EXECUTION
      VERSION





*
            Certain
      information in this exhibit has been omitted and has been filed separately
      with the Securities and Exchange Commission pursuant to a confidential
      treatment request under Rule 24b-2 of the Securities Exchange Act of
      1934, as amended.  The copy filed herewith omits the information
      subject to the confidential treatment request.  Omissions are
      designated as “***”.




Master
Manufacturing Agreement




Between




Kenmec
Mechanical Engineering Co., Ltd.




And




Ojo
Video Phones LLC




Dated as
of November 18, 2009







TABLE
OF CONTENTS




Article
                        
                        Page
                            Number1.
                        SCOPE
      OF AGREEMENT
                        
                        12.
                        DEFINITIONS
                        
                        13.
                        DEVELOPMENT
                        
                        64.
                        PRODUCT
      PURCHASES
                        
                        65.
                        DELIVERY
      AND ACCEPTANCE
                        
                        86.
                        FLEXIBILITY
      GUIDELINES
                        
                        107.
                        COST
      MANAGEMENT
                        
                        108.
                        PRICES
      AND PAYMENT TERMS
                        
                        119.
                        COMPONENT
      PROCUREMENT
                        
                        1210.
                        WARRANTIES
      AND INDEMNIFCATION
                        
                        1411.
                        NON-CONFORMING
      PRODUCTS
                        
                        1612.
                        QUALITY
                        
                        1813.
                        PROCESS
      CHANGE NOTIFICATION
                        
                        1914.
                        PROPERTY
      RIGHTS
                        
                        2015.
                        FORCE
      MAJEURE EVENTS
                        
                        2216.
                        TERMINATION
                        
                        2217.
                        EFFECT
      OF EXPIRATION OR TERMINATION
                        
                        2318.
                        INSURANCE
      REQUIREMENTS
                        
                        2419.
                        MISCELLANEOUS
                        
                        25







MASTER
MANUFACTURING AGREEMENT




THIS
MASTER MANUFACTURING AGREEMENT (the “Agreement”) is
entered into as of November 18, 2009 (the “Effective Date”) by
and between Kenmec Mechanical Engineering Co., Ltd. (“Kenmec”), a Taiwanese
corporation with its principal place of business at 3F, No. 97, Sec. 2, Nan-Kang
Rd., Taipei 11578, Taiwan and Ojo Video Phones LLC (“OJO” and together
with Kenmec, the “Parties” and
individually, a “Party”), a
Pennsylvania limited liability company with its principal place of business at
3190 Tremont Avenue, Trevose, Pennsylvania 19053 USA.




WHEREAS,
Kenmec desires to design, manufacture, test, configure, assemble, package and
ship certain video phone and related products for OJO, and OJO desires to
purchase such services from Kenmec; and




WHEREAS,
it is the intention of the Parties that this Agreement set forth the general
terms and conditions under which Kenmec would deliver the services referred to
in the preceding recital and that the Parties would further enter into one or
more SOWs that incorporate the terms set forth in this Agreement and describe in
more detail the specific services to be rendered to OJO and the financial
arrangements with respect to such services.




NOW,
THEREFORE, in consideration of the foregoing recitals and the conditions set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties, intending to be
legally bound, hereby agree as follows:




1.           SCOPE OF
AGREEMENT.  This Agreement specifies the terms and conditions
under which Kenmec agrees to provide Manufacturing Services and Deliverables
described in the Services Agreements, based on the Product Requirements provided
by OJO.  Without limiting any specific obligation specified in any
Services Agreement, Kenmec will maintain one or more manufacturing processes and
production lines, purchase or procure Tools, and source Components, provide
materials as needed to fulfill Kenmec’s obligations to manufacture the Products
in accordance with the Product Requirements, and will put in place a
customer-focused overall account management team.




2.           DEFINITIONS.  The
following capitalized terms shall have the meanings given for the purposes of
the Services Agreements:




2.1.       “Accepted Orders”
means orders for which Kenmec has acknowledged receipt of an Order and has
committed to a firm Scheduled Shipment Date.




2.2.       “Affiliate” means,
with respect to any Person, any other Person directly or indirectly controlling
or controlled by, or under direct or indirect common control with, such
Person.  For purposes of this definition, “control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the affairs or management of an entity, whether through ownership
of voting securities, by contract or otherwise.




2.3.       “Bankruptcy Code”
means Chapter 7 or Chapter 11 of the United States bankruptcy code (Title 11 of
the United States Code).


1







2.4.       “Bill of Material”
means the list of all Components, quantity per assembly, and part number where
applicable, that is used to assemble each Product.




2.5.       “Breach Event” means
any:




2.5.1.     proceeding,
whether voluntary or involuntary, in bankruptcy or insolvency by or against a
Party; assignment for the benefit of creditors or any general arrangement with
creditors; discontinuance of business or adoption of a resolution calling for
the same; inability to pay its debts when they become due, which cause a
material adverse impact on the Parties’ relationship; appointment, with or
without a Party’s consent, of a receiver or an assignee of a Party for the
benefit of creditors;




2.5.2.     material
breach of any provision of any Services Agreement, including (a) failure by
Kenmec to make Products available for shipment in accordance with the
requirements of such Services Agreement or any Accepted Order and (b) failure by
Kenmec to replace or repair Non-Conforming Products in a timely manner or to
provide a refund in the time frame, each as required in any Services
Agreement;




2.5.3.     violation
by a Party of any applicable Laws that impact the Parties abilities to perform
under any Services Agreement;




2.5.4.     third
party Claim of Intellectual Property infringement that would give rise to an
indemnification obligation under any agreement between the Parties, provided
that the right to terminate based on this Section 2.5.5 may be exercised only by
the Party who would be entitled to seek indemnification; or




2.5.5.     other
provision in any Services Agreement that permits a Party to terminate a Services
Agreement.




2.6.       “Business Day” means a
day in Philadelphia, Pennsylvania other than a Saturday, Sunday or other day on
which banks located in Philadelphia, Pennsylvania, Taiwan or China are
authorized or required by applicable Law to close.  Other than
references to “Business Days,” all references in the Services Agreements to
“days” will mean calendar days.




2.7.       “Change Order” means
the written notification provided to Kenmec by OJO to implement a Design Change,
as further described in Section 13.2.




2.8.       “Claim” means any
actions, suits, claims, demands, debts, complaints, sums of money, accounts,
reckonings, bonds, bills, covenants, agreements (whether oral or written,
express or implied from any source), warranties, controversies, judgments,
liabilities or obligations of any kind whatsoever, in Law or equity, and causes
of action of every kind and nature, or otherwise (including claims for damages,
costs, expenses, and fees and expenses of attorneys, brokers, accountants,
consultants, computer forensic examiners and other professionals) asserted,
commenced or threatened against a Party or any of its Related
Persons.




2.9.       “Commercially Reasonable
Efforts” means those efforts that would be deemed in good faith and in
accordance with commonly accepted commercially reasonable practice after having
taken into account all relevant commercial considerations.


2




2.10.     “Component” means the
parts, subassemblies, software, OEM components and products, and all other
materials to be incorporated by Kenmec into Products.




2.11.     “Confidential
Information” shall have the meaning provided for such term in the Mutual
Nondisclosure Agreement, dated October 21, 2009, between Kenmec and WorldGate
Communications, Inc.




2.12.     “Deliverables” means
Products, Developments, Components, packaging, programs or code to perform test
verification for Deliverables, manufacturing and design documentation and other
work developed or provided by Kenmec to OJO in connection with Kenmec’s
performance under the SOWs.




2.13.     “Design Change” means
any (a) electrical, mechanical, process, or chemical changes to the Products,
(b) re-design changes, (c) geographical relocations of manufacturing from one
facility to another or (d) outsourcing of the manufacturing of
sub-processes.




2.14.     “Developments” means
any Intellectual Property developed in connection with Kenmec’s performance
under the SOWs, including any customizations, enhancements, modifications, and
corrections of, and any addition to or derivative work of any Deliverable or
manufacturing design or process.




2.15.     “Encumbrance” means
any encumbrance, lien, charge, hypothecation, pledge, mortgage, title retention
agreement, security interest, covenant, exception, right of others, adverse
claim or interest, right of set-off, any matter capable of registration against
title, right of preemption, right of first offer or refusal, privilege or any
contract to create any of the foregoing.




2.16.     “First Time Pass Rate”
or “FTPR” means
the percentage obtained by dividing (a) the aggregate number of Non-Conforming
Products (other than any Non-Conforming Products solely the result of a Product
Requirement) in a given Lot determined by OJO pursuant to its inspection and
acceptance testing contemplated by Section 5.2, by (b) the aggregate number of
Products for that same Lot.




2.17.     “Forecast” means OJO’s
rolling estimate of its monthly purchase requirements over a six (6) month
period.




2.18.     “Governmental
Authority” means any federal, state, county, municipal, district or local
government or government body, or any public administrative or regulatory
agency, political subdivision, commission, court, board or body, or
representative of any of the foregoing, foreign or domestic, of, or established
by, any such government or government body that has authority in respect to a
particular matter.




2.19.     “Impact Proposal”
means the evaluation of the effect of proposed Design Changes on, but not
limited to, the price, performance, reliability, lead and shipment times,
manufacturing capacity, appearance and Components of the
Deliverables.


3


2.20.     “Intellectual
Property” means all of the following in any jurisdiction throughout the
world: (a) all inventions, all improvements thereto, and all patents, patent
applications, and patent disclosures, (b) Marks, (c) all copyrightable works,
all copyrights, and all applications, registrations, and renewals in connection
therewith, (d) all mask works and all applications, registrations, and renewals
in connection therewith (including the pattern used to transfer design and
technical information from the Product Requirements onto a Product or
Component), (e) all trade secrets and confidential business information
(including ideas, research and development, know-how, formulas, compositions,
manufacturing and production processes and techniques, schematics, technical
data, designs, flowcharts, diagrams, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing plans
and proposals), (f) all computer software, (g) all other proprietary rights and
(h) all copies and tangible embodiments of any of the foregoing (in whatever
form or medium).




2.21.     “Law” any statute, law
(including common law), constitution, treaty, charter, ordinance, code, rule,
award, injunction, judgment, decree, order, ruling, subpoena or verdict,
regulation and any other binding requirement or determination of any
Governmental Authority.




2.22.     “Losses” means all
losses, liabilities, injuries, indebtedness, obligations, deficiencies, damages,
demands, fines, penalties, judgments, Encumbrances, diminution in value and
claims, and all related expenses, costs, charges and fees, including fees and
expenses of attorneys, brokers, accountants, consultants, computer forensic
examiners and other professionals, costs of investigation, litigation,
settlement, collection, and judgment, and any taxes, interest and penalties with
respect to any of the foregoing.




2.23.     “Lot” means a batch of
the Products manufactured under the same Order.




2.24.     “Manufacturing Lead
Time” means the period of time between the Order date and the Scheduled
Shipment Date.




2.25.     “Manufacturing
Services” means the services performed by Kenmec or Kenmec’s Related
Persons under the SOWs, including designing, developing, manufacturing, testing,
configuring, assembling and packaging the Products and making Products available
for shipment.




2.26.     “Marks” means all
trademarks, service marks, trade dress, logos, slogans, insignia, trade names,
corporate names, symbols and Internet domain names, together with all
translations, adaptations, derivations, notices and combinations thereof, and
all applications, registrations, renewals and goodwill associated
therewith.




2.27.     “Non-Conforming
Products” means any Product that does not conform to the Product
Requirements or Kenmec’s warranties under any Services Agreement.




2.28.     “Obsolete Components”
means Components on-hand at, or on order by, Kenmec made obsolete by a Change
Order.




2.29.     “OJO Property” means
(a) all Deliverables, Product Requirements, Developments, Tools, Technical
Manufacturing Information, OJO Confidential Information and Intellectual
Property related to any of the foregoing and (b) all property (including all
Intellectual Property related thereto) furnished to Kenmec by OJO or paid for,
ordered, directed or requested in connection with any SOW.


4




2.30.     “Order” means a
written or electronic purchase order (including any attachments thereto) issued
to Kenmec by OJO containing unit quantity, unit price, shipping destination and
instructions, Scheduled Shipment Date and other instructions or requirements
pertinent to the Products or Manufacturing Services under a given
SOW.




2.31.     “Person” means an
individual, corporation, partnership, unincorporated association, trust, the
media, limited liability company, Governmental Authority or any other entity or
body.




2.32.     “Pre-Existing Intellectual
Property” means any Intellectual Property owned, conceived or developed
by or for either Party prior to the Effective Date of this Agreement or
independently developed by or for a Party outside the scope of the
SOWs.




2.33.     “Product Requirement”
means any requirement for the development of Deliverables or the provision of
Manufacturing Services, including all manufacturing information, technical data
and manuals, designs, schematics, drawings, documentation, packaging, Bills of
Material, testing requirements, the general technical specifications listed in
standards IEC 61340, ANSI ESD 20:20, IPC-A-610C, RoHS (EU Directive 2002/95) and
ANSI/ASQ Z1.4 2008, compliance with the standards contained in the Quality
Control Program, warranties in the applicable Services Agreement and any other
criteria provided to Kenmec by OJO.




2.34.     “Product(s)” means
assemblies, sub-assemblies, systems, prototypes and other products manufactured
by Kenmec in accordance with the SOWs.




2.35.     “Prudent Procurement
Practices” means commercially reasonable practices in connection with
purchasing Components to meet Forecasts and Orders and to support variations in
demand for such Forecasts and Orders, including (a) utilizing minimum order
quantities and economic order quantities approved by OJO; (b) ordering and
buying Components as required to meet Manufacturing Lead Times; (c) negotiating
most favored customer terms with suppliers; and (d) exercising return and
cancellation privileges.




2.36.     “Quality Control
Program” means an ISO 9002 certified quality or equivalent program and
shall include Kenmec’s current assembly and inspection processes, OJO Quality
Control Inspection Procedure; OJO Appearance Inspection Document; Military
Standard 105E or ANSI/ASQ Z1.4; IPC A-610 Acceptability of Electronic
Assemblies; IPC A-620 Requirements and Acceptance for Cable and Wire Harness
Assemblies; Electrostatic Discharge Handling Compliance and RoHS
Compliance; monitoring the manufacturing processes; statistical process control;
corrective action analysis of returned Product and repairs; defined failure
modes; improving materials and procurement/incoming inspection processes;
component traceability for critical Components (i.e., the ability to trace any
given production batch to the Component lot or lots used in a given batch of
Products); implementation of corrective actions and any additional requirements
agreed to by the Parties.




2.37.     “Related Persons”
means, collectively, jointly and severally, a Party’s predecessors, successors,
Affiliates, subsidiaries (direct and indirect), successors-in-interest,
executors, heirs, administrators, receivers, trustees, assignees, employees,
independent contractors, agents and representatives, and its and their insurers,
officers, directors, members, partners, owners, shareholders, subsidiaries
(direct and indirect), employees, independent contractors, agents,
representatives, attorneys, lenders, advisors, accountants and
consultants.


5




2.38.     “Scheduled Shipment
Date” means the date specified in an Order for making the Product
available to OJO for shipment.




2.39.     “Services Agreements”
means this Agreement, each SOW and each Order.




2.40.     “SOW” means a
statement of work that incorporates the terms set forth in this Agreement and
describes in more detail the specific services to be rendered by Kenmec to OJO
and the financial arrangements with respect to such services.




2.41.     “Technical Manufacturing
Information” means the manufacturing information, process, technology and
Intellectual Property used by Kenmec or its Related Persons to design, develop,
test or manufacture any Deliverable, including all inspection, manufacturing,
test and quality control procedures and any other work processes; general
knowledge and information relating to the Deliverables; and support
documentation.




2.42.     “Term” means the term
of this Agreement set forth in Section 16.1.




2.43.     “Tools” means
equipment, jigs and fixtures that may be used by Kenmec or its Related Persons
in the manufacture of Deliverables.




3.           DEVELOPMENT.  Kenmec
may design and develop prototypes for each Product as specified in the related
SOW.  OJO may engage Kenmec to render consulting, design or
engineering services in connection with Deliverables.  In the event
that OJO desires to engage Kenmec to render such services, the Parties shall
prepare and agree upon a SOW that provides an engineering development plan,
which may include a description of the services to be rendered, any milestones
or delivery dates, payment terms, product roadmaps, deliverables or other terms
relevant to such engagement.




4.           PRODUCT
PURCHASES.




4.1.       Purchase and Sale of
Products. OJO may purchase and Kenmec will sell Products pursuant to the
terms and conditions of the SOWs.  Kenmec will not sell Products to
any third party other than OJO, without the prior written approval of
OJO.  Kenmec will refer any third party who may desire to purchase
Products to OJO.  Nothing in the Services Agreements will be deemed to
restrict OJO’s right to manufacture Products internally or through third
parties, purchase Products from other sources or enter into a similar agreement
with any third party.




4.2.       Forecasts.  To
the extent OJO expects to order Products from Kenmec, OJO shall provide Kenmec
with a Forecast.  Kenmec will notify OJO within five (5) Business Days
of receipt of the Forecast if Kenmec is unable to meet the forecasted
requirements. The absence of written notice constitutes Kenmec’s acceptance of
the Forecast and commitment to the terms of the Forecast.


6


4.3.       Order
Acknowledgment.  Purchase of Products will be initiated by
issuance of an Order by OJO to Kenmec.  If Kenmec is unable to meet
any requested Order requirements, Kenmec will notify OJO within ten (10)
Business Days of receipt of the Order and inform OJO of the reason for its
inability to meet the requirements. The absence of written notice constitutes
acceptance of the Order and commitment to the terms of the Order.




4.4.       Commitment to Orders and
Forecasts. Except as provided below, Forecasts supplied to Kenmec from
OJO are provided as an accommodation for planning purposes and for Kenmec to
purchase Components to meet the quantities stated using Prudent Procurement
Practices.  If Kenmec has followed Prudent Procurement Practices, OJO
assumes ultimate financial responsibility for the direct costs for work in
progress, Product inventory and Component inventory to meet Accepted Orders that
have been canceled or decreased or Forecasts that have been
revised.




4.5.       Manufacturing Lead
Time. The Manufacturing Lead Time for each Product will be provided in
the applicable SOW.  Kenmec shall give OJO advance written notice of
any proposed increase in Manufacturing Lead Time, which shall be applicable to
all Orders accepted by Kenmec after the date of receipt by OJO of such advance
written notice.




4.6.       Duty to Fulfill
Orders.  Kenmec agrees to fulfill all Accepted Orders in
accordance with the applicable Services Agreement, even if the Scheduled
Shipment Dates under such Accepted Order occur after the date of expiration or
termination of such Services Agreement.  If for any reason Kenmec is
unable to meet an Accepted Order, without waiving any breach of the Services
Agreement by Kenmec, Kenmec will notify OJO of such inability within two (2)
Business Days of discovery of the problem and will provide OJO a corrective
action plan.




4.7.       Emergency
Orders.  If OJO deems it necessary, it may order Products on an
emergency basis subject to the availability of such Products in Kenmec’s
inventory.  Kenmec will use its Commercially Reasonable Efforts to
make such Products available for shipment within forty-eight (48)
hours.  OJO will pay any reasonable additional expenses related to
such order.




4.8.       Discontinued
Products.  Kenmec acknowledges its obligation to manufacture,
supply and support the Products without interruption.  If, however,
during the Term and after the first year of shipment of a Product, Kenmec seeks
to discontinue the manufacture, supply or support of such Product (a “Discontinued
Product”), Kenmec will give written notice to OJO at least six (6) months
in advance of the last date the Discontinued Product can be
ordered.  After receipt of notice of discontinuance, OJO may choose
any, all or none of the following: (a) continue to place Orders for the
Discontinued Product for the remaining six (6) month period prior to
discontinuance; (b) at the end of the six (6) month period, issue one final
Order to Kenmec for such quantity of the Discontinued Product as OJO deems
necessary for its future requirements to be manufactured by Kenmec in one batch
with scheduled deliveries over a mutually agreed period; and (c) manufacture the
Discontinued Product under the manufacturing rights granted in Section 17.2,
without payment to Kenmec of any royalties or other charges.


7


4.9.       Documentation.  Kenmec
shall utilize Commercially Reasonable Efforts to ensure that Technical
Manufacturing Information are completely and accurately maintained and kept up
to date.  As requested by OJO, Kenmec shall provide OJO such Technical
Manufacturing Information and shall use Commercially Reasonable Efforts to
collect reports and certifications regarding materials included in the
Products.  In the event any supplier does not provide such reports and
certifications for materials included in the Products, Kenmec shall notify OJO
and take such other action as the Parties mutually agree.  Kenmec
shall provide a material safety data sheet in a form requested by OJO for any
Products that contain any chemicals which are regulated by the U.S. Occupational
Safety and Health Administration’s hazard communications regulations set forth
in 29 CFR 1910.1200.  Kenmec shall obtain certifications from each of
its suppliers that the materials purchased by Kenmec are not on the U.S. Toxic
Substances Control Act, 15 U.S.C.S. §2601, et seq., chemical inventory or are
subject to an exemption.




5.           DELIVERY AND
ACCEPTANCE.




5.1.       Delivery. Kenmec
shall mark, pack, crate, transport, make available for shipment and store all
Products to reasonably ensure, without additional cost to OJO, (a) delivery of
the Products to their ultimate destination without damage, (b) compliance with
all requirements of the carrier selected by OJO, the shipping and destination
authorities, and with good commercial practices, (c) compliance with OJO’s bar
code requirements and other marking requirements and (d) compliance with the
Product Requirements, and to reasonably ensure, at OJO’s cost as provided in the
applicable SOW, compliance with any special instructions of OJO.  All
invoices, shipping documents, exterior packaging and correspondence related to
an Order shall indicate the Order number and include suitable markings and
information to reference the covered Products.  All shipments shall be
accompanied by the appropriate shipping documents, including applicable customs
and export documentation and an itemized packing list indicating the Order
number, description of the Products and total quantity by Lot for such
Products.  OJO’s count and/or weights shall be conclusive on shipments
not accompanied by a conforming packing list.  Unless otherwise agreed
by the Parties, all Product shipments will be FCA (Incoterms 2000) at Kenmec’s
facility.  Title to and risk of loss for a Product will pass to OJO at
such Kenmec’s facility as contemplated by FCA (Incoterms 2000) shipping
terms.  Kenmec shall not change the location of the manufacturing
facility for the Products from Taiwan to any other location without the written
consent of OJO.  Kenmec agrees to provide reasonable assistance, at
Kenmec’s cost, to OJO in connection with obtaining or determining appropriate
classification of Products for import purposes wherever the Product will be
shipped.




5.2.       Acceptance.  The
Parties shall mutually agree on the inspection and acceptance testing criteria
related to the Products, which shall be subject to periodic revision as mutually
agreed to by the Parties.  All Products shall be subject to inspection
and acceptance testing by OJO for fifteen (15) days after receipt of such
Products by OJO to determine conformity with the applicable Order and the
Product Requirements.  On at least five (5) days advance notice, OJO
may also inspect Products at Kenmec’s facility prior to the shipment thereof to
OJO, and Kenmec shall provide all reasonable assistance for such
inspection.  OJO shall be under no duty to inspect Products prior to
use or resale of the Products, and neither inspection, acceptance, receipt,
retention, use, resale, nor payment of or for the same shall be construed to
constitute a waiver of any obligations of Kenmec with respect to such
Product.  In addition, OJO may reject a Lot if any Non-Conforming
Products are discovered in such Lot and it is reasonably likely that certain
remaining Products in such Lot may be affected.  In such case, the
expenses of OJO in sorting and testing the Products in order to find
Non-Conforming Products shall also be reimbursed to OJO by Kenmec.  In
the event that the Product does not pass acceptance test procedures or
inspection procedures, OJO may deem such Product a Non-Conforming Product and
OJO will have all available remedies with respect to Non-Conforming
Products.


8




5.3.       Early, Over and Partial
Shipment.  Without express written consent from OJO, Kenmec
will not ship Products more than five (5) days in advance of the Scheduled
Shipment Date, will not deliver more Products than the quantity specified in the
Order and will not make shipments of Products covered by an Order that have less
than the number of units of Product equal to ninety percent (90%) multiplied by
the number of units contemplated by the full amount of such Order.  In
the event of early, over or partial shipment, OJO may return (in accordance with
Section 11.2.2) the delivered Products.  If OJO elects to retain the
Products, OJO will not issue payment for such Products until such time that
payment would have been due if Orders had been properly
fulfilled.  Lot sizes and minimum shipment quantities will be agreed
to by the Parties.




5.4.       Late
Shipment.




5.4.1.     Other
than as solely a result of (a) a force majeure events contemplated by Article
13, (b) delays due to the poor quality of OJO-consigned Components, (c) delays
due to vendors that Kenmec was specifically directed by OJO to purchase a
specific component from and that fail to meet agreed upon delivery dates, or (d)
equipment and test inefficiencies provided by OJO that directly affected the
delivery of the Product, (A) in addition to any other remedies available to OJO,
any Order with respect to a Product that has not been made available for
shipment thirty (30) or more days after the Scheduled Shipment Date may be
cancelled by OJO without charge or penalty to OJO and (B) OJO shall have the
right to require Kenmec to pay liquidated damages to OJO, as partial relief for
the damages suffered by OJO for such delay, in an amount equal to the expedited
shipping costs for the delayed Products plus, for any Product made available for
shipment more than thirty (30) days after the Scheduled Shipment Date, five
percent (5%) of the purchase price for such Product.




5.4.2.     The
Parties acknowledge and agree that the sums payable under this Section 5.4 shall
constitute liquidated damages and not penalties and are in addition to all other
rights and remedies of OJO under the Services Agreements or
otherwise.  The Parties further acknowledge that (a) the amount of
loss or damages likely to be incurred is incapable or is difficult to precisely
estimate, (b) the amounts specified in this Section 5.4 bear a reasonable
relationship to, and are not plainly or grossly disproportionate to, the
probable loss likely to be incurred in connection with any failure by Kenmec to
meet a Scheduled Shipment Date, (c) one of the reasons for the Parties reaching
an agreement as to such amounts was the uncertainty and cost of litigation
regarding the question of actual damages, and (d) the Parties are sophisticated
business parties and have been represented by sophisticated and able legal
counsel and negotiated this Agreement at arm’s length.




5.5.       Country of Origin and Duty
Drawback. Upon OJO’s request, Kenmec will provide OJO with an appropriate
certification stating the country of origin for the Products sufficient to
satisfy the requirements of any applicable export licensing
Laws.  Kenmec will mark each Product, or the container if there is no
room on the Product, with the country of origin.  OJO will be the
importer or exporter of record for all Products to be shipped to
OJO.  If OJO is not the importer of record and Kenmec obtains duty
drawback rights to any Products, Kenmec will, upon OJO’s request, provide OJO
with documents required by the customs authorities of the country of receipt to
prove importation and to transfer duty drawback rights to OJO.


9


6.           FLEXIBILITY
GUIDELINES.




6.1.       Increase in
Demand.  Kenmec agrees to use Commercially Reasonable Efforts
to meet variations in Product demand outside of Forecasts and
Orders.  Increases to Forecasts and Orders will be done in accordance
with Sections 4.3 and 4.4, respectively.




6.2.       Cancellation and Reduction
in Demand. OJO may cancel or decrease an Order or revise a Forecast in
whole or in part upon written notice to Kenmec, and Kenmec will then (a)
immediately cease or reduce production and all work in progress related to the
affected Order or Forecast; (b) within one (1) Business Day, re-generate its
material requirements plan and initiate the process of contacting its suppliers
to notify them of the changes in demand; (c) contact all applicable suppliers
within three (3) Business Days; and (d) apply Prudent Procurement Practices to
cancel, re-schedule or reduce the supply of Components to align with the
cancelled or reduced Order or revised Forecast.  If Kenmec has
complied with the prior sentence, OJO assumes ultimate financial responsibility
for the direct costs for work in progress, Product inventory and Component
inventory to meet Accepted Orders that have been canceled or decreased or
Forecasts that have been revised.




6.3.       Rescheduled Scheduled
Shipment Dates.  Without the prior agreement of Kenmec, OJO may
delay, defer or reschedule any Scheduled Shipment Date at no charge to OJO with
respect to the following percentages of Products:




6.3.1.     one
hundred percent (100%) of Products with a Scheduled Shipment Date of eighty four
(84) days or more following the date notice is given to Kenmec;




6.3.2.     fifty
percent (50%) of Products with a Scheduled Shipment Date of fifty six (56) days
or more but less than eighty four (84) days following the date notice is given
to Kenmec;




6.3.3.     thirty
percent (30%) of Products with a Scheduled Shipment Date of twenty eight (28)
days or more but less than fifty six (56) days following the date notice is
given to Kenmec; and




6.3.4.     zero
percent (0%) of Products with a Scheduled Shipment Date less than twenty eight
(28) days following the date notice is given to Kenmec.




Any
particular Scheduled Shipment Date may only be delayed, deferred or rescheduled
once without any charge to OJO.  Ojo may not delay, defer or
reschedule a Scheduled Shipment Date by more than three (3)
months.  Any additional changes to a previously delayed, deferred or
rescheduled Scheduled Shipment Date shall require the mutual agreement of the
Parties.




7.           COST
MANAGEMENT.




7.1.       Methodology.  Kenmec
shall use its Commercially Reasonable Efforts to achieve pricing over time for
the Products and Manufacturing Services provided to OJO that is as favorable as
that which could be reasonably attained from other contract manufacturers for
comparable volumes of substantially similar products and comparable
manufacturing services.


10


The
Parties agree to pursue continuous cost reduction initiatives to ensure that
sustainable and competitive pricing is achieved and maintained.  These
initiatives may include supply chain redesign, review of available supplier
agreements to ensure best pricing and terms, improved logistics solutions,
manufacturing processes and test efficiency/elimination improvements, and
Product redesign.  Kenmec will demonstrate cost reduction improvements
and report such results to OJO on a calendar quarterly basis as part of a
rolling cost management process with an eighteen (18) month outlook for each
Product.




7.2.       Cost Reduction
Sharing.  As a result of any improvements contemplated by
Section 7.1 or otherwise, Kenmec agrees to provide OJO with (a) fifty percent
(50%) of any cost savings realized by Kenmec during the first year of
implementation with respect to Products that are subject to an SOW and
corresponding fully-costed Bill of Material and (b) one hundred percent (100%)
of any cost savings realized by Kenmec after the first year of implementation
with respect to Products that are subject to an SOW and corresponding
fully-costed Bill of Material.  Notwithstanding anything to the
contrary in any Services Agreement, Kenmec shall not be entitled to the benefits
of any cost reductions with respect to Variable Priced Components.




7.3.       Most Favored Customer.  If Kenmec offers a better price or pricing formula to any
other customer for any Products or products similar to the Products, based on
similar volumes and under similar circumstances and conditions, Kenmec agrees to
immediately offer such price or pricing formula to OJO.  Kenmec agrees
to fulfill its obligations in this Section 7.3 in good faith in accordance with
Kenmec’s standard pricing models and forecasting tools.  OJO reserves
the right, upon two (2) Business Days prior notice, to conduct an audit of
Kenmec’s books and records to ensure compliance with this Section
7.3.




8.           PRICES AND PAYMENT
TERMS.




8.1.       Pricing Management
Process.




8.1.1.     Kenmec
shall use Commercially Reasonable Efforts to provide OJO a fully-costed Bill of
Material and Manufacturing Lead Time for each Product requested by OJO, which
shall provide the price of each Component in such Product and shall be provided
to OJO within the period of time mutually agreed to by the
Parties.  The Parties shall use their Commercially Reasonable Efforts
to reduce the cost of such fully-costed Bill of Material and Manufacturing Lead
Time prior to finalization.  The Parties shall mutually agree on the
final fully-costed Bill of Material and Manufacturing Lead Time for each
Product.  For Manufacturing Services related to the Products, the
Parties agree that Kenmec shall be permitted a markup for each Product of
[***].  All quotations, Bills of Material and Manufacturing Lead Times
shall be deemed Confidential Information of OJO.




8.1.2.     Prices
for Products shall remain stable unless changed in accordance with this Section
8.1.  Product price changes based on material increases or decreases
to Component Prices or to the costs for Manufacturing Services shall be
discussed by the Parties.  Notwithstanding the foregoing, (a) during
the Bill of Material finalization process, the Parties shall mutually agree on
any Components that regularly and materially fluctuate in Variable Priced
Components




***
This information has been omitted and has be filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request
under Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.


11




8.1.3.     If,
during the Term, changed prices are put in effect pursuant to this Agreement or
by mutual agreement of the Parties, such prices shall apply to all new Accepted
Orders after the effective date of such prices, but shall not apply to any open
Accepted Orders that exist at the time of the effective date of such
prices.




8.2.       Payment
Terms.  OJO shall pay all undisputed charges with respect to
Orders related to Products that conform to the Product Requirements within
thirty (30) days after OJO has received the invoice with respect to such
Order.  Kenmec shall not issue any invoices for Products unless Kenmec
has made the Products available for shipment to OJO at Kenmec’s facility and has
provided OJO notice thereof.  Notwithstanding anything to the contrary
in any Services Agreement, and without being deemed in default of any Services
Agreement, if Kenmec owes any amounts to OJO that have not been paid, OJO may
withhold payment of an equal amount owed by OJO to Kenmec.  Any
payments not received by their respective due dates (other than with respect to
any disputed amounts) may bear interest at a rate of one percent (1.0%) per
month (or the pro-rata portion thereof) or the maximum rate permitted by Law,
whichever is less, until paid in full.  Any payments made by OJO will
be without prejudice to OJO’s right to subsequently claim or determine that it
has overpaid Kenmec or to require Kenmec to remedy any deficiencies in Kenmec’s
performance required by the Services Agreements.




8.3.       Additional Charges and
Expenses.  Kenmec will separately list on its invoices all
charges and expenses relating to the Products, including agreed to set-up,
tooling, or non-recurring engineering expenses agreed to by the
Parties.




8.4.       Disputed
Invoices.  If a Kenmec invoice does not meet the invoicing
requirements of the applicable Services Agreements, or if OJO in good faith
disputes any invoiced charges, OJO will notify Kenmec of the disputed items and
may withhold payment of the disputed charges pending resolution of the invoicing
or dispute.  The Parties will use their Commercially Reasonable
Efforts to attempt to resolve any failure to meet the invoicing requirements or
any disputed invoiced charges.




9.           COMPONENT
PROCUREMENT.




9.1.       Prudent Procurement
Practices. Kenmec will purchase Components using Prudent Procurement
Practices to support OJO’s Forecasts and Orders and react to support the
variations in demand using Prudent Procurement Practices for such Forecasts and
Orders to deliver Products to OJO in accordance with specified Scheduled
Shipment Dates.  OJO has the right to conduct periodic audits of
Component pricing quoted to OJO.  If Kenmec has not followed Prudent
Procurement Practices, in the event of excess Component inventory due to
cancellation, termination or demand reductions with respect to Forecasts and
Accepted Orders, OJO will not be liable for that portion of the Component
inventory purchased in excess of the amount that would have been purchased if
Prudent Procurement Practices had been used.  If Kenmec has followed
Prudent Procurement Practices, in the event of excess Component inventory due to
cancellation, termination or demand reductions with respect to Forecasts and
Accepted Orders, OJO will be liable for such excess Component
inventory.


12




9.2.       Inventory
Management.  Kenmec shall provide such cooperation as may
reasonably be requested by OJO, at OJO’s sole cost, in connection with the
establishment of an inventory management program with a third party warehouse or
inventory management services provider.  Kenmec agrees, upon the
request of OJO, to use Commercially Reasonable Effort to set up and implement
electronic means of receiving Forecasts, Orders and other communications under
the Services Agreements.  Kenmec is responsible for managing Component
allocations in the supply chain, excluding (a) OJO-consigned Components or (b)
vendors that Kenmec was specifically directed by OJO to purchase a specific
component from and that fail to enter into a supply agreement with
Kenmec.




9.3.       Component
Discontinuances.




9.3.1.     If
either Party receives notice from a supplier or the other Party that a Component
will be discontinued, the Party receiving such notice will immediately notify
the other Party and will work with that Party to identify a form, fit and
function replacement in a reasonable period of time.  The Parties will
develop an appropriate action plan, including all sample requirements, product
qualifications, and schedule changes necessary to reach a mutually agreeable
resolution of the discontinuance and the Parties shall use Commercially
Reasonable Efforts to find an alternate source of supply.  Upon OJO’s
request, Kenmec will disclose to OJO the agreements in place with the supplier
of such discontinued Component.




9.3.2.     In
the event that OJO cannot identify a form, fit and function replacement, or does
not approve a replacement identified by Kenmec, for any discontinued Components,
pursuant to a SOW, Kenmec shall purchase the available inventory of such
discontinued Components as requested by OJO and manage the consumption of such
inventory.  OJO will pay Kenmec the purchase price, plus any third
party costs associated with storage or handling, paid by Kenmec for the amount
of such inventory of such discontinued Components in excess of the inventory of
such discontinued Components necessary for OJO’s then-outstanding Forecasts and
Orders.




9.4.       Component
Shortages.  Kenmec agrees to provide appropriate technical and
commercial support to ensure supply of all Components that may be in limited
supply.  In the event of a probable or potential Component shortage or
availability problem, Kenmec will immediately notify OJO.  The Parties
will agree on appropriate action and allocation of associated
costs.  In addition, the Parties may mutually agree to operate with a
price part variance dollar limit on a single or multiple Component basis to
procure Components in shortage of supply.  For general market
allocation issues that arise for Components, the Parties will follow the process
set forth below:


13




9.4.1.     The
Parties will provide each other monthly updates on the Component
marketplace.  Specific reference will be made to Components that are
considered by either Party to be at risk or currently in
allocation.  If either Party identifies a Component as being on
allocation, the Parties will meet to discuss the problems and agree upon a time
based, aggregate, dollar amount limit that Kenmec can use to cover all premium
purchases for that allocated Component, without having to get line item approval
from OJO.




9.4.2.     Kenmec,
on a weekly basis, will report to OJO the following for each allocated
Component: (a) agreed upon Component limit; (b) spend to date for allocated
Component; and (c) forecasted spend for allocated Component.




9.4.3.     Kenmec
agrees to utilize Prudent Procurement Practices to purchase Components in market
allocation periods.  Kenmec agrees to review and modify as required
the frequency of supplier forecast transmissions during the allocation
period.  Kenmec further agrees to use such allocated Components
procured to meet Forecasts and Accepted Orders.




9.5.       Component Forecasts from
Kenmec to Suppliers.  Kenmec will provide to applicable
suppliers on a monthly basis a rolling six (6) month forecast of the key, unique
or long-lead Component requirements to be procured.  Kenmec will
update the forecast at least monthly for all planned orders.  A copy
of the forecast will be provided to OJO upon request.




9.6.       Component
Prices.  Kenmec represents, covenants and agrees that the
prices which OJO pays hereunder for Components are not in excess of the lesser
of Kenmec’s purchase price or the applicable vendor’s list, catalog or published
prices for the Components.




10.         WARRANTIES AND
INDEMNIFCATION.




10.1.     Product and Component
Warranties.  Kenmec represents and warrants to OJO that the
statements contained in this Section 10.1 are true and correct.




10.1.1.   Products Warranty.
All Products will (a) be new or newly manufactured, include new Components and
be manufactured, processed and assembled by Kenmec; (b) conform strictly to the
Product Requirements; (c) comply with all applicable Laws; (d) be free and clear
of all Encumbrances and other claims to title or ownership; and (e) be free from
defects in material, workmanship and design; provided however that, the warranty
under this Section 10.1.1(e) shall not apply to the extent that a Product defect
results from (i) accident or misuse after title has passed to OJO; (ii) repair
or modification not permitted by the Services Agreement; (iii) the Product
Requirements, unless the defect results from Kenmec’s implementation of the
Product Requirements or (iv) inadequate equipment and test inefficiencies
provided by OJO.




10.1.2.   Components Warranty.
Kenmec will pass on to OJO all suppliers’ warranties and indemnities to the
extent that they are transferable.  Kenmec agrees to use Commercially
Reasonable Efforts (a) to ensure that all warranties and indemnities from
suppliers are transferable to OJO and (b) to obtain a warranty and indemnity
with respect to each Component used in a Product that such Component does not
violate or infringe any Intellectual Property of any Person.


14




10.1.3.   Performance.  Kenmec
will perform all work under the Services Agreements in a professional manner and
with corresponding diligence, expertise and skill.




10.1.4.   Ozone Depleting
Substances. The processes used to manufacture the Products do not contain
any “Class 1 Substance” or “Class 2 Substance”, as those terms are defined in 42
USC Section 7671 and implementing regulations of the U.S. Environmental
Protection Agency at 40 CFR Part 82.




10.1.5.   Bribery.  No
gratuities have been or will be offered or given by Kenmec or its Related
Persons to OJO or any of its Related Persons, or, to the extent violative of any
applicable Law, including the U.S. Foreign Corrupt Practices Act, to any
representative or employee of any Governmental Authority or political party, for
the purpose of securing favorable treatment with respect to the awarding,
performance or amendment of any contract.




10.1.6.   Forced, Indentured or
Convict Labor.  All Products will not be produced,
manufactured, mined, or assembled, in whole or in part, with the use of illegal
child labor or forced, convict, and/or indentured labor under penal sanction as
prohibited by any Law.




10.1.7.   Export
Controls.  Kenmec acknowledges that OJO Property may be subject
to import or export Laws, and any use or transfer of OJO Property must be in
compliance with all such Laws.  Kenmec will not use, distribute,
transfer, or transmit OJO Property except in compliance with such
Laws.  If requested by OJO, Kenmec agrees to sign written assurances
and other documents as may be required to comply with such Laws.




10.1.8.   Technical
Expertise.  Kenmec will maintain technical expertise on
Products, including personnel with sufficient training to be able to repair the
Products; tools and equipment needed for the repair of Product (provided that,
any unique tools and equipment needed for the repair of Product shall be
provided by OJO to Kenmec as needed); and ready access to historical and most
current manufacturing documents.  Unless otherwise agreed to in a SOW,
all costs and expenses for Kenmec to provide technical support and expertise to
OJO shall be at Kenmec’s sole cost.




10.2.     General Representations and
Warranties of the Parties.  Each Party represents and warrants
to the other Party that the statements contained in this Section 10.2 are true
and correct.




10.2.1.   Status and
Authority.  Such Party is an entity validly existing and in
good standing under the Laws of the jurisdiction in which it was
formed.  Such Party has the requisite power and authority to execute
and deliver the Services Agreements and to perform the transactions to be
performed by it under the Services Agreements.  Such execution,
delivery and performance has been duly authorized by all necessary action on the
part of such Party.  This Agreement constitutes, and any other
Services Agreement will constitute when executed and delivered, the valid and
binding obligation of such Party, enforceable against such Party in accordance
with its terms, subject to applicable bankruptcy and other Laws that affect the
rights of creditors generally.


15


10.2.2.   Consents and
Approvals.  Neither the execution and delivery by such Party of
any Services Agreement, nor the performance of the transactions contemplated by
such Party under the Services Agreements, will require any filing, consent,
renegotiation or approval, or conflict with, result in any breach of or
constitute a default under (a) any provision of any Law to which such Party is
subject, (b) the constituent documents of such Party, or (c) any contract,
governmental permit or other document to which such Party is
subject.  At the time of execution of this Agreement, such Party is
not aware of nor has such Party received notice of any pending or threatened
legal action or proceeding by or against it that may have a material adverse
effect on its ability to fulfill its obligations under any Services
Agreement.




10.3.     Survival of
Warranties. The warranties under Section 10.1 will survive any
inspection, delivery, acceptance or payment by OJO and be in effect for a
sixteen (16) month period, or such other term as agreed to by the Parties,
following the date of delivery of such Product to OJO (the “Warranty
Period”).  This warranty is extended to, and may only be
enforced by OJO.   All other warranties in the Services
Agreements other than in Section 10.1 shall survive indefinitely.




10.4.     Indemnification.  Kenmec
shall indemnify, defend (at OJO’s option and using legal counsel satisfactory to
OJO) and hold harmless OJO and its Related Persons from any Losses based on,
arising from or related to (a) any breach of any Services Agreement by Kenmec or
its Related Persons, (b) any allegation that any Products (other than with
respect to the Product Requirements), or the use or sale thereof in accordance
with the Services Agreements, violates or infringes any intellectual property
right of any Person, (c) strict liability in tort or product liability in
connection with any contributions to the Products by Kenmec or its Related
Persons under the Services Agreements or (d) any personal injury or property
damage sustained or claimed to have been sustained by OJO or its Related Persons
during such Person’s presence on the property of Kenmec.  Kenmec shall
not compromise any third-party claim or consent to the entry of any judgment
without an unconditional release of all Losses of OJO and its Related Persons to
each claimant or plaintiff.




10.5.     EXCEPT
FOR A BREACH OF SECTIONS 5.4 OR 19.6 OR ARTICLE 14, IN NO EVENT SHALL EITHER
PARTY BE LIABLE IN ANY MANNER WHATSOEVER FOR ANY DAMAGES RESULTING FROM LOSS OF
DATA, PROFITS OR USE OF PRODUCTS OR ANY INDIRECT, SPECIAL, INCIDENTAL,
CONSEQUENTIAL, OR PUNITIVE DAMAGES, INCLUDING BUT NOT LIMITED TO LOSS OF
REVENUES, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.  THIS LIMITATION OF LIABILITY WILL APPLY REGARDLESS OF THE
FORM OF ACTION, WHETHER IN CONTRACT OR TORT, INCLUDING
NEGLIGENCE.  NONE OF THE REMEDIES OF EITHER PARTY ARE EXCLUSIVE OR
INTENDED TO LIMIT ANY OTHER LEGAL OR EQUITABLE REMEDIES
AVAILABLE.   NEITHER PARTY HERETO MAKES ANY WARRANTIES, EXPRESS
OR IMPLIED, WHICH ARE NOT EXPRESSLY CONTAINED IN ANY SERVICES
AGREEMENT.




11.         NON-CONFORMING
PRODUCTS.




11.1.     Non-Conforming
Product.  In the event that OJO receives a Non-Conforming
Product, OJO will determine which one of the following processes will be
used:


16




11.1.1.   Repair of Non-Conforming
Products.  In OJO’s discretion, OJO or its Related Persons may
repair Non-Conforming Products and Kenmec will be responsible and shall promptly
reimburse OJO for the reasonable costs of repairing Non-Conforming
Products.  OJO’s use of a Related Person to repair Non-Conforming
Products will not void any warranties of Kenmec under any Services
Agreement.  Kenmec reserves the right to audit such third party
repairs and charges.




11.1.2.   Return of Non-Conforming
Products.  In OJO’s discretion, OJO may return the
Non-Conforming Product to Kenmec and the following provisions shall
apply:




11.1.2.1.  At
OJO’s option, OJO will (a) create a debit memo against which Kenmec will provide
OJO with a credit for the purchase price of the Non-Conforming Product, (b)
create an internal debit memo that will deduct the purchase price of the
Non-Conforming Product from the next invoice payable to Kenmec, (c) create a
replacement memo against which Kenmec will promptly provide OJO with a
replacement Product, or (d) create a repair memo against which Kenmec will
promptly provide OJO with a repaired Product.




11.1.2.2.  Kenmec
will be responsible for all freight and transportation charges and import and
export costs associated with the return of Non-Conforming Products to Kenmec,
and with the delivery of replacement or repaired Products to OJO; provided that,
if any Product returned to Kenmec that was deemed by OJO to be a Non-Conforming
Product for which Kenmec paid the applicable freight and transportation charges
and import and export costs, but such Product was not a Non-Conforming Product,
OJO shall reimburse Kenmec for the actual amount paid by Kenmec for the
applicable freight and transportation charges and import and export costs
related to returning the Product to Kenmec.  Title and risk of loss or
damage to the Non-Conforming Products will pass to Kenmec upon OJO’s tender of
the Non-Conforming Products to the freight carrier.  Unless mutually
agreed upon by the Parties, if OJO returns the Non-Conforming Product to Kenmec,
Kenmec is not permitted to re-sell the Non-Conforming Product to OJO or
otherwise.




11.2.     Repairs Due to Component
Failures. In the event that OJO receives a Non-Conforming Product and the
Parties determine that the defects results from a Component, Kenmec will
negotiate with the applicable supplier, with OJO present or on OJO’s behalf (at
OJO’s option), for additional remedies outside of the warranties pursuant to or
contemplated by Article 10.  Kenmec shall not enter into any
settlement with respect to Component failures that affects any of OJO’s rights
or interests without OJO’s prior written approval, which shall not be
unreasonably withheld.




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12.         QUALITY.




12.1.     Process Quality
Problems.


12.1.1.   Kenmec
agrees to promptly establish and implement corrective action plans mutually
agreed upon by the Parties as necessary to correct any process quality issues
that are identified.  The Parties will establish a mutually agreeable
FTPR for each Product as part of the inspection and acceptance testing criteria
contemplated by Section 5.2.  With respect to any shipment of Product,
Kenmec, at its sole cost, agrees to maintain, for a period of two (2) months
after a particular shipment of Products, an inventory of such Products in an
amount equal to (a) the lesser of two percent (2%) or such lesser percentage as
requested by OJO in writing multiplied by (b) the number of such Products
contained in such shipment (such inventory, the “Available Replacement
Inventory”).




12.1.2.   If
(a) during the first six (6) months after the initial manufacture by Kenmec of a
particular model (as identified by stock keeping unit (SKU)) of Product, the
FTPR for any particular Lot of such Product exceeds ten percent (10%) or (b) at
any time following the first six (6) months after the initial manufacture by
Kenmec of a particular model (as identified by stock keeping unit (SKU)) of
Product, the FTPR for any particular Lot of such Product exceeds five percent
(5%), Kenmec shall promptly coordinate and pay the costs for identifying and
repairing or replacing the Non-Conforming Products contained in such Lot,
including paying the costs of expedited shipping of Available Replacement
Inventory to OJO.  OJO shall not be charged any costs (e.g.,
manufacturing, Component, Product, shipping or other) for any Available
Replacement Inventory provided to OJO to replace Non-Conforming
Products.




12.1.3.   After
the expiration of the two (2) month holding period related to a particular batch
of Available Replacement Inventory, (a) if OJO places an additional Order for
the Products in such batch of Available Replacement Inventory, Kenmec shall
integrate the remaining Products in such batch of Available Replacement
Inventory into such additional Order and (b) if OJO does not place an additional
Order for the Products in such batch of Available Replacement Inventory, OJO
assumes financial responsibility for the costs of such Products.




12.2.     Product Quality
Problems.   Kenmec will notify OJO within one (1) Business
Day after identifying any significant quality issues relating to the Products
that will affect FTPR goals, will document to OJO the inspection leading to this
action and will inspect existing inventories and remove defective Products and
Components within five (5) Business Days.  Upon OJO’s receipt of
notification from Kenmec, the Parties will work together to determine the root
cause analysis of any quality problems.  For quality problems that are
attributable to OJO, Kenmec will assist OJO (at OJO’s sole cost) in establishing
and implementing a corrective action plan relating to Kenmec’s manufacturing
process or Components.  For quality problems that are attributable to
Kenmec, Kenmec (at Kenmec’s sole cost) will establish and implement a corrective
action plan mutually agreed upon by the Parties to remedy such
problems.  A copy of the implemented corrective action plan will be
provided to OJO.  Kenmec will provide OJO with weekly updates, and
notify OJO after the correction plan has been fully implemented and the problem
has been resolved.  After OJO has verified that the corrective action
plan has been fully implemented and the problem has been resolved, OJO will
notify Kenmec that the corrective action plan has been closed.  Kenmec
will maintain all records relating to corrective action plans for a minimum of
five (5) years after OJO notifies Kenmec that such corrective action plan has
been closed.


18


12.3.     Process Improvement and
Quality Control Program.  Kenmec shall use its Commercially
Reasonable Efforts to develop and, if agreed to by OJO, implement process
improvements.  Kenmec shall maintain a documented Quality Control
Program at Kenmec’s facilities acceptable to OJO.  Kenmec shall
provide OJO with the documentation on the quality control program on a calendar
quarterly basis.  Kenmec shall promptly request from OJO any standards
that Kenmec is not aware of that are required by the Quality Control
Program.  Revisions and improvements to the Quality Control Program
shall be made on a continuous basis by Kenmec with the consent of
OJO.  As requested by OJO, Kenmec agrees to provide OJO with
information on the Quality Control Program on a calendar quarterly
basis.  The relevant quality control process utilized by Kenmec shall
be referenced when performing incoming, in-process, and outgoing inspections of
all electrical, mechanical, subassemblies and finished goods.  If any
Product does not meet the standards contained in the quality control program,
such Product shall be deemed a Non-Conforming Product.




12.4.     Inspection.  OJO
and its Related Persons may inspect and audit (without unduly interfering with
Kenmec’s operations) the Kenmec plant, purchasing processes, manufacturing
processes, Quality Control Program and supporting documentation.  The
inspection or audit may take place at any time during the Term, on five (5)
Business Days notice, during normal business hours.  OJO and its
Related Persons shall use Commercially Reasonable Efforts to minimize the
frequency of audits.  Kenmec will provide, at no charge to OJO, access
to such facilities and services as are reasonably required by OJO in performing
such inspection and audit.




12.5.     Continuity
Plan.  Kenmec shall promptly develop and keep current a formal
business continuity plan detailing Kenmec’s plans, procedures and designated
resources for timely response to and recovery from potential civil, natural, and
physical plant disasters that could reasonably be expected to disrupt
Manufacturing Services.  Kenmec agrees to notify OJO as soon as
possible in the event of a crisis that disrupts the Manufacturing
Services.  Unless authorized in advance by OJO, Kenmec will not refer
to OJO in public and media communications about any crisis or subsequent
recovery.




13.         PROCESS CHANGE
NOTIFICATION.




13.1.     Kenmec Proposed
Changes. No Design Changes may be made to, or incorporated into, Products
without the prior written approval of OJO. Kenmec will provide OJO advance
notice of any proposed Design Changes and provide documentation, evaluation
samples and an Impact Proposal relating to such Design
Changes.  Written approval of the Impact Proposal must be received by
Kenmec from OJO prior to any implementation of the Design Change.  Any
effect on price or other terms resulting from Design Changes will be mutually
agreed to by the Parties in the Impact Proposal.




13.2.     OJO Proposed Changes.
Kenmec acknowledges that OJO may need to change Products or processes during the
Term.  These changes will be communicated through a Change
Order.  Kenmec is only to take action when given a Change Order from
OJO.  After receipt of the Change Order, Kenmec will provide to OJO
within two (2) Business Days an acknowledgement of the Change Order and promptly
thereafter provide an Impact Proposal describing any delivery impact, an
implementation date, potential scrap or material exposure and the impact on the
cost of the Product due to Change Order changes.  If the Impact
Proposal is acceptable, OJO will notify Kenmec and provide specific instructions
to Kenmec on Change Order implementation.


19




13.3.     OJO Financial
Responsibility. If OJO accepts an Impact Proposal, OJO will assume
liability for any incremental costs identified as OJO’s responsibility in the
Impact Proposal and for any Obsolete Components, made obsolete due to a Change
Order implementation and that were purchased or committed to be purchased by
Kenmec using Prudent Procurement Practices, by utilizing one of the following
methods (at OJO’s option): (a) purchasing the Obsolete Components from Kenmec,
at Kenmec’s third party acquisition costs for such Obsolete Components and
having the Obsolete Components returned to OJO; (b) authorizing Kenmec to sell
Obsolete Components internally or externally and OJO, upon review and agreement,
pays the difference between Kenmec’s third party acquisition costs for such
Obsolete Components and the selling price for such Obsolete Components; or (c)
scrapping and disposing of the Obsolete Components and OJO paying Kenmec’s third
party acquisition costs for such Obsolete Components.  Notwithstanding
the above, Kenmec will be responsible for expenses caused by failure to
implement an acknowledged Change Order or accepted Impact Proposal.




13.4.     Change Monitoring and
Tracking. Upon implementation of an OJO approved change to a Product
under this Article 13, Kenmec will provide OJO with the first (1st) serial
number, first MAC Address, first shipping date, Order number and quantity of
Product to be included in that first shipment of Product incorporating the
change. Residual inventories of pre-existing finished goods inventory or work in
progress for the affected Products will be disposed of or processed as mutually
agreed to by the Parties.




13.5.     Emergency Change
Request.  Kenmec agrees to acknowledge all written emergency
change requests within one (1) Business Day, such acknowledgments to include at
a minimum, a date on which Kenmec will respond to OJO with the conditions
(including price and delivery impact) for implementing the proposed
changes.  An emergency will be defined as a severe situation,
including Product safety, Product quality or a line shut down. Upon both
Parties’ agreement on the price, delivery, or any other conditions impacted by
the emergency change request, OJO will issue a Change Order to Kenmec reflecting
these new terms and conditions.




14.         PROPERTY
RIGHTS.




14.1.     Title to
Property.




14.1.1.   Kenmec acknowledges that OJO will at
all times retain all right, title and interest in OJO Property.  OJO
Property will be provided to Kenmec as bailed property under the terms of this
Article 14.  Each Party will maintain all right, title and interest in
Pre-Existing Intellectual Property, subject only to any licenses that may be
granted by the owning Party.  Ownership of Intellectual Property
conceived or developed by OJO or jointly developed by the Parties under any
Services Agreement will be owned by OJO and shall be deemed OJO
Property.  If all undisputed amounts under all outstanding invoices
that are due and payable have been paid by OJO to Kenmec, ownership of
Intellectual Property conceived or developed solely by Kenmec under any Services
Agreement at such time will be owned by OJO and shall be deemed OJO
Property.  Notwithstanding anything to the contrary in any Services
Agreement, to the extent the results of Kenmec’s performance of Manufacturing
Services or other services may constitute “work made for hire” for OJO under the
USA Copyright Revision Act of 1976, then such work shall be considered “work
made for hire” by the Parties.


20




14.1.2.   To
the extent that any OJO Property is not the property of OJO by operation of Law,
Kenmec, and Kenmec shall cause each of its Related Persons to, irrevocably
assign, transfer and convey to OJO, without further consideration, all right,
title and interest of Kenmec or such Related Person, as the case may be, in and
to such OJO Property.  In addition, Kenmec will, and Kenmec shall
cause each of its Related Persons to, execute any necessary documents and will
take such other actions and otherwise assist OJO, as reasonably requested, to
perfect OJO’s ownership of the OJO Property.  Kenmec shall ensure that
all of its Related Persons involved with the creation of OJO Property execute an
assignment in favor of Kenmec assigning any and all rights that they may have in
any OJO Property.  Kenmec appoints, and Kenmec shall cause each of its
Related Persons to appoint, OJO, its true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for Kenmec and each of its
Related Persons, as the case may be, to appoint, and in the name of Kenmec and
each of its Related Persons, as the case may be, place, and stead, in any and
all capacities, to sign any and all documents and certificates to perfect OJO’s
ownership of the OJO Property, granting unto OJO, full power and authority to do
and perform each and every act and thing requisite or necessary to be done in
connection therewith, as fully to all intents and purposes as it might or could
do in person, ratifying and confirming all that OJO, or its substitute, may
lawfully do or cause to be done by virtue of any Services
Agreement.




14.1.3.   Limited license to OJO
Property. OJO grants to Kenmec a worldwide, non-exclusive,
non-assignable, non-transferrable, royalty-free license during the Term to use
the OJO Property for the sole purpose of providing Manufacturing Services to OJO
under the Services Agreements.  OJO may revoke this license at any
time and for any reason.




14.2.     OJO
Property.  Kenmec agrees that all OJO Property shall (a) remain
personal property, and not become a fixture to real property; (b) be subject to
inspection and audit by OJO at any time; (c) be used only in filling Orders from
OJO; (d) be kept free of Encumbrances; (e) be kept separate or identifiable from
other materials, tools or property of Kenmec or held by Kenmec; (f) be kept in
the same condition as received, normal wear and tear excepted and (g) not be
modified in any manner by Kenmec without prior written permission from
OJO.  OJO Property shall be deemed Confidential Information of
OJO.  During the Term plus any period of support that may survive
termination or expiration of any Services Agreement, Kenmec agrees to inform OJO
promptly of any Developments.  Kenmec will maintain accurate records
of the receipt and location of all OJO Property.  Kenmec will bear all
risk of loss with respect to OJO Property in the possession or control of Kenmec
or its Related Persons.




14.3.     Use of Kenmec Intellectual
Property.  Kenmec represents and warrants that no Kenmec
Intellectual Property has been incorporated into any OJO
Property.  Kenmec shall not incorporate any Kenmec Intellectual
Property into any OJO Property without OJO’s prior written
approval.  To the extent any Kenmec Intellectual Property is
incorporated within, or used in connection with, any OJO Property, Kenmec grants
to OJO a non-exclusive, royalty-free, fully paid up, worldwide, transferable,
perpetual, license (including the right to sublicense to third parties) to such
Kenmec Intellectual Property to disclose, make, have made, sell, offer for sale,
import, use, reproduce, modify, adapt, display, distribute, to make derivative
works, and make other versions of OJO Property and any future products of OJO or
its Related Persons.


21




14.4.     Return of OJO
Property. Upon OJO’s request, Kenmec will promptly return to OJO, in good
condition, normal wear and tear excepted, any OJO Property requested by
OJO.  The Parties shall mutually agree on the manner and procedure for
returning the OJO Property.  OJO Property will be shipped FCA
(Incoterms 2000) at Kenmec’s facility.  Notwithstanding the foregoing,
if the return of OJO Property is due to the termination by OJO of a Services
Agreement under Section 16.2 where Kenmec is the Breaching Party, Kenmec will
pay all shipping costs to return the OJO Property to a shipping address
specified by OJO and any insurance requested by OJO.  If the OJO
Property is not delivered within the time frame mutually agreed upon by the
Parties, without excusing Kenmec’s breach of its obligation to deliver the OJO
Property to OJO, Kenmec shall permit OJO to enter upon Kenmec’s premises to take
possession of, assemble and collect OJO Property or render them
unusable.




14.5.     Warranty
Disclaimer.  ALL OJO PROPERTY IS PROVIDED “AS-IS” WITH NO
WARRANTIES WHATSOEVER, EITHER EXPRESSED OR IMPLIED, ORAL, OR WRITTEN. OJO
SPECIFICALLY DISCLAIMS ANY WARRANTIES OF NON-INFRINGEMENT, MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.




15.         FORCE MAJEURE
EVENTS.  Neither Party will be liable for any delay in
performing, or for failing to perform, its obligations under any Services
Agreement resulting from any cause beyond its reasonable control, and without
that Party’s fault or negligence, which may include acts of God, acts of war,
power failures, fire, explosions, floods, hurricanes, typhoons, tornadoes,
earthquakes, and, if affecting the general industry (not just the applicable
Party), strikes, industrial disputes, lockouts, sabotage, terrorism, destruction
of manufacturing facilities, riots or civil disturbances or acts by any
Governmental Authority.  Failure of a supplier to or subcontractor of
Kenmec will not be considered a force majeure event unless the supplier or
subcontractor is the sole source of a supply of product or services and is
itself subject to a force majeure event. The Party affected by such event will
notify the other Party of the force majeure event within two (2) Business Days
of occurrence of the event. The Party receiving notice may terminate the
applicable Services Agreement that is subject to a declaration of force majeure
event in whole or in part if the delay caused by the force majeure event is not
cured within thirty (30) days of receipt of such notice.




16.         TERMINATION.




16.1.     Term of
Agreement.  Subject to earlier termination pursuant to Section
16.2, this Agreement shall commence as of the Effective Date and will remain in
effect until the later of (a) the two (2) year anniversary of the Effective
Date, which shall be automatically extended for successive one year terms unless
a Party delivers written notice to the other Party of its intention not to
extend, not less than one-hundred twenty (120) days prior to the expiration of
the then current term or (b) the termination or expiration of the last to
terminate or expire of the SOWs.




16.2.     Early
Termination.  If a Breach Event occurs with respect to a Party
(such Party, the “Breaching Party”),
the non-breaching Party may, by notice to the Breaching Party, terminate the
applicable Services Agreement or any Order outstanding thereunder unless, if the
breach is able to be cured, the Breaching Party cures the breach within thirty
(30) days after receipt of notice and the Breaching Party provides the
non-breaching Party, upon request, with reasonable assurances of future
performance.  The right, if any, of either party to terminate for
convenience shall be set forth in each SOW.


22




17.         EFFECT OF EXPIRATION OR
TERMINATION.




17.1.     Effect of Expiration or
Termination for Any Reason. Upon expiration or termination of any
Services Agreement for any reason, and in the case of termination of a SOW, only
to the extent applicable to the terminated SOW:




17.1.1.   All
Accepted Orders issued prior to the effective date of the termination or
expiration will be fulfilled pursuant to and subject to the terms of the
applicable Services Agreement, even if the Shipment Dates of Products under such
Orders are after the effective date of expiration or termination;




17.1.2.   All
licenses granted by OJO to Kenmec to any OJO Property or Intellectual Property
will automatically terminate;




17.1.3.   Kenmec
will identify any Products or Components in inventory and on order;




17.1.4.   Kenmec
will cancel all cancelable, pending orders to suppliers within five (5) Business
Days from the date of notification of termination or non-renewal of the
applicable Services Agreement or partial termination or cancellation of the
Order or Services Agreement, and within ten (10) Business Days thereafter notify
OJO of the cancellation.  To the extent OJO may be liable for orders
with suppliers pursuant to the terms of the Services Agreements, OJO will not be
liable for orders with suppliers where Kenmec has not issued a cancellation
notice within this five (5) Business Day period unless expressly notified by
Kenmec and approved by OJO.  Kenmec will use Commercially Reasonable
Efforts to cancel any other purchase commitments or return for credit or find
other use for all Components intended for use in the Product and, following such
actions and if Kenmec has followed Prudent Procurement Practices, OJO assumes
ultimate financial responsibility for the direct costs for work in progress,
Product inventory and Component inventory to meet Accepted Orders that have been
canceled or decreased or Forecasts that have been revised; and




17.1.5.   Except
for termination of the applicable Services Agreement where Kenmec is the
Breaching Party, OJO will reimburse Kenmec for any mutually agreed non-recovered
non-recurring engineering expenses agreed to by the Parties.




17.2.     Manufacturing
Rights.




17.2.1.   If
Kenmec ceases to supply any Product due to (a) discontinuance of the Product in
accordance with Section 4.8; (b) termination of a Services Agreement by OJO for
breach by Kenmec in accordance with Section 16.2; (c) the commencement of any
proceeding, whether voluntary or involuntary, in bankruptcy or insolvency by or
against a Party; an assignment by Kenmec for the benefit of creditors or any
general arrangement with creditors; appointment by Kenmec of a receiver or an
assignee for the benefit of creditors; whether or not OJO terminates any
applicable Services Agreements; or (d) termination of a Services Agreement by
OJO for a Force Majeure Event resulting in Kenmec’s inability to manufacture any
Products, then Kenmec grants to OJO a non-exclusive, royalty-free, worldwide,
transferable, perpetual irrevocable license to all Kenmec Intellectual Property
necessary to enable OJO to make, have made, sell, offer for sale, import, use,
reproduce, modify, adapt, display, distribute, make derivative works and make
other versions of the Deliverables.  OJO may sublicense these rights
to third parties.


23




17.2.2.   If
OJO is entitled to access Kenmec’s Intellectual Property under this Section
17.2, Kenmec shall promptly provide to OJO without charge all information,
including Technical Manufacturing Information, parts catalogues, schematics,
material lists, Design Changes, Change Orders, and other servicing
documentation, to enable OJO to independently manufacture, test and repair any
Deliverables.  If Kenmec refuses to cooperate with its obligations
under this Section 17.2, OJO may charge Kenmec for all reasonable costs to
procure or prepare the documentation.




17.2.3.   If
OJO is entitled to access Kenmec’s Intellectual Property under this Section
17.2, Kenmec will furnish to OJO, within seven (7) days after OJO’s request, the
names and addresses of Kenmec’s sources for Components or materials not
manufactured by Kenmec, including the terms of any arrangements with such
sources and the appropriate part numbers for commercially available equivalents
of electronic parts.  Kenmec will use all reasonable efforts to assist
OJO in procuring the right to purchase all such components or materials directly
from Kenmec’s vendors.




17.2.4.   If
OJO is entitled to access Kenmec’s Intellectual Property under this Section 17.2
and if requested by OJO, Kenmec will assign to OJO any license rights it may
have with third parties for software, documentation, or any Intellectual
Property used in the manufacture of the relevant Products.  If any
such license rights are assigned by Kenmec to OJO, OJO shall reimburse Kenmec
for the unamortized costs of any such assigned licensed rights.




17.3.     Survival.  Obligations
and rights in connection with any Services Agreement, which by their nature
would continue beyond the termination or expiration of such Services Agreement
(including those in Sections 2 (“Definitions); 5.4 (“Late Shipment”); 8
(“Pricing and Payment Terms”); 10 (“Warranties and Indemnification”); 11
(“Non-Conforming Products”); 14 (“Property Rights”); 16 (“Termination”); 17
(“Effect of Expiration or Termination”); and 19 (“Miscellaneous”)) will survive
any expiration or termination of such Services Agreement.




18.         INSURANCE
REQUIREMENTS.




18.1.     During
the Term and at all times that Kenmec performs Manufacturing Services, Kenmec
will maintain in full force and effect, at Kenmec’s own expense, for the benefit
of Kenmec, OJO and OJO’s Related Persons, the following insurance
coverage:




18.1.1.   Workers’ Compensation and
Employer’s Liability. Workers’ Compensation insurance and employer’s
liability insurance will be provided as required by applicable Law where work
under the Services Agreements is performed.  Employer’s liability
insurance will be provided in amounts and coverages not less than that provided
by similarly situated businesses.


24




18.1.2.   Insurance Coverage.
Kenmec will maintain commercial general liability insurance on an occurrence
basis (including premises and operations, products and completed operations,
broad form contractual liability, broad form property damage and personal injury
liability in amounts and coverages not less than that provided by similarly
situated businesses. The insurance required by this Section 18.1.2 shall be
primary and no other insurance will be called upon to contribute to the extent a
loss is covered thereunder, and Kenmec will secure endorsements from its
insurers to this effect.  Such insurance policies will be written with
appropriately licensed and financially responsible insurers, and will provide
for a minimum of sixty (60) days written notice to OJO of any cancellation or
reduction in coverage.




18.2.     Additional
Requirements.  For any insurance required by this Article 18,
Kenmec shall not rely on self insurance and all policy deductibles will be paid
by Kenmec.  In no event will any insurance, or the lack or
unavailability of any insurance, be deemed to limit or diminish Kenmec’s
obligations or liability to OJO or its Related Persons under the Services
Agreements.




19.         MISCELLANEOUS.




19.1.     Notices.  Notices,
authorizations, approvals, designations and agreements given pursuant to the
Services Agreements shall be in writing, signed by an authorized representative
of each Party and shall be deemed to have been duly given on the date
established by the sender as having been delivered personally, upon confirmation
of receipt if sent by facsimile or email, on the date delivered by a private
courier as established by the sender by evidence obtained from the courier, or
on the fifth day after the date mailed, if mailed by certified or registered
mail, return receipt requested, postage prepaid, to the Party being notified at
its address or facsimile number set forth below (or such other address as the
addressee may subsequently notify the other Party of in writing):




If to
Kenmec:




3F, No.
97, Sec. 2, Nan-Kang Rd.


Taipei
11578, Taiwan


Attention:  Chief
Executive Officer


Facsimile:
886-2-2785-9213


Email:
sfnan@kenmec.com


25





If to
OJO:




3190
Tremont Avenue


Trevose,
Pennsylvania 19053


Attn:
Senior Vice President, Engineering


Facsimile:
215-354-1049


Email:
wblackmon@wgate.com





With a
copy to:


3190
Tremont Avenue


Trevose,
Pennsylvania 19053


Attn:
General Counsel


Facsimile:
215-354-1049


Email:
cvitale@wgate.com





19.2.     Exhibits.  Exhibit
A attached to this Agreement is deemed a part of this Agreement and incorporated
in this Agreement.




19.3.     Independent
Contractors.  Each Party represents and warrants to the other
that its relationship with the other under any Services Agreement will be as an
independent contractor and neither Party is a partner, employee, agent or joint
venturer of or with the other.  Neither Party has the right to bind
the other Party, transact any business in other Party’s name or on the other
Party’s behalf or incur any liability for or on behalf of the other
Party.




19.4.     Severability.  If
any provision of the Services Agreements is determined by a court of competent
jurisdiction to be invalid or unenforceable in any respect, such determination
will not impair or affect the validity, legality or enforceability of the
remaining provisions of the Services Agreements, and each provision is declared
to be separate, severable and distinct. To the extent that any such provision is
found to be invalid, illegal or unenforceable, the Parties will negotiate in
good faith to substitute for such provision, to the extent possible, a new
provision that most nearly effects the original intent in entering into such
Services Agreement or to provide equitable adjustment in the event no such
provision can be added.




19.5.     Hierarchy of
Documents.  Unless mutually agreed to by the Parties, in the
event of any conflict between the provisions of this Agreement or any Exhibits,
SOWs or Orders negotiated either prior to or subsequent to this Agreement, the
order of precedence is as follows: (a) the SOW; (b) this Agreement; (c) the
Exhibits to this Agreement; and (d) each Order.




19.6.     Confidential
Information.  The provisions of the Mutual Nondisclosure
Agreement, dated October 21, 2009, between Kenmec and WorldGate Communications,
Inc, shall apply to the Parties, substituting OJO for WorldGate Communications,
Inc.




19.7.     Entire Agreement, Amendment
and Waiver. This Agreement, together with the Exhibits and any
subsequently executed SOWs, Forecasts or Orders, constitutes the entire
agreement between the Parties with respect to the subject matter of this
Agreement and supersedes all prior agreements, understandings, negotiations and
discussions, whether written or oral.  No modifications, amendments,
or waiver of any term, condition, or provision of the Services Agreements will
be binding on either Party unless in writing.  No failure or delay by
a Party in exercising any right, power or remedy will operate as a waiver of
that right, power or remedy, and no waiver will be effective unless it is in
writing and signed by an authorized representative of the waiving Party. If a
Party waives any right, power or remedy, the waiver will not waive any
successive or other right, power or remedy that Party may have.


26




19.8.     Governing Law. The
Services Agreements shall be governed by and construed in accordance with the
Laws of the Commonwealth of Pennsylvania, (a) without giving effect to any
choice of Law or conflicts of Laws provisions or rule of any jurisdiction that
would cause the substantive Laws of any other jurisdiction to apply and (b)
without giving effect to the Convention of the International Sale of
Goods.  Kenmec irrevocably and unconditionally consents to submit to
the exclusive jurisdiction of the courts of either the Court of Common Pleas of
Bucks County, Pennsylvania or of the United States of America located in the
Eastern District of Pennsylvania for any actions, suits or proceedings arising
out of or relating to the Services Agreements.  Kenmec irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of the Services Agreements, in the courts of either
the Court of Common Pleas of Bucks County, Pennsylvania or of the United States
of America located in the Eastern District of Pennsylvania and further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum.




19.9.     Assignment. Neither
Party may, directly or indirectly, in whole or in part, by operation of Law or
otherwise, assign or transfer any Services Agreement or delegate any of its
obligations under any Services Agreement without the other Party’s written
consent.  Any attempted assignment, transfer or delegation without
such prior written consent will be void.  In an event of a change in
control of Kenmec, such change in control of Kenmec shall be deemed a Breach
Event and OJO may terminate this Agreement pursuant to Section
16.2.  Notwithstanding the foregoing, OJO, or its permitted successive
assignees or transferees, may assign or transfer any Services Agreement, or
delegate any rights or obligations under any Services Agreement, without consent
of Kenmec, to any Affiliate of OJO or any of their permitted successive
assignees or transferees.  Without limiting the foregoing, each
Services Agreement will be binding upon and inure to the benefit of the Parties
and their permitted successors and assigns.




19.10.   Subcontracting. Any
subcontracting or delegation by Kenmec of its obligations under any Services
Agreement requires OJO’s prior written approval.  OJO may require
Kenmec to replace any previously approved subcontractor whose performance, in
the judgment of OJO, has been unacceptable.  Kenmec is responsible for
managing all subcontractors and remains responsible for all obligations
delegated to subcontractors to the same extent as if such obligations were
retained by Kenmec.




19.11.   Bankruptcy.  Notwithstanding
anything to the contrary in any Services Agreement, (a) all rights and licenses
granted under any Services Agreement are intended to be, and shall be deemed to
be, for purposes of Section 365(n) of the Bankruptcy Code (“Section 365(n)”)
licenses of rights to “intellectual property” as defined under Section 101(35A)
of the Bankruptcy Code; and (b) the Deliverables are, and shall be deemed to be,
“embodiment[s]” of “intellectual property”.  All of the rights of OJO
under the Services Agreement shall be deemed to exist immediately before the
occurrence of any bankruptcy case in which Kenmec is a
debtor.  Without limiting the generality of the foregoing, Kenmec
acknowledges that the rights and licenses granted to OJO pursuant to any
Services Agreement, to the maximum extent permitted by Law, shall not be
affected by the rejection of such Services Agreement in bankruptcy, and shall
continue subject to the terms and conditions of such Services
Agreement.  In the event that any Services Agreement is rejected or
deemed rejected in a bankruptcy proceeding, any continuing payments required by
OJO hereunder shall be equitably adjusted to reflect the loss of any services or
other rights of OJO or obligations of Kenmec that are terminated as a result of
the Rejection.


27




19.12.   Interpretation. The
Article and Section headings in the Services Agreements are for convenience of
reference only. The Article and Section headings will not limit or extend the
meaning of any provision of the Services Agreements, and will not be relevant in
interpreting any provision of the Services Agreements.  References to
specific Articles and Sections shall be deemed to be references to Articles and
Sections of the Services Agreement in which they appear.  Unless the
context requires otherwise, in each Services Agreement (a) “including” (and any
of its derivative forms) means “including but not limited to”, (b) “may” means
has the right, but not the obligation to do something and “may not” means does
not have the right to do something, (c) “will” and “shall” are expressions of
command, not merely expressions of future intent or expectation, (d) “written”
or “in writing” is used for emphasis in certain circumstances, but that will not
derogate from the general application of the notice requirements set forth in
Section 19.1 in those and other circumstances, (e) use of the singular imports
the plural and vice versa, (f) use of a specific gender imports the other
gender; (g) all monies payable or to be paid are expressed in United States
dollars; (h) any approval, determination, election or authorization required to
be obtained from OJO shall be at OJO’s sole discretion and (i) a reference to
any Law means such Law as amended, modified, codified, replaced or reenacted,
and all rules and regulations promulgated thereunder.  Each Party
certifies that it has read the terms of this Agreement, that it understands the
terms of this Agreement, and that it is entering into this Agreement of its own
volition.  Each Party certifies that it will read the terms of each
SOW, that it will understand the terms of each SOW, and that it will enter into
each SOW of its own volition.  Each Party warrants and represents that
it has received independent legal advice from its attorney regarding its
decision with respect to the advisability of making and entering into this
Agreement.  Each Party warrants and represents that it will receive
independent legal advice from its attorney regarding its decision with respect
to the advisability of making and entering into any SOW.  Each Party
and its counsel has reviewed this Agreement and has participated in its drafting
and, accordingly, no Party shall attempt to invoke the normal rule of
construction to the effect that ambiguities are to be resolved against the
drafting party in any interpretation of this Agreement.  Each Party
and its counsel will review each SOW and will participate in its drafting and,
accordingly, no Party shall attempt to invoke the normal rule of construction to
the effect that ambiguities are to be resolved against the drafting party in any
interpretation of each SOW.




19.13.   Third Party
Beneficiaries. Each Services Agreement is entered into solely between the
Parties and, except for the Parties’ indemnification obligations, will not be
deemed to create any rights in any third parties or to create any obligations of
either Party to any third parties.




28




19.14.   Translation. This
Agreement, any and all agreements and instruments executed and delivered in
accordance herewith (including any other Services Agreements), along with any
amendments hereto or thereto, are drafted in the English language.




19.15.   Counterparts.  Each
Services Agreement may be executed in multiple counterparts, each of which shall
be deemed an original but all of which together shall constitute one and the
same instrument.  This Agreement, any and all agreements and
instruments executed and delivered in accordance herewith (including any other
Services Agreements), along with any amendments hereto or thereto, to the extent
signed and delivered by means of email, a facsimile machine or other means of
electronic transmission, shall be treated in all manner and respects and for all
purposes as an original signature, agreement or instrument and shall be
considered to have the same binding legal effect as if it were the original
signed version thereof delivered in person.




[Signature Page
Follows]


29




IN
WITNESS WHEREOF, the Parties have executed this Master Manufacturing Agreement
as of the date first written above.




Ojo Video
Phones, LLC




By:
WorldGate Communications, Inc., its sole member





By:
                /s/ George E. Daddis, Jr.Name:  George
      E. Daddis, Jr.Title:  Chief
      Executive Officer





Kenmec
Mechanical Engineering Co., Ltd.




By:
                /s/ Shun Fa NanName:
      Shun Fa NanTitle:
      Chief Executive Officer




GUARANTEE




WorldGate
Communications, a Delaware corporation and sole member of Ojo Video Phones, LLC,
hereby guarantees the payment by Ojo Video Phones, LLC of its obligations under
the foregoing Master Manufacturing Agreement.




WorldGate
Communications, Inc.




By:
                /s/ George E. Daddis, Jr.Name:  George
      E. Daddis, Jr.Title:  Chief
      Executive Officer









EXHIBIT
A




Reporting
Requirements




Kenmec
agrees to provide OJO the reports listed below.  OJO reserves the
right upon two (2) Business Days prior notice, to conduct an audit of Kenmec’s
books and records to confirm the accuracy of the reports described in this
Exhibit A.  Exhibit A may be amended from time to time by OJO upon
five (5) Business Days notice to Kenmec.




1.
            Inventory Material
      Liability Report.




a.
            Summary
      Report.  A monthly summary report of all OJO inventory
      liabilities in a spreadsheet or database
format.




b.
            Detailed
      Report.  A monthly detailed report from which the summary
      information will be generated that includes the following information for
      each key Component (as mutually agreed to by the Parties):  OJO
      Component part; inventory on hand and on order by OJO Component part; and
      minimum order quantities and lead times for each key OJO Component
      part.




2.
            Accounts Outstanding
      Payables to Kenmec.  A monthly report of accounts
      receivable owed by OJO to Kenmec that are aged 1-30, 31-90 and > 90
      days.  Kenmec will also report the average payment
      days.




3.
            Discontinuance
      Report.  A monthly report showing all open
      discontinuances and inventory of discontinued Components.  This
      report will provide details of current status of activities, the
      responsible contact for each Party, date of last buy availability, and
      date for closure.




4.
            Yield
      Report.  A monthly report detailing 1st
      pass test yield by Product.  Kenmec will also maintain records
      of test results and repair detail by Product for review upon
      request.




5.
            Shipment
      Report.  A monthly report comparing actual shipment to
      the Scheduled Shipment Date and acceptance by OJO in accordance with
      Section 5.2.




6.
            Additional Reporting
      Requirements.  Additional management reports as
      reasonably requested to allow OJO to measure Kenmec’s ongoing performance
      or otherwise.