Exhibit 10.26
ANTIDILUTION AGREEMENT
THIS ANTIDILUTION AGREEMENT is entered into as of November 24, 1997, by
and between Silicon Valley Bank ("Purchaser") and Bluestone Software, Inc. (the
"Company").
RECITALS
A. Concurrently with the execution of this Antidilution Agreement,
the Purchaser is purchasing from the Company a Warrant (the "Warrant') pursuant
to which Purchaser has the right to acquire from the Company the Shares (as
defined in the Warrant).
B. By this Antidilution 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 in the
Warrant).
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 Antidilution 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 or exercise
of Options and Convertible Securities outstanding as of the date of the Warrant;
the Shares; or Common Stock Issued or reserved for issuance pursuant to a stock
option plan which was approved by the Board of Directors of 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.
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 4) is less than the
Warrant Price in effect immediately before such Issue, the Warrant Price 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 such Common Stock
outstanding immediately before such Issue plus the amount of Common Stock that
the aggregate consideration received by the 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. 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.
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5. GENERAL.
5.1 GOVERNING LAW. This Antidilution Agreement shall be
governed in all respects by the laws of the State of Delaware.
5.2 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, permitted assigns, heirs, executors and
administrators of the parties hereto.
5.3 ENTIRE AGREEMENT. Except as set forth below, this
Antidilution 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.
5.4 NOTICES, ETC. All notices and other communications
required or permitted hereunder shall be in writing and shall be mailed by
overnight delivery by a reputable courier service or by first class mail,
postage prepaid, certified or registered mail, return receipt requested,
addressed (a) if to Purchaser at Purchaser's address as set forth below, or at
such other address as Purchaser shall have furnished to the Company in writing,
or (b) if to the Company, at the Company's address set forth below, or at such
other address as the Company shall have furnished to the Purchaser in writing.
5.5 SEVERABILITY. In case any provision of this Antidilution
Agreement shall be invalid, illegal, or unenforceable, the validity, legality
and enforceability of the remaining provisions of this Antidilution Agreement
shall not in any way be affected or impaired thereby.
5.6 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 Antidilution Agreement.
5.7 COUNTERPARTS. This Antidilution 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 COMPANY
SILICON VALLEY BANK BLUESTONE SOFTWARE, INC.
By:/s/ Xxxxxx Xxxxxxxxx By:/s/ Xxx Xxxxxx
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Name: Xxxxxx Xxxxxxxxx Name: Xxx Xxxxxx
Title: Vice President Title: President
Address: Address:
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