Document:

James
McLoughlin

    [address]

    

    As of May
15, 2009

    

    Chief
Executive Officer

    WorldGate
Communications, Inc.

    WorldGate
Service, Inc.

    3190
Tremont Avenue

    Trevose,
PA 19355

    

    Dear
Sir:

    

    As was
discussed on May 15, 2009 (the “Resignation Date”), I am hereby tendering my
resignation as Vice President Sales and Marketing of WorldGate Communications,
Inc., and any other offices or positions I may hold in WorldGate Communications,
Inc. or any of its affiliates, including without limitation WorldGate Service,
Inc., and each of WorldGate Communications, Inc.’s subsidiaries (collectively
with WorldGate Communications, Inc., the “Company”).   We have
mutually agreed that my resignation is to be treated as a termination without
cause effective on the Resignation Date under that certain Employment Agreement
between me and the Company dated April 6, 2009 (the “Employment
Agreement”).

     

    The
Employment Agreement calls for me to be provided with certain post-termination
benefits in the event that my employment is terminated by the Company without
cause.  In exchange for my resignation and undertakings in this
letter, and in exchange for the general release upon which any severance
benefits are conditioned by the Employment Agreement, which release is set forth
in this letter, the Company is offering me the following severance benefits (the
“Severance Benefits”):

     

    (a)           beginning
with the next regular payday following the Resignation Date, and in accordance
with the Company’s regularly-scheduled paydays thereafter, the Company will
continue to pay me my monthly base salary amount of $15,865.25 (which equals
$190,383 annually), less applicable withholdings from May 15, 2009 through April
7, 2010 (the “Severance Period”), with the first payment to be retroactive to
the Resignation Date;

     

    (b)           because
I have been employed by the Company for the first forty-five days of the 91-day
second quarter of 2009, the Company will pay me the accrued portion of the cash
bonus for the second quarter of 2009 as described in Section 2(a) of the
Employment Agreement, in the amount of $8,237.73, which shall be paid on August
14, 2009;

     

    (c)           notwithstanding
anything to the contrary in the Company’s 2003 Equity Incentive Plan, as amended
to date (the “2003 Plan”), or in any award agreement issued to me thereunder, if
and to the extent any options I hold were vested as of the Resignation Date,
then any such options will continue to be exercisable (as to such vested portion
only) until 5:00pm Eastern time on April 7, 2010, and shall thereupon terminate
if not so exercised; and

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    (d) the
Company will retain me as part of its insured group covered by the Company’s
health, dental and vision benefits providers, and will continue to pay the
employer portion of the insurance premiums for such benefits, and will continue
to deduct my portion from the severance payments.  COBRA notice and
coverage will begin upon the cessation of the Severance Period.

     

    Notwithstanding
the foregoing, if at any time during the Severance Period I breach the terms of
the Non-Disclosure, Non-Circumvention and Non-Competition Agreement dated April
6, 2009 (the “Non-Disclosure Agreement”), or the terms of this letter, I shall
have no further right to receive the Severance Benefits.  I also agree
that I will return to the Company any Severance Benefits (or portions thereof)
made to me for any time period after I first breach the Non-Disclosure Agreement
or the terms of this letter.  During the Severance Period, I will
immediately notify the Company, in writing, of the date on which I will begin
non-competing employment with another company, my position and annual salary or
wages.  During the Severance Period, the Company may reasonably
request in writing from me, and I will not withhold, information reflecting my
employment status and salary, including my paystubs and earnings
statements.

     

    I
acknowledge that I am receiving the Severance Benefits outlined above in
consideration, the sufficiency of which is hereby acknowledged, for my
undertakings set forth in this letter, including releasing and waiving my rights
to claims referred to below, and that I would not otherwise be entitled to
receive the Severance Benefits.

     

    I agree
that the Severance Benefits shall be in full and complete satisfaction of any
and all sums which are now or might hereafter become owing to me for services
rendered by me during my employment or in connection with my resignation of
employment.  I acknowledge that I have received from the Company all
wages, expense reimbursements, accrued but unused vacation pay, and incentive
compensation of all types, including deferred or foregone salary or cash or
equity compensation, due and owing to me by the Company.  I hereby
waive all claims or entitlement to any deferred salary, and to any unvested
stock option or other unvested equity grants, and I also waive any entitlement
to the unvested stock options that might have been granted to me in accordance
with Section 2.2(b) of the Employment Agreement.  I acknowledge this
letter does not constitute an admission of wrongdoing of any kind by me or by
the Company and agree that I have not suffered any wrongdoing by the
Company.  I acknowledge and agree that I have not suffered any
discrimination or harassment based on any category protected by law including,
but not limited to, age, religion, race, gender, sexual orientation, national
original, and disability.  I acknowledge and represent that the
Company has not violated or denied me any right under the Family Medical Leave
Act (FMLA), or any other federal, state or local law, statute or
ordinance.  I acknowledge and agree that the Company has not
interfered with, restrained, or denied the exercise of or the attempt to
exercise any rights under the FMLA, and that the Company has not discriminated
against or retaliated against me in any way regarding the exercise of any rights
under the FMLA.  I agree that my resignation from the Company is
final, and that the Company has no obligation to consider me for rehire or
reinstatement.  I represent that all of the factual representations
made herein, which induced the Company to enter into this letter, are true in
all material respects.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    I
acknowledge and agree that all of my options that were not vested as of the
Resignation Date and all other equity or similar awards granted to me under the
2003 Plan or otherwise, including all performance shares, terminate in full upon
the Resignation Date prior to the existence of any right of exercise, payment or
other benefit thereunder.  I also acknowledge and understand that as a
result of the extension of my exercise period for vested stock options described
in paragraph (c) above, any such stock options affected thereby that were
granted as incentive stock options will be treated for tax purposes as
non-qualified stock options, and I will be solely responsible for any tax
consequences to me resulting from such change in treatment.

     

    I agree
that I will not, at any time following the Resignation Date, disparage the
Company or any of the people or organizations associated with it currently, in
the past, or in the future; and that I will not otherwise do or say anything
that would harm their respective business or reputation. I shall not hold myself
out to any customers or any other third parties as a representative or employee
of the Company.  I will not enter onto the Company’s premises unless
expressly invited to do so by the Chief Executive Officer of the Company. I
agree that all Company paid fringe benefits, including life insurance, long-term
disability insurance, short-term disability insurance, and any other Company
bonus program or practice, stock option program or practice, or 401(k) program,
cease on the Resignation Date (other than the period in which I may exercise any
vested options I may have that has been extended by paragraph (c) of this
letter.)

     

    In
signing this letter I represent that I have returned to the Company any and all
Confidential Information as that term is defined in the Non-Disclosure Agreement
and other documents, materials and information related to the business, whether
present or otherwise, of the Company and its affiliates, and all copies, and all
keys, credit cards, computers, phone, and other tangible property of the Company
and its affiliates, in my possession or control, including without limitation
all items set forth and initialed by me on the Company Property Return Checklist
attached as Exhibit
A to this letter.  I acknowledge that as an insider of the
Company, I possess material non-public information about the Company and
therefore acknowledge and agree that during the Severance Period I will be
subject to and will comply with the Company’s insider trading policy to the
extent that I am in possession of material non-public information regarding the
Company or its securities.  I also acknowledge and agree that the
Company shall have no responsibility for any filings required to be made by me
under applicable securities laws (including Form 144 or Form 4
filings).

     

    As a
material inducement to the Company to enter into this letter, and for good and
valuable consideration to be paid pursuant to this letter, I, with full
understanding of the content and legal effect of this letter and having the
right and opportunity to consult with my attorney, and on behalf of myself, my
heirs, personal representatives, beneficiaries, agents and assigns, irrevocably,
unconditionally and forever release and discharge the Company and its affiliates
and subsidiaries from any and all claims, actions, causes of action, grievances,
suits, charges or complaints of any kind or nature against the Company, its
affiliates, successors, assigns, officers, directors, shareholders, employees,
agents, attorneys and representatives, that I ever had or now have up to and
including the end of the Revocation Period, whether fixed or contingent,
liquidated or unliquidated, known or unknown, suspected or unsuspected, and
whether arising in tort, contract, statute or equity, before any federal, state,
administrative, local or private court, agency, arbitrator, mediator or other
entity, regardless of the relief or remedy.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    Without
limiting the generality of the foregoing, it being my intention and the
Company’s intention to make this release as broad and as general as the law
permits, this release specifically includes any and all claims arising from my
employment or positions with the Company or its affiliates and any alleged
violation by the Company or its affiliates of the Age Discrimination in Employment Act
of 1967, as amended; the Older Workers’ Benefits
Protection Act, as amended; the Americans with Disabilities
Act; Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights Act of
1866, as amended by the
Civil Rights Act of 1991; the Pennsylvania Human Relations Act,
or any other federal, state or local statute, regulation or
ordinance, breach of an
expressed or implied contract of employment or other expressed or implied
contract claim; promissory estoppel; wrongful discharge in violation of the
public policy of Pennsylvania or any other state; any common law claim for
wrongful discharge; breach of an implied covenant of good faith and fair
dealing; tortious interference with contractual relations and/or advantageous
business relationship; public policy wrongful discharge claim; assault, battery,
conspiracy, defamation, invasion of privacy or intentional or negligent
infliction of emotional distress arising out of or involving my employment with
the Company, my resignation or any continuing effects of my employment with
and/or separation from the Company.  (This letter shall not include
any claims that may arise after the date I execute this letter, any claims for
vested benefits under the Company’s 401(k) or any employee retirement plan, any
claims under this letter or any claims arising out of any vested stock options
that I may have that remain unexpired.)

     

    Nothing
in this letter shall be construed to affect the Equal Employment Opportunity
Commission’s or any similar state or local commission’s or agency’s (the
“Commission”) independent right and responsibility to enforce the
law.  I understand, however, that, while this letter, including its
general release of claims, does not affect my right to file a charge or
participate in an investigation or proceeding conducted by the Commission, it
does bar any claim I might have to receive monetary damages in connection with
any Commission proceeding concerning matters covered by this letter, including
its general release of claims.

     

    If any
provision of this letter shall be found by a court to be invalid or
unenforceable, in whole or in part, then such provision shall be construed
and/or modified or restricted to the extent and in the manner necessary to
render the same valid and enforceable, or shall be deemed excised from this
letter, as the case may require, and this letter shall be construed and enforced
to the maximum extent permitted by law, as if such provision had not been
originally incorporated herein, as the case may be.  Upon a finding by
a court, administrative agency or other tribunal of competent jurisdiction that
any release, waiver or covenant contained in this letter is void, illegal or
unenforceable, the Company and I agree to promptly execute a release, waiver or
covenant that is modified to the minimum extent necessary to be deemed legal and
enforceable by the authority making the finding.

     

    A waiver
by the Company or me of a breach of any provision of this letter shall not
operate or be construed as a waiver or estoppel of any subsequent breach by
either me or the Company.  No waiver on behalf of the Company shall be
valid unless in writing and signed by an authorized officer of the
Company.  No waiver on behalf of me shall be valid unless in writing
and signed by me.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    Except
for the Non-Disclosure Agreement, which remains in full force and effect, this
letter sets forth the entire agreement between me and the Company and
supersedes, voids, extinguishes and replaces all prior and contemporaneous
agreements, communications and understandings, whether written or oral, between
the Company and me.  This letter shall be binding upon and inure to
the benefit of me, my heirs, executors, administrators and beneficiaries, and
shall be binding upon and inure to the benefit of the Company and its
affiliates, successors and assigns.  This letter may not be altered or
modified except in writing signed by both me and the Company.  The
Company and I agree that Pennsylvania law shall govern the enforceability and
construction of this letter, without regard to its principles of conflicts of
laws.

    

    The
Company and I agree to submit any dispute (i) concerning the interpretation or
enforcement of the rights and duties under this letter, or (ii) relating to this
letter to final and binding arbitration pursuant to the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association then
existing.  At the request of any party, the arbitrator, attorneys,
parties to the arbitration, witnesses, experts, court reporters, or other
persons present at the arbitration shall agree in writing to maintain the strict
confidentiality of the arbitration proceedings.  The arbitration shall
be conducted in Pennsylvania by a single, neutral arbitrator.  The
award of the arbitrator may be enforced in any court having jurisdiction over
the award, the relevant party or such party’s assets.

    

    I agree
that I am physically and mentally able to perform all duties of the positions I
have resigned from and that I am not suffering from any injury or illness, which
I attribute to the Company.  I represent and certify that I have
carefully read and fully understand all of the provisions and effects of this
letter, have knowingly and voluntarily entered into this letter freely and
without coercion, and acknowledge and agree that I have been advised in writing
to consult with an attorney prior to executing this letter, and that I have had
opportunity to do so.  I represent that neither the Company nor the
Company’s agents, representatives or attorneys, have made any representations
concerning the terms or effect of this letter other than those contained in this
letter itself.  I acknowledge that I have been advised that I have at
least twenty-one (21) days within which to consider this letter.  I
acknowledge and agree that my execution of this letter before the full
twenty-one (21) day period has elapsed is a decision made by me voluntarily, and
I freely and knowingly have chosen not to wait at least twenty-one (21) days to
sign this letter. I further acknowledge that I have seven (7) days from the date
this letter is executed in which to revoke my acceptance of this letter (the
“Revocation Period”); provided that all Severance Benefits shall cease
immediately upon any such revocation.  To be effective, the revocation
must be in writing and delivered to WorldGate Service, Inc., 3190 Tremont
Avenue, Trevose, PA 19355, Attn: General Counsel.  This letter will
not be effective or enforceable until the day after such seven (7) day period
has expired as required by law.  I understand, agree and deem that the
consideration exchanged for the various releases, covenants and agreements
contained herein is sufficient and apportionable and waive any and all rights to
assert any claim of lack of sufficiency and/or apportionability of
consideration.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    

    
      
        
          	 
      	 	
                  Sincerely,

                
	 
      	 	 
      
	 
      	 	
                  /s/
      James McLoughlin

                
	 
      	 	 
      
	 
      	 	
                  James
      McLoughlin

                
	 
      	 	 
      
	
                  Accepted
      and agreed:

                	 	 
      
	 
      	 	 
      
	
                  WorldGate
      Service, Inc.

                	 	 
      
	 
      	 	 
      
	
                  By:

                	
                  /s/ Joel Boyarski

                	 	 
      
	
                  Name:
      Joel Boyarski

                	 	 
      
	
                  Title:
      Senior Vice President and Chief Financial Officer

                	 	 
      
	 
      	 	 
      
	
                  WorldGate
      Communications, Inc.

                	 	 
      
	 
      	 	 
      
	
                  By:

                	
                  /s/ Joel Boyarski

                	 	 
      
	
                  Name:
      Joel Boyarski

                	 	 
      
	
                  Title:
      Senior Vice President and Chief Financial Officer

                	 	 
      

        

      

    

     

    
      
         

      

      
        6ACN
CONSUMER COMMUNICATIONS EQUIPMENT

    MASTER
PURCHASE AGREEMENT

    

    This
Master Purchase Agreement (hereinafter referred to as this “Agreement”), dated as of April
6, 2009 (the "Effective
Date"), is made and entered into by and between ACN Digital Phone
Service, LLC, a Delaware limited liability company, with its principal place of
business at 1000 Progress Place, Concord, NC, 28025 (hereinafter referred to as
“ACN”), and Ojo Video
Phones LLC, a Pennsylvania limited liability company, with its principal place
of business at 3190 Tremont Avenue, Trevose, PA 19053 (hereinafter referred to
as “Seller”).  Seller
and ACN are individually referred to herein as a “Party” and together as the
“Parties.”

    

    WHEREAS,
Seller is engaged in the business of manufacturing and selling certain Video
Phone communication devices and related accessories and providing a variety of
services with respect thereto;

    

    WHEREAS,
ACN is engaged in the business of purchasing and selling to its customers
certain communication devices; and

    

    WHEREAS,
the Parties desire to enter into an agreement for the purchase and sale of
certain products manufactured by Seller and related services thereto on the
terms and conditions set forth below.

    

    NOW,
THEREFORE, in consideration of the premise, the mutual promises hereinafter
contained, and other good and valuable consideration, receipt of which are
hereby acknowledged, the Parties hereto agree as follows:

    

    
      	
              1.

            	
              DEFINITIONS

            

    

    
      	
               
      

            	
              1.1

            	
              “ACN Marks” means those
      trademarks, service marks, trade names and logos of ACN or its affiliates
      provided by ACN to Seller for use in accordance with this
      Agreement.

            

    

    
      	
               
      

            	
              1.2

            	
              “ACN Platform” means the
      current release of the VoIP applications platform, including all
      modifications, updates, upgrades, enhancements and new releases thereto as
      provided to Seller by ACN in
writing.

            

    

    
      	
               
      

            	
              1.3

            	
              “Dollars” means U.S.
      Dollars.

            

    

    
      	
               
      

            	
              1.4

            	
              “Product” means the Video
      Phone communication devices, including all equipment hardware, materials,
      software and firmware, as described in Exhibit A
  hereto.

            

    

    
      	
               
      

            	
              1.5

            	
              “Services” means the
      services as described in Exhibit A
hereto.

            

    

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              1.6

            	
              “Spare Parts” means the
      spares or accessories that are provided by Seller to ACN for replacing the
      damaged components or spare parts of the
  Products.

            

    

    
      	
               
      

            	
              1.7

            	
              “Technical Documentation”
      means the mutually agreed specifications, manuals, installation manuals,
      technical reference manuals, drawings, release notes, descriptions, data
      and other relevant technical materials of the Product provided in
      accordance with this Agreement and its Exhibits relating to the operation,
      maintenance, commissioning, testing and inspection of the
      Product.

            

    

    

    
      	
              2.

            	
              SCOPE
      OF AGREEMENT

            

    

    
      	
               
      

            	
              2.1.

            	
              Scope.  Subject
      to the terms of this Agreement, Seller will provide Product, Spare Parts
      and Services to ACN pursuant to a written Purchase Order issued and
      accepted in accordance with Section 3
below.

            

    

    
      	
               
      

            	
              2.2.

            	
              Modifications and
      Additions.  Subject to ninety (90) days prior written
      notification to ACN, Seller may modify the Product, including software and
      firmware therein or add additional products to Exhibit A; provided,
      however, that any modified or additional Product must meet the
      compatibility requirements under Section 2.5 below and Seller must provide
      ACN with new Technical Documentation and a detailed summary that describes
      the modifications of any Product, including without limitation, any new
      features, upgrades, updates or bug fixes, as applicable.  Upon
      notification by Seller to ACN of Product changes, Seller must update or
      deliver to ACN up to an aggregate of ten units to ACN’s designated test
      facilities in North America and Europe, and ACN must sign-off (which shall
      not be unreasonably withheld, conditioned or delayed) as accepting Product
      changes prior to Seller shipping any modified units to ACN for resale to
      its customers.  Any agreed changes to the Technical
      Documentation requested by ACN, including without limitation the
      specifications for the Product, will be made pursuant to a mutually agreed
      change process as described in Exhibit
D.

            

    

    
      	
               
      

            	
              2.3.

            	
              Discontinuance.  Subject
      to the Parties' mutual agreement (which shall not be unreasonably
      withheld, conditioned or delayed), any Product may be discontinued subject
      to Seller's obligations pursuant to Section 2.4
  below.

            

    

    
      	
               
      

            	
              2.4.

            	
              Spare
      Parts.  Seller shall make Spare Parts for all Products
      available to ACN for a minimum of two (2) years after the last shipment of
      the applicable Product to ACN.  If ACN requires Spare Parts after
      such two-year period, Seller will provide available drawings or purchase
      specifications to assist ACN in obtaining the Products from other sources.
      The documentation to be supplied will be that documentation as is in
      existence at that time.

            

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              2.5.

            	
              Compatibility.  To
      the extent required by the Technical Documentation, Seller shall ensure
      that all Product shipped to ACN hereunder, shall be compatible and
      interoperate with (a) the then-current version of the ACN Platform, (b)
      all similar Products previously purchased by ACN hereunder, and (c) all
      other Video Phone equipment purchased by ACN from third
      parties.  ACN will notify Seller as soon as practicable of any
      planned or actual modification, update, upgrade, enhancement or release to
      the ACN Platform.  Seller agrees that it shall add features and
      functionality to the Products as may be necessary to ensure continued
      compatibility with the ACN
Platform.

            

    

    
      	
               
      

            	
              2.6.

            	
              Printing.  At ACN’s
      cost and expense Seller will provide printing services with respect to the
      packaging of Products for shipping.  A Purchase Order (as
      defined below) will include a description of the printing, including the
      relevant languages, to be applied to each of the applicable packaging
      items associated with a given Purchase Order, as well as any collateral
      inserts or documentation to be added to the shipped
    Products.

            

    

    
      	
              3.

            	
              PURCHASE
      ORDERS

            

    

    
      	
               
      

            	
              3.1.

            	
              Issuance.  Purchases
      by ACN will be by individual written purchase orders (“Purchase Order”) via fax
      or other electronic means made during the term of this
      Agreement.

            

    

    
      	
               
      

            	
              3.2.

            	
              Acceptance.  Purchase
      Orders will be deemed accepted upon Seller’s issuance of its initial
      invoice related to such Purchase Order (hereinafter referred to as “Initial
      Invoice”).  If an Initial Invoice is not issued within
      ten (10) days of receipt of a Purchase Order, the Purchase Order will be
      deemed rejected; provided, however, that Seller shall not be permitted to
      reject any Purchase Order that contains the information necessary for
      Seller to process the order and otherwise conforms to the terms and
      conditions of this Agreement, including without limitation the required
      lead times and advance forecast, provided however that if Seller
      reasonably demonstrates that it cannot meet the desired shipping date in
      the Purchase Order for reasons not related to Seller’s performance of its
      obligations under this Agreement, it can within five (5) business days of
      receiving the Purchase Order, notify ACN of a recommended commercially
      reasonable shipping date.  If the parties cannot agree on a
      shipping date within an additional five (5) business days after the
      request for an alternate shipping date, ACN may terminate the Purchase
      Order without any prejudice or
liability.

            

    

    
      	
               
      

            	
              3.3.

            	
              Initial
      Order.  The first Purchase Order for twenty-five thousand
      (25,000) pieces of Product, which shall be non-cancelable (hereinafter
      refer to as “Initial
      Order”), is to be issued as soon as practicable after Seller
      provides a demonstration of working Product to
  Buyer.

            

    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              3.4.

            	
              Commitment.  Subject
      to a mutual agreement between Seller and ACN as to the Technical
      Documentation requirements as defined in Section 1.7, and further subject
      to the ability of Seller to supply a Video Phone meeting the mutually
      agreed Technical Documentation and the Technical Support requirements as
      set forth in Exhibit C, ACN agrees that within twenty-four (24) months of
      the Effective Date, ACN will purchase from Seller 300,000 units of
      Product, subject to all the terms and conditions of this
      Agreement.

            

    

    
      	
               
      

            	
              3.5.

            	
              Delivery
      Schedule.  Each Purchase Order, subject to the conditions
      set forth in Article 6 below, shall set forth the desired delivery
      schedule for each Product.  ACN shall be entitled to a per unit
      credit of $15.00, solely for those units not shipped (unless previously
      shipped), to the extent the Purchase Order amount materially differs from
      the amount actually shipped within the time frames set forth in the
      desired delivery schedule as set forth in the accepted Purchase Order,
      including any modification thereof pursuant to Section 3.2
      above.

            

    

    

    
      	
              4.

            	
              PAYMENT
      AND INVOICE

            

    

    
      	
               
      

            	
              4.1.

            	
              Price.

            

    

    
      	
               
      

            	
              4.1.1.

            	
              The
      Parties intend that the price to ACN for the Products will be Seller’s
      cost of producing and supplying the Product (including by way of example
      and not limitation, freight, handling, insurance and overhead) (“Seller’s Costs”) plus a
      forty ($40) dollar markup.  On a quarterly basis, Seller will
      provide ACN with full documentation of these costs.  Any changes
      to Seller’s Costs at any time will apply upon the effective date of such
      cost change, and will apply to all new Purchase Orders accepted thereafter
      by Seller.

            

    

    
      	
               
      

            	
              4.1.2.

            	
              Prices
      are exclusive of any sales, use, property, and like taxes, as well as any
      duties and tariffs. Any such tax, duty, tariff Seller may be required to
      collect or pay upon the sale or delivery of the Products, other than taxes
      based on Seller’s income, shall be promptly reimbursed by ACN upon Seller
      providing appropriate documentation.  Applicable taxes, duties
      and tariffs shall be billed as a separate item on the
    invoice.

            

    

    
      	
               
      

            	
              4.2.

            	
              Invoicing.  Seller
      shall separately invoice ACN for Products ordered under each Purchase
      Order.  Seller shall invoice ACN ten percent (10%) of the total
      price of the Products set forth in a Purchase Order upon acceptance of the
      Purchase Order by Seller, which invoice shall be due within thirty (30)
      days after receipt of such invoice by ACN.  Upon delivery of
      Products to ACN, Seller shall invoice ACN for the remaining amounts due
      under the Purchase Order, which shall be paid as follows: (a) forty
      percent (40%) shall be due within five (5) days upon written confirmation
      of product shipment from Seller’s manufacturing facility and (b) the
      remaining fifty percent (50%) shall be due within the earlier of (i)
      thirty (30) days after receipt of product at ACN’s fulfillment facility,
      or (ii) forty-five (45) days after product
  shipment.

            

    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              4.3.

            	
              Payment
      Terms.

            

    

    
      	
               
      

            	
              4.3.1.

            	
              ACN
      shall make payments for Products purchased under this Agreement in Dollars
      by wire transfer.

            

    

    
      	
               
      

            	
              4.3.2.

            	
              The
      bank information for Seller is listed as
  following:

            

    

    Bank
Name:

    Bank
Account:

    SWIFT
Code:

    Account
Name:

    
      	
               
      

            	
              4.4.

            	
              Disputed
      Charges.  If Seller submits an invoice which ACN
      reasonably and in good faith believes is incorrect or it can be shown that
      the charges do not correspond to a Purchase Order, then ACN will pay any
      undisputed amounts in accordance with the Agreement and notify Seller in
      writing of the dispute.  While the Parties are working together
      to determine the correct amount to be invoiced, ACN will not be deemed to
      be in breach of this Agreement for nonpayment.  Seller shall
      provide ACN reasonable supporting documentation regarding any disputed
      invoice or claim amount.

            

    

    
      	
               
      

            	
              4.5.

            	
              ACN’s
      Representations. ACN hereby represents to Seller that it has
      financial ability to pay for Products ordered from Seller, is able to pay
      its debts in the ordinary course of business as they become due, and is
      not insolvent within the meaning of applicable bankruptcy
      law.  ACN shall provide any creditability information and
      documentation as reasonably requested by Seller.  ACN agrees and
      undertakes to notify Seller within thirty (30) days in the event that the
      foregoing representations become untrue or inaccurate.  ACN
      agrees that Seller may reasonably rely on the representations contained in
      this Section in selling Products to ACN, that these representations are a
      material inducement to Seller for selling Products and any extension of
      credit, and that it is ACN’s intent that Seller shall so
    rely.

            

    

    
      	
              5.

            	
              LEAD
      TIMES; CHANGES, RESCHEDULING AND CANCELLATIONS;
  RETURNS

            

    

    Seller
shall use its commercially reasonable efforts to manufacture and timely ship the
full quantity of Products under the Purchaser Order accepted by Seller, as
necessary to meet the delivery schedule.  Seller may make partial
shipments of less than the full quantity of Products under the Purchase Order
upon ACN's prior written consent. If Seller cannot ship purchase order
quantities as requested by ACN in two subsequent months, ACN retains the right
to cancel the particular Purchase Order (excluding the Initial Order) and/or
this Agreement.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              5.1.

            	
              Lead
      Time.  The initial product and parts lead time is one
      hundred fifty (150) days for the current Product.  Within the
      first ninety (90) days following the first delivery of Product to ACN, and
      within each thirty (30) days thereafter, ACN and Seller will meet to
      discuss the shortening of lead time changes, and Seller will make all
      reasonable efforts to shorten such lead time, until lead time becomes
      ninety (90) days.

            

    

    
      	
               
      

            	
              5.2.

            	
              Reduced Lead
      Time.  Notwithstanding the above, Seller will, on
      request, make reasonable efforts to shorten the lead time for demand
      exceeding the forecast quantities.

            

    

    
      	
               
      

            	
              5.3.

            	
              Rescheduling, Changes,
      Cancellations.  ACN may reschedule (no more than once per
      line item) or cancel the applicable part of an accepted order only in
      accordance with the following: (i) if, for reason other than an event of
      force majeure or the actions or omissions of ACN or its agents, a delay in
      the scheduled shipping date for the products ordered exceeds or will
      exceed thirty (30) days, or (ii) upon ACN’s written notice to Seller,
      received by Seller prior to the originally scheduled shipment date by a
      period greater than the current lead time for the product plus thirty
      days.  Any rescheduling which results in a delay in shipment by
      more than ninety days from the originally requested shipment date may, at
      Seller’s option, be deemed a cancellation by ACN.  Any
      cancellation or rescheduling of an accepted Purchase Order by ACN other
      than as expressly authorized above (other than for Seller’s default) shall
      be subject to the payment of an equitable cancellation charge including,
      without limitation, any unearned pricing adjustment and uniquely incurred
      costs for such order.  Such cancellation charge shall be
      determined based upon the work completed and commitments incurred in good
      faith prior to such cancellation and Seller’s current price to ACN for the
      applicable products.  At ACN’s request and at least fifteen (15)
      business days prior to payment of any cancellation charge, Seller will
      document all amounts it reasonably believes should be incorporated into
      any cancellation charge.  If ACN reasonably disputes the
      cancellation charge amounts, the parties will utilize the remedy available
      in Section 23.8.1 hereof.  Upon receipt of notice of such
      termination, Seller will use commercially reasonable efforts to terminate
      work in progress and/or to divert such products to other
      customers.  In no event shall such cancellation or rescheduling
      charge exceed the full contract price for the products so canceled or
      rescheduled by ACN.  ACN shall be entitled to receive any
      Products to the extent payment in full has been made to Seller for the
      same.

            

    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      	
              6.

            	
              PRODUCT
      FORECASTS

            

    

    On or
before the fifteenth day of each calendar month ACN shall provide Seller with a
monthly, detailed rolling forecast of its delivery requirements for each model
of the Product for the following six (6) calendar months.  Except as
set forth below, such forecast shall be non-binding and provided solely for
planning purposes.  To the extent such forecasted Products have a
requested delivery date within a period equal to the lead time plus fifteen days
from the date of the forecast, ACN shall be deemed to have issued Purchase
Orders hereunder consistent with the units so forecasted for this delivery
period.  To the extent such forecasted Products have a requested
delivery date within a period equal to the lead time period plus sixteen days,
but less than the lead time period plus forty-five days, both from the date of
the forecast, the delivery requirements for each version of the Product may be
adjusted only up to 25% (plus or minus) of the quantities forecast for this
period in the immediately preceding monthly forecast.

    
      	
              7.

            	
              ACCEPTANCE
      AND DELIVERY OF PRODUCT AND SPARE
PARTS

            

    

    
      	
               
      

            	
              7.1.

            	
              Any
      Product and Spare Parts shall be deemed to have been delivered in
      conformity with the applicable Purchase Order unless ACN gives written
      notice to the Seller within ten business days after the date of ACN’s
      receipt of such Products and/or Spare Parts at ACN’s fulfillment
      facility.  ACN shall notify Seller in writing with respect to
      any non-conformity of the Products and/or Spare Parts with the Purchase
      Order and these terms and conditions, setting forth in detail the nature
      and scope of any such non-conformity.  Such inspection or
      acceptance shall not, however, be deemed a waiver of any non-conformity
      which could not reasonably be ascertained by an inspection conducted in
      accordance with good commercial practices.  Absent timely
      receipt of such notification by Seller, such Products shall be deemed
      accepted by ACN.  Any determination of non-conformity hereunder
      shall be subject to verification by Seller.  Non-conforming
      Products which have been duly rejected in accordance herewith may be
      returned by ACN for repair, replacement or credit as set forth
      below.

            

    

    
      	
               
      

            	
              7.2.

            	
              Seller
      shall be responsible for any and all government mandated export and import
      requirements needed to deliver products to ACN’s fulfillment facilities,
      with the cost of such compliance being included within the Seller’s
      Costs.

            

    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
      	
              8.

            	
              SHIPPING
      AND RISK OF LOSS

            

    

    
      	
               
      

            	
              8.1.

            	
              All
      Products and Spare Parts shall be shipped FOB Origin at Seller's site in
      [   ].

            

    

    
      	
               
      

            	
              8.2.

            	
              Seller
      shall be responsible for arranging all freight, handling and insurance
      prior to delivery to ACN’s fulfillment facility.  Actual costs
      of shipping (including by way of example and not limitation, the freight,
      handling and insurance) will be borne by ACN with payment terms for
      shipping and related costs due upon receipt of invoice and supporting
      documentation from Seller. Seller will package the Products in accordance
      with ACN’s standard fulfillment guidelines as provided to Seller. All
      shipments shall be made on wooden pallets treated for entry into the USA,
      Canada and all EU countries.

            

    

    
      	
               
      

            	
              8.3.

            	
              If
      ACN desires to replace Seller as the shipping party or designate the
      method of shipment on each individual Purchase Order issued under this
      Agreement and/or arrange for shipment by other than the designated method,
      ACN shall pay any additional reasonable documented expense arising from
      such designation.

            

    

    
      	
              9.

            	
              LICENSE
      GRANT

            

    

    Subject
to the terms and conditions of this Agreement, Seller grants to ACN, with
respect to the Products purchased by ACN from Seller and paid for hereunder, including without limitation, the
hardware, firmware and software that constitute the Product, a non-exclusive,
irrevocable, perpetual, worldwide, royalty-free license to distribute and use
(and solely and then only to the extent reasonably required for such lawful use
of the Products purchased hereunder, reproduce and create derivative works of
such firmware and software, and publicly perform and publicly display such works
contained therein, by all means now known or later developed), with the right to
sublicense such rights through multiple levels of sublicenses through its
standard distribution channels.  Seller agrees to render all
reasonably required assistance to ACN to protect ACN’s rights herein above
described.  Nothing contained herein shall give ACN or any other
person or entity any other license, right or interest in Products except as
herein expressly provided, and any such other license, right and interest is
hereby expressly reserved by Seller and its affiliated companies, and disclaimed
by ACN and anyone else gaining access to the Products hereunder.  By
way of example and not limitation, the following rights are expressly
disclaimed; any right for itself, or to sublicense or otherwise grant to any
party any right to reproduce or modify the product, to manufacture or provide
other video phone products or services, to facilitate or control the access by
and/or operation of the Products with other products and services, or to
facilitate the operation of video phones other than the Products or video phones
that are not part of an Seller authorized service offering.  All use
of Seller’s intellectual property contained in or related to the Products shall
inure to the benefit of Seller and its affiliated companies.  Seller
reserves all rights and remedies, whether provided by contract, at law,
self-help, in equity and/or otherwise, to enforce it rights under this
license.  Any breach or threatened breach of this license shall cause
Seller irreparable injury for which there may be no adequate remedy at law, and
in addition to any other remedies available, Seller shall be entitled to obtain
injunctive relief as well as actual damages.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    
      	
              10.

            	
              BRANDING

            

    

    
      	
            	
              10.1.

            	
              Branding.  ACN
      shall provide to Seller the content, language, logos (including size and
      location thereof), and design of all packaging, end user documentation,
      welcome kits and any other materials included with the Products for
      distribution by ACN hereunder.  The Seller agrees that the ACN
      Marks shall be used on all Products.  In addition, ACN provided
      "wallpaper" shall be loaded and used on all Products, where applicable and
      reasonably possible.

            

    

    
      	
            	
              10.2.

            	
              Welcome
      Kit.  If applicable, ACN may modify welcome kits and
      other materials included with the Products for distribution at ACN’s cost
      and expenses, and upon sixty (60) days prior written notice to
      Seller.

            

    

    
      	
            	
              10.3.

            	
              Seller’s
      products and services are identified by means of certain trade names,
      trade dress, service marks, trademarks, logos, and other indicia of
      origin, including, but not limited to, the mark "Ojo" and such indicia of
      origin as are now, or may hereafter, be designated by Ojo for use in
      connection therewith (collectively referred to as Seller’s "Proprietary
      Marks").  Seller continues to develop, use, and control
      the use of such Proprietary Marks in order to identify for the public the
      source of services and products marketed thereunder and to represent the
      high standards of quality and performance of such products and
      services.  ACN may use and promote Seller’s Proprietary
      Marks.  In the event that ACN does use and promote Seller’s
      Proprietary Marks, all use of Seller’s Proprietary Marks shall be on a
      non-exclusive basis, shall be in accordance with Seller’s current
      guidelines and directions, and shall be used for the sole purpose of
      promoting the Ojo video phone products and services.  Any use of
      Seller’s Proprietary Marks shall always clearly indicate that the same is
      the property of Seller or a Seller affiliated company, as the case may be,
      and as directed by Seller.  It is acknowledged and agreed that
      Seller may at any time object to a specific use or application of any of
      Seller’s Proprietary Marks, in which event such use or application will
      promptly cease.  In no event shall Seller’s Proprietary Marks or
      any similar words, names symbols or marks be (i) used as part of any
      business name, or on a letterhead or business card, except as may be
      approved by Seller in writing; (ii) attached to any other name or mark; or
      (iii) added to, obliterated, defaced, modified or removed from the Seller
      video phone products, documentation or the packaging
      thereof.  All materials using Seller’s Proprietary Marks that
      are generated other than by Seller shall require the prior written
      (including electronic) approval of Seller.  Except as may be
      expressly agreed in writing by Seller, all use of Seller’s Proprietary
      Marks shall cease immediately upon the expiration or termination of the
      agreement in which these terms and conditions are
      incorporated.

            

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              10.4.

            	
              Trademark
      License.  Subject to the terms and conditions of this
      Agreement, ACN hereby grants Seller a non-transferable, non-exclusive,
      limited license to use the ACN Marks in the format provided by ACN solely
      on Products and related documentation which are ordered by ACN pursuant to
      a Purchase Order solely in relation to performing its obligations under
      this Agreement.  Seller will comply with conditions reasonably
      set forth in writing from time to time by ACN with respect to the style,
      appearance and manner of use of the ACN Marks.  Any use of the
      ACN Marks not specifically provided for by such conditions shall be
      adopted by Seller only upon prior written approval by
      ACN.  Seller hereby acknowledges ACN's ownership of the ACN
      Marks and agrees that it will not contest such
      ownership.  Seller also agrees that any and all rights that may
      be acquired by the use of the ACN Marks by Seller shall inure to the sole
      benefit of ACN.  ACN agrees that to the extent Seller has
      manufactured Products bearing the ACN Marks in accordance with the terms
      and conditions of this Agreement, such Products will not be generally
      sellable other than to ACN, and in the event of any cancellation of a
      Purchase Order not authorized by this Agreement or a termination of this
      Agreement other than for Seller’s breach hereof, ACN will be liable for
      payment of the full purchase price for such Products as well as any goods
      in process not being purchased by ACN
hereunder.

            

    

    
      	
              11.

            	
              WARRANTY

            

    

    
      	
            	
              11.1.

            	
              All
      Products and Spare Parts purchased under this Agreement are warranted by
      Seller (i) for units of Product shipped for use in the US, for a period of
      fifteen (15) months from receipt by ACN or twelve (12) months from the
      date of purchase by an ACN end user customer, whichever is longer, and
      (ii) for units of Product shipped for use in the EU, for a period of
      twenty-four (24) months from the date of purchase by an end-user customer
      (the “Warranty
      Period”).  This warranty is that the Product will conform
      to the generally applicable product specification issued by Seller in
      writing and expressly identified as the product specification, (ii) and
      that the hardware components of the Products and the media upon which any
      software components are delivered, will be free from defects in
      workmanship and materials at the time of delivery .  This
      warranty is provided solely to ACN as a reseller of the products
      hereunder, and to no other person or entity, whether by way of assignment
      or otherwise.  Seller’s warranty to ACN shall not be enlarged,
      diminished or affected by, and no obligation or liability shall arise or
      grow out of, the rendering of technical advice or service to ACN in
      connection herewith.  Seller’s warranty shall apply only to
      Products which are found to have been defective within the Warranty
      Period, provided Seller is so notified in writing of any such defects, and
      the defective Product is returned to a Seller authorized service center,
      including ACN’s third party logistics support vendors who have been
      approved by Seller, in accordance with the procedures set forth herein, no
      later than thirty (30) days after the expiration of the Warranty
      Period.  Products repaired or replaced under warranty are
      warranted for the greater of one hundred twenty (120) days from the
      receipt thereof by ACN or for the unexpired term of the original
      warranty.

            

    

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              11.2.

            	
              The
      above warranty shall not apply to any defects or deficiency arising
      from:

            

    

    
      	
               
      

            	
              11.2.1.

            	
              Any
      interference with Products which is not as a result of normal usage (for
      instance, but not limited to, by not following the instructions given in
      the user’s manual);

            

    

    
      	
               
      

            	
              11.2.2.

            	
              Any
      modification made to the Products by ACN or other third party not duly
      authorized by Seller;

            

    

    
      	
               
      

            	
              11.2.3.

            	
              Any
      ACN provided, consigned, or designated hardware, software, and/or service,
      which are incorporated or adopted in the Products and are not authorized
      or approved for use with the Products by
Seller;

            

    

    
      	
               
      

            	
              11.2.4.

            	
              Any
      operation or use of any of the Products in combination with other
      hardware, software or system not furnished or authorized by
      Seller;

            

    

    
      	
               
      

            	
              11.2.5.

            	
              Any
      accident or deterioration or as a result of the occurrence of an event
      such as damage by water, fire, explosion, or
  lightning;

            

    

    
      	
               
      

            	
              11.2.6.

            	
              Any
      malfunctions resulting from negligent operation or unfit operating
      environment; or

            

    

    
      	
               
      

            	
              11.2.7.

            	
              Any
      malicious act or intentional damage committed by any person
      whatsoever.

            

    

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              11.3.

            	
              Prior
      to the return of any defective Products to Seller, ACN shall request from
      Seller a return material authorization ("RMA"), which RMA shall
      not be unreasonably withheld by Seller.  Products returned
      without an RMA will be refused and returned freight collect to the
      sender.  Upon the receipt of such RMA, ACN shall, at its risk
      and expense, securely pack and return such defective Products as have been
      furnished by Seller hereunder, to Seller at Seller's designated return
      facility as set forth in the RMA.  Such products shall be
      clearly labeled with the RMA number.  Subject to the above
      conditions and limitations, and provided that ACN has rightfully and
      timely, either rejected Products, rightfully revoked a prior acceptance or
      claimed a breach of the aforesaid warranty in accordance with the terms
      hereof, and duly notified Seller and returned the defective Product,
      Seller shall, without charge to ACN, at Seller's option, repair or replace
      (or make arrangements therefor) any such defective Products, and return
      the repaired or replaced Products to the applicable ACN facility, or
      provide ACN with a credit for the same.  In such event Seller
      shall also provide ACN with a credit for the standard shipping charges for
      originally returning the applicable defective Product to
      Seller.  For purposes hereof used Product can be replaced with
      refurbished product, with such refurbished Product covered under the same
      Warranty Period as the original purchase.  Any expedited or
      other non-standard shipping or handling will be at ACN’s
      expense.  In the event of an improper or untimely rejection,
      revocation, return, or in the event of a defect not covered by the above
      warranty, ACN shall pay for all labor, materials and third party charges
      involved in the shipping, receipt, handling, testing, storage and return
      or restocking, as well as the requested remediation of any defect not
      covered by the aforesaid, at the then current rates of
      Seller.  At ACN’s request and at least fifteen (15) business
      days prior to payment of any such return charges, Seller will document all
      amounts it reasonably believes should be incorporated into any such return
      charge.  If ACN reasonably disputes the return charge amounts,
      the parties will utilize the remedy available in Section 23.8.1
      hereof.

            

    

    
      	
            	
              11.4.

            	
              THE
      LIABILITY OF SELLER, IF ANY, FOR DAMAGES RELATING TO ANY ALLEGEDLY
      DEFECTIVE PRODUCTS, UNDER ANY LEGAL OR EQUITABLE THEORY, SHALL BE LIMITED
      TO, IN SELLER'S DISCRETION, THE REPAIR OR REPLACEMENT OF THE PRODUCTS OR
      THE REFUND OF THE ACTUAL PRICE PAID (TAKING INTO ACCOUNT ANY DISCOUNTS,
      REBATES AND THE LIKE WHICH MAY LOWER THE PRICE) TO SELLER BY ACN FOR SUCH
      PRODUCTS.

            

    

    
      	
            	
              11.5.

            	
              In
      the event of an epidemic failure, which, for purposes of this Agreement,
      will mean a failure covered by the above warranty which is due to the same
      cause, and which occurs in more than 10% of the Products (and at least
      fifty units) in any given delivery, Seller shall use all reasonable
      efforts to correct the cause(s) of such failure at Seller’s sole expense.
      If Seller cannot correct the problem in a reasonable amount of time, ACN
      has the right to cancel all pending Purchase Orders affected, or
      reasonably like to be affected, by such defect without
      penalty.

            

    

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              11.6.

            	
              EXCEPT
      AS PROVIDED IN SECTION 11.7 BELOW, THE FOREGOING WARRANTY IS EXCLUSIVE AND
      IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT
      LIMITED TO, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR
      PURPOSE. SELLER SHALL HAVE NO RESPONSIBILITY FOR ANY PARTICULAR
      APPLICATION FOR ANY PRODUCTS.

            

    

    
      	
               
      

            	
              11.7.

            

    

    In
addition to the warranty above, Seller hereby represents, warrants and agrees
that (a) to the knowledge of Seller, the Products shall comply with all
applicable laws, statutes, regulations, rules, ordinances and judicial or
governmental agency orders and (b) to the extent applicable, each Product shall,
at Seller's option, either (i) contain, on the outside surface of all exposed
power cords, cables, or wires, no more than 300 parts per million of lead, by
weight; or (ii) be accompanied by the following warning label:
“WARNING:  The cord(s) on this product contain(s) lead, a chemical
known to the State of California to cause birth defects or other reproductive
harm.  Wash hands after handling."  If Seller elects to
utilize option (b)(i) above, Seller shall use commercially reasonable efforts to
make available to ACN test results verifying that the lead content of the
Product cords, cables, or wires does not exceed 300 parts per million, using a
testing method of sufficient sensitivity to establish a limit of quantification
(as distinguished from detection) of less than 300 parts per
million.  If Seller elects to utilize option (b)(ii) above, the
warning shall appear in the same section of the label that contains other safety
information, if any, or near its displayed price and/or UPC
code.  Moreover, the word “WARNING” shall appear in all capital
letters and in bold typeface, and the hand-washing admonition shall be in bold
and italicized typeface.  If space does not permit the warning to be
inserted into the label, it shall be prominently affixed to each Product unit
itself or to each Product unit packaging.  Type shall be similar in
size to that used to convey other important information regarding use of the
Product.

    
      	
              12.

            	
              INDEMNITY

            

    

    
      	
            	
              12.1.

            	
              Seller
      agrees to indemnify, defend and hold ACN harmless from and against any
      third party claim, suit or proceeding involving ACN to the extent that
      such claim, suit or proceeding is based on a claim related to Seller’s
      obligations under Section 11.7, provided that Seller is notified promptly
      in writing and given complete authority, information and assistance
      required for defense of same.  Seller, however, shall not be
      responsible for any settlement made by ACN without Seller's prior written
      consent.

            

    

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              12.2.

            	
              Seller
      agrees to indemnify, defend and hold ACN harmless from and against any
      third part claim asserted against ACN, arising from the direct
      infringement by the Products sold by Seller to ACN hereunder, of a valid
      United States patent.  The aforesaid notwithstanding, in no
      event shall Seller be liable for any of the following exclusions: (i)
      infringement by any products, components, materials, or goods not supplied
      by Seller hereunder, or arising from a combination with, an addition to,
      or modification of the products after delivery by Seller, (ii) the use of
      the Products as part of a process or method involving steps, devices,
      agents or intermediary not fully contained or performed within the
      product, (iii) any products manufactured to the purchasing party’s
      specification, (iv) sales after the purchasing party hereunder has been
      advised to cease sales, or (v) for royalties payable with respect to the
      use of such infringing products, or revenues derived by the purchasing
      party there from, or for any royalty basis other than as solely upon the
      purchase price of the infringing product from Seller.  Seller
      shall not be obligated to defend or be liable for costs and damages
      arising out of or related to the above exclusions and a comparable
      indemnity as that set forth above is hereby extended by the purchasing
      party to Seller if any suit or proceeding brought against Seller to the
      extent it is based upon any of the above exclusions and/or claims arising
      therefrom.  In the event any Product furnished hereunder is, in
      Seller's opinion, likely to or does become the subject of a claim of
      infringement, Seller may, at its option and expense, procure for ACN the
      right to continue using the Product, replace same with a non-infringing
      Product of substantially similar capability, or modify the Product so it
      becomes non-infringing (but has substantially similar capability). In the
      event none of the foregoing alternatives is commercially reasonable, and
      provided that there is a bona fide claim of infringement, in order to
      minimize its liabilities hereunder, Seller may terminate this Agreement
      and the obligation to sell Product to ACN hereunder by written notice to
      ACN; provided however, that notwithstanding such termination, (i) the
      indemnity provided in Section 12.2 hereof shall still apply and remain in
      full force and effect, and (ii) Seller shall promptly repurchase from ACN
      at full cost, all units of Product purchased by ACN under this Agreement
      and not yet resold by ACN and ACN will promptly return same per the prior
      written instructions of Seller, which shall not be unreasonably
      withheld.

            

    

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              12.3.

            	
              THE
      FOREGOING STATES THE SOLE AND EXCLUSIVE LIABILITY OF SELLER HERETO FOR
      INFRINGEMENT OR THE LIKE, OF ANY PATENTS, TRADEMARKS, COPYRIGHTS, AND
      OTHER PROPRIETARY RIGHTS, WHETHER DIRECT OR CONTRIBUTORY, AND IS IN LIEU
      OF ALL WARRANTIES, EXPRESS, IMPLIED OR STATUTORY IN REGARD THERETO,
      INCLUDING, WITHOUT LIMITATION, THE WARRANTY AGAINST INFRINGEMENT IN THE
      UNIFORM COMMERCIAL CODE.

            

    

    
      	
              13.

            	
              TERM
      AND TERMINATION

            

    

    
      	
            	
              13.1.

            	
              This
      Agreement shall commence on the Effective Date and, unless earlier
      terminated, shall continue for a period of two (2) years thereafter and
      shall be automatically renewed for additional one (1) year terms unless
      either Party terminates this Agreement by written notice to the other
      Party at least two (2) months before the expiration of the original term
      or any such extended term of this
Agreement.

            

    

    
      	
            	
              13.2.

            	
              This
      Agreement may be terminated as
follows:

            

    

    
      	
               
      

            	
              13.2.1.

            	
              By
      either Party at any time, if the other Party materially defaults in
      performing any provision of this Agreement. The defaulting Party shall
      have a period of thirty (30) days from the date of receipt of written
      notice from the non-defaulting Party describing the default within which
      to remedy the default. The termination shall become effective at the end
      of the thirty (30) day period if the defaulting Party has failed to remedy
      the default.

            

    

    
      	
               
      

            	
              13.2.2.

            	
              If
      either Party (i) admits in writing its inability to pay its debts
      generally as they become due, or (ii) makes an assignment for the benefit
      of its creditors, or (iii) institutes or consents to the filing of a
      petition in bankruptcy, whether for reorganization or liquidation, under
      federal or similar applicable state laws, or (iv) is adjudged bankrupt or
      insolvent by a court having jurisdiction, then in either of such events,
      the other Party may, by written notice, immediately terminate this
      Agreement.

            

    

    
      	
            	
              13.3.

            	
              ACN's
      obligation to pay for all Products purchased by it hereunder (and not
      cancellable in accordance herewith) and the license granted in Article 10
      above shall survive termination or expiration of this Agreement. In the
      event that Seller terminates the Agreement for default, Seller will honor
      any Purchase Orders received prior to the effective date of such
      termination.

            

    

    
      	
              14.

            	
              LIMITATION
      OF LIABILITY

            

    

    EXCEPT TO
THE EXTENT OF A PARTY'S INDEMNIFICATION OBLIGATIONS HEREIN, UNDER NO
CIRCUMSTANCE SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR ANY OTHER PERSON
FOR ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING WITHOUT
LIMITATION DAMAGES BASED UPON LOST GOODWILL, LOST SALES OR PROFITS, COSTS OF
REMOVAL AND REINSTALLATION, LOSS OF INVESTMENT, WORK STOPPAGE, IMPAIRMENT OF
OTHER GOODS OR OTHERWISE AND WHETHER ARISING OUT OF BREACH OF WARRANTY, BREACH
OF CONTRACT, NEGLIGENCE OR OTHERWISE. EACH PARTY’S LIABILITY SHALL NOT EXCEED
THE TOTAL OF THE AMOUNT OF SALES TO ACN FOR THE APPLICABLE PRODUCT AS SOLD
HEREUNDER FOR THE PRIOR TWELVE MONTH PERIOD.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    
      	
              15.

            	
              TRAINING

            

    

    Seller
shall provide all training as required in Exhibit B.

    
      	
              16.

            	
              TECHNICAL
      SUPPORT

            

    

    Seller
shall provide all technical support as required in Exhibit C.

    
      	
              17.

            	
              PRODUCT
      LINE EVOLUTION

            

    

    Seller
shall use commercially reasonable efforts to keep abreast of major developments
in the video phone industry and shall allow ACN to assist in creating design
concepts for the next generation products, including the look and feel of such
products and its technology.  Each Party agrees to meet from time to
time to discuss any developments that might substantially affect the production
of the Product under this Agreement.

    
      	
              18.

            	
              FORCE
      MAJEURE

            

    

    Neither
Party shall be liable for a delay in performing its obligations under this
Agreement if such delay is caused by anything beyond such Party's reasonable
control, including, but not limited to, strike, riot, war, government
regulations, flood or any other unforeseeable or unavoidable event; provided,
that such delay could not have been prevented by reasonable precautions or
commercially accepted processes, or could not reasonably be circumvented by
through the use of substitute services, alternate sources, work around plans or
other means.  Delays of suppliers shall not be deemed to be beyond the
reasonable control of a Party unless such supplier's delay is the result of
causes beyond such supplier's reasonable control.

    
      	
              19.

            	
              REGULATORY LAWS AND
      STANDARDS.

            

    

    Except as
otherwise provided herein, Seller makes no promise or representation that the
Products shall conform to any local laws, regulations, ordinances, codes or
standards, except as particularly specified and agreed upon in writing by a duly
authorized representative of Seller.  Prices for Products do not
include the cost of any inspections or permits as may be required of
ACN.

    
      	
              20.

            	
              EXPORT
      RESTRICTIONS

            

    

    Seller
agrees that it shall not at any time make or permit any export or re-export of
Products directly or indirectly to any country, without full compliance with
United States export laws and regulations as issued by the United States
Department of Commerce, Office of Export Administration, as amended from time to
time, as those laws and regulations apply to the Products.  ACN shall
provide Seller such information and assistance as may reasonably be required by
Seller in connection with securing any required export authorizations or
licenses, and to take timely action to obtain all required support
documentation.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    
      	
              21.

            	
              CONFIDENTIALITY

            

    

    Each
Party agrees that it shall not disclose to any third party, or use for its own
benefit, except as expressly permitted herein and other than is necessary for
its performance under this Agreement, any trade secrets, technical data,
methods, processes or procedures or any other confidential, financial, or
business information or data of the other Party, which is disclosed by one Party
to the other in the course performance of this Agreement, without the prior
written consent of the Party asserting ownership of the information. This
obligation shall survive the termination or expiration of this Agreement for a
period of 2 years. This Article 21 shall not apply to any data or information
which (a) becomes generally known or available through no fault of the receiving
Party; (b) is already known to the receiving Party at the time of receipt as
evidenced by its written records; (c) is received from a third party without
breach of the confidentiality obligations of this Agreement; or (d) is required
by court order or operation of law, but only for the sole purpose and to the
extent of, the required disclosure.  The aforesaid notwithstanding,
the Products and the components thereof shall not be de-compiled, disassembled
or otherwise reverse engineered.  No copies of, or alterations to, or
other derivatives of, shall be made with respect to the Products or its
components (except as expressly authorized by Seller herein.)  No
serial numbers or other proprietary or legally required markings, or warnings or
restrictive legends are to be removed, modified or defaced.  To the
extent Seller offers access to any components of the Products, such access shall
be solely for the purposes set forth herein and be fully in compliance with any
instructions provided by Seller.

    
      	
              22.

            	
              REPRESENTATIVES

            

    

    
      	
            	
              22.1.

            	
              Each
      Party shall designate the following representatives (which may be revised
      from time to time by providing notice to the other Party) to be
      responsible for technical issues that arise in connection with this
      Agreement:

            

    

    

    
      
        
          	
                  ACN’s
      Technical Representative

                	
                  Seller’s
      Technical Representative

                
	
                  Primary:

                	
                  Primary:

                
	
                  Back-Up:

                	
                  Back-up:

                

        

      

    

    

    
      	
            	
              22.2.

            	
              Each
      Party shall designate the following representative (which may be revised
      from time to time by providing notice to the other Party) to be
      responsible for business issues that arise in connection with this
      Agreement.

            

    

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    
      
        	
                ACN’s
      Business Representative

              	
                Seller’s
      Business Representative

              
	
                Primary:

              	
                Primary:

              
	
                Back-Up:

              	
                Back-up:

              

      

    

    

    
      	
              23.

            	
              GENERAL
      PROVISIONS

            

    

    
      	
            	
              23.1.

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

            

    

    

    Seller:     Ojo
Video Phones LLC

                   
3190 Tremont Avenue

     
             
Trevose, PA, 19355

      
            
Attn:  General Counsel

                   
Fax: 215-354-1049

                   
Email: rgort@wgate.com

    

    ACN:    
ACN Digital Phone Service, LLC

                  
1000 Progress Place

                   Concord,
NC 28025

                  
Attn:  General Counsel – North America

                  
Fax:   704-260-3304

                  
Email: kkuder@acninc.com

    

    
      	
            	
              23.2.

            	
              Assignment.  Neither
      Party shall have the right to assign, transfer or sublicense its rights or
      obligations under this Agreement without the prior written consent of the
      other Party, except that either Party may assign its rights and
      obligations under this Agreement without the other Party's approval to the
      extent such assignment is limited to a change in corporate form of such
      Party only. Any prohibited assignment shall be null and
      void.  The parties acknowledge and agree that nothing in this
      section 23.2 shall limit ACN’s ability to finance the purchase of
      Products, including the execution of required documentation creating a
      security interest in such purchased
Products.

            

    

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              23.3.

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

            

    

    
      	
            	
              23.4.

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

            

    

    
      	
            	
              23.5.

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

            

    

    
      	
            	
              23.6.

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

            

    

    
      	
            	
              23.7.

            	
              Governing
      Law.  This Agreement, its Exhibits and each Purchase
      Order shall be governed by the laws of the State of New York, excluding
      its conflicts of law rules.

            

    

    
      	
            	
              23.8.

            	
              Dispute
      Resolution

            

    

    
      	
               
      

            	
              23.8.1.

            	
              Informal Dispute
      Resolution.

            

    

    Prior to
filing any arbitration proceeding pursuant to Section 23.8.2 below, the Party
intending to file such a proceeding shall be required to notify the other Party
in writing of the existence and the nature of any dispute.  Within
fifteen (15) business days after the other Party’s receipt of such notice, the
authorized representatives of both of the Parties shall meet in order to attempt
to resolve the dispute amicably.  If such informal dispute resolution
attempts prove to be unsuccessful, either Party may initiate an arbitration
proceeding as described in Section 23.8.2 below.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              23.8.2 

            	
              Arbitration.

            

    

    All
controversies, disputes or claims arising in connection with, from or with
respect to this Agreement which are not resolved by the informal dispute
resolution described in Section 23.8.1 above, shall be finally settled in
accordance with the commercial arbitration rules of the American Arbitration
Association ("AAA") then obtaining, by a panel of three
arbitrators.  Each Party shall have the right to appoint one
arbitrator from the list of arbitrators supplied to the Parties by the AAA, and
the two arbitrators so appointed shall appoint the third.  The place
of arbitration shall be the City of New York, New York, USA and the language of
the arbitration shall be in English.  The arbitrators shall determine
the matters in dispute in accordance with the internal law of the State of New
York, without reference to the Convention on Contracts for the International
Sale of goods.  Except as precluded by the United Nations Convention
on the Recognition and Enforcement of Foreign Arbitral Awards, the internal
procedure and substantive laws of New York and the United States Federal
Arbitration Act shall govern all questions of arbitral procedure, arbitral
review, scope of arbitral authority, and arbitral enforcement.  The
Parties agree that the award of the arbitrators shall be the sole and exclusive
remedy between them regarding any claims, counterclaims, issues or accountings
presented or pled to the arbitrators, that the award shall be made and shall be
promptly payable in Dollars, free of any tax, deduction or offset, and that any
costs, fees or taxes instant to enforcing the award shall, to the maximum extent
permitted by law, be charged against the Party resisting such
enforcement.  No claim may be submitted by a Party to arbitration in
accordance with this Section unless such submitting Party notifies the other
Party within two (2) years of the date on which the submitting Party first knew
or should have known of the existence of the facts indicating the existence of
such dispute.  Each Party shall continue performing its obligations
under this Agreement while any dispute is being resolved except to the extent
the issue in dispute precludes performance (dispute over payment shall not be
deemed to preclude performance).

    
      	
            	
              23.9.

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

            

    

    
      	
            	
              23.10.

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

            

    

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              23.11.

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

            

    

    
      	
            	
              23.12.

            	
              Incorporation.  All
      Exhibits attached hereto are incorporated herein by this
      reference.

            

    

    

    [Remainder
of Page Intentionally Blank]

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    INTENDING TO BE LEGALLY BOUND,
the Parties hereto have caused this Master Purchase Agreement to be executed as
of the date and year first above written.

    

    
      
        
          
            
              	
                      ACN
      Digital Phone Service, LLC

                    	 	
                      Ojo
      Video Phones LLC

                    
	 
      	 	 
      
	
                      /s/ Dave Stevanovski

                    	 	
                              /s/
      Harold M. Krisbergh

                    
	
                      (Signature)

                    	 	
                      (Signature)

                    
	 
      	 	 
      
	
                      Dave Stevanovski

                    	 	
                      Harold M. Krisbergh

                    
	
                      (Typed/Printed
      Name)

                    	 	
                       
      (Typed/Printed Name)

                    
	 
      	 	 
      
	
                      President

                    	 	 
      
	
                      (Title)

                    	 	
                      (Title)

                    

            

          

        

      

    

     

    
      
        
        

      

      
        22

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