EXHIBIT 6
STOCK OPTION AGREEMENT
THE SECURITIES REPRESENTED BY THIS STOCK OPTION AGREEMENT HAVE BEEN
ACQUIRED FOR INVESTMENT AND NEITHER THESE SECURITIES NOR THE UNDERLYING
SHARES HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAW. SUCH SECURITIES MAY NOT BE SOLD
OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH SALE OR
TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SAID ACT.
This Stock Option Agreement (this "Option") is entered into as of this
5th day of February, 2003 by and between BDO Xxxxxxx, LLP, a New York registered
limited liability partnership ("BDO"), and WAG Holdings, LLC (the "Grantor").
WHEREAS, in consideration of the execution and delivery by BDO of an
Assignment Agreement as of the date hereof pursuant to which BDO has assigned
all of its right, title and interest in and to BDO's accounts receivables due
from Paladyne Corp., a Delaware corporation (the "Company"), Grantor desires to
enter into this Agreement to give BDO an option to acquire shares of the common
stock of the Company.
NOW, THEREFORE, in consideration of the premises and agreements
contained herein, the parties hereto agree as follows:
1. GRANT OF OPTION. Grantor hereby grants BDO the right to
purchase from Grantor, at any time after the date hereof and on or before 5:00
p.m., New York Time, on the fifth anniversary of the date hereof (the
"Expiration Date"), that number of fully paid and nonassessable shares of the
common stock of the Company, as shall be determined in accordance with the
provisions of Section 3 hereof, at an exercise price determined in accordance
with the provisions of Section 2 hereof.
2. EXERCISE PRICE. The exercise price per Option Share (the
"Exercise Price") shall be equal to the average closing price of the Company's
common stock on the OTC Bulletin Board over the five trading days commencing on
the first trading day following the effectiveness of the reverse split (the
"Reverse Split") of the common stock of the Company referred to in that certain
Stock Purchase Agreement (the "Stock Purchase Agreement"), dated as of January
9, 2003, by and among the Company, Xxxx X. Xxxxxx, WAG Holdings, LLC and A.
Xxxxxxx Xxxxxxxxx (the fifth such trading day is referred to herein as the
"Price Determination Date"). For the purposes of this Agreement, the term
"trading day" shall mean a day that sales of equity securities are effected over
the OTC Bulletin Board, regardless of whether any shares of the Company are
traded on such day.
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3. EXERCISE OF OPTION, ETC.
3.1. Number of Option Shares for Which Option is
Exercisable. The number of shares of the Company's common stock for which this
Option may be exercised at any time on or before the Expiration Date shall be
50,000 (the "Option Shares"), subject to any adjustments provided in Section 4
hereof.
3.2 Procedure for Exercise of Option. This Option may be
exercised in whole or part for any number of remaining Option Shares by
delivering an exercise notice to the Grantor, in accordance with Section 5,
along with a check, payable to the order of the Grantor, or a wire transfer of
funds, in an amount equal to the then aggregate Exercise Price with respect to
the Option Shares as to which this Option is then being exercised. Upon receipt
by the Grantor of BDO's exercise notice, the Grantor shall, as promptly as
practicable, and in any event within five business days thereafter, cause to be
delivered to BDO, subject to compliance with applicable law and the terms of
this Option, a certificate or certificates, as BDO may direct, representing such
Option Shares. Each certificate so delivered shall be in such denomination as
may be requested by BDO. The Grantor shall pay all expenses, taxes (other than
income taxes) and other charges payable in connection with the preparation,
execution and delivery of certificates pursuant to this Section 3.2, except
that, in case such certificates shall be registered in a name or names other
than the name of BDO, funds sufficient to pay all transfer taxes which shall be
payable upon the execution and delivery of such certificate or certificates
shall be paid by BDO to the Grantor at the time of delivering this Option to the
Grantor as mentioned above.
3.3. Transfer Restriction Legend. Any certificate for
Option Shares initially issued upon exercise of this Option, unless at the time
of exercise such Option Shares are registered under the Securities Act of 1933,
as amended (the "Securities Act"), shall bear the following legend on the face
thereof:
"These securities have not been registered under the
Securities Act of 1933, as amended, or under any state
securities laws and may be offered, sold or transferred only
if registered pursuant to the provisions of such laws, or if
an exemption from such registration is available."
3.5. Investment Representation. BDO, by acceptance hereof,
to the extent required by applicable law, acknowledges that this Option and,
upon exercise, the Option Shares, are being acquired solely for BDO's own
account and not as a nominee for any other party, and for investment, and BDO
covenants and agrees that it will not offer, sell, transfer, assign or otherwise
dispose of this Option or the Option Shares issued upon exercise hereof, except
under circumstances that will not result in a violation of the Securities Act or
any relevant state securities or blue sky laws.
3.6. Fractional Shares. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this Option.
With respect to any fraction of a share called for upon any exercise hereof, the
Grantor shall pay to BDO an amount in cash equal to such fraction multiplied by
the then current market value of such share.
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4. ANTI-DILUTION.
(a) The Exercise Price and the number and type of securities that
may be purchased pursuant to this Option are subject to adjustment from time to
time as provided in this Section 4. Upon each adjustment of the Exercise Price
in accordance with this Section 4, BDO shall be entitled to purchase, at the
Exercise Price resulting from such adjustment, the number of Option Shares
obtained by multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of Option Shares purchasable immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.
(b) In the event that, at any time during prior to the Expiration
Date, the Company shall (i) subdivide the number of outstanding shares of the
Company's common stock into a greater number of shares, (ii) combine the number
of outstanding shares of the Company's common stock into a lesser number of
shares, or (iii) declare, order, pay or make a dividend or other distribution to
holders of shares of the Company's common stock payable in shares of common
stock of the Company, then, in each such case, the Exercise Price in effect
immediately prior to such event shall be adjusted to an adjusted Exercise Price
in accordance with the following formula:
X = A*(Y/Z)
where:
X = the adjusted Exercise Price;
Y = the number of shares of common stock of the Company outstanding
immediately prior to such event;
Z = the number of shares of common stock of the Company outstanding
immediately following such event; and
A = the Exercise Price in effect immediately prior to such event.
Such adjustment shall become effective immediately following the effective date
of such event or, in the event of a dividend or other distribution, on the date
such dividend or distribution is made.
(c) In the event that, at any time prior to the Expiration Date,
the Company shall effect (i) any reorganization or reclassification of equity
securities of the Company (other than as set forth in Section 4(a) above), (ii)
any merger or consolidation of the Company with another Company, (iii) any sale,
lease, license or other conveyance of all or substantially all of the assets of
the Company, (iv) any liquidation or dissolution of the Company, or (v) any
other transaction which is to be effected in such a manner that, as a result of
such transaction, the holders of equity securities of the Company shall be
entitled to receive securities, property or other consideration (including,
without limitation, cash) (each, a "Fundamental Change Transaction"), then
lawful and adequate provision shall be made whereby BDO shall thereafter have
the right to purchase and receive upon the basis and upon the terms and
conditions specified in this Option, and in lieu
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of the Option Shares purchasable immediately prior to such Fundamental Change
Transaction upon the exercise of this Option, such securities, property or
consideration (including, without limitation, cash) as may be issuable or
payable with respect to or in exchange for a number of shares of common stock of
the Company equal to the Option Shares purchasable immediately prior to such
Fundamental Change Transaction upon the exercise of this Option. In any such
case, appropriate provision shall be made with respect to the rights and
interests of BDO so that the provisions hereof (including, without limitation,
the provisions for adjustments of the Exercise Price and the number of Option
Shares purchasable upon the exercise of this Option) shall thereafter be
applicable as nearly as may be reasonably possible in relation to such
securities, property or consideration deliverable to BDO upon exercise of this
Option.
(d) Upon the occurrence of any event requiring an adjustment of
the Exercise Price pursuant to this Section 4, then and in each case, Grantor
shall deliver to BDO a notice stating the adjusted Exercise Price resulting from
such adjustment and the increase or decrease, if any, in the number of Option
Shares issuable upon exercise of this Option, setting forth in detail the method
and calculation thereof and the facts upon which such calculation is based.
(e) If any event occurs as to which the provisions of this Section
4 are not applicable or if strictly applicable would not fairly protect the
exercise rights of BDO in accordance with the intent and principle of such
provisions, then Grantor and BDO shall make such adjustments, if any, on a basis
consistent with such intent and provisions as may be necessary to preserve the
rights of BDO.
5. NOTICES. Any notice or demand which is required or provided to
be given under this Option shall be deemed to have been sufficiently given to
and received by a party for all purposes when delivered by hand, telecopy, telex
or other method of facsimile, or five days after being sent by certified or
registered mail, postage and charges prepaid, return receipt requested, or two
days after being sent by overnight delivery providing receipt of delivery, to
the address of such party shown on the signature page hereto, or at any other
address designated by such party to the other party in writing.
6. NO RIGHTS AS STOCKHOLDER. This Option in and of itself shall
not entitle BDO to any voting rights or other rights as a stockholder of the
Company.
7. REPRESENTATIONS AND WARRANTIES OF COMPANY. Grantor hereby
represents and warrants to BDO that:
(i) Absence of Conflicts. Neither the execution,
delivery and performance of this Option by Grantor, nor the
consummation of the transactions contemplated hereby, nor compliance by
Grantor with any of the provisions hereof, will (with notice or lapse
of time or both) (a) violate, conflict with, or result in a breach of
any provision of, constitute a default under, or permit or result in
the termination of, acceleration of any obligation under, or creation
of a lien under any of the terms, conditions or provisions of, any
indenture, license, sublicense, agreement or instrument to which
Grantor is a party or by which any of Grantor's assets are bound, or
(b) violate or conflict with any law, rule, regulation, judgment,
ruling, order, writ, injunction or decree applicable to Grantor or any
of Grantor's properties or assets.
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(ii) Authorization of Agreements, Etc. Each of
(A) the execution and delivery by the Grantor of this Option, (B) the
performance by the Grantor, and (C) the issuance, sale and delivery of
this Option by Grantor has been duly authorized by the Grantor.
(iii) Validity. This Option has been duly executed
and delivered by the Grantor and constitutes the legal, valid and
binding obligation of the Grantor, enforceable against the Grantor in
accordance with its terms. Grantor shall use Grantor's best efforts to
ensure that all Option Shares that may be transferred to BDO upon the
exercise of this Option shall be validly issued, fully paid and
nonassessable, with no personal liability attaching to the ownership
thereof, and free from all taxes, liens and charges.
8. ARBITRATION
(c) Except as provided in this Option, if any dispute,
controversy or claim arises in connection with the performance or breach of this
Option, either BDO or the Grantor may, upon written notice to the other party,
request facilitated negotiations. Such negotiations shall be assisted by a
neutral facilitator acceptable to both parties and shall require the best
efforts of the parties to discuss with each other in good faith their respective
positions and, respecting their different interests, to finally resolve such
dispute. Each party may disclose any facts to the other party or to the
facilitator that it, in good faith, considers necessary to resolve the dispute.
However, all such disclosures shall be deemed in furtherance of settlement
efforts and shall not be admissible in any subsequent litigation against the
disclosing party. Except as agreed by both parties, the facilitator shall keep
confidential all information disclosed during negotiations. The facilitator
shall not act as a witness for either party in any subsequent arbitration
between the parties. Such facilitated negotiations shall conclude within sixty
(60) calendar days from receipt of the written notice unless extended by mutual
consent. The parties may also agree at any time to terminate or waive
facilitated negotiations. The costs incurred by each party in such negotiations
shall be borne by such party; the fees and expenses of the facilitator, if any,
shall be borne equally by the parties.
(d) Except as provided in this Option, if any dispute,
controversy or claim arises in connection with the performance or breach of this
Option and cannot be resolved by facilitated negotiations (or the parties agree
to waive that process) then such dispute, controversy or claim shall be settled
by arbitration in accordance with the laws of the State of Delaware and the then
current Commercial Rules of the American Arbitration Association ("AAA"), except
that no pre-hearing discovery shall be permitted unless specifically authorized
by the arbitration panel, and shall take place in the State of New York, unless
the parties agree to a different locale. Such arbitration shall be conducted
before an arbitrator selected by the AAA. The arbitration panel shall have no
authority to award non-monetary or equitable relief, and any monetary award
shall not include punitive damages. The confidentiality provisions applicable to
facilitated negotiation shall also apply to arbitration. The award issued by the
arbitration panel may be confirmed in a judgment by any federal or state court
of competent jurisdiction. All reasonable costs of both parties, as determined
by the arbitrators, including but not limited to (1) the costs, including
reasonable attorneys' fees, of the arbitration; (2) the fees and expenses of the
AAA and the arbitrators; and (3) the costs, including reasonable attorneys'
fees, necessary to confirm the
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award in court shall be borne entirely by the non-prevailing party (to be
designated by the arbitration panel in the award) and may not be allocated
between the parties by the arbitration panel. TO THE EXTENT ANY MATTER IS NOT
ARBITRABLE HEREUNDER, THE PARTIES MUTUALLY WAIVE TRIAL BY JURY IN ANY ACTION,
SUIT OR PROCEEDING TO RESOLVE SUCH MATTER.
9. GOVERNING LAW. This Option shall be governed by, and construed
and enforced in accordance with, the internal laws of the State of New York,
without giving effect to its conflicts of laws provisions.
10. SUBMISSION TO JURISDICTION. BDO and the Grantor each hereby
irrevocably waives, in connection with any such action or proceeding, any
objection, including, without limitation, any objection to the laying of venue
or based on the grounds of forum non conveniens, which such party may now or
hereafter have to the bringing of any such action or proceeding in such
jurisdictions.
11. MISCELLANEOUS.
(a) Any term of this Option may be amended solely with
the written consent of the Grantor and BDO.
(b) The headings in this Option are for purposes of
reference only and shall not affect the meaning or construction of any of the
provisions hereof.
(c) The Grantor stipulates that the remedies at law of
BDO in the event of any default or threatened default by the Grantor in the
performance of or compliance with any of the terms of this Option are not and
will not be adequate, and that such terms may be specifically enforced by a
decree for the specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof or otherwise.
[Signature Page Follows]
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IN WITNESS WHEREOF, each of the parties hereto has caused this Option
to be signed by its duly authorized officer, as of the date first written above.
"GRANTOR"
WAG HOLDINGS, LLC
By: /s/ Xxxxxxx X. Xxxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxxx
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Title: Manager
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"BDO"
BDO XXXXXXX, LLP
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
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Title: Partner
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