Document:

Exhibit 4.2

 

FOURTH AMENDED AND RESTATED

REGISTRATION RIGHTS AGREEMENT

 

THIS FOURTH AMENDED AND RESTATED REGISTRATION RIGHTS
AGREEMENT (this “Agreement”) is entered into as of July 31, 2007, by and among (i) Metastorm
Inc., a Maryland corporation (the “Company”), (ii) the purchasers
(the “Series CC Investors”) of the Company’s Series CC
Convertible Preferred Stock, par value $0.01 per share (the “Series CC
Preferred Stock”), listed on Exhibit A hereto, (iii) the
other Persons listed on Exhibit A hereto, and (iv) the other
Persons that from time to time execute joinders to this Agreement.

 

WITNESSETH:

 

WHEREAS, the Company has entered into a Series CC
Convertible Preferred Stock Purchase Agreement dated as of July 31, 2007
(the “Stock Purchase Agreement”) with the Series CC Investors
pursuant to which the Company has agreed to issue and sell to the Series CC
Investors shares of the Company’s Series CC Preferred Stock; and

 

WHEREAS, the Company has agreed to grant certain
registration rights with respect to the shares of the Company’s Common Stock
issuable upon conversion of the Series CC Preferred Stock sold to the Series CC
Investors pursuant to the Stock Purchase Agreement; and

 

WHEREAS, the holders of the Company’s Series AA Convertible Preferred Stock,
par value $0.01 per share (the “Series AA Preferred Stock”), who
were holders of the Company’s Series BB Convertible Preferred Stock, par
value $0.01 per share (the “Series BB Preferred Stock”), prior to
the conversion thereof on the date of this Agreement (the “Converted
BB Investors”) have, concurrently with the execution and delivery of this
Agreement, (x) converted all of the issued and outstanding shares of the Series BB Convertible Preferred
Stock into shares of Series AA Preferred Stock at a conversion ratio
of 1.8339403 shares of Series AA Preferred Stock for each share of Series BB
Preferred Stock , and (y) exchanged all of the outstanding warrants to
purchase Series BB Preferred Stock (the “Series BB Warrants”)
for Series AA Preferred Stock, at an exchange ratio of one share of Series AA
Preferred Stock for each warrant to purchase a share of Series BB
Preferred Stock; and

 

WHEREAS, the Company, the Original Stockholders, the
Converted BB Investors and the then-Series AA Investors previously entered
into that certain Third Amended and Restated Registration Rights Agreement,
dated as of October 4, 2005 (the “Prior Registration Rights Agreement”),
which Prior Registration Rights Agreement is being amended, restated and
superseded in its entirety by this Agreement; and

 

WHEREAS, pursuant to Section 11.8 of the Prior
Registration Rights Agreement, the Company and the holders of at least
two-thirds (2¤3)
of the Registrable Securities (as that term was defined in the Prior
Registration Rights Agreement) have approved such amendment, which approval is
evidenced by such holder’s signature hereon;

 

 

NOW, THEREFORE, in consideration of the foregoing and
of the mutual promises and covenants contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound hereby agree as
follows:

 

ARTICLE 1

CERTAIN DEFINITIONS

 

As used herein, the following terms shall have the
following respective meanings:

 

1.1                                 “Commission”
shall mean the Securities and Exchange Commission, or any other successor
federal agency at the time administering the Securities Act.

 

1.2                                 “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended, or any
similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.

 

1.3                                 “Holders”
shall mean and include each of the Stockholders and any person or entity that
shall have executed this Agreement and whose name appears on the Schedule of
Registration Rights Holders attached hereto as Exhibit A or who
shall, pursuant to Section 11.2 hereof, become a party hereto, and any
permitted transferee under Article 9 hereof who holds Registrable
Securities.

 

1.4                                 “Initial
Public Offering” shall mean the first closing of a firm commitment
underwritten public offering pursuant to an effective registration statement
under the Securities Act, covering the offer and sale of Common Stock to the
public.

 

1.5                                 “Initiating
Holders” shall mean Holders of Registrable Securities representing at least
10% of the total Registrable Securities then outstanding.

 

1.6                                 “Original
Stockholders” shall mean the holders of Series AA Preferred Stock, as
listed on Exhibit A attached hereto, who were among the holders of
the Company’s previously outstanding Common Stock prior to the conversion
thereof to Series AA Preferred Stock on September 1, 2004.

 

1.7                                 “Original
Stockholder Shares” shall mean, collectively, the shares of Series AA
Preferred Stock held by the Original Stockholders, if any, including shares of
Common Stock issuable upon conversion of any option, warrant or other
convertible security granted or issued by the Company, whether outstanding as
of the date of this Agreement or granted or issued thereafter.

 

1.8                                 “Person” means any individual,
corporation, partnership, limited liability company, limited liability
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.

 

1.9                                 “Preferred
Holders” shall mean the Holders consisting solely of the Series AA
Investors and the Series CC Investors and any of their Permitted
Transferees.

 

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1.10                           “Preferred
Stock” shall mean the Series AA Preferred Stock and the Series CC
Preferred Stock treated together as one class.

 

1.11                           “Recapitalization
Events” shall mean stock splits, stock dividends, combinations,
recapitalizations, reorganizations, reclassifications, mergers, consolidations
and other similar events which affect the number of outstanding shares of the Series AA
Preferred Stock or the Series CC Preferred Stock.

 

1.12                           The
terms “register,” “registered” and “registration” refer to
a registration effected by preparing and filing with the Commission a
registration statement in compliance with the Securities Act, and the
declaration or ordering by the Commission of the effectiveness of such
registration statement.

 

1.13                           “Registrable
Preferred Securities” shall mean the Registrable Securities, excluding the
Original Stockholder Shares.

 

1.14                           “Registrable
Securities” shall mean (a) any and all shares of Common Stock (i) issued
or issuable with respect to the Original Stockholder Shares held by the
Original Stockholders and their respective Permitted Transferees, and (ii) issued
or issuable with respect to the Original Stockholder Shares held by the
Original Stockholders and any of their respective Permitted Transferees upon
any Recapitalization Event, (b) any and all shares of Common Stock (i) issued
or issuable upon conversion of the Series AA Preferred Stock held by the Series AA
Investors and any of their respective Permitted Transferees, and (ii) issued
or issuable with respect to the Series AA Preferred Stock held by the Series AA
Investors and any of their respective Permitted Transferees upon any
Recapitalization Event, and (c) any and all shares of Common Stock (i) issued
or issuable upon conversion of the Series CC Preferred Stock held by the Series CC
Investors and their respective Permitted Transferees, and (ii) issued or
issuable with respect to the Series CC Preferred Stock held by the Series CC
Investors and their respective Permitted Transferees upon any Recapitalization
Event, excluding in all cases, however, Registrable Securities sold by a Holder
to the public or pursuant to Rule 144 promulgated under the Securities
Act.

 

1.15                           “Registration
Expenses” shall mean all expenses incurred by the Company in complying with
Articles 2 and 3 hereof, including, without limitation, all registration,
qualification and filing fees, printing expenses, escrow fees, fees and
disbursements of legal counsel for the Company, fees and disbursements of one
legal counsel for the selling Holders, blue sky fees and expenses, and the
expense of any special audits incident to or required by any such registration
(but excluding the compensation of regular employees of the Company, which
shall be paid in any event by the Company). Such fees and disbursement of a
single legal counsel for the selling Holders, to be paid for by the Company
hereunder shall in no event exceed $15,000 in the case of any single
registration effected under Article 2 or 3 hereof.

 

1.16                           “S-3
Registration Expenses” shall mean all expenses incurred by the Company in
complying with Article 4 hereof, including, without limitation, all
registration, qualification and filing fees, printing expenses, escrow fees,
fees and disbursements of legal counsel for the Company,

 

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fees and disbursements of one legal counsel for the selling Holders,
blue sky fees and expenses, and the expense of any special audits incident to
or required by any such registration (but excluding the compensation of regular
employees of the Company, which shall be paid in any event by the Company).
Such fees and disbursement of a single legal counsel for the selling Holders to
be paid for by the Company hereunder shall in no event exceed $15,000 in the
case of any single registration effected under Article 4 hereof.

 

1.17                           “Series AA Investors” means,
collectively, the Holders of Series AA Preferred Stock other than Original
Stockholders (including, for the avoidance of doubt, the Converted BB
Investors), and the Permitted Transferees of such Holders of Series AA
Preferred Stock.

 

1.18                           “Securities
Act” shall mean the Securities Act of 1933, as amended, or any similar
federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.

 

1.19                           “Selling
Expenses” shall mean all underwriting fees, discounts, selling commissions
and stock transfer taxes applicable to the Registrable Securities registered by
the Holders.

 

1.20                           The
terms “Stockholders,” collectively, and a “Stockholder,”
individually, means the Series AA Investors and the Series CC
Investors.

 

ARTICLE 2

REQUESTED REGISTRATION

 

2.1                                 Request
for Registration. At the earlier of (i) the six month anniversary of
the effective date of the Initial Public Offering, or (ii) the second
anniversary of the date of this Agreement, the Initiating Holders may request
registration in accordance with this Article 2. In the event the Company
shall receive from the Initiating Holders a written request that the Company
effect any registration, qualification or compliance with respect to
Registrable Securities, the Company will:

 

(a)                                  promptly
give written notice of the proposed registration, qualification or compliance
to all other Holders; and

 

(b)                                 use
its best efforts to effect such registration, qualification or compliance as
soon as practicable (including, without limitation, undertaking to file
post-effective amendments, appropriate qualifications under applicable blue sky
or other state securities laws, and appropriate compliance with applicable
regulations issued under the Securities Act, and any other governmental
requirements or regulations) as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Registrable
Securities as are specified in such request, together with all or such portion
of the Registrable Securities of any Holder or Holders joining in such request
as are specified in a written request received by the Company within 15 days
after the receipt of the written notice from the Company described in Section 2.1(a);
provided, however, that

 

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the Company shall not be obligated to take any action to effect any
such registration, qualification or compliance pursuant to this Article 2:

 

(i)                                     in
any particular jurisdiction in which the Company would be required to execute a
general consent to service of process in effecting such registration,
qualification or compliance, unless the Company is already subject to service
in such jurisdiction and except as may be required by the Securities Act;

 

(ii)                                  during
the period starting with the date immediately preceding the Company’s
anticipated date of filing of, and ending on the date 180 days immediately
following the effective date of, any registration statement pertaining to a firmly
underwritten offering of securities of the Company for its own account (or such
lesser period as the managing underwriters of such offering will allow);

 

(iii)                               after the Company has
effected four (4) such requested registrations pursuant to this Article 2
(not including registrations on Form S-3) on behalf of the Initiating
Holders, with such registrations having been declared or ordered effective, and
the Registrable Securities offered pursuant to each of such registrations
having been sold, or if the Company has effected any requested registration
(other than a registration for the Company’s Initial Public Offering) pursuant
to this Agreement during the previous six-month period (or such shorter period
as the managing underwriter of the Company’s most recent public offering will
allow); or

 

(iv)                              if
the Company then meets the eligibility requirements applicable to the use of Form S-3
in connection with such registration and is able to effect such requested
registration pursuant to Article 4 hereof.

 

(c)                                  Subject
to the foregoing clauses (i) through (iv), the Company shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practicable after receipt of the request of the
Initiating Holders; provided, however, that if the Company shall
furnish to such Holders a certificate signed by the Chairman or Chief Executive
Officer of the Company stating that in the good faith judgment of the Board of
Directors of the Company, the registration and distribution of the Registrable
Securities covered or to be covered by such registration statement, or the
disclosure required by such registration statement, would materially interfere
with any pending material financing, acquisition or corporate reorganization,
or other material corporate development involving the Company or its
subsidiaries, or would require premature disclosure thereof, and it is
therefore essential to defer the filing of such registration statement, the
Company shall have the right to defer such filing for a period of not more than
90 days, but in no event for a period longer than 105 days after receipt of the
request of the Initiating Holders; and provided, further, that
the Company shall not be permitted to exercise such deferral right under this Section 2.1(c) or
Section 4.1(c) hereof more than once in any 360-day period.

 

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2.2                                 Underwriting.

 

(a)                                  The
distribution of the Registrable Securities covered by the request of the
Initiating Holders shall be effected by means of the method of distribution
selected by the Holders holding at least two-thirds (2/3)
of the Registrable Securities covered by such registration. If such
distribution is effected by means of an underwriting, the right of any Holder
to registration pursuant to this Article 2 shall be conditioned upon such
Holder’s participation in such underwriting and the inclusion of such Holder’s
Registrable Securities in the underwriting (unless otherwise agreed by the
Initiating Holders) to the extent provided herein.

 

(b)                                 If
such distribution is effected by means of an underwriting, the Company
(together with all Holders proposing to distribute their securities through
such underwriting) shall enter into an underwriting agreement in customary form with
a managing underwriter of nationally recognized standing selected for such
underwriting by the Company and approved by a majority in interest of the
Initiating Holders, which approval shall not be unreasonably withheld.
Notwithstanding any other provision of this Article 2, if the managing
underwriter, if any, advises the Initiating Holders in writing that marketing
factors (including pricing) require a limitation of the number of shares to be
underwritten, then the Preferred Holders who have requested registration of
Registrable Preferred Securities together shall share pro  rata in
the available portion of the registration in question, such sharing to be based
upon the number of shares of Registrable Preferred Securities then held by such
Preferred Holders. If after inclusion of such Registrable Preferred Securities,
it is possible to include additional shares in such registration, the Original
Stockholders who have requested registration together shall share pro  rata
in the remaining available portion of the registration in question, such
sharing to be based upon the number of shares of Original Stockholder Shares
then held by such Original Stockholders. No Registrable Securities excluded
from the underwriting by reason of the managing underwriter’s marketing
limitation shall be included in such registration.

 

(c)                                  If
any Holder disapproves of the terms of the underwriting, such person may elect
to withdraw therefrom by written notice to the Company, the managing
underwriter and the Initiating Holders. The Registrable Securities and/or other
securities so withdrawn shall also be withdrawn from registration; provided,
however, that if by the withdrawal of such Registrable Securities a
greater number of Registrable Securities held by other Holders may be
included in such registration (up to the maximum of any limitation imposed by
the underwriters), then the Company shall offer to all Holders who have
included (or requested to include) Registrable Securities in the registration
the right to include additional Registrable Securities in the same proportion
used in determining the underwriter limitation in this Section 2.2.

 

2.3                                 Inclusion
of Shares by Company. If the distribution of Registrable Securities is
being effected by means of an underwriting and if the managing underwriter has
not limited the number of Registrable Securities to be underwritten, the
Company may include securities for its own account or for the account of
others in such registration if the managing underwriter so agrees. The
inclusion of such shares shall be on the same terms as the registration of
shares held by the Initiating Holders, as applicable. In the event that the
underwriters exclude some of the securities to be registered, the

 

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securities to be sold for the account of the Company and any other
holders shall be excluded in their entirety prior to the exclusion of any
Registrable Securities.

 

2.4                                 Cancellation
of Registration. A majority in interest of the Initiating Holders, as
applicable, shall have the right to cancel a proposed registration of
Registrable Securities pursuant to Article 2 when, in their discretion,
market conditions are so unfavorable as to be seriously detrimental to an
offering pursuant to such registration. Such cancellation of a registration
shall not be counted as one of the four (4) such requested registrations
pursuant to Section 2.1(b)(iii) for the Initiating Holders so long as
the Initiating Holders agree to pay the reasonable expenses associated with
such cancelled registration.

 

ARTICLE 3

COMPANY REGISTRATION

 

3.1                                 Notice
of Registration to Holders. If at any time or from time to time the Company
shall determine to register any of its securities, either for its own account
or the account of a security holder or holders (including pursuant to Article 4),
other than (i) a registration relating solely to employee benefit plans on
Form S-8 (or any successor form) or (ii) a registration relating
solely to a Commission Rule 145 transaction on Form S-4 (or any
successor form), the Company will:

 

(a)                                  promptly
give to each Holder written notice thereof, and

 

(b)                                 include
in such registration (and any related qualification under blue sky laws or
other compliance), and in any underwriting involved therein, all the Registrable
Securities specified in a written request or requests, made within 15 days
after delivery of such written notice from the Company described in Section 3.1(a),
by any Holder or Holders.

 

3.2                                 Underwriting.
If the registration of which the Company gives notice is for a registered
public offering involving an underwriting, the Company shall so advise the
Holders as a part of the written notice given pursuant to Section 3.1(a).
In such event, the right of any Holder to registration pursuant to this Article 3
shall be conditioned upon such Holder’s participation in such underwriting and
the inclusion of such Holder’s Registrable Securities in the underwriting to
the extent provided herein. All Holders proposing to distribute their
securities through such underwriting shall (together with the Company) enter
into an underwriting agreement in customary form with the managing
underwriter selected for such underwriting by the Company.

 

(a)                                  Notwithstanding
any other provision of this Article 3, if the managing underwriter
determines that marketing factors (including pricing) require a limitation of
the number of shares to be underwritten, the Holders of Registrable Securities
shall have priority as to sales over the other holders of the Company’s
securities, and the Company shall cause such other holders to withdraw their
shares from such offering to the extent necessary to allow all requesting
Holders of Registrable Securities to include all shares so requested to be
included in such registration. Whenever the number of shares which may be
registered pursuant to Article 3 is still limited by this Section 3.2(a),
the Company shall have priority as to sales over the Holders of Registrable
Securities,

 

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and each Holder of Registrable Securities hereby agrees that it shall
withdraw its Registrable Securities from such registration to the extent
necessary to allow the Company to include all the shares which the Company
desires to sell for its own account to be included within such registration.
The Holders of Registrable Preferred Securities given rights by this Article 3
and participating in an offering pursuant to Section 3.1 together shall
share pro  rata in the available portion of the registration in
question, such sharing to be based upon the number of shares of Registrable
Preferred Securities then held by such participating Holders. If after the
inclusion of such Registrable Preferred Securities, it is possible to include
additional shares in such registration, the Original Stockholders given rights
by this Article 3 and participating in an offering pursuant to Section 3.1
together shall share pro  rata in the remaining available portion
of the registration in question, such sharing based upon the number of shares
of Original Stockholder Shares then held by such participating Original
Stockholders. No Registrable Securities excluded from the underwriting by
reason of the underwriters’ marketing limitation shall be included in such
registration.

 

(b)                                 The
Company shall so advise all Holders and the other holders distributing their
securities through such underwriting of any such limitation, and the number of
shares of Registrable Securities held by Holders that may be included in
the registration. If any Holder disapproves of the terms of any such
underwriting, such Holder may elect to withdraw therefrom by written
notice to the Company and the managing underwriter. Any securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration, but
the Holder shall continue to be bound by Section 11.10 hereof. If by the
withdrawal of such securities a greater number of Registrable Securities held
by other Holders may be included in such registration (up to the maximum
of any limitation imposed by the underwriters), then the Company shall offer to
all Holders who have included (or requested to include) Registrable Securities
in the registration the right to include additional Registrable Securities in
the same proportion used in determining the underwriter limitation in this Section 3.2.

 

(c)                                  The
Company shall have the right to terminate or withdraw any registration
initiated by it under this Article 3 prior to the effectiveness of such
registration, whether or not a Holder has elected to include Registrable Securities
in such registration.

 

ARTICLE 4

REGISTRATION ON FORM S-3

 

4.1                                 Request
for Registration.

 

(a)                                  In
addition to the rights set forth in Articles 2 and 3 hereof, if a Holder or
Holders request that the Company file a registration statement on Form S-3
(or any successor to Form S-3) for a public offering of shares of
Registrable Securities having an aggregate offering price of at least
$1,000,000 (based on the closing market price as of the trading day immediately
preceding the date of the request) and the Company is a registrant entitled to
use Form S-3 (or any successor form to Form S-3) to register
such shares for such an offering, the Company shall use its best efforts to
cause such shares to be registered for the offering as soon as practicable on Form S-3
(or any such successor form to Form S-3); provided, however,
that the Company shall not be required to effect

 

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more than two such registrations on behalf of the Holders pursuant to
this Article 4.1(a) during any consecutive 12 month period.

 

(b)                                 Notwithstanding
the foregoing, the Company shall not be obligated to take any action pursuant
to this Article 4:

 

(i)                                     in
any particular jurisdiction in which the Company would be required to execute a
general consent to service of process in effecting such registration,
qualification or compliance, unless the Company is already subject to service
in such jurisdiction and except as may be required by the Securities Act;

 

(ii)                                  if
the Company, within ten (10) days of the receipt of the request of the
Holder or Holders, gives notice of its bona  fide intention to
effect the filing of a registration statement with the Commission within
forty-five (45) days of receipt of such request (other than with respect to a
registration statement relating to a Rule 145 transaction or an offering
solely to employees);

 

(iii)                               during the period
starting with the date of filing of, and ending on a date which is 180 days
immediately following the effective date of, a registration statement described
in (ii) above or filed pursuant to this Article 4 or Articles 2 or 3
hereof (or such shorter period as the managing underwriter of the Company’s
most recent public offering may agree), provided that the Company is
actively employing in good faith all reasonable efforts to cause such
registration statement to become effective and provided, further, that no other
person or entity could require the Company to file a registration statement in
such period;

 

(c)                                  Subject
to the foregoing clauses (b) (i) through (iii), the Company shall
file a registration statement on Form S-3 covering the Registrable
Securities so requested to be registered within 90 days after receipt of the
request of the Holders; provided, however, that if the Company
shall furnish to such Holders a certificate signed by the Chairman or Chief
Executive Officer of the Company stating that in the good faith judgment of the
Board of Directors of the Company, the registration and distribution of the
Registrable Securities covered or to be covered by such registration, or the
disclosure required by such registration statement, would materially interfere
with any pending material financing, acquisition or corporate reorganization,
or other material corporate development of the Company or its subsidiaries, or
would require premature disclosure thereof, and it is therefore essential to
defer the filing of such registration statement, the Company shall have the
right to defer such filing for a period of not more than 90 days, but in no event
for a period longer than 105 days after receipt of the request of the
Initiating Holders; and provided, further that the Company shall
not be permitted to exercise such deferral right under this Section 4.1(c) or
Section 2.1(c) hereof more than once in any 360-day period.

 

4.2                                 Underwriting.

 

(a)                                  The
distribution of the Registrable Securities covered by the registration on Form S-3
shall be effected by means of the method of distribution selected by the
Holders holding two-thirds (2/3) of the Registrable Securities
covered by such registration. If such distribution is

 

9

 

effected by means of an underwriting, the right of any Holder to
registration pursuant to this Article 4 shall be conditioned upon such Holder’s
participation in such underwriting, if any, and the inclusion of such Holder’s
Registrable Securities in such underwriting.

 

(b)                                 If
the distribution of the Registrable Securities pursuant to this Section 4.2
is effected by means of an underwriting, the Company (together with all Holders
proposing to distribute their securities through such underwriting) shall enter
into an underwriting agreement in customary form with a managing
underwriter of nationally recognized standing selected for such underwriting by
a majority in interest of the Holders requesting registration on Form S-3
and approved by the Company, which approval shall not be unreasonably withheld.
Notwithstanding any other provision of this Article 4, if the managing
underwriter advises the Holders in writing that marketing factors (including
pricing) require a limitation of the number of shares to be underwritten, then
the Holders of Registrable Preferred Securities participating in an offering
pursuant to Section 4.1 together shall share pro  rata in the
available portion of the registration in question, such sharing to be based
upon the number of shares of Registrable Preferred Securities then held by such
Holders. If after the inclusion of such Registrable Preferred Securities, it is
possible to include additional shares in such registration, the Original
Stockholders participating in an offering pursuant to Section 4.1 together
shall share pro  rata in the remaining available portion of the
registration in question, such sharing based upon the number of shares of
Original Stockholder Shares then held by such participating Original
Stockholders. No Registrable Securities excluded from the underwriting by
reason of the managing underwriter’s marketing limitation shall be included in
such registration.

 

(c)                                  If
the distribution of the Registrable Securities pursuant to this Section 4.2
is effected by means of an underwriting and if any Holder disapproves of the
terms of the underwriting, such person may elect to withdraw therefrom by
written notice to the Company, the managing underwriter and the Holders. The
Registrable Securities and/or other securities so withdrawn shall also be
withdrawn from registration; provided, however, that if by the
withdrawal of such securities a greater number of Registrable Securities held
by other Holders may be included in such registration (up to the maximum
of any limitation imposed by the underwriters), then the Company shall offer to
all Holders who have included (or requested to include) Registrable Securities
in the registration the right to include additional Registrable Securities in
the same proportion used in determining the underwriter limitation in this Section 4.2.

 

4.3                                 Inclusion
of Shares by Company. If the distribution of the Registrable Securities
pursuant to this Article 4 is effected by means of an underwriting and if
the managing underwriter has not limited the number of Registrable Securities
to be underwritten, the Company may include securities for its own account
or for the account of others in such registration if the managing underwriter
so agrees and if the number of Registrable Securities held by Holders
requesting registration on Form S-3 which would otherwise have been
included in such registration and underwriting will not thereby be limited. The
inclusion of such shares shall be on the same terms as the registration of
shares held by the Holders requesting such registration. In the event that the
underwriters exclude some of the securities to be registered on Form S-3,
the securities to be sold for the account of the Company and any other holders
shall be excluded in their entirety prior to the exclusion of any Registrable
Securities.

 

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ARTICLE 5

EXPENSES OF REGISTRATION

 

All Registration Expenses incurred in connection with
any registration, qualification or compliance pursuant to Article 2, Article 3
and Article 4 hereof and all S-3 Registration Expenses shall be borne by
the Company. All Selling Expenses relating to Registrable Securities registered
by the Holders shall be borne by the Holders of such Registrable Securities pro
rata on the basis of the number of shares so registered.

 

ARTICLE 6

REGISTRATION PROCEDURES

 

(a)                                  In
the case of each registration effected by the Company pursuant to this
Agreement, the Company will keep each Holder advised in writing as to the
initiation of each registration and as to the completion thereof. The Company
agrees to use its best efforts to effect or cause such registration to permit
the sale of the Registrable Securities covered thereby by the Holders thereof
in accordance with the intended method or methods of distribution thereof
described in such registration statement. In connection with any registration
of any Registrable Securities pursuant to Article 2, 3 or 4 hereof, the
Company shall, as soon as reasonably possible:

 

(i)                                     use
its best efforts to cause the registration statement filed for purposes of such
registration to become effective as soon as reasonably possible thereafter;

 

(ii)                                  prepare
and file with the Commission such amendments and supplements to such
registration statement and the prospectus included therein as may be
necessary to effect and maintain the effectiveness of such registration
statement as may be required by the applicable rules and regulations
of the Commission and the instructions applicable to the form of such
registration statement, and furnish to the holders of the Registrable
Securities covered thereby copies of any such supplement or amendment prior to
its being used and/or filed with the Commission; and comply with the provisions
of the Securities Act with respect to the disposition of all the Registrable
Securities to be included in such registration statement;

 

(iii)                               provide
(A) the Holders of the Registrable Securities to be included in such
registration statement, (B) the underwriters (which term, for purposes of
this Agreement, shall include a person deemed to be an underwriter within the
meaning of Section 2(11) of the Securities Act), if any, thereof, (C) the
sales or placement agent, if any, therefor, (D) one counsel for such
underwriters or agent, and (E) not more than one counsel for all the
Holders of such Registrable Securities, the opportunity to participate in the
preparation of such registration statement, each prospectus included therein or
filed with the Commission, and each amendment or supplement thereto;

 

(iv)                              for
a reasonable period prior to the filing of such registration statement, and
throughout the period specified above, make available for inspection by the
parties

 

11

 

referred to in Section 6(a)(iii) above such financial and
other information and books and records of the Company, and cause the officers,
directors, employees, counsel and independent certified public accountants of
the Company to respond to such inquiries, as shall be reasonably necessary, in
the judgment of the respective counsel referred to in such Section 6(a)(iii),
to conduct a reasonable investigation within the meaning of the Securities Act;
provided, however, that each such party shall be required to
maintain in confidence and not disclose to any other person or entity any
information or records reasonably designated by the Company in writing as being
confidential, until such time as (a) such information becomes a matter of
public record (whether by virtue of its inclusion in such registration
statement or otherwise), or (b) such party shall be required so to
disclose such information pursuant to the subpoena or order of any court or
other governmental agency or body having jurisdiction over the matter, or (c) such
information is required to be set forth in such registration statement or the
prospectus included therein or in an amendment to such registration statement
or an amendment or supplement to such prospectus in order that such
registration statement, prospectus, amendment or supplement, as the case may be,
does not include an untrue statement of a material fact or omit to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading; and provided, further, that
the Company need not make such information available, nor need it cause any
officer, director or employee to respond to such inquiry, unless each such
Holder of Registrable Securities to be included in a registration statement
hereunder and such counsel, upon the Company’s request, execute and deliver to
the Company an undertaking to substantially the same effect contained in the
preceding proviso;

 

(v)                                 promptly
notify the Holders of Registrable Securities to be included in a registration
statement hereunder, the sales or placement agent, if any, therefor and the
managing underwriter of the securities being sold and confirm such advice in
writing, (A) when such registration statement or the prospectus included
therein or any prospectus amendment or supplement or post-effective amendment
has been filed, and, with respect to such registration statement or any post-effective
amendment, when the same has become effective, (B) of any comments by the
Commission and by the blue sky or securities commissioner or regulator of any
state with respect thereto or any request by the Commission for amendments or
supplements to such registration statement or the prospectus or for additional
information, (C) of the issuance by the Commission of any stop order
suspending the effectiveness of such registration statement or the initiation
of any proceedings for that purpose, (D) of the receipt by the Company of
any notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, or (E) if it shall be the case,
at any time when a prospectus is required to be delivered under the Securities
Act, that such registration statement, prospectus, or any document incorporated
by reference, in any of the foregoing contains an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances then existing;

 

(vi)                              use
its best efforts to obtain the withdrawal of any order suspending the
effectiveness of such registration statement or any post-effective amendment
thereto at the earliest practicable date;

 

12

 

(vii)                           if requested by any managing
underwriter or underwriter, any placement or sales agent or any Holder of
Registrable Securities to be included in a registration statement, promptly
incorporate in a prospectus, prospectus supplement or post-effective amendment
such information as is required by the applicable rules and regulations of
the Commission and as such managing underwriter or underwriters, such agent or
such Holder may reasonably specify should be included therein relating to
the terms of the sale of the Registrable Securities included thereunder,
including, without limitation, information with respect to the number of
Registrable Securities being sold by such Holder or agent or to such
underwriters, the name and description of such Holder, the offering price of
such Registrable Securities and any discount, commission or other compensation payable
in respect thereof, the purchase price being paid therefor by such underwriters
and with respect to any other terms of the offering of the Registrable
Securities to be sold in such offering; and make all required filings of such
prospectus; prospectus supplement or post-effective amendment promptly after
notification of the matters to be incorporated in such prospectus, prospectus
supplement or post-effective amendment;

 

(viii)                        furnish to each Holder of
Registrable Securities to be included in such registration statement hereunder,
each placement or sales agent, if any, therefor, each underwriter, if any,
thereof and the counsel referred to in Section 6(a)(iii) an executed
copy of such registration statement, each such amendment and supplement thereto
(in each case excluding all exhibits and documents incorporated by reference)
and such number of copies of the registration statement (excluding exhibits
thereto and documents incorporated by reference therein unless specifically so
requested by such holder, agent or underwriter, as the case may be) of the
prospectus included in such registration statement (including each preliminary
prospectus and any summary prospectus), in conformity with the requirements of
the Securities Act, as such Holder, agent, if any, and underwriter, if any, may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such Holder sold by such agent or underwritten by such underwriter and
to permit such Holder, agent and underwriter to satisfy the prospectus delivery
requirements of the Securities Act; and the Company hereby consents to the use
of such prospectus and any amendment or supplement thereto by each such Holder
and by any such agent and underwriter, in each case in the form most recently
provided to such party by the Company, in connection with the offering and sale
of the Registrable Securities covered by the prospectus (including such
preliminary and summary prospectus) or any supplement or amendment thereto;

 

(ix)                                use
its best efforts to (A) register or qualify the Registrable Securities to
be included in such registration statement under such other securities laws or
blue sky laws of such jurisdictions to be designated by the Holders of a
majority of such Registrable Securities participating in such registration and
each placement or sales agent, if any, therefor and underwriter, if any,
thereof, as any Holder and each underwriter, if any, of the securities being
sold shall reasonably request, (B) keep such registrations or qualifications
in effect and comply with such laws so as to permit the continuance of offers,
sales and dealings therein in such jurisdictions for so long as may be
necessary to enable such Holder, agent or underwriter to complete its
distribution of the Registrable Securities pursuant to such registration
statement and (C) take any and all such actions as may be reasonably
necessary or advisable to enable such Holder, agent, if any, and underwriter to
consummate the disposition in such jurisdictions of such Registrable
Securities; provided, however, that the Company shall not be
required for any such purpose to (1) qualify generally to do business as

 

13

 

a foreign company or a broker-dealer in any jurisdiction wherein it
would not otherwise be required to qualify but for the requirements of this Section 6(a)(ix),
or (2) subject itself to taxation in any such jurisdiction;

 

(x)                                   cooperate
with the Holders of the Registrable Securities to be included in a registration
statement hereunder and the managing underwriters to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold, which certificates shall be printed, lithographed or engraved, or
produced by any combination of such methods, on steel engraved borders and
which shall not bear any restrictive legends; and enable such Registrable
Securities to be in such denominations and registered in such names as the
managing underwriters may request at least two business days prior to any
sale of the Registrable Securities;

 

(xi)                                provide
a CUSIP number for all Registrable Securities, not later than the effective
date of the registration statement;

 

(xii)                             enter into one or more
underwriting agreements, engagement letters, agency agreements, “best efforts”
underwriting agreements or similar agreements, as appropriate, and take such
other actions in connection therewith as the Holders of at least a majority of
the Registrable Securities being sold shall reasonably request in order to
expedite or facilitate the disposition of such Registrable Securities;

 

(xiii)                          whether or not an agreement
of the type referred to in the preceding subsection is entered into and
whether or not any portion of the offering contemplated by such registration
statement is an underwritten offering or is made though a placement or sales
agent or any other entity, (A) make such representations and warranties to
the Holders of such Registrable Securities and the placement or sales agent, if
any, therefor and the underwriters, if any, thereof in form, substance and
scope as are customarily made in connection with any offering of equity
securities pursuant to any appropriate agreement and/or to a registration
statement filed on the form applicable to such registration statement; (B) obtain
an opinion of counsel to the Company in customary form and covering such
matters, of the type customarily covered by such an opinion, as the managing
underwriters, if any, and as the Holders of at least a majority of such Registrable
Securities may reasonably request, addressed to such Holders and the
placement or sales agent, if any, therefor and the underwriters, if any,
thereof and dated the effective date of such registration statement (and if
such registration statement contemplates an underwritten offering of a party or
of all of the Registrable Securities, dated the date of the closing under the
underwriting agreement relating thereto) (it being agreed that the matters to
be covered by such opinion shall include, without limitation, the due
organization of the Company, and its subsidiaries, if any; the qualification of
the Company, and its subsidiaries, if any, to transact business as foreign
companies; the due authorization, execution and delivery of this agreement and of
any agreement of the typed referred to in Section 6(a)(xii) hereof; the
due authorization, valid issuance, and the fully paid status of the capital
stock of the Company; the absence of pending or, to such counsel’s knowledge,
threatened material legal or governmental proceedings involving the Company;
the absence to the knowledge of such counsel of a breach by the Company or its
subsidiaries of, or a default under, material agreements binding the Company or
any subsidiary; the absence of governmental approvals required to be obtained
in connection with the registration statement, the offering and sale of the
Registrable

 

14

 

Securities, this Agreement or any agreement of the type referred to in Section 6(a)(xii)
hereof; the compliance as to form of such registration statement and any
documents incorporated by reference therein with the requirements of the
Securities Act; the effectiveness of such registration statement under the
Securities Act; and, as of the date of the opinion and of the registration
statement or most recent post-effective amendment thereto, as the case may be,
the absence, to the knowledge of such counsel, from such registration statement
and the prospectus included therein, as then amended or supplemented, and from
the documents incorporated by reference therein of an untrue statement of a
material fact or the omission to state therein a material fact necessary to
make the statements therein not misleading (in case of such documents, in the light
of the circumstances existing at the time that such documents were filed with
the Commission under the Exchange Act)); (C) obtain a “cold” comfort
letter or letters from the independent certified public accountants of the
Company addressed to the Holders and the placement or sales agent, if any,
therefor and the underwriters, if any, thereof, dated (I) the effective
date of such registration statement and (II) the effective date of any
prospectus supplement to the prospectus included in such registration statement
or post-effective amendment to such registration statement which includes
unaudited or audited financial statements as of a date or for a period
subsequent to that of the latest such statements included in such prospectus
(and, if such registration statement contemplates an underwritten offering
pursuant to any prospectus supplement to the prospectus included in such
registration statement or post-effective amendment to such registration
statement which includes unaudited or audited financial statements as of a date
or for a period subsequent to that of the latest such statements included in
such prospectus, dated the date of the closing under the underwriting agreement
relating thereto), such letter or letters to be in customary form and
covering such matters of the type customarily covered by letters of such type; (D) deliver
such documents and certificates, including officers’ certificates, as may be
customary and reasonably requested by Holders of at least a majority of the
Registrable Securities being sold and the placement or sales agent, if any,
therefor and the managing underwriters, if any, thereof to evidence the
accuracy of the representations and warranties made pursuant to clause (A) above
and the compliance with or satisfaction of any agreements or conditions
contained in the underwriting agreement or other agreement entered into by the
Company; and (E) undertake such obligations relating to expense
reimbursement, indemnification and contribution as are provided in
Articles 5 and 7 hereof;

 

(xiv)                         notify in writing each Holder
of Registrable Securities of any proposal by the Company to amend or waive any
provision of this Agreement and of any amendment or waiver effected pursuant
thereto, each of which notices shall contain the text of the amendment or
waiver proposed or effected, as the case may be;

 

(xv)                            engage
to act on behalf of the Company with respect to the Registrable Securities to
be so registered a registrar and transfer agent having such duties and
responsibilities (including, without limitation, registration of transfers and
maintenance of stock registers) as are customarily discharged by such an agent,
and to enter into such agreements and to offer such indemnities as are
customary in respect thereof;

 

(xvi)                         cause all such Registrable
Securities to be listed on each securities exchange or other securities trading
markets, if any, on which similar securities issued by the

 

15

 

Company are then listed (or if not then listed, on such exchanges or
other securities trading markets requested by the holders of a majority of the
Registrable Securities to be so registered); and

 

(xvii)                      otherwise use its best efforts to
comply with all applicable rules and regulations of the Commission, and
make available to its Holders, as soon as practicable, but in any event not
later than 18 months after the effective date of such registration statement,
an earnings statement covering a period of at least twelve months which shall
satisfy the provisions of Section 6(a) of the Securities Act
(including, at the option of the Company, pursuant to Rule 158
thereunder).

 

(b)                                 In
the event that the Company would be required, pursuant to Section 6(a)(v)(E) above,
to notify the Holders of Registrable Securities included in a registration
statement hereunder, the sales or placement agent, if any, and the managing
underwriters, if any, of the securities being sold, the Company shall promptly
prepare and furnish to each such Holder, to each such agent, if any, and to each
underwriter, if any, a reasonable number of copies of a prospectus supplement
or amendment so that, as thereafter delivered to the purchasers of Registrable
Securities, such prospectus shall not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing. Each Holder agrees that upon receipt of any notice
from the Company pursuant to Section 6(a)(v)(E) hereof, such Holder
shall forthwith discontinue the distribution of Registrable Securities until
such Holder shall have received copies of such amended or supplemented
registration statement or prospectus, and if so directed by the Company, such
Holder shall deliver to the Company (at the Company’s expense) all copies,
other than permanent file copies, then in such Holder’s possession of the
prospectus covering such Registrable Securities at the time of receipt of such
notice.

 

(c)                                  The
Company may require each Holder of Registrable Securities as to which any
registration is being effected to furnish to the Company such information
regarding such Holder and such Holder’s method of distribution of such
Registrable Securities as the Company may from time to time reasonably
request in writing but only to the extent that such information is required in
order to comply with the Securities Act. Each such Holder agrees to notify the
Company as promptly as practicable of any inaccuracy or change in information
previously furnished by such Holder to the Company or of the occurrence of any
event in either case as a result of which any prospectus relating to such
registration contains or would contain an untrue statement of a material fact
regarding such Holder or the distribution of such Registrable Securities or
omits to state any material fact regarding such Holder or the distribution of
such Registrable Securities required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances then
existing, and promptly to furnish to the Company any additional information
required to correct and update any previously furnished information or required
so that such prospectus shall not contain, with respect to such Holder or the distribution
of such Registrable Securities, an untrue statement or a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing.

 

16

 

ARTICLE 7

INDEMNIFICATION

 

7.1                                 The
Company will indemnify each Holder, each of its officers and directors and
partners, and such Holder’s legal counsel and independent accountants, if any,
and each person controlling any such persons within the meaning of Section 15
of the Securities Act, with respect to which registration, qualification or
compliance has been effected pursuant to this Agreement, and each underwriter,
if any, and each person who controls any underwriter within the meaning of Section 15
of the Securities Act, against all expenses, claims, losses, damages and
liabilities (or actions in respect thereof), including any of the foregoing
incurred in settlement of any litigation, commenced or threatened, arising out
of or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any registration statement, prospectus, offering circular or
other document, or any amendment or supplement thereof, incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein, a material fact required to be stated therein or
necessary to make the statements therein, not misleading, or any violation by
the Company of any rule or regulation promulgated under the Securities Act
or any state securities laws applicable to the Company and relating to action
or inaction by the Company in connection with any such registration,
qualification or compliance, and will reimburse each such Holder, each of its
officers and directors and partners and such Holder’s legal counsel and
independent accountants, and each person controlling any such persons, each
such underwriter and each person who controls any such underwriter, for any
legal and any other expenses reasonably incurred in connection with
investigating, preparing or defending any such claim, loss, damage, liability
or action; provided, however, that the Company will not be liable
in any such case to the extent that any such claim, loss, damage, liability or
expense arises out of or is based on any untrue statement or omission or
alleged untrue statement or omission, made in reliance upon and in conformity
with written information furnished to the Company by such Holder or underwriter
and expressly intended for use in such registration statement, prospectus,
offering circular or other document, or any amendment or supplement thereof.

 

7.2                                 Each
Holder will, if Registrable Securities held by such Holder are included in the
securities as to which such registration, qualification or compliance is being
effected, indemnify the Company, each of its directors and officers and its
legal counsel and independent accountants, each underwriter, if any, of the
Company’s securities covered by such a registration statement, each person who
controls the Company or such underwriter within the meaning of Section 15
of the Securities Act, and each other such Holder, each of its officers,
directors, partners, legal counsel and independent accountants, if any, and each
person controlling such other Holder within the meaning of Section 15 of
the Securities Act, against all expenses, claims, losses, damages and
liabilities (or actions in respect thereof), including any of the foregoing
incurred in settlement of any litigation, commenced or threatened, arising out
of or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any such registration statement, prospectus, offering
circular or other document, or any amendment or supplement thereto, incident to
any such registration, qualification or compliance or based on any omission (or
alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will reimburse
the Company, such Holders, such directors, officers, partners, legal counsel,
independent accountants, underwriters or control persons for any legal or any
other

 

17

 

expenses reasonably incurred in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action, in
each case to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular, other document or
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Holder and expressly intended for
use in such registration statement, prospectus, offering circular or other
document, or any amendment or supplement thereof; provided, however,
that the obligations of each Holder hereunder shall be limited to an amount
equal to the proceeds to such Holder of Registrable Securities sold as
contemplated herein.

 

7.3                                 Each
party entitled to indemnification under this Section 7 (the “Indemnified
Party”) shall give notice to the party required to provide indemnification
(the “Indemnifying Party”) promptly after such Indemnified Party has
actual knowledge of any claim as to which indemnity may be sought, and
shall permit the Indemnifying Party to assume the defense of any such claim or
any litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld). The Indemnified Party may participate in such defense at such
party’s expense; provided, however, that the Indemnifying Party
shall bear the expense of such defense of the Indemnified Party if
representation of both parties by the same counsel would be inappropriate due
to actual or potential conflicts of interest. The failure of any Indemnified
Party to give notice as provided herein shall not relieve the Indemnifying
Party of its obligations under this Agreement, unless (and then, only to the
extent that) such failure is prejudicial to the ability of the Indemnifying
Party to defend the action. No Indemnifying Party, in the defense of any such
claim or litigation, shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect of such
claim or litigation.

 

7.4                                 If
the indemnification provided for in Section 7.1 or 7.2 is unavailable or
insufficient to hold harmless an Indemnified Party, then each Indemnifying
Party shall contribute to the amount paid or payable by such Indemnified Party
as a result of the expenses, claims, losses, damages or liabilities (or actions
or proceedings in respect thereof) referred to in Section 7.1 or 7.2, in
such proportion as is appropriate to reflect the relative fault of the Company
on the one hand and such sellers of Registrable Securities on the other hand in
connection with statements or omissions which resulted in such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) or
expenses, as well as any other relevant equitable considerations. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company or such sellers of Registrable Securities and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The Company and the Holders agree that it
would not be just and equitable if contributions pursuant to this Section 7.4
were to be determined by pro rata allocation (even if all Sellers of
Registrable Securities were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to in the first sentence of this Section 7.4. The
amount paid by an Indemnified Party as a result of the expenses,

 

18

 

claims, losses, damages or liabilities (or actions or proceedings in
respect thereof) referred to in the first sentence of this Section 7.4
shall be deemed to include any legal or other expenses reasonably incurred by such
Indemnified Party in connection with investigating or defending any claim,
action or proceeding which is the subject of this Section 7.4. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The obligations of sellers of
Registrable Securities to contribute pursuant to this Section 7.4 shall be
several in proportion to the respective amount of Registrable Securities sold
by them pursuant to a registration statement.

 

ARTICLE 8

RULE 144 REPORTING

 

With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time
permit the sale of securities of the Company to the public without
registration, after such time as a public market exists for the Common Stock of
the Company, the Company agrees to:

 

8.1                                 Make
and keep public information available as those terms are understood and defined
in Rule 144 under the Securities Act, at all times after the effective
date of the first registration under the Securities Act filed by the Company
for an offering of its securities to the general public; and

 

8.2                                 Use
its best efforts to then file with the Commission in a timely manner all
reports and other documents required of the Company under the Securities Act
and the Exchange Act (at any time after it has become subject to such reporting
requirements); and

 

8.3                                 So
long as a Holder owns any Registrable Securities, furnish to the Holder
forthwith upon request a written statement by the Company as to its compliance
with the reporting requirements of said Rule 144 (at any time after ninety
(90) days following the effective date of the first registration statement
filed by the Company for an offering of its securities to the general public),
and of the Securities Act and the Exchange Act (at any time after it has become
subject to such reporting requirements), a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents of the
Company as a Holder may reasonably request in availing itself of any rule or
regulation of the Commission allowing a Holder to sell any such securities
without registration.

 

19

 

ARTICLE 9

TRANSFER OF REGISTRATION RIGHTS

 

The rights to cause the Company to register
Registrable Securities granted Holders under Articles 2, 3 and 4 hereof may be
assigned in connection with any permitted transfer or assignment of the Holder’s
Registrable Securities. All transferees and assignees (“Permitted
Transferees”) of the rights to cause the Company to register Registrable
Securities granted Holders under Articles 2, 3 and 4 hereof, as a condition to
the transfer of such rights, shall agree in writing to be bound by the
agreements set forth herein.

 

ARTICLE 10

LIMITATIONS ON REGISTRATION RIGHTS

GRANTED TO OTHER SECURITIES

 

The parties hereto agree that additional holders may,
with the consent of the Company and the Holders of at least two-thirds (2¤3)
of the Registrable Securities then outstanding, be added as parties to this
Agreement with respect to any or all securities of the Company held by them; provided,
however, that from and after the date of this Agreement, the Company
shall not without the prior written consent of the Holders of at least
two-thirds (2¤3)
of the Registrable Securities then outstanding, enter into any agreement with
any holder or prospective holder of any securities of the Company providing for
the grant to such holder of registration rights superior to, or pari  passu
with, those granted herein. Any additional parties shall execute a counterpart of
this Agreement, and upon execution by such additional parties and by the
Company, shall be considered Holders for purposes of this Agreement, and shall
be added to the Schedule of Registration Rights Holders.

 

ARTICLE 11

MISCELLANEOUS

 

11.1                           GOVERNING
LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN THE STATE WITHOUT REGARD TO PRINCIPLES OF CONFLICTS
OF LAW.

 

11.2                           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.

 

11.3                           Entire
Agreement. This Agreement constitutes the full and entire understanding and
agreement between the parties with regard to the subject matter hereof, and the
parties hereto intend, agree and understand that this Agreement amends and
supersedes and replaces in its entirety any and all prior agreements pertaining
to the subject matter hereof (including the Prior Registration Rights
Agreement).

 

20

 

11.4                           Notices.
All notices, requests, consents, and other communications hereunder shall be in
writing and shall be deemed effectively given and received upon delivery in
person, or upon receipt after delivery by national overnight courier service or
by telecopier transmission with acknowledgment of transmission receipt, or
three business days after deposit via certified or registered mail, return
receipt requested, in each case addressed as follows:

 

if to the Company:

 

Metastorm Inc.

500 East Pratt Street, Suite 1250

Baltimore, Maryland 21202

Attention: Robert J. Farrell

Telecopier: (443) 874-1337

 

with a copy to:

 

Venable LLP

Two Hopkins Plaza, Suite 1800

Baltimore, MD 21201

Attention: Thomas D. Washburne, Jr., Esq.

Telecopier: (410) 244-7742

 

if to any Holder:

 

The address reflected on the records of the Company
or, in any such case, at such other address or address as shall have been
furnished in writing by such party to the others.

 

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

 

11.6                           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 Agreement.

 

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

 

11.8                           Waivers
and Amendments. With the written consent of the Company and the Holders
holding at least two-thirds (2/3)
of the Registrable Securities held by all the Holders, the obligations and
rights of the Company and the Holders under this Agreement may be waived
(either generally or in a particular instance, either retroactively or
prospectively, and either for a specified period of time or indefinitely) or
amended; provided, however, that no such waiver or amendment
shall reduce the aforesaid number of shares the Holders of which are required
to consent to any waiver or amendment, without the consent of all the Holders; provided
further, that (i) Purchasers (as defined in the Stock Purchase
Agreement) purchasing shares of Series CC Preferred Stock under the Stock

 

21

 

Purchase Agreement after the Initial Closing (as defined in the Stock
Purchase Agreement) (and as a condition thereto) shall become parties to this
Agreement as “Series CC Investors” hereunder by such Purchaser’s (as
defined in the Stock Purchase Agreement) execution of a written joinder
agreement (a “Joinder Agreement”) to this Agreement acknowledging such
Purchaser’s (as defined in the Stock Purchase Agreement) agreement to be bound
as a party to this Agreement, without any amendment of this Agreement pursuant
to this paragraph or any consent, approval or other action of any party hereto,
and (ii) Persons acquiring shares of Series AA Preferred Stock
pursuant to the Proforma Acquisition (as defined in the Stock Purchase
Agreement) (and as a condition thereto) shall become a party to this Agreement
as “Series AA Investors” hereunder by such Person’s execution of a Joinder
Agreement, without any amendment of this Agreement pursuant to this paragraph
or any consent, approval or other action of any party hereto. Upon the
effectuation of each waiver or amendment, the Company shall promptly give
written notice thereof to any Holders who have not previously consented thereto
in writing. Notwithstanding the foregoing, any party hereto may waive any
of its rights hereunder by a statement in writing signed by such party. Such
waiver shall only be effective with respect to the rights specifically set
forth in such writing and shall not waive, amend or prejudice any other rights
the party may have hereunder.

 

11.9                           Termination.  The
right of any Holder under this Agreement to request registration or inclusion
in any registration shall not be exercisable by a Holder at such time when (i) after
the closing of the Initial Public Offering of the Common Stock of the Company,
all shares of Registrable Securities held or entitled to be held upon
conversion by such Holder may immediately be sold without limitation
pursuant to Rule 144(k) under the Securities Act and (ii) the
Company’s Common Stock is traded on a national exchange or the Nasdaq Global
Market. The termination provision set forth in this Section 11.9 shall
only apply to Holders who hold less than 5% of the capital stock (on a
fully-diluted basis) of the Company at such time.

 

11.10                     Lock-Up Agreement.   Each
Holder agrees, in connection with the Company’s Initial Public Offering of the
Company’s securities, upon request of the underwriters managing any underwritten
offering of the Company’s securities, not to sell, make any short sale of,
loan, grant any option for the purchase of, or otherwise dispose of any
Registrable Securities (other than those included in the registration) without
the prior written consent of such underwriters, for such period of time (not to
exceed 180 days) from the effective date of such registration as may be
requested by the underwriters; provided, however, that the officers and
directors of the Company who own stock of the Company, together with all
holders of one percent (1%) or more of the Company’s outstanding stock, also
agree to such restrictions. Notwithstanding the foregoing, Holders shall only
be bound to the provisions of this Section 11.10 if the underwriters agree
that any early release from any lock-up agreement for any person in connection
with a public offering shall be pro rata among such person and the Holders.

 

[signatures on next page]

 

22

 

IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement, or have caused this Agreement to be duly executed on
their behalf, as of the day and year first above written

 

	
   

  	
  METASTORM INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Robert J. Farrell

  
	
   

  	
  Name: Robert J. Farrell

  
	
   

  	
  Title: President

  
	
   

  	
   

  
	
   

  	
  ABS CAPITAL PARTNERS V, L.P.

  
	
   

  	
  By: ABS Partners V, L.P.,

  
	
   

  	
  Its General Partner

  
	
   

  	
   

  
	
   

  	
  By: ABS Partners V,
  L.L.C.,

  
	
   

  	
  Its General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Laura L. Witt

  
	
   

  	
  Name: Laura L. Witt

  
	
   

  	
  Title: Managing Member

  
	
   

  	
   

  
	
   

  	
  ABS CAPITAL PARTNERS V-A, L.P.

  
	
   

  	
  By: ABS Partners V, L.P.,

  
	
   

  	
  Its General Partner

  
	
   

  	
   

  
	
   

  	
  By: ABS Partners V,
  L.L.C.,

  
	
   

  	
  Its General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Laura L. Witt

  
	
   

  	
  Name: Laura L. Witt

  
	
   

  	
  Title: Managing Member

  
	
   

  	
   

  
	
   

  	
  ABS CAPITAL PARTNERS V OFFSHORE, L.P.

  
	
   

  	
  By: ABS Partners V, L.P.,

  
	
   

  	
  Its General Partner

  
	
   

  	
   

  
	
   

  	
  By: ABS Partners V, L.L.C.,

  
	
   

  	
  Its General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Laura L. Witt

  
	
   

  	
  Name: Laura L. Witt

  
	
   

  	
  Title: Managing Member

  

 

Metastorm Inc.

Signature
Page to Fourth Amended and Restated Registration Rights Agreement

 

 

	
   

  	
  ICG HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Walter
  W. Buckley III

  
	
   

  	
  Name: Walter W. Buckley
  III

  
	
   

  	
  Title: President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MAYFLOWER LP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
    /s/ John
  Russell Hogg

  
	
   

  	
  Name: John Russell Hogg

  
	
   

  	
  Title: Duly Authorized
  Attorney

  
	
   

  	
   

  
	
   

  	
  INDUSTRY VENTURES FUND IV, L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Hans
  Swilden

  
	
   

  	
  Name: Hans Swilden

  
	
   

  	
  Title: Managing Member

  
	
   

  	
   

  
	
   

  	
  GOLDMAN
  SACHS PRIVATE EQUITY

  OPPORTUNITIES, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Jennifer Barbetta

  
	
   

  	
  Name:
  Jennifer Barbetta

  
	
   

  	
  Title:
  Authorized Signatory

  
	
   

  	
   

  
	
   

  	
  IRONSIDE
  VENTURES, L.P.

  
	
   

  	
  By: Ironside Management
  LLC,

  
	
   

  	
  Its General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Myles
  P. Gilbert

  
	
   

  	
  Name:
  Myles P. Gilbert

  
	
   

  	
  Title:
  Managing Director

  
	
   

  	
   

  
	
   

  	
  AXIOM
  VENTURE PARTNERS II, LP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ William
  Wilcoxson

  
	
   

  	
  Name:
  William Wilcoxson

  
	
   

  	
  Title:
  Partner

  

 

24

 

HOLDERS OF AT LEAST TWO-THIRDS OF

REGISTRABLE SECURITIES HELD PURSUANT

TO THE PRIOR REGISTRATION RIGHTS

AGREEMENT

 

 

	
   

  	
  ICG HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
    /s/ Walter W. Buckley III

  
	
   

  	
  Name: Walter W. Buckley III

  
	
   

  	
  Title: President

  
	
   

  	
   

  
	
   

  	
  MAYFLOWER LP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
    /s/ John Russell Hogg

  
	
   

  	
  Name: John Russell Hogg

  
	
   

  	
  Title: Duly Authorized Attorney

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INDUSTRY VENTURES FUND IV, L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GOLDMAN SACHS PRIVATE EQUITY

  
	
   

  	
  OPPORTUNITIES, L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Jennifer Barbetta_

  
	
   

  	
  Name: Jennifer Barbetta

  
	
   

  	
  Title: Authorized
  Signatory

  

 

Metastorm Inc.

Signature
Page to Fourth Amended and Restated Registration Rights Agreement

 

25

 

	
   

  	
  WALL STREET TECHNOLOGY

  PARTNERS LP

  
	
   

  	
  By: Wall Street Technology Managers LP,

  Its General Partner

  
	
   

  	
  By:
  Technology Equity Employees LLC

  Its General Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Adam Lichtenstein

  
	
   

  	
  Name: Adam Lichtenstein

  
	
   

  	
  Its: Authorized Person

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Its: Authorized Person

  

 

26

 

Exhibit A

Schedule of Registration Rights Holders

 

	
  Series AA Investors

  
	
   

  
	
  Sandler Internet Partners, L.P.

  
	
  Sandler Capital Partners IV, L.P.

  	
   

  
	
  Sandler Capital Partners IV FTE, L.P.

  	
   

  
	
  Sandler Co-Investment Partners, L.P.

  	
   

  
	
  Axiom Venture Partners II, LP

  	
   

  
	
  J. Allen Dougherty, Trustee FBO Peter Wetherill

  	
   

  
	
  Pennstone, LLC

  	
   

  
	
  Riggs Capital Partners, LLC

  	
   

  
	
  Morgan Stanley Dean Witter Inc. C/F J. Allen Dougherty, IRA Rollover

  
	
  Gail Dougherty

  	
   

  
	
  Mark T. Cannon

  	
   

  
	
  Nancy Walker

  	
   

  
	
  Paul E. Ambrose and Paula J. Ambrose

  	
   

  
	
  Michael Savage

  	
   

  
	
  David R. Schaeffer

  	
   

  
	
  Stephen Todd Walker

  	
   

  
	
  Mark O’Neill

  	
   

  
	
  Wall Street Technology Partners LP

  	
   

  
	
  Ironside Ventures, L.P.

  	
   

  
	
  Ironside Venture Partners II, LLC

  	
   

  
	
  Industry Ventures Fund IV, L.P.

  	
   

  
	
  Goldman Sachs Private Equity Opportunities, L.P.

  	
   

  
	
  Mayflower L.P. (formerly 3i Group, PLC)

  	
   

  
	
  M&M Capital Partners

  	
   

  
	
  Eric Luftig

  	
   

  
	
  Walter A. Maul, Jr.

  	
   

  
	
  Melissa B. Eisenstat

  	
   

  
	
  Riggs Capital Partners II, LLC

  	
   

  
	
  ICG Holdings, Inc.

  	
   

  

 

	
  Original Stockholders

  	
   

  
	
   

  	
   

  
	
  Mayflower L.P. (formerly 3i Group, PLC)

  	
   

  
	
  V-Sys, Ltd

  	
   

  
	
  Avi Hoffer

  	
   

  
	
  Stephen Miles Brown

  	
   

  
	
  Michael Philip Vieyra

  	
   

  
	
  Bharat Patel

  	
   

  
	
  Stuart Frost

  	
   

  
	
  Mark O’Hare

  	
   

  

 

 

	
  Bruce Grisewood

  	
   

  
	
  Michael Jackson

  	
   

  
	
  Brian McPhee

  	
   

  
	
  Jonathan Summers

  	
   

  
	
   

  	
   

  
	
  Series CC Investors

  	
   

  
	
   

  	
   

  
	
  ABS Capital Partners V, L.P.

  	
   

  
	
  ABS Capital Partners, V-A, L.P.

  	
   

  
	
  ABS Capital Partners V Offshore, L.P.

  	
   

  
	
  ICG Holdings, Inc.

  	
   

  
	
  Mayflower LP

  	
   

  
	
  Industry Ventures Fund IV, L.P.

  	
   

  
	
  Goldman Sacks Private Equity Opportunities, L.P.

  	
   

  
	
  Ironside Ventures, L.P.

  	
   

  
	
  Axiom Venture Partners II, LP

  	
   

  

 

28Exhibit 4.3

 

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:

  	
   

  	
  9,132

  
	
  Class of
  Stock:

  	
   

  	
  Common
  Stock

  
	
  Initial
  Exercise Price:

  	
   

  	
  $2.19
  per share [per share price in most recently issued stock options]

  
	
  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/ Robert J.
  Farrell

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Robert J. Farrell

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  President & CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Chris
  Desautelle

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Chris Desautelle

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  VP & CFO

  
						

 

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.

 

8

 

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.

 

9

 

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 

 

10

 

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/ Amy Tsang

  	
   

  	
  By:

  	
   /s/ Chris
  Desautelle

  
	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Amy Tsang

  	
   

  	
  Name:

  	
  Chris Desautelle

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Corporate Banking Officer

  	
   

  	
  Title:

  	
  VP & CFO

  
	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
  11921 Freedom Drive

  Suite 920

  Reston, VA 20190

  	
  Address:

  	
  8825 Stanford Blvd

  Ste 200

  Columbia, MD 21045

  

 

11

 

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.

 

12

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