AMENDMENT NO. 1 TO WARRANT
AGREEMENT
THIS AMENDMENT NO. 1 TO WARRANT
AGREEMENT , dated as of
the date provided on the signature page hereto (this “
Agreement ”), is entered into by and between WorldGate
Communications, Inc., a Delaware corporation (the “
Company ”), and the person or entity under the heading
“ Holder ” provided on the signature page hereto
(the “ Holder ”, and together with the Company,
the “ Parties ”). All capitalized terms used but
not defined in this Agreement shall have the meanings ascribed to
them by that certain warrant to purchase common stock of the
Company issued June 23, 2004 by the Company and attached hereto as
Exhibit A (the “ Warrant ”).
RECITALS
A.
WHEREAS , the Warrant entitles the Holder, subject to the
provisions of the Warrant, to purchase the Warrant Shares (as
defined on the signature page hereto) at an exercise price as
provided in, and as adjusted from time to time per the terms of,
the Warrant (the “ Exercise Price ”);
B.
WHEREAS , in consideration for the Holder’s immediate
exercise of the right to purchase shares of Common Stock underlying
certain other warrants issued by the Company simultaneously with
the execution of this Agreement, the Company has agreed to amend
the Warrant such that the Exercise Price of the Warrant shall be
equal to the New Exercise Price (as defined on the signature page
hereto); and
C.
WHEREAS , each of the Parties desires to enter into this
Agreement in order to amend the Warrant as set forth
herein.
NOW, THEREFORE , in consideration of the premises and the
mutual covenants hereinafter contained, the Parties agree as
follows:
1.
Amendment to Exercise Price . The Exercise Price set forth
in the second sentence of Section 1(a) of the Warrant is hereby
amended as of the date hereof to be the New Exercise Price (as
defined on the signature page hereto) per share of Common Stock.
The definition of Expiration Date set forth in the Warrant is
hereby amended and restated to mean “August 7,
2009”.
2.
Removal of Cashless Exercise Provisions . The Warrant is
hereby amended in its entirety to remove all references to a
Cashless Exercise and all such references shall no longer have any
force or effect such that the Holder may only exercise the Warrant
and receive the Warrant Shares upon the exercise of the Warrant by
delivering immediately available funds to the Company.
3.
Consent to Amendment . In accordance with Section 13 of the
Warrant, (a) Holder hereby irrevocably consents to the amendments
to the Warrant contemplated by this Agreement and (b) Holder agrees
and acknowledges that the amendments to the Warrant contemplated by
this Agreement shall not be effective until holders of at least
two-thirds (2/3) of the number of shares into which all warrants to
purchase common stock of the Company issued June 23, 2004 by the
Company are exercisable (without regard to any limitation contained
in the 2004 Warrants on such exercise) have agreed to such
amendments.
4.
Termination of Certain Agreements . Each of the Current
Agreements, with respect to any rights or obligations between the
Parties, shall be deemed terminated, void and of no further force
and effect, and none of the Parties shall have any further
liabilities or obligations under the Current Agreements whatsoever.
For purposes of this Agreement, “ Current Agreements
” means the Securities Purchase Agreement, dated June 23,
2004, by and between the Company and the other signatories thereto,
the Registration Rights Agreement, dated June 23, 2004, by and
between the Company and the other signatories thereto, and any
other agreements entered into in connection with, in any way
related to or arising from the Warrant, such Securities Purchase
Agreement or such Registration Rights Agreement, other than the
Warrant itself and this Agreement.
5.
Exercise of Warrant . Upon any exercise of the Warrant,
Holder acknowledges and agrees that the Company shall effect
delivery of the Warrant Shares by delivering to the Holder or its
nominee a physical certificate representing such Warrant Shares and
that such certificate representing the Warrant Shares shall contain
the following restrictive legend:
THE SHARES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR ANY STATE SECURITIES LAW, AND MAY
NOT BE OFFERED FOR SALE, SOLD OR TRANSFERRED UNLESS A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS SHALL BE EFFECTIVE WITH RESPECT THERETO, OR AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS IS AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR
TRANSFER AND THE CORPORATION RECEIVES AN OPINION OF COUNSEL (BOTH
SUCH OPINION AND SUCH COUSEL BEING REASONABLY ACCEPTABLE TO THE
CORPORATION) TO SUCH EFFECT. SUBJECT TO COMPLIANCE WITH THE
REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS, THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE PLEDGED OR
HYPOTHECATED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY THE SHARES REPRESENTED BY THIS
CERTIFICATE.
6.
Representations and Warranties . By executing this
Agreement, Holder represents and warrants to the Company as
follows:
|
|
|
The Holder
hereby acknowledges and agrees that attached hereto as Exhibit A is
a true, complete and valid copy of the Warrant as currently in
effect prior to the amendment contemplated by this
Agreement.
|
|
|
|
Holder has all
necessary power and authority under all applicable provisions of
law to execute and deliver this Agreement and to carry out its
provisions. All action on Holder’s part required for the
lawful execution and delivery of this Agreement has been or will be
effectively taken prior to the delivery of this Agreement by
Holder.
|
|
|
|
Neither the
execution and delivery by the Holder of this Agreement, nor the
performance of the transactions performed hereunder by the Holder,
will require any filing, consent, renegotiation or approval that
has not previously been obtained or conflict with, result in any
breach of or constitute a default under (i) any provision of any
law, statute, rule or regulation, or any ruling, writ, injunction,
order, judgment or decree of any court order or other governmental
authority to which the Holder is subject, (ii) the organizational
documents (if any) of the Holder, or (iii) any contract,
governmental permit or other document to which the Holder is
subject.
|
|
|
|
The Holder is
the sole record and beneficial owner of the Warrant and the Holder
has good title to the Warrant free and clear of any mortgage, lien,
pledge, charge, security interest, encumbrance, conditional sales
contract, transfer restriction, right of first refusal, voting
trust agreement, preemptive right, power of attorney or other
adverse claim, defect of title, limitation or restriction of any
type or nature whatsoever. No other person, firm, corporation or
other entity has any right, title, claim, or interest in, to, or
respecting any of the Warrant.
|
|
|
|
Holder
understands that the Warrant Shares have not been registered under
the Securities Act of 1933, as amended (the “ Securities
Act ”). The Warrant Shares are being acquired for
Holder’s own account and not with the view to, or for resale
in connection with, any distribution other than resales made in
compliance with the Securities Act. Holder has substantial
experience in evaluating and investing in private placement
transactions of securities similar to the Company so that Holder is
capable of evaluating the merits and risks of its investment in the
Company and has the capacity to protect its own interests. Holder
understands and agrees that the Warrant Shares are being offered
and will be sold in transactions in compliance with or exempt from
the registration requirements of the Securities Act based in part
upon Holder’s representations contained in this Agreement
and, as a result, the Warrant Shares may only be transferred if
such securities are registered under the Securities Act or if the
transfer is exempt from registration. Holder must bear the economic
risk of this investment indefinitely unless the Warrant Shares are
registered pursuant to the Securities Act or an exemption from
registration is available. Holder understands that the Company has
no present intention of registering the Warrant Shares. Holder also
understands that there is no assurance that any exemption from
registration under the Securities Act will be available and that,
even if available, such exemption may not allow the Holder to
transfer all or any portion of the Warrant Shares under the
circumstances, in the amounts or at the times the Holder might
propose. H
|
|
