SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): DECEMBER 10, 1998
TOTAL-TEL USA COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
NEW JERSEY
(State or other jurisdiction of incorporation)
0-2180 1656895
(Commission (I.R.S. Employer
File Number) Identification Number)
OVERLOOK AT GREAT NOTCH
150 CLOVE ROAD
BOX 449
LITTLE FALLS, NEW JERSEY 07054
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (973) 812-1100
NONE
(Former name or former address, if changed since last report)
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Item 5. Other Events
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On December 10, 1998, Total-Tel USA Communications, Inc. ("the "Company"),
a New Jersey corporation, entered into a Settlement Agreement with Revision,
LLC, ("Revision"), a Delaware limited liability corporation, Gold & Appel
Transfer, S.A. ("Gold & Appel"), a British Virgin Islands corporation, and Walt
Anderson (the "Settlement Agreement") terminating litigation initiated in April
1998 by Gold & Appel and Mr. Anderson against Total-Tel (the "Litigation"). Mr.
Anderson is the attorney-in-fact for Gold & Appel. Warren Feldman is Total-Tel's
Chairman and Chief Executive Officer; Solomon Feldman is a director of the
company. The Settlement Agreement also includes the resolution of a proxy
contest initiated by Revision and Mr. Anderson in November 1998 to displace
certain members of Total-Tel's Board of Directors. The Board of Directors of
Total-Tel, with Messrs. Solomon Feldman and Warren Feldman not voting, approved
the Settlement Agreement on December 10, 1998.
Also on December 10, 1998, Warren Feldman and Solomon Feldman entered into
a Stock Purchase Agreement with Revision and Mr. Anderson providing, among other
things, for (i) the purchase by Revision from the Feldmans of between 1,100,000
and 1,200,000 shares of Total-Tel common stock (the "Common Stock") for $24 per
share ("the Stock Purchase"), (ii) an agreement by the Feldmans and Mr. Anderson
to vote their shares in favor of a reconstituted Board of Directors, and (iii)
an agreement to negotiate a one-year employment agreement for Warren Feldman
under which he will continue to serve as Chairman of the Board and Chief
Executive Officer of the Company (the "Stock Purchase Agreement").
The Settlement Agreement
- ------------------------
The Settlement Agreement is filed as an exhibit to this Report and is
incorporated herein by reference. The following summary of the terms of the
Settlement Agreement is qualified in its entirety by the provisions of the
Settlement Agreement.
SETTLEMENT OF LITIGATION. Under the terms of the Settlement Agreement,
Revision, Gold & Appel and the Company are required to prepare and jointly file,
as soon as practicable, a stipulation with the Superior Court, Chancery
Division, Passaic County, New Jersey (the "Court"), seeking to dismiss the
Litigation with prejudice. The Court is expected to rule on the request for
dismissal within the next 30 days. Total-Tel, Revision, and Gold & Appel will
request the Court to dismiss all orders it previously entered that prohibit
Revision, Gold & Appel, Mr. Anderson, Warren Feldman or Solomon Feldman from
purchasing or acquiring, directly or indirectly, any additional stock of the
Company.
POSTPONING ANNUAL MEETING OF SHAREHOLDERS. On December 9, 1998, the Company
postponed its 1998 Annual Meeting, which was originally scheduled for December
10, 1998, because the parties to the litigation were engaged in settlement
negotiations. Under the Settlement Agreement, the Company is required to take
all actions necessary to reschedule the meeting to a date no later than January
31, 1999 (or in the event that date because impracticable due to delays in the
satisfaction of the regulatory or court approval conditions to the Stock
Purchase, no later than February 28, 1999).
PROXY STATEMENTS. The Settlement Agreement provides that Total-Tel shall
prepare and file with the Securities and Exchange Commission upon the closing of
the Stock Purchase, a proxy statement which contains the recommendations of the
Board with respect to the election of a new Board at the rescheduled 1998 Annual
Meeting. Under the Settlement Agreement, the new Board will consist of the
following six individuals: Warren Feldman, two designees of Warren Feldman, Walt
Anderson, and two designees of Walt Anderson.
THE BY-LAW AMENDMENTS. On April 7, 1998, the Board of Directors amended the
Company's By-Laws in five respects: (i) a provision establishing June 10 as the
date of the annual meeting of shareholders was deleted, and replaced with a
provision permitting the Board to schedule the annual shareholders' meeting at
its discretion, (ii) a provision was added allowing shareholders to act by
written consent in lieu of a meeting, (iii) a provision was deleted which
required five day's notice to all directors before amending the By-Laws, (iv) a
provision permitting any shareholder who owned 25 percent or more of the
Company's stock to call a special meeting was deleted, (v) a provision was added
that requires submission of notice of shareholder proposals or Board nominees
not less than 60 days before the anniversary date of the prior year's
shareholders' meeting.
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On April 8, 1998 -- the day following the adoption of the By-Law amendments
- -- Gold & Appel and Revision initiated the Litigation by filing suit to
invalidate the By-Law amendments and a Shareholders Rights Plan adopted by the
Company's Board of Directors on March 31, 1998. On April 13, 1998, the Court
ordered the Company not to implement the By-Law amendments and the Shareholders
Rights Plan pending a trial on the merits. Pursuant to the Settlement Agreement,
the Board has reinstated the By-Laws that were in effect before March 31, 1998,
and agreed that such By-Laws shall remain in effect and will not be amended or
modified in any manner until the election of the new Board, at which time such
Board will consider and determine appropriate By-Law provisions for the Company.
AGREEMENT WITH RESPECT TO FUTURE COMMON STOCK PURCHASES. Mr. Anderson and
Revision have agreed in the Settlement Agreement that for the one-year period
beginning December 10, 1998, neither he nor it, as the case may be, or any of
their respective affiliates (other than the Company), will purchase, directly or
indirectly, any shares of Total-Tel Common Stock for a purchase price of less
than $24.00 per share. At the close of trading on December 11, 1998, the
Company's Common Stock traded for $19.00 per share.
FUTURE FINANCING. The Company's Board believes that ready access to capital
is increasingly important to companies in the telecommunications business,
including Total-Tel. The Settlement Agreement provides that, during the period
in which Walt Anderson serves as a Total-Tel director, he and Revision shall use
commercially reasonable efforts to assist the Company in obtaining any financing
needed by it to the extent the Company requests such assistance.
BOARD APPROVAL OF SETTLEMENT AGREEMENT. At its meeting on December 10,
1998, the Board has concluded that the Settlement Agreement is in the best
interests of the Company because, among other things, it will end the expense
and disruption of litigation and disputes with the Company's largest
shareholder, bring additional telecommunications expertise and experience into
Total-Tel, may enhance the Company's access to financing, promote management
continuity by allowing Warren Feldman to remain as Chairman of the Board for at
least a one-year term, and protect shareholders by precluding Anderson, Revision
and their affiliates from purchasing Total-Tel shares for less than $24 per
share for a period of one year. In connection with this approval of the
Settlement Agreement, the Board rescinded the Shareholders Rights Plan, which
otherwise would have prevented the entry into the Stock Purchase Agreement and
the consummation of the Stock Purchase.
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REGULATORY MATTERS. The Stock Purchase will require compliance with the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"). Each of the Company, Revision and Walt Anderson are obligated to make any
required filing as soon as practicable and to use their best efforts to cause to
occur on the earliest practicable date the expiration of the waiting period
under the HSR Act. The Settlement Agreement may also require approval of the
Federal Communications Commission (the "FCC") if the Settlement Agreement is
deemed to involve a change of control of licenses and authorizations issued to
the Company by the FCC.
The Stock Purchase Agreement
- ----------------------------
The Stock Purchase Agreement is filed as an exhibit to this Report and is
incorporated herein by reference. The following summary of the terms of the
Stock Purchase Agreement is qualified in its entirety by the provisions of the
Stock Purchase Agreement.
AGREEMENT TO PURCHASE SHARES HELD BY WARREN FELDMAN AND SOLOMON FELDMAN.
Under the Stock Purchase Agreement, Revision has agreed to purchase between
1,100,000 and 1,200,000 Total-Tel shares from Warren Feldman and Solomon Feldman
and/or their designees at a purchase price of $24.00 per share. The closing of
the Stock Purchase Agreement is contingent upon (i) the expiration of the all
waiting periods provided under the HSR Act and (ii) the Court having rescinded
all outstanding orders in connection with the Litigation that precluded the
purchase of Total-Tel Common Stock.
THE RECONSTITUTED BOARD. Under the Stock Purchase Agreement, Warren Feldman
and Solomon Feldman each have agreed to use his respective best efforts to cause
the resignations three members of the current Board, one of whom is Solomon
Feldman, and to fill the vacancies created thereby with Mr. Anderson, Dennis
Spina (or if he is unable to serve, another designee of Mr. Anderson), and a
designee of Mr. Anderson's who has no affiliation with the Company (the
"Reconstituted Board").
VOTING AGREEMENTS. For the period commencing 12 months from the date of the
Stock Purchase Agreement and ending 24 months later, Mr. Anderson and Revision
agree to vote the Total-Tel shares owned by them in favor of the election to the
Board of two nominees designated by Warren Feldman (one of whom may be Warren
Feldman). During the same period, Warren Feldman and Solomon Feldman agree to
vote the Total-Tel shares owned by them in favor of the election to the Board of
Directors an unlimited number of nominees designated by Mr. Anderson. These
voting agreements will become void if the aggregate ownership of Total-Tel's
outstanding Common Stock by Warren Feldman and Solomon Feldman, on the one hand,
or Mr. Anderson or Revision, on the other hand, falls below five percent of the
then outstanding shares of Common Stock.
WARREN FELDMAN'S EMPLOYMENT CONTRACT. For the 1998 fiscal year Warren
Feldman received a base compensation of $287,115 and a $350,000 bonus for his
service as Chairman and Chief Executive Officer. Under the Stock Purchase
Agreement, Walt Anderson and Revision agree to use their best efforts to cause
the Company as soon after the Reconstituted Board is elected to enter into a
one-year employment contract with Warren Feldman, pursuant to which Warren
Feldman would be employed as Chairman of the Board and Chief Executive Officer
of the Company at a salary of $250,000 per year, and with incentive compensation
up to $250,000 as may be determined by the Board based upon performance targets
set by the Board for executive officers generally. Such agreement would
supersede any prior agreement between Warren Feldman and the Company with
respect to Mr. Feldman's employment by the Company. In its December 10, 1998
resolution, the Company's Board of Directors also agreed to waive any buy-back
provisions attached to non-statutory stock options held by Warren Feldman.
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INDEMNITY AGREEMENT. On December 10, 1998, Revision, Warren Feldman, and
Solomon Feldman entered into a letter Agreement pursuant to which Revision
agreed to indemnify, defend and hold harmless Warren Feldman and Solomon
Feldman, (and their respective designees who sell shares of the Company's Common
Stock to Revision pursuant to the Stock Purchase Agreement) against all losses,
claims, damages, costs, expenses, liabilities or judgments or amounts (including
all reasonable attorneys fees) that are suffered or incurred by them in
connection with any claim, action, suit, proceeding or investigation resulting
from the purchase of Total-Tel Common Stock by Revision under the Stock Purchase
Agreement.
Item 7. Financial Statements And Exhibits
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(a) Financial statements of businesses acquired. Not applicable
(b) Pro forma financial information. Not applicable
(c) Exhibits.
Exhibit No. Description of Exhibit Reference
----------- ---------------------- ---------
1 Settlement Agreement, dated Filed herewith
as of December 10, 1998, among
Total-Tel, Revision and
Walt Anderson
2 Settlement Agreement, dated as of Filed herewith
December 10, 1998, among
Warren Feldman, Solomon
Feldman, and Revision
Signature
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TOTAL-TEL USA COMMUNICATIONS, INC.
Dated: December 15, 1998 By: /s/ Warren H. Feldman
------------------------
Warren H. Feldman
Chief Executive Officer
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EXHIBIT 1
---------
SETTLEMENT AGREEMENT, made this 10th day of December, 1998, between
TOTAL-TEL USA COMMUNICATIONS, INC., a New Jersey corporation (the "Company"),
WALT ANDERSON and REVISION LLC, a Delaware limited liability company ("Revision"
and collectively with Anderson, the "Committee").
WHEREAS, on or about April 7, 1998, Gold & Appel Transfer, S.A. ("Gold &
Appel") filed a complaint against the Company in the Superior Court of New
Jersey, Chancery Division, Passaic County (the "Court"), Docket No. PAS-C49-98
(the "Lawsuit") and Revision subsequently became a party to the Lawsuit.
WHEREAS, the Lawsuit is currently pending and the parties hereto desire to
settle the Lawsuit and petition the Court for the recission of all outstanding
orders issued in connection with the Lawsuit, on the terms and conditions set
forth herein.
WHEREAS, the Company and the Committee have been engaged in a proxy contest
with respect to the election of directors of the Company at the Annual Meeting
of Stockholders of the Company to be held on December 10, 1998 (the "Meeting")
and desire to agree upon a settlement of the matters relating to such proxy
contest, on the terms and conditions provided herein.
WHEREAS, in connection with such proxy contest the Company has distributed
to stockholders a proxy statement dated November 11, 1998, and the Committee has
distributed stockholders a proxy statement, dated November 25, 1998.
NOW, THEREFORE, for good and valid consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Settlement of Litigation. As soon as practicable after the execution and
delivery of this Agreement, Revision, Gold & Appel and the Company shall prepare
and file a stipulation dismissing with prejudice the Lawsuit and requesting that
the Court orders outstanding in connection with the Lawsuit be rescinded,
revoked or otherwise caused to be ineffective, and such parties agree to take
all action and deliver and exchange such documents as may be reasonably
necessary to cause such dismissal of the Lawsuit and rescission or revocation of
such orders.
<PAGE>
2. ANNUAL MEETING DATE, PROXY STATEMENT AND BY-LAWS.
(a) Meeting Date. Upon the execution and delivery of this Agreement,
the Company shall promptly take all action necessary to change the date of the
Meeting from December 10, 1998 to a date no later than January 31, 1999, or in
the event that date becomes impracticable due to delays in the satisfaction of
the regulatory or court approval conditions to such closing, no later than
February 28, 1999.
(b) Proxy Statement. Upon the closing of the Stock Purchase (as
defined in Section 3 hereof), the Company shall promptly prepare and file with
the Securities and Exchange Commission on a date no later than two business days
from the date thereof, a Proxy Statement for solicitation of proxies with
respect to the Meeting which contains the recommendation of the Board in favor
of the election to the Board of Warren Feldman and two designees of Warren
Feldman and Walt Anderson and two designees of Walt Anderson.
(c) By-laws of the Company. The By-laws of the Company, dated June
10, 1959 shall remain in effect and shall not be amended or modified in any
manner until the election of the reconstituted Board as contemplated by Section
2(b) hereof, at which time such Board shall consider and determine appropriate
By-law provisions of the Company.
3. HSR ACT. Each of the Company, on the one hand, and Revision and Walt
Anderson, on the other hand, will, as soon as practicable after the date hereof
and in connection with the contemplated purchase by Revision from Warren Feldman
and Solomon Feldman (the "Stock Purchase") of up to 1,200,000 additional shares
of common stock of the Company ("Common Stock"), prepare and file with the
appropriate governmental agencies, the filings required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"). Each of the Company, on the one hand, and Revision and Walt Anderson, on
the other hand, will use their best efforts to cause to occur on the earliest
practicable date the expiration of the waiting period under the HSR Act, and in
furtherance of such objective, will take all reasonable actions necessary to
comply promptly with all legal requirements or requests for additional
information which may be imposed on it with respect thereto and will promptly
cooperate with and furnish information to each other in connection with any such
requirements imposed upon them.
4. AGREEMENT WITH RESPECT TO FUTURE PURCHASES. Each of Walt Anderson and
Revision agree that during the period commencing on the date hereof and ending
on the first anniversary of the date hereof, he or it, as the case may be, and
their respective affiliates (other than the Company), will not, directly or
indirectly, purchase any shares of Common Stock for a purchase price of less
than $24 per share.
5. ADDITIONAL AGREEMENTS; BEST EFFORTS. The parties hereto will agree upon
a joint press release to be issued immediately following the execution of this
Agreement. Subject to the terms and conditions of this Agreement, each of the
parties hereto agrees to use its best efforts to take, or cause to be taken, all
action and to do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement. Until the Board is reconstituted as
contemplated by Section 2(b) hereof, the Company shall use its best efforts to
provide a copy of any press release or other public disclosure about the
transactions contemplated hereby to Walt Anderson prior to dissemination of such
press release or other disclosure.
<PAGE>
6. FUTURE FINANCING. During the period in which Walt Anderson serves as a
director of the Company, Mr. Anderson and Revision agree to use their
commercially reasonable efforts to assist the Company in obtaining any financing
needed by it to the extent that the Company requests such assistance.
7. ORDINARY COURSE. During the period from the date of this Agreement and
continuing until the Board is reconstituted in accordance with Section 2(b)
hereof, the Company shall use its best efforts to carry on its business in the
usual, regular and ordinary course in substantially the same manner as
heretofore conducted and to preserve intact its present business organizations,
and to preserve its relationships with customers, suppliers and others having
business dealings with it to the end that its goodwill and ongoing business
shall not be impaired in any material respect.
8. CERTAIN REPRESENTATIONS BY THE COMPANY. The Company hereby represents
and warrants to Walt Anderson and Revision that (i) the execution, delivery and
performance by the Company of this Agreement has been duly authorized by all
action required by law, its certificate of incorporation and by-laws, (ii) this
Agreement has been duly executed and delivered by the Company and constitutes a
legal, valid and binding obligation of the Company, enforceable against it in
accordance with its terms, (iii) the execution, delivery and performance by the
Company of this Agreement will not conflict with or result in any breach of any
provision of the charter or by-laws of the Company, (iv) the execution, delivery
and performance by the Company of this Agreement will not result in a violation
or breach of, or constitute (with or without due notice or lapse of time or
both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which the Company is a party or by which any
of its assets or properties may be bound, (v) subject to the provisions of
Sections 1 and 3 hereof, the execution, delivery and performance by the Company
of this Agreement will not violate any order, writ, injunction, decree, statute,
rule or regulation applicable to the Company or any of its properties or assets
and (vi) the Company has duly authorized and approved, by all action required by
law, including a duly adopted Board resolution, the rescission of the Rights
Agreement, dated as of March 31, 1998, between the Company and American Stock
Transfer & Trust Company, and such Rights Agreement is void ab initio.
<PAGE>
9. CERTAIN REPRESENTATIONS BY REVISION AND WALT ANDERSON. Revision hereby
represents and warrants to the Company that (i) the execution, delivery and
performance by Revision of this Agreement has been duly authorized by all action
required by law, its certificate of formation and operating agreement, (ii) this
Agreement has been duly executed and delivered by Revision and constitutes a
legal, valid and binding obligation of Revision, enforceable against it in
accordance with its terms, (iii) the execution, delivery and performance by
Revision of this Agreement will not conflict with or result in any breach of any
provision of the certificate of formation and operating agreement of Revision,
(iv) the execution, delivery and performance by Revision of this Agreement will
not result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, amendment, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which Revision is a
party or by which any of its assets or properties may be bound and (v) subject
to the provisions of Sections 1 and 3 hereof, the execution, delivery and
performance by Revision of this Agreement will not violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Revision or any of
its properties or assets. Anderson hereby represents and warrants to the Company
that this Agreement has been duly executed and delivered by him and constitutes
his legal, valid and binding obligation, enforceable against him in accordance
with its terms and subject to the provisions of Sections 1 and 3 hereof, the
execution, delivery and performance by him of this Agreement will not violate
any order, writ, injunction, decree, statute, rule or regulation applicable to
him or any of his properties or assets.
10. ENTIRE AGREEMENT. This Agreement contains the entire agreement between
the parties hereto and constitutes the complete, final and exclusive embodiment
of their agreement with respect to the subject matter hereof, and supersedes all
prior or contemporaneous agreements, understandings, representations and
statements, oral or written.
<PAGE>
11. NOTICES. All communications provided for hereunder shall be sent in
writing and mailed by first class mail, return receipt requested, or sent by
overnight courier, or sent by facsimile transmission to the address stated below
or to such changed address as the addressee may have been given by similar
notice:
(a) If, to the Company:
Total-Tel USA Communications, Inc.
150 Clove Road
Little Falls, New Jersey
Attn: Warren Feldman
Facsimile No.: (973) 785-5173
With a copy to:
Covington & Burling
1201 Pennsylvania Avenue, N.W.
Washington, D.C. 20044
Attn: Bobby R. Burchfield, Esq.
Facsimile No.: (202) 778-5350
And a copy to:
Jay Miller, Esq.
430 East 57th Street, Suite 5D
New York, New York 10022
Facsimile No.: (212) 758-0624
(b) If to Revision or Anderson:
Walt Anderson
c/o Gold & Appel
1023 31st Street, 4th Floor
Washington, D.C. 20007
Facsimile No.: (202)736-5065
<PAGE>
With a copy to:
Swidler Berlin Shereff Friedman, LLP
919 Third Avenue
New York, NY 10022
Attn: Richard Goldberg, Esq.
Facsimile No.: (212) 758-9526
Any such notice shall be deemed received, if mailed, five days after mailing, or
one day after sending by overnight courier, or upon confirmation of transmission
if sent by facsimile transmission.
12. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey, without giving effect to
the conflict of laws provisions thereof.
13. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, all of which together
shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed the day and year first above written.
TOTAL-TEL USA COMMUNICATIONS, INC.
------------------------
Name: Warren Feldman
Title: Chairman and CEO
REVISION LLC
By: /s/ Walt Anderson
------------------------
Name: Walt Anderson
Title: Manager
/s/ Walt Anderson
------------------------
Walt Anderson
Evidencing agreement with respect to the
provisions of Section 1 hereof only and not
with respect to any other provision of this
Agreement:
GOLD & APPEL TRANSFER, S.A.
By: /s/ Walt Anderson
------------------------
Walt Anderson,
Attorney-In-Fact
<PAGE>
EXHIBIT 2
---------
STOCK PURCHASE AGREEMENT
------------------------
STOCK PURCHASE AGREEMENT made this 10th day of December, 1998, between
WARREN FELDMAN, SOLOMON FELDMAN, WALT ANDERSON and REVISION LLC, a Delaware
limited liability company ("Revision").
WHEREAS, each of the parties hereto is a stockholder of Total-Tel USA
Communications, Inc., a New Jersey corporation (the "Company").
WHEREAS, the parties hereto desire to enter into certain agreements
regarding the purchase by Revision from Warren Feldman and Solomon Feldman
and/or their designees of up to 1,200,000 shares of Common Stock of the Company
("Common Stock"), on the terms and subject to the conditions set forth herein.
WHEREAS, the parties hereto desire to enter into certain agreements
regarding the voting of their shares of Common Stock and certain other matters,
on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, for good and valid consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. PURCHASE AND SALE OF SHARES.
(a) General Terms. Revision agrees to purchase from Warren Feldman,
Solomon Feldman, and if so designated, one or more of their designees (in an
amount to be determined by Warren Feldman and Solomon Feldman), and Warren
Feldman and Solomon Feldman agree to sell, up to an aggregate of 1,200,000
shares of Common Stock, but not less than 1,100,000 shares of Common Stock, at a
purchase price of $24 per share upon the terms and subject to the conditions set
forth herein. Prior to December 20, 1998, Warren Feldman and Solomon Feldman
shall deliver to Revision a written notice (the "Designee Notice"), setting
forth the aggregate number of shares which shall be purchased by Revision
pursuant to this Section 1, listing each designee (the "Designees", which term
shall include Warren Feldman and Solomon Feldman) who will sell shares, the
number of shares to be sold by each such Designee, the account information (name
of bank, address of bank, ABA number and bank account number) to which the
purchase price payment for such designee should be wired, and the purchase
price. The Deposit (as defined below) shall be paid at the closing as directed
by Warren Feldman and Solomon Feldman and shall be credited against the purchase
price. The Designees shall be solely responsible for any transfer taxes payable
in respect of the sale of the Common Stock under this Agreement.
<PAGE>
(b) Representations and Warranties of Designees. The Designee Notice
shall be accompanied by signed statements of each Designee (the "Designee
Statements"), pursuant to which each Designee represents and warrants to
Revision that (i) such Designee is the sole beneficial and record owner of all
right, title and interest in and to the shares to be sold to Revision, free and
clear of any security interest, claims, liens, pledges, options, encumbrances,
charges, agreements, voting trusts, proxies, preemptive rights or rights of
first refusal or other arrangements, restrictions or legal or equitable
limitations of any kind, (ii) upon the delivery of the stock certificates at the
closing, such Designee will transfer good, valid and marketable title to the
shares to Revision, free and clear of any security interests, claims, liens,
pledges, options, encumbrances, charges, agreements, voting trusts, proxies,
preemptive rights or rights of first refusal or other arrangements, restrictions
or legal or equitable limitations of any kind and (iii) such Designee shall, at
the closing deliver to Revision, a certificate confirming that the
representations of such Designee made therein are true as of the closing date.
Warren Feldman beneficially owns between 1,000,544 and 1,035,524 shares of
Common Stock and Solomon Feldman beneficially owns between 886,380 and 927,260
shares of Common Stock (in each case exclusive of stock options), and each of
Warren Feldman and Solomon Feldman hereby makes the representations and
warranties set forth in this Section 1(b) with respect to himself and the shares
which he owns as of the date hereof.
(c) Representations of Revision. Revision represents and warrants to
each of Warren Feldman, Solomon Feldman and each Designee that it is acquiring
up to 1,200,000 shares of Common Stock pursuant to the provisions of this
Section 1 for its own account for investment and not with a view to, or for sale
in connection with, any public distribution thereof in violation of the
Securities Act of 1933, as amended (the "Securities Act"). Revision further
represents that it is an Accredited Investor within the meaning ascribed to such
term under Regulation D of the rules and regulations promulgated under the
Securities Act.
(d) Conditions to Closing and the Closing. It shall be a condition
to the purchase and sale of shares contemplated under this Section 1 that (i)
the waiting period (and any extension thereof) under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act") applicable to the
purchase by Revision of the aggregate number of shares to be purchased pursuant
to this Section 1 shall have expired or been terminated and (ii) the Superior
Court of New Jersey, Chancery Division, Passaic County (the "Court") shall have
rescinded, revoked or otherwise caused to be ineffective any Court orders
outstanding in connection with the lawsuit against the Company which was filed
in the Court on or about April 7, 1998, by Gold & Appel Transfer, S.A., Docket
No. PAS-C49-98. The closing of the purchase and sale of shares contemplated in
this Section 1 shall occur at 10:00 a.m. on the date that is two business days
after the satisfaction of both of the conditions set forth in the preceding
sentence; provided however that the closing date shall in no event be earlier
than January 2, 1999. The closing shall take place at the offices of Swidler
Berlin Shereff Friedman, LLP, 919 Third Avenue, New York, New York. On the
closing date, Revision shall pay to each Designee the purchase price (net of
such Designee's pro rata share of the Deposit as designated pursuant to Section
1(a)) by wire transfer to the account set forth in the Designee Notice and each
Designee shall deliver the stock certificates for the shares duly endorsed or
with stock power attached together with the representation letter required
pursuant to of Section 1(b) above.
<PAGE>
(e) Deposit. Within five (5) business days of the execution and
delivery of this Agreement, Revision shall transfer $4,000,000 by wire transfer
to Swidler Berlin Shereff Friedman, LLP as escrow agent (the "Escrow Agent"),
and such $4,000,000 shall be held in escrow by the Escrow Agent as a deposit
("Deposit") pursuant to an escrow agreement containing the terms of this Section
1(e) and other customary terms. In the event that prior to the closing, the
Escrow Agent receives a written notice from Revision, on the one hand, or Warren
Feldman or Solomon Feldman, on the other hand, stating that a material breach by
the other party has occurred under this Agreement or, in the case of a notice by
Revision that a material breach by the Company has occurred under that certain
agreement dated the date hereof by and among the Company, Walt Anderson and
Revision, then, the Deposit, together with interest earned thereon, shall be
delivered to the nonbreaching party unless the party alleged to have breached
(or Warren Feldman or Solomon Feldman in the case of an alleged breach by the
Company) shall deliver, within five business days of notice thereof, a notice of
objection to the Escrow Agent in which case the Deposit shall not be disbursed
from escrow until such time as the Escrow Agent has received joint written
instructions of Warren Feldman, Solomon Feldman and Walt Anderson, directing the
disbursement of such Deposit or until such time as the Escrow Agent has received
a court order from a court of competent jurisdiction directing the disposition
of such Deposit. At least one business day prior to the closing, Warren Feldman,
Solomon Feldman and Walt Anderson shall deliver to the Escrow Agent joint
written instructions directing the transfer of the Deposit. Each disbursement of
the Deposit from escrow shall include the pro rata portion of interest income,
if any, with respect to such disbursement amount. In the event that Revision is
legally prohibited from purchasing the shares of the Common Stock as
contemplated under this Section 1 due to a failure to be satisfied of one of the
conditions to closing contained in Section 1(d) by February 28, 1999, the
Deposit, together with interest earned thereon, shall be returned to Revision
unless Warren Feldman or Solomon Feldman shall have delivered notice of
objection within five business days of notice from the Escrow Agent of the
intended payment to Revision, in which case the Deposit shall not be disbursed
from escrow until such time as the Escrow Agent has received joint written
instructions of Warren Feldman, Solomon Feldman and Walt Anderson, directing the
disbursement of such Deposit or until such time as the Escrow Agent has received
a court order from a court of competent jurisdiction directing the disposition
of such Deposit.
2. BOARD OF DIRECTORS. Immediately following the closing of the sale of
shares pursuant to Section 1 hereof, Warren Feldman and Solomon Feldman shall
use their respective best efforts to cause the resignation of Messrs. Solomon
Feldman, Brad Berger and Joseph Kelly from the Board of Directors of the Company
(the "Board") and to cause the election to the Board of the following persons to
the vacancies on the Board created thereby: (a) Walt Anderson, (b) Dennis Spina
or if he is unable to serve, another designee of Mr. Anderson, and (c) an
individual who has no affiliation with the Company and is designated by Walt
Anderson. (The six members of the Board as reconstituted pursuant to the terms
of this Section 2 are sometimes referred to herein as the "Reconstituted
Board".)
<PAGE>
3. VOTING AGREEMENTS.
(a) Next Annual Meeting. At the next Annual Meeting of Shareholders
of the Company to be held no later than February 28, 1999 and for a period
ending one year from the date hereof, Walt Anderson and Revision agree, on the
one hand, and Warren Feldman and Solomon Feldman agree, on the other hand, to
vote the shares of Common Stock owned by them in favor of the election to the
Board of the six members of the Reconstituted Board, or if any one of such
members shall be unwilling or unable to serve, then in favor of a substituted
designee of Walt Anderson or Warren Feldman, as the case may be. For a period of
one year commencing on the date hereof, the parties agree to use their
respective best efforts to cause the number of directors comprising the complete
Board to be fixed at six (6).
(b) Subsequent Period. For the period commencing 12 months from the
date hereof and ending 36 months from the date hereof, Walt Anderson and
Revision agree to vote the shares of Common Stock beneficially owned by them in
favor of the election to the Board of Directors of the Company of two nominees
designated by Warren Feldman (one of whom may be Warren Feldman). For the period
commencing 12 months from the date hereof and ending 36 months from the date
hereof, Warren Feldman and Solomon Feldman agree to vote the shares of Common
Stock beneficially owned by them in favor of the election to the Board of
Directors of the Company of the nominees (regardless of the number of such
nominees) designated by Walt Anderson. The provisions of this Section 3(b) shall
cease to be of any further force and effect if at any time the aggregate
beneficial ownership of Common Stock by Warren Feldman and Solomon Feldman on
the one hand, or Walt Anderson and Revision, on the other hand, shall fall below
5% of the then outstanding Common Stock.
(c) Feldman Employment Contract. Walt Anderson and Revision agree to
use their best efforts to cause the Company as soon as practical after the
Reconstituted Board is elected to enter into a one year employment contract with
Warren Feldman, pursuant to which Warren Feldman will be employed as Chief
Executive Officer and Chairman of the Board of the Company at a salary of
$250,000 per year and with incentive compensation up to $250,000 as may be
determined by the Board based upon performance targets set by the Board for
executive officers generally. Such agreement will supersede any prior agreements
between Warren Feldman and the Company with respect to Mr. Feldman's employment
by the Company.
4. ORDINARY COURSE. During the period from the date of this Agreement and
continuing until the Board is reconstituted in accordance with Section 2 hereof,
each of Warren Feldman and Solomon Feldman shall use their respective best
efforts to cause the Company to carry on its business in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted and use
its best efforts to preserve intact its present business organizations, and to
preserve its relationships with customers, suppliers and others having business
dealings with it to the end that its goodwill and ongoing business shall not be
impaired in any material respect.
<PAGE>
5. ADDITIONAL AGREEMENTS; BEST EFFORTS. Subject to the terms and conditions
of this Agreement, each of the parties hereto agrees to use its best efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
6. CERTAIN REPRESENTATIONS BY THE FELDMANS. Each of Warren Feldman and
Solomon Feldman hereby represents and warrants that (i) this Agreement has been
duly executed and delivered by him and constitutes his legal, valid and binding
obligation, enforceable against him in accordance with its terms, (ii) subject
to the provisions of Section 1(d) hereto, the execution, delivery and
performance by him of this Agreement will not violate any order, writ,
injunction, decree, statute, rule or regulation applicable to him, and (iii) to
the best of their knowledge after due inquiry, except as disclosed in the forms,
reports, schedules, statements and other documents filed by the Company under
the Securities Exchange Act of 1934, as amended, and in the draft financial
statements with respect to the fiscal quarter of the Company ended October 31,
1998, which were provided to Walt Anderson, since January 31, 1998, there have
been no events, changes or effects (excluding any of the foregoing which affect
the industry generally, and are not specific to the Company) having,
individually or in the aggregate, a material adverse effect on the Company.
7. CERTAIN REPRESENTATIONS BY REVISION AND WALT ANDERSON. Revision hereby
represents and warrants that (i) the execution, delivery and performance by
Revision of this Agreement has been duly authorized by all action required by
law, its certificate of formation and operating agreement, (ii) this Agreement
has been duly executed and delivered by Revision and constitutes a legal, valid
and binding obligation of Revision, enforceable against it in accordance with
its terms, (iii) the execution, delivery and performance by Revision of this
Agreement will not conflict with or result in any breach of any provision of the
certificate of formation and operating agreement of Revision, (iv) the
execution, delivery and performance by Revision of this Agreement will not
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which Revision is a party or by
which any of its assets or properties may be bound, (v) subject to the
provisions of Section 1(d) hereto, the execution, delivery and performance by
Revision of this Agreement will not violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Revision or any of its properties or
assets, (vi) Revision is the sole beneficial and record owner of all right,
title and interest in and to 1,857,434 shares of Common Stock, free and clear of
any security interest, claims, liens, pledges, options, encumbrances, charges,
agreements, voting trusts, proxies, preemptive rights or rights of first refusal
or other arrangements, restrictions or legal or equitable limitations of any
kind, and (vii) Revision has no outstanding indebtedness for borrowed money.
Anderson hereby represents and warrants that (i) this Agreement has been duly
executed and delivered by him and constitutes his legal, valid and binding
obligation, enforceable against him in accordance with its terms, and (ii)
<PAGE>
subject to the provisions of Section 1(d) hereto, the execution, delivery and
performance by him of this Agreement will not violate any order, writ,
injunction, decree, statute, rule or regulation applicable to him.
8. ASSIGNMENT. This Agreement shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns. None of Warren
Feldman or Solomon Feldman, on the one hand, or Walt Anderson or Revision, on
the other hand, shall have the right to assign or transfer shares of Common
Stock or its rights or obligations under this Agreement to an affiliate of such
party unless (i) such transferee affiliate has a net worth (calculated in
accordance with generally accepted accounting principles) at least equal to the
net worth of the transferor immediately prior to such transfer and (ii) such
transferee affiliate assumes the obligations of the transferor hereunder.
9. ENTIRE AGREEMENT. This Agreement contains the entire agreement between
the parties hereto and constitutes the complete, final and exclusive embodiment
of their agreement with respect to the subject matter hereof, and supersedes all
prior or contemporaneous agreements, understandings, representations and
statements, oral or written.
10. NOTICES. All communications provided for hereunder shall be sent in
writing and mailed by first class mail, return receipt requested, or sent by
overnight courier, or sent by facsimile transmission to the address stated below
or to such changed address as the addressee may have been given by similar
notice:
(a) If to the Warren Feldman or Solomon Feldman:
Total-Tel USA Communications, Inc.
150 Clove Road
Little Falls, New Jersey 07424
Attn: Warren Feldman
Facsimile No.: (973) 785-5173
With a copy to:
Covington & Burling
1201 Pennsylvania Avenue, N.W.
Washington, D.C. 20044
Attn: Bobby R. Burchfield, Esq.
Facsimile No.: (202) 778-5350
<PAGE>
(b) If to Revision or Anderson:
Walt Anderson
c/o Gold & Appel
1023 31st Street, 4th Floor
Washington, D.C. 20007
Facsimile No.: (202)736-5065
With a copy to:
Swidler Berlin Shereff Friedman, LLP
919 Third Avenue
New York, New York 10022
Attn: Richard Goldberg, Esq.
Facsimile No.: (212) 758-9526
Any such notice shall be deemed received, if mailed, five days after mailing,
one day after sending by overnight courier, or upon confirmation of transmission
if sent by facsimile transmission.
11. NOTICE ON BEHALF OF OTHER PARTIES. Any notice, designation or
determination required to be made or delivered hereunder by Warren Feldman or
Solomon Feldman shall be binding on the other if made or delivered by either of
such parties. Any notice, designation or determination required to be made or
delivered hereunder by Revision or Walt Anderson shall be binding on the other
if made or delivered by either of such parties.
12. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey, without giving effect to
the conflict of laws provisions thereof.
13. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, all of which together
shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed the day and year first above written.
/s/ Warren Feldman
------------------------
Warren Feldman
/s/ Solomon Feldman
------------------------
Solomon Feldman
REVISION LLC
By: /s/ Walt Anderson
------------------------
Name: Walt Anderson
Title: Manager
/s/ Walt Anderson
------------------------
Walt Anderson
