EXHIBIT 7(a)
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SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
NET2PHONE HOLDINGS, L.L.C.
Dated as of October 19, 2001
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TABLE OF CONTENTS
Page No.
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ARTICLE I.
DEFINITIONS
1.1. Definitions............................................................2
1.2. Terms Generally.......................................................10
ARTICLE II.
THE COMPANY AND ITS BUSINESS
2.1. Formation of the Company; Effectiveness...............................11
2.2. Company Name..........................................................11
2.3. Term..................................................................11
2.4. Business; Scope of Members' Authority.................................11
2.5. Principal Office; Registered Agent....................................12
2.6. Names and Addresses of Members........................................12
2.7. Certain Representations by Members....................................12
2.8. Withholding Tax.......................................................13
ARTICLE III.
MANAGEMENT OF COMPANY BUSINESS
3.1. Management and Control................................................13
3.2. Appointment of Managers; Removal of Managers; Meetings of
Managers and Members..................................................14
3.3. Significant Decisions.................................................16
3.4. Compensation of Managers..............................................17
3.5. Actions by the Members................................................18
ARTICLE IV.
RIGHTS AND DUTIES OF MEMBERS
4.1. Other Activities of the Members.......................................18
4.2. Liability of Members, Managers and Officers...........................19
4.3. Investment Representations............................................20
4.4. Legend................................................................20
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4.5. Limited Liability of Members..........................................21
4.6. Dealing with Members..................................................21
4.7. Designation of Tax Matters Member.....................................22
4.8. Tax Matters...........................................................22
ARTICLE V.
BOOKS, RECORDS, BUDGETS AND REPORTS
5.1. Books of Account......................................................25
5.2. Availability of Books of Account......................................25
5.3. Annual and Periodic Reports and Statements............................25
5.4. Accounting Expenses...................................................26
ARTICLE VI.
CAPITAL CONTRIBUTIONS, CAPITAL ACCOUNTS, PROFITS AND LOSSES AND ALLOCATIONS
6.1. Capital Contributions of the Members..................................26
6.2. Capital of the Company................................................27
6.3. Return of Capital Contribution........................................27
6.4. Capital Accounts......................................................27
6.5. Profits and Losses....................................................28
6.6. Special Allocations...................................................28
6.7. Other Allocation Rules................................................29
6.8. Tax Allocations: Code Section 704(c).................................29
ARTICLE VII.
DISTRIBUTIONS
7.1. Distribution Policy...................................................30
7.2. Liquidation...........................................................32
ARTICLE VIII.
RECIPROCAL PUT/CALL RIGHTS
8.1. Put Rights............................................................32
8.2. Call Rights...........................................................34
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ARTICLE IX.
TERMINATION OF A MEMBER; TRANSFER OF MEMBERSHIP INTERESTS
9.1. Termination of a Member...............................................35
9.2. Transfer of Membership Interests......................................35
ARTICLE X.
TERMINATION OF THE COMPANY;
LIQUIDATION AND DISTRIBUTION OF ASSETS
10.1. Dissolution and Termination...........................................36
10.2. Distribution Upon Liquidation.........................................37
10.3. Sale of Company Assets................................................38
10.4. Deficit Capital Accounts..............................................38
ARTICLE XI.
REDEMPTION OF CLASS A MEMBERSHIP INTERESTS
11.1. Redemption of the Class A Membership Interests
held by AT&T Sub......................................................38
ARTICLE XII.
AMENDMENTS
12.1. Amendments............................................................39
ARTICLE XIII.
MISCELLANEOUS
13.1. Further Assurances....................................................40
13.2. Notices...............................................................40
13.3. Headings and Captions.................................................40
13.4. Variance of Pronouns..................................................40
13.5. Counterparts..........................................................41
13.6. Governing Law.........................................................41
13.7. Partition.............................................................41
13.8. Invalidity............................................................41
13.9. Assignment; Successors and Assigns....................................41
13.10. Entire Agreement......................................................42
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13.11. No Brokers............................................................42
13.12. Maintenance as a Separate Entity......................................43
13.13. Expenses..............................................................43
13.14. Publicity.............................................................43
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SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
NET2PHONE HOLDINGS, L.L.C.
This Second Amended and Restated Limited Liability Company
Agreement of Net2Phone Holdings, L.L.C. (the "Company") is made, entered into
and effective as of October 19, 2001, by and among AT&T Corp., a New York
corporation ("AT&T"), ITelTech, LLC, a Delaware limited liability company ("AT&T
Sub"), IDT Corporation, a Delaware corporation ("IDT Corporation"), IDT
Domestic-Union, LLC, a Delaware limited liability company ("IDT Sub"), IDT
Investments Inc., a Nevada corporation ("IDT Investments"), Liberty Media
Corporation, a Delaware corporation ("LMC"), and LMC Animal Planet, Inc., a
Colorado corporation ("Liberty Sub"), and each other Person who, in accordance
with the terms hereof, shall become a party to or be bound by the terms of this
Agreement after the date hereof.
R E C I T A L S
WHEREAS, the Company was formed under the Act pursuant to the
Certificate of Formation filed with the Secretary of State of the State of
Delaware on October 17, 2001;
WHEREAS, IDT Sub entered into a Limited Liability Company
Agreement, dated as of October 19, 2001 (the "Limited Liability Company
Agreement"), in respect of the Company, which was amended and restated on
October 19, 2001, by the Amended and Restated Limited Liability Company
Agreement, dated as of October 19, 2001 (the "Amended and Restated Limited
Liability Company Agreement"), entered into by IDT Sub, AT&T Sub and AT&T;
WHEREAS, IDT Sub and AT&T Sub hereby agree to admit IDT
Investments and Liberty Sub as members to the Company, on the terms and
conditions contained in this Agreement;
WHEREAS, AT&T, AT&T Sub, IDT Corporation, IDT Sub, IDT
Investments, LMC and Liberty Sub are entering into this Agreement to jointly own
28,896,750 shares of Class A Common Stock, par value $.01 per share (together
with any shares of such common stock or other property distributed in respect
thereof, the "Common Stock"), of Net2Phone, Inc., a Delaware corporation
("Net2Phone"), and to actively manage the Common Stock through the Company to
increase the value of the Common Stock for the benefit of the parties;
WHEREAS, IDT Sub contributed to the Company the 9,996,750 shares
of Common Stock owned by IDT Sub immediately prior to the execution and delivery
of the Limited Liability Company Agreement (the "IDT Sub Shares") in exchange
for Class A-1 and Class B Membership Interests of the Company, on the terms and
conditions contained in the Limited Liability Company Agreement, the Amended and
Restated Limited Liability Company Agreement and this Agreement;
WHEREAS, AT&T Sub contributed to the Company the 18,900,000
shares of Common Stock beneficially owned by AT&T Sub immediately prior to the
execution and delivery of the Amended and Restated Limited Liability Company
Agreement (the "AT&T Sub Shares") in exchange for Class A and Class B Membership
Interests of the Company, on the terms and conditions contained in the Amended
and Restated Limited Liability Company Agreement and this Agreement; and
WHEREAS, AT&T Sub wishes to transfer certain of its Class A
Membership Interests and Class B Membership Interests in exchange for cash and
stock of Liberty Sub and IDT Investments in accordance with the Exchange
Agreements (as defined herein).
NOW, THEREFORE, in order to carry out their intent as expressed
above and in consideration of the mutual agreements contained herein, the
parties hereby agree to amend and restate the Amended and Restated Limited
Liability Company Agreement in its entirety as follows:
ARTICLE I.
DEFINITIONS
1.1. Definitions. As used in this Agreement, the following
terms shall have the meanings set forth below:
"Act" shall mean the Delaware Limited Liability Company Act,
Sections 18-101 et seq. of Title 6 of the Delaware Code, as amended from time to
time.
"Additional Member" shall mean any Person admitted to the Company
as a Member pursuant to the terms of this Agreement.
"Adjusted Capital Account Deficit" shall mean, with respect to
any Member, the deficit balance, if any, in such Member's Capital Account as of
the end of the relevant period, after giving effect to the following
adjustments:
(i) credit to such Capital Account of any amounts which such
Member is obligated to restore pursuant to any provision of this
Agreement or is deemed to be obligated to restore pursuant to the
penultimate sentence of Treasury
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Regulations Section 1.704-2(g)(1) or pursuant to the penultimate
sentence of Treasury Regulations Section 1.704-2(i)(5); and
(ii) debit to such Capital Account the items described in
Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
This definition of Adjusted Capital Account Deficit and the limitations and
allocations set forth in Section 6.6(a), (b) and (c) hereof are together
intended to comply with Treasury Regulations Section 1.704-1(b)(2)(ii)(d), and
shall be so interpreted.
"Affiliate" shall mean with respect to any Person, any other
Person that directly or indirectly through one or more intermediaries Controls,
is Controlled by or is under common Control with such Person.
"Affiliate Transaction" shall have the meaning set forth in
Section 4.6.
"Agreement" shall mean this Second Amended and Restated Limited
Liability Company Agreement of Net2Phone Holdings, L.L.C., including any
Schedules hereto, as it may hereafter be amended, modified or supplemented from
time to time.
"Amended and Restated Limited Liability Company Agreement" has
the meaning given in the Recitals.
"AT&T" has the meaning given in the Preamble.
"AT&T Restructuring Entity" has the meaning given in Section
13.9.
"AT&T Sub Shares" has the meaning given in the Recitals.
"AT&T Sub" has the meaning given in the Preamble.
"Bankruptcy" shall mean, with respect to the affected party, (i)
the entry of an Order for Relief under Title 11 of the United States Code, (ii)
the admission by such party of its inability to pay its debts as they mature,
(iii) the making by it of an assignment for the benefit of creditors, (iv) the
filing by it of a petition in bankruptcy or a petition for relief under Title 11
of the United States Code or any other applicable federal or state bankruptcy or
insolvency law, (v) the expiration of sixty (60) days after the filing of an
involuntary petition under Title 11 of the United States Code, an application
for the appointment of a receiver for the assets of such party, or an
involuntary petition seeking liquidation, reorganization, arrangement or
readjustment of its debts under any other federal or state insolvency law,
provided that the same shall not have been vacated, set aside or stayed within
such sixty (60)-day period or (vi) the imposition of a judicial or statutory
lien on all or a substantial part of its assets unless such lien is discharged
or vacated or the enforcement thereof stayed within sixty (60) days after its
effective date. With respect to a Member, the foregoing definition of
"Bankruptcy" is intended to
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replace and shall supersede and replace the definition of "bankruptcy" set forth
in Sections 18-101(1) and 18-304 of the Act.
"Board of Managers" shall mean the governing board of the
Company, constituted in accordance with the provisions of Article III hereof.
Each member of the Board of Managers shall constitute a "manager" within the
meaning of the Act.
"Book Value" with respect to any Company Asset shall mean its
adjusted basis for federal income tax purposes, except that the initial Book
Value of any asset contributed by a Member to the Company shall be an amount
equal to the fair market value of such asset as determined by the Board of
Managers, and such Book Value shall thereafter be adjusted in a manner
consistent with Treasury Regulations Section 1.704-l(b)(2)(iv)(g), including as
a result of any revaluations pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(f) in the sole discretion of the Board of Managers.
"Breaching Member" shall have the meaning set forth in Section
2.7.
"Capital Account" when used in respect of any Member shall mean
the Capital Account maintained for such Member in accordance with Section 6.4,
as said Capital Account may be increased or decreased from time to time pursuant
to the terms of Section 6.4.
"Capital Contribution" when used with respect to (x) any Member
shall mean the amount of capital, if any, contributed by such Member in
accordance with Section 6.1(a) and (y) each of the Class A Membership Interests,
Class A-1 Membership Interests and Class B Membership Interests held by a
Member, the amount of capital contributed by the Member with respect to each
such class of Membership Interests.
"Certificate of Formation" shall mean the certificate of
formation of the Company filed with the Secretary of State of the State of
Delaware on October 17, 2001, as the same may be amended and/or restated from
time to time.
"Class A Capital Account" shall have the meaning set forth in
Section 6.4(a).
"Class A Fair Market Value" shall mean, at any time with respect
to a Class A Membership Interest, the value of the distributions that the holder
of such Class A Membership Interest would receive pursuant to Section 10.2(iii)
upon the hypothetical liquidation of the Company at such time. For purposes of
determining the Class A Fair Market Value, the Common Stock shall be valued as
set forth in Section 10.2 hereof.
"Class A Member" shall mean (i) each of AT&T Sub and Liberty Sub
for so long as each holds any Class A Membership Interests, (ii) any transferee
of any Class A Membership Interest who has been admitted to the Company as an
Additional Member
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in accordance with the terms of this Agreement or (iii) any other Person who has
been admitted to the Company as a Class A Member in accordance with the terms of
this Agreement.
"Class A Membership Interest" shall mean one unit of the
authorized Class A Membership Interests of the Company issued and outstanding in
accordance with this Agreement.
"Class A Percentage Interest" shall equal, with respect to any
Class A Member, the number of Class A Membership Interests then held by such
Class A Member divided by the aggregate number of Class A Membership Interests
then issued and outstanding, expressed as a percentage.
"Class A-1 Capital Account" shall have the meaning set forth in
Section 6.4(a).
"Class A-1 Member" shall mean (i) IDT Sub for so long as it holds
any Class A-1 Membership Interests, (ii) any transferee of any Class A-1
Membership Interest who has been admitted to the Company as an Additional Member
in accordance with the terms of this Agreement or (iii) any other Person who has
been admitted to the Company as a Class A-1 Member in accordance with the terms
of this Agreement.
"Class A-1 Membership Interest" shall mean one unit of the
authorized Class A-1 Membership Interests of the Company issued and outstanding
in accordance with this Agreement.
"Class A-1 Percentage Interest" shall equal, with respect to any
Class A-1 Member, the number of Class A-1 Membership Interests then held by such
Class A-1 Member divided by the aggregate number of Class A-1 Membership
Interests then issued and outstanding, expressed as a percentage.
"Class B Capital Account" shall have the meaning set forth in
Section 6.4(a).
"Class B Member" shall mean (i) each of IDT Sub, IDT Investments
and Liberty Sub for so long as each holds any Class B Membership Interests, (ii)
any transferee of any Class B Membership Interest who has been admitted to the
Company as an Additional Member in accordance with the terms of this Agreement
or (iii) any other Person who has been admitted to the Company as a Class B
Member in accordance with the terms of this Agreement.
"Class B Membership Interest" shall mean one unit of the
authorized Class B Membership Interests of the Company issued and outstanding in
accordance with this Agreement.
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"Class B Percentage Interest" shall equal, with respect to any
Class B Member, the number of the Class B Membership Interests then held by such
Class B Member divided by the aggregate number of Class B Membership Interests
then issued and outstanding, expressed as a percentage.
"Code" shall mean the Internal Revenue Code of 1986, as amended,
or any corresponding provision(s) of succeeding law.
"Company Assets" shall mean all right, title and interest of the
Company in and to all or any portion of the assets of the Company, including,
without limitation, securities of, and ownership interests in, Subsidiaries of
the Company, and any property (real, personal, tangible or intangible) acquired
in exchange therefor or in connection therewith.
"Common Stock" shall have the meaning set forth in the recitals.
"Control" shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
another Person, whether through the ownership of voting securities or other
ownership interests by contract or otherwise.
"Damages" shall have the meaning set forth in Section 2.7.
"Distributable Funds" shall mean all cash receipts of the Company
(or released from reserves) during any period, as reduced by the setting aside
during such period of such reserves as the Board of Managers may deem reasonably
necessary for the discharge of liabilities or obligations of the Company and as
increased by the release of any such reserves as determined by the Board of
Managers.
"electronic transmission" has the meaning given in Section
3.2(i).
"Exchange Agreements" shall mean, (i) the exchange agreement,
dated as of the date hereof, among AT&T, AT&T Sub, IDT Corporation, IDT Domestic
Telecom, Inc., IDT Nevada Holdings, Inc. and IDT Investments, and (ii) the
exchange agreement, dated as of the date hereof, among AT&T, AT&T Sub, LMC and
Liberty Sub, pursuant to which the Exchange Transactions will occur.
"Exchange Transactions" shall mean the separate transactions,
entered into as of the date hereof, pursuant to which AT&T Sub (x) is
transferring certain Class A Membership Interests, Class B Membership Interests
and shares of IDTC Class B Common Stock to Liberty Sub in exchange for cash and
shares of preferred stock and common stock of Liberty Sub and (y) is
transferring certain Class B Membership Interests to IDT Investments in exchange
for cash and shares of IDT Investments Preferred Stock.
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"Fiscal Year" shall mean the fiscal year of the Company, which
shall be each twelve-month period ending December 31 of each year; provided,
however, that upon termination of the Company, "Fiscal Year" shall mean the
period from the end of the last preceding Fiscal Year to the date of such
termination.
"IDT Corporation" has the meaning given in the Preamble.
"IDT Investments" has the meaning given in the Preamble.
"IDT Investments Call" has the meaning given in Section 8.2(a).
"IDT Investments Preferred Stock" has the meaning given in
Section 8.1(b).
"IDT Investments Put" has the meaning given in Section 8.1(a).
"IDT Sub" has the meaning given in the Preamble.
"IDT Sub Shares" has the meaning given in the Recitals.
"IDTC Class B Common Stock" has the meaning given in Section
8.1(b).
"Indebtedness" shall mean (i) all indebtedness for borrowed
money or for the deferred purchase price of property, goods and services,
including reimbursement, and all other obligations, absolute or contingent, with
respect to surety bonds, letters of credit and bankers' acceptances whether or
not matured, and xxxxxx, swaps and other derivative contracts and financial
instruments, (ii) all obligations evidenced by notes, bonds, debentures, or
similar instruments, (iii) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to acquired
property (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (iv) all capital lease obligations, (v) all indebtedness referred to
in clause (i), (ii), (iii) or (iv) above secured by (or for which the holder of
such indebtedness has an existing right, contingent or otherwise, to be secured
by) any lien upon or on property owned by the Company or any wholly-owned
Subsidiary (including accounts or contract rights), even though the Company or
such wholly-owned Subsidiary has not assumed or become liable for such
indebtedness, and (vi) all guaranteed indebtedness of others.
"Independent Accountants" has the meaning given in Section
4.8(a).
"Initial Class B Return" has the meaning given in Section
7.1(a)(iii).
"IRR" shall mean the internal rate of return since the date
hereof earned by the Class B Members on the Capital Contributions made with
respect to the Class B Membership Interests taking into account the timing and
amounts of any distributions
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made with respect to the Class B Membership Interests pursuant to Sections
7.1(a) and 10.2.
"IRS" shall mean the Internal Revenue Service and any successor
agency or entity thereto.
"Liberty Sub" has the meaning given in the Preamble.
"Liberty Sub Call" has the meaning given in Section 8.2(a).
"Liberty Sub Preferred Stock" has the meaning given in Section
8.1(c).
"Liberty Sub Put" has the meaning given in Section 8.1(a).
"Limited Liability Company Agreement" has the meaning given in
the Recitals.
"LMC" has the meaning given in the Preamble.
"LMC Manager" has the meaning given in Section 3.2(b).
"Managers" has the meaning given in Section 3.2(a).
"Member" shall mean a Class A Member, a Class A-1 Member or a
Class B Member, as the context may require, in its capacity as a member of the
Company. For purposes of the Act, there are no separate classes or groups of
members other than the Class A Members, the Class A-1 Members and the Class B
Members.
"Membership Interests" means the Class A Membership Interests,
the Class A-1 Membership Interests and the Class B Membership Interests.
"Net2Phone" has the meaning given in the Recitals.
"Organizational Documents" shall mean (if applicable) (i) with
respect to a corporation, such Person's certificate or articles of incorporation
and by-laws (including any constitution or rules constituting such by-laws), and
any shareholder agreement, voting agreement, voting trust or similar arrangement
applicable to any of such Person's authorized shares of capital stock, (ii) with
respect to a partnership, such Person's certificate of limited partnership, if
any, partnership agreement, voting trusts, voting agreements or similar
arrangements applicable to any of its partnership interests or (iii) with
respect to a limited liability company, such Person's certificate of formation,
limited liability company or operating agreement, voting trusts, voting
agreements or similar arrangements applicable to any of its limited liability
company interests.
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"Parent" shall mean (i) LMC with respect to Liberty Sub or any
Permitted Transferee of Liberty Sub, (ii) AT&T (or if the Agreement is assigned
by AT&T to an AT&T Restructuring Entity, the AT&T Restructuring Entity) with
respect to AT&T Sub or any Permitted Transferee of AT&T Sub, (iii) IDT
Corporation with respect to IDT Sub or any Permitted Transferee of IDT Sub and
IDT Investments or any Permitted Transferee of IDT Investments, and (iv) with
respect to each of the foregoing, any assignee pursuant to Section 13.9(a)(ii).
"Permitted Transferee" has the meaning given in Section 9.2.
"Person" shall mean an individual, corporation (including any
non-profit corporation), association, general or limited partnership,
organization, business, firm, limited liability company, joint venture, trust,
estate or other entity, association or organization, whether constituting a
separate legal entity or not.
"Profits" and "Losses" for any period shall mean the taxable
income or loss, as the case may be, of the Company for such period determined in
accordance with Code Section 703(a) and Treasury Regulation Section 1.703-1
computed with the following adjustments:
(i) Items of gain, loss, and deduction shall be
computed based upon the Book Values of the Company's assets (in
accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(g)
and/or 1.704-3(d)) rather than upon the assets' adjusted bases
for federal income tax purposes;
(ii) Any tax exempt income received by the Company
shall be included as an item of gross income;
(iii) The amount of any adjustments to the Book Values
of any assets of the Company pursuant to Code Section 743 shall
not be taken into account; and
(iv) Any expenditure of the Company described in Code
Section 705(a)(2)(B) (including any expenditure treated as being
described in Code Section 705(a)(2)(B) pursuant to Treasury
Regulation under Code Section 704(b)) shall be treated as a
deductible expense.
"Regulatory Allocations" has the meaning given in Section
6.6(d).
"Significant Decision" has the meaning given in Section 3.3.
"Sub-Capital Account" when used in respect of the Membership
Interests held by any Member shall mean the Sub-Capital Account maintained for
such Member in accordance with Section 6.4 with respect to each class of
Membership Interests held by
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such Member, as said Sub-Capital Accounts may be increased or decreased from
time to time pursuant to the terms of Section 6.4.
"Subsidiary" shall mean, with respect to any Person, (x) any
other Person which such Person Controls and (y) in which such Person owns a
majority of the outstanding capital stock or other ownership interests.
"Tax Matters Member" shall initially be IDT Sub who shall serve
as Tax Matters Member until such time as a successor Tax Matters Member is
appointed by the Board of Managers.
"Terminating Event" has the meaning given in Section 9.1.
"Total Class B Return" has the meaning given in Section
7.1(a)(iv).
"Transaction Documents" shall mean the Exchange Agreements and
this Agreement.
"Transfer" shall have the meaning set forth in Section 9.2.
"Treasury Regulations" shall mean the regulations promulgated
under the Code, as amended.
"Voting Agreement" shall mean the Voting Agreement, dated as of
August 11, 2000, by and between AT&T Sub and IDT Investments.
1.2. Terms Generally. For all purposes of this Agreement,
except as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined herein have the meanings assigned to
them herein and include both the plural and the singular, as the context may
require;
(b) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision; and
(c) the words "including" and "include" and other words of
similar import shall be deemed to be followed by the phrase "without
limitation."
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ARTICLE II.
THE COMPANY AND ITS BUSINESS
2.1. Formation of the Company; Effectiveness. Prior to the
date hereof, the Certificate of Formation was filed with the Secretary of State
of the State of Delaware. The Members hereby agree to execute and file any
required amendments to the Certificate of Formation and shall do all other acts
required for the constitution of the Company as a limited liability company
under the laws of the State of Delaware. The Members and the Board of Managers
hereby ratify and approve the execution, delivery and filing of the original
Certificate of Formation with the Secretary of State of the State of Delaware by
Xxxxxx Xxxxxx, and all other certificates executed, delivered and filed as of
the date hereof with the Secretary of State of the State of Delaware by any
officer of the Company, as an authorized person within the meaning of the Act.
Thereafter, Xxxxxx Xxxxxx'x powers as an authorized person ceased, and any
Person authorized by the Board of Managers as an authorized person within the
meaning of the Act shall execute, deliver and file, or cause the execution,
delivery and filing of, all certificates (and any amendments and/or restatements
thereof) required or permitted by the Act to be filed with the Secretary of
State of the State of Delaware.
2.2. Company Name. The business of the Company shall be
conducted under the name of "Net2Phone Holdings, L.L.C." in the State of
Delaware and under such name or such assumed or trade names as the Board of
Managers deem necessary or appropriate to comply with the requirements of any
other jurisdiction in which the Company may be required to qualify.
2.3. Term. The term of the Company commenced on the date the
Secretary of State of the State of Delaware accepted for filing the Certificate
of Formation for the Company and shall continue until the Company is dissolved
pursuant to Article X of this Agreement.
2.4. Business; Scope of Members' Authority.
(a) The Company is organized for the object and purpose of,
and the nature of the business to be conducted and promoted by the Company is,
engaging in any lawful act or activity for which limited liability companies may
be formed under the Act and engaging in any and all activities necessary,
convenient, desirable or incidental to the foregoing, including, without
limitation, acquiring, holding, managing, operating and disposing of real and
personal property.
(b) Except as otherwise expressly and specifically provided
in this Agreement, no Member shall have any authority to bind or act for, or
assume any obligations or responsibility on behalf of, any other Member or the
Company. Neither the Company nor any Member shall, by virtue of executing this
Agreement, be
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responsible or liable for any Indebtedness or obligation of the other Members
incurred or arising either before or after the execution of this Agreement,
except that the Company shall be responsible for the responsibilities,
liabilities, Indebtedness and obligations of the Company incurred after the date
hereof pursuant to and as limited by the terms of this Agreement.
2.5. Principal Office; Registered Agent. The principal office
of the Company shall be at 000 Xxxxx Xxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx,
Xxxxxx 00000. The Company may change its place of business to such location or
locations as may at any time or from time to time be determined by the Board of
Managers. The mailing address of the Company shall be at 000 Xxxxx Xxxxxxxxx
Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxx 00000, or such other address as may be
selected from time to time by the Board of Managers. The registered office and
registered agent in the State of Delaware of the Company shall be c/o The
Corporation Trust Company, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000.
2.6. Names and Addresses of Members. The names and addresses
of the Members are set forth on Schedule I hereto, as such schedule shall be
amended from time to time to reflect changes in the Members or their addresses.
Upon execution and delivery of this Agreement IDT Investments and Liberty Sub
shall be admitted to the Company as Members and IDT Sub and AT&T Sub shall
continue as Members.
2.7. Certain Representations by Members. Each Member
represents, warrants, agrees and acknowledges that, as of the date hereof, (i)
it has been duly authorized to purchase and hold its Membership Interests and to
execute and deliver this Agreement and all other instruments executed and
delivered on behalf of it in connection with the acquisition of its Membership
Interests, (ii) the execution and delivery of this Agreement and the performance
of its obligations hereunder will not result in a breach or violation of, a
default under, or conflict with (A) its Organizational Documents or (B) any
existing agreement to which it or any of its properties or assets is subject,
other than in the case of clause (ii) (B) above, such breaches, violations,
defaults and conflicts that will not materially adversely affect the ability of
the Company and the Members to consummate the transactions and acts contemplated
by this Agreement and, to the best of its knowledge, will not subject the
Company, any wholly-owned Subsidiary of the Company or the Members to any
material liability or materially and adversely affect the ability of the Company
or any wholly-owned Subsidiary of the Company to conduct its business as
currently conducted or as proposed to be conducted, (iii) this Agreement has
been duly authorized, executed and delivered by, and is a binding agreement on
the part of, such Member enforceable against such Member in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles, and (iv) all authorizations,
consents, approvals, orders, notices, filings, registrations, qualifications and
exemptions of, with or from any court, administrative agency or commission or
other federal, state or local governmental authority and
12
agencies, departments or subdivisions thereof or any self-regulatory authority
required to be obtained or made by or on behalf of such Member in connection
with the execution of this Agreement or the performance of its obligations
hereunder, to its knowledge, have been duly obtained or made by such Member and
are in full force and effect, other than authorizations, consents, approvals,
orders, notices, filings, registrations, qualifications and exemptions the
absence of which would not have individually or in the aggregate a material
adverse effect on the transactions contemplated by this Agreement. Each Member
agrees to indemnify the Company, any wholly-owned Subsidiary of the Company and
each other Member against any and all claims, demands, losses, damages,
liabilities, lawsuits and other proceedings, judgments and awards, and costs and
expenses (including, but not limited to, reasonable attorneys' fees)
(collectively, "Damages") incurred by the Company or any such other Member or
any Affiliate of any Member arising from any breach by such Member of any of the
foregoing representations and warranties or the representations and warranties
contained in Section 6.1(b) of this Agreement (the "Breaching Member");
provided, however, that (A) if the Breaching Member is AT&T Sub, AT&T shall also
covenant and agree to indemnify the Company, any wholly-owned Subsidiary of the
Company and each other Member against any and all Damages arising from AT&T
Sub's breach of any of the foregoing representations and warranties, (B) if the
Breaching Member is IDT Sub or IDT Investments, IDT Corporation shall also
covenant and agree to indemnify the Company, any wholly-owned Subsidiary of the
Company and each other Member against any and all Damages arising from IDT Sub's
or IDT Investments' breach of any of the foregoing representations and
warranties, and (C) if the Breaching Member is Liberty Sub, LMC shall also
covenant and agree to indemnify the Company, any wholly-owned Subsidiary of the
Company and each other Member against any and all Damages arising from Liberty
Sub's breach of any of the foregoing representations and warranties.
2.8. Withholding Tax. Each Member represents and warrants
that it is not a foreign partner under Section 1446(e) of the Code.
ARTICLE III.
MANAGEMENT OF COMPANY BUSINESS
3.1. Management and Control.
(a) Except as otherwise specifically set forth in this
Agreement, the Board of Managers of the Company, acting in accordance with the
terms of this Agreement, including, but not limited to, Section 3.2, shall have
the right, power and authority to oversee the business and affairs of the
Company and to do all things necessary to manage the business of the Company,
and the Board of Managers is hereby authorized to take any action of any kind
and to do anything and everything the Board of Managers deems necessary or
appropriate in accordance with the provisions of this
13
Agreement and applicable law. Any action taken by the Board of Managers in
accordance with the terms of this Agreement that is not otherwise in violation
of applicable law shall constitute the act of, and shall serve to bind, the
Company.
(b) No Member shall take any action on behalf of or in the
name of the Company, or enter into any commitment or obligation binding upon the
Company, except for actions authorized by the Board of Managers in the manner
set forth herein.
3.2. Appointment of Managers; Removal of Managers; Meetings
of Managers and Members.
(a) The Board of Managers shall be comprised of five (5)
Managers of the Company (the "Managers"), who shall be appointed by Members
owning a majority of the Class A-1 Membership Interests, subject to the consent
of the other Members, which shall not be unreasonably withheld. For so long as
Liberty Sub owns a majority of the Membership Interests owned by it on the date
hereof, the Class A-1 Member or Members agree to cause one nominee selected by
Liberty Sub to be appointed as a Manager of the Company (the "LMC Manager"). A
Manager need not be a Member. The initial Managers shall be those individuals
designated on Schedule II hereto.
(b) Each Manager shall hold office until his death,
resignation or removal as set forth in this Section 3.2(b). Any Manager may
resign at any time upon written notice to the Board of Managers. Such
resignation shall take effect at the time specified therein, and unless
specified therein, no acceptance of such resignation shall be necessary to make
it effective. Any Manager may be removed with or without cause by Members owning
a majority of the Class A-1 Membership Interests, and any Person designated to
replace such Manager shall be appointed in accordance with Section 3.2(a);
provided, however, that so long as Liberty Sub owns a majority of the Membership
Interests owned by it on the date hereof, the Class A-1 Member or Members, shall
not, without Liberty Sub's consent, remove or cause the removal without cause of
the LMC Manager.
(c) As soon as practicable after the date hereof, each of
AT&T Sub and IDT Investments shall (i) assign its rights under the Voting
Agreement to the Company and (ii) use reasonable best efforts to fully cooperate
with each other and with the Company in removing and replacing the directors of
Net2Phone currently designated by AT&T Sub and in ensuring that the directors of
Net2Phone designated by IDT Investments are elected to the Net2Phone board of
directors.
(d) The Board of Managers shall make all decisions relating
to the casting of votes in respect of the Common Stock on all matters submitted
to a vote of, or seeking the written consent of, the stockholders of Net2Phone,
including the election and removal of directors to the board of directors of
Net2Phone.
14
(e) The Board of Managers may hold meetings, both regular
and special, either within or without the State of Delaware.
(f) Regular meetings of the Board of Managers may be called
by any Manager on one (1) day's prior notice to each member of the Board of
Managers, either personally or by mail or by facsimile, at such time and such
place as from time to time shall be determined by the Board of Managers, but in
any event shall be held at least once every quarter.
(g) Special meetings of the Board of Managers may be called
by any Manager on one (1) day's prior notice to each member of the Board of
Managers, either personally or by mail or by facsimile. Such notice shall state
the purpose or purposes for which the special meeting is called.
(h) At all meetings of the Board of Managers, three (3)
Managers, present in person or represented by proxy, shall constitute a quorum
for the transaction of business and, provided proper notice has been given to
the Managers, the act of a majority of the Managers, present in person or
represented by proxy, at any meeting at which there is a quorum shall be the act
of the Board of Managers and, subject to Section 3.3, shall conduct, oversee and
manage the business and affairs of the Company.
(i) Any action required or permitted to be taken at any
meeting of the Board of Managers may be taken without a meeting if the Managers
having not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all Managers were present,
consent thereto in writing or by electronic transmission and the writing or
writings or electronic transmission or transmissions are filed with the minutes
of the Company. Such filing shall be in paper form if the minutes are maintained
in paper form and shall be in electronic form if the minutes are maintained in
electronic form. As used in this Agreement, "electronic transmission" means any
form of communication, not directly involving the physical transmission of
paper, that creates a record that may be retained, retrieved and reviewed by a
recipient thereof, and that may be directly reproduced in paper form by such a
recipient through an automated process.
(j) Managers may participate in a meeting of the Board of
Managers by means of conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other, and
such participation in a meeting shall constitute presence in person at the
meeting.
(k) Each Manager shall have the right to receive all printed
information distributed to any member of the Board of Managers in his or her
capacity as a Manager.
(l) Each Manager may authorize another person or persons to
act for such Manager by proxy at any meeting of the Board of Managers.
15
3.3. Significant Decisions. The Company shall not, and no
Manager of the Company shall have the power or authority to cause the Company
to, without the prior unanimous consent of all of the Members, take any action
in respect of a Significant Decision; provided, however, that if a Member
receives notice from the Company, either personally or by mail or by facsimile,
describing in reasonable detail an action with respect to a Significant Decision
that the Company intends to adopt, and such Member does not notify the Company
in writing within seven (7) days or such longer period as may be stated in the
notice that it does not consent to the taking of such action, such Member shall
be deemed to have consented to the taking of such action with respect to the
Significant Decision. For purposes of this Agreement, each of the following
matters shall constitute a "Significant Decision":
(a) the adoption, amendment, alteration or repeal of any
provision or term of any Organizational Document of the Company;
(b) any merger or consolidation involving, or any
reorganization, dissolution (other than as expressly provided in Article X or
Article XI hereof), liquidation or the issuance of equity securities or
securities convertible into or exchangeable for equity securities (other than in
any of the foregoing instances any merger or consolidation of a wholly owned
Subsidiary of the Company, if any, with or into the Company or another wholly
owned Subsidiary of the Company which would not have a material adverse tax
effect on any Member) or other winding-up or termination of, the Company (or the
adoption of a plan to do any of the foregoing);
(c) the purchase or other acquisition (by merger,
consolidation or otherwise) by the Company of any stock or equity interests in
or of any other Person, or any assets of any other Person, or any business (or a
substantial part of a business), other than the purchase or other acquisition of
(i) securities issued by governmental agencies backed by the full faith and
credit of the United States government, (ii) deposits with, certificates of
deposit issued by and securities repurchase contracts with commercial banks or
primary financial institutions, (iii) commercial paper, or (iv) shares of money
market mutual or similar funds which invest exclusively in assets satisfying the
requirements of clauses (i), (ii) or (iii) hereof;
(d) except as otherwise provided in this Agreement, the
redemption, purchase, repurchase or other acquisition for value of any
Membership Interests (other than as expressly provided in Article VIII and
Article XI hereof) or any debt securities of the Company or any wholly-owned
Subsidiary of the Company (except to the extent such debt security is required
to be so redeemed, purchased, repurchased or otherwise acquired in accordance
with the terms of this Agreement);
(e) the sale, transfer, pledge or hypothecation of any
shares of Common Stock other than to a wholly-owned Subsidiary of the Company;
16
(f) subject to subsection (i) below, the entering into of
any contract or transaction with or for the direct or indirect benefit of, or
payment or provision of any money or other form of consideration, directly or
indirectly, to or for the benefit of, or assumption, guarantee or becoming
otherwise liable for any indebtedness or other obligation of, or sale, lease (as
lessor or lessee), transfer, giving or other assignment or acquisition of any
properties or assets, tangible or intangible, or services to or from, any Member
or any of their respective Affiliates; provided, that subject to subsection (i)
below, the unanimous consent of the Members shall not be required for the
advancement of any working capital to the Company by IDT Corporation and LMC as
contemplated in Section 4.1(e);
(g) taking any action or failing to take any action that
could reasonably be expected to result in (i) the Company failing to be treated
as a partnership for U.S. federal income tax purposes or (ii) the termination of
the Company under Section 708(b) of the Code;
(h) accepting contributions of capital from any Member after
the date hereof;
(i) enter into any contract or arrangement which requires
payment to or by the Company or any of its Subsidiaries in an amount, whether
payable at one time or in a series of payments, in excess of U.S. $500,000 over
the life of the contract or arrangement, except for any contract or arrangement
which require payment of reasonable fees relating to administrative or
professional services provided to the Company or any of its Subsidiaries;
(j) cause any settlement of any litigation or other
governmental proceeding or which provides for the release of a Manager from any
liability for damages to the Company caused by fraud or willful misconduct of
such Manager; provided, however, that the consent of the Members to take action
with respect to this Section 3.3(j) shall not be unreasonably withheld;
(k) entering into, assuming or becoming bound by any
contract to do any of the foregoing, or otherwise attempting to do any of the
foregoing, either directly or indirectly.
Notwithstanding anything to the contrary contained herein, any action required
to be taken by the Company pursuant to Article VII shall not be deemed a
Significant Decision.
3.4. Compensation of Managers. The Managers shall not be
entitled to any compensation in connection with management services rendered to
the Company. All expenses incurred by the Managers in connection with travel to
and from meetings of
17
the Board of Managers shall be borne by the Class A-1 Member, other than the
expenses of the LMC Manager, which shall be borne by Liberty Sub.
3.5. Actions by the Members. All actions required or
permitted to be taken by the Members may be taken without a meeting. The Members
having not less than the minimum number of votes that would be necessary to
authorize or take an action may consent in writing or by electronic transmission
to the authorization or taking of an action and the written consent or
electronic transmission or transmissions shall be filed with the minutes of the
Company. The filing shall be in paper form if the minutes are maintained in
paper form and shall be in electronic form if the minutes are maintained in
electronic form.
ARTICLE IV.
RIGHTS AND DUTIES OF MEMBERS
4.1. Other Activities of the Members. (a) Subject to Sections
4.1(b) and 4.1(c), this Agreement shall not be construed to create any duty or
obligation on the part of any of the Members, the Company or any other person
employed by, related to or in any way affiliated with any Member or the Company
to disclose or offer to the Company or the Members, or obtain for the benefit of
the Company or the Members, any other activity or venture or interest therein,
or to create on the part of the Company, any of the Members, any creditors of
the Company or any other Person having any interest in the Company (i) any
claim, right or cause of action against any of the Members or any other Person
employed by, related to or in any way affiliated with, any of the Members by
reason of any direct or indirect investment or other participation, whether
active or passive, in any other activity or venture or interest therein or (ii)
any right to any such activity or venture or interest therein or the income or
profits derived therefrom.
(b) AT&T hereby undertakes to use its reasonable best
efforts to make valuable and meaningful introductions for the Company to
appropriate executives at AT&T (or its Broadband division or Business division
if separate entities) and certain PTTs and equipment manufacturers where AT&T
would face no conflict of interest. AT&T further will endeavor to provide, when
appropriate, intangible value to the Company through its contacts and
relationships and, as appropriate and in its sole discretion, to purchase
products and services from Net2Phone for its own use.
(c) IDT Corporation hereby undertakes that, to the extent
that as owner, directly or indirectly, of (i) the IDT Sub Shares, (ii) any
Membership Interests or (iii) any shares of Common Stock, it is entitled to the
proceeds of any judgment or award resulting from any lawsuit or other legal
proceeding brought by Net2Phone or the stockholders of Net2Phone against AT&T
Sub or its Affiliates relating to any matter pertaining to AT&T Sub's ownership
of Common Stock prior to the date hereof or its obligations under the agreements
relating to the AT&T Sub Shares, IDT Corporation
18
shall, and cause it Affiliates to, as soon as practicable after the receipt by
IDT Corporation or any of its Affiliates of such proceeds, transfer such
proceeds (net of any taxes payable with respect to such proceeds) to AT&T Sub
for its sole benefit; provided, however, that for purposes of this Section
4.1(c), Net2Phone shall not be deemed an Affiliate of IDT Corporation.
(d) The provisions of Sections 4.1(b) and (c) hereof were
negotiated in good faith by the parties hereto, and the parties hereto agree
that such provisions are reasonable and are not more restrictive than necessary
to protect the legitimate interests of the parties hereto. If any provision of
Section 4.1(b) or (c) hereof shall for any reason be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of such Section 4.1(b) or (c). It is the
intention of the parties hereto that if any of the covenants contained in
Section 4.1(b) or (c) is in any way construed to be too broad or to any extent
invalid, such provision shall not be construed to be null, void and of no
effect, but to the extent such provision would be valid or enforceable under
applicable law, such Section 4.1(b) or (c) shall be construed, interpreted or
reformed to provide for a covenant having the maximum enforceable provisions as
shall be valid and enforceable under applicable law.
(e) From time to time, IDT Corporation and/or LMC may
advance or cause any of their Affiliates to advance working capital to the
Company in the form of loans in such amounts as the Board of Managers deems
appropriate in order to fund administrative and professional services required
by the Company, subject to terms and conditions on arm's-length basis (including
interest payments, sufficient collateral to secure the obligations and other
commercial terms) satisfactory to IDT Corporation and LMC.
4.2. Liability of Members, Managers and Officers.
(a) Except as otherwise expressly provided herein, no Member
(including any Member acting in its capacity as the Tax Matters Member), Manager
or officer of the Company shall be liable, responsible or accountable in damages
or otherwise, with respect to matters or actions relating to the Company, under
this Agreement to the Company or to any other Member or Manager for (i) any act
performed or omission made in good faith except for fraud or the willful
misconduct of such Member, Manager or officer, (ii) such Member's, Manager's or
officer's performance of, or failure to perform, any act on the reasonable
reliance on advice of legal counsel to the Company or (iii) the negligence,
malfeasance or bad faith of any agent, consultant or broker of the Company
selected, engaged or retained in good faith. In any threatened, pending or
completed action, suit or proceeding, each Member (including any Member acting
in its capacity as the Tax Matters Member), Manager and officer shall be fully
protected and indemnified and held harmless by the Company to the fullest extent
permitted by applicable law against all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, proceedings, costs, expenses and
disbursements of any kind or
19
nature whatsoever (including, without limitation, reasonable attorneys' fees,
costs of investigation, fines, judgments and amounts paid in settlement,
actually incurred by such Member, Manager or officer in connection with such
action, suit or proceeding) by virtue of its status as a Member (including by
virtue of any Member's status as the Tax Matters Member), Manager or officer, as
the case may be, or with respect to any action or omission taken or suffered in
good faith, other than liabilities and losses resulting from fraud or the
willful misconduct of such Member, Manager or officer. The indemnification
provided by this Section 4.2(a) shall be recoverable only out of the assets of
the Company, and no Member or Manager shall have any personal liability on
account thereof.
(b) To the extent that, at law or in equity, a Member,
Manager or officer of the Company has duties (including fiduciary duties) and
liabilities relating thereto to the Company or to another Member or Manager,
such Member, Manager or officer of the Company acting in connection with the
Company's business or affairs, shall not be liable to the Company or to any
Member or Manager for its good faith reliance on the provisions of this
Agreement. The provisions of this Agreement, to the extent that they restrict
the duties and liabilities of a Member, Manager or officer of the Company
otherwise existing at law or in equity, are agreed by the Members to replace
such other duties and liabilities of such Member, Manager or officer of the
Company in the context of this Agreement.
4.3. Investment Representations. Each Member agrees that it
will not Transfer all or any portion of, or offer to Transfer all or any portion
of, such Membership Interests, or solicit offers to buy from or otherwise
approach or negotiate in respect thereof with any Person or Persons whomsoever,
all or any portion of such Membership Interests (i) in any manner which would
violate or cause the Company or any Member to violate applicable federal or
state securities laws and (ii) other than in accordance with the provisions of
this Agreement.
4.4. Legend. The Company may issue certificates representing
Membership Interests and in the event that the Company issues such certificates,
such certificates shall bear substantially the following legend:
"THE MEMBERSHIP INTERESTS REPRESENTED HEREBY WERE ORIGINALLY
ISSUED AS OF OCTOBER 19, 2001, HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION
THEREUNDER OR IN VIOLATION
20
OF ANY SUCH STATE SECURITIES LAWS. THE SECURITIES REPRESENTED
HEREBY ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER
AND CERTAIN OTHER AGREEMENTS SET FORTH IN THE SECOND AMENDED AND
RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF THE COMPANY AND
THE COMPANY RESERVES THE RIGHT TO REFUSE THE TRANSFER OF THE
SHARES REPRESENTED HEREBY UNTIL THE CONDITIONS THEREIN HAVE BEEN
FULFILLED WITH RESPECT TO SUCH TRANSFER. UPON WRITTEN REQUEST, A
COPY OF THE SECOND AMENDED AND RESTATED LIMITED LIABILITY
COMPANY AGREEMENT SHALL BE FURNISHED BY THE COMPANY TO THE
HOLDER HEREOF WITHOUT CHARGE."
4.5. Limited Liability of Members.
(a) Except as otherwise expressly provided herein or in the
Act, no Member (and no director, officer, employee or controlling Person (if
any) of such Member) shall be bound by, or be personally liable for, any
expense, liability, indebtedness or obligations of the Company or any Subsidiary
of the Company or of any other Member. Moreover, except as otherwise expressly
provided herein or in the Act or for breach of this Agreement, no Member (and no
director, officer, employee or controlling Person (if any) of such Member) shall
have any liability under this Agreement to the Company or any other Member other
than, with respect to such Member only, its Capital Contributions. The Members
shall not be required to contribute any amounts in excess of the amounts set
forth in Section 6.1 hereof.
(b) To the fullest extent permitted by applicable law,
recourse for any monetary liability or obligation of a Member to the Company or
any other Member under this Agreement shall be had only against the Membership
Interests held by such Member or the value thereof, and not against other assets
of such Member.
(c) Notwithstanding Sections 4.5(a) and (b) hereof, each
Member shall be fully liable to contribute its Capital Contribution in
accordance with Section 6.1 hereof.
4.6. Dealing with Members. The fact that a Member, an
Affiliate of a Member or any officer, director, employee, partner, consultant or
agent of a Member, is directly or indirectly interested in or connected with any
person, firm or corporation employed by the Company to render or perform a
service, or from or to whom the Company may buy or sell any property or have
other business dealings, shall not prohibit
21
the Company from employing such person, firm or corporation or from dealing with
him or it (each, an "Affiliate Transaction") on arm's-length terms, and neither
the Company nor any of the Members shall have any rights in or to any income or
profits derived therefrom by the party to any such Affiliate Transaction.
4.7. Designation of Tax Matters Member.
(a) The Tax Matters Member shall act as the "tax matters
partner" of the Company, as provided in the regulations pursuant to Section 6231
of the Code. The Tax Matters Member shall initially be IDT Sub, which shall
serve as Tax Matters Member until such time as a successor Tax Matters Member is
appointed by the Board of Managers. Any Person serving as the Tax Matters Member
may be removed and a new Tax Matters Member may be appointed by the Board of
Managers. Any Tax Matters Member who is to be replaced by a successor Tax
Matters Member in accordance with this Section 4.7(a) shall certify that another
Member has been selected as the Tax Matters Member of the Company by filing a
statement to that effect with the IRS in the form and manner prescribed by
Section 301.6231(a)(7)-1(d) of the Treasury Regulation. Each Member hereby
approves of such designation and agrees to execute, certify, acknowledge,
deliver, swear to, file and record at the appropriate public offices such
documents as may be deemed necessary or appropriate to evidence such approval.
To the extent and in the manner provided by applicable Code sections and
Treasury Regulations thereunder, the Tax Matters Member (a) shall furnish the
name, address, profits interest and taxpayer identification number of each
Member to the IRS and (b) shall inform each Member of administrative or judicial
proceedings for the adjustment of Company items required to be taken into
account by a Member for income tax purposes. The Tax Matters Member shall act
reasonably at all times and keep the other Members reasonably informed about its
actions.
(b) All reasonable out-of-pocket expenses and costs incurred
by any Tax Matters Member in its capacity as Tax Matters Member shall be paid by
the Company as an ordinary expense of its business.
4.8. Tax Matters.
(a) The Board of Managers shall prepare all tax returns of
the Company; provided, however, that the Board of Managers shall not file any
such tax return without the approval of all Members, which approval shall not be
unreasonably withheld. The Board of Managers shall cause the Company to
circulate to each Member for its review and approval a draft of any income tax
return no later than ninety (90) days after the end of the Company's Fiscal
Year. If any Member shall object to any items on the return within thirty (30)
days, then the Members and the Board of Managers shall attempt to agree on a
mutually acceptable resolution of any disputed tax items. If the Member and the
Board of Managers cannot resolve their disagreement within 10 days, either the
Member or the Board of Managers may request, in writing with a copy sent to
22
the other party, that the disagreement be resolved by a mutually agreed upon
"big five" independent accounting firm (Xxxxxx Xxxxxxxx LLP, Xxxxx & Xxxxx LLP,
PricewaterhouseCoopers LLP, KPMG LLP or Deloitte & Touche LLP) (the "Independent
Accountants") and the Independent Accountants shall be instructed to resolve the
dispute by, first determining if both positions have merit, and if not, shall
adopt the position that has merit. If the Independent Accountants determines
that both positions have merit, the Independent Accountants shall adopt the
position that will maximize, in the aggregate, the U.S. Federal, state and local
income tax advantages and will minimize, in the aggregate, the U.S. Federal,
state, and local income tax detriments, available to the Company's Members. The
Independent Accountants shall provide their written resolution of the
disagreement to both the Member and the Board of Managers within 15 days from
the date that the Independent Accountants were requested to resolve such
disagreement. If the Independent Accountants are incapable of resolving such
disagreement based on the above-stated criteria, the position of the Board of
Managers shall prevail.
(b) The Board of Managers shall furnish a copy of all filed
tax returns of the Company to each of the Members. In addition, upon reasonable
written notice provided to the Company by a Member (and as otherwise required by
law), the Company shall furnish such Members, on a timely basis, with all
information relating to the Company required to be reported in any U.S. Federal,
state and local tax returns of such Members, including a report indicating such
Member's allocable share for U.S. Federal income tax purposes of the Company's
income, gain, credits, losses and deductions.
(c) The Members shall report their tax items with respect
to, and arising from, their Membership Interests in a manner that is consistent
with the Company's tax returns.
(d) The Board of Managers shall provide prompt notice to the
Members of advice that the IRS or any applicable state or local taxing authority
intends to examine any tax returns or records or books of the Company and of any
notice from the IRS in any administrative or judicial proceeding at the Company
level relating to the determination of any item of income, gain, loss, deduction
or credit of the Company, in each case together with a copy of such IRS or state
or local taxing authority notice and any written materials submitted by the
Board of Managers in response to such notice. In the event of any tax audit or
any contest, dispute or litigation with respect to the treatment of, or
liability of the Company for, any U.S. Federal, state or local income tax for
any taxable period (or portion of a taxable period) of the Company beginning
after the date hereof, the Board of Managers shall control, defend and otherwise
represent the Company in such audit, contest, dispute or litigation; provided,
however, that any Member that constitutes a "notice partner" (as defined in Code
Section 6231(a)(8)) of the Company shall have the right, directly or through its
designated representatives, to review in advance and timely comment upon all
significant written submissions made in the course of such audit, contest,
dispute or litigation and to participate in, directly or through
23
its designated representatives, all conferences, meetings or proceedings with
any taxing authority, and all appearances before any court or judicial body, the
subject matter of which is or includes an item for which such Member's U.S.
Federal income tax liability or U.S. Federal income tax benefits could be
increased or decreased, respectively, by more than $1,000,000 with respect to
the Fiscal Year at issue. The Board of Managers shall advise any Member that
constitutes a "notice partner" of the Company (as described above) of any
written proposed adjustment by the IRS that would increase (directly or through
such Member's interest in any intermediate entities) such Member's U.S. Federal
income tax liability (or decrease (directly or through such Member's interest in
any intermediate entities) such Member's U.S. Federal tax benefits) by more than
$1,000,000 with respect to the Fiscal Year at issue. If the Board of Managers
proposes that such adjustment be approved, the Company shall not concede such
adjustment without such "notice partner" Member's prior written approval, which
approval shall not be unreasonably withheld. In the event of a disagreement
between the Board of Managers and a "notice partner" Member with respect to such
adjustment, the procedures for resolving disagreements set forth in Section
4.8(a) hereof shall apply.
(e) The Board of Managers shall take any steps necessary
pursuant to Code Section 6223(a) to designate any Member who so requests, as a
"notice partner" (as defined in Code Section 6231(a)(8)) if such Member so
requests. In addition, nothing in this Agreement is intended to waive any
rights, including rights to participate in administrative and judicial
proceedings, that a Member may have under Code Sections 6221 through 6233,
inclusive.
(f) Notwithstanding any other provisions of this Agreement,
the provisions of this Section 4.8 shall survive the dissolution of the Company
or the termination of any Member's interest in the Company and shall remain
binding on all Members for a period of time necessary to resolve with the IRS or
any applicable state or local taxing authority all matters (including
litigation) regarding the U.S. Federal, state and local income taxation, as the
case may be, of the Company or any Member with respect to the Company.
(g) The parties hereby agree that the Company will file all
of its tax returns in a manner that is consistent with the tax positions set
forth in Sections 4.08 and 7.01 of the Exchange Agreement documenting the
transfer by AT&T Sub of certain Class B Membership Interests to IDT Investments
and on the basis that the contributions by the Members of the Common Stock to
the Company are tax-free transactions under Code Section 721.
24
ARTICLE V.
BOOKS, RECORDS, BUDGETS AND REPORTS
5.1. Books of Account. At all times during the continuance of
the Company, the Board of Managers shall keep or cause to be kept true and
complete books of account in accordance with United States generally accepted
accounting principles (except as noted in the last sentence of Section 5.3) and
in which shall be entered fully and accurately the transactions of the Company.
Such books of account shall be kept on the basis of the Fiscal Year in
accordance with the accrual method of accounting, and shall reflect all
transactions of the Company in accordance with United States generally accepted
accounting principles (except as noted in the last sentence of Section 5.3).
5.2. Availability of Books of Account. All of the books of
account referred to in Section 5.1, together with an executed copy of this
Agreement, the Certificate of Formation and any amendments thereto shall at all
times be maintained at the principal office of the Company or such other place
in the State of Nevada or in such other state as the Board of Managers may
designate in writing to the Members, and upon reasonable notice to the Board of
Managers, shall be open to the inspection and examination of the Members or
their representatives during reasonable business hours for purposes reasonably
related to their Membership Interests.
5.3. Annual and Periodic Reports and Statements. For each
Fiscal Year, the Board of Managers shall send or shall cause to be sent to each
Person who was a Member at any time during such Fiscal Year, within one hundred
and twenty (120) days after the end of such Fiscal Year, the consolidated annual
financial statements of the Company including an annual balance sheet, profit
and loss statement and a statement of changes in financial position, and a
statement showing distributions to the Members, all as prepared in accordance
with United States generally accepted accounting principles consistently applied
(except as noted in the last sentence of this Section 5.3) and audited by the
Company's independent public accountants, which shall be a firm of Independent
Accountants and, within one hundred and twenty (120) days after the end of the
Fiscal Year, a statement showing allocations to the Members of taxable income,
gains, losses, deductions and credits, as prepared by such accountants. In
addition, the Board of Managers shall send or cause to be sent to each Member
(i) within forty-five (45) days after the end of the first three fiscal quarters
of each year, a quarterly report, as applicable, setting forth such financial
and operating information as the Board of Managers shall reasonably determine
but which shall include a consolidated balance sheet and income statement
(except as noted in the last sentence of this Section 5.3), (ii) such monthly
and quarterly financial reporting information as the Board of Managers shall
reasonably determine and (iii) such financial and other information concerning
the Company as is reasonably requested by any Member that is necessary for the
preparation of (A) such Member's federal, state and local income or other tax
returns or (B) any filing, notice or application made by or on behalf of such
Member to or with any
25
regulatory body having jurisdiction over such Member, subject to the right of
the Company to withhold any confidential information that it reasonably
determines will not remain confidential and that the public disclosure of which
could adversely affect the Company. In addition to the rights under this
Agreement and under the Act, the Company may provide such information to such
Members and such other Persons as it deems appropriate. Notwithstanding the
foregoing, in no event shall the results of Net2Phone be consolidated within
such financial statements.
5.4. Accounting Expenses. All out-of-pocket expenses payable
to Persons in connection with the keeping of the books and records of the
Company and the preparation of audited or unaudited financial statements and
federal and local tax and information returns required to implement the
provisions of this Agreement or required by any governmental authority with
jurisdiction over the Company shall be borne by the Company as an ordinary
expense of its business.
ARTICLE VI.
CAPITAL CONTRIBUTIONS, CAPITAL
ACCOUNTS, PROFITS AND LOSSES AND ALLOCATIONS
6.1. Capital Contributions of the Members.
(a) IDT Sub has made a Capital Contribution to the Company
in the form of the IDT Sub Shares, as of the date of the Limited Liability
Company Agreement, with 1,300,000 shares of Common Stock exchanged for Class B
Membership Interests and 8,696,750 shares of Common Stock exchanged for Class
A-1 Membership Interests. AT&T Sub has made a Capital Contribution to the
Company in the form of the AT&T Sub Shares, as of the date of the Amended and
Restated Limited Liability Company Agreement, with 6,200,000 shares of Common
Stock exchanged for Class A Membership Interests and 12,700,000 shares of Common
Stock exchanged for Class B Membership Interests. No other Member is making a
Capital Contribution. The Exchange Transactions are hereby approved in all
respects.
(b) Each of AT&T Sub and IDT Sub represents, warrants and
acknowledges that immediately prior to its Capital Contribution, it owned the
AT&T Sub Shares or the IDT Sub Shares, as applicable, beneficially and of
record, free and clear of any mortgage, pledge, lien, security interest, claim,
restriction, charge or encumbrance of any kind. Each of AT&T Sub and IDT Sub
represents, warrants and acknowledges that it owns its Membership Interests,
subject, in the case of AT&T Sub, to the Exchange Agreements, beneficially and
of record, free and clear of any mortgage, pledge, lien, security interest,
claim, restriction, charge or encumbrance of any kind, other than as provided in
the Transaction Agreements.
(c) The Membership Interests held by each Member and the
Capital
26
Contributions attributable to each class of Membership Interests held by each
Member, before and after giving effect to the Exchange Transactions, are set
forth on Schedule III hereto, as such schedule may be hereafter amended from
time to time.
6.2. Capital of the Company. The capital of the Company shall
be the aggregate capital in all of the Members' Capital Accounts. Except as
otherwise provided herein, no Member shall be entitled to (i) withdraw or
receive any interest or other return on its Capital Contribution or (ii)
voluntarily contribute capital to the Company.
6.3. Return of Capital Contribution. Except as otherwise
provided in this Agreement, no Member shall have the right to demand the return
of all or any part of its Capital Contribution until the Company has been
dissolved, or, in the event it has such right, to demand or receive any property
other than cash in return for its Capital Contribution.
6.4. Capital Accounts.
(a) The Company shall maintain separate Capital Accounts for
each Member in accordance with Section 704(b) of the Code and the Treasury
Regulations thereunder. In addition, the Company shall maintain separate
Sub-Capital Accounts for each Member (i) with respect to the Class A Membership
Interests held by such Member (the "Class A Capital Account"), (ii) with respect
to the Class A-1 Membership Interests held by such Member (the "Class A-1
Capital Account") and (iii) with respect to the Class B Membership Interests
held by such Member (the "Class B Capital Account"), each in the same manner as
the Capital Accounts except that only items allocable or attributable to each
individual class of Membership Interests shall be taken into account. The
Capital Accounts and the Sub-Capital Accounts of each Member as of the date
hereof, after giving effect to the Exchange Transactions, are deemed to equal
the dollar amounts set forth opposite such Member's name on Schedule IV hereto
as of the date hereof.
(b) The Capital Account of each Member shall be increased by
the amount of any Profits allocated to such Member. The Capital Account of each
Member shall be decreased by (i) the amount of any Losses allocated to such
Member and (ii) the amount of distributions to such Member. In all respects, the
Members' Capital Accounts shall be determined in accordance with the detailed
capital accounting rules set forth in Treasury Regulations Section
1.704-1(b)(2)(iv) as currently in effect and may be adjusted in the sole
discretion of the Board of Managers as provided in Treasury Regulations Section
1.704-1(b)(2)(iv)(f) as currently in effect.
(c) A transferee of all (or a portion) of the Membership
Interests held by a Member shall succeed to the Capital Account, Sub-Capital
Account and Capital Contributions attributable to the transferred Membership
Interests.
27
6.5. Profits and Losses. Except as otherwise set forth in
Section 6.6 hereof, Profits, Losses and items of income, gain, deduction and
loss of the Company for each Fiscal Year shall be allocated among all Persons
who were Members during such Fiscal Year at the direction of the Board of
Managers in a manner that will, as nearly as possible, cause the Capital Account
balance of each Member (as computed for purposes of section 704(b) of the Code),
as of the date the Board of Managers determine the allocations, to be equal to
the sum of the amounts of cash or the Book Value of other property that would be
distributable to such Member pursuant to Article X hereof at such time upon a
hypothetical liquidation of the Company assuming that all the remaining assets
of the Company were sold for their Book Values, all debts of the Company were
paid according to their terms (with any nonrecourse debt for U.S. Federal income
tax purposes deemed paid in amounts not in excess of the Book Value of the
property securing such nonrecourse debt) and the cash or other property received
therefrom was distributed to the Members in accordance with the priorities set
forth in Article X hereof.
6.6. Special Allocations.
The following special allocations shall be made in the following
order:
(a) Qualified Income Offset. In the event any Member
unexpectedly receives any adjustments, allocations, or distributions described
in Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704-1(b)(2)(ii)(d)(6) of the Treasury Regulations, items of Company income and
gain shall be specially allocated to such Member in an amount and manner
sufficient to eliminate, to the extent required by the Treasury Regulations, the
Adjusted Capital Account Deficit of the Member as quickly as possible; provided
that an allocation pursuant to this Section 6.6(a) shall be made only if and to
the extent that the Member would have an Adjusted Capital Account Deficit after
all other allocations provided for in this Article VI have been tentatively made
as if this Section 6.6(a) were not in the Agreement.
(b) Gross Income Allocations. In the event any Member has an
Adjusted Capital Account Deficit at the end of any Fiscal Year, each such Member
shall be specially allocated items of Company income and gain in the amount of
such excess as quickly as possible; provided that an allocation pursuant to this
Section 6.6(b) shall be made only if and to the extent that such Member would
have an Adjusted Capital Account Deficit in excess of such sum after all other
allocations provided for in this Article VI have been made as if Section 6.6(a)
and this Section 6.6(b) were not in the Agreement.
(c) Loss Limitation. Losses allocated pursuant to Section
6.5 hereof shall, to the extent possible, not exceed the maximum amount of
Losses that can be allocated without causing any Member to have an Adjusted
Capital Account Deficit at the end of any Fiscal Year. In the event some but not
all of the Members would have Adjusted Capital Account Deficits as a consequence
of an allocation of Losses pursuant
28
to Section 6.5 hereof, the limitation set forth in this Section 6.6(c) shall be
applied on a Member by Member basis and Losses not allocable to any Member as a
result of such limitation shall be allocated to the other Members in accordance
with the positive balances in such Member's Capital Accounts so as to allocate
the maximum permissible Losses to each Member under Section 1.704-1(b)(2)(ii)(d)
of the Treasury Regulations. Any remaining Losses shall be allocated to the
Members in the proportion and to the extent to which such Members bear the
economic risk with respect to such Losses.
(d) Curative Allocations. The allocations set forth in
Section 6.6 hereof (the "Regulatory Allocations") are intended to comply with
certain requirements of the Treasury Regulations. It is the intent of the
Members that, to the extent possible, all Regulatory Allocations shall be offset
either with other Regulatory Allocations or with special allocations of other
items of Company income, gain, loss or deduction pursuant to this Section
6.6(d). Therefore, notwithstanding any other provision of this Article VI (other
than the Regulatory Allocations), to the extent permitted under the Treasury
Regulations, the Board of Managers shall make such offsetting special
allocations of Company income, gain, loss or deduction in whatever manner it
determines appropriate so that, after such offsetting allocations are made, each
Member's Capital Account balance is, to the extent possible, equal to the
Capital Account balance such Member would have had if the Regulatory Allocations
were not part of the Agreement and all Company items were allocated pursuant to
Section 6.5.
6.7. Other Allocation Rules.
(a) For purposes of determining the Profits, Losses, or any
other items allocable to any period, Profits, Losses, and any such other items
shall be determined on a daily, monthly, or other basis, as determined by the
Board of Managers using any permissible method under Code Section 706 and the
Treasury Regulations thereunder.
(b) The Members are aware of the income tax consequences of
the allocations made by this Article VI and hereby agree to be bound by the
provisions of this Article VI in reporting their shares of Company income and
loss for income tax purposes.
(c) Notwithstanding anything to the contrary in this Article
VI, the Board of Managers shall be permitted to allocate Profits and Losses and
gross items of income, gain, loss and deduction and to adjust the Members'
Capital Accounts in the manner the Board of Managers, in its reasonable
discretion, deems required to cause the Capital Account balances of the Members
to be consistent with the distribution provisions of Article VII.
6.8. Tax Allocations: Code Section 704(c).
(a) For tax purposes, all items of income, gain, loss,
deduction, expense and credit, shall be allocated in the same manner as are
Profits and Losses and
29
items of income, gain, loss and deduction pursuant to Sections 6.5, 6.6 and 6.7;
provided, however, that in accordance with Code Section 704(c) and the Treasury
Regulations thereunder, income, gain, loss and deductions with respect to any
property contributed to the capital of the Company shall, solely for tax
purposes, be allocated among the Members so as to take account of any variation
between the adjusted basis of such property to the Company for federal income
tax purposes and its initial Book Value (computed in accordance with the
definition of Book Value) using any permissible method as provided in the
Treasury Regulations.
(b) In the event the Book Value of any Company asset is
adjusted pursuant to subparagraph (ii) of the definition of Book Value,
subsequent allocations of income, gain, loss and deductions with respect to such
asset shall take account of any variation between the adjusted basis of such
asset for federal income tax purposes and its Book Value in the same manner as
under Code Section 704(c) and the Treasury Regulations thereunder using any
permissible method as provided in the Treasury Regulations.
(c) Any elections or other decisions relating to such
allocations shall be made by the Board of Managers in its sole discretion.
Allocations pursuant to this Section 6.8 are solely for purposes of federal,
state and local taxes and shall not affect, or in any way be taken into account
in computing any Member's Capital Account or share of Profits, Losses, other
items or distributions pursuant to any provisions of this Agreement.
(d) No election shall be made under Section 754 of the Code
for the Company unless otherwise determined by the Board of Managers in its sole
discretion.
ARTICLE VII.
DISTRIBUTIONS
7.1. Distribution Policy.
(a) Subject to Paragraph (b) below, the Company shall
distribute Distributable Funds only when, as and if determined by the Board of
Managers. Distributable Funds on any distribution date shall be distributed to
the Members in the following order of priority:
(i) First, 100% to the Class B Membership Interests
in accordance with the Class B Percentage Interests until the
cumulative amounts distributed pursuant to this Section
7.1(a)(i) equal the Capital Contributions made with respect to
the Class B Membership Interests;
(ii) Second, 58.4% to the Class A-1 Membership
Interests in
30
accordance with the Class A-1 Percentage Interests and 41.6% to
the Class A Membership Interests in accordance with the Class A
Percentage Interests until the cumulative amounts distributed
pursuant to this Section 7.1(a)(ii) equal the aggregate of the
Capital Contributions made with respect to the Class A-1
Membership Interests and the Class A Membership Interests;
(iii) Third, 100% to the Class B Membership Interests
in accordance with the Class B Percentage Interests until the
sum of the cumulative distributions to the Class B Membership
Interests pursuant to Section 7.1(a)(i) and this Section
7.1(a)(iii) represents an annual IRR of 8.5% compounded
quarterly with respect to the Class B Membership Interests (the
"Initial Class B Return") as of such distribution date;
(iv) Fourth, 58.4% to the Class B Membership
Interests in accordance with the Class B Percentage Interests
and 41.6% to the Class A Membership Interest in accordance with
the Class A Percentage Interests until the sum of the cumulative
distributions to the Class B Membership Interests pursuant to
Section 7.1(a)(i), Section 7.1(a)(iii) and this Section
7.1(a)(iv) represents an annual IRR of 13% compounded quarterly
with respect to the Class B Membership Interests (the "Total
Class B Return") as of such distribution date; and
(v) Fifth, 58.4% to the Class A-1 Membership
Interests in accordance with the Class A-1 Percentage Interests
and 41.6% to the Class A Membership Interests in accordance with
the Class A Percentage Interests.
(b) All amounts withheld pursuant to any provision of any
U.S. federal, state, local or foreign tax law with respect to any payment,
distribution or allocation to the Company or the Members shall be treated as
amounts distributed to the Members pursuant to Section 7.1(a) for all purposes
of this Agreement. The Board of Managers is authorized to withhold from
distributions, or with respect to allocations, to the Members and to pay over to
any U.S. federal, state, local or foreign government any amounts required to be
so withheld pursuant to the Code or any provision of any other U.S. federal,
state or local law and shall allocate such amounts to those Members with respect
to which such amounts were withheld. To the extent that withholding taxes and
other related expenses paid to any U.S. federal, state, local or foreign
government on behalf of a Member exceed the amount of any distribution the
Member would otherwise receive from the Company, the Board of Managers may, in
its discretion, require such Member to contribute cash to the Company up to the
amount paid on such Member's behalf.
31
7.2. Liquidation. In the event of any sale or other
disposition of all or substantially all of the assets of the Company in
accordance with the terms of this Agreement, the Company shall be dissolved and
the proceeds of such sale or other disposition shall be distributed to the
Members in liquidation as provided in Article X.
ARTICLE VIII.
RECIPROCAL PUT/CALL RIGHTS
8.1. Put Rights.
(a) AT&T Sub may, at its sole option, by written notice to
the relevant party (or parties) delivered not more than fifteen (15) days prior
to, or within fifteen (15) after, the first anniversary of the date hereof,
transfer, within 30 days of providing such written notice, (x) six (6) of its
Class A Membership Interests in exchange for cash and stock of IDT Investments
(the "IDT Investments Put") and/or (y) twenty-three (23) of its Class A
Membership Interests in exchange for cash and stock of Liberty Sub (the "Liberty
Sub Put"), in either case valued at the Class A Fair Market Value of such
Membership Interests, calculated as of such first anniversary.
(b) If the Class A Fair Market Value required to be paid
with respect to the IDT Investments Put is $7.4 million or less at the time the
IDT Investments Put is exercised, then at least 90% of such Class A Fair Market
Value shall be paid by IDT Investments to AT&T Sub in cash and the remaining
portion (with the exact combination to be determined in the sole discretion of
IDT Investments) of such Class A Fair Market Value shall be paid by IDT
Investments to AT&T Sub in the form of preferred stock of IDT Investments having
terms and conditions substantially similar to the terms and conditions contained
on Schedule V-A hereto ("IDT Investments Preferred Stock"). If the Class A Fair
Market Value required to be paid with respect to the IDT Investments Put is
greater than $7.4 million at the time the IDT Investments Put is exercised, then
IDT Investments may elect, at its sole option, to pay the portion of such Class
A Fair Market Value that exceeds $7.4 million in the form of a combination of
cash and shares of Class B Common Stock, par value $0.01 per share, of IDT
Corporation ("IDTC Class B Common Stock") up to 90% of such excess (with the
exact combination to be determined in the sole discretion of IDT Investments)
and 10% to be paid in the form of IDT Investments Preferred Stock. For purposes
of this Section 8.1(b), the value of a share of Class B Common Stock shall be
determined to be the average (rounded to the nearest 1/10,000) of the closing
prices of the IDTC Class B Common Stock during regular trading hours on the
principal market on which shares of IDTC Class B Common Stock are then listed or
quoted (whether the NASDAQ National Market, The New York Stock Exchange or
another national securities exchange or association) for the twenty (20)
consecutive trading day period ending on the first anniversary of the date
hereof. Such satisfaction of the IDT Investments Put shall, at the option of IDT
Investments, be
32
structured in the most tax efficient manner as determined by IDT Investments;
provided, that such structuring shall not change the payment terms of the IDT
Investments Put described above.
(c) The Class A Fair Market Value required to be paid with
respect to the Liberty Sub Put shall be paid at the time the Liberty Sub Put is
exercised, with at least 90% to be paid by Liberty Sub to AT&T Sub in the form
of cash and the remaining portion (with the exact combination to be determined
in the sole discretion of Liberty Sub) to be paid by Liberty Sub to AT&T Sub in
the form of preferred stock of Liberty Sub having terms and conditions
substantially similar to the terms and conditions contained on Schedule V-B
hereto ("Liberty Sub Preferred Stock"). Such satisfaction of the Liberty Sub Put
shall, at the option of Liberty Sub, be structured in the most tax efficient
manner as determined by Liberty Sub; provided, that such structuring shall not
change the payment terms of the Liberty Sub Put described above.
(d) Subject to the immediately succeeding sentence, IDT
Investments or Liberty Sub, as the case may be, shall pay to AT&T Sub the Class
A Fair Market Value as provided in Section 8.1(b) or 8.1(c), as the case may be,
within thirty (30) days of the date the IDT Investments Put or the Liberty Sub
Put, as the case may be, is exercised. In the event that the payment of any
portion of the Class A Fair Market Value required to be paid with respect to the
IDT Investments Put or the Class A Fair Market Value required to be paid with
respect to the Liberty Sub Put requires any statutory or regulatory approval,
the making of any statutory or regulatory filing or notification or the passage
of any waiting period required under applicable statute or regulation, the
payment of any such portion requiring such approval, filing, notification or
passage of such waiting period shall be postponed until after all such approvals
have been obtained, all such filings and notifications have been made and all
such waiting periods have passed; provided, however, that in no event shall the
payment date be extended beyond 180 days of the date the IDT Investments Put or
the Liberty Sub Put, as the case may be, was exercised. The parties agree to
cooperate in good faith and use all commercially reasonable efforts to obtain
any such approvals, make any such filings and notifications and secure the
termination of any such waiting periods.
(e) The IDT Investments Put may be assigned by IDT
Investments to Liberty Sub or any of its Affiliates at any time without the
consent of AT&T or AT&T Sub; provided, however, that if the IDT Investments Put
is assigned to Liberty Sub or any of its Affiliates, Liberty Sub or its
Affiliate, as the case may be, shall be permitted to satisfy the IDT Investments
Put in part by delivering to AT&T Sub shares of Liberty Sub Preferred Stock to
the extent IDT Investments would have been permitted to satisfy the IDT
Investments Put in part by delivering to AT&T Sub shares of IDT Investments
Preferred Stock;
(f) The Liberty Sub Put may be assigned by Liberty Sub to
IDT Investments or any of its Affiliates at any time without the consent of AT&T
or AT&T
33
Sub; provided, however, that if the Liberty Sub Put is assigned to IDT
Investments or any of its Affiliates, IDT Investments or its Affiliate, as the
case may be, shall be permitted to satisfy the Liberty Sub Put in part by
delivering to AT&T Sub shares of IDT Investments Preferred Stock to the extent
Liberty Sub would have been permitted to satisfy the Liberty Sub Put in part by
delivering to AT&T Sub shares of Liberty Sub Preferred Stock.
8.2. Call Rights.
(a) IDT Investments may, at its sole option, by written
notice to the relevant party (or parties) delivered not more than thirty (30)
days prior to, or within thirty (30) days after, the second anniversary of the
date hereof, require AT&T Sub to transfer, within ten (10) days of providing
such written notice (but in no event prior to the second anniversary of the date
hereof), six (6) of the Class A Membership Interests held by AT&T Sub in
exchange for cash and stock of IDT Investments (the "IDT Investments Call"), and
Liberty Sub may, at its sole option, require AT&T Sub to transfer on such second
anniversary twenty three (23) of the Class A Membership Interests held by AT&T
Sub in exchange for cash and stock of Liberty Sub (the "Liberty Sub Call"), in
either case valued at the Class A Fair Market Value of such Membership
Interests, calculated as of such second anniversary.
(b) The Class A Fair Market Value required to be paid with
respect to the IDT Investments Call shall be paid within ten (10) days after the
IDT Investments Call is exercised (but in no event prior to the second
anniversary of the date hereof), with at least 90% to be paid in cash and the
remaining portion to be paid in IDT Investments Preferred Stock, with the exact
combination to be determined in the sole discretion of IDT Investments. Such
satisfaction of the IDT Investments Call shall, at the option of IDT
Investments, be structured in the most tax efficient manner as determined by IDT
Investments; provided, that such structuring shall not change the payment terms
of the IDT Investments Call described above
(c) The Class A Fair Market Value required to be paid with
respect to the Liberty Sub Call shall be paid within ten (10) days after the
Liberty Sub Call is exercised (but in no event prior to the second anniversary
of the date hereof), with at least 90% to be paid in cash and the remaining
portion to be paid in Liberty Sub Preferred Stock, with the exact combination to
be determined in the sole discretion of Liberty Sub. Such satisfaction of the
Liberty Sub Call shall, at the option of Liberty Sub, be structured in the most
tax efficient manner as determined by Liberty Sub; provided, that such
structuring shall not change the payment terms of the Liberty Sub Call described
above.
(d) The IDT Investments Call may be assigned by IDT
Investments or any of its Affiliates to Liberty Sub at any time without the
consent of AT&T or AT&T Sub; provided, however, that if the IDT Investments Call
is assigned to Liberty Sub or any of its Affiliates, Liberty Sub or its
Affiliate, as the case may be, shall be permitted to
34
satisfy the IDT Investments Call in part by delivering to AT&T Sub shares of
Liberty Sub Preferred Stock to the extent IDT Investments would have been
permitted to satisfy the IDT Investments Put in part by delivering to AT&T Sub
shares of IDT Investments Preferred Stock.
(e) The Liberty Sub Call may be assigned by Liberty Sub to
IDT Investments or any of its Affiliates at any time without the consent of AT&T
or AT&T Sub; provided, however, that if the Liberty Sub Call is assigned to IDT
Investments or any of its Affiliates, IDT Investments or its Affiliate, as the
case may be, shall be permitted to satisfy the Liberty Sub Put in part by
delivering to AT&T Sub shares of IDT Investments Preferred Stock to the extent
Liberty Sub would have been permitted to satisfy the Liberty Sub Put in part by
delivering to AT&T Sub shares of Liberty Sub Preferred Stock.
ARTICLE IX.
TERMINATION OF A MEMBER; TRANSFER OF MEMBERSHIP INTERESTS
9.1. Termination of a Member. The expulsion, dissolution or
Bankruptcy of a Member or any other event that terminates the continued
membership of any Member (each a "Terminating Event") shall not in and of itself
cause the Company to be dissolved, wound up or terminated unless, no later than
ninety (90) days following a Terminating Event with respect to a Member, Members
owning all of the remaining Membership Interests unanimously determine not to
continue the business of the Company, in which case the Company shall dissolve
and liquidate pursuant to Article X hereof and the remaining Members shall
select the liquidator pursuant to such Article. No Member shall have the right
to withdraw or resign as a Member or, except as provided in Section 10.1(a)(i),
dissolve the Company voluntarily.
9.2. Transfer of Membership Interests. No Member may
transfer, sell, pledge, hypothecate, encumber, assign or otherwise dispose of
(whether voluntarily, involuntarily, by operation of law or otherwise) (each, a
"Transfer") any Membership Interest, or agree or contract to Transfer any
Membership Interests held by such Member, without the unanimous consent of the
other Members to (x) such Transfer and (y) the admission of the proposed
transferee as a Member of the Company. Notwithstanding the foregoing, a Member
may Transfer any or all of its Membership Interests to (i) the Parent of such
Member and/or (ii) one or more Subsidiaries of the Parent of such Member;
provided that any such transferee agrees to be bound by the terms of this
Agreement applicable to the Membership Interests so transferred and either (1)
the other Members are reasonably satisfied that such transferee has the ability
to meet the obligations it would have hereunder or (2) the transferring Member
or the Parent of such Member guarantees the performance of such obligations
(each, a "Permitted Transferee"). Any attempted or purported Transfer in
violation of this Section 9.2 shall be void and of no
35
force or effect. For purposes of this Agreement, any Transfer by a Parent or any
Subsidiary of a Parent of any direct or indirect interest in a Member which
results in such Member ceasing to be a Subsidiary of such Parent shall be deemed
a Transfer by such Member of all of its Membership Interests.
ARTICLE X.
TERMINATION OF THE COMPANY;
LIQUIDATION AND DISTRIBUTION OF ASSETS
10.1. Dissolution and Termination.
(a) The Company shall be dissolved only upon the occurrence
of any of the following:
(i) the delivery of a written notice by any Member
on or after January 1, 2004 to the other Members electing to
unwind and dissolve the Company; provided, however, that such
election to unwind the Company shall not be effective if at any
time prior to or within 30 days after the date of any such
notice, the Class A-1 Members and Class B Members have elected
to acquire or cause the Company to redeem the Class A Membership
Interests held by AT&T Sub pursuant to Section 11.1;
(ii) the sale or other disposition of all or
substantially all of the Common Stock held directly or
indirectly by the Company and receipt of the final payment of
any installment obligation received as a result of any such sale
or disposition;
(iii) the unanimous written consent of all Members;
(iv) any event which makes it unlawful for the
Company's business to be continued unless, no later than thirty
(30) days following such event, the Members unanimously
determine not to dissolve the Company;
(v) the issuance of a decree by any court of
competent jurisdiction that the Company be dissolved and
liquidated; or
(vi) at any time that there are no Members of the
Company, unless the Company is continued in accordance with the
Act.
Upon dissolution, the Company shall wind-up its affairs and shall be liquidated
and a certificate of cancellation of the Company's Certificate of Formation, as
required by law, shall be filed.
36
(b) In the event of the dissolution of the Company, its
business activities shall be wound up, any amounts due from the Members shall be
collected, its debts and liabilities shall be satisfied and its remaining
assets, if any, shall be distributed as set forth in Section 10.2 below.
Dissolution shall be effective on the date of the occurrence of an event set
forth in Section 10.1(a) but the Company shall not terminate until all of the
Company Assets have been liquidated and the proceeds distributed in accordance
with the provisions of this Article X. Notwithstanding the dissolution of the
Company, prior to the termination of the Company as aforesaid, the business of
the Company and the affairs of the Members as such, shall continue to be
governed by this Agreement.
10.2. Distribution Upon Liquidation. Upon dissolution of the
Company, the Board of Managers, as provided in this Agreement, or if there shall
be none, a trustee or liquidator appointed by unanimous consent of the Members
shall proceed to the liquidation of the Company and the proceeds of such
liquidation shall, notwithstanding any other provision of this Agreement to the
contrary, be applied and distributed in the following order of priority:
(i) to creditors other than Members (whether by
payment or the making of reasonable provision for payment
thereof, including the setting up of any reserves that the
Managers or trustee or liquidator, as the case may be, shall
determine are reasonably necessary for any liabilities or
obligations of the Company) in satisfaction of all Indebtedness
and liabilities of the Company (including the expenses of the
liquidation);
(ii) to Members who are creditors (whether by payment
or the making of reasonable provision for payment thereof,
including the setting up of any reserves that the Managers or
trustee or liquidator, as the case may be, shall determine are
reasonably necessary for any liabilities or obligations of the
Company) in satisfaction of other debts and liabilities of the
Company owed to Members; and
(iii) to the Members in accordance with Section 7.1(a)
hereof.
Any Member may elect to receive distributions in kind of Common Stock held
directly or indirectly by the Company to be distributed prior to any sale of
shares of Common Stock or any Company Assets. In such case, the Company shall
xxxx-to-market the shares of Common Stock based on the average (rounded to the
nearest 1/10,000) of the closing prices of the Common Stock of Net2Phone during
regular trading hours on the principal market on which shares of Common Stock of
Net2Phone are then listed or quoted (whether the NASDAQ National Market, The New
York Stock Exchange or another national securities exchange or association) for
the twenty (20) trading days up to and including such date and distribute Common
Stock to such electing Member in lieu of cash in the amount that such Member
would have received pursuant to clause (iii) above
37
if all shares of Common Stock were distributed to all the Members in a final
liquidation of the Company after all obligations under clauses (i) and (ii)
above are satisfied and the number of shares of Common Stock to be distributed
to such electing Member are adjusted accordingly to satisfy such electing
Member's pro rata share of such obligations.
10.3. Sale of Company Assets.
(a) As expeditiously as possible after dissolution, the
Board of Managers, or any trustee or liquidator, shall satisfy all Company
Indebtedness and liabilities, and make the distributions provided for in Section
10.2. Except as agreed by the Board of Managers and subject to paragraph (b)
below, the priorities set forth in Section 10.2 and each Member's right to elect
to receive distributions in kind of Common Stock held directly or indirectly by
the Company as set forth in Section 10.2, no Member shall have the right to
demand or receive property other than cash upon liquidation, and the Board of
Managers, or any such trustee or liquidator, shall, in any event, have the power
to sell Company Assets for cash.
(b) In connection with the sale by the Company and reduction
to cash of its assets, although the Company has no obligation to offer to sell
any property to the Members, any Member or any Affiliate of any Member may bid
on and purchase any Company Assets. If the Board of Managers, or any such
trustee or liquidator, determines that an immediate sale of part or all of the
Company's assets would cause undue loss to the Members, the Members, or any
trustee or liquidator, may, with the approval of the Board of Managers, defer
liquidation of and withhold from distribution for a reasonable time any Company
Assets (except those necessary to satisfy the Company's current obligations).
10.4. Deficit Capital Accounts. Notwithstanding anything to
the contrary contained in this Agreement, and notwithstanding any custom or law
to the contrary, upon dissolution of the Company, any deficit in a Member's
Capital Account shall not be an asset of the Company and such Member shall not
be obligated to contribute such amount to the Company to bring the balance of
such Member's Capital Account to zero.
ARTICLE XI.
REDEMPTION OF
CLASS A MEMBERSHIP INTERESTS
11.1. Redemption of the Class A Membership Interests held by
AT&T Sub. On or after January 1, 2004, the Class A-1 Members and the Class B
Members may agree to elect to either (i) acquire or (ii) cause the Company to
redeem the Class A Membership Interests held by AT&T Sub. If such Members so
elect, with notice of such
38
election to be delivered to the Class A Members in accordance with Section 13.2,
then (x) such Members may cause the Company to redeem the Class A Membership
Interests held by AT&T Sub with Common Stock at the Class A Fair Market Value
(with shares of Common Stock to be marked-to-market in accordance with Section
10.2) or (y) either or both of IDT Investments and Liberty Sub may acquire the
Class A Membership Interests held by AT&T Sub at the Class A Fair Market Value
(with shares of Common Stock to be marked-to-market in accordance with Section
10.2), for at least 90% cash and up to 10% IDT Investments Preferred Stock or
Liberty Sub Preferred Stock, as the case may be. Such transaction shall, at the
option of IDT Investments or Liberty Sub, as the case may be, be structured in
the most tax efficient manner as determined by IDT Investments or Liberty Sub,
as the case may be; provided, that such structuring shall not change the payment
terms described above. Subject to the immediately succeeding sentence, IDT
Investments, Liberty Sub or the Company, as the case may be, shall pay to AT&T
Sub the Class A Fair Market Value as provided in this Section 11.1 within thirty
(30) days of the date such Member or Members or the Company elected to acquire
the Class A Membership Interests held by AT&T Sub. In the event that the payment
of any portion of the Class A Fair Market Value required to be paid with respect
to such redemption requires any statutory or regulatory approval, the making of
any statutory or regulatory filing or notification or the passage of any waiting
period required under applicable statute or regulation, the payment of any such
portion requiring such approval, filing, notification or passage of such waiting
period shall be postponed until after all such approvals have been obtained, all
such filings and notifications have been made and all such waiting periods have
passed; provided, however, that in no event shall the payment date be extended
beyond 180 days of such election date. The parties agree to cooperate in good
faith and use all commercially reasonable efforts to obtain any such approvals,
make any such filings and notifications and secure the termination of any such
waiting periods.
ARTICLE XII.
AMENDMENTS
12.1. Amendments. (a) Amendments may be made to this Agreement
from time to time by the unanimous consent of the Members. In making any
amendments, there shall be prepared and filed by the Board of Managers such
documents and certificates as shall be required to be prepared and filed. All
amendments to this Agreement shall be in writing.
(b) Notwithstanding anything to the contrary contained in
this Agreement, the Board of Managers shall amend Schedules I through IV hereof
to reflect the admission of Additional Members, the Transfer of Membership
Interests, changes in the Capital Accounts of Members and any other changes in
the information set forth therein accomplished in accordance with this
Agreement, and the amendment of such
39
Schedules shall not constitute an amendment of this Agreement and shall not
require the consent of any Member or other Person.
ARTICLE XIII.
MISCELLANEOUS
13.1. Further Assurances. Each party to this Agreement agrees
to execute, acknowledge, deliver, file and record such further certificates,
amendments, instruments and documents, and to do all such other acts and things,
as may be required by law or as, in the reasonable judgment of both the Board of
Managers and such party, are necessary to carry out the intent and purpose of
this Agreement.
13.2. Notices. Unless otherwise specified in this Agreement,
all notices, demands, elections, requests or other communications that any party
to this Agreement may desire or be required to give hereunder shall be in
writing and shall be given by hand, by facsimile, or by a recognized overnight
courier service providing confirmation of delivery, addressed as follows:
(a) to the Company, at the address set forth in Section 2.5;
and
(b) to the Members at their respective addresses set forth
in Schedule I hereto. Each Member shall have the right to designate another
address or change an address by written notice to the Company and the other
Members in the manner prescribed herein.
All notices given pursuant to this Section 13.2 shall be deemed to have been
given (i) if delivered by hand on the date of delivery or on the date delivery
was refused by the addressee, (ii) if delivered by facsimile transmission, when
transmitted to the applicable number so specified in (or pursuant to) this
Section 13.2 and an appropriate answer back is received or (iii) if delivered by
overnight courier, on the date of delivery as established by the return receipt
or courier service confirmation (or the date on which the courier service
confirms that acceptance of delivery was refused by the addressee).
13.3. Headings and Captions. All headings and captions
contained in this Agreement and the table of contents hereto are inserted for
convenience only and shall not be deemed a part of this Agreement.
13.4. Variance of Pronouns. All pronouns and all variations
thereof shall be deemed to refer to the masculine, feminine or neuter, singular
or plural, as the identity of the person or entity may require.
40
13.5. Counterparts. This Agreement may be executed in two or
more separate counterparts, each of which shall constitute an original and all
of which, when taken together, shall constitute one Agreement.
13.6. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO CONFLICT OF
LAW PROVISIONS THEREOF.
13.7. Partition. The Members hereby agree that no Member nor
any successor-in-interest to any Member shall have the right, while this
Agreement remains in effect, to have the property of the Company partitioned, or
to file a complaint or institute any proceeding at law or in equity to have the
property of the Company partitioned, and each Member, on behalf of himself, his
successors, representatives, heirs and assigns, hereby waives any such right.
13.8. Invalidity. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement. If a provision of this Agreement is held to be invalid and
the rest of this Agreement is not invalidated, each party shall use all
reasonable efforts to effect as far as practicable and valid under applicable
law a new provision to achieve the purpose of such invalidated provision.
13.9. Assignment; Successors and Assigns. (a) This Agreement
may be assigned, in whole or part, (i) by any Member, to any Permitted
Transferee as it pertains to the Membership Interests transferred to such
Permitted Transferee, (ii) by any Parent, to any successor to or assignee of all
or substantially all of the assets or business of such Parent, (iii) by IDT
Investments, as provided in Sections 8.1(d) and 8.2(d), (iv) by Liberty Sub, as
provided in Sections 8.1(e) and 8.2(e), and (v) by AT&T, to any entity that
controls and operates substantially all of the businesses operated by AT&T's
Broadband division, AT&T's Business division or AT&T's Consumer division (each
an "AT&T Restructuring Entity") and to which all Membership Interests held
directly or indirectly by AT&T are assigned following completion of the
restructuring plan announced by AT&T in October 2000, or any successor to or
assignee of all or substantially all of the assets or business of any AT&T
Restructuring Entity; provided that (x) in any such case, the assignee agrees to
be bound by the applicable terms of this Agreement and either (1) the other
Members are reasonably satisfied that such transferee has the ability to meet
the obligations it would have hereunder or (2) the assigning party or the Parent
of such assigning party guarantees the performance of such obligations and (y)
in the case of AT&T, the right to assign the Agreement to an AT&T Restructuring
Entity shall not be utilized more than once. Any other assignment of this
Agreement requires the unanimous written consent of the other parties hereto.
Any attempted or
41
purported assignment in violation of this Section 13.9 shall be void and of no
force or effect.
(b) This Agreement shall be binding upon the parties hereto
and their respective successors, executors, administrators, legal
representatives, heirs and legal assigns and shall inure to the benefit of the
parties hereto and, except as otherwise provided herein, their respective
successors, executors, administrators, legal representatives, heirs and legal
assigns. No Person other than the parties hereto and their respective
successors, executors, administrators, legal representatives, heirs and legal
assigns, shall have any rights or claims under this Agreement.
(c) AT&T agrees, and in the event it assigns its rights
under this Agreement pursuant to Section 13.9(a) hereof, its assignee shall
agree, to retain beneficial ownership, either directly or indirectly, of 50% or
more of the outstanding voting securities of, or other ownership interests in,
AT&T Sub, or any Permitted Transferee of AT&T Sub to which any of AT&T Sub's
Membership Interests are transferred.
(d) LMC agrees, and in the event it assigns its rights under
this Agreement pursuant to Section 13.9(a) hereof, its assignee shall agree, to
retain beneficial ownership, either directly or indirectly, of 50% or more of
the outstanding voting securities of, or other ownership interests in, Liberty
Sub, or any Permitted Transferee of Liberty Sub to which any of Liberty Sub's
Membership Interests are transferred.
(e) IDT Corporation agrees, and in the event it assigns its
rights under this Agreement pursuant to Section 13.9(a) hereof, its assignee
shall agree, to retain beneficial ownership, either directly or indirectly, of
50% or more of the outstanding voting securities of, or other ownership
interests in, IDT Investments or IDT Sub, as the case may be, or any Permitted
Transferee of IDT Investments or IDT Sub to which any of IDT Investments' or IDT
Sub's Membership Interests are transferred.
13.10. Entire Agreement. This Agreement and the Exchange
Agreements supersede all prior agreements among the parties with respect to the
subject matter hereof and thereof and contain the entire agreement among the
parties with respect to such subject matter. No waiver of any provision hereof
by any party hereto shall be deemed a waiver by any other party nor shall any
such waiver by any party be deemed a continuing waiver of any matter by such
party. No amendment, modification, supplement, discharge or waiver hereof or
hereunder shall require the consent of any Person not a party to this Agreement.
13.11. No Brokers. Each of the parties hereto warrants to each
other that there are no brokerage commissions or finders' fees (or any basis
therefor) resulting from any action taken by such party or any Person acting or
purporting to act on its behalf upon entering into this Agreement. Each Member
agrees to indemnify and hold harmless
42
each other Member for all costs, damages or other expenses arising out of any
misrepresentation made in this Section 13.11.
13.12. Maintenance as a Separate Entity. The Company shall
maintain books and records and bank accounts separate from those of its
Affiliates; shall at all times hold itself out to the public as a legal entity
separate and distinct from any of its Affiliates (including in its leasing
activities, in entering into any contract, in preparing its financial
statements, and in its stationery and on any signs it posts), and shall cause
its controlled Affiliates to do the same and to conduct business with it on an
arm's-length basis; shall not commingle its assets with assets of any of its
Affiliates; shall not guarantee any obligation of any of its Affiliates; shall
cause its business to be carried on by the Board of Managers and shall keep
minutes of all meetings of, or written consent executed by, the Members.
13.13. Expenses. Without prejudice to its ability to recover
for any losses, damages or liabilities relating to any dispute, controversy or
claim arising out of or relating to this Agreement, each of the parties to this
Agreement shall pay its own expenses in connection with this Agreement and any
amendments, consents or waivers (whether or not the same become effective) under
or in respect of this Agreement.
13.14. Publicity. None of the parties hereto shall, or permit
any of their Affiliates to, issue any press release or make any other public
statements, filings or disclosure with respect to the matters contemplated by
this Agreement, the Exchange Agreements or any other matter related hereto or
thereto, except (a) as may be required by applicable law, court process or
obligations pursuant to the requirement of any applicable self-regulatory
authority or (b) with the consent of the other parties to this Agreement.
43
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
AT&T CORP.
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Mergers & Acquisitions
Vice President, Assistant Treasurer
ITELTECH, LLC
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Mergers & Acquisitions
Vice President, Assistant Treasurer
IDT DOMESTIC-UNION, LLC
By: IDT Domestic Telecom, Inc., its Managing
Member
By: /s/ Xxxxx Xxxxxxxxxxxx
---------------------------------
Name: Xxxxx Xxxxxxxxxxx
Title: CEO
IDT CORPORATION
By: /s/ Xxxxx Xxxxxxxxxxxx
---------------------------------------
Name: Xxxxx Xxxxxxxxxxxx
Title: EVP
44
IDT INVESTMENTS INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President and CFO
LMC ANIMAL PLANET, INC.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President
LIBERTY MEDIA CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President
45
