Document:

EXHIBIT 4.19  

101 Huntington Ave.

Prudential Center

Boston, Massachusetts 02199

(“the Building”)

SECOND AMENDMENT

January __, 2005

 

 

		
LANDLORD:
	
            BP Prucenter Acquisition LLC, successor in interest to The Prudential Insurance Company of America

		
TENANT:
	
            Arnold Worldwide LLC, a Delaware limited liability company, and Havas, S. A., a corporation organized under the laws of France, jointly and severally

		
EXISTING
PREMISES:
	
            The Existing Premises consist of the Office Premises, the Storage Premises and the First Amendment Premises.

		
Office Premises:
	
            The Office Premises consist of the entirety of Floors 15-20 of the Building, the entirety of Floor 23 and the Existing 21st Floor Premises, as defined in Section B.l of the Lease.

		
Storage Premises:
	
            An area on the orange level of the Garage serving the Building, and an area on the penthouse 2 level of the Building.

Each Floor of the Office Premises and each portion of the Storage Premises is shown on Exhibit D attached to the Lease.

First Amendment

		
Premises:
	
            The entirety of the twenty-second (22nd) floor of the Building, consisting of
22,303 rentable square feet, substantially as shown on Exhibit A, First
Amendment

	ORIGINAL

      LEASE

      DATA 	
      DATE
        OF

        LEASE 

    	
      

         October 1, 2003

    
	 	TERMINATION

      DATE: 

      	

      August 31, 2014
	 	PREVIOUS

      LEASE

      AMENDMENTS:

      	

      

      First Amendment dated September __, 2004 
      

    

 

 

 

 

 

	 	SECOND

      AMENDMENT

      PREMISES:

      	

      

      A portion of the twenty-first (21st) floor of the Building, consisting of
      7,818 rentable square feet., substantially as shown on Exhibit A, Second
      Amendment, a copy of which is attached hereto and incorporated by reference
      herein (“Second Amendment Premises”). With the addition of the
      Second Amendment Premises to the Existing Premises, Tenant will be leasing
      the entirety of the 21st flour of the Building.

WHEREAS, Tenant desires to lease additional premises from Landlord, to wit, the Second Amendment Premises, and to make certain other changes in the terms of the above-described lease, as previously amended (the “Lease”);

WHEREAS, Landlord is willing to lease the Second Amendment Premises to Tenant and to make certain other changes to the Lease on the terms and conditions hereinafter set forth;

 

NOW THEREFORE, the Lease is hereby amended as follows:

	
            1.
 	
            NEW 21st FLOOR PREMISES
 

The parties acknowledge that. the Second Amendment Premises are the “New 21st Floor Premises” defined in Section 3 of the First Amendment. Accordingly, the Second Amendment Premises are hereby deleted from the First Offer Space, as defined in Section 17.2 of the. Lease.

 

	
            2.
 	
            DEMISE OF THE SECOND AMENDMENT PREMISES
 

Landlord hereby demises and leases to Tenant and Tenant hereby hires and takes from Landlord, the Second Amendment Premises for a term commencing as of the Commencement Date in respect of the Second Amendment Premises, as hereinafter defined, and terminating as of August 31, 2014. Said demise of the Second Amendment Premises shall be upon all of the terms and conditions of the Lease (including, without limitation, Tenant’s obligation to pay for electricity pursuant to Section 5.2 of the Lease, Tax Excess pursuant to Section 6.2 of the Lease, and Operating Cost Excess pursuant to Section 7.5 of the Lease), except as follows:

A.              The “Construction Start Date” for the Second Amendment Premises shall be the date that Tenant commences Tenant’s Work in the Second Amendment Premises. The Commencement Date in respect of the Second Amendment Premises shall be the earlier of (i) the Construction Start Date for the Second Amendment Premises and (ii) the date on which Landlord delivers the Second Amendment Premises to Tenant, free and clear of tenants and other occupants (but not earlier than February 1, 2005). The Rent Commencement Date in respect of the Second Amendment Premises shall be the earlier to occur of (i) ninety (90) days after the Commencement Date in respect of the Second Amendment Premises, and (ii) the day Tenant commences its business operations
the Second Amendment Premises.

 

 

 

 

B.              The Annual Fixed Rent in respect of the Second Amendment Premises shall be as follows:

	
                       Time Period
 	
            Annual
 	
            Monthly
 	
            Per RSF
 
	
            Rent Commencement

Date in respect of the

Second Amendment

Premises – August 31,

2014
 	
            $269,721.00
 	
            $22,476.75
 	
            $34.50
 

C.              In the event that any of the provisions of the Lease are inconsistent with this Amendment or the state of facts contemplated hereby, the provisions of this Amendment shall control.

 

	
            3.
 	
            CONDITION OF SECOND AMENDMENT PREMISES
 

Tenant shall accept the Second Amendment Premises in its AS-IS condition without any obligation on the Landlord’s part to perform any additions, alterations, improvements or other work therein or pertaining thereto, except that Landlord shall perform demolition on the existing improvements therein and deliver the Second Amendment Premises to Tenant in shell condition, as defined in Exhibit B - Second Amendment attached hereto. Any work performed by Tenant in the Second Amendment Premises (“Tenant’s Work in the Second Amendment Premises”) shall be performed in accordance with the Lease including, without limitation, Article IX thereof.

 

	
            4.
 	
            LANDLORD’S ALLOWANCE WITH RESPECT TO THE SECOND
 
	
             
	
            AMENDMENT PREMISES
 	
             

With respect to the Second Amendment Premises only, Section 5.3 of the Lease is hereby amended to read as follows:

	
            5.3
 	
            ALLOWANCES
 

 

(1)             Landlord’s Second Amendment Premises Allowance.  As an inducement to Tenant’s entering into this Lease, Landlord shall provide to Tenant a special allowance (“Landlord’s Second Amendment Premises Allowance”) not to exceed $273,630.00, based on a rate of $35.00 per Rentable Square Foot, to be used by Tenant to pay for the cost (“Hard Costs”) of the Tenant’s Work in any portion of the Premises, and Permitted Soft Costs, as hereinafter defined. Provided that (i) Tenant has delivered to Landlord lien waivers from all persons with contracts with a value in excess of $25,000.00 who might have a lien as a result of Tenant’s Work in the Second Amendment Premises, in recordable form (Landlord
acknowledging that Tenant shall not be able to obtain a lien waiver from a contractor in connection with such contractor’s first application for payment), (ii) Tenant has delivered to Landlord its certificate as to the cost of such Tenant’s Work in the Second Amendment Premises, together with evidence thereof in the form of paid invoices, receipts and the like, (iii) Tenant has made request for such payment on or before the second (2nd) anniversary of the Commencement Date in respect of the Second Amendment Premises (“Second Amendment Outside Requisition Date”), and (iv) no Event of Default of Tenant described in 

 

 

 

clauses (a) or (d) of Section 15.1 of the Lease is outstanding and no condition described in clauses (b), (e), (f), (g), (h), (i), (j), or (k) of Section 15.2 has occurred and is outstanding, then within thirty (30) days after the satisfaction of the foregoing conditions, the Landlord shall pay to the Tenant Landlord’s Share of the amount of such costs so certified up to the Landlord’s Second Amendment Premises Allowance. For purposes hereof, “Landlord’s Share” shall be a fraction, the numerator of which is the amount of Landlord’s Second Amendment Premises Allowance and the denominator of which is the estimated total cost of Tenant’s Work in the Second Amendment Premises. Notwithstanding the foregoing, if Tenant certifies to Landlord that Tenant’s Work in the Second Amendment Premises is complete, then with respect to the last requisition, Landlord
shall pay Tenant the lesser of (i) the remainder of Landlord’s Second Amendment Premises Allowance and (ii) the cost of such requisition. Tenant may not submit a requisition for payment on account of Landlord’s Second Amendment Premises Allowance more than one time in any calendar month, Tenant may submit requisitions for payment to Landlord on account of Landlord’s Second Amendment Premises Allowance after the Commencement Date in respect of the Second Amendment Premises. Tenant shall have no right to any unused portion of Landlord’s Second Amendment Premises Allowance, nor shall there be any application of the same toward Annual Fixed Rent or Additional Rent owed by Tenant under this Lease. If Landlord fails timely to pay any portion of Landlord’s Second Amendment Premises Allowance properly payable to Tenant when due, then Tenant shall have the right to deduct such amount from the next installment(s) of the Annual Fixed Rent and other charges due under the
Lease.

(2)             Landlord’s Second Amendment Premises Additional Allowance. In addition to Landlord’s Allowance, Landlord shall, at Tenant’s election, provide to Tenant an additional allowance (“Landlord’s Second Amendment Premises Additional Allowance”) not to exceed $156,350.00, based on a rate of $20.00 per Rentable Square Foot, which maybe used solely for the payment of Hard Costs only.  Landlord’s Second Amendment Premises Additional Allowance shall he provided to Tenant on the same terms and conditions as are applicable to Landlord’s Second Amendment Premises Allowance, except: (i) to the extent inconsistent with the provisions of this Paragraph (2), (ii) if Tenant elects to use any portion of Landlord’s Second Amendment
Premises Additional Allowance, Tenant shall pay Construction Rent in accordance with Section 5.5, (iii) the Outside Requisition Date with respect to Landlord’s Second Amendment Premises Additional Allowance shall be the Second Amendment Outside Requisition Date, (iv) Tenant may submit to Landlord requisitions (“Second Amendment Premises Additional Allowance Requisitions”) for the payment of Landlord’s Second Amendment Premises Additional Allowances no more often than three times and each Second Amendment Premises Additional Allowance Requisition, other than the last one to be submitted, shall request funds at least equal to $50,000.00, and (v) Tenant shall have no right of offset if Landlord fails to pay Landlord’s Second Amendment Premises Additional Allowance.

(3)             Lavatory Allowance.With. respect to the 21st floor only, Landlord shall provide Tenant with an
allowance of up to Fifty Thousand and 00/100 Dollars ($50,000.00) for each of
the two lavatories on the 21st floor, for an aggregate amount of up to One
Hundred Thousand and 00/100 Dollars ($100,000.00) (the “Lavatory
Allowance”). The Lavatory Allowance shall be used by Tenant to pay for the
cost (“Hard Costs”) of renovating and updating the lavatories on the
21st floor, including any changes to make the same compliant with all applicable
law, and Permitted Soft Costs, as defined above. The Lavatory Allowance shall he
disbursed in accordance with the provisions of this Section 5.3 

 

 

 

governing the disbursement of the. Second Amendment Premises Allowance. Notwithstanding anything contained in this Lease, Tenant acknowledges that it shall be responsible, at its sole cost and expense (but subject to the application of the Lavatory Allowance), for ensuring that the lavatories on the 21st floor comply with all applicable law. Any work done by Tenant to the lavatories on the 21st Floor (the “Lavatory Work”) shall be subject to all of the terms and conditions of the Lease governing Tenant’s Work in the Second Amendment Premises.

(4)             Permitted Soft Costs. “Permitted Soft Costs” shall be defined as: (i) moving costs incurred by Tenant with respect to swing space used by Tenant in connection with the performance of Tenant’s Work in the Second Amendment Premises, provided however that Tenant may not apply more than $23,454,000 based on a rate of $3.00 per Rentable Square Foot (“Moving Costs Cap”) towards moving costs, and (ii) architectural, engineering, and cabling costs and the cost of permit fees and payment and performance bonds required hereunder and the cost of builders risk insurance, provided however, that Tenant may not apply more than $7,818,00 based on a rate of $1.00 per Rentable Square Foot (“Other Soft Costs Cap”) towards the costs descri
bed in this clause (ii).

 

	
            5.
 	
            CONSTRUCTION RENT WITH RESPECT TO THE SECOND AMENDMENT
 
	
             
	
            PREMISES
 	
             

				

 

Any amounts of Landlord’s Second Amendment Premises Additional Allowance elected by Tenant shall constitute a portion of “Landlord’s Additional Allowance” for purposes of Section 5.5 of the Lease.

 

	
            6.
 	
            EXISTING 21st FLOOR PREMISES
 

 

As an additional inducement to Tenant to enter into this Second Amendment, Landlord agrees to perform demolition on the existing improvements in the Existing 21st Floor Premises at Landlord’s cost at the same time that Landlord performs the demolition of the Second Amendment Premises as provided in Section 3 above. It is the intention of the parties that Landlord will perform demolition work of the improvements in all of Tenant’s Premises on the 21st floor of the Building and deliver the Existing 21st Floor Premises to Tenant in shell condition (as defined in Exhibit B Second Amendment attached hereto) at the same time that it delivers the Second Amendment Premises to Tenant hereunder. In order to permit Landlord to accomplish this demolition work. Tenant hereby agrees to vacate all of its Premises on the 21st floor, and to remove all of its property therefrom, on or before January
16, 2005, time being of the essence.

 

	
            7.
 	
            BROKER
 

 

Tenant and Landlord represent and warrant to each other that they have not directly or indirectly dealt, with respect to the leasing of the Second Amendment Premises with any broker other than GVA Thompson, Doyle, Hennessey & Stevens (the “Broker”) and covenant and agree to defend, save harmless and indemnify each other against any breach of the foregoing representation.

 

	
            8.
 	
            DELETED AND INAPPLICABLE LEASE PROVISIONS
 

 

A.              Abatement Work.  All of the provisions of the Lease concerning Abatement Work which are applicable to the New 21st Floor Premises shall be applicable to the Second Amendment Premises.

 

 

 

 

B.              Miscellaneous.  Section 4.1(A) of the Lease and Exhibit D to the Lease and Sections 2, 4, 5, 6 and 7 of the First Amendment shall have no applicability to the Second Amendment Premises.

9.              As hereby amended, the Lease is ratified, confirmed and approved in all respects. Without limitation, the parties specifically agree that the provisions of the First Amendment concerning Landlord’s Allowances remain in full force and effect.

 

EXECUTED under seal as of the date first above-written.

 

LANDLORD:

BP PRUCENTER ACQUISITION LLC

 

		
By:
	
                Boston Properties Limited Partnership, 
     a Delaware limited partnership

 

	
            Its:
 	
            Manager
 

 

By:   Boston Properties, Inc., a Delaware corporation

 

	
            Its:
 	
            General Partner
 

 

By:___________________________.

Name:________________________

Its:___________________________

Hereunto Duly Authorized

 

 

Date Signed: __________________

 

 

 

TENANT:

	
             
	
            (
 	
            ARNOLD WORLDWIDE LLC
 	
             

	
             
	
            (
 	
            By: Arnold Worldwide Partners LLC,
 
	
             
	
            (
 	
            its sole member
 	
             

	
            Signing
 	
            (
 	
             

	
            Jointly and
 	
            (
 	
             

	
            Severally
 	
            (
 	
            By ______________________
 	
             

	
             
	
            (
 	
            Name:
 	
            Edmund B. Davis
 	
             

	
             
	
            (
 	
            Title:
 	
            Chief Financial Officer
 	
             

	
             
	
            (
 	
            Hereunto Duly Authorized
 	
             

	
             
	
            (
 	
             

	
             
	
            (
 	
             

	
             
	
            (
 	
             

	
             
	
            (
 	
            HAVAS, S.A.
 	
             

	
             
	
            (
 	
             

	
             
	
            (
 	
             

	
             
	
            (
 	
            By ______________________
 	
             

	
             
	
            (
 	
            Name:
 	
             

	
             
	
            (
 	
            Title:
 	
             

	
             
	
            (
 	
            Hereunto Duly Authorized
 	
             

																	

 

	
            Date Signed:____________________
 

 

 

BY ITS SIGNATURE BELOW, HAVAS, S.A. HEREBY RATIFIES AND AFFIRMS THE FIRST AMENDMENT TO THE LEASE DATED SEPTEMBER __, 2004

 

 

	
            HAVAS, S.A.
 

 

 

 

	
            By ______________________
 
	
            Name:
 	
             

	
            Title:
 	
             

	
            Hereunto Duly Authorized
 	
             

				

 

	
            Date Signed:____________________20-F

Exhibit 4.7  

AGREEMENT 

        THIS
AGREEMENT is entered into as of the 30th day of June, 2004 between AREL
COMMUNICATIONS & SOFTWARE LTD., an Israeli corporation (“Arel”) and
GEORGE P. MORRIS (“Mr. Morris”), under the following circumstances: 

             A.       
          Mr. Morris has been previously employed for many years by The Iams Company as
          Senior Vice President and Chief Financial Officer. Mr. Morris currently serves
          as a Board Member of Arel and Chairman of its Investment Committee. The Board of
          Directors of Arel has elected Mr. Morris as the Chairman of the Board of Arel. 

        NOW,
THEREFORE, in consideration of the premises and the mutual agreements set forth herein, it
is hereby agreed as follows: 

        Section
1. Term. Unless sooner terminated as provided in Section 9, the term of
this Agreement (the “Term”) shall commence as of July 1, 2004 and shall expire
on June 30, 2007; provided, however, that the Term shall be automatically extended on June
30, 2007 and on each June 30 thereafter (each a “Renewal Date”) for an
additional one year period unless, at least six (6) months prior to any Renewal Date,
either Mr. Morris or Arel gives written notice (a “Nonrenewal Notice”) to the
other that the Term will not be so extended on such Renewal Date and, in such event, the
Term shall expire on such Renewal Date. Arel agrees to use its best efforts to obtain any
requisite shareholder approval of this Agreement as soon as possible. 

        Section
2. Chairman of the Board.  

             (a)       
          Election. During the Term, Mr. Morris shall serve as the
          Chairman of the Board of Arel, provided Mr. Morris is elected by Arel’s
          shareholders to serve as a Director. Mr. Morris hereby agrees to serve in such
          capacity and, if requested and in Mr. Morris’s sole discretion, to also
          serve as a member of other committees of the Board of Directors of Arel or as a
          director of other subsidiaries of Arel. Arel agrees to use its best efforts to
          nominate Mr. Morris as a Director of Arel to its shareholders so that he serves
          as a Director of Arel at all times during the Term. 

             (b)       
          Duties. In his capacity as Chairman of the Board of Arel,
          Mr. Morris shall perform such duties as may be required by law or Arel’s
          Articles of Association or as may be reasonably assigned to him from time to
          time by the Board of Directors of Arel. While Mr. Morris shall devote such time
          and attention as shall be necessary to perform his duties hereunder, the parties
          acknowledge that Mr. Morris’s engagement hereunder is not fulltime and that
          he has other active business interests and engagements. 

             (c)       
          Compensation. For his services under this Section 2, Mr.
          Morris shall receive a retainer fee at the quarterly rate of Twenty-One Thousand
          Two Hundred and Fifty U.S. Dollars (US$21,250), payable in advance on the first
          business day of July, October, January and April during the Term (the first of
          such payments to be made in arrears upon the effectiveness of this Agreement).
          During each quarter of the Term, the quarterly fee shall be adjusted upward to
          equal twice the fee paid in cash to any other director of Arel but shall not be
          adjusted to exceed the annual rate of One Hundred Thousand U.S. Dollars
          (US$100,000). 

             (d)       
          Stock Options. Within seven (7) days after the
          effectiveness of this Agreement, Arel shall grant Mr. Morris options to purchase
          150,000 ordinary shares of Arel at a purchase price equal to the closing price
          of Arel shares on the date of grant. Such options shall vest in three
          installments of 50,000 shares each on June 30, 2005, 2006 and 2007 and shall be
          subject to the terms and conditions of an option agreement to be entered into
          between Arel and Mr. Morris and, as to be agreed to between the parties, subject
          to one of Arel’s existing stock option plans or an option plan to be
          adopted by Arel. 

        Section
3. Place of Performance. In performing his duties under this Agreement, Mr.
Morris shall not be required to be physically located within Israel and Mr. Morris may
perform such duties from such locations as Mr. Morris may determine from time to time. 

        Section
4. Expenses. Arel shall reimburse Mr. Morris for all reasonable
out-of-pocket expenses (including travel expenses) incurred by him in connection with the
performance of his duties hereunder, including, but not limited to, expenses relating to
the purchase, set up and maintenance of new office equipment as Mr. Morris may reasonably
request from time to time. 

        Section
5. Relationship of Parties. In the performance of his duties hereunder, Mr.
Morris’s relationship to Arel shall be that of an independent contractor and not that
of an employee. Mr. Morris shall be solely responsible for and shall pay all applicable
federal, state, local or other self-employment and income taxes applicable to the
compensation payable to him hereunder. Arel may withhold such taxes as shall be required
to be withheld pursuant to applicable law or regulation with respect to any amounts
payable or benefits granted to Mr. Morris under this Agreement. 

2

        Section
6. Confidentiality. During the Term and indefinitely thereafter, Mr. Morris
shall keep and hold all confidential, nonpublic and proprietary information (including,
without limitation, any information which may constitute a “trade secret”) of,
or relating to, Arel or any of its subsidiaries or affiliates in strict confidence. 

        Section
7. Indemnification. Arel undertakes to amend its Articles of Association to
provide for the exemption (ptor) and indemnification (Shipui) of Mr. Morris
in connection with the performance of his duties hereunder to the full extent that Arel is
permitted to exempt and indemnify a director and officer under Israeli law. Arel shall at
all times cause Mr. Morris to be included, in his capacities as a director or officer of
Arel, as a named insured under all directors’ and officers’ liability insurance
coverage (or similar insurance coverage) maintained by Arel from time to time. 

        Section
8. Other Activities. Nothing contained herein shall prevent Mr. Morris from
engaging in other business, civic, charitable or industry activities so long as such other
activities do not unreasonably interfere with the performance of his duties hereunder. 

3

        Section
9. Termination.  

             (a)       
          Death. This Agreement shall terminate automatically upon
          Mr. Morris’s death during the Term. 

             (b)       
          By Arel. Arel may terminate this Agreement during the Term
          on account of Mr. Morris’s Disability or for Cause. 

             (c)       
          By Mr. Morris. Mr. Morris may terminate this Agreement
          during the Term for Good Reason. 

             (d)       
          Change of Control. This Agreement shall terminate
          automatically upon the consummation of a Change of Control during the Term. 

             (e)       
          Notice of Termination. Any termination of this Agreement
          pursuant to Section 9(b), (c) or (g) shall be communicated by a Notice of
          Termination. For this purpose, a “Notice of Termination” means a
          written notice given by Arel to Mr. Morris or by Mr. Morris to Arel which (i)
          indicates the specific termination provision(s) relied upon, (ii) to the extent
          applicable, sets forth in reasonable detail the facts and circumstances claimed
          to provide a basis for termination and (iii) specifies the Date of Termination. 

             (f)       
          Failure to Obtain Approvals. This Agreement shall terminate
          unless any requisite shareholder approval has been obtained by Arel by December
          31, 2004; subject to extension by Mr. Morris in his sole discretion. 

        (g)       
Removal as Director and Chairman. In the event that during the Term,
Mr. Morris is not elected as a Director and Chairman of the Board (or is removed as a
Director or Chairman of the Board), then unless Mr. Morris and Arel thereupon mutually
agree otherwise, Mr. Morris may terminate this Agreement. 

        Section
10. Obligations of Arel Upon Termination.  

             (a)       
          Generally. Upon termination of this Agreement for any
          reason (including, without limitation, by reason of the expiration of the Term),
          Arel shall pay to Mr. Morris in cash or cashier’s check not later than the
          fifteenth day after the Date of Termination the amount of any compensation
          payable to Mr. Morris pursuant to Section 2 through the Date of Termination to
          the extent not theretofore paid. 

             (b)       
          Severance Benefits Upon Termination in Certain Events. In addition
          to the payments and benefits provided for in Section 10(a), if this Agreement is
          terminated prior to the expiration of the Term (i) by Mr. Morris pursuant to
          Section 9 (c); (ii) by Arel other than pursuant to Section 9 (b); or (iii)
          because of the consummation of a Change of Control pursuant to Section 9 (d),
          then: 

		                (i)        Arel
shall pay to Mr. Morris as severance compensation in a lump sum in cash or
          cashier’s check not later than the fifteenth day after the Date of
          Termination an amount equal to the aggregate amount of the annual fees which
          would have been payable to Mr. Morris pursuant to Section 2 during the
remainder           of the Term had this Agreement not been terminated; and  

4

		                (ii)        all
of Mr. Morris’s options to purchase ordinary shares of Arel shall be
          deemed to be vested and exercisable in full as of the Date of Termination.  

             (c)       
          No Mitigation. The benefits provided under Section 10 shall
          not be treated as damages, but rather shall be treated as severance compensation
          to which Mr. Morris is entitled under the terms and conditions set forth herein.
          Mr. Morris shall not be required to mitigate the amount of any benefit provided
          for in Section 10 by seeking employment or otherwise. 

             (d)       
          Survival. Sections 4, 5, 6, 7, 9, 10, 13 and 14 shall
          survive termination of this Agreement. 

        Section
11. Certain Definitions. For purposes of this Agreement, the following
terms have the following meanings: 

        “Cause”
means only (i) the commission of a felony, (ii) embezzlement, (iii) the illegal use of
drugs, or (iv) breach of obligations of confidentiality or fiduciary duties.
Notwithstanding the foregoing, “Cause” shall not be deemed to exist unless and
until there shall have been delivered to Mr. Morris a copy of a resolution duly adopted by
the Board of Directors, which is confirmed in writing as agreed to by not less than
three-fourths of the number of directors of Arel then in office (after reasonable notice
to Mr. Morris and an opportunity for Mr. Morris, together with his counsel, to be heard at
a meeting of the Board of Directors of Arel called and held for that purpose), finding
that in the good faith opinion of such directors Mr. Morris was guilty of conduct set
forth in any of clauses (i)-(iv)and specifying the particulars thereof in detail. 

        “Change
of Control” means any change in control of Arel of a nature that would be
required to be reported in response to Item 6 (e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended (the ‘Exchange
Act’), or any similar law of the State of Israel that is applicable to Arel; provided
that, without limitation, such a Change of Control shall be deemed to have occurred if (i)
any ‘person’ (as such term is defined in Sections 13 (d) and 14 (d) (2) of the
Exchange Act; hereafter, a ‘Person’) other than existing shareholders of Arel
that directly or indirectly hold more than 20% of the voting rights in Arel as of the date
hereof, after the date hereof becomes or consummates a tender offer to become
the beneficial owner, directly or indirectly, of securities of Arel representing 34% or
more of the combined voting power of the then outstanding securities of Arel; (ii) Arel
enters into an agreement to merge or consolidate itself, or an agreement to consummate a
‘combination’ or ‘majority share acquisition’ in which it is the
‘acquiring corporation’ and in which shareholders of Arel as the case may be,
immediately prior to entering into such agreement, will beneficially own, immediately
after the effective time of the merger, consolidation, combination or majority share
acquisition, securities of Arel or any surviving or new corporation, as the case may be,
having less than 50% of the ‘voting power’ of Arel or any surviving or new
corporation, as the case may be, including ‘voting power’ exercisable on a
contingent or deferred basis as well as immediately exercisable ‘voting power’;
(iii) Arel enters into an agreement to sell, lease, exchange or otherwise transfer or
dispose of all or substantially all of its assets to any Person other than to a wholly
owned subsidiary; but not including a mortgage or pledge of assets granted in connection
with a financing or (iv) any transaction referred to in (ii) or (iii) above is
consummated. 

5

        “Date
of Termination” means (a) if this Agreement is terminated pursuant to Section
9(b), 9 (c) or pursuant to Section 9(g), the date specified in the Notice of Termination
(provided that such date shall not exceed 60 days from the date of the Notice of
Termination) or (b) if this Agreement is terminated for any other reason (including,
without limitation, by reason of the expiration of the Term or the consummation of a
Change of Control), the date of such termination. 

        “Disability”
means the inability of Mr. Morris to perform his duties hereunder for a period of three
consecutive months because of physical or mental illness or other physical or mental
disability or incapacity. 

        “Good
Reason” means: (a) other than in connection with the termination of this
Agreement pursuant to Section 9(a) or 9(b) or by reason of the expiration of the Term, the
assignment to Mr. Morris, without his consent, of any duties inconsistent with the duties
contemplated by Section 2; (b) if, during the pendency of a Change of Control, Mr. Morris
determines in good faith that, due to such Change in Control, he is not able to
effectively discharge his duties hereunder; (c) the termination of this Agreement by Arel
without satisfying any of the applicable requirements therefore set forth herein; or (d)
any material breach by Arel of this Agreement. 

        Section
12. Successors. This Agreement is personal and shall not be assignable by
either Arel or by Mr. Morris (otherwise than by will or the laws of descent and
distribution) without prior written consent of the other party. 

        Section
13. Legal Expenses. Arel shall reimburse Mr. Morris in full for all legal
fees and expenses reasonably incurred by him in connection with this Agreement and in the
performance of his responsibilities hereunder (including, without limitation, any such
fees and expenses incurred in connection with the preparation and negotiation of this
Agreement; or in contesting or disputing any termination of this Agreement or in seeking
to obtain or enforce any right or benefit provided herein, provided a court finds for Mr.
Morris. 

        Section
14. General Provisions.  

             (a)       
          Notices. All notices required or permitted to be given
          under this Agreement shall be in writing and shall be mailed (postage prepaid by
          either registered or certified mail) or delivered, if to Arel, addressed to Arel
          Communications & Software, Ltd., 22 Einstein St., Park Hamadah, Kiryat
          Weizmann, Nes Ziona, 74140, Israel, Attention: the Board of Directors and the
          Chief Executive Officer, with a copy to: David H. Schapiro, Adv., Yigal Arnon
          & Co., One Azrieli Center, 46th Floor – Round Tower,
          Tel-Aviv, Israel 67021; and if to Mr. Morris, addressed to: Mr. George P.
          Morris, 848 Foxhill Road, Chatham, MA 02633, with a copy to: Richard J.
          Chernesky, Esq., Chernesky, Heyman & Kress P.L.L., 10 Courthouse Plaza,
          S.W., Suite 1100, Dayton, OH 45402. Any party may change the address to which
          notices to such party are to be directed by giving written notice of such change
          to the other parties in the manner specified in this Section 14. 

6

             (b)       
          Waiver. No failure or delay in exercising any right
          hereunder shall operate as a waiver thereof, nor shall any single or partial
          exercise thereof preclude any other or further exercise thereof or the exercise
          of any other right. 

             (c)       
          Amendment. Any amendment to this Agreement or any waiver of
          rights or any consent hereunder shall not be operative unless it is in writing
          and signed by the party sought to be charged. 

             (d)       
          Counterparts. This Agreement may be executed in multiple
          counterparts, each of which shall be deemed an original for all purposes and all
          of which shall constitute a single instrument. 

             (e)       
          Governing Law. This Agreement shall be governed by, and
          construed and enforced in accordance with, the laws of the State of Israel,
          without giving effect to the principles of conflict of laws thereof. 

             (f)       
          Effectiveness. THE VALIDITY AND EFFECTIVENESS OF THIS AGREEMENT
          IS SUBJECT TO THE APPROVAL OF ITS TERMS BY AREL’S AUDIT COMMITTEE, BOARD OF
          DIRECTORS AND SHAREHOLDERS TO THE EXTENT REQUIRED BY APPLICABLE LAW. 

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

	_______________________________

GEORGE P. MORRIS
	AREL COMMUNICATIONS & SOFTWARE

LTD.

By:____________________________

Title:_________________________

7

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00086-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00086-of-00352.parquet"}]]