Exhibit 10.32
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON ITS EXERCISE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR THE SECURITIES LAWS OF ANY STATE. THIS WARRANT AND SUCH SHARES MAY
NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF REGISTRATION UNDER SAID ACT AND ALL OTHER APPLICABLE SECURITIES
LAWS OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
No. CS-__ Warrant to Purchase up to ________ Shares
of Common Stock
(subject to adjustment)
Date: ___________, 1999
WARRANT TO PURCHASE COMMON STOCK
OF
BLUESTONE SOFTWARE, INC.
(Void after __________, 2009)
This certifies that, for value received ______________________________,
or registered assigns ("Holder") is entitled, subject to the terms and
conditions set forth below, to purchase from Bluestone Software, Inc., a
Delaware corporation (the "Company"), _________ shares of common stock, (or
such other number of shares of Common Stock as may be determined in
accordance with Section 2 hereof), $.001 par value, of the Company (the
"Common Stock") upon surrender hereof, at the principal office of the Company
referred to below, with the notice of exercise form attached hereto duly
executed, and simultaneous payment therefor in lawful money of the United
States or otherwise as hereinafter provided, at the Exercise Price as set
forth in Section 2 below. The number, character and Exercise Price of such
shares of Common Stock are subject to adjustment as provided below.
This Warrant is issued pursuant to the Note and Warrant Purchase
Agreement (as amended, modified or otherwise supplemented from time to time, the
"Purchase Agreement") dated as of January 21, 1999 by and between, among others,
the Company and the investors named therein. The Holder of this Warrant is
subject to certain restrictions set forth in the Purchase Agreement and shall be
entitled to certain rights and privileges set forth in the Purchase Agreement.
This Warrant is one of the Warrants referred to as the "Warrants" in the
Purchase Agreement.
1. TERM OF WARRANT. Subject to the terms and conditions set forth
herein, this Warrant shall be exercisable, in whole or in part, at any time,
or from time to time during the term ("Term") commencing at 9:00 a.m.,
Philadelphia, Pennsylvania time, on the date hereof and ending at 5:00 p.m.,
Philadelphia, Pennsylvania time, on _________, 2009, and shall be void
thereafter.
2. EXERCISE PRICE AND NUMBER OF SHARES. The Exercise Price (per share
of Common Stock) at which this Warrant may be exercised shall be $.62. The
Exercise Price and the number of shares are subject to adjustment from time to
time pursuant to Section 11 hereof.
3. EXERCISE OF WARRANT.
(a) MANNER OF EXERCISE. The purchase rights represented by this
Warrant are exercisable by the Holder in whole or in part, at any time, or
from time to time, during the term hereof as described in Section 1 above, by
the surrender of this Warrant and the Notice of Exercise annexed hereto duly
completed and executed on behalf of the Holder, at the office of the Company
(or such other office or agency of the Company as it may designate by notice
in writing to the Holder at the address of the Holder appearing on the books
of the Company), upon payment (i) in cash or by check acceptable to the
Company, (ii) by cancellation by the Holder of indebtedness of the Company to
the Holder, or (iii) by a combination of (i) and (ii), of the purchase price
of the shares to be purchased.
(b) TIME 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 above, and the person entitled to receive
the shares of Common Stock issuable upon such exercise shall be treated for
all purposes as the holder of record of such shares as of the close of
business on such date. As promptly as practicable on or after such date and
in any event within 10 days thereafter, the Company at its expense, will
issue and deliver to the person or persons entitled to receive the same a
certificate or certificates for the number of shares issuable upon such
exercise. In the event that this Warrant is exercised in part, the Company at
its expense, shall execute and deliver a new Warrant of like tenor
exercisable for the number of shares for which this Warrant may then be
exercised.
(c) NET ISSUE EXERCISE. Notwithstanding any provisions herein to
the contrary, if the fair market value of one share of Common Stock is
greater than the Exercise Price (at the date of calculation as set forth
below), in lieu of exercising this Warrant for cash, the holder may elect to
receive shares equal to the value (as determined below) of this Warrant (or
the portion thereof being canceled) by surrender of this Warrant at the
principal office of the Company together with the properly endorsed Notice of
Exercise and notice of such election in which event the Company shall issue
to the Holder a number of shares of Common Stock computed using the following
formula:
-2-
Y (A-B)
X = ---------
A
X = the number of shares of Common Stock to be
issued to the Holder
Y = the number of shares of Common
Stock purchasable under the Warrant
or, if only a portion of the Warrant
is being exercised, the portion of
the Warrant being canceled (at the
date of such calculation)
A = the fair market value of one share
of the Company's Common Stock (at
the date of such calculation)
B = Exercise Price (as adjusted to the date
of such calculation)
For purposes of the above calculation, fair market value of one share
of Common Stock shall be determined as set forth in Section 11 hereof.
Notwithstanding the foregoing, in the event the Warrant is exercised in
connection with the Company's initial public offering of Common Stock, the fair
market value per share shall be the per share offering price to the public of
the Company's initial public offering.
4. NO FRACTIONAL SHARES OR SCRIP. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional share to which the Holder would otherwise be
entitled, the Company shall make a cash payment equal to the Exercise Price
multiplied by such fraction.
5. REPLACEMENT OF WARRANT. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of loss, theft or destruction, on delivery of
an indemnity agreement reasonably satisfactory in form and substance to the
Company or, in the case of mutilation, on surrender and cancellation of this
Warrant, the Company at its expense shall execute and deliver, in lieu of
this Warrant, a new warrant of like tenor and amount. Any such new Warrant
shall constitute an original contractual obligation of the Company, whether
or not the allegedly lost, stolen, mutilated or destroyed Warrant shall at
any time be enforceable by anyone.
6. RIGHTS OF SHAREHOLDERS. Subject to Sections 9 and 11 of this Warrant,
the Holder shall not be entitled to vote or receive dividends or be deemed
the holder of Common Stock or any other securities of the Company that may at
any time be issuable on the exercise hereof for any purpose, nor shall
anything contained herein be construed to confer upon the Holder, as such,
any of the rights of a shareholder of the Company or any right to vote for
the election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action
(whether upon any recapitalization, issuance of stock, reclassification of
stock, change of par value, or change of stock to no par value,
consolidation,
-3-
merger, conveyance, or otherwise) or to receive notice of meetings, or to
receive dividends or subscription rights or otherwise until the Warrant shall
have been exercised as provided herein.
7. TRANSFER OF WARRANT.
(a) WARRANT REGISTER. The Company will maintain a register (the
"Warrant Register") containing the names and addresses of the Holder or
Holders. Any Holder of this Warrant or any portion thereof may change his
address as shown on the Warrant Register by written notice to the Company
requesting such change. Any notice or written communication required or
permitted to be given to the Holder may be delivered or given by mail to such
Holder as shown on the Warrant Register and at the address shown on the
Warrant Register. Until this Warrant is transferred on the Warrant Register
of the Company, the Company may treat the Holder as shown on the Warrant
Register as the absolute owner of this Warrant for all purposes,
notwithstanding any notice to the contrary.
(b) WARRANT AGENT. The Company may, by written notice to the Holder,
appoint an agent for the purpose of maintaining the Warrant Register referred
to in Section 7(a) above, issuing the Common Stock or other securities then
issuable upon the exercise of this Warrant, exchanging this Warrant,
replacing this Warrant, or any or all of the foregoing. Thereafter, any such
registration, issuance, exchange, or replacement, as the case may be, shall
be made at the office of such agent.
(c) TRANSFERABILITY AND NONNEGOTIABILITY OF WARRANT. This Warrant may
not be transferred or assigned in whole or in part without compliance with
all applicable federal and state securities laws by the transferor and the
transferee (including the delivery of investment representation letters and
legal opinions reasonably satisfactory to the Company, if such are requested
by the Company). Subject to the provisions of this Warrant with respect to
compliance with the Securities Act of 1933, as amended (the "Act") and
subject to Section 3 of the Purchase Agreement, title to this Warrant may be
transferred by endorsement (by the Holder executing the Assignment Form
annexed hereto) and delivery in the same manner as a negotiable instrument
transferable by endorsement and delivery.
(d) EXCHANGE OF WARRANT UPON A TRANSFER. On surrender of this Warrant
for exchange, properly endorsed on the Assignment Form and subject to the
provisions of this Warrant with respect to compliance with the Act and with
the limitations on assignments and transfers contained in this Section 7 and
Section 3 of the Purchase Agreement, the Company at its expense shall issue
to or on the order of the Holder a new warrant or warrants of like tenor, in
the name of the Holder or as the Holder (on payment by the Holder of any
applicable transfer taxes) may direct, for the number of shares issuable upon
exercise hereof.
(e) RESTRICTIONS ON TRANSFER. The Holder of this Warrant by
acceptance hereof agrees that the transfer of this Warrant and the shares of
Common Stock issuable upon the exercise of all or any portion of this Warrant
(the "Securities") are subject to the provisions of Section 3 of the Purchase
Agreement, which include restrictions on transfer of the Securities; and this
Warrant and the Securities shall be entitled to all rights and benefits
accorded thereto in the
-4-
Purchase Agreement, and the applicable provisions of the Purchase Agreement
are hereby incorporated herein by reference.
8. RESERVATION OF STOCK. The Company covenants that during the term this
Warrant is exercisable, the Company will reserve from its authorized and
unissued Common Stock a sufficient number of shares to provide for the
issuance of Common Stock upon the exercise of this Warrant and, from time to
time, will take all steps necessary to amend its Restated Certificate to
provide sufficient reserves of shares of Common Stock issuable upon exercise
of the Warrant. The Company further covenants that all shares that may be
issued upon exercise of the rights represented by this Warrant and payment of
the Exercise Price, all as set forth herein, will be free from all taxes,
liens and charges in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously or otherwise specified
herein). The Company agrees that its issuance of this Warrant shall
constitute full authority to its officers who are charged with the duty of
executing stock certificates to execute and issue the necessary certificates
for shares of Common Stock upon the exercise of this Warrant.
9. NOTICES OF CERTAIN EVENTS.
(a) In case:
(i) the Company shall take a record of the holders of its
Common Stock (or other stock or securities at the time receivable upon the
exercise of this Warrant) for the purpose of entitling them to receive any
dividend or other distribution, or any right to subscribe for or purchase any
shares of stock of any class or any other securities, or to receive any other
right, or
(ii) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another corporation, or any conveyance of
all or substantially all of the assets of the Company to another corporation,
or
(iii) of any voluntary dissolution, liquidation or winding-up of
the Company, then, and in each such case, the Company will mail or cause to
be mailed to the Holder or Holders a notice specifying, as the case may be,
(A) the date on which a record is to be taken for the purpose of such
dividend, distribution or right, and stating the amount and character of such
dividend, distribution or right, or (B) the date on which such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation
or winding-up is to take place, and the time, if any is to be fixed, as of
which the holders of record of Common Stock (or such stock or securities at
the time receivable upon the exercise of this Warrant) shall be entitled to
exchange their shares of Common Stock (or such other stock or securities) for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation
or winding-up. Such notice shall be mailed at least 15 days prior to the date
therein specified.
-5-
(b) All such notices, advices and communications shall be deemed to
have been received (i) when delivered personally, (ii) three business days
after being mailed by first class mail, postage prepaid, or (iii) one
business day after being sent by a reputable overnight delivery service,
postage or deliver charges prepaid. Notices, advices and communications may
also be given by prepaid telegram or facsimile and shall be effective on the
date transmitted if confirmed within 24 hours thereafter by a signed original
sent in the manner provided in the preceding sentence.
10. AMENDMENTS AND WAIVERS.
(a) MANNER OF AMENDMENT. Any term of this Warrant may be amended or
waived upon the written consent of the Company and the Holder and further
provided that the number of shares of Common Stock subject to the Warrant and
the Exercise Price may not be amended, and the right to exercise this Warrant
may not be waived, without the written consent of the Holder of this Warrant
(it being agreed that an amendment to or waiver under any of the provisions
of Section 11 of this Warrant shall not be considered an amendment of the
number of shares subject to the Warrant or the Exercise Price).
(b) NO CONTINUING WAIVER. No waivers of, or exceptions to, any term,
condition or provision of this Warrant, in any one or more instances, shall
be deemed to be, or construed as, further or continuing waiver of any such
term, condition or provision.
11. ADJUSTMENTS. The Exercise Price and the number of shares purchasable
hereunder are subject to adjustment from time to time as follows:
(a) ISSUANCE OF ADDITIONAL STOCK.
(i) In the event the Company shall issue Additional Stock (as
such term is defined below) for a consideration per share less than the Fair
Market Value (as such term is defined below) but greater than or equal to the
prevailing Exercise Price, then the Exercise Price in effect immediately
prior to each such issuance shall forthwith be adjusted by multiplying such
Exercise Price by the quotient obtained by dividing (a) an amount equal to
the sum of (1) the total number of shares of Common Stock outstanding on a
fully diluted basis immediately prior to such issuance (including shares
deemed to be outstanding as provided in Section 11(a)(vi)), plus (2) the
number of shares of Common Stock which the aggregate consideration received
by the Company for such securities so issued would purchase at Fair Market
Value, by (b) an amount equal to the sum of (1) the total number of shares of
Common Stock outstanding on a fully diluted basis immediately prior to such
issuance (including shares deemed to be outstanding as provided in Section
11(a)(vii)), plus (2) the number of shares of Common Stock to be issued by
the Company for a consideration per share less than the Fair Market Value.
For purposes of this Section 11, "Fair Market Value" per share
of Common Stock shall be determined as follows:
-6-
(A) If the security is not registered under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), the value
of the security shall be determined in good faith by the Board of Directors
of the Company and certified in a board resolution, taking into
consideration, INTER ALIA, (i) the most recently completed (but not longer
than six months preceding such date) arm's length transaction between the
Company and a person other than an affiliate of the Company (ii) if no such
transaction shall have occurred on such date or within such six-month period,
the value of the security most recently determined as of a date within the
six months preceding such date by an Independent Financial Expert or (iii) if
neither clause (i) nor (ii) is applicable, the value of the security as
mutually agreed by the Company and the Holder; provided, however, that if the
Company and such Holder are unable to mutually agree upon such value, the
Company shall select an Independent Financial Expert approved by such Holder
(whose consent shall not be unreasonably withheld or delayed) who shall
determine the value of such security.
(B) If the security is registered under the Exchange Act,
the average of the daily market prices for each business day during the
period commencing 30 business days before such date and ending on the date
one day prior to such date or, if the security has been registered under the
Exchange Act for less than 30 consecutive business days before such date,
then the average of the daily market prices (as hereinafter defined) for all
of the business days before such date for which daily market prices are
available. If the market price is not determinable for at least 15 business
days in such period, the Fair Market Value of the security shall be
determined as if the security was not registered under the Exchange Act.
(C) The "MARKET PRICE" for any security on each business
day means: (A) if such Security is listed or admitted to trading on any
securities exchange, the closing price, regular way, on such day on the
principal exchange on which such security is traded, or if no sale takes
place on such day, the average of the closing bid and asked prices on such
day or (B) if such security is not then listed or admitted to trading on any
securities exchange, the last reported sale price on such day, or if there is
no such last reported sale price on such day, the average of the closing bid
and the asked prices on such day, as reported by a reputable quotation source
designated by the Company. If there are no such prices on a business day,
then the market price shall not be determinable for such business day.
(D) "INDEPENDENT FINANCIAL EXPERT" shall mean a
nationally recognized Investment banking firm selected by the Company (i)
that does not (and whose directors, officers, employees and affiliates do
not) have a direct or indirect financial interest in the Company, (ii) that
has not been, and, at the time it is called upon to serve as an Independent
Financial Expert is not (and none of whose directors, officers, employees or
affiliates is) a promoter, director or officer of the Company, (iii) that has
not been retained by the Company for any purpose, other than to perform an
equity valuation, within the preceding twelve months, and (iv) that, in the
reasonable judgment of the Board of Directors of the Company, is otherwise
qualified to serve as an independent financial advisor. Any such person may
receive customary compensation from and indemnification by the Company for
opinions or services it provides as an Independent Financial Expert.
-7-
(ii) If the Company shall issue any Additional Stock without
consideration or for a consideration per share less than the Exercise Price
in effect immediately prior to the issuance of such Additional Stock, the
Exercise Price in effect immediately prior to each such issuance shall
forthwith be adjusted to a price per share equal to the product obtained by
multiplying the Exercise Price in effect immediately prior to the issuance of
such Additional Stock by a fraction, (i) the numerator of which is equal to
the sum of (x) the number of shares of Common Stock deemed outstanding on a
fully as-converted basis immediately prior to such issuance (including shares
deemed to be outstanding as provided in Section 11(a)(vii)) and (y) the
quotient of the aggregate consideration received by the Company upon such
issuance, divided by the Exercise Price in effect immediately prior to the
issuance of such Additional Stock, and (ii) the denominator of which is the
total number of shares of Common Stock deemed outstanding on a fully
as-converted basis (including shares deemed outstanding as provided in
Section 11(a)(vii)) immediately after (and including) such issuance.
(iii) No adjustment of the Exercise Price shall be made in an
amount less than one cent per share, provided that any adjustments that are
not required to be made by reason of this sentence shall be carried forward
and shall be either taken into account in any subsequent adjustment made
prior to three (3) years from the date of the event giving rise to the
adjustment being carried forward, or shall be made at the end of three (3)
years from the date of the event giving rise to the adjustment being carried
forward. No adjustment of such Exercise Price pursuant to Section 11(a)(i)
shall have the effect of increasing the Exercise Price above the Exercise
Price in effect immediately prior to such adjustment.
(iv) In the case of the issuance of Common Stock for cash, the
consideration shall be deemed to be the amount of cash paid therefor before
deducting any reasonable discounts, commissions or other expenses allowed,
paid or incurred by the Company for underwriting or otherwise in connection
with the issuance and sale thereof.
(v) In the case of the issuance of the Common Stock for a
consideration in whole or in part other than cash, the consideration other
than cash shall be deemed to be the fair value thereof as determined by the
Board of Directors irrespective of any accounting treatment.
(vi) In the event Additional Stock is issued together with
other shares or securities or other assets of the Company for consideration
which covers both, the consideration allocable to the Additional Stock shall
be the proportion of such consideration so received, computed as provided in
Sections 11(a) (iv) and (v) above, as determined in good faith by the Board
of Directors.
(vii) In the case of the issuance after January 21, 1999 of
options to purchase or rights to subscribe for Common Stock, securities by
their terms convertible into or exchangeable for Common Stock or options to
purchase or rights to subscribe for such convertible or exchangeable
securities, the following provisions shall apply for all purposes of this
Section 11(a):
-8-
(1) The aggregate maximum number of shares of Common
Stock deliverable upon exercise (assuming the satisfaction of any conditions
to exercisability, including without limitation, the passage of time, but
without taking into account potential antidilution adjustments) of such
options to purchase or rights to subscribe for Common Stock shall be deemed
to have been issued at the time such options or rights were issued and for a
consideration equal to the consideration (determined in the manner provided
in Sections 11(a)(iv), (v) and (vi)) if any, received by the Company upon the
issuance of such options or rights plus the minimum exercise price provided
in such options or rights (without taking into account potential antidilution
adjustments) for the Common Stock covered thereby. Notwithstanding anything
to the contrary herein, no further adjustment shall be made for the actual
issuance of Common Stock or any payment of such consideration upon the
exercise of any such options or rights or the conversion or exchange of such
securities.
(2) The aggregate maximum number of shares of Common
Stock deliverable upon conversion of or in exchange (assuming the
satisfaction of any conditions to convertibility or exchangeability,
including, without limitation, the passage of time, but without taking into
account potential antidilution adjustments) for any such convertible or
exchangeable securities or upon the exercise of options to purchase or rights
to subscribe for such convertible exchangeable securities and subsequent
conversion or exchange thereof shall be deemed to have been issued at the
time such securities were issued or such options or rights were issued and
for a consideration equal to the consideration, if any, received by the
Company for any such securities and related options or rights (excluding any
cash received on account of accrued interest or accrued dividends), plus the
minimum additional consideration, if any, to be received by the Company
(without taking into account potential antidilution adjustments) upon the
conversion or exchange of such securities or the exercise of any related
options or rights (the consideration in each case to be determined in the
manner provided in Sections 11(a)(iv), (v) and (vi)). Notwithstanding
anything to the contrary herein, no further adjustment shall be made for the
actual issuance of Common Stock or any payment of such consideration upon the
exercise of any such options or rights or the conversion or exchange of such
securities.
(3) In the event of any change in the number of
shares of Common Stock deliverable or in the consideration payable to the
Company upon exercise of such options or rights or upon conversion of or in
exchange for such convertible or exchangeable securities, including, but not
limited to, a change resulting from the antidilution provisions thereof, the
Exercise Price, to the extent in any way affected by or computed using such
options, rights or securities, shall be recomputed to reflect such change,
but no further adjustment shall be made for the actual issuance of Common
Stock or any payment of such consideration upon the exercise of any such
options or rights or the conversion or exchange of such securities.
(4) Upon the expiration of any such options or rights,
the termination of any such rights to convert or exchange or the expiration
of any options or rights related to such convertible or exchangeable
securities, the Exercise Price, to the extent in any way affected by or
computed using such options, rights or securities or options or rights
related to such securities, shall be recomputed to reflect the issuance of
only the number of shares of Common Stock (and convertible or exchangeable
securities that remain in effect) actually issued
-9-
upon the exercise of such options or rights, upon the conversion or exchange
of such securities or upon the exercise of the options or rights related to
such securities.
(5) The number of shares of Common Stock deemed
issued and the consideration deemed paid therefor pursuant to Section
11(a)(vii)(1) and (2) shall be appropriately adjusted to reflect any change,
termination, or expiration of the type described in either Section
11(a)(vii)(3) or (4).
(viii) "Additional Stock" shall mean any shares of Common Stock
issued (or deemed to have been issued pursuant to Section 11(a)(vii)) by the
Company after January 21, 1999 other than:
(1) Common Stock issued pursuant to the events
described in Sections 11(b), (c), (d) or (e) hereof;
(2) shares of Common Stock, not to exceed 4,500,000
shares, or such greater number which shall be approved by the Company's
Board of Directors, (net of any repurchases of such shares or cancellations
or expirations of options), issuable to consultants, employees, officers or
directors of the Company pursuant to stock options or stock awards granted or
to be granted, provided that the grant of such options or awards shall have
been approved by the Board of Directors;
(3) shares of Common Stock issuable pursuant to
warrants outstanding as of January 21, 1999 or any Warrants issued or to be
issued pursuant to the Purchase Agreement;
(4) shares of Series A or Series B Preferred Stock issued
and outstanding as of January 21, 1999 or shares of Series A or Series B
Preferred Stock issued in respect of Series A or Series B Preferred Stock,
respectively, as a dividend on such stock or issued under the terms of the
Restated Certificate, or the Common Stock issued or issuable upon conversion
thereof; or
(5) shares of Common Stock issued or issuable upon
conversion of the convertible term note held by ▇▇▇▇ ▇▇▇▇▇▇ in the principal
amount of $500,000.
(B) MERGER, SALE OF ASSETS, ETC. If at any time while this Warrant,
or any portion thereof, is outstanding and unexpired there shall be (i) a
reorganization (other than a combination, reclassification, exchange or
subdivision of shares otherwise provided for herein), (ii) a merger or
consolidation of the Company with or into another corporation in which the
Company is not the surviving entity, or a reverse triangular merger in which
the Company is the surviving entity but the shares of the Company's capital
stock outstanding immediately prior to the merger are converted by virtue of
the merger into other property whether in the form of securities, cash or
otherwise, or (iii) a sale or transfer of the Company's properties and assets
as, or substantially as, an entirety to any other person, this Warrant shall
thereafter represent the right
-10-
to acquire the number of shares of stock or other securities which the Holder
of this Warrant would have owned immediately after the consummation of such
reorganization, merger, consolidation, sale or transfer, if the Holder of
this Warrant had exercised this Warrant immediately before the effective date
of the reorganization, merger, consolidation, sale or transfer.
(c) RECLASSIFICATION, ETC. If the Company, at any time while this
Warrant, or any portion thereof, remains outstanding and unexpired by
reclassification of securities or otherwise, shall change any of the
securities as to which purchase rights under this Warrant exist into the same
or a different number of securities of any other class or classes, this
Warrant shall thereafter represent the right to acquire such number and kind
of securities as would have been issuable as the result of such change with
respect to the securities that were subject to the purchase rights under this
Warrant immediately prior to such reclassification or other change and the
Exercise Price therefor shall be appropriately adjusted, all subject to
further adjustment as provided in this Section 11.
(d) SPLIT, SUBDIVISION OR COMBINATION OF SHARES. If the Company at
any time while this Warrant, or any portion thereof, remains outstanding and
unexpired shall split, subdivide or combine the securities as to which
purchase rights under this Warrant exist, into a different number of
securities of the same class, the Exercise Price for such securities shall be
proportionately decreased in the case of a split or subdivision or
proportionately increased in the case of a combination.
(e) ADJUSTMENTS FOR DIVIDENDS IN STOCK OR OTHER SECURITIES. If
while this Warrant, or any portion hereof, remains outstanding and unexpired
the holders of the securities as to which purchase rights under this Warrant
exist at the time shall have received, or, on or after the record date fixed
for the determination of eligible shareholders, shall have become entitled to
receive, without payment therefor, other or additional stock or other
securities of the Company by way of dividend, then and in each case, this
Warrant shall represent the right to acquire, in addition to the number of
shares of the security receivable upon exercise of this Warrant, and without
payment of any additional consideration therefor, the amount of such other or
additional stock or other securities of the Company that such holder would
hold on the date of such exercise had it been the holder of record of the
security receivable upon exercise of this Warrant on the date hereof and had
thereafter, during the period from the date hereof to and including the date
of such exercise, retained such shares and/or all other additional stock
available to it as aforesaid during such period, giving effect to all
adjustments called for during such period by the provisions of this Section
11.
(f) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment pursuant to this Section 11, the Company at its
expense shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and furnish to each Holder of this Warrant a
certificate setting forth, in reasonable detail, the event requiring the
adjustment or readjustment, the amount of such adjustment or readjustment,
the method by which such adjustment or readjustment was calculated, the
Exercise Price at the time in effect, and the number of shares and the
amount, if any, of other property that at the time would be received
-11-
upon the exercise of the Warrant. The Company shall upon the written request,
at any time, of any such Holder, furnish or cause to be furnished to such
Holder a like certificate.
(g) ADJUSTMENT IN NUMBER OF SHARES. Upon each adjustment of the
Exercise Price pursuant to this Section 11, this Warrant shall thereafter
evidence the right to receive upon payment of the adjusted Exercise Price
that number of shares of Common Stock (calculated to the nearest hundredth)
obtained from the following formula:
Y x A
X = ---
B
X = the adjusted number of shares of
Common Stock issuable upon exercise
of the Warrant by payment of the
adjusted Exercise Price.
Y = the number of shares of Common
Stock previously issuable upon the
exercise of the Warrant by payment
of the Exercise Price prior to
adjustment.
A = the Exercise Price prior to adjustment.
B = the adjusted Exercise Price.
* * *
12. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants
to the Holder that all shares of Common Stock that may be issued upon the
exercise of this Warrant will, upon issuance, be validly issued, fully paid
and nonassessable, with no personal liability attaching to the ownership
thereof, and free from all taxes, liens and charges with respect to the issue
thereof (other than pursuant to the Purchase Agreement and/or any other
document to be delivered in connection with the transactions contemplated by
the Purchase Agreement). The Company will from time to time use its best
efforts to take all such action as may be required to assure that the stated
or par value per share of the Common Stock is at all times no greater than
the then effective Exercise Price. The Company shall at all times have
authorized and reserved, free from pre-emptive rights, a sufficient number of
shares of its Common Stock to provide for the exercise of this Warrant. The
Company shall not take any action which would cause the number of authorized
but unissued shares of Common Stock to be less than the number of such shares
required to be reserved hereunder for issuance upon exercise of the Warrant.
The Company shall take all reasonable actions to cause all shares of Common
Stock reserved for the purpose of issuance upon the exercise of this Warrant
to be issued and delivered by the Company pursuant to an available exemption
from registration under applicable federal and state securities laws.
-12-
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officers thereunto duly authorized as of the date first above written,
intending to be legally bound hereby.
BLUESTONE SOFTWARE, INC.
By:
------------------------------------
Name:
Title:
-13-