Exhibit 4.1


 


THIS
WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “ACT”).  NO TRANSFER OF THIS WARRANT
SHALL BE VALID OR EFFECTIVE UNLESS SUCH TRANSFER IS MADE (A) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR (B) AN EXEMPTION
FROM SUCH REGISTRATION IS AVAILABLE.


 


	
  Warrant No. -

  	
   

  	
  Issue Date: August 3, 2005

  



 


WARRANT TO PURCHASE COMMON STOCK


OF


WORLDGATE COMMMUNICATIONS, INC.


 


This
certifies that, for value received, receipt and sufficiency of which are hereby
acknowledged,                         
(the “Holder”), is entitled, subject to the
terms and conditions set forth below, to purchase from WorldGate Communications, Inc.,
a Delaware corporation (the “Company”),                           
validly issued, fully paid and nonassessable shares (the “Warrant
Shares”) of Common Stock of the Company, par value $0.01 per share
(the “Common Stock”), subject to adjustment
as provided herein, at a purchase price equal to $5.00 per
share (the “Exercise Price”), subject to
adjustment as provided herein.


 


The
term “Warrant” as used herein shall mean this
Warrant, and any warrants delivered in substitution or exchange therefor as
provided herein.


 


1.                                       Term
of Warrant.  Subject to the terms and
conditions set forth herein, this Warrant shall be exercisable, in whole or in
part, during the term commencing on February 3, 2006 and ending at 5:00 P.M.
(United States Eastern Time) on August 3, 2010 (subject to extension as
provided below, the “Exercise Period”);
provided, however,
that in the event that the expiration date of this Warrant shall fall on a day
that is not a Business Day (defined below), the expiration date for this
Warrant shall be extended to 5:00 P.M. (United States Eastern Time) on the
Business Day following such date.  The
term “Business Day” shall mean any day except
a Saturday, Sunday or any day on which banking institutions are authorized or
required to close in the city of New York, New York.


 


2.                                       Exercise
of Warrant.


 


(a)                                  This
Warrant may be exercised by the Holder, in whole or in part, by (i) the
surrender of this Warrant to the Company, with the Notice of Exercise annexed
hereto duly completed and executed on behalf of the Holder and delivered to the
Company during the Exercise Period and, (ii) in the case of a Cash
Exercise (defined below), the delivery of payment to the Company of the
Exercise Price for the number of Warrant Shares specified in the Notice of
Exercise.


 





















 


(b)                                 The
Company agrees that such Warrant Shares shall be deemed to be issued to the
Holder as the record holder of such Warrant Shares as of the close of business
on the date on which this Warrant shall have been surrendered and payment made
for the Warrant Shares as provided herein. 
A stock certificate or certificates for the Warrant Shares specified in
the Notice of Exercise shall be delivered to the Holder as promptly as
practicable, and in any event within five days thereafter.  If this Warrant shall have been exercised
only in part, the Company shall, at the time of delivery of the stock
certificate or certificates, deliver to the Holder a new Warrant evidencing the
rights to purchase the remaining Warrant Shares, which new Warrant shall in all
other respects be identical with this Warrant. 
Notwithstanding the foregoing, if the Company’s transfer agent is
participating in the Depository Trust Company (“DTC”)
Fast Automated Securities Transfer program, and so long as the certificates
therefore do not bear a legend (pursuant to the terms of the Securities
Purchase Agreement, dated as of August 3,
2005, among the Company and the investors identified on the signature pages thereto
(the “Securities Purchase Agreement”))
and the Holder is not then required to return such certificate for the
placement of a legend thereon (pursuant to the terms of the Securities Purchase
Agreement), the Company shall cause its transfer agent to promptly
electronically transmit the Warrant Shares issuable upon conversion to the Holder
by crediting the account of the Holder or its nominee with DTC through its Deposit
Withdrawal Agent Commission system (“DTC Transfer”).  If the aforementioned conditions to a DTC
Transfer are not satisfied, the Company shall deliver as provided above to the
Holder physical certificates representing the Warrant Shares issuable upon conversion.  Further, the Holder may instruct the Company
to deliver to the Holder physical certificates representing the Warrant Shares
issuable upon conversion in lieu of delivering such shares by way of DTC
Transfer.


 


(c)                                  Notwithstanding
anything to the contrary contained herein, the number of Warrant Shares that
may be acquired by the Holder upon any exercise of this Warrant (or otherwise
in respect hereof) shall be limited to the extent necessary to insure that,
following such exercise (or other issuance), the total number of shares of
Common Stock then beneficially owned by such Holder and its Affiliates and any
other Persons whose beneficial ownership of Common Stock would be aggregated
with the Holder’s for purposes of Section 13(d) of the Exchange Act,
does not exceed 4.99% of the total number of issued and outstanding shares of
Common Stock (including for such purpose the shares of Common Stock issuable
upon such exercise). For such purposes, beneficial ownership shall be
determined in accordance with Section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder. Each delivery of a
Notice of Exercise hereunder will constitute a representation by the Holder
that it has evaluated the limitation set forth in this paragraph and determined
that issuance of the full number of Warrant Shares requested in such Notice of
Exercise is permitted under this paragraph. By written notice to the Company,
the Holder may waive the provisions of this Section but any such waiver
will not be effective until the 61st
day after such notice is delivered to the Company.


 


3.                                       No
Fractional Shares or Scrip.  No
fractional shares or scrip representing fractional shares shall be issued upon
the exercise of this Warrant.  In lieu of
any fractional share to which the Holder would otherwise be entitled, the
Company shall make a cash payment equal to the fair market value multiplied by
such fraction or, at the Company’s option, round such fractional share to the
nearest whole share.  The fair market
value shall be determined by the Company’s Board of Directors.


 





















 


4.                                       Replacement
of Warrant.  On receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant and, in the case of loss, theft or destruction, on
delivery of an indemnity agreement reasonably satisfactory in form and
substance to the Company or, in the case of mutilation, on surrender and
cancellation of this Warrant, the Company at its expense shall execute and
deliver, in lieu of this Warrant, a new warrant of like tenor and amount.


 


5.                                       Rights
of Stockholders.  Subject to the
provisions of Sections 7 and 9 hereof, the Holder shall not be entitled to vote
or receive dividends or be deemed the holder of Common Stock or any other
securities of the Company that may at any time be issuable on the exercise
hereof for any purpose, nor shall anything contained herein be construed to
confer upon the Holder, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action (whether upon any recapitalization, issuance of
stock, reclassification of stock, change of par value, or change of stock to no
par value, consolidation, merger, conveyance or otherwise) or to receive notice
of meetings, or to receive dividends or subscription rights or otherwise until
the Warrant shall have been exercised as provided herein.


 


6.                                       Payment
of the Exercise Price; Cashless Exercise. 
The Holder may pay the Exercise Price in either of the following forms
or, at the election of Holder, a combination thereof:


 


(a)                                  through
a cash exercise (a “Cash Exercise”),
payable by wire transfer of immediately available funds to a bank account
specified by the Company or by certified or bank cashiers’ check in lawful
money of the United States of America; or


 


(b)                                 if (i) the Registration Statement
(as defined in the Securities Purchase
Agreement) has not been declared effective until such time as the
Registration Statement is declared effective or at any time a Registration
Statement is no longer effective or a stop order issued by the staff of the
Securities and Exchange Commission is in effect with respect to the
Registration Statement, and (ii) the fair market value of one share of the
Company’s Common Stock is greater than the Exercise Price (at the date of
calculation as set forth below),
through a cashless exercise (a “Cashless Exercise”). 
The Holder may effect a Cashless Exercise by surrendering this Warrant to the
Company and noting on the Notice of Exercise that the Holder wishes to effect a
Cashless Exercise, upon which the Company shall issue to the Holder the number
of Warrant Shares determined as follows:


 


X = Y
(A-B)


A


 


where:                                                             X
=                             the
number of Warrant Shares to be issued to the Holder;


 


Y =                              the
number of Warrant Shares purchasable under the Warrant or, if only a portion of
the Warrant is being exercised, the portion of the Warrant being canceled (at
the date of such calculation);


 


A =                            the
fair market value of one share of the Company’s Common Stock (at the date of
such calculation); and


 


B =                              Exercise
Price (as adjusted to the date of such calculation).


 





















 


For purposes of the above
calculation, the “fair market value”
of one share of Common Stock shall mean (i) the average of the closing
sales prices for the shares of Common Stock on the Nasdaq SmallCap Market or
other trading market where such security is listed or traded as reported by
Bloomberg Financial Markets (or a comparable reporting service of national
reputation selected by the Company and reasonably acceptable to the Holders if
Bloomberg Financial Markets is not then reporting sales prices of such
security) (collectively, “Bloomberg”) for
the 10 consecutive trading days immediately preceding such date, or (ii) if
the Nasdaq SmallCap Market is not the principal trading market for the shares
of Common Stock, the average of the reported sales prices reported by Bloomberg
on the principal trading market for the Common Stock during the same period,
or, if there is no sales price for such period, the last sales price reported
by Bloomberg for such period, or (iii) if neither of the foregoing
applies, the last sales price of such security in the over-the-counter market on
the pink sheets or bulletin board for such security as reported by Bloomberg,
or if no sales price is so reported for such security, the last bid price of
such security as reported by Bloomberg or (iv) if fair market value cannot
be calculated as of such date on any of the foregoing bases, the fair market
value shall be as determined by the Board of Directors of the Company in the
exercise of its good faith judgment.


 


7.                                       Adjustments.


 


(a)                                  Adjustment
for Stock Splits and Combinations. 
If the Company shall effect a subdivision of the outstanding shares of
the Company’s Common Stock, then the Exercise Price then in effect immediately
before that subdivision shall be proportionately decreased and the number of
shares of Common Stock issuable upon any exercise of such warrant shall be
proportionally increased, and conversely, if the Company combines the
outstanding shares of the Company’s Common Stock into a smaller number of
shares, the Exercise Price then in effect immediately before the combination
shall be proportionately increased and the number of shares of Common Stock
issuable upon any exercise of such warrant shall be proportionally decreased.


 


(b)                                 Adjustment
for Certain Dividends and Distributions. 
If the Company makes or fixes a record date for the determination of
holders of Common Stock entitled to receive, a dividend or other distribution
payable in additional shares of Common Stock, then and in each such event (i) the
Exercise Price then in effect shall be decreased as of the time of such issuance
or, in the event such record date is fixed, as of the close of business on such
record date, by multiplying the Exercise Price then in effect by a fraction (1) the
numerator of which is the total number of shares of Common Stock issued and
outstanding immediately prior to the time of such issuance or the close of
business on such record date, and (2) the denominator of which shall be
the total number of shares of Common Stock issued and outstanding immediately
prior to the time of such issuance or the close of business on such record date
plus the number of shares of Common Stock issuable in payment of such dividend
or distribution, and (ii) the number of shares of Common Stock issuable
upon exercise of this Warrant at such time shall be increased as of the time of
such issuance, or in the event such record date is fixed, as of the close of
business on such record date, by multiplying the number of shares issuable upon
any exercise of this Warrant by a fraction (1) the numerator of which
shall be the total number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close of business on such
record date plus the number of shares of Common Stock issuable in


 





















 


payment of such dividend or distribution, and (2) the
denominator of which shall be the total number of shares of Common Stock issued
and outstanding immediately prior to the time of such issuance or the close of
business on such record date; provided, however, that if such record date is
fixed and such dividend is not fully paid or if such distribution is not fully
made on the date fixed therefor, the Exercise Price and the number of shares of
Common Stock issuable upon any exercise of this Warrant shall be recomputed
accordingly as of the close of business on such record date and thereafter the
Exercise Price shall be adjusted pursuant to this section as of the time
of actual payment of such dividends or distributions.


 


(c)                                  Adjustments
for Other Dividends and Distributions. 
In the event the Company at any time prior to exercise of this Warrant
shall make or issue, or fix a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution payable in
securities of the Company (other than Common Stock for which an adjustment is
made pursuant to Section 7(a), Section 7(b) or Section 7(d) hereof)
or in cash or other property, then and in each such event provision shall be
made so that the Holder shall receive upon exercise hereof, in addition to the
number of shares of Common Stock issuable hereunder, the kind and amount of
securities of the Company and/or cash and other property which the Holder would
have been entitled to receive had this Warrant been exercised into Common Stock
on the date of such event and had the Holder thereafter, during the period from
the date of such event to and including the Exercise Date, retained any such
securities receivable, giving application to all adjustments called for during
such period under this Section 7 with respect to the rights of the Holder.


 


(d)                                 Reorganizations,
Mergers, Consolidations or Transfers of Assets.  If at any time or from time to time there is
a capital reorganization of the Common Stock or other securities that will be
issuable upon exercise of this Warrant, or a merger, consolidation or binding
share exchange of the Company with or into another entity, or the transfer of
all or substantially all of the Company’s properties and assets to any other
entity, then, as a part of such capital reorganization, merger, consolidation,
exchange or transfer, provision shall be made so that Holder shall thereafter
be entitled to receive upon exercise of this Warrant the number of shares of
stock or other securities, cash or property to which a holder of the number of
shares of Common Stock or other securities otherwise deliverable upon exercise
of this Warrant would have been entitled on such capital reorganization,
merger, consolidation, exchange or transfer in respect of such Common Stock or
other securities.  In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Section 7 to the end that the provisions of this Section 7
(including adjustment of the then in effect Exercise Price and the number of
shares purchasable upon exercise of this Warrant) shall be applicable after
that event and be as nearly equivalent as may be practicable.  Upon the consummation of such capital
reorganization, merger, consolidation, exchange or transfer, the successor (if
other than the Company) resulting from such transaction or the entity acquiring
such assets or other appropriate entity shall assume, by written instrument,
the obligation to deliver to Holder such securities, cash or other property as,
in accordance with the foregoing provisions, Holder may be entitled to purchase
pursuant to this Warrant.


 


(e)                                  Certificate
of Adjustment.  Upon the occurrence
of each adjustment or readjustment pursuant to this Section 7 of the
Exercise Price, the number of Warrant Shares or other securities issuable upon exercise
of this Warrant, the Company shall promptly compute


 





















 


such adjustment or readjustment in accordance with the
terms hereof and furnish to the Holder a certificate setting forth such
adjustment or readjustment (including the kind and amount of securities, cash
or other property for which this Warrant shall be exercisable and the Exercise
Price) and showing in detail the facts upon which such adjustment or
readjustment is based.  The Company
shall, upon the written request at any time of the Holder, furnish or cause to
be furnished to the Holder a certificate setting forth (i) the Exercise
Price then in effect and (ii) the number of Warrant Shares and the amount,
if any, of other securities, cash or property which then would be received upon
the exercise of this Warrant.


 


(f)                                    In
case:


 


(i)                                     the
Company shall declare a dividend or other distribution on its Common Stock;


 


(ii)                                  the
Company or any of its subsidiaries shall make a tender offer for the Common
Stock;


 


(iii)                               the Company shall
authorize the granting to holders of its Common Stock of rights, options or
warrants to subscribe for or purchase any shares of capital stock of any class;


 


(iv)                              of
any reclassification of the Common Stock (other than a subdivision or
combination of its outstanding shares of Common Stock), or of any
consolidation, merger or share exchange to which the Company is a party and for
which approval of any stockholders of the Company is required, or of the sale
or transfer of all or substantially all of the assets of the Company; or


 


(v)                                 of
the voluntary of involuntary dissolution, liquidation or winding up of the
Company;


 


then the Company shall cause to be mailed to the
Holder of this Warrant, at least ten days prior written notice stating (A) the
date on which a record has been taken for the purpose of such dividend,
distribution or grant of rights, options or warrants, or, if record is not to
be taken, the date as of which the identity of the holders of Common Stock of
record entitled to such dividend, distribution, rights, options or warrants is
to be determined, (B) the date on which a record shall be taken for
determining rights to vote, if any, in respect of the matters referred to in
clauses (i) through (v), and (C) the date on which such
reclassification, consolidation, merger, share exchange, sale, transfer,
dissolution, liquidation or winding up is expected to become effective, 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 deliverable upon such reclassification, consolidation, merger, share
exchange, sale, transfer, dissolution, liquidation or winding up.


 


8.                                       Transfers.


 


(a)                                  The
Warrant Shares shall not be sold or transferred unless either (i) they
first shall have been registered under the Act and any other applicable
securities laws, or (ii) the Company first shall have been furnished with
an opinion of legal counsel, reasonably satisfactory


 





















 


to the Company, to the effect that such sale or transfer
is exempt from the registration requirements of the Act and any other
applicable securities laws. 
Notwithstanding the foregoing, no opinion of counsel shall be required
for a transfer by a holder of Warrant Shares (1) which is a corporation to
an affiliate of such corporation, (2) which is a partnership to a partner
of such partnership or a retired partner of such partnership or to the estate
of any such partner or retired partner, or (3) which is a limited
liability company to a member of such limited liability company or a retired
member or to the estate of any such member or retired member; provided that in
each case the transferee in each case executes the Assignment Form attached
hereto.


 


(b)                                 In
addition, the Holder shall not assign, pledge, hypothecate, sell or otherwise
transfer this Warrant (other than to an affiliate of the Holder) without the
prior written consent of the Company, which consent will not be unreasonably
withheld, delayed or conditioned.


 


9.                                       Covenants
of the Company.  The Company hereby
covenants and agrees that:


 


(a)                                  during
the term of this Warrant, the Company will reserve a sufficient number of
shares of authorized and unissued Common Stock to provide for the issuance of
Common Stock, which shares shall be duly authorized, fully paid and
non-assessable, upon the exercise of this Warrant and, from time to time, will
take all steps necessary to amend its Certificate of Incorporation to provide
sufficient reserves of shares of Common Stock issuable upon exercise of the
Warrant;


 


(b)                                 the
Company will not, by amendment of its Certificate of Incorporation or through
reorganization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms.


 


(c)                                  all
shares that may be issued upon the exercise of this Warrant, upon exercise of
this Warrant and payment of the Exercise Price, all as set forth herein, will
be free from all taxes, liens and charges in respect of the issue thereof
(other than taxes in respect of any transfer occurring contemporaneously or
otherwise specified herein); and


 


(d)                                 issuance
of this Warrant by the Company shall constitute full authority to its officers
who are charged with the duty of executing stock certificates to execute and
issue the necessary certificates for shares of Common Stock upon the exercise
of this Warrant


 


10.                                 Notices.  Any notice or other communication to the
Company or to Holder regarding the Warrant shall be in writing and shall be
deemed duly given or made when hand delivered, when delivered by overnight
courier or three business days after mailed by registered or certified mail,
return receipt requested, postage prepaid and, if to the Company, to the
Company’s office at 3190 Tremont Avenue, Trevose, PA 19053, or such other
address as the Company may designate by notice to Holder and, if to Holder, to:
                                                , or such other address as Holder may
designate by prior written notice to the Company.


 


11.                                 Amendments.  Neither this Warrant nor any term hereof may
be amended, waived, discharged or terminated other than by a written instrument
signed by the Company and the Holder.


 





















 


12.                                 Governing
Law.  This Warrant shall be governed
in all respects by the internal laws of the State of Delaware as applied to
contracts entered into solely between residents of, and to be performed
entirely within, such state, and without reference to principles of conflicts
of laws or choice of laws.


 


13.                                 Successors
and Assigns.  This Warrant shall be
binding upon the Company’s successors and assigns and shall inure to the
benefit of the Holder’s successors, legal representatives and assigns.


 





















 


IN
WITNESS WHEREOF, WORLDGATE COMMUNICATIONS, INC. has caused this Warrant to be
executed by its authorized officer.


 


	
   

  	
  WORLDGATE COMMMUNICATIONS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						



 





















 


NOTICE OF EXERCISE


 


To:  WORLDGATE
COMMMUNICATIONS, INC.


 


(1)                                  The
undersigned hereby elects to purchase                      
shares of Common Stock of WorldGate Communications, Inc., pursuant to the
terms of the attached Warrant, and tenders herewith payment of the purchase
price for such shares in full.


 


(2)                                  Please
issue a certificate or certificates representing said shares of Common Stock in
the name of the undersigned or in such other name as is specified below:


 


	
   

  	
   

  	
   

  
	
   

  	
  (Name)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Name)

  	
   

  



 


 


(3)                                  Please
issue a new Warrant for the unexercised portion of the attached Warrant in the
name of the undersigned or in such other name as is specified below:


 


 


	
   

  	
   

  	
   

  
	
   

  	
  (Name)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (Date)

  	
   

  	
  (Signature)

  	
   

  



 





















 


ASSIGNMENT FORM


 


FOR
VALUE RECEIVED, the undersigned registered owner of this Warrant hereby sells,
assigns and transfers unto the Assignee named below all of the rights of the
undersigned under the within Warrant, with respect to the number of shares of
Common Stock set forth below:


 


	
   

  	
   

  	
   

  	
   

  	
  No of

  
	
  Name of Assignee

  	
   

  	
  Address

  	
   

  	
  Shares

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 


and does hereby
irrevocably constitute and appoint as Attorney                                  to
make such transfer on the books of WORLDGATE COMMUNICATIONS, INC., maintained
for the purpose, with full power of substitution in the premises.


 


	
  Dated:

  	
   

  	
   

  
	
   

  
	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature of Holder

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature of Assignee