NOTE 17: COMMITMENTS AND CONTINGENCIES

The Company is party, from time to time, to various legal proceedings, including patent infringement claims, regulatory investigations and tax examinations incidental to its business. The Company continually monitors these legal proceedings, regulatory investigations and tax examinations to determine the impact and any required accruals.

On March 31, 2014, David J. Cuthbert was terminated as President and Chief Executive Officer of Alteva. The Company notified Mr. Cuthbert that his termination was for "cause" and, as such, Mr. Cuthbert was not entitled to any of the benefits provided for under his employment agreement dated March 5, 2013, including cash severance and the acceleration of vesting on any unvested equity instruments. Mr. Cuthbert disputed the Company's basis for termination and claimed that he was due his full severance benefits.

As the Company did not want to incur further legal fees or the risk of distraction of a protracted legal dispute, on October 16, 2014, the Company, through mediation, entered into a settlement agreement and mutual release agreement (the "Settlement Agreement") with Mr. Cuthbert. In consideration for Mr. Cuthbert's execution of the Settlement Agreement, the Company agreed to pay to Mr. Cuthbert the amount of $0.75 million less certain taxes and withholdings, which was paid out on October 28, 2014.

Total expense, net of insurance recoveries, of $0.7 million for the year ended December 31, 2014 is included in the loss on disposal, restructuring costs and other special charges line in the condensed statement of operations.

During the year ended December 31, 2014, the Company was named as a party to a lawsuit from Sprint regarding a certain tariff charge (IntraMTA carrier charge) billed by Alteva, paid by Sprint over a number of years that had not previously been disputed. Sprint has filed similar lawsuits against other carriers related to the same tariff charges. The Company has filed a motion to dismiss. The

amount of the claim filed by Sprint is for $0.2 million; however the Company has not been able to substantiate the basis for the claim amount and therefore, has not recorded an accrual as of December 31, 2014.

The Company leases office equipment for operations as well as office space in Philadelphia, Pennsylvania. Total expenses associated with these agreements were $0.4 million and $0.5 million in 2014 and 2013, respectively.

The future aggregate operating lease commitments as of December 31, 2014 were as follows:


($ in thousands)

2015	$	366
2016		361
2017		290
2018		209
2019 and thereafter		1,200
Total	$	2,426

The Company has commitments with certain vendors related to access lines and seat licenses. The future aggregate commitment for these is $3.7 million beginning in 2015 through 2017.

The Company entered into capital finance agreements for $0.4 million during the years ended December 31, 2014 and 2013. Interest rates ranged 3.50% to 7.17% and maturity dates were three years for those agreements entered into during the year ended December 31, 2014. Interest rates ranged 4.678% to 8.962% and maturity dates were three years for those agreements entered into during the year ended December 31, 2013. The Company utilizes capital leases to fund equipment and software purchases.

Approximately 24% of the Company's employees are represented by Local 503 of the International Brotherhood of Electrical Workers. The existing contract with the Company's union employees expires on October 31, 2016.