EXHIBIT B
CENTREX INC.,
STOCK GRANT
This Agreement entered into on this 21st day of January 2003 by and between Xxxx
X. Xxxxxxx ("Holder") and Centrex Inc. an Oklahoma Corporation ("Company")
whereby Holder agrees with the Company that this Stock Grant to Purchase
15,000,000 Shares of Common Stock of the Company (this "Stock Grant") is issued
and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. Date of Issuance and Term.
(a) Share Grant: Amount This restricted Stock Grant of 15,000,000 shares
of Centrex common stock shall be deemed to be issued on January 21,
2003 ("Date of Issuance").
(b) New Financing:
As a condition of employment the Company will raise a minimum of
$1,500,000 in cash (net of fees and all financing expenses) prior to
Holder's official start date. Holder will receive a grant for 15% of
the fully diluted shares after the new $1,500,000 net financing and
after the issuance of the Holders stock grant. To the extent that such
grant in Section 1(a) exceeds 15% of the fully diluted shares after
the financing and also after the Holders grant then the total grant
will be adjusted downward so that the 15% ceiling in not exceeded.
This new grant number, if any, will be defined as the Adjusted Grant.
(c) Purchase of grant shares:
Holder agrees to purchase said shares in the grant via a recourse note
executed effective with the grant issuance.
(d) Increase in Authorized Shares:
The Company will cause a shareholder meeting to raise the ceiling on
authorized common shares so that the grant to Holder can be validated.
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2. Stock Grant.
(a) Manner of Stock Grant. During the Stock Grant Period, this Stock Grant
may be Granted as to all or any lesser number of full shares of Common Stock
covered hereby (the "Stock Grant Shares") pursuant to the Vesting Terms as set
forth below.
(b) Delivery of Shares of Common Stock Upon Stock Grant. Upon the Vesting
of this Stock Grant, the Company shall use its reasonable best efforts to
deliver, or shall cause its transfer agent to deliver, a stock certificate or
certificates representing the number of shares of Common Stock, which has Vested
within three (3) trading days of the date that all the Vesting Criteria is met
and the Holder makes written demand upon the Company. Such stock certificates
shall not contain a legend restricting transfer if a registration statement
covering the resale of such shares of Common Stock is in effect at the time of
Vesting of the Stock Grant or if such shares of Common Stock may be resold
pursuant to an exemption from registration, including but not limited to Rule
144 under the Securities Act of 1933.
(c) Economic Loss Due to Late Delivery of Shares. If the Company fails for
any reason to deliver the requisite number of shares of Common Stock
(unlegended, if so required by the terms of this Stock Grant)(the "Stock Grant
Shares") to a Holder upon an Stock Grant of this Stock Grant within ten (10)
business days of the Receipt Date (the "Late Delivery Deadline"), the Company
shall pay such Holder (in addition to any other remedies available to Holder) an
amount equal to ("Non-Delivery Payment") the number of Stock Grant Shares for
which delivery is late, multiplied by the difference of:
(x) the highest closing price for the Company's Common Stock for any
trading day during the period beginning on and including the Date of
Stock Grant and ending on the earlier of (i) the date that the
Investor receives from the Company certificates (unlegended, if so
required by the terms of this Stock Grant) representing the Stock
Grant Shares of Common Stock issuable in conjunction with such Stock
Grant, or (ii) the
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date that the Holder receives the full amount of the Non-Delivery
Payment, whichever is earlier,
minus
(y) The lower of fFive Cents ($0.05) or the Adjusted Equity Purchase
Price as defined in Paragraph 3 herein.
Non-Delivery Payments shall be payable, in cash, within five (5)
business days of the Late Delivery Deadline.
(d) Liquidated Damages. The parties hereto acknowledge and agree that
the sums payable as Non-Delivery Payments shall give rise to liquidated
damages and not penalties. The parties further acknowledge that (i) the
amount of loss or damages likely to be incurred by the Holder is incapable
or is difficult to precisely estimate, (ii) the amounts specified bear a
reasonable proportion and are not plainly or grossly disproportionate to
the probable loss likely to be incurred by the Holder, and (iii) the
parties are sophisticated business parties and have been represented by
sophisticated and able legal and financial counsel and negotiated this
Agreement at arm's length.
(eg) Holder of Record. The Holder shall be deemed to be the Holder of
record of such shares on the Date of the Vesting of this Stock Grant,
irrespective of the date of delivery of the Common Stock purchased upon the
Stock Grant of this Stock Grant. Nothing in this Stock Grant shall be construed
as conferring upon Holder any rights as a stockholder of the Company prior to
Vesting.
3. Payment of Stock Grant Stock Xxxxx Xxxxx.
Executive will be granted the right to purchase up to 15 million shares of
restricted Centrex common stock for $250,000. The final number of shares to be
granted will be based on final re-requisite events and calculations to include
the closing of the next $1,500,000 (net after all fees and expenses) financing
(approximately $2 million gross) plus any other adjustments for debt conversion
or any other adjustments involving equity on a fully diluted basis. The Stock
Xxxxx Xxxxx per share ("Stock Xxxxx Xxxxx") shall equal to the lower of(the
"Initial Stock Xxxxx Xxxxx"), which is
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$0.05 or the Adjusted Equity Purchase Price which is the result of dividing
$250,000 by the actual calculated number of shares granted to Executive after
all pre-conditions are met. The Payment of this Stock Xxxxx Xxxxx shall be made
by Holder in the form of a Full Recourse Loan. The Full Recourse Promissory Note
is attached and made apart hereof as exhibit "A". This note may be paid off in
whole or in part by the Executive at any time and any or all of the following
payments options are deemed to be acceptable:
- The then market value of Company shares owned by Executive at the date
of redemption whether restricted for sale or not.
- The then "in the money" market value (share market price less strike
price) of Company derivatives (options or warrants) owned by Executive
at the date of redemption.
- The forgiveness of any debt owned by the Company to Executive plus all
accrued interest payments owed to Executive by the Company at the date
of redemption.
Any bonuses or salary payments or other payments that Executive wishes to
apply to such outstanding note.
4. Transfer and Registration.
(a) Transfer Rights. The shares underlying this Stock Grant may be issued
to Holder, but may not be further transferred, pledged or used as collateral
until such time as said shares vest pursuant to the terms and conditions of this
Stock Grant specifically including any necessary downward adjustments as set
forth in apargraph one (b).
(b) Registrable Securities. In addition to any other registration rights of
the Holder, if the Common Stock issuable pursuant to this Stock Grant is not
registered for resale at the time the Company proposes to register (including
for this purpose a registration effected by the Company for stockholders other
than the Holders) any of its Common Stock under the Act (including a
registration relating solely for the sale of securities to participants in a
Company stock plan or a registration on Form S-4 or Form S-8 promulgated under
the Act or any successor or similar form registering stock issuable upon a
reclassification, upon a business combination involving an exchange of
securities or upon an exchange offer for securities of the issuer or another
entity)(a "Piggyback Registration Statement"), the Company shall cause to be
included in such Piggyback Registration Statement ("Piggyback Registration") all
of the Common Stock issuable
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pursuant to this Stock Grant ("Registrable Securities") to the extent such
inclusion does not violate the registration rights of any other securityholder
of the Company granted prior to the date hereof. Nothing herein shall prevent
the Company from withdrawing or abandoning the Piggyback Registration Statement
prior to its effectiveness.
(c) Limitation on Obligations to Register under a Piggyback Registration.
In the case of a Piggyback Registration pursuant to an underwritten public
offering by the Company, if the managing underwriter determines and advises in
writing that the inclusion in the registration statement of all Registrable
Securities proposed to be included would interfere with the successful marketing
of the securities proposed to be registered by the Company, then the number of
such Registrable Securities to be included in the Piggyback Registration
Statement, to the extent such Registrable Securities may be included in such
Piggyback Registration Statement, shall be allocated among all Holders who had
requested Piggyback Registration pursuant to the terms hereof, in the proportion
that the number of Registrable Securities which each such Holder seeks to
register bears to the total number of Registrable Securities sought to be
included by all Holders. If required by the managing underwriter of such an
underwritten public offering, the Holders shall enter into a reasonable
agreement limiting the number of Registrable Securities to be included in such
Piggyback Registration Statement and the terms, if any, regarding the future
sale of such Registrable Securities.
5. Anti-Dilution Adjustments.
(a) Stock Dividend. If the Company shall at any time declare a dividend
payable in shares of Common Stock, then Holder, upon Vesting of this Stock Grant
after the record date for the determination of holders of Common Stock entitled
to receive such dividend, shall be entitled to receive upon Vesting of this
Stock Grant, in addition to the number of shares of Common Stock as to which
this Stock Grant is Vested, such additional shares of Common Stock as such
Holder would have received had these shares been Vested immediately prior to
such record date and the Stock Xxxxx Xxxxx will be proportionately adjusted.
(b) Recapitalization or Reclassification.
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(i) Stock Split. If the Company shall at any time effect a
recapitalization, reclassification or other similar transaction of such
character that the shares of Common Stock shall be changed into or become
exchangeable for a larger number of shares (a "Stock Split"), then upon the
effective date thereof, the number of shares of Common Stock which Holder shall
be entitled to receive upon Vesting of this Stock Grant shall be increased in
direct proportion to the increase in the number of shares of Common Stock by
reason of such recapitalization, reclassification or similar transaction, and
the Stock Xxxxx Xxxxx shall be proportionally decreased.
(ii) Reverse Stock Split. If the Company shall at any time effect a
recapitalization, reclassification or other similar transaction of such
character that the shares of Common Stock shall be changed into or become
exchangeable for a smaller number of shares (a "Reverse Stock Split"), then upon
the effective date thereof, the number of shares of Common Stock which Holder
shall be entitled to receive upon Vesting of this Stock Grant shall be
proportionately decreased and the Stock Xxxxx Xxxxx shall be proportionally
increased. The Company shall give Holder the same notice it provides to holders
of Common Stock of any transaction described in this Section 5(b).
(c) Distributions. If the Company shall at any time distribute for no
consideration to holders of Common Stock cash, evidences of indebtedness or
other securities or assets (other than cash dividends or distributions payable
out of earned surplus or net profits for the current or preceding years) then,
in any such case, Holder shall be entitled to receive, upon Vesting of this
Stock Grant, with respect to each share of Common Stock issuable upon such
Vesting, the amount of cash or evidences of indebtedness or other securities or
assets which Holder would have been entitled to receive with respect to each
such share of Common Stock as a result of the happening of such event had this
Stock Grant been Vested immediately prior to the record date or other date
fixing shareholders to be affected by such event (the "Determination Date") or,
in lieu thereof, if the Board of Directors of the Company should so determine at
the time of such distribution, a reduced Stock Xxxxx Xxxxx determined by
multiplying the Stock Xxxxx Xxxxx on the Determination Date by a fraction, the
numerator of which is the result of such Stock Xxxxx Xxxxx reduced by the value
of such distribution applicable to one share of Common Stock (such value to be
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determined by the Board of Directors of the Company in its discretion) and the
denominator of which is such Stock Xxxxx Xxxxx.
(d) Notice of Consolidation or Merger and Stock Grant Exchange. The Company
shall not, at any time after the date hereof, effect a merger, consolidation,
exchange of shares, recapitalization, reorganization, or other similar event, as
a result of which shares of Common Stock shall be changed into the same or a
different number of shares of the same or another class or classes of stock or
securities or other assets of the Company or another entity or there is a sale
of all or substantially all the Company's assets (a "Corporate Change"), unless
the resulting successor or acquiring entity (the "Resulting Entity") assumes by
written instrument the Company's obligations under this Stock Grant, including
but not limited to the Stock Xxxxx Xxxxx reset provisions as provided herein
during the term of the resultant Stock Grants, and agrees in such written
instrument that this Stock Grant shall be exercisable into such class and type
of securities or other assets of the Resulting Entity as Holder would have
received had Holder fully Vested under the terms of this Stock Grant immediately
prior to such Corporate Change, and the Stock Xxxxx Xxxxx of this Stock Grant
shall be proportionately increased (if this Stock Grant shall be changed into or
become exchangeable for a Stock Grant to purchase a smaller number of shares of
Common Stock of the Resulting Entity) or shall be proportionately decreased (if
this Stock Grant shall be changed or become exchangeable for a Stock Grant to
purchase a larger number of shares of Common Stock of the Resulting Entity);
provided, however, that Company may not affect any Corporate Change unless it
first shall have given three (3) days notice to Holder hereof of any Corporate
Change.
(e) Stock Xxxxx Xxxxx Adjusted. As used in this Stock Grant, the term "Stock
Xxxxx Xxxxx" shall mean the purchase price per share specified in Section 3 of
this Stock Grant, until the occurrence of an event stated in subsection (a),
(b), (c) or (d) of this Section 5, and thereafter shall mean said price as
adjusted from time to time in accordance with the provisions of this Stock
Grant. No such adjustment under this Section 5 shall be made unless such
adjustment would change the Stock Xxxxx Xxxxx at the time by 2% or more;
provided, however, that all adjustments not so made shall be deferred and made
when the aggregate thereof would change the Stock Xxxxx Xxxxx at the time by 2%
or more.
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Adjustments: Additional Shares, Securities or Assets. In the event that at
any time, as a result of an adjustment made pursuant to this Section 5,
Holder shall, upon Vesting of this Stock Grant, become entitled to receive
shares and/or other securities or assets (other than Common Stock) then,
wherever appropriate, all references herein to shares of Common Stock shall
be deemed to refer to and include such shares and/or other securities or
assets; and thereafter the number of such shares and/or other securities or
assets shall be subject to adjustment from time to time in a manner and
upon terms as nearly equivalent as practicable to the provisions of this
Section 5.Additional Funding. The number of shares of Common Stock granted
herein shall be adjusted (either upward or downward) to include the
issuance of Common Stock necessary for the Company to raise an additional
one million five hundred thousand dollars. It is the intent of the parties
that the Holder receives 15% of the number of fully diluted shares the
Company has issued and outstanding after an additional one million five
hundred thousand dollars in net cash (after all fees and expenses) is
raised. This one million five hundred thousand dollars shall specifically
include any and all money raised by the Company whether through the sale of
stock, debt exercise of existing options or otherwise
6. Fractional Interests.
No fractional shares or scrip representing fractional shares shall be
issuable upon the Vesting of this Stock Grant, but on the Vesting of this Stock
Grant, Holder may receive only a whole number of shares of Common Stock. If, on
Vesting of this Stock Grant, Holder would be entitled to a fractional share of
Common Stock or a right to acquire a fractional share of Common Stock, such
fractional share shall be disregarded and the number of shares of Common Stock
issuable upon Stock Grant shall be the next higher number of shares.
7. Reservation of Shares.
The Company shall at all times reserve for issuance such number of
authorized and unissued shares of Common Stock (or other securities substituted
therefor as herein above provided) as shall be sufficient for the Stock Grant or
take such corporate action as necessary to ensure the reservation of said
shares. The Company covenants and agrees that upon the Stock Grant of this Stock
Grant, all shares of Common Stock issuable upon
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such Stock Grant shall be duly and validly issued, fully paid, nonassessable and
not subject to preemptive rights, rights of first refusal or similar rights of
any person or entity.
8. Restrictions on Transfer.
(a) Registration or Exemption Required. This Stock Grant has been issued in
a transaction exempt from the registration requirements of the Act by virtue of
Regulation D and exempt from state registration under applicable state laws. The
Stock Grant and the Common Stock issuable upon the Vesting of this Stock Grant
may not be pledged, transferred, sold or assigned except pursuant to an
effective registration statement or unless the Company has received an opinion
from the Company's counsel to the effect that such registration is not required,
or the Holder has furnished to the Company an opinion of the Holder's counsel,
which counsel shall be reasonably satisfactory to the Company, to the effect
that such registration is not required; the transfer complies with any
applicable state securities laws; and, if no registration covering the resale of
the Stock Grant Shares is effective at the time the Stock Grant Shares are
issued, the Holder consents to a legend being placed on certificates for the
Stock Grant Shares stating that the securities have not been registered under
the Securities Act and referring to such restrictions on transferability and
sale.
9. Benefits of this Stock Grant.
Nothing in this Stock Grant shall be construed to confer upon any person
other than the Company and Holder any legal or equitable right, remedy or claim
under this Stock Grant and this Stock Grant shall be for the sole and exclusive
benefit of the Company and Holder.
10. Applicable Law.
This Stock Grant is issued under and shall for all purposes be governed by
and construed in accordance with the laws of the state of Oklahoma, without
giving effect to conflict of law provisions thereof.
11. Loss of Stock Grant.
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Upon receipt by the Company of evidence of the loss, theft, destruction or
mutilation of this Stock Grant, and (in the case of loss, theft or destruction)
of indemnity or security reasonably satisfactory to the Company, and upon
surrender and cancellation of this Stock Grant, if mutilated, the Company shall
execute and deliver a new Stock Grant of like tenor and date.
12. Notice or Demands.
Notices or demands pursuant to this Stock Grant to be given or made by Holder to
or on the Company shall be sufficiently given or made if sent by certified or
registered mail, return receipt requested, postage prepaid, and addressed, until
another address is designated in writing by the Company, to the address set
forth in Section 2(a) above. Notices or demands pursuant to this Stock Grant to
be given or made by the Company to or on Holder shall be sufficiently given or
made if sent by certified or registered mail, return receipt requested, postage
prepaid, and addressed, to the address of Holder set forth in the Company's
records, until another address is designated in writing by Holder.
13. Additional Provisions
(a) Stock Grant Restrictions. Company and Holder agree the (i) Stock Grants will
not be Vested until after twelve (12) months from the Date of Issuance (ii) The
shares underlying the Stock Grants will not be registered until after twelve
(12) months after the Date of Issuance (iii) The shares underlying the Stock
Grants will not have voting rights until twelve (12) months after the Date of
Issuance. (iv) All registration and Stock Grant rights will be further delayed
beyond twelve (12) months from the Date of Issuance if Company has not completed
equity funding in excess of $2,000,000 or has not consummated either a
significant partnering agreement, or merger, or key third party contract, any of
which have been approved by the Board of Directors.
(b)Vesting.
Regular Vesting:
The Stock Grants will vest according to the following schedule
(i) twenty percent (20%) of the total in Section 1 on the Date of
Issuance (ii) sixty percent (60%) of the total in Section 1 to be
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vested in twelve (12) equal installments over the next twelve
quarters at the end of each quarter (or portion thereof if
termination occurs prior to the end of the Term. (iii) twenty
percent (20%) of the total in Section 1 upon completion of
$2,000,000 of equity funding or a merger with a company that
provides at least $2 million in cash to the combined entity The
Stock Grants vesting pursuant to this section will be prorated
and Stock Grants will vest for each $250,000 in equity funding
completed.
Special Vesting:
In the event a significant partnering agreement, or merger, or
key third party contract, or key financing is achieved by Holder
as determined by the Board of Directors then the last four
quarters in this section (b) (ii) will also vest.
If there is a Change In Control as defined in the Change In
Control Agreement then all remaining unvested shares will
eacclerate and become fully edvesting on the Change In Control
event.
14. Termination by Either Party
Termination of Holder by Company:
Accelerated vesting of the stock grant will automatically occur
upon the following events:
Termination for No Cause - Vesting will be accelerated twelve
(12) months from the official date of termination.
Termination for Cause - No acceleration of vesting will occur.
Death - Vesting will be accelerated 12 months from the official
date of death.
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Permanent Disability - Vesting will be accelerated six (6) months
from the official date of permanent disability
Termination from Company by Holder:
Termination for No Cause - No acceleration of vesting will occur.
Termination for Cause - If Holder terminates his employment for
Cause then vesting will be accelerated twelve (12) months from
the official date of Termination.
15. Share Repurchase -
Upon Termination the remaining unvested shares from the stock grant
after making adjustments for accelerated vesting as described in
Section 14 will be calculated. If after such calculation there remains
any unvested shares then the following will govern the handling of
such unvested shares:
If the shares were not previously purchased by Holder from
Company then the unvested shares will be returned to the
Company treasury.
If the shares were previously purchased by the Holder and
there is an outstanding note with the Company for the
purchase of these unvested shares a full credit for both the
principle and any interest for the unvested shares will be
credited against the then balance of the note.
If the shares were previously purchased by the Holder from
the Company then the Company will purchase the shares at the
original purchase price paid by Holder to the Company. The
Company will have the option to either pay Holder cash for
the unvested shares he purchased within 7 days or the shares
owned by Holder will become fully vested and Holder will
have full flexibility to trade such shares without any
restrictions.
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16. Note Repayment
Holder will pay off the Note at the end of his employment Term or at
the end of any extension(s) within 90 days of such termination if it
is still outstanding. Holder will also have the option to
exchange/sell back shares at market value back to the Company for the
purpose of reducing or eliminating the note balance. This repayment
may be executed by Holder at any time during his employment Term
without restrictions since the exchange is directly with the Company
and not on the open market. An example of with fictional assumptions
would be as follows:
If the principle balance of the note was $25500,000 and the purchase
price of the restricted stock was $.05/share and the market price was
$.30/share on the day Holder elects to sell back shares to the Company
the stock repayment formula would work as follows:
Using the above example the Executive would have a paper
profit of $.25/share ($.30-.05). By exchanging/selling back to
the Company 12 million of his shares the note would be paid
off with the paper profit ($.25/share x 12 million shares =
$25500,000). If this were the case the remaining shares held
by Holder would be free and clear of any financial obligation
to the Company.
In addition, the Company grants the Holder the right to sell
back shares to the Company for the purchase of note repayment
at any time and it can be done in whole or in multiple parts
at the option of the Holder at any time during his employment
Term plus any extensions.
IN WITNESS WHEREOF, the undersigned has executed this Stock Grant as
of the 21st day of January 2003.
CENTREX, INC.
By: ________________________________
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Xxxxxx X. Xxxxxxxx, Xx. M.D.
President
By: _________________________
Xxxx Xxxxxxx
Stock Xxxxx Xxxxxx
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