Exhibit 10.11


 


TERMINATION AND SETTLEMENT AGREEMENT


 


This
Termination and Settlement Agreement (“Termination Agreement”), dated as of
February     , 2006 (“Effective Date”), is entered into by
and between GENERAL INSTRUMENT CORPORATION doing business as the Connected Home
Solutions Business of Motorola, Inc. with a place of business at 101 Tournament
Drive, Horsham, Pennsylvania 19044 (“GI”), and WORLDGATE SERVICES, INC. with a
place of business at 3190 Tremont Avenue, Trevose, PA 19053 (“WorldGate”).


 


RECITALS


 


WHEREAS,
GI and WorldGate entered into a Development and Distribution Agreement, dated
April 28, 2004 (the “Development and Distribution Agreement”); and


 


WHEREAS,
that parties now desire to terminate the Development and Distribution Agreement
by mutual agreement and settle all potential claims that each may have
thereunder or related thereto:


 


NOW,
THEREFORE, in consideration of the mutual covenants and undertakings contained
herein, and subject to and on the terms and conditions set forth hererin, the
parties hereby agree as follows:


 


1.             All
capitalized terms used and not defined herein shall have the definitions
ascribed to such terms in the Development and Distribution Agreement.


 


2.             GI
and WorldGate each hereby agree to the mutual termination of the Development
and Distribution Agreement by mutual consent, effective upon the execution of
this Termination Agreement, except for the Surviving Obligations described
below. GI and WorldGate agree that their respective rights and obligations with
respect to any related purchase orders are hereby mutually terminated, released
and cancelled without penalty.


 


3.             GI
and WorldGate agree that notwithstanding the provisions of Section 3.3(e) of
the Development and Distribution Agreement, only the following provisions of
the Development and Distribution Agreement survive this termination
(collectively, the “Surviving Obligations”): 
Sections 4.7, 5.9, 6.1, 6.2, 6.7 (but only as GI’s rights relate to the
use and maintenance of Product sold by GI prior to the Effective Date), and
Articles 10 (except for Sections 10.6 and 10.7, and only as GI’s rights relate
to Products sold by GI prior to the Effective Date,) 13, 14, 16 (Except that
the Parties hereby agree that the term of the Non-Disclosure Agreement shall
survive any expiration or termination of this Distribution Agreement and
continue for the full term set forth in paragraph 3 of the Non-Disclosure
Agreement, not withstanding any language therein to the contrary) 19, 20, 21,
24, 25 and 26 (except for Sections 26.1 and 26.7), as well as all rights and
licenses that were rightfully granted under the Development and Distribution
Agreement to Customers and end users, but only to the extent that the same
relate to the licensed use and maintenance of Products sold by GI prior to the
Effective Date. Notwithstanding anything contained in the Development and
Distribution Agreement, WorldGate will assume all responsibility to provide
Level 1 and Level 2 support for all Product in the field.


 

















 


4.             Not in
limitation of the foregoing, the parties specifically acknowledge that this
Termination Agreement terminates the mutual exclusivity and non-competition
obligations of each party all as described in Section 2.1 (c) of the
Development and Distribution Agreement. Notwithstanding the foregoing, GI
hereby agrees that it shall not, on or before a period ending on January 1,
2007, directly or indirectly, distribute a stand-alone product which has as a
primary function the making or receipt of video phone calls over a broadband
network. By way of example and not limitation, this restraint is not intended
to include the distribution of a cell phone the primary function of which is
voice communications but which includes the ability to receive and transmit
video streams. GI further agrees to refrain from using or adopting any
trademarks or trade names that are confusingly similar to WorldGate or Ojo in
connection with any goods or services confusingly similar to the Ojo. GI shall not be
prohibited from using the mark “Mojo” if the mark is used in a general manner
(i.e. not in connection with a particular product or offering) or is used in
connection with products and/or services which would not be confused with the
Ojo video phone.


 


5.             The parties
agree that as of the date hereof, each of the parties, on behalf of itself and
its present and former parents, subsidiaries, affiliates, officers, directors,
shareholders, employees, partners, trustees, agents, attorneys,
representatives, predecessors, successors, transferees, and assigns (collectively
the “Releasing Parties”) does hereby forever and fully release, acquit, waive,
relinquish, discharge and exonerate the other party and their present and
former parents, subsidiaries, affiliates, officers, directors, shareholders,
employees, partners, trustees, agents, attorneys, representatives,
predecessors, successors, transferees, and assigns, from any and all claims,
demands, damages, injuries to person or property, breaches, contracts, setoffs,
covenants, obligations, warranties, debts, liabilities, costs, expenses, sums
of money, controversies, accounts, liens, suits, actions or causes of action of
every kind and nature whatsoever (hereinafter “Claims”), arising under or
relating to Development and Distribution Agreement, whether known or unknown,
presently existing or which may hereafter arise, which any of the Releasing
Parties ever had, now have or hereafter can, shall or may have, as a result of
actions occurring prior to the date hereof, but excluding Claims under the
Surviving Obligations.


 


6.             GI represents
to WorldGate that it has at least CONFIDENTIAL TREATMENT REQUESTED units of
Product in its inventory. Contemporaneously with the execution of this
Termination Agreement, GI hereby sells to WorldGate all inventory of the
Product that GI has in its possession for resale on the Effective Date (the “Existing
Inventory”) in exchange for the payment by WorldGate to GI of $480,000 (USD)
(the “Existing Inventory Payment”), which payment shall be made within one (1)
Business Days after the Effective Date. Within five (5) Business Days after the
Effective Date and contingent on receiving full payment from WorldGate of the
Existing Inventory Payment, GI will transfer to WorldGate the Existing
Inventory. The parties understand and agree that all amounts owed by GI to
WorldGate for the original purchase of the Existing Inventory are fully
discharged and released pursuant to the provisions of Section 5 hereof.


 


7.             WorldGate shall
also purchase from GI all Product inventory returned to GI from its Customers after
the Effective Date (the “Dealer Returns”,) and shall pay GI an amount equal to
$ CONFIDENTIAL TREATMENT REQUESTED per unit so returned, provided that such
unit is not a warranty return and is otherwise in undamaged, unopened condition.
Payment for such units shall be in advance of WorldGate receiving shipment of
Products from GI. To the extent such returns of Products originally sold by GI
are


 


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permitted by GI (in its
discretion, not to be unreasonably withheld or conditioned) to be made directly
from the Customers to WorldGate and if WorldGate has made a refund to the
Customers for such Products, GI shall pay to WorldGate the difference between
such refund (to the extent it does not exceed GI’s documented sales price) and $
CONFIDENTIAL TREATMENT REQUESTED. WorldGate shall provide GI with all
appropriate documentation regarding returns to WorldGate, including shipping
documents and credit memoranda issued to the Customers, and payment to
WorldGate of such difference shall be made within thirty (30) days of the
receipt of such documentation.


 


8.             All purchases
of Product inventory by WorldGate from GI shall be “as is” without any
representations or warranties of any kind from GI. WorldGate shall be
responsible for all shipping and handling charges for return of Product
inventory to WorldGate. All invoices issued by either party pursuant to this
Termination Agreement that are not paid by the due date shall accrue interest
on unpaid amounts at the rate equal to 12% per annum. Except for Products
distributed pursuant to the limited license set forth in Section 8.1 of this
Termination Agreement, WorldGate will re-work all Product inventory returned to
WorldGate, at its cost, to remove Motorola branding prior to re-sale. Except as
permitted under the limited license the parties will no longer have any rights
to use the other parties’ trade marks or trade names after the Effective Date
of this Termination Agreement without subsequent written authorization.


 


8.1   Notwithstanding the
foregoing, during the Transition Period (as hereinafter defined,) WorldGate may
re-sell the Existing Inventory and Dealer Returns that display Motorola
trademarks and trade names (including for purposes hereof the Software,
Documentation and promotional materials associated therewith) without altering
such trade marks or trade names in order to satisfy delivery obligations to
WorldGate’s customers. The foregoing authorization is subject to (i) WorldGate
first satisfying any such delivery obligation with available Product (if any is
reasonably available) that does not display Motorola trade marks and trade
names, and (ii) WorldGate not transferring any Motorola-branded Product to a
customer of WorldGate that has returned Motorola-branded Product to either
WorldGate or GI. WorldGate hereby indemnifies, defends and holds GI, its
parents and affiliates, harmless from and against all claims, actions, causes
of action, costs, damages, and/or liabilities whatsoever (including
reimbursement of reasonable attorneys fees) solely to the extent arising out of
or related to WorldGate’s sale, transfer and/or use of Motorola-branded Product
under this limited license.


 


9.             Upon execution
of this Termination Agreement, the parties will use good faith, commercially
reasonable efforts to transition existing Product sales accounts from GI to
WorldGate. Such efforts shall consist of (i) providing to WorldGate a
reasonably detailed summary of the then current status of all existing Ojo
Customers and (ii) appropriate GI representatives accompanying WorldGate
representatives to in person meetings with such Customers as WorldGate may
request for the purpose of reasonably facilitating the transition of sale of
Products for such Customers from Motorola to WorldGate. For those Customers for
which WorldGate does not request meetings, appropriate Motorola representatives
will participate with WorldGate representatives in telephone and/or other
communications with such Customers to likewise reasonably facilitate the transition
of sale of Products for such Customers from Motorola to WorldGate. The parties
will also use good faith efforts to agree on how to transition the SAP accounts.
The parties will work to complete a full transition as soon as possible, but in
any event not later than March 29, 2006 (“Transition Period”). Notwithstanding
anything contained herein, GI’s


 


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obligations relating to the
transition of customers to WorldGate will end upon termination of the
Transition Period.


 


10.           Upon execution
of this Termination Agreement, GI will, at WorldGate’s discretion, assign to
WorldGate all stand-alone customer contracts (i.e. contracts with customers
that relate solely to the sale of the Ojo and not other products) to the extent
assignment is permitted by those contracts. If assignment is not permitted
without the consent of other parties to the contracts, GI will undertake good
faith efforts to obtain such consent.


 


11.           Within thirty
(30) days after execution of this Termination Agreement, GI will transfer to
WorldGate (i) all point of sale materials for the Products, to the extent owned
by GI, (ii) the large Ojo and the Birthday commercial, and (iii) market
research, target leads and other marketing materials, to the extent not
inconsistent with GI’s contractual obligations to third parties. Except as
provided in Section 8.1 above, WorldGate will remove all GI branding from all
such materials prior to use or re-sale. The use of such Birthday commercial by
WorldGate after the Effective Date may involve the payment by WorldGate of
royalties. GI will inform WorldGate in writing of what royalties may be payable
for the future use of the Birthday Commercial and WorldGate hereby assumes all
continuing royalty obligations for future use of the Birthday commercial after
the Effective Date and indemnifies, defends and holds GI harmless in accordance
with Section 13 hereof from and against any obligation to pay any such
royalties. GI will also maintain the current web presence promoting the sale of
Products on its Web Site during the Transition Period, but will adjust such
links as are contained therein for the purchase of Ojo to links as are
reasonably directed by WorldGate.


 


12.           PUBLIC
RELATIONS AND STATEMENTS TO CUSTOMERS, MEDIA, FINANCIAL COMMUNITY AND OTHER
RELEVANT PERSONS.


 


12.1   Joint Press Release and
Message. Attached hereto and incorporated herein as Exhibit 1 is the agreed
message (the “Message”) regarding the termination of the Development and
Distribution Agreement by the Parties. No later than four (4) Business Days
after the Effective Date the Parties will issue a joint press release which is
substantially consistent with this Message. This Message shall also form the
basis for any public statements, or private statement directly or indirectly
made by the Parties with any and all Persons known to be or which reasonably
should be known to be associated with current or potential Customers, the
media, the financial community or WorldGate shareholders (“Relevant Persons”).


 


12.2   Variance in Statements. The
Parties will not, nor will they authorize, induce or knowingly permit any third
party (including any employee, representative, agent or other Person over which
they have authority or control) to make any statement to any Relevant Person,
or which may reasonably be known will be transmitted to any Relevant Person,
which is contrary to or in any way materially different from this Message. Any
violation of this Article shall be deemed a material breach of this Agreement,
indemnifiable under Section 13 of this Termination Agreement.


 


13.           INDEMNIFICATION


 


13.1   WorldGate’s Indemnification.
WorldGate shall indemnify, defend and hold harmless GI and its affiliates,
shareholders, directors, officers, employees, contractors, agents and other
representatives from all third party demands, claims, actions, causes of


 


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action, proceedings,
assessments, losses, damages, liabilities, settlements, judgments, fines,
penalties, interest, costs and expenses (including fees and disbursements of
counsel) (collectively, “Damages”) of every kind to the extent arising from or
related to (i) strict liability in tort or Product liability in connection with
any Product supplied by WorldGate to GI under the Development and Distribution
Agreement, (ii)  any breach by WorldGate
of any of its obligations under this Termination Agreement and any Surviving
Obligations under the Development and Distribution Agreement, (iii) any actual
or alleged infringement or misappropriation of any patent, trademark,
copyright, trade secret or any actual violation of any other intellectual
property rights arising from or in connection with the Product supplied by
WorldGate to GI under the Development and Distribution Agreement, or (iv) the
indemnity as provided by Section 8..1 of this Termination Agreement. The
indemnification obligations in this Article 13 shall survive the expiration or
termination of this Termination Agreement for any reason. In no event, however,
shall WorldGate be liable hereunder for (x) any products or services not
supplied to GI by WorldGate hereunder (except for Products described in Section
8.1 hereof), or (y) any negligent act or omission of any of the indemnified
parties or their agents, including without limitation any Damages which could
reasonably have been mitigated by such Parties,


 


13.2   GI’s Indemnification. GI
shall indemnify, defend and hold harmless WorldGate and WorldGate’s affiliates,
shareholders, directors, officers, employees, contractors, agents and other
representatives from all Damages of every kind to the extent arising from or
related to (i) any breach by Motorola of any of its obligations under this
Termination Agreement and any Surviving Obligations under the Development and
Distribution Agreement, (ii) warranty or customer support in excess of that
assumed by WorldGate hereunder or by virtue of the Surviving Obligations under
the Development and Distribution Agreement. The indemnification obligations in
this Article 13 shall survive the expiration or termination of this Termination
Agreement for any reason. In no event, however, shall GI be liable hereunder
for any negligent act or omission of any of the indemnified parties or their
agents, including without limitation any Damages which could reasonably have
been mitigated by such parties.


 


13.3   Procedures. The indemnified
party shall promptly notify the indemnifying party in writing of any suits,
claims or demands covered by this indemnity. Promptly after such notice is
given, the indemnifying party shall assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party. Notwithstanding the
foregoing, if the indemnified party in its sole judgment so elects, it may also
participate in the defense of such actions by employing counsel, at its
expense, without waiving the indemnifying party’s obligation to indemnify and
defend. The indemnified party shall furnish all reasonable assistance as may be
required, at the indemnifying party’s request and reasonable expense, to enable
the indemnifying party to defend against any third-party suits, claims or demands
threatened or filed and covered by this indemnity. The indemnifying party shall
not compromise any third-party claim or consent to the entry of any judgment
without an unconditional release of all liability of the indemnified party to
each claimant or plaintiff.


 


14.           NOTWITHSTANDING
ANYTHING CONTAINED HEREIN, EXCEPT FOR LIABILITY UNDER ARTICLE 16 OF THE
DEVELOPMENT AND DISTRIBUTION AGREEMENT OR PRODUCT LIABILITY CLAIMS ARISING
UNDER SECTIONS 8.1 OR 13.1 IN THIS TERMINATION AGREEMENT, IN NO EVENT SHALL
EITHER PARTY’S LIABILITY UNDER THIS TERMINATION AGREEMENT OR


 


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OTHERWISE INCLUDE ANY
SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY CHARACTER, WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER LEGAL THEORY, EVEN IF THE OTHER PARTY SHALL HAVE
KNOWLEDGE OF THE POSSIBLITY OF SUCH POTENTIAL LOSS OR DAMAGE.


 


15.           The rights and
obligations of the parties under this Termination Agreement shall be governed
by, and construed in accordance with, the internal substantive laws of the
Commonwealth of Pennsylvania, without giving effect to conflict of law
principles.


 


16.           Neither party
shall publicly announce or disclose the nature, terms or conditions of the
Development and Distribution Agreement or this Termination Agreement (except as
strictly required for compliance with the laws and regulations applicable to
the Parties, including without limitation the reporting obligations of a public
company, and then only after giving the other Party notice and an opportunity
to reasonably participate in determining the appropriate extent of any such
disclosure), or the circumstances surrounding this Termination Agreement, or
advertise, release or disclose any publicity or statement regarding any of the
foregoing in any manner which is materially different from the Message, without
the prior written consent of the other party, which consent shall not be
unreasonably withheld or conditioned.


 


17.           This
Termination Agreement constitutes the final written expression of all terms of
the agreement between the parties relating to the transactions described herein
and supersedes all previous communications, representations, agreements,
promises or statements, either oral or written, with respect to such
transactions. No addition to or modification of any provisions of this
Termination Agreement will be binding unless made in writing and signed by both
parties.


 


18.           Neither party
may assign this Termination Agreement or otherwise transfer any of its rights
or obligations under this Termination Agreement (whether by operation of law or
otherwise) without the prior written consent of the other party; provided
however, that this Termination Agreement may be assigned by either party
(without consent) to a third party which acquires substantially all of such
party’s assets or stock, or which merges with such party. Any prohibited
assignment shall be null and void.


 


IN WITNESS WHEREOF, the
parties have executed and agree to be bound by the provisions of this
Termination Agreement as of the Effective Date.


 


	
  GENERAL
  INSTRUMENT CORPORATION

  	
  WORLDGATE
  SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Geoffrey
  Roman

  	
   

  	
   

  	
  By:

  	
  /s/ Hal
  Krisbergh

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Geoffrey
  Roman

  	
   

  	
   

  	
  Name:

  	
  Hal
  Krisbergh

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Corporate
  Vice President

  	
   

  	
   

  	
  Title:

  	
  Chairman and
  CEO

  	
   

  
											



 


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Exhibit
1 – The Message


 


WorldGate
and Motorola End Video Telephony Distribution Agreement


 


[Add normal into with Nasdaq
symbols] Today, WorldGate Communications and Motorola, Inc. announced that the
companies have agreed to end their video telephony distribution agreement.


 


WorldGate will be responsible
for all sales, marketing and distribution of its video telephony products going
forward. Both parties will work to ensure a smooth transition for customer
accounts.


 


The companies agree that ending
the distribution agreement is in both their interest. Further details or
information regarding this decision will not be disclosed by either company.


 


[INSERT BOILERPLATES AND SAFE HARBOR]


 


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