AMENDMENT NO. 1 TO WARRANT AND
EXERCISE AGREEMENT
THIS AMENDMENT NO. 1 TO WARRANT
AND EXERCISE AGREEMENT ,
dated as of the date provided on the signature page hereto (this
“ Agreement ”), is entered into by and between
WorldGate Communications, Inc., a Delaware corporation (the “
Company ”), and the person or entity under the heading
“Holder” provided on the signature page hereto (the
“ Holder ”, and together with the Company, the
“ Parties ”). All capitalized terms used but not
defined in this Agreement shall have the meanings ascribed to them
by that certain warrant to purchase common stock of the Company
issued August 3, 2005 by the Company and attached hereto as Exhibit
A (the “ Warrant ”).
RECITALS
A. WHEREAS ,
the Warrant entitles the Holder, subject to the provisions of the
Warrant, to purchase the Warrant Shares (as defined on the
signature page hereto) at an exercise price as provided in, and as
adjusted from time to time per the terms of, the Warrant (the
“ Exercise Price ”); and
B.
WHEREAS , in consideration for the Holder’s immediate
exercise of the right to purchase all of the Warrant Shares
contemplated by the Warrant simultaneously with the execution of
this Agreement, the Company has agreed to amend the Warrant such
that the Exercise Price of the Warrant shall be equal to the New
Exercise Price (as defined on the signature page hereto);
and
C.
WHEREAS , each of the Parties desires to enter into this
Agreement in order to amend the Warrant as set forth
herein.
NOW, THEREFORE , in consideration of the premises and the
mutual covenants hereinafter contained, the Parties agree as
follows:
1.
Amendment to Exercise Price . The Exercise Price set forth
in the first sentence of the first paragraph of the Warrant is
hereby amended as of the date hereof to be the New Exercise Price
(as defined on the signature page hereto) per share of Common
Stock.
2. Removal
of Cashless Exercise Provisions . The Warrant is hereby amended
in its entirety to remove all references to a Cashless Exercise and
all such references shall no longer have any force or effect such
that the Holder may only exercise the Warrant and receive the
Warrant Shares upon the exercise of the Warrant by delivering
immediately available funds to the Company.
3.
Termination of Certain Agreements . Each of the Current
Agreements, with respect to any rights or obligations between the
Parties, shall be deemed terminated, void and of no further force
and effect, and none of the Parties shall have any further
liabilities or obligations under the Current Agreements whatsoever.
For purposes of this Agreement, “ Current Agreements
” means the Securities Purchase Agreement, dated August 3,
2005, by and between the Company and the other signatories thereto,
the Registration Rights Agreement, dated August 3, 2005, by and
between the Company and the other signatories thereto, and any
other agreements entered into in connection with, in any way
related to or arising from the Warrant, such Securities Purchase
Agreement or such Registration Rights Agreement, other than the
Warrant itself and this Agreement.
4. Exercise
of Warrant . Holder hereby irrevocably exercises the right to
purchase all of the Warrant Shares evidenced by the Warrant. Holder
intends that payment of the Exercise Price shall be made as a Cash
Exercise with respect to all of the Warrant Shares to be issued by
this exercise of the Warrant. No later than one (1) business day
after the execution of this Agreement, Holder shall pay the sum
equal to the Exercise Cash Proceeds (as defined on the signature
page hereto) to the Company by wire transfer to the following
account of the Company:
Philadelphia,
Pennsylvania 19107 USA
ABA/Sort Code
no. 031 201 467
Swift Code/BIC
no. PNBPUS33
For credit to
account no. 200 0003 326307 WorldGate Service, Inc. Operating
Account
Holder directs
that the certificates representing the Warrant Shares shall be
issued in the name of the Holder at the address provided on the
signature page hereto. Holder acknowledges and agrees that the
Company shall effect delivery of the Warrant Shares by delivering
to the Holder or its nominee a physical certificate representing
such Warrant Shares and that such certificate representing the
Warrant Shares shall contain the following restrictive
legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE
SECURITIES LAW, AND MAY NOT BE OFFERED FOR SALE, SOLD OR
TRANSFERRED UNLESS A REGISTRATION STATEMENT UNDER THE SECURITIES
ACT AND APPLICABLE STATE SECURITIES LAWS SHALL BE EFFECTIVE WITH
RESPECT THERETO, OR AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN
CONNECTION WITH SUCH OFFER, SALE OR TRANSFER AND THE CORPORATION
RECEIVES AN OPINION OF COUNSEL (BOTH SUCH OPINION AND SUCH COUSEL
BEING REASONABLY ACCEPTABLE TO THE CORPORATION) TO SUCH EFFECT.
SUBJECT TO COMPLIANCE WITH THE REQUIREMENTS OF THE SECURITIES ACT
AND APPLICABLE STATE SECURITIES LAWS, THE SHARES REPRESENTED BY
THIS CERTIFICATE MAY BE PLEDGED OR HYPOTHECATED IN CONNECTION WITH
A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY THE SHARES
REPRESENTED BY THIS CERTIFICATE.
5.
Representations and Warranties . By executing this
Agreement, Holder represents and warrants to the Company as
follows:
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a.
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The Holder
hereby acknowledges and agrees that attached hereto as Exhibit A is
a true, complete and valid copy of the Warrant as currently in
effect prior to the amendment contemplated by this
Agreement.
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b.
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Holder has all
necessary power and authority under all applicable provisions of
law to execute and deliver this Agreement and to carry out its
provisions. All action on Holder’s part required for the
lawful execution and delivery of this Agreement has been or will be
effectively taken prior to the delivery of this Agreement by
Holder.
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c.
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Neither the
execution and delivery by the Holder of this Agreement, nor the
performance of the transactions performed hereunder by the Holder,
will require any filing, consent, renegotiation or approval that
has not previously been obtained or conflict with, result in any
breach of or constitute a default under (i) any provision of any
law, statute, rule or regulation, or any ruling, writ, injunction,
order, judgment or decree of any court order or other governmental
authority to which the Holder is subject, (ii) the organizational
documents (if any) of the Holder, or (iii) any contract,
governmental permit or other document to which the Holder is
subject.
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d.
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The Holder is
the sole record and beneficial owner of the Warrant and the Holder
has good title to the Warrant free and clear of any mortgage, lien,
pledge, charge, security interest, encumbrance, conditional sales
contract, transfer restriction, right of first refusal, voting
trust agreement, preemptive right, power of attorney or other
adverse claim, defect of title, limitation or restriction of any
type or nature whatsoever. No other person, firm, corporation or
other entity has any right, title, claim, or interest in, to, or
respecting any of the Warrant.
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e.
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Holder
understands that the Warrant Shares have not been registered under
the Securities Act of 1933, as amended (the “ Securities
Act ”). The Warrant Shares are being acquired for
Holder’s own account and not with the view to, or for resale
in connection with, any distribution other than resales made in
compliance with the Securities Act. Holder has substantial
experience in evaluating and investing in private placement
transactions of securities similar to the Company so that Holder is
capable of evaluating the merits and risks of its investment in the
Company and has the capacity to protect its own interests. Holder
understands and agrees that the Warrant Shares are being offered
and will be sold in transactions in compliance with or exempt from
the registration requirements of the Securities Act based in part
upon Holder’s representations contained in this Agreement
and, as a result, the Warrant Shares may only be transferred if
such securities are registered under the Securities Act or if the
transfer is exempt from registration. Holder must bear the economic
risk of this investment indefinitely unless the Warrant Shares are
registered pursuant to the Securities Act or an exemption from
registration is available. Holder understands that the Company has
no present intention of registering the Warrant Shares. Holder also
understands that there is no assurance that any exemption from
registration under the Securities Act will be available and that,
even if available, such exemption may not allow the Holder to
transfer all or any portion of the Warrant Shares under the
circumstances, in the amounts or at the times the Holder might
propose. Holder has been advised of or is aware of the provisions
of Rule 144 promulgated under the Securities Act as in effect from
time to time, which per
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