EXHIBIT 7.1
SETTLEMENT AGREEMENT
SETTLEMENT AGREEMENT, made this 10th day of December, 1998, between
TOTAL-TEL USA COMMUNICATIONS, INC., a New Jersey corporation (the "Company"),
XXXX XXXXXXXX and REVISION LLC, a Delaware limited liability company
("Revision" and collectively with Xxxxxxxx, the "Committee").
WHEREAS, on or about April 7, 1998, Gold & Xxxxx Transfer, S.A.
("Gold & Xxxxx") filed a complaint against the Company in the Superior Court of
New Jersey, Chancery Division, Passaic County (the "Court"), Docket No.
PAS-C49-98 (the "Lawsuit") and Revision subsequently became a party to the
Lawsuit.
WHEREAS, the Lawsuit is currently pending and the parties hereto
desire to settle the Lawsuit and petition the Court for the recission of all
outstanding orders issued in connection with the Lawsuit, on the terms and
conditions set forth herein.
WHEREAS, the Company and the Committee have been engaged in a proxy
contest with respect to the election of directors of the Company at the Annual
Meeting of Stockholders of the Company to be held on December 10, 1998 (the
"Meeting") and desire to agree upon a settlement of the matters relating to
such proxy contest, on the terms and conditions provided herein.
WHEREAS, in connection with such proxy contest the Company has
distributed to stockholders a proxy statement dated November 11, 1998, and the
Committee has distributed stockholders a proxy statement, dated November 25,
1998.
NOW, THEREFORE, for good and valid consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. SETTLEMENT OF LITIGATION. As soon as practicable after the execution and
delivery of this Agreement, Revision, Gold & Xxxxx and the Company shall
prepare and file a stipulation dismissing with prejudice the Lawsuit and
requesting that the Court orders outstanding in connection with the Lawsuit be
rescinded, revoked or otherwise caused to be ineffective, and such parties
agree to take all action and deliver and exchange such documents as may be
reasonably necessary to cause such dismissal of the Lawsuit and rescission or
revocation of such orders.
2. ANNUAL MEETING DATE, PROXY STATEMENT AND BY-LAWS.
(A) MEETING DATE. Upon the execution and delivery of this Agreement, the
Company shall promptly take all action necessary to change the date of the
Meeting from December 10, 1998 to a date no later than January 31, 1999, or in
the event that date becomes impracticable due to delays
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in the satisfaction of the regulatory or court approval conditions to such
closing, no later than February 28, 1999.
(B) PROXY STATEMENT. Upon the closing of the Stock Purchase (as defined in
Section 3 hereof), the Company shall promptly prepare and file with the
Securities and Exchange Commission on a date no later than two business days
from the date thereof, a Proxy Statement for solicitation of proxies with
respect to the Meeting which contains the recommendation of the Board in favor
of the election to the Board of Xxxxxx Xxxxxxx and two designees of Xxxxxx
Xxxxxxx and Xxxx Xxxxxxxx and two designees of Xxxx Xxxxxxxx.
(C) BY-LAWS OF THE COMPANY. The By-laws of the Company, dated June 10, 1959
shall remain in effect and shall not be amended or modified in any manner until
the election of the reconstituted Board as contemplated by Section 2(b) hereof,
at which time such Board shall consider and determine appropriate By-law
provisions of the Company.
3. HSR ACT. Each of the Company, on the one hand, and Revision and Xxxx
Xxxxxxxx, on the other hand, will, as soon as practicable after the date hereof
and in connection with the contemplated purchase by Revision from Xxxxxx
Xxxxxxx and Xxxxxxx Xxxxxxx (the "Stock Purchase") of up to 1,200,000
additional shares of common stock of the Company ("Common Stock"), prepare and
file with the appropriate governmental agencies, the filings required under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"). Each of the Company, on the one hand, and Revision and Xxxx Xxxxxxxx, on
the other hand, will use their best efforts to cause to occur on the earliest
practicable date the expiration of the waiting period under the HSR Act, and in
furtherance of such objective, will take all reasonable actions necessary to
comply promptly with all legal requirements or requests for additional
information which may be imposed on it with respect thereto and will promptly
cooperate with and furnish information to each other in connection with any
such requirements imposed upon them.
4. AGREEMENT WITH RESPECT TO FUTURE PURCHASES. Each of Xxxx Xxxxxxxx and
Revision agree that during the period commencing on the date hereof and ending
on the first anniversary of the date hereof, he or it, as the case may be, and
their respective affiliates (other than the Company), will not, directly or
indirectly, purchase any shares of Common Stock for a purchase price of less
than $24 per share.
5. ADDITIONAL AGREEMENTS; BEST EFFORTS. The parties hereto will agree upon a
joint press release to be issued immediately following the execution of this
Agreement. Subject to the terms and conditions of this Agreement, each of the
parties hereto agrees to use its best efforts to take, or cause to be taken,
all action and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement. Until the Board is
reconstituted as contemplated by Section 2(b) hereof, the Company shall use its
best efforts to provide a copy of any press release or other public disclosure
about the transactions contemplated hereby to Xxxx Xxxxxxxx prior to
dissemination of such press release or other disclosure.
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6. FUTURE FINANCING. During the period in which Xxxx Xxxxxxxx serves as a
director of the Company, Xx. Xxxxxxxx and Revision agree to use their
commercially reasonable efforts to assist the Company in obtaining any
financing needed by it to the extent that the Company requests such assistance.
7. ORDINARY COURSE. During the period from the date of this Agreement and
continuing until the Board is reconstituted in accordance with Section 2(b)
hereof, the Company shall use its best efforts to carry on its business in the
usual, regular and ordinary course in substantially the same manner as
heretofore conducted and to preserve intact its present business organizations,
and to preserve its relationships with customers, suppliers and others having
business dealings with it to the end that its goodwill and ongoing business
shall not be impaired in any material respect.
8. CERTAIN REPRESENTATIONS BY THE COMPANY. The Company hereby represents and
warrants to Xxxx Xxxxxxxx and Revision that (i) the execution, delivery and
performance by the Company of this Agreement has been duly authorized by all
action required by law, its certificate of incorporation and by-laws, (ii) this
Agreement has been duly executed and delivered by the Company and constitutes a
legal, valid and binding obligation of the Company, enforceable against it in
accordance with its terms, (iii) the execution, delivery and performance by the
Company of this Agreement will not conflict with or result in any breach of any
provision of the charter or by-laws of the Company, (iv) the execution,
delivery and performance by the Company of this Agreement will not result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which the Company is a party or by which any
of its assets or properties may be bound, (v) subject to the provisions of
Sections 1 and 3 hereof, the execution, delivery and performance by the Company
of this Agreement will not violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company or any of its properties
or assets and (vi) the Company has duly authorized and approved, by all action
required by law, including a duly adopted Board resolution, the rescission of
the Rights Agreement, dated as of March 31, 1998, between the Company and
American Stock Transfer & Trust Company, and such Rights Agreement is void ab
initio.
9. CERTAIN REPRESENTATIONS BY REVISION AND XXXX XXXXXXXX. Revision hereby
represents and warrants to the Company that (i) the execution, delivery and
performance by Revision of this Agreement has been duly authorized by all
action required by law, its certificate of formation and operating agreement,
(ii) this Agreement has been duly executed and delivered by Revision and
constitutes a legal, valid and binding obligation of Revision, enforceable
against it in accordance with its terms, (iii) the execution, delivery and
performance by Revision of this Agreement will not conflict with or result in
any breach of any provision of the certificate of formation and operating
agreement of Revision, (iv) the execution, delivery and performance by Revision
of this Agreement will not result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise
to any right of termination, amendment, cancellation or acceleration) under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease,
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license, contract, agreement or other instrument or obligation to which
Revision is a party or by which any of its assets or properties may be bound
and (v) subject to the provisions of Sections 1 and 3 hereof, the execution,
delivery and performance by Revision of this Agreement will not violate any
order, writ, injunction, decree, statute, rule or regulation applicable to
Revision or any of its properties or assets. Xxxxxxxx hereby represents and
warrants to the Company that this Agreement has been duly executed and
delivered by him and constitutes his legal, valid and binding obligation,
enforceable against him in accordance with its terms and subject to the
provisions of Sections 1 and 3 hereof, the execution, delivery and performance
by him of this Agreement will not violate any order, writ, injunction, decree,
statute, rule or regulation applicable to him or any of his properties or
assets.
10. ENTIRE AGREEMENT. This Agreement contains the entire agreement between the
parties hereto and constitutes the complete, final and exclusive embodiment of
their agreement with respect to the subject matter hereof, and supercedes all
prior or contemporaneous agreements, understandings, representations and
statements, oral or written.
11. NOTICES. All communications provided for hereunder shall be sent in writing
and mailed by first class mail, return receipt requested, or sent by overnight
courier, or sent by facsimile transmission to the address stated below or to
such changed address as the addressee may have been given by similar notice:
(a) If, to the Company:
Total-Tel USA Communications, Inc.
000 Xxxxx Xxxx
Xxxxxx Xxxxx, Xxx Xxxxxx
Attn: Xxxxxx Xxxxxxx
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
And a copy to:
Xxx Xxxxxx, Esq.
000 Xxxx 00xx Xxxxxx, Xxxxx 0X
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
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(b) If to Revision or Xxxxxxxx:
Xxxx Xxxxxxxx
c/o Gold & Xxxxx
0000 00xx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxx, X.X. 00000
Facsimile No.: (000)000-0000
With a copy to:
Xxxxxxx Berlin Shereff Xxxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
Any such notice shall be deemed received, if mailed, five days after mailing,
or one day after sending by overnight courier, or upon confirmation of
transmission if sent by facsimile transmission.
12. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey, without giving effect to
the conflict of laws provisions thereof.
13. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, all of which together shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed the day and year first above written.
TOTAL-TEL USA COMMUNICATIONS, INC.
By: /s/ Xxxxxx Xxxxxxx
---------------------------
Name: Xxxxxx Xxxxxxx
Title: Chairman and Chief
Executive Officer
REVISION LLC
By: /s/ Xxxx Xxxxxxxx
---------------------------
Name: Xxxx Xxxxxxxx
Title: Manager
/s/ Xxxx Xxxxxxxx
-------------------------------
Xxxx Xxxxxxxx
Evidencing agreement with respect to the provisions of Section 1 hereof only
and not with respect to any other provision of this Agreement:
GOLD & XXXXX TRANSFER, S.A.
By: /s/ Xxxx Xxxxxxxx
---------------------------
Xxxx Xxxxxxxx, Attorney-In-Fact
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