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