AGREEMENT REGARDING THE
ASSIGNMENT OF CONTRACTS,
CURE AMOUNTS AND RELATED MATTERS
AGREEMENT, dated as of February __, 2000 (this "Cure and Assignment
Agreement"), is entered into by and among GLOBAL LINK TELECOM CORPORATION, a
Delaware Corporation ("Global Link"), GTS HOLDING CORP., INC., a Delaware
corporation, TELTIME, INC., a Delaware corporation, NETWORK SERVICES SYSTEM,
INC., a Delaware corporation, NETWORK SERVICES SYSTEM, L.P., a Delaware limited
partnership, GTS MARKETING, INC., a Delaware corporation, GLOBAL
TELECOMMUNICATION SOLUTIONS, L.P., a Delaware limited partnership, NETWORKS
AROUND THE WORLD, INC., a New Jersey corporation ("NAWI"), and CENTERPIECE
COMMUNICATIONS, INC., a New Jersey corporation (each a "Debtor" and collectively
the "Debtors"), GLOBAL TELECOMMUNICATION SOLUTIONS, INC. ("GTS Inc."), XXXXXXXX
XXXXXXX, an individual ("Xxxxxxx"), and XXXX XXXXXXX, an individual ("Xxxxxxx").
WHEREAS, the Debtors are debtors and debtors-in-possession in joint
proceedings under Chapter 11 of the Bankruptcy Code before the United States
Bankruptcy Court for the District of Delaware, consolidated for administrative
purposes under Case No. 99-3923 (MFW);
WHEREAS, the Debtors have determined that it is in the best
interests of the Debtors' estates to sell the Debtors' prepaid phonecard
business and the assets related thereto (the "Business") and the Debtors have
been negotiating with various parties for the sale of the Business;
WHEREAS, the Debtors wish to sell the Business to JD Services, Inc.
("Purchaser") and are negotiating an agreement with Purchaser for the purchase
and sale of the Business, including the assignment and assumption of certain
contracts, which agreement is subject to (i) "higher and better offers" received
at an auction, and (ii) Bankruptcy Court approval;
WHEREAS Purchaser requires, as a condition of closing on the
purchase and sale of the Business, that the Non-compete (as hereinafter defined)
be assigned to Purchaser;
WHEREAS, Xxxxxxx was a director of the Debtors, was an officer and
director of the Debtors' parent company, GTS Inc., and Xxxxxxx and Xxxxxxx are
employees of the Debtor GTS L.P.;
WHEREAS, Xxxxxxx and Xxxxxxx have entered into various agreements
with GTS Inc. or NAWI, including the following:
A. Merger and Reorganization Agreement, dated as of January 31, 1998,
among Global Telecommunication Solutions, Inc., Networks Acquisition
Corp., Networks Around the World, Inc., Xxxxxxxx Xxxxxxx and Xxxx
Xxxxxxx (the "Merger Agreement");
B. Non-Negotiable Promissory Note, dated January 31, 1998, in the
amount of $900,000 payable to Xxxxxxxx Xxxxxxx, executed by Global
Telecommunication Solutions, Inc. (the "Xxxxxxx Note");
C. Non-Negotiable Promissory Note, dated January 31, 1998, in the
amount of $100,000 payable to Xxxx Xxxxxxx, executed by Global
Telecommunication Solutions, Inc. (the "Xxxxxxx Note");
D. Earn Out Agreement, dated as of January 31, 1998 among Global
Telecommunication Solutions, Inc. and Xxxxxxxx Xxxxxxx (the "Earn-
out Agreement");
E. Employment Agreement, dated January 31, 1998, between Global
Telecommunication Solutions, Inc. and Xxxxxxxx Xxxxxxx (the "Xxxxxxx
Employment Agreement");
F. Employment Agreement, dated January 31, 1998, between Global
Telecommunication Solutions, Inc. and Xxxx Xxxxxxx (the "Xxxxxxx
Employment Agreement"); and
G. Security Agreement, dated January 31, 1998, between Networks Around
the World, Inc. as Debtor and Xxxxxxxx Xxxxxxx and Xxxx Xxxxxxx as
the Secured Parties (the "Security Agreement").
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The Merger Agreement, Xxxxxxx Note, Xxxxxxx Note, Earn-out Agreement, Xxxxxxx
Employment Agreement, and the Xxxxxxx Employment Agreement may be referred to
herein as the "Required Contracts".
WHEREAS, the Merger Agreement at (pounds)6.2 contains a provision by
which Xxxxxxx and Xxxxxxx have agreed not to compete with the business of GTS
Inc. And affiliates, including the Debtors (the "Non-compete");
WHEREAS the Non-compete provides that if there is a material breach
in payment under the Xxxxxxx Note, Xxxxxxx Note, Earn-out Agreement, Xxxxxxx
Employment Agreement, or the Xxxxxxx Employment Agreement, then Xxxxxxx'
and Xxxxxxx'x obligation under the Non-compete shall cease.
WHEREAS, GTS Inc. is an obligor under the Xxxxxxx Note, Xxxxxxx
Note, Earn-out Agreement, Xxxxxxx Employment Agreement and the Xxxxxxx
Employment Agreement, and the obligations under the Xxxxxxx Note, Xxxxxxx Note,
and the Earn-out Agreement have been assigned to and assumed by Global Link,
without releasing GTS Inc. from its obligations to Xxxxxxx and Xxxxxxx
thereunder;
WHEREAS, in order to transfer the Non-compete to Purchaser (which is
a condition to Purchaser closing on the purchase and sale of the Business) it
will be necessary for Global Link, NAWI, the Debtors and GTS, Inc. to cure
defaults under the contracts so that the contracts may be assigned to Purchaser;
WHEREAS, Xxxxxxx claims that he is owed $900,000 plus approximately
$90,000 in interest by Global Link and GTS Inc. under the Xxxxxxx Note.
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WHEREAS, the Debtors and GTS Inc. believe that there are certain
offsets to the obligations to make payment to Xxxxxxx under the Xxxxxxx Note,
including (I) an offset in the amount of approximately $375,000 based upon an
agreement with Xxxxxxx to allow an offset for a loss sustained by the Debtors
due to the failure of a carrier, Access Telecom, Inc., to provide service to the
Debtors (the "Access Offset"); and (ii) an agreement by Xxxxxxx to convert the
remaining debt under the note to equity in GTS Inc. at the rate of $.80/share
(the "Conversion Offset"). Thus, the Debtors and GTS Inc. believe that the
Access Offset and the Conversion Offset completely offset all amounts due under
the Xxxxxxx Note, and therefore, the Debtors and GTS Inc. believe their
liability to Xxxxxxx under the Xxxxxxx Note can be completely satisfied by the
application of the Access Offset and delivery of the stock under the Conversion
Offset.
WHEREAS, Xxxxxxx claims that he is owed $100,000 plus approximately
$10,000 in interest by Global Link and GTS Inc. under the Xxxxxxx Note.
WHEREAS, Xxxxxxx alleges that he is owed $876,157.00 by Global Link
and GTS Inc. under the Earn-out Agreement for sales during the periods ending
July 31, 1999, that such amount was payable on October 31, 1999 and now is past
due and accruing interest. Xxxxxxx also alleges that for sales for the period
from August 1, 1999 through January 31, 2000, he will be entitled to an
additional payment, in the estimated amount of approximately $322,000, payable
on April 30, 2000.
WHEREAS, the Debtors and GTS Inc. believe that there are certain
offsets or defenses to the obligations to make certain payments to Xxxxxxx under
the Earn-out
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Agreement, including that no payment is or will become due for the period from
August 1, 1999 through January 31, 2000.
WHEREAS, Xxxxxxx claims that he is entitled to approximately $64,167
for unpaid salary under his Employment Agreement and Xxxxxxx claims that he is
entitled to approximately $9,000 for unpaid second quarter bonuses and $6,000
for unpaid fourth quarter bonuses under his Employment Agreement.
WHEREAS, Xxxxxxx also alleges that he is entitled to interest,
attorneys' fees and costs relating to his claims under the Earn-out Agreement.
WHEREAS, Xxxxxxx and Xxxxxxx are not aware of any other claims which
they may have against GTS Inc. or the Debtors other than the claims set forth
herein.
WHEREAS, the Debtors, GTS Inc., Xxxxxxx and Xxxxxxx wish to avoid
litigation over the issues set forth herein, acknowledge that this agreement was
negotiated in good faith with all parties having the advice of counsel, and the
parties believe that the agreements contained herein are in the best interest of
the Debtors' estates and all parties hereto;
NOW THEREFORE, IT IS HEREBY AGREED, by and between the Debtors, GTS
Inc., Xxxxxxx and Xxxxxxx that:
1. The Debtors and GTS Inc. shall be entitled to reduce the Xxxxxxx
Note to zero, based upon the Access Offset and the Conversion Offset, and shall
no longer have any liability under the Xxxxxxx Note, upon compliance with
paragraph 4 of this Cure and Assignment Agreement.
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2. Three weeks after the Closing of a sale to Purchaser, the Debtors
shall pay to Xxxxxxx $110,000 for unpaid obligations under the Xxxxxxx Note. At
the Closing of a sale to Purchaser, GTS Inc. shall deliver to Xxxxxxx 50,000
shares of GTS common stock subject to trading restrictions and exemptions under
applicable securities laws ("Rule 144 Stock").
3. On the date that the true-up referred to in Section 1.7 of the
Asset Purchase Agreement is finalized, to cure all defaults under the Earn-out
Agreement and to compensate Xxxxxxx for any damages he may have suffered,
Xxxxxxx shall be entitled to receive from the Debtors an amount, up to an
additional $1,198,157, equal to: (a) directly from Purchaser, all of the
proceeds resulting from the true-up from Purchaser with the Debtors up to
$500,000; and (b) 70% of the amount of the Debtors' available cash remaining
after deducting amounts for unpaid administrative expenses accrued and
reasonably expected to be incurred through the effective date of a confirmed
plan. In addition to the amount set forth in subparagraph 3(b) hereof, Xxxxxxx
shall be entitled to an administrative priority claim, subordinate to all other
administrative priority claims, for 70% of the amount of the Debtors' available
cash remaining after payment of all other allowed administrative priority
claims, payable on the effective date of a plan.
4. Within two business days of executing this Agreement, GTS Inc.
shall deliver to Xxxxxxx 769,750 shares of GTS Rule 144 common stock in
consideration of Xxxxxxx' conversion of a portion of the Xxxxxxx Note in
accordance with the Conversion
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Offset. Failure to deliver such stock as provided in this paragraph shall be a
material breach of the Required Contracts.
5. At the Closing of a sale to Purchaser, GTS, Inc. shall: (a) pay
$30,000 to Xxxxxxx; and (b) assign (or cause to be assigned) to Xxxxxxx GTS,
Inc.'s interest in the trademarks/tradenames "Networks Around the World, Inc."
and "Centerpiece Communications, Inc." to compensate Xxxxxxx for interest and
other costs incurred in accordance with the provisions of the Earn-out
Agreement. At the Closing the Debtors shall assign to Xxxxxxx the Debtors'
interests in the trademarks/tradenames Networks Around the World, Inc." and
"Centerpiece Communications, Inc." Failure to make such payments and deliver
such assignments as provided in this paragraph shall be a material breach of the
Required Contracts.
6. At the Closing of a sale to Purchaser, GTS, Inc. shall pay to
Xxxxxxx $64,167 for unpaid obligations under the Xxxxxxx Employment Agreement.
Failure to make such payment as provided in this paragraph shall be a material
breach of the Required Contracts.
7. At the Closing of a sale to Purchaser, GTS Inc. shall pay to
Xxxxxxx $15,000 for unpaid obligations under the Xxxxxxx Employment Agreement.
Failure to make such payment as provided in this paragraph shall be a material
breach of the Required Contracts.
8. At the Closing of a sale to Purchaser, the Debtors will assign to
the Purchaser their rights and interests in all of the Required Contracts,
including, but not
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limited to, the Merger Agreement, the Xxxxxxx and Xxxxxxx Notes and the Earn-out
Agreement.
9. At the Closing of a sale to Purchaser, GTS Inc. will assign to
the Purchaser its rights, if any, under all of the Required Contracts,
including, but not limited to, the Merger Agreement, the Xxxxxxx Note, the
Xxxxxxx Note, the Earn-out Agreement and the Xxxxxxx and Xxxxxxx Employment
Agreements.
10. Xxxxxxx and Xxxxxxx each acknowledge that compliance with
paragraphs 2, 3, 4, 5, 6 and 7 of this Agreement:
a. cures all of the Debtors' defaults under the Required
Contracts, as required by 365(b)(1)(A) of the Bankruptcy Code;
b. compensates each of them for any actual pecuniary loss
resulting from any of the Debtors' defaults under the Required
Contracts, as required by (pound)365(b)(1)(B) of the
Bankruptcy Code;
c. provides each of them with adequate assurance of future
performance of the obligations under the Required Contracts,
as required by (pound)365(b)(1)(C) of the Bankruptcy Code.
11. Upon full compliance with paragraphs 2, 3, 4, 5, 6 and 7 of this
Cure and Assignment Agreement by the Debtors, GTS Inc., to the extent that any
default remains uncured, any damages have not been paid or assurance of future
performance has not been
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given, Xxxxxxx and Xxxxxxx each waive any rights they may have against the
Debtors and the Purchaser with respect thereto.
12. Xxxxxxx and Xxxxxxx consent to the assignment of the Required
Contracts at the Closing of a sale to Purchaser, subject to and conditioned upon
performance of the terms and conditions set forth in paragraphs 2, 3, 4, 5, 6
and 7 of this Cure and Assignment Agreement.
13. If requested, Xxxxxxx and Xxxxxxx will, upon receipt of the
common stock and amounts due under paragraphs 2, 3, 4, 5, 6 and 7 hereof and
receipt of the assumption agreement under paragraph 14 hereof, provide to
Purchaser a writing, in a form reasonably acceptable to Purchaser:
a. consenting to the assignment to and assumption by the
Purchaser of the Required Contracts;
b. acknowledging that the Required Contracts remain in full force
and effect and agreeing to be bound by the provisions of the
Required Contracts, including but not limited to the
Restrictive Covenant contained in (pound)6.2 of the Merger
Agreement;
c. acknowledging that all defaults of the Debtors existing as of
Closing under the Required Contracts have been cured or waived
by each Xxxxxxx and Xxxxxxx, except as set forth in paragraph
16 hereof;
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d. acknowledging that they each have been compensated for damages
suffered as a result of any breach by the Debtors of the
Required Contracts existing as of Closing or have waived any
such right, except as set forth in paragraph 16 hereof;
e. acknowledging that they each have been provided with adequate
assurance of future performance under the Required Contracts
or have waived any such right;
f. acknowledging and agreeing that the Required Contracts are
modified, and that in consideration of the payments received
and to be received, Xxxxxxx and Xxxxxxx waive any rights
against the Debtors they may have under the Required
Contracts, except for the right to receive the following,
which obligations are being assumed by the Purchaser:
(1) The obligations to pay salary and bonuses and to provide
benefits to Xxxxxxx under the Xxxxxxx Employment
Agreement; and
(2) The obligations to pay salary and bonuses and to provide
benefits to Xxxxxxx under the Xxxxxxx Employment
Agreement.
14. At the Closing of a sale to Purchaser the Debtors' will attempt
to obtain from Purchaser a writing in a form reasonably acceptable to Xxxxxxx
and Xxxxxxx
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acknowledging and agreeing that Purchaser has assumed liability to
Xxxxxxx and Xxxxxxx for the obligations set forth in paragraph 13(f) hereof.
15. At the Closing of a sale to Purchaser, the Debtors (but not GTS,
Inc.) on one side and Xxxxxxx and Xxxxxxx on the other shall exchange mutual
releases substantially in the form set forth below:
Xxxxxxx and Xxxxxxx, on one side, and the Debtors on the other, for
good and valuable consideration, the receipt and sufficiency whereof is hereby
acknowledged, release and discharge each other and each others' heirs,
executors, administrators, successors and assigns from all actions, causes of
action, suits, debts, sums of money, accounts, reckonings, bonds, bills,
specialties, covenants, contracts, controversies, agreements, promises,
variances, trespasses, damages, judgments, extents, executions, claims, and
demands whatsoever, in law, admiralty or equity, which against each other and
each others successors and assigns they ever had, now have or hereafter can,
shall or may have, for, upon or by reason of any matter, cause or thing,
including, but not limited to claims arising out of or relating to the Required
Contracts, excepting however, the obligations under this Agreement Regarding The
Assignment of Contracts, Cure Amounts and Related Matters.
16. Conditioned and effective upon receipt of the common stock, the
amounts due under paragraphs 2, 4, 5, 6 and 7 hereof and, in addition to the
amounts under paragraphs 2, 4, 5, 6 and 7 hereof, payment within six (6) months
of the Closing Date of $700,000 of the amount referred to in paragraph 3 hereof
Xxxxxxx and Xxxxxxx
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release and discharge GTS Inc. and its parents, subsidiaries, affiliates,
officers, directors, agents, shareholders and employees from all obligations
under the Required Contracts, excepting however, the obligations under this
Agreement Regarding The Assignment of Contracts, Cure Amounts and Related
Matters.
17. Conditioned and effective upon the deliveries required under
paragraph 13 hereof, GTS, Inc. releases and discharges Xxxxxxx and Xxxxxxx and
their heirs, executors, administrators, successors and assigns from all actions,
causes of action, suits, debts, sums of money, accounts, reckonings, bonds,
bills, specialties, covenants, contracts, controversies, agreements, promises,
variances, trespasses, damages, judgments, extents, executions, claims, and
demands whatsoever, in law, admiralty or equity, which GTS Inc. and its
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, including, but not limited
to claims arising out of or relating to the Required Contracts, excepting
however, the obligations under this Agreement Regarding The Assignment of
Contracts, Cure Amounts and Related Matters.
18. The parties hereto each acknowledge and agree that Purchaser is
deemed to be an intended third party beneficiary of the agreements contained
herein, but that Xxxxxxx and Xxxxxxx do not, by signing this Agreement, consent
to assumption and assignment on these terms by any other buyer.
19. This Cure and Assignment Agreement may not be changed orally but
may be modified by a writing signed by all the parties hereto. If such
modification is made by the parties after they shall have received Bankruptcy
Court approval of this Cure and
12
Assignment Agreement, any such modification shall have the same force and effect
as if it had been approved by the Bankruptcy Court.
20. This Agreement is conditioned upon and becomes effective only
upon the closing of a sale of the Debtors' business to the Purchaser, which sale
requires the assignment of the Non-compete.
21. Nothing in this Cure and Assignment Agreement shall be deemed a
waiver of any existing defaults under the Required Contracts, except as set
forth in paragraphs 10, 11, 13,15, 16 and 17 hereof.
22. This Agreement is subject to Bankruptcy Court approval.
GLOBAL LINK TELECOM CORPORATION GTS HOLDING CORP., INC.
/s/ Xxx X. Xxxxxxxxxx /s/ Xxx X. Xxxxxxxxxx
------------------------------- -----------------------------------
By: Xxx X. Xxxxxxxxxx By: Xxx X. Xxxxxxxxxx
Title:Chief Financial Officer Title:Chief Financial Officer
NETWORK SERVICES SYSTEM, INC. TELTIME, INC.
/s/ Xxx X. Xxxxxxxxxx /s/ Xxx X. Xxxxxxxxxx
------------------------------- -----------------------------------
By: Xxx X. Xxxxxxxxxx By: Xxx X. Xxxxxxxxxx
Title:Chief Financial Officer Title:Chief Financial Officer
NETWORK SERVICES SYSTEM, L.P. GTS MARKETING, INC.
/s/ Xxx X. Xxxxxxxxxx /s/ Xxx X. Xxxxxxxxxx
------------------------------- -----------------------------------
By: Xxx X. Xxxxxxxxxx By: Xxx X. Xxxxxxxxxx
Title:Chief Financial Officer Title:Chief Financial Officer
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GLOBAL TELECOMMUNICATION SOLUTIONS, L.P.
/s/ Xxx X. Xxxxxxxxxx
-----------------------------------------
By: Xxx X. Xxxxxxxxxx
Title:Chief Financial Officer
NETWORKS AROUND THE WORLD, INC. CENTERPIECE COMMUNICATIONS, INC.
/s/ Xxx X. Xxxxxxxxxx /s/ Xxx X. Xxxxxxxxxx
------------------------------- -----------------------------------
By: Xxx X. Xxxxxxxxxx By: Xxx X. Xxxxxxxxxx
Title:Chief Financial Officer Title:Chief Financial Officer
GLOBAL TELECOMMUNICATION SOLUTIONS, INC.
/s/ Xxx X. Xxxxxxxxxx
----------------------------------------
By: Xxx X. Xxxxxxxxxx
Title:Chief Financial Officer
XXXXXXXX XXXXXXX XXXX XXXXXXX
/s/ XXXXXXXX XXXXXXX /s/ XXXX XXXXXXX
------------------------------- -----------------------------------
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