Exhibit 10.1
Amended and Restated Settlement Agreement
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This Amended and Restated Settlement Agreement ("Agreement") made this
7th day of May, 2003, between Net2Phone, Inc. a Delaware corporation having
offices at 000 Xxxxx Xxxxxx, Xxxxxx, Xxx Xxxxxx ("X0X"), and Deutsche Bank AG
London, having offices at Xxxxxxxxxx Xxxxx, 0 Xxxxx Xxxxxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxx XX0X 0XX ("Assignee"),
Witnesseth That
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WHEREAS, N2P previously entered into Settlement Agreements in May and
July, 2001 with certain former shareholders of Aplio, S.A. arising out of the
acquisition by N2P of direct and indirect ownership of all of the capital stock
of Aplio, S.A. ("Original Settlement Agreements"); and
WHEREAS, Assignee has received assignments from such former
shareholders of all of their rights under the Original Settlement Agreements and
has acquired all of the total of 585,325 shares of the common stock of N2P which
are the subject matter of the Original Settlement Agreements pursuant to
Assignment Agreements dated the date hereof and substantially in the form set
forth in Exhibit 2 hereto, for a total purchase price of $19,213,371.00, of
which sum, $4,999,267.76 (the "Purchase Price") is allocated to the 152,300
shares ("Shares") that are the subject of this Agreement; and
WHEREAS, Assignee and N2P have agreed to amend and restate in their
entirety the Original Settlement Agreements as hereinafter provided; and
WHEREAS, the balance of the shares acquired by Assignee from such
former shareholders together with their rights under the Original Settlement
Agreements are the subject matter of substantially identical Amended and
Restated Settlement Agreements entered into between N2P and Assignee
simultaneously herewith.
NOW THEREFORE, on the basis of the foregoing premises and the
understandings and premises hereinafter set forth, the parties hereto agree as
follows:
1. Definitions.
As used in this Agreement, the following terms shall have the
following meanings:
"Affiliate" means, with respect to any party to this Agreement, any
entity controlling, controlled by or under common control with such party. As
used in this definition, "controlling," "controlled by" and "under common
control with" mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of another entity
whether through the ownership of voting securities, by contract or otherwise.
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"Business Day" means any day, other than a Saturday or Sunday, on which
banks in New York, New York are open for the transaction of ordinary banking
business.
"Market Value" of the shares of N2P common stock means the aggregate
proceeds from the sale of all Shares (net of brokerage commissions and fees)
remaining after all Interim Transfers received or payable to Assignee by reason
of regular way sale of such Shares on the NASDAQ National Market System or other
national exchange during the Sales Period by Xxxxx Xxxxxx as agent for Assignee
and as reflected in sales confirmations delivered by Assignee to N2P.
"Sales Period" means the period from January 2, 2006 through April 25,
2006.
"Security" means a stand-by letter of credit issued by Wachovia Bank,
National Association, dated the date hereof in an initial amount equal to the
obligations to be secured hereunder, including the Purchase Amount (as defined
below) and cumulative interest payments pursuant to paragraph 4 below payable
from the date hereof through the Purchase Date (as defined below), and having a
termination date of August 4, 2006.
"Share Price" means initially $32.83, as adjusted pursuant to Section
5.
"Transfer" shall mean any sale, assignment, transfer, conveyance,
distribution or other disposition of Shares, whether voluntary or by operation
of law.
2. Share Purchase. On May 1, 2006 ("Purchase Date"), N2P shall purchase from
Assignee, and the Assignee shall sell to N2P, the maximum aggregate sum of
152,300 Shares of N2P common stock at a price of $32.83 per Share for a total
aggregate purchase price of $4,999,267.76, subject to appropriate adjustments
for Interim Transfers pursuant to paragraph 3 below, ("Purchase Amount"). For
the avoidance of doubt, it is hereby specified that the Purchase Amount and the
maximum number of shares of N2P common stock covered by this paragraph 2 shall
be reduced only pursuant to the provisions of paragraphs 3 and 5 hereof.
Notwithstanding the foregoing, provided that the Shares are then
registered for sale under the Act or N2P provides Assignee with the opinion of
reputable securities counsel that the Shares may be sold or otherwise
transferred without the requirement of registration under the Act, N2P, at its
sole and exclusive option, shall have the right to notify Assignee (a "Sales
Notice"), on or before December 31, 2005, of N2P's election to pay to Assignee
on May 1, 2006 the excess of $32.83 per Share over the Market Value of the
Shares. Upon receipt of such notice, Assignee shall be required to sell all of
its Shares in regular way transactions over the NASDAQ or other major stock
exchange during the Sales Period, provided that it shall not offer more than
2,602 Shares for sale in any one trading day (the "Daily Maximum"), without
N2P's prior written consent. It is agreed by the parties hereto that the sales
shall be effectuated through Xxxxx Xxxxxx, as agent for Assignee. If the Market
Value equals or exceeds the product of $32.83 times the number of Shares
remaining after all Interim Transfers , then N2P shall pay $0. If the Market
Value is less than the product of $32.83 times the number of Shares remaining
after all Interim Transfers ("Maturity Amount"), then N2P shall pay the
difference to Assignee on May 1, 2006.
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Payment with respect to the Shares as provided in each of the previous
two paragraphs shall be made on the Purchase Date. Upon making such payment, N2P
shall have no further rights or obligations with respect to such Shares.
3. Interim Transfers. In the event that, between the date hereof and the
Purchase Date, Assignee shall Transfer any Shares of N2P common stock without an
accompanying assignment of all of Assignee's rights under this Agreement (other
than sales during the Sales Period following Assignee's receipt of the notice
from N2P provided for in paragraph 2 above) ("Interim Transfer"), within five
(5) Business Days of such Transfer, Assignee shall provide written notice of
such Transfer to N2P (a "Transfer Notice"). Such Transfer Notice shall be
substantially in the form of Exhibit 3 and shall contain an acknowledgment by
the Assignee that the Security is to be reduced by the product of $32.83 times
the number of Shares being transferred plus the amount of the cumulative unpaid
and unaccrued interest payments through the Purchase Date for each Share so
transferred. Upon such a Transfer, the number of Shares that Assignee shall be
entitled to sell and that N2P shall be required to purchase shall be reduced by
each Share transferred. N2P shall then provide the Transfer Notice to Wachovia
Bank, National Association ("Wachovia"), and such Transfer Notice shall be
deemed to be authority for Wachovia to reduce the Security by $32.83 times the
number of Shares transferred plus cumulative unpaid and unaccrued interest
payments through the Purchase Date for each Share so transferred as provided by
N2P to Wachovia.
Transfers of Shares between Assignee and any Affiliate of Assignee
shall be excluded from the provisions of this paragraph 3 and shall not operate
to reduce the number of shares that Assignee is entitled to sell on the Purchase
Date or the amount of the Security. For the avoidance of doubt, it is specified
that a transferee that is an Affiliate of Assignee shall automatically and
without the need for any formalities succeed to the Assignee's rights (and
obligations) under this Agreement with respect to the Shares transferred to such
Affiliate.
4. Interest Payments. N2P shall pay to Assignee interest at the rate of 3.5% per
annum (calculated on the basis of a 360 day year, comprised of twelve 30-day
months) on the Purchase Amount (as reduced by Interim Transfers, if any)
commencing as of and including the date hereof and to and including the date of
payment in full of the Purchase Amount. The Purchase Amount shall be reduced
from time to time as the number of Shares required to be purchased by N2P is
reduced as the result of Interim Transfers. Interest shall be paid semi-annually
in cash on May 1 and November 1 or the next Business Day if May 1 or November 1
is not a Business Day. The first interest payment payable to the Assignee
hereunder shall be payable on November 1, 2003. Upon receipt of any interest
payment hereunder, Assignee shall provide written notice (substantially in the
form of Exhibit 4 hereto) simultaneously to Wachovia and N2P, and Wachovia shall
thereupon be authorized to reduce the Security by the amount of such interest
payment. It is understood and agreed that the Assignee shall make a good faith
effort to provide the foregoing notice to Wachovia and N2P, but any failure of
Assignee to provide such notice shall not create any liability for the Assignee
or give rise to any claim of Wachovia, N2P or any other person against the
Assignee or its affiliates; all such claims are hereby waived.
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5. Effect of Stock Splits, Reverse Stock Splits, Mergers, Consolidations and
Other Transactions Involving Exchanges or Conversions of Shares . The 152,300
Shares shall be adjusted to account for any stock splits, reverse stock splits
or dividends or distributions payable in stock (other than distributions in the
form of stock made by N2P to employees under employee benefit, retirement or
compensation arrangements or plans) effected by N2P during the period covered by
this Agreement. If there is a stock split, a reverse stock split or a dividend
or distribution payable in stock, (i) the number of Shares subject to this
Agreement and the Daily Maximum shall be adjusted immediately after the
occurrence of any such event to equal the number of shares of Common Stock which
a record holder of the same number of shares immediately prior to the occurrence
of such event would own or be entitled to receive after the occurrence of such
event, and (ii) the Share Price shall be adjusted to equal (A) the Share Price
multiplied by the number of Shares subject to this Agreement immediately prior
to the adjustment divided by (B) the number of Shares subject to this Agreement
immediately after such adjustment.
In the event of merger or consolidation of N2P into IDT Corporation or another
transaction in which the Shares are converted into or exchanged for stock of IDT
Corporation as described in paragraph 8 below, the 152,300 number of shares and
$32.83 per share price shall be appropriately adjusted to reflect the conversion
or exchange.
If N2P shall take any action in respect of its Common Stock other than any
action described in this Section 5, the number of Shares subject to this
Agreement shall be adjusted in such manner as may be equitable in the
circumstances.
6. Method of Payment and Transfer of Shares. All payments of interest and the
Purchase Amount to be made hereunder shall be made by wire transfer in
accordance with instructions provided by Assignee from time to time. Any and all
Shares purchased by N2P shall be delivered to N2P duly endorsed for Transfer.
Within 5 days of Assignee's receipt of full payment of the Purchase Amount and
all required interest, it shall return the Security to N2P for submission to
Wachovia for cancellation.
7. Posting of Security. In order to secure payment by N2P of the Purchase Amount
and the interest provided for herein, simultaneous with the execution and the
delivery of this Agreement, N2P has posted Security in the amount of
$5,522,501.92. substantially in the form set forth in Exhibit 1 hereto. The
amount of the Security shall be subject to reduction as interest payments are
made and the Purchase Amount is reduced by reason of Interim Transfers, as
provided for in paragraphs 3 and 4 above. All Transfers shall be subject to the
provisions of the Security documents.
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8. Defaults. N2P shall be in default of its obligations under this Agreement in
the event that (A) N2P fails to pay to Assignee any sum due to it pursuant to
paragraphs 2 or 4 hereof, or (B) if the shares of common stock of N2P or, in the
event of a merger of N2P into IDT Corporation ("IDT") in which the merger
consideration is IDT common stock, IDT, cease to be traded on the NASDAQ
National Market System and are not, at that time, traded on either the New York
Stock Exchange or the American Stock Exchange, or (C) involuntary proceedings
are initiated against N2P under the United States Bankruptcy Code, which
proceedings are not dismissed within 60 days, or (D) N2P becomes insolvent and
cannot pay its debts as they become due, or (E) a receiver is appointed for the
property of N2P, or (F) N2P consolidates or amalgamates with, or merges with or
into, or transfers all or substantially all its assets to, another entity,
unless (i) the resulting surviving or transferee entity is N2P or IDT, and, if
IDT, IDT assumes all of N2P's obligations under this Agreement and (ii) the
Assignee is issued shares of IDT common stock in exchange for the Shares in the
same proportion as issued to all other holders of shares of N2P common stock or
(G) N2P shall amend, modify, cancel or terminate the Security, or (H) N2P shall
withdraw in whole or in part the cash collateral issued in support of the
Security, except as otherwise provided for in the documents evidencing the
Security, or (I) there occurs a consolidation or merger of N2P with another
entity in which N2P is not the surviving entity unless such consolidation or
merger is a stock merger with IDT or (J) there occurs a material breach by N2P
under the documents evidencing the Security resulting in an acceleration by
Wachovia of its rights against N2P under such documents or (K) voluntary
proceedings are initiated by N2P under the United States Bankruptcy Code. In the
event of such a default, Assignee shall be entitled to require N2P to acquire
immediately, and N2P shall be obliged to acquire immediately, from Assignee, all
of the Shares held by Assignee for a price of $32.83 per share, subject to any
adjustment pursuant to paragraph 5 above, and Assignee shall be entitled to
obtain payment of any and all sums due, including the Purchase Amount and
accrued but unpaid interest to the date of payment pursuant to paragraph 4
above, by resorting to the Security. Any draw under the Security shall be
accompanied by a tender of the Shares that are to be purchased by such draw.
N2P shall remain fully responsible for all of its payment obligations hereunder,
notwithstanding any failure of the bank issuing the Security to fulfill its
obligations under the Security. To the extent such payment obligations are not
satisfied by the Assignee's recourse to the Security, N2P shall be liable for
all damages arising out of or in connection with its default, including, without
limitation, taxes, fines, penalties, losses, expenses, court and other costs,
attorneys' fees and disbursements and interest on any unpaid amount at the
annual rate of 9% until such amount is paid ("Damages").
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9. Integration Clause. This Agreement constitutes the complete and entire
agreement between N2P and Assignee and supersedes all proposals, prior
agreements (including without limitation the Original Settlement Agreements),
and all other communications between the parties, whether oral or in writing,
including any representations or warranties, relating to the subject matter of
this Agreement.
10. Notices. All notices and other communications hereunder shall be in writing
and shall be deemed duly given only if sent by facsimile transmission and by
Federal Express (or other recognized international overnight courier service)
and addressed to the intended recipient as follows:
If to N2P: If to Assignee:
Xxxxx X. Xxxxxxxx, Deutsche Bank AG London
General Counsel Winchester House
Net2Phone, Inc. 0 Xxxxx Xxxxxxxxxx Xxxxxx
000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxx XX0X 0XX
Xxxxxx, Xxx Xxxxxx 00000
XXX
Telecopy: 000-000-0000
Any notice or other communication hereunder shall be deemed duly given and
received three business days after it is transmitted by the foregoing methods.
Any party may change the address to which notices and other communications under
this Agreement are to be delivered by giving notice of such change in the manner
provided for herein.
11. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to conflict of
law principles. Any disputes arising under this Agreement and any action brought
to enforce this Agreement must be brought exclusively in a state or federal
court of competent jurisdiction located in New York County, New York. The
parties hereto consent to personal jurisdiction of such courts and waive any
defense of forum non-conveniens.
12. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns (other than pursuant to Interim Transfers). It is specifically agreed
and understood that Assignee shall have the right to assign its rights hereunder
in whole, but not in part, or the Shares (in whole or in part) separate from its
rights under this Agreement (subject to the provisions of paragraph 3 above), so
long as such assignment complies with applicable restrictions (and/or available
exemptions from registration) under the Securities Act of 1933 (the "Act") and
the transferee is not an "affiliate" of N2P as such term is defined in Rule 144
issued pursuant to the Act . In addition, Assignee shall have the right request
the removal of any restrictive legend on the Share certificates. In order to
effect such assignment or delegending of the Share certificates, including at
N2P's request pursuant to Section 2, Assignee shall provide N2P with the
favorable opinion of reputable securities counsel (which shall include, without
limitation, ____________________) that the proposed assignment does not require
registration under the provisions of the Act or that the Shares are freely
tradable under Rule 144. N2P shall pay the reasonable fees of such counsel for
examining the matter and rendering its opinion.
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Upon receipt by N2P of a favorable opinion of outside counsel that the
proposed assignment does not require registration under the provisions of the
Act or that the Shares are freely tradable under Rule 144, N2P shall promptly,
but in any event within three (3) Business Days following the date of its
receipt of such opinion, instruct its transfer agent to remove the legend
described in paragraph 14(b) (ii) below. All transfer agent costs shall be borne
by N2P.
In the event the Shares are not freely tradable under Rule 144 or
otherwise during the period between May 8, 2005 and the Purchase Date and
Assignee shall notify N2P of its intention to dispose of all of the Shares, then
N2P shall take all reasonably required actions to register the Shares so that
the same will be saleable. In the event N2P is unable to register the Shares to
enable Assignee to sell them, including pursuant to paragraph 2, Assignee shall
have no obligation to dispose of the Shares.
13. Counterparts. This Agreement may be executed in counterparts, each of which
shall, for all purposes, be deemed an original and all of such counterparts,
taken together, shall constitute the same agreement.
14. Certain Representations and Warranties and Covenants.
(a) N2P hereby represents and warrants and covenants to the Assignee
that:
(i) All corporate action on the part of N2P, its officers,
directors and shareholders necessary for the authorization, execution and
delivery of this Agreement, and the other agreements contemplated hereby
("Agreements") and the performance of all obligations of N2P hereunder and
thereunder has been taken prior to the date hereof, and the Agreements, when
executed and delivered by N2P, shall constitute valid and legally binding
obligations of N2P, enforceable against N2P in accordance with their terms;
(ii) the transactions contemplated hereby are being entered
into by N2P in compliance with all applicable federal and state securities laws;
(iii) the transactions contemplated hereby will be accounted
for in N2P's financial statements in accordance with generally accepted
accounting principles;
(iv) First Albany Corporation is acting as exclusive agent on
behalf of N2P with respect to the transactions contemplated hereby and will
receive a placement fee from N2P upon the execution of this Agreement pursuant
to an engagement letter dated March 19, 2003;
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(v) N2P will pay its own out-of-pocket expenses incurred in
connection with the transactions contemplated hereby;
(vi) the Security and the documentation entered into by N2P in
connection therewith constitute valid and legally binding obligations of N2P,
enforceable against N2P in accordance with their terms;
(vii) N2P (x) owns assets whose fair saleable value is greater
than the amount required to pay all of its indebtedness (including contingent
debts, which will be computed at the amounts which, in light of all the facts
and circumstances existing on the date hereof, represents the amounts that can
reasonably be expected to become an actual or matured liability), (y) is able to
pay all of its indebtedness as such indebtedness matures in the ordinary course
of business and (z) has capital sufficient to carry on its business and
transactions in the ordinary course of its business and all business and
transactions in which it is about to engage; and
(viii) N2P shall, with respect to (x) the representations,
warranties and agreements made by N2P herein arising from the untruth,
inaccuracy or breach of any such representations, warranties or agreements of
N2P hereunder and (y) any actions by third parties against Assignee in
connection with any Transfers by Assignee under the second paragraph of Section
2 above, indemnify, defend and hold Assignee harmless against all liability,
loss or damage, together with all reasonable costs and expenses related thereto
(including legal and accounting fees and expenses) arising therefrom.
(b) Assignee hereby represents and warrants and covenants to N2P that:
(i) All corporate action on the part of Assignee, its
officers, directors and shareholders necessary for the authorization, execution
and delivery of this Agreement and the Agreements and the performance of all
obligations of Assignee hereunder and thereunder has been taken prior to the
date hereof, and the Agreements, when executed and delivered by Assignee, shall
constitute valid and legally binding obligations of Assignee, enforceable
against Assignee in accordance with their terms;
(ii) Assignee is a qualified institutional buyer within the
meaning of Rule 144A of the Securities Act of 1933, as amended, (the "Act") and
represents that it is acquiring the Shares for investment and not for
distribution and Assignee recognizes and acknowledges that the Shares may not be
disposed of except in accordance with an effective registration statement, the
provisions of Rule 144 under the Act or another exemption to the Act and,
subject to the provisions of paragraph 12 above, that the Shares will carry a
restrictive legend to such effect;
(iii) Assignee is entering into this Agreement solely based on
the documentation included in this Agreement and the Agreements and has not
relied on or requested any other information in making its investment decision
hereunder;
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(iv) Assignee understands that First Albany Corporation is
acting as an exclusive agent on behalf of N2P and will not receive any
compensation from the Assignee;
(v) Assignee has relied on its own legal counsel and tax
experts for legal and tax advice in connection with the transactions
contemplated hereby;
(vi) Assignee will pay its own out-of-pocket expenses incurred
in connection with the transactions contemplated hereby; and
(vii) Assignee shall be responsible for any transfer fees or
taxes incurred as a result any assignment by the Assignee of this Agreement or
the Security.
In Witness Hereof, the parties have caused this Agreement to be
executed the date and year first-above mentioned.
Net2Phone, Inc.
By: ________________________
Name:
Title:
Deutsche Bank AG London
By: ________________________
Name:
Title:
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