EXHIBIT 10.24
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WARRANT TO PURCHASE COMMON STOCK
OF
BRIDGELINE SOFTWARE, INC.
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND MAY NOT BE
TRANSFERRED UNTIL (i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT") SHALL HAVE BECOME EFFECTIVE WITH RESPECT
THERETO OR (ii) RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER THE SECURITIES
ACT IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER NOR IS SUCH
TRANSFER IN VIOLATION OF ANY APPLICABLE STATE SECURITIES LAWS. THIS LEGEND SHALL
BE ENDORSED UPON ANY WARRANT ISSUED IN EXCHANGE FOR THIS WARRANT OR ANY SHARES
OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT.
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This is to Certify That, FOR VALUE RECEIVED, _____________, or assigns
("Holder"), is entitled to purchase, subject to the provisions of this Warrant,
from Bridgeline Software, Inc., a Delaware corporation (the "Company"), ________
fully paid, validly issued and nonassessable shares of common stock, par value
$.001 per share, of the Company ("Common Stock") at an exercise price equal to
the IPO (as defined in the Memorandum (as defined below)) price or, in the event
there is no IPO as contemplated under the Memorandum, $4.68 per share (which
price reflects the reverse stock split effected on April 7, 2006) (the "Exercise
Price"), which exercise may take place at any time or from time to time during
the period of five (5) years from the day hereof, provided, however, that no
such exercise may take place prior to the earlier of (i) the IPO and (ii) April
21, 2008 (the "Exercise Period"). This Warrant comprises a portion of the fee
being paid to the Placement Agent (as defined in the Memorandum) pursuant to the
Confidential Private Placement Memorandum dated April 7, 2006 (the
"Memorandum"). Unless otherwise defined herein, terms defined in this Warrant
shall have the meaning as set forth in the Memorandum. The Exercise Price is
subject to adjustment as set forth herein. The number of shares of Common Stock
to be received upon the exercise of this Warrant and the price to be paid for
each share of Common Stock may be adjusted from time to time as hereinafter set
forth. The shares of Common Stock deliverable upon such exercise, and as
adjusted from time to time, are hereinafter sometimes referred to as "Warrant
Shares" and the exercise price of a share of Common Stock in effect at any time
and as adjusted from time to time is hereinafter sometimes referred to as the
"Exercise Price".
(a) EXERCISE OF WARRANT; CANCELLATION OF WARRANT.
(1) This Warrant may be exercised in whole or in part at any
time or from time to time during the Exercise Period; provided, however, that
(i) if either such day is a day on which banking institutions in the State of
New York are authorized by law to close, then on the next succeeding day which
shall not be such a day, and (ii) in the event of any merger, consolidation or
sale of substantially all the assets of the Company as an entirety, which is
anticipated to result in any distribution to the Company's stockholders (A)
prior to an IPO, or
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(B) if an IPO has occurred in any distribution to the Company's stockholders,
prior to termination of the Exercise Period, the Holder shall have the right to
exercise this Warrant in conjunction with such transaction, into the kind and
amount of shares of stock and other securities and property (including cash)
receivable by a holder of the number of shares of Common Stock into which this
Warrant might have been exercisable immediately prior thereto. This Warrant may
be exercised by presentation and surrender hereof to the Company at its
principal office with the Purchase Form annexed hereto duly executed and
accompanied by payment of the Exercise Price for the number of Warrant Shares
specified in such form. As soon as practicable after each such exercise of the
Warrant, but not later than three (3) business days following the receipt of
good and available funds, the Company shall issue and deliver to the Holder a
certificate or certificate for the Warrant Shares issuable upon such exercise,
registered in the name of the Holder or its designee. If this Warrant should be
exercised in part only, the Company shall, upon surrender of this Warrant for
cancellation, execute and deliver a new Warrant evidencing the rights of the
Holder thereof to purchase the balance of the Warrant Shares purchasable
thereunder. Upon receipt by the Company of this Warrant at its office in proper
form for exercise accompanied by payment of the Exercise Price for the number of
Warrant Shares specified in such form, the Holder shall be deemed to be the
holder of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of the Company shall then be
closed or that certificates representing such shares of Common Stock shall not
then be physically delivered to the Holder.
(2) At any time during the Exercise Period, the Holder may, at
its option, exercise this Warrant on a cashless basis by exchanging this
Warrant, in whole or in part (a "Warrant Exchange"), into the number of Warrant
Shares determined in accordance with this Section (a)(2), by surrendering this
Warrant at the principal office of the Company or at the office of its stock
transfer agent, accompanied by a notice stating such Holder's intent to effect
such exchange, the number of Warrant Shares to be exchanged and the date on
which the Holder requests that such Warrant Exchange occur (the "Notice of
Exchange"). The Warrant Exchange shall take place on the date specified in the
Notice of Exchange or, if later, the date the Notice of Exchange is received by
the Company (the "Exchange Date"). Certificates for the shares issuable upon
such Warrant Exchange and, if applicable, a new warrant of like tenor evidencing
the balance of the shares remaining subject to this Warrant, shall be issued as
of the Exchange Date and delivered to the Holder within seven (7) days following
the Exchange Date. In connection with any Warrant Exchange, this Warrant shall
represent the right to subscribe for and acquire the number of Warrant Shares
equal to (i) the number of Warrant Shares specified by the Holder in its Notice
of Exchange (the "Total Number") less (ii) the number of Warrant Shares equal to
the quotient obtained by dividing (A) the product of the Total Number and the
existing Exercise Price by (B) the current market value of a share of Common
Stock. Current market value shall have the meaning set forth Section (c) below,
except that for purposes hereof, the date of exercise, as used in such Section
(c), shall mean the Exchange Date.
(b) RESERVATION OF SHARES. The Company shall at all times reserve for
issuance and/or delivery upon exercise of this Warrant such number of shares of
its Common Stock as shall be required for issuance and delivery upon exercise of
the Warrant.
(c) FRACTIONAL SHARES. No fractional shares or script representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share
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called for upon any exercise hereof, the Company shall pay to the Holder an
amount in cash equal to such fraction multiplied by the current market value of
a share, determined as follows:
(1) If the Common Stock is listed on a national securities
exchange or admitted to unlisted trading privileges on such exchange or listed
for trading on the Nasdaq National Market, the current market value shall be the
last reported sale price of the Common Stock on such exchange or market on the
last business day prior to the date of exercise of this Warrant or if no such
sale is made on such day, the average of the closing bid and asked prices for
such day on such exchange or market; or
(2) If the Common Stock is not so listed or admitted to
unlisted trading privileges, but is traded on the Nasdaq SmallCap Market, the
current market value shall be the average of the closing bid and asked prices
for such day on such market and if the Common Stock is not so traded, the
current market value shall be the mean of the last reported bid and asked prices
reported by the NASD Electronic Bulletin Board on the last business day prior to
the date of the exercise of this Warrant; or
(3) If the Common Stock is not so listed or admitted to
unlisted trading privileges and bid and asked prices are not so reported, the
current market value shall be an amount, not less than book value thereof as at
the end of the most recent fiscal year of the Company ending prior to the date
of the exercise of the Warrant, determined in such reasonable manner as may be
prescribed by the Board of Directors of the Company.
(d) EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This Warrant is
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender hereof to the Company or at the office of its stock transfer
agent, if any, for other warrants of different denominations entitling the
holder thereof to purchase in the aggregate the same number of shares of Common
Stock purchasable hereunder. Upon surrender of this Warrant to the Company at
its principal office or at the office of its stock transfer agent, if any, with
the Assignment Form annexed hereto duly executed and funds sufficient to pay any
transfer tax, the Company shall, without charge, execute and deliver a new
Warrant in the name of the assignee named in such instrument of assignment and
this Warrant shall promptly be cancelled. This Warrant may be divided or
combined with other warrants which carry the same rights upon presentation
hereof at the principal office of the Company or at the office of its stock
transfer agent, if any, together with a written notice specifying the names and
denominations in which new Warrants are to be issued and signed by the Holder
hereof. The term "Warrant" as used herein includes any Warrants into which this
Warrant may be divided or exchanged. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Warrant, if mutilated, the Company will execute and deliver a new Warrant of
like tenor and date. Any such new Warrant executed and delivered shall
constitute an additional contractual obligation on the part of the Company,
whether or not this Warrant so lost, stolen, destroyed, or mutilated shall be at
any time enforceable by anyone.
(e) RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be
entitled to any rights of a shareholder in the Company, either at law or equity,
and the rights of the
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Holder are limited to those expressed in the Warrant and are not enforceable
against the Company except to the extent set forth herein.
(f) ANTI-DILUTION PROVISIONS. Subject to the provisions of Section l
hereof, the Exercise Price in effect at any time and the number and kind of
securities purchasable upon the exercise of the Warrant shall be subject to
adjustment from time to time upon the happening of certain events as follows:
(1) In case the Company shall hereafter (i) declare a dividend
or make a distribution on its outstanding shares of Common Stock in shares of
Common Stock, (ii) subdivide or reclassify its outstanding shares of Common
Stock into a greater number of shares, or (iii) combine or reclassify its
outstanding shares of Common Stock into a smaller number of shares, the Exercise
Price in effect at the time of the record date for such dividend or distribution
or of the effective date of such subdivision, combination or reclassification
shall be adjusted so that it shall equal the price determined by multiplying the
Exercise Price by a fraction, the denominator of which shall be the number of
shares of Common Stock outstanding after giving effect to such action, and the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such action with an appropriate adjustment in the number of
shares purchasable hereunder. Such adjustment shall be made successively
whenever any event listed above shall occur. Notwithstanding anything to the
contrary herein, no adjustments shall be made to the Exercise Price or the
number of Shares purchasable upon exercise of this Warrant, upon the occurrence
of an event described in Section (f)(1)(iii) that occurs prior to the IPO.
(2) Subject to the provisions of Subsection (6) below, in case
the Company shall fix a record date for the issuance of rights or warrants to
all holders of its Common Stock entitling them to subscribe for or purchase
shares of Common Stock (or securities convertible into Common Stock) at a price
(the "Subscription Price") (or having a conversion price per share) less than
the current market price of the Common Stock (as defined in Subsection (8)
below) on the record date mentioned below, or less than the Exercise Price on
such record date, the Exercise Price shall be adjusted so that the same shall
equal the lower of (i) the price determined by multiplying the Exercise Price in
effect immediately prior to the date of such issuance by a fraction, the
numerator of which shall be the sum of the number of shares of Common Stock
outstanding on the record date mentioned below and the number of additional
shares of Common Stock which the aggregate offering price of the total number of
shares of Common Stock so offered (or the aggregate conversion price of the
convertible securities so offered) would purchase at such current market price
per share of the Common Stock (as defined in Subsection (8) below), and the
denominator of which shall be the sum of the number of shares of Common Stock
outstanding on such record date and the number of additional shares of Common
Stock offered for subscription or purchase (or into which the convertible
securities so offered are convertible) or (ii) in the event the Subscription
Price is equal to or higher than the current market price but is less than the
Exercise Price, the price determined by multiplying the Exercise Price in effect
immediately
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prior to the date of issuance by a fraction, the numerator of which shall be the
sum of the number of shares outstanding on the record date mentioned below and
the number of additional shares of Common Stock which the aggregate offering
price of the total number of shares of Common Stock so offered (or the aggregate
conversion price of the convertible securities so offered) would purchase at the
Exercise Price in effect immediately prior to the date of such issuance, and the
denominator of which shall be the sum of the number of shares of Common Stock
outstanding on the record date mentioned below and the number of additional
shares of Common Stock offered for subscription or purchase (or into which the
convertible securities so offered are convertible). Such adjustment shall be
made successively whenever such rights or warrants are issued and shall become
effective immediately after the record date for the determination of
shareholders entitled to receive such rights or warrants; and to the extent that
shares of Common Stock are not delivered (or securities convertible into Common
Stock are not delivered) after the expiration of such rights or warrants the
Exercise Price shall be readjusted to the Exercise Price which would then be in
effect had the adjustments made upon the issuance of such rights or warrants
been made upon the basis of delivery of only the number of shares of Common
Stock (or securities convertible into Common Stock) actually delivered.
(3) In case the Company shall hereafter distribute to the
holders of its Common Stock evidences of its indebtedness or assets (excluding
cash dividends or distributions and dividends or distributions referred to in
Subsection (1) above) or subscription rights or warrants (excluding those
referred to in Subsection (2) above), then in each such case the Exercise Price
in effect thereafter shall be determined by multiplying the Exercise Price in
effect immediately prior thereto by a fraction, the numerator of which shall be
the total number of shares of Common Stock outstanding multiplied by the current
market price per share of Common Stock (as defined in Subsection (8) below),
less the fair market value (as determined by the Company's Board of Directors)
of said assets or evidences of indebtedness so distributed or of such rights or
warrants, and the denominator of which shall be the total number of shares of
Common Stock outstanding multiplied by such current market price per share of
Common Stock. Such adjustment shall be made successively whenever such a record
date is fixed. Such adjustment shall be made whenever any such distribution is
made and shall become effective immediately after the record date for the
determination of shareholders entitled to receive such distribution.
(4) Subject to the provisions of Subsection (6) below, in case
the Company shall hereafter issue shares of its Common Stock (excluding shares
issued (a) in any of the transactions described in Subsection (1) above, (b)
upon exercise of options granted to the Company's officers, directors,
consultants and employees under its current stock option which provides for the
issuance of up to 3,600,000 (prior to the effectiveness of the "Reverse Stock
Split" described in the Private Placement Memorandum, but subject to appropriate
adjustment in the event of any stock dividend, stock split, combination or other
similar recapitalization affecting such shares) shares of Common Stock, if such
shares would otherwise be included in this Subsection (4), (c) upon exercise of
options, warrants and convertible debentures outstanding as of the date hereof
or upon the issuance or exercise of warrants or convertible debentures issued
pursuant to the offering set forth in the Memorandum (subject to appropriate
adjustment in the event of any stock dividend, stock split, combination or other
similar recapitalization affecting such shares), (d) to shareholders of any
corporation which merges into the Company in proportion to their stock holdings
of such corporation immediately prior to such merger, upon such merger, (e)
issued in a bona fide public offering pursuant to a firm commitment
underwriting, but only if no adjustment is required pursuant to any other
specific subsection of this Section (f) (without regard to Subsection (8) below)
with respect to the transaction giving rise to such rights) for a consideration
per share (the "Offering Price") less
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than the current market price per share (as defined in Subsection (8) below on
the date the Company fixes the offering price of such additional shares or less
than the Exercise Price, the Exercise Price shall be adjusted immediately
thereafter so that it shall equal the lower of (i) the price determined by
multiplying the Exercise Price in effect immediately prior thereto by a
fraction, the numerator of which shall be the sum of the number of shares of
Common Stock outstanding immediately prior to the issuance of such additional
shares and the number of shares of Common Stock which the aggregate
consideration received (determined as provided in Subsection (8) below) for the
issuance of such additional shares would purchase at such current market price
per share of Common Stock (as defined in Subsection (8) below), and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately after the issuance of such additional shares or (ii) in the event
the Offering Price is equal to or higher than the current market price per share
but less than the Exercise Price, the price determined by multiplying the
Exercise Price in effect immediately prior to the date of issuance by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to the issuance of such additional shares and the
number of shares of Common Stock which the aggregate consideration received
(determined as provided in subsection (7) below) for the issuance of such
additional shares would purchase at the Exercise Price in effect immediately
prior to the date of such issuance, and the denominator of which shall be the
number of shares of Common Stock outstanding immediately after the issuance of
such additional shares. Such adjustment shall be made successively whenever such
an issuance is made.
(5) Subject to the provisions of Subsection (6) below, in case
the Company shall hereafter issue any securities convertible into or
exchangeable for its Common Stock (excluding securities issued in transactions
described in Subsections (2) or (3) above or which are convertible or
exchangeable into securities described Subsections (4)(a)-(e) above) for a
consideration per share of Common Stock (the "Conversion Price") initially
deliverable upon conversion or exchange of such securities (determined as
provided in Subsection (7) below) less than the current market price per share
(as defined in Subsection (8) below) in effect immediately prior to the issuance
of such securities, or less than the Exercise Price, the Exercise Price shall be
adjusted immediately thereafter so that it shall equal the lower of (i) the
price determined by multiplying the Exercise Price in effect immediately prior
thereto by a fraction, the numerator of which shall be the sum of the number of
shares of Common Stock outstanding immediately prior to the issuance of such
securities and the number of shares of Common Stock which the aggregate
consideration received (determined as provided in Subsection (7) below) for such
securities would purchase at such current market price per share of Common Stock
(as defined in Subsection (8) below), and the denominator of which shall be the
sum of the number of shares of Common Stock outstanding immediately prior to
such issuance and the maximum number of shares of Common Stock of the Company
deliverable upon conversion of or in exchange for such securities at the initial
conversion or exchange price or rate or (ii) in the event the Conversion Price
is equal to or higher than the current market price per share but less than the
Exercise Price, the price determined by multiplying the Exercise Price in effect
immediately prior to the date of issuance by a fraction, the numerator of which
shall be the sum of the number of shares outstanding immediately prior to the
issuance of such securities and the number of shares of Common Stock which the
aggregate consideration received (determined as provided in subsection (8)
below) for such securities would purchase at the Exercise Price in effect
immediately prior to the date of such issuance, and the denominator of which
shall be the sum of
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the number of shares of Common Stock outstanding immediately prior to the
issuance of such securities and the maximum number of shares of Common Stock of
the Company deliverable upon conversion of or in exchange for such securities at
the initial conversion or exchange price or rate. Such adjustment shall be made
successively whenever such an issuance is made.
(6) Whenever the Exercise Price payable upon exercise of each
Warrant is adjusted pursuant to Subsections (1), (2), (3), (4) and (5) above,
the number of Shares purchasable upon exercise of this Warrant shall
simultaneously be adjusted by multiplying the number of Shares initially
issuable upon exercise of this Warrant by the Exercise Price in effect on the
date hereof and dividing the product so obtained by the Exercise Price, as
adjusted.
(7) For purposes of any computation respecting consideration
received pursuant to Subsections (4) and (5) above, the following shall apply:
(A) in the case of the issuance of shares of Common
Stock for cash, the consideration shall be the amount of such
cash, provided that in no case shall any deduction be made for
any commissions, discounts or other expenses incurred by the
Company for any underwriting of the issue or otherwise in
connection therewith;
(B) in the case of the issuance of shares of 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 market value thereof as determined in good faith by the
Board of Directors of the Company (irrespective of the
accounting treatment thereof), whose determination shall be
conclusive; and
(C) in the case of the issuance of securities
convertible into or exchangeable for shares of Common Stock,
the aggregate consideration received therefor shall be deemed
to be the consideration received by the Company for the
issuance of such securities plus the additional minimum
consideration, if any, to be received by the Company upon the
conversion or exchange thereof (the consideration in each case
to be determined in the same manner as provided in clauses (A)
and (B) of this Subsection (7)).
(8) For the purpose of any computation under Subsections (2),
(3), (4) and (5) above, the current market price per share of Common Stock at
any date shall be determined in the manner set forth in Section (c) hereof
except that the current market price per share shall be deemed to be the higher
of (i) the average of the prices for 30 consecutive business days before such
date or (ii) the price on the business day immediately preceding such date.
(9) No adjustment in the Exercise Price shall be required
unless such adjustment would require an increase or decrease of at least five
cents ($0.05) in such price; provided, however, that any adjustments which by
reason of this Subsection (9) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment required to be made
hereunder. All calculations under this Section (f) shall be made to the nearest
cent or to the nearest one-hundredth of a share, as the case may be. Anything in
this Section (f) to the contrary notwithstanding, the Company shall be entitled,
but shall not be
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required, to make such changes in the Exercise Price, in addition to those
required by this Section (f), as it shall determine, in its sole discretion, to
be advisable in order that any dividend or distribution in shares of Common
Stock, or any subdivision, reclassification or combination of Common Stock,
hereafter made by the Company shall not result in any Federal Income tax
liability to the holders of Common Stock or securities convertible into Common
Stock (including Warrants).
(10) Whenever the Exercise Price is adjusted, as herein
provided, the Company shall promptly but no later than 10 days after any request
for such an adjustment by the Holder, cause a notice setting forth the adjusted
Exercise Price and adjusted number of Shares issuable upon exercise of each
Warrant, and, if requested, information describing the transactions giving rise
to such adjustments, to be mailed to the Holders at their last addresses
appearing in the Warrant Register, and shall cause a certified copy thereof to
be mailed to its transfer agent, if any. In the event the Company does not
provide the Holder with such notice and information within 10 days of a request
by the Holder, the failure of which causes the Holder material damage, then
notwithstanding the provisions of this Section (f), the Exercise Price shall be
immediately adjusted to equal the lowest Offering Price, Subscription Price or
Conversion Price, as applicable, since the date of this Warrant, and the number
of shares issuable upon exercise of this Warrant shall be adjusted accordingly.
The Company may retain a firm of independent certified public accountants
selected by the Board of Directors (who may be the regular accountants employed
by the Company) to make any computation required by this Section (f), and a
certificate signed by such firm shall be conclusive evidence of the correctness
of such adjustment.
(11) In the event that at any time, as a result of an
adjustment made pursuant to Subsection (1) above, the Holder of this Warrant
thereafter shall become entitled to receive any shares of the Company, other
than Common Stock, thereafter the number of such other shares so receivable upon
exercise of this Warrant shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Common Stock contained in Subsections (1) to (10), inclusive
above.
(12) Irrespective of any adjustments in the Exercise Price or
the number or kind of shares purchasable upon exercise of this Warrant, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in the similar Warrants initially
issuable pursuant to this Agreement.
(g) OFFICER'S CERTIFICATE. Whenever the Exercise Price shall be
adjusted as required by the provisions of the foregoing Section, the Company
shall forthwith file in the custody of its Secretary or an Assistant Secretary
at its principal office and with its stock transfer agent, if any, an officer's
certificate showing the adjusted Exercise Price determined as herein provided,
setting forth in reasonable detail the facts requiring such adjustment,
including a statement of the number of additional shares of Common Stock, if
any, and such other facts as shall be necessary to show the reason for and the
manner of computing such adjustment. Each such officer's certificate shall be
made available at all reasonable times for inspection by the holder or any
holder of a Warrant executed and delivered pursuant to Section (a) and the
Company shall, forthwith after each such adjustment, mail a copy by certified
mail of such certificate to the Holder or any such holder.
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(h) NOTICES TO WARRANT HOLDERS. So long as this Warrant shall be
outstanding, (i) if the Company shall pay any dividend or make any distribution
upon the Common Stock or (ii) if the Company shall offer to the holders of
Common Stock for subscription or purchase by them any share of any class or any
other rights or (iii) if any capital reorganization of the Company,
reclassification of the capital stock of the Company, consolidation or merger of
the Company with or into another corporation, sale, lease or transfer of all or
substantially all of the property and assets of the Company to another
corporation, or voluntary or involuntary dissolution, liquidation or winding up
of the Company shall be effected, then in any such case, the Company shall cause
to be mailed by certified mail to the Holder, at least fifteen days prior the
date specified in (x) or (y) below, as the case may be, a notice containing a
brief description of the proposed action and stating the date on which (x) a
record is to be taken for the purpose of such dividend, distribution or rights,
or (y) such reclassification, reorganization, consolidation, merger, conveyance,
lease, dissolution, liquidation or winding up is to take place and the date, if
any is to be fixed, as of which the holders of Common Stock or other securities
shall receive cash or other property deliverable upon such reclassification,
reorganization, consolidation, merger, conveyance, dissolution, liquidation or
winding up.
(i) RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the Company, or in case of any consolidation or merger of the
Company with or into another corporation (other than a merger with a subsidiary
in which merger the Company is the continuing corporation and which does not
result in any reclassification, capital reorganization or other change of
outstanding shares of Common Stock of the class issuable upon exercise of this
Warrant) or in case of any sale, lease or conveyance to another corporation of
the property of the Company as an entirety, the Company shall, as a condition
precedent to such transaction, cause effective provisions to be made so that the
Holder shall have the right thereafter by exercising this Warrant at any time
prior to the expiration of the Warrant, to purchase the kind and amount of
shares of stock and other securities and property receivable upon such
reclassification, capital reorganization and other change, consolidation,
merger, sale or conveyance by a holder of the number of shares of Common Stock
which might have been purchased upon exercise of this Warrant immediately prior
to such reclassification, change, consolidation, merger, sale or conveyance. Any
such provision shall include provision for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Warrant. The foregoing provisions of this Section (i) shall similarly apply to
successive reclassifications, capital reorganizations and changes of shares of
Common Stock and to successive consolidations, mergers, sales or conveyances. In
the event that in connection with any such capital reorganization or
reclassification, consolidation, merger, sale or conveyance, additional shares
of Common Stock shall be issued in exchange, conversion, substitution or
payment, in whole or in part, for a security of the Company other than Common
Stock, any such issue shall be treated as an issue of Common Stock covered by
the provisions of Subsection (1) of Section (f) hereof.
(j) REGISTRATION RIGHTS.
(1) The Warrant Shares will be registered in an initial public
offering of the Company's securities pursuant to a registration statement filed
on a appropriate form (the "Registration Statement") with the SEC and the
Company covenants and agrees to maintain the
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effectiveness of the Registration Statement until all Warrant Shares have been
sold (the "Expiration Date"). Notwithstanding the foregoing, in the event that,
prior to the Expiration Date, the Warrant Shares cease to be eligible for
inclusion in such Registration Statement to the extent necessary to permit the
Holder to exercise the Warrant and sell the Warrant Shares without restriction
under the Act, the Company will promptly (and in any event within thirty (30)
days of the date that any Warrant Shares cease to be so eligible), amend or file
a new Registration Statement under the Act on a form eligible for use by the
Company for the registration of such securities and use its best efforts to have
such Registration Statement declared effective by the SEC as soon as practicable
after such filing, which Registration Statement shall include such information
as may be required to permit the exercise of the Warrant and the sale of the
Warrant Shares without restriction under the Act. The Holder acknowledges and
agrees that the Warrant shall be exercisable pursuant to any such Registration
Statement only at such times as the Registration Statement is effective or in
accordance with any applicable exemption from the registration requirements of
the Act. Upon such Registration Statement's being declared effective by the SEC,
the Company shall use its best efforts to cause the Registration Statement to
remain effective for a period of at least six (6) consecutive months from the
date that the Holders of the Warrants and Warrant Shares covered by such
Registration Statement are first given the opportunity to sell all of such
securities. In the event that ninety (90) days prior to the Expiration Date, the
Registration Statement registering the Warrant Shares is not effective or is
withdrawn or the SEC issues a stop order suspending the effectiveness of such
Registration Statement, the Company hereby agrees to extend the Expiration Date
for (x) an additional ninety (90) days or (y) until the Registration Statement
is declared effective by the SEC, whichever period is longer. During such time
as the Warrant Shares are registered pursuant to any Registration Statement
under the Act, the Company further covenants and agrees to make timely filings
of all documents required to be filed under the Act or the Exchange Act in order
to ensure that the Registration Statement, including the documents incorporated
by reference therein, if any, do not contain an untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading.
(2) The Company will, until such time as the Warrant Shares
may be sold under Rule 144 without volume limitation:
(A) prepare and file with the SEC such amendments to
such Registration Statement and supplements to the prospectus
contained therein as may be necessary to keep such
Registration Statement effective;
(B) furnish to the Holders participating in such
registration and to the underwriters of the securities being
registered such reasonable number of copies of the
Registration Statement, preliminary prospectus, final
prospectus and such other documents as such underwriters may
reasonably request in order to facilitate the public offering
of such securities;
(C) use its best efforts to register or qualify the
securities covered by such Registration Statement under such
state securities or blue sky laws of such jurisdictions as the
Holders may reasonably request in writing within twenty (20)
days following the original filing of such Registration
Statement, except that the
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Company shall not for any purpose be required to execute a
general consent to service of process or to qualify to do
business as a foreign corporation in any jurisdiction wherein
it is not so qualified or subject itself to taxation in any
such jurisdiction;
(D) notify the Holders, promptly after it shall
receive notice thereof, of the time when such Registration
Statement has become effective or a supplement to any
prospectus forming a part of such Registration Statement has
been filed;
(E) notify the Holders promptly of any request by the
SEC for the amending or supplementing of such Registration
Statement or prospectus or for additional information;
(F) prepare and file with the SEC, promptly upon the
request of any Holders, any amendments or supplements to such
Registration Statement or prospectus which, in the opinion of
counsel for such Holders (and concurred in by counsel for the
Company), is required under the Act or the rules and
regulations thereunder in connection with the distribution of
Common Stock by such Holders;
(G) prepare and promptly file with the SEC and
promptly notify such Holders of the filing of such amendment
or supplement to such Registration Statement or prospectus as
may be necessary to correct any statements or omissions if, at
the time when a prospectus relating to such securities is
required to be delivered under the Act, any event shall have
occurred as the result of which any such prospectus or any
other prospectus as then in effect would include an untrue
statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of
the circumstances in which they were made, not misleading; and
(H) advise the Holders, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance of
any stop order by the SEC suspending the effectiveness of such
Registration Statement or the initiation or threatening of any
proceeding for that purpose and promptly use its best efforts
to prevent the issuance of any stop order or to obtain its
withdrawal if such stop order should be issued.
The Company may require each Holder of Warrant Shares as to which any
registration is being effected to furnish to the Company such information
regarding the distribution of such Warrant Shares as the Company may from time
to time reasonably request in writing.
(3) All fees, costs and expenses of and incidental to such
registration, inclusion and public offering in connection therewith shall be
borne by the Company, provided, however, that the Holders shall bear their pro
rata share of the underwriting discount and commissions and transfer taxes. The
fees, costs and expenses of registration to be borne by the Company as provided
above shall include, without limitation, all registration, filing, and NASD
fees, printing expenses, fees and disbursements of counsel and accountants for
the Company, and all legal fees and disbursements and other expenses of
complying with state securities or blue
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sky laws of any jurisdictions in which the securities to be offered are to be
registered and qualified (except as provided above), and, in the case of a
registration, other than such registration set forth in Section (c)(8), fees of
one (1) counsel for the Holders of the Warrant Shares. Fees and disbursements of
counsel and accountants for the Holders and any other expenses incurred by the
Holders not expressly included above shall be borne by the Holders.
(4) The Company will indemnify and hold harmless each Holder
of Warrant Shares which are included in a Registration Statement pursuant to the
provisions of Section (j)(1) hereof, its directors and officers, and any
underwriter (as defined in the Act) for such Holder and each person, if any, who
controls such Holder or such underwriter within the meaning of the Act, from and
against, and will reimburse such Holder and each such underwriter and
controlling person with respect to, any and all loss, damage, liability, cost
and expense to which such Holder or any such underwriter or controlling person
may become subject under the Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue statement or alleged
untrue statement of any material fact contained in such Registration Statement,
any prospectus contained therein or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, damage, liability, cost or expenses
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission so made in conformity with information furnished
by such Holder, such underwriter or such controlling person in writing
specifically for use in the preparation thereof.
(5) Each Holder of Warrant Shares included in a registration
pursuant to the provisions of Section (j)(1) hereof will indemnify and hold
harmless the Company, its directors and officers, any controlling person and any
underwriter from and against, and will reimburse the Company, its directors and
officers, any controlling person and any underwriter with respect to, any and
all loss, damage, liability, cost or expense to which the Company or any
controlling person and/or any underwriter may become subject under the Act or
otherwise, insofar as such losses, damages, liabilities, costs or expenses are
caused by any untrue statement or alleged untrue statement of any material fact
contained in such Registration Statement, any prospectus contained therein or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was so made in reliance upon and in
strict conformity with written information furnished by or on behalf of such
Holder specifically for use in the preparation thereof.
(6) Promptly after receipt by an indemnified party pursuant to
the provisions of Sections (j)(4) or (5) of notice of the commencement of any
action involving the subject matter of the foregoing indemnity provisions such
indemnified party will, if a claim thereof is to be made against the
indemnifying party pursuant to the provisions of said Sections (j)(4) or (5),
promptly notify the indemnifying party of the commencement thereof; but the
omission to so notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than hereunder.
In case such action is brought against any
12
indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party shall have the right to participate in, and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party, provided, however, if counsel for the indemnifying party
concludes that a single counsel cannot under applicable legal and ethical
considerations, represent both the indemnifying party and the indemnified party,
the indemnified party or parties have the right to select separate counsel to
participate in the defense of such action on behalf of such indemnified party or
parties. After notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying party will not
be liable to such indemnified party pursuant to the provisions of said Sections
(j)(4) or (5) for any legal or other expense subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation, unless (i) the indemnified party shall have employed
counsel in accordance with the provisions of the preceding sentence, (ii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after the notice of the commencement of the action or (iii) the indemnifying
party has authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party.
(7) If the Company fails to carry out its obligations under
this Section (j), the Holder shall be entitled to tender this Warrant for a sum
equal to the number of Warrant Shares multiplied by the current market thereof
less the Exercise Price thereof and a person who has exercised this Warrant
shall be entitled to tender the Common Stock thereby purchased for the current
market value, and in each case to be paid therefor in 10 business days
thereafter.
(8) If the Warrant Shares have been included in a Registration
Statement filed with the SEC in connection with the IPO and if such Registration
Statement is declared effective, and for so long as it remains effective, the
Holder shall have no rights to demand a registration under Section (j)(1)
hereof.
BRIDGELINE SOFTWARE, INC.
By:
----------------------------
Name: Thomas Massie
Title: President, Chief Executive Officer
Dated: ______, 2006
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PURCHASE FORM
-------------
Dated
The undersigned hereby irrevocably elects to exercise the within
Warrant to the extent of purchasing shares of Common Stock and hereby makes
payment of in payment of the actual exercise price thereof _____ (check) or
elects a cashless exercise with respect thereto ______ (check) as to a total of
___________ shares.
___________________________________
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name
-----------------------------------------------------------
(Please typewrite or print in block letters)
Address
--------------------------------------------------------
Signature
------------------------------------------------------
ASSIGNMENT FORM
FOR VALUE RECEIVED, __________________________ hereby sells, assigns
and transfers unto
Name ____________________________________________
(Please typewrite or print in block letters)
Address _________________________________________
the right to purchase Common Stock represented by this Warrant to the extent of
shares as to which such right is exercisable and does hereby irrevocably
constitute and appoint Attorney, to transfer the same on the books of the
Company with full power of substitution in the premises.
Date ____________________________________________
Signature _______________________________________
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