THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT
THE PRIOR WRITTEN CONSENT OF THE COMPANY OR WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL FOR THE
HOLDER, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE ACT OR RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND
EXCHANGE COMMISSION.
May 12, 1998
NETRATINGS, INC.
a Delaware corporation
SERIES B PREFERRED STOCK WARRANT
THIS CERTIFIES THAT, for value received, (hereinafter, "Holder"), is
entitled, upon the terms and subject to the conditions hereinafter set forth,
to purchase from NetRatings, Inc., a Delaware corporation (the "Company"),
that number of shares of the Company's Series B Preferred Stock, without par
value (the "Shares"), determined pursuant to the terms of the Loan Agreement
and Promissory note to which this Warrant is attached, at a purchase price
(the "Exercise Price") equal to the per share price established in the
Company's Series B Financing, and otherwise upon and subject to the terms and
conditions hereinafter set forth. This Warrant may be exercised in whole or
in part from time to time and must be exercised, if at all, at any time
following completion of the Series B Financing and on or before the
Expiration Date (as defined in Section 6(b)). Any defined terms not otherwise
defined herein shall have the terms defined for them in the Loan Agreement
and Promissory Note to which this Warrant is attached.
This Warrant is issued in accordance with and subject to all terms and
conditions of the Loan Agreement and Promissory Note, dated , 1998 (the
"Note"), issued by the Company to Holder for an aggregate principal amount of
pursuant to which Xxxxxx has the right to obtain this Warrant.
TERMS AND CONDITIONS OF WARRANT
1. EXERCISE OF WARRANT.
(a) This Warrant may be exercised by Xxxxxx as to the whole or any
lesser number of the Shares covered hereby, at any time and from time to time
prior to the Expiration Date, upon surrender of this Warrant to the Company
at its principal executive office together with the Notice of Exercise
attached hereto as EXHIBIT A, duly completed and executed by Xxxxxx, and the
payment in cash to the Company of the aggregate Exercise Price for the Shares
to be purchased. Certificates for the Shares so purchased shall be delivered
to Holder within a reasonable time not to exceed 21 days after exercise of
the stock purchase rights represented by this Warrant. The exercise of this
Warrant shall be deemed to have been effected on the day on which Xxxxxx
surrenders this Warrant to the Company and satisfies all of the requirements
of this Section 1. Upon such exercise, Holder will be deemed a
stockholder of record of those Shares for which the warrant has been
exercised with all rights of a stockholder (including, without limitation,
all voting rights with respect to such Shares and all rights to receive any
dividends with respect to such Shares). If this Warrant is to be exercised in
respect of less than all of the Shares covered hereby, Holder shall be
entitled to receive a new warrant covering the number of Shares in respect of
which this Warrant shall not have been exercised and for which it remains
subject to exercise. Such new warrant shall be in all other respects
identical to this Warrant.
(b) NET ISSUE EXERCISE. In lieu of exercising this Warrant via
cash payment, Holder may elect to receive shares equal to the value of this
Warrant (or the portion thereof being canceled) by surrender of this Warrant
at the principal office of the Company together with notice of election to
exercise by means of a net issuance exercise, in which event the Company
shall issue to Holder a number of shares of Series B Preferred Stock of the
Company computed using the following formula:
X = Y(A-B)
------
A
Where X = the number of shares of Series B Preferred Stock to be issued
to Holder.
Y = the number of shares of Series B Preferred Stock purchasable
under this Warrant.
A = the Fair Market Value (as defined below) of one share of
Series B Preferred Stock on the date of exercise.
B = the Exercise Price (as adjusted to the date of such
calculation).
If the above calculation results in a negative number, then no
shares of Series B Preferred Stock shall be issued or issuable upon conversion
of this Warrant.
(c) FAIR MARKET VALUE. For purposes of this Section 1, the fair
market value of the Series B Preferred Stock shall mean:
(i) If the Company's Common Stock is traded
Over-The-Counter or on an exchange, the product of (x) the average of the
closing bid and asked prices of the Company's Common Stock quoted in the
Over-The-Counter Market Summary or the closing price quoted on any exchange
on which the Common Stock is listed, whichever is applicable, as published in
the Western Edition of THE WALL STREET JOURNAL for the ten (10) trading days
prior to the date of determination of fair market value, PROVIDED, HOWEVER,
in the event this Warrant is deemed to be exercised in connection with an
IPO, (as such term is defined in Section 6 hereto), the Fair Market Value of
the Common Stock of the Company for purposes of this Section 1 shall be the
per share price of Common Stock sold in such offering and (y) the number of
shares of Common Stock into which each share of the Series B Preferred Stock
is convertible at the time of such exercise.
(ii) If the Company's Common Stock is not traded
Over-The-Counter or on an exchange, the product of (x) the number of shares
of Common Stock into which each share of Series B Preferred Stock is
convertible at the time such exercise and (y) the highest price per share
which the Company could obtain from a willing buyer (not a current employee or
director) for shares sold by
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the Company from authorized but unissued shares of Common Stock as determined
in good faith by its Board of Directors.
(d) STOCK CERTIFICATES. In the event of any exercise of the
rights represented by this Warrant, certificates for the Series B Preferred
Stock so purchased shall be delivered to Holder within a reasonable time and,
unless this Warrant has been fully exercised or has expired, a new Warrant
representing the shares with respect to which this Warrant shall not have
been exercised shall also be issued to Holder within such time.
2. COVENANTS TO THE COMPANY. The Company covenants and agrees that all
equity securities which may be issued upon the exercise of the rights
represented by this Warrant, upon issuance and payment therefor in accordance
herewith, will be duly authorized, validly issued, fully paid and
nonassessable shares of capital stock of the Company. The Company further
covenants and agrees that, during the period within which the stock purchase
rights represented by this Warrant may be exercised, the Company will at all
times have duly authorized and duly reserved for issuance upon the exercise
of the purchase rights evidenced by this Warrant a number of shares of its
Series B Preferred Stock sufficient for such issuance.
3. TRANSFER, EXCHANGE, OR LOSS OF WARRANT.
(a) This Warrant may not be assigned or transferred except as
provided in this Section 3 and in accordance with and subject to the
provisions of the Securities Act of 1933, as amended, and the Rules and
Regulations promulgated thereunder (collectively, the "Securities Act"). Any
purported transfer or assignment made other than in accordance with this
Section 3 shall be null and void and of no force or effect.
(b) Prior to any transfer of this Warrant, other than in an
offering registered under the Securities Act, Holder shall notify the Company
of its intention to effect such transfer, indicating the circumstances of the
proposed transfer and, upon request, furnish the company with an opinion of
its counsel, in form and substance satisfactory to counsel for the Company,
to the effect that the proposed transfer may be made without registration
under the Securities Act or qualification under any applicable state
securities laws. The Company will promptly notify Holder if the opinion of
counsel furnished to the Company is satisfactory to counsel for the Company.
Unless the Company notifies Holder within ten (10) days after its receipt of
such opinion that such opinion is not satisfactory to counsel for the
Company, Xxxxxx may proceed to effect the transfer.
(c) Unless a registration statement under the Securities Act is
effective with respect to the Shares or any other security issued upon
exercise of this Warrant, the certificate representing such Shares or other
securities shall bear the following legend, in addition to any legend imposed
by applicable state securities laws:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT").
NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT THE PRIOR WRITTEN
CONSENT OF THE COMPANY OR WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF
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COUNSEL FOR THE HOLDER, SATISFACTORY TO THE COMPANY, THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT OR RECEIPT OF
A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION.
(d) Upon receipt by the Company of satisfactory evidence of loss,
theft, destruction or mutilation of this Warrant and of indemnity
satisfactory to the Company, and upon surrender and cancellation of this
Warrant, if mutilated, the Company will execute and deliver a new Warrant of
like tenor and date and any such lost, stolen, or destroyed Warrant shall
thereupon become void. Any such new Warrant executed and delivered shall
constitute an additional contractual obligation on the part of the Company,
whether or not the Warrant so lost, stolen, destroyed or mutilated shall be at
any time enforceable by anyone.
4. NO FRACTIONAL SHARES OR SCRIP. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional share to which such Holder would
otherwise be entitled, such Holder shall be entitled, at its option, to
receive either (i) a cash payment equal to the excess of the Fair Market
Value for such fractional share above the Exercise Price for such fractional
share (as mutually determined by the Company and Holder) or (ii) a whole
share if Holder tenders the Exercise Price for one whole share.
5. NO RIGHTS AS STOCKHOLDERS. This Warrant does not entitle
Holder hereof to any voting rights, dividend rights or other rights as a
stockholder of the Company prior to the exercise hereof.
6. EXPIRATION.
(a) This Warrant shall become void as to all securities of
the Company in respect of which the stock purchase rights hereunder are not
fully exercised, and payment has not been made for the securities issuable
upon such exercise, on or before the Expiration Date (as defined in
subsection (b) hereto); provided that in the case of the earlier dissolution
of the Company, this Warrant shall become void on the date fixed for such
dissolution.
(b) For purposes of this Warrant, "Expiration Date" shall
mean the first to occur of (i) the fifth anniversary of the completion date
of the Series B Financing or (ii) the closing of a firm commitment
underwritten public offering pursuant to an effective registration statement
under the Securities Act (a "Registration Statement") covering the offer and
sale of Common Stock for the account of the Company to the public at an
aggregate offering price of not less than $15,000,000 (an "IPO").
7. SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or appointed
day for the taking of any action or the expiration of any right required or
granted herein shall be a Saturday or a Sunday or shall be a legal holiday,
then such action may be taken or such right may be exercised on the next
succeeding day not a Saturday or a Sunday or a legal holiday.
8. ADJUSTMENTS. The Exercise Price per Share and the number of
Shares purchasable hereunder shall be subject to adjustment from time to time
as follows:
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(a) MERGER. If at any time there shall be a merger or
consolidation of the Company with or into another corporation when the
Company is not the surviving corporation, then, as a part of such merger or
consolidation, lawful provision shall be made so that Holder of this Warrant
shall thereafter be entitled to receive upon exercise of this Warrant, during
the period specified herein and upon payment of the aggregate Exercise Price
then in effect, the number of shares of stock or other securities or property
of the successor corporation resulting from such merger or consolidation, to
which a holder of the stock deliverable upon exercise of this Warrant would
have been entitled in such merger or consolidation if this Warrant had been
exercised immediately before such merger or consolidation. In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Warrant with respect to the rights and interests of Holder after the
merger or consolidation.
(b) RECLASSIFICATION, ETC. If the Company shall, at any
time, by subdivision, combination, or reclassification of securities or
otherwise, change any of the securities as to which purchase rights under
this Warrant exist into the same or a different number of securities of any
other class or classes, the Exercise Price shall be adjusted such that this
Warrant shall thereafter represent the right to acquire such number and kind
of securities as would have been issuable as the result of such change with
respect to the securities which were subject to the purchase rights under
this Warrant immediately prior to such subdivision, combination,
reclassification or other change.
(c) SPLIT, SUBDIVISION OR COMBINATION OF SHARES. If the
Company at any time while this Warrant remains outstanding and unexpired
shall split, subdivide or combine the securities as to which purchase rights
under this Warrant exist, the number of Shares issuable on the exercise 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. Appropriate adjustments shall also be made to the purchase
price payable per share, but the aggregate purchase price payable for the
total number of Shares purchasable under this Warrant (as adjusted) shall
remain the same. Any adjustment under this Section 8(c) shall become
effective at the close of business on the date the subdivision or combination
becomes effective, or as of the record date of such dividend, or in the event
that no record date is fixed, upon making of such dividend.
9. NOTICES.
(a) NOTICES FOR ADJUSTMENTS. Whenever the Exercise Price or
number of Shares issuable upon exercise hereof shall be adjusted pursuant to
Section 8 hereof, the Company shall issue a written notice 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
Exercise Price and number of Shares purchasable hereunder after giving effect
to such adjustment, and shall cause a copy of such notice to be mailed to
Holder of this Warrant.
(b) IPO NOTICE. The Company shall give Holder written notice
of an IPO at least twenty (20) and no more than ninety (90) days prior to the
effectiveness of a Registration Statement and shall deliver a copy of the
preliminary prospectus with respect to any such public offering to Holder
promptly after it becomes available.
10. MISCELLANEOUS.
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(a) SUCCESSORS AND ASSIGNS. This Warrant shall be binding
upon any successors or assigns of the Company.
(b) GOVERNING LAW. This Warrant shall be governed by and
construed in accordance with the laws of the State of California without
giving effect to the conflicts of law principles thereof.
(c) ATTORNEYS' FEES. In any litigation, arbitration, or
court proceeding between the Company and Holder relating hereto, the
prevailing party shall be entitled to reasonable attorneys' fees and expenses
incurred in enforcing this Warrant.
(d) AMENDMENTS. This Warrant may be amended and the
observance of any term of this Warrant may be waived only with the written
consent of the Company and Holders.
(e) NOTICE. Any notice, request, or other communication
required or permitted hereunder shall be in writing and shall be deemed to
have been daily given if personally delivered, sent by facsimile, or mailed
by registered or certified mail, postage prepaid or by recognized overnight
courier or personal delivery at the respective addresses or facsimile number
of the parties as set forth below. Any party hereto may by notice so given
change its address for future notice hereunder. Notice shall conclusively be
deemed to have been given when received.
If to Holder: At the address set forth by Xxxxxx under
Xxxxxx's signature to this Warrant, unless the Company is otherwise notified
in writing.
If to the Company: NetRatings, Inc.
000 Xxxxxxxx Xx., Xxxxx 000
Xxxxxxxx, XX 00000
Attn: Chief Financial Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(f) REGISTRATION RIGHTS. All Shares issuable upon exercise
of this Warrant shall be entitled to registration rights on parity accorded
to the investors in the Series B Financing.
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IN WITNESS WHEREOF, the Company and Holder have caused this Series B
Preferred Stock Purchase Warrant Agreement to be executed as of the date
first above written.
NETRATINGS, INC.
By:
------------------------------
Print Name:
----------------------
Title:
---------------------------
Acknowledged and Agreed:
Holder:
---------------------------------------------
By:
-------------------------------------------------
Print Name:
-----------------------------------------
(if different from Holder)
Title:
----------------------------------------------
(if applicable)
Address of Holder: --------------------------------
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EXHIBIT A
NOTICE OF EXERCISE
NOTICE OF EXERCISE
SERIES B PREFERRED STOCK PURCHASE WARRANT
To: NetRatings, Inc.
1. The undersigned hereby elects to purchase _____ shares of
Series B Preferred Stock ("Stock") of NetRatings, Inc. (the "Company")
pursuant to the terms of the attached Warrant, and (check the applicable box):
/ / Tenders herewith payment of the exercise price in full and any
transfer taxes payable pursuant to the terms of the Warrant in the
form of cash or a certified or official bank check in same-day
funds or by wire transfer in the amount of $________ for _______ Shares
of Series B Preferred Stock.
/ / Elects the Net Issue Exercise option pursuant to Section 1(b) of the
Warrant, and accordingly requests delivery of a net of ________ Shares of
Series ___ Preferred Stock.
2. The shares of Stock to be received by the undersigned upon exercise
of the Warrant are being acquired for its own account, not as a nominee or
agent, and not with a view to resale or distribution of any part thereof, and
the undersigned has no present intention of selling, granting any
participation in, or otherwise distributing the same. The undersigned further
represents that it does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participation to such
person or to any third person, with respect to the Stock. The undersigned is
sufficiently aware of the Company's business affairs and financial condition
to reach and informed and knowledgeable decision to acquire the Stock.
3. The undersigned understands that the shares of Stock are
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in transactions not
involving a public offering and that under such laws and applicable
regulations such securities may be resold without registration under the
Securities Act of 1933, as amended (the "Act"), only in certain limited
circumstances. In this connection, the undersigned represents that it is
familiar with Rule 144 promulgated under the Act, as presently in effect,
and understands the resale limitations imposed thereby and by the
Act.
4. The undersigned understands the instruments evidencing the Stock
may bear the following legend, in addition to any legend required by
applicable state securities laws:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). NO
SALE OR DISPOSITION MAY BE EFFECTED WITHOUT THE PRIOR WRITTEN CONSENT
OF THE COMPANY OR WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF
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COUNSEL FOR THE HOLDER, SATISFACTORY TO THE COMPANY, THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT OR RECEIPT OF
A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION.
5. Please issue a certificate or certificates representing said shares
of Stock in the name of the undersigned:
Name: ______________________________________________
Address: ______________________________________________
6. Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned:
Name: ______________________________________________
Address: ______________________________________________
IN WITNESS WHEREOF, the Warrant Xxxxxx has executed this Notice of
Exercise effective this ___ day of _________, 199__.
WARRANT HOLDER
________________________________________
By: ____________________________________
Name: __________________________________
Title: _________________________________
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