WARRANT
To Subscribe for and Purchase Common Stock of
ALLAIRE CORP.
THIS CERTIFIES THAT, for value received, Polaris Venture Partners, L.P.
(herein called Purchaser) or registered assigns is entitled to subscribe for
and purchase from Allaire Corp. (herein called the Company), a corporation
organized and existing under the laws of the State of Minnesota, at the price
specified below (subject to adjustment as noted below) at any time from and
after the Second Closing Date (as hereinafter defined) to and including March 7,
2002 or, if no Second Closing Date shall have occurred by March 7, 1998, at any
time from and after March 7, 1998, the number of fully paid and nonassessable
shares of the Company's Common Stock specified below (subject to adjustment as
noted below). This Warrant has been issued in connection with the purchase from
the Company by Purchaser of a 10% Convertible Subordinated Note due March 7,
1999 of the Company (the Bridge Note) in the principal amount of $238,412 (the
Principal Amount).
The number of shares of Common Stock which are purchasable under this
Warrant (subject to adjustment as noted below) shall be equal to 10% of the
quotient obtained by dividing (1) the Principal Amount by (2) the initial
warrant purchase price (as defined below).
The initial warrant purchase price (subject to further adjustment as
noted below) shall be equal to the price per share received by the Company upon
the closing of the first sale by the Company for cash of Second Round Preferred
Stock following the issuance of the Bridge Note (such closing hereinafter
referred to as the Second Round Closing ), in which the net proceeds to the
Company are in excess of $1,000,000; provided, however, that if no Second Round
Closing shall have occurred by March 7, 1998, the initial warrant purchase price
shall be $6.00. As used herein, Second Round Preferred Stock shall have the
meaning given to such term in the form of Bridge Note.
This Warrant is subject to the following provisions, terms and
conditions:
1. The rights represented by this Warrant may be exercised by the
holder hereof, in whole or in part, by written notice of exercise, in the form
attached hereto, delivered to the Company prior to the intended date of exercise
and by the surrender of this Warrant (properly endorsed if required) at the
principal office of the Company and upon payment to it by check of the purchase
price for such shares in lawful money of the United States. The Company agrees
that the shares so purchased shall be and are deemed to be issued to the holder
hereof as the record owner of such shares as of the close of business on the
date on which this Warrant shall have been surrendered and payment made for such
shares as aforesaid. Subject to the provisions of the next succeeding paragraph,
certificates for the shares of stock so purchased shall be delivered to the
holder hereof within a reasonable time, not exceeding 10 days, after the rights
represented by this Warrant shall have been so exercised, and, unless this
Warrant has expired, a new Warrant representing the number of shares, if any,
with respect to which this Warrant shall not then have been exercised shall also
be delivered to the holder hereof within such time.
2. Notwithstanding the foregoing, however, the Company shall not be
required to deliver any certificate for shares of stock upon exercise of this
Warrant except in accordance with the provisions, and subject to the
limitations, of paragraph 7 hereof and the restrictive legend under the heading
Restriction on Transfer below.
3. The Company covenants and agrees that all shares which may be issued
upon the exercise of the rights represented by this Warrant will, upon issuance,
be duly authorized and issued, fully paid and nonassessable. The Company further
covenants and agrees that during the period within which the rights represented
by this Warrant may be exercised, the Company will at all times have authorized,
and reserved for the purpose of issue or transfer upon exercise of the
subscription rights evidenced by this Warrant, a sufficient number of shares of
its Common Stock to provide for the exercise of the rights represented by this
Warrant.
4. The above provisions are, however, subject to the following:
(a) The warrant purchase price shall, from and after the Price
Determination Date, be subject to adjustment from time to time as hereinafter
provided. The warrant purchase price shall, in addition, from and after the date
of the Second Round Closing, be subject to such additional protective
adjustments as may be set forth in the description of rights and preferences
applicable to the Second Round Preferred Stock contained in the Company's
charter documents. Upon each adjustment of the warrant purchase price, the
holder of this Warrant shall thereafter be entitled to purchase, at the warrant
purchase price resulting from such adjustment, the number of shares obtained by
multiplying the warrant purchase price in effect immediately prior to such
adjustment by the number of shares purchasable pursuant hereto immediately prior
to such adjustment and dividing the product thereof by the warrant purchase
price resulting from such adjustment. For purposes of this Warrant, the term
Price Determination Date shall mean the date of the Second Round Closing, or, if
no Second Round closing shall have occurred prior to March 7, 1998, the term
Price Determination Date shall mean the date of the issuance of this Warrant.
(b) In case the Company shall (i) declare a dividend upon the Common
Stock payable in Common Stock (other than a dividend declared to effect a
subdivision of the outstanding shares of Common Stock, as described in paragraph
(c) below) or any obligations or any shares of stock of the Company which are
convertible into or exchangeable for Common Stock (any of such obligations or
shares of stock being hereinafter called Convertible Securities ), or in any
rights or options to purchase Common Stock or Convertible Securities, or (ii)
declare any other dividend or make any other distribution upon the Common Stock
payable otherwise than out of earnings or earned surplus, then thereafter the
holder of this Warrant upon the exercise hereof will be entitled to receive the
number of shares of Common Stock to which such holder shall be entitled upon
such exercise, and, in addition and without further payment therefor, each
dividend described in clause (i) above and each dividend or distribution
described in clause (ii) above which such holder would have received by way of
dividends or distributions if continuously since the Price Determination Date
such holder (x) had been the record holder of the number of shares of Common
Stock then received, and (y) had retained all dividends or distributions in
stock or securities (including Common Stock or Convertible Securities, and any
rights or options to purchase any Common Stock or Convertible Securities)
payable in respect of such Common Stock or in respect of any stock or securities
paid as dividends or distributions and originating directly or indirectly from
such Common Stock. For the purposes of the foregoing, a dividend or distribution
other than in cash shall be considered payable out of earnings or earned surplus
only to the extent that such earnings or earned surplus are charged an amount
equal to the fair value of such dividend or distribution as determined by the
Board of Directors of the Company.
(c) In case the Company shall at any time subdivide its outstanding
shares of Common Stock into a greater number of shares, the warrant purchase
price in effect immediately prior to such subdivision shall be proportionately
reduced, and conversely, in case the outstanding shares of Common Stock of the
Company shall be combined into a smaller number of shares, the warrant purchase
price in effect immediately prior to such combination shall be proportionately
increased.
(d) If any capital reorganization or reclassification of the capital
stock of the Company, or consolidation or merger of the Company with another
corporation, or sale of all or substantially all of its assets to another
corporation (any such reorganization, reclassification, consolidation, merger or
sale being hereinafter called an Event ) shall be effected in such a way that
holders of Common Stock shall be entitled to receive stock, securities or assets
with respect to or in exchange for Common Stock, then, unless lawful and
adequate provision shall have been made whereby the holder hereof shall
thereafter have the right to purchase and receive, upon the basis and upon the
terms and conditions specified in this Warrant and in lieu of the shares of the
Common Stock of the Company immediately theretofore purchasable and receivable
upon the exercise of the rights represented hereby, such shares of stock,
securities or assets as may be issued or payable with respect to or in exchange
for a number of outstanding shares of Common Stock of the Company equal to the
number of shares of such stock immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby had the Event not
taken place, the Board of Directors of the Company shall declare, at least
twenty days prior to the actual effective date of the Event, and provide written
notice to the holder hereof of the declaration, that this Warrant shall be
canceled at the
time of, or immediately prior to the occurrence of, the Event (unless it shall
have been exercised prior to the occurrence of the Event) in exchange for
payment to the holder hereof, within twenty days after the Event, of cash equal
to the amount (if any), for each share of Common Stock issuable upon exercise of
this Warrant, by which the Event Proceeds per share of Common Stock (as
hereinafter defined) exceeds the purchase price per share of Common Stock under
this Warrant. In the event of a declaration pursuant to this paragraph (d), this
Warrant, if not exercised prior to the Event, shall be canceled at the time of,
or immediately prior to, the Event, as provided in the declaration, subject to
the payment obligations of the Company provided in this paragraph (d). For
purposes of this paragraph (d), if the Event shall occur prior to both the date
of Second Round Closing and March 7, 1998, then the Price Determination Date
shall be deemed to be March 7, 1997, and the initial warrant purchase price
shall be deemed to be $6.00 per share. Also for purposes of this paragraph (d),
Event Proceeds per share of Common Stock shall mean the cash plus the fair
market value, as determined in good faith by the Board of Directors of the
Company, of the non-cash consideration to be received per share of Common Stock
by the shareholders of the Company upon the occurrence of the Event. If
provision shall be made, pursuant to this paragraph (d), for the right of the
holder hereof to purchase and receive stock, securities or assets of any
successor corporation (other than the Company) upon the occurrence of any Event,
then such successor corporation shall assume, by written instrument executed and
mailed to the registered holder hereof at the last address of such holder
appearing on the books of the Company, the obligation to deliver to such holder
such shares of stock, securities or assets as, in accordance with the foregoing
provisions, such holder may be entitled to purchase.
(e) Upon any adjustment of the warrant purchase price, then and in each
such case the Company shall give written notice thereof, by first-class mail,
postage prepaid, addressed to the registered holder of this Warrant at the
address of such holder as shown on the books of the Company, which notice shall
state the warrant purchase price resulting from such adjustment and the increase
or decrease, if any, in the number of shares purchasable at such price upon the
exercise of this Warrant, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.
(f) If any event occurs as to which in the opinion of the Board of
Directors of the Company the other provisions of this paragraph 4 are not
strictly applicable or if strictly applicable would not fairly protect the
purchase rights of the holder of this Warrant or of Common Stock in accordance
with the essential intent and principles of such provisions, then the Board of
Directors shall make an adjustment in the application of such provisions, in
accordance with such essential intent and principles, as necessary or
appropriate to protect such holder's rights, subject to such holder's consent.
(g) No fractional shares of Common Stock shall be issued upon the
exercise of this Warrant, but, instead of any fraction of a share which would
otherwise be issuable, the Company shall pay a cash adjustment (which may be
effected as a reduction of the amount to be paid by the holder hereof upon such
exercise) in respect of such fraction.
5. As used herein, the term Common Stock shall mean and include the
Company's presently authorized Common Stock and shall also include any capital
stock of any class of the Company hereafter authorized which shall not be
limited to a fixed sum or percentage in respect of the rights of the holders
thereof to participate in dividends or in the distribution of assets upon the
voluntary or involuntary liquidation, dissolution or winding up of the Company;
provided that the shares purchasable pursuant to this Warrant shall include
shares designated as Common Stock of the Company on the date of original issue
of this Warrant or, in the case of any reclassification of the outstanding
shares thereof, the stock, securities or assets provided for in paragraph 4(d)
above.
6. This Warrant shall not entitle the holder hereof to any voting
rights or other rights as a stockholder of the Company.
7.
(a) The holder of this Warrant acknowledges that neither this
Warrant nor any of the shares of Common Stock issuable upon exercise hereof have
been registered under the Securities Act of 1933, as amended (the Act ), or any
state securities laws and that this Warrant or such shares of Common Stock may
only be transferred in accordance with this Paragraph 7. The holder of this
Warrant, by acceptance hereof, represents that it has acquired this Warrant for
investment and not with a view to distribution of this Warrant or the shares of
Common Stock issuable upon exercise hereof within the meaning of the Act and the
rules and regulations thereunder.
(b) The holder of this Warrant, by acceptance hereof, agrees
to give written notice to the Company before exercising or transferring this
Warrant, in whole or in part, or transferring any shares of Common Stock
issuable or issued upon the exercise hereof, of such holder's intention to do
so, describing briefly the manner of any proposed exercise or transfer. Such
holder shall also provide the Company with an opinion of counsel satisfactory to
the Company to the effect that the proposed exercise or transfer of this Warrant
or transfer of shares may be effected without registration or qualification
under the Act and any applicable state securities laws of this Warrant and the
shares of Common Stock issuable or issued upon the exercise hereof. Upon receipt
of such written notice and opinion by the Company, such holder shall be entitled
to exercise this Warrant in accordance with its terms, or to transfer this
Warrant, or to transfer shares of Common Stock issuable or issued upon the
exercise of this Warrant, all in accordance with the terms of the notice
delivered by such holder to the Company, provided that an appropriate legend
respecting the aforesaid restrictions on transfer may be endorsed on this
Warrant or the certificates for such shares. In the event of a proposed transfer
of this Warrant, prior to the transfer the proposed transferee shall execute and
deliver to the Company a warrant transfer letter in the form attached hereto.
8. Subject to the provisions of paragraph 7 hereof, this Warrant and
all rights hereunder are transferable, in whole or in part, at the principal
office of the Company by the holder hereof in person or by duly authorized
attorney, upon surrender of this Warrant properly endorsed. Each taker and
holder of this Warrant, by taking or holding the same, consents and agrees that
the bearer of this Warrant, when endorsed, may be treated by the Company and all
other persons dealing with this Warrant as the absolute owner hereof for any
purpose and as the person entitled to exercise the rights represented by this
Warrant, or to the transfer hereof on the books of the Company, any notice to
the contrary notwithstanding; but until such transfer on such books, the Company
may treat the registered holder hereof as the owner for all purposes.
9. This Warrant is exchangeable, upon the surrender hereof by the
holder hereof at the principal office of the Company, for new Warrants of like
tenor representing in the aggregate the right to subscribe for and purchase the
number of shares which may be subscribed for and purchased hereunder, each of
such new Warrants to represent the right to subscribe for and purchase such
number of shares as shall be designated by said holder hereof at the time of
such surrender.
10. The holder of this Warrant shall have rights to have the shares of
Common Stock purchased upon exercise included on registration statements filed
by the Company under the Act and shall be subject to limitations to have such
shares so included and shall be obligated to provide the Company with
indemnification with regards to such registration, all as set forth in that
certain Registration Rights Agreement dated as of June 18 1996 by and among the
Company and (among others) the initial holder of this Warrant. As used herein,
Initial Public Offering shall mean the first public offering by the Corporation
of shares of Common Stock registered under the Act, giving rise to registration
rights under Section 4 of such Registration Rights Agreement.
11. All questions concerning this Warrant will be governed and
interpreted and enforced in accordance with the internal law of the Commonwealth
of Massachusetts.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer and this Warrant to be dated as of March 7, 1997.
ALLAIRE CORP.
By: /s/ David J. Orfao
------------------
Its: -------------
RESTRICTION ON TRANSFER
The securities evidenced hereby may not be transferred without (i) the
opinion of counsel satisfactory to the Company that such transfer may be
lawfully made without registration under the Federal Securities Act of 1933 and
all applicable state securities laws or (ii) such registration.
ASSIGNMENT
(To Be Signed Only Upon Assignment)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ____________________________________________________________________ this
Warrant, and appoints ____________________________________________________ to
transfer this Warrant on the books of Allaire Corp. with the full power of
substitution in the premises.
Dated: ___________________________________
In the presence of: ___________________________________
___________________________________
(Signature must conform in all respects to the name of the holder as specified
on the face of this Warrant without any alteration or change whatsoever, and the
signature must be guaranteed in the usual manner)
FORM OF WARRANT TRANSFER LETTER
To: Allaire Corp.
Ladies and Gentlemen:
The undersigned is a proposed transferee of the warrant (the Warrant )
to purchase ____________________ shares of Common Stock ( Common Stock ), of
Allaire Corp., a Minnesota corporation (the Company ), currently registered in
the name of ____________________. In order to induce the Company to consent to
the transfer of the Warrant, the undersigned hereby represents, warrants and
agrees as follows:
1. The undersigned acknowledges that neither the Warrant nor any of the
shares of Common Stock issuable upon exercise thereof have been registered under
the Securities Act of 1933, as amended (the Act ), or any state securities laws
and that, accordingly, the Warrant and such shares of Common Stock may only be
transferred in accordance with the terms of paragraph 7 of the Warrant.
2. The undersigned is acquiring the Warrant for investment and not with
a view to distribution of the Warrant or the shares of Common Stock issuable
upon exercise thereof within the meaning of the Act and the rules and
regulations thereunder.
3. The undersigned is an accredited investor as defined in Rule 501(a)
of Regulation D promulgated under the Act.
Signature ____________________________________
Address ______________________________________
Date _________________________________________
FORM OF EXERCISE NOTICE
To be Executed by the Holder of this Warrant if such Holder
Desires to Exercise this Warrant in Whole or in Part:
To: Allaire Corp. (the Company)
The undersigned ___________________________________________
Please insert Social Security or other
identifying number of Subscriber:
______________________________________
hereby irrevocably elects to exercise the right of purchase represented by this
Warrant for, and to purchase thereunder, ______________________ shares of the
Common Stock provided for therein and tenders payment herewith to the order of
the Company in the amount of $______________________, such payment being made as
provided on the face of this Warrant.
In order to induce the Company to consent to the exercise of this
Warrant, the undersigned hereby represents, warrants and agrees as follows:
1.The undersigned acknowledges that neither this Warrant nor any of the
shares of Common Stock issuable upon exercise hereof have been registered under
the Securities Act of 1933, as amended (the Act), or any state securities laws
and that, accordingly, this Warrant may be exercised and the shares of Common
Stock issued pursuant to this exercise may only be transferred in accordance
with the terms of paragraph 7 of this Warrant.
2.The undersigned is acquiring the shares of Common Stock issued
pursuant to this exercise for investment and not with a view to distribution of
such shares within the meaning of the Act and the rules and regulations
thereunder.
3.The undersigned is an accredited investor as defined in Rule 501(a)
of Regulation D promulgated under the Act.
The undersigned requests that certificates for such shares of Common
Stock be issued as follows:
Name: _______________________________________________________________________
Address: ___________________________________________________________________
Deliver to: _________________________________________________________________
Address: ____________________________________________________________________
and, if such number of shares of Common Stock shall not be all the shares of
Common Stock purchasable hereunder, that a new Warrant for the balance remaining
of the shares of Common Stock purchasable under this Warrant be registered in
the name of, and delivered to, the undersigned at the address stated below.
Address: _____________________________________________________________________
Signature ____________________________________
(Signature must conform in all respects to the name of the holder as written
specified on the face of this Warrant without any alteration or change
whatsoever)
Dated: ____________________