Document:

Exhibit
10.2

 

NONQUALIFIED
STOCK OPTION AGREEMENT

 

AVAILENT
FINANCIAL, INC.

2003 EQUITY INCENTIVE PLAN

 

1.                                       Grant
of Option.  Pursuant to the Availent
Financial, Inc. 2003  Equity
Incentive Plan (the “Plan”) for employees, consultants and outside directors of
Availent Financial, Inc., a Delaware corporation (the “Company”), the Company
grants to

 

CHRIS PHILLIPS

(the
“Participant”),

 

an option to purchase shares of Common Stock (“Common Stock”) of the
Company as follows:

 

On the date hereof, the Company grants to the
Participant an option (the “Option” or “Stock Option”) to purchase THIRTY-SEVEN
THOUSAND FIVE HUNDRED (37,500) full shares (the “Optioned Shares”) of Common
Stock at an Option Price equal to $1.00 per share.  The Date of Grant of this Stock Option is March 14, 2003.

 

The “Option Period” shall commence on the Date of Grant and shall
expire on the date immediately preceding the tenth (10th)
anniversary of the Date of Grant.  The
Stock Option is a Nonqualified Stock Option.

 

2.                                       Subject
to Plan.  The Stock Option and its
exercise are subject to the terms and conditions of the Plan, and the terms of
the Plan shall control to the extent not otherwise inconsistent with the
provisions of this Agreement. The capitalized terms used herein that are
defined in the Plan shall have the same meanings assigned to them in the
Plan.  The Stock Option is subject to
any rules promulgated pursuant to the Plan by the Board or the Committee and
communicated to the Participant in writing. In addition, if the Plan previously has not been approved by the
Company’s stockholders, the Stock Option is granted subject to such stockholder
approval.

 

3.                                       Vesting; Time of Exercise.

 

a.                                       Except as specifically provided in this
Agreement and subject to certain restrictions and conditions set forth in the
Plan, the Stock Option shall be fully exercisable on the Date of Grant.

 

b.                                      Except as specifically provided in this
Agreement and subject to certain restrictions and conditions set forth in the
Plan, the Optioned Shares shall be fully vested as follows:

 

i.                                          SEVEN THOUSAND FIVE HUNDRED (7,500) of the
total Optioned Shares shall vest on May 21, 2003, provided the Participant is
employed by (or, if the Participant is a consultant or an Outside Director, is
providing services to) the Company or a Subsidiary on that date.

 

ii.                                       FIFTEEN THOUSAND (15,000) of the total
Optioned Shares shall vest on May 21, 2004, provided the Participant is
employed by (or, if the Participant is a consultant or an Outside Director, is
providing services to) the Company or a Subsidiary on that date.

 

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iii.                                    FIFTEEN THOUSAND (15,000) of the total
Optioned Shares shall vest on May 21, 2005, provided the Participant is
employed by (or, if the Participant is a consultant or an Outside Director, is
providing services to) the Company or a Subsidiary on that date.

 

c.                                       If the Optioned Shares received upon exercise
of this Stock Option are not fully vested as described in Section 3.b.
above at the time of exercise of the Stock Option, the unvested Optioned Shares
issued to the Participant shall be Restricted Stock, subject to the conditions
of Section 6.5 of the Plan.  The
Restriction Period for such Restricted Stock shall commence on the date of
exercise and shall expire on the date the Optioned Shares otherwise would vest
as described in Section 3.b. above. 
The Participant shall forfeit any Restricted Stock pursuant to the terms
of this Agreement.

 

Upon
the issuance to Participant of a certificate for Restricted Stock, Participant
shall endorse such certificate in blank or execute a stock power in form
satisfactory to the Company in blank and deliver such certificate and executed
stock power to the Company.  The
provisions of this paragraph shall be specifically performable by the Company
in a court of equity or law.

 

In
the event any shares of Restricted Stock are forfeited pursuant to a the terms
of this Agreement, the Company shall pay to the Participant, as soon as
practicable after the event causing forfeiture of such shares (but in any event
within five (5) business days after such event), in cash, an amount equal to
the lesser of the total consideration paid by the Participant for such
forfeited shares or the Fair Market Value of such forfeited shares as of the
date of such event.  Upon any
forfeiture, all rights of a Participant with respect to the forfeited shares of
the Restricted Stock shall cease and terminate, without any further obligation
on the part of the Company.

 

4.                                       Term;
Forfeiture.  Except as otherwise
provided in this Agreement, to the extent the unexercised portion of the Stock
Option relates to Optioned Shares which are not vested on the date of the
Participant’s Termination of Service, the Stock Option will be terminated on
that date, and to the extent the Participant has any Restricted Stock on the
date of the Participant’s Termination of Service, such Restricted Stock shall
be forfeited on that date.  The
unexercised portion of the Stock Option that relates to Optioned Shares which
are vested will terminate at the first of the following to occur:

 

i.                                          5
p.m. on the date the Option Period terminates;

 

ii.                                       5
p.m. on the date which is twelve (12) months following the date of the
Participant’s Termination of Service due to death or Total and Permanent Disability;

 

iii.                                    5
p.m. on the date of the Participant’s Termination of Service by the Company for
cause (as defined herein);

 

iv.                                   5 p.m. on the date of the Participant’s
voluntary Termination of Service, without the consent of the Company;

 

v.                                      5
p.m. on the date the Company causes any portion of the Option to be forfeited
pursuant to Section 7 hereof.

 

vi.                                   For purposes hereof, “cause” shall mean that
the Participant shall have (i) engaged in activities in direct or
indirect competition with the Company, including but not

 

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limited to any violation of the Non-Competition and
Non-Solicitation Agreement contained in Participant’s Employment Agreement, if
any, (ii) committed acts of gross negligence, (iii) been convicted of a felony
or misdemeanor involving moral turpitude, (iv) demonstrated any acts of
dishonesty or theft on the part of Participant which, in the opinion of the
Board of Directors of the Company, is detrimental to the best interests of the
Company, or (v) intentionally and materially violated any written policy
adopted by the Board of Directors of the Company which is not corrected within
ten (10) days after receipt by Participant of a detailed written explanation
from the Board of Directors of the Company.

 

(b)                                 Acceleration
of Vesting.  In the event of a
Change of Control of the Company where a Participant is Involuntarily
Terminated (hereinafter defined) upon or within one year of the effective date
of such Change of Control, then notwithstanding the vesting provisions set
forth in Section 4(a) of
this Agreement, all unvested Optioned Shares shall automatically vest on an
accelerated basis as of the date immediately preceding any such Involuntary
Termination.  For purposes of this
agreement a “Involuntary
Termination” shall mean (i) a termination by the Company of the
Participant’s employment with the Company other than for cause (as defined in Section
4(a)(vi) above); (ii) without
the Participant’s consent, a material change in the nature or scope of the
Participant’s authority, powers, functions, duties or responsibilities relative
to the Participant’s authority, powers, functions, duties or responsibilities
as in effect immediately prior to such change; provided, however,
that any change in authority, powers, functions, duties or responsibilities
resulting solely from the Company being acquired by and made a part of a larger
entity (as, for example, when a chief financial officer becomes an employee of
the acquiring corporation following a Change of Control but is not the chief
financial officer of the acquiring corporation) shall not constitute an
Involuntary Termination; (iii) without the Participant’s consent, a material
reduction in the base salary of the Participant as in effect immediately prior
to such reduction; (iv) without the Participant’s consent, a material reduction
by the Company in the kind or level of employee benefits to which the
Participant was entitled immediately prior to such reduction, with the result
that the Participant’s overall benefits package is materially reduced; or (v)
without the Participant’s consent, the relocation of the Participant to a
location more than fifty (50) miles from the Participant’s then present
location.

 

5.                                       Who
May Exercise.  Subject to the terms
and conditions set forth in Sections 3 and 4 above, during the lifetime
of the Participant, the Stock Option may be exercised only by the Participant,
or by the Participant’s guardian or personal or legal representative.  If the Participant’s Termination of Service
is due to his death prior to the date specified in Section 4.a.i.
hereof, or Participant dies prior to the termination dates specified in Sections
4.a.i., ii., iii., iv. or v. hereof, and the Participant has not exercised
the Stock Option as to the maximum number of vested Optioned Shares as set
forth in Section 3 hereof as of the date of death, the following persons
may exercise the exercisable portion of the Stock Option on behalf of the
Participant at any time prior to the earliest of the dates specified in Section
4 hereof:  the personal
representative of his estate, or the person who acquired the right to exercise
the Stock Option by bequest or inheritance or by reason of the death of the
Participant; provided that the Stock Option shall remain subject to the other
terms of this Agreement, the Plan, and applicable laws, rules, and regulations.

 

6.                                       No
Fractional Shares.  The Stock Option
may be exercised only with respect to full shares, and no fractional share of
stock shall be issued.

 

7.                                       Manner
of Exercise.  Subject to such
administrative regulations as the Committee may from time to time adopt, the
Stock Option may be exercised by the delivery of written notice to the
Committee setting forth the number of shares of Common Stock with respect to
which the Stock Option is to be exercised, the date of exercise thereof (the
“Exercise Date”) which shall be at least three (3) days after giving such
notice

 

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unless an earlier time shall have been mutually agreed upon.  On the Exercise Date, the Participant shall
deliver to the Company consideration with a value equal to the total Option
Price of the shares to be purchased, payable as follows:  (a) cash, check, bank draft, or money order
payable to the order of the Company, (b) Common Stock (including Restricted
Stock) owned by the Participant on the Exercise Date, valued at its Fair Market
Value on the Exercise Date, and which the Participant has not acquired from the
Company within six (6) months prior to the Exercise Date, (c) if the Optioned
Shares are no longer Nonpublicly Traded, by delivery (including by FAX) to the
Company or its designated agent of an executed irrevocable option exercise form
together with irrevocable instructions from the Participant to a broker or
dealer, reasonably acceptable to the Company, to sell certain of the shares of
Common Stock purchased upon exercise of the Stock Option or to pledge such
shares as collateral for a loan and promptly deliver to the Company the amount
of sale or loan proceeds necessary to pay such purchase price, and/or (d) in
any other form of valid consideration that is acceptable to the Committee in
its sole discretion.  In the event that shares of Restricted Stock
are tendered as consideration for the exercise of a Stock Option, a number of
shares of Common Stock issued upon the exercise of the Stock Option with an
Option Price equal to the value of Restricted Stock used as consideration
therefor shall be subject to the same restrictions and provisions as the Restricted
Stock so tendered.  For example, if 250
shares of Restricted Stock valued at $2.00 per share are used to purchase 500
Optioned Shares at an Option Price of $1.00 per share, all 500 Optioned Shares
shall be Restricted Stock.

 

Subject to Section 3.c.
hereof, Upon payment of all amounts due from the Participant, the
Company shall cause certificates for the Optioned Shares then being purchased
to be delivered to the Participant (or the person exercising the Participant’s
Stock Option in the event of his death) at its principal business office within
ten (10) business days after the Exercise Date. The obligation of the Company
to deliver shares of Common Stock shall, however, be subject to the condition
that if at any time the Company shall determine in its discretion that the
listing, registration, or qualification of the Stock Option or the Optioned
Shares upon any securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body, is necessary as a
condition of, or in connection with, the Stock Option or the issuance or
purchase of shares of Common Stock thereunder, then the Stock Option may not be
exercised in whole or in part unless such listing, registration, qualification,
consent, or approval shall have been effected or obtained free of any
conditions not reasonably acceptable to the Committee.

 

If the Participant fails to pay for any of the
Optioned Shares specified in such notice or fails to accept delivery thereof,
then the Stock Option, and right to purchase such Optioned Shares may be
forfeited by the Company.

 

8.                                       Nonassignability.

 

a.                                       The
Stock Option is not assignable or transferable by the Participant except by
will or by the laws of descent and distribution.

 

b.                                      Except as provided for in Section 7
hereof, no Restricted Stock, or interests therein, may be sold, assigned,
transferred (whether or not for consideration), registered for transfer, given,
donated, subjected to an option to purchase, pledged, encumbered, hypothecated,
or in any manner disposed of, or subjected to an agreement to do any of the
foregoing, by the Participant except by will or by the laws of descent and
distribution.

 

9.                                       Rights
as Stockholder.  The Participant
will have no rights as a stockholder with respect to any shares covered by the
Stock Option until the issuance of a certificate or certificates to the
Participant for the Optioned Shares. 
The Optioned Shares shall be subject to the terms and conditions of this
Agreement

 

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regarding such Shares.  Except
as otherwise provided in Section 10 hereof, no adjustment shall be made
for dividends or other rights for which the record date is prior to the
issuance of such certificate or certificates.

 

10.                                 Adjustment
of Number of Optioned Shares and Related Matters.  The number of shares of Common Stock covered by the Stock Option,
and the Option Prices thereof, shall be subject to adjustment in accordance
with Articles 11 - 13 of the Plan.

 

11.                                 Nonqualified
Stock Option.  The Stock Option
shall not be treated as an Incentive Stock Option.

 

12.                                 Voting.  The Participant, as record
holder of some or all of the Optioned Shares following exercise of this Stock
Option, has the exclusive right to vote, or consent with respect to, such
Optioned Shares until such time as the Optioned Shares are transferred in
accordance with this Agreement or a proxy is granted pursuant to Section 13
below; provided, however, that this Section shall not create any
voting right where the holders of such Optioned Shares otherwise have no such
right.

 

13.                                 Proxies.  The Participant shall execute
an irrevocable proxy with respect to any shares of Restricted Stock authorizing
the Board to vote such shares on all issues until the earlier of (i) the
expiration of the Restriction Period, or (ii) the date the Restricted Stock is
no longer Nonpublicly Traded.  Subject
to the foregoing provisions of this Section, the Participant may not grant a
proxy to any person, other than a revocable proxy not to exceed 30 days in
duration granted to another stockholder for the sole purpose of voting for
directors of the Company.

 

14.                                 Community Property. 
Each spouse individually is bound by, and such spouse’s interest, if
any, in any Optioned Shares is subject to, the terms of this Agreement.  Nothing in this Agreement shall create a
community property interest where none otherwise exists.

 

15.                                 Dispute Resolution.

 

a.                                       Arbitration.                                  All disputes and controversies of every kind
and nature between any parties hereto arising out of or in connection with this
Agreement or the transactions described herein as to the construction,
validity, interpretation or meaning, performance, non-performance, enforcement,
operation or breach, shall be submitted to arbitration pursuant to the
following procedures:

 

i.                                          After a dispute or controversy arises, any
party may, in a written notice delivered to the other parties to the dispute,
demand such arbitration.  Such notice
shall designate the name of the arbitrator (who shall be an impartial person)
appointed by such party demanding arbitration, together with a statement of the
matter in controversy.

 

ii.                                       Within 30 days after receipt of such demand,
the other parties shall, in a written notice delivered to the first party, name
such parties’ arbitrator (who shall be an impartial person).  If such parties fail to name an arbitrator,
then the second arbitrator shall be named by the American Arbitration
Association (the “AAA”).  The two
arbitrators so selected shall name a third arbitrator (who shall be an
impartial person) within 30 days, or in lieu of such agreement on a third
arbitrator by the two arbitrators so appointed, the third arbitrator shall be
appointed by the AAA.  If any arbitrator
appointed hereunder shall die, resign, refuse or become unable to act before an
arbitration decision is rendered, then the vacancy shall be filled by the
method set forth in this Section for the original appointment of such
arbitrator.

 

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iii.                                    Each party shall bear its own arbitration
costs and expenses.  The arbitration
hearing shall be held in Dallas, Texas at a location designated by a majority
of the arbitrators.  The Commercial
Arbitration Rules of the American Arbitration Association shall be incorporated
by reference at such hearing and the substantive laws of the State of Texas
(excluding conflict of laws provisions) shall apply.

 

iv.                                   The arbitration hearing shall be concluded
within ten (10) days unless otherwise ordered by the arbitrators and the
written award thereon shall be made within fifteen (15) days after the close of
submission of evidence.  An award
rendered by a majority of the arbitrators appointed pursuant to this Agreement
shall be final and binding on all parties to the proceeding, shall resolve the
question of costs of the arbitrators and all related matters, and judgment on
such award may be entered and enforced by either party in any court of
competent jurisdiction.

 

v.                                      Except as set forth in Section 15.b.,
the parties stipulate that the provisions of this Section shall be a complete
defense to any suit, action or proceeding instituted in any federal, state or
local court or before any administrative tribunal with respect to any
controversy or dispute arising out of this Agreement or the transactions described
herein.  The arbitration provisions
hereof shall, with respect to such controversy or dispute, survive the
termination or expiration of this Agreement.

 

No party to an arbitration
may disclose the existence or results of any arbitration hereunder without the
prior written consent of the other parties; nor will any party to an
arbitration disclose to any third party any confidential information disclosed
by any other party to an arbitration in the course of an arbitration hereunder
without the prior written consent of such other party.

 

b.                                      Emergency Relief. 
Notwithstanding anything in this Section 15 to the contrary, any
party may seek from a court any provisional remedy that may be necessary to
protect any rights or property of such party pending the establishment of the
arbitral tribunal or its determination of the merits of the controversy or to
enforce a party’s rights under Section 15.

 

16.                                 Participant’s
Representations.  Notwithstanding
any of the provisions hereof, the Participant hereby agrees that he will not
exercise the Stock Option granted hereby, and that the Company will not be
obligated to issue any shares to the Participant hereunder, if the exercise
thereof or the issuance of such shares shall constitute a violation by the
Participant or the Company of any provision of any law or regulation of any
governmental authority.  Any
determination in this connection by the Company shall be final, binding, and
conclusive.  The obligations of the
Company and the rights of the Participant are subject to all applicable laws,
rules, and regulations.

 

17.                                 Investment
Representation.  Unless the Common
Stock is issued to him in a transaction registered under applicable federal and
state securities laws, by his execution hereof, the Participant represents and
warrants to the Company that all Common Stock which may be purchased hereunder
will be acquired by the Participant for investment purposes for his own account
and not with any intent for resale or distribution in violation of federal or
state securities laws.  Unless the
Common Stock is issued to him in a transaction registered under the applicable
federal and state securities laws, all certificates issued with respect to the
Common Stock shall bear an appropriate restrictive investment legend and shall
be held indefinitely, unless they are subsequently registered under the
applicable federal and state securities laws or the Participant obtains

 

6

 

an opinion of counsel, in form and substance satisfactory to the
Company and its counsel, that such registration is not required.

 

18.                                 Legend.  The following legend shall be placed on all
certificates representing Optioned Shares:

 

“The shares evidenced by this certificate are subject
to a Stock Option Agreement containing certain rights and limitations on
transfer.  A copy of that agreement is
on file at the principal place of business or the registered office of the
Company, and a copy may be obtained without charge upon written request to the
Company at its principal place of business or its registered office.”

 

All Optioned Shares and shares into which Optioned
Shares may be converted owned by the Participant shall be subject to the terms
of this Agreement and shall be represented by a certificate or certificates
bearing the foregoing legend.

 

19.                                 Lock-up Agreement.  The
Participant agrees that in connection with any underwritten public offering of
Common Stock, the Optioned Shares may not be sold, offered for sale, pledged or
otherwise disposed of or transferred without the prior written consent of the
Company or the principal underwriter managing such public offering, as the case
may be, for at least sixty (60) days after the effectiveness of the
registration statement filed in connection with such offering, or such longer
period of time as the Board of Directors or the principal underwriter may
determine, if all of the Company’s directors and officers agree to be similarly
bound.  In the event of the declaration
of a stock dividend, a spin-off, a stock split, an adjustment in conversion
ratio, a recapitalization or a similar transaction affecting the Company’s
outstanding securities without receipt of consideration, any new, substituted
or additional securities which are by reason of such transaction distributed with
respect to any Optioned Shares subject to this Section 19 or into which
such Optioned Shares thereby become convertible shall immediately be subject to
this Section 19.  Appropriate
adjustments to reflect the distribution of such securities or property shall be
made to the number and/or class of the Optioned Shares subject to this Section
19.  The obligations under this Section
19 shall remain effective for all underwritten public offerings with
respect to which the Company has filed a registration statement on or before
the date five (5) years after the closing of the Company’s initial public
offering, provided, however, that this Section 19 shall cease to apply
to any Optioned Shares sold to the public pursuant to an effective registration
statement or an exemption from the registration requirements of the Securities
Act in a transaction that complied with the terms of this Agreement.

 

20.                                 Participant’s
Acknowledgments.  The Participant
acknowledges receipt of a copy of the Plan, which is annexed hereto, and
represents that he or she is familiar with the terms and provisions thereof,
and hereby accepts this Option subject to all the terms and provisions thereof.
The Participant hereby agrees to accept as binding, conclusive, and final all
decisions or interpretations of the Committee or the Board, as appropriate,
upon any questions arising under the Plan or this Agreement.

 

21.                                 Law
Governing.  This Agreement shall be
governed by, construed, and enforced in accordance with the laws of the State
of Delaware (excluding any conflict of laws rule or principle of Delaware law
that might refer the governance, construction, or interpretation of this
agreement to the laws of another state).

 

22.                                 No
Right to Continue Service or Employment. 
Nothing herein shall be construed to confer upon the Participant the
right to continue in the employ or to provide services to the Company or any
Subsidiary, whether as an employee or as a consultant or as an Outside
Director, or interfere with or restrict in

 

7

 

any way the right of the Company or any Subsidiary to discharge the
Participant as an employee, consultant or Outside Director at any time.

 

23.                                 Legal
Construction.  In the event that any
one or more of the terms, provisions, or agreements that are contained in this
Agreement shall be held by a Court of competent jurisdiction to be invalid,
illegal, or unenforceable in any respect for any reason, the invalid, illegal,
or unenforceable term, provision, or agreement shall not affect any other term,
provision, or agreement that is contained in this Agreement and this Agreement
shall be construed in all respects as if the invalid, illegal, or unenforceable
term, provision, or agreement had never been contained herein.

 

24.                                 Covenants
and Agreements as Independent Agreements. Each of the covenants and
agreements that is set forth in this Agreement shall be construed as a covenant
and agreement independent of any other provision of this Agreement.  The existence of any claim or cause of
action of the Participant against the Company, whether predicated on this
Agreement or otherwise, shall not constitute a defense to the enforcement by
the Company of the covenants and agreements that are set forth in this
Agreement.

 

25.                                 Entire
Agreement.  This Agreement together
with the Plan supersede any and all other prior understandings and agreements,
either oral or in writing, between the parties with respect to the subject
matter hereof and constitute the sole and only agreements between the parties
with respect to the said subject matter. 
All prior negotiations and agreements between the parties with respect
to the subject matter hereof are merged into this Agreement.  Each party to this Agreement acknowledges
that no representations, inducements, promises, or agreements, orally or
otherwise, have been made by any party or by anyone acting on behalf of any
party, which are not embodied in this Agreement or the Plan and that any
agreement, statement or promise that is not contained in this Agreement or the
Plan shall not be valid or binding or of any force or effect.

 

26.                                 Parties
Bound.  The terms, provisions, and
agreements that are contained in this Agreement shall apply to, be binding
upon, and inure to the benefit of the parties and their respective heirs,
executors, administrators, legal representatives, and permitted successors and
assigns, subject to the limitation on assignment expressly set forth herein. No person or entity shall be permitted to
acquire any Optioned Shares without first executing and delivering an agreement
in the form satisfactory to the Company making such person or entity subject to
the restrictions on transfer contained herein.

 

27.                                 Modification.  No change or modification of this Agreement
shall be valid or binding upon the parties unless the change or modification is
in writing and signed by the parties. 
Notwithstanding the preceding sentence, the Company may amend the Plan
or revoke this Stock Option to the extent permitted by the Plan.

 

28.                                 Headings.  The headings that are used in this Agreement
are used for reference and convenience purposes only and do not constitute
substantive matters to be considered in construing the terms and provisions of
this Agreement.

 

29.                                 Gender
and Number.  Words of any gender
used in this Agreement shall be held and construed to include any other gender,
and words in the singular number shall be held to include the plural, and vice
versa, unless the context requires otherwise.

 

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30.                                 Notice.  Any notice required or permitted to be
delivered hereunder shall be deemed to be delivered only when actually received
by the Company or by the Participant, as the case may be, at the addresses set
forth below, or at such other addresses as they have theretofore specified by
written notice delivered in accordance herewith:

 

a.                                       Notice
to the Company shall be addressed and delivered as follows:

 

	
   

  
	
   

  
	
   

  
	
  Attn:

  	
   

  
	
  Facsimile:

  	
   

  
			

 

b.                                      Notice
to the Participant shall be addressed and delivered as set forth on the signature
page.

 

31.                                 Tax
Requirements.  The Participant is
hereby advised to consult immediately with his or her own tax advisor regarding
the tax consequences of this Agreement, the availability, method, and timing
for filing an election to include income arising from this Agreement into the
Participant’s gross income under Section 83(b) of the Code, and the tax
consequences of such election.  By
execution of this Agreement, the Participant agrees that if the Participant
makes such an election, the Participant shall provide the Company with written
notice of such election in accordance with the regulations promulgated under
Code Section 83(b).  The Company or, if
applicable, any Subsidiary (for purposes of this Section 31, the term “Company” shall be
deemed to include any applicable Subsidiary), shall have the right to deduct
from all amounts hereunder paid in cash or other form, any Federal, state,
local, or other taxes required by law to be withheld in connection with this
Award.  The Company may, in its sole
discretion, also require the Participant receiving shares of Common Stock
issued under the Plan to pay the Company the amount of any taxes that the
Company is required to withhold in connection with the Participant’s income
arising with respect to this Award. 
Such payments shall be required to be made when requested by the Company
and may be required to be made prior to the delivery of any certificate
representing shares of Common Stock. 
Such payment may be made (i) by the delivery of cash to the Company in
an amount that equals or exceeds (to avoid the issuance of fractional shares
under (iii) below) the required tax withholding obligations of the Company;
(ii) if the Company, in its sole discretion, so consents in writing, the actual
delivery by the exercising Participant to the Company of shares of Common Stock
other than (A) Restricted Stock or (B)
Common Stock that the Participant has not acquired from the Company
within six (6) months prior to the date of exercise, which shares so delivered
have an aggregate Fair Market Value that equals or exceeds (to avoid the
issuance of fractional shares under (iii) below) the required tax withholding
payment; (iii) if the Company, in its sole discretion, so consents in writing,
the Company’s withholding of a number of shares to be delivered upon the
exercise of the Stock Option other than shares that will constitute Restricted
Stock, which shares so withheld have an aggregate fair market value that equals
(but does not exceed) the required tax withholding payment; or (iv) any
combination of (i), (ii), or (iii).  The
Company may, in its sole discretion, withhold any such taxes from any other
cash remuneration otherwise paid by the Company to the Participant.

 

* * * * * * * *

 

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IN WITNESS WHEREOF, the Company has caused this
Agreement to be executed by its duly authorized officer, and the Participant,
to evidence his consent and approval of all the terms hereof, has duly executed
this Agreement, as of the date specified in Section 1 hereof.

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  AVAILENT FINANCIAL, INC.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PARTICIPANT:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
   

  	
  Name:  CHRIS
  PHILLIPS

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Witness:

  	
   

  	
   

  
								

 

10EXHIBIT 10.3

 

STOCK TRANSFER AND CONSULTING AGREEMENT

 

THE FOLLOWING AGREEMENTS are made effective this 31st day of March,
2003 (the “Effective Date”) by and between CONSOLIDATED AMERICAN ENERGY
RESOURCES, INC. (“Consolidated”), whose principal offices are located at 660
Forest Center, Suite #307 Dallas, TX 75230 and PATRICK A. MCGEENEY
(“McGeeney”), whose principal offices are located at 2720 Stemmons Freeway
South Tower, Suite 600 Dallas, TX 75207.

 

PURPOSES: The parties desire to enter into the following Stock Transfer
Agreement and to cause certain financial adjustments to be made by Availent
Financial, Inc. of which McGeeney is presently a Director, Officer (President)
and Stockholder. In addition they agree to enter into, and to use their best
efforts to cause Availent to enter into the Consulting Agreement, as set forth
below. The execution of the Stock Transfer is a condition precedent to
Consolidated’s obligation to enter into its Consulting Agreement as set forth
below. They further agree to cause all of these agreements to he ratified by
Availent.

 

RECITALS

 

A. WHEREAS Consolidated is experienced in providing corporate financial
and investment banking consulting services.

 

B.  WHEREAS Consolidated has
developed relationships with brokers, institutional investors, investment
bankers, financial public relations firms and individual accredited investors
which may assist McGeeney in the corporate restructuring and possible debt and
equity financing of AVAILENT FINANCIAL, INC. (“Availent” or the “Company”).

 

C.  WHEREAS according to the
unaudited financial statements of Availent (updated by the Company on March 20,
2003, hereinafter referred to as the “Financial Statements”), Availent’s
negative net worth was ($3,474,069) and ($4,256,117) on December 31, 2002 and
February 28, 2003, respectively. According to the Financial Statements,
Availent lost ($3,016,310) for the fiscal year ending December 31, 2002 and
lost ($782,048) for the two months ending February 28,2003.

 

D.  WHEREAS, McGeeney in
consideration of Consolidated’s best efforts participation in the corporate
restructuring and possible future equity and/or debt financing of Availent,
McGeeney agrees to the following:

 

NOW THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are expressly acknowledged, Consolidated and
McGeeney agree as follows:

 

(1)                                  McGeeney does hereby
agree to transfer and convey all (1,685,221 more or less) of the common shares
of Availent (the “Shares”) owned by McGeeney (this specifically excludes the
374,434 shares owned directly by Michele McGeeney which now charge piggyback
registration rights) to Consolidated and Consolidated’s agents and assigns, or Consolidated’s
order, 

 

1

 

effective immediately upon execution of this
Agreement and any other agreement deemed by Consolidated to be necessary to
effectuate said transfer of Shares. Further McGeeney agrees to notify the
escrow agent of the transfer of Shares to Consolidated, said escrow agent is
currently holding the Shares in accordance with the Loan Agreement between
Availent and Bobby Lutz dated February 12, 2003. In addition, immediately upon
receipt of written instructions from Consolidated, McGeeney agrees to notify
Availent’s Stock Transfer Agent of the transfer of Shares to Consolidated, its
agents and assigns. 

 

[2]                                  McGeeney does hereby
agree to convert all principal balances owed to him and his wife (Michele
McGeeney) as evidenced by Notes Receivable (the “Notes”) from Availent into
Availent common shares at the price of $1.00 per share. As of March 28, 2003,
Availent owed McGeeney and his wife $615,000. These Notes Receivable amounting
to $615,000 are hereby converted to equity at $1.00 per share in the amount of
615,000 shares with piggyback registration rights. 

 

[3]                                  McGeeney and Michele
McGeeney do hereby agree to forgive immediately as of March 28, 2003 any and
all interest accrued and unpaid on the Notes (see Section 3 above), now and
forevermore. 

 

[4]                                  McGeeney does hereby
agree to forgive immediately any and all deferred compensation payable to him
by Availent as of March 28, now and forevermore. Said deferred compensation
amounts to $48,9l6 + FICA for FY 2001, $130,035 + FICA for FY 2002 and
approximately $47,500 + FICA for FY 2003 (total is $226,451 plus FICA). 

 

[5]                                  To immediately elect
up to five additional directors to Availent’s Board of Directors, said five
directors to be chosen and nominated by Consolidated, at Consolidated’s
request.  

 

E.  Consolidated, as further consideration for
McGeeney’s agreement and performance as shown in Section D. [1] thru [5] above
and elsewhere in this agreement, does hereby agree to use its best efforts to have
Availent issue and execute an Employment Agreement, an Executive Stock Option
Plan and an Executive Performance Bonus Plan with the provisions as shown
below. Note that the aforementioned agreements and all provisions contained
therein arc subject to review and approval of Availent’s general counsel and
Board of Directors: 

 

[1]                                  Annual salary, pay to
commence immediately as of March 30, 2003, every two weeks, payable in arrears.
McGeeney’s annual salary is $100,000. 

 

[2]                                  A Quarterly Bonus
Plan (the “Bonus Plan”) for the Executives of Availent as designated by the
Board of Directors equal to 5% of the Net Income Before Taxes (in accordance
with GAAP) of Availent Financial up to $5 million Net Income Before Taxes
annually, payable within 45 days subsequent to the end of the quarter. Should
Net Income Before Taxes exceed $5 million per annum, the executives shall be
paid 2% of any NIBT in excess of $5 million. 

 

2

 

(3)                                  The term of
employment is 5 years, from March 31, 2003 to March 31, 2008.

 

(4)                                  McGeeney will retain
the title of President of Availent.

 

(5)                                  McGeeney will
participate in a stock option plan with the participants limited to whatever
employees of Availent that are dictated by Federal statutes and ERISA.
McGeeney’s minimum participation in the ESOP under any and all circumstances
will be 40% of the total options. The ESOP will provide for the issuance in the
aggregate of at least 5% of the total common shares issued and outstanding of
Availent for three years as of fiscal year end 2003, 2004 and 2005. For
purposes of calculating the number of shares issued and outstanding, December
31 will be utilized. 50% of the options shall be earned automatically. 25% of
the options shall be earned as annual gross revenue target amounts are achieved
(amounts to be determined) for FY 2003, 2004, 2005. 25% of the options shall be
earned according to Net Income Before Tax target amounts (to be determined) for
FY 2003, 2004, 2005. These options will be cashless exchange options and will
vest 100% as earned. 

 

(6)                                  Consolidated does
hereby agree to use its best efforts to facilitate Availent’s payment to
McGeeney for reimbursable expenses in the aggregate amount of $54,445.25. The
future payments related to these charge cards are subject to and conditional
upon an audit. 

 

F.                                      The services
provided herein are to be provided on a “best efforts” basis directly and
through the Consolidated’s officers, agents or others employed or retained by
and under the direction of Consolidated provided however, that the services
shall expressly exclude all legal advice, accounting services or any other
services which require licenses or certification which Consolidated does not
possess. 

 

G.                                     Should further
documents be reasonably required to affect the purposes to these agreements and
the assent of either or both of the parties be necessary then they hereby agree
to execute such agreements.

 

CONSULTING AGREEMENT

 

NOW THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are expressly acknowledged, Consolidated and
McGenney agree as follows and to cause Availent to ratify, approve and enter
into the following agreement: 

 

1.  SCOPE OF REPRESENTATION.
Consolidated shall provide the corporate consulting restructuring and financing
services detailed in Sections D and E of the Stock Transfer Agreement as set
forth above and Section 2 of this agreement as set forth below (the
“Services”). 

 

3

 

2.  CONSOLIDATED’S EXPENSES.
Expense reimbursement shall be covered in a separate consulting agreement
between Consolidated and its agents and assigns and Availent. Availent and
Consolidated agree that such agreement shall provide for the recovery by
Consolidated of all of its reasonable and necessary expenses incurred in the
performance of Consolidated’s efforts to affect the purposes of this and future
agreements entered into for the benefit of Availent. The reasonable necessity
for such expenses shall be presumed until established otherwise. 

 

3.  INDEPENDENT CONTRACTOR: No
Power to Bind. Consolidated and its agents and assigns are not employees of
McGeeney nor Availent any purpose whatsoever, but are independent contractors.
McGeeney is interested only in the results obtained by Consolidated, and
Consolidated shall have, subject to the terms of this Agreement, sole control
of the manner and means of performing under this Agreement.

 

4.  COMPENSATION. The transfer
of shares as set forth in Section D. [1] herein shall constitute Consolidated’s
compensation. Any additional compensation to be paid to Consolidated for its
consulting services will be set forth in a separate agreement with Availent.

 

5.  TERM. The term of this
Agreement shall be for 12 (twelve) months from the date of execution of this
Agreement.

 

6.  WARRANTIES AND
REPRESENTATIONS OF CONSOLIDATED. Consolidated represents, warrants and
covenants to McGeeney that it will at all times during the term of this
Agreement satisfy the following warranties and representations.

 

(a)  Consolidated shall at all
times comply with any and all applicable federal, state, local or foreign
securities laws, rules and regulations in its performance hereunder.
Consolidated will disclose in all reports, communications, etc. that it is a
consultant of Availent that it is being compensated by Availent and is a
shareholder of Availent. Specifically, that Consolidated will at all times
comply with the requirements of Section 17(b) of the Securities Act and will
not solicit the purchase or sale of any securities of Availent without
disclosing any compensation arrangement and the exact number of shares held by
Consolidated and any shares held by related parties as defined in the
Securities Act of 1933, as amended. 

 

(b)  Consolidated shall at all
times comply with all federal, state and foreign laws and all applicable rules,
regulations and orders of any court, government or any unit or agency thereof
in connection with performing its duties under this Agreement. 

 

(c)  Consolidated acknowledges
that the services to be provided pursuant to this Agreement and the receipt,
retention and disposition of the compensation to be paid to Consolidated under
this Agreement are subject to applicable securities laws, including the
Securities Act and the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), shall at all times comply with all applicable securities laws
in connection with performing its duties under this Agreement and in connection
with the receipt, retention and disposition of the compensation to be paid to
Consolidated under this Agreement.  

 

4

 

(d)  Consolidated is free to
enter into this Agreement and the services to be provided pursuant to this
Agreement are not in conflict with any other contractual or other obligation to
which the Consolidated is bound. 

 

(e)  Consolidated is providing
the Services on a best effort basis which are based on its management’s
personal experience and expertise. There are no guarantees warranties and
representations (express or implied) of any kind that its advice or Services
will produce any specific results for the benefit of McGeeney or Availent.
Actual results may substantially and materially differ from those suggested by
Consolidated. 

 

(f)  Consolidated represents and
warrants to McGeeney that: (i) it is under no contractual restriction or other
restrictions or obligations that are inconsistent with this Agreement, the
performance of its duties and the covenants hereunder; (ii) its management is
under no physical or mental disability that would interfere with its keeping
and performing all of the agreements, covenants and conditions to be kept or
performed hereunder; (iii) it is familiar with all federal and state securities
laws applicable to the performance of its services as contemplated in this
Agreement, including Sections 17(b) of the Securities Act, Sections 9 and 10(b)
of the Exchange Act and Regulation PD; (iv) it will comply with all applicable
federal and state securities laws in the performance of the services under this
Agreement; and (v) it will cause any person to whom any of the Securities of
the Company or other compensation are transferred to agree and undertake for
the benefit of the Company to comply with all applicable federal and state
securities laws in connection with their ownership or disposition of the
Securities (including compliance with Section 17(b) of the Securities Act to
the extent applicable). 

 

(g)  Consolidated acknowledges
that it is in the business of consulting and may provide consulting services
and consulting advice (of the type contemplated by this Agreement) to others
and that nothing herein contained shall be construed to limit or restrict the
Consolidated in providing such similar consultant type services to others, or
rendering such advice to others. 

 

7.  WARRANTIES AND
REPRESENTATIONS OF MCGEENEY. McGeeney agrees to indemnify and hold
Consolidated, its agents and assigns, harmless from any and all claims, causes
of action or liabilities of any nature whatsoever arising out of this Agreement
or the actions taken by Consolidated pursuant to the terms of this Agreement,
specifically including, but not limited too, any claims by other Availent
shareholders, regulatory authorities, financiers or any other person or
institution whose claim or claims are based upon the terms and conditions of
this Agreement. 

 

8.  NOTICE. Except as otherwise
specifically provided, any notices to be given hereunder shall be deemed given
upon personal delivery, upon the next business day immediately following the
day sent if sent by overnight express carrier, or upon the third business day
following the day if sent by fax and separately by postage prepaid by certified
or registered mail, return receipt requested to the following addresses (or
such other address as shall be specified in any notice given): 

 

	
  In case of Consolidated:

  	
   

  	
  CONSOLIDATED AMERICAN ENERGY RESOURCES, INC.

  
	
   

  	
   

  	
  David Malina, President

  

 

 

5

 

	
   

  	
   

  	
  660 Forest Center, Suite #307

  
	
   

  	
   

  	
  Dallas, TX 75230

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  In case of McGeeney:

  	
   

  	
  PATRICK A. MCGEENEY

  
	
   

  	
   

  	
  2720 Stemmons Freeway, South Tower, Suite 600

  
	
   

  	
   

  	
  Dallas, TX 75207

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  In case of Availent:

  	
   

  	
  PATRICK A. MCGEENEY

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  	
  2720 Stemmons Freeway, South Tower, Suite 600

  
	
   

  	
   

  	
  Dallas, TX 75207

  

 

9.  WAIVER OF BREACH. The waiver
by a party hereto of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent breach of this Agreement.

 

10.  ASSIGNMENT. Except as
otherwise provided herein, the rights and benefits of the parties contained in
this Agreement shall inure to the benefit of and be binding upon the
successors, assigns, administrators, and personal representatives of the
parties hereto. Consolidated’s duties under this Agreement can be delegated by
the them to third parties who agree to act in accordance with the terms and
conditions of this Agreement. 

 

12.  ARBITRATION. Any controversy
or claim arising out of or relating to any interpretation, breach or dispute
concerning any of the terms or provisions of this Agreement, which disagreement
is not settled within thirty days after it arises, shall be settled by binding
arbitration in Dallas, Texas in accordance with the laws of the State of Texas
and under the rules then obtaining of the American Arbitration Association and
judgment upon the award rendered in said arbitration shall be final and may be
entered in any court of the State of Texas having jurisdiction thereof. Any
party hereto may apply for such arbitration. 

 

13.  ATTORNEYS FEES. In the
event that an action at law or in equity is brought to enforce the provisions
of this Agreement or to prevent a breach thereof, the successful party in such
action or arbitration proceeding shall be entitled to an award of attorney’s
fees and other costs as shall be established by the court or pursuant to a
binding arbitration proceeding. 

 

14.  HOLD HARMLESS AND
INDEMNIFICATION. McGeeney shall hold Consolidated, its officers and directors
harmless from and against any liability, loss, cost, expenses or damages,
including attorney’s fees howsoever caused by reason of any injury or loss
sustained by or to any person or property by reason of any actual or alleged
wrongful act, misrepresentation or omission by McGeeney and Availent or its
agents or representatives (other than the 

 

6

 

Consolidated). Consolidated shall hold the McGeeney and Availent and
its management harmless from and against any liability, loss, cost, expenses or
damages, including attorney’s fees, howsoever caused by reason of any injury or
loss sustained by or to any person or property by reason of any actual or
alleged wrongful act, misrepresentation or omission by the Consolidated or
their agents or representatives. 

 

15.  APPLICABLE LAW. This
Agreement shall be construed as whole and in accordance with its fair meaning.
This Agreement shall be interpreted in accordance with the laws of the State of
Texas. 

 

16.  ENTIRE AGREEMENT. This
Agreement, together with the documents and exhibits referred to herein,
embodies the entire understanding among the parties and merges all prior
discussions or communications among them, and no party shall be bound by any
definitions, conditions or warranties, or representations other than as
expressly stated in this Agreement, or as subsequently set forth in writing,
signed by the duly authorized representatives of all of the parties hereto.
This Agreement, when executed shall supercede and render null and void any and
all preceding oral or written understandings and agreements. This agreement may
be signed in counterparts. 

 

17.  NO ORAL CHANGE: WAIVER.
This Agreement may only be changed, modified, or amended in writing by the
mutual consent of the parties hereto. The provisions of this Agreement may only
be waived in or by writing signed by the party against whom enforcement of any
waiver is sought. 

 

18.  CONFLICT OF INTEREST.
Consolidated represents that it is not presently aware of any conflicts of
interest regarding the performance of the Services in accordance with this
Agreement. 

 

19.  SEVERABILITY. If any
provision of this Agreement shall be held or deemed to be, or shall in fact be,
inoperative or unenforceable as applied in any particular case because it
conflicts with any other provision or provisions hereof, or any other provision
or provisions hereof, or any constitution or statute or rule of public policy,
or for any other reason, such circumstances shall not have the effect of
rendering the provision in question inoperative or unenforceable to any extent
whatsoever. The invalidity of any one or more phrases, sentences, clauses,
sections or subsections of this Agreement shall not affect the remaining
portions of this Agreement. 

 

20.  INTERPRETATION. Each of the
parties acknowledge that they have been represented by independent counsel of
their choice throughout all negotiations that have preceded the execution of
this Agreement, and that they have executed the same with consent and upon the
advice of said independent counsel. Each party and their counsel cooperated in
the drafting and preparation of this Agreement and the documents referred to
herein, and any and all drafts relating thereto shall be deemed the work
product of the parties and may not be construed against any party by reason of
its preparation. Accordingly, any rule of law, including but not limited to any
decision that would require interpretation of any ambiguities in this Agreement
against the party that drafted it, is of no application and is hereby expressly
waived. The provisions of this 

 

7

 

Agreement shall be construed as a whole and in accordance with its fair
meaning to affect the intentions of the parties and this Agreement.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
March 31, 2003:

 

 

CONSOLIDATED AMERICAN ENERGY RESOURCES, INC.

 

 

	
  BY:

  	
   /s/   DAVID MAFINA

  	
   

  
	
   

  	
  DAVID MAFINA, PRESIDENT

  
	
   

  	
   

  
	
  WITNESS:

  	
   

  
	
   

  	
   

  
	
  NAME:

  	
  (ILLEGIBLE)

  	
   

  
	
   

  	
   

  
	
  ADDRESS:

  	
  (ILLEGIBLE)

  	
   

  
	
   

  	
  (ILLEGIBLE)

  	
   

  
	
   

  	
   

  
	
  PATRICK A. MCGEENEY

  	
   

  	
  MICHELE MCGEENEY

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  /s/ PATRICK A. MCGEENEY 

  	
   

  	
  Agreed: 

  	
  /s/ MICHELE MCGEENEY

  	
   

  
	
   

  	
  PATRICK A. MCGEENEY, INDIVIDUALLY AND

  	
   

  	
   

  	
   

  
	
   

  	
  AS PRESIDENT OF AVAILENT FINANCIAL, INC.

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  WITNESS:

  	
   

  
	
   

  	
   

  
	
  NAME:

  	
  (ILLEGIBLE)

  	
   

  
	
   

  	
  SECRETARY OF AVAILENT FINANCIAL, INC.

  	
   

  
	
   

  	
   

  
	
  ADDRESS: 

  	
  (ILLEGIBLE)

  	
   

  
	
   

  	
  (ILLEGIBLE)

  	
   

  
												

 

8

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