Sample Business Contracts


Agreement - Communication Telesystems International d/b/a WorldxChange Communications, Tel-Save.com Inc., Mark Pavol, D&K Grantor Retain Annuity Trust, Roger B. Abbott, Rosalind Abbott and Edward Soren

Promissory Notes


                                    AGREEMENT



     This  agreement  (this  "Agreement")  is entered into as of March __, 1999,
effective  as of  February  28,  1999  (the  "Effective  Date"),  by  and  among
COMMUNICATION TELESYSTEMS INTERNATIONAL,  d.b.a. WorldxChange Communications,  a
California  corporation  ("CTS"),  TEL-SAVE.com,  INC.,  a Delaware  corporation
("Tel-Save"),  TEL-SAVE,  INC., a Pennsylvania  corporation  and a subsidiary of
Tel-Save (the "Subsidiary"),  MARK PAVOL, as Trustee of that certain D&K Grantor
Retained  Annuity Trust dated June 15, 1998 (the  "Trust"),  ROGER B. ABBOTT AND
ROSALIND ABBOTT,  individuals residing in San Diego,  California  (collectively,
the  "Abbotts"),  and  EDWARD  SOREN,  an  individual  residing  in  San  Diego,
California ("Soren").


                                    RECITALS

     A. CTS is the maker of three  subordinated  promissory  notes,  each  dated
August 25, 1998, in favor of Gerard Klauer  Mattison & Co., Inc.  ("GKM") in the
aggregate initial principal amount of $55,000,000 (collectively, the "Notes").

     B. CTS is the maker of a  subordinated  promissory  note,  dated August 25,
1998, in favor of Tel-Save in the initial  principal  amount of $1,200,000  (the
"Accrued Interest Note").

     C. CTS and GKM entered into that certain  Security  Agreement  dated August
25, 1998 (the "Security Agreement"), pursuant to which CTS provided security for
repayment of the Notes and of the Accrued Interest Note, among other things.

     D. The Abbotts and GKM entered into that  certain  Pledge  Agreement  dated
August 25, 1998 (the "Abbott Pledge  Agreement"),  pursuant to which the Abbotts
granted  a limited  guaranty  of the Notes  and of the  Accrued  Interest  Note,
pledged  certain shares of CTS stock (the "Abbott  Pledged  Shares") as security
for such limited  guaranty,  and delivered  appropriate  stock  certificates and
stock powers pursuant to such pledge.

     E. Soren and GKM entered into that certain  Pledge  Agreement  dated August
25,  1998 (the "Soren  Pledge  Agreement"),  pursuant  to which Soren  granted a
limited guaranty of the Notes and of the Accrued Interest Note,  pledged certain
shares of CTS stock (the "Soren  Pledged  Shares") as security  for such limited
guaranty, and delivered appropriate stock certificates and stock powers pursuant
to such pledge.

     F. GKM assigned to Tel-Save all of the rights,  title,  and interest of GKM
in the Notes, the Security  Agreement,  the Abbott Pledge Agreement,  the Abbott
Pledged Shares,  the Soren Pledge Agreement,  the Soren Pledged Shares,  and all
related stock certificates and stock powers.



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<PAGE>

     G. CTS consented to such assignment  from GKM to Tel-Save and  acknowledged
Tel-Save as the payee of the Notes and the  Secured  Party under (and as defined
in) the Security Agreement.

     H. The  Abbotts  consented  to such  assignment  from GKM to  Tel-Save  and
acknowledged  Tel-Save as the Secured Party under (and as defined in) the Abbott
Pledge Agreement.

     I. Soren consented to such assignment from GKM to Tel-Save and acknowledged
Tel-Save  as the  Secured  Party  under  (and as  defined  in) the Soren  Pledge
Agreement.

     J. Pursuant to that certain  Exchange  Agreement dated January 2, 1999 (the
"Exchange Agreement"), Tel-Save granted to the Trust a participation interest in
all of the rights,  title,  and  interest of Tel-Save in the Notes,  the Accrued
Interest Note, the Security  Agreement,  the Abbott Pledge Agreement,  the Soren
Pledge  Agreement,  the Abbott Pledged  Shares,  the Soren Pledged  Shares,  all
related  stock  certificates  and  stock  powers,  that  certain   Intercreditor
Agreement dated as of August 25, 1998, between Foothill Capital  Corporation,  a
California corporation,  Tel-Save, and GKM, and the Financing Statement that was
filed in  connection  with the  Security  Agreement  and that  showed CTS as the
Debtor  and  Tel-Save  as the  Secured  Party  (such  documents,  other than the
Exchange  Agreement,  to be referred to  hereinafter  collectively  as the "Note
Documents").

     K. CTS  desires  to sell  equity  securities  in an  amount  not less  than
$30,000,000,  and desires to enter into this  Agreement in connection  with that
proposed sale.

     L. The parties hereto  acknowledge  and agree that the aggregate  principal
balance owing on the Notes at the date hereof is $50,000,000.

     M. The parties  hereto  acknowledge  and agree that the  principal  balance
owing on the Accrued Interest Note at the date hereof is $1,200,000.

     N. The  parties  hereto  desire  to modify  certain  of the  covenants  and
provisions of the Accrued  Interest Note and the Notes and to enter into certain
other agreements as hereinafter set forth.

     NOW  THEREFORE,  for good  and  valuable  consideration,  the  receipt  and
sufficiency of which is hereby acknowledged, the parties hereto agree that:

          1. INCORPORATION OF RECITALS. CTS represents and warrants that Recital
K of this Agreement is true,  complete,  and correct. All other Recitals to this
Agreement  are hereby  incorporated  by this  reference  herein  and  constitute
agreements among the parties hereto.

          2.  MODIFICATION  OF CALL  RIGHTS  UNDER THE NOTES.  Each of the Notes
contains  certain "Call  Rights" (as defined in the Notes).  As of the Effective
Date, the second paragraph (unnumbered) of each Note shall be amended to read in
full as follows:

          "In the event that the Maker shall close a private placement or public
          offering of its Common Stock (an "Equity Offering"),  the


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<PAGE>

          Holder shall have the right (the "Call Right") to require the Maker to
          use up to an amount (the "Amount") of the net proceeds received by the
          Maker  from the  Equity  Offering  to repay  any  accrued  but  unpaid
          interest and any unpaid principal  balance under this Note;  provided,
          however,  the Holder shall have, within ten business days from receipt
          of a  written  notice  by the  Maker of a  proposed  Equity  Offering,
          notified  the Maker in writing of the  exercise of its Call Right with
          respect  to  such  proposed  Equity  Offering.  The  Amount  shall  be
          expressed  herein as an aggregate amount to be applicable to this Note
          and two other notes issued by Maker concurrently herewith, which three
          promissory  notes are in the  initial  aggregate  principal  amount of
          $55,000,000.  The Amount shall be divided among such three  promissory
          notes  pro rata  based on the  initial  principal  amount of each such
          promissory  note.  The Maker shall provide the Holder with  reasonable
          written notice of any proposed Equity Offering.

               "(a) In the event that,  after February 28, 1999, Maker closes an
          Equity  Offering  in which  net  proceeds  to the  Maker  are at least
          $6,000,000 (the "First Equity Offering"),  the Amount shall be limited
          to an amount  equal to the  greater  of:  (i) 20% of the net  proceeds
          received  by  the  Maker  from  the  First  Equity  Offering  or  (ii)
          $6,000,000.

               "(b) With  respect to any Equity  Offering  after the date of the
          First Equity Offering,  the Amount shall be limited to an amount equal
          to 35% of the net  proceeds  received  by the Maker  from such  Equity
          Offering.

               "(c) With respect to any Equity Offering after the Effective Date
          of this Agreement but prior to the First Equity  Offering,  the Amount
          shall  be  limited  to an  amount  equal  to 25% of the  net  proceeds
          received by the Maker from such Equity Offering.

               "(d)  Multiple  closings  under  one  agreement  for the  private
          placement  of Common  Stock of the Maker shall be deemed to be part of
          the same Equity Offering."

          3.  POSSIBLE ONE YEAR  EXTENSION  OF THE TERM OF THE ACCRUED  INTEREST
NOTE AND THE NOTES.  In the event that, on or before  November 30, 2000: (i) the
Accrued  Interest Note and the Notes have not been repaid in full;  and (ii) CTS
has made  payments of principal on the Accrued  Interest Note or the Notes after
the Effective Date of an aggregate amount of at least $12,250,000 (excluding any
and all payments  described in subsection (a) contained in the amendment  quoted
in Section 2 of this Agreement),  then the due date of the Accrued Interest Note
and each of the Notes shall be extended  from November 30, 2000, to November 30,
2001.

          4.  POSSIBLE TWO YEAR  EXTENSION  OF THE TERM OF THE ACCRUED  INTEREST
NOTE AND THE NOTES.  In the event that, on or before  November 30, 2001: (i) the
Accrued 


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<PAGE>


Interest Note and the Notes have not been repaid in full;  and (ii) CTS has made
payments  of  principal  on the  Accrued  Interest  Note or the Notes  after the
Effective Date of an aggregate amount of at least $21,000,000 (excluding any and
all payments  described in subsection  (a) contained in the amendment  quoted in
Section 2 of this Agreement), then the due date of the Accrued Interest Note and
each of the Notes shall be extended from November 30, 2000, or, if the due dates
have already been extended pursuant to Section 3 hereof, from November 30, 2001,
to November 30, 2002.

          5. CERTAIN CONSENTS AND WAIVERS.

               (a) Each of CTS, the Abbotts, and Soren  (collectively,  the "CTS
Parties")  acknowledges  and consents to each of the  assignments  and transfers
referred to in this Agreement,  including without limitation the assignments and
transfers referred to in the Recitals to this Agreement.

               (b) Each of the CTS Parties  acknowledges  and certifies that, as
of the date hereof,  no default or Event of Default exists under any of the Note
Documents,  nor would a default or Event of Default exist thereunder with notice
or the passage of time or both.

               (c) CTS  acknowledges and agrees that it has waived the effect of
Section  4.10 of the Security  Agreement  and that such Section is of no further
force or effect.

               (d) Each of the CTS  Parties  represents  and  warrants  to,  and
agrees with, each of Tel-Save, the Trust, and the Subsidiary (collectively,  the
"Other  Parties") that, at the date hereof:  (i) none of the Other Parties is in
default  under  any of the Note  Documents;  (ii)  none of the CTS  Parties  has
suffered any damage under any of the Note Documents, and none of the CTS Parties
has, under any of the Note Documents,  any cause of action,  right of set-off or
counterclaim,  or any other claim of any nature whatsoever under any of the Note
Documents against any of the Other Parties or any director,  officer,  attorney,
agent,  employee, or affiliate of any of the Other Parties  (collectively,  "CTS
Parties'  Claims");  and  (iii)  each  of the  CTS  Parties  hereby  waives  and
relinquishes any and all CTS Parties' Claims.

               (e) Each of the Other  Parties  represents  and  warrants to, and
agrees with,  each of the CTS Parties that, at the date hereof:  (i) none of the
CTS  Parties is in  default  under any of the Note  Documents;  (ii) none of the
Other Parties has suffered any damage under any of the Note Documents,  and none
of the Other Parties has, under any of the Note Documents,  any cause of action,
right of set-off or  counterclaim,  or any other claim of any nature  whatsoever
under any of the Note Documents  against any of the CTS Parties or any director,
officer,  attorney,  agent,  employee,  or  affiliate  of any of the CTS Parties
(collectively,  "Other  Parties'  Claims");  and (iii) each of the Other Parties
hereby waives and relinquishes any and all Other Parties' Claims.

               (f) CTS agrees that the Security  Agreement remains in full force
and effect on the date hereof and that its force and effect will not be affected
by any of the  transactions  contemplated  hereby,  subject  only to the express
confirmation  of the  prior  modification  of the  Security  Agreement  by  this
Agreement,  and that the Security Agreement provides collateral security for the
Accrued Interest Note and for the Notes.


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<PAGE>


               (g) Each of the Abbotts  agrees that the Abbott Pledge  Agreement
remains  in full  force  and  effect on the date  hereof  and that its force and
effect will not be affected by any of the transactions  contemplated hereby, and
that it provides  collateral  security for the Accrued Interest Note and for the
Notes.

               (h) Soren agrees that the Soren Pledge Agreement  remains in full
force and effect on the date  hereof  and that its force and effect  will not be
affected by any of the transactions  contemplated  hereby,  and that it provides
collateral security for the Accrued Interest Note and for the Notes.

               (i) CTS  acknowledges and agrees that it may not reduce or offset
against any of its  obligations  under any of the Notes or the Accrued  Interest
Note for any reason whatsover. Without limiting the generality of the foregoing,
nothing in this Agreement shall be deemed or construed to create such a right of
offset.

          6. CERTAIN AGREEMENTS.

               (a) Tel-Save  represents  and warrants to the Trust and CTS that,
except  for the  transfer  to the Trust  referred  to herein,  Tel-Save  has not
transferred or assigned any of the Note Documents,  or any interest therein,  to
any other person or entity.

               (b) The Trust  represents  and  warrants to Tel-Save and CTS that
the Trust has not  transferred  or assigned  any of the Note  Documents,  or any
interest therein, to any other person or entity.

               (c)  None of the  Other  Parties  shall  have any  obligation  or
responsibility  with  regard  to the  offer,  purchase,  or sale  of any  Equity
Offering.  Without limiting the generality of the foregoing,  and except for the
agreements of the Other Parties  expressly set forth in this Agreement,  none of
the Other Parties makes any representation, warranty, or covenant regarding CTS,
any Equity Offering,  or such offer,  purchase, or sale, and expressly disclaims
any such representation, warranty, or covenant, express or implied.

          7.  ADDITIONAL  COVENANTS.  Within 10 days  following  the  receipt by
Tel-Save of a minimum of  $6,000,000  from CTS as payment under  subsection  (a)
contained in the amendment quoted in Section 2 hereof, provided that such amount
is received by Tel-Save on or prior to May 31, 1999:

               (a) Tel-Save, the Subsidiary, and the Trust shall enter into that
certain  Modification  of the  Exchange  Agreement,  substantially  in the  form
attached hereto as Exhibit A, pursuant to which: (i) The Trust shall release and
discharge  Tel-Save and the Subsidiary  from all of their future  individual and
joint obligations and responsibilities  under the Exchange Agreement,  including
without limitation the obligation of the Subsidiary to perform under its limited
guaranty set forth in the Exchange  Agreement;  (ii) Tel-Save  shall sell to the
Trust the  participation  interest  of  Tel-Save  in the Note  Documents;  (iii)
Tel-Save  shall  assign and deliver the Note  Documents  to the Trust;  (iv) the
Subsidiary  shall waive any guaranty fee payable under Section 4 of the Exchange
Agreement;  and (v)  Tel-Save and the Trust shall agree that  Sections  3.4-3.18
(inclusive),  4, and 5 of the Exchange  Agreement are  terminated  and are of no
further force or effect.


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<PAGE>


               (b)  Tel-Save  and the Trust  shall  execute  and deliver to each
other and to the other parties thereto a Modification of the Registration Rights
Agreement  substantially  in the form of Exhibit B hereto,  and the Trust  shall
cause  the  other  parties  to  such  Modification  of the  Registration  Rights
Agreement to execute and deliver such document to each other and to Tel-Save and
the Trust.

               (c) CTS shall pay up to $10,000 of the reasonable  costs and fees
incurred by Tel-Save,  the  Subsidiary,  and the Trust in  connection  with this
Agreement and the transactions contemplated hereby, including without limitation
the reasonable fees of legal counsel incurred by such entities.

               (d) The Trust shall deliver to CTS the Accrued  Interest Note and
the Notes in exchange  for an Amended and  Restated  Accrued  Interest  Note and
Amended and Restated  Notes that shall be of identical  terms as the  promissory
notes  exchanged  therefor  except that the payee of such  Amended and  Restated
promissory notes shall be the Trust.

               (e) At the time of the transactions identified in this Section 7,
each of the Abbotts and Soren shall  reconfirm in writing that their  respective
Pledge Agreements remain in full force and effect.

          8.  TERMINATION.  If,  on or before  May 31,  1999,  Tel-Save  has not
received  a minimum  of  $6,000,000  from CTS as payment  under  subsection  (a)
contained in the amendment quoted in Section 2 hereof: (a) Sections 2, 3, 4, and
7 of  this  Agreement  shall  be of no  further  force  or  effect;  and (b) the
provisions  set  forth  in  Sections  2, 3, and 4 hereof  amending  the  Accrued
Interest Note and the Notes shall be rescinded as of the Effective  Date,  shall
be of no further  force or effect,  and the Accrued  Interest Note and the Notes
shall revert to their forms as they existed prior to such amendments.

          9. BINDING EFFECT; TRANSFER. This Agreement is binding upon and inures
to the  benefit  of the  successors  and  assigns of each of the  parties.  This
Agreement is also binding upon any  transferees of the Accrued  Interest Note or
any of the Notes. Each of the Other Parties agrees not to assign or transfer the
Accrued  Interest  Note or any of the Notes  without  first:  (i)  informing the
assignee or  transferee  of the terms of this  Agreement;  (ii)  providing  such
assignee or transferee with a copy of this Agreement; and (iii) notifying CTS in
writing of the  proposed  transfer.  The  possible  modifications  and  possible
extensions in Sections 2, 3, and 4 hereof shall apply only to the provisions and
periods  specifically  referred  to therein  and no other,  further,  or broader
modifications or possible  extensions,  or any waiver or consent, is inferred or
shall be implied.

          10.  GOVERNING  LAW.  This  Agreement  is and  shall be deemed to be a
contract entered into and made pursuant to the laws of the State of New York and
shall  in  all  respects  be  governed,  construed,  applied,  and  enforced  in
accordance  with the laws of the State of New York  without  regard to choice of
law  principles.  The parties hereby agree that the venue of any legal action or
proceeding  with respect to this Agreement and the rights and obligations of the
parties hereto shall lie in any state or federal court in the State of New York.
Each of the  parties  further  consents  to and  hereby  submits  itself  to the
jurisdiction of the above-mentioned courts situated in the State of New York.


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<PAGE>

          11.  FULL FORCE AND EFFECT OF CERTAIN  DOCUMENTS.  Each of the parties
hereto  agrees  that,  at the date hereof each of the Note  Documents is in full
force and effect except as modified by this Agreement and the Exhibits hereto.

          12.  FURTHER  COOPERATION.  Each  of  the  parties  hereto  agrees  to
cooperate with each of the other parties hereto, including without limitation by
executing and delivering  appropriate  documents,  to more fully  effectuate the
purposes of this Agreement.

          13.  EXHIBITS.  Exhibits  A and  B  hereto  are,  by  this  reference,
incorporated herein.

          14. LEGEND. On or before the date of this Agreement, the Other Parties
shall cause the following legend to be stamped or otherwise  imprinted (while in
the presence of an officer of CTS) on the Accrued  Interest Note and each of the
Notes:

          "THIS NOTE AND THE INDEBTEDNESS  EVIDENCED BY THIS NOTE ARE SUBJECT TO
     AN  AGREEMENT,  DATED AS OF MARCH __,  1999,  BY AND  BETWEEN THE MAKER (AS
     DEFINED HEREIN), TEL-SAVE.com, INC., AND TEL-SAVE, INC., AND OTHER PARTIES,
     COPIES OF WHICH  AGREEMENT  MAY BE OBTAINED FROM THE SECRETARY OF THE MAKER
     (AS DEFINED HEREIN)."

     IN WITNESS  WHEREOF,  CTS,  Tel-Save,  the  Subsidiary,  and the Trust have
caused this  Agreement to be executed by their  respective  officers,  thereunto
duly authorized,  and the Abbotts and Soren have executed this Agreement,  as of
the date first above written to be effective as of the Effective Date.

COMMUNICATIONS TELESYSTEMS
INTERNATIONAL, d.b.a.
WORLDXCHANGE
COMMUNICATIONS, a California
corporation


By:
   ---------------------------

Name:
     -------------------------

Title:
      ------------------------



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<PAGE>

TEL-SAVE.com, INC., a Delaware
corporation


By:
   ---------------------------

Name:
     -------------------------

Title:
      ------------------------


TEL-SAVE, INC., a Pennsylvania
corporation


By:
   ---------------------------

Name:
     -------------------------

Title:
      ------------------------



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<PAGE>



MARK PAVOL, as Trustee of that certain
D&K Grantor Retained Annuity Trust
dated June 15, 1998



------------------------------------




ROGER B. ABBOTT


------------------------------------



ROSALIND ABBOTT


------------------------------------



EDWARD S. SOREN


------------------------------------




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<PAGE>



                                LIST OF EXHIBITS


A. Modification of the Exchange Agreement
B. Modification of Registration Rights Agreement




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