THIS WARRANT
HAS 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, TRANSFERRED,
PLEDGED OR HYPOTHECATED 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, TRANSFER, PLEDGE OR
HYPOTHECATION AND THE CORPORATION RECEIVES AN OPINION OF COUNSEL
(BOTH SUCH OPINION AND SUCH COUSEL BEING REASONABLY ACCEPTABLE TO
THE CORPORATION) TO SUCH EFFECT.
WARRANT TO PURCHASE COMMON
STOCK
OF
WORLDGATE COMMMUNICATIONS,
INC.
This certifies that, for value received, receipt
and sufficiency of which are hereby acknowledged, Mototech, Inc.
(the “ Holder ”), is entitled, subject to the
terms and conditions set forth below, to purchase from WorldGate
Communications, Inc., a Delaware corporation (the “
Company ”), 1,000,000 validly issued, fully paid and
nonassessable shares (the “ Warrant Shares ”) of
common stock of the Company, par value $0.01 per share (the “
Common Stock ”), subject to adjustment as provided
herein, at a purchase price equal to $0.35 per share (the “
Exercise Price ”).
The term “ Warrant ” as used
herein shall mean this Warrant, and any warrants delivered in
substitution or exchange therefor as provided herein.
1. Term
of Warrant . Subject to the terms and conditions set
forth herein, this Warrant shall be exercisable, in whole or in
part, during the term commencing on July 8, 2009 and ending at 5:00
P.M. (Philadelphia, Pennsylvania local time) on the Expiration
Date.
The term
“ Business Day ” shall mean any day except a
Saturday, Sunday or any day on which banking institutions are
authorized or required to close in the city of New York, New
York.
The term
“ Expiration Date ” shall mean the earlier of
(a) July 8, 2014; provided , however , that in the
event that July 8, 2014 is not a Business Day, the Expiration Date
for this Warrant shall be extended to 5:00 P.M. (Philadelphia,
Pennsylvania local time) on the Business Day following such date,
(b) a Change of Control (as defined below); or (c) the twentieth
(20th) day following the Company’s delivery of notice to the
Holder of a Trading Price Termination Event (as defined below);
provided , however , that in the event that such
twentieth (20th) day shall fall on a day that is not a Business Day
(defined below), the Expiration Date for this Warrant shall be
extended to 5:00 P.M. (Philadelphia, Pennsylvania local time) on
the Business Day following such date.
The term
“ Trading Price Termination Event ” shall mean
at any time that the Common Stock is listed for trading on a
national securities exchange, other nationally recognized trading
system, or is quoted on the Pink Sheets LLC or similar
over-the-counter service (including, without limitation, the OTC
Bulletin Board), the occurrence of a period of ten (10) consecutive
trading days during which the quoted bid price of the Common Stock
has been greater than a price equal to one hundred fifty percent
(150%) of the Exercise Price.
The term
“ Change of Control ” shall mean (i) the
acquisition of the Company by another entity by means of any
transaction or series of related transactions (including, without
limitation, any merger, consolidation or other form of
reorganization in which outstanding shares of the Company are
exchanged for securities or other consideration issued, or caused
to be issued, by the acquiring entity or its subsidiary, but
excluding any transaction effected primarily for the purpose of
changing the Company’s jurisdiction of incorporation), unless
the Company’s stockholders of record as constituted
immediately prior to such transaction or series of related
transactions will, immediately after such transaction or series of
related transactions hold at least a majority of the voting power
of the surviving or acquiring entity; or (ii) a sale of all or
substantially all of the assets of the Company. In the
event of a proposed Change of Control, the Company shall use its
commercially reasonable efforts to give the Holder ten (10) days
prior notice of the proposed closing date of the Change of Control
and, to the extent the Warrant has not been exercised by the
closing date of the Change of Control, then this Warrant shall
terminate.
2.
Exercise of Warrant .
(a) This
Warrant may be exercised by the Holder, in whole or in part, by (i)
the surrender of this Warrant to the Company, with the Notice of
Exercise annexed hereto duly completed and executed on behalf of
the Holder and delivered to the Company prior to the Expiration
Date and (ii) the delivery of payment to the Company of the
Exercise Price for the number of Warrant Shares specified in the
Notice of Exercise. The Exercise Price shall be payable
in cash or its equivalent, payable by wire transfer of immediately
available funds to a bank account specified by the Company or by
certified or bank cashiers’ check in lawful money of the
United States of America.
(b) The
Company agrees that such Warrant Shares shall be deemed to be
issued to the Holder as the record holder of such Warrant Shares as
of the close of business on the date on which this Warrant shall
have been surrendered and payment made for the Warrant Shares as
aforesaid. A stock certificate or certificates for the
Warrant Shares specified in the Notice of Exercise shall be
delivered to the Holder as promptly as practicable, and in any
event within five days thereafter. If this Warrant shall
have been exercised only in part, the Company shall, at the time of
delivery of the stock certificate or certificates, deliver to the
Holder a new Warrant evidencing the rights to purchase the
remaining Warrant Shares, which new Warrant shall in all other
respects be identical with this Warrant.
3. No
Fractional Shares or Scrip . No fractional shares or
scrip representing fractional shares shall be issued upon the
exercise of this Warrant. In lieu of any fractional
share to which the Holder would otherwise be entitled, the Company
shall make a cash payment equal to the fair market value multiplied
by such fraction or, at the Company’s option, round such
fractional share to the nearest whole share. The fair
market value shall be determined by the Company’s Board of
Directors.
4.
Replacement of Warrant . On receipt of evidence
reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and, in the case of loss,
theft or destruction, on delivery of an indemnity agreement
reasonably satisfactory in form and substance to the Company or, in
the case of mutilation, on surrender and cancellation of this
Warrant, the Company at its expense shall execute and deliver, in
lieu of this Warrant, a new warrant of like tenor and
amount.
5. Rights
of Stockholders . Subject to the provisions of
Sections 6 and 8 hereof, the Holder shall not be entitled to vote
or receive dividends or be deemed the holder of Common Stock or any
other securities of the Company that may at any time be issuable on
the exercise hereof for any purpose, nor shall anything contained
herein be construed to confer upon the Holder, as such, any of the
rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders
at any meeting thereof, or to give or withhold consent to any
corporate action (whether upon any recapitalization, issuance of
stock, reclassification of stock, change of par value, or change of
stock to no par value, consolidation, merger, conveyance or
otherwise) or to receive notice of meetings, or to receive
dividends or subscription rights or otherwise until the Warrant
shall have been exercised as provided herein.
6.
Adjustments .
(a)
Adjustment for Stock Splits and Combinations . If
the Company shall effect a subdivision of the outstanding shares of
the Common Stock, then the Exercise Price then in effect
immediately before that subdivision shall be proportionately
decreased and the number of shares of Common Stock issuable upon
any exercise of such warrant shall be proportionally increased, and
conversely, if the Company combines the outstanding shares of the
Common Stock into a smaller number of shares, the Exercise Price
then in effect immediately before the combination shall be
proportionately increased and the number of shares of Common Stock
issuable upon any exercise of such warrant shall be proportionally
decreased.
(b)
Adjustment for Certain Dividends and Distributions
. If the Company makes or fixes a record date for the
determination of holders of Common Stock entitled to receive, a
dividend or other distribution payable in additional shares of
Common Stock, then and in each such event (i) the Exercise Price
then in effect shall be decreased as of the time of such issuance
or, in the event such record date is fixed, as of the close of
business on such record date, by multiplying the Exercise Price
then in effect by a fraction (1) the numerator of which is the
total number of shares of Common Stock issued and outstanding
i
