Exhibit 10.1
 
 
WAIVER AND CONDITIONAL ADVANCE AGREEMENT
 

THIS WAIVER AND CONDITIONAL ADVANCE AGREEMENT (this “Agreement”) is made as of
March 30, 2011 by and among (i) WorldGate Communications, Inc., a Delaware
corporation, WorldGate Service, Inc., a Delaware corporation, WorldGate Finance,
Inc., a Delaware corporation, Ojo Services LLC, a Pennsylvania limited liability
company, and Ojo Video Phones LLC, a Pennsylvania limited liability company
(jointly and severally, the “Borrower”), and (ii) WGI Investor LLC, a Delaware
limited liability company (“Lender”).
 
RECITALS:
 
A.           Borrower and Lender have entered into that certain Revolving Loan
and Security Agreement dated as of October 28, 2009 and amended as of March 9,
2010 and August 11, 2010 (as may be further amended, modified, supplemented or
restated, the “Loan Agreement”).  Capitalized terms used but not otherwise
defined herein shall have the meaning given to them in the Loan Agreement.
 
B.           In connection with the Loan Agreement, Borrower executed that
certain promissory note dated October 28, 2009 and amended as of March 9, 2010
and August 11, 2010, in the maximum original principal amount of $7,000,000,
made payable to the Lender (as amended to date, the “Note”).
 
C.           Pursuant to the Loan Agreement, Borrower granted to Lender a first
priority security interest in the Collateral.
 
D.           As of the date hereof, Lender has determined that Borrower has
failed to meet certain of the conditions for Loan Advances under the Loan
Agreement (the “Condition Failure”).  Neither the omission of any failure to
meet a condition for Loan Advances nor the omission of any existing default or
Event of Default under any Loan Document shall constitute a waiver, release or
discharge of any such condition failure, default or Event of Default.
 
E.           Borrower has requested that Lender waive certain conditions to
making a Loan Advance under the Loan Agreement, and Lender has agreed to such
waiver solely for the purposes of making a conditional Loan Advance under the
Loan Agreement on the terms and subject to the conditions set forth in this
Agreement.
 
AGREEMENT:
 
In consideration of the mutual covenants and provisions herein contained, the
parties hereto agree as follows:
 
1.           Recitals.  The Recitals set forth above are true and correct and
are hereby incorporated by reference.

2.           Acknowledgment of Indebtedness and Liens.  Borrower hereby
acknowledges, confirms and agrees that (i) as of the date hereof, $2,340,408.87
in principal and accrued interest indebtedness is outstanding under the Note and
such indebtedness is without defense, offset or counterclaim; and (ii) the liens
and security interests evidenced by the Loan Documents are valid liens and
security interests upon the Collateral and are enforceable in accordance with
their terms.

3.           Acknowledgment of Condition Failure. Borrower hereby acknowledges,
confirms and agrees that (i) the condition set forth in Section 3(a)(iv) of the
Loan Agreement has not been satisfied, (ii) such Condition Failure is continuing
as of the date hereof and has not been waived by virtue of any previous actions
(or failure to act) by Lender through any course of conduct or course of dealing
or otherwise, (iii) Lender is not obligated to make any further Loan Advances
under the Loan Agreement, and (iv) Borrower does not have, and will not assert,
any defenses, counterclaims, or rights of setoff with respect to the Condition
Failure.

 
 

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4.           Conditions and Agreements.  In order to induce Lender to agree to
make the Conditional Loan Advance specified in Section 5 below notwithstanding
the Condition Failure, Borrower agrees as follows:
 
(a)           Three Month Plan.  Borrower has prepared a proposed operating
budget dated the date hereof and covering a period from the date hereof through
June 24, 2011, setting forth proposed expenditures to be paid (after reflecting
expense and workforce reductions) during such period (the “Budget”).  The
Borrower has provided Lender with a true and correct copy of the Budget.
 
(b)           Payments to Creditors.  Borrower shall not (and will not enter
into any agreement obligating it to) pay or prepay any indebtedness of Borrower
to creditors other than payments expressly identified to be paid as provided in
the Budget, unless otherwise agreed in writing (including email) by the Lender.
 
5.           Conditional Loan Advance; Deferred Interest Obligation.
 
(a)           Subject to the conditions set forth herein, notwithstanding the
Condition Failure, Lender agrees to make a Loan Advance under the Loan Agreement
in an amount equal to the aggregate amount of payments set forth on the Budget,
but not to exceed $1,200,000 (the “Conditional Loan Advance”).  Lender shall
have no obligation to make any further Loan Advances under the Loan Agreement or
any other Loan Document. Any breach by the Borrower of its agreements or
obligations under this Agreement shall constitute an Event of Default under the
Loan Documents, and Lender shall immediately be entitled to pursue its rights
and remedies under any or all of the Loan Documents and applicable law on
account of such Event of Default without further notice.
 
(b)           Subject to the conditions set forth herein, Lender agrees that
notwithstanding Section 1(d) of the Loan Agreement, Borrower’s obligation to
make periodic interest payments on outstanding amounts under the Loan Agreement
shall be deferred until July 1, 2011 (the “Interest Payment Deferral”), at which
time (i) all accrued but unpaid interest shall be due and payable, and (ii)
Borrower’s obligation to make periodic interest payments under the Loan
Agreement shall resume.
 
6.           Release.  Borrower hereby releases, acquits and forever discharges
Lender and its officers, directors, employees, members, managers, affiliates and
agents from any and all claims, demands, causes of action in law or in equity
and liabilities, of any kind or nature, whether known or unknown, liquidated or
unliquidated, absolute or contingent, which such party ever had, presently has
or claims to have against Lender and any of its officers, directors, employees,
members, managers, affiliates or agents prior to the date of this Agreement,
that arise out of or in any way relate to this Agreement or any of the Loan
Documents or the transactions contemplated thereby.
 
7.           Ratification.  Except to the extent set forth in this Agreement,
each of the Loan Documents shall remain in full force and effect and is hereby
ratified and confirmed by Borrower.

 
 

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8.           Further Assurances. Borrower agrees to promptly execute such
additional documents and take such additional actions as Lender may require to
carry out the intentions of this Agreement.

9.           No Waiver; Amendments and Waivers.

(a)           Notwithstanding anything contained herein, Lender does not now
waive, nor does it agree that it will waive in the future, any condition,
default or Event of Default under the Loan Documents, and any waiver by Lender
of any condition, default or Event of Default under the Loan Documents will only
be effective if in writing and executed by Lender.  Lender explicitly retains
its rights and remedies under the Loan Documents for any default or Event of
Default, and Lender explicitly reserves its right to require the satisfaction of
any condition under the Loan Documents.

(b)           Borrower acknowledges and agrees that (i) this Agreement is not
intended to, nor shall it, establish any course of dealing between the Borrower
and the Lender that is inconsistent with the express terms of the Loan
Documents, and (ii) except with respect to the conditional agreement hereunder
to make the Conditional Loan Advance and the Interest Payment Deferral, the
Lender shall not be under any obligation to forbear from exercising any of its
rights or remedies upon the occurrence of any default or Event of Default or to
make any further Loan Advances under the Loan Agreement.

(c)           No amendment, modification, termination or waiver of any provision
of any Loan Document or this Agreement shall be effective unless the same shall
be in writing and signed by Lender, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.  No waiver given in any instance shall entitle Borrower to any other or
further notice or demand in any similar or other circumstances.

10.           Advice of Counsel.  Borrower acknowledges that it has sought and
had the opportunity to obtain the advice of, and has been advised by,
independent legal counsel of its choice, in connection with the negotiation of
the transactions contemplated by this Agreement, and that Borrower has willingly
entered into this Agreement with full understanding of the legal and financial
consequences of this Agreement.

11.           Miscellaneous.  This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns.  This Agreement contains the entire agreement between the parties
relating to the subject matter hereof and supersedes all oral statements and
prior writings with respect thereto.  This Agreement shall be governed by and
construed in accordance with the internal and substantive laws of the State of
Delaware and without regard to any conflicts of laws concepts which would apply
the substantive law of some other jurisdiction.  The headings used in this
Agreement are for convenience only and shall be disregarded in interpreting the
substantive provisions of this Agreement.  Time is of the essence of each term
of the Loan Documents, including this Agreement.  If any provision of this
Agreement or any of the other Loan Documents shall be determined by a court of
competent jurisdiction to be invalid, illegal or unenforceable, that portion
shall be deemed severed therefrom, and the remaining parts shall remain in full
force as though the invalid, illegal or unenforceable portion had never been a
part thereof.  All notices made or provided under this Agreement shall be made
or provided in the manner set forth in the Loan Documents.  This Agreement shall
constitute one of the Loan Documents.

12.           Counterparts.  This Agreement may be executed in multiple
counterparts, delivery of which may occur by facsimile or electronic
communication, all of which taken together shall constitute one instrument.

 
 

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IN WITNESS WHEREOF, each of the parties hereto have entered into this Agreement
as of the date first above written.

BORROWER:
 
WORLDGATE COMMUNICATIONS, INC.
 
By:  /s/ Christopher V. Vitale                      
Name:  Christopher V. Vitale
Title:  Chief Administrative Officer 
 
 
WORLDGATE SERVICE, INC.
 
By:  /s/ Christopher V. Vitale                      
Name:  Christopher V. Vitale
Title:  SVP, General Counsel and Secretary  
 
 
WORLDGATE FINANCE, INC.
 
By:  /s/ Christopher V. Vitale                      
Name:  Christopher V. Vitale
Title:  SVP, General Counsel and Secretary    
 
 
OJO SERVICE LLC
 
By:WorldGate Communications, Inc., its sole member
 
By:  /s/ Christopher V. Vitale                      
Name:  Christopher V. Vitale
Title:  Chief Administrative Officer 
 
 
OJO VIDEO PHONES LLC
 
By:WorldGate Communications, Inc., its sole member
 
By:  /s/ Christopher V. Vitale                      
Name:  Christopher V. Vitale
Title:  Chief Administrative Officer 
LENDER:
 
WGI INVESTOR LLC
 
 
By:  PRAESCIENT, LLC, its manager
 
 
By:  /s/ Robert Stevanovski         
Name:   Robert Stevanovski
Title:   Manager

 
 

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