STOCK PURCHASE AGREEMENT
by and between
AT&T CORP.,
IDT CORPORATION
and
IDT INVESTMENTS INC.
dated as of August 11, 2000
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TABLE OF CONTENTS
PAGE
ARTICLE I -- DEFINITIONS.......................................................1
1.1 Definitions.......................................................1
ARTICLE II -- BUYER; SALE OF CLASS A STOCK; CLOSING............................4
2.1 Buyer.............................................................4
2.2 Purchase and Sale.................................................4
2.3 Closing...........................................................4
ARTICLE III -- REPRESENTATIONS AND WARRANTIES
OF IDT..........................................................4
3.1 Organization......................................................4
3.2 Authorization; No Conflicts.......................................5
3.3 Ownership of Stock................................................5
3.4 Brokers or Finders................................................6
3.5 HSR Act...........................................................6
ARTICLE IV-- REPRESENTATIONS AND WARRANTIES OF AT&T............................6
4.1 Organization......................................................6
4.2 Authorization; No Conflicts.......................................6
4.3 Brokers or Finders................................................7
4.4 HSR Act...........................................................7
4.5 No Registration of Shares.........................................7
4.6 Suitability of Investment.........................................7
ARTICLE V -- COVENANTS.........................................................8
5.1 Governmental Inquiries............................................8
5.2 Public Announcements..............................................9
5.3 Taking of Necessary Action........................................9
ARTICLE VI -- CERTAIN ADDITIONAL COVENANTS.....................................9
6.1 Interests in Buyer................................................9
6.2 Support of the Primary Issuance...................................9
6.3 Right of First Refusal............................................9
6.4 Conversion of Remaining Shares...................................10
6.5 Company Headquarters.............................................11
6.6 Joint Venture....................................................11
6.7 Tag-along Provisions.............................................11
6.8 IDT Director.....................................................11
6.9 Voting Agreement.................................................11
ARTICLE VII -- CONDITIONS.....................................................11
7.1 Conditions of Purchase...........................................11
7.2 Conditions of Sale...............................................13
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ARTICLE VIII -- TERMINATION...................................................13
8.1 Termination......................................................13
8.2 Effect of Termination............................................14
ARTICLE IX -- MISCELLANEOUS...................................................14
9.1 Survival of Representations and Warranties.......................14
9.2 Notices..........................................................14
9.3 Entire Agreement Amendment.......................................16
9.4 Counterparts.....................................................16
9.5 Governing Law....................................................16
9.6 Consent to Jurisdiction Venue....................................16
9.7 Expenses.........................................................17
9.8 Third-Party Beneficiaries........................................17
9.9 Successors and Assigns...........................................17
9.10 Headings.........................................................17
9.11 Interpretation; Absence of Presumption...........................17
9.12 Severability.....................................................18
9.13 Specific Performance.............................................18
9.14 No Consequential Damages.........................................18
SCHEDULES:
Schedule 3.2 Consents of IDT and IDT Investments
Schedule 4.2 Consents of AT&T
EXHIBITS:
Exhibit A Form of Voting Agreement
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "AGREEMENT"), dated as of August 11,
2000, by and among AT&T Corp., a New York corporation ("AT&T"), IDT Corporation,
a Delaware corporation ("IDT") and IDT Investments Inc., a Nevada corporation
and a wholly-owned subsidiary of IDT ("IDT INVESTMENTS").
W I T N E S S E T H:
WHEREAS, IDT Investments owns 24,896,750 shares of Class A Common Stock,
par value $.01 ("CLASS A STOCK"), of Net2Phone, Inc., a Delaware corporation
(the "COMPANY");
WHEREAS, the parties desire that IDT Investments sell and transfer to Buyer
(as defined below) and Buyer purchase from IDT Investments 14,900,000 shares of
Class A Stock (the "PURCHASE");
WHEREAS, AT&T, IDT and IDT Investments are entering into this Agreement to
provide for the Purchase and to establish various rights and obligations in
connection therewith;
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereto
hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. As used in this Agreement, the following terms shall have
the meanings set forth below:
"AGGREGATE PURCHASE PRICE" shall have the meaning set forth in Section 6.3.
"AMENDMENTS" shall mean the amendments to the Company's Amended and
Restated Certificate of Incorporation (i) increasing the number of authorized
shares of Class A Stock by 4,000,000 and (ii) increasing the maximum number of
directors who may serve on the Board of Directors of the Company from 11 to 13.
"ANTITRUST DIVISION" shall have the meaning set forth in Section 5.1.
"AT&T" shall have the meaning set forth in the preamble.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a legal
holiday under the laws of the State of New York.
"BUYER" shall have the meaning set forth in Section 2.1.
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"CLOSING" shall have the meaning set forth in Section 2.3(a).
"CLOSING DATE" shall have the meaning set forth in Section 2.3(b).
"CLASS A STOCK" shall have the meaning set forth in the recitals.
"COMMON SHARES" shall have the meaning set forth in Article Fourth of the
Company's Amended and Restated Certificate of Incorporation.
"COMMON STOCK" shall mean the common stock, par value $.01 per share, of
the Company.
"COMPANY" shall have the meaning set forth in the recitals.
"CONCERT" shall mean Concert Communications Company, an unlimited liability
company incorporated in England and Wales (a joint venture between AT&T and
British Telecommunications, plc).
"CONTRACT" shall mean any contract, agreement, indenture, note, bond, loan,
instrument, lease, conditional sale agreement, purchase order, mortgage, deed of
trust, license, permit, concession, grant, franchise, commitment, guarantee,
other evidence of indebtedness or other binding arrangement, understanding or
agreement, whether or not written.
"DAMAGES" shall mean costs, losses, liabilities, damages, lawsuits,
deficiencies, claims, taxes and expenses (whether or not arising out
of third-party actions or governmental examinations, inspections or audits)
actually suffered or sustained by the relevant party, including, without
limitation, interest, penalties, reasonable attorneys' fees and all amounts paid
in investigation, defense or settlement of any of the foregoing.
"DOLLARS" shall mean dollars constituting legal tender for the payment of
public and private debts in the United States of America.
"FCC" shall mean the U.S. Federal Communications Commission.
"FTC" shall mean the meaning set forth in Section 5.1.
"GOVERNMENTAL AUTHORITY" shall mean any supranational, national, state,
municipal or local government or any agency, authority, bureau, commission,
department or similar body or instrumentality thereof, or any governmental court
or tribunal, or any entity involved in international governance having
jurisdiction over the Company, the Company's businesses or operations, IDT, IDT
Investments, AT&T, Buyer and/or the Transactions.
"HOLDER" shall mean any holder of (i) Class A Stock or (ii) a proxy to vote
shares of Class A Stock (as set forth in Article Fourth, Section 3(e)(2) of the
Company's Amended and Restated Certificate of Incorporation).
"HSR ACT" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
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"IDT" shall have the meaning set forth in the preamble.
"IDT INVESTMENTS" shall have the meaning set forth in the preamble.
"LAWS" shall mean common law or other laws, statutes, rules, regulations,
decrees, ordinances, orders and codes.
"LIBERTY MEDIA GROUP" shall mean the assets, liabilities and businesses of
AT&T as represented collectively by the Series A Liberty Media Group Common
Stock, par value $1.00 per share, of AT&T and the Series B Liberty Media Group
Common Stock, par value $1.00 per share, of AT&T.
"NOTICE PERIOD" shall have the meaning set forth in Section 6.3.
"PERSON" or "PERSON" shall mean an individual, corporation, association,
partnership, limited liability company, group (as defined in Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended), joint venture, trust or
unincorporated organization, other form of business or legal entity or a
Governmental Entity.
"PRIMARY ISSUANCE" shall mean the Company's issuance to Buyer of four
million shares of Class A Stock for a price of $75 per share immediately prior
to the Closing.
"PURCHASE" shall have the meaning set forth in the recitals.
"PURCHASE PRICE" shall mean $75 per share of Class A Stock or an aggregate
of US$1,117,500,000.
"PURCHASED SHARES" shall have the meaning set forth in Section 2.3(a).
"REMAINING SHARES" shall have the meaning set forth in Section 6.3.
"RIGHT OF FIRST REFUSAL" shall have the meaning set forth in Section 6.3.
"RIGHT OF FIRST REFUSAL PERIOD" shall have the meaning set forth in Section
6.3.
"SEC" shall mean the Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SUBSCRIPTION AGREEMENT" shall mean the Subscription Agreement, dated as of
August 11, 2000, by and between AT&T and the Company.
"THREE-PARTY LETTER AGREEMENT" shall mean the Letter Agreement, dated March
30, 2000, by and among AT&T, IDT and the Company.
"TRANSACTIONS" shall have the meaning set forth in Section 3.2.
"TWO-PARTY LETTER AGREEMENT" shall mean the Letter Agreement, dated March
28, 2000, between AT&T and IDT.
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"VOTING AGREEMENT" shall mean the Voting Agreement to be entered into prior
to the Closing between Buyer and IDT Investments substantially in the form
attached as EXHIBIT A to this Agreement.
ARTICLE II
BUYER; SALE OF CLASS A STOCK; CLOSING
2.1 BUYER. Pursuant to the terms of Section 9.9, AT&T may assign to a
directly or indirectly majority-owned subsidiary its rights and obligations
under this Agreement. Until such an assignment is effected, AT&T is the "Buyer"
for all purposes of this Agreement. At the time of such assignment, such
subsidiary shall become the "Buyer" for all purposes of this Agreement, it being
understood that AT&T shall cause Buyer to perform all of Buyer's obligations
under this Agreement and that AT&T is intended to be directly and fully liable
for any breach of Buyer's obligations hereunder.
2.2 PURCHASE AND SALE. At the Closing and subject to the terms and
conditions set forth herein, IDT agrees to cause IDT Investments, and IDT
Investments agrees, to sell, convey, assign, transfer and deliver to Buyer, and
Buyer agrees to purchase and acquire from IDT and IDT Investments, 14,900,000
shares of Class A Stock in exchange for the Purchase Price as set forth in
Section 2.3. At least two Business Days prior to the Closing Date, IDT
Investments shall deliver to Buyer written wire transfer instructions
designating the account or accounts to which the Purchase Price payable to IDT
Investments at Closing shall be paid by Buyer.
2.3 CLOSING.
(a) PAYMENT AND DELIVERY. On the terms and conditions of this Agreement,
and in reliance upon the representations and warranties hereinafter set forth,
at the closing of the Transactions (the "CLOSING"): (i) IDT Investments will
deliver to Buyer a certificate representing 14,900,000 shares of Class A Stock
to be purchased and sold (the "PURCHASED SHARES"), duly endorsed in blank or
accompanied by appropriate stock powers duly executed in blank, in proper form
for transfer and (ii) Buyer will pay to IDT Investments the Purchase Price by
wire transfer to the account or accounts designated by IDT Investments.
(b) LOCATION. Subject to the terms and conditions hereof, the Closing is
being held simultaneously herewith (the "CLOSING DATE") at the offices of
Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, NY, 10019.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF IDT
IDT represents and warrants to, and agrees with, AT&T as follows:
3.1 ORGANIZATION. IDT is a corporation duly organized and validly existing
and in good standing under the laws of Delaware. IDT has full power and
authority to enter into this Agreement. IDT Investments is a corporation duly
organized and validly existing and in
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good standing under the laws of Nevada. IDT Investments has full power and
authority to enter into this Agreement.
3.2 AUTHORIZATION; NO CONFLICTS. This Agreement has been duly authorized,
executed and delivered by each of IDT and IDT Investments and constitutes a
valid and binding obligation of each of IDT and IDT Investments, enforceable
against each of IDT and IDT Investments in accordance with its terms subject to
bankruptcy, insolvency, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles. The execution and delivery of this Agreement by IDT and IDT
Investments, and the performance of this Agreement and the covenants contained
in this Agreement, and the consummation of the other transactions contemplated
hereby (all of the actions, events and transactions set forth in this sentence
and any of the agreements in connection with such actions, events and
transactions being referred to herein collectively as the "TRANSACTIONS") by IDT
and IDT Investments will not (with or without the lapse of time or the giving of
notice or both) conflict with, breach, violate or result in a breach or
violation of, or cause any vesting, modification or acceleration of rights or
obligations under, or constitute a default under, (i) any provision of the
restated certificate of incorporation or by-laws of IDT, (ii) any provision of
the articles of incorporation or by-laws of IDT Investments or (iii) any
contract or any judgment, order, decree, statute, rule, regulation, arbitration
award, or any other restriction of any kind or character, applicable to IDT or
its, to IDT Investments or its, or to IDT's knowledge, based on information
publicly available, the Company or its, respective properties other than any
conflicts, violations, breaches, vestings, modifications, accelerations or
defaults under this clause (iii) which, individually or in the aggregate, could
not be reasonably likely to have a material adverse effect on the Company or the
consummation of the Transactions. Each of IDT and IDT Investments has used its
best efforts to obtain, or at the Closing Date will have used its best efforts
to obtain, all consents from banks and other lenders in respect of indebtedness
for borrowed money or on account of capital leases and other long-term
indebtedness, and guarantees in respect thereof, of IDT and IDT Investments, and
any other consents or waivers of third parties with respect to any contracts or
other arrangements, required in connection with the execution and delivery of
this Agreement by IDT and IDT Investments, and the performance of this Agreement
by IDT and IDT Investments and the consummation of the Transactions. All such
consents are set forth on Schedule 3.2.
3.3 OWNERSHIP OF STOCK. All of the shares of Class A Stock owned by IDT
Investments are owned by IDT Investments free and clear of all liens, claims,
charges, pledges, security interests, options or other encumbrances, other than
the restrictions imposed by federal and state securities laws. Upon the
consummation of the Transactions, Buyer will acquire title to such shares free
and clear of all liens, claims, charges, pledges, security interests, options or
other encumbrances (except for encumbrances for the benefit of the Buyer
provided in accordance with this Agreement), other than the restrictions imposed
by federal and state securities laws. The sale and purchase of the shares of
Class A Stock owned by IDT Investments or the pledge, conveyance or transfer of
Class A Stock owned by IDT Investments will not give rise to any preemptive
rights, rights of first refusal, or similar rights on behalf of any person under
any provision of any contract to which IDT or IDT Investments is party or by
which any property of IDT or IDT Investments is bound other than the rights
granted to IDT and IDT Investments pursuant to this Agreement and the Voting
Agreement.
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3.4 BROKERS OR FINDERS. No agent, broker, finder, investment banker or
other firm or person retained by IDT or IDT Investments is or will be entitled
to any broker's or finder's fee or any other commission or similar fee in
connection with the Transactions for which AT&T or any of its affiliates or the
Company or any of its affiliates will be responsible.
3.5 HSR ACT. IDT has completed and filed, or caused to be completed and
filed, at its own cost and expense, any notification and report required to be
filed under the HSR Act with respect to the transactions contemplated by this
Agreement, has requested early termination of the waiting period imposed by the
HSR Act and the waiting period has been terminated.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF AT&T
AT&T represents and warrants to, and agrees with, IDT and IDT Investments
as follows:
4.1 ORGANIZATION. AT&T is a corporation duly organized and validly existing
and in good standing under the laws of New York. AT&T has full power and
authority to enter into this Agreement. AT&T has full power and authority to
cause Buyer to (i) purchase the Purchased Shares and (ii) consummate the
Transactions. On the Closing Date, Buyer shall (i) be duly organized and validly
existing and in good standing under the laws of its state of formation and (ii)
have the power and authority to enter into and perform this Agreement.
4.2 AUTHORIZATION; NO CONFLICTS. This Agreement has been duly authorized,
executed, and delivered by AT&T and constitutes a valid and binding obligation
of AT&T, enforceable against AT&T in accordance with its terms subject to
bankruptcy, insolvency, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles. The performance of the Transactions by AT&T will not (with or
without the lapse of time or the giving of notice or both) conflict with,
breach, violate or result in a breach or violation of, or cause any vesting,
modification or acceleration of rights or obligations under, or constitute a
default under, (i) any provision of the certificate of incorporation or bylaws
of AT&T or (ii) any contract or any judgment, order, decree, statute, rule,
regulation, arbitration award, or any other restriction of any kind or
character, applicable to AT&T or its properties other than any conflicts,
violations, breaches or defaults under this clause (ii) which, individually or
in the aggregate, could not be reasonably likely to have a material adverse
effect on the consummation of the Transactions. The performance of the
Transactions by Buyer will not (with or without the lapse of time or the giving
of notice or both) conflict with, breach, violate or result in a breach or
violation of, or cause any vesting, modification or acceleration of rights or
obligations under, or constitute a default under, (i) any provision of the
limited liability company agreement or certificate of incorporation or bylaws of
Buyer, as applicable, or (ii) any contract or any judgment, order, decree,
statute, rule, regulation, arbitration award, or any other restriction of any
kind or character, applicable to Buyer or its properties other than any
conflicts, violations, breaches or defaults under this clause (ii) which,
individually or in the aggregate, could not be reasonably likely to have a
material adverse effect on the consummation of the Transactions. Each of AT&T
and Buyer has used its best efforts to obtain,
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or at the Closing Date will have used its best efforts to obtain, all consents
from banks and other lenders in respect of indebtedness for borrowed money or on
account of capital leases and other long-term indebtedness, and guarantees in
respect thereof, of AT&T and Buyer, and any other consents or waivers of third
parties with respect to any contracts or other arrangements, required in
connection with the execution and delivery of this Agreement by AT&T and Buyer,
and the performance of this Agreement by AT&T and Buyer and the consummation of
the Transactions. All such consents are set forth on SCHEDULE 4.2.
4.3 BROKERS OR FINDERS. No agent, broker, investment banker or other firm
or person retained by AT&T or Buyer is or will be entitled to any broker's or
finder's fee or any other commission or similar fee in connection with the
Transactions for which IDT, IDT Investments or the Company or any of their
affiliates will be responsible.
4.4 HSR ACT. AT&T has completed or filed, or caused to be completed or
filed, at its own cost and expense, any notification and report required to be
filed under the HSR Act with respect to the transactions contemplated by
this Agreement, has requested early termination of the waiting period imposed
by the HSR Act and the waiting period has been terminated.
4.5 NO REGISTRATION OF SHARES. AT&T is aware that the Purchased Shares have
not been registered under the Securities Act, that such offer and sale are
intended to be exempt from registration under the Securities Act and the rules
promulgated thereunder by the SEC and that the Purchased Shares cannot be sold,
assigned, transferred, or otherwise disposed of unless they are subsequently
registered under the Securities Act or an exemption from such registration is
available. AT&T is also aware that sales or transfers of the Purchased Shares
are further restricted by state securities laws and the provisions of this
Agreement and that the certificates for the Purchased Shares will bear
appropriate legends restricting their transfer pursuant to applicable laws, and
this Agreement.
4.6 SUITABILITY OF INVESTMENT.
(a) Buyer is acquiring the Purchased Shares for its own account, for
investment purposes only and not with a view to the resale or distribution
thereof;
(b) Buyer has not and will not, directly or indirectly, offer, sell,
transfer, assign, exchange or otherwise dispose of all or any part of the
Purchased Shares, except in accordance with applicable federal and state
securities laws;
(c) AT&T has such knowledge and experience in financial, business and tax
matters that AT&T is capable, on Buyer's behalf, of evaluating the merits and
risks relating to Buyer's investment in the Purchased Shares and making an
investment decision with respect to the Company;
(d) To the full satisfaction of AT&T, AT&T, on Buyer's behalf, 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 Purchased Shares;
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(e) Neither AT&T nor any of its affiliates has engaged in any activity that
would be deemed a "general solicitation" under the provisions of Regulation D as
promulgated under the Act;
(f) AT&T has such knowledge and experience in financial or business matters
that it can, and it has, on Buyer's behalf, adequately analyzed the risks of an
investment in the Purchased Shares and it has determined the Purchased Shares
are a suitable investment for Buyer and that Buyer 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;
(g) AT&T is aware that there are substantial risks incident to an
investment in the Purchased Shares; and
(h) Buyer will be an "accredited investor" within the meaning of Rule 501
of Regulation D promulgated under the Act as presently in effect and is either
purchasing for its own account or for the account of another "accredited
investor," and any accounts for which Buyer is acting are each able to bear the
economic risks of this investment. If Buyer is subject to the Employee
Retirement Income Security Act of 1974, as amended, and the regulations
thereunder, and is acquiring the Purchased Shares as a fiduciary or agent for
another investor's account, Buyer will have sole investment and voting
discretion with respect to such account and will have full power to make the
acknowledgments, representations and agreements contained herein on behalf of
such account.
ARTICLE V
COVENANTS
5.1 GOVERNMENTAL INQUIRIES. AT&T, IDT and IDT Investments shall use their
respective commercially reasonable efforts to respond, as promptly as reasonably
practicable, to any inquiries received from the Federal Trade Commission (the
"FTC") and the Antitrust Division of the Department of Justice (the "ANTITRUST
DIVISION") for additional information or documentation, and to respond, as
promptly as reasonably practicable, to all inquiries and requests received from
any other Governmental Authority in connection with antitrust matters. AT&T, IDT
and IDT Investments shall use their respective commercially reasonable efforts
to overcome any objections which may be raised by the FTC, the Antitrust
Division or any other Governmental Authority having jurisdiction over antitrust
matters. AT&T, IDT and IDT Investments shall (i) promptly notify the other party
of any communication to that party from the FTC, the Antitrust Division, any
state attorney general or any other Governmental Authority and, subject to
applicable law, permit the other party to review in advance any proposed written
communication to any of the foregoing; (ii) not agree to participate in any
substantive meeting or discussion with any Governmental Authority in respect of
any filings, investigation or inquiry concerning this Agreement or the
transactions contemplated hereby unless it consults with the other party in
advance and, to the extent permitted by such Governmental Authority, gives the
other party the opportunity to attend and participate thereat; and (iii) furnish
the other party with copies of all correspondence, filings, and communications
(and memoranda setting forth the substance thereof) between them and their
affiliates and their respective representatives on the one hand, and any
Government Authority or members or their respective staffs on the other
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hand, with respect to this Agreement and the transactions contemplated hereby.
Notwithstanding the foregoing, no party shall be required to make any
significant change in the operations or activities of the business (or any
material assets employed therein) of such party or any of its affiliates if a
party determines in good faith that such change would be materially adverse to
the operations or activities of the business (or any material assets employed
therein) of such party or any of its affiliates having significant assets, net
worth or revenue.
5.2 PUBLIC ANNOUNCEMENTS. Subject to each party's disclosure obligations
imposed by law, IDT, IDT Investments, AT&T and Buyer will cooperate with each
other in the development and distribution of all news releases and other public
information disclosures with respect to this Agreement and any of the
Transactions. All notices to third parties, press releases and other publicity
concerning the Transactions shall be jointly planned and coordinated by IDT, IDT
Investments and AT&T. Neither of the parties hereto shall act unilaterally in
this regard, except as may be required by law, without the prior written
approval of the other party, which approval will not be unreasonably withheld.
5.3 TAKING OF NECESSARY ACTION. Each of the parties hereto agrees to use
its best efforts promptly to take or cause to be taken all action and promptly
to do or cause to be done all things necessary, proper or advisable under
applicable Laws to consummate and make effective the Transactions. Without
limiting the foregoing, AT&T, IDT and IDT Investments will, and AT&T will cause
Buyer to, use their respective best efforts to make or cause to be made all
filings and obtain all approvals and consents of Governmental Authorities
necessary or, in the opinion of AT&T and IDT, advisable in order to permit the
consummation of the Transactions.
ARTICLE VI
CERTAIN ADDITIONAL COVENANTS
6.1 INTERESTS IN BUYER. (a) Until August 1, 2003, provided that IDT
Investments, directly or through any affiliate controlled by IDT, owns not less
than one million Common Shares, Buyer shall not sell or transfer without IDT
Investments' consent all or any portion of its shares of Class A Stock or Common
Stock purchased pursuant to this Agreement.
(b) AT&T shall retain, either directly or indirectly through their
respective controlled affiliates and Liberty Media Group, a majority of the
ownership and voting interests in Buyer, for a period of three years from the
Closing Date.
6.2 SUPPORT OF THE PRIMARY ISSUANCE. Each of IDT and IDT Investments shall
use its best efforts to cause the Primary Issuance to occur.
6.3 RIGHT OF FIRST REFUSAL. The shares of Class A Stock currently owned by
IDT Investments other than the Purchased Shares (the "REMAINING SHARES") shall
be subject to a right of first refusal in favor of Buyer (the "RIGHT OF FIRST
REFUSAL") until August 1, 2003 (the "RIGHT OF FIRST REFUSAL PERIOD"). IDT
Investments shall not transfer any of the Remaining Shares other than to an
affiliate controlled by IDT during the Right of First Refusal Period unless
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it shall have provided Buyer with notice in writing stating (1) that it has
received a firm offer to purchase such shares, (2) the fair market value of the
consideration proposed to be paid to IDT Investments in such transfer (the
"AGGREGATE PURCHASE PRICE") (or, in the case of a proposed sale of shares in a
transaction registered under the Securities Act or in accordance with Rule
144(f) thereunder, the Aggregate Purchase Price per share shall be equal to the
lower of (i) the average daily closing price per share of the Company for the
ten trading days prior to the date on which IDT Investments notifies Buyer in
writing that it proposes to enter into a binding agreement within five days for
the sale of such shares and (ii) such other purchase price as determined by IDT
Investments), as well as the other terms thereof and (3) in the case of a
proposed buyer who is also a Holder, the identity of the proposed buyer. In the
event that the Aggregate Purchase Price of the Remaining Shares proposed to be
sold by IDT Investments to a third party purchaser determined in accordance with
clause (2) in the preceding sentence equals or exceeds $100,000,000, Buyer shall
have 21 days from the date of such written notice (the "NOTICE PERIOD") to
advise IDT Investments whether it wishes to exercise the Right of First Refusal.
If Buyer advises IDT Investments in writing that it wishes to exercise the Right
of First Refusal, thereupon IDT Investments and Buyer will be deemed to have
agreed to the sale to Buyer of such shares upon financial terms and conditions
no less favorable to IDT Investments than those set forth in the notice, the
closing thereon to occur as promptly as practicable following the receipt of all
necessary regulatory approvals; PROVIDED, HOWEVER, that if all necessary
regulatory approvals are not obtained within 90 days from the date of the
notice, the provisions in this Section 6.3 shall automatically terminate. If
Buyer notifies IDT Investments in writing that it does not wish to purchase such
shares, or such 21 day period elapses without any written notification by Buyer,
then IDT Investments shall be free to dispose, or contract to dispose, of such
shares upon terms and conditions no more favorable to a third party than those
set forth in the notice for a period of 60 days; PROVIDED, HOWEVER, (i) that if
IDT Investments identified a Holder as the proposed buyer in its notice to
Buyer, such shares shall only be sold to such Holder and (ii) that in the case
of a proposed sale of shares in a transaction registered under the Securities
Act or in accordance with Rule 144(f) thereunder, the sale of such shares for a
price equal to the prevailing market price of such shares at the time of such
sale shall not be considered a price, term or condition more favorable than the
Aggregate Purchase Price set forth in the notice. If the aggregate purchase
price of the Remaining Shares proposed to be sold by IDT Investments to a third
party purchaser determined in accordance with clause (2) of the second sentence
of this Section 6.3 is less than $100,000,000, the Notice Period shall be seven
days from the date of written notice. Notwithstanding the foregoing, provided
that the Closing has occurred, individual sales of not more than 100,000 shares
of Class A Stock by IDT Investments, up to an aggregate of 2,000,000 shares of
Class A Stock during the Right of First Refusal Period, shall not be subject to
the provisions of this Section 6.3.
6.4 CONVERSION OF REMAINING SHARES. IDT Investments shall convert such
number of the Remaining Shares, which have not been previously sold by IDT
Investments, into shares of Common Stock as requested by Buyer by written notice
delivered not less than eight days prior to the date the shares are to be
converted into shares of Common Stock upon the payment in cash to IDT
Investments of an amount equal to 10% of the average daily closing price per
share of Common Stock for the 20-trading day period ending on the day prior to
the date of such notice of conversion in respect of each of the Remaining Shares
requested to be converted, if so requested by Buyer, during the period ending
August 1, 2003.
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6.5 COMPANY HEADQUARTERS. AT&T, IDT and IDT Investments agree that they
will support moving the headquarters of the Company to 520 Broad Street in
Newark, New Jersey and the continued presence of the headquarters at such
location for no less than 10 years, unless otherwise mutually agreed.
6.6 JOINT VENTURE. AT&T and Buyer will support the formation of a joint
venture between the Company and IDT for the development and sale of Internet
telephony network equipment using the Company's Voice over Internet Protocol
technology.
6.7 TAG-ALONG PROVISIONS. If at any time, and from time to time, prior to
September 28, 2001 Buyer consummates an acquisition of shares of Class A Stock
from other current Holders, Buyer will so notify IDT Investments in writing not
later than two days after such acquisition, such notice to contain information
regarding number of shares, price and other material terms of the transaction.
IDT Investments then will have the option, exercisable within 30 days of its
having received such written notice of such purchase, of notifying Buyer that it
wishes to cause Buyer to purchase up to 5,000,000 shares of Class A Stock (or if
Buyer has exercised its conversion rights under Section 6.4, then Common Stock)
from it on the same terms and conditions as Buyer purchased shares of Class A
Stock from such other Holder whereupon such purchase will be consummated as
promptly as practicable following receipt of all required regulatory approvals.
6.8 IDT DIRECTOR. Promptly after the Closing, IDT shall cause one of its
designated members of the Board of Directors of the Company to resign, and AT&T
shall nominate the replacement designee.
6.9 VOTING AGREEMENT. On or before the Closing Date, Buyer and IDT
Investments shall enter into the Voting Agreement. AT&T shall cause Buyer to
perform all of its obligations under the Voting Agreement and IDT shall cause
IDT Investments to perform all of its obligations under the Voting Agreement.
ARTICLE VII
CONDITIONS
7.1 CONDITIONS OF PURCHASE. The obligation of Buyer to purchase and pay for
the Purchased Shares at the Closing is subject to satisfaction or waiver of each
of the following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES; COVENANTS. Each of the representations
and warranties of IDT set forth in this Agreement that is qualified as to
materiality or material adverse effect shall have been true and correct when
made and shall be true and correct on and as of the Closing Date as if made on
and as of such date (other than representations and warranties which address
matters only as of a certain date which shall be true and correct as of such
certain date), and each of the representations and warranties of IDT that is not
so qualified shall have been true and correct in all material respects when made
and shall be true
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and correct in all material respects on and as of the Closing Date as if made on
and as of such date (other than representations and warranties which address
matters only as of a certain date which shall be true and correct in all
material respects as of such certain date). Each of IDT and IDT Investments
shall have performed in all material respects all obligations and complied with
all agreements, undertakings, covenants and conditions required hereunder to be
performed by IDT or IDT Investments at or prior to the Closing. IDT shall
deliver to AT&T at the Closing a certificate in form and substance satisfactory
to AT&T dated the Closing Date and signed by the president or a vice-president
of IDT to the effects set forth above.
(b) PRIMARY ISSUANCE. The Primary Issuance shall have occurred.
(c) BOARD OF DIRECTORS. The amendment to the Company's Amended and Restated
Certificate of Incorporation increasing the maximum number of directors who may
serve on the Board of Directors of the Company from 11 to 13 shall have become
effective and the Board of Directors of the Company shall have elected two
designees of Buyer to fill the vacancies created thereby, and one designee of
Buyer to fill the vacancy created by the resignation of an IDT designee as
contemplated by Section 6.8.
(d) INJUNCTIONS. There shall be no injunctions making illegal or otherwise
prohibiting the consummation of the Transactions. There shall be no suits,
hearings, claims, actions or proceedings pending initiated by a Governmental
Authority with respect to the Transactions.
(e) COMPLIANCE WITH APPLICABLE LAWS. The purchase of and payment for the
Purchased Shares on the terms and conditions herein shall not violate any
applicable Law.
(f) REGULATORY CONSENTS. All material consents, authorizations, orders and
approvals of, and filings and registrations with, any Governmental Authority,
required for or in connection with the execution and delivery of this Agreement
and the consummation of the Transactions shall have been obtained or made. All
filings required under the HSR Act shall have been made and the applicable
waiting period shall have expired or been earlier terminated.
(g) NO MATERIAL ADVERSE CHANGE. Since April 30, 2000, there shall not have
been any material adverse change in the operations or business of the Company
resulting from actions or inactions of the management of the Company; PROVIDED,
HOWEVER, that a change in the operations or business of the Company resulting
from (i) actions or decisions not to act by management of the Company taken in
good faith and with the appropriate degree of care, (ii) changes in general
economic conditions, (iii) general changes in the industry in which the Company
is engaged and (iv) general changes in technology shall not constitute a
material adverse change for purposes of this Section 7.1(g).
(h) VOTING AGREEMENT. The Voting Agreement shall have been executed.
(i) SEC FILINGS. All reports and materials filed by the Company since April
30, 2000 with the SEC shall have been accurate and true in all material respects
when made.
(j) INTELLECTUAL PROPERTY. There are no infringements by the Company of any
intellectual property rights of third parties that, individually or in the
aggregate, have or could reasonably be expected to have a material adverse
effect on the business of the Company.
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7.2 CONDITIONS OF SALE. The obligations of IDT and IDT Investments to sell
the Purchased Shares at the Closing is subject to satisfaction or waiver of each
of the following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES; COVENANTS. Each of the representations
and warranties of AT&T set forth in this Agreement that is qualified as to
materiality or material adverse effect shall have been true and correct when
made and shall be true and correct on and as of the Closing Date as if made on
and as of such date (other than representations and warranties which address
matters only as of a certain date which shall be true and correct as of such
certain date), and each of the representations and warranties of AT&T that is
not so qualified shall have been true and correct in all material respects when
made and shall be true and correct in all material respects on and as of the
Closing Date as if made on and as of such date (other than representations and
warranties which address matters only as of a certain date which shall be true
and correct in all material respects as of such certain date). AT&T shall have
performed, and caused Buyer to perform, in all material respects all obligations
and complied with all agreements, undertakings, covenants and conditions
required hereunder to be performed by AT&T at or prior to the Closing. AT&T
shall deliver to IDT and IDT Investments at the Closing a certificate in form
and substance satisfactory to IDT and IDT Investments dated the Closing Date and
signed by the president or a vice-president of AT&T to the effects set forth
above.
(b) INJUNCTIONS. There shall be no injunctions making illegal or otherwise
prohibiting the consummation of the Transactions. There shall be no suits,
hearings, claims, actions or proceedings pending initiated by a Governmental
Authority with respect to the Transactions.
(c) COMPLIANCE WITH APPLICABLE LAWS. The sale of the Purchased Shares on
the terms and conditions herein shall not violate any applicable Law.
(d) REGULATORY CONSENTS. All material consents, authorizations, orders and
approvals of, and filings and registrations with, any Governmental Authority,
required for or in connection with the execution and delivery of this Agreement
and the consummation of the Transactions shall have been obtained or made. All
filings required under the HSR Act shall have been made and the applicable
waiting period shall have expired or been earlier terminated.
(e) VOTING AGREEMENT. The Voting Agreement shall have been executed.
ARTICLE VIII
TERMINATION
8.1 TERMINATION. This Agreement may be terminated at any time prior to the
Closing:
(a) by mutual written consent of the parties hereto;
(b) by IDT or AT&T in the event any Governmental Authority of competent
jurisdiction shall have issued an order, decree, injunction, judgment or ruling
or taken any other
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action restraining, enjoining or otherwise prohibiting the Transactions and such
order, decree, injunction, judgment or ruling or other action shall have become
final and nonappealable; or
(c) by AT&T, if IDT or IDT Investments breaches their obligation contained
in Section 6.2; provided, that AT&T terminates the Agreement within five
Business Days of such action.
8.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement as provided in Section 8.1, this Agreement shall forthwith become
void, and there shall be no liability or obligation on the part of the parties
hereto, except for the obligations set forth in Sections 9.2, 9.3, 9.5, 9.6,
9.7, 9.8, 9.9, 9.13 and 9.14 and this Section 8.2; PROVIDED, HOWEVER, that the
foregoing shall not relieve any party of any liability for damages incurred as a
result of any breach of this Agreement; and PROVIDED, FURTHER, that, in the
absence of actual fraud, neither party shall be liable to the other for the
inaccuracy of any representation made in this Agreement in the event of a
termination.
ARTICLE IX
MISCELLANEOUS
9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained herein shall expire at the Closing.
9.2 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given, if delivered personally, by
telecopier or sent by certified mail, return receipt requested, postage prepaid,
or by a recognized air courier service, as follows:
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If to IDT, to:
IDT Corporation
520 Broad Street
Newark, New Jersey 07102
Attention: Morris Lichtenstein, Executive Vice President, Business
Development
Fax Number: (201) 928-2885
With a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Robert S. Risoleo, Esq.
Fax number: (212) 558-3588
If to IDT Investments, to:
IDT Investments Inc.
2325 B Renaissance Drive
Las Vegas, Nevada 89119
Attention: Jonathan Levy, Secretary
Fax Number: (702) 966-4247
With a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Robert S. Risoleo, Esq.
Fax number: (212) 558-3588
If to AT&T, to:
AT&T Corp.
295 North Maple Avenue
Basking Ridge, New Jersey 07920
Attention: Marilyn J. Wasser, Vice President-Law and Secretary
Fax number: (908) 221-6618
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With a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Seth A. Kaplan, Esq.
Fax number: (212) 403-2000
or to such other address or addresses as shall be designated in writing. All
notices shall be effective when received.
9.3 ENTIRE AGREEMENT; AMENDMENT. Except for Sections 11, 11(a), 11(b) and
12 of the Two-Party Letter Agreement (and agreements effecting the provisions
thereof), Sections 7 and 8 of the Three-Party Letter Agreement (and agreements
effecting the provisions thereof), and the Option Agreement, dated as of March
3, 2000, between IDT and AT&T, this Agreement and the documents described herein
or attached or delivered pursuant hereto set forth the entire agreement by the
parties hereto with respect to the Transactions and supersedes all prior
agreements, understandings and discussions between them and all documents
delivered by or on behalf of the Company, AT&T, IDT or IDT Investments and their
agents and representatives, with respect to such matter. Any provision of this
Agreement may be amended or modified in whole or in part at any time by an
agreement in writing by the parties hereto executed in the same manner as this
Agreement. No failure on the part of any party to exercise, and no delay in
exercising, any right shall operate as waiver thereof, nor shall any single or
partial exercise by either party of any right preclude any other or future
exercise thereof or the exercise of any other right.
9.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to constitute an original, but all
of which together shall constitute one and the same document.
9.5 GOVERNING LAW. This Agreement shall be governed by, and interpreted in
accordance with, the laws of the State of New York applicable to contracts made
and to be performed in that State without regard to conflict of laws provisions
thereof.
9.6 CONSENT TO JURISDICTION; VENUE.
(a) Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of any state or federal court sitting in the City of New York in
any action or proceeding arising out of or relating to this Agreement or any of
the Transactions and hereby irrevocably agrees that all claims in respect of
such action or proceeding may be heard and determined in such state court or, to
the extent permitted by law, in such federal court. Each of the parties hereby
irrevocably consents to the service of process in any such action or proceeding
by the mailing by certified mail of copies of any service or copies of the
summons and complaint and any other process to such party at the address
specified in Section 9.2.
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(b) The parties agree that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.
(c) Nothing in this Section 9.6 shall affect the right of a party to serve
legal process in any other manner permitted by law.
9.7 EXPENSES. Unless otherwise indicated herein and whether or not the
Transactions are consummated, each of the parties hereto shall bear its own
expenses in connection with the negotiation of this Agreement and consummation
of the Transactions, including but not limited to, legal and accounting fees.
9.8 THIRD-PARTY BENEFICIARIES. Nothing in this Agreement, express or
implied, is intended or shall be construed to create any third-party
beneficiaries. AT&T agrees that the Company has no liability with respect to or
which may arise out of the transactions contemplated in this Agreement.
9.9 SUCCESSORS AND ASSIGNS. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, which consent shall not be unreasonably withheld,
and the attempted or purported assignment shall be void; PROVIDED, HOWEVER, that
AT&T may transfer its rights under this Agreement to a directly or indirectly
majority-owned subsidiary without the consent of IDT or IDT Investments and IDT
Investments may transfer its rights under this Agreement to a directly
wholly-owned subsidiary of IDT without the consent of AT&T. Subject to the
preceding sentence, this Agreement shall be binding upon, inure to the benefit
of and be enforceable by the parties and their respective successors and
assigns.
9.10 HEADINGS. The Section, Article and other headings contained in this
Agreement are inserted for convenience of reference only and will not affect the
meaning or interpretation of this Agreement. All references to Sections or
Articles contained herein mean Sections or Articles of this Agreement unless
otherwise stated.
9.11 INTERPRETATION; ABSENCE OF PRESUMPTION.
(a) For the purposes hereof, (i) words in the singular shall be held to
include the plural and vice versa and words of one gender shall be held to
include the other gender as the context requires, (ii) the terms "hereof",
"herein", and "herewith" and words of similar import shall, unless otherwise
stated, be construed to refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Article, Section and paragraph
references are to the Articles, Sections and paragraphs to this Agreement unless
otherwise specified, (iii) the word "including" and words of similar import when
used in this Agreement shall mean "including, without limitation," unless the
context otherwise requires or unless otherwise specified and (iv) the word "or"
shall not be exclusive.
(b) This Agreement shall be construed without regard to any presumption or
rule requiring construction or interpretation against the party drafting or
causing any instrument to be drafted.
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9.12 SEVERABILITY. Any provision hereof which is invalid or unenforceable
shall be ineffective to the extent of such invalidity or unenforceability,
without affecting in any way the remaining provisions hereof.
9.13 SPECIFIC PERFORMANCE. The parties hereto each acknowledge that, in
view of the uniqueness of arrangements contemplated by this Agreement, the
parties hereto would not have an adequate remedy at law for money damages in the
event that this Agreement were not performed in accordance with its terms, and
therefore agree that the parties hereto shall be entitled to specific
enforcement of the terms hereof in addition to any other remedy to which the
parties hereto may be entitled at law or in equity.
9.14 NO CONSEQUENTIAL DAMAGES. Except as prohibited by Law, each party
waives any right it may have to claim or recover any special, exemplary,
punitive or consequential damages, or any damages other than, or in addition to,
actual damages.
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IN WITNESS WHEREOF, this Agreement has been executed on behalf of the
parties hereto by their respective duly authorized officers, all as of the date
first above written.
AT&T CORP.
By: /s/ Edward M. Dwyer
---------------------------------------
Name: Edward M. Dwyer
Title: Vice President and Treasurer
IDT CORPORATION
By: /s/ Howard S. Jonas
---------------------------------------
Name: Howard S. Jonas
Title: Chief Executive Officer
IDT INVESTMENTS INC.
By: /s/ Howard Millendorf
---------------------------------------
Name: Howard Millendorf
Title: President
