Contract
Exhibit 4.5
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR ANY STATE
SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT (i) EFFECTIVE REGISTRATION
STATEMENTS RELATED THERETO, (ii) AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY
TO THE COMPANY, THAT SUCH REGISTRATIONS ARE NOT REQUIRED, (iii) RECEIPT OF NO-ACTION LETTERS FROM
THE APPROPRIATE GOVERNMENTAL AUTHORITIES, OR (iv) OTHERWISE COMPLYING WITH THE PROVISIONS OF
SECTION 7 OF THIS WARRANT.
WATERFRONT MEDIA INC.
WARRANT TO PURCHASE SHARES
OF SERIES F PREFERRED STOCK
OF SERIES F PREFERRED STOCK
THIS CERTIFIES THAT, for value received, COMPASS HORIZON FUNDING COMPANY LLC and its assignees
are entitled to subscribe for and purchase 65,674 shares of the fully paid and nonassessable Series
Preferred Stock (as adjusted pursuant to Section 4 hereof, the “Shares”) of WATERFRONT MEDIA, INC.,
a Delaware corporation (the “Company”), at the price of $7.6134 per share (such price and such
other price as shall result, from time to time, from the adjustments specified in Section 4 hereof
is herein referred to as the “Warrant Price”), subject to the provisions and upon the terms and
conditions hereinafter set forth. As used herein, (a) the term “Series Preferred” shall mean the
Company’s presently authorized Series F Preferred Stock, and any stock into or for which such
Series F Preferred Stock may hereafter be converted or exchanged, and after the automatic
conversion of the Series F Preferred Stock to Common Stock shall mean the Company’s Common Stock,
(b) the term “Date of Grant” shall mean October 8, 2009, and (c) the term “Other Warrants” shall
mean any other warrants issued by the Company in connection with the transaction with respect to
which this Warrant was issued, and any warrant issued upon transfer or partial exercise of or in
lieu of this Warrant. The term “Warrant” as used herein shall be deemed to include Other Warrants
unless the context clearly requires otherwise.
1. Term. The purchase right represented by this Warrant is exercisable, in whole or
in part, at any time and from time to time from the Date of Grant through the later of (i) ten (10)
years after the Date of Grant or (ii) five (5) years after the closing of the Company’s initial
public offering of its Common Stock (“IPO”) effected pursuant to a Registration Statement on Form
S-1 (or its successor) filed under the Securities Act of 1933, as amended (the “Act”).
2. Method of Exercise; Payment; Issuance of New Warrant. Subject to Section 1 hereof,
the purchase right represented by this Warrant may be exercised by the holder hereof, in whole or
in part and from time to time, at the election of the holder hereof, by (a) the surrender of this
Warrant (with the notice of exercise substantially in the form attached hereto as Exhibit A-1 duly
completed and executed) at the principal office of the Company and by the payment to the Company,
by certified or bank check, or by wire transfer to an account designated by the
Company (a “Wire Transfer”) of an amount equal to the then applicable Warrant Price multiplied
by the number of Shares then being purchased; (b) if in connection with a registered public
offering of the Company’s securities, the surrender of this Warrant (with the notice of exercise
form attached hereto as Exhibit A-2 duly completed and executed) at the principal office of the
Company together with notice of arrangements reasonably satisfactory to the Company for payment to
the Company either by certified or bank check or by Wire Transfer from the proceeds of the sale of
shares to be sold by the holder in such public offering of an amount equal to the then applicable
Warrant Price per share multiplied by the number of Shares then being purchased; or (c) exercise of
the “net issuance” right provided for in Section 10.2 hereof. The person or persons in whose
name(s) any certificate(s) representing shares of Series Preferred shall be issuable upon exercise
of this Warrant shall be deemed to have become the holder(s) of record of, and shall be treated for
all purposes as the record holder(s) of, the shares represented thereby (and such shares shall be
deemed to have been issued) immediately prior to the close of business on the date or dates upon
which this Warrant is exercised. In the event of any exercise of the rights represented by this
Warrant, certificates for the shares of stock so purchased shall be delivered to the holder hereof
as soon as possible and in any event within thirty (30) days after such exercise and, unless this
Warrant has been fully exercised or expired, a new Warrant representing the portion of the Shares,
if any, with respect to which this Warrant shall not then have been exercised shall also be issued
to the holder hereof as soon as possible and in any event within such thirty-day period; provided,
however, at such time as the Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended, if requested by the holder of this Warrant, the Company shall
cause its transfer agent to deliver the certificate representing Shares issued upon exercise of
this Warrant to a broker or other person (as directed by the holder exercising this Warrant) within
the time period required to settle any trade made by the holder after exercise of this Warrant.
3. Stock Fully Paid; Reservation of Shares. All Shares that may be issued upon the
exercise of the rights represented by this Warrant will, upon issuance pursuant to the terms and
conditions herein, be fully paid and nonassessable, and free from all preemptive rights and taxes,
liens and charges with respect to the issue thereof. During the period within which the rights
represented by this Warrant may be exercised, the Company will at all times have authorized, and
reserved for the purpose of the issue upon exercise of the purchase rights evidenced by this
Warrant, a sufficient number of shares of its Series Preferred to provide for the exercise of the
rights represented by this Warrant and a sufficient number of shares of its Common Stock to provide
for the conversion of the Series Preferred into Common Stock.
4. Adjustment of Warrant Price and Number of Shares. The number and kind of
securities purchasable upon the exercise of this Warrant and the Warrant Price shall be subject to
adjustment from time to time upon the occurrence of certain events, as follows:
(a) Reclassification. In case of any reclassification or change of securities of the
class issuable upon exercise of this Warrant (other than a change in par value, or from par value
to no par value, or from no par value to par value, or as a result of a subdivision or
combination), the Company, shall duly execute and deliver to the holder of this Warrant a new
Warrant, so that the holder of this Warrant shall have the right to receive upon exercise of this
Warrant, at a total purchase price not to exceed that payable upon the exercise of the unexercised
portion of this Warrant, and in lieu of the shares of Series Preferred theretofore issuable upon
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exercise of this Warrant, the kind and amount of shares of stock, other securities, money and
property receivable upon such reclassification by a holder of the number of shares of Series
Preferred then purchasable under this Warrant. Any new Warrant shall provide for adjustments that
shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section
4. The provisions of this Section 4(a) shall similarly apply to successive reclassifications or
changes.
(b) Subdivision or Combination of Shares. If the Company at any time while this
Warrant remains outstanding and unexpired shall subdivide or combine its outstanding shares of
Series Preferred, the Warrant Price shall be proportionately decreased and the number of Shares
issuable hereunder shall be proportionately increased in the case of a subdivision and the Warrant
Price shall be proportionately increased and the number of Shares issuable hereunder shall be
proportionately decreased in the case of a combination.
(c) Stock Dividends and Other Distributions. If the Company at any time while this
Warrant is outstanding and unexpired shall pay a dividend with respect to Series Preferred payable
in Series Preferred, then, upon exercise of this Warrant, for each Share acquired, the holder
hereof shall receive, without cost to the holder hereof, the total number and kind of securities to
which the holder hereof would have been entitled had the holder hereof owned the Shares of record
as of the date the dividend occurred; provided that the holder hereof shall not be entitled
to receive any such securities to the extent that the conversion price of the Shares is
appropriately adjusted to provide for such issuance or distribution upon the conversion of the
Shares.
(d) Repurchase on Sale, Merger, or Consolidation of the Company.
(i) 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, (b) any sale or disposition of all or substantially all of the capital
stock of the Company, or (c) any reorganization, consolidation, merger or sale of the voting
securities of the Company or any other transaction, other than a financing 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.
(ii) 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. In the event of an Acquisition in which the outstanding capital
stock of the Company is acquired for shares or stock in a privately held company, the successor
entity shall assume the obligations of this Warrant, and the 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, and the Warrant Price shall be adjusted accordingly. In the
event of an Acquisition in which the outstanding capital stock of the Company is acquired for cash
and/or capital stock of a publicly-traded acquiror, this
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Warrant shall be automatically deemed to be exercised and converted pursuant to Section 10.2
below immediately prior to the consummation of the Acquisition.
(iii) Nonassumption. If upon the closing of any Acquisition the successor entity is
not required to assume the obligations of this Warrant and the holder hereof has not otherwise
exercised this Warrant in full, then this Warrant shall be deemed to have been automatically
converted pursuant to Section 10.2 below and thereafter the holder hereof shall participate in the
Acquisition on the same terms as other holders of the same class of securities of the Company.
(e) Adjustment of Number of Shares. Upon each adjustment in the Warrant Price, the
number of Shares of Series Preferred purchasable hereunder shall be adjusted, to the nearest whole
share, to the product obtained by multiplying the number of Shares purchasable immediately prior to
such adjustment in the Warrant Price by a fraction, the numerator of which shall be the Warrant
Price immediately prior to such adjustment and the denominator of which shall be the Warrant Price
immediately thereafter.
(f) Antidilution Rights. The other antidilution rights applicable to the Shares of
Series Preferred purchasable hereunder are set forth in the Company’s Certificate of Incorporation,
as amended and/or restated through the Date of Grant (the “Charter”). Such antidilution rights
shall not be restated, amended, modified or waived in any manner in which the holder is treated
differently than other holders of the same class of securities of the Company without such holder’s
prior written consent. The Company shall promptly provide the holder hereof with any restatement,
amendment, modification or waiver of the Charter promptly after the same has been made.
5. Notice of Adjustments. Whenever the Warrant Price or the number of Shares
purchasable hereunder shall be adjusted pursuant to Section 4 hereof, the Company shall make a
certificate signed by its chief financial officer setting forth, in reasonable detail, the event
requiring the adjustment, the amount of the adjustment, the method by which such adjustment was
calculated, and the Warrant Price and the number of Shares purchasable hereunder after giving
effect to such adjustment, and shall cause copies of such certificate to be mailed (without regard
to Section 13 hereof, by first class mail, postage prepaid) to the holder of this Warrant. In
addition, whenever the conversion price or conversion ratio of the Series Preferred shall be
adjusted, the Company shall make a certificate signed by its chief financial officer setting forth,
in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method
by which such adjustment was calculated, and the conversion price or ratio of the Series Preferred
after giving effect to such adjustment, and shall cause copies of such certificate to be mailed
(without regard to Section 13 hereof, by first class mail, postage prepaid) to the holder of this
Warrant.
6. Fractional Shares. No fractional shares of Series Preferred will be issued in
connection with any exercise hereunder, but in lieu of such fractional shares the Company shall
make a cash payment therefor based on the fair market value of the Series Preferred on the date of
exercise as reasonably determined in good faith by the Company’s Board of Directors.
7. Compliance with Act; Disposition of Warrant or Shares of Series Preferred.
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(a) Compliance with Act. The holder of this Warrant, by acceptance hereof, agrees
that this Warrant, and the shares of Series Preferred to be issued upon exercise hereof and any
Common Stock issued upon conversion thereof are being acquired for investment and that such holder
will not offer, sell or otherwise dispose of this Warrant, or any shares of Series Preferred to be
issued upon exercise hereof or any Common Stock issued upon conversion thereof except under
circumstances which will not result in a violation of the Act or any applicable state securities
laws. Upon exercise of this Warrant, unless the Shares being acquired are registered under the Act
and any applicable state securities laws or an exemption from such registration is available, the
holder hereof shall confirm in writing that the shares of Series Preferred so purchased (and any
shares of Common Stock issued upon conversion thereof) are being acquired for investment and not
with a view toward distribution or resale in violation of the Act and shall confirm such other
matters related thereto as may be reasonably requested by the Company. This Warrant and all shares
of Series Preferred issued upon exercise of this Warrant and all shares of Common Stock issued upon
conversion thereof (unless registered under the Act and any applicable state securities laws) shall
be stamped or imprinted with a legend in substantially the following form:
“THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT (i) EFFECTIVE
REGISTRATION STATEMENTS RELATED THERETO, (ii) AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATIONS ARE NOT REQUIRED, (iii) RECEIPT OF NO-ACTION
LETTERS FROM THE APPROPRIATE GOVERNMENTAL AUTHORITIES, OR (iv) OTHERWISE COMPLYING WITH THE
PROVISIONS OF SECTION 7 OF THE WARRANT UNDER WHICH THESE SECURITIES WERE ISSUED, DIRECTLY OR
INDIRECTLY.”
Said legend shall be removed by the Company, upon the request of a holder, at such time as the
restrictions on the transfer of the applicable security shall have terminated. In addition, in
connection with the issuance of this Warrant, the holder specifically represents to the Company by
acceptance of this Warrant as follows:
(1) The holder is aware of the Company’s business affairs and financial condition, and has
acquired information about the Company sufficient to reach an informed and knowledgeable decision
to acquire this Warrant. The holder is acquiring this Warrant for its own account for investment
purposes only and not with a view to, or for the resale in connection with, any “distribution”
thereof in violation of the Act.
(2) The holder understands that this Warrant has not been registered under the Act in reliance
upon a specific exemption therefrom, which exemption depends upon, among other things, the bona
fide nature of the holder’s investment intent as expressed herein.
(3) The holder further understands that this Warrant must be held indefinitely unless
subsequently registered under the Act and qualified under any applicable state securities laws, or
unless exemptions from registration and qualification are otherwise available. The holder is aware
of the provisions of Rule 144, promulgated under the Act.
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(4) The holder is an “accredited investor” as such term is defined in Rule 501 of Regulation D
promulgated under the Act.
(b) Disposition of Warrant or Shares. With respect to any offer, sale or other
disposition of this Warrant or any shares of Series Preferred acquired pursuant to the exercise of
this Warrant prior to registration of such Warrant or shares, the holder hereof agrees to give
written notice to the Company prior thereto, describing briefly the manner thereof, together with a
written opinion of such holder’s counsel, or other evidence, if reasonably satisfactory to the
Company, to the effect that such offer, sale or other disposition may be effected without
registration or qualification (under the Act as then in effect or any federal or state securities
law then in effect) of this Warrant or such shares of Series Preferred or Common Stock and
indicating whether or not under the Act certificates for this Warrant or such shares of Series
Preferred to be sold or otherwise disposed of require any restrictive legend as to applicable
restrictions on transferability in order to ensure compliance with such law. Upon receiving such
written notice and reasonably satisfactory opinion or other evidence, the Company, as promptly as
practicable but no later than fifteen (15) days after receipt of the written notice, shall notify
such holder that such holder may sell or otherwise dispose of this Warrant or such shares of Series
Preferred or Common Stock, all in accordance with the terms of the notice delivered to the Company.
If a determination has been made pursuant to this Section 7(b) that the opinion of counsel for the
holder or other evidence is not reasonably satisfactory to the Company, the Company shall so notify
the holder promptly with details thereof after such determination has been made. Notwithstanding
the foregoing, this Warrant or such shares of Series Preferred or Common Stock may, as to such
federal laws, be offered, sold or otherwise disposed of in accordance with Rule 144 or 144A under
the Act, provided that the Company shall have been furnished with such information as the Company
may reasonably request to provide a reasonable assurance that the provisions of Rule 144 or 144A
have been satisfied. Each certificate representing this Warrant or the shares of Series Preferred
thus transferred (except a transfer pursuant to Rule 144 or 144A) shall bear a legend as to the
applicable restrictions on transferability in order to ensure compliance with such laws, unless in
the aforesaid opinion of counsel for the holder, such legend is not required in order to ensure
compliance with such laws. The Company may issue stop transfer instructions to its transfer agent
in connection with such restrictions.
(c) Applicability of Restrictions. Neither any restrictions of any legend described in
this Warrant nor the requirements of Section 7(b) above shall apply to any transfer of, or grant of
a security interest in, this Warrant (or the Series Preferred or Common Stock obtainable upon
exercise thereof) or any part hereof (i) to a partner of the holder if the holder is a partnership
or to a member of the holder if the holder is a limited liability company, (ii) to a partnership of
which the holder is a partner or to a limited liability company of which the holder is a member,
(iii) to any affiliate of the holder if the holder is a corporation, (iv) notwithstanding the
foregoing, to any corporation, company, limited liability company, limited partnership,
partnership, or other person managed or sponsored by Compass Horizon Funding Company LLC (“Finance
LLC”) or its principals or in which Finance LLC has an interest, (v) to Horizon Credit I LLC or
(vi) to a lender to the holder or any of the foregoing; provided, however, in any
such transfer, if applicable, the transferee shall on the Company’s request agree in writing to be
bound by the terms of this Warrant as if an original holder hereof. Notwithstanding any term or
condition contained in this Warrant to the contrary, the Company may refuse to transfer this
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Warrant or issue shares issuable upon conversion or exercise of this Warrant to any person
(whether legal or natural) who is reasonably determined in good faith by the Company’s Board of
Directors to be an actual or potential competitor of the Company (or who is an affiliate of any
person (whether legal or natural) so deemed to be an actual or potential competitor of the
Company).
8. Rights as Shareholders; Information. No holder of this Warrant, as such, shall be
entitled to vote or receive dividends or be deemed the holder of Series Preferred or any other
securities of the Company which may at any time be issuable upon the exercise hereof for any
purpose, nor shall anything contained herein be construed to confer upon the holder of this
Warrant, as such, any of the rights of a shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any meeting thereof, or to
receive notice of meetings, or to receive dividends or subscription rights or otherwise until this
Warrant shall have been exercised and the Shares purchasable upon the exercise hereof shall have
become deliverable, as provided herein. Notwithstanding the foregoing, until the closing of the
IPO, the Company will transmit to the holder of this Warrant such information, documents and
reports as are generally distributed to the holders of any class or series of the securities of the
Company concurrently with the distribution thereof to the shareholders.
9. Registration Rights. The Company grants registration rights to the holder of this
Warrant for any Common Stock of the Company obtained upon conversion of the Series Preferred,
comparable to the registration rights granted to Square 1 Bank in that certain Fifth Amended and
Restated Stockholders Rights Agreement dated as of October 15, 2008, as amended (the “Stockholder
Rights Agreement”).
10. Additional Rights.
10.1 Acquisition Transactions. The Company shall provide the holder of this Warrant
with at least ten (10) days’ written notice prior to closing thereof of the terms and conditions of
any Acquisition.
10.2 Right to Convert Warrant into Stock: Net Issuance.
(a) Right to Convert. In addition to and without limiting the rights of the holder
under the terms of this Warrant, the holder shall have the right to convert this Warrant or any
portion thereof (the “Conversion Right”) into shares of Series Preferred as provided in this
Section 10.2 at any time or from time to time during the term of this Warrant. Upon exercise of the
Conversion Right with respect to a particular number of shares subject to this Warrant (the
“Converted Warrant Shares”), the Company shall deliver to the holder (without payment by the holder
of any exercise price or any cash or other consideration) that number of shares of fully paid and
nonassessable Series Preferred as is determined according to the following formula:
| X= | B - A
|
Where: X =
|
the number of shares of Series Preferred that shall be issued to holder | |
Y =
|
the fair market value of one share of Series Preferred |
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A =
|
the aggregate Warrant Price of the specified number of Converted Warrant Shares immediately prior to the exercise of the Conversion Right (i.e., the number of Converted Warrant Shares multiplied by the Warrant Price) | |
B =
|
the aggregate fair market value of the specified number of Converted Warrant Shares (i.e., the number of Converted Warrant Shares multiplied by the fair market value of one Converted Warrant Share) |
No fractional shares shall be issuable upon exercise of the Conversion Right, and, if the
number of shares to be issued determined in accordance with the foregoing formula is other than a
whole number, the Company shall pay to the holder an amount in cash equal to the fair market value
of the resulting fractional share on the Conversion Date (as hereinafter defined). For purposes of
Section 10 of this Warrant, shares issued pursuant to the Conversion Right shall be treated as if
they were issued upon the exercise of this Warrant.
(b) Method of Exercise. The Conversion Right may be exercised by the holder by the
surrender of this Warrant at the principal office of the Company together with a written statement
(which may be in the form of Exhibit A-1 or Exhibit A-2 hereto) specifying that the holder thereby
intends to exercise the Conversion Right and indicating the number of shares subject to this
Warrant which are being surrendered (referred to in Section 10.2(a) hereof as the Converted Warrant
Shares) in exercise of the Conversion Right. Such conversion shall be effective upon receipt by the
Company of this Warrant together with the aforesaid written statement, or on such later date as is
specified therein (the “Conversion Date”), and, at the election of the holder hereof, may be made
contingent upon the closing of the sale of the Company’s Common Stock to the public in a public
offering pursuant to a Registration Statement under the Act (a “Public Offering”). Certificates for
the shares issuable upon exercise of the Conversion Right and, if applicable, a new warrant
evidencing the balance of the shares remaining subject to this Warrant, shall be issued as of the
Conversion Date and shall be delivered to the holder within thirty (30) days following the
Conversion Date.
(c) Determination of Fair Market Value. For purposes of this Section 10.2, “fair
market value” of a share of Series Preferred (or Common Stock if the Series Preferred has been
automatically converted into Common Stock) as of a particular date (the “Determination Date”) shall
mean:
(i) If the Conversion Right is exercised in connection with and contingent upon a Public
Offering, and if the Company’s Registration Statement relating to such Public Offering
(“Registration Statement”) has been declared effective by the Securities and Exchange Commission,
then the initial “Price to Public” specified in the final prospectus with respect to such offering,
net of any discounts and/or commissions paid to the underwriters.
(ii) If the Conversion Right is not exercised in connection with and contingent upon a Public
Offering, then as follows:
(A) If traded on a securities exchange, the fair market value of the Common Stock shall be
deemed to be the average of the closing prices of the Common Stock on such exchange over the five
trading days immediately prior to the Determination Date, and the fair
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market value of the Series Preferred shall be deemed to be such fair market value of the
Common Stock multiplied by the number of shares of Common Stock into which each share of Series
Preferred is then convertible;
(B) If traded on the Nasdaq Stock Market or other over-the-counter system, the fair market
value of the Common Stock shall be deemed to be the average of the closing bid prices of the Common
Stock over the five trading days immediately prior to the Determination Date, and the fair market
value of the Series Preferred shall be deemed to be such fair market value of the Common Stock
multiplied by the number of shares of Common Stock into which each share of Series Preferred is
then convertible; and
(C) If there is no public market for the Common Stock, then fair market value shall be
determined by the Board of Directors of the Company in good faith.
In making a determination under clauses (A) or (B) above, if on the Determination Date, five
trading days had not passed since the IPO, then the fair market value of the Common Stock shall be
the average closing prices or closing bid prices, as applicable, for the shorter period beginning
on and including the date of the IPO and ending on the trading day prior to the Determination Date
(or if such period includes only one trading day, the closing price or closing bid price, as
applicable, for such trading day). If closing prices or closing bid prices are no longer reported
by a securities exchange or other trading system, the closing price or closing bid price shall be
that which is reported by such securities exchange or other trading system at 4:00 p.m. New York
City time on the applicable trading day.
10.3 Exercise Prior to Expiration. To the extent this Warrant is not previously
exercised as to all of the Shares subject hereto, and if the fair market value of one share of the
Series Preferred is greater than the Warrant Price then in effect, this Warrant shall be deemed
automatically exercised pursuant to Section 10.2 above (even if not surrendered) immediately before
its expiration. For purposes of such automatic exercise, the fair market value of one share of the
Series Preferred upon such expiration shall be determined pursuant to Section 10.2(c). To the
extent this Warrant or any portion thereof is deemed automatically exercised pursuant to this
Section 10.3, the Company agrees to promptly notify the holder hereof of the number of Shares, if
any, the holder hereof is to receive by reason of such automatic exercise.
11. Representations and Warranties. The Company represents and warrants to the holder
of this Warrant as follows:
(a) This Warrant has been duly authorized and executed by the Company and is a valid and
binding obligation of the Company enforceable in accordance with its terms, subject to laws of
general application relating to bankruptcy, insolvency and the relief of debtors and the rules of
law or principles at equity governing specific performance, injunctive relief and other equitable
remedies.
(b) The Shares have been duly authorized and reserved for issuance by the Company and, when
issued in accordance with the terms hereof, will be validly issued, fully paid and nonassessable
and free from preemptive rights.
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(c) The rights, preferences, privileges and restrictions granted to or imposed upon the Series
Preferred and the holders thereof are as set forth in the Charter, and on the Date of Grant, each
share of the Series Preferred represented by this Warrant is convertible into one share of Common
Stock.
(d) The shares of Common Stock issuable upon conversion of the Shares have been duly
authorized and reserved for issuance by the Company and, when issued in accordance with the terms
of the Charter will be validly issued, fully paid and nonassessable.
(e) Assuming the accuracy of the representations of the holder hereof in Section 7(a) above,
the execution and delivery of this Warrant are not, and the issuance of the Shares upon exercise of
this Warrant in accordance with the terms hereof will not be, inconsistent with the Company’s
Charter or by-laws, do not and will not contravene any law, governmental rule or regulation,
judgment or order applicable to the Company, and do not and will not conflict with or contravene
any provision of, or constitute a default under, any indenture, mortgage, contract or other
instrument of which the Company is a party or by which it is bound or require the consent or
approval of, the giving of notice to, the registration or filing with or the taking of any action
in respect of or by, any Federal, state or local government authority or agency or other person,
except for the filing of notices pursuant to federal and state securities laws, which filings, if
any, will be effected by the time required thereby.
(f) There are no actions, suits, audits, investigations or proceedings pending or, to the
knowledge of the Company, threatened against the Company in any court or before any governmental
commission, board or authority which, if adversely determined, could have a material adverse effect
on the ability of the Company to perform its obligations under this Warrant.
(g) The number of shares of Common Stock of the Company outstanding on the date hereof, on a
fully diluted basis (assuming the conversion of all outstanding convertible securities and the
exercise of all outstanding options and warrants), does not exceed 37,000,000 shares.
12. Modification and Waiver. This Warrant and any provision hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the party against which
enforcement of the same is sought.
13. Notices. Any notice, request, communication or other document required or
permitted to be given or delivered to the holder hereof or the Company shall be delivered, or shall
be sent by certified or registered mail, postage prepaid, to each such holder at its address as
shown on the books of the Company or to the Company at the address indicated therefor on the
signature page of this Warrant.
14. Lost Warrants or Stock Certificates. The Company covenants to the holder hereof
that, upon receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant or any stock certificate and, in the case of any such
loss, theft or destruction, upon receipt of an indemnity reasonably satisfactory to the Company, or
in the case of any such mutilation upon surrender and cancellation of such Warrant or stock
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certificate, the Company will make and deliver a new Warrant or stock certificate, of like
tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant or stock certificate.
15. Descriptive Headings. The descriptive headings of the various Sections of this
Warrant are inserted for convenience only and do not constitute a part of this Warrant. The
language in this Warrant shall be construed as to its fair meaning without regard to which party
drafted this Warrant.
16. Governing Law. This Warrant shall be construed and enforced in accordance with,
and the rights of the parties shall be governed by, the laws of the State of Delaware.
17. Survival of Representations, Warranties and Agreements. All representations and
warranties of the Company and the holder hereof contained herein shall survive the Date of Grant,
the exercise or conversion of this Warrant (or any part hereof) or the termination or expiration of
rights hereunder. All agreements of the Company and the holder hereof contained herein shall
survive indefinitely until, by their respective terms, they are no longer operative.
18. Remedies. In case any one or more of the covenants and agreements contained in
this Warrant shall have been breached, the holders hereof (in the case of a breach by the Company),
or the Company (in the case of a breach by a holder), may proceed to protect and enforce their or
its rights either by suit in equity and/or by action at law, including, but not limited to, an
action for damages as a result of any such breach and/or an action for specific performance of any
such covenant or agreement contained in this Warrant.
19. No Impairment of Rights. The Company will not, by amendment of its Charter or
through any other means, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant, but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such action as may be necessary or appropriate in order to protect the
rights of the holder of this Warrant against impairment.
20. Severability. The invalidity or unenforceability of any provision of this Warrant
in any jurisdiction shall not affect the validity or enforceability of such provision in any other
jurisdiction, or affect any other provision of this Warrant, which shall remain in full force and
effect.
21. Recovery of Litigation Costs. If any legal action or other proceeding is brought
for the enforcement of this Warrant, or because of an alleged dispute, breach, default, or
misrepresentation in connection with any of the provisions of this Warrant, the successful or
prevailing party or parties shall be entitled to recover reasonable attorneys’ fees and other costs
incurred in that action or proceeding, in addition to any other relief to which it or they may be
entitled.
22. Entire Agreement; Modification. This Warrant constitutes the entire agreement
between the parties pertaining to the subject matter contained in it and supersedes all prior and
contemporaneous agreements, representations, and undertakings of the parties, whether oral or
written, with respect to such subject matter.
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23. “Market Stand-off’ Agreement. The holder hereof hereby agrees that it will not,
without the prior written consent of the managing underwriter in an initial public offering of the
Company, during the period commencing on the date of the final prospectus relating to such initial
public offering and ending on the date specified by the Company and the managing underwriter (such
period not to exceed one hundred eighty (180) days or such longer period as is necessary to
facilitate compliance with NASD Rule 2711 or NYSE Member Rule 472 or any successor or similar rule
or regulation), (i) lend; offer; pledge; sell; contract to sell; sell any option or contract to
purchase; purchase any option or contract to sell; grant any option, right, or warrant to purchase;
or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock held immediately before
the effective date of the registration statement for such offering or (ii) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Common Stock, whether any such transaction described in clause (i) or (ii)
above is to be settled by delivery of Common Stock or other securities, in cash, or otherwise. The
foregoing provisions of this Section 23 shall apply only to an initial public offering of the
Company, shall not apply to the sale of any shares to an underwriter pursuant to an underwriting
agreement, and shall be applicable to the holder hereof only if all officers, directors, and
stockholders individually owning more than one percent (1%) of the Company’s outstanding Common
Stock are subject to the same restrictions. The underwriters in connection with an initial public
offering of the Company are intended third-party beneficiaries of this Section 23 and shall have
the right, power, and authority to enforce the provisions hereof as though they were a party
hereto. The holder hereof further agrees to execute such agreements as may be reasonably requested
by the underwriters an the initial public offering of the Company that are consistent with this
Section 23 or that are necessary to give further effect thereto. Any discretionary waiver or
termination of the restrictions of any or all of such agreements by the Company or the underwriters
shall apply pro rata to all holders subject to such agreements.
[Remainder of page intentionally left blank.]
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The Company has caused this Warrant to be duly executed and delivered as of the Date of Grant
specified above.
| WATERFRONT MEDIA INC. | ||||||
| By: Name: |
/s/ Xxxx Xxxxxxx
|
|||||
| Title: | Senior Vice President and General Counsel | |||||
| Address: | 00 Xxxx Xxxxxx | |||||
| Xxxxxxxx, Xxx Xxxx 00000 |
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