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EXHIBIT 10.5
STOCK OPTION AGREEMENT
This Stock Option Agreement (the "AGREEMENT"), made as of this 6th day of
August, 1999 (the "DATE OF GRANT"), is between MigraTEC, Inc., a Florida
corporation (the "COMPANY") and EAI Partners Inc., a Florida corporation
("OPTIONEE").
Introductory Statements
Whereas, the parties hereto previously were parties to a certain Stock
Option Agreement dated November 12, 1996, pursuant to which the parties had
various duties and obligations pursuant to such agreement, and
Whereas, the parties hereto desire to release each other of and from any
and all obligations which either party may have had under such Stock Option
Agreement, and
Whereas, the Company desires to grant to Optionee certain rights, as
provided hereunder, with respect to 5,903,614 shares (the "OPTION SHARES") of
the Company's authorized but unissued common stock, no par value per share (the
"COMMON STOCK"), and
Whereas, the parties wish to replace the duties and obligations of the
parties to said Stock Option Agreement with the duties and obligations of the
parties contained in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants hereinafter set forth, the parties hereof, intending to become
legally bound, agree as follows:
1. Grant of the Option. The Company hereby grants to Optionee the right
and option to purchase, on the terms and conditions hereinafter set forth, the
Option Shares (the "OPTION"). The per share purchase price of the first
1,903,614 Option Shares to become exercisable pursuant to this Option shall be
$0.075 per share. Optionee agrees to exercise 1,000,000 shares of the first
1,903,614 Option Shares immediately upon signing this agreement by tendering
payment of $75,000 to the Company. The per share purchase price of the next
2,000,000 Option Shares to become exercisable pursuant to this Option shall be
the greater of (i) $0.20 or (ii) the Standard Exercise Price, as hereinafter
defined. The per share purchase price of the final 2,000,000 Option Shares to
become exercisable pursuant to this Option shall be the greater of (i) $0.50 or
(ii) the Standard Exercise Price. Notwithstanding the foregoing, in the event
Optionee exercises an additional 333,333 shares of the first 1,903,614 Option
Shares by tendering an additional payment of $25,000 to the Company on or
before September 4, 1999, the per share purchase price of the final 2,000,000
Option Shares to become exercisable pursuant to this Option shall be the
greater of $0.20 or the Standard Exercise Price. The Standard Exercise Price
shall be defined as 50% of the average of the closing bid prices per share of
the Common Stock for the five days immediately prior to the date of Optionee's
exercise as traded on the Nasdaq OTC Bulletin Board or the principal exchange
over which the Common Stock is traded immediately prior to the date of
exercise.
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2. Option Term. Subject to the provisions of Section 3, the term of the
Option and this Agreement shall begin immediately and continue until twelve
months after the date the Company's Registration Statement (to be filed
pursuant to Section 8) first becomes effective.
3. Vesting and Expiration of Stock Options.
This Option shall only be exercisable in accordance with the following
vesting schedule:
Number of Shares Vesting Date Expiration Date
---------------- ------------ ---------------
1,903,614 Immediate 30 days after the date the Company's Registration Statement (to be filed pursuant to
Section 8) first becomes effective
2,000,000 Immediate 6 months after the date the Company's Registration Statement (to be filed pursuant to
Section 8) first becomes effective
2,000,000 Immediate 12 months after the date the Company's Registration Statement (to be filed pursuant to
Section 8) first becomes effective
4. Exercise of the Option. This Option may be exercised as to Option
Shares either in whole or in part but prior to expiration as specified in
Section 3 of this Agreement. Each exercise of the Option, or any part thereof,
shall be evidenced by a notice in writing to the Company. The applicable
exercise price of the Option Shares as to which to the Option shall be
exercised shall be paid in full at the time of exercise, and may be paid to the
Company by wire transfer in immediately available funds to the account set
forth on Exhibit A hereto.
5. No Rights as Shareholder Until Exercise. Optionee acknowledges to the
Company that Optionee shall not have any of the rights of a shareholder of the
Company with respect to the Option Shares covered by this Agreement except to
the extent that one or more certificates of such Option Shares shall have been
delivered to Optionee, or Optionee has been determined to be a shareholder of
record by the Company's Transfer Agent, upon due exercise of the Option granted
hereunder.
6. Adjustments Upon Changes in Capitalization or Reorganization. The
number of Option Shares subject to this Option shall be adjusted from time to
time as follows:
(a) Subject to any required action by shareholders of the Company, the
number of Option Shares subject to this Option, and the Exercise Price shall be
proportionately and equitably adjusted for any increase or decrease in the
number of shares issued and outstanding Common Stock as a result of a
subdivision or consolidation (i.e. stock split) of shares or the declaration of
a stock dividend (but only in shares of Common Stock).
(b) Subject to any required action by shareholders of the Company, if the
Company shall be the surviving corporation in any reorganization, merger or
consolidation, and if a plan or
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agreement reflecting any such event is in effect that specifically provides for
the change, conversion or exchange of the Common Stock, then any adjustment to
the Option Shares subject to this Option shall not be inconsistent with the
terms of any such plan or agreement.
(c) In the event of a change in the Common Stock as presently constituted,
which is limited to a change of par value into the same number of shares with a
different par value or without par value, the Option Shares resulting from any
such change shall be deemed to be the Option Shares within the meaning of this
Agreement.
(d) The Optionee shall have no rights by reason of: 1) any subdivision or
consolidation of stock of any class other than Common Stock or 2) the payment
of any stock dividend on other than Common Stock or 3) any other increase or
decrease in the number of shares of stock of any class other than Common Stock
by reason of any dissolution, liquidation, reorganization, merger or
consolidation or 4) spinoff of assets or stock of another corporation, and any
issue by the Company of shares of stock of any class other than Common Stock,
or securities convertible into shares of stock of any class, shall not affect,
and no adjustment by reason thereof shall be made with respect to, the number
or Exercise Price of the Option Shares subject to this Option.
(e) The Optionee shall have no preemptive rights with respect to the
Option Shares subject to this Option.
7. Non-Transferability of the Option. This Option shall not be
transferable and shall be exercisable only by Optionee.
8. Registration.
(a) The Company agrees to file with the Securities & Exchange Commission no
later than August 31, 2000, a shelf registration statement ("REGISTRATION
STATEMENT") for an offering to be made on a continuous basis pursuant to Rule
415 covering all of the Option Shares. The Registration Statement shall be on
Form SB-1 under the Securities Act or another appropriate form permitting
registration of such Option Shares for resale by the Optionee. The Company shall
use its best efforts to cause such Registration Statement to be declared
effective pursuant to the Securities Act as promptly as practicable following
the filing thereof and to keep the Registration Statement continuously effective
under the Securities Act throughout the period ending August 31, 2001 (except
during periods following the filing of a post-effective amendment thereto and
prior to the declaration of the effectiveness of such post-effective amendment;
provided, the Company shall use its best efforts to cause any such
post-effective amendment to be declared effective as soon as practicable), or
such shorter period as may be specified by the Commission in amending Rule 144
or ending when there cease to be outstanding any restricted Option Shares
("Effectiveness Time"). In connection with such registration of the Option
Shares, the Company shall use its reasonable efforts to register or qualify or
cooperate with Optionee and respective counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Option Shares for offer and sale under the securities or
"Blue Sky" laws of the state of Florida and such jurisdictions within the United
States as Optionee reasonably requests in writing. Notwithstanding the
foregoing, in the event the Company fails to file the Registration Statement by
August 31, 2000, Optionee shall be entitled to purchase an additional 600,000
shares of common stock of the Company at the greater of (i) $0.50 per share, or
(ii) the Standard Exercise Price. In
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such event. Optionee's right to purchase such additional 600,000 shares shall
begin or commence on September 1, 2000, and shall expire on August 31, 2001.
(b) Optionee shall provide such information as is requested by the
Company and cooperate fully with the Company's efforts to the cause the
Registration Statement to be declared effective under the Securities Act.
(c) The fees and expenses incident to the performance of or compliance
with this section shall be borne by the Company whether or not the Registration
Statement becomes effective and whether or not any securities are sold pursuant
to any Registration Statement. The fees and expenses referred to in the
foregoing sentence shall include, without limitation, (i) all registration and
filing fees (including, without limitation, fees and expenses (A) with respect
to filings required to be made with the National Association of Securities
Dealers, Inc. and (B) in compliance with the applicable state securities laws,
(ii) printing expenses, (iii) fees and disbursements of Counsel for the Company
(but not counsel for the Optionee), (iv) fees and disbursements of the Company's
independent certified public accountants, and (v) fees and expenses of all other
persons retained for such purpose by the Company.
9. COMPLIANCE WITH SECURITIES AND OTHER LAWS. In no event shall the
Company be required to issue Option Shares under this Option if the issuance
thereof would constitute a violation of applicable federal or state securities
laws or regulations or a violation of any other law or regulation of any
governmental or regulatory agency or authority or any national securities
exchange. As a condition to any transfer of Option Shares, the Company may place
legends on Option Shares, issue stop transfer orders, and require such
agreements or undertakings as the Company may deem necessary or advisable to
assure compliance with any such laws or regulations, including, if the Company
or its counsel deems it reasonably appropriate, further representation from
Optionee that Optionee is acquiring the Option Shares solely for investment and
not with a view to distribution and that no distribution of the Option Shares
will be made unless such shares are registered pursuant to applicable securities
laws, or in the opinion of counsel of the Company, such registration is
unnecessary or not required.
10. ORGANIZATION OF OPTIONEE. Optionee is a corporation duly organized
under the laws of the State of Florida and is validly existing under the laws of
Florida.
11. AUTHORITY OF OPTIONEE. Optionee has full corporate power and
authority to execute and deliver this Agreement and to carry out its obligations
hereunder. The execution, delivery and performance by Optionee of this Agreement
have been duly authorized by the Optionee. This Agreement is a valid, binding
and enforceable obligation of the Optionee, enforceable against it in accordance
with its terms, except to the extent the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization or other laws and judicial decisions
of general application relating to or affecting the enforcement of creditors'
rights generally or by general equitable principles.
12. ACCREDITED INVESTOR. Optionee is an "Accredited Investor" as such
term is defined in Section 501(a) of the Securities Act. Optionee represents and
warrants that is has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks
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of its investment in the Option and the Option Shares. Optionee has had the
opportunity to obtain from the Company any and all information, to the extent
possessed by the Company or obtainable with reasonable efforts by the Company,
necessary to evaluate the merits and risks of an investment in the Option and
the Option Shares and has concluded, based on such information and other
information previously known to Optionee, to invest in the Option and the
Option Shares pursuant to the terms of this Agreement.
13. Investment Purposes. Optionee hereby represents and warrants that it
is acquiring the Option and the Option Shares for investment purposes only, for
its own account, and not as nominee or agent for any other person or entity,
and not with a view to, or for resale in connection with, any distribution
thereof within the meaning of the Securities Act. Optionee has no agreement or
other arrangement with any person or entity to sell, transfer or pledge any
part of the Option Shares and has no plans to enter into any such agreement or
arrangement.
14. Restricted Security. Optionee acknowledges that the Option Shares are
not currently registered under the Securities Act. Optionee further
acknowledges that the representative of the Company has advised Optionee that
no state or federal agency or instrumentality has made any finding or
determination as the investment in the Option Shares, nor has any state or
federal agency or instrumentality made any recommendation with respect to any
purchase or investment in the Option Shares.
15. Release of Prior Obligations. The parties hereto release each other
of and from all duties and obligations which either party has or had, whether
previously, currently or potentially in the future, under the Stock Option
Agreement between the parties dated November 12, 1996, and agree that said
Stock Option Agreement shall be deemed null and void as of the date first
written above.
16. Domicile. As of the date hereof, the principal business office of the
Optionee is in the State of Florida.
17. Notices. Any notice necessary under this Agreement shall be in
writing, addressed (a) to the Company in care of its General Counsel at 00000
Xxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxx, Xxxxx, 00000 and/or (b) to Optionee at
0000 Xxxxxxxxx Xxxx., Xxxxx 000 Xxxx, Xxxx Xxxxx, Xxxxxxx, 00000. Except as
otherwise provided herein, any such notice shall be deemed effective upon
receipt thereof by the addressee.
18. Choice of Law. THE INTERPRETATION, PERFORMANCE AND ENFORCEMENT OF
THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF FLORIDA, WITHOUT
REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
19. Amendment of Agreement. This Agreement may be amended, altered,
suspended, discontinued or terminated only by the mutual written consent of
both parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
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MIGRATEC, INC.
By: /s/ XXXXXX XXXXXXXXXX
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Name: Xxxxxx Xxxxxxxxxx
Title: President
OPTIONEE:
EAI PARTNERS, INC.
By: /s/ XXXXXX X. BARBARCSH
-----------------------
Name: Xxxxxx X. Barbarcsh
Title: President
