EXECUTION COPY
LIMITED LIABILITY COMPANY
AGREEMENT
OF
NET2PHONE HOLDINGS, L.L.C.
This Limited Liability Company Agreement (the "Agreement") of Net2Phone
Holdings, L.L.C. is entered into and effective as of this 19th day of October,
2001, by IDT Domestic-Union, LLC, a Delaware limited liability company, as
member (the "Member").
WHEREAS, the Member, by execution of this Agreement and causing a
Certificate of Formation of the Company (as defined herein), dated as of October
17, 2001, to be filed in the Office of the Secretary of State of the State of
Delaware (the "Certificate of Formation"), hereby forms the Company as a limited
liability company pursuant to and in accordance with the statutes and laws of
the State of Delaware relating to limited liability companies, including without
limitation, the Delaware Limited Liability Company Act (6 Del. C.ss.18-101 et
seq.), as amended from time to time (the "Act");
NOW THEREFORE, the Member, by execution of this Agreement, does hereby
form the Company as a limited liability company pursuant to the Act, upon the
following terms and conditions:
1. Name. The name of the limited liability company formed hereby is
Net2Phone Holdings, L.L.C. (the "Company").
2. Purpose. The Company is formed 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 or
incidental to the foregoing.
3. Powers. In furtherance of its purposes, the Company shall have the
power and is hereby authorized to do any and all acts necessary or convenient to
carry out any and all of the objects and purposes of the Company and to perform
all acts in furtherance thereof, and shall have and may exercise all of the
powers and rights conferred upon a limited liability company formed pursuant to
the Act.
4. Certificates. The Member and 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, as an authorized
person within the meaning of the Act. Upon the execution and delivery of this
Agreement, Xxxxxx Xxxxxx'x powers as an authorized person shall cease, and any
person authorized by any Manager as an authorized person within the meaning of
the Act shall execute, deliver, file, or cause the execution, delivery and
filing of, all certificates required or permitted by the Act to be filed with
the Secretary of State of the State of Delaware.
5. Registered Office. The address of the registered office of the
Company in the State of Delaware is Corporation Trust Center, 0000 Xxxxxx
Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000.
6. Registered Agent. The name and address of the registered agent of the
Company for service of process on the Company in the State of Delaware is The
Corporation Trust Company, Corporation Trust Center, 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000.
7. Fiscal Year. The fiscal year of the Company (the "fiscal year")
shall end on the fiscal year end required for U.S. federal income tax purposes.
The Member is authorized to make all elections for tax or other purposes as it
may deem necessary or appropriate in such connection, including the
establishment and implementation of transition periods.
8. Member. The name of the Member is as set forth above in the preamble
to this Agreement.
9. Management and Control. The Company shall be managed by one or more
managers appointed by the Member ("Managers"), each of which shall have the
right, power and authority acting alone to conduct the business and affairs of
the Company and do all things necessary or convenient to carry on the business
and purposes of the Company, including, without limitation, any and all other
actions such Manager deems necessary, desirable, convenient or incidental for
the furtherance of the objects and purposes of the Company, and shall have and
may exercise all of the powers and rights conferred upon a manager of a limited
liability company formed pursuant to the Act. Notwithstanding any other
provision of this Agreement or any provision of the Act or other applicable law,
rule or regulation, if there is more than one Manager appointed, then each
Manager shall have the right, power and authority to act alone in carrying out
activities and conducting business in the name, or on behalf, of the Company
without any further act, vote or approval of any person or entity. As provided
in Section 18-402 of the Act, each Manager shall have the authority to bind the
Company.
10. Definition of Affiliate. The term "Affiliate", as used in this
Agreement shall mean, as to any person, any other person that, directly or
indirectly, is in
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control of, is controlled by or is under common control with such person. As
used in this Agreement, the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a person or entity, whether through ownership of voting securities,
by contract or otherwise.
11. Managers.
(a) Appointment and Removal of Managers. The Member shall have the
power to set from time-to-time the number of Managers, to remove any Manager
(with or without cause and for any reason or no reason) and/or to appoint a
Manager by delivering notice to the Company, which removal or appointment shall
become effective immediately upon receipt by the Company of such notice. The
Managers shall not have the authority to appoint additional or successor
Managers. A Manager may resign at any time by providing prior written notice of
such resignation to the Company and the Member.
(b) Managers as Agents. The Managers, to the extent of their powers set
forth in this Agreement and subject to Section 11(a), are agents of the Company
for the purpose of conducting the business and affairs of the Company, and the
actions of any Manager taken in accordance with such powers shall bind the
Company and any third party dealing with such Manager shall be entitled to rely
conclusively (without making inquiry of any kind) on any actions so taken as
being properly authorized by the Company.
12. Officers.
(a) Any Manager, acting alone or with the other Managers, may appoint
one or more officers of the Company (each, an "Officer"), including, without
limitation, a President, a Chief Executive Officer, a Chief Operating Officer, a
Secretary, a Treasurer, one or more Vice Presidents and one or more Assistant
Secretaries, and Assistant Vice Presidents. Any two or more offices may be held
by the same person. Each such Officer shall have delegated to him or her the
authority and power to execute and deliver on behalf of the Company (and to
cause the Company to perform) any and all such contracts, certificates,
agreements, instruments and other documents, and to take any such action, as any
one or more Managers deems necessary or appropriate, all as may be set forth in
a written delegation of authority executed by any one or more Managers. In
addition, unless a Manager decides otherwise, if the title given to such Officer
is one commonly used for officers of a business corporation formed under the
Delaware General Corporation Law, the assignment of such title shall constitute
the delegation to such person of the authorities and duties that are normally
associated with that office. The Officers shall serve at the pleasure of the
Managers, and any Manager may remove any person as an Officer and/or appoint
additional persons as Officers, as any such Manager deems necessary or
desirable. Any Officer may resign at any time by giving written notice of such
resignation to a Manager. Unless otherwise specified in such written
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notice, such resignation shall take effect upon receipt thereof by a Manager and
the acceptance of such resignation shall not be necessary to make it effective.
Any person or entity dealing with the Company may conclusively presume that an
Officer specified in such a written delegation of authority who executes a
contract, certificate, agreement, instrument or other document on behalf of the
Company has the full power and authority to do so and each such document shall,
for all purposes, be duly authorized, executed and delivered by the Company upon
execution and delivery by such Officer.
(b) The Officers, to the extent of their powers set forth in this
Agreement or otherwise vested in them by action of a Manager(s) not inconsistent
with this Agreement, are agents of the Company for the purpose of conducting the
business and affairs of the Company, and the actions of any Officer taken in
accordance with such powers shall bind the Company and any third party dealing
with such Officer shall be entitled to rely conclusively (without making inquiry
of any kind) on any actions so taken as being properly authorized by the
Company.
13. Exculpation and Indemnification. No Manager or Member or other
authorized agent of the Company shall be liable to the Company, or any other
person or entity who has an interest in the Company, for any loss, damage or
claim incurred by reason of any act or omission performed or omitted by such
person in good faith on behalf of the Company and in a manner reasonably
believed to be within the scope of the authority conferred on such person by
this Agreement, except that such person shall be liable for any such loss,
damage or claim incurred by reason of such person's willful misfeasance or bad
faith. In the event that any Member, or any of its direct or indirect partners,
directors, managing directors, officers, stockholders, employees, agents or
Affiliates, or any Manager or Officer of the Company (collectively, the
"Indemnified Persons"; and each an "Indemnified Person"), becomes involved, in
any capacity, in any threatened, pending or completed, action, suit, proceeding
or investigation, in connection with any matter arising out of or relating to
the Company's business or affairs, to the fullest extent permitted by applicable
law, any legal and other expenses (including the cost of any investigation and
preparation) incurred by such Indemnified Person in connection therewith shall,
from time to time, be advanced by the Company prior to the final disposition of
such action, suit, proceeding or investigation upon receipt by the Company of an
undertaking by or on behalf of the Indemnified Person to repay such amount if it
shall ultimately be determined that such Indemnified Person is not entitled to
be indemnified by the Company in connection with such action, suit, proceeding
or investigation as provided in the exception contained in the next succeeding
sentence. To the fullest extent permitted by law, the Company also will
indemnify and hold harmless an Indemnified Person against any losses, claims,
damages, liabilities, obligations, penalties, actions, judgments, suits,
proceedings , costs, expenses and disbursements of any kind or nature whatsoever
(collectively, "Costs"), to which such an Indemnified Person may become subject
in connection with any matter arising out of or in connection with the Company's
business or affairs, except to the extent that any such Costs result solely from
the willful misfeasance or bad faith of such Indemnified Person. If for any
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reason (other than the willful misfeasance or bad faith of such Indemnified
Person) the foregoing indemnification is unavailable to such Indemnified Person,
or insufficient to hold it harmless, then the Company shall contribute to the
amount paid or payable by such Indemnified Person as a result of such Costs in
such proportion as is appropriate to reflect not only the relative benefits
received by the Company on the one hand and such Indemnified Person on the other
hand but also the relative fault of the Company and such Indemnified Person, as
well as any relevant equitable considerations. The reimbursement, indemnity and
contribution obligations of the Company under this Section 13 shall be in
addition to any liability which the Company may otherwise have to any
Indemnified Person and shall be binding upon and inure to the benefit of any
successors, assigns, heirs and personal representatives of the Company and any
Indemnified Person. The reimbursement, indemnity and contribution obligations of
the Company under this Section 13 shall be limited to the Company's assets, and
no Member shall have any personal liability on account thereof. The foregoing
provisions shall survive any termination of this Agreement.
14. Member Shall Not Have Power to Bind Company. Except as provided
herein, the Member shall not transact business for the Company nor shall the
Member have the power or authority to sign, act for or bind the Company, all of
such powers being vested solely and exclusively in each of the Managers and
their delegates, as described herein. The Member shall not hold itself out to be
responsible for the decisions or actions respecting the daily business and
affairs of the Company.
15. Dissolution. The Company shall dissolve, and its affairs shall be
wound up upon the first to occur of the following: (a) the written consent of
the Member, (b) the entry of a decree of judicial dissolution under Section
18-802 of the Act and (c) at any time there are no members, unless the business
of the Company is continued in a manner permitted by the Act.
The bankruptcy (as defined in Section 18-101(1) of the Act) of the
Member shall not cause the Member to cease to be a member of the Company and
upon the occurrence of such an event, the business of the Company shall continue
without dissolution.
In the event of dissolution, the Company shall conduct only such
activities as are necessary to wind up its affairs (including the sale of the
assets of the Company in an orderly manner), and the assets of the Company shall
be applied in such manner, and in such order of priority, as determined by any
Manager, subject to any requirements of the Act.
16. Capital Contributions; Capital Accounts. The Member has contributed
to the Company (i) 1,300,000 shares of Class A Common Stock, par value $0.01 per
share ("Class A Common Stock"), of Net2Phone, Inc., a Delaware corporation
("Net2Phone"), in exchange for 13 units of Class B Membership Interests of the
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Company and (ii) 8,696,750 shares of Class A Common Stock of Net2Phone in
exchange for 87 units of Class A-1 Membership Interests of the Company, as set
forth on Annex I hereto. Each member shall have a capital account determined and
maintained in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv).
17. Treatment for Tax Purposes. For so long as the Company has only one
member, it is the intention of the Member that the Company be disregarded as a
separate entity for federal, state and local tax purposes. If at any time the
Company has more than one member, it shall be treated as a partnership for
federal, state and local tax purposes.
18. Additional Contributions. The Member is not required to make any
additional capital contribution to the Company but may in its sole discretion
elect to do so.
19. Allocation of Profit and Losses. All of the Company's profits and
losses shall be allocated to the Member.
20. Distributions. Distributions shall be made to the Member at the
times and in the aggregate amounts determined by one or more of the Managers.
Notwithstanding anything to the contrary contained in this Agreement, the
Company shall not make a distribution to any Member on account of its interest
in the Company if such distribution would violate the Act or other applicable
law.
21. Assignments. The Member may transfer or assign in whole or in part
its limited liability company interest.
22. Admission of Additional Members. One or more additional Members of
the Company may be admitted to the Company with the consent of the Member and
upon the execution of a counterpart of this Agreement.
23. Amendments. This Agreement may not be modified, altered,
supplemented or amended except pursuant to a written agreement executed and
delivered by the Member.
24. Limited Liability. Except as otherwise provided by the Act, the
debts, obligations and liabilities of the Company, whether arising in contract,
tort or otherwise, shall be solely the debts, obligations and liabilities of the
Company, and the Member, the Officers and the Managers shall not be obligated
personally for any such debt, obligation or liability of the Company solely by
reason of being a Member, an Officer or a Manager of the Company.
25. No Third Party Beneficiaries. The right or obligation of the Member
to call for any capital contribution or to make a capital contribution or
otherwise
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to do, perform, satisfy or discharge any liability or obligation of the Member
hereunder, or to pursue any other right or remedy hereunder or at law or in
equity, shall not confer any right or claim upon or otherwise inure to the
benefit of any creditor or other third party having dealings with the Company;
it being understood and agreed that the provisions of this Agreement shall be
solely for the benefit of, and may be enforced solely by, the parties hereto and
their respective successors and assigns except as may be otherwise agreed to by
the Company in writing with the prior written approval of the Member.
26. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
UNDER, THE LAWS OF THE STATE OF DELAWARE, ALL RIGHTS AND REMEDIES BEING GOVERNED
BY SAID LAWS, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
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IN WITNESS WHEREOF, the undersigned, intending to be legally bound
hereby, has duly executed this Limited Liability Company Agreement as of the
date first above written. Pursuant to Section 18-201(d) of the Act, this
Agreement shall be effective as of the date hereof.
MEMBER:
IDT DOMESTIC-UNION, LLC
By: IDT Domestic Telecom, Inc., its
Managing Member
By: /s/ XXXXX XXXXXXXXXXXX
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Name: Xxxxx Xxxxxxxxxxxx
Title: CEO
ANNEX I
Capital Contributions of the Member
IDT DOMESTIC-UNION, LLC
Capital Contributions:
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A. 1,300,000 shares of Class A Common Stock, par value $0.01 per share, of
Net2Phone, Inc. in exchange for 13 units of Class B Membership
Interests of the Company.
B. 8,696,750 shares of Class A Common Stock, par value $0.01 per share, of
Net2Phone, Inc. in exchange for 87 units of Class A-1 Membership
Interests of the Company.
