Document:

QuickLinks
 -- Click here to rapidly navigate through this document

 
 

Exhibit 10.1    
  

 
 

EXECUTIVE TRANSITION AGREEMENT    
  

This
Executive Transition Agreement ("Agreement") is entered into effective on the dates set forth below by and between Errol Ekaireb ("Executive") and REMEC, Inc. ("Company") (collectively,
"the Parties"), in light of the following: 

 
 

RECITALS    
  

A.    Executive
is currently employed as President and COO of the Company, and serves as well as Chairman of the Board of Directors of Nanowave, Inc., a subsidiary business; and 

B.    Executive
has expressed a desire to enter into an agreement for the transition of his employment duties with the Company as President and COO and to outline an orderly process toward
retirement; and 

C.    Company
desires to facilitate that transition in a way still preserving Executive's many contributions to Company and recognizing his accomplishments. 

 
 

AGREEMENT    
  

To
effectuate these purposes the Parties do hereby agree: 

1.0    Definition of Terms.    The following terms referred to in this Agreement shall have the following meanings: 

        1.1    "Stock
Option Plan" refers to the REMEC, Inc., 1995 Equity Incentive Plan and the REMEC, Inc. 2001 Equity Incentive Plan as amended from time to time, and
all ancillary agreements implementing its purposes. 

        1.2    "Executive's
Retirement Benefits" refers to the following benefits: 

        1.2.1    Post-Retirement
Medical Insurance 

        Upon
retirement, Executive shall be entitled to continue medical, dental and vision insurance at the same monthly premiums being paid at such time by the Company's Corporate employees,
until the death of both the Executive and the Executive's spouse. 

        1.2.2    Exercise
of Stock Options Following Retirement 

        Upon
retirement, awards in any of the Company's Stock Option Plans, with the exception of awards of incentive stock options granted on or before March 8, 1999, held at the date of
Executive's retirement (but only to the extent then exercisable) may be exercised in whole or in part by the Executive, by the Executive's guardian or legal representative or by the person to whom the
award is transferred by assignment, will or the laws of descent and distribution, at any time within two years from the date of retirement, or any lesser period specified in the Award Agreement (but
in no event after the expiration of the award). Awards of incentive stock options granted on or before March 8, 1999 in any of the Company's Stock Option Plans held at the date of Executive's
retirement (but only to the extent then exercisable) may be exercised in whole or in part by the Executive, by the Executive's guardian or legal representative or by the person to whom the award is
transferred by assignment, will or the laws of descent and distribution, at any time within one year from the date of retirement, or any lesser period specified in the Award Agreement (but in no event
after the expiration of the award). 

        1.2.3    Distribution
Under the Company's Non-Qualified Deferred Compensation Plan 

        Upon
retirement, the Executive's full account balance in the Company's Non-Qualified Deferred Compensation Plan shall be paid to the Executive in a single, lump sum
distribution. 

 

        1.3    "Executive
Duties Transition Date" is that date which is (1) two weeks after the date that Thomas Waechter takes over as President and COO of the Company, or
(2) October 1, 2002, whichever is earlier. While it is anticipated to occur, it is not a condition of this Agreement that Mr. Waechter take over as President. 

        1.4    "First
Phase" refers to that period between the Executive Duties Transition Date and June 30, 2003. 

        1.5    "Second
Phase" refers to the time period beginning July 1, 2003, and ending not later than June 30, 2005. 

        1.6    "The
Second Phase Agreement" refers to that Agreement defined in section 3.0 of this Agreement governing Executive's duties during the year beginning
July 1, 2003, and any renewals thereof. 

        1.7    "Change
of Control Agreement" refers to the Change of Control Agreement effective September 1, 2001, by and between Executive and the Company, or any similar
document the Company might enter from time to time. 

2.0    Transition of Duties (July 1, 2002 to June 30, 2003). 

        2.1    Executive Duties Transition.    Executive will continue as a full time Executive of the Company, as its
President and COO, up to the Executive Duties Transition Date. During this period Executive will receive his normal compensation and benefits under all Company programs. 

        2.2    Changes.    Effective on the Executive Duties Transition Date the following shall occur: 

        2.2.1    Executive
will resign, and by executing this Agreement does resign, as President and COO of the Company, and will cease being an officer of the Company. Executive
understands that as of the Executive Duties Transition Date, Executive will no longer be subject to the reporting requirements of Section 16 of the Securities and Exchange Act of 1934, but will
continue to be bound by all federal securities laws, including the prohibition on trading in the Company's securities if the Executive has material information about the Company that has not been
disclosed to the public. Nothing in this Agreement is intended to deprive Executive from receiving Executive's Retirement Benefits and other executive-level retirement benefits under the Company's
benefit plans. 

        2.2.2    Executive
will be appointed to the position of Special Advisor to the Company, a non-officer position reporting to the CEO. Executive's duties as Special
Advisor shall be mutually agreed upon, and shall be arranged between the CEO or his designee, and Executive. 

        2.3    During the First Phase (up to June 30, 2003):    

        2.3.1    Executive
will perform such duties as requested by the CEO or COO of REMEC, Inc., and will continue to act as Chairman of the Board of Nanowave, Inc., as
long as desired by the Company. 

        2.3.2    The
Special Advisor will be expected to render approximately one fifth time service during the First Phase, most likely in somewhat concentrated periods of time (e.g.,
three to five consecutive days). The Special Advisor will work from his home office, except as otherwise arranged. 

        2.3.3    As
Special Advisor, during the First Phase, Executive's compensation and benefits will remain at the same level as they currently are, except as altered by this
Agreement, from the Executive Duties Transition Date to June 30, 2003, except that Executive shall not accrue or retain any vacation benefits, except that all accrued and unused vacation time
earned through the Executive Duties Transition Date shall be paid to the Executive on that date. 

2

 

        2.3.4    Executive
may retain, during the First Phase and thereafter, all his office furniture, computers, copiers, fax machines, and similar items currently at his home. All
items will be upgraded as necessary. An onsite office will be available at the corporate headquarters, as required. 

3.0    Second Phase (On and after July 1, 2003) (The Second Phase Agreement). 

        Effective
July 1, 2003, and for the period of one year thereafter, Executive shall be employed by the Company on the following basis, which shall be referred to as the "Second
Phase Agreement": 

        3.1    Executive
shall continue as Special Advisor, performing such duties as the CEO and COO shall from time to time assign, but will continue to perform as Chairman of the
Board of Nanowave, Inc., as long as desired by the Company. 

        3.2    Executive's
expected time commitment will be approximately 20% of full time. 

        3.3    Executive
shall be compensated at the rate of $12,000 per month. If in any three month period of time Executive is called upon to render services exceeding 25% of
regular full-time employment, the parties will meet and define such services, and arrange for Executive to be compensated for such additional services by either reduced time in a later
time period, or $2,000 per day, plus business expenses. 

        3.4    Executive
will continue to be covered by the Company's health and welfare benefit programs (except its vacation benefits), Life Insurance Plan, Stock Option Plan, will
continue to be eligible to participate in the Company 401 (k) plan, and will be eligible for Executive's Retirement Benefits upon retirement. The Company will reimburse Executive for all
ordinary and necessary business expenses incurred by Executive in performing duties hereunder. 

        3.5    The
Second Phase Agreement may be terminated by either party at any time by either party giving 30 days written notice to the other Party. The Company will invoke
this right only if Executive breaches this Agreement, takes full time employment with another Company, or becomes incapacitated or unable to perform his duties hereunder. In the event either party
elects to terminate the Second Phase Agreement, Executive will be paid through the effective date of such notice and thereafter relieved of any additional working responsibilities, and will become
retired from the Company on the effective date of such notice. 

        3.6    The
Second Phase Agreement will terminate as of June 30, 2004, unless the agreement is mutually extended in writing by Executive and Company for another period
not to exceed one year. 

        3.7    At
the termination of the Second Phase Agreement Executive will retire. Upon retirement Executive shall be entitled to Executive's Retirement Benefits as defined in
Section 1.2 and other executive-level retirement benefits under the Company's then current Executive benefit plans. 

4.0    Relationship to Other Agreements and Commitments. 

        4.1    Change of Control.    Executive acknowledges and agrees that the benefits and consideration provided by this
Agreement are in lieu of any rights and entitlements, if any, under any severance or Change of Control Agreement, and further agrees that any Change of Control Agreement now in effect between the
parties shall be deemed null and void upon the execution of this Agreement. 

        4.2    Indemnification.    This Agreement does not impair in any way Executive's rights to defense and indemnification
under any law or agreement providing same to Executive, specifically including rights under the California Corporations Code and the California Labor Code, which rights are preserved to the maximum
extent permitted by law. 

        4.3    Trade Secrets and Proprietary Information.    The Parties agree that Executive's obligations under any
Invention, Nondisclosure, Trade Secrets, Proprietary Information or similar agreement 

3

 

between Executive and Company, or covenant of the same effect in any Company agreement with any third party, shall remain in full force and effect. 

        4.4    Noncompetition and Nonsolicitation.    During the term of this Agreement and while serving as Special Advisor,
Executive agrees that he will not perform services for any business in competition with the Company, nor will he directly or indirectly recruit, solicit, or encourage any employee, customer or agent
of the Company to leave the Company to join or affiliate with any competitor. 

        4.5    Other Agreements.    Except as otherwise provided herein, this Agreement supercedes any prior oral or written
agreement between the parties on the subjects contained herein, and contains the entire agreement of the parties on the matters referred to herein. 

5.0    Release of Claims. 

        5.1    Release by Executive.    Except for any rights created by this Agreement, Executive unconditionally,
irrevocably and absolutely releases and discharges Company and any related entity, as well as all present and former Company executives, officers, directors, attorneys, agents, and their successors
and assigns (collectively, "Releasees"), from all claims related in any way to the transactions or occurrences between them to date, including, but not limited to, all claims, charges, demands and
causes of action, known or unknown, suspected or unsuspected, arising directly or indirectly out of or in any way connected with Executive's employment with Company, and his termination from
employment. This Agreement is intended to have the broadest possible application and includes, any claim for severance pay, unpaid salary, bonuses, or other benefits, breach of contract, wrongful
termination, tortious discharge, defamation, infliction of emotional distress, fraud, conspiracy, or harassment or employment discrimination arising under federal, state or local law, including but
not limited to the California Fair Employment and Housing Act, the California Labor Code, Title VII of the Civil Rights Act of 1964, the Americans With Disabilities Act, and the Age Discrimination in
Employment Act of 1967, as amended (the "Released Claims"). 

        5.2    Release by Company.    Except for any rights created by this Agreement, Company, for its respective subsidiary
corporations, divisions, affiliates, partners, officers, employees (past or present), agents, representatives, heirs, assigns, executors, administrators and successors and each of them
unconditionally, irrevocably and absolutely releases and forever discharges Executive, his heirs, assigns, executors, successors and each of them, from any and all claims related in any way to the
transactions or occurrences between them to date, including, but not limited to, all claims, charges, demands and causes of action, known or unknown, suspected or unsuspected, arising directly or
indirectly out of or in any way connected with Executive's employment with Company. This Release is intended to have the broadest possible application. 

6.0    California Civil Code Section 1542 Waiver. 

        Executive
acknowledges and agrees that all rights under Section 1542 of the California Civil Code are expressly waived. That statute reads as follows: 

A
general release does not extend to claims which the creditor does not know of or suspect to exist in his favor at the time of executing the release, which if known by him must have materially
affected his settlement with the debtor. 

7.0    Compliance with Older Workers' Benefits Protection Act. 

        The
Parties intend that the release contained above be a knowing and voluntary release of age discrimination claims arising under the Age Discrimination in Employment Act of 1967. In
accordance 

4

 

with the requirements of the Older Workers' Benefit Protection Act, the Parties agree to the following provisions: 

        7.1    Executive
has been advised to consult with an attorney regarding the terms of this Agreement, and he has received all legal counsel and advice he requires regarding this
Agreement; 

        7.2    Executive
has been given 21 days in which to consider whether to enter into this Agreement, and has taken as much of this time as he deems necessary; 

        7.3    This
Agreement shall not become binding or effective until the eighth day following Executive's execution of it (the "Effective Date"). Until the Effective Date,
Executive may revoke this Agreement by delivering a written notice of revocation that is received by Company's Chief Executive Officer on or before the Effective Date. In the event Executive invokes
his right of revocation as provided herein, Company shall have no further obligations to Executive under this Agreement. 

8.0    Miscellaneous. 

        8.1    Applicable Law.    The validity, interpretation and performance of this Agreement shall be construed and
interpreted according to the laws of the State of California. 

        8.2    Amendments.    This Agreement may be amended only by a written instrument executed by both parties hereto. 

        8.3    Cooperation.    The parties agree to do all things necessary and to execute all further documents necessary and
appropriate to carry out and effectuate the terms and purposes of this Agreement. 

        8.4    Arbitration of Disputes.    Any disputes between Executive and Releasees, arising out of or in any way
connected to the terms of this Agreement, or the Parties' rights or obligations with respect to Executive's termination from Company shall be resolved by binding arbitration before a single arbitrator
pursuant to the then current Employment Dispute Resolution Rules of the American Arbitration Association. The arbitrators' and administrative fees of arbitration shall be borne equally by the Parties.
The Parties hereby agree that any arbitration shall take place in San Diego County, California. 

WHEREFORE, the Parties have executed this Agreement on the date shown below.

	Dated: June 13, 2002	 	/s/  ERROL EKAIREB      

	 	 	Executive
	 	 	 	 	 
	

Dated: June 14, 2002	
 	

Company
	

 	
 	

By:	
 	

/s/  RONALD E. RAGLAND      

	 	 	Its:	 	Chairman & CEO

5

QuickLinks

Exhibit 10.1

EXECUTIVE TRANSITION AGREEMENT

RECITALS

AGREEMENTQuickLinks
 -- Click here to rapidly navigate through this document

 
 

Exhibit 4.1    
  

SUBSCRIPTION RIGHTS AGREEMENT  

        This Subscription Rights Agreement (the "Agreement"), made and entered into as of this day
of                        
2002, by and between WORLDGATE COMMUNICATIONS, INC., a Delaware corporation (the "Company"), and AMERICAN STOCK TRANSFER & TRUST COMPANY
(the "Subscription Agent"), 

W I T N E S S E T H    T H A T:  

        WHEREAS, the Company has filed a Registration Statement on Form S-1 (Registration No. 333-            ) with the
Securities and Exchange Commission (the "Registration Statement") in connection with the proposed offering (the "Rights
Offering") of up to 6,000,000 Units, each consisting of one share of Common Stock, $0.01 par value per share (the "Common
Stock"), and one Redeemable Common Stock Purchase Warrant (the "Warrant"), for sale to holders of non-transferable
subscription rights (the "Rights"), which are to be issued to holders (the "Common Stockholders") of
outstanding shares of the Company's Common Stock, 

        WHEREAS,
the Subscription Agent presently serves as transfer agent and registrar of the Company's Common Stock and will also serve as transfer agent and registrar for the Rights and the
Warrants; 

        WHEREAS,
the Company intends to issue to the Common Stockholders one Right (the "Basic Subscription Right") for each share of Common Stock
held of record as of                        , 2002 (the "Record Date"), and intends
that the Rights will be exercisable to purchase one unit (the
"Unit") at a subscription price of $    (U.S.) per Unit (the "Subscription Price") that any
Rights holder who exercises all of their Basic Subscription Rights may subscribe for additional Units pursuant to a limited Over-Subscription Right (as defined herein), and that the Rights
will be evidenced by non-transferable certificates (the "Rights Certificates") in a form satisfactory to the Subscription Agent and the
Company; and 

        WHEREAS,
the Company desires to employ the Subscription Agent to act as a subscription agent in connection with the Rights Offering, including, but not limited to, the issuance and
delivery of the Rights Certificates, and the Subscription Agent is willing to act in such capacity: 

        NOW,
THEREFORE, in consideration of the premises and the mutual agreements hereinafter set forth and for the purpose of defining the terms and provisions of the Rights and the Rights
Certificates and the respective rights and obligations thereunder of the Company, the holders of Rights Certificates and the Rights Agent, the parties agree as follows: 

ARTICLE I

APPOINTMENT OF SUBSCRIPTION AGENT  

        1.1    Appointment of Subscription Agent.    The Company hereby appoints the Subscription
Agent to act as agent for the Company in accordance with the instructions set forth in this Agreement, and the Subscription Agent hereby accepts such appointment. 

ARTICLE II

DELIVERY OF DOCUMENTS BY COMPANY  

        2.1    Delivery of Documents by Company.    The Company will cause to be timely delivered to
the Subscription Agent sufficient copies of the following documents for delivery to all intended recipients of the Rights (the "Rights Offerees"): 

        (a)  the
Prospectus; 

        (b)  blank
Rights Certificates, including instructions for completion; 

 

        (c)  a
transmittal letter to Rights Offerees (the "Rights Letter"); 

        (d)  separate
instructions for Rights Offerees who are nominees (the "Nominee Instructions"); and 

        (e)  a
notice of guaranteed delivery (the "Notice of Guaranteed Delivery"). 

        2.2    Additional Documents to be Delivered by Company.    The Company will also deliver to
the Subscription Agent: 

        (a)  resolutions
adopted by the Board of Directors of the Company in connection with the Rights Offering, certified by the Secretary or Assistant Secretary of the Company;
and 

        (b)  on
or promptly following the Expiration Date (as defined below), sufficient blank forms for the issuance of the Warrants. 

ARTICLE III

DETERMINATION OF RIGHTS OFFEREES AND RIGHTS  

        3.1    Determination of Rights Offerees.    On or about the Record Date, the Subscription
Agent shall create and maintain, from the stock ledger and register it maintains in its capacities as transfer agent and registrar for the Common Stock, a list of the names, addresses and taxpayer
identification numbers of the Rights Offerees and the number of Rights each such Rights Offeree is entitled to receive in the Rights Offering (the "Rights
Ledger"). With respect to the Common Stock held of record by stock depositary trust companies, the Subscription Agent and the Company shall timely solicit and obtain a list
containing similar information with respect to the broker/dealers or banks for whom such companies hold such stock as nominee. The Rights Offerees shall be established as of the close of business on
the Record Date. 

        3.2    Determination of Rights.    Each Rights Offeree shall receive one Right for each one
share of Common Stock held of record as of the Record Date. Fractional Rights will not be issued by the Company. 

ARTICLE IV

MAILING OF SUBSCRIPTION DOCUMENTS BY SUBSCRIPTION AGENT  

        4.1    Mailing of Subscription Documents by Subscription Agent.    Except as provided in  Section 4.2 below, upon the written
advice of the Company, signed by any of its duly authorized officers, after the date of effectiveness of the
Registration Statement, the Subscription Agent shall mail or cause to be mailed, via first class mail, to each Rights Offeree a prospectus, Rights Certificate, including instructions for completion,
Rights Letter and Notice of Guaranteed Delivery (the "Subscription Documents"). Prior to mailing, the Subscription Agent, as transfer agent and
registrar for the Rights, will cause to be issued Rights Certificates in the names of the Rights Offerees and for the number of Rights to which they are each entitled, as determined in accordance with  Section 3 above. The Subscription Agent shall make reasonable efforts to identify which of the Rights Offerees are likely to be nominee holders
and to include the Nominee Instructions with such mailing to such Rights Offerees. The Subscription Agent shall either manually sign or affix a duly authorized facsimile signature on all Rights
Certificates. The signatures of the officers of the Company on the Rights Certificates shall be facsimile signatures. Immediately after the Rights Certificates are mailed, the Subscription Agent shall
execute and deliver to the Company a certificate in the form of Exhibit A hereto. 

        4.2    Foreign Stockholders.    If requested by the Company, the Subscription Agent shall
airmail or courier the documents required by Section 4.1 to Rights Offerees whose addresses are outside the 

2

 

United States or Canada and take other reasonable action requested by the Company to cause the timely delivery of such documents to such Rights Offerees. 

ARTICLE V

SUBSCRIPTION PROCEDURE  

        5.1    Valid Exercise of Rights.    For a valid exercise of Rights to occur, the Subscription
Agent must receive, by mail, hand delivery, and otherwise, prior to 5:00 p.m., New York City time, on            , 2002 (the "Expiration
Date"), which time period may be extended for up to 30 days by the Company, the Rights Certificate pertaining to such Rights, which has been properly completed and
endorsed for exercise, as provided in the instructions on the reverse side of the Rights Certificate, and payment in full in U.S. dollars of the
Subscription Price for the number of Units subscribed by check, bank check, money order or other negotiable instrument payable to the order of "American Stock Transfer & Trust Company, as
Subscription Agent—WorldGate Communications, Inc." 

        5.2    Guaranteed Signatures.    If a Rights Offeree requests that the Rights Certificate
representing the Common Stock or Warrants to be issued in a name other than the name of the Rights Offeree or such certificate is to be sent to an address other than the address shown on such Rights
Offeree's Rights Certificate, the signatures on such Rights Certificate must be guaranteed by a financial institution (including commercial banks, savings and loan associations and brokerage houses)
that is a member of a recognized signature guarantee or medallion program within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended (each, an
"Eligible Institution"). 

        5.3    Depository Trust Company.    In the case of Rights Offerees of Rights that are held of
record through the Depository Trust Company ("DTC"), exercises of the Basic Subscription Right may be effected by instructing DTC to transfer Rights
from the DTC account of such Rights Offeree to the DTC account of the Subscription Agent, together with payment of the Subscription Price for each Unit subscribed for pursuant to the Basic
Subscription Right and the Over-Subscription Right. Alternatively, a Rights Offeree may exercise the Rights evidenced by the Rights Certificate by effecting compliance with the procedures
for guaranteed delivery set forth in Section 5.4 below. 

        Notice of Guaranteed Delivery.    If a Rights Offeree wishes to exercise Rights, but time will not permit such Rights Offeree to
cause the Rights Certificate evidencing such Rights to reach the Subscription Agent on or prior to the Expiration Date, such Rights may nevertheless be exercised if all of the following conditions are
met (the "Guaranteed Delivery Procedures"): (a) such Rights Offeree has caused payment in full of the Subscription Price for each Unit being
subscribed for pursuant to the Basic Subscription Right and the Over-Subscription Right to be received by the Subscription Agent on or prior to the Expiration Date; (b) the
Subscription Agent receives, on or prior to the Expiration Date, a guarantee notice (a "Notice of Guaranteed Delivery"), substantially in the form
provided with the Subscription Documents, from an Eligible Institution, stating the name of the Rights Offeree, the number of Rights held by the Rights Certificate or Rights Certificates held by such
Rights Offeree, the number of Units being subscribed for pursuant to the Basic Subscription Right and the number of Units, if any, being subscribed for pursuant to the Over-Subscription
Right, and guaranteeing the delivery to the Subscription Agent of the Rights Certificate evidencing such Rights at or prior to 5:00 p.m., New York City time, on the date three
(3) business days following the date of the Notice of Guaranteed Delivery; and (c) the properly completed Rights Certificate(s) evidencing the Rights being exercised, with any required
signatures guaranteed, are received by the Subscription Agent, or such Rights are transferred into the DTC account of the Subscription Agent, at or prior to 5:00 p.m., New York City time, on
the date three (3) business days following the date of the Notice of Guaranteed Delivery relating thereto. The Notice of Guaranteed Delivery may be delivered to the Subscription Agent in the
same manner as Rights Certificates at the addresses set forth above, or may be transmitted to the Subscription Agent by telegram or facsimile transmission (facsimile: 800 937-5449). 

3

 

        5.4    Deemed Exercises.    If a Rights Offeree has not indicated the number of Rights being
exercised, or if the Subscription Price payment forwarded by such Rights Offeree to the Subscription Agent is not sufficient to purchase the number of Units subscribed for, the Rights Offeree will be
deemed to have exercised the Basic Subscription Right with respect to the maximum number of Rights which may be exercised for the Subscription Price delivered to the Subscription Agent and, to the
extent that the Subscription Price payment delivered by such Rights Offeree exceeds the Subscription Price multiplied by the maximum number of Rights which may be exercised (the
"Subscription Excess"), the Rights Offeree will have been deemed to have exercised its Over-Subscription Right to purchase, except as
provided in Section 8.2, that number of Units equal to the quotient obtained by dividing the Subscription Excess by the Subscription Price, up to
the maximum number of Units purchasable by such Rights Offeree. The Subscription Agent, as soon as practicable after the exercise of the Rights, shall mail to such Rights Offerees any portion of the
Subscription Excess not applied to the purchase of Units pursuant to the Over-Subscription Right, without interest or deduction. 

        5.6    Amendment of Subscription Procedure.    The Subscription Agent will follow and act upon
any reasonable amendments, modifications or supplements to the subscription procedures, and upon any further reasonable information in connection with the terms of the Rights Offering, any of which
may be given to the Subscription Agent by the Company or by its legal counsel including instructions with respect to (i) any extension or other modifications of the Rights Offering and
(ii) the amount or manner of payment for any Common Stock purchasable in the Rights Offering. 

ARTICLE VI

DELIVERY OF STOCK CERTIFICATES AND WARRANTS  

        6.1    Delivery of Stock Certificates and Warrants.    As soon as practicable after the
Expiration Date, the Subscription Agent shall mail certificates representing the Warrants and Common Stock subscribed for by the holders of the Rights. The certificates shall be mailed via first class
mail to the subscribers' address as shown on the reverse side of the Rights Certificate or, if none, then as listed on the Subscription Agent's register. The Subscription Agent shall maintain a mail
loss surety bond protecting the Company and the Subscription Agent from loss or liability arising out of non-receipt or non-delivery of such certificates. 

ARTICLE VII

FRACTIONAL UNITS AND SHARES  

        7.1    Fractional Units and Shares.    No fractional Units will be issued by the Company. A
Rights Certificate may not be divided in such a manner as would permit the holders to subscribe for a greater number of Units than the number for which they would be entitled to subscribe under the
original Rights
Certificate. Rights Offerees, such as banks, securities dealers and brokers, who receive Rights as nominees for one or more beneficial owners shall be entitled to exercise their Rights Certificates on
behalf of the beneficial owners. 

ARTICLE VIII

OVER-SUBSCRIPTION RIGHT  

        8.1    Prorating of Basic Subscription Right if Insufficient Units.    If there are
insufficient Units to fill all Basic Subscription Rights, the Units that are available will be allocated to the Company's subscribing Rights Offerees on a pro rata basis in proportion to the total
number of rights granted to each Rights Offeree. 

        8.2    Over-Subscription Right.    If a Rights Offeree exercises his or her Basic
Subscription Right in full, the Rights Offeree may subscribe for additional Units (the "Over-Subscription Right") at the Subscription Price.
The Subscription Agent shall determine the number of Units subscribed for 

4

 

pursuant to the exercise of the Over-Subscription Right. If sufficient Units in excess of all Units subscribed for pursuant to the regular exercise of Rights are available to satisfy all
exercised Over-Subscription Rights, the Subscription Agent shall fill all such exercised Over-Subscription Rights as and to the same extent as if pursuant to the regular
exercise of Rights. To the extent, however, that sufficient Units are not available to fill all such exercised Over-Subscription Rights, the Units which are available will be allocated
among those electing to additionally subscribe on a pro rata basis in proportion to the amount of each securityholder's Over-Subscription. Unsubscribed Rights as of the Expiration Date may
be subscribed for by those electing to exercise the Over-Subscription Right. To exercise the Over-Subscription Right, the appropriate block on the Over-Subscription
form must be completed and payment in full for additional Units must accompany the form and be submitted to the Subscription Agent prior to the Expiration Date. 

        8.3    Refund.    In the event any holder who exercises his Basic Subscription Right or
Over-Subscription Right does not receive the Units subscribed therefor, the Subscription Agent shall refund the Subscription Price paid for the Units not received, without interest, to
such holder promptly after the Expiration Date. 

ARTICLE IX

DEFECTIVE EXERCISE OF RIGHTS; LOST RIGHTS CERTIFICATES  

        9.1    Defective Exercise of Rights.    The Company shall have the absolute right to reject
any defective exercise of Rights or to waive any defect in exercise and the Company's interpretations of the terms and conditions of the Rights Offering shall be final and binding. All questions as to
the validity, form, eligibility (including times of receipt and matters pertaining to the beneficial ownership) and the acceptance of subscriptions and payment of the Subscription Price will be
determined by the Company, which determinations shall be final and binding. If the Company advises the Subscription Agent that the Company rejects any defective exercise of Rights (except a failure to
pay the full Subscription Price with respect to such exercise), the Subscription Agent shall as soon as practicable either (i) telephone the holder of such Rights (at the telephone number on
the reverse side of the Rights Certificate) to explain the nature of the defect if the defect and the necessary correction can be adequately explained by telephone and the holder can correct the
defect without possession of the Rights Certificates, or (ii) mail the Rights Certificate, together with a letter explaining the nature of the defect in exercise and how to correct the defect.
If an exercise is not defective except that there is a partial payment of the Subscription Price, the Subscription Agent shall issue only the number of Units for which sufficient payment has been made
and seek additional payment for the remaining number of Units for which the exercise of the underlying Rights had been attempted. Any Rights Certificate with respect to which defects in exercise are
not corrected prior to 5:00 p.m., New York City time, on the Expiration Date, shall be returned with any applicable tendered funds, without interest, to the holder of such Rights Certificate. 

        9.2    Lost Rights Certificates.    If any Rights Certificate is alleged to have been lost,
stolen or destroyed, the Subscription Agent should follow the same procedures followed for lost stock certificates representing shares of Common Stock of the Company that the Company and the
Subscription Agent in its capacity as transfer agent for the Common Stock use, provided that such procedure must be completed prior to the Expiration Date in order to be effective. 

ARTICLE X

PROOF OF AUTHORITY TO SIGN  

        10.1    Proof of Authority to Sign.    The Subscription Agent need not procure supporting
legal papers, and is authorized to dispense with proof of authority to sign (including any proof of appointment or authority to sign of any fiduciary, custodian for a minor, or other person acting in
a 

5

 

representative capacity), and to dispense with the signatures of co-fiduciaries, in connection with exercise of the Rights in the following cases: 

        (a)  where
the Rights Certificate is registered in the name of an executor, administrator, trustee, custodian for a minor or other fiduciary, and the subscription form
thereof is executed by such executor, administrator, trustee, custodian for a minor or other fiduciary, and the shares of Common
Stock and Warrants comprising the Units subscribed for are to be issued in the name of the registered holder of the Rights Certificate, as appropriate; 

        (b)  where
the Rights Certificate is in the name of a corporation and the subscription form thereof is executed by an officer of such corporation and the shares of Common
Stock and Warrants comprising the Units subscribed for are to be issued in the name of such corporation; 

        (c)  where
the Rights Certificate is executed by a bank or broker as agent for the registered holder of the Rights Certificate; provided that, the shares of Common Stock and
Warrants subscribed for are to be issued in the name of the registered holder of the Rights Certificate; and 

        (d)  where
the Rights Certificate is registered in the name of a decedent and the subscription form thereof is executed by a subscriber who purports to act as the executor or
administrator of the estate, provided (i) the subscription is for not more than $1,000, and (ii) the Units subscribed for are to be registered in the name of the subscriber as executor
or administrator of such estate of the deceased registered holder. In all of the cases set forth in this Section 10 and notwithstanding anything
contained in this Agreement to the contrary, the check tendered in payment of the applicable subscription must be drawn for the proper amount, to the order of the Subscription Agent and otherwise be
in proper form, and there must be no evidence indicating that the subscriber is not the duly authorized representative he purports to be. In cases other than those set forth above, the Subscription
Agent should procure the necessary legal documents. However, in the event that all legal requirements for proper exercise of the Rights have not been met at the Expiration Date, the Subscription Agent
may accept approval from the Company as to whether such Rights Certificates may be accepted and the Units subscribed for thereunder issued. 

ARTICLE XI

ESCROW OF FUNDS  

        11.1    Escrow of Funds.    Any funds received by the Subscription Agent as payments in
connection with subscriptions for Units pursuant to the Rights Offering shall be deposited in an escrow account maintained by the Subscription Agent to be held in trust and escrow by the Subscription
Agent (and shall be invested in a non-interest-bearing bank account or other investment acceptable to the Company) pending receipt of written disbursement instructions and written
instructions from the Company to mail the Units subscribed for pursuant to the Rights, at which time the funds shall be disbursed in accordance with such written disbursement instructions. The
Subscription Agent is hereby authorized and directed to endorse, negotiate and deposit all subscription payments into the escrow account. All interest on any funds received by the Subscription Agent
shall inure to the benefit of and belong to the Company, including interest on any funds returned by the Subscription Agent to subscribers. All interest shall be disbursed or invested in accordance
with written instructions from the Company. The Subscription Agent shall account on a weekly basis to the Company for all escrowed funds and on a more frequent basis, if requested by the Company. 

        11.2    Collection Procedure.    If the Subscription Agent rejects any Rights exercise
(including any exercise of Over-Subscription Rights) for which the Subscription Agent has already collected funds, it shall promptly issue a refund check to the rejected Rights Offeree. If
the Subscription Agent rejects any Rights exercise for which the Subscription Agent has not yet collected funds but has submitted the Rights Offeree's check for collection, the Subscription Agent
shall promptly remit the Rights Offeree's check directly to such Rights Offeree. 

6

 

ARTICLE XII

INFORMATION PROVIDED TO THE COMPANY  

        12.1    Reports.    The Subscription Agent shall notify the Company (attn: Randall J. Gort,
Esq. 215-354-5100) or his designee, and Brean Murray & Co., Inc. on or before 4:00 p.m., New York City time, on each business day during the period
commencing with mailing of the Rights Certificates and ending at the Expiration Date (and in the case of guaranteed delivering, ending three (3) business days after the Expiration Date) of
(i) the number of Units validly subscribed for, (ii) the number of Units subject to guaranteed delivery, (iii) the number of Units for which defective subscriptions have been
received and the nature of such defects, (iv) the number of Units validly subscribed for pursuant to the Over-Subscription Right, (v) the amounts of collected funds in the
subscription escrow account established under this Agreement, (vi) each investor's name, (vii) the number of Rights exercised by each investor, (viii) the payment amount received
from each investor, (ix) each investor's social security number, and (x) such other information as shall be reasonably requested by the Company or Brean Murray & Co., Inc.
At or before 5:00 p.m., New York City time, on the first business day following the Expiration Date, or upon the request from the Company from time to time thereafter, the Subscription Agent
shall certify in writing to the Company the cumulative totals through the Expiration Date of all the information set forth in clauses (i) through (x) above. At or before
5:00 p.m., New York City time, on the third business day following receipt from the Company of written instructions to mail the Units subscribed for pursuant to the Rights, the Subscription
Agent will execute and deliver to the Company a certificate in the form of Exhibit B hereto. The Subscription Agent shall also maintain and
update a listing of holders who have fully or partially exercised their Rights and holders who have not exercised their Rights. The Subscription Agent shall provide the Company or their designees with
such information compiled by the Subscription Agent pursuant to this Section 12 as any of them shall request from time to time by telephone or
telecopy. The Subscription Agent hereby represents, warrants and agrees that the information contained in each notification referred to in this  Section 12 shall be accurate in all material
respects. 

        12.2    Further Information.    In addition, the Subscription Agent shall provide and shall
cooperate in making available to the Company, upon oral request made from time to time, such other information as the Company may reasonably request. 

ARTICLE XIII

FUTURE INSTRUCTIONS  

        13.1    Future Instructions.    With respect to notices or instructions to be provided by the
Company hereunder, the Subscription Agent may rely and act on any written instruction signed by any one or more of the following authorized officers or employees of the Company: Hal M. Krisbergh,
James V. Agnello or Randall J. Gort. 

ARTICLE XIV

PAYMENT OF EXPENSES  

        14.1    Payment of Expenses.    The Company will pay the Subscription Agent for its services
under this Agreement in accordance with the fees listed on Schedule I attached hereto, and will reimburse the Subscription Agent for all
reasonable and necessary expenses incurred by it in so acting. 

ARTICLE XV

COUNSEL  

        15.1    Counsel.    The Subscription Agent may consult with counsel satisfactory to it, which
may be counsel to the Company, and the written advice or opinion of such counsel shall be full and complete 

7

 

authorization and protection in respect of any action taken, suffered or omitted by the Subscription Agent hereunder in good faith and in accordance with such advice or opinion of such counsel. 

ARTICLE XVI

INDEMNIFICATION  

        16.1    Indemnification.    The Company covenants and agrees to indemnify and hold the
Subscription Agent harmless against any costs, expenses (including reasonable fees for legal counsel), losses or damages, which may be paid, incurred or suffered by or to which the Subscription Agent
may become subject, arising from or out of, directly or indirectly, any claim or liability resulting from its actions pursuant to this Agreement and for which the Subscription Agent is not otherwise
reimbursed under the mail loss surety bond; provided that such covenant and agreement does not extend to such costs, expenses, losses and damages incurred or suffered by the Subscription Agent as a
result of, or arising out of, any negligence, misconduct or bad faith of the Subscription Agent or of any employees, agents or independent contractors used by the Subscription Agent in connection with
performance of its duties hereunder. 

ARTICLE XVII

MISCELLANEOUS  

        17.1    Notices.    Unless otherwise provided herein, all reports, notices and other
communications required or permitted to be given hereunder shall be in writing and delivered by hand or telecopy or by first class mail, postage prepaid, as follows: 

        (a)  If
to the Company, to: 

WorldGate
Communications, Inc.

3190 Tremont Avenue

Trevose, Pennsylvania 19053

Attention: Randall J. Gort, Esq.

Telecopy No. (215) 354-1049 

With
a copy to: 

Walter
J. Mostek, Jr., Esq.

Drinker Biddle & Reath LLP

1000 Westlakes Drive, Suite 300

Berwyn, Pennsylvania 19312

Telecopy No. (610) 993-8585 

        (b)  If
to the Subscription Agent, to: 

American
Stock Transfer & Trust Company

40 Wall Street

New York, New York 10005

Attention: Herbert Lemmer

Telecopy No. (718) 921-8310 

        17.2    Amendments and Waivers.    This Agreement may not be amended or modified except by a
written instrument or document which has been executed by all of the parties hereto. Any party hereto may waive any of its rights arising under this Agreement only by a written instrument or document
executed by such party, and any such waiver shall not be construed as a waiver of any subsequent, or other, right of such party. 

        17.3    Invalidity.    If one or more of the terms of this Agreement shall for any reason be
held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not 

8

 

affect the remaining terms of this Agreement and this Agreement shall be construed as if such invalid, illegal or unenforceable term or terms had never been contained herein. 

        17.4    Binding Effect and Assignments.    This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective legal representatives, successors and permitted assigns; provided, however, that, without the prior written consent of the Company, the
Subscription Agent may not assign any of its interests, rights or obligations arising out of this Agreement. 

        17.5    Governing Law.    This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Pennsylvania. 

[Remainder
of page intentionally left blank.] 

9

   
        IN WITNESS WHEREOF, the undersigned have hereto set their hands as of the date first written above. 

	 	 	WORLDGATE COMMUNICATIONS, INC.
	

 	
 	

By:	
 	

        

	 	 	Name:	 	        

	 	 	Title:	 	        

	

 	
 	

AMERICAN STOCK TRANSFER & TRUST COMPANY
	

 	
 	

By:	
 	

        

	 	 	Name:	 	        

	 	 	Title:	 	        

10

  

 
 

SCHEDULE I    
    
    SUBSCRIPTION AGENT AGREEMENT    
  

        FEES AS SUBSCRIPTION AGENT: 

11

  

 
 

EXHIBIT A    
  

CERTIFICATE OF SUBSCRIPTION AGENT FOR RIGHTS TO SUBSCRIBE FOR UNITS OF WORLDGATE COMMUNICATIONS, INC.  

        The
American Stock Transfer & Trust Company (the "Agent") does hereby certify that: 

        1.    The
Agent has been duly appointed and authorized to act as Subscription Agent in connection with the issuance of rights (the
"Rights") to subscribe for the purchase of Units, each Unit consisting of one share of Common Stock and one Warrant of WorldGate
Communications, Inc., a Delaware corporation (the "Company"), pursuant to the Company's Prospectus, dated            , 2002. 

        2.    As
of the close of business on                        , 2002, there were issued and
outstanding                        shares of the Company's Common Stock, $0.01 par value per share.
 

        3.    As
such Subscription Agent, the Agent has as of this date issued, countersigned and mailed Rights Certificates evidencing the right to purchase            Units,
together with accompanying Prospectus and other materials, in accordance with the obligations of the Agent set forth in the Subscription Rights Agreement,
dated                        , 2002, between the
Company and the Agent. 

        4.    Said
certificates contain facsimile signatures of officers of the Company and were countersigned on behalf of the Agent, as Subscription Agent, by authorized officers of
the Agent who were at the time of affixing their signatures and still are duly authorized to countersign such certificates. 

        Dated:                        ,
2002. 

	 	 	AMERICAN STOCK TRANSFER & TRUST COMPANY
	

 	
 	

By:	
 	

        

	 	 	Name:	 	        

	 	 	Title:	 	        

12

  

 
 

EXHIBIT B    
  

 
 

CERTIFICATE OF SUBSCRIPTION AGENT FOR RIGHTS TO SUBSCRIBE FOR UNITS OF WORLDGATE COMMUNICATIONS, INC.    
  

        The
American Stock Transfer & Trust Company (the "Agent") does hereby certify that: 

        1.    The
Agent is the duly appointed and authorized Transfer Agent and Registrar for WorldGate Communications, Inc., a Delaware corporation (the
"Company"), with respect to the Company's Common Stock and Warrants. 

        2.    As
such Transfer Agent and Registrar, it has as of this date issued and countersigned certificates for                        shares
of Common Stock and certificates for
            Warrants as an original issue pursuant to the written order of the Company, in accordance with the obligations of the Agent set forth in the Subscription Rights Agreement (the
"Agreement"), dated                        , 2002, between the Company and the
Agent. 

        3.    Said
certificates contain facsimile signatures of officers of the Company and were countersigned or authenticated, as the case may be, on behalf of the Agent, as Transfer
Agent and Registrar, by authorized officers of the Agent who were at the time of affixing their signatures and still are duly authorized to countersign or authenticate such certificates. 

        4.    In
its role as Subscription Agent pursuant to the Agreement, the Agent has mailed to the parties entitled thereto, in accordance with the Agreement, the shares of Common
Stock and the Warrants described in Section 2 above of this Certificate. 

        Dated:                        ,
2002. 

	 	 	AMERICAN STOCK TRANSFER & TRUST COMPANY
	

 	
 	

By:	
 	

        

	 	 	Name:	 	        

	 	 	Title:	 	        

13

QuickLinks

Exhibit 4.1

SCHEDULE I SUBSCRIPTION AGENT AGREEMENT

EXHIBIT A

EXHIBIT B

CERTIFICATE OF SUBSCRIPTION AGENT FOR RIGHTS TO SUBSCRIBE FOR UNITS OF WORLDGATE COMMUNICATIONS, INC.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00043-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00043-of-00352.parquet"}]]