EXHIBIT 4.4
WARRANT
THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF SERIES B COMMON
STOCK OR COMMON STOCK, AS THE CASE MAY BE, ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "1933 ACT"), OR UNDER ANY STATE SECURITIES LAWS AND THIS WARRANT
HAS BEEN ISSUED TO THE HOLDER IN RELIANCE UPON CERTAIN EXEMPTIONS FROM
REGISTRATION AND QUALIFICATION PROVIDED IN THE 1933 ACT AND THE RULES AND
REGULATIONS THERETO AND THE APPLICABLE STATE SECURITIES LAWS. ACCORDINGLY,
NEITHER THIS WARRANT NOR ANY SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED,
ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (A) A REGISTRATION STATEMENT WITH
RESPECT THERETO IS EFFECTIVE UNDER THE 1933 ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR (B) AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS IS
AVAILABLE.
Warrant No.: 1 August 6, 2002
WARRANT TO PURCHASE
SHARES OF SERIES B COMMON STOCK
OF
PROGRESSIVE SOFTWARE HOLDING, INC.
THIS CERTIFIES THAT, for value received, ARK CLO 2000-1, LIMITED or its
assignees and transferees (the "Holder"), is entitled, in accordance with the
terms and conditions hereinafter set forth, to subscribe for and purchase from
PROGRESSIVE SOFTWARE HOLDING, INC., a Delaware corporation (the "Company"), at
any time during the Exercise Period (as defined below), 418,836 shares of Series
B Common Stock (as defined below) or if the Series B Common Stock shall no
longer exist as provided in Article IV of the Certificate of Incorporation (as
defined below), shares of Common Stock (as defined below) (such number of shares
of Series B Common Stock, or Common Stock, as the case may be, being the
"Warrant Securities"), for a purchase price of $.01 per share for the Warrant
Securities (such price being the "Exercise Price"), and to receive a certificate
or certificates for the Warrant Securities so purchased, upon presentation and
surrender of this Warrant at the location set forth in Section 3(b) below,
together with the Exercise Price.
Section 1. Definitions. Capitalized terms used but not otherwise defined
herein have the meanings given them in the Certificate of Incorporation of the
Company, as in effect on the date hereof (the "Certificate of Incorporation").
In all other cases, the following capitalized terms have the following meanings:
"Affiliate" of a Person means any other Person that directly or indirectly
controls, is controlled by or is under common control with, the Person.
"Common Stock" means the Series A Common Stock and the Series B Common
Stock of the Company.
"Convertible Securities" means any stock or securities convertible into or
exchangeable for shares of Common Stock.
"Credit Agreement" means the Credit Agreement, dated as of the Effective
Date, among the Company, ARK CLO 2000-1, Limited and the other lenders parties
thereto.
"Expiration Date" means (i) the date which is six months after the Trigger
Date or (ii) if no Revolving Loan is made pursuant to the Credit Agreement prior
to the Revolving Credit Commitment Termination Date (as defined in the Credit
Agreement), then the Revolving Credit Commitment Termination Date.
"Fair Market Value" means (a) if the Warrant Securities are then traded on
a national securities exchange or on the over-the-counter market, the average of
the daily Market Prices for the 10 consecutive Trading Days immediately prior to
the date in question, and (b) if the Warrant Securities are not so traded, the
price per Warrant Security as agreed between the Holder and the Company.
"Market Price" per share of Series B Common Stock means on any day, the
last sales price, regular way, per share of such security on such day, or if no
such sale takes place on such day, the average of the closing bid and asked
prices, regular way, as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading on the
principal national securities exchange on which the shares of such stock are
listed or admitted to trading, or, if the shares of such stock are not listed or
admitted to trading on any national securities exchange, the average of the high
bid and low asked prices in the over-the-counter market as reported by the
National Association of Securities Dealers Inc.'s Automated Quotation System.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of August 6, 2002, by and among the Company, ARK CLO 2000-1, Limited
and the other stockholders parties thereto.
"Revolving Loan" has the meaning stated in the Credit Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Common Stock" means the Series A Common stock, par value $0.01
per share, of the Company as described in the Certificate of Incorporation.
"Series B Common Stock" means the Series B Common Stock, par value $0.01
per share, of the Company as described in the Certificate of Incorporation.
"Stockholders Agreement" means the Stockholders Agreement, dated as of
August 6, 2002, by and among the Company, Massachusetts Mutual Life Insurance
Company, MassMutual Corporate Investors, MassMutual Participant Investors,
MassMutual Corporate Value Partners, ARK CLO 2000-1, Limited, Thomas Schwarz,
William Beebe and Christopher Sebes.
"Trading Day" means a day on which the principal national securities
exchange on which the Warrant Securities are listed or admitted to trading is
open for the transaction of business or, if the Warrant Securities are not
listed or admitted to trading on any national securities exchange, a Monday,
Tuesday, Wednesday, Thursday or Friday on which banking institutions in the
Borough of Manhattan, City and State of New York, are not authorized or
obligated by law or executive order to close.
"Trigger Date" means the date on which the first Revolving Loan is made
pursuant to the Credit Agreement.
Section 2. Exercise Period. The exercise period of the Warrant (the
"Exercise Period") shall begin on the Trigger Date and expire at 5:00 p.m. New
York City time on the Expiration Date. The Warrant shall not be exercisable
before the beginning of the Exercise Period or after the expiration of the
Exercise Period. Upon the expiration of the Exercise Period, all rights of the
Holder hereunder shall cease and this Warrant shall be of no further force or
effect.
Section 3. Exercise of the Warrant.
(a) General. The Warrant shall be exercisable, in whole, at any time during
the Exercise Period.
(b) Mechanics. Subject to compliance with all applicable securities laws,
in order to exercise the Warrant, the Holder must:
(i) Original Warrant Agreement. Deliver the original Warrant to the
Company at the address for the Company set forth on the signature page
hereto, or such other address as the Company may provide to the Holder in
writing;
(ii) Subscription Notice. Deliver to the Company an executed notice of
exercise in substantially the form of Exhibit A to this Warrant (the
"Subscription Notice"), duly completed and executed by the Holder;
(iii) Payment of Exercise Price. Pay an amount equal to the Exercise
Price of the Warrant in one or more of the following forms:
(A) by cash or bank check made payable to the Company, in an
amount equal to the Exercise Price, which payment must accompany the
Subscription Notice delivered to the Company in connection with the
exercise of the Warrant; or
(B) by surrendering the right to receive upon exercise of this
Warrant a number of Warrant Securities having a value (as determined
below) equal to the Exercise Price, in which case, the number of
Warrant Securities to be issued to the Holder upon such exercise shall
be calculated using the following formula:
Y * (A - B)
-----------
X = A
with X = the number of Warrant Securities to be issued to the Holder
Y = the number of Warrant Securities with respect to which the
Warrant is being exercised
A = the Fair Market Value of one Warrant Security on the date
of exercise of this Warrant
B = the Exercise Price of the Warrant.
(c) Date of Exercise. This Warrant shall be deemed to have been exercised
immediately prior to the close of business on the date of its surrender for
exercise as provided in Section 3(b) above, and the Person entitled to receive
the Warrant Securities issuable upon such exercise shall be treated for all
purposes as the holder of record of such Warrant Securities as of the close of
business on such date (such date being, the "Exercise Date").
(d) Issuance of Warrant Securities; No Fractional Securities. As soon as
practicable after the Company's receipt (but in any event no later than 2
business days after such receipt) of the Warrant surrendered in connection with
an exercise provided for in Section 3(b) above, the Company shall issue and
deliver to the Person entitled to receive the Warrant Securities issuable upon
such exercise of the Warrant, a certificate or certificates for the number of
whole Warrant Securities issuable upon such exercise. No fractional Warrant
Securities shall be issued upon the exercise of this Warrant, and any fractions
shall be rounded down to the nearest whole number of Warrant Securities.
(e) Taxes. The issuance of Warrant Securities upon the exercise of this
Warrant will be made without charge by the Company to the Holder for any issue
tax (other than applicable income tax).
Section 5. Representations and Warranties of the Company. The Company
hereby represents and warrants to the Holder as of the date of this Warrant and
as of the date of exercise of this Warrant that upon the exercise of this
Warrant the Warrant Securities will be duly authorized, validly issued, fully
paid and nonassessable.
Section 6. Investment Representations.
6.1 Representations by Holder. The Holder hereof represents and warrants to
the Company with respect to its acquisition and exercise of this Warrant that it
is experienced in evaluating and investing in technology companies such as the
Company; that it is acquiring the Warrant Securities for investment for his or
its own account and not with a view to, or for resale in connection with, any
distribution thereof; and that it has no present intention of selling or
distributing the Warrant or any of the Warrant Securities issuable upon exercise
of this Warrant, except in accordance with securities laws. The Holder
understands that this Warrant (and the Warrant Securities issuable upon exercise
of this Warrant) to be purchased by it have not been registered under the
Securities Act by reason of a specific exemption from the registration
provisions of the Securities Act which, in the case of the Warrant Securities,
depends upon, among other things, the bona fide nature of the investment intent
as expressed herein. The Holder has had an opportunity to discuss the Company's
business, management and financial affairs with the Company's management and to
obtain any additional information necessary to verify the accuracy of the
information given to him or it. The Holder represents that it is an "accredited
investor" as defined in Rule 501(a) of Regulation D promulgated under the
Securities Act and that the Holder is able to bear the economic risk of his or
its investment in the Company contemplated hereby.
6.2 Sale or Transfer of the Warrant. On the basis of the foregoing
representations set forth in Subsection 6.1 above, this Warrant has not been
registered under the Securities Act, and neither this Warrant nor the Warrant
Securities issuable hereunder shall be sold, pledged, transferred or otherwise
disposed of unless (a) they first shall have been registered under the
Securities Act, (b) the Company first shall have been furnished with an opinion
of legal counsel reasonably satisfactory to the Company or, at its option, legal
counsel of the Company stating that such sale or transfer is an exempted
transaction under the Securities Act and, unless such opinion states that such
Warrant or such Warrant Securities may be transferred by the transferee
immediately after acquisition without registration under the Securities Act, a
written agreement by the transferee thereof not to sell or transfer such Warrant
or such Warrant Securities without complying with the requirements provided for
in this subsection 6.2, or (c) or the Warrant Securities issuable hereunder are
transferred to an Affiliate of the Holder in compliance with the Securities Act
and such Affiliate shall make the same representations and warranties to the
Company as are set forth in this Section 6.
6.3 Restrictive Legend. Shares of Warrant Securities issued upon exercise
of this Warrant shall be stamped or otherwise imprinted with a legend
substantially in the following form (in addition to, or in combination with, any
other legend required under applicable state securities law and agreements or
by-law provisions relating to the transfer of the Company's securities):
NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION
OF THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT IN
COMPLIANCE WITH ALL APPLICABLE PROVISIONS OF STATE SECURITIES LAWS AND (A)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND THE RULES AND REGULATIONS IN EFFECT THEREUNDER (THE
"ACT") OR (B) IF THE COMPANY HAS BEEN FURNISHED WITH A SATISFACTORY OPINION
OF COUNSEL FOR THE HOLDER ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER,
SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM
THE PROVISIONS OF SECTION 5 OF THE ACT.
Section 7. Covenants of the Company.
(a) Reservation of Warrant Securities. The Company shall reserve and keep
available out of its authorized but unissued shares of Series B Common Stock or
Common Stock, as the case may be, for issuance upon the exercise of this
Warrant, free from preemptive rights, such number of shares of Series B Common
Stock, or Common Stock, as the case may be, for which this Warrant shall from
time to time be exercisable.
(b) No Impairment. The Company will not, by amendment of its charter
documents, or through reorganization, consolidation, merger, dissolution, issue
or sale of securities, sale or transfer of assets or any other voluntary or
involuntary action, avoid or seek to avoid the observance or performance of any
of the terms of this Warrant to be observed or performed by the Company, and
will at all times in good faith assist in the carrying out of all of the terms
and provisions of this Warrant and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the Holder under this
Warrant.
(c) Listing Requirements. If and so long as any Series B Common Stock
issuable upon the exercise of this Warrant is listed on any national securities
exchange, the Company will, if permitted by the rules of such exchange, list and
keep listed on such exchange, upon official notice of issuance, all shares of
Series B Common Stock issuable upon exercise of this Warrant.
Section 8. Replacement Warrant. In case this Warrant is mutilated, lost,
stolen or destroyed, the Company shall issue and deliver in exchange and
substitution for and upon cancellation of the mutilated Warrant, or in lieu of
and in substitution for the Warrant lost, stolen or destroyed, a new Warrant of
like tenor and representing an equivalent right or interest, but only upon
receipt of evidence reasonably satisfactory to the Company of such loss, theft
or destruction of such Warrant and upon receipt of indemnity reasonably
satisfactory to the Company.
Section 9. Stockholders Agreement. Each Warrant Security acquired by the
Holder pursuant to the exercise of this Warrant will be subject to the terms and
provisions of the Stockholders Agreement.
Section 10. Transferability.
(a) Restrictions on Transferability. The Holder may sell, assign, transfer,
convey or otherwise dispose (a "Transfer") of this Warrant and any of the
Warrant Securities (or portion thereof) or any interest therein (the
"Transferred Interest") without the consent of the Company.
(b) Conditions to Transfers. No Transferred Interest may be Transferred
unless such Transfer satisfies all of the following conditions (unless such
conditions shall be waived by the Company in its reasonable good faith
discretion):
(i) the Holder shall have delivered to the Company this Warrant and a
properly completed and executed assignment substantially in the form of
Exhibit B attached hereto; and
(ii) such Transfer shall be in compliance with all of the requirements
of the Securities Act and all other applicable securities laws, the Holder
recognizing that neither the Warrant nor the Warrant Securities have been
registered under Federal or state securities laws.
(c) Transferees Bound; Other Transfers Void. The Transferee shall be bound
to the same extent as the Holder in making a Transfer of the Transferred
Interest. Any Transfer or attempted Transfer of a Transferred Interest made in
violation of the provisions of this Section 9 shall be null and void ab initio
and of no force or effect.
Section 11. Registration Rights. All Warrant Securities will be
"Registrable Securities" under the Registration Rights Agreement.
Section 12. Miscellaneous.
(a) Notices. All notices, requests, demands and other communications to any
party or given under this Warrant will be in writing and delivered personally,
by overnight delivery or courier, by registered mail or by telecopier (with
confirmation received) to the parties at the address or telecopy number
specified for such parties on the signature pages hereto (or at such other
address or telecopy number as may be specified by a party in writing given at
least five business days prior thereto). All notices, requests, demands and
other communications will be deemed delivered when actually received.
(b) Counterparts. This Warrant may be executed simultaneously in one or
more counterparts, and by different parties hereto in separate counterparts,
each of which when executed will be deemed an original, but all of which taken
together will constitute one and the same instrument.
(c) Amendment of Warrant. This Warrant may not be amended, modified or
waived except by an instrument in writing signed on behalf of each of the
parties hereto.
(d) Successors and Assigns; Assignability. This Warrant will be binding
upon and inures to the benefit of and is enforceable by the respective
successors and permitted assigns of the parties hereto.
(e) Governing Law. This Warrant will be governed by, and construed in
accordance with, the laws of the state of Delaware applicable to contracts
executed in and to be performed entirely within that state, without reference to
conflicts of laws provisions.
(f) Severability. If any term or other provision of this Warrant is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Warrant will nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto will negotiate in
good faith to modify this Warrant so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
(g) Interpretation. As used in this Warrant, references to the singular
will include the plural and vice versa and references to the masculine gender
will include the feminine and neuter genders and vice versa, as appropriate.
Unless otherwise expressly provided in this Warrant (i) the words "hereof",
"herein" and "hereunder" and words of similar import when used in this Warrant
will refer to this Warrant as a whole and not to any particular provision of
this Warrant and (ii) article, section, subsection, schedule and exhibit
references are references with respect to this Warrant unless otherwise
specified. Unless the context otherwise requires, the term "including" will mean
"including, without limitation." The headings in this Warrant and in the
Schedules are included for convenience of reference only and will not affect in
any way the meaning or interpretation of this Warrant.
(h) Ambiguities. This Warrant was negotiated between legal counsel for the
parties and any ambiguity in this Warrant shall not be construed against the
party who drafted this Warrant.
(i) Submission to Jurisdiction. Each of the Company and the Holder hereby
(i) agrees that any lawsuit, proceeding or other legal action with respect to
this Warrant may be brought in the courts of the State of New York or of the
United States of America for the Southern District of New York, (ii) accepts for
itself and in respect of its property, generally and unconditionally, the
nonexclusive jurisdiction of such courts, (iii) irrevocably waives any
objection, including, without limitation, any objection to the laying of venue
or based on the grounds of forum non conveniens, which it may now or hereafter
have to the bringing of any lawsuit, proceeding or other legal action in those
jurisdictions, and (d) irrevocably consents to the service of process of any of
the courts referred to above in any lawsuit, proceeding or legal action by the
mailing of copies of the process to the parties hereto as provided in Section
10(a). Service effected as provided in this manner will become effective ten
calendar days after the mailing of the process.
(j) Waiver of Jury Trial. Each of the Company and the Holder hereby waives
any right to a trial by jury in any lawsuit, proceedings or legal action to
enforce or defend any right under this Warrant or any amendment, instrument,
document or agreement delivered or to be delivered in connection with this
Agreement and agrees that any such lawsuit, proceeding or legal action will be
tried before a court and not before a jury.
In witness whereof, the Company and the Holder have caused this Warrant to
be executed as of the date first written above.
Address for Notices: PROGRESSIVE SOFTWARE HOLDING, INC.
Progressive Software Holdings, Inc.
6836 Morrison Blvd.
Charlotte, NC 28211
Attention: Chief Executive Officer
Facsimile No.: 704-295-7001 By: /s/ William A. Beebe
________________________________
Name:William A. Beebe
Title:Treasurer
With a copy to:
Hinckley, Allen & Snyder LLP
1500 Fleet Center
Providence, RI 02903
Attention: Stephen J. Carlotti
Facsimile No.: 401-277-9600
Address for Notices: ARK CLO 2000-1, LIMITED
c/o Patriarch Partners, LLC
40 Well Street
New York, NY 10005
Attention: Ms. Lynn Tilton
Phone No.: 212-825-0550
Facsimile No.: 212-825-2038 By: /s/ Lynn Tilton
________________________________
Name: Lynn Tilton
Title:
With a copy to:
Richard Spears Kiffe &Orbe
1 Chase Manhattan Plaza
New York, NY 20005
Phone No.212-530-1846
Facsimile No.: 212530-1801
Attention: Michael Friedman
EXHIBIT A
to
WARRANT AGREEMENT
Subscription Form
-----------------
To: Progressive Software Holding, Inc.
[Address]
(a) The undersigned hereby elects to purchase 418,836 shares of [Series B]
Common Stock of Progressive Software Holding, Inc. pursuant to the terms of the
attached Warrant, and tenders payment of the purchase price for such [Series B]
Common Stock in full.
(b) In exercising this Warrant, the undersigned hereby confirms and
acknowledges that all of the representations and warranties of the undersigned
set forth in Section 5 of the Warrant are true and correct as of this date.
(c) [If applicable] Please issue a certificate or certificates representing
said [Series B] Common Stock in the name or names specified below:
[insert name, address and number of shares to be issued]
Dated: ____________________ HOLDER:
[HOLDER]
By:________________________________
Name:
Title:
EXHIBIT B
to
WARRANT AGREEMENT
Form of Assignment
------------------
To: Progressive Software Holding, Inc.
[Address]
FOR VALUE RECEIVED, the undersigned Holder of the attached Warrant hereby
sells, assigns and transfers unto each of the Assignee(s) named below all of the
rights of the undersigned under such Warrant, with respect to the number of
Warrant Securities set forth below:
Number of
Warrant
Name of Assignee Address Securities Assigned
- ---------------- ------- ---------------------
- ---------------------- ------------------- ----------------
and does hereby irrevocably constitute and appoint the Secretary of Progressive
Software Holding, Inc. (the "Company") as attorney to make such transfer on the
books of the Company maintained for such purpose, with full power of
substitution.
Dated: ___________________ [HOLDER]:
By:________________________________
Name:
Title:
