Document:

Exhibit 10.3

 

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER 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 8 OF THIS WARRANT.

 

THE TRADE DESK, INC.

 

WARRANT TO PURCHASE SHARES

OF SERIES PREFERRED STOCK

 

THIS CERTIFIES THAT, for value received and subject to the provisions and upon the terms and conditions set forth in this Warrant, LEADER EQUITY, LLC and its assignees are entitled to subscribe for and purchase at the Warrant Price that number of the fully paid and nonassessable shares of Series Preferred Stock of THE TRADE DESK, INC., a Delaware corporation (the “Company”), as is equal to the nearest whole number derived from dividing the Warrant Dollar Amount by the Warrant Price.

 

1.                                      Definitions.  As used herein, capitalized terms not otherwise defined herein shall have the following respective meanings:

 

(a)                                 “Act” means the Securities Act of 1933, as amended.

 

(b)                                 “Common Stock” means the Common Stock of the Company.

 

(c)                                  “Common Stock Equivalents” means, (i) with respect to any Convertible Security, the number of shares of Common Stock that would result from full conversion, exercise or exchange of a Convertible Security in one or more steps, and (ii) with respect to a Unit, the number of shares of Common Stock resulting after aggregating all Common Stock and Common Stock Equivalents underlying Convertible Securities which are contained within a Unit.

 

(d)                                 “Convertible Security” means (i) any stock or securities directly or indirectly convertible into or exchangeable for Common Stock and (ii) any rights, warrants or options to subscribe for or purchase Common Stock or stock or securities directly or indirectly convertible into or exchangeable for Common Stock.

 

(e)                                  “Date of Grant” means August 30, 2011.

 

(f)                                   “Effective Price per share of Common Stock” means the price of a single Convertible Security or Unit divided by the sum of (i) the number of Common Stock Equivalents underlying such Convertible Security or Unit plus (ii) the number determined by dividing (A) the number of additional shares of Common Stock or Common Stock Equivalents that become issuable for no or nominal additional consideration in connection with the transaction in which such Convertible Securities or Units are sold due to adjustments in rates of conversion of

 

 

Convertible Securities or the like, including extraordinary issuances of securities to employees, directors or consultants in connection with the transaction, by (B) the aggregate number of shares of Common Stock and Common Stock Equivalents underlying the Securities sold in the transaction.

 

(g)                                  “Holder” means the initial holder of this Warrant set forth in the first paragraph of this Warrant and any other person or entity which becomes a holder of this Warrant pursuant to the terms of this Warrant.

 

(h)                                 “IPO” means the initial public offering of the Company’s Common Stock effected pursuant to a registration statement on Form S-1 (or its successor) filed under the Act.

 

(i)                                     “Next Round Financing” means the Company’s next Qualified Financing after the Date of Grant.

 

(j)                                    “Next Round Price” means the lowest Effective Price per share of Common Stock at which Securities are sold in the Next Round Financing.

 

(k)                                 “Other Warrants” means 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.

 

(l)                                     “Qualified Financing” means the sale prior to the Company’s IPO of Securities of the Company to purchasers which include venture capital investors in an aggregate cash amount not less than $3,000,000.

 

(m)                             “Securities” means Common Stock, Convertible Securities or Units.

 

(n)                                 “Seed Series Price” means $1.00 per share.

 

(o)                                 “Series Preferred” means (i)(A) if the Warrant Price is the Seed Series Price, the Company’s presently authorized Seed Preferred Stock, or (B) if the Warrant Price is the Next Round Price, then the type of securities sold in the Next Round Financing (the “Next Round Securities”), (ii) after the conversion of all of the outstanding shares of Series Preferred Stock into Common Stock, either automatically or by vote of the requisite holders thereof, the Company’s Common Stock, (iii) upon any conversion, exchange, reclassification or change, any security into which the securities described in clauses (i) or (ii) of this definition may be converted, exchanged, reclassified or otherwise changed; (iv) if Pay to Play Provisions are applied to the Series Preferred, the security that a holder of Series Preferred would have received had such holder participated in the manner necessary to receive or retain the security having the rights more favorable to the holder.  “Pay to Play Provisions” means (i) provisions that require the holder of a security to participate in a subsequent round of equity financing or lose all or a portion of the benefit of antidilution protection applicable to a security or have such security automatically convert to common stock or another series of capital stock, or (ii) an exchange transaction having the same or similar economic effect.

 

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(p)                                 “Shares” means the shares of Series Preferred of Company issuable upon exercise of this Warrant.

 

(q)                                 “Units” means any combination of Common Stock and Convertible Securities issued by Company sold together as a single unit.

 

(r)                                    “Warrant Dollar Amount” means $120,000.

 

(s)                                   “Warrant Price” means, as it may be adjusted from time to time pursuant to Section 6, the Seed Series Price; provided, however, if the Next Round Financing occurs prior to the exercise or expiration of this Warrant, provided the Holder is given sufficient information from the Company regarding the Next Round to make an informed decision, the Holder may, by written notice to the Company within 30 days following closing of the Next Round Financing or when the Holder receives sufficient information, elect that the Warrant Price shall be the Next Round Price.  (For the avoidance of doubt, if the Holder does not so elect within such period of time, the Warrant Price shall be the Seed Series Price.)

 

2.                                      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 tenth anniversary of the Date of Grant.

 

Notwithstanding the foregoing, in the event of a Corporate Event (as defined in Section 6(a)) where the consideration received by holders of Series Preferred in such Corporate Event is all cash, then this Warrant (i) to the extent the cash consideration per share of Series Preferred exceeds the Warrant Price, shall be deemed exercised in accordance with the provisions of Section 3(b) immediately prior to the closing of the Corporate Event, or (ii) to the extent the cash consideration per share of Series Preferred does not exceed the Warrant Price, shall terminate.

 

3.                                      Method of Exercise; Payment; Issuance of New Warrant; Net Issuance.

 

(a)                         Subject to Section 2 hereof, the purchase right represented by this Warrant may be exercised by the Holder, in whole or in part and from time to time, at the election of the Holder, by (a) the delivery of 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 delivery of 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 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 3(b) hereof.  The person or persons in whose name(s) Shares shall be registered 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

 

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to the close of business on the date or dates upon which this Warrant is exercised.  In the event of any exercise of this Warrant, certificates for the shares of stock so purchased shall be delivered to the Holder 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 (subject to delivery of the old Warrant to the Company) as soon as possible and in any event within such thirty-day period; provided, however, that 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, the Company shall cause its transfer agent to deliver the certificate representing Shares issued upon exercise of this Warrant to, or credit the securities account of, 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.

 

(b)                                 Right to Convert Warrant into Stock:  Net Issuance.

 

(i)                                     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 3(b) 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

 

Y

 

	
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
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
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)
    

 

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(ii)                                  Method of Exercise.  The Conversion Right may be exercised by the Holder by the delivery by Holder of 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 3(b)(i) hereof as the Converted Warrant Shares) in exercise of the Conversion Right.  Such conversion shall be effective upon receipt by the Company of the aforesaid written statement, or on such later date as is specified therein (the “Conversion Date”), and, at the election of the Holder, 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”).

 

(iii)                               Determination of Fair Market Value.  For purposes of this Section 3(b), “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:

 

(1)                                 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 Public Offering.

 

(2)                                 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 closing price of the Common Stock on such exchange on the trading day 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 (if the Series Preferred is not then constituted as Common Stock) 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 closing bid price of the Common Stock on the trading day 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 (if the Series Preferred is not then constituted as Common Stock) 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 reasonably determined in good faith by the board of directors of the Company.

 

(iv)                              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.

 

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4.                                      Voting Agreement.  Upon any exercise of this Warrant (other than an exercise contingent upon a Public Offering in which the Voting Agreement would terminate by its terms), and as a condition thereto, the Holder shall agree in writing, in a form reasonably satisfactory to the Company, to be bound by and subject to the terms of that certain Voting Agreement dated as of March 5, 2010 by and among the Company and certain of its stockholders, as the same may be amended from time to time in accordance with its terms (the “Voting Agreement”), having all the rights and obligations of a “Stockholder” thereunder.

 

5.                                      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, while applicable, a sufficient number of shares of its Common Stock to provide for the conversion of the Series Preferred into Common Stock.

 

6.                                      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)                                 Corporate Events.  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), or in case of any merger of the Company with or into another corporation (other than a merger with another corporation in which the Company is the acquiring and the surviving corporation and which does not result in any reclassification or change of outstanding securities issuable upon exercise of this Warrant) (each, a “Corporate Event”), the Company, or such successor corporation, as the case may be, shall duly execute and deliver to the Holder a new Warrant (in form and substance satisfactory to the Holder), or the Company shall make appropriate provision without the issuance of a new Warrant, so that the Holder 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 exercise of this Warrant, the kind and amount of shares of stock, other securities, money and property receivable upon such Corporate Event 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 6.  The provisions of this Section 6(a) shall similarly apply to successive Corporate Events.

 

(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.

 

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(c)                                  Stock Dividends and Other Distributions.  If the Company at any time while this Warrant is outstanding and unexpired shall (i) pay a dividend with respect to Series Preferred payable in Series Preferred, then the Warrant Price shall be adjusted, from and after the date of determination of shareholders entitled to receive such dividend or distribution, to that price determined by multiplying the Warrant Price in effect immediately prior to such date of determination by a fraction (A) the numerator of which shall be the total number of shares of Series Preferred outstanding immediately prior to such dividend or distribution, and (B) the denominator of which shall be the total number of shares of Series Preferred outstanding immediately after such dividend or distribution; or (ii) make any other distribution with respect to Series Preferred (except any distribution specifically provided for in Sections 6(a) and 6(b)), then, in each such case, provision shall be made by the Company such that the Holder shall receive upon exercise of this Warrant a proportionate share of any such dividend or distribution as though it were the holder of the Series Preferred (or Common Stock issuable upon conversion thereof) as of the record date fixed for the determination of the shareholders of the Company entitled to receive such dividend or distribution.

 

(d)                                 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.

 

7.                                      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 through the Date of Grant, a true and complete copy of which is attached hereto as Exhibit B (the “Charter”).  Such antidilution rights shall not be restated, amended, modified or waived in any manner that treats the Shares of Series Preferred purchasable hereunder in a manner different from the treatment of all other shares of the same class of stock without the Holder’s prior written consent.  The Company shall promptly provide the Holder with any restatement, amendment, modification or waiver of the Charter promptly after the same has been made.

 

8.                                      Notice of Qualified Financing and Adjustments.

 

(a)                                 The Company shall notify the Holder not less than 10 days prior to its consummation of a Qualified Financing.

 

(b)                                 Whenever the Warrant Price or the number of Shares purchasable hereunder shall be adjusted pursuant to Section 6 hereof, the Company shall deliver to Holder 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.  In addition, whenever the conversion price or conversion ratio

 

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of the Series Preferred shall be adjusted, the Company shall deliver to Holder 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.

 

9.                                      Fractional Shares.  No fractional shares of Series Preferred will be issued in connection with any exercise or conversion 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 or conversion as reasonably determined in good faith by the Company’s Board of Directors.

 

10.                               Compliance with Act; Disposition of Warrant or Shares of Series Preferred.

 

(a)                                 Compliance with Act.  The Holder, 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 the 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 shall confirm in writing that the shares of Series Preferred so purchased (and any 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 Common Stock issued upon conversion thereof (unless registered under the Act and any applicable state securities laws) shall be stamped or imprinted with legends in substantially the following forms:

 

“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 8 OF THE WARRANT UNDER WHICH THESE SECURITIES WERE ISSUED, DIRECTLY OR INDIRECTLY.”

 

“THE SECURITIES EVIDENCED HEREBY ARE SUBJECT TO RESTRICTIONS ON TRANSFER FOR A PERIOD OF TIME FOLLOWING THE COMPANY’S INITIAL PUBLIC OFFERING, AS SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY.  TRANSFEREES OF THE SECURITIES EVIDENCED HEREBY ARE SUBJECT TO SUCH RESTRICTIONS.”

 

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Said legend shall be removed by the Company, upon the request of the 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.

 

(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, the Holder agrees to give written notice to the Company prior thereto, describing briefly the manner thereof, together with a written opinion of counsel (at the Company’s expense), 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 the Holder that the 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 10(b) that the opinion of counsel 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 (i) pursuant to an effective registration statement covering such securities or (ii) 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

 

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transferred (except a transfer pursuant to an effective registration statement or 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 10(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, or (iii) to a single affiliate of the Holder if the Holder is a corporation, where, in each case, the transferee is an “accredited investor”; 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.

 

(d)                                 IPO Lockup.  In connection with the initial public offering of the Company’s securities in an underwritten offering under the Securities Act, and upon request of the Company or the underwriters managing such offering, Holder agrees not to sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any securities of the Company held immediately prior to the effectiveness of the registration statement for such offering (other than those included in the registration) without the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed 180 days or such longer period of time as may be required to comply with Rule 2711 of the Financial Industry Regulatory Authority, Inc. (or any successor rule thereto)) from the effective date of such registration statement as may be requested by the Company or such managing underwriters and to execute an agreement reflecting the foregoing as may be requested by the underwriters at the time of the Company’s initial public offering; provided that any such period of time shall not exceed the shortest period of time applicable to the Company’s officers and other investors.

 

11.                               Rights as Shareholders; Information.  No Holder, as a holder of this Warrant, 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 or conversion hereof for any purpose, nor shall anything contained herein be construed to confer upon the Holder, 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 or converted and the Shares purchasable upon the exercise or conversion hereof shall have become deliverable, as provided herein.  Notwithstanding the foregoing, the Company will transmit to the Holder 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.  In addition, the Company agrees to provide in a timely manner any information reasonably requested by the Holder to enable the Holder and its affiliates to comply with their accounting reporting requirements.  Notwithstanding the foregoing, prior to the effective date of the initial registration statement covering a Public Offering of Company’s securities, Company will provide Holder or successor the following information:

 

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(a)                                 As soon as practicable (and in any event within thirty (30) days after the end of each quarter), unaudited financial statements for such month, certified by Company’s Chief Executive Officer or Chief Financial Officer to fairly present in all material respects the data reflected therein.

 

(b)                                 As soon as practicable (and in any event within two hundred thirty (230) days after the end of each fiscal year), audited financial statements for such year, setting forth in comparative form the corresponding figures for the preceding fiscal year, and accompanied by an audit report and unqualified opinion of the independent certified public accountants of recognized national standing selected by Company.

 

(c)                                  No later than thirty (30) days before the start of Company’s fiscal year, financial projections for the next fiscal year approved by Company’s Board of Directors.

 

(d)                                 Upon request by the Holder, the latest available stockholder or shareholder valuation report of the Company.

 

(e)                                  Upon request by the Holder, the latest available summary of the Company’s equity capital account showing share classes, number of shares outstanding in each share class, common stock equivalents for each class, stock incentive plan amounts, amounts paid per share for each share class and valuation as of the last round of financing.

 

Holder agrees to hold non-public information received in confidence and shall not disclose such information to third parties except to its employees, members, partners or the partners of its affiliated investment funds, their lenders, and professional advisors to the foregoing, including attorneys and accountants, and others under a similar duty of confidentiality, and as Holder may deem necessary in its reasonable judgment to satisfy its legal obligations or to enforce its rights under this Warrant.

 

12.                               Additional Rights.

 

(a)                                 Acquisition Transactions.  The Company shall provide the Holder with at least twenty (20) days’ written notice prior to closing thereof of the terms and conditions of any of the following transactions (to the extent the Company has notice thereof): (i) the sale, lease, exchange, conveyance or other disposition of all or substantially all of the Company’s property or business, or (ii) its merger into or consolidation with any other corporation (other than a wholly-owned subsidiary of the Company), or any transaction (including a merger or other reorganization) or series of related transactions, in which more than 50% of the voting power of the Company is disposed of (other than a sale of stock by the Company for capital raising purposes).

 

(b)                                 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 3(b) above (even if not surrendered) immediately before its expiration.  For purposes of such automatic exercise, the fair market value of one share

 

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of the Series Preferred upon such expiration shall be determined pursuant to Section 3(b).  To the extent this Warrant or any portion thereof is deemed automatically exercised pursuant to this Section 12(b), the Company agrees to promptly notify the Holder of the number of Shares, if any, the Holder is to receive by reason of such automatic exercise.

 

13.                               Representations and Warranties.  The Company represents and warrants to the Holder 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 Seed Preferred Stock that may be issuable upon exercise of this Warrant has been, and to the extent that Holder elects that this Warrant become exercisable into Next Round Securities such securities shall be, duly authorized and reserved for issuance by the Company and, when issued in accordance with the terms hereof the Series Preferred will be validly issued, fully paid and nonassessable and free from preemptive rights.

 

(c)                                  The rights, preferences, privileges and restrictions granted to or imposed upon the Seed Preferred Stock and the holders thereof are as set forth in the Certificate of Incorporation, and on the Date of Grant, each share of the Seed Preferred represented by this Warrant is convertible into one share of Common Stock.

 

(d)                                 The shares of Common Stock issuable upon conversion of the Seed Preferred Stock that may be issuable upon exercise of this Warrant have been, and to the extent that Holder elects that this Warrant become exercisable into Next Round Securities the shares of Common Stock issuable upon conversion thereof shall be, duly authorized and reserved for issuance by the Company and, when issued in accordance with the terms of the Certificate of Incorporation will be validly issued, fully paid and nonassessable.

 

(e)                                  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 Certificate of Incorporation 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 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.

 

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(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, but excluding the conversion of convertible notes for which the conversion price is tied to the Company’s next equity financing and cannot yet be determined, and including shares reserved for issuance under the Company’s stock plan), does not exceed 6,345,000 shares.

 

14.                               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.

 

15.                               Notices.  Any notice, request, communication or other document required or permitted to be given or delivered to the Holder or the Company shall be delivered, or shall be sent by certified or registered mail, postage prepaid, to the 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.  Such notice, request, communication or other document may also be delivered by any other means of transmission so long as reasonable confirmation of receipt by the addressee is obtained.

 

16.                               Binding Effect on Successors.  This Warrant shall be binding upon any corporation succeeding the Company by merger, consolidation or acquisition of all or substantially all of the Company’s assets, and all of the obligations of the Company relating to the Series Preferred issuable upon the exercise or conversion of this Warrant shall survive the exercise, conversion and termination of this Warrant and all of the covenants and agreements of the Company shall inure to the benefit of the successors and assigns of the Holder.

 

17.                               Lost Warrants or Stock Certificates.  The Company covenants to the Holder 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 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.

 

18.                               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.

 

19.                               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 California.

 

20.                               Survival of Representations, Warranties and Agreements.  All representations and warranties of the Company and the Holder 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 contained herein shall survive indefinitely until, by their respective terms, they are no longer operative.

 

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21.                               Remedies.  In case any one or more of the covenants and agreements contained in this Warrant shall have been breached, the Holder (in the case of a breach by the Company), or the Company (in the case of a breach by the 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.

 

22.                               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.

 

23.                               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.

 

24.                               Entire Agreement.  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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The Company has caused this Warrant to be duly executed and delivered as of the Date of Grant specified above.

 

	
 
    	
THE   TRADE DESK, INC.
    
	
 
    	
 
    
	
 
    	
By
    	
/s/   Jeffrey Green
    
	
 
    	
 
    
	
 
    	
Title
    	
CEO
    
	
 
    	
 
    
	
 
    	
Address
    
				

 

Signature Page to Warrant

 

 

EXHIBIT A-1

 

NOTICE OF EXERCISE

 

To:                             THE TRADE DESK, INC. (the “Company”)

 

1.                                      The undersigned hereby:

 

o                                    elects to purchase            shares of Series Preferred Stock of the Company pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price of such shares in full, or

 

o                                    elects to exercise its net issuance rights pursuant to Section 3(b) of the attached Warrant with respect to            Shares of Series Preferred Stock.

 

2.                                      Please issue a certificate or certificates representing            shares in the name of the undersigned or in such other name or names as are specified below:

 

	
 
    	
 
    	
 
    
	
(Name)
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
(Address)
    	
 
    

 

3.                                      The undersigned represents that the aforesaid shares are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares, all except as in compliance with applicable securities laws.

 

4.                                      The undersigned hereby agrees to be bound by and subject to the terms of the Voting Agreement (as that term is defined in the Warrant), having all of the rights and obligations of a “Stockholder” thereunder, with the same force and effect as if the undersigned had originally executed and delivered the Voting Agreement and were originally a party thereto.

 

	
 
    	
 
    
	
 
    	
(Signature)
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
(Date)
    	
 
    	
 
    

 

 

EXHIBIT A-2

 

NOTICE OF EXERCISE

 

To:                             THE TRADE DESK, INC. (the “Company”)

 

1.                                      Contingent upon and effective immediately prior to the closing (the “Closing”) of the Company’s public offering contemplated by the Registration Statement on Form S       , filed           , 200   , the undersigned hereby:

 

o                                    elects to purchase            shares of Series Preferred Stock of the Company (or such lesser number of shares as may be sold on behalf of the undersigned at the Closing) pursuant to the terms of the attached Warrant, or

 

o                                    elects to exercise its net issuance rights pursuant to Section 3(b) of the attached Warrant with respect to            Shares of Series Preferred Stock.

 

2.                                      Please deliver to the custodian for the selling shareholders a stock certificate representing such            shares.

 

3.                                      The undersigned has instructed the custodian for the selling shareholders to deliver to the Company $            or, if less, the net proceeds due the undersigned from the sale of shares in the aforesaid public offering.  If such net proceeds are less than the purchase price for such shares, the undersigned agrees to deliver the difference to the Company prior to the Closing.

 

	
 
    	
 
    
	
 
    	
(Signature)
    
	
 
    	
 
    	
 
    
	
(Date)
    	
 
    	
 
    
	
 
    	
 
    	
 
    

 

 

EXHIBIT B

 

CHARTERExhibit 10.4

 

THE WARRANT EVIDENCED HEREBY, AND THE SECURITIES ISSUABLE HEREUNDER, HAVE BEEN AND WILL BE ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933 AS AMENDED.  OR THE APPLICABLE SECURITIES LAWS OF ANY STATE.  SUCH SECURITIES HAVE BEEN ACQUIRED NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND SHALL NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THE PROPOSED DISPOSITION IS THE SUBJECT OF A CURRENTLY EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.  SEE SECTION 6.

 

The Trade Desk, Inc.

Warrant for Purchase of Preferred Shares

 

For value received, The Trade Desk, Inc. (the “Company”), a Delaware corporation, hereby certifies that Eastward Capital Partners V, L.P. or the permitted assign(s) of such entity (collectively, “Holder”) is entitled to purchase from the Company, 99,064 shares of the Series A-3 Preferred Stock of the Company, fully-paid and nonassessable, with a par value of U.S. $.00001 per share (the “Preferred Shares”), at any time or from time to time, but prior to 5:00 p.m. East Coast time on the earlier of (i) ten (10) years from the date this Warrant is executed (the “Original Issue Date”), (ii) three (3) years from the date of closing of any initial public offering of the Company’s common stock (the “Company’s IPO”), and (iii) the Company’s consummation of a Liquidity Event (as defined below); provided that the Company agrees to provide Holder at least ten (10) business days prior written notice of the occurrence of such event described in this subsection (iii) which notice shall provide reasonable details of such event (the “Expiration Date”), A “Liquidity Event” shall mean any of the following transactions in which the consideration payable to the stockholders of the Company consists solely of cash, securities issued by a business entity listed on the New York Stock Exchange or the National Association of Securities Dealers Automated Quotations System (“NASDAQ”), or any combination of the foregoing: (i) a merger or consolidation in which the Company is acquired by any business entity except any such merger or consolidation involving the Company in which the holders of capital stock of Lessee immediately prior to such merger or consolidation continue to hold immediately following such merger or consolidation at least 51%, by voting power and economic interest, of the capital stock of (1) the surviving or resulting corporation, or (2) if the surviving or resulting corporation is a wholly owned subsidiary of another corporation immediately following such merger or consolidation, the parent corporation of such surviving or resulting corporation; (ii) the sale, in a single transaction or series of related transactions, by the Company of all or substantially all the assets of the Company; or (iii) any transaction or series of related transactions that involves the sale or transfer, directly or indirectly, of the Company’s capital stock, as a result of which a majority of the issued and outstanding shares of the Company’s capital stock are not held of record by persons who were holders of the Company’s capital stock as of the date hereof, provided that a merger effected exclusively for the purpose of changing the domicile of the Company or an equity financing in which the Company is the surviving corporation shall not be a “Liquidity Event”.

 

The price per share for each such share purchased pursuant to an exercise of this Warrant shall be calculated as follows:

 

 

(A)                               The “Aggregate Exercise Price” of the Preferred Shares hereunder is $182,000.38.

 

(B)                               The Holder may purchase Preferred Shares at an exercise price of $1.8372 per share, subject to adjustment as hereinafter provided (the “Per Share Exercise Price”).

 

(Hereinafter: the term “Common Stock” shall refer to all shares of the capital common stock of the Company issued and outstanding at any time during the term of this Warrant, together with any other equity securities that the Company may issue in substitution for such shares other than Warrants: the term “Preferred Shares” shall refer to all shares of the Series A-3 Preferred Stock of the Company issued and outstanding at any time during the term of this Warrant, together with any other equity securities that the Company may issue in substitution for such shares other than Warrants; the term “Warrants” shall refer to this Warrant and all warrants issued in exchange or substitution for this Warrant; the term “Warrant Shares” shall refer to the Preferred Shares purchasable under Warrants.)

 

1.                                      Exercise of Warrant.

 

(A)                               Exercise of Warrant in Whole.  The Holder may exercise this Warrant in full at any time prior to 5:00 p.m. on the Expiration Date by surrendering it (with the subscription form at the end of this Warrant duly executed and indicating the whole number of Warrant Shares with respect to which the Holder shall then be exercising the Warrant) at the principal office of the Company at the time of exercise (currently 505 Poli Street, 5th Floor, Ventura, CA 93001), together with a certified, registered or bank cashier’s check drawn upon Boston clearinghouse funds in the amount of the Aggregate Exercise Price payable to the order of the Company (hereinafter, the term “Payment” shall mean payment in this manner).  Upon such exercise of this Warrant in full, the Holder shall receive: (i) a certificate or certificates in the name of the Holder for the largest number of whole Warrant Shares to which the Holder shall then be entitled: (ii) cash equal in value to any fractional share to which the Holder shall then be entitled (with the amount of such cash to be calculated in such reasonable manner as the board of directors of the Company shall determine); and (iii) the other securities and properties, if any, receivable pursuant to the provisions of this Warrant.  No fractional shares shall be issued to the Holder in respect of exercise of this Warrant.

 

(B)                               Exercise of Warrant in Part.  The Holder may exercise this Warrant in part at any time and from time to time prior to 5:00 p.m. on the Expiration Date, by surrendering it (with the subscription form at the end of this Warrant duly executed and indicating the whole number of Warrant Shares with respect to which the Holder shall then be exercising the Warrant) at the principal office of the Company at the time of exercise, together with Payment of that portion of the Aggregate Exercise Price that shall bear the same ratio to the total Aggregate Exercise Price as the number of Warrant Shares in respect of which this Warrant is then being exercised shall bear to the total number of Warrant Shares subject to this Warrant.  If this Warrant shall be exercised in part, it must be exercised for a whole number of Warrant Shares; and, upon such partial exercise, the Holder shall receive: (i) a new Warrant for the number of Warrant Shares in respect of which this Warrant has not been exercised (“Remaining Shares”), which new Warrant shall be identical in all other respects to this Warrant and which Warrant shall set forth the Aggregate Exercise Price applicable to the Remaining Shares: and (ii) the applicable proportion of the other securities and properties, if any, receivable pursuant to the provisions of this Warrant.

 

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2.                                      Conversion Right.

 

(A)                               In the event of a Liquidity Event or the Company’s IPO, in lieu of Payment of the Aggregate Exercise Price or any portion thereof, the Holder shall have the right (but not the obligation), to require the Company to convert this Warrant, in whole or in part, into shares of Preferred Shares (the “Conversion Right”) as provided for in this Section 2.  Upon exercise of the Conversion Right, the Company shall deliver to the Holder (without Payment by the Holder: provided, however, that the Holder shall be required to pay the par value for any shares of Preferred Shares so delivered) that number of shares of Preferred Shares equal to the quotient obtained by dividing (x) the value of the Warrant at the time the Conversion Right is exercised, by (y) the Fair Market Value of one share of Preferred Shares immediately prior to the exercise of the Conversion Right.  For purposes of this Section, the “value” of the Warrant shall be determined by subtracting the Aggregate Exercise Price in effect immediately prior to the exercise of the Conversion Right from the Aggregate Fair Market Value of the Warrant immediately prior to the exercise of the Conversion Right.

 

(B)                          The Conversion Right may be exercised by the Holder on any business day prior to 5:00 p.m. on the Expiration Date by delivering the Warrant, with the subscription form at the end of this Warrant to the Company duly executed and indicating that the Holder is exercising the Conversion Right and specifying the total number of shares of Preferred Shares the Holder will be issued pursuant to such conversion.

 

(C)                          Fair Market Value of one share of Preferred Shares as of a particular date (the “Determination Date”) shall mean:

 

(i)                                     If the Preferred Shares are listed on a national securities exchange, then the Fair Market Value shall be the average of the last ten “daily sales prices” of the Preferred Shares on the national securities exchange on which the Preferred Shares are listed or admitted for trading on the last ten business days prior to the Determination Date, or if not listed or traded on any such exchange, then the Fair Market Value shall be the average of the last ten “daily sales prices” of the Preferred Shares on the National Market or Small Cap Market of NASDAQ on the last ten business days prior to the Determination Date.  The “daily sales price” shall be the closing price of the Preferred Shares at the end of each day; or

 

(ii)                                  If the Preferred Shares are not so listed or admitted to unlisted trading privileges or if no such sale is made on at least nine of such days, then the Fair Market Value shall be the higher of (x) the book value per share, and (y) the fair value as reasonably determined in good faith by the Company’s Board of Directors or a duly appointed committee of the Board (which determination shall be reasonably described in the written notice delivered to the Holder together with the certificates for the Preferred Shares).

 

(D)                          As used herein, “Aggregate Fair Market Value of the Warrant” shall mean the Fair Market Value of one share of Preferred Shares multiplied by the Warrant Shares, all determined immediately prior to the exercise of the Conversion Right.

 

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3.                                      Reservation of Warrant Shares.  The Company agrees that the Company shall, at all times during the term of this Warrant, have the Warrant Shares and other securities and properties, if any, as from time to time shall be receivable upon the exercise of this Warrant authorized, in reserve, and available solely for issuance or delivery upon exercise of this Warrant, free and clear of all restrictions upon sale or transfer, except (a) such as may exist under the Company’s Certificate of Incorporation and By-Laws as constituted on the Original Issue Date: or (b) such as may exist or arise under agreements between the Holder, on the one hand, and the Company or others, on the other hand, with respect to the securities of the Company: and (c) such as may be imposed by applicable securities laws of any state, nation or political subdivision.

 

4.                                      Adjustments.  The rights of the Holder shall be subject to the following terms and conditions:

 

(A)                          Anti-Dilution Rights of Preferred Shares.  The Preferred Shares have certain anti-dilution protections contained in the Company’s Certificate of Incorporation (as the same may be amended from time to time), which protections may result in adjustments in the price and number of shares of Common Stock of the Company issuable upon conversion of the Preferred Shares of the Company which occur prior to the exercise of this Warrant.  Such antidilution protections shall not be restated, amended or modified in any manner which affects the Holder differently than the holders of Preferred Shares without such Holder’s prior written consent (it being acknowledged that an restatement, amendment or modification which relates to all shares Series A-3 Preferred Stock as a series, or all shares of the Company’s Preferred Stock as a class, shall not be deemed to affect the Holder differently than the holders of Preferred Shares).

 

(B)                          Adjustment to Per Share Exercise Price for Subdivision or Combination.  If the Company at any time or from time to time after the Original Issue Date subdivides (by any stock split, stock dividend, recapitalization or otherwise) the outstanding shares of the class of securities issuable upon exercise hereof into a greater number of shares, the Per Share Exercise Price in effect immediately before that subdivision shall be proportionately decreased.  If the Company at any time or from time to time after the Original Issue Date combines (by reverse stock split or otherwise) the outstanding shares of the class of securities issuable upon exercise hereof, the Per Share Exercise Price in effect immediately before the combination shall be proportionately increased.  Any adjustment under this paragraph shall become effective at the close of business on the date the subdivision or combination becomes effective.

 

(C)                          Adjustment in the Number of Shares for Subdivisions or Combinations.  Whenever the Per Share Exercise Price is adjusted pursuant to Section 4, the number of shares of the class of securities issuable upon exercise hereof also shall be adjusted.

 

(D)                          Adjustments for Certain Dividends and Distributions.  In the event that at any time or from time to time after the Original Issue Date the Company shall make or issue, or fix a record date for the determination of holders of the class of securities issuable upon exercise hereof who are entitled to receive a dividend or other distribution payable in securities of the Company, then and in each such event, unless such dividend or distribution

 

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results in an adjustment of the Per Share Exercise Price pursuant to Subsections 4(A) or 4(B), provision shall be made so that the Holder shall receive upon exercise hereof in addition to the securities receivable hereupon, the amount of securities of the Company that it would have received had this Warrant been exercised on the date of such event and had it thereafter, during the period from the date of such event to and including the exercise date, retained such securities receivable by it as aforesaid during such period, giving application during such period to all adjustments called for herein.

 

(E)                           Adjustment for Reclassification, Exchange, Substitution or Conversion.  In the event that at any time or from time to time after the Original Issue Date, the class of securities issuable upon the exercise of this Warrant shall be changed into the same or a different number of shares of any class or classes of stock, whether by capital reorganization, reclassification., or otherwise (other than a subdivision or combination of shares or stock dividend provided for above, or a merger, consolidation, or sale of assets provided for below), including by conversion of all of the Series A-3 Preferred Stock to Common Stock in accordance with the terms of the Company’s Certificate of Incorporation, then and in each such event the Holder shall have the right thereafter to exercise this Warrant for the kind and amount of shares of stock and other securities and property receivable upon such reorganization, reclassification, conversion, or other change, by holders of the number of shares of the class of securities into which such Warrant might have been exercisable for immediately prior to such reorganization, reclassification, conversion, or change, all subject to further adjustment as provided herein.

 

(F)                            Adjustment for Merger Consolidation or Sale of Assets.  In the event that at any time or from time to time after the Original Issue Date, the Company shall merge or consolidate with or into another entity or sell all or substantially all of its assets in a transaction that does not constitute a Liquidity Event, this Warrant shall thereafter be exercisable for the kind and amount of shares of stock or other securities or property to which a holder of the number of shares of the class of securities of the Company deliverable upon exercise of this Warrant would have been entitled upon such consolidation, merger or sale; and, in such case, appropriate adjustment (as determined in good faith by the Company’s Board of Directors) shall be made in the application of the provisions set forth in this Section 4 with respect to the rights and interest thereafter of the Holder, to the end that the provisions set forth in this Section 4 (including provisions with respect to changes in and other adjustments of the Per Share Exercise Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other property thereafter deliverable upon the exercise of this Warrant.

 

(G)                          No Impairment.  The Company shall not, by amendment of its Certificate of Incorporation, as in effect on the date hereof, or By-Laws or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company but shall at all times in good faith assist in the carrying out of all the provisions of this Section 4 and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder against impairment.

 

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(H)                         Notice of Adjustment of Number of Shares.  Upon any adjustment, readjustment or other change relating to the number of shares purchasable upon exercise of this Warrant or to the Per Share Exercise Price or the conversion rate between the Preferred Shares and the Common Stock, then, and in each such case, the Company shall give written notice thereof, which notice shall state the Per Share Exercise Price resulting from such adjustment and the increase or decrease in the number of shares (or other denominations of securities) purchasable at the Per Share Exercise Price upon the exercise of this Warrant setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based.

 

(I)                              Notice.  In case at any time: (1) the Company shall pay any dividend or make any distribution (other than regular cash dividends from earnings or earned surplus paid at an established rate) to the holders of the class of securities issuable upon exercise of this Warrant; (2) the Company shall offer for subscription pro rata to the holders of the class of securities issuable upon exercise of this Warrant any additional shares of stock of any class or other rights; (3) there shall be any capital reorganization or reclassification of the capital stock of the Company, or consolidation or merger of the Company with or sale of all or substantially all of its assets to another corporation; or (4) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company; then, in any one or more of such cases, the Company shall give written notice of the date on which (a) the books of the Company shall close or a record date shall be fixed for determining the shareholders entitled to such dividend, distribution or subscription right, or (b) such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up shall take place, as the case may be.  Such notice shall also provide reasonable details of the proposed transaction and specify the date as of which the holders of record of the class of securities issuable upon exercise of this Warrant shall participate in such dividend, distribution or subscription right, or shall be entitled to exchange their securities for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale.  dissolution, liquidation or winding up, as the case may be.  Such written notice shall be given at least 10 days prior to the action in question and not less than 10 days prior to the record date or the date on which the Company’s transfer books are closed in respect thereto.

 

(J)                              No Change Necessary.  The form of this Warrant need not be changed because of any adjustment in the Per Share Exercise Price or in the number of shares issuable upon its exercise.  A Warrant issued after any adjustment on any partial exercise or upon replacement may continue to express the same Per Share Exercise Price and the same number of shares (appropriately reduced in the case of partial exercise) as are stated on this Warrant as initially issued, and that Per Share Exercise Price and that number of shares shall be considered to have been so changed as of the close of business on the date of adjustment.

 

5.                                 Fully-Paid Shares; Taxes.  The Company covenants that the Preferred Shares represented by each and every certificate for Warrant Shares delivered upon exercise of this Warrant shall, at the time of such delivery, be duly authorized, validly-issued and outstanding, and fully-paid and nonassessable, and that the Company shall take any and all such actions as may be necessary to ensure that the par value or stated value, if any, of each Warrant Share is at all times equal to or less than the then Per Share Exercise Price; and that it will pay when due and payable any and all stamp, original issue or similar taxes that may be payable in respect of issuance of any Warrant Shares or certificates for Warrant Shares.

 

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6.                                      Restrictions upon Transfer.  Each holder of this Warrant acknowledges that this Warrant and the Warrant Shares have not been registered under the Securities Act of 1933, as now in force or hereafter amended, or any successor legislation (the “Act”), and agrees not to sell, pledge, distribute, offer for sale, transfer or otherwise dispose of this Warrant or any Warrant Shares issued upon its exercise in the absence of (a) an effective registration statement under the Act as to this Warrant or such Warrant Shares and registration or qualification of this Warrant or such Warrant Shares under any applicable Blue Sky or state securities law then in effect, or (b) an opinion of counsel, satisfactory to the Company, that such registration and qualification are not required.  Any transfer of this Warrant or the Warrant Shares will be made at no cost to the Holder.

 

Without limiting the generality of the foregoing, unless the offering and sale of the Warrant Shares to be issued upon the particular exercise of the Warrant shall have been effectively registered under the Act, the Company shall be under no obligation to issue the shares covered by such exercise unless and until the Holder shall have executed an investment letter in form and substance satisfactory to the Company, including a warranty at the time of such exercise that it is acquiring such shares for its own account, for investment and not with a view to, or for sale in connection with, the distribution of any such shares, in which event the Holder shall be bound by the provisions of the following legend or a legend in substantially similar form which shall be endorsed upon the certificate(s) evidencing the Warrant Shares issued pursuant to such exercise:

 

The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended (the “Act”), or any state securities laws, have been acquired for investment, and may not be sold, pledged, hypothecated or otherwise transferred unless a registration statement under the Act and applicable state law is in effect with regard thereto or unless an exemption from such registration is available.

 

In addition, without limiting the generality of the foregoing, the Company may delay issuance of the Warrant Shares until completion of any action or obtaining of any consent, which the Company deems necessary under any applicable law (including without limitation state securities or “blue sky” laws).

 

In addition, Holder agrees that, other than with respect to an affiliate of Holder, this Warrant may not be assigned or transferred by it in whole or in part without the prior written consent of the Company (not to be unreasonably withheld).

 

7.                                      Accredited Investor; No Distribution.  The Holder, by acceptance hereof, represents and warrants that (i) it is an “accredited investor” as that term is defined in Rule 501 under the Act; and (ii) it is acquiring this Warrant without a view to, or for sale in connection with, a distribution thereof and not with a view to its resale, and that this Warrant has been acquired for the Holder’s own account and not with a view to its division among others, and that no other person has any direct or indirect beneficial interest in this Warrant.  Notwithstanding the foregoing, the Company agrees that the Holder shall have the right to grant participation interests in the Warrant.

 

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8.                                      Registration Rights; Market Standoff; Voting Agreement.

 

(A)                               The Holder shall be entitled, with respect to (i) its Warrant Shares and other securities issued or issuable upon exercise of this Warrant and (ii) any securities issued or issuable with respect to any Preferred Shares or other securities referred to in subdivision (i) by way of a stock dividend or stock split or in connection with a combination or other reorganization or otherwise, to the piggyback registration rights afforded to the holders of Preferred Shares (but not the right to demand a registration), all as set forth in that certain Amended and Restated Investor Rights Agreement dated as of May 10, 2012 (as the same may be amended from time to time in accordance with its terms, the “Registration Rights Agreement”), as such agreement may be amended or restated.  Except as may be otherwise provided in the Registration Rights Agreement, the right to have the Company register such securities pursuant to such agreement shall be automatically assigned to transferees or assignees of this Warrant or such securities, provided that immediately following such transfer or assignment, the further disposition of such securities by the transferee or assignee would be subject to restrictions under the Act.

 

(B)                               In connection with the initial public offering of the Company’s securities in a firm commitment underwritten offering, and upon request of the Company or the underwriters managing such initial public offering, Holder agrees not to sell, make any short sale of, loan, grant any option for the purchase of or otherwise dispose of any securities of the Company held immediately prior to the effectiveness of the Registration Statement for such offering (other than those included in the registration) without the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed 180 days or such longer period of time as may be required to comply with Rule 2711 of the Financial Industry Regulatory Authority, Inc. (or any successor rule thereto)) from the effective date of such registration statement as may be requested by the Company or such managing underwriters and to execute an agreement reflecting the foregoing as may be requested by the underwriters at the time of the Company’s initial public offering.  The provisions of this section shall not apply to the sale of any shares to an underwriter pursuant to an underwriting agreement.  The provisions of this section shall apply to Holder only if all officers and directors of the Company are subject to substantially similar restrictions and any discretionary waiver or termination of such restrictions with respect to any officers or directors of the Company shall apply pro rata to Holder, based on the number of shares subject to such agreements between Holder and such officer or director.  The underwriters in connection with such offering are intended third-party beneficiaries of this section and shall have the right, power, and authority to enforce the provisions hereof as though they were a party hereto.  Holder further agrees to execute such agreements as may be reasonably requested by the underwriters in connection with such offering that are consistent with this section or that are necessary to give further effect hereto.  The Company may impose stop-transfer instructions with respect to the securities of Holder in order to enforce the foregoing covenant.  This Section 8(B) shall be binding on any Holder or successor, assign or transferee of the Warrant or the Preferred Shares.

 

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Holder agrees that prior to the Company’s initial public offering it will not transfer securities of the Company unless each transferee agrees in writing to be bound by all of the provisions of this Section 8(B) provided that this Section 8(B) shall not apply to transfers pursuant to a registration statement.

 

(C)                               Upon any exercise of this Warrant (other than an exercise contingent upon the Company’s IPO or a Liquidity Event in which the Voting Agreement would terminate by its terms), and as a condition thereto, the Holder shall agree in writing, in a form reasonably satisfactory to the Company, to be bound by and subject to the terms of that certain Amended and Restated Voting Agreement dated as of May 10, 2012 by and among the Company and certain of its stockholders, as the same may be amended from time to time in accordance with its terms (the “Voting Agreement”), having all the rights and obligations of a “Stockholder thereunder.

 

9.                                      Books of the Company.  The Company may treat the Holder of this Warrant as appearing on the Company’s books at any time as the Holder for all purposes.

 

10.                               Loss, Theft, Destruction or Mutilation of Warrant.  If this Warrant shall be lost, stolen, destroyed, or mutilated, the Company shall execute and deliver to the Holder a replacement warrant of like date, tenor, and denomination upon receipt by the Company of (a) evidence satisfactory to the Company of the occurrence of such event, (b) reimbursement of the Company’s reasonable incidental expenses, and (c) (i) in the event of mutilation, upon surrender and cancellation of this Warrant, or (ii) in the event of loss, theft, or destruction of this Warrant, of indemnity reasonably satisfactory to the Company.

 

11.                               Holder Not Shareholder.  Except as may otherwise be expressly provided in this Warrant, this Warrant does not, prior to its exercise, confer upon the Holder any right to vote, or to consent, or to receive notice, or otherwise to act, as a shareholder of the Company in respect of any matters whatsoever, or confer or impose upon the Holder any other rights or liabilities of a shareholder of the Company, but upon presentation of this Warrant with the subscription form annexed duly executed and the tender of Payment of the Exercise Price at the office of the Company pursuant to the provisions of this Warrant, the Holder shall forthwith be deemed a stockholder of the Company in respect of the securities so subscribed and paid for.

 

12.                               Notices and Other Communications.  Any notice or other communication under this Warrant shall be effective and shall be deemed to have been given if, and only if, the same shall have been given in writing and mailed by first-class mail, postage prepaid, addressed to:

 

(A)                               the Company at the address set forth in Section 1(A) above, or such other address as the Company may designate in writing to the Holder, or

 

(B)                               the Holder at 432 Cherry Street, West Newton, MA 02465, or such other address as the Holder may designate in writing to the Company.

 

13.                               Headings.  The headings contained in this Warrant have been inserted as a matter of convenience, do not form part, and shall not affect construction of, this Warrant.

 

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14.                               Applicable Law.  This Warrant shall be governed by and construed in accordance with the laws of The Commonwealth of Massachusetts applicable to contracts wholly made, accepted and performed within that jurisdiction, without application of principles of conflict of laws.

 

15.                               Confidentiality.  Holder agrees to maintain the confidentiality of, and not to disclose to any person or use, any financial, business or other information provided to Holder hereunder other than as permitted pursuant to that certain Mutual NonDisclosure Agreement between the parties effective as of December 20, 2012.

 

The Company has caused this Warrant to be executed by its President and attested by its Secretary or Assistant Secretary this 28 day of March, 2013.

 

	
 
    	
The   Trade Desk, Inc.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Jeffrey Green
    
	
 
    	
 
    	
President
    

 

10

 

SUBSCRIPTION

 

	
 
    	
 
    	
Date:
    	
 
    

 

To:

 

The undersigned, pursuant to the provisions set forth in the attached Warrant hereby irrevocably elects to purchase        shares of the Preferred Shares (the “Preferred Shares”) covered by such Warrant and herewith makes payment of $          representing the [full/partial] purchase price for such shares at the price per share provided for in such Warrant.

 

The undersigned is aware that the Preferred Shares have not been registered under the Securities Act of 1933, as amended (the “1933 Act”) or any state securities laws.  The undersigned understands that the reliance by the Company on exemptions under the 1933 Act is predicated in part upon the truth and accuracy of the statements of the undersigned in this Subscription.

 

The undersigned represents and warrants that (1) it has been furnished with all information which it deems necessary to evaluate the merits and risks of the purchase of the Preferred Shares; (2) it has had the opportunity to ask questions concerning the Preferred Shares and the Company and all questions posed have been answered to its satisfaction; (3) it has been given the opportunity to obtain any additional information it deems necessary to verify the accuracy of any information obtained concerning the Preferred Shares and the Company; and (4) it has such knowledge and experience in financial and business matters that it is able to evaluate the merits and risks of purchasing the Preferred Shares and to make an informed investment decision relating thereto.

 

The undersigned hereby represents and warrants that it is purchasing the Preferred Shares for its own account and not with a view to the sale or distribution of all or any part of the Preferred Shares.

 

The undersigned understands that because the Preferred Shares have not been registered under the 1933 Act, it must continue to bear the economic risk of the investment for an indefinite time and the Preferred Shares cannot be sold unless the Preferred Shares are subsequently registered under applicable federal and state securities laws or an exemption from such registration is available.

 

The undersigned agrees that it will in no event sell or distribute or otherwise dispose of all or any part of the Preferred Shares unless (1) there is an effective registration statement under the 1933 Act and applicable state securities laws covering any such transaction involving the Preferred Shares or (2) the Company receives an opinion of legal counsel to the undersigned (concurred in by legal counsel for the Company) stating that such transaction is exempt from registration or the Company otherwise satisfies itself that such transaction is exempt from registration.

 

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The undersigned acknowledges and agrees that it is subject to the market standoff provisions set forth in Section 8(B) of the Warrant and that it has certain rights and obligations under the Voting Agreement.

 

The undersigned consents to the placing of a legend on its certificate for the Preferred Shares stating that (i) the Preferred Shares have not been registered and setting forth the restriction on transfer contemplated hereby and to the placing of a stop transfer order on the books of the Company and with any transfer agents against the Preferred Shares until the Preferred Shares may be legally resold or distributed without restriction: (ii) the Preferred Shares are subject to a market standoff agreement that restricts the transfer of the Preferred Shares for a period of time following the Company’s initial public offering; and (iii) any legend required by the Voting Agreement, if applicable.

 

The undersigned has considered the Federal and state income tax implications of the exercise of the Warrant and the purchase and subsequent sale of the Preferred Shares.

 

	
 
    	
Eastward   Capital Partners V, L.P.
    
	
 
    	
 
    
	
 
    	
By:
    	
Eastward   Capital Partners V GP. L.P.,
    
	
 
    	
 
    	
its   General Partner
    
	
 
    	
 
    
	
 
    	
 
    	
By:
    	
ECP   V GP, LLC, its General Partner
    
	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Managing Member
    
	
 
    	
 
    
	
 
    	
 
    	
Date:
    	
 
    
					

 

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