AGREEMENT
FOR TELEPHONE SERVICE
THROUGH LITEL TELECOMMUNICATIONS CORP.
Dated: November 1, 1991
between
Executive TeleCard SA (hereinafter referred to as "TeleCard"),
whose
address is Rue de la Morache 14, 1260 Nyon, Switzerland,
and
LiTel Telecommunications Corp., a corporation duly organized and
existing under the laws of the USA having its principal office
at 4650 Lakehurst Court, Dublin, Ohio 43017 (hereinafter
referred to as "LiTel")
1. The Service
TeleCard is engaged in the business of providing a service
which enables users of the public telephone systems of a
number of countries to charge their calls to a credit or
calling card while in that country. The calls charged can
be domestic or international. The cards used may be any
credit or calling card that has been activated in
TeleCard's dialing system database. All calls are re-
dialed through the local country's Postal Telephone &
Telegraph Company (PTT), thereby making accessible to
callers the worldwide network of that particular country's
telephone system.
2. Terms
The terms of this contract are from November 15, 1991 to
November 15, 1994. Unless terminated in accordance with
clause 9, this agreement will be renewed for periods of
12 months at a time from November 15, 1994.
3. Operation
3.1 When used in this Agreement, unless the context otherwise
requires, each of the terms set forth hereinbelow shall
have the meaning as indicated below:
a) "LiTel Card(s)" shall mean an unexpired credit card(s)
bearing the service marks, trade mark(s) and/or trade name of
LiTel and a design or style as may, from time to time, be
determined by LiTel.
b) "Cardholder(s)" shall mean the person or entity whose name
appears on the LiTel Card as the authorized user thereof.
C) "Hot Card Notice" shall mean a notification supplied by
LiTel to TeleCard containing the number of LiTel cards
which are to be blocked from use.
d) "Stop List" ("Black List") shall mean the list to be
supplied regularly by LiTel to TeleCard, containing the
card numbers of LiTel cards which are being improperly
used and any lost, stolen and/or cancelled LiTel cards
which are then to be blocked from use.
3.2 TeleCard will transmit to LiTel on a mutually agreed upon
interval, information as to the telephone usage totals
for each cardholder so that LiTel may apply its own
standards for ceilings and other credit limit decisions.
Control over
which card is not authorized to charge telephone calls
will be via regularly transmitted "black lists" from
LiTel to TeleCard. TeleCard will update all of its
worldwide databases with the most current black list
immediately upon receipt.
3.3 TeleCard will establish a system that allows LiTel
cardholders to use their current LiTel number to charge
telephone calls.
3.4 TeleCard will adapt its software to accept the LiTel
number-
ing system and technical specifications, and a pin number
(security code) to be assigned by TeleCard.
3.5 TeleCard shall send to LiTel every two weeks a magnetic
tape
containing the information necessary for LiTel to bill its
cardholders for telephone calls made and charged through Tele-
Card.
3.6 TeleCard will bill LiTel in U.S. dollars.
3.7 LiTel shall pay TeleCard in U.S. dollars minus the
compensation to LiTel (see article 7 of this agreement),
30 days after receipt of the magnetic tape containing the
billing information.
3.8 LiTel will invoice and collect from the cardholder in
accordance with the normal procedures and practices of
LiTel.
3.9 LiTel shall be entitled to refuse payment to TeleCard in
respect of a call made by a cardholder through TeleCard,
or if payment has been made, to claim an immediate refund,
if:
a) the call was made with an expired LiTel Card or a LiTel
card appearing on a Stop List, Hot Notice or Black List
received by TeleCard in time to be posted to the ETI
database;
b) the cardholder refuses to make payment to LiTel in respect
of such call on the grounds of poor transmission quality
or mis-dailing;
C) The cardholder (past or present) refuses to make payment to
LiTel because such cardholder asserts that the subject call
was unauthorized.
d) The call was made by a person not authorized to use the
card ("Unauthorized Call"). The determination of whether
a particular call was an Unauthorized Call shall be made
in good faith by LiTel based on its investigation into the
matter, including conversations with the LiTel customer in
question.
LiTel shall have the right to set-off from any payment
due hereunder, any amount owing to LiTel by TeleCard.
TeleCard covenants, warrants and agrees that it shall:
a) not make any extra or special charge in connection with
any call made by a cardholder and will bill according to
published prices.
b) deal with all complaints made by cardholders.
3.10 TeleCard shall monitor usage of the LiTel Card-(s) on a
daily_
basis. TeleCard shall use its best efforts to detect any
fraudulent use of the LiTel Card(s), and upon detection of
any use of the LiTel Card(s) that indicates fraud may be
occurring, TeleCard shall immediately deactivate the LiTel
Card(s) where fraud may be occurring and immediately
notify
LiTel of such deactivation.
3.11 TeleCard warrants, represents and covenants that the
services provided under this agreement are and will be in
compliance with all laws, regulations, directives and
policies of the
jurisdictions in which TeleCard provides such services
(including, but not limited to, the regulations,
directives,
and policies of any government regulators of telecommunica-
tions in each such jurisdiction) and the regulations,
directives, policies and tariffs of the postal telephone
and telegraph administrations ("PTTs") and/or telephone
service providers in each such jurisdiction, and that
TeleCard now possesses and will at ' all times possess all
consents, authorizations and approvals from such
jurisdictions and/or PTTs and telephone service providers
that are necessary to provide the service under this
agreement.
4. Marketing
4.1 LiTel will distribute to all of its cardholders or
selected cardholders, instructional material as to how the
cardholder will use the "Service" and such other
promotional and user material which LiTel deems suitable
to promote the use of the "Service."
4.2 LiTel shall advertise, use direct mail, engage in sales
promotions and other related marketing activities that
LiTel deems suitable to promote the use of the "Service"
and at LiTells expense.
4.3 TeleCard will provide free-of-charge technical and
marketing assistance in the production of cardholder
information for use of the service.
5. Trademarks, Service Marks and Logos
5.1 TeleCard hereby authorizes LiTel for the term of this
Agreement to publish the name of TeleCard and the
locations of the "Service" in any directory of merchants
or other publication of LiTel.
5.2 LiTel agrees that the Executive TeleCard International
trademarks, service marks and logos belong to TeleCard and
will devote its best efforts during and after the Term to
protect TeleCard's interests in these trademarks, service
marks and logo.
5.3 TeleCard shall obtain from LiTel approval in writing,
prior to publication, of any advertising and/or
promotional materials containing the service marks and/or
trademarks of LiTel.
6. Power of Attorney/Claims
6.1 LiTel is not acting on behalf of TeleCard.
6.2 TeleCard is not acting on behalf of LiTel.
6.3 This Agreement does not in any way create the relationship
of joint venture, partnership, or principal and agent
between
LiTel and TeleCard. TeleCard shall not act or attempt to
act, or represent itself, directly or by implication, as
agent for LiTel or in any manner assume or create or
attempt to assume or create any obligation on behalf or in
the name of LiTel.
7. Compensation
7.1 For the marketing and administrative services rendered,
including billing to and collection from the cardholders,
TeleCard will grant LiTel a "discount feel' of 3% of toll
charges resulting from the use of the "Service" by the
cardholders. LiTel will deduct the "discount feel' from
each payment made to TeleCard. LiTel may elect to
increase the discount fee for calls originated outside
the United States by instructing TeleCard to increase its
international tariff rate by a percentage not to exceed
ten (10%) per cent. TeleCard will retain twenty-five
(25%) per cent of said increase and the balance will be
discounted by LiTel. This election may be made by LiTel
once each year on the annual anniversary date of this
agreement and become effective no later than 60 days
thereafter.
7.2 An annual service charge of US$ 9.95 will be billed to
LiTel cardholders who utilize the service for calls
originated outside of the United States to maintain their
eligibility to access the Executive TeleCard dialing
system. ETI will bill this fee annually in the tapes it
prepares and sends to LiTel for billing. This annual
service charge will only be applied to people who actually
use the card the first time in each new calendar year.
7.3 Tariff rates billed by TeleCard will not exceed a 40%
markup from Postal Telephone and Telegraph (PTT) standard
cost.
B. Confidentiality
8.1 As a result of carrying out this Agreement, LiTel will
have access to confidential material and information
belonging to TeleCard, and TeleCard will have access to
confidential material and information belonging to LiTel
such as client lists, employee lists, procedure manuals
and techniques and programs used by the company or planned
to be used in the future, etc. This confidential
information has been acquired by TeleCard and LiTel after
considerable expense, time and energy. TeleCard and LiTel
agree to protect the confidentiality of this information
and, other than in the ordinary course of business,
TeleCard and LiTel will not disclose any of such
confidential information during or after the Term of this
Agreement.
9. Termination
9.1 LiTel can terminate this Agreement upon 90 days written
notice to TeleCard prior to the end of the initial period
or any additional annual renewal period. TeleCard can
terminate this Agreement upon 90 days written notice to
LiTel prior to the end of the initial period and any
additional annual renewal period.
9.2 Upon termination of this Agreement, discount fees will
continue to be paid as outlined in Article 7, for the
"Service" used by cardholders before termination, as long
as billing and collection are performed by LiTel.
9.3 Termination of this Agreement for any reason shall not
release either party hereto from any accrued liability to
the other party. LiTells right to terminate this Agreement
as
provided above shall be without prejudice to any other
rights
provided to it under law or equity.
10. Assignment
10.1 It is expressly agreed that both parties shall not assign
or transfer all or any part of its rights under this
Agreement. Any such assignment or transfer of this
Agreement, or any assignment or transfer of any interest
in this Agreement, without the prior written approval of
both parties, shall be null and void and of no effect.
LiTel may, without prior written approval, assign this
agreement to any affiliate of LiTel.
11. Warranties
11.1 LiTel will not make any warranty to its prospects and
clients beyond those made by TeleCard.
12. Hold harmless
12.1 TeleCard shall indemnify and hold LiTel harmless in
respect
of:
a) any loss, damage or liability suffered or incurred as a
result of TeleCard's failure to perform or observe any of
its obligations under this Agreement;
b) any loss, damage or liability suffered or incurred as a
result of any failure or omission of TeleCard to charge,
report or pay any taxes required by law to be charged,
reported or paid in connection with any LiTel Card
transaction contemplated by this Agreement.
13. Communications
13.1 Any notice or communication by either party to the other
shall be in writing and shall be deemed to have been duly
given if either delivered personally, by telefax
transmission or by prepaid registered mail, addressed to
the other party at the appropriate address stated above,
or at such other address as such party hereto may
hereafter specify to the other party.
14. Applicable Law
14.1 This Agreement shall be governed by and construed in
accordance with the laws of the United States and the
parties hereto submit to the nonexclusive jurisdiction of
the United States Courts in the State of New York.
14.2 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.
14.3 The failure of either party to require the performance of
any of the terms of this Agreement or the waiver by either
party of any default under this Agreement shall not
prevent a subsequent enforcement of such term, nor be
deemed a waiver of any subsequent breach.
14.4 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.
15. Arbitration
15.1 Any dispute concerning this contract or . related
agreement, in particular as to their existence, validity,
interpretation, performance or nonperformance, whether
arising before or after the expiration of the contract,
will be settled by arbitration.
15.2 The seat of the arbitration will be in New York.
15.3 The arbitration shall take place in accordance with the
rules
of arbitration of the American Arbitration Association,
applicable at the seat of the arbitration.
15.4 Judgement upon the award rendered may be entered in any
court having jurisdiction or application and may be made to such
court for a judicial acceptance of the award and an order of
enforcement, as the case may be.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized
representatives as of the day and year first set forth above.
Litel Communications Corp.
BY:
President
Executive TeleCard SA
BY: