Document:

Exhibit 4.4

 

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:

  	
   

  	
  Metastorm Inc., a Maryland
  corporation

  
	
  Number of Shares:

  	
   

  	
  13,699

  
	
  Class of Stock:

  	
   

  	
  Common Stock

  
	
  Initial Exercise Price:

  	
   

  	
  $2.19 per share

  
	
  Issue Date:

  	
   

  	
  March 21, 2005

  
	
  Expiration Date:

  	
   

  	
  March 21, 2012
  (Subject to Section 4.1)

  

 

THIS WARRANT CERTIFIES THAT, for good and valuable
consideration, the receipt of which is hereby acknowledged, COMERICA BANK or
its assignee (“Holder”) is entitled to purchase the number of fully paid and
nonassessable shares of the class of securities (the “Shares”) of the
corporation (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 this warrant and 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 regularly 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 regularly
traded in a public market, the Board of Directors of the Company shall
determine fair market value in its reasonable good faith judgment.

 

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 (a) any sale, license, or other disposition of all or substantially
all of the assets (including intellectual property) of the Company, or (b) any
reorganization, consolidation, merger or sale of the voting securities of the
Company or any other transaction 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.  If
upon the closing of any Acquisition the successor entity assumes the
obligations of this warrant, then 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.  The Company shall use
reasonable efforts to cause the surviving corporation to assume the obligations
of this warrant.

 

1.7.3                        Nonassumption.  If
upon the closing of any Acquisition the successor entity does not assume the
obligations of this warrant and Holder has not otherwise exercised this warrant
in full, then Holder shall have the option either to (a) deem this warrant
to have been automatically converted pursuant to Section 1.2 and
thereafter Holder shall participate in the Acquisition on the same terms as
other holders of the same class of securities of the Company; or (b) require
the Company to purchase this warrant for cash upon the closing of the
Acquisition for an amount per Share equal to three (3) times the Warrant
Price.

 

ARTICLE 2.                                ADJUSTMENTS TO THE SHARES.

 

2.1                                 Stock Dividends, Splits, Etc.  If
the Company declares or pays a dividend on its common stock payable in common
stock, or other securities, or subdivides the outstanding common stock into a
greater amount of common stock, 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, 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 Articles of Incorporation upon the closing of a
registered public offering of the Company’s common 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

 

2.3                                 Adjustments for Combinations, Etc.  If
the outstanding Shares are combined or consolidated, by reclassification or
otherwise, into a lesser number of shares, the Warrant Price shall be
proportionately increased.  If the
outstanding Shares are combined or consolidated, by reclassification or
otherwise, into a greater number of shares, the Warrant Price shall be
proportionately decreased.

 

2.4                                 Adjustments for Diluting Issuances.  The
Warrant Price and the number of Shares issuable upon exercise of this warrant
shall be subject to adjustment, from time to time, in the manner set forth on Exhibit A,
if attached, in the event of Diluting Issuances (as defined on Exhibit A).

 

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 all the provisions of this Article 2 and in
taking all such action as may be necessary or appropriate to protect Holder’s
rights under this Article against impairment.

 

2.6                                 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.

 

2.7                                 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.

 

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)                                  The initial Warrant Price referenced on the
first page of this warrant is not greater than the fair market value of
the Shares as of the date of this warrant.

 

(b)                                 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.

 

(c)                                  The Company’s capitalization table attached
to this warrant is true and complete as of the Issue Date.

 

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; or (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 

 

3

 

wind up, then, in connection with each such
event, the Company shall give Holder (1) at least 20 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 (a) and (b) above;
and (2) in the case of the matters referred to in (c) and (d) above
at least 20 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).

 

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
communiques 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) 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.

 

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 on Exhibit B,
if attached.

 

ARTICLE 4.                                MISCELLANEOUS.

 

4.1                                 Term; Exercise Upon 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; provided, however, that if
the Company completes its initial public offering within the three-year period
immediately prior to the Expiration Date, the Expiration Date shall
automatically be extended until the third anniversary of the effective date of
the Company’s initial public offering.  If
this warrant has not been exercised prior to the Expiration Date, this warrant
shall be deemed to have been automatically exercised on the Expiration Date by “cashless”
conversion pursuant to Section 1.2.

 

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.

 

4.3                                 Compliance with Securities Laws on Transfer.  This
warrant and the Shares issuable upon exercise of 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).  The Company shall not require
Holder to provide an opinion of counsel if the transfer is to an affiliate of
Holder 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

 

4.4                                 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) 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); provided, however,
that Holder may transfer all or part of this warrant to its affiliates,
including, without limitation, Comerica Incorporated, at any time without
notice to the Company, and such affiliate shall then be entitled to all the
rights of Holder under this warrant and any related agreements, and the Company
shall cooperate fully in ensuring that any stock issued upon exercise of this
warrant is issued in the name of the affiliate that exercises the warrant.  The terms and conditions of this warrant shall
inure to the benefit of, and be binding upon, the Company and the holders
hereof and their respective permitted successors and assigns.  Unless the Company is filing financial
information with the SEC pursuant to the Securities Exchange Act of 1934, the
Company shall have the right to refuse to transfer any portion of this warrant
to any person who directly competes with the Company.

 

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 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.  All notices to the Holder shall be addressed
as follows:

 

Comerica Bank

Attn: Warrant Administrator

500 Woodward Avenue, 32nd Floor, MC 3379

Detroit, MI 48226

 

4.6                                 Amendments.  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                                 Governing Law.  This
warrant shall be governed by and construed in accordance with the laws of the
State of California, without giving effect to its principles regarding
conflicts of law.

 

5

 

	
   

  	
  Metastorm Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Chris Desautelle

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Chris Desautelle

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  VP & CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert J. Farrell

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Robert J. Farrell

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  President

  
							

 

Authorized signatories under Corporate
Resolutions to Borrow or an authorized signer(s) under a resolution
covering warrants must sign the warrant.

 

6

 

APPENDIX 1

 

NOTICE OF EXERCISE

 

1.                                       The undersigned hereby elects to purchase                         
shares of the                         
stock of Metastorm Inc. pursuant to the terms of the attached warrant, and
tenders herewith payment of the purchase price of such shares in full.

 

1.                                       The undersigned hereby elects to convert the
attached warrant into shares in the manner specified in the warrant.  This conversion is exercised with respect to                         
of the shares covered by the warrant.

 

[Strike paragraph that does not apply.]

 

2.                                       Please issue a certificate or certificates
representing said shares in the name of the undersigned or in such other name
as is specified below:

 

Comerica Bank

Attn: Warrant Administrator

500 Woodward Avenue, 32nd Floor, MC 3379

Detroit, MI 48226

 

3.                                       The undersigned represents it is acquiring
the shares solely for its own account and not as a nominee for any other party
and not with a view toward the resale or distribution thereof except in compliance
with applicable securities laws.

 

	
  COMERICA BANK or Registered Assignee

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (Signature)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (Signature)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (Date)

  	
   

  

 

7

 

EXHIBIT A

COMERICA BANK

ANTI-DILUTION AGREEMENT

(for Common Stock Warrants)

 

This Anti-dilution Agreement is entered into as of March 21,
2005, by and between Comerica Bank (“Purchaser”) and Metastorm Inc. (“the
Company”).

 

RECITALS

 

A.                                   Concurrently with the execution of this
Anti-dilution Agreement, the Purchaser is purchasing from the Company a Warrant
to Purchase Stock (the “Warrant”) pursuant to which Purchaser has the right to
acquire from the Company the Shares (as defined in the Warrant).

 

B.                                     By this Anti-dilution Agreement, the
Purchaser and the Company desire to set forth the adjustment in the number of
Shares issuable upon exercise of the Warrant as a result of a Diluting Issuance
(as defined below).

 

C.                                     Capitalized terms used herein shall have the
same meaning as set forth in the Warrant.

 

NOW, THEREFORE, in consideration of the mutual
promises, covenants and conditions hereinafter set forth, the parties hereto
mutually agree as follows:

 

1.                                       Definitions.  As used in this Anti-dilution Agreement, the
following terms have the following respective meanings:

 

(a)                                  “Option” means any right, option or warrant
to subscribe for, purchase or otherwise acquire common stock or Convertible
Securities.

 

(b)                                 “Convertible Securities” means any evidences
of indebtedness, shares of stock or other securities directly or indirectly
convertible into or exchangeable for common stock.

 

(c)                                  “Issue” means to grant, issue, sell, assume
or fix a record date for determining persons entitled to receive any security
(including Options), whichever of the foregoing is the first to occur.

 

(d)                                 “Additional Common Shares” means all common
stock (including reissued shares) Issued (or deemed to be issued pursuant to Section 2)
after the date of the Warrant.  Additional
Common Shares does not include, however, any common stock Issued in a
transaction described in Sections 2.1 and 2.2 of the Warrant; any common stock
Issued upon conversion of preferred stock outstanding on the date of the Warrant;
the Shares; or common stock Issued as incentive or in a nonfinancing
transaction to employees, officers, directors or consultants to the Company.

 

2.                                       Deemed Issuance of Additional Common Shares.  The
shares of common stock ultimately Issuable upon exercise of an Option
(including the shares of common stock ultimately Issuable upon conversion or
exercise of a Convertible Security Issuable pursuant to an Option) are deemed
to be Issued when the Option is Issued.  The
shares of common stock ultimately Issuable upon conversion or exercise of a
Convertible Security (other than a Convertible Security Issued pursuant to an
Option) shall be deemed Issued upon Issuance of the Convertible Security.  The maximum amount of common stock Issuable is
determined without regard to any future adjustments permitted under the
instrument creating the Options or Convertible Securities.

 

1

 

3.                                       Adjustment of Warrant Price for Diluting
Issuances.

 

3.1                                 Weighted Average Adjustment.  If
the Company issues Additional Common Shares after the date of the Warrant and
the consideration per Additional Common Share (determined pursuant to Section 9)
is less than the Warrant Price in effect immediately before such Issue (a “Diluting
Issuance”), the Warrant Price in effect immediately before such Issue shall be
reduced, concurrently with such Issue, to a price (calculated to the nearest
hundredth of a cent) determined by multiplying the Warrant Price by a fraction:

 

(a)                                  the numerator of which is the amount of
common stock outstanding immediately before such Issue plus the amount of
common stock that the aggregate consideration received by Company for the
Additional Common Shares would purchase at the Warrant Price in effect
immediately before such Issue, and

 

(b)                                 the denominator of which is the amount of
common stock outstanding immediately before such Issue plus the number of such
Additional Common Shares.

 

3.2                                 Adjustment of Number of Shares.  Upon
each adjustment of the Warrant Price, the number of Shares Issuable upon
exercise of the Warrant shall be increased to equal the quotient obtained by
dividing (a) the product resulting from multiplying (i) the number of
Shares Issuable upon exercise of the Warrant and (ii) the Warrant Price,
in each case as in effect immediately before such adjustment, by (b) the
adjusted Warrant Price.

 

3.3                                 Securities Deemed Outstanding.  For
the purpose of this Section 3, all securities Issuable upon exercise of
any outstanding Convertible Securities or Options, Warrants, or other rights to
acquire securities of the Company shall be deemed to be outstanding.

 

4.                                       No Adjustment for Issuances Following Deemed
Issuances.  No adjustment to the Warrant Price shall be
made upon the exercise of Options or conversion of Convertible Securities.

 

5.                                       Adjustment Following Changes in Terms of
Options or Convertible Securities.  If the consideration payable
to, or the amount of common stock Issuable by, the Company increases or
decreases, respectively, pursuant to the terms of any outstanding Options or
Convertible Securities, the Warrant Price shall be recomputed to reflect such
increase or decrease.  The recomputation
shall be made as of the time of the Issuance of the Options or Convertible
Securities.  Any changes in the Warrant Price
that occurred after such Issuance because other Additional Common Shares were
Issued or deemed Issued shall also be recomputed.

 

6.                                       Recomputation Upon Expiration of Options or
Convertible Securities.  The Warrant Price computed upon the original
Issue of any Options or Convertible Securities, and any subsequent adjustments
based thereon, shall be recomputed when any Options or rights of conversion
under Convertible Securities expire without having been exercised.  In the case of Convertible Securities or
Options for common stock, the Warrant Price shall be recomputed as if the only
Additional Common Shares Issued were the shares of common stock actually Issued
upon the exercise of such securities, if any, and as if the only consideration
received therefor was the consideration actually received upon the Issue,
exercise or conversion of the Options or Convertible Securities.  In the case of Options for Convertible
Securities, the Warrant Price shall be recomputed as if the only Convertible
Securities Issued were the Convertible Securities actually Issued upon the
exercise thereof, if any, and as if the only consideration received therefor
was the consideration actually received by the Company (determined pursuant to Section 9),
if any, upon the Issue of the Options for the Convertible Securities.

 

2

 

7.                                       Limit on Readjustments.  No
readjustment of the Warrant Price pursuant to Sections 5 or 6 shall increase
the Warrant Price more than the amount of any decrease made in respect of the
Issue of any Options or Convertible Securities.

 

8.                                       30 Day Options.  In
the case of any Options that expire by their terms not more than 30 days after
the date of Issue thereof, no adjustment of the Warrant Price shall be made
until the expiration or exercise of all such Options.

 

9.                                       Computation of Consideration.  The
consideration received by the Company for the Issue of any Additional Common
Shares shall be computed as follows:

 

(a)                                  Cash shall be valued at the amount of cash received by the Corporation,
excluding amounts paid or payable for accrued interest or accrued dividends.

 

(b)                                 Property.  Property, other than cash,
shall be computed at the fair market value thereof at the time of the Issue as
determined in good faith by the Board of Directors of the Company.

 

(c)                                  Mixed Consideration.  The
consideration for Additional Common Shares Issued together with other property
of the Company for consideration that covers both shall be determined in good
faith by the Board of Directors.

 

(d)                                 Options, and Convertible Securities.  The
consideration per Additional Common Share for Options and Convertible
Securities shall be determined by dividing:

 

(i)                                     the total amount, if any, received or
receivable by the Company for the Issue of the Options or Convertible
Securities, plus the minimum amount of additional consideration (as set forth
in the instruments relating thereto, without regard to any provision contained
therein for a subsequent adjustment of such consideration) payable to the
Company upon exercise of the Options or conversion of the Convertible
Securities, by

 

(ii)                                  the maximum amount of common stock (as set
forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such number) ultimately
Issuable upon the exercise of such Options or the conversion of such
Convertible Securities.

 

10.                                 General.

 

10.1                           Governing Law.  This
Anti-dilution Agreement shall be governed in all respects by the laws of the
State of California as such laws are applied to agreements between California
residents entered into and to be performed entirely within California.

 

10.2                           Successors and Assigns.  Except
as otherwise expressly provided herein, the provisions hereof shall inure to
the benefit of, and be binding upon, the successors, assigns, heirs, executors
and administrators of the parties hereto.

 

10.3                           Entire Agreement.  Except as set forth below, this Anti-dilution
Agreement and the other documents delivered pursuant hereto constitute the full
and entire understanding and agreement between the parties with regard to the
subjects hereof and thereof.

 

10.4                           Notices, etc.  All
notices and other communications required or permitted hereunder shall be in
writing and shall be mailed by first class mail, postage prepaid, certified or 

 

3

 

registered mail, return
receipt requested, addressed (a) if to Purchaser at Purchaser’s address as
set forth below, or at such other address as Purchaser shall have furnished to
the Company in writing, or (b) if to the Company, at the Company’s address
set forth below, or at such other address as the Company shall have furnished
to the Purchaser in writing.

 

10.5                           Severability.  In
case any provision of this Anti-dilution Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions of this Anti-dilution Agreement shall not in any way be affected or
impaired thereby.

 

10.6                           Titles and Subtitles.  The
titles of the sections and subsections of this Agreement are for convenience of
reference only and are not to be considered in construing this Anti-dilution
Agreement.

 

10.7                           Counterparts.  This
Anti-dilution Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument.

 

	
  PURCHASER

  	
  ISSUER

  
	
   

  	
   

  
	
  COMERICA BANK

  	
  METASTORM INC

  
	
   

  	
   

  
	
  By:

  	
  /s/ Joseph Clayton

  	
   

  	
  By:

  	
  /s/ Chris Desautelle

  
	
   

  	
   

  
	
  Name:

  	
  Joseph Clayton

  	
   

  	
  Name:

  	
  Chris Desautelle

  
	
   

  	
   

  
	
  Title:

  	
  VP

  	
   

  	
  Title:

  	
  VP & CFO

  
	
   

  	
   

  
	
  Address:

  	
  11921 Freedom Dr.

  	
   

  	
  Address:

  	
  8825 Stanford Blvd.

  
	
   

  	
  Suite 920

  	
   

  	
   

  	
  Ste. 200

  
	
   

  	
  Reston, VA 20190

  	
   

  	
   

  	
  Columbia, MD 21045

  
											

 

4

 

EXHIBIT B

 

Registration
Rights

 

The Shares (if common stock), or the common stock
issuable upon conversion of the Shares, shall be deemed “registrable securities”
or otherwise entitled to “piggy back” registration rights in accordance with
the terms of the following agreement (the “Agreement”) between the Company and
its investors):

 

Amended
and Restated Registration Rights Agreement dated May 7, 2001, by and among
the Company and the Investors named therein, as amended.

 

The Company agrees that no amendments will be made
to the Agreement, which would have an adverse impact on Holder’s registration
rights thereunder without the consent of Holder.  By acceptance of the Warrant to which this Exhibit B
is attached, Holder shall be deemed to be a party to the Agreement.

 

If no Agreement exists, then the Company and the
Holder shall enter into Holder’s standard form of Registration Rights Agreement
as in effect on the Issue Date of the Warrant.

 

5Exhibit 4.5

 

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:

  	
   

  	
  Metastorm Inc., a Maryland
  Corporation

  
	
  Number of Shares:

  	
   

  	
  51,277

  
	
  Class of Stock:

  	
   

  	
  Common Stock

  
	
  Initial Exercise Price:

  	
   

  	
  $0.65 per share

  
	
  Issue Date:

  	
   

  	
  February 20, 2003

  
	
  Expiration Date:

  	
   

  	
  February 20, 2010
  (Subject to  4.1)

  

 

THIS WARRANT CERTIFIES THAT, for good and valuable
consideration, the receipt of which is hereby acknowledged, COMERICA BANK -
CALIFORNIA or its assignee (“Holder”) is entitled to purchase the number of
fully paid and nonassessable shares of the class of securities (the “Shares”)
of the corporation (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 this warrant and 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                                 Agreement to be Bound by Stockholders
Agreement.  Exercise of this Warrant pursuant to either Section 1.1
or 1.2 shall be contingent on Holder’s agreement to be bound by the terms and
conditions of that certain Second Amended and Restated Stockholders Agreement
dated as of May 7, 2001, by and among the Company, the Purchasers, the
holders of Series A Preferred Stock, and the other holders of Common Stock
(each as defined therein) listed on Schedule 1 thereto, as amended and/or
restated from time to time (the “Stockholders Agreement”).

 

1.4                                 Fair Market Value.  If
the Shares are traded regularly 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 regularly
traded in a public market, the Board of Directors of the Company shall
determine fair market value in its reasonable good faith judgment.

 

 

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 (including intellectual property) 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.  If
upon the closing of any Acquisition the successor entity assumes the
obligations of this warrant, then 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.  The Company shall use
reasonable efforts to cause the surviving corporation to assume the obligations
of this warrant.

 

Nonassumption.  If upon
the closing of any Acquisition the successor entity does not assume the
obligations of this warrant and Holder has not otherwise exercised this warrant
in full, then Holder shall have the option either to (a) deem this warrant
to have been automatically converted pursuant to Section 1.2 and
thereafter Holder shall participate in the Acquisition on the same terms as
other holders of the same class of securities of the Company; or (b) require
the Company to purchase this warrant for cash upon the closing of the
Acquisition for an amount per Share equal to three (3) times the Warrant
Price.

 

ARTICLE 2.                                ADJUSTMENTS TO THE SHARES.

 

2.1                                 Stock Dividends, Splits, Etc.  If
the Company declares or pays a dividend on its common stock payable in common
stock, or other securities, subdivides the outstanding common stock into a
greater amount of common stock, 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, 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 Articles of Incorporation upon the closing of a
registered public offering of the Company’s common stock.  The Company or its successor shall promptly
issue to 

 

2

 

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, the Warrant Price shall be
proportionately increased.  If the
outstanding Shares are combined or consolidated, by reclassification or
otherwise, into a greater number of shares, the Warrant Price shall be
proportionately decreased.

 

2.4                                 Adjustments for Diluting Issuances.  The
Warrant Price and the number of Shares issuable upon exercise of this warrant
shall be subject to adjustment, from time to time, in the manner set forth on Exhibit A,
if attached, in the event of Diluting Issuances (as defined on Exhibit A).

 

2.5                                 No Impairment.  The
Company shall not, by amendment of its Articles 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 all the provisions of this Article 2 and in taking all such
action as may be necessary or appropriate to protect Holder’s rights under this
Article against impairment.

 

2.6                                 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)                                  The initial Warrant Price referenced on the
first page of this warrant is not greater than the fair market value of
the Shares as of the date of this warrant.

 

(b)                                 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.

 

(c)                                  The Company’s capitalization table attached
to this warrant is true and complete as of the Issue Date.

 

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; or (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 

 

3

 

wind up, then, in connection with each such
event, the Company shall give Holder (1) at least 20 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 (a) and (b) above; and (2) in
the case of the matters referred to in (c) and (d) above at least 20
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).

 

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 communiqués
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) 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.

 

3.4                                 Market Stand-Off Agreement.  Holder hereby agrees that it shall not, to the
extent reasonably requested by the Company and an underwriter of stock (or
other securities) of the Company, sell or otherwise transfer or dispose of
(other than to donees who agree to be similarly bound) any Shares during the
one hundred eighty (180)-day period following the effective date of a
registration statement of the Company filed under the Securities Act of 1933;
provided, however, that such agreement shall be applicable only to the first
such registration statement of the Company which covers shares (or securities)
to be sold on its behalf to the public in a Public Offering.  Such agreement shall be in writing in a form satisfactory
to the Company and such underwriter.  In order
to enforce the foregoing covenant, the Company may impose stop-transfer
instructions with respect to the Shares (and the shares or securities of every
other person subject to the foregoing restriction) until the end of such one
hundred eighty (180) day period.

 

3.5                                 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 on Exhibit B, if
attached.

 

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; provided, however, that if the
Company completes its initial public offering within the three-year period
immediately prior to the Expiration Date, the Expiration Date shall
automatically be extended until the third anniversary of the effective date of
the Company’s initial public offering.  If this warrant has not been exercised prior
to the Expiration Date, this warrant shall be deemed to have been automatically
exercised on the Expiration Date by “cashless” conversion pursuant to Section 1.2.

 

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.

 

4

 

4.3                                 Compliance with Securities Laws on Transfer.  This
warrant and the Shares issuable upon exercise of 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 (i) 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) and (ii) the transferee’s agreement to be bound by the
Stockholders Agreement.  The Company
shall not require Holder to provide an opinion of counsel if the transfer is to
an affiliate of Holder 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),
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) 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); provided, however, that
so long as the transferee affiliate agrees to be bound by the Stockholders
Agreement, Holder may transfer all or part of this warrant to its affiliates,
including, without limitation, Comerica Incorporated, at any time without
notice to the Company, and such affiliate shall then be entitled to all the
rights of Holder under this warrant and any related agreements, and the Company
shall cooperate fully in ensuring that any stock issued upon exercise of this
warrant is issued in the name of the affiliate that exercises the warrant.  The terms and conditions of this warrant shall
inure to the benefit of, and be binding upon, the Company and the holders
hereof and their respective permitted successors and assigns.  The Company shall have the right to refuse to
transfer any portion of this warrant to any person who directly competes with
the Company, unless the Company is filing financial information with the SEC
pursuant to the Securities Exchange Act of 1934.

 

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 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. 
All notices to the Holder shall be addressed as follows:

 

Comerica
Bank – California

Attn:
Warrant Administrator

Technology
and Life Sciences Division

P.O. Box
7279

San
Francisco, CA  94120-7279

 

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                                 Governing Law.  This
warrant shall be governed by and construed in accordance with the laws of the
State of California, without giving effect to its principles regarding
conflicts of law.

 

5

 

	
   

  	
  Metastorm Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Chris Desautelle

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Chris Desautelle

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  VP & CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert J. Farrell

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Robert J. Farrell

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  President & CEO

  
						

 

Authorized signatories under Corporate Resolutions
to Borrow or an authorized signer(s) under a resolution covering warrants
must sign the warrant.

 

6

 

APPENDIX 1

 

NOTICE OF EXERCISE

 

1.                                       The undersigned hereby elects to purchase                     
shares of the common stock of Metastorm Inc.
pursuant to the terms of the attached warrant, and tenders herewith payment of
the purchase price of such shares in full.

 

1.                                       The undersigned hereby elects to convert the
attached warrant into shares in the manner specified in the warrant.  This conversion is exercised with respect to                     
of the shares covered by the warrant.

 

[Strike paragraph that does not apply.]

 

2.                                       Please issue a certificate or certificates
representing said shares in the name of the undersigned or in such other name
as is specified below:

 

Comerica Bank – California

Attn: Warrant Administrator

Technology and Life Sciences Division

P.O. Box 7279

San Francisco, CA  94120-7279

 

3.                                       The undersigned represents it is acquiring
the shares solely for its own account and not as a nominee for any other party
and not with a view toward the resale or distribution thereof except in compliance
with applicable securities laws.

 

	
  COMERICA BANK -
  CALIFORNIA or

  	
   

  
	
  Registered Assignee

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (Signature)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (Date)

  	
   

  

 

7

 

EXHIBIT A

 

COMERICA BANK-CALIFORNIA

ANTI-DILUTION AGREEMENT

(for Common Stock Warrants)

 

This Anti-dilution Agreement is entered into as of February 20, 2003, by and between Comerica Bank -
California (“Purchaser”) and Metastorm Inc.
(“the Company”).

 

RECITALS

 

A                                      Concurrently with the execution of this
Anti-dilution Agreement, the Purchaser is purchasing from the Company a Warrant
to Purchase Stock (the “Warrant”) pursuant to which Purchaser has the right to
acquire from the Company the Shares (as defined in the Warrant).

 

B.                                     By this Anti-dilution Agreement, the
Purchaser and the Company desire to set forth the adjustment in the number of
Shares issuable upon exercise of the Warrant as a result of a Diluting Issuance
(as defined below).

 

C.                                     Capitalized terms used herein shall have the
same meaning as set forth in the Warrant.

 

NOW, THEREFORE, in
consideration of the mutual promises, covenants and conditions hereinafter set
forth, the parties hereto mutually agree as follows:

 

1.                                        Definitions.  As used in this Anti-dilution Agreement, the
following terms have the following respective meanings:

 

(a)                                  “Option” means any right, option or warrant
to subscribe for, purchase or otherwise acquire common stock or Convertible
Securities.

 

(b)                                 “Convertible Securities” means any evidences
of indebtedness, shares of stock or other securities directly or indirectly
convertible into or exchangeable for common stock.

 

(c)                                  “Issue” means to grant, issue, sell, assume
or fix a record date for determining persons entitled to receive any security
(including Options), whichever of the foregoing is the first to occur.

 

(d)                                 “Additional Common Shares” means all shares
of common stock Issued (or, deemed to be Issued) by the Company after the date
hereof, other than (a) shares of common stock Issued or Issuable upon the
conversion of shares of the preferred stock outstanding on the date hereof (“Preferred
Stock”); (b) shares of common stock Issued or Issuable to employees,
directors or consultants of the Company pursuant to a plan or arrangement
approved by the Board of Directors of the Company (the “Board”) (provided that
the Board shall also approve the grant of shares of common stock or other
securities exercisable for such shares of common stock in connection
therewith); (c) shares of common stock Issued pursuant to a merger or
consolidation of the Company with or into any other corporation or corporations
approved in accordance with the articles of incorporation of the Company, as
amended and/or restated, from time to time (the “Charter”); (d) shares of
common stock Issued in connection with an acquisition approved in accordance
with the Charter; (e) shares of common stock Issued or Issuable to
commercial banking or equipment lease financing entities in connection with
banking or lease financing transactions approved by the Board; (f) shares
of common stock and or Preferred Stock issued pursuant to Section 6.7 of
the Stock Purchase Agreement by and among the Company and the purchasers of Series B
Preferred Stock listed on Schedule 1 thereto, dated as of May 7,
2001; (g) Option(s) Issued to Riggs Capital 

 

8

 

Partners, LLC (“Riggs”) to
purchase Series A Preferred Stock up to that number of shares of Series A
Preferred Stock (subject to appropriate adjustment for any Recapitalization
Event (as defined in the Charter)) owned by Riggs on the Series B Original
Issue Date (as defined in the Charter) in exchange for the transfer to the
Company by Riggs of a number of shares of Series A Preferred Stock equal
to or greater than that number of shares for which such Option(s) is (are)
exercisable, provided that such Option(s) shall not be exercisable under
any circumstance by Riggs (but only by a transferee thereof); or (h) Option(s) Issued
to Riggs to purchase up to that number of shares of common stock equal to the
number of shares of common stock for which the warrant to purchase common stock
owned by Riggs on the Series B Original Issue Date transferred to the
Company by Riggs is exercisable immediately prior to such transfer, provided
that such Option(s) shall not be exercisable under any circumstance by
Riggs (but only by a transferee thereof).

 

2.                                       Deemed Issuance of Additional Common Shares.  The
shares of common stock ultimately Issuable upon exercise of an Option
(including the shares of common stock ultimately Issuable upon conversion or
exercise of a Convertible Security Issuable pursuant to an Option) are deemed
to be Issued when the Option is Issued, provided that, if the Company
fixes a record date for the determination of holders of any class of securities
entitled to receive any such Options, then shares of common stock ultimately
Issuable upon exercise of an Option shall be deemed Issued as of the close of
business on such record date, provided further that in no event shall
Additional Common Shares be deemed to be Issued if the consideration per share
of such Additional Common Shares would be less than the Warrant Price in effect
on the date of and immediately prior to such issuance, or the record date.  The shares of common stock ultimately Issuable
upon conversion or exercise of a Convertible Security (other than a Convertible
Security Issued pursuant to an Option) shall be deemed Issued upon Issuance of
the Convertible Security provided that, if the Company fixes a record
date for the determination of holders of any class of securities entitled to
receive any such Convertible Securities, then shares of common stock ultimately
Issuable upon the conversion or exchange of such Convertible Securities, shall
be deemed to be Issued as of the close of business on such record date, provided
further, that no Additional Common Shares shall be deemed to have been
Issued unless the consideration per share of such Additional Common Shares
would be less than the Warrant Price in effect on the date of and immediately
prior to such issuance, or the record date.  The maximum amount of common stock Issuable is
determined without regard to any future adjustments permitted under the
instrument creating the Options or Convertible Securities.

 

3.                                       Adjustment of Warrant Price for Diluting
Issuances.

 

3.1                                  Weighted Average Adjustment.  If
the Company issues Additional Common Shares after the date of the Warrant and
the consideration per Additional Common Share (determined pursuant to Section 9)
is less than the Warrant Price in effect immediately before such Issue (a “Diluting
Issuance”), the Warrant Price in effect immediately before such Issue shall be
reduced, concurrently with such Issue, to a price (calculated to the nearest
hundredth of a cent) determined by multiplying the Warrant Price by a fraction:

 

(a)                                   the numerator of which is the amount of
common stock outstanding immediately before such Issue plus the amount of
common stock that the aggregate consideration received by Company for the
Additional Common Shares would purchase at the Warrant Price in effect
immediately before such Issue, and

 

(b)                                  the denominator of which is the amount of
common stock outstanding immediately before such Issue plus the number of such
Additional Common Shares.

 

3.2                                  Adjustment of Number of Shares.  Upon
each adjustment of the Warrant Price, the number of Shares Issuable upon
exercise of the Warrant shall be increased to equal the quotient 

 

9

 

obtained by dividing (a) the
product resulting from multiplying (i) the number of Shares Issuable upon
exercise of the Warrant and (ii) the Warrant Price, in each case as in
effect immediately before such adjustment, by (b) the adjusted Warrant
Price.

 

3.3                                  Securities Deemed Outstanding.  For
the purpose of this Section 3, all securities Issuable upon exercise of
any outstanding Convertible Securities or Options, Warrants, or other rights to
acquire securities of the Company shall be deemed to be outstanding.

 

4.                                       No Adjustment for Issuances Following Deemed
Issuances.  No adjustment to the Warrant Price shall be
made upon the exercise of Options or conversion of Convertible Securities.

 

5.                                       Adjustment Following Changes in Terms of
Options or Convertible Securities.  If the consideration payable
to, or the amount of common stock Issuable by, the Company increases or decreases,
respectively, pursuant to the terms of any outstanding Options or Convertible
Securities, upon the exercise, conversion or exchange thereof, the Warrant
Price shall be recomputed to reflect such increase or decrease insofar as it
affects such Options or the rights of conversion or exchange under such Convertible
Securities.  Any changes in the Warrant
Price that occurred after such Issuance because other Additional Common Shares
were Issued or deemed Issued shall also be recomputed.

 

6.                                       Recomputation Upon Expiration of Options or
Convertible Securities.  The Warrant Price computed upon the original
Issue of any Options or Convertible Securities, and any subsequent adjustments
based thereon, shall be recomputed when any Options or rights of conversion
under Convertible Securities expire without having been exercised.  In the case of Convertible Securities or
Options for common stock, the Warrant Price shall be recomputed as if the only
Additional Common Shares Issued were the shares of common stock actually Issued
upon the exercise of such securities, if any, and as if the only consideration
received therefor was the consideration actually received upon the Issue,
exercise or conversion of the Options or Convertible Securities.  In the case of Options for Convertible
Securities, the Warrant Price shall be recomputed as if the only Convertible
Securities Issued were the Convertible Securities actually Issued upon the
exercise thereof, if any, and as if the only consideration received therefor
was the consideration actually received by the Company (determined pursuant to Section 9),
if any, upon the Issue of the Options for the Convertible Securities.

 

7.                                       Limit on Readjustments.  No
readjustment of the Warrant Price pursuant to Sections 5 or 6 shall
increase the Warrant Price more than the amount of any decrease made in respect
of the Issue of any Options or Convertible Securities.

 

8.                                       30 Day Options.  In
the case of any Options that expire by their terms not more than 30 days after
the date of Issue thereof, no adjustment of the Warrant Price shall be made
until the expiration or exercise of all such Options.

 

9.                                       Computation of Consideration.  The
consideration received by the Company for the Issue of any Additional Common
Shares shall be computed as follows:

 

(a)                                  Cash shall be valued at the amount of cash received by the Corporation,
excluding amounts paid or payable for accrued interest or accrued dividends.

 

(b)                                 Property.  Property, other than cash,
shall be computed at the fair market value thereof at the time of the Issue as
determined in good faith by the Board of Directors of the Company.

 

10

 

(c)                                  Mixed Consideration.  The
consideration for Additional Common Shares Issued together with other property
of the Company for consideration that covers both shall be determined in good
faith by the Board of Directors.

 

(d)                                 Options and Convertible Securities.  The
consideration per share received by the Company for Options and Convertible
Securities, shall be determined by dividing:

 

(i)                                      the total amount, if any, received or
receivable by the Company as consideration for the issuance of such Options or
Convertible Securities, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment of such
consideration) payable to the Company upon the exercise of such Options or the conversion
or exchange of such Convertible Securities, or in the case of Options for
Convertible Securities, the exercise of such Options for Convertible Securities
and the conversion or exchange of such Convertible Securities, by

 

(ii)                                   the maximum number of shares of common stock
(as set forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such number) Issuable
upon the exercise of such Options or the conversion or exchange of such
Convertible Securities.

 

10.                                 General.

 

10.1                            Governing Law.  This
Anti-dilution Agreement shall be governed in all respects by the laws of the
State of California as such laws are applied to agreements between California
residents entered into and to be performed entirely within California.

 

10.2                            Successors and Assigns.  Except
as otherwise expressly provided herein, the provisions hereof shall inure to
the benefit of, and be binding upon, the successors, assigns, heirs, executors
and administrators of the parties hereto.

 

10.3                            Entire Agreement.  Except
as set forth below, this Anti-dilution Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof.

 

10.4                            Notices, etc.  All notices
and other communications required or permitted hereunder shall be in writing
and shall be mailed by first class mail, postage prepaid, certified or registered
mail, return receipt requested, addressed (a) if to Purchaser at Purchaser’s
address as set forth below, or at such other address as Purchaser shall have
furnished to the Company in writing, or (b) if to the Company, at the
Company’s address set forth below, or at such other address as the Company
shall have furnished to the Purchaser in writing.

 

10.5                           Severability.  In case any provision of this Anti-dilution
Agreement shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions of this Anti-dilution Agreement
shall not in any way be affected or impaired thereby.

 

10.6                           Titles and Subtitles.
 The titles of the sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Anti-dilution Agreement.

 

10.7                           Counterparts.  This Anti-dilution Agreement may be executed
in any number of counterparts, each of which shall be an original, but all of
which together shall constitute one instrument.

 

11

 

	
  PURCHASER

  	
  ISSUER

  
	
   

  	
   

  
	
  COMERICA BANK – CALIFORNIA

  	
  METASTORM INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Joseph Crayton

  	
   

  	
  By:

  	
  /s/ Chris Desautelle

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Joseph Crayton

  	
   

  	
  Name:

  	
  Chris Desautelle

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  AVD

  	
   

  	
  Title:

  	
  VP/ CFO

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
  11921 Freedom Dr, 920

  	
   

  	
  Address:

  	
  8825 Stanford Blvd

  
	
   

  	
  Reston, VA 20190

  	
   

  	
   

  	
  Columbia, MD 21045

  
											

 

12

 

EXHIBIT B

 

Registration Rights

 

The Shares (if common stock), or the common stock
issuable upon conversion of the Shares, shall be deemed “registrable securities”
or otherwise entitled to “piggy back” registration rights in accordance with
the terms of the following agreement (the “Agreement”) between the Company and
its investor(s):

 

Amended and Restated Registration Rights Agreement dated May 7,
2001, by and among the Company and the Investors named therein, as amended.

 

The Company agrees that no amendments will be made
to the Agreement which would have an adverse impact on Holder’s registration rights
thereunder without the consent of Holder.  By acceptance of the Warrant to which this Exhibit B
is attached, Holder shall be deemed to be a party to the Agreement subject to
the terms and provisions thereof.

 

[OPEN]

 

13

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