iVILLAGE INC.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
February 27, 1997
To Each of the Parties Named
on Schedule I Hereto (each,
a "Purchaser", and,
collectively, the "Purchasers")
Note and Warrant Purchase Agreement
-----------------------------------
Dear Sirs:
This letter will confirm the terms and conditions upon which
iVillage Inc., a Delaware corporation (the "Company"), agrees to sell to each
Purchaser (i) one or more convertible promissory notes of the Company in
substantially the form of Exhibit A hereto (each, a "Note" and, collectively,
the "Notes") (representing initially $1,600,000 aggregate principal amount of
Notes and subject to increase in principal amount as provided in Section 1
hereof) and (ii) stock subscription warrants of the Company, in substantially
the form of Exhibit B hereto (each, a "Warrant" and, collectively, the
"Warrants") to purchase shares of capital stock (the "Underlying Securities")
of the Company. Accordingly, the Company hereby agrees with the Purchasers as
follows:
SECTION 1. Purchase and Sale of the Securities.
----------------------------------------------
(a) Upon the terms and subject to the conditions of
this Agreement, on February 26, 1997, the Company is issuing and selling to
each Purchaser, and each such Purchaser is purchasing and acquiring from the
Company, a Note in the principal amount set forth opposite the name of such
Purchaser on Schedule I hereto and a Warrant to purchase up to that number of
shares of capital stock as is determined pursuant thereto for the aggregate
purchase price set forth opposite the name of such Purchaser on Schedule I
hereto. The purchase and sale of the Note and the Warrant with respect to each
Purchaser is being held at the offices of the Company or such other place as
the Company and each such Purchaser have agreed simultaneously with the
execution and delivery of this Agreement. The purchase price for the
applicable Note and Warrant to be purchased by each Purchaser are being paid
by wire transfer of funds to the account of the Company, and the Company is
issuing and delivering the Note and Warrant to each such Purchaser,
registered in the name of the Purchaser, against receipt of the purchase price
therefore.
(b) Anything contained herein to the contrary
notwithstanding, America Online, Inc. ("AOL") may, upon the written request of
the Company and at AOL's sole option and discretion, elect to (but shall be
under no obligation to) fund up to an additional $450,000 on the terms and
conditions set forth herein (the "AOL Additional Funding"); provided, however,
that in the event that the Company receives one or more commitments from
potential investors (other than the current holders of Series B Preferred Stock,
$.0005 par value, of the Company ("Series B Preferred Stock")) for the purchase
of an aggregate of at least $10,000,000 of Series C Preferred Stock (the "Series
C Preferred Stock") of the Company as determined in the reasonable good faith
judgment of Bear ▇▇▇▇▇▇▇ & Co., Inc., the placement agent for the proposed
issuance and sale of the Series C Preferred Stock, then within five (5) days of
a written request of the Company, AOL shall be obligated to and shall fund an
additional $450,000 on the terms and conditions set forth herein (the "AOL
Mandatory Funding"); provided further, however, that if AOL shall make an AOL
Additional Funding or an AOL Mandatory Funding, then The Tribune Company
("Tribune") shall concurrently therewith fund an amount equal to 50% of such
AOL Additional Funding or Mandatory Funding, as the case may be, on the terms
and conditions set forth herein (the "Tribune Additional Funding"; and the AOL
Additional Funding, the AOL Mandatory Funding and the Tribune Additional
Funding, collectively, the "Additional Funding")). Any such Additional Funding
shall be evidenced by an amendment to the Note being issued and delivered to AOL
or Tribune (as the case may be) on the date hereof to reflect an increase in the
principal amount thereof equal to the amount of the Additional Funding, and the
Additional Funding shall not require the consent or approval of any other
Purchaser hereunder.
SECTION 2. Representations and Warranties of the Company. The Company
hereby represents and warrants to each Purchaser as follows:
(a) Organization. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware and has all requisite corporate power and authority to own, lease
and operate the assets used in its business, to carry on its business
as presently conducted and as proposed to be conducted, to enter into
this Agreement and the Instruments (as hereinafter defined), to perform its
obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby. "Instruments" means the Notes and the
Warrants.
(b) Qualification; Good Standing. The Company is
qualified to do business as a foreign corporation in the State
2
of New York and is not qualified to do business as a foreign corporation in
any other jurisdiction, no other jurisdiction has demanded or requested in
writing that the Company so qualify, the Company has no knowledge of the need
to so qualify and the failure to be so qualified does not have a material
adverse effect on the Company.
(c) Corporate Authorization; Enforceability. The
Company has taken all corporate action (including all action required of its
Board of Directors and stockholders) necessary to authorize its execution and
delivery of this Agreement and the Instruments, its performance of its
obligations hereunder and thereunder, and its consummation of the transactions
contemplated hereby and thereby. Each of this Agreement and the Instruments
have been executed and delivered by an officer of the Company in accordance
with such authorization. Each of this Agreement and the Instruments
constitutes a valid and binding obligation of the Company, enforceable in
accordance with its terms, subject to applicable bankruptcy, reorganization,
insolvency, moratorium, and similar laws affecting creditors' rights generally
and to general principles of equity.
(d) No Conflict. The execution and delivery by the
Company of this Agreement and the Instruments, its consummation of the
transactions contemplated hereby and thereby, and its compliance with the
provisions hereof and thereof, will not (a) violate or conflict with its
Certificate of Incorporation or By-laws, (b) violate, conflict with, or give
rise to any right of termination, cancellation, recision or acceleration under
any agreement, lease, security, license, permit, or instrument to which the
Company is a party, or to which it or any of its assets is subject, (c) result
in the imposition of any Encumbrance on any asset of the Company, (d) violate
or conflict with any Laws, or (e) require any consent, approval or other
action of, notice to, or filing with any entity or person (governmental or
private), except for those that have been obtained or made. "Encumbrance"
means any security interest, mortgage, lien, pledge, charge, easement,
reservation, restriction, or similar right of any third party; and "Laws"
means all laws, rules, regulations, ordinances, orders, judgments,
injunctions, decrees and other legislative, administrative or judicial
restrictions.
(e) No Consent or Approval Required. No authorization,
consent, approval or other order of, or declaration to or filing with, any
governmental agency or body or other person or entity is required for the
valid authorization, execution and delivery by the Company of this Agreement
and the Instruments, or for the consummation of the transactions contemplated
hereby or thereby or, if required, the same has been obtained or effected.
3
(f) No Material Adverse Change. Since May 6, 1996 (the
date of the Closing (as defined in, and pursuant to the Series B Convertible
Preferred Stock Purchase Agreement dated as of May 6, 1996 (the "Stock
Purchase Agreement"), among the Company and the Investors (as such term is
defined therein)), there has been no material adverse change in the assets,
liabilities, operations, result of operations, business, condition (financial
or otherwise) or affairs of the Company, except that the Company has continued
to utilize the proceeds from the sale of Series B Preferred Stock issued and
sold under the Stock Purchase Agreement and to incur losses.
(g) Use of Proceeds. The net proceeds received by the
Company from the sale of the Notes and Warrants shall be used by the Company
for working capital and general corporate purposes.
SECTION 3. Representations and Warranties of the Purchaser.
------------------------------------------------
Each Purchaser, as to itself, himself or herself, as the case
may be, represents and warrants to the Company as follows:
(a) Organization. Such Purchaser is a corporation or
partnership, as the case may be, duly organized, validly existing and in good
standing under the laws of its jurisdiction and has all requisite power and
authority to enter into the Instruments to which it is a party, to perform its
obligations thereunder, and to consummate the transactions contemplated
thereby.
(b) Authorization. Such Purchaser has taken all
corporate or partnership action necessary to authorize its execution and
delivery of this Agreement and the Instruments to which it is a party, its
performance of its obligations hereunder and thereunder, and its consummation
of the transactions contemplated hereby and thereby. Each of this Agreement
and the Instruments to which the Purchaser is a party has been executed and
delivered by an officer of the Purchaser in accordance with such
authorization. Each Document to which the Purchaser is a party constitutes a
valid and binding obligation of the Purchaser, enforceable in accordance with
its terms, subject to bankruptcy, reorganization, insolvency, moratorium, and
similar laws affecting creditors, rights generally and to general principles
of equity.
(c) Investment Representations and Warranties.
-----------------------------------------
(i) Such Purchaser is acquiring the Instruments,
and it will acquire any underlying securities issuable upon exercise or
exchange thereof, for its own account, for investment and not with a view to
the
4
distribution thereof, nor with any present intention of distributing the same.
(ii) Such Purchaser understands that the Instruments,
and any underlying securities issuable upon exercise or exchange thereof, will
not be registered under the Securities Act or registered or qualified under
any state securities or "blue-sky" laws, by reason of their issuance in a
transaction exempt from the registration and/or qualification requirements
thereof, and that they must be held indefinitely unless a subsequent
disposition thereof is registered under the Securities Act or registered or
qualified under any applicable state securities or "blue-sky" laws or is
exempt from registration and/or, qualification.
(iii) Such Purchaser understands that the exemption from
registration afforded by Rule 144 (the provisions of which are known to such
Purchaser) promulgated under the Securities Act depends on the satisfaction of
various conditions and that, if applicable, Rule 144 may only afford the basis
for sales under certain circumstances only in limited amounts.
(iv) Without limitation of the representations and
warranties of the Company contained herein, such Purchaser acknowledges that
such Purchaser has met with representatives of the Company and has had the
opportunity to ask questions and receive answers concerning the terms and
conditions of the offering of the Securities, and to obtain any additional
information which the Company possessed or could acquire without unreasonable
effort or expense, and has generally such knowledge and experience in business
and financial matters and with respect to investments in securities of
privately held companies as to enable such Purchaser to understand and
evaluate the risks of such investment and form an investment decision with
respect thereto.
(v) Such Purchaser has no need for liquidity in its
investment in the Company, and is able to bear the economic risk of such
investment for an indefinite period and to afford a complete loss thereof.
(vi) Such Purchaser is an "accredited purchaser" as such
term is defined in Rule 501 (the provisions of which are known to such
Purchaser) promulgated under the Securities Act.
SECTION 4. Amendment to Registration Rights Agreement.
Reference is hereby made to the Amended and Restated Registration Rights
Agreement, dated as of May 6, 1996 (the "Registration Rights Agreement"),
among the Company and the
5
Investors (as defined therein). Simultaneously herewith, the Company and each
Purchaser are executing and delivering an Amendment No. 1 to the
Registration Rights Agreement, substantially in the form attached hereto as
Exhibit C, conferring on each Purchaser registration rights as provided
therein with respect to the Underlying Securities issuable upon exercise or
exchange of the Warrants or conversion of the Notes.
SECTION 5. Amendment to Amended and Restated Stockholders'
Agreement. Reference is hereby made to the Amended and Restated Stockholders'
Agreement, dated as of May 6, 1996 (the "Stockholders' Agreement"), among the
Company and the investors (as defined therein). Simultaneously herewith, the
Company and each Purchaser are executing and delivering an Amendment No. 2 to
the Stockholders' Agreement, substantially in the form attached hereto as
Exhibit D, conferring on each Purchaser the rights as provided therein with
respect to the Underlying Securities issuable upon exercise or exchange of the
Warrants or conversion of the Notes and providing for the right to designate
additional directorships under the circumstances provided therein.
SECTION 6. Certain Covenants.
-----------------
(a) Sufficient Shares. The Company shall take or cause
to be taken all action (including, without limitation, appropriate amendments
to the Certificate of Incorporation of the Company or otherwise) necessary to
assure that there exists a sufficient number of authorized shares of capital
stock of the Company to permit the full and complete conversion, exercise or
exchange of the Notes and Warrants.
(b) Underlying Securities. The securities of the Company
which shall be issuable upon conversion of the Notes and/or exercise or
exchange of the Warrants (collectively, the "Underlying Securities"), upon
their issuance in compliance with the respective terms of the Notes and the
Warrants, shall be duly authorized, validly issued and outstanding, fully paid
and non-assessable, free of any liens or encumbrances, except as provided in
the applicable agreements governing all purchasers of such Underlying
Securities, provided that such securities may be subject to restrictions on
transfer under state and/or federal securities laws as set forth therein. The
Company shall ensure that the original issuance by the Company of the
Underlying Securities will not be subject to any pre-emptive rights, rights of
first refusal or similar rights.
(c) Waiver of Right of First Refusal. Each Purchaser
hereby irrevocably waives its right of first refusal and any rights to notice
thereof provided in Section 3.4 of the Stockholders' Agreement to which it
was, is or may be entitled with respect to the offer, issuance and sale of the
Notes and Warrants hereunder or the Underlying Securities issuable upon
6
conversion, exercise or exchange thereof or the issuance of any stock
subscription warrants issued by Company to the Purchasers pursuant to the
Notes as the result of the occurrence of a Trigger Event (as such term is
defined in the Notes) and any shares of capital stock of the Company issued or
issuable upon conversion, exercise or exchange thereof or issued or issuable
upon conversion of any such capital stock.
SECTION 7. Survival of Representations, Warranties and
Acreements, Etc. All representations and warranties hereunder shall survive
the execution and delivery of the Agreement. All covenants and agreements
contained herein shall survive indefinitely until, by their respective terms,
they are no longer operative.
SECTION 8. Exchanges; Lost, Stolen or Mutilated
Certificates. Upon surrender by any Purchaser to the Company of any
certificate representing Underlying Securities, the Company at its expense
will issue in exchange therefor, and deliver to such Purchaser, a new
certificate or certificates representing such shares, in such denominations as
may be requested by such Purchaser. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
any certificate representing any Underlying Securities purchased by a
Purchaser and in case of any such loss, theft or destruction, upon delivery of
any indemnity agreement satisfactory to the Company, or in case of any such
mutilation, upon surrender and cancellation of such certificate, the Company
at its expense will issue and deliver to such Purchaser a new certificate for
such Underlying Securities of like tenor, in lieu of such lost, stolen or
mutilated certificate.
SECTION 9. Fees and Expenses. Each party hereto shall bear
its own costs and expenses incurred on its behalf in connection with the
preparation, negotiation, execution, and delivery of this Agreement and the
Instruments and the preparation for and consummation of the transactions
contemplated hereby and thereby.
SECTION 10. Assignment; Parties in Interest. This
Agreement and the rights and obligations of the parties hereunder shall not be
assignable, except that a Purchaser may assign its rights hereunder (a) if
such Purchaser is a partnership, to any partner thereof (in the case of a pro
rata distribution by a Purchaser that is a partnership to its partners) (b) if
such Purchaser is a corporation, to any majority-owned subsidiary of such
Purchaser (provided that such rights may be exercised by such subsidiary only
for so long as such subsidiary continues to be majority-owned by such
Purchaser) or (c) if such Purchaser is a natural person, to the spouse or
descendants of such person or any trust for the benefit of any thereof;
provided, however, that the Company is given written notice at the time of
such assignment stating the name and address of the assignee and
7
identifying the securities with respect to which the rights and benefits
hereunder are being assigned and such assignee expressly agrees in writing
with the Company and the other Purchasers to be bound by and to comply with
all applicable provisions of this Agreement. Anything contained herein to the
contrary notwithstanding, no Purchaser (or permitted assignee of a Purchaser)
shall, without the consent of the Company, be permitted to assign any rights
and/or benefits hereunder to a person that is then actively engaged in a
business that is directly competitive with the business then primarily and
actively conducted or engaged in by the Company other than, in the case of a
Purchaser that is a corporation, a majority-owned subsidiary thereof. Any
assignment pursuant to this Section 9 shall not relieve, release or otherwise
discharge the Purchaser effecting such assignment from its obligations under
this Agreement. This Agreement shall bind and inure to the benefit of the
Company, each Purchaser, and its or his respective successors, permitted
assigns, heirs and legal representatives.
SECTION 11. Entire Agreement. This Agreement contains the
entire understanding of the parties with respect to the subject matter hereof
and supersedes all prior agreements and understandings among the parties with
respect to such subject matter.
SECTION 12. Notices. All notices, claims, certificates,
requests, demands and other communications hereunder shall be in writing and
shall be deemed to have been duly given if personally delivered or if sent by
nationally-recognized overnight courier, by telecopy, or by registered or
certified mail, return receipt requested and postage prepaid, addressed as
follows:
if to the Company:
iVillage Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Chairman of the Board and
Chief Executive Officer;
if to a Purchaser, to such address as is specified on
Schedule I hereto;
or to such other address as the party to whom notice is to be given may have
furnished to the other parties in writing in accordance herewith. Any such
notice or communication shall be deemed to have been received (a) in the case
of personal delivery, on the date of such delivery, (b) in the case of
nationally-recognized overnight courier, on the next business day
8
after the date when sent, (c) in the case of telecopy transmission, when
received, and (d) in the case of mailing, on the third business day following
that on which the piece of mail containing such communication is posted.
SECTION 13. Amendments. The terms and provisions of this
Agreement may only be modified or amended, or the performance thereof waived,
pursuant to an instrument signed by (a) the Company and (b) the holders of at
least 80% of the principal amount of all the Notes then outstanding (the
"Requisite Holders").
SECTION 14. Counterparts. This Agreement may be executed in
any number of counterparts, and each such counterpart shall be deemed to be an
original instrument, but all such counterparts together shall constitute but
one agreement.
SECTION 15. Headings. The section and paragraph headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.
SECTION 16. Governing Law. This Agreement shall be governed by
and construed in accordance with the domestic laws of the State of New York,
without giving effect to any law or rule that would cause the laws of any
jurisdiction other than the State of New York to be applied.
9
Please indicate your agreement with the foregoing, and acknowledge
your receipt Of the Note and Warrant issued to you hereunder, by executing and
returning the enclosed counterpart of this letter agreement to the Company.
Very truly yours,
iVILLAGE INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Chairman of the Board
and Chief Executive Officer
ACCEPTED AND AGREED TO BY:
AMERICA ONLINE, INC.
By: /s/ Illegible
-------------------------------
Name:
Title:
TRIBUNE COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Sr. Vice President-Development
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VII
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: General Partner
KPCB INFORMATION SCIENCES ZAIBATSU FUND II
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: General Partner
10
SCHEDULE E
TO VOTE AND
WARRANT PURCHASE
AGREEMENT
---------
Name and Addresses Principal Purchase Price for
of Purchaser Amount Of Note Notes and Warrants
------------ -------------- ------------------
America Online, Inc. $ 900,000 $ 900,000
▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Miles ▇.
▇▇▇▇▇▇▇▇
Tribune Company $ 450,000 $ 450,000
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ . ▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & $ 243,750 $ 243,750
▇▇▇▇▇ VII
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇
KPCB Information Sciences $ 6,250 $ 6,250
Zaibatsu Fund II
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇
TOTAL S 1,600,000 $ 1,600,000
11
EXHIBIT A TO THE
----------------
NOTE AND WARRANT
----------------
PURCHASE AGREEMENT
------------------
FORM OF SECURED CONVERTIBLE PROMISSORY NOTE
-------------------------------------------
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT. ADDITIONALLY, THE
TRANSFER OF THESE SECURITIES IS SUBJECT TO THE CONDITIONS SPECIFIED IN SECTION
13 OF THE AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT, DATED AS OF MAY
6, 1996, AS AMENDED, AMONG iVILLAGE INC. AND THE OTHER SIGNATORIES THERETO
AND THE AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT DATED AS OF MAY 6, 1996,
AS AMENDED, AMONG iVILLAGE AND THE OTHER SIGNATORIES THERETO (THE
"STOCKHOLDERS' AGREEMENT"), AND NO TRANSFER OF THESE SECURITIES SHALL BE VALID
OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED. UPON THE FULFILLMENT
OF CERTAIN OF SUCH CONDITIONS, iVILLAGE INC., HAS AGREED TO DELIVER TO THE
HOLDER HEREOF A NEW CERTIFICATE, NOT BEARING THIS LEGEND, FOR THE SECURITIES
REPRESENTED HEREBY REGISTERED IN THE NAME OF SUCH HOLDER. COPIES OF SUCH
AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF
RECORD OF THIS CERTIFICATE TO THE SECRETARY OF iVILLAGE INC.
iVILLAGE INC.
Convertible Secured Promissory Note
$_______
(Maximum Amount) February , 1997
iVILLAGE INC., a Delaware corporation (the "Company"), for value
received, hereby promises to pay [insert name of holder], (the "Holder"), or
permitted registered assigns, $ and to pay interest from the date hereof at
the rate specified below. The principal amount outstanding hereon shall be
convertible into such shares of capital stock of the Company as shall be
determined in accordance with Section 2 hereof (the securities into which this
Note is convertible being referred to as the "Underlying Securities") pursuant
to Section 2 below. This Note is one of a series of convertible notes (the
"Notes") issued pursuant to the Note and Purchase Agreement dated as of
February , 1997 (the "Purchase Agreement") among the Company and the other
signatories thereto and is subject to the provisions thereof. Terms used but
not defined herein shall have the meanings set forth herein the Purchase
Agreement.
1. Principal and Interest
----------------------
Unless converted pursuant to Section 2, the principal amount of
this Note shall be payable upon demand at any time on or after May 1, 1997
(the "Demand Date"); provided, however, that if the Company has not then
consummated a Qualified Financing but in the good faith reasonable judgment of
the Purchasers the consummation of the Qualified Financing is imminent, the
Demand Date shall be extended by thirty days; provided further, however, that
if the Company prior thereto is unable to fulfill its payroll obligations (a
"Payroll Event"; and the date thereof being herein referred to as the "Payroll
Date"), the Demand Date shall be the Payroll Date. The unpaid principal amount
of this Note shall bear interest at the rate of twelve (12%) percent per
annum. Interest shall be payable upon demand at any time on or after the
Demand Date. The Holder hereof may apply any portion of unpaid principal and
interest to the payment of the exercise price under the Warrant.
2. Conversion
----------
(a) Conversion Upon Closing of a Qualified Financing. If the
Company shall consummate an equity financing (or series of related financings)
involving the issuance and sale of Series C Convertible Preferred Stock (the
rights, preferences and privileges of which are to be designated by the Board
of Directors of the Company) (the "Series C Preferred Stock") prior to the
Demand Date, yielding aggregate proceeds of at least $12,000,000 (the
"Qualified Financing"), then the principal amount of this Note shall
automatically and without any action on the part of the Holder be converted
into that number of fully paid and nonassessable shares of Series C Preferred
Stock as are purchasable with the principal amount of this Note (the principal
of this Note being treated as if it were cash consideration), on the identical
terms and conditions and at the same price as the Series C Preferred Stock is
issued and sold in the Qualified Financing
(b) Conversion on or after Demand Date.
----------------------------------
(i) If the Company does not consummate a Qualified Financing
before the Demand Date, then, if the Note shall not theretofore have
been converted pursuant to Section 2(b)(ii) hereof, the principal
amount of this Note shall, at the option of the Holder, exercisable
at any time, be convertible into that number of fully-paid and
nonassessable shares of preferred stock (which may be Series C
Preferred Stock issued in a Qualified Financing occurring after the
Demand Date) issued in connection with the first private placement of
equity for cash completed by the Company (the "Non-Qualified
Preferred Stock") on or after the date hereof, equal to (A) the
amount of the then outstanding principal hereof divided by (B) the
price per share at which
-2-
the Company shall have issued and sold such shares of Non-Qualified
Preferred Stock
(ii) Anything contained in Sections 2(a) or (b)(i) to the
contrary notwithstanding, if the Company does not consummate a
Qualified Financing before the Demand Date, the principal of this
Note shall, at the option of the Holder, exercisable at any time, be
convertible, in full and not in part, into that number of fully-paid
and nonassessable shares of Senior Series B-2 Preferred Stock, $.0005
par value, of the Company, equal to (A) the amount of the then
outstanding principal hereof divided by (B) $2.50.
(c) Conversion on Qualified Public Offering. Simultaneously with
the closing of the Qualified Public Offering, the principal of this Note shall
automatically and without any action on the part of the Holder be converted
into that number of fully-paid and nonassessable shares of Common Stock equal
to (A) the amount of the then outstanding principal hereof by (B) $2.50.
(d) Mechanics of Conversion. Before any holder of this Note shall
be entitled to receive evidence of the Underlying Securities into which this
Note has been converted, such holder shall surrender this Note duly endorsed,
at the office of the Company, and shall give written notice by mail, postage
prepaid, to the Company at its principal corporate office stating therein the
name or names in which the certificate or certificates for the Underlying
Securities are to be issued. The Company shall, promptly thereafter, issue and
deliver to such holder at the address specified by such holder, or to the
nominee or nominees of such holder, a certificate or certificates for the
Underlying Securities to which such holder shall be entitled as aforesaid.
Such conversion shall be deemed to have been made immediately prior to the
close of business on the date of such conversion as provided in paragraph (a),
(b) or (c) above, as the case may be, and the person or persons entitled to
receive the Underlying Securities issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such Underlying
Securities as of such date.
(e) No Fractional Shares and Certificate as to Adjustment. No
fractional shares shall be issued upon conversion of this Note and the number
of the Underlying Shares to be issued shall be rounded up to the nearest whole
share.
(f) Interest. Upon conversion of the principal amount of this
Note as provided in this Section 2, the Company shall simultaneously therewith
pay to the holder of this Note all accrued and unpaid interest on this Note in
cash.
-3-
3. Trigger Event Warrants
----------------------
If the Company shall not have consummated a Qualified Financing on
or prior to the Demand Date and this Note is outstanding (the "Trigger Event"),
then the Company shall issue to the holder of this Note a stock subscription
warrant of the Company, in substantially the form of Exhibit A hereto (a
"Warrant") to purchase that number of shares of Senior Series B-2 Preferred
Stock of the Company as shall be determined in accordance with Section 1
thereof, with the designation, preferences and rights thereof set forth in a
Certificate of Designation of Rights, Preferences and Privileges of Senior
Series B-2 Preferred Stock (the "Certificate of Designation") in substantially
the form of Exhibit B attached hereto; provided, however, that no such warrant
shall be issued to any Purchaser (as such term is defined in the Purchase
Agreement) that has not committed to the Qualified Financing that amount set
forth opposite such Purchaser's name on Schedule-B attached hereto. In the event
of the occurrence of a Trigger Event, the Company shall forthwith file (i) the
Certificate of Designation with the Secretary of State of the State of Delaware
and (ii) the Certificate of Amendment to the Amended Certificate of
Incorporation of the Corporation in substantially the form attached hereto as
Exhibit C.
4. No Rights as Shareholder
------------------------
Nothing contained in this Note shall be construed as conferring
upon the holder hereof or its transferee, prior to the conversion of this
Note, the right to vote or to receive dividends or to consent or to receive
notice as a shareholder in respect of any meeting of shareholders for the
election of directors of the Company or of any other matter, or any other
rights as a shareholder of the Company.
5. Security Interest
-----------------
Payment and performance of this Note is being secured pursuant
to, and by the collateral described in, the Security Agreement dated the date
hereof among the Company and the Purchasers.
6. Optional Prepayment
-------------------
At any time on or after the Demand Date after giving two days
prior written notice to the Holder, the Company may prepay the outstanding
principal amount of this Note, together with interest thereon, in whole or in
part, provided that (a) any prepayment in part must be for a minimum amount
equal to the lesser of $10,000 or the outstanding principal and interest hereof
and (b) all Notes (including this Note) then outstanding shall simultaneously be
prepaid by the Company on a pro rata
-4-
basis among all such Notes in accordance with the respective Outstanding
principal amounts thereof.
7. No Impairment
------------
The Company will not, by amendment of its Certificate of
Incorporation or through reorganization, consolidation, merger, dissolution,
sale of assets or another voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Note, 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 Note against impairment.
8. Restrictions on Transfer
------------------------
(a) The Company shall keep at its principal executive office a
register (herein sometimes referred to as the "Note Register"), in which,
subject to such reasonable regulations as it may prescribe, but at its expense
(other than transfer taxes, if any), the Company shall provide for the
registration and transfer of this Note.
(b) Whenever this Note shall be surrendered at the principal
executive office of the Company for transfer, accompanied by a written
instrument of transfer in form reasonably satisfactory to the Company duly
executed by the holder of his attorney duly authorized in writing, the Company
shall execute and deliver in exchange therefor a new Note or Notes, as may be
requested by such holder, in the same aggregate unpaid principal amount and
payable on the same date as the principal amount of the Note or Notes so
surrendered; each such new Note shall be dated as of the date to which
interest has been paid on the unpaid principal amount of the Note or Notes so
surrendered and shall be in such principal amount and registered in such name
or names as such holder may designate in writing. As a condition to any such
transfer, the Company may require representations and opinions of like tenor
and effect to those it may require pursuant to Section 13 of the Registration
Rights Agreement.
(c) Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Note
and of indemnity reasonably satisfactory to it, and upon reimbursement to the
Company of all reasonable expenses incidental thereto, and upon surrender and
cancellation of this Note (in case of mutilation), the Company will make and
deliver in lieu of this Note a new Note of like tenor and unpaid principal
amount and dated as of the date to which interest has been paid on the unpaid
principal amount of this Note in lieu of which such new Note is made and
delivered.
-5-
9. Remedies for Default
--------------------
(a) Event of Default. The occurrence of any of the following
shall constitute an "Event of Default":
(i) if the Company shall fail to pay principal or interest on
this Note when due, after the expiration of any applicable grace period; or
(ii) if the Company shall fail to pay when due any dividend
required to be paid on any share of Preferred Stock or to make any payment
required in respect of liquidation of the Company or redemption of any capital
stock of the Company; or
(iii) if the Company shall fail to perform or observe any term,
covenant or provision of (x) Section 7.1 of the Series B Preferred Stock
Agreement dated as of May 6, 1996 (the "Series B Purchase Agreement"), among
the Company and the other signatories thereto for 5 days after notice thereof
has been given to the Company by the Requisite Holders or (y) Sections 7.3 or
7.4 of the Purchase Agreement for 30 days after notice thereof has been given
to the Company by the Requisite Holders; or
(iv) if the Company shall fail to perform or observe in any
material respect any other term, covenant or agreement contained in the
Purchase Agreement or this Note; or
(v) if the Company shall fail to pay any indebtedness or
obligation of the Company in excess of $50,000 when due (whether by scheduled
maturity, required prepayment, acceleration, demand or-otherwise) after the
expiration of any applicable grace period, or to perform or observe any
material term, covenant or condition under any agreement or instrument
relating to any such indebtedness or obligation when required to be performed
or observed; provided however, that it shall not be an Event of Default if the
Company shall fail to pay any such indebtedness or obligation of the Company
if such indebtedness or obligation is being contested in good faith by
appropriate proceedings and adequate provision therefor has been made; or
(vi) if any representation, warranty or statement made by or on
behalf of the Company in the Purchase Agreement or which is contained in any
certificate, document, opinion, financial or other statement furnished at any
time under or in connection with the Purchase Agreement shall prove to have
been incorrect in any material respect on or as of the date made; or
-6-
(vii) if one or more judgments, decrees or orders for the payment
of money in excess of $50,000 shall be rendered against the Company, any such
judgments, decrees, or orders shall continue unsatisfied and in effect for a
period of thirty (30) consecutive days without being vacated, discharged,
satisfied or stayed or bonded pending appeal; or
(viii) if the Company shall become insolvent, or is adjudicated
insolvent or bankrupt; or
(ix) if the Company admits in writing its inability to pay its
debts; or
(x) if the Company shall come under the authority of a
custodian, receiver or trustee for it or for substantially all of its
property; or
(xi) if the Company makes an assignment for the benefit of
creditors, or suffers proceedings under any law related to bankruptcy,
insolvency, liquidation or the reorganization, readjustment or the release of
debtors to be instituted against it and if contested by it not dismissed or
stayed within sixty (60) days; or
(xii) if proceedings under any law related to bankruptcy,
insolvency, liquidation or the reorganization, readjustment or the release of
debtors are instituted or commenced by the Company; or
(xiii) if any order for relief is entered relating to any of the
foregoing proceedings under subsections (vii) through (xi).
(b) Upon the occurrence of an Event of Default, the Holder,
acting jointly with the Requisite Holders, shall have the option to demand
full and immediate payment of the then outstanding principal amount of this
Note and to protect and enforce its right or remedy as may be available.
(c) Cost of Collection. In the event of any default under this
Note, the Company shall pay any costs of collection incurred by the Holder
(including reasonable attorney's fees and expenses).
10. Waivers
-------
(a) The Company and all endorsers, sureties and, guarantors of
this Note hereby jointly and severally waive presentment, demand for payment,
notice of dishonor, notice of protest, and protest in connection with the
delivery, acceptance, performance, default, endorsement or guaranty of this
Note.
-7-
(b) No delay by the Holder in exercising any power or right
hereunder shall operate as a waiver of any power or right, nor shall an single
or partial exercise of any power or right preclude other or further exercise
thereof, or the exercise of any other power or right hereunder or otherwise.
No waiver or modification of the terms hereof shall be valid unless set forth
in writing by the Holder.
11. General
-------
(a) Successors and Assigns. This Note and the obligations and
rights of the Company hereunder shall be binding upon and inure to the benefit
of the Company and the Holder and their respective successors and assigns.
This Note is assignable in whole, but not in part.
(b) Changes. Changes in or additions to this Note may be made or
compliance with any term, covenant, agreement, condition or provision set
forth herein may be omitted or waived (either generally or in a particular
instance and either retroactively or prospectively) upon written consent of
the Company and the Holder.
(c) Currency. All payments shall be made in such coin or currency
of the United States of America as at the time of payment shall be either
legal tender therein for the payment of public and private debts.
(d) Notices. All notices, request, consents and demands shall be
made in writing and shall be mailed postage prepaid, or delivered by hand, to
the Company or the Holder at their respective addresses as set forth in the
records of the Company or to such other address as may be furnished in writing
to the other party hereto.
(e) Severability. If any term or provision of this Note shall be
held invalid, illegal or unenforceable, the validity of all other terms and
provisions hereof shall in no way be affected thereby.
(f) Saturdays, Sundays, Holidays. If any date that may at any
time be specified in this Note as a date for the making of any payment of
principal or interest under this Note shall fall on Saturday, Sunday or on a
day which in Vienna, Virginia, shall be a legal holiday, then the date for the
making of that payment shall be the next subsequent day which is not a
Saturday, Sunday, or legal holiday.
12. Governing Law
-------------
This Note shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the
-8-
laws of the State of New York, without regard to choice of law principles.
-9-
IN WITNESS WHEROF, this Note has been executed and delivered on
the date first above written by the duly authorized representative of the
Company.
iVILLAGE INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice-President
Attest:
----------------------------
Secretary
SCHEDULE B
Purchaser Commitment Amount
America Online, Inc. $2,900,000
The Tribune Company $1,500,000
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & $ 750,000
▇▇▇▇▇ VII and
KPCB Information Sciences
Zaibatsu Fund VII
EXHIBIT A TO THE
----------------
SECURED CONVERTIBLE
-------------------
PROMISSORY NOTE
---------------
FORM OF STOCK SUBSCRIPTION WARRANT
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT. ADDITIONALLY, THE
TRANSFER OF THESE SECURITIES IS SUBJECT TO THE CONDITIONS SPECIFIED IN SECTION
13 OF THE REGISTRATION RIGHTS AGREEMENT DATED AS OF MAY 6, 1996, AS AMENDED,
AMONG iVILLAGE, INC. AND THE OTHER SIGNATORIES THERETO (THE "REGISTRATION
RIGHTS AGREEMENT") AND THE AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT DATED
AS OF MAY 6, 1996, AS AMENDED, AMONG iVILLAGE INC. AND THE OTHER SIGNATORIES
THERETO (THE "STOCKHOLDERS AGREEMENT"), AND NO TRANSFER OF THESE SECURITIES
SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED. UPON
THE FULFILLMENT OF CERTAIN OF SUCH CONDITIONS, iVILLAGE INC., HAS AGREED TO
DELIVER TO THE HOLDER HEREOF A NEW CERTIFICATE, NOT BEARING THIS LEGEND, FOR
THE SECURITIES REPRESENTED HEREBY REGISTERED IN THE NAME OF SUCH HOLDER.
COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY
THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF iVILLAGE INC.
_________________ ___, 1997*
iVILLAGE INC.
STOCK SUBSCRIPTION WARRANT
THIS CERTIFIES that, for value received, [Insert name of
holder], or assigns, is entitled to subscribe for and purchase from iVILLAGE
INC., a Delaware corporation (the "Company"), that number of shares (the
"Warrant Shares") of Senior Series B-2 Preferred Stock, $.0005 par value, of
the Company as shall be determined in accordance with the provisions of
Section 1 hereof at the price per share (the "Warrant Price") determined in
accordance with the provisions of Section 1 hereof, at any time or from time
to time during the period (the "Exercise Period") commencing with the date
hereof and terminating on the fifth anniversary of the date hereof. This
Warrant is being issued pursuant to a Secured Convertible Promissory Note
dated as of February , 1997 (the "Note"), issued by the Company to the holder
of this Warrant and is one of a series of stock subscription warrants
(including this Warrant, the "Warrants") being issued pursuant to one or more
secured convertible
-------------------
* This Warrant will be issued on the Demand Date (as such term is defined in the
Note).
promissory notes issued by the Company. Terms used but not defined herein shall
have the meanings set forth in the Note.
SECTION 1. Warrant Shares and Warrant Price.
-------------------------------------------
The Warrant Shares and the Warrant Price shall be established as
follows:
(a) The Warrant Shares shall consist of the Company's Senior
Series B-2 Preferred Stock, $.0005 par value, (the "Senior Series B-2
Preferred Stock"), and the Warrant Price shall equal $.01.
(b) The number of Warrant Shares for which this Warrant is
exercisable shall be equal to (1) the product of (x) the quotient of (A) the
principal amount of the Note plus accrued interest (calculated on a weekly
basis) divided by (B) $1,000,000 and (y) four (4%) percent of the number of
shares of voting capital stock of the Company outstanding on the date of
calculation after giving effect to the exercise, exchange or conversion of all
then outstanding securities, rights, options, warrants, that are, directly or
indirectly, exercisable or exchangeable for, or convertible into or otherwise
represent the right to purchase or otherwise receive, directly or indirectly,
any such capital stock (collectively, the "Fully-Diluted Shares"),
multiplied by the number of thirty-day periods during which the Note shall be
outstanding (the "Multiple"), commencing with the earlier of (x) the date of
issuance of this Warrant (the "Issue Date") or (y) in the event of the
occurrence of a Payroll Event, 10 days prior to the Payroll Date, and ending
with the date as of which the Note shall no longer be outstanding, divided by
(2) the Warrant Price, minus the number of Warrant Shares for which this
Warrant was previously exercised; provided however, that in the event of a
partial period, the Multiple shall be increased by a fraction the numerator of
which shall be the number of days from the end of the prior full thirty-day
(or shorter) period to the date of exercise of this Warrant and the
denominator of which shall be thirty (30). The number of Warrant Shares for
which this Warrant is exercisable shall increase as aforesaid at the end of
each thirty-day period during which the Note (as defined herein) shall be
outstanding.
SECTION 2. Exercise of Warrant.
--------------------
The rights represented by this Warrant may be exercised by
the holder hereof, in whole or in part, at any time during the Exercise
Period, by the surrender of this Warrant (properly endorsed) at the office of
the Company, or at such other agency or office of the Company in the United
States of America as it may designate by notice in writing to the holder
hereof at the address of such holder appearing on the books of the Company,
and by payment to the Company of the Warrant Price in cash or by check (or by
cancellation of indebtedness evidenced by the Note
-2-
issued by the Company to such holder which, for such purpose, shall be valued
at the principal amount thereof and interest thereon so canceled) for each
share being purchased. In the event of the exercise of the rights represented
by this Warrant, a certificate or certificates for the shares of Senior Series
B-2 Preferred Stock so purchased, registered in the name of the holder, and if
such Warrant Exercise shall not have been for all Warrant Shares, a new
Warrant, registered in the name of the holder hereof, of like tenor to this
Warrant, shall be delivered to the holder hereof within a reasonable time, not
exceeding ten days, after the rights represented by this Warrant shall have
been so exercised. The person in whose name any certificate for shares of
Senior Series B-2 Preferred Stock is issued upon exercise of this Warrant
shall for all purposes be deemed to have become the holder of record of such
shares on the date on which the Warrant was surrendered and payment of the
Warrant Price and any applicable taxes was made, irrespective of the date of
delivery of such certificate, except that, if the date of such surrender and
payment is a date when the stock transfer books of the Company are closed,
such person shall be deemed to have become the holder of such shares at the
close of business on the next succeeding date on which the stock transfer
books are open.
SECTION 3. Exchange of Warrant.
(a) At any time and from time to time during the Exercise Period,
the holder may, at its option, exchange this warrant, in whole or in part (a
"Warrant Exchange"), into the number of Warrant Shares determined in
accordance with paragraph (b) below, by the surrender of this Warrant,
accompanied by a properly completed and executed Notice of Exchange in the
form attached, at the agency or office of the Company referred to in Section
2.
(b) In connection with any Warrant Exchange, this Warrant shall
represent the right to subscribe for and acquire the excess (rounded to the
next higher integer) of (i) the number (the "Total Number") of Warrant Shares
specified in the Notice of Exchange over (ii) the number of Warrant Shares
equal to the quotient obtained by dividing (A) the product of the Total Number
and the existing Warrant Price by (B) the Fair Market Value.
(c) "Fair Market Value" as of a particular date (the
"Determination Date") shall mean:
(i) if the Company's Common Stock is traded on an
exchange or is quoted on the National Association of Securities
Dealers, Inc., Automated Quotation ("NASDAQ") National Market
System, then the average of the closing or last sale prices,
respectively, reported for the twenty (20) trading days ended
immediately preceding the Determination Date; or if the Company's
-3-
Common Stock is not traded on an exchange or on the NASDAQ
Nationl Market System but is traded in the over-the-counter
market, then the mean of the average of the closing bid and asked
prices reported for the twenty (20) trading days ended
immediately preceding the Determination Date;
(ii) in the event of a Warrant Exchange in
connection with a merger or consolidation of the Company or a
sale of all outstanding capital stock or sale of all or
substantially all of the assets, the value of the consideration
received or receivable by the stockholders of the Company for
each share of Common Stock held (assuming, in the case of a sale
of assets, the Company is liquidated immediately following such
sale and the consideration paid to the Company is immediately
distributed to its stockholders); and
(iii) in all other circumstances, the fair market
value per share of outstanding Common Stock as determined by a
nationally recognized independent investment banking firm jointly
selected by the Company and the holders of a majority-in-interest
of all Warrants then outstanding or, if such selection cannot be
made within five days after delivery of the Notice of Exchange, by
a nationally recognized independent investment banking firm
selected by the American Arbitration Association in accordance with
its rules.
(d) The closing of any Warrant Exchange shall take place at the
offices of the Company on the date specified in the Notice of Exchange (the
"Exchange Date"), which shall be not less than five and not more than 30 days
after the delivery of such Notice. At such closing, the Company shall issue and
deliver to the holder or its designee a certificate or certificates for the
Warrant Shares to be issued upon such Warrant Exchange, registered in the name
of the holder or such designee, and if such Warrant Exchange shall not have been
for all Warrant Shares, a new Warrant, registered in the name of the holder, of
like tenor to this Warrant for the number of shares still subject to this
Warrant following such Warrant Exchange (i.e., the excess of (i) the number of
shares subject to this Warrant immediately before such Warrant Exchange over
(ii) the Total Number).
SECTION 4. Adjustment of Warrant Price.
---------------------------
If, at any time during the Exercise Period, the number of
outstanding shares of Senior Series B-2 Preferred Stock is (i) increased by a
stock dividend payable in shares of such class of capital stock or by a
subdivision or split-up of shares of such class of capital stock, or (ii)
decreased by a combination of shares of such class of capital stock, then,
following the record
-4-
date fixed for the determination of holders of such class of capital stock
entitled to receive the benefits of such stock dividend, subdivision,
split-up, or combination, the Warrant Price shall be adjusted to a new amount
equal to the product of (A) the Warrant Price in effect on such record date
and (B) the quotient obtained by dividing (x) the number of shares of such
class of capital stock outstanding on such record date (without giving effect
to the event referred to in the foregoing clause (i) or (ii), by (y) the number
of shares of such class of capital stock which would be outstanding
immediately after the event referred to in the foregoing clause (i) or (ii),
if such event had occurred immediately following such record date.
SECTION 5. Adjustment of Warrant Shares.
----------------------------
Upon each adjustment of the Warrant Price as provided in Section
4, the Holder shall thereafter be entitled to subscribe for and purchase, at
the Warrant Price resulting from such adjustment, the number of Warrant Shares
equal to the product of (i) the number of Warrant Shares existing prior to
such adjustment and (ii) the quotient obtained by dividing (A) the Warrant
Price existing prior to such adjustment by (B) the new Warrant Price resulting
from such adjustment. No fractional shares of capital stock of the Company
shall be issued as a result of any such adjustment, and any fractional shares
resulting from the computations pursuant to this paragraph shall be eliminated
without consideration.
SECTION 6. Covenants as to Senior Series B-2 Preferred Stock and
Common Stock.
(a) The Company covenants and agrees that all shares of capital
stock which may be issued upon the exercise of the rights represented by this
Warrant, and all shares of Common Stock of the Company which may be issued
upon the conversion of Senior Series B-2 Preferred Stock if issued upon
exercise of this Warrant (collectively, the "Underlying Securities") will,
upon issuance, be validly issued, fully paid and non-assessable and free from
all taxes, liens and charges with respect to the issue thereof. The Company
further covenants and agrees that the Company will from time to time take all
such action as may be requisite to assure that the stated or par value per
share of the Underlying Securities is at all times equal to or less than the
then effective Warrant Price per share of the Underlying Securities issuable
upon exercise of this Warrant. The Company further covenants and agrees that
the Company will at all times have authorized and reserved, free from
preemptive rights, a sufficient number of (a) shares of its Underlying
Securities to provide for the exercise of the rights represented by this
Warrant and (b) shares of Common Stock to provide for the conversion of Senior
Series B-2 Preferred Stock if issuable upon exercise of this Warrant. The
Company further covenants and agrees that if any shares of capital stock to be
reserved for the
-5-
purpose of the issuance of shares of capital stock upon the exercise of this
Warrant or the conversion of Senior Series B-2 Preferred Stock if issuable
upon exercise of this Warrant require registration with or approval of any
governmental authority under any Federal or state law before such shares may
be validly issued or delivered upon exercise, then the Company will in good
faith and expeditiously as possible endeavor to secure such registration or
approval, as the case may be. If and so long as the capital stock issuable
upon the exercise of this Warrant or the Common Stock issuable upon conversion
of the Senior Series B-2 Preferred Stock if issuable upon exercise of this
Warrant is listed on any national securities exchange, the Company will, if
permitted by the rules of such exchange, list and keep listed on such
exchange, upon official notice of issuance, all shares of such capital stock.
(b) The Company further covenants and agrees that the holder
hereof will be entitled to the benefits of any adjustment prior to the
exercise hereof pursuant to any anti-dilution protection afforded to holders
of Senior Series B-2 Preferred Stock if issuable upon exercise of this
Warrant.
SECTION 7. No Shareholder Rights.
----------------------
This Warrant shall not entitle the holder hereof to any voting
rights or other rights as a shareholder of the Company.
SECTION 8. Restrictions on Transfer, Rights Under Purchase
-----------------------------------------------
Agreement; Etc.
---------------
The holder of this Warrant by acceptance hereof agrees that the
transfer of this Warrant or any of the Underlying Securities are subject to
the provisions of Section 13 of the Registration Rights Agreement and this
Warrant. The Underlying Securities issuable upon exercise of this Warrant and
the shares of Common Stock issuable upon conversion of shares of Senior Series
B-2 Preferred Stock if issuable upon exercise of this Warrant shall be
entitled to all rights and benefits accorded thereto in the Purchase
Agreement, and the applicable provisions of the Purchase Agreement are hereby
incorporated herein by reference.
SECTION 9. Transfer of Warrant; Amendment.
-------------------------------
(a) This Warrant and all rights hereunder are transferable, in
whole, or in part, in accordance with the Stockholders' Agreement, at the
agency or office of the Company referred to in Section 2, by the holder hereof
in person or by duly authorized attorney, upon surrender of this Warrant
properly endorsed. Each taker and holder of this Warrant, by taking or holding
the same, consents and agrees that this Warrant, when endorsed in blank,
shall be deemed negotiable, and, when so endorsed the holder hereof may be
treated by the Company and all
-6-
other persons dealing with this Warrant as the absolute owner hereof for any
purposes and as the person entitled to exercise the rights represented by this
Warrant, or to the transfer hereof on the books of the Company, any notice
to the contrary notwithstanding; but until each transfer on such books, the
Company may treat the registered holder hereof as the owner hereof for all
purposes.
(b) The terms and provisions of this Warrant may not be modified
or amended, except under the written consent of the Company and the Holders of
a majority of Warrant Shares issuable upon exercise hereof.
SECTION 10. Reorganizations, Etc.
---------------------
In case, at any time during the Exercise Period, of any
capital reorganization, of any reclassification of the stock of the Company
(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 stock dividend or subdivision,
split-up or combination of shares), or the consolidation or merger of the
Company with or into another corporation (other than a consolidation or merger
in which the Company is the continuing operation and which does not result in
any change in the Underlying Securities) or of the sale of all or
substantially all the properties and assets of the Company as an entirety to
any other corporation, this Warrant shall, after such reorganization,
reclassification, consolidation, merger or sale, be exercisable for the kind
and number of shares of stock or other securities or property of the Company
or of the corporation resulting from such consolidation or surviving such
merger or to which such properties and assets shall have been sold to which
such holder would have been entitled if he had held the Underlying Securities
issuable upon the exercise hereof immediately prior to such reorganization,
reclassification, consolidation, merger or sale.
SECTION 11. Lost, Stolen, Mutilated or Destroyed Warrant.
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If this Warrant is lost, stolen, mutilated or destroyed, the
Company may, on such terms as to indemnity or otherwise as it may in its
discretion impose (which shall, in the case of a mutilated Warrant, include
the surrender thereof), issue a new Warrant of like denomination and tenor as
the Warrant so lost, stolen, mutilated or destroyed. Any such new Warrant
shall constitute an original contractual obligation of the Company, whether or
not the allegedly lost, stolen, mutilated or destroyed Warrant shall be at any
time enforceable by anyone.
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IN WITNESS WHEREOF, the undersigned has caused this Warrant to be
executed by its duly authorized officer on the date first above written.
iVILLAGE INC.
By:
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Name:
Title:
ATTEST:
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Secretary