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EXHIBIT 10.6
PUT AGREEMENT
THIS PUT AGREEMENT (this "Agreement") is made as of the May 26, 1999
(the "Effective Date") by and between PARADIGM4, Inc., a Delaware corporation
with its principal place of business at 000 Xxxxx 00 Xxxx, Xxxxxxxxx, XX 00000
(the "Company") and J. XXXXX XXXXXXXX, an individual with whose principal place
of residence is 00 Xxxx Xxxxxx, Xxxxxxxxxx, XX 00000 (the "Executive").
RECITALS
WHEREAS, the Company and the Executive desire that the Executive shall
have the opportunity to sell the Shares to the Company;
WHEREAS, the Executive is an employee of Company and an integral part
of its management who participates in the decision-making process relative to
short- and long-term planning and policy for Company;
WHEREAS, Company, acting through its Board of Directors, has determined
that it would be in the best interests of Company and Executive to assure
continuity in the management of Company's administration and operations by
entering into a Put Agreement in connection with the retention of the services
of Executive;
WHEREAS, Company desires to establish and maintain the management
expertise which is essential to enhance shareholder value; and
WHEREAS, as an inducement for Executive to join Company, Company has
determined that it would be in the best interests of Company and Executive to
assure that Executive is treated fairly in the advent of a possible change of
control in order to prevent Executive from being distracted or otherwise having
his performance adversely affected by a possible change in control.
NOW THEREFORE, each of the parties hereto, in consideration of the
mutual covenants set forth herein, agrees as follows:
ARTICLE ONE
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
following meanings:
1.1. Affiliate shall mean, as to any Person, (i) the spouse or lineal
descendants of such Person or any of the parties referred to in the subsequent
clauses of this definition, (ii) a trust for the benefit of such Person or any
of the parties referred to in the foregoing clause of this definition, (iii) any
corporation, partnership, limited liability company, or other entity of which
such Person is an officer, director, member or general partner, or which is
otherwise controlled
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by such Person or by any of the parties referred to in this or any of the
foregoing clauses of this definition, (iv) any other Person that directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, such Person, and (v) the members, partners, former
partners, former members, directors and officers, as the case may be, of such
Person or of any of the parties referred to in the foregoing clauses of this
definition.
1.2. ATTI Group shall mean any of Xxxxxx Xxxxxxx, Advanced
Telecommunications Technologies, Inc., ATT IV, N.V., and any of their respective
Affiliates (other than limited partners) and any other Person or account as to
whom any of the foregoing persons exercises or has exercised investment
discretion.
1.3. Beneficial Ownership shall be determined in accordance with the
provisions of Rule 13d-3 under the Exchange Act as such Rule may be in effect
from time to time or any successor rule or regulation.
1.4. Company Group shall mean any of the ATTI Group, the Xxxxxx Xxxx
Group, the Xxxxx Xxxxx Group, the Management Group or the Crestwood Group.
1.5. Crestwood Group shall mean Crestwood Capital International, LTD.
and Crestwood Capital Partners, L.P.
1.6. Distribution shall have the meaning ascribed to it in Section
1.24.
1.7 Effective Date shall have the meaning ascribed to in the preamble
of this Agreement.
1.8. Equity Security shall mean any capital stock (including the Common
and Preferred Stock) of the Company, whether now or hereafter authorized, and
rights, options, warrants or rights to purchase capital stock, and securities of
any type whatsoever that are, or may become, convertible into or exchangeable or
exercisable for capital stock; the number of shares represented by an Equity
Security which is an option, warrant, right or convertible security shall be the
number of shares of such capital stock which would be issued upon the immediate
exercise of such option, warrant or right of conversion of such convertible
security, without regard to when such option, warrant or right may in fact be
exercised or such convertible security may in fact be converted.
1.9. Exchange Act shall mean the Securities Exchange Act of 1934, as
amended.
1.10. Xxxxxx Xxxx Group shall mean any of ING Barings Xxxxxx Xxxx, LLC
and any of its Affiliates and any other Person or account as to whom any of the
foregoing persons exercises or has exercised investment discretion.
1.11. Management Group shall mean the group comprised of the Management
Shareholders.
1.12. Management Shareholders shall mean the persons listed on Schedule
I hereto and
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any additional officers of the Company who own Equity Securities.
1.13. Xxxxx Xxxxx Group shall mean any of Xxxx Xxxxx, Xxxxxx Xxxxx,
Xxxxx Xxxxx Ventures III, L.P., MD Strategic L.P., P.V. II, L.P., Star Partners
Predictive Ventures, L.P., Seedling Fund, L.P. and any of their respective
Affiliates (other than limited partners) and any other Person or account as to
whom any of the foregoing persons exercises or has exercised investment
discretion.
1.14. Non-Qualified Stock Option Agreement shall have the meaning
ascribed to it in Section 1.16.
1.15. Notice of Put shall have the meaning ascribed to it in Section
2.2 herein.
1.16. Permitted Transferee shall have the meaning ascribed to it in
Section 5 of the Executive's Non-Qualified Stock Option Agreement dated as of
May 26, 1999 (the "Non-Qualified Stock Option Agreement").
1.17. Person shall mean any individual, firm, corporation, business
trust, partnership, limited liability company or other entity, and shall include
any successor (by merger or otherwise) of such entity.
1.18. Put shall have the meaning ascribed to it in Section 2.1 herein.
The term "Put", when used as a verb, shall also mean the Executive's exercise of
the Put.
1.19. Preferred Stockholder shall mean a holder of shares of the Series
A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock and Series F Preferred Stock of the
Company.
1.20. Put Closing shall have the meaning ascribed to it in Section 3.1
herein.
1.21. Put Date shall have the meaning ascribed to it in Section 3.1
herein.
1.22. Put Price shall have the meaning ascribed to it in Section 2.1
herein.
1.23. Sale shall have the meaning ascribed in Section 2.1 herein.
1.24. Securities Act shall mean the Securities Act of 1933, as amended.
1.25. Sell, as to any Equity Security, shall mean to sell, to offer to
sell, to accept any offer to purchase, or in any other way directly or
indirectly transfer, assign, distribute, encumber or otherwise dispose of such
Equity Security, either voluntarily or involuntarily, but shall not include any
sale, transfer or other disposition of Equity Securities (i) in an underwritten
public offering of such Equity Security pursuant to a registration statement
under the Securities Act, or a sale pursuant to Rule 144 (or a successor rule or
regulation) thereunder, (ii) by any Preferred Stockholders to a then current
Affiliate of such Preferred Stockholder or to a member of any Group to which
such Preferred Stockholder is then associated, or (iii) the distribution of
Equity
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Securities by any member of the ATTI Group, the Xxxxx Xxxxx Group, the Xxxxxx
Xxxx Group or the Crestwood Group to any of their respective limited partners or
other passive investors (a distribution contemplated by this clause (iii) being
sometimes referred to as a "Distribution").
1.26. Shares shall mean (i) 1,320,000 shares of the Company's common
stock, par value $.01 per share ("Common Shares"), subject to options granted to
the Executive on May 26, 1999 (or if such options have been exercised, the
Common Shares purchased thereby) plus (ii) if a Sale occurs with a Common Share
equivalent purchase price in excess of $6.00 per share, 330,000 Common Shares
subject to options granted to the Executive on May 26, 1999 (or if such options
have been exercised, the Common Shares purchased thereby), plus such additional
number of shares subject to such options in (i) and (ii) above as shall be fixed
from time to time in accordance with the provisions of Sections 8 of the
Incentive Stock Option Agreement and the Non-Qualified Stock Option Agreement,
respectively.
1.27. Trigger Event shall have the meaning ascribed to it in Section
2.1 herein.
ARTICLE TWO
RIGHT TO PUT SHARES
2.1 Right to Put. In the event that any one or more of the Preferred
Stockholders shall Sell, in a single transaction or a series of related
transactions (a "Sale"), to any Person or group of Persons (other than to any
(i) member of any Company Group to which the Preferred Stockholder(s) is (are)
then associated or (ii) Permitted Transferee, 50% or more of the aggregate
Equity Securities held collectively by all of the Preferred Stockholders taken
together, and the Executive is not concurrently provided with an offer to
participate in such Sale on substantially the same terms as the Preferred
Stockholder(s) (a "Trigging Event"), then the Executive shall have the right to
require the Company to purchase from the Executive (the "Put"), and upon
exercise of the Put the Company shall purchase from the Executive, up to that
number of the Shares (the "Put Shares") equal in percentage to the percentage of
Equity Securities Sold by the Preferred Stockholder(s), for a price per share
equal to the common stock equivalent Sale price received by the Preferred
Stockholder(s) in such Sale minus the applicable exercise price for any options
which are the subject of the Put and which have not been exercised prior to the
Put Date (the "Put Price").
2.2 Method of Exercise. The Executive may exercise the Put and his
rights related hereunder to sell the Put Shares to the Company by delivering to
the Company, at its office referred to above, a notice of Put (a "Notice of
Put") in the form attached hereto as Annex A.
2.3 Time of Exercise. The rights of the Executive to Put all or such
portion of the Shares as shall be specified in the Notice of Put of the Shares
shall become exercisable immediately upon completion of the Sale by the
Preferred Stockholders.
ARTICLE THREE
CLOSING
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3.1. Put Closing.
(a) The closing (the "Put Closing") of the purchase and sale
of the Put Shares pursuant to Section 2 hereof shall be held on the
date (the "Put Date") which is the thirtieth (30th) day after delivery
of the Notice of Put.
(b) At the Put Closing, the Executive will deliver the Put
Shares to the Company, and the Company will deliver to the Executive
the Put Price for the Put Shares made the subject of the Notice of Put
in cash, certified or bank check, or by wire transfer.
3.2 Insufficient Surplus, Etc. In the event that a payment by the
Company in respect of all or a portion of the Put Price shall not be permitted
by Section 170 of the Delaware General Corporation Law, the portion so
restricted (the "Restricted Portion") may be deferred by the Company until and
shall be payable by the Company in installments or one lump sum, as appropriate,
at such time or times as (a) the Company has adequate surplus, as defined in and
computed in accordance with Sections 154 and 244 of the Delaware General
Corporation Law or (b) in the case there shall be no such adequate surplus, the
Company has adequate net profits for the then current fiscal year and/or the
preceding fiscal year or in any subsequent fiscal year, in any such case to the
extent required for purposes of permitting the payment in full of the applicable
Put Price without contravention of said Section 170. During any such time period
that the Company is not able to pay the Restricted Portion of the Put Price, the
Put Closing shall be held in abeyance as to those Shares which would have been
purchased had the Restricted Portion been available and the Executive shall be
entitled to retain, and he shall be deemed to be the Beneficial Owner of, all of
the Put Shares which have not been purchased until such time as the entire
amount of the Put Price shall have been paid in full. Nothing herein shall
impair, as between the Company and the Executive, the obligation of the Company,
which is unconditional and absolute, to pay to the Executive the full amount of
the Put Price in accordance with the terms hereof; nor shall anything herein
prevent the Executive from exercising all remedies otherwise permitted by
applicable law or hereunder upon default by the Company in payment of the full
amount of the Put Price or otherwise in respect of the provisions of this
Agreement.
ARTICLE FOUR
ADDITIONAL COVENANTS
4.1 Changes in Terms of Capital Stock. From and after the date of
delivery by the Executive of his Notice of Put, the Company shall not effect or
permit any change in or amendment to any document or instrument pertaining to
the terms of its capital stock unless such change or amendment is of a nature
that would not prevent the Put or prevent the Company's satisfying consummation
of the Put.
4.2 Preservation of Rights. If, in the reasonable determination of the
Board of Directors of the Company made in good faith, any event occurs as to
which the provisions of this Put Agreement are not strictly applicable but it
would be equitable to preserve the rights of the Executive to participate in a
Triggering Event in accordance with the basic intent and principles of this Put
Agreement or if the other provisions of this Put Agreement would not preserve
the rights of the Executive in accordance with such basic intent and principles,
then the Company
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shall appoint, at its sole expense, a firm of independent public accountants of
recognized standing (which may be the regular auditors of the Company) to
determine, and report on what adjustments, if any, are necessary to preserve the
rights of the Executive in accordance with the basic intent and principles of
this Put Agreement. The determination of such firm shall be final and binding
and the Company shall take whatever action is required in order to comply with
the recommendation of such firm as set forth in its report.
4.3 Executive's Remedies. The Company acknowledges that the Executive's
rights herein and the benefits to be derived therefrom are unique. Accordingly,
in the event the Company shall breach any of the terms or conditions of this Put
Agreement, the Executive may proceed to protect and enforce his rights by any
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein, for an injunction
against a violation of any of the terms hereof, or the pursuit of any other
remedy which he may have by virtue of this Put Agreement or pursuant to
applicable law. The Company shall pay to the Executive upon demand the costs and
expenses of collection and of any other actions referred to in this Section 4.3,
including without limitation reasonable attorneys' fees, expenses and
disbursements.
4.4 Course of Dealing. No course of dealing and no delay on the part of
the Executive in exercising any of his rights shall operate as a waiver thereof
or otherwise prejudice his rights, nor shall any single or partial exercise of
any right, power or remedy preclude any other or further exercise thereof or the
exercise of any other right, power or remedy hereunder. No right, power or
remedy conferred hereby or by applicable law on the Executive shall be exclusive
of any other right, power or remedy referred to herein or therein or now or
hereafter available at law, in equity, by statute or otherwise.
4.5 Further Assurances. Each of the Company and the Executive agree to
execute and deliver and take such other and further action as may be reasonably
requested by the other in order that each of the parties hereto may realize the
full benefits intended to be derived from this Put Agreement.
ARTICLE FIVE
MISCELLANEOUS
5.1 Notices. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), or (b)
when received by the addressee, if sent by certified mail or a nationally
recognized overnight delivery service (receipt requested), in each case to the
appropriate addresses set forth below (or to such other addresses as a party may
designate by notice to the other party):
(a) If to Company:
PARADIGM4, INC.
000 Xxxxx Xxxxxx
Xxxxx 0X
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Exhibit 10.6
Xxxxxxxx, XX 00000
Attention: General Counsel
(b) If to Executive:
J. XXXXX XXXXXXXX
00 Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
5.2 Applicable Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of New Jersey (excluding
application of any choice of law doctrines that would make applicable the law of
any other state).
5.3 Headings. The section headings appear as a matter of convenience
only and do not constitute a part of this Agreement and shall not affect the
construction hereof.
5.4. Assignment. This Agreement shall inure to the benefit of, and be
binding upon, the successors and assigns of each of the parties hereto; provided
that the Company may not assign its rights or delegate its obligations
hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the Effective Date.
COMPANY:
PARADIGM4, INC.
By: /s/ XXXXXXX X. XXXXXX
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Name: Xxxxxxx X. Xxxxxx
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Title: Vice President
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EXECUTIVE:
/s/ J. XXXXX XXXXXXXX
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J. Xxxxx Xxxxxxxx
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ANNEX A
NOTICE OF PUT
1. In accordance with a Put Agreement (the "Put Agreement") dated as of May 26,
1999 by and between the undersigned (the "Executive") and PARADIGM4, INC. (the
"Company"), the undersigned hereby exercises his right to sell, and does hereby
sell upon receipt of the Put Price as defined in the Put Agreement, the number
of Put Shares set forth below. "Put Shares" shall have the meaning ascribed to
it in the Put Agreement.
2. The Put Price is to be paid in the manner set forth in the Put Agreement.
3. All capitalized terms used herein and not otherwise defined herein shall have
the respective meanings assigned to them in the Put Agreement.
4. Other Instructions:
Number of Put Shares to be Purchased
J. Xxxxx Xxxxxxxx
Dated:
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SCHEDULE I
SCHEDULE OF MANAGEMENT SHAREHOLDERS
NAME AND ADDRESS
Xxxx Xxx
c/o Paradigm4, Inc.
000 Xxxxx Xxxxxx
Xxxxx 000
Xxx Xxxx, XX 00000
Xxxxxx Xxxxx
c/o Paradigm4, Inc.
000 Xxxxx Xxxxxx
Xxxxx 000
Xxx Xxxx, XX 00000
Xxxxxx Xxxxx
c/o Paradigm4, Inc.
000 Xxxxx Xxxxxx
Xxxxx 000
Xxx Xxxx, XX 00000
Xxxxx Xxxxx
c/o Paradigm4, Inc.
000 Xxxxx Xxxxxx
Xxxxx 000
Xxx Xxxx, XX 00000
Xxxxxx Xxxx
c/o Paradigm4, Inc.
000 Xxxxx Xxxxxx
Xxxxx 000
Xxx Xxxx, XX 00000
