as Landmark Graphics first made such software available to its
customers. Prior to the Company's initial public offering of Common Stock in
December 1996, Landmark Graphics was the beneficial owner of greater than 5% of
the issued and outstanding Common Stock. In addition, the agreement provides for
a strategic alliance between Landmark Graphics and the Company, which enables
the Company to request, and requires Landmark Graphics to deliver, enhancements
and modifications to existing Landmark Graphics software and, in certain
instances, to develop new software for use in the Company's oil and gas
exploration efforts. In exchange for such rights, the Company has agreed to
serve as an alpha test site for software developed by Landmark Graphics.
Neither this agreement nor any of the licenses granted by Landmark Graphics to
the Company contain any provisions with respect to expiration or termination.
In addition, the Company and Landmark Graphics are also parties to informal
agreements pursuant to which the Company's employees participate in Landmark
Graphics' medical insurance plan, life insurance plans and 401(k) plan.
In connection with the informal agreements pursuant to which the Company
purchases medical and life insurance for its employees and their dependents as a
part of the Landmark Graphics benefit plan and the agreements which enable the
Company's employees to participate in the Landmark Graphics' 401(k) Plan, the
Company reimburses Landmark Graphics for all direct costs associated with such
benefits and programs and pays Landmark Graphics a quarterly administrative and
billing fee in an aggregate amount less than $1,500 annually. The Company
believes these informal arrangements result in an administrative convenience for
the Company, and may allow the Company's employees and their dependents to
obtain better insurance coverage than would be available from other plans that
the Company could obtain independently. Such arrangements do not result in any
material financial benefit to the Company since the Company reimburses Landmark
Graphics for all of costs which Landmark Graphics incurs in connection with such
arrangements.
PROPOSAL FOUR
-------------
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected Arthur Andersen LLP as the Company's
independent accountants to audit the books and records of the Company for the
fiscal year ending December 31, 1997 and has further directed that management
submit the selection of such independent accountants for ratification by the
stockholders at the Annual Meeting. Arthur Andersen LLP has audited the
financial statements of the Company since 1994 and are experienced in the
accounting procedures utilized in the oil and gas industry. The firm of Arthur
Andersen LLP has advised the Company that neither it nor any of its members has
any direct financial interest in the Company. A representative of Arthur
Andersen LLP is expected to be present at the Annual Meeting, will have an
opportunity to make a statement if so desired, and will be available to respond
to appropriate questions.
Stockholder ratification of the selection of Arthur Andersen LLP as the
Company's independent accountant is not required by the By-laws or otherwise.
However, the Board of Directors is submitting the selection of Arthur Andersen
LLP to the stockholders for ratification as a matter of good corporate practice.
If the stockholders fail to ratify the selection, the Audit Committee and the
Board of Directors will reconsider whether or not to retain the firm. Even if
the selection is ratified, the Audit Committee and the Board of Directors in
their discretion may direct the appointment of a different independent
accountant at any time during the year if they determine that such a change
would be in the best interests of the Company and its stockholders.
13
<PAGE>
STOCKHOLDER VOTE REQUIRED
- -------------------------
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote thereon at the Annual
Meeting when a quorum is present is required to ratify the selection of Arthur
Andersen LLP.
RECOMMENDATION OF THE BOARD
- ---------------------------
FOR THE REASONS SET FORTH ABOVE, THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE IN
FAVOR OF THIS PROPOSAL.
OTHER MATTERS
The Company knows of no other matters to be submitted to the Annual
Meeting. If any other matters properly come before the meeting, it is the
intention of the persons named in the enclosed proxy to vote the shares
represented by such proxies in the manner which the Board of Directors may
recommend.
SUBMISSION OF STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company which are intended to be presented
by such stockholders at the 1998 Annual Meeting must be received by the Company
no later than January 21, 1998 for inclusion in the proxy statement and form of
proxy relating to that annual meeting.
ANNUAL REPORT
A copy of the Company's 1996 Annual Report to Stockholders is being mailed
with this Proxy Statement to each stockholder entitled to vote at the Annual
Meeting. Stockholders no receiving a copy of such Annual Report may obtain a
copy, without charge, by writing or calling Douglas C. Nester, Secretary, 3DX
Technologies Inc., 12012 Wickchester, Suite 250, Houston, Texas 77079, telephone
(281) 579-3398.
By Order of the Board of Directors
/s/ Douglas C. Nester
May 20, 1997 Douglas C. Nester
Houston, Texas Vice President and Secretary
14
<PAGE>
EXHIBIT A
AMENDMENT OF RESTATED CERTIFICATE OF
INCORPORATION AND SECOND AMENDED AND RESTATED BY-LAWS
ELIMINATING THE CLASSIFIED BOARD
RESOLVED, that Article SIXTH of the Restated Certificate of Incorporation (the
"Restated Certificate") of 3DX Technology Inc. (the "Corporation") is hereby
amended and restated in its entirety to read as follows:
SIXTH: The powers of the Company shall be exercised by or under the
authority of, and the business and affairs of the Corporation shall be
managed under the direction of, a Board of Directors. The number of
directors may be increased or decreased by the Board of Directors from time
to time as provided in the By-laws.
RESOLVED, that the Corporation's Second Amended and Restated By-Laws (the "By-
Laws") are hereby amended as follows:
(1) SECTION 3 of ARTICLE II of the By-Laws is hereby amended by
deleting therefrom the first sentence thereof which reads as follows:
"The Board of Directors shall be divided into three classes serving
staggered three-year terms."
(2) SECTION 4 of ARTICLE II of the By-Laws is hereby amended and
restated as follows:
SECTION 4. Removal, Vacancies and Additional Directors. The
-------------------------------------------
stockholders may, by the affirmative vote of the holders of at least a
majority of the issued and outstanding shares of the Corporation's capital
stock entitled to vote with respect to the election of Directors, at any
special meeting the notice of which shall state that it is called for that
purpose, remove, with or without cause, any Director and fill the vacancy
in accordance with these By-laws; provided, however, that whenever any
Director shall have been elected by the holders of any class of stock of
the Corporation voting separately as a class pursuant to statute or the
provisions of the Restated Certificate, such Director may be removed and
the vacancy filled only by the holders of that class of stock voting
separately as a class. Vacancies caused by any removal, or any vacancy
caused by the death or resignation of any Director or for any other reason,
and any newly created Directorship resulting from any increase in the
authorized number of Directors, shall be filled by the affirmative vote of
a majority of the Directors then in office, although less than a quorum,
and if there shall be no Directors then in office, such vacancy or newly
created Directorship shall be filled by holders of at least a majority of
the shares of the Corporation's capital stock entitled to vote with respect
to the election of Directors, and any Director so elected to fill such
vacancy or any newly created directorship shall hold office for a term that
shall expire at the first annual meeting of stockholders following such
appointment or until the earlier resignation or removal of the Director.
When one (1) or more Directors shall resign from the Board of
Directors effective at a future date, a majority of the Directors then in
office, including those who have so resigned, shall have power to fill such
vacancy or vacancies, the vote thereon to take effect when such resignation
or resignations shall become effective, and each Director so chosen shall
hold office until the first annual meeting of stockholders following such
appointment or until the earlier resignation or removal of the Director.
A-1
<PAGE>
EXHIBIT B
3DX TECHNOLOGIES INC.
1994 STOCK OPTION PLAN
(as amended May 2, 1997)
1. Establishment and Purpose.
--------------------------
(a) Establishment. The 3DX TECHNOLOGIES INC. Employee Stock Option Plan
was adopted effective January 4, 1994 (the "Plan").
(b) Purpose. The purpose of the Plan is to attract, retain and reward
persons providing services to 3DX Technologies Inc., a Delaware corporation, and
any successor corporation thereto (collectively referred to as the "Company"),
and any present or future parent and/or subsidiary corporations of such
corporation (all of which along with the Company being individually referred to
as a "Participating Company" and collectively referred to as the "Participating
Company Group"), and to motivate such persons to contribute to the growth and
profits of the Participating Company Group in the future. For purposes of the
Plan, a parent corporation and a subsidiary corporation shall be as defined in
Sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as amended (the
"Code").
2. Administration.
--------------
(a) Administration by Board and/or Committee. The Plan shall be
administered by the Board of Directors of the Company (the "Board") and/or by a
duly appointed committee of the Board having such powers as shall be specified
by the Board. Any subsequent references herein to the Board shall also mean the
committee if such committee has been appointed and, unless the powers of the
committee have been specifically limited, the committee shall have all of the
powers of the Board granted herein, including, without limitation, the power to
terminate or amend the Plan at any time, subject to the terms of the Plan and
any applicable limitations imposed by law. All questions of interpretation of
the Plan or of any options granted under the Plan (an "Option") shall be
determined by the Board, and such determinations shall be final and binding upon
all persons having an interest in the Plan and/or any Option.
(b) Options Authorized. Options may be either incentive stock options as
defined in Section 422 of the Code ("Incentive Stock Options") or non-statutory
stock options.
(c) Authority of Officers. Any officer of a Participating Company shall
have the authority to act on behalf of the Company with respect to any matter,
right, obligation, or election which is the responsibility of or which is
allocated to the Company herein, provided the officer has apparent authority
with respect to such matter, right, obligation, or election.
3. Eligibility.
-----------
(a) Eligible Persons. Options may be granted only to employees (including
officers) and directors of the Participating Company Group or to individuals who
are rendering services as consultants, advisors, or other independent
contractors to the Participating Company Group. The Board shall, in its sole
discretion, determine which persons shall be granted Options (an "Optionee").
Eligible persons may be granted more than one (1) Option.
(b) Restrictions on Option Grants. A director of a Participating Company
may only be granted a non-statutory stock option unless the director is also an
employee of the Participating Company Group. An individual who is rendering
services as a consultant, advisor, or other independent contractor may only be
granted a non-statutory stock option.
4. Shares Subject to Option. Options shall be for the purchase of shares of
the authorized but unissued common stock or treasury shares of common stock $.01
par value of the Company (the "Stock"), subject to adjustment as provided in
paragraph 10 below. The maximum number of shares of Stock which may be issued
under
B-1
<PAGE>
the Plan shall be two million, four thousand nine hundred thirty seven
(2,004,937) shares. In the event that any outstanding Option for any reason
expires or is terminated or canceled and/or shares of Stock subject to
repurchase are repurchased by the Company, the shares allocable to the
unexercised portion of such Option, or such repurchased shares, may again be
subject to an Option grant. Notwithstanding the foregoing any such shares shall
be made subject to a new Option only if the grant of such new Option and the
issuance of such shares pursuant to such new Option would not cause the Plan or
any Option granted under the Plan to contravene Rule 16b-3.
5. Time for Granting Options. All Options shall be granted, if at all,
within ten (10) years from the earlier of the date the Plan is adopted by the
Board or the date the Plan approved by the stockholders of the Company.
6. Terms, Conditions and Form of Options. Subject to the provisions of the
Plan, the Board shall determine for each Option (which need not be identical)
the number of shares of Stock for which the Option shall be granted, the
exercise price of the Option, the timing and terms of exercisability and vesting
of the Option, the time of expiration of the Option, the effect of the
Optionee's termination of employment or service, whether the Option is to be
treated as an Incentive Stock Option or as a non-statutory stock option, the
method for satisfaction of any tax withholding obligation arising in connection
with Option, including by the withholding or delivery of shares of stock, and
all other terms and conditions of the Option not inconsistent with the Plan.
Options granted pursuant to the Plan shall be evidenced by written agreements
specifying the number of shares of Stock covered thereby, in such form as the
Board shall from time to time establish, which agreements may incorporate all or
any of the terms of the Plan by reference and shall comply with and be subject
to the following terms and conditions:
(a) Exercise Price. The exercise price for each Option shall be
established in the sole discretion of the Board; provided, however; that (i) the
exercise price per share for an Incentive Stock Option shall be not less than
the fair market value, as determined by the Board, of a share of Stock on the
date of the granting of the Option, (ii) the exercise price per share for a non-
statutory stock option shall not be less than eighty-five percent (85%) of the
fair market value, as determined by the Board, of a share of Stock on the date
of the granting of the Option and (iii) no Incentive Stock Option granted to an
Optionee who at the time the Option is granted owns stock possessing more than
ten percent (10%) of the total combined voting power of all classes of stock of
a Participating Company within the meaning of Section 422(b)(6) of the Code (a
"Ten Percent Owner Optionee") shall have an exercise price per share less than
one hundred ten percent (110%) of the fair market value, as determined by the
Board, of a share of Stock on the date of the granting of the Option.
Notwithstanding the foregoing, an Option (whether an Incentive Stock Option or a
non-statutory stock option) may be granted with an exercise price lower than the
minimum exercise price set forth above if such Option is granted pursuant to an
assumption or substitution for another option in a manner qualifying with the
provisions of Section 424(a) of the Code.
(b) Exercise Period of Options. The Board shall have the power to set,
including by amendment of an Option, the time or times within which each Option
shall be exercisable or the event or events upon the occurrence of which all or
a portion of each Option shall be exercisable and the term of each Option;
provided, however, that (i) no Option shall be exercisable after the expiration
of ten (10) years after the date such Option is granted, and (ii) no Incentive
Stock Option granted to a Ten Percent Owner Optionee shall be exercisable after
the expiration of five (5) years after the date such Option is granted.
(c) Payment of Exercise Price.
(i) Forms of Payment Authorized. Payment of the exercise price for the
number of shares of Stock being purchased pursuant to any Option shall be made
(1) in cash, by check, or cash equivalent, (2) by tender to the Company of
shares of the Company's stock owned by the Optionee having a fair market value,
as determined by the Board (but without regard to any restrictions on
transferability applicable to such stock by reason of federal or state
securities laws or agreements with an underwriter for the Company), not less
than the exercise price, (3) by the Optionee's recourse promissory note in a
form approved by the Company, (4) by the assignment of the proceeds of a sale of
some or all of the shares being acquired upon the exercise of the Option
(including, without limitation, through an exercise complying with the
provisions of Regulation T as promulgated from time to time by the Board of
Governors of the Federal Reserve System), (5) by the withholding of shares being
acquired upon exercise of the Option having a fair market value, as determined
by the Board (but without regard to any restrictions on transferability
applicable to such stock by reason of federal or state securities laws or
agreements with an underwriter for the Company), not less than the exercise
price, or (6) by any combination thereof. The Board may at any time or
B-2
<PAGE>
from time to time grant Options which do not permit all of the foregoing forms
of consideration to be used in payment of the exercise price and/or which
otherwise restrict one (1) or more forms of consideration.
(ii) Tender of Company Stock. Notwithstanding the foregoing, an Option
may not be exercised by tender to the Company of shares of the Company's stock
to the extent such tender of stock, as determined by the Board, would constitute
a violation of the provisions of any law, regulation and/or agreement
restricting the redemption of the Company's stock. Unless otherwise provided by
the Board, an Option may not be exercised by tender to the Company of shares of
the Company's stock unless such shares of the Company's stock either have been
owned by the Optionee for more than six (6) months or were not acquired,
directly or indirectly, from the Company.
(iii) Promissory Notes. No promissory note shall be permitted if an
exercise using a promissory note would be a violation of any law. Any permitted
promissory note shall be due and payable not more than four (4) years after the
Option is exercised, and interest shall be payable at least annually and be at
least equal to the minimum interest rate necessary to avoid imputed interest
pursuant to all applicable sections of the Code. The Board shall have the
authority to permit or require the Optionee to secure any promissory note used
to exercise an Option with the shares of Stock acquired on exercise of the
Option and/or with other collateral acceptable to the Company. Unless otherwise
provided by the Board, in the event the Company at any time is subject to the
regulations promulgated by the Board of Governors of the Federal Reserve System
or any other governmental entity affecting the extension of credit in connection
with the Company's securities, any promissory note shall comply with such
applicable regulations, and the Optionee shall pay the unpaid principal and
accrued interest, if any, to the extent necessary to comply with such applicable
regulations.
(iv) Assignment of Proceeds of Sale. The Company reserves, at any and
all times, the right, in the Company's sole and absolute discretion, to
establish, decline to approve and/or terminate any program and/or procedures for
the exercise of Options by means of an assignment of the proceeds of a sale of
some or all of the shares of Stock to be acquired upon such exercise.
7. Standard Forms of Stock Option Agreement.
----------------------------------------
(a) Incentive Stock Options. Unless otherwise provided for by the Board
at the time an Option is granted, an Option designated as an "Incentive Stock
Option" shall comply with and be subject to the terms and conditions set forth
in the form of incentive stock option agreement attached hereto as Exhibit A and
incorporated herein by reference.
(b) Non-statutory Stock Options. Unless otherwise provided for by
the Board at the time an Option is granted, an Option designated as a "Non-
statutory Stock Option" shall comply with and be subject to the terms and
conditions set forth in the forms of non-statutory stock option agreement
attached hereto as Exhibit B and incorporated herein by reference.
(c) Standard Term for Options. Unless otherwise provided for by the Board
in the grant of an Option, any Option granted hereunder shall be exercisable for
a term of ten (10) years.
8. Authority to Vary Terms. The Board shall have the authority from time to
time to vary the terms of either of the standard forms of Stock Option Agreement
described in paragraph 7 above either in connection with the grant or amendment
of an individual Option or in connection with the authorization of a new
standard form or forms; provided, however, that the terms and conditions of such
revised or amended standard form or forms of stock option agreement shall be in
accordance with the terms of the Plan. Such authority shall include, but not by
way of limitation, the authority to grant Options which are not immediately
exercisable.
9. Fair Market Value Limitation. To the extent that the aggregate fair
market value (determined at the time the Option is granted) of stock with
respect to which Incentive Stock Options are exercisable by an Optionee for the
first time during any calendar year (under all stock option plans of the
Company, including the Plan) exceeds One Hundred Thousand Dollars ($100,000),
such Options shall be treated as non-statutory stock options. This paragraph
shall be applied by taking Incentive Stock Options into account in the order in
which they were granted.
B-3
<PAGE>
10. Effect of Change in Stock Subject to Plan. Appropriate adjustments shall
be made in the number and class of shares of Stock subject to the Plan and to
any outstanding Options and in the exercise price of any outstanding Options in
the event of a stock dividend, stock split, reverse stock split,
recapitalization, combination, reclassification, or like change in the capital
structure of the Company.
In the event a majority of the shares which are of the same class as the
shares that are subject to outstanding Options are exchanged for, converted
into, or otherwise become (whether or not pursuant to a Transfer of Control (as
defined below)) shares of another corporation (the "New Shares"), the Company
may unilaterally amend the outstanding Options to provide that such Options are
exercisable for New Shares. In the event of any such amendment, the number of
shares and the exercise price of the outstanding Options shall be adjusted in a
fair and equitable manner.
11. Transfer of Control. A "Transfer of Control" shall be deemed to have
occurred in the event any of the following occurs with respect to the Company.
(a) the acquisition of direct or indirect ownership of stock by any
person, entity or group of persons or entities acting in concert possessing more
than a majority of the beneficial interest in the voting stock of the Company;
(b) the direct or indirect sale or exchange by the stockholders of the
Company of all or substantially all of the stock of the Company where the
stockholders of the Company before such sale or exchange do not retain, directly
or indirectly, at least a majority of the beneficial interest in the voting
stock of the Company after such sale or exchange;
(c) a merger or consolidation where the stockholders of the Company
before such merger or consolidation do not retain, directly or indirectly, at
least a majority of the beneficial interest in the voting stock of the Company
after such merger or consolidation;
(d) the sale, exchange, or transfer of all or substantially all of the
assets of the Company (other than a sale, exchange, or transfer to one (1) or
more subsidiary corporations (as defined in paragraph 1 above) of the Company);
or
(e) a liquidation or dissolution of the Company.
For purposes of the foregoing, if a group of persons or entities begins to act
in concert, and if such group meets the beneficial ownership requirements set
forth in clause (a) above, then such acquisition shall be deemed to have
occurred on the date the Company first becomes aware of such group or its
actions.
A Stock Option Agreement may, in the discretion of the Board, provide for
accelerated vesting in the event of a Transer of Control.
In the event of a Transfer of Control, the surviving, continuing, successor,
or purchasing corporation or parent corporation thereof, as the case may be (the
"Acquiring Corporation"), shall either assume the Company's rights and
obligations under outstanding stock option agreements or substitute options for
the Acquiring Corporation's stock for such outstanding Options. In the event the
Acquiring Corporation elects not to assume or substitute for such outstanding
Options in connection with the Transfer of Control, any unexercisable and/or
unvested shares subject to such outstanding stock option agreements shall be
immediately exercisable and fully vested as of the date thirty (30) days prior
to the proposed effective date of the Transfer of Control. The exercise and/or
vesting of any Option that was permissible solely by reason of this paragraph 11
shall be conditioned upon the consummation of the Transfer of Control. Any
Options which are neither assumed or substituted for by the Acquiring
Corporation in connection with the Transfer of Control nor exercised as of the
date of the Transfer of Control shall terminate and cease to be outstanding
effective as of the date of the Transfer of Control.
12. Provision of Information. Each Optionee shall be given access to
information concerning the Company equivalent to that information generally made
available to the Company's common stockholders generally.
B-4
<PAGE>
13. Options Non-Transferable. During the lifetime of the Optionee, the
Option shall be exercisable only by the Optionee. No Option shall be assignable
or transferable by the Optionee, except by will or by the laws of descent and
distribution.
14. Termination or Amendment of Plan or Options. The Board, including any
duly appointed committee of the Board, may terminate or amend the Plan or any
Option at any time; provided, however, that without the approval of the
Company's stockholders, there shall be (a) no increase in the total number of
shares of Stock covered by the Plan (except by operation of the provisions of
paragraph 10 above), (b) no change in the class eligible to receive Incentive
Stock Options and (c) no expansion in the class eligible to receive non-
statutory stock options. In addition to the foregoing, the approval of the
Company's stockholders shall be sought for any amendment to the Plan for which
the Board deems stockholder approval necessary in order to comply with Rule 16b-
3. In any event, no amendment may adversely affect any then outstanding Option
or any unexercised portion thereof, without the consent of the Optionee, unless
such amendment is required to enable an Option designated as an Incentive Stock
Option to qualify as an Incentive Stock Option.
B-5
<PAGE>
LOGO
3DX TECHNOLOGIES INC.
ANNUAL MEETING OF STOCKHOLDERS
JUNE 13, 1997
The undersigned hereby appoints John W. Bayless and C. Eugene Ennis, and each
of them, with power of substitution, proxies for the undersigned and authorizes
each of them to represent and vote, as designated, all of the shares of common
stock of 3DX Technologies Inc. (the "Company") held of record by the
undersigned on May 19, 1997, at the Annual Meeting of Stockholders (the "Annual
Meeting") to be held at 12012 Wickchester, Suite 250, Houston, Texas 77079 at
11:00 a.m. on June 13, 1997, and at any adjournments or postponements thereof
for the purposes identified below and with discretionary authority as to any
other matters that may properly come before the Annual Meeting, including
substitute nominees, if any, of the named nominees for Director should the
named nominees be unavailable to stand for election, in accordance with and as
described in the Notice of Annual Meeting of Stockholders and Proxy Statement.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. If the proxy is returned without direction
being given, this proxy will be voted FOR proposals 1, 2, 3 and 4.
The Board of Directors recommends a vote FOR PROPOSALS 1, 2, 3 AND 4.
1. Approval of amendment of each of the Company's Restated Certificate of
Incorporation and the Company's Second Amended and Restated By-laws to
eliminate the classification of the Company's Board of Directors and provide
that all directors of the Company shall be elected annually by the
stockholders entitled to vote thereon.
FOR [_] AGAINST [_] ABSTAIN [_]
2(a). Election of Directors if Proposal 1 is approved by the stockholders.
Nominees: Jon W. Bayless, C. Eugene Ennis, Robert H. Chaney, Charles E.
Edwards and Douglas C. Williamson.
FOR ALL NOMINEES LISTED WITHHOLD AUTHORITY TO VOTE FOR
ABOVE [_] ALL NOMINEES LISTED ABOVE [_]
(INSTRUCTION: TO WITHHOLD THE AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE EACH NOMINEE'S NAME FOR WHOM AUTHORITY TO VOTE IS BEING WITHHELD IN THE
SPACE PROVIDED BELOW.)
- --------------------------------------------------------------------------------
(IMPORTANT--TO BE SIGNED AND DATED ON REVERSE SIDE)
LOGO
2(b). Election of Class A Directors if Proposal 1 is not approved by the
stockholders. Nominees: Robert H. Chaney and Douglas C. Williamson
FOR ALL NOMINEES LISTED WITHHOLD AUTHORITY TO VOTE FOR
ABOVE [_] ALL NOMINEES LISTED ABOVE [_]
(INSTRUCTION: TO WITHHOLD THE AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE EACH NOMINEE'S NAME FOR WHOM AUTHORITY TO VOTE IS BEING WITHHELD IN THE
SPACE PROVIDED BELOW.)
- --------------------------------------------------------------------------------
3. Approval of amendment of the Company's 1994 Stock Option Plan to increase
the number of shares of Common Stock reserved for issuance under such plan
by 500,000 shares of Common Stock.
FOR [_] AGAINST [_] ABSTAIN [_]
4.Ratification of the appointment of Arthur Andersen LLP as independent
accountants for the Company for fiscal year ending December 31, 1997.
FOR [_] AGAINST [_] ABSTAIN [_]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF 3DX
TECHNOLOGIES INC.
DATE: __________________________, 1997
--------------------------------------
Signature
--------------------------------------
Signature if held jointly
PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS ON YOUR STOCK CERTIFICATE(S).
If acting as attorney, executor,
trustee or in other representative
capacity, sign name and title. If a
corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person. If held jointly,
both parties must sign and date.
PLEASE RETURN YOUR PROXY IN THE
ENCLOSED ENVELOPE WHICH HAS BEEN
PROVIDED.
