Software
Development and Integration


and


Manufacturing
Assistance Agreement





This
Software Development and
Integration and Manufacturing Assistance Agreement (this “Agreement”) is
made as of April 6, 2009 between ACN Digital Phone Service, LLC, a Delaware
limited liability company with its principal place of business at 1000 Progress
Place, Concord, NC 28025 (“ACN”), and Ojo Video Phones LLC, a Pennsylvania
limited liability company with its principal place of business at 3190 Tremont
Avenue, Trevose, PA 19053 (“OJO” and together with ACN, the “Parties” or a
“Party” as the case may be).





Recitals





Whereas, ACN sells video
phones together with digital phone service using Voice over Internet Protocol;
and





Whereas, OJO develops software
for, manufactures, and sells certain video phone communication devices and
related accessories, providing a variety of services with respect thereto;
and





Whereas, ACN, in accordance
with the terms of this Agreement, wants to retain OJO to develop software (the
“Developed Software”) for ACN’s existing video phone (“IRIS 3000”) according to
mutually agreed specifications, and to assist ACN with the capability to
manufacture and acquire IRIS video phones, including, without limitation, the
IRIS 3000 with the Developed Software integrated therein (the “IRIS 3000W”),
with such effort being generally referred to hereunder as Phase 1;
and





Whereas, pursuant to the terms
and conditions of an ACN Consumer Communications Equipment Master Purchase
Agreement (the “Commercial Agreement”) that is being executed by the Parties
concurrently herewith, OJO has agreed to develop and to sell to ACN a new video
phone, using the DaVinci chip and the Developed Software (the “IRIS 4000”)
according to mutually agreed specifications with such effort being generally
referred to hereunder as Phase 2.





Now, Therefore, in
consideration of the mutual covenants, representations and warranties
of the Parties contained in this Agreement, the Parties hereby agree as
follows:









1.1.           Phase
1 Development





OJO shall
carry out a project (the “Project”) to specify, develop and deliver software
that (i) is specially developed or customized for the IRIS 3000, (ii) shall
reasonably fulfil ACN's objectives and requirements as described in Appendix 1,
and (iii) shall be compliant with the  mutually agreed specifications
that are to be developed as part of the Project.





1.2           Development
tools – development method





OJO shall
be responsible for selecting the development tools, methods and environment, and
establishing and maintaining this development environment.  If ACN has
any special requirements concerning the development environment or method, then
such requirements will be communicated in writing to OJO.





1.3           Project
implementation and cooperation





1.3.1  OJO
shall carry out the Project in accordance with a mutually agreed work schedule
to be developed as part of the Project.





1.3.2  Both
ACN and OJO shall have a development project manager. The development project
managers are responsible for the day-to-day follow-up of their own personnel,
and they are responsible for planning and following up their own
obligations.





1.3.3  The
development project managers shall meet frequently to monitor the progress of
the development effort and to provide feedback to each other as the Project
progresses.  The development project managers shall also provide each
other with the information from their respective organizations that is
reasonably required to manage, monitor and complete this development
effort.





1.4           Detailed
specifications and project plan





1.4.1  OJO
shall prepare Detailed Specifications and a Software Development Project Plan
for the Developed Software based on consultation with ACN and the documentary
materials provided to OJO by ACN for such purpose.   The Detailed
Specifications shall consist of a detailed itemization and/or definition of the
Developed Software and its required operation and functionality.  The
Detailed Specifications shall form the basis for the development to be carried
out in the development. The Software Development Project Plan shall consist of
the anticipated schedule for the development project, and the allocation of
project responsibilities as required for this schedule.  This work
shall be carried out in close cooperation and consultation with
ACN.




2




1.4.2  Upon
agreement of the parties on the Detailed Specifications and the Software
Development Project Plan the same shall be finalized in writing and attached
hereto as Appendices 2 and 3 respectively.





1.4.3  The
Parties acknowledge and agree that the Detailed Specifications and the Software
Development Project Plan may be subject to change during the course of the
development effort, and as such, the Parties will reasonably cooperate to
evaluate and accommodate proposed changes as the same may arise.





1.5           Development
of the Developed Software





OJO shall
develop the Developed Software described in the Detailed Specifications. OJO is
responsible for designing, developing and testing the Developed Software in
accordance with the Detailed Specifications and the Software Development Project
Plan.





1.6           Title,
Rights and Interests





As
between the Parties, each Party expressly retains all title, right and interest
in and to their respective confidential and/or proprietary information and work
product as the same may be developed, furnished or utilized
hereunder.





1.7           Testing





OJO and
ACN shall cooperate to carry out any tests that are necessary to verify that the
Developed Software functions in accordance with the agreed Detailed
Specifications prior to field installation and use in IRIS 3000W.





1.8           Manufacture
and sourcing of IRIS 3000 and 3000W





Pending
the development of the IRIS 4000, the Parties will jointly develop a plan to
provide for the manufacture and purchase of the IRIS 3000 (and ultimately the
IRIS 3000 W) through and with OJO’s assistance, from ACN’s existing IRIS 3000
manufacturing partner, UMEC. Such plan may involve the assignment to OJO, in
whole or in part, of ACN’s current contract with UMEC (attached hereto as
Appendix 4 and referred to herein as the UMEC Contract), the creation of an
agency relationship, or some other arrangement as the Parties may mutually
agree, and that would reasonably facilitate continued supply to ACN of products
and services as required for its business.  Such plan would also
provide for the potential download of the Developed Software to deployed IRIS
3000’s, resulting in an upgrade of the same to IRIS 3000Ws.




3




1.9           Project
implementation and cooperation





1.9.1  OJO
shall carry out the Project in accordance with a mutually agreed work schedule
to be developed as part of the Project.





1.9.2  Both
ACN and OJO shall have a manufacturing project manager. The manufacturing
project managers are responsible for the day-to-day follow-up of their own
personnel, and they are responsible for planning and following up their own
obligations.





1.9.3  The
manufacturing project managers shall meet frequently to monitor the progress of
the Project and to provide feedback to each other as the Project
progresses.  The manufacturing project managers shall also provide
each other with the information from their respective organizations that is
reasonably required to manage, monitor and complete the Project.





1.9.4  The
Parties acknowledge and agree that the manufacture and purchase of Phase 1 video
phone products will inherently involve the application of the terms and
conditions of the UMEC Contract, and to the extent such terms and conditions are
different from the terms and conditions set forth in the Commercial Agreement
which provide for the routine development and sourcing by ACN from OJO of the
Phase 2 video phone products, such UMEC Contract shall govern.  The
Parties however agree to reasonably cooperate to modify or adapt the terms and
conditions of the UMEC Contract as they are applied hereunder to the extent
possible and necessary to facilitate the object and scope of the
Project.





2.1           Product
Manufacture and Software Integration Project Plan





2.1.1  OJO
shall prepare a Product Manufacture and Software Integration Project Plan for
the Project based on consultation with ACN and the documentary materials
provided to OJO by ACN for such purpose.  The Product Manufacture and
Software Integration Project Plan shall consist of a detailed itemization and/or
definition of the efforts required for the Project, the anticipated schedule for
the Project and the responsibility of the Parties with respect to the
Project.  This work shall be carried out in close cooperation and
consultation with ACN.




4




2.1.2  Upon
agreement of the parties on the Product Manufacture and Software Integration
Project Plan the same shall be finalized in writing and attached hereto as
Appendix 5.





2.1.3  The
Parties acknowledge and agree that the Product Manufacture and Software
Integration Project Plan may be subject to change during the course of the
development effort, and as such, the Parties will reasonably cooperate to
evaluate and accommodate proposed changes as the same may arise.





2.2           Price
and payment





ACN shall
pay OJO an aggregate of $1.2 million USD for the Project.  Payment
will be made in three installments of $400,000 USD each as
follows:  the first such installment shall be made on April 30, 2009,
the second installment shall be made on May 30, 2009, and the third installment
shall be made on June 30, 2009.  Each such payment shall be made by
wire transfer.  Such payments are intended only to partially
compensate WorldGate for its efforts under the Phase 1 project as payment for a
worldwide, irrevocable, transferable, perpetual up-front, pre-paid software
license , and such payments are expressly not intended as a payment of, or
consideration for, any per unit download or integration software license fees,
product purchase price, or other per unit hardware, software or intellectual
property acquisition cost, whether through UMEC or OJO.  All such
other fees, prices and costs are subject to future negotiation and agreement by
the Parties.





2.3 General
provisions





2.3.1  Notices.  All
notices required to be given hereunder shall be in writing and shall be
considered received (a) on the day of actual transmittal when transmitted by
facsimile or email with written confirmation of such transmittal, (b) on the
next business day following actual transmittal when transmitted by a nationally
recognized overnight courier, or (c) on the third business day following actual
transmittal when transmitted by registered or certified mail, return receipt
requested, postage prepaid, in each case when transmitted to a Party at the
address shown below, or at such other addresses as that Party may, from time to
time, advise in writing in accordance with this Section.





OJO:    
WorldGate Service Inc.


3190 Tremont Ave.


Trevose, PA  19355


Attn:  General Counsel




5




ACN:  
ACN Digital Phone Service, LLC


1000 Progress Place


Concord, NC 28025


Attn:  General Counsel – North America





2.3.2  Assignment.  Neither
Party shall have the right to assign, transfer or sublicense its rights or
obligations under this Agreement without the prior written consent of the other
Party, except that either Party may assign its rights and obligations under this
Agreement without the other Party's approval to the extent such assignment is
limited to a change in corporate form of such Party only.  Any
prohibited assignment shall be null and void.





2.3.3  Relationship.  Each
of ACN and OJO shall conduct its business in its own legal name and at its own
expense and risk, and shall be responsible, as an independent contractor, for
(i) paying all taxes, levies, tariffs, duties, fees and other charges imposed by
the applicable governmental authorities in connection with activities hereunder,
(ii) securing and maintaining all required approvals, registrations, permits and
licenses, and (iii) otherwise complying with all laws and regulations governing
the conduct of its business.  ACN and OJO are independent contractors,
and as such, shall not act or represent themselves, directly or by implication,
as an agent for the other or assume or create any obligation on behalf of or in
the name of the other, or otherwise bind the other in any
manner.  Nothing herein shall be deemed to create an agency,
partnership, franchise or joint venture between the parties.





2.3.4  Waiver.  The
failure of either Party to enforce at any time the terms, conditions,
requirements, or any other provisions of this Agreement shall not be construed
as a waiver by such Party.





2.3.5  Headings.  The
headings of paragraphs contained herein are for convenience and reference only
and are not a part of this Agreement, nor shall they in any way affect the
interpretation thereof.





2.3.6  Severability.  The
Parties agree that if any portion of this Agreement shall be held illegal and/or
unenforceable, the remaining portions of this Agreement shall continue to be
binding and enforceable provided that the efficacy of the remaining portion of
this Agreement would not defeat the overall business intent of the Parties, or
give one Party any substantial financial benefit to the detriment of the other
Party.





2.3.7  Governing
Law.  This Agreement and its Appendices shall be governed by the laws
of the State of New York, excluding its conflicts of law rules.




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2.3.8  Dispute
Resolution





2.3.8.1  Informal
Dispute Resolution.


Prior to
filing any arbitration proceeding pursuant to Section 2.3.8.2 below, the Party
intending to file such a proceeding shall be required to notify the other Party
in writing of the existence and the nature of any dispute.  Within
fifteen (15) business days after the other Party’s receipt of such notice, the
authorized representatives of both of the Parties shall meet in order to attempt
to resolve the dispute amicably.  If such informal dispute resolution
attempts prove to be unsuccessful, either Party may initiate an arbitration
proceeding as described in Section 2.3.8.2 below.





2.3.8.2   Arbitration.


All
controversies, disputes or claims arising in connection with, from or with
respect to this Agreement which are not resolved by the informal dispute
resolution described in Section 2.3.8.1 above, shall be finally settled in
accordance with the commercial arbitration rules of the American Arbitration
Association ("AAA") then obtaining, by a panel of three
arbitrators.  Each Party shall have the right to appoint one
arbitrator from the list of arbitrators supplied to the Parties by the AAA, and
the two arbitrators so appointed shall appoint the third.  The place
of arbitration shall be the City of New York, New York, USA and the language of
the arbitration shall be in English.  The arbitrators shall determine
the matters in dispute in accordance with the internal law of the State of New
York, without reference to the Convention on Contracts for the International
Sale of Goods.  Except as precluded by the United Nations Convention
on the Recognition and Enforcement of Foreign Arbitral Awards, the internal
procedure and substantive laws of New York and the United States Federal
Arbitration Act shall govern all questions of arbitral procedure, arbitral
review, scope of arbitral authority, and arbitral enforcement.  The
Parties agree that the award of the arbitrators shall be the sole and exclusive
remedy between them regarding any claims, counterclaims, issues or accountings
presented or pled to the arbitrators, that the award shall be made and shall be
promptly payable in U.S. Dollars, free of any tax, deduction or offset, and that
any costs, fees or taxes instant to enforcing the award shall, to the maximum
extent permitted by law, be charged against the Party resisting such
enforcement.  No claim may be submitted by a Party to arbitration in
accordance with this Section unless such submitting Party notifies the other
Party within two (2) years of the date on which the submitting Party first knew
or should have known of the existence of the facts indicating the existence of
such dispute.


Each
Party shall continue performing its obligations under this Agreement while any
dispute is being resolved except to the extent the issue in dispute precludes
performance (dispute over payment shall not be deemed to preclude
performance).




7




2.3.9  Entire
Agreement.  This Agreement constitutes the entire Agreement between
the Parties and supersedes all prior discussion, either oral or in
writing.





2.3.10  Amendment.  The
terms and conditions of this Agreement will prevail notwithstanding any variance
with the terms and conditions of any order.  Except as expressly set
forth in this Agreement, this Agreement shall not be deemed, or construed to be,
modified, amended, rescinded, or canceled in whole or in part, except by written
amendment executed by the Parties hereto.





2.3.11  Survival.  Provisions
of this Agreement relating to confidentiality, license, branding, warranty,
indemnity, limit of liability, export, assignment, governing law, dispute
resolution, and survival shall survive the termination or expiration of this
Agreement.





2.3.12  Incorporation.  All
Appendices attached hereto are incorporated herein by this
reference.





[Remainder
of Page Intentionally Blank]




8




INTENDING TO BE LEGALLY BOUND,
the Parties hereto have caused this Software Development and Integration and
Manufacturing Assistance Agreement to be executed as of the date and year first
above written.





ACN
      Digital Phone Service, LLC
                      
                      Ojo
      Video Phones LLC/s/ Dave
      Stevanovski
                      
                      /s/ Harold M.
      Krisbergh(Signature)
                      
                      (Signature)Dave Stevanovski
                      
                      Harold M. Krisbergh(Typed/Printed
      Name)
                      
                      (Typed/Printed
      Name)President(Title)
                      
                      (Title)