WRITTEN DESCRIPTION OF SERVICE AGREEMENT
BY AND BETWEEN
STARTEC, INC. AND
COMPANHIA SANTOMENSED DE TELECOMUNICACOES
STARTEC, Inc. and Companhia Santomensed de Telecomunicacoes
entered into a service agreement in January 1995 for the
provision of international switched services. This agreement was
not set forth in a formal written document. The specific terms
and conditions were intended to be set forth in a subsequent
amendment. This service agreement was modified by a written
amendment dated February 8, 1995.
Startec, Inc.
February 8, 1995
Blue Xxxxx Enterprises Limited
c/o Consec Services Limited
000 Xxxxx Xxxxxx
Xxxxxxx Xxxx, Xxxxxxx
Xxxx Xxxx
Re: Amendment to Service Agreement between Blue Xxxxx
Affiliate and Startec, Inc, ("Startec")
Ladies and Gentlemen:
In connection with the mutual agreement for Startec to
provide international long distance telephone and facsimile
services between itself and Companhia Santomensed de
Telecomunicacoes (the "Blue Xxxxx Affiliate"), or in the event of
more than one such agreement or agreements relating to more than
one Carrier that agreement or Carrier nominated in writing by
Blue Xxxxx Enterprises Limited ("Blue Xxxxx"), (as hereinafter
referred to as the "Service Agreement"), this letter will confirm
Startec's willingness to modify the economic terms of the
relevant Service Agreement as follows:
1.1 Subject to Clause 1.6, for service provided under the
Service Agreement on and after the date of this letter (the
"Commencement Date"), Startec will allow the Blue Xxxxx Affiliate
the following adjustments (the "Rate Adjustment") on amounts
payable by the parties to the Service Agreement under that
agreement:
(a) Startec will allow the Blue Xxxxx Affiliate a deduction
of 15 cents per minute to the rate per minute at which
one Party to the service Agreement pays the other Party
for telecommunications traffic originated by that other
Party (the "Pay-out Rate") applying as between Startec
and the Blue Xxxxx Affiliate for every minute of
carriage charged by Startec to the Blue Xxxxx
Affiliate; and
(b) the Blue Xxxxx Affiliate will increase the Payout Rate
applying as between it and Startec by 15 cents per
minute for every minute of carriage charged by the Blue
Xxxxx Affiliate to Startec.
1.2 Commencing with the third anniversary of the
Commencement date, interest will accrue on the average
outstanding Net Base (as defined herein) for each six-month
period at the rate of Base Rate LIBOR plus 2% (determined at the
beginning of each such six-month period At the end of each such
six-month period the Blue Xxxxx Affiliate will send Startec a
calculation of the interest accrued during such six-month period
and Startec shall pay the interest due within fifteen (15) days
of its receipt of such calculation.
1.3 The deductions and additions referred to in Clause 1.1
and the interest referred to in Clause 1.2 will be incorporated
into the accounts and invoices prepared by Startec and the Blue
Xxxxx Affiliate from time to time, as contemplated in the Service
Agreement.
1.4 If the total benefit of the Rate Adjustment to CS any
calendar year comprising the term of this Agreement, commencing
on the Commencement Date (a "Year") amounts to less than
US$150,000 the Blue Xxxxx Affiliate will advise Startec, and
Startec will pay the amount of any shortfall to the Blue Xxxxx
Affiliate within 15 days of receiving that advice.
1.5 If, before the end of any Year, the total benefit of
the Rate Adjustment to the Blue Xxxxx Affiliate in that Year
reaches US$250,000 the Blue Xxxxx Affiliate will advise Startec,
and the parties to the Service Agreement will cease to apply the
Rate Adjustment to payments due to and from the Blue Xxxxx
Affiliate under that agreement for the remainder of the Year, the
Blue Xxxxx Affiliate and Startec will begin reapplying the Rate
Adjustment at the beginning of the next Year.
1.6 The Blue Xxxxx Affiliate and Startec will cease to
apply the Rate Adjustment when the total benefit to the Blue
Xxxxx Affiliate of the Rate Adjustment and any payments made
pursuant to Clause 1.4 equals US$750,000 (the "Base Amount").
1.7 If Startec fails to comply with its obligations under
this letter agreement, otherwise than as a result of the Blue
Xxxxx Affiliate being in default of its obligations under the
Service Agreement, the Blue Xxxxx Affiliate may require Startec:
(a) to issue to the Blue Xxxxx Affiliate or any Affiliate
it may nominate, shares in Startec; or
(b) to provide services under the Service Agreement,
at Startec's expense, to the value of any debt Startec owes to
the Blue Xxxxx Affiliate or any other Loss or expenses incurred
by the Blue Xxxxx Affiliate or any of its Affiliates, as a result
of Startec's failure.
1.8 Without prejudice to Clause 1.8, Startec indemnifies
each of the Blue Xxxxx Affiliate, Blue Xxxxx, their Affiliates,
their respective partners, employees, agents, contractors and
assigns and will keep each of them indemnified from and against
all costs and expenses incurred by them, or any of the, directly
or indirectly as a result of Startec's failure to meet its
obligations under this Letter Agreement.
1.9 For purposes of this letter agreement, the term "Net
Base" shall mean the Base Amount less the aggregate of all Rate
Adjustments allowed pursuant to clause 1.1 and any payments made
pursuant to Clause 1.4.
1.10 This Letter Agreement shall continue for so long as the
Agreement for Management Participation of even date between Blue
Xxxxx, Startec, Inc. and Ram Xxxxxxx ("Management Agreement")
shall remain in force.
1.11 Upon expiration of the Rate Adjustment, Blue Xxxxx will
agree to terminate its rights under Clause 3.1(d) of the
Management Agreement.
If this letter properly sets forth the modifications to the
terms and conditions of the Service Agreement, please sign and
date the consent below and fax the signed consent to me at
000-000-0000.
Sincerely,
STARTEC, INC.
Ram Xxxxxxx, President
CONSENT:
Blue Xxxxx Enterprises Limited
By:____/s/________________
Title: Director
Date: 8th February 95
In consideration of Blue Xxxxx entering into the Management
Agreement and other agreements referred to therein, and for other
good and valuable consideration, I, Ram Xxxxxxx, agree that I am
jointly and severally liable with Startec for any and all loss
the Blue Xxxxx Affiliate may sustain as a result of Startec's
breach of this Letter Agreement.
___________________________
Ram Xxxxxxx
(Personally)
