FORM A OF NQSO
GRANT

    


    WORLDGATE
COMMUNICATIONS, INC.

     

    2003
EQUITY INCENTIVE PLAN

    


    NONSTATUTORY STOCK OPTION
GRANT

     

    This
NONSTATUTORY STOCK OPTION GRANT AGREEMENT (the “Agreement”), dated as
of May ___, 2009 (the “Date of Grant”), is
delivered by WorldGate Communications, Inc. (the “Company”) to
_______________ (the “Participant”).

     

    RECITALS

     

    WHEREAS,
the Company and the Participant previously entered into an [Employment
Agreement][Letter Agreement], dated as of _______ __, 200__, (the “Employment
Agreement”), pursuant to which it was agreed that as soon as
administratively practicable following the effective date of the Employment
Agreement the Board of Directors of the Company (the “Board”) would approve
and adopt a new 2009 Company Employee Stock Option Plan (the “2009 Plan”) and
following the adoption and the approval of the 2009 Plan, the Participant would
be awarded a stock option to purchase _______ shares of the common stock under
the 2009 Plan with terms and conditions as set forth in the Employment Agreement
(the “New Hire
Option”);

     

    WHEREAS,
in lieu of adopting the 2009 Plan, the Board has determined to amend the
WorldGate Communications, Inc. 2003 Equity Incentive Plan (the “Plan”) to increase
the number of shares of common stock of the Company authorized for issuance
under the Plan and has approved an amendment to the Plan to increase the shares
authorized for issuance thereunder, subject to the approval of the Company’s
stockholders;

     

    WHEREAS,
for purposes of this nonstatutory stock option grant, only those Committee (as
defined in the Plan) members who are “outside directors” as defined in Treas.
Reg. Section 1.162-27(e)(3) and “non-employee directors” as defined in Rule
16(b)-3 of the Securities and Exchange Act of 1934, as amended (the “Outside Directors”),
have approved this grant;

     

    WHEREAS,
the Outside Directors have determined that the Participant’s New Hire Option
will be granted under the Plan; and

     

    WHEREAS,
the Participant has agreed that his New Hire Option shall be issued under the
Plan and shall be subject to the terms and conditions set forth in this
Agreement; and

     

    WHEREAS,
the Committee desires that
the Participant execute a [Non-Compete/Non-Solicitation/Confidentiality/Invention
Assignment Agreement] (the “Restrictive Covenant
Agreement”) as a condition to making this nonstatutory stock option grant
to the Participant, and the Participant has agreed to execute the Restrictive
Covenant Agreement, attached hereto as Exhibit
A.

     

    NOW,
THEREFORE, the parties to this Agreement, intending to be legally bound hereby,
agree as follows:

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    1.           Grant of
Option.  Subject to the terms and conditions set forth in this
Agreement and in the Plan, the Company hereby grants to the Participant a
nonstatutory stock option (the “Option”) to purchase
___________ shares of Stock (as defined in the Plan), at an exercise price of
$_________ per share of Stock.  Notwithstanding anything herein to the
contrary, this Agreement shall be null, void and without effect if the Company’s
stockholders do not approve the amendment to the Plan that increases the number
of shares authorized for issuance thereunder within twelve (12) months from the
Date of Grant.

     

    2.           Exercisability of
Option.

     

    (a)           The
Option shall become exercisable on the following dates, if the Participant
continues to provide Service (as defined in the Plan) to an employer within the
Participating Company Group (as defined in the Plan) from the Date of Grant
through the applicable date:

     

    
      
        
          
            
              
                	
                        Date

                      	 	
                        Shares for Which the Option is
      Exercisable

                      	 
	 
      	 	 	 
	
                        First
      anniversary of the Date of Grant

                      	 	 	25	%
	 
      	 	 	 	 
	
                        Second
      anniversary of the Date of Grant

                      	 	 	25	%
	 
      	 	 	 	 
	
                        Third
      anniversary of the Date of Grant

                      	 	 	25	%
	 
      	 	 	 	 
	
                        Fourth
      anniversary of the Date of Grant

                      	 	 	25	%


              

            

          

        

      

    

     

    The
exercisability of the Option is cumulative, but shall not exceed 100% of the
shares of Stock subject to the Option.  If the foregoing schedule
would produce fractional shares of Stock, the number of shares of Stock for
which the Option becomes exercisable shall be rounded down to the nearest whole
share of Stock.  The Option shall become fully exercisable on the
fourth anniversary of the Date of Grant, provided that the Participant is
providing Service to the Participating Company Group on such
date.  Notwithstanding anything herein to the contrary, no portion of
the Option may be exercised prior to the date on which the Company’s
stockholders approve the increase in the shares of Stock authorized for issuance
under the Plan.

     

    (b)           If
at any time prior to the first anniversary of the Date of Grant, the
Participant’s Service with the Participating Company Group is terminated by the
applicable Participating Company without Cause (as defined in the Employment
Agreement) or, to the extent such concept is contained in the Participant’s
Employment Agreement, by the Participant for Good Reason (as defined in the
Employment Agreement), the Option shall become exercisable as to Applicable
Percentage of the shares of Stock subject to the Option on the date of the
Participant’s termination of Service by the applicable Participating Company
without Cause or, to the extent such concept is contained in the Participant’s
Employment Agreement.  For purposes of this Agreement, “Applicable
Percentage” means the termination vesting credit percentage specified in the
Employment Agreement with respect to the New Hire Option or, if no such
percentage is specified, 0%.

     

    
      
        
        

      

      
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    3.           Term of
Option.

     

    (a)           The
Option shall have a term of ten (10) years from the Date of Grant, and shall
terminate at the expiration of that period, unless it is terminated at an
earlier date pursuant to the provisions of this Agreement or the Plan.

     

    (b)           The
Option shall automatically terminate upon the happening of the first of the
following events:

     

    (i)           If
the Participant’s Service with the Participating Company Group terminates on
account of death or Disability (as defined in the Plan), the expiration of the
one-year period following the date of the Participant’s termination of Service
on account of death or Disability.

     

    (ii)           If
the Participant’s Service with the Participating Company Group terminates for
any reason other than on account of death, Disability, voluntary termination by
the Participant without the consent of the applicable Participating Company, or
termination by the applicable Participating Company for Cause,  the
expiration of the three-month period following the date of the Participant’s
termination of Service for any reason other than on account of death,
Disability, voluntary termination by the Participant without the consent of the
applicable Participating Company, or termination by the applicable Participating
Company for Cause.

     

    (iii)           The
date on which the Participant ceases to provide Service to the Participating
Company Group due to a termination by the applicable Participating Company for
Cause or due to a voluntary separation from the applicable Participating Company
without the consent of the Participating Company.

     

    Notwithstanding
the foregoing, in no event may the Option be exercised after the tenth
anniversary of the Date of Grant.  Any portion of the Option that is
not exercisable at the time the Participant ceases to provide Service to the
Participating Company Group shall immediately terminate as of such
date.

     

    4.           Restrictive Covenant
Agreement.  In consideration for this grant of the Option, the
Participant agrees to execute and to be bound by the terms and conditions of the
Restrictive Covenant Agreement, attached hereto as Exhibit A.  If the
Participant breaches the terms and conditions of the Restrictive Covenant
Agreement, this Agreement shall be null, void and without effect.

     

    5.           Exercise
Procedures.

     

    (a)           Subject
to the provisions of Paragraphs 2 and 3 above, the Participant may exercise part
or all of the exercisable portion of the Option by delivering to the Company
written notice of intent to exercise in the manner provided in this Agreement,
specifying the number of shares of Stock as to which the Option is to be
exercised and the method of payment.  Payment of the exercise price
shall be made in accordance with procedures established by the Committee from
time to time based on the type of payment being made but, in any event, prior to
issuance of the shares of Stock.  The Participant shall pay the
exercise price (i) in cash, by check or cash equivalent; (ii) by tender to the
Company of shares of Stock owned by the Participant having a Fair Market Value
(as defined in the Plan) not less than the exercise price; (iii) by payment
through a broker in accordance with procedures permitted by Regulation T of the
Federal Reserve Board; or (iv) by any combination thereof.  The
Committee may impose from time to time such limitations as it deems appropriate
on the use of shares of Stock to exercise the Option.

     

    
      
         


      

      
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    (b)           The
obligation of the Company to deliver shares of Stock upon exercise of the Option
shall be subject to all applicable laws, rules, and regulations and such
approvals by governmental agencies as may be deemed appropriate by the
Committee, including such actions as Company counsel shall deem necessary or
appropriate to comply with relevant securities laws and
regulations.  The Company may require that the Participant (or other
person exercising the Option after the Participant’s death) represent that the
Participant is purchasing the shares of Stock for the Participant’s own account
and not with a view to or for sale in connection with any distribution of the
shares of Stock, or such other representations as the Committee deems
appropriate.  No portion of the Option may be exercised during a
period which the Committee designates in writing as a prohibited exercise
period.

     

    (c)           All
obligations of the Company under this Agreement shall be subject to the rights
of the Company as set forth in the Plan to withhold amounts required to be
withheld for any taxes.

     

    6.           Change in
Control.  The provisions of the Plan applicable to a Change in
Control (as defined in the Plan) shall apply to the Option, and, in the event of
a Change in Control, the Committee may take such actions as it deems appropriate
pursuant to the Plan.

     

    7.           Restrictions on
Exercise.  Only the Participant may exercise the Option during
the Participant’s lifetime and, after the Participant’s death, the Option shall
be exercisable (subject to the limitations specified in the Plan) solely by the
guardian or legal representatives of the Participant, or by the person who
acquires the right to exercise the Option by will or by the laws of descent and
distribution, to the extent that the Option is exercisable pursuant to this
Agreement.

     

    8.           Grant Subject to Plan
Provisions.  This Option grant is made pursuant to the Plan,
the terms of which are incorporated herein by reference, and in all respects
shall be interpreted in accordance with the Plan.  The grant and
exercise of the Option and this Agreement are subject to interpretations,
regulations and determinations concerning the Plan established from time to time
by the Committee in accordance with the provisions of the Plan, including, but
not limited to, provisions pertaining to (i) rights and obligations with respect
to withholding taxes, (ii) the registration, qualification or listing of the
shares of Stock, (iii) changes in capitalization of the Company, and (iv) other
requirements of applicable law.  The Committee shall have the
authority to interpret and construe the Option pursuant to the terms of the
Plan, and its decisions shall be conclusive as to any questions arising
hereunder.  By accepting this Option, the Participant agrees to be
bound by the terms of the Plan and this Agreement and that all decisions and
determinations of the Committee with respect to the Agreement shall be final and
binding on the Participant and the Participant’s beneficiaries.

     

    
      
        
        

      

      
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    9.           Restrictions on Sale or
Transfer of Shares.

     

    (a)           The
Participant agrees that he or she shall not sell, transfer, pledge, donate,
assign, mortgage, hypothecate or otherwise encumber the shares of Stock
underlying the Option unless the shares of Stock are registered under the
Securities Act of 1933, as amended (the “Securities Act”) or
the Company is given an opinion of counsel reasonably acceptable to the Company
that such registration is not required under the Securities Act.

     

    (b)           As
a condition to receive any shares of Stock upon the exercise of the Option, the
Participant agrees to be bound by the Company’s policies regarding the
limitations on the transfer of such shares, and understands that there may be
certain times during the year that the Participant will be prohibited from
selling, transferring, pledging, donating, assigning, mortgaging, hypothecating
or otherwise encumbering the shares.

     

    10.         No Employment or Other
Rights.  The grant of this Option shall not confer upon the
Participant any right to be retained in the Service of the Participating Company
Group and shall not interfere in any way with the right of the applicable
Participating Company to terminate the Participant’s Service at any
time.  The right of the applicable Participating Company to terminate
at will the Participant’s Service at any time for any reason is specifically
reserved.

     

    11.         No Stockholder
Rights.  Neither the Participant, nor any person entitled to
exercise the Participant’s rights in the event of the Participant’s death, shall
have any of the rights and privileges of a stockholder with respect to the
shares of Stock subject to the Option, until certificates for shares of Stock
have been issued upon the exercise of the Option.

     

    12.         Assignment and
Transfers.  The rights and interests of the Participant under
this Agreement may not be sold, assigned, encumbered or otherwise transferred
except, in the event of the death of the Participant, by will or by the laws of
descent and distribution.  In the event of any attempt by the
Participant to alienate, assign, pledge, hypothecate, or otherwise dispose of
the Option or any right hereunder, except as provided for in this Agreement, or
in the event of the levy or any attachment, execution or similar process upon
the rights or interests hereby conferred, the Company may terminate the Option
by notice to the Participant, and the Option and all rights hereunder shall
thereupon become null and void.  The rights and protections of the
Company hereunder shall extend to any successors or assigns of the Company and
to any Participating Company.  This Agreement may be assigned by the
Company without the Participant’s consent.

     

    13.         Effect on Other
Benefits.  The value of shares of Stock received upon exercise
of the Option shall not be considered eligible earnings for purposes of any
other plans maintained by the Company or any other Participating
Company.  Neither shall such value be considered part of the
Participant’s compensation for purposes of determining or calculating other
benefits that are based on compensation, such as life insurance.

     

    14.         Applicable
Law.  The validity, construction, interpretation and effect of
this instrument shall be governed by and construed in accordance with the laws
of the Commonwealth of Pennsylvania, without giving effect to the conflicts of
laws provisions thereof.

     

    
      
         


      

      
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    15.         Notice.  Any
notice to the Company provided for in this instrument shall be addressed to the
Company in care of the Board, Attn: Stock Options at the Company’s corporate
headquarters, and any notice to the Participant shall be addressed to such
Participant at the current address shown on the payroll records of the
applicable Participating Company, or to such other address as the Participant
may designate to the applicable Participating Company in writing.  Any
notice shall be delivered by hand, sent by telecopy or enclosed in a properly
sealed envelope addressed as stated above, registered and deposited, postage
prepaid, in a post office regularly maintained by the United States Postal
Service.

     

    
      
         


      

      
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    IN
WITNESS WHEREOF, the Company has caused its duly authorized officers to execute
and attest this Agreement, and the Participant has executed this Agreement,
effective as of the Date of Grant.

    


    
      
        
          	 
      	 
      	
                  WORLDGATE
      COMMUNICATIONS, INC.

                
	 
      	 
      	 
      	 
      
	 
      	 
      	
                  By:

                	
                     

                
	 
      	 
      	 
      	 
      
	 
      	 
      	
                  Its:

                	
                      

                
	 	 	 	 
	
                  ATTESTED
      BY:

                	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	
                      

                	 
      	 
      	 
      
	
                  Name:

                	 
      	 
      	 
      
	
                  Title:

                	 
      	 
      	 
      


        

      

    

     

    I hereby
accept the Option described in this Agreement, and I agree to be bound by the
terms of the Plan and this Agreement. I hereby further agree that all of the
decisions and determinations of the Committee shall be final and
binding.

    


    
      	 
      	
              Participant:

            	
                

            
	 
      	 
      
	 
      	 
      
	 
      	
              Date:

            	
                 

            


    

     

    
      
         


      

      
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    Exhibit
A

     

    [RESTRICTIVE
COVENANT AGREEMENT]

     

    
      
         


      

      
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