Stock Escrow Agreement

EXHIBIT 10.3


STOCK ESCROW AGREEMENT
----------------------


Physicians Information Exchange, Inc. (hereinafter called the "Company"), _____________________ (hereinafter called the "Escrow Agent") and certain of the SHAREHOLDERS of the Company (hereinafter called the "Shareholders"), whose names are set forth in the attached Exhibit A (which is incorporated herein for all purposes), have made and entered into this Stock Escrow Agreement (hereinafter called the "Agreement").


WHEREAS, the Shareholders are the beneficial owners of shares of Common Stock, $.001 par value of the Company and/or options or warrants or conversion rights to acquire such shares of the Company as set forth in the attached
Exhibit A. All of the foregoing shares, options or warrants or conversion - --------- rights to acquire such shares of the Company are collectively referred to herein as the "Common Stock"; and


WHEREAS, the Company desires to make a public offering of the Company (hereinafter called the "Offering") of shares of its securities at $1.00 per share pursuant to an application for registration filed with the State Securities Commissioner of Texas (hereinafter called the "Commissioner") and


WHEREAS, as a condition of registration the Commissioner has required that the Shareholders place in escrow those shares of Common Stock of the Company set forth in Exhibit A; and
---------


WHEREAS, the Company, the Shareholders and the Escrow Agent desire to enter into a Stock Escrow Agreement with respect to the escrow of such Common Stock of the Company.


NOW, THEREFORE, in consideration of the foregoing and the covenants herein contained, it is agreed as follows:


1. The effective date of this Agreement shall be the date upon which the offering is registered for sale in Texas by the Commissioner (hereinafter called the "Effective Date") as contained in the Issuer's Permit to be issued by the Commissioner. The public offering price referred to in this Agreement, for the purposes of this Agreement is One Dollar ($1.00) per share of Common Stock (hereinafter called the "Public Offering Price").


2. The securities subject to escrow under this Agreement shall include: (a) all of those shares of Common Stock as set forth in the attached Exhibit A;
--------- (b) any stock or cash dividends that may be paid thereon during the term of this Agreement; (c) any additional securities issued through, or by reason of, any stock split, exchange of shares, merger, consolidation, recapitalization, reorganization or similar business combination or subdivision in substitution for, or in lieu of, any of the securities subject to this Agreement at the time; and (d) any other dividends or distributions of any kind with respect to the securities subject to escrow under this Agreement. All of the foregoing are collectively referred to herein as the "Escrowed Securities".


Any dividends or distributions of any kind with respect to the Escrowed Securities that may be paid during the term of this Agreement shall be paid to the Escrow Agent and held pursuant to the terms hereof. Such dividends or distributions of any kind with respect to the Escrowed Securities shall be treated as assets of the Company available for distribution in accordance with the provisions of Paragraph 11 hereof. The Escrow Agent shall place all cash dividends in an interest-bearing account. The dividends and interest thereon will be disbursed in proportion to the number of shares released from the escrow in accordance with the terms of this Agreement,


2


provided that such dividends and interest thereon are not first distributed in accordance with Paragraph 11 hereof.


3. The Shareholders shall promptly deliver to the Escrow Agent certificates of Common Stock in the Company evidencing the number of shares of Common Stock or documents evidencing the right to acquire the shares which are set forth opposite their names in Exhibit A, as well as any certificates
--------- evidencing any additional shares subject to escrow (including dividends or distributions of any kind with respect to the Escrowed Securities) as set forth in Paragraph 2 hereof, for deposit pursuant to the terms hereof. The Escrow Agent shall furnish each depositing Shareholder a safekeeping receipt or other similar instrument reflecting the name and address of the Shareholder, the number of shares deposited and respective stock certificate number(s), list of documents evidencing the right to acquire the shares, and the amount of any cash distributions deposited in escrow. A copy of any such safekeeping receipt or similar instrument reflecting such deposit shall be furnished by the Escrow Agent to the Commissioner for his information at the same time such receipt or instrument is furnished to the depositing shareholders. The Escrow Agent shall have no obligation to solicit the delivery of any cash or distributions of any kind with respect to the Escrowed Securities, or any certificates of stock representing any such Escrowed Securities or any document evidencing the right to acquire any such Escrowed Securities.


4. The escrow period shall begin on the Effective Date of this Agreement and shall terminate as provided herein. The securities deposited in escrow under this Agreement shall be held in such escrow until the earliest occurrence of any one of the following:


(a) When the Company in each of any two consecutive fiscal years has
achieved fully diluted net earnings per share for each fiscal year,
computed under generally accepted accounting principles, at least
equal to 10% of the Public Offering Price


3


per share. Such earnings shall include net income per share after
deducting provisions for any current and deferred income taxes for
such fiscal year and shall not take into consideration any
extraordinary items of income or expense, results of discontinued
operations or credit for tax-loss carryforward. The amount of the
fully diluted net earnings per share required for the termination of
the Escrow shall be adjusted proportionately to account for any stock
dividends, stock split, share combination, exchange of shares,
recapitalization, merger, consolidation, reorganization, liquidation
or similar combination or subdivision of the Common Stock of the
company. In the event of merger or consolidation the net income per
share will be computed upon earnings of the resulting entity for any
fiscal year subsequent to such merger or consolidation upon the basis
of the total shares of the resulting entity outstanding.


(b) When the Company during any five consecutive fiscal years has
accumulated fully diluted net earnings per share, computed under
generally accepted accounting principles, at least equal to 30% of the
Public Offering Price per share. Such earnings shall include net
income per share after deducting provisions for any current and
deferred income taxes for such fiscal year and shall not take into
consideration any extraordinary items of income or expense, results of
discontinued operations or credit for tax-loss carry-forward. The
amount of the fully diluted net earnings per share required for the
termination of the Escrow shall be adjusted proportionately to account
for any stock dividends, stock split, share combination, exchange of
shares, recapitalization, merger consolidation, reorganization,
liquidation or similar combination or subdivision of the Common Stock
of the Company. In the event of merger or consolidation the net
income per share will be computed upon earnings of the resulting
entity for any fiscal year subsequent to such merger or consolidation
upon the basis of the total shares of the resulting entity
outstanding.


(c) When the shares of the Company's Common Stock have traded in a
reliable public market (e.g., either the New York Stock Exchange, the
American Stock Exchange or the NASDAQ National Market System) at a
price per share of at least one hundred seventy-five percent (175%) of
the Public Offering Price per share of Common Stock for a period of at
least ninety (90) consecutive trading days after at least one year
from the Effective Date.


(d) (i) When a tender offer or an offer to merge or otherwise acquire the
Company's Common Stock is made pursuant to which all public
shareholders of the Company will receive either cash in the amount of
at least two times the Public Offering Price per share of Common
Stock, or securities listed or to be listed, or qualified in all
respects for listing, on the New York Stock Exchange, the American
Stock Exchange, or the National Market System of the National
Association of Security Dealers Automated Quotation System (NASDAQ),
and


4


having a market value at the effective date of the tender offer,
merger, or other acquisition of at least two times the Public Offering
Price per share of Common Stock, if the tender offer, merger, or other
acquisition is made and accepted not less than eighteen months nor
more than two years after the Effective Date; or (ii) in the event
such tender ...