Exhibit
4.4


 


Execution
Copy


 


EXHIBIT E


 


REGISTRATION RIGHTS AGREEMENT


 


This REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as
of June 24, 2004, is by and between WORLDGATE COMMUNICATIONS, INC., a
Delaware corporation (the “Company”), and each of the entities whose
names appear on the signature pages hereof. 
Such entities are each referred to herein as an “Investor” and,
collectively, as the “Investors”.


 


The Company has agreed, on the terms and subject to the conditions set
forth in the Securities Purchase Agreement, dated as of June 24, 2004 (the
“Securities Purchase Agreement”), to issue and sell to each Investor
named therein Series A Convertible Preferred Stock (the “Preferred Stock”)
and Warrants (the “Warrants”).


 


The shares of Preferred Stock are convertible into shares (the “Conversion
Shares”) of the Company’s common stock, par value $0.01 per share (the “Common
Stock”). The Warrants are exercisable into shares of Common Stock (the “Warrant
Shares”) in accordance with their terms.


 


In order to induce each Investor to enter into the Securities Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended (the “Securities Act”), and under
applicable state securities laws. 
Capitalized terms used herein and not otherwise defined shall have the
respective meanings set forth in the Securities Purchase Agreement.


 


In
consideration of each Investor entering into the Securities Purchase Agreement,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:


 


1.                                       DEFINITIONS.


 


For purposes of this Agreement, the following terms shall have the
meanings specified:


 


“Effective Date” means the date on
which the Registration Statement is declared effective by the Securities and
Exchange Commission (the “Commission”).


 


“Filing Deadline” means the thirtieth
(30th) calendar day following the Closing Date.


 


“Holder” means any person owning or
having the right to acquire, through conversion of the Preferred Stock or
exercise of the Warrants or otherwise, Registrable Securities, including
initially each Investor and thereafter any permitted assignee thereof.


 

















 


“Registrable Securities” means the
Conversion Shares and the Warrant Shares and any other shares of Common Stock
issuable pursuant to the terms of the Preferred Stock or the Warrants, and any
shares of capital stock issued or issuable from time to time (with any
adjustments) in replacement of, in exchange for or otherwise in respect of the
Conversion Shares or the Warrant Shares.


 


“Registration Deadline” means the one
hundred twentieth (120th) calendar day following the Closing Date.


 


“Registration Period” has the meaning
set forth in paragraph 2(b) below.


 


“Registration Statement” means a
registration statement or statements prepared in compliance with the Securities
Act and pursuant to Rule 415 under the Securities Act (“Rule 415”) or
any successor rule providing for the offering of securities on a continuous or
delayed basis.


 


Capitalized terms used herein and not otherwise defined shall have the
respective meanings specified in the Securities Purchase Agreement or the
Certificate of Designation, as applicable.


 


2.                                       REGISTRATION.


 


(a)                                  Registration
Statement.  On or before the Filing
Deadline, the Company shall prepare and file with the Commission a Registration
Statement on Form SB-2 as a “shelf” registration statement under Rule 415
covering the resale of a number of shares of Registrable Securities equal to
one hundred and fifty percent (150%) of the number of shares of Common Stock
issuable on the Closing Date pursuant to the conversion of the Preferred Stock
and the exercise of the Warrants (such number to be determined using the
Conversion Price or Exercise Price, as applicable, in effect on such date and
without regard to any restriction on the ability of any Holder to convert such
Holder’s Preferred Stock or exercise such Holder’s Warrant as of such
date).  The Registration Statement shall
state, to the extent permitted by Rule 416 under the Securities Act, that it
also covers such indeterminate number of additional shares of Common Stock as
may become issuable upon the conversion of the Preferred Stock and exercise of
the Warrants in order to prevent dilution resulting from stock splits, stock
dividends or similar events. The Company shall re-file such Registration
Statement, or file a new Registration Statement covering at least the number of
shares then registered on the existing Registration Statement (and not previously
sold pursuant to the existing Registration Statement or pursuant to Rule 144),
on Form S-3 as promptly as practicable (but in no event later than thirty (30)
days) after the Company meets the eligibility requirements to use Form S-3 for
the resale of Registrable Securities by each Investor.


 


(b)                                 Effectiveness.  The Company shall use its best efforts to
cause the Registration Statement to become effective as soon as practicable
following the filing thereof, but in no event later than the Registration Deadline.
The Company shall respond promptly to any and all comments made by the staff of
the Commission on the Registration Statement, and shall submit to the
Commission, within two (2) Business Days after the Company learns that no
review of the Registration Statement will be made by the staff of the
Commission or that the staff of the Commission has no further comments on the
Registration Statement, as the case may be, a request


 


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for acceleration of the effectiveness of the Registration Statement to
a time and date not later than two (2) Business Days after the submission of
such request.  The Company will maintain
the effectiveness of the Registration Statement until the earlier to occur of
(i) the date on which all of the Registrable Securities eligible for resale
thereunder have been publicly sold pursuant to either the Registration
Statement or Rule 144 and (ii) the date on which all of the Registrable
Securities remaining to be sold under the Registration Statement (in the
reasonable opinion of counsel to the Company) may be immediately sold to the
public under Rule 144(k) or any successor provision (the period beginning on
the Closing Date and ending on the earlier to occur of (i) or (ii) above being
referred to herein as the “Registration Period”).


 


(c)                                  Registration
Default.  If (i) the Registration
Statement is not filed on or before the Filing Deadline or declared effective
by the Commission on or before the Registration Deadline, (ii) after the Registration
Statement has been declared effective by the Commission, sales of Registrable
Securities cannot be made by a Holder under the Registration Statement for any
reason not within the exclusive control of such Holder (other than such
Registrable Securities as are then freely saleable pursuant to Rule 144(k)), or
(iii) an amendment or supplement to the Registration Statement, or a new
registration statement, required to be filed pursuant to the terms of
Section 4(k) below is not filed on or before the date required by such
paragraph (each of the foregoing clauses (i), (ii) and (iii) being referred to
herein as a “Registration Default”), the Company shall make cash
payments to each Holder equal to one percent (1.0%) of the Liquidation
Preference of the Preferred Stock then held by such Holder for each thirty (30)
day period in which a Registration Default exists (prorated for any period of
less than thirty days).  Each such
payment shall be made within five (5) Business Days following the last day of
each calendar month in which a Registration Default existed. Any such payment
shall be in addition to any other remedies available to each Holder at law or
in equity, whether pursuant to the terms hereof, the Securities Purchase
Agreement, the Certificate of Designation, or otherwise.


 


(d)                                 Allocation
of Conversion Shares and Warrant Shares. The initial number of Conversion
Shares and Warrant Shares included in any Registration Statement and each
increase in the number thereof included therein shall be allocated pro rata
among the Holders based on the aggregate number of Registrable Securities
issuable to each Holder at the time the Registration Statement covering such
initial number of Registrable Securities or increase thereof is declared
effective by the Commission (such number to be determined using the Conversion
Price or Exercise Price, as applicable, in effect at such time and without
regard to any restriction on the ability of a Holder to convert such Holder’s
Preferred Stock or exercise such Holder’s Warrant as of such date).  In the event that a Holder sells or
otherwise transfers any of such Holder’s Registrable Securities, each
transferee shall be allocated the portion of the then remaining number of
Registrable Securities included in such Registration Statement allocable to the
transferor.


 


(e)                                  Registration
of Other Securities.  During the
period beginning on the date hereof and ending on the Effective Date, the
Company shall, except as described in Schedule 3.12 to the Securities
Purchase Agreement, refrain from filing any registration statement (other than
(i) a Registration Statement filed hereunder, (ii) a registration statement on
Form S-8 with respect to stock option plans and agreements and stock plans
currently in effect and disclosed pursuant to the terms of the Securities
Purchase Agreement, or (iii) amendments or supplements to any currently
effective registration statement that is described in the disclosure schedules
to the Securities


 


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Purchase Agreement).  In no
event shall the Company include any securities other than the Registrable
Securities on any Registration Statement filed by the Company on behalf of the
Holders pursuant to the terms hereof.


 


3.                                       PIGGYBACK
REGISTRATION.


 


If at any time prior to the expiration of the Registration Period, (i)
the Company proposes to register shares of Common Stock under the Securities
Act in connection with the public offering of such shares for cash (a “Proposed
Registration”) other than a registration statement on Form S-8 or Form S-4
or any successor or other forms promulgated for similar purposes and (ii) a
Registration Statement covering the sale of all of the Registrable Securities
is not then effective and available for sales thereof by the Holders, the
Company shall, at such time, promptly give each Holder written notice of such
Proposed Registration.  Each Holder
shall have ten (10) Business Days from its receipt of such notice to deliver to
the Company a written request specifying the amount of Registrable Securities
that such Holder intends to sell and such Holder’s intended method of
distribution.  Upon receipt of such
request, the Company shall use its best efforts to cause all Registrable
Securities which the Company has been requested to register to be registered
under the Securities Act to the extent necessary to permit their sale or other
disposition in accordance with the intended methods of distribution specified
in the request of such Holder; provided, however, that the
Company shall have the right to postpone or withdraw any registration effected
pursuant to this Section 3 without obligation to the Holders.  If, in connection with any underwritten
public offering for the account of the Company or for stockholders of the
Company that have contractual rights to require the Company to register shares
of Common Stock, the managing underwriter(s) thereof shall impose a limitation
on the number of shares of Common Stock which may be included in a registration
statement because, in the judgment of such underwriter(s), marketing or other
factors dictate such limitation is necessary to facilitate such offering, then
the Company shall be obligated to include in the registration statement only
such limited portion of the Registrable Securities with respect to which each
Holder has requested inclusion hereunder as such underwriter(s) shall
permit.  Any exclusion of Registrable
Securities shall be made pro rata
among the Holders seeking to include Registrable Securities in a registration
statement, in proportion to the number of Registrable Securities sought to be
included by such Holders; provided, however, that the Company shall not exclude
any Registrable Securities unless the Company has first excluded all
outstanding securities, the holders of which are not entitled to inclusion of
such securities in the registration statement or are not entitled to pro rata inclusion with the Registrable
Securities; and provided, further, that, after giving effect to the immediately
preceding proviso, any exclusion of Registrable Securities shall be made pro rata with holders of other securities
having the right to include such securities in the registration statement.


 


4.                                       OBLIGATIONS
OF THE COMPANY.


 


In addition to performing its obligations hereunder, including without
limitation those pursuant to Section 2 above, the Company shall, with
respect to the Registration Statement:


 


(a)                                  prepare
and file with the Commission such amendments and supplements to the
Registration Statement and the prospectus used in connection with the
Registration Statement as may be necessary to comply with the provisions of the
Securities Act or to maintain the effectiveness of the Registration Statement
during the Registration Period, or as may be reasonably


 


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requested by a Holder in order to incorporate information concerning
such Holder or such Holder’s intended method of distribution;


 


(b)                                 promptly
following the Closing, secure the listing of all Registrable Securities on the
Nasdaq SmallCap Market, and provide each Holder with reasonable evidence
thereof;


 


(c)                                  furnish
to each Holder such number of copies of the prospectus included in the
Registration Statement, including a preliminary prospectus, in conformity with
the requirements of the Securities Act, and such other documents as such Holder
may reasonably request in order to facilitate the disposition of such Holder’s
Registrable Securities;


 


(d)                                 use
all commercially reasonable efforts to register or qualify the Registrable
Securities under the securities or “blue sky” laws of such jurisdictions within
the United States as shall be reasonably requested from time to time by a
Holder, and do any and all other acts or things which may be necessary or
advisable to enable such Holder to consummate the public sale or other
disposition of the Registrable Securities in such jurisdictions; provided that
the Company shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service of
process in any such jurisdiction;


 


(e)                                  in
the event of an underwritten public offering of the Registrable Securities,
enter into (together with all Holders proposing to distribute Registrable
Securities through such underwriting) and perform its obligations under an
underwriting agreement, in usual and customary form reasonably acceptable to
the Company, with the managing underwriter of such offering;


 


(f)                                    notify
each Holder immediately after becoming aware of the occurrence of any event
(but shall not, without the prior written consent of such Holder, disclose to
such Holder any facts or circumstances constituting material non-public
information) as a result of which the prospectus included in the Registration
Statement, as then in effect, contains an untrue statement of material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing, and as promptly as practicable prepare and file with the Commission
and furnish to each Holder a reasonable number of copies of a supplement or an
amendment to such prospectus as may be necessary so that such prospectus does
not contain an untrue statement of material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing;


 


(g)                                 use
all commercially reasonable efforts to prevent the issuance of any stop order
or other order suspending the effectiveness of the Registration Statement and,
if such an order is issued, to obtain the withdrawal thereof at the earliest
possible time and to notify each Holder of the issuance of such order and the
resolution thereof;


 


(h)                                 furnish
to each Holder, on the date that the Registration Statement, or any successor
registration statement, becomes effective, (x) a letter, dated such date, of
outside counsel representing the Company (and reasonably acceptable to such
Holder) addressed to such Holder, confirming such effectiveness and, to the
knowledge of such counsel, the absence of any stop order, and (y) in the case
of an underwriting, (A) a copy of an opinion, dated such date, of such outside


 


5

















 


counsel, in such form and substance as is required to be given to the
underwriters, and (B) a letter addressed to such Holder, dated such date, from
the Company’s independent certified public accountants, in such form and
substance as is required to be given by the Company’s independent certified
public accountants to such underwriters;


 


(i)                                     provide
to each Holder and its representatives the reasonable opportunity to conduct a
reasonable inquiry of the Company’s financial and other records during normal
business hours and make available its officers, directors and employees for
questions regarding information which such Holder may reasonably request in
order to fulfill any due diligence obligation on its part;


 


(j)                                     permit
counsel for each Holder, upon the request of such Holder, to review the
Registration Statement and all amendments and supplements thereto, and any
comments made by the staff of the Commission concerning such Holder and/or the
transactions contemplated by the Transaction Documents and the Company’s
responses thereto, within a reasonable period of time prior to the filing
thereof with the Commission (or, in the case of comments made by the staff of
the Commission, within a reasonable period of time following the receipt
thereof by the Company); and


 


(k)                                  in
the event that, at any time, the number of shares available under the
Registration Statement is insufficient to cover one hundred twenty five percent
125% of the Registrable Securities issuable under the related Preferred Stock
and Warrants (such number to be determined using the Conversion Price or
Exercise Price, as applicable, in effect at such time and without regard to any
restriction on the ability of any Holder to convert such Holder’s Preferred
Stock or exercise such Holder’s Warrant) the Company shall promptly amend the
Registration Statement or file a new registration statement, in any event as
soon as practicable, but not later than the thirtieth (30th) day
following notice from a Holder of the occurrence of such event, so that the
Registration Statement or such new registration statement, or both, covers no
less than one hundred fifty percent (150%) of the Registrable Securities
eligible for resale thereunder and issuable under the related Preferred Stock
and Warrants (such number to be determined using the Conversion Price or
Exercise Price, as applicable, in effect at the time of such amendment or
filing and without regard to any restriction on the ability of any Holder to
convert such Holder’s Preferred Stock or exercise such Holder’s Warrant).  The Company shall use its best efforts to
cause such amendment and/or new Registration Statement to become effective as
soon as practicable following the filing thereof. Any Registration Statement
filed pursuant to this paragraph 4(k) shall state that, to the extent permitted
by Rule 416 under the Securities Act, such Registration Statement also covers
such indeterminate number of additional shares of Common Stock as may become
issuable upon conversion of the Preferred Stock and exercise of the Warrants in
order to prevent dilution resulting from stock splits, stock dividends or
similar events. Unless and until such amendment or new Registration Statement
becomes effective, each Holder shall have the rights described in
Section 2(c) above.


 


5.                                       OBLIGATIONS
OF EACH HOLDER.


 


In connection with the registration of Registrable Securities pursuant
to a Registration Statement, each Holder shall:


 


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(a)  timely furnish to the
Company in writing such information regarding itself and the intended method of
disposition of such Registrable Securities as the Company shall reasonably
request in order to effect the registration thereof;


 


(b)  upon receipt of any notice
from the Company of the happening of any event of the kind described in
paragraphs 4(f) or 4(g), immediately discontinue any sale or other disposition
of such Registrable Securities pursuant to such Registration Statement until
the filing of an amendment or supplement as described in paragraph 4(f) or
withdrawal of the stop order referred to in paragraph 4(g), and use
commercially reasonable efforts to maintain the confidentiality of such notice
and its contents;


 


(c)  in the event of an
underwritten offering of such Registrable Securities in which such Holder
participates, enter into a customary and reasonable underwriting agreement and
execute such other documents as the Company and the managing underwriter for
such offering may reasonably request;


 


(d)  to the extent required by
applicable law, deliver a prospectus to the purchaser of such Registrable
Securities;


 


(e)  notify the Company when it
has sold all of the Registrable Securities held by it and, upon the Company’s
request (which may occur no more frequently than four (4) times during any
twelve month period), notify the Company as to the number of Registrable
Securities held by such Holder as of a recent date; and


 


(f)  notify the Company in the
event that any information supplied by such Holder in writing for inclusion in
such Registration Statement or related prospectus is untrue or omits to state a
material fact required to be stated therein or necessary to make such
information not misleading in light of the circumstances then existing;
immediately discontinue any sale or other disposition of such Registrable
Securities pursuant to such Registration Statement until the filing of an
amendment or supplement to such prospectus as may be necessary so that such
prospectus does not contain an untrue statement of material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing;
and use commercially reasonable efforts to assist the Company as may be
appropriate to make such amendment or supplement effective for such purpose.


 


6.                                       INDEMNIFICATION.


 


In the event that any Registrable Securities are included in a
Registration Statement under this Agreement:


 


(a)                                  To
the extent permitted by law, the Company shall indemnify and hold harmless each
Holder, the officers, directors, employees, agents and representatives of such
Holder, and each person, if any, who controls such Holder within the meaning of
the Securities Act or the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), against any losses, claims, damages, liabilities or reasonable
out-of-pocket expenses (whether joint or several) (collectively, including
legal or other expenses reasonably incurred in connection with investigating or
defending same, “Losses”), insofar as any such Losses arise out of or
are based upon (i) any untrue statement


 


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or alleged untrue statement of a material fact contained in such
Registration Statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, or (ii)
the omission or alleged omission to state therein a material fact required to
be stated therein, or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.  Subject to the provisions of paragraph 6(c)
below, the Company will reimburse such Holder, and each such officer, director,
employee, agent, representative or controlling person, for any legal or other
out-of-pocket expenses as reasonably incurred by any such entity or person in
connection with investigating or defending any Loss; provided, however, that
the foregoing indemnity shall not apply to amounts paid in settlement of any
Loss if such settlement is effected without the consent of the Company (which
consent shall not be unreasonably withheld), nor shall the Company be obligated
to indemnify any person for any Loss to the extent that such Loss is (i) based
upon and is in conformity with written information furnished by such person
expressly for use in such Registration Statement or (ii) based on a failure of
such person to deliver or cause to be delivered the final prospectus contained
in the Registration Statement and made available by the Company, if such
delivery is required by applicable law.


 


(b)                                 To
the extent permitted by law, each Holder who is named in such Registration
Statement as a selling stockholder, acting severally and not jointly, shall
indemnify and hold harmless the Company, the officers, directors, employees,
agents and representatives of the Company, and each person, if any, who
controls the Company within the meaning of the Securities Act or the Exchange
Act, against any Losses to the extent (and only to the extent) that any such
Losses are based upon and in conformity with written information furnished by
such Holder expressly for use in such Registration Statement. Subject to the
provisions of paragraph 6(c) below, such Holder will reimburse any legal or
other expenses as reasonably incurred by the Company and any such officer,
director, employee, agent, representative, or controlling person, in connection
with investigating or defending any such Loss; provided, however, that the
foregoing indemnity shall not apply to amounts paid in settlement of any such
Loss if such settlement is effected without the consent of such Holder (which
consent shall not be unreasonably withheld); and provided, further, that, in no
event shall any indemnity under this subsection 6(b) exceed the net
proceeds resulting from the sale of the Registrable Securities sold by such
Holder under such Registration Statement.


 


(c)                                  Promptly
after receipt by an indemnified party under this Section 6 of notice of
the commencement of any action (including any governmental action), such
indemnified party will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying party
a written notice of the commencement thereof and the indemnifying party shall
have the right to participate in and to assume the defense thereof with counsel
mutually satisfactory to the parties; provided, however, that an indemnified
party shall have the right to retain its own counsel, with the reasonably
incurred fees and expenses of one such counsel for all indemnified parties to
be paid by the indemnifying party, if representation of such indemnified party
by the counsel retained by the indemnifying party would be inappropriate under
applicable standards of professional conduct due to actual or potential
conflicting interests between such indemnified party and any other party
represented by such counsel in such proceeding.  The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action, to the extent
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this
Section 6 with respect to such action, but the omission so to deliver
written notice to the indemnifying party will


 


8

















 


not relieve it of any liability that it may have to any indemnified
party otherwise than under this Section 6 or with respect to any other
action unless the indemnifying party is materially prejudiced as a result of
not receiving such notice.


 


(d)                                 In
the event that the indemnity provided in paragraph (a) or (b) of this
Section 6 is unavailable or insufficient to hold harmless an indemnified
party for any reason, the Company and each Holder agree, severally and not
jointly, to contribute to the aggregate Losses to which the Company or such
Holder may be subject in such proportion as is appropriate to reflect the
relative fault of the Company and such Holder in connection with the statements
or omissions which resulted in such Losses; provided, however, that in no case
shall such Holder be responsible for any amount in excess of the net proceeds
resulting from the sale of the Registrable Securities sold by it under the
Registration Statement.  Relative fault
shall be determined by reference to whether any alleged untrue statement or
omission relates to information provided by the Company or by such Holder.  The Company and each Holder agree that it
would not be just and equitable if contribution were determined by pro rata allocation or any other method of
allocation which does not take account of the equitable considerations referred
to above.  Notwithstanding the
provisions of this paragraph (d), no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who is not guilty of such fraudulent
misrepresentation.  For purposes of this
Section 6, each person who controls a Holder within the meaning of either
the Securities Act or the Exchange Act and each officer, director, employee,
agent or representative of such Holder shall have the same rights to
contribution as such Holder, and each person who controls the Company within
the meaning of either the Securities Act or the Exchange Act and each officer,
director, employee, agent or representative of the Company shall have the same
rights to contribution as the Company, subject in each case to the applicable
terms and conditions of this paragraph (d).


 


(e)                                  The
obligations of the Company and each Holder under this Section 6 shall
survive the conversion of the Preferred Stock and exercise of the Warrants in
full, the completion of any offering or sale of Registrable Securities pursuant
to a Registration Statement under this Agreement, or otherwise.


 


7.                                       REPORTS.


 


With a view to making available to each Holder the benefits of Rule 144
under the Securities Act (“Rule 144”) and any other similar rule or
regulation of the Commission that may at any time permit such Holder to sell
securities of the Company to the public without registration, the Company
agrees to:


 


(a)                                  make
and keep public information available, as those terms are understood and
defined in Rule 144;


 


(b)                                 file
with the Commission in a timely manner all reports and other documents required
of the Company under the Securities Act and the Exchange Act; and


 


(c)                                  furnish
to such Holder, so long as such Holder owns any Registrable Securities,
promptly upon written request (i) a written statement by the Company, if true,
that it has


 


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complied with the reporting requirements of Rule 144, the Securities
Act and the Exchange Act, (ii) to the extent not publicly available through the
Commission’s EDGAR database, a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably requested by
such Holder in connection with such Holder’s compliance with any rule or regulation
of the Commission which permits the selling of any such securities without
registration.


 


8.                                       MISCELLANEOUS.


 


(a)                                  Expenses
of Registration.  Except as
otherwise provided in the Securities Purchase Agreement, all reasonable
expenses, other than underwriting discounts and commissions and fees and
expenses of counsel and other advisors to each Holder, incurred in connection
with the registrations, filings or qualifications described herein, including
(without limitation) all registration, filing and qualification fees, printers’
and accounting fees, the fees and disbursements of counsel for the Company, and
the fees and disbursements incurred in connection with the opinion and letter
described in paragraph 4(h) hereof, shall be borne by the Company.


 


(b)                                 Amendment;
Waiver.  Except as expressly
provided herein, neither this Agreement nor any term hereof may be amended or
waived except pursuant to a written instrument executed by the Company and the
Holders of at least two-thirds (2/3) of the Registrable Securities into which
all of the Preferred Stock and Warrants then outstanding are convertible or
exercisable (without regard to any limitation on such conversion or exercise).
Any amendment or waiver effected in accordance with this paragraph shall be binding
upon each Holder, each future Holder and the Company.  The failure of any party to exercise any right or remedy under
this Agreement or otherwise, or the delay by any party in exercising such right
or remedy, shall not operate as a waiver thereof.


 


(c)                                  Notices.  Any notice, demand or request required or
permitted to be given by the Company or a Holder pursuant to the terms of this
Agreement shall be in writing and shall be deemed delivered (i) when delivered
personally or by verifiable facsimile transmission, unless such delivery is
made on a day that is not a Business Day, in which case such delivery will be
deemed to be made on the next succeeding Business Day, (ii) on the next
Business Day after timely delivery to an overnight courier and (iii) on the
Business Day actually received if deposited in the U.S. mail (certified or
registered mail, return receipt requested, postage prepaid), addressed as
follows:


 


If to the Company:


 


WorldGate Communications, Inc.


3190 Tremont Avenue


Trevose, Pennsylvania 19053


Attn:     Randy Gort


Tel:       (215) 354-5100


Fax:      (215) 354-1049


 


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with a copy to:


 


Drinker Biddle & Reath LLP


1000 Westlakes Drive, Suite 300


Berwyn, Pennsylvania 19312


Attn:     Walter J. Mostek, Jr.


Tel:       (610) 993-2200


Fax:      (610) 993-8585


 


and if to a Holder, to such
address as shall be designated by such Holder in writing to the Company.


 


(d)                                 Assignment.  Upon the transfer of any Preferred Stock,
Warrants or Registrable Securities by a Holder, the rights of such Holder
hereunder with respect to such securities so transferred shall be assigned
automatically to the transferee thereof, and such transferee shall thereupon be
deemed to be a “Holder” for purposes of this Agreement, as long as: (i) the
Company is, within a reasonable period of time following such transfer,
furnished with written notice of the name and address of such transferee, (ii)
the transferee agrees in writing with the Company to be bound by all of the
provisions hereof, and (iii) such transfer is made in accordance with the
applicable requirements of the Securities Purchase Agreement; provided, however,
that this Agreement shall not be transferred to any person or entity that
receives any Preferred Stock, Warrants or Registrable Securities in a public
transaction pursuant to an effective registration statement under the
Securities Act or pursuant to Rule 144.


 


(e)                                  Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed an original, and all of which
together shall be deemed one and the same instrument.  This Agreement, once executed by a party, may be delivered to any
other party hereto by facsimile transmission.


 


(f)                                    Governing
Law.  This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed entirely within the State of
New York.


 


(g)                                 Holder
of Record.  A person is deemed to be
a Holder whenever such person owns or is deemed to own of record such
Registrable Securities.  If the Company
receives conflicting instructions, notices or elections from two or more
persons with respect to the same Registrable Securities, the Company shall act
upon the basis of instructions, notice or election received from the record
owner of such Registrable Securities.


 


(h)                                 Entire
Agreement. This Agreement, the Securities Purchase Agreement, the
Certificate of Designation, the Warrants, and the other Transaction Documents
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof and thereof. 
There are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein and therein.  This Agreement, the Securities Purchase
Agreement, the Certificate of Designation, the Warrants, and the other
Transaction Documents supersede all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof and thereof.


 


(i)                                     Headings.  The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.


 


11

















 


(j)                                     Third
Party Beneficiaries.  This Agreement
is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.


 


[Signature Pages to Follow]


 


12

















 


IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first-above written.


 


WORLDGATE COMMUNICATIONS, INC.


 


 


	
  By:

  	
  /s/ Joel Boyarski

  	
   

  
	
   

  	
  Name:

  	
  Joel Boyarski

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
				



 


[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK


SIGNATURE PAGES FOR PURCHASERS FOLLOW]


 

















 


SATELLITE STRATEGIC FINANCE ASSOCIATES, LLC


 


	
  By:

  	
  Satellite Asset Management, L.P., its Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian S. Kriftcher

  	
   

  
	
   

  	
   

  	
  Brian S. Kriftcher

  
	
   

  	
   

  	
  Chief Operating Officer and Principal

  



 

















 


CAPITAL VENTURES INTERNATIONAL


 


	
  By:

  	
  Heights Capital Management, Inc., its authorized agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin Kobinger

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Martin Kobinger

  
	
   

  	
   

  	
  Title:

  	
  Investment Manager

  
						



 

















 


CASTLE CREEK TECHNOLOGY PARTNERS LLC


 


	
  By:

  	
  Castle Creek Partners, LLC, its Investment Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas A. Frei

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Thomas A. Frei

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  
						



 

















 


CRANSHIRE CAPITAL, L.P.


 


 


	
   

  	
  By:

  	
  /s/ Mitchell P. Kopin

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Mitchell P. Kopin

  
	
   

  	
   

  	
  Title:

  	
  President – Downsview Capital, the General Partner

  
					



 

















 


IROQUOIS CAPITAL LP


 


	
  By:

  	
  Iroquois Capital Partners LLC, its Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joshua Silverman

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Joshua Silverman

  
	
   

  	
   

  	
  Title:

  	
  Partner

  
						



 

















 


OMICRON MASTER TRUST


 


	
  By:

  	
  Omicron Capital L.P., as advisor

  
	
  By:

  	
  Omicron Capital Inc., its general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bruce Bernstein

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Bruce Bernstein

  
	
   

  	
   

  	
  Title:

  	
  Managing Partner

  
						



 

















 


SMITHFIELD FIDUCIARY LLC


 


 


	
  By:

  	
  /s/ Adam J. Chill

  	
   

  
	
   

  	
  Name:

  	
  Adam J. Chill

  
	
   

  	
  Title:

  	
  Authorized Signatory