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Exhibit 7(g)
Lock-up, Registration Rights and Exchange Agreement
LOCK-UP, REGISTRATION RIGHTS AND EXCHANGE AGREEMENT (this "Agreement"),
dated as of June 6, 2000, by and between IDT Corporation, a Delaware corporation
(the "Company"), and Liberty Media Corporation, a Delaware corporation (the
"Investor").
WHEREAS, the Company and the Investor have entered into a Subscription
Agreement, dated as of March 24, 2000 and amended as of May 26, 2000 (the
"Subscription Agreement"), pursuant to which the Investor has agreed to
purchase, or cause its designee to purchase, and the Company has agreed to sell
to Investor or its designee, shares (the "Investor Securities") of the Common
Stock, par value $0.01 per share, of the Company (the "Common Stock"); 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:
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"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.
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"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,
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however, that such Securities shall cease to be Registrable Securities when and
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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.
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2.1 (a) Registration Upon Demand. At any time on or after the first
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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
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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
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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
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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
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delay registering such Registrable Securities for the same period as the delay
in respect of the proposed offering.
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
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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
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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
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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.
2.3 Obligations of the Company. Whenever the Company is required to effect
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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
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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
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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.
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(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 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.
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(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.
(n) Cooperate with each selling Holder and each underwriter participating
in the disposition of such Registrable Securities and their respective counsel
in connection
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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.
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(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,
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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
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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
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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 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
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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
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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
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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
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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
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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
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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
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
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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
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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
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shall have
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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
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.
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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
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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;
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(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.
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.
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(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 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
16
<PAGE>
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
17
<PAGE>
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.
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:
Liberty Media Corporation
9197 South Peoria Street
Englewood, Colorado 80112
Attn: Legal Department
Telephone: (720) 875-5400
Fax: (720) 875-5382
with a copy to:
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.
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,
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<PAGE>
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.]
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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: /s/ Howard S. Jonas
-------------------------------
Name: Howard S. Jonas
Title: Chief Executive Officer
LIBERTY MEDIA CORPORATION
By: /s/ Charles Y. Tanabe
-------------------------------
Name: Charles Y. Tanabe
Title: Senior Vice President
21
