EXHIBIT 4.2
STOCKHOLDERS AGREEMENT
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This AGREEMENT, dated as of August 6, 2002 (this "Agreement"), by and among
Progressive Software Holding, Inc., a Delaware corporation (the "Corporation"),
Massachusetts Mutual Life Insurance Company, MassMutual Corporate Investors,
Mass Mutual Participation Investors, and MassMutual Corporate Value Partners
Limited, (collectively, "MassMutual"), ARK CLO 2000-1, Limited, a Cayman Islands
exempted company, ("ARK"), and Xxxxxxx Xxxxx and Xxxxxxxxxxx Xxxxx
(collectively, the "Management Parties").
MassMutual and ARK and any person who becomes a party to this Agreement
pursuant to Section 2.1(a) hereof are referred to individually as a
"Stockholder" and collectively as the "Stockholders."
Recitals
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The Stockholders are currently owners of approximately 80% of the issued
and outstanding capital stock of the Corporation as set forth on Exhibit A and
the Management Parties are currently members of management of the Corporation.
The Stockholders, the Management Parties and the Corporation desire to set forth
the terms and conditions with respect to voting of the Corporation's stock
currently owned and hereafter acquired by the Stockholders (the "Securities").
NOW, THEREFORE, the parties hereby agree as follows:
1. Corporate Governance.
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1.1 Management Representatives. There shall be up to three representatives
of management (the "Management Representatives"), who shall not be entitled to
vote at any meeting, or participate in any written consent or other official
action, of the Board but who shall be entitled to attend all meetings of the
Board and receive all materials distributed to members of the Board. Initially
and until such time as they resign from such position, the Management
Representatives shall be the Management Parties and a third Management
Representative to be appointed by the Management Parties. The Management
Representatives, by majority vote or written consent, shall have the right, but
not the obligation, to designate the replacement for any Management
Representative upon his or her resignation, incapacity or death.
1.2 Board of Directors. Each of the Stockholders agrees to cast all votes
to which such party is entitled in respect of such Stockholder's Securities and
other shares of capital stock of the Corporation, whether at any annual or
special meeting, by written consent or otherwise, to elect the members
("members") of the Corporation's board of directors (the "Board") as follows:
(a) Management Director. Unless a Triggering Event (as defined in the
Corporation's Certificate of Incorporation) shall have occurred, the
Management Representatives, by majority vote or written consent, shall be
entitled to designate one member to the Board (such director being the
"Management Director"). The Management Director may only be removed with
the vote or written consent of a majority of the Management Representatives
and such Management Representatives shall be entitled to remove the
Management Director at their sole discretion. Only the Management
Representatives shall have the right, by majority vote or written consent,
to designate the replacement for any Management Director upon his or her
removal, resignation, incapacity or death. Notwithstanding the foregoing,
effective on and after the Triggering Date (as defined in the Corporation's
Certificate of Incorporation), automatically, and without any action on the
part of the Corporation or any other person or entity, (i) the Management
Director shall immediately cease to be a member of the Board and (ii) the
Management Representatives shall have no further rights to appoint any
Management Directors.
(b) Series B Director or Directors. On the date hereof and for so long
as ARK and any Person to whom ARK shall sell, assign, transfer or otherwise
convey its Series B Common Stock (the "Series B Holders") shall own
securities of the Corporation possessing 5% or more of the voting power for
the election of directors of the Corporation or the right to receive on
liquidation of the Corporation at least 5% in value of the assets
distributed to holders of the Corporation's Common Stock, Series B Holders
holding a majority of the Series B Common Stock held by the Series B
Holders, shall be entitled to designate one member to the Board (such
member being the "Initial Series B Director"). In addition, effective on
and after the Triggering Date, automatically, and without any action on the
part of the Corporation, any holder of Series B Common Stock or any other
person or entity, Series B Holders holding a majority of the Series B
Common Stock held by the Series B Holders shall be entitled to designate
one member to the Board to fill the vacancy in the Board created by the
absence of the Management Director (the "Additional Series B Director" and,
together with the Initial Series B Director, the "Series B Directors"),
such that after a Triggering Event the Series B Holders shall be entitled
to appoint a total of 2 directors to the Board. Any Series B Director may
only be removed with the vote or written consent of Series B Holders
holding a majority of the Series B Common Stock held by the Series B
Holders and such Series B Holders shall be entitled to remove any Series B
Director at their sole discretion. Only Series B Holders holding a majority
of the Series B Common Stock held by the Series B Holders shall have the
right to designate the replacement for any Series B Director upon his or
her removal, resignation, incapacity or death.
(c) Mass Mutual Director. On the date hereof and for so long as
MassMutual and any Person to whom MassMutual shall sell, assign, transfer
or otherwise convey its Series A Common Stock (the "MassMutual Holders")
shall own securities of the Corporation possessing 5% or more of the voting
power for the election of directors of the Corporation or the right to
receive on liquidation of the Corporation at least 5% in value of the
assets distributed to holders of the Corporation's Common Stock, MassMutual
Holders holding a majority of the Series A Common Stock held by the
MassMutual Holders shall be entitled to designate one member to the Board
(the "MassMutual Director"). The MassMutual Director may only be removed
with the vote or written consent of MassMutual Holders holding a majority
of the Series A Common Stock held by the MassMutual Holders and such
MassMutual Holders shall be entitled to remove the MassMutual Director at
their sole discretion. Only MassMutual Holders holding a majority of the
Series A Common Stock held by the MassMutual Holders shall have the right
to designate the replacement for any MassMutual Director upon his or her
removal, resignation, incapacity or death.
1.3 Number of Directors. Each of the Stockholders agrees to cast all votes
to which such party is entitled in respect of such shares of capital stock,
whether at any annual or special meeting, by written consent or otherwise, to
ensure that: (a) until such time as all indebtedness of the Company to ARK
pursuant to the Credit Agreement shall have been paid in full, the number of
directors constituting the entire Board shall be three and (b) after payment in
full of all indebtedness of the Company to ARK pursuant to the Credit Agreement,
if ARK shall have exercised its Warrant, the number of directors constituting
the entire Board shall be not more than five.
1.4 Meetings of Directors. The Board shall hold meetings quarterly or as
otherwise determined by the Board.
1.5 Indemnification. The Corporation shall at all times maintain provisions
in the Certificate of Incorporation or By-laws exculpating and indemnifying all
of the members of the Board from and against liability to the maximum extent
permitted under the laws of the state of its incorporation.
1.6 Expenses. The Corporation shall reimburse each member of the Board and
each Management Representative for reasonable out-of-pocket travel and other
similar expenses incurred by each such member or Management Representative in
connection with such member's or Management Representative's participation in
meetings of the Board and of its committees in accordance with such reasonable
procedures as may be approved by the Board.
2. Certain Voting Rights. As long as the Series B Common Stock is
outstanding as a separate series, each of the Stockholders agrees not to permit
or cause the Corporation, without the affirmative vote of the holders of at
least 66-2/3% of the outstanding shares of Series B Common Stock (voting
together as a separate class), to take, or permit to occur, any of the following
actions:
(a) Amend, modify or waive any provision of Article IV or Article V of
the Corporation's Certificate of Incorporation so as to alter the rights,
preferences, privileges, restrictions or terms of the Series B Common
Stock;
(b) Increase the number of authorized shares of Series B Common Stock
or issue additional shares of Series B Common Stock;
(c) Change the authorized number of directors constituting the entire
Board or the board of directors of any of its subsidiaries; or
(d) Authorize, cause or permit the Corporation to engage in any
material transaction with an Affiliate of the Corporation.
3. Transfers of Securities. No Stockholder shall directly or indirectly
sell, assign or otherwise transfer (each, a "Transfer") any Securities unless
the transferee in such Transfer becomes a party to this Agreement by due
execution and delivery of a written instrument. No person or entity shall
foreclose or otherwise realize upon any pledge, encumbrance or lien in respect
of any Securities covered by this Agreement unless it or the transferee in
connection with such foreclosure or other realization becomes a party to this
Agreement by due execution and delivery of a written instrument. This Section 3
shall not apply to any Securities Transferred pursuant to an effective
registration statement filed with the Securities and Exchange Commission.
4. Notation On Share Certificates. There will be endorsed upon each
certificate for shares of the Corporation held by the Stockholders a statement
in substantially the following form:
"These shares are subject to the terms and conditions of the
Stockholders Agreement, dated August 6, 2002, a copy of which
Agreement will be furnished by the Corporation to the holder of this
certificate upon written request and without charge, and these shares
can only be transferred subject to, and in accordance with, the
provisions of such Agreement."
5. Successors and Assigns. Except as expressly permitted or required
elsewhere in this Agreement, this Agreement and the rights of a party hereunder
may not be assigned, and the obligations of a party hereunder may not be
delegated, in whole or in part, without the prior written consent of the other
parties hereto.
6. Termination. This Agreement shall terminate (a) upon the written
agreement of the Corporation, Series B Holders holding a majority of the Series
B Common Stock held by the Series B Holders, MassMutual Holders holding a
majority of the Series A Common Stock held by the MassMutual Holders and a
majority of the Management Representatives agreeing to such termination, (b)
upon the filing of proceedings by the Corporation intended to liquidate or
dissolve the Corporation under any federal or state law, (c) upon the date on
which the Corporation shall consummate an initial public offering of the
Corporation's Common Stock (i) resulting in aggregate net proceeds to the
Corporation of not less than $30,000,000, (ii) with a public offering price of
not less than $5.00 per share, and (iii) immediately after which, the shares of
the Corporation's Common Stock are listed on a national securities exchange or
quoted on the NASDAQ National Market System, (d) upon the date the Series B
Holders no longer have the right to designate a Series B Director, or (e) upon
the date on which (i) all indebtedness of the Company to ARK pursuant to the
Credit Agreement shall have been paid in full and (ii) the Warrant has
terminated without having been exercised by ARK.
7. Governing Law. This Agreement shall be subject to and governed by the
substantive laws of the State of Delaware. The parties hereto agree and consent
to the personal jurisdiction and service in venue in any federal or state court
within the State of Delaware having subject matter jurisdiction, for purposes of
any action, suit or proceeding arising out of or relating to this Agreement.
8. No Third Party Beneficiaries. Except as otherwise specifically provided
herein, nothing in this Agreement is intended to confer upon any person other
than the parties hereto any rights or remedies.
9. Severability. If any portion of this Agreement or the applications in
particular circumstances shall for any reason be held by a judicial decision to
be invalid and unenforceable, the valid and enforceable provisions in those and
other circumstances will continue to be given effect and bind the Stockholders.
10. Entire Agreement. This document contains the entire Agreement between
the parties hereto with respect to the subject matter herein and supercedes and
cancels all prior agreements among any or all of the parties. No variations,
modifications, or changes herein or hereof shall be binding upon any party
hereto unless set forth in a document duly executed by all of the parties
hereto.
11. Amendment and Waiver. This Agreement may not be amended or modified,
nor any of its terms waived, except by a written instrument duly executed by the
parties hereto. When used herein, the term "Agreement" will include any
amendments or modifications made in accordance herewith. A waiver by either
party of a breach of any provision of this Agreement by the other party, or any
right hereunder, will not be effective unless in writing and will not operate to
waive or excuse any subsequent breach or to waive any other right. Failure of a
party to insist upon strict compliance with any of the terms hereof will not be
deemed a waiver of such right at any subsequent time.
12. Notices. All notices, statements, instructions or other documents
required to be given hereunder, shall be in writing and shall be deemed to have
been sufficiently given if (i) delivered personally, (ii) mailed by registered
or certified first-class mail, postage prepaid with return receipt requested,
(iii) sent by a nationally recognized overnight courier service or (iv)
delivered by facsimile transmission which is confirmed in writing pursuant to
clauses (i), (ii) or (iii) above at the addresses specified below. Each
Stockholder, by written notice given to the Corporation in accordance with this
Section 11 may change the address to which notices, statements, instructions or
other documents are to be sent to such Stockholder, which information the
Corporation shall provide to any Stockholder upon request.
If to the Corporation:
Progressive Software Holding, Inc.
00 Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Chief Executive Officer
Phone: (000) 000-0000
Facsimile: (000) 000-0000
with a required copy to:
Xxxxxxxx, Xxxxx & Xxxxxx LLP
0000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Phone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Series B Holders:
ARK CLO 2000-1, Limited
c/o Patriarch Partners, LLC
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Ms. Xxxx Xxxxxx
Phone: 000-000-0000
Facsimile: 212-825
with a required copy to:
Xxxxxxxx Spears Kibe & Orbe
0 Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxx
Phone: 000-000-0000
Facsimile: 000-000-0000
If to the MassMutual Holders:
c/o Xxxxx X. Xxxxxx &Company
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Attention: [___________]
Phone: [___________]
Facsimile: [___________]
with a required copy to:
[-----------]
[-----------]
Attention: [___________]
Phone: [___________]
Facsimile: [___________]
If to the Management Parties:
Xxxxxxxxxxx Xxxxx
c/o Progressive Software, Inc.
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Phone: 000-000-0000
Facsimile: 000-000-0000
Xxxxxxx Xxxxx
c/o Progressive Software, Inc.
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Phone: 000-000-0000
Facsimile: 000-000-0000
13. Specific Enforcement. It is hereby agreed and acknowledged that it will
be impossible to measure in money the damages that would be suffered if the
parties fail to comply with any of the obligations herein imposed on them and
that in the event of any such failure, an aggrieved party will be irreparably
damaged and will not have an adequate remedy at law. Any such party shall,
therefore, be entitled to injunctive relief, including specific performance
(without the requirement of posting a bond or other security or any similar
requirement), to enforce such obligations in addition to any other remedy to
which it may be entitled at law or in equity, and if any action should be
brought in equity to enforce any of the provisions of this Agreement, none of
the parties hereto shall raise the defense that there is an adequate remedy at
law and each of the parties hereto further agrees to waive any requirement for
the securing or posting of any bond in connection with obtaining any such
injunctive or other equitable relief.
14. Headings. All headings are inserted herein for convenience only and do
not form a part of this Agreement.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
16. Agreement to Perform Necessary Acts. Each party to this Agreement
agrees to perform any further acts and to execute and deliver any further
documents that may be reasonably necessary to carry out the provisions of this
Agreement.
17. Definitions. Capitalized terms used but not otherwise defined herein
have the meanings given to them in the Corporation's Certificate of
Incorporation. In addition, the following terms have the meanings stated:
(a) "Affiliate" has the meaning set forth in the Credit Agreement.
(b) "Credit Agreement" means the Credit Agreement, dated as of the
date hereof, among the Corporation, Progressive Software, Inc., ARK and the
lenders party thereto
(c) "Person" means an individual, a corporation, a partnership, a
limited liability company, an association, a trust or any other entity or
organization.
(d) "Warrant" means ARK's Warrant to purchase shares of Series B
Common Stock, dated August 6, 2002, originally issued by the Company to
ARK.
[signatures appear on following pages]
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
duly executed on the date first written above.
PROGRESSIVE SOFTWARE HOLDING, INC.
By: /s/ Xxxxxxx X. Xxxxx
_______________________________
Name: Xxxxxxx X. Xxxxx
Title:Treasurer
Massachusetts Mutual Life Insurance Company
By: /s/ Xxxxxxx X. Xxxxxxxx
_______________________________
Name: Xxxxxxx X. Xxxxxxxx
Title:Managing Director
MassMutual Corporate Investors
By: /s/ Xxxxxxx X. Xxxxxxxx
_______________________________
Name: Xxxxxxx X. Xxxxxxxx
Title:Vice President
The foregoing is executed on behalf of MassMutual Corporate Investors, organized
under a Declaration of Trust, dated September 13, 1985, as amended from time to
time. The obligations of such trust are not personally binding upon, nor shall
resort be had to the property of, any of the Trustees, shareholders, officers,
employees or agents of such Trust, but the Trust's property only shall be bound.
Mass Mutual Participation Investors
By: /s/ Xxxxxxx X. Xxxxxxxx
_______________________________
Name: Xxxxxxx X. Xxxxxxxx
Title:Vice President
The foregoing is executed on behalf of MassMutual Participation Investors,
organized under a Declaration of Trust, dated April 7, 1988, as amended from
time to time. The obligations of such Trust are not binding upon, nor shall
resort be had to the property of, any of the Trustees, shareholders, officers,
employees or agents of such Trust individually, but the Trust's assets and
property only shall be bound.
MassMutual Corporate Value Partners Limited
By: /s/ Xxxxxxx X. Xxxxxxxx
_______________________________
Name: Xxxxxxx X. Xxxxxxxx
Title:Managing Director
ARK CLO 2000-1, Limited
By: /s/ Xxxx Xxxxxx
_______________________________
Name:Xxxx Xxxxxx
Title
MANAGEMENT PARTIES
/s/ Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx
/s/ Xxxxxxxxxxx Xxxxx
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Xxxxxxxxxxx Xxxxx
