Document:

Exhibit
4.2

[FORM OF NOTE]

HUMANA INC.

6.450% Senior Notes due 2016

	
  

  	
  PRINCIPAL AMOUNT

  
	
  REGISTERED

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CUSIP No.: 444859 AV 4

  
	
  No.

  	
  ISIN No.: US444859AV47

  

 

THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF
THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITARY OR A NOMINEE THEREOF. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR
IN PART FOR NOTES IN CERTIFICATED FORM, THIS NOTE MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TRUST COMPANY (THE “DEPOSITARY”)
TO A NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY TO THE
COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.

HUMANA INC., a Delaware corporation (the “Issuer” or
the “Company,” which terms include any successor corporation under the
Indenture hereinafter referred to), for value received, hereby promises to pay
to CEDE & CO., or registered assigns, the principal sum of
________________________ on June 1, 2016, and to pay interest thereon
(computed on the basis of a 360-day year of twelve 30-day months),
semi-annually in arrears on June 1 and December 1 (the “Interest
Payment Dates”) of each year, commencing on December 1, 2006, at the rate
per annum specified in the title of this Note from May 31, 2006 or the
most recent Interest Payment Date to which interest had been paid or duly
provided for.

The interest so payable and punctually paid or duly
provided for on any Interest Payment Date will as provided in the Indenture be
paid to the Person in whose name this Note (or one or more Predecessor
Securities) is registered at the close of business on the May 15 or November 15
(the “Record Date”) immediately preceding such Interest Payment Date. Except as
provided herein, payment of the principal of (and premium, if any) and interest
on this Note will be made at the office or agency of the Company maintained by
the Company for such purpose, in the Borough of Manhattan, The City of New
York, which initially will be in the corporate trust 

 

office of The Bank of New
York Trust Company, N.A., the Trustee for this Note under the Indenture,
located at 101 Barclay Street, New York, New York 10286, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.

Reference is hereby made to the further provisions of
this Note as set forth on the reverse hereof, which further provisions shall
for all purposes have the same effect as if set forth at this place.

Unless the certificate of authentication hereon has
been executed by or on behalf of The Bank of New York Trust Company, N.A., the
Trustee for this Note under the Indenture, or its successor thereunder, by the
manual signature of one of its authorized officers, this Note shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.

 2
 

 

IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed, manually or in facsimile, and an imprint or
facsimile of its corporate seal to be imprinted hereon.

Dated:  May 31, 2006

HUMANA INC.

By:                                                                                                              

Name: James H.
Bloem

Title: Senior Vice President and Chief
          Financial Officer

[FACSIMILE OF SEAL]

Attest:

By:                                                                                                              

Name: Joan O. Lenahan

Title: Corporate Secretary

CERTIFICATE OF AUTHENTICATION

This is one of the Securities of the series designated
therein described in the within-mentioned Indenture.

THE BANK OF NEW
YORK TRUST COMPANY, N.A.,

as Trustee

By:                                                                                  

Authorized
Signatory

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(Reverse of Note)

HUMANA INC.

 This Note is
one of a duly authorized issue of Securities of the Company designated as its
6.450% Senior Notes due 2016 (the “Notes”). The Notes are one of an indefinite
number of series of debt securities of the Company (the “Securities”), issued
or issuable under and pursuant to a base indenture, dated as of August 5,
2003 (the “Base Indenture”), between the Company and The Bank of New York Trust
Company, N.A. (as successor to The Bank of New York) (herein called the “Trustee,”
which term includes any successor Trustee under the Indenture), as supplemented
by a second supplemental indenture, dated as of May 31, 2006 (the “Second
Supplemental Indenture”; the Base Indenture as supplemented by the Second
Supplemental Indenture is herein called the “Indenture”), to which Indenture
and all indentures supplemental thereto (other than supplemental indentures
creating a different series of notes) reference is hereby made for a statement
of the respective rights thereunder of the Company, the Trustee and the Holders
of the Notes and the terms upon which the Notes are to be authenticated and
delivered. The terms, conditions and provisions of the Notes are those stated
in the Indenture, those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended, and those set forth in this Note. This Note
is one of a series designated on the face hereof initially issued in an
aggregate principal amount of $__________. The Company may, from time to time,
without the consent of the Holders, issue and sell additional Securities
ranking equally with the Notes and otherwise identical in all respects (except
for their date of issue, issue price and, if applicable, the first payment of interest
on the additional notes) so that such additional Securities shall be
consolidated and form a single series with the Notes.

The terms of other series of Securities issued under
the Base Indenture may vary with respect to interest rates or interest rate
formulas, issue dates, maturity, redemption, repayment, currency of payment and
otherwise as provided in the Base Indenture. The Base Indenture further
provides that Securities of a single series may be issued at various times,
with different maturity dates and may bear interest at different rates. All
terms used in this Note which are defined in the Indenture shall have the
meanings assigned to them in the Indenture.

This Note is not subject to any sinking fund.

If an Event of Default (other than an Event of Default
described in Section 501(5) or 501(6) of the Indenture, with
respect to the Company) with respect to the Notes shall occur and be
continuing, then either the Trustee or the Holders of not less than 25% in
aggregate principal amount of the Notes of this series then Outstanding may
declare the aggregate principal amount of the Notes of this series due and
payable in the manner and with the effect provided in the Indenture. If an
Event of Default specified in Section 501(5) or 501(6) occurs
with respect to the Company, all of the unpaid principal amount and accrued
interest thereon shall ipso  facto become and be immediately due
and payable in the manner and with the effect provided in the Indenture without
any declaration or other act by the Trustee or any Holder.

This Note may be redeemed at any time in whole, or
from time to time in part, at the option of the Company (such date of
redemption, the “Optional Redemption Date”) at the 

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Redemption Price (as
defined below) together with interest accrued thereon to the Optional
Redemption Date.

The “Redemption Price” shall equal to the greater of:

·                  100% of the principal amount of the Notes to be
redeemed; and

·                  the sum of the present values of the remaining
scheduled payments on the Notes to be redeemed consisting of principal and
interest, exclusive of interest accrued to the Optional Redemption Date,
discounted to the Optional Redemption Date on a semiannual basis (assuming a
360-day year consisting of twelve 30-day months) at the applicable Treasury Yield
plus 30 basis points plus accrued interest to the date of redemption.

The Notes called for redemption become due on the
Optional Redemption Date. Notices of redemption will be mailed by first-class
mail at least 30 but not more than 60 days before the Optional Redemption Date
to each Holder of Notes to be redeemed at its registered address. The notice of
redemption for the Notes will state the amount to be redeemed. On and after the
Optional Redemption Date, interest will cease to accrue on any Notes that are
redeemed. If less than all the Notes are redeemed at any time, the Trustee will
select Notes on a pro rata basis or by any other method the Trustee deems fair
and appropriate.

For purposes of determining the Redemption Price, the
following definitions are applicable:

“Comparable Treasury Issue” means the United States
Treasury security selected by an Independent Investment Banker as having a
maturity comparable to the remaining term of the Notes that would be utilized,
at the time of selection and in accordance with customary financial practice,
in pricing new issues of corporate debt securities of comparable maturity to
the remaining terms of the Notes.

“Comparable Treasury Price” means, with respect to any
Optional Redemption Date:

the average of the bid and the asked prices for the
Comparable Treasury Issue, expressed as a percentage of its principal amount,
at 4:00 p.m. on the third Business Day preceding that Optional Redemption
Date, as set forth on “Telerate Page 500,” or such other page as may
replace Telerate Page 500; or

if Telerate Page 500, or any successor page, is
not displayed or does not contain bid and/or asked prices for the Comparable
Treasury Issue at that time, the average of the Reference Treasury Dealer
Quotations obtained by the Company for that Optional Redemption Date, after
excluding the highest and lowest of such Reference Treasury Dealer Quotations,
or, if the Company is unable to obtain at least four such Reference Treasury
Dealer Quotations, the average of all Reference Treasury Dealer Quotations
obtained by the Company.

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“Independent Investment Banker” means either Citigroup
Global Markets Inc. or Wachovia Capital Markets, LLC, as selected by the
Company or, if both such firms are unwilling or unable to select the applicable
Comparable Treasury Issue, an independent investment banking institution of
national standing appointed by the Company.

“Reference Treasury Dealer” means Citigroup Global
Markets Inc. and its successors and four other primary U.S. government
securities dealers in New York City (each, a “Primary Treasury Dealer”)
selected by the Independent Investment Banker; provided, however, that if any
of the foregoing shall cease to be a Primary Treasury Dealer, the Company shall
substitute therefor another Primary Treasury Dealer.

“Reference Treasury Dealer Quotations” means, with
respect to each Reference Treasury Dealer and any Optional Redemption Date for
the Notes, an average, as determined by the Company, of the bid and asked
prices for the Comparable Treasury Issue for the Notes, expressed in each case
as a percentage of its principal amount, quoted in writing to the Trustee by
the Reference Treasury Dealer at 5:00 p.m., New York City time, on the
third business day preceding the Optional Redemption Date.

“Treasury Yield” means, with respect to any Optional
Redemption Date, the rate per annum equal to the semi-annual equivalent yield
to maturity, computed as of the third business day immediately preceding the
Optional Redemption Date, of the Comparable Treasury Issue, assuming a price
for the Comparable Treasury Issue, expressed as a percentage of its principal
amount, equal to the applicable Comparable Treasury Price for the Optional
Redemption Date.

The Indenture permits, with certain exceptions as
therein provided, the Company and the Trustee with the consent of the Holders
of more than 50% in principal amount of the Securities at the time Outstanding
of each series issued under the Indenture to be affected thereby, to execute
supplemental indentures for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of the Indenture or of
modifying in any manner the rights of the Holders of the Securities of such
series; provided, however, that
no such supplemental indenture shall, among other things, (i) change the
Stated Maturity of the principal of, or any installment of principal of or
interest on, any Security, or reduce the principal amount thereof or interest
thereon, if any, or any premium payable upon redemption thereof; or (ii) change
the Place of Payment on any Security or the currency or currency unit in which
any Security or the principal or interest thereon is payable; (iii) impair
the right to institute suit for the enforcement of any such payment on or after
the Stated Maturity thereof; (iv) reduce or alter the method of
computation of any amount payable upon redemption, repayment or purchase of any
Securities by the Company (or the time when such redemption, repayment or
purchase may be made); or (v) reduce the percentage in principal amount of
the Securities, the Holders of which are required to consent to any
supplemental indenture, without the consent of the Holder of each Security
affected thereby. The Indenture also contains provisions permitting the Holders
of more than 50% in principal amount of the Securities of each series at the
time outstanding, on behalf of the Holders of all the Securities of that
series, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences
with respect to such series, except a default in the payment of principal of or

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interest, if any,
on any Security of that series or a default with respect to a covenant or
provision of the Indenture which cannot be amended without the consent of such
Holder.

The Notes are issuable only in registered form without
coupons in denominations of $1,000 and integral multiples thereof. The Notes
shall be initially issued in the form of a Global Security. All payments of
principal of (and premium, if any) and interest on the Notes will be made to
the Trustee so long as the Notes are in the form of a Global Security. As
provided in the Indenture and subject to certain limitations therein set forth,
the Notes are exchangeable for a like aggregate principal amount of Notes as
requested by the Holder surrendering the same. If (x) the Depositary is at
any time unwilling or unable to continue as depository and a successor
depository is not appointed by the Company within 90 days after the Company
receives such notice or becomes aware of such ineligibility, (y) the
Company delivers to the Trustee a Company Order to the effect that this Note
shall be exchangeable or (z) an Event of Default has occurred and is
continuing with respect to the Notes, this Note shall be exchangeable for Notes
in definitive form and in an equal aggregate principal amount. Such definitive
Notes shall be registered in such name or names as the Depositary shall
instruct the Trustee.

As provided in the Indenture and subject to certain
limitations set forth therein and above, the transfer of this Note may be
registered on the Security Register of the Company, upon surrender of this Note
for registration of transfer at the office or agency of the Company in the
Borough of Manhattan, The City of New York, duly endorsed by, or accompanied by
a written instrument of transfer in form satisfactory to the Company duly
executed by, the Holder hereof or by his attorney duly authorized in writing,
and thereupon one or more new Notes of authorized denominations and for the
same aggregate principal amount will be issued to the designated transferee or
transferees.

No reference herein to the Indenture and no provisions
of this Note or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest on this Note at the time, place and rate, and in
the coin or currency, herein and in the Indenture prescribed.

No service charge shall be made for any such
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith.

Prior to due presentment of this Note for registration
of transfer, the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Note is registered as the owner
hereof for all purposes, whether or not this Note be overdue, and neither the
Company, the Trustee nor any such agent shall be affected by notice to the
contrary.

Certain of the Company’s obligations under the
Indenture with respect to Notes may be terminated if the Company irrevocably
deposits with the Trustee money or Government Obligations sufficient to pay and
discharge the entire indebtedness on all Notes, as provided in the Indenture.

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No recourse shall be had for the payment of the
principal of (and premium, if any), or the interest, if any, on this Note, or
for any claim based thereon, or upon any obligation, covenant or agreement of
the Company in the Indenture, against any incorporator, stockholder, officer or
director, as such, past, present or future, of the Company or of any successor
corporation, whether by virtue of any constitution, statute or rule of law
or by the enforcement of any assessment of penalty or otherwise; and all such
personal liability is expressly released and waived as a condition of, and as
part of the consideration for, the issuance of this Note.

The Indenture and the Notes shall be governed by and
construed in accordance with the laws of the State of New York.

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ASSIGNMENT/TRANSFER FORM

 

	
  FOR VALUE RECEIVED the
  undersigned registered Holder hereby sell(s), assign(s) and 

  
	
  transfer(s) unto (insert Taxpayer
  Identification No.)

  	
   

  
	
   

  	
   

  
	
   

  
	
  (Please
  print or typewrite name and address including postal zip code of assignee)

  
	
   

  
	
  the within Note and all rights thereunder, hereby
  irrevocably constituting and appointing

  
	
   

  
	
   

  	
  attorney to transfer said 

  
	
  Note on the books of the Company with full power of
  substitution in the premises.

  	
   

  
	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  
																

 

NOTICE:  The
signature of the registered Holder to this assignment must correspond with the
name as written upon the face of the within instrument in every particular,
without alteration or enlargement or any change whatsoever.

 

 9Exhibit 10.3

 

MANUFACTURING

AGREEMENT

 

 

between

 

 

MOTOTECH INC.

 

 

and

 

 

WORLDGATE COMMUNICATIONS, INC.

 

 

This agreement (the “Agreement”) is entered into and made effective as
of the 9th day of September, 2003 by and between MOTOTECH INC., a Taiwanese corporation,
having its principal place of business at No. 9, Park Ave. II, Science-Based
Industrial Park, Hsinchu 300, Taiwan, R.O.C. (hereinafter referred to as “Mototech”)
and    WORLDGATE COMMUNICATIONS, INC., a corporation
incorporated and existing under the laws of the State of Delaware, having its
principal place of business at 3190 Tremont Avenue, Trevose, PA, 19053
(hereinafter referred to as “Developer” and together with Mototech, the “Parties”
or a “Party” as the case may be).

 

RECITALS:

 

WHEREAS, Mototech is engaged in the business of developing,
manufacturing and selling various electronic products, including without
limitation cable modems and wireless data devices; and has developed
significant expertise with respect to such products;

 

WHEREAS, Developer has designed a videotelephone (the “Product”) and
desires to use Mototech’s expertise to assist Developer with the productizing
of the Product, including such things as design, cost reduction,
manufacturability and sourcing for the videophone;

 

WHEREAS, Mototech is willing to provide such assistance to Developer on
a contract basis

 

NOW, THEREFORE, in consideration of mutual promises and other good and
valuable consideration, receipt of which is hereby acknowledged, the parties do
hereby agree as follows:

 

1. TERM

 

The term of this Agreement is from the effective date entered above for
two (2) year.  Unless it is terminated on
an earlier date pursuant to this Section 1, this Agreement shall be
automatically renewed for successive one (1) year terms unless a Party gives
written notice to the other of its election not to renew this Agreement.

 

A. This Agreement may be terminated by either
Party for any reason at any time during the term of the Agreement.  Notice of termination must be submitted in
writing ninety (90) days in advance of the effective date of termination.
During that final 90 day period, Mototech shall, at Developer’s request
continue to manufacture and ship Product in accordance with the existing
delivery schedule on the Developer’s purchase orders (“POs”).

 

B. This Agreement shall terminate forthwith,
at the option of either Party by notice in writing to the other Party, upon the
occurrence of either one or more of the following events stated below:

 

•  in the event that the other Party ceases to
carry on its business or in the event the other Party becomes the subject of
any proceedings for the relief of debtors or otherwise becomes insolvent,
bankrupt, or makes an assignment for the benefit of creditors, or upon the
appointment of a receiver for the other Party, or its reorganization for the
benefit of creditors.

 

•  in the event that the other Party has failed
substantially in the performance of any material contractual obligation, not
remedied to other Party’s satisfaction, within sixty (60) days after written
notice to other Party specifying the nature of such default and requiring
remedy of the same.

 

2. PRODUCT DEVELOPMENT.

 

Exhibit A to this Agreement contains specifications for the Product to
be further developed hereunder, which specifications may be modified from time
to time pursuant to the provisions of this Agreement (as

 

 

such specifications are so modified, the “Development Specifications”).  Mototech hereby agrees to and accordingly
will so design and develop the Product for Developer, in conformity with the
Development Specifications.

 

3. DEVELOPMENT PROCEDURES, SCHEDULE AND
REPORTING

 

Developer and Mototech shall perform their respective obligations
hereunder in compliance with the procedures set forth in Exhibit B to this
Agreement (the “Development Procedures”), including without limitation the
schedule and reporting/program review requirements contained therein.  The Parties agree and acknowledge that the
aforesaid procedures are critical to this Agreement, and without limiting their
obligations hereunder, shall reasonably notify the other promptly of any
circumstance that may affect their ability to comply with such procedures,
including the schedule.

 

4. DEVELOPMENT COSTS

 

Subject to Mototech’s adherence to the Development Procedures,
Developer shall pay for Mototech’s services under this Agreement in accordance
with the milestone payment schedule set forth within such Development
Procedures.  Except as set forth herein
all costs and expenses incurred or payable by Mototech in connection with the
performance of its services under this Agreement shall be the responsibility of
Mototech.

 

5. INTELLECTUAL PROPERTY RIGHTS

 

A. Mototech and Developer have executed a Non-Disclosure Agreement in
the form of Exhibit C to this Agreement, either prior to or contemporaneously
with their execution and delivery of this Agreement.  The provisions of such Non-Disclosure
Agreement shall be controlling with respect to the use and disclosure of information
hereunder.

 

B. In the event that the Products are to bear any trade names,
trademarks, insignias, logos and the like, which are owned or controlled by any
Developer affiliated company (“Developer Marks”), such use shall be strictly in
accordance with Developer’s written directions and nothing contained in this
Agreement or in any PO shall transfer or grant to Mototech any right or
interest in the Developer Marks except use thereof in the supply of Products to
Developer pursuant to the PO.

 

C. Mototech agrees that the tools, dies, drawings, designs,
specifications, procedures, artwork, materials, components, etc., consigned,
supplied or paid for by Developer shall be and remain Developer’s property,
shall be used only on Developer’s orders, and shall be held by Mototech for
Developer or promptly returned to Developer, as Developer directs.  Mototech will take such reasonable actions as
are necessary to ensure that such Developer property does not become subject to
any lien or adverse interest of any other Party and shall account for and keep
the same in good working condition and fully covered by insurance at all times
without further expense to Developer.

 

D. As between the Parties hereto the ownership of and all rights in and
to the such Product (“Development Technology”) as developed hereunder, but
excluding any of Mototech’s Background Technology as defined below, shall vest
in and be owned by Developer. Accordingly, and for all purposes hereof, to the
extent of any contribution as a result of the services rendered hereunder by
Mototech, the resulting Development Technology shall be deemed a work for hire,
which shall be owned by Developer and which is hereby assigned to Developer. By
way of example and not limitation, Developer’s right to the Development
Technology shall include all designs, documentation, methods, processes,
inventions, works and other design, development and manufacturing materials and
other related information resulting from the development efforts hereunder,
including without limitation all patents (and all applications for the same
whether in process or not), copyrights (and all applications for the same
whether in process or not), trade secrets and other intellectual and property
rights in or based upon the foregoing, in whole or in part. As used herein
Background Technology shall mean any designs, documentation, methods,
processes,

 

 

inventions, works and other design, development and manufacturing
materials and information relating to this development effort and in existence
and owned by such Party prior to the commencement of the services hereunder, as
well as all patents (and all applications for the same), copyrights (and all
applications for the same), trade secrets and other intellectual and property
rights in or to the extent based upon the foregoing, and owned by a Party
hereto prior to the date of this Agreement (collectively the “Background
Technology”).  Each Party retains all
ownership interests in their Background Technology and except as required for
the operation of this Agreement or as authorized in writing by the Party owning
the same, all such Background Materials and all copies thereof shall be
returned to such Party owning the same at the termination of this Agreement.
Except as expressly set forth in this paragraph, nothing contained herein or in
any PO shall transfer or grant to Mototech or any other party, any of Developer’s
rights in the Product or any Development Technology except the use thereof as
reasonably required for Mototech’s performance of its obligations hereunder.

 

E. Products ordered hereunder to be made with use of Developer’s
confidential information, designs, trademarks, trade names, or other
intellectual property rights, shall be furnished by Mototech exclusively to
Developer or such designees as it may expressly authorize in writing.  Developer expressly reserves the right to
have multiple sources of manufacture and supply for the Product.

 

F. In the event Mototech devises and incorporates any new features or
design into any Products made hereunder, which are not otherwise deemed to be
Development Technology, Mototech hereby grants to Developer the right of
reproduction of such items, together with a worldwide, royalty-free,
nonexclusive, irrevocable license to make, have made, use and distribute such
new features and designs as part of the Product, whether or not manufactured or
supplied by Mototech.

 

6. REPRESENTATIONS AND WARRANTIES

 

The Parties make the following representations and warranties for the
benefit of each other hereunder:

 

A.                                   No
Conflict.  Each Party represents and warrants
that it is under no obligation or restriction, and it will not assume or incur
any such obligation or restriction, that does or would in any material way
interfere or conflict with, or that does or would present a conflict of
interest concerning its obligations hereunder.

 

B.                                     Ownership
Rights.  Each Party represents and
warrants that (1) it has and will have full and sufficient title and/or right
and interest to grant the title, rights and/or licenses to be granted by it
pursuant to this Agreement; (2) neither the execution or performance by a Party
under this Agreement, nor the consummation of any transactions contemplated
herein by a Party, does or will (i) violate any law, order, regulation or
ruling applicable to the Products or the Development Technology, (ii) to the
best of each Party’s knowledge and belief, their efforts and deliverables
hereunder will not infringe any intellectual or other property, personal or
contract rights of any third party; and (3) no claim (whether or not embodied
in an action, past or present) of any such infringement as aforesaid, has been
threatened or asserted, nor is any such a claim pending, against a Party (or,
insofar as such Party is aware, any entity from which such Party has obtained
any rights related to the Products or the Development Technology).

 

C.                                     Performance.  Mototech will perform all work hereunder in a
professional manner and with corresponding diligence, expertise and skill.

 

D.                                    Deliverables
Warranty.  Mototech warrants that the
required that it’s required deliverables hereunder shall conform to the
corresponding requirements of the Development Specifications and the
Development Procedures.

 

7. SUPPLY OF PRODUCTS

 

 

Mototech shall manufacture and sell to the Developer and the Developer
shall purchase from Mototech the Products in accordance with the following
procedure:

 

A. The agreed manufacturing lead-time required by Mototech is sixty
(60) working days, and the Developer agrees to place Purchase Orders in a
timely fashion taking cognizance of the lead-time.  Mototech agrees to confirm the Developer’s
requested shipment dates within five (5) working days by FAX, or E-Mail.

 

B. Developer shall provide to Mototech a non-binding three months
rolling forecast on a monthly basis.

 

C. From time to time during the term hereof Developer may furnish POs
to Mototech to purchase Products hereunder. 
Such POs shall reference this Agreement, describe the nature and
quantity of the Products being ordered, and set forth the requested release or
shipment dates.  Products can only be
purchased hereunder with the issuance of a PO by Developer.  In the event such POs are placed by telephone
or facsimile, they shall be promptly confirmed by Developer in writing.  Providing such POs are placed in accordance
with the terms of this Agreement, including without limitation any lead-time
requirements and forecasting procedures set forth herein, they shall be
accepted by Mototech. Mototech shall not, however, be required to accept any PO
hereunder which requires shipment or release of quantities exceeding such
forecasts by more than ten (10%) percent. 
The parties will from time to time discuss Mototech’s production
capacity for the Products, taking into account Developer’s forecasts, currently
scheduled Product shipments, and the POs currently placed for the Product.
Acceptance of any POs by Mototech may be made by signing and returning the
attached acknowledgment copy of the PO, or by other express acceptance.  If Mototech uses its own form to accept a PO,
it is understood that such use is for Mototech’s convenience only and that
Developer hereby refuses to assent to any terms or conditions contained
therein, whether conflicting with or in addition to those contained herein, and
such conflicting and/or additional terms and conditions shall be of no force or
effect.

 

D. Except as set forth herein Developer shall have the right at any
time and from time to time, to make changes of any kind or nature with respect
to a PO, including without limitation, cancellation or rescheduling of the PO.  If any such change causes a material increase
or decrease in Mototech’s cost or the time required for the performance as set
forth herein (each as determined in accordance with generally accepted
accounting and manufacturing practices which are consistently applied,)
Mototech may, at its election, require the payment of an equitable change
adjustment.  Developer may, however, at
any time and from time to time, without further cost or liability (including
any equitable change adjustment), by written notice to Mototech at least thirty
(30) days prior to a required delivery date, reschedule any POs, in whole or in
part, to a later rescheduled delivery date, not more that thirty (30) days from
the original scheduled delivery date. 
Such equitable change adjustment shall be Mototech’s only remedy for
such change by Developer.  Such equitable
change adjustment shall not include any costs or expenses of Mototech or
Mototech’s suppliers or subcontractors which Mototech could reasonably have
avoided, such as, by way of example and not limitation, charges for any work
done after receipt of the notice of cancellation (other than as required by
Developer).  In no event shall any
equitable change adjustment for a cancellation of a PO exceed the purchase
price of the Products canceled, nor shall any such charge apply to goods or
materials which are reasonably returnable by Mototech or otherwise useable or
can be sold in the normal course of Mototech’s business without violation of
the terms of this Agreement.  At its option,
Developer shall be entitled to delivery of any Products (at the current state
of production) and the costs (cost savings) of which are included within such
cancellation charge. Any claim for an equitable adjustment hereunder shall,
however, be made by Mototech as soon as is practical, but no later than
forty-five (45) days from the date such change is requested.  Mototech agrees to accept any such changes
subject to the provisions of this Section and continue its diligent performance
under the PO as so changed, which PO shall be modified in writing accordingly
to reflect such change. Unless agreed in writing by Developer, Mototech shall
not purchase materials, or make commitments or production arrangements, in
excess of the amount, or in advance of the time reasonably necessary to meet
the required delivery date as set forth on a PO.

 

 

E. Mototech shall mark, package, store, transport and ship all Products
to reasonably ensure (i) delivery thereof to the identified ultimate
destination in safe condition, (ii) compliance with good commercial practices
and all requirements of the carrier and destination authorities and (iii)
compliance with any reasonable special instructions of Developer. All invoices,
shipping documents, exterior packaging and correspondence related thereto shall
indicate the PO number and include suitable markings and information to
reference the covered Products.  All
shipments shall be accompanied by the appropriate shipping documents, including
without limitation, applicable customs and export documentation and an itemized
packing list indicating the PO number, description of the Products and total
quantity by “lot” for such Products. 
Developer’s count and/or weights shall be conclusive on shipments not
accompanied by a conforming packing list. 
All Products shall be insured for their replacement value with Developer
named as an additional loss payee with respect to the same to the extent of its
interest therein.  All Products shall be
manufactured and delivered to Developer in accordance with the required
delivery dates, time being of the essence. 
Mototech shall immediately notify Developer by telephone of the
occurrence of any delay and the period of such delay in the scheduled and or
actual delivery of any PO or any portion thereof with respect to the required
delivery date.  If such delay in delivery
is expected to be, or is for a period of more than five (5) days and is not due
to Developer’s fault, Developer may, at its option, and by written notice to
Mototech (a) agree to reschedule the delivery date for the delayed PO or
delayed portion thereof; or (b) require the Mototech to ship the Product by
expedited air freight or other premium means and charge the Mototech with the
cost difference.

 

F. Mototech shall invoice Developer for the Products upon the actual
shipment thereof to the Developer, and each invoice shall (i) reference the
applicable PO number, (ii) cover only a single PO or delivery thereunder, (iii)
be itemized with respect to the Products so delivered, and (iv) be tendered to
the appropriate address as set forth on the PO. 
Such invoices shall be payable in accordance with the payment terms set
forth on the face of such PO, or if none, payment shall be due thirty (30) days
from, and any payment period or discount related thereto shall begin upon, the
later of Developer’s receipt of the invoice or the Products.  Developer may deduct from any payment due to
Mototech or set-off against any claim by Mototech any amount which is due to
Developer by Mototech for any reason, including, among other reasons, any
charges caused by deviations from the terms, conditions and provisions of a
PO.  Unless otherwise set forth on the
face of the PO, title and risk of loss with respect to the Products hereunder
shall pass to Developer upon Developer’s receipt of the conforming Products at
the destination designated by Developer on the face hereof.  Prior to passage of title to Developer the
Products shall be held by or on Mototech’s behalf without risk or expense to
Developer, and any payments received by Mototech for the purchase of such
Products shall be held in trust by Mototech pending such title transfer.

 

G. In no event shall Mototech, without Developer’s prior written
consent, (i) make any changes to the Product, or (ii) make any changes to the
manufacturing process for the Product which detrimentally affect the Product’s
manufacturability, appearance, operation, reliability, performance or quality

 

8. PRICES AND PAYMENT

 

A. Mototech agrees to supply the Developer with Products at the prices
set forth in Exhibit A.

 

B. Unless the key component(s) costs vary more than, either increase or
decrease, ten (10%) percent of its original costs, the prices shall remain
fixed and firm for the contract period. The parties agree to re-negotiate the
price in good faith upon the occurrence of such cost changes.

 

C. All prices shall be inclusive of packing FOB Taiwan.

 

9. WARRANTY AND QUALITY CONTROL

 

 

A. Mototech warrants for a period of twelve months from the date of
shipment that all units supplied under this Agreement shall be free from
defects in material and workmanship, and shall comply in all respects with the
Development Specifications.

 

B. Mototech’s sole responsibility under said warranty shall be, at its
cost and expense and within a reasonable period (not to exceed sixty days)
after the return thereof to Mototech under the provisions hereof, to repair or
replace any Product that fails to comply with the above warranty (“Defective
Product”). If the cause of a Defective Product is not corrected and/or the
affected Products are not repaired or replaced within such period, Developer
may, at its option and by written notice to Mototech at any time and from time
to time thereafter during the continuance of Mototech’s failure to correct the
Product Failure: (i) without liability or charge, cancel any PO or affected
portion thereof and return for a full refund any Products to which the Product
Failure relates, or (ii) make such corrections, repairs and replacements as are
required with respect to the Product Failure and charge Mototech for the costs
incurred in so doing if such costs has approved by Mototech within thirty days
of receipt of notice of the estimated amount of such costs, which approval
shall not be unreasonably withheld or delayed. 
All such monies as may become payable to Developer hereunder shall be
promptly paid by Mototech, or at Developer’s option offset against any monies
due to Mototech. Prior to returning the defective Product, the Developer must
contact Mototech to retain a Return Material Authorization (RMA) number, which
shall not be unreasonably denied or withheld. 
The (RMA) number shall be noted on the shipping carton and on all
shipping documents.  The transportation
costs incurred with respect to the return of such products shall be borne by
the Developer when returned to Mototech, and by Mototech when returned to the
Developer.

 

C. Any repairs or maintenance required by Developer outside of warranty
period shall be provided by Mototech and charged to the Developer at a reasonable
material cost basis and Mototech’s standard rates of labor in effect at that
time.

 

D. Mototech shall conduct such routine sampling, testing and analysis
as reasonably necessary to verify that the Products comply with the Mototech’s
warranty hereunder, and shall maintain suitable records to analyze and track
Defective Products and trends associated therewith.  Upon Developer’s request Mototech shall
furnish Developer with a summary of the same. 
Mototech agrees to monitor its quality and to improvement systems and
procedures, and establish controls on critical parameters and key processes as
reasonably required by good commercial practices or as may be reasonably
specified by Developer.  Mototech shall
durably encode the manufacture date and other material identification
information as may be reasonably requested by Developer on the outside of each
Product by bar coding or such other method as may be set forth in the
Specification.  Developer or its agents
may inspect the Products upon receipt and/or at any time prior thereto at
Mototech’s facility or otherwise. Neither receipt nor payment of or for the
same shall be construed to constitute an acceptance of any Products not in
compliance with the requirements of this Agreement and the PO, including without
limitation Mototech’s warranty herein. 
Developer’s required shipping or release schedule, quantity requirements
and/or shipping instructions hereunder. 
Developer reserves the right to refuse to accept Products which do not
conform with such requirements.

 

E. The warranty as set forth in this Section 9 is in lieu of all other warranties, whether expressed,
implied or statutory, including but not limited to implied warranties of
merchantability and fitness for a particular purpose. The repair and replacement
service will not cover for the Products that were misused, unauthorized fixing
or by other reasons beyond Mototech’s fault.

 

10. LIABILITY

 

In no event shall either Party be liable, whether in contract, in tort
or any other reason for
incidental, consequential, indirect or special damages or liabilities, or for
(i) loss of revenue, loss of business or other financial loss arising out of or
in connection with the sale, lease, maintenance, use, performance, failure or
interruption of the Products, or (ii) any loss, property damage, personal
injury or expense, including legal expense, incurred by any employee, agent, or
invitee of the other Party, regardless of how caused.

 

 

11. INDEMNITY

 

A.
Subject to subsection B below, if the Product purchased from Mototech under
this Agreement or used in connection therewith or anything done in relation
thereto shall infringe or to be alleged to infringe any patent, registered
design, trademark, copyright or other intellectual property right, Mototech
shall indemnify the Developer against all claims, damages, expenditure and
liability which the Developer may sustain or incur by reason of or in
connection with such infringement or alleged infringement provided that
Mototech receives prompt written notice of all such Intellectual Property
Claims, and all commercially reasonable assistance in the defense of such
claims. Mototech shall have sole control of any defense and any settlement. If
the use or sale of any Product as contemplated under this Agreement is enjoined
as a result of any Intellectual Property Claims, then Mototech shall at its
option, (i) obtain for Developer, at its expense, any required license for
Developer to use, market or sell the Product as contemplated by this Agreement;
or (ii) redesign the infringing portion to be non infringing while maintaining
the original function; or (iii) replace the infringing product with an
equivalent, non-infringing product approved by Developer.

 

B. This indemnity shall not apply to infringements caused by designs modifications
made by the Developer or designs (including Development Specifications)
provided by Developer if but for the design or modification such infringement
would not occur.

 

12. TERMINATION

 

Any NOTICE hereunder shall be deemed to have received if received by
facsimile transmission followed by receipt of original notice within seven (7)
days after it has been deposited in the mail, proper postage prepaid and
registered, addressed as follows:

 

	
  To Mototech:

  	
   

  	
  To Developer:

  
	
   

  	
   

  	
   

  
	
  Mototech Inc.

  	
   

  	
  WorldGate Communications, Inc.

  
	
  No. 9, Park Ave., III,

  	
   

  	
  3190 Tremont Avenue

  
	
  Science-Based Industrial Park

  	
   

  	
  Trevose, Pa

  
	
  Hsinchu 300, Taiwan, R.O.C.

  	
   

  	
   

  
	
  Tel: +886-3-5783381

  	
   

  	
  215-354-5100

  
	
  Fax: +886-3-5641583

  	
   

  	
  215-354-1049

  
	
   

  	
   

  	
   

  
	
  Attn.:                                       

  	
   

  	
   

  

 

 

13. MISCELLANEOUS

 

A. Assignment.  This Agreement
shall be binding upon the parties hereto and their respective successors and
assigns, with the further understandings, however, that neither Party shall
have the right to assign this Agreement (or any or its rights hereunder) to any
person, firm or corporation in the absence of

 

 

having received the other Party’s prior written consent therefore,
which consent shall not be unreasonably withheld or denied.

 

B. Entire Agreement.  This
Agreement supersedes all prior agreements either written or verbal and this
Agreement along with the Exhibits referenced herein (as the same may be amended
in accordance herewith) contain the entire Agreement between the parties and
may not be altered, amended or modified, except by formal agreement in writing
signed by duly authorized representatives of both parties.

 

C. Relationship of Parties.  The
relationship of Developer and Mototech as established under this Agreement
shall be and at all times remain one of independent contractors, and neither
Party shall at any time or in any way represent itself as being a dealer, agent
or other representative of the other Party or as having authority to assume or
create obligations or otherwise act in any manner on behalf of the other Party.

 

D. Governing Law.  This Agreement
shall be interpreted and construed, and the legal relations created herein
shall be determined, in accordance with the laws of the state of New York.

 

E. Arbitration.  Any dispute,
controversy or claim arising out of or relating to this Agreement or to a
breach thereof, including its interpretation, performance or termination, shall
be finally resolved by arbitration.  The
arbitration shall be held in Honolulu, Hawaii in accordance with the rules of
American Arbitration Association.  The decision
of the arbitrators shall be final and binding upon the parties hereto, and the
expense of the arbitration (including without limitation the award of attorneys’
fees to the prevailing Party) shall be paid as the arbitrators determine.  The decision of the arbitrators shall be
executory, and judgment thereon may be entered by any court of competent
jurisdiction.  

 

F. Force Majeure.  Neither Party
shall be held responsibility for any actions that are not under their control,
which may breach the above contract in any way.

 

G.  Waiver.  A waiver of any breach or any provision of
this Agreement shall not be construed as a continuing waiver of other breaches
of the same or other provisions of this Agreement.

 

H. Survival of Contents. 
Notwithstanding anything else in this Agreement to the contrary, the
parties agree that Sections 5, 6, 9-13, as well as any obligations or rights
which by the terms hereof have accrued, shall survive the termination or
expiration of this Agreement to the extent required thereby for the full
observation and performance by any or all of the parties hereto.

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
causing their duly authorized representatives (officers) to sign below as the
date first written above.

 

	
   

  	
  MOTOTECH INC.

  	
  WORLDGATE INC.

  
	
   

  	
   

  
	
  By:

  	
  /s/ K.Y. Chou

  	
   

  	
  By:

  	
  /s/ Hal Krisbergh

  	
   

  
	
   

  	
   

  
	
  Name: K.Y. Chou

  	
  Name: Hal Krisbergh

  
	
  (Print)

  	
  (Print)

  
	
   

  	
   

  
	
  Title: Chairman and President

  	
  Title: Chairman and CEO

  
	
   

  	
   

  
	
  Date: September 9, 2003

  	
  Date: September 11, 2003

  
						

 

 

Exhibit A

 

PRODUCT SPECIFICATIONS

 

 

Ojo 1000

Brief Functional and Technical Specification

PN 70501002-B03

2005, June 8

 

 

Document History

 

	
  Rev.

  	
   

  	
  Description of Changes

  	
   

  	
  Requested By

  	
   

  	
  Authored By

  	
   

  	
  Date

  	
   

  
	
  B01

  	
   

  	
  Initial Draft. Dervied from 71001001-15 Ojo 1000
  Product Requirements Specification mark-up and 71301004-01 Ojo 1000 Product
  Specification Sheet

  	
   

  	
  Rich Westerfer

  	
   

  	
  Colin Crowe

  	
   

  	
  20050605

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B02

  	
   

  	
  Edits to requirements per Rich.

  	
   

  	
  Rich Westerfer

  	
   

  	
  Colin Crowe

  	
   

  	
  20050608

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B03

  	
   

  	
  Edits to document per Randy Gort.

  	
   

  	
  Randy Gort

  	
   

  	
  Colin Crowe

  	
   

  	
  20050608

  	
   

  

 

 

1                                         Introduction

 

Overview

 

This
document defines the requirements for the 1.0 release of the Ojo video phone.
Included are individual requirements for hardware, systems, software, user
interface and user experience.

 

Document Terminology

 

 

	
  TERMINOLOGY

  	
   

  	
  PRIORITY

  	
   

  	
  DESCRIPTION

  	
   

  
	
  Shall

  	
   

  	
  High Priority

  	
   

  	
  A must-have

  	
   

  
	
  Will

  	
   

  	
  Medium Priority

  	
   

  	
  Perceived as a necessity but not required to meet minimum product
  requirements.

  	
   

  
	
  May

  	
   

  	
  Low Priority

  	
   

  	
  Would be nice to have if time, resource, and development constraints
  allow.

  	
   

  

 

Definitions

 

Call
- the event that begins when one telephone device connects to another and ends
when that connection is terminated.

 

Call
cleanup - the process of disconnecting a phone call.

 

Call
setup - the process of using a phone device to initiate a connection with
another phone device.

 

Handset
- a device that is used for audio-only calls, or for audio privacy when engaged
in video calls.

 

Headend
components - all hardware components that are required for inclusion in a cable
headend facility to enable video and audio phone communications.

 

Household
components - all hardware components beyond the video phone that are required
within the user’s house to enable video and audio phone communications.

 

iLBC - Internet Low Bitrate Codec.

 

SIP
(Session Initiation Protocol) - a signaling protocol for real-time Internet
conferencing, telephony, presence, event notification, and instant messaging.

 

System
- the entire collection of hardware, firmware and software, including cable
headend equipment, required to make the product work.

 

UNIT
– the device’s main unit, excluding the handset and power supply.

 

Video
call - a phone call that includes both audio and video.

 

Video
phone - a collection of equipment, software, and firmware, including the UNIT,
the handset, and the power supply, used for making video calls.

 

 

2                                         Requirements

 

1.               General Requirements

 

This
section specifies basic product requirements that Ojo must meet to satisfy the
high-level definition of the product, its components, and expectations of its
performance.

 

1.1.           The product shall be a video phone suitable
for use in consumer households.

 

1.2.           The product shall include a UNIT that contains
the following:

 

1.2.1.       The UNIT shall include a handset cradle and
charger.

 

1.2.2.       The UNIT shall contain an interface that
contains all hardware necessary for the video phone to connect to the cable/DSL
modem and the PSTN line.

 

1.2.3.       The UNIT shall contain one Ethernet RJ-45
jack.

 

1.2.4.       The UNIT shall contain one RJ-11 phone jack
for connection to an analog phone line.

 

1.3.           The product shall include a cordless handset,
a portable device that contains a microphone and speaker for audio-only calls and
for audio privacy during video calls.

 

1.3.1.       The handset will include a keypad and
navigation device for data entry and menu navigation, and a display.

 

1.3.2.       The handset shall have an electrical
interface to the UNIT for power charging.

 

1.3.3.       The handset shall be a consumer-replaceable
component.

 

1.4.           The product shall include an external power
supply compatible with North American power supplies.

 

1.4.1.       The DC input of the power supply will be 12
V.

 

1.4.2.       The DC current of the power supply will be
1.5 to 3 A (typical).

 

1.4.3.       The UNIT will consume ~30 W.

 

1.4.4.       The product will include a power source that
accepts input voltage ranging from 100 to 240 VAC at 50/60 Hz

 

1.4.5.       The external power supply shall be a consumer
replaceable component.

 

1.5.           The product shall include component
interconnection and power cables:

 

1.5.1.       RJ-11 cable (8ft)

 

1.5.2.       RJ-45 cable (8ft)

 

1.5.3.       Product power supply cable (minimum length
6ft)

 

1.6.           The product shall include instructions for
product installation, setup and operations.

 

1.7.           All in-home components shall be consumer
installable.

 

1.7.1.       Installation shall not require specialized
tools or knowledge.

 

1.7.2.       Installation and provisioning will not
require more than fifteen minutes under typical installation conditions.

 

1.7.3.       Handset battery replacement shall not require
specialized tools or knowledge.

 

1.7.4.       Diagnostic functions shall be provided such
that a consumer guided by a customer service representative could provide
useful and meaningful feedback.

 

1.8.           The product shall meet regulatory
requirements.

 

1.8.1.       The product shall meet all specifications
required by US regulatory authorities (FCC).

 

1.8.2.       Applicable product components shall be
designed and certified to meet UL requirements.

 

1.9.           The product shall meet standards for power
consumption.

 

1.10.     The UNIT shall support an inactivity time-out
for the display.

 

 

1.10.1.               Inactivity time-out shall be activated when
the unit has not detected any display related activity in a configurable time.

 

1.10.2.               The default time before an inactivity
time-out shall be two minutes.

 

1.11.     Display related activity will include
incoming or outgoing video calls, activation of any menus, activation of
features that require the display, and any user input such as key presses.

 

1.12.     Return to an active state shall occur within
two seconds of the input that triggered the active state. (Numeric key presses
will show on LCD; all other key presses will wake unit.)

 

1.13.     Handset battery charging shall be accomplished
by placing the handset in the UNIT while the UNIT is connected to an active
power source.

 

1.14.     User-configured information and critical
function data shall remain in the unit for a minimum of three years.

 

1.15.     The product shall meet minimum requirements
for operation, shipping and storage under certain environmental conditions.

 

1.15.1.               The product shall be operable withstanding
humidity of 0 to 95% non-condensing.

 

1.15.2.               The product shall be operable withstanding
temperatures of 10 to 40oC.

 

1.15.3.               The product shall be operable after
withstanding electrostatic shock to 15kV.

 

1.15.4.               The product shall sustain no damage in
storage or shipping withstanding humidity of 0 to 100% non-condensing.

 

1.15.5.               The product shall sustain no damage in
storage or shipping withstanding temperatures of -10 to 60oC.

 

1.15.6.               The product shall sustain no damage in
storage or shipping withstanding—

 

1.15.6.1.             Frequency Rage: 8 – 33.3Hz.

 

1.15.6.2.             Amplitude: 1.3mm

 

1.15.6.3.             Sweep: 33.3~400Hz

 

1.15.6.4.             Acceleration: 3G

 

1.15.6.5.             Cycle: 15min

 

1.15.6.6.             X/Y: 2 hours for each direction, 4 hours for
Y direction

 

1.15.7.               The product shall sustain no damage when
dropped in its shipping carton from heights up to three feet.

 

1.15.8.               The product shall sustain no damage when
dropped in its consumer packaging from heights up to two feet.

 

1.15.9.               The product shall sustain no damage when
dropped from heights up to one foot.

 

1.15.10.         The product shall not exceed maximum failure
rates.

 

2.               System Requirements

 

This
section describes requirements for the overall system, the entire collection of
hardware, firmware and software required to make the product work, including
cable headend equipment.

 

2.1.           The product shall support SIP technology.

 

2.2.           The product shall operate at the required
bandwidth.

 

2.2.1.       The total average bandwidth required for
video phone calls shall be configurable to operate on systems with 128Kbps
upstream. Typical rate may be 150Kbps. 
Total average bandwidth will be user-adjustable between 100 and 250 Kbps.

 

2.3.           The product shall meet basic system
requirements:

 

2.3.1.       There may be no Ojo-specific equipment
required in the MSO headends or DSL central offices.

 

2.3.2.       Data Center functionality may be capable of
being distributed, with Multiple System Operator (MSO) capability to add its
own Data Center.

 

 

2.3.3.       The product/system shall provide a method to
ensure a high quality of service during IP based calls.

 

2.3.3.1.       Ojo shall have high quality audio and video
performance on Ojo-to-Ojo calls, with a typical one way data latency of less
than CONFIDENTIAL TREATMENT REQUESTED ms.

 

2.3.3.2.       Ojo shall have high quality audio and video
performance on Ojo-to-Ojo calls, with a typical data jitter of less than
CONFIDENTIAL TREATMENT REQUESTED ms.

 

2.3.3.3.       Ojo shall have high quality audio and video
performance on Ojo-to-Ojo calls, with a typical data packet loss of less than
CONFIDENTIAL TREATMENT REQUESTED packet loss could cause perceptible video
artifacts, but the system will operate to CONFIDENTIAL TREATMENT REQUESTED
loss.

 

2.3.4.       The system shall provide error concealment
and recovery.

 

2.4.           Product software updates shall be
downloadable.

 

2.4.1.       Application software shall be downloadable.

 

2.4.1.1.       Downloads shall be able to be initiated by
the Ojo.

 

2.4.1.2.       User settings shall be preserved during
application software or OS software revision/update.

 

2.4.1.3.       Incomplete download or incomplete
installation of application software or OS software shall not negatively impact
the functionality of the product in any way that is not easily recovered from.

2.4.1.4.       In the event of unsuccessful installation of
OS software, the system shall be able to revert back to a previous version of
the OS.

 

2.4.1.5.       In the event of unsuccessful installation of
application software, the system shall be able to revert to a previous version
of the software and return to full functionality.

 

2.4.1.6.       The video phone will not be out of service
for more than ten minutes during OS and application software updates and
downloads.

 

2.4.1.7.       User notification that an update is ready for
install shall be provided.

 

2.4.1.8.       All downloaded production software shall be
interoperable with at minimum two previous minor released versions of software.

2.5.           The product shall be capable of interfacing
via Ethernet to DOCSIS 1.0 (and higher) cable modems.

 

2.5.1.       The product will support DOCSIS 1.2 modems
and infrastructure.

 

2.5.2.       The product may support DOCSIS 2.0 modems and
infrastructure.

 

2.5.3.       The product may support EuroDOCSIS.

 

2.6.           The product will be capable of interfacing
via Ethernet to DSL modems behind a router.

 

2.7.           The product shall work with a changing IP
address.

 

2.8.           The product shall use DHCP.

 

2.9.           The product shall support ARP.

 

2.10.     Multiple Ojo video phones with unique IP
addresses in the same household will be supported.

 

2.10.1.               Individual Ojo video phones shall have unique
user settings.

 

2.10.2.               Multiple Ojo video phones within a household
shall have unique phone numbers.

 

2.11.     The product shall support a user configurable
Phonebook that includes telephone numbers, names and caller ID images.

 

2.11.1.               The Phonebook will support a minimum of 100
entries.

 

2.11.2.               The Phonebook shall support audio-only and
video-and-audio phone numbers.

 

2.12.     The product shall support video and audio
caller ID.

 

2.12.1.               The system will automatically locate caller
ID from the Ojo’s Phonebook based on an entered phone number.

 

2.13.     The product shall capture received and dialed
calls and store them in a calls list.

 

 

2.14.     Received calls shall be stored separately
from dialed calls.

 

2.14.1.               Up to 20 received and 20 sent calls shall be
stored in the calls list.

 

2.14.2.               After the 20th stored call, new calls replace
oldest calls and lists display the last call at the top of the list.

 

3.               Mechanical Rqeuirements

 

This
section describes the physical characteristics of the product and its
components.

 

3.1.           The user interface shall meet these
requirement:

 

3.1.1.       The UI shall provide language support for
North American English.

 

3.2.           The product shall have clearly labeled
inputs, outputs, and LEDs:

 

3.2.1.       The UNIT shall have an RJ-45 jack, for the
modem, labeled: Router / Modem

 

3.2.2.       The UNIT shall have an RJ-11 jack labeled:
Wall

 

3.2.3.       The UNIT shall have a power connector
labeled: 12V

 

3.2.4.       The UNIT shall have a link-status LED

 

3.2.5.       The UNIT shall have a speed status LED

 

3.3.           The UNIT will weigh less than 3lbs.

 

3.4.           The UNIT shall have these user accessible
buttons:

 

3.4.1.       The UNIT shall have a TALK/SPKR button.

 

3.4.2.       The UNIT shall have an END button.

 

3.4.3.       The UNIT shall have a LOCATE button.

 

3.5.           All UNIT buttons will have a minimum usable
life of one million cycles.

 

3.6.           UNIT buttons shall be a color that matches
the color of the UNIT form factor.

 

3.7.           The minimum actuation pressure rating of UNIT
buttons shall be 1-8oz.

 

3.8.           UNIT buttons shall provide tactile response
when pressed.

 

3.9.           UNIT buttons shall have labels that beneath
the button caps:

 

3.9.1.       The TALK button shall be labeled: TALK/SPKR

 

3.9.2.       The END button shall be labeled: END

 

3.9.3.       The LOCATE button shall be labeled: LOCATE

 

3.10.     The UNIT will have a ringer device that shall
be capable of playing at least seven ringer sounds.

 

3.11.     The UNIT shall provide an audible response to
key presses and menu navigation.

 

3.12.     The UNIT shall have a control device for
adjusting audio volume.

 

3.13.     The audio volume control device shall conform
to the industrial design of the UNIT.

 

3.13.1.               The audio volume control device shall be on
the right-hand side of the UNIT base.

 

3.13.2.               The audio volume control device shall be
labeled as follows:

 

3.13.2.1.         The audio volume control device shall be
labeled: VOLUME

 

3.13.2.2.         The control for increasing volume shall be
labeled: + (labeled next to the E in VOLUME)

 

3.13.2.3.         The control for decreasing volume shall be
labeled: - (labeled next to the V in VOLUME)

 

3.13.3.               The audio volume labels shall be
silk-screened.

 

3.13.3.1.      The color of audio volume labels shall be
white.

 

3.14.     The UNIT shall provide manual video mute with
notification.

 

 

3.14.1.               The UNIT shall have a video mute device that
shall be capable of placing or removing a physical cover over the camera lens.

 

3.14.2.               The video mute device shall protrude provide
positive feedback to the user when signalling its condition.

 

3.14.3.               The video mute device shall be clearly
visible to the user looking at the front of the UNIT.

 

3.14.4.               The on or off position of the video mute
device shall be communicated to the product at all times to enable appropriate
programmatic control of user prompts and on-screen displays.

 

3.14.5.               The aperture for the lens and video mute
device will be a minimum diameter of 1.2cm.

 

3.14.6.               When the video mute device is covering the
lens, the video mute device shall display an easily recognizable indicator that
the lens is covered.

 

3.14.6.1.          The indicator shall be Ojo orange.

 

3.14.6.2.          The indicator shall use all available space
inside the video mute aperture.

 

3.15.     The UNIT camera’s requirements are defined in
Video Requirements:

 

3.16.     The UNIT LCD’s requirements are defined in
Video Requirements:

 

3.16.1.               The entire usable viewing area of the LCD
display will be available for menus.

 

3.17.     The product shall have a cordless handset.

 

3.17.1.               The handset will use a NiMH battery.

 

3.17.1.1.          The charge time will be 24 hours or less for
a full charge.

 

3.17.1.2.          The talk time will be six hours.

 

3.17.1.3.          The standby time will be 96 hours.

 

3.17.2.               The handset will measure 6.25 X 1.63 X 0.82”.

 

3.17.3.               The handset will weigh five oz.

 

3.17.4.               The range of the handset will be 100 ft.

 

3.17.5.               The handset will be able to receive and
transmit on ten channels.

 

3.17.6.               The cordless phone will use tone (DTMF)
dialing.

 

3.17.7.               The cordless handset will be DECT-based, 2.4
GHz.

 

3.17.8.               Any mechanism used to secure the handset
shall not unreasonably impair the removal of the handset from the handset
cradle with a single hand.

4.               Video Requirements

 

This
section describes requirements related to the product’s video output and input.

 

4.1.           The UNIT shall contain an imaging device
(camera).

 

4.1.1.       The camera will have 640  480 pixels resolution (0.3 Mpixels).

 

4.1.2.       The camera’s optical format will be 1⁄4”.

 

4.1.3.       The camera’s aperture will be f2.8.

 

4.1.4.       The camera’s focal length will be 20 cm to
infinity.

 

4.1.5.       The camera will have backlight compensation.

 

4.1.6.       The camera will have automatic gain control.

 

4.1.7.       The camera will have auto white balance.

 

4.1.8.       The camera will require a minimum 4 lux
illumination.

 

4.2.           The UNIT shall contain a display device (LCD)
that measures 7in diagonally.

 

4.2.1.       The LCD will have 400 cd/m^2 luminance.

 

 

4.2.2.                The LCD will be backlit.

 

4.2.3.                The LCD will have anti-glare coating.

 

4.2.4.                The LCD will have the following viewing
angles:  H:  —50°, +60°; V:  —65°, +65°.

 

4.2.5.                The LCD will have an active area of 6.1” X
3.4”.

 

4.2.6.                The LCD will have an aspect ratio of 16:9.

 

4.2.7.                The LCD will have 480 X 854 resolution.

 

4.2.8.                The LCD will have 0.06 X 0.185 MM pitch.

 

4.3.           The product shall meet minimum video output
requirements:

 

4.3.1.                The product shall use H.264/ MPEG4 Part
10/AVC, QCIF resolution digital video compression and be capable of 30fps, or
better.

 

4.3.2.                The UNIT may be capable of simultaneous LCD
output of two full-motion/live images, one full-motion recorded image, text,
and 16-bit graphics.

 

4.3.3.                During calls, the LCD will display a
full-motion image of the incoming caller and a full-motion image of the
outgoing caller (mirror image).

 

4.3.4.                The LCD shall provide a high-quality view
within an acceptable viewing range.

 

4.3.5.                Under normal good call conditions, the
product will return to high quality within CONFIDENTIAL TREATMENT REQUESTED
seconds after any UNIT movement ends.

 

4.3.6.                The product will employ error resilience,
error concealment, and low processing latency.

 

4.3.7.                Mirror-image video latency will be
CONFIDENTIAL TREATMENT REQUESTED.

 

4.3.8.                The display will experience limited video
freezes during video calls due to things within our control.

 

4.3.9.                The display will experience limited video
blocking during video calls due to things within our control.

 

4.3.10.          The display will experience limited video
breakup during video calls due to things within our control.

 

4.3.11.          The display will experience no TOTAL video
loss, due to things within our control, during video calls.

 

4.4.           Mirror-image video shall be mutable.

 

4.4.1.       On incoming calls, Ojo shall, by default,
programmatically mute the mirror-image video.

 

4.4.2.                Video mute status shall not inhibit the call.

 

4.4.3.                Ojo shall not display mirror-image video
while video mute is engaged.

 

4.4.4.                The other party’s Ojo shall not display
incoming video while video mute is engaged.

 

5.               Audio Requirements

 

This
section describes requirements related to the product’s audio output and input.

 

5.1.           The product shall meet minimum audio output
requirements:

 

5.1.1.       The speakerphone in the UNIT shall be
available for voice-only calls and for the audio portion of video calls.

 

5.1.1.1.       Speakerphone audio will be full duplex.

 

5.1.1.2.       The speakerphone will have adaptive sub-band
echo cancellation.

 

5.1.1.2.1.        Echo cancellation will cancel echo tails of
lengths up to CONFIDENTIAL TREATMENT REQUESTED.

 

5.1.1.3.       The speakerphone shall have a frequency range
of CONFIDENTIAL TREATMENT REQUESTED.

 

5.1.1.4.       The speakerphone will suppress acoustical
echo in excess of CONFIDENTIAL TREATMENT REQUESTED.                               

 

 

5.2.           The product shall support iLBC audio
compression.

 

5.3.           The product shall support G711 and iLBC
audio.

 

5.4.           The audio stream will use an average bandwidth
of CONFIDENTIAL TREATMENT
REQUESTED Kbps.

 

5.5.           The product will experience minimal audio
distortion (clipping, garble) due to things within our control during video
calls.

 

5.6.           The product shall experience no audio loss
during video calls due to the product.

 

5.7.           The product will experience minimal audio
delay between calling parties during video calls due to the product

 

5.8.           There shall be no perceivable delay between
audio and video.

 

5.9.           The product shall meet minimum audio input
requirements:

 

5.9.1.       The UNIT microphone pick-up pattern shall
deliver optimum audio quality at CONFIDENTIAL TREATMENT REQUESTED horizontally
or CONFIDENTIAL TREATMENT REQUESTED vertically from the center of the UNIT.

 

5.9.2.       The UNIT microphone pick-up pattern shall deliver
acceptable audio quality at CONFIDENTIAL TREATMENT REQUESTED horizontally or
CONFIDENTIAL TREATMENT REQUESTED vertically from the center of the UNIT.

 

5.9.3.       The UNIT microphone shall have a frequency
range of CONFIDENTIAL TREATMENT REQUESTED.

 

5.9.4.       The UNIT microphone shall have a
signal-to-noise ratio of 65dB.

 

5.9.5.       UNIT microphone sensitivity shall be
CONFIDENTIAL TREATMENT REQUESTED.

 

5.9.6.       The product shall provide UNIT microphone
automatic gain control.

 

5.10.     The UNIT shall include audio mute
functionality.

 

6.               User Interface Requirements

 

This
section describes requirements related to the product’s user interface (UI),
including both physical and programmatic controls and indicators.

 

6.1.           The UI shall provide these visual and audible
indicators:

 

6.1.1.       In standby mode, the handset display will
display the following:

 

6.1.1.1.       Handset battery charging

 

6.1.1.2.       Handset signal strength

 

6.1.2.       When the handset is NOT in the cradle, the
handset will provide a distinct ringer sound to indicate Handset location when
LOCATE button is pressed.

 

6.1.2.1.       Handset ring shall end when the caller
presses either the END button on the handset or the END button on the display
arm.

 

6.1.2.2.       Handset ring shall time-out 20 seconds after
the LOCATE button is pressed.

 

6.2.           The user shall be able to answer an incoming
call by pressing the TALK button.

 

6.3.           The product shall be capable of initiating
calls by user’s direct number entry on the handset’s numeric keypad and then
pressing the TALK button.

 

6.3.1.       The product will provide an audible
response—a brief dial tone when placing a video call and echosed key tones when
placing an audio call — when user presses the TALK button after entering phone
number on the handset’s numeric keypad.

 

6.4.           The product shall redial the last number
called when user presses the TALK button twice without entering or selecting a
number.

 

6.4.1.       The product will provide an audible
response—a brief dial tone when placing a video call and echosed key tones when
placing an audio call — when user presses the TALK button after entering phone
number on the handset’s numeric keypad.

 

 

6.5.           The user will be able to set up and use speed
dial on the handset’s numeric keypad to initiate calls.

 

6.5.1.       To use speed dial, the user shall press any
one- or two-digit sequence followed by TALK or SELECT.

 

6.6.           When the user initiates a call from an
originating Ojo to a receiving Ojo, and the receiving Ojo is engaged in another
call, the originating Ojo shall produce a busy display.

 

6.7.           When the receiving Ojo is busy and cannot
accept a video call, the Ojo originating the video call will try an audio-only
call.

 

6.8.           If, during a PSTN call, another PSTN call
comes in, the TALK button shall act as a “flash” button.

 

6.9.           If the called party presses END, the calling
Ojo will attempt a PSTN call; if the called party presses END again, the called
unit will return to the Home screen and the calling unit will hear a dial tone.

 

6.10.     The user shall be able to control video
muting.

 

6.10.1.               The user shall have the option to un-mute
outgoing video at any time during the call.

 

6.10.2.               When the user moves the video mute slider to
the on (lens capped) position, video images shall be replaced by a canned image
and a text message that the camera is off.

 

6.10.2.1.            There will be minimal delay of <50ms
between user moving the video mute slider to the on position and inset video
self- image being replaced by text or no image.

 

6.10.2.2.            Units will experience minimal delay of
<200ms between user moving the video mute slider to the on position and
incoming video image on other party’s phone being replaced by text and canned
image.

 

6.10.2.3.            Manual video mute shall prevail when the user
turns off programmatic video mute while the manual video mute switch is on (lens
is capped).

 

6.11.     The user shall be able to control audio
volume.

 

6.11.1.            The GUI shall display an audio volume
indicator when the user presses either of the audio volume control buttons on
the DU.

 

6.11.2.            The audio volume indicator will remain on for
up to ten seconds after an audio volume control button press.

 

6.11.3.            The audio volume indicator will display a
minimum of ten increments between minimum and maximum audio volume.

 

6.11.4.            Audio volume will increase by the lesser of
3dB or the current volume each time the user presses the audio volume up
control.

 

6.11.5.            Volume will decrease by the lesser of 3dB or
half of the current volume each time the user presses the audio volume down
control.

 

6.12.                                             The user shall be able to mute outgoing
audio.

 

6.12.1.            Audio output volume shall decrease to an
inaudible level when user presses the MUTE button.

 

6.12.2.            There shall be minimal delay between user
pressing MUTE button and audio output volume decreasing to inaudible level.

 

6.13.                                             The user shall be able to have audio privacy.

 

6.13.1.            Removing the correctly positioned handset
from the UNIT handset cradle will silence the speakerphone and invoke private
conversation mode.

 

6.13.2.            Returning the correctly positioned handset to
the UNIT handset cradle will end private conversation mode and re-enable the
speakerphone or end the call.

 

6.14.                                             The user will be able to locate a handset
that is not in the handset cradle.

 

6.14.1.            The handset will emit a distinct sound when
the user presses the LOCATE button.

 

6.15.                                             GUI screen navigation shall be via the
navigation device on the handset.

 

 

6.15.1.               The GUI shall have a Dialer screen that shall
be invoked by numeric key press.

 

6.15.1.1.      The Dialer screen will display numbers in an
on-screen textbox with minimum delay after numeric key press.

 

6.15.2.               The GUI shall include a Calls Received screen
that lists captured calls received.

 

6.15.2.1.      Users shall be able to initiate a call by
selecting a listed number on the Calls Received screen.

 

6.15.2.1.1.  The product will provide an audible
response—a brief dial tone when placing a video call and echosed key tones when
placing an audio call — when user presses the TALK button after entering phone
number on the handset’s numeric keypad.

 

6.15.3.               The GUI shall include a Calls Dialed screen
that lists captured calls dialed.

 

6.15.3.1.      Users shall be able to initiate a call by
selecting a listed number on the Calls Dialed screen.

 

6.15.3.1.1.  The product will provide an audible
response—a brief dial tone when placing a video call and echosed key tones when
placing an audio call — when user presses the TALK button after entering phone
number on the handset’s numeric keypad.

 

6.15.4.               The GUI shall include a Phonebook screen that
displays a user-created list of telephone numbers, names and photo caller IDs.

 

6.15.4.1.                                   The Phonebook shall support audio-only as
well as video and audio numbers.

 

6.15.4.2.                                   Users shall be able to initiate a call by
selecting a listed number on the Phonebook screen.

 

6.15.4.2.1.  The product will provide an audible
response—a brief dial tone when placing a video call and echosed key tones when
placing an audio call — when user presses the TALK button after entering phone
number on the handset’s numeric keypad.

 

6.15.4.3.                                   Users shall be able to add phonebook entries.

 

6.15.4.4.                                   Users shall be able to delete phonebook
entries.

 

6.15.4.5.                                   Users shall be able to edit phonebook
entries.

 

6.15.5.               Users shall be able to capture and store
caller ID photos.

 

6.15.6.               The GUI shall have an Incoming Call screen
that shall be invoked by an incoming call before the second ring.

 

6.15.6.1.                                   The Incoming Call screen shall display caller
information—including caller’s number, name, and image or generic icon (caller
ID)—and connection status.  Information
within the unit’s local Phonebook will be provided when available; if not,
incoming caller ID information will be presented.

 

6.15.7.               The product shall experience minimal delay
between user pressing TALK button to receive call and image display.

 

6.15.8.               The GUI shall have a Preview screen that
shall be invoked by pressing “#” when not in call.  The Preview screen displays mirror-image
video in the incoming video area.

 

6.15.9.               Any common information displayed on both the
UNIT LCD and the handset LCM shall be displayed simultaneously.

 

6.15.10.                                                              The GUI shall display error messages.

 

6.15.11.                                                              The GUI shall provide controls for
user-configured settings.

 

6.15.11.1.                            The LCD brightness shall be
user-configurable.

 

6.15.11.2.                            The IP setting shall be user-configurable.

 

6.15.11.3.                             The ring tone shall be user-configurable.

 

6.15.11.4.                             The ringer volume shall be user-configurable.

 

7.               Activation and Billing Requirements

 

 

This
section describes requirements related to product activation and service
billing.

 

7.1.           The system shall support the ability to
provide a monthly billable service.

 

7.2.           Soft disconnection (removal of billing
authorization) from the service will disable the product’s ability to make
video phone calls.

 

7.3.           Video phones connected to active PSTN lines
shall continue to function as audio-only phones.

 

7.4.           Activating shall require minimal user effort.

 

7.4.1.       No special knowledge outside of basic
information shall be required.

 

7.5.           The un-provisioned video phone shall try to
connect to the Data Center upon power-up and boot-up.

 

7.5.1.       The GUI shall provide status messages to the
user throughout boot-up and connection.

 

7.5.2.       The GUI shall provide error messages to the
user to debug connection and setup.

 

7.6.           The user shall have the option to modify
provisioning and registry information after provisioning process has been
completed.

 

7.7.           The video phone will use the same telephone
number (including country code and area code) as the PSTN phone in the
household when available.

 

7.7.1.       Where a PSTN number is unavailable, the video
phone will use another unique identifier to permit incoming and outgoing video
calls.

 

7.7.2.       Where a PSTN number is not desirable, the
video phone may use another unique identifier to permit incoming and outgoing
video calls.

 

7.8.           Registration of some video phone components
shall be required for interoperability of components.

 

7.8.1.       All devices requiring registration and
packaged in the same retail box shall be registered to the appropriate device
prior to shipping.

 

7.8.2.       Unregistered devices shall not be
interoperable.

 

7.9.           There shall be a means to permit a consumer
to register devices in the field.

 

7.9.1.       Registration shall require information
specific to the registering devices (serial numbers, MAC addresses, etc.).

 

8.               Security Requirements

 

This
section describes requirements related to system security.

 

8.1.           Security levels shall meet or exceed security
levels for other cable or DSL modem devices.

 

8.2.           Video phone communication sessions shall
maintain a security level consistent with high-volume cordless telephones.

 

8.3.           Video phone communications sessions shall use
a minimum of 128-bit AES encryption.

 

8.4.           Audio communication sessions shall maintain a
security level consistent with high-volume cordless telephones.

 

8.5.           The product shall attempt to prevent users
from stealing bandwidth.

 

8.6.           Software downloads shall be secure at a level
consistent with enterprise software standards.

 

8.7.           SIP traffic shall use a minimum of 128-bit
encryption.

 

8.8.           Ojo provisioning shall use a minimum of
128-bit encryption.

 

8.9.           All Ojo devices and network components shall
be capable of preventing 99% of all “Denial of Service” attacks.

 

8.10.     Any information stored in in-home Ojo devices
shall be protected from access by non-authorized, non-local users.

 

8.11.     Ojo devices shall contain the security
necessary to prevent a non-authorized user from stealing the identity of
another Ojo device (spoofing).

 

 

8.11.1.               The Ojo devices shall include a warranty invalidation device, i.e., the
means to determine when an unauthorized user has attempted to access not
user-accessible hardware cavities.

 

9.               Network Requirements

 

This section describes requirements related to the
product’s networking capability.

 

9.1.           The product will share the DSL or cable modem
with other devices in the household.

 

9.2.           Other devices shall include personal
computers and SIP devices.

 

9.3.           The prodcut will support TCP/IP, UPD/IP, RTP,
and SIP RFC-3261 protocols.

 

9.4.           The product will use a 10/100 Base T Ethernet
network interface.

 

9.5.           The product will support SIP/NCS, TCP/IP,
UDP, and RTP commuication standards.

 

9.6.           The product shall be operable from behind a
firewall or NAT server, whether such device is part of the modem or is
external.

 

9.7.           The product shall support standard DHCP
protocol.

 

9.7.1.       The product shall act as a DHCP client.

 

 

Exhibit B

 

DEVELOPMENT PROCEDURES

 

I.                 Definitions:

 

A.           “Development Specification” means a written
presentation prepared by Developer and accepted in writing by Mototech,
specifically identifying the requirements of the Final Release of the Product,
including without limitation a detailed description of the features, functions
and performance requirements of the Product and the Test Plan for the Product.

 

B.             “Test Plan” means a written presentation
prepared by Mototech and accepted in writing by Developer, specifically
identifying the procedures for testing the required releases of the Product for
conformance with the Development Specification, the results required for
successful compliance with and completion of such Test Plan, and the reports
that will be required to document such successful completion of such Test Plan.

 

C.             “Beta Release”  or “Prototype” means a preliminary release of
the Product in substantial conformance with the Development Specifications,
with all features and functions implemented (unless agreed in writing by
Developer), which effectively addresses all comments theretofore received in
reviews of any prior releases, and which successfully complies with any corresponding
elements of the Test Plan.

 

D.            “Final Release” means a post Beta release of
the Product meeting all Development Specification and Beta-Release requirements
and which effectively addresses all comments theretofore received in reviews of
any prior releases, and which successfully complies with any corresponding
elements of the Test Plan.  Final testing
has been completed and all known defects have been fixed.  The Product Documentation accompanying the
Final Release shall be adequately complete and detailed to reasonably afford
the ability to manufacture, modify, support and maintain the Product without
undue experimentation.

 

E.              “Critical Design Review” or “CDR”, if
required by this Agreement, means a written and in person presentation prepared
and conducted by Mototech and accepted in writing by Developer, reviewing the
Product and the Development Technology after the successful delivery of the
Beta Release and a copy of the Development Documentation complete and current
as of the delivery of the Beta Release, including without limitation the test
results of any elements of the Test Plan for the Beta Release, a listing of any
comments and issues which need to be addressed and the plan for addressing the
same.

 

F.              “Product Documentation” means all then existing
and current tangible information, regardless of media, which substantially
relates to the design, development, manufacture, use, operation, support or
maintenance of the Development Technology, including without limitation any
bills of material, drawings, schematics, software copies and listings, test
results, and any reports and documented procedures relevant thereto.

 

II.             Mototech Development Deliverables:

 

A.           Schematics

B.             Mechanical drawings

C.             Assembly drawing

D.            Parts list

E.              Test procedures

F.              PCB artwork and electronic files

G.             Prototype units (3)

H.            Prototype Documentation

I.                 Prototype Test report

J.                Trial Units (150)

K.            Trial Unit documentation

L.              Trial Unit Test plan

 

III.         Developer Deliverables:

 

A.           Product requirement specification

 

 

B.             Mechanical concept drawings

C.             Functional specifications

D.            Software code objects for each development
phase

 

IV.         Development Schedule, Milestones and
Milestone Payment

 

Such milestones set forth herein shall be completed
in the sequential order indicated and the deliverables associated with such
milestones cannot be skipped or combined out of sequence.  Upon the completion of each development
milestone as set forth herein, Mototech shall inform Developer in writing of
the completion of such milestone and shall promptly delivery to Developer at
the address for notices as specified herein all materials required to be
provided in accordance with such milestone. 
All milestone deliverables hereunder will include such Product
Documentation or updates thereto as are in existence at the time of delivery of
such deliverable or is otherwise required by the Development Specification.

 

	
  Description

  	
   

  	
  Date Due

  	
   

  	
  Payment

  	
   

  	
   

  	
   

  
	
  Trial
  Prototype

  	
   

  	
  10/B/03

  	
   

  	
   

  	
   

  	
  $

  	
  100K of equity at market price

  	
  *

  
	
  Trial Pre
  Production

  	
   

  	
  12/B/03

  	
   

  	
   

  	
   

  	
  $

  	
  100K

  	
   

  
	
  Final
  Prototype

  	
   

  	
  4/B/04

  	
   

  	
  $

  	
  100K

  	
   

  	
   

  	
   

  
	
  Pre-production
  pilot units

  	
   

  	
  8/M/04

  	
   

  	
  $

  	
  100K

  	
   

  	
   

  	
   

  
	
  Production
  sign off

  	
   

  	
  9/B/04

  	
   

  	
  $

  	
  200K

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total
  Development Funding

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  

 

*This will be accomplished by the grant to Mototech
as a consultant to WorldGate, of an immediately vested stock option under the
terms and conditions of WorldGate’s 1996 Stock Option Plan, with the $100K
being applied to pay the exercise price for the option.

Developer shall promptly examine such deliverables
as the milestones require to determine if they conform to the requirements
hereof, and shall diligently thereafter notify Mototech in writing upon
Developer’s acceptance or rejection of the same.  If Developer believes a deliverable hereunder
is defective or otherwise fails to conform to the requirements as set forth
herein, including without limitations the warranties of Mototech hereunder,
Developer will furnish Mototech with notice thereof, advising Mototech of the
nature of the defect.  Mototech will have
a reasonable opportunity to investigate any alleged defect or failure and, if
the same did not result from unauthorized modification or misuse by Developer,
its Affiliates or their customers, Mototech shall promptly remedy the same,
without charge, by repair or replacement meeting the warranties and without
said defect.  The Parties acknowledge
that such schedule as is set forth herein anticipates this review, approval and
remedy process, and provided that both Parties are diligent in fulfilling their
obligations hereunder, sets forth a reasonable time frame for the performance
of this development effort.

 

Developer will promptly remit the corresponding
development funds (if any) upon the timely and conforming delivery of the
milestones set forth below.  In no event
shall Developer be obligated to remit a development funding installment until
Mototech has successfully completed the corresponding milestone. If such
milestone payment includes payment for materials, components, equipment, unique
fixtures or other goods which are ultimately to be delivered to or owned by
Developer hereunder, title to the same shall transfer to Developer upon
Mototech’s receipt of such payment (Risk of Loss shall however remain with
Mototech until delivery to Developer), and Developer shall be entitled to
immediate possession of the same upon demand. Mototech shall cooperate fully in
this regard, including without limitation, executing whatever documentation is
reasonably required to accomplish the aforesaid.  Furthermore Mototech shall ensure that such
materials, components, equipment, unique fixtures and other goods are not
subject to any mortgage, pledge, lien, attachment or other adverse claim or
encumbrance of any third parties.

 

V.             Modification of Specifications, Schedule and
Procedures.

 

Developer shall have the right at any time and from
time to time, to make changes to the Development Specifications and schedule
for performance hereunder, subject to the following.  If any such changes cause an increase or
decrease in the cost, or the time required for the performance as set forth
herein, an equitable adjustment shall be made and this Agreement shall be
modified in writing accordingly. 
Mototech agrees to accept any such changes subject to this
paragraph.  Such equitable adjustment
shall be Mototech’s only remedy for such changes.  This right to an adjustment with respect to
any change shall be deemed waived by

 

 

Mototech
unless Mototech has, within thirty (30) days after the request for such change,
asserted a claim for the same and advised Developer of the details of such
adjustment.

 

VI.         Design Reviews, Reporting Procedures and
Project Coordinators.

 

Mototech shall endeavor to keep Developer fully
informed as to the progress of the development efforts hereunder and any material
problems which are experienced.  Mototech
shall submit periodic status reports and shall conduct such design reviews as
are reasonably require to accomplish such process, and as are reasonably required
to resolve any material functional, parametric, performance, device
qualification or other similar problems which may arise during the development
process hereunder and shall notify Developer in writing as to the timing and
agenda of all design reviews to be held hereunder.  All material actions taken as a result of
such design reviews shall be documented by Mototech and furnished to Developer
for its review.  The Parties hereby agree
that the following individuals have been designated as project coordinators:

 

For Mototech:

 

For Developer:

Whitney Balckmon – Tech lead/Program Manager

 

 

Exhibit C

 

NON-DISCLOSURE
AGREEMENT

 

 

NON-DISCLOSURE AGREEMENT

 

This
Agreement is entered into and effective this 9th day April, 2003
between WorldGate Communications, Inc.  (“WGC”)
and the participant identified below (“Participant” and together with WGC, the “Parties”
or a “Party” as the case may be).  In
order to protect certain confidential information that may be disclosed between
them, WGC and PARTICIPANT agree as follows:

 

1.  WGC and its affiliated companies have developed
certain proprietary information relating to their strategic, financial and
other business plans as well as the marketing, design and operation of their
products and services and PARTICIPANT has developed certain proprietary
information relating to: NONE

 

2.  In order to pursue a potential business
relationship between them relating contract manufacturer of WGC’s product (“Purpose”),
WGC and PARTICIPANT

each
recognize that it may be necessary to disclose information of the nature set
forth in t he p receding paragraph to the other (“Recipient”) which is
considered confidential and/or proprietary (“Proprietary Information”) by the
party disclosing the information (“Discloser”).

 

3.  Recipient agrees to safeguard the
confidentiality of any Proprietary Information it receives from Discloser that
is marked or otherwise indicated by Discloser prior to disclosure hereunder as
being “Proprietary” or “Confidential”, by applying policies and procedures
adequate for that purpose, including without limitation, restricting the
disclosure of this Proprietary Information to employees and consultants needing
to know the same for the Purpose of this Agreement, who have agreed in writing
to safeguard such Proprietary Information in a manner consistent with the
provisions of this Agreement.  Recipient
shall not reproduce any Proprietary Information nor disclose any Proprietary
Information to any other person, firm or corporation, nor use or disclose the
same except for the Purpose stated hereinabove, and shall exercise at least the
same degree of care to guard against disclosure or unauthorized reproduction or
use of such Information, as Recipient employs with respect to its own
Proprietary Information, but in no event less than reasonable care.

 

4.  In the event Discloser discloses its
Proprietary Information to Recipient otherwise than as fixed in a tangible
medium of expression, Discloser shall inform Recipient prior to the disclosure
that such Proprietary Information is deemed confidential and/or proprietary,
and shall provide Recipient with a brief written description of such
Proprietary Information, either prior to or within thirty (30) days of such
disclosure. Recipient shall, upon being notified that such information is
Proprietary Information, have the same obligations with respect to such
Proprietary Information as described in Section 3. “Tangible medium of
expression” as used herein shall be deemed to include, by way of example,
memoranda, written descriptions, drawings, photographs, models, prototypes,
tapes, disks and circuitry.

 

5.  Recipient agrees to promptly notify Discloser
of any inadvertent unauthorized use, reproduction or disclosure of any
Proprietary Information it has received from Discloser and to take prompt and
effective steps to reclaim the same and to prevent recurrence of such use,
reproduction or disclosure.

 

6.  Recipient shall have no obligation hereunder
with respect to any information which:

(a)  is already properly known to Recipient other
than as a result of a prior confidential disclosure by Discloser;

(b)  is or becomes publicly known otherwise than
by Recipient’s (or someone receiving the information from Recipient) fault or
breach of this Agreement;

(c)  is rightfully received by Recipient without
restriction from a third party who is not under an obligation of
confidentiality, directly or indirectly, to Discloser;

(d)  is independently developed by Recipient
without benefit of the Proprietary Information received hereunder;

(e)  is approved for release in writing by
Discloser; or

(f)  is required to be disclosed by Recipient
pursuant to law or judicial or regulatory action, provided that Discloser is
promptly notified at the time such action is initiated and Recipient fully
cooperates with Discloser in seeking continued confidential treatment of such
information to the extent possible.

 

7.  All tangible media of expression wherein
Discloser’s Proprietary Information is fixed, and which have been delivered by
Discloser to Recipient pursuant to this Agreement, shall be and remain the
property of Discloser.  All such tangible
media of expression, and any copies thereof, shall be promptly returned to
Discloser upon written request, or destroyed at Discloser’s option, and in the
event of such requested destruction, Recipient shall provide written
certification of compliance within thirty (30) days of such written request.

 

8.  Nothing herein shall be construed as a
warranty of the accuracy, worth or fitness of the Information furnished
pursuant to this Agreement, nor as a grant of any rights to any invention,
work, discovery or improvement so furnished, nor as a commitment to enter into
any future agreement for any continuing relationship whether for the purchase
or supply of products or services, or otherwise.

 

9.  Recipient agrees that it will not indirectly
(i) export or re-export any of Discloser’s Proprietary Information, or any
products using such Proprietary Information, or (ii) use any such Proprietary
Information to engage in or facilitate the trading of any securities, in either
case, in violation of any prevailing laws and regulations in any applicable
jurisdiction.

 

10.  This Agreement shall have a term of three
years beginning with the effective date set forth above, provided however, that
either party may terminate this Agreement upon at least thirty days prior
written notice.  The expiration or
termination of this Agreement shall, however, have no affect upon the
obligations imposed by this Agreement with respect to Proprietary Information
disclosed prior to such termination or expiration, which obligations shall end
four years from the date of such disclosure hereunder.

 

11.  This Agreement contains the entire
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior understandings in connection herewith.  No modification or alternation shall be
binding unless executed in writing by the parties.  No waiver of any provision of this Agreement
shall be deemed or construed a waiver of any other provisions hereof (whether
or not similar) nor shall a waiver be construed a continuing waiver unless
expressly so stated.

 

12.  This Agreement shall be construed in
accordance with the laws of the Commonwealth of Pennsylvania.  Jurisdiction and venue for any suit or
proceeding brought with regard to this Agreement shall be either in the Court
of Common Pleas of Bucks County, Pennsylvania or the United States District
Court for the Eastern District of Pennsylvania. 
Each party understands and acknowledges that violation of its covenants
and agreements herein contained may cause the other party irreparable harm and
damage which may not be recoverable at law. 
Each party hereby agrees that the other party’s remedies for a breach
hereof may be in equity by way of injunctive relief, as well as for damages and
any other relief available, whether in law or in equity.

 

 

IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement on the
date first written above.

 

 

	
   PARTICIPANT: Mototech Inc.

  	
  WorldGate
  Communications, Inc.

  
	
   

  	
   

  
	
   By:

  	
   

  	
  By:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   Name:

  	
  KY
  Chou

  	
  Name:

  	
  Richard
  Westerfer

  	
   

  	
   

  	
   

  	
   

  
	
   Address:

  	
  9,
  Park Ave II Science-Based Industrial Park

  	
  Address:

  	
  3190
  Tremont Avenue - Ste. 100

  	
   

  	
   

  
	
   

  	
  Hsin-Chu,
  Taiwan

  	
   

  	
  Trevose,
  PA 19053

  
	
   Title:

  	
  General
  Manager

  	
  Title:

  	
  COO

  
	
   Tel.:

  	
  886-3-511-8500

  	
   Fax:

  	
  886-3-564-1583

  	
  Tel.:

  	
  215-354-5100

  	
  Fax:

  	
  215-354-1049

  
	
   

  	
   

  	
   

  	
   

  
	
  E-mail:
  

  	
  kychou@mototech.com.tw

  	
  E-Mail:

  	
  rwesterfer@wgate.com
  

  
	
  Date:

  	
   

  	
  Date:

  	
  4/9/03

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