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EXHIBIT 2
SEPARATION AGREEMENT
This SEPARATION AGREEMENT (this "Agreement") is made as of September
21, 1999 by and between XXXXXX X. XXXXXXX, residing at 000 Xxxx Xxxx Xxxx,
Xxxxxxxxx Xxxx, Xxx Xxxxxx 00000 ("Xxxxxx Xxxxxxx") and TOTAL-TEL USA
COMMUNICATIONS, INC., a New Jersey corporation with offices at 000 Xxxxx Xxxx,
Xxxxxx Xxxxx, Xxx Xxxxxx 00000 (the "Company").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Employment Agreement dated May 5,
1999 by and between Xxxxxx Xxxxxxx and the Company (the "Employment
Agreement"), Xxxxxx Xxxxxxx has agreed to serve as Chairman of the Board of the
Company until December 31, 2001, on the terms and subject to the conditions set
forth therein; and
WHEREAS, Xxxxxx Xxxxxxx and the Company desire to terminate the
Employment Agreement on the mutually beneficial terms set forth herein.
NOW, THEREFORE, in consideration of the above mentioned premises, the
mutual covenants and agreements contained herein, and other good and valuable
consideration the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. TERMINATION OF EMPLOYMENT AGREEMENT.
(a) Termination of Employment Agreement. Xxxxxx Xxxxxxx
and the Company agree that the Employment Agreement shall be terminated as of
5:00 p.m. on the Effective Date (as defined below), and shall have no further
force or effect, unless this Agreement is revoked by Xxxxxx Xxxxxxx on or prior
to such date pursuant to Section 10(h), in which case such termination of the
Employment Agreement shall not be effective.
(b) Resignation. Xxxxxx Xxxxxxx hereby resigns from the
office of Chairman of the Board and as a member of the Board of Directors of
the Company and from each position he holds at any subsidiary of the Company,
such resignations to be effective at 5:00 p.m. on October 7, 1999 (the
"Effective Date"), unless this Agreement is revoked by Xxxxxx Xxxxxxx on or
prior to such date pursuant to Section 10(h), in which case such resignations
shall not become effective and this Agreement shall be void and of no force and
effect. The Company hereby accepts the resignations of Xxxxxx Xxxxxxx as of
the Effective Date.
2. XXXXXXX RELEASE OF CLAIMS.
(a) General Release. Xxxxxx Xxxxxxx agrees, on his own
behalf and on behalf of his heirs, successors, agents, executors,
administrators, and assigns (collectively, the "Xxxxxxx Releasors"), to release
the Company and its present and former subsidiaries, affiliates, divisions,
branches, agencies, and other offices and its and their respective present and
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successors, assigns, officers, agents, representatives, affiliates, attorneys,
fiduciaries, administrators, directors, stockholders, and employees
(collectively, the "Xxxxxxx Releasees") from any and all manner of actions,
causes of action, suits, judgments, executions, demands, debts, dues, duties,
accounts, bonds, agreements (other than those relating to the Options or as
otherwise provided herein), contracts, covenants, damages and all other claims
whatsoever, both in law and in equity, which the Xxxxxxx Releasors ever had,
now have or may in the future have against any or all of the Xxxxxxx Releasees
for or by reason of or in any way arising out of any cause, matter or thing
existing up to the Effective Date including, without limiting the generality of
the foregoing, for or by reason of or in any way arising out of any cause,
matter or thing relating to salary, wages, monies advanced, bonuses, expenses,
director's fees, retirement or pension allowances, participation in profits or
earnings or damages for wrongful dismissal (including but not limited to any
discrimination claim based on age, sex, race, religion, color, national origin,
disability, marital status, appearance or sexual orientation under federal,
state or local law, rule or regulation, and/or any claim for wrongful
termination, defamation, and any other claim, whether in tort, contract or
otherwise). This release shall not apply to any claims the Xxxxxxx Releasors
may have relating to the Company's performance of its obligations under this
Agreement.
(b) ADEA Release. The Xxxxxxx Releasors further agree
that they are hereby releasing any and all claims that they may have under the
Age Discrimination in Employment Act connected with Xxxxxx Xxxxxxx'x employment
with the Company (or his separation therefrom) arising on or before the
Effective Date.
(c) Promise Not To Xxx On Claims Released. The Xxxxxxx
Releasors promise not to initiate any court or judicial-type proceeding against
the Company that involves any claim that they have released in Sections 2(a)
and 2(b) of this Agreement. If a court determines that the Xxxxxxx Releasors
or any one of them have violated this release by suing the Company or any of
the Xxxxxxx Releasees they hereby agree that they will pay all costs and
expenses of defending against the suit incurred by the Company. Nothing in this
Section 2(c) shall be construed to prevent the Xxxxxxx Releasors or any one of
them from filing a charge of discrimination with, or participating in an
investigation or proceeding conducted by, the Equal Employment Opportunity
Commission.
(d) Consultation With an Attorney. Xxxxxx Xxxxxxx
acknowledges that he has been advised to consult his own attorney prior to
entering into this Agreement and that he was afforded sufficient time to
undertake such consultation.
3. COMPANY RELEASE OF CLAIMS.
(a) General Release. The Company agrees on its own
behalf and on behalf of its present and former subsidiaries, affiliates,
divisions, branches, agencies, and other offices and its and their respective
present and former successors, assigns, officers, agents, representatives,
affiliates, attorneys, fiduciaries, administrators, directors, stockholders,
and employees (collectively, the "Company Releasors"), to release Xxxxxx
Xxxxxxx and his heirs, successors, agents, executors, administrators, and
assigns (the "Company Releasees") from any and all manner of actions, causes of
action, suits, judgments, executions, demands, debts, dues, duties, accounts,
bonds, agreements (other than those provided herein), contracts, covenants,
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damages and all other claims whatsoever, both in law and in equity, which the
Company Releasors ever had, now have or may in the future have against any or
all of the Company Releasees for or by reason of or in any way arising out of
any cause, matter or thing existing up to the Effective Date. This release
shall not apply to any claims the Company Releasors may have relating to Xxxxxx
Xxxxxxx'x performance of his obligations under this Agreement, or to any claim
for recovery by the Company of short-swing profits under Section 16(b) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
(b) Promise Not To Xxx On Claims Released. The Company
Releasors promise not to initiate any court or judicial-type proceeding against
the Company Releasees that involves any claim that they have released in
Section 3(a) of this Agreement. If a court determines that the Company
Releasors or any one of them have violated this release by suing any of the
Company Releasees they hereby agree that they will pay all costs and expenses
of defending against the suit incurred by the Company Releasees.
4. CONSIDERATION.
(a) Severance Payment. In full satisfaction of all
amounts outstanding under the Employment Agreement and in consideration of the
promises set forth herein and other good and valuable consideration, the
Company agrees to pay to Xxxxxx Xxxxxxx xxxxxxxxx pay in the lump-sum amount of
$650,000, which amount shall be payable promptly (but in any event not later
than three (3) business days) following the execution and delivery hereof.
(b) Existing Options. The Company acknowledges and
agrees that Xxxxxx Xxxxxxx has been granted non-statutory stock options to
purchase 120,222 shares of the Company's common stock ("Common Stock"), which
stock options (collectively, the "Options") are exercisable as follows:
(i) 39,222 from the grant of April 15, 1997 are
exercisable at $7.25, per share;
(ii) 33,000 from the grant of November 3, 1992 are
exercisable at $0.5114, per share; and
(iii) 48,000 from the grant of February 2, 1992 are
exercisable at $0.5114, per share.
(c) Exercise of Options. The Company acknowledges and
agrees that Xxxxxx Xxxxxxx shall have ninety (90) days from the Effective Date
to exercise the Options, approval by the Board of Directors of the Company of
this Agreement constituting the determination by the Board that such 90-day
period is reasonable and appropriate.
5. TAXES AND BENEFITS; WITHHOLDINGS. The parties acknowledge and
agree that (i) federal, state and local tax withholdings will be made from the
payments provided for in this Agreement as may be required by law and/or in
accordance with the Company's benefit plans, and (ii) Xxxxxx Xxxxxxx shall be
solely responsible for the federal, state, and local and other taxes normally
paid by employees relating to these payments.
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6. REPRESENTATIONS AND WARRANTIES.
(a) Certain Representations and Warranties by Xxxxxx
Xxxxxxx. Xxxxxx Xxxxxxx represents and warrants to the Company 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) the execution, delivery, and performance by Xxxxxx Xxxxxxx 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
Xxxxxx Xxxxxxx is a party or by which any of his assets or properties may be
bound, and (iii) 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.
(b) Certain Representations and Warranties by the
Company. The Company represents and warrants to Xxxxxx Xxxxxxx that (i) the
execution, delivery, and performance by the Company of this Agreement have been
duly authorized by all action required by law, its certificate of incorporation
and bylaws, (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 articles of incorporation
or bylaws 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) 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) it has obtained directors and officers liability insurance
policies covering all officers and directors of the Company, and such policies
are in full force and effect on the date hereof.
7. NON-COMPETE, NON-DISPARAGEMENT AND CONFIDENTIAL INFORMATION.
(a) Company Business. Xxxxxx Xxxxxxx covenants and
agrees that he will not, during the period commencing on the Effective Date and
ending on the date twelve (12) months thereafter, directly or indirectly, in
any capacity, engage in or participate in the management, ownership, or
operation of any business or activity which directly competes with the business
conducted by the Company (as such business is conducted on the Effective Date)
in the States of New York and New Jersey.
(b) No Solicitation. Xxxxxx Xxxxxxx covenants and agrees
that he will not, during the period commencing on the Effective Date and ending
on the date twenty-four
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(24) months thereafter, directly or indirectly: (i) employ or solicit the
employment (or assist any third party to employ or solicit the employment) of
any person who was engaged by the Company as an employee on September 1, 1999
(provided that the foregoing prohibition shall not apply to his executive
assistant, or after October 7, 2000, to (A) any person whose employment is
involuntarily terminated by the Company or (B) any person who is not employed
by the Company at the time his employment is first solicited by Xxxxxx
Xxxxxxx); or (ii) call on any party that was a customer of the Company on the
Effective Date for the purpose of competing with the Company by soliciting,
diverting or taking away any customer of the Company (provided that after
October 7, 2000 the foregoing prohibition shall not apply to any customer from
which the Company has not billed or received a total of $10,000 in payments for
products or services during the six-month period prior to when such customer is
first solicited by Xxxxxx Xxxxxxx).
(c) Reasonable Restrictions. Xxxxxx Xxxxxxx recognizes
and hereby acknowledges that the restrictions imposed upon him in this Section
7 are reasonable and are necessary for the protection of the business of the
Company. It is understood and agreed that this Section 7 shall not be deemed
to be violated merely because Xxxxxx Xxxxxxx owns stock or other equity
interests in an entity that is in competition with the Company, so long as a
class of equity securities of such entity is registered pursuant to the
Exchange Act , and Xxxxxx Xxxxxxx owns no more than five percent (5%) of the
outstanding equity securities of such class.
(d) Non-Disparagement. Neither party to this Agreement
shall in any way attempt to disparage or impair the reputation or good name of
the other party, the Company's divisions, affiliates, or subsidiaries, or any
of the Company's officers, directors or employees.
(e) Confidential Information. Xxxxxx Xxxxxxx hereby
acknowledges that during the course of his employment with the Company he came
into contact with, and had access to, information that is the property of the
Company. Such information includes, but is not limited to, business plans,
present or prospective customers, vendors, products, processes services or
activities, including the costing and pricing of such services or activities.
Xxxxxx Xxxxxxx covenants and agrees that he has not and will not utilize or
disclose any of the above described confidential information to any person(s)
or entities for any reason or purpose whatsoever, except in the performance of
his duties for the Company. The foregoing limitations shall not apply to any
information that (i) is or becomes public knowledge through no action or
default on the part of Xxxxxx Xxxxxxx; (ii) is approved by the Company in
writing for disclosure to specified third parties; or (iii) is required to be
disclosed by Xxxxxx Xxxxxxx pursuant to a court order or applicable rules and
regulations.
(f) Rights and Remedies Upon Breach. In the event of any
breach or threatened breach by Xxxxxx Xxxxxxx of the covenants of Section 7,
the Company shall be entitled to such equitable and injunctive relief as may be
available to restrain Xxxxxx Xxxxxxx from the violation of the provisions
hereof. Nothing herein shall be construed as prohibiting the Company from
pursuing any other remedies available at law or in equity for such breach or
threatened breach.
(g) Severability of Covenants. If any court determines
that any of the
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covenants of this Section 7, or any part thereof, is invalid or unenforceable,
the remainder of the covenants shall not thereby be affected and shall be given
full effect, without regard to the invalid portions.
(h) The prohibitions of paragraphs (a) and (b) of this
Section 7 shall terminate at such time as any person or group (as such term is
defined by Section 13(d) of the Exchange Act) other than Revision LLC, Xxxx
Xxxxxxxx, Gold & Xxxxx Transfer, S.A. and their respective affiliates acquires
voting common stock of the Company in a purchase or transaction or in a series
of purchases or transactions, if immediately thereafter such person or group
has, or would have, beneficial ownership (as determined pursuant to Rule 13d-3
under the Exchange Act) of a majority of the voting power of the Company's then
outstanding voting equity securities.
8. INDEMNIFICATION.
(a) Right to Indemnification. If Xxxxxx Xxxxxxx is made
a party or is threatened to be made a party to any action, suit, or proceeding,
whether civil, criminal, administrative, or investigative, by reason of the
fact he was a director or officer of the Company or was serving at the request
of the Company as a director or officer of another corporation or of a
partnership, joint venture, trust, or other enterprise, he shall be indemnified
and held harmless by the Company to the fullest extent permitted by applicable
law against all expenses, liabilities and losses (including attorneys' fees,
judgments, fines, or penalties and amounts paid in settlement) reasonably
incurred or suffered by him in connection therewith, and such indemnification
shall continue after the Effective Date and shall inure to the benefit of
Xxxxxx Xxxxxxx'x heirs, executors, and administrators.
(b) Right to Advancement of Expenses. The right to
indemnification conferred in this Section 8 shall include the right to be paid
by the Company the expenses incurred in defending any action, suit, or
proceeding in advance of its final disposition, subject to the receipt by the
Company of an undertaking by Xxxxxx Xxxxxxx to repay all amounts so advanced if
it shall ultimately be determined that he is not entitled to be indemnified.
(c) Nonexclusivity of Rights. The rights to
indemnification and to the advancement of expenses contained in this Section 8
shall not be exclusive of any other right which Xxxxxx Xxxxxxx may have or
hereafter acquire under any statute, provision of the Company's articles of
incorporation, by-laws, agreement, vote of stockholders or disinterested
directors, or otherwise.
(d) Duration. The indemnification obligations of the
Company hereunder shall apply only to indemnified liabilities arising from
claims as to which notice has been provided to the Company by Xxxxxx Xxxxxxx
within sixty (60) days of receipt of such notice by Xxxxxx Xxxxxxx.
(e) Indemnification Agreement. The parties hereto
acknowledge and agree that (i) the Indemnification Agreement dated March 6,
1998 between Xxxxxx Xxxxxxx and the Company (the "Indemnification Agreement")
is, and at all times since March 6, 1998 has been, in full force and effect,
(ii) that, notwithstanding the provisions of Section 1 of the
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Indemnification Agreement, Xxxxxx Xxxxxxx shall be entitled to the rights of
indemnification provided therein if at any time after the Effective Date, by
reason of his Corporate Status (as defined therein) he is, or is threatened to
be made, a party to any threatened, pending, or completed Proceeding (as
defined therein), and (iii) the Indemnification Agreement shall continue until
the expiration of the term set forth in Section 10 thereof.
9. OTHER COVENANTS AND UNDERTAKINGS.
(a) Insurance. The Company further covenants and agrees
that, for a period of three (3) years following the Effective Date, it will
maintain a directors and officers liability insurance policy covering Xxxxxx
Xxxxxxx for the period of his service as a director and officer of the Company
up to and including the Effective Date.
(b) Transition Issues. Xxxxxx Xxxxxxx shall return the
Company car currently in his possession on or before the date that is fifteen
(15) days after the Effective Date, and the Company shall maintain the existing
automobile insurance coverage on such car until such date. Xxxxxx Xxxxxxx
shall have the right to purchase (i) the cellular phone he currently uses, (ii)
the personal computer currently in his office, and (iii) the personal computer,
printer, fax machine and cellular phone currently used by his executive
assistant, each for a purchase price equal to the depreciated value of such
equipment; provided, however, that all Company-related information shall be
deleted from the two personal computers before they are sold to Xxxxxx Xxxxxxx.
(c) Press Releases. The Company shall provide a copy of
any press release or other public disclosure concerning the transactions
contemplated hereby to Xxxxxx Xxxxxxx, and any such press release or other
public disclosure shall not be disseminated or released without the prior
written approval of Xxxxxx Xxxxxxx, such approval not to be unreasonably
withheld or delayed.
10. GENERAL MATTERS.
(a) Notice. 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:
(i) If to Xxxxxx Xxxxxxx:
000 Xxxx Xxxx Xxxx,
Xxxxxxxxx Xxxx, Xxx Xxxxxx 00000
Attn: Xxxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
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with a copy (which shall not constitute notice) to:
0000 Xxxxxxxx Xxxxxx
Xxx. 00X
Xxxx Xxx, XX 00000
Attn: Xxxxxxx Xxxxxxx
(ii) If to the Company:
Total-Tel USA Communications, Inc.
000 Xxxxx Xxxx
Xxxxxx Xxxxx, Xxx Xxxxxx 00000
Attn: President & Chief Executive Officer
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxxxxx & Xxxxxxx
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxx X. Xxxxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
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.
(b) 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 its principles or rules of conflict of laws to the extent such
principles or rules would require or permit the application of the laws of
another jurisdiction.
(c) Expenses. All costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall
be borne by the party incurring such expenses; provided, however, that the
Company shall pay the fees and expenses of Xxxxxxxxx & Xxxxxxx, counsel to the
Company, incurred in connection with the preparation of this Agreement.
(d) No Third-Party Beneficiaries. Except as provided in
Sections 2 and 8, nothing in this Agreement shall be construed as giving any
person or entity, other than the parties hereto and their successors and
permitted assigns, any right, remedy, or claim under or in respect of this
Agreement or any provision hereof, except as expressly provided herein.
(e) Successors and Assigns; Severability. This Agreement
shall be binding upon the respective successors, trustees, and permitted
assigns of the parties hereto. This Agreement shall not be assignable or
otherwise transferable by any party without the prior written consent of the
other parties and any attempt to so assign or transfer this Agreement
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without such consent shall be void and of no effect. If any provision of this
Agreement is held to be unenforceable for any reason, it shall be adjusted
rather than voided, if possible, in order to achieve the intent of the parties
to this Agreement to the extent possible.
(f) Counterparts; Amendments; Entire Agreement, Etc.
This Agreement and any amendments hereto may be executed in one or more
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument. This Agreement may be changed, modified,
amended, or supplemented only by written instrument signed by the parties
hereto. No provision of this Agreement may be waived orally, but only by a
written instrument signed by the party against whom enforcement of such waiver
is sought. The headings in this Agreement are inserted for convenience only
and shall not constitute a part hereof. As used herein, except as the context
otherwise indicates, the singular shall include the plural and vice versa and
words of any gender shall include any other gender. The conjunction "or" shall
be understood in its inclusive sense (and/or). This Agreement constitutes the
entire agreement and understanding of the parties with respect to its subject
matter and supersedes all oral communications and prior writings with respect
thereto.
(g) Period of Consideration. By his signature below,
Xxxxxx Xxxxxxx acknowledges that the Company complied with the ADEA by giving
him a period of at least twenty-one (21) days from the date that this Agreement
was first provided to him to consider this Agreement and to decide whether to
accept it. Xxxxxx Xxxxxxx further acknowledges that no representative of the
Company ever stated or implied that he had less than twenty-one (21) days to
consider this Agreement. Xxxxxx Xxxxxxx also acknowledges that, to the extent
he decided to sign this Agreement prior to the expiration of the full
twenty-one (21) day period, such decision was knowing and voluntary on his part
and was in no way coerced by the Company. To the extent any changes were made
in this Agreement as a result of negotiations taking place after the date this
Agreement was provided to Xxxxxx Xxxxxxx, he and the Company agree that such
changes, whether material or not, did not restart the running of the period of
twenty-one (21) days to consider this Agreement required by the ADEA.
(h) Right to Revoke Agreement. Except for the
obligations of the Company under Section 4(a), this Agreement will not become
effective or enforceable until October 7, 1999, which is more than seven (7)
days from the date first above written. During the period prior to such date,
Xxxxxx Xxxxxxx has a right to change his decision to accept the severance
payment that has been offered and paid to him and to revoke this Agreement, in
which case he shall be obligated to return such payment.
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IN WITNESS WHEREOF, this Separation Agreement has been executed and
delivered by the parties hereto on the date first above written.
TOTAL-TEL USA COMMUNICATIONS, INC.
for itself and for all its subsidiaries
By: /s/ Xxxxxx Xxxxx
---------------------------------------
Name: Xxxxxx Xxxxx
Title: President & Chief Executive Officer
/s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx
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