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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 7)*
Total-Tel USA Communications, Inc.
--------------------------------------
(Name of Issuer)
Common Stock, par value $.05 per share
--------------------------------------
(Title of Class of Securities)
89151T 10-6
--------------------------------
(CUSIP Number)
Walt Anderson
c/o Shereff, Friedman, Hoffman & Goodman, LLP
919 Third Avenue
New York, New York 10022
Attn: Richard A. Goldberg (212) 758-9500
----------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
June 10, 1998
-----------------------------------
(Date of Event which Requires Filing of
this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
statement because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check
the following box: [ ].
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss. 240.13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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SCHEDULE 13D
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CUSIP No. 89151T 10-6 Page 2 of 13 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Walt Anderson
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
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3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
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7 SOLE VOTING POWER
928,817 (includes shares pursuant to an
agreement to purchase 69,000 shares of
NUMBER OF Common Shares)
SHARES --------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 0
EACH --------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 928,817 (includes shares pursuant to an
WITH agreement to purchase 69,000 shares of
Common Shares)
--------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
928,817 (includes shares pursuant to an agreement to
purchase 69,000 shares of Common Shares)
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
27%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
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SCHEDULE 13D
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CUSIP No. 89151T 10-6 Page 3 of 13 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Revision LLC
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
928,717 (includes shares pursuant to an
NUMBER OF agreement to purchase 69,000 shares of
SHARES Common Stock)
BENEFICIALLY --------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 0
REPORTING --------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 928,717 (includes shares pursuant to an
agreement to purchase 69,000 shares of
Common Stock)
--------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
928,717 (Includes shares pursuant to an agreement to purchase
69,000 shares of Common Stock)
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
27%
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14 TYPE OF REPORTING PERSON*
OO
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SCHEDULE 13D
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CUSIP No. 89151T 10-6 Page 4 of 13 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Gold & Appel Transfer, S.A.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
N/A
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
British Virgin Islands
- -------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF ---------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0
OWNED BY ---------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON ---------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
0
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- -------------------------------------------------------------------------------
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE
ATTESTATION.
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<PAGE>
AMENDMENT NO. 7 TO SCHEDULE 13D
This Amendment No. 7 ("Amendment No. 7") to Schedule 13D filed by Gold
& Appel Transfer, S.A., a British Virgin Islands corporation ("Gold & Appel),
Revision LLC, a Delaware limited liability company ("Revision"), and Walt
Anderson, a natural person and a U.S. citizen ("Mr. Anderson"), as joint
filers, with respect to the common stock, par value $0.05 per share (the
"Common Shares"), of Total-Tel USA Communications, Inc., a New Jersey
corporation (the "Issuer"), amends and/or supplements, as indicated, Items 2,
3, 4, 5, 6 and 7 of the Schedule 13D previously filed with the Securities and
Exchange Commission (the "SEC") by Gold & Appel and Mr. Anderson as joint
filers on January 16, 1998 (the "Schedule 13D"), as amended by Amendment No. 1
thereto filed with the SEC on January 30, 1998 ("Amendment No. 1"), Amendment
No. 2 thereto filed with the SEC on February 13, 1998 ("Amendment No. 2"),
Amendment No. 3 thereto filed with the SEC on March 4, 1998 ("Amendment No.
3"), Amendment No. 4 thereto filed with the SEC on March 13, 1998 ("Amendment
No. 4"), Amendment No. 5 thereto filed with the SEC on March 30, 1998
("Amendment No. 5") and Amendment No. 6 thereto filed with the SEC on April 6,
1998 ("Amendment No. 6"). All capitalized terms used and not defined herein
shall have the meanings ascribed to them in the Schedule 13D, as amended by
Amendment No. 1, Amendment No. 2, Amendment No. 3, Amendment No. 4, Amendment
No. 5 and Amendment No. 6.
ITEM 2. IDENTITY AND BACKGROUND.
The response set forth in Item 2 of the Schedule 13D is hereby amended
and supplemented to add the following:
This Amendment No. 7 is being filed by Gold & Appel, Revision and Mr.
Anderson, as joint filers. Revision and Mr. Anderson are sometimes referred to
collectively as the "Reporting Persons."
Revision is a limited liability company formed in June 1998 in the
State of Delaware. Revision was organized to acquire, invest in, trade in, sell
or otherwise dispose of Common Shares and to engage in any other lawful
business activity related thereto. The business address of Revision is 1313
North Market Street, Wilmington, Delaware 19801.
On June 10, 1998, in order to establish a separate entity through
which all future activity concerning the Issuer will be conducted, Gold & Appel
transferred, as a capital contribution to Revision, 859,717 Common Shares (the
"Shares"), the right to purchase 69,000 Common Shares (the "Option Shares"; and
together with the Shares, the "Revision Shares") which may be acquired on
October 1, 1998 but not later than October 5, 1998 pursuant to the Agreement
between Kevin A. Alward and Gold & Appel, dated as of January 6, 1998 (the
"Agreement") and the right to vote the Option Shares pursuant to a Proxy
Agreement dated February 24, 1998 between Mr. Alward and Gold & Appel (the
"Proxy"). In consideration for its capital contribution, Gold & Appel received
100% of the non-voting membership interests in Revision.
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Mr. Anderson is the sole manager of Revision (the "Manager") and the
holder of 100% of the voting membership interests in Revision. All powers of
Revision are exercised exclusively by Mr. Anderson and the business and affairs
of Revision are managed exclusively by Mr. Anderson.
On June 10, 1998, Gold & Appel transferred 100 Common Shares (the
"Anderson Shares") to Anderson for no consideration. As a result of the
transfers by Gold & Appel discussed above, Gold & Appel is no longer the
beneficial owner of any Common Shares.
During the past five years, Revision has not been convicted in any
criminal proceeding (excluding traffic violations or similar misdemeanors) or
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to
a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The response set forth in Item 3 of the Schedule 13D is hereby amended
and supplemented to add the following:
On June 10, 1998, Gold & Appel transferred, as a capital contribution
to Revision, 859,717 Common Shares, the right to purchase the Option Shares and
the right to vote the Option Shares pursuant to the Proxy. In consideration for
its capital contribution, Gold & Appel received 100% of the non-voting
membership interests in Revision.
On June 10, 1998, Gold & Appel transferred 100 Common Shares to Mr.
Anderson for no consideration.
ITEM 4. PURPOSE OF THE TRANSACTION.
The response set forth in Item 4 of the Schedule 13D is hereby amended
and restated in its entirety as follows:
The Reporting Persons may determine, subject to the outcome of the
litigation described below, to purchase additional shares of the Issuer in
market transactions, or otherwise. In addition, the Reporting Persons may
determine to sell some or all of any of the Revision Shares at any time in
private or market transactions. Any such determination will depend on market
conditions, an evaluation of the Issuer's business, prospects and financial
condition, the market for the Common Shares, other opportunities available to
the Reporting Persons, general economic conditions, money and stock market
conditions, and other further developments. In addition, the Reporting Persons
intend to take preparatory steps to evaluate the desirability of seeking
representation on the Board of Directors of Issuer (the "Board") and may
thereafter seek to effect changes in the management of Issuer and/or the Board.
In early March, 1998, Gold & Appel requested the Issuer's records of
shareholders, as permitted by statute. On March 31, 1998, the Board adopted a
shareholders
6
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rights plan (the "Poison Pill") and on April 7, 1998 it amended the Issuer's
by-laws (the "Amended By-Laws") to eliminate the right of shareholders holding
25% of the outstanding Common Shares to call a special shareholders meeting.
Such by-law amendment included the addition of advance reporting requirements
for nominating a director. On April 8, 1998, Gold & Appel filed suit in New
Jersey state court seeking an order compelling delivery of the shareholder
records and a declaratory judgment that the Board's actions with respect to the
Poison Pill and the by-laws are invalid and seeking injunctive relief. On April
13, 1998, the court issued an order requiring the Issuer to provide Gold &
Appel with immediate access to the records of shareholders and a temporary
restraining order, enjoining any action by the Issuer in connection with the
Poison Pill and precluding the Issuer from implementing the changes to its
by-laws contained in the Amended By-Laws. The order also required, among other
things, that until further order of the court, Gold & Appel and Walt Anderson
are prohibited from purchasing additional shares of the Issuer. On June 2,
1998, the court entered a preliminary injunction, pending further order of the
court, which enjoins any action by the Issuer in connection with the Poison
Pill, and enjoins the Issuer from implementing the Amended By-Laws. The
preliminary injunction also enjoins Warren Feldman, Chairman of the Board and
Chief Executive Officer of the Issuer, and Solomon Feldman, a Director of the
Issuer, on the one hand, and Gold & Appel and Walt Anderson, on the other hand,
from purchasing any stock of the Issuer, other than, in each case, through the
exercise of options held on April 1, 1998. On May 28, 1998, Gold & Appel filed
an amended complaint, a copy of which is attached hereto as Exhibit 7.1. Also
attached as Exhibit 7.1 are the judge's temporary restraining and preliminary
injunction orders. The foregoing summary is qualified in its entirety by
reference to Exhibit 7.1 which is incorporated herein by reference.
Except as otherwise described herein, the Reporting Persons have no
plan or proposal with respect to the Issuer which would result in any of the
matters listed in Items 4(a)-(j) of Schedule 13D under the Securities and
Exchange Act of 1934, as amended. However, the Reporting Persons retain their
rights to review or reconsider their plans with respect to the transactions
described in this Item 4, to acquire or dispose of Common Shares and to
formulate plans and proposals which could result in the occurrence of any such
events, subject to applicable laws or regulations.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
The responses set forth in (a) and (b) of Item 5 of the Schedule 13D
are hereby amended and restated in their entirety as follows:
(a) The Reporting Persons, collectively, beneficially own 928,817
Common Shares (of which 69,000 Common Shares have not yet been acquired but may
be acquired on October 1, 1998 but not later than October 5, 1998 pursuant to
the Agreement and are subject to the Proxy) or 27% of the outstanding Common
Shares. Mr. Anderson directly owns 100 Common Shares or less than .01% of the
outstanding Common Shares. Revision directly owns 928,717 (of which 69,000
Common Shares have not yet been acquired but may be acquired on October 1, 1998
but not later than October 5, 1998 pursuant to the Agreement and are subject to
the Proxy) or 27% of the outstanding Common Shares.
7
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In addition, Mr. Anderson is the President and a Director of the
Foundation for International Non-Governmental Development of Space, a
non-profit organization ("FINDS") which owns 35,465 Common Shares. Mr. Anderson
does not have a controlling interest in FINDS and thus disclaims beneficial
ownership of the Common Shares held by FINDS.
(b) The sole power to vote or direct the voting of and the power to
dispose or direct the disposition of the Anderson Shares is held by Mr.
Anderson.
As the Manager and holder of 100% of the non-voting membership
interests in Revision, Mr. Anderson has the sole power to vote or direct the
voting of 928,717 Common Shares (which includes 69,000 Common Shares which may
be acquired under the Agreement and may be voted by Revision pursuant to the
Proxy) and the power, in the name and on behalf of Revision, to dispose of the
859,717 Common Shares beneficially owned by Revision. Accordingly, Mr. Anderson
may be deemed to be the beneficial owner of the Revision Shares, and thereby
the beneficial owner of 928,817 or 27% of the outstanding Common Shares.
The number of shares beneficially owned by each of the Reporting
Persons and the percentage of outstanding shares represented thereby, have been
computed in accordance with Rule 13d-3 under the Securities Exchange Act of
1934, as amended. The ownership of the Reporting Persons is based on 3,441,447
outstanding Common Shares of the Issuer as of May 12, 1998, as reported in the
Issuer's Annual Report on Form 10-K for the fiscal year ended January 31, 1998.
The responses set forth in (c) and (d) of Item 5 of the Schedule 13D
are hereby amended and supplemented to add the following:
(c) On June 10, 1998, Gold & Appel transferred 100 Common Shares to
Mr. Anderson for no consideration. On June 10, 1998, Gold & Appel transferred
to Revision 859,717 Common Shares, the right to purchase the Option Shares and
the right to vote the Option Shares pursuant to the Proxy. In consideration for
its capital contribution, Gold & Appel received 100% of the non-voting
membership interests in Revision.
(d) Until the delivery of the Common Shares to Revision pursuant to
the Agreement, Mr. Alward has the sole right to receive dividends paid on the
Option Shares. Mr. Alward has the sole right to receive the proceeds from the
sale of said shares. No other person is known by Revision nor by Mr. Anderson
to have the right to receive or power to direct the receipt of dividends from,
or the proceeds from the sale of, the Common Shares beneficially owned by
Revision or Mr. Anderson.
The response set forth in (e) of Item 5 of the Schedule 13D is hereby
amended and restated in its entirety as follows:
(e) As a result of the transfers by Gold & Appel discussed above, Gold
& Appel is no longer a beneficial owner of any Common Shares.
8
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ITEM 6. CONTRACTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES
OF THE ISSUER.
The response set forth in Item 6 of the Schedule 13D is hereby amended
and supplemented as follows:
The Operating Agreement, which is attached hereto as Exhibit 7.2 and
which is incorporated herein by reference, provides that, among other things:
(i) There are two classes of members of Revision: the voting members and
the non-voting members. On any matter requiring a vote, consent or approval of
the members, the voting members are the only persons to whom the matter is
required to be submitted, and each voting member has one vote. No non-voting
member has a voice or vote in any matter, except as specifically set forth in
the Operating Agreement.
(ii) The initial members of Revision are Mr. Anderson and Gold & Appel. Mr.
Anderson is the sole voting member, and Gold & Appel is the sole non-voting
member. Additional members may be admitted to Revision, but unless otherwise
specifically provided by amendment to the Operating Agreement, any such
additional member will be a non-voting member.
(iii) All powers of Revision will be exercised by or under the authority of
the Manager and the business and affairs of Revision will be managed under the
direction of the Manager.
(iv) Unless otherwise agreed by a unanimous vote of the voting members of
Revision, there will be one Manager of Revision who shall be designated by the
voting member. The initial Manager is Mr. Anderson. A Manager holds office
until his or her death, resignation or retirement or until his successor is
elected and assumes office. Non-voting members have no authority to appoint or
remove a Manager for any reason.
(v) Mr. Anderson will be allocated 2% of the net profits and net losses of
Revision (up to Mr. Anderson's capital contribution) and Gold & Appel will be
allocated 98% of the net profits and losses of Revision.
(vi) Revision will be dissolved upon the occurrence of any of the following
events:
(a) The vote of a two-thirds majority of the voting members to
dissolve Revision;
(b) The death, retirement, resignation, bankruptcy (which shall mean
being the subject of an order for relief under Title 11 of the
United States Code), or dissolution of any member (a "Dissolution
Event") unless, within sixty (60) days following the occurrence
of any such event, the business of Revision is continued by the
consent of a majority-in-interest of the remaining members and,
in the case of a Dissolution Event with respect to the Manager,
the remaining members, including the non-voting members if there
is no remaining voting member, appoint a substitute Manager; or
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(c) As otherwise required by the Delaware Limited Liability Company
Act.
(vii) The Operating Agreement may be modified or amended by unanimous
written Agreement of the voting members. No amendment may modify the economic
interest of a member without such member's consent.
The foregoing summary is qualified in its entirety by reference to
Exhibit 7.2 which is incorporated by reference herein.
Except for the Operating Agreement, the Agreement and the Proxy
described in Item 2 above, and the Joint Filing Agreement attached hereto as
Exhibit 7.3, the Reporting Persons have no contract, arrangement, understanding
or relationship (legal or otherwise) with any person with respect to any
securities of the Issuer, including but not limited to the transfer of any of
the Common Shares, beneficially owned by Revision or Mr. Anderson, finder's
fees, joint ventures, guarantees of profits, division of profits or loss, or
the giving or withholding of proxies.
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS.
Exhibit 7.1 Amended Complaint, including restraining and injunction orders
attached thereto.
Exhibit 7.2 Operating Agreement of Revision, LLC, dated as of June 10, 1998.
Exhibit 7.3 Joint Filing Agreement between Walt Anderson and Revision LLC,
dated as of June 10, 1998.
10
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SIGNATURE
After reasonable inquiry and to the best of the undersigned's
knowledge and belief, the undersigned certifies that the information set forth
in this statement is true, complete and correct.
Dated: June 11, 1998
/s/ Walt Anderson
-----------------------------------
Walt Anderson
11
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SIGNATURE
After reasonable inquiry and to the best of the undersigned's
knowledge and belief, the undersigned certifies that the information set forth
in this statement is true, complete and correct.
Dated: June 11, 1998
REVISION LLC
By: /s/ Walt Anderson
--------------------------------
Walt Anderson, Manager
12
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SIGNATURE
After reasonable inquiry and to the best of the undersigned's
knowledge and belief, the undersigned certifies that the information set forth
in this statement is true, complete and correct.
Dated: June 11, 1998
GOLD & APPEL TRANSFER, S.A.
By: /s/ Walt Anderson
--------------------------------
Walt Anderson, Attorney-In-Fact
for Gold & Appel Transfer, S.A.
13
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EXHIBIT INDEX
Exhibit Description
- ------- -----------
Exhibit 7.1 Amended Complaint, Temporary Restraining Order and Preliminary
Injunction.
Exhibit 7.2 Operating Agreement of Revision LLC, dated as of June 10, 1998.
Exhibit 7.3 Joint Filing Agreement between Walt Anderson and Revision
LLC, dated as of June 10, 1998.
14
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REC'D & FILED
SUPERIOR COURT
OF NEW JERSEY
MAY 28, 1998
PITNEY, HARDIN, KIPP & SZUCH
(MAIL TO) P O BOX 1945, MORRISTOWN, N.J. 07962-1945
(DELIVERY TO) 200 CAMPUS DRIVE, FLORHAM PARK, N.J. 07932-0950
(973) 966-6300
ATTORNEYS FOR Plaintiff Gold & Appel Transfer, S.A.
SUPERIOR COURT OF NEW JERSEY
CHANCERY DIVISION-PASSAIC COUNTY
DOCKET NO. PAS-C49-98
GOLD & APPEL TRANSFER, S.A., a :
British Virgin Islands
corporation, : Civil Action
Plaintiff,
: AMENDED COMPLAINT
v.
:
TOTAL-TEL USA COMMUNICATIONS,
INC., a New Jersey :
corporation,
:
Defendant.
Plaintiff Gold & Appel Transfer, S.A., having its principal place of
business at Omar Hodge Building, Wickhams Cay, Road Town, Tortula, British
Virgin Islands, by way of Amended Complaint against defendant, says:
GENERAL FACTS APPLICABLE TO ALL COUNTS
<PAGE>
NATURE OF THE ACTION
1. Plaintiff Gold & Appel Transfer, S.A. ("Gold & Appel") brings this
action to prevent Total-Tel USA Communications, Inc. ("Total-Tel") from
implementing a strategy designed to entrench Total-Tel's management and "freeze
out" Gold & Appel, including Total-Tel's adoption on Apri1 1, 1998 of a
"poison pill" plan and its adoption, on April 7, 1998, of certain amendments to
its corporate by-laws to thwart any efforts by Gold & Appel to nominate persons
for election to the Board of Directors or to acquire additional shares of
Total-Tel.
THE PARTIES
1. Plaintiff Gold & Appel Transfer, S.A. ("Gold & Appel") is a
corporation organized under the laws of the British Virgin Islands with its
principal place of business located in the Omar Hodge Building, Wickhams Cay,
Road Town, Tortula, British Virgin Islands.
2. Gold & Appel is in the principal business of making capital venture
investments.
3. Defendant Total-Tel is a corporation organized under the laws of
the State of New Jersey, having its principal place of business at Overlook at
Great Notch, 150 Clove Road, Little Falls, Passaic County, New Jersey 07424.
4. Total-Tel is in the business of providing long distance telephone
services and its shares are publicly traded over the NASDAQ National exchange.
5. Gold & Appel is a shareholder of Total-Tel and holds in excess of
25% of the issued and outstanding stock of Total-Tel.
TOTAL-TEL'S REFUSAL TO PROVIDE ACCESS TO INFORMATION
-2-
<PAGE>
1. On or about March 11, 1998, in accordance with its rights under
Section 14A:5-28(3) of the New Jersey Business Corporations Act, Gold & Appel
made a written demand to examine Total-Tel's minutes of the proceedings of its
shareholders, record of shareholders and other information required to be
maintained by Total-Tel pursuant to N.J.S.A. 14A:5-28(1), and to make extracts
therefrom.
2. As of March 20, 1998, Gold & Appel had not received a response to
the demand letter referred to in the preceding paragraph and, by letter dated
March 20, 1998, Gold & Appel made a second written request to examine
Total-Tel's minutes.
3. On or about March 23, 1998, Gold & Appel received a letter from
Total-Tel, dated March 12, 1998, in which Total-Tel stated that it would make
its shareholder minutes available to Gold & Appel and stated further that,
prior to permitting inspection of the shareholder records, Total-Tel would
require written advice as to the purpose of Gold & Appel's proposed examination
of the shareholder records.
4. By letter dated March 23, 1998, Total-Tel purported to respond in
writing to Gold & Appel's demand letter of March 23, 1998, simply enclosing and
referring its prior letter to Gold & Appel dated as of March 12.
5. On or about March 30, 1998, Gold & Appel advised Total-Tel in
writing of the purpose for its demand for Total-Tel's shareholder list; namely,
Gold & Appel sought to evaluate its current ownership position in Total-Tel and
to consider increasing its ownership in Total-Tel.
6. By letter dated April 6, 1998, Total-Tel advised that it refused to
provide Gold & Appel with the information it demanded, stating that "Total-Tel
is not obligated to provide such information to Gold & Appel Transfer, S.A. at
this time." Total-Tel provided no explanation for its failure to comply with
its statutory obligations.
-3-
<PAGE>
TOTAL-TEL'S ENTRENCHMENT AND FREEZE OUT OF GOLD & APPEL
1. Since the time of Gold & Appel's initial demand for information
from Total-Tel, and in particular since Gold & Appel advised Total-Tel of its
purpose for demanding the information, Total-Tel has undertaken a course of
conduct with the intent of entrenching Total-Tel's management and "freezing
out" Gold & Appel.
2. On March 31, 1998, Total-Tel adopted a Shareholders' Rights Plan
(the "Poison Pill"), which is purportedly designed to prevent coercive or
unfair takeover tactics. Under the Poison Pill, each existing shareholder is
scheduled to receive a dividend of one common share purchase right for each
outstanding share of common stock. This dividend was supposed to be payable on
April 13, 1998, and is to be distributed upon the occurrence of certain
triggering events. Events which would trigger the Poison Pill include any
nonpublic proxy solicitation by Gold & Appel.
3. In addition, the Poison Pill precludes shareholders from acquiring
more than 20% of Total-Tel's stock without the consent of the Board of
Directors. As a holder of more than 20% of Total-Tel's shares, Gold & Appel is
specifically precluded from purchasing additional shares without triggering a
substantial dilution of the value of Gold & Appel's shares.
4. The Poison Pill does not apply in the same way to other substantial
holders of shares in Total-Tel, including the Feldmans, who are also part of
the management of Total-Tel.
5. Specifically, the Poison Pill contains a provision that allows
Solomon Feldman and Warren Feldman, two of Total-Tel's directors, to acquire
additional shares through an employee benefit plan, including through the
issuance of options, without triggering the Poison Pill.
-4-
<PAGE>
6. The Poison Pill was adopted in response to Gold & Appel's requests
for information from Total-Tel and for the purpose of preventing Gold & Appel
from increasing its holding in Total-Tel.
7. On or about April 7, 1998, Total-Tel amended its corporate by-laws
(the "Amended By-laws"). In the Amended By-laws, Total-Tel deleted an existing
provision, in effect since 1959, which granted a 25% shareholder an absolute
right to call a special shareholders' meeting. In addition, Total-Tel's Amended
By-laws added onerous reporting requirements for nominations to the Board of
Directors.
8. Total-Tel implemented the aforesaid amendments to its corporate
by-laws for the purpose of preventing Gold & Appel from exercising its
shareholder rights.
9. Total-Tel's conduct in connection with its adoption of the "Poison
Pill," and the amendment of its corporate by-laws, was undertaken with an
intent to entrench Total-Tel's management and its control of Total-Tel.
10. Total-Tel's conduct in connection with its adoption of the "Poison
Pill," and the amendment of its corporate by-laws, was undertaken with an
intent to "freeze out" Gold & Appel.
11. Total-Tel's conduct in connection with its adoption of the "Poison
Pill," and the amendment of its corporate by-laws, was undertaken with an
intent to prevent Gold & Appel from purchasing additional shares of Total-Tel
and nominating persons to be elected as directors of Total-Tel.
12. Total-Tel's conduct in connection with its adoption of the "Poison
Pill," and the amendment of its corporate by-laws, was undertaken with
knowledge that it would be prejudicial to the interests of Gold & Appel as a
shareholder of Total-Tel.
-5-
<PAGE>
13. Total-Tel's conduct in connection with its adoption of the "Poison
Pill," and the amendment of its corporate by-laws, was undertaken with
knowledge that it would cause harm to Gold & Appel.
14. At a hearing on April 13, 1998, the Court ordered Total-Tel to
immediately provide Gold & Appel with the records of shareholders, including a
list of non-objecting beneficial owners.
15. As of May 27, 1998, Gold & Appel has not received a complete and
accurate list of Total-Tel shareholders, which identifies all of Total-Tel's
beneficial owners.
-6-
<PAGE>
FIRST COUNT
(INJUNCTIVE RELIEF)
1. Gold & Appel repeats and makes a part hereof the allegations
contained in paragraphs 1 through 27.
2. The aforesaid conduct of Total-Tel in connection with its adoption
of the "Poison Pill," and the amendment of its corporate by-laws, unlawfully
discriminates against Gold & Appel, as a holder of more than 20% of the stock
of Total-Tel.
3. The aforesaid conduct of Total-Tel in connection with its adoption
of the "Poison Pill," and the amendment of its corporate by-laws, was
undertaken with an intent to improperly prevent Gold & Appel from communicating
with other shareholders and doing other things it has a right to do, including
purchasing additional shares of Total-Tel.
4. The aforesaid conduct of Total-Tel in connection with its adoption
of the "Poison Pill," and the amendment of its corporate by-laws, was
implemented for no proper business purpose.
5. The aforesaid conduct of Total-Tel in connection with its adoption
of the "Poison Pill," and the amendment of its corporate by-laws, were
undertaken with the intent of preventing Gold & Appel from exercising its
rights as shareholder.
6. The aforesaid conduct of Total-Tel in adopting the "Poison Pill"
and the Amended By-laws is causing irreparable harm to Gold & Appel.
7. The harm to Gold & Appel outweighs the harm, if any, to Total-Tel.
WHEREFORE, plaintiff Gold & Appel Transfer, S.A. demands judgment in
its favor and against Defendant Total-Tel USA Communications, Inc., permanently
enjoining Total-Tel from taking any actions in connection with the Poison Pill
and enjoining Total-Tel from
-7-
<PAGE>
implementing the changes to its corporate by-laws that were adopted an April 7,
1998; and granting such other and further relief as is just and proper.
SECOND COUNT
(DECLARATORY JUDGMENT)
1. Gold & Appel repeats and makes a part hereof the allegations
contained in paragraphs 1 through 34.
2. The Poison Pill was adopted in direct response to Gold & Appel's
written demand for access to Total-Tel's minutes of proceedings and shareholder
records.
3. On April 7, 1997, after Gold & Appel's written demand for access to
Total-Tel's minutes of proceedings and shareholder records, Total-Tel's Board
of Directors amended the corporate by-laws in ways that are prejudicial to Gold
& Appel's shareholder rights.
4. Total-Tel's amendments to its corporate by-laws, on or about April
7, 1997, were adopted in direct response to Gold & Appel's written demand for
access to Total-Tel's minutes of proceedings and shareholder records.
5. Total-Tel's Board of Directors adopted the Poison Pill, and amended
the by-laws on April 7, 1998, for an improper purpose, to deprive Gold & Appel
of its shareholder rights.
6. Gold & Appel's purchase of Total-Tel shares did not pose any threat
that justified the Board of Directors' adoption of the Poison Pill and the
Amended By-laws.
7. Total-Tel's directors did not and do not have a compelling
justification for adopting the Poison Pill or for changing the corporate
by-laws on April 7, 1998. Their adoption of the Poison Pill was in breach of
New Jersey law and the fiduciary duties owed to Gold & Appel.
-8-
<PAGE>
WHEREFORE, plaintiff Gold & Appel Transfer, S.A. demands judgment in
its favor and against Defendant Total-Tel USA Communications, Inc., declaring
that the Poison Pill and the April 7, 1998 amendments to Total-Tel's corporate
by-laws are illegal, null and void.
PITNEY, HARDIN, KIPP
& SZUCH Attorneys for
Plaintiff GOLD &
APPEL TRANSFER, S.A.
By: /s/ Joseph Lunin
------------------------------
JOSEPH LUNIN
A Member of the Firm
Of Counsel:
SWIDLER & BERLIN, CHARTERED
Michael J. Lichtenstein
3000 K Street, N.W., Suite 300
Washington, D.C. 20007-5116
DATED: May 28, 1998 (202) 424-7500
-9-
<PAGE>
CERTIFICATE OF SERVICE
I hereby certify that on this date a true and correct copy of the
within Amended Complaint was served upon all counsel of record, as follows:
Via Hand Delivery:
------------------
William Wallach, Esq.
McCarter & English
4 Gateway Center
100 Mulberry Street
Newark, NJ 07102
Via Facsimile & Federal Express
-------------------------------
Bobby Burchfield, Esq.
Covington & Burling
1201 Pennsylvania Ave., N.W.
Washington, DC 20044-7566
/s/ James F. Baxley
--------------------------------
JAMES F. BAXLEY
DATED: May 28, 1998
-10-
<PAGE>
FILED
APRIL 13, 1998
AMOS C. SAUNDERS
JUDGE
PITNEY, HARDIN, KIPP & SZUCH
(MAIL TO) P.O. BOX 1945, MORRISTOWN, N J 07962-1945
(DELIVERY TO) 200 CAMPUS DRIVE, FLORHAM PARK, N J. 07932-0950
(973) 966-3000
ATTORNEYS FOR Plaintiff
Gold & Appel Transfer, S.A.
SUPERIOR COURT OF NEW JERSEY
CHANCERY DIVISION: PASSAIC COUNTY
DOCKET NO.: PAS-C49-98
GOLD & APPEL TRANSFER, S.A., a :
British Virgin Islands
corporation, : Civil Action
Plaintiff, :
v. : ORDER TO SHOW CAUSE
WITH TEMPORARY RESTRAINTS
TOTAL-TEL USA COMMUNICATIONS, :
INC., a New Jersey corporation,
:
Defendant.
This matter having been brought before the Court on the application of
Pitney, Hardin, Kipp & Szuch, attorneys for Gold & Appel Transfer, S.A. ("Gold
& Appel"), for an Order requiring Total-Tel Communications, Inc. ("Total-Tel")
to show cause why it should not be (1) required to provide Gold & Appel with
access to its records of shareholders and other information required to be
maintained and (2) enjoined from taking actions causing irreparable harm to
Gold & Appel; and the Court having considered the Memorandum of Law submitted
in support of the application; and good cause having been shown;
IT IS on this 13th day of April, 1998,
<PAGE>
ORDERED that on the 30th day of April, 1998, at 9:00 in the forenoon,
or as soon thereafter as counsel may be heard, Total-Tel shall show cause
before the Honorable Amos C. Saunders, at the Passaic County Courthouse,
Paterson, New Jersey, why an Order should not be entered as follows:
1. Directing Total-Tel to immediately deliver to Gold & Appel at the
offices of its counsel, Pitney, Hardin, Kipp & Szuch, Florham Park, N.J., its
records of shareholders, including a list of non-objecting beneficial owners,
and such list shall be provided in written form and on a magnetic computer
disk. This relief was ordered on April 13, 1998 on the record; and
2. Restraining and enjoining Total-Tel from taking any actions in
connection with the Shareholders' Rights Plan (the "Poison Pill Plan") adopted
on April 1, 1998, and restraining and enjoining Total-Tel from implementing the
changes to its corporate by-laws that were adopted on April 7, 1998.
IT IS FURTHER ORDER that, pending further Order of the Court,
Total-Tel be and hereby is temporarily restrained from taking any actions in
connection with the Shareholders' Rights Plan (the "Poison Pill Plan") adopted
on April 1, 1998, and restraining and enjoining Total-Tel from implementing the
changes to its corporate by-laws that were adopted on April 7, 1998;
IT IS FURTHER ORDERED that a copy of this Order to Show Cause,
together with all supporting papers and the Verified Complaint herein shall be
served upon Total-Tel by Gold & Appel within two (2) days of the date hereof;
and
IT IS FURTHER ORDERED that Gold & Appel shall serve and file any
additional memoranda and any further affidavits in support of its application
for relief on or before April 23,
-2-
<PAGE>
1998, Total-Tel shall serve and file any answering affidavits or memoranda in
response to Gold & Appel's application on or before April 28th, 1998; and Gold
& Appel shall serve and file any reply papers on or before April 29th, 1998.
Each party is permitted Expedited Discovery on the issues raised in
the Pleadings.
IT IS FURTHER ORDERED that, pending further order of the Court,
Plaintiff shall not purchase or acquire, directly or indirectly, any stock of
Total-Tel.
/s/ Amos C. Saunders
-----------------------------------
Judge, Superior Court of New Jersey
-3-
<PAGE>
FILED
JUNE 2, 1998
AMOS C. SAUNDERS
JUDGE
MCCARTER & ENGLISH, LLP
FOUR GATEWAY CENTER
100 MULBERRY STREET
NEWARK, NEW JERSEY 07102
(973) 622-4444
OF COUNSEL:
COVINGTON & BURLING
1201 PENNSYLVANIA AVENUE, N.W.
P.O. BOX 7566
WASHINGTON, DC 20044-7566
(202) 662-5350
ATTORNEYS FOR DEFENDANT
TOTAL-TEL USA COMMUNICATIONS, INC.
- ------------------------------------
: SUPERIOR COURT OF NEW JERSEY
GOLD & APPEL TRANSFER, S.A., CHANCERY DIVISION-PASSAIC COUNTY
A British Virgin Islands corporation, : DOCKET NO. PAS-C49-98
Plaintiff, : Civil Action
v.
: ORDER OF MAY 20, 1998
TOTAL-TEL USA COMMUNICATIONS, COURT HEARING
INC., A New Jersey corporation, :
Defendant. :
- ------------------------------------
THIS MATTER having been opened to the Court by plaintiff Gold & Appel Transfer,
S.A. ("Gold & Appel"), by and through its attorneys, Pitney, Hardin, Kipp &
Szuch and Swidler & Berlin, upon notice to defendant Total-Tel USA
Communications, Inc. ("Total-Tel"), by and through its attorneys, McCarter &
English, for the entry of a preliminary injunction pursuant to
<PAGE>
Rule 4:52-2, and the Court having considered the written submissions of the
parties, the oral argument of counsel on May 20, 1998, the record in this
matter, and for good cause appearing, It is on this 2nd day of June, 1998,
ORDERED that:
10. Gold & Appel's request to invalidate the actions by the Total-Tel Board of
Directors in adopting a Shareholders' Rights Plan on March 31, 1998, and
certain bylaw amendments on April 7, 1998, on the ground that two of
Total-Tel's four directors were not shareholders at the time of their election,
is DENIED.
11. Pending further Order of this Court, the parties shall maintain the status
quo as follows:
a. Total-Tel shall take no action to implement or enforce the
Shareholders' Rights Plan adopted on March 31, 1998;
b. Total-Tel shall take no action to implement or enforce the
changes in its corporate bylaws adopted on April 7, 1998;
c. Warren Feldman and Solomon Feldman shall not purchase or acquire,
directly, or indirectly, any stock of Total-Tel other than to
exercise options for stock held on April 1, 1998; and
d. Gold & Appel and Walter Anderson shall not purchase or acquire,
directly, or indirectly, any stock of Total-Tel other than to
exercise options for such stock held on April 1, 1998.
12. This Order supersedes all prior Orders by the Court.
13. A copy of this Order shall be served upon counsel for Gold & Appel
by Total-Tel's counsel within five days of receipt from the Court.
/s/ Amos C. Saunders
-----------------------------------
Judge, Superior Court of New Jersey
-2-
<PAGE>
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
REVISION LLC
a Delaware Limited Liability Company
dated as of June 10, 1998
<PAGE>
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
REVISION LLC
a Delaware Limited Liability Company
This Limited Liability Company Operating Agreement (the "Agreement")
of Revision LLC (the "Company") dated as of June 10, 1998 is adopted and agreed
to by the undersigned Members.
ARTICLE 1.
PURPOSE AND POWERS
1.1 Purpose. The Company has been organized to acquire, invest in,
trade in, sell or otherwise dispose of capital stock of, or other securities
issued by, Total-Tel USA Communications, Inc. (the "Subject Company") and to
engage in any other lawful business activity related or incident thereto.
1.2 Powers. The Company shall have the power and authority to enter
into, make and perform all contracts, agreements and undertakings, and to do
any and all acts and things necessary, appropriate, incidental or convenient to
the accomplishment of its purposes and for the protection and benefit of the
Company. Without limitation of the foregoing, the Company may borrow, pledge
its assets and take any and all steps necessary to exercise active control over
the Subject Company. The Company may act directly or through one or more
subsidiaries, through joint ventures, partnerships or otherwise in carrying out
its purpose.
1
<PAGE>
ARTICLE 2.
MEMBERS AND INTERESTS
2.1 Members; Voting Rights.
(a) There shall be two classes of Members: the Voting Members and
the Non-voting Members. On any matter requiring a vote, consent or approval of
the Members, the Voting Members shall be the only persons to whom the matter is
required to be submitted, and each shall have one vote. Except as otherwise
provided herein, or as required by applicable law, the vote, consent or
approval of a majority of the Voting Members shall constitute the act of the
Company. No Non-voting Member shall have a voice or vote in any matter, except
as specifically provided herein.
(b) The initial Members of the Company shall be Walt Anderson
("Anderson") and Gold & Appel Transfer, SA, a British Virgin Islands
corporation ("G&A"). Anderson shall be a Voting Member, and G&A shall be a
Non-voting Member. Additional Members may be admitted to the Company, but
unless otherwise specifically provided by amendment to this Agreement, any such
additional Member shall be a Non-voting Member. Each Member shall execute a
counterpart of this Agreement indicating his agreement to the terms and
provisions hereof.
2.2 Membership Interests. Each Member's ownership interest in the
Company is herein referred to generally as a "Membership Interest." The
respective rights of each Member to share in the capital of the Company, either
by way of distributions or on liquidation, will be determined by reference to
the Capital Account (as defined herein) of such Member; and each Member's
interest in the profits and losses of the Company shall be established as
provided herein. Each Member shall have the rights and powers set forth in this
Agreement.
2.3 Meetings.
(a) The Members shall have a regular annual meeting each year
beginning in 1999, on a date established by the Manager for the purpose of
electing Managers and conducting such other business as may properly come
before the meeting. Special meetings of the Members may be called by the
Manager.
(b) Written notice stating the place, day and hour of each meeting
of Members and the general purpose or purposes for which the meeting is called
shall be given not less than seven (7) nor more than thirty (30) days before
the date of the meeting to each Member, including the Non-voting Members.
(c) A Member may waive any notice required by law or this
Agreement, before or after the date and time of the meeting that is the subject
of such notice. Except as provided in the next sentence, the waiver shall be in
writing, signed by the Member entitled to the notice and delivered to the
Manager for inclusion in the Company's minutes or records. A
2
<PAGE>
Member's attendance at or participation in a meeting shall be deemed to waive
any required notice to such Member of the meeting unless the Member, at the
beginning of the meeting or promptly upon such Member's arrival, objects to the
transaction of any business at such meeting on the ground that such meeting is
not lawfully called or convened. A Member may participate in a meeting in
person or by proxy.
(d) Any vote, consent or approval of the Members may be
accomplished by written consent in lieu of a meeting signed by Members
constituting the required vote for the action so taken.
(e) Members may participate in a regular or special meeting by, or
conduct the meeting through, the use of any means of communication by which all
Members participating may simultaneously hear each other during the meeting.
Any Member who participates in a meeting in this manner is deemed to be present
in person at the meeting, except where a Member participates in the meeting for
the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.
ARTICLE 3.
MANAGEMENT OF THE COMPANY
3.1 Managers. Except as otherwise limited by this Agreement or
applicable law, all powers of the Company shall be exercised by or under the
authority of, and the business and affairs of the Company shall be managed
under the direction of, the Company's Manager(s).
3.2 Number, Term and Election. Unless otherwise agreed by a unanimous
vote of the Members, there shall be one Manager who shall be designated by the
Voting Member. The initial Manager shall be Anderson. A Manager shall hold
office until his or her death, resignation or retirement or until his successor
is elected and assumes office. A Manager need not be a Member of the Company.
For the avoidance of doubt, Non-voting Members shall have no authority to
appoint or remove a Manager for any reason.
3.3 Officers. The Manager may appoint such officers who shall have
such power and authority as may be specified in a resolution of the Manager.
Officers shall serve at the pleasure of the Manager.
3.4 Meetings.
(a) An annual meeting of the Manager(s) shall be held immediately
following each annual meeting of Members for the purpose of appointing
officers, if any, and carrying on such other business as may properly come
before the meeting.
(b) Special meetings of the Manager(s) may be called by any
Manager.
3
<PAGE>
(c) Notices of meetings of the Manager(s) shall be given to each
Manager not less than twenty-four (24) hours before the meeting. Any such
notice shall set forth the time and place of the meeting.
(d) A Manager may waive any notice required by law or this
Agreement before or after the date and time stated in the notice and such
waiver shall be equivalent to the giving of such notice. The waiver shall be in
writing, signed by the Manager entitled to the notice and filed with the
Company's minutes or records; provided that a Manager's attendance at or
participation in a meeting waives any required notice to him or her of the
meeting.
(e) A quorum for the transaction of business at a meeting of the
Manager shall consist of all of the Managers.
(f) Any or all Managers may participate in a regular or special
meeting by, or conduct the meeting through, the use of any means of
communication by which all Managers participating may simultaneously hear each
other during the meeting. A Manager participating in a meeting in this manner
is deemed to be present in person at the meeting.
(g) Any action of the Company that may be authorized by the
Manager(s) at a meeting may be authorized by written consent in lieu of meeting
of the Manager(s) signed by the Manager(s) constituting the required vote for
the action so taken, and any such consent shall be filed with the Company's
minutes or records.
3.5 Management Decisions.
(a) Except to the extent that the Manager(s) agree to delegate the
authority with respect to specified matters, all decisions shall be made by a
unanimous vote of the Manager(s).
(b) Any disbursement of funds of the Company will require such
signatures as may be determined by the Manager(s).
3.6 Management Compensation. The Manager(s) shall not be entitled to
receive from the Company compensation for his or their services to the Company.
In all events, the Manager(s) shall be entitled to reimbursement for all
reasonable expenses incurred on the Company's behalf.
ARTICLE 4.
FINANCIAL INTERESTS OF MEMBERS
4.1 General. The Company has been organized with the intention that it
qualify for taxation as a partnership for U.S. federal income tax purposes. The
Members acknowledge that the provisions of Subchapter K of the Internal Revenue
Code of l986, as amended (the "Code") and the Treasury Regulations (the
"Regulations") promulgated thereunder will apply to the
4
<PAGE>
Company, and intend that the allocations of taxable income and loss,
distributions to the Members and maintenance of capital accounts all conform to
the requirements of the Code and the applicable Regulations.
4.2 Capital Contributions. The Voting Member shall contribute $100,
and the Non-voting Member shall contribute all of its rights and ownership in
859,717 shares of common stock, par value $0.05 per share (the "Common
Shares"), of the Subject Company and the right to purchase 69,000 Common Shares
pursuant to an Agreement between Kevin A. Alward and G&A, dated as of January
6, 1998, to the capital of the Company ("Capital Contributions"). Additional
Capital Contributions may (but need not) be made by the Members on such basis
as the contributing Member and the Manager shall mutually agree upon.
4.3 Capital Accounts.
(a) A separate capital account ("Capital Account") shall be
established and maintained for each Member on the books of the Company which
will reflect the capital contributions, distributions and share of profits and
losses of the Company of the Member in accordance with the Regulations.
(b) No Member shall be entitled to receive interest on his Capital
Contributions.
(c) No Member shall be entitled to withdraw all or any part of his
Capital Account prior to the dissolution of the Company except as permitted by
the Manager in his sole discretion.
(d) Loans or advances by any Member to the Company shall not be
considered Capital Contributions and shall not increase the Capital Account of
the lending or advancing Member.
(e) Except as provided in this Agreement, no Member shall be
required under any circumstances to contribute or lend any additional money or
property to the Company.
4.4 Sharing Percentages; Allocations of Profits and Losses.
(a) The percentage interests of the Members in the net profits of
the Company (the "Sharing percentages") are 2% - Anderson and 98% - G&A.
(b) Net income of the Company for a fiscal year or other period
shall be allocated among the Members (i) first, to the extent of cumulative
losses of the Company to the date of allocation, proportionately among the
Members who have borne such losses, and (ii) the balance in accordance with
their Sharing Percentages.
(c) Net losses of the Company for a fiscal year or other period
shall be allocated among the Members in accordance with the positive balances
in their Capital Accounts.
5
<PAGE>
In general, no Member shall be allocated net losses in excess of the positive
balance in his Capital Account; however, in the event net losses exceed Company
capital, allocations shall be made among the Members, if any, who bear such
losses as provided in the Regulations.
(d) Items of income, gain, loss, deduction and credit that are
recognized by the Company for tax purposes shall be allocated among the Members
in such manner as equitably reflects amounts credited or debited to the
Members' Capital Accounts pursuant hereto. To the extent profits or losses have
been reflected in Capital Accounts prior to their recognition for tax purposes,
allocations shall be made consistent with the principles of Code Section
704(c).
4.5 Distributions. Distributions to or among the Members to the extent
of the positive balances in their Capital Accounts may be made from time to
time as the Manager determines.
ARTICLE 5.
TRANSFERS AND THE ADMISSION OF ADDITIONAL MEMBERS
5.1 Transfers Generally. Membership Interests may be assigned, in
whole or in part, (each such assignment, a "Transfer") only in accordance with
this Article.
5.2 Effect of Transfers.
(a) Except as provided in paragraph (b) below, any Transfer of a
Membership Interest by a person (the "Transferor") shall be effective only to
give the transferee (the "Transferee") the right to the share of allocations
and distributions to which the Transferor would otherwise be entitled, and no
Transferee of a Membership Interest shall be admitted as a Member, (ii) the
Transferee shall have no right to vote on or consent to any matter submitted to
the Members or otherwise participate in the management of the business and
affairs of the Company, and (iii) subject to 5.3(c) below, the Transferor, if
he retains a Membership Interest, shall retain such rights and shall have the
power to exercise any rights of a Member, except the right to receive
allocations and distributions to the extent those rights are assigned.
(b) A Transferee of a Membership Interest shall, upon such
Transfer, be admitted as a Member with all the rights and powers of his
Transferor if, prior to such Transfer, the Manager consents to the admission of
the Transferee as a Member.
(c) The Manager may, in its discretion, charge a reasonable fee to
cover the expenses incurred by the Company in connection with or as a
consequence of the Transfer of all or part of a Membership Interest.
(d) The Company, the Manager, each Member and any other person or
persons having business with the Company, need deal only with holders of
Membership Interests who are admitted as Members of the Company, and shall not
be required to deal with any Transferee who has not been admitted as a Member.
6
<PAGE>
5.3 Admission of Members. The Managing Directors may from time to time
admit additional Members to the Company on such terms and conditions, including
such contributions to the capital of the Company, as the Managing Directors
shall determine. Any such additional Members shall join in and agree to be
bound by the terms of this Agreement.
ARTICLE 6.
TERM AND TERMINATION OF THE COMPANY
6.1 Term of the Company. The term of the Company commenced upon the
filing of the certificate of formation with the Secretary of State of Delaware
on June 10, 1998. The term of the Company shall be five (5) years from the date
of formation unless the term of the Company is extended by consent of the
Voting Members or if the Company is dissolved and terminated as provided in
this Agreement.
6.2 Events of Dissolution. The Company shall be dissolved upon the
occurrence of any of the following events:
(a) The vote of a two-thirds majority of the Voting Members to
dissolve the Company;
(b) The death, retirement, resignation, bankruptcy (which shall
mean being the subject of an order for relief under Title 11 of the United
States Code), or dissolution of any Member ( a "Dissolution Event") unless,
within sixty (60) days following the occurrence of any such event, the business
of the Company is continued by the consent of a majority-in-interest of the
remaining Members and, in the case of a Dissolution Event with respect to the
Manager, the remaining Members, including the Non-voting Members if there is no
remaining Voting Member, appoint a substitute Manager;
(c) As otherwise required by the Delaware Limited Liability
Company Act.
As used in this Article VI, consent of a majority-in-interest means consent
of Members (including for this purpose Voting and Non-voting Members) owning
Capital Accounts representing a majority of Company capital.
6.3 Conclusion of Affairs. In the event of dissolution of the Company
for any reason, the Manager, or if no Manager remains, the Members, by vote of
a majority-in-interest, shall appoint a person (the "Liquidator"), who may but
need not be a Manager and/or Member, and the Liquidator shall proceed, as soon
as reasonably practicable, to wind up the affairs of the Company. The Members
(and their successors in interest) shall continue to share in allocations of
income and loss and distributions during the period of winding up in the same
manner as before the dissolution. The Liquidator shall have reasonable
discretion to determine the time, manner and terms of any sale or sales of
Company property pursuant to such winding up, having due regard to the activity
and the condition of the Company and relevant market and financial and economic
conditions, and consistent with his obligations to the Members.
7
<PAGE>
6.4 Liquidating Distributions. After paying or providing for the
payment of all debts and liabilities of the Company and all expenses of winding
up, and subject to the right of the Liquidator to set up such reserves as it
may deem reasonably necessary for any contingent or unforeseen liabilities or
obligations of the Company, the proceeds of the liquidation, and any other
remaining assets of the Company, shall be distributed to or for the benefit of
the Members (and their successors in interest) in accordance with their
respective Capital Accounts. No Member shall have any right to demand or
receive property other than cash upon dissolution and winding up of the
Company; provided, however, the Liquidator shall have the right and power to
distribute assets in kind (whether to some or all of the persons entitled to
such distributions), valued at the then estimated fair market value of such
assets, as a liquidating distribution to the Members (and their successors in
interest).
6.5 Termination. Within a reasonable time following the completion of
the winding up of the Company, the Liquidator shall supply to each Member a
statement which shall set forth the assets and the liabilities of the Company
as of the date of complete winding up and each Member's portion of the
distributions pursuant to this Agreement. Upon completion of the winding up of
the Company and the distribution of all Company assets, the Company shall
terminate, and the Liquidator shall execute and file a certificate of
cancellation of the Company with the Secretary of State of Delaware, and shall
take all other action necessary to effectuate the dissolution and termination
of the Company.
ARTICLE 7.
GENERAL AND ADMINISTRATIVE PROVISIONS
7.1 Principal Office. The principal office of the Company shall be at
such location or locations as may be determined by the Manager from time to
time.
7.2 Indemnification. To the fullest extent permitted by law, the
Company shall indemnify and hold harmless, and may advance expenses to, any
Member or Manager (collectively, the "Indemnitees"), from and against any and
all claims and demands whatsoever arising out of the business and affairs of
the Company; provided, however, that no indemnification may be made to or on
behalf of any Indemnitee if a judgment or other final adjudication adverse to
such Indemnitee establishes (a) that his or her acts were committed in bad
faith or were the result of active and deliberate dishonesty and were material
to the cause of action so adjudicated or (b) that he or she personally gained
in fact a financial profit or other advantage to which he or she was not
legally entitled. The provision of this section shall continue to afford
protection to each Indemnitee regardless of whether such Indemnitee remains a
Member, Manager, employee or agent of the Company.
7.3 Fiscal Year. Unless otherwise determined by the Manager, the
fiscal year of the Company shall end on the thirty-first of December.
7.4 Books and Records. At all times during the term of the Company,
the Manager shall keep, or cause to be kept at the Company's principal office,
the books and records of the Company.
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7.5 Reports. As soon as practicable following the end of each fiscal
year, the Company shall provide each Member a financial report of the results
of operations, including audited or unaudited financial statements, as
determined by the Manager.
7.6 Notices. Any notice to be given under this Agreement may be given
either personally or by mail, telephone, telegraph, teletype, telecopy or other
form of wire or wireless communication, or by overnight courier. If mailed,
notice shall be deemed to be effective three (3) days after deposited in
registered or certified mail with postage thereon prepaid addressed if to a
Member at its address as it appears on the signature page to this Agreement (or
at such other address for any party as such party shall notify the other
parties), and if to the Company at its principal office. If given in any other
manner, such notice shall be deemed to be effective (i) when given personally,
(ii) when given by telephone, teletype, telecopy or other form of wire or
wireless communication (if followed by a copy delivered by registered or
certified mail) or (iii) one (1) day after given to an overnight courier to be
delivered.
7.7 Headings. The headings of the sections hereof are inserted for
convenience only and shall not control or affect the meaning or construction of
any of the provisions hereof.
7.8 Gender; Number. Where the context so requires, the masculine
gender shall be construed to include the female, a corporation, a trust or
other entity, and the singular shall be construed to include the plural and the
plural the singular.
7.9 Amendments. This Agreement may be modified or amended by unanimous
written agreement of the Voting Members; provided, that, no amendment may
modify the economic interest of a Member without such Member's consent.
7.10 Entire Agreement. This Agreement sets forth the entire
understanding of the parties hereto.
7.11 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the undersigned have affixed their signatures
signifying their adoption of this Agreement:
/s/ Walt Anderson
-----------------------------------
Walt Anderson
Address: 1313 North Market Street
Wilmington, Delaware 19801
GOLD & APPEL TRANSFER, S.A.
By: /s/ Walt Anderson
--------------------------------
Walt Anderson, Attorney-In-Fact for
Gold & Appel Transfer, S.A.
Address: Omar Holdge Building
Wickhams Cay
Road Town
Tortula, BVI
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TABLE OF CONTENTS
Page
ARTICLE I
PURPOSE AND POWERS.................................................1
1.1 Purpose...................................................1
1.2 Powers....................................................1
ARTICLE II
MEMBERS AND INTERESTS..............................................2
2.1 Members; Voting Rights....................................2
2.2 Membership Interests......................................2
2.3 Meetings..................................................2
ARTICLE III
MANAGEMENT OF THE COMPANY..........................................3
3.1 Managers..................................................3
3.2 Number, Term and Election.................................3
3.3 Officers..................................................3
3.4 Meetings..................................................3
3.5 Management Decisions......................................4
3.6 Management Compensation...................................4
ARTICLE IV
FINANCIAL INTERESTS OF MEMBERS.....................................5
4.1 General...................................................5
4.2 Capital Contributions.....................................5
4.3 Capital Accounts..........................................5
4.4 Sharing Percentages; Allocations of Profits and Losses....6
4.5 Distributions.............................................6
ARTICLE V
TRANSFERS AND THE ADMISSION OF ADDITIONAL MEMBERS..................6
5.1 Transfers Generally.......................................6
5.2 Effect of Transfers.......................................6
5.3 Admission of Members......................................7
ARTICLE VI
TERM AND TERMINATION OF THE COMPANY................................7
6.1 Term of the Company.......................................7
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6.2 Events of Dissolution.....................................7
6.3 Conclusion of Affairs.....................................8
6.4 Liquidating Distributions.................................8
6.5 Termination...............................................8
ARTICLE VII
GENERAL AND ADMINISTRATIVE PROVISIONS..............................8
7.1 Principal Office..........................................8
7.2 Indemnification...........................................9
7.3 Fiscal Year...............................................9
7.4 Books and Records.........................................9
7.5 Reports...................................................9
7.6 Notices...................................................9
7.7 Headings..................................................9
7.8 Gender; Number............................................9
7.9 Amendments................................................9
7.10 Entire Agreement.........................................10
7.11 Counterparts.............................................10
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JOINT FILING AGREEMENT
In accordance with Rule 13d-1(f) promulgated under the Securities
Exchange Act of 1934, the undersigned agree to the joint filing of a Statement
on Schedule 13D (including any and all amendments thereto) with respect to the
shares of common stock, par value $.05 per share, of Total-Tel USA
Communications, Inc., and further agree that this Joint Filing Agreement be
included as an Exhibit thereto. In addition, each of Revision LLC and Walt
Anderson, expressly authorizes the other to file on its behalf any and all
amendments to such statement.
Date: June 10, 1998 REVISION LLC
By: /s/ Walt Anderson
--------------------------------
Walt Anderson, Manager
GOLD & APPEL TRANSFER, S.A.
By: /s/ Walt Anderson
--------------------------------
Walt Anderson, Attorney-In-Fact
for Gold & Appel Transfer, S.A.
/s/ Walt Anderson
-----------------------------------
WALT ANDERSON
