Exhibit 2.1
OPTION AGREEMENT
OPTION AGREEMENT (this "Agreement"), dated as of March 3, 2000, between
IDT Corporation, a Delaware corporation (the "Company"), and AT&T Corp., a New
York corporation (the "Investor").
WHEREAS, in order to induce the Company to execute a letter of intent,
dated March 3, 2000, between the Investor and the Company, the Investor has
agreed to purchase, at the election of the Company, Class B Common Stock, par
value $.01 per share, of the Company (the "Class B Common Stock"), upon the
terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, the Company and the Investor hereby agree as follows:
Section 1. Option.
1.1. Grant of Option. The Investor hereby grants the Company an option
to sell to the Investor (the "Option") 2,040,817 shares of Class B Common Stock
(the "Investor Shares" or the "Securities"), at a price of $36.75 per share of
Class B Common Stock (the "Strike Price") for an aggregate purchase price of
$75,000,024.75.
1.2. Exercise of Option. The Option shall be exercisable from April 2,
2000 until the earlier of (i) the date that is 180 days following the date of
this Agreement and (ii) the sale by the Company of at least 12,500,000 shares of
Class A Stock, $0.01 par value, of Net2Phone, Inc. ("Class A Common Stock") (or
the issuance of a call or put on such shares) to a current holder of shares of
Class A Common Stock (a "Third Party Sale") during the period (the "Exercise
Period"), provided that if a Third Party Sale occurs or a Net2Phone Issuance
Event occurs prior to the date that is 180 days following the date of this
Agreement and the Option has been exercised, Investor shall have the right for
10 days following the Third Party Sale or Net2Phone Issuance Event to require
the Company to repurchase the Investor Shares, in whole but not in part, at the
Strike Price.
A "Net2Phone Issuance Event" shall mean the authorization and issuance
of shares of Class A Common Stock in excess of the currently authorized amount
of Class A Common Stock at any time prior to the date that is 180 days after the
date of this Agreement, provided that an authorization and issuance of shares of
Class A Common Stock to the Investor shall not constitute a Net2Phone Issuance
Event.
1.3. Exercise Mechanics. The Company may exercise the Option by giving
written notice to the Investor at any time during the Exercise Period (the
"Exercise Notice").
1.4. Issuance of Class B Common Stock; Execution of Additional
Agreements. If the Company delivers an Exercise Notice hereunder, then at the
Closing (as hereinafter defined):
(a) The Investor will pay to the Company cash in immediately available
funds in the amount representing the aggregate purchase price for the number of
Investor Shares purchased by it (the "Purchase Price") to the bank account
specified by the Company to Investor not later than two business days prior to
the Closing Date.
(b) The Company will issue and deliver to the Investor a share
certificate or certificates representing the Investor Shares purchased hereunder
by the Investor, which certificate or certificates shall be registered in the
Investor's name or such name as the Investor designates.
(c) The Company and the Investor shall execute and deliver the Lock-up
and Registration Rights Agreement relating to the Investor Shares substantially
in the form attached as Exhibit A hereto (the "Lock-up and Registration Rights
Agreement").
1.5. Closing. The issuance and delivery of the Investor Shares by the
Company to the Investor and the delivery of the Purchase Price by the Investor
to the Company (the "Closing"), will take place at the offices of Xxxxxxxx &
Xxxxxxxx, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, at 10:00 A.M. on the business day
that is ten business days after the date on which the conditions set forth in
Section 4 have been fulfilled or waived, or at such other time and place as the
Company and the Investor may agree orally or in writing.
1.6. Alternate Investment. If the Closing cannot occur because the
condition in Section 4(c) has not been satisfied, then the Investor shall invest
$75 million in equity securities issued by a subsidiary of the Company in a
public offering, at the election of the Company, at the initial public offering
price, provided that the Investor's obligation to purchase such securities shall
be subject to conditions analogous to those set forth in Section 4(c).
Section 2. Representations, Warranties and Acknowledgments of the
Investor. The Investor hereby represents, warrants and acknowledges to the
Company, as follows:
2.1. No Registration of Investor Shares. The Investor is aware that the
Investor Shares have not been registered under the Securities Act of 1933, as
amended (the "Act"), that such offer and sale are intended to be exempt from
registration under the Act and the rules promulgated thereunder by the
Securities and Exchange Commission (the "SEC"), and that the Securities cannot
be offered, sold, assigned, transferred, or otherwise disposed of unless they
are subsequently registered under the Act or an exemption from such registration
is available. The Investor is also aware that sales or transfers of the
Securities are further restricted by state securities laws and the provisions of
this
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Agreement and that the certificates for the Securities will bear appropriate
legends restricting their transfer pursuant to applicable laws, this Agreement
and the Lock-up and Registration Rights Agreement.
2.2. Suitability of Investment.
(a) The Investor understands that there is no established market for
the Securities;
(b) The Investor is an "accredited investor" within the meaning of Rule
501 of Regulation D of the Act as presently in effect and is acquiring the
Securities for its own account, or for the account of another "accredited
investor" who is an affiliate of the Investor and who can make all of the
representations contained herein, for investment purposes only and not with a
view to the resale or distribution thereof;
(c) The Investor has not and will not, directly or indirectly, offer,
sell, transfer, assign, exchange or otherwise dispose of all or any part of the
Securities, except in accordance with applicable federal and state securities
laws and the provisions of this Agreement and the Lock-up and Registration
Rights Agreement as long as such documents remain in effect;
(d) The Investor has such knowledge and experience in financial,
business and tax matters that the Investor is capable of evaluating the merits
and risks relating to the Investor's investment in the Securities and making an
investment decision with respect to the Company;
(e) The Investor has been given the opportunity to obtain information
and documents relating to the Company and to ask questions of and receive
answers from representatives of the Company concerning the Company and the
investment in the Securities;
(f) Neither the Investor nor any of its affiliates has engaged in any
activity that would be deemed a "general solicitation" under the provisions of
Regulation D;
(g) The Investor has such knowledge and experience in financial or
business matters that it can, and it has, adequately analyzed the risks of an
investment in the Securities and it has determined the Securities are a suitable
investment for the Investor and that the Investor is able at this time, and in
the foreseeable future, to bear the economic risk of a total loss of its
investment in the Company; and
(h) The Investor is aware that there are substantial risks incident to
an investment in the Securities.
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2.3. Corporate Authority. The Investor has all requisite corporate
power and authority and has taken all corporate and other action necessary in
order to execute, deliver and perform its obligations under this Agreement and
the Lock-up and Registration Rights Agreement. This Agreement and the Lock-up
and Registration Rights Agreement are valid and binding agreements of the
Investor enforceable against the Investor in accordance with their respective
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
Section 3. Representations, Warranties and Acknowledgments of the
Company. The Company hereby represents, warrants and acknowledges to the
Investor as of the date hereof as follows:
3.1. Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of its respective jurisdiction of organization and has all requisite corporate
or similar power and authority to own and operate its properties and assets and
to carry on its business as currently conducted and is qualified to do business
and is in good standing as a foreign corporation in each jurisdiction where the
ownership or operation of its assets or properties or conduct of its business
requires such qualification, except where the failure to be so organized,
qualified or in good standing, or to have such power or authority when taken
together with all other such failures, is not reasonably likely to have a
Company Material Adverse Effect (as defined below).
As used in this Agreement, the term "Company Material Adverse Effect"
means a material adverse effect on the financial condition, properties,
prospects, business or results of operations of the Company and its subsidiaries
taken as a whole; provided, however, that any such effect resulting from any
change (i) in law, rule, or regulation or generally accepted accounting
principles or interpretations thereof that applies to the Company or (ii) in
economic or business conditions generally or in the telecommunications or
Internet telephony industries specifically, shall not be considered when
determining if a Company Material Adverse Effect has occurred.
3.2. Corporate Authority. The Company has all requisite corporate power
and authority and has taken all corporate action necessary in order to execute,
deliver and perform its obligations under this Agreement and the Lock-up and
Registration Rights Agreement. Each of this Agreement and the Lock-up and
Registration Rights Agreement is or will be a valid and binding agreement of the
Company enforceable against the Company in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
3.3. Capital Structure. The authorized capital stock of the Company
consists of 100,000,000 shares of Common Stock, $.01 par value, of which
24,100,383 shares
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were outstanding as of the close of business on the date hereof, 35,000,000
shares of Class A Stock, $.01 par value, of which 10,029,758 shares were
outstanding as of the close of business on the date hereof, and 10,000,000
shares of Preferred Stock, $.01 par value, of which no shares are outstanding as
of the close of business on the date hereof. All of the outstanding shares of
Common Stock and Class A Stock have been duly authorized and are validly issued,
fully paid and nonassessable. When issued, delivered and paid for in accordance
with the terms of this Agreement, the Securities will be duly authorized,
validly issued, fully paid and nonassessable.
3.4. Company Reports; Financial Statements. As of their respective
dates (or, if amended, as of the date of such amendment), (i) the Company's
Annual Report on Form 10-K for the year ended July 31, 1999, and (ii) the
Company's Quarterly Report on Form 10-Q for the period ended October 31, 1999,
each in the form (including exhibits, annexes and any amendments thereto) filed
with the SEC (collectively, including any such reports filed subsequent to the
date hereof and as amended, the "Company Reports") did not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made therein, in light of the circumstances in which they were
made, not misleading. Each of the consolidated balance sheets included in or
incorporated by reference into the Company Reports (including the related notes
and schedules) fairly presents, or will fairly present, the consolidated
financial position of the Company and its subsidiaries as of the date of such
balance sheet and each of the consolidated statements of income and cash flows
included in or incorporated by reference into the Company Reports (including any
related notes and schedules) fairly presents, or will fairly present, the
results of operations and cash flows, as the case may be, of the Company and its
subsidiaries for the periods set forth in such settlements (subject, in the case
of unaudited statements, to notes and normal year-end audit adjustments that
will not be material in amount or effect), in each case in accordance with
generally accepted accounting principles ("GAAP") consistently applied during
the periods involved, except as may be noted therein.
3.5. Absence of Certain Changes. Except as disclosed in the Company
Reports filed prior to the date hereof, since October 31, 1999 there has not
been any change in the financial condition, properties, prospects, business or
results of operations of the Company that has had or could reasonably be
expected to have a Company Material Adverse Effect.
3.6. Compliance with Laws. Except as set forth in the Company Reports
filed prior to the date hereof, the business of the Company has not been, and is
not being, conducted in violation of any federal, state, local or foreign law,
statute, ordinance, rule, regulation, judgment, order, injunction, decree,
arbitration award, agency requirement, license or permit of any Governmental
Entity, except for violations or possible violations that, individually or in
the aggregate, would not be reasonably expected to have a Company Material
Adverse Effect or prevent or materially burden or materially impair the ability
of the Company to consummate the transactions contemplated by this
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Agreement and the Lock-up and Registration Rights Agreement. Except as set forth
in the Company Reports filed prior to the date hereof, no investigation or
review by any Governmental Entity with respect to the Company is pending or, to
the knowledge of the executive officers of the Company, threatened, nor has any
Governmental Entity indicated an intention to conduct the same, except for those
the outcome of which are not, individually or in the aggregate, reasonably
likely to have a Company Material Adverse Effect or prevent or materially burden
or materially impair the ability of the Company to consummate the transactions
contemplated by this Agreement and the Lock-up and Registration Rights
Agreement.
Section 4. Conditions to Obligations of the Investor. The obligation of
the Investor to pay the Purchase Price for the Investor Shares to the Company is
absolute, subject to the fulfillment or waiver at or before the Closing of each
of the following conditions, any or all of which may be waived by the Investor:
(a) Representations and Warranties. The representations and warranties
of the Company set forth in Section 3 hereof shall have been true and correct in
all material respects as of the date of this Agreement (or as of such other
earlier date or dates as of which any such representation and warranty may be
expressly made).
(b) Authorized Securities. The Company shall have adopted resolutions
setting forth the terms of the Investor Shares, which shall have the rights,
preferences and terms set forth in the form of Certificate of Amendment to the
Restated Certificate of Incorporation attached as Exhibit B hereto (the
"Certificate of Amendment"). The Company shall have filed the Certificate of
Amendment with the Secretary of State of the State of Delaware, and the issuance
of Class B Common Stock shall have been duly authorized, and upon payment of the
Purchase Price by the Investor and delivery of the Investor Shares by the
Company, the Investor Shares shall be validly issued, fully paid and
nonassessable.
(c) Governmental Filings. All notices, reports and other filings
required to be made by the Company with, and consents, registrations, approvals,
permits or authorizations required to be obtained by the Company from, any
governmental or regulatory authority, agency, commission, body or other
governmental entity ("Governmental Entity"), in connection with the execution
and delivery of this Agreement and the Lock-up and Registration Rights Agreement
by the Company and the exercise of the Option by the Company or the issuance and
sale of the Securities by the Company hereunder have been made or obtained,
except those that the failure to make or obtain are not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect.
(d) No Violation. The execution, delivery and performance of this
Agreement and the Lock-up and Registration Rights Agreement by the Company and
the exercise of the Option by the Company or the issuance and sale of the
Securities by the Company
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hereunder do not and will not constitute or result in (i) a breach or violation
of, or a default under, the certificate or by-laws of the Company, (ii) a breach
or violation of, or a default under, the acceleration of any obligations or the
creation of a lien, pledge, security interest or other encumbrance on the assets
of the Company (with or without notice, lapse of time or both) pursuant to, any
agreement, lease, license, contract, note, mortgage, indenture, arrangement or
other obligation ("Contracts") binding upon the Company or any law or
governmental or non-governmental permit or license to which the Company is
subject or (iii) any change in the rights or obligations of any party under any
of the Contracts, except, in the case of clause (ii) or (iii) above, for any
breach, violation, default, acceleration, creation or change that, individually
or in the aggregate, is not reasonably likely to prevent, materially delay or
materially impair the ability of the Company to consummate the transactions
contemplated by this Agreement and the Lock-up and Registration Rights
Agreement.
(e) Certificate. The Investor shall have received a certificate, dated
as of the Closing Date, executed by an executive officer of the Company and
stating that, to the best knowledge of such executive officer, the conditions
set forth in clauses (a), (b), (c) and (d) above have been satisfied.
(f) Opinion of Counsel to the Company. Xxxxxxxx & Xxxxxxxx, counsel to
the Company, shall deliver an opinion addressed to the Investor, dated the date
of the Closing, with respect to the valid existence of the Company and due
authorization and valid issuance of the Securities in form and substance
customary and reasonably satisfactory to the Investor, and counsel to the
Company (who may be internal counsel) shall deliver an opinion addressed to the
Investor, dated the Closing Date, to the effect set forth in Sections 4(c) and
4(d) in form and substance customary and reasonably satisfactory to Investor.
(g) Lock-up and Registration Rights Agreement. The Lock-up and
Registration Rights Agreement shall have been duly executed and delivered by the
Company.
(h) HSR Act. All applicable waiting periods under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976 with respect to the transactions contemplated
by this Agreement and the Lock-up and Registration Rights Agreement shall have
expired or been terminated.
Section 5. Conditions to Obligations of the Company. The obligation of
the Company to deliver the Securities to the Investor is absolute, subject to
the prior delivery by the Company of the Exercise Notice to the Investor and
subject to the fulfillment or waiver at or before the Closing of each of the
following conditions, any or all of which may be waived by the Company:
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(a) Representations and Warranties. The representations and warranties
of the Investor set forth in Section 2 hereof shall have been true and correct
in all material respects as of the date of this Agreement (or as of such other
earlier date or dates as of which any such representation and warranty may be
expressly made).
(b) Governmental Filings. All notices, reports and other filings
required to be made by the Investor with, and consents, registrations,
approvals, permits or authorizations required to be obtained by the Investor
from a Governmental Entity, in connection with the execution and delivery of
this Agreement and the Lock-up and Registration Rights Agreement by the Investor
have been made or obtained.
(c) No Violation. The execution, delivery and performance of this
Agreement and the Lock-up and Registration Rights Agreement by the Investor do
not and will not constitute or result in (i) a breach or violation of, or a
default under, the certificate or by-laws of the Investor, (ii) a breach or
violation of, or a default under, the acceleration of any obligations or the
creation of a lien, pledge, security interest or other encumbrance on the assets
of the Investor (with or without notice, lapse of time or both) pursuant to any
Contracts binding upon the Investor or any law or governmental or
non-governmental permit or license to which the Investor is subject or (iii) any
change in the rights or obligations of any party under any of the Contracts,
except, in the case of clause (ii) or (iii) above, for any breach, violation,
default, acceleration, creation or change that, individually or in the
aggregate, is not reasonably likely to prevent, materially delay or materially
impair the ability of the Investor to consummate the transactions contemplated
by this Agreement and the Lock-up and Registration Rights Agreement.
(d) Certificate. The Company shall have received a certificate, dated
as of the Closing Date, executed by an executive officer of the Investor and
stating that, to the best knowledge of such executive officer, the conditions
set forth in clauses (a), (b) and (c) above have been satisfied.
(e) Lock-up and Registration Rights Agreement. The Lock-up and
Registration Rights Agreement has been executed and delivered by the Investor.
Section 6. Transfer Limitations: 1933 Act Legend.
(a) Unless sold pursuant to an effective registration statement, each
certificate representing Securities shall bear a legend substantially in the
following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY
NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS
AND UNTIL SUCH SHARES ARE REGISTERED UNDER THE ACT OR, EXCEPT AS OTHERWISE
PERMITTED PURSUANT TO RULE 144 UNDER THE ACT OR ANOTHER
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EXEMPTION FROM REGISTRATION UNDER THE ACT OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY IS OBTAINED TO THE EFFECT THAT SUCH REGISTRATION IS
NOT REQUIRED AND ARE SUBJECT TO TRANSFER RESTRICTIONS AS SET FORTH IN A LOCK-UP
AND REGISTRATION RIGHTS AGREEMENT, DATED MARCH 1, 2000, COPIES OF WHICH MAY BE
OBTAINED FROM THE COMPANY."
The foregoing legend, if necessary, shall be removed from the
certificates representing any Class B Common Stock, at the request of the holder
thereof, at such time as (i) they are sold pursuant to an effective registration
statement, (ii) they become eligible for resale pursuant to Rule 144(k) or
another provision of Rule 144 of the Act pursuant to which all or a portion of
Securities could be sold in a single transaction, or (iii) an opinion of counsel
reasonably satisfactory to the Company is obtained to the effect that the
proposed transfer is exempt from the Act; provided that in the case of clauses
(ii) and (iii) the holder is permitted to transfer the Securities pursuant to
the Lock-up and Registration Rights Agreement.
Section 7. Indemnification.
7.1. Company Indemnification. The Company covenants and agrees to
defend, indemnify and save and hold harmless the Investor, together with its
officers, directors, partners, shareholders, employees, trustees, affiliates
(within the meaning of Rule 405 of the SEC under the Act), beneficial owners,
attorneys and representatives, from and against any and all losses, costs,
expenses, liabilities, claims or legal damages (including, without limitation,
reasonable fees and disbursements of counsel and accountants and other costs and
expenses incident to any actual or threatened claim, suit, action or proceeding,
whether incurred in connection with a claim against the Company or a third party
claim) (collectively, "Investor Losses") up to the amount equal to the Purchase
Price arising out of or resulting from:
(i) any inaccuracy in or breach of any representation, warranty,
covenant or agreement made by the Company in this Agreement, the Lock-up and
Registration Rights Agreement or in any writing delivered pursuant to this
Agreement or the Lock-up and Registration Rights Agreement or at the Closing; or
(ii) the failure of the Company to perform or observe fully any
covenant, agreement or provision to be performed or observed by it pursuant to
this Agreement or the Lock-up and Registration Rights Agreement;
provided that the indemnity agreement contained in this 7.1 shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld).
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7.2. Investor Indemnification. The Investor covenants and agrees to
defend, indemnify and save and hold harmless the Company, together with its
officers, directors, partners, shareholders, employees, trustees, affiliates
(within the meaning of Rule 405 of the SEC under the Act), attorneys and
representatives, from and against any and all losses, costs, expenses,
liabilities, claims or legal damages (including, without limitation, reasonable
fees and disbursements of counsel and accountants and other costs and expenses
incident to any actual or threatened claim, suit, action or proceeding, whether
incurred in connection with a claim against the Investor or a third party claim)
(collectively, "Company Losses"), up to the amount equal to the Purchase Price
arising out of or resulting from:
(i) any inaccuracy in or breach of any representation, warranty,
covenant or agreement made by the Investor in this Agreement or the Lock-up and
Registration Rights Agreement or in any writing delivered pursuant to this
Agreement or the Lock-up and Registration Rights Agreement or at the Closing; or
(ii) the failure of the Investor to perform or observe fully any
covenant, agreement or provision to be performed or observed by it pursuant to
this Agreement or the Lock-up and Registration Rights Agreement.
7.3. Procedure. Each party entitled to be indemnified pursuant to
Section 7.1 and 7.2 (each, an "Indemnified Party") shall notify the other party
in writing of any action against such Indemnified Party in respect of which the
other party is or may be obligated to provide indemnification on account of
Section 7.1 or 7.2, promptly after the receipt of notice. The omission of any
Indemnified Party so to notify the other party of any such action shall not
relieve such other party from any liability which it may have to such
Indemnified Party except to the extent the other party shall have been
materially prejudiced by the omission of such Indemnified Party so to notify it,
pursuant to this Section 7.3. In case any such action shall be brought against
any Indemnified Party and it shall notify the other party of the commencement
thereof, the other party shall be entitled to participate therein and, to the
extent that such other party may wish, to assume the defense thereof, with
counsel reasonably satisfactory to such Indemnified Party, and after notice from
it to such Indemnified Party of its election so to assume the defense thereof,
the other party will not be liable to such Indemnified Party under Section 7.1
or 7.2 for any legal or other expense subsequently incurred by such Indemnified
Party in connection with the defense thereof nor for any settlement thereof
entered into without the consent of the other party; provided, however, that (i)
if the other party shall elect not to assume the defense of such claim or action
or (ii) if the Indemnified Party reasonably determines (x) that there may be a
conflict between the positions of the other party and of the Indemnified Party
in defending such claim or action or (y) that there may be legal defenses
available to such Indemnified Party different from or in addition to those
available to the other party, then separate counsel for the Indemnified Party
shall be entitled to participate in and conduct the defense, in the case of (i)
and (ii)(x), or such different defenses, in the case of (ii)(y), and the other
party shall be liable for any
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reasonable legal or other expenses incurred by the Indemnified Party in
connection with the defense.
7.4. Indemnification Non-Exclusive. The foregoing indemnification
provisions are in addition to, and not in derogation of, any statutory,
equitable or common-law remedy any party may have for breach of representation,
warranty, covenant or agreement.
Section 8. Miscellaneous.
8.1. Survival of Warranties. The representations and warranties set
forth in Sections 2 and 3 hereof shall survive until the eighteen month
anniversary of the Closing.
8.2. Best Efforts to Satisfy Conditions. Each party shall use its best
efforts to satisfy the conditions precedent to the Closing hereunder.
8.3. Certain Limitations. The indemnification obligations of the
parties hereto for any breach of a representation and warranty set forth in
Sections 2 and 3 shall survive for only the period applicable to such
representations and warranties as set forth in Section 8.1 of this Agreement,
and thereafter all such representations and warranties of the parties hereto
under this Agreement shall be extinguished; provided, however, that such
indemnification obligation shall not be extinguished in the event of Investor
Losses or Company Losses incurred as a result of an investigation, review, suit,
claim or action that was instituted or begun prior to the expiration of the
survival period set forth in Section 8.1.
8.4. Successors and Assigns. This Agreement may not be assigned by the
Investor or the Company without the prior written consent of the other party
hereto and the attempted or purported assignment shall be void; provided,
however, that the Investor may, without written consent of the Company, assign
its rights and obligations hereunder to any of its Affiliates (provided that no
such assignment shall relieve the Investor of its responsibility for the
performance of the obligations hereunder). Nothing in this Agreement, express or
implied, is intended to confer upon any party, other than the parties hereto or
their respective successors and permitted assigns, any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
As used in this Agreement, the term "Affiliates" shall mean, with
respect to any person or entity, any other person or entity directly or
indirectly controlling, controlled by or under common control with the first
such person or entity.
8.5. Governing Law; Submission to Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York.
Each of the Company and the Investor hereby submits to the nonexclusive
jurisdiction of the
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Xxxxxx Xxxxxx Xxxxxxxx Xxxxx for the Southern District of New York and of any
New York State court sitting in New York City for purposes of all legal
proceedings arising out of or relating to this Agreement and the transactions
contemplated hereby. Each of the Company and the Investor irrevocably waives, to
the fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such proceeding brought in such a court
and any claim that any such proceeding brought in such a court has been brought
in an inconvenient forum.
8.6. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, and all of which together shall be deemed
to constitute one and the same instrument.
8.7. Captions and Headings. The captions and headings used in this
Agreement are for convenience only and are not to be considered in construing or
interpreting this Agreement.
8.8. Notices. Unless otherwise provided, any notice or other
communication required or permitted to be given or effected under this Agreement
shall be in writing and shall be deemed effective upon personal or facsimile
delivery to the party to be notified or three business days after deposit with
an internationally recognized courier service, delivery fees prepaid, and
addressed to the party to be notified at the following respective addresses, or
at such other addresses as may be designated by written notice; provided that
any notice of change of address shall be deemed effective only upon receipt:
If to the Company:
IDT Corporation
000 Xxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attn: Xxx Xxxxxxx
Fax: (000) 000-0000
with a copy to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxx
Fax: (000) 000-0000
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If to the Investor:
AT&T Corp.
000 Xxxxx Xxxxx Xxxxxx, Xxxx
Xxxxxxx Xxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxxx Xxxxxx
Fax: (000) 000-0000
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxx X. Xxxxxx
Fax: (000) 000-0000
8.9. Amendments and Waivers. All terms of this Agreement may be
amended, and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of each of the Company and the
Investor. Any amendment or waiver effected in accordance with this Section 8.9
shall be binding upon each holder of any Securities purchased under this
Agreement at the time outstanding, each future holder of all such Securities,
and the other parties to this Agreement.
8.10. Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provisions shall be excluded
from this Agreement and the balance of this Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
8.11. Entire Agreement. This Agreement (and the Exhibits and Schedules
hereto) and the Lock-up and Registration Rights Agreement constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements, understandings and discussions between them, and
all documents delivered by or on behalf of the Company to the Investor and its
agents and representatives, with respect to such subject matter.
8.12. No Specific Enforcement. The parties agree that in the event of a
breach of this Agreement, the parties shall not be entitled to specific
performance of the terms hereof.
8.13. Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES ITS RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS AGREEMENT AND THE REGISTRATION RIGHTS AGREEMENT. THE SCOPE OF THIS WAIVER
IS INTENDED TO BE
13
ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT
RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION,
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW
AND STATUTORY CLAIMS. THIS SECTION 8.13 HAS BEEN FULLY DISCUSSED BY EACH OF THE
PARTIES HERETO AND THESE PROVISIONS SHALL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH
PARTY HERETO HEREBY FURTHER WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED
THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
SUPPLEMENTS OR MODIFICATIONS TO (OR ASSIGNMENTS OF) THIS AGREEMENT. IN THE EVENT
OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL
(WITHOUT A JURY) BY THE COURT.
[Signatures on the following page.]
14
IN WITNESS WHEREOF, the parties have executed this Option Agreement as
of the date first above written.
IDT CORPORATION
By: /s/ XXXXXX X. XXXXX
---------------------
Name: Xxxxxx X. Xxxxx
Title: Chief Executive Officer
AT&T CORP.
By: /s/ XXXX X. XXXXXXXX
----------------------
Name: Xxxx X. Xxxxxxxx
Title: Executive Vice President
15
EXHIBIT A
LOCK-UP AND REGISTRATION RIGHTS AGREEMENT
LOCK-UP AND REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as
of March __, 2000, by and between IDT Corporation, a Delaware corporation (the
"Company"), and AT&T Corp., a New York corporation (the "Investor").
WHEREAS, the Company and the Investor have entered into an Option
Agreement, dated as of March 3, 2000; and
WHEREAS, it is a condition to the Closing (as defined below) of the
Option Agreement that the Company grant Investor the registration rights set
forth herein, and it is a condition to the Company's execution of the Option
Agreement that the Investor agree to the restrictions on transfer set forth
herein.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
Section 1. Definitions. For the purposes of this Agreement:
(a) The term "Affiliate" means, with respect to any person or
entity, any other person or entity directly or indirectly controlling,
controlled by or under common control with the first such person or entity.
(b) The terms "Closing" and "Closing Date" mean the date of the
Closing, as such term is defined in the Option Agreement.
(c) The term "Holder" means a holder of Registrable Securities or,
unless the context otherwise requires, securities convertible into or
exercisable for Registrable Securities.
(d) The terms "register," "registered" and "registration" refer to
a registration effected by preparing and filing a registration statement in
compliance with the Securities Act of 1933, as amended (the "Act"), and the
declaration or ordering of effectiveness of such registration statement.
(e) The term "Registrable Securities" means the shares of Class B
Common Stock, par value $.01 per share, of the Company (the "Class B Common
Stock") issued to the Investor pursuant to the Option Agreement (the
"Securities"); provided, however, that such Securities shall cease to be
Registrable Securities when and to the
extent that (i) such Securities have been sold pursuant to an effective
registration statement under the Act, (ii) such Securities have become eligible
for resale pursuant to Rule 144(k) of the Act (or any similar provision then in
force) or another provision of Rule 144 of the Act pursuant to which all of the
Investor's Securities are immediately eligible for resale or (iii) such
Securities have ceased to be outstanding.
Section 2. Registration Rights.
2.1. (a) Registration Upon Demand. At any time on or after the first
anniversary of the Closing Date, one or more holders that in the aggregate
beneficially own at least 20% of the Registrable Securities may make a demand
that the Company effect the registration of all or part of such Holders'
Registrable Securities (an "S-3 Demand Registration"). Upon receipt of a valid
request for an S-3 Demand Registration, the Company shall promptly, in and any
event no later than 15 days after such receipt, notify all other Holders of the
making of such demand and shall use its reasonable efforts to register under the
Act as expeditiously as may be practicable the Registrable Securities which
Holders have requested the Company to register in accordance with this Section
2.1. Notwithstanding the foregoing, the Company shall not be required to effect
any registration if the number of Registrable Securities that the Company shall
have been requested to register shall, in the aggregate, be less than 10% of the
number of shares of Class B Common Stock purchased by the Investor on the
Closing Date. The Holders shall have the right to two (2) S-3 Demand
Registrations pursuant to this Section 2.1(a).
(b) Effective Registration Statement. A registration requested pursuant
to Section 2.1(a) hereof shall not be deemed to have been effected (i) if a
registration statement with respect thereto has not been declared effective by
the Securities and Exchange Commission ("SEC"), (ii) if after it has become
effective and prior to the date ninety (90) days after the effective date, such
registration is materially interfered with by any stop order, injunction or
similar order or requirement of the SEC or other governmental agency or court
for any reason not attributable to any of the Holders and has not thereafter
become effective for not less than ninety (90) additional consecutive days, or
(iii) the conditions to closing specified in the underwriting agreement, if any,
entered into in connection with such registration are not satisfied or waived,
other than by reason of a failure on the part of a Holder
2.2. "Piggy-Back" Registration. (a) At any time after the first
anniversary of the Closing Date and prior to the fifth anniversary of the
Closing Date, if the Company proposes to register any securities under the Act
in connection with any offering of its securities (other than a registration
statement on Form S-8 or Form S-4, or their successors, or any other form for a
similar limited purpose, or any registration statement
2
covering only securities proposed to be issued in exchange for securities or
assets of another corporation), whether or not for its own account, the Company
shall furnish promptly, and in any event not less than 10 days in advance,
written notice to the Holders of its intention to effect such registration and
the intended method of distribution in connection therewith. Upon the written
request of a Holder made to the Company within 15 days after the receipt of such
notice by the Company, the Company shall include in such registration the
requested number of the Holder's Registrable Securities (a "Piggy-Back
Registration"). If a Holder decides not to include all of its Registrable
Securities in any registration statement thereafter filed by the Company, the
Holder shall nevertheless continue to have the right to include any Registrable
Securities in any subsequent registration statement or registration statements
as may be filed by the Company with respect to offerings of its Common Stock and
any other securities, all upon the terms and conditions set forth herein.
(b) Nothing in this Section 2.2 shall create any liability on the part
of the Company or any other person to the Holders if the Company, for any
reason, decides not to file a registration statement proposed to be filed
pursuant to Section 2.2(a) or to withdraw such registration statement subsequent
to its filing, regardless of any action whatsoever that a Holder may have taken,
whether as a result of the issuance by the Company of any notice under Section
2.2(a) or otherwise.
2.3. Blackout Periods for Holders. If the board of directors of the
Company determines in good faith that the registration and distribution of
Registrable Securities pursuant to Section 2.1 or Section 2.2 hereof (or the use
of a registration statement or related prospectus) would be materially
detrimental to the Company or its shareholders, including (without limitation)
that such filing could result in disclosure of material non-public information
or could interfere with the Company's financing plans, and therefore the board
of directors determines that it is in the Company's best interest to defer the
filing or inclusion of Registrable Securities (as the case may be), and promptly
gives the Holders written notice of such determination in the form of a
certificate signed by an executive officer of the Company following their
request to register any Registrable Securities pursuant to Section 2.1 or
Section 2.2, the Company shall be entitled to (i) postpone the filing of the
registration statement otherwise required to be prepared and filed by the
Company pursuant to Section 2.1 hereof for a reasonable period of time, but not
to exceed 90 days (a "Demand Blackout Period") after the date of such request,
provided that the Company's exercise of its rights under this Section 2.3 (x)
shall not result in Demand Blackout Periods for more than 180 days in any 365
day period and (y) shall not result in Demand Blackout Periods that are
separated by less than 45 days, or (ii) exclude all or a portion of the
Registrable Securities (on a pro-rata basis by Holder) otherwise required to be
registered pursuant to Section 2.2. hereof. The Company shall
3
promptly notify each holder of the expiration or earlier termination of any
Demand Blackout Period.
2.4. Obligations of the Company. Whenever the Company is required to
effect the registration of any Registrable Securities under this Section 2, the
Company shall, at its expense and as expeditiously as may be practicable:
(a) Prepare and file with the SEC a registration statement with respect
to such Registrable Securities and use its reasonable efforts to cause such
registration statement to become effective and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, use
reasonable efforts to keep such registration statement effective for not less
than ninety (90) days.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of
applicable law with respect to the disposition of all of the Registrable
Securities covered by such registration statement.
(c) Use its best efforts to qualify such Registrable Securities (i) for
quotation on the NASDAQ National Market or listing on the New York Stock
Exchange, Inc. or (ii) if neither such quotation system or exchange is available
for quotation or listing, for listing on a national securities exchange selected
by a majority in interest of the Holders of the Registrable Securities being
registered.
(d) Furnish to the Holders of Registrable Securities registering such
securities such numbers of copies of a prospectus, including a preliminary
prospectus (in the event of an underwritten offering), in conformity with the
requirements of applicable law, and such other documents as each such Holder may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by it.
(e) Use reasonable efforts to register and qualify the securities
covered by such registration statement under state blue sky laws in any U.S.
jurisdictions in which such registration and qualification is reasonably
requested by any Holder; provided, that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such jurisdictions.
4
(f) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form and substance as agreed to by the Company and the managing underwriter of
such offering.
(g) Promptly notify the Holders in writing: (i) when the registration
statement, the prospectus or any prospectus supplement related thereto or
post-effective amendment to the registration statement has been filed, and, with
respect to the registration statement or any post-effective amendment thereto,
when the same has become effective; (ii) of any request by the SEC for
amendments or supplements to the registration statement or related prospectus or
any written request by the SEC for additional information; (iii) of the issuance
by the SEC of any stop order suspending the effectiveness of the registration
statement or prospectus or any amendment or supplement thereto or the initiation
of any proceedings by any person for that purpose, and promptly use its
reasonable efforts to prevent the issuance of any stop order or to obtain its
withdrawal if such stop order should be issued; and (iv) of the receipt by the
Company of any written notification with respect to the suspension of the
qualification of any Registrable Securities for sale in any jurisdiction or the
initiation or overt threat of any proceeding for such purpose.
(h) Notify the Holders in writing on a timely basis, at any time when a
prospectus relating to such Registrable Securities is required to be delivered
under applicable law, of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing and at the request of
any such Holder promptly prepare and furnish to such Holder a reasonable number
of copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the offerees of such securities,
such prospectus shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(i) Furnish, at the request of any Holder participating in the
registration, on the date that such Registrable Securities are delivered to the
underwriters for sale, if such securities are being sold through underwriters,
or, if such securities are not being sold through underwriters, on the date that
the registration statement with respect to such securities becomes effective,
(i) an opinion, dated as of such date, of the counsel representing the Company
for the purposes of such registration, in form and substance as if customarily
given to underwriters in an underwritten public offering and reasonably
satisfactory to a majority in interest of the Holders participating in the
registration, addressed to the underwriters, if any, and to the Holders
participating in the registration
5
of Registrable Securities and (ii) a "Cold Comfort" letter dated as of such
date, from the independent certified public accountants to the underwriters in
an underwritten public offering and reasonably satisfactory to a majority in
interest of the Holders participating in the registration, addressed to the
board of directors of the Company, to the underwriters, if any, and if permitted
by applicable accounting standards, to the Holders participating in the
registration of Registrable Securities.
(j) Use reasonable efforts to cause the transfer agent to remove
restrictive legends on certificates representing the securities covered by such
registration statement, as the Company determines to be appropriate, upon advice
of counsel.
(k) Prepare and file with the SEC, promptly upon the request of any
such Holders, any amendments or supplements to such registration statement or
prospectus which, in the opinion of counsel for such Holders, is required under
the Act or the rules and regulations thereunder in connection with the
distribution of the Registrable Securities by such Holders.
(l) Make available for inspection by any Holder of such Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other agent retained by
any such seller or underwriter (collectively, the "Inspectors"), all pertinent
financial and other records, pertinent corporate documents and properties of the
Company (collectively, the "Records"), as shall be reasonably necessary to
enable them to exercise their due diligence responsibility, and cause the
Company's officers, directors and employees to supply all information (together
with the Records, the "Information") reasonably requested by any such Inspector
in connection with such registration statement. Any of the Information that the
Company determines in good faith to be confidential, and of which determination
the Inspectors are so notified, shall not be disclosed by the Inspectors unless
(i) the release of such Information is ordered pursuant to a subpoena or other
order from a court of competent jurisdiction or (ii) such Information has been
made generally available to the public or (iii) as necessary to enforce a
Holder's rights under this Agreement. Each Holder of Registrable Securities
shall be responsible for any breach of the foregoing covenant by any Inspector
retained by or on behalf of such Holder. The Holder of Registrable Securities
agrees that it will, upon learning that disclosure of such Information is sought
in a court of competent jurisdiction, give notice to the Company and allow the
Company, at the Company's expense, to undertake appropriate action to prevent
disclosure of the Information deemed confidential and the Inspectors shall not
disclose such Information until such action is determined.
6
(m) Provide a transfer agent and registrar (which may be the same
entity and which may be the Company) for such Registrable Securities.
(n) Use its reasonable efforts to take all other steps necessary to
effect the registration of such Registrable Securities pursuant to the terms
contemplated hereby.
2.5. Furnish Information.
(a) It shall be a condition precedent to the obligation of the Company
to include any Registrable Securities of any Holder in a registration statement
pursuant to this Section 2 that the Holder shall furnish to the Company such
information regarding itself, the Registrable Securities held by it, any other
securities of the Company held by it, and the intended method of disposition of
such Registrable Securities as shall be required to effect the registration of
the Registrable Securities held by such Holder. Any such information shall be
provided to the Company within any reasonable time period requested by the
Company.
(b) Each Holder shall notify the Company, at any time when a prospectus
is required to be delivered under applicable law, of the happening of any event
as a result of which the prospectus included in the applicable registration
statement, as then in effect, in each case only with respect to information
provided by such Holder, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing. Such Holder shall immediately upon the happening of any such event
cease using such prospectus. Any other Holders shall cease using such prospectus
immediately upon receipt of notice from the Company to that effect. If so
requested by the Company, each Holder shall promptly return to the Company any
copies of any prospectus in its possession (other than one permanent file copy)
that contains an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing.
2.6. Expenses of Registration. The Company shall bear and pay all
reasonable expenses incurred in connection with any registration, filing or
qualification of Registrable Securities pursuant to Section 2.1 or Section 2.2
including (without limitation) all registration, filing and qualification fees,
printers' and accounting fees, but excluding underwriting discounts and
commissions relating to the Registrable Securities. The Company also shall be
required to pay and bear the legal fees of one counsel for the Holders in an
amount not to exceed $25,000 in connection with any registration.
7
2.7. Underwriting Requirements. In connection with any underwritten
offering of a Holder's Registrable Securities, the Company shall not be required
under Section 2.4 to register any of such Registrable Securities in connection
with such underwritten offering unless (i) in the case of a registration
pursuant to Section 2.1, the Company consents to the underwriters selected by
the Holders participating in the registration (which consent shall not be
unreasonably withheld) and (ii) in the case of a registration pursuant to
Section 2.2, the Holder accepts the underwriters selected by the Company and
then, in either case (i) or (ii), the Company shall be required to register
Registrable Securities only in such quantity as the lead managing underwriter
determines, in its good faith discretion, will not jeopardize the success of the
offering by the Company. To the extent that the lead managing underwriter will
not permit the registration of all of the Registrable Securities sought to be
registered, in the case of a registration pursuant to Section 2.1 or 2.2, the
Registrable Securities to be included shall be apportioned among the Holders on
a pro rata basis (based on the number of shares of Class B Common Stock proposed
to be registered by each), first among the Holders of Registrable Securities to
be registered pursuant to Section 2.1, and thereafter among the Holders of
Registrable Securities to be registered pursuant to Section 2.2; provided,
however, that the right of the underwriters to exclude Registrable Securities
from the registration and underwriting as described above shall be restricted
such that all shares that are not Registrable Securities and all shares that are
held by persons who are employees or directors of the Company (or any subsidiary
of the Company) shall first be excluded from such registration and underwriting
before any Registrable Securities are so excluded. Those Registrable Securities
and other securities that are excluded from the underwriting by reason of the
managing underwriter's marketing limitation and all other Registrable Securities
not originally requested to be so included shall not be included in such
registration and shall be withheld from the market by the Holders thereof for a
period, not to exceed 90 days, which the managing underwriter reasonably
determines necessary to effect the underwritten public offering. No Holder of
Registrable Securities shall be entitled to participate in an underwritten
offering unless such Holder enters into, and performs its obligations under, one
or more underwriting agreements and any related agreements and documents
(including an escrow agreement and/or a power of attorney with respect to the
disposition of the Registrable Securities), in the form that such Holder shall
agree to with the lead managing underwriter of the transaction. If any Holder
disapproves of the terms of any underwriting, it may elect, prior to the
execution of any underwriting agreement, to withdraw there from by written
notice to the Company and the lead managing underwriter. Any Registrable
Securities so withdrawn from an underwriting by such Holder shall be withdrawn
from such registration and shall not be transferred in a public distribution
prior to 180 days following the effective date of the registration statement
relating thereto.
8
2.8. Delay of Registration. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Section 2.
2.9. Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 2:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each Holder and each person, if any, who controls such Holder within
the meaning of the Act and the Securities Exchange Act of 1934, as amended (the
"1934 Act"), and their respective directors, officers, and each person, if any,
who controls the Holder within the meaning of the 1934 Act (each, an
"Indemnified Person"), against any losses, claims, damages, or liabilities joint
or several) to which they may become subject insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon (collectively, a "Violation") (x) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any final prospectus contained therein or any amendments or supplements thereto
or (y) the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading; or (z) any violation by the Company of the Act, the 1934 Act, any
state securities law or any rule or regulation promulgated under the Act, the
1934 Act or any state securities law in connection with the offering covered by
any registration statement; and the Company will pay to each Indemnified Person
any reasonable legal or other expenses incurred by it in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided that the indemnity agreement contained in this Section 2.9(a) shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the consent of the Company
(which consent shall not be unreasonably withheld), nor shall the Company be
liable in any such case for any such loss, claim, damage, liability or action to
the extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in strict conformity with written information furnished by a
Holder expressly for use in connection with such registration or is caused by
any failure by the Holder to deliver a prospectus or preliminary prospectus (or
amendment or supplement thereto) as and when required under the Act after such
prospectus has been timely furnished by the Company.
(b) To the extent permitted by law, each Holder will indemnify and hold
harmless the Company, each of its directors, each of its officers who has signed
the registration statement, and each person, if any, who controls the Company
within the meaning of the Act or the 1934 Act (each, an "Indemnified Person"),
against any losses,
9
claims, damages or liabilities (joint or several) to which any of the foregoing
persons may become subject, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation is caused by (x) any untrue statement or alleged untrue statement
contained in, or by any omission or alleged omission from, information furnished
in writing to the Company by the Holder specifically and expressly for use in
any such registration statement or prospectus but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission was
so made in reliance upon and in strict conformity with written information
furnished by such Holder specifically for use in the preparation thereof or (y)
any failure by the Holder to deliver a prospectus or preliminary prospectus (or
amendment or supplement thereto) as and when required under the Securities Act
after such prospectus has been timely filed by the Company. Such Holder will pay
any reasonable legal or other expenses incurred by any Indemnified Person
pursuant to this Section 2.9(b) in connection with investigating or defending
any such loss, claim, damage, liability or action; provided that the indemnity
agreement contained in this Section 2.9(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld; provided, further, that in no event shall any
indemnity under this Section 2.9(b) exceed the net proceeds from the offering
received by such Holder upon its sale of Registrable Securities included in the
registration statement.
(c) Promptly after receipt by an Indemnified Person under this Section
2.9 of notice of the commencement of any action (including any governmental
action), such Indemnified Person will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 2.9, deliver to the
indemnifying party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the indemnifying parties; provided that an Indemnified Person
(together with all other indemnified parties that may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the reasonable fees and expenses to be paid by the indemnifying party, if
representation of such Indemnified Person by the counsel retained by the
indemnifying party would be inappropriate (in the opinion of the Indemnified
Person) due to actual or potential differing interests between such Indemnified
Person and any other party represented by such counsel in such proceeding. The
failure to deliver written notice to the indemnifying party within a reasonable
time of the commencement of any such action, if materially prejudicial to its
ability to defend such action, shall relieve such indemnifying party of any
liability to the Indemnified Person under this Section 2.9, but the omission so
to deliver written notice to
10
the indemnifying party will not relieve it of any liability that it may have to
any Indemnified Person otherwise than under this Section 2.9; provided, that in
no event shall any indemnity under this Section 2.9(c) exceed the net proceeds
from the offering received by such Holder upon its sale of Registrable
Securities included in the registration statement.
(d) If the indemnification provided for in this Section 2.9 is held by
a court of competent jurisdiction to be unavailable to an indemnified party with
respect to any losses, claims, damages or liabilities referred to herein, the
indemnifying party, in lieu of indemnifying such Indemnified Person thereunder,
agrees to contribute to the amount paid or payable by such Indemnified Person as
a result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the Indemnified Person on the other in connection with the
Violation(s) that resulted in such loss, claim, damage or liability, as well as
any other relevant equitable considerations. The relative fault of the
indemnifying party and of the Indemnified Person shall be determined by a court
of law by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the Indemnified Person and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. No person found guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution hereunder from any person who was not guilty
of such fraudulent misrepresentation.
(e) The obligations of the Company and the Holders under this Section
2.9 shall survive the completion of any offering of Registrable Securities under
a registration statement pursuant to this Section 2.
2.10. Lock-up and Permitted Transfers. At any time prior to the first
anniversary of the Closing Date, Investor shall not offer, sell, contract to
sell or otherwise dispose of any Class B Common Stock (including entering into
any agreement or arrangement that has the effect of transferring all or a
substantial part of the economic effect of holding the Class B Common Stock)
without the written consent of the Company; provided, however, that the Investor
shall be permitted to transfer (i) all or part of the Class B Common Stock to an
Affiliate of the Investor, if such Affiliate and the Investor agree for the
benefit of the Company that such Affiliate shall remain an Affiliate of the
Investor until at least the first anniversary of the Closing Date, and (ii) up
to 20% of the aggregate number of shares of Class B Common Stock purchasable
pursuant to the Option Agreement to any party, to the extent necessary to remedy
a breach by the Investor of Section 11.1 of the Framework Agreement, dated as of
October 23, 1998, by
11
and among the Investor, VLT Corporation, British Telecommunications plc, BT
(Netherlands) Holdings B.V. and Thistle B.V. (the "Framework Agreement") (each
such transferee, a "Permitted Transferee"); provided that in connection with any
proposed transfer pursuant to clause (ii) above, (x) the Investor shall deliver
to the Company a certificate of an executive officer of the Investor setting
forth in reasonable detail a computation made in accordance with the Framework
Agreement and demonstrating that the proposed sale will remedy such breach, and
(y) the Company and the Investor shall have agreed to the reinvestment of the
net proceeds from the sale of such shares in equity securities of an Affiliate
of the Company in such a manner so as not to cause a breach under the Framework
Agreement. Without limiting any other remedy that may be available to the
Company, failure of the Investor or any Permitted Transferee to comply with the
provisions of this Section 2.10 shall result in termination of the Company's
obligations under Section 2.1 and Section 2.2 of this Agreement with respect to
the affected Class B Common Stock.
2.11. Assignment of Registration Rights. The rights to cause the
Company to register Registrable Securities pursuant to this Section 2 may be
assigned by a Holder to a Permitted Transferee of Registrable Securities;
provided, however, (i) the transferor shall, within ten (10) days after such
transfer, furnish to the Company written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned and (ii) such transferee shall agree with
the Company in writing to be subject to all restrictions set forth in this
Agreement. No other assignment of the Investor's or any Holder's rights
hereunder shall be permitted, and the attempted or purported assignment in
violation of this provision shall be void.
2.12. Rule 144 Reporting. With a view to making available to the
Holders the benefits of certain rules and regulations of the SEC that permit the
sale of the Registrable Securities to the public without registration, the
Company agrees to use its reasonable efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in SEC Rule 144 or any similar or analogous rule
promulgated under the Act, at all times after the effective date of the first
registration filed by the Company for an offering of its securities to the
general public;
(b) File with the SEC, in a timely manner, all reports and other
documents required of the Company under the 1934 Act; and
(c) So long as a Holder owns any Registrable Securities, furnish such
Holder upon request a written statement by the Company as to its compliance with
the reporting
12
requirements of said Rule 144 of the Act, and of the 1934 Act (at any time after
it has become subject to such reporting requirements), a copy of the most recent
annual or quarterly report of the Company and such other reports and documents
as a Holder may reasonably request in availing itself of any rule or regulation
of the SEC allowing it to sell any such securities without registration.
2.13 Self-Tender Protection. Until such time as the Investor and its
Permitted Transferees hold less than 50% of the shares of Class B Common Stock
issued to the Investor pursuant to the Option Agreement, the Company shall not
make a tender offer for its common stock, par value $.01 per share ("Common
Stock"), unless such offer is extended ratably and for equivalent per share
consideration to the Investor and its Permitted Transferees in respect of shares
of Class B Common Stock then held by them.
2.14. Third Party Tender Protection. Until such time as the Investor
and its Permitted Transferees hold less than 50% of the Class B Common Stock
issued to the Investor pursuant to the Option Agreement, if (i) any person makes
a tender offer for the Common Stock, (ii) such tender offer is consummated with
respect to more than 20% of the outstanding Common Stock and (iii) such tender
offer is not extended ratably and on an equal consideration basis to the
Investor and its Permitted Transferees in respect of their holdings of Class B
Common Stock, then within ten (10) business days of the date of consummation of
such tender offer, the Company shall make an offer to purchase, for
consideration equivalent to that paid in such tender offer, a portion of the
Class B Common Stock held by the Investor and its Permitted Transferees
equivalent to the portion of the outstanding Common Stock purchased pursuant to
such tender offer.
2.15. Assignment of Tender Protections. Notwithstanding Section 2.11,
the provisions in Sections 2.13 and 2.14 shall be automatically assigned to, and
shall be enforceable against the Company by, subsequent holders of the shares of
Class B Common Stock to be issued and sold hereunder, but only for so long as
there is no public market for the Class B Common Stock.
Section 3. Miscellaneous.
3.1. Successors and Assigns. The provisions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
permitted assigns of the parties hereto. Nothing in this Agreement, express or
implied, is intended to confer upon any party, other than the parties hereto or
their respective successors and permitted assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement. Nothing
contained herein shall be construed as permitting any transfer of any securities
of the Company in violation of any applicable law or agreement.
13
3.2. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York. The Investor and the
Company hereby submit to the nonexclusive jurisdiction of the United States
District Court for the Southern District of New York and of any New York State
court sitting in New York City for purposes of all legal proceedings arising out
of or relating to this Agreement and the transactions contemplated hereby. The
Investor and the Company irrevocably waive, to the fullest extent permitted by
law, any objection which it may now or hereafter have to the laying of the venue
of any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient forum.
3.3. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, and all of which together shall constitute
one and the same instrument.
3.4. Captions and Headings. The captions and headings used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
3.5. Notices. Unless otherwise provided, any notice or other
communication required or permitted to be given or effected under this Agreement
shall be in writing and shall be deemed effective upon (i) personal or facsimile
delivery to the party to be notified, (ii) one business day after deposit with
an internationally recognized courier service, delivery fees prepaid, or (iii)
three business days after deposit with the U.S. mail, return-receipt requested,
postage prepaid, and in each case, addressed to the party to be notified at the
following respective addresses, or at such other addresses as may be designated
by written notice; provided that any notice of change of address shall be deemed
effective only upon receipt.
If to the Company:
IDT Corporation
000 Xxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attn: Xxx Xxxxxxx
Fax: (000) 000-0000
14
with a copy to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxx
Fax: (000) 000-0000
If to the Investor:
AT&T Corp.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx Xxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxxx Xxxxxx
Fax: (000) 000-0000
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxx X. Xxxxxx
Fax: (000) 000-0000
3.6. Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained written consent of Holders
owning in the aggregate 51% of the outstanding Registrable Securities affected
by such amendment, modification, supplement, waiver or departure.
3.7. Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provisions shall be excluded from
this Agreement and the balance of this Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
3.8. Entire Agreement. This Agreement contains the entire understanding
of the parties hereto with respect to the subject matter contained herein, and
supersedes and cancels all prior agreements, negotiations, correspondence,
undertakings and communications of the parties, oral or written, respecting such
subject matter. There are
15
no restrictions, promises, representations, warranties, agreements or
undertakings of any party hereto with respect to the matters contemplated
hereby, other than those set forth herein or made hereunder.
3.9. Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES ITS RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS AGREEMENT, THE SERIES A COMMON OR THE SUBJECT MATTER HEREOF. THE SCOPE OF
THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY
BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION,
INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION 3.9 HAS BEEN
FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS SHALL NOT BE
SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER WARRANTS AND
REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND
THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, SUPPLEMENTS OR MODIFICATIONS TO (OR ASSIGNMENTS OF) THIS
AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL (WITHOUT A JURY) BY THE COURT.
[Signatures on the following page.]
16
IN WITNESS WHEREOF, the parties have executed this Lock-up and
Registration Rights Agreement as of the date first above written.
IDT CORPORATION
By:
-----------------------------
Name:
Title:
AT&T CORP.
By:
-----------------------------
Name:
Title:
17
EXHIBIT B
CERTIFICATE OF AMENDMENT
TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF
IDT CORPORATION
(pursuant to Section 242 of the Delaware General Corporation Law)
IDT Corporation, a Delaware corporation, hereby certifies as follows:
1. The name of the corporation is IDT Corporation (hereinafter the
"Corporation").
2. The Corporation's Certificate of Incorporation was initially filed
with the Secretary of State of the State of Delaware on December 22, 1995 and a
Restated Certificate of Incorporation was filed on February 7, 1996.
3. The Restated Certificate of Incorporation of the Corporation is
hereby amended by deleting the preamble of Article Fourth thereof and replacing
it with the following:
"FOURTH: The aggregate number of shares of all classes of
capital stock which the Corporation shall have the authority to
issue is two hundred and forty five million (245,000,000) shares,
consisting of (a) 100,000,000 shares of common stock, par value
$0.0l per share ("Common Stock"), (b) 35,000,000 shares of Class A
Common Stock, par value $0.01 per share (the "Class A Stock"), (c)
100,000,000 shares of Class B Common Stock, par value $0.01 per
share (the "Class B Stock", and collectively, such Common Stock,
Class A Stock and Class B Stock are referred to herein as the
"Common Shares"), and (d) 10,000,000 shares of preferred stock,
par value $0.01 per share ("Preferred Stock")."
4. The Restated Certificate of Incorporation of the Corporation is
hereby further amended by deleting Sections 1(h), 2(a), 2(b), 2(c) and 2(d) of
Article Fourth and replacing them with the following:
"1. Preferred Stock
(h) the limitations and restrictions, if any, to be effective
while any shares of such series are outstanding upon the payments
of dividends or the making of other distributions on, and upon the
purchase, redemption or other acquisition by the Corporation of,
the Common Stock, the Class A Stock, the Class B Stock or shares
of stock of any other class or any other series of this class;"
"2. Common Stock, Class A Stock and Class B Stock
(a) General. Except as hereinafter expressly set forth in Section
2, and subject to the rights and preferences of the holders of
Preferred Stock at any time outstanding, the Class A Stock, Class
B Stock and the Common Stock, all of which are classes of common
stock, shall have the same rights and privileges and shall rank
equally, share ratably and be identical in respects as to all
matters, including rights in liquidation.
(b) Voting Rights. Except as otherwise provided in this Restated
Certificate of Incorporation or as expressly provided by law, and
subject to any voting rights provided to holders of Preferred
Stock at any time outstanding, the Common Shares have exclusive
voting rights on all matters requiring a vote of the Corporation.
The holders of Common Stock shall be entitled to one vote
per share on all matters to be voted on by the stockholders of the
Corporation. The holders of Class A Stock shall be entitled to
three votes per share on all matters to be voted on by the
stockholders of the Corporation. The holders of Class B Stock
shall not be entitled to vote on any matter to be voted on by the
stockholders of the Corporation, including (without limitation)
the election of directors to the Board of Directors, except for
such matters where applicable law or regulation or quotation or
listing obligation requires that such holders be entitled to vote,
in which case holders of Class B Stock shall be entitled to
one-tenth (1/10) of a vote per share.
Except as otherwise provided in this Restated Certificate of
Incorporation or as required by law, and subject to any voting
rights provided to holders of Preferred Stock at any time
outstanding, the holders of shares of Class A Stock, the holders
of Class B Stock and the holders of shares of Common Stock shall
vote together as one class on all matters submitted to a vote of
stockholders of the Corporation.
(c)(1) Dividends and Distributions. Subject to the rights of the
holders of Preferred Stock, and subject to any other provisions of
this Restated Certificate of Incorporation, as it may be amended
from time to time, holders of Class A Stock, holders of Class B
Stock and holders of Common Stock shall be entitled to receive
such dividends and other distributions in cash, in property or in
shares of the Corporation as may be declared thereon by the Board
of Directors from time to time out of assets or funds of the
Corporation legally available therefor; provided, however, that no
cash, property or share dividend or distribution may be declared
or paid on the outstanding shares of either the Class A Stock, the
Class B
-2-
Stock or the Common Stock unless an identical per share dividend
or distribution is simultaneously declared and paid on the
outstanding shares of the other such class of common stock;
provided, further, however, that a dividend of shares may be
declared and paid in Class A Stock to holders of Class A Stock, in
Class B Stock to holders of Class B Stock and in Common Stock to
holders of Common Stock if the number of shares paid per share to
holders of Class A Stock, to holders of Class B Stock and to
holders of Common Stock shall be the same. If the Corporation
shall in any manner subdivide, combine or reclassify the
outstanding shares of Class A Stock, Class B Stock or Common
Stock, the outstanding shares of the other classes of common stock
shall be subdivided, combined or reclassified proportionately in
the same manner and on the same basis as the outstanding shares of
Class A Stock, Class B Stock or Common Stock, as the case may be,
have been subdivided, combined or reclassified.
(2) Consideration in Merger and Similar Transactions. The
Corporation shall not be a party to a merger, recapitalization,
reclassification or similar transaction where the Corporation is
not the surviving entity or all of the outstanding Common Stock is
purchased or exchanged for or converted into a different security
or cash or other property, or any combination thereof (an
"Extraordinary Transaction"), unless the per share consideration
received by holders of Class B Stock in connection with the
Extraordinary Transaction is the same as the per share
consideration received by the holders of Common Stock in
connection with the Extraordinary Transaction.
(d) Optional Conversion.
(1) The shares of Common Stock and Class B Stock are not
convertible into or exchangeable for shares of Class A Stock.
(2) Each share of Class A Stock may be converted, at any time and
at the option of the holder thereof, into one fully paid and
nonassessable share of Common Stock.
(3) Each share of Class B Stock may be converted, at any time and
at the option of the Corporation, into one fully paid
nonassessable share of Common Stock."
-3-
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be executed on its behalf this ___ day of March, 2000.
IDT CORPORATION
By:
------------------------------
Name:
Title:
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