<PAGE>
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SCHEDULE 14C
(Rule 14c-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities Exchange Act
of 1934
Check the appropriate box:
[_] Preliminary Information Statement [_] Confidential, for Use of the
Commission Only (as Permitted by
Rule 14c-5(d)(2))
[X] Definitive Information Statement
IDT CORPORATION
(Name of Registrant as Specified in Charter)
Payment of Filing Fee (Check the appropriate box):
[X]No fee required
[_]Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price of other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_]Fee paid previously with preliminary materials.
[_]Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form of Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Dates filed:
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<PAGE>
IDT CORPORATION
520 Broad Street
Newark, New Jersey 07102
(201) 928-1000
June 12, 2000
Dear Fellow Stockholder:
The purpose of this letter is to inform you that we intend to amend IDT
Corporation's restated certificate of incorporation (i) to increase its
authorized capital stock from 145,000,000 shares to 245,000,000 shares, (ii) to
create and authorize a new class of common stock, Class B Common Stock, par
value $0.01 per share, and (iii) to increase the number of directors on its
Board of Directors from fifteen (15) to seventeen (17).
The Board of Directors has approved and adopted the amendments to our
restated certificate of incorporation. On April 28, 2000, a written consent
approving the amendments to the restated certificate of incorporation was
executed by Mr. Howard S. Jonas, as the beneficial owner of approximately 0.04%
of the outstanding shares of our Common Stock and 100% of the outstanding
shares of our Class A Common Stock, together representing approximately 56.6%
of the combined voting power of all our outstanding Common Stock and Class A
Common Stock. Mr. Jonas' consent satisfies the stockholder approval
requirements for the amendments. In addition to being the largest stockholder
of IDT Corporation, Mr. Jonas is the Chief Executive Officer and Chairman of
the Board of Directors of IDT Corporation.
We Are Not Asking For Your Proxy. Because the written consent of Mr. Jonas
satisfies any applicable stockholder voting requirement of the Delaware General
Corporation Law and IDT Corporation's restated certificate of incorporation and
bylaws, we are not asking for a proxy and you are requested not to send us one.
The accompanying Information Statement is for information purposes only and
explains the terms of the amendments to our restated certificate of
incorporation. Please read the accompanying Information Statement carefully.
We appreciate your loyalty and support as our stockholder in the past and
your continued loyalty and support as we move forward with this transition.
By order of the Board of Directors,
/s/ Joyce J. Mason
Joyce J. Mason,
General Counsel and Secretary
Newark, New Jersey
June 12, 2000
<PAGE>
IDT CORPORATION
520 Broad Street
Newark, New Jersey 07102
(201) 928-1000
INFORMATION STATEMENT
June 12, 2000
This Information Statement is being furnished to the stockholders of IDT
Corporation to inform you of the adoption of a stockholder consent by Mr.
Howard S. Jonas authorizing IDT Corporation to amend its restated certificate
of incorporation (i) to increase its authorized capital stock from 145,000,000
shares to 245,000,000 shares, (ii) to create and authorize a new class of
common stock, Class B Common Stock, par value $0.01 per share, and (iii) to
increase the number of directors on its Board of Directors from fifteen (15) to
seventeen (17).
On March 14, 2000, March 26, 2000 and April 18, 2000 our Board of Directors
adopted resolutions authorizing the amendments to the restated certificate of
incorporation and recommending that the stockholders adopt a resolution
authorizing the amendments. The Board of Directors' recommendations are
reaffirmed as of the date of this Information Statement.
Mr. Howard Jonas is the beneficial owner of approximately 0.04% of the
outstanding shares of our Common Stock and 100% of the outstanding shares of
our Class A Common Stock, together representing 56.6% of the combined voting
power of all our outstanding shares of Common Stock and Class A Common Stock.
Accordingly, stockholder approval of the amendments to the restated certificate
of incorporation was obtained by Mr. Jonas' execution of a written consent in
favor of the amendments.
This Information Statement is being mailed on or about June 12, 2000 to the
stockholders of record at the close of business on April 25, 2000 (the "record
date") for information purposes only. No action is requested on your part.
As of the close of business on the record date, we had an aggregate of
34,540,494 shares of Common Stock and Class A Common Stock outstanding,
consisting of 24,570,761 shares of Common Stock and 9,969,733 shares of Class A
Common Stock. Each holder of Class A Common Stock is entitled to three votes
per share, while each holder of Common Stock is entitled to one vote per share.
Both holders of Class A Common Stock and Common Stock vote as a single body on
all matters presented to the stockholders. If the proposed amendments to the
restated certificate of incorporation were put to a vote at a meeting of Common
Stock and Class A Common Stock stockholders, a majority of the votes cast would
be required for their approval.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE
REQUESTED NOT TO SEND US A PROXY
1
<PAGE>
AMENDMENTS TO THE RESTATED CERTIFICATE OF INCORPORATION
Increase of Authorized Capital Stock, Creation of Class B Common Stock and
Increase of Board of Directors
The Board of Directors has adopted amendments to IDT Corporation's restated
certificate of incorporation:
. to increase its authorized capital stock from 145,000,000 shares to
245,000,000 shares;
. to create and authorize a new class of common stock, Class B Common
Stock, par value $0.01 per share; and
. to increase the number of directors on its Board of Directors from
fifteen (15) to seventeen (17).
The Board of Directors believes that it is advisable and in the best
interests of IDT Corporation to have available unissued shares of Class B
Common Stock in an amount adequate to provide for its future needs. The
additional shares will be available for issuance from time to time by IDT
Corporation in the discretion of the Board of Directors, without further
stockholder action (except as may be required for a particular transaction by
applicable law, requirements of regulatory agencies or by stock exchange
rules), for any proper corporate purpose including, among other things, equity
financing, convertible debt financing, future acquisitions of securities of
other corporations, stock dividends and stock splits. No stockholder of IDT
Corporation would have any preemptive rights regarding future issuances of
shares of Class B Common Stock.
On March 3, 2000, we entered into an option agreement with AT&T Corp.
("AT&T"). According to the agreement, AT&T granted us an option to sell to it
2,040,817 shares of our Class B Common Stock, at a price of $36.75 per share,
for an aggregate purchase price of approximately $75 million. The option is
exercisable from April 2, 2000 until the earlier of (i) 180 days following
March 3, 2000 and (ii) the date we sell at least 12,500,000 shares of Class A
Stock, $0.01 par value, of Net2Phone, Inc. ("Net2Phone"), our majority-owned
subsidiary, to a current holder of shares of such Class A Stock of Net2Phone.
As of April 5, 2000, we amended the agreement to provide for the terms of the
Class B Common Stock issuable to AT&T in connection with this agreement to be
the same as the terms of the Class B Common Stock issuable to Liberty Media
Corporation as described in the next paragraph. The Board of Directors has
adopted a resolution, which will reserve, once authorized, 2,040,817 shares of
Class B Common Stock for the purpose of exercising the option. Once exercised,
we intend to use the proceeds from the sale of shares of Class B Common Stock
to AT&T for working capital, network expansion and capital expenditures.
Copies of the option agreement and amendment are attached as Exhibit A to this
Information Statement.
On March 24, 2000, we entered into a subscription agreement with Liberty
Media Corporation ("Liberty Media"). According to the agreement, which was
amended on May 26, 2000, Liberty Media has agreed to purchase approximately
9.99% of our equity. Under the terms of the agreement, we issued and sold to
Liberty Media on June 6, 2000, 3,728,949 shares of our Common Stock, at a
price of $34.50 per share, for an aggregate purchase price of approximately
$130 million. The newly issued shares purchased by Liberty Media are
exchangeable for shares of Class B Common Stock. Liberty Media also has the
right to nominate a director for election to our Board of Directors. The Board
of Directors has adopted a resolution, which will reserve, once authorized,
3,775,000 shares of Class B Common Stock for the purpose of exchanging the
shares of Common Stock purchased by Liberty Media. We intend to use the
proceeds from the sale of shares of Common Stock to Liberty Media for working
capital, network expansion, capital expenditures and stock repurchases. Copies
of the subscription agreement and amendment are attached as Exhibit B to this
Information Statement.
A condition to exercising the AT&T option and exchanging the Liberty Media
shares into shares of Class B Common Stock is that we file a certificate of
amendment to our restated certificate of incorporation with the Secretary of
State of the State of Delaware in the form attached as Exhibit C to this
Information Statement.
2
<PAGE>
Summary of the Newly Authorized Class B Common Stock
The amendments to the restated certificate of incorporation modify our
capitalization such that, upon filing the certificate of amendment with the
Secretary of State of the State of Delaware, our authorized capital will
include 100,000,000 shares of Class B Common Stock, par value $0.01 per share.
The following is a brief summary of the terms of the proposed Class B Common
Stock.
General. The rights of holders of Common Stock, Class A Common Stock and
Class B Common Stock are identical except for voting and conversion rights and
restrictions on transferability.
Voting Rights. The holders of Class A Common Stock are entitled to three
votes per share, the holders of Common Stock are entitled to one vote per share
and the holders of Class B Common Stock are entitled to one-tenth (1/10) of a
vote per share. Except as otherwise required by law or as described above,
holders of Class A Common Stock, Class B Common Stock and Common Stock will
vote together as a single class on all matters presented to the stockholders
for their vote or approval. Stockholders are not entitled to vote cumulatively
for the election of directors, and no class of outstanding common stock acting
alone is entitled to elect any directors.
Transfer Restrictions. Class A Common Stock is subject to certain
limitations on transferability that do not apply to the Common Stock and the
Class B Common Stock. The restated certificate of incorporation provides that
shares of Class A Common Stock automatically convert into an equal number of
shares of Common Stock if there is a transfer of shares of Class A Common Stock
to a person other than a permitted transferee, as defined below. Thereafter,
such shares of Common Stock may be freely transferred, subject to restrictions
imposed under applicable securities laws.
A "permitted transferee" means, (A) with respect to each holder of shares of
Class A Common Stock, IDT Corporation and its subsidiaries and affiliates, and
(B) with respect to each holder who is a natural person, (i) a family member,
(ii) the trustee of a trust exclusively for the benefit of such holder, any
family member or certain charitable organizations, (iii) a charitable
organization established solely by one or more of such holders or family
members, (iv) any IRA or 401(k) employee benefit plan of such holder, (v) the
estate or any appointed guardian or custodian of such holder and (vi) any
corporation or partnership controlled by such holder.
Shares of Class A Common Stock acquired by IDT Corporation will be canceled
and may not be reissued. The provision concerning mandatory conversion may not
be amended without the affirmative vote of holders of the majority of the
shares of Class A Common Stock, the affirmative vote of holders of the majority
of the shares of Class B Common Stock and the affirmative vote of holders of a
majority of the shares of Common Stock, each voting separately as a class.
Dividends and Liquidation. Holders of Class A Common Stock, holders of Class
B Common Stock and holders of Common Stock have an equal right to receive
dividends when and if declared by the Board of Directors out of funds legally
available. A dividend of shares may be declared and paid in Class A Common
Stock to holders of Class A Common Stock, in Class B Common Stock to holders of
Class B Common Stock and in Common Stock to holders of Common Stock, provided
the number of shares paid per share to holders of Class A Common Stock, Class B
Common Stock and Common Stock is the same.
In the event of the liquidation, dissolution, or winding up of IDT
Corporation, holders of shares of Class A Common Stock, Class B Common Stock
and Common Stock are entitled to share equally, share-for-share, in the assets
available for distribution after payment of all creditors and the liquidation
preferences of our outstanding Preferred Stock.
3
<PAGE>
Optional Conversion Rights. Each share of Class A Common Stock may, at any
time and at the option of the holder, be converted into one fully paid and non-
assessable share of Common Stock. Upon conversion, such shares of Common Stock
would not be subject to restrictions on transfer that applied to the shares of
Class A Common Stock prior to conversion except to the extent such restrictions
are imposed under applicable securities laws. Each share of Class B Common
Stock may, at any time and at our option, be converted into one fully paid and
non-assessable share of Common Stock, provided that all shares of Class B
Common Stock are so converted. The shares of Common Stock and Class B Common
Stock are not convertible into or exchangeable for shares of Class A Common
Stock.
Stockholder Information. We will deliver to the holders of Common Stock,
Class A Common Stock and Class B Common Stock the same proxy statements, annual
reports and other information reports.
Other Provisions. We are not permitted to be a party to a merger,
recapitalization, reclassification or similar transaction (whether or not we
are the surviving or resulting entity), unless the per share consideration
received by holders of Class B Common Stock in connection with such transaction
is the same as the per share consideration received by the holders of our other
classes of common stock in connection with such transaction.
Holders of Class A Common Stock, Class B Common Stock and Common Stock have
no preemptive rights to subscribe to any additional securities of any class
which we may issue and there are no redemption provisions or sinking fund
provisions applicable to either such class, nor is the Class A Common Stock,
Class B Common Stock or the Common Stock subject to calls or assessments by us.
The rights, preferences, and privileges of the holders of Common Stock,
Class A Common Stock and Class B Common Stock are subject to and may be
adversely affected by, the rights of the holders of any series of Preferred
Stock which we may designate and issue in the future. As of the date of this
Information Statement, there are no shares of Preferred Stock outstanding.
Anti-Takeover Provisions
Our restated certificate of incorporation authorizes the board of directors
to issue, without stockholder approval, one or more series of preferred stock
having dividend rights, voting rights and other rights as the board of
directors may determine. Our issuance of this "blank-check" preferred stock
could make it more difficult or discourage an attempt to obtain control of our
company by means of a tender offer, merger, proxy contest or otherwise, which
may limit the ability of our stockholders to obtain the maximum value for their
shares of common stock. Furthermore, the restated certificate of incorporation
provides for a classified board of directors, which may also have the effect of
inhibiting or delaying a change in control of our company, in that only
approximately one-third of our directors will be subject to reelection at each
of our annual stockholder meetings.
Increase the Size of the Board of Directors
In connection with the subscription agreement entered into with Liberty
Media, for so long as Liberty Media or its affiliates own at least 50% of the
shares issued to it pursuant to the subscription agreement, we agreed to
increase the size of our Board of Directors by two members and to cause a
nominee on its behalf to be elected to our Board of Directors.
The new directorships, which will be created by the amendment of the
restated certificate of incorporation, will be filled by the affirmative vote
of a majority of the directors then in office. The new directors will hold
office for a term expiring at the annual meeting of the stockholders scheduled
for December 2000, at which time their successors will be elected by the vote
of the stockholders for a term of three years.
4
<PAGE>
Reasons For Adopting the Amendments to the Restated Certificate of
Incorporation
The Board of Directors believes that the potential advantages of increasing
our capital stock, creating a new class of shares, Class B Common Stock, and
increasing the size of the Board of Directors, include:
. facilitating the raising of additional capital through a public or
private sale of Class B Common Stock;
. facilitating the formation of joint ventures or other strategic
alliances and businesses by inviting senior management of alliance
companies to join the Board of Directors;
. providing greater flexibility to management in issuing shares of Class B
Common Stock in connection with employee benefits and incentive plans;
and
. providing greater flexibility to expand in the future through
acquisitions of companies by use of Class B Common Stock shares at times
when management deems such actions beneficial.
Potential Disadvantages of Adopting the Amendments to the Restated Certificate
of Incorporation
There may be disadvantages to increasing our capital stock, creating a new
class of Class B Common Stock and increasing the size of our Board of
Directors. Possible disadvantages include:
. Dilution. The issuance of shares of Class B Common Stock, which may be
converted into shares of Common Stock may dilute the ownership of the
current stockholders, as well as their proportionate voting rights.
. Discourage Takeovers. The conversion of the Class B Common Stock to
shares of Common Stock could also make it more difficult for third
parties to acquire control of IDT Corporation thereby discouraging
attempts to do so, even though our stockholders may deem such an
acquisition desirable. Shares of Class B Common Stock could also be
issued to one or more investors sympathetic to IDT Corporation and
opposed to any takeover bid and thereby discourage attempts to acquire
control of IDT Corporation. To the extent that it impedes any such
attempts, the amendment may serve to perpetuate our management.
. Institutional Investors. The three class stock structure effected by
the amendment may affect the decision of certain institutional investors
that would otherwise consider investing in or retaining the Common
Stock. The holding of low-voting shares may not be permitted by the
investment policies of certain institutional investors. We are not aware
of the effect, if any, that the adoption of the amendment will have on
the continued holdings of those institutional investors who currently
own Common Stock.
. Liquidity. The creation of a new third class of Common Stock may
adversely affect the liquidity of each class of common stock when
compared to the liquidity situation where only two classes of common
stock existed.
Rights of Dissenting Stockholders
Our stockholders are not entitled to any appraisal or similar rights under
Delaware law in connection with the approval, adoption or filing of the
amendments to our restated certificate of incorporation.
5
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of our Common Stock and Class A Common Stock on a combined basis as
of April 25, 2000 by (i) each person known by us to be the beneficial owner of
more than 5% of the outstanding shares of Common Stock and Class A Common
Stock, on a combined basis, (ii) each of our directors and named executive
officers, and (iii) all our directors and executive officers as a group. Unless
otherwise noted in the footnotes to the table, the persons named in the table
have sole voting and investing power with respect to all shares of Common Stock
or Class A Common Stock indicated as being beneficially owned by them.
<TABLE>
<CAPTION>
Percentage of Percentage of
Named Executive Officers and Combined Combined Combined Voting
Directors Number of Shares Ownership (%) Power (%)
---------------------------- ---------------- ------------- ---------------
<S> <C> <C> <C>
Howard S. Jonas(1)(2) ......... 10,923,338 31.6% 56.6%
520 Broad Street
Newark, NJ 07102
Hal Brecher(3)................. 230,000 * *
James A. Courter(2)(4)......... 574,500 1.6% 1.0%
Stephen R. Brown(5)............ 45,250 * *
Moshe Kaganoff(6).............. 2,500 * *
Joyce J. Mason(7).............. 119,190 * *
Marc E. Knoller(8)............. 130,000 * *
Geoffrey Rochwarger(9)......... 76,000 * *
Michael Fischberger(10)........ 3,500 * *
Morris Lichtenstein(11)........ 22,000 * *
Meyer A. Berman(12)............ 41,600 * *
J. Warren Blaker(13)........... 40,500 * *
Denis A. Bovin(14)............. 140,500 * *
Saul K. Fenster(15)............ 10,500 * *
William A. Owens(16)........... 10,000 * *
William F. Weld(16)............ 10,000 * *
All directors and officers as a
group (16 persons)............ 12,377,378 34.6% 58.0%
</TABLE>
--------
* Less than 1%.
(1) Includes (i) 951,605 shares of Common Stock issued in connection with our
acquisition of InterExchange, Inc. over which Mr. Jonas has been granted a
proxy to vote, and (ii) 9,969,733 shares of Class A Common Stock,
consisting of (a) 3,155,441 shares held by Mr. Jonas directly, (b) 19,570
shares beneficially owned by The Jonas Family Limited Partnership, (c)
2,957,544 shares beneficially owned by the Howard S. Jonas 1996 Annuity
Trust, (d) 1,276,607 shares beneficially owned by the Howard S. Jonas 1998
Annuity Trust, and (e) 2,560,571 shares beneficially owned by the Jonas
Foundation. Mr. Jonas is the General Partner of The Jonas Family Limited
Partnership and the Trustee of each of the Howard S. Jonas 1996 Annuity
Trust, the Howard S. Jonas 1998 Annuity Trust and together with Deborah
Jonas, is a Trustee of The Jonas Foundation.
(2) Includes 2,000 shares of Common Stock owned by The JTBC Foundation. The
JTBC Foundation is a charitable organization of which Messrs. Howard Jonas,
David Turock (our Director of Technology), Howard Balter and James Courter
are trustees.
(3) Includes 205,000 shares of Common Stock issuable upon the exercise of stock
options exercisable within 60 days.
(4) Includes 20,000 shares of Common Stock owned by Mr. Courter's wife and
410,000 shares of Common Stock issuable upon the exercise of stock options
exercisable within 60 days.
(5) Includes 30,250 shares of Common Stock issuable upon the exercise of stock
options exercisable within 60 days.
6
<PAGE>
(6) Includes 2,500 shares of Common Stock issuable upon the exercise of stock
options exercisable within 60 days.
(7) Includes an aggregate of 5,305 shares of Common Stock owned by Ms. Mason's
husband, son and daughter and 103,950 shares of Common Stock issuable upon
the exercise of stock options exercisable within 60 days.
(8) Includes 130,000 shares of Common Stock issuable upon the exercise of stock
options exercisable within 60 days.
(9) Includes 76,000 shares of Common Stock issuable upon the exercise of stock
options exercisable within 60 days.
(10) Includes 3,500 shares of Common Stock issuable upon the exercise of stock
options exercisable within 60 days.
(11) Includes 22,000 shares of Common Stock issuable upon the exercise of stock
options exercisable within 60 days.
(12) Includes 20,000 shares of Common Stock issuable upon the exercise of stock
options exercisable within 60 days.
(13) Includes 40,500 shares of Common Stock issuable upon the exercise of stock
options exercisable within 60 days.
(14) Includes 140,000 shares of Common Stock issuable upon the exercise of
stock options exercisable within 60 days.
(15) Includes 500 shares of Common Stock owned by Mr. Fenster's wife and 10,000
shares of common stock issuable upon the exercise of stock options
exercisable within 60 days.
(16) Includes 10,000 shares of Common Stock issuable upon the exercise of stock
options exercisable within 60 days.
7
<PAGE>
As the requisite stockholder vote for the amendments to our restated
certificate of incorporation was obtained upon the delivery of the written
consent of Mr. Jonas, we are not asking for a proxy and you are requested not
to send us one. This Information Statement is for information purposes only.
Please read this Information Statement carefully.
By order of the Board of Directors
/s/ Joyce J. Mason
Joyce J. Mason,
General Counsel and Secretary
Newark, New Jersey
June 12, 2000
8
<PAGE>
INDEX OF EXHIBITS
A. Option Agreement, dated as of March 3, 2000, between IDT Corporation and
AT&T Corp. and Amendment to Option Agreement, dated as of April 5, 2000
between IDT Corporation and AT&T Corp.
B. Subscription Agreement, dated as of March 24, 2000, between IDT Corporation
and Liberty Media Corporation and Amendment to Subscription Agreement, dated
as of May 26, 2000, between IDT Corporation and Liberty Media Corporation.
C. Certificate of Amendment to the Restated Certificate of Incorporation of IDT
Corporation
9
<PAGE>
EXHIBIT A
OPTION AGREEMENT
OPTION AGREEMENT (this "Agreement"), dated as of March 3, 2000, between IDT
Corporation, a Delaware corporation (the "Company"), and AT&T Corp., a New York
corporation (the "Investor").
WHEREAS, in order to induce the Company to execute a letter of intent, dated
March 3, 2000, between the Investor and the Company, the Investor has agreed to
purchase, at the election of the Company, Class B Common Stock, par value $.01
per share, of the Company (the "Class B Common Stock"), upon the terms and
subject to the conditions set forth in this Agreement.
NOW, THEREFORE, the Company and the Investor hereby agree as follows:
Section 1. Option.
1.1 Grant of Option. The Investor hereby grants the Company an option to
sell to the Investor (the "Option") 2,040,817 shares of Class B Common Stock
(the "Investor Shares" or the "Securities"), at a price of $36.75 per share of
Class B Common Stock (the "Strike Price") for an aggregate purchase price of
$75,000,024.75.
1.2 Exercise of Option. The Option shall be exercisable from April 2, 2000
until the earlier of (i) the date that is 180 days following the date of this
Agreement and (ii) the sale by the Company of at least 12,500,000 shares of
Class A Stock, $0.01 par value, of Net2Phone, Inc. ("Class A Common Stock") (or
the issuance of a call or put on such shares) to a current holder of shares of
Class A Common Stock (a "Third Party Sale") during the period (the "Exercise
Period"), provided that if a Third Party Sale occurs or a Net2Phone Issuance
Event occurs prior to the date that is 180 days following the date of this
Agreement and the Option has been exercised, Investor shall have the right for
10 days following the Third Party Sale or Net2Phone Issuance Event to require
the Company to repurchase the Investor Shares, in whole but not in part, at the
Strike Price.
A "Net2Phone Issuance Event" shall mean the authorization and issuance of
shares of Class A Common Stock in excess of the currently authorized amount of
Class A Common Stock at any time prior to the date that is 180 days after the
date of this Agreement, provided that an authorization and issuance of shares
of Class A Common Stock to the Investor shall not constitute a Net2Phone
Issuance Event.
1.3 Exercise Mechanics. The Company may exercise the Option by giving
written notice to the Investor at any time during the Exercise Period (the
"Exercise Notice").
1.4 Issuance of Class B Common Stock; Execution of Additional Agreements. If
the Company delivers an Exercise Notice hereunder, then at the Closing (as
hereinafter defined):
(a) The Investor will pay to the Company cash in immediately available
funds in the amount representing the aggregate purchase price for the
number of Investor Shares purchased by it (the "Purchase Price") to the
bank account specified by the Company to Investor not later than two
business days prior to the Closing Date.
(b) The Company will issue and deliver to the Investor a share
certificate or certificates representing the Investor Shares purchased
hereunder by the Investor, which certificate or certificates shall be
registered in the Investor's name or such name as the Investor designates.
(c) The Company and the Investor shall execute and deliver the Lock-up
and Registration Rights Agreement relating to the Investor Shares
substantially in the form attached as Exhibit A hereto (the "Lock-up and
Registration Rights Agreement").
1.5 Closing. The issuance and delivery of the Investor Shares by the Company
to the Investor and the delivery of the Purchase Price by the Investor to the
Company (the "Closing"), will take place at the offices of Sullivan & Cromwell,
375 Park Avenue, New York, New York, at 10:00 A.M. on the business day that is
ten
A-1
<PAGE>
business days after the date on which the conditions set forth in Section 4
have been fulfilled or waived, or at such other time and place as the Company
and the Investor may agree orally or in writing.
1.6 Alternate Investment. If the Closing cannot occur because the condition
in Section 4(c) has not been satisfied, then the Investor shall invest $75
million in equity securities issued by a subsidiary of the Company in a public
offering, at the election of the Company, at the initial public offering
price, provided that the Investor's obligation to purchase such securities
shall be subject to conditions analogous to those set forth in Section 4(c).
Section 2. Representations, Warranties and Acknowledgments of the
Investor. The Investor hereby represents, warrants and acknowledges to the
Company, as follows:
2.1 No Registration of Investor Shares. The Investor is aware that the
Investor Shares have not been registered under the Securities Act of 1933, as
amended (the "Act"), that such offer and sale are intended to be exempt from
registration under the Act and the rules promulgated thereunder by the
Securities and Exchange Commission (the "SEC"), and that the Securities cannot
be offered, sold, assigned, transferred, or otherwise disposed of unless they
are subsequently registered under the Act or an exemption from such
registration is available. The Investor is also aware that sales or transfers
of the Securities are further restricted by state securities laws and the
provisions of this Agreement and that the certificates for the Securities will
bear appropriate legends restricting their transfer pursuant to applicable
laws, this Agreement and the Lock-up and Registration Rights Agreement.
2.2 Suitability of Investment.
(a) The Investor understands that there is no established market for the
Securities;
(b) The Investor is an "accredited investor" within the meaning of Rule
501 of Regulation D of the Act as presently in effect and is acquiring the
Securities for its own account, or for the account of another "accredited
investor" who is an affiliate of the Investor and who can make all of the
representations contained herein, for investment purposes only and not with
a view to the resale or distribution thereof;
(c) The Investor has not and will not, directly or indirectly, offer,
sell, transfer, assign, exchange or otherwise dispose of all or any part of
the Securities, except in accordance with applicable federal and state
securities laws and the provisions of this Agreement and the Lock-up and
Registration Rights Agreement as long as such documents remain in effect;
(d) The Investor has such knowledge and experience in financial,
business and tax matters that the Investor is capable of evaluating the
merits and risks relating to the Investor's investment in the Securities
and making an investment decision with respect to the Company;
(e) The Investor has been given the opportunity to obtain information
and documents relating to the Company and to ask questions of and receive
answers from representatives of the Company concerning the Company and the
investment in the Securities;
(f) Neither the Investor nor any of its affiliates has engaged in any
activity that would be deemed a "general solicitation" under the provisions
of Regulation D;
(g) The Investor has such knowledge and experience in financial or
business matters that it can, and it has, adequately analyzed the risks of
an investment in the Securities and it has determined the Securities are a
suitable investment for the Investor and that the Investor is able at this
time, and in the foreseeable future, to bear the economic risk of a total
loss of its investment in the Company; and
(h) The Investor is aware that there are substantial risks incident to
an investment in the Securities.
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2.3 Corporate Authority. The Investor has all requisite corporate power and
authority and has taken all corporate and other action necessary in order to
execute, deliver and perform its obligations under this Agreement and the Lock-
up and Registration Rights Agreement. This Agreement and the Lock-up and
Registration Rights Agreement are valid and binding agreements of the Investor
enforceable against the Investor in accordance with their respective terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
Section 3. Representations, Warranties and Acknowledgments of the
Company. The Company hereby represents, warrants and acknowledges to the
Investor as of the date hereof as follows:
3.1 Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of its respective jurisdiction of organization and has all requisite
corporate or similar power and authority to own and operate its properties and
assets and to carry on its business as currently conducted and is qualified to
do business and is in good standing as a foreign corporation in each
jurisdiction where the ownership or operation of its assets or properties or
conduct of its business requires such qualification, except where the failure
to be so organized, qualified or in good standing, or to have such power or
authority when taken together with all other such failures, is not reasonably
likely to have a Company Material Adverse Effect (as defined below).
As used in this Agreement, the term "Company Material Adverse Effect" means
a material adverse effect on the financial condition, properties, prospects,
business or results of operations of the Company and its subsidiaries taken as
a whole; provided, however, that any such effect resulting from any change
(i) in law, rule, or regulation or generally accepted accounting principles or
interpretations thereof that applies to the Company or (ii) in economic or
business conditions generally or in the telecommunications or Internet
telephony industries specifically, shall not be considered when determining if
a Company Material Adverse Effect has occurred.
3.2 Corporate Authority. The Company has all requisite corporate power and
authority and has taken all corporate action necessary in order to execute,
deliver and perform its obligations under this Agreement and the Lock-up and
Registration Rights Agreement. Each of this Agreement and the Lock-up and
Registration Rights Agreement is or will be a valid and binding agreement of
the Company enforceable against the Company in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
3.3 Capital Structure. The authorized capital stock of the Company consists
of 100,000,000 shares of Common Stock, $.01 par value, of which 24,100,383
shares were outstanding as of the close of business on the date hereof,
35,000,000 shares of Class A Stock, $.01 par value, of which 10,029,758 shares
were outstanding as of the close of business on the date hereof, and 10,000,000
shares of Preferred Stock, $.01 par value, of which no shares are outstanding
as of the close of business on the date hereof. All of the outstanding shares
of Common Stock and Class A Stock have been duly authorized and are validly
issued, fully paid and nonassessable. When issued, delivered and paid for in
accordance with the terms of this Agreement, the Securities will be duly
authorized, validly issued, fully paid and nonassessable.
3.4 Company Reports; Financial Statements. As of their respective dates (or,
if amended, as of the date of such amendment), (i) the Company's Annual Report
on Form 10-K for the year ended July 31, 1999, and (ii) the Company's Quarterly
Report on Form 10-Q for the period ended October 31, 1999, each in the form
(including exhibits, annexes and any amendments thereto) filed with the SEC
(collectively, including any such reports filed subsequent to the date hereof
and as amended, the "Company Reports") did not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made therein, in light of the circumstances in which they were made,
not misleading. Each of the consolidated balance sheets included in or
incorporated by reference into the Company Reports (including the related notes
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and schedules) fairly presents, or will fairly present, the consolidated
financial position of the Company and its subsidiaries as of the date of such
balance sheet and each of the consolidated statements of income and cash flows
included in or incorporated by reference into the Company Reports (including
any related notes and schedules) fairly presents, or will fairly present, the
results of operations and cash flows, as the case may be, of the Company and
its subsidiaries for the periods set forth in such settlements (subject, in the
case of unaudited statements, to notes and normal year-end audit adjustments
that will not be material in amount or effect), in each case in accordance with
generally accepted accounting principles ("GAAP") consistently applied during
the periods involved, except as may be noted therein.
3.5 Absence of Certain Changes. Except as disclosed in the Company Reports
filed prior to the date hereof, since October 31, 1999 there has not been any
change in the financial condition, properties, prospects, business or results
of operations of the Company that has had or could reasonably be expected to
have a Company Material Adverse Effect.
3.6 Compliance with Laws. Except as set forth in the Company Reports filed
prior to the date hereof, the business of the Company has not been, and is not
being, conducted in violation of any federal, state, local or foreign law,
statute, ordinance, rule, regulation, judgment, order, injunction, decree,
arbitration award, agency requirement, license or permit of any Governmental
Entity, except for violations or possible violations that, individually or in
the aggregate, would not be reasonably expected to have a Company Material
Adverse Effect or prevent or materially burden or materially impair the ability
of the Company to consummate the transactions contemplated by this Agreement
and the Lock-up and Registration Rights Agreement. Except as set forth in the
Company Reports filed prior to the date hereof, no investigation or review by
any Governmental Entity with respect to the Company is pending or, to the
knowledge of the executive officers of the Company, threatened, nor has any
Governmental Entity indicated an intention to conduct the same, except for
those the outcome of which are not, individually or in the aggregate,
reasonably likely to have a Company Material Adverse Effect or prevent or
materially burden or materially impair the ability of the Company to consummate
the transactions contemplated by this Agreement and the Lock-up and
Registration Rights Agreement.
Section 4. Conditions to Obligations of the Investor. The obligation of the
Investor to pay the Purchase Price for the Investor Shares to the Company is
absolute, subject to the fulfillment or waiver at or before the Closing of each
of the following conditions, any or all of which may be waived by the Investor:
(a) Representations and Warranties. The representations and warranties
of the Company set forth in Section 3 hereof shall have been true and
correct in all material respects as of the date of this Agreement (or as of
such other earlier date or dates as of which any such representation and
warranty may be expressly made).
(b) Authorized Securities. The Company shall have adopted resolutions
setting forth the terms of the Investor Shares, which shall have the
rights, preferences and terms set forth in the form of Certificate of
Amendment to the Restated Certificate of Incorporation attached as Exhibit
B hereto (the "Certificate of Amendment"). The Company shall have filed the
Certificate of Amendment with the Secretary of State of the State of
Delaware, and the issuance of Class B Common Stock shall have been duly
authorized, and upon payment of the Purchase Price by the Investor and
delivery of the Investor Shares by the Company, the Investor Shares shall
be validly issued, fully paid and nonassessable.
(c) Governmental Filings. All notices, reports and other filings
required to be made by the Company with, and consents, registrations,
approvals, permits or authorizations required to be obtained by the Company
from, any governmental or regulatory authority, agency, commission, body or
other governmental entity ("Governmental Entity"), in connection with the
execution and delivery of this Agreement and the Lock-up and Registration
Rights Agreement by the Company and the exercise of the Option by the
Company or the issuance and sale of the Securities by the Company hereunder
have been made or obtained, except those that the failure to make or obtain
are not, individually or in the aggregate, reasonably likely to have a
Company Material Adverse Effect.
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(d) No Violation. The execution, delivery and performance of this
Agreement and the Lock-up and Registration Rights Agreement by the Company
and the exercise of the Option by the Company or the issuance and sale of
the Securities by the Company hereunder do not and will not constitute or
result in (i) a breach or violation of, or a default under, the certificate
or by-laws of the Company, (ii) a breach or violation of, or a default
under, the acceleration of any obligations or the creation of a lien,
pledge, security interest or other encumbrance on the assets of the Company
(with or without notice, lapse of time or both) pursuant to, any agreement,
lease, license, contract, note, mortgage, indenture, arrangement or other
obligation ("Contracts") binding upon the Company or any law or
governmental or non-governmental permit or license to which the Company is
subject or (iii) any change in the rights or obligations of any party under
any of the Contracts, except, in the case of clause (ii) or (iii) above,
for any breach, violation, default, acceleration, creation or change that,
individually or in the aggregate, is not reasonably likely to prevent,
materially delay or materially impair the ability of the Company to
consummate the transactions contemplated by this Agreement and the Lock-up
and Registration Rights Agreement.
(e) Certificate. The Investor shall have received a certificate, dated
as of the Closing Date, executed by an executive officer of the Company and
stating that, to the best knowledge of such executive officer, the
conditions set forth in clauses (a), (b), (c) and (d) above have been
satisfied.
(f) Opinion of Counsel to the Company. Sullivan & Cromwell, counsel to
the Company, shall deliver an opinion addressed to the Investor, dated the
date of the Closing, with respect to the valid existence of the Company and
due authorization and valid issuance of the Securities in form and
substance customary and reasonably satisfactory to the Investor, and
counsel to the Company (who may be internal counsel) shall deliver an
opinion addressed to the Investor, dated the Closing Date, to the effect
set forth in Sections 4(c) and 4(d) in form and substance customary and
reasonably satisfactory to Investor.
(g) Lock-up and Registration Rights Agreement. The Lock-up and
Registration Rights Agreement shall have been duly executed and delivered
by the Company.
(h) HSR Act. All applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 with respect to the transactions
contemplated by this Agreement and the Lock-up and Registration Rights
Agreement shall have expired or been terminated.
Section 5. Conditions to Obligations of the Company. The obligation of the
Company to deliver the Securities to the Investor is absolute, subject to the
prior delivery by the Company of the Exercise Notice to the Investor and
subject to the fulfillment or waiver at or before the Closing of each of the
following conditions, any or all of which may be waived by the Company:
(a) Representations and Warranties. The representations and warranties
of the Investor set forth in Section 2 hereof shall have been true and
correct in all material respects as of the date of this Agreement (or as of
such other earlier date or dates as of which any such representation and
warranty may be expressly made).
(b) Governmental Filings. All notices, reports and other filings
required to be made by the Investor with, and consents, registrations,
approvals, permits or authorizations required to be obtained by the
Investor from a Governmental Entity, in connection with the execution and
delivery of this Agreement and the Lock-up and Registration Rights
Agreement by the Investor have been made or obtained.
(c) No Violation. The execution, delivery and performance of this
Agreement and the Lock-up and Registration Rights Agreement by the Investor
do not and will not constitute or result in (i) a breach or violation of,
or a default under, the certificate or by-laws of the Investor, (ii) a
breach or violation of, or a default under, the acceleration of any
obligations or the creation of a lien, pledge, security interest or other
encumbrance on the assets of the Investor (with or without notice, lapse of
time or both) pursuant to any Contracts binding upon the Investor or any
law or governmental or non-governmental permit or license to which the
Investor is subject or (iii) any change in the rights or obligations of any
party under any of the
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Contracts, except, in the case of clause (ii) or (iii) above, for any
breach, violation, default, acceleration, creation or change that,
individually or in the aggregate, is not reasonably likely to prevent,
materially delay or materially impair the ability of the Investor to
consummate the transactions contemplated by this Agreement and the Lock-up
and Registration Rights Agreement.
(d) Certificate. The Company shall have received a certificate, dated as
of the Closing Date, executed by an executive officer of the Investor and
stating that, to the best knowledge of such executive officer, the
conditions set forth in clauses (a), (b) and (c) above have been satisfied.
(e) Lock-up and Registration Rights Agreement. The Lock-up and
Registration Rights Agreement has been executed and delivered by the
Investor.
Section 6. Transfer Limitations: 1933 Act Legend.
(a) Unless sold pursuant to an effective registration statement, each
certificate representing Securities shall bear a legend substantially in the
following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
UNLESS AND UNTIL SUCH SHARES ARE REGISTERED UNDER THE ACT OR, EXCEPT AS
OTHERWISE PERMITTED PURSUANT TO RULE 144 UNDER THE ACT OR ANOTHER EXEMPTION
FROM REGISTRATION UNDER THE ACT OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY IS OBTAINED TO THE EFFECT THAT SUCH
REGISTRATION IS NOT REQUIRED AND ARE SUBJECT TO TRANSFER RESTRICTIONS AS
SET FORTH IN A LOCK-UP AND REGISTRATION RIGHTS AGREEMENT, DATED MARCH 1,
2000, COPIES OF WHICH MAY BE OBTAINED FROM THE COMPANY."
The foregoing legend, if necessary, shall be removed from the certificates
representing any Class B Common Stock, at the request of the holder thereof, at
such time as (i) they are sold pursuant to an effective registration statement,
(ii) they become eligible for resale pursuant to Rule 144(k) or another
provision of Rule 144 of the Act pursuant to which all or a portion of
Securities could be sold in a single transaction, or (iii) an opinion of
counsel reasonably satisfactory to the Company is obtained to the effect that
the proposed transfer is exempt from the Act; provided that in the case of
clauses (ii) and (iii) the holder is permitted to transfer the Securities
pursuant to the Lock-up and Registration Rights Agreement.
Section 7. Indemnification.
7.1 Company Indemnification. The Company covenants and agrees to defend,
indemnify and save and hold harmless the Investor, together with its officers,
directors, partners, shareholders, employees, trustees, affiliates (within the
meaning of Rule 405 of the SEC under the Act), beneficial owners, attorneys and
representatives, from and against any and all losses, costs, expenses,
liabilities, claims or legal damages (including, without limitation, reasonable
fees and disbursements of counsel and accountants and other costs and expenses
incident to any actual or threatened claim, suit, action or proceeding, whether
incurred in connection with a claim against the Company or a third party claim)
(collectively, "Investor Losses") up to the amount equal to the Purchase Price
arising out of or resulting from:
(i) any inaccuracy in or breach of any representation, warranty,
covenant or agreement made by the Company in this Agreement, the Lock-up
and Registration Rights Agreement or in any writing delivered pursuant to
this Agreement or the Lock-up and Registration Rights Agreement or at the
Closing; or
(ii) the failure of the Company to perform or observe fully any
covenant, agreement or provision to be performed or observed by it pursuant
to this Agreement or the Lock-up and Registration Rights Agreement;
provided that the indemnity agreement contained in this 7.1 shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Company (which
consent shall not be unreasonably withheld).
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7.2 Investor Indemnification. The Investor covenants and agrees to defend,
indemnify and save and hold harmless the Company, together with its officers,
directors, partners, shareholders, employees, trustees, affiliates (within the
meaning of Rule 405 of the SEC under the Act), attorneys and representatives,
from and against any and all losses, costs, expenses, liabilities, claims or
legal damages (including, without limitation, reasonable fees and disbursements
of counsel and accountants and other costs and expenses incident to any actual
or threatened claim, suit, action or proceeding, whether incurred in connection
with a claim against the Investor or a third party claim) (collectively,
"Company Losses"), up to the amount equal to the Purchase Price arising out of
or resulting from:
(i) any inaccuracy in or breach of any representation, warranty,
covenant or agreement made by the Investor in this Agreement or the Lock-up
and Registration Rights Agreement or in any writing delivered pursuant to
this Agreement or the Lock-up and Registration Rights Agreement or at the
Closing; or
(ii) the failure of the Investor to perform or observe fully any
covenant, agreement or provision to be performed or observed by it pursuant
to this Agreement or the Lock-up and Registration Rights Agreement.
7.3 Procedure. Each party entitled to be indemnified pursuant to Section 7.1
and 7.2 (each, an "Indemnified Party") shall notify the other party in writing
of any action against such Indemnified Party in respect of which the other
party is or may be obligated to provide indemnification on account of Section
7.1 or 7.2, promptly after the receipt of notice. The omission of any
Indemnified Party so to notify the other party of any such action shall not
relieve such other party from any liability which it may have to such
Indemnified Party except to the extent the other party shall have been
materially prejudiced by the omission of such Indemnified Party so to notify
it, pursuant to this Section 7.3. In case any such action shall be brought
against any Indemnified Party and it shall notify the other party of the
commencement thereof, the other party shall be entitled to participate therein
and, to the extent that such other party may wish, to assume the defense
thereof, with counsel reasonably satisfactory to such Indemnified Party, and
after notice from it to such Indemnified Party of its election so to assume the
defense thereof, the other party will not be liable to such Indemnified Party
under Section 7.1 or 7.2 for any legal or other expense subsequently incurred
by such Indemnified Party in connection with the defense thereof nor for any
settlement thereof entered into without the consent of the other party;
provided, however, that (i) if the other party shall elect not to assume the
defense of such claim or action or (ii) if the Indemnified Party reasonably
determines (x) that there may be a conflict between the positions of the other
party and of the Indemnified Party in defending such claim or action or (y)
that there may be legal defenses available to such Indemnified Party different
from or in addition to those available to the other party, then separate
counsel for the Indemnified Party shall be entitled to participate in and
conduct the defense, in the case of (i) and (ii)(x), or such different
defenses, in the case of (ii)(y), and the other party shall be liable for any
reasonable legal or other expenses incurred by the Indemnified Party in
connection with the defense.
7.4 Indemnification Non-Exclusive. The foregoing indemnification provisions
are in addition to, and not in derogation of, any statutory, equitable or
common-law remedy any party may have for breach of representation, warranty,
covenant or agreement.
Section 8. Miscellaneous.
8.1 Survival of Warranties. The representations and warranties set forth in
Sections 2 and 3 hereof shall survive until the eighteen month anniversary of
the Closing.
8.2 Best Efforts to Satisfy Conditions. Each party shall use its best
efforts to satisfy the conditions precedent to the Closing hereunder.
8.3 Certain Limitations. The indemnification obligations of the parties
hereto for any breach of a representation and warranty set forth in Sections 2
and 3 shall survive for only the period applicable to such representations and
warranties as set forth in Section 8.1 of this Agreement, and thereafter all
such representations and warranties of the parties hereto under this Agreement
shall be extinguished; provided,
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however, that such indemnification obligation shall not be extinguished in the
event of Investor Losses or Company Losses incurred as a result of an
investigation, review, suit, claim or action that was instituted or begun prior
to the expiration of the survival period set forth in Section 8.1.
8.4 Successors and Assigns. This Agreement may not be assigned by the
Investor or the Company without the prior written consent of the other party
hereto and the attempted or purported assignment shall be void; provided,
however, that the Investor may, without written consent of the Company, assign
its rights and obligations hereunder to any of its Affiliates (provided that no
such assignment shall relieve the Investor of its responsibility for the
performance of the obligations hereunder). Nothing in this Agreement, express
or implied, is intended to confer upon any party, other than the parties hereto
or their respective successors and permitted assigns, any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
As used in this Agreement, the term "Affiliates" shall mean, with respect to
any person or entity, any other person or entity directly or indirectly
controlling, controlled by or under common control with the first such person
or entity.
8.5 Governing Law; Submission to Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York.
Each of the Company and the Investor hereby submits to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York and of any New York State court sitting in New York City for purposes
of all legal proceedings arising out of or relating to this Agreement and the
transactions contemplated hereby. Each of the Company and the Investor
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought in such
a court has been brought in an inconvenient forum.
8.6 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, and all of which together shall be deemed to
constitute one and the same instrument.
8.7 Captions and Headings. The captions and headings used in this Agreement
are for convenience only and are not to be considered in construing or
interpreting this Agreement.
8.8 Notices. Unless otherwise provided, any notice or other communication
required or permitted to be given or effected under this Agreement shall be in
writing and shall be deemed effective upon personal or facsimile delivery to
the party to be notified or three business days after deposit with an
internationally recognized courier service, delivery fees prepaid, and
addressed to the party to be notified at the following respective addresses, or
at such other addresses as may be designated by written notice; provided that
any notice of change of address shall be deemed effective only upon receipt:
If to the Company:
IDT Corporation
520 Broad Street
Newark, New Jersey 07102
Attn: Hal Brecher
Fax: (201) 928-2885
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attn: Robert S. Risoleo
Fax: (212) 558-1600
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If to the Investor:
AT&T Corp.
295 North Maple Avenue, Room
Basking Ridge, New Jersey 07920
Attn: Marilyn Wasser
Fax: (908) 221-6618
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019-6150
Attn: Seth A. Kaplan
Fax: (212) 403-2000
8.9 Amendments and Waivers. All terms of this Agreement may be amended, and
the observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively), only with
the written consent of each of the Company and the Investor. Any amendment or
waiver effected in accordance with this Section 8.9 shall be binding upon each
holder of any Securities purchased under this Agreement at the time
outstanding, each future holder of all such Securities, and the other parties
to this Agreement.
8.10 Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provisions shall be excluded from
this Agreement and the balance of this Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
8.11 Entire Agreement. This Agreement (and the Exhibits and Schedules
hereto) and the Lock-up and Registration Rights Agreement constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements, understandings and discussions between them,
and all documents delivered by or on behalf of the Company to the Investor and
its agents and representatives, with respect to such subject matter.
8.12 No Specific Enforcement. The parties agree that in the event of a
breach of this Agreement, the parties shall not be entitled to specific
performance of the terms hereof.
8.13 Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES ITS RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT AND THE REGISTRATION RIGHTS AGREEMENT. THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN
ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING,
WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND
ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION 8.13 HAS BEEN FULLY
DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS SHALL NOT BE
SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER WARRANTS AND
REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND
THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING
THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, SUPPLEMENTS OR MODIFICATIONS TO (OR
ASSIGNMENTS OF) THIS AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY
BE FILED AS A WRITTEN CONSENT TO A TRIAL (WITHOUT A JURY) BY THE COURT.
[Signatures on the following page.]
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IN WITNESS WHEREOF, the parties have executed this Option Agreement as of
the date first above written.
IDT CORPORATION
By: /s/ Howard S. Jonas
___________________________________
Name: Howard S. Jonas
Title: Chief Executive Officer
AT&T CORP.
By: /s/ John C. Petrillo
___________________________________
Name: John C. Petrillo
Title: Executive Vice President
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Exhibit A
LOCK-UP AND REGISTRATION RIGHTS AGREEMENT
LOCK-UP AND REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of
March . , 2000, by and between IDT Corporation, a Delaware corporation (the
"Company"), and AT&T Corp., a New York corporation (the "Investor").
WHEREAS, the Company and the Investor have entered into an Option Agreement,
dated as of March 3, 2000; and
WHEREAS, it is a condition to the Closing (as defined below) of the Option
Agreement that the Company grant Investor the registration rights set forth
herein, and it is a condition to the Company's execution of the Option
Agreement that the Investor agree to the restrictions on transfer set forth
herein.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
Section 1. Definitions. For the purposes of this Agreement:
(a) The term "Affiliate" means, with respect to any person or
entity, any other person or entity directly or indirectly controlling,
controlled by or under common control with the first such person or
entity.
(b) The terms "Closing" and "Closing Date" mean the date of the
Closing, as such term is defined in the Option Agreement.
(c) The term "Holder" means a holder of Registrable Securities or,
unless the context otherwise requires, securities convertible into or
exercisable for Registrable Securities.
(d) The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement
in compliance with the Securities Act of 1933, as amended (the "Act"),
and the declaration or ordering of effectiveness of such registration
statement.
(e) The term "Registrable Securities" means the shares of Class B
Common Stock, par value $.01 per share, of the Company (the "Class B
Common Stock") issued to the Investor pursuant to the Option Agreement
(the "Securities"); provided, however, that such Securities shall cease
to be Registrable Securities when and to the extent that (i) such
Securities have been sold pursuant to an effective registration
statement under the Act, (ii) such Securities have become eligible for
resale pursuant to Rule 144(k) of the Act (or any similar provision
then in force) or another provision of Rule 144 of the Act pursuant to
which all of the Investor's Securities are immediately eligible for
resale or (iii) such Securities have ceased to be outstanding.
Section 2. Registration Rights.
2.1. (a) Registration Upon Demand. At any time on or after the first
anniversary of the Closing Date, one or more holders that in the aggregate
beneficially own at least 20% of the Registrable Securities may make a
demand that the Company effect the registration of all or part of such
Holders' Registrable Securities (an "S-3 Demand Registration"). Upon
receipt of a valid request for an S-3 Demand Registration, the Company
shall promptly, in and any event no later than 15 days after such receipt,
notify all other Holders of the making of such demand and shall use its
reasonable efforts to register under the Act as expeditiously as may be
practicable the Registrable Securities which Holders have requested the
Company to register in accordance with this Section 2.1. Notwithstanding
the foregoing, the Company shall not be required to effect any registration
if the number of Registrable Securities that the Company shall have been
requested to register shall, in the aggregate, be less than 10% of the
number of shares of Class B Common Stock purchased by the Investor on the
Closing Date. The Holders shall have the right to two (2) S-3 Demand
Registrations pursuant to this Section 2.1(a).
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(b) Effective Registration Statement. A registration requested pursuant
to Section 2.1(a) hereof shall not be deemed to have been effected (i) if a
registration statement with respect thereto has not been declared effective
by the Securities and Exchange Commission ("SEC"), (ii) if after it has
become effective and prior to the date ninety (90) days after the effective
date, such registration is materially interfered with by any stop order,
injunction or similar order or requirement of the SEC or other governmental
agency or court for any reason not attributable to any of the Holders and
has not thereafter become effective for not less than ninety (90)
additional consecutive days, or (iii) the conditions to closing specified
in the underwriting agreement, if any, entered into in connection with such
registration are not satisfied or waived, other than by reason of a failure
on the part of a Holder
2.2. "Piggy-Back" Registration. (a) At any time after the first
anniversary of the Closing Date and prior to the fifth anniversary of the
Closing Date, if the Company proposes to register any securities under the
Act in connection with any offering of its securities (other than a
registration statement on Form S-8 or Form S-4, or their successors, or any
other form for a similar limited purpose, or any registration statement
covering only securities proposed to be issued in exchange for securities
or assets of another corporation), whether or not for its own account, the
Company shall furnish promptly, and in any event not less than 10 days in
advance, written notice to the Holders of its intention to effect such
registration and the intended method of distribution in connection there
with. Upon the written request of a Holder made to the Company within 15
days after the receipt of such notice by the Company, the Company shall
include in such registration the requested number of the Holder's
Registrable Securities (a "Piggy-Back Registration"). If a Holder decides
not to include all of its Registrable Securities in any registration
statement thereafter filed by the Company, the Holder shall nevertheless
continue to have the right to include any Registrable Securities in any
subsequent registration statement or registration statements as may be
filed by the Company with respect to offerings of its Common Stock and any
other securities, all upon the terms and conditions set forth herein.
(b) Nothing in this Section 2.2 shall create any liability on the part
of the Company or any other person to the Holders if the Company, for any
reason, decides not to file a registration statement proposed to be filed
pursuant to Section 2.2(a) or to withdraw such registration statement
subsequent to its filing, regardless of any action whatsoever that a Holder
may have taken, whether as a result of the issuance by the Company of any
notice under Section 2.2(a) or otherwise.
2.3. Blackout Periods for Holders. If the board of directors of the
Company determines in good faith that the registration and distribution of
Registrable Securities pursuant to Section 2.1 or Section 2.2 hereof (or
the use of a registration statement or related prospectus) would be
materially detrimental to the Company or its shareholders, including
(without limitation) that such filing could result in disclosure of
material non-public information or could interfere with the Company's
financing plans, and therefore the board of directors determines that it is
in the Company's best interest to defer the filing or inclusion of
Registrable Securities (as the case may be), and promptly gives the Holders
written notice of such determination in the form of a certificate signed by
an executive officer of the Company following their request to register any
Registrable Securities pursuant to Section 2.1 or Section 2.2, the Company
shall be entitled to (i) postpone the filing of the registration statement
otherwise required to be prepared and filed by the Company pursuant to
Section 2.1 hereof for a reasonable period of time, but not to exceed 90
days (a "Demand Blackout Period") after the date of such request, provided
that the Company's exercise of its rights under this Section 2.3 (x) shall
not result in Demand Blackout Periods for more than 180 days in any 365 day
period and (y) shall not result in Demand Blackout Periods that are
separated by less than 45 days, or (ii) exclude all or a portion of the
Registrable Securities (on a pro-rata basis by Holder) otherwise required
to be registered pursuant to Section 2.2. hereof. The Company shall
promptly notify each holder of the expiration or earlier termination of any
Demand Blackout Period.
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2.4. Obligations of the Company. Whenever the Company is required to
effect the registration of any Registrable Securities under this Section 2,
the Company shall, at its expense and as expeditiously as may be
practicable:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its reasonable efforts
to cause such registration statement to become effective and, upon the
request of the Holders of a majority of the Registrable Securities
registered thereunder, use reasonable efforts to keep such registration
statement effective for not less than ninety (90) days.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with
such registration statement as may be necessary to comply with the
provisions of applicable law with respect to the disposition of all of
the Registrable Securities covered by such registration statement.
(c) Use its best efforts to qualify such Registrable Securities (i)
for quotation on the NASDAQ National Market or listing on the New York
Stock Exchange, Inc. or (ii) if neither such quotation system or
exchange is available for quotation or listing, for listing on a
national securities exchange selected by a majority in interest of the
Holders of the Registrable Securities being registered.
(d) Furnish to the Holders of Registrable Securities registering
such securities such numbers of copies of a prospectus, including a
preliminary prospectus (in the event of an underwritten offering), in
conformity with the requirements of applicable law, and such other
documents as each such Holder may reasonably request in order to
facilitate the disposition of Registrable Securities owned by it.
(e) Use reasonable efforts to register and qualify the securities
covered by such registration statement under state blue sky laws in any
U.S. jurisdictions in which such registration and qualification is
reasonably requested by any Holder; provided, that the Company shall
not be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of
process in any such jurisdictions.
(f) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and
customary form and substance as agreed to by the Company and the
managing underwriter of such offering.
(g) Promptly notify the Holders in writing: (i) when the
registration statement, the prospectus or any prospectus supplement
related thereto or post-effective amendment to the registration
statement has been filed, and, with respect to the registration
statement or any post-effective amendment thereto, when the same has
become effective; (ii) of any request by the SEC for amendments or
supplements to the registration statement or related prospectus or any
written request by the SEC for additional information; (iii) of the
issuance by the SEC of any stop order suspending the effectiveness of
the registration statement or prospectus or any amendment or supplement
thereto or the initiation of any proceedings by any person for that
purpose, and promptly use its reasonable efforts to prevent the
issuance of any stop order or to obtain its withdrawal if such stop
order should be issued; and (iv) of the receipt by the Company of any
written notification with respect to the suspension of the
qualification of any Registrable Securities for sale in any
jurisdiction or the initiation or overt threat of any proceeding for
such purpose.
(h) Notify the Holders in writing on a timely basis, at any time
when a prospectus relating to such Registrable Securities is required
to be delivered under applicable law, of the happening of any event as
a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing and at the request of any
such Holder promptly prepare and furnish to such Holder a reasonable
number of copies of a supplement to or an amendment of such prospectus
as may be necessary so that, as thereafter delivered to the offerees of
such securities, such prospectus shall not
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include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances
then existing.
(i) Furnish, at the request of any Holder participating in the
registration, on the date that such Registrable Securities are
delivered to the underwriters for sale, if such securities are being
sold through underwriters, or, if such securities are not being sold
through underwriters, on the date that the registration statement with
respect to such securities becomes effective, (i) an opinion, dated as
of such date, of the counsel representing the Company for the purposes
of such registration, in form and substance as if customarily given to
underwriters in an underwritten public offering and reasonably
satisfactory to a majority in interest of the Holders participating in
the registration, addressed to the underwriters, if any, and to the
Holders participating in the registration of Registrable Securities and
(ii) a "Cold Comfort" letter dated as of such date, from the
independent certified public accountants to the underwriters in an
underwritten public offering and reasonably satisfactory to a majority
in interest of the Holders participating in the registration, addressed
to the board of directors of the Company, to the underwriters, if any,
and if permitted by applicable accounting standards, to the Holders
participating in the registration of Registrable Securities.
(j) Use reasonable efforts to cause the transfer agent to remove
restrictive legends on certificates representing the securities covered
by such registration statement, as the Company determines to be
appropriate, upon advice of counsel.
(k) Prepare and file with the SEC, promptly upon the request of any
such Holders, any amendments or supplements to such registration
statement or prospectus which, in the opinion of counsel for such
Holders, is required under the Act or the rules and regulations
thereunder in connection with the distribution of the Registrable
Securities by such Holders.
(l) Make available for inspection by any Holder of such Registrable
Securities, any underwriter participating in any disposition pursuant
to such registration statement and any attorney, accountant or other
agent retained by any such seller or underwriter (collectively, the
"Inspectors"), all pertinent financial and other records, pertinent
corporate documents and properties of the Company (collectively, the
"Records"), as shall be reasonably necessary to enable them to exercise
their due diligence responsibility, and cause the Company's officers,
directors and employees to supply all information (together with the
Records, the "Information") reasonably requested by any such Inspector
in connection with such registration statement. Any of the Information
that the Company determines in good faith to be confidential, and of
which determination the Inspectors are so notified, shall not be
disclosed by the Inspectors unless (i) the release of such Information
is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction or (ii) such Information has been made generally
available to the public or (iii) as necessary to enforce a Holder's
rights under this Agreement. Each Holder of Registrable Securities
shall be responsible for any breach of the foregoing covenant by any
Inspector retained by or on behalf of such Holder. The Holder of
Registrable Securities, agrees that it will, upon learning that
disclosure of such Information is sought in a court of competent
jurisdiction, give notice to the Company and allow the Company, at the
Company's expense, to undertake appropriate action to prevent
disclosure of the Information deemed confidential and the Inspectors
shall not disclose such Information until such action is determined.
(m) Provide a transfer agent and registrar (which may be the same
entity and which may be the Company) for such Registrable Securities.
(n) Use its reasonable efforts to take all other steps necessary to
effect the registration of such Registrable Securities pursuant to the
terms contemplated hereby.
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2.5. Furnish Information.
(a) It shall be a condition precedent to the obligation of the Company
to include any Registrable Securities of any Holder in a registration
statement pursuant to this Section 2 that the Holder shall furnish to the
Company such information regarding itself, the Registrable Securities held
by it, any other securities of the Company held by it, and the intended
method of disposition of such Registrable Securities as shall be required
to effect the registration of the Registrable Securities held by such
Holder. Any such information shall be provided to the Company within any
reasonable time period requested by the Company.
(b) Each Holder shall notify the Company, at any time when a prospectus
is required to be delivered under applicable law, of the happening of any
event as a result of which the prospectus included in the applicable
registration statement, as then in effect, in each case only with respect
to information provided by such Holder, includes an untrue statement of a
material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light
of the circumstances then existing. Such Holder shall immediately upon the
happening of any such event cease using such prospectus. Any other Holders
shall cease using such prospectus immediately upon receipt of notice from
the Company to that effect. If so requested by the Company, each Holder
shall promptly return to the Company any copies of any prospectus in its
possession (other than one permanent file copy) that contains an untrue
statement of a material fact or omits to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing.
2.6. Expenses of Registration. The Company shall bear and pay all
reasonable expenses incurred in connection with any registration, filing or
qualification of Registrable Securities pursuant to Section 2.1 or Section
2.2 including (without limitation) all registration, filing and
qualification fees, printers' and accounting fees, but excluding
underwriting discounts and commissions relating to the Registrable
Securities. The Company also shall be required to pay and bear the legal
fees of one counsel for the Holders in an amount not to exceed $25,000 in
connection with any registration.
2.7. Underwriting Requirements. In connection with any underwritten
offering of a Holder's Registrable Securities, the Company shall not be
required under Section 2.4 to register any of such Registrable Securities
in connection with such underwritten offering unless (i) in the case of a
registration pursuant to Section 2.1, the Company consents to the
underwriters selected by the Holders participating in the registration
(which consent shall not be unreasonably withheld) and (ii) in the case of
a registration pursuant to Section 2.2, the Holder accepts the underwriters
selected by the Company and then, in either case (i) or (ii), the Company
shall be required to register Registrable Securities only in such quantity
as the lead managing underwriter determines, in its good faith discretion,
will not jeopardize the success of the offering by the Company. To the
extent that the lead managing underwriter will not permit the registration
of all of the Registrable Securities sought to be registered, in the case
of a registration pursuant to Section 2.1 or 2.2, the Registrable
Securities to be included shall be apportioned among the Holders on a pro
rata basis (based on the number of shares of Class B Common Stock proposed
to be registered by each), first among the Holders of Registrable
Securities to be registered pursuant to Section 2.1, and thereafter among
the Holders of Registrable Securities to be registered pursuant to Section
2.2; provided, however, that the right of the underwriters to exclude
Registrable Securities from the registration and underwriting as described
above shall be restricted such that all shares that are not Registrable
Securities and all shares that are held by persons who are employees or
directors of the Company (or any subsidiary of the Company) shall first be
excluded from such registration and underwriting before any Registrable
Securities are so excluded. Those Registrable Securities and other
securities that are excluded from the underwriting by reason of the
managing underwriter's marketing limitation and all other Registrable
Securities not originally requested to be so included shall not be included
in such registration and shall be withheld from the market by the Holders
thereof for a period, not to exceed 90 days, which the managing underwriter
reasonably determines necessary to effect the underwritten public offering.
No Holder of Registrable Securities shall be entitled to participate in an
underwritten offering unless such Holder enters into, and performs its
obligations under, one or more
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underwriting agreements and any related agreements and documents (including
an escrow agreement and/or a power of attorney with respect to the
disposition of the Registrable Securities), in the form that such Holder
shall agree to with the lead managing underwriter of the transaction. If
any Holder disapproves of the terms of any underwriting, it may elect,
prior to the execution of any underwriting agreement, to withdraw there
from by written notice to the Company and the lead managing underwriter.
Any Registrable Securities so withdrawn from an underwriting by such Holder
shall be withdrawn from such registration and shall not be transferred in a
public distribution prior to 180 days following the effective date of the
registration statement relating thereto.
2.8. Delay of Registration. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 2.
2.9. Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 2:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder and each person, if any, who controls such
Holder within the meaning of the Act and the Securities Exchange Act of
1934, as amended (the "1934 Act"), and their respective directors,
officers, and each person, if any, who controls the Holder within the
meaning of the 1934 Act (each, an "Indemnified Person"), against any
losses, claims, damages, or liabilities joint or several) to which they
may become subject insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon (collectively, a "Violation") (x) any untrue statement or alleged
untrue statement of a material fact contained in such registration
statement, including any final prospectus contained therein or any
amendments or supplements thereto or (y) the omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading; or (z) any
violation by the Company of the Act, the 1934 Act, any state securities
law or any rule or regulation promulgated under the Act, the 1934 Act
or any state securities law in connection with the offering covered by
any registration statement; and the Company will pay to each
Indemnified Person any reasonable legal or other expenses incurred by
it in connection with investigating or defending any such loss, claim,
damage, liability or action; provided that the indemnity agreement
contained in this Section 2.9(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which
consent shall not be unreasonably withheld), nor shall the Company be
liable in any such case for any such loss, claim, damage, liability or
action to the extent that it arises out of or is based upon a Violation
which occurs in reliance upon and in strict conformity with written
information furnished by a Holder expressly for use in connection with
such registration or is caused by any failure by the Holder to deliver
a prospectus or preliminary prospectus (or amendment or supplement
thereto) as and when required under the Act after such prospectus has
been timely furnished by the Company.
(b) To the extent permitted by law, each Holder will indemnify and
hold harmless the Company, each of its directors, each of its officers
who has signed the registration statement, and each person, if any, who
controls the Company within the meaning of the Act or the 1934 Act
(each, an "Indemnified Person"), against any losses, claims, damages or
liabilities (joint or several) to which any of the foregoing persons
may become subject, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based
upon any Violation, in each case to the extent (and only to the extent)
that such Violation is caused by (x) any untrue statement or alleged
untrue statement contained in, or by any omission or alleged omission
from, information furnished in writing to the Company by the Holder
specifically and expressly for use in any such registration statement
or prospectus but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was so made in
reliance upon and in strict conformity with written information
furnished by such Holder specifically for use in the preparation
thereof or (y) any failure by the Holder to deliver a prospectus or
preliminary prospectus (or
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amendment or supplement thereto) as and when required under the Securities
Act after such prospectus has been timely filed by the Company. Such Holder
will pay any reasonable legal or other expenses incurred by any Indemnified
Person pursuant to this Section 2.9(b) in connection with investigating or
defending any such loss, claim, damage, liability or action; provided that
the indemnity agreement contained in this Section 2.9(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Holder,
which consent shall not be unreasonably withheld; provided, further, that in
no event shall any indemnity under this Section 2.9(b) exceed the net
proceeds from the offering received by such Holder upon its sale of
Registrable Securities included in the registration statement.
(c) Promptly after receipt by an Indemnified Person under this
Section 2.9 of notice of the commencement of any action (including any
governmental action), such Indemnified Person will, if a claim in
respect thereof is to be made against any indemnifying party under this
Section 2.9, deliver to the indemnifying party a written notice of the
commencement thereof, and the indemnifying party shall have the right
to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed,
to assume the defense thereof with counsel mutually satisfactory to the
indemnifying parties; provided that an Indemnified Person (together
with all other indemnified parties that may be represented without
conflict by one counsel) shall have the right to retain one separate
counsel, with the reasonable fees and expenses to be paid by the
indemnifying party, if representation of such Indemnified Person by the
counsel retained by the indemnifying party would be inappropriate (in
the opinion of the Indemnified Person) due to actual or potential
differing interests between such Indemnified Person and any other party
represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of
the commencement of any such action, if materially prejudicial to its
ability to defend such action, shall relieve such indemnifying party of
any liability to the Indemnified Person under this Section 2.9, but the
omission so to deliver written notice to the indemnifying party will
not relieve it of any liability that it may have to any Indemnified
Person otherwise than under this Section 2.9; provided, that in no
event shall any indemnity under this Section 2.9(c) exceed the net
proceeds from the offering received by such Holder upon its sale of
Registrable Securities included in the registration statement.
(d) If the indemnification provided for in this Section 2.9 is held
by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any losses, claims, damages or
liabilities referred to herein, the indemnifying party, in lieu of
indemnifying such Indemnified Person thereunder, agrees to contribute
to the amount paid or payable by such Indemnified Person as a result of
such loss, claim, damage or liability in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on
the one hand and of the Indemnified Person on the other in connection
with the Violation(s) that resulted in such loss, claim, damage or
liability, as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the Indemnified Person
shall be determined by a court of law by reference to, among other
things, whether the untrue or alleged untrue statement of a material
fact or the omission to state a material fact relates to information
supplied by the indemnifying party or by the Indemnified Person and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. No person
found guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution hereunder
from any person who was not guilty of such fraudulent
misrepresentation.
(e) The obligations of the Company and the Holders under this
Section 2.9 shall survive the completion of any offering of Registrable
Securities under a registration statement pursuant to this Section 2.
2.10. Lock-up and Permitted Transfers. At any time prior to the first
anniversary of the Closing Date, Investor shall not offer, sell, contract
to sell or otherwise dispose of any Class B Common Stock (including
entering into any agreement or arrangement that has the effect of
transferring all or a substantial
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part of the economic effect of holding the Class B Common Stock ) without the
written consent of the Company; provided, however, that the Investor shall be
permitted to transfer (i) all or part of the Class B Common Stock to an
Affiliate of the Investor, if such Affiliate and the Investor agree for the
benefit of the Company that such Affiliate shall remain an Affiliate of the
Investor until at least the first anniversary of the Closing Date, and (ii) up
to 20% of the aggregate number of shares of Class B Common Stock purchasable
pursuant to the Option Agreement to any party, to the extent necessary to
remedy a breach by the Investor of Section 11.1 of the Framework Agreement,
dated as of October 23, 1998, by and among the Investor, VLT Corporation,
British Telecommunications plc, BT (Netherlands) Holdings B.V. and Thistle
B.V. (the "Framework Agreement") (each such transferee, a "Permitted
Transferee"); provided that in connection with any proposed transfer pursuant
to clause (ii) above, (x) the Investor shall deliver to the Company a
certificate of an executive officer of the Investor setting forth in
reasonable detail a computation made in accordance with the Framework
Agreement and demonstrating that the proposed sale will remedy such breach,
and (y) the Company and the Investor shall have agreed to the reinvestment of
the net proceeds from the sale of such shares in equity securities of an
Affiliate of the Company in such a manner so as not to cause a breach under
the Framework Agreement. Without limiting any other remedy that may be
available to the Company, failure of the Investor or any Permitted Transferee
to comply with the provisions of this Section 2.10 shall result in termination
of the Company's obligations under Section 2.1 and Section 2.2 of this
Agreement with respect to the affected Class B Common Stock.
2.11. Assignment of Registration Rights. The rights to cause the Company
to register Registrable Securities pursuant to this Section 2 may be
assigned by a Holder to a Permitted Transferee of Registrable Securities;
provided, however, (i) the transferor shall, within ten (10) days after
such transfer, furnish to the Company written notice of the name and
address of such transferee or assignee and the securities with respect to
which such registration rights are being assigned and (ii) such transferee
shall agree with the Company in writing to be subject to all restrictions
set forth in this Agreement. No other assignment of the Investor's or any
Holder's rights hereunder shall be permitted, and the attempted or
purported assignment in violation of this provision shall be void.
2.12. Rule 144 Reporting. With a view to making available to the Holders
the benefits of certain rules and regulations of the SEC that permit the
sale of the Registrable Securities to the public without registration, the
Company agrees to use its reasonable efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in SEC Rule 144 or any similar or analogous rule
promulgated under the Act, at all times after the effective date of the
first registration filed by the Company for an offering of its
securities to the general public;
(b) File with the SEC, in a timely manner, all reports and other
documents required of the Company under the 1934 Act; and
(c) So long as a Holder owns any Registrable Securities, furnish
such Holder upon request a written statement by the Company as to its
compliance with the reporting requirements of said Rule 144 of the Act,
and of the 1934 Act (at any time after it has become subject to such
reporting requirements), a copy of the most recent annual or quarterly
report of the Company and such other reports and documents as a Holder
may reasonably request in availing itself of any rule or regulation of
the SEC allowing it to sell any such securities without registration.
2.13 Self-Tender Protection. Until such time as the Investor and its
Permitted Transferees hold less than 50% of the shares of Class B Common
Stock issued to the Investor pursuant to the Option Agreement, the Company
shall not make a tender offer for its common stock, par value $.01 per
share ("Common Stock"), unless such offer is extended ratably and for
equivalent per share consideration to the Investor and its Permitted
Transferees in respect of shares of Class B Common Stock then held by them.
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2.14. Third Party Tender Protection. Until such time as the Investor and
its Permitted Transferees hold less than 50% of the Class B Common Stock
issued to the Investor pursuant to the Option Agreement, if (i) any person
makes a tender offer for the Common Stock, (ii) such tender offer is
consummated with respect to more than 20% of the outstanding Common Stock
and (iii) such tender offer is not extended ratably and on an equal
consideration basis to the Investor and its Permitted Transferees in
respect of their holdings of Class B Common Stock, then within ten (10)
business days of the date of consummation of such tender offer, the Company
shall make an offer to purchase, for consideration equivalent to that paid
in such tender offer, a portion of the Class B Common Stock held by the
Investor and its Permitted Transferees equivalent to the portion of the
outstanding Common Stock purchased pursuant to such tender offer.
2.15. Assignment of Tender Protections. Notwithstanding Section 2.11,
the provisions in Sections 2.13 and 2.14 shall be automatically assigned
to, and shall be enforceable against the Company by, subsequent holders of
the shares of Class B Common Stock to be issued and sold hereunder, but
only for so long as there is no public market for the Class B Common Stock.
Section 3. Miscellaneous.
3.1. Successors and Assigns. The provisions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
permitted assigns of the parties hereto. Nothing in this Agreement, express
or implied, is intended to confer upon any party, other than the parties
hereto or their respective successors and permitted assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
Nothing contained herein shall be construed as permitting any transfer of
any securities of the Company in violation of any applicable law or
agreement.
3.2. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. The Investor and the
Company hereby submit to the nonexclusive jurisdiction of the United States
District Court for the Southern District of New York and of any New York
State court sitting in New York City for purposes of all legal proceedings
arising out of or relating to this Agreement and the transactions
contemplated hereby. The Investor and the Company irrevocably waive, to the
fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court
has been brought in an inconvenient forum.
3.3. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, and all of which together shall
constitute one and the same instrument.
3.4. Captions and Headings. The captions and headings used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
3.5. Notices. Unless otherwise provided, any notice or other
communication required or permitted to be given or effected under this
Agreement shall be in writing and shall be deemed effective upon
(i) personal or facsimile delivery to the party to be notified, (ii) one
business day after deposit with an internationally recognized courier
service, delivery fees prepaid, or (iii) three business days after deposit
with the U.S. mail, return-receipt requested, postage prepaid, and in each
case, addressed to the party to be notified at the following respective
addresses, or at such other addresses as may be designated by written
notice; provided that any notice of change of address shall be deemed
effective only upon receipt.
A-19
<PAGE>
If to the Company:
IDT Corporation
520 Broad Street
Newark, New Jersey 07102
Attn: Hal Brecher
Fax: (201) 928-2885
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attn: Robert S. Risoleo
Fax: (212) 558-1600
If to the Investor:
AT&T Corp.
295 North Maple Avenue
Basking Ridge, New Jersey 07920
Attn: Marilyn Wasser
Fax: (908) 221-6618
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019-6150
Attn: Seth A. Kaplan
Fax: (212) 403-2000
3.6. Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions
hereof may not be given, unless the Company has obtained written consent of
Holders owning in the aggregate 51% of the outstanding Registrable
Securities affected by such amendment, modification, supplement, waiver or
departure.
3.7. Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provisions shall be excluded
from this Agreement and the balance of this Agreement shall be interpreted
as if such provision were so excluded and shall be enforceable in
accordance with its terms.
3.8. Entire Agreement. This Agreement contains the entire understanding
of the parties hereto with respect to the subject matter contained herein,
and supersedes and cancels all prior agreements, negotiations,
correspondence, undertakings and communications of the parties, oral or
written, respecting such subject matter. There are no restrictions,
promises, representations, warranties, agreements or undertakings of any
party hereto with respect to the matters contemplated hereby, other than
those set forth herein or made hereunder.
3.9. Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES ITS RIGHTS TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS AGREEMENT, THE SERIES A COMMON OR THE SUBJECT MATTER HEREOF. THE SCOPE
OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF
THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY
CLAIMS. THIS SECTION 3.9 HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES
HERETO AND
A-20
<PAGE>
THESE PROVISIONS SHALL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO
HEREBY FURTHER WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS
WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, SUPPLEMENTS OR MODIFICATIONS TO (OR ASSIGNMENTS OF) THIS
AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL (WITHOUT A JURY) BY THE COURT.
[Signatures on the following page.]
A-21
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Lock-up and Registration
Rights Agreement as of the date first above written.
IDT CORPORATION
By: _________________________________
Name:
Title:
AT&T CORP.
By: _________________________________
Name:
Title:
A-22
<PAGE>
Exhibit B
CERTIFICATE OF AMENDMENT
TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF
IDT CORPORATION
(pursuant to Section 242 of the Delaware General Corporation Law)
IDT Corporation, a Delaware corporation, hereby certifies as follows:
1. The name of the corporation is IDT Corporation (hereinafter the
"Corporation").
2. The Corporation's Certificate of Incorporation was initially filed
with the Secretary of State of the State of Delaware on December 22, 1995
and a Restated Certificate of Incorporation was filed on February 7, 1996.
3. The Restated Certificate of Incorporation of the Corporation is
hereby amended by deleting the preamble of Article Fourth thereof and
replacing it with the following:
"FOURTH: The aggregate number of shares of all classes of capital
stock which the Corporation shall have the authority to issue is two
hundred and forty five million (245,000,000) shares, consisting of (a)
100,000,000 shares of common stock, par value $0.0l per share ("Common
Stock"), (b) 35,000,000 shares of Class A Common Stock, par value $0.01
per share (the "Class A Stock"), (c) 100,000,000 shares of Class B
Common Stock, par value $0.01 per share (the "Class B Stock", and
collectively, such Common Stock, Class A Stock and Class B Stock are
referred to herein as the "Common Shares"), and (d) 10,000,000 shares
of preferred stock, par value $0.01 per share ("Preferred Stock")."
4. The Restated Certificate of Incorporation of the Corporation is
hereby further amended by deleting Sections 1(h), 2(a), 2(b), 2(c) and 2(d)
of Article Fourth and replacing them with the following:
"1. Preferred Stock
(h) the limitations and restrictions, if any, to be effective while
any shares of such series are outstanding upon the payments of
dividends or the making of other distributions on, and upon the
purchase, redemption or other acquisition by the Corporation of, the
Common Stock, the Class A Stock, the Class B Stock or shares of stock
of any other class or any other series of this class;"
"2. Common Stock, Class A Stock and Class B Stock
(a) General. Except as hereinafter expressly set forth in Section 2,
and subject to the rights and preferences of the holders of Preferred
Stock at any time outstanding, the Class A Stock, Class B Stock and the
Common Stock, all of which are classes of common stock, shall have the
same rights and privileges and shall rank equally, share ratably and be
identical in respects as to all matters, including rights in
liquidation.
(b) Voting Rights. Except as otherwise provided in this Restated
Certificate of Incorporation or as expressly provided by law, and
subject to any voting rights provided to holders of Preferred Stock at
any time outstanding, the Common Shares have exclusive voting rights on
all matters requiring a vote of the Corporation.
The holders of Common Stock shall be entitled to one vote per share on
all matters to be voted on by the stockholders of the Corporation. The
holders of Class A Stock shall be entitled to three votes per share on all
matters to be voted on by the stockholders of the Corporation. The holders
of Class B Stock shall not be entitled to vote on any matter to be voted on
by the stockholders of the Corporation, including (without limitation) the
election of directors to the Board of Directors, except for such matters
where applicable law or regulation or quotation or listing obligation
requires that such holders be entitled to vote, in which case holders of
Class B Stock shall be entitled to one-tenth (1/10) of a vote per share.
A-23
<PAGE>
Except as otherwise provided in this Restated Certificate of
Incorporation or as required by law, and subject to any voting rights
provided to holders of Preferred Stock at any time outstanding, the holders
of shares of Class A Stock, the holders of Class B Stock and the holders of
shares of Common Stock shall vote together as one class on all matters
submitted to a vote of stockholders of the Corporation.
(c)(1) Dividends and Distributions. Subject to the rights of the
holders of Preferred Stock, and subject to any other provisions of this
Restated Certificate of Incorporation, as it may be amended from time
to time, holders of Class A Stock, holders of Class B Stock and holders
of Common Stock shall be entitled to receive such dividends and other
distributions in cash, in property or in shares of the Corporation as
may be declared thereon by the Board of Directors from time to time out
of assets or funds of the Corporation legally available therefor;
provided, however, that no cash, property or share dividend or
distribution may be declared or paid on the outstanding shares of
either the Class A Stock, the Class B Stock or the Common Stock unless
an identical per share dividend or distribution is simultaneously
declared and paid on the outstanding shares of the other such class of
common stock; provided, further, however, that a dividend of shares may
be declared and paid in Class A Stock to holders of Class A Stock, in
Class B Stock to holders of Class B Stock and in Common Stock to
holders of Common Stock if the number of shares paid per share to
holders of Class A Stock, to holders of Class B Stock and to holders of
Common Stock shall be the same. If the Corporation shall in any manner
subdivide, combine or reclassify the outstanding shares of Class A
Stock, Class B Stock or Common Stock, the outstanding shares of the
other classes of common stock shall be subdivided, combined or
reclassified proportionately in the same manner and on the same basis
as the outstanding shares of Class A Stock, Class B Stock or Common
Stock, as the case may be, have been subdivided, combined or
reclassified.
(2) Consideration in Merger and Similar Transactions. The
Corporation shall not be a party to a merger, recapitalization,
reclassification or similar transaction where the Corporation is not
the surviving entity or all of the outstanding Common Stock is
purchased or exchanged for or converted into a different security or
cash or other property, or any combination thereof (an "Extraordinary
Transaction"), unless the per share consideration received by holders
of Class B Stock in connection with the Extraordinary Transaction is
the same as the per share consideration received by the holders of
Common Stock in connection with the Extraordinary Transaction.
(d) Optional Conversion.
(1) The shares of Common Stock and Class B Stock are not convertible
into or exchangeable for shares of Class A Stock.
(2) Each share of Class A Stock may be converted, at any time and at
the option of the holder thereof, into one fully paid and nonassessable
share of Common Stock.
(3) Each share of Class B Stock may be converted, at any time and at
the option of the Corporation, into one fully paid nonassessable share
of Common Stock."
A-24
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment
to be executed on its behalf this . day of March, 2000.
IDT CORPORATION
By:__________________________________
Name:
Title:
A-25
<PAGE>
AMENDMENT TO OPTION AGREEMENT
AMENDMENT TO OPTION AGREEMENT, dated as of April 5, 2000 between IDT
Corporation, a Delaware corporation (the "Company"), and AT&T Corp., a New York
corporation (the "Investor").
WITNESSETH :
WHEREAS, the Company and the Investor entered into an option agreement (the
"Option Agreement"), dated as of March 3, 2000.
WHEREAS, the parties intend to amend the Option Agreement by replacing the
Form of Certificate of Amendment to the Restated Certificate of Incorporation
of IDT Corporation as set forth in Exhibit B to the Option Agreement, with the
Form of Certificate of Amendment to the Restated Certificate of Incorporation
of IDT Corporation as set forth in Exhibit A to the Lock-Up, Registration
Rights and Exchange Agreement (which is Exhibit A to the Subscription
Agreement, dated March 24, 2000, between the Company and Liberty Media
Corporation, a Delaware Corporation).
NOW, THEREFORE, in consideration of the premises the Company and the
Investor hereby agree as follows:
Section 1.
Form of Certificate of Amendment. The Form of Certificate of Amendment
to the Restated Certificate of Incorporation of IDT Corporation, appearing
as Exhibit B to the Option Agreement, is hereby replaced in its entirety in
the form set forth as Exhibit A hereto.
Section 2.
Option Agreement Remains in Effect. In all other respects, the Option
Agreement remains in full force and effect.
Section 3.
Counterparts. This Amendment may be executed and acknowledged in one or
more counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
A-26
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment to Option
Agreement as of the date first above written.
IDT CORPORATION
/s/ James A. Courter
By: _________________________________
Name: James A. Courter
Title: President & Vice Chairman
of the Board of Directors
AT&T CORP.
/s/ John C. Petrillo
By: _________________________________
Name: John C. Petrillo
Title: Executive Vice-President
A-27
<PAGE>
Exhibit A
CERTIFICATE OF AMENDMENT
TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF
IDT CORPORATION
(pursuant to Section 242 of the Delaware General Corporation Law)
IDT Corporation, a Delaware corporation, hereby certifies as follows:
1. The name of the corporation is IDT Corporation (hereinafter the
"Corporation").
2. The Corporation's Certificate of Incorporation was initially filed
with the Secretary of State of the State of Delaware on December 22, 1995
and a Restated Certificate of Incorporation was filed on February 7, 1996.
3. The Restated Certificate of Incorporation of the Corporation is
hereby amended by deleting the preamble of Article Fourth thereof and
replacing it with the following:
"FOURTH: The aggregate number of shares of all classes of capital
stock which the Corporation shall have the authority to issue is two
hundred and forty five million (245,000,000) shares, consisting of (a)
100,000,000 shares of common stock, par value $0.0l per share ("Common
Stock"), (b) 35,000,000 shares of Class A Common Stock, par value $0.01
per share (the "Class A Stock"), (c) 100,000,000 shares of Class B
Common Stock, par value $0.01 per share (the "Class B Stock", and
collectively, such Common Stock, Class A Stock and Class B Stock are
referred to herein as the "Common Shares"), and (d) 10,000,000 shares
of preferred stock, par value $0.01 per share ("Preferred Stock")."
4. The Restated Certificate of Incorporation of the Corporation is
hereby further amended by deleting Sections 1(h), 2(a), 2(b), 2(c), 2(d),
2(e)(6) and 2(f) of Article Fourth and replacing them with the following:
"1. Preferred Stock
(h) the limitations and restrictions, if any, to be effective while
any shares of such series are outstanding upon the payments of
dividends or the making of other distributions on, and upon the
purchase, redemption or other acquisition by the Corporation of, the
Common Stock, the Class A Stock, the Class B Stock or shares of stock
of any other class or any other series of this class;"
"2. Common Stock, Class A Stock and Class B Stock
(a) General. Except as hereinafter expressly set forth in Section 2,
and subject to the rights and preferences of the holders of Preferred
Stock at any time outstanding, the Class A Stock, Class B Stock and the
Common Stock, all of which are classes of common stock, shall have the
same rights and privileges and shall rank equally, share ratably and be
identical in respects as to all matters, including rights in
liquidation.
(b) Voting Rights. Except as otherwise provided in this Restated
Certificate of Incorporation or as expressly provided by law, and
subject to any voting rights provided to holders of Preferred Stock at
any time outstanding, the Common Shares have exclusive voting rights on
all matters requiring a vote of the Corporation.
The holders of Common Stock shall be entitled to one vote per share
on all matters to be voted on by the stockholders of the Corporation.
The holders of Class A Stock shall be entitled to three votes per share
on all matters to be voted on by the stockholders of the Corporation.
The holders of Class B Stock shall entitled to one-tenth (1/10) of a
vote per share on all matters to be voted on by the stockholders of the
Corporation.
A-28
<PAGE>
Except as otherwise provided in this Restated Certificate of
Incorporation or as required by law, and subject to any voting rights
provided to holders of Preferred Stock at any time outstanding, the
holders of shares of Class A Stock, the holders of shares of Class B
Stock and the holders of shares of Common Stock shall vote together as
one class on all matters submitted to a vote of stockholders of the
Corporation.
(c) (1) Dividends and Distributions. Subject to the rights of the
holders of Preferred Stock, and subject to any other provisions of this
Restated Certificate of Incorporation, as it may be amended from time
to time, holders of Class A Stock, holders of Class B Stock and holders
of Common Stock shall be entitled to receive such dividends and other
distributions in cash, in property or in shares of the Corporation as
may be declared thereon by the Board of Directors from time to time out
of assets or funds of the Corporation legally available therefor;
provided, however, that no cash, property or share dividend or
distribution may be declared or paid on the outstanding shares of any
of the Class A Stock, the Class B Stock or the Common Stock unless an
identical per share dividend or distribution is simultaneously declared
and paid on the outstanding shares of the other classes of common
stock; provided, further, however, that a dividend of shares may be
declared and paid in Class A Stock to holders of Class A Stock, in
Class B Stock to holders of Class B Stock and in Common Stock to
holders of Common Stock if the number of shares paid per share to
holders of Class A Stock, to holders of Class B Stock and to holders of
Common Stock shall be the same. If the Corporation shall in any manner
subdivide, combine or reclassify the outstanding shares of Class A
Stock, Class B Stock or Common Stock, the outstanding shares of the
other classes of common stock shall be subdivided, combined or
reclassified proportionately in the same manner and on the same basis
as the outstanding shares of Class A Stock, Class B Stock or Common
Stock, as the case may be, have been subdivided, combined or
reclassified.
(2) Consideration in Merger and Similar Transactions. The
Corporation shall not be a party to a merger, consolidation, binding
share exchange, recapitalization, reclassification or similar
transaction (whether or not the Corporation is the surviving or
resulting entity) (an "Extraordinary Transaction"), unless the per
share consideration, if any, that the holders of Common Stock and Class
B Stock receive in connection with such Extraordinary Transaction or
are entitled to elect to receive in such Extraordinary Transaction is
the same as the per share consideration that the holders of the other
of such classes of common stock are entitled to receive or elect to
receive in connection with the Extraordinary Transaction.
(d) Optional Conversion.
(1) The shares of Common Stock and Class B Stock are not convertible
into or exchangeable for shares of Class A Stock.
(2) Each share of Class A Stock may be converted, at any time and at
the option of the holder thereof, into one fully paid and nonassessable
share of Common Stock.
(3) Each share of Class B Stock may be converted, at any time and at
the option of the Corporation, into one fully paid nonassessable share
of Common Stock provided that all shares of Class B Stock are so
converted."
"(e) Mandatory Conversion.
(6) This Section 2(e) may not be amended without the affirmative
vote of holders of the majority of the shares of the Class A Stock, the
affirmative vote of holders of the majority of the shares of the Class
B Stock and the affirmative vote of holders of the majority of the
shares of the Common Stock, each voting separately as a class."
A-29
<PAGE>
"(f) Conversion Procedures.
(1) Each conversion of shares pursuant to Section 2(d) hereof will
be effected by the surrender of the certificate or certificates, duly
endorsed, representing the shares to be converted at the principal
office of the transfer agent of the Class A Stock, in the case of
conversion pursuant to Section 2(d)(2), or of the Class B Stock, in the
case of conversion pursuant to Section 2(d)(3), at any time during
normal business hours, together with a written notice by the holder
stating the number of shares that such holder desires to convert and
the names or name in which he wishes the certificate or certificates
for the Common Stock to be issued. Such conversion shall be deemed to
have been effected as of the close of business on the date on which
such certificate or certificates have been surrendered, and at such
time, the rights of any such holder with respect to the converted
shares of such holder will cease and the person or persons in whose
name or names the certificate or certificates for shares are to be
issued upon such conversion will be deemed to have become the holder or
holders of record of such shares represented thereby.
Promptly after such surrender, the Corporation will issue and
deliver in accordance with the surrendering holder's instructions the
certificate or certificates for the Common Stock issuable upon such
conversion and a certificate representing any Class A Stock, in the
case of conversion pursuant to Section 2(d)(2) which was represented by
the certificate or certificates delivered to the Corporation in
connection with such conversion, but which was not converted.
(2) The issuance of certificates upon conversion of shares pursuant
to Section 2(d) hereto will be made without charge to the holder or
holders of such shares for any issuance tax (except stock transfer tax)
in respect thereof or other costs incurred by the Corporation in
connection therewith.
(3) The Corporation shall at all times reserve and keep available
out of its authorized but unissued shares of Common Stock or its
treasury shares, solely for the purpose of issuance upon the conversion
of the Class A Stock and the Class B Stock, such number of shares of
Common Stock as may be issued upon conversion of all outstanding Class
A Stock and the Class B Stock.
(4) Shares of the Class A Stock and Class B Stock surrendered for
conversion as above provided or otherwise acquired by the Corporation
shall be cancelled according to law and shall not be reissued.
(5) All shares of Common Stock which may be issued upon conversion
of shares of Class A Stock and Class B Stock will, upon issue, be fully
paid and nonassessable."
5. The Restated Certificate of Incorporation of the Corporation is
hereby further amended by deleting the first sentence to Article Fifth and
replacing it with the following:
"FIFTH: The business and affairs of the Corporation shall be managed
by or under the direction of a Board of Directors consisting of not
less than three (3) and not more than seventeen (17) directors, the
exact number of which shall be fixed from time to time by the Board of
Directors."
A-30
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment
to be executed on its behalf this . day of . , 2000.
IDT CORPORATION
By: _________________________________
Name:
Title
A-31
<PAGE>
EXHIBIT B
SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT (this "Agreement"), dated as of March 24, 2000,
between IDT Corporation, a Delaware corporation (the "Company"), and Liberty
Media Corporation, a Delaware corporation ("LMC").
WHEREAS, LMC desires to purchase or cause its designee to purchase shares of
Common Stock, par value $0.01 per share, of the Company (the "Common Stock"),
and the Company desires to issue and sell shares of Common Stock to LMC or its
designee (which shall be a member of the Liberty Group (as defined herein)),
upon the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, the Company and the Investor hereby agree as follows:
Section 1. Subscription.
1.1 Subscription for Common Stock. Upon the terms and subject to the
conditions of this Agreement, the Company hereby agrees to issue and sell and
LMC hereby agrees to purchase or cause its designee to purchase (the applicable
purchaser being referred to herein as the "Investor") from the Company
3,775,000 shares of Common Stock (the "Investor Securities"), at a price of
$34.50 per share of Common Stock. The number of Investor Securities and the
purchase price per share will be appropriately adjusted to reflect the effect
of any stock splits, reverse stock splits, stock dividends and other similar
events affecting the Common Stock.
1.2 Issuance of Common Stock; Execution of Additional Agreements. At the
Closing (as defined below) upon the terms and subject to the conditions of this
Agreement:
(a) Against delivery of the share certificate(s) referred to in clause
(b) below, the Investor will pay to the Company cash in immediately
available funds in the amount representing the aggregate purchase price for
the number of Investor Securities purchased by it (the "Purchase Price") to
the bank account specified by the Company to Investor not later than two
business days prior to the date of the Closing.
(b) Against payment of the Purchase Price, the Company will issue and
deliver to the Investor a share certificate or certificates representing
the Investor Securities purchased hereunder by the Investor, which
certificate or certificates shall be registered in the Investor's name.
(c) The Company and the Investor shall execute and deliver the Lock-up,
Registration Rights and Exchange Agreement relating to the Investor
Securities substantially in the form attached as Exhibit A hereto (the
"Lock-up, Registration Rights and Exchange Agreement").
(d) The Investor and Howard S. Jonas shall execute and deliver the
Voting Agreement substantially in the form attached as Exhibit B hereto
(the "Voting Agreement").
1.3 Closing. The issuance and delivery of the Investor Securities by the
Company to the Investor and the delivery of the Purchase Price by the Investor
to the Company (the "Closing"), will take place at the offices of Sullivan &
Cromwell, 375 Park Avenue, New York, New York, at 10:00 A.M. on the business
day that is three (3) business days after the date on which the conditions set
forth in Section 4 have been fulfilled or, where permissible waived, or at such
other time and place as the Company and the Investor may agree orally or in
writing. "Business Day" for purposes of this Agreement means a day other than a
Saturday, Sunday or day on which banks in the City of New York are authorized
to close.
Section 2. Representations, Warranties and Acknowledgments of the
Investor. LMC hereby represents, warrants and acknowledges to the Company, as
follows:
2.1 No Registration of Investor Shares. The Investor is aware that the
Investor Securities have not been registered under the Securities Act of 1933,
as amended (the "Act"), that such offer and sale are intended to be exempt from
registration under the Act and the rules promulgated thereunder by the
Securities and Exchange
B-1
<PAGE>
Commission (the "SEC"), and that the Investor Securities cannot be offered,
sold, assigned, transferred, or otherwise disposed of unless they are
subsequently registered under the Act or an exemption from such registration is
available. The Investor is also aware that sales or transfers of the Investor
Securities are further restricted by state securities laws and the provisions
of the Lock-up, Registration Rights and Exchange Agreement and that the
certificates for the Investor Securities will bear appropriate legends
restricting their transfer pursuant to applicable laws and the Lock-up,
Registration Rights and Exchange Agreement.
2.2 Suitability of Investment. (a) The Investor is an "accredited investor"
within the meaning of Rule 501 of Regulation D of the Act as presently in
effect and is acquiring the Investor Securities for its own account, or for the
account of another "accredited investor" who is an affiliate of the Investor
and who can make all of the representations contained herein, for investment
purposes only and not with a view to the resale or distribution thereof;
(b) The Investor will not, directly or indirectly, offer, sell,
transfer, assign, exchange or otherwise dispose of all or any part of the
Investor Securities, except in accordance with applicable federal and state
securities laws, to the extent applicable, and the provisions of the Lock-
up, Registration Rights and Exchange Agreement.
(c) The Investor has such knowledge and experience in financial,
business and tax matters that the Investor is capable of evaluating the
merits and risks relating to the Investor's investment in the Investor
Securities and making an investment decision with respect to the Company;
(d) The Investor has been given the opportunity to obtain information
and documents relating to the Company and to ask questions of and receive
answers from representatives of the Company concerning the Company and the
investment in the Investor Securities;
(e) The Investor has such knowledge and experience in financial or
business matters that it can, and it has, adequately analyzed the risks of
an investment in the Investor Securities and it has determined the Investor
Securities are a suitable investment for the Investor and that the Investor
is able at this time, and in the foreseeable future, to bear the economic
risk of a total loss of its investment in the Company; and
(f) The Investor is aware that there are substantial risks incident to
an investment in the Investor Securities.
2.3 Corporate Authority. LMC has and prior to the Closing the Investor will
have all requisite corporate power and authority and has or will have taken all
corporate and other action necessary in order to execute, deliver and perform
its obligations under the applicable of this Agreement, the Lock-up,
Registration Rights and Exchange Agreement and the Voting Agreement
(collectively, the "Equity Documents") to which it is or will be a party. This
Agreement is and, upon the execution and delivery in accordance with the terms
of this Agreement, the Lock-up, Registration Rights and Exchange Agreement and
the Voting Agreement will be, valid and binding agreements of the applicable of
LMC or of the Investor enforceable against it in accordance with their
respective terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating
to or affecting creditors' rights and to general equity principles.
Section 3. Representations, Warranties and Acknowledgments of the
Company. The Company hereby represents, warrants and acknowledges to LMC and
the Investor on the date hereof and as of the Closing Date as follows:
3.1 Organization, Good Standing and Qualification . (a) Each of the Company
and each of its "significant subsidiaries" (each an "IDT Subsidiary") within
the meaning of Rule 1-02(w) of Regulation S-X promulgated by the SEC, is a
corporation duly organized, validly existing and in good standing under the
laws of its respective jurisdiction of organization and has all requisite
corporate or similar power and authority to own, lease and operate its
properties and assets and to carry on its business as currently conducted. Each
of the Company and each IDT Subsidiary is qualified to do business and is in
good standing as a foreign corporation
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in each jurisdiction where the ownership, lease or operation of its assets or
properties or conduct of its business requires such qualification, except where
the failure to be so qualified or in good standing, when taken together with
all other such failures, is not reasonably likely to have a Company Material
Adverse Effect (as defined below).
As used in this Agreement, the term "Company Material Adverse Effect" means
a material adverse effect on the financial condition, properties, assets,
business or results of operations of the Company and its subsidiaries taken as
a whole; provided, however, that any such effect resulting from any change that
affects companies in the telecommunications, Internet or Internet telephony
industries generally, shall not be considered when determining if a Company
Material Adverse Effect has occurred.
(b) All of the outstanding shares of capital stock of each IDT Subsidiary
beneficially owned by the Company have been validly issued and are fully paid
and nonassessable and are so owned free and clear of any mortgage, pledge,
lien, security interest, claim, restriction, charge or encumbrance of any kind
("Lien").
(c) The Company has delivered to LMC true and complete copies of the
Restated Certificate of Incorporation, as amended to date, and By-laws, as in
effect on the date hereof, of the Company and the equivalent governing
instruments of each of its subsidiaries any of the equity or debt securities of
which are publicly owned.
3.2 Corporate Authority. The Company has all requisite corporate power and
authority and has taken all corporate action necessary in order to execute,
deliver and perform its obligations under this Agreement and the Lock-up,
Registration Rights and Exchange Agreement and to consummate the transactions
contemplated hereby. The Company has duly executed and delivered this
Agreement, and at the Closing, the Company will have duly executed and
delivered the Lock-up, Registration Rights and Exchange Agreement. This
Agreement is and, upon the execution and delivery in accordance with the terms
of this Agreement, the Lock-up, Registration Rights and Exchange Agreement will
be, a valid and binding agreement of the Company enforceable against the
Company in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
3.3 Capital Structure. (a) The authorized capital stock of the Company
consists solely of 100,000,000 shares of Common Stock, $0.01 par value, of
which 24,231,999 shares were outstanding as of the close of business on the
date hereof, 35,000,000 shares of Class A Common Stock, $0.01 par value ("Class
A Stock"), of which 10,019,692 shares were outstanding as of the close of
business on the date hereof, and 10,000,000 shares of Preferred Stock, $0.01
par value, of which no shares are outstanding as of the close of business on
the date hereof. All of the outstanding shares of Common Stock and Class A
Stock have been duly authorized and are validly issued, fully paid and
nonassessable. The Investor Securities have been duly authorized and, when
issued, delivered and paid for in accordance with the terms of this Agreement,
will be validly issued, fully paid and nonassessable, and the issuance thereof
will not have been subject to any preemptive rights or made in violation of any
Applicable Law. The term "Applicable Law" for purposes of this Agreement means
(a) any foreign, United States Federal, state or local law, statute, rule,
regulation, order, writ, injunction, judgment, decree or permit of any
Governmental Entity (as defined in Section 5(d)) and (b) any rule or listing
requirement of any applicable national stock exchange or association or listing
requirement of any national stock exchange or association or SEC recognized
trading market on which securities issued by the Company or any of the IDT
Subsidiaries are listed or quoted.
(b) Except as set forth on Schedule 3.3, as of the date of this Agreement,
there are (i) no outstanding options, warrants, agreements, conversion rights,
exchange rights, preemptive rights or other rights (whether contingent or not)
to subscribe for, purchase or acquire any issued or unissued shares of capital
stock of the Company or any non public IDT Subsidiary, (ii) no authorized or
outstanding stock appreciation, phantom stock, profit participation, or similar
rights with respect to the Company or any non public IDT Subsidiary, (iii) no
rights, contracts, commitments or arrangements (contingent or otherwise)
obligating the Company or
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any IDT Subsidiary to either (A) redeem, purchase or otherwise acquire, or
offer to purchase, redeem, or otherwise acquire, any outstanding shares of, or
any outstanding warrants or rights of any kind to acquire any shares of, or any
outstanding securities that are convertible into or exchangeable for any shares
of, capital stock of the Company, or (B) pay any dividend or make any
distribution in respect of any shares of, or any outstanding securities that
are convertible or exchangeable for any shares of, capital stock of the
Company, (iv) no agreements or arrangements under which the Company or any non
public IDT Subsidiary is obligated to register the sale of any of its
securities under the Act (except as provided hereunder) and (v) no restrictions
upon, or Contracts (as defined in Section 5(e)) or understandings of the
Company or any subsidiary of the Company, or, to the knowledge of the Company,
Contracts or understandings of any other person, with respect to, the voting or
transfer of any shares of capital stock of the Company or any non public IDT
Subsidiary. Except as set forth on Schedule 3.3, there are no securities or
instruments containing antidilution or similar provisions that will be
triggered by the consummation of the transactions contemplated by the Equity
Documents (collectively, the "Transactions"). Except as set forth on Schedule
3.3, no party has any right of first refusal, right of first offer, right of
co-sale or other similar right regarding the Company's securities. Except as
set forth on Schedule 3.3, there are no provisions of the Restated Certificate
of Incorporation, as amended, or the By-laws of the Company, no agreements to
which the Company is a party and no agreements by which the Company or any IDT
Subsidiary are bound, that would (a) require the vote of the holders of more
than a majority of the voting power of the shares of the Company's issued and
outstanding Common Stock and Class A Stock, voting together as a single class,
to take or prevent any corporate action, other than those matters requiring a
class vote under the General Corporation Law of the State of Delaware (the
"DGCL"), or (b) entitle any party to nominate or elect any director of the
Company or require any of the Company's stockholders to vote for any such
nominee or other person as a director of the Company. As used in this
Agreement, the term "person" means any individual, partnership, corporation,
limited liability company, joint venture, association, joint-stock company
trust, unincorporated organization, government or agency or political
subdivision thereof, or other entity.
3.4 No Violation; Consents. (a) Subject to the filing and consents referred
to in Section 3.4(b), the execution, delivery and performance by the Company of
each of the applicable Equity Documents and the consummation by the Company of
the Transactions do not and will not contravene any Applicable Law, except for
any such contravention that would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect. The
execution, delivery and performance by the Company of each of the applicable
Equity Documents and the consummation of the Transactions (i) will not
(A) violate, result in a 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,
cancellation or acceleration) under any Contract to which the Company or any
IDT Subsidiary is a party or by which the Company or any IDT Subsidiary is
bound or to which any of their respective assets is subject, or (B) result in
the creation or imposition of any Lien upon any of the assets of the Company or
any IDT Subsidiary, except for any such violations, breaches, defaults or Liens
that would not, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect and (ii) will not conflict with or
violate any provision of the Restated Certificate of Incorporation or Bylaws of
the Company currently in effect or in effect as of the Closing.
(b) Except for (i) the filings by the Company, if any, required by the HSR
Act (as defined in Section 5(i)), (ii) applicable filings, if any, required by
applicable federal and state securities laws, and (iii) applicable filings, if
any, required by the Federal Communication Commission and state public utility
commissions which, in each case referred to in clauses (i)--(iii), shall be
made (or are not required to be made) on or prior to the Closing Date, and
except as contemplated by the Lock-up, Registration Rights and Exchange
Agreement, no consent, authorization or order of, or filing or registration
with, any Governmental Entity or other Person is required to be obtained or
made by the Company or the IDT Subsidiaries for the execution and delivery of
the Equity Documents or the consummation by the Company of the Transactions
except where the failure to obtain such consents, authorizations or orders, or
make such filings or registrations, would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect or
a material adverse effect on the ability of the Company to consummate the
Transactions.
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3.5 Company Reports; Financial Statements. (a) The Company has filed all
reports, registration statements and other filings, together with any
amendments or supplements required to be made with respect thereto, that it has
been required to file with the SEC under the Act and the Securities Exchange
Act of 1934, as amended (the "1934 Act"). As of the respective dates of their
filing with the SEC, the Company Reports complied in all material respects with
the applicable provisions of the Act and the 1934 Act and did not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements made therein, in the
light of the circumstances under which they were made, not misleading. All
reports, registration statements and other filings filed by the Company with
the SEC since June 30, 1998 (including exhibits and any amendments thereto and
documents incorporated by reference therein) are referred to in this Agreement
as the "Company Reports".
(b) Each of the consolidated balance sheets included in or incorporated by
reference into the Company Reports (including the related notes and schedules)
fairly presents, or will fairly present, the consolidated financial position of
the Company and its subsidiaries as of the date of such balance sheet and each
of the consolidated statements of income, changes in stockholders' equity, and
cash flows included in or incorporated by reference into the Company Reports
(including any related notes and schedules) fairly presents, or will fairly
present, the results of operations, cash flows, and changes in stockholders'
equity, as the case may be, of the Company and its subsidiaries for the periods
set forth in such statements (subject, in the case of unaudited statements, to
notes and normal year-end audit adjustments that will not be material in amount
or effect), and in each case has been prepared in accordance with generally
accepted accounting principles ("GAAP") consistently applied during the periods
involved, except as may be noted therein, and in compliance in all material
respects with the rules and regulations of the SEC.
3.6 Absence of Certain Changes. Except as disclosed in the Company Reports
filed and publicly available prior to the date hereof, since October 31, 1999
there has not been any event or occurrence or any change in the financial
condition, properties, business or results of operations of the Company that
has had or could reasonably be expected to have a Company Material Adverse
Effect.
3.7 Compliance with Laws. Except as set forth in the Company Reports filed
and publicly available prior to the date hereof, the business of the Company
has not been, and is not being, conducted in violation of any Federal, state,
local or foreign law, statute, ordinance, rule, regulation, judgment, order,
injunction, decree, arbitration award, agency requirement, license or permit of
any Governmental Entity, except for violations or possible violations that,
individually or in the aggregate, would not be reasonably expected to have a
Company Material Adverse Effect or prevent or materially burden or materially
impair the ability of the Company to consummate the Transactions. Except as set
forth in the Company Reports filed and publicly available prior to the date
hereof, no investigation or review by any Governmental Entity with respect to
the Company or the IDT Subsidiaries is pending or, to the knowledge of the
executive officers of the Company, threatened, nor has any Governmental Entity
indicated an intention to conduct the same, except for those the outcome of
which are not, individually or in the aggregate, reasonably likely to have a
Company Material Adverse Effect or prevent or materially burden or materially
impair the ability of the Company to consummate the Transactions.
3.8 Private Offering. Based, in part, on LMC's and Investor's
representations in Section 2, the offer and sale of the Investor Securities is
exempt from the registration and prospectus delivery requirements of the Act.
Neither the Company, nor anyone acting on behalf of it, has offered or sold or
will offer or sell any securities, or has taken or will take any other action
(including, without limitation, any offering of any securities of the Company
under circumstances that would require, under the Act, the integration of such
offering with the offering and sale of the Investor Securities), that would
subject the issuance of the Investor Securities to the registration provisions
of the Act.
3.9 Litigation. Except as disclosed in the Company Reports filed and
publicly available prior to the date hereof, there are not any (a) outstanding
judgments against or affecting the Company or any of the IDT Subsidiaries, or
(b) proceedings pending or, to the knowledge of the Company, threatened against
or affecting the Company or any of the IDT Subsidiaries that (i) in any manner
challenge or seek to prevent, enjoin, alter or materially delay the
Transactions or (ii) if resolved adversely to the Company or any IDT
Subsidiary, would have, individually or in the aggregate, a Company Material
Adverse Effect.
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3.10 Permits and Licenses. The Company and the IDT Subsidiaries have
obtained all governmental permits, licenses, franchises and authorizations
required for the Company and its subsidiaries to conduct their respective
businesses as currently conducted, except for those the failure of which to be
obtained would not have a Material Adverse Effect.
3.11 Intellectual Property, etc. The Company and the IDT Subsidiaries have
taken all reasonable efforts to ensure that they have, and have no reason to
believe that they do not have, all right, title and interest in, or a valid and
binding license to use, all Company Intellectual Property (as defined below).
The Company and the IDT Subsidiaries (i) have not defaulted in any material
respect under any license to use any Company Intellectual Property, (ii) are
not the subject of any proceeding or litigation for infringement of any third
party intellectual property, except for the proceedings disclosed in the
Company Reports filed and publicly available prior to the date hereof, which
proceedings the Company believes are without merit, (iii) have no knowledge of
circumstances that would be reasonably expected to give rise to any such
proceeding or litigation and (iv) have no knowledge of circumstances that are
causing or would be reasonably expected to cause the loss or impairment of any
Company Intellectual Property, other than a default, proceeding, litigation,
loss or impairment that is not having or would not be reasonably expected to
have, individually or in the aggregate, a Company Material Adverse Effect. The
Company and the IDT Subsidiaries have from time to time received correspondence
from third parties asserting intellectual property rights purportedly owned by
said third parties and allegedly violated by the Company or any of the IDT
Subsidiaries and have also received correspondence asserting that a license may
be necessary to avoid alleged violation of third party rights, none of which
assertions or allegations has had or would be reasonably expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
For purposes of this Agreement, "Company Intellectual Property" means
patents and patent rights, trademarks and trademark rights, tradenames and
tradename rights, service marks and service mark rights, copyrights and
copyright rights, trade secret and trade secret rights, and other intellectual
property rights, and all pending applications for and registrations of any of
the foregoing that are used in the conduct of the business of the Company or
the IDT Subsidiaries as presently conducted.
3.12 Business Combination Statutes. None of LMC, the Investor or any of
their respective "affiliates" and "associates" (as those terms are defined in
Section 203 of the DGCL or any comparable business combination statute of any
applicable jurisdiction) shall as a result of the execution of this Agreement
or consummation of the Transactions, be subject to any of the restrictions of
Section 203 of the DGCL or any similar provisions of Applicable Law with
respect to the Company or any of the Company's direct or indirect subsidiaries
any of the shares of which are publicly traded.
3.13 British Telecommunications. As of the date hereof, the Company and its
subsidiaries do not, directly or indirectly, beneficially own (within the
meaning of Rule 13d-3 promulgated under the 1934 Act) any shares of any class
of capital stock of British Telecommunications plc, a company organized under
the laws of England and Wales ("BT"), or any of its Subsidiaries, or any direct
or indirect rights or options to acquire (through purchase, exchange,
conversion or otherwise) any shares of any class of capital stock of BT or any
of its subsidiaries.
Section 4. Covenants.
4.1 Operation of Business. (a) From the date hereof until the Closing date,
the Company shall, and shall cause each of the IDT Subsidiaries to:
(i) operate its business in all material respects in the ordinary
course and in compliance with Applicable Laws;
(ii) not amend the Restated Certificate of Incorporation or Bylaws
of the Company, reclassify the Company's capital stock or declare, pay
or make any dividend or other distribution on its capital stock other
than (i) reclassifications of the Company's then outstanding capital
stock into Class B Common Stock or (ii) dividends or other
distributions on the Company's then outstanding capital stock payable
in the form of Class B Common Stock;
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(iii) not take any action, or knowingly omit to take any action,
that would, or that would reasonably be expected to, result in (A) any
of the representations and warranties of the Company set forth in
Section 3 (other than those representations and warranties in Section
3.3 that speak as of the date of this Agreement) becoming untrue or (B)
any of the conditions to the obligations of the Investor not being
satisfied; or
(iv) enter into any agreement or commitment to do any of the
foregoing.
(b) Without the consent of LMC, neither the Company nor any of its
subsidiaries will voluntarily acquire or agree to acquire (through purchase,
exchange, conversion or otherwise) beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the 1934 Act) of any shares of any class of
capital stock of BT or its Subsidiaries or any direct or indirect rights or
options to so acquire any shares of any class of capital stock of BT or any of
its subsidiaries.
4.2 Investor Director. For so long as members of the Liberty Group (as
defined below) in the aggregate own any combination of shares of Common Stock
and Class B Common Stock that, taken together, equal by number at least 50% of
the number of Investor Securities or, following the exchange thereof for Class
B Common Stock, 50% of the number of shares of Class B Common Stock issued in
exchange for the Investor Securities (in each case as appropriately adjusted to
reflect the effect of stock splits, stock dividends, reverse stock splits and
other similar events affecting the Common Stock or the Class B Common Stock),
the Investor shall be entitled to designate one member of the Company's Board
of Directors (the "Investor Director"). In the event the Investor is entitled
under this Section 4.2 to designate an Investor Director, the Investor shall so
notify the Company in writing and the Company shall (a) increase the size of
the Board of Directors by one and fill the vacancy created thereby by electing
an Investor Director and (b) in connection with the meeting of stockholders of
the Company next following such election, nominate an Investor Director for
election as a director by the stockholders and use its commercially reasonable
efforts to cause the Investor Director to be so elected. If the Investor is
entitled under this Section 4.2 to designate an Investor Director and a vacancy
shall exist in the office of the Investor Director, the Investor shall be
entitled to designate a successor and the Board of Directors shall elect such
successor and, in connection with the meeting of stockholders of the Company
next following such election, nominate such successor for election as director
by the stockholders and use its commercially reasonable efforts to cause the
successor to be elected.
As used in this Agreement, "Liberty Group" means Liberty and its Affiliates.
"Liberty" means LMC, provided that if substantially all of the assets of LMC
are at any time hereafter contributed to Liberty Media Group LLC, a Delaware
limited liability company, then from and after such contribution, Liberty shall
mean Liberty Media Group LLC. "Affiliate" has the meaning ascribed to such term
in Section 9.4.
4.3 Access to Books and Records. The Company shall afford to Investor, its
counsel and representatives full access upon reasonable notice during normal
business hours throughout the period prior to the Closing Date (or the earlier
termination of this Agreement) to all its properties, books, Contracts,
commitments and records (including, but not limited to, tax returns) and,
during such period, shall, upon request, furnish promptly to Investors (i) a
copy of each report, schedule and other document filed or received by it
pursuant to the requirements of Federal or state securities laws and (ii) all
other information concerning its business, properties and personnel as Investor
may reasonably request, provided that no investigation or receipt of
information pursuant to this Section 4.3 shall affect any representation or
warranty of the Company or the conditions to the obligations of the Investor.
4.4 Compliance with Conditions; Commercially Reasonable Efforts. (a) The
Company shall use all commercially reasonable efforts to cause all of the
obligations imposed upon it in this Agreement to be duly complied with, and to
cause the conditions precedent to the obligations of Investor to be satisfied.
Upon the terms and subject to the conditions of this Agreement, the Company
will use all commercially reasonable efforts to take, or cause to be taken, all
action, and to do, or cause to be done, all things necessary, proper or
advisable consistent with Applicable Law to consummate and make effective in
the most expeditious manner practicable the Transactions in accordance with the
terms of this Agreement. Nothing set forth in this Section 4.4 shall impose any
obligations with respect to any filing or approval under the HSR Act, which
requirements are the subject of Section 4.5.
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(b) LMC shall use all commercially reasonable efforts to cause all of the
obligations imposed upon it in this Agreement to be duly complied with, and to
cause the conditions precedent to the obligations of the Company to be
satisfied. Upon the terms and subject to the conditions of this Agreement, LMC
will use all commercially reasonable efforts to take, or cause to be taken, all
action, and to do, or cause to be done, all things necessary, proper or
advisable consistent with Applicable Law to consummate and make effective in
the most expeditious manner practicable the Transactions in accordance with the
terms of this Agreement. Nothing herein shall be construed to require LMC or
any of its Affiliates to divest or otherwise rearrange the composition of any
assets or agree to any conditions or requirements which are, or are reasonably
likely to be, materially adverse or burdensome to LMC or its Affiliates, as
applicable. Nothing set forth in this Section 4.4 shall impose any obligations
with respect to any filing or approval under the HSR Act, which requirements
are the subject of Section 4.5.
4.5 HSR Act Notification. (a) To the extent required by the HSR Act (as
defined in Section 5(i)), the Company shall, to the extent it has not already
done so, (i) use all commercially reasonable efforts to file or cause to be
filed, as promptly as practicable after the execution and delivery of this
Agreement, with the United States Federal Trade Commission and the Antitrust
Division of the United States Department of Justice, all reports and other
documents required to be filed by it under the HSR Act concerning the
Transactions and (ii) use all commercially reasonable efforts to promptly
comply with or cause to be complied with any requests by the United States
Federal Trade Commission or the Antitrust Division of the United States
Department of Justice for additional information concerning such Transactions,
in each case so that the waiting period applicable to this Agreement and the
Transactions under the HSR Act shall expire as soon as practicable after the
execution and delivery of this Agreement. The Company agrees to request, and to
cooperate with the Investor in requesting, early termination of any applicable
waiting period under the HSR Act.
(b) To the extent required by the HSR Act, LMC shall, if it has not already
done so, (i) use all commercially reasonable efforts to file or cause to be
filed, as promptly as practicable after the execution and delivery of this
Agreement, with the United States Federal Trade Commission and the Antitrust
Division of the United States Department of Justice, all reports and other
documents required to be filed by it under the HSR Act concerning the
transactions contemplated hereby and (ii) use all commercially reasonable
efforts to promptly comply with or cause to be complied with any requests by
the United States Federal Trade Commission or the Antitrust Division of the
United States Department of Justice for additional information concerning such
transactions in each case so that the waiting period applicable to this
Agreement and the transactions contemplated hereby under the HSR Act shall
expire as soon as practicable after the execution and delivery of this
Agreement. LMC agrees to request, and to cooperate with the Company in
requesting, early termination of any applicable waiting period under the HSR
Act.
4.6 Consents and Approvals. (a) The Company (i) shall use all commercially
reasonable efforts to obtain all necessary consents, waivers, authorizations
and approvals of all Governmental Entities and of all other persons required in
connection with the execution, delivery and performance by the Company of the
Equity Documents or the consummation of the Transactions and (ii) shall
diligently assist and cooperate with the Investor in preparing and filing all
documents required to be submitted by the Investor to any Governmental Entity
in connection with the Transactions (which assistance and cooperation shall
include, without limitation, timely furnishing, upon written requests, to the
Investor all information concerning the Company and the subsidiaries that
counsel to the Investor reasonably determines is required to be included in
such documents or would be helpful in obtaining any such required consent,
waiver, authorization or approval). Nothing herein shall be construed to
require the Company or any of its Affiliates to divest or otherwise rearrange
the composition of any assets or agree to any conditions or requirements which
are, or are reasonably likely to be, materially adverse or burdensome to the
Company or its Affiliates as applicable.
(b) LMC (i) shall use all commercially reasonable efforts to obtain all
necessary consents, waivers, authorizations and approvals of all Governmental
Entities other than as expressly set forth in Section 4.5(b) regarding the HSR
Act, and of all other persons required in connection with the execution,
delivery and performance by LMC of this Agreement or the consummation of the
Transactions and (ii) shall
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diligently assist and cooperate with the Company in preparing and filing all
documents required to be submitted by the Company to any Governmental Entity in
connection with such Transactions (which assistance and cooperation shall
include, without limitation, timely furnishing to the Company all information
concerning LMC that counsel to the Company reasonably determines is required to
be included in such documents or would be helpful in obtaining any such
required consent, waiver, authorization or approval). Nothing herein shall be
construed to require LMC or any of its Affiliates to divest or otherwise
rearrange the composition of any assets or agree to any conditions or
requirements which are, or are reasonably likely to be, materially adverse or
burdensome to LMC or its Affiliates, as applicable.
4.7 Use of Proceeds. The Company shall use the Purchase Price for payment of
expenses incurred in connection with the Transactions, capital expenditures
(including acquisitions), repayment of indebtedness and such other general
corporate purposes as the Board of Directors of the Company shall determine.
4.8 Listing of Shares. The Company shall use all commercially reasonable
efforts to cause the Investor Securities to be listed or otherwise eligible for
trading on the Nasdaq National Market System.
4.9 Confidentiality. Unless otherwise agreed to in writing by the Company,
LMC will, and will cause its affiliates, directors, officers, employees and
agents (such affiliates and other persons being collectively referred to as
LMC's "Representatives") to, (i) keep all Confidential Information of the
Company confidential and not disclose or reveal any such Confidential
Information to any person other than those Representatives who are
participating in effecting the transactions contemplated hereby or who
otherwise need to know such Confidential Information, (ii) use such
Confidential Information only in connection with consummating the transactions
contemplated hereby and enforcing LMC's and Investor's rights hereunder, and
(iii) not use Confidential Information in any manner detrimental to the
Company. In the event that LMC is requested pursuant to, or required by,
applicable law or regulation or by legal process to disclose any Confidential
Information of the Company, LMC will provide the Company with prompt notice of
such request(s) so that the Company may seek an appropriate protective order.
LMC's obligations hereunder with respect to Confidential Information that (i)
is disclosed to a third party with the Company's written approval, (ii) is
required to be produced under order of a court of competent jurisdiction or
other similar requirements of a governmental agency, or (iii) is required to be
disclosed by applicable law or regulation, will, subject in the case of clauses
(ii) and (iii) above to LMC's compliance with the preceding sentence, cease to
the extent of the disclosure so consented to or required, except to the extent
otherwise provided by the terms of such consent or covered by a protective
order. If LMC uses a degree of care to prevent disclosure of the Confidential
Information that is at least as great as the care it normally takes to preserve
its own information of a similar nature, it will not be liable for any
disclosure that occurs despite the exercise of that degree of care, and in no
event will LMC be liable for any indirect, punitive, special or consequential
damages unless such disclosure resulted from its willful misconduct or gross
negligence in which event it will be liable in damages for the Company's lost
profits resulting directly and solely from such disclosure. In the event this
Agreement is terminated, LMC will, if so requested by the Company, promptly
return or destroy all of the Confidential Information of the Company, including
all copies, reproductions, summaries, analyses or extracts thereof or based
thereon in the possession of LMC or its Representatives; provided, however,
that LMC will not be required to return or cause to be returned summaries,
analyses or extracts prepared by it or its Representatives, but will destroy
(or cause to be destroyed) the same upon request of the Company. The
confidentiality obligations of LMC contained in this Section 4.9 shall survive
until the third anniversary of the date of this Agreement.
For purposes of this Section 4.9, "Confidential Information" of the
Company means all confidential and proprietary information about the
Company and its subsidiaries that is furnished by it or its agents or
representatives to LMC or its Representatives, regardless of the manner in
which it is furnished. "Confidential Information" does not include,
however, information which (a) has been or in the future is published or is
now or in the future is otherwise in the public domain through no fault of
LMC or its Representatives, (b) was available to LMC or its Representatives
on a non-confidential basis prior to its disclosure by the disclosing
party, (c) becomes available to LMC or its Representatives on a non-
confidential basis from a person other than the Company or its
representatives or agents who is not
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otherwise bound by a confidentiality agreement with the Company or its
representatives or agents, or is not otherwise prohibited from transmitting
the information to LMC or its Representatives, or (d) is independently
developed by the Company or its Representatives through persons who have
not had, either directly or indirectly, access to or knowledge of such
information.
Section 5. Conditions to Obligations of the Investor. The obligation of LMC
to pay or cause the Investor to pay the Purchase Price for the Investor
Securities to the Company against delivery of the share certificate(s) therefor
at the Closing is absolute, subject to the fulfillment or waiver at or before
the Closing of each of the following conditions, any or all of which may be
waived by the Investor:
(a) Representations and Warranties. The representations and warranties
of the Company set forth in Section 3 hereof shall (i) have been true and
correct when made and (ii) (except with respect to representations and
warranties made in Section 3.3 that speak as of the date of this Agreement)
shall be (A) in the case of representations and warranties that are
qualified as to materiality or Company Material Adverse Effect, true and
correct and (B) in all other cases, true and correct in all material
respects, in the case of clauses (A) and (B), as of the Closing date with
the same force and effect as though made on and as of the Closing date.
(b) Covenants. The Company shall have performed in all material respects
all of its obligations and agreements and complied in all material respects
with all of its covenants contained in this Agreement to be performed and
complied with at or prior to the Closing date.
(c) Authorized Securities. The issuance of the Investor Securities shall
have been duly authorized, and upon payment of the Purchase Price by the
Investor and delivery of the Investor Securities by the Company, the
Investor Securities shall be validly issued, fully paid and nonassessable
and the issuance thereof shall not be subject to any preemptive rights.
(d) Governmental Filings. All notices, reports and other filings
required to be made by the Company with, and consents, registrations,
approvals, permits or authorizations required to be obtained by the Company
from, any governmental or regulatory authority, agency, commission, body or
other governmental entity or court ("Governmental Entity"), in connection
with the execution, delivery and performance of this Agreement and the
Lock-up, Registration Rights and Exchange Agreement by the Company and the
issuance and sale of the Investor Securities by the Company hereunder have
been made or obtained, except those that the failure to make or obtain are
not, individually or in the aggregate, reasonably likely to have a Company
Material Adverse Effect.
(e) No Violation. The execution, delivery and performance of this
Agreement and the Lock-up, Registration Rights and Exchange Agreement by
the Company and the issuance and sale of the Investor Securities by the
Company hereunder do not and will not constitute or result in (i) a breach
or violation of, or a default under, the Restated Certificate of
Incorporation or By-laws of the Company, (ii) a breach or violation of, or
a default under, the acceleration of any obligations or the creation of a
Lien on the assets of the Company (with or without notice, lapse of time or
both) pursuant to, any agreement, lease, license, contract, note, mortgage,
indenture, arrangement or other obligation ("Contracts") binding upon the
Company or any law or governmental or non-governmental permit or license to
which the Company is subject or (iii) any change in the rights or
obligations of any party under any of the Contracts, except, in the case of
clause (ii) or (iii) above, for any breach, violation, default,
acceleration, creation or change that, individually or in the aggregate, is
not reasonably likely to prevent, materially delay or materially impair the
ability of the Company to consummate the Transactions. No provision of any
Applicable Law, injunction, order or decree of any Governmental Entity
shall be in effect which has the effect of making the Transactions illegal
or shall otherwise restrain or prohibit the consummation of the
Transactions.
(f) Certificate. The Investor shall have received (i) a certificate,
dated as of the Closing Date, executed by an executive officer of the
Company and stating that, to the best knowledge of such executive officer,
the conditions set forth in clauses (a), (b), (c), (d) and (e) above have
been satisfied, (ii) a certificate of the secretary of the Company covering
such matters as are customarily covered by such certificates, and (iii) a
long form good standing certificate for the Company from the Delaware
Secretary of State.
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(g) Opinion of Counsel to the Company. Investor shall have received an
opinion of (x) Sullivan & Cromwell, counsel to the Company with respect to
the valid existence of the Company and due authorization and valid issuance
of the Investor Securities, and of (y) Joyce J. Mason, general counsel of
the Company, with respect to the matters set forth in Exhibit C, in each
case addressed to the Investor, dated the date of the Closing and in form
and substance reasonably satisfactory to the Investor.
(h) Lock-up, Registration Rights and Exchange Agreement. The Lock-up,
Registration Rights and Exchange Agreement shall have been duly executed
and delivered by the Company.
(i) HSR Act. All applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 ("HSR Act") with respect to the
Transactions shall have expired or been terminated and no litigation
arising therefrom shall have been commenced and remain outstanding.
(j) No Adverse Change. There shall not have occurred any event,
circumstance, condition, fact, effect or other matter which has had or
could reasonably be expected to have a material adverse effect (x) on the
business, assets, financial condition, or results of operations of the
Company and its subsidiaries taken as a whole or (y) on the ability of the
Company and its subsidiaries to perform on a timely basis any material
obligation under this Agreement or the other Equity Documents or to
consummate the Transactions contemplated hereby.
Section 6. Conditions to Obligations of the Company. The obligation of the
Company to deliver the Investor Securities to the Investor at the Closing
against payment of the Purchase Price is absolute, subject to the fulfillment
or waiver at or before the Closing of each of the following conditions, any or
all of which may be waived by the Company:
(a) Representations and Warranties. The representations and warranties
of the Investor set forth in Section 2 hereof shall have been true and
correct in all material respects as of the date of this Agreement (or as of
such other earlier date or dates as of which any such representation and
warranty may be expressly made).
(b) Governmental Filings. All notices, reports and other filings
required to be made by the Investor with, and consents, registrations,
approvals, permits or authorizations required to be obtained by the
Investor from a Governmental Entity, in connection with the execution and
delivery of this Agreement, the Lock-up, Registration Rights and Exchange
Agreement and the Voting Agreement by the Investor have been made or
obtained.
(c) No Violation. The execution, delivery and performance of this
Agreement, the Lock-up, Registration Rights and Exchange Agreement and the
Voting Agreement by the Investor do not and will not constitute or result
in (i) a breach or violation of, or a default under, the certificate of
incorporation or by-laws of the Investor, (ii) a breach or violation of, or
a default under, the acceleration of any obligations or the creation of a
Lien on the assets of the Investor (with or without notice, lapse of time
or both) pursuant to any Contracts binding upon the Investor or any law or
governmental or non-governmental permit or license to which the Investor is
subject or (iii) any change in the rights or obligations of any party under
any of such Contracts, except, in the case of clause (ii) or (iii) above,
for any breach, violation, default, acceleration, creation or change that,
individually or in the aggregate, is not reasonably likely to prevent,
materially delay or materially impair the ability of the Investor to
consummate the Transactions. No provision of any Applicable Law,
injunction, order or decree of any Governmental Entity shall be in effect
which has the effect of making the Transactions illegal or shall otherwise
restrain or prohibit the consummation of the Transactions.
(d) Certificate. The Company shall have received a certificate, dated as
of the Closing Date, executed by an executive officer of the Investor and
stating that, to the best knowledge of such executive officer, the
conditions set forth in clauses (a), (b) and (c) above have been satisfied.
(e) Lock-up, Registration Rights and Exchange Agreement. The Lock-up,
Registration Rights and Exchange Agreement has been executed and delivered
by the Investor.
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(f) Voting Agreement. The Voting Agreement has been executed and
delivered by the Investor.
Section 7. Transfer Limitations: 1933 Act Legend.
(a) Unless sold pursuant to an effective registration statement, each
certificate representing Securities shall bear a legend substantially in the
following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
UNLESS AND UNTIL SUCH SHARES ARE REGISTERED UNDER THE ACT OR, EXCEPT AS
OTHERWISE PERMITTED PURSUANT TO RULE 144 UNDER THE ACT OR ANOTHER EXEMPTION
FROM REGISTRATION UNDER THE ACT OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY IS OBTAINED TO THE EFFECT THAT SUCH
REGISTRATION IS NOT REQUIRED AND ARE SUBJECT TO TRANSFER RESTRICTIONS AS
SET FORTH IN A LOCK-UP, REGISTRATION RIGHTS AND EXCHANGE AGREEMENT, DATED
, 2000, COPIES OF WHICH MAY BE OBTAINED FROM THE COMPANY."
(b) The foregoing legend shall be removed from the certificates representing
any shares of Common Stock, at the request of the holder thereof, at such time
as (i) they are sold pursuant to an effective registration statement, (ii) they
become eligible for resale pursuant to Rule 144(k) or another provision of Rule
144 of the Act pursuant to which all or a portion of Securities could be sold
in a single transaction, or (iii) an opinion of counsel reasonably satisfactory
to the Company is obtained to the effect that the proposed transfer is exempt
from the Act; provided that in the case of clauses (ii) and (iii) the holder is
permitted to transfer the Securities pursuant to the Lock-up, Registration
Rights and Exchange Agreement. The portion of the legend referring to the Lock-
up, Registration Rights and Exchange Agreement shall be eliminated at such time
as Section 2.9 of that agreement ceases to be applicable.
Section 8. Indemnification.
8.1 Company Indemnification. The Company covenants and agrees to defend,
indemnify and save and hold harmless the Investor, together with its officers,
directors, partners, shareholders, employees, trustees, affiliates (within the
meaning of Rule 405 of the SEC under the Act), beneficial owners, attorneys and
representatives, from and against any and all losses, costs, expenses,
liabilities, claims or legal damages (including, without limitation, reasonable
fees and disbursements of counsel and accountants and other costs and expenses
incident to any actual or threatened claim, suit, action or proceeding, whether
incurred in connection with a claim against the Company or a third party claim)
(collectively, "Investor Losses") up to the amount equal to the Purchase Price
arising out of or resulting from:
(i) any inaccuracy in or breach of any representation, warranty,
covenant or agreement made by the Company in this Agreement or in any
writing delivered pursuant to this Agreement; or
(ii) the failure of the Company to perform or observe fully any
covenant, agreement or provision to be performed or observed by it pursuant
to this Agreement;
provided that the indemnity agreement contained in this 8.1 shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Company (which
consent shall not be unreasonably withheld).
8.2 Investor Indemnification. The Investor covenants and agrees to defend,
indemnify and save and hold harmless the Company, together with its officers,
directors, partners, shareholders, employees, trustees, affiliates (within the
meaning of Rule 405 of the SEC under the Act), attorneys and representatives,
from and against any and all losses, costs, expenses, liabilities, claims or
legal damages (including, without limitation, reasonable fees and disbursements
of counsel and accountants and other costs and expenses incident to any actual
or threatened claim, suit, action or proceeding, whether incurred in connection
with a claim against the Investor or a third party claim) (collectively,
"Company Losses"), up to the amount equal to the Purchase Price arising out of
or resulting from:
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(i) any inaccuracy in or breach of any representation, warranty,
covenant or agreement made by the Investor in this Agreement or in any
writing delivered pursuant to this Agreement; or
(ii) the failure of the Investor to perform or observe fully any
covenant, agreement or provision to be performed or observed by it pursuant
to this Agreement.
8.3 Procedure. Each party entitled to be indemnified pursuant to Section 8.1
and 8.2 (each, an "Indemnified Party") shall notify the other party in writing
of any action against such Indemnified Party in respect of which the other
party is or may be obligated to provide indemnification on account of Section
8.1 or 8.2, promptly after the receipt of notice. The omission of any
Indemnified Party so to notify the other party of any such action shall not
relieve such other party from any liability which it may have to such
Indemnified Party except to the extent the other party shall have been
materially prejudiced by the omission of such Indemnified Party so to notify
it, pursuant to this Section 8.3. In case any such action shall be brought
against any Indemnified Party and it shall notify the other party of the
commencement thereof, the other party shall be entitled to participate therein
and, to the extent that such other party may wish, to assume the defense
thereof, with counsel reasonably satisfactory to such Indemnified Party, and
after notice from it to such Indemnified Party of its election so to assume the
defense thereof, the other party will not be liable to such Indemnified Party
under Section 8.1 or 8.2 for any legal or other expense subsequently incurred
by such Indemnified Party in connection with the defense thereof nor for any
settlement thereof entered into without the consent of the other party;
provided, however, that (i) if the other party shall elect not to assume the
defense of such claim or action or (ii) if the Indemnified Party reasonably
determines (x) that there may be a conflict between the positions of the other
party and of the Indemnified Party in defending such claim or action or (y)
that there may be legal defenses available to such Indemnified Party different
from or in addition to those available to the other party, then separate
counsel for the Indemnified Party shall be entitled to participate in and
conduct the defense, in the case of (i) and (ii)(x), or such different
defenses, in the case of (ii)(y), and the other party shall be liable for any
reasonable legal or other expenses incurred by the Indemnified Party in
connection with the defense.
8.4 Indemnification Non-Exclusive. The foregoing indemnification provisions
are in addition to, and not in derogation of, any statutory, equitable or
common-law remedy any party may have for breach of representation, warranty,
covenant or agreement.
Section 9. Miscellaneous.
9.1 Survival of Representations and Warranties. The representations and
warranties set forth in Sections 2 and 3 hereof shall survive until the
eighteen month anniversary of the Closing, except that the third sentence of
Section 3.3(a) shall survive indefinitely.
9.2 Termination. (a) This Agreement may be terminated (i) at any time prior
to the Closing date by mutual written agreement of the Company and LMC, (ii) if
the Closing shall not have occurred on or prior to June 30, 2000 (the "Outside
Date"), by either the Company or LMC at any time after the Outside Date,
provided that if a necessary regulatory approval is pending or the waiting
period under the HSR Act has not expired by June 30, 2000, then the Outside
Date shall be extended until such approval is obtained or waiting period has
expired, but not beyond December 31, 2000, and provided, further, that the
right to terminate this Agreement under this clause (ii) shall not be available
to any party whose failure to fulfill any obligation under this Agreement was
the cause of or resulted in the failure of the Closing to occur on or before
such date, or (iii) if any Governmental Entity shall have issued a
nonappealable final order, decree or ruling or taken any other action having
the effect of permanently restraining, enjoining or otherwise prohibiting the
Transactions, by either the Company or LMC. Any party desiring to terminate
this Agreement shall promptly give notice of such termination to the other
party.
(b) If this Agreement is terminated, as permitted by Section 9.2(a), such
termination shall be without liability of any party (or any stockholder,
director, officer, partner, employee, agent, consultant or representative of
such party) to any other party to this Agreement; provided that if such
termination shall result from the
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willful (i) failure of any party to fulfill a condition to the performance of
the obligations of the other party, (ii) failure to perform a covenant made by
it in this Agreement or (iii) breach by any party hereto of any of its
representations or warranties contained herein, such failing or breaching party
shall be fully liable for any and all losses (excluding consequential damages)
incurred or suffered by the other party as a result of such failure or breach,
subject to the express limitations of Section 8. The provisions of Sections 8
and 9 shall survive any termination hereof.
9.3 Certain Limitations. The indemnification obligations of the parties
hereto with respect to claims asserted for any breach of a representation and
warranty set forth in Section 2 or 3 prior to expiration of the survival period
applicable to such representation or warranty shall survive until such claims
are finally adjudicated or otherwise resolved.
9.4 Successors and Assigns. This Agreement may not be assigned by the
Investor or the Company without the prior written consent of the other party
hereto and the attempted or purported assignment shall be void; provided,
however, that the Investor may, without written consent of the Company, assign
its rights and obligations hereunder to any of its Affiliates (provided that no
such assignment shall relieve the Investor of its responsibility for the
performance of the obligations hereunder and any such assignment shall be valid
only for the time and to the extent the assignee remains an Affiliate of the
Investor). Nothing in this Agreement, express or implied, is intended to confer
upon any party, other than the parties hereto or their respective successors
and permitted assigns, any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided in this Agreement.
As used in this Agreement, the term "Affiliates" shall mean, with respect to
any person or entity, any other person or entity directly or indirectly
controlling, controlled by or under common control with the first such person
or entity.
9.5 Governing Law; Submission to Jurisdiction. This Agreement shall be
governed by and construed in accordance with the internal laws of the State of
New York. Each of the Company and the Investor hereby submits to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York State court sitting in New York City
for purposes of all legal proceedings arising out of or relating to this
Agreement and the transactions contemplated hereby. Each of the Company and the
Investor irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of the venue of any
such proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum.
9.6 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, and all of which together shall be deemed to
constitute one and the same instrument.
9.7 Captions and Headings. The captions and headings used in this Agreement
are for convenience only and are not to be considered in construing or
interpreting this Agreement.
9.8 Notices. Unless otherwise provided, any notice or other communication
required or permitted to be given or effected under this Agreement shall be in
writing and shall be deemed effective upon personal or facsimile delivery to
the party to be notified or one business day after deposit with an
internationally recognized courier service, delivery fees prepaid, or three
business days after the deposit with the U.S. mail, return receipt requested,
postage prepaid, and in each case, addressed to the party to be notified at the
following respective addresses, or at such other addresses as may be designated
by written notice; provided that any notice of change of address shall be
deemed effective only upon receipt:
If to the Company, to it at:
520 Broad Street
Newark, New Jersey 07102
Attn: Hal Brecher
Fax: (201) 928-2885
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with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attn: Robert S. Risoleo
Fax: (212) 558-1600
If to the Investor, to it at:
9197 South Peoria Street
Englewood, Colorado 80112
Attn: Robert R. Bennett
Telephone: (720) 875-5400
Fax: (720) 875-5434
with copies to:
Liberty Media Corporation
9197 South Peoria Street
Englewood, Colorado 80112
Attn: Legal Department
Telephone: (720) 875-5400
Fax: (720) 875-5382
and
Baker Botts, L.L.P.
599 Lexington Avenue
New York, New York 10022
Attn: Elizabeth M. Markowski
Telephone: (212) 705-5000
Fax: (212) 705-5125
9.9 Amendments and Waivers. All terms of this Agreement may be amended, and
the observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively), only with
the written consent of each of the Company and LMC. Any amendment or waiver
effected in accordance with this Section 9.9 shall be binding upon Investor and
the other parties to this Agreement.
9.10 Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provisions shall be excluded from
this Agreement and the balance of this Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
9.11 Entire Agreement. This Agreement (and the Exhibits hereto) and the
Lock-up, Registration Rights and Exchange Agreement constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements, understandings and discussions between them.
9.12 Specific Enforcement. The parties hereto agree that irreparable harm
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with its specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof, this being in addition to any other remedy to
which they are entitled at law or in equity.
9.13 Expenses. All costs and expenses incurred in connection with this
Agreement shall be paid by the party incurring such cost or expense; provided,
however, that the Company and the Investor shall each pay one-half of the
filing fees in respect of any filings pursuant to the HSR Act.
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9.14 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES ITS RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT AND THE LOCK-UP, REGISTRATION RIGHTS AND CONVERSION RIGHTS AGREEMENT.
THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL
DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER
OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.
THIS SECTION 9.14 HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND
THESE PROVISIONS SHALL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO
HEREBY FURTHER WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES
ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, SUPPLEMENTS OR
MODIFICATIONS TO (OR ASSIGNMENTS OF) THIS AGREEMENT. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL
(WITHOUT A JURY) BY THE COURT.
[Signatures on the following page.]
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Subscription Agreement as
of the date first above written.
IDT CORPORATION
/s/ Howard S. Jonas
By:__________________________________
Name: Howard S. Jonas
Title: Chief Executive
LIBERTY MEDIA CORPORATION
/s/ Charles Y. Tanabe
By:__________________________________
Name: Charles Y. Tanabe
Title: Senior Vice President
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Exhibit A
LOCK-UP, REGISTRATION RIGHTS AND EXCHANGE AGREEMENT
LOCK-UP, REGISTRATION RIGHTS AND EXCHANGE AGREEMENT (this "Agreement"),
dated as of . , 2000, by and between IDT Corporation, a Delaware corporation
(the "Company"), and . a . corporation (the "Investor").
WHEREAS, the Company and Liberty Media Corporation, a Delaware
corporation ("LMC") have entered into a Subscription Agreement, dated as of
March . , 2000 (the "Subscription Agreement"), pursuant to which LMC has agreed
to purchase, or cause its designee to purchase, and the Company has agreed to
sell to LMC or its designee, shares (the "Investor Securities") of the Common
Stock, par value $0.01 per share, of the Company (the "Common Stock");
WHEREAS, Investor is LMC's designee for purposes of the Subscription
Agreement; and
WHEREAS, it is a condition to the consummation of the Subscription
Agreement that the Company and Investor enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
Section 1. Definitions. (a) For the purposes of this Agreement:
"Act" means the Securities Act of 1933, as amended.
"Affiliate" means, with respect to any person, any other person
directly or indirectly controlling, controlled by or under common control
with the first such person.
"Class B Common Stock" means the Class B Common Stock, par value
$0.01 per share, of the Company to be authorized pursuant to the Charter
Amendment referred to in Section 2.13.
"Closing" and "Closing Date" mean the date of the Closing, as such
term is defined in the Subscription Agreement.
"Holder" means a holder of Registrable Securities or, unless the
context otherwise requires, securities convertible into or exercisable for
Registrable Securities.
"Initially Issued Number" means the total number of Investor
Securities issued to the Investor at the Closing or, if applicable, the
total number of shares of Class B Common Stock issuable in exchange for all
of the Investor Securities if all of the initially issued Investor
Securities continued to be outstanding immediately prior to the Exchange
Date, in each case, as appropriately adjusted for stock splits, stock
dividends, reverse stock splits and other similar events affecting the
Common Stock or the Class B Common Stock.
"person" means any individual, partnership, corporation, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or agency or political subdivision
thereof, or other entity.
"register," "registered" and "registration" refer to a registration
effected by preparing and filing a registration statement in compliance
with the Act, and the declaration or ordering of effectiveness of such
registration statement.
"Registrable Securities" means the Investor Securities, or the shares of
Class B Common Stock for which the Investor Securities are exchanged in
accordance with Section 2.13 (collectively, the "Securities"); provided,
however, that such Securities shall cease to be Registrable Securities when
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<PAGE>
and to the extent that (i) such Securities have been sold pursuant to an
effective registration statement under the Act, (ii) such Securities have
become eligible for resale pursuant to Rule 144(k) of the Act (or any
similar provision then in force) or (iii) such Securities have ceased to be
outstanding.
(b) Capitalized terms used and not otherwise defined in this Agreement have
the meaning ascribed to them in the Subscription Agreement.
Section 2. Registration Rights.
2.1 (a) Registration Upon Demand. At any time on or after the first
anniversary of the Closing Date, one or more Holders that in the aggregate
beneficially own at least 20% of the Registrable Securities may make a demand
that the Company effect the registration of all or part of such Holders'
Registrable Securities (a "Demand Registration"). Upon receipt of a valid
request for a Demand Registration, the Company shall promptly, and in any event
no later than 15 days after such receipt, notify all other Holders of the
making of such demand and shall use its reasonable efforts to register under
the Act as expeditiously as may be practicable the Registrable Securities which
Holders have requested the Company to register in accordance with this Section
2.1. Notwithstanding the foregoing, the Company shall only be required to
effect a registration if the number of Registrable Securities that the Company
shall have been requested to register shall, in the aggregate, (i) represent at
least 20% of the Initially Issued Number or (ii) represent all of the
Registrable Securities then held by all Holders. The Holders shall together
have the right to two Demand Registrations pursuant to this Section 2.1(a),
provided, however, that no more than one such Demand Registration may be
requested in any 12 month period.
(b) Effective Registration Statement. A registration requested pursuant to
Section 2.1(a) hereof shall not be deemed to have been effected (i) if a
registration statement with respect thereto has not been declared effective by
the Securities and Exchange Commission ("SEC"), (ii) if after it has become
effective and prior to the date ninety (90) days after the effective date, such
registration is materially interfered with by any stop order, injunction or
similar order or requirement of the SEC or other governmental agency or court
for any reason not attributable to the fault of any of the Holders, or (iii)
the conditions to closing specified in the underwriting agreement, if any,
entered into in connection with such registration are not satisfied or waived,
other than by reason of a failure on the part of a Holder to perform its
obligations under such underwriting agreement.
(c) Piggyback Registration. If the Company proposes to file a registration
statement under the Act with respect to an offering of its equity securities
for its own account or for the account of another person or entity (other than
a registration statement on Form S-4 or S-8 (or any substitute forms that may
be adopted by the Commission)), the Company shall give written notice of such
proposed filing to the Holders at the address set forth in the share register
of the Company as soon as reasonably practicable (but in no event less than 7
business days before the anticipated filing date), undertaking to provide each
Holder the opportunity to register on the same terms and conditions such amount
of Registrable Securities as such Holder may request (a "Piggyback
Registration"). Each Holder will have 5 business days after receipt of any such
notice to notify the Company as to whether it wishes to participate in a
Piggyback Registration (which notice shall not be deemed to be a request for a
Demand Registration). If the registration statement is filed on behalf of a
person or entity other than the Company, the Company will use its reasonable
best efforts to have the Registrable Securities that the Holders wish to sell
included in the registration statement. If the Company or the person or entity
for whose account such offering is being made shall determine in its sole
discretion not to register or to delay the proposed offering, the Company may,
at its election, provide written notice of such determination to the Holders
and (i) in the case of a determination not to effect the proposed offering,
shall thereupon be relieved of the obligation to register such Registrable
Securities in connection therewith and (ii) in the case of a determination to
delay a proposed offering, shall thereupon be permitted to delay registering
such Registrable Securities for the same period as the delay in respect of the
proposed offering.
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If the Registrable Securities requested to be included in the Piggyback
Registration by any Holder differ from the type of securities proposed to be
registered by the Company and the managing underwriter for such offering
advises the Company that due to such differences the inclusion of such
Registrable Securities would cause a material adverse effect on the price of
the offering (a "Material Adverse Effect"), then (x) the number of such
Holders' Registrable Securities to be included in the Piggyback Registration
shall be reduced to an amount which, in the opinion of the managing
underwriter, would eliminate such Material Adverse Effect or (y) if no such
reduction would, in the opinion of the managing underwriter, eliminate such
Material Adverse Effect, then the Company shall have the right to exclude all
such Registrable Securities from such Piggyback Registration, provided, that no
other securities of such type are included and offered for the account of any
other Person in such Piggyback Registration. Any partial reduction in number of
Registrable Securities of any Holder to be included in the Piggyback
Registration pursuant to clause (x) of the immediately preceding sentence shall
be effected pro rata based on the ratio which such Holder's requested
securities bears to the total number of securities requested to be included in
such Piggyback Registration by all persons or entities other than the Company
who have the contractual right to request that their securities be included in
such registration statement and who have requested that their securities be
included. If the Registrable Securities requested to be included in the
registration statement are of the same type as the securities being registered
by the Company and the managing underwriter advises the Company that the
inclusion of such Registrable Securities would cause a Material Adverse Effect,
the Company will be obligated to include in such registration statement, as to
each Holder, only a portion of the Registrable Securities such Holder has
requested be registered equal to the ratio which such Holder's requested
securities bears to the total number of securities requested to be included in
such registration statement by all persons or entities (other than any persons
or entities initiating such registration request) who have the contractual
right to request that their securities be included in such registration
statement and who have requested their securities be included. If the Company
initiated the registration, then the Company may include all of its securities
in such registration statement before any such Holder's requested securities
are included. If another securityholder initiated the registration, then the
Company may not include any of its securities in such registration statement
unless all Registrable Securities requested to be included in the registration
statement by all Holders are included in such registration statement. If as a
result of the provisions of this Section 2.1(c) any Holder shall not be
entitled to include all Registrable Securities in a registration that such
Holder has requested to be so included, such Holder may withdraw such Holder's
request to include Registrable Securities in such registration statement prior
to its effectiveness.
2.2 Blackout Periods for Holders. If the board of directors of the Company
determines in good faith that the registration of Registrable Securities
pursuant to Section 2.1(a) hereof (or the use of a registration statement or
related prospectus) would be materially detrimental to the Company or its
shareholders because such filing would require disclosure of material non-
public information or would materially interfere with the Company's financing
plans, and therefore the board of directors determines that it is in the
Company's best interest to defer the filing of the registration statement, and
promptly gives the Holders written notice of such determination in the form of
a certificate signed by an executive officer of the Company following their
request to register any Registrable Securities pursuant to Section 2.1(a), the
Company shall be entitled to postpone the filing of the registration statement
otherwise required to be prepared and filed by the Company pursuant to Section
2.1(a) hereof for a reasonable period of time, but not to exceed 60 days (a
"Demand Blackout Period") after the date of such request, provided that the
Company's exercise of its rights under this Section 2.2 (i) shall not result in
Demand Blackout Periods for more than 180 days in any 365 day period, (ii)
shall not result in Demand Blackout Periods that are separated by less than 45
days and (iii) shall only be effective when and for so long as the officers and
directors of the Company and other holders, if any, of registration rights with
respect to the Company's securities are similarly restricted from buying or
selling securities of the Company and/or exercising their registration rights,
as applicable. The Company shall promptly notify each Holder of the expiration
or earlier termination of any Demand Blackout Period.
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<PAGE>
2.3 Obligations of the Company. Whenever the Company is required to effect
the registration of any Registrable Securities under this Section 2, the
Company shall, at its expense and as expeditiously as may be practicable:
(a) Prepare and file with the SEC a registration statement with respect
to such Registrable Securities and use its reasonable efforts to cause such
registration statement to become effective and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder,
use reasonable efforts to keep such registration statement effective for
not less than 120 days, unless all Registrable Securities included therein
are earlier sold.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of
applicable law with respect to the disposition of all of the Registrable
Securities covered by such registration statement.
(c) Use its best efforts to qualify such Registrable Securities (i) for
listing on the Nasdaq National Market or listing on the New York Stock
Exchange, Inc. or (ii) if neither such quotation system or exchange is
available for quotation or listing, for listing on a national securities
exchange selected by a majority in interest of the Holders of the
Registrable Securities being registered.
(d) Furnish to the Holders of Registrable Securities registering such
securities such numbers of copies of a prospectus, including a preliminary
prospectus (in the event of an underwritten offering), in conformity with
the requirements of applicable law, and such other documents as each such
Holder may reasonably request in order to facilitate the disposition of
Registrable Securities owned by it.
(e) Use reasonable efforts to register and qualify the securities
covered by such registration statement under state blue sky laws in any
U.S. jurisdictions in which such registration and qualification is
reasonably requested by any Holder; provided, that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such
jurisdictions.
(f) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and
customary form and substance as agreed to by the Company and the managing
underwriter of such offering.
(g) Promptly notify the Holders in writing: (i) when the registration
statement, the prospectus or any prospectus supplement related thereto or
post-effective amendment to the registration statement has been filed, and,
with respect to the registration statement or any post-effective amendment
thereto, when the same has become effective; (ii) of any request by the SEC
for amendments or supplements to the registration statement or related
prospectus or any written request by the SEC for additional information;
(iii) of the issuance by the SEC of any stop order suspending the
effectiveness of the registration statement or prospectus or any amendment
or supplement thereto or the initiation of any proceedings by any person
for that purpose, and promptly use its reasonable efforts to prevent the
issuance of any stop order or to obtain its withdrawal if such stop order
should be issued; and (iv) of the receipt by the Company of any written
notification with respect to the suspension of the qualification of any
Registrable Securities for sale in any jurisdiction or the initiation or
overt threat of any proceeding for such purpose.
(h) Notify the Holders in writing on a timely basis, at any time when a
prospectus relating to such Registrable Securities is required to be
delivered under applicable law, of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing and at the request of any such Holder promptly prepare and furnish
to such Holder a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the offerees of such securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not
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misleading in the light of the circumstances then existing. Upon receipt of
any notice of the occurrence of any event of the kind described in the
preceding sentence, each Holder will cease using such prospectus until
receipt by the Holders of the copies of such supplemented or amended
prospectus. If so requested by the Company, each Holder will deliver to the
Company any copies of such prospectus then in its possession (other than
one permanent file copy). If the Company shall give such notice, the
Company shall extend the period during which such registration statement
shall be maintained effective as provided in Section 2.3(a) hereof by the
number of days during the period from and including the date of the giving
of such notice to the date when the Company shall make available to the
Holders such supplemented or amended prospectus.
(i) Furnish, at the request of any Holder participating in the
registration, on the date that such Registrable Securities are delivered to
the underwriters for sale, if such securities are being sold through
underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to
such securities becomes effective, (i) an opinion, dated as of such date,
of the counsel representing the Company for the purposes of such
registration, in form and substance as if customarily given to underwriters
in an underwritten public offering and reasonably satisfactory to a
majority in interest of the Holders participating in the registration,
addressed to the underwriters, if any, and to the Holders participating in
the registration of Registrable Securities and (ii) a "Cold Comfort" letter
dated as of such date, from the independent certified public accountants to
the underwriters in an underwritten public offering and reasonably
satisfactory to a majority in interest of the Holders participating in the
registration, addressed to the board of directors of the Company, to the
underwriters, if any, and if permitted by applicable accounting standards,
to the Holders participating in the registration of Registrable Securities.
(j) Use reasonable efforts to cause the transfer agent to remove
restrictive legends on certificates representing the securities covered by
such registration statement, as the Company determines to be appropriate,
upon advice of counsel.
(k) Prepare and file with the SEC, promptly upon the request of any such
Holders, any amendments or supplements to such registration statement or
prospectus which, in the opinion of counsel for such Holders, is required
under the Act or the rules and regulations thereunder in connection with
the distribution of the Registrable Securities by such Holders.
(l) Make available for inspection by any Holder of such Registrable
Securities, any underwriter participating in any disposition pursuant to
such registration statement and any attorney, accountant or other agent
retained by any such Holder or underwriter (collectively, the
"Inspectors"), all pertinent financial and other records, pertinent
corporate documents and properties of the Company (collectively, the
"Records"), as shall be reasonably necessary to enable them to exercise
their due diligence responsibility, and cause the Company's officers,
directors and employees to supply all information (together with the
Records, the "Information") reasonably requested by any such Inspector in
connection with such registration statement. Any of the Information that
the Company determines in good faith to be confidential, and of which
determination the Inspectors are so notified, shall not be disclosed by the
Inspectors unless (i) the release of such Information is ordered pursuant
to a subpoena or other order from a court of competent jurisdiction, (ii)
such Information has been made generally available to the public, (iii) as
necessary to enforce a Holder's rights under this Agreement or (iv) such
Holder of Registrable Securities requiring such information agrees to enter
into a confidentiality agreement in customary form and subject to customary
exceptions. Each Holder of Registrable Securities shall be responsible for
any breach of the foregoing covenant by any Inspector retained by or on
behalf of such Holder. The Holder of Registrable Securities, agrees that it
will, upon learning that disclosure of such Information is sought in a
court of competent jurisdiction, give notice to the Company and allow the
Company, at the Company's expense, to undertake appropriate action to
prevent disclosure of the Information deemed confidential and the
Inspectors shall not disclose such Information until such action is
determined.
(m) Provide a CUSIP number for the Registrable Securities included in
any registration statement not later than the effective date of such
registration statement.
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<PAGE>
(n) Cooperate with each selling Holder and each underwriter
participating in the disposition of such Registrable Securities and their
respective counsel in connection with any filings required to be made with
the National Association of Securities Dealers, Inc.
(o) During the period when the prospectus is required to be delivered
under the Act, promptly file all documents required to be filed with the
SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "1934 Act").
(p) Make generally available to its securityholders, as soon as
reasonably practicable, an earnings statement covering a period of 12
months, beginning within three months after the effective date of the
registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Act and the rules and regulations of the
SEC thereunder
(q) Provide a transfer agent and registrar (which may be the same entity
and which may be the Company) for such Registrable Securities.
(r) Use its reasonable efforts to take all other steps necessary to
effect the registration of such Registrable Securities pursuant to the
terms contemplated hereby.
2.4 Furnish Information.
(a) It shall be a condition precedent to the obligation of the Company
to include any Registrable Securities of any Holder in a registration statement
pursuant to this Section 2 that the Holder shall furnish to the Company such
information regarding itself, the Registrable Securities held by it, any other
securities of the Company held by it, and the intended method of disposition of
such Registrable Securities as shall be required to effect the registration of
the Registrable Securities held by such Holder. Any such information shall be
provided to the Company within any reasonable time period requested by the
Company.
(b) Each Holder shall notify the Company, at any time when a prospectus
is required to be delivered under applicable law, of the happening of any event
as a result of which the prospectus included in the applicable registration
statement, as then in effect, in each case only with respect to information
provided by such Holder, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing. Such Holder shall immediately upon the happening of any such event
cease using such prospectus. Any other Holders shall cease using such
prospectus immediately upon receipt of notice from the Company to that effect.
If so requested by the Company, each Holder shall promptly return to the
Company any copies of such prospectus in its possession (other than one
permanent file copy). The Company shall promptly prepare and furnish to each
such Holder a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter delivered to the
offerees of such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing.
2.5 Expenses of Registration. The Company shall bear and pay all reasonable
expenses incurred in connection with any registration, filing or qualification
of Registrable Securities pursuant to this Section 2, including (without
limitation) all registration, filing and qualification fees, printers' and
accounting fees, but excluding underwriting discounts and commissions relating
to the Registrable Securities. The Company also shall be required to pay and
bear the reasonable legal fees of not more than one counsel for the Holders in
an amount not to exceed $50,000 in connection with any registration.
2.6 Underwriting Requirements. In connection with any underwritten offering
of a Holder's Registrable Securities, the Company shall not be required under
Section 2.3 to register any of such Registrable Securities in connection with
such underwritten offering unless the Company consents to the underwriters
selected by the Holders participating in the registration (which consent shall
not be unreasonably withheld) and the Company
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<PAGE>
shall be required to register Registrable Securities only in such quantity as
the lead managing underwriter determines, in its good faith discretion, will
not jeopardize the success of the offering by the Company. To the extent that
the lead managing underwriter will not permit the registration of all of the
Registrable Securities sought to be registered, in the case of a registration
pursuant to Section 2.1(a), the Registrable Securities to be included shall be
apportioned among the Holders on a pro rata basis (based on the number of
Securities proposed to be registered by each); provided, however, that the
right of the underwriters to exclude Registrable Securities from the
registration and underwriting as described above shall be restricted such that
all securities that are not Registrable Securities and all securities that are
held by persons who are employees or directors of the Company (or any
subsidiary of the Company) shall first be excluded from such registration and
underwriting before any Registrable Securities are so excluded. Those
Registrable Securities and other securities that are excluded from the
underwriting by reason of the managing underwriter's marketing limitation and
all other Registrable Securities not originally requested to be so included
shall not be included in such registration and shall be withheld from the
market by the Holders thereof for a period, not to exceed 90 days, which the
managing underwriter reasonably determines necessary to effect the underwritten
public offering. No Holder of Registrable Securities shall be entitled to
participate in an underwritten offering unless such Holder enters into, and
performs its obligations under, one or more underwriting agreements and any
related agreements and documents (which may include an escrow agreement and/or
a power of attorney with respect to the disposition of the Registrable
Securities), in the form that such Holder shall agree to with the lead managing
underwriter of the transaction. If any Holder disapproves of the terms of any
underwriting, it may elect, prior to the execution of any underwriting
agreement, to withdraw therefrom by written notice to the Company and the lead
managing underwriter.
2.7 Delay of Registration. No Holder shall have any right to obtain or seek
an injunction restraining or otherwise delaying any registration as the result
of any controversy that might arise with respect to the interpretation or
implementation of this Section 2.
2.8 Indemnification. In the event any Registrable Securities are included in
a registration statement under this Section 2:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each Holder and each person, if any, who controls such Holder
within the meaning of the Act and the 1934 Act and their respective
directors, officers, partners, stockholders, members, employees, agents and
representatives and each person, if any, who controls such Holder within
the meaning of the Act and the 1934 Act (each, an "Indemnified Person"),
against any losses, claims, damages, or liabilities joint or several) to
which they may become subject insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of, are based upon or
relate to (collectively, a "Violation") (x) any untrue statement or alleged
untrue statement of a material fact contained in such registration
statement, including any preliminary or final prospectus contained therein
or any amendments or supplements thereto or (y) the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; or (z) any
violation by the Company of the Act, the 1934 Act, any state securities law
or any rule or regulation promulgated under the Act, the 1934 Act or any
state securities law in connection with the offering covered by any
registration statement; and the Company will pay to each Indemnified Person
any reasonable legal or other expenses incurred by it in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided that the indemnity agreement contained in this Section
2.8(a) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without
the consent of the Company (which consent shall not be unreasonably
withheld), nor shall the Company be liable in any such case for any such
loss, claim, damage, liability or action to the extent that it arises out
of or is based upon a Violation which occurs in reliance upon and in strict
conformity with written information furnished by a Holder expressly for use
in connection with such registration or is caused by any failure by the
Holder to deliver a prospectus or preliminary prospectus (or amendment or
supplement thereto) as and when required under the Act after such
prospectus has been timely furnished by the Company.
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<PAGE>
(b) To the extent permitted by law, each Holder will indemnify and hold
harmless the Company, each of its directors, each of its officers who has
signed the registration statement, and each person, if any, who controls
the Company within the meaning of the Act or the 1934 Act (each, an
"Indemnified Person"), against any losses, claims, damages or liabilities
(joint or several) to which any of the foregoing persons may become
subject, insofar as such losses, claims, damages or liabilities (or actions
in respect thereto) arise out of or are based upon any Violation, in each
case to the extent (and only to the extent) that such Violation is caused
by (x) any untrue statement or alleged untrue statement contained in, or by
any omission or alleged omission from, information furnished in writing to
the Company by the Holder specifically and expressly for use in any such
registration statement or prospectus but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged
omission was so made in reliance upon and in strict conformity with written
information furnished by such Holder specifically for use in the
preparation thereof or (y) any failure by the Holder to deliver a
prospectus or preliminary prospectus (or amendment or supplement thereto)
as and when required under the Securities Act after such prospectus has
been timely filed by the Company. Such Holder will pay any reasonable legal
or other expenses incurred by any Indemnified Person pursuant to this
Section 2.8(b) in connection with investigating or defending any such loss,
claim, damage, liability or action; provided that the indemnity agreement
contained in this Section 2.8(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent
shall not be unreasonably withheld; provided, further, that in no event
shall any indemnity under this Section 2.8(b) exceed the net proceeds from
the offering received by such Holder upon its sale of Registrable
Securities included in the registration statement.
(c) Promptly after receipt by an Indemnified Person under this Section
2.8 of notice of the commencement of any action (including any governmental
action), such Indemnified Person will, if a claim in respect thereof is to
be made against any indemnifying party under this Section 2.8, deliver to
the indemnifying party a written notice of the commencement thereof, and
the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with
counsel mutually satisfactory to the indemnifying parties; provided that an
Indemnified Person shall have the right to retain separate counsel, and the
reasonable fees and expenses of such counsel shall be paid by the
indemnifying party if representation of such Indemnified Person by the
counsel retained by the indemnifying party would be inappropriate (in the
opinion of the Indemnified Person) due to actual or potential differing
interests between such Indemnified Person and any other party represented
by such counsel in such proceeding, provided that the indemnifying party in
such event shall not be responsible for the fees of more than one separate
firm of attorneys (in addition to any local counsel) for all Indemnified
Persons that may be represented without conflict by one counsel. The
failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action, if materially
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the Indemnified Person under this
Section 2.8, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to
any Indemnified Person otherwise than under this Section 2.8.
(d) If the indemnification provided for in this Section 2.8 is held by a
court of competent jurisdiction to be unavailable to an Indemnified Person
with respect to any losses, claims, damages or liabilities referred to
herein, the indemnifying party, in lieu of indemnifying such Indemnified
Person hereunder, agrees to contribute to the amount paid or payable by
such Indemnified Person as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and of the Indemnified
Person on the other in connection with the Violation(s) that resulted in
such loss, claim, damage or liability, as well as any other relevant
equitable considerations. The relative fault of the indemnifying party and
of the Indemnified Person shall be determined by a court of law by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact
relates to information supplied by the indemnifying party or by the
Indemnified Person and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. No person found guilty of
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<PAGE>
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution hereunder from any person who was
not guilty of such fraudulent misrepresentation. In no event shall a
Holder's obligation to contribute pursuant to this Section 2.8(d) exceed
the net proceeds from the offering received by such Holder upon its sale of
Registrable Securities included in the registration statement.
(e) The obligations of the Company and the Holders under this Section
2.8 shall survive the completion of any offering of Registrable Securities
under a registration statement pursuant to this Section 2.
2.9 Lock-up and Permitted Transfers. At any time prior to the first
anniversary of the Closing Date, Investor shall not offer, sell, contract to
sell or otherwise dispose of any of the Investor Securities or any interest
therein without the written consent of the Company; provided, however, that the
Investor without the Company's consent shall be permitted (a) to transfer all
or part of the Investor Securities (i) to the Company, as contemplated by
Section 2.12 or otherwise; (ii) to any other member of the Liberty Group (a
"Permitted Transferee"), provided that such member agrees with the Company to
be bound hereby with the same effect as if it were named herein in lieu of the
Investor; and (iii) in any transaction in which holders of Common Stock
generally participate or have the opportunity to participate pro rata,
including, without limitation, a merger, consolidation or binding share
exchange involving the Company or a tender or exchange offer for shares of the
Company's capital stock; and (b) to pledge the Investor Securities to secure
bona fide indebtedness, provided that the transferee in the event of
foreclosure agrees with the Company to be bound hereby with the same effect as
if it were named herein in lieu of the Investor. Without limiting any other
remedy that may be available to the Company, failure of the Investor or any
Permitted Transferee to comply with the provisions of this Section 2.9 shall
result in termination of the Company's obligations under Section 2.1 of this
Agreement with respect to the affected Investor Securities.
2.10 Assignment of Registration Rights. The rights to cause the Company to
register Registrable Securities pursuant to this Section 2 may be assigned by a
Holder to a transferee of Registrable Securities (other than a competitor of
the Company or any of its subsidiaries, except that neither AT&T Corp. nor any
of its Affiliates shall be deemed a competitor for this purpose), provided
that, in the case of a transfer prior to the first anniversary of the Closing
Date, such transferee is a Permitted Transferee; and provided, further, that
(i) the transferor shall, within ten (10) days after such transfer, furnish to
the Company written notice of the name and address of such transferee or
assignee and the securities with respect to which such registration rights are
being assigned and (ii) such transferee shall agree with the Company in writing
to be subject to the terms and conditions of this Agreement to the extent then
applicable. No other assignment of the Investor's or any Holder's rights
hereunder shall be permitted, and the attempted or purported assignment in
violation of this provision shall be void.
2.11 Rule 144 Reporting. With a view to making available to the Holders the
benefits of certain rules and regulations of the SEC that permit the sale of
the Registrable Securities to the public without registration, the Company
agrees to use its best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in SEC Rule 144 or any similar or analogous rule
promulgated under the Act, at all times;
(b) File with the SEC, in a timely manner, all reports and other
documents required to be filed by the Company under the Act and the 1934
Act; and
(c) So long as a Holder owns any Registrable Securities, furnish such
Holder upon request a written statement by the Company as to its compliance
with the reporting requirements of SEC Rule 144 or any similar or analogous
rule promulgated under the Act, and of the 1934 Act, a copy of the most
recent annual or quarterly report of the Company and such other reports and
documents as a Holder may reasonably request in availing itself of any rule
or regulation of the SEC allowing it to sell any such securities without
registration.
B-26
<PAGE>
2.12 Exchange. (a) The Company shall use its best efforts to ensure that no
later than the first anniversary of the Closing Date it shall have complied
with its covenant set forth in Section 2.13 and issued, registered, qualified
under applicable state securities laws, and caused to be listed or quoted on
the applicable of the Nasdaq National Market or The New York Stock Exchange or
such other national securities exchange or national securities association as
is the then principal market on which the Common Stock is listed or quoted, an
aggregate number of shares of Class B Common Stock at least equal to the number
of shares of Common Stock then listed or quoted on such market ("Equivalent
Float"). The date as of which the Equivalent Float is first achieved is
referred to as the "Trigger Date" . The Company shall notify the Investor of
the Trigger Date promptly and in any event within 2 business days after its
occurrence.
(b) The Investor Securities shall be exchanged for shares of Class B Common
Stock at the Exchange Rate (as defined below) effective immediately prior to
the close of business on the trading day (the "Automatic Exchange Date")
immediately following the expiration of the period of 60 consecutive trading
days commencing with the Trigger Date, provided that such exchange shall not be
effected unless the Trigger Date occurs on or prior to the first anniversary of
the Closing. At any time following the first anniversary of the Closing, but
subject to the Trigger Date having occurred and not earlier than the 30th
trading day following the Trigger Date, the Investor may deliver a written
notice to the Company requesting it to exchange its Investor Securities for
shares of Class B Common Stock at the Exchange Rate, in which event such
exchange shall be effected immediately prior to the close of business on the
trading day (the "Elective Exchange Date", and together with the Automatic
Exchange Date if the Trigger Date occurs prior to the first anniversary of the
Closing, the "Exchange Date") immediately following the expiration of the
period of 30 consecutive trading days commencing with the trading day on which
such notice from the Investor is given to the Company.
(c) On the Exchange Date or as soon as possible thereafter, the Investor
shall surrender the certificate or certificates for the Investor Securities,
duly endorsed or assigned to the Company or in blank, at the Company's address
for notices as specified in Section 3.5. The Investor Securities shall be
deemed to have been exchanged immediately prior to the close of business on the
Exchange Date in accordance with the foregoing provisions, and the person or
persons entitled to receive the Class B Common Stock issuable upon such
exchange shall be treated for all purposes as the recordholder or holders of
such Class B Common Stock at such time.
(d) As promptly as practicable on or after the Exchange Date, the Company
shall issue and deliver at such office a certificate or certificates for the
number of full shares of Class B Common Stock issuable upon such exchange based
on the Exchange Rate, as defined below, together with a cash payment in lieu of
any fraction of a share of Class B Common Stock (based on the same fraction of
the price determined pursuant to clause (y) of the definition of Exchange Rate
below), to the person or persons entitled to receive the same.
The "Exchange Rate" shall be the number of shares of Class B Common Stock to
be delivered in exchange for each share of Common Stock surrendered by the
Investor. The Exchange Rate shall be equal to the number obtained by dividing
(x) the Average Market Price per share of Common Stock for the 30 consecutive
trading days ending on the trading day immediately preceding the Exchange Date
by (y) the Average Market Price per share of Class B Common Stock for the 30
consecutive trading days ending on the trading day immediately preceding the
Exchange Date. "Average Market Price" of a share of Common Stock or Class B
Common Stock, as applicable, means the average (rounded to the nearest
1/10,000) of the volume weighted averages (rounded to the nearest 1/10,000) of
the trading prices of the applicable security on the principal market on which
shares of the applicable security are then listed or quoted (whether the Nasdaq
National Market, The New York Stock Exchange or another national securities
exchange or association) as reported by Bloomberg Financial Markets (or such
other source as the Investor and the Company shall agree) for the relevant 30
trading day period.
(e) The Company shall not declare a dividend or make a distribution on, or
reclassify, subdivide or combine, the Class B Common Stock or the Common Stock
or take any other action with respect to the Class B Common Stock or the Common
Stock of the kind that would typically require an adjustment to the conversion
price or conversion rate of a convertible security, if the "ex" date, record
date, payment date or
B-27
<PAGE>
effective date for such event would occur during the period during which the
Exchange Rate is established, and will not effect repurchases of Class B Common
Stock or Common Stock in the market, or announce its intention to effect
repurchases of any such securities, during such period. The Investor will not
effect market purchases of the Common Stock or Class B Common Stock during the
period the Exchange Rate is established, provided, in the case of the period
related to the Automatic Exchange Date, that it has been notified of the
occurrence of the Trigger Date.
2.13 Amendment to Restated Certificate of Incorporation. As soon as
practicable after the execution of this Agreement, the Company and its Board of
Directors shall:
(a) Take all action necessary in accordance with applicable law, the
Company's Restated Certificate of Incorporation and the Company's By-laws
to obtain the requisite approval of the Company's stockholders for the
adoption of the Certificate of Amendment to the Company's Restated
Certificate of Incorporation (the "Charter Amendment"), in the form annexed
hereto as Exhibit A, which shall be authorized by the Board of Directors
to, among other things, establish the terms of the Class B Common Stock;
and
(b) File the Charter Amendment with the Secretary of State of the State
of Delaware.
Section 3. Miscellaneous.
3.1 Successors and Assigns. The provisions of this Agreement shall inure to
the benefit of and be binding upon the respective successors and permitted
assigns of the parties hereto. Nothing in this Agreement, express or implied,
is intended to confer upon any party, other than the parties hereto or their
respective successors and permitted assigns, any rights, remedies, obligations
or liabilities under or by reason of this Agreement. Nothing contained herein
shall be construed as permitting any transfer of any securities of the Company
in violation of any applicable law or agreement.
3.2 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York. The Investor and
the Company hereby submit to the nonexclusive jurisdiction of the United States
District Court for the Southern District of New York and of any New York State
court sitting in New York City for purposes of all legal proceedings arising
out of or relating to this Agreement and the transactions contemplated hereby.
The Investor and the Company irrevocably waive, to the fullest extent permitted
by law, any objection which it may now or hereafter have to the laying of the
venue of any such proceeding brought in such a court and any claim that any
such proceeding brought in such a court has been brought in an inconvenient
forum.
3.3 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, and all of which together shall constitute
one and the same instrument.
3.4 Captions and Headings. The captions and headings used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
3.5 Notices. Unless otherwise provided, any notice or other communication
required or permitted to be given or effected under this Agreement shall be in
writing and shall be deemed effective upon (i) personal or facsimile delivery
to the party to be notified, (ii) one business day after deposit with an
internationally recognized courier service, delivery fees prepaid, or (iii)
three business days after deposit with the U.S. mail, return-receipt requested,
postage prepaid, and in each case, addressed to the party to be notified at the
following respective addresses, or at such other addresses as may be designated
by written notice; provided that any notice of change of address shall be
deemed effective only upon receipt.
B-28
<PAGE>
If to the Company:
IDT Corporation
520 Broad Street
Newark, New Jersey 07102
Attn: Hal Brecher
Fax: (201) 928-2885
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attn: Robert S. Risoleo
Fax: (212) 558-1600
If to the Investor:
.
9197 South Peoria Street
Englewood, Colorado
Attn: Robert R. Bennett
Telephone: (720) 875-5400
Fax: (720) 875-5434
with copies to:
Liberty Media Corporation
9197 South Peoria Street
Englewood, Colorado 80112
Attn: Legal Department
Telephone: (720) 875-5400
Fax: (720) 875-5382
and
Baker Botts, L.L.P.
599 Lexington Avenue
New York, New York 10022
Attn: Elizabeth M. Markowski
Telephone: (212) 705-5000
Fax: (212) 705-5125
3.6 Amendments and Waivers. The provisions of Sections 2.9, 2.12 and 2.13 of
this Agreement and the provisions of this sentence may be amended, and the
observance of any such provision may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of each of the Company and the Investor. The remaining
provisions of this Agreement, including the provisions of this sentence, may
not be amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given, unless the Company has obtained
written consent of Holders owning in the aggregate at least 51% of the
outstanding Registrable Securities affected by such amendment, modification,
supplement, waiver or departure.
3.7 Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provisions shall be excluded from this
Agreement and the balance of this Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
B-29
<PAGE>
3.8 Entire Agreement. This Agreement (together with the agreements
referenced herein) contains the entire understanding of the parties hereto with
respect to the subject matter contained herein, and supersedes and cancels all
prior agreements, negotiations, correspondence, undertakings and communications
of the parties, oral or written, respecting such subject matter. There are no
restrictions, promises, representations, warranties, agreements or undertakings
of any party hereto with respect to the matters contemplated hereby, other than
those set forth herein or made hereunder.
3.9 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES ITS RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, THE SECURITIES OR THE SUBJECT MATTER HEREOF. THE SCOPE OF THIS
WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE
FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION,
INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION 3.9 HAS
BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS SHALL
NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER WARRANTS AND
REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND
THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING
THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, SUPPLEMENTS OR MODIFICATIONS TO (OR
ASSIGNMENTS OF) THIS AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY
BE FILED AS A WRITTEN CONSENT TO A TRIAL (WITHOUT A JURY) BY THE COURT.
[Signatures on the following page.]
B-30
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Lock-up, Registration
Rights and Exchange Agreement as of the date first above written.
IDT CORPORATION
By:
__________________________________
Name:
Title:
.
By:
__________________________________
Name:
Title:
B-31
<PAGE>
EXHIBIT A
FORM OF CERTIFICATE OF AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION
OF IDT CORPORATION
(pursuant to Section 242 of the Delaware General Corporation Law)
IDT Corporation, a Delaware corporation, hereby certifies as follows:
1. The name of the corporation is IDT Corporation (hereinafter the
"Corporation").
2. The Corporation's Certificate of Incorporation was initially filed
with the Secretary of State of the State of Delaware on December 22, 1995
and a Restated Certificate of Incorporation was filed on February 7, 1996.
3. The Restated Certificate of Incorporation of the Corporation is
hereby amended by deleting the preamble of Article Fourth thereof and
replacing it with the following:
"FOURTH: The aggregate number of shares of all classes of capital
stock which the Corporation shall have the authority to issue is two
hundred and forty five million (245,000,000) shares, consisting of (a)
100,000,000 shares of common stock, par value $0.0l per share ("Common
Stock"), (b) 35,000,000 shares of Class A Common Stock, par value $0.01
per share (the "Class A Stock"), (c) 100,000,000 shares of Class B
Common Stock, par value $0.01 per share (the "Class B Stock", and
collectively, such Common Stock, Class A Stock and Class B Stock are
referred to herein as the "Common Shares"), and (d) 10,000,000 shares
of preferred stock, par value $0.01 per share ("Preferred Stock").
4. The Restated Certificate of Incorporation of the Corporation is
hereby further amended by deleting Sections 1(h), 2(a), 2(b), 2(c), 2(d),
2(e)(6) and 2(f) of Article Fourth and replacing them with the following:
"1. Preferred Stock
(h) the limitations and restrictions, if any, to be effective while
any shares of such series are outstanding upon the payments of
dividends or the making of other distributions on, and upon the
purchase, redemption or other acquisition by the Corporation of, the
Common Stock, the Class A Stock, the Class B Stock or shares of
stock of any other class or any other series of this class;"
"2. Common Stock, Class A Stock and Class B Stock
(a) General. Except as hereinafter expressly set forth in Section 2,
and subject to the rights and preferences of the holders of
Preferred Stock at any time outstanding, the Class A Stock, Class B
Stock and the Common Stock, all of which are classes of common
stock, shall have the same rights and privileges and shall rank
equally, share ratably and be identical in respects as to all
matters, including rights in liquidation.
(b) Voting Rights. Except as otherwise provided in this Restated
Certificate of Incorporation or as expressly provided by law, and
subject to any voting rights provided to holders of Preferred Stock
at any time outstanding, the Common Shares have exclusive voting
rights on all matters requiring a vote of the Corporation.
The holders of Common Stock shall be entitled to one vote per share
on all matters to be voted on by the stockholders of the
Corporation. The holders of Class A Stock shall be entitled to three
votes per share on all matters to be voted on by the stockholders of
the Corporation. The holders of Class B Stock shall entitled to one-
tenth (1/10) of a vote per share on all matters to be voted on by
the stockholders of the Corporation.
B-32
<PAGE>
Except as otherwise provided in this Restated Certificate of
Incorporation or as required by law, and subject to any voting
rights provided to holders of Preferred Stock at any time
outstanding, the holders of shares of Class A Stock, the holders of
shares of Class B Stock and the holders of shares of Common Stock
shall vote together as one class on all matters submitted to a vote
of stockholders of the Corporation.
(c) (1) Dividends and Distributions. Subject to the rights of the
holders of Preferred Stock, and subject to any other provisions of
this Restated Certificate of Incorporation, as it may be amended
from time to time, holders of Class A Stock, holders of Class B
Stock and holders of Common Stock shall be entitled to receive such
dividends and other distributions in cash, in property or in shares
of the Corporation as may be declared thereon by the Board of
Directors from time to time out of assets or funds of the
Corporation legally available therefor; provided, however, that no
cash, property or share dividend or distribution may be declared or
paid on the outstanding shares of any of the Class A Stock, the
Class B Stock or the Common Stock unless an identical per share
dividend or distribution is simultaneously declared and paid on the
outstanding shares of the other classes of common stock; provided,
further, however, that a dividend of shares may be declared and paid
in Class A Stock to holders of Class A Stock, in Class B Stock to
holders of Class B Stock and in Common Stock to holders of Common
Stock if the number of shares paid per share to holders of Class A
Stock, to holders of Class B Stock and to holders of Common Stock
shall be the same. If the Corporation shall in any manner subdivide,
combine or reclassify the outstanding shares of Class A Stock, Class
B Stock or Common Stock, the outstanding shares of the other classes
of common stock shall be subdivided, combined or reclassified
proportionately in the same manner and on the same basis as the
outstanding shares of Class A Stock, Class B Stock or Common Stock,
as the case may be, have been subdivided, combined or reclassified.
(2) Consideration in Merger and Similar Transactions. The
Corporation shall not be a party to a merger, consolidation, binding
share exchange, recapitalization, reclassification or similar
transaction (whether or not the Corporation is the surviving or
resulting entity) (an "Extraordinary Transaction"), unless the per
share consideration, if any, that the holders of Common Stock and
Class B Stock receive in connection with such Extraordinary
Transaction or are entitled to elect to receive in such
Extraordinary Transaction is the same as the per share consideration
that the holders of the other of such classes of common stock are
entitled to receive or elect to receive in connection with the
Extraordinary Transaction.
(d) Optional Conversion.
(1) The shares of Common Stock and Class B Stock are not
convertible into or exchangeable for shares of Class A Stock.
(2) Each share of Class A Stock may be converted, at any time and
at the option of the holder thereof, into one fully paid and
nonassessable share of Common Stock.
(3) Each share of Class B Stock may be converted, at any time and
at the option of the Corporation, into one fully paid nonassessable
share of Common Stock provided that all shares of Class B Stock are
so converted."
"(e) Mandatory Conversion.
(6) This Section 2(e) may not be amended without the affirmative
vote of holders of the majority of the shares of the Class A
Stock, the affirmative vote of holders of the majority of the
shares of the Class B Stock and the affirmative vote of holders
of the majority of the shares of the Common Stock, each voting
separately as a class."
"(f) Conversion Procedures.
(1) Each conversion of shares pursuant to Section 2(d) hereof
will be effected by the surrender of the certificate or
certificates, duly endorsed, representing the shares to be converted
at the principal office of the transfer agent of the Class A Stock,
in the case of conversion
B-33
<PAGE>
pursuant to Section 2(d)(2), or of the Class B Stock, in the case of
conversion pursuant to Section 2(d)(3), at any time during normal
business hours, together with a written notice by the holder stating
the number of shares that such holder desires to convert and the
names or name in which he wishes the certificate or certificates for
the Common Stock to be issued. Such conversion shall be deemed to
have been effected as of the close of business on the date on which
such certificate or certificates have been surrendered, and at such
time, the rights of any such holder with respect to the converted
shares of such holder will cease and the person or persons in whose
name or names the certificate or certificates for shares are to be
issued upon such conversion will be deemed to have become the holder
or holders of record of such shares represented thereby.
Promptly after such surrender, the Corporation will issue and
deliver in accordance with the surrendering holder's instructions
the certificate or certificates for the Common Stock issuable upon
such conversion and a certificate representing any Class A Stock, in
the case of conversion pursuant to Section 2(d)(2) which was
represented by the certificate or certificates delivered to the
Corporation in connection with such conversion, but which was not
converted.
(2) The issuance of certificates upon conversion of shares
pursuant to Section 2(d) hereto will be made without charge to the
holder or holders of such shares for any issuance tax (except stock
transfer tax) in respect thereof or other costs incurred by the
Corporation in connection therewith.
(3) The Corporation shall at all times reserve and keep available
out of its authorized but unissued shares of Common Stock or its
treasury shares, solely for the purpose of issuance upon the
conversion of the Class A Stock and the Class B Stock, such number
of shares of Common Stock as may be issued upon conversion of all
outstanding Class A Stock and the Class B Stock.
(4) Shares of the Class A Stock and Class B Stock surrendered for
conversion as above provided or otherwise acquired by the
Corporation shall be cancelled according to law and shall not be
reissued.
(5) All shares of Common Stock which may be issued upon
conversion of shares of Class A Stock and Class B Stock will, upon
issue, be fully paid and nonassessable."
5. The Restated Certificate of Incorporation of the Corporation is
hereby further amended by deleting the first sentence to Article Fifth and
replacing it with the following:
"FIFTH: The business and affairs of the Corporation shall be managed
by or under the direction of a Board of Directors consisting of not
less than three (3) and not more than seventeen (17) directors, the
exact number of which shall be fixed from time to time by the Board of
Directors."
B-34
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be executed on its behalf this day of , 2000.
IDT CORPORATION
By___________________________________
Name:
Title:
B-35
<PAGE>
Exhibit B
FORM OF VOTING AGREEMENT
VOTING AGREEMENT (this "Agreement"), dated as of ., 2000, between Howard
S. Jonas (the "Stockholder"), and ., a . corporation (the "Investor").
WHEREAS, IDT Corporation, a Delaware corporation (the "Company") and
Liberty Media Corporation, a Delaware corporation ("LMC") have entered into a
Subscription Agreement, dated as of March ., 2000, (the "Subscription
Agreement"), pursuant to which LMC has agreed to purchase, or cause its
designee to purchase, and the Company has agreed to sell to LMC or its
designee, 3,775,000 shares (the "Investor Securities") of the Company's Common
Stock, par value $0.01 per share (the "Common Stock"); and
WHEREAS, Investor is LMC's designee for purposes of the Subscription
Agreement; and
WHEREAS, the Stockholder is a principal stockholder of the Company; and
WHEREAS, it is a condition to the consummation of the Subscription
Agreement that the Stockholder and the Investor enter into this Agreement; and
WHEREAS, capitalized terms used and not otherwise defined herein shall
have the respective meanings ascribed thereto in the Subscription Agreement.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
Section 1. Representations, Warranties and Acknowledgments of the
Investor. The Investor hereby represents, warrants and acknowledges to the
Stockholder, as follows:
1.1 Ownership of Securities. The Investor will, upon purchasing the
Investor Securities, be the record and beneficial owner of the Investor
Securities. Upon purchasing the Investor Securities, the Investor will
have sole voting power, sole power to issue instructions with respect
to the voting and sole power of disposition, in each case with respect
to all of the Investor Securities.
1.2 Power; Binding Agreement. The Investor has the legal capacity,
power and authority to enter into and perform all its obligations under
this Agreement. The execution, delivery and performance of this
Agreement by the Investor will not violate any other agreement relating
to the Investor Securities to which the Investor is a party, including,
without limitation, any voting agreement, shareholders' agreement,
partnership agreement or voting trust. This Agreement has been duly
authorized and duly and validly executed and delivered by the Investor
and constitutes a valid and binding agreement of the Investor,
enforceable against it in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
Section 2. Representations, Warranties and Acknowledgments of the
Stockholder. The Stockholder hereby represents, warrants and acknowledges
to the Investor, as follows:
2.1 Ownership of Securities. The Stockholder is the record and
beneficial owner of the number of shares of Class A Common Stock, par
value $0.01 per share, of the Company (the "Class A Common Stock") and
Common Stock set forth on the signature page to this Agreement
(collectively, the "Stockholder Securities"). The Stockholder does not
beneficially or of record own any securities of the Company on the date
hereof other than the Stockholder Securities. The Stockholder has sole
voting power, sole power to issue instructions with respect to the
voting and sole power of disposition, in each case with respect to all
of the Stockholder Securities.
B-36
<PAGE>
2.2 Power; Binding Agreement. The Stockholder has the legal
capacity, power and authority to enter into and perform all his
obligations under this Agreement. The execution, delivery and
performance of this Agreement by the Stockholder will not violate any
other agreement relating to the Stockholder Securities to which the
Stockholder is a party, including, without limitation, any voting
agreement, shareholders' agreement, partnership agreement or voting
trust. This Agreement has been duly authorized and duly and validly
executed and delivered by the Stockholder and constitutes a valid and
binding agreement of the Stockholder, enforceable against him in
accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to
general equity principles.
Section 3. Agreement to Vote Investor Securities. Until the first to
occur of (x) the first anniversary of the date of the Closing and (y) the
date on which the Investor Securities are exchanged in full for shares of
Class B Common Stock, par value $0.01 per share, of the Company ("Class B
Common Stock") in accordance with the Lock-up, Registration Rights and
Exchange Agreement, except as provided in the following sentence and
subject to Stockholder's compliance with his obligations herein, the
Investor shall, at any meeting of the stockholders of the Company or in any
written consent in lieu thereof, vote the Investor Securities in the same
manner as the Stockholder votes the Stockholder Securities, as notified by
Stockholder to the Investor not less than two Business Days prior to the
date of such stockholder meeting or action by written consent.
Notwithstanding the foregoing, without regard to the manner in which the
Stockholder votes the Stockholder Securities, (a) Investor shall be
entitled to vote the Investor Securities in favor of, or give its written
consent to, an amendment to the Company's Restated Certificate of
Incorporation substantially in the form annexed as Exhibit A to the Lock-
up, Registration Rights and Exchange Agreement, (the "Charter Amendment"),
(b) Investor shall be entitled to vote the Investor Securities for or
against or abstain from voting, or give or withhold its consent, in its
sole discretion with respect to (i) any proposed amendment to the Company's
Restated Certificate of Incorporation, other than the Charter Amendment,
that would alter or change the powers, preferences or special rights of the
Common Stock or Class B Common Stock so as to affect them adversely, or
that would establish different terms for the Class B Common Stock or change
the powers, preferences or special rights of the Common Stock or Class B
Common Stock (collectively with the Class A Common Stock, the "Common
Shares") relative to any other class of Common Shares from that
contemplated by the Restated Certificate of Incorporation of the Company as
in effect on the date of the Subscription Agreement, as proposed to be
amended by the Charter Amendment, and (ii) any proposed reclassification of
any shares of capital stock of the Company into shares having any
preference or priority as to dividends or upon liquidation superior to that
of the Common Stock and/or Class B Common Stock, other than capital stock
so preferred as to dividends or upon liquidation prior to such
reclassification, and (c) Investor shall be entitled to vote or abstain
from voting the Investor Securities, or give or withhold its written
consent, in each case in the same proportion (by voting power) as the other
Common Shares with respect to (i) any proposed consolidation, merger,
binding share exchange or similar transaction involving the Company in
which the Company is not the surviving or resulting entity, or the Class A
Common Stock, the Common Stock and/or the Class B Common Stock is changed
or reclassified or the holders of Common Shares immediately prior to such
transaction own less than 50% of the Common Shares immediately following
consummation of such transaction, (ii) any conveyance of all or
substantially all of the consolidated assets of the Company to any other
Person, or (iii) the liquidation or dissolution of the Company.
Section 4. Agreement to Vote Stockholder Securities.
(a) For so long as the members of the Liberty Group in the aggregate
own any combination of shares of Common Stock and Class B Common Stock
that, taken together, equal by number at least 50% of the number of
Investor Securities or, following the exchange thereof for Class B
Common Stock, 50% of the number of shares of Class B Common Stock
issued in exchange for the Investor Securities (in each case, as
appropriately adjusted to reflect the effect of stock splits, reverse
stock splits, stock dividends and other similar events affecting the
Common Stock or the Class B Common
B-37
<PAGE>
Stock), Investor shall be entitled to nominate a person to serve as a
director on the Company's Board of Directors (the "Investor Director")
and the Stockholder shall vote (or give its written consent with
respect to) or cause to be voted all of the Stockholder Securities in
favor of the election of the Investor Director. Subject to applicable
regulatory constraints, the Investor will nominate the Chairman of the
Board or the Chief Executive Officer of LMC as the Investor Director.
Once the members of the Liberty Group no longer hold a majority of the
Investor Securities, the Investor shall use its reasonable best efforts
to secure the immediate resignation of the Investor Director.
(b) Stockholder further agrees that until Investor is relieved of
its obligations under Section 3 above and Sections 2.9 and 2.12 of the
Lock-up, Registration Rights and Exchange Agreement, Stockholder will
vote or cause to be voted (or give his written consent with respect to)
all of the Stockholder Securities in favor of the Charter Amendment
and, if requested by the Investor, against any other proposed amendment
to the Company's Restated Certificate of Incorporation that would
establish different terms for the Class B Common Stock or relative
powers, preferences and special rights for any of the Class A Common
Stock, Common Stock or Class B Common Stock than those contemplated by
the Charter Amendment.
Section 5. Fiduciary Duties. Notwithstanding anything in this Agreement
to the contrary, the covenants and agreements set forth herein shall not
prevent the Stockholder or the Investor Director, in their respective
capacities as members of the Company's Board of Directors, from taking any
action which such director shall deem to be required by his fiduciary
duties to the Company while acting in such person's capacity as a director
of the Company.
Section 6. Successors and Assigns. This Agreement may not be assigned by
the Investor or the Stockholder without the prior written consent of the
other party hereto and the attempted or purported assignment of this
Agreement without such consent shall be void; provided, however, that the
Investor may, without written consent of the Stockholder, assign its rights
and obligations hereunder in whole or in part to any other member of the
Liberty Group to which it transfers Investor Securities (provided that no
such assignment shall relieve the Investor of its responsibility for the
performance of the obligations hereunder for so long as it holds any
Investor Securities). This Agreement shall be binding upon and inure to the
benefit of the parties hereto and, in the case of Investor, its successors
and permitted assigns. Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties hereto or, in the
case of Investor, its successors and permitted assigns, any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
Section 7. Governing Law; Submission to Jurisdiction. This Agreement
shall be governed by and construed in accordance with the internal laws of
the State of New York. Each of the Stockholder and the Investor hereby
submits to the nonexclusive jurisdiction of the United States District
Court for the Southern District of New York and of any New York State court
sitting in New York City for purposes of all legal proceedings arising out
of or relating to this Agreement and the transactions contemplated hereby.
Each of the Stockholder and the Investor irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have
to the laying of the venue of any such proceeding brought in such a court
and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum.
Section 8. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, and all of which together shall
be deemed to constitute one and the same instrument.
Section 9. Captions and Headings. The captions and headings used in this
Agreement are for convenience only and are not to be considered in
construing or interpreting this Agreement.
Section 10. Notices. Unless otherwise provided, any notice or other
communication required or permitted to be given or effected under this
Agreement shall be in writing and shall be deemed effective
B-38
<PAGE>
upon personal or facsimile delivery to the party to be notified or one
business day after deposit with an internationally recognized courier
service, delivery fees prepaid, or three business days after deposit with
the U.S. mail, return receipt requested, postage prepaid, and in each case,
addressed to the party to be notified at the following respective
addresses, or at such other addresses as may be designated by written
notice; provided that any notice of change of address shall be deemed
effective only upon receipt:
If to the Stockholder:
Howard S. Jonas
520 Broad Street
Newark, New Jersey 07102
Attn: Howard S. Jonas
Fax: (201) 928-2885
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attn: Robert S. Risoleo
Fax: (212) 558-1600
If to the Investor:
.
9197 South Peoria Street
Englewood, Colorado 80112
Attn: Robert R. Bennett
Telephone: (720) 875-5400
Fax: (720) 875-5434
with copies to:
Liberty Media Corporation
9197 South Peoria Street
Englewood, Colorado 80112
Attn: Legal Department
Telephone: (720) 875-5400
Fax: (720) 875-5382
and
Baker Botts, L.L.P.
599 Lexington Avenue
New York, New York 10022
Attn: Elizabeth M. Markowski
Telephone: (212) 705-5000
Fax: (212) 705-5125
Section 11. Amendments and Waivers. All terms of this Agreement may be
amended, and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of each of the Stockholder
and the Investor. Any amendment or waiver effected in accordance with this
Section 11 shall be binding upon
B-39
<PAGE>
each holder of any Investor Securities and Stockholder Securities at the
time outstanding, each future holder of such Investor Securities and
Stockholder Securities, and the other parties to this Agreement.
Section 12. Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provisions shall be
excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable
in accordance with its terms.
Section 13. Entire Agreement. This Agreement (together with the
agreements referred to herein) constitutes the entire agreement among the
parties with respect to the subject matter hereof and supersedes all prior
agreements, understandings and discussions between them, and all documents
delivered between them, with respect to such subject matter.
Section 14. Specific Performance. The parties hereto agree that
irreparable harm would occur in the event that any of the provisions of
this Agreement were not performed in accordance with its specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which they are entitled at law or
in equity.
Section 15. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES ITS
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE
ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND
THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT
LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION 16 HAS BEEN FULLY
DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS SHALL NOT BE
SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER WARRANTS AND
REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL,
AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, SUPPLEMENTS OR
MODIFICATIONS TO (OR ASSIGNMENTS OF) THIS AGREEMENT. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL
(WITHOUT A JURY) BY THE COURT.
[Signatures on the following page.]
B-40
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Voting Agreement as
of the date first above written.
_____________________________________
Howard S. Jonas
. Shares of Class A Stock
. Shares of Common Stock
.
By: _________________________________
Name:
Title:
B-41
<PAGE>
Exhibit C
OPINION MATTERS
1. The Company is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware and has all corporate
powers required to carry on its business as now conducted.
2. The execution, delivery and performance by the Company of the Agreement
and the other Equity Documents are within the corporate power of the Company
and have been duly authorized by all necessary corporate and shareholder action
on the part of the Company.
3. The execution, delivery and performance by the Company of the Agreement
and the other Equity Documents and the consummation of the transactions
contemplated therein do not and will not (a) violate the certificate of
incorporation or bylaws of the Company or (b) to the best knowledge of such
counsel after due inquiry, (i) violate any Applicable Law, other than
violations that would not individually or in the aggregate be reasonably
expected to have a Company Material Adverse Effect or a material adverse effect
on the Investor, (ii) except as to matters which would not individually or in
the aggregate be reasonably expected to have a Company Material Adverse Effect
or a material adverse effect on the Investor, constitute a default under, or
give rise to any rights of termination, cancellation or acceleration of any
right or obligation of the Company or any IDT Subsidiary or to a loss of any
benefit to which the Company or any IDT Subsidiary is entitled under any
provision of any agreement or other instrument binding upon the Company or any
IDT Subsidiary or (iii) result in the creation or imposition of any Lien on any
asset of the Company or any IDT Subsidiary, except where such Lien would not
have a Company Material Adverse Effect.
4. The Agreement and the other Equity Documents constitute valid and binding
agreements of the Company, enforceable in accordance with their terms, subject
to the effects of applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and equitable principles of general applicability.
5. The authorized capital stock of the Company conforms as to legal matters
to the description thereof set forth in Section 3.3 of the Agreement. To the
best knowledge of such counsel after due inquiry, all outstanding capital stock
of the Company is duly authorized, validly issued and fully paid and non-
assessable. The issuance, sale and delivery of the Investor Securities have
been duly authorized by all requisite corporate and shareholder action of the
Company. The Investor Securities are validly issued, fully paid and
nonassessable, free and clear of any Liens and are not subject to preemptive or
other similar rights.
6. Neither the Investor nor its affiliates or associates shall, as a result
of the execution of the Agreement or the consummation of the Transactions
contemplated by the Agreement, become subject to any of the restrictions of
Section 203 of the DGCL with respect to IDT or any of its direct or indirect
subsidiaries any of the stock of which is publicly traded.
B-42
<PAGE>
AMENDMENT TO SUBSCRIPTION AGREEMENT
AMENDMENT TO SUBSCRIPTION AGREEMENT (this "Amendment"), dated as of May
26, 2000, between IDT Corporation, a Delaware corporation (the "Company"), and
Liberty Media Corporation, a Delaware corporation ("LMC").
WHEREAS, the Company and LMC entered into a Subscription Agreement, dated
as of March 24, 2000 (the "Subscription Agreement"); and
WHEREAS, the Company and LMC desire to amend certain sections of the
Subscription Agreement relating to the number of shares of Common Stock, par
value $0.01 per share, of the Company (the "Common Stock") to be issued and
sold by the Company to LMC or its designee, upon the terms and subject to the
conditions set forth in the Subscription Agreement.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the LMC hereby agree as follows:
Section 1. The Subscription Agreement is hereby amended by deleting
Section 1.1 in its entirety and replacing it with the following:
"1.1 Subscription for Common Stock. Upon the terms and subject to
the conditions of this Agreement, the Company hereby agrees to issue
and sell and LMC hereby agrees to purchase or cause its designee to
purchase (the applicable purchaser being referred to herein as the
"Investor") from the Company shares of Common Stock in an amount equal
to the lesser of (a) 3,775,000 shares of Common Stock and (b) 9.99% of
the outstanding shares of Common Stock, as of the date of Closing
immediately following such issuance (the "Investor Securities"), at a
price of $34.50 per share of Common Stock. The purchase price per share
will be appropriately adjusted to reflect the effect of any stock
splits, reverse stock splits, stock dividends and other similar events
affecting the Common Stock."
Section 2. The Subscription Agreement is hereby amended by deleting
Section 5(f) in its entirety and replacing it with the following:
"(f) Certificate. The Investor shall have received (i) a
certificate, dated as of the Closing Date, executed by an executive
officer of the Company and stating (x) that, to the best knowledge of
such executive officer, the conditions set forth in clauses (a), (b),
(c), (d) and (e) above have been satisfied and (y) the number of shares
of Common Stock, Class A Stock and Preferred Stock outstanding on the
Closing Date, prior to giving effect to the issuance of the Investor
Securities, (ii) a certificate of the secretary of the Company covering
such matters as are customarily covered by such certificates, and (iii)
a long form good standing certificate for the Company from the Delaware
Secretary of State."
Section 3. Section 9.2(a) of the Subscription Agreement is hereby
amended by adding the following language immediately after the final
sentence thereof:
"Prior to and as a condition of the effectiveness of any termination
of this Agreement by the Company pursuant to clauses (ii) or (iii)
above, the Company shall repay the outstanding principal balance under
the Notes, dated May 19, 2000 and May 25, 2000, respectively, made by
the Company to the order of LMC, together with all accrued and unpaid
interest thereon."
B-43
<PAGE>
Section 4. Exhibit B to the Subscription Agreement is hereby amended by
deleting the first recital thereof in its entirety and replacing it with
the following:
"WHEREAS, IDT Corporation, a Delaware corporation (the "Company"),
and Liberty Media Corporation, a Delaware corporation ("LMC"), have
entered into a Subscription Agreement, dated as of March ., 2000, as
amended (the "Subscription Agreement"), pursuant to which LMC has
agreed to purchase, or cause its designee to purchase, and the Company
has agreed to sell to LMC or its designee, shares (the "Investor
Securities") of the Company's Common Stock, par value $0.01 per share,
of the Company (the "Common Stock");"
Section 5. In all other respects, the Subscription Agreement remains in
full force and effect.
Section 6. This Amendment may be executed in counterparts, each of which
shall be deemed an original, and all of which together shall be deemed to
constitute one and the same instrument.
[Signatures on the following page.]
B-44
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment to Subscription
Agreement as of the date first above written.
IDT CORPORATION
/s/ Howard S. Jonas
By: ____________________________
Name: Howard S. Jonas
Title: Chief Executive Officer
LIBERTY MEDIA CORPORATION
/s/ Charles Y. Tanabe
By: ____________________________
Name: Charles Y. Tanabe
Title: Senior Vice President
B-45
<PAGE>
EXHIBIT C
CERTIFICATE OF AMENDMENT
TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF
IDT CORPORATION
(pursuant to Section 242 of the Delaware General Corporation Law)
IDT Corporation, a Delaware corporation, hereby certifies as follows:
1. The name of the corporation is IDT Corporation (hereinafter the
"Corporation").
2. The Corporation's Certificate of Incorporation was initially filed
with the Secretary of State of the State of Delaware on December 22, 1995
and a Restated Certificate of Incorporation was filed on February 7, 1996.
3. The Restated Certificate of Incorporation of the Corporation is
hereby amended by deleting the preamble of Article Fourth thereof and
replacing it with the following:
"FOURTH: The aggregate number of shares of all classes of capital
stock which the Corporation shall have the authority to issue is two
hundred and forty five million (245,000,000) shares, consisting of (a)
100,000,000 shares of common stock, par value $0.0l per share ("Common
Stock"), (b) 35,000,000 shares of Class A Common Stock, par value $0.01
per share (the "Class A Stock"), (c) 100,000,000 shares of Class B
Common Stock, par value $0.01 per share (the "Class B Stock", and
collectively, such Common Stock, Class A Stock and Class B Stock are
referred to herein as the "Common Shares"), and (d) 10,000,000 shares
of preferred stock, par value $0.01 per share ("Preferred Stock")."
4. The Restated Certificate of Incorporation of the Corporation is
hereby further amended by deleting Sections 1(h), 2(a), 2(b), 2(c), 2(d),
2(e)(6) and 2(f) of Article Fourth and replacing them with the following:
"1. Preferred Stock
(h) the limitations and restrictions, if any, to be effective while
any shares of such series are outstanding upon the payments of
dividends or the making of other distributions on, and upon the
purchase, redemption or other acquisition by the Corporation of, the
Common Stock, the Class A Stock, the Class B Stock or shares of stock
of any other class or any other series of this class;"
"2. Common Stock, Class A Stock and Class B Stock
(a) General. Except as hereinafter expressly set forth in Section 2,
and subject to the rights and preferences of the holders of Preferred
Stock at any time outstanding, the Class A Stock, Class B Stock and the
Common Stock, all of which are classes of common stock, shall have the
same rights and privileges and shall rank equally, share ratably and be
identical in respects as to all matters, including rights in
liquidation.
(b) Voting Rights. Except as otherwise provided in this Restated
Certificate of Incorporation or as expressly provided by law, and
subject to any voting rights provided to holders of Preferred Stock at
any time outstanding, the Common Shares have exclusive voting rights on
all matters requiring a vote of the Corporation.
The holders of Common Stock shall be entitled to one vote per share
on all matters to be voted on by the stockholders of the Corporation.
The holders of Class A Stock shall be entitled to three votes per share
on all matters to be voted on by the stockholders of the Corporation.
The holders of Class B Stock shall entitled to one-tenth (1/10) of a
vote per share on all matters to be voted on by the stockholders of the
Corporation.
C-1
<PAGE>
Except as otherwise provided in this Restated Certificate of
Incorporation or as required by law, and subject to any voting rights
provided to holders of Preferred Stock at any time outstanding, the
holders of shares of Class A Stock, the holders of shares of Class B
Stock and the holders of shares of Common Stock shall vote together as
one class on all matters submitted to a vote of stockholders of the
Corporation.
(c)(1) Dividends and Distributions. Subject to the rights of the
holders of Preferred Stock, and subject to any other provisions of this
Restated Certificate of Incorporation, as it may be amended from time
to time, holders of Class A Stock, holders of Class B Stock and holders
of Common Stock shall be entitled to receive such dividends and other
distributions in cash, in property or in shares of the Corporation as
may be declared thereon by the Board of Directors from time to time out
of assets or funds of the Corporation legally available therefor;
provided, however, that no cash, property or share dividend or
distribution may be declared or paid on the outstanding shares of any
of the Class A Stock, the Class B Stock or the Common Stock unless an
identical per share dividend or distribution is simultaneously declared
and paid on the outstanding shares of the other classes of common
stock; provided, further, however, that a dividend of shares may be
declared and paid in Class A Stock to holders of Class A Stock, in
Class B Stock to holders of Class B Stock and in Common Stock to
holders of Common Stock if the number of shares paid per share to
holders of Class A Stock, to holders of Class B Stock and to holders of
Common Stock shall be the same. If the Corporation shall in any manner
subdivide, combine or reclassify the outstanding shares of Class A
Stock, Class B Stock or Common Stock, the outstanding shares of the
other classes of common stock shall be subdivided, combined or
reclassified proportionately in the same manner and on the same basis
as the outstanding shares of Class A Stock, Class B Stock or Common
Stock, as the case may be, have been subdivided, combined or
reclassified.
(2) Consideration in Merger and Similar Transactions. The
Corporation shall not be a party to a merger, consolidation, binding
share exchange, recapitalization, reclassification or similar
transaction (whether or not the Corporation is the surviving or
resulting entity) (an "Extraordinary Transaction"), unless the per
share consideration, if any, that the holders of Common Stock and Class
B Stock receive in connection with such Extraordinary Transaction or
are entitled to elect to receive in such Extraordinary Transaction is
the same as the per share consideration that the holders of the other
of such classes of common stock are entitled to receive or elect to
receive in connection with the Extraordinary Transaction.
(d) Optional Conversion.
(1) The shares of Common Stock and Class B Stock are not convertible
into or exchangeable for shares of Class A Stock.
(2) Each share of Class A Stock may be converted, at any time and at
the option of the holder thereof, into one fully paid and nonassessable
share of Common Stock.
(3) Each share of Class B Stock may be converted, at any time and at
the option of the Corporation, into one fully paid nonassessable share
of Common Stock provided that all shares of Class B Stock are so
converted."
"(e) Mandatory Conversion.
(6) This Section 2(e) may not be amended without the affirmative
vote of holders of the majority of the shares of the Class A Stock, the
affirmative vote of holders of the majority of the shares of the Class
B Stock and the affirmative vote of holders of the majority of the
shares of the Common Stock, each voting separately as a class."
C-2
<PAGE>
"(f) Conversion Procedures.
(1) Each conversion of shares pursuant to Section 2(d) hereof will
be effected by the surrender of the certificate or certificates, duly
endorsed, representing the shares to be converted at the principal
office of the transfer agent of the Class A Stock, in the case of
conversion pursuant to Section 2(d)(2), or of the Class B Stock, in the
case of conversion pursuant to Section 2(d)(3), at any time during
normal business hours, together with a written notice by the holder
stating the number of shares that such holder desires to convert and
the names or name in which he wishes the certificate or certificates
for the Common Stock to be issued. Such conversion shall be deemed to
have been effected as of the close of business on the date on which
such certificate or certificates have been surrendered, and at such
time, the rights of any such holder with respect to the converted
shares of such holder will cease and the person or persons in whose
name or names the certificate or certificates for shares are to be
issued upon such conversion will be deemed to have become the holder or
holders of record of such shares represented thereby.
Promptly after such surrender, the Corporation will issue and
deliver in accordance with the surrendering holder's instructions the
certificate or certificates for the Common Stock issuable upon such
conversion and a certificate representing any Class A Stock, in the
case of conversion pursuant to Section 2(d)(2) which was represented by
the certificate or certificates delivered to the Corporation in
connection with such conversion, but which was not converted.
(2) The issuance of certificates upon conversion of shares pursuant
to Section 2(d) hereto will be made without charge to the holder or
holders of such shares for any issuance tax (except stock transfer tax)
in respect thereof or other costs incurred by the Corporation in
connection therewith.
(3) The Corporation shall at all times reserve and keep available
out of its authorized but unissued shares of Common Stock or its
treasury shares, solely for the purpose of issuance upon the conversion
of the Class A Stock and the Class B Stock, such number of shares of
Common Stock as may be issued upon conversion of all outstanding Class
A Stock and the Class B Stock.
(4) Shares of the Class A Stock and Class B Stock surrendered for
conversion as above provided or otherwise acquired by the Corporation
shall be canceled according to law and shall not be reissued.
(5) All shares of Common Stock which may be issued upon conversion
of shares of Class A Stock and Class B Stock will, upon issue, be fully
paid and nonassessable."
5. The Restated Certificate of Incorporation of the Corporation is hereby
further amended by deleting the first sentence to Article Fifth and replacing
it with the following:
"FIFTH: The business and affairs of the Corporation shall be managed by or
under the direction of a Board of Directors consisting of not less than three
(3) and not more than seventeen (17) directors, the exact number of which shall
be fixed from time to time by the Board of Directors."
C-3
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be executed on its behalf this . day of . , 2000.
IDT CORPORATION
By:
___________________________________
Name:
Title:
C-4
