Exhibit 10.2
SEPARATION AND MUTUAL RELEASE
AGREEMENT
     THIS AGREEMENT (“Agreement”) is made as of the 18th day of June, 2010, by
and between JOSEPH A. FERRARA (“Executive”) and TOLLGRADE COMMUNICATIONS, INC.,
a Pennsylvania corporation (the “Corporation”) (Executive and the Corporation
are referred to sometimes hereinafter individually as “Party” and collectively
as, the “Parties”).
W I T N E S S E T H:
     WHEREAS, Executive served as the Corporation’s Chief Executive Officer from
November 16, 2007 to the Date of Termination; and
     WHEREAS, pursuant to that certain Employment Agreement dated as of
April 10, 2008, as amended from time to time (the “Employment Agreement”),
Executive was employed by the Corporation as its Chief Executive Officer; and
     WHEREAS, the Executive’s employment with the Corporation terminated
effective as of June 8, 2010 (the “Date of Termination”); and
     WHEREAS, Executive served as a member of the Board of Directors of the
Corporation (the “Board” or “Board of Directors”) and as a director of certain
of the Corporation’s subsidiaries; and
     WHEREAS, the Executive has resigned as a director of the Corporation
effective as of the Date of Termination as required in the Employment Agreement;
and
     WHEREAS, on and subject to the terms and conditions of this Agreement,
Executive and the Corporation desire to settle fully and finally all matters
between them, including, without limitation, any matters that relate to
Executive’s employment, the termination of that employment, or Executive’s
association with the Corporation generally, whether as an employee, director,
officer, shareholder or otherwise.
     NOW, THEREFORE, in consideration of the premises and the covenants and
agreements set forth herein, the Parties hereto, intending to be legally bound,
agree as follows:

1.   Termination/Resignation. Executive acknowledges that his employment with
the Corporation has terminated and hereby resigns his position as an officer and
director of the Corporation and any and all positions he holds with the
Corporation, its subsidiary companies, or any of its other affiliates, effective
as of the Date of Termination. From and after the Date of Termination, Executive
shall not make any statements or engage in conduct which would lead any person
or entity to believe that he is an employee, officer, director, consultant,
agent or other authorized representative of the Corporation or any of its
subsidiaries.   2.   Separation Pay, Employee Benefits, Corporation-Related
Business Expenses, Indemnity and D&O Coverage, and Other Obligations. The
Corporation shall pay to

 

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    Executive as separation pay the payments as may be required in the
Employment Agreement. The Corporation shall provide to or on behalf of Executive
all of the benefits and coverages as may be required pursuant to the Employment
Agreement. All the provisions of the Employment Agreement which specifically
survive termination of the Employment Agreement are incorporated into this
Agreement as though fully set forth herein.

3.   Return of Corporation Property. Executive agrees that he will promptly
return to the Corporation all property belonging to the Corporation and that he
will otherwise comply with the Corporation’s normal employment termination
procedures. By way of example only, the Corporation’s property includes, but is
not limited to, items such as keys, vehicles, credit cards, cell phones, pagers,
computers, all originals and copies (regardless of the form or format on which
such originals and copies are maintained) of all Corporation specifications and
pricing information, all customer lists and other customer-related information,
all supplier lists and other supplier-related information, computer discs, tapes
and other documents which relate to the business of the Corporation and/or its
customers and/or its suppliers.   4.   Standstill Provision. Through the second
anniversary of the Date of Termination, Executive and his Representatives (as
defined below) shall not, directly or indirectly, without the prior written
consent of the Board: (a) acquire or offer or agree to acquire, directly or
indirectly, by purchase or otherwise, more than 5% of any outstanding class of
voting securities or securities convertible into voting securities of the
Corporation, (b) propose to, or attempt to induce any other individual or entity
to, enter into, directly or indirectly, any merger, consolidation, business
combination, asset purchase (other than routine purchases in the ordinary course
of business of product offered for sale by the Corporation) or other similar
transaction involving the Corporation or any of its affiliates, (c) make, or in
any way participate in any solicitation of proxies to vote, execute any consent
as a Corporation shareholder, act to call a meeting of the Corporation’s
shareholders, make a proposal to be acted upon by the Corporation’s shareholders
or seek to advise or influence any person with respect to the voting or not
voting of any securities of the Corporation, (d) form, join or in any way
participate in a partnership, syndicate, joint venture or other “group” (as
defined under Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the “1934 Act”)), with respect to any voting securities of the
Corporation or transfer Executive’s voting rights with respect to any securities
of the Corporation (by voting trust or otherwise), (e) otherwise act, alone or
in concert with others, to seek to control or influence the management, Board or
policies of the Corporation or seek a position on the Board, (f) disclose any
intention, plan or arrangement inconsistent with the foregoing, or (g) advise,
assist or encourage any other persons in connection with any of the foregoing.
If Executive has initiated any of the foregoing activities prior to the date
hereof, Executive shall cease, terminate and otherwise refrain from conducting
such activities and shall take any and all necessary steps to effect the
foregoing and any proposals made by Executive as a shareholder of the
Corporation on or before the date hereof, are hereby withdrawn. As used herein,
the term “Representative” shall include Executive’s employees, agents,
investment bankers, advisors, affiliates and associates of any of the foregoing
and persons under the control of any of the foregoing (as the term “affiliate,”
“associate” and “control” are defined under

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    the 1934 Act). Executive also agrees during such period not to request the
Corporation or its representatives, directly or indirectly, to amend or waive
any provision of this Section 5 (including this sentence) to take any action
which might require the Corporation to make a public announcement regarding the
possibility of a merger, consolidation, business combination or other
transaction of any kind with the Executive or any affiliate of the Executive.

5.   Mutual General Release and Covenant Not-to-Sue.

  (a)   By Executive.

  (i)   Except as is otherwise explicitly provided herein, Executive, for
himself, his agents, attorneys, Representatives, affiliates, heirs and assigns
and all persons claiming by, through, for or under any of them or on any of
their behalf, hereby fully and forever releases and discharges the Corporation,
its subsidiaries and other affiliates, predecessors and successors, their
respective shareholders, officers, directors, employees, heirs and assigns
(individually, a “Releasee” and collectively, “Releasees”), from any and all
Claims which Executive may have had, may now have, or may hereafter claim or
assert against the Releasees on account of any matter whatsoever, arising out of
or relating to (A) Executive’s employment or termination of employment or other
association with the Corporation, its subsidiaries or other affiliates (as an
employee, director, officer, shareholder or otherwise) or (B) any other act,
event, failure to act or thing which has occurred or was created at any time on
or before the date of signing this Agreement. As used herein, “Claims” shall
mean all claims, counterclaims, cross-claims, actions, causes of action,
demands, obligations, debts, disputes, covenants, contracts, agreements, rights,
suits, rights of contribution and indemnity, liens, expenses, assessments,
penalties, charges, injuries, losses, costs (including, without limitation,
attorneys’ fees and costs of suit), damages (including, without limitation,
compensatory, consequential, bad faith or punitive damages), and liabilities,
direct or indirect, of any and every kind, character, nature and manner
whatsoever, in law or in equity, civil or criminal, administrative or judicial,
in contract or in tort (including, without limitation, bad faith and negligence
of any kind) or otherwise, whether now known or unknown, claimed or unclaimed,
asserted or unasserted, suspected or unsuspected, discovered or undiscovered,
accrued or unaccrued, anticipated or unanticipated, fixed or contingent,
liquidated or unliquidated, state or federal, under common law, statute or
regulation. Without limiting the generality hereof, this release (and the
defined term “Claims” as used in this Agreement) covers Claims based upon torts
(such as, for example, negligence, fraud, defamation, wrongful discharge);
express and implied contracts (except this Agreement); federal, state or local
statutes and ordinances; and every other source of legal rights and obligations
which may be validly waived or released.

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  (ii)   Executive covenants and represents that he has not filed and will not
in the future file or permit to be filed in his name, or on his behalf, any
lawsuit or other legal proceeding asserting Claims which are within the scope of
the release in Section 5(a)(i) against any of the Releasees. Further, Executive
represents and warrants that he has not suffered any on-the-job injury for which
he has not filed a claim.     (iii)   Nothing contained in this Section 5(a)
shall be deemed to waive any remedy available to Executive at law or in equity
in the event of a breach by the Corporation (or any of its successors) of its or
their obligations under this Agreement.     (iv)   Excluded from the release and
covenant not to sue set forth in Sections 5(a)(i) and 5(a)(ii), respectively,
are any Claims which cannot be waived by law and any rights that may arise after
the date of signing this Agreement (including matters arising pursuant to this
Agreement, any benefit policy, plan or program, and the provisions of the
Employment Agreement which specifically survive termination of the Employment
Agreement) and any claims against any Releasee for fraud, deceit, theft or
misrepresentation.     (v)   Executive acknowledges and agrees that it is his
intention that the release set forth in Section 5(a)(i) be effective as a full
and final release of each and every thing released herein.

  (b)   By the Corporation.

  (i)   Except as is otherwise expressly provided herein, the Corporation, for
itself, its subsidiaries and other affiliates, agents, attorneys,
representatives, officers, directors, shareholders, predecessors, successors and
assigns and all persons claiming by, through, for or under any of them or on any
of their behalf, hereby fully and forever releases and discharges Executive, his
affiliates, heirs and assigns (individually, an “Executive Releasee” and
collectively, “Executive Releasees”), from any and all Claims which the
Corporation may have had, may now have, or may hereafter claim or assert against
the Executive Releasees, on account of any matter whatsoever, arising out of or
relating to (A) Executive’s employment or termination of employment, service as
an officer, director of or fiduciary acting on behalf of the Corporation, or any
other association with the Corporation, its subsidiaries or any of its other
affiliates (whether as an employee, officer, director, shareholder or
otherwise), or (B) any other act, event, failure to act or thing which has
occurred or was created at any time on or before the date of signing this
Agreement.     (ii)   The Corporation covenants and represents that it has not
filed and will not in the future file or permit to be filed in its name, or on
its behalf, any

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      lawsuit or other legal proceeding asserting Claims which are within the
scope of this release against any of the Executive Releasees.

  (iii)   Excluded from the release and covenant not to sue set forth in
Sections 5(b)(i) and 5(b)(ii), respectively, are any Claims which cannot be
waived by law, any rights that may arise after the date of signing this
Agreement (including matters arising pursuant to this Agreement) and any Claims
against any Executive Releasee for fraud, deceit, theft or misrepresentation.  
  (iv)   The Corporation acknowledges and agrees that it is its intention that
the release set forth in Section 5(b)(i) be effective as a full and final
release of each and every thing released herein.

6.   Corporation’s Information; Nondisclosure; Related Matters. Executive
covenants and agrees to be bound by the provisions of Section 5 of the
Employment Agreement.   7.   Executive’s Noncompetition. Executive covenants and
agrees to be bound by the provisions of Section 6 of the Employment Agreement.  
8.   Non-Admission of Liability. It is acknowledged and agreed that nothing
contained herein, including but not limited to the consideration paid hereunder,
constitutes or will be construed as an admission of liability or of any
wrongdoing or violation of law on the part of either Party hereto.   9.  
Non-Disparagement.

  (a)   Executive agrees that he will not, at any time, make any disparaging
statements about the Corporation or any Releasee to any current, former or
prospective employer, any applicant referral source, any current, former or
prospective employee of the Corporation, any current, former or prospective
customer or supplier of the Corporation, the media, or to any other person or
entity.     (b)   The Corporation agrees that none of the members of the Board
or the Executive Council of the Corporation as constituted on the date hereof,
at no time, will make any disparaging statements about Executive to any former
or prospective employer of Executive, the media, or to any other person or
entity. The Corporation will instruct its employees not to make any disparaging
statements about Executive.     (c)   As used in this Section 9, the term
“disparaging statement” means any communication, oral or written, which would
cause or tend to cause the recipient of the communication to question the
integrity, competence, or good character of the person or entity to whom the
communication relates.

10.   Remedies for Breach. Each Party will be entitled to pursue any remedy
available at law or in equity for any breach of this Agreement by the other
Party. Each Party acknowledges that remedies at law may be inadequate to protect
against its breach of this

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    Agreement and hereby in advance agrees, without prejudice to any rights to
judicial relief the other Party may otherwise have, to the granting of equitable
relief, including injunctive relief, in the other Party’s favor without proof of
actual damages.

11.   Representations/Warranties by Executive. Executive represents and warrants
to the Corporation that the following statements are true and correct:

  (a)   Executive is signing this Agreement voluntarily and is legally competent
to do so.     (b)   Executive has been advised to consult, and has in fact
consulted, an attorney of his own choice before signing this Agreement.     (c)
  Executive has read and fully understands each of the provisions of this
Agreement, he has been given sufficient and reasonable time to consider each of
them and fully understands his rights under all applicable laws and the
ramifications and consequences of his execution of this Agreement.     (d)   No
promises, agreements or representations have been made to Executive to induce
him to sign this Agreement, except those that are written in this Agreement.    
(e)   Executive has not, in whole or in part, sold, assigned, transferred,
conveyed or otherwise disposed of any of the Claims covered by the release set
forth in Section 5(a) (the “Executive’s Release”).     (f)   The consideration
received by Executive for the Executive’s Release constitutes lawful and
adequate consideration.     (g)   Executive has not engaged in any of the
activities listed in subsections (a)-(g) of Section 4 hereof.     (h)  
Executive waives any notice requirements under the Corporation’s by-laws with
respect to any of the Board’s meetings to consider the approval of the terms and
conditions of this Agreement.

12.   Representations/Warranties by the Corporation. The Corporation represents
and warrants to Executive that the following statements are true and correct:

  (a)   This Agreement has been duly authorized and executed by the Corporation.
    (b)   The Corporation has not, in whole or in part, sold, assigned,
transferred, conveyed or otherwise disposed of any of the Claims covered by the
release set forth in Section 5(b) (the “Corporation’s Release”).     (c)   The
consideration received by the Corporation for the Corporation’s Release
constitutes lawful and adequate consideration.

13.   Waiver of Rights. If on one or more instances either Party fails to insist
that the other Party perform any of the terms of this Agreement, such failure
shall not be construed as a

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    waiver by such Party of any past, present, or future right granted under
this Agreement; and the obligations of both Parties under this Agreement shall
continue in full force and effect.

14.   Severability/Applicability. If any provision, section or subsection of
this Agreement is adjudged by any court to be void or unenforceable in whole or
in part, this adjudication shall not affect the validity of the remainder of
this Agreement, including any other provision, section or subsection. Each
provision, section and subsection of this Agreement is separable from every
other provision, section and subsection, and constitutes a separate and distinct
covenant.   15.   Successors & Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the Parties and their respective successors,
assigns, executors, administrators and personal representatives.   16.  
Notices. All notices, requests, demands, claims and other communications under
this Agreement shall be in writing. Any notice, request, demand, claim or other
communication hereunder shall be deemed duly given the next business day (or
when received if sooner) if it is sent by (a) confirmed facsimile or
(b) overnight delivery and addressed, to the respective address of such Party
specified below its or his signature below. Either Party may send any notice,
request, demand, claim or other communication hereunder to the intended
recipient at the address set forth below using any other means (including
personal delivery, expedited courier, messenger service, telecopy, telex,
ordinary mail, registered or certified mail, return receipt requested, postage
prepaid, or electronic mail), but no such notice, request, demand, claim or
other communication shall be deemed to have been duly given unless and until it
is actually received by the intended recipient. Either Party may change the
address to which notices, requests, demands, claims and other communications
hereunder are to be delivered by giving the other Party notice in the manner
provided in this Agreement. Each Party irrevocably consents to service of
process in connection with disputes arising out of this Agreement or otherwise
in the manner provided for notices in this Section 16. Nothing in this Agreement
will affect the right of any Party to service process in any other manner
permitted by law.   17.   Public Announcement of Termination/Resignation. The
Parties agree that the Corporation will file with the Securities and Exchange
Commission (the “SEC”) a report on Form 8-K and the Corporation will issue a
press release each of which will disclose Executive’s resignation as a Director
and termination as an executive officer of the Corporation. Executive
acknowledges and agrees that he has received and reviewed those provisions of
the press release that will be issued that relate to the termination of
employment and resignation from the Board, agrees fully with the statements made
by the Corporation therein with respect thereto, and has not provided and will
not provide to the Corporation any written correspondence concerning the
circumstances surrounding his termination or employment of resignation as a
Director. Executive acknowledges and agrees that his resignation as a Director
did not involve any disagreement with the Corporation on any matter relating to
the Corporation’s operations, policies or practices within the meaning
contemplated by Form 8-K.

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18.   Sub-certification of 2010 Annual Report. In connection with the
preparation of the Corporation’s Annual Report on Form 10-K for the fiscal year
ending December 31, 2010 (the “Annual Report”) and prior to the filing by the
Corporation of such Annual Report with the SEC, Executive shall provide to the
Corporation promptly following the Corporation’s request (and in no event more
than seven business days after such request) a duly executed original of the
Certificate attached hereto as Exhibit A (the “Sub-certification Certificate”).
The Corporation shall provide to Executive a copy of the Annual Report and the
Corporation’s Proxy Statement on Schedule 14A at the time of requesting such
Certificate. If the Corporation requests that Executive provide the
Sub-certification Certificate and Executive provides the same to the Corporation
within the foregoing time frame, the Corporation shall indemnify, defend and
hold harmless Executive, to the fullest extent provided under applicable law,
against any losses, claims, damages, liabilities, action, suit, proceeding, cost
or expense (including reasonable attorney’s fees) (collectively, “Liabilities”)
arising out of or pertaining to any action against Executive for any material
misstatement or omission in the Annual Report; provided, however,
notwithstanding the foregoing provisions of this sentence, the Corporation shall
have no obligation to indemnify, defend or hold harmless Executive for
Liabilities arising out of or pertaining to any material misstatement or
omission in the Annual Report which is actually known to Executive (without duty
of investigation) and not disclosed by him to the Corporation at the time of his
delivery to the Corporation of the Sub-certification Certificate.   19.   Entire
Agreement. This Agreement supersedes and replaces all prior and contemporaneous
written or oral agreements relating to Executive’s employment, compensation and
employment termination, including the Employment Agreement (other than the
post-termination provisions which survive the termination of the Employment
Agreement as provided therein), but not including any and all stock option
agreements between Executive and the Corporation and any employee benefit plans
or programs.   20.   Interpretation; Enforcement. This Agreement will be
interpreted and enforced according to the laws of the Commonwealth of
Pennsylvania, without regard to its conflicts of laws provision. The parties
hereto further agree that any action to enforce any right or obligation under
this Agreement shall be subject to the exclusive jurisdiction of the courts of
the Commonwealth of Pennsylvania. Each Party hereby consents to personal
jurisdiction in any action brought in any court, federal or state, within the
Commonwealth of Pennsylvania having subject matter jurisdiction in this matter.
Each Party hereby irrevocably waives any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
forum non conveniens, which it may now or hereafter have to the bringing of any
such action or proceeding in such jurisdiction.   21.   Amendment. No provision
of this Agreement may be modified, amended or revoked, except in a writing
signed by Executive and an authorized official of the Corporation.   22.  
Acknowledgment of Waiver of Claims Under ADEA. Executive acknowledges that he is
waiving and releasing any rights he may have under the Age Discrimination in
Employment Act of 1967 (“ADEA”) and that this waiver and release is knowing and

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    voluntary. Executive and the Corporation agree that this waiver and release
does not apply to any rights that or claims that might arise under the ADEA
after the date of this Agreement. Executive acknowledges that the consideration
given for this waiver and release agreement is in addition to anything of value
to which Executive was already entitled. Executive further acknowledges that he
has been advised by this writing that (a) he has at least twenty-one (21) days
within which to consider this Agreement, (b) he has seven days following the
execution of this Agreement by the Parties to revoke the Agreement and (c) this
Agreement shall not be effective until the revocation period has expired. Any
revocation should be in writing and delivered to the Corporation by the close of
business on the seventh day from the date that Executive signs this Agreement.

[Intentionally Left Blank]

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     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
WITNESS:

                      /s/ Joseph A. Ferrara         Joseph A. Ferrara       
Address:                         

            TOLLGRADE COMMUNICATIONS, INC.
      By:   /s/ Jennifer M. Reinke         Name:   Jennifer M. Reinke       
Title:   General Counsel and Secretary       Address:   493 Nixon Road
Cheswick, PA 15024     

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Exhibit A

CERTIFICATE
The undersigned hereby certifies as follows:

1.   I understand that this certificate will be relied upon by the Chief
Executive Officer and Chief Financial Officer of Tollgrade Communications, Inc.
(the “Corporation”) in making the certifications required of them in the
Corporation’s annual report for its 2010 fiscal year on Form 10-K (the “Annual
Report”).   2.   I have reviewed the Annual Report (as distributed on
                    , 20___). I did not participate in the preparation of the
Annual Report.   3.   Based on my actual knowledge (without duty of
investigation) gained during my employment by the Corporation, except as set
forth in the Schedule attached hereto, nothing has come to my attention that
causes me to believe that the Annual Report contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading.   4.   Based on my actual knowledge (without duty of investigation)
gained during my employment by the Corporation, except as set forth in the
Schedule attached hereto, nothing has come to my attention that causes me to
believe that the financial statements and other financial information included
in the Annual Report, do not fairly present in all material respects the
financial conditions, results of operations and cash flows of the corporation as
of, and for, the year ended December 31, 2010.   5.   Based on my actual
knowledge (without duty of investigation) gained during my employment by the
Corporation, except as set forth in the Schedule attached hereto, nothing has
come to my attention that causes me to believe that there is any material
weakness or significant deficiency in the design or operation of the
Corporation’s disclosure controls and procedures or the Corporation’s internal
controls over financial reporting as they existed and were utilized as of the
last day of my employment by the Corporation, which could adversely affect the
Corporation’s ability to timely and accurately report the financial and other
information required to be disclosed by the Corporation in its periodic reports
required to be filed pursuant to the Securities Exchange Act of 1934, as
amended.

Date:                     , 20___

            Joseph A. Ferrara