1
Exhibit 4.5
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS. IT MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER SUCH ACT AND APPLICABLE LAWS, OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE, SATISFACTORY TO THE
COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
TRANSFER OF THIS WARRANT IS NOT VALID EXCEPT TO THE EXTENT THAT SUCH
TRANSFER HAS BEEN MADE IN COMPLIANCE WITH THE PROVISIONS REGARDING
TRANSFER CONTAINED HEREIN.
TIMELINE, INC.
COMMON STOCK PURCHASE WARRANT
Warrant Number Infinium 1 Maximum Number of Shares: 300,000
This Warrant is issued to Infinium Software, Inc., a Massachusetts
corporation (the "Holder") by Timeline, Inc., a Washington corporation (the
"Company").
For value received and subject to the terms and conditions hereinafter
set forth, the Holder of this Warrant is entitled upon exercise in accordance
with Section 3 hereof to purchase from the Company up to 300,000 fully paid and
non-assessable shares of common stock, $.01 par value (the "Common Stock"), of
the Company, at the Exercise Price as set forth in Section 2 below. The number,
character and Exercise Price of such shares of Common Stock are subject to
adjustment as set forth below.
1. Term of Warrant. Subject to the terms and conditions set forth
herein, this Warrant shall be exercisable, in whole or in part, during the term
commencing on the date of this Warrant and ending at 5:00 p.m., Pacific standard
time, on the second anniversary of the date of this Warrant. This Warrant shall
be void thereafter.
2. Exercise Price. The Exercise Price at which this Warrant may be
exercised shall be $1.00 per share of Common Stock, as adjusted from time to
time pursuant to Section 5 hereof.
3. Exercise of Warrant.
(a) The purchase rights represented by this Warrant are
exercisable by the Holder in whole or in part, but not for less than 10,000
shares at a time (or such lesser number of shares which may then constitute the
maximum number purchasable; such number being subject to adjustment as provided
in Section 5 below), at any time, or from time to time, during the term hereof
as described in Section 1 above, by the surrender of this Warrant and the Notice
of Exercise annexed hereto duly completed and executed on behalf of the Holder,
at the office of the Company (or such other office or agency of the Company as
it may designate by notice in writing to the Holder at the address of the Holder
appearing on the books of the Company), accompanied by payment (in the form
specified in the Notice of Exercise) of the purchase price of the shares to be
purchased (i) by cash, money order, certified or bank cashier's check, or wire
transfer, (ii) by surrender to the Company of shares of Common Stock of the
Company having an aggregate Fair Market Value equal to the aggregate Exercise
Price, (iii) by reducing the number of shares of Common Stock issuable upon
exercise by the number of shares of Common Stock having an
2
aggregate Fair Market Value equal to the aggregate Exercise Price of the Warrant
or portion thereof being exercised, or (iv) by a combination of (i) through
(iii) above.
(b) For purposes of this Section 3, the Fair Market Value of a
share of Common Stock at any date shall be deemed to be (i) if the shares of
Common Stock are traded in the over-the-counter market and not on any national
securities exchange and not in the NASDAQ National Market System or NASDAQ Small
Cap System, the average of the closing bid and asked prices per share, as
reported by The National Quotation Bureau, Inc. or an equivalent generally
accepted reporting service, for the twenty (20) consecutive trading days
immediately preceding the date for which the determination of Fair Market Value
is to be made; (ii) if the shares of Common Stock are traded on a national
securities exchange or in the NASDAQ National Market System or NASDAQ Small Cap
System, the average daily per share closing price on the principal national
securities exchange on which they are so listed or in the NASDAQ National Market
System or NASDAQ Small Cap System, as the case may be, for the twenty (20)
consecutive trading days immediately preceding the date for which the
determination of Fair Market Value is to be made; or (iii) if the Common Stock
is no longer traded on the Nasdaq National Market System, NASDAQ Small Cap
System or other stock exchange or in the over-the-counter market on the relevant
date, then the Fair Market Value as of such date shall be determined by an
appraiser mutually agreed upon by the Holder and the Company (the cost of which
shall be borne by the Company).
(c) This Warrant shall be deemed to have been exercised
immediately before the close of business on the date of its surrender for
exercise as provided above, and the person entitled to receive the shares of
Common Stock issuable upon such exercise shall be treated for all purposes as
the holder of record of such shares as of the close of business on such date. As
promptly as practicable on or after such date and in any event within ten (10)
business days thereafter, the Company at its expense shall issue and deliver to
the person or persons entitled to receive the same a certificate or certificates
for the number of shares issuable upon such exercise. In the event that this
Warrant is exercised in part, the Company at its expense will execute and
deliver a new Warrant of like tenor exercisable for the remaining number of
shares for which this Warrant may then be exercised.
4. Reservation of Stock. The Company covenants that it will at all times
reserve and keep available a number of its authorized but unissued or treasury
shares of its Common Stock, free from all preemptive rights therein, which will
be sufficient to permit the exercise of this Warrant. The Company further
covenants that such Common Stock as may be issued pursuant to the exercise of
this Warrant will, upon issuance, be duly and validly issued, fully paid and
non-assessable and free from all taxes, liens and charges with respect to the
issue thereof.
5. Adjustments. The number and kind of securities purchasable upon the
exercise of this Warrant and the Exercise Price shall be subject to adjustment
from time to time upon the occurrence of certain events, as follows:
(a) Reclassification, Merger, Sale of Assets, etc. In case of any
reclassification, capital reorganization, or change of the outstanding Common
Stock of the Company (other than as a result of a subdivision, combination or
stock dividend), or in case of any consolidation of the Company with, or merger
of the Company into, another company or other business organization (other than
a consolidation or merger in which the holders of the outstanding voting stock
of the Company immediately before the consummation of such transaction shall,
immediately after such transaction, hold, as a group, at least a majority of the
voting securities of the surviving or successor entity), or in case of any sale
or conveyance to another company or other business organization of the property
of the Company, as an entirety or substantially as an entirety, at any time
before the expiration of this Warrant, then, as a condition of such
reclassification, reorganization, change, consolidation, merger, sale or
conveyance, lawful provision shall be made and duly executed documents
evidencing the same from the Company or its successor shall be delivered to the
Holder of this Warrant, so that the Holder of this Warrant shall have the right
before the expiration of this Warrant to purchase, at a total price not to
exceed that payable upon the exercise of the unexercised portion of this
Warrant, the kind and amount of shares of stock and other
2
3
securities and property receivable upon such reclassification, reorganization,
change, consolidation, merger, sale or conveyance by a holder of the number of
shares of Common Stock of the Company which might have been purchased by the
Holder of this Warrant immediately before such reclassification, reorganization,
change, consolidation, merger, sale or conveyance, and in any such case
appropriate provisions shall be made with respect to the rights and interest of
the Holder of this Warrant to the end that the provisions hereof shall
thereafter be applicable in relation to any shares of stock, and other
securities and property thereafter deliverable upon exercise hereof.
(b) Split, Subdivision or Combination of Shares. If the Company
shall at any time before the expiration of this Warrant subdivide its
outstanding Common Stock, by split-up or otherwise, or combine its outstanding
Common Stock, or issue additional shares of its capital stock in payment of a
stock dividend in respect of its Common Stock, the number of shares issuable on
the exercise of the unexercised portion of this Warrant shall forthwith be
proportionately increased in the case of a subdivision or stock dividend, or
proportionately decreased in the case of a combination, and the Exercise Price
then applicable to shares covered by the unexercised portion of this Warrant
shall forthwith be proportionately decreased in the case of a subdivision or
stock dividend, or proportionately increased in the case of a combination.
(c) Adjustments for Dividends in Stock or Other Securities or
Property. If while this Warrant, or any portion thereof, remains outstanding and
unexpired, the holders of the securities as to which purchase rights under this
Warrant exist at the time shall receive, or, on or after the record date fixed
for the determination of eligible stockholders, shall have become entitled to
receive, without payment therefor, other or additional stock or other securities
or property (other than cash) of the Company by way of dividend, then and in
each case, this Warrant shall represent the right to acquire, in addition to the
number of shares of the security receivable upon exercise of this Warrant, and
without payment of any additional consideration therefor, the amount of such
other or additional stock or other securities or property (other than cash) of
the Company that such holder would hold on the date of such exercise had it been
the holder of record of the security receivable upon exercise of this Warrant on
the record date of such dividend, giving effect to all adjustments called for
during such period by the provisions of this Section 5.
(d) No Impairment. The Company will not, by amendment of its
Articles of Organization or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issuance or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of the
terms to be observed or performed hereunder by the Company, but will at all
times in good faith assist in the carrying out of all the provisions of this
Section 5 and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder against impairment.
(e) Capitalization. On the date of this Warrant, there are
3,130,610 shares of Common Stock, par value $.01 per share, issued and
outstanding, and no shares of preferred stock issued and outstanding.
Except for (a) outstanding options as of the date hereof to purchase
631,064 shares of Common Stock granted to employees pursuant to the Company's
stock option plan(s), and (b) outstanding warrants as of the date hereof to
purchase 1,071,125 shares of Common Stock at a price of $6.25 per share, there
are not outstanding any options, warrants, rights (including conversion or
preemptive rights and rights of first refusal), proxy or stockholder agreements
or agreements of any kind for the purchase or acquisition from the Company of
any of its securities. In addition to the aforementioned options, the Company
has reserved an additional 184,000 shares of its Common Stock for purchase upon
exercise of options to be granted in the future under the Company's stock option
plan(s).
6. No Fractional Shares. In no event shall any fractional share of
Common Stock of the Company be issued upon any exercise of this Warrant. If,
upon exercise of this Warrant as an entirety,
3
4
the Holder would, except as provided in this Section 6, be entitled to receive a
fractional share of Common Stock, then the Company shall issue a full share with
respect to such fractional share.
7. Replacement of Warrant. In case this Warrant shall be mutilated,
lost, stolen, or destroyed, the Company may issue a new warrant of like tenor
and denomination and deliver the same (a) in exchange and substitution for and
upon surrender and cancellation of any mutilated Warrant, or (b) in lieu of any
Warrant lost, stolen, or destroyed, upon receipt of evidence satisfactory to the
Company of the loss, theft or destruction of such Warrant (including a
reasonably detailed affidavit with respect to the circumstances of any loss,
theft, or destruction) and of indemnity satisfactory to the Company.
8. Rights of Stockholders. Except as provided in Sections 5 and 12
hereof above, this Warrant shall not entitle its Holder to any of the rights of
a stockholder of the Company.
9. Transfer of Warrant.
(a) Warrant Register. The Company will maintain a register (the
"Warrant Register") containing the name and address of the Holder of this
Warrant. The Holder of this Warrant may change its address as shown on the
Warrant Register by written notice to the Company requesting such change. Any
notice or written communication required or permitted to be given to the Holder
may be given by registered mail, or delivered to such Holder at its address as
shown on the Warrant Register.
(b) Warrant Agent. The Company may, by written notice to the
Holder, appoint an agent for the purpose of maintaining the Warrant Register
referred to in Section 9(a) above, issuing the Common Stock issuable upon the
exercise of this Warrant, exchanging this Warrant, replacing this Warrant, or
any or all of the foregoing. Thereafter, any such registration, issuance,
exchange or replacement, as the case may be, shall be made at the office of such
agent.
(c) Transferability of Warrant. This Warrant may be transferred
or assigned in whole or in part by the Holder either to an affiliate (as that
term is defined in the Securities Act of 1933, as amended (the "Securities Act")
of the Holder or if the Holder has complied with the terms and conditions of (i)
this Warrant and (ii) all applicable federal and state securities laws. Such
compliance shall include, without limitation, the delivery of investment
representation letters and legal opinions reasonably satisfactory to the
Company. Subject to the provisions of this Warrant with respect to compliance
with the Securities Act, title to this Warrant may be transferred by endorsement
(by the Holder executing the Form of Assignment annexed hereto) and delivery in
the same manner as a negotiable instrument transferable by endorsement and
delivery. The transferees of this Warrant shall be deemed the Holder or Holders
thereof for all purposes of this Warrant.
(d) Exchange of Warrant Upon a Transfer. On surrender of this
Warrant for exchange, properly endorsed on the Form of Assignment and subject to
the provisions of this Warrant with respect to compliance with the Securities
Act and with the limitations on assignments and transfers contained in this
Section 9, the Company at its expense shall issue to or on the order of the
Holder a new warrant or warrants of like tenor, in the name of the Holder or as
the Holder (on payment by the Holder of any applicable transfer taxes) may
direct, for the number of shares issuable upon exercise hereof.
(e) Compliance with Securities Laws.
(i) The Holder of this Warrant, by acceptance hereof,
acknowledges that this Warrant and the shares of Common Stock to be issued upon
exercise hereof are being acquired solely for the Holder's own account and not
as a nominee for any other party, and for investment, and that the Holder will
not offer, sell or otherwise dispose of this Warrant or any shares of Common
Stock to be issued upon exercise hereof except under circumstances that will not
result in a violation of the Securities Act or any state securities laws. Upon
exercise of this Warrant, the Holder shall, if requested by the Company, confirm
in writing, in a form satisfactory to the Company, that the shares of Common
Stock so
4
5
purchased are being acquired solely for the Holder's own account and not as a
nominee for any other party, for investment, and not with a view toward
distribution or resale.
(ii) This Warrant and all shares of Common Stock issued
upon exercise hereof shall be stamped or imprinted with a legend in
substantially the following form (in addition to any legend required by state
securities laws):
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS. IT MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED UNLESS AND UNTIL REGISTERED
UNDER SUCH ACT AND APPLICABLE LAWS, OR UNLESS THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL OR OTHER EVIDENCE, SATISFACTORY TO THE COMPANY AND ITS
COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
10. Registration Rights.
(a) Certain Definitions. As used in this Section 10, the following
terms shall have the following respective meanings:
"Commission" means the Securities and Exchange Commission, or any
other federal agency at the time administering the Securities Act.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission issued under such Act, as they each may, from time to time, be in
effect.
"Registration Statement" means a registration statement filed by
the Company with the Commission for a public offering and sale of shares of
Common Stock (other than a registration statement on Form S-8 or Form S-4, or
their successors, or any other form for a similar limited purpose, or any
registration statement covering only securities proposed to be issued in
exchange for securities or assets of another corporation, or any registration
statement that does not permit secondary sales).
"Registration Expenses" means the expenses described in Section
10(e) hereof.
"Registrable Stock" means (i) the shares of Common Stock issuable
upon exercise of this Warrant and (ii) any other shares of Common Stock issued
in respect of such shares (because of stock splits, stock dividends,
reclassifications, recapitalizations, or similar events); provided, however,
that shares of Common Stock which are shares of Registrable Stock shall cease to
be shares of Registrable Stock (A) upon any sale pursuant to a Registration
Statement, Section 4(1) of the Securities Act or Rule 144 under the Securities
Act or (B) at such time as they are eligible for sale pursuant to Rule 144(k)
under the Securities Act.
(b) Required Registrations.
(i) At any time that the Company is eligible to file a
Registration Statement on Form S-3 (or any successor form relating to secondary
offerings), the Holder may request the Company, in writing, to effect the
registration on Form S-3 (or such successor form), of the Registrable Stock
owned by the Holder having an aggregate offering price of at least $250,000
(based on the then current Fair Market Value, determined in accordance with
Section 3(a) hereof); provided that if the underwriter (if any) managing the
offering determines that, because of marketing factors, all of the such shares
of Registrable Stock requested to be registered by the Holder and all other
holders with contractual registration rights may not be included in the
offering, then the Holder and all other holders of securities entitled by
contract to include them in such Form S-3 Registration Statement shall
participate in the registration pro rata based
5
6
upon the number of shares of Registrable Stock or other securities which they
have requested to be so registered (on an as-converted to shares of Common Stock
basis). Thereupon, the Company shall, as expeditiously as possible, use its best
efforts to effect the registration on Form S-3 (or such successor form) of all
shares of Registrable Stock or other securities which the Company has been
requested to so register.
(ii) The Company shall be required to effect up to two
registrations pursuant to Section 10(b)(i) above; provided, however, that (i) a
registration shall not count as one of the two permitted registrations if less
than one-quarter of the shares of Registrable Stock requested to be included in
such registration are included and (ii) the Company shall not be required to
effect any registration within nine months after the effective date of any other
Registration Statement of the Company pursuant to Section 10(b)(i) or that
permits inclusion of shares of Registrable Stock pursuant to Section 10(c) of
this Warrant.
(iii) If at the time of any request to register shares of
Registrable Stock pursuant to this Section 10(b), the Company is engaged or has
fixed plans to engage within 90 days of the time of the request in a registered
public offering as to which the Holder may include shares of Registrable Stock
pursuant to Section 10(c), or is engaged in any other activity which, in the
good faith determination of the Company's Board of Directors, would be adversely
affected by the requested registration to the material detriment of the Company,
then the Company may at its option direct that such request be delayed for a
period not in excess of four months from the date of receipt of the request by
the Holder pursuant to this Section 10(b), such right to delay a request to be
exercised by the Company not more than once in any twelve-month period.
(c) Incidental Registration.
(i) Whenever the Company proposes to file a Registration
Statement (other than pursuant to Section 10(b)) at any time and from time to
time, it will, prior to such filing, give written notice to the Holder of its
intention to do so and, upon the written request of the Holder given within 20
days after the Company provides such notice (which request shall state the
intended method of disposition of such shares of Registrable Stock), the Company
shall use its best efforts to cause all shares of Registrable Stock which the
Company has been requested by the Holder to register to be registered under the
Securities Act to the extent necessary to permit their sale or other disposition
in accordance with the intended methods of distribution specified in the request
of the Holder; provided that the Company shall have the right to postpone or
withdraw any registration effected pursuant to this Section 10(c) without
obligation to the Holder.
(ii) In connection with any registration under this Section 10(c)
involving an underwriting, the Company shall not be required to include any
shares of Registrable Stock in such registration unless the Holder accepts the
terms of the underwriting as agreed upon between the Company and the
underwriters selected by it pursuant to an underwriting agreement in customary
form among the Company, the Holder and the representative of such underwriters.
If in the prior written opinion of the managing underwriter it is appropriate
because of marketing factors to limit the number of shares of Common Stock to be
included in the offering, then the Company shall be required to include in the
registration only that number of shares of Registrable Stock, if any, which the
managing underwriter believes will not jeopardize the success of the offering by
the Company. The number of shares that are entitled to be included in the
registration and underwriting shall be allocated first to the Company for
securities being sold for its own account. Thereafter, if the number of shares
of Registrable Stock and shares of Common Stock held by other holders with
contractual registration rights to be included in the offering in accordance
with the foregoing is less than the total number of shares which the Holder and
other holders with contractual registration rights have requested to be
included, then the Holder and other holders of securities by contract entitled
to include them in such registration shall participate in the registration pro
rata based upon their total ownership of shares of Common Stock (giving effect
to the conversion into shares of Common Stock of all securities convertible
thereunto). If any holder would thus
6
7
be entitled to include more securities than such holder requested to be
registered, the excess shall be allocated among other requesting holders pro
rata in the manner described in the preceding sentence.
(d) Registration Procedures. If and whenever the Company is required
by the provisions of this Warrant to use its best efforts to effect the
registration of any of the shares of Registrable Stock under the Securities Act,
the Company shall:
(i) file with the Commission a Registration Statement with
respect to such shares of Registrable Stock and use its best efforts to cause
that Registration Statement to become and remain effective;
(ii) as expeditiously as possible prepare and file with the
Commission any amendments and supplements to the Registration Statement and the
prospectus included in the Registration Statement as may be necessary to keep
the Registration Statement effective, in the case of a firm commitment
underwritten public offering, until each underwriter has completed the
distribution of all securities purchased by it and, in the case of any other
offering, until the earlier of the sale of all shares of Registrable Stock
covered thereby or 120 days after the effective date thereof (subject to
extension by the aggregate amount of any Black Out Periods (defined in
subsection 10(d)(v) below);
(iii) as expeditiously as possible furnish to the Holder, counsel
to the Holder and the managing underwriter such reasonable numbers of copies of
the prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents, including any
amendment of or supplement to the prospectus, as the Holder, counsel to the
Holder or the managing underwriter may reasonably request in order to facilitate
the public sale or other disposition of the shares of Registrable Stock; and
(iv) as expeditiously as possible use its best efforts to
register or qualify the shares of Registrable Stock covered by the Registration
Statement under the securities or Blue Sky laws of such states as the Holder
shall reasonably request, and do any and all other acts and things that may be
necessary or desirable to enable the Holder to consummate the public sale or
other disposition in such states of the shares of Registrable Stock owned by the
Holder; provided, however, that the Company shall not be required in connection
with this paragraph (d) to qualify to do business or execute a general consent
to service of process in any jurisdiction.
(v) if the shares of Common Stock are covered by a Form S-3
Registration Statement, notify the Holder at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the happening
of any event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
under which the prospectus is used (a "Fundamental Change") and, at the request
of the Holder, promptly prepare and furnish to the Holder and each underwriter,
if any, a reasonable number of copies of a supplement to such prospectus as may
be necessary so that, as thereafter delivered to the purchasers of such
securities, such prospectus shall not include 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 the light of the circumstances
under which they were made; provided, however, that if the Company receives an
opinion of its counsel that the event in question constitutes a Fundamental
Change and the Company notifies the Holder that it wishes to defer disclosure of
the Fundamental Change and distribution of any related supplements to or
stickers of the prospectus and/or filing of post-effective amendments to the
Registration Statement, the Company shall be entitled to defer such disclosure,
filing and/or supplements to or stickering of the prospectus for a period of up
to 60 days and, in the case of a Fundamental Change which in the opinion of its
counsel would require a post-effective amendment to the registration statement,
shall use its best efforts to have the post-effective amendment declared
effective by the Commission as soon as practicably possible thereafter (such
period of time, a "Black Out Period"). The Holder may not sell any shares of
Registrable
7
8
Stock during a Black Out Period. The Registration Statement effectiveness period
set forth in subsection 10(d)(ii) above shall be extended by the aggregate
amount of all Black Out Periods.
If the Company has delivered preliminary or final prospectuses to the
Holder and after having done so the prospectus is amended to comply with the
requirements of the Securities Act, the Company shall promptly notify the Holder
and, if requested, the Holder shall immediately cease making offers of shares of
Registrable Stock and return all prospectuses to the Company. The Company shall
promptly provide the Holder with revised prospectuses and, following receipt of
the revised prospectuses, the Holder shall be free to resume making offers of
the shares of Registrable Stock.
(e) Allocation of Expenses. The Company will pay all Registration
Expenses of one registration under Section 10(b) of this Warrant and all
Registration Expenses of all registrations under Section 10(c) of this Warrant;
provided, however, that if a registration under Section 10(b) is withdrawn at
the request of the Holder (other than as a result of information concerning the
business or financial condition of the Company which is made known to the Holder
after the date on which such registration was requested) and if the Holder
elects not to have such registration counted as a registration requested under
Section 10(b), the Holder and such other person selling securities thereunder
shall pay the Registration Expenses of such registration pro rata in accordance
with the number of shares of Registrable Stock or other securities (all on an
as-converted to Common Stock basis) included in such registration. For purposes
of this Section 10(e), the term "Registration Expenses" shall mean all expenses
incurred by the Company in complying with this Section 10, including, without
limitation, all registration and filing fees, fees of the National Association
of Securities Dealers, Inc., exchange or Nasdaq National Market listing fees,
printing expenses, fees and expenses of counsel for the Company, state Blue Sky
fees and expenses, and the expense of any special audits incident to or required
by any such registration, but excluding underwriting discounts, selling
commissions and the fees and expenses of Holder's own counsel.
(f) Indemnification and Contribution.
(i) In the event of any registration of any of the shares of
Registrable Stock under the Securities Act pursuant to this Warrant, the Company
will indemnify and hold harmless, to the full extent permitted by law, the
Holder, each underwriter of such shares of Registrable Stock, and each other
person, if any, who controls the Holder or such underwriter within the meaning
of the Securities Act or the Exchange Act against any losses, claims, damages or
liabilities, joint or several, to which the Holder, such underwriter or
controlling person may become subject under the Securities Act, the Exchange
Act, state securities or Blue Sky laws or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in any Registration Statement under which such shares of
Registrable Stock were registered under the Securities Act, including all
documents incorporated therein by reference, any preliminary prospectus or final
prospectus contained in the Registration Statement, or any amendment or
supplement to such Registration Statement, or arise out of or are based upon the
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances under which they were made; and the Company will reimburse
the Holder, such underwriter and each such controlling person for any legal or
any other expenses reasonably incurred by such seller, underwriter or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that (i) the Company will
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon any untrue statement or omission
made in such Registration Statement, preliminary prospectus or final prospectus,
or any such amendment or supplement, in reliance upon and in conformity with
information furnished to the Company, in writing, by or on behalf of the Holder,
underwriter or controlling person specifically for use in the preparation
thereof and (ii) such indemnity with respect to any preliminary prospectus shall
not inure to the benefit of any seller from whom the person asserting any such
loss, claim, damage or liability purchased stock if such person did not receive
a copy of the final prospectus at or prior to the confirmation of the sale of
such stock to such person in any case where such
8
9
delivery is required by the Securities Act and the untrue statement or omission
of material fact contained in the preliminary prospectus was corrected in the
final prospectus unless such failure to deliver the final prospectus was a
result of the failure of the Company to furnish copies of the final prospectus
for delivery.
(ii) In the event of any registration of any of the shares of
Registrable Stock under the Securities Act pursuant to this Warrant, the Holder
will indemnify and hold harmless the Company, each of its directors and officers
and each underwriter (if any) and each person, if any, who controls the Company
or any such underwriter within the meaning of the Securities Act or the Exchange
Act, against any losses, claims, damages or liabilities, joint or several, to
which the Company, such directors and officers, underwriter or controlling
person may become subject under the Securities Act, Exchange Act, state
securities or Blue Sky laws or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement under which such shares of Registrable
Stock or other securities were registered under the Securities Act, any
preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to the Registration Statement, or
arise out of or are based upon any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which they were made,
if the statement or omission was made in reliance upon and in conformity with
information relating to the Holder furnished in writing to the Company by or on
behalf of the Holder specifically for use in connection with the preparation of
such Registration Statement, prospectus, amendment or supplement and the Holder
will reimburse the Company for any legal or any other expenses reasonably
incurred by the Company in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that (i) the
obligations of the Holder hereunder shall be limited to an amount equal to the
proceeds to the Holder from the shares of Registrable Stock sold in connection
with such registration, (ii) such indemnity with respect to any preliminary
prospectus shall not inure to the benefit of the Company, if the person
asserting any such loss, claim, damage or liability did not receive a copy of
the final prospectus at or prior to the confirmation of the sale of such stock
to such person in any case where such delivery is required by the Securities Act
and the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected in the final prospectus if such failure to
deliver the final prospectus was a result of the failure of the Company to
furnish copies of the final prospectus for delivery, and (iii) the Holder shall
not be obligated to provide indemnity hereunder to the extent that damages
result from the failure of the Company to promptly amend or supplement any
Registration Statement or prospectus on the basis of supplemental information
provided to the Company in writing by the Holder (provided that such
supplemental information constitutes new facts or information relative to the
Holder and not a correction or completion of statements that were inaccurate or
incomplete when originally provided by the Holder to the Company).
(iii) Each party entitled to indemnification under this Section
10(f) (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 be
unreasonably withheld); and, provided, further, that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 10(f). The Indemnified
Party may participate in such defense at such party's expense; provided,
however, that the Indemnifying Party shall pay such expense if representation of
such Indemnified Party by the counsel retained by the Indemnifying Party would
be inappropriate due to actual or potential differing interests between the
Indemnified Party and any other party represented by such counsel in such
proceeding. 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, and no Indemnified Party shall consent to entry of any judgment or
settle such claim or litigation without the prior written consent of the
Indemnifying Party.
9
10
(iv) In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which either (i) the
Holder or any controlling person thereof, makes a claim for indemnification
pursuant to this Section 10(f) but it is judicially determined (by the entry of
a final judgment or decree by a court of competent jurisdiction and the
expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that this Section 10(f) provides for indemnification in such case, or (ii)
contribution under the Securities Act may be required on the part of the Holder
or any such controlling person in circumstances for which indemnification is
provided under this Section 10(f); then, in each such case, the Company, the
Holder and all other persons who have sold securities pursuant to such
Registration Statement will contribute to the aggregate losses, claims, damages
or liabilities to which they may be subject (after contribution from others) in
such proportions so the Holder is responsible for the portion represented by the
percentage that the public offering price of its shares of Registrable Stock
offered by the Registration Statement bears to the public offering price of all
securities offered by such Registration Statement, and the Company and the other
selling stockholders are responsible for the remaining portion; provided,
however, that, in any such case, (A) in no event will the Holder be required to
contribute any amount in excess of the proceeds to it of all shares of
Registrable Stock sold by it pursuant to such Registration Statement, and (B) no
person or entity guilty of fraudulent misrepresentation, within the meaning of
Section 11 of the Securities Act, shall be entitled to contribution from any
person or entity who is not guilty of such fraudulent misrepresentation.
(g) Indemnification with Respect to Underwritten Offering. In the event
that shares of Registrable Stock are sold pursuant to a Registration Statement
in an underwritten offering pursuant to Section 10(b), the Company agrees to
enter into an underwriting agreement containing customary representations and
warranties with respect to the business and operations of an issuer of the
securities being registered and customary covenants and agreements to be
performed by such issuer, including without limitation customary provisions with
respect to indemnification by the Company of the underwriters of such offering.
(h) Information by Holder. The Holder shall furnish to the Company such
information regarding the Holder and the distribution proposed by the Holder as
the Company may reasonably request in writing and as shall be required in
connection with any registration, qualification or compliance referred to in
this Warrant.
(i) Survival of Terms. The provisions of this Section 10 shall survive
the exercise of this Warrant in whole or in part and shall inure to the benefit
of any successor Holder(s) of this Warrant by virtue of Section 9 hereof.
11. Certificate of Adjustment. Whenever the Exercise Price or the number
of shares of Common Stock purchasable hereunder is adjusted, as herein provided,
the Company shall promptly deliver to the Holder of this Warrant a certificate
setting forth the Exercise Price and number of shares of Common Stock
purchasable hereunder after such adjustment and setting forth a brief statement
of the facts requiring such adjustment, as certified by the Company's chief
financial officer.
12. Notice of Dividend or Distribution.
(a) If at any time before the expiration or exercise of this
Warrant:
(i) the Company shall take a record of the Holders of its
Common Stock (or other stock or securities at the time receivable upon the
exercise of this Warrant) for the purpose of entitling them to receive any
dividend or other distribution, or any right to subscribe for or purchase any
shares of stock of any class or any other securities, or to receive any other
right, or
(ii) there shall occur any capital reorganization of the
Company, any reclassification of the capital stock of the Company, consolidation
or merger of the Company with or into
10
11
another corporation, or any conveyance of all or substantially all of the assets
of the Company to another corporation, or
(iii) there shall occur any voluntary dissolution,
liquidation or winding-up of the Company,
then, in each such case, the Company will mail or cause to be mailed to the
Holder a notice specifying, as the case may be, (A) the date on which a record
is to be taken for the purpose of such dividend, distribution or right, and
stating the amount and character of such dividend, distribution or right, or (B)
the date on which such reorganization, reclassification, consolidation, merger,
conveyance, dissolution, liquidation or winding-up is to take place, and the
time, if any is to be fixed, as of which the holders of record of Common Stock
(or such stock or securities at the time receivable upon the exercise of this
Warrant) shall be entitled to exchange their shares of Common Stock (or such
other stock or securities) for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up. Such notice shall be mailed at least 15
days prior to the date therein specified.
(b) All such notices, advices and communications shall be deemed
to have been received (i) in the case of personal delivery, on the date of such
delivery and (ii) in the case of mailing, on the third business day following
the date of such mailing.
(c) Failure to give such notice, or any defect therein, shall not
affect the legality or validity of any dividend, distribution, recapitalization,
reorganization or liquidation.
13. Governing Law. The provisions and terms of this Warrant shall be
construed in accordance with the laws of the State of Washington.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
under seal this 9th day of February, 1998.
TIMELINE, INC.
By: _______________________________
Name: ____________________________
Title: _____________________________
Address: 0000 000xx Xxxxxx XX
Xxxxx 000
Xxxxxxxx, XX 00000
11
12
Notice of Warrant Exercise
Date ____________________
Timeline, Inc.
0000 000xx Xxxxxx XX
Xxxxx 000
Xxxxxxxx, XX 00000
(1) The undersigned hereby elects to purchase ________ shares of Common
Stock of Timeline, Inc. pursuant to the provisions of Section 3 of the attached
Warrant, and tenders herewith payment of the Exercise Price for such shares in
accordance with Section 3(a) of such Warrant, as follows:______________________
_______________________________________________________________________________
(2) In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the shares of Common Stock are being acquired solely for the
account of the undersigned and not as a nominee for any other party (other than
affiliates as permitted under Section 9(c) of the attached Warrant), and for
investment, and that the undersigned will not offer, sell or otherwise dispose
of any such shares of Common Stock except under circumstances that will not
result in a violation of the Securities Act of 1933, as amended or any
applicable state securities laws.
(3) Please issue a certificate or certificates representing said shares
of Common Stock in the name of the undersigned or in such other name as is
specified below:
________________________________________________________________________________
Certificate Name
(4) Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned or in such other name as is
specified below.
By: _______________________________
Name: ____________________________
Title: _____________________________
Address:
12
13
Form of Assignment
For value received __________________ hereby sells, assigns and transfers unto
_________________________________________________________________
_________________________________________________________________
(Please print or typewrite name and address of Assignee)
warrants to purchase ________________________________(__________) shares of the
Common Stock of Timeline, Inc., represented by the within Warrant, and does
hereby irrevocably constitute and appoint _________________________ Attorney to
transfer the within Warrant on the books of the _____________, with full power
of substitution on the premises.
Dated: ______________________
By: _______________________________
Name: ____________________________
Title: _____________________________
Address:
13
