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EXHIBIT 6(b)
STANDSTILL AND RESTRICTIONS
ON TRANSFER AGREEMENT
BETWEEN AND AMONG PROGRESSIVE ASSET MANAGEMENT,
PARADOX INC.,AND FINANCIAL WEST GROUP
This Agreement is made and entered into effective March 5, 1999, by and among
Progressive Asset Management ("PAM"), Paradox Holdings, Inc. ("Paradox"), and
Financial West Group, ("FWG"), each a California Corporation, with reference to
the following facts:
Recitals
WHEREAS the parties have entered into a "Purchase Agreement" of this same date
(hereinafter the "Purchase Agreement");
WHEREAS under the Purchase Agreement, Paradox is acquiring 25,000 shares of
stock of PAM, designated Series B Convertible Preferred Stock ("Series B
Stock");
WHEREAS the parties seek to ensure the percentage ownership of Paradox in PAM
remains constant until at least January 1, 2002; and
WHEREAS the Purchase Agreement provides that the parties will enter into this
shareholder's agreement;
Agreement
NOW, THEREFORE, In consideration of the promises and mutual covenants contained
herein, the Parties agree as follows;
1. STAND-STILL AGREEMENT. Prior to January 1, 2002, the parties agree that
Paradox will not attempt to directly or indirectly acquire shares of PAM such
that Paradox would hold more than 40% of the common stock of PAM, nor will PAM
attempt to directly or indirectly reduce Paradox's holding of shares of PAM such
that it would hold less than 40%, nor issue any other class or series of
Securities without approval of Paradox.
2. RESTRICTION ON TRANSFERS. To accomplish the purposes of this Agreement, any
transfer, sale, assignment, hypothecation, encumbrance, or alienation of any of
the stock of PAM other than according to the terms of this Agreement is void and
transfers no right, title, or interest in or to those Securities, or any of them
to the purported transferee, buyer, assignee, pledgee, or encumbrance holder.
a. Prior to January 1, 2002, Paradox will not transfer sell, assign,
hypothecate, encumber, or alienate of any Securities of PAM it holds.
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b. On or after January 1, 2002, if Paradox elects to make a tender offer to
purchase Securities of PAM not owned by Paradox, directly or indirectly, Paradox
shall be deemed to make an offer to PAM to repurchase the Securities held by
Paradox. PAM shall have the right for 120 days after the date of receipt of
notice of the proposed tender offer, to purchase any or all of the shares of the
Securities of PAM held by Paradox at the same price per Security, as Paradox has
offered to purchase the outstanding Securities, plus $1.00 to the total purchase
price. Example: Paradox offers to purchase 60% of the common stock of PAM not
already held by Paradox for a total price of $2,400,000; then PAM may counter by
purchasing the shares of common stock held by Paradox at $1,600,001.
c. In the event Paradox elects to make a tender offer under subsection b,
above, the following procedures shall apply.
i. Paradox shall first serve written notice on PAM at least 120 days
prior to the commencement of such proposed tender offer. The notice must
specify: (1) the number of securities, or the interest in Securities, Paradox
proposes to acquire; (2) the price or amount per each of the Securities to be
paid by Paradox for the proposed purchase; and (3) all other terms and
conditions of the proposed transaction.
ii. Within 48 hours after actual physical receipt of any notice given
pursuant to this Agreement, the Secretary of PAM shall also cause a special
meeting of PAM's Board of Directors to be called for a 10 o'clock a.m. Pacific
Time on the following (which is at least 48 hours after the giving of notice)
Monday, or at 10 o'clock a.m. Pacific Time on the following Tuesday if the
following Monday be a legal holiday, and shall promptly give telephonic notice
to each member of PAM's Board of Directors at the address then shown for each
such member on the books and records of PAM of the time, place, and purpose of
the meeting.
iii. PAM shall have 120 days after a notice given to it, to purchase
the Securities held by Paradox at the price specified in the notice. Should PAM,
within the time specified in this Section, elect to purchase any Securities held
by Paradox, the Secretary of PAM shall promptly give written notice of that fact
to Paradox. Within seven days thereafter, on delivery to it of the certificate
representing the Securities held by Paradox, PAM shall deliver to Paradox the
cash or instruments required to consummate its purchase of such Securities, in
accordance with this Agreement. Paradox shall then commence the tender offer.
iv. Should PAM fail to purchase within the time and in the manner
specified any or all of the Securities held by Paradox, the Secretary of PAM
shall promptly give written notice, herein called "the rejection notice," of
that fact to Paradox. Paradox shall then commence the tender offer.
d. Transfers to PAM on Repurchase of Securities Held by Officers, Directors
and Employees. Any purchase by PAM of
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Securities of a Paradox who is an officer, director or employee of PAM if such
purchase is made pursuant to an employment agreement, or other agreement for the
services and/or compensation of such Paradox, made between PAM and the officer,
director, or employee, is not a sale or transfer that is subject to the
provisions of this Agreement.
3. MISCELLANEOUS PROVISIONS
a. Legend on Securities. All certificates evidencing securities now or
hereafter owned by any Shareholder shall be endorsed substantially as follows:
The securities represented by this certificate are subject to and
may be transferred only in compliance with a Shareholders Agreement effective as
of March 5, 1999, made by and among the Shareholder hereof and PAM issuing this
certificate and certain other Shareholders of PAM's securities therein named or
referred to.
All certificates evidencing securities hereafter issued, for any
reason or purpose to any Shareholder shall, when issued, be similarly endorsed.
b. Execution of Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original as to its signatory, but
all of which together shall constitute one and the same instrument.
c. Injunctive Relief and Provisional Remedies. PAM and each Shareholder
agrees that remedies at law in the event of any breach or threatened breach of
this Agreement are not and will not be adequate, and that this Agreement may be
specifically enforced by a decree for the specified performance of any of its
terms, or by an injunction against a violation of any such terms. The Parties to
this Agreement acknowledge that it would be difficult to measure the damage from
any breach of the covenants set forth in this Agreement, that injury from any
such breach would be impossible to calculate, and that money damages would
therefore be an inadequate remedy for any such breach. It is further agreed that
any breach of this Agreement may render irreparable harm. Accordingly, in the
event of such a breach, a party shall be entitled to commence legal action and
shall have available to it all remedies provided by law, including, but not
limited to, permanent injunctive relief to restrain a party or other person from
violating this Agreement notwithstanding the arbitration provision contained
herein, without demonstrating any actual damage. Further, by submitting a
dispute to arbitration, the parties do not waive the right to seek other
provisional remedies from a court, such as attachment and receivership.
d. Governing Law. This Agreement and any disputes arising
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hereunder shall be interpreted and construed under, and be governed by, the
local, internal laws of the State of California as such laws are applied to any
act or agreement entered into in California, between California residents and
performed entirely within California, and not the conflict laws of the State of
California.
e. Entire Agreement. The parties acknowledge receipt of this Agreement and
agrees that, with respect to the subject matter hereof, this Agreement is the
entire agreement between the parties, superseding any previous oral or written
communications, representations, understandings, or agreements between the
parties or any officer or other representative thereof.
f. Severability of Provisions. In case any one or more of the provisions or
part of a provision, or any word, phrase, clause or sentence thereof contained
in this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect in a jurisdiction in which enforcement is sought,
this Agreement shall be reformed and construed in any such jurisdiction as if
such invalid or illegal or unenforceable provision or part of a provision, or
any word, phrase, clause or sentence thereof had never been contained herein and
such provision or part reformed so that it would be valid, legal and enforceable
to the maximum extent permitted in such jurisdiction.
g. Modification. This Agreement may not be changed, modified, released,
discharged, abandoned, or otherwise amended, in whole or in part, except by an
instrument in writing signed by the parties to this Agreement, and where
necessary, that is approved by majority of the Shareholders of each Series,
class and type of securities affected by the modification.
h. Additional Necessary Actions. Each of the parties hereto agrees to
execute all such further instruments and documents and to take all such further
action as any other party may reasonably require in order to effectuate the
terms and purposes of this Agreement. The parties recognize that the Articles of
Incorporation must be amended to ensure the effectiveness of certain provisions
of this Agreement and each party to this Agreement represents and warrants that
each has not taken any actions that would violate the terms of the Agreement and
will not take any such action prior to the amendment of the Articles of
Incorporation.
i. Binding on Heirs and Successors. This Agreement shall be binding upon
and shall inure to the benefit of each Shareholder and the Shareholder's
respective heirs, executors, administrators, assigns, successors and legal
representatives.
j. Non-Waiver of Rights. The Parties agree that no failure to exercise or
delay in exercising any right, power, or privilege
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on the part of either party shall operate as a waiver of any right, power or
privilege under this Agreement. The Parties further agree that no single or
partial exercise of any right, power, or privilege hereunder shall preclude
further exercise thereof.
In witness whereof, the Parties have executed this Agreement on the date first
written above.
Progressive Asset Management, Inc.
PETER CAMEJO
by Peter Camejo, Chief Executive Officer
Paradox Holdings, Inc.
GENE C. VALENTINE
by Gene C. Valentine, Chief Executive
Officer
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