SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to _________
Commission File Number: 1-10210
EXECUTIVE TELECARD, LTD.
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(Exact name of registrant as specified in its charter)
Delaware 13-3486421
(State or other jurisdiction of (I.R.S. employer Identification No.)
incorporation of organization)
8 Avenue C, Nanuet, New York 10954
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(Address of principal executive offices)
Registrant's telephone number, including area code: (914) 627-2060
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Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to section 12(g) of the Act:
Common Stock $.001 Par Value
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(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of
the registrant based on the closing sale price of such stock as of May 28,
1996 amounted to approximately $208,458,300.
The number of shares outstanding of each of the registrant's classes of
common stock as of May 31, 1996 was 14,408,626 shares, all of one class of
$.001 par value Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company's definitive proxy statement for the 1996 annual
meeting of stockholders are incorporated by reference into Part III of
this report.
<PAGE>
The undersigned Registrant hereby amends the following items,
financial statements, exhibits or other portions of its Form 10-K for the
period ended March 31, 1996 as set forth below:
ITEM 14 - Exhibits, Financial Statements, Schedules and Reports on
Form 8-K
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c) Exhibits:
10.10 Deed of Trust and Security Agreement between the Company
and The Capitol Life Insurance Company dated December 21,
1992 for the 4260 East Evans Avenue, Denver, Colorado
offices
10.11 Directors and Employees 1993 Stock Option Plan
10.12 Agreement between Executive Telecard SA (Switzerland) and
Telstra Corporation Limited (Australia) for Enhancement of
Telecom Australia Calling Card dated August 3, 1993
10.13 Employment Agreement between Executive Telecard, S.A. and
Edward J. Gerrity, Jr. dated March 15, 1995 and Termination
Agreement dated August 31, 1995
10.14 Settlement Agreement between the Company and Network Data
Systems Limited dated March 27, 1995
10.15 Employment Agreement and Termination Agreement between
Executive Telecard, S.A. and Anthony Balinger dated June
30, 1995
10.16 Employment Agreement and Termination Agreement between
Executive Telecard, S.A. and Robert N. Schuck dated
September 28, 1995.
10.17 Employment Agreement and Termination Agreement between
Executive Telecard, S.A. and Allen Mandel dated September
28, 1995
10.18 Employment Agreement between Executive Telecard, S.A. and
Stig Sonnerberg dated November 1, 1995
10.19 Office Building Lease between Executive Telecard, S.A. and
Provident Life and Accident Insurance Company dated
December 15, 1995 for the 1720 South Bellaire, Denver,
Colorado offices and First Amendment to Lease dated April
19, 1996
10.20 Promissory Note and Stock Option Agreement between the
Company and World Wide Export, Ltd. dated February 28, 1996
10.21 Promissory Note and Stock Option Agreement between the
Company and Seymour Gordon dated February 28, 1996
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
EXECUTIVE TELECARD, LTD.
Dated: September 3, 1996 BY:/s/Anthony Balinger
Anthony Balinger, President and Principal
Executive Officer
Pursuant to the requirement of the Securities Act of 1934, this report has
been signed below by the following persons on behalf of the registrant and
in capacities and on the dates indicated.
Dated: September 3, 1996 BY:/s/Anthony Balinger
Anthony Balinger, Director
Dated: September 3, 1996 BY:/s/Edward J. Gerrity
Edward J. Gerrity, Chairman and Director
Dated: September 3, 1996 BY:/s/Allen Mandel
Allen Mandel, Executive Vice President and
Principal Financial Officer
Dated: September 3, 1996 BY:/s/Timothy A. Peach
Timothy A. Peach, Controller, Principal
Accounting Officer
Dated: September 3, 1996 BY:/s/Stig Sonnerberg
Stig Sonnerberg, Director
Dated: September 3, 1996 BY:/s/Richard Krinsley
Richard Krinsley, Director
Dated: September 3, 1996 BY:/s/David Warnes
David Warnes, Director
Dated: September 3, 1996 BY:/s/Ebrahim Ali Abdul Aal
Ebrahim Ali Abdul Aal, Director
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT METHOD OF FILING
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<S> <C> <C>
10.10 Deed of Trust and Security
Agreement between the Company
and The Capitol Life
Insurance Company dated
December 21, 1992 for the
4260 East Evans Avenue,
Denver, Colorado offices Filed herewith electronically
10.11 Directors and Employees
1993 Stock Option Plan Filed herewith electronically
10.12 Agreement between Executive
Telecard SA (Switzerland) and
Telstra Corporation Limited
(Australia) for Enhancement
of Telecom Australia Calling
Card dated August 3, 1993 Filed herewith electronically
10.13 Employment Agreement between
Executive Telecard, S.A. and
Edward J. Gerrity, Jr. dated
March 15, 1995 and Termination
Agreement dated
August 31, 1995 Filed herewith electronically
10.14 Settlement Agreement between
the Company and Network Data
Systems Limited dated
March 27, 1995 Filed herewith electronically
10.15 Employment Agreement and
Termination Agreement between
Executive Telecard, S.A. and
Anthony Balinger dated
June 30, 1995 Filed herewith electronically
10.16 Employment Agreement and
Termination Agreement between
Executive Telecard, S.A. and
Robert N. Schuck dated
September 28, 1995. Filed herewith electronically
10.17 Employment Agreement and
Termination Agreement
between Executive Telecard,
S.A. and Allen Mandel
dated September 28, 1995 Filed herewith electronically
10.18 Employment Agreement between
Executive Telecard, S.A. and
Stig Sonnerberg dated
November 1, 1995 Filed herewith electronically
10.19 Office Building Lease between
Executive Telecard, S.A. and
Provident Life and Accident
Insurance Company dated
December 15, 1995 for the
1720 South Bellaire,
Denver, Colorado offices and
First Amendment to Lease
dated April 19, 1996 Filed herewith electronically
10.20 Promissory Note and Stock
Option Agreement between
the Company and World Wide
Export, Ltd. dated
February 28, 1996 Filed herewith electronically
10.21 Promissory Note and Stock
Option Agreement between
the Company and Seymour
Gordon dated
February 28, 1996 Filed herewith electronically
</TABLE>
DEED OF TRUST
AND SECURITY AGREEMENT
WITH ASSIGNMENT OF RENTS
THIS DEED OF TRUST is made as of this 21st day of December, 1992 by and
among Executive Telecard, Inc. ("Trustor"), the Public Trustee of the City
and County of Denver, State of Colorado ("Trustee"), and The Capitol Life
Insurance Company, a Colorado corporation ("Beneficiary").
FOR GOOD AND VALUABLE CONSIDERATION, the receipt of which is hereby
acknowledged, Trustor hereby irrevocably conveys to Trustee, IN TRUST,
WITH POWER OF SALE, under and subject to the terms and conditions
hereinafter set forth, for the benefit and security of Beneficiary, the
real property known and described as follows:
Lots 11 and 12 and Lots 43 to 48 inclusive,
Block 3, Warren's University Heights,
City and County of Denver State of Colorado
also known as 4260 East Evans Avenue
Denver, Colorado
TOGETHER WITH all rents, issues and profits of the Real Property,
subject however, to the right, power and authority hereinafter given to
Trustor to collect and apply such rents, issues and profits;
TOGETHER WITH all streets, roads, easements, rights-of-way, licenses,
and other rights used in connection therewith or as a means of access
thereto and, all tenements, hereditaments and appurtenances thereof;
TOGETHER WITH any and all buildings and improvements belonging to
Trustor now or hereafter erected or placed thereon, including without
limitation any and all fixtures, attachments, appliances, equipment,
machinery and other articles of property, whether real or personal, now or
hereafter attached or affixed to, placed upon or used in connection with
said buildings and improvements (the "Improvements");
TOGETHER WITH any and all compensation, awards, payments or rights
thereto by reason of any public improvement or condemnation proceeding, or
by a sale or transfer in lieu of condemnation proceeding, or any other
taking of all or any portion of the Trust Estate (as hereinafter defined);
and
TOGETHER WITH all the estate, interest, other claim or demand, both in
law and in equity, including claims or demands with respect to the
proceeds of insurance in effect with respect thereto, which Trustor now
has or hereafter acquires in all or any portion of the property hereby
conveyed to the Trustee (the Real Property, the Improvements and all other
rights, interests and things conveyed to the Trustee by this Deed of Trust
being herein referred to as the "Trust Estate");
FOR THE PURPOSE OF SECURING:
A. The due and punctual payment of each sum now or hereafter due from
Trustor to Beneficiary, including, without limitation, all sums due under
that certain promissory note of even date herewith between Trustor as
maker and Beneficiary as payee, in the principal amount of U.S.
$176,250.00 (the "Note"), the full and final balance of which shall be due
and payable on December 21, 1997 and the due and punctual performance of
each and every other obligation now or hereafter existing of Trustor to
Beneficiary, pursuant to the provisions hereof and any other agreements,
documents or instruments now or hereafter securing or relating to the
indebtedness secured hereby. The Note, this Deed of Trust and such other
documents are sometimes referred to as "The Agreements".
B. The payment of all sums paid or expended by Beneficiary to protect
the Trust Estate, with interest thereon at the rate of 12% per annum,
compounded annually;
C. The performance of all obligations of Trustor set forth
herein; and
D. The payment of any sums and interest thereon which may hereafter be
lent to Trustor, or its successors or assigns, by Beneficiary, which are
evidenced by a promissory note or notes reciting that they are secured by
this Deed of Trust.
To the extent any portion of the Trust Estate consists of personal
property and to the extent that such personal property is not specifically
covered by a separate Security Agreement, the Deed of Trust constitutes a
security agreement and Trustor hereby grants, conveys to and creates in
Beneficiary a security interest in such property in accordance with the
Colorado Uniform Commercial Code. Without limiting the generality of the
foregoing, it is intended that this Deed of Trust provide Beneficiary with
a security interest in: (a) all building materials, fixtures, equipment
and other personal property owned by the Trustor to be incorporated into
the Improvements; (b) all interest of Trustor in all goods, materials,
supplies, fixtures, equipment, machinery, furniture and furnishings and
other personal property which are now or may hereafter be appropriated for
use on (whether such items are stored on the Real Property or elsewhere),
located on, or used in connection with the Real Property and/or the
Improvements, and all proceeds therefrom.
Maker hereby consents to the personal jurisdiction of the state and
federal courts of the State of Colorado.
Regardless of the place of its execution, this note shall be construed
and enforced in accordance with the laws of the State of Colorado.
EXECUTIVE TELECARD, INC.
By:/s/Pam Molitor
Title: Accounting Manager
Attest:----------------------
By:--------------------------
Title:-----------------------
ARTICLE I
COVENANTS AND AGREEMENTS OF TRUSTOR
To protect the security of this Deed of Trust, Trustor hereby covenants
and agrees as follows:
1.01. PERFORMANCE OF SECURED OBLIGATIONS. To pay or otherwise perform
all obligations secured hereby in accordance with their terms. For the
purposes of this Deed of Trust all sums expended by Beneficiary or Trustee
pursuant to the provisions hereof shall be payable on demand.
1.02. MAINTENANCE, REPAIR, ALTERATIONS. To keep the Trust Estate in
good condition and repair; not to remove, demolish or structurally alter
any Improvement located on the Real Property, except with the prior
written consent of Beneficiary; to complete or restore promptly and in
good and workmanlike manner any Improvement which may be constructed,
damaged or destroyed thereon and to pay when due all claims for labor
performed and materials furnished therefor; not to commit or permit waste
thereof; to cultivate, irrigate, fertilize, fumigate, prune and do all
other acts which from the character or use of the Trust Estate or any
portion thereof may be necessary, the specific enumerations herein not
excluding the general; and not to leave the Trust Estate unprotected,
unguarded or deserted. Trustor shall not be required to obtain written
consent of the Beneficiary for any customary tenant finish or interior
remodeling so long as any changes made do not structurally alter any
exterior walls or foundations.
1.03. PROPERTY INSURANCE. To keep the improvements now existing or
hereafter erected on the Property insured against loss by fire or hazards
included within the term "extended coverage" in an amount at least equal
to the lesser of (1) the insurable value of the Property or (2) an amount
sufficient to pay the sums secured by this Deed of Trust as well as any
prior encumbrance on the Property. All of the foregoing shall be known as
"Property Insurance".
The insurance carrier providing the insurance shall be qualified
to write Property Insurance in Colorado and shall be chosen by Borrower
subject to Lender's right to reject the chosen carrier for reasonable
cause. All insurance policies and renewals thereof shall include a
standard mortgage clause in favor of Lender, and shall provide that the
insurance carrier shall notify Lender at least thirty (30) days before
cancellation, termination or any material change of coverage. Insurance
policies shall be furnished to Lender at or before closing. Lender shall
have the right to hold the policies and renewals thereof.
1.04. DELIVERY OF POLICIES, PAYMENT OF PREMIUMS. To furnish to
Beneficiary a copy of each such policy of insurance, and at least thirty
(30) days prior to the expiration of each such policy, to furnish to
Beneficiary evidence satisfactory to Beneficiary of the continuation of
insurance coverage to the satisfaction of Beneficiary. In the event
Trustor fails to provide, maintain, keep in force or deliver and furnish
to Beneficiary the policies of insurance required by Section 1.03 hereof,
Beneficiary may procure such insurance and Trustor will pay all premiums
thereon promptly upon demand by Beneficiary, and until such payment is
made by Trustor the amount of all such premiums together with interest
thereon at the default rate set forth in the Agreements shall be secured
by this Deed of Trust. Beneficiary shall not be responsible for or incur
and liability for the insolvency of the insurer or the inadequacy of the
insurance even though Beneficiary may have procured the insurance.
1.05. INSURANCE PROCEEDS. After the happening of any casualty insured
against, to give prompt written notice thereof to Beneficiary and deliver
or cause delivery of all resulting insurance proceeds to Beneficiary. All
or part of any such proceeds may, as Beneficiary may elect, be held by
Beneficiary on account of the obligations secured hereby, whether such
obligations are unmatured or contingent or otherwise, be used, upon such
terms and conditions as Beneficiary may specify, in the repair and
restoration of the Trust Estate or may be released to Trustor upon such
terms and conditions as Beneficiary may specify, all without curing or
waiving any default or notice of default hereunder or invalidating any act
done pursuant to such notice. Any balance may be retained by Beneficiary
to be held on account of the obligations secured hereby, whether such
obligations are unmatured or contingent or otherwise, or delivered to
Trustor as Beneficiary may elect.
1.06. ASSIGNMENT OF POLICIES UPON FORECLOSURE. In the event of
foreclosure of this Deed of Trust or other transfer of title or assignment
of the entire Trust Estate in extinguishment, in whole or in part, of the
indebtedness secured hereby, all right, title and interest of Trustor in
and to all policies of insurance required by this Deed of Trust shall
inure to the benefit of any pass to the successor in interest to Trustor
or the purchaser or grantee of the Trust Estate.
1.07. TAXES AND IMPOSITIONS.
(a) To pay, prior to delinquency, all real property taxes and
assessments whatsoever which are assessed or imposed upon or become due
and payable and which create or appear to create a lien upon the Trust
Estate or any part thereof or any personal property, equipment or other
facility used in the operation thereof (all of which taxes, assessments
and other governmental taxes are hereinafter referred to as
"Impositions"); provided, however, that if by law any such Imposition is
payable, or may at the option of the taxpayer be paid, in installments,
Trustor may pay the same together with any accrued interest on the unpaid
balance of such Imposition in installments as the same respectively become
due and before any fine, penalty, interest or cost may be added thereto
for the nonpayment of any such installment and interest.
(b) If at any time after the date hereof there shall be
assessed or imposed (i) a tax or assessment on the Trust Estate in lieu of
or in addition to the Impositions payable by Trustor pursuant to paragraph
(a) hereof, or (ii) a license fee, tax or assessment imposed on
Beneficiary and measured by or based in whole or in part upon the amount
of the outstanding obligations secured hereby, then all such taxes or
assessments of fees shall be deemed to be included within the term
"Impositions" as defined in (a) hereof, and Trustor shall pay and
discharge the same as herein provided in respect of the payment of
Impositions or, at the option of Beneficiary, all obligations secured
hereby together with all accrued interest thereon, shall immediately
become due and payable. Anything to the contrary herein notwithstanding,
Trustor shall have no obligation to pay any franchise, estate,
inheritance, income, excess profits or similar tax levied on Beneficiary
or on the obligations secured hereby.
(c) Subject to the provisions of paragraph (d) of this Section
1.07, Trustor covenants to furnish Beneficiary within thirty (30) days
after the date upon which any such Imposition is payable by Trustor,
official receipts of the appropriate taxing authority, or other proof
satisfactory to Beneficiary, evidencing the payment thereof.
(d) Trustor shall have the right before any delinquency occurs
to contest or object to the amount or validity of any such Imposition by
appropriate legal proceedings diligently prosecuted but Trustor's doing so
shall not relieve, modify or extend Trustor's covenant to pay any such
Imposition at the time and in the manner provided in this Section 1.07,
unless (i) the legal proceeding shall operate to prevent the sale of the
Trust Estate or any part thereof to satisfy such Imposition prior to final
determination of such proceedings; or (ii) Trustor shall have provided a
good and sufficient undertaking as may be required or permitted by law to
accomplish a stay of such proceedings.
1.08. UTILITIES. To pay when due all utility charges, whether
incurred by Trustor or not, which may become a charge or lien against the
Trust Estate for gas, electricity, water and sewer services furnished to
the Trust Estate and all other assessments or charges of a similar nature,
whether public or private, affecting the Trust Estate or any portion
thereof, whether or not such taxes, assessments or charges are liens
thereon.
1.09. LEASES AND OTHER AGREEMENTS. To perform all covenants and
agreements contained in any lease or sublease of all or any portion of the
Trust Estate; and not to collect any advance rentals under any lease or
sublease of all or any portion of the Trust Estate in an amount in excess
of three (3) months' rent thereunder without Beneficiary's prior written
consent which shall not be unreasonably withheld.
1.10. ACTIONS AFFECTING TRUST ESTATE. To appear in and contest any
action or proceeding purporting to affect the security hereof or the
rights or powers of beneficiary or trustee; and to pay all costs and
expenses including costs of evidence of title and reasonable attorneys'
and accountants' fees in any such action or proceeding in which
Beneficiary or Trustee may appear, in any suit brought by Beneficiary to
foreclose this Deed of Trust or in any sale under the power of sale
contained herein. Any amounts paid by Beneficiary or Trustee pursuant to
this Section, with interest thereon, shall become additional indebtedness
of Trustor to Beneficiary payable on demand and secured by this Deed of
Trust. Nothing contained in this Section shall require Beneficiary or
Trustee to incur any expense or do any act hereunder.
1.11. TRANSFER OF TRUST ESTATE BY TRUSTOR. Except as permitted by the
terms of the Agreements, Trustor shall not transfer or permit to be
transferred all or part of the Trust Estate without the prior written
consent of Beneficiary. Consent to one such transfer shall not be deemed
to be a waiver of the right to require consent to future or successive
transfer. As used herein, "transfer" shall mean (i) the sale,
encumbrance, pledge, conveyance, transfer, lease, or hypothecation of or
agreement to sell, encumber, pledge, convey, transfer, lease, or
hypothecate the Trust Estate or any portion thereof or interest therein,
whether voluntarily, involuntarily, by operation of law or otherwise, or
(ii) the change in ownership and/or control of Trustor. No such transfer
shall relieve Trustor of its obligations under these agreements or the
note.
1.12. EMINENT DOMAIN. Should the Trust Estate or any part thereof be
taken or damaged by reason of any public improvement or condemnation
proceeding, or by a sale or other transfer in lieu of condemnation or
other taking; or should Trustor receive any notice or other information
regarding such proceeding, Trustor shall give prompt written notice
thereof to Beneficiary and:
(a) Beneficiary, to the extent of the total indebtedness
secured by this deed of trust, shall be entitled to all compensation,
awards and other payments or relief therefor, and shall be entitled at its
option to commence, appear in and prosecute in its own name any action or
proceedings. Beneficiary shall also be entitled to make any compromise or
settlement in connection with such taking or damages. All such
compensation, awards, damages, rights of action and proceeds awarded to
Trustor (the "Condemnation Proceeds") may be held by Beneficiary on
account of the obligations secured hereby, whether such obligations are
unmatured or contingent or otherwise, be used, upon such terms and
conditions as Beneficiary may specify, or may be released to Trustor upon
such terms and conditions as Beneficiary may specify.
Any balance may be retained by Beneficiary to be held on Account of the
obligations secured hereby, whether such obligations are unmatured or
contingent or otherwise, or delivered to Trustor as Beneficiary may elect.
(b) In the event any portion of the Trust Estate is so taken or
damaged, and Beneficiary's security hereunder is not materially impaired,
and in the event Trustor is not then in default hereunder, Beneficiary
shall deliver, to the extent reasonably required, all Condemnation
Proceeds to Trustor to be used in the repair and restoration of the Trust
Estate upon such terms and conditions as Beneficiary may specify without
curing or waiving any default or notice of default hereunder or
invalidating any act done pursuant to such notice. Any balance may be
retained by Beneficiary to be held on account of the obligations secured
hereby, whether such obligations are unmatured, contingent or otherwise,
or delivered to Trustor as Beneficiary may elect.
1.13. INSPECTIONS. Beneficiary or its agents, representatives or
workmen, are authorized to enter at any reasonable time, with 24 hours
advance notice, upon or in any part of the Trust Estate for the purpose of
inspecting the same and for the purpose of performing any of the acts it
is authorized to perform under the terms of this Deed of Trust or the
Agreements.
1.14. SUCCESSORS AND ASSIGNS. This Deed of Trust applies, inures to
the benefit of, and binds all parties hereto, their heirs, legatees,
devisees, administrators, executors, successors and assign. In this Deed
of Trust, whenever the context so requires, the masculine gender includes
the feminine and/or neuter, and the singular number includes the plural.
1.15. LIENS. To pay and promptly discharge, at Trustor's cost and
expense, all liens, encumbrances and charges upon the Trust Estate or any
part thereof; provided that the existence of any mechanic's, laborers,
materialman's, supplier's or vendor's lien or right thereto shall not
constitute a violation of this Section if payment is not yet due under the
contract which is the foundation thereof and if such contract does not
postpone payment for more than sixty (60) days after the payment therefor
is or becomes due. Trustor shall have the right to contest in good faith
the validity of any such lien, encumbrance or charge provided Trustor
shall first deposit with or provide Beneficiary a bond or other security
satisfactory to Beneficiary in such amounts and form as Beneficiary shall
reasonably require and provided further that Trustor shall thereafter
diligently proceed to cause such lien, encumbrance or charge to be removed
or discharged. If Trustor shall fail to discharge any such lien,
encumbrance or charge, then, in addition to any other right or remedy of
Beneficiary, Beneficiary may, but shall not be obligated to, discharge the
same by paying the amount claimed to be due or by procuring discharge of
such lien in such other manner as is or may be authorized by law. Trustor
shall provide Beneficiary with mechanics' lien insurance in form and at
times satisfactory to Beneficiary.
1.16. DEPOSITS, IMPOUNDS. In the event of any failure of Trustor to
pay any Impositions as they become due and a sale of the property or a
lien in the property may result, Beneficiary may, but is not obligated to,
require Trustor to deposit with Beneficiary at times required by
Beneficiary an amount equal to all past due Impositions and in addition,
an amount equal to the pro rata portion on a monthly basis of the next
installment of Impositions, payments on bonds, assessments, insurance
and/or other items, for which Trustor may be liable and affecting all or
any portion of the Trust Estate. In the event Beneficiary elects to
require any such deposit, Beneficiary will estimate the amount of such
items annually, and in the event the amounts deposited are in excess of
the actual charges for which they are deposited, subject to the
limitations of Colorado law, Beneficiary may return such amounts, or at
its option, may hold the same and reduce the required monthly installments
proportionately for the ensuing year. In the event there is not a
sufficient amount on deposit with Beneficiary thirty (30) days prior to
the date the Impositions, payments on bonds, assessments, insurance and/or
other items become delinquent, Beneficiary may require Trustor to deposit,
at least ten (10) days prior to said date, such additional amounts.
Except as otherwise provided herein, in the event Beneficiary elects to
require any such deposit, Beneficiary will use the amounts deposited to
pay the items for which the deposit was made. Trustor will deliver to
Beneficiary all tax bills thirty (30) days prior to any delinquent date.
In the event of default of Trustor, Beneficiary may at its option hold the
amounts deposited with Beneficiary on account of all or any part of the
obligations secured hereby, whether such obligations are unmatured,
contingent or otherwise.
Notwithstanding the foregoing, nothing contained herein shall cause
Beneficiary to be deemed a trustee of said funds or to be obligated to pay
any amounts in excess of the amount of funds deposited with Beneficiary
pursuant to this Section. Beneficiary may commingle said funds with its
own funds, and Trustor shall be entitled to no interest thereon.
1.17. HOMESTEAD EXEMPTION; MARSHALING OF ASSETS. Trustor shall not
have nor assert any right under any statute or rule of law pertaining to
the marshaling or separate sale of Trustor's assets, including the Trust
Estate, or to the exemption of homestead or other exemption under and by
virtue of any law of the State of Colorado now existing or which may
hereafter be passed in relation thereto.
1.18. COMPLIANCE WITH LAWS.
(a) Generally.
Trustor shall comply with all laws, ordinances,
regulations, easement agreements, covenants, conditions and restrictions
affecting the Trust Estate or the operation thereof. Trustor shall not
cause, permit nor suffer any violation of any of the foregoing and shall
pay all fees or charges of any kind in connection therewith.
(b) Environmental Laws.
For purposes hereof, the phrase "Hazardous Materials" shall
mean and include any oil, hazardous substance, regulated substance
(regulated substances defined under 42 U.S.C. Section 6991(2)), pollutant,
contaminant, hazardous waste, hazardous material, dangerous waste,
extremely hazardous waste, toxic waste, asbestos or air pollution, as any
such term or similar term is now or hereafter defined, used or understood
in or under any federal, state, county, city or other governmental
statute, rule, ordinance, order or regulation which relates in any way to
the protection of the environment (the "Environmental Laws"). In no event
shall Trustor bring onto, store upon, bury, use upon, emit or release
from, nor knowingly allow to be brought onto, stored upon, buried, used
upon, or emitted or released from, the Trust Estate or the Improvements,
any Hazardous Materials in violation of any Environmental Laws. Trustor
shall not cause nor permit any underground storage tanks containing
Hazardous Materials to be installed. Trustor shall indemnify and hold
Beneficiary, its officers, directors and agents, harmless from any claim,
cost, damage or expense, including attorneys' fees, monitoring costs,
response costs and penalties, incurred by Beneficiary arising from events
or activities which occurred or will occur after Trustor acquired title to
the Trust Estate and prior to Beneficiary acquiring title to the Trust
Estate through foreclosure or deed in lieu of foreclosure with respect to
any breach or breach alleged by third parties of these warranties and
covenants.
ARTICLE II
ASSIGNMENT OF RENTS
2.01. ASSIGNMENT OF RENTS AND LEASES. Trustor hereby absolutely
grants, transfers and assigns to Beneficiary all rents, royalties, issues,
Profits and income ("Rents") now or hereafter due or payable for the
occupancy or use of all or any portion of the Trust Estate and/or any
personal property of Trustor located thereon (excluding, however, any
furniture, furnishings, fixtures and equipment used by Trustor in
connection with Trustor's occupancy of any office space within the Real
Property), and all of Trustor's right, title and interest in and to any
and all leases ("Leases"), with all security therefor including all
guarantees thereof and all options to purchase, now or hereafter affecting
the Trust Estate or any personal property of Trustor located thereon;
provided, however, Trustor shall have the right to collect, retain, use
and enjoy such Rents prior to any Event of Default hereunder. Failure of
Beneficiary at any time or from time to time to enforce this assignment
shall not in any manner prevent its subsequent enforcement and Beneficiary
shall not be obligated to collect anything hereunder, but is accountable
only for sums actually collected by Beneficiary.
2.02. FURTHER PROMISES. Trustor agrees to cooperate with Beneficiary
to execute any additional documents or take any other steps reasonably
necessary to perfect or maintain the Dead of Trust, mortgage and security
interests herein created.
2.03. DEDUCTIONS. Trustor agrees that Beneficiary shall be entitled
to deduct and retain from monies received by Beneficiary hereunder a just
and reasonable compensation for Beneficiary's services or that of its
agents in collecting rents. Any monies received by Beneficiary hereunder
may be applied when received from time to time in payment of any taxes,
assessments or other liens affecting the Trust Estate or to the
indebtedness secured by this Deed of Trust regardless of delinquency, such
application to be in such order, at such times and to such extent as
Beneficiary may determine, or any or all of said monies may be released at
its option. The acceptance of this Deed of Trust by Beneficiary or the
exercise of any rights by it hereunder shall not be, or be construed to
be, an affirmation by it of any tenancy, lease or option, nor an
assumption of any liability under any such tenancy, lease or option.
2.04. ELECTION UPON DEFAULT. Upon any event of default hereunder
which has not been cured by Trustor in accordance with the applicable
provisions of this Deed of Trust, Beneficiary may at any time either in
person, by agent or by a receiver appointed by a court, and without regard
to the adequacy of any security for the obligations hereby secured, enter
upon and take possession of all or any portion of the Trust Estate, in its
own name sue for or otherwise collect Rents including those past due and
unpaid, and apply the same, less costs and expenses of operation and
collection, including without limitation reasonable attorneys' and
accountants' fees, in such order as Beneficiary may determine upon any
obligations secured hereby, whether such obligations are unmatured,
contingent or otherwise. The collection of such Rents or the entering
upon or taking possession of all or any portion of the Trust Estate, or
the application thereof as aforesaid, shall not cure or waive any default
or notice of default hereunder or invalidate any acts done pursuant to
such notice.
ARTICLE III
DEFAULTS BY TRUSTOR AND BENEFICIARY'S REMEDIES
3.01. EVENTS OF DEFAULT.
Any of the following events shall constitute an Event of
Default:
(i) occurrence of a default in any payment of principal or
interest on the Note secured hereby; or
(ii) the occurrence of a default under the Agreements, as they
may be modified, supplemented or amended, failure of
Trustor to perform any of its obligations under this Deed
of Trust, or failure of Trustor to cure within five (5)
days of notice thereof any default under any encumbrance
charged against the Trust Estate with priority over this
Deed of Trust; or
(iii) after commencement of construction, if any, on the Real
Property and prior to completion, work ceases or is not
diligently prosecuted for a period of thirty (30)
consecutive days exclusive of days lost by reason of war,
insurrection, strikes, lockouts, riots, floods,
earthquakes, fires, casualties, acts of God, acts of the
public enemy, epidemics, quarantine restrictions, freight
embargoes, litigation, or unusually severe weather (being
inclement weather in excess of twenty (20) days per
year); or the Trust Estate is damaged or destroyed by
casualty not covered by any insurance policy in favor of
Trustor unless Trustor resumes the work or commences the
repair of such damage or destruction within thirty (30)
days from the occurrence thereof; or
(iv) any construction, service, engineering, consulting,
architectural or other similar contract relating to the
Trust Estate is terminated for any reason without
Beneficiary's prior written consent, or there shall be
any default by Trustor under any such contract; or
(v) Trustor (as defined in the Agreements) becomes insolvent
or admits in writing its inability to pay its debts as
they mature; or Trustor makes any assignment for the
benefit of creditors; or Trustor applies for or consents
to the appointment of a receiver or trustee for it or for
a substantial part of its property or business, or such a
receiver or trustee otherwise is appointed and is not
discharged within thirty (30) days after such
appointment; or
(vi) any of Trustor's representations or warranties made
herein or in any statement or certificate at any time
given by Trustor pursuant hereto or in connection
herewith is false or misleading in any material respect;
or
(vii) any order, judgment or decree is entered against Trustor
decreeing the dissolution or division of Trustor or
Guarantor and such order remains undischarged or unstayed
for a period in excess of thirty (30) days; or
(viii) any bankruptcy, insolvency, reorganization or liquidation
proceeding or other proceeding for relief under any
bankruptcy law or any law for the relief of debtors is
instituted by or against Trustor; or
(ix) any money judgment, writ or warrant of attachment, or
similar process is entered or filed against Trustor or
any of its assets and remains unvacated, unbonded or
unstayed for a period of thirty (30) days or in any event
later than five (5) days prior to the date of any
proposed sale thereunder; or Trustor has not appealed the
same in good faith to Beneficiary's satisfaction; or
(x) any mechanic's lien or materialman's lien or other
similar lien or charge is recorded or filed on or against
the Trust Estate, or any stop notice or other similar
notice of order is filed or made, and such lien, charge,
order or notice is not bonded against in amount
satisfactory to Beneficiary, satisfied, removed or stayed
by appropriate proceedings diligently contested in good
faith to Beneficiary's satisfaction within thirty (30)
days thereafter; or
(xi) any material default by Trustor under any agreement
involving the borrowing of money or credit which would,
in the sole opinion of Beneficiary, impair Trustor's
ability to perform its respective obligations under the
Agreements; or
3.02. REMEDIES. Upon the occurrence and during the continuance of any
default under this Deed of Trust, Beneficiary at its option and with
notice to Trustor as required by law may do any one or more of the
following:
(a) Commence an action to foreclose this Deed of Trust by
judicial action;
(b) Elect to foreclose this Deed of Trust pursuant to the power
of public sale contained herein;
(c) In person, or through Beneficiary's agent or a receiver
appointed by a court, take possession of all or part of the Trust Estate
and collect all rents relating thereto; and/or
(d) Exercise any or all rights of Beneficiary pursuant to this
Deed of Trust, the Agreements, or now or hereafter existing at law, in
equity or by statute in such order, at such times and in such manner as
Beneficiary may, in its sole and exclusive judgment, determine.
3.03. FORECLOSURE BY POWER OF SALE. Should Beneficiary elect to
foreclose this Deed of Trust pursuant to the power of public sale
contained herein, Beneficiary shall (i) deliver to Trustee a written
notice of default and election to cause Trustor's interest in the Trust
Estate to be sold, and (ii) deposit with Trustee this Deed of Trust, the
Agreements and such receipts or evidence of expenditures made and secured
hereby as Trustee may require.
(a) Upon receipt of such notice from Beneficiary, Trustee shall
give notice of sale and shall sell the Trust Estate according to the laws
of Colorado.
(b) After deducting all costs, fees and expenses of Trustee and
of this trust, including costs of evidence of title in connection with
sale, Trustee shall apply the proceeds of sale to payment of all sums
expended under the terms hereof, not then repaid, with accrued interest at
the rate set forth in the Agreements, all other sums then secured hereby
and the remainder, if any, to the person or persons legally entitled
thereto.
3.04. APPOINTMENT OF RECEIVER. If an Event of Default described in
Section 3.01 of this Deed of Trust shall have occurred and be continuing,
Beneficiary, as a matter of right and without notice to Trustor or anyone
claiming under Trustor, and without regard to the then value of the Trust
Estate or the interest of Trustor therein, may apply to any court having
jurisdiction to appoint a receiver or receivers of the Trust Estate, and
Trustor hereby irrevocably consents to such appointment and waives notice
of any application therefor. Any such receiver or receivers shall have
all the usual powers and duties of receivers in like or similar cases and
all the powers and duties of Beneficiary in case of entry as contemplated
in or by this Deed of Trust and shall be entitled to continue as such and
exercise all such powers until the date of confirmation of sale of the
Trust Estate, unless such receivership is sooner terminated. Beneficiary
shall promptly notify Trustor of an application by Beneficiary for the
appointment of any receiver, but Beneficiary's failure to do so shall not
invalidate such application or the appointment or any act of any receiver,
affect any of Trustor's obligations to Beneficiary, or give rise to any
right, claim or defense on the part of Trustor.
3.05. REMEDIES NOT EXCLUSIVE. No remedy herein conferred upon
Beneficiary or Trustee is intended to be exclusive of any other remedy
herein, in the Agreements, or in any other agreement between Trustor and
Beneficiary or by law provided or permitted, but each shall be cumulative
and shall be in addition to every other remedy given hereunder, under the
Agreements or now or hereafter existing at law, in equity or by statute.
Every power or remedy given by this Deed of Trust or by the Agreements to
Trustee or Beneficiary or to which either of them may be otherwise
entitled, may be exercised, concurrently or independently, from time to
time and as often as may be deemed expedient by Trustee or Beneficiary and
either of them may pursue inconsistent remedies.
3.06. NONWAIVER OF REMEDIES. No waiver of any breach or default under
any provision of this Deed of Trust shall constitute or be construed as a
waiver by Beneficiary of any subsequent breach of or default under that or
any other provision of this Deed of Trust.
ARTICLE IV
MISCELLANEOUS PROVISIONS
4.01. NOTICES. Except as otherwise provided herein, all notices
required or permitted to be given herein shall be in writing and shall be
personally served or sent by mail and shall be deemed to have been given
when deposited in the mail, registered, with postage prepaid and properly
addressed. For the purposes hereof, the addresses of the parties hereto
(until notice of a change thereof as provided in this section) shall be as
follows:
Beneficiary: THE CAPITOL LIFE INSURANCE COMPANY
1597 Cole Boulevard, Bldg. 15, Suite 305
Golden, Colorado 80401-3414
Attention: Hugh Fallon
Copy to: Minor & Brown, P.C.
650 S. Cherry Street
Suite 1100
Denver, CO 80222
Attention: John A. Logan, Esq.
Trustor: EXECUTIVE TELECARD, INC.
4260 East Evans Avenue
Denver, CO 80222
Copy to: Rider and Woulf, P.C.
11246 E. Mississippi Avenue
Aurora, CO 80012
Attention: Steven R. Rider, Esq.
4.02. ASSIGNABILITY. This Deed of Trust shall be binding upon, and
inure to the benefit of, the parties hereto and their respective
successors and assigns, provided, however, that Trustor may not assign
this Deed of Trust or any of its rights or obligations under this Deed of
Trust without the prior written consent of Beneficiary.
4.03. HEADINGS. Headings of the articles and sections of this Deed of
Trust are inserted for convenience only and shall not be deemed to
constitute a part hereof.
4.04. MODIFICATIONS. This Deed of Trust cannot be changed, modified
or supplemented except in writing signed by the party against whom
enforcement of such change, modification or supplement is sought.
4.05. PAYMENT ON NONBUSINESS DAYS. Whenever any payment to be made
hereunder shall be due on a Saturday, Sunday or public holiday under the
laws of the jurisdiction in which payment is to be made, such payment may
be made on the next succeeding business day and such extension of time
shall be included in computing any interest in connection with such
payment.
4.06. MODIFICATIONS OF SECURITY.
(a) Without affecting the liability or obligations of any
person, including Trustor, for the performance of any obligations secured
hereby (excepting only any person or property otherwise expressly released
in writing by Beneficiary), Beneficiary may from time to time and without
notice release any person liable for payment of any of said indebtedness
or the performance of said obligations, extend the time of payment or
otherwise alter the terms of any of said obligations, accept additional
security therefor of any kind, including trust deeds or mortgages, or
alter, substitute or release any property securing said obligations.
(b) Upon request of Beneficiary, Trustor shall reexecute,
reacknowledge and rerecord this Deed of Trust, or execute, acknowledge,
deliver and record a new instrument or instruments, and do all other acts
and things necessary to correct any defect, error or omission which may be
discovered herein or to preserve the validity and the efficacy hereof as a
conveyance of an continued encumbrance upon the Trust Estate, but such
acts shall neither extend nor modify Trustor's liability or obligations
hereunder.
4.07. RELEASE. The Trustor may, upon production of this Deed of Trust
duly canceled, release this Deed of Trust without further showing as to
additional sums or expenditures advanced hereunder by Beneficiary and
without liability for so doing, and such release shall constitute a
release of a lien of all such additional sums and expenditures made
pursuant to this Deed of Trust.
4.08. ACTIONS BY TRUSTEE AND/OR BENEFICIARY TO PRESERVE TRUST ESTATE.
Should Trustor fail to make any payment or to do any act as herein
provided, Beneficiary, but without obligation to do so and with notice as
required by law to or demand upon Trustor and without releasing Trustor
from any obligation hereof or secured hereby, may within such times and in
such manner as Beneficiary may deem reasonable make or do the same in such
manner and to such extent as either may deem necessary to protect the
security hereof. In connection therewith (without limiting their general
powers), Beneficiary shall have and is hereby given the rights (i) to make
additions, alterations, repairs and improvements to the Trust Estate which
it may consider necessary or proper to keep the Trust Estate in good
condition and repair, (ii) to appear in and defend any action or
proceeding purporting to affect the Trust Estate or any portion thereof or
the rights or powers of Beneficiary, (iii) to pay, purchase, contest or
compromise any encumbrance, charge, or lien which in its judgment appears
to be prior or superior hereto, and (iv) in exercising any such powers, to
pay necessary expenses, employ counsel, accountants and other assistants
and pay their reasonable fees. Any amounts disbursed by Beneficiary
pursuant to this Section shall be additional indebtedness of Trustor and
shall bear interest from the date of disbursement at the default rate set
forth in the Agreements. Nothing herein shall require Beneficiary to
incur any expense or do any act hereunder.
4.09. STATUTES OF LIMITATIONS. The pleading of the statutes of
limitation as a defense of this Deed of Trust, or any and all obligations
referred to herein or secured hereby, is hereby waived to the full extent
permissible by law.
4.10. GOVERNING LAW. This Deed of Trust shall be governed by and
construed according to the laws of the State of Colorado.
IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the
date first set forth above.
TRUSTOR BENEFICIARY
Executive Telecard, Inc. The Capitol Life Insurance Company
By:/s/Pam Molitor By:/s/Hugh Fallon
Title:Accounting Manager Hugh Fallon
Executive Vice President
Attest:---------------
By:-------------------
Title:----------------
STATE OF COLORADO )
) ss.
COUNTY OF DENVER )
Subscribed, sworn to, and acknowledged before me this 21st day
of December, 1992, by Pam Molitor as Accounting Manager of Executive
Telecard, Inc.
Witness my hand and official seal.
My commission expires: 2-6-93
/s/Linda R. Null
Notary Public
( S E A L )
STATE OF COLORADO )
) ss.
COUNTY OF DENVER )
Subscribed, sworn to, and acknowledged before me this 21st day
of December, 1992, by Hugh Fallon as Vice President of The Capitol Life
Insurance Company.
Witness my hand and official seal.
My commission expires: 2-6-93
/s/Linda R. Null
Notary Public
( S E A L )
EXECUTIVE TELECARD, LTD.
DIRECTORS AND EMPLOYEES
1993 STOCK OPTION PLAN
1. Purpose: It is the belief of the management of Executive
Telecard, Ltd. (the "Company") that the Company's economic growth is
enhanced by attracting, retaining and motivating Directors and Employees
of experience and skill. Accordingly, Directors and Employees of the
Company shall be afforded the opportunity to acquire shares of the
Company's authorized Common Stock, par value $.10 per share, at a price
which the Company expects to be below the fair market value of such shares
on the exercise date. By providing this opportunity through the adoption
of the Executive Telecard, Ltd. Directors and Employees Stock Option Plan
and Agreement (the "Plan"), the Company hopes to motivate superior
performance on the part of these Directors and Employees and insure the
continuing growth and profitability of the Company.
2. Administration:
(a) In General: The Plan shall be administered by one or
more members of the Board of Directors of the Company (the "Committee").
The Committee shall be appointed by and serve at the pleasure of the
Board.
(b) Procedural Guidelines: The Committee shall act by
agreement of a majority of its entire membership, either by vote taken at
a duly convened meeting (which may include a meeting conducted by way of
conference telephone call) or by written direction executed by all members
of the Committee.
(c) Powers and Duties: The Committee shall have the power
and duty to do all things necessary or convenient to effect the intent and
purpose of the Plan not inconsistent with any of the provisions hereof,
whether or not such powers and duties are specifically set forth herein,
and not in limitation but in application the foregoing, shall have the
power and/or obligation to:
(1) provide rules and regulations for the
administration of the Plan and the conduct of the Committee's affairs, and
from time to time, as appropriate, to amend or supplement such rules and
regulations;
(2) correct any defect, supply any omission or
reconcile any inconsistency in the Plan of a procedural nature in such
manner and to such extent as it shall deem advisable to maintain the Plan
in the manner intended; but it shall have no power to add to, subtract
from or modify any of the substantive terms of the Plan, and
(3) appoint or employ such advisors, agents or
representatives as it shall reasonably deem advisable in connection with
its proper administration of the Plan, and to rely upon their written
opinions, certificates or advice.
Notwithstanding the above, in no event shall the Committee exercise any
discretion as to the selection of Directors to whom options may be granted
or the number of shares subject to options granted under the Plan.
(d) Compensation and Expense: The members of the
Committee shall receive no special compensation as a result of the
rendition of their services hereunder, but shall be entitled to receive
any reasonable expenses actually incurred in administering the Plan, as
long as the same are substantiated by appropriate written documentation of
such expenses. All such substantiated expenses shall be paid by the
Company.
3. Eligibility: The persons eligible to receive options under
the Plan shall be those of the Company's Directors and Employees,
excluding any such person to whom the issuance of such an option is
prohibited by any federal or state law, rule or regulation.
4. Shares Subject to Plan: The shares which shall be issued
and delivered upon exercise of options being granted under the Plan shall
be shares of the Company's authorized, but unissued or issued and
reacquired Common Stock, par value $.10 per share (the "Shares"). Subject
to the adjustments described below, the maximum aggregate number of Shares
which may be issued or transferred under the Plan shall not exceed 300,000
Shares. Appropriate equitable adjustments in the option price per Share
and number of Shares subject to each option shall be made by the
Committee, to give effect to any merger, consolidation, reorganization,
recapitalization, reclassification, combination, stock dividend, stock
split, reverse stock split or other relevant change in the capital
structure of the Company after the date an option is granted.
5. Option Grants: Subject to the terms and conditions herein
set forth and evidenced by separate acceptance forms executed by the
option holders, each Director and Employee described in Section 3 above
shall be granted an option to acquire, at the Option Price described in
Subsection 6(c) below, in the amount to be established by the Committee.
Each such option shall be initially exercisable only on or after June 1,
1993 and only if the option holder is a Director or Employee of the
Company on said date.
6. Terms and Conditions of Options: Each option granted under
the Plan shall be subject to the following terms and conditions.
a.) Date of Grant: The date on which an option is deemed
granted (the "Date of Grant") shall be the date on which the option holder
was granted options under the Plan.
b.) Option Price: The purchase price of each Share
capable of being acquired upon exercising an option shall be the fair
market value of each Share as of the Date of Grant (the "Option Price").
For purposes hereof, the fair market value of a Share on a particular date
shall be the last sale price for one Share, as reported by the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") as
of the close of business of such date. If there were no bid and asked
prices for the Company's Shares reported by NASDAQ on the valuation date,
but such bid and asked prices for the Company's Shares were reported by
NASDAQ within a reasonable period before that date, the fair market value
shall be determined by taking the mean between the bid and asked prices
for the Share, as reported by NASDAQ as of the close of business on the
nearest date preceding the valuation date. In the event the Shares become
listed on a national securities exchange, the fair market value of such
Shares shall be the mean between the highest and lowest sales prices of
Shares on the principal securities exchange on which the Company's stock
is listed on the relevant valuation date.
c.) Mechanics of Exercise: A Director or Employee
entitled to any option granted under the Plan may exercise the same either
in whole or in part at any time by delivering written notice of exercise
to the office of the Secretary of the Company specifying therein the
dollar amount and the number of Shares with respect to which the option is
being exercised, which notice shall be accompanied by payment in full of
the purchase price of the Shares being acquired; provided, however, that
the Company, in its discretion, may also require the Director or Employee
(or any other person then having the right to exercise the option) to make
such representations and furnish such information as it may consider
appropriate in connection with the issuance or delivery of the Shares in
compliance with applicable laws, rules and regulations. Payment of the
purchase price may be made by (i) cash or (ii) check. No Shares shall be
issued until full payment therefor has been made.
d.) Expiration of Option: Each option granted under the
Plan shall expire and all rights to purchase Shares thereunder shall cease
five years after the Date of Grant or ninety (90) days after termination
of employment whichever comes first.
e.) Termination of Option: Each option granted hereunder
shall terminate and may no longer be exercised if the option holder ceases
for any reason to perform services for the Company as a Director or
Employee of the Company, or a subsidiary, in accordance with the following
provisions:
(1) if the option holder's services shall terminate
by resignation or other voluntary action, or if such services shall have
been terminated involuntarily for cause, the option shall expire
immediately upon such termination and may no longer be exercised;
(2) if the option holder's services shall terminate
involuntarily and without cause, the option holder may at any time within
a period of ninety (90) days after such termination of services exercise
the option to the extent it was exercisable on the date of termination of
the option holder's services;
(3) if the option holder's services shall terminate
because of disability within the meaning of Section 105(d)(4) of the
Internal Revenue Code, the option holder may at any time within a period
of six (6) months after such termination of services exercise the option
to the extent that the option was exercisable on the date of termination
of the option holder's services; and
(4) if the option holder dies at a time when he might
have exercised the option, then his estate, personal representative or
beneficiary to whom it has been transferred may at any time within a
period of six (6) months after the option holder's death exercise the
option to the extent the option holder might have exercised it at the time
of his death; provided, however, that no option may be exercised to any
extent by anyone after the date of expiration of the option. For purposes
of this Subsection (e)(1), termination for cause shall mean termination of
employment by reason of the option holder's commission of a felony, fraud
or willful misconduct which has resulted, or is likely to result, in
substantial and material damage to the Company, all as the Committee, in
its sole discretion, may determine.
(f) Transferability. No option shall be transferable by
the option holder otherwise than by will or the laws of descent or
distribution, and each option shall be exercisable during his lifetime
only by him.
(g) Investment Purpose. Each option is granted on the
express condition that the purchase of Shares upon an exercise thereof
shall be made for investment purposes only and not with a view to their
resale or further distribution unless such Shares, at the time of their
issuance and delivery, are registered under the Securities Act of 1933, as
amended (the "Act"), or, alternatively, at some time following such
issuance their resale is determined by counsel for the Company to be
exempt from the registration requirements of the Act and of any other
applicable law, regulation or ruling.
(h) Rights as Shareholder. The option holder shall have
no rights as a shareholder with respect to any Shares covered by his
option until the date of issuance of a stock certificate to him for such
Shares.
(i) Notices. Any notice required hereunder to the Company
shall be addressed to its Secretary at its office and any notice required
hereunder to an option holder shall be addressed to his last known mailing
address, as it may appear in the records of the Company, subject to the
right of any party hereto to designate at any time hereafter in writing
some other address.
7. Amendment, Suspension or Discontinuance of Plan. The Board
may from time to time amend, suspend or discontinue the Plan.
Notwithstanding the above, no amendment shall adversely affect or impair
any then outstanding option without the consent of the option holder.
8. Legends. The Committee shall cause appropriate legends to
be placed on certificates representing any Shares issued pursuant to the
exercise of any options granted under the Plan in order to reflect any
limitations imposed on the transfer of such Shares by the Act or other
applicable federal and state laws or regulations.
9. Compliance With Other Laws and Regulations. The Plan, the
grant and exercise of options thereunder, and the obligation of the
Company to sell and deliver Shares under such options, shall be subject to
all applicable federal and state laws, rules and regulations and to such
approvals by any government or regulatory agency as may be required. The
Company, in its discretion, may postpone the issuance of delivery of any
certificates for Shares prior to (a) the listing of such Shares on any
stock exchange on which they may then be listed and (b) the completion of
any registration or qualification of such Shares under any federal or
state law, or any ruling or regulation of any government body which the
Company shall, in its sole discretion, determine to be necessary or
advisable.
10. Binding Agreement. The terms and conditions of the Plan
shall be binding upon and inure to the benefit of the Company and each
option holder and their respective heirs, representatives and successors.
11. Option Holder's Acceptance. Each option holder shall be
provided with a copy of the Plan upon issuance of the grant.
AGREEMENT BETWEEN
EXECUTIVE TELECARD SA (SWITZERLAND)
AND
TELSTRA CORPORATION LIMITED (AUSTRALIA)
FOR
ENHANCEMENT OF
TELECOM AUSTRALIA CALLING CARD
EXECUTIVE TELECARD AGREEMENT
This agreement (hereinafter referred to as the "Agreement") is
made as of this third day of August, 1993 by and between Executive
TeleCard SA, (hereinafter referred to as "TeleCard"), a corporation whose
address is Rue de la Morache 14, 1260 Nyon, Switzerland, and Telstra
Corporation Limited ACN 051 775 556 (hereinafter referred to as
"Telecom"), a corporation organised under the laws of Australia with its
principal offices located at 231 Elizabeth Street, Sydney, NSW 2000,
Australia.
WITNESSETH:
WHEREAS, TeleCard provides a service which enables users of the public
telephone systems in various countries to charge their telephone calls to
a credit card while in such countries; and
WHEREAS, Telecom has a requirement for such service for use by holders of
telephone calling cards issued by Telecom and desires to obtain such
services from TeleCard.
NOW THEREFORE, for and in consideration of the mutual premises and
covenants contained herein and for other good consideration and intending
to be legally bound by this Agreement, the parties agree to the following:
I. DEFINITIONS
In this Agreement, unless the context or use indicates another meaning:
"Account Number" in respect of a Telecom Card shall mean the numbers
appearing on the face of that Telecom Card.
"Commencement Date" shall mean the date of the first use (other than for
testing purposes) of a Telecom Card to obtain the Service.
"CAVIAR" shall mean the Computer-Assisted Variable International Automatic
Redialler or other system which allows TeleCard to capture usage
information and issue monthly bills in any major currency with full call
details and allows callers to place authorised direct-dial domestic and
international calls in a country in which there is a CAVIAR node, or from
which a CAVIAR node is accessible.
"Operator Assisted Service" shall mean the TeleCard USA based operator
assist help desk which can be accessed by way of toll-free access from the
countries listed in Part 3 of Appendix A and where, upon providing the
relevant Account number and PIN and called number details to the operator,
the call will be placed by that operator.
"PIN" shall mean the four (4) digit Personal Identification Number issued
to each Telecom Cardholder for use in conjunction with the Account Number.
"PVV" shall mean the Personal Verification Value [ ] which represents a
numeric value [ ].
[ ] which, when applied to the Cardholder's Account Number and PIN, will
result in a value which, if the Account Number and PIN are valid, will
[ ].
"Restricted Card List" or "RCL" shall mean the list, to be updated daily,
supplied by Telecom to TeleCard which contains the Account Number of
Telecom Cards which are being improperly used and lost, stolen and/or
cancelled Telecom Cards which are then to be blocked from use.
"Service" shall mean the service provided by TeleCard which enables the
users of public telephone systems in those countries other than Australia
in which a CAVIAR system node is located or from which a CAVIAR system
node is accessible (being currently the countries listed in Appendix A) to
make domestic and international telephone calls using a telephone calling
card which is recognised by CAVIAR.
"Service Charge" shall mean an annual charge applied to each Telecom
Cardholder that actually uses the Service which will be due for the
initial annual period upon the first use of the Service. Use in
subsequent annual periods will result in the annual charge applying from
the anniversary date of the first use of the Service.
"Telecom Card(s)" shall mean Telecom Telecard-TM-, activated Telecom
Network Plus cards and other telephone calling cards issued by Telecom as
are agreed between the parties from time to time.
"Telecom Cardholder(s)" or "Cardholder(s)" shall mean the holder(s) of a
Telecom Card.
2. THE SERVICE
2.1 Expansion of the Service.
TeleCard shall use its best efforts to expand the Service to
countries additional to those listed in Part 1 of Appendix A, to
include those countries listed in Part 2 of Appendix A.
2.2 Provision of Service to Telecom Cardholders
TeleCard shall make the Service available for use by each
Telecom Cardholder where the Telecom Card has been activated in
the TeleCard CAVIAR databases and is, in respect of each call
made by the Telecom Cardholder, validated in accordance with the
procedures outlined in Section 2.2.B.
TeleCard agrees that the Service to be provided to Telecom
Cardholders shall be such that all calls made shall be redialled
through the principal administration or recognised private
operating agency (being an administration or recognised private
operating agency within the meaning ascribed to those terms in
the International Telecommunication Convention) in the country
of calling (hereinafter referred to as the "PTT") so as to make
accessible to the Telecom Cardholder caller the international
telephone network facilities of the PTT.
For the purposes of TeleCard providing the Service to Telecom
Cardholders:
A. Order Entry.
Not later than 30 days after the execution of this Agreement,
TeleCard shall update its CAVIAR databases with Telecom Card
Account Numbers, associated PVV's and [ ].
TeleCard will use these stored values to undertake and perform
several authenticity checks required for validation. Telecard
agrees to adapt its software to accept the Telecom Card
numbering system and technical specifications, and to undertake
a testing program as agreed between the parties that provides a
level of assurance acceptable to each party that the processes
are functioning satisfactorily. The storage of the Telecom PVV
algorithm in the TeleCard databases will occur at no cost to
Telecom. TeleCard undertakes that all Telecom Cardholder
information (including the [ ]) will be handled with full
security measures, will be used solely and strictly for the
purpose of providing the Service to Telecom Cardholders in
accordance with this Agreement and otherwise will be treated as
Confidential Information in accordance with Section 13.
B. Card Validation
TeleCard shall undertake the following validation checks prior
to the placement of a call:
(a) Analyse the Telecom Card Account Number to determine if the
card presented is eligible to use the Service. [ ]
(b) As from 1 January 1994 or later agreed date, carry out [ ]
to assure that the Telecom Card number is valid.
(c) Check that the Telecom Card Account Number is not listed in
the Telecom RCL.
(d) Apply the [ ] to the Telecom Card Account Number and PIN
[ ] that can be compared with the stored PVV.
C. Call Completion and Floor Limits
TeleCard shall provide to Telecom and keep current a detailed
listing of the designated local phone numbers for TeleCard in
each country of operation of the Service and Telecom shall
provide these numbers to Telecom Cardholders. Each such local
phone number shall connect a Telecom Cardholder wishing to use
the Service to a CAVIAR node or an operator, whereupon the
caller shall be requested to provide the caller's Account Number
and PIN and the telephone number to be called. TeleCard shall
validate the transaction in accordance with the procedures in
Section 2.2.B. TeleCard shall implement a facility that will
impose periodic cumulative expenditure limits as agreed with
Telecom.
D. RCL
Telecom shall provide weekly, in a medium to be agreed, a
composite RCL file to TeleCard which TeleCard shall use to
update its database. TeleCard shall update all of its Service
databases with information from the most current weekly RCL or
daily update no later than [ ] after receipt.
E. Future Development
As a priority, TeleCard and Telecom shall work jointly toward
the development of [ ]. It is expected that TeleCard will
implement [ ]. A requirement for development of [ ] is also
foreseen.
3. BILLING AND SETTLEMENT
3.1 Billing
TeleCard will transmit call records and charges to Telecom in a
manner and format to be agreed thereby providing billing details
for all calls made using Telecom Cards to Telecom. These
individual billing records will be submitted to Telecom on, at a
minimum, a weekly basis for settlement. Each record will
include:
- Telecom Card Account Number
- date and time of the call
- telephone number called
- originating country including (where possible) geographic
location
- duration of call in minutes and seconds
- TeleCard rating of the call in the currency of call origin
- Service Charges due under Section 11.2
Telecom reserves the right to re-tariff or surcharge calls when
billing Telecom Cardholders and to represent billing details
according to its corporate policy on such issues.
3.2. Settlement
TeleCard will bill Telecom on a monthly basis charges for calls
made by Telecom Cardholders in the preceding month based on
TeleCard's published tariffs and Service Charges due (see
Section 11.2) in the currency of Australia ("Australian
Dollars"). Where TeleCard must convert from another currency to
Australian Dollars it shall use the conversion rates published
by Dow Jones [ ].
Telecom shall pay TeleCard in Australian Dollars all charges
recorded by TeleCard less the Administration Fee (see Section
11.1) and any Refunds and Credits and Chargebacks due under 3.3
and 3.4 below, within 30 days of receipt of the statement from
TeleCard.
3.3. Refunds and Credits.
Telecom shall be entitled to refuse payment to TeleCard and/or
receive an immediate refund from TeleCard if payment has been
made for calls placed by Telecom Cardholders using the Service
under the following circumstances:
(i) the call was made with a Telecom Card appearing on the RCL
received by TeleCard in time to be posted to the Service
databases in accordance with Section 2.2.D.
(ii) the call transaction is under [ ] and the Telecom
Cardholder has refused to make payment to Telecom with
respect to the call on the grounds that the call was of
poor transmission quality or a misdialled call;
(iii) the Telecom Cardholder asserts the call transaction is
unauthorised or fraudulent and refuses to make payment
to Telecom.
In the event that the call transaction appears to be fraudulent,
TeleCard shall investigate the charges through various
established methods. This process may include contacting the
Telecom Cardholder and possibly blocking the Telecom Card from
the Service until the investigation is completed.
TeleCard agrees that [ ] any and all calls alleged to be
fraudulent or unauthorised by Telecom Cardholders shall be
deemed to be fraudulent or unauthorised calls for purposes of
this Agreement. Telecom agrees to cooperate fully with TeleCard
in the investigation of suspected fraudulent activities
associated with the use of any Telecom Card on the Service.
3.4. Chargebacks.
Chargebacks shall be accepted by TeleCard as set forth in
Appendix B. TeleCard agrees to be responsible for all charges
that are properly charged back by Telecom as set forth in
Appendix B.
4. SECURITY AND FRAUD DETECTION SERVICES
4.1. In addition to the Card validation procedures outlined in
Section 2.2.B, TeleCard shall provide the following levels of
security and fraud control:
(1) Daily transmission to Telecom of usage of Telecom Cards
[ ].
(2) [ ].
(3) [ ].
4.2. TeleCard shall poll all Service Caviar databases on a daily
basis and utilise proprietary fraud control software to analyse
every call recorded in those databases. TeleCard shall produce
a daily report to Telecom based on such analysis which lists in
respect of Telecom Cards:
(1) all telephone calls of more than [ ];
(2) Account Numbers to which are charged [ ];
(3) Account Numbers to which [ ];
(4) Account Numbers to which are charged telephone calls made
[ ];
(5) any attempted use of an Account Number which does not
appear in the Service database (where applicable); and
(6) [ ].
Each of the activities described in items (1) through (6) may
indicated "abnormal usage".
4.3. If any patterns of abnormal usage are detected (which can be
reasonably suspected to indicate fraudulent usage), TeleCard
shall immediately block the relevant Account Number(s), promptly
notify Telecom via telephone or facsimile that such action has
been taken, and await recommendations from Telecom. Situations
which will result in the blocking of a Telecom Card shall be
agreed from time to time by the parties in writing.
5. CUSTOMER SERVICE
TeleCard warrants and represents that it will develop and implement
mutually acceptable customer service performance standards and facilities
in support of Telecom Card users of the Service and that:
(i) the language for customer prompting used by the Service shall be
English;
(ii) TeleCard will provide local toll-free numbers for English-
speaking Operator Assisted Service; and
(iii) TeleCard will provide customer service facilities in Denver,
Colorado for Telecom Cardholders whilst they are outside
Australia.
6. REPORTS
TeleCard agrees to provide and generate such reports, documentation and
tracking information as may be reasonably requested by Telecom regarding
utilisation and performance of the Service.
7. AUDIT and RECORD RETENTION
7.1 Telecom shall have the right to audit, during business hours and
upon reasonable notice and at Telecom's expense, TeleCard
records relating to card validation and screening and call
placement under this Agreement to determine TeleCard compliance
with this Agreement.
7.2 TeleCard shall retain detailed call information records for
Cardholders using the Service for a period of not less than one
year or any such longer time as may be required by law.
TeleCard shall provide Telecom with a copy of any such records
within [ ] of receipt of a written request.
8. MARKETING ACTIVITIES
The parties shall carry out activities relating to marketing the Service
to Telecom Cardholders as follows:
A. Telecom Cardholder Promotional and User Material. TeleCard
shall provide to Telecom instructional material delineating
pricing, procedures for use of the Service and such agreed
promotional and user material in a medium which will assist
Telecom to promote and assist the use of the Service by Telecom
Cardholders. When requested, TeleCard shall provide, free-of-
charge, technical and marketing assistance in the production of
Cardholder information for use of the Service.
B. Advertising. At Telecom's expense, Telecom shall advertise, use
direct mail and engage in such sales promotions and other
related marketing activities as Telecom deems, in its absolute
discretion, suitable to promote the use of the Service to
Telecom Cardholders.
C. Tone Dialers. TeleCard shall make Tone Dialers available to
Telecom Cardholders at a cost of not more than [ ] each.
D. Customisation. TeleCard shall adopt and implement emerging
world standards for customer interfaces and other operational
aspects of the Service, including validation standards as they
emerge so long as the implementation of any such standard would
not result in the lowering of any standard (including validation
checks and procedures) agreed.
9. SERVICE PERFORMANCE LEVELS
9.1 Availability
TeleCard shall make all reasonable efforts to ensure that the
accessibility to and availability of its CAVIAR nodes is
maintained at a level being equivalent to similar carrier
service offerings.
9.2 Service Quality
TeleCard shall make all reasonable efforts to ensure that users
of the Service consistently experience high end to end call
quality.
10. TRADEMARKS, SERVICE MARKS AND LOGOS.
TeleCard agrees that it has no right, title or interest in any of
Telecom's trade or service marks, logos or names ("Telecom Marks") and
agrees that it shall not use Telecom Marks without the prior written
consent of Telecom, which consent may be withheld at Telecom's discretion.
TeleCard hereby authorise Telecom, for the term of the Agreement, to
publish the name of TeleCard and the locations of the Service in any
directory of merchants or other publication of Telecom. Telecom agrees
that the TeleCard trade or service marks and logos ("TeleCard Marks")
belong to TeleCard and Telecom agrees to use its best efforts during and
after the term of the Agreement to protect TeleCard's interest in TeleCard
Marks insofar as any prejudice to TeleCard's interest therein may arise by
reason of any act or omission of Telecom under or in connection with this
Agreement.
11. COMPENSATION
11.1 Administration Fee
For the marketing and administrative services provided by
Telecom (including billing to and collection from Telecom
Cardholders), TeleCard shall pay Telecom a fee ("the
Administration Fee") equal to [ ] of the charges payable to
TeleCard by Telecom for use of the Service by Telecom
Cardholders. Telecom shall be entitled to deduct the
Administration Fee from each payment made by Telecom to TeleCard
under Section 3.2. The Administration Fee shall be calculated
on the basis of records submitted to Telecom under Section 3.1
less any chargebacks as set out in Section 3.4 and without any
adjustment for Credits or Refunds (Section 3.3).
TeleCard and Telecom shall review the Administration Fee
annually commencing on the first anniversary of the Commencement
Date. The current Administration Fee shall continue to apply
during the review period. If the Administration Fee is varied
as a result of the review, the new Administration Fee shall be
effective from the relevant anniversary of the Commencement Date
and adjustment payments will be made between the parties as
appropriate and necessary to give effect to the new
Administration Fee from that date.
11.2 Service Charge
A Service Charge of [ ] will be billed to Telecom for each
Telecom Card accessing the Service. TeleCard shall include this
fee as it is incurred as set out in Section 3.1 of this
Agreement.
11.3 Pricing
TeleCard shall keep Telecom advised of TeleCard's current
tariffs for the Service in each country where the Service is
offered and shall notify Telecom in writing of any changes to
such tariffs within one (1) month of the change.
During the first twelve (12) months after the Commencement Date,
any increase in a TeleCard tariff shall not exceed [ ] of the
tariff that applied at the Commencement Date except for any
increase that is a direct result of increases in charges to
TeleCard by the carrier in the country for which the increased
tariff is to apply ("an Exempt Increase").
If in any 12 month period (the first such period commencing on
the Commencement Date and thereafter on each anniversary of the
Commencement Date) the TeleCard tariffs applying for any country
where the Service is offered is increased by more than [ ] other
than by reason of Exempt Increases, Telecom may terminate this
Agreement by giving not less than three (3) months' prior
written notice to TeleCard.
12. INDEPENDENT CONTRACTORS
The parties hereto are independent contractors with respect to each other
and nothing contained herein shall be construed to create a joint venture,
partnership, principal and agent or other relationship between the parties
except that of independent contractors. TeleCard shall not act or attempt
to act or represent itself directly or by implication as agent for
Telecom, or in any manner assume or create or attempt to assume or create
any obligation on behalf or in the name of Telecom.
13. CONFIDENTIALITY
13.1 During the term of this Agreement the parties shall regard and
preserve as proprietary all information related to the business
and customers/Cardholders of the other party ("the releasing
party") it receives or learns as a result of this Agreement
("Confidential Information"). The parties agree not to disclose
any such Confidential Information without first obtaining the
other party's prior written consent.
13.2 The parties agree to use the Confidential Information only for
the purposes of fulfilling obligations under this Agreement.
Except as provided in Section 10, no other rights or licenses to
trade or service marks, inventions, copyrights, patents, or
other intellectual property rights are implied or granted under
this Agreement. Each party shall use reasonable care to avoid
unauthorised disclosure or use of the other party's Confidential
Information and not less than the same degree of care as it uses
to protect its own confidential information of similar
sensitivity. It is agreed that access to all Confidential
Information shall be limited to only such employees or agents
who need to know such information for the purpose of fulfilling
obligations under this Agreement and that each party shall be
liable for any unauthorised disclosure or use of the other
party's Confidential Information by any of its employees or
agents to whom such Confidential Information is disclosed.
13.3 All Confidential Information shall remain the property of the
releasing party and such Confidential Information, including all
copies thereof, shall be returned to the releasing party or
destroyed after the need for it has expired, upon request and,
in any event, promptly upon termination of this Agreement.
13.4 No party shall have any obligation with respect to Confidential
Information to the extent, but only to the extent, that it:
i) is already in the possession of the party free from any
obligation to keep such information confidential;
ii) is or becomes publicly known through no wrongful act of the
party;
iii) is rightfully received from a third party who has the right
to deliver it without restriction and without breach of
this Agreement;
iv) is independently developed by the party without use of any
Confidential Information of the releasing party; or
v) must be disclosed pursuant to a court order or is required
by any governmental or administrative authority having
jurisdiction over the party and the party gives the
releasing party prompt notice of the disclosure.
13.5 Without the prior written consent of the releasing party, the
other party shall not directly solicit customers of the
releasing party by utilising any Confidential Information of the
releasing party. A Telecom Cardholder enrolled to use the
Service under this Agreement shall be the customer of Telecom,
and TeleCard shall have no proprietary rights with respect to
such Cardholder.
13.6 Notwithstanding any other provision of this Section 13, except
subsection 13.7, Telecom shall be entitled to disclose to its
shareholder, the Commonwealth of Australia, or its nominee any
Confidential Information of TeleCard contained in any books,
documents or other papers of Telecom other than Confidential
Information comprising confidential details of products,
technical processes and know how including computer programs
directly related to those products, technical processes or know
how.
13.7 If Telecom is required to disclose Confidential Information of
TeleCard to the Commonwealth of Australia or its nominee,
Telecom shall:
i) promptly notify TeleCard of the disclosure requirement;
ii) mark all such information required to be disclosed as
"Commercial-in-Confidence"; and
iii) advise the Commonwealth of the confidentiality of the
information and request that the Commonwealth agree that it
be treated as confidential information.
13.8 In sub section 13.6 the words "books, documents or other papers"
include:
i) any book, map, plan, graph or drawing;
ii) any photograph;
iii) any label, marking or other writing which identifies or
describes anything of which it forms a part, or to which it
is attached by any means whatsoever;
iv) any disc, tape, sound track or other device in which sounds
or other data (not being visual images) are embodied so as
to be capable (with or without the aid of some other
equipment) of being reproduced therefrom;
v) any film (including a microfilm) negative, tape or other
device in which one or more visual images are embodied so
as to be capable (with or without the aid of some other
equipment) of being reproduced therefrom; and
vi) anything whatsoever on which is marked any words, figures,
letters or symbols which are capable of carrying a definite
meaning to persons conversant with them.
14. TERM AND TERMINATION
14.1 Unless terminated earlier in accordance with sub section 14.2 or
sub section 14.3, either party may terminate this Agreement
without cause at any time after [ ], by giving not less than
[ ] prior written notice to the other party.
14.2 Either party may terminate this Agreement by written notice to
the other party if:
i) the other party commits any material breach of this
Agreement which is not capable of being remedied;
ii) the other party commits a breach of this Agreement which is
capable of being remedied and fails to remedy the breach
within 30 days of receipt of written notice of default or
within such longer period as may be specified in the notice
of default;
iii) the other party ceases, or proposes to cease to carry on
business or to pay its debts as and when they fall due;
iv) except for the purposes of a solvent reconstruction or
amalgamation, an application is made, proceedings are
commended, or a resolution is passed or proposed in a
notice of meeting for the winding up, dissolution, official
management or administration of the other party or the
other party enters into any arrangement, compromise or
composition with, or any assignment for the benefit of, its
creditors or any class of them;
v) a receiver, receiver and manager, official manager or
provisional liquidator is appointed with respect to the
other party or any of its assets; or
vi) the other party, being a corporation incorporated outside
Australia, becomes insolvent or suffers any event similar
to any event referred to in paragraphs (iv) and (v).
14.3 Telecom may terminate this Agreement at any time in accordance
with sub section 11.3.
14.4 Upon notice of termination of this Agreement, an orderly phase-
out schedule shall be agreed between Telecom and TeleCard.
Administrative Fees shall continue to be paid as set forth in
Section 11 in respect of use of the Service by Telecom
Cardholders before termination, as long as billing and
collection are performed by Telecom.
14.5 Termination of this Agreement for any reason shall not release
either party from any accrued liability to the other party. A
party's right to terminate this Agreement as provided herein
shall be without prejudice to any other rights provided to it
under law or equity.
15. [ ]
Telecom reserves the right to enter into agreements with other parties for
their acceptance of the Telecom Card for [ ].
16. ASSIGNMENT
Neither party shall assign or transfer all or any part of its rights under
this Agreement. Any such assignment or transfer without the prior written
approval of the other party shall be null and void and of no effect.
17. WARRANTIES
Telecom shall not make any warranty regarding the Service to Telecom
Cardholders beyond those made by TeleCard.
18. INDEMNIFICATION
18.1 Indemnity by TeleCard. TeleCard shall indemnify and hold
harmless Telecom and its respective affiliate corporations, and
the officers, directors, employees and agents of each such
corporation, from and against any and all liabilities, losses,
claims, suits, complaints, proceedings, damages, costs, and
expenses whatsoever, including reasonable outside attorneys'
fees, resulting from any claim, complaint, action, proceeding,
counterclaim or offset arising directly or indirectly out of
TeleCard's performance under this Agreement or TeleCard's
failure to perform in accordance with any of the terms and
conditions of this Agreement.
18.2 Indemnity by Telecom. Telecom shall indemnify and hold harmless
TeleCard, its affiliate corporations, and the officers,
directors, employees and agents of each such corporation, from
and against any and all liabilities, losses, claims, suits,
complaints, proceedings, damages, costs, and expenses
whatsoever, including reasonable outside attorneys' fees,
resulting from any claim, complaint, action, proceeding,
counterclaim or offset arising out of or resulting from the
gross negligence or wilful misconduct of Telecom.
19. GOVERNING LAW AND CONSENT TO JURISDICTION
This Agreement shall be governed by and construed in accordance with the
substantive laws of the State of New South Wales, Australia, in all
respects, including matters of construction, enforcement and performance,
without giving effect to the principles of choice of laws thereof. Each
party hereby irrevocably submits to the non-exclusive jurisdiction of the
courts of or having jurisdiction in the State of New South Wales in any
action or proceeding arising out of or relating to this Agreement, and
each party hereby irrevocably agrees that all claims in respect of any
such action or proceeding may be heard and determined in any such court.
20. NOTICES
All notices, reports and other communications pursuant to or in connection
with this Agreement shall be given by certified mail, facsimile, or
courier service. Notices shall be deemed received from the date the
telecopy, or the certified mail or courier message, is delivered to the
applicable location described below:
To Telstra: Mailing Address:Telecom Australia
Card Products Group
11/624 Bourke Street
Melbourne, Victoria, 3000
Australia
Attention: Mr Rick Arden
Facsimile Number+61 3 634 2510
To TeleCard Mailing Address:Executive TeleCard SA
Rue de la Morache 14
1260 Nyon, Switzerland
Attention:
Facsimile Number+41 22 61 0227
21. COMPLIANCE WITH LAWS
TeleCard agrees to comply with any and all laws and regulations regulating
its activities and services, including the Service. TeleCard agrees to
pass on and provide to Telecom any benefits, discounts or refunds related
to the Service that it receives as a result of revisions to Federal
Communications Commission or other applicable rules and regulations.
22. SEVERABILITY
If any provision of this Agreement is held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect the validity, legality or enforceability
of any other provision hereof, provided that such invalidity does not
materially prejudice either party in their respective rights and
obligations contained in the valid terms, covenants or conditions.
23. WAIVER
The failure of either party to require the performance of any of the terms
and conditions of this Agreement or the waiver by either party of any
default under this Agreement shall not prevent a subsequent enforcement of
such term or condition, nor be deemed a waiver of any subsequent breach.
24. ENTIRE AGREEMENT
This Agreement comprises the entire understanding between the parties and
supersedes all prior agreements and understandings related to its subject
matter. This Agreement may not be amended, changed, modified, waived,
discharged or terminated except by a writing signed by both parties.
25. HEADINGS
The headings in this Agreement are for convenience and reference only and
shall not limit or affect any of the terms and conditions herein.
26. GENERAL
The use of any gender shall include all genders, and the use of any number
shall be construed as the singular or the plural, as the context may
require.
27. SURVIVAL
The rights and obligations set forth in Sections 10 (Trademarks), 13
(Confidentiality), 14 (Term and Termination), 18 (Indemnification) and 19
(Governing Law) of this Agreement shall survive and continue after any
expiration or termination of this Agreement and shall bind the parties and
their legal representatives, successors, heirs and assigns, for acts
connected with performance or conduct during the course of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorised representatives as of the day and year first set
forth below.
TELSTRA CORPORATION LIMITED.
By Phillip Hastings
Signed /s/ Phillip Hastings
Title General Manager, International Network Products
Date 3 August 1993
EXECUTIVE TELECARD SA
By Daryl Engelman
Signed /s/ D Engelman
Title Vice President of Operations and Chief Operating Officer
Date July 23, 1993
<PAGE>
APPENDIX A (Part 1)
EXECUTIVE TELECARD SERVICE LOCATIONS
As at 1 July 1993
Direct Dialled Operator Assisted
Andorra Abi Dhabi Northern Island
Austria Andorra Norway
Bahrain Austria Oman
Belgium Bahamas Peru
Canada Bahrain Philippines
Denmark Belgium Portugal
Finland Brazil Qatar
France Canada San Marino
Germany Canary Islands Singapore
Gibraltar Chile South Korea
Hong Kong Columbia Spain
Iceland Costa Rico Sweden
Republic of Ireland Cyprus Switzerland
Italy (Incl Vatican City Denmark Taiwan
and San Marino) Dominican Republic Turkey
Japan Dubai Uraguay
Liechtenstein Finland US Virgin Islands
Luxembourg France Venezuela
Malaysia Germany
Monaco Gibraltar
Netherlands Greece
Norway Hong Kong
New Zealand Hungary
Oman India
Philippines Ireland
Singapore Israel
Spain (incl Canary Is. and Italy (incl. Vatican City)
Majorca) Jamaica
Sweden Japan
Switzerland Kuwait
Taiwan Liechtenstein
Thailand Luxembourg
United Kingdom (incl. Madeira
Guernsey, Ilse of Man, Jersey Majorca
and Northern Ireland) Malaysia
United States of America Mexico
Monaco
Netherlands
New Zealand
<PAGE>
APPENDIX A (Part 2)
EXECUTIVE TELECARD PLANNED SERVICE LOCATIONS
As at 1 July 1993
Direct Dial Operator Assist
[ ] Argentina
[ ] Chile
Chile [ ]
[ ] [ ]
[ ] [ ]
[ ] Columbia
[ ] [ ]
[ ] Venezuela
[ ] [ ]
South Africa [ ]
[ ]
[ ]
[ ]
[ ]
[ ]
<PAGE>
APPENDIX B
EXECUTIVE TELECARD AGREEMENT CHARGEBACK REASONS
The following details the applicable set of chargeback reasons for the
Service:
WARNING BULLETIN - 45 DAYS
This chargeback is to be used if the transaction received contains an
Account Number which had been notified by Telecom on any RCL listing and
transmitted to TeleCard more than 6 hours before the usage of the
particular Telecom Card is attempted.
Telecom may effect a chargeback with respect of such transaction within 45
days of the transaction date. For purposes of this chargeback, the
transaction date will be considered the date that the call is placed. If
the record has no transaction date, Telecom may exercise this chargeback
if the Account Number appeared on any RCL notification on any date within
15 (fifteen) calendar days prior to the central processing date.
CARD SHOULD BE ON SUSPENDED/CANCELLED LIST
This chargeback reason may be used when a call is switched and billed
during a period the Telecom Card used should have been on TeleCard's lists
of suspended and/or cancelled cards, i.e. activity on the card met the
criteria which had been agreed between TeleCard and Telecom (see
Section 3.3(iii)) for deciding if and when a card should be so suspended
or cancelled.
CARD NOT CORRECTLY VALIDATED.
(Not applicable until "on-us" validation is introduced)
This chargeback reason may be used when a call is connected and billed by
TeleCard but a positive validation was not received by TeleCard from
Telecom prior to the placement of the call.
DUPLICATE PROCESSING - 120 DAYS
This chargeback applies when a single transaction is presented two or more
times to Telecom for the same Cardholder Account Number.
Telecom may effect a chargeback with respect of such transaction within
120 days of the transaction date. For purposes of this chargeback, the
transaction date will be considered the date that the call is placed.
LATE PRESENTATION - 180 DAYS
The transaction date is more than 30 days prior to the central processing
date. This chargeback will apply if TeleCard fails to transmit a
transaction to Telecom within 180 days of that transaction.
Telecom may affect a chargeback with respect of such transaction within
180 days of the transaction date. For purposes of this chargeback, the
transaction date will be considered the date that the call is placed.
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement"), dated as of March 15, 1995, between
EXECUTIVE TELECARD, S.A., a Turks & Caicos corporation with offices at
4260 East Evans Avenue, Denver, Colorado 80222 (hereinafter called the
"Company"), and EDWARD J. GERRITY, JR., residing at 14 Plymouth Road, Rye,
New York 10580 (hereinafter called "Employee").
WHEREAS, the services of Employee, his experience and knowledge of the
affairs of the Company and his reputation and contacts in the industry are
extremely valuable to the Company; and
WHEREAS, the Company desires to obtain the benefits of his knowledge,
experience, reputation, and contacts for a period of two (2) years and is
willing to offer Employee an incentive to do so; and
WHEREAS, Employee is willing to accept employment with the Company upon
the terms and conditions hereinafter set forth:
NOW, THEREFORE, in consideration of the mutual covenants and conditions
herein, the parties to this Agreement agree as follows:
1. EMPLOYMENT TERM
The Company hereby employs Employee, and Employee hereby accepts
employment by the Company, on the terms and conditions herein
contained, for a period of two (2) years commencing on March 15, 1995
and continuing through March 14, 1997 (the "Employment Term").
Company has the right to extend the employment of Employee, subject
to acceptance by Employee, for an additional period as agreed by the
parties in writing prior to the termination of this Employment
Agreement.
2. ACCEPTANCE OF THIS EMPLOYMENT AGREEMENT
Should Employee accept this Agreement as evidence by his signature
thereupon, and Company subsequently withdraws its offer within thirty
days following commencement of the Employment Term, regardless of the
reason for the withdrawal, Employee shall receive a lump sum
compensation of One Hundred Twenty Thousand Dollars (US $120,000.00)
plus 41,257 unrestricted registered shares of the common stock of the
Company in lieu of all stock options which have heretofore been
granted to Employee by the Company.
3. EMPLOYEE'S DUTIES
3.1 Duties
During the Employment Term, and any extension thereof, Employee shall
have the responsibility to solicit and negotiate, subject to approval
by the Board of Directors, Revenue Sharing and Enhancement Agreements
with foreign postal, telegraph and telephone authorities or
companies.
3.2 Other Employment
Employee shall provide employment services to the Company during the
term of this Agreement as reasonably requested by the Company.
Nothing contained herein, however, shall prevent Employee from
accepting other employment.
3.3 Travel
Employee shall not, without his consent, be required to travel for a
period greater than fourteen (14) days per calendar month during the
Employment Term.
4. COMPENSATION AND EXPENSES
4.1 Salary
As salary for his services and covenants herein described, the
Company will pay Employee, a salary (the "Salary") during the
Employment Term of One Hundred Thousand Dollars (US $100,000.00) per
annum, payable as follows:
a. the sum of Fifty Thousand Dollars ($50,000.00) payable within
five (5) business days of execution of this Agreement;
b. the sum of Fifty Thousand Dollars ($50,000.00) payable in equal
weekly installments during the first year of the Employment
Term;
c. the sum of One Hundred Thousand Dollars ($100,000.00) payable in
equal weekly installments during the second year of the
Employment Term.
4.2 Business Expenses
The Company will reimburse Employee for all reasonable expenses
properly incurred by him in the performance of his duties hereunder,
upon presentation of properly itemized charges, receipts and/or
similar documentation, and otherwise in accordance with policies
established from time to time by the Board of Directors of the
Company. Employee's spouse will be permitted to accompany Employee
on four trips per year and Employee will be reimbursed by Company for
the expense of his spouse's accompaniment, including travel, meals
and accommodations. Employee shall be reimbursed for the initiation
fees and membership dues for one private country club located in
Westchester County, New York and the monthly minimum charges, food,
beverage and entertainment expenses incurred by Employee in
connection with carrying out the purposes of this Agreement.
4.3 Automobile Lease
The Company will negotiate separately reimbursement of Employee's
business related automobile expenses.
4.4 Stock Participation
Employee will be granted stock options to purchase shares of the
Company in an amount equal to the greater of any stock options
granted to the Executive Vice President and/or a director of the
Company under any stock option plan in effect during the Employment
Term and under the same terms and conditions as are provided for
other officers or directors of the Company in the plan.
4.5 Relocation of Employee
Company agrees that without Employee's written consent, Employee
shall not be relocated and shall continue to have his office in New
York. To the extent that Employee consents to a relocation, Company
agrees to reimburse Employee for the cost of such relocation of
Employee and Employee's spouse and all personal property from New
York to Employee's new location. Company further agrees to reimburse
Employee for all temporary living expenses, up to a maximum of four
(4) weeks, until Employee has completed the purchase of and occupied
a new residence near Employee's new work location with Company.
5. BENEFITS
5.1 Insurance and Retirement
During the Employment Term, Employee shall be entitled to participate
in any welfare and benefit plans (including, but not limited to, any
insurance, major medical, health, dental and pension or other
retirement plans) established by the Company from time to time for
the general and overall benefit of upper level executives of the
Company.
5.2 Vacation
Employee shall be entitled to all paid holidays and personal days as
available to other employees of the Company, and, in addition, to
vacation time of three (3) weeks per annum, which vacation and/or
personal day(s) shall be taken by him at such time or times as are
consistent with the needs of the business of the Company. Unused
vacations and/or personal day(s) during each year of the Employment
Term shall be carried over from year to year as necessary due to the
exigencies of the business, and Employee shall be compensated for any
unused time.
5.3 Indemnification
Employee shall be indemnified by the Company to the fullest extent
provided under any indemnification provision contained in the By-Laws
and/or Certificate of Incorporation presently in existence, or, to
the extent that the scope of such indemnification is greater, under
any amendments to the By-Laws and/or Certificate of Incorporation.
To the extent that the Company obtains indemnification insurance for
its officers and/or directors, such insurance shall also cover
Employee to the same extent.
6. EMPLOYEE'S DEATH OR DISABILITY
If Employee dies or becomes disabled during the term of his
employment, Company will pay to Employee or Employee's estate any
compensation due him up to the end of the Employment Term, plus
registered and unrestricted shares of the common stock of the Company
equal to the number of stock options granted but unexercised by
Employee at the time of consultant's death or disability. Delivery of
the shares shall be in lieu of all stock options held by Employee.
7. TERMINATION, RIGHTS AND OBLIGATIONS, RENEWAL
7.1 Termination
The Employment Term shall cease and terminate upon the earliest to
occur of the following events specified below:
a. The expiration of the Employment Term without renewal pursuant
to clause 1 hereof.
b. The voluntary departure of Employee from the employ of the
Company.
7.2 Renewal
The Company and Employee may renew or extend the term of Employee's
employment upon such terms as shall be mutually acceptable.
8. ASSIGNMENT
This Agreement and any rights (including Employee's Compensation)
hereunder shall not be assigned, pledged or transferred in any way by
either party hereto except that the Company shall have, with
Employee's consent, the right to assign its rights hereunder to any
successor in interest of the Company whether by merger,
consolidation, purchase of assets or stock or otherwise. Any
attempted assignment, pledge, transfer or other disposition of this
Agreement or any rights, interests or benefits contrary to the
foregoing provisions shall be null and void.
9. NOTICES
All notices, requests, demands and other communications hereunder
must be in writing and shall be deemed to have been duly given if
delivered by hand, sent by facsimile (if to Company) or mailed within
the continental United States by first class, registered mail, return
receipt requested, postage and registry fees prepaid, the applicable
party and addressed as follows:
(i) if to Company: Executive TeleCard, S.A.
4260 East Evans Avenue
Denver, Colorado 80222
Facsimile: (303) 692-0965
(ii) if to Employee: Edward J. Gerrity, Jr.
14 Plymouth Road
Rye, New York 10580
Facsimile: (914) 967-4378
10. SEVERABILITY
If any provision of this Agreement shall, for any reason, be adjudged
by any court of competent jurisdiction to be invalid or
unenforceable, such judgment shall not affect, impair or invalidate
the remainder of this Agreement but shall be confined in its
operation to the jurisdiction in which made and to the provisions of
this Agreement directly involved in the controversy in which said
judgment shall have been rendered.
11. WAIVER
No course of dealing and no delay on the part of any party hereto in
exercising any right, power, or remedy under or relating to this
Agreement shall operate as a waiver thereof or otherwise prejudice
such party's rights, powers and remedies. No single or partial
exercise of any rights, powers or remedies under or relating to this
Agreement shall preclude any other or further exercise thereof or the
exercise of any other right, power or remedy.
12. ENTIRE AGREEMENT/GOVERNING LAW
This Agreement embodies the entire understanding and supersedes all
other oral or written agreements or understandings between the
parties regarding the subject matter hereof. No change, alteration,
or modification hereof may be made except in writing signed by both
parties thereto. This Agreement shall be construed and governed in
all respects and shall at all times be determined in accordance with
the laws of the State of New York. The parties consent to the
exclusive jurisdiction of the appropriate court in New York state as
to any controversy arising out of execution of this Agreement or the
terms and conditions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement, consisting of four (4) pages, on this 15th day of March, 1995.
EXECUTIVE TELECARD, S.A.
/s/John Gitlin By:/s/Robert N. Schuck
Witness Its:
/s/Edward J. Gerrity, Jr.
Witness Edward J. Gerrity, Jr.
<PAGE>
TERMINATION AGREEMENT
This AGREEMENT ("Agreement"), dated August 31, 1995, by and between
Executive TeleCard, S.A., a Turks & Caicos corporation (the "Company"),
and Edward J. Gerrity (the "Employee").
WHEREAS, the services of Executive, his representation of the Company
and contacts are extremely valuable to the Company and Company recognizes
the valuable services that Executive can continue to render to the
Company; and
WHEREAS, Executive is willing to continue to serve the Company but
desires assurances that in the event of any change in control of Company
he will continue to have the responsibility and status he has earned;
NOW THEREFORE, in consideration of the promises and the mutual
agreements herein contained, Company and Executive hereby agree as
follows:
1. Term.
This Agreement shall terminate the later of two years from the
date of this Agreement or two years from the effective date in a Change in
Control of the Company or a Change in Control of Executive TeleCard, Ltd.
("EXTL").
2. Change in Control.
No benefits shall be payable under this Agreement unless and
until (a) there shall have been a Change in Control of the Company or a
Change in Control of EXTL, while the Executive is still an Executive of
the Company and (b) the Executive's employment by the Company thereafter
shall have been terminated in accordance with Section 3 below. For
purposes of this Agreement, a Change in Control of the Company and/or EXTL
shall be deemed to have occurred if (i) there shall be consummated (x) any
consolidation or merger of the Company or EXTL in which the Company or
EXTL is not the continuing or surviving corporation or pursuant to which
shares of the Company's or EXTL's Common Stock would be converted into
cash, securities or other property, other than a merger of the Company or
EXTL in which the holders of the Company's or EXTL's Common Stock
immediately prior to the merger have the same proportionate ownership of
common stock of the surviving corporation immediately after the merger, or
(y) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all, of the
assets of the Company or EXTL, or (ii) the stockholders of the Company or
EXTL approved any plan or proposal for the liquidation or dissolution of
the Company or EXTL, or (iii) any person (as such term is used in Section
13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), shall become the beneficial owner (within the meaning of
Rule 13d-3 under the Exchange Act) of 20% or more of the Company's or
EXTL's outstanding Common Stock, or (iv) during any period of two
consecutive years, individuals who at the beginning of such period
constitute the entire Board of Directors of either the Company or EXTL
shall cease for any reason to constitute a majority thereof unless the
election, or the nomination for election by the Company's or EXTL's
stockholders, of each new director was approved by a vote of at least two-
thirds of the directors then still in office who were directors at the
beginning of the period.
3. Termination Following Change in Control.
(a) If a Change in Control of the Company or EXTL shall have
occurred while the Executive is still an Executive of the Company, the
Executive shall be entitled to the benefits provided in Section 4 below
upon the subsequent termination of the Executive's employment with the
Company by the Executive for Good Reason (as defined in Section 3 (c)
below) or by the Company unless such termination is a result of (i) the
Executive's death; or (ii) the Executive's termination by the Company for
Cause (as defined in Section 3(b) below).;
(b) Cause: For purposes of this Agreement only, the Company
shall have "Cause" to terminate the Executive's employment hereunder only
on the basis of material fraud or a criminal conviction involving moral
turpitude or arising from an act of the Executive that is directly
contrary to the Company's interest. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for Cause unless and
until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than three-
quarters of the entire membership of the Company's Board of Directors at a
meeting of the Board called and held for that purpose (after reasonable
notice to the Executive and an opportunity for the Executive, together
with the Executive's counsel, to be heard before the Board), finding that
in the good faith opinion of the Board the Executive was guilty of the
conduct set forth in the first sentence of this Section 3(b) and
specifying the particulars thereof in detail, and an opinion of counsel
for the Company confirming that the opinion of the Board has a substantial
basis in fact and in law.
(c) Good Reason. For purpose of this Agreement "Good Reason"
shall mean any of the following (without the Executive's express written
consent):
(i) The assignment to the Executive by the Company of
duties inconsistent with the Executive's position, duties,
responsibilities and status with the Company immediately prior to a
Change in Control of the Company or EXTL, or a change in the
Executive's titles or offices then in effect immediately prior to the
Change in Control of the Company or EXTL, or any removal of the
Executive from or any failure to reelect or reappoint the Executive
to any such positions;
(ii) a reduction by the Company in the Executive's base
salary in effect on the date hereof or as the same may be increased
from time to time during the term of this Agreement or the Company's
failure to increase (within 12 months of the Executive's last
increase in base salary) the Executive's base salary after a Change
in Control of the Company or EXTL in an amount which at least equals,
on a percentage basis, the average percentage increase in base salary
for officers of the Company effected in the preceding 12 months;
(iii) any failure by the Company to continue in effect any
benefit plan, program or arrangement in which the Executive and/or
eligible family members are participating at the time of a Change in
Control of the Company or EXTL and any other plans or fringe benefits
providing the Executive with substantially similar benefits
(hereinafter referred to as "Benefit Plans"), or the taking of any
action by the Company which would adversely affect the Executive's
and/or Executive's eligible family members participation in or
materially reduce the Executive's and/or Executive's eligible family
member's benefits under any such Benefit Plan or deprive the
Executive and/or any eligible family member of any material fringe
benefit enjoyed by the Executive at the time of a Change in Control
of the Company or EXTL;
(iv) any failure by the Company to continue in effect any
incentive plan or arrangement in which the Executive is participating
at the time of a Change in Control of the Company or EXTL (or any
other plans or arrangements providing him with substantially similar
benefits) (hereinafter referred to as "Incentive Plans") or the
taking of any action by the Company which would adversely affect the
Executive's participation in any such Incentive Plan or reduce the
Executive's benefits under any such Incentive Plan;
(v) any failure by the Company to continue in effect any
plan or arrangement to receive securities of the Company (including,
without limitation, the Company's existing Stock Option Plan, or any
future Stock Option Plan through the term of Executive's employment
and any other plan or arrangement to receive and exercise stock
options, stock appreciation rights, restricted stock or grants
thereof) in which the Executive is participating at the time of a
Change in Control of the Company or EXTL (or plans or arrangements
providing him with substantially similar benefits) (hereinafter
referred to as "Securities Plans") or the taking of any action by the
Company which would adversely affect the Executive's participation in
or materially reduce the Executive's benefits under any such
Securities Plan;
(vi) a relocation of Executive's offices to a location
greater then twenty-five miles from the Executive's office as of the
effective date of Change in Control, or the Executive's relocation to
any place other than the location at which the Executive performed
the Executive's duties prior to a Change in Control of the Company or
EXTL, except for required travel by the Executive on the Company's
business to an extent substantially consistent with the Executive's
business travel obligations at the time of a Change in Control of the
Company or EXTL;
(vii) any failure by the Company to provide the Executive
with the number of paid vacation days to which the Executive is
entitled at the time of a Change in Control of the Company;
(viii) any material breach by the Company of any provision
of this Agreement;
(ix) any failure by the Company to obtain the assumption
of this Agreement by any successor or assign of the Company; or
(x) any purported termination of the Executive's
employment which is not effected pursuant to the Notice of
Termination satisfying the requirements of Section 3(d), and for
purposes of this Agreement, no such purported termination shall be
effective.
(xi) Executive's voluntary resignation for any reason
within six (6) months from the effective date of Change in Control of
the Company or EXTL;
(d) Notice of Termination by the Company. Any termination by
the Company pursuant to Section 3(b) shall be communicated by a Notice of
Termination. For purposes of this Agreement a "Notice of Termination"
shall mean a written notice which shall indicate those specific
termination provisions in this Agreement relied upon and which sets forth
in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated. For the purposes of this Agreement, no such purported
termination by the Company shall be effective without such Notice of
Termination.
(e) Date of Termination. "Date of Termination" shall mean if
the Executive's employment is terminated by Executive or by the Company
for any reason, the date on which a Notice of Termination is given;
provided that if within 30 days after any Notice of Termination is given
to the Executive by the Company, the Executive notifies the Company that a
dispute exists concerning the termination, the Date of Termination shall
be the date the dispute is finally determined, whether by mutual agreement
by the parties or upon final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and
no appeal having been perfected).
4. Severance Compensation upon Termination of Employment.
If the Company shall terminate the Executive's employment other
than pursuant to Section 3(b) or if the Executive shall terminate his
employment for Good Reason, then the Company shall pay to the Executive as
severance pay the following compensation:
(a) On the fifth day following termination, in a lump sum, in
cash, an amount equal to three times the average of the aggregate of the
annual compensation paid by the Company to the Executive during the term
of his employment preceding the Change in Control of the Company or EXTL;
provided, however, that if the lump sum severance payment under this
Section 4, either alone or together with other payments which the
Executive has the right to receive from the Company, would constitute a
"parachute payment" (as defined in Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code"), such lump sum severance payment
shall be reduced to the largest amount as will result in no portion of the
lump sum severance payment under this Section 4 being subject to the
excise tax imposed by Section 4999 of the Code. The determination of any
reduction in the lump sum severance payment under this Section 4 pursuant
to the foregoing provision shall be made by the Executive in good faith,
and such determination shall be conclusive and binding on the Company;
(b) To the extent Executive and the Executive's eligible family
members are eligible they shall continue to be covered by all noncash
benefit plans of the Company or any successor plans or programs in effect
on the date of acquisition of control, for twenty-four months thereafter.
In the event Executive and participating family members are ineligible
under the terms of such plans to continue to be so covered, Company shall
provide substantially equivalent coverage from other sources;
(c) At no cost to Executive, the number of unrestricted shares
of the common stock of Executive TeleCard, Ltd. equal to the total number
of outstanding stock options held by Executive on the fifth day following
termination or in lieu thereof Executive may elect to surrender to Company
his rights in such outstanding stock options (whether or not then
exercisable) then held by Executive, and, upon such surrender, Company
shall pay to Executive an amount in cash per share, which is the greater
of the average price per share paid in connection with the acquisition of
control of Executive TeleCard, Ltd. if such control was acquired by the
payment of cash or the then fair market value per option share of the
consideration paid for such shares if such control was acquired for
consideration other than cash, or the price per share paid in connection
with any tender offer for shares of Executive TeleCard, Ltd. common stock
leading to control, or the mean between the high and low selling price of
such stock on the Nasdaq National Market or other market on which
Executive TeleCard, Ltd. stock is then traded on the date of Executive's
termination.
5. No Obligation to Mitigate Damages; No Effect on Other
Contractual Rights; No Right of Set-Off.
(a) Executive's benefits hereunder shall be considered
severance pay in consideration of his past service and pay and
consideration of his continued service from the date hereof and his
entitlement thereto shall not be governed by any duty to mitigate his
damages by seeking further employment nor offset by any compensation which
he may receive from future employment.
(b) The provisions of this Agreement, and any payment provided
for hereunder, shall not reduce any amounts otherwise payable, or in any
way diminish the Executive's or the Executive's eligible family members'
existing rights, or rights which would accrue solely as a result of the
passage of time, under any Benefit Plan, Incentive Plan or Securities
Plan, employment agreement or other contract, plan or arrangement.
(c) The Company shall have no right of set-off or counterclaim
in respect of any claim, debt or obligation against any payments to
Executive, his dependents, beneficiaries, or estate provided for in this
Agreement.
6. Successor to the Company.
(a) The Company and EXTL will require any successor or assign
(whether direct or indirect, by purchase merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of
the Company, by agreement in form and substance satisfactory to the
Executive, expressly, absolutely and unconditionally to assume and agree
to perform this Agreement in the same manner and to the same extent that
the Company and EXTL would be required to perform it if no such succession
or assignment had taken place. Any failure by the Company or EXTL to
obtain such agreement prior to the effectiveness of any such succession or
assignment shall be a material breach of this Agreement and shall entitle
the Executive to terminate the Executive's employment for Good Reason. As
used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor or assign to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in this
Section 6 or which otherwise becomes bound by all the terms and provisions
of this Agreement by operation of law. If at any time during the term of
this Agreement the Executive is employed by any corporation a majority of
the voting securities of which is then owned by the Company, "Company" as
used in this Agreement shall in addition include such employer. In such
event, the Company agrees that it shall pay or shall cause such employer
to pay any amounts owed to the Executive pursuant to Section 4 hereof.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal and legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amounts are still payable
to him hereunder, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to the
Executive's devisee, legatee or other designee or, if there be no such
designee, to the Executive's estate.
7. Notice.
For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt registered, postage prepaid as
follows:
If to the Company: Executive TeleCard, S.A.
MacLaw House, Duke Street
Grand Turk, Turks & Caicos Island, B.W.I.
If to Executive: Edward J. Gerrity
14 Plymouth Road
Rye, NY 10580
or such other address as either of the parties may have furnished to the
other in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
8. Miscellaneous.
No provisions of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive and the Company. No waiver by any party
hereto at any time of any breach by another party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by any party which are
not set forth expressly in this Agreement. This Agreement shall be
governed by and construed in accordance with the laws of the State of New
York.
9. Validity.
The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability or any other
provision of this Agreement, which shall remain in full force and effect.
10. Counterparts.
This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
11. Legal Fees and Expenses.
In the event that the Company terminates or seeks to terminate
Executive and Executive disputes such termination or attempted termination
and prevails and, or Executive elects to terminate his service hereunder
for Good Reason and the Company disputes its obligation to pay Executive
the benefits provided for under Section 4 of this Agreement and Executive
prevails, the Company shall pay or reimburse Executive for all reasonable
costs incurred by Executive in such dispute, including attorney's fees and
costs.
12. Entire Agreement/Governing Law
This Agreement embodies the entire understanding and supersedes
all other oral or written agreements or understandings, between the
parties regarding the subject matter hereof. No change, alteration or
modification hereof may be made except in writing signed by both parties
hereto. This Agreement shall be construed and governed in all respect and
shall at all times be determined in accordance with the laws of the State
of New York.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement, consisting of eight (8) pages, on this 31st day
of August, 1995.
EXECUTIVE TELECARD, S.A.
/s/ By:/s/Anthony Balinger
Witness Its: Chief Operating Officer
/s/John Gitlin By:/s/Edward J. Gerrity, Jr.
Witness Edward J. Gerrity, Jr.
GUARANTY
For valuable consideration and to induce Executive to enter into the
within Agreement with the Company, the undersigned hereby unconditionally
guarantees to Executive, his heirs and assigns, full, prompt and complete
performance by the Company of all of the provisions, conditions, covenants
and agreements contained in the within Agreement and does hereby waive all
notice of default by the Company, notice of the acceptance of this
Guaranty by Executive and consents to any extension of time that may be
given by Executive to the Company of time of payment and performance.
This guaranty is an absolute, continuing and unlimited guarantee of
payment and performance.
IN WITNESS WHEREOF, Guarantor has signed this guaranty on August 31, 1995.
EXECUTIVE TELECARD, S.A.
/s/ By:/s/Anthony Balinger
Witness Its:
SETTLEMENT AGREEMENT
This Settlement Agreement (the "Agreement") is entered into this
27th day of March, 1995, between Network Data Systems Limited, a Canadian
corporation with offices at 333 Denison Unit 4, Markham, Ontario L3R 2Z4
("NDS") and Executive TeleCard, Ltd., a Delaware corporation with its
principle offices at 4260 East Evans Avenue, Denver, Colorado 80222
("TeleCard").
1.0 BACKGROUND
1.1 NDS presently holds a shareholder interest in TeleCard of
approximately ten percent (10%) of all of the issued and outstanding
shares of the common stock of TeleCard. Certain claims may presently
exist as between the parties relating to NDS' shareholder interest in
TeleCard, and certain business relationships between the parties. It is
the intent of the parties to this Agreement to terminate all existing
agreements (written or otherwise) as between them and to settle any actual
or potential claims that the parties may have against the other.
1.2 Without admission of liability and for valuable
consideration, the sufficiency of which is hereby acknowledged, the
parties to this Agreement desire to settle all matters directly or
indirectly arising from or relating to the relationship of the parties in
accordance with the terms and conditions hereafter set forth as more
expressly provided for in this Agreement.
2.0 SETTLEMENT OF LIABILITIES
2.1 Contemporaneous with the execution and delivery of this
Agreement, NDS will deliver to TeleCard payment in the amount of Three
Hundred, Fifty Thousand Dollars ($350,000.00), less the sum of One
Hundred, Seventy-Three Thousand Dollars ($173,000.00) representing
advances made by NDS of Sixty-Three Thousand Dollars ($63,000.00) on or
about March 9, 1995 and Sixty Thousand Dollars ($60,000.00) made on March
16, 1995, and Fifty Thousand Dollars ($50,000.00) made on or about March
20, 1995. Payment by NDS of the balance of One Hundred, Seventy-Seven
Thousand Dollars ($177,000.00) shall be made by wire transfer to
TeleCard's bank account at:
First Bank
P.O. Box 5220
Arvada, CO 80005
Account Number: XXX XXX XXXX
A/B/A Number: XXXXX XXXX
Account Name: Executive TeleCard, Ltd.
Or such other bank as TeleCard may direct in writing.
As further consideration, NDS further covenants and agrees that for a
period of three (3) years from the date of this Agreement, it shall not
directly or indirectly in any manner whatsoever, engage in any business
which directly or indirectly competes with the business of TeleCard as it
presently exists and further covenants and agrees that it shall vote all
shares of TeleCard owned by it in favor of the director nominees proposed
and recommended to the shareholders by the Board of Directors of TeleCard
at any annual or other meeting of shareholders for a period of two (2)
years from the date of execution of this Agreement. NDS further covenants
and agrees that it shall use its best efforts to cause Residual
Corporation ("Residual") to vote any shares held by Residual in TeleCard
in favor of the director nominees proposed and recommended by the Board of
Directors of TeleCard at any annual or other meeting of the shareholders
for a period of two (2) years from the date of execution of this
Agreement.
2.2 Contemporaneous with the execution of this Agreement, all
agency and any other agreements which exists between the parties are
hereby terminated without any further liability of the parties hereunder.
3.0 RELEASES
3.1 In consideration of the foregoing covenants, agreements
and payment by NDS as contained in Paragraph 2.1 hereinabove, TeleCard, on
behalf of itself, its subsidiaries, their respective officers and
directors (acting in such capacity), successors and assigns hereby
releases and discharges NDS, its officers, directors and shareholders
(acting in such capacity), successors and assigns from all actions, causes
of action, suits, debts, dues, sums of money, accounts, reckonings, bonds,
bills, specialties, covenants, contracts, controversies, agreements,
promises, variances, trespasses, damages, judgements, extents, executions,
claims and demands whatsoever, in law, admiralty or equity which against
NDS, its subsidiaries, officers, directors and shareholders (acting in
such capacity), successors and assigns, TeleCard, its subsidiaries, their
respective officers and directors (acting in such capacity), successors
and assigns ever had, now have or hereafter can, shall or may, have for,
upon, or by reason of any matter, cause or thing whatsoever from the
beginning of the world to the day of the date of this Agreement.
3.2 In consideration of the agreements, covenants and releases
of TeleCard as contained in this Agreement, NDS on behalf of itself, its
subsidiaries, officers and directors (acting in such capacity), successors
and assigns releases and discharges TeleCard, its subsidiaries, their
respective officers, directors and shareholders (acting in such capacity),
successors and assigns from all actions, causes of action, suits, debts,
dues, sums of money, accounts, reckonings, bonds, bills, specialties,
covenants, contracts, controversies, agreements, promises, variances,
trespasses, damages, judgements, extents, executions, claims and demands
whatsoever, in law, admiralty or equity which against TeleCard, its
subsidiaries, their respective officers, directors and shareholders
(acting in such capacity), successors and assigns, NDS, its officers and
directors (acting in such capacity), subsidiaries, successors and assigns
ever had, now have or hereafter can, shall or may, have for, upon, or by
reason of any matter, cause or thing whatsoever from the beginning of the
world to the day of the date of this Agreement. Notwithstanding the
foregoing or anything contained in this Agreement to the contrary, NDS
does not release Service 800 S.A. of and from any claims that it might
have against Service 800 S.A.
4.0 GENERAL CONDITIONS
4.1 This Agreement may not be amended or modified in any way
except in writing and signed by both parties to this Agreement.
4.2 The captions used in this Agreement are for convenience of
reference only, and do not form a part hereof, and do not in any way
modify, interpret or construe the meaning or intent of the parties
hereunder.
4.3 Whenever used herein, and the context requires it, the
singular and plural numbers shall each include the other, and the
masculine, feminine and neuter gender shall each include the other.
4.4 This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
4.5 This Agreement constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof and
supersedes all prior and contemporaneous agreements and understandings of
the parties in connection herewith. There are no representations,
warranties, covenants, conditions, agreements, understandings or
arrangements, oral or written, between or among the parties relating to
the subject matter hereof which are not fully expressed herein. No agent
of any party is authorized to make any representation, promise or warranty
not contained in this Agreement.
4.6 Each party to this Agreement agrees to perform any further
acts and to execute and deliver any further documents which may be
reasonably necessary to carry out the provisions of this Agreement.
4.7 This Agreement shall be binding on and inure to the
benefit of the parties hereto, their representatives, successors and
permitted assigns.
4.8 If any one or more provisions of this Agreement is, for
any reason, held by a court of competent jurisdiction to be unenforceable
in any respect, such unenforceability shall not affect any other provision
hereof; and this Agreement shall be construed as if such unenforceable
provision were never contained herein.
4.9 All notices permitted or required under this Agreement
shall be deemed sufficient only if given in writing and delivered
personally or mailed by certified mail, return receipt requested, postage
prepaid, or by telex (confirmed by letter), properly addressed to the
appropriate party at the following address:
(i) If to NDS:
Network Data Systems Limited
333 Denison Unit 4
Markham, Ontario L3R 2Z4
(ii) If to TeleCard:
Executive TeleCard, Ltd.
4260 East Evans Avenue
Denver, Colorado 80222
The above addresses for notice may be changed only by written
notice given in accordance with the provisions of this paragraph.
Personally delivered and telexed notices shall be deemed to be received
upon actual receipt; properly mailed notices shall be deemed to be
received three (3) days after mailing.
4.10 Nothing contained herein is intended to nor shall be
construed so as to limit the remedies which any party hereto may have
against any other party hereto in the event of a breach by any party of
any representation, warranty, covenant or agreement made under or pursuant
to this Agreement, it being intended that any remedies shall be cumulative
and not exclusive.
4.11 The parties acknowledge that each party and its counsel
has reviewed this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation or construction of this
Agreement.
4.12 Any waiver by any party of any provision of this Agreement
shall not constitute or imply a subsequent or other waiver of the same or
any other provision of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement this 27th day of March, 1995.
NETWORK DATA SYSTEMS LIMITED
/s/William V. Moore
By: William V. Moore
Its: President
EXECUTIVE TELECARD, LTD.
/s/Edward J. Gerrity, Jr.
By: Edward J. Gerrity, Jr.
Its: Chairman of the Board
/s/Daryl Engelman
By: Daryl Engelman
Its: President and Director
/s/Allen Mandel
By: Allen Mandel
Its: Director
/s/Robert N. Schuck
By: Robert N. Schuck
Its: Director
/s/Carl J. Corcoran
By: Carl J. Corcoran
Its: Director
/s/Anthony Balinger
By: Anthony Balinger
Its: Director
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement"), dated June 30, 1995, between
Executive TeleCard, S.A., a Turks and Caicos corporation with offices at
Duke Street, Grand Turk, Turks and Caicos, BWI (hereinafter called the
"Company"), and Anthony Balinger, residing at Flat 21A, Caroline Heights,
1A Link Road, Causeway Bay, Hong Kong (hereinafter called "Executive").
WHEREAS, the Company wishes to continue services of Executive as Vice
President and Director of Asia Pacific Operations for an extended period
to and including June 30, 1997; and
WHEREAS, Executive is willing to enter into this Agreement for such
period upon the terms and conditions hereinafter set forth:
NOW, THEREFORE, in consideration of the mutual covenants and
conditions herein contained, the parties to this Agreement agree as
follows:
1. EMPLOYMENT
Company shall employ Executive, and Executive shall serve as the Vice
President and Director of Far Eastern Operations of the Company during the
term of employment set forth in Paragraph 2 of this Agreement.
2. TERM OF EMPLOYMENT
Executive's "Term of Employment", as this term is used throughout
this Agreement shall be for a period of two years commencing June 30, 1995
and ending June 30, 1997 and any extension thereof.
3. EXECUTIVE'S TITLE AND DUTIES
3.1 Title and Duties
Executive shall during the term of his employment hereunder, have
responsibility for marketing and sales primarily in the Far East and
Pacific Rim. Executive's responsibilities shall consist primarily of
managing the Asian Pacific region including the solicitation and securing
of revenue sharing and enhancement arrangements with Postal Telegraph and
Telephone authorities in the defined area. Executive shall devote his
full time and attention to, and exert his best effort in the performance
of his duties hereunder, so as to promote the business of the Company, and
its affiliates. Executive shall accept the payments to be made to him
under this Agreement as full and complete compensation for all the
services performed by him under this Agreement except as may be otherwise
provided in writing.
3.2 Confidential Information
Executive shall not, directly or indirectly, or at any time, during
the term of his employment hereunder or thereafter and without regard to
when or for what reason, if any, such employment shall terminate, use or
permit the use of any trade secrets, customer's lists, or other
information of, or relating to information of the Company or any such
subsidiary or affiliate in connection with any activity or business,
except the business of the Company or any such subsidiary, or affiliate
and shall not divulge such trade secrets, customer's lists, and
information to any person, firm or corporation whatsoever, except as may
be necessary in the performance of his duties hereunder or as may be
required by any applicable law or determination of any duly constituted
administrative agency.
4. COMPENSATION AND EXPENSES
4.1 Salary
The Company shall pay Executive during the Term of Employment a total
base salary (the "salary") of not less than one hundred thousand dollars
($100,000.00) per annum payable in the normal pay periods of the Company
relating to executives of the Company, during each year of such term. It
is understood that the Company may, in the sole discretion of its Board of
Directors, increase such base salary. If the Company in its discretion
increases the compensation of Executive for any period of time, and if
Executive accepts such increase, this Agreement shall continue in full
force and effect whether or not it has been amended to reflect such
increase. Nothing herein is intended or shall be construed to obligate
the Company to make such increase.
4.2 Business Expenses
The Company will reimburse Executive for all reasonable expenses
properly incurred by him in its behalf in the performance of his duties
hereunder, upon presentation of properly itemized charges, receipts and/or
similar documentation, and otherwise in accordance with policies
established from time to time by the Board of Directors of the Company.
Executive's spouse will be permitted to accompany Executive on ____ trips
per year and Executive will be reimbursed by Company for the reasonable
expenses of his spouses accompaniment, including travel, meals and
accommodations.
4.3 Stock Participation
Executive will be eligible to receive stock options to purchase
shares of Executive TeleCard, Ltd. in an amount to be determined by the
Stock Option Committee under any stock option plan in effect during the
Employment Term and under the same terms and conditions as are provided
for other officers and directors under such plan.
4.4 Location of Executive
Company agrees that without Executive's written consent Executive's
principal place of work shall not be relocated and Executive shall
continue to have his offices in Hong Kong. To the extent that Executive
consents to a relocation, Company agrees to reimburse Executive for the
cost of such relocation of Executive and Executive's family and all
personal property from Hong Kong to Executive's new location. Company
further agrees to reimburse Executive for all temporary living expenses
for a minimum of three months, until Executive has completed the purchase
or lease of and occupied a new residence near Executive's new work
location with the Company.
4.5 Additional Compensation
In addition to the compensation and benefits to which Executive is
entitled under this Agreement, Executive shall receive a housing allowance
payable monthly in the sum of Two Thousand Two Hundred Fifty Dollars
($2.250.00) and the sum of Three Hundred Twenty Dollars ($320) per month
to cover the monthly premiums on life insurance policy for Executive.
5. BENEFITS
5.1 Participation in Benefit Plans
In addition to the other compensation provided in Paragraph 4.1
through 4.5 during the Term of Employment, Executive shall be entitled to
participate and shall be included in any profit sharing and stock option
plan or program of the Company now existing, and shall participate in any
such plans or programs established hereafter to the same extent as
executive officers and/or directors of the Company.
5.2 Holidays and Annual Vacation Leave
Executive shall be entitled to all paid holidays as available to
other employees of the Company and, in addition, to an annual vacation
leave which shall accrue on a pro rata basis during the Employment Term at
the rate of three (3) weeks per annum. Unused annual vacation leave
during each year of the Employment Term shall be carried over from year to
year as necessary due to the exigencies of the business.
5.3 Indemnification
Executive shall be indemnified by the Company to the fullest extent
provided under the indemnification provisions of the By-Laws and/or
Certificate of Incorporation presently in existence, or, to the extent
that the scope of such indemnification is greater, under any amendments to
the By-Laws and/or Certificate of Incorporation. To the extent that the
Company obtains indemnification insurance for its officers and/or
directors, such insurance shall also cover Executive to the same extent.
6. TERMINATION AND SEVERANCE PAYMENT
6.1 Termination
Upon the occurrence of an event of termination (as hereinafter
defined) during the period of Executive's employment under this Agreement,
the provisions of this Paragraph 6 shall apply. As used in this Agreement
an "event of termination" shall mean and include any one or more of the
following:
(i) The termination by the Company of Executive's employment
hereunder for any reason other than a material breach by Executive of this
Agreement or for "cause" as defined in (iii) hereinbelow, or
(ii) Executive's resignation from the Company's employ, pursuant to
the provisions of this paragraph, upon (a) any liquidation, dissolution,
consolidation, or merger of the Company with any third party, or transfer
of all or substantially all of its assets to any third party; or (b)
material breach of this Agreement by Company and such breach continues for
at least thirty (30) days following written notification by Executive of
such breach. Upon the occurrence of any event described in Clauses (a),
or (b) above, Executive shall have the right to elect to terminate his
employment under this Agreement by resignation upon not less than thirty
(30) days prior written notice given within a reasonable period of time
not to exceed, except in case of continuing breach, four (4) calendar
months after the event giving rise to said right to elect.
(iii) Termination by the Company for "cause" shall mean the
Executive's termination by action of the Company's Board of Directors
because of dishonesty, gross neglect of duties hereunder, conviction of a
felony, engaging directly or indirectly in any competing business, or
willful misconduct.
6.2 Termination Pay
Upon the occurrence of an event of termination the Company shall pay
Executive (a) a lump sum compensation of the greater of One Hundred,
Twenty Thousand ($120,000.00) or the balance of the salary to which the
Executive would be entitled to the end of the Term of Employment (b) at no
cost to Executive, the number of unrestricted shares of the common stock
of Executive TeleCard, Ltd. equal to the total number of outstanding stock
options held by Executive on the fifth day following termination or in
lieu thereof Executive may elect to surrender to Company his rights in
such outstanding stock options or shares (whether or not then exercisable)
then held by Executive, and, upon such surrender, Company shall pay to
Executive an amount in cash per share equal to, the mean between the high
and low selling price of such stock on the Nasdaq National Market or such
other market as Executive TeleCard, Ltd. stock is then traded on the date
of Executive's termination.
6.3 No Obligation to Mitigate Damages
Executive's benefits hereunder shall be considered severance pay in
consideration of his past service and pay and consideration of his
continued service from the date hereof and his entitlement thereto shall
not be governed by any duty to mitigate his damages by seeking further
employment nor offset by any compensation which he may receive from future
employment.
7. ASSIGNMENT
This Agreement and any rights (including Executive's Compensation)
hereunder shall not be assigned, pledged or transferred in any way by
either party hereto except that the Company shall have, with Executive's
consent, the right to assign its rights hereunder to any third party
successor in interest of the Company whether by merger, consolidation,
purchase of assets or stock or otherwise. Any attempted assignment,
pledge, transfer or other disposition of this Agreement or any rights,
interests or benefits contrary to the foregoing provisions shall be null
and void.
8. NOTICES
All notices, requests, demands and other communications hereunder
must be in writing and shall be deemed to have been duly given if
delivered by hand, sent by facsimile, or mailed by first class, registered
mail, return receipt requested, postage and registry fees prepaid to, the
applicable party and addressed as follows:
(i) if to the Company: Executive TeleCard, S.A.
8 Avenue C
Nanuet, New York 10954
Facsimile: (914) 627 3631
(ii) if to Executive: Anthony Balinger
Flat 21A, Caroline Heights
1A Link Road
Causeway Bay, Hong Kong
9. SEVERABILITY
If any provision of this Agreement shall, for any reason, be adjudged
by any court of competent jurisdiction to be invalid or unenforceable,
such judgement shall not affect, impair or invalidate the remainder of
this Agreement but shall be confined in its operation to the jurisdiction
in which made and to the provisions of this Agreement directly involved in
the controversy in which such judgement shall have been rendered.
10. WAIVER
No course of dealing and no delay on the part of any party hereto in
exercising any right, power or remedy under or relating to this Agreement
shall operate as a waiver thereof or otherwise prejudice such party's
rights, powers and remedies. No single or partial exercise of any rights,
powers or remedies under or relating to this Agreement shall preclude any
other or further exercise thereof or the exercise of any other right,
power or remedy.
11. ENTIRE AGREEMENT/GOVERNING LAW
This Agreement embodies the entire understanding and supersedes all
other oral or written agreements or understandings, between the parties
regarding the subject matter hereof. No change, alteration or
modification hereof may be made except in writing signed by both parties
hereto. This Agreement shall be construed and governed in all respect and
shall at all times be determined in accordance with the laws of the State
of New York.
12. HEADINGS
The headings of Paragraphs herein are included solely for convenience
of reference and shall not control the meaning or interpretation of any of
the provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement, consisting of seven (6) pages, on this 30th day of June, 1995.
EXECUTIVE TELECARD, S.A.
/s/Harold Reisner By:/s/ Edward J. Gerrity, Jr.
Witness Its:
EXECUTIVE
/s/Anthony Balinger
Anthony Balinger
GUARANTY
For valuable consideration and to induce Executive to enter into the
within Agreement with the Company, the undersigned hereby unconditionally
guarantees to Executive, his heirs and assigns, full, prompt and complete
performance by the Company of all of the provisions, conditions, covenants
and agreements contained in the within Agreement and does hereby waive all
notice of default by the Company, notice of the acceptance of this
Guaranty by Executive and consents to any extension of time that may be
given by Executive to the Company of time of payment and performance.
This guaranty is an absolute, continuing and unlimited guarantee of
payment and performance.
IN WITNESS WHEREOF, Guarantor has signed this guaranty on June 30,
1995.
EXECUTIVE TELECARD, LTD.
/s/Harold Reisner By:/s/ Edward J. Gerrity, Jr.
Witness Its:
<PAGE>
TERMINATION AGREEMENT
This AGREEMENT ("Agreement"), dated June 30, 1995, by and between
Executive TeleCard, S.A., a Turks & Caicos corporation (the "Company"),
and Anthony Balinger (the "Executive").
WHEREAS, the service of Executive, his knowledge and experience and
contacts in the industry are extremely valuable to the Company and Company
recognizes the valuable services that Executive can continue to render to
the Company; and
WHEREAS, Executive is willing to continue to serve Company but
desires assurances that in the event of any change in control of Company
he will continue to have the responsibility and status he has earned;
NOW THEREFORE, in consideration of the promises and the mutual
agreements herein contained, Company and Executive hereby agree as
follows:
1. Term.
This Agreement shall terminate the later of two years from the date
of this Agreement or two years from the effective date of a Change in
Control of the Company or a Change in Control of Executive TeleCard, Ltd.
("EXTL").
2. Change in Control.
No benefits shall be payable under this Agreement unless and until
(a) there shall have been a Change in Control of the Company or a Change
in Control of EXTL, while the Executive is still an employee of the
Company and (b) the Executive's employment by the Company thereafter shall
have been terminated in accordance with Section 3 below. For purposes of
this Agreement, a Change in Control of the Company and/or EXTL shall be
deemed to have occurred if (i) there shall be consummated (x) any
consolidation or merger of the Company or EXTL in which the Company or
EXTL is not the continuing or surviving corporation or pursuant to which
shares of the Company's or EXTL's Common Stock would be converted into
cash, securities or other property, other than a merger of the Company or
EXTL in which the holders of the Company's or EXTL's Common Stock
immediately prior to the merger have the same proportionate ownership of
common stock of the surviving corporation immediately after the merger, or
(y) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all, of the
assets of the Company or EXTL, or (ii) the stockholders of the Company or
EXTL approved any plan or proposal for the liquidation or dissolution of
the Company or EXTL, or (iii) any person (as such term is used in Section
13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), shall become the beneficial owner (within the meaning of
Rule 13d-3 under the Exchange Act) of 20% or more of the Company's or
EXTL's outstanding Common Stock, or (iv) during any period of two
consecutive years, individuals who at the beginning of such period
constitute the entire Board of Directors of either the Company or EXTL
shall cease for any reason to constitute a majority thereof unless the
election, or the nomination for election by the Company's or EXTL's
stockholders, of each new director was approved by a vote of at least two-
thirds of the directors then still in office who were directors at the
beginning of the period.
3. Termination Following Change in Control.
(a) If a Change in Control of the Company or EXTL shall have
occurred while the Executive is still an Employee of the Company, the
Executive shall be entitled to the benefits provided in Section 4 below
upon the subsequent termination of the Executive's employment with the
Company by the Executive for Good Reason (as defined in Section 3 (c)
below) or by the Company unless such termination is as a result of (i) the
Executive's death; or (ii) the Executive's termination by the Company for
Cause (as defined in Section 3(b) below).
(B) Cause: For purposes of this Agreement only, the Company shall
have "Cause" to terminate the Executive's employment hereunder only on the
basis of material fraud or a criminal conviction involving moral turpitude
or arising from an act of the Executive that is directly contrary to the
Company's interest. Notwithstanding the foregoing, the Executive shall
not be deemed to have been terminated for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters of the
entire membership of the Company's Board of Directors at a meeting of the
Board called and held for that purpose (after reasonable notice to the
Executive and an opportunity for the Executive, together with the
Executive's counsel, to be heard before the Board), finding that in the
good faith opinion of the Board the Executive was guilty of the conduct
set forth in the first sentence of this Section 3(b) and specifying the
particulars thereof in detail, and an opinion of counsel for the Company
confirming that the opinion of the Board has a substantial basis in fact
and in law.
(C) Good Reason. For purposes of this Agreement "Good Reason" shall
mean any of the following (without the Executive's express written
consent):
(i) The assignment to the Executive by the Company of duties
inconsistent with the Executive's position, duties, responsibilities and
status with the Company immediately prior to a Change in Control of the
Company or EXTL, or a change in the Executive's titles or offices then in
effect immediately prior to the Change in Control of the Company or EXTL,
or any removal of the Executive from or any failure to reelect or
reappoint the Executive to any such positions;
(ii) a reduction by the Company in the Executive's base salary
in effect on the date hereof or as the same may be increased from time to
time during the term of this Agreement or the Company's failure to
increase (within 12 months of the Executive's last increase in base
salary) the Executive's base salary after a Change in Control of the
Company or EXTL in an amount which at least equals, on a percentage basis,
the average percentage increase in base salary for officers of the Company
effected in the preceding 12 months.
(iii) any failure by the Company to continue in effect any
benefit plan, program or arrangement in which the Executive and/or
eligible family members are participating at the time of a Change in
Control of the Company or EXTL and any other plans or fringe benefits
providing the Executive with substantially similar benefits (hereinafter
referred to as "Benefit Plans"), or the taking of any action by the
Company which would adversely affect the Executive's and/or Executive's
eligible family member's benefits under any such Benefit Plan or deprive
the Executive and/or any eligible family member of any material fringe
benefit enjoyed by the Executive at the time of a Change in Control of the
Company or EXTL;
(iv) any failure by the Company to continue in effect any
incentive plan or arrangement in which the Executive is participating at
the time of a Change in Control of the Company or EXTL (or any other plans
or arrangements providing him with substantially similar benefits)
(hereinafter referred to as "Incentive Plans") or the taking of any action
by the Company which would adversely affect the Executive's participation
in any such Incentive Plan or reduce the Executive's benefits under any
such Incentive Plan;
(v) any failure by the Company to continue in effect any plan
or arrangement to receive securities of the Company (including, without
limitation, the Company's existing Stock Option Plan, or any future Stock
Option Plan through the term of Executive's employment and any other plan
or arrangement to receive and exercise stock options, stock appreciation
rights, restricted stock or grants thereof) in which the Executive is
participating at the time of a Change in Control of the Company or EXTL
(or plans or arrangements providing him with substantially similar
benefits) (hereinafter referred to as "Securities Plans") or the taking of
any action by the Company which would adversely affect the Executive's
participation in or materially reduce the Executive's benefits under any
such Securities Plan;
(vi) a relocation of Executive's offices to a location greater
then twenty-five miles from the Executive's office as of the effective
date of Change in Control, or the Executive's relocation to any place
other than the location at which the Executive performed the Executive's
duties prior to a Change in Control of the Company or EXTL, except for
required travel by the Executive on the Company's business to an extent
substantially consistent with the Executive's business travel obligations
at the time of a Change in Control of the Company or EXTL.
(vii) any failure by the Company to provide the Executive with
the number of paid vacation days to which the Executive is entitled at the
time of a Change in Control of the Company.
(viii) any material breach by the Company of any provision of
this Agreement.
(ix) the Company's failure to pay Executive the compensation
and expenses to which Executive is entitled under the terms of his
employment with the Company dated June 30, 1995. Any failure by the
Company to obtain the assumption of this Agreement by any successor or
assign of the Company; or
(x) any purported termination of the Executive's employment
which is not effected pursuant to the Notice of Termination satisfying the
requirements of Section 3(d), and for purposes of this Agreement, no such
purported termination shall be effective.
(xi) Executive's voluntary resignation for any reason within
six (6) months from the effective date of Change in Control of the Company
or EXTL
(d) Notice of Termination by the Company. Any termination by the
Company pursuant to Section 3(b) shall be communicated by a Notice of
Termination. For purposes of this Agreement a "Notice of Termination"
shall mean a written notice which shall indicate those specific
termination provisions in this Agreement relied upon and which sets forth
in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated. For the purposes of this Agreement, no such purported
termination by the Company shall be effective without such Notice of
Termination.
(e) Date of Termination. "Date of Termination" shall mean if the
Executive's employment is terminated by Executive or by the Company for
any reason, the date on which a Notice of Termination is given, provided
that if within 30 days after any Notice of Termination is given to the
Executive by the Company, the Executive notifies the Company that a
dispute exists concerning the termination, the Date of Termination shall
be the date the dispute is finally determined, whether by mutual agreement
by the parties or upon final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and
no appeal having been perfected).
4. Severance Compensation upon Termination of Employment.
If the Company shall terminate the Executive's employment other than
pursuant to Section 3(b) or if the Executive shall terminate his
employment for Good Reason, then the Company shall pay to the Executive as
severance pay the following compensation:
(a) On the fifth day following termination, in a lump sum, in cash,
an amount equal to three times the average of the aggregate of the annual
compensation paid by the Company to the Executive during the term of his
employment preceding the Change in Control of the Company or EXTL;
provided, however, that if the lump sum severance payment under this
Section 4, either alone or together with other payments which the
Executive has the right to receive from the Company, would constitute a
"parachute payment" (as defined in Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code"), such lump sum severance payment
shall be reduced to the largest amount as will result in no portion of the
lump sum severance payment under this Section 4 being subject to the
excise tax imposed by Section 4999 of the Code. The determination of any
reduction in the lump sum severance payment under this Section 4 pursuant
to the foregoing provision shall be made by the Executive in good faith,
and such determination shall be conclusive and binding on the Company;
(b) To the extent Executive and the Executive's eligible family
members are eligible they shall continue to be covered by all noncash
benefit plans of the Company or any successor plans or programs in effect
on the date of acquisition of control, for twenty-four months thereafter.
In the event Executive and participating family members are ineligible
under the terms of such plans to continue to be so covered, Company shall
provide substantially equivalent coverage from other sources.
(c) At no cost to Executive, the number of unrestricted shares of
the common stock of Executive TeleCard, Ltd. equal to the total number of
outstanding stock options held by Executive on the fifth day following
termination or in lieu thereof Executive may elect to surrender to Company
his rights in such outstanding stock options (whether or not then
exercisable) then held by Executive, and, upon such surrender, Company
shall pay to Executive an amount in cash per share, which is the greater
of the average price per share paid in connection with the acquisition of
control of Executive TeleCard, Ltd. if such control was acquired by the
payment of cash or the then fair market value per option share of the
consideration paid for such shares if such control was acquired for
consideration other than cash, or the price per share paid in connection
with any tender offer for shares of Executive TeleCard, Ltd. common stock
leading to control, or the mean between the high and low selling price of
such stock on the Nasdaq National Market or other market on which
Executive TeleCard, Ltd. stock is then traded on the date of Executive's
termination.
5. No Obligation to Mitigate Damages; No Effect on Other Contractual
Rights; No Right of Set-Off.
(a) Executive's benefits hereunder shall be considered severance pay
in consideration of his past service and pay and consideration of his
continued service from the date hereof and his entitlement thereto shall
not be governed by any duty to mitigate his damages by seeking further
employment nor offset by any compensation which he may receive from future
employment.
(b) The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's or the Executive's eligible family members'
existing rights, or rights which would accrue solely as a result of the
passage of time, under any Benefit Plan, Incentive Plan or Securities
Plan, employment agreement or other contract, plan or arrangement.
(c) The Company shall have no right of set-off or counterclaim in
respect of any claim, debt or obligation against any payments to
Executive, his dependents, beneficiaries, or estate provided for in this
Agreement.
6. Successor to the Company.
(a) The Company and EXTL will require any successor or assign
(whether direct or indirect, by purchase merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of
the Company, by agreement in form and substance satisfactory to the
Executive, expressly, absolutely and unconditionally to assume and agree
to perform this Agreement in the same manner and to the same extent that
the Company and EXTL would be required to perform it if no such succession
or assignment had taken place. Any failure by the Company or EXTL to
obtain such agreement prior to the effectiveness of any such succession or
assignment shall be a material breach of this Agreement and shall entitle
the Executive to terminate the Executive's employment for Good Reason. As
used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor or assign to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in this
Section 6 or which otherwise becomes bound by all the terms and provisions
of this Agreement by operation of law. If at any time during the term of
this Agreement the Executive is employed by any corporation a majority of
the voting securities of which is then owned by the Company, "Company" as
used in this Agreement shall in addition include such employer. In such
event, the Company agrees that it shall pay or shall cause such employer
to pay any amounts owed to the Executive pursuant to Section 4 hereof.
(b) This Agreement shall inure to the benefit of and be enforceable
by the Executive's personal and legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
If the Executive should die while any amounts are still payable to him
hereunder, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the Executive's
devisee, legatee or other designee or, if there be no such designee, to
the Executive's estate.
7. Notice.
For purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to
have been duly given when delivered or mailed by United States registered
mail, return receipt registered, postage prepaid as follows:
If to the Company: Executive TeleCard, S.A.
MacLaw House, Duke Street
Grand Turk, Turks & Caicos Island, B.W.I.
If to Executive: Anthony Balinger
Flat 21A, Caroline Heights, 1A Link Road
Causeway Bay, Hong Kong
or such other address as either of the parties may have furnished to the
other in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
8. Miscellaneous.
No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing
signed by the Executive and the Company. No waiver by any party hereto at
any time of any breach by another party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements
or representations, oral or otherwise, express or implied, with respect to
the subject matter hereof have been made by any party which are not set
forth expressly in this Agreement. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
9. Validity.
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of
this Agreement, which shall remain in full force and effect.
10. Counterparts.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
11. Legal Fees and Expenses.
In the event that the Company terminates or seeks to terminate
Executive and Executive disputes such termination or attempted termination
and prevails and, or Executive elects to terminate his service hereunder
for Good Reason and the Company disputes its obligation to pay Executive
the benefits provided for under Section 4 of this Agreement and Executive
prevails, the Company shall pay or reimburse Executive for all reasonable
costs incurred by Executive in such dispute, including attorney's fees and
costs.
12, Entire Agreement/Governing Law
This Agreement embodies the entire understanding and supersedes all
other oral or written agreements or understandings, between the parties
regarding the subject matter hereof. No change, alteration or
modification hereof may be made except in writing signed by both parties
hereto. This Agreement shall be construed and governed in all respect and
shall at all times be determined in accordance with the laws of the State
of New York.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement, consisting of eight pages, on this 30th day of June, 1995.
EXECUTIVE TELECARD, S.A.
By:/s/Edward J. Gerrity, Jr.
Witness Its:
/s/Anthony Balinger
Witness Anthony Balinger
GUARANTY
For valuable consideration and to induce Executive to enter into the
within Agreement with the Company, the undersigned hereby unconditionally
guarantees to Executive, his heirs and assigns, full, prompt and complete
performance by the Company of all of the provisions, conditions, covenants
and agreements contained in the within Agreement and does hereby waive all
notice of default by the Company, notice of the acceptance of this
Guaranty by Executive and consents to any extension of time that may be
given by Executive to the Company of time of payment and performance.
This guaranty is an absolute, continuing and unlimited guarantee of
payment and performance.
IN WITNESS WHEREOF, Guarantor has signed this guaranty on June 30, 1995.
EXECUTIVE TELECARD, LTD.
By:/s/Edward J. Gerrity, Jr.
Witness Its:
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement"), dated September 28, 1995, between
Executive TeleCard, S.A., a Turks & Caicos Islands corporation with
offices at MacLaw House, Duke Street, Turks & Caicos (hereinafter called
the "Company"), and Robert N. Schuck, residing at 85 Somerset Road,
Norwood, NJ 07648 (hereinafter called "Executive").
WHEREAS, the Executive has held the position of Executive Vice
President and a Director of the Company from its inception until June,
1995 and, through his efforts has secured for the Company the overwhelming
majority of revenue sharing, enhancement and other agreements, and
WHEREAS, Executive has served as a Consultant from July 1, 1995 until
the present with the Company;
WHEREAS, the services of Executive, his experience and knowledge of
the affairs of the Company and his reputation and contacts in the industry
are extremely valuable to the Company; and
WHEREAS, the Company desires that Executive reassume the position of
Executive Vice President of the Company for the period as set forth
hereinbelow and is willing to offer Executive an incentive to do so; and
WHEREAS, Executive is willing to accept employment with the Company
upon the terms and conditions hereinafter set forth:
NOW, THEREFORE, in consideration of the mutual covenants and
conditions herein contained, the parties to this Agreement agree as
follows:
1. EMPLOYMENT
Company shall employ Executive, and Executive shall serve as
Executive to the Company during the term of employment set forth in
Paragraph 2 of this Agreement. Executive shall report only to the Board
of Directors of the Company and his powers and authority shall be as set
forth in Paragraph 4.1 hereunder.
2. TERM OF EMPLOYMENT
Executive's "Term of Employment", as this term is used throughout
this Agreement shall be for a period of three (3) years commencing on
September 27, 1995 and ending September 26th, 1998, subject to termination
by the Company for cause as the term is defined in this Agreement.
Company has the right to extend the employment of Executive, subject to
acceptance by Executive, for an additional period as agreed by the parties
in writing prior to the termination of this EMPLOYMENT Agreement.
Notwithstanding anything contained in this Agreement to the contrary,
Executive may voluntarily terminate this Agreement, other than under the
conditions provided for in Paragraph 7.1 (ii) herein, by giving the
Company sixty (60) days written notice of such termination and this
Agreement shall terminate upon the expiration of the sixty day period.
3. EXECUTIVE'S TITLE AND DUTIES
3.1 Title and Duties
During the Employment Term, and any extension thereof,
Executive's title shall be that of Executive Vice President of the Company
and Executive shall have the responsibility and authority to negotiate on
behalf of the Company agreements with third parties, including, without
limitation, Revenue Sharing with Postal, Telegraph and Telephone ("PTT")
authorities and Enhancement Agreements with PTT authorities and/or
corporation and credit card companies. Executive's scope of
responsibility and authority to act on behalf of the Company shall,
subject only to the general direction and control of the Company's Board
of Directors and Chief Executive Officer, include management of the
operations of the Company, formulating policies and administering the
operations of the Company in all respects. Executive may also serve, at
his discretion, as an officer of one or more of any subsidiary corporation
or division of the Company and to carry out the same responsibilities and
duties for each such corporation as set forth above.
3.2 Non-compete
During the Employment Term, Executive shall not accept
employment with any major long distance telephone carrier that presently
provides international calling cards, including, by way of example, such
carriers as British Telecom, MCI, AT&T and Sprint.
4. COMPENSATION AND EXPENSES
4.1 Salary
For all services by Executive under this Agreement, the Company
shall pay Executive an initial annual base salary of One Hundred Thousand
Dollars ($100,000.00) per annum, payable in weekly installments during
each year of such term. The Board of Directors may, at it's sole
discretion, increase such annual base salary at any time during the Term
of this Agreement.
4.2 Business Expenses
The Company will reimburse Executive for all reasonable expenses
properly incurred by him in the performance of his duties hereunder, upon
presentation of properly itemized charges, receipts and/or similar
documentation, and otherwise in accordance with policies established from
time to time by the Board of Directors of the Company. Executive's spouse
will be permitted to accompany Executive on all trips and Executive will
be reimbursed by Company for the reasonable expenses of his spouse's
accompaniment, including travel, meals and accommodation, including a
gross-up of any income taxes payable by Executive for such reimbursement.
4.3 Stock Participation
Executive will be eligible to receive stock options to purchase
shares of the Company in an amount of at least the greater of any stock
options granted to the President or Chief Executive Officer or a director
of the Company under any stock option plan in effect during the Employment
Term and under the same terms and conditions in the plan as are provided
for other officers or directors of the Company.
4.4 Location of Executive
Company agrees that without Executive's written consent,
Executive's principal place of work shall not be relocated and, Executive
shall continue to have his office in New York or the metropolitan New York
area. The Company shall provide Executive with an office and secretarial
support, at the Company's expense. To the extent that Executive consents
to a relocation, Company agrees to reimburse Executive for the cost of
such relocation of Executive and Executive's spouse and all personal
property from New Jersey to Executive's new location. Company further
agrees to reimburse Executive for all temporary living expenses, for a
minimum of four (4) months, until Executive has completed the purchase or
lease of and occupied a new residence near Executive's new work location
with Company.
5. BENEFITS
5.1 Participation in Benefit and Insurance Plans
In addition to the other compensation provided in Paragraph 4.1
through 4.4, during the Term of Employment, Executive and eligible members
of Executive's family shall be entitled to participate in all Company
sponsored benefit and insurance plans. Executive shall be included in any
pension, profit-sharing, stock option, or similar plan or program of the
Company now existing, and shall participate in any such plans or programs
established hereafter to the same extent as executive officers and/or
directors of the Company. Executive shall be eligible to receive during
the period of his employment under this Agreement, and during any
subsequent period for which he will be entitled to receive payments from
the Company as provided for in this Agreement, all benefits and emoluments
for which key executives and/or directors are eligible under every such
plan or program and to the same extent and under the same terms and
conditions for which key executives and/or directors are eligible under
such plan or program.
5.2 Vacation
Executive shall be entitled to all paid holidays days as
available to other employees of the Company and, in addition, to vacation
and personal days which shall accrue on a pro rata basis during the
Employment Term at the rate of three (3) weeks per annum which vacation
and/or personal day(s) shall be taken by him at such time or times as are
consistent with the needs of the business of the Company. Unused
vacations and/or personal day(s) during each year of the Employment Term
shall be carried over from year to year as necessary due to the exigencies
of the business.
5.3 Indemnification
Executive shall be indemnified by the Company to the fullest
extent provided under the indemnification provisions of the By-Laws and/or
Certificate of Incorporation in existence, as of the date hereof, or, to
the extent that the scope of such indemnification is greater, under any
amendments to the By-Laws and/or Certificate of Incorporation. To the
extent that the Company obtains indemnification insurance for its officers
and/or directors, such insurance shall also cover Executive to the same
extent.
6. BENEFITS PAYABLE UPON DISABILITY OR DEATH
6.1 Disability Benefits
In the event of the disability (as hereinafter defined) of
Executive, the Company shall continue to pay Executive the weekly
compensation provided in Paragraph 5 hereof during the period of his
disability; provided, however, that in the event Executive is disabled for
a continuous period exceeding six (6) calendar months, the Company shall
compensate Executive for the difference between the Executive's long-term
disability (including Social Security) and the amount of his salary as of
the sixth month date from the date of disability.
As used in this Agreement, the term "disability" shall mean "the
complete inability of Executive to perform his duties under this Agreement
as determined by an independent physician selected by the Executive with
the approval of the Company, which approval shall not be unreasonably
withheld".
6.2 Death Benefits
In the event of the death of Executive, either during his
disability or otherwise, during the term of this Agreement, or any
extension thereof, the Company shall pay, or cause to be paid, to
Executive's designated beneficiary or beneficiaries or legal
representatives a death benefit of Three Hundred Thousand Dollars
($300,000.00). The Company shall purchase one or more term or other life
or similar insurance policies in the amount to provide for its obligations
under this paragraph, and if no adverse tax consequences would result to
Executive and his designated beneficiary or beneficiaries, the ownership
of said policy or policies shall be transferred to Executive, such
transfer to constitute compliance with the Company's obligations under
this paragraph.
7. TERMINATION, RIGHTS AND OBLIGATIONS, RENEWAL
7.1 Termination
Upon the occurrence of an event of termination (as hereinafter
defined) during the period of Executive's employment under this Agreement,
or any extension thereof, the provisions of this Paragraph 8 shall apply.
As used in this Agreement an "event of termination" shall mean and include
any one or more of the following:
(i) The termination by the Company of Executive's employment
hereunder for any reason other than for cause. For purposes of the
Agreement only, the Company shall have "cause" to terminate Executive
hereunder only on the basis of material fraud, or a criminal conviction
for an act by Executive that is directly contrary to the Company's
interest; or
(ii) Executive's resignation from the Company's employ upon any
(a) material change by the Company of the Executive's functions, duties or
responsibilities which change would cause Executive's position with the
Company to become of less dignity, responsibility, importance, or scope
from the position and attributes thereof described in Paragraph 4 above,
and any such material change shall be deemed a continuing breach of this
Agreement; (b) reduction in Executive's salary from that provided to him
under the terms of this Agreement or a diminution in Executive's
eligibility to participate in bonus, stock option, incentive award and
other benefit plans, or a diminution in Executive's or Executive's
spouse's benefits including, but not limited to, medical, dental or life
insurance and long term disability plans; or (c) liquidation, dissolution,
consolidation, or merger of the Company, or transfer of all or
substantially all of its assets; or (d) other breach of this Agreement by
the Company. Upon the occurrence of any event described in Clauses (a),
(b) (c) or (d) above, Executive shall have the right to elect to terminate
his employment under this Agreement by resignation upon not less than
thirty (30) days prior written notice given within a reasonable period of
time not to exceed, except in case of continuing breach, four (4) calendar
months after the event giving rise to said right to elect.
7.2 Termination Pay
Upon the occurrence of an event of termination, the Company
shall pay Executive (a) a lump sum compensation of the greater of One
Hundred, Twenty Thousand ($120,000.00) or the balance of the salary to
which the Executive would be entitled to the end of the Term of Employment
(b) the number of unrestricted shares of the common stock of the Company
equal to the total number of outstanding stock options held by Executive
on the fifth day following termination or in lieu of exercising or
retaining his right to exercise any outstanding stock options then held by
Executive, Executive may elect to surrender to Company his rights in such
outstanding stock options (whether or not then exercisable) then held by
Executive, and, upon such surrender, Company shall pay to Executive an
amount in cash per share equal to the mean between the high and low
selling price of such stock on the Nasdaq National Market or such other
market as the Company's stock is then traded on the date of Executive's
termination.
7.3 No Obligation to Mitigate Damages
(i) Executive's benefits hereunder shall be considered
severance pay in consideration of his past service and pay and
consideration of his continued service from the date hereof and his
entitlement thereto shall not be governed by any duty to mitigate his
damages by seeking further employment nor offset by any compensation which
he may receive from future employment.
(ii) The provisions of this Agreement, and any payment provided
for hereunder, shall not reduce any amounts otherwise payable, or in any
way diminish the Executive's existing rights, or rights which would accrue
solely as a result of the passage of time, to the benefits provided under
Sections 4.3, 5.1, 5.2, 6.1 and 6.2 of this Agreement.
7.4 No Right to Set-off.
There shall be no right of set-off or counterclaim by the
Company in respect to any claim, debt or obligation, against any payments
to Executive, his dependents, beneficiaries, or estate provided for in
this Agreement.
8. ASSIGNMENT
This Agreement and any rights (including Executive's Compensation)
hereunder shall not be assigned, pledged or transferred in any way by
either party hereto except that the Company shall have the obligation to
assign its rights hereunder to any successor in interest of the Company
whether by merger, consolidation, purchase of assets or stock or
otherwise. Any attempted assignment, pledge, transfer or other
disposition of this Agreement or any rights, interests or benefits
contrary to the foregoing provisions shall be null and void.
9. NOTICES
All notices, requests, demands and other communications hereunder
must be in writing and shall be deemed to have been duly given if
delivered by hand, sent by facsimile (if to Company) or mailed within the
continental United States by first class, registered mail, return receipt
requested, postage and registry fees prepaid, the applicable party and
addressed as follows:
(i) if to Company: Executive TeleCard, S.A.
4260 East Evans Avenue
Denver, CO 80222
Facsimile: (303) 692-0965
(ii) if to Executive: Robert N. Schuck
85 Somerset Road
Norwood, NJ 07648
Facsimile: (201) 768-9128
10. SEVERABILITY
If any provision of this Agreement shall, for any reason, be adjudged
by any court of competent jurisdiction to be invalid or unenforceable,
such judgment shall not affect, impair or invalidate the remainder of this
Agreement but shall be confined in its operation to the jurisdiction in
which made and to the provisions of this Agreement directly involved in
the controversy in which said judgment shall have been rendered.
11. WAIVER
No course of dealing and no delay on the part of any party hereto in
exercising any right, power, or remedy under or relating to this Agreement
shall operate as a waiver thereof or otherwise prejudice such party's
rights, powers and remedies. No single or partial exercise of any rights,
powers or remedies under or relating to this Agreement shall preclude any
other or further exercise thereof or the exercise of any other right,
power or remedy.
12. ENTIRE AGREEMENT/GOVERNING LAW
This Agreement embodies the entire understanding and supersedes all
other oral or written agreements or understandings, between the parties
regarding the subject matter hereof. No change, alteration, or
modification hereof may be made except in writing signed by both parties
hereto. This Agreement shall be construed and governed in all respects
and shall at all times be determined in accordance with the laws of the
State of New York. The parties consent to the exclusive jurisdiction of
the appropriate court in New York state as to any controversy arising out
of execution of this Agreement or the terms and conditions of this
Agreement.
13. HEADINGS
The headings of Paragraphs herein are included solely for convenience
of reference and shall not control the meaning or interpretation of any of
the provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement, consisting of eight (8) pages, on this _____ day of August,
1995.
EXECUTIVE TELECARD, LTD.
/s/Harold Reisner By:/s/John Gitlin
Witness Its: Secretary
/s/Marlene Lombardi By:/s/Robert N. Schuck
Witness Robert N. Schuck
GUARANTY
For valuable consideration and to induce Executive to enter into the
within Agreement with the Company, the undersigned hereby unconditionally
guarantees to Executive, his heirs and assigns, full, prompt and complete
performance by the Company of all of the provisions, conditions, covenants
and agreements contained in the within Agreement and does hereby waive all
notice of default by the Company, notice of the acceptance of this
Guaranty by Executive and consents to any extension of time that may be
given by Executive to the Company of time of payment and performance.
This guaranty is an absolute, continuing and unlimited guarantee of
payment and performance.
IN WITNESS WHEREOF, Guarantor has signed this guaranty on September 28,
1995.
EXECUTIVE TELECARD, S.A.
/s/ Harold Reisner By:/s/Edward J. Gerrity, Jr.
Witness Its:
<PAGE>
TERMINATION AGREEMENT
This AGREEMENT ("Agreement"), dated September 28, 1995, by and
between Executive TeleCard, S.A., a Turks & Caicos corporation (the
"Company"), and Robert N. Schuck (the "Executive").
WHEREAS, the services of Executive, his experience and knowledge of
the affairs of the Company and his representation and contacts in the
industry are extremely valuable to the Company and Company recognizes the
valuable services that Executive has rendered and desires to be assured
that Executive will continue his active participation in the business of
Company; and
WHEREAS, Executive is willing to continue to serve Company but
desires assurances that in the event of any change in control of Company
he will continue to have the responsibility and status he has earned;
NOW THEREFORE, in consideration of the promises and the mutual
agreements herein contained, Company and Executive hereby agree as
follows:
1. Term.
This Agreement shall terminate the later of three (3) years from
the date of this Agreement or two years from the effective date of a
Change in Control of the Company or a Change in Control of Executive
TeleCard, Ltd. ("EXTL").
2. Change in Control.
No benefits shall be payable under this Agreement unless and
until (a) there shall have been a Change in Control of the Company or a
Change in Control of EXTL, while the Executive is still an Employee of the
Company and (b) the Executive's employment by the Company thereafter shall
have been terminated in accordance with Section 3 below. For purposes of
this Agreement, a Change in Control of the Company and/or EXTL shall be
deemed to have occurred if (i) there shall be consummated (x) any
consolidation or merger of the Company or EXTL in which the Company or
EXTL is not the continuing or surviving corporation or pursuant to which
shares of the Company's or EXTL's Common Stock would be converted into
cash, securities or other property, other than a merger of the Company or
EXTL in which the holders of the Company's or EXTL's Common Stock
immediately prior to the merger have the same proportionate ownership of
common stock of the surviving corporation immediately after the merger, or
(y) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all, of the
assets of the Company or EXTL, or (ii) the stockholders of the Company or
EXTL approved any plan or proposal for the liquidation or dissolution of
the Company or EXTL, or (iii) any person (as such term is used in Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), shall become the beneficial owner (within the meaning of
Rule 13d-3 under the Exchange Act) of 20% or more of the Company's or
EXTL's outstanding Common Stock, or (iv) during any period of two
consecutive years, individuals who at the beginning of such period
constitute the entire Board of Directors of either the Company or EXTL
shall cease for any reason to constitute a majority thereof unless the
election, or the nomination for election by the Company's or EXTL's
stockholders, of each new director was approved by a vote of at least
three-fourths of the directors then still in office who were directors at
the beginning of the period.
3. Termination Following Change in Control.
(a) If a Change in Control of the Company or EXTL shall have
occurred while the Executive is still an Employee of the Company, the
Executive shall be entitled to the benefits provided in Section 4 below
upon the subsequent termination of the Executive's employment with the
Company by the Executive for Good Reason (as defined in Section 3 (c)
below) or by the Company unless such termination is a result of (i) the
Executive's death; or (ii) the Executive's termination by the Company for
Cause (as defined in Section 3(b) below).;
(b) Cause: For purposes of this Agreement only, the Company
shall have "Cause" to terminate the Executive's employment hereunder only
on the basis of material fraud or a criminal conviction involving moral
turpitude or arising from an act of the Executive that is directly
contrary to the Company's interest. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for Cause unless and
until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than three-
quarters of the entire membership of the Company's Board of Directors at a
meeting of the Board called and held for that purpose (after reasonable
notice to the Executive and an opportunity for the Executive, together
with the Executive's counsel, to be heard before the Board), finding that
in the good faith opinion of the Board the Executive was guilty of the
conduct set forth in the first sentence of this Section 3(b) and
specifying the particulars thereof in detail, and an opinion of counsel
for the Company confirming that the opinion of the Board has a substantial
basis in fact and in law.
(c) Good Reason. For purpose of this Agreement "Good Reason"
shall mean any of the following (without the Executive's express written
consent):
(i) The assignment to the Executive by the Company of
duties inconsistent with the Executive's position, duties,
responsibilities and status with the Company immediately prior to a
Change in Control of the Company or EXTL, or a change in the
Executive's titles or offices then in effect immediately prior to the
Change in Control of the Company or EXTL, or any removal of the
Executive from or any failure to reelect or reappoint the Executive
to any such positions:
(ii) a reduction by the Company in the Executive's base
salary in effect on the date hereof or as the same may be increased
from time to time during the term of this Agreement or the Company's
failure to increase (within 12 months of the Executive's last
increase in base salary) the Executive's base salary after a Change
in Control of the Company or EXTL in an amount which at least equals,
on a percentage basis, the average percentage increase in base salary
for officers of the Company effected in the preceding 12 months;
(iii) any failure by the Company to continue in effect any
benefit plan, program or arrangement in which the Executive and/or
eligible family members are participating at the time of a Change in
Control of the Company or EXTL and any other plans or fringe benefits
providing the Executive with substantially similar benefits
(hereinafter referred to as "Benefit Plans"), or the taking of any
action by the Company which would adversely affect the Executive's
and/or Executive's eligible family members participation in or
materially reduce the Executive's and/or Executive's eligible family
member's benefits under any such Benefit Plan or deprive the
Executive and/or any eligible family member of any material fringe
benefit enjoyed by the Executive at the time of a Change in Control
of the Company or EXTL;
(iv) any failure by the Company to continue in effect any
incentive plan or arrangement in which the Executive is participating
at the time of a Change in Control of the Company or EXTL (or any
other plans or arrangements providing him with substantially similar
benefits) (hereinafter referred to as "Incentive Plans") or the
taking of any action by the Company which would adversely affect the
Executive's participation in any such Incentive Plan or reduce the
Executive's benefits under any such Incentive Plan;
(v) any failure by the Company to continue in effect any
plan or arrangement to receive securities of the Company (including,
without limitation, the Company's existing Stock Option Plan, or any
future Stock Option Plan through the term of Executive's employment
and any other plan or arrangement to receive and exercise stock
options, stock appreciation rights, restricted stock or grants
thereof) in which the Executive is participating at the time of a
Change in Control of the Company or EXTL (or plans or arrangements
providing him with substantially similar benefits) (hereinafter
referred to as "Securities Plans") or the taking of any action by the
Company which would adversely affect the Executive's participation in
or materially reduce the Executive's benefits under any such
Securities Plan;
(vi) a relocation of Executive's offices to a location
greater then twenty-five miles from the Executive's office as of the
effective date of Change in Control, or the Executive's relocation to
any place other than the location at which the Executive performed
the Executive's duties prior to a Change in Control of the Company or
EXTL, except for required travel by the Executive on the Company's
business to an extent substantially consistent with the Executive's
business travel obligations at the time of a Change in Control of the
Company or EXTL;
(vii) any failure by the Company to provide the Executive
with the number of paid vacation days to which the Executive is
entitled at the time of a Change in Control of the Company;
(viii) any material breach by the Company of any provision
of this Agreement;
(ix) any failure by the Company to obtain the assumption
of this Agreement by any successor or assign of the Company; or
(x) any purported termination of the Executive's
employment which is not effected pursuant to the Notice of
Termination satisfying the requirements of Section 3(d), and for
purposes of this Agreement, no such purported termination shall be
effective.
(xi) Executive's voluntary resignation for any reason
within six (6) months from the effective date of Change in Control of
the Company or EXTL.
(d) Notice of Termination by the Company. Any termination by
the Company pursuant to Section 3(b) shall be communicated by a Notice of
Termination. For purposes of this Agreement, a "Notice of Termination"
shall mean a written notice which shall indicate those specific
termination provisions in this Agreement relied upon and which sets forth
in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated. For the purposes of this Agreement, no such purported
termination by the Company shall be effective without such Notice of
Termination.
(e) Date of Termination. "Date of Termination" shall mean if
the Executive's employment is terminated by Executive or by the Company
for any reason, the date on which a Notice of Termination is given;
provided that if within 30 days after any Notice of Termination is given
to the Executive by the Company, the Executive notifies the Company that a
dispute exists concerning the termination, the Date of Termination shall
be the date the dispute is finally determined, whether by mutual agreement
by the parties or upon final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and
no appeal having been perfected).
4. Severance Compensation upon Termination of Employment.
If the Company shall terminate the Executive's employment other
than pursuant to Section 3(b) or if the Executive shall terminate his
employment for Good Reason, then the Company shall pay to the Executive as
severance pay the following compensation:
(a) On the fifth day following termination, in a lump sum, in
cash, an amount equal to three times the average of the aggregate of the
annual compensation paid by the Company to the Executive during the term
of his employment preceding the Change in Control of the Company or EXTL;
provided, however, that if the lump sum severance payment under this
Section 4, either alone or together with other payments which the
Executive has the right to receive from the Company, would constitute a
"parachute payment" (as defined in Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code"), such lump sum severance payment
shall be reduced to the largest amount as will result in no portion of the
lump sum severance payment under this Section 4 being subject to the
excise tax imposed by Section 4999 of the Code. The determination of any
reduction in the lump sum severance payment under this Section 4 pursuant
to the foregoing provision shall be made by the Executive in good faith,
and such determination shall be conclusive and binding on the Company;
(b) To the extent Executive and the Executive's eligible family
members are eligible they shall continue to be covered by all noncash
benefit plans of the Company or any successor plans or programs in effect
on the date of acquisition of control, for twenty-four months thereafter.
In the event Executive and participating family members are ineligible
under the terms of such plans to continue to be so covered, Company shall
provide substantially equivalent coverage from other sources;
(c) At no cost to Executive, the number of unrestricted shares
of the common stock of Executive TeleCard, Ltd. equal to the total number
of outstanding stock options held by Executive on the fifth day following
termination or in lieu thereof Executive may elect to surrender to Company
his rights in such outstanding stock options (whether or not then
exercisable) then held by Executive, and, upon such surrender, Company
shall pay to Executive an amount in cash per share, which is the greater
of the average price per share paid in connection with the acquisition of
control of Executive TeleCard, Ltd. if such control was acquired by the
payment of cash or the then fair market value per option share of the
consideration paid for such shares if such control was acquired for
consideration other than cash, or the price per share paid in connection
with any tender offer for shares of Executive TeleCard, Ltd. common stock
leading to control, or the mean between the high and low selling price of
such stock on the Nasdaq National Market or other market on which
Executive TeleCard, Ltd. stock is then traded on the date of Executive's
termination.
5. No Obligation to Mitigate Damages; No Effect on Other
Contractual Rights; No Right of Set-Off.
(a) Executive's benefits hereunder shall be considered
severance pay in consideration of his past service and pay and
consideration of his continued service from the date hereof and his
entitlement thereto shall not be governed by any duty to mitigate his
damages by seeking further employment nor offset by any compensation which
he may receive from future employment.
(b) The provisions of this Agreement, and any payment provided
for hereunder, shall not reduce any amounts otherwise payable, or in any
way diminish the Executive's or the Executive's eligible family members'
existing rights, or rights which would accrue solely as a result of the
passage of time, under any Benefit Plan, Incentive Plan or Securities
Plan, employment agreement or other contract, plan or arrangement.
(c) The Company shall have no right of set-off or counterclaim
in respect of any claim, debt or obligation against any payments to
Executive, his dependents, beneficiaries, or estate provided for in this
Agreement.
6. Successor to the Company.
(a) The Company and EXTL will require any successor or assign
(whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of
the Company, by agreement in form and substance satisfactory to the
Executive, expressly, absolutely and unconditionally to assume and agree
to perform this Agreement in the same manner and to the same extent that
the Company and EXTL would be required to perform it if no such succession
or assignment had taken place. Any failure by the Company or EXTL to
obtain such agreement prior to the effectiveness of any such succession or
assignment shall be a material breach of this Agreement and shall entitle
the Executive to terminate the Executive's employment for Good Reason. As
used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor or assign to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in this
Section 6 or which otherwise becomes bound by all the terms and provisions
of this Agreement by operation of law. If at any time during the term of
this Agreement the Executive is employed by any corporation a majority of
the voting securities of which is then owned by the Company, "Company" as
used in this Agreement shall in addition include such employer. In such
event, the Company agrees that it shall pay or shall cause such employer
to pay any amounts owed to the Executive pursuant to Section 4 hereof.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal and legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amounts are still payable
to him hereunder, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to the
Executive's devisee, legatee or other designee or, if there be no such
designee, to the Executive's estate.
7. Notice.
For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt registered, postage prepaid as
follows:
If to the Company: Executive TeleCard, S.A.
MacLaw House, Duke Street
Grand Turk, Turks & Caicos Islands, B.W.I
If to the Executive: Robert N. Schuck
85 Somerset Road
Norwood, New Jersey 07648
or such other address as either of the parties may have furnished to the
other in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
8. Miscellaneous.
No provisions of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive and the Company. No waiver by any party
hereto at any time of any breach by another party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by any party which are
not set forth expressly in this Agreement. This Agreement shall be
governed by and construed in accordance with the laws of the State of New
York.
9. Validity.
The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability or any other
provision of this Agreement, which shall remain in full force and effect.
10. Counterparts.
This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
11. Legal Fees and Expenses.
In the event that the Company terminates or seeks to terminate
Executive and Executive disputes such termination or attempted termination
and prevails and, or Executive elects to terminate his service hereunder
for Good Reason and the Company disputes its obligation to pay Executive
the benefits provided for under Section 4 of this Agreement and Executive
prevails, the Company shall pay or reimburse Executive for all reasonable
costs incurred by Executive in such dispute, including attorney's fees and
costs.
12. Entire Agreement/Governing Law
This Agreement embodies the entire understanding and supersedes
all other oral or written agreements or understandings, between the
parties regarding the subject matter hereof. No change, alteration, or
modification hereof may be made except in writing signed by both parties
hereto. This Agreement shall be construed and governed in all respect and
shall at all times be determined in accordance with the laws of the State
of New York.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement, consisting of eight pages, on this 28th day of
September, 1995.
EXECUTIVE TELECARD, S.A.
/s/Harold Reisner By:/s/John Gitlin
Witness Its: Secretary
Marlene Lombardi By:/s/Robert N. Schuck
Witness Robert N. Schuck
GUARANTY
For valuable consideration and to induce Executive to enter into the
within Agreement with the Company, the undersigned hereby unconditionally
guarantees to Executive, his heirs and assigns, full, prompt and complete
performance by the Company of all of the provisions, conditions, covenants
and agreements contained in the within Agreement and does hereby waive all
notice of default by the Company, notice of the acceptance of this
Guaranty by Executive and consents to any extension of time that may be
given by Executive to the Company of time of payment and performance.
This guaranty is an absolute, continuing and unlimited guarantee of
payment and performance.
IN WITNESS WHEREOF, Guarantor has signed this guaranty on September 28th,
1995.
EXECUTIVE TELECARD, S.A.
/s/Harold Reisner By:/s/Edward J. Gerrity, Jr.
Witness Its:
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement"), dated September 28, 1995, between
Executive TeleCard, S.A., a Turks & Caicos Island corporation with offices
at MacLaw House, Duke Street, Turks & Caicos (hereinafter called the
"Company"), and Allen Mandel, residing at 9362 South Mountain Brush
Street, Highlands Ranch, Colorado 80126 (hereinafter called "Executive").
WHEREAS, the Executive has held the position of Senior Vice President
and a Director of the Company from January, 1991 until August, 1995 and,
through his efforts has maintained for the Company, at various times the
operations of accounting, finance, customer service, fraud control,
billing and administration, and
WHEREAS, Executive has served as a Consultant from August 18, 1995
until the present with the Company;
WHEREAS, the services of Executive, his experience and knowledge of
the affairs of the Company and his reputation and contacts in the industry
are extremely valuable to the Company; and
WHEREAS, the Company desire that Executive assume the position of
Executive Vice President of the Company for the period as set forth
hereinbelow and is willing to offer Executive an incentive to do so; and
WHEREAS, Executive is willing to accept employment with the Company
upon his terms and conditions hereinafter set forth:
NOW, THEREFORE, in consideration of the mutual covenants and
conditions herein contained, the parties to this Agreement agree as
follows:
1. EMPLOYMENT
Company shall employ Executive, and Executive shall serve as
Executive to the Company during the term of employment set forth in
Paragraph 2 of this Agreement. Executive shall report only to the Board
of Directors of the Company and his powers and authority shall be as set
forth in Paragraph 4.1 hereunder.
2. TERM OF EMPLOYMENT
Executive's "Term of Employment", as this term is used throughout
this Agreement shall be for a period of three (3) years commencing on
September 27, 1995 and ending September 26th, 1998, subject to termination
by the Company for cause as the term is defined in this Agreement.
Company has the right to extend the employment of Executive, subject to
acceptance by Executive, for an additional period as agreed by the parties
in writing prior to the termination of this EMPLOYMENT Agreement.
Notwithstanding anything contained in this Agreement to the contrary,
Executive may voluntarily terminate this Agreement, other than under the
conditions provided for in Paragraph 7.1 (ii) herein, by giving the
Company sixty (60) days written notice of such termination and this
Agreement shall terminate upon the expiration of the sixty day period.
3. EXECUTIVE'S TITLE AND DUTIES
3.1 Title and Duties
During the Employment Term, and any extension thereof,
Executive's title shall be that of Executive Vice President, Finance and
Administration, of the Company and Executive shall have the responsibility
and authority, commensurate with such position. Executive's scope of
responsibility and authority to act on behalf of the Company shall,
subject only to the general direction and control of the Company's Board
of Directors and Chief Executive Officer, including management of the
operations of the Company, formulating policies and administering the
operations of the Company in all respects. Executive may also serve, at
his discretion, as an officer of one or more of any subsidiary corporation
or division of the Company and to carry out the same responsibilities and
duties for each such corporation as set forth above.
3.2 Non-compete
During the Employment Term, Executive shall not accept
employment with any major long distance telephone carrier that presently
provides international calling cards, including, by way of example, such
carriers as British Telecom, MCI, AT&T and Sprint.
4. COMPENSATION AND EXPENSES
4.1 Salary
For all services by Executive under this Agreement, the Company
shall pay Executive an initial annual base salary of One Hundred Thousand
Dollars ($100,000.00) per annum, payable in weekly installments during
each year of such term. The Board of Directors may, at it's sole
discretion, increase such annual base salary at any time during the Term
of this Agreement.
4.2 Business Expenses
The Company will reimburse Executive for all reasonable expenses
properly incurred by him in the performance of his duties hereunder, upon
presentation of properly itemized charges, receipts and/or similar
documentation, otherwise in accordance with policies established from time
to time by the Board of Directors of the Company. Executive's spouse will
be permitted to accompany Executive on all trips and Executive will be
reimbursed by Company for the reasonable expenses of his spouse's
accompaniment, including travel, meals and accommodations, including a
gross-up of any income taxes payable by Executive for such reimbursement.
4.3 Stock Participation
Executive will be eligible to receive stock options to purchase
shares of the Company in an amount of at least the greater of any stock
options granted to the President or Chief Executive Officer or a director
of the Company under any stock option plan in effect during the Employment
Term and under the same terms and conditions in the plan as are provided
for other officers or directors of the Company.
4.4 Location of Executive
Company agrees that without Executive's written consent,
Executive's principal place of work shall not be relocated and, Executive
shall continue to have his office in Denver, Colorado. The Company shall
provide Executive with an office and secretarial support, at the Company's
expense. To the extent that Executive consents to a relocation, Company
agrees to reimburse Executive for the cost of such relocation of Executive
and Executive's spouse and all personal property from Colorado to
Executive's new location. Company further agrees to reimburse Executive
for all temporary living expenses, for a minimum of four (4) months, until
Executive has completed the purchase or lease of and occupied a new
residence near Executive's new work location with Company.
5. BENEFITS
5.1 Participation in Benefit and Insurance Plans
In addition to the other compensation provided in Paragraph 4.1
through 4.4, during the Term of Employment, Executive and eligible members
of Executive's family shall be entitled to participate in all Company
sponsored benefit and insurance plans. Executive shall be included in any
pension, profit-sharing, stock option, or similar plan or program of the
Company now existing, and shall participate in any such plans or programs
established hereafter to the same extent as executive officers and/or
directors of the Company. Executive shall be eligible to receive during
the period of his employment under this Agreement, and during any
subsequent period for which he will be entitled to receive payments from
the Company as provided for in this Agreement, all benefits and emoluments
for which key executives and/or directors are eligible under every such
plan or program and to the same extent and under the same terms and
conditions for which key executives and/or directors are eligible under
such plan or program.
5.2 Vacation
Executive shall be entitled to all paid holidays as available to
employees of the Company, and, in addition, to vacation and personal days
which shall accrue on a pro rata basis during the Employment Term at the
rate of three (3) weeks per annum which vacation and/or personal day(s)
shall be taken by him at such time or times as are consistent with the
needs of the business of the Company. Unused vacations and/or personal
day(s) during each year of the Employment Term shall be carried over from
year to year as necessary due to the exigencies of the business.
5.3 Indemnification
Executive shall be indemnified by the Company to the fullest
extent provided under the indemnification provisions of the By-Laws and/or
Certificate of Incorporation in existence, as of the date hereof, or, to
the extent that the scope of such indemnification is greater, under any
amendments to the By-Laws and/or Certificate of Incorporation. To the
extent that the Company obtains indemnification insurance for its officers
and/or directors, such insurance shall also cover Executive to the same
extent.
6. BENEFITS PAYABLE UPON DISABILITY OR DEATH
6.1 Disability Benefits
In the event of the disability (as hereinafter defined) of
Executive, the Company shall continue to pay Executive the weekly
compensation provided in Paragraph 5 hereof during the period of his
disability; provided, however, that in the event Executive is disabled for
a continuous period exceeding six (6) calendar months, the Company shall
compensate Executive for the difference between the Executive's long-term
disability (including Social Security) and the amount of his salary as of
the sixth month date from the date of disability.
As used in this Agreement, the term "disability" shall mean "the
complete inability of Executive to perform his duties under this Agreement
as determined by an independent physician selected by the Executive with
the approval of the Company, which approval shall not be unreasonably
withheld".
6.2 Death Benefits
In the event of the death of Executive, either during his
disability or otherwise, during the term of this Agreement, or any
extension thereof, the Company shall pay, or cause to be paid, to
Executive's designated beneficiary or beneficiaries or legal
representatives a death benefit of Three Hundred Thousand Dollars
($300,000.00). The Company shall purchase one or more term or other life
or similar insurance policies in the amount to provide for its obligations
under this paragraph, and if no adverse tax consequences would result to
Executive and his designated beneficiary or beneficiaries, the ownership
of said policy or policies shall be transferred to Executive, such
transfer to constitute compliance with the Company's obligations under
this paragraph.
7. TERMINATION, RIGHTS AND OBLIGATIONS, RENEWAL
7.1 Termination
Upon the occurrence of an event of termination (as hereinafter
defined) during the period of Executive's employment under this Agreement,
or any extension thereof, the provisions of this Paragraph 8 shall apply.
As used in this Agreement an "event of termination" shall mean and include
any one or more of the following:
(i) The termination by the Company of Executive's employment
hereunder for any reason other than for cause. For purposes of the
Agreement only, the Company shall have "cause" to terminate Executive
hereunder only on the basis of material fraud, or a criminal conviction
for an act by Executive that is directly contrary to the Company's
interest; or
(ii) Executive's resignation from the Company's employ upon any
(a) material change by the Company of the Executive's functions, duties or
responsibilities which change would cause Executive's position with the
Company to become of less dignity, responsibility, importance, or scope
from the position and attributes thereof described in Paragraph 4 above,
and any such material change shall be deemed a continuing breach of this
Agreement; (b) reduction in Executive's salary from that provided to him
under the terms of this Agreement or a diminution in Executive's
eligibility to participate in bonus, stock option, incentive award and
other benefit plans, or a diminution in Executive's or Executive's
spouse's benefits including, but not limited to, medical, dental or life
insurance and long term disability plans; or (c) liquidation, dissolution,
consolidation, or merger of the Company, or transfer of all or
substantially all of its assets; or (d) other breach of this Agreement by
the Company. Upon the occurrence of any event described in Clauses (a),
(b), (c) or (d) above, Executive shall have the right to elect to
terminate his employment under this Agreement by resignation upon not less
than thirty (30) days prior written notice given within a reasonable
period of time not to exceed, except in case of continuing breach, four
(4) calendar months after the event giving rise to said right to elect.
7.2 Termination Pay
Upon the occurrence of an event of termination, the Company
shall pay Executive (a) a lump sum compensation of the greater of One
Hundred, Twenty Thousand ($120,000.00) or the balance of the salary to
which the Executive would be entitled to the end of the Term of Employment
(b) the number of unrestricted shares of the common stock of the Company
equal to the total number of outstanding stock options held by Executive
on the fifth day following termination or in lieu of exercising or
retaining his right to exercise any outstanding stock options then held by
Executive, Executive may elect to surrender to Company his rights in such
outstanding stock options (whether or not then exercisable) then held by
Executive, and, upon such surrender, Company shall pay to Executive an
amount in cash per share equal to the mean between the high and low
selling price of such stock on the Nasdaq National Market or other market
as the Company's stock is then traded on the date of Executive's
termination.
7.3 No Obligation to Mitigate Damages
(i) Executive's benefits hereunder shall be considered
severance pay in consideration of his past service and pay and
consideration of his continued service from the date hereof and his
entitlement thereto shall not be governed by any duty to mitigate his
damages by seeking further employment nor offset by any compensation which
he may receive from future employment.
(ii) The provisions of this Agreement, and any payment provided
for hereunder, shall not reduce any amounts otherwise payable, or in any
way diminish the Executive's existing rights, or rights which would accrue
solely as a result of the passage of time, to the benefits provided under
Sections 4.3, 5.1, 5.2, 6.1 and 6.2 of this Agreement.
7.4 No Right to Set-off.
There shall be no right of set-off or counterclaim by the
Company in respect to any claim, debt or obligation against any payments
to Executive, his dependents, beneficiaries, or estate provided for in
this Agreement.
8. ASSIGNMENT
This Agreement and any rights (including Executive's Compensation)
hereunder shall not be assigned, pledged or transferred in any way by
either party hereto except that the Company shall have the obligation to
assign its rights hereunder to any successor in interest of the Company
whether by merger, consolidation, purchase of assets or stock or
otherwise. Any attempted assignment, pledge, transfer or other
disposition of this Agreement or any rights, interests or benefits
contrary to the foregoing provisions shall be null and void.
9. NOTICES
All notices, requests, demands and other communications hereunder
must be in writing and shall be deemed to have been duly given if
delivered by hand, sent by facsimile (if to Company), or mailed within the
continental United States by first class, registered mail, return receipt
requested, postage and registry fees prepaid, the applicable party and
addressed as follows:
(i) if to the Company: Executive TeleCard, S.A.
4260 East Evans Avenue
Denver, Colorado 80222
Facsimile: (303) 692-0965
(ii) if to Executive: Allen Mandel
9362 S. Mountain Brush Street
Highlands Ranch, CO 80126
10. SEVERABILITY
If any provision of this Agreement shall, for any reason, be adjudged
by any court of competent jurisdiction to be invalid or unenforceable,
such judgment shall not affect, impair or invalidate the remainder of this
Agreement but shall be confined in its operation to the jurisdiction in
which made and to the provisions of this Agreement directly involved in
the controversy in which said judgment shall have been rendered.
11. WAIVER
No course of dealing and no delay on the part of any party hereto in
exercising any right, power, or remedy under or relating to this Agreement
shall operate as a waiver thereof or otherwise prejudice such party's
rights, powers and remedies. No single or partial exercise of any rights,
powers or remedies under or relating to this Agreement shall preclude any
other or further exercise thereof or the exercise of any other right,
power or remedy.
12. ENTIRE AGREEMENT/GOVERNING LAW
This Agreement embodies the entire understanding and supersedes all
other oral or written agreements or understandings between the parties
regarding the subject matter hereof. No change, alteration, or
modification hereof may be made except in writing signed by both parties
hereto. This Agreement shall be construed and governed in all respect and
shall at all times be determined in accordance with the laws of the State
of New York. The parties consent to the exclusive jurisdiction of the
appropriate court in New York state as to any controversy arising out of
execution of this Agreement or the terms and conditions of this Agreement.
13. HEADINGS
The headings of Paragraphs herein are included solely for convenience
of reference and shall not control the meaning or interpretation of any of
the provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement, consisting of eight (8) pages, on this 28th day of September,
1995.
EXECUTIVE TELECARD, S.A.
/s/Robert N. Schuck By:/s/Anthony Balinger
Witness Its: President
/s/Robert N. Schuck By:/s/Allen Mandel
Witness Allen Mandel
GUARANTY
For valuable consideration and to induce Executive to enter into the
within Agreement with the Company, the undersigned hereby unconditionally
guarantees to Executive, his heirs and assigns, full, prompt and complete
performance by the Company of all of the provisions, conditions, covenants
and agreements contained in the within Agreement and does hereby waive all
notice of default by the Company, notice of the acceptance of this
Guaranty by Executive and consents to any extension of time that may be
given by Executive to the Company of time of payment and performance.
This guaranty is an absolute, continuing and unlimited guarantee of
payment and performance.
IN WITNESS WHEREOF, Guarantor has signed this guaranty on September 28,
1995.
EXECUTIVE TELECARD, S.A.
/s/ John Gitlin By:/s/Edward J. Gerrity, Jr.
Witness Its: Chairman
<PAGE>
TERMINATION AGREEMENT
This AGREEMENT ("Agreement"), dated September 28, 1995, by and
between Executive TeleCard, S.A., a Turks & Caicos corporation (the
"Company"), and Allen Mandel (the "Executive").
WHEREAS, the services of Executive, his experience and knowledge of
the affairs of the Company and his representation and contacts in the
industry are extremely valuable to the Company and Company recognizes the
valuable services that Executive has rendered and desires to be assured
that Executive will continue his active participation in the business of
Company; and
WHEREAS, Executive is willing to continue to serve Company but
desires assurances that in the event of any change in control of Company
he will continue to have the responsibility and status he has earned;
NOW THEREFORE, in consideration of the promises and the mutual
agreements herein contained, Company and Executive hereby agree as
follows:
1. Term.
This Agreement shall terminate the later of three (3) years from
the date of this Agreement or two years from the effective date of a
Change in Control of the Company or a Change in Control of Executive
TeleCard, Ltd. ("EXTL").
2. Change in Control.
No benefits shall be payable under this Agreement unless and
until (a) there shall have been a Change in Control of the Company or a
Change in Control of EXTL, while the Executive is still an employee of the
Company and (b) the Executive's employment by the Company thereafter shall
have been terminated in accordance with Section 3 below. For purposes of
this Agreement, a Change in Control of the Company and/or EXTL shall be
deemed to have occurred if (i) there shall be consummated (x) any
consolidation or merger of the Company or EXTL in which the Company or
EXTL is not the continuing or surviving corporation or pursuant to which
shares of the Company's or EXTL's Common Stock would be converted into
cash, securities or other property, other than a merger of the Company or
EXTL in which the holders of the Company's or EXTL's Common Stock
immediately prior to the merger have the same proportionate ownership of
common stock of the surviving corporation immediately after the merger, or
(y) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all, of the
assets of the Company or EXTL, or (ii) the stockholders of the Company or
EXTL approved any plan or proposal for the liquidation or dissolution of
the Company or EXTL, or (iii) any person (as such term is used in Section
13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), shall become the beneficial owner (within the meaning of
Rule 13d-3 under the Exchange Act) of 20% or more of the Company's or
EXTL's outstanding Common Stock, or (iv) during any period of two
consecutive years, individuals who at the beginning of such period
constitute the entire Board of Directors of either the Company or EXTL
shall cease for any reason to constitute a majority thereof unless the
election, or the nomination for election by the Company's or EXTL's
stockholders, of each new director was approved by a vote of at least
three-fourths of the directors then still in office who were directors at
the beginning of the period.
3. Termination Following Change in Control.
(a) If a Change in Control of the Company or EXTL shall have
occurred while the Executive is still an employee of the Company, the
Executive shall be entitled to the benefits provided in Section 4 below
upon the subsequent termination of the Executive's employment with the
Company by the Executive for Good Reason (as defined in Section 3 (c)
below) or by the Company unless such termination is a result of (i) the
Executive's death; or (ii) the Executive's termination by the Company for
Cause (as defined in Section 3(b) below).;
(b) Cause: For purposes of this Agreement only, the Company
shall have "Cause" to terminate the Executive's employment hereunder only
on the basis of material fraud or a criminal conviction involving moral
turpitude or arising from an act of the Executive that is directly
contrary to the Company's interest. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for Cause unless and
until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than three-
quarters of the entire membership of the Company's Board of Directors at a
meeting of the Board called and held for that purpose (after reasonable
notice to the Executive and an opportunity for the Executive, together
with the Executive's counsel, to be heard before the Board), finding that
in the good faith opinion of the Board the Executive was guilty of the
conduct set forth in the first sentence of this Section 3(b) and
specifying the particulars thereof in detail, and an opinion of counsel
for the Company confirming that the opinion of the Board has a substantial
basis in fact and in law.
(c) Good Reason. For purpose of this Agreement "Good Reason"
shall mean any of the following (without the Executive's express written
consent):
(i) The assignment to the Executive by the Company of
duties inconsistent with the Executive's position, duties,
responsibilities and status with the Company immediately prior to a
Change in Control of the Company or EXTL, or a change in the
Executive's titles or offices then in effect immediately prior to the
Change in Control of the Company or EXTL, or any removal of the
Executive from or any failure to reelect or reappoint the Executive
to any such positions;
(ii) a reduction by the Company in the Executive's base
salary in effect on the date hereof or as the same may be increased
from time to time during the term of this Agreement or the Company's
failure to increase (within 12 months of the Executive's last
increase in base salary) the Executive's base salary after a Change
in Control of the Company or EXTL in an amount which at least equals,
on a percentage basis, the average percentage increase in base salary
for officers of the Company effected in the preceding 12 months;
(iii) any failure by the Company to continue in effect any
benefit plan, program or arrangement in which the Executive and/or
eligible family members are participating at the time of a Change in
Control of the Company or EXTL and any other plans or fringe benefits
providing the Executive with substantially similar benefits
(hereinafter referred to as "Benefit Plans"), or the taking of any
action by the Company which would adversely affect the Executive's
and/or Executive's eligible family members participation in or
materially reduce the Executive's and/or Executive's eligible family
member's benefits under any such Benefit Plan or deprive the
Executive and/or any eligible family member of any material fringe
benefit enjoyed by the Executive at the time of a Change in Control
of the Company or EXTL;
(iv) any failure by the Company to continue in effect any
incentive plan or arrangement in which the Executive is participating
at the time of a Change in Control of the Company or EXTL (or any
other plans or arrangements providing him with substantially similar
benefits) (hereinafter referred to as "Incentive Plans") or the
taking of any action by the Company which would adversely affect the
Executive's participation in any such Incentive Plan or reduce the
Executive's benefits under any such Incentive Plan;
(v) any failure by the Company to continue in effect any
plan or arrangement to receive securities of the Company (including,
without limitation, the Company's existing Stock Option Plan, or any
future Stock Option Plan through the term of Executive's employment
and any other plan or arrangement to receive and exercise stock
options, stock appreciation rights, restricted stock or grants
thereof) in which the Executive is participating at the time of a
Change in Control of the Company or EXTL (or plans or arrangements
providing him with substantially similar benefits) (hereinafter
referred to as "Securities Plans") or the taking of any action by the
Company which would adversely affect the Executive's participation in
or materially reduce the Executive's benefits under any such
Securities Plan;
(vi) a relocation of Executive's offices to a location
greater then twenty-five miles from the Executive's office as of the
effective date of Change in Control, or the Executive's relocation to
any place other than the location at which the Executive performed
the Executive's duties prior to a Change in Control of the Company or
EXTL, except for required travel by the Executive on the Company's
business to an extent substantially consistent with the Executive's
business travel obligations at the time of a Change in Control of the
Company or EXTL;
(vii) any failure by the Company to provide the Executive
with the number of paid vacation days to which the Executive is
entitled at the time of a Change in Control of the Company;
(viii) any material breach by the Company of any provision
of this Agreement;
(ix) any failure by the Company to obtain the assumption
of this Agreement by any successor or assign of the Company; or
(x) any purported termination of the Executive's
employment which is not effected pursuant to the Notice of
Termination satisfying the requirements of Section 3(d), and for
purposes of this Agreement, no such purported termination shall be
effective.
(xi) Executive's voluntary resignation for any reason
within six (6) months from the effective date of Change in Control of
the Company or EXTL;
(d) Notice of Termination by the Company. Any termination by
the Company pursuant to Section 3(b) shall be communicated by a Notice of
Termination. For purposes of this Agreement, a "Notice of Termination"
shall mean a written notice which shall indicate those specific
termination provisions in this Agreement relied upon and which sets forth
in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated. For the purposes of this Agreement, no such purported
termination by the Company shall be effective without such Notice of
Termination.
(e) Date of Termination. "Date of Termination" shall mean if
the Executive's employment is terminated by Executive or by the Company
for any reason, the date on which a Notice of Termination is given;
provided that if within 30 days after any Notice of Termination is given
to the Executive by the Company, the Executive notifies the Company that a
dispute exists concerning the termination, the Date of Termination shall
be the date the dispute is finally determined, whether by mutual agreement
by the parties or upon final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and
no appeal having been perfected).
4. Severance Compensation upon Termination of Employment.
If the Company shall terminate the Executive's employment other
than pursuant to Section 3(b) or if the Executive shall terminate his
employment for Good Reason, then the Company shall pay to the Executive as
severance pay the following compensation:
(a) On the fifth day following termination, in a lump sum, in
cash, an amount equal to three times the average of the aggregate of the
annual compensation paid by the Company to the Executive during the term
of his employment preceding the Change in Control of the Company or EXTL;
provided, however, that if the lump sum severance payment under this
Section 4, either alone or together with other payments which the
Executive has the right to receive from the Company, would constitute a
"parachute payment" (as defined in Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code"), such lump sum severance payment
shall be reduced to the largest amount as will result in no portion of the
lump sum severance payment under this Section 4 being subject to the
excise tax imposed by Section 4999 of the Code. The determination of any
reduction in the lump sum severance payment under this Section 4 pursuant
to the foregoing provision shall be made by the Executive in good faith,
and such determination shall be conclusive and binding on the Company;
(b) To the extent Executive and the Executive's eligible family
members are eligible they shall continue to be covered by all noncash
benefit plans of the Company or any successor plans or programs in effect
on the date of acquisition of control, for twenty-four months thereafter.
In the event Executive and participating family members are ineligible
under the terms of such plans to continue to be so covered, Company shall
provide substantially equivalent coverage from other sources;
(c) At no cost to Executive, the number of unrestricted shares
of the common stock of Executive TeleCard, Ltd. equal to the total number
of outstanding stock options held by Executive on the fifth day following
termination or in lieu thereof Executive may elect to surrender to Company
his rights in such outstanding stock options (whether or not then
exercisable) then held by Executive, and, upon such surrender, Company
shall pay to Executive an amount in cash per share, which is the greater
of the average price per share paid in connection with the acquisition of
control of Executive TeleCard, Ltd. if such control was acquired by the
payment of cash or the then fair market value per option share of the
consideration paid for such shares if such control was acquired for
consideration other than cash, or the price per share paid in connection
with any tender offer for shares of Executive TeleCard, Ltd. common stock
leading to control, or the mean between the high and low selling price of
such stock on the Nasdaq National Market or other market on which
Executive TeleCard, Ltd. stock is then traded on the date of Executive's
termination.
5. No Obligation to Mitigate Damages; No Effect on Other
Contractual Rights; No Right of Set-Off.
(a) Executive's benefits hereunder shall be considered
severance pay in consideration of his past service and pay and
consideration of his continued service from the date hereof and his
entitlement thereto shall not be governed by any duty to mitigate his
damages by seeking further employment nor offset by any compensation which
he may receive from future employment.
(b) The provisions of this Agreement, and any payment provided
for hereunder, shall not reduce any amounts otherwise payable, or in any
way diminish the Executive's or the Executive's eligible family members'
existing rights, or rights which would accrue solely as a result of the
passage of time, under any Benefit Plan, Incentive Plan or Securities
Plan, employment agreement or other contract, plan or arrangement.
(c) The Company shall have no right of set-off or counterclaim
in respect of any claim, debt or obligation against any payments to
Executive, his dependents, beneficiaries, or estate provided for in this
Agreement.
6. Successor to the Company.
(a) The Company and EXTL will require any successor or assign
(whether direct or indirect, by purchase merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of
the Company, by agreement in form and substance satisfactory to the
Executive, expressly, absolutely and unconditionally to assume and agree
to perform this Agreement in the same manner and to the same extent that
the Company and EXTL would be required to perform it if no such succession
or assignment had taken place. Any failure by the Company or EXTL to
obtain such agreement prior to the effectiveness of any such succession or
assignment shall be a material breach of this Agreement and shall entitle
the Executive to terminate the Executive's employment for Good Reason. As
used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor or assign to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in this
Section 6 or which otherwise becomes bound by all the terms and provisions
of this Agreement by operation of law. If at any time during the term of
this Agreement the Executive is employed by any corporation a majority of
the voting securities of which is then owned by the Company, "Company" as
used in this Agreement shall in addition include such employer. In such
event, the Company agrees that it shall pay or shall cause such employer
to pay any amounts owed to the Executive pursuant to Section 4 hereof.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal and legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amounts are still payable
to him hereunder, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to the
Executive's devisee, legatee or other designee or, if there be no such
designee, to the Executive's estate.
7. Notice.
For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt registered, postage prepaid as
follows:
If to the Company: Executive TeleCard, S.A.
MacLaw House, Duke Street
Grand Turk, Turks & Caicos Island, B.W.I.
If to Executive: Allen Mandel
9362 S. Mountain Brush Street
Highlands Ranch, CO 80126
or such other address as either of the parties may have furnished to the
other in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
8. Miscellaneous.
No provisions of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive and the Company. No waiver by any party
hereto at any time of any breach by another party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by any party which are
not set forth expressly in this Agreement. This Agreement shall be
governed by and construed in accordance with the laws of the State of New
York.
9. Validity.
The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
10. Counterparts.
This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
11. Legal Fees and Expenses.
In the event that the Company terminates or seeks to terminate
Executive and Executive disputes such termination or attempted termination
and prevails and, or Executive elects to terminate his service hereunder
for Good Reason and the Company disputes its obligation to pay Executive
the benefits provided for under Section 4 of this Agreement and Executive
prevails, the Company shall pay or reimburse Executive for all reasonable
costs incurred by Executive in such dispute, including attorney's fees and
costs.
12. Entire Agreement/Governing Law
This Agreement embodies the entire understanding and supersedes
all other oral or written agreements or understandings, between the
parties regarding the subject matter hereof. No change, alteration or
modification hereof may be made except in writing signed by both parties
hereto. This Agreement shall be construed and governed in all respect and
shall at all times be determined in accordance with the laws of the State
of New York.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement, consisting of eight (8) pages, on this 28th day
of September, 1995.
EXECUTIVE TELECARD, S.A.
/s/John Gitlin By:Anthony Balinger
Witness Its:
/s/Harold Reisner By:/s/Allen Mandel
Witness Allen Mandel
GUARANTY
For valuable consideration and to induce Executive to enter into the
within Agreement with the Company, the undersigned hereby unconditionally
guarantees to Executive, his heirs and assigns, full, prompt and complete
performance by the Company of all of the provisions, conditions, covenants
and agreements contained in the within Agreement and does hereby waive all
notice of default by the Company, notice of the acceptance of this
Guaranty by Executive and consents to any extension of time that may be
given by Executive to the Company of time of payment and performance.
This guaranty is an absolute, continuing and unlimited guarantee of
payment and performance.
IN WITNESS WHEREOF, Guarantor has signed this guaranty on September 28,
1995.
EXECUTIVE TELECARD, S.A.
/s/John Gitlin By:/s/Edward J. Gerrity, Jr.
Witness Its: Chairman
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement"), dated November 1, 1995, between
Executive TeleCard, S.A., a Turks and Caicos corporation with offices at
Duke Street, Grand Turk, Turks and Caicos, BWI (hereinafter called the
"Company"), and Stig Sonnerberg, residing at Stavgardsgatan 76, S16145
Bromma, Sweden (hereinafter called "Executive").
WHEREAS, the Company wishes to secure the services of Executive as its
Senior Vice President and Director of European Operations for an extended
period to and including October 31, 1998; and
WHEREAS, Executive is willing to enter into this Agreement for such period
upon the terms and conditions hereinafter set forth:
NOW, THEREFORE, in consideration of the mutual covenants and conditions
herein contained, the parties to this Agreement agree as follows:
1. EMPLOYMENT
Company shall employ Executive, and Executive shall serve as the
Senior Vice President and Director of European Operations of the Company
during the term of employment set forth in Paragraph 2 of this Agreement.
2. TERM OF EMPLOYMENT
Executive's "Term of Employment", as this term is used
throughout this Agreement, shall be for a period of three years commencing
on November 1, 1995 and ending October 31, 1998, and any extension
thereof.
3. EXECUTIVE ACCEPTANCE
Should Executive accept this Agreement as evidenced by his
signature and terminate employment with his present employer and Company
subsequently withdraws its offer prior to commencement of the Employment
Term, regardless of the reason for the withdrawal, Executive shall receive
a lump sum compensation of One Hundred Thousand Dollars (US $100,000.00)
payable within fifteen (15) days of notice of the withdrawal.
4. EXECUTIVE'S TITLE AND DUTIES
4.1 Title and Duties
Executive shall during the term of this employment hereunder,
have responsibility for marketing and sales primarily in Europe, Africa
and the Middle East. Executive's responsibilities shall primarily consist
of the solicitation and securing of enhancement agreements with financing
institutions and credit card companies as well as revenue sharing and
enhancement arrangements with Postal Telegraph and Telephone authorities
in the defined area. Executive shall devote his full time and attention
to, and exert his best effort in the performance of his duties hereunder,
so as to promote the business of the Company, and its affiliates.
Executive shall accept the payments to be made to him under this Agreement
as full and complete compensation for all the services performed by him
under this Agreement except as may be otherwise provided in writing.
4.2 Confidential Information
Executive shall not, directly or indirectly, or at any time,
during the term of his employment hereunder or thereafter and without
regard to when or for what reason, if any, such employment shall
terminate, use or permit the use of any trade secrets, customer's lists,
or other information of, or relating to information of, the Company, or
any such subsidiary or affiliate in connection with any activity or
business, except the business of the Company or any such subsidiary or
affiliate and shall not divulge such trade secrets, customer's lists, and
information to any person, firm, or corporation whatsoever, except as may
be necessary in the performance of his duties hereunder or as may be
required by any applicable law or determination of any duly constituted
administrative agency.
5. COMPENSATION AND EXPENSES
5.1 Salary
The Company shall pay Executive during the Term of Employment a
total base salary (the "Salary") of not less than sixty thousand dollars
($60,000.00) per annum, payable in the normal pay periods of the Company
relating to executives of the Company, during each year of such term. It
is understood that the Company may, in its sole discretion of its Board of
Directors, increase such base salary. If the Company in its discretion
increases the compensation of Executive for any period of time, and if
Executive accepts such increase, this Agreement shall continue in full
force and effect whether or not it has been amended to reflect such
increase. Nothing herein is intended or shall be construed to obligate
the Company to make such increase.
5.2 Business Expenses
The Company will reimburse Executive for all reasonable expenses
properly incurred by him in its behalf in the performance of his duties
hereunder, upon presentation of properly itemized charges, receipts and/or
similar documentation, and otherwise in accordance with policies
established from time to time by the Board of Directors of the Company, as
well as mileage reimbursement for automobile usage at a rate of 2.50
kroner per kilometer. In addition, Company will provide Executive with a
personal computer, printer, mobile phone and a facsimile machine.
5.3 Stock Participation
Executive will be eligible to receive stock options to purchase
shares of Executive TeleCard, Ltd. in an amount to be determined by the
Stock Option Committee under any stock option plan in effect during the
Employment Term and under the same terms and conditions as are provided
for other officers and directors under such plan.
5.4 Location of Executive
Company agrees that without Executive's written consent,
Executive's principal place of work shall not be relocated and Executive
shall continue to have his offices in Bromma, Sweden. To the extent that
Executive consents to a relocation, Company agrees to reimburse Executive
for the cost of such relocation of Executive and Executive's family and
all personal property from Bromma, Sweden to Executive's new location.
Company further agrees to reimburse Executive for all temporary living
expenses for a minimum of three months, until Executive has completed the
purchase or lease of and occupied a new residence near Executive's new
work location with the Company.
5.5 Additional Compensation
During the Term of Employment, Executive shall be entitled to
additional compensation in an amount equal to the rate of taxed costs
which would be assessable against the amount of Salary payable to
Executive in Sweden under the terms of this Agreement which tax rate is
currently thirty-three percent (33%). Such additional compensation shall
be payable monthly and shall be adjusted as necessary to meet any change
in the percent of taxed costs to Executive on the amount of Salary
received hereunder.
6. BENEFITS
6.1 Participation in Benefit Plans
In addition to the other compensation provided in Paragraph 5.1
through 5.5, during the Term of Employment, Executive shall be entitled to
participate and shall be included in any profit-sharing and stock option
plan or program of the Company now existing, and shall participate in any
such plans or programs, except for any pension or retirement plans,
established hereafter to the same extent as executive officers and/or
directors of the Company. Additionally, and in lieu of Executive's
participation in any retirement or pension plan of the Company, the
Company shall pay annually to a pension plan designated by Executive the
sum of thirty-four thousand six hundred dollars ($34,600) to fund an
individual pension plan for Executive.
6.2 Holidays and Annual Vacation Leave
Executive shall be entitled to all paid holidays as available to
other employees of the Company and, in addition, to annual vacation leave
which shall accrue on a pro rata basis during the Employment Term at the
rate of thirty (30) working days per annum. Unused annual vacation leave
during each year of the Employment Term shall be carried over from year to
year as necessary due to the exigencies of the business.
6.3 Indemnification
Executive shall be indemnified by the Company to the fullest
extent provided under the indemnification provisions of the By-Laws and/or
Certificate of Incorporation presently in existence, or, to the extent
that the scope of such indemnification is greater, under any amendments to
the By-Laws and/or Certificate of Incorporation. To the extent that the
Company obtains indemnification insurance for its officers and/or
directors, such insurance shall also cover Executive to the same extent.
6.4 Exchange Rate Adjustments
Executive and the Company agree that to the extent that the
exchange rate between the dollar and Swedish kroner changes so that the
rate of the dollar drops more than ten percent (10%) against the Swedish
kroner, then the Company will pay Executive an additional amount equal to
the difference in the exchange rate. Payment of the difference shall be
made on a quarterly basis.
7. TERMINATION AND SEVERANCE PAYMENT
7.1 Termination
Upon the occurrence of an event of termination (as hereinafter
defined) during the period of Executive's employment under this Agreement,
the provisions of this Paragraph 8 shall apply. As used in this Agreement
an "event of termination" shall mean and include any one or more of the
following:
(i) The termination by the Company of Executive's employment
hereunder for any reason other than a material breach by Executive of this
Agreement or for "cause" as defined in (iii) hereinbelow, or
(ii) Executive's resignation from the Company's employ, pursuant to
the provisions of this paragraph, upon (a) any liquidation, dissolution,
consolidation, or merger of the Company with any third party, or transfer
of all or substantially all of its assets to any third party; or (b)
material breach of this Agreement by Company and such breach continues for
at least thirty (30) days following written notification by Executive of
such breach. Upon the occurrence of any event described in Clauses (a),
or (b) above, Executive shall have the right to elect to terminate his
employment under this Agreement by resignation upon not less than thirty
(30) days prior written notice given within a reasonable period of time
not to exceed, except in case of continuing breach, four (4) calendar
months after the event giving rise to said right to elect.
(iii) Termination by the Company for "cause" shall mean the
Executive's termination by action of the Company's Board of Directors
because of dishonesty, gross neglect of duties hereunder, conviction of a
felony, engaging directly or indirectly in any competing business, or
willful misconduct.
7.2 Termination Pay
Upon the occurrence of an event of termination, the Company shall pay
Executive (a) a lump sum compensation of the greater of One Hundred,
Twenty Thousand ($120,000.00) or the balance of the salary to which the
Executive would be entitled to the end of the Term of Employment (b) at no
cost to Executive, the number of unrestricted shares of the common stock
of Executive TeleCard, Ltd. equal to the total number of outstanding stock
options held by Executive on the fifth day following termination or in
lieu thereof Executive may elect to surrender to Company his rights in
such outstanding stock options or shares (whether or not then exercisable)
then held by Executive, and, upon such surrender, Company shall pay to
Executive an amount in cash per share equal to, the mean between the high
and low selling price of such stock on the Nasdaq National Market or such
other market as Executive TeleCard, Ltd. stock is then traded on the date
of Executive's termination.
7.3 No Obligation to Mitigate Damages
Executive's benefits hereunder shall be considered severance pay in
consideration of his past service and pay and consideration of his
continued service from the date hereof and his entitlement thereto shall
not be governed by any duty to mitigate his damages by seeking further
employment nor offset by any compensation which he may receive from future
employment.
8. ASSIGNMENT
This Agreement and any rights (including Executive's Compensation)
hereunder shall not be assigned, pledged or transferred in any way by
either party hereto except that the Company shall have, with Executive's
consent, the right to assign its rights hereunder to any third party
successor in interest of the Company whether by merger, consolidation,
purchase of assets or stock or otherwise. Any attempted assignment,
pledge, transfer or other disposition of this Agreement or any rights,
interests or benefits contrary to the foregoing provisions shall be null
and void.
9. NOTICES
All notices, requests, demands and other communications hereunder
must be in writing and shall be deemed to have been duly given if
delivered by hand, sent by facsimile, or mailed by first class, registered
mail, return receipt requested, postage and registry fees prepaid to, the
applicable party and addressed as follows:
(i) if to the Company: Executive TeleCard, S.A.
8 Avenue C
Nanuet, New York 10954
Facsimile: (914) 627 3631
(ii) if to Executive: Stig Sonnerberg
Stavgardsgatan 76
S16145
Bromma, Sweden
10. SEVERABILITY
If any provision of this Agreement shall, for any reason, be adjudged
by any court of competent jurisdiction to be invalid or unenforceable,
such judgement shall not affect, impair or invalidate the remainder of
this Agreement but shall be confined in its operation to the jurisdiction
in which made and to the provisions of this Agreement directly involved in
the controversy in which such judgement shall have been rendered.
11. WAIVER
No course of dealing and no delay on the part of any party hereto in
exercising any right, power or remedy under or relating to this Agreement
shall operate as a waiver thereof or otherwise prejudice such party's
rights, powers and remedies. No single or partial exercise of any rights,
powers or remedies under or relating to this Agreement shall preclude any
other or further exercise thereof or the exercise of any other right,
power or remedy.
12. ENTIRE AGREEMENT/GOVERNING LAW
This Agreement embodies the entire understanding and supersedes all
other oral or written agreements or understandings, between the parties
regarding the subject matter hereof. No change, alteration or
modification hereof may be made except in writing signed by both parties
hereto. This Agreement shall be construed and governed in all respect and
shall at all times be determined in accordance with the laws of the State
of New York.
13. HEADINGS
The headings of Paragraphs herein are included solely for convenience
of reference and shall not control the meaning or interpretation of any of
the provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement, consisting of seven (7) pages, on this 1st day of November,
1995.
EXECUTIVE TELECARD, S.A.
/s/John Gitlin By:/s/Robert N. Schuck
Witness Its:
EXECUTIVE
/s/Stig Sonnerberg
Witness Stig Sonnerberg
GUARANTY
For valuable consideration and to induce Executive to enter into the
within Agreement with the Company, the undersigned hereby unconditionally
guarantees to Executive, his heirs and assigns, full, prompt and complete
performance by the Company of all of the provisions, conditions, covenants
and agreements contained in the within Agreement and does hereby waive all
notice of default by the Company, notice of the acceptance of this
Guaranty by Executive and consents to any extension of time that may be
given by Executive to the Company of time of payment and performance.
This guaranty is an absolute, continuing and unlimited guarantee of
payment and performance.
IN WITNESS WHEREOF, Guarantor has signed this guaranty on November 1,
1995.
EXECUTIVE TELECARD, LTD.
/s/John Gitlin By:/s/Robert N. Schuck
Witness Its: Executive Vice President
TOWER COLORADO
OFFICE BUILDING LEASE
THIS LEASE is made this 15th day of December, 1995, between PROVIDENT
LIFE AND ACCIDENT INSURANCE COMPANY, a Tennessee Corporation ("Landlord")
and EXECUTIVE TELECARD SA, ("Tenant"),
1. PREMISES: Landlord hereby leases to Tenant those certain
premises designated on the Plans attached hereto as EXHIBIT A and
incorporated herein by this reference (hereinafter the "Premises"),
consisting of a total of approximately 8,095 square feet of space
(Rentable Area) on the 10th floor, Suite 1000 of the building known as
Tower Colorado located at 1720 S. Bellaire, Denver, Colorado 80222
(hereinafter the "Building"), located on the real property more
particularly described on EXHIBIT B attached hereto and incorporated
herein by this reference, together with a non-exclusive right, subject to
the provisions hereof, to use all appurtenances thereunto, including, but
not limited to, parking garage, parking areas and any other areas
designated by Landlord for use by tenants of the Building (the Building,
real property on which the same is situated, parking areas, other areas
and appurtenances are hereinafter collectively sometimes called the
"Building Complex"). For purposes of this Lease, "Rentable Area" shall
mean a measure of area expressed in square feet computed by measuring the
distance between the walls which enclose the floor to the inside finished
surface of the dominant portion of the permanent outer building walls,
exclusive of any major vertical penetrations of the floor and inclusive of
columns and projections necessary to the building. Major vertical
penetrations shall mean stairs, elevator shafts, flues, pipe shafts,
vertical ducts and the like, and their enclosing walls, which serve more
than one floor of the building, but shall not include stairs, dumb-
waiters, lifts, and the like, exclusively serving a tenant occupying the
leased premises. This Lease is subject to the terms, covenants and
conditions set forth herein and Tenant and Landlord each covenant as a
material part of the consideration for this Lease to keep and perform each
and all of said terms, covenants and conditions to be kept and performed
by them.
2. TERM:
A. The term of this Lease shall be for sixty (60) months (the
"Primary Lease Term") commencing at 12:01 a.m. on January 1, 1995, (the
"Commencement Date") and terminating at 12:00 midnight on DECEMBER 31,
2000 (the "Termination Date"), unless sooner terminated pursuant to the
terms hereof. In the event the Premises are not "Ready for Occupancy" as
such term is defined in Paragraph 22 hereof, the Commencement Date shall
mean and refer to the date the Premises are Ready for Occupancy.
Occupancy will occur no later than 120 days after the leases are fully
executed and can occur as soon as all or part of the Premises is
substantially complete.
B. If, as a result of the postponement or acceleration of the
Commencement Date, the term would begin other than on the first day of the
month, Tenant shall pay proportionate rent at the same monthly rate set
forth herein (also in advance) for such partial month and all other terms
and conditions of this Lease shall be in force and effect during such
partial month, and the end of the term hereof shall be adjusted to a date
which is the last day of the month 60 months after the Commencement Date.
Tenant agrees to execute and deliver to Landlord, in form attached hereto
as EXHIBIT C, an Estoppel and Commencement Date Certificate, within ten
(10) days of the date the term commences, certifying as to the actual
commencement and termination dates of the term, the rent commencement
date, if different, and such other matters as may be required by Landlord.
3. RENT: Tenant shall pay to Landlord, rent for the Premises
("Base Rent") as follows:
A. During the 1 through 12 months of the Primary Lease Term,
the sum of $109,282.56 Dollars ($ ONE HUNDRED NINE THOUSAND TWO HUNDRED
EIGHTY TWO AND 56/100) per year, payable in 12 equal monthly installments
of $9,106.88 Dollars ($NINE THOUSAND ONE HUNDRED SIX AND 88/100);
B. During the 13 through 24 months of the Primary Lease Term,
the sum of $113,330.04 Dollars ($ ONE HUNDRED THIRTEEN THOUSAND THREE
HUNDRED THIRTY AND 4/100) per year, payable in 12 equal monthly
installments of $9,444.17 Dollars ($ NINE THOUSAND FOUR HUNDRED FORTY FOUR
AND 17/100);
C. During the 25 through 36 months of the Primary Lease Term,
the sum of $117,377.52 Dollars ($ ONE HUNDRED SEVENTEEN THOUSAND THREE
HUNDRED SEVENTY SEVEN AND 52/100) per year, payable in 12 equal monthly
installments of $9,781.46 Dollars ($ NINE THOUSAND SEVEN HUNDRED EIGHTY
ONE AND 46/100);
D. During the 37 through 48 months of the Primary Lease Term,
the sum of $121,425.00 Dollars ($ ONE HUNDRED TWENTY ONE THOUSAND FOUR
HUNDRED TWENTY FIVE AND NO/100) per year, payable in 12 equal monthly
installments of TEN THOUSAND ONE HUNDRED EIGHTEEN AND 75/100 Dollars
($10,118.75);
E. During the 49 through 60 months of the Primary Lease Term,
the sum of $125,472.48 Dollars ($ ONE HUNDRED TWENTY FIVE THOUSAND FOUR
HUNDRED SEVENTY TWO AND 48/100) per year, payable in 12 equal monthly
installments of $10,456,04 Dollars ($ TEN THOUSAND FOUR HUNDRED FIFTY SIX
AND 4/100);
All installments of Base Rent shall be payable in advance,
on the first (1st) day of each calendar month during the term hereof.
Rent for the first and last months of the term hereof shall be prorated
based upon the number of days during each of said months that the Lease
term was in effect. One monthly installment of Base Rent shall be due and
payable on the date of execution of this Lease by Tenant. All Base Rent
shall be paid without notice, demand, deduction or offset, at the office
of Landlord or to such other person or at such other place as Landlord may
designate in writing. Tenant shall pay to Landlord as "Additional Rent"
all other sums due under this Lease.
4. It is agreed that Tenant, concurrently with the execution of
this Lease, has deposited with Landlord, and will keep on deposit at all
times during the term hereof, the sum of NINE THOUSAND ONE HUNDRED SIX AND
88/100 Dollars ($9,106.88), the receipt of which is hereby acknowledged,
as security for the payment by Tenant of the rent and all other sums
herein agreed to be paid and for the faithful performance of all the
terms, conditions and covenants of this Lease. If, at any time during the
term hereof, Tenant shall be in default in the performance of any
provisions of this Lease, Landlord shall have the right, but shall not be
obligated, to use said deposit, or so much thereof as necessary, in
payment of any rent in default, reimbursement of any expense incurred by
Landlord, and in payment of any damages incurred by the Landlord by reason
of Tenant's default. In such event, Tenant shall, on written demand of
Landlord, forthwith remit to Landlord a sufficient amount in cash to
restore said deposit to its original amount. In the event said deposit
has not been utilized as aforesaid, said deposit, or as much thereof as
has not been utilized for such purposes, shall be refunded to Tenant,
without interest, within sixty (60) days after the termination of this
Lease upon full performance of this Lease by Tenant and vacation of the
Premises by Tenant. Landlord shall have the right, to commingle said
deposit with other funds of Landlord. Landlord may deliver the funds
deposited herein by Tenant to any purchaser of Landlord's interest in the
Premises in the event such interest is sold, and thereupon Landlord shall
be discharged from further liability with respect to such deposit. If the
claims of Landlord exceed the amount of said deposit, Tenant shall remain
liable for the balance of such claims.
5. RENT ADJUSTMENT:
A. The following terms shall have the following meanings with
respect to the provisions of this Paragraph 5:
(1) "Base Operating Expenses" shall mean an amount equal
to the 1996 BASE YEAR actual Operating Expenses incurred by Landlord, as
hereinafter defined. In the event that the actual Operating Expenses
during any year are less than the Base Operating Expenses, Tenant shall
not be entitled to any refund, credit or other form of reimbursement.
(2) "Building Rentable Area" shall mean all rentable space
available for lease in the Building. If there is a significant change in
the aggregate Building Rentable Area, of a permanent nature, as a result
of an addition to the Building, partial destruction thereof or similar
circumstance, Landlord's accountants shall determine and make an
appropriate adjustment to the provisions herein.
(3) "Tenant's Pro Rata Share" shall mean a fraction, the
numerator of which is the Rentable Area of the Premises (i.e., 8,095
square feet) and the denominator of which is the Building Rentable Area
(i.e., 128,450 square feet), and is equal to 6.302%. At such time, if
ever, any space is added to or subtracted from the Premises pursuant to
the terms of this Lease, Tenant's Pro Rata Share shall be increased or
decreased accordingly.
(4) "Operating Expenses" shall mean:
(a) All operating expenses of any kind or nature
which are necessary, ordinary or customarily incurred with respect to the
operation and maintenance of the Building Complex as determined in
accordance with generally accepted accounting principles and shall
include, but not be limited to:
(i) Costs of supplies, including but not limited
to the cost of "re-lamping" all tenant lighting as the same may be
required from time to time;
(ii) Costs incurred in connection with obtaining
and providing energy for the Building Complex, including but not limited
to costs of propane, butane, natural gas, steam, electricity, solar energy
and fuel oils, coal or any other energy sources as well as costs for
heating, ventilation, and air conditioning services ("HVAC");
(iii) Costs of water and sanitary and storm
drainage services;
(iv) Costs of janitorial, window cleaning and
security services, if any;
(v) Costs of general maintenance and repairs,
including costs under HVAC and other mechanical maintenance contracts; and
repairs and replacements of equipment used in connection with such
maintenance and repair work;
(vi) Costs of maintenance and replacement of
plants and landscaping; and costs of maintenance, repair, striping and
repaving of parking areas, common areas, plazas and other areas used by
tenants of the Building Complex, including trash and snow removal;
(vii) Any fees, costs or assessments imposed by
any property owners association;
(viii) Insurance premiums, including fire and all-
risk coverage, together with loss of rent endorsement; public liability
insurance; and any other insurance carried by Landlord on the Building
Complex or any component parts thereof;
(ix) Labor costs, including wages and other
payments, costs to Landlord of workmen's compensation and disability
insurance, payroll taxes, welfare fringe benefits and all legal fees and
other costs or expenses incurred in resolving any labor disputes;
(x) Professional building management fees;
(xi) Legal, accounting, inspection and other
consultation fees (including, without limitation, fees charged by
consultants retained by Landlord for services that are designed to produce
a reduction in Operating Expenses or reasonably to improve the operation,
maintenance or state of repair of the Building Complex) incurred for the
normal, prudent operation of the Building Complex and a general overhead
and administrative charge equal to two percent (2%) of all Operating
Expenses;
(xii) The costs of capital improvements and
structural repairs and replacements made in or to the Building Complex or
the cost of any machinery or equipment installed in the Building Complex
in order to comply with, in any applicable laws, ordinances, rules,
regulations or orders of any governmental or quasi-governmental authority
having jurisdiction over the Building Complex (herein, "Required Capital
Improvement"), the costs of any capital improvements and structural
repairs and replacements designed primarily to reduce Operating Expenses
(herein, "Cost Savings Improvements"); and a reasonable annual reserve for
all other capital improvements and structural repairs and replacements
reasonably necessary to permit Landlord to maintain the Building as a
first class office building. The expenditures for Required Capital
Improvements and Cost Savings Improvements shall be amortized over the
useful life of such capital improvement or structural repair or
replacement (as determined by Landlord's accountants), provided that the
amortized amount of any Cost Savings Improvement shall be limited in any
year to the reduction in Operating Expenses as a result thereof; and
(xiii) "Real Estate Taxes" including all real
property taxes and assessments levied against the Building Complex by any
governmental or quasi-governmental authority, including any taxes,
assessments, surcharges, or service or other fees of a nature not
presently in effect which shall hereafter be levied on the Building
Complex as a result of the use, ownership or operation of the Building
Complex or for any other reason, whether in lieu of or in addition to any
current real estate taxes and assessments; provided, however, that any
taxes which shall be levied on the rentals of the Building Complex shall
be determined as if the Building Complex were Landlord's only property and
provided further, that in no event shall the term "Taxes and Assessments",
as used herein, include any federal, state or local income taxes levied or
assessed on Landlord, unless such taxes are a specific substitute for real
property taxes; such term shall, however, include gross taxes on rentals
and expenses incurred by Landlord for tax consultants and in contesting
the amount or validity of any such Taxes or Assessments (all of the
foregoing are collectively referred to herein as "Taxes"). "Assessments"
shall include any and all so-called special assessments, license tax,
business license fee, business license tax, commercial rental tax, levy,
charge or tax imposed by any authority having the direct power to tax,
including any city, county, state or federal government, or any school,
agricultural, lighting, water, drainage or other improvement or special
district thereof, against the Premises, the Building or the Building
Complex, or against any legal or equitable interest of Landlord therein,
For the purposes of this Lease, any special assessment shall be deemed
payable in such number of installments as is permitted by law, whether or
not actually so paid. If the Building Complex has not been fully assessed
as a completed project, for the purposes of computing the Real Estate
Taxes for any adjustment required herein, the same shall be increased by
Landlord's Accountants, in accordance with their estimate of what the
assessment will be, upon full completion of the Building Complex,
including installation of all tenant finish items.
(xiv) Any other expense which under generally
accepted accounting principles would be considered a normal maintenance or
operating expense.
If Landlord selects an accrual accounting basis
for calculating Operating Expenses, Operating Expenses shall be deemed to
have been paid when such expenses have accrued in accordance with
generally accepted accounting principles. The Landlord will cap all
controllable expenses at seven percent (7%) per annum. The uncontrollable
expenses will include any taxes, insurance, or utility expenses.
(b) Operating Expenses shall expressly exclude
Landlord's income taxes; leasing commissions, advertising and promotional
expenses; interest on debt or amortization payments on any mortgages or
deeds of trust except costs of repairs or other work occasioned by fire,
windstorm or other casualty to the extent of insurance proceeds received;
and any other expense which under generally accepted accounting principles
would not be considered a normal maintenance or operating expense, except
as otherwise specifically provided herein.
(5) It is hereby agreed that commencing JANUARY 1, 1997,
Tenant shall pay to Landlord as Additional Rent during the balance of the
term hereof an estimate of Tenant's Pro Rata Share of Operating Expenses
for the calendar year in excess of the Base Operating Expenses as
reasonably estimated by Landlord, payable monthly, at the rate of one
twelfth (1/12) thereof, on the same date and at the same place Base Rent
is payable, with an adjustment to be made between the parties at a later
date as hereinafter provided. Landlord shall deliver to Tenant, as soon
as practicable following the end of any calendar year, an estimate of the
Operating Expenses for the new calendar year (the "Budget Sheet"). Until
receipt of the Budget Sheet, Tenant shall continue to pay its monthly
Tenant's Pro Rata Share of Operating Expenses based upon the estimate for
the preceding calendar year. To the extent that the Budget Sheet reflects
an estimate of Tenant's Pro Rata Share of Operating Expenses for the new
calendar year greater than the amount actually paid to the date of receipt
of the Budget Sheet for the new calendar year, Tenant shall pay such
amount to Landlord within thirty (30) days of receipt of the Budget Sheet.
Upon receipt of the Budget Sheet, Tenant shall thereafter pay the amount
of its monthly Tenant's Pro Rata Share of Operating Expenses as set forth
in the Budget Sheet. As soon as practicable following the end of any
calendar year, but not later than May 1st, Landlord shall submit to Tenant
a statement in reasonable detail describing the computations of the
Operating Expenses setting forth the exact amount of Tenant's Pro Rata
Share of Operating Expenses for the calendar year just completed (the
"Statement"), and the difference, if any, between the actual Tenant's Pro
Rata Share of Operating Expenses for the calendar year just completed and
the estimated amount of Tenant's Pro Rata Share of Operating Expenses paid
by Tenant to Landlord. Notwithstanding the foregoing, Landlord's failure
to deliver the Statement to Tenant on or before May 1st, shall in no way
serve as a waiver of Landlord's rights under this Paragraph. To the
extent that the actual Tenant's Pro Rata Share of Operating Expenses for
the period covered by the Statement is higher than the estimated Tenant's
Pro Rata Share of Operating Expenses which Tenant previously paid during
the calendar year just completed, Tenant shall also pay to Landlord such
balance within thirty (30) days following receipt of the Statement from
Landlord. To the extent that the actual Tenant's Pro Rata Share of
Operating Expenses for the period covered by the Statement is less than
the estimated Tenant's Pro Rata Share of Operating Expenses which Tenant
previously paid during the calendar year just completed, Landlord shall
credit the excess against any sums then owing or next becoming due from
Tenant under the Lease.
(a) If the Lease term hereunder covers a period of
less than a full calendar year during the first or last calendar years of
the term hereof, Tenant's Pro Rata Share of Operating Expenses for such
partial year shall be calculated by proportionately reducing the Base
Operating Expenses to reflect the number of months in such year during
which Tenant leased the Premises (the "Adjusted Base Operating Expenses").
The Adjusted Base Operating Expenses shall then be compared with the
actual Operating Expenses for said partial year to determine the amount,
if any, of any increases in the actual Operating Expenses for such partial
year over the Adjusted Base Operating Expenses. Tenant shall pay Tenant's
Pro Rata Share of any such increases within ten (10) days following
receipt of notice thereof.
(b) Tenant shall have the right at its own expense
and at a reasonable time (after written notice to Landlord) within thirty
(30) days of the date of the Statement to audit Landlord's books relevant
to the Additional Rent due under this Paragraph 5. In the event Tenant
does not audit Landlord's books and deliver the results thereof to
Landlord within said 30-day period, the terms and amounts set forth in the
Statement shall be deemed conclusive and final and Tenant shall have no
further right to adjustment. In the event Tenant's examination reveals
that an error has been made in Landlord's determination of Tenant's Pro
Rata Share of Operating Expenses and Landlord agrees with such
determination, then the amount of such adjustment shall be payable by
Landlord or Tenant, to the other party as the case may be. In the event
Tenant's examination reveals an error has been made in Landlord's
determination of Tenant's Pro Rata Share of Operating Expenses, and
Landlord disagrees with the results thereof, Landlord shall have thirty
(30) days to obtain an audit from an accountant of its choice to determine
Tenant's Pro Rata Share of Operating Expenses. In the event Landlord's
accountant and Tenant's accountant are unable to reconcile their audits,
both accountants shall mutually agree upon a third accountant, whose
determination of Tenant's Pro Rata Share of Operating Expenses shall be
conclusive. In the event the amount of error by Landlord is determined to
be ten percent (10%) or more, the reasonable costs of the three audits
made pursuant to this subparagraph shall be paid by Landlord. In the
event the amount of error by Landlord is determined to be less than ten
percent (10%), the reasonable costs of the three audits made pursuant to
this subparagraph shall be paid by Tenant.
(c) Landlord's failure during the Lease term to
prepare and deliver any statements or bills, or Landlord's failure to make
a demand under this Paragraph or under any other provision of this Lease
shall not in any way be deemed to be a waiver of, or cause Landlord to
forfeit or surrender its rights to collect any items of Additional Rent
which may have become due pursuant to this Paragraph during the term of
this Lease. Tenant's liability for all Additional Rent due under this
Paragraph 5 shall survive the expiration or earlier termination of this
Lease.
6. CHARACTER OF OCCUPANCY:
A. The Premises are to be used for general offices not
inconsistent with the character and type of tenancy found in comparable
first-class office buildings in the Metropolitan Denver area and for no
other purpose without the prior written consent of Landlord. Tenant
shall, at its sole expense, comply with all laws, rules and regulations
applicable to the Premises and procure all permits or licenses required
for the transaction of business at the Premises.
B. Tenant shall not suffer nor permit the Premises nor any
part thereof to be used in any manner, nor anything to be done therein,
nor suffer or permit anything to be brought into or kept therein, which
would in any material way (i) make void or voidable any fire or liability
insurance policy then in force with respect to the Building Complex, (ii)
make unobtainable from reputable insurance companies authorized to do
business in the state where the Premises are located any fire insurance
with extended coverage, or liability, elevator, boiler or other insurance
required to be furnished by Landlord under the terms of any lease or
mortgage to which this Lease is subordinate at standard rates, (iii) cause
or in Landlord's reasonable opinion be likely to cause physical damage to
the Building Complex or any part thereof, (iv) constitute a public or
private nuisance, (v) impair, in the opinion of Landlord, the appearance,
character or reputation of the Building Complex, (vi) discharge
objectionable fumes, vapors or odors into the Building air conditioning
system or into the Building flues or vents not designed to receive them or
otherwise in such manner as may unreasonably offend other occupants of the
Building, (vii) impair or interfere with any of the Building services or
impair or interfere with or tend to impair or interfere with the use of
any of the other areas of the Building by, or occasion discomfort, or
annoyance to Landlord or any of the other tenants or occupants of the
Building Complex, any such impairment or interference to be based upon the
judgment of Landlord, (viii) increase on an ongoing periodic basis the
pedestrian traffic in and out of the Premises or the Building above an
ordinary level, (ix) create waste in, on or around the Premises, Building,
or Building Complex, or (x) make any noise or set up any vibration which
will disturb other tenants, except in the course of permitted repairs or
alterations at times permitted by Landlord.
C. Tenant shall not use the Premises nor permit anything to be
done in or about the Premises or Building Complex which will in any way
conflict with any law, statute, ordinance, protective covenants affecting
the Building Complex or governmental or quasi-governmental rules or
regulations now in force or which may hereafter be enacted or promulgated.
Tenant shall give written notice within two (2) days from receipt thereof
to Landlord of any notice it receives of the violation of any law or
requirement of any public authority with respect to the Premises or the
use or occupation thereof. Landlord shall give prompt notice to Tenant of
any notice it receives relative to the violation by Tenant of any law or
requirement of any public authority with respect to the Premises or the
use or occupation thereof.
7. SERVICES AND UTILITIES:
A. Landlord agrees, without charge except as provided herein,
and in accordance with standards from time to time prevailing for first-
class office buildings in the Metropolitan Denver area, to furnish water
to the Building for use in lavatories and drinking fountains (and to the
Premises if the plans for the Premises so provide); during ordinary
business hours to furnish such heated or cooled air to the Premises as
may, in the judgment of Landlord, be reasonably required for the
comfortable use and occupancy of the Premises provided that Tenant
complies with the recommendations of Landlord's engineer or other duly
authorized representative, regarding occupancy and use of the Premises; to
provide janitorial services for the Premises (including such interior and
exterior window washing as may be required), such janitorial services to
be provided five days a week (Exhibit H), except for "Holidays" as herein
defined; during ordinary business hours to cause electric current to be
supplied for lighting the Premises and public halls; and to furnish such
snow removal services to the Building Complex as may, in the judgment of
Landlord, be reasonably required for safe access to the Building Complex.
B. Landlord shall provide electricity for normal office
purposes including but not limited to fluorescent and incandescent
lighting, including task and task ambient lighting systems and for normal
office equipment including but not limited to duplicating (reproduction)
machines, communications and audio visual equipment, vending machines,
portable computers (provided they do not require any additional voltage or
special electrical requirements) executive kitchen equipment and internal
communication systems (which may include piped-in music). To the extent
that electric current is utilized in excess of the amounts indicated
above, Tenant's rent shall be increased from time to time by Landlord in
such amounts to cover the cost of providing such increased use. Landlord
shall have the right, if it determines based on its own judgment that
Tenant is using electric current for purposes other than those described
above or for other than normal office use, to require Tenant to install a
check meter to determine the amount which Tenant is utilizing. The cost
of such excess usage, and check meter, including but not limited to
monitoring, installation and repair thereof, shall be paid by Tenant.
C. If Tenant requires water in excess of that usually
furnished or supplied for use in the Premises as general office space,
Tenant shall first procure the consent of Landlord for the use thereof.
Tenant agrees to pay to Landlord such amounts as Landlord determines are
necessary to cover the costs of such increased use of water, including,
but not limited to, the cost of installation, monitoring, maintenance and
repair of any check meter or other instrument necessary to measure the use
of additional water.
D. Tenant agrees that Landlord shall not be liable for failure
to supply any heating, air conditioning, elevator, electrical, janitorial,
lighting or other services during any period when Landlord uses reasonable
diligence to supply such services, or during any period Landlord is
required to reduce or curtail such services pursuant to any applicable
laws, rules or regulations, now or hereafter in force or effect, it being
understood and agreed to by Tenant that Landlord may discontinue, reduce
or curtail such services, or any of them at such times as it may be
necessary by reason of accident, unavailability of employees, repairs,
alterations, improvements, strikes, lockouts, riots, acts of God,
application of applicable laws, statutes, rules and regulations, or due to
any other happening beyond the reasonable control of Landlord. In the
event of any such interruption, reduction or discontinuance of Landlord's
services, Landlord shall not be liable for damages to persons or property
as a result thereof, nor shall the occurrence of any such event in any way
be construed as an eviction of Tenant or cause or permit an abatement,
reduction or setoff of rent, or operate to release Tenant from any of
Tenant's obligations hereunder.
E. Whenever heat generating machines or equipment are used by
Tenant in the Premises which affect the temperature otherwise maintained
by the air conditioning system, Landlord reserves the right to install
supplementary air conditioning units in the Premises in the event
Landlord's independent consulting engineer determines same are necessary
as a result of Tenant's use of lights or equipment which generate heat
loads in excess of those for which the HVAC system is designed and the
cost therefor, including the cost of installation, operation and
maintenance thereof, shall be paid by Tenant to Landlord upon demand by
Landlord.
F. In the event that Tenant has any special or additional
electrical or mechanical requirements related to its use of the Premises,
any such electrical or mechanical equipment must be located within the
Premises. Such electrical or mechanical requirements, for the purposes
hereof, shall include by way of example, but not limitation, any internal
telephone system. The foregoing shall in no way be construed as granting
to Tenant additional rights to use any such special or additional
electrical or mechanical equipment in its Premises without the prior
written consent of Landlord. Any additional cost or expense related to or
resulting from such electrical or mechanical requirements shall be the
sole obligation of Tenant.
G. If Tenant requires HVAC service beyond ordinary business
hours (hereafter "After Hours Usage"), such service must be requested from
the Building manager at least twenty-four (24) hours prior thereto. After
Hours Usage shall only be supplied in full floor increments of the
Building, for a minimum of four (4) hour periods, with increments of one
half (1/2) hour thereafter. Tenant shall reimburse Landlord, as
Additional Rent, for all costs and expenses for After Hours Usage in
accordance with tile then prevailing operational rate per hour per floor.
Notwithstanding the foregoing, if in Landlord's determination
Tenant's demand for After Hours Usage is or becomes excessive or
sufficiently frequent as to warrant the same, Landlord may install, at
Tenant's expense, separate meters to monitor or control Tenant's After
Hours Usage, with all costs for the installation, maintenance and repair
of such meter to be paid by Tenant.
8. QUIET ENJOYMENT: Subject to the provisions of this Lease,
Landlord covenants that Tenant on paying the rent and performing the
covenants of this Lease on its part to be performed shall and may
peacefully and quietly have, hold and enjoy the Premises for the term of
this Lease. Landlord shall not be responsible for the acts or omissions
of any other tenant or third party which may interfere with Tenant's use
and enjoyment of the Premises. In the event of any transfer or transfers
of Landlord's interest in the Premises or in the real property of which
the Premises are a part, other than a transfer for security purposes only,
the transferor shall be automatically relieved of any and all obligations
and liabilities on the part of Landlord accruing from and after the date
of such transfer.
9. MAINTENANCE AND REPAIRS:
A. Notwithstanding any other provisions of this Lease,
Landlord shall repair and maintain in a first-class condition the
structural portions of the Building, including the elevators, plumbing,
air conditioning, heating and electrical systems installed or furnished by
Landlord, unless such maintenance and repairs are caused in part or in
whole by the act, neglect, fault or omission of Tenant, its agents,
servants, employees, licensees or invitees, in which case Tenant shall pay
to Landlord, on demand, the cost of such maintenance and repairs less the
amount of any insurance proceeds received by Landlord on account thereof,
if applicable. Landlord shall also maintain and keep in good order and
repair the Building roof; the curtain wall, including ALL glass
connections at the perimeter of the Building; all exterior doors,
including any exterior plate glass within the Building; the Building
ventilating systems, elevators; escalators; Building telephone and
electrical closets; public portions of the Building or Building Complex,
including but not limited to the balconies, landscaping, walkways, and
upper floor lobbies and corridors, and interior portions of the Building
above and below grade which are not covered by leases.
B. Tenant, at Tenant's sole cost and expense, except for
services furnished by Landlord pursuant to Paragraph 7 hereof, shall
maintain, in good order, condition and repair, the Premises, including the
interior surfaces of the ceilings (if damaged or discolored due in whole
or in part to the act, neglect, omission or fault of Tenant), walls and
floors, all doors, interior glass partitions or glass surfaces (not
exterior windows) and pipes, electrical wiring, switches, fixtures and
other special items, subject to the provisions of Paragraph 15 hereof. In
the event Tenant fails to so maintain the Premises in good order,
condition and repair, Landlord shall give Tenant notice to do such acts as
are reasonably required to maintain the Premises. In the event Tenant
fails to promptly commence such work and diligently pursue it to
completion, then Landlord shall have the right, but shall not be required,
to do such acts and expend such funds at the expense of Tenant as are
reasonably required to perform such work. The funds so expended plus
twenty percent (20%) of such amounts as an overhead/administrative charge
shall be due and payable by Tenant within ten (10) days after receipt of
Landlord's invoice therefor. Landlord shall have no liability to Tenant
for any damage, inconvenience or interference with the use of the Premises
by Tenant as a result of performing any such work.
10. ALTERATIONS AND ADDITIONS:
A. Tenant shall make no alterations, additions or improvements
to the Premises or any part thereof without obtaining the prior written
consent of Landlord. Tenant shall submit any such request to Landlord at
least thirty (30) days prior to the proposed commencement date of such
work. Landlord may impose, as a condition to such consent, and at
Tenant's sole cost, such requirements as Landlord may deem necessary in
its judgment, including without limitation, the manner in which the work
is done, a right of approval of the contractor by whom the work is to be
performed and the times during which the work is to be accomplished,
approval of all plans and specifications and the procurement of all
licenses and permits. Landlord shall be entitled to post notices on and
about the Premises with respect to Landlord's non-liability for mechanics'
liens and Tenant shall not permit such notices to be defaced or removed,
Tenant further agrees not to connect any apparatus, machinery or device to
the Building systems, including electric wires, water pipes, fire safety,
heating and mechanical systems, without the prior written consent of
Landlord.
B. All alterations, improvements and additions to the
Premises, including, by way of illustration but not by limitation, all
counters, screens, grilles, special cabinetry work, partitions, paneling,
carpeting, drapes or other window coverings and light fixtures, shall be
deemed a part of the real estate and the property of Landlord excluding
the swipe card security system, the safe and the remote surveillance
systems, to be paid for by Tenant and not included in the Tenant
Improvement Allowance and shall remain upon and be surrendered with the
Premises as a part thereof without molestation, disturbance or injury at
the end of the Lease term, whether by lapse of time or otherwise, unless
Landlord, by notice given to Tenant no later than fifteen (15) days prior
to the end of the term, shall elect to have Tenant remove all or any of
such alterations, improvements or additions (excluding non-movable office
walls), and in such event, Tenant shall promptly remove, at its sole cost
and expense, such alterations, improvements and additions and restore the
Premises to the condition in which the Premises were prior to the making
of the same, reasonable wear and tear excepted. Any such removal, whether
required or permitted by Landlord, shall be at Tenant's sole cost and
expense, and Tenant shall restore the Premises to the condition in which
the Premises were prior to the making of the same, reasonable wear and
tear excepted. All movable partitions, machines and equipment which are
installed in the Premises by or for Tenant, without expense to Landlord,
and can be removed without structural damage to or defacement of the
Building or the Premises, and all furniture, furnishings and other
articles of personal property owned by Tenant and located in the Promises
(all of which are herein called "Tenant's Property") shall be and remain
the property of Tenant and may be removed by it at any time during the
term of this Lease. However, if any of Tenant's Property is removed,
Tenant shall repair or pay the cost of repairing any damage to the
Building or the Premises resulting from such removal. All additions or
improvements which are to be surrendered with the Premises shall be
surrendered with the Premises, as a part thereof, at the end of the term
or the earlier termination of this Lease.
C. If Landlord permits persons requested by Tenant to perform
any alterations, repairs, modifications or additions, which shall not be
unreasonably withheld, to the Premises, then prior to the commencement of
any such work, Tenant shall deliver to Landlord certificates issued by
insurance companies qualified to do business in the state where the
Premises are located evidencing that workmen's compensation, public
liability insurance and property damage insurance, all in amounts, with
companies and on forms satisfactory to Landlord, are in force and
maintained by all such contractors and subcontractors engaged by Tenant to
perform such work, All such policies shall name Landlord as an additional
insured and shall provide that the same may not be canceled or modified
without thirty (30) days prior written notice to Landlord.
D. Tenant, at its sole cost and expense, shall cause any
permitted alterations, decorations, installations, additions or
improvements in or about the Premises to be performed in compliance with
all applicable requirements of insurance bodies having jurisdiction, and
in such manner as not to interfere with, delay, or impose any additional
expense upon Landlord in the construction, maintenance or operation of the
Building, and so as to maintain harmonious labor relations in the
Building.
11. ENTRY BY LANDLORD:
A. Landlord and its agents shall have the right to enter the
Premises at all reasonable times and upon reasonable notice for the
purpose of examining or inspecting the same, to supply any services to be
provided by Landlord hereunder, to show the same to prospective purchasers
of the Building, to make such alterations, repairs, improvements or
additions to the Premises or to the Building as Landlord may deem
necessary or desirable, and to show the same to prospective tenants of the
Premises. Landlord and its agent may enter the Premises at all times and
without advance notice for the purpose of responding to an actual or
apparent emergency. Landlord may for the purpose of supplying scheduled
janitorial services and evaluating janitorial services at any time and
from time to time enter the Premises by means of a master key without
liability to Tenant and without affecting this Lease. If, during the last
60 days of the term hereof, Tenant shall have removed substantially all of
its property from the Premises, Landlord may immediately enter and alter,
renovate and redecorate the Premises without elimination or abatement of
rent or incurring liability to Tenant for any compensation.
B. Tenant shall be entitled to four (4) sets of keys to the
Premises. In the event Tenant needs any additional keys, such keys must
be requested from Landlord. Tenant shall pay to Landlord the actual cost
of making such additional keys.
12. MECHANIC'S LIENS: Tenant shall pay or cause to be paid all
costs for work done by or on behalf of Tenant or caused to be done by or
on behalf of Tenant on the Premises of a character which will or may
result in liens against Landlord's interest in the Premises, Building or
Building Complex and Tenant will keep the Premises, Building and Building
Complex free and clear of all mechanic's liens and other liens on account
of work done for or on behalf of Tenant or persons claiming under Tenant.
Tenant hereby agrees to indemnify, defend and save Landlord harmless of
and from all liability, loss, damages, costs or expenses, including
attorneys' fees, incurred in connection with any claims of any nature
whatsoever for work performed for, or materials or supplies furnished to
Tenant, including lien claims of laborers, materialmen or others. Should
any such liens be filed or recorded against the Premises, Building or
Building Complex with respect to work done for or materials supplied to or
on behalf of Tenant or should any action affecting the title thereto be
commenced, Tenant shall cause such liens to be released of record within
ten (10) days after notice thereof. If Tenant desires to contest any such
claim of lien, Tenant shall nonetheless cause such lien to be released of
record by the posting of adequate security with a court of competent
jurisdiction if provided by applicable law or statute of the state where
the Premises are located. If Tenant shall be in default in paying any
charge for which such a mechanic's lien or suit to foreclose such a lien
has been recorded or filed and shall not have caused the lien to be
released as aforesaid, Landlord may (but without being required to do so)
pay such lien or claim and any costs associated therewith, and the amount
so paid, together with interest at the Interest Rate and reasonable
attorneys' fees incurred in connection therewith, shall be immediately due
and payable from Tenant to Landlord as Additional Rent.
13. DAMAGE TO PROPERTY, INJURY TO PERSONS:
A. Tenant, for itself and its legal representatives,
successors and assigns, hereby indemnities and agrees to hold harmless
Landlord, its agents, employees, contractors, legal representatives,
successors and assigns, from any and all claims of liability for any
injury or damage to any person or property whatsoever occurring in, on or
about the Premises or the Building Complex or any part thereof, to the
extent such injury or damage is caused by the negligence, fault or
omission of Tenant, its agents, contractors, employees, licensees or
invitees. Tenant further agrees to indemnify and to hold Landlord
harmless from and against any and all claims arising from any breach or
default in the performance of any obligation on Tenant's part to be
performed under the terms of this Lease, or arising from any act or
negligence of Tenant, or any of its agents, contractors, employees,
licensees or invitees. Such indemnities shall include by way of example,
but not limitation, all costs, reasonable attorneys' fees, expenses and
liabilities incurred in or about any such claim, action or proceeding.
B. Landlord shall not be liable to Tenant for any damage by or
from any act or negligence of any co-tenant or other occupant of the
Building Complex, or by any owner or occupant of adjoining or contiguous
property. Landlord shall not be liable for any injury or damage to
persons or property resulting in whole or in part from the criminal
activities of others. To the extent not covered by normal fire and
extended coverage insurance, Tenant agrees to pay for all damage to the
Building Complex, as well as all damage to persons or property of other
tenants or occupants thereof, caused by the misuse, neglect, act, omission
or negligence of Tenant or any of its agents, contractors, employees,
licensees or invitees.
C. Neither Landlord nor its agents or employees shall be
liable for any damage to property entrusted to Landlord, its agents or
employees, or employees of the building manager, if any, nor for the loss
or damage to any property occurring by theft or otherwise, nor for any
injury or damage to persons or property resulting from fire, explosion,
falling plaster, steam, gas, electricity, water or rain which may leak
from any part of the Building Complex or from the pipes, appliances or
plumbing works therein or from the roof, street or subsurface or from any
other place or resulting from dampness, or any other cause whatsoever;
provided, however, nothing contained herein shall be construed to relieve
Landlord from liability for any personal injury resulting from its gross
negligence. Neither Landlord nor its agents or employees shall be liable
for interference with the lights, view or other incorporeal hereditaments,
nor shall Landlord be liable for any latent defect in the Premises or in
the Building or Building Complex.
Tenant shall give prompt notice to Landlord in case of fire or
accidents in or about the Premises or the Building or of defects therein
or in the fixtures or equipment located therein.
D. In case any claim, demand, action or proceeding is made or
brought against Landlord, its agents or employees, by reason of any
obligation on Tenant's part to be performed under the terms of this Lease,
or arising from any act or negligence of Tenant, its agents or employees,
or which gives rise to Tenant's obligation to indemnify Landlord, Tenant
shall be responsible for all costs and expenses, including but not limited
to reasonable attorneys' fees incurred in defending or prosecution of the
same, as applicable.
14. INSURANCE:
A. Landlord agrees to carry and maintain general public
liability insurance against claims for personal injury, including death
and property damage in or about the Building Complex (excluding Tenant's
Property), such insurance to be in such amounts as Landlord (or its
mortgagees) may deem appropriate. Such insurance may expressly exclude
property paid for by tenants or paid for by Landlord for which tenants
have reimbursed Landlord located in, or constituting a part of the
Building or the Building Complex. Such insurance shall afford coverage
for damages resulting from (a) fire, (b) perils covered by extended
coverage insurance, and (c) explosion of steam and pressure boilers and
similar apparatus located in the Building or the Building Complex.
Landlord may carry such other additional insurance coverage as Landlord or
Landlord's mortgagee deems appropriate including coverage for loss of
rents. All such insurance shall be procured from a responsible insurance
company or companies authorized to do business in the State where the
Premises are located.
B. Tenant shall, at its own cost, at all times during the term
of this Lease and any extensions hereof, procure and maintain insurance
for hazard, fire and extended coverage on Tenant's Property and the
contents of the Premises in an amount equal to full replacement cost
thereof, and comprehensive general liability insurance, including coverage
for bodily injury, property damage, personal injury (employee and
contractual liability exclusions deleted), products and completed
operations, contractual liability, owner's protective liability, host
liquor legal liability and broad form property damage with the following
limits of liability: One Million Dollars ($1,000,000.00) each occurrence
combined single limit for bodily injury, property damage and personal
injury: Two Million Dollars ($2,000,000.00) aggregate for bodily injury
and property damage for products and completed operations. All such
insurance shall be procured from a responsible insurance company or
companies authorized to do business in the State where the Premises are
located, with general policyholder's ratings of not less than "A" and a
financial rating of not less than "XI" in the most current available
Best's Insurance Reports, and shall be otherwise satisfactory to Landlord.
All such policies shall name Landlord as an additional insured, and shall
provide that the same may not be canceled or altered except upon thirty
(30) days prior written notice to Landlord. All insurance maintained by
Tenant shall be primary to any insurance provided by Landlord. If Tenant
obtains any general liability insurance policy on a claims-made basis,
Tenant shall provide continuous liability coverage for claims arising
during the entire term of this Lease, regardless of when such claims are
made, either by obtaining an endorsement providing for an unlimited
extended reporting period in the event such policy is canceled or not
renewed for any reason whatsoever or by obtaining new coverage with a
retroactive date the same as or earlier than the expiration date of the
canceled or expired policy. Tenant shall provide certificate(s) of such
insurance to Landlord upon commencement of the Lease term and at least
thirty (30) days prior to any annual renewal date thereof and upon request
from time to time and such certificate(s) shall disclose that such
insurance names Landlord as an additional insured, in addition to the
other requirements set forth herein. The limits of such insurance shall
not, under any circumstances, limit the liability of Tenant hereunder.
C. Each party agrees to use its best efforts to include in
each of its policies insuring against loss, damage or destruction by fire
or other casualty a waiver of the insurer's right of subrogation against
the other party, or if such waiver should be unobtainable or unenforceable
(i) an express agreement that such policy shall not be invalidated if the
insured waives the right of recovery against any party responsible for a
casualty covered by the policy before the casualty; or (ii) any other form
of permission for the release of the other party. If such waiver,
agreement or permission shall not be, or shall cease to be, obtainable
without additional charge or at all, the insured party shall so notify the
other party promptly after learning thereof. In such case, if the other
party shall so elect and shall pay the insurer's additional charge
therefor, such waiver, agreement or permission shall be included in the
policy, or the other party shall be named as an additional insured in the
policy. Each such policy which shall so name a party hereto as an
additional insured shall contain, if obtainable, agreements by the insurer
that the policy will not be canceled without at least thirty (30) days
prior notice to both insureds and that the act or omission of one insured
will not invalidate the policy as to the other insured. Any failure by
either party, if named as an additional insured, promptly to endorse to
the order of the other party, without recourse, any instrument for the
payment of money under or with respect to the policy of which the other
party is the owner or original or primary insured, shall be deemed a
default under this Lease.
D. Each party hereby releases the other party with respect to
any claim (including a claim for negligence) which it might otherwise have
against the other party for loss, damage or destruction with respect to
its property (including the Building, Building Complex, the Premises and
rental value or business interruption) occurring during the term of this
Lease to the extent to which it is insured under a policy or policies
containing a waiver of subrogation or permission to release liability or
naming the above party as an additional insured as provided above.
E. Neither Landlord, the Building manager, if any, nor their
respective agents shall be liable for any damage to the property of Tenant
or others entrusted to employees of the Building, nor for the loss of or
damage to any property of Tenant by theft or otherwise and Tenant shall
indemnity Landlord of and from any loss or damages, costs or actions
Landlord may suffer or incur as a result of such loss or damage to
Property.
15. DAMAGE OR DESTRUCTION TO BUILDING:
A. In the event that the Premises or the Building are damaged
by fire or other insured casualty and the insurance proceeds have been
made available therefor by the holder or holders of any mortgages or deeds
of trust covering the Building, the damage shall be repaired by and at the
expense of Landlord to the extent of such insurance proceeds available
therefor, provided such repairs and restoration can, in Landlord's
reasonable opinion, be made within two hundred ten (210) days after the
occurrence of such damage without the payment of overtime or other
premiums, and until such repairs and restoration are completed, the Base
Rent shall be abated in proportion to the part of the Premises which is
unusable by Tenant in the conduct of its business, as may be reasonably
determined by Landlord, (but there shall be no abatement of Base Rent by
reason of any portion of the Premises being unusable for a period equal to
one day or less). Landlord agrees to notify Tenant within forty-five (45)
days after such casualty if it estimates that it will be unable to repair
and restore the Premises within said two hundred ten (210) day period.
Such notice shall set forth the approximate length of time Landlord
estimates will be required to complete such repairs and restoration.
Notwithstanding anything to the contrary contained herein, if Landlord
cannot or estimates it cannot make such repairs and restoration within
said two hundred ten (210) day period, then Tenant may, by written notice
to Landlord cancel this Lease, provided such notice is given to Landlord
within fifteen (15) days after Landlord notifies Tenant of the estimated
time for completion of such repairs and restoration. Notwithstanding the
preceding sentence, Tenant may not cancel this Lease as hereinabove stated
if the damage to the Premises or the Building is in whole or in part the
result of the act, omission, fault or negligence of Tenant, its agents,
contractors, employees, licensees or invitees. Except as provided in this
Paragraph 15, there shall be no abatement of rent and no liability of
Landlord by reason of any injury to or interference with Tenant's business
or property arising from the making of any such repairs, alterations or
improvements in or to the Building, Premises or fixtures, appurtenances
and equipment. Tenant understands that Landlord will not carry insurance
of any kind on Tenant's Property, including furniture and furnishings, or
on any fixtures or equipment removable by Tenant under the provisions of
this Lease, or any improvement installed in the Premises by or on behalf
of Tenant, and that Landlord shall not be obligated to repair any damage
thereto or replace the same.
B. In case the Building throughout shall be so injured or
damaged, whether by fire or otherwise (though the Premises may not be
affected, or if affected, can be repaired within said 210 days) that
Landlord, within sixty (60) days after the happening of such injury, shall
decide not to reconstruct or rebuild the Building, then notwithstanding
anything contained herein to the contrary, upon notice in writing to that
effect given by Landlord to Tenant within said sixty (60) days, Tenant
shall pay the rent, properly apportioned up to date of such casualty, this
Lease shall terminate from the date of delivery of said written notice,
and both parties hereto shall be released and discharged from all further
obligations hereunder (except those obligations which expressly survive
termination of the Lease term). A total destruction of the Building shall
automatically terminate this Lease.
16. CONDEMNATION:
A. If the whole of the Premises or so much thereof as to
render the balance unusable by Tenant for the proper conduct of its
business shall be taken under power of eminent domain or transferred under
threat thereof, then this Lease, at the option of either Landlord or
Tenant exercised by either party giving notice to the other of such
election within thirty (30) days after such conveyance or taking
possession, whichever is earlier, shall forthwith cease and terminate and
the rent shall be duly apportioned as of the date of such taking or
conveyance. No award for any partial or entire taking shall be
apportioned and Tenant hereby assigns to Landlord any award which may be
made in such taking or condemnation, together with any and all rights of
Tenant now or hereafter arising in or to the same or any part thereof.
Notwithstanding the foregoing, Tenant shall be entitled to seek, directly
from the condemning authority, an award for its removable trade fixtures,
equipment and personal property and relocation expenses, if any, to the
extent Landlord's award is not diminished. In the event of a partial
taking which does not result in a termination of this Lease, Base Rent
shall be reduced in proportion to the reduction in the size of the
Premises so taken and this Lease shall be modified accordingly. Promptly
after obtaining knowledge thereof, Landlord or Tenant, as the case may be,
shall notify the other of any pending or threatened condemnation or taking
affecting the Premises or the Building.
B. If all or any portion of the Premises shall be condemned or
taken for governmental occupancy for a limited period, this Lease shall
not terminate and Landlord shall be entitled to receive the entire amount
of any such award or payment thereof as damages, rent or otherwise.
Tenant hereby assigns to Landlord any award which may be made in such
temporary taking, together with any and all rights of Tenant now or
hereafter arising in or to the same or any part thereof. Tenant shall be
entitled to receive an abatement of Base Rent in proportion to the
reduction in the size of the Premises so taken.
17. ASSIGNMENT AND SUBLETTING:
A. Tenant shall not permit any part of the Premises to be used
or occupied by any persons other than Tenant and its employees, nor shall
Tenant permit any part of the Premises to be used or occupied by any
licensee or concessionaire or permit any persons other than Tenant, its
employees and invitees, to be upon the Premises. Tenant shall not
voluntarily, by operation of law, or otherwise, assign, transfer or
encumber this Lease or any interest herein nor sublet or part with
possession of all or any part of the Premises (any and all of which shall
hereinafter be referred to as "Transfer") without Landlord's prior written
consent. That consent will not be unreasonably withheld. Any Transfer
without the prior written consent of Landlord shall constitute a default
hereunder and shall be void ab initio and shall confer no rights upon any
third party, notwithstanding Landlord's acceptance of rent payments from
any purported transferee. Landlord's consent to any requested assignment
of this Lease or subletting of all or any part of the Premises shall be
subject to the following conditions:
(1) such consent and resulting subletting or assignment
shall not relieve Tenant of its primary obligations hereunder, including
the obligation for payment of all rents due hereunder;
(2) Landlord, at its option and from time to time, may
collect the rent from the subtenant or assignee, and apply the net amount
collected to the rent herein reserved, but no such collection shall be
deemed an acceptance by Landlord of the subtenant or assignee as the
tenant hereof, or a release of Tenant from further performance of
covenants on the part of Tenant herein contained;
(3) any such subtenant or assignee shall be a company or
other entity of good repute, engaged in a business or profession
compatible with and in keeping with the then standards of the Building and
financially capable of performing its obligations with respect to the
Premises:
(4) such subtenant or assignee shall assume and agree to
perform all of Tenant's obligations under this Lease insofar as they
pertain to the space so sublet or assigned; and
(5) Tenant is not in default of any term or condition of
this Lease at the time it requests Landlord's consent.
B. In the event of any Transfer of this Lease or all or any
part of the Premises by Tenant, Landlord in addition to any rights
contained herein, shall have the option, at its discretion, to collect and
receive the excess of rent due to Tenant from such sublessee or assignee
over the Base Rent due hereunder. Further, in the event of any Transfer
of this Lease of all or any part of the Premises by Tenant without the
prior written consent of Landlord, Landlord, in addition to any rights
contained herein shall have the following options, at its discretion:
(1) To give Tenant written notice of Landlord's
intention to terminate this Lease on the date such notice is given or on
any later date specified therein, whereupon, on the date specified in such
notice, Tenant's right to possession of the Premises shall cease and this
Lease shall thereupon be terminated, except as to any incompleted
obligations of Tenant; or
(2) To re-enter and take possession of the Premises
or the part thereof subject to such Transfer, and to enforce all rights of
Tenant, and receive and collect all rents and other payments due to
Tenant, in accordance with such sublet or assignment of the Premises, or
any part thereof, as if Landlord was the sublettor or assignor, and to do
whatever Tenant is permitted to do pursuant to the terms of such sublease
or assignment.
C. The sale of all or a majority of the stock of Tenant, if
Tenant is a corporation, or the sale of all or a majority of the ownership
interest in Tenant, if Tenant is a partnership, or the sale of all or
substantially all of the assets of Tenant shall constitute a Transfer for
purposes of this Lease. Landlord recognizes that Executive Telecard is a
publicly traded company on the NASDAQ Exchange. As long as Executive
Telecard continues the public trading of such stock it will not constitute
a transfer as defined herein.
D. At the time of making a request for Landlord's consent to a
Transfer and not less than thirty (30) days prior to the proposed
effective date thereof, Tenant shall provide to Landlord such information
as Landlord, its accountants and attorneys, shall reasonably require with
respect to such proposed Transfer, including but not limited to name and
address of the proposed transferee, description of business operations,
financial information and certificate of corporate authority and good
standing or partnership certificate, as applicable.
E. Consent of Landlord to a Transfer shall not relieve Tenant
from seeking consent to any subsequent Transfers.
F. Subletting or assignments by subtenants or assignees shall
not be permitted under any circumstances, nor shall Tenant be permitted to
assign this Lease or sublet all or any part of the Premises during any
period of time that all or any portion of the Base Rent is abated.
Further, no option to renew or extend the term of this Lease or to lease
additional space, if any, shall be exercisable by any subtenant or
assignor.
G. All subleases or assignments shall be in writing and a copy
thereof provided to Landlord within ten (10) days of its effective date.
All subleases shall further contain an express provision that in the event
of any default by Tenant under this Lease and upon notice thereof to the
subtenant from Landlord, all rentals payable by the subtenant shall be
paid directly to Landlord, for the Tenant's account, until subsequent
notice from Landlord that such default has been cured. Notwithstanding
the foregoing, receipt by Landlord of rent directly from the subtenant
shall not be considered a waiver of the default on the part of Tenant, nor
an acceptance of such subtenant.
18. ESTOPPEL CERTIFICATE: Tenant further agrees at any time and
from time to time on or before five (5) days after written request by
Landlord, to execute, acknowledge and deliver to Landlord an estoppel
certificate certifying (to the extent it believes the same to be true)
that this Lease is unmodified and in full force and effect (or if there
have been modifications, that the same is in full force and effect as
modified, and stating the modifications), that there have been no defaults
thereunder by Landlord or Tenant (or if there have been defaults, setting
forth the nature thereof), the date to which the rent and other charges
have been paid, if any, that Tenant claims no present charge, lien, claim
or offset against rent, the rent is not prepaid for more than one month in
advance and such other matters as may be reasonably required by Landlord,
Landlord's mortgagee, or any potential purchaser of the Building, it being
intended that any such statement delivered pursuant to this Paragraph may
be relied upon by any prospective purchaser of all or any portion of
Landlord's interest herein, or a holder of any mortgage or deed of trust
encumbering any portion of the Building Complex. Tenant's failure to
deliver such statement within such time shall be a default under this
Lease.
19. DEFAULT:
A. The following events (herein referred to as an "event of
default") shall constitute a default by Tenant hereunder;
(1) Tenant shall fail to pay when due any installment of
Base Rent, Additional Rent or any other amounts payable hereunder;
(2) This Lease or the estate of Tenant hereunder shall be
transferred to or shall press to or devolve upon any other person or party
in violation of the provisions of this Lease, except as permitted herein;
(3) This Lease or the Premises or any part thereof shall
be taken upon execution or by other process of law directed against
Tenant, or shall be taken upon or subject to any attachment at the
instance of any creditor or claimant against Tenant, and said attachment
shall not be discharged or disposed of within fifteen (15) days after the
levy thereof;
(4) Tenant shall file a petition in bankruptcy or
insolvency or for reorganization or arrangement under the bankruptcy laws
of the United States or under any insolvency act of any state, or shall
voluntarily take advantage of any such law or act by answer or otherwise,
or shall be dissolved or shall make an assignment for the benefit of
creditors;
(5) Involuntary proceedings under any such bankruptcy law
or insolvency act or for the dissolution of Tenant shall be instituted
against Tenant, or a receiver or trustee shall be appointed of all or
substantially all of the property of Tenant, and such proceedings shall
not be dismissed or such receivership or trusteeship vacated within thirty
(30) days after such institution or appointment;
(6) Tenant shall fail to take possession of the Premises
within thirty (30) days of the Commencement Date;
(7) Tenant shall abandon or permanently vacate the
Premises for ten (10) consecutive days;
(8) Tenant shall fail to perform any of the other
agreements, terms, covenants or conditions hereof on Tenant's part to be
performed (other than the obligation to pay rent or any other charges
payable hereunder), and such nonperformance shall continue for a period of
fifteen (15) days after notice thereof by Landlord to Tenant; provided,
however, that if Tenant cannot reasonably cure such nonperformance within
fifteen (15) days, Tenant shall not be in default if it commences cure
within said fifteen (15) days and diligently pursues the same to
completion, with completion occurring in all instances within sixty (60)
days;
(9) Tenant shall, for reasons other than those
specifically permitted in this Lease, cease to conduct continually its
normal business operations in the Premises, or fail to, from the
Commencement Date throughout the term of this Lease and any renewals
hereof, do any of the following: (i) keep the phone lines in the Premises
hooked up with adequate personnel to operate the same; or (ii) operate its
normal business activities as an active and ongoing entity consistent with
generally accepted standards in the industry;
(10) Tenant shall fail to obtain a release of any
mechanic's lien, as required herein;
(11) A guarantor of this Lease, if any, or a general
partner of Tenant (if Tenant is a general or limited partnership), becomes
a debtor under any state or federal bankruptcy proceedings, or becomes
subject to receivership or trusteeship proceedings, whether voluntary or
involuntary; except in the case of a guarantor, Tenant shall not be in
default if a substitute guarantor, with acceptable creditworthiness and
financial abilities in light of the responsibilities of Tenant hereunder,
and otherwise acceptable to Landlord, is provided to Landlord within
fifteen (15) days; and
(12) All or any part of the personal property of Tenant is
seized, subject to levy or attachment, or similarly repossessed or removed
from the Premises.
B. Upon the occurrence of an event of default, Landlord shall
have the right, at its election, then or at any time thereafter and while
any such event of default shall continue, either:
(1) To give Tenant written notice of Landlord's intention
to terminate this Lease on the date such notice is given or on any later
date specified therein, where-upon, on the date specified in such notice,
Tenant's right to possession of the Premises shall cease and this Lease
shall thereupon be terminated; provided however, all of Tenant's
obligations, including but not limited to, the amount of Base Rent and
other obligations reserved in this Lease for the balance of the term
hereof, shall immediately be accelerated and due and payable.
(2) To re-enter and take possession of the Premises or any
part thereof and repossess the same as Landlord's former estate and expel
Tenant and those claiming through or under Tenant, and remove the effects
of both or either, using such force for such purposes as may be reasonably
necessary, without being liable for prosecution thereof, without being
deemed guilty of any manner of trespass and without prejudice to any
remedies for arrears of rent or preceding breach of covenants or
conditions. Should Landlord elect to re-enter the Premises as provided in
this Paragraph 19(b)(2) or should Landlord take possession pursuant to
legal proceedings or pursuant to any notice provided for by law, Landlord
may, from time to time, without terminating this Lease, relet the Premises
or any part thereof in Landlord's or Tenant's name, but for the account of
Tenant, for such term or terms (which may be greater or less than the
period which would otherwise have constituted the balance of the term of
this Lease) and on such conditions and upon such other terms (which may
include concessions of free rent and alteration and repair of the
Premises) as Landlord, in its discretion, may determine, and Landlord may
collect and receive the rents therefor. Landlord shall in no way be
responsible or liable for any failure to relet the Premises or any part
thereof or for any failure to collect any rent due upon such reletting.
No such re-entry or taking possession of the Premises by Landlord shall be
construed as an election on Landlord's part to terminate this Lease unless
a written notice of such intention be given to Tenant. No notice from
Landlord hereunder or under a forcible entry and detainer statute or
similar law shall constitute an election by Landlord to terminate this
Lease unless such notice specifically so states. Landlord reserves the
right following any such re-entry and/or reletting, to exercise its right
to terminate this Lease by giving Tenant such written notice, in which
event, this Lease will terminate as specified in said notice.
C. In the event that Landlord does not elect to terminate this
Lease as permitted in Paragraph 19(b)(1) hereof, but on the contrary,
elects to take possession as provided in Paragraph 19(b)(2), Tenant shall
pay to Landlord (i) the rent and other sums as herein provided, which
would be payable hereunder if such repossession had not occurred, less
(ii) the net proceeds, if any, of any reletting of the Premises after
deducting all Landlord's expenses in connection with such reletting,
including but without limitation, all repossession costs, brokerage
commissions, legal expenses, attorneys' fees, expenses of employees,
alteration and repair costs and expenses of preparation for such
reletting. If, in connection with any reletting, the new lease term
extends beyond the existing term, or the premises covered thereby include
other premises not part of the Premises, a fair apportionment of the rent
received from such reletting and the expenses incurred in connection
therewith as provided aforesaid will be made in determining the net
proceeds from such reletting. Tenant shall pay such rent and other sums
to Landlord monthly on the days on which the rent would have been payable
hereunder if possession had not been retaken.
D. In the event this Lease is terminated, Landlord shall be
entitled to recover forthwith against Tenant as damages for loss of the
bargain and not as a penalty, an aggregate sum which, at the time of such
termination of this Lease, represents the excess, if any, of the aggregate
of the rent and all other sums payable by Tenant hereunder that would have
accrued for the balance of the term over the aggregate rental value of the
Premises (such rental value to be computed on the basis of a tenant paying
not only a rent to Landlord for the use and occupation of the Premises,
but also such other charges as are required to be paid by Tenant under the
terms of this Lease) for the balance of such term, both discounted to
present worth at the rate of eight percent (8%) per annum. Alternatively,
at Landlord's option, Tenant shall remain liable to Landlord for damages
in an amount equal to the rent and other sums arising under the Lease for
the balance of the term had the Lease not been terminated, less the net
proceeds, if any, from any subsequent reletting, after deducting all
expenses associated therewith and as enumerated above. Landlord shall be
entitled to receipt of such amounts from Tenant monthly on the days on
which such sums would have otherwise been payable.
E. Suit or suits for the recovery of the amounts and damages
set forth above may be brought by Landlord, from time to time, at
Landlord's election and nothing herein shall be deemed to require Landlord
to await the date whereon this Lease or the term hereof would have expired
had there been no such default by Tenant or no such termination, as the
case may be.
F. After an event of default by Tenant, Landlord may sue for
or otherwise collect all rents, issues and profits payable under all
subleases on the Premises, including those past due and unpaid.
G. After an event of default by Tenant, Landlord may without
terminating this Lease, enter upon the Premises, with force if necessary,
without being liable for prosecution of any claim for damages, without
being deemed guilty of any manner of trespass and without prejudice to any
other remedies, and do whatever Tenant is obligated to do under the terms
of this Lease. Tenant agrees to reimburse Landlord on demand for any
expenses which Landlord may incur in effecting compliance with the
Tenant's obligations under this Lease; further, Tenant agrees that
Landlord shall not be liable for any damages resulting to Tenant from
effecting compliance with Tenant's obligations under this subparagraph
caused by the negligence of Landlord or otherwise.
H. No failure by Landlord to insist upon the strict performance of
any agreement, term, covenant or condition thereof or to exercise any
right or remedy consequent upon a breach hereof, and no acceptance of full
or partial rent during the continuance of any such breach, shall
constitute a waiver of any such breach of such agreement, term, covenant
or condition. No agreement, term, covenant or condition hereof to be
performed or complied with by Tenant, and no breach thereof, shall be
waived, altered or modified except by written instrument executed by
Landlord. No waiver of any breach shall affect or alter this Lease, but
each and every agreement, term, covenant and condition hereof shall
continue in full force and effect with respect to any other then existing
or subsequent breach thereof. Notwithstanding any unilateral termination
of this Lease, this Lease shall continue in force and effect as to any
provisions hereof which require observance or performance of Landlord or
Tenant subsequent to termination.
I. Nothing contained in this Paragraph shall limit or
prejudice the right of Landlord to prove and obtain as liquidated damages
in any bankruptcy, insolvency, receivership, reorganization or dissolution
proceeding, an amount equal to the maximum allowed by any statute or rule
of law governing such proceeding and in effect at the time when such
damages are to be proved, whether or not such amount be greater, equal to
or less than the amounts recoverable, either as damages or rent, referred
to in any of the preceding provisions of this Paragraph.
J. Any rents or other amounts owing to Landlord hereunder
which are not paid within five (5) days of the date they are due, shall
thereafter bear interest from the due date at the rate of eighteen percent
(18%) per annum ("Interest Rate") until paid. Similarly, any amounts paid
by Landlord to cure any default of Tenant or to perform any obligation of
Tenant, shall, if not repaid by the Tenant within five (5) days of demand
by Landlord, thereafter bear interest from the date paid by Landlord at
the Interest Rate until paid. In addition to the foregoing, Tenant shall
pay to Landlord whenever any Base Rent, Additional Rent or any other sums
due hereunder remain unpaid more than five (5) days after the due date
thereof, an administrative charge to compensate Landlord for the costs and
expenses associated with handling a delinquent account equal to ten
percent (10%) of the amount due. Further, in the event of default by
Tenant, in addition to all other rights and remedies, Landlord shall be
entitled to receive from Tenant all sums, the payment of which may
previously have been waived or abated by Landlord, or which may have been
paid by Landlord pursuant to any agreement to grant Tenant a rental
abatement or other monetary inducement or concession, including but not
limited to any tenant finish allowance or moving allowance, together with
interest thereon from the date or dates such amounts were paid by Landlord
or would have been due from Tenant but for the abatement, at the Interest
Rate, until paid; it being understood and agreed that such concession or
abatement was made on the condition and basis that Tenant fully perform
all obligations and covenants under the Lease for the entire term.
K. Each right and remedy provided for in this Lease shall be
cumulative and shall be in addition to every other right or remedy
provided for in this Lease now or hereafter existing at law or in equity
or by statute or otherwise, including, but not limited to, suits for
injunctive or declaratory relief and specific performance. The exercise
or commencement of the exercise by Landlord of any one or more of the
rights or remedies provided for in this Lease now or hereafter existing at
law or in equity or by statute or otherwise shall not preclude the
simultaneous or subsequent exercise by Landlord of any or all other rights
or remedies provided for in this Lease, or now or hereafter existing at
law or in equity or by statute or otherwise. All costs incurred by
Landlord in connection with collecting any amounts and damages owing by
Tenant pursuant to the provisions of this Lease or to enforce any
provision of this Lease, including by way of example, but not limitation,
reasonable attorneys' fees from the date any such matter is turned over to
an attorney, shall also be recoverable by Landlord from Tenant. Landlord
and Tenant agree that any action or proceeding arising out of this Lease
shall be heard by a court sitting without a jury and thus hereby waive all
rights to a trial by jury.
20. LANDLORD'S LIEN: As security for the payment of rent, damages
and all other payments required to be made under this Lease, Tenant hereby
grants to Landlord a lien upon all property INCLUDED IN EXHIBIT I, of
Tenant now or hereafter located upon the Premises. If Tenant abandons or
vacates any portion of the Premises or is in default in the payment of any
rentals, damages or other payments required to be made by this Lease or is
in default of any other provision of this Lease, Landlord may enter upon
the Premises, without being liable for any claim of damages, without being
deemed guilty of any manner of trespass, and without prejudice to any
other remedy which it may have for possession or arrearages in rent and
take possession of all or any part of such personal property, and may sell
and convey all or any part of such personal property at a public or
private sale, in one or successive sales, with or without notice, to the
highest bidder for cash and on behalf of Tenant, delivering to the highest
bidder all of Tenant's title and interest in the personal property so
sold. The proceeds of such sale of the personal property shall be applied
by Landlord toward the reasonable costs and expenses of the sale,
including attorneys' fees, and then toward the payment of all sums then
due by Tenant to Landlord under the terms of this Lease; any excess
proceeds shall be paid to Tenant or any other person entitled thereto by
law. The above not to include Exhibit "I".
21. INTENTIONALLY DELETED.
22. COMPLETION OF PREMISES:
A. Landlord has agreed to complete the Premises as more fully
set forth in a work letter (the "Work Letter") attached hereto and
incorporated herein as EXHIBIT D. Other than as set forth in the Work
Letter, Landlord shall have no obligation for the completion of the
Premises, and Tenant shall accept the Premises in its "as is" condition on
the Commencement Date. Landlord shall not have any obligation for the
repair or replacement of any portions of the interior of the Premises,
including but not limited to carpeting, draperies, window coverings,
wallcoverings or painting, which are damaged or wear out during the term
hereof, regardless of the cause therefor, except as may otherwise be
specifically set forth in this Lease. If the Premises are not
Substantially Complete (as hereafter defined) on the Commencement Date,
unless such delay is caused by Tenant, its agents or employees, the rental
obligations hereunder shall not commence until the Premises are
Substantially Complete, whereupon, this Lease and all covenants,
conditions and terms hereof shall be in full force and effect; and the
Termination Date hereof shall be postponed as set forth in paragraph 2(b).
The postponement of the rent and term herein provided for such period
shall be in full settlement for all claims which Tenant might have by
reason of the Premises not being Substantially Complete on the
Commencement Date. If Tenant wishes to take possession of all or any part
of the Premises prior to the date the Premises are Substantially Complete,
it must first secure the prior written consent of Landlord and such
occupancy shall in no way hinder, delay or interfere with Landlord's work
in completion of the Premises, and in such event, all terms and provisions
of this Lease, including the obligation to pay rent at a rate equal to the
monthly rate provided in Paragraph 3 (prorated accordingly) shall apply.
"Substantially Complete" as that term is used herein shall mean the date
when all major construction aspects of the Premises and any remodeling
work to be performed by Landlord to the extent agreed to in the Work
Letter are completed although minor items are not completed (including but
not limited to, touch-up plastering or repainting which does not
unreasonably interfere with Tenant's ability to carry on its business in
the Premises). The certificate of the architect (or other representative
of Landlord) in charge of supervising the completion or remodeling of the
Premises shall control conclusively the date upon which the Premises are
Substantially Complete. If Landlord is delayed in delivering the Premises
to Tenant because the same are not Substantially Complete or due to the
failure of a prior occupant to vacate the same, then the rent and term
shall be postponed as hereinabove set forth, and such postponement shall
be in full settlement of all claims which Tenant may otherwise have by
reason of the delay of delivery.
B. Landlord, at its sole option, may allow Tenant to enter
into the Premises for the purpose of installing furniture, fixtures and
equipment and other leasehold improvements, including, but not limited to,
wall and floor coverings, millwork and draperies, subject to the terms of
the Work Letter prior to the Commencement Date at its sole risk and with
no obligation to pay rent provided that such entry and work do not
unreasonably interfere in any way with the performance of Landlord's work
or other workers in and about the Building. At any time during such
period of early entry, if Landlord notifies Tenant that Tenant's entry or
work is interfering with or delaying the performance of work to be
performed by Landlord or other workers in and about the Building, or
causing any disruption whatsoever, Tenant shall forthwith discontinue any
further work and shall vacate the Premises, and shall cause its workmen or
contractors to remove therefrom, any equipment, materials or installations
which are the subject of Landlord's notice.
23. REMOVAL OF TENANT'S PROPERTY: All movable furniture and
personal effects of Tenant not removed from the Premises upon the vacation
or abandonment thereof or upon the termination of this Lease for any cause
whatsoever shall conclusively be deemed to have been abandoned and may be
appropriated, sold, stored, destroyed or otherwise disposed of by Landlord
without notice to Tenant and without obligation to account therefor, and
Tenant shall reimburse Landlord for all reasonable expenses incurred in
connection with the disposition of such property.
24. HOLDING OVER: Should Tenant hold over after the termination of
this Lease without Landlord's consent, Tenant shall be deemed a holdover
tenant at will. During such holdover period, Tenant shall be liable for
all damages incurred by Landlord as a result of Tenant's withholding of
the Premises. Should Tenant holdover after the termination of this Lease,
with Landlord's consent, Tenant shall become a tenant from month to month
only upon each and all of the terms herein provided as may be applicable
to such month to month tenancy and any such holding over shall not
constitute an extension of this Lease. During such holding over, Tenant
shall pay monthly rent equal to one hundred fifty percent (150%) of the
last monthly rental rate plus all other monetary charges as provided
herein. Such tenancy shall continue until terminated by Landlord, as
provided by law, or until Tenant shall have given to Landlord at least
thirty (30) days written notice prior to the last day of the calendar
month intended as the date of termination of such month to month tenancy.
25. PARKING AND COMMON AREAS: Tenant hereby agrees to rent from
Landlord during the Primary Lease Term, the quantity of parking spaces as
set forth on EXHIBIT E attached hereto and incorporated herein by this
reference. Tenant shall pay to Landlord rent for the parking space(s) as
set forth in EXHIBIT E. Such spaces shall be located as designated by
Landlord. Landlord shall have the right, without obligation, and from
time to time, to change the number of BUILDING total parking spaces, size,
location, shape and arrangement of parking areas and other common areas,
restrict parking of tenants or their guests to designated areas, designate
loading or handicap loading areas, change the level or grade of parking
and to charge for all parking or any portion thereof. Except as otherwise
specifically provided herein, all access roads, courtyards and other
areas, facilities or improvements furnished by Landlord are for the
general and nonexclusive use in common of all tenants of the Building, and
those persons invited upon the land upon which the Building is situated
and shall be subject to the exclusive control and management of Landlord,
and Landlord shall have the right, without obligation to establish, modify
and enforce such rules and regulations, which the Landlord may deem
reasonable and/or necessary. Unless as otherwise provided, Tenant's use
of the parking area, as herein set forth, shall be in common with other
tenants of the Building and any other parties permitted by Landlord to use
the parking area. The parking rights herein granted shall not be deemed a
lease but shall be construed as a license granted by Landlord to Tenant
for the term of this Lease. Notwithstanding the above, tenant is
guaranteed a minimum of nineteen parking spaces during the term of this
lease.
26. SURRENDER AND NOTICE: Upon the expiration or earlier
termination of this Lease, Tenant shall promptly quit and surrender to
Landlord the Premises broom clean, in good order and condition, ordinary
wear and tear and loss by fire or other casualty excepted, and Tenant
shall remove all of its movable furniture and other effects and such
alterations, additions and improvements as Landlord shall require Tenant
to remove pursuant to Paragraph 10 hereof. In the event Tenant fails to
so vacate the Premises on a timely basis as required, Tenant shall be
responsible to Landlord for all costs and damages, including but not
limited to any amounts required to be paid to third parties who were to
have occupied the Premises, incurred by Landlord as a result of such
failure, plus interest thereon at the Interest Rate on all amounts not
paid by Tenant within five (5) days of demand, until paid in full.
27. ACCEPTANCE OF PREMISES BY TENANT: Taking possession of the
Premises by Tenant shall be conclusive evidence as against Tenant that the
Premises were in the condition agreed upon between Landlord and Tenant,
and acknowledgment of satisfactory completion of the fix-up work which
Landlord has agreed in writing to perform, except as otherwise set forth
herein.
28. SUBORDINATION AND ATTORNMENT:
A. This Lease, and all rights of Tenant hereunder, are and
shall be subject and subordinate in all respects to all present and future
ground leases, overriding leases and underlying leases and/or grants of
term of the real property and/or the Building or the Building Complex now
or hereafter existing and to all deeds of trust, mortgages and building
loan agreements, including leasehold mortgages and building loan
agreements, which may now or hereafter affect the Building or the Building
Complex or any of such leases, whether or not such deeds of trust or
mortgages shall also cover other lands or buildings, to each and every
advance made or hereafter to be made under such deeds of trust or
mortgages, and to all renewals, modifications, replacements and extension
of such leases, deeds of trust and mortgages. The provisions of this
Paragraph shall be self-operative and no further instrument of
subordination shall be required. However, in confirmation of such
subordination, Tenant shall promptly execute and deliver to Landlord (or
such other party so designated by Landlord) at Tenant's own cost and
expense, within five (5) days after request from Landlord an instrument,
in recordable form if required, that Landlord, the lessor of any such
lease or the holder of any such deed of trust or mortgage or any of their
respective successors in interest or assigns may request evidencing such
subordination. Failure by Tenant to comply with the requirements of this
Paragraph shall be a default hereunder. Notwithstanding the foregoing, in
the event that Tenant does not execute such documents as may be required
to confirm the subordination set forth in this Paragraph, Tenant hereby
grants to Landlord a power of attorney coupled with an interest to act as
Tenant's attorney in fact for the purposes of executing whatever documents
are necessary to evidence such subordination. The leases to which this
Lease is, at the time referred to, subject and subordinate pursuant to
this paragraph are hereinafter sometimes called "superior leases" and the
deeds of trust or mortgages to which this Lease is, at the time referred
to, subject and subordinate are hereinafter sometimes called "superior
deeds of trust" or "superior mortgages". The lessor of a superior lease
or the beneficiary of a superior deed of trust or superior mortgage or
their successors in interest or assigns are hereinafter sometimes
collectively referred to as a "superior party". Notwithstanding the
foregoing, upon Tenant's request, Landlord agrees to request such superior
party grant to Tenant a non-disturbance agreement in the form then being
used by such superior party for such purposes, providing that Tenant,
notwithstanding a default by Landlord, shall be entitled to remain in
possession of the Premises in accordance with the terms of this Lease for
so long as Tenant shall not be in default of any term, condition or
covenant of this Lease. Further, Tenant shall attorn to such superior
party.
B. Tenant shall take no steps to terminate this Lease, without
giving written notice to such superior party, and a reasonable opportunity
to cure (without such superior party being obligated to cure), any default
on the part of Landlord under this Lease.
C. If, in connection with the procurement, continuation or
renewal of any financing for which the Building or the Building Complex or
of which the interest of the lessee therein under a superior lease
represents collateral in whole or in part, a lender shall request
reasonable modifications of this Lease as a condition of such financing,
Tenant will not unreasonably withhold its consent thereto provided that
such modifications do not increase the obligations of Tenant under this
Lease or adversely affect any rights of Tenant or decrease the obligations
of Landlord under this Lease.
29. PAYMENTS AFTER TERMINATION: No payments of money by Tenant to
Landlord after the termination of this Lease, in any manner, or after
giving of any notice (other than a demand for payment of money) by
Landlord to Tenant, shall reinstate, continue or extend the term of this
Lease or affect any notice given to Tenant prior to the payment of such
money, it being agreed that after the service of notice of the
commencement of a suit or other final judgment granting Landlord
possession of the Premises, Landlord may receive and collect any sums of
rent due, or any other sums of money due under the terms of this Lease or
otherwise exercise its rights and remedies hereunder. The payment of such
sums of money, whether as rent or otherwise, shall not waive said notice
or in any manner affect any pending suit or judgment theretofore obtained.
30. AUTHORITIES FOR ACTION AND NOTICE:
A. Except as otherwise provided herein, Landlord may, for any
matter pertaining to this Lease, act by and through its Building manager
or any other person designated in writing from time to time.
B. All notices or demands required or permitted to be given to
Landlord hereunder shall be in writing, and shall be served by hand
delivery or by deposit in the United States mail, with proper postage
prepaid, certified or registered, return receipt requested, addressed as
follows:
Investment Department
Provident Life and Accident Insurance Company
One Fountain Square
Chattanooga, TN 37402
All notices or demands required or permitted to be given to Tenant
hereunder shall be in writing and shall be served by hand delivery or by
deposit in the United States Mail, with proper postage prepaid, certified
or registered, return receipt requested, addressed to Tenant at the
Premises.
With a copy to:
EXECUTIVE TELECARD SA
1720 SOUTH BELLAIRE, # 1000
DENVER, CO
Either party shall have the right to designate in writing, served as
above provided, a different address to which notice is to be provided.
All notices or demands shall be deemed served on the day of delivery if
hand delivered, or three (3) days after deposit in the U.S. Mail, if sent
by registered or certified mail. The foregoing shall in no event prohibit
notice from being given as provided by the federal or state Rules of Civil
Procedure, as the same may be amended from time to time.
31. LIABILITY OF LANDLORD: Landlord's liability under this Lease
shall be limited to Landlord's estate and interest in the Building (or to
the proceeds thereof) and no other property or other assets of Landlord or
its partners (if Landlord is a partnership), agents, employees, legal
representatives, successors or assigns, shall be subject to levy,
execution or other enforcement procedure for the satisfaction of Tenant's
remedies under or with respect to this Lease, the relationship of Landlord
and Tenant hereunder or Tenant's use and occupancy of the Premises.
Nothing contained in this Paragraph shall be construed to permit Tenant to
offset against rents due a successor landlord, a judgment (or other
judicial process) requiring the payment of money by reason of any default
of a prior landlord, except as otherwise specifically set forth herein.
32. BROKERAGE: Tenant represents and warrants that it has dealt
only with MILE HIGH AND GRUBB & ELLIS (the "Broker") in the negotiation of
this Lease. Landlord shall make payment of the brokerage fee due to the
Broker pursuant to and in accordance with Landlord's separate agreement
with the Broker. Tenant hereby agrees to indemnify and hold the Landlord
harmless of and from any and all loss, costs, damages or expenses
(including, without limitation, all attorneys' fees and disbursements) by
reason of any claim of or liability to any other broker or person claiming
through Tenant and arising out of or in connection with the negotiation,
execution and delivery of this Lease. Additionally, Tenant acknowledges
and agrees that Landlord shall have no obligation for payment of any
brokerage fee or similar compensation to any person with whom Tenant has
dealt or may in the future deal with respect to leasing of any additional
or expansion space in the Building or renewals or extensions of this
Lease. In the event any claim shall be made against Landlord by any other
broker who shall claim to have negotiated this Lease on behalf of Tenant
or to have introduced Tenant to the Building or to Landlord, Tenant shall
be liable for payment of all reasonable attorneys' fees, costs and
expenses incurred by Landlord in defending against the same, and in the
event such broker shall be successful in any such action, Tenant shall, in
addition, make payment to such Broker.
33. TAXES:
A. Tenant shall be liable for and shall pay at least ten (10)
days before delinquency and Tenant hereby agrees to indemnify and hold
Landlord harmless from and against any liability in connection with, all
taxes levied against any personal property, fixtures, machinery,
equipment, apparatus, systems and appurtenances placed by or on behalf of
Tenant in or about or utilized by Tenant in, upon or in connection with
the Premises ("Equipment Taxes"). If any Equipment Taxes are levied
against Landlord or Landlord's property or if the assessed value of
Landlord's property is increased by the inclusion therein of a value
placed upon such personal property, fixtures, machinery, equipment,
apparatus, systems or appurtenances of Tenant, and if Landlord, after
written notice to Tenant pays the Equipment Taxes or taxes based upon such
an increased assessment (which Landlord shall have the right to do
regardless of the validity of such levy, but under proper protest if
requested by Tenant prior to such payment and if payment under protest is
permissible), Tenant shall pay to Landlord upon demand, as Additional Rent
hereunder, the taxes so levied against Landlord or the proportion of such
taxes resulting from such increase in the assessment; provided, however,
that in any such event, Tenant shall have the right, on behalf of Landlord
and with Landlord's full cooperation, but at no cost to Landlord, to bring
suit in any court of competent jurisdiction to recover the amount of any
such tax so paid under protest, and any amount so recovered shall belong
to Tenant (provided Tenant has previously paid such amount to Landlord).
Notwithstanding the foregoing to the contrary, Tenant shall cooperate with
Landlord to the extent reasonably necessary to cause the fixtures,
furnishings, equipment and other personal property to be assessed and
billed separately from the real property of which the Premises form a
part, and Landlord shall use reasonable efforts to treat all other Tenants
on the same basis.
B. Tenant shall pay to Landlord, as Additional Rent, any
excise, sales, privilege or other tax, assessment or other charge (other
than income or franchise taxes) imposed, assessed or levied by any
governmental or quasi-governmental authority or agency upon Landlord on
account of this Lease, the rent or other payments made by Tenant
hereunder, any other benefit received by Landlord hereunder, Landlord's
business as a lessor hereunder, or other in respect of or as a result of
the agreement or relationship of Landlord and Tenant hereunder.
34. INTENTIONALLY DELETED.
35. RIGHTS RESERVED TO LANDLORD:
A. All portions of the Building are reserved to Landlord
except the Premises and the inside surfaces of all walls, windows and
doors bounding in the Premises, but including exterior building walls,
core corridor walls and doors and any core corridor entrance. Landlord
also reserves any space in or adjacent to the Premises used for shafts,
stacks, pipes, conduits, fan rooms, ducts, electric or other utilities,
sinks or other building facilities, and the use thereof, as well as the
right to access thereto through the Premises for the purposes of
operation, maintenance and repair, upon written notice of not less than
twenty-four (24) hours, except in the event of emergencies or apparent
emergencies, when no prior notice shall be required.
B. Landlord shall have the following rights without liability
to Tenant for damage or injury to property, person or business (all claims
for damage being hereby waived and released), and without effecting an
eviction or disturbance of Tenant's use or possession of the Premises or
giving rise to any claim for setoffs or abatement of rent:
(1) To enter the Premises as more fully provided in this
Lease.
(2) To install and maintain signs on the exterior and
interior of the Building, except within the Premises, provided the signs
do not block either completely or partially the exterior windows of the
Premises.
(3) To have pass keys to the Premises.
(4) To decorate, remodel, repair, alter or otherwise
prepare the Premises for re-occupancy during the last six (6) months of
the term hereof if, during or prior to such time, Tenant has vacated the
Premises, or at any time after Tenant abandons the Premises.
(5) To have access to all mail chutes according to the
rules of the United States Postal Service.
(6) To do or permit to be done any work in or about the
exterior of the Building or any adjacent or nearby building, land, street
or alley.
(7) To grant to anyone the exclusive right to conduct any
business or render any service in the Building, provided such exclusive
right shall not operate to exclude Tenant from the use expressly permitted
by this Lease.
36. FORCE MAJEURE CLAUSE: Wherever there is provided in this Lease
a time limitation for performance by Landlord of any obligation, including
but not limited to obligations related to construction, repair,
maintenance or service, the time provided for shall be extended for as
long as and to the extent that delay in compliance with such limitation is
due to an act of God, governmental control or other factors beyond the
reasonable control of Landlord.
37. SIGNAGE:
A. No sign, advertisement or notice shall be inscribed,
painted or affixed on any part of the inside or outside of the Building
unless of such color, size and style and in such place upon or in the
Building as shall be first designated by Landlord, but there shall be no
obligation or duty on Landlord to allow any sign, advertisement or notice
to be inscribed, painted or affixed on any part of the inside or outside
of the Building. A directory in a conspicuous place, with the names of
Tenant, not to exceed FOUR name, shall be provided by Landlord on a one
time basis. Any necessary revision to such directory and/or suite
identification sign shall be made by Landlord, at Tenant's expense, within
a reasonable time after written notice from Tenant of the change making
the revision necessary should Tenant become a full floor Tenant and if
Landlord chooses to construct a monument sign, Tenant will have the right
to use the sign at Landlord's discretion. Landlord shall have the right
to remove all non-permitted signs without notice to Tenant and at the
expense of Tenant.
B. Tenant shall only be permitted to install building standard
signs and logos, subject to Landlord's prior written consent and criteria
as to size, design, materials and location.
38. ATTORNEYS' FEES: In the event of any dispute hereunder, or any
default in the performance of any term or condition of this Lease, the
prevailing party shall be entitled to recover all costs and expenses
associated therewith, including reasonable attorneys' fees.
39. HAZARDOUS MATERIALS:
A. Tenant shall (i) not cause or permit any Hazardous Material
to be brought upon, kept, or used in or about the Premises by Tenant, its
agents, employees, contractors, licensees or invitees, without the prior
written consent of Landlord (which Landlord shall not unreasonably
withhold as long as Tenant demonstrates to Landlord's reasonable
satisfaction that such Hazardous Material is necessary or useful to
Tenant's business and will be used, kept and stored in a manner that
complies with all laws regulating any such Hazardous Material so brought
upon or used or kept in or about the Premises). If Tenant breaches the
obligations stated in the preceding sentence, or if the presence of
Hazardous Material on the Premises caused or permitted by Tenant results
in contamination of the Premises or Building Complex, or any part thereof,
or if contamination of the Premises or Building Complex by Hazardous
Material otherwise occurs for which Tenant is legally liable to Landlord
for damages resulting therefrom, then Tenant shall indemnify, defend and
hold Landlord, its agents, employees, legal representatives, successors
and assigns, harmless from any and all claims, judgments, damages,
penalties, fines, costs, liabilities, or losses (including, without
limitation, diminution in value of the Premises and Building Complex,
damages for the loss or restriction on use of any rentable or usable space
or of any amenity of the Premises or Building Complex, damages arising
from any adverse impact on marketing of space in the Building, and sums
paid in settlement of claims, attorneys' fees, consultant fees and expert
fees) which arise during or after the Lease term as a result of such
contamination. This indemnification of Landlord by Tenant includes,
without limitation, costs incurred in connection with any investigation of
site conditions or any cleanup, remedial, removal or restoration work
required by any federal, state, or local governmental agency or political
subdivision because of Hazardous Material present in or about the Building
Complex or the soil or ground water on or under the Building Complex.
Without limiting the foregoing, if the presence of any Hazardous Material
on or about the Building Complex caused or permitted by Tenant results in
any contamination of any portion thereof, Tenant shall promptly take all
actions at its sole expense as are necessary to return the Building
Complex to the condition existing prior to the introduction of any such
Hazardous Material, subject to obtaining Landlord's prior written consent
to the actions to be taken by Tenant. Landlord may properly require its
consent to the selection of the contractors and other experts involved in
the inspection, testing and removal or abatement activities, the scope of
activities to be performed, the manner and method for performance of such
activities, and such other matters as may be required or requested by
Landlord for the safety of and continued use of the Building Complex and
all occupants thereof. The obligations and liabilities of Tenant herein
shall survive expiration or termination of this Lease.
B. "Hazardous Material", as used in this Lease, shall be
construed in its broadest sense and shall include asbestos, other
asbestotic material (which is currently or may be designated in the future
as a Hazardous Material), any petroleum base products, pesticides, paints
and solvents, polychlorinated biphenyl, lead, cyanide, DDT, acids,
ammonium compounds and other chemical products (excluding commercially
used cleaning materials in ordinary quantities) and any substance or
material if defined or designated as a hazardous or toxic substance, or
other similar term, by any federal, state or local law, statute,
regulation, or ordinance affecting the Building Complex or Premises
presently in effect or that may be promulgated in the future, as such
statutes, regulations and ordinances may be amended from time to time.
40. BANKRUPTCY OR INSOLVENCY. If the Tenant becomes a debtor under
Chapter 7 of the United States Bankruptcy Code, or in the event that a
petition for reorganization or adjustment of debts is filed concerning the
Tenant under Chapter 11 or Chapter 13 of the Bankruptcy Code, or a
proceeding filed under Chapter 7 is transferred to Chapter 11 or 13, the
Trustee or the Tenant, as Debtor-in-Possession, shall be deemed to have
rejected this Lease. No election by the Trustee or Debtor-in-Possession
to assume this Lease shall be effective unless each of the following
conditions, which Landlord and Tenant hereby acknowledge to be
commercially reasonable in the context of a bankruptcy proceeding, has
been satisfied, and the Landlord has so acknowledged in writing:
A. The Trustee or Debtor-in-Possession has cured, or has
provided the Landlord "adequate assurance" (as hereinafter defined) that
from the date of such assumption, the Trustee or Debtor-in-Possession will
promptly cure all monetary and non-monetary defaults under this Lease.
B. The Trustee or Debtor-in-Possession has compensated, or has
provided to the Landlord adequate assurance that within ten (10) days of
the date of assumption, the Landlord will be compensated, for any
pecuniary loss incurred by the Landlord arising from default of the
Tenant, the Trustee or the Debtor-in-Possession as recited in the
Landlord's written statement of pecuniary loss sent to the Trustee or
Debtor-in-Possession.
C. The Trustee or Debtor-in-Possession has provided the
Landlord with adequate assurance of future performance of each of the
Tenant's, the Trustee's, or Debtor-in-Possession's obligations under this
Lease; provided, however, that:
(1) The Trustee or Debtor-in-Possession shall also deposit
with the Landlord, as security for the timely payment of rent and other
sums due hereunder, an amount equal to three months Base Rent, Additional
Rent and other monetary charges accruing under this Lease; and
(2) The obligations imposed upon the Trustee or Debtor-in-
Possession shall continue with respect to the Tenant or any assignee of
this Lease after the completion of the bankruptcy proceedings.
D. For purposes of this Paragraph, Landlord and Tenant
acknowledge that, in the context of the bankruptcy proceeding of the
Tenant, at a minimum, "adequate assurance" shall mean:
(1) The Trustee or Debtor-in-Possession will continue to
have sufficient unencumbered assets after the payment of all secured
obligations and administrative expenses to assure the Landlord that the
Trustee or Debtor-in-Possession will have sufficient funds to fulfill all
of the obligations of Tenant under this Lease; or
(2) The Bankruptcy Court shall have entered an order
segregating sufficient cash payable to the Landlord, and the Trustee or
Debtor-in-Possession shall have granted to the Landlord a valid and
perfected first lien and security interest or mortgage in property of the
Tenant, the Trustee or Debtor-in-Possession, acceptable as to value and
kind to the Landlord, in order to secure to the Landlord the obligation of
the Tenant, Trustee or Debtor-in-Possession to cure the monetary or non-
monetary defaults under the Lease within the time period set forth above.
E. The following conditions shall apply to any assignment of
this Lease in Bankruptcy Proceedings:
(1) If the Trustee or Debtor-in-Possession has assumed
this Lease and elects to assign the Lease to any other person, such
interest or estate of Tenant in this Lease may be so assigned only if the
Landlord has acknowledged in writing that the intended assignee can
provide to the Landlord "adequate assurance of future performance" (as
hereinafter defined) of all of the terms, covenants and conditions of this
Lease to be performed by the Tenant.
(2) For the purposes of this provision, Landlord and
Tenant acknowledge that, in the context of a bankruptcy proceeding, at a
minimum, "adequate assurance of future performance" shall mean that each
of the following conditions has been satisfied, and the Landlord has so
acknowledged in writing:
(a) The proposed assignee has submitted a
current financial statement audited by a Certified Public Accountant which
shows the net worth and working capital and amounts determined by Landlord
to be sufficient to assure the future performance by such assignee of all
of Tenant's obligations under this Lease;
(b) The proposed assignee, if requested by the
Landlord, shall have obtained guarantees in form and substance
satisfactory to the Landlord from one or more persons who satisfy the
Landlord's standards of creditworthiness;
(c) The Landlord has obtained all consents or
waivers from any third party required under any lease, mortgage, financing
arrangement, or other agreement by which the Landlord is bound, in order
to permit the Landlord to consent to such assignment.
41. MISCELLANEOUS:
A. The rules and regulations attached hereto as EXHIBIT F, as
well as such rules and regulations as may hereafter be adopted by Landlord
for the safety, care and cleanliness of the Premises and the Building and
the preservation of good order thereon, are hereby expressly made a part
hereof, and Tenant agrees to obey all such rules and regulations. The
violation of any of such rules and regulations by Tenant shall be deemed a
breach of this Lease by Tenant affording Landlord all the remedies set
forth herein. Landlord shall not be responsible to Tenant for the
nonperformance by any other tenant or occupant of the Building of any of
said rules and regulations.
B. The term "Landlord" as used in this Lease, so far as
covenants or obligations on the part of Landlord are concerned, shall be
limited to mean and include only the owner or owners of the Building at
the time in question, and in the event of any transfer or transfers of the
title thereto, Landlord herein named (and in the case of any subsequent
transfers or conveyances, the then grantor) shall be automatically
released from and after the date of such transfer or conveyance of all
liability in respect to the performance of any covenants or obligations on
the part of Landlord contained in this Lease thereafter to be performed
and relating to events occurring thereafter; provided that any funds in
the hands of Landlord or the then grantor at the time of such transfer in
which Tenant has an interest shall be turned over to the grantee, and any
amount then due and payable to Tenant by Landlord or the then grantor
under any provisions of this Lease shall be paid to Tenant.
C. As used in this Lease, the term "ordinary business hours"
shall mean the hours from 7:00 a.m. to 6:00 p.m., Monday through Friday,
and 8:00 a.m. to 1:00 p.m. on Saturday, except for New Year's Day,
Presidents' Day, Memorial Day, Independence Day, Labor Day, Thanksgiving
Day, Christmas Day, and any other national or state holiday as may be
established from time to time ("Holidays").
D. This Lease shall be construed as though the covenants
herein between Landlord and Tenant are independent and not dependent and
Tenant shall not be entitled to any setoff of the rent or other amounts
owing hereunder against Landlord, if Landlord fails to perform its
obligations set forth herein, except as herein specifically set forth;
provided, however, the foregoing shall in no way impair the right of
Tenant to commence a separate action against Landlord for any violation by
Landlord of the provisions hereof so long as notice is first given to
Landlord and any holder of a mortgage or deed of trust covering the
Building Complex or any portion thereof whose address Tenant has been
notified in writing and so long as an opportunity has been granted to
Landlord and such holder to correct such violation as provided in
Paragraph 41(h) hereof.
E. If any clause or provision of this Lease is illegal,
invalid or unenforceable under present or future laws effective during the
term of this Lease, then and in that event, it is the intention of the
parties hereto that the remainder of this Lease shall not be affected
thereby, and it is also the intention of the parties to this Lease that in
lieu of each clause or provision of this Lease that is illegal, invalid or
unenforceable, there shall be added as a part of this Lease a clause or
provision as similar in terms to such illegal, invalid or unenforceable
clause or provision as may be possible and be legal, valid and
enforceable, provided such addition does not increase or decrease the
obligations of or derogate from the rights or powers of either Landlord or
Tenant.
F. The captions of each paragraph are added as a matter of
convenience only and shall be considered of no effect in the construction
of any provision or provisions of this Lease.
G. Except as herein specifically set forth, all terms,
conditions and covenants to be observed and performed by the parties
hereto shall be applicable to and binding upon their respective heirs,
administrators, executors, successors and assigns. The terms, conditions
and covenants hereof shall also be considered to be covenants running with
the land.
H. Except as otherwise specifically provided herein, in the
event Landlord shall fail to perform any of the agreements, terms,
covenants or conditions hereof on Landlord's part to be performed, and
such nonperformance shall continue for a period of thirty (30) days after
written notice thereof, from Tenant to Landlord, or if such performance
cannot be reasonably had within such thirty (30) day period, and Landlord
shall not in good faith have commenced such performance within such thirty
(30) day period and proceed therewith to completion, it shall be
considered a default of Landlord under this Lease. Tenant shall give
written notice to Landlord in the matter herein set forth and shall afford
Landlord a reasonable opportunity to cure any such default. In addition,
Tenant shall send notice of such default by certified or registered mail,
with proper postage prepaid, to the holder of any mortgages or deeds of
trust covering the Building Complex or any portion thereof of whose
address Tenant has been notified in writing and shall afford such holder a
reasonable opportunity to cure any alleged default on Landlord's behalf.
I. If there is more than one entity or person which or who are
the Tenants under this Lease, the obligations imposed upon Tenant under
this Lease shall be joint and several.
J. No act or thing done by Landlord or Landlord's agent during
the term hereof, including but not limited to any agreement to accept
surrender of the Premises or to amend or modify this Lease, shall be
deemed to be binding upon Landlord unless such act or things shall be by
an officer of Landlord or a party designated in writing by Landlord as so
authorized to act. The delivery of keys to Landlord, or Landlord's agent,
employees or officers shall not operate as a termination of this Lease or
a surrender of the Premises. No payment by Tenant or receipt by Landlord
of a lesser amount than the monthly rent herein stipulated shall be deemed
to be other than on account of the earliest stipulated rent, nor shall any
endorsement or statement on any check or any letter accompanying any check
or payment as rent be deemed an accord and satisfaction and Landlord may
accept such check or payment without prejudice to Landlord's right to
recover the balance of such rent or pursue any other remedy available to
Landlord.
K. Landlord shall have the right to construct other buildings
or improvements in any common area, or any other area designated by
Landlord for use by tenants or to change the location, character or make
alterations of or additions to any of said common areas or other areas.
Landlord, during the entire term of this Lease, shall have the right to
change the number and name of the Building at any time without liability
to Tenant.
L. Tenant acknowledges and agrees that it has not relied upon
any statements, representations, agreements or warranties, except such as
are expressed in this Lease.
M. Notwithstanding anything to the contrary contained herein,
Landlord's liability under this Lease shall be limited to its interests in
this building.
N. Time is of the essence hereof.
O. Tenant and Landlord and the party executing this Lease on
behalf of each of them represent to each other that such party is
authorized to do so by requisite action of the board of directors or
partners, as the case may be, and agree upon request to deliver to each
other a resolution or similar document to that effect.
P. This Lease shall be governed by and construed in accordance
with the laws of the State where the Premises are located.
Q. This Lease, together with the exhibits attached hereto,
contains the entire agreement of the parties and may not be amended or
modified in any manner except by an instrument in writing signed by both
parties. Tenant shall not record this Lease or a memorandum hereof.
R. Tenant shall not use the name of the Building, the Building
Complex or the development in which the Building is situated as part of
its legal or trade name, nor for any purpose other than as an address for
the business to be conducted by Tenant in the Premises.
S. In the event Landlord makes available to Tenant and its
employees any area of the Building Complex for use as an athletic/health
facility, Tenant agrees, on behalf of itself and its employees, that
Landlord shall have no liability for any damages or injuries incurred by
any person as a result of the use of such facility.
T. The submission or delivery of this document for examination
and review does not constitute an option, an offer to lease space in the
Building or an agreement to lease. This document shall have no binding
effect on the parties unless and until executed by both Landlord and
Tenant.
U. Tenant acknowledges that the presence in and use of the
Tower Colorado Fitness Center can constitute a dangerous activity and may
expose the user to considerable risk of personal injury or death. Tenant
agrees to indemnify and hold harmless Landlord, its agents, employees,
contractors, legal representatives, successors and assigns from all
liability and all claims of liability for any injury to or death of
Tenant, its employees and any authorized and/or unauthorized guests or
invitees, resulting from the use of the Tower Colorado Fitness Center.
Tenant further agrees that it and any of its employees shall execute, if
requested by Landlord, a release of liability agreement before access to
the Tower Colorado Fitness Center is allowed. Landlord may deny access to
Tenant or any individual who refuses to execute said agreement.
42. LABORATORY SAMPLES: Tenant hereby acknowledges and agrees that,
in the event Tenant requires any off-Premises testing of blood or tissue
samples ("Samples") which Samples are picked up by a testing laboratory or
other courier service, such Samples shall be picked up from inside the
Tenant's Premises and shall not be left in any common area of the Building
for pick-up. The Samples shall be disseminated only to those persons who
are authorized by Tenant to remove Tenant's Samples from the Premises.
Landlord shall in no manner be responsible for Samples, Furthermore,
Tenant hereby agrees to indemnify and hold Landlord harmless from and
against any loss, claim, damage, cost or expense including, without
limitation, attorneys' fees, which Landlord may incur as the result of the
existence of the Samples.
43. MEDICAL WASTE:
A. Tenant shall be responsible for the same and complete
disposal of all items, instruments or things which are utilized by Tenant,
its agents or employees, in the treatment of patients or other individuals
treated upon the Premises, including but not limited to: needles,
syringes, bandages, medical instruments, tissues, containers, receptacles,
swabs, etc., as well as any and all potentially, possible or actually
contaminated, hazardous, diseased, infected or infectious material,
substance or thing utilized or brought upon the Premises by Tenant or
others. All such disposal shall comply fully with all applicable laws and
regulations.
B. Tenant hereby indemnifies Landlord, its agents and
employees, from any judgment, loss or claim, including attorneys' fees
incurred in defending against any such loss or claim entered against,
incurred or sustained by any or either of them as the result of any injury
to any individual or entity occasioned by contact with or exposure to any
infectious, infected, hazardous or contaminated material, substance or
thing utilized, applied, removed or received by Tenant, its agents or
employees.
44. RIGHT OF FIRST OPTION:
A. Provided that Tenant is not then in default under the Lease
and has not previously defaulted in the payment of any amounts due under
the Lease (subject to applicable grace periods, if any and subject to any
previous or existing rights of other tenants in the building which exist
as of the date hereof). Tenant shall have the right (the "Option to
Expand") to lease all or a portion of the remaining additional space on
the tenth floor of the building which is adjacent to the Premises (the
"Option Space") as the same may become available during the initial term
of the Lease, on the terms and conditions set forth herein.
B. Prior to execution of a lease on the First Option Premises,
Landlord agrees to notify Tenant in writing of said bona fide third party
offer, which notification shall contain the terms and conditions of the
written offer.
C. Tenant shall have two (2) business days from receipt of
said written offer to exercise this Right of First Option. In the event
that Tenant does elect to exercise this Right of First Option, Tenant
shall, within three (3) business days from receipt of said written offer
to exercise thereof, enter into a lease agreement for said premises with
Landlord on the same terms and conditions as said bona fide third party
offer or the terms and conditions outlined herein, whichever is higher.
Notwithstanding anything herein the Tenant Improvements will be prorated
based on the time remaining on this Lease.
D. The Option is personal to Tenant and is not transferable to
any assignee, sublessee or other successor in interest.
45. OPTION TO RENEW: Provided that Tenant is not in default under
the Terms of this Lease, or if Tenant cures any such default within the
time period provided elsewhere herein, Tenant shall have a one-time right
to renew ("Option to Renew") this Lease for one (1) additional term(s) of
five (5) year(s), subject to the following terms and conditions:
A. The Base Rent for renewal term shall be the then prevailing
market lease rate for comparable office space at the time of renewal, but
in no event shall the base rent for the renewal term be less than the Base
Rent for the Primary Lease Term.
B. Notice of Tenant's intent to renew the Lease shall be given
to Landlord at least one hundred eighty (180) days prior to the expiration
date of the Primary Lease Term.
C. Tenant's leasing of the Premises during the Renewal Term
shall be subject to the same terms, covenants and conditions set forth in
the Lease with the exception or any provision granting Tenant a tenant
finish allowance, or similar monetary inducement or concession, and with
the exception of base rent.
D. Failure of Tenant to exercise the Option to Renew in the
time and manner set forth herein shall result in automatic termination of
the same.
E. The Option to Renew may not be exercised by any subtenant
and may only be exercised by an assignee if simultaneously exercised by
the assignee and the Tenant.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease the
day and year first above written.
LANDLORD:
Provident Life and Accident Insurance Company,
a Tennessee Corporation
BY: AMRESCO Management, Inc., Servicer
By: /s/
Title: Authorized Signatory
TENANT:
EXECUTIVE TELECARD, S.A.
a Corporation
By:
Title:
STATE OF COLORADO )
) ss
COUNTY OF )
The foregoing instrument was acknowledged before me this day of
, 19 , by as Authorized Signatory
of PROVIDENT LIFE AND ACCIDENT INSURANCE COMPANY, a Tennessee corporation.
Witness my hand and official seal.
My Commission Expires:
Notary Public
STATE OF COLORADO )
) ss
COUNTY OF DENVER )
The foregoing instrument was acknowledged before me this 15th day of
December, 1995, by as of
.
Witness my hand and official seal.
My Commission Expires: 12-16-99
/s/ Shirley M. Young
Notary Public
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE is made and entered into this 19th day
of April, 1996, by and between Provident Life and Accident Insurance
Company, a Tennessee Corporation, as successor in interest to Provident
National Assurance Company, ("Landlord"), and Executive TeleCard, SA
("Tenant").
RECITALS
A. Landlord and Tenant entered in that certain office lease, dated
December 15, 1995 (hereinafter "Lease"), pursuant to which Tenant leased
Suite 1000, consisting of approximately 8,095 square feet of rentable area
(hereinafter "Premises"), of the office building known as Tower Colorado,
located at 1720 S. Bellaire St., Denver, Colorado (hereinafter
"Building").
B. Tenant has requested and Landlord has agreed to lease to Tenant
an additional 2,433 square feet ("Expansion Premises") which space has
been designated on Exhibit "A" of the First Amendment to Lease.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Landlord and Tenant amend the Lease as
follows:
1. PREMISES. Landlord and Tenant agree the Rentable Area Leased is
8,095, the Expansion Premises rentable leased area is 2,433 square feet
for a total of 10,528 square feet as designated on Exhibit "A" of the
First Amendment to Lease.
2. TERM. Landlord and Tenant desire to lease the Expansion
Premises conterminously with the existing premises.
3. RENTAL. Tenant agrees to pay Landlord for use and occupancy of
the Premises and Expansion Premises, without notice or demand in advance
on the first day of each calendar month during the Lease Extension. The
base rental shall be as follows:
MONTHS ANNUAL RENT MONTHLY RENT
1-12 $142,128.00 $11,844.00
13-24 $147,392.05 $12,282.67
25-36 $152,656.03 $12,721.34
37-48 $157,920.00 $13,160.00
49-60 $163,183.97 $13,598.66
5. PARKING. Tenant shall be entitled to an additional six (6)
parking spaces in the parking garage at no charge for the initial term.
6. TENANT FINISH. Landlord shall, at Landlords sole cost and
expense (which expense shall not exceed $19,464.00) alter and construct
the expansion space on the 10th floor using Landlords standard building
materials, herein defined as the quantity, style and quality of material
finishes and workmanship from time to time specified by Landlord for Tower
Colorado, including architectural and construction drawings. If the
tenant finish costs exceed the $19,464.00 allowance, all additional costs
will be the sole cost and expense of the tenant and such cost will be due
and payable within sixty (60) days of a written invoice from Landlord.
7. TENANT'S PROPORTIONATE SHARE. Tenant's Proportionate Share
shall be changed to 8.196%.
8. BROKERAGE. Tenant warrants that it had no dealings with any
broker, agent or any other person in connection with the negotiation or
execution of this Amendment other than Mile High Property Services, Inc.,
and other agents, and employees of other agents, purported to represent
the Landlord.
Tenant agrees to indemnify and hold harmless Landlord from and
against any and all cost, expense, or liability for commissions or other
compensation and charges claimed by any broker or agent with respect to
this Lease on account of Tenant's acts. Landlord agrees to indemnify and
hold harmless Tenant from and against any and all cost, expense, or
liability for commissions or other compensation and charges claimed by any
broker or agent with respect to this Lease on account of Landlord's acts.
In the event this Amendment to Lease conflicts with, varies from or
modifies the terms and provisions of the Lease, then, in such event, the
terms and provisions hereof shall control and govern the rights and
obligations of Landlord and Tenant. In all other respects, the terms of
the Lease and First Amendment to Lease are republished and reaffirmed
hereby and shall remain binding on the parties, their representative and
assigns, except as specifically modified in this Agreement.
IN WITNESS WHEREOF, the parties have executed this First Amendment to
Lease this 24th day of April, 1996.
LANDLORD: PROVIDENT LIFE AND ACCIDENT INSURANCE
COMPANY
BY: AMRESCO Management, Inc., Servicer
By: /s/
Title: Vice President
TENANT: EXECUTIVE TELECARD, SA
By: /s/
Title: Executive Vice President
PROMISSORY NOTE
$1,000,000 February 28, 1996
EXECUTIVE TELECARD, LTD., a Delaware corporation (hereinafter
called "Maker"), for value received, promises to pay to the order of World
Wide Export, Ltd., an Israeli corporation with principle offices at 28
Hamesgar Street, Tel Aviv, Israel (hereinafter called "Payee"), in lawful
money of the United States of America, the principal amount of one million
dollars ($1,000,000.00).
Principal and interest shall be payable as follows:
All accrued interest shall be payable in monthly installments,
the first payment commencing on March 28, 1996 and continuing on the 28th
day of each month thereafter through September 28, 1997 at which time the
unpaid principal amount and all accrued but unpaid interest shall be due
and payable in full.
The unpaid principal amount outstanding under this Note shall
bear interest from the date hereof until paid in full at a rate of twelve
percent (12%) per annum.
MAKER SHALL make all payments due hereunder to the following
address:
World Wide Export Ltd.
c/o Merrill, Lynch, Pierce, Fenner and Smith
115 West Century Road
Paramus, New Jersey 07962
Attention: James Mulcahy
MAKER SHALL be entitled to prepay the principal or interest of
this Note from time to time and at any time, in whole or in part, without
premium or penalty. Provided, however, that if the principal of this Note
is prepaid in whole or in part, at any time after the date hereof, all
accrued and unpaid interest with respect to such principal amount prepaid
if due and payable on the date of such prepayment.
ALL PAST due principal and interest shall bear interest until
paid at the highest rate allowed by applicable law.
IF ANY payment on this Note becomes due and payable on a
Saturday or Sunday, the maturity thereof shall be extended to the next
succeeding business day and interest thereon shall be payable at the then
applicable rate during such extension. Interest shall be calculated on
the basis of the actual number of days (including the first day but
excluding the last) elapsed over a year of 360 days.
MAKER WARRANTS and represents to Payee that Maker is a
corporation existing and in good standing under the laws of the State of
Delaware, that the borrowing evidenced hereby, the execution and delivery
of this Note and the performance by Maker of its obligations under this
Note or under any security or other agreement relating to the payment of
this Note are within Maker's corporate powers, have been authorized by all
necessary corporate action, have received all necessary governmental
approval, if any is required, and do not and will not contravene or
conflict with any provision of law or of the charter or by-laws of Maker
or of any agreement to which Maker is a party or is bound thereby.
IF DEFAULT, is made in the payment of any installment of
interest or principal, as and when the same is or becomes due and such
default continues for five business days following delivery to Maker of
written notice of default by Payee, the owner and holder of this Note may,
without notice or demand, declare all sums owing hereon at once due and
payable. If default is made in the payment of this Note at maturity
(regardless of how maturity may be brought about), and the same is placed
in the hands of an attorney for collection, or suit is filed hereon, or
proceedings are had in bankruptcy, receivership or other judicial
proceedings for the establishment or collection of any amount called for
hereunder, or any amount payable or to be payable hereunder is collected
through any such proceedings, Maker agrees to pay the owner and holder of
this note all reasonable attorney's and collection fees incurred and
actually expended by such owner and holder for such purposes.
MAKER, expressly waives demand and presentment for payment,
notice of nonpayment, protest, notice of protest, notice of dishonor,
bringing of suit and diligence in taking any action to collect amounts
called for hereunder.
NO DELAY on the part of the holder of this Note in the exercise
of any power or right under this Note, or under any other instrument
executed pursuant hereto, shall operate as a waiver thereof, nor shall a
single or partial exercise of any power or right preclude other or further
exercise thereof or the exercise of any other power or right.
IT IS the intention of Maker and Payee to conform strictly to
applicable usury laws. Accordingly, if the transactions contemplated
hereby would be usurious under applicable law (including without
limitation, the laws of the State of Delaware and the laws of the United
States), then in that event, notwithstanding anything to the contrary in
any agreement entered into in connection with or as security for this
Note, it is agreed as follows: (i) the aggregate of all consideration
which constitutes interest under applicable law that is taken, reserved,
contracted for, charged or received under this Note or under any of the
other aforesaid agreements or otherwise in connection with this Note shall
under no circumstances exceed the maximum amount of interest allowed by
applicable law, (or, if this Note shall have been paid in full, refunded
to the Maker); and (ii) in the event that maturity of this Note is
accelerated by reason of an election by the holder hereof resulting from
any default hereunder or otherwise, or in the event of any required or
permitted prepayment, then such consideration that constitutes interest
may never include more than the maximum amount allowed by applicable law,
and excess interest, if any, provided for in this Note or otherwise shall
be canceled automatically as of the date of such acceleration or
prepayment and, if theretofore prepaid, shall be credited on this Note (or
if this Note shall have been paid in full, refunded to the Maker).
At such time as three (3) or more of the members of the Maker's
Board of Directors serving as of the date first above written shall cease
to be members of the Maker's Board of Directors, the Maker shall promptly
give notice of such change to the Payee, and the Payee may require the
Maker to repay the principal amount of $1,000,000 together with any
interest thereon (but without any premium or penalty) immediately upon
receipt of such request from the Payee.
THIS NOTE has been executed and delivered in and shall be
construed in accordance with and governed by the laws of the State of New
York and shall be performable in the State of New Jersey.
MAKER
EXECUTIVE TELECARD, LTD.
/s/Allen Mandel
By: Allen Mandel
Its: Executive Vice President
<PAGE>
STOCK OPTION AGREEMENT
THIS AGREEMENT is made February 28, 1996, by and between
Executive Telecard, Ltd., a Delaware corporation (the "Corporation") and
World Wide Export, Ltd. ("World Wide").
1. Grant of Option. The Corporation hereby grants to World
Wide the right, privilege and option to purchase eighty-two thousand five
hundred (82,500) shares of its restricted common stock at the purchase
price of Six Dollars ($6.00) per share, in the manner and subject to the
conditions hereinafter provided.
2. Time of Exercise of Option. The aforesaid option may be
exercised at any time, and from time to time, in whole or in part, until
the termination thereof as provided in paragraph 4 below.
3. Method of Exercise. The option shall be exercised by
written notice directed to the Corporation at the Corporation's principal
place of business at 8 Avenue C, Nanuet, New York 10954, accompanied by a
check in payment of the option price for the number of shares specified
and paid for. The Corporation shall make immediate delivery of such
shares, provided that if any law or regulation requires the Corporation to
take any action with respect to the shares specified in such notice before
the issuance thereof, then the date of delivery of such shares shall be
extended for the period necessary to take action.
4. Termination of Option. The option, to the extent not
heretofore exercised, shall terminate on the third (3rd) anniversary of
the date of this Agreement.
5. Reclassification, Consolidation or Merger. If and to the
extent that the number of issued shares of the common stock of the
Corporation shall be increased or reduced by change in par value, split
up, reclassification, distribution of a dividend payable in stock, or the
like, the number of shares subject to option and the option price per
share shall be proportionately adjusted. If the Corporation is
reorganized or consolidated or merged with another corporation, World Wide
shall be entitled to receive options covering shares of such reorganized,
consolidated or merged company in the same proportion, at an equivalent
price, and subject to the same conditions. For the purposes of the
preceding sentence, the excess of the aggregate fair market value of the
shares subject to the option immediately after the reorganization,
consolidation or merger over the aggregate option price of such shares
shall not be more than the excess of the aggregate fair market value of
all shares subject to the option immediately before such reorganization,
consolidation or merger over the aggregate option price of such shares,
and the new option or assumption of the old option shall not give World
Wide additional benefits which he did not have under the old option, or
deprive him of benefits which he had under the old option.
6. Rights Prior to Exercise of Option. This option is non-
transferable by World Wide, except in the event of his death, and during
his lifetime is exercisable only by him. World Wide shall have no rights
as a stockholder with respect to the option shares until payment of the
option price and delivery to him of such shares as herein provided.
7. Investment Intent. World Wide represents that all common
shares of the Corporation purchased by him pursuant to the exercise of all
or any portion of the option will be acquired for investment purposes and
not with a view to distribution, and that he will not sell or otherwise
dispose of any such common shares in any manner which is contrary to the
laws, regulations and rules enforced or promulgated by the Securities and
Exchange Commission.
8. Notices. All Notices and other communication hereunder
shall be in writing and shall be deemed to have been duly given if
delivered or mailed first class, postage prepaid:
a) If to the Corporation, at 8 Avenue C, Nanuet, New York
10954; and
b) If to World Wide, at 28 Hamesgar Street, Tel Aviv,
Israel.
9. Governing Law. This Agreement shall be deemed to be made
under and shall be construed in accordance with the laws of the State of
New York.
10. Binding Effect. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective heirs,
executors, administrators, successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on the day and year first above written.
WORLD WIDE EXPORT, LTD. EXECUTIVE TELECARD, LTD.
/s/Allen Mandel
By: By: Allen Mandel
Its: Its: Executive Vice President
PROMISSORY NOTE
$500,000 February 28, 1996
EXECUTIVE TELECARD, LTD., a Delaware corporation (hereinafter
called "Maker"), for value received, promises to pay to the order of
Seymour Gordon, (hereinafter called "Payee"), in lawful money of the
United States of America, the principal amount of five hundred thousand
dollars ($500,000).
Principal and interest shall be payable as follows:
All accrued interest shall be payable in monthly installments,
the first payment commencing on March 28, 1996 and continuing on the 28th
day of each month thereafter through August 28, 1997, at which time the
unpaid principal amount and all accrued but unpaid interest shall be due
and payable in full.
The unpaid principal amount outstanding under this Note shall
bear interest from the date hereof until paid in full at a rate of twelve
percent (12%) per annum.
MAKER SHALL make all payments due hereunder to the following
address:
Mr. Seymour Gordon
3 Hawthorne Lane
Lawrence, New York 11559
MAKER SHALL be entitled to prepay the principal or interest of
this Note from time to time and at any time, in whole or in part, without
premium or penalty.
ALL PAST due principal and interest shall bear interest until
paid at the highest rate allowed by applicable law.
If ANY payment on this Note becomes due and payable on a
Saturday or Sunday, the maturity thereof shall be extended to the next
succeeding business day and interest thereon shall be payable at the then
applicable rate during such extension. Interest shall be calculated on
the basis of the actual number of days (including the first day but
excluding the last) elapsed over a year of 360 days.
MAKER WARRANTS and represents to Payee that Maker is a
corporation existing and in good standing under the laws of the State of
Delaware, that the borrowing evidenced hereby, the execution and delivery
of this Note and the performance by Maker of its obligations under this
Note or under any security or other agreement relating to the payment of
this Note are within Maker's corporate powers, have been authorized by all
necessary corporate action, have received all necessary governmental
approval, if any is required, and do not and will not contravene or
conflict with any provision of law or of the charter or by-laws of Maker
or of any agreement to which Maker is a party or is bound thereby.
IF DEFAULT, is made in the payment of any installment of
interest or principal, as and when the same is or becomes due and such
default continues for five business days following delivery to Maker of
written notice of default by Payee, the owner and holder of this Note may,
without notice or demand, declare all sums owing hereon at once due and
payable. If default is made in the payment of this Note at maturity
(regardless of how maturity may be brought about), and the same is placed
in the hands of an attorney for collection, or suit is filed hereon, or
proceedings are had in bankruptcy, receivership or other judicial
proceedings for the establishment or collection of any amount called for
hereunder, or any amount payable or to be payable hereunder is collected
through any such proceedings, Maker agrees to pay the owner and holder of
this note all reasonable attorney's and collection fees incurred and
actually expended by such owner and holder for such purposes.
MAKER, expressly waives demand and presentment for payment,
notice of nonpayment, protest, notice of protest, notice of dishonor,
bringing of suit and diligence in taking any action to collect amounts
called for hereunder.
NO DELAY on the part of the holder of this Note in the exercise
of any power or right under this Note, or under any other instrument
executed pursuant hereto, shall operate as a waiver thereof, nor shall a
single or partial exercise of any power or right preclude other or further
exercise thereof or the exercise of any other power or right.
IT IS the intention of Maker and Payee to conform strictly to
applicable usury laws. Accordingly, if the transactions contemplated
hereby would be usurious under applicable law (including without
limitation, the laws of the State of New York and the laws of the United
States), then in that event, notwithstanding anything to the contrary in
any agreement entered into in connection with or as security for this
Note, it is agreed as follows: (i) the aggregate of all consideration
which constitutes interest under applicable law that is taken, reserved,
contracted for, charged or received under this Note or under any of the
other aforesaid agreements or otherwise in connection with this Note shall
under no circumstances exceed the maximum amount of interest allowed by
applicable law, (or, if this Note shall have been paid in full, refunded
to the Maker); and (ii) in the event that maturity of this Note is
accelerated by reason of an election by the holder hereof resulting from
any default hereunder or otherwise, or in the event of any required or
permitted prepayment, then such consideration that constitutes interest
may never include more than the maximum amount allowed by applicable law,
and excess interest, if any, provided for in this Note or otherwise shall
be canceled automatically as of the date of such acceleration or
prepayment and, if theretofore prepaid, shall be credited on this Note (or
if this Note shall have been paid in full, refunded to the Maker).
THIS NOTE shall be construed in accordance with and governed by
the laws of the State of New York.
MAKER
EXECUTIVE TELECARD, LTD.
/s/ Allen Mandel
By: Allen Mandel
Its: Executive Vice President
<PAGE>
STOCK OPTION AGREEMENT
THIS AGREEMENT is made February 28, 1996, by and between
Executive Telecard, Ltd., a Delaware corporation (the "Corporation") and
Seymour Gordon ("Gordon").
1. Grant of Option. The Corporation hereby grants to Gordon
the right, privilege and option to purchase 50,000 shares of its
restricted common stock at the purchase price of $6 per share, in the
manner and subject to the conditions hereinafter provided.
2. Time of Exercise of Option. The aforesaid option may be
exercised at any time, and from time to time, in whole or in part, until
the termination thereof as provided in paragraph 4 below.
3. Method of Exercise. The option shall be exercised by
written notice directed to the Corporation at the Corporation's principal
place of business at 8 Avenue C, Nanuet, New York 10954, accompanied by a
check in payment of the option price for the number of shares specified
and paid for. The Corporation shall make immediate delivery of such
shares, provided that if any law or regulation requires the Corporation to
take any action with respect to the shares specified in such notice before
the issuance thereof, then the date of delivery of such shares shall be
extended for the period necessary to take such action.
4. Termination of Option. This option, to the extent not
heretofore exercised, shall terminate on the third anniversary of the date
of this Agreement.
5. Reclassification, Consolidation or Merger. If and to the
extent that the number of issued shares of the common stock of the
Corporation shall be increased or reduced by change in par value, split
up, reclassification, distribution of a dividend payable in stock, or the
like, the number of share subject to option and the option price per share
shall be proportionately adjusted. If the Corporation is reorganized or
consolidated or merged with another corporation, Gordon shall be entitled
to receive options covering shares of such reorganized, consolidated or
merged company in the same proportion, at an equivalent price, and subject
to the same conditions. For the purposes of the preceding sentence, the
excess of the aggregate fair market value of the shares subject to the
option immediately after the reorganization, consolidation or merger over
the aggregate option price of such shares shall not be more than the
excess of the aggregate fair market value of all shares subject to the
option immediately before such reorganization, consolidation or merger
over the aggregate option price of such shares, and the new option or
assumption of the old option shall not give Gordon additional benefits
which he did not have under the old option, or deprive him of benefits
which he had under the old option.
6. Rights Prior to Exercise of Option. This option is non-
transferable by Gordon, except in the event of his death, and during his
lifetime is exercisable only by him. Gordon shall have no rights as a
stockholder with respect to the option shares until payment of the option
price and delivery to him of such shares as herein provided.
7. Investment Intent. Gordon represents that all common
shares of the Corporation purchased by him pursuant to the exercise of all
or any portion of the option will be acquired for investment purposes and
not with a view to distribution, and that he will not sell or otherwise
dispose of any such common shares in any manner which is contrary to the
laws, regulations and rules enforced or promulgated by the Securities and
Exchange Commission.
8. Notices. All Notices and other communication hereunder
shall be in writing and shall be deemed to have been duly given if
delivered or mailed first class, postage prepaid:
a) If to the Corporation, at 8 Avenue C, Nanuet, New York
10954; and
b) If to Gordon, at 3 Hawthorne Lane, Lawrence, New York
11559.
9. Governing Law. This Agreement shall be deemed to be made
under and shall be construed in accordance with the laws of the State of
New York.
10. Binding Effect. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective heirs,
executors, administrators, successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on the day and year first above written.
SEYMOUR GORDON EXECUTIVE TELECARD, LTD.
/s/ Seymour Gordon /s/ Allen Mandel
By: Allen Mandel
Its: Executive Vice President
