Exhibit 4.1


 


EXHIBIT B


 


NEITHER THESE SECURITIES NOR THE SECURITIES
FOR 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, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS.  THESE
SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY
SUCH SECURITIES.


 


 


WORLDGATE COMMUNICATIONS, INC.


 


WARRANT


 


	
  Warrant No. [  ]

  	
   

  	
  Dated: 
  November 28, 2003

  



 


WorldGate
Communications, Inc., a Delaware corporation (the “Company”), hereby certifies that, for value received, [Name of
Holder] or its registered assigns (the “Holder”),
is entitled to purchase from the Company up to a total of
[          ](1) shares of
common stock, $0.01 par value per share (the “Common
Stock”), of the Company (each such share, a “Warrant Share” and all such shares, the “Warrant Shares”) at an exercise price equal
to $1.00 per share (as adjusted from time to time as provided in Section 9,
the “Exercise Price”), at any time
and from time to time from and after the date hereof and through and including
the date that is five years from the date of issuance hereof (the “Expiration Date”), and subject to the
following terms and conditions.  This
Warrant (this “Warrant”) is one of
a series of similar warrants issued pursuant to that certain Securities
Purchase Agreement, dated as of the date hereof, by and among the Company and
the Purchasers identified therein (the “Purchase
Agreement”).  All such
warrants are referred to herein, collectively, as the “Warrants.”


 


1.                                       Definitions.  In addition to the terms defined
elsewhere in this Warrant, capitalized terms that are not otherwise defined
herein have the meanings given to such terms in the Purchase Agreement.


 


2.                                       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 from time to time. 
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, absent actual notice to
the contrary.


 












(1)  30% warrant
coverage


 

















 


3.                                       Registration of Transfers.  The
Company shall register the transfer of any portion of this Warrant 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 its address specified herein. 
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 by such transferee of all of the rights and obligations of a holder
of a Warrant.


 


4.                                       Exercise and Duration of Warrants.


 


(a)                                  This
Warrant shall be exercisable by the registered Holder at any time and from time
to time on or after the date hereof to and including the Expiration Date.  At 5:30 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; provided that, if the average of the
Closing Prices for the five Trading Days immediately prior to (but not
including) the Expiration Date exceeds the Exercise Price on the Expiration
Date, then this Warrant shall be deemed to have been exercised in full (to the
extent not previously exercised) on a “cashless exercise” basis at 5:30 P.M.
New York City time on the Expiration Date if a “cashless exercise” may occur at
such time pursuant to Section 10 below. 
Notwithstanding anything to the contrary herein, the Expiration Date
shall be extended for each day following the Effective Date that the
Registration Statement is not effective.


 


(b)                                 A
Holder may exercise this Warrant by delivering to the Company (i) an exercise
notice, in the form attached hereto (the “Exercise Notice”),
appropriately completed and duly signed, and (ii) payment of the Exercise
Price for the number of Warrant Shares as to which this Warrant is being
exercised (which may take the form of a “cashless exercise” if so indicated in
the Exercise Notice and if a “cashless exercise” may occur at such time
pursuant to Section 10 below), and the date such items are delivered to the
Company (as determined in accordance with the notice provisions hereof) is an “Exercise Date.”  The
Holder shall not be required to deliver the original Warrant in order to effect
an exercise hereunder.  Execution and
delivery of the Exercise Notice shall have the same effect as cancellation of
the original Warrant and issuance of a New Warrant evidencing the right to
purchase the remaining number of Warrant Shares.


 


5.                                       Delivery of Warrant Shares.


 


(a)                                  Upon
exercise of this Warrant, the Company shall promptly (but in no event later
than three Trading Days after the Exercise Date) 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, free of restrictive legends unless a
registration statement covering the resale of the Warrant Shares and naming the
Holder as a selling stockholder thereunder is not then effective and the
Warrant Shares are not freely transferable without volume restrictions pursuant
to Rule 144 under the Securities Act. 
The Holder, or any Person so designated by the Holder to receive Warrant


 


2

















 


Shares, shall be deemed to have
become holder of record of such Warrant Shares as of the Exercise Date.  The Company shall, upon request of the
Holder, use its best efforts to deliver Warrant Shares hereunder electronically
through the Depository Trust Corporation or another established clearing
corporation performing similar functions.


 


(b)                                 This
Warrant is exercisable, either in its entirety or, from time to time, for a
portion of the number of Warrant Shares. 
Upon surrender of this Warrant following one or more partial exercises,
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.


 


(c)                                  In
addition to any other rights available to a Holder, if the Company fails to
deliver to the Holder a certificate representing Warrant Shares by the third
Trading Day after the date on which delivery of such certificate is required by
this Warrant, and if after such third Trading Day the Holder purchases (in an
open market transaction or otherwise) shares of Common Stock to deliver in satisfaction
of a sale by the Holder of the Warrant Shares that the Holder anticipated
receiving from the Company (a “Buy-In”), then
the Company shall, within three Trading Days after the Holder’s request and in
the Holder’s discretion, either (i) pay cash to the Holder in an amount equal
to the Holder’s total purchase price (including brokerage commissions, if any)
for the shares of Common Stock so purchased (the “Buy-In
Price”), at which point the Company’s obligation to deliver such
certificate (and to issue such Common Stock) shall terminate, or (ii) promptly
honor its obligation to deliver to the Holder a certificate or certificates
representing such Common Stock and pay cash to the Holder in an amount equal to
the excess (if any) of the Buy-In Price over the product of (A) such number of
shares of Common Stock, times (B) the Closing Price on the date of the event
giving rise to the Company’s obligation to deliver such certificate.


 


(d)                                 The
Company’s obligations to issue and deliver Warrant Shares in accordance with
the terms hereof are absolute and unconditional, irrespective of any action or
inaction by the Holder to enforce the same, any waiver or consent with respect
to any provision hereof, the recovery of any judgment against any Person or any
action to enforce the same, or any setoff, counterclaim, recoupment, limitation
or termination, or any breach or alleged breach by the Holder or any other
Person of any obligation to the Company or any violation or alleged violation
of law by the Holder or any other Person, and irrespective of any other
circumstance which might otherwise limit such obligation of the Company to the
Holder in connection with the issuance of Warrant Shares.  Nothing herein shall limit a Holder’s right
to pursue any other remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver
certificates representing shares of Common Stock upon exercise of the Warrant
as required pursuant to the terms hereof.


 


6.                                       Charges, Taxes and Expenses.  
Issuance and delivery of certificates for shares of Common Stock upon
exercise of this Warrant shall be made without charge to the Holder for any
issue or transfer tax, withholding tax, transfer agent fee or other incidental
tax or expense in respect of the issuance of such certificates, all of which
taxes and expenses shall be paid by the Company; 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 Holder or an Affiliate
thereof.  The Holder


 


3

















 


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 customary and reasonable bond or indemnity, if
requested.  Applicants for a New Warrant
under such circumstances shall also comply with such other reasonable
regulations and procedures and pay such other reasonable third-party costs 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 and otherwise unreserved 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 contingent purchase rights of persons
other than the Holder (after giving effect to the adjustments and restrictions
of Section 9, if any). The Company covenants that all Warrant Shares 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.  The Company will take all such action as may be necessary to assure that
such shares of Common Stock may be issued as provided herein without violation
of any applicable law or regulation, or of any requirements of any securities
exchange or automated quotation system upon which the Common Stock may be
listed.


 


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.


 


(a)                                  Stock
Dividends and Splits.  If the
Company, at any time while this Warrant is outstanding, (i) pays a stock
dividend on its Common Stock or otherwise makes a distribution on any class of
capital stock that is payable in shares of Common Stock, (ii) subdivides
outstanding shares of Common Stock into a larger number of shares, or (iii)
combines outstanding shares of Common Stock into a smaller number of shares,
then in each such case the Exercise Price shall be multiplied by a fraction of
which the numerator shall be the number of shares of Common Stock outstanding
immediately before such event and of which the denominator shall be the number
of shares of Common Stock outstanding immediately after such event.  Any adjustment made pursuant to clause (i)
of this paragraph shall become effective immediately after the record date for
the determination of stockholders entitled to receive such dividend or
distribution, and any adjustment pursuant to clause (ii) or (iii) of this
paragraph shall become effective immediately after the effective date of such
subdivision or combination.


 


(b)                                 Pro
Rata Distributions.  If the Company,
at any time while this Warrant is outstanding, distributes to holders of Common
Stock (i) evidences of its indebtedness, (ii) any security (other than a
distribution of Common Stock covered by the preceding paragraph),
(iii) rights or warrants to subscribe for or purchase any security, or
(iv) any other asset (in each case, “Distributed Property”),
then in each such case the Exercise Price in effect immediately


 


4

















 


prior to the record date fixed
for determination of stockholders entitled to receive such distribution shall
be adjusted (effective on such record date) to equal the product of such
Exercise Price times a fraction of which the denominator shall be the average
of the Closing Prices for the five Trading Days immediately prior to (but not
including) such record date and of which the numerator shall be such average
less the then fair market value of the Distributed Property distributed in
respect of one outstanding share of Common Stock, as determined by the
Company’s independent certified public accountants that regularly examine the
financial statements of the Company, (an “Appraiser”).  In such event, 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 such fair market value shall be deemed to equal the average of
the values determined by each of the Appraiser and such appraiser.  As an alternative to the foregoing
adjustment to the Exercise Price, at the request of the Holder delivered before
the 90th day after such record date, the Company will deliver to such Holder,
within five Trading Days after such request (or, if later, on the effective
date of such distribution), the Distributed Property that such Holder would
have been entitled to receive in respect of the Warrant Shares for which this
Warrant could have been exercised immediately prior to such record date.  If such Distributed Property is not
delivered to a Holder pursuant to the preceding sentence, then upon expiration
of or any exercise of the Warrant that occurs after such record date, such
Holder shall remain entitled to receive, in addition to the Warrant Shares
otherwise issuable upon such exercise (if applicable), such Distributed
Property.


 


(c)                                  Fundamental
Transactions.  If, at any time while
this Warrant is outstanding, (i) the Company effects any merger or
consolidation of the Company with or into another Person, (ii) the Company
effects any sale of all or substantially all of its assets in one or a series
of related transactions, (iii) any tender offer or exchange offer (whether by
the Company or another Person) is completed pursuant to which holders of Common
Stock are permitted to tender or exchange their shares for other securities,
cash or property, or (iv) the Company effects any reclassification of the
Common Stock or any compulsory share exchange pursuant to which the Common
Stock is effectively converted into or exchanged for other securities, cash or
property (other than as a result of a subdivision or combination of shares of
Common Stock covered by Section 9(a) above) (in any such case, a “Fundamental Transaction”), then the Holder shall have the
right thereafter to receive, upon exercise of this Warrant, the same amount and
kind of securities, cash or property as it would have been entitled to receive
upon the occurrence of such Fundamental Transaction if it had been, immediately
prior to such Fundamental Transaction, the holder of the number of Warrant
Shares then issuable upon exercise in full of this Warrant (the “Alternate Consideration”). 
The aggregate Exercise Price for this Warrant will not be affected by
any such Fundamental Transaction, but the Company shall apportion such
aggregate Exercise Price among the Alternate Consideration in a reasonable
manner reflecting the relative value of any different components of the
Alternate Consideration.  If holders of
Common Stock are given any choice as to the securities, cash or property to be
received in a Fundamental Transaction, then the Holder shall be given the same
choice as to the Alternate Consideration it receives upon any exercise of this
Warrant following such Fundamental Transaction.  At the Holder’s request, any successor to the Company or
surviving entity in such Fundamental Transaction shall issue to the Holder a
new warrant consistent with the foregoing provisions and evidencing the
Holder’s right to purchase the Alternate Consideration for the aggregate
Exercise Price upon exercise thereof. 
The terms of any agreement pursuant to which a Fundamental Transaction
is effected shall include terms requiring


 


5

















 


any such successor or surviving
entity to comply with the provisions of this paragraph (c) and insuring that
the Warrant (or any such replacement security) will be similarly adjusted upon
any subsequent transaction analogous to a Fundamental Transaction. If any
Fundamental Transaction constitutes or results in a Change of Control, then at
the request of the Holder delivered before the 90th day after such Fundamental
Transaction, the Company (or any such successor or surviving entity) will
purchase the Warrant from the Holder for a purchase price, payable in cash
within five Trading Days after such request (or, if later, on the effective
date of the Fundamental Transaction), equal to the Black-Scholes value of the
remaining unexercised portion of this Warrant on the date of such request.


 


(d)                                 Subsequent
Equity Sales.


 


(i)                                     If,
at any time while this Warrant is outstanding, the Company or any Subsidiary
issues additional shares of Common Stock or rights, warrants, options or other
securities or debt convertible, exercisable or exchangeable for shares of
Common Stock or otherwise entitling any Person to acquire shares of Common
Stock (collectively, “Common Stock Equivalents”)
at an effective net price to the Company per share of Common Stock (the “Effective Price”) less than the Exercise Price (as adjusted
hereunder to such date), then the Exercise Price shall be reduced to equal the
lesser of (x) 125% of the Effective Price and (x) the Exercise Price.  If, at any time while this Warrant is
outstanding, the Company or any Subsidiary issues Common Stock or Common Stock
Equivalents at an Effective Price greater than the Exercise Price (as adjusted
hereunder to such date) but less than the average Closing Price over the five
Business Days prior to such issuance (the “Adjustment Price”),
then the Exercise Price shall be reduced to equal the product of (A) the Exercise
Price in effect immediately prior to such issuance of Common Stock or Common
Stock Equivalents times (B) a fraction, the numerator of which is the sum of
(1) the number of shares of Common Stock outstanding immediately prior to such
issuance, plus (2) the number of shares of Common Stock which the aggregate
Effective Price of the Common Stock issued (or deemed to be issued) would
purchase at the Adjustment Price, and the denominator of which is the aggregate
number of shares of Common Stock outstanding or deemed to be outstanding
immediately after such issuance.  For
purposes of this paragraph, in connection with any issuance of any Common Stock
Equivalents, (A) the maximum number of shares of Common Stock potentially
issuable at any time upon conversion, exercise or exchange of such Common Stock
Equivalents (the “Deemed Number”)
shall be deemed to be outstanding upon issuance of such Common Stock
Equivalents, (B) the Effective Price applicable to such Common Stock shall
equal the weighted average dollar value of consideration payable to the Company
to purchase such Common Stock Equivalents and to convert, exercise or exchange
them into Common Stock (net of any discounts, fees, commissions and other
expenses), divided by the Deemed Number, and (C) no further adjustment shall be
made to the Exercise Price upon the actual issuance of Common Stock upon
conversion, exercise or exchange of such Common Stock Equivalents.


 


(ii)                                  If,
at any time while this Warrant is outstanding, the Company or any Subsidiary
issues Common Stock Equivalents with an Effective Price or a number of
underlying shares that floats or resets or otherwise varies or is subject to
adjustment based (directly or indirectly) on market prices of the Common Stock
(a “Floating Price


 


6

















 


Security”), then for
purposes of applying the preceding paragraph in connection with any subsequent
exercise, the Effective Price will be determined separately on each Exercise
Date and will be deemed to equal the lowest Effective Price at which any holder
of such Floating Price Security is entitled to acquire Common Stock on such
Exercise Date (regardless of whether any such holder actually acquires any
shares on such date).


 


(iii)                               Notwithstanding
the foregoing, no adjustment will be made under this paragraph (d) in respect
to any issuance of Common Stock or Common Stock Equivalents (A) upon exercise
or conversion of any options or other securities described in Schedule 3.1(f)
of the Purchase Agreement (provided that such exercise or conversion occurs in
accordance with the terms thereof, without amendment or modification, and that
the applicable exercise or conversion price or ratio is described in such
schedule) or otherwise pursuant to any employee benefit plan described in the
SEC Reports, Schedule 3.1(f) of the Purchase Agreement or hereafter adopted by
the Company and approved by its stockholders, (B) in connection with any grant
of options to employees, officers, directors or consultants of the Company
pursuant to a stock option plan duly adopted by the Company’s board of
directors or in respect of the issuance of Common Stock upon exercise of any
such options, or (C) the issuance of securities, in connection with a joint
venture or development agreement or strategic partnership, or similar agreement
approved by the Company’s board of directors, a primary purpose of which is not
to raise equity capital and to an entity whose primary business is other than
investing in other entities.


 


(e)                                  Number
of Warrant Shares.  Simultaneously
with any adjustment to the Exercise Price pursuant to paragraphs (a) or (b) of
this Section, the number of Warrant Shares that may be purchased upon exercise
of this Warrant shall be increased or decreased proportionately, so that after
such adjustment the aggregate Exercise Price payable hereunder for the
increased or decreased number of Warrant Shares shall be the same as the
aggregate Exercise Price in effect immediately prior to such adjustment.


 


(f)                                    Calculations.  All calculations under this Section 9
shall be made to the nearest cent or the nearest 1/100th of a share, as
applicable.  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.


 


(g)                                 Notice
of Adjustments.  Upon the occurrence
of each adjustment pursuant to this Section 9, the Company at its
expense will promptly compute such adjustment in accordance with the terms of
this Warrant and prepare a certificate setting forth such adjustment, including
a statement of the adjusted Exercise Price and adjusted number or type of
Warrant Shares or other securities issuable upon exercise of this Warrant (as
applicable), describing the transactions giving rise to such adjustments and
showing in detail the facts upon which such adjustment is based.  Upon written request, the Company will
promptly deliver a copy of each such certificate to the Holder and to the
Company’s Transfer Agent.


 


(h)                                 Notice
of Corporate Events.  If the Company
(i) declares a dividend or any other distribution of cash, securities or other
property in respect of its Common Stock, including


 


7

















 


without limitation any granting
of rights or warrants to subscribe for or purchase any capital stock of the
Company or any Subsidiary, (ii) authorizes or approves, enters into any
agreement contemplating or solicits stockholder approval for any Fundamental
Transaction or (iii) authorizes the voluntary dissolution, liquidation or
winding up of the affairs of the Company, then the Company shall deliver to the
Holder a notice describing the material terms and conditions of such
transaction, at least 20 calendar days prior to the applicable record or
effective date on which a Person would need to hold Common Stock in order to
participate in or vote with respect to such transaction, and the Company will
take all steps reasonably necessary in order to insure that the Holder is given
the practical opportunity to exercise this Warrant prior to such time so as to
participate in or vote with respect to such transaction; provided, however,
that the failure to deliver such notice or any defect therein shall not affect
the validity of the corporate action required to be described in such notice.


 


10.                                 Payment of Exercise Price.  The
Holder shall pay the Exercise Price in immediately available funds; provided,
however, that the Holder may satisfy its obligation to pay the Exercise Price
through a “cashless exercise,” in which event 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 with respect to which this Warrant
  is being exercised.

  
	
   

  	
   

  
	
   

  	
  A = the average of the Closing Prices for the five Trading Days
  immediately prior to (but not including) the Exercise Date.

  
	
   

  	
   

  
	
   

  	
  B = the Exercise Price.

  



 


For purposes
of Rule 144 promulgated under the Securities Act, it is intended, understood
and acknowledged that the Warrant Shares issued in a cashless exercise
transaction shall be deemed to have been acquired by the Holder, and the
holding period for the Warrant Shares shall be deemed to have commenced, on the
date this Warrant was originally issued pursuant to the Purchase Agreement.


 


11.                                 Limitation on Exercise.


 


(a)                                  Notwithstanding
anything to the contrary contained herein, the number of shares of Common Stock
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 4.999% (the “Maximum
Percentage”) of the total number of issued and outstanding shares of
Common Stock (including for such purpose the shares of


 


8

















 


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.  The Company shall, instead of issuing shares
of Common Stock in excess of the limitation referred to in this Section
11,  pay to such Holder an amount in cash
equal to the fair market value, less the Exercise Price, of the number of
shares of Common Stock in excess of such limitation; provided, however,
that the Holder may, at its option, elect to waive the requirement to deliver
such cash and the Company’s obligation to issue shares in excess of the
foregoing limitation shall be suspended until such time, if any, as such shares
of Common Stock may be issued in compliance with such limitation.  Additionally, by written notice to the
Company, the Holder may waive the provisions of this Section 11 or increase or
decrease the Maximum Percentage to any other percentage specified in such
notice, but (i) any such waiver or increase will not be effective until the
61st day after such notice is delivered to the Company, and (ii) any such
waiver or increase or decrease will apply only to the Holder and not to any
other holder of Warrants.


 


(b)                                 Notwithstanding
anything to the contrary contained herein, the maximum number of shares of
Common Stock that the Company may issue pursuant to the Transaction Documents
at an effective purchase price less than the Closing Price on the Trading Day
immediately preceding the Closing Date shall equal 19.99% of the shares of
Common Stock outstanding on the Closing Date (the “Issuable Maximum”), unless
the Company obtains the necessary stockholder approvals required by the rules
and regulations of the Trading Market. 
If, at the time any Holder requests an exercise of any of the Warrants,
the Actual Minimum (excluding any shares issued or issuable at an effective
purchase price in excess of the Closing Price on the Trading Day immediately
preceding the Closing Date) exceeds the Issuable Maximum (and if the Company
has not previously obtained the required stockholder approval), then the Company
shall issue to the Holder requesting such exercise a number of shares of Common
Stock not exceeding such Holder’s pro-rata portion of the Issuable Maximum
(based on such Holder’s share (vis-à-vis other Holders) of the aggregate
purchase price paid under the Purchase Agreement and taking into account any
Warrant Shares previously issued to such Holder).  For the purposes hereof, “Actual
Minimum” shall mean, as of any date, the maximum aggregate number of
shares of Common Stock then issued or potentially issuable in the future
pursuant to the Transaction Documents, including any Underlying Shares issuable
upon exercise in full of all Warrants, without giving effect to any limits on
the number of shares of Common Stock that may be owned by a Holder at any one
time.


 


12.                                 Fractional Shares.  The
Company shall not be required to issue or cause to be issued fractional Warrant
Shares on the exercise of this Warrant. 
If any fraction of a Warrant Share would, except for the provisions of
this Section, be issuable upon exercise of this Warrant, the number of Warrant
Shares to be issued will be rounded up to the nearest whole share.


 


13.                                 Notices.  Any and all notices or other
communications or deliveries hereunder (including without limitation any
Exercise Notice) 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 number specified in this Section
prior to 5:30 p.m. (New York City time) on a Trading Day, (ii) the next Trading
Day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number specified in this Section on a
day that is not a Trading Day or later than 5:30 p.m. (New York City time) on
any


 


9

















 


Trading Day, (iii) the Trading
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 address for
such notices or communications shall be as set forth in the Purchase Agreement.


 


14.                                 Warrant Agent.  The Company shall serve as
warrant agent under this Warrant.  Upon
30 days’ notice to the Holder, the Company may appoint a new warrant
agent.  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 stockholders 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.


 


15.                                 Miscellaneous.


 


(a)                                  Subject
to the restrictions on transfer set forth on the first page hereof, this
Warrant may be assigned by the Holder. 
This Warrant may not be assigned by the Company except to a successor in
the event of a Fundamental Transaction. 
This Warrant shall be binding on and inure to the benefit of the parties
hereto and their respective successors and assigns.  Subject to the preceding sentence, nothing in this Warrant shall
be construed to give to any Person other than the Company and the Holder any
legal or equitable right, remedy or cause of action under this Warrant.  This Warrant may be amended only in writing
signed by the Company and the Holder and their successors and assigns.


 


(b)                                 The
Company will not, by amendment of its governing documents or through any
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 and in the taking
of all such action as may be necessary or appropriate in order to protect the
rights of the Holder against impairment. 
Without limiting the generality of the foregoing, the Company (i) will
not increase the par value of any Warrant Shares above the amount payable
therefor on such exercise, (ii) will take all such action as may be reasonably
necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable Warrant Shares on the exercise of this
Warrant, and (iii) will not close its stockholder books or records in any
manner which interferes with the timely exercise of this Warrant.


 


(c)                                  GOVERNING
LAW; VENUE; WAIVER OF JURY TRIAL. 
ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND
INTERPRETATION OF THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.  EACH PARTY HEREBY IRREVOCABLY SUBMITS 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
(INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION


 


10

















 


DOCUMENTS), 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, THAT SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER.  EACH PARTY HEREBY IRREVOCABLY WAIVES
PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH
SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR
CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY
AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT 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.  THE COMPANY HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY.


 


(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.


 


[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,

SIGNATURE PAGE FOLLOWS]


 


11

















 


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:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						



 


12

















 


FORM OF EXERCISE NOTICE


 


(To be executed by the Holder to exercise the right to purchase shares
of Common Stock under the foregoing Warrant)


 


To:  WORLDGATE COMMUNICATIONS,
INC.


 


The undersigned is the Holder of Warrant No.
              (the
“Warrant”) issued by Worldgate
Communications, Inc., a Delaware corporation (the “Company”).  Capitalized
terms used herein and not otherwise defined have the respective meanings set
forth in the Warrant.


 


1.                                       The
Warrant is currently exercisable to purchase a total
of                 Warrant
Shares.


 


2.                                       The
undersigned Holder hereby exercises its right to
purchase                           Warrant
Shares pursuant to the Warrant.


 


3.                                       The
Holder intends that payment of the Exercise Price shall be made as (check one):


 


o                     “Cash
Exercise” under Section 10


 


o                     “Cashless
Exercise” under Section 10


 


4.                                       If
the holder has elected a Cash Exercise, the holder shall pay the sum of
$                 to
the Company in accordance with the terms of the Warrant.


 


5.                                       Pursuant
to this exercise, the Company shall deliver to the
holder                    Warrant
Shares in accordance with the terms of the Warrant.


 


6.                                       Following
this exercise, the Warrant shall be exercisable to purchase a total
of                    Warrant
Shares.


 


 


	
  Dated: 

  	
   

  	
  ,

  	
   

  	
   

  	
  Name of Holder:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Print)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Signature must conform in all respects to name of holder as
  specified on the face of the Warrant)

  
													



 

















 


FORM OF ASSIGNMENT


 


[To be
completed and signed only upon transfer of Warrant]


 


FOR VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers
unto                                                the
right represented by the within Warrant to
purchase                        shares
of Common Stock of Worldgate Communications, Inc. to which the within Warrant
relates and
appoints                        attorney
to transfer said right on the books of Worldgate Communications, Inc. with full
power of substitution in the premises.


 


 


	
  Dated: 

  	
   

  	
  ,

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Signature must conform in all respects to name of holder as
  specified on the face of the Warrant)

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address of Transferee

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  In the presence of: