As filed with the Securities and Exchange Commission
on October 2, 1997
REGISTRATION NO. 333-32753
=================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
PRE-EFFECTIVE AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
STARTEC GLOBAL COMMUNICATIONS CORPORATION
(Exact name of Registrant as specified in its charter)
4813
(Primary Standard Industrial Code Number)
MARYLAND 52-1660985
(State or other Jurisdiction (I.R.S. Employer Ident. No.)
of Incorporation or Organization)
---------------
10411 MOTOR CITY DRIVE RAM MUKUNDA
BETHESDA, MD 20817 PRESIDENT AND CHIEF
(301) 365-8959 EXECUTIVE OFFICER
(Address, Including Zip Code, 10411 MOTOR CITY DRIVE
and Telephone Number, Including BETHESDA, MD 20817
Area Code, of Registrant's (301) 365-8959
Principal Executive Offices) (Name, Address, Including
Zip Code, and Telephone
Number Including Area
Code, of Agent for Service)
----------------
COPIES TO:
Thomas L. Hanley, Esq. John L. Sullivan, III, Esq.
Robert B. Murphy, Esq. David L. Kaye, Esq.
Yolanda Stefanou Faerber, Esq. Venable, Baetjer & Howard LLP
Shulman, Rogers, Gandal, 2010 Corporate Ridge
Pordy & Ecker, P.A. Suite 400
11921 Rockville Pike McLean, VA 22102
Rockville, MD 20852 (703) 760-1600
(301) 230-5200
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE
PUBLIC: AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT
BECOMES EFFECTIVE.
If any of the securities being registered on this Form are
to be offered on a delayed or continuous basis pursuant to Rule
415 under the Securities Act of 1933, check the following box.[ ]
If this Form is filed to register additional securities for
an offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to
Rule 462(c)under the Securities Act, check the following box and
list the Securities Act registration statement number of the
earlier effective registration statement for the same offering.[]
If delivery of the prospectus is expected to be made
pursuant to Rule 434, please check the following box. [ ]
The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, or until this Registration
Statement shall become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.
=================================================================
PAGE 0 OF 238 PAGES
EXHIBIT INDEX ON PAGE II-11
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth an estimate (except for the
SEC registration fee, NASD filing fee and Nasdaq National Market
listing fee) of the fees and expenses, all of which will be borne
by the Registrant, in connection with the sale and distribution
of the securities being registered, other than the underwriting
discounts and commissions.
SEC registration fee .............................. $8,817.00
NASD filing fee .................................... *
Nasdaq National Market listing fee .................. *
Legal fees and expenses ........................... *
Accounting fees and expenses ........................ *
Blue Sky fees and expenses ........................... *
Printing and engraving expenses ..................... *
Transfer Agent and Registrar fees and expenses ...... *
Miscellaneous ....................................... *
Total ................................................ $ *
II-1
______________
* To be completed by amendment.
ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 2-418 of the Corporations and Associations Article
of the Annotated Code of Maryland permits a corporation to
indemnify its present and former officers and directors, among
others, against judgments, penalties, fines, settlements and
reasonable expenses actually incurred by them in connection with
any proceeding to which they may be made a party by reason of
their services in those or other capacities, unless it is
established that (a) the act or omission of the director or
officer was material to the matter giving rise to the proceeding
and (i) was committed in bad faith or (ii) was the result of
active and deliberate dishonesty; or (b) the director or officer
actually received an improper personal benefit in money,
property, or services; or (c) in the case of any criminal
proceeding, the director or officer had reasonable cause to
believe that the act or omission was unlawful. Maryland law
permits a corporation to indemnify a present and former officer
to the same extent as a director, and to provide additional
indemnification to an officer who is not also a director. In
addition, Section 2-418(f) of the Corporations and Associations
Article of the Annotated Code of Maryland permits a corporation
to pay or reimburse, in advance of the final disposition of a
proceeding, reasonable expenses (including attorney's fees)
incurred by a present or former director or officer made a party
to the proceeding by reason of his service in that capacity,
provided that the corporation shall have received (a) a written
affirmation by the director or officer of his good faith belief
that he has met the standard of conduct necessary for
indemnification by the corporation; and (b) a written undertaking
by or on his behalf to repay the amount paid or reimbursed by the
corporation if it shall ultimately be determined that the
standard of conduct was not met.
The Registrant has provided for indemnification of
directors, officers, employees, and agents in Article VIII of its
charter. This provision reads as follows:
(a) To the maximum extent permitted by the laws of the
II-2
State of Maryland in effect from time to time, any person who is
or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that such
person (i) is or was a director or officer of the Corporation or
of a predecessor of the Corporation, or (ii)is or was a director
or officer of the Corporation or of a predecessor of the
Corporation and is or was serving at the request of the
Corporation as a director, officer, partner, trustee, employee or
agent of another foreign or domestic corporation, limited
liability company, partnership, joint venture, trust, other
enterprise, or employee benefit plan, shall be indemnified by
the Corporation against judgments, penalties, fines, settlements
and reasonable expenses (including, but not limited to
attorneys' fees and court costs) actually incurred by such person
in connection with such action, suit or proceeding, or in
connection with any appeal thereof (which reasonable expenses may
be paid or reimbursed in advance of final disposition of any such
suit, action or proceeding).
(b) To the maximum extent permitted by the laws of the
State of Maryland in effect from time to time, any person who is
or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact
that such person (i) is or was an employee or agent of the
Corporation or of a predecessor of the Corporation, or (ii) is or
was an employee of agent of the Corporation or of a predecessor
of the Corporation and is or was serving at the request of the
Corporation as a director, officer, partner, trustee, employee
or agent of another foreign or domestic corporation, limited
liability company, partnership, joint venture, trust, other
enterprise, or other employee benefit plan, may (but need not) be
indemnified by the Corporation against judgments, penalties,
fines, settlements and reasonable expenses (including, but not
limited to, attorneys' fees and court costs) actually incurred by
such person in connection with such action, suit or proceeding,
or in connection with any appeal thereof (which reasonable
expenses may be paid or reimbursed in advance of final
disposition of any such suit, action or proceeding).
(c) Neither the amendment nor repeal of this Article, nor
the adoption or amendment of any other provision of the charter
II-3
or bylaws of the Corporation inconsistent with this Article,
shall apply to or affect in any respect the applicability of this
Article with respect to indemnification for any act or failure to
act which occurred prior to such amendment, repeal or adoption.
(d) The foregoing right of indemnification and advancement
of expenses shall not be deemed exclusive of any other rights of
which any officer, director, employee or agent of the Corporation
may be entitled apart from the provisions of this Article.
Under Maryland law, a corporation is permitted to limit by
provision in its charter the liability of directors and officers,
so that no director or officer of the corporation shall be liable
to the corporation or to any stockholder for money damages
except to the extent that (i) the director or officer actually
received an improper benefit in money, property, or services, for
the amount of the benefit or profit in money, property or
services actually received, or (ii) a judgment or other final
adjudication adverse to the director or officer is entered in a
proceeding based on a finding in the proceeding that the
director's or officer's action, or failure to act, was the result
or active and deliberate dishonesty and was material to the
cause of action adjudicated in the proceeding. The Registrant
has limited the liability of its directors and officers for money
damages in Article VII of its charter, as amended. This
provision reads as follows:
No director or officer of the Corporation shall be liable
to the Corporation or to any stockholder for money damages except
to the extent that (i) the director or officer actually received
an improper personal benefit in money, property, or services, for
the amount of the benefit or profit in money, property or
services actually received, or (ii) a judgment or other final
adjudication adverse to the director or officer is entered in a
proceeding based on a finding in the proceeding that the
director's or officer's action, or failure to act, was the result
of active and deliberate dishonesty and was material to the
cause of action adjudicated in the proceeding. Neither the
amendment nor repeal of this Article, nor the adoption or
amendment of any provision of the charter or bylaws of the
Corporation inconsistent with this Article, shall apply to or
affect in any respect the applicability of the preceding
II-4
sentence with respect to any act or failure to act which occurred
Prior to such amendment, repeal or adoption.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
The following sets forth information as of August 31, 1997,
regarding all sales of unregistered securities of the Registrant
during the past three years. All such shares were issued in
reliance upon an exemption or exemptions from registration under
the Securities Act by reason of Section 4(2) of the Securities
Act or Regulation D promulgated thereunder, or Rule 701
promulgated under Section 3(b) of the Securities Act, as
transactions by an issuer not involving a public offering or
transactions pursuant to compensatory benefit plans and
contracts relating to compensation as provided under Rule 701. In
connection with each of these transactions, the securities were
sold to a limited number of persons, such persons were provided
access to all relevant information regarding the Registrant
and/or represented to the Registrant that they were
"sophisticated" investors, and such persons represented to the
Registrant that the shares were purchased for investment purposes
only and with no view toward distribution.
(a) In February 1995, the Registrant completed a private
sale of 807,124 shares of Common Stock to a foreign corporation
for an aggregate investment of $750,000. No underwriters were
used in connection with either private transactions.
(b) During the period, the Registrant also granted options
pursuant to its Amended and Restated Stock Option Plan to 32
persons to purchase an aggregate of up to 269,766 shares of
Common Stock at exercise prices ranging from $.30 to $1.85 per
share. In addition, the Registrant granted options pursuant to
its 1997 Performance Incentive Plan to 55 persons to purchase an
aggregate of up to 254,250 shares of Common Stock at an exercise
price of $10.00 per share.
(c) On July 1, 1997, the Registrant issued warrants to
purchase up to 539,800 shares of its Common Stock to Signet Bank
in connection with the provision by Signet of a revolving credit
facility.
(d) On July 29, 1997, the Registrant exchanged 17,175 shares
II-5
of it non-voting common stock held of record by Ram Mukunda for
an equal number of shares of its voting common stock.
(e) On September 11, 1997, the Registrant granted
Atlantic-ACM the option to acquire 3,000 shares of Common Stock
in lieu of
payment in the amount of $30,000 owed by the registrant to
Atlantic-ACM for certain consulting services.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ----------------------------------------------------------------
1.1** Form of Underwriting Agreement.
3.1* Amended and Restated Articles of Incorporation.
3.2* Amended and Restated Bylaws.
4.1* Specimen of Common Stock Certificate.
4.2* Warrant Agreement dated as of July 1, 1997 by and
between Startec, Inc. and Signet Bank.
4.3** Form of Underwriters' Warrant Agreement (including
Form of Warrant).
4.4* Voting Agreement dated as of July 31, 1997 by and
between Ram Mukunda and Vijay and Usha Srinivas.
5.1** Opinion of Shulman, Rogers, Gandal, Pordy & Ecker,
P.A. with respect to the Registrant's Common
Stock.
10.1* Secured Revolving Line of Credit Facility Agreement
dated as of July 1, 1997 by and between Startec,
Inc. and Signet Bank.
10.2* Lease by and between Vaswani Place Limited
Partnership and Startec, Inc. dated as of
II-6
September 1, 1994, as amended.
10.3* Agreement by and between World Communications,
Inc. and Startec, Inc. dated as of April 25, 1990.
10.4* Co-Location and Facilities Management Services
Agreement by and between Extranet
Telecommunications, Inc. and Startec, Inc. dated
as of August 28, 1997.
10.5* Employment Agreement dated as of July 1, 1997 by
and between Startec, Inc. and Ram Mukunda.
10.6* Employment Agreement dated as of July 1, 1997 by
and between Startec, Inc. and Prabhav V. Maniyar.
10.7* Amended and Restated Stock Option Plan.
10.8* 1997 Performance Incentive Plan.
10.9** Subscription Agreement by and among Blue Carol
Enterprises, Limited, Startec, Inc. and Ram
Mukunda dated as of February 8, 1995.
10.10**+ Agreement for Management Participation by and among
Blue Carol Enterprises, Limited, Startec, Inc.
and Ram Mukunda dated as of February 8, 1995, as
amended as of June 16, 1997.
10.11** Service Agreement by and between Companhia
Santomensed De Telecommunicacoes and Startec, Inc.
as amended on February 8, 1995.
10.12**+ Lease Agreement between Companhia Portuguesa Radio
Marconi, S.A. and Startec, Inc. dated as of June
15, 1996.
10.13**+ Indefeasible Right of Use Agreement between
Companhia Portuguesa Radio Marconi, S.A. and
Startec, Inc. dated as of January 1, 1996.
10.14**+ International Telecommunication Services Agreement
between Videsh Sanchar Nigam Ltd. and Startec,
II-7
Inc. dated as of November 12, 1992.
10.15**+ Digital Service Agreement with Communications
Transmission Group, Inc. dated as of October 25,
1994.
10.16**+ Lease Agreement by and between GPT Finance
Corporation and Startec, Inc. dated as of January
10, 1990.
10.17**+ Carrier Services Agreement by and between Frontier
Communications Services, Inc. and Startec, Inc.
dated as of February 26, 1997.
10.18**+ Carrier Services Agreement by and between MFS
International, Inc. and Startec, Inc. dated as of
July 3, 1996.
10.19**+ International Carrier Voice Service Agreement by
and between MFS International, Inc. and Startec,
Inc. dated as of June 6, 1996.
10.20**+ Carrier Service Agreement by and between Cherry
Communications, Inc. and Startec, Inc. dated as of
June 7, 1995.
11.1* Statement regarding computation of earnings per
share.
23.1* Consent of Arthur Andersen LLP.
23.2** Consent of Shulman, Rogers, Gandal, Pordy & Ecker,
P.A. (included in Exhibit 5.1).
24.1* Power of Attorney (contained on the signature
page).
27.1* Financial Data Schedule.
99.1* Consent of Nazir G. Dossani.
99.2* Consent of Richard K. Prins.
II-8
__________________
* Previously filed.
** Filed herewith.
+ Portions of Exhibit have been omitted pursuant to a request
for Confidental Treatment filed with the Securities and Exchange
Commission under Rule 406 of the Securities Act of 1933, as
amended, and the Freedom of Information Act. Such portions have
been filed separately with the Commission.
(B) FINANCIAL STATEMENT SCHEDULES.
The following financial statement schedules are included in
Part II of this Registration Statement:
Schedule II-Valuation and Qualifying Accounts*
All other schedules are omitted because they are
inapplicable or because the information required is included in
the financial statements or notes thereto.
_________________
*Previously filed.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the Company's
Charter or Bylaws, Maryland law, or otherwise, the Registrant has
been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid
by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
II-9
indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes to provide the
Underwriters at the closing specified in the Underwriting
Agreement certificates in such denomination and registered in
such names as required by the Underwriters to permit prompt
delivery to each purchaser.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act, the information omitted from the form of
prospectus filed as part of this Registration Statement in
reliance upon Rule 430A and contained in a form of prospectus
filed by the Registrant pursuant to Rule 424(b)(1) or (4), or
497(h) under the Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purposes of determining any liability under
the Securities Act, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant has duly caused this Pre-Effective Amendment No. 3
to its Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Montgomery County,
State of Maryland, on the first day of October, 1997.
STARTEC GLOBAL COMMUNICATIONS CORPORATION
By: /s/ Ram Mukunda
Ram Mukunda
President and Chief Executive Officer
II-10
Pursuant to the requirements of the Securities Act, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
SIGNATURES TITLE DATE
/s/ Ram Mukunda President, Chief Executive October 1, 1997
Ram Mukunda Officer, Treasurer and Director
(Principal Executive Officer)
/s/ * Senior Vice President, October 1, 1997
Prabhav V. Maniyar Chief Financial Officer,
Secretary and Director
(Principal Financial and
Accounting Officer)
/s/ * Director October 1, 1997
Vijay Srinivas
___________________________
By: /s/ Ram Mukunda
Ram Mukunda
Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT PAGE
- ----------------------------------------------------------------
1.1** Form of Underwriting Agreement. 16
3.1* Amended and Restated Articles of Incorporation.
3.2* Amended and Restated Bylaws.
4.1* Specimen of Common Stock Certificate.
4.2* Warrant Agreement dated as of July 1, 1997 by and
between Startec, Inc. and Signet Bank.
II-11
4.3** Form of Underwriters' Warrant Agreement (including 67
Form of Warrant).
4.4* Voting Agreement dated as of July 31, 1997 by and
between Ram Mukunda and Vijay and Usha Srinivas.
5.1** Opinion of Shulman, Rogers, Gandal, Pordy & Ecker, 89
P.A. with respect to the Registrant's Common
Stock.
10.1* Secured Revolving Line of Credit Facility Agreement
dated as of July 1, 1997 by and between Startec,
Inc. and Signet Bank.
10.2* Lease by and between Vaswani Place Limited
Partnership and Startec, Inc. dated as of
September 1, 1994, as amended.
10.3* Agreement by and between World Communications,
Inc. and Startec, Inc. dated as of April 25, 1990.
10.4* Co-Location and Facilities Management Services
Agreement by and between Extranet
Telecommunications, Inc. and Startec, Inc. dated
as of August 28, 1997.
10.5* Employment Agreement dated as of July 1, 1997 by
and between Startec, Inc. and Ram Mukunda.
10.6* Employment Agreement dated as of July 1, 1997 by
and between Startec, Inc. and Prabhav V. Maniyar.
10.7* Amended and Restated Stock Option Plan.
10.8* 1997 Performance Incentive Plan.
10.9** Subscription Agreement by and among Blue Carol 91
Enterprises, Limited, Startec, Inc. and Ram
Mukunda dated as of February 8, 1995.
10.10**+ Agreement for Management Participation by and 108
among Blue Carol Enterprises, Limited, Startec, Inc.
and Ram Mukunda dated as of February 8, 1995, as
amended as of June 16, 1997.
10.11** Service Agreement by and between Companhia 125
Portuguesa Radio Marconi, S.A. and Startec, Inc.
as amended on February 8, 1995.
10.12**+ Lease Agreement between Companhia Portuguesa Radio 129
Marconi, S.A. and Startec, Inc. dated as of June
15, 1996.
10.13**+ Indefeasible Right of Use Agreement between 134
Companhia Portuguesa Radio Marconi, S.A. and
Startec, Inc. dated as of January 1, 1996.
10.14**+ International Telecommunication Services Agreement 141
between Videsh Sanchar Nigam Ltd. and Startec,
Inc. dated as of November 12, 1992.
10.15**+ Digital Service Agreement with Communications 150
Transmission Group, Inc. dated as of October 25,
1994.
10.16**+ Lease Agreement by and between GPT Finance 163
Corporation and Startec, Inc. dated as of January
10, 1990.
10.17**+ Carrier Services Agreement by and between Frontier 200
Communications Services, Inc. and Startec, Inc.
dated as of February 26, 1997.
10.18**+ Carrier Services Agreement by and between MFS 207
International, Inc. and Startec, Inc. dated as of
July 3, 1996.
10.19**+ International Carrier Voice Service Agreement by 219
and between MFS International, Inc. and Startec,
Inc. dated as of June 6, 1996.
10.20**+ Carrier Service Agreement by and between Cherry 227
Communications, Inc. and Startec, Inc. dated as of
June 7, 1995.
11.1* Statement regarding computation of earnings per
share.
23.1* Consent of Arthur Andersen LLP.
23.2** Consent of Shulman, Rogers, Gandal, Pordy & Ecker,
P.A. (included in Exhibit 5.1).
24.1* Power of Attorney (contained on the signature
page).
27.1* Financial Data Schedule.
99.1* Consent of Nazir G. Dossani.
99.2* Consent of Richard K. Prins.
__________________
* Previously filed.
** Filed herewith.
+ Portions of Exhibit have been omitted pursuant to a request
for Confidental Treatment filed with the Securities and Exchange
Commission under Rule 406 of the Securities Act of 1933, as
amended, and the Freedom of Information Act. Such portions have
been filed separately with the Commission.
<PAGE>
2,300,000 Shares
STARTEC GLOBAL COMMUNICATIONS CORPORATION
Common Stock
(Par Value $0.01 Per Share)
UNDERWRITING AGREEMENT
September __, 1997
Ferris, Baker Watts, Incorporated
Boenning & Scattergood, Inc.
As Representatives of the
Several Underwriters Identified
In Schedule I Hereto,
c/o Ferris, Baker Watts, Incorporated
1720 Eye Street, N.W.
Washington, D.C. 20006
Ladies and Gentlemen:
Section 1. Introduction. Startec Global Communications
Corporation, a Maryland corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and
sell to the Underwriters named in Schedule I hereto (the
"Underwriters"), for which Ferris, Baker Watts, Inc. and Boenning
& Scattergood, Inc. are acting as Representatives (the
"Representatives"), an aggregate of 2,300,000 shares and, at the
election of the Underwriters, up to 345,000 additional shares of
Common Stock, par value $0.01 per share ("Stock"), of the
Company. The 2,300,000 shares to be sold by the Company are
herein called the "Firm Shares" and the 345,000 additional shares
to be sold by the Company are herein called the "Optional
Shares." The Firm Shares and the Optional Shares that the
Underwriters elect to purchase pursuant to Section 3 hereof are
herein collectively called the "Shares."
Section 2. Representations and Warranties of the
Company. The Company represents and warrants to, and agrees
with, each of the Underwriters that:
(a) A registration statement on Form S-1 (File No.
333-32753) under the Securities Act of 1933, as amended (the
"Act"), with respect to the Shares, including a form of
prospectus subject to completion, has been prepared by the
Company in conformity with the requirements of the Act and the
rules and regulations of the Securities and Exchange Commission
(the "Commission") thereunder (the "Rules and Regulations").
Such registration statement has been filed with the Commission
under the Act and one or more amendments to such registration
statement may also have been so filed. After the execution of
this Agreement, the Company shall file with the Commission a
Prospectus (as hereinafter defined) which shall have been
provided to, and approved by, the Representatives prior to the
filing thereof. As used in this Agreement, the term
"Registration Statement" means such registration statement, as
amended and revised at the time when such registration statement
becomes effective, including all financial schedules and exhibits
thereto and any information omitted therefrom pursuant to Rule
430A under the Act and included in the Prospectus (as hereinafter
defined). The term "Preliminary Prospectus" means each prospectus
subject to completion contained in such registration statement or
any amendment thereto before the Registration Statement was or is
declared effective, or such prospectus subject to completion
filed pursuant to Rule 424(a) under the Act which omits the
information permitted under Rule 430A. The term "Prospectus"
means a prospectus, including any amendments or supplements
thereto, relating to the Registration Statement that includes all
the information contained in the most recently filed Preliminary
Prospectus in addition to such information which may have been
omitted in any Preliminary Prospectus pursuant to Rule 430A under
the Act. To the extent the Company relies on Rule 462(b) under
the Act to increase the maximum aggregate offering price, the
Company shall have made in a timely manner any filing required
under Rule 462(b) and such filing shall be in compliance with
such Rule. Copies of the Registration Statement, any amendment
thereto and any Preliminary Prospectus filed with the Commission
have been delivered by the Company to the Representatives on
behalf of the Underwriters. The Registration Statement any and
post-effective amendments thereto have been declared effective by
the Commission.
(b) The Commission has not issued any order suspending
the effectiveness of the Registration Statement, any
post-effective amendment thereto or Rule 462(b) Registration
Statement, if any, or preventing or suspending the use of any
Preliminary Prospectus, the Prospectus, the Registration
Statement or any amendment or supplement thereto or suspending
the registration of the Shares, nor has the Commission instituted
or threatened to institute any proceedings with respect to such
an order. Each Preliminary Prospectus, at the time of filing
thereof, conformed in all material respects to the requirements
of the Act and the Rules and Regulations thereunder, and did not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that
this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Company by an
Underwriter through the Representatives expressly for use
therein.
(c) The Registration Statement conforms, and the
Prospectus (or the most recent Preliminary Prospectus) and any
further amendments or supplements to the Registration Statement
or the Prospectus will conform, in all material respects, to the
requirements of the Act and the Rules and Regulations thereunder.
The Registration Statement and any post-effective amendment
thereto, as of the applicable effective date or dates, and each
Preliminary Prospectus and Prospectus, as of the date each such
Preliminary Prospectus or Prospectus is filed and at all times
subsequent thereto up to and including the Closing Date (as
defined in Section 5 hereof) and any Option Closing Date (as
defined in Section 5 hereof), and during such longer period
during which the Prospectus may be required to be delivered in
connection with sales to any dealer and during such longer period
until any post-effective amendment thereto shall become
effective, do not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished in
writing to the Company by an Underwriter through the
Representatives expressly for use therein, and no event will have
occurred which should have been set forth in an amendment or
supplement to the Registration Statement or the Prospectus which
has not then been set forth in such an amendment or supplement.
(d) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of Maryland, its jurisdiction of incorporation, and has been duly
qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts
any business so as to require such qualification, except for
those jurisdictions in which the failure to so qualify has not
had and will not have a Material Adverse Effect (as hereinafter
defined), and has all power and authority necessary to own or
hold its properties and to conduct the business in which it is
engaged. Each subsidiary of the Company in existence as of the
date hereof (each a "Subsidiary" and together the "Subsidiaries")
has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction
of incorporation and each has been duly qualified as a foreign
corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it
owns or leases properties, or conducts any business so as to
require such qualification (except for those jurisdictions in
which the failure to so qualify has not had and will not have a
Material Adverse Effect (as hereinafter defined). "Material
Adverse Effect" means, when used in connection with the Company,
any development, change or effect that is materially adverse to
the business, properties, assets, net worth, condition (financial
or other), results of operations, or prospects of the Company and
its Subsidiaries, taken as a whole.
(e) The Company has the duly authorized capitalization
as set forth in the Prospectus (or most recent Preliminary
Prospectus) and will have the adjusted capitalization set forth
therein at the Closing Date, based on the assumptions set forth
therein. All of the shares of capital stock of the Company
issued and outstanding have been duly and validly authorized and
issued, are fully paid and non-assessable, without personal
liability attaching to the ownership thereof, and none of such
shares have been issued or are owned or held in violation of any
preemptive or other rights of security holders or other persons
to acquire securities of the Company. As of the Closing Date,
the securities of the Company including, without limitation, the
Stock, the Shares, the warrants (the "Underwriters' Warrants") to
be issued to the Representatives pursuant to the Underwriters'
Warrant Agreement of even date herewith (the "Underwriters'
Warrant Agreement") conform in all material respects to all
statements relating thereto contained in the Registration
Statement or the Prospectus. With respect to each Subsidiary of
the Company, all of the issued and outstanding shares of capital
stock are fully paid and non-assessable, without personal
liability attaching to the ownership thereof, and none of such
shares have been issued or are owned or held in violation of any
preemptive or other rights of security holders or other persons
to acquire securities of the Company and (except as otherwise
described in the Prospectus (or the most recent Preliminary
Prospectus)) are owned directly by the Company, free and clear of
all liens, encumbrances, equities or claims. Other than as
disclosed in the Prospectus (or the most recent Preliminary
Prospectus), there are no holders of the securities of the
Company having rights to registration thereof or preemptive
rights to purchase capital stock of the Company. Except as
created hereby or described in the Prospectus or most recently
filed Preliminary Prospectus, there are no commitments, plans or
arrangements to issue, and no outstanding options, warrants or
other rights, calling for issuance of, any shares of capital
stock of the Company or any of its Subsidiaries or any security
or other instrument which, by its terms, is convertible into,
exercisable for, or exchangeable for capital stock of the Company
or any of its Subsidiaries. Except as described in the
Prospectus or the most recently filed Preliminary Prospectus,
there is no outstanding security or other instrument which, by
its terms, is convertible into, exercisable for, or exchangeable
for capital stock of the Company or any of its Subsidiaries.
(f) The Shares and the Underwriters' Warrants have
been duly and validly authorized. When the Shares are issued and
delivered against payment therefor as provided herein, or when
the Underwriters' Warrants are issued and delivered in accordance
with the terms hereof, thereof and of the Underwriters' Warrant
Agreement, such Shares and such Underwriters' Warrants, will be
duly and validly issued, fully paid and non-assessable, will not
have been issued in violation of any preemptive or other rights
of security holders or other persons to acquire securities of the
Company and will conform in all material respects to all
statements relating thereto in the Registration Statement and the
Prospectus. Good and marketable title to the Shares and the
Underwriters' Warrants will pass to the Underwriters on the
Closing Date free and clear of any lien, encumbrance, security
interest, claim or other restriction whatsoever. The shares to
be issued upon exercise of the Underwriters' Warrants (the
"Warrant Shares") have been duly authorized and validly reserved
for issuance and, when issued, paid for and delivered in
accordance with the terms of the Underwriters' Warrants and the
Underwriters' Warrant Agreement will be duly and validly issued
and fully paid and non-assessable, will not have been issued in
violation of any preemptive or other rights of security holders
or other persons to acquire securities of the Company and will
conform in all material respects to all statements relating
thereto in the Registration Statement and the Prospectus (or most
recent Preliminary Prospectus). Good and marketable title, free
and clear of any lien, encumbrance, security interest, claim or
other restriction whatsoever, will pass to the holders of Warrant
Shares issued upon exercise of Underwriters' Warrants in
accordance with the terms thereof and of the Underwriters'
Warrant Agreement. The Company has received, subject to notice
of issuance, approval to have the Shares listed on The Nasdaq
National Market ("NNM") and the Company knows of no reason or set
of facts which is likely to adversely affect such approval.
(g) The financial statements and the related notes and
schedules thereto included in the Registration Statement and the
Prospectus or the most recent Preliminary Prospectus fairly
present the financial condition, results of operations,
stockholders' equity and cash flows, and the other information
purported to be shown therein, of the Company and its
Subsidiaries, on a consolidated basis at the respective dates and
for the respective periods specified therein. Such financial
statements and the related notes and schedules thereto have been
prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved
(except as otherwise noted therein) and have been properly
derived from the books and records of the Company and such
financial statements as are audited have been examined by Arthur
Andersen LLP, who are independent public accountants within the
meaning of the Act and the Rules and Regulations, as indicated in
their reports filed therewith. The selected financial
information and statistical data set forth under the captions
"Prospectus Summary Financial Data," "Capitalization," "Selected
Financial Data," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business" in
the Prospectus (or the most recent Preliminary Prospectus) fairly
present, on the basis stated in the Prospectus or such
Preliminary Prospectus, the information included therein and have
been properly derived from the financial statements and other
operating records of the Company and its Subsidiaries. No other
financial statements or financial information, except that which
is contained in the Registration Statement, the Prospectus or the
most recent Preliminary Prospectus, is required by Form S-1, the
Rules and Regulations, or otherwise, to be included in the
Registration Statement, the Prospectus or such Preliminary
Prospectus.
(h) Since the respective dates as of which information
is given in the Prospectus (or the most recent Preliminary
Prospectus), and except as otherwise may be stated therein (i)
neither the Company, nor any of its Subsidiaries has entered into
any transaction or incurred any liability or obligation,
contingent or otherwise, which is material to the Company and its
Subsidiaries, taken as a whole, (ii) there has not been any
change in the outstanding capital stock of the Company or any of
its Subsidiaries, or any issuance of options, warrants or rights
to purchase the capital stock of the Company or any of its
Subsidiaries, or any material increase in the long-term debt of
the Company or any of its Subsidiaries, or any material adverse
change in the business, condition (financial or otherwise) or
results of operations of the Company or any of its Subsidiaries,
(iii) no loss or damage (whether or not insured) to the
properties of the Company or any of its Subsidiaries has been
sustained which has resulted in a Material Adverse Effect, (iv)
neither the Company nor any of its Subsidiaries has paid or
declared any dividend or other distribution with respect to its
capital stock, and (v) there has not been any change, contingent
or otherwise, in the direct or indirect control of the Company or
any of its Subsidiaries nor, to the best knowledge of the
Company, do there exist any circumstances which would likely
result in such a change.
(i) The Company and each of its Subsidiaries has filed
all foreign, federal, state and local income, franchise and other
material tax returns required to be filed (or have obtained
extensions with respect thereto) and has paid all taxes shown as
due thereunder and all assessments received by it to the extent
that payment has become due, and the Company has no knowledge of
any tax deficiency which might be assessed against the Company or
any of its Subsidiaries which, if so assessed, would be
reasonably expected to have a Material Adverse Effect.
(j) The Company and each of its Subsidiaries maintains
insurance of the types and in amounts which the Company
reasonably believes to be adequate for its business, in such
amounts and with such deductibles as are customary for companies
in the same or similar business, all of which insurance is in
full force and effect.
(k) Other than as set forth in the Prospectus (or most
recent Preliminary Prospectus), there are no legal or
governmental proceedings pending to which the Company or any of
its Subsidiaries is a party or to which any property of the
Company or any of its Subsidiaries is the subject which (i)
challenges the validity of the capital stock of the Company or
this Agreement or the Underwriters' Warrant Agreement, or of any
action taken or to be taken by the Company pursuant to or in
connection herewith or therewith, (ii) is required to be
disclosed in the Registration Statement or Prospectus (or most
recent Preliminary Prospectus), or (iii) if determined adversely
to the Company or any of its Subsidiaries, could reasonably be
expected, individually or in the aggregate, to have a Material
Adverse Effect, and to the Company's best knowledge, no such
proceedings are threatened or contemplated by governmental
authorities or threatened by others. Any such proceedings that
are set forth in the Prospectus (or most recent Preliminary
Prospectus) are fairly and accurately summarized therein.
(l) The Company has full legal right, power and
authority to enter into this Agreement and the Underwriters'
Warrant Agreement and to consummate the transactions provided
for, and perform its obligations as provided, herein and therein.
All necessary corporate proceedings of the Company have been duly
taken to authorize the execution, delivery and performance by the
Company of this Agreement and the Underwriters' Warrant
Agreement. This Agreement and the Underwriters' Warrant
Agreement have been duly authorized, executed and delivered by
the Company and, assuming each is a binding agreement of yours,
constitutes a legal, valid and binding agreement of the Company
enforceable against the Company in accordance with its terms
(except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws
of general application relating to or affecting the enforcement
of creditors' rights and the application of equitable principles
relating to the availability of remedies and except as rights to
indemnity or contribution may be limited by federal or state
securities laws and the public policy underlying such laws).
(m) The Company's execution and performance of this
Agreement and the Underwriters' Warrant Agreement, including,
without limitation, application of the net proceeds of the
offering, if and when received, as described in the Prospectus
(or most recent Preliminary Prospectus) under the caption "Use of
Proceeds," will not violate any provision of the Charter or
Bylaws or any similar constitutive documents of the Company or
any of its Subsidiaries, or any law, rule or regulation
applicable to the Company or any of its Subsidiaries of any
government, court, regulatory body, administrative agency or
other governmental body having jurisdiction over the Company or
any of its Subsidiaries or any of their respective businesses or
properties, and will not result in the breach, or be in
contravention, of any loan agreement, lease, franchise, license,
note, bond, other evidence of indebtedness, indenture, mortgage,
deed of trust, voting trust agreement, stockholders' agreement,
note agreement or other agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which their
respective properties are or may be subject, or any statute,
judgment, decree, order, rule or regulation applicable to the
Company or any of its Subsidiaries of any government, arbitrator,
court, regulatory body or administrative agency or other
governmental agency or body, domestic or foreign, having
jurisdiction over the Company or any of its Subsidiaries or any
of their respective businesses, activities or properties, except
those, if any, that are described in the Prospectus (or most
recent Preliminary Prospectus) or those which would not,
individually or in the aggregate, have a Material Adverse Effect.
(n) All executed agreements or copies of executed
agreements filed as exhibits to the Registration Statement to
which the Company or any of its Subsidiaries is a party or by
which any of them is or may be bound or to which any of their
respective assets, properties or businesses is or may be subject
have been duly and validly authorized, executed and delivered by
the Company or the relevant Subsidiary or Subsidiaries and,
assuming that each is a binding obligation of the other party or
parties thereto, constitutes the legal, valid and binding
agreement of the Company or such Subsidiary or Subsidiaries,
enforceable against it or them in accordance with its terms
(except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws
relating to enforcement of creditors' rights generally, and
general equitable principles relating to the availability of
remedies, and except as rights to indemnity or contribution may
be limited by federal or state securities laws and the public
policy underlying such laws). The descriptions in the Prospectus
and Preliminary Prospectus of contracts and other documents are
accurate and fairly present in all material respects the
information required to be disclosed with respect thereto by the
Act and the Rules and Regulations, and there are no contracts or
other documents which are required by the Act or the Rules and
Regulations to be described in the Prospectus or filed as
exhibits to the Registration Statement which are not described or
filed as required, and the exhibits which have been filed are
complete and correct copies of the documents of which they
purport to be copies.
(o) The Company and each of its Subsidiaries has good
and marketable title in fee simple to all real property and good
title to all other property and assets owned thereby as set forth
in the Prospectus (or most recent Preliminary Prospectus), in
each case free and clear of all liens, security interests,
pledges, charges, mortgages and other defects and encumbrances,
except such as are described in the Prospectus (or most recent
Preliminary Prospectus) or such as do not materially affect the
value of such property, and do not interfere with the use made
and proposed to be made of such property by the Company or its
Subsidiaries; and any real properties and buildings held under
lease by the Company or any of its Subsidiaries are held under
valid, subsisting and enforceable leases with such exceptions as
are not material and do not interfere with the use made and
proposed to be made of such property and buildings by the Company
and its Subsidiaries. No real property owned, leased, licensed
or used by the Company or any of its Subsidiaries is situated in
an area which is, or to the best knowledge of the Company, will
be subject to zoning, use, or building code restrictions which
would prohibit (and no state of facts relating to the actions or
inaction of another person or entity or his or its ownership,
leasing, licensing, or use of any real or personal property
exists or will exist which would prevent) the continued effective
ownership, leasing, licensing, or use of such real property in
the business of the Company or its Subsidiaries as presently
conducted or as the Prospectus (or most recent Preliminary
Prospectus) indicates any of them contemplate conducting such
business in the future, except as disclosed in the Prospectus (or
most recent Preliminary Prospectus).
(p) No consent, authorization, approval, order,
license, certificate, declaration or permit of or from, or filing
with, any governmental or regulatory authority, agent, board or
other body is required for the issue and sale of the Shares by
the Company and the execution, delivery or performance by the
Company of this Agreement or the Underwriters' Warrant Agreement,
or the issuance of the Warrant Shares in accordance with the
terms of the Underwriters' Warrants and the Underwriters' Warrant
Agreement, except for the registration under the Act of the
Shares and the registration of the Stock under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), each of
which has been made or obtained, and such consents, approvals,
authorizations, registrations or qualifications as may be
required under state securities or blue sky laws in connection
with the purchase and distribution of the Shares by the
Underwriters, and such approval as may be required from the NNM
to have the Shares listed thereon. No consent of any party to any
contract, agreement, instrument, lease, license, arrangement or
understanding to which the Company or any of its Subsidiaries is
a party, or to which any of their properties or assets are
subject, is required for the execution, delivery or performance
of this Agreement or the Underwriters' Warrant Agreement.
(q) Neither the Company nor any of its Subsidiaries is
in violation of its Charter or Bylaws or similar constitutive
documents; neither the Company nor any of its Subsidiaries is
(or, as a result of the passage of time or based on its projected
plans of operations, will be) in default in the performance or
observance of any obligation, agreement, covenant or condition
contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is
a party or by which it or any of its properties may be bound,
which default may reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect, or which could in
any way, individually or in the aggregate, impair or delay the
consummation of the transactions contemplated by this Agreement
or the offering of the Shares in the manner contemplated herein
and in the Registration Statement and the Prospectus (or most
recent Preliminary Prospectus), and each such indenture,
mortgage, deed of trust, loan agreement lease or other agreement
or instrument is in full force and effect and is a legal, valid
and binding obligation of the Company or is Subsidiary or
Subsidiaries, as the case may be and, to the best knowledge of
the Company, of each other party thereto.
(r) The statements set forth in the Prospectus (or
most recent Preliminary Prospectus) under the caption
"Description of Capital Stock," insofar as they purport to
constitute a Summary of the terms of the Company's securities,
and under the captions "Shares Eligible for Future Sale,"
"Business," "Management" and "Underwriting" (except, with respect
to the statements under the caption "Underwriting," for
information furnished in writing to the Company by the
Underwriters through the Representatives expressly for use
therein), insofar as they purport to describe the provisions of
the laws and the provisions of documents referred to therein, are
accurate and fairly summarize such provisions.
(s) The Company is not and, after giving effect to the
offering and sale of the Shares, will not be, an "investment
company" or an "affiliated person" of or a "promoter" or
"principal underwriter" of or an entity "controlled" by an
"investment company," as such terms are defined in the Investment
Company Act of 1940 (the "Investment Company Act").
(t) The Company and each of its Subsidiaries owns or
is licensed or otherwise has sufficient right to use the
proprietary knowledge, inventions, patents, trademarks, service
marks, trade names, logo marks and copyrights ("Intellectual
Property") currently used in the conduct of their respective
businesses, except for those patents, trademarks, service marks,
trade names, logo marks or copyrights with respect to which the
failure to own or license same would not have a Material Adverse
Effect. To the best knowledge of the Company, none of the
activities engaged in by the Company or any of its Subsidiaries
infringes upon or otherwise conflicts with Intellectual Property
rights of others, except for any such conflicts that would not
have a Material Adverse Effect, and no claims have been asserted
against the Company or any of its Subsidiaries by any person with
respect to the use of any such rights or challenging or
questioning the validity or effectiveness of any such rights.
(u) No labor disturbance by, or labor dispute with,
the employees of the Company or any of its Subsidiaries exists
or, to the Company's knowledge, is threatened or imminent which
may have a Material Adverse Effect.
(v) Since its inception, the Company has not incurred
any liability arising under or as a result of the application of
the provisions of the Act.
(w) The Company and each of its Subsidiaries (i) is in
compliance with all environmental, safety, health or similar law
or regulation relating to the protection of human health and
safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws")
applicable to its business, (ii) has received all permits,
licenses or other approvals required under applicable
Environmental Laws to conduct its business, and (iii) is in
compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance, failure to
receive such license or approval or failure to comply would not
have a Material Adverse Effect.
(x) The Company and each of its Subsidiaries is in
compliance with all federal or state laws, including the rules
and regulations promulgated thereunder, relating to
discrimination in the hiring, promotion or pay of employees, any
applicable federal or state wages and hours law, and the
provisions of the Employee Retirement Income Security Act of
1974, as amended, applicable to its business, except where such
noncompliance would not have a Material Adverse Effect.
(y) The Company and each of its Subsidiaries has full
corporate power and authority and has obtained and holds all
necessary consents, authorizations, approvals, orders,
certificates and permits of and from, and have made all
declarations and filings with, all U.S. and foreign, federal
state or provincial, local and other governmental authorities,
all self-regulatory organizations and all courts and other
tribunals, to own, lease, license and use its properties and
assets and to conduct its business in the manner described in the
Prospectus (or most recent Preliminary Prospectus), except to the
extent that the failure to obtain or file would not have Material
Adverse Effect, and except as otherwise described in the
Prospectus (or most recent Preliminary Prospectus). Neither the
Company nor any of its Subsidiaries has received any notice of
proceedings relating to, and does not have reason to believe that
any governmental body or agency is considering limiting,
suspending, modifying or revoking, any such consent,
authorization, approval, order, certificate or permit which,
individually or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material
Adverse Effect.
(z) The Company and each of its Subsidiaries has all
necessary applications, statements, reports, information, forms,
consents, authorizations, approvals, orders, certificates and
permits ("Licenses") of and from all United States federal or
state authorities, including the Federal Communications
Commission (the "FCC") and State Public Utilities Commissions to
own, lease, license and use its properties and assets and to
conduct its business in the manner described in the Prospectus
(or most recent Preliminary Prospectus), except to the extent
that the failure to obtain or file would not have a Material
Adverse Effect, and except as described in the Prospectus (or
most recent Preliminary Prospectus).
(aa) The Licenses are in full force and effect without
conditions that would have a Material Adverse Effect, except for
such conditions imposed generally by the FCC upon such licenses
or conditions stated on the face of the Licenses, (ii) all
express conditions in the Licenses have been satisfied where the
failure to satisfy such conditions would have a Material Adverse
Effect, and (iii) neither the Company nor any of its Subsidiaries
has received any notification that any revocation or limitation
of the Licenses is threatened or pending that would have a
Material Adverse Effect.
(bb) The Licenses are validly issued. The Company and
each of its Subsidiaries has filed with the FCC all applications,
statements, reports, information, forms, or any other document
required under the Communications Act of 1934, as amended (the
"Communications Act") and the rules and regulations thereunder,
except where the failure to so file would not have a Material
Adverse Effect, such filings or submissions were in compliance
with applicable laws or regulations when filed or submitted and
no deficiencies have been asserted by the FCC with respect to
such filings or submissions, except where the deficiency is of
such a nature that failure to cure would not have a Material
Adverse Effect, and the information contained in such filings or
submissions was, in all material respects, accurate, complete and
up-to-date at the time the filings or submissions were made.
(cc) With respect to matters relating to the regulation
of long distance telecommunications carriers administered by
United States federal or state authorities, including, and not
limited to, the FCC and state and public utility commissions or
similar state governmental agencies (collectively "PUCs" and
individually a "PUC"), the execution and delivery by the Company
of, and the performance by the Company of its obligations under,
this Agreement and the Underwriters' Warrant Agreement will not
contravene any provisions of applicable law or any judgment,
order or decree of any governmental body, agency or court having
jurisdiction over the Company or any of its Subsidiaries, and no
consent, approval, authorization or order of, or qualification
with, any governmental body or agency is required for the
performance by the Company of its obligations hereunder or
thereunder.
(dd) There is no proceeding, formal or informal
complaint or investigation before the FCC against the Company or
any of its Subsidiaries or any of the Licenses or based on any
violation or alleged violation by the Company or any of its
Subsidiaries of the Communications Act, except for proceedings
affecting the industry generally to which neither the Company nor
any of its Subsidiaries is a specific party.
(ee) Neither the execution, delivery and performance of
this Agreement by the Company, nor the issuance and sale of the
Shares, the Underwriters' Warrants or the Warrant Shares, as
described in the Registration Statement and Prospectus (or most
recent Preliminary Prospectus), will conflict with, violate or
require any authorization, approval, or consent under the
Communications Act or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, or
cause any forfeiture or impairment of, any of the Licenses.
(ff) Neither the Company nor any other person
associated with or acting on behalf of the Company including,
without limitation, any director, officer, agent, or employee of
the Company has, directly or indirectly, while acting on behalf
of the Company (i) used any corporate funds for unlawful
contributions, gifts, entertainment, or other unlawful expenses
relating to political activity, (ii) made any unlawful
contribution to any candidate for foreign or domestic office, or
to any foreign or domestic government officials or employees or
other person charged with similar public or quasi-public duties,
other than payments required or permitted by the laws of the
United States or any jurisdiction thereof or to foreign or
domestic political parties or campaigns from corporate funds, or
failed to disclose fully any contribution in violation of law,
(iii) violated any provision of the Foreign Corrupt Practices Act
of 1977, as amended, or (iv) made any other unlawful payment.
(gg) Neither the Company nor, to the Company's best
knowledge, any employee or agent of the Company, has made any
payment of funds of the Company or received or retained any funds
which constitutes a violation by the Company of any law, rule or
regulation or of a character required to be disclosed in the
Prospectus (or most recent Preliminary Prospectus).
(hh) With respect to state certificates of public
convenience and necessity of other operating authorizations
issued by PUCs (such PUC certificates and authorizations are
hereinafter referred to collectively as the "State
Authorizations") held by the Company or any of its Subsidiaries,
such State Authorizations are in full force and effect and are
unimpaired by any act or omission of the Company or any of its
employees or agents or the Company's Subsidiaries, in each case
except where such authorization is not required or where the
failure to so hold any such State Authorization would not have a
Material Adverse Effect. The State Authorizations are all of the
licenses, authorizations, consents and approvals necessary from
the PUCs in order to allow the Company and each of its
Subsidiaries to own their respective assets and carry on their
respective businesses as currently being conducted, except where
the failure to so hold any State Authorizations would not have a
Material Adverse Effect. To the Company's best knowledge, there
are no proceedings of any kind, including but not limited to
rulemaking proceedings of general applicability in the industry
or industries in which the Company operates, by or before any
PUC, now pending or threatened, which, if adversely determined,
would have a Material Adverse Effect. Neither the execution and
delivery of this Agreement or the Underwriters' Warrant
Agreement, nor the consummation of the transactions contemplated
herein, therein and in the Registration Statement, will conflict
with or result in a breach of, or require any authorization,
approval or consent under the Communications Act, or the rules of
the FCC or the communications statutes of any state or the
policies or rules of any PUC. All applications, reports and
other filings required by the FCC or any PUC to be filed as of
the date hereof with respect to any FCC license or the State
Authorizations, as the case may be, have been duly and currently
filed as of the date hereof, except where the failure to so file
would not have a Material Adverse Effect.
(ii) The Company and each of its Subsidiaries has filed
with the applicable foreign and domestic regulatory authorities
each and every statement, report, information or form required by
any applicable law, regulation or order, except where the
failure to so file would not have a Material Adverse Effect, and
all such filings or submissions were in compliance with
applicable laws when filed, and no deficiencies have been
asserted by any regulatory commission, agency or authority with
respect to such filings or submissions, except where the failure
to so file or cure would not have a Material Adverse Effect. The
Company and each of its Subsidiaries has maintained in full force
and effect all licenses and permits necessary or proper for the
conduct of its business, except where the failure to do so would
not have a Material Adverse Effect, and neither the Company nor
any of its Subsidiaries has received any notification that any
revocation or limitation thereof is threatened or pending that
would have such an Effect. Except as disclosed in the
Registration Statement and the Prospectus (or most recent
Preliminary Prospectus), there is not pending any change under
any law, regulation, license or permit that would have a Material
Adverse Effect. Neither the Company nor any or its Subsidiaries
has received any notice of, or, to the best knowledge of the
Company, been threatened with or is under investigation with
respect to, a violation or a possible violation of any provision
of any law, regulation or order, except such violation or
violations as would not have a Material Adverse Effect.
(jj) The books, records and accounts and systems of
internal accounting controls of the Company currently comply with
the requirements of Section 13(b)(2) of the Exchange Act.
(kk) Neither the Company nor any of its officers,
directors or affiliates (within the meaning of the Rules and
Regulations) has taken, directly or indirectly, any action
designed to stabilize or manipulate the price of any security of
the Company, or which has constituted or which might in the
future reasonably be expected to, cause or result in,
stabilization or manipulation of the price of any security of the
Company, to facilitate the sale or resale of the Shares or
otherwise.
(ll) The minute books of the Company and each of its
Subsidiaries are current and contain a correct and complete
record of all corporate action taken by the respective Boards of
Directors and stockholders of the Company and the Subsidiaries
and all signatures contained therein are true signatures of the
persons whose signatures they purport to be.
(mm) Except as described in the Prospectus (or most
recent Preliminary Prospectus), to the best knowledge of the
Company there is no loss or threatened loss of any key customer,
supplier, or account which loss would result in a Material
Adverse Effect.
(nn) Neither the Company nor any of its Subsidiaries
has incurred, directly or indirectly, any liability for a fee,
commission or other compensation on account of the employment of
a broker or finder in connection with the offering and sale of
the Shares contemplated by this Agreement.
(oo) There are no business relationships or related
party transactions of the nature described in Item 404 of
Regulation S-K of the Rules and Regulations involving the
Company, any of its Subsidiaries and any person referred to in
Items 401 or 404 of such Regulation S-K, except as required to be
described, and as so described, in the Prospectus (or most recent
Preliminary Prospectus).
Section 3. Purchase of Securities by the Underwriters.
On the basis of the representations, warranties, covenants and
agreements herein contained, and subject to the terms and
conditions herein set forth (i) the Company agrees to sell to
each of the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company, at a
purchase price per share of $_______, the number of Firm Shares
set forth opposite the name of such Underwriter in Schedule I
hereto and (ii) in the event and to the extent that the
Underwriters shall exercise the election to purchase Optional
Shares as provided below, the Company agrees to sell to each of
the Underwriters, and each of the Underwriters agrees, severally
and not jointly, to purchase from the Company, at the purchase
price per share set forth in clause (i) of this Section 3, its
proportionate share of the number of Optional Shares as to which
such election shall have been exercised (based on the monetary
obligation of the several Underwriters hereunder on account of
the purchase of Firm Shares).
The Company hereby grants to the Underwriters the right
to purchase at their election up to 345,000 Optional Shares, at
the purchase price per share set forth in the paragraph above,
for the sole purpose of covering over-allotments, if any, in the
sale of the Firm Shares. Each such election to purchase Optional
Shares may be exercised only by written notice from the
Representatives to the Company, given within a period of thirty
(30) calendar days after the date of this Agreement and setting
forth the aggregate number of Optional Shares to be purchased and
the date on which such Optional Shares are to be delivered, as
determined by you but in no event earlier than the Closing Date
or, unless you and the Company otherwise agree in writing, no
earlier than two (2) nor later than ten (10) business days after
the date of such notice.
Section 4. Offering of the Shares by the Underwriters.
Upon the authorization by the Representatives of the release of
the Firm Shares, the several Underwriters propose to offer the
Firm Shares for sale upon the terms and conditions set forth in
the Prospectus.
Section 5. Delivery of and Payment for the Shares.
(a) The Firm Shares to be purchased by each
Underwriter hereunder, in definitive form, and in such authorized
denominations and registered, in such names as the
Representatives may request upon at least forty-eight (48)
hours' prior notice to the Company shall be delivered by or on
behalf of the Company to the Representatives, for the account of
such Underwriter, against payment by or on behalf of such
Underwriter of the purchase price therefor in Federal (same day)
funds. The Company will cause the certificates representing the
Firm Shares to be made available for checking and packaging at
least twenty-four (24) hours prior to the Closing Date (as
defined below) with respect thereto at the office of Ferris,
Baker Watts, Incorporated, 1720 Eye Street, N.W., Washington,
D.C. 20006 or such other location as the Representatives may
reasonably designate (the "Designated Office"). The time and
date of such delivery and payment shall be, with respect to the
Firm Shares, at ______ o'clock a.m., Washington, DC time, on
______________, 1997 or such other time and date as the
Representatives and the Company may agree. Such time and date for
delivery of the Firm Shares is herein called the "Closing Date."
(b) Delivery and payment of any Optional Shares to be
purchased by each Underwriter pursuant hereto shall be made at
the Designated Office at _____ o'clock a.m., Washington, DC time,
on the date specified by the Representatives in the written
notice of the Underwriters' election to purchase such Optional
Shares, or such other time and date as the Representatives and
the Company may agree. Such time and date for delivery of
Optional Shares, if not the Closing Date, is herein called the
"Option Closing Date."
(c) The documents to be delivered at the Closing Date
or any Option Closing Date, as the case may be, by or on behalf
of the parties hereto pursuant to Section 8 hereof, including the
cross-receipt for the Shares and any additional documents
requested by the Underwriters will be delivered at the offices of
Venable, Baetjer, Howard & Civiletti, LLP, 1201 New York Avenue,
NW, Washington, DC 20005 (the "Closing Location"), and the Shares
will be delivered at the Designated Office, on the Closing Date
or the Option Closing Date, as the case may be.
(d) A meeting will be held at the Closing Location at
2:00 p.m., Washington, D.C. time, on the business day next
preceding Closing Date or any Option Closing Date, as the case
may be, or at such other time as is mutually agreed upon by the
parties hereto, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding paragraph
will be available for review by the parties hereto.
Section 6. Covenants of the Company. The Company
covenants and agrees with each of the Underwriters as follows:
(a) The Company will use its best efforts to cause the
Registration Statement, if not effective at the time of execution
of this Agreement, and any amendments thereto, to become
effective as promptly as practicable. If required, the Company
will file the Prospectus and any amendments or supplements
thereto with the Commission in the manner and within the time
period required by Rule 424(b). During any time when a
prospectus relating to the Shares is required to be delivered
under the Act, the Company will comply with all requirements
imposed upon it by the Act and the Rules and Regulations to the
extent necessary to permit the continuance of sales of or
dealings in the Shares in accordance with the provisions hereof
and of the Prospectus, as then amended or supplemented. With
respect to any registration statement, prospectus, amendment, or
supplement to be filed with the Commission in connection with the
Shares, the Company will provide a copy of each such document to
each of the Representatives a reasonable time prior to the date
such document is proposed to be filed with the Commission and
will not file any such document without the consent of the
Representatives. Any such registration statement, prospectus,
amendment or supplement, when filed, will comply with the Act.
In the event that the Registration Statement is effective at the
time of execution of this Agreement, but the total number of
Shares subject to this Agreement exceeds the number of Shares
covered by the Registration Statement, the Company will promptly
file with the Commission on the date hereof a registration
statement pursuant to Rule 462(b) in accordance with the
requirements of such Rule and will make payment of the filing fee
therefor in accordance with the requirements of Rule 111(b) under
the Act.
(b) The Company will advise the Representatives promptly (i)
when the Registration Statement, as amended, has become
effective; (ii) if the provisions of Rule 430A promulgated under
the Act will be relied upon, when the Prospectus has been filed
in accordance with said Rule 430A; (iii) when any post-effective
amendment to the Registration Statement becomes effective; (iv)
of any request made by the Commission for amendments or
supplements to the Registration Statement, any Preliminary
Prospectus or Prospectus or for additional information; (v) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any post-effective
amendment thereto or any order preventing or suspending the use
of any Preliminary Prospectus or Prospectus or any amendment or
supplement thereto or the institution or threat of any
investigation or proceeding for that purpose, and will use its
best efforts to prevent the issuance of any such order; and (vi)
of the receipt of any comments from the Commission regarding the
Registration Statement, any post-effective amendment thereto, the
Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto. The Company will use its best efforts to
prevent the issuance of any stop order by the Commission, and if
at any time the Commission shall issue any stop order, the
Company will use its best efforts to obtain the withdrawal of
such stop order at the earliest possible moment.
(c) The Company will cooperate with the Representatives,
their counsel and the Underwriters in qualifying or registering
the Shares for sale, or obtaining an exemption therefrom, under
the blue sky laws of such jurisdictions as the Representatives
shall designate, and will continue such qualifications or
registrations or exemptions in effect so long as reasonably
requested by the Representatives to effect the distribution of
the Shares. The Company shall not be required to qualify as a
foreign corporation or to file a general consent to service of
process in any such jurisdiction where it is not presently
qualified.
(d) The Company consents to the use of the Prospectus (and
any amendment or supplement thereto) by the Underwriters and all
dealers to whom the Shares may be sold, in connection with the
offering or sale of the Shares and for such period of time
thereafter as the Prospectus is required by law to be delivered
in connection therewith. If, at any time when a prospectus
relating to the Shares is required to be delivered under the Act,
any event occurs as a result of which the Prospectus, as then
amended or supplemented, would include any untrue statement of a
material fact or omit to state a material fact necessary to make
the statements therein not misleading, or if it becomes necessary
at any time to amend or supplement the Prospectus to comply with
the Act or the Rules and Regulations, the Company promptly will
so notify the Representatives and will prepare and file with the
Commission an amendment to the Registration Statement or an
amendment or supplement to the Prospectus which will correct such
statement or omission or effect such compliance; each such
amendment or supplement to be reasonably satisfactory to counsel
to the Underwriters.
(e) As soon as practicable, but in any event not later than
forty-five (45) calendar days after the end of the 12-month
period beginning on the day after the end of the fiscal quarter
of the Company during which the effective date of the
Registration Statement occurs (90 calendar days in the event that
such quarter is the Company's last fiscal quarter), the Company
will make generally available to its securityholders, in the
manner specified in Rule 158(b) of the Rules and Regulations, and
will deliver to each of the Representatives, an earnings
statement which will be in the detail required by, and will
otherwise comply with, the provisions of Section 11(a) of the Act
and Rule 158(a) of the Rules and Regulations, which statement
need not be audited unless required by the Act or the Rules and
Regulations, covering a period of at least twelve (12)
consecutive months after the effective date of the Registration
Statement.
(f) During the period of five (5) years commencing with the
date hereof, the Company will deliver to the Representatives:
(i) within ninety (90) calendar days after the end of
each fiscal year, financial statements for the Company, certified
by the Company's independent certified public accountants,
including a balance sheet, statement of operations, statement of
stockholders' equity and statement of cash flows, with supporting
schedules, prepared in accordance with generally accepted
accounting principles, as at the end of such fiscal year and for
the twelve (12) months then ended, accompanied by a copy of the
certificate or report thereon of such independent certified
public accountants; provided that if, during such five-year
period, the Company has active subsidiaries, the foregoing
financial statements will be on a consolidated basis to the
extent that the accounts of the Company and its subsidiaries are
consolidated, and will be accompanied by similar financial
statements for any significant subsidiary which is not so
consolidated;
(ii) as soon as practicable after filing with the
Commission, all such reports, forms or other documents as may be
required from time to time, under the Act, the Rules and
Regulations, the Exchange Act and the rules and regulations
thereunder;
(iii) as soon as they are available, copies of all
information (financial or other) mailed to stockholders;
(iv) as soon as they are available, copies of all
reports and financial statements furnished to or filed with the
National Association of Securities Dealers, Inc.("NASD"), the NNM
or any other securities exchange or market;
(v) promptly following release by the Company, every
press release and every material news item or article of interest
to the financial community in respect of the Company or its
affairs which was released or prepared by the Company; and
(vi) as soon as possible following receipt of a
request, any additional information of a public nature concerning
the Company or its business which the Representatives may
reasonably request.
(g) The Company will maintain a transfer agent and, if
necessary under the jurisdiction of incorporation of the Company,
a registrar (which may be the same entity as the Transfer Agent)
for its Stock.
(h) The Company will furnish, without charge, to the
Representatives or on the Representatives' order, at such place
as the Representatives may designate, copies of the Preliminary
Prospectus, the Registration Statement and any pre-effective or
post-effective amendments thereto, and any registration statement
filed pursuant to Rule 462(b) (of which three (3) copies will be
signed and will include all financial statements and exhibits)
and the Prospectus, and all amendments and supplements thereto in
each case as soon as available and in such quantities as the
Representatives may reasonably request.
(i) Except pursuant to this Agreement, the Company will not,
directly or indirectly, without the prior written consent of the
Representatives, issue, offer, sell, offer to sell, contract to
sell, grant any option to purchase, pledge or otherwise dispose
(or announce any issuance, offer, sale, offer of sale, contract
of sale, grant of any option to purchase, pledge or other
disposition) of any shares of Stock or any securities convertible
into, or exchangeable or exercisable for, shares of Stock for a
period of one hundred eighty (180) calendar days after the date
hereof, other than issuances pursuant to the exercise of stock
options outstanding on or granted subsequent to the date hereof,
pursuant to a stock option or other employee benefit plan in
existence on the date hereof. With respect to securities issued
or issuable under stock option plans and employee benefit plans,
the Company will not file any registration statement on Form S-8
(or other applicable form) for a period of one hundred eighty
(180) calendar days after the date hereof.
(j) The Company will cause the Shares to be duly approved
for listing on the NNM prior to the Closing Date. The Company
shall take all necessary and appropriate action such that the
Shares are authorized for quotation on the NNM as soon as
practicable after the effectiveness of the Registration Statement
and the Shares shall remain so authorized for at least thirty-six
(36) months thereafter.
(k) Neither the Company nor any of its officers or
directors, nor affiliates of any of them (within the meaning of
the Rules and Regulations) will take, directly or indirectly, any
action designed to, or which might in the future reasonably be
expected to, cause or result in, or which will constitute,
stabilization or manipulation of the price of any securities of
the Company.
(l) The Company will apply the net proceeds of the offering
received in the manner set forth under the caption "Use of
Proceeds" in the Prospectus. The Company will operate its
business in such a manner and, pending application of the net
proceeds of the offering for the purposes and in the manner set
forth under the caption "Use of Proceeds" in the Prospectus, will
invest such net proceeds in such securities so as not to become
an "investment company" as such term is defined under the
Investment Company Act.
(m) The Company will timely file all such reports, forms or
other documents as may be required from time to time, under the
Act, the Rules and Regulations, the Exchange Act and the rules
and regulations thereunder, and all such reports, forms and
documents so filed will comply as to form and substance with the
applicable requirements under the Act, the Rules and Regulations,
the Exchange Act and the rules and regulations thereunder which
may from time to time be applicable to the Company. Without
limiting the generality of the foregoing, the Company has filed a
registration statement on Form 8-A covering the Shares pursuant
to Section 12(g) of the Exchange Act and will use its best
efforts to cause said registration statement to become effective
on the Effective Date. The Company shall comply with the
provisions of all undertakings contained in the Registration
Statement.
(n) Except as described in the Prospectus, the Company will
not, until the earlier to occur of (i) thirty (30) calendar days
following the date of this Agreement or (ii) the Option Closing
Date immediately after which all Optional Shares shall have been
so purchased, incur any liability or obligation, direct or
contingent, or enter into any material transaction, other than in
the ordinary course of business.
(o) For a period of thirty (30) calendar days following the
date of this Agreement the Company will not acquire any of the
Company's capital stock, declare or pay any dividend or make any
other distribution upon its capital stock payable to its holders
of record on a date prior to the expiration of such 30-day
period.
(p) The Company will comply or cause to be complied with the
conditions to the Underwriters' obligations set forth in Section
8 hereof.
(q) On the Closing Date, the Company will enter into the
Underwriters' Warrant Agreement and, pursuant thereto will sell
to the Representatives the Underwriters' Warrants to purchase in
the aggregate, 150,000 shares of Stock at an aggregate price of
$1,500.
(r) During the period of thirty (30) calendar days commencing
with the date of this Agreement, the Company shall neither issue
any press release or other communication, directly or indirectly,
nor hold any press conference with respect to the offering of the
Shares, the Company, its Subsidiaries or its business, results of
operations, condition (financial or otherwise), property, assets,
liabilities or prospects of the Company or any of its
Subsidiaries, without the prior written consent of the
Representatives, which consent shall not unreasonably be denied
or delayed; provided, however, that if counsel to the Company is
of the opinion that the issuance of a press release or other
communication or a press conference is required to comply with or
avoid a violation of applicable law, and having been so informed
the Representatives decline to consent thereto, the Company shall
be permitted to issue such press release or other communication
or hold such press conference in the manner advised by its
counsel.
(s) Neither the Company nor any of its Subsidiaries will
grant any person or entity registration rights with respect to
any of its securities, except such rights as are subordinate to
the registration rights contained in the Underwriters' Warrant
Agreement and are exercisable no earlier than six (6) months
after the securities to be registered upon exercise of such
registration rights contained in the Underwriters' Warrant
Agreement have been offered for sale pursuant to an effective
registration statement under the Act and registered or qualified
for sale under the blue sky or state securities law, rules or
regulations of the jurisdictions in which such securities are to
be offered for sale.
Section 7. Expenses. (a) If the Underwriters purchase the
Firm Shares, in accordance with the terms of this Agreement, the
Company will pay the Representatives, out of the first proceeds
of the offering contemplated by this Agreement, a non-accountable
expense allowance of one percent (1%) of the gross proceeds
raised, in order to compensate the Representatives for their
expenses in connection with the transactions contemplated hereby
The costs and expenses of registration, filings and fees of all
counsel in completing the applications and in clearing the
offering contemplated by this Agreement through the state
securities commissions or similar regulatory authorities of the
various states or other jurisdictions shall be borne and paid by
the Company in addition to the non-accountable expense allowance
referred to in the immediately preceding sentence.
(b) If the purchase of the Firm Shares as herein
contemplated is not consummated for any reason other than the
Underwriters' default under this Agreement or other than by
reason of Section 11(a), the Company shall reimburse the several
Underwriters, in an amount not to exceed $100,000 in the
aggregate, for their out-of-pocket expenses (including but not
limited to counsel fees and disbursements) in connection with any
investigation made by them, and any preparation made by them in
respect of marketing of the Shares or in contemplation of the
performance by them of their obligations hereunder.
Section 8. Conditions of the Underwriters' Obligations.
The obligations of each Underwriter to purchase and pay for the
Shares set forth opposite the name of such Underwriter in
Schedule I are subject to the continuing accuracy of the
representations and warranties of the Company herein as of the
date hereof, as of the Closing Date, and as of each Option
Closing Date, if any, as if they had been made on and as of the
Closing Date or Option Closing Date, as the case may be; the
accuracy on and as of the Closing Date, and each Option Closing
Date, if any, of the statements of officers of the Company made
pursuant to the provisions hereof; the performance by the Company
on and as of the Closing Date, and each Option Closing Date, as
the case may be, of their respective covenants and agreements
hereunder; and the following additional conditions:
(a) The Registration Statement shall have been declared
effective, and the Prospectus (containing the information omitted
pursuant to Rule 430(A)) shall have been filed with the
Commission not later than the Commission's close of business on
the second business day following the date hereof or such later
time and date to which the Representatives shall have consented.
No stop order suspending the effectiveness of the Registration
Statement or any amendment thereto shall have been issued, and no
proceedings for that purpose shall have been instituted or
threatened or, to the best knowledge of the Company or the
Representatives, shall be contemplated by the Commission. The
Company shall have complied with any request of the Commission
for additional information (to be included in the Registration
Statement or the Prospectus or otherwise).
(b) The Representatives shall not have advised the Company
that the Registration Statement, or any amendment thereto,
contains an untrue statement of fact which, in the
Representatives' opinion, is material, or omits to state a fact
which, in the Representatives' opinion, is material and is
required to be stated therein or is necessary to make the
statements therein not misleading, or that the Prospectus, or any
supplement thereto, contains an untrue statement of fact which,
in the Representatives' opinion, is material, or omits to state a
fact which, in the Representatives' opinion, is material and is
required to be stated therein or is necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading.
(c) On or prior to the Closing Date, and any Option Closing
Date, as the case may be, the Representatives shall have received
from counsel to the Underwriters, such opinion or opinions with
respect to the issuance and sale of the Firm Shares, the
Registration Statement and the Prospectus and such other related
matters as the Representatives reasonably may request and such
counsel shall have received such documents and other information
as they request to enable them to pass upon such matters.
(d) On the Closing Date, the Underwriters shall have
received the opinion, dated the Closing Date, of Shulman, Rogers,
Gandal, Pordy & Ecker, P.A., counsel to the Company (which
opinion may rely, with respect to certain regulatory matters,
upon the opinion, dated the Closing Date, of Kelley Drye & Warren
LLP, regulatory counsel to the Company, copies of which shall be
provided to counsel for the Underwriters and shall be attached to
the opinion of counsel of the Company and may be referred to
therein), to the effect set forth below:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of Maryland, its jurisdiction of incorporation, and has been duly
qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts
any business so as to require such qualification, (except for
those jurisdictions in which the failure to so qualify has not
had and will not have a Material Adverse Effect). Each of the
Subsidiaries has been duly incorporated and is validly existing
as a corporation in good standing under the laws of its
jurisdiction of incorporation and each has been duly qualified as
a foreign corporation for the transaction of business and is in
good standing under the laws of each other jurisdiction in which
it owns or leases properties, or conducts any business so as to
require such qualification (except for those jurisdictions in
which the failure to so qualify has not had and will not have a
Material Adverse Effect).
(ii) The Company has the duly authorized capitalization
as set forth in the Prospectus. All of the shares of capital
stock of the Company issued and outstanding immediately prior to
the Closing Date or an Option Closing Date, as the case may be,
have been duly and validly authorized and issued, are fully paid
and non-assessable, without personal liability attaching to the
ownership thereof, and none of such shares have been issued or
are owned or held in violation of any preemptive or other rights
of security holders or other persons to acquire securities of the
Company. The securities of the Company including, without
limitation, the Shares, the Stock, the Underwriters' Warrants and
the Warrant Shares, conform to all statements relating thereto
contained in the Registration Statement or the Prospectus. With
respect to each Subsidiary of the Company, all of the issued and
outstanding shares of capital stock are fully paid and
non-assessable, without personal liability attaching to the
ownership thereof, and none of such shares have been issued or
are owned or held in violation of any preemptive or other rights
of security holders or other persons to acquire securities of the
Company and (except as otherwise described in the Prospectus) are
owned directly by the Company, free and clear of all liens,
encumbrances, equities or claims. Other than as disclosed in the
Prospectus, to the best knowledge of such counsel, there are no
holders of the securities of the Company or any of its
Subsidiaries having rights to registration thereof or preemptive
rights to purchase capital stock of the Company or any such
Subsidiary. Except as created hereby or described in the
Prospectus, to the best knowledge of such counsel, there are no
commitments, plans or arrangements to issue, and no outstanding
options, warrants or other rights, calling for issuance of, any
shares of capital stock of the Company or any of its Subsidiaries
or any security or other instrument which, by its terms, is
convertible into, exercisable for, or exchangeable for capital
stock of the Company or any of its Subsidiaries.
(iii) The Shares and the Underwriters' Warrants have
been duly and validly authorized and, when the Shares are issued
and delivered against payment therefor as provided herein, or
when such Underwriters' Warrants are issued and delivered in
accordance with the terms thereof and of the Underwriters'
Warrant Agreement, will be duly and validly issued and fully paid
and non-assessable, will not have been issued in violation of any
preemptive or other rights of security holders or other persons
to acquire securities of the Company and will conform to all
statements relating thereto in the Registration Statement and the
Prospectus. Good and marketable title to the Shares and the
Underwriters' Warrants will pass to the Underwriters on the
Closing Date free and clear of any lien, encumbrance, security
interest, claim or other restriction whatsoever. The Warrant
Shares have been duly authorized and validly reserved for
issuance and, when issued, paid for and delivered in accordance
with the terms of the Underwriters' Warrant Agreement and the
Underwriters' Warrants, the Warrant Shares will be duly and
validly issued and fully paid and non-assessable, will not have
been issued in violation of any preemptive or other rights of
security holders or other persons to acquire securities of the
Company and will conform to all statements relating thereto in
the Prospectus. Good and marketable title, free and clear of any
lien, encumbrance, security interest, claim or any other
restriction will pass to the holders of Warrant Shares issued
upon exercise of Underwriters' Warrants in accordance with the
terms thereof and of this Agreement and the Underwriters' Warrant
Agreement.
(iv) The Shares have been duly approved for listing on
the NNM.
(v) The Registration Statement is effective under the
Act. Any required filing of a registration statement pursuant to
Rule 462(b) has been made in the manner and within the time
period required by Rule 462(b). The Prospectus has been filed
with the Commission pursuant to the appropriate subparagraph of
Rule 424(b) under the Act and no stop order suspending the
effectiveness of the Registration Statement or any amendment
thereto has been issued, and no proceedings for that purpose have
been instituted or are pending or, to the best knowledge of such
counsel, are threatened or contemplated under the Act.
(vi) The registration statement originally filed with
respect to the Shares and each amendment thereto, each
Preliminary Prospectus and Prospectus and, if any, each amendment
and supplement thereto (except for the financial statements,
schedules and other financial data included therein, as to which
such counsel need not express any opinion), complies as to form
in all material respects with the requirements of the Act and the
Rules and Regulations.
(vii) The descriptions and summaries contained in the
Prospectus of contracts, agreements, instruments leases, licenses
and other documents, are accurate and fairly represent, in all
material respects, the information required to be disclosed with
respect thereto by the Act and the Rules and Regulations. To the
best knowledge of such counsel, all contracts, agreements,
instruments, leases, licenses or other documents which are
required by the Act or the Rules and Regulations to be described
in the Prospectus or to be filed as exhibits to the Registration
Statement have been so described or filed.
(viii) To the best knowledge of such counsel, there is
not pending or threatened against the Company any action, suit or
proceeding by any person or any action, suit, proceeding or
investigation before or by any court, regulatory body, or
administrative agency or any other governmental agency or body,
domestic or foreign, of a character required to be disclosed in
the Registration Statement or the Prospectus which is not so
disclosed therein.
(ix) The statements set forth under the captions "Risk
Factors," "Use of Proceeds," "Business," "Management," "Shares
Eligible for Future Sale," and "Description of Capital Stock" in
the Prospectus, insofar as such statements constitute summaries
of the legal matters, documents or proceedings referred to
therein, fairly and accurately summarize such legal matters,
documents and proceedings.
(x) The Company has full legal right, power, and
authority to enter into this Agreement and the Underwriters'
Warrant Agreement and to consummate the transactions provided for
herein and therein. All necessary corporate proceedings of the
Company have been taken to authorize the execution, delivery and
performance, by the Company, of this Agreement and the
Underwriters' Warrant Agreement. This Agreement and the
Underwriters' Warrant Agreement have been duly authorized,
executed and delivered by the Company and, assuming due
authorization, execution and delivery by each other party hereto
or thereto, constitute the valid and binding agreements of the
Company, enforceable in accordance with their respective terms,
except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws now or hereafter in
effect relating to or affecting creditors' rights generally or by
general principles of equity relating to the availability of
remedies and except as rights to indemnity and contribution may
be limited by federal or state securities laws or the public
policy underlying such laws.
(xi) All required consents from any party to any
material contract, agreement, instrument, lease, license, or
other document, or any arrangement or understanding to which the
Company or any of its Subsidiaries is a party, or to which any
of the property, assets or business of the Company or any of its
Subsidiaries is subject, is required for the execution, delivery
and performance of this Agreement and the Underwriters Warrant
Agreement have been obtained. None of the Company's execution
and delivery of this Agreement and the Underwriters Warrant
Agreement, performance of its obligations hereunder and
thereunder, consummation of the transactions contemplated herein
or therein, and application of the net proceeds of the offering
in the manner set forth under the caption "Use of Proceeds" in
the Prospectus will conflict with or results in any breach or
violation of any of the terms or provisions of, or constitute a
default under, or entitle any other party to terminate or call a
default under, or result in the creation or imposition of any
lien, charge or encumbrance upon, any property or asset of the
Company or any of its Subsidiaries pursuant to the terms of (i)
the Charter or Bylaws of the Company or any of its Subsidiaries;
(ii) the terms of any indenture, mortgage, deed of trust, voting
trust agreement, stockholders agreement, note agreement or other
agreement or instrument known to such counsel after reasonable
investigation to which the Company or any of its Subsidiaries is
a party or by which the Company or any of its Subsidiaries is or
may be bound or to which any of their respective properties,
assets or businesses may be subject; (iii) any statute, rule or
regulation of any regulatory body or administrative agency or
other governmental agency or body, domestic or foreign, having
jurisdiction over the Company or any of its Subsidiaries or any
of their respective businesses, activities or properties; or (iv)
any order or decree of any government, arbitrator, court,
regulatory body or administrative agency or other governmental
agency or body, domestic or foreign, having such jurisdiction.
(xii) All legally required proceedings in connection
with the authorization, issue and sale of the Shares, the
Underwriters' Warrants and the Warrant Shares by the Company in
accordance with the provisions of this Agreement and the
Underwriters' Warrant Agreement have been taken and no consent,
approval, authorization, order, license, certificate, declaration
or permit from or of any court, regulatory body or administrative
agency or other governmental agency or body, domestic or foreign
has been or is required for the Company's performance of this
Agreement and the Underwriters Warrant Agreement or the
consummation of the transactions contemplated hereby and thereby,
except such as may be required under federal or state securities
laws in connection with the purchase and distribution by the
Underwriters of the Shares.
(xiii) To such counsel's best knowledge, the conduct of
the business of the Company and each of its Subsidiaries is not
in violation of any federal, state or local statute,
administrative regulation or other law, which violation could
have a Material Adverse Effect. The Company and each of its
Subsidiaries possesses all licenses, permits, approvals and other
governmental authorizations required for the conduct of its
business, as described in the Prospectus; all such licenses,
permits and other governmental authorizations are in full force
and effect and the Company and each of its Subsidiaries is in all
material respects in compliance therewith. To such counsel's
best knowledge, there is no reason why the Company would not
receive, or would be unlikely to receive, such licenses, permits,
approvals and other governmental authorization as would be
required for the conduct of the Company's business as
contemplated by the Prospectus.
(xiv) Neither the Company nor any of its Subsidiaries
is in violation or breach of its respective Charter or Bylaws or
similar constitutive documents. To such counsel's best, except
as disclosed in the Prospectus, none of the Company, any of its
Subsidiaries, or any other party is now in violation or breach
of, or in default with respect to complying with, any material
provision of any indenture, mortgage, deed of trust, debenture,
note or other evidence of indebtedness, contract, agreement,
instrument, lease or license, or arrangement or understanding
which is material to the Company, and each such indenture,
mortgage, deed of trust, debenture, note or other evidence of
indebtedness, contract, agreement, instrument, lease or license
is in full and force and is the legal, valid and binding
obligation of the Company or its Subsidiary or Subsidiaries,
except to the extent that the enforceability of the rights and
remedies of the Company or any of its Subsidiaries under any such
lease or other agreement may be limited by bankruptcy,
insolvency, or similar laws generally affecting the rights of
creditors and by equitable principles limiting the right to
specific performance or other equitable relief.
(xv) To such counsel's best knowledge, the Company and
each of its Subsidiaries has good and marketable title, in fee
simple, to all the real property owned thereby as set forth in
the Prospectus, subject to no lien, mortgage, pledge, charge or
encumbrance of any kind or nature whatsoever except those, if
any, referred to in the Prospectus (or reflected in the financial
statements included therein) or which, in the aggregate, are not
material to the Company and its business and do not materially
affect the value of such property; and the real properties held
or used by the Company and each of its Subsidiaries under
material leases or other material agreements as set forth in the
Prospectus are held under valid, subsisting and enforceable
leases or other agreements with respect to which neither the
Company nor any of its Subsidiaries is in default, except to the
extent that the enforceability of the rights and remedies of the
Company or any of its Subsidiaries under any such lease or other
agreement may be limited by bankruptcy, insolvency, or similar
laws generally affecting the rights of creditors and by equitable
principles limiting the right to specific performance or other
equitable relief.
(xvi) The Company is not and, after giving effect to
the offering and sale of the Shares, will not be an "investment
company," or an "affiliated person" of or a "promoter" or
"principal underwriter" of or an entity "controlled" by an
"investment company," as such terms are defined in the Investment
Company Act.
(xvii) Neither the Company nor any other person
associated with or acting on behalf of the Company including,
without limitation, any director, officer, agent, or employee of
the Company has, directly or indirectly, while acting on behalf
of the Company, (i) used any corporate funds for unlawful
contributions, gifts, entertainment, or other unlawful expenses
relating to political activity; (ii) made any unlawful
contribution to any candidate for foreign or domestic office, or
to any foreign or domestic government officials or employees or
other person charged with similar public or quasi-public duties,
other than payments required or permitted by the laws of the
United States or any jurisdiction thereof or to foreign or
domestic political parties or campaigns from corporate funds, or
failed to disclose fully any contribution in violation of law;
(iii) violated any provision of the Foreign Corrupt Practices Act
of 1977, as amended; or (iv) made any other unlawful payment.
(xviii) To the best knowledge of such counsel, since
the effective date of the Registration Statement or the later
effective date of any amendment thereto, no event has occurred
which should have been set forth in an amendment or supplement to
the Registration Statement or Prospectus which has not been so
set forth.
(xix) Schedule 1 hereto accurately and completely
lists all of the licenses, permits, and authorizations issued by
the FCC (collectively, the "Licenses") necessary for the Company
to carry on its business as described in the Registration
Statement and Prospectus. Schedule 2 hereto accurately and
completely lists all pending applications filed by the Company
with the FCC.
(xx) To the best knowledge of such counsel, the
Licenses are validly issued. "Validly issued" as used herein
means that the Licenses have been issued through the means of
regular FCC procedures applied in conformity with the
Communications Act and prior FCC practice and there is no legal
basis under the Communications Act to conclude that the Company
cannot hold one or more of the Licenses as a matter of law. To
the best of knowledge of such counsel (i) the Licenses are in
full force and effect without conditions that would have a
Material Adverse Effect, except for such conditions imposed
generally by the FCC upon such licenses or conditions stated on
the face of the Licenses, (ii) all express conditions in the
Licenses have been satisfied where the failure to satisfy such
conditions would have a Material Adverse Effect, and (iii) the
Company has not received any notification that any revocation or
limitation of the Licenses is threatened or pending that would
have a Material Adverse Effect.
(xxi) Except as specified in Schedule 3 hereto, the
Company has filed with the FCC all applications, statements,
reports, information, forms, or any other document required under
the Communications Act, except where the failure to so file would
not have a Material Adverse Effect, and, to the best knowledge of
such counsel, such filings or submissions were in compliance with
applicable laws or regulations when filed or submitted and no
deficiencies have been asserted by the FCC with respect to such
filings or submissions except where the deficiency is of such a
nature that failure to cure any such deficiency would not have a
Material Adverse Effect, and the information contained in such
filings or submissions was, in all material respects, accurate,
complete and up-to-date at the time the filings or submissions
were made.
(xxii) The Company has filed with the applicable
foreign and domestic regulatory authorities each and every
statement, report, information or form required by any applicable
law, regulation or order, except where the failure to so file
would not have a Material Adverse Effect, and all such filings or
submissions were in compliance with applicable laws when filed,
and no deficiencies have been asserted by any regulatory
commission, agency or authority with respect to such filings or
submissions, except where the failure to so file or cure any such
deficiency would not have a Material Adverse Effect. The
Company has maintained in full force and effect all licenses and
permits necessary or proper for the conduct of its business,
except where the failure to do so would not have a Material
Adverse Effect, and the Company has not received any notification
that any revocation or limitation thereof is threatened or
pending that would have such an effect. Except as disclosed in
the Registration Statement and the Prospectus, there is not
pending any change under any law, regulation, license or permit
that would have a Material Adverse Effect. The Company has not
received any notice of, or, to the best knowledge of such
counsel, been threatened with or is under investigation with
respect to, a violation or a possible violation of any provision
of any law, regulation or order, except such violation or
violations as would not have a Material Adverse Effect.
(xxiii) With respect to State Authorizations issued by
PUCs held by the Company, such State Authorizations are in full
force and effect and are unimpaired by any act or omission of the
Company or any of its employees or agents, in each case except
where such authorization is not required or where the failure to
so hold any such State Authorization would not have a Material
Adverse Effect. The State Authorizations are all of the licenses,
authorizations, consents and approvals necessary from the PUCs in
order to allow the Company to own its assets and carry on its
business as currently being conducted, except where the failure
to so hold any State Authorizations would not have a Material
Adverse Effect. To the best knowledge of such counsel, there are
no proceedings of any kind, including but not limited to
rulemaking proceedings of general applicability in the industry
or industries in which the Company operates, by or before any
PUC, now pending or threatened, which, if adversely determined,
would have a Material Adverse Effect. Neither the execution and
delivery of this Agreement and the Underwriters' Warrant
Agreement nor the consummation of the transactions contemplated
herein and therein and in the Registration Statement will
conflict with or result in a breach of, or require any
authorization, approval or consent under the Communications Act
or the rules of the FCC or the communications statutes of any
state or the policies or rules of any PUC.
(xxiv) To the best knowledge of such counsel, there is
no proceeding, formal or informal complaint or investigation
before the FCC or any PUC against the Company or any of the
Licenses identified in Schedule 1 or based on any violation or
alleged violation by the Company of the Communications Act or any
state law, except for proceedings affecting the industry
generally to which the Company is not a specific party. In
addition, such counsel shall state that in the course of the
preparation of the Registration Statement and the Prospectus,
such counsel has participated in conferences with officers and
representatives of the Company and its Subsidiaries, with the
Company's independent public accountants, and with the
Representatives, at which conferences such counsel made inquiries
of such officers, representatives and accountants and discussed
the contents of the Registration Statement and the Prospectus and
on the basis of the foregoing, nothing has come to such counsel's
attention that would lead such counsel to believe that either the
Registration Statement or any amendment thereto, as of the date
the Registration Statement or such amendment is or was declared
effective, and as of the Closing Date or any Option Closing Date,
as the case may be, or the Prospectus as of the date thereof and
as of the Closing Date or any Option Closing Date, as the case
may be, contained or contains any untrue statement of a material
fact or omitted or omits to state a material fact required to be
stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading (it being understood that such counsel need not
express any belief with respect to the financial statements, and
the notes and schedules related thereto and other financial
information or statistical data included in the Registration
Statement, any amendment thereto, or the Prospectus). In
rendering any such opinions, such counsel may rely, (i) as to
matters of fact, to the extent such counsel deems proper, on
certificates of responsible officers of the Company provided that
copies of any such certificates shall be delivered to counsel for
the Underwriters; and (ii) to the extent such counsel deems
proper, upon written statements or certificates of public
officials, provided that copies of any such statements or
certificates shall be delivered to counsel for the Underwriters.
References to the Registration Statement and the Prospectus in
this paragraph (d) shall include any amendment or supplement
thereto at the date of such opinion.
(e) On or prior to the Closing Date or any Option Closing
Date, as the case may be, counsel to the Underwriters shall have
been furnished such documents, certificates and opinions as they
may reasonably require in order to evidence the accuracy,
completeness or satisfaction of any of the representations or
warranties of the Company or conditions herein contained.
(f) At the time that this Agreement is executed by the
Company the Underwriters shall have received from Arthur Andersen
LLP a letter as of the date of this Agreement in form and
substance satisfactory to the Representatives (the "Original
Letter"), and on the Closing Date and any Option Closing Date the
Underwriters shall have received from such firm a letter dated
the Closing Date or such Option Closing Date, stating that, as of
a specified date not earlier than five (5) calendar days prior to
the Closing Date or Option Closing Date, as the case may be,
nothing has come to the attention of such firm to suggest that
the statements made in the Original Letter are not true and
correct.
(g) On the Closing Date and any Option Closing Date, the
Underwriters shall have received a certificate, dated the Closing
Date or such Option Closing Date, as the case may be, of the
principal executive officer and the principal financial or
accounting officer of the Company to the effect that each such
person has carefully examined the Registration Statement and the
Prospectus and any amendments or supplements thereto and this
Agreement, and that:
(i) the representations and warranties of the Company
in this Agreement are true and correct, as if made on and as of
the Closing Date or the Option Closing Date, as the case may be,
and the Company has complied with all agreements and covenants
and satisfied all conditions contained in this Agreement on its
part to be performed or satisfied at or prior to the Closing Date
or such Option Closing Date;
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for
that purpose have been instituted or are pending or, to the best
knowledge of each such person, are contemplated or threatened
under the Act and any and all filings required by Rule 424, Rule
430A and Rule 462(b) have been timely made;
(iii) The Registration Statement and Prospectus and,
if any, each amendment and each supplement thereto, contain all
statements and information required by the Act or the Rules and
Regulations to be included therein, and neither the Registration
Statement or the Prospectus nor any amendment or supplement
thereto includes any untrue statement of a material fact or omits
to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and
(iv) Subsequent to the respective dates as of which
information is given in the Registration Statement and the
Prospectus or any amendment or supplement thereto, up to and
including the Closing Date or the Option Closing Date, as the
case may be, neither the Company nor any of its Subsidiaries has
incurred, other than in the ordinary course of its business or as
described in the Prospectus or in an amended or supplemented
Prospectus, any material liabilities or obligations, direct or
contingent; the Company has not purchased any of its outstanding
capital stock or paid or declared any dividends or other
distributions on its capital stock; neither the Company nor any
of its Subsidiaries has entered into any transactions not in the
ordinary course of business; and there has not been any change in
the capital stock or long-term debt or any increase in the
short-term borrowings (other than any increase in short-term
borrowings in the ordinary course of business) of the Company or
any material adverse change to the business, properties, assets,
net worth, condition (financial or other), results of operations
or prospects of the Company; the Company has not sustained any
material loss or damage to its property or assets, whether or not
insured; there is no litigation which is pending or threatened
against the Company which is required under the Act or the Rules
and Regulations to be set forth in an amended or supplemented
Prospectus which has not been set forth; and there has not
occurred any event required to be set forth in an amended or
supplemented Prospectus which has not been set forth. References
to the Registration Statement and the Prospectus in this
paragraph (g) are to such documents as amended and supplemented
at the date of the certificate required hereby.
(h) Subsequent to the respective dates as of which
information is given in the Registration Statement and the
Prospectus up to and including the Closing Date or any Option
Closing Date, as the case may be, there has not been (i) any
change or decrease specified in the letter or letters referred to
in paragraph (f) of this Section 8 or (ii) any change, or any
development involving a prospective change, in the business or
properties of the Company which change or decrease in the case of
clause (i) or change or development in the case of clause (ii)
makes it impractical or inadvisable in the Representatives'
judgment to proceed with the public offering or the delivery of
the Shares as contemplated by the Prospectus.
(i) No order suspending the sale of the Shares in any
jurisdiction designated by you pursuant to Section 6(c) hereof
has been issued on or prior to the Closing Date or any Option
Closing Date, as the case may be, and no proceedings for that
purpose have been instituted or, to the best knowledge of such
persons or that of the Company, have been or are contemplated.
(j) The Representatives shall have received from each person
who is a director or officer of the Company, each stockholder,
and each other person, if any, who has the right to acquire more
than five percent (5%) or more of the outstanding shares of
Stock, assuming exercise of currently exercisable stock options
on a fully diluted basis, an agreement to the effect that such
person will not, directly or indirectly, without the prior
written consent of the Representatives, on behalf of the
Underwriters, offer, sell, offer to sell, contract to sell, grant
any option to purchase, pledge or otherwise dispose (or announce
any offer, sale, offer of sale, contract of sale, grant of an
option to purchase, pledge or other disposition) of any shares of
Common Stock or any securities convertible into, or exchangeable
or exercisable for, shares of Common Stock for a period of 180
calendar days after the date of this Agreement.
(k) The Shares shall have been duly authorized for listing
on the NNM.
(l) The NASD, upon review of the terms of the public
offering of the Shares contemplated hereby, shall have indicated
that it has no objection to the underwriting arrangements
pertaining to the sale of the Shares and the Underwriters'
participation in the sale of the Shares as so contemplated.
(m) The Company shall have furnished the Underwriters with
such further opinions, letters, certificates or documents as the
Representatives or counsel for the Underwriters may reasonably
request. All opinions, certificates, letters and documents to be
furnished by the Company will comply with the provisions hereof
only if they are reasonably satisfactory in all material respects
to the Underwriters and to counsel for the Underwriters. The
Company shall furnish the Underwriters with manually signed or
conformed copies of such opinions, certificates, letters and
documents in such quantities as you reasonably request. The
certificates delivered under this Section 8 shall constitute
representations, warranties and agreements of the Company as to
all matters set forth therein as fully and effectively as if such
matters had been set forth in Section 2 of this Agreement. If
any condition to the Underwriters' obligations hereunder to be
satisfied prior to or at either the Closing Date or any Option
Closing Date is not so satisfied, this Agreement, at the
Representatives' election, will terminate upon notification to
the Company without liability on the part of any Underwriter
(including the Representatives) or the Company, except for the
expenses to be paid by the Company pursuant to Section 7 hereof
and except to the extent provided in Section 9 hereof.
Section 9. Indemnification. (a) The Company agrees to
indemnify and hold harmless each Underwriter, and its officers,
directors, partners, employees, agents and counsel, and each
person, if any, who controls such Underwriter within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act,
against any and all losses, claims, damages, liabilities or
expenses whatsoever (which shall include, for all purposes of
this Section 9, but not be limited to, attorneys' fees and any
and all fees and expenses whatsoever incurred in investigating,
preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever and any and all amounts paid
in settlement), joint or several (and actions in respect
thereof), to which such Underwriter, officer, director, partner,
employee, agent, counsel or controlling person may become
subject, under the Act or other federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities, expenses or actions arise out of or
are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement or
the Prospectus or any Preliminary Prospectus, or any amendment or
supplement thereto, or any blue sky application or other document
executed by the Company specifically for the purposes of
qualifying, or based upon written information furnished by the
Company in any state or other jurisdiction in order to qualify,
any or all of the Shares under the securities or blue sky laws
thereof (any such application, document or information being
hereinafter called a "Blue Sky Application"), or arise out of or
are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse,
as incurred, expenses of such Underwriter, partner, employee,
agent, counsel or controlling person in connection with
investigating, defending or appearing as a third party witness in
connection with any such loss, claim, damage, liability, expense
or action; provided, however, that the Company will not be liable
in any such case to the extent that any such loss, claim, damage,
liability, expense or action arises out of or is based upon any
untrue statement or alleged untrue statement or omission or
alleged omission made in any of such documents in reliance upon
and in conformity with information furnished in writing to the
Company on behalf of such Underwriter through the Representatives
expressly for use therein, and provided, further, that such
indemnity with respect to any Preliminary Prospectus shall not
inure to the benefit of any Underwriter (or to the benefit of any
person controlling such Underwriter) from whom the person
asserting any such loss, claim, damage, liability or action
purchased Shares which are the subject thereof to the extent that
any such loss, claim, damage, liability or action (i) results
from the fact that such Underwriter failed to send or give a copy
of the Prospectus (as amended or supplemented) to such person at
or prior to the confirmation of the sale of such Shares to such
person in any case where such delivery is required by the Act and
(ii) arises out of or is based upon an untrue statement or
omission of a material fact contained in such Preliminary
Prospectus that was corrected in the Prospectus (as amended and
supplemented), unless such failure resulted from non-compliance
by the Company with Section 6(h) hereof. The indemnity agreement
in this paragraph (a) shall be in addition to any liability which
the Company may otherwise have.
(b) Each of the Underwriters agrees severally, but not
jointly, to indemnify and hold harmless the Company, each of its
directors, each of its officers who has signed the Registration
Statement and each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act against any and all losses, claims, damages,
liabilities or expenses whatsoever (which shall include, for all
purposes of this Section 9, but not be limited to, attorneys'
fees and any and all fees and expenses whatsoever incurred in
investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever and any and all
amounts paid in settlement), (and actions in respect thereof) to
which the Company or any such director, officer, or controlling
person may become subject, under the Act or other federal or
state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities, expenses or
actions arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
Registration Statement or the Prospectus or any Preliminary
Prospectus, or any amendment or supplement thereto or in any Blue
Sky Application, or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements not
misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in
conformity with information furnished in writing by that
Underwriter through the Representatives to the Company expressly
for use therein. The Company acknowledges that the statements
with respect to the public offering of the Shares set forth under
the caption "Underwriting" and the stabilization legend in the
Prospectus have been furnished by the Underwriters to the Company
expressly for use therein and constitute the only information
furnished in writing by or on behalf of the Underwriters for
inclusion in the Prospectus. The indemnity agreement contained
in this paragraph (b) shall be in addition to any liability which
the Underwriters may otherwise have.
(c) Promptly after receipt by an indemnified party under
this Section 9 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof it to be
made against one or more indemnifying parties under this Section
9, notify such indemnifying party or parties of the commencement
thereof; but the failure so to notify the indemnifying party
shall not relieve it from any liability which it may have to any
indemnified party otherwise than under paragraph (a) or (b) of
this Section 9 to the extent that the indemnifying party was not
adversely affected by such omission. In case any such action is
brought against an indemnified party and it notifies an
indemnifying party or parties of the commencement thereof, the
indemnifying party or parties against which a claim is to be made
will be entitled to participate therein and, to the extent that
it or they may wish, to assume the defense thereof, with counsel
reasonably satisfactory to such indemnified party; provided,
however, that if the defendants in any such action include both
the indemnified party and the indemnifying party and the
indemnified party has reasonably concluded that there may be
legal defenses available to it and/or other indemnified parties
which are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have
the right to select separate counsel to assume such legal
defenses and otherwise to participate in the defense of such
action on behalf of such indemnified party or parties. Upon
receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and
approval by the indemnified party of counsel, the indemnifying
party will not be liable to such indemnified party under this
Section 9 for any legal or other expenses (other than the
reasonable costs of investigation) subsequently incurred by such
indemnified party in connection with the defense thereof unless
(i) the indemnified party has employed such counsel in connection
with the assumption of such different or additional legal
defenses in accordance with the proviso to the immediately
preceding sentence, (ii) the indemnifying party has not employed
counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after
notice of commencement of the action, or (iii) the indemnifying
party has authorized in writing the employment of counsel for the
indemnified party at the expense of the indemnifying party.
(d) If the indemnification provided for in this Section 9 is
unavailable or insufficient to hold harmless an indemnified party
under paragraph (a) or (b) above in respect of any losses,
claims, damages, liabilities or expenses (or actions in respect
thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) (i) in such
proportion as is appropriate to reflect the relative benefits
received by each of the contributing parties, on the one hand,
and the party to be indemnified, on the other hand, from the
offering of the Shares or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative
fault of each of the contributing parties, on the one hand, and
the party to be indemnified, on the other hand in connection with
the statements or omissions that resulted in such losses, claims,
damages or liabilities, as well as any other relevant equitable
considerations. In any case where the Company is a contributing
party and the Underwriters are the indemnified party, the
relative benefits received by the Company on the one hand, and
the Underwriters, on the other hand, shall be deemed to be in the
same proportion as the total net proceeds from the offering of
the Shares (before deducting expenses) bear to the total
underwriting discounts received by the Underwriters hereunder, in
each case as set forth in the table on the cover page of the
Prospectus. Relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the
Company or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The amount paid or
payable by an indemnified party as a result of the losses,
claims, damages, liabilities or expenses (or actions in respect
thereof) referred to above in this paragraph (d) shall be deemed
to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the
provisions of this paragraph (d), the Underwriters shall not be
required to contribute any amount in excess of the underwriting
discounts applicable to the Shares purchased by the Underwriters
hereunder. The Underwriters' obligations to contribute pursuant
to this paragraph (d) are several in proportion to their
respective underwriting obligations, and not joint. No person
guilty of fraudulent misrepresentations (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent
misrepresentation. For purposes of this paragraph (d), (i) each
person, if any, who controls an Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act shall
have the same rights to contribution as such Underwriter and (ii)
each director of the Company, each officer of the Company who has
signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act shall have the same rights to
contribution as the Company. Any party entitled to contribution
will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect to which
claim for contribution may be made against another party or
parties under this paragraph (d), notify such party or parties
from whom contribution may be sought, but the omission so to
notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any other
obligation (x) it or they may have hereunder or otherwise than
under this paragraph (d) or (y) to the extent that such party or
parties were not adversely affected by such omission. The
contribution agreement set forth above shall be in addition to
any liabilities which any indemnifying party may otherwise have.
Section 10. Representations, Etc. to Survive Delivery. The
respective representations, warranties, agreements, covenants,
indemnities and statements of, and on behalf of, the Company and
its officers and the Underwriters, respectively, set forth in or
made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of
the Underwriters, and will survive delivery of and payment for
the Shares. Any successors to the Underwriters shall be entitled
to the indemnity, contribution and reimbursement agreements
contained in this Agreement.
Section 11. Effective Date and Termination. (a) This
Agreement shall become effective at _____ a.m., Washington, D.
C. time, on the first business day following the date hereof, or
at such earlier time after the Registration Statement becomes
effective as the Representatives, in their sole discretion, shall
release the Shares for the sale to the public, unless prior to
such time the Representatives shall have received written notice
from the Company that it elects that this Agreement shall not
become effective, or the Representatives shall have given written
notice to the Company that the Representatives on behalf of the
Underwriters elect that this Agreement shall not become
effective; provided, however, that the provisions of this Section
11 and of Section 7 and Section 9 hereof shall at all times be
effective. For purposes of this Section 11(a), the Shares to be
purchased hereunder shall be deemed to have been so released upon
the earlier of notification by the Representatives to securities
dealers releasing such Shares for offering or the release by the
Representatives for publication of the first newspaper
advertisement which is subsequently published relating to the
Shares.
(b) This Agreement (except for the provisions of Sections 7
and 9 hereof) may be terminated by the Representatives by notice
to the Company in the event that the Company has failed to comply
in any respect with any of the provisions of this Agreement
required on its part to be performed at or prior to the Closing
Date or any Option Closing Date, as the case may be, or if any of
the representations or warranties of the Company are not accurate
in any respect or if the covenants, agreements or conditions of,
or applicable to, the Company herein contained have not been
complied with in any respect or satisfied within the time
specified on the Closing Date or any Option Closing Date, as the
case may be, or if prior to the Closing Date or any such Option
Closing Date:
(i) the Company shall have sustained a loss by strike,
fire, flood, accident or other calamity of such a character as to
interfere materially with the conduct of the business and
operations of the Company regardless of whether or not such loss
was insured;
(ii) trading in the Stock shall have been suspended by
the Commission or the NNM or trading in securities generally on
the New York Stock Exchange or the NNM shall have been suspended
or a material limitation on such trading shall have been imposed
or minimum or maximum prices shall have been established on
either such exchange or market;
(iii) a banking moratorium shall have been declared by
New York or United States authorities;
(iv) there shall have been an outbreak or escalation of
hostilities between the United States and any foreign power or an
outbreak or escalation of any other insurrection or armed
conflict involving the United States;
(v) there shall have been commenced any action, suit
or proceeding at law or in equity against the Company, or by any
federal, state or other commission, board or agency, wherein any
unfavorable decision would materially adversely affect the
business, properties or financial condition of the Company;
(vi) there shall have occurred any material adverse
market conditions, of which the Representatives shall be the sole
judge;
(vii) Company's independent public accountants shall
have imposed qualifications in certifying to, or its attorneys in
opining upon, material items including, without limitation,
information in the footnotes to the financial statements or
matters incident to the issuance and sale of the Shares,
corporate proceedings or other subjects; or
(viii) there shall have been a material adverse change
in (i) general economic, political or financial conditions or
(ii) the present or prospective business or condition (financial
or other) of the Company that, in each case, in the
Representatives' judgment makes it impracticable or inadvisable
to make or consummate the public offering, sale or delivery of
the Company's Shares on the terms and in the manner contemplated
in the Prospectus and the Registration Statement.
(c) Termination of this Agreement under this Section 11 or
Section 12 after the Firm Shares have been purchased by the
Underwriters hereunder shall be applicable only to the Optional
Shares. Termination of this Agreement shall be without liability
of any party to any other party other than as provided in
Sections 7 and 9 hereof.
Section 12. Substitution of Underwriters. If one or more of
the Underwriters shall fail or refuse (otherwise than for a
reason sufficient to justify the termination of this Agreement
under the provisions of Section 8 or 11 hereof) to purchase and
pay for (a) in the case of the Closing Date, the number of Firm
Shares agreed to be purchased by such Underwriter or Underwriters
upon tender to the Representatives such Firm Shares in accordance
with the terms hereof or (b) in the case of any Option Closing
Date, the number of Optional Shares agreed to be purchased by
such Underwriter or Underwriters upon tender to the
Representatives of such Optional Shares in accordance with the
terms hereof, and the number of such Shares shall not exceed ten
percent (10%) of the Firm Shares or Optional Shares required to
be purchased on the Closing Date or such Option Closing Date, as
the case may be, then, each of the non-defaulting Underwriters
shall purchase and pay for (in addition to the number of such
Shares which it has severally agreed to purchase hereunder) its
proportionate share (based on the monetary obligations of the
several Underwriters hereunder on account of the purchase of Firm
Shares, excluding the Firm Shares allocable to the defaulting
Underwriter or Underwriters) which the defaulting Underwriter or
Underwriters shall have so failed or refused to purchase on such
Closing Date or Option Closing Date, as the case may be. In such
case, the Representatives, on behalf of the Underwriters, shall
have the right to postpone the Closing Date or the Option Closing
Date, as the case may be, to a date not exceeding seven (7) full
business days after the date originally fixed as such Closing
Date or the Option Closing Date, as the case may be, pursuant to
the terms hereof in order that any necessary changes in the
Registration Statement, the Prospectus or any other documents or
arrangements may be made. If one or more of the Underwriters
shall fail or refuse (otherwise than for a reason sufficient to
justify the termination of this Agreement under the provisions of
Section 8 or 11 hereof) to purchase and pay for (a) in the case
of the Closing Date, the number of Firm Shares agreed to be
purchased by such Underwriter or Underwriters upon tender to you
of such Firm Shares in accordance with the terms hereof or (b) in
the case of the Option Closing Date, the number of Optional
Shares agreed to be purchased by such Underwriter or Underwriters
upon tender to you of such Optional Shares in accordance with the
terms hereof, and the number of such Shares shall exceed ten
percent (10%) of the Firm Shares or Optional Shares required to
be purchased by all the Underwriters on the Closing Date or the
Option Closing Date, as the case may be, then (unless within
forty-eight (48) hours after such default arrangements to your
satisfaction shall have been made for the purchase of the
defaulted Shares by an Underwriter or Underwriters) and subject
to the provisions of Section 11(b) hereof, this Agreement will
terminate without liability on the part of any non-defaulting
Underwriter or on the part of the Company except as otherwise
provided in Sections 7 and 9 hereof. As used in this Agreement,
the term "Underwriter" includes any person substituted for an
Underwriter under this paragraph. Nothing in this Section 12,
and no action taken hereunder, shall relieve any defaulting
Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
Section 13. Notices. All communications hereunder shall be
in writing and if sent to the Representatives shall be mailed or
delivered or sent by facsimile transmission and confirmed by
letter to Ferris, Baker Watts, Incorporated at 1720 Eye Street,
N.W., Washington, D.C. 20006, Attention: Richard K. Prins
(facsimile number: (703) 761-9610) or, if sent to the Company,
shall be mailed or delivered or sent by facsimile transmission
and confirmed by letter to the Company at 10411 Motor City Drive,
Bethesda, Maryland 20817, attention: Ram Mukunda (facsimile
number: (301) 365-8969).
Section 14. Successors. This Agreement shall inure to the
benefit of and be binding upon the Company and each Underwriter
and the Company's and each Underwriter's respective successors
and legal representatives, and nothing expressed or mentioned in
this Agreement is intended or shall be construed to give any
other person any legal or equitable right, remedy or claim under
or in respect of this Agreement, or any provisions herein
contained, this Agreement and all conditions and provisions
hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person,
except that the representatives, warranties, indemnities and
contribution agreements of the Company contained in this
Agreement shall also be for the benefit of the partners,
employees agents of each Underwriter and any person or persons,
if any, who control any Underwriter within the meaning of Section
15 of the Act or Section 20 of the Exchange Act, and except that
the Underwriters' indemnity and contribution agreements shall
also be for the benefit of the directors of the Company, the
officers of the Company who have signed the Registration
Statement and any person or persons, if any, who control the
Company within the meaning of Section 15 of the Act or Section 20
of the Exchange Act. No purchaser of Shares from the
Underwriters will be deemed a successor because of such purchase.
Section 15. Applicable Law; Jurisdiction. This Agreement
shall be governed by and construed in accordance with the laws of
the State of Maryland, without giving effect to the choice of law
or conflict of law principles thereof. Each party hereto
consents to the jurisdiction of each court in which any action is
commenced seeking indemnity or contribution pursuant to Section 9
above and agrees to accept, either directly or through an agent,
service of process of each such court.
Section 16. Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be
an original, and all of which together shall be deemed to be one
and the same instrument.
If the foregoing is in accordance with your understanding,
please sign and return to us three (3) counterparts hereof, and
upon the acceptance hereof by you, on behalf of each of the
Underwriters, this letter and such acceptance hereof shall
constitute a binding agreement among each of the Underwriters and
the Company. It is understood that your acceptance of this
letter on behalf of each of the Underwriters is pursuant to the
authority set forth in a form of Agreement among Underwriters,
the form of which shall be submitted to the Company for
examination, upon request, but without warranty on your part as
to the authority of the signers thereof.
Very truly yours,
STARTEC Global Communications, Inc.
By: _________________________________
Name: ______________________________
Title: _______________________________
Accepted as of the date hereof
FERRIS, BAKER WATTS, INCORPORATED
1720 Eye Street, N.W.
Washington, D.C. 20006
By: FERRIS, BAKER WATTS, INCORPORATED
On behalf of each of the Underwriters
By:
Name:
Title:
<PAGE>
SCHEDULE I
NUMBER OF SHARES TO BE PURCHASED BY EACH UNDERWRITER
Name of Underwriter Percentage Number of Firm Shares to be
Purchased from the Company
Ferris, Baker Watts,
Incorporated
Boenning & Scattergood
<PAGE>
STARTEC GLOBAL COMMUNICATIONS CORPORATION
UNDERWRITERS' WARRANT AGREEMENT
UNDERWRITERS' WARRANT AGREEMENT dated as of ___________,
1997 by and between STARTEC GLOBAL COMMUNICATIONS CORPORATION, a
Maryland Corporation (the "Company"), and FERRIS, BAKER WATTS,
INCORPORATED ("FERRIS") and BOENNING & SCATTERGOOD, INC.
("BOENNING") (Ferris and Boenning sometimes being referred to
collectively herein as the "Underwriters").
W I T N E S S E T H:
WHEREAS, the Company proposes to issue warrants to the
Underwriters (the "Warrants") to purchase up to 150,000 shares
of common stock, par value $0.01 per share, of the Company (the
"Stock"), of which 110,000 Warrants are to be issued to Ferris
and the remaining 40,000 Warrants are to be issued to Boenning;
and
WHEREAS, the Underwriters have agreed, pursuant to an
underwriting agreement (the "Underwriting Agreement") dated
_________, 1997, to which the Underwriters and the Company are
parties, to act as the co-lead underwriters in connection with
the Company's public offering of up to 2,300,000 shares of its
Stock at a public offering price of $_____ per share (the
"Public Offering"); and
WHEREAS, the Warrants to be issued pursuant to this
Agreement will be issued on the Closing Date (as such term is
defined in the Underwriting Agreement) by the Company to the
Underwriters in the amounts set forth in the first recital above
written, in consideration for, and as part of their
compensation in connection with, acting as underwriters pursuant
to the Underwriting Agreement;
NOW, THEREFORE, in consideration of the foregoing premises,
which are incorporated into the terms hereof, of the payment by
Ferris and Boenning to the Company of $1,100 and $400
respectively for the Warrants to be purchased hereunder, the
agreements herein set forth and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Grant. The Holders (as that term is defined in
Section 3 hereof) of the Warrants issued hereunder are hereby
granted the right to purchase, at any time from _______________,
1998 (the first anniversary of the effective date of the
Company's Registration Statement relating to the Public Offering
(the "Effective Date")) until 5:00 p.m., Washington, DC time,
on _________, 2003 (the sixth anniversary of the Effective Date),
up to an aggregate of 150,000 shares of the Stock of the
Company, at an initial exercise price (subject to adjustment as
provided in Section 8 hereof) of $____ per Share (110% of the
initial public offering price per share in the Public Offering),
subject to the terms and conditions of this Agreement. The
shares issuable upon exercise of the Warrants are referred to
herein as the "Warrant Shares".
2. Warrant Certificates. The warrant certificates (the
"Warrant Certificates") delivered and to be delivered pursuant
to this Agreement shall be in the form set forth in Exhibit A,
attached hereto and made a part hereof, with such appropriate
insertions, omissions, substitutions, and other variations as
required or permitted by this Agreement.
3. Exercise of Warrants. The Warrants are exercisable
during the term set forth in Section 1 hereof at the Exercise
Price (defined below) per Warrant Share set forth in Section 6
hereof, payable by certified or cashier's check or money order
payable in lawful money of the United States, subject to
adjustment as provided in Section 8 hereof; provided, however,
that if the fair market value of one share of Stock is greater
than the Exercise Price (at the date of calculation as set forth
below), in lieu of exercising a Warrant for cash, the Holder may
elect to receive Warrant Shares equal to the value (as determined
below) of the Warrant (or the portion thereof being canceled) by
surrender of the Warrant Certificate at the principal office of
the Company together with the properly completed and executed
Form of Election to Purchase in the form attached as Exhibit B,
in which event the Company shall issue to the Holder a number of
Warrant Shares computed using the following formula:
Where: X = the number of Warrant Shares to be issued to
the Holder;
Y = the number of shares of Stock purchasable
pursuant to the Warrant Certificate surrendered, or, if only a
portion of the Warrant represented by such Warrant Certificate is
being exercised, the portion of the Warrant being canceled (at
the date of such calculation);
A = the fair market value of one share of the
Company's Stock (at the date of such calculation); and
B = Exercise Price (as adjusted to the date of
such calculation).
For purposes of the above calculation, fair market value of
one share of Stock shall be determined by the Company's Board of
Directors in good faith; provided, however, that where there
exists a public market for the Stock at the time of such
exercise, the fair market value per share shall be equal to the
average of the closing bid and asked prices of the Stock quoted
in the Over-The-Counter Market Summary or the last reported sale
price of the Stock or the closing price quoted on the Nasdaq
National Market or on any exchange on which the Stock is listed,
whichever is applicable, as published in The Wall Street Journal
for the five (5) trading days prior to the date of determination
of fair market value. Notwithstanding the foregoing, in the
event the Warrant is exercised in connection with a pubic
offering by the Company (except for the Public Offering), the
fair market value per share shall be equal to the per share
offering price to the public of the Stock in such public
offering. Upon surrender of a Warrant Certificate with the
annexed Form of Election to Purchase duly executed, together with
payment of the Exercise Price (as hereinafter defined) for the
Warrant Shares (and such other amounts, if any, arising pursuant
to Section 4 hereof) at the Company's principal office, the
registered holder of a Warrant Certificate (each, a "Holder"
and, collectively, the "Holders") shall be entitled to receive a
certificate or certificates for the Warrant Shares so purchased.
(References herein to a "Holder" or "Holders of Warrant Shares
shall mean the registered holder or holders thereof). The
purchase rights represented by each Warrant Certificate are
exercisable, at the option of the Holder thereof, in whole or in
part, (but not as to fractional Warrant Shares). In the case of
the purchase of less than all the Warrant Shares purchasable on
the exercise of the Warrants represented by a Warrant
Certificate, the Company shall cancel the Warrant Certificate
represented thereby upon the surrender thereof and shall execute
and deliver a new Warrant Certificate of like tenor for the
balance of the Warrant Shares purchasable thereunder.
4. Issuance of Certificates. Upon the exercise of the
Warrants and payment of the Exercise Price therefor, the issuance
of certificates for the Warrant Shares underlying such Warrants
shall be made forthwith (and, in any event, within three (3)
business days thereafter) without further charge to the Holder
thereof, and such certificates shall (subject to the provisions
of Sections 5 and 7 hereof) be issued in the name of, or in such
names as may be directed by, the Holder effecting such exercise;
provided, however, that the Company shall not be required to pay
any tax which may be payable in respect of any transfer involved
in the issuance and delivery of any such certificates in a name
other than that of such Holder, and the Company shall not be
required to issue or deliver such certificates unless or until
the person or persons requesting the issuance thereof shall have
paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has
been paid. The Warrant Certificates and the certificates
representing the Warrant Shares shall be executed on behalf of
the Company by the persons and in the manner prescribed by the
Bylaws of the Company and by applicable law. Warrant
Certificates shall be dated the date of execution by the Company
upon initial issuance, division, exchange, substitution or
transfer.
5. Restrictions on Transfer of Warrants. The Holder of a
Warrant Certificate (and its Permitted Transferee, as defined
below), by its acceptance thereof, covenants and agrees that the
Warrants are being acquired as an investment and not with a view
to the distribution thereof; that the Warrants may be sold,
transferred, assigned, hypothecated or otherwise disposed of, in
whole or in part, to (i) any person who is an officer, director,
employee, agent or other affiliate of the Underwriters or (ii)
such other person as may be approved by counsel for the Company
(a "Permitted Transferee"), provided such transfer, assignment,
hypothecation or other disposition is made in accordance with the
provisions of the Securities Act of 1933, as amended (the "1933
Act"). Any transfer of a Warrant Certificate shall be effected
by delivery of such Warrant Certificate at the principal office
of the Company, together with the properly completed and executed
Form of Assignment in the form attached as Exhibit C.
6. Exercise Price
a. Initial and Adjusted Exercise Price. Except as
otherwise provided in Section 8 hereof, the initial exercise
price of each Warrant to purchase Warrant Shares shall be $____
per Share. The adjusted exercise price shall be the price which
shall result from time to time from any and all adjustments of
the initial exercise price in accordance with the provisions of
Section 8 hereof.
b. Exercise Price. The term "Exercise Price" herein shall
mean the initial exercise price or the adjusted exercise price,
depending upon the context.
7. Registration Rights.
a. Warrant Legend. The Warrant Certificates shall bear the
following legends:
THE SECURITIES ISSUABLE UPON EXERCISE OF THE WARRANT REPRESENTED
BY THIS CERTIFICATE MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO
(I) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "1933 ACT"), (II) TO THE EXTENT
APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER
SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (III) AN
OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY
SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED
FOR SALE OR SOLD EXCEPT PURSUANT TO (I) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE 1933 ACT, OR (II) AN OPINION OF COUNSEL, IF
SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL TO THE
ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH 1933 ACT
IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANT REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE WARRANT
AGREEMENT REFERRED TO HEREIN.
b. Demand Registration. On any one (1) occasion commencing
at any time one (1) year after the Effective Date and expiring
six (6) years after the Effective Date, the Holders of the
Warrants and the Warrant Shares representing at least a Majority
(as hereinafter defined) of such securities shall have the right,
exercisable by written notice to the Company, to have the Company
prepare and file with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1, SB-2 (or
other appropriate form) and such other documents, including a
prospectus, as may be necessary in the opinion of both counsel
for the Company and counsel for the Holders, in order to comply
with the provisions of the 1933 Act, so as to permit a public
offering and sale, for a period of not less than twelve (12)
months, of the Warrant Shares by such Holders, and any other
Holders of the Warrants and/or Warrant Shares who shall notify
the Company within thirty (30) business days after receipt of the
notice described in the succeeding sentence. The Company
covenants and agrees to give written notice of any registration
request under this Section 7(b) by any Holder(s) of Warrants or
Warrants Shares to all other Holders of the Warrants and the
Warrant Shares within ten (10) calendar days from the date of the
receipt of any such registration request. For purposes of this
Agreement, the term "Majority," or any stated percentage, in
reference to the Holders of the Warrants and/or Warrant Shares or
any category thereof, shall mean the Holders of Warrant Shares
and Warrants or category thereof representing, in the aggregate,
in excess of fifty percent (50%) or such other stated percentage
of the then-outstanding Warrant Shares and Warrant Shares or
category thereof into which then-outstanding Warrants or category
thereof are then exercisable, excluding all Warrant Shares and
Warrants that (i) are held by the Company, an affiliate, officer,
director, employee or agent thereof or any of their respective
affiliates, members of their family, persons acting as nominees
or in conjunction therewith, or (ii) have been resold to the
public pursuant to a registration statement filed with the
Commission under the 1933 Act. For the purposes of subsection
(i) above, the Underwriters and their respective officers,
directors, employees and agents shall not be deemed to be
affiliates, officers, directors, employees or agents of the
Company. No registration statement filed pursuant to this demand
registration provision (without the consent of the Holders
holding a Majority of the Warrant Shares requested to be
registered pursuant to such registration statement) may relate to
any securities other than the Warrant Shares, and no other
securities may be sold incidentally to any such underwritten
public offering of Warrant Shares so registered.
c. Piggyback Registration. If, at any time within eight
(8) years after the Effective Date, the Company should file a
registration statement with the Commission under the 1933 Act
(other than in connection with a merger or pursuant to Form S-8)
it will give written notice by registered mail, at least
forty-five (45) calendar days prior to the filing of each such
registration statement, to each of the Underwriters (if then a
Holder) and to all other Holders of the Warrants and/or the
Warrant Shares of its intention to do so. If the Underwriters or
other Holders of the Warrants and/or the Warrant Shares notify
the Company within thirty (30) calendar days after receipt of any
such notice of its or their desire to include any Warrant Shares
in such proposed registration statement, the Company shall afford
such Underwriters and Holders of the Warrants and/or Warrant
Shares the opportunity to have any such Warrant Shares registered
under such registration statement; provided, however, that the
Holders shall not be entitled to piggyback registration rights in
respect of any registration statement filed pursuant to the
demand registration rights granted to Signet Bank pursuant to
that certain Warrants Agreement dated as of July 1, 1997.
Notwithstanding the provisions of this Section 7(c), the Company
shall have the right at any time after it shall have given
written notice pursuant to this Section 7(c) (irrespective of
whether a written request for inclusion of any such securities
shall have been made) to elect not to file any such proposed
registration statement, or to withdraw the same after the filing
but prior to the effective date thereof.
If the underwriter of an offering to which the above
piggyback registration rights apply objects to such rights, such
objection shall preclude such inclusion. However, in the event
(i) the Holders of Warrant Shares or Warrants do not constitute
at least forty percent (40%) of the Warrant Shares to be sold by
Holders requesting to sell shares in such offering, or (ii) such
offering is pursuant to a registration pursuant to a demand for
registration made by Signet Bank, the Company will, within one
hundred eighty (180) days of completion of such subsequent
underwriting, file at its sole expense, a registration statement
relating to such excluded Warrant Shares, which shall be in
addition to any registration statement required to be filed
pursuant to Section 7(b), unless such Holders had refused an
opportunity provided with the consent of the underwriter, to be
included in the registration statement on the condition that they
agree not to offer the securities for sale (without the prior
written consent of the underwriter) for a period not exceeding
(60) calendar days from the effective date of such registration
statement.
If the underwriter in such underwritten offering shall
advise the Company that it declines to include a portion or all
of the Warrant Shares requested by the Underwriters and the
Holders to be included in the registration statement, then (i)
registration of all of the Warrant Shares shall be excluded from
such registration statement on the condition that all securities
to be registered by other selling security holders, if any, are
also excluded and (ii) registration of a portion of such Warrant
Shares allocated among the Underwriters and the Holders and any
other selling securityholders in proportion to the respective
numbers of securities to be registered by the Underwriters and
each such Holder and other selling securityholder (provided that,
for purposes of such allocation, Warrants shall be treated as
representing the number of Warrant Shares then represented
thereby). In such event the Company shall give the Underwriters
and the Holders prompt notice of the number of Warrant Shares
excluded.
d. Covenants of the Company in Respect of Registration.
In connection with any registrations under Sections 7(b) and 7(c)
hereof, the Company covenants and agrees as follows:
(1) The Company shall use its best efforts to file a
registration statement within sixty (60) calendar days of receipt
of any demand therefor; provided, however, that the Company shall
not be required to produce audited or unaudited financial
statements for any period prior to the date such financial
statements are required to be filed in a report on Form 10-K or
Form 10-Q (or Form 10-KSB or Form 10-QSB), as the case may be.
The Company shall use its best efforts to have any registration
statement declared effective at the earliest possible time, and
shall furnish each Holder desiring to sell Warrant Shares such
number of prospectuses as shall reasonably be requested.
(2) The Company shall pay all costs (excluding any
underwriting discounts or commissions), fees and expenses in
connection with any registration statement filed pursuant to
Sections 7(b) or 7(c) hereof including, without limitation, the
actual and reasonable costs and expenses of one firm serving as
legal counsel to the Holders, the Company's legal and accounting
fees, printing expenses, and any blue sky fees and expenses.
(3) The Company will take all necessary and reasonable
steps which may be required to qualify or register the Warrant
Shares included in a registration statement for offering and sale
under the securities or blue sky laws of such states as
reasonably are requested by the Holder(s), provided that the
Company shall not be obligated to execute or file any general
consent to service of process or to qualify as a foreign
corporation to do business under the laws of any such
jurisdiction.
(4) The Company shall indemnify the Holder(s) of the
Warrant Shares to be sold pursuant to any registration statement,
each, director, officer, partner, employee and agent of each such
Holder and each person, if any, who controls such Holder within
the meaning of Section 15 of the 1933 Act or Section 20(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), against all losses, claims, damages, expenses or liability
(including, without limitation, all expenses reasonably incurred
in investigating, preparing or defending against any claim
whatsoever) to which any of them may become subject under the
1933 Act, the Exchange Act or otherwise, arising from such
registration statement, but only to the same extent and with the
same effect as the provisions pursuant to which the Company has
agreed to indemnify the Underwriters contained in Section 9 of
the Underwriting Agreement.
(5) The Holder(s) of the Warrant Shares to be sold
pursuant to a registration statement, and their successors and
assigns, shall severally, and not jointly, indemnify the Company,
its officers and directors and each persons, if any, who controls
the Company within the meaning of Section 15 of the 1933 Act or
Section 20(a) of the Exchange Act, against all losses, claims,
damages, expenses or liability (including all expenses reasonably
incurred in investigating, preparing or defending against any
claim whatsoever) to which they may become subject under the 1933
Act, the Exchange Act or otherwise, arising from information
furnished by or on behalf of such Holders, or their successors or
assigns, for specific inclusion in such registration statement to
the same extent and with the same effect as the provisions
contained in Section 9 of the Underwriting Agreement pursuant to
which the Underwriters have agreed to indemnify the Company.
(6) Nothing contained in this Agreement shall be
construed as requiring the Holder(s) to exercise their Warrants
prior to the initial filing of any registration statement or the
effectiveness thereof.
(7) If the manner of distribution proposed by the
Holders is an underwriting, the Company shall furnish to each
Holder participating in the offering and to each underwriter of
such offering, a signed counterpart, addressed to such Holder or
underwriter of (i) an opinion of counsel to the Company, dated
the effective date of such registration statement (and, if such
registration includes an underwritten public offering, an opinion
dated the date of the closing under the underwriting agreement),
and (ii) a "cold comfort" letter dated the effective date of such
registration statement (and, if such registration includes an
underwritten public offering, a letter dated the date of the
closing under the underwriting agreement) signed by the
independent public accountants who have issued a report (or
reports) on the Company's financial statements included in such
registration statements, in each case covering substantially the
same matters with respect to such registration statement (and the
prospectus included therein) and, in the case of such
accountants' letter, with respect to events subsequent to the
date of such financial statements, as are customarily covered in
opinions of issuer's counsel and in accountants' letters, with
respect to events subsequent to the date of such financial
statements, as are customarily covered in opinions of issuer's
counsel in accountants' letters delivered to underwriters in
underwritten public offerings of securities.
(8) The Company shall, as soon as practicable after
the effective date of the registration statement, and in any
event within the first full four fiscal quarters following the
effective date, make "generally available to its security
holders" (within the meaning of Rule 158 under the 1933 Act) an
earnings statement (which need not be audited) complying with
Section 11(a) of the 1933 Act.
(9) The Company shall deliver promptly to one
designated representative for each Holder participating in the
offering requesting the correspondence described below and any
managing underwriter, copies of all correspondence between the
Commission and the Company, its counsel or auditors with respect
to the registration statement and permit each Holder and
underwriter to do such investigation, upon reasonable advance
notice, with respect to information contained in or omitted from
the registration statement as it deems reasonably necessary to
comply with applicable securities laws or rules of the National
Association of Securities Dealers, Inc. (the "NASD"). Such
investigation shall include access to books, records and
properties and opportunities to discuss the business of the
Company with its officers and independent auditors, all to such
reasonable extent and at such reasonable times and as often as
any such Holder shall reasonably request.
(10) In connection with an offering for which the
Holders have demand rights, the Company shall enter into an
underwriting agreement with the managing underwriter selected for
such underwriting by Holders holding a Majority of the Warrant
Shares requested to be included in such underwriting. In
connection with an offering for which the Holders have piggyback
rights, the Company shall have the sole right to select the
managing underwriter. Such underwriting agreement shall be
satisfactory in form and substance to the Company, a Majority of
such Holders and such managing underwriter, and shall contain
such representations, warranties and covenants by the Company and
such other terms as are customarily contained in agreements of
that type used by the managing underwriter. The Holders shall be
parties to any underwriting agreement relating to an underwritten
sale of their Warrant Shares and may, at their option, require
that any or all the representations, warranties and covenants of
the Company to or for the benefit of such underwriter shall also
be made to and for the benefit of such Holders. Such Holders
shall not be required to make any representations or warranties
to or agreements with the Company or the underwriter except as
they may relate to such Holders, their ownership of Warrant
Shares subject to registration, and their intended methods of
distribution.
8. Adjustments to Exercise Price and Number of Securities.
a. Adjustment of Exercise Price. Except as
hereinafter provided, in the event the Company shall, at any
time or from time to time after the date hereof, issue any
shares of Stock as a stock dividend to the holders of Stock, or
subdivide or combine the outstanding shares of Stock into a
greater or lesser number of shares (any such issuance,
subdivision or combination being herein called a "Change of
Shares"), then, and thereafter upon each Change of Shares, the
Exercise Price for the Warrants (whether or not the same shall be
issued and outstanding) in effect immediately prior to such
Change of Shares shall be changed to a price (including any
applicable fraction of a cent to the nearest cent) determined
by dividing (i) the sum of (a) the total number of shares of
Stock outstanding immediately prior to such Change of Shares,
multiplied by the Exercise Price in effect immediately prior to
such Change of Shares, and (b) the consideration, if any,
received by the Company upon such issuance, subdivision or
combination by (ii) the total number of shares of Stock
outstanding immediately after such Change of Shares; provided,
however, that in no event shall the Exercise Price be adjusted
pursuant to this computation to an amount in excess of the
Exercise Price in effect immediately prior to such computation,
except in the case of a combination of outstanding shares of
Stock. For the purposes of any adjustment to be made in
accordance with this Section 8(a) the following provisions shall
be applicable:
(1) Shares or equivalents of Stock issuable by way of
dividend or other distribution on any stock of the Company shall
be deemed to have been issued immediately after the opening of
business on the day following the record date for the
determination of stockholders entitled to receive such dividend
or other distribution and shall be deemed to have been issued
without consideration.
(2) The reclassification of securities of the Company
other than shares of Stock into securities including shares of
Stock shall be deemed to involve the issuance of such shares of
Stock for a consideration other than cash immediately prior to
the close of business on the date fixed for the determination of
security holders entitled to receive such shares, and the value
of the consideration allocable to such shares of Stock shall be
determined in good faith by the Board of Directors of the Company
on the basis of a record of values of similar property or
services.
(3) The number of shares of Stock at any one time
outstanding shall be deemed to include the aggregate maximum
number of shares issuable (subject to readjustment upon the
actual issuance thereof) upon the exercise of options, rights or
warrants and upon the conversion or exchange of convertible or
exchangeable securities.
b. Adjustment of Number of Warrants. Upon each adjustment
of the Exercise Price pursuant to Section 8(a) above, the number
of Shares purchasable upon the exercise of each Warrant shall be
the number derived by multiplying the number of shares of Stock
purchasable immediately prior to such adjustment by the Exercise
Price in effect prior to such adjustment and dividing the product
so obtained by the applicable adjusted Exercise Price.
c. Action Upon Reclassification, Merger, Etc. The Company
will not merge, reorganize or take any other action which would
terminate the Warrants without first making adequate provision
for the Warrants as provided for herein. In case of any
reclassification or change of the outstanding shares of Stock
(other than a change in par value to no par value, or from nor
par value to par value, or as a result of a subdivision or
combination), or in case of any consolidation of the Company
with, or merger of the Company with or into, another corporation
(other than a consolidation or merger in which the Company is the
continuing corporation and which does not result in any
reclassification or change of the outstanding Stock except a
change as a result of a subdivision or combination of such shares
or a change in par value, as aforesaid), or in the case of a sale
or conveyance to another corporation or other entity of the
property of the Company as an entirety, the Holder of each
Warrant then outstanding or to be outstanding shall have the
right thereafter (until the expiration of such Warrant) to
purchase, upon exercise of such Warrant, the kind and number of
shares of stock and other securities and property receivable upon
such reclassification, change, consolidation, merger, sale or
conveyance as if the Holder were the owner of the Shares
underlying such Warrants immediately prior to any such events at
a price equal to the product of (x) the number of shares issuable
upon exercise of the Warrants and (y) the Exercise Prices in
effect immediately prior to the record date for such
reclassification, change, consolidation, merger, sale or
conveyance, as if such Holder has exercised the Warrants. In
the event of a consolidation, merger, sale or conveyance of
property, the corporation formed by such consolidation or merger,
or acquiring such property, shall execute and deliver to the
Holders a supplemental warrant agreement to such effect. Such
supplemental warrant agreement shall provide for adjustments
which shall be identical to the adjustment to those provided in
Section 8. The provisions of this Section 8(c) shall similarly
apply to successive reclassifications, changes, consolidations,
mergers, sales or conveyances.
d. Effect of Adjustments on Warrant Certificates.
Irrespective of any adjustments or changes in the Exercise Price
or the number of Shares purchasable upon exercise of the
Warrants, the Warrant Certificates theretofore and thereafter
issued shall, unless the Company shall exercise its option to
issue new Warrant Certificates, continue to express the Exercise
Price per share and the number of shares purchasable thereunder
as the Exercise Price per share and the number of shares
purchasable thereunder were expressed in the Warrant Certificates
when the same were originally issued.
e. Notification to Holders. After each adjustment of the
Exercise Price pursuant to this Section 8, the Company will
promptly prepare a certificate signed by the Chairman or
President, and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary, of the Company setting
forth: (i) the Exercise Price as so adjusted; (ii) the number of
Shares purchasable upon exercise of each Warrant, after such
adjustment; and (iii) a brief statement of the facts accounting
for such adjustment. The Company will promptly cause a copy of
such certificate to be sent by first class mail to each Holder at
his last address as it shall appear on the registry books of the
Company. No failure to mail such notice nor any defect therein
or in the mailing thereof shall affect the validity thereof
except as to the Holder to whom the Company failed to mail such
notice, or except as to the Holder whose notice was defective.
The affidavit of the Secretary or an Assistant Secretary of the
Company that such notice has been mailed shall, in the absence of
fraud, be prima facie evidence of the facts stated therein.
f. Events Not Triggering Adjustment. No adjustment of the
Exercise Price shall be made upon the issuance or sale of: (i)
the Warrants or the Warrant Shares; (ii) the shares of Stock
pursuant to the Public Offering; or (iii) the shares of Stock
issuable upon the exercise of the options or warrants outstanding
or shares reserved for issuance pursuant to stock option plans in
effect on the date hereof as described in the prospectus relating
to the Public Offering. In addition, no adjustment of the
Exercise Price shall be made if the amount of said adjustments
shall be less than five cents ($.05) per Warrant Share, provided,
however, that in such case any adjustment that would otherwise be
required then to be made shall be carried forward and shall be
made at the time of and together with the next subsequent
adjustment which, together with any adjustment so carried
forward, shall amount to at least five cents ($.05) per Warrant
Share.
g. Securities Included in the Definition of "Stock". For
the purpose of this Agreement, the term "Stock" shall mean (i)
the class of stock designated as Common Stock in the Charter of
the Company as it may be amended as of the date hereof, or (ii)
any other class of stock resulting from successive changes or
reclassification of such stock consisting solely of changes in
par value, or from par value to no par value, or from no par
value to par value. In the event that the Company shall, after
the date hereof issue securities with greater or superior voting
rights than those of the shares of stock outstanding as of the
date hereof, each Holder, at its option, may receive upon
exercise of any Warrant either shares of Stock or a like number
of such securities with greater or superior voting rights.
h. Noncash Dividends and Other Distributions. In the event that
the Company shall at any time prior to the exercise or expiration
of all the Warrants declare a dividend (other than a dividend
consisting solely of shares of Stock) or otherwise distribute to
its stockholders any assets, property, rights, evidences of
indebtedness, securities (other than shares of Stock), whether
issued by the Company or by another, or any other thing of value,
the Holders of the unexercised Warrants shall thereafter be
entitled, in addition to the shares of Stock or other securities
and property receivable upon the exercise thereof, to receive,
upon the exercise of such Warrants, the same property, assets,
rights, evidences of indebtedness, securities or any other thing
of value that they would have been entitled to receive at the
time of such dividend or distribution as if the Warrants had been
exercised immediately prior to such dividend or distribution. At
the time of any such dividend or distribution, the Company shall
make appropriate reserves to ensure the timely performance of the
provisions of this Section 8h.
i. Subscription Rights for Shares of Stock and Other
Securities. In the event that the Company or an affiliate of the
Company shall, at any time after the date hereof and prior to the
exercise or expiration of all the Warrants, issue any rights to
subscribe for shares of Stock or any other securities of the
Company or of such affiliate to all the stockholders of the
Company, the Holders of the unexercised Warrants shall be
entitled to receive, in addition to the Warrant Shares receivable
upon the exercise of the Warrants, such rights at the time such
rights are distributed to the other stockholders of the Company.
9. Exchange and Replacement of Warrant Certificates. Each
Warrant Certificate is exchangeable, without charge, upon the
surrender thereof by the Holder at the principal executive office
of the Company, for a new Warrant Certificate of like tenor and
date representing in the aggregate the right to purchase the
same number of Warrant Shares in such denominations as shall be
designated by the Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of any
Warrant Certificate, and, in case of loss, theft or destruction,
of indemnity or security reasonably satisfactory to it, and
reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the
Warrants, if mutilated, the Company will make and deliver a new
Warrant Certificate of like tenor, in lieu thereof.
10. Elimination of Fractional Interests. The Company shall
not be required to issue certificates representing fractions of
Warrant Shares upon the exercise of the Warrants, nor shall it be
required to issue scrip or pay cash in lieu of fractional
interests; provided, however, that if a Holder exercises all
Warrants held of record by such Holder the fractional interests
shall be eliminated by rounding any fraction up to the nearest
whole number of Warrant Shares.
11. Reservation and Listing of Securities. The Company
shall at all times reserve and keep available out of its
authorized shares of Stock, solely for the purpose of issuance
upon the exercise of the Warrants, such number of shares of Stock
as shall be issuable as Warrant Shares upon the exercise thereof.
The Company covenants and agrees that, upon exercise of the
Warrants and payment of the Exercise Price therefor, all the
Warrant Shares issuable upon such exercise shall be duly and
validly issued, fully paid, nonassessable and not subject to the
preemptive rights of any stockholder. As long as the Warrants
shall be outstanding, the Company shall use its best efforts to
cause the Stock to be listed and quoted (subject to official
notice of issuance) on all securities exchanges or associations
on which the Stock issued to the public in connection with the
Public Offering may then be listed or quoted.
12. Limitations on Rights of, and Certain Notices to
Warrant Holders. Nothing contained in this Agreement shall be
construed as conferring upon the Holders of Warrants, prior to
the exercise thereof, the right to receive cash dividends to vote
or to consent or to receive notice as a stockholder in respect of
any meetings of stockholders for the election of directors or any
other matter, or as having any rights whatsoever as a stockholder
of the Company. If, however, at any time prior to the expiration
of the Warrants or their earlier exercise, any of the following
events shall occur:
(1) the Company shall take a record of the holders of
its shares of Stock for the purpose of entitling them to receive
a dividend or distribution payable otherwise than in cash, or a
cash dividend or distribution payable otherwise than out of
current or retained earnings, as indicated by the accounting
treatment of such dividend or distribution on the books of the
Company; or
(2) the Company shall offer to all the holders of its
Stock any additional shares of capital stock of the Company or
securities convertible into or exchangeable for shares of Stock
or such other capital stock of the Company, or any option, right
or warrant to subscribe therefor; or
(3) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation or merger)
or a sale of all or substantially all of its property, assets and
business as an entirety shall be proposed; then, in any one or
more of said events, the Company shall give written notice of
such event at least thirty (30) calendar days prior to the date
fixed as a record date or the date of closing the transfer books
for the determination of the stockholders entitled to such
dividend, distribution, convertible or exchangeable securities or
subscription rights, or entitled to vote on such proposed
dissolution, liquidation, winding up or sale. Such notice shall
specify such record date or the date of closing the transfer
books, as the case may be. Failure to give such notice or any
defect therein shall not affect the validity of any action taken
in connection with the declaration or payment of any such
dividend, or the issuance of any convertible or exchangeable
securities, or subscription rights, options or warrants, or any
proposed dissolution, liquidation, winding up or sale.
13. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed
to have been duly made when (i) personally delivered, (ii) three
(3) business days after having been properly addressed, enclosed
in a properly sealed envelope or wrapper and sent postage-paid by
first class mail, (iii) transmitted by facsimile transmission, if
acknowledged by such facsimile equipment as received, or (iv) one
(1) business day after being sent, at the expense of the sender,
by Federal Express, Airborne, U.S. Express Mail or similar
overnight carrier (a) if to a Holder of the Warrants, to the
address of such Holder as shown on the books of the Company or
(b) if to the Company, at its principal office or to such other
address as the Company may designate by notice to the Holders.
14. Supplements and Amendments. The Company and the
Underwriters may, from time to time, supplement or amend this
Agreement without the approval of any Holders of Warrants (other
than the Underwriters) in order to cure any ambiguity, to correct
or supplement any provision contained herein which may be
defective or inconsistent with any provisions herein, or to make
any other provisions in regard to matters or questions arising
hereunder which the Company and the Underwriters may deem
necessary or desirable and which the Company and the Underwriters
deem shall not adversely affect the interests of the Holders of
Warrants other than the Underwriters.
15. Successors. All the covenants and provisions of this
Agreement shall be binding upon and inure to the benefit of the
Company, the Underwriters, the Holders and their respective
successors and assigns hereunder.
16. Termination. This Agreement shall terminate at the
close of business on __________, 2006 (the eighth anniversary of
the Effective Date). Notwithstanding the foregoing, the
registration provisions and indemnification provisions of Section
7 shall survive such termination until the close of business on
the later of the expiration of any applicable statue of
limitations or ________, 2008.
17. Governing Law; Submission to Jurisdiction. This
Agreement and each Warrant Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of
Maryland and for all purposes shall be construed in accordance
with the laws of said State without giving effect to the rules of
said State governing the conflicts of laws. The Company, each of
the Underwriters and each and any Holders hereby agrees that any
action, proceeding or claim against it arising out of, or
relating in any way to, this Agreement, the Warrants or the
Warrant Certificates shall be brought and enforced in the courts
of the State of Maryland or of the United States of America for
the District of Maryland, and irrevocably submits to such
jurisdiction, which jurisdiction shall be exclusive. The
Company, each of the Underwriters and each and any Holders hereby
irrevocably waives any objection to such exclusive jurisdiction
or inconvenient forum. Any such process or summons to be served
upon any of the Company, the Underwriters and the Holders (at the
option of the party bringing such action, proceeding or claim)
may be served by transmitting a copy thereof, by registered or
certified mail, return receipt requested, postage prepaid,
addressed to it at the address provided for in Section 13 hereof.
Such mailing shall be deemed personal service and shall be legal
and binding upon the party so served in any action, proceeding or
claim.
18. Entire Agreement; Modification. This Agreement
(including the Underwriting Agreement to the extent portions
thereof are referred to herein) contains the entire understanding
between the parties hereto with respect to the subject matter
hereof. Subject to Section 14, this Agreement may not be
modified except upon the express agreement of the Company and a
Majority of the of the Holders of the Warrants and the Warrant
Shares.
19. Severability. If any provision of this Agreement shall
be held to be invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provision of this
Agreement.
20. Captions. The caption headings of the Sections of this
Agreement are for convenience of reference only and are not
intended, nor should they be construed as, a part of this
Agreement and shall be given no substantive effect.
21. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation, other
than the Company and the Underwriters and any other Holder(s) of
the Warrants or Warrant Shares, any legal or equitable right,
remedy or claim under this Agreement; and this Agreement shall be
for the sole and exclusive benefit of the Company and the
Underwriters and any other Holder(s) of the Warrants or Warrant
Shares.
22. Counterparts. This Agreement may be executed in any
number of counterparts, each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts
together shall together constitute but one and the same
instrument.
23. Binding Effect. This Agreement shall be binding upon
and inure to the benefit of the Company, each of the Underwriters
and their successors and assigns and the Holders from time to
time of the Warrant(s) or any of them.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above
written.
STARTEC GLOBAL COMMUNICATIONS CORPORATION
By:_______________________________________
Print Name:________________________________
Title:_____________________________________
FERRIS, BAKER WATTS, INCORPORATED
By:_______________________________________
Print Name:________________________________
Title:_____________________________________
BOENNING & SCATTERGOOD, INC.
By:_______________________________________
Print Name:________________________________
Title:_____________________________________
<PAGE>
EXHIBIT A
STARTEC GLOBAL COMMUNICATIONS CORPORATION
WARRANT CERTIFICATE
THE SECURITIES ISSUABLE UPON EXERCISE OF THE WARRANT
REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO (I) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), (II) TO THE
EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE
UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR
(III) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY
SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT IS AVAILABLE. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED FOR SALE OR
SOLD EXCEPT PURSUANT TO (I) AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE 1933 ACT, OR (II) AN OPINION OF COUNSEL, IF SUCH
OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL TO THE
ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH 1933 ACT
IS AVAILABLE. THE TRANSFER OR EXCHANGE OF THE WARRANT
REPRESENTED BY THIS CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH
THE WARRANT AGREEMENT REFERRED TO HEREIN. EXERCISABLE COMMENCING
________, 1998 THROUGH 5:00 P.M., WASHINGTON, DC TIME ________,
2003.
NO. WC- ___ _________ WARRANTS
This Warrant Certificate certifies that ______________
_______________ or registered assigns, is the registered holder
of _________ warrants (the "Warrants") to purchase initially, at
any time from _______, 1998, until 5:00 p.m., Washington, DC time
on _______, 2003 (the "Expiration Date"), up to _____________
fully paid and non-assessable shares (the "Shares"), of the
Common Stock, par value $0.01 per share (the "Stock"), of STARTEC
Global Communications Corporation, a Maryland corporation (the
"Company") at the initial exercise price of $____ per Share (the
"Exercise Price"), upon the surrender of this Warrant Certificate
and payment of the Exercise Price at an office or agency of the
Company, but subject to the conditions set forth herein and in
the warrant agreement dated as of ____________________, 1997
(the "Warrant Agreement") by and between the Company and Ferris,
Baker Watts, Incorporated and Boenning & Scattergood, Inc.
Payment of the Exercise Price shall be made as provided in
Section 3 of the Warrant Agreement. No Warrant may be exercised
after 5:00 P.M, Washington, DC time, on the Expiration Date, at
which time all Warrants evidenced hereby, unless exercised prior
thereto, shall thereafter be void. The Warrants evidenced by
this Warrant Certificate are part of a duly authorized issue of
Warrants issued pursuant to the Warrant Agreement, which Warrant
Agreement is hereby incorporated by reference in and made a part
of this instrument and is hereby referred to for a description of
the rights, limitation of rights, obligations duties and
immunities thereunder of the Company and the holders (the words
"holders" or "holder" meaning the registered holders or
registered holder) of the Warrants. The Warrant Agreement
provides that upon the occurrence of certain events the Exercise
Price and the type and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be
adjusted. In such event, the Company will, at the request of the
holder, issue a new Warrant Certificate evidencing the adjustment
in the Exercise Price and the number and/or type of securities
issuable upon the exercise of the Warrants; provided, however,
that the failure of the Company to issue such new Warrant
Certificates shall not in any way change, alter, or otherwise
impair, the rights of the holder as set forth in the Warrant
Agreement. Upon due presentment for registration of transfer of
this Warrant Certificate at an office or agency of the Company, a
new Warrant Certificate or Warrant Certificates of like tenor and
evidencing in the aggregate a like number of Warrants shall be
issued to the transferee(s) in exchange as provided herein,
without any charge except for any tax or other governmental
charge imposed in connection with such transfer. Upon the
exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder
hereof a new Warrant Certificate representing such number of
unexercised Warrants. The Company may deem and treat the
registered holder(s) hereof as the absolute owner(s) of this
Warrant Certificate (notwithstanding any notation of ownership or
other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof,
and for all other purposes, and the Company shall not be affected
by any notice to the contrary. All terms used in this Warrant
Certificate which are defined in the Warrant Agreement shall have
the meanings assigned to them in the Warrant Agreement.
IN WITNESS WHEREOF, the undersigned has executed this
certificate this __th day of _______, 1997.
STARTEC Global Communications Corporation
By:_______________________________________
Print Name:________________________________
Title:_____________________________________
[SEAL] ATTEST:
By:____________________________
<PAGE>
EXHIBIT B
FORM OF ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to purchase:
_______ Shares and herewith tenders in payment for such
securities the amount of $____________, in accordance with the
terms of this Warrant Certificate and of the Warrant Agreement.
The undersigned requests that a certificate for such securities
be registered in the name of _________________________________,
whose address is _______________________________________________,
and that such Certificate be delivered to
___________________________________, whose address is
_________________________________________________________
____________________________________________.
Dated:___________ Signature:________________________
(Signature must conform in all respects to the name of holder as
specified on the face of the Warrant Certificate.)
_______________________________
(Insert Social Security or Other Identifying Number of Holder)
<PAGE>
EXHIBIT C
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires
to transfer the Warrant Certificate.)
FOR VALUE RECEIVED __________________________________ hereby
sells, assigns and transfers unto ______________________________
(Please print name and address of transferee) this Warrant
Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint
___________________________________ Attorney, to transfer the
within Warrant Certificate on the books of STARTEC Global
Communications Corporation, with full power of substitution.
Dated:___________ Signature: _______________________________
(Signature must conform in all respects to the name of holder as
specified on the face of the Warrant Certificate.)
______________________________
(Insert Social Security or Other Identifying Number of Holder)
<PAGE>
LAW FIRM
SHULMAN, ROGERS, GANDAL, PORDY & ECKER, P.A.
11921 ROCKVILLE PIKE, THIRD FLOOR
ROCKVILLE, MD 20852-2743
(301)230-5200
TELECOPIER (301)230-2891
TDD (301)230-6570
October 2, 1997
Startec Global Communications Corporation
10411 Motor City Drive
Bethesda, MD 20817
Re: Registration Statement on Form S-1
Ladies and Gentlemen:
We are acting as counsel to Startec Global Communications
Corporation, a Maryland corporation (the "Company"), in
connection with the registration of 2,645,000 shares of the
Company's Common Stock, par value $0.01 per share, including
345,000 shares subject to an over-allotment option (collectively,
the "Shares"), pursuant to a Registration Statement on Form S-1
(Registration No. 333-32753), as amended (the "Registration
Statement"), filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended.
As counsel for the Company, we have examined originals or
copies, certified or otherwise identified to our satisfaction, of
such documents, corporate records, certificates of public
officials and other instruments as we have deemed necessary for
the purposes of rendering this opinion. In our examination, we
have assumed the genuineness of all signatures, the authenticity
of all documents submitted to us as originals and the conformity
with the originals of all documents submitted to us as copies.
As to various questions of fact material to such opinion, we have
relied, to the extent we deemed appropriate, upon
representations, statements and certificates of officers and
representatives of the Company and others.
Based upon the foregoing, we are of the opinion that the
Shares to be registered for sale by the Company have been duly
authorized by the Company, and when issued, delivered and paid
for in accordance with the terms of the underwriting agreement
referred to in the Registration Statement and in accordance with
the resolutions adopted by the Board of Directors of the Company,
will be, validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the
Registration Statement, and we consent to the use of our name
under the caption "Legal Maters" in the Prospectus forming a part
of the Registration Statement.
Very truly yours,
/s/ SHULMAN, ROGERS, GANDAL
PORDY AND ECKER, P.A.
<PAGE>
DATED February 8, 1995
BLUE CAROL ENTERPRISES LIMITED
AND
STARTEC, INC.
AND
RAM MUKUNDA, solely for the purposes
of Clause 3
_________________
SUBSCRIPTION AGREEMENT
_________________
DEACONS
in association with
GRAHAM & JAMES
AND
SLY & WEIGALL
Solicitors & Notaries
Alexandra House
3rd-6th Floors
Hong Kong
<PAGE>
INDEX
Page
Parties 1
Recitals 1
Clauses
1. Interpretation 1
2. Subscription 4
3. The Company's and Mukunda's obligations 4
4. Expenses 6
5. Warranties and undertakings 6
6. General 6
7. Notices 8
8. Governing Law and Jurisdiction 8
Schedule 1 11
Schedule 2 14
<PAGE>
THIS SUBSCRIPTION AGREEMENT is made on February 8, 1995.
PARTIES:
(1) BLUE CAROL ENTERPRISES LIMITED, a company incorporated in
the British Virgin Islands whose address for service and
facsimile number are 930 Ocean Centre, Harbour City,
Kowloon, Hong Kong and (852) 730-4379 respectively
("Subscriber");
(2) STARTEC, INC., a company incorporated in the State of
Maryland whose address for service and facsimile number are
10411 Motor City Drive, Suite 301, Bethesda, Maryland 20817
(U.S.A.) c/o Ram Mukunda, President and 301-365-8969
respectively ("Company"); and
(3) RAM MUKUNDA, solely for the purposes of Clause 3, whose
address for service and facsimile number are c/o Startec,
Inc., 10411 Motor City Drive, Suite 301, Bethesda, Maryland
20817 (U.S.A.) and 301-365-8969 respectively ("Mukunda").
RECITALS :
(A) The Company has an authorized share capital of $125,000
divided into ten million Shares of voting common stock
having a par value of $.01 per share (each a "Voting Share")
and twenty-five thousand Shares of non-voting common stock
having a par value of $1.00 per share (each a "Non-voting
Share" and together with Voting Shares, "Shares"). As at the
date hereof the Company has in issue 4,573,700 Shares, and
Mukunda is the majority shareholder owning 3,562,500 shares
of the Company.
(B) The Subscriber wishes to subscribe for, and Mukunda and the
Company wishes to issue to it, 807,124 new Voting Shares
("Subscription Shares") comprising 15% of the enlarged share
capital of the Company on the terms and conditions herein.
(C) The Board of Directors of the Company have, by resolution
passed on the date hereof, approved the issue of the
Subscription Shares on the terms of this Subscription
Agreement.
AGREEMENT
1. INTERPRETATION
1.1 In this Agreement including the Recitals the following
expressions have the following meaning except where the context
otherwise requires:
"Adverse Consequences"
all actions, suits, proceedings, hearings, investigations,
charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues,
penalties, fines, costs, amounts paid in settlement,
Liabilities, obligations, Taxes, liens, losses, expenses,
and fees, including court costs and reasonable attorneys'
fees and expenses;
"Business Day"
a day, excluding Saturdays, on which banks in Hong Kong and
Annapolis, Maryland are open for business;
"Directors"
the Board of Directors of the Company;
"Knowledge"
actual knowledge after reasonable investigation;
"Liability"
any liability (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued
or unaccrued, or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Net Asset Value"
the net asset value of Startec as shown in its most recent
unaudited quarterly consolidated account for the period
immediately preceding any of the events or transactions,
that may arise throughout the terms of this Agreement, as
contemplated in Section 3 hereof;
"Non-voting Shares"
the non-voting Shares in the Company winch are more
particularly described in Recital (A);
"Shares"
Voting Shares and Non-voting Shares, and such other Shares
in the Company as are authorized, from time to time;
"Shareholders"
the shareholders in the Company, from time to time;
"Subscription"
the subscription by the Subscriber of the Subscription
Shares as provided in this
"Subscription Shares"
the 807,124 new Voting Shares the subject of the
Subscription;
"Subscription Price"
$750,000, being the purchase price of the Subscription
Shares;
"$" and "cents"
United States dollars and cents.
"Tax"
any federal, state, local, or foreign income (except for
such taxes due from Subscriber to any taxing authority),
gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits,
environmental, customs duties, capital stock, franchise,
profits, withholding, social security (or similar),
unemployment, disability, real property, personal property,
sales, use, transfer, registration, value added, alternative
or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition
thereto, whether disputed or not; and
"Voting Shares"
the voting Shares in the Company which are more particularly
described in Recital (A).
1.2 In this Agreement:
(a) reference to Recitals, Clauses, and the Schedules are to the
clauses and subclauses of, and the recitals, and the
schedules to this Agreement;
(b) references to any statutory provision or any rule or
regulation (whether or not having the force of law) shall be
construed as references to the same as amended, varied,
modified, consolidated or re-enacted from time to time and
to any subordinate legislation made under such statutory
provision;
(c) words importing the singular include the plural and vice
versa, words importing one gender include every gender, and
references to persons include bodies corporate and
unincorporated; and
(d) headings are for ease of reference only and shall not affect
the interpretation of this Agreement.
1.3 The Recitals and the Schedules form part of this Agreement
and shall have the same force and effect as if expressly set out
in the body of this Agreement and any reference to this Agreement
shall include the Recitals and the Schedules.
2. SUBSCRIPTION
2.1 The Subscriber agrees to subscribe, and the Company agrees
to issue, each of the Subscription Shares at the
Subscription Price subject to and in accordance with the
terms and conditions set out herein and to rank pari passu
with all other Shares then in issue other than in respect of
any dividend declared prior to the date of such issue of the
Subscription Shares.
2.2 This Agreement constitutes the Subscriber's application for
the Subscription Shares subject to the Articles and By-Laws
of the Company.
2.3 Completion of the Subscription shall take place at the
office of Subscriber's counsel, Graham & James, 2000 M
Street, N.W., Suite 700, Washington, D.C. 20036 on February
8, 1995.
2.4 At Completion:
(a) the Company shall deliver to the Subscriber (or as it may
direct) evidence of the due allotment and issue to the
Subscriber of fully paid, non-assessable Subscription Shares
and of the due registration of the Subscriber as holder of
the Subscription Shares, and a share certificate, for the
Subscription Shares; and
(b) contemporaneously with the allotment, issue and delivery
provided for in (a) above the Subscriber shall deliver to
the Company, by electronic transfer of funds to the
Company's designated account, the Subscription Price of all
Subscription Shares.
3. THE COMPANY'S AND MUKUNDA'S OBLIGATIONS
3.1 The Company undertakes and agrees that for so long as the
Subscriber holds such number of Shares as shall comprise less
than 40% or more than 10% of the then issued share capital of the
Company it will not issue any additional Shares unless either of
the following conditions is satisfied:
(a) if at any time the Company proposes to issue additional
Shares pursuant to an option granted or shares set aside for
issuance to employees prior to the Closing Date, the Company
must also issue to the Subscriber, at 0.01 (one cent) per
share, such additional Shares as will ensure that the
Subscriber's percentage interest in the Company's
outstanding Shares prior to such issuance shall equal to the
Subscriber's percentage interest in the Company's
outstanding Shares after such issuance (taking into account
all Shares issued to the option holder);
(b) if at any time the Company proposes to issue additional
Shares for any other reason, it shall first offer such
Shares to the Subscriber by notice in writing of such
proposed issuance (the "Notice"). The Notice shall set forth
the number of Shares proposed to be offered, and the
proposed price per share. The Subscriber shall have the
right to purchase some or all of the Shares at the offer
price, provided that written notice of such acceptance is
provided to the Company specifying the number of Shares to
be acquired within 15 days of receipt of the Notice. The
Company shall have the right to issue any Shares not
purchased by the Subscriber, at the price per share set
forth in the Notice (or higher), for six months following
the end of the 15 day period. Thereafter, any such unsold
Shares shall again be subject to this Section 3.1. Any
Shares that the Subscriber agrees to purchase hereunder
shall be issued to Subscriber within ten (10) days of
Subscriber's acceptance, upon receipt of payment in full in
U.S. Dollars.
3.2 Subject to Clause 3.3, and except for transfers by descent
and distribution, which transfer shall be permitted only if the
transferee agrees in writing to be bound by this Agreement,
Mukunda shall not sell, transfer or assign any Shares now or
hereafter owned by him unless:
(a) Mukunda first offers to sell such Shares to the
Subscriber, in the manner prescribed in relation to the
Company's issue of additional Shares in Section 3.1,
except that the Subscriber must agree to purchase all,
and not less than all, of the offered Shares; and
(b) if the number of Shares described in the Notice amounts
to greater than 45 percent of the Shares then
outstanding, and the Subscriber has declined to
purchase the offered Shares, then Mukunda may not sell
such Shares to any third party unless such third party
also offers to purchase all of the Subscriber's Shares
at the same price per Share as it has offered Mukunda
for the Shares described in the Notice; the Subscriber
shall accept or reject any such offer within 15 days of
receipt of the offer by delivering notice in writing to
the offeror and to Mukunda for all, and not less than
all, of the Subscriber's Shares. If the Subscriber does
not send notice accepting the offer within such 15 day
period, Mukunda shall be permitted to sell to the
offeror all of the Shares described in the Notice;
3.3 Section 3.2 shall not apply if the Subscriber owns 40
percent or more or less than 10 percent of the then-issued Shares
of the Company.
3.4 In the event that the Subscriber or Mukunda considers, in
good faith, that there is a disagreement between the Subscriber
and the Company on which no satisfactory resolution of material
points can be found, Mukunda will offer to sell the Subscriber
all of his Shares, for a price per Share to be specified by
Mukunda; the Subscriber must accept any such offer to purchase
Shares within 15 days of the offer being received by it; if the
Subscriber declines to take up Mukunda's offer, the Subscriber
will be deemed to offer for sale and Mukunda will purchase all of
the Shares then held by the Subscriber for the same price per
Share as that at which Mukunda originally offered to sell his
Shares to the Subscriber.
3.5 Except as is provided in this Clause 3, nothing in this
Agreement will oblige the Subscriber to take up any Shares
offered to it by the Company or any of the Shareholders, or
hinder it from taking up an offer of Shares in part only,
depending on the price and terms of such offer. Any decision by
the Subscriber to take up the whole or any part of an offer of
Shares will not relieve Mukunda of his undertakings under this
Clause 3.
3.6 The provisions of this Clause 3 shall expire upon the
earlier of (i) a bona fide public offering of the Company's
Shares pursuant to an effective registration under the Securities
Act of 1933, as amended, or (ii) the sale or other transfer of 50
percent or more of the stock ownership of Subscriber (whether
directly or through a change of control of Subscriber).
3.7 Mukunda will exercise his voting rights as a shareholder
and, subject to Maryland law, as a director and such influence as
he has over the Directors to procure the Company's performance of
its obligations under this Agreement.
3.8 Mukunda will be jointly and severally liable with the
Company for any loss Blue Carol may sustain as a result of the
Company's failure to perform its obligations under this Section 3
of this Agreement.
4. EXPENSES
4.1 Save as expressly provided in this Agreement, all costs,
charges and expenses of or incidental to this Agreement shall be
paid by the party incurring those expenses.
5. WARRANTIES AND UNDERTAKINGS
5.1 The Company represents, warrants and undertakes to the
Subscriber, subject to the provisions of this Clause 5, in the
terms of Schedule 1 and the Subscriber represents, warrants and
undertakes to the Company, subject to the provisions of this
Clause 5, in the terms of Schedule 2.
6. GENERAL
6.1 This Agreement contains the entire agreement between the
Parties relating to the Subscription and supersedes any previous
agreements between the Parties in relation to the issue and
allotment of the Subscription Shares.
6.2 Any variation to this Agreement shall be binding only if
recorded in a document signed by the Parties.
6.3 Time shall be of the essence of this Agreement both as
regard the time and periods specifically referred to and any time
or period which may (by agreement in writing) be substituted
therefor, but, except as provided herein, no failure by any Party
to exercise, and no delay on its part in exercising, any right
hereunder will operate as a waiver thereof, nor shall any single
or partial exercise of any right under this Agreement preclude
any other or further exercise of it or the exercise of any right
or prejudice or affect any right against any person under the
same liability whether joint, several or otherwise.
6.4 The rights and remedies provided in this Agreement are
cumulative and not exclusive of any rights or remedies provided
by law and shall not be affected by completion of the
Subscription.
6.5 None of the Parties may assign or transfer any of their
rights or obligations under this Agreement save that the
Subscriber may assign the warranties given in Clause 5.1.
6.6 If this Agreement is rescinded or terminated in accordance
with its terms, all rights and obligations of the Parties shall
cease to have effect immediately upon such rescission or
termination except that rescission or termination shall not
affect the then accrued rights, obligations and liabilities of
the Parties and the continued application of Clause 6.
6.7 All of the representations and warranties of the Parties
contained in this Agreement shall survive completion of
Subscription and continue in full force and effect forever
thereafter (subject to any applicable statutes of limitations).
6.8 This Agreement shall not confer any rights or remedies upon
any person other than the Parties and their respective successors
and/or assigns.
6.9 Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the
offending term or provision in any other situation or in any
other jurisdiction.
6.10 In the event the Company or Mukunda breaches (or in the
event any third party alleges facts that, if true, would mean the
Company and/or Mukunda have breached) any of their
representations, warranties, and covenants contained herein, then
the Company agrees to indemnify the Subscriber, from and against
the entirety of any Adverse Consequences the Subscriber may
suffer through and after the date of the claim for
indemnification resulting from, arising out of, relating to, in
the nature of, or caused by the breach (or the alleged breach);
provided that, the Subscriber provides reasonable notice of such
breach to the Company, and further provides the Company 30 days
in which to cure such breach. Subscriber may not settle any
matter arising from a third party claim without the consent of
the Company, which cannot be unreasonably withheld or delayed.
7. NOTICES
7.1 All notices delivered hereunder shall be in writing in
English and shall be communicated to the address and/or the
facsimile number of the Party specified at the beginning of this
Agreement, or to such other address and/or facsimile number as
the relevant Party shall have notified to the other Parties in
accordance with the terms hereof.
7.2 Any such notice shall be served either personally or by
sending it by overnight mail, courier or facsimile. In the case
of notice served personally during normal business hours, it
shall be deemed to have been given when delivered, if sent by
overnight mail or courier, 7 days after posting or, if sent by
facsimile, upon receipt in full.
8. GOVERNING LAW AND JURISDICTION
8.1 This Agreement shall be governed and construed in accordance
with the laws of the State of Maryland.
8.2 Any dispute, controversy or claim arising out of or relating
to this Agreement, or the breach, termination or invalidity
thereof, shall be settled in accordance with the Rules of
Arbitration of the International Chamber of Commerce as at
present in force. The arbitration shall be held at London in
England and heard by a single arbitrator appointed in accordance
with the said Rules.
IN WITNESS WHEREOF the parties hereto have caused this
Agreement to be duly executed.
SIGNED by
for and on behalf of )
BLUE CAROL ENTERPRISES LIMITED )
in the presence of: )
)
)
Witness' signature:
Witness' name:
Witness' occupation:
Witness' address:
SIGNED by Ram Mukunda, President
for and on behalf of )
STARTEC, INC )
in the presence of: )
)
Witness' signature: Ram Mukunda
Witness' name: Subhash Pai
Witness' occupation: Timana
Witness' address: 11411 Motor City Dr.
Bethesda, MD 20817
SIGNED BY RAM MAKUNDA
RAM MAKUNDA solely for the purposes of
Clause 3
the present of:
Witness' signature:
Witness' name Subhash Pai
Witness' occupation: Timana
Witness' address: 10411 Motor City Dr.
Bethesda, MD 20817
<PAGE>
SCHEDULE 1
Warranties by the Company
References in this Schedule to:
the "Accounts" are to the audited consolidated accounts for the
Group for the period ended December 31, 1993 (including without
limitation, the balance sheets, profit and loss accounts and
notes contained therein);
the "Interim Accounts" are to the consolidated unaudited accounts
of the Group for the six months ended December 31, 1994; and
"the Group" are to the Company and its subsidiaries.]
1. Recitals (A) and (C) are true and correct.
2. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Maryland.
3. The Company has the full right, power, and authority to
enter into and perform its obligations under this Agreement
and to allot and issue the Subscription Shares without any
further sanction or consent of its Shareholders and all
necessary authorizations, approvals, consents and licenses
relating to the same have been unconditionally obtained and
are in full force and effect, and this Agreement is a legal,
valid and binding agreement of the Company, enforceable in
accordance with its terms, except as may be limited by the
affect of bankruptcy, insolvency, reorganization or similar
laws affecting the rights of creditors generally from time
to time in effect.
4. The allotment and issue of the Subscription Shares pursuant
to, and compliance by the Company with, this Agreement will
not result in the breach of and will comply with all
relevant provisions of all applicable laws, rules and
regulations, and all agreements and obligations to which any
member of the Group is a party or by which any of them or
any of their respective property is bound.
5. The Company has no liability or obligation to pay any fees
or commissions to any broker, finder, or agent with respect
to the transactions contemplated by this Agreement for which
Subscriber could become liable or obligated.
6. The Subscription Shares shall be allotted and issued free
from all liens, charges, encumbrances, and all third party
rights, interests or claims of any nature whatsoever and
together with all rights now and hereafter attaching
thereto, including the right to any dividend or distribution
declared, made or paid on or after the date of this
Agreement (but excluding, for the avoidance of doubt, any
dividend declared prior to the date hereof).
7. Once allotted, the Subscription Shares shall comprise 15% of
the entire issued share capital of the Company.
8. Except for this Agreement and the options specified on
Exhibit A to this Schedule 1, there are no agreements or
arrangements in force which provide for the present or
future issue, allotment or transfer of, or grant to any
person the right (whether conditional or otherwise) to call
for the issue, allotment or transfer of any share or loan
capital of the Company, or any subsidiary of the Company
(including any option or right of preemption or conversion).
9. The Accounts and Interim Accounts:
(a) have been prepared in accordance with all applicable
laws and regulations and on bases consistent with
previous audited accounts and interim accounts of the
Group in respect of the immediately preceding financial
year and in accordance with generally accepted
accountancy principles, standards and practices in the
United States as at the date of such accounts;
(b) give a true and fair view of the state of affairs of
the Group as at, and its results for the financial
period ended, on December 31, 1993 and December 31,
1994 respectively and correctly set out the issued
share capital, assets, liabilities and reserves of the
Group as at such dates; and
(c) make full provision for all material actual liabilities
and contain proper provision for or notes of all
material contingent and prospective liabilities,
including in each case liabilities for any form of
taxation and capital commitments.
10. There has been no material adverse change in the financial
position or prospects of the Group since January 31, 1994 and
each member of the Group has since such date carried on business
in the ordinary and usual course and has not entered into any
contracts or commitments of an unusual or onerous nature.
11. No member of the Group is or has within the previous 12
months been, nor is or has been any person for whom it may be
vicariously liable, engaged in any litigation, arbitration or
similar proceedings (whether of a criminal or civil nature) which
may have a significant effect on the financial position of the
Group, and there are no such proceedings pending or to the
knowledge of the Company threatened and no matters or
circumstances which are likely to give rise to such proceedings
which may have a significant effect on the financial position of
the Group.
12. No event or circumstance has occurred which constitutes or
could constitute a material infringement or default, or could
result in the acceleration of any material obligation, under any
agreement, undertaking, instrument or arrangement to which any
member of the Group is a party or by which any such person or any
of its properties, revenues and assets are bound, and no member
of the Group has received notice to repay under any agreement
relating to any material borrowing or indebtedness in the nature
of borrowing on the part of any member of the Group which is
repayable on demand, or to perform any guarantee or indemnity
given by any of them in relation to the material indebtedness or
obligations of any person, and to the knowledge of the Company
there are no circumstances which might lead to any of the
aforesaid events, or circumstances arising or occurring.
13. No member of the Group has taken any action, nor to the
knowledge of the Company have any other steps been taken, or any
legal proceedings been started or threatened, against any member
of the Group by any person, for its winding up or dissolution, or
for it to enter into any arrangement or composition for the
benefit of creditors, or for the appointment of a receiver,
trustee, administrator or similar officer of any of them, or any
of their respective properties, revenues or assets, and each
member of the Group can pay its debts as and when they fall due
for payment.
14. The Company and its subsidiaries have duly complied with
their obligations to account to all relevant taxation authorities
for all amounts for which they are or may become accountable in
respect of any form of taxation (including overseas taxation,
stamp duty, levies, import duties, charges, fees, deductions and
withholdings whatsoever charged or imposed by any statutory or
governmental authority), or reserves have been set aside
therefor.
Initials
RM
<PAGE>
SCHEDULE 2
Warranties by the Subscriber
1. The Subscriber is a corporation, duly organized, validly
existing, and in good standing under the laws of the British
Virgin Islands and has no present intention of domesticating
in any other jurisdiction.
2. The Subscriber has the full right, power and authority to
enter into and perform its obligations under this Agreement
without any sanction or consent of its members and all
necessary authorizations, approvals, consent and licenses
relating to the same have been unconditionally obtained and
are in full force and effect, and this Agreement is a legal,
valid and binding agreement of the Subscriber, enforceable
in accordance with its terms.
3. The applications for, allotment and issue of the
Subscription Shares pursuant to, and compliance by the
Subscriber with, this Agreement will not result in the
breach of and will comply with the laws of the British
Virgin Islands and all other applicable laws, rules and
regulations, and all agreements and obligations to which the
Subscriber is a party or by which it or its property is
bound.
4. Subscriber confirms that it understands, among other things,
that: (i) the Shares are speculative investments which
involve a risk of loss of the entire investment therein;
(ii) there are substantial restrictions on transferability
of the Shares; and (iii) presently there is no public market
for the Shares and Startec makes no assurance that such a
public market will exist.
6. Subscriber can bear the economic risk of loss of its entire
investment in the Shares.
7. Subscriber understands that the Shares have not been
registered or qualified under any federal, state or other
securities laws and are being offered and sold under
exemption(s) from registration provided under provisions of
federal securities laws and regulations thereunder; and
Subscriber further understands and agrees that the Shares
may not be sold or transferred by it without compliance with
the registration or qualification provisions of applicable
federal and state securities laws or applicable exemptions
therefrom.
8. The Shares hereby subscribed for are being acquired by
Subscriber solely for its own account and not for the
account of another person, for investment purposes only, and
are not being purchased with a view to, or in connection
with, any resale, distribution, subdivision, or
fractionalization, either in whole or in part.
9. Subscriber understands that neither the Securities and
Exchange Commission nor any state or other securities
commission has passed on, or has made any recommendation or
endorsement of, the Shares or the offering thereof.
Initials
__________
<PAGE>
EXHIBIT A
SHARES SET ASIDE BY STARTEC
The company has set aside 270,000 shares as options for issuance
to employees, consultants, advisors, etc. The terms, conditions
and price of issuance will be determined by the Board of
Directors.
The company has issued an option to Mr. Vipin Kundra to convert a
loan to the company. The option gives him a right to purchase
75,000 shares at $1.50 per share. The option expires on October
18, 1995.
PORTIONS OF THIS EXHIBIT ("CONFIDENTIAL PORTIONS") HAVE BEEN
DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION ("COMMISSION")UNDER
RULE 406 OF THE SECURITIES ACT OF 1933 AND THE FREEDOM OF
INFORMATION ACT. THE CONFIDENTIAL PORTIONS HAVE BEEN FILED
SEPARATELY WITH THE COMMISSION AND ARE IDENTIFIED IN THIS EXHIBIT
BY THE NOTATION "CT REQUESTED."
DATED February 8, 1995
BLUE CAROL ENTERPRISES, LIMITED
AND
STARTEC, INC.
AND
RAM MUKUNDA, solely for the purposes
of Clause 6
_______________________
AGREEMENT
for
MANAGEMENT PARTICIPATION
________________________
DEACONS
in association with
GRAHAM & JAMES
AND
SLY & WEIGALL
Solicitors & Notaries
Alexandria House
3rd-6th Floors
Hong Kong
<PAGE>
INDEX
Page
Parties
Recitals 1
Clauses 1
1. Interpretation 2
2. Statement of Purpose 3
3. Management Participation 3
4. Termination 8
5. Startec's Warranties 8
6. Mukunda's Warranties 9
7. General 9
8. Notices 10
9. Governing Law and Dispute Resolution 11
Schedule 12
<PAGE>
THIS AGREEMENT FOR MANAGEMENT PARTICIPATION is made on
1995
PARTIES
(1) BLUE CAROL ENTERPRISES LIMITED, a company incorporated in
the British Virgin Islands whose address for service and
facsimile number are c/- Consec Services Limited at 930
Ocean Centre, Harbour City, Kowloon, Hong Kong and (852)
2730 4379 respectively ("Blue Carol"); and
(2) STARTEC, INC., a company incorporated in the State of
Maryland whose address for service and facsimile number are
10411 Motor City Drive, Suite 301, Bethesda, Maryland 20817
(U.S.A.) c/o Ram Mukunda, President and 301-365-8469
respectively ("Startec"); and
(3) RAM MUKUNDA solely for the purposes of Clause 6, whose
address for service and facsimile number are c/o Startec,
Inc., 10411 Motor City Drive, Suite 301, Bethesda, Maryland
20817 (U.S.A.) and 301-365-8469 respectively ("Mukunda").
RECITALS
(A) Startec is in the business of providing telecommunications
services to end users and telecommunications operators, and
Mukunda is the majority shareholder in Startec holding 75%
of its enlarged share capital.
(B) Pursuant to a Subscription Agreement executed on the same
date as this Agreement, Blue Carol subscribed for 807,124
comprising 15% of the enlarged share capital of Startec in
consideration of US$750,000.
(C) Blue Carol wants to participate in the management of the
telecommunications services conducted by Startec and
Startec, and Mukunda agree to allow Blue Carol's
participation in that management on the terms and conditions
set out in this Agreement.
NOW THEREFORE, in consideration of the premises, to induce
Blue Carol to enter into the Subscription Agreement and purchase
a certain number of Shares of Startec, and for Ten Dollars
($10.00) in hand paid by Blue Carol to Startec, the mutual
covenants and conditions herein contained, and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:-
AGREEMENT
1. INTERPRETATION
1.1 In this Agreement (including the Recitals), the following
expressions have the following meaning unless the context
otherwise requires:-
"Affiliate"
in relation to any company or other legal entity, a company
which controls or is a Subsidiary of or is under the same
control as the first-mentioned company;
"Business"
the business of providing telecommunications services to end
users and international telecommunications operators which
is conducted by Startec;
"Commencement Date"
the date of execution of this Agreement;
"Deed of Confidentiality"
the deed of confidentiality between Startec and Blue Carol
executed on the same date as this Agreement;
"Directors"
the Board of Directors of Startec or any of its Subsidiary,
as the case may be;
"Executive Committee"
the committee appointed by Startec which is more
particularly described in Clauses 3.1(a) and (b);
"FCC"
the Federal Communications Commission of the United States
of America;
"Net Asset Value"
the net asset value of Startec as shown in its most recent
unaudited quarterly consolidated account for the period
immediately preceding any of the events or transactions,
that may arise throughout the terms of this Agreement, as
contemplated in Section 3 hereof.
"Subscription Agreement"
the subscription agreement between Blue Carol, Startec and
Mukunda executed on the same date as this Agreement, as
amended from time to time;
"Subsidiary"
in relation to any company, a company which is controlled by
that company; and
1.2 References in this Agreement to:-
(a) the singular include the plural and to the plural include
the singular;
(b) a Party is to a party to this Agreement, and includes the
Party's executors, administrators, successors and permitted
assigns;
(c) Clauses, Recitals and Schedules are to clauses or
sub-clauses of and recitals and schedules to this Agreement;
(d) any Act, Regulation or other statutory provision includes
reference to such Act, Regulation or provisions as modified,
verified or enacted; and
(e) the word "including" and similar words do not imply any
limitation.
1.3 Recitals to this Agreement form part of this Agreement.
1.4 Headings are for ease of reference only and do not form part
of this Agreement.
2. STATEMENT OF PURPOSE
2.1 In consideration of Blue Carol entering into and performing
its obligations under the Subscription Agreement, Startec will
allow Blue Carol to participate in the management of the
Business, in accordance with Clause 3.
3. MANAGEMENT PARTICIPATION
3.1 Startec will allow Blue Carol to participate in the
management of the Business as follows:-
(a) Startec will appoint a 3-man committee to act as the
Executive Committee of Startec, responsible for recommending
to the Directors any action concerning issues relating to
the following:
(i) long term debt;
(ii) any increase in the issued or authorized share
capital in Startec;
(iii) the discontinuance of any existing business or the
establishment of any new place of business;
(iv) the introduction of a new line of business or the
substantial expansion, discontinuance or
substantial reduction of the Business;
(v) the appointment and remuneration of executive
staff; and
(vi) amendments to the Articles or By-laws of Startec;
(b) Startec may increase the number of members of the Executive
Committee provided that the total number of members is, at
all times, a multiple of three;
(c) Blue Carol may:-
(i) for so long as it holds at least [CT REQUESTED] of
the issued share capital in Startec, nominate one
Director and/or one of each three members of the
Executive Committee and Mukunda shall vote his
shares in favor of the election or removal of such
Director upon the request of Blue Carol;
(ii) second a manager to Startec to participate in the
day-to-day management and operations of Startec,
and to, without limitation if Blue Carol so
requires, sit on and participate in the Executive
Committee as Blue Carol's representative pursuant
to Clause 3.1(c)(i);
(d) Startec will not undertake the following actions without the
prior consent of Blue Carol:-
(i) the discontinuance of any existing business or the
substantial expansion, establishment of a place of
business outside the United States of America
which requires notice or disclosure to the FCC;
(ii) the introduction of a new line of business or the
discontinuance or substantial reduction of the
business which requires notice or disclosure to
the FCC;
(iii) the borrowing of any money or incurring of any
debt or commitment or the making of any loan or
advance to a value in excess of [CT REQUESTED] of
its Net Asset Value;
(iv) the creating, incurring or suffering to exist of
any mortgage, pledge, lien, charge, security
interest, claim or encumbrance on or with respect
to, or lease of, any of its property or assets to
a value in excess of [CT REQUESTED] of its Net
Asset Value;
(v) the creation or assumption of any guarantee of or
indemnity for third party obligations outside its
ordinary course of business;
(vi) any acquisition or disposition of any material
assets to, or any acquisition or consolidation or
merger with, any other entity, or the sale or
other disposition of all or substantially all of
its assets;
(vii) the acquisition of Shares in any company, the
incorporation of any Subsidiary or the formation
of any joint venture enterprise or the dissolution
of any such Subsidiary or joint venture
enterprise;
(viii) any increase in the issued or authorized share
capital of Startec;
(ix) any reduction in the percentage of Startec's
beneficial ownership of Shares in any other
company, either through the disposal of Shares in
that company or by election not to participate in
any share transfer or subscription offer;
(x) any change to the Articles or By-laws of Startec
to the extent that such changes do not relate to
routine management procedures and policies;
(xi) the initiation of any litigation or arbitration
capable of having a material adverse effect on
Startec's financial capabilities;
(xii) the remuneration of Directors in excess of [CT
REQUESTED] per Board meeting;
(xiii) the employment of any member of staff whose total
remuneration exceeds [CT REQUESTED], or any
material change in the remuneration or other terms
of employment of such staff;
(xiv) the declaration of dividends payable on Startec
shares;
(xv) the retaining of any services in consideration of
an amount in excess of [CT REQUESTED] of its Net
Asset Value;
(xvi) any decision or action containing the activities
of any Subsidiary of Startec or any other company
in relation to which Startec has a right of
approval over such activities;
(xvii) any decision to dissolve or wind Startec up or to
file for bankruptcy;
(xviii) subject to Clause 3 of the Subscription Agreement,
any decision or action capable of diluting Blue
Carol's ownership interest in Startec to [CT
REQUESTED] or less including, but not limited to,
any decision or action to issue options in
relation to Startec's shares;
(e) after expiration of the provisions set forth in section
3.1(d) above, and for so long as Blue Carol holds at least
[CT REQUESTED] of the issued share capital in Startec,
Startec will not undertake the following actions without the
prior consent of Blue Carol;
(i) the borrowing of any funds or the incurring of any
debt, commitment or the making of any loan or
advance to a value in excess of [CT REQUESTED];
(ii) the creating, incurring or suffering to exist of
any mortgage, pledge, lien, charge, security
interest, claim or encumbrance on or with respect
to, or lease of, any of its property or assets
having a value in excess of [CT REQUESTED] of its
Net Asset Value;
(iii) any acquisition or disposal of any material
assets, or any acquisition of or consolidation or
merger with, any other entity, or the sale or
other disposition of assets having a value in
excess of [CT REQUESTED] of its Net Asset Value;
(iv) any reduction in the percentage of Startec's
beneficial ownership of shares in any other
company, either through the disposal of shares in
that company or by election not to participate in
any share transfer or subscription offer;
(v) any increase in the issued or authorized share
capital of Startec;
(vi) any change to the Articles or By-laws of Startec
to the extent that such change does not relate to
routine management procedures or policies;
(vii) the retaining of any services for an amount in
excess of [CT REQUESTED] of its Net Asset Value;
or
(viii) the employment of any member of the executive
staff of Startec whose total annual remuneration
exceeds [CT REQUESTED];
(ix) any decision to dissolve or wind Startec up, or to
file for bankruptcy;
(x) subject to Clause 3 of the Subscription Agreement,
any decision or action capable of diluting Blue
Carol's ownership interest in Startec to [CT
REQUESTED] or less including, but not limited to,
any decision or action to issue options in
relation to Startec's Shares;
(f) Startec will promptly notify Blue Carol of any decision
by it to undertake any of the actions referred to in
Clauses 3.1(a) and (e), and Blue Carol will be deemed
to have given its prior consent to such action unless
it notifies Startec otherwise within 15 days of its
receipt of notice of the proposed action from Startec;
Blue Carol will not unreasonably withhold its consent
to any such proposed action;
(g) Startec will cause all of its Subsidiaries to allow
Blue Carol to participate in the management of their
respective businesses in the manner contemplated in
relation to Startec in Clauses 3.1 (a), (b), (c), (d),
(e) and (f);
(h) the Parties acknowledge that Blue Carol's rights of
prior consent set out in this Agreement do not entitle
Blue Carol to determine Startec's or its Subsidiaries'
methods of routine operation or to dominate their
corporate affairs;
(i) Startec and/or any of its Subsidiaries will amend their
By-laws to reflect the rights of Blue Carol to
participate in their management in the manner set out
in the Schedule, and Blue Carol may require such
further amendments to Startec's and/or any of its
Subsidiaries' Articles or By-laws as it may, from time
to time, require in order to secure for itself the
rights to participate in the management of Startec
which are contemplated in this Clause 3;
(j) Startec will not negotiate with nor enter into any
arrangement involving its provision of services to
telephone operators in [CT REQUESTED] or any other
country or territory specified by Blue Carol from time
to time, without Blue Carol's prior written approval;
and
(k) the provisions of this Clause 3 shall expire upon the
earlier of (i) a bona fide public offering of the
shares in Startec pursuant to an effective registration
under the Securities Act of 1933, as amended, (ii) the
sale or other transfer of [CT REQUESTED] or more of the
stock ownership of Blue Carol (whether directly or by
issuance of additional shares by Blue Carol).
3 l.2 Startec may require Blue Carol or any of its Affiliates
to appoint trainees nominated by Startec on a short-term basis
(3-6 months), on terms relating to training conditions to be
agreed between the Parties.
3.3 Blue Carol may require Startec to appoint trainees
nominated by Blue Carol on a short term basis (3-6 months), on
terms relating to training conditions to be agreed between the
Parties.
4. TERMINATION
4.1 Either Party may terminate this Agreement immediately by
notice in writing to the other Party if:-
(a) the other Party commits a material breach or default of
any of the provisions of this Agreement which, if it is
capable of remedy, has not been remedied within 30 days
of the Party's receipt of notice requiring the breach
or default to be remedied;
(b) the other Party goes into liquidation, has entered into
any composition with its creditors or any class
thereof, has execution levied against for an
established debt or has a receiver or manager appointed
in respect of the whole or part of its undertaking.
4.2 Blue Carol may terminate this Agreement immediately, by
notice in writing to Startec on termination of:-
(a) the Subscription Agreement; and/or
(b) the Deed of Confidentiality
for any reason.
4.3 Termination of this Agreement for any reason will be without
prejudice to any right either Party may have accrued against the
other prior to the termination.
5. STARTEC'S WARRANTIES
5.1 Startec warrants to Blue Carol that:-
(a) it will comply in all respects with the terms of the
Subscription Agreement, as amended from time to time;
(b) it will comply in all respects with the terms of the
Deed of Confidentiality, as amended from time to time;
(c) Startec is a corporation duly organized, validly
existing and in good standing under the laws of the
State of Maryland;
(d) Startec has the full right, power, and authority to
enter into and perform its obligations under this
Agreement without any further sanction or consent of
its shareholders and all necessary authorizations,
approvals, consents and licenses relating to the same
have been unconditionally obtained and are in full
force and effect, and this Agreement is a legal, valid
and binding agreement of Startec, enforceable in
accordance with its terms; and
(e) compliance by Startec with, this Agreement will not
result in the breach of and will comply with all
relevant provisions of all applicable laws, rules and
regulations, and all agreements and obligations to
which Startec or any Shareholder is a party or by which
any of them or any of their respective property is
bound.
5.1 Startec indemnifies each of Blue Carol and its Affiliates,
their respective partners, employees, agents, contractors and
assigns and will keep each of them indemnified from and against
all loss and expenses incurred by them, or any of them, directly
or indirectly as a result of Startec's failure to meet its
obligations under this Agreement or under the Subscription
Agreement and/or the Deed of Confidentiality.
6.1 MUKUNDA'S WARRANTIES
6.1 Mukunda warrants to Blue Carol that he will exercise his
voting rights as a shareholder, and, subject to Maryland law as a
director, and such influence as he may have over the Directors to
procure Startec's performance under the Agreement and, in
particular, to:
(a) procure the appointment of the Executive Committee as
soon as is practicable after completion of Blue Carol's
subscription for shares in Startec under the
Subscription Agreement;
(b) procure the appointment and removal of the individuals
referred to in Clause 3.1 as and when required by Blue
Carol; and
(c) procure the amendment of the Articles and By-laws of
Startec and/or any of its Subsidiaries in accordance
with Clause 3.1(i) as and when required by Blue Carol
in writing.
6.2 Mukunda will be jointly and severally liable with Startec
for any loss Blue Carol may sustain as a result of Startec's
failure to perform its obligations under this Agreement.
7. GENERAL
7.1 This Agreement contains the entire agreement between the
Parties and supersedes any prior understanding and/or agreement
between them relating to the subject matter of the agreement.
7.2 Should any provision of this Agreement be declared void or
unenforceable by any competent authority or court this will not
affect the other provisions of this Agreement which are capable
of severance, which will continue unaffected.
7.3 Any variation to this Agreement will be binding only if it
is recorded in writing and signed by all of the Parties.
7.4 Nothing in this Agreement will be taken to constitute a
partnership between the Parties nor the appointment of one of the
Parties as agent for any other.
7.5 The failure by any Party at any time or times to require
performance by any other Party of any provision of this Agreement
will in no way affect the right of that Party to require
performance of that or any other provision, and the waiver by a
Party of any breach of this Agreement will not be construed as a
waiver of any continuing or succeeding breach of that provision,
a waiver of the provision itself or a waiver of any other right
under this Agreement.
7.6 Each Party will bear its own costs of and incidental to the
preparation and completion of this Agreement.
7.7 This Agreement may be executed in one or more counterparts,
each of which will be deemed an original, and these counterparts
will constitute one and the same instrument.
7.8 Except as is specifically provided in this Agreement, none
of the Parties may assign or transfer any of its rights or
obligations under this Agreement without the prior consent of the
other Parties.
8. NOTICES
8.1 All notices delivered under this Agreement shall be in
writing in English and shall be communicated to the address
and/or to the facsimile number of the Party specified at the
beginning of this Agreement, or to such other address and/or
facsimile number as the relevant Party shall have notified to the
other Parties in accordance with the terms of this Clause 8.1.
8.2 Any such notice shall be served either personally or by
sending it by overnight mail, courier or facsimile. In the case
of notice served personally during normal business hours, it
shall be deemed to have been given when delivered, if sent by
overnight mail or courier 7 days after posting, or, if sent by
facsimile, upon the sender's receipt of electronic and telephonic
confirmation of the successful transmission of the notice to the
recipient.
9. Governing LAW AND DISPUTE RESOLUTION
9.1 This Agreement shall be governed and construed in accordance
with the laws of the State of Maryland.
9.2 Any dispute, controversy or claim arising out of or relating
to this Agreement, or the breach, termination, or invalidity
thereof, shall be settled by arbitration in accordance with the
Rules of Arbitration of the International Chamber of Commerce as
at present in force. The arbitration shall be held in London in
England, and heard by a single arbitrator appointed in accordance
with the said Rules.
SCHEDULE
Amended By-laws of Startec
(Clause 4.1(a)).
AS WITNESS THIS Agreement has executed on the day and year
first above written.
SIGNED by
for and on behalf of )
BLUE CAROL ENTERPRISES LIMITED )
in the presence of- )
Signed by Ram Mukunda, President )
for and on behalf of )
STARTEC, INC. )
in the presence of Subhash Pai )
Signed by Ram Mukunda, President )
RAM MUKUNDA, solely for the purposes )
of Clause 6 )
in the presence of:- )
Subhash Pai
<PAGE>
10411 Motor City Drive
Bethesda, MD 20817
301-365-8959
AMENDMENT TO AGREEMENT FOR MANAGEMENT PARTICIPATION
APPROVED AND AGREED TO
ON OR ABOUT JUNE 16, 1997
STARTEC COOPERATION AND SHAREHOLDERS' AGREEMENT
2 STATEMENT OF PURPOSE
2.1 In consideration of Blue Carol entering into and
performing its obligations under the Subscription
Agreement, Startec will allow Blue Carol to participate
in the Management of the Business, in accordance with
Clause 3. The parties recognize that control of
Startec is held by Ram Mukunda through his ownership of
a majority of Startec's voting stock and the parties do
not intend by this agreement to transfer control of
Startec to Blue Carol or any other person. The parties
further recognize and acknowledge that control of
Startec may not be transferred from Ram Mukunda to any
other person without the prior approval of the Federal
Communications Commission. Further, the parties hereto
recognize and acknowledge that Blue Carol's
participation in the management of Startec's business
must be in compliance at all times with the rules and
policies of the Federal Communications Commission
("FCC") and any provision of Clause 3 of this Agreement
which is found by the FCC to be in violation of those
rules and policies will be void and no longer have any
force or effect and will be deemed to have been deleted
from this Agreement.
3 MANAGEMENT PARTICIPATION
3.1 Startec will allow Blue Carol to participate in the
management of the Business as follows:
(A) Blue Carol may second a manager to Startec to
participate in the day to day management and
operations of Startec, under the supervision and
direction of Startec's officers;
(B) After the date of this Agreement, Startec will not
undertake the following actions without the prior
consent of Blue Carol;
(i) the discontinuance or substantial
reduction of the Business which requires
notice or disclosure to the FCC, if such
discontinuance or reduction would result
in a greater than [CT REQUESTED] reduction
in Startec's revenues;
(ii) the introduction of a new line of business
not involving the provision of
telecommunications services or other
services related hereto;
(iii) advancing a loan, if the amount thereof
exceeds [CT REQUESTED] of Startec's Total
Asset Value; for purposes of this Clause
3, "Total Asset Value" shall mean the
total amount of Startec's current and
other assets as shown on its most recent,
regularly prepared consolidated balance
sheet, prepared in accordance with
Generally Accepted Accounting Principles,
unless such loan is in the ordinary course
of business;
(iv) the creation or assumption of any
guarantee of or indemnify for third party
obligations outside its ordinary course of
business;
(v) any consolidation or merger with, any
other entity, or the sale or other
disposition of all or substantially all of
Startec's assets;
(vi) any change to the Articles or By-laws of
Startec to the extent that such changes do
not relate to routine management
procedures and policies;
(vii) The remuneration of Directors in excess of
[CT REQUESTED] per Board meeting;
(viii) the declaration of dividends payable on
Startec shares;
(ix) any decision to voluntarily dissolve or
wind-up Startec or to file for bankruptcy;
(x) subject to Clause 3 of the Subscription
Agreement, any decision or action capable
of diluting Blue Carol's ownership
interest in Startec to less than [CT
REQUESTED] unless such dilution is pro-rata
effecting all stock holders.
(C) Startec will promptly notify Blue Carol of any
decision by it to undertake any of the actions
referred to in Clauses 3.1(B) and Blue Carol will
be deemed to have given its prior consent to such
action unless it notifies Startec otherwise within
15 days of its receipt of notice of the proposed
action from Startec; Blue Carol will not
unreasonably withhold its consent to such proposed
action;
(D) Startec will cause all of its Subsidiaries to
allow Blue Carol's representative to participate
in the management of their respective businesses
in the manner contemplated in relation to Startec
all Clauses of 3;
(E) the Parties acknowledge that Blue Carol's rights
of prior consent set out in this Agreement do not
and are not intended to entitle Blue Carol to
direct Startec's or its Subsidiaries' regular
business operations or to control their corporate
affairs;
(F) the provisions of this Clause 3 shall expire upon
the earlier of (i) a bona fide public offering of
the shares in Startec pursuant to an effective
registration under the Securities Act of 1933, as
amended or (ii) the sale or other transfer of [CT
REQUESTED] or more of the stock ownership of Blue
Carol or its beneficial owner (whether directly or
by issuance of additional shares by Blue Carol).
WRITTEN DESCRIPTION OF SERVICE AGREEMENT
BY AND BETWEEN
STARTEC, INC. AND
COMPANHIA SANTOMENSED DE TELECOMUNICACOES
STARTEC, Inc. and Companhia Santomensed de Telecomunicacoes
entered into a service agreement in January 1995 for the
provision of international switched services. This agreement was
not set forth in a formal written document. The specific terms
and conditions were intended to be set forth in a subsequent
amendment. This service agreement was modified by a written
amendment dated February 8, 1995.
Startec, Inc.
February 8, 1995
Blue Carol Enterprises Limited
c/o Consec Services Limited
930 Ocean Centre
Harbour City, Kowloon
Hong Kong
Re: Amendment to Service Agreement between Blue Carol
Affiliate and Startec, Inc, ("Startec")
Ladies and Gentlemen:
In connection with the mutual agreement for Startec to
provide international long distance telephone and facsimile
services between itself and Companhia Santomensed de
Telecomunicacoes (the "Blue Carol Affiliate"), or in the event of
more than one such agreement or agreements relating to more than
one Carrier that agreement or Carrier nominated in writing by
Blue Carol Enterprises Limited ("Blue Carol"), (as hereinafter
referred to as the "Service Agreement"), this letter will confirm
Startec's willingness to modify the economic terms of the
relevant Service Agreement as follows:
1.1 Subject to Clause 1.6, for service provided under the
Service Agreement on and after the date of this letter (the
"Commencement Date"), Startec will allow the Blue Carol Affiliate
the following adjustments (the "Rate Adjustment") on amounts
payable by the parties to the Service Agreement under that
agreement:
(a) Startec will allow the Blue Carol Affiliate a deduction
of 15 cents per minute to the rate per minute at which
one Party to the service Agreement pays the other Party
for telecommunications traffic originated by that other
Party (the "Pay-out Rate") applying as between Startec
and the Blue Carol Affiliate for every minute of
carriage charged by Startec to the Blue Carol
Affiliate; and
(b) the Blue Carol Affiliate will increase the Payout Rate
applying as between it and Startec by 15 cents per
minute for every minute of carriage charged by the Blue
Carol Affiliate to Startec.
1.2 Commencing with the third anniversary of the
Commencement date, interest will accrue on the average
outstanding Net Base (as defined herein) for each six-month
period at the rate of Base Rate LIBOR plus 2% (determined at the
beginning of each such six-month period At the end of each such
six-month period the Blue Carol Affiliate will send Startec a
calculation of the interest accrued during such six-month period
and Startec shall pay the interest due within fifteen (15) days
of its receipt of such calculation.
1.3 The deductions and additions referred to in Clause 1.1
and the interest referred to in Clause 1.2 will be incorporated
into the accounts and invoices prepared by Startec and the Blue
Carol Affiliate from time to time, as contemplated in the Service
Agreement.
1.4 If the total benefit of the Rate Adjustment to CS any
calendar year comprising the term of this Agreement, commencing
on the Commencement Date (a "Year") amounts to less than
US$150,000 the Blue Carol Affiliate will advise Startec, and
Startec will pay the amount of any shortfall to the Blue Carol
Affiliate within 15 days of receiving that advice.
1.5 If, before the end of any Year, the total benefit of
the Rate Adjustment to the Blue Carol Affiliate in that Year
reaches US$250,000 the Blue Carol Affiliate will advise Startec,
and the parties to the Service Agreement will cease to apply the
Rate Adjustment to payments due to and from the Blue Carol
Affiliate under that agreement for the remainder of the Year, the
Blue Carol Affiliate and Startec will begin reapplying the Rate
Adjustment at the beginning of the next Year.
1.6 The Blue Carol Affiliate and Startec will cease to
apply the Rate Adjustment when the total benefit to the Blue
Carol Affiliate of the Rate Adjustment and any payments made
pursuant to Clause 1.4 equals US$750,000 (the "Base Amount").
1.7 If Startec fails to comply with its obligations under
this letter agreement, otherwise than as a result of the Blue
Carol Affiliate being in default of its obligations under the
Service Agreement, the Blue Carol Affiliate may require Startec:
(a) to issue to the Blue Carol Affiliate or any Affiliate
it may nominate, shares in Startec; or
(b) to provide services under the Service Agreement,
at Startec's expense, to the value of any debt Startec owes to
the Blue Carol Affiliate or any other Loss or expenses incurred
by the Blue Carol Affiliate or any of its Affiliates, as a result
of Startec's failure.
1.8 Without prejudice to Clause 1.8, Startec indemnifies
each of the Blue Carol Affiliate, Blue Carol, their Affiliates,
their respective partners, employees, agents, contractors and
assigns and will keep each of them indemnified from and against
all costs and expenses incurred by them, or any of the, directly
or indirectly as a result of Startec's failure to meet its
obligations under this Letter Agreement.
1.9 For purposes of this letter agreement, the term "Net
Base" shall mean the Base Amount less the aggregate of all Rate
Adjustments allowed pursuant to clause 1.1 and any payments made
pursuant to Clause 1.4.
1.10 This Letter Agreement shall continue for so long as the
Agreement for Management Participation of even date between Blue
Carol, Startec, Inc. and Ram Mukunda ("Management Agreement")
shall remain in force.
1.11 Upon expiration of the Rate Adjustment, Blue Carol will
agree to terminate its rights under Clause 3.1(d) of the
Management Agreement.
If this letter properly sets forth the modifications to the
terms and conditions of the Service Agreement, please sign and
date the consent below and fax the signed consent to me at
301-365-8969.
Sincerely,
STARTEC, INC.
Ram Mukunda, President
CONSENT:
Blue Carol Enterprises Limited
By:____/s/________________
Title: Director
Date: 8th February 95
In consideration of Blue Carol entering into the Management
Agreement and other agreements referred to therein, and for other
good and valuable consideration, I, Ram Mukunda, agree that I am
jointly and severally liable with Startec for any and all loss
the Blue Carol Affiliate may sustain as a result of Startec's
breach of this Letter Agreement.
___________________________
Ram Mukunda
(Personally)
<PAGE>
PORTIONS OF THIS EXHIBIT ("CONFIDENTIAL PORTIONS") HAVE BEEN
DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION ("COMMISSION")UNDER
RULE 406 OF THE SECURITIES ACT OF 1933 AND THE FREEDOM OF
INFORMATION ACT. THE CONFIDENTIAL PORTIONS HAVE BEEN FILED
SEPARATELY WITH THE COMMISSION AND ARE IDENTIFIED IN THIS EXHIBIT
BY THE NOTATION "CT REQUESTED."
LEASE AGREEMENT
BETWEEN
COMPANHIA PORTUGUESA RADIO MARCONI, S.A.
AND
STARTEC, INC.
<PAGE>
THIS AGREEMENT, made and entered into this 15th day of June 1996,
between:
COMPANHIA PORTUGUESA RADIO MARCONI, S.A., a corporation organized
and existing under the laws of Portugal, with the capital stock
of PTE 15.600.000.000$00, corporate body 500069131, registered in
the Commercial Registry of Lisbon under the number 10844 and
having its main office at Av. lvaro Pais, 2, 1699 Lisboa Codex,
Portugal (hereinafter referred to as "MARCONI", which expression
shall include its successors and assigns), and
STARTEC, INC., having its principal office at 10411 Motor City
Drive, Suite 301, Bethesda, MD 20817, U.S.A., (hereinafter called
"STARTEC", which expression shall include its successors and
assigns).
WITNESSETH
WHEREAS MARCONI has assigned capacity in EURAFRICA and
COLUMBUS-ll systems for joint use with STARTEC for the provision
of telecommunications services between points in or reached via
the continental United States and Portugal mainland.
WHEREAS, pursuant to an Agreement dated January 1, 1996 MARCONI
and STARTEC defined the terms and conditions according to which
MARCONI sold to STARTEC the Irrevocable Right of Use (IRU) of the
half interests corresponding the western part of the circuits
intended for the establishment of telecommunications services
between STARTEC and CST, India and others.
WHEREAS this capacity in EURAFRICA and COLUMBUS-ll systems has
been used for the establishment of a [CT REQUESTED] bearer
between Lisbon and Washington D.C.
WHEREAS, the operation of this bearer is associated with the use
of a terminal equipment, which allows the optimisation of the
communications capability of such circuits.
WHEREAS, STARTEC wishes to lease from MARCONI and MARCONI is
willing to lease to STARTEC the eastern half interests in a
number of circuits for the establishment of communication
services between STARTEC and points reached via Portugal
mainland.
WHEREAS, the Parties to the present Agreement want to define
terms and conditions according to which MARCONI will provide such
capacity to STARTEC.
NOW THEREFORE, the Parties to the present Agreement, in
consideration of the mutual covenants herein expressed, covenant
and agree with each other as follows:
1. Effective from the date of this Agreement, MARCONI provides
to STARTEC the capacity corresponding to half of the eastern
part of the relevant capacity in EURAFRICA and COLUMBUS-ll
systems. These half circuits will be used for supplying
communications services between STARTEC and points reached
via Portugal mainland.
2. For the lease of the capacity as indicated in article 1
above STARTEC will pay for a period of three years to
MARCONI the monthly amount of USD 2.500. Bills for such
amounts shall be paid by STARTEC by the end of the month
following the month in which the bills are rendered.
3. Bills not paid by the due date will incur a quarterly
compounded financing charge at a rate of one hundred and
twenty five (125) percent of the LIBOR rate applicable on a
180 (one hundred eighty) day USD denominated loan, effective
during the period that the payment is overdue.
4. If the bills are not paid by STARTEC within one year after
the end of the month in which the bills are rendered,
MARCONI will be entitled to terminate automatically this
Agreement without any compensation for STARTEC.
5. Neither Party shall be liable to the other for any loss or
damage sustained by reason of any failure in or breakdown of
EURAFRICA and COLUMBUS-ll or of the facilities associated
with EURAFRICA and COLUMBUS-ll or for any interruption of
service, whatsoever shall be the cause of such failure,
breakdown or interruption, and however long it shall last.
6. The performance of this Agreement by MARCONI and STARTEC is
contingent upon the provision and continued operation of
EURAFRICA and COLUMBUS-ll, and upon the obtaining and
continuance of such approvals, consents, governmental
authorisations, licenses and permits as may be required or
be deemed necessary for this Agreement by the Parties hereto
and as may be satisfactory to them. MARCONI and STARTEC
shall use their best efforts to obtain and continue, or have
continued such approvals, consents, licenses and permits.
7. Amendments to this Agreement or to any of the conditions
contained herein shall be effected by means of another
written agreement, signed on behalf of each of the Parties
by a person duly authorised to do so.
8. The relationship between the Parties hereto shall not be
that of partners and nothing herein contained shall be
deemed to constitute a partnership between them.
9. This Agreement shall become effective on the day and year
first above written and shall continue in effect for three
years.
10. For all purposes, the addresses of the Parties of this
Agreement shall be as follows, unless otherwise designated
in writing by the respective Parties:
COMPANHIA PORTUGUESA RADIO MARCONI, SA
Av. lvaro Pais, n 2
1699 LISBOA CODEX
PORTUGAL
STARTEC,INC.
10411 Motor City Drive
Suite 301, Bethesda
MD 20817, U.S.A.
11. This Agreement shall be executed in two counterparts and
each such counterpart shall together, as well as separately,
constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties hereto have severally subscribed
these presents or caused them to be subscribed in their names and
behalf by their respective officers thereunto duly authorised.
COMPANHIA PORTUGUESA RADIO MARCONI, SA
by:
STARTEC, INC.
by: /S/
PORTIONS OF THIS EXHIBIT ("CONFIDENTIAL PORTIONS") HAVE BEEN
DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION ("COMMISSION")UNDER
RULE 406 OF THE SECURITIES ACT OF 1933 AND THE FREEDOM OF
INFORMATION ACT. THE CONFIDENTIAL PORTIONS HAVE BEEN FILED
SEPARATELY WITH THE COMMISSION AND ARE IDENTIFIED IN THIS EXHIBIT
BY THE NOTATION "CT REQUESTED."
INDEFEASIBLE RIGHT OF USE AGREEMENT
BETWEEN
COMPANHIA PORTUGUESA RADIO MARCONI, S.A.
AND
STARTEC, INC.
<PAGE>
THIS AGREEMENT, made and entered into this 1st day of January
1996, between:
COMPANHIA PORTUGUESA RADIO MARCONI, S.A., a corporation organized
and existing under the laws of Portugal, with the capital stock
of PTE 15.600.000.000$00, corporate body 500069131, registered in
the Commercial Registry of Lisbon under the number 10844 and
having its main office at Av. lvaro Pais, 2, 1699 Lisboa Codex,
Portugal (hereinafter referred to as "The Vendor", which
expression shall include its successors and assigns), and
STARTEC, INC., having its principal office at 10411 Motor City
Drive, Suite 301, Bethesda, MD 20817, U.S.A., (hereinafter called
"the Purchaser", which expression shall include its successors
and assigns).
WITNESSETH
WHEREAS, pursuant to an Agreement dated July 3, 1989 (hereinafter
called "EURAFRICA Agreement"), a digital fibre optic cable system
between France, Portugal mainland, Morocco and Madeira Island
(hereinafter called "EURAFRICA"), for telecommunication services
between and among points in or reached via France, Portugal
mainland, Morocco and Madeira Island and points beyond has been
constructed and is being operated.
WHEREAS, pursuant to an Agreement dated November 12, 1992
(hereinafter called "COLUMBUS-ll Agreement"), an optical fiber
cable system linking North America and Europe (hereinafter called
"COLUMBUS-ll"), for telecommunication services between and among
points in or reached via the continental United States and St.
Thomas, U.S. Virgin Islands and Mexico on the west, and points in
or reached via Spain, Italy and Portugal on the east has been
constructed and is being operated.
WHEREAS, part of capacity assigned to the Vendor in EURAFRICA and
COLUMBUS-ll systems is to be sold as Indefeasible Right of Use
(IRU) for use between International Telecommunication Entities
not Parties to the EURAFRICA and COLUMBUS-ll Agreements.
WHEREAS, the Purchaser wishes to obtain from the Vendor and the
VENDOR wishes to sell to the Purchaser the IRU of the half
interests in a number of circuits, owned by the Vendor in
EURAFRICA and COLUMBUS-ll for service between Portugal mainland
and the continental United States.
WHEREAS, the Parties to the present Agreement want to define
terms and conditions according to which the Vendor sells to the
Purchaser the IRU in EURAFRICA and COLUMBUS-ll systems as
follows:
[CT REQUESTED]in the segment Funchal-Sesimbra
[CT REQUESTED]in the segment West Palm Beach-Funchal
NOW THEREFORE, the Parties to the present Agreement, in
consideration of the mutual covenants herein expressed, covenant
and agree with each other as follows:
1. Effective from the date of this Agreement, the Vendor sells
to the Purchaser the IRU of:
EURAFRICA:
[CT REQUESTED]in the segment Funchal-Sesimbra
[CT REQUESTED]
[CT REQUESTED]in the segment West Palm Beach-Funchal
These half circuits will be used for supplying
communications services between points in or reached via
continental United States and points in or reached via
Portugal mainland.
2. For the IRU in the half circuits as indicated in article 1
above, sold to the Purchaser pursuant to this Agreement, the
Purchaser will pay the capital cost of 383,300 USD accrued
by financial charges, under the following payment
conditions:
a) 10 (ten) semestral instalments, being the first payment
due on June 30, 1996. Bills for such installments
shall include:
- 1/10 of the capital cost (38.330 USD).
- financial charges calculated at the LIBOR rate
applicable on a 180 (one hundred eighty) day USD
denominated loan plus 0,25%
Bills for such installments shall be rendered by the
Vendor on the months of May and November and shall be
paid by the Purchaser by the end of the month following
the month the bills are rendered.
b) A quarterly amount equal to the portion of the costs of
operating and maintaining EURAFRICA and COLUMBUS-ll,
allocable to the half circuits sold hereunder on a pro
rata basis. The Vendor or any other entity designated
as its successor will render bills quarterly to the
Purchaser from the date of the present Agreement and
the Purchaser will pay such bills by the end of the
month following the month in which the bills are
rendered.
c) Amounts equal to the portion of the costs incurred for
repairing at sea EURAFRICA and COLUMBUS-ll, allocable
to the half circuits sold to the Purchaser hereunder on
a pro rata basis. Bills for such amounts incurred
subsequent to the effective date of this Agreement
shall be rendered by the Vendor or any other entity
designated as its successor to the Purchaser as soon as
practicable after such costs are charged to the Vendor.
Such bills shall be payable by the Purchaser within one
calendar month after the end of the month in which
bills are rendered.
d) Bills not paid by the due date will incur a quarterly
compounded financing charge at a rate of one hundred
and twenty five (125) percent of the LIBOR rate
applicable on a 180 (one hundred eighty) day USD
denominated loan, effective during the period that the
payment is overdue.
e) If the bills are not paid by the Purchaser within one
year after the end of the month in which the bills are
rendered, the Vendor will be entitled to terminate
automatically this Agreement without any compensation
for the Purchaser.
3. In the event that the total number of circuits which any of
the fibre pairs in EURAFRICA and COLUMBUS-ll is capable of
providing upon its completion is reduced as a result of
physical deterioration, or for other reasons beyond the
control of the Parties to the EURAFRICA and COLUMBUS-ll
Agreements, during the term of this Agreement, the number of
half circuits sold to the Purchaser hereunder may be reduced
in the same proportion as the total number of circuits is
reduced.
4. Neither Party shall be liable to the other for any loss or
damage sustained by reason of any failure in or breakdown of
EURAFRICA and COLUMBUS-ll or of the facilities associated
with EURAFRICA and COLUMBUS-ll or for any interruption of
service, whatsoever shall be the cause of such failure,
breakdown or interruption, and however long it shall last.
5. The operation by the Purchaser of the half circuits sold to
it hereunder and any equipment associated therewith with the
previous written consent of the Vendor shall be such as not
to interrupt, interfere with or impair service over any of
the facilities comprising EURAFRICA and COLUMBUS-ll, any
circuits of the Vendor or any circuits of connecting
companies or of other right of use, impair privacy of any
communications over such facilities, cause damage to plant,
or create hazards to the employees of any of the
aforementioned companies or of any owner of the
aforementioned facilities or to the public. The Purchaser
shall hold harmless the Vendor and bear the cost of any
additional protective apparatus reasonably required to be
installed because of the use of such facilities by the
Purchaser, any lessee of the Purchaser, or any customer or
customers of the Purchaser or of any such lessee, and the
cost of any possible damage thereto related.
A consent granted under this clause may be revoked at
anytime by the Vendor if the provisions of the clause are
not fulfilled. Such equipment, if used, shall not
constitute a part of EURAFRICA and COLUMBUS-ll. Similar
obligations will be included in any such Agreements made
with users of EURAFRICA and COLUMBUS-ll.
6. The half circuits sold to the Purchaser hereunder will be
maintained or caused to be maintained in efficient working
order by the Vendor.
In this regard, at a time agreeable to the Vendor, the half
MAUOs sold to the Purchaser hereunder shall be made
available to the Vendor to make such tests and adjustments
as may be necessary for such circuits to be maintained in
efficient working order.
7. In the event of the liquidation of a segment of EURAFRICA
and COLUMBUS-ll by sale or other disposition, during the
term in which this Agreement is in force, the Vendor shall
share with the Purchaser the net proceeds or cost of any
such sale or disposition, in the proportion in which the
Purchaser contributed to the cost of the Segment
Funchal-Sesimbra of EURAFRICA and Segment West Palm
Beach-Funchal of COLUMBUS-ll.
8. No license under patents is granted by the Vendor or shall
be implied or arise by estoppel in the Purchaser's favor
with respect to any apparatus, system or method used by the
Purchaser in connection with the use of the half circuits
sold to it hereunder. With respect to claims of patent
infringement made by third persons, (i) the Vendor will save
the Purchaser harmless against claims arising out of the use
by the Purchaser of such half circuits in accordance with
the provision of this Agreement, and (ii) the Purchaser will
save the Vendor harmless against claims arising out of
combining such half circuits or using such half circuits in
connection with any apparatus, system or method provided by
the Purchaser.
9. The Vendor or any other entity designated as its successor
shall keep such books, records, vouchers and accounts of all
of its costs with respect to the provision and maintenance
of EURAFRICA and COLUMBUS-ll, as may be appropriate to
support its costs, for a period of three years from the date
on which the corresponding bills were rendered to the
Purchaser.
10. The performance of this Agreement by the Vendor and the
Purchaser is contingent upon the provision and continued
operation of EURAFRICA and COLUMBUS-ll, and upon the
obtaining and continuance of such approvals, consents,
governmental authorizations, licenses and permits as may be
required or be deemed necessary for this Agreement by the
Parties hereto and as may be satisfactory to them. The
Vendor and Purchaser shall use their best efforts to obtain
and continue, or have continued such approvals, consents,
licenses and permits.
11. Unless otherwise stipulated, no transfer of the rights
granted under this Agreement or of any right resulting from
it by either of the Parties to this Agreement shall be
considered valid without the written consent of the other
Party to this Agreement, except to a successor or assign or
subsidiary of such Party, or corporation controlling, or
under the same control as such Party, in which case written
notice shall be given in a timely manner by the Party making
said transfer.
12. Amendments to this Agreement or to any of the conditions
contained herein shall be effected by means of another
written agreement, signed on behalf of each of the Parties
by a person duly authorized to do so.
13. The relationship between the Parties hereto shall not be
that of partners and nothing herein contained shall be
deemed to constitute a partnership between them.
Termination of this Agreement shall not terminate the
provisions of Article 7 above, or prejudice the operation or
effect thereof.
14. This Agreement shall become effective on the day and year
first above written and shall continue in effect for the
duration of the COLUMBUS-ll and EURAFRICA Agreements.
15. For all purposes, the addresses of the Parties to this
Agreement shall be as follows, unless otherwise designated
in writing by the respective Parties:
Vendor
COMPANHIA PORTUGUESA RADIO MARCONI, SA
Av. lvaro pais, n 2
1699 LISBOA CODEX
PORTUGAL
Purchaser
STARTEC, INC.
10411 Motor City Drive
Suite 301, Bethesda
MD20817, U.S.A.
16. This Agreement shall be executed in two counterparts and
each such counterpart shall together, as well as separately,
constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties hereto have severally subscribed
these presents or caused them to be subscribed in their names and
behalf by their respective officers thereunto duly authorized.
COMPANHIA PORTUGUESA RADIO MARCONI, SA
by: /s/
STARTEC, INC.
by: /s/
<PAGE>
PORTIONS OF THIS EXHIBIT ("CONFIDENTIAL PORTIONS") HAVE BEEN
DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION ("COMMISSION")UNDER
RULE 406 OF THE SECURITIES ACT OF 1933 AND THE FREEDOM OF
INFORMATION ACT. THE CONFIDENTIAL PORTIONS HAVE BEEN FILED
SEPARATELY WITH THE COMMISSION AND ARE IDENTIFIED IN THIS EXHIBIT
BY THE NOTATION "CT REQUESTED."
INTERNATIONAL TELECOMMUNICATION SERVICES AGREEMENT
BETWEEN
VIDESH SANCHAR NIGAM LTD.
AND
STARTEC INCORPORATED
<PAGE>
This Agreement made at Bombay and on this 12th day of
November, 1992 by Videsh Sanchar Nigam Limited (a Government of
India Enterprise), incorporated under the Indian Companies Act,
1956 and having its registered office at Videsh Sanchar Bhavan
Mahatma Gandhi Road, Bombay 400 001, India (hereinafter referred
to as "VSNL" which expression shall, unless excluded by or
repugnant to the context or meaning thereof, include its
successors and assignees) of the One Part and STARTEC
Incorporated, a corporation incorporated and existing under the
laws of the state of Maryland in the United States of America and
having its registered office at 6000 Executive Boulevard, Suite
202, Rockville, Maryland 20852, U.S.A. (hereinafter referred to
as "STARTEC" which expression shall, unless excluded by or
repugnant to the context or meaning thereof, include its
successors and assignees).
WHEREAS, VSNL is a duly authorized international
telecommunications carrier, existing and operating under the laws
of India.
AND WHEREAS, STARTEC is a duly authorized telecommunications
carrier existing and operating under the laws of Maryland and the
United States of America.
AND WHEREAS, VSNL and STARTEC have agreed to provide jointly
on a non-exclusive basis telecommunications services between
India and U.S.A. and pursuant to that agreement VSNL and STARTEC
have set up six lines between Washington D.C. and Delhi since
July 1990, and have jointly installed and completed the testing
of STARTEC's Fax Node between Washington D.C. and Bombay;
WHEREAS, the purpose of the Agreement is to provide a basis
for further expansion of the VSNL and STARTEC relationship to the
common benefit;
NOW IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES HERETO AS
FOLLOWS:
ARTICLE I
1. This Agreement contemplates cooperation between the Parties
hereto to provide on a non-exclusive basis telecommunication
services including telephone, facsimile Node services, voice
services, (collectively referred to as "PSTN Service"), and other
value added services such as remote office and video
conferencing.
2. The present Agreement details out the understanding for
cooperation and expansion for PSTN Service.
3. The understanding for other valued added services will be
negotiated on a case by case basis and entered into as
Supplementary Agreements as and when concluded.
ARTICLE II
Agreement for Proposed Expansion of Services
Subject to compliance with the new financial terms and conditions
set out in this part, the Parties agree to implement expansion as
stated herein below subject to the understanding that until the
date for expansion is decided in writing and the expansion is
implemented, the Parties shall continue operations as per the
existing terms and conditions, and on furnishing the [CT
REQUESTED] of this agreement before 1st January, 1993.
1. PSTN Voice
i. the number of circuits will be increased to thirty
initially. Thereafter, the Parties will increase circuits by
mutual Agreement to reflect traffic patterns, provided that
before any such increase in number of circuits is effected by
VSNL, dues if any, up to the end of the quarter previous to the
quarter in which decision for increase in number of circuits is
proposed, shall be settled by STARTEC and realized by VSNL.
ii. All circuits will be configured as two way and extended
initially to Bombay, Delhi and Madras. Gradually, circuits will
be extended to all Indian Gateways, upon mutual Agreement to
reflect traffic patterns.
2. Facsimile Node:
i. The parties have installed one Fax Node at STARTEC's
premises in Washington, D.C. and the other at VSNL's premises in
Bombay.
ii. STARTEC has provided all the software involved with the
operation of the Fax Node.
iii. STARTEC has provided at its own cost peripheral
hardware like Fax Cards, Voice boards and modems as required for
the Fax Node in Bombay.
iv. STARTEC has trained VSNL personnel for the operation
and maintenance of the Fax Node. STARTEC has met all expenses
for any training to be imparted in the U.S.
v. VSNL has procured the Personal Computers required for
setting up the Fax Node in india.
vi. Traffic on the Fax Node will be on a two way basis.
vii. The accounting of the Fax traffic will be similar to
the accounting for the voice, as paid minutes of traffic sent on
the telephone lines. Settlement will be done on a duration
basis, not on a page basis.
viii. Both parties agree to jointly proliferate the Fax
Nodes and interconnect them.
ix. STARTEC agrees to market the Fax Node in the U.S.A. as
a STARTEC/VSNL joint service, and similarly VSNL agrees to market
it as a VSNL/STARTEC joint product in India.
x. The Fax Nodes installed using STARTEC technology will
be used exclusively with STARTEC.
xi. Traffic will be both ways with VSNL offering the
service through all its telecommunications Bureaus.
xiii. Commercial operation of the Fax Node will commence
upon mutual Agreement, but no later than when the additional
circuits are commissioned.
3. STARTEC Direct:
i. VSNL will provide STARTEC with a direct access number
for customers in India, wishing to access with STARTEC network in
U.S.A.
ii. Calls originating via this plan will be treated as
incoming into India.
iii. STARTEC will remit accounts and settlements to VSNL for
this service, in accordance with the procedure adopted for the
PSTN Voice Service.
4. Leased Lines:
i. VSNL agrees to assist STARTEC in providing its
customers with dedicated leased lines, as and when requested.
ii. The actual terms and conditions for this service will
be decided on a case by case basis via faxes.
5. Remote Offices:
i. The parties agree to explore the possibility of setting
up digital links between the U.S.A. and technology parks in
India, which would enable to transmission of data from the U.S.A.
for processing in India.
ii. Specific terms for this service will be subsequently
negotiated, agreed upon and recorded in a supplementary
Agreement.
6. Video Conferencing:
i. The Parties agree to explore the possibility of setting
up video conferencing facilities between India and U.S.A.
ii. Specific terms for this service will be subsequently
negotiated, agreed upon and recorded in a supplementary
Agreement.
ARTICLE III
Link Specifications:
I. Operations will commence initially via the 359 degree
INTELSAT satellite on a 2 Mbps Carrier.
ii. Thereafter circuits will be expanded upon mutual Agreement
via CME or new routes.
iii. STARTEC will pay for transit charges on a full length basis
for hard patched circuits, in case traffic is routed on dedicated
international links. If the traffic is routed via auto transit
facilities of other international carriers, STARTEC will bear the
full transit charges and VSNL will be entitled to fifty percent
of the Total Accounting Rate.
iv. The circuits will be configured as two way circuits and
STARTEC will receive return traffic in accordance with VSNL's
practice with other International carriers of U.S.A.
ARTICLE IV
Accounting Rate and Procedures
1. The Total Accounting Rate between U.S.A. and India will
be $2.00 per minute until March 31, 1993. This is based on the
Agreement that at all times the same total Accounting Rate (TAR),
including any revisions, will be equally applicable to all U.S.
based carriers including STARTEC.
2. The accounting rate shall be shared between the parties
in such a way that VSNL receives 50% if the Total Accounting Rate
(T.A.R.) and transit charges if payable to other international
carriers will be borne by STARTEC.
3. Service messages between the parties will be exchanged
free of charge.
4. Each Party shall keep full and complete records of all
calls originated on its side and each party shall be responsible
as between the parties for the collections of the charges in
respect of al messages originated on its side. For purposes of
accounting between the parties no allowance shall be made for bad
debts.
5. Both parties shall render to the other an account of
traffic routed on its side during each calendar month not later
than the 20th of the following month to which the account
relates.
6. The account shall be deemed to have accepted by the
party to whom it is rendered if that party does not take
objection thereto in writing within one month of the receipt of
the account by the other party to which that account refers.
7. Settlement and payment of dues on such account shall
take place not later than the last working day of the month
following the month in which the account is tendered by TMO,
Demand Drafts or Bank Transfers. Unless specifically agreed the
payment shall be effected in U.S. Dollars.
8. Any hard patch or transit charges payable by STARTEC in
respect of hard patched charges will be made in advance or
directly to the third carrier by STARTEC.
ARTICLE V
1. Liability for Loss/Damage:
Neither party shall be liable to the other Party for any
losses or damages either direct, indirect, consequential or
otherwise sustained by reason of any failure in or breakdown of
the communications systems or facilities herein provided for, or
for any interruption of the service, whether caused by Act of
God, insurrection or civil disorder, war or military operations,
national or local emergency, acts or omissions of any Government
authorities, industrial disputes, fire, lightening, explosion,
inclement weather, or other causes beyond the control of either
Party.
2. Sales Effort:
Each Party undertakes with the other Party to promote on a
non-exclusive basis the sale of the agreed upon
telecommunications services.
3. Transfer of Rights:
Neither Party shall transfer or assign its rights or
obligations under this Agreement, without prior written consent
of the other Party, which consent shall not be unreasonably
withheld or delayed. No consent shall be required for transfers
or assignments by either Party to its legal successor or Parent
or Subsidiary.
4. Government Regulations:
At all times during the terms of this Agreement, the parties
hereto agree to comply and remain in compliance with all
applicable laws, rules and regulations relating to or affecting
the performance of each of their obligations hereunder and shall
secure and maintain in full force and effect all licenses,
permits and authorizations from al government agencies, to the
extent the same are required or necessary for the performance of
their respective obligations hereunder.
5. Intellectual Property Rights:
The Parties agree that trademarks, inventions, patents,
copyrights, registered designs, service marks, trade name and all
other intellectual property shall remain in the ownership of the
person or Party originating the same for the terms of this
Agreement, and nothing contained herein shall confer or be deemed
to confer on either Party, expressly, implied, or otherwise, any
rights or licenses in the intellectual property of the other.
6. Proper Notice:
Any communication or notice by either Party should be sent
to the registered office of the addressee as given in the
preamble to this Agreement, or to such other address as amy be
notified in writing by either party to the other as an address to
which such communications may be sent. All such communications
will be sent by registered mail or registered courier only.
7. Arbitration:
Any dispute, controversy or claim arising out of or in
connection with this Agreement, or breach, termination or
validity hereof, shall first be settled through friendly
discussion or negotiations between the Parties. If the dispute
cannot be amicably settled either Party, as soon as practicable,
the dispute amicably has been made to the other Party, give to
the other notice in writing of the existence of such question,
dispute or difference, specifying the nature and the point at
issue, and the same shall be finally settled by Arbitration in
India, in accordance with the Indian Arbitration Act and relevant
regulations in force at that time. Arbitration will be conducted
by a neutral arbitrator acceptable to both parties.
8. [CT REQUESTED]
9. Term and Termination:
a. the Agreement will become effective from the date
on which both Parties sign below and shall continue in effect for
an initial term of two years from that date. The agreement shall
be renewed for successive two year terms, unless terminated in
accordance with the provisions below.
b. This Agreement may be terminated for violation of
any terms incorporated in this Agreement by either Party by
giving at least three months written notice to the other Party.
In particular the Agreement could be terminated:
(i) for default in payment of dues.
(ii) for poor grade of telephony service
compared to the performance of other
international carriers of USA.
and (iii) if the traffic volume overaged over a
period of calendar month in terms of paid
minutes per circuit per day falls below
the average performance of other USA
carriers.
The grade of service and traffic volumes referred
under b (ii) and be (iii) will be reckoned after
the expansion of circuits as referred in
Article-II and Article-III of this agreement.
c. If the Party to whom written notice is given in
accordance with the provisions contained herein, rectifies the
same, the Agreement shall continue for its full term, including
any renewal of the same.
d. In case of termination of this Agreement, the
parties shall continue to be liable for the dues arising out of
the Agreement and shall settle the same in accordance with the
provisions of this Agreement.
IN WITNESS WHEREOF THE SECRETARY OF VSNL AND THE REPRESENTATIVE
OF STARTEC HAVE HEREUNDER SET THEIR RESPECTIVE HANDS THE DAY AND
YEAR FIRST ABOVE WRITTEN.
Signatures:
For STARTEC For Videsh Sanchar Nigam Limited
Name /S/ Name /s/
SUHAIL NATHANI SATISH RANADE
Title Legal Advisor & Title
authorized signatory
Date 12th Nov.'92 Date 12-11-92
<PAGE>
PORTIONS OF THIS EXHIBIT ("CONFIDENTIAL PORTIONS") HAVE BEEN
DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION ("COMMISSION")UNDER
RULE 406 OF THE SECURITIES ACT OF 1933 AND THE FREEDOM OF
INFORMATION ACT. THE CONFIDENTIAL PORTIONS HAVE BEEN FILED
SEPARATELY WITH THE COMMISSION AND ARE IDENTIFIED IN THIS EXHIBIT
BY THE NOTATION "CT REQUESTED."
DIGITAL SERVICES AGREEMENT
This Digital Service Agreement (this "Agreement") is entered
into as of 25th Oct, 1994, by and between Communications
Transmission Group, Inc., a Nevada corporation ("Lessor"), and
Startec, Inc., a Maryland Corporation ("Lessee").
In consideration of the mutual promises set forth below and
for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby
agree as follows:
1. Definitions.
(a) "Available" shall mean, with respect to any
Circuit, that all necessary equipment with respect to such
Circuit has been installed, connected, tested and confirmed by
Lessor to be operating in accordance with the required
specifications.
(b) "Activation Date" shall mean, with respect to any
circuit, the date such circuit is first made Available to Lessee.
(c) "Circuit" shall mean a DS-1.
(d) "Circuit Lease Term" shall mean, with respect to
any Circuit, the term in months for which Lessee desires to
obtain Service on such Circuit from the Activation Date of such
Circuit, as specified in the Purchase Order pursuant to which
such Circuit is Ordered.
(e) "Circuit Mileage" shall mean, with respect to any
Circuit, the length of such Circuit in airline miles computed
according to industry standard V&H coordinates as specified in
the Purchase Order pursuant to which such Circuit is ordered.
(f) "City Pair" shall mean, with respect to any
Circuit, the two cities in which such Circuit terminates, as
specified in the Purchase Order pursuant to which such Circuit is
ordered.
(g) "DS-0 Circuit Mile Rate" shall mean, with respect
to any Circuit, the rate, if any, so designated with respect to
such Circuit in the Purchase Order pursuant to which such Circuit
is ordered.
(h) "DS I" shall mean a circuit meeting the
specifications set forth in AT&T Technical Reference Pub. 62411,
December 1990 and Bellcore TR MWT-000488, Issues 4, November
1991, Revision 1, April 1992.
(i) "Monthly Lease Rate" shall mean, with respect to
any Circuit, the amount designated in Exhibit D hereto, or if
different, in the Purchase Order accepted by Lessor pursuant to
which such Circuit is ordered.
(j) "On-net Service" shall be service between any of
the cities contained in Exhibit C attached hereto. "On-net City"
shall mean any such city. "On-net DS-1" shall mean a DS-1
between two On-Net Cities. Service to any city not contained in
Exhibit C shall be considered "Off-net Service".
(k) "Purchase Order" shall mean any written purchase
order in substantially the form attached hereto as Exhibit A made
hereunder by Lessee and accepted by Lessor.
(l) "Requested Service Commencement Date" shall mean,
with respect to any Circuit, the date Service on such Circuit is
requested by Lessee to commence as specified in the Purchase
Order pursuant to which such Circuit is ordered.
(m) "Service" shall mean the digital
telecommunications transmission service provided hereunder. Such
service shall be provided from a North American DSX standard
cross-connect panel located in Lessor's terminal location as
identified on the Purchase Order.
(n) "Take or Pay Commitment" shall mean, with respect
to a certain period and amount, that Lessee has the obligation to
pay for Service hereunder in such amount for each month during
such period, whether or not such service is used.
2. Scope and Lease Rates. Lessor shall provide Service to
Lessee upon the terms and conditions set forth below.
(a) Service shall be provided with respect to each
Circuit set forth in each Purchase Order between Lessor's
locations in each city of the City Pair specified in such
Purchase Order with respect to such Circuit.
(b) Lessor shall provide maintenance for all digital
transmission equipment used in connection herewith.
(c) Lessor shall use its best efforts consistent with
its obligations to its other customers to provide Service on each
Circuit commencing on the Requested Service Commencement Date
specified with respect to such Circuit.
(d) Lessor shall provide Service on each Circuit
ordered hereunder from the Activation Date of such Circuit for
the Circuit Lease Term of such Circuit.
(e) Lessee may, subject to availability, order other
associated services listed in Exhibit B hereto offered by Lessor
under the terms and conditions of this Agreement.
(f) The rates for Service under this Agreement are as
set forth in Exhibit D hereto, unless otherwise specified in the
applicable Purchase Order accepted by Lessor. The rates set
forth in Exhibit D are valid for Purchase Orders accepted within
one year of the date hereof. After such one-year period, Lessor
may change such rates as it deems desirable for Purchase Orders
accepted thereafter; provided that no such rate change shall
effect any Circuit then in service.
(g) Lessee shall have (i) a Take or Pay Commitment of
[CT REQUESTED] per month commencing as of the first month Lessee
obtains Service hereunder.
3. Payments.
(a) Lessee agrees to pay in advance to Lessor each
month during the term of this Agreement (i) the Monthly Lease
Rate for each Circuit ordered by Lessee hereunder which has been
made Available to Lessee, and (ii) the applicable charges,
including installation charges, if any, for any associated
services listed in Exhibit B hereto delivered to Lessee.
(b) Lessor's invoices for amounts payable hereunder
shall be due upon receipt by Lessee. The first such invoice
shall be for the first two months' Service and each monthly
invoice thereafter shall be for the following month.
(c) In the event that a Circuit is made Available to
Lessee on any day other than the first day of the month, the
Monthly Lease Rate for that month shall be pro-rated according to
the number of days for which such Circuit was Available.
(d) In the event that any lease payment remains unpaid
after 30 days following the date of the first Lessor invoice for
such payment, such payment shall be subject to a late payment
charge equal to the lesser of (i) one and one-half percent of the
unpaid balance per month or (ii) the maximum rate allowed under
applicable state law. In the event that any lease payment is
unpaid 30 days following the date of the first Lessor invoice for
such payment, in addition to any other remedies available, at law
or otherwise, to Lessor, Lessor may, without any liability to
Lessee, at its option: (A) suspend the Service or (B) it
immediately terminate the Service.
4. Term. The term of the Agreement shall commence on the
date hereof and continue for a period of one year from the date
hereof, and if longer, until the end of the Circuit Lease Term of
each Circuit ordered hereunder which is last to expire. In the
event the Lessor and Lessee agree, orally or in writing, to
continue to perform hereunder after the expiration or termination
hereof, unless otherwise specifically agreed to in writing, this
Agreement shall be extended on a month-to-month basis with rates
equal to [CT REQUESTED] of the rates hereunder and shall be
terminable by either party upon 30 days' written notice thereof
to the other party.
5. Termination.
(a) Lessee may terminate Service with respect to any
Circuit upon ninety (90) days prior written notice thereof to
Lessor and payment of all termination charges set forth below.
Such termination charges shall include:
(i) In the event such termination occurs prior
to the Activation Date specified with respect to such Circuit,
all nonrecoverable costs of the implementation of, and
expenditures or liabilities reasonably incurred and directly
connected with, the provision of Service, including but not be
limited to, all professional, consulting and other costs incurred
by Lessor in furtherance of implementing such Service; and
(ii) In the event such termination occurs at or
after the Activation Date specified with respect to such Circuit,
Lessee shall pay all charges hereunder for the period during
which Service is rendered on such Circuit. If Service on a
Circuit is terminated prior to the expiration of this Agreement,
Lessor shall make its best efforts to lease Service on such
Circuit at no less than the Monthly Lease Rate for such Circuit.
In the event Lessor cannot lease Service on such Circuit on the
same or substantially similar terms and conditions as set forth
herein, Lessee shall be liable to Lessor for payment (1) for the
rental amount due through the end of the term of this Agreement
with respect to such Circuit less (2) the total amount collected
by Lessor from any other lessee with respect to such Circuit.
(b) Lessee shall give written notice to Lessor of any
material breach in performance hereunder. Lessor shall have 45
days after such notice to cure such breach. If after such 45-day
period, Lessor fails to cure such breach, including but not
limited to, compliance with the material technical and
operational specifications applicable to a Circuit, Lessee may
terminate Service on the such affected Circuit. In the event of
such termination, Lessee's liability with respect to such
Circuits shall be limited to the Monthly Lease Rate for the
affected Service which was properly rendered prior to the
effective date of such termination.
(c) In the event Lessor fails to provide the Service
within six months of the Requested Service Commencement Date for
such Circuit, then Lessee, at its option, may terminate that
Service on the affected Circuit without any liability whatsoever.
Such right to terminate shall be Lessee's sole remedy for such
failure to provide Service.
(d) Notwithstanding anything herein to the contrary,
no termination shall effect or reduce Lessee's obligation to make
the [CT REQUESTED] per month "Take or Pay Commitment" payments
required by Section 2.
6. Force Majeure. Lessor shall not be liable for any
interruptions of Service which are solely attributable to causes
outside its control, including fires, floods, national
emergencies, insurrections, riots, civil disorders, wars, or acts
of God so long as it uses its best efforts to restore Service as
promptly as possible after the interruption. No credits shall be
allowed for any outage periods caused by such conditions.
7. Allowance for Service Outage Periods.
(a) A Circuit shall be deemed to be in an outage
condition under this Agreement if, while Lessee is using or
attempting to use such Circuit, such Circuit loses continuity and
fails to comply with the applicable specifications for such
Circuit. An outage period begins when a report is received by
Lessor's Network Control Center from Lessee by telephone that
Service has been interrupted and that such Circuit is released
for repair. An outage period ends when Lessor notifies Lessee by
telephone that Service has been restored.
(b) A credit for each outage period shall be allowed
and calculated as follows:
(i) No credit shall be allowed for an outage
period of seventy-two (72) hours or less in the case of a
Catastrophic Outage (as defined below, or of one (1) hours or
less in the case of a Non-Catastrophic Outage (as defined below).
Lessee shall be credited for an outage period to the extent such
outage period exceeds seventy-two (72) hours or one(1) hour, as
the case may be, at the rate of [CT REQUESTED] of the monthly
rate or charge applicable to the Circuits which are subject to
the outage period for each half-hour or major fraction thereof
that an outage period continues beyond seventy-two (72) hours or
one (1) hour as the case may be. For purposes of the foregoing,
"Catastrophic Outage" includes outages caused by a cable cut or
radio failure, an equipment enclosure fire, an explosion, or any
other circumstance of an extraordinary and catastrophic nature
and "Non-Catastrophic Outage" includes all other outages.
(ii) No credit shall be allowed with respect to
any period during which Lessee fails to afford access to any
facilities provided by Lessor for the purpose of investigating
and correcting an interruption to Service.
(iii) The Monthly Lease Rates used to determine
any credit hereunder shall be the then current Monthly Lease
Rates being assessed.
(iv) The seventy-two (72) hour and one (1) hour
periods set forth above shall be extended by the period during
which Lessor is unable to restore Service due to an event or
circumstance described in Paragraph 6.
(v) In no event shall any credit be allowed
hereunder (1) in excess of the then current Monthly Lease Rate
for the applicable Circuit or (2) with respect to any Circuit for
which Lessee (i) fails to make or (ii) is excused from making any
payment because of operation of law or any other reason.
(c) Calculations of credits shall be based upon
Lessor's Customer Service Group Log maintained in Lessor's
Network Status Center.
(d) No credit allowance will be made for outage
periods:
(i) caused by Lessee;
(ii) caused by the failure of equipment or
systems provided by Lessee or persons other than Lessor,
including any provider of local access service to Lessor;
(iii) occurring with respect to a Circuit released
by Lessee to Lessor to perform maintenance, to make
rearrangements, or to implement an order for a change in the
Circuit; or
(iv) occurring with respect to a Circuit which
Lessee elects not to release for testing or repair and continues
to use on an impaired basis.
(e) The credit provided for hereunder shall be
Lessor's sole liability and Lessee's sole remedy in the event of
any outage periods or interruption of Service.
(f) In the event Lessor determines it is necessary to
interrupt Service on a Circuit for maintenance, Lessor shall use
its best efforts to give Lessee notice thereof by telephone.
Lessor will use its best efforts to schedule such Service
interruptions on weekends between midnight and 3:00 a.m. Credits
will not be allowed with respect to such Service interruptions.
8. Representations and Warranties of Lessor and Lessee.
(a) Lessor hereby represents and warrants to Lessee
that this Agreement has been validly authorized, executed and
delivered by Lessor and represents a valid and binding obligation
of Lessor.
(b) Lessee hereby represents and warrants to Lessor
that this Agreement has been validly authorized, executed and
delivered by Lessee and represents a valid and binding obligation
of Lessee.
(c) Except as set out in Paragraphs (1) and (b) above:
(i) ALL EXPRESS AND IMPLIED WARRANTIES,
INCLUDING BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR ANY PURPOSE OR USE ARE EXPRESSLY EXCLUDED AND
DISCLAIMED. LESSEE ACKNOWLEDGES THAT IT HAS NOT RELIED ON ANY
WRITTEN OR ORAL REPRESENTATIONS BY LESSOR CONCERNING THE SUBJECT
OF THIS AGREEMENT OTHER THAN THOSE EXPRESSED IN THIS AGREEMENT;
and
(ii) LESSOR MAKES NO WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED, TO ANY OTHER PERSON OR ENTITY
CONCERNING THE SERVICE PROVIDED HEREUNDER AND LESSEE SHALL DEFEND
AND INDEMNITY LESSOR FROM ANY CLAIMS MADE BY ANY CUSTOMER OF
LESSEE OR UNDER ANY WARRANTY OR REPRESENTATION BY LESSEE TO ANY
THIRD PARTY.
9. FCC Permits, Authorization and Filings. Lessor shall
take all necessary and appropriate steps, as soon as possible, to
procure from the Federal Communications Commission the necessary
authorizations, if any, to deliver Service hereunder to Lessee
and whatever approvals are necessary from any other federal or
state agency. In the event that Lessor cannot obtain all
necessary federal, state or local authority to provide Service
hereunder. Lessor shall promptly give written notice thereof to
Lessee, and such notice shall constitute termination without
liability of either party hereto of all obligations hereunder.
10. Governing Law. This Agreement shall be construed and
enforced in accordance with, and the validity and performance
hereof, shall be governed by the laws of the State of Texas
without regard to its principles of choice of law.
11. Convenience of Titles. Headings contained herein are
for convenience only and do not modify, enlarge or limit the
scope of the body of the section thereof in any manner.
12. Notices. All notice and other communications hereunder
shall be in writing and shall be deemed to have been duly given
as of the date of delivery, facsimile transmission or mailing,
and if mailed, first class postage prepaid, certified or
registered mail, return receipt requested to the following
persons, unless contrary instructions are given by the parties in
writing:
If to Lessee: Startec, Inc.
6000 Executive Blvd., Suite 202
Rockville, Maryland 20852
Attention: Teferi Dejene
Telephone No.: (301) 816-3101
Facsimile No.: (301) 816-2041
If to Lessor: Communications Transmission Group, Inc.
5000 Plaza on the Lake, Suite 200
Austin, Texas 78746
Attention: Chief Operating Officer
With a copy to: Sales Administrator
Telephone No.: (512) 328-1112
Facsimile No.: (512) 328-7632
13. Waiver of Breach or Violation not Deemed Continuing.
The waiver by either party hereto of a breach or violation of any
provision of this Agreement shall not operate as or be construed
to be a waiver of any subsequent breach hereof.
14. Bankruptcy. In the event of the bankruptcy or
insolvency of either party hereto or if either party hereto shall
make an assignment for the benefit of credits or take advantage
of any act or law for relief of debtors, the other party to this
Agreement shall have the right to terminate this Agreement
without further obligation or liability on its part.
15. Limits of Liability. Lessor's sole duty under this
Agreement shall be the provision of Service to Lessee under the
terms and conditions set forth herein. Lessee's sole remedy for
Lessor's failure to perform its obligations hereunder shall be
Lessee's right to credit with respect to outage periods. In no
event shall Lessor be liable for any special, incidental,
indirect, punitive, reliance or consequential damages, whether
foreseeable or not, including but not limited to, damage or loss
of property or equipment, loss of profits or revenue, cost of
capital, cost of replacement services, or claims of customers for
service interruptions or transmission problems, occasioned by any
defect in the service provided hereunder, delay in availability
of the service provided hereunder, failure of the service
provided hereunder or any other cause whatsoever; and in no event
shall Lessor be liable at any time for any amount in excess of
the aggregate amount it has prior to such time collected from
Lessee with respect to Service delivered hereunder.
16. Business Relationship. This Agreement shall not create
any agency, employment, joint venture, partnership,
representation, or fiduciary relationship between the parties.
Neither party shall have the authority to, nor shall any party
attempt to, create any obligation on behalf of the other party.
17. Indemnity.
(a) Each party shall indemnify, defend, release and
hold harmless the other party and all of its officers, agents,
directors, shareholders, subcontractors, subsidiaries, employees
and other affiliates (collectively "Affiliates"), from and
against any action, claim, court cost, damage, demand, expense,
liability, loss, penalty, proceeding or suit, (collectively,
together with related attorneys' fees; including costs and
disbursements, "Claims") imposed upon either party by reason of
damages to property or injuries, including death, as a result of
a negligent act or omission on the part of the indemnifying party
or any of its Affiliates in connection with: (i) the performance
of this Agreement; or (ii) other activities relating to the
property or facilities which are the subject of this Agreement.
In the event a Claim relates to the negligence of both parties,
the relative burden of the Claim shall be attributed equitably
between the parties in accordance with the principles of
comparative negligence.
(b) In the event any action shall be brought against
the indemnified party, such party shall immediately notify the
indemnifying party in writing, and the indemnifying party, upon
the request of the indemnified party, shall assume the defense
thereof on behalf of the indemnified party and its Affiliates and
shall pay all expenses and satisfy all judgments which may be
incurred by or rendered against the indemnified party or its
Affiliates in connection therewith, provided that the indemnified
party shall not be liable for any settlement of any such action
effected without its written consent.
(c) Notwithstanding the termination of this Agreement
for any reason, this Paragraph 17 shall survive such termination.
18. Insurance.
(a) Throughout the term of this Agreement and any
extension thereof, each party shall maintain, and, upon written
request, shall provide to the other proof of adequate liability
insurance:
(i) Worker's compensation insurance up to the
amount of the statutory limit in the state or states where work
is to be performed;
(ii) Employer's liability insurance with a
limit of not less than $200,000 per claim with an all-states
endorsement;
(iii) Comprehensive general liability insurance
with a limit of not less than $1,000,000 per occurrence for
bodily injury liability and property damage liability, including
coverage extensions for blanket contractual liability, personal
injury liability and products and completed operations liability.
19. Assignment. Neither party hereto may assign this
Agreement without the express written consent of the other party
hereto. Such consent shall not be unreasonably withheld.
20. Assignment by Lessor. Notwithstanding the foregoing,
however, (1) a security interest in this Agreement may be granted
by Lessor to any lender to secure borrowings by Lessor or any of
its affiliates ("Affiliates") and (2) Lessor may assign all its
rights and obligations hereunder with respect to any Circuit to
any Affiliate. Upon such assignment, this Agreement shall be
deemed to be multiple agreements, each upon the terms and
conditions set forth herein by and between Lessee and Lessor, and
between Lessee and such Affiliate, with respect to such Circuit.
21. Confidential Relationship. Unless required by law, the
parties hereto shall not disclose, duplicate, or copy, or use for
any purpose other than the performance of this Agreement, and
shall treat as confidential and as proprietary all information,
specifications, drawings, blueprints, nomenclature, samples, and
models supplied or disclosed to each other in connection with
this Agreement, all of which shall be returned to the respective
owners thereof upon completion of this Agreement.
Notwithstanding the foregoing however, Lessor may make such
information available to its lenders. Neither party shall in any
manner advertise or publish or release for publication any
statement mentioning the other party or the fact that the other
party has furnished or contracted to furnish goods and services
hereunder or quote the opinion of any employees of such other
party, unless written consent of such other party shall first be
obtained or unless required by law.
22. Taxes. The amounts payable by Lessee under this
Agreement do not include any State or local sales or use taxes,
or utility taxes, however designated which may be levied on the
goods and services provided by Lessor hereunder. With respect to
such taxes, if applicable, Lessee shall furnish Lessor with an
appropriate exemption certificate or pay to Lessor, upon timely
presentation of invoices therefore, such amounts thereof as
Lessor may be by law required to collect or pay. Any and all
other taxes, including but not limited to franchise, net or gross
income, license, occupation, and real or personal property taxes,
shall be timely paid by Lessor.
23. Binding Arbitration. Upon notice to the other party,
any party may refer any dispute or claim arising out of or
relating to this Agreement to arbitration in Austin, Texas in
accordance with the commercial arbitration rules of the American
Arbitration Association then prevailing and, in such event
neither party may commence any action based on such dispute or
claim, and, if any action has been commenced, it shall be stayed,
pending the outcome of such arbitration proceeding. Each party
shall select one independent arbitrator within ten days of such
notice and the two arbitrators shall then select a third
arbitrator within an additional ten days to form a three-person
panel of arbitrators. The panel of arbitrators shall have the
power to order specific performance if requested. Any award,
order, or judgment pursuant to such arbitration shall be deemed
final and binding and may be enforced by any court of competent
jurisdiction. All such arbitration proceedings shall be
conducted on a confidential basis. The panel of arbitrators may,
as part of the arbitration award, permit the substantially
prevailing party to recover all or part of its attorney's fees
and other out-of-pocket costs incurred in connection with such
arbitration. Lessee may, at its option, continue to accept what
it considers to be below-standard Service and pay the charges
hereunder relating thereto during such pendency of such
arbitration, without prejudice thereto.
24. Legal Construction. In case any one or more of the
provisions contained in this Agreement shall, for any reason be
held to be invalid, illegal, or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect
any other provision hereof, and this Agreement shall be construed
as if such invalid, illegal or unenforceable provision had never
been contained herein.
25. Entire Agreement; Amendments. This Agreement
constitutes the entire agreement among the parties pertaining to
the subject matter hereof and supersedes all prior and
contemporaneous agreements and understandings of such parties in
connection herewith. This Agreement may only be modified or
supplemented by an instrument in writing executed by each party.
26. No Personal Liability. Each action or claim against
any party arising under or relating to this Agreement shall be
made only against such party is a corporation, and any liability
relating thereto shall be enforceable only against the corporate
assets of such party. No party shall seek to pierce the
corporate veil or otherwise seek to impose any liability relating
to, or arising from, this Agreement against any shareholder,
employee, officer or director of the other party. Each of such
persons is an intended beneficiary of the mutual promises set
forth in this section and shall be entitled to enforce the
obligations of this section.
In confirmation of their consent hereto and intention to be
legally bound hereby, the parties have executed this agreement
below:
Startec, Inc. Communication Transmission
Group, Inc.
By: /s/ By: /s/
(Signature) (Signature)
Subhash Pai K.F.Hinther
(Name - please print) (Name - please print
Controller Executive Vice President
Chief Finance Officer
(Title - please print) (Title - please print)
<PAGE>
LIST OF EXHIBITS
Exhibit A Form of Purchase Order
Exhibit B Maintenance and other Additional Services
Exhibit C List of On-net Cities
Exhibit D List of Rates for On-net Service
<PAGE>
PORTIONS OF THIS EXHIBIT ("CONFIDENTIAL PORTIONS") HAVE BEEN
DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION ("COMMISSION")UNDER
RULE 406 OF THE SECURITIES ACT OF 1933 AND THE FREEDOM OF
INFORMATION ACT. THE CONFIDENTIAL PORTIONS HAVE BEEN FILED
SEPARATELY WITH THE COMMISSION AND ARE IDENTIFIED IN THIS EXHIBIT
BY THE NOTATION "CT REQUESTED."
LEASE AGREEMENT
This LEASE AGREEMENT, is effective on January 10, 1990
between GPT FINANCE CORPORATION, a Delaware Corporation
("Lessor") and STARTEC, INC. , a Maryland Corporation ("Lessee").
1. Lease.
Lessor, subject to the conditions set forth in Section 25
hereof, agrees to lease to Lessee and Lessee agrees to lease from
Lessor hereunder, those items of personal property (the
"Equipment") which are described on Schedule 1 of Exhibit A
hereto. Lessee agrees to execute and deliver to Lessor a
certificate of delivery ad acceptance in substantively the form
of Exhibit A hereto (a "Delivery Certificate") immediately after
Turnover of the Equipment, and such execution shall constitute
Lessee's irrevocable acceptance of such items of Equipment for
all purposes of this Lease. The Delivery Certificate shall
constitute a part of this Lease to the same extent as if the
provisions thereof were set forth herein.
2. Definitions.
"Amortization Deductions" as defined in Section 11(b)(i)
hereof.
"Appraisal Procedure" shall mean the following procedure for
determining the Fair Market Sale Value of any item of Equipment.
If either Lessor or Lessee shall request by notice (the
"Appraisal Request") to the other that such value be determined
by the Appraisal Procedure, (i) Lessor and Lessee shall, within
15 days after the Appraisal Request, appoint an independent
appraiser mutually satisfactory to them, or (ii) if the parties
are unable to agree on a mutually acceptable appraiser within
such time, Lessor and Lessee shall each appoint one independent
appraiser (provided that if either party hereto fails to notify
the other party hereto of the identity of the independent
appraiser chosen by it within 30 days after the Appraisal
Request, the determination of such value shall be made by the
independent appraiser chosen by such other party), and (iii) if
such appraisers cannot agree on such value within 20 days after
their appointment and if one appraisal is not within 5% of the
other appraisal, Lessor and Lessee shall choose a third
independent appraiser mutually satisfactory to them (or, if they
fail to agree upon a third appraiser within 25 days after the
appointment of the first two appraisers, such third independent
appraiser shall within 20 days thereafter be appointed by the
American Arbitration Association), and such value shall be
determined by such third independent appraiser within 20 days
after his appointment, after consultation with the other two
independent appraiser. If the first two appraisals are within 5%
of each other, then the average of the two appraisals shall be
the Fair Market Sale Value. The fees and expenses of all
appraisers shall be paid by Lessee.
"Business Day" shall mean a day other than a Saturday,
Sunday or legal holiday under the laws of the State of Florida.
"Code" shall mean the Internal Revenue Code of 1954, as
amended, or any comparable successor law.
"Commencement Date" as defined in Section 3 hereof.
"Default" shall mean any event or condition which after the
giving of notice or lapse of time or both would become an Event
of Default.
"Delivery Certificate" as defined in Section 1 hereof.
"Equipment" as defined in Section 1 hereof.
"Event of Default" as defined in Section 18 hereof.
"Event of Loss" shall mean, with respect to any item of
Equipment, the actual or constructive total loss of such item of
Equipment or the use thereof, due to theft, destruction, damage
beyond repair or rendition thereof permanently unfit for normal
use from any reason whatsoever, or the condemnation, confiscation
or seizure of, or requisition of title to or use of, such item of
Equipment.
"Fair Market Sale Value" shall, at any time with respect to
any item of Equipment, be equal to the sale value of such item of
Equipment which would be obtained in an arm's-length transaction
between an informed and willing seller under no compulsion to
sell and an informed and willing buyer-user (other than a lessee
currently in possession or a used equipment or scrap dealer).
For purposes of Section 7(b) hereof, Fair Market Sale Value shall
be determined by (i) an independent appraiser (at Lessee's
expense) selected by Lessor or (ii) by the Appraiser Procedure if
the Appraisal Request is made at least 90 days (but not more than
360 days) prior to the termination or expiration of the Lease
Term, as the case may be, which determination shall be made (a)
without deduction for any costs or expenses of dismantling or
removal; and (b) on the assumption that such item of Equipment is
free and clear of all Liens and is in the condition and repair in
which it is required to be returned pursuant to Section 7(a)
hereof. For purposes of Section 19(c) hereof, Fair Market Sale
Value shall be determined (at Lessee's expense) by an independent
appraiser selected by Lessor, on an "as-is, where-is" basis,
without regard to the provisions of clauses (a) and (b) above;
provided that if Lessor shall have sold any item of Equipment
pursuant to Section 19(b) hereof prior to giving the notice
referred to in Section 19(c) hereof, Fair Market Sale Value of
such item of Equipment shall be the net proceeds of such sale
after deduction of all costs and expenses incurred by Lessor in
connection therewith; provided further, that if for any reason
Lessor is not able to obtain possession of any item of Equipment
pursuant to Section 19(a) hereof, the Fair Market Sale Value of
such item of Equipment shall be zero.
"Imposition" as defined in Section 11(a) hereof.
"Indemnitee" as defined in Section 17 hereof.
"Late Charge Rate" shall mean an interest rate per annum
equal to the higher of two percent (2%) over the Reference Rate
or eighteen percent (18%), but not to exceed the highest rate
permitted by applicable law.
"Lease" and the terms "hereof", "herein", "hereto" and
"hereunder", when used in this Lease Agreement, shall mean and
include this Lease Agreement, Exhibits and the Delivery
Certificate hereto as the same may from time to time be amended,
modified or supplemented.
"Lease Term" shall mean, with respect to any item of
Equipment, the term of the lease of such item of Equipment
hereunder specified in Section 3 hereof.
"Lessee" as defined in the introductory paragraph to this
Lease.
"Lessor" as defined in the introductory paragraph of this
Lease.
"Lessor's Cost" shall mean, with respect to any item of
Equipment, the total amount set forth in Schedule 1 of Exhibit A
hereto.
"Lessor's Liens" shall mean (i) any mortgage, pledge, lien,
security interest, charge, encumbrance, financing statement,
title retention or any other right or claim of any person
claiming through or under Lessor, not based upon or relating to
ownership of the Equipment or the lease thereof hereunder and
(ii) any mortgage, pledge, lien, security interest, charge,
encumbrance, financing statement, title retention or any other
right or claim of Owner (other than Lessor) claiming through or
under Lessor in connection with the transactions described in
Section 21(b) hereof.
"Liens" shall mean any mortgage, pledge, lien, security
interest, charge, encumbrance, financing statement, title
retention or any other right or claim of any person, other than
any Lessor's Lien.
"Loss Payment Date" shall mean with respect to any item of
Equipment the date on which payment, as described in Section
16(b) hereof, is made to the Lessor by the Lessee as the result
of an Event of Loss with respect to such item. The Loss Payment
Date shall be within ninety (90) days of the said Event of Loss.
"Owner" shall mean the entity or person having ownership
interest to the Equipment as contemplated by the provisions of
Section 21(b) hereof and may be a person other than Lessor.
"Owner's Economics" shall mean the after-tax yield and
periodic after-tax cash flow anticipated by Owner as of the date
of this Lease, in connection with the transactions contemplated
by this Lease as determined by Owner unless Lessor shall have
transferred its interest in the Equipment to another person as
contemplated by the provisions of Section 21(b) hereof in which
case "Owner's Economics" shall mean the after-tax yield and
periodic after-tax cash flow anticipated by such person as of the
date of the lease between such person and Lessor contemplated by
said provisions, in connection with the transactions contemplated
by such lease as determined by such person.
"Recovery Deductions" as defined in Section 11(b)(i) hereof.
"Reference Rate" shall mean the rate of interest publicly
announced by Manufacturers Hanover Trust Company ("MHT") in New
York, New York from time to time as its reference rate.
The reference rate is not intended to be the lowest rate of
interest charged by MHT in connection with extensions of credit
to debtors. The Reference Rate shall be determined at the close
of business on the 15th day of each calendar month (if the 15th
day is not a Business Day, then on the first preceding Business
Day) and shall become effective as of the first day of the
calendar month succeeding such determination and shall continue
in effect to, and including, the last day of said calendar month.
"Rent Payment Date" shall mean each date on which an
installment of rent is due and payable pursuant to Section 5(a)
hereof.
"Stipulated Loss Value" shall mean, with respect to any item
of Equipment, the amount determined by multiplying the Lessors
Cost of such item of Equipment by the percentage set forth in
Schedule A hereto opposite the applicable Rent Payment Date;
provided, that for purposes of Section 16(b) and 19(c) hereof,
any determination of Stipulated Loss Value as of a date occurring
after the final Rent Payment Date with respect to such item of
Equipment, shall be made as of such final Rent Payment Date.
"Tax Benefits" shall mean the right to claim such
deductions, credits, and other benefits as are provided by the
Code to an owner of property, including the Recovery Deductions
and Amortization Deductions.
(b) All accounting terms not specifically defined herein shall
be construed in accordance with generally accepted accounting
principles. "Turnover" shall mean that point in time when the
equipment installation personnel complete testing of the
equipment, or when the equipment is placed into service,
whichever first occurs.
3. Lease Term.
The term of the lease of Equipment hereunder shall commence
on the Commencement Date specified in the Delivery Certificate
("Commencement Date") and, unless earlier terminated pursuant to
the provision hereof, shall continue for a term of sixty (60)
months from such Commencement Date. The Commencement Date
specified in the Delivery Certificate shall be the date on which
Turnover occurs at a site provided by Lessee in accordance with
the provisions of Section 4 hereof.
4. Installation.
Lessor shall arrange for installation of the Equipment, the
cost of which installation shall be deemed to be part of Lessor's
Cost. Exhibit A hereto shall indicate whether such cost is
included or excluded from the monthly rent payments due in
accordance with Section 5(a) hereof. If excluded from such
monthly rent payments, Lessor shall separately invoice Lessee for
such installation upon completion thereof and Lessee shall pay
such invoice within thirty (30) days from the date thereof.
Lessee shall be obligated to timely provide a suitable site for
the installation of the Equipment in accordance with the
Equipment manufacturer's practices attached hereto as Exhibit C.
Lessee shall be responsible for compliance with environmental
requirements and central office grounding procedures specified in
Exhibit C hereto and for providing adequate space, lighting,
heating, air-conditioning and A/C power at the installation site.
Unavailability of Lessee furnished facilities shall be cause for
adjustments to the installation price set forth in Schedule 1 of
Exhibit A hereto.
5. Rent; Unconditional Obligations.
(a) Lessee agrees to pay to Lessor, at the address
specified in Section 24 hereof or at such other address as Lessor
may specify, rent for the Equipment at a rate not to exceed [CT
REQUESTED] of the total Lessors Cost of such items of Equipment,
as set forth in Schedule 1 of Exhibit A dated January 10 ,
19 90 or as from time to time amended, (plus applicable sales or
use taxes) per month, in sixty (60) consecutive monthly
installments, with the first installment of rent being due on the
Commencement Date unless the Commencement Date is other than the
first day of a calendar month, in which event the first
installment of rent shall be due on the first day of the month
following the Commencement Date, and succeeding installments
being due on the same date of each month thereafter.
(b) Lessee shall also pay to Lessor, on demand, interests
at the Late Charge Rate on any installment of rent and on any
other amount owing hereunder which is not paid within 10 days of
its due date, for any period for which the same shall be overdue.
Each payment made under this Lease shall be applied first to the
payment of interest then owing and then to rent or other amounts
owing hereunder. Interest shall be computed on the basis of a
360-day year and actual days elapsed.
(c) This Lease is a net lease, and Lessee's obligation to
pay all rent and all other amounts payable hereunder is ABSOLUTE
and UNCONDITIONAL under any and all circumstances and shall not
be affected by any circumstances of any character whatsoever,
including, without limitation, (i) any set-off, counterclaim,
recoupment, defense, abatement or reduction or any right which
Lessee may have against Lessor, the manufacturer or supplier of
any of the Equipment or anyone else for any reason whatsoever;
(ii) any defect in the title, condition, design, or operation of,
or lack of fitness for use of, or any damage to, or loss of, all
or any part of the Equipment from any cause whatsoever;(iii) the
existence of any Liens with respect to the Equipment; (iv) the
invalidity, unenforceability or disaffirmance of this Lease or
any other document related hereto; or (v) the prohibition of or
interference with the use or possession by Lessee of all or any
part of the Equipment, for any reason whatsoever, including
without limitation, by reason of (1) claims for patent, trademark
or copyright ingringement; (2) present or future governmental
laws, rules or orders; (3) the insolvency, bankruptcy or
reorganization of any person; and (4) any other cause whether
similar or dissimilar to the foregoing, any present or future law
to the contrary notwithstanding. Lessee hereby waives, to the
extent permitted by applicable law, any and all rights which it
may now have or which may at any time hereafter be conferred upon
it, by statute or otherwise, to terminate, cancel, quit or
surrender the lease of any Equipment. If for any reason
whatsoever this Lease or any Supplement, other than pursuant to
Section 16(b) hereof, shall be terminated in whole or in part by
operation of law or otherwise, Lessee will nonetheless pay to
Lessor an amount equal to each installment of rent at the time
such installment would have become due and payable in accordance
with the terms hereof. Each payment of rent or other amount paid
by Lessee hereunder shall be final and Lessee will not seek to
recover all or any part of such payment from Lessor for any
reason whatsoever.
6. Disclaimer; Assignment of Warranties.
(a) LESSOR NEITHER MAKES NOR SHALL BE DEEMED TO HAVE MADE
AND LESSEE HEREBY EXPRESSLY WAIVES ANY WARRANTY OR
REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE EQUIPMENT,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR
FITNESS OF THE EQUIPMENT FOR ANY PARTICULAR PURPOSE OR AS TO THE
TITLE TO OR LESSOR'S OR LESSEE'S INTEREST IN THE EQUIPMENT OR AS
TO ANY OTHER MATTER RELATING TO THE EQUIPMENT OR ANY PART
THEREOF.
LESSEE CONFIRMS THAT IT HAS SELECTED THE EQUIPMENT AND
EACH PART THEREOF ON THE BASIS OF ITS OWN JUDGMENT AND EXPRESSLY
DISCLAIMS RELIANCE UPON ANY STATEMENTS, REPRESENTATIONS OR
WARRANTIES MADE BY LESSOR, AND LESSEE ACKNOWLEDGES THAT LESSOR IS
NOT A MANUFACTURER OR VENDOR OF ANY PART OF THE EQUIPMENT.
LESSOR NEITHER MAKES NOR SHALL BE DEEMED TO HAVE MADE
ANY REPRESENTATION OR WARRANTY AS TO THE ACCOUNTING TREATMENT TO
BE ACCORDED TO THE TRANSACTIONS CONTEMPLATED BY THIS LEASE OR AS
TO ANY TAX CONSEQUENCES AND/OR TAX TREATMENT THEREOF.
(b) Lessor hereby assigns to Lessee such rights as Lessor
may have (to extent Lessor may validly assign such rights) under
all manufacturers' and suppliers' warranties with respect to the
Equipment; provided, however, that the foregoing rights shall
automatically revert to Lessor upon the occurrence and during the
continuance of any Event of Default hereunder, or upon the return
of the Equipment to Lessor. Lessee agrees to settle all claims
with respect to the Equipment directly with the manufacturers or
suppliers thereof, and to give Lessor prompt notice of any such
settlement and the details of such settlement. However, in the
event any warranties are not assignable, the Lessor agrees to act
on behalf of the Lessee in settling claims arising under the
warranty with the manufacturer or supplier.
7. Disposition of Equipment.
(a) Return.
Lessee shall, upon the expiration of the Lease Term of
each item of Equipment, subject to paragraph (b) below, return
such item of Equipment to Lessor at such place within the
continental United States of America as Lessor shall designate in
writing to Lessee. Until such item of Equipment is returned to
Lessor pursuant to the provisions of this Section, all of the
provisions of this Lease with respect thereto shall continue in
full force and effect. Lessee shall pay all the costs and
expenses in connection with or incidental to the return of the
Equipment, including, without limitation, the cost of removing,
assembling, packing, insuring and transporting the Equipment. At
the time of such return, the Equipment shall be in the condition
and repair required to be maintained by Section 12 hereof and
free and clear of all Liens.
(b) Purchase Option.
So long as no Default or Event of Default shall have
occurred and be continuing, Lessee may, by written notice given
to Lessor at least 120 days (but not more than 360 days) prior to
the expiration date of the Lease Term of any item of Equipment
(which notice shall be irrevocable), elect to purchase such item
of Equipment on such expiration date for a cash purchase price
equal to the Fair Market Sale Value of such item of Equipment
determined as of such expiration date, plus an amount equal to
all taxes (other than income taxes on any gain on such sale),
costs and expenses (including legal fees and expenses) incurred
or paid by Lessor in connection with such sale. Upon payment by
Lessee of such purchase price, and of all other amounts then due
and payable by Lessee hereunder, Lessor shall transfer title to
such items of Equipment to Lessee on an "as-is, where-is" basis,
without recourse and without representation or warranty of any
kind, express or implied, other than a representation and
warranty that such item of Equipment is free and clear of any
Lessor's Liens.
8. Representation and Warranties.
In order to induce Lessor to enter into this Lease and to
lease the Equipment to Lessee hereunder, Lessee represents and
warrants that:
(a) Organization.
Lessee is duly organized, validly existing and in good
standing under the laws of the State of Maryland and is
duly qualified to do business and is in good standing in the
State in which the Equipment will be located.
(b) Power and Authority.
Lessee has full power, authority and legal right to
execute, deliver and perform this Lease, and the execution,
delivery and performance hereof has been duly authorized by
Lessee's governing body or officer(s).
(c) Enforceability.
This Lease has been duly executed and delivered by
Lessee and constitutes a legal, valid and binding obligation of
Lessee enforceable in accordance with its terms.
(d) Consents and Permits.
The execution, delivery and performance of this Lease
does not require any approval or consent of any trustee,
shareholder, partner, sole proprietor or holders of any
indebtedness or obligations of Lessee, and will not contravene
any law, regulation, judgment or decree applicable to Lessee, or
the certificate of partnership or incorporation or by-laws of
Lessee, or contravene the provisions of, or constitute a default
under, or result in the creation of any Lien upon any property of
Lessee under any mortgage, instrument or other agreement to which
Lessee is a party or by which Lessee or its assets may be bound
or affected; and no authorization, approval, license, filing or
registration with any court or governmental agency or
instrumentality is necessary in connection with the execution,
delivery, performance, validity and enforceability of this Lease.
(e) Financial Condition of the Lessee.
The financial statements of Lessee heretofore furnished to
Lessor are complete and correct and fairly present the financial
condition of Lessee and the results of its operations for the
respective periods covered thereby, there are no known contingent
liabilities or liabilities for taxes of Lessee which are not
reflected in said financial statements and since the date
thereof, there has been no material adverse change in such
financial condition or operations.
(f) No Litigation.
There is no action, suit, investigation or proceeding by or
before any court, arbitrator, administrative agency or other
governmental authority pending or threatened against or affecting
Lessee (A) which involves the transactions contemplated by this
Lease or the Equipment; or (B) which, if adversely determined,
could have a material adverse effect on the financial condition,
business or operations of Lessee.
(g) United States Source Income.
No items of Equipment shall be used in a way that
results in the creation of an item of income to Lessor, the
source of which for Federal Income Tax purposes is without the
United States.
9. Liens.
Lessee will not directly or indirectly create, incur,
assume, suffer, or permit to exist any Lien on or with respect to
the Equipment.
10. Insurance.
Lessee shall maintain at all times on the Equipment, at its
expense, property damage, direct damage and liability insurance
in such amounts, against such risks, in such form and with such
insurers as shall be satisfactory to Lessor and any other Owner;
provided, that the amount of direct damage insurance shall not on
any date be less than the greater of the full replacement value
or the Stipulated Loss Value of the Equipment as of such date.
Each insurance policy will, among other things, name Lessor and
any other Owner as an additional insured or as loss payee (as the
case may be) as their interests may appear, require that the
insurer give Lessor and any such Owner at least thirty (30) days
prior written notice of any alteration in or cancellation of the
terms of such policy, and require that the interest of Lessor and
any such Owner be continued insured regardless of any breach of
or violation by Lessee of any warranties, declarations or
conditions contained in such insurance policy. At Lessor's or
such Owner's option, Lessee shall furnish to Lessor and such
Owner a certificate or other evidence satisfactory to Lessor that
such insurance coverage is in effect provided, however, that
Lessor and such Owner shall be under no duty to ascertain the
existence or adequacy of such insurance.
11. Taxes.
(a) General Tax Provisions.
Lessee shall pay, and shall indemnify and hold Lessor
harmless from and against, all fees, taxes (whether sales, use,
excise, personal property or other taxes), imposts, duties,
withholdings, assessments and other governmental charges of
whatever kind or character, however designated (together with any
penalties, fines or interest thereon), all of the foregoing being
herein collectively called "Impositions", which are at any time
levied or imposed against Lessor, Lessee, this Lease, the
Equipment or any part thereof by any Federal, State, or Local
Government or taxing authority in the United States or by any
foreign government or any subdivision or taxing authority thereof
upon, with respect to, as a result of or measured by (i) the
Equipment (or any part thereof), or this Lease or the interests
of the Lessor therein; or (ii) the purchase, ownership, delivery,
leasing, possession, maintenance, use, operation, return, sale or
other disposition of the Equipment or any part thereof; or (iii)
the rentals, receipts or earnings payable under this Lease or
otherwise arising from the Equipment or any part thereof;
excluding, however, taxes based on or measured by the net income
of Lessor that are imposed by (1) the United States of America,
or (2) the State of Florida, or any political subdivision of the
State of Florida, or (3) any other State of the United States of
America or any political subdivision of any such State in which
Lessor is subject to Impositions as the result (whether solely or
in part) of business or transactions unrelated to this Lease. In
case any report or return is required to be filed with respect to
any obligation of Lessee under this Section or arising out of
this Section, Lessee will notify Lessor of such requirement and
make such report or return in such manner as shall be
satisfactory to Lessor; provided, that the payment of any use
taxes shall be made in such manner as specified by Lessor in
writing to Lessee; or (iv) the provisions of this Section shall
survive the expiration or earlier termination of this Lease.
(b) Special Tax Provisions.
(i) The owner of the items of Equipment, shall be
entitled to take into account in computing its Federal income tax
liability, Current Tax Rate and such deductions, credits, and
other benefits as are provided by the Code to an owner of
property, including, without limitation:
(A) Recovery deductions ("Recovery
Deductions") under Section 168(a) of the Code for
each item of Equipment in an amount determined,
commencing with the 19 90 taxable year, by
multiplying the Owner's Cost of such item of
Equipment by the percentages applicable under
Section 168(b) of the Code with respect to
"(5)-year property" within the meaning of Section
168(c)(2) of the Code;
(B) Amortization of expenses ("Amortization
Deductions") paid or to be paid by Owner in
connection with this Lease at a rate no less rapid
than straight line over the Lease Term.
(ii) For the purposes of this Subsection 11(b) only,
the term "Owner" shall include the "common parent" and all other
corporations included in the affiliated group, within the meaning
of Section 1504 of the Code (or any other successor section
thereto), of which Owner is or becomes a member.
12. Compliance with Laws; Operation and Maintenance.
(a) Lessee will use the Equipment in a careful and proper
manner, will comply with and conform to all governmental laws,
rules and regulations relating thereto, and will cause the
Equipment to be operated in accordance with the manufacturer's or
supplier's instructions or manuals.
(b) Lessee will, at his own expense, keep and maintain the
Equipment in good repair, condition and working order and furnish
all parts, replacements, mechanisms, devices and servicing
required therefor so that the value, condition and operating
efficiency therefor will at all times be maintained and preserved
reasonable wear and tear excepted. All such repairs, parts,
mechanisms, devices and replacements shall immediately, without
further act, become the property of Lessor and part of the
Equipment.
(c) Lessee will not make or authorize any improvement,
change, addition or alteration to the Equipment (i) if such
improvement, change, addition or alteration will impair the
originally intended function or use of the Equipment or impair
the value of the Equipment as it existed immediately prior to
such improvement, change, addition, or alteration; or (ii) if any
parts installed in or attached to or otherwise becoming a part of
the Equipment as a result of any such improvement, change,
addition or alteration shall not be readily removable without
damage to the Equipment. Any part which is added to the
Equipment without violating the provisions of the immediately
preceding sentence and which is not a replacement or substitution
for any property which was a part of the Equipment, shall remain
the property of Lessee and may be removed by Lessee at any time
prior to the expiration or earlier termination of the Lease Term.
All such parts shall be and remain free and clear of any Liens.
Any such part which is not so removed prior to the expiration or
earlier termination of the Lease Term shall, without further act,
become property of Lessor.
13. Inspection.
Upon prior notice, Lessor or its authorized representative
may at any reasonable time or times inspect the Equipment when it
deems it necessary to protect its interest therein.
14. Identification.
Lessee shall, at its expense, attach to each item of
Equipment a notice satisfactory to Lessor disclosing Owner's
ownership of such item of Equipment.
15. Personal Property.
Lessee represents that the Equipment shall be and at all
times remain separately identifiable personal property. Lessee
shall, at its expense, take such action (including the obtaining
and recording of waivers) as may be necessary to prevent any
third party from acquiring any right to or interest in the
Equipment by virtue of the Equipment being deemed to be real
property or a part of real property or a part of other personal
property, and if at any time any person shall claim any such
right or interest, Lessee shall, at its expense, cause such claim
to be waived in writing or otherwise eliminated to Lessor's
satisfaction within 30 days after such claim shall have first
become known to Lessee.
16. Loss or Damage.
(a) All risk of loss, theft, damage or destruction to the
Equipment or any part thereof, however incurred or occasioned,
shall be borne by Lessee and, unless such occurrence constitutes
an Event of Loss pursuant to paragraph (b) of this Section,
Lessee shall promptly give Lessor written notice hereof and shall
promptly cause the affected part or parts of the Equipment to be
replaced or restored to the condition and repair required to be
maintained by Section 12 hereof.
(b) If an Event of Loss with respect to any item of
Equipment shall occur, Lessee shall promptly give Lessor written
notice thereof, and Lessee shall promptly pay to Lessor as soon
as it receives insurance proceeds with respect to said Event of
Loss but in any event no later than 90 days after the occurrence
of said Event of Loss an amount equal to the sum of (i) the
Stipulated Loss Value of such item of Equipment computed as of
the Rent Payment Date with respect to such item of Equipment on
or immediately preceding the date of the occurrence of such Event
of Loss; and (ii) all rent and other amounts due and owing
hereunder for such item of Equipment on or prior to the Loss
Payment Date. Upon payment of such amount to Lessor, the lease
of such item of Equipment hereunder shall terminate, and Lessor
will transfer within forty days to Lessee, Lessor's right, title
and interest in and to such item of Equipment, on an "as-is,
where-is" basis, without recourse and without representation or
warranty, express or implied, other than a representation and
warranty that such item of Equipment is free and clear of any
Lessor's Liens.
(c) Any payments received at any time by Lessor or Lessee
from any insurer with respect to loss or damage to the Equipment
shall be applied as follows: (i) if such payments are received
with respect to an Event of Loss they shall be paid to Lessor,
but to the extent received by Lessor, they shall reduce or
discharge, as the case may be, Lessee's obligation to pay the
amounts due to Lessor under Section 16(b) hereof with respect to
such Event of Loss; or (ii) if such payments are received with
respect to any loss of or damage to the Equipment other than an
Event of Loss, such payments shall, unless a Default or Event of
Default shall have occurred and be continuing, be paid over to
Lessee to reimburse Lessee for its payment of the costs and
expenses occurred by Lessee in replacing or restoring pursuant to
Section 16(a) hereof the part or parts of the Equipment which
suffered such loss or damage.
17. General Indemnity.
Lessee assumes liability for, and shall indemnify, protect
save and keep harmless Lessor and its agents, servants,
successors and assigns (an "Indemnitee") from and against any and
all liabilities, obligations, losses, damages, penalties, claims,
actions, suits, costs and expenses, including reasonable legal
expenses, of whatsoever kind and nature, imposed on, incurred by
or asserted against an Indemnitee, in any way relating to or
arising out of this Lease or the enforcement hereof, or the
manufacture, purchase, acceptance, rejection, ownership,
possession, use selection, delivery, lease, operation, condition,
sale, return or other disposition of the Equipment or any part
thereof (including, without limitation, latent or other defects,
whether or not discoverable by Lessee or any other person, any
claim in tort for strict liability and any claim patent,
trademark or copyright infringement); provided, however, that
Lessee shall not be required to indemnify any Indemnitee for loss
or liability arising from acts or events which occur after the
Equipment has been returned to Lessor in accordance with the
Lease, or for loss or liability resulting solely from the willful
misconduct or gross negligence of such Indemnitee. The
provisions of this Section shall survive the expiration or
earlier termination of this Lease.
18. Events of Default.
The following events shall each constitute an event of
default (herein called "Event of Default") under this Lease:
(i) Lessee shall fail to execute and deliver to Lessor (or
Lessor's agent) the "Delivery Certificate" within twenty-four
(24) hours of Turnover of the Equipment to Lessee.
(ii) Lessee shall fail to commence lease payments on the
first day of the month following the Commencement Date, or such
other initiation of lease payments as specified in Section 5 of
this Lease.
(iii) Lessee shall fail to make any payment of rent or other
amount owing hereunder within 10 days after notice has been given
that payment is past due; or
(iv) Lessee shall fail to maintain the insurance required by
Section 10 hereof or to perform or observe any of the covenants
contained in Sections 21 and 22 hereof; or
(v) Lessee shall fail to perform or observe any other
covenant, condition or agreement to be performed or observed by
it with respect to this Lease and such failure shall continue
unremedied for 30 days after the earlier of (a) the date on which
Lessee obtains, or should have obtained knowledge of such
failure; or (b) the date on which notice thereof shall be given
by Lessor to Lessee; or
(vi) Any representation or warranty made by Lessee herein or
in any document, certificate or financial or other statement now
or hereafter furnished Lessor in connection with this Lease shall
prove at any time to have been untrue, incomplete or misleading
in any material respect as of the time when made; or
(vii) The entry of a decree or order for relief by a court
having jurisdiction in respect of Lessee, adjudging Lessee a
bankrupt or insolvent, or approving as properly filed a petition
seeking a reorganization, arrangement, adjustment or composition
of or in respect of Lessee in an involuntary proceeding or case
under the Federal bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal or State bankruptcy,
insolvency or other similar law, or appointing a receiver,
liquidator, assignee, custodian, trustee or sequestrator (or
similar official) of Lessee or of any substantial part of its
property, or ordering the winding-up or liquidation of its
affairs, and the continuance of any such decree or order unstayed
and in effect for a period of 30 days; or
(viii) The institution by Lessee of proceedings to be
adjudicated a bankrupt or insolvent, or the consent by it to the
institution of bankruptcy or insolvency proceedings against it,
or the commencement by Lessee of a voluntary proceeding or case
under the Federal bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal or state bankruptcy,
insolvency or other similar law, or the consent by it to the
filing of any such petition or to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee,
custodian or sequestrator (or other similar official) of Lessee
or of any substantial part of its property, or the making by it
of any assignment for the benefit of creditors or the admission
by it of its inability to pay its debts generally as they become
due or its willingness to be adjudicated a bankrupt or the
failure of Lessee generally to pay its debts as they become due
or the taking of corporate action by Lessee in furtherance of any
of the foregoing.
19. Remedies.
If an Event of Default specified in Subsection 18 (vii) or
(viii) above shall occur, then, and in any such event, Lessor
shall not be obligated to purchase or lease any of the Equipment
and this Lease shall, without any declaration or other action by
Lessor, be in default. If an Event of Default, other than an
Event of Default specified in Subsection 18(vii) or (viii) above,
shall occur, Lessor may, at its option, declare this Lease to be
in default. At any time after this Lease is in default under the
first sentence of this Section 19, Lessor has declared this Lease
to be in default under the second sentence of this Section 19,
Lessor and/or its representative may do any one or more of the
following with respect to all of the Equipment or any part
thereof as Lessor in its sole discretion shall elect, to the
extent permitted by applicable law then in effect:
(a) demand that Lessee, and Lessee shall at its expense
upon such demand, return the Equipment promptly to Lessor at such
place in the continental United States of America as Lessor shall
specify, or Lessor and/or its agents, at its option, may with or
without entry upon the premises where the Equipment is located
and disable the Equipment, or make the Equipment inoperable
permanently or temporarily in Lessor's sole discretion, and/or
take immediate possession of the Equipment and remove the same by
summary proceedings or otherwise, all without liability for
reason of such entry or taking of possession, whether for the
restoration of damage to property caused by such taking or for
disabling or otherwise;
(b) sell the Equipment at public or private sale, with or
without notice, advertisement or publication, as Lessor may
determine, or otherwise dispose of, hold, use, operate, lease to
others or keep idle the Equipment as Lessor in its sole
discretion may determine, all free and clear of any rights of
Lessee and without any duty to account to Lessee with respect to
such action or inaction or for any proceeds with respect thereto;
(c) by written notice to Lessee specifying a payment date
which shall be not earlier than 20 days after the date of such
notice, demand that Lessee pay to Lessor, and Lessee shall pay to
Lessor, on the payment date specified in such notice, as
liquidated damages for loss of a bargain and not as a penalty,
all accrued and unpaid rent for the Equipment due on all Rent
Payment Dates up to and including the payment date specified in
such notice plus an amount (together with interest on such amount
at the Late Charge Rate, from the payment date specified in such
notice to the date of actual payment) equal to the excess, if
any, of the Stipulated Loss Value of the Equipment as of the
payment date specified in such notice over the Fair Market Sale
Value of the Equipment as of such date;
(d) Lessor may exercise any other right to remedy which may
be available to it under applicable law or proceed by appropriate
court action to enforce the terms hereof or to recover damages
for the breach hereof or to rescind this Lease. In addition,
Lessee shall be liable for any and all unpaid rent and other
amounts due hereunder before or during the exercise of any of the
foregoing remedies and for all reasonable legal fees and other
costs and expenses incurred by reason of the occurrence of any
Event of Default or the exercise of Lessor's remedies with
respect thereto, including all reasonable costs and expenses
incurred in connection with the placing of the Equipment in the
condition required by Section 12 hereof.
No remedy referred to in this Section 19 is intended to be
exclusive, but each shall be cumulative and in addition to any
other remedy referred to herein or otherwise available to Lessor
at law or in equity; and the exercise or beginning of exercise by
Lessor of any one or more of such remedies shall not preclude the
simultaneous or later exercise by Lessor of any or all such other
remedies. No express or implied waiver by Lessor of an Event of
Default shall in any way be, or be construed to be, a waiver of
any future or subsequent Event of Default. To the extent
permitted by applicable law, Lessee hereby waives any rights now
or hereafter conferred by statute or otherwise which may require
Lessor to sell or lease or otherwise use the Equipment in
mitigation of Lessor's damages or losses or which may otherwise
limit or modify any of Lessor's rights or remedies under this
Lease.
20. Lessor's Right to Perform.
If Lessee fails to make any payment required to be made by
it hereunder or fails to perform or comply with any of its other
agreements contained herein, Lessor may itself make such payment
or perform or comply with such agreement, and the amount of such
payment and the amount of the reasonable expenses of Lessor
incurred in connection with such payment or the performance of or
compliance with such agreement, as the case may be, together with
interest thereon at the Late Charge Rate, shall be deemed to be
additional rent, payable by Lessee within 30 days of notice.
21. Location; Assignment or Sublease; Title Transfer.
(a) Lessee will not remove the Equipment from the location
specified in Schedule 1 of Exhibit A without the prior written
consent of Lessor, such consent not to be unreasonably withheld,
except removal outside the Continental U.S. is not permitted.
The Equipment shall at all times be in the sole possession and
control of Lessee and Lessee will not, without the prior written
consent of Lessor, assign this Lease or any interest herein or
sublease or otherwise transfer its interest in any of the
Equipment, and any attempted assignment, sublease or other
transfer by Lessee in violation of these provisions shall be
void.
(b) Lessor and Lessee acknowledge that Lessor (i) may
transfer its interest in the Equipment to an Owner other than
Lessor and contemporaneously therewith lease the Equipment back
from such Owner, and (ii) may assign this Lease to such Owner.
Lessee hereby consents to each of the above-described
transactions.
22. Status Changes in Lessee.
Lessee will not without thirty (30) days prior written
notice to Lessor, (a) enter into any transaction of merger or
consolidation unless it is the surviving corporation or after
giving effect to such merger or consolidation its net worth
equals or exceeds that which existed prior to such merger or
consolidation; or (b) change the form of organization of its
business; or (c) change its name or its chief place of business.
Lessee must obtain Lessor's prior written concurrence before
Lessee may undertake any actions to (a) liquidate or dissolve or
similar action of the Lessee's organization, or (b) sell,
transfer or otherwise dispose of all or any substantial part of
Lessee's assets.
23. Further Assurances; Financial Information.
(a) Lessee will, at its expense, promptly and duly execute
and deliver to Lessor such further documents and assurances and
take such further action as Lessor may from time to time request
in order to establish and protect the rights, interests and
remedies created or intended to be created in favor of Lessor
hereunder, including, without limitation, the execution and
filing of Uniform Commercial Code financing statements covering
the Equipment and proceeds therefrom in the jurisdictions in
which the Equipment is located from time to time. To the extent
permitted by applicable law, Lessee hereby authorizes Lessor to
file any such financing statements without the signature of
Lessee.
(b) Lessee will qualify to do business and remain qualified
in good standing, in each jurisdiction in which the Equipment is
from time to time located.
(c) Lessee will furnish to Lessor as soon as available, but
in any event not later than 90 days after the end of each fiscal
year of Lessee, a consolidated balance sheet of Lessee as at the
end of such fiscal year, and consolidated statements of income
and changes in financial position of Lessee for such fiscal year,
all in reasonable detail, prepared in accordance with generally
accepted accounting principles applied on a basis consistently
maintained through the period involved. These reports will not
be disclosed to anyone other than the Lessor and/or Owner as
provided in Section 21(b).
24. Notices.
All notices, demands and other communications hereunder
shall be in writing, and shall be deemed to have been given or
made when deposited in the United States mail, first class
postage prepaid, addressed as follows or to such other address as
any of the following persons may from time to time designate in
writing to the other persons listed below:
Lessor: GPT Finance Corporation
400 Rinehart Road
Lake Mary, Florida 32746
Attention: Treasurer
Lessee: Startec, Inc.
1220 L Street, N.W.
Washington, D.C. 20005
25. Conditions Precedent:
(a) Lessor shall not be obligated to lease the items of
Equipment described herein to Lessee hereunder unless:
(i) Such Uniform Commercial Code financing statements
covering Equipment and proceeds therefrom and landlord and/or
mortgagee waivers or disclaimers and/or severance agreements with
respect to the items of Equipment covered by this Lease as Lessor
shall deem necessary or desirable in order to perfect and protect
its interests therein shall have been duly executed and filed, at
Lessee's expense, in such public offices as Lessor shall direct;
(ii) All representations and warranties of Lessee
contained herein or in any document or certificate furnished
Lessor in connection herewith shall be true and correct on and as
of the date of this Lease with the same force and effect as if
made on and as of such date; no Event of Default or Default shall
be in existence on such date or shall occur as a result of the
lease by Lessee of the Equipment specified in Schedule 1 of
Exhibit A;
(iii) In the sole judgment of Lessor, there shall have
been no material adverse change in the financial condition of
business or Lessee;
(iv) All proceedings to be taken in connection with the
transactions contemplated by this Lease, and all documents
incidental thereto, shall be satisfactory in form and substance
to Lessor and its counsel;
(v) Lessor shall have received from Lessee, in form
and substance satisfactory to it, such other documents and
information as Lessor shall reasonably request;
(vi) All legal matters in connection with the
transactions contemplated by this Lease shall be satisfactory to
Lessor's counsel; and
(vii) No Change in Tax Law, which in the sole judgment
of Lessor would adversely affect Lessor's Economics, shall have
occurred or shall appear, in Lessor's good faith judgment, to be
imminent.
26. Software License.
Reference is made to the form of DCO Software License
Agreement attached hereto as Exhibit B (the "License Document").
Lessor has arranged for the Equipment manufacturer to grant
Lessee a license to use the Software as defined in the License
Document in conjunction with the equipment leased hereunder in
accordance with the terms of the License Document. The original
license fee is contained in the lease rate. To avail itself of
the license grant, Lessee must execute the License Document, upon
commencement of the Lease. The option to obtain a fully paid up
license as provided in Article 2 of the License Document shall be
exercised by the Lessee and the payment made directly to the
equipment manufacturer named in the License Document and must be
exercised in conjunction with the option provided in Section 7(b)
of the Lease to purchase the Equipment. "Buyer" and "Licensee"
as used in the License Document are synonymous with lessee.
27. Miscellaneous.
(a) Any provision of this Lease which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provisions in any other jurisdiction. To the extent permitted by
applicable law, Lessee hereby waives any provision of law which
renders any provision hereof prohibited or unenforceable in any
respect.
(b) No terms or provisions of this Lease may be changed,
waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which the
enforcement of the change, waiver, discharge or termination is
sought. No delay or failure on the part of Lessor to exercise
any power or right hereunder shall operate as a waiver thereof,
nor as an acquiescence in any default, nor shall any single or
partial exercise of any power or right preclude any other or
further exercise thereof, or the exercise of any other power or
right. After the occurrence of any Default or Event of Default,
the acceptance by Lessor of any payment of rent or other sum owed
by Lessee pursuant hereto shall not constitute a waiver by Lessor
of such Default or Event of Default, regardless of Lessor's
knowledge or lack of knowledge thereof at the time of acceptance
of any such payment, and shall not constitute a reinstatement of
this Lease, if this Lease shall have been declared in default by
Lessor pursuant to Section 18 hereof or otherwise, unless Lessor
shall have agreed in writing to reinstate the Lease and to waive
the Default or Event of Default.
In the event Lessee tenders payment to Lessor by check or
draft containing a qualified endorsement purporting to limit or
modify Lessee's liability or obligations under this Lease, such
qualified endorsement shall be of no force and effect even if
Lessor processes the check or draft for payment.
(c) This Lease with exhibits contains the full, final and
exclusive statement of the agreement between Lessor and Lessee
relating to the Lease of the Equipment.
(d) This Lease shall constitute an agreement of an
operating lease, and nothing herein shall be construed as
conveying to Lessee any right, title, or interest in the
Equipment except as Lessee only.
(e) This Lease and the covenants and agreements contained
herein shall be binding upon, and inure to the benefit of, Lessor
and its successors and assigns and Lessee and, to the extent
permitted by Section 21 hereof, its successors and assigns.
(f) The headings of the Sections are for convenience of
reference only, are not a part of this Lease and shall not be
deemed to affect the meaning or construction of any of the
provisions hereof.
(g) This Lease may be executed by the parties hereto on any
number of separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
(h) This Lease is deemed made and entered into in the State
of Florida and shall be governed by and construed under and in
accordance with the laws of the State of Florida as if both
parties were residents of Florida. Lessee hereby irrevocably
consents and agrees that any legal action, suit or proceeding
arising out of or in any way in connection with this contract may
be instituted or brought in the courts of the State of Florida or
the United States court sitting in the State of Florida as Lessor
may elect, and by execution of this lease hereby irrevocably
accepts and submits to, for itself and in respect of its
property, generally and unconditionally, the jurisdiction of any
such court and to all proceedings in such court.
(i) Lessee hereby irrevocably consents and agrees that any
legal action, suit, or proceeding arising out of or in any way in
connection with this Lease may be instituted or brought in the
courts of the State of Florida, or the United States Courts for
the District of Florida, as Lessor may elect, and by execution
and delivery of this Lease, Lessee hereby irrevocably accepts and
submits to, for itself and in respect of its property, generally
and unconditionally, the non-exclusive jurisdiction of any such
court, and to all proceedings in such courts. Lessee irrevocably
consents to service of any summons and/or legal process by
registered or certified United States mail, postage prepaid, to
Lessee at the address set forth in Section 24 hereof, such method
of service to constitute, in every respect, sufficient and
effective services of process in any legal action or proceeding.
Nothing in this Lease shall affect the right to service of
process in any other manner permitted by law or limit the right
of Lessor to bring actions, suits or proceedings in the court of
any other jurisdiction. Lessee further agrees that final
judgment against it in any such legal action, suit or proceeding
shall be conclusive and may be enforced in any other
jurisdiction, within or outside the United States of America, but
suit on the judgment, a certified or exemplified copy of which
shall be conclusive evidence of the fact and the amount of the
liability.
IN WITNESS WHEREOF, Lessor and Lessee have each caused this
Lease to be duly executed as of the day and year first above
written.
STARTEC, INC. (Lessee)
By:_________/s/___________________
HARI PANI, PRESIDENT
(Name & Title)
Date Signed: March 01, 1990
GPT FINANCE CORPORATION
By:__________/s/________________
P.J. Rossi-Vice President
(Name & Title)
Date Signed: March 12, 1990
<PAGE>
AMENDMENT TO LEASE AGREEMENT DATED JANUARY 10, 1990 BETWEEN
TELECOMMUNICATIONS FINANCE GROUP AND
STARTEC, INC.
FOR A DCO-CS AND PERIPHERAL EQUIPMENT
LOCATED IN WASHINGTON, D.C.
Effective February 2, 1995, the following sections of said Lease
Agreement are amended as follows:
1. Section 3:
The term of the lease is changed from sixty (60) months
to one hundred twelve (112) months.
2. Section 5(a):
The number of consecutive monthly installments of rent
for the Equipment is changed from sixty (60) to one
hundred twelve (112).
TELECOMMUNICATIONS FINANCE GROUP STARTEC, INC.
By: /s/ CC Calloway By: /s/ Ram Mukunda
CC Calloway Ram Mukunda
President
AUTHORIZED REPRESENTATIVE OF (NAME & TITLE)
TELECOMMUNICATIONS FINANCE GROUP
DATE SIGNED: 23 May 1995 DATE SIGNED: 2/1/95
<PAGE>
STARTEC, INC.
SITE: WASHINGTON, D.C.
LEASE PAYMENTS
ADDENDUM TO LEASE AGREEMENT DATED January 10, 1990 BETWEEN
TELECOMMUNICATIONS FINANCE GROUP AND
STARTEC, INC.
EFFECTIVE NOVEMBER 1, 1990 (60 MONTHLY LEASE PAYMENTS)
ORIGINAL VALUE OF EQUIPMENT $[CT REQUESTED]
ADDITION I $[CT REQUESTED]
TOTAL $[CT REQUESTED]
RATE FACTOR PER $1,000 $[CT REQUESTED]
ORIGINAL MONTHLY LEASE PAYMENT $[CT REQUESTED]
EFFECTIVE DECEMBER 1, 1991 (47 MONTHLY LEASE PAYMENTS REMAINING)
ADDITION II $[CT REQUESTED]
RATE FACTOR PER $1,000 $[CT REQUESTED]
ADDITION II MONTHLY
LEASE PAYMENT $[CT REQUESTED]
TOTAL MONTHLY LEASE PAYMENT $[CT REQUESTED]
EFFECTIVE OCTOBER 1, 1994 (13 MONTHLY LEASE PAYMENTS REMAINING)
ADDITION III $[CT REQUESTED]
RATE FACTOR PER $1,000 $[CT REQUESTED]
ADDITION III MONTHLY
LEASE PAYMENT $[CT REQUESTED]
TOTAL MONTHLY LEASE PAYMENT $[CT REQUESTED]
EFFECTIVE FEBRUARY 2, 1995, THE LEASE TERM IS EXTENDED FROM 60
MONTHS TO 112 MONTHS
NEW LEASE PAYMENT THROUGH ADDITION III $[CT REQUESTED]
EFFECTIVE MARCH 1, 1995 (60 MONTHLY LEASE PAYMENTS REMAINING)
ADDITION IV $[CT REQUESTED]
RATE FACTOR PER $1,000 $[CT REQUESTED]
ADDITION IV MONTHLY
LEASE PAYMENT $[CT REQUESTED]
TOTAL MONTHLY LEASE PAYMENT $[CT REQUESTED]
EFFECTIVE DECEMBER 1, 1995 (51 MONTHLY LEASE PAYMENTS REMAINING)
ADDITION V $[CT REQUESTED]
RATE FACTOR PER $1,000 $[CT REQUESTED]
ADDITION V MONTHLY
LEASE PAYMENT $[CT REQUESTED]
TOTAL MONTHLY LEASE PAYMENT $[CT REQUESTED]
EFFECTIVE APRIL 1, 1996 (47 MONTHLY LEASE PAYMENTS REMAINING)
ADDITION VI $[CT REQUESTED]
RATE FACTOR PER $1,000 $[CT REQUESTED]
ADDITION VI MONTHLY
LEASE PAYMENT $[CT REQUESTED]
TOTAL MONTHLY LEASE PAYMENT $[CT REQUESTED]
<PAGE>
STARTEC, INC.
SITE: WASHINGTON, D.C.
LEASE PAYMENTS
ADDENDUM TO LEASE AGREEMENT DATED January 10, 1990 BETWEEN
TELECOMMUNICATIONS FINANCE GROUP AND
STARTEC, INC.
EFFECTIVE JUNE 1, 1996 (45 MONTHLY LEASE PAYMENTS REMAINING)
ADDITION VII $[CT REQUESTED]
RATE FACTOR PER $1,000 $[CT REQUESTED]
ADDITION VII MONTHLY
LEASE PAYMENT $[CT REQUESTED]
TOTAL MONTHLY LEASE PAYMENT $[CT REQUESTED]
EFFECTIVE SEPTEMBER 1, 1996 (42 MONTHLY LEASE PAYMENTS REMAINING)
ADDITION VIII $[CT REQUESTED]
RATE FACTOR PER $1,000 $[CT REQUESTED]
ADDITION VIII MONTHLY
LEASE PAYMENT $[CT REQUESTED]
TOTAL MONTHLY LEASE PAYMENT $[CT REQUESTED]
EFFECTIVE JANUARY 1, 1997 (38 MONTHLY LEASE PAYMENTS REMAINING
ADDITION IX $[CT REQUESTED]
RATE FACTOR PER $1,000 $[CT REQUESTED]
ADDITION IX MONTHLY
LEASE PAYMENT $[CT REQUESTED]
TOTAL MONTHLY LEASE PAYMENT $[CT REQUESTED]
EFFECTIVE MAY 1, 1997 (34 MONTHLY LEASE PAYMENTS REMAINING)
ADDITION X $[CT REQUESTED]
RATE FACTOR PER $1,000 $[CT REQUESTED]
ADDITION X MONTHLY
LEASE PAYMENT $[CT REQUESTED]
TOTAL MONTHLY LEASE PAYMENT $[CT REQUESTED]
EFFECTIVE JULY 1, 1997 (32 MONTHLY LEASE PAYMENTS REMAINING)
ADDITION XI $[CT REQUESTED]
RATE FACTOR PER $1,000 $[CT REQUESTED]
ADDITION XI MONTHLY
LEASE PAYMENT $[CT REQUESTED]
TOTAL MONTHLY LEASE PAYMENT $[CT REQUESTED]
TOTAL VALUE OF EQUIPMENT $[CT REQUESTED]
SUMMARY OF TOTAL LEASE PAYMENTS:
13 @ $ [CT REQUESTED] = $ [CT REQUESTED]
34 @ $ [CT REQUESTED] = $ [CT REQUESTED]
5 @ $ [CT REQUESTED] = $ [CT REQUESTED]
9 @ $ [CT REQUESTED] = $ [CT REQUESTED]
4 @ $ [CT REQUESTED] = $ [CT REQUESTED]
2 @ $ [CT REQUESTED] = $ [CT REQUESTED]
3 @ $ [CT REQUESTED] = $ [CT REQUESTED]
4 @ $ [CT REQUESTED] = $ [CT REQUESTED]
4 @ $ [CT REQUESTED] = $ [CT REQUESTED]
2 @ $ [CT REQUESTED] = $ [CT REQUESTED]
32 @ $ [CT REQUESTED] = $ [CT REQUESTED]
112 $ [CT REQUESTED]
ACCEPTED BY:__________________________
DATE:_________________________________
<PAGE>
FORM OF ASSIGNMENT OF PURCHASE ORDER
This Assignment between STARTEC, INC. ("Company") and
TELECOMMUNICATIONS FINANCE GROUP ("Lessor").
WHEREAS, the Company and Lessor have, or will shortly,
execute a Lease Agreement ("Lease"); and
WHEREAS, the Company has executed and delivered a certain
purchase contract covering the property described therein (the
"Equipment"), a copy of which purchase contract is attached
hereto as Attachment A ("Purchase Order"); and
WHEREAS, the Company desires to assign to Lessor all of its
rights and interests under the Purchase Order for that equipment
listed on Schedule I, as amended from time to time, of Exhibit A
of the Lease so that Lessor might purchase and take title to such
equipment in the Company's stead.
NOW, THEREFORE, for valuable consideration, receipt of which
is hereby acknowledged, the parties hereto agree as follows:
1. This Assignment shall be effective as of the date the
Company executes Exhibit A entitled "Certificate of Delivery and
Acceptance" of the Lease.
2. The Company (a) represents and warrants that the Purchase
Order constitutes the entire understanding of the parties thereto
with respect to the purchase and sale of the Equipment covered
thereby; (b) hereby assigns to Lessor all of its rights under the
Purchase Order as to the equipment listed on Schedule 1, as
amended from time to time, of Exhibit A of the Lease; (c) hereby
assigns to Lessor and Lessor hereby assumes and agrees, so long
as a Company complies with the provisions of the Lease and
otherwise performs its obligations under the Purchase Order, to
perform Company's obligations under the Purchase Order to pay the
price of the equipment listed on Schedule 1, as amended from time
to time, of Exhibit A of the Lease; and (d) represents and
warrants that neither notice to nor consent from the respective
vendor is required in connection with the execution, delivery and
performance of this Assignment or for the validity or
enforceability of this Assignment.
3. Pursuant to this Assignment, the Company hereby agrees with
Lessor that the Company shall continue to be responsible for the
performance of all obligations under the Purchase Order, except
for, subject to the condition provided in Paragraph 1 above, the
obligation to pay the price as provided in Paragraph 2 above, and
the Company agrees to hold harmless and indemnify Lessor from all
liability, loss, damage, and expense arising from or directly or
indirectly attributable to such obligations.
IN WITNESS WHEREOF, the parties have duly executed this
Assignment under seal by their authorized representatives as of
the date opposite their respective signatures.
TELECOMMUNICATIONS FINANCE GROUP STARTEC, INC.
By:_____________________________ By:______________________
________________________________ _________________________
Authorized Representative
(Name and Title)
Date Signed:____________________ Date Signed:_____________
<PAGE>
ATTACHMENT A
EQUIPMENT LIST #TFG-97246
Dated
COMPANY: STARTEC, INC.
SITE LOCATION: WASHINGTON, D.C.
ADDITION: XI
PART NO./DESCRIPTION QUANTITY
AMOUNT
SS-C
DTF-03 1152 PORT ADDITION PER
DCO-782030, ISSUE 1, DATED 03/27/97
(S.O.#071632) AS FOLLOWS:
MATERIAL 1 LOT $[CT REQUESTED]
INSTALLATION [CT REQUESTED]
FREIGHT [CT REQUESTED]
REMOVE AMAF-00 AND SHIP TO SS-C,
LAKE MARY, FL 1 LOT [CT REQUESTED]
THIRD PARTY VENDOR - SOTAS
PORTABLE TQMS III DOLCH COMPUTER
S/N DCS2017765 1 LOT [CT REQUESTED]
TOTAL [CT REQUESTED]
<PAGE>
FORM OF CERTIFICATE OF DELIVERY AND ACCEPTANCE
Commencement Date:
THIS CERTIFICATE OF DELIVERY AND ACCEPTANCE is executed and
delivered to TELECOMMUNICATIONS FINANCE GROUP ("Lessor") by
STARTEC, INC. ("Lessee") pursuant to and in accordance with the
Lease Agreement dated January 10, 1990 between Lessor and Lessee
(the "Lease", the defined terms therein being used herein with
their defined meanings).
1. The Equipment covered by this Certificate consists of the
items described in Schedule 1 of Exhibit A of the Lease.
2. Lessee confirms that the items of Equipment covered hereby
have been delivered to it in good working order and
condition and have been inspected and accepted by Lessee as
of the Commencement Date set forth above. Lessee hereby
waives any right it may have under Section 2A-517 of the
Uniform Commercial Code or otherwise to revoke this
acceptance for any reason whatsoever, including but not
limited to, (1) any assumption by Lessee that a
nonconformity would be cured, (ii) any inducement of
acceptance by the Lessor's assurances or any difficulty to
disclaim a nonconformity before acceptance, or (iii) any
Lessor default under the Lease. Lessee further hereby
waives its rights under Sections 2A-1401 and 2A-402 of the
Uniform Commercial Code to suspend performances of any of
its obligations under the Lease with respect to the
Equipment hereby accepted.
3. Lessee confirms that such items of Equipment have been
installed at: 1828 L Street, N.W., Suite 662, Washington,
D.C. 20005.
4. The Lessor's value of the items of Equipment covered hereby
is set forth in the Schedule 1 of Exhibit A. Lessee
confirms that each installment of rent payable is as defined
by the rental rate factor per thousand dollars as specified
in Section 5 of the Lease.
5. Lessee hereby: (a) confirms that the items of Equipment
covered hereby have been inspected by Lessee, have been
delivered in good working order and condition and are of the
size, design, capacity and manufacture selected by it and
meet the provisions of the purchase order(s) with respect
thereto; and (b) irrevocably accepts said items of Equipment
"as-is, where-is" for all purposes of the Lease as of the
Commencement Date set forth above and shall pursue remedies
to correct deficiencies, if any, in said items of equipment
under the manufacturer's warranty provisions only.
6. Lessee hereby confirms: (i) that no Default or Event of
Default is in existence as of the Commencement Date set
forth above, nor shall any Default or Event of Default occur
as a result of the lease by Lessee of the Equipment
specified herein; and (ii) that all representations and
warranties of Lessee contained in the Lease or in any
document or certificate furnished Lessor in connection
herewith, are true and correct as of the Commencement Date
set forth above with the same force and effect as if made on
such date.
7. Lessee assumes sole responsibility for ensuring that the
billing center can correct read all records. Lessee's
responsibility includes reading daily the automatic
message/ticketing accounting system and/or polling system
tape(s) by the billing system to ensure all ticket
information is present. Risk of loss for any revenue or
profit associated therewith passes to Lessee upon cutover of
any hardware or software.
8. All of the terms, provisions and conditions of the Lease are
hereby incorporated herein and made a part hereof as if said
terms, provisions and conditions were set forth in full in
this Certificate. By their execution and delivery of this
Certificate, the parties hereto reaffirm all of the terms,
provisions and conditions of the Lease.
IN WITNESS WHEREOF, Lessee has caused this Certificate to be
executed by its duly authorized officer as of the Commencement
Date set forth above.
Refer S.O. STARTEC, INC.
By:________________________
___________________________
(Name & Title)
Date:______________________
ACCEPTED BY:
TELECOMMUNICATIONS FINANCE GROUP
AS OF THE __ DAY OF ______, 19__
By:_____________________________
________________________________
Authorized Representative
<PAGE>
SCHEDULE 1 OF EXHIBIT A
(CERTIFICATE OF DELIVERY AND ACCEPTANCE)
EQUIPMENT DESCRIPTION
The items of personal property to be leased pursuant to this
Lease Agreement, dated January 10, 1990 between
TELECOMMUNICATIONS FINANCE GROUP, as Lessor, and STARTEC, INC.,
as Lessee, are described below and in the attached equipment
list(s):
EQUIPMENT
LIST NUMBER DESCRIPTION AMOUNT
DCO-892280 A SIEMENS STROMBERG-CARLSON $[CT REQUESTED]
DIGITAL CENTRAL OFFICE CARRIER SWITCH
EQUIPPED WITH 216 DIGITAL PORTS
AND WIRED FOR 384 DIGITAL PORTS
INCLUDING INSTALLATION WITH BASIC
RELEASE 10
DCO-892280 AN ADDITION OF BATTERIES AND CHARGERS [CT REQUESTED]
DCO-892280 AN ADDITION OF A USED AMA [CT REQUESTED]
DCO-892280 AN ADDITION OF A USED TONE COMMANDER [CT REQUESTED]
DCO-892280 AN ADDITION OF MISCELLANEOUS
EQUIPMENT [CT REQUESTED]
GPT-90116 ADDITION I [CT REQUESTED]
TFG-91147 ADDITION II [CT REQUESTED]
TFG-94062 ADDITION III [CT REQUESTED]
TFG-95002 ADDITION IV [CT REQUESTED]
TFG-95068 ADDITION V [CT REQUESTED]
TFG-96111 ADDITION VI [CT REQUESTED]
TFG-96124 ADDITION VII [CT REQUESTED]
TFG-96154 ADDITION VIII [CT REQUESTED]
TFG-96183 ADDITION IX [CT REQUESTED]
TFG-97221 ADDITION X [CT REQUESTED]
TFG-97246 ADDITION XI [CT REQUESTED]
TOTAL[CT REQUESTED]
The above described equipment installed at:
1828 L Street, N.W., Suite 662, Washington, D.C. 20005
ACCEPTED
BY:_______________________
DATE:______________________________
Dated: January 10, 1990
Revised: November 8, 1990
Revised: October 10, 1991
Revised: September 6, 1994
Revised: February 1, 1995
Revised: October 10, 1995
Revised: March 7, 1996
Revised: April 18, 1996
Revised: July 24, 1996
Revised: December 3, 1996
Revised: April 3, 1997
Revised: June 2, 1997
<PAGE>
EQUIPMENT LIST #TFG-97246 DATED:
COMPANY: STARTEC, INC.
SITE LOCATION: WASHINGTON, D.C.
ADDITION: XI
PART NO./DESCRIPTION QUANTITY AMOUNT
SS-C
DTF-03 1152 PORT ADDITION PER
DCO-782030, ISSUE 1, DATED 03/27/97
(S.O. #071632) AS FOLLOWS:
MATERIAL 1 LOT $[CT REQUESTED]
INSTALLATION [CT REQUESTED]
FREIGHT [CT REQUESTED]
REMOVE AMAF-00 AND SHIP TO SS-C,
LAKE MARY, FL 1 LOT [CT REQUESTED]
THIRD PARTY VENDOR-SOTAS
PORTABLE TQMS III DOLCH COMPUTER
S/N DCS2017765 1 LOT [CT REQUESTED]
TOTAL[CT REQUESTED]
<PAGE>
SIEMENS
Stromberg-Carlson
Installation Site: Washington, DC
PART NUMBER DESCRIPTION QTY
ITEM 01
CMF-00. CCS-02
822068-812 Diag. Grading Panel 1
822003-595A PWBA, (2W) SI HDI 4
822002-526 PWBA, TSI PGH I/F 4
207800-482 Cable Assembly (TSI/PGH) 4
822005-546A PWBA, (2W) TPPO HDI 2
822006-566A PWBA, TPP1 2
822017-556A PWBA, TPP2 2
DTF-03
817577-900 MG Basic DTF Assembly 1
817577-901 MG, DS1 Host CUA 6
817577-902 MG, Basics PWBAs DS1 CUA 6
207600-225 Frame Weidment 1
207800-079 Pkg Assy Front Door Mtg Hardware 1
207800-080 Pkg Assy Rear Door Mtg Hardware 1
207600-158 Door Assembly, Right I/O 2
207600-159 Door Assembly, Left I/O 2
207600-721 PWBA Guide 6
817560-606 PWBA, T1 Interface 18
817577-917 MG Blower w/Fan Alarm, Base 1
PRT-00
817576-938 Mod Group, Circuit Breaker 2
Miscellaneous
DSX-DR19 Cross Connect Panel 2
DOC-ADD Additions Documentation 1
ITEM 02
NOT USED
PORTIONS OF THIS EXHIBIT ("CONFIDENTIAL PORTIONS") HAVE BEEN
DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION ("COMMISSION")UNDER
RULE 406 OF THE SECURITIES ACT OF 1933 AND THE FREEDOM OF
INFORMATION ACT. THE CONFIDENTIAL PORTIONS HAVE BEEN FILED
SEPARATELY WITH THE COMMISSION AND ARE IDENTIFIED IN THIS EXHIBIT
BY THE NOTATION "CT REQUESTED."
STARTEC, Inc. CARRIER SERVICES AGREEMENT
THIS AGREEMENT (the "Agreement") is made this 26th day of
February, 1997, by and between STARTEC, Inc., a Maryland
corporation, with its principal office at 10411 Motor City Drive,
Suite 301, Bethesda, MD 20817 ("STARTEC") and Frontier
Communications Services Inc., a Michigan corporation with its
principal office at 30300 Telegraph Road, Bingham Farms, Michigan
48025-4510 ("Customer"). STARTEC and Customer are "Parties"
hereto.
STARTEC agrees to provide switched international
telecommunications services and other associated services
(collectively "Service"), as described herewith, to Customer on
the following terms and conditions, and Customer agrees to accept
Service subject to the specific terms and charges set forth in
the Annexure(s) attached hereto and pursuant to the terms of this
Agreement.
1. CONFIDENTIALITY: During the Term and for three (3) year
thereafter, neither Party shall disclose any terms of this
Agreement, including pricing, or "Confidential Information" of
the other Party. For purposes of this Agreement, "Confidential
Information" shall mean information in written or other tangible
form specifically labeled as such when disclosed by a Party.
Confidential Information transmitted orally shall be identified
as such at the time of its disclosure. Confidential Information
shall remain the property of the disclosing Party. A Party
receiving Confidential Information shall: (i) use or reproduce
such information only when necessary to perform this Agreement;
(ii) provide at least the same care to avoid disclosure or
unauthorized use of such information as it provides to protect
its own Confidential Information; (iii) limit access to such
information to its employees or agents who need such information
to perform this Agreement; and (iv) return or destroy all such
information, including copies, after the need for it has expired,
upon request of the disclosing Party, or upon termination of this
Agreement. Notwithstanding anything to the contrary contained
herein, a Party shall be allowed to disclose Confidential
Information pursuant to judicial or governmental order or if
otherwise required to do so by law, provided the other Party is
given prior notice of disclosure and the opportunity to obtain a
protective order if deemed necessary.
2. TERM: The term of this Agreement shall be a minimum one (1)
year from the last date of signature. The Agreement shall
continue thereafter, in full force and effect, until canceled by
either party giving sixty (60) days written notice to the other
Party. Service will be discontinued the first business day of
the third month after such notice of termination.
3. RELATIONSHIP TO PARTIES: Neither this agreement nor the
provision of Service creates a joint venture, partnership or
agency between STARTEC and Customer.
4. USE OF NAME AND MARKS: This Agreement confers no right to
use the name, service marks, trademarks, copyrights, patents of
either Party except as expressly provided herein. Neither Party
shall take any action which would compromise the registered
copyrights or service marks of the other.
5. LEGAL COMPLIANCE: REMEDIES FOR NON-COMPLIANCE: Customer
and STARTEC represent and warrant that they have obtained all
licenses, approvals and/or regulatory authority necessary to
operate as contemplated herein.
6. CUSTOMER RESPONSIBILITIES: Customer shall comply with
STARTEC's network interface procedures when it orders its own
access facilities. STARTEC agrees to promptly provide Customer
with such network interface procedures.
7. SERVICE ACTIVATION: STARTEC will use reasonable efforts to
provide Service within thirty (30) days, following execution of
the applicable Annexure(s), or the requested delivery date,
whichever is later.
8. PRICING. Pricing is pursuant to the applicable
Annexure(s). STARTEC reserves the right to change the pricing,
upon fifteen (15) days prior written notice. Should any unit
price increase more than [CT REQUESTED] during a calendar year,
Customer may terminate this Agreement with thirty (30) days
written notice and without any early termination fee.
9. PAYMENTS FOR SERVICE:
9.1 Customer shall pay STARTEC for Service pursuant to the
terms of this Agreement.
9.2 STARTEC will invoice Customer monthly for Service provided
hereunder. Invoices shall be due and payable thirty (30) days
after receipt of invoice. Undisputed charges for Service that
are not paid within thirty (30) days after Customer's receipt of
the invoice shall be past due. Interest will be charged on
undisputed past due amounts beginning the thirty-first (31st) day
following Customer's receipt of the invoice at a rate equal to
the lesser of eighteen percent(18%) per annum or the maximum rate
allowed by law.
9.3 Customer will provide STARTEC with a valid tax exemption
form to exempt Customer, under applicable law, from taxes that
would otherwise be paid by Customer. STARTEC will invoice
Customer for taxes (other than income taxes payable by STARTEC)
that are not covered by tax exemption certificate properly filed
with STARTEC.
9.4 If Customer, in good faith, disputes any invoiced amount,
it shall submit to STARTEC within ninety (90) days following
receipt of the invoice written documentation identifying and
substantiating the disputed amount. If the Parties, in good
faith, cannot resolve the dispute within a reasonable period of
time, then the dispute shall be settled by arbitration pursuant
to Paragraph sixteen (16).
9.5 The customer shall be solely responsible for billing and
collecting from its customers. Under no circumstances shall
STARTEC be responsible for fraudulent, unbillable calls, credits
given by the Customer and bad debts incurred by the Customer.
10. PAYMENT SECURITY: Provision of Service is contingent upon
credit approval by STARTEC.
11. INDEMNIFICATION: Each Party (as "Indemnitor") shall
indemnify, defend and hold harmless the other Party (as
"Indemnitee") from and against any and all liabilities, costs,
damages, fines, assessments, penalties and expenses (including
reasonable attorney's fees) resulting from (a) breach of any
provision in this Agreement by Indemnitor, its employees or
agents, arising out of the Indemnitor's performance hereunder.
Customer shall indemnify, defend and hold STARTEC harmless from
and against any and all liabilities, costs, and damages
(including reasonable attorney's fees) resulting from any claim
arising out of libel, slander, or patent or trademark
infringement arising from the combination or use of Service with
Customer provided service or facilities; or Customer's marketing,
advertising, sales or promotional activities.
12. LIMITATION OF LIABILITY: IN NO EVENT SHALL EITHER PARTY BE
LIABLE TO THE OTHER FOR ANY SPECIAL, INDIRECT, INCIDENTAL,
CONSEQUENTIAL, OR EXEMPLARY DAMAGES, INCLUDING WITHOUT LIMITATION
LOSS OF REVENUE, LOSS OF PROFITS, LOSS OF CUSTOMERS, CLIENTS OR
GOODWILL ARISING IN ANY MANNER FROM THIS AGREEMENT AND THE
PERFORMANCE OR NON-PERFORMANCE OF BUSINESS HEREUNDER.
THE LIABILITY OF STARTEC WITH RESPECT TO THE INSTALLATION
(INCLUDING DELAYS THEREOF), PROVISION, TERMINATION, MAINTENANCE,
REPAIR, INTERRUPTION, OR RESTORATION, OF ANY SERVICE OR
FACILITIES OFFERED UNDER THIS AGREEMENT SHALL NOT EXCEED AN
AMOUNT EQUAL TO THE CHARGE APPLICABLE UNDER THIS AGREEMENT TO THE
PERIOD DURING WHICH SERVICES WERE AFFECTED. FOR THOSE SERVICES
WITH MONTHLY RECURRING CHARGES, THE LIABILITY OF STARTEC IS
LIMITED AN AMOUNT EQUAL TO THE PROPORTIONATE MONTHLY RECURRING
CHARGES FOR THE PERIOD DURING WHICH SERVICE WAS AFFECTED.
13. WARRANTIES: STARTEC WILL USE REASONABLE EFFORTS UNDER THE
CIRCUMSTANCES TO MAINTAIN ITS OVERALL NETWORK QUALITY. THE
QUALITY OF SERVICE PROVIDED HEREUNDER SHALL BE CONSISTENT WITH
OTHER COMMON CARRIER INDUSTRY STANDARDS, GOVERNMENT REGULATIONS
AND SOUND BUSINESS PRACTICES. STARTEC MAKES NO OTHER WARRANTIES
ABOUT THE SERVICE PROVIDED HEREUNDER, EXPRESS OR IMPLIED,
INCLUDING BUT NOT LIMITED TO, ANY WARRANTY OR MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
14. TERMINATION FOR CAUSE
14.1 A Party may terminate this Agreement upon the other Party's
failure to cure any of the following within thirty (30) days
following written notice thereof: (a) the (i) insolvency,
corporate reorganization, arrangement with creditors,
receivership or dissolution of the other Party; or (ii)
institution of bankruptcy proceeding by or against the other
Party; (b) assignment or attempted assignment of the Agreement or
any interest therein, except as permitted by Paragraph nineteen
(19) hereof; (c) a final order by a government entity with
appropriate jurisdiction that a Service or the relationship
hereunder is contrary to law or regulation; or (d) breach of any
provision herein not otherwise referred to in this Paragraph
fourteen (14).
15. TERMINATION FOR CONVENIENCE: Customer may terminate this
Agreement for convenience with sixty (60) days advance written
notice, provided that all early termination requirements
stipulated in the Annexure(s) are met.
16. ARBITRATION: Any dispute arising out of or relating to the
Agreement will be finally settled by arbitration in accordance
with the commercial rules of the American Arbitration
Association. The arbitration will be governed by the United
States Arbitration Act, nine (9) U.S.C. Sec. I. et. seq., and
judgment upon the award rendered by the arbitrator(s) may be
entered by any court with jurisdiction. The arbitration will be
held in the Washington, DC metropolitan area.
17. FORCE MAJEURE: Neither Party shall be liable for any delay
or failure in performance of any part of this Agreement, other
than for any delay or failure in an obligation to pay money, to
the extent such delay or failure is caused by fire, flood,
explosion, accident, war, strike, embargo, governmental
requirement, civil or military authority, Act of God, inability
to secure materials or labor or any other causes beyond their
reasonable control. Any such delay or failure shall suspend this
Agreement until the Force Majeure ceases and the term shall be
extended by the length of the suspension. Customer reserves the
right to terminate the Agreement if Force Majeure lasts for more
than five(5) consecutive days.
18. NOTICES: Notices, requests or other communications
(excluding invoices) hereunder shall be in writing. If mailed
then shall be sent certified, if by fax then, with
acknowledgement from receiving Party.
Fax and Address:
If to STARTEC: If to Customer:
STARTEC, Inc. Frontier Communications Services,
Inc.
10411 Motor City Drive 1530 Wilson Blvd.
Suite 301 Arlington, VA 22209
Bethesda, MD 20817 USA Attention: VP Carrier Relations
Attention: Director- Carrier
Services
Tel.: (301) 365-8959 Tel.: (703) 524-8895
Fax: (301) 365-1488 Fax: (703) 243-8118
19. ASSIGNMENT: Neither this Agreement nor any right or
obligation hereunder may be assigned or delegated to any other
entity without the prior written consent of the other Party,
which consent shall not be unreasonably withheld, unless assigned
to an affiliated company.
20. RULES OF CONSTRUCTION: No rule of construction requiring
interpretation against the draftsman shall apply in the
interpretation of this Agreement.
21. ENTIRE AGREEMENT: This Agreement, together with the
attached Annexure(s), represents the entire agreement of the
Parties with respect to the subject matter hereof and supersedes
all other agreements (written or oral) between the Parties
relating to the Service.
22. MODIFICATION OF AGREEMENT: This Agreement, including its
Annexure(s), may be amended, modified, or supplemented only by a
separate written document executed by authorized representatives
of both Parties. Rates (prices) issued within the parameters of
section eight (8) require only the signature of an authorized
representative of STARTEC and do not require counter-signature
from Customer.
23. WAIVER OF TERMS: No term or provision herein shall be
waived, and no breach or default excused, unless such waiver or
consent is in writing and signed by the Party to which it is
attributed. No consent by a Party to, or waiver of, a breach or
default by the other, whether express or implied shall constitute
a consent to, or waiver of, any subsequent breach or default.
24. PARTIAL INVALIDITY: If any provision of this Agreement
shall be invalid or unenforceable, such invalidity or
unenforceability shall not invalidate or render the Agreement
unenforceable, but rather the Agreement shall be construed as if
not containing the invalid or unenforceable provision. However,
if such provision is an essential element of this Agreement, the
Parties shall promptly attempt to negotiate a substitute
therefor.
25. CUMULATIVE REMEDIES: Except as otherwise provide herein,
the remedies provided for in this Agreement are in addition to
any other remedies available at law or in equity.
26. GOVERNING LAW: This Agreement shall be governed and
construed in accordance with the laws of the State of Michigan.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year last written below.
Customer
Frontier Communications Services, Inc. STARTEC, Inc.
/s/ Steven D. Kozlowicki /s/ Dhruva Kumar
Title: V.P. Intn'l Relations Title: Director, Carrier
Services
Date: February 24, 1997 Date: 26 February, 1997
<PAGE>
ANNEXURE TO STARTEC CARRIER SERVICES AGREEMENT
This Annexure is made and entered into this 17th day of July
1997, by and between STARTEC, Inc., ("STARTEC") a corporation
duly incorporated in the state of Maryland and having its
principal office at 10411 Motor City Drive, Suite 301, Bethesda,
MD-USA 20817 and FRONTIER COMMUNICATIONS SERVICES, INC.
("Customer") a corporation duly incorporated in the state of
Michigan and having its principal office at 30300 Telegraph Road,
Bingham Farms, Michigan 48025-4510.
Whereas, the Parties have signed a Carrier Services Agreement
dated February 26, 1997.
Now this Annexure witnesseth as follows:
1a. Service: Dedicated Access-Switched Services.
1b. Rate Modification: Effective: July 24, 1997
Supersedes all previously quoted rates.
Code Country Rate/Min
[CT REQUESTED]
Billing Method: unless otherwise agreed to in any
annexure(s) attached hereto, Billing will be in the
following format: 1. International Termination: Billing
will be in [CT REQUESTED] increments with a minimum of [CT
REQUESTED] 2. Mexico Termination will be billed in
increments of [CT REQUESTED] with [CT REQUESTED] minimum.
3. Domestic U.S. Termination will be billed in increments
of [CT REQUESTED] with a minimum of [CT REQUESTED] 4. 800
U.S. Origination traffic will be billed in increments of [CT
REQUESTED] with a minimum of [CT REQUESTED]
2. Rate Modification: Rates may be amended with [CT REQUESTED]
notice.
3. Cust. Acct. # [CT REQUESTED] (STARTEC Use only)
4. Please note: customer signature not required; rates will
become effective on the stated effective date.
AUTHORIZED BY: STARTEC, Inc. /s/___________
Date: 17 July 1997 Dhruva D. Kumar, Director-Carrier
Services
Hard copy sent by Certified Mail w/
return receipt
#P372839487
STARTEC Use Only: Folder____ Initial_____ Date ________
PORTIONS OF THIS EXHIBIT ("CONFIDENTIAL PORTIONS") HAVE BEEN
DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION ("COMMISSION")UNDER
RULE 406 OF THE SECURITIES ACT OF 1933 AND THE FREEDOM OF
INFORMATION ACT. THE CONFIDENTIAL PORTIONS HAVE BEEN FILED
SEPARATELY WITH THE COMMISSION AND ARE IDENTIFIED IN THIS EXHIBIT
BY THE NOTATION "CT REQUESTED."
STARTEC, Inc. CARRIER SERVICES AGREEMENT
THIS AGREEMENT, (the "Agreement") is made this 3rd day of
July, 1996, by and between STARTEC, Inc., a Maryland corporation,
with its principal office at 10411 Motor City Drive, Suite 301,
Bethesda, MD 20817 ("STARTEC") and MFS International, Inc., a
Delaware corporation with its principal office at 8100 Boone
Blvd., Ste. 400, Vienna, Virginia 22182 ("Customer"). STARTEC
and Customer are "Parties" hereto.
STARTEC agrees to provide switched international
telecommunications services and other associated services
(collectively "Service"), as described herewith, to Customer on
the following terms and conditions, and Customer agrees to accept
Service subject to the specific terms and charges set forth in
the Annexure(s) attached hereto and pursuant to the terms of this
Agreement.
1. CONFIDENTIALITY: During the Term and for three (3) years
thereafter, neither Party shall disclose any terms of this
Agreement, including pricing, or "Confidential Information" of
the other Party. For purposes of this Agreement, "Confidential
Information" shall mean information in written or other tangible
form specifically labeled as such when disclosed by a Party.
Confidential Information orally shall be identified as such at
the time of tis disclosure. Confidential Information shall
remain the property of the disclosing Party. A Party receiving
Confidential Information shall: (i) use or reproduce such
information only when necessary to perform this Agreement; (ii)
provide at least the same care to avoid disclosure or
unauthorized use of such information as it provides to protect
its own Confidential Information; (iii) limit access to such
information to its employees or agents who need such information
to perform this Agreement; and (iv) return or destroy all such
information, including copies, after the need for it has expired,
upon request of the disclosing Party, or upon termination of this
Agreement. Notwithstanding anything to the contrary contained
herein, a Party shall be allowed to disclose Confidential
Information pursuant to judicial or governmental order or if
otherwise required to do so by law.
2. TERM: The term of this Agreement shall be a minimum of one
(1) year from the last date of signature. The Agreement shall
continue thereafter, in full force and effect, until canceled by
either party giving 60 days written notice to the other Party.
Service will be discontinued the first business day of the third
month after such notice of termination.
3. RELATIONSHIP TO PARTIES: Neither this agreement nor the
provision of Service creates a joint venture, partnership or
agency between STARTEC and Customer.
4. USE OF NAME AND MARKS: This Agreement confers no right to use
the name, service marks, trademarks, copyrights, patents of
either Party except as expressly provided herein. Neither Party
shall take any action which would compromise the registered
copyrights or service marks of the other.
5. LEGAL COMPLIANCE: REMEDIES FOR NON-COMPLIANCE: Customer
represents and warrants that it has obtained all licenses,
approvals and/or regulatory authority necessary to operate as
contemplated herein.
6. CUSTOMER RESPONSIBILITIES: Customer shall comply with
STARTEC's network interface procedures when it orders its own
access facilities. STARTEC agrees to promptly provide Customer
with such network interface procedures.
7. SERVICE ACTIVATION: STARTEC will use reasonable efforts to
provide Service within 30 days, following execution of the
applicable Annexure(s), or the requested delivery date, whichever
is later.
8. PRICING: Pricing is pursuant to the applicable Annexures(s).
STARTEC reserves the right to change the pricing, upon ten (10)
days prior written notice. Should any unit price increase more
than [CT REQUESTED] during a calendar year, Customer may
terminate this Agreement with 30 days written notice providing
that all relevant requirements have been met (i.e. paragraph
14.3).
9. PAYMENTS FOR SERVICE:
9.1 Customer shall pay STARTEC for Service pursuant to the
terms of this Agreement.
9.2 STARTEC will invoice Customer monthly for Service provided
hereunder. Invoices shall be due and payable upon receipt.
Undisputed charges for Service that are not paid within 30 days
after Customer's receipt of the invoice shall be past due.
Interest will be charged on past due amounts beginning the 31st
day following Customer's receipt of the invoice at a rate equal
to the lesser of 18% per annum or the maximum rate allowed by
law.
9.3 Customer will provide STARTEC with a valid tax exemption
form to exempt Customer, under applicable law, from taxes that
would otherwise be paid by Customer. STARTEC will invoice
Customer for taxes (other than income taxes payable by STARTEC)
that are not covered by tax exemption certificate properly filed
with STARTEC.
9.4 If Customer, in good faith, disputes any invoiced amount,
it shall submit to STARTEC within 30 days following receipt of
the invoice, full payment of the undisputed portion of the
invoice and written documentation identifying and substantiating
the disputed amount. If the Parties, in good faith, cannot
resolve the dispute within a reasonable period of time, then the
dispute shall be settled by arbitration pursuant to Paragraph 16.
9.5 The customer shall be solely responsible for billing and
collecting from its customers. Under no circumstances shall
STARTEC be responsible for fraudulent, unbillable calls, credits
given by the Customer and bad debts incurred by the Customer.
10. PAYMENT SECURITY: Provision of Service is contingent on
credit approval by STARTEC. Upon request by STARTEC, Customer
shall provide STARTEC with financial circumstances. If
Customer's financial circumstance or payment history is or
becomes unacceptable to STARTEC, then STARTEC may require a
deposit, irrevocable letter of credit or other form of security
acceptable to STARTEC within 20 days following STARTEC's request.
11. INDEMNIFICATION: Each Party (as "Indemnitor") shall
indemnify, defend and hold harmless the other Party (as
"Indemnitee") from and against any and all liabilities, costs,
damages, fines, assessments, penalties and expenses (including
reasonable attorney's fees) resulting from (a) breach of any
provision in this Agreement by Indemnitor, it employees or
agents, arising out of the Indemnitor's performance hereunder.
Customer shall indemnify, defend and hold STARTEC harmless from
and against any and all liabilities, costs, and damages
(including reasonable attorney's fees) resulting from any claim
arising out of libel, slander, or patent or trademark
infringement arising from the combination or use of Service with
Customer provided service or facilities; or Customer's marketing,
advertising, sales or promotional activities.
12. LIMITATION OF LIABILITY: IN NO EVENT SHALL EITHER PARTY BE
LIABLE TO THE OTHER FOR ANY SPECIAL, INDIRECT, INCIDENTAL,
CONSEQUENTIAL, OR EXEMPLARY DAMAGES, INCLUDING WITHOUT LIMITATION
LOSS OF REVENUE, LOSS OF PROFITS, LOSS OF CUSTOMERS, CLIENTS OR
GOODWILL ARISING IN ANY MANNER FROM THIS AGREEMENT AND THE
PERFORMANCE OR NON-PERFORMANCE OF BUSINESS HEREUNDER.
THE LIABILITY OF STARTEC WITH RESPECT TO THE INSTALLATION
(INCLUDING DELAYS THEREOF), PROVISION, TERMINATION, MAINTENANCE,
REPAIR, INTERRUPTION, OR RESTORATION, OF ANY SERVICE OR
FACILITIES OFFERED UNDER THIS AGREEMENT SHALL NOT EXCEED AN
AMOUNT EQUAL TO THE CHARGE APPLICABLE UNDER THIS AGREEMENT TO THE
PERIOD DURING WHICH SERVICES WERE AFFECTED. FOR THOSE SERVICES
WITH MONTHLY RECURRING CHARGES, THE LIABILITY OF STARTEC IS
LIMITED TO AN AMOUNT EQUAL TO THE PROPORTIONATE MONTHLY RECURRING
CHARGES FOR THE PERIOD DURING WHICH SERVICE WAS AFFECTED.
13. WARRANTIES: STARTEC WILL USE REASONABLE EFFORTS UNDER THE
CIRCUMSTANCES TO MAINTAIN ITS OVERALL NETWORK QUALITY. THE
QUALITY OF SERVICE PROVIDED HEREUNDER SHALL BE CONSISTENT WITH
OTHER COMMON CARRIER INDUSTRY STANDARDS, GOVERNMENT REGULATIONS
AND SOUND BUSINESS PRACTICES. STARTEC MAKES NO OTHER WARRANTIES
ABOUT THE SERVICE PROVIDED HEREUNDER, EXPRESS OR IMPLIED,
INCLUDING BUT NOT LIMITED TO, ANY WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
14. TERMINATION FOR CAUSE
14.1 A Party may terminate this Agreement upon the other Party's
failure to cure any of the following within 30 days following
written notice thereof: (a) the (i) insolvency, corporate
reorganization, arrangement with creditors, receivership or
dissolution of the other Party; or (ii) institution of bankruptcy
proceedings by or against the other Party; (b) assignment or
attempted assignment of the Agreement or any interest therein,
except as permitted by Paragraph 19 hereof; (c) change in control
of the defaulting Party without the other Party's prior written
consent, which consent shall not be unreasonably withheld; (d) a
final order by a government entity with appropriate jurisdiction
that a Service or the relationship hereunder is contrary to law
or regulation; or (e) breach of any provision herein not
otherwise referred to in this Paragraph 14.
14.2 STARTEC may terminate this Agreement immediately and
without notice if Customer breaches a provision of Paragraph 10
or 11.
14.3 Upon termination of this Agreement immediately and without
notice if Customer breaches a provision of Paragraph 10 or 11.
15. TERMINATION FOR CONVENIENCE: Customer may terminate this
Agreement for convenience with 60 days advance written notice,
provided that all early termination requirements stipulated in
the Annexure(s) are met.
16. ARBITRATION: Any dispute arising out of or relating to the
Agreement will be finally settled by arbitration in accordance
with the rules of the American Arbitration Association. The
arbitration will be governed by the United States Arbitration
Act, 9 U.S.C. Sec. I, et. seq., and judgment upon the award
rendered by the arbitrator(s) may be entered by any court with
jurisdiction. The arbitration will be held in the Washington, DC
metropolitan area.
17. FORCE MAJEURE: Neither Party shall be liable for any delay
or failure in performance of any part of this Agreement, other
than for any delay or failure in an obligation to pay money, to
the extent such delay or failure is caused by fire, flood,
explosion, accident, war, strike, embargo, governmental
requirement, civil or military authority, Act of God, inability
to secure materials or labor or any other causes beyond their
reasonable control. Any such delay or failure shall suspend this
Agreement until the Force Majeure ceases and the term shall be
extended by the length of the suspension.
18. NOTICES: Notices, requests or other communications
(excluding invoices) hereunder shall be in writing. If mailed
then shall be sent certified, if by fax then, with
acknowledgement from receiving Party. Fax and Address:
If to STARTEC: If to Customer:
STARTEC, Inc. MFS International, Inc.
10411 Motor City Drive, Suite 301 8100 Boone Blvd., Suite 400
Bethesda, MD 20817 USA Vienna, Virginia 22182 USA
Attention: Manager-Carrier Attention: John Hendler
Services
Tel.: (703) 287-2400 Tel.: (301) 365-8959
Fax: (703)287-2499 Fax: (301) 365-8969
19. ASSIGNMENT: Neither this Agreement nor any right or
obligation hereunder may be assigned or delegated to any other
entity without the prior written consent of the other Party,
which consent shall not be unreasonably withheld.
20. RULES OF CONSTRUCTION: No rule of construction requiring
interpretation against the draftsman shall apply in the
interpretation of this Agreement.
21. ENTIRE AGREEMENT: This Agreement, together with the
attached Annexure(s), represents the entire agreement of the
Parties with respect to the subject matter hereof and supersedes
all other agreements (written or oral) between the Parties
relating to the Service.
22. MODIFICATION OF AGREEMENT: This Agreement, including its
Annexure(s), may be amended, modified, or supplemented only by a
separate written document executed by authorized representatives
of both Parties.
23. WAIVER OF TERMS: No term or provision herein shall be
waived, and no breach or default excused, unless such waiver or
consent is in writing and signed by the Party to which it is
attributed. No consent by a Party to, or waiver of, a breach or
default by the other, whether express or implied shall constitute
a consent to, or waiver of, any subsequent breach or default.
24. PARTIAL INVALIDITY: If any provision of this Agreement
shall be invalid or unenforceable, such invalidity or
unenforceability shall not invalidate or render the Agreement
unenforceable, but rather the Agreement shall be construed as if
not containing the invalid or unenforceable provision. However,
if such provision is an essential element of this Agreement, the
Parties shall promptly attempt to negotiate a substitute
therefor.
25. CUMULATIVE REMEDIES: Except as otherwise provide herein,
the remedies provided for in this Agreement are in addition to
any other remedies available at law or in equity.
26. GOVERNING LAW: This Agreement shall be governed and
construed in accordance with the laws of the State of Maryland,
and the Parties irrevocably agree to the exclusive jurisdiction
of the courts of the State of Maryland.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year last written below.
Customer MFS International, Inc. STARTEC, Inc.
/s/ Mary Lee Allen /s/ Dhruva Kumar
Name: Mary Lee Allen Name: Dhruva Kumar
Title: Vice-President, International Title: Manager, Carrier
Carrier Relations Services
Date: July 3, 1996 Date: 19 July 1996
<PAGE>
AMENDMENT
to STARTEC Carrier Services Agreement
This Amendment to STARTEC Carrier Services Agreement is made and
entered into this 7th day of April, 1997, by and between STARTEC,
Inc., ("STARTEC") a corporation duly incorporated in the state of
Maryland and having its principal office at 10411 Motor City
Drive, Suite 301, Bethesda, MD 20817 and Worldcom, Inc. successor
in interest to MFS International, Inc. ("Customer") a corporation
duly incorporated in the state of Georgia and having its
principal office at 515 East Amite St., Jackson, MS 39201-2702.
STARTEC and Customer are "Parties" hereto.
Whereas, STARTEC and Customer have signed a STARTEC Carrier
Services Agreement ("Agreement") dated 3rd July, 1996 and,
Whereas, STARTEC and Customer desire to amend the Agreement in
accordance with Section 22 (Modification of Agreement) thereof,
NOW, THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, STARTEC and Customer hereby agree
as follows:
I. Pursuant to Section 19-ASSIGNMENT, STARTEC agrees to assign
the STARTEC Carrier Services Agreement to Worldcom, Inc.
II. Section 14.3 is amended to read as follows: Upon Termination
of this Agreement a Party may recover from the other all
sums it is owed at the time of termination.
III. Section 8-PRICING is amended to read as follows: Pricing is
pursuant to the applicable Annexure(s). STARTEC reserves
the right to change the pricing, upon fifteen (15) days
prior written notice. Should any unit price increase more
than [CT REQUESTED] during a calendar year, Customer may
terminate the Agreement relevant to the unit price increase
with [CT REQUESTED] written notice providing that all
relevant requirements have been met (i.e. paragraph 14.3).
It is agreed, however, that Customer may terminate the
Agreement according to the terms of this section even if
sums are owed, if said sums are validly in dispute.
IV. Section 22-MODIFICATION OF AGREEMENT is amended to read as
follows: This Agreement, including its Annexure(s) may be
amended, modified, or supplemented only by a separate
written document executed by authorized representatives of
both Parties. Rates (prices) issued within the parameters
of section eight (8)-Pricing and section eighteen
(18)-Notices require only the signature of an authorized
representative of STARTEC and do not require
counter-signature from customer.
Except as expressly amended herein, the terms and conditions of
the Service Agreement shall remain in full force and effect
without waiver or modification of the rights of any party hereto.
IN WITNESS WHEREOF, each of the Parties hereto has caused this
Amendment to be executed on its behalf by an officer thereunto
duly authorized as of the date first above written.
ACCEPTED BY:
STARTEC, Inc. Customer:
Worldcom, Inc.
/s/: ________________(signature) /s/:____________________
Dhruva D. Kumar (print name) __________________________
Director-Carrier Services (title) __________________________
_____________________ (date)
__________________________
Price Schedule
Effective Date: June 6, 1996
Minimum Term: [CT REQUESTED]
Termination Liability: [CT REQUESTED]
Minimum Usage Commitment (Per Month): N/A
[CT REQUESTED]
Per Call Billing Increments: [CT REQUESTED]
MFSI Is My International Carrier of Choice To: [CT REQUESTED]
All Amounts Due are in U.S. Dollars.
Unit Prices: See Attachment A. All prices are exclusive of any
taxes or surcharges that may be applicable.
Port Charge: [CT REQUESTED]
Volume Discounts To Be Applied on Top of the Unit Prices
Contained in Attachment A: [CT REQUESTED]
Range Discount Range Discount
_______ ________ ________ __________
_______ ________ ________ __________
_______ ________ ________ __________
_______ ________ ________ __________
Acknowledged and Agreed.
Customer: STARTEC, Inc. MSF International, Inc.
/s/ Dhruva Diego Kumar /s/ Mary Lee Allen
Name: Dhruva Diego Kumar Name: Mary Lee Allen
Title: Manager-Carrier Svcs. Title: VP, International
Carrier Relations
Date: 6 June, 1996 Date: 6/26/96
<PAGE>
ANNEXURE to STARTEC Carrier Services Agreement
This Annexure is made and entered into this 2nd day of May,
1997, by and between STARTEC, Inc., ("STARTEC") a
corporation duly incorporated in the state of Maryland and
having its principal office at 10411 Motor City Drive, Suite
301, Bethesda, MD 20817 and WORLDCOM, Inc. successor in
interest to MFS International, Inc. "Customer") a
corporation duly incorporated in the state of Georgia and
having its principal office at 515 East Amite Street,
Jackson, 39201-2702.
Whereas, the Parties have signed a master Agreement dated
3rd July,1996.
Now this Annexure witnesseth as follows:
1a. Service: Dedicated Access-Switched Services.
1b. Special Rates:
Effective: March 1, 1997
Special rate supersede base rates.
Code Country Rate/min.
[CT REQUESTED]
2. Billing Method: unless otherwise agreed to in any
annexure(s) attached hereto, Billing will be in the
following format: 1. International Termination: Billing
will be in [CT REQUESTED] increments with a minimum of [CT
REQUESTED] 2. Mexico Termination will be billed in
increments of [CT REQUESTED] with a [CT REQUESTED] minimum.
3. Domestic U.S. Termination will be billed in increments
of [CT REQUESTED] with a minimum of [CT REQUESTED] 4. 800
U.S. Origination traffic will be billed in increments of [CT
REQUESTED] with a minimum of [CT REQUESTED]
3. Rate Modification: [CT REQUESTED]
4. Cust. Account [CT REQUESTED] (STARTEC Use only)
5. Please note customer signature not required, rates will
become effective on the stated effective date.
AUTHORIZED BY: STARTEC, Inc. /s/ Dhruva D. Kumar
Date: 2 May, 1997 Dhruva D. Kumar, Director, Carrier
Services
<PAGE>
ANNEXURE A-1.0
This Annexure A-1.0 is made and entered into this 19th day
of July, 1996, by and between STARTEC, Inc., ("STARTEC") a
corporation duly incorporated in the state of Maryland and having
its principal office at 10411 Motor City Drive, Suite 301,
Bethesda, MD 20817 and MFS International, Inc. ("Customer") a
corporation duly incorporated in the state of Delaware and having
its principal office at 8100 Boone Blvd., Ste. 400 Vienna,
Virginia 22182.
WHEREAS, the Parties have signed a Carrier Services
Agreement dated 3rd July, 1996.
Now this Annexure witnesseth as follows:
1a. Service: Dedicated Access-Switched Services.
1b. Rates: [CT REQUESTED]
Effective: August 1, 1996.
1c. Special Rates: Special Rates for Customer per ANNEXURE A-2.
2. Interconnection-STARTEC POP:
The nearest STARTEC POP to Customer is located at: [CT
REQUESTED]
3a. Port Charge: [CT REQUESTED]
3b. Minimum Term: [CT REQUESTED]
3c. Termination Liability: [CT REQUESTED]
3d. Ramp-up Period: [CT REQUESTED]
3e. Minimum Usage Commitment (Per Month):
[CT REQUESTED]
4a. Billing Method: unless otherwise agreed to in any
annexure(s) attached hereto, Billing will be in the following
format: 1. International Termination: Billing will be in [CT
REQUESTED] increments with a minimum of [CT REQUESTED]. 2.
Mexico Termination will be billed in increments of [CT REQUESTED]
with a [CT REQUESTED] minimum. 3. Domestic U.S. Termination
will be billed in increments of [CT REQUESTED] with a minimum of
[CT REQUESTED] 4. 800 U.S. Origination traffic will be billed
in increments of [CT REQUESTED] with a minimum of [CT REQUESTED]
4b. Bill Rendering: Call Data Records (CDR's) provided on floppy
diskette and summary invoice in paper form.
5. Special or Ancillary Information:
6. Cust. Account. [CT REQUESTED] (STARTEC Use only)
ACCEPTED BY:
STARTEC, Inc. Customer: MFS International, Inc.
/s/: Dhruva Kumar (signature) /s/: Mary Lee Allen
Dhruva Kumar (print name) Mary Lee Allen
Manager, Carrier Services Vice-President, International
(title) Carrier Relations
19 July 1996 (date) July 3, 1996
PORTIONS OF THIS EXHIBIT ("CONFIDENTIAL PORTIONS") HAVE BEEN
DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION ("COMMISSION")UNDER
RULE 406 OF THE SECURITIES ACT OF 1933 AND THE FREEDOM OF
INFORMATION ACT. THE CONFIDENTIAL PORTIONS HAVE BEEN FILED
SEPARATELY WITH THE COMMISSION AND ARE IDENTIFIED IN THIS EXHIBIT
BY THE NOTATION "CT REQUESTED."
INTERNATIONAL CARRIER VOICE SERVICE AGREEMENT
THIS AGREEMENT (the "Agreement") is made this 6th day of June,
1996, by and between MFS International, a Delaware corporation,
with its principal office at 8100 Boone Boulevard, Suite 500,
Vienna, VA 22182 ("MFSI"), and STARTEC, Inc. a Maryland Corp.
with its principal office at 10411 Motor City Drive, Suite 301,
Bethesda, MD 20877 ("Customer"). MFSI and Customer are
"Parties" hereto.
MFSI agrees to provide switched international telecommunications
services and other associated services (collectively "Service"),
as described herewith, to Customer on the following terms and
conditions, and Customer agrees to accept Service subject to the
specific terms and charges set forth in the Price Schedule(s) and
pursuant to the terms of this Agreement.
1. Confidentiality. During the Term and for three (3) years
thereafter, neither Party shall disclose any terms of this
Agreement, including pricing, or "Confidential Information" of
the other Party. For purposes of this Agreement, "Confidential
Information" shall mean information in written or other tangible
form specifically labeled as such when disclosed by a Party.
Confidential information transmitted orally shall be identified
as such at the time of its disclosure., Confidential Information
shall remain the property of the disclosing Party. A Party
receiving Confidential Information shall: (i) use or reproduce
such information only when necessary to perform this Agreement;
(ii) provide at least the same care to avoid disclosure or
unauthorized use of such information as it provides to protect
its own Confidential Information; (iii) limit access to such
information to its employees or agents who need such information
to perform this Agreement; and (iv) return or destroy all such
information, including copies, after the need for it has expired,
upon request of the disclosing Party, or upon termination of this
Agreement. Notwithstanding anything to the contrary contained
herein, a Party shall be allowed to disclose Confidential
Information pursuant to judicial or governmental order or if
otherwise required to do so by law.
2. TERM. The term of this Agreement shall be a minimum one (1)
year from the last date of signature. The Agreement shall
continue thereafter, in full force and effect, until canceled by
either party giving 60 days written notice to the other party.
Service will be discontinued the first business day of the third
month after such notice of termination.
3. RELATIONSHIP OF PARTIES. Neither this Agreement nor the
provision of Service creates a joint venture, partnership or
agency between MFSI and Customer.
4. USE OF NAME AND MARKS. This Agreement confers no right to
use the name, service marks, trademarks, copyrights, patents of
either Party except as expressly provided herein. Neither Party
shall take any action which would compromise the registered
copyrights or service marks of the other.
5. LEGAL COMPLIANCE: REMEDIES FOR NON-COMPLIANCE. Customer
represents and warrants that it has obtained all licenses,
approvals and/or regulatory authority necessary to operate as
contemplated herein.
6. CUSTOMER RESPONSIBILITIES. Customer shall comply with
MFSI's network interface procedures when it orders its own access
facilities. MFSI agrees to promptly provide Customer with such
network interface procedures.
7. SERVICE ACTIVATION. MFSI will use reasonable efforts to
provide Service within 30 days, following execution of the
applicable Price Schedule, or the requested delivery date,
whichever is later.
8. PRICING. Pricing is pursuant to the applicable Price
Schedule(s). MFSI reserves the right to change the pricing upon
ten (10) days prior written notice. Should any unit price
increase more than [CT REQUESTED] during a calendar year,
Customer may terminate this Agreement with 30 days written notice
providing that all relevant requirements have been met (i.e.
paragraph 14.3).
9. PAYMENT FOR SERVICE.
9.1 Customer shall pay MFSI for Service pursuant to the terms of
this Agreement.
9.2 MFSI will invoice Customer monthly for Service provided
hereunder. Invoices shall be due and payable upon receipt.
Undisputed charges for Service that are not paid within 30 days
after Customer's receipt of the invoice shall be past due.
Interest will be charged on past due amounts beginning the 31st
day following Customer's receipt of the invoice at a rate equal
to the lesser of 18% per annum or the maximum rate allowed by
law.
9.3 Customer will provide MFSI with a valid tax exemption form
to exempt Customer, under applicable law, from taxes that would
otherwise be paid by Customer. MFSI will invoice Customer for
taxes (other than income taxes payable by MFSI) that are not
covered by tax exemption certificate properly filed with MFSI.
9.4 If Customer, in good faith, disputes any invoiced amount, it
shall submit to MFSI, within 30 days following receipt of the
invoice, full payment of the undisputed portion of the invoice
and written documentation identifying and substantiating the
disputed amount. If the Parties, in good faith, cannot resolve
the dispute within a reasonable period of time, then the dispute
shall be settled by arbitration pursuant to Paragraph 16.
10. PAYMENT SECURITY. Provision of Service is contingent on
credit approval by MFSI. Upon request by MFSI, Customer shall
provide MFSI with financial circumstances. If Customer's
financial circumstances or payment history is or becomes
unacceptable to MFSI, then MFSI may require a deposit,
irrevocable letter of credit or other form of security acceptable
to MFSI within 20 days following MFSI's request.
11. INDEMNIFICATION. Each Party (as "Indemnitor") shall
indemnify, defend and hold harmless the other Party (as
"Indemnitee") from and against any and all liabilities, costs,
damages, fines, assessments, penalties and expenses (including
reasonable attorney's fees) resulting from (a) breach of any
provision in this Agreement by Indemnitor, its employees or
agents, or (b) any misrepresentation or illegal act of
Indemnitor, its employees or agents, arising out of the
Indemnitor's performance hereunder.
Customer shall indemnify, defend and hold MFSI harmless from and
against any and all liabilities, costs and damages (including
reasonable attorney's fees) resulting from any claim arising out
of libel, slander, or patent or trademark infringement arising
from the combination or use of Service with Customer provided
service or facilities; or Customer's marketing, advertising,
sales or promotion activities.
12. LIMITATION OF LIABILITY. IN NO EVENT SHALL EITHER PARTY BE
LIABLE TO THE OTHER PARTY FOR ANY SPECIAL, INDIRECT, INCIDENTAL,
CONSEQUENTIAL OR EXEMPLARY DAMAGES, INCLUDING WITHOUT LIMITATION
LOSS OF REVENUE, LOSS OF PROFITS, LOSS OF CUSTOMERS, CLIENTS OR
GOODWILL ARISING IN ANY MANNER FROM THIS AGREEMENT AND THE
PERFORMANCE OR NONPERFORMANCE OF BUSINESS HEREUNDER.
THE LIABILITY OF MFSI WITH RESPECT TO THE INSTALLATION (INCLUDING
DELAYS THEREOF), PROVISION, TERMINATION, MAINTENANCE, REPAIR,
INTERRUPTION, OR RESTORATION OF ANY SERVICE OR FACILITIES OFFERED
UNDER THIS AGREEMENT SHALL NOT EXCEED AN AMOUNT EQUAL TO THE
CHARGE APPLICABLE UNDER THIS AGREEMENT TO THE PERIOD DURING WHICH
SERVICES WERE AFFECTED. FOR THOSE SERVICES WITH MONTHLY
RECURRING CHARGES, THE LIABILITY OF MFSI IS LIMITED TO AN AMOUNT
EQUAL TO THE PROPORTIONATE MONTHLY RECURRING CHARGES FOR THE
PERIOD DURING WHICH SERVICE WAS AFFECTED.
13. WARRANTIES. MFSI WILL USE REASONABLE EFFORTS UNDER THE
CIRCUMSTANCES TO MAINTAIN ITS OVERALL NETWORK QUALITY. THE
QUALITY OF SERVICE PROVIDED HEREUNDER SHALL BE CONSISTENT WITH
OTHER COMMON CARRIER INDUSTRY STANDARDS, GOVERNMENT REGULATIONS
AND SOUND BUSINESS PRACTICES. MFSI MAKES NO OTHER WARRANTIES
ABOUT THE SERVICE PROVIDED HEREUNDER, EXPRESS OR IMPLIED,
INCLUDING BUT NOT LIMITED TO, ANY WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
14. TERMINATION FOR CAUSE.
14.1 A Party may terminate this Agreement upon the other Party's
failure to cure any of the following with 30 days following
written notice thereof: (a) the (i) insolvency, corporate
reorganization, arrangement with creditors, receivership or
dissolution of the other Party; or (ii) institution of bankruptcy
proceedings by or against the other Party; (b) assignment or
attempted assignment of the Agreement or any interest therein,
except as permitted by paragraph 19 hereof; (c) change in control
of the defaulting Party without the other Party's prior written
consent, which consent shall not be unreasonably withheld; (d) a
final order by a government entity with appropriate jurisdiction
that a Service or the relationship hereunder is contrary to law
or regulation; or (e) breach of any provision herein not
otherwise referred to in this Paragraph 14.
14.2 MFSI may terminate this Agreement immediately and without
notice if Customer breaches a provision of Paragraph 10 or 11.
14.3 Upon termination of this Agreement a Party may recover from
the other all sums it is owed at the time of termination.
15. TERMINATION FOR CONVENIENCE. Customer may terminate this
Agreement for convenience with 60 days advance written notice,
provided that all early termination requirements stipulated in
the Price Schedule(s) are met.
16. ARBITRATION. Any dispute arising out of or relating to the
Agreement will be finally settled by arbitration in accordance
with the rules of the American Arbitration Association. The
arbitration will be governed by the United States Arbitration
Act, 9 U.S.C. Sec. I, et. seq., and judgment upon the award
rendered by the arbitrator(s) may be entered by any court with
jurisdiction. The arbitration will be held in the Washington,
D.C. metropolitan area.
17. FORCE MAJEURE. Neither Party shall be liable for any delay
or failure in performance of any part of this Agreement, other
than for any delay or failure in an obligation to pay money, to
the extent such delay or failure is caused by fire, flood,
explosion, accident, war strike, embargo, governmental
requirement, civil or military authority, Act of God, inability
to secure materials or labor or any other causes beyond their
reasonable control. Any such delay or failure shall suspend this
Agreement until the Force Majeure ceases and the term shall be
extended by the length of the suspension.
18. NOTICES. Notices, requests or other communications
(excluding invoices) hereunder shall be in writing and sent by
certified mail addressed as follows:
If to MFS International:
MFS International
ATTN: Manager-Carrier Svcs.
8100 Boone Blvd., Suite 500
Vienna,VA 22182
(703) 714-2381
If to Customer:
STARTEC, Inc.
10411 Motor City Dr. #301
Bethesda, MD 20817
Attention: Director,
International Voice Services
Fax (301) 365-8969
phone: (301) 365-8959
19. ASSIGNMENT. Neither this Agreement nor any right or
obligation hereunder may be assigned or delegated to any other
entity without the prior written consent of the other Party,
which consent shall not be unreasonably withheld.
20. RULES OF CONSTRUCTION. No rule of construction requiring
interpretation against the draftsman shall apply in the
interpretation of this Agreement.
21. ENTIRE AGREEMENT. This Agreement, together with the
attached Price Schedule(s), represents the entire agreement of
the Parties with respect to the subject matter hereof and
supersedes all other agreements (written or oral) between the
Parties relating to the Service.
22. MODIFICATION OF AGREEMENT. This Agreement, including its
Price Schedule(s), may be amended, modified or supplemented only
by a separate written document executed by authorized
representatives of both Parties.
23. WAIVER OF TERMS. No term or provision herein shall be
waived, and no breach or default excused, unless such waiver or
consent is in writing and signed by the Party to which it is
attributed. No consent by a Party to, or waiver of, a breach or
default by the other, whether express or implied shall constitute
a consent to, or waiver of, any subsequent breach or default.
24. PARTIAL INVALIDITY. If any provision of this Agreement
shall be invalid or unenforceable, such invalidity or
unenforceability shall not invalidate or render the Agreement
unenforceable, but rather the Agreement shall be construed as if
not containing the invalid or unenforceable provision. However,
if such provision is an essential element of this Agreement, the
Parties shall promptly attempt to negotiate a substitute
therefor.
25. CUMULATIVE REMEDIES. Except as otherwise provided herein,
the remedies provided for in this Agreement are in addition to
any other remedies available at law or in equity.
26. GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the Commonwealth of
Virginia, and the Parties irrevocably agree to the exclusive
jurisdiction of the courts of the Commonwealth of Virginia.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year last written below.
Customer: STARTEC, Inc. MFS International
/s/_________________________ /s/_________________________
Name: Dhruva Kumar Name: Mary Lee Allen
Title: Manager - Carrier Svcs. Title: V.P. International
Carrier Relations
Date: 6 June, 1996
Date: 6/26/96
<PAGE>
ANNEXURE to STARTEC Carrier Services Agreement
This Annexure is made and entered into this 2nd day of May,
1997, by and between STARTEC, Inc., ("STARTEC") a
corporation duly incorporated in the state of Maryland and
having its principal office at 10411 Motor City Drive, Suite
301, Bethesda, MD 20817 and WORLDCOM, Inc. successor in
interest to MFS International, Inc. "Customer") a
corporation duly incorporated in the state of Georgia and
having its principal office at 515 East Amite Street,
Jackson, 39201-2702.
Whereas, the Parties have signed a master Agreement dated
June 6, 1996.
Now this Annexure witnesseth as follows:
1a. Service: Dedicated Access-Switched Services.
1b. Special Rates:
Effective: March 1, 1997
Special rate supersede base rates.
Code Country Rate/min.
[CT REQUESTED]
2. Billing Method: unless otherwise agreed to in any
annexure(s) attached hereto, Billing will be in the
following format: 1. International Termination: billing
will be in [CT REQUESTED] increments with a minimum of [CT
REQUESTED] 2. Mexico Termination will be billed in
increments of [CT REQUESTED] with a [CT REQUESTED] minimum.
3. Domestic U.S. Termination will be billed in increments
of [CT REQUESTED] with a minimum of [CT REQUESTED] 4. 800
U.S. Origination traffic will be billed in increments of [CT
REQUESTED] with a minimum of [CT REQUESTED]
3. Rate Modification: [CT REQUESTED]
4. Cust. Account [CT REQUESTED] (STARTEC Use only)
5. Please note customer signature not required, rates will
become effective on the stated effective date.
AUTHORIZED BY: STARTEC, Inc. /s/ Dhruva D. Kumar
Date: 2 May, 1997 Dhruva D. Kumar, Director, Carrier
Services
PORTIONS OF THIS EXHIBIT ("CONFIDENTIAL PORTIONS") HAVE BEEN
DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION ("COMMISSION")UNDER
RULE 406 OF THE SECURITIES ACT OF 1933 AND THE FREEDOM OF
INFORMATION ACT. THE CONFIDENTIAL PORTIONS HAVE BEEN FILED
SEPARATELY WITH THE COMMISSION AND ARE IDENTIFIED IN THIS EXHIBIT
BY THE NOTATION "CT REQUESTED."
CHERRY COMMUNICATIONS INCORPORATED
CARRIER SERVICE AGREEMENT
THIS CARRIER SERVICE AGREEMENT ("AGREEMENT") IS ENTERED INTO
ON 7 June, 1995, between CHERRY COMMUNICATIONS INCORPORATED, a
Illinois corporation ("Provider") with its principal offices at
2205 Enterprise Drive, Suite 501, Westchester, IL 60154, and
STARTEC, INC. a(n) Maryland corporation ("Purchaser") with its
principal offices at 10411 Motor City Drive, Suite 301, Bethesda.
Maryland 20817.
Background:
A. Provider provides telephone communications
services between its location and the inbound/outbound
origination/termination points identified on Exhibit A and
subsequent attachments attached hereto and incorporated herein by
this reference; and
B. Purchaser desires to purchase and Provider
desires to provide, upon the terms and conditions set forth in
this Agreement, telephone communication services to Purchaser.
Agreement:
NOW, THEREFORE, intending to be legally bound, the parties
agree as follows:
Business Provisions:
1. Service Commencement Date. Beginning on or about 7 June,
1995, Provider shall provide telephone communications services to
Purchaser at the rates, terms and conditions described at Exhibit
A and subsequent attachments, and to the termination/origination
points set forth at such Exhibit A and subsequent attachments.
The services to be provided are limited to those set forth at
such Exhibit A and subsequent attachments. New services will be
added as subsequent attachments referencing this contract as long
as both parties (provider/purchaser) duly initial and date the
attachments.
2. Term of Service. This Agreement shall be effective and the
parties' obligations shall commence upon the above date of
execution by the parties and the Agreement shall continue for a
period of one year from such date. This Agreement will be
automatically renewed for additional one year periods after the
expiration of the initial term or any subsequent term. If either
party desires to cancel this Agreement upon the expiration of the
initial term or any subsequent term, it shall give the other
party notice of its intent to cancel at least sixty (60) days
prior to the expiration of the current term. This Agreement
shall continue and remain in full force and effect until canceled
by either party upon notice as provided herein.
3. Security. As a condition of the Provider's obligations
hereunder, to ensure the prompt payments of sums due hereunder,
Purchaser shall agree to pay all reasonably undisputed funds in
net 30 days of receipt of invoice.
General Provisions:
4. Invoice. Provider shall submit an invoice to purchaser each
month, covering charges for the previous month. Purchaser shall
make payment to Provider within the later of: (1) thirty (30)
days after the invoice date, which shall be the last date of the
previous month's billing cycle; or (2) thirty (30) days after
Purchaser's receipt of the invoice. If payment of reasonable
undisputed charges is not received by Provider by such date, the
delinquent balance shall bear interest at the rate of one and
one-half percent (1-1/2%) per month. In addition, to cover
additional administrative expense, a five percent (5%) surcharge
on all overdue invoices shall be imposed until the account is
brought current. In the case where there is bi-lateral exchange
of services, the Purchaser will apply amounts due from Provider
to the monthly invoice and remit balance accordingly. Nothing
herein shall be construed to constitute a waiver of Provider's
right to declare a default by Purchaser under this agreement on
account of such delinquency, to terminate this Agreement on five
(5) business days written notice and failure of Purchaser to cure
within five (5) business day period and to excise any other
rights under this Agreement or at law or in equity.
5. Taxes. Purchaser upon the execution of this Agreement shall
provide Provider with a properly executed Certificate of
Exemption for all foreign, federal, state, country and local
taxes and fees (if any) and shall be responsible for the
collection of all applicable end-user taxes and fees and the
remittance of such taxes and fees to the relevant governmental
authority.
6. Termination. If payment has not been received by the due
date described above, or any extension thereof permitted in
writing at Provider's option, for all charges (including
transmission charges, service charges and monthly fixed charges,
if any) billed to Purchaser, the Provider may at its sole
discretion and with five (5) business days prior written notice
to Purchaser, terminate transmission services in part or in
whole. Provider reserves the right to collect reasonable
attorney's fees and any and all cost incurred by Provider in the
collection of any unpaid amounts whether or not suit is
instituted.
7. Adjustments. Request for billing adjustments must be made
within sixty (60) days of the invoice date. Any amounts which
are determined to be in error will be credited against the next
month's invoice. Such request for adjustment shall not be cause
for delay in payment of the due net or reasonably dispute
charges.
8. No Warranties. PROVIDER MAKES NO WARRANTY, EXPRESS OR
IMPLIED WITH RESPECT TO THE TRANSMISSION SERVICES PROVIDED
HEREUNDER AND EXPRESSLY DISCLAIMS ANY WARRANTY OF
MERCHANTABILITY, DESCRIPTION OR FITNESS FOR ANY PARTICULAR
PURPOSE OR FUNCTION.
9. Waiver of Liability. As a material inducement for Provider
to provide the services hereunder at the prices stated, Purchaser
agrees that Provider shall in no event be liable for any loss,
expense or damage for (i) loss of revenue, profits savings,
business or goodwill, and (ii) exemplary, proximate,
consequential, or incidental damages and expenses of any type or
nature on account of any breach or default hereunder by Provider
or on account of the use of the services.
10. Indemnity. Purchaser shall indemnify and hold harmless
Provider, its stockholders, officers, directors, employees and
agents from any and all loss, cost, damage, expense or liability,
including, without limitation, court cost and reasonable
attorney's fees, arising out of, in whole or in part, directly or
indirectly, the installation, hook-up, maintenance, service or
trouble-shooting of the transmission services described in this
Agreement including any interruption of transmission service to
Purchaser, its employees, agents and customers, except when
caused by the gross negligence of Provider or the international
violations of any applicable law or governmental regulation by
Provider.
11. Regulations. This Agreement is made expressly subject to
all present and future valid orders and regulations of any
regulatory body having jurisdiction over the subject matter
hereof and to the laws of the United States of America, any of
its states, or any foreign governmental agency having
jurisdiction. In the event this Agreement, or any of its
provision, shall be found contrary to or in conflict with any
such order, rule, regulation or law, this Agreement shall be
deemed modified to the extent necessary to comply with any such
order, rule, regulation or law and shall be modified in such a
way as is consistent with the form, intent and purpose of this
Agreement.
12. No Agency. Nether party is authorized to act as an agent
for, or legal representative of, the other party and neither
party shall have the authority to assume or create any obligation
on behalf of, in the name of, or binding upon the other party.
Purchaser shall not represent or intimate that Provider is
responsible for the type or quality of Purchaser's services to
its customers.
13. Force Majeure. The parties' obligations under this
Agreement are subject to, and neither party shall be liable for,
delays, failures to perform (except the payment of money by
Purchaser), damages, losses or destruction, or malfunction of any
equipment or any consequence thereof caused or occasioned by, or
due to fire, flood, water, the elements, labor disputes or
shortage, utility curtailments, power failures, explosions, civil
disturbances, governmental actions, shortage of equipment for
supplies, unavailability of transportation, acts or omissions of
third parties, or any other cause beyond the party's reasonable
control. Purchaser shall not represent that Provider is
responsible for the type or quality of Purchaser's services to
its customers.
14. No Waiver. The failure of either party to enforce or insist
upon compliance with any of the provisions of this Agreement or
the waiver thereof, in any instance, shall not be construed as a
general waiver or relinquishment of any other provision of this
Agreement.
15. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
heirs, successors and assigns. Nether party shall voluntarily or
by operation of law assign, transfer, license, or otherwise
transfer all or any party of its right, duties or other interests
in this Agreement or the proceeds thereof (collectively,
"Assignment"), without the other party's prior written consent,
which consent shall not be unreasonably with held or delayed.
Any attempt to make an Assignment in violation of this provision
shall be null and void. Purchaser shall provide written notice
to Provider of any provision shall be null and void. Purchaser
shall provide written notice to Provider of any material change
in ownership of Purchaser. Purchaser's failure to comply with
the assignment provision, as contained in this paragraph, shall
give Provider, at its sole discretion, the option to either
accept Purchaser's assignee or terminate this Agreement. No
assignment shall release Purchaser of its obligations hereunder.
16. Amendment. This Agreement may not be amended except by an
instrument in writing, executed by the parties. No modification
or amendment hereto shall effected by the acknowledgment or
acceptance by either party of any purchase order, sales
acknowledgment or other similar form from the other party.
17. Merger. This Agreement (including its exhibits and
attachments) supersedes and merges all prior agreements,
promises, understandings, statements, representations,
warranties, indemnities and covenants and all inducements to the
making of this Agreement relied upon by either party herein,
whether written or oral, and embodies the parties' completed and
entire agreement with respect to the subject to the subject
matter hereof. No statement or agreement, oral or written, made
before the execution of the Agreement shall vary or modify the
written terms hereof in any way whatsoever.
18. Interpretation. The words and phrases used herein shall
have the meaning generally understood in the telecommunications
industry. This Agreement shall be construed in accordance with
its fair meaning and not for or against either party on account
of which party drafted this Agreement.
19. Third Party Beneficiaries/Parties in Interest. This
Agreement has been made and is made solely for the benefit of
Provider and Purchaser, and their respective successors and
permitted assigns. Nothing in this Agreement is intended t
confer any rights to remedies under or by reason of this
Agreement on any third party.
20. Severability. If any term or provision of this Agreement is
determined to be illegal, unenforceable, or invalid in whole or
in part for any reason, such illegal, unenforceable, or invalid
provisions or part thereof shall be stricken from this Agreement
and such provision shall not affect the legality, enforceability,
or validity of the remainder of this Agreement. If any provision
or part thereof of this agreement is stricken in accordance with
the provisions of this section, then this stricken provision
shall be replaced, to the extent possible, with a legal,
enforceable, and valid provision that is as similar in tenor to
the stricken provision as is legally possible.
21. Representation of authority. Each party represents and
warrants the other that the execution and delivery of the
Agreement and the performance of such party's obligations
hereunder have been duly authorized and that the Agreement is a
valid and legal agreement binding on such party and enforceable
in accordance with its terms.
22. Further Assurance. The parties shall at their own cost and
expense execute and deliver such further documents and
instruments and shall take such other actions as may be
reasonable required or appropriate to carry out the intent and
purpose of the Agreement.
23. Governing Law. This Agreement shall be in all respects,
governed by and construed and enforced in accordance with the
laws of the State of Illinois, including all matters of
construction, validity and performance. Any action to enforce or
interpret the terms of this Agreement shall be instituted and
maintained in the Superior Court of the County of Cook, State of
Illinois. Purchaser hereby consents to the jurisdiction of such
court and waives any objections to such jurisdiction. In any
action or proceeding arising out of this Agreement, the party
prevailing in such action shall be entitled to recover its
reasonable attorney's fees and costs.
24. Counterparts. This Agreement may be executed in several
counterparts, each of which shall constitute an original, but all
of which shall constitute one and the same instrument.
25. Notices. All notices, demands, requests and other
communications required or permitted hereunder shall be in
writing and shall be deemed to be delivered when actually
received, or, if earlier and regardless of whether actually
received on the day following the date of mailing, first class
mail, duly addressed and with proper postage to the last known
place of business of either party.
If to STARTEC, Inc. If to Cherry:
ATTN: General Counsel ATTN: James Elliott
10411 Motor City Drive, 2205 Enterprise Drive,
Suite 501 Westchester, IL 60154
Bethesda, MD 20817
Tel. No.: 301 365-8959 Tel. No.: 708-449-7000
Fax No.: 301-365-8969 Fax No.: 708-449-1783
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first written above.
PROVIDER: CHERRY COMMUNICATIONS PURCHASER: STARTEC, Inc.
BY: ____________________ By:_____________________
_________________________ _________________________
Its: Vice President, Its: Manager, Carrier &
Carrier Sales Transit Services
<PAGE>
CONFIDENTIAL
"EXHIBIT A"
Cherry Plc
Carrier Origination Services
STARTEC CIC translation on Cherry Network
1. Cherry (PROVIDER) will set-up STARTEC CIC to be translated
via Cherry Network in those locations mutually agreed by Cherry
and STARTEC (PURCHASER) for the purpose of dedicated
(pre-subscribed or casual) origination into STARTEC P.O.P in
Wash.D.C. or other site as mutually agreed by Cherry and STARTEC.
2. The [CT REQUESTED] rate for STARTEC CIC translated
origination will be [CT REQUESTED]
3. Cherry will pass on any associated fixed or variable
monthly costs for CIC translation from LEC or will offer STARTEC
the option to cover LEC costs by specifying required minimum
usage amounts on a case by case basis.
4. Cherry will facilitate activation of STARTEC's Customer
ANI's to be originated via STARTEC CIC on Cherry Network.
5. Cherry will provide the necessary interface to achieve #4
in a timely manner consistent with normal provision of service.
CHERRY PRESUBSCRIBED CIC Origination into STARTEC P.O.P.
6. Cherry will provide usage of Cherry CIC on a pre-subscribed
basis for STARTEC's Customer ANI's for the purpose of origination
into STARTEC P.O.P (Wash., D.C. or where specified) excluding
STARTEC's existing FGD sites and those locations (LATA's, etc.)
covered by #1.
7. Origination will be requested by STARTEC as necessary and
service will be provided by Cherry where capable.
8. The [CT REQUESTED] rate for Cherry CIC origination will be
[CT REQUESTED]
9. Cherry will facilitate activation of STARTEC's Customer
ANI's to be originated on Cherry CIC via Cherry Network.
10. Cherry will provide the necessary interface to achieve #9
in a timely manner consistent with normal provision of service.
<PAGE>
CONFIDENTIAL
"EXHIBIT A"
Attachment 1 cont., Page 2
CHERRY PIC
Carrier Origination Services
NATIONWIDE CASUAL COUNTRY SPECIFIC ORIGINATION ON CHERRY CIC
11. Cherry will provide [CT REQUESTED] on Cherry CIC for all
calls designated to [CT REQUESTED] and deliver these calls to [CT
REQUESTED]
12. The [CT REQUESTED] rate for Cherry CIC country specific
origination will be [CT REQUESTED]
13. STARTEC will terminate above calls to [CT REQUESTED] and
will be responsible for billing all casual traffic via STARTEC
Network at its applicable tariffed rate.
14. Notwithstanding the aforementioned, where specified,
STARTEC will separate Cherry CDR's for calls terminated to [CT
REQUESTED] and invoice Cherry at a termination rate specified in
attachment 6.
15. CDR's for Cherry specified calls will be returned to Cherry
on mag. tape or other acceptable format.
16. If STARTEC is no longer able to provide a competitive
termination rate for #14, then Cherry has the option to terminate
Cherry generated calls via a suitable carrier.
Notwithstanding above, STARTEC generated calls will continue to
be originated by Cherry into STARTEC P.O.P. for termination by
STARTEC. STARTEC calls can be identified by city code, DNIS or
other suitable means.
<PAGE>
"EXHIBIT A"
Attachment 2
Cherry Pic
Carrier Termination Services
Dedicated Access
SPECIAL INTERSTATE RATE
1. WHEREVER CHERRY INSTALLS ITS OWN FGD'S IN THE CHERRY "PIC"
YOUR DESTINATION LATAS (listed in Exhibit A, Attachment 3), THE
DEDICATED TERMINATION RATE WILL BE [CT REQUESTED]
2. LATAS WHERE FGD'S ARE INSTALLED ARE INCLUDED IN ATTACHMENT 4.
CHERRY WILL NOTIFY IN WRITING BY FAX OR MAIL AS AND WHEN FGD'S
ARE INSTALLED IN NEW LATA'S. THE NOTIFICATION WILL MADE WITHIN
30 DAYS AND WILL BE ADDED TO EXHIBIT A AS THE SUBSEQUENT
ATTACHMENT.
3. WHERE PLAUSIBLE, CHERRY WILL PROVIDE SWITCHED DOMESTIC
TERMINATION AT A COMBINED RATE OF [CT REQUESTED] CHERRY WILL
SEND MAG. TAPES OR OTHER ACCEPTABLE FORMAT CONTAINING STARTEC
CDR'S.
4. WHERE #1 IS NOT APPLICABLE, REGULAR TERMINATION RATES ARE PER
EXHIBIT A., ATTACHMENT 3. MINIMUM USAGES ARE WAIVED.
<PAGE>
Exhibit "A"
Attachment 3
Cherry Pic
Carrier Termination Services
Dedicated Access
INTERSTATE RATE SCHEDULE
<PAGE>
"EXHIBIT A"
Attachment 4
Cherry Plc
A. LATA'S WHERE CHERRY FGD'S ARE INSTALLED
1. _____
2. _____
3. _____
4. _____
B. LATA'S WHERE CHERRY HAS ORIGINATION
CAPABILITY
1. _____
2. _____
3. _____
4. _____
<PAGE>
Exhibit "A"
Attachment 5
Cherry Plc
Carrier
[CT REQUESTED]
[CT REQUESTED] Base Rates
Switched Dedicated
[CT REQUESTED] [CT REQUESTED]
[CT REQUESTED] Base Rates
Switched Dedicated
[CT REQUESTED] Bands Day Non-Day Day Non-Day
[CT REQUESTED]
[CT REQUESTED] calls are billed in [CT REQUESTED] increments
with a [CT REQUESTED] minimum
<PAGE>
"EXHIBIT A"
Attachment 6
CHERRY PIC
Carrier Termination Services
Dedicated Access
[CT REQUESTED] TERMINATION RATES
A. [CT REQUESTED]
B. [CT REQUESTED]
C. [CT REQUESTED]
D. [CT REQUESTED]
E. [CT REQUESTED]
F. [CT REQUESTED]
G. [CT REQUESTED]
H. [CT REQUESTED]
Note: [CT REQUESTED] rates may be negotiated from time
to time as rates decrease.
