August 5, 1998
Xx. Xxxxxx Xxxxx
0000 Xxxxxxx Xxxx Xxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Re: Employment Agreement
Dear Xxx:
This letter, effective upon your execution and its return, shall set forth
our complete agreement in connection with the modification (the "Amendment") to
the Employment Agreement between you and Global Telecommunication Solutions,
Inc. (the "Company"), dated as of August 1, 1997 (the "Employment Agreement")
and to the other matters set forth herein. This letter agreement, when
countersigned by you, amends the Employment Agreement.
1. Section 1 of the Employment Agreement is hereby deleted. Executive
acknowledges and agrees that effective August 31, 1998, Executive shall no
longer serve as President of the Company. Executive agrees to use his best
efforts to ensure an orderly transition and to provide the Company with
assistance in those projects that Executive is managing as of August 31, 1998.
2. Section 2.1 of the Employment Agreement shall be amended to read as
follows: "Effective September 1, 1998, the Company shall pay to Executive a base
salary ("Base Salary") at the aggregate rate of $100,000 per annum through the
Employment Term (as such term is defined in Section 3.1 below). Executive's
Salary shall be paid in equal, periodic installments, in accordance with the
Company's normal payroll procedures and shall be subject to withholding taxes
and other normal payroll deductions.
3. Executive and the Company acknowledge and agree that the Options granted
to Executive pursuant to Section 2.3 of the Employment Agreement shall remain
exercisable until December 31, 2001.
4. Section 2.4 of the Employment Agreement shall be amended to read as
follows: "Executive shall be entitled to continue to receive those health
insurance benefits which Executive is receiving as of the date of this Amendment
through the Employment Term; provided, however, in the event Executive becomes
employed after the date of this Amendment and, as a result of such employment,
Executive is eligible to participate in his new employer's group health
insurance plan, the Company's obligation to provide health insurance hereunder
shall terminate as of the date Executive is so eligible."
5. Section 2.6 of the Employment Agreement is hereby deleted.
6. Section 2.7 of the Employment Agreement is hereby deleted.
7. Sections 3.2 (b) and 3.2 (c) of the Employment Agreement are hereby
deleted.
8. The last sentence of Section 3.2(d) is hereby deleted.
Xx. Xxxxxx Xxxxx
August 5, 1998
Page 2
9. Section 3.4 of the Employment Agreement is hereby deleted.
10. Before, during and after the Employment Term, you shall assist the
Company as necessary in its defense or prosecution of litigation currently
existing or commenced in the future arising out of matters transacted while you
were employed by the Company and you shall, subject to your employment or
business obligations, make yourself reasonably available for information
requests and consultation regarding business affairs and transactions of the
Company occurring or commenced during your employment by the Company.
Additionally, you agree that you will continue to work on the following matters
after August 31, 1998 until they are completed or until a representative of the
Company has taken over your duties in connection with that particular matter:
(i) financing agreement with Transamerica Business Credit Corporation ("TBCC")
in accordance with that certain proposal entered into between the Company and
TBCC dated July 23, 1998; (ii) private placement through Penn Merchant Group
pursuant to which the Company is attempting to sell 1,200,000 shares of its
common stock; and (iii) KPMG Peat Marwick ("KPMG") state tax minimization in
accordance with that certain letter from KPMG dated July 28, 1998. No additional
compensation shall be payable to you for any such assistance, information or
consultation; provided, however, the Company shall pay any reasonable out of
pocket costs to be incurred by you in fulfilling your obligations under this
Paragraph10.
11. In the event of a Change in Control, Executive shall be entitled to
receive all payments set forth in Section 2.1, as amended herein, of the
Employment Agreement, in a single lump sum payment within seven (7) days of such
Change in Control.
12. In the event the Company raises a significant amount of capital in
connection with the sale of its securities or the assumption of debt, then the
Company, at the Chairman's reasonable discretion, may choose to pay all payments
set forth in Section 2.1, as amended herein, in a single lump sum payment within
30 days after the closing of such transaction.
13. The Company acknowledges that it has accrued approximately $4 million
in liabilities that may be due and owing to certain state and federal taxing
authorities in connection with the sale of its prepaid phone cards and that such
liabilities are the liabilities of the Company as of the date of this Amendment.
Moreover, the Company acknowledges that to date, it has not satisfied those
accrued liabilities.
14. In executing this letter, you affirm that (i) you are competent and
that you understand and accept the nature, terms and scope of this letter and
the agreements contained herein, (ii) this letter constitutes your valid,
binding and enforceable obligation, enforceable in accordance with its terms,
(iii) this letter states the entire agreement between you and the Company and
that any other agreements which may have existed between you and the Company
(except the Employment Agreement as modified herein) are superseded by this
letter and are no longer effective, (iv) you acknowledge that by signing your
name below you have read, understand and accept each of the terms of this
letter, and that you have had sufficient opportunity to review it, to consult
with an attorney or other advisor, and that you are entering into it freely and
knowingly.
Xx. Xxxxxx Xxxxx
August 5, 1998
Page 3
If this letter accurately sets forth our understanding and agreement with
respect to amending the Employment Agreement and other matters set forth herein,
please indicate by signing in the space provided below and returning this letter
agreement to me.
Very truly yours,
Global Telecommunication Solutions, Inc.
/s/ Xxxxxx Xxxxxx
By:______________________________
Xxxxxx Xxxxxx,
Chairman of the Board
Accepted and agreed to this 5th of August, 1998:
/s/ Xxxxxx Xxxxx
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Xxxxxx Xxxxx
