Exhibit 10.25
BLUESTONE SOFTWARE, INC.
OFFICER'S CERTIFICATE
The undersigned officer of Bluestone Software, Inc., a Delaware
corporation (the "Company"), hereby certifies to Silicon Valley Bank (the
"Bank"), in accordance with the Antidilution Agreement dated as of November 24,
1997 between the Company and the Bank, and the Warrant to purchase Common Stock,
par value $.001 of the Company, issued by the Company to the Bank as of November
24, 1997, as follows:
1. As of December 31, 1998, the conversion ratio of Series B
Preferred Stock of the Company was adjusted such that
8,782,695 shares of Series B Preferred Stock of the Company
with an original purchase price of $1.296 per share is
convertible into 18,382,695 shares of Common Stock. The
effective purchase price for the Common Stock issuable to
Series B Preferred Stockholders was reduced from $1.296 per
share to $.62 per share.
2. On January 21, 1999, the Company entered into a Convertible
Subordinated Secured Note and Warrant Purchase Agreement,
pursuant to which, among other things, the Company agreed to
issue Warrants to purchase 1,612,903 shares Common Stock of
the Company with an exercise price of $.62 per share.
3. As a result of the foregoing, the exercise price of the
Warrant granted to the Bank is reduced from $.95 per share to
$.80 per share and the shares issuable under said warrant are
increased from 26,316 shares of Common Stock to 31,250 shares
of Common Stock. The calculation is set forth on ATTACHMENT A
hereto.
The undersigned has executed this Certificate on this 16th day of
February, 1999.
BLUESTONE SOFTWARE, INC.
By: /s/ P. Kevin Kilroy
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Name: P. Kevin Kilroy
Title: President
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT
OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE STOCK
Corporation: Bluestone Software, Inc., a Delaware corporation
Number of Shares: 26,316
Class of Stock: common, $.001 par value (the "Common Stock")
Initial Exercise Price: $0.95 per share
Issue Date: November 24, 1997
Expiration Date: November 24, 2004
THIS WARRANT CERTIFIES THAT, for the agreed upon value of $1.00 and for
other good and valuable consideration, SILICON VALLEY BANK ("Holder") is
entitled to purchase the number of fully paid and nonassessable shares of the
class of Common Stock (the "Shares") of Bluestone Software, Inc. (the "Company")
at the initial exercise price per Share (the "Warrant Price") all as set forth
above and as adjusted pursuant to Article 2 of this Warrant, subject to the
provisions and upon the terms and conditions set forth in this Warrant.
ARTICLE 1. EXERCISE.
1.1 METHOD OF EXERCISE. Holder may exercise this Warrant by
delivering a duly executed Notice of Exercise in substantially the form attached
as APPENDIX 1 to the principal office of the Company. Unless Holder is
exercising the conversion right set forth in Section 1.2, Holder shall also
deliver to the Company a check for the aggregate Warrant Price for the Shares
being purchased.
1.2 CONVERSION RIGHT. In lieu of exercising this Warrant as
specified in Section 1.1, Holder may from time to time convert this Warrant, in
whole or in part, into a number of Shares determined by dividing (a) the
aggregate fair market value of the Shares or other securities otherwise issuable
upon exercise of this Warrant minus the aggregate Warrant Price of such Shares
by (b) the fair market value of one Share. The fair market value of the Shares
shall be determined pursuant to Section 1.4.
1.3 INTENTIONALLY OMITTED
1.4 FAIR MARKET VALUE. If the Shares are traded in a public
market, the fair market value of the Shares shall be the closing price of the
Shares (or the closing price of the Company's stock into which the Shares are
convertible) reported for the business day immediately before Holder delivers
its Notice of Exercise to the Company. If the Shares are not traded in a public
market, the Board of Directors of the Company shall determine fair market value
in its reasonable good faith judgment. The foregoing notwithstanding, if Holder
advises the Board of Directors in writing that Holder disagrees with such
determination, then the Company and Holder shall promptly agree upon a reputable
investment banking firm to undertake such valuation. If the valuation of such
investment banking firm is greater than that determined by the Board of
Directors, then all fees and expenses of such investment banking firm shall be
paid by the Company. In all other circumstances, such fees and expenses shall be
paid by Holder.
1.5 DELIVERY OF CERTIFICATE AND NEW WARRANT. Promptly after
Holder exercises or converts this Warrant, the Company shall deliver to Holder
certificates for the Shares acquired and, if this Warrant has not been fully
exercised or converted and has not expired, a new Warrant representing the
Shares not so acquired.
1.6 REPLACEMENT OF WARRANTS. 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 amount 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.
1.7 REPURCHASE ON SALE, MERGER, OR CONSOLIDATION OF THE
COMPANY.
1.7.1. "ACQUISITION". For the purpose of this
Warrant, "Acquisition" means any sale, license, or other disposition of all or
substantially all of the assets of the Company, or any reorganization,
consolidation, or merger of the Company where the holders of the Company's
securities before the transaction beneficially own less than 50% of the
outstanding voting securities of the surviving entity after the transaction.
1.7.2. ASSUMPTION OF WARRANT. Upon the closing of any
Acquisition the successor entity shall assume the obligations of this Warrant,
and this Warrant shall be exercisable for the same securities, cash, and
property as would be payable for the Shares issuable upon exercise of the
unexercised portion of this Warrant as if such Shares were outstanding on the
record date for the Acquisition and subsequent closing. The Warrant Price shall
be adjusted accordingly.
ARTICLE 2. ADJUSTMENTS TO THE SHARES.
2.1 STOCK DIVIDENDS, SPLITS, ETC. If the Company declares or
pays a dividend on its Common Stock (or the Shares if the Shares are securities
other than Common Stock) payable in Common Stock, or other securities,
subdivides the outstanding Common Stock into a greater amount of Common Stock
(other than a change in par value), or, if the Shares are securities other than
Common Stock, subdivides the Shares in a transaction that increases the amount
of Common Stock into which the Shares are convertible (other than a change in
par value), then upon exercise of this Warrant, for each Share acquired, Holder
shall receive, without cost to Holder, the total number and kind of securities
to which Holder would have been entitled had Holder owned the Shares of record
as of the date the dividend or subdivision occurred.
2.2 RECLASSIFICATION, EXCHANGE OR SUBSTITUTION. Upon any
reclassification, exchange, substitution, or other event that results in a
change of the number and/or class of the securities issuable upon exercise or
conversion of this Warrant (other than a change in par value), Holder shall be
entitled to receive, upon exercise or conversion of this Warrant, the number and
kind of securities and property that Holder would have received for the Shares
if this Warrant had been exercised immediately before such reclassification,
exchange, substitution, or other event. Such an event shall include any
automatic conversion of the outstanding or issuable securities of the Company of
the same class or series as the Shares to Common Stock pursuant to the terms of
the Company's Certificate of Incorporation upon the closing of a registered
public offering of the Company's Stock. The Company or its successor shall
promptly issue to Holder a new Warrant for such new securities or other
property. The new Warrant shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Article
2 including, without limitation, adjustments to the Warrant Price and to the
number of securities or property issuable upon exercise of the new Warrant. The
provisions of this Section 2.2 shall similarly apply to successive
reclassifications, exchanges, substitutions, or other events.
2.3 ADJUSTMENTS FOR COMBINATIONS, ETC. If the outstanding
Shares are combined or consolidated, by reclassification or otherwise, into a
lesser number of shares (other than a change in par value), the Warrant Price
shall be proportionately increased.
2.4 ADJUSTMENTS FOR DILUTING ISSUANCES. In the event of the
issuance (a "Diluting Issuance") by the Company, after the Issue Date of this
Warrant, of Common Stock at a price per share less
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than the Warrant Price or securities convertible into Common Stock at a
conversion price per share less than the Warrant Price, then the number of
Shares issuable upon exercise of this Warrant, shall be adjusted as a result of
Diluting Issuances in accordance with that certain Antidilution Agreement dated
as of the date of this Warrant, by and between Holder and the Company. Under no
circumstances shall the aggregate Warrant Price payable by Holder upon exercise
of this Warrant increase as a result of any adjustment arising from a Diluting
Issuance.
2.5 NO IMPAIRMENT. The Company shall not, by amendment of its
Certificate of Incorporation or through a reorganization, transfer of assets,
consolidation, merger, dissolution, issue, or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed under this Warrant by the Company, but
shall at all times in good faith assist in carrying out of all the provisions of
this Article 2 and in taking all such action as may be reasonably necessary or
appropriate to protect Holder's rights under this Article against impairment.
2.6 FRACTIONAL SHARES. No fractional Shares shall be issuable
upon exercise or conversion of the Warrant and the number of Shares to be issued
shall be rounded down to the nearest whole Share. If a fractional share interest
arises upon any exercise or conversion of the Warrant, the Company shall
eliminate such fractional share interest by paying Holder amount computed by
multiplying the fractional interest by the fair market value of a full Share.
2.7 CERTIFICATE AS TO ADJUSTMENTS. Upon each adjustment of the
Warrant Price, the Company at its expense shall promptly compute such
adjustment, and furnish Holder with a certificate of its Chief Financial Officer
setting forth such adjustment and the facts upon which such adjustment is based.
The Company shall, upon written request, furnish Holder a certificate setting
forth the Warrant Price in effect upon the date thereof and the series of
adjustments leading to such Warrant Price.
ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
3.1 REPRESENTATIONS AND WARRANTIES. The Company hereby
represents and warrants to the Holder as follows:
(a) All Shares which may be issued upon the exercise
of the purchase right represented by this Warrant, and all securities, if any,
issuable upon conversion of the Shares, shall, upon issuance, be duly
authorized, validly issued, fully paid and nonassessable, and free of any liens
and encumbrances except for restrictions on transfer provided for herein or
under applicable federal and state securities laws.
(b) The authorized capital stock of the corporation
consists of 23,252,632 shares of capital stock which are divided into 17,726,312
shares of Common Stock and 5,526,316 shares of Series A Convertible Preferred
Stock, par value $.001 per share. SCHEDULE 3.1(b) sets forth all of the
outstanding shares of Common Stock and outstanding options, warrants,
convertible securities, convertible debentures, and rights to acquire, subscribe
for, and/or purchase any Common Stock and/or other capital stock of the Company
or any securities or debentures convertible into or exchangeable for Common
Stock and/or other capital stock of the Company.
(c) The Company has reserved for issuance pursuant to
this Warrant not less than Twenty Six Thousand Three Hundred Sixteen (26,316)
shares of the Common Stock of the Company, and the Company covenants that it
shall at all times cause to be reserved and kept available out of its authorized
and unissued shares of Common Stock of the Company such number of shares of
Common Stock as will be sufficient to permit the exercise in full of this
Warrant,
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3.2 NOTICE OF CERTAIN EVENTS. If the Company proposes at any
time (a) to declare any dividend or distribution upon its Common Stock, whether
in cash, property, stock, or other securities and whether or not a regular cash
dividend; (b) to offer for subscription pro rata to the holders of any class or
series of its stock any additional shares of stock of any class or series or
other rights; (c) to effect any reclassification or recapitalization of Common
Stock; (d) to merge or consolidate with or into any other corporation, or sell,
lease, license, or convey all or substantially all of its assets, or to
liquidate, dissolve or wind up; or (e) offer holders of registration rights the
opportunity to participate in an underwritten public offering of the company's
securities for cash, then, in connection with each such event, the Company shall
give Holder (1) at least 10 days prior written notice of the date on which a
record will be taken for such dividend, distribution, or subscription rights
(and specifying the date on which the holders of Common Stock will be entitled
thereto) or for determining rights to vote, if any, in respect of the matters
referred to in (c) and (d) above; (2) in the case of the matters referred to in
(c) and (d) above at least 10 days prior written notice of the date when the
same will take place (and specifying the date on which the holders of Common
Stock will be entitled to exchange their Common Stock for securities or other
property deliverable upon the occurrence of such event); and (3) in the case of
the matter referred to in (e) above, the same notice as is given to the holders
of such registration rights.
3.3 INFORMATION RIGHTS. So long as the Holder holds this
Warrant and/or any of the Shares, the Company shall deliver to the Holder (a)
promptly after mailing, copies of all notices or other written communications to
the shareholders of the Company, (b) within ninety (90) days after the end of
each fiscal year of the Company, the annual audited financial statements of the
Company certified by independent public accountants of recognized standing and
(c) such other financial statements required under and in accordance with any
loan documents between Holder and the Company or if there are no such
requirements (or if the subject loan(s) no longer are outstanding), then within
forty-five (45) days after the end of each of the first three quarters of each
fiscal year, the Company's quarterly, unaudited financial statements. Holder
acknowledges that the information received by it pursuant to this Section 3.3
may be confidential. Holder agrees by acceptance of this Warrant that it will
not use such confidential information in violation of the Securities Exchange
Act of 1934, as amended, or reproduce, disclose or disseminate such information
to any third person (other than its employees, agents or attorneys).
3.4 REGISTRATION UNDER SECURITIES ACT OF 1933, AS AMENDED. The
Company agrees that the Shares or, if the Shares are convertible into Common
Stock of the Company, such Common Stock, shall be subject to the registration
rights set forth in that certain Registration Rights Agreement, dated as of the
date of this Warrant, by and between Holder and the Company.
ARTICLE 4. MISCELLANEOUS.
4.1 TERM; NOTICE OF EXPIRATION. This Warrant is exercisable, in
whole or in part, at any time and from time to time on or before the Expiration
Date set forth above.
4.2 LEGENDS. This Warrant and the Shares (and the securities
issuable, directly or indirectly, upon conversion of the Shares, if any) shall
be imprinted with a legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED
WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT TO
RULE 144 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
CORPORATION AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED. THE
TRANSFER OF THIS SECURITY IS SUBJECT TO THE PROVISIONS OF THE WARRANT,
DATED
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NOVEMBER 24, 1997, ISSUED BY THE COMPANY, INCLUDING THE PROVISIONS SET
FORTH ON EXHIBIT A THERETO.
4.3 COMPLIANCE WITH SECURITIES LAWS ON TRANSFER. This Warrant
and the Shares issuable upon exercise this Warrant (and the securities issuable,
directly or indirectly, upon conversion of the Shares, if any) may not be
transferred or assigned in whole or in part without compliance with applicable
federal and state securities laws by the transferor and the transferee
(including, without limitation, the delivery of investment representation
letters and legal opinions reasonably satisfactory to the Company, as reasonably
requested by the Company). The Company shall not require Holder to provide an
opinion of counsel if the transfer is to a Permitted Transferee (as defined
herein) or if there is no material question as to the availability of current
information as referenced in Rule 144(c), Holder represents that it has complied
with Rule 144(d) and (e) in reasonable detail, the selling broker represents
that it has complied with Rule 144(f), and the Company is provided with a copy
of Holder s notice of proposed sale.
4.4 TRANSFER PROCEDURE. Subject to the provisions of Section
4.3 Holder may transfer all or part of this Warrant or the Shares issuable upon
exercise of this Warrant (or the securities issuable, directly or indirectly,
upon conversion of the Shares, if any) at any time to Silicon Valley Bancshares,
The Silicon Valley Bank Foundation, or any affiliate of Holder (each a
"Permitted Transferee"), or, to any other transferee by giving the Company
notice of the portion of the Warrant being transferred setting forth the name,
address and taxpayer identification number of the transferee and surrendering
this Warrant to the Company for reissuance to the transferee(s) (and Holder if
applicable). Notwithstanding anything to contrary set forth in this Warrant,
Holder agrees that it shall make no disposition of this Warrant, and the Shares
issued upon exercise of this Warrant, other than a transfer to a Permitted
Transferee, unless and until Holder shall have notified the Company of the
proposed disposition, provided a written summary of the terms and conditions of
the proposed disposition, and complied with the terms of the Company's Right of
First Refusal option as set forth in EXHIBIT A hereto.
4.5 NOTICES. All notices and other communications from the
Company to the Holder, or vice versa, shall be deemed delivered and effective
when given personally or mailed by a reputable overnight delivery service or by
first-class registered or certified mail, postage prepaid, at such address as
may have been furnished to the Company or the Holder, as the case may be, in
writing by the Company or such holder from time to time.
4.6 WAIVER. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought.
4.7 ATTORNEYS FEES. In the event of any dispute between the
parties concerning the terms and provisions of this Warrant, the party
prevailing in such dispute shall be entitled to collect from the other party all
costs incurred in such dispute, including reasonable attorneys' fees.
4.8 NO RIGHTS OF STOCKHOLDERS. Holder shall not be entitled to
vote, to receive dividends or subscription rights, or to 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 Holder, as such, any of the rights of a
stockholder of the Company, including without limitation, any right to vote for
the election of directors or upon any matter submitted to stockholders, 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, merger, conveyance, or otherwise), to
receive notices, or otherwise, until the Warrant shall have been exercised as
provided herein.
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4.9 GOVERNING LAW. This Warrant shall be governed by and
construed in accordance with the laws of the State of Delaware, without giving
effect to its principles regarding conflicts of law.
ATTEST: "COMPANY"
BLUESTONE SOFTWARE, INC.
By: By: /s/ Mel Baiada
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Name: Name: Mel Baiada
Title: Title: President
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