EXHIBIT 10.6
SUBSCRIPTION AGREEMENT
ISSUER:
Centrex Inc.
The undersigned subscriber ("Subscriber") hereby subscribes to and agrees to
purchase 100,000 Shares of Centrex Inc. Preferred Convertible Stock at $0.50 per
share for a total of $50,000. The Subscriber is further purchasing 400,000
restricted shares of Emergency Filtration Products at a price of $0.119 per
share for a total of $47,354.04.
1. Class of Stock. The subscriber is purchasing Preferred Convertible Shares
of Centrex Inc. The 100,000 Shares issued above are the only issued and
outstanding preferred shares of Centrex. These shares are to convert into
15% of Centrex Common Stock on a fully diluted basis as of January 1, 2004.
2. Conversion Rights.
2.1 General:
The subscriber shall have the right to convert these preferred shares on
January 1, 2004 and such right may be accelerated under certain conditions.
The subscriber must convert all shares at one time. The conversion of all
shares of preferred stock shall equal 15% of the issued and outstanding
Common Stock on a fully diluted basis after allowing for the exercise of
all derivatives that exist at the time of conversion. The Conversion will
be subject to the fulfillment of the contingencies set forth below
|X| Continued support of the Company through at least April 2003.
|X| Completion of a revised Centrex Company Overview presentation for
presentation to investors
|X| Completion of a preliminary Operating Plan financial model to support
activites with investors
2.2 Conversion Acceleration:
Conversion of preferred shares to common shares will take place on January
1, 2004, however, Subscriber has the right to accelerate such conversion
prior to January 1, 2004 if any one of the following conditions are met or
occur:
|X| The Company experiences a Change Of Control of more than 20% voting
control exluding capital raised intentionally by bankers retained by
the Company to do so.
|X| Removal of Xxxxxx Xxxxxxxx from either the CEO or Centrex Board for
any reason.
|X| The appointment of any new Centrex Board members.
|X| The official appointment of Xxxx X. Xxxxxxx as CEO or Centrex
|X| A cumulative capital raise of $2 million in cash from Effective Date.
|X| Any tender offer or takeover over received in writing or publicly
announced.
|X| The partnering of any of the technology to a third party.
|X| Any key vote by shareholders that require majority approval.
3. Transfer of Preferred Shares. These Preferred shares shall be delivered to
the Subscriber within five working days of the Subscriber's written demand.
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4. Common Stock Option. Due to time restraints the parties are unable to
ascertain the tax ramifications of the sale of the Preferred Shares.
Therefore, if the sale of the Preferred Shares has an unintened taxable
consequence the Subscriber shall have the right to purchase restricted
shares of Centrex Common Stock at a per share price equal to the lowest
private placement sale of the 2003 calander year.
5. Anti-Dilution. It is the intent of the parties that the Subscriber own
fifteen percent of the Common Stock of the Company on a fully diluted basis
after all additional issuances between now and January 1, 2004.
6. Voting Rights. The Preferred shares shall have identical voting rights to
the Common Stock. One share of Preferred shall equal one share of Common
Stock.
7. Employment Agreement. This Subscription Agreement shall be subject to the
terms and conditions of the Amended Employment Agreement dated March 25,
2003 and the fee waiver dated March 25, 2003. The Amended Employment
Agreement is attached and made apart hereof as exhibit "B", The Fee Waiver
Agreement is attached and made apart hereof as exhibit "C".
8. Additional Risk Factors. The Risk Factors for Centrex include its auditor's
doubt that it can continue as a going concern. Other risk factors related
to Centrex Common Stock are set forth in its most recent SB-2 filing dated
December 9, 2002. Additional risks since then include:
Overall Company:
|X| Centrex is currently two months in arrears in payment of a research
contract for its only significant asset which is the license with Los
Alamos. A slowdown or, even worse, the termination of the license
would eliminate the only tangible asset of the Company.
|X| The Company has no cash and cannot sustain itself without additional
funding. It is behind in payments with a number of vendors and may
suffer from the shut down of some services as a result of non-payment.
The Preferred shares have the following additional risks.
|X| There is no market for the Preferred Shares
|X| The Preferred Shares are not registered under the Securities Exchange
Act of 1934
|X| That it is likely that you will be unable to resell the Preferred
Shares
|X| That the conversion of the Preferred Shares into Common Stock is
dependent upon several contingencies. Thus you may never be able to
convert these shares into Common Stock.
|X| The sole value of the Preferred Shares is based upon their conversion
to Common Stock.
|X| That if you are unable to convert the shares of Preferred Stock you
will lose your entire investment.
|X| Even if you are able to convert the Preferred Shares into Common Stock
you still may lose your entire investment.
8. Transfer of EMFP Shares. As additional consideration Centrex Inc. will
transfer and assign all right title and interest to four hundred thousand
(400,000) shares of Emergency Filtrations Products, Inc.'s Restricted
Common Stock to the Subscriber. Centrex further transfers and assigns all
right title and interest to all rights conveyed to Centrex in the
EMFP/Centrex Letter of Intent, which is attached and made apart hereof as
exhibit "B".
9. Conversion:
Conversion of preferred shares to common shares will take place on January
1, 2004 or sooner if any one of the following conditions are met or occur:
|X| The Company experiences a Change Of Control of more than 20% voting
control exluding capital raised intentionally by bankers retained by the
Company to do so. |X| Removal of Xxxxxx Xxxxxxxx from either the CEO or
Centrex Board for any reason. |X| The official appointment of Xxxx X.
Xxxxxxx as CEO or Centrex |X| A cumulative capital raise of $2 million in
cash from Effective Date. |X| Any tender offer or takeover over received in
writing or publicly announced. |X| The partnering of any of the technology
to a third party. |X| Any key vote by shareholders that require majority
approval.
10. General Information Concerning the Company and the Offering. Subscriber has
received information about the company and has received answers to all
questions pertaining to operations and the financial condition of the
company.
11. Tax Review: This transaction is subject to a tax review by the Subscriber's
CPA or designated tax professional.. It is the intent of the parties that
the Subscriber have the option to purchase Centrex Restricted Common Stock
as set forth above to avoid an unintentional taxable consequence.
12. Status of Investor. (Check all that apply)
Accredited Investor
Subscriber is an "accredited investor" as defined by SEC Rule 501(a), by
reason of being (check one):
|x| A natural person who has a net worth (together with my spouse) of more
than $1,000,000; or
|_| A natural person who had income in excess of $200,000 ($300,000
jointly with my spouse) in each of the last two (2) years and a
reasonable expectation of earning the same income level this year; or
|_| As otherwise specified in SEC Rule 501(a).
Non-Accredited Investor
|_| Subscriber does not meet the requirements as an accredited investor.
13. Subscriber's Investment Experience. Subscriber represents and warrants to
the Company that:
(A) Subscriber has such knowledge and experience in financial and business
matters as to be capable of evaluating the risks and merits of an
investment in the shares; and
(B) Subscriber is able to bear the economic risk of the investment in the
shares, including the risk of a total loss of the investment in the shares.
14. Subscriber's Investment Representations. Subscriber represents and warrants
to the Company that:
(A) The acquisition of the shares by Subscriber is for Subscriber's own
account and is for investment; and
(B) Subscriber has no present intention of selling, transferring or
otherwise disposing in any way of all or any portion of the shares; and
(C) All information that Subscriber has supplied to the Company in
connection with Subscriber's subscription to purchase the shares is true
and correct.
15. Subscriber's Understanding Concerning the Company. Subscriber represents
and warrants to the Company that:
(A) Subscriber understands that an investment in the shares involves a very
high degree of risk; and
(B) Subscriber acknowledges that the Company is a development stage company
having been incorporated on October 6, 1998, and that the Company has
little prior business or financial experience; and
(C) Subscriber has conducted all investigations and due diligence
concerning the Company and the shares which Subscriber deems appropriate,
and Subscriber has found all such information obtained fully acceptable;
and
(D) Subscriber is knowledgeable about the prospects, business, financial
condition and operations of the Company; and
(E) Subscriber has had an opportunity to ask questions of the officers and
directors of the Company concerning the shares and the business and
financial condition of and prospects for the Company, and the officers and
directors of the Company have adequately answered all questions asked and
made all relevant information available to Subscriber, including all
relevant books and records of the Company; and
(F) Subscriber understands that no market exists for the shares and that
there can be no assurance that a market will exist in the near future, or
at all.
16. Compliance with Securities Laws. Subscriber understands and agrees that the
following restrictions and limitations are applicable to the purchase,
resale and distribution of the common stock pursuant to applicable
securities laws:
(A) Subscriber is aware that Subscriber must bear the full economic risk of
an investment in the Company for an indefinite period of time, because the
common stock has not been registered under the Securities Act of 1933, as
amended (the "Securities Act"), or the securities laws of any state; and,
therefore, the common stock cannot be sold, pledged, transferred or
otherwise disposed of unless registered under applicable securities laws or
an exemption from registration is available. Subscriber further understands
that only the Company can take action to register the common stock and the
cost of registration is prohibitive; and
(B) A legend will be placed on the certificates representing the common
stock in substantially the following form:
NOTICE OF TRANSFER RESTRICTIONS
The shares evidenced by this certificate have been acquired for
investment only and have not been registered under the Securities Act
of 1933, as amended, or the securities laws of any state. Without such
registration, the shares may not be sold, transferred, pledged or
otherwise disposed of, except upon receipt by the Company of an
opinion of counsel satisfactory to the Company that registration is
not required.
(C) Stop transfer instructions have been placed in the Company's transfer
records with respect to the common stock to insure that any transfer or
disposition thereof is in full compliance with applicable law. Subscriber
agrees that the Company may delay transfer or impose other restrictions on
the transfer if the Company is not insured that the transfer is lawful.
17. Indemnification. Subscriber agrees that the Company has relied on the
accuracy of the statements of Subscriber set forth herein and otherwise.
Subscriber agrees to defend and indemnify the Company and its officers,
directors, controlling persons, representatives, accountants, attorneys and
agents and to hold all and each of them harmless from and against any and
all losses, damages, liabilities and expenses, including, without
limitation, reasonable attorneys' fees and expenses, which they or any of
them incurs by reason of any alleged misrepresentation made by or on behalf
of Subscriber, any alleged breach by Subscriber of the representations and
warranties made by Subscriber herein, any alleged failure by Subscriber to
fulfill any of the covenants and agreements of Subscriber set forth herein
and any alleged violation of applicable securities law by Subscriber.
18. Survival. All representations, warranties and covenants contained in this
Subscription Agreement, including without limitation, the indemnification
provisions hereof, shall survive the acceptance by the Company of this
Subscription Agreement and the delivery of the common stock to Subscriber.
Subscriber acknowledges and agrees that this Subscription Agreement shall
survive the death or disability of Subscriber.
19. Applicable Law. This Subscription Agreement shall be governed by and
construed in accordance with the laws of the State of Oklahoma.
SUBSCRIBER
This Subscription Agreement has been executed by Subscriber effective March 25,
2003. Please make check payable to: "Centrex, Inc."
FOR INDIVIDUALS FOR CORPORATE & OTHER
Signature(s): /s/ Xxxx Xxxxxxx 3/25/03 Signature:
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By:
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(Second signature if Shares held (Print name and title)
jointly)
Please Register Shares as Follows: Please Register Shares as Follows:
Name: Xxxx X. Xxxxxxx Name:
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Address: XXXXXXXXXXXXXXXXXXXX Address:
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City/State: XXXXXXXXXXXXXXX City/State:
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Zipcode: XXXXX Zipcode:
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Phone XXXXXXXXXXXX Phone
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Fax: XXXXXXXXXXXX Fax:
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SSN #: XXXXXXXXXXX Tax ID #:
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If Shares are jointly held, please check one:
[ ] Joint Tenants with Right of Survivorship [ ] Tenants in Common
MAIL SUBSCRIPTION AND CHECK TO:
Centrex, Inc.
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Agreed and accepted, effective March 25, 2003.
Centrex, Inc.
By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
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Xxxxxx Xxxxxxxx Jr.
