Exhibit 4.2


INVESTOR REGISTRATION RIGHTS AGREEMENT


THIS REGISTRATION RIGHTS AGREEMENT
(this “Agreement”), dated as of August 11, 2006, by and among WORLDGATE COMMUNICATIONS, INC., a Delaware
corporation (the “Company”), and the undersigned investors listed
on Schedule I attached hereto (each, an “Investor” and
collectively, the “Investors”).


WHEREAS:


A.            In
connection with the Securities Purchase Agreement by and among the parties
hereto of even date herewith (the “Securities
Purchase Agreement”), the Company has agreed, upon the terms and subject to
the conditions of the Securities Purchase Agreement, to issue and sell to the
Investors secured convertible debentures (the “Convertible Debentures”)
which shall be convertible into that number of shares of the Company’s common
stock, par value $0.01 per share (the “Common Stock”), pursuant to the
terms of the Securities Purchase 
Agreement for an aggregate purchase price of up to Eleven Million
Dollars ($11,000,000).  Capitalized terms
not defined herein shall have the meaning ascribed to them in the Securities
Purchase Agreement.


B.            To
induce the Investors to execute and deliver the Securities Purchase Agreement,
the Company has agreed to provide certain registration rights under the
Securities Act of 1933, as amended, and the rules and regulations thereunder,
or any similar successor statute (collectively, the “Securities Act”),
and applicable state securities laws.


NOW, THEREFORE, in
consideration of the premises and the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Investors hereby agree as follows:


1.             DEFINITIONS.


As used in this Agreement, the following terms shall
have the following meanings:


(a)           “Person”
means a corporation, a limited liability company, an association, a
partnership, an organization, a business, an individual, a governmental or
political subdivision thereof or a governmental agency.


(b)           “Register,” “registered,”
and “registration” refer to a registration effected by preparing and
filing one or more Registration Statements (as defined below) in compliance
with the Securities Act and pursuant to Rule 415 under the Securities Act or
any successor rule providing for offering securities on a continuous or delayed
basis (“Rule 415”), and the declaration or ordering of effectiveness of
such Registration Statement(s) by the United States Securities and Exchange
Commission (the “SEC”).


(c)           “Registrable
Securities” means the shares of Common Stock issuable to the Investors upon
conversion of the Convertible Debentures pursuant to the terms thereof, the
Warrant Shares (as defined in the Securities Purchase Agreement), and the
Commitment Shares (as defined in the Securities Purchase Agreement).











 


(d)           “Registration
Statement” means a registration statement under the Securities Act which
covers the Registrable Securities.


2.             REGISTRATION.


(a)           Subject to the terms
and conditions of this Agreement, the Company shall prepare and file, no later
than forty-five (45) days from the date hereof (the “Scheduled Filing
Deadline”), with the SEC a registration statement on Form S-1 or SB-2 (or,
if the Company is then eligible, on Form S-3) under the Securities Act (the “Initial
Registration Statement”) for the resale by the Investors of the Registrable
Securities, which includes at least all shares listed on Schedule II attached
hereto.  Prior to the filing of the
Registration Statement with the SEC, the Company shall furnish a copy of the
Initial Registration Statement to the Investors for their review and
comment.  The Investors shall furnish
comments on the Initial Registration Statement to the Company within
twenty-four (24) hours of the receipt thereof from the Company.


(b)           Effectiveness of
the Initial Registration Statement. 
The Company shall use its best efforts (i) to have the Initial
Registration Statement declared effective by the SEC no later than one hundred
twenty (120) days from the date hereof (the “Scheduled Effective Deadline”)
and (ii) to insure that the Initial Registration Statement and any subsequent
Registration Statement remains in effect until all of the Registrable
Securities have been sold or until they become eligible for sale pursuant to
Rule 144(k), subject to the terms and conditions of this Agreement.


(c)           Failure to File
or Obtain Effectiveness of the Registration Statement.  In the event the Registration Statement is
not filed by the Scheduled Filing Deadline or is not declared effective by the
SEC on or before the Scheduled Effective Date, or if after the Registration
Statement has been declared effective by the SEC, sales cannot be made pursuant
to the Registration Statement (whether because of a failure to keep the
Registration Statement effective, failure to disclose such information as is
necessary for sales to be made pursuant to the Registration Statement, failure
to register sufficient shares of Common Stock or otherwise) then as partial
relief for the damages to any holder of Registrable Securities by reason of any
such delay in or reduction of its ability to sell the underlying shares of
Common Stock (which remedy shall not be exclusive of any other remedies at law
or in equity), the Company will pay as liquidated damages (the “Liquidated
Damages”) to the holder, at the holder’s option, either a cash amount or
shares of the Company’s Common Stock within three (3) business days, after
demand therefore, equal to one percent (1%) of the liquidated value of the
Convertible Debentures outstanding as Liquidated Damages for each thirty (30)
day period after the Scheduled Filing Deadline or the Scheduled Effective Date
as the case may be.  Notwithstanding
anything herein to the contrary, in no event shall Liquidated Damages exceed
twelve percent (12%) of the aggregate Purchase Price for all Investors.


(d)           Liquidated
Damages.  The Company and the
Investor hereto acknowledge and agree that the sums payable under subsection
2(c) above shall constitute liquidated damages and not penalties and are in
addition to all other rights of the Investor, including the right to call a
default.  The parties further acknowledge
that (i) the amount of loss or damages likely to be incurred is incapable or is
difficult to precisely estimate, (ii) the amounts specified in such subsections
bear a reasonable relationship to, and are not plainly or grossly
disproportionate to,



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the probable
loss likely to be incurred in connection with any failure by the Company to
obtain or maintain the effectiveness of a Registration Statement, (iii) one of
the reasons for the Company and the Investor reaching an agreement as to such
amounts was the uncertainty and cost of litigation regarding the question of
actual damages, and (iv) the Company and the Investor are sophisticated
business parties and have been represented by sophisticated and able legal
counsel and negotiated this Agreement at arm’s length.


3.             RELATED
OBLIGATIONS.


(a)           The Company shall
keep the Registration Statement effective pursuant to Rule 415 at all
times until the date on which the Investor shall have sold all the Registrable
Securities covered by such Registration Statement or until they become eligible
for sale pursuant to Rule 144(k) (the “Registration Period”), which
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein) shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein,
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading.


(b)           The Company shall
prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to a Registration Statement and the prospectus used
in connection with such Registration Statement, which prospectus is to be filed
pursuant to Rule 424 promulgated under the Securities Act, as may be necessary
to keep such Registration Statement effective at all times during the
Registration Period, and, during such period, comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities of
the Company covered by such Registration Statement until such time as all of
such Registrable Securities shall have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof as set forth
in such Registration Statement.  In the
case of amendments and supplements to a Registration Statement which are
required to be filed pursuant to this Agreement (including pursuant to this
Section 3(b)) by reason of the Company’s filing a report on Form 10-K, Form
10-Q or Form 8-K or any analogous report under the Securities Exchange Act of
1934, as amended (the “Exchange Act”), the Company shall incorporate
such report by reference into the Registration Statement, if applicable, or
shall file such amendments or supplements with the SEC on the same day on which
the Exchange Act report is filed which created the requirement for the Company
to amend or supplement the Registration Statement.


(c)           The Company shall
furnish to each Investor whose Registrable Securities are included in any
Registration Statement, upon request and without charge, (i) at least one (1)
copy of such Registration Statement as declared effective by the SEC and any
amendment(s) thereto, including financial statements and schedules, all
documents incorporated therein by reference, all exhibits and each preliminary
prospectus, (ii) ten (10) copies of the final prospectus included in such
Registration Statement and all amendments and supplements thereto (or such other
number of copies as such Investor may reasonably request) and (iii) such other
documents as such Investor may reasonably request from time to time in order to
facilitate the disposition of the Registrable Securities owned by such
Investor.



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(d)           The Company shall use its best
efforts to (i) register and qualify the Registrable Securities covered by a
Registration Statement under such other securities or “blue sky” laws of such
jurisdictions in the United States as any Investor reasonably requests, (ii) prepare
and file in those jurisdictions, such amendments (including post-effective
amendments) and supplements to such registrations and qualifications as may be
necessary to maintain the effectiveness thereof during the Registration Period,
(iii) take such other actions as may be necessary to maintain such
registrations and qualifications in effect at all times during the Registration
Period, and (iv) take all other actions reasonably necessary or advisable to
qualify the Registrable Securities for sale in such jurisdictions; provided,
however, that the Company shall not be required in connection therewith or as a
condition thereto to (w) make any change to its certificate of incorporation or
by-laws, (x) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(d), (y) subject itself
to general taxation in any such jurisdiction, or (z) file a general consent to
service of process in any such jurisdiction. 
The Company shall promptly notify each Investor who holds Registrable
Securities of the receipt by the Company of any notification with respect to
the suspension of the registration or qualification of any of the Registrable
Securities for sale under the securities or “blue sky” laws of any jurisdiction
in the United States or its receipt of actual notice of the initiation or
threat of any proceeding for such purpose.


(e)           As promptly as practicable after
becoming aware of such event or development, the Company shall notify each
Investor in writing of the happening of any event as a result of which the
prospectus included in a Registration Statement, as then in effect, includes an
untrue statement of a material fact or omission to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading (provided
that in no event shall such notice contain any material, nonpublic
information), and promptly prepare a supplement or amendment to such Registration
Statement to correct such untrue statement or omission, and, upon the request
of an Investor, deliver ten (10) copies of such supplement or amendment to such
Investor.  The Company shall also
promptly notify each Investor in writing (i) when a prospectus or any
prospectus supplement or post-effective amendment has been filed, and when a
Registration Statement or any post-effective amendment has become effective
(notification of such effectiveness shall be delivered to each Investor by
facsimile on the same day of such effectiveness), (ii) of any request by the
SEC for amendments or supplements to a Registration Statement or related
prospectus or related information, and (iii) of the Company’s reasonable
determination that a post-effective amendment to a Registration Statement would
be appropriate.


(f)            The Company shall use its best
efforts to prevent the issuance of any stop order or other suspension of
effectiveness of a Registration Statement, or the suspension of the
qualification of any of the Registrable Securities for sale in any jurisdiction
within the United States of America and, if such an order or suspension is
issued, to obtain the withdrawal of such order or suspension at the earliest
possible moment and to notify each Investor who holds Registrable Securities
being sold of the issuance of such order and the resolution thereof or its
receipt of actual notice of the initiation or threat of any proceeding for such
purpose.


(g)           The Company shall make available for
inspection by (i) any Investor and (ii) one (1) firm of accountants or
other agents retained by the Investors (collectively, the “Inspectors”)
all pertinent financial and other records, and pertinent corporate documents
and



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properties of the Company (collectively, the “Records”),
as shall be reasonably deemed necessary by each Inspector, and cause the
Company’s officers, directors and employees to supply all information which any
Inspector may reasonably request; provided, however, that each Inspector shall
agree, and each Investor hereby agrees, to hold in strict confidence and shall
not make any disclosure (except to an Investor) or use  any Record or other information which the
Company determines in good faith to be confidential, and of which determination
the Inspectors are so notified, unless (a) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in any Registration
Statement or is otherwise required under the Securities Act, (b) the release of
such Records is ordered pursuant to a final, non-appealable subpoena or order
from a court or government body of competent jurisdiction, or (c) the
information in such Records has been made generally available to the public
other than by disclosure in violation of this or any other agreement of which
the Inspector and the Investor has knowledge. 
Each Investor agrees that it shall, upon learning that disclosure of
such Records is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to the Company and
allow the Company, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, the Records deemed
confidential.


(h)           The Company shall hold in confidence
and not make any disclosure of information concerning an Investor provided to
the Company unless (i) disclosure of such information is necessary to comply
with federal or state securities laws, (ii) the disclosure of such information
is necessary to avoid or correct a misstatement or omission in any Registration
Statement, (iii) the release of such information is ordered pursuant to a
subpoena or other final, non-appealable order from a court or governmental body
of competent jurisdiction, or (iv) such information has been made generally
available to the public other than by disclosure in violation of this Agreement
or any other agreement.  The Company
agrees that it shall, upon learning that disclosure of such information
concerning an Investor is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt written notice to
such Investor and allow such Investor, at the Investor’s expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, such information.


(i)            The Company shall use its best
efforts either to cause all the Registrable Securities covered by a
Registration Statement to be (i) listed on each securities exchange on which
securities of the same class or series issued by the Company are then listed,
if any, if the listing of such Registrable Securities is then permitted under
the rules of such exchange, or (ii) included for quotation on the Nasdaq
National Market, Nasdaq Capital Market, or Nasdaq OTC Bulletin Board.  The Company shall pay all fees and expenses
in connection with satisfying its obligation under this Section 3(i).


(j)            The Company shall cooperate with the
Investors who hold Registrable Securities being offered and, to the extent
applicable, to facilitate the timely preparation and delivery of certificates
(not bearing any restrictive legend, provided that the Investors have provided
an undertaking that (i) they will only sell such Registrable Securities
pursuant to an effective registration statement for such securities under the
Securities Act and (ii) they will comply with all applicable prospectus
delivery requirements) representing the Registrable Securities to be offered
pursuant to a Registration Statement and enable such certificates to be in 



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such denominations or amounts, as the case
may be, as the Investors may reasonably request and registered in such names as
the Investors may request.


(k)           The Company shall
use its best efforts to cause the Registrable Securities covered by the
applicable Registration Statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to consummate
the disposition of such Registrable Securities.


(l)            The Company shall
make generally available to its security holders, as soon as practical, an
earnings statement (in form complying with the provisions of Rule 158 under the
Securities Act) covering a twelve (12) month period beginning not later than
the first day of the Company’s fiscal year next following the effective date of
the Registration Statement.


(m)          The Company shall
otherwise use its best efforts to comply with all applicable rules and
regulations of the SEC in connection with any registration hereunder.


(n)           Within two (2)
business days after a Registration Statement which covers Registrable
Securities is declared effective by the SEC, the Company shall deliver, and
shall cause legal counsel for the Company to deliver, to the transfer agent for
such Registrable Securities (with copies to the Investors whose Registrable
Securities are included in such Registration Statement) confirmation that such
Registration Statement has been declared effective by the SEC in the form
attached hereto as Exhibit A.


(o)           The Company shall
take all other reasonable actions necessary to expedite and facilitate
disposition by the Investors of Registrable Securities pursuant to a
Registration Statement.


(p)           Notwithstanding
anything to the contrary herein, at any time after the Effective Date, the
Company may delay the disclosure of material, non-public information concerning
the Company the disclosure of which at the time is not, in the good faith
opinion of the Board of Directors of the Company (following consultation with
its counsel), in the best interest of the Company (a “Grace Period”); provided, that
the Company shall promptly (i) notify the Investors in writing that such
determination has been made (provided that in each notice the Company will not
disclose the content of such material, non-public information to the Investors)
and the date on which the Grace Period will begin, and (ii) notify the
Investors in writing of the date on which the Grace Period ends; and, provided
further, that during any three hundred sixty five (365) day period such Grace
Periods shall not exceed an aggregate of twenty (20) days and the first day of
any Grace Period must be at ten (10) trading days after the last day of any
prior Grace Period (each, an “Allowable
Grace Period”).  For purposes
of determining the length of a Grace Period above, the Grace Period shall begin
on and include the date the Investors receive the notice referred to in clause
(i) and shall end on and include the later of the date the Investors receive
the notice referred to in clause (ii) and the date referred to in such
notice.  Upon expiration of the Grace
Period, the Company shall again be bound by the first sentence of Section 3(e)
with respect to the information giving rise thereto unless such material,
non-public information is no longer applicable. 
Notwithstanding anything to the contrary, the Company shall cause its transfer
agent to deliver unlegended shares of Common Stock to a transferee of an
Investor in accordance with the terms of the Securities Purchase Agreement in
connection with



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any sale of
Registrable Securities with respect to which an Investor has entered into a
contract for sale and delivered a copy of the prospectus included as part of
the applicable Registration Statement (unless an exemption from such prospectus
delivery requirement exists) prior to the Investor’s receipt of the notice of a
Grace Period and for which the Investor has not yet settled.


4.             OBLIGATIONS OF
THE INVESTORS.


Each Investor agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in Section
3(f) or the first sentence of 3(e), such Investor will immediately discontinue
disposition of Registrable Securities pursuant to any Registration Statement(s)
covering such Registrable Securities until such Investor’s receipt of the
copies of the supplemented or amended prospectus contemplated by Section 3(e)
or receipt of notice that no supplement or amendment is required.  Notwithstanding anything to the contrary, the
Company shall cause its transfer agent to deliver unlegended certificates for
shares of Common Stock to a transferee of an Investor in accordance with the
terms of the Securities Purchase Agreement in connection with any sale of
Registrable Securities with respect to which an Investor has entered into a
contract for sale prior to the Investor’s receipt of a notice from the Company
of the happening of any event of the kind described in Section 3(f) or the
first sentence of 3(e) and for which the Investor has not yet settled; provided
that such Investor has provided an undertaking that (i) it has sold such
Registrable Securities only pursuant to an effective registration statement for
such securities under the Securities Act and (ii) it has complied, and will
comply, with all applicable prospectus delivery requirements.


5.             EXPENSES OF
REGISTRATION.


All expenses incurred by the Company in connection
with registrations, filings or qualifications pursuant to Sections 2 and 3,
including, without limitation, all registration, listing and qualifications
fees, printers, legal and accounting fees shall be paid by the Company.


6.             INDEMNIFICATION.


With respect to Registrable Securities which are
included in a Registration Statement under this Agreement:


(a)           To the fullest
extent permitted by law, the Company will, and hereby does, indemnify, hold
harmless and defend each Investor, the directors, officers, partners,
employees, agents, representatives of, and each Person, if any, who controls
any Investor within the meaning of the Securities Act or the Exchange Act
(each, an “Indemnified Person”), against any losses, claims, damages,
liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys’
fees, amounts paid in settlement or expenses, joint or several (collectively, “Claims”)
incurred in investigating, preparing or defending any action, claim, suit,
inquiry, proceeding, investigation or appeal taken from the foregoing by or
before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto (“Indemnified Damages”), to which any
of them may become subject insofar as such Claims (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are based
upon: (i) any untrue statement or alleged untrue statement of a material fact in
a Registration Statement or any post-effective amendment



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thereto or in
any filing made in connection with the qualification of the offering under the
securities or other “blue sky” laws of any jurisdiction in which Registrable
Securities are offered (“Blue Sky Filing”), or the omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; (ii) any untrue
statement or alleged untrue statement of a material fact contained in any final
prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading; or (iii) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act, any other law, including,
without limitation, any state securities law, or any rule or regulation
thereunder relating to the offer or sale of the Registrable Securities pursuant
to a Registration Statement (the matters in the foregoing clauses (i) through
(iii) being, collectively, “Violations”).  The Company shall reimburse the Investors and
each such controlling person promptly as such expenses are incurred and are due
and payable, for any legal fees or disbursements or other reasonable expenses
incurred by them in connection with investigating or defending any such Claim.  Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section 6(a):
(x) shall not apply to a Claim by an Indemnified Person arising out of or based
upon a Violation which occurs in reliance upon and in conformity with
information furnished in writing to the Company by such Indemnified Person for
use in connection with the preparation of the Registration Statement or any
such amendment thereof or supplement thereto; (y) shall not be available to the
extent such Claim is based on a failure of the Investor to deliver or to cause
to be delivered the prospectus made available by the Company, if such
prospectus was timely made available by the Company pursuant to Section 3(c);
and (z) shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of the Company, which
consent shall not be unreasonably withheld. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of the
Indemnified Person and shall survive the transfer of the Registrable Securities
by the Investors pursuant to Section 9 hereof.


(b)           In connection with a
Registration Statement, each Investor agrees to severally and not jointly
indemnify, hold harmless and defend, to the same extent and in the same manner
as is set forth in Section 6(a), the Company, each of its directors, each of
its officers, employees, representatives, or agents and each Person, if any,
who controls the Company within the meaning of the Securities Act or the
Exchange Act (each an “Indemnified Party”), against any Claim or
Indemnified Damages to which any of them may become subject, under the
Securities Act, the Exchange Act or otherwise, insofar as such Claim or
Indemnified Damages arise out of or is based upon any Violation, in each case
to the extent, and only to the extent, that such Violation occurs in reliance
upon and in conformity with written information furnished to the Company by
such Investor for use in connection with such Registration Statement; and,
subject to Section 6(d), such Investor will reimburse any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such Claim; provided, however, that the indemnity agreement
contained in this Section 6(b) and the agreement with respect to contribution
contained in Section 7 shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of such
Investor, which consent shall not be unreasonably withheld; provided, further,
however, that the Investor shall be liable under this Section 6(b) for only
that amount of a Claim or Indemnified Damages as does not exceed the net
proceeds to such Investor as a result of the sale of 



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Registrable
Securities pursuant to such Registration Statement.  Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such Indemnified
Party and shall survive the transfer of the Registrable Securities by the
Investors pursuant to Section 9. 
Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(b) with respect to any
prospectus shall not inure to the benefit of any Indemnified Party if the
untrue statement or omission of material fact contained in the prospectus was
corrected and such new prospectus was made available to each Investor prior to
such Investor’s use of the prospectus to which the Claim relates.


(c)           Promptly after receipt
by an Indemnified Person or Indemnified Party under this Section 6 of notice of
the commencement of any action or proceeding (including any governmental action
or proceeding) involving a Claim, such Indemnified Person or Indemnified Party
shall, if a Claim in respect thereof is to be made against any indemnifying
party under this Section 6, deliver to the indemnifying party a written notice
of the commencement thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying party
and the Indemnified Person or the Indemnified Party, as the case may be;
provided, however, that an Indemnified Person or Indemnified Party shall have
the right to retain its own counsel with the fees and expenses of not more than
one (1) counsel for such Indemnified Person or Indemnified Party to be paid by
the indemnifying party, if, in the reasonable opinion of counsel retained by
the indemnifying party, the representation by such counsel of the Indemnified
Person or Indemnified Party and the indemnifying party would be inappropriate
due to actual or potential differing 
interests between such Indemnified Person or Indemnified Party and any
other party represented by such counsel in such proceeding.  The Indemnified Party or Indemnified Person
shall cooperate fully with the indemnifying party in connection with any
negotiation or defense of any such action or claim by the indemnifying party
and shall furnish to the indemnifying party all information reasonably
available to the Indemnified Party or Indemnified Person which relates to such
action or claim.  The indemnifying party
shall keep the Indemnified Party or Indemnified Person fully apprised at all
times as to the status of the defense or any settlement negotiations with
respect thereto.  No indemnifying party
shall be liable for any settlement of any action, claim or proceeding effected
without its prior written consent; provided, however, that the indemnifying
party shall not unreasonably withhold, delay or condition its consent.  No indemnifying party shall, without the
prior written consent of the Indemnified Party or Indemnified Person, consent
to entry of any judgment or enter into any settlement or other compromise which
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party or Indemnified Person of a release from all
liability in respect to such claim or litigation.  Following indemnification as provided for
hereunder, the indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third parties,
firms or corporations relating to the matter for which indemnification has been
made.  The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement
of any such action shall not relieve such indemnifying party of any liability
to the Indemnified Person or Indemnified Party under this Section 6, except to
the extent that the indemnifying party is prejudiced in its ability to defend
such action.


 



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(d)           The indemnification
required by this Section 6 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as and when bills
are received or Indemnified Damages are incurred.


(e)           The indemnity
agreements contained herein shall be in addition to (i) any cause of
action or similar right of the Indemnified Party or Indemnified Person against
the indemnifying party or others, and (ii) any liabilities the indemnifying
party may be subject to pursuant to the law.


7.             CONTRIBUTION.


To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party agrees to make
the maximum contribution with respect to any amounts for which it would
otherwise be liable under Section 6 to the fullest extent permitted by law;
provided, however, that:  (i) no seller
of Registrable Securities guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of
Registrable Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Registrable Securities.


8.             REPORTS UNDER
THE EXCHANGE ACT.


With a view to making available to the Investors the
benefits of Rule 144 promulgated under the Securities Act or any similar rule
or regulation of the SEC that may at any time permit the Investors to sell securities
of the Company to the public without registration (“Rule 144”) the
Company agrees to:


(a)           make and keep public
information available, as those terms are understood and defined in Rule 144;


(b)           file with the SEC in
a timely manner all reports and other documents required of the Company under
the Securities Act and the Exchange Act so long as the Company remains subject
to such requirements (it being understood that nothing herein shall limit the
Company’s obligations under Section 4(c) of the Securities Purchase Agreement)
and the filing of such reports and other documents as are  required by the applicable provisions of Rule
144; and


(c)           furnish to each
Investor so long as such Investor owns Registrable Securities, promptly upon
request, (i) a written statement by the Company that it has complied with the
reporting requirements of Rule 144, the Securities Act and the Exchange Act,
(ii) a copy of the most recent annual or quarterly report of the Company and
such other reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested to permit the Investors to sell such
securities pursuant to Rule 144 without registration.



 10
 






 



 


9.             AMENDMENT
OF REGISTRATION RIGHTS.


Provisions of this Agreement may be amended and the
observance thereof may be waived (either generally or in a particular instance
and either retroactively or prospectively), only with the written consent of
the Company and Investors who then hold at least two-thirds (2/3) of the
Registrable Securities.  Any amendment or
waiver effected in accordance with this Section 9 shall be binding upon
each Investor and the Company.  No such
amendment shall be effective to the extent that it applies to fewer than all of
the holders of the Registrable Securities. 
No consideration shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of any of this Agreement
unless the same consideration also is offered to all of the parties to this
Agreement.


10.           MISCELLANEOUS.


(a)           A Person is deemed
to be a holder of Registrable Securities whenever such Person owns or is deemed
to own of record such Registrable Securities or owns the right to receive the
Registrable Securities.  If the Company receives
conflicting instructions, notices or elections from two (2) or more Persons
with respect to the same Registrable Securities, the Company shall act upon the
basis of instructions, notice or election received from the registered owner of
such Registrable Securities.


(b)           Any notices, consents,
waivers or other communications required or permitted to be given under the
terms of this Agreement must be in writing and will be deemed to have been
delivered:  (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one (1) business day after deposit
with a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. 
The addresses and facsimile numbers for such communications shall be:


	
  If to the Company, to:

  	
   

  	
  WorldGate Communications, Inc.

  
	
   

  	
   

  	
  3190 Tremont Avenue

  	
   

  
	
   

  	
   

  	
  Trevose, PA 19053

  	
   

  
	
   

  	
   

  	
  Attention: 

  	
  Joel Boyarski

  
	
   

  	
   

  	
  Telephone:

  	
  (215) 354-5312

  
	
   

  	
   

  	
  Facsimile:

  	
  (215) 354-1049

  
	
   

  	
   

  	
   

  	
   

  
	
  With Copy to:

  	
   

  	
  Drinker Biddle & Reath LLP

  
	
   

  	
   

  	
  1000 Westlakes Drive, Suite 300

  
	
   

  	
   

  	
  Berwyn, PA 19312-2409

  
	
   

  	
   

  	
  Attention:

  	
  Walter Mostek

  
	
   

  	
   

  	
  Telephone:

  	
  (610) 993-2233

  
	
   

  	
   

  	
  Facsimile:

  	
  (610) 993-8585

  
					



 


If to an Investor, to its address and facsimile number
on the Schedule of Investors attached hereto, with copies to such Investor’s
representatives as set forth on the Schedule of Investors or to such other
address and/or facsimile number and/or to the attention of such other person as
the recipient party has specified by written notice given to each other party
five (5) days prior to the 



 11
 






 



 


effectiveness of such change.  Written confirmation of receipt (A) given by
the recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender’s facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by a courier or overnight courier
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in
accordance with clause (i), (ii) or (iii) above, respectively.


(c)           Failure of any party
to exercise any right or remedy under this Agreement or otherwise, or delay by
a party in exercising such right or remedy, shall not operate as a waiver
thereof.


(d)           The laws of the
State of New Jersey shall govern all issues concerning the relative rights of
the Company and the Investors as its stockholders.  All other questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of New Jersey, without giving
effect to any choice of law or conflict of law provision or rule (whether of
the State of New Jersey or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of New
Jersey.  Each party hereby irrevocably
submits to the non-exclusive jurisdiction of the Superior Courts of the State
of New Jersey, sitting in Hudson County, New Jersey and federal courts for the
District of New Jersey sitting Newark, New Jersey, for the adjudication of any
dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, 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 brought in an inconvenient forum or that the venue of
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 to such party at the address for such 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.  If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction.  EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH
OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.


(e)           This Agreement, the
Irrevocable Transfer Agent Instructions, the Securities Purchase Agreement and
related documents including the Convertible Debenture and the Security
Agreement dated the date hereof (the “Security Agreement”) constitute
the entire agreement among the parties hereto with respect to the subject
matter hereof and thereof.  There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein and therein.  This
Agreement, the Irrevocable Transfer Agent Instructions, the Securities Purchase
Agreement and related documents including the Convertible Debenture, and the 



 12
 






 



 


Security
Agreement supersede all prior agreements and understandings among the parties
hereto with respect to the subject matter hereof and thereof.


(f)            This Agreement
shall inure to the benefit of and be binding upon the permitted successors and
assigns of each of the parties hereto.


(g)           The headings in this
Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof.


(h)           This Agreement may
be executed in identical counterparts, each of which shall be deemed an
original but all of which shall constitute one and the same agreement.  This Agreement, once executed by a party, may
be delivered to the other party hereto by facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.


(i)            Each party shall do
and perform, or cause to be done and performed, all such further acts and
things, and shall execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably request in order
to carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.


The language
used in this Agreement will be deemed to be the language chosen by the parties
to express their mutual intent and no rules of strict construction will be
applied against any party.


(j)            This Agreement is
intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision
hereof be enforced by, any other Person.


[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]



 13
 






 



 


IN WITNESS WHEREOF,
each Investor and the Company have caused their signature page to this Investor
Registration Rights Agreement to be duly executed as of the date first above
written.


	
  

  	
  COMPANY:

  
	
   

  	
  WORLDGATE COMMUNICATIONS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joel Boyarksi

  
	
   

  	
  Name:

  	
  Joel Boyarski

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  



 



 14
 






 



 


IN WITNESS WHEREOF,
each Investor and the Company have caused their signature page to this Investor
Registration Rights Agreement to be duly executed as of the date first above
written.


	
  

  	
  INVESTOR:

  
	
   

  	
  CORNELL CAPITAL PARTNERS, LP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Yorkville Advisors, LLC

  
	
   

  	
  Its:

  	
  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark Angelo

  
	
   

  	
  Name:

  	
  Mark Angelo

  
	
   

  	
  Title:

  	
  Portfolio Manager

  



 



 15
 






 



 


SCHEDULE I


SCHEDULE OF INVESTORS


	
  Investor

  	
   

  	
  Address/Facsimile 

  Number of Investor

  	
   

  	
  Address/Facsimile 

  Number of Investor’s Representative

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cornell Capital
  Partners, LP

  	
   

  	
  101 Hudson Street — Suite 3700

  	
   

  	
  101 Hudson Street — Suite 3700

  
	
   

  	
   

  	
  Jersey City, NJ 07303

  	
   

  	
  Jersey City, NJ 07303

  
	
   

  	
   

  	
  Facsimile:  (201) 985-8266

  	
   

  	
  Facsimile:  (201) 985-8266

  
	
   

  	
   

  	
   

  	
   

  	
  Attention: David Gonzalez, Esq.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 



 16
 






 



 


SCHEDULE II


REGISTRABLE
SECURITIES


	
  Selling Stockholder

  	
   

  	
  Shares of Common

  Stock to be 

  Registered

  	
   

  	
  Description

  
	
  Cornell Capital
  Partners, LP

  	
   

  	
  27,227,581 shares of
  which 7,798,333 shares shall be included on the Initial Registration
  Statement

  	
   

  	
  Shares of Common Stock underlying Convertible
  Debentures.

  
	
  Cornell Capital
  Partners, LP

  	
   

  	
  177,419 shares which
  shall be included on the Initial Registration Statement

  	
   

  	
  Commitment Shares.

  
	
  Cornell Capital
  Partners, LP

  	
   

  	
  2,595,000 shares which shall
  be included on the subsequent Registration Statement

  	
   

  	
  Shares of Common Stock underlying the Warrants.

  



 


 



 17














 


 


EXHIBIT
A


FORM OF NOTICE OF
EFFECTIVENESS

OF REGISTRATION STATEMENT


              ,
200 


              


Attention:


RE:         WORLDGATE COMMUNICATIONS, INC.


Ladies and
Gentlemen:


We
are counsel to WorldGate Communications, Inc., (the “Company”), and have
represented the Company in connection with that certain Securities Purchase
Agreement, dated as of                
     , 200  (the “Securities Purchase
Agreement”), entered into by and among the Company and the Buyers set forth
on Schedule I attached thereto (collectively the “Buyers”) pursuant to
which the Company has agreed to sell to the Buyers up to $11,000,000 of secured
convertible debentures, which shall be convertible into shares (the “Conversion
Shares”) of the Company’s common stock, par value $.01 per share (the “Common
Stock”), in accordance with the terms of the Securities Purchase
Agreement.  Pursuant to the Securities
Purchase Agreement, the Company also has entered into a Registration Rights
Agreement, dated as of                 
     , 200 , with the Buyers (the “Investor
Registration Rights Agreement”) pursuant to which the Company agreed, among
other things, to register the Conversion Shares under the Securities Act of
1933, as amended (the “1933 Act”). 
In connection with the Company’s obligations under the Securities
Purchase Agreement and the Registration Rights Agreement, on           ,
200 , the Company filed a Registration Statement (File No.       -          )
(the “Registration Statement”) with the Securities and Exchange
Commission (the “SEC”) relating to the sale of the Conversion Shares.


In connection with the foregoing, we advise the
Transfer Agent that a member of the SEC’s staff has advised us by telephone
that the SEC has entered an order declaring the Registration Statement effective
under the 1933 Act at       P.M. on              ,
200  and we have no knowledge that any stop order suspending its
effectiveness has been issued or that any proceedings for that purpose are
pending before, or threatened by, the SEC and the Conversion Shares are
available for sale under the 1933 Act pursuant to the Registration Statement.


The statement made herein that “we have no knowledge”
is based solely on information actually known to those attorneys currently
practicing with this firm and engaged in the representation of the Company in
connection with the transactions contem­plated by the Securities Purchase
Agreement.


Very truly yours,


DRINKER BIDDLE
& REATH LLP


cc:           [LIST
NAMES OF INVESTORS]