Exhibit 10.20
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREUNDER AND IN
COMPLIANCE WITH APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.
WORLDGATE COMMUNICATIONS, INC.
WARRANT
Dated: March 2, 1999
WorldGate Communications, Inc., a Delaware corporation (the
"Company"), hereby certifies that, for value received, Strong River
Investment, Inc. or its registered assigns ("Holder"), is entitled, subject
to the terms set forth below, to purchase from the Company up to a total of
such number of shares of Common Stock, $.01 par value per share (the "Common
Stock"), of the Company (each such share, a "Warrant Share" and all such
shares, the "Warrant Shares") as shall equal the quotient obtained by
dividing 2,734,800 (the "Invested Amount") by the lower of (i) 16.50 and (ii)
the per share price at which the Common Stock is offered to the public in the
Initial Public Offering (as hereinafter defined) (the "IPO Price") at a U.S.
dollar ($) exercise price per share equal to the lower of (i) 16.50 and (ii)
the IPO Price (as adjusted from time to time pursuant to the terms hereunder,
the "Exercise Price"), at any time and from time to time from and after the
date hereof and through and including the date which shall be the later of
(i) three (3) years from the date hereof and (ii) thirty (30) months from the
date of the closing of the Initial Public Offering, but in no event later
than March 2, 2004 (such date, the "Expiration Date"), and subject to the
following terms and conditions:
1. REGISTRATION OF WARRANT. The Company shall register this Warrant,
upon records to be maintained by the Company for that purpose (the "Warrant
Register"), in the name of the record Holder hereof. The Company may deem and
treat the registered Holder of this Warrant as the absolute owner hereof for the
purpose of any exercise hereof or any distribution to the Holder, and for all
other purposes, and the Company shall not be affected by notice to the contrary.
2. REGISTRATION OF TRANSFERS AND EXCHANGES.
(a) Subject to the provisions of Section 15 hereof, the Company shall
register the transfer of any portion of this Warrant by the Holder to any
affiliate or affiliates of the Holder or any fund or funds under common
management with the Holder (collectively, the "PERMITTED TRANSFEREES") or among
the Permitted Transferees in the Warrant Register, upon surrender of this
Warrant, with the Form of Assignment attached hereto duly completed and signed,
to the Transfer Agent or to the Company at the office specified in or pursuant
to Section 3(b) PROVIDED, that the Company's consent shall be required for any
transfer other than to Permitted Transferees. Upon any such registration or
transfer, a new warrant to purchase Common Stock, in substantially the form of
this Warrant (any such new warrant, a "New Warrant"), evidencing the portion of
this Warrant so transferred shall be issued to the transferee and a New Warrant
evidencing the remaining portion of this Warrant not so transferred, if any,
shall be issued to the transferring Holder. The acceptance of the New Warrant by
the transferee thereof shall be deemed the acceptance of such transferee of all
of the rights and obligations of a holder of a Warrant.
(b) This Warrant is exchangeable, upon the surrender hereof by the
Holder to the office of the Company specified in or pursuant to Section 3(b) for
one or more New Warrants, evidencing in the aggregate the right to purchase the
number of Warrant Shares which may then be purchased hereunder. Any such New
Warrant will be dated the date of such exchange.
3. DURATION AND EXERCISE OF WARRANT.
(a) This Warrant shall be exercisable by the registered Holder on any
business day before 4:00 P.M., New York City time, at any time and from time to
time, on or after the date hereof to and including the Expiration Date. At 4:00
P.M., New York City time on the Expiration Date, the portion of this Warrant not
exercised prior thereto shall be and become void and of no value. Prior to the
Expiration Date, the Company may not call or otherwise redeem this Warrant
without the prior written consent of the Holder.
(b) Subject to Sections 2(a), 6 and 10, upon surrender of this
Warrant, with the Form of Election to Purchase attached hereto duly completed
and signed, to the Company at its address for notice set forth in Section 12 and
upon payment of the Exercise Price multiplied by the number of Warrant Shares
that the Holder intends to purchase hereunder, in the manner provided hereunder,
all as specified by the Holder in the Form of Election to Purchase, the Company
shall promptly (but in no event later than five (5) business days after the Date
of Exercise (as defined herein)) issue or cause to be issued and cause to be
delivered to or upon the written order of the Holder and in such name or names
as the Holder may designate, a certificate for the Warrant Shares issuable upon
such exercise. Any person so designated by the Holder to receive Warrant Shares
shall be deemed to have become holder of record of such Warrant Shares as of the
Date of Exercise of this Warrant.
A "Date of Exercise" means the date on which the Company shall have
received (i) this Warrant (or any New Warrant, as applicable), with the Form of
Election to Purchase attached hereto (or attached to such New Warrant)
appropriately completed and duly signed, and (ii)
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payment of the Exercise Price for the number of Warrant Shares so indicated
by the Holder to be purchased.
(c) This Warrant shall be exercisable, either in its entirety or, from
time to time, for a portion of the number of Warrant Shares. If less than all of
the Warrant Shares which may be purchased under this Warrant are exercised at
any time, the Company shall issue or cause to be issued, at its expense, a New
Warrant evidencing the right to purchase the remaining number of Warrant Shares
for which no exercise has been evidenced by this Warrant.
4. LOCK-UP. The Holder shall agree not to effect any public sale or
distribution of securities of the same class as those being registered or a
similar security of the Company, or any securities convertible into or
exchangeable or exercisable for such securities, including a sale pursuant to
Rule 144, during the 14 days prior to, and during the 180-day period (or such
lesser period as may be determined by the Company in its sole discretion)
beginning on, the effective date of any registration statement filed by the
Company under the Securities Act registering its securities for sale by the
Company to the public in an underwritten public offering, PROVIDED, that the
Company shall obtain from all directors and officers of the Company and all
affiliates of such directors and officers, all affiliates of the Company and all
other similarly situated holders of warrants or convertible securities of the
Company their agreement that they will also defer the sale of their shares
(except as part of the registration) for the same period.
5. REGISTRATION RIGHTS. (a) No later than the first business day
following the 150th day immediately following the date of the closing of the
Initial Public Offering, the Company shall file a "shelf" registration
statement, naming the Holders as selling stockholders thereunder, registering
for resale under the Securities Act all the Warrant Shares (such shares, the
"Eligible Securities"). The Company shall use its best efforts to cause such
registration statement to (i) be declared effective as promptly as possible, but
in any case within 180 days after the date of the closing of the Initial Public
Offering, and (ii) remain effective until the earlier of the date all of the
Warrant Shares have been sold in accordance with such registration statement or
the Expiration Date, PROVIDED, that if such registration statement has not been
declared effective by the 240th day after the date of the closing of the Initial
Public Offering (the "Liquidated Damages Date"), the Company shall pay to the
Holder (i) on the Liquidated Damages Date, 1% of the Invested Amount in cash, as
liquidated damages and not as a penalty, (ii) on the first month anniversary of
the Liquidated Damages Date, if such registration statement has not been
declared effective as of such date, an additional 1% of the Invested Amount in
cash, as liquidated damages and not as a penalty, and thereafter (iii) on each
monthly anniversary of the Liquidated Damages Date on which such registration
statement has not been declared effective, an additional 2% of the Invested
Amount in cash, as liquidated damages and not as a penalty PROVIDED, FURTHER,
that the Company shall not be obligated to pay aggregate liquidated damages
under this Section 5(a) in excess of $500,000. In any registration effectuated
under this Section 5, the Company will pay all registration expenses in
connection therewith other than the fees and expenses of the Holder's counsel,
underwriting discounts and commissions, brokerage commissions, non-accountable
expense allowances
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attributable to the sale of the Holder's Eligible Securities and the Holder's
other out-of-pocket expenses.
(b) The Company's obligations under this Section shall terminate when
Holder may sell or otherwise transfer the Eligible Securities without
registration under the Securities Act by virtue of Rule 144, without limitation
as to volume of sales.
(c) Holder may not participate in any underwritten registration
hereunder unless Holder (i) agrees to sell its securities on the basis provided
in any underwriting arrangements approved by the Company, and (ii) completes and
executes all questionnaires, custody agreements, powers of attorney,
indemnities, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements.
(d) Following the filing of a registration statement registering the
Eligible Securities of Holder and during any period that the registration
statement is effective, Holder shall:
(i) not effect any stabilization transactions or engage in any
stabilization activity in connection with any securities of the
Company in contravention of Regulation M under the Exchange Act;
(ii) furnish each broker or dealer through whom Holder offers
Eligible Securities such number of copies of the prospectus as the
broker may require and otherwise comply with prospectus delivery
requirements under the Securities Act;
(iii) not, and shall not permit any Affiliated Purchaser (as that
term is defined in Regulation M under the Exchange Act) to, bid for or
purchase for any account in which Holder has a beneficial interest, or
attempt to induce any other person to purchase, any securities of the
Company in contravention of Regulation M under the Exchange Act;
(iv) not offer or agree to pay, directly or indirectly, to anyone
any compensation for soliciting another to purchase, or for purchasing
(other than for Holder's own account), any securities of the Company
on a national securities exchange in contravention of Regulation M
under the Exchange Act;
(v) cooperate with the Company as the Company fulfills its
obligations under this Section;
(vi) furnish such information concerning Holder and the
distribution of the Eligible Securities as the Company may from time
to time reasonably request;
(vii) sell Eligible Securities only in the manner described in the
registration statement; and
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(viii) not sell Eligible Securities during any period after the
Company has provided notice (the "Blackout Notice") to Holder of the
happening of any event as a result of which the prospectus included in
the registration statement contains an untrue statement of a material
fact or omits to state any material fact required to be stated therein
or necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading, and until
the Company provides notice to Holder that the registration statement
no longer fails to state a material fact required to be stated
therein, misstates a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements made
not misleading, PROVIDED, that, the Company shall, no later than forty
(40) days from the submission to the Holder of any Blackout Notice,
modify and amend the registration statement and the prospectus
included therein such that it no longer fails to state a material fact
required to be stated therein, misstates a material fact or omits to
state a material fact required to be stated therein or necessary to
make the statements made not misleading. The Company will pay all
registration expenses in connection therewith other than the fees and
expenses of Holder's counsel, underwriting discounts and commissions,
brokerage commissions, non-accountable expense allowances attributable
to the sale of Holder's Eligible Securities, and Holders' other out of
pocket expenses.
6. PAYMENT OF TAXES. The Company will pay all documentary stamp taxes
attributable to the issuance of Warrant Shares upon the exercise of this
Warrant; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the registration
of any certificates for Warrant Shares or Warrants in a name other than that of
the initial Holder. The Holder shall be responsible for all other tax liability
that may arise as a result of holding or transferring this Warrant or receiving
Warrant Shares upon exercise hereof.
7. REPLACEMENT OF WARRANT. If this Warrant is mutilated, lost, stolen
or destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and indemnity, if
requested, satisfactory to it. Applicants for a New Warrant under such
circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable charges as the Company may prescribe.
8. RESERVATION OF WARRANT SHARES. The Company covenants that it will
at all times reserve and keep available out of the aggregate of its authorized
but unissued Common Stock, solely for the purpose of enabling it to issue
Warrant Shares upon exercise of this Warrant as herein provided, the number of
Warrant Shares which are then issuable and deliverable upon the exercise of this
entire Warrant, free from preemptive rights or any other actual contingent
purchase rights of persons other than the Holder (taking into account the
adjustments and restrictions of Section 9). The Company covenants that all
Warrant Shares that shall be so issuable and deliverable shall, upon issuance
and the payment of the applicable Exercise Price in accordance with the terms
hereof, be duly and validly authorized, issued and fully paid and nonassessable.
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9. CERTAIN ADJUSTMENTS. The Exercise Price and number of Warrant
Shares issuable upon exercise of this Warrant are subject to adjustment from
time to time as set forth in this Section 9. Upon each such adjustment of the
Exercise Price pursuant to this Section 9, the Holder shall thereafter prior to
the Expiration Date be entitled to purchase, at the Exercise Price resulting
from such adjustment, the number of Warrant Shares obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number of
Warrant Shares issuable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.
(a) If the Company, at any time while this Warrant is outstanding, (i)
shall pay a stock dividend (except scheduled dividends paid on outstanding
preferred stock as of the date hereof which contain a stated dividend rate) or
otherwise make a distribution or distributions on shares of its Common Stock or
on any other class of capital stock payable in shares of Common Stock, (ii)
subdivide outstanding shares of Common Stock into a larger number of shares, or
(iii) combine outstanding shares of Common Stock into a smaller number of
shares, the Exercise Price shall be multiplied by a fraction of which the
numerator shall be the number of shares of Common Stock (excluding treasury
shares, if any) outstanding before such event and of which the denominator shall
be the number of shares of Common Stock (excluding treasury shares, if any)
outstanding after such event. Any adjustment made pursuant to this Section shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision or
combination, and shall apply to successive subdivisions and combinations.
(b) In case of any reclassification of the Common Stock, any
consolidation or merger of the Company with or into another person, the sale or
transfer of all or substantially all of the assets of the Company or any
compulsory share exchange pursuant to which the Common Stock is converted into
other securities, cash or property, then the Holder shall have the right
thereafter to exercise this Warrant only into the shares of stock and other
securities and property receivable upon or deemed to be held by holders of
Common Stock following such reclassification, consolidation, merger, sale,
transfer or share exchange, and the Holder shall be entitled upon such event to
receive such amount of securities or property equal to the amount such Holder
would have been entitled to had such Holder exercised this Warrant immediately
prior to such reclassification, consolidation, merger, sale, transfer or share
exchange. The terms of any such consolidation, merger, sale, transfer or share
exchange shall include such terms so as to continue to give to the Holder the
right to receive the securities or property set forth in this Section 9(b) upon
any exercise following any such reclassification, consolidation, merger, sale,
transfer or share exchange.
(c) If the Company, at any time while this Warrant is outstanding,
shall distribute to all holders of Common Stock (and not to holders of this
Warrant) evidences of its indebtedness or assets or rights or warrants to
subscribe for or purchase any security (excluding those referred to in Sections
9(a), (b) and (d)), then in each such case the Exercise Price shall be
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determined by multiplying the Exercise Price in effect immediately prior to the
record date fixed for determination of stockholders entitled to receive such
distribution by a fraction of which the denominator shall be the Exercise Price
determined as of the record date mentioned above, and of which the numerator
shall be such Exercise Price on such record date less the then fair market value
at such record date of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of Common Stock as determined by
the Company's independent certified public accountants that regularly examines
the financial statements of the Company (an "Appraiser").
(d) If, at any time while this Warrant is outstanding, the Company
shall issue or cause to be issued rights or warrants to acquire or otherwise
sell or distribute shares of Common Stock for a consideration per share less
than the Market Price (as defined herein) then in effect, then, forthwith upon
such issue or sale, the Exercise Price shall be reduced to the price (calculated
to the nearest cent) determined by multiplying the Exercise Price in effect
immediately prior thereto by a fraction, the numerator of which shall be the sum
of (i) the number of shares of Common Stock outstanding immediately prior to
such issuance, and (ii) the number of shares of Common Stock which the aggregate
consideration received (or to be received, assuming exercise or conversion in
full of such rights, warrants and convertible securities) for the issuance of
such additional shares of Common Stock would purchase at such Market Price, and
the denominator of which shall be the sum of the number of shares of Common
Stock outstanding immediately after the issuance of such additional shares
provided, however, no adjustment shall be made (i) for any issuance of any
shares of Common Stock prior to or concurrently with the execution and delivery
of this Warrant, (ii) for the issuance of any shares of Common Stock pursuant to
the exercise of any option, warrant or rights or upon the conversion of the
Company's Series A Convertible Preferred Stock, the Series B Convertible
Preferred Stock, the Series C Convertible Preferred Stock and the Class B Common
Stock, any convertible promissory note or any other convertible security by
holders of any such convertible security that were granted or issued prior to or
on the date of this Warrant, (iii) for any issuance of any shares of Common
Stock pursuant to the exercise of any options granted pursuant to any employee,
non-employee, director or incentive stock option plan, (iv) for any shares of
Common Stock issued or issuable pursuant to any warrant or right that resulted
in any adjustment pursuant to this Section and (v) for any issuance of any
capital stock or otherwise in connection with any underwritten public offering
under the Securities Act. Such adjustment shall be made successively whenever
such an issuance is made. The fair market value deemed to be received for any
additional shares of capital stock issuable pursuant to any warrants or rights
to subscribe for or purchase the same shall be the consideration received by the
Company for issuing such warrants or rights plus the additional consideration
payable to the Company upon the exercise of such warrants or rights. Upon the
expiration of any rights or warrants, without exercise, the issuance of which
rights or warrants effected an adjustment in the Exercise Price, such Exercise
Price shall forthwith be readjusted and thereafter be the price which it would
have been (but reflecting any other adjustments in the Exercise Price made
pursuant to the provisions of this Section 9 after the issuance of such rights
or warrants) immediately prior to the issuance or sale of such rights or
warrants. If the purchase price provided for in any rights or warrants changes
at any time (other than under or by reason of provisions designed to protect
against dilution), the Exercise Price in effect
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at the time of the change shall be adjusted to the Exercise Price that would
have been in effect at such time had such rights or warrants still outstanding
provided for such changed purchase price, additional consideration or conversion
rate, as the case may be, at the time initially granted, issued or sold.
For purposes of this Section, "Market Price" means, per share of
Common Stock on any date specified herein: (i) the average of the closing prices
per share of the Common Stock for the five days immediately preceding such date
published in The Wall Street Journal or, if no such closing price on such dates
is published in The Wall Street Journal, the average of the closing bid and
asked prices for the five days immediately preceding such date, as officially
reported on the principal national securities exchange on which the Common Stock
is then listed or admitted to trading; or (ii) if the Common Stock is not then
listed or admitted to trading on any national securities exchange but is
designated as a national market system security by the NASD, the average of the
trading prices of the Common Stock for the five days immediately preceding such
date; or (iii) if there shall have been no trading on such dates or if the
Common Stock is not so designated, the average of the reported closing bid and
asked prices of the Common Shares for the five days immediately preceding such
date as shown by the Nasdaq National Market or other over-the-counter market and
reported by any member firm of the New York Stock Exchange selected by the
Company; or (iv) if none of (i), (ii) or (iii) is applicable, a market price per
share determined in such reasonable manner as may be prescribed by the Company's
Board of Directors.
(e) For the purposes of this Section 9, the following clauses shall
also be applicable:
(i) RECORD DATE. In case the Company shall take a record of
the holders of its Common Stock for the purpose of entitling them (A)
to receive a dividend or other distribution payable in Common Stock or
in securities convertible or exchangeable into shares of Common Stock,
or (B) to subscribe for or purchase Common Stock or securities
convertible or exchangeable into shares of Common Stock, then such
record date shall be deemed to be the date of the issue or sale of the
shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution
or the date of the granting of such right of subscription or purchase,
as the case may be.
(ii) TREASURY SHARES. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held
by or for the account of the Company, and the disposition of any such
shares shall be considered an issue or sale of Common Stock.
(f) All calculations under this Section 9 shall be made to the nearest
cent or the nearest 1/100th of a share, as the case may be.
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(g) Whenever the Exercise Price is adjusted pursuant to Section 9(c)
above, the Holder, after receipt of the determination by the Appraiser, shall
have the right to select an additional appraiser (which shall be a nationally
recognized accounting firm), in which case the adjustment shall be equal to the
average of the adjustments recommended by each of the Appraiser and such
appraiser. The Holder shall promptly mail or cause to be mailed to the Company,
a notice setting forth the Exercise Price after such adjustment and setting
forth a brief statement of the facts requiring such adjustment. Such adjustment
shall become effective immediately after the record date mentioned above.
(h) If:
(i) the Company shall declare a dividend (or any
other distribution) on its Common Stock; or
(ii) the Company shall declare a special
nonrecurring cash dividend on or a redemption of its Common
Stock; or
(iii) the Company shall authorize the granting to
all holders of the Common Stock rights or warrants to
subscribe for or purchase any shares of capital stock of any
class or of any rights; or
(iv) the approval of any stockholders of the
Company shall be required in connection with any
reclassification of the Common Stock of the Company, any
consolidation or merger to which the Company is a party, any
sale or transfer of all or substantially all of the assets
of the Company, or any compulsory share exchange whereby the
Common Stock is converted into other securities, cash or
property; or
(v) the Company shall authorize the voluntary
dissolution, liquidation or winding up of the affairs of the
Company,
then the Company shall cause to be mailed to each Holder at their last addresses
as they shall appear upon the Warrant Register, at least 15 calendar days prior
to the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a record is not to
be taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or warrants are to
be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property
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deliverable upon such reclassification, consolidation, merger, sale, transfer,
share exchange, dissolution, liquidation or winding up; PROVIDED, HOWEVER, that
the failure to mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to be specified
in such notice.
10. PAYMENT OF EXERCISE PRICE. The Holder may pay the Exercise Price
by delivery of immediately available funds.
11. FRACTIONAL SHARES. The Company shall not be required to issue or
cause to be issued fractional Warrant Shares on the exercise of this Warrant.
The number of full Warrant Shares which shall be issuable upon the exercise of
this Warrant shall be computed on the basis of the aggregate number of Warrant
Shares purchasable on exercise of this Warrant so presented. If any fraction of
a Warrant Share would, except for the provisions of this Section 11, be issuable
on the exercise of this Warrant, the Company shall pay an amount in cash equal
to the Exercise Price multiplied by such fraction.
12. NOTICES. Any and all notices or other communications or deliveries
hereunder shall be in writing and shall be deemed given and effective on the
earliest of (i) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section prior to 4:00 p.m. (New York City time) on a business day, (ii) the
business day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section later than 4:00 p.m. (New York City time) on any date and earlier than
11:59 p.m. (New York City time) on such date, (iii) the business day following
the date of mailing, if sent by nationally recognized overnight courier service,
or (iv) upon actual receipt by the party to whom such notice is required to be
given. The addresses for such communications shall be: (i) if to the Company,
WorldGate Communications, Inc., 0000 Xxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxx, XX
00000, attention Xxxxx X. Xxxx, or (ii) if to the Holder, to the Holder at the
address or facsimile number appearing on the Warrant Register, or such other
address or facsimile number as a party may provide to the other in accordance
with this Section 12.
13. WARRANT AGENT.
(a) The Company shall serve as warrant agent under this Warrant. Upon
thirty (30) days' notice to the Holder, the Company may appoint a new warrant
agent.
(b) Any corporation into which the Company or any new warrant agent
may be merged or any corporation resulting from any consolidation to which the
Company or any new warrant agent shall be a party or any corporation to which
the Company or any new warrant agent transfers substantially all of its
corporate trust or shareholders services business shall be a successor warrant
agent under this Warrant without any further act. Any such successor warrant
agent shall promptly cause notice of its succession as warrant agent to be
mailed (by first class mail, postage prepaid) to the Holder at the Holder's last
address as shown on the Warrant Register.
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14. MISCELLANEOUS.
(a) This Warrant shall be binding on and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. This
Warrant may be amended only in writing signed by the Company and the Holder and
their successors and assigns.
(b) Subject to Section 14(a), above, nothing in this Warrant shall be
construed to give to any person or corporation other than the Company and the
Holder any legal or equitable right, remedy or cause under this Warrant. This
Warrant shall inure to the sole and exclusive benefit of the Company and the
Holder.
(c) This Warrant shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York without regard to the
principles of conflicts of law thereof. The Company and the Holder hereby
irrevocably submit to the exclusive jurisdiction of the state and federal courts
sitting in the City of New York, borough of Manhattan, for the adjudication of
any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, or that such suit,
action or proceeding is improper. Each of the Company and the Holder hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by receiving a copy thereof sent
to the Company at the address in effect for notices to it under this instrument
and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any manner permitted by law.
(d) The headings herein are for convenience only, do not constitute a
part of this Warrant and shall not be deemed to limit or affect any of the
provisions hereof.
(e) In case any one or more of the provisions of this Warrant shall be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Warrant shall not in any way be affected
or impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
(f) For purposes of this Warrant, the term "INITIAL PUBLIC OFFERING"
shall mean the first offering of securities of the Company after the date hereof
pursuant to a registration statement filed under the Securities Act.
(g) The Holder shall not be entitled to, nor shall anything contained
in this Warrant be construed to confer upon the Holder, any right as a
stockholder of the Company, including, without limitation, any right to vote,
give or withhold consent to action by the stockholders of the Company (whether
upon any recapitalization, issue of shares, reclassification of
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shares, consolidation, merger, conveyance or otherwise), receive notice of
meetings or other action affecting stockholders (except for notices provided for
in this Warrant), receive dividends or subscription rights.
15. SECURITIES LAWS REPRESENTATIONS AND WARRANTIES; TRANSFER TO COMPLY
WITH SECURITIES LAWS.
(a) The Holder, by acceptance of this Warrant, represents and warrants
to the Company that this Warrant is being, and any Warrant Shares acquired on
exercise of this Warrant will be, acquired by the Holder for its own account,
not as nominee or agent, and not with a view to resale or distribution within
the meaning of the Securities Act of 1933, as amended (the "Securities Act") and
the Holder will not distribute this Warrant or any Warrant Shares in violation
of the Securities Act or any applicable state or foreign law.
(b) The Holder, by acceptance of this Warrant: (i) acknowledges that
this Warrant and the Warrant Shares are not registered under the Securities Act
or any state securities laws and that this Warrant and any Warrant Shares to be
issued to it upon the exercise of this Warrant must be held indefinitely by it
unless they are subsequently registered under the Securities Act and all
applicable state securities laws or an exemption from registration is available,
(ii) is aware that any routine sales under Rule 144 promulgated under the
Securities Act ("Rule 144") of this Warrant and the Warrant Shares may be made
only in limited amounts and in accordance with the terms and conditions of Rule
144 and that in such cases where Rule 144 is not applicable, compliance with
some other registration exemption will be required, (iii) is aware that Rule 144
is not presently available for use by the Holder for resale of such Warrant and
Warrant Shares, and (iv) is aware that, except as set forth herein, the Company
is not obligated to register under the Securities Act any sale, transfer or
other disposition of this Warrant or the Warrant Shares.
(c) The Holder, by acceptance of this Warrant, confirms that the
Company has made available to it the opportunity to ask questions of and receive
answers from the Company's officers and directors concerning the terms and
conditions of the issuance hereof and the business and financial condition of
the Company, and to acquire, and the Holder has received to its satisfaction,
such additional information about the business and financial condition of the
Company as it has requested.
(d) The Holder, by acceptance of this Warrant, represents that (i) it
is an "accredited investor" as such term is defined in Rule 501(a)(3)
promulgated under the Securities Act, (ii) its financial condition is such that
it can afford to bear the economic risk of holding this Warrant and the Warrant
Shares for an indefinite period of time and suffer complete loss of its
investment in this Warrant, and (iii) its knowledge and experience in financial
and business matters are such that it is capable of evaluating the merits and
risks of its purchase of this Warrant.
(e) The certificate representing any Warrant Shares acquired upon
exercise of this Warrant, and any shares of Common Stock or other securities
issued in respect of
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such Warrant Shares upon any stock split, stock dividend, recapitalization,
merger, consolidation or similar event, shall be stamped or otherwise imprinted
with the following legend (unless such a legend is no longer required under the
Securities Act or unless the Warrant Shares have been registered under the
Securities Act for resale by the Holder):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES LAW AND MAY NOT BE SOLD EXCEPT IN A
TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT OR PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT."
(f) The Company shall not be required to register the transfer of this
Warrant or any Warrant Shares on the books of the Company unless the Company
shall have been provided with an opinion of counsel reasonably satisfactory to
it or no-action letters from the Securities and Exchange Commission or the
appropriate state regulatory agencies prior to such transfer to the effect that
registration under the Securities Act and any applicable state securities law is
not required in connection with the transaction resulting in such transfer;
provided, however, that no such opinion of counsel or no-action letter shall be
necessary in order to effectuate a transfer in accordance with the provisions of
Rule 144(k) promulgated under the Securities Act. Each Warrant or certificate
for Warrant Shares issued upon any transfer, as above provided, shall bear the
restrictive legend set forth above, except that such restrictive legend shall
not be required if in the
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opinion of counsel reasonably satisfactory to the Company or no-action letters
referred to above are to the further effect that such legend is not required in
order to establish compliance with the provisions of the Securities Act and any
applicable state securities law, or if the transfer is made in accordance with
the provisions of Rule 144(k) under the Securities Act.
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SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer as of the date first indicated above.
WORLDGATE COMMUNICATIONS, INC.
By: /s/ Xxxxxxx Xxxx
Name: Xxxxxxx Xxxx
Title: Vice President, Corporate Affairs
