EXHIBIT 10.31
AMENDMENT
TO THE
STOCK SUBSCRIPTION WARRANT
This Amendment dated November 19, 1999 between Net2Phone Inc. (the
"Corporation") and America Online, Inc. ("AOL"), is intended to and does amend
certain sections of the Stock Subscription Warrant between the Corporation and
AOL, dated July 15, 1999 (the "Warrant").
WHEREAS, the parties desire to amend certain sections of the Warrant;
NOW, THEREFORE, in consideration of the promises and the respective
covenants and agreements of the parties herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Section 1(a) of the Warrant is hereby amended to read as follows:
THIS CERTIFIES that, for value received, AMERICA ONLINE, INC. ("AOL")
or its assigns, is entitled to subscribe for and purchase from
NET2PHONE, INC., a Delaware corporation (the "Corporation"), at any
time or from time to time during the period (the "Exercise Period")
commencing with the date hereof and ending on November 19, 2004, on
the terms and subject to the provisions hereinafter set forth, up to
a maximum of that number of shares (subject to adjustment as provided
herein) (the "Warrant Shares") of fully paid and non-assessable
shares of Common Stock, $.01 par value, of the Corporation (the
"Common Stock") as shall be determined in accordance with the
provisions of Section 1(b) and Section 1(c) hereof and Exhibit A
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hereto that shall constitute three and one half percent (3.5%) of the
number of shares of voting capital stock of the Corporation
outstanding on the date of exercise or exchange of this Warrant after
giving effect to the exercise, exchange or conversion of all
outstanding securities, rights, options, warrants (including this
Warrant), calls, commitments or agreements of any nature or character
(whether debt or equity) 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 or other arrangement to acquire at
any time or under any circumstance, voting capital stock of the
Corporation or any such other securities and assuming that all stock
options and/or shares of capital stock reserved for grant or issuance
to officers, directors, employees and consultants under all
agreements, plans or arrangements theretofore approved by the Board
of Directors of the Corporation have been so granted or issued (as
the case may be) (collectively, the "Fully-Diluted Shares"). The
price per share (the "Warrant Price") for the Warrant Shares shall be
(i) with respect to the Warrant Shares described on Exhibit A in
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provisions (A), (B) and (C), a price per share determined on the
Designated Date (as hereinafter defined) (subject to adjustment as
set forth in Section 4 hereof) of the lesser of (A)
$12 per share or (B) $450,000,000 divided by the number of Fully
Diluted Shares on the Designated Date, and (ii) with respect to the
Warrant Shares described on Exhibit A in provision (D), 95.5% of the
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closing price per share of the Corporation's common stock on The
Nasdaq National Market (as reported in the Wall Street Journal)
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on November 19, 1999 (subject to adjustment as set forth in Section 4
hereof). As used herein, the term "Designated Date" shall mean the
date on which the holder of this Warrant shall first deliver notice of
its intention to exercise or exchange this Warrant, in whole or in
part, pursuant to the terms hereof (including Exhibit A). Upon receipt
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of any notice of exercise the Corporation shall certify to the holder
of this Warrant in writing (i) the number of Warrant Shares being
issued to the holder of this Warrant pursuant to its exercise thereof,
(ii) the Warrant Price and (iii) the basis for such calculations;
provided, that the failure of the Corporation to deliver such
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certification shall not effect the validity or terms of this Warrant
or derogate from the rights of the holder hereunder. This Warrant is
being issued pursuant to an IP Telephony Services Distribution and
Interactive Marketing Agreement dated as of July 15, 1999 (the "ICQ
Agreement"), between the Corporation and ICQ, Inc., a Delaware
corporation, and an IP Telephony Services Distribution and Interactive
Marketing Agreement dated as of November 19, 1999 (the "AIM
Agreement," and collectively, the "Agreements"), between the
Corporation and AOL. All terms used but not defined herein shall have
the meanings set forth in the Agreements.
2. Section 1(b) of the Warrant is hereby amended to read as follows:
This Warrant shall become exercisable as to that number of Warrant
Shares, and at such times, as are determined in accordance with
Exhibit A attached hereto; provided, however, that this Warrant shall
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become exercisable as to all of the Warrant Shares immediately upon
the occurrence of a Stipulated Event. As used herein, the term
"Stipulated Event" shall mean (a) a Corporate Transaction (as
hereinafter defined) or (b) a termination of either of the Agreements
that results from a material breach by the Corporation of such
Agreement (except for a termination pursuant to Section 16.6(i)(c) or
Section 16.6(i)(d) of such Agreement). "Corporate Transaction" means
(A) any consolidation or merger of the Corporation with or into any
other corporation or other entity, other than any merger or
consolidation resulting in the holders of the capital stock of the
Corporation entitled to vote for the election of directors holding a
majority of the capital stock of the surviving or resulting
corporation or other entity entitled to vote for the election of
directors, (B) subject to subsection (b)(D) below, any person or
entity (including any affiliates thereof) becoming the holder of a
majority of the capital stock of the Corporation entitled to vote for
the election of directors, (C) any sale or other disposition by the
Corporation of all or substantially all of its assets or capital stock
or (D) IDT Corporation becoming the beneficial owner of
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greater than seventy-five percent (75.0%) of the outstanding capital
stock of the Corporation.
3. The first paragraph of Section 4(a) of the Warrant is hereby amended to
read as follows:
The Warrant Price with respect to the Warrant Shares for which this
Warrant may be exercised shall be subject to adjustment as described
below (i) at any time after the Designated Date with respect to the
Warrant Shares described on Exhibit A in provisions (A), (B) and (C),
and (ii) at any time with respect to the Warrant Shares described on
Exhibit A in provision (D):
4. Section 9 of the Warrant is hereby amended to read as follows:
Transfer of Warrant; Amendment. Subject to the restriction set forth
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in Section 7, this Warrant and all rights hereunder are transferable,
in whole, or in part, at the agency or office of the Corporation
referred to in Section 2, by the holder hereof in person or by duly
authorized attorney, upon surrender of this Warrant properly endorsed;
provided that, the transferor and transferee shall promptly notify the
Corporation of a transfer of the warrant. Notwithstanding the
foregoing, this Warrant may not be transferred to any N2P Competitor
or IDT Competitor, as those terms are defined in the Agreements. 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 Corporation and all 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 Corporation, any notice to
the contrary notwithstanding; but until each transfer on such books,
the Corporation may treat the registered holder hereof as the owner
hereof for all purposes.
5. Section 13 of the Warrant is hereby amended to read as follows:
Notices. All notices, advices and communications to be given or
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otherwise made to any party to this Warrant shall be deemed to be
sufficient if contained in a written instrument delivered in person or
by telecopier or duly sent by first class registered or certified
mail, return receipt requested, postage prepaid, or by overnight
courier, or by electronic mail, with a copy thereof to be sent by mail
(as aforesaid) within 24 hours of such electronic mail, addressed to
such party at the address set forth below or at such other address as
may hereafter be designated in writing by the addressee to the
addresser listing all parties:
If to the Corporation, to:
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Net2Phone, Inc.
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
e-mail address: ▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇; ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
e-mail address: ▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇
and
If to AOL as follows:
America Online, Inc.
▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel and Senior Vice President, Business
Affairs
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇ and (▇▇▇) ▇▇▇-▇▇▇▇
e-mail address: ▇▇▇▇▇▇@▇▇▇.▇▇▇, ▇▇▇▇▇@▇▇▇.▇▇▇
Or to such other address as the party to whom notice is to be given
may have furnished to the other parties hereto in writing in
accordance herewith. Any such notice or communication shall be deemed
to have been delivered and received (i) in the case of personal
delivery or delivery by telecopier, on the date of such delivery, (ii)
in the case of nationally-recognized overnight courier, on the next
business day after the date when sent and (iii) in the case of
mailing, on the third business day following that on which the piece
of mail containing such communication is posted. As used in this
Section 14, "business day" shall mean any day other than a day on
which banking institutions in the Commonwealth of Virginia are legally
closed for business.
6. The first sentence of Exhibit A to the Warrant is hereby amended to read
as follows:
The Warrant Shares shall vest, during the period commencing on July
15, 1999 and ending on November 19, 2003, as follows:
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7. The chart in Exhibit A to the Warrant is hereby amended with the
addition of the following:
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(D) 0.5% of Fully Diluted Shares Once aggregate Transaction Revenues, Net
Advertising Revenue and N2P's share of
Net Button Advertising Revenue exceed
One Hundred Million Dollars
(US$100,000,000)
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The terms Transaction Revenues, Net Advertising Revenue and N2P's
share of Net Button Advertising Revenue in this Exhibit A shall
include revenues derived from both of the Agreements and shall be
aggregated for the purposes of determining whether each of the revenue
thresholds have be met.
8. Section 2(e) of Exhibit B to the Warrant is hereby amended to read as
follows:
The obligations of the Corporation under this Section 2 shall not
apply to (i) a public offering of Equity Securities of the Corporation
registered pursuant to the Securities Act (an "IPO"), (ii) a Corporate
Transaction (as defined in the Warrant), (iii) issuances of capital
stock pursuant to Section 5 of the Series A Subscription Agreement,
dated as of May 13, 1999, among the Corporation, AOL and certain other
investors in the Corporation, or (iv) up to 11,040,000 shares of
Common Stock issued pursuant to the Corporation's 1999 Stock Option
and Incentive Plan. The obligations of the Corporation under this
Section 2 shall expire upon the consummation of an underwritten public
offering of Common Stock of the Corporation registered pursuant to the
Securities Act of 1933, as amended, resulting in aggregate cash
proceeds (prior to underwriters' commissions and expenses) of more
than $15,000,000.
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IN WITNESS WHEREOF, the undersigned have caused this Amendment to the Stock
Subscription Warrant to be executed by their duly authorized officers on the
date first above written.
NET2PHONE, INC.
By: ______________________________
Name:
Title:
ATTEST: ___________________________
Secretary
AMERICA ONLINE, INC.
By: ______________________________
Name:
Title:
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