UNITED STATES
	SECURITIES AND EXCHANGE COMMISSION
	Washington, D.C. 20549
	SCHEDULE 13D/A

Under the Securities Exchange Act of 1934
(Amendment No. 3)*

(Name of Issuer)

 

(Title of Class of Securities)

 

(CUSIP Number)

 

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

 

(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.

^* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

 

 

 

(1)           As reported in the Issuer’s Report on Form 10-Q for the fiscal quarter ended January 31, 2005, filed with the Commission on March 14, 2005, as of March 8, 2005, the Issuer had outstanding 18,593,923 shares (excluding 6,480,937 treasury shares) of Common Stock, par value $0.01 per share (“Common Stock”), 9,816,988 shares of Class A Common Stock, par value $0.01 per share (“Class A Common Stock”), and 73,513,774 shares (excluding 1,713,053 treasury shares) of Class B Common Stock, par value $0.01 per share (“Class B Common Stock”).  Each share of Common Stock is entitled to one vote per share, each share of Class A Common Stock is entitled to three votes per share, and each share of Class B Common Stock is entitled to one-tenth of one vote per share.  The Reporting Person’s beneficial ownership has decreased from approximately 24.5% to approximately 23.45% of the outstanding Class B Common Stock, increased from approximately 15.51% to 16.91% of the Issuer’s outstanding common equity, and increased from approximately 2.36% to 3.11% of the Issuer’s outstanding voting power.

 

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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 13D/A

(Amendment No. 3)

 

Statement of

 

LIBERTY MEDIA CORPORATION

 

Pursuant to Section 13(d) of the Securities Exchange Act of 1934

in respect of

 

IDT CORPORATION

 

Liberty Media Corporation, a Delaware corporation (“Liberty” or the “Reporting Person”), originally filed a Statement on Schedule 13D (the “Original Statement” ) on June 16, 2000, with respect to the Common Stock, par value $0.01 per share (“Common Stock”) of IDT Corporation, a Delaware corporation (“IDT” or the “Issuer”).  The Reporting Person filed Amendment No. 1 to the Original Statement on November 8, 2001 (the “First Amendment”), in which it reported that it had exchanged all of its shares of Common Stock for shares of IDT Class B Common Stock, par value $0.01 per share (“Class B Common Stock”), and had acquired additional shares of Class B Common Stock.  The Reporting Person filed Amendment No. 2 to the Original Statement on March 9, 2004 (the “Second Amendment,” and together with the Original Statement and the First Amendment, the “Statement”), to report its acquisition of additional shares of Class B Common Stock.  The Reporting Person is filing this Amendment No. 3 (the “Third Amendment”) to report its acquisition of additional shares of Class B Common Stock.  Capitalized terms used but not otherwise defined herein have the respective meanings given to such terms in the Statement.

 

Item 2.	Identity and Background
The first and second paragraphs of Item 2 of the Second Amendment are hereby deleted and restated in their entirety as follows:
The Reporting Person owns 100% of LMC Capital LLC, a Delaware limited liability company (“LMC Capital”).  LMC Capital owns 100% of Liberty Programming Company LLC, a Delaware limited liability company (“Liberty Programming”).  Liberty Programming owns 99.7% of the outstanding common stock of LMC Animal Planet, Inc., a Colorado corporation (“LMC Animal Planet”), representing a 96.7% voting interest therein.  LMC Animal Planet holds 3,754,479 shares of Class B Common Stock directly.  LMC Animal Planet owns 100% of Liberty IDTC, Inc., a Delaware corporation (“Liberty IDTC”).  Liberty IDTC holds 10,260,303 shares of Class B Common Stock.
The Reporting Person owns 100% of each of the following subsidiaries indirectly:  (i) Liberty IDTC 2, Inc., a Delaware corporation, which holds 676,890 shares of Class B Common Stock, (ii) Liberty IDTC 3, Inc., a Delaware corporation, which holds 2,030,669 shares of Class B Common Stock and (iii) Liberty IDTC 4, Inc., a Delaware corporation, which holds 515,227 shares of Class B Common Stock.
The Reporting Person is a holding company which, through its ownership of interests in subsidiaries and other companies, is primarily engaged in the electronic retailing, media, communications

 

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and entertainment industries.  Through its subsidiaries, the Reporting Person operates in the United States, Europe and Asia.
Schedule 1 referenced in Item 2 of the Statement is hereby deleted and restated in its entirety as set forth on Schedule 1 attached to this Third Amendment.
Item 3.	Source and Amount of Funds or Other Consideration
Item 3 of the Statement is hereby amended and supplemented to include the following:
The Reporting Person acquired beneficial ownership of 3,754,479 shares of Class B Common Stock pursuant to the Agreement and Plan of Merger, dated as of December 15, 2004, among the Issuer, LMC Animal Planet, Inc., a Colorado corporation and a majority owned subsidiary of Liberty (“LMC Animal Planet”), and certain of their respective subsidiaries (the “Merger Agreement”).  Pursuant to the Merger Agreement, on March 8, 2005 (the “Closing Date”), three wholly owned subsidiaries of LMC Animal Planet were merged with three wholly owned subsidiaries of the Issuer, in exchange for an aggregate of 3,754,479 shares of Class B Common Stock issued to LMC Animal Planet.  The sole assets of the three subsidiaries acquired by the Issuer were, collectively, 1,250,000 shares of common stock of Net2Phone, Inc., a Delaware corporation (“Net2Phone”), and non-controlling membership interests in NTOP Holdings LLC, a Delaware limited liability company (“NTOP”), which holds 28,896,750 shares of Class A common stock of Net2Phone.
The foregoing description of the Merger Agreement is qualified in its entirety by reference to the full text of such document, a copy of which is filed as an Exhibit to this Third Amendment and is incorporated herein by reference.
Item 4.	Purpose of Transaction
Item 4 of the Statement is hereby amended and supplemented to include the following:
On March 8, 2005, the Reporting Person acquired beneficial ownership of an aggregate of 3,754,479 shares of Class B Common Stock for investment purposes pursuant to the Merger Agreement described in Item 3 of this Third Amendment, which description is incorporated herein by reference.
Item 5.	Interest in Securities of the Issuer
The first paragraph of Item 5(a) of the Statement is hereby deleted and restated in its entirety as follows:
(a)           As reported in the Issuer’s Report on Form 10-Q for the fiscal quarter ended January 31, 2005, filed with the Commission on March 14, 2005, as of March 8, 2005, the Issuer had outstanding 18,593,923 shares (excluding 6,480,937 treasury shares) of Common Stock, 9,816,988 shares of Class A Common Stock, and 73,513,774 shares (excluding 1,713,053 treasury shares) of Class B Common Stock.  Each share of Common Stock is entitled to one vote per share, each share of Class A Common Stock is entitled to three votes per share, and each share of Class B Common Stock is entitled to one-tenth of one vote per share.  The Reporting Person’s beneficial ownership has decreased from approximately 24.5% to approximately 23.5% of the outstanding Class B Common Stock, increased from approximately 15.51% to 16.91% of the Issuer’s outstanding common equity, and increased from approximately 2.36% to 3.11% of the Issuer’s outstanding voting power.
The second paragraph of Item 5(a) of the Statement is hereby amended and supplemented to include the following:

 

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In December 2004 the Malone Family Foundation disposed of all the shares of Common Stock and Class B Common Stock it previously held.
Item 5(b) of the Statement is hereby deleted and restated in its entirety as follows:
(b)           The Reporting Person has the sole power to vote or to direct the voting of and to dispose or direct the disposition of 17,237,568 shares of Class B Common Stock.  Mr. Bennett shares voting and dispositive power over the Class B Common Stock held by Hilltop Investments, Inc. with his spouse.
Item 6.	Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer
Item 6 of the Statement is hereby amended and supplemented to include the following:
2005 Registration Rights Agreement
In connection with the Merger Agreement, LMC Animal Planet and the Issuer entered into a Registration Rights Agreement, dated as of March 8, 2005 (the “2005 Registration Rights Agreement”).  The 2005 Registration Rights Agreement provides LMC Animal Planet with, among other things, certain rights to require the Issuer to register for resale under the Securities Act of 1933, as amended, up to 3,754,479 shares of Class B Common Stock issued to LMC Animal Planet pursuant to the Merger Agreement.
The foregoing description of the 2005 Registration Rights Agreement is qualified in its entirety by reference to the full text of such document, a copy of which is filed as an Exhibit to this Third Amendment, and is incorporated herein by reference.
Item 7.	Material to Be Filed as Exhibits
Item 7 is hereby amended and supplemented to include the following:
7(r)          Agreement and Plan of Merger, dated as of December 15, 2004, among LMC Animal Planet, Inc., Liberty N2P, Inc., Liberty N2P II, Inc., Liberty N2P III, Inc., IDT Corporation, IDT-LMC Acquisition I, Inc., IDT-LMC Acquisition II, Inc., and IDT-LMC Acquisition III, Inc.
7(s)         Registration Rights Agreement, dated as of March 8, 2005, between IDT Corporation and LMC Animal Planet, Inc.

 

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Signature

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

 

Dated: March 18, 2005
LIBERTY MEDIA CORPORATION
By:	/s/ Charles Y. Tanabe
	Name:	Charles Y. Tanabe
	Title:	Senior Vice President, General Counsel and Secretary

 

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Schedule I

 

DIRECTORS AND EXECUTIVE OFFICERS
OF
LIBERTY MEDIA CORPORATION

 

The name and present principal occupation of each director and executive officer of Liberty are set forth below.  Unless otherwise noted, the business address for each person listed below is c/o Liberty Media Corporation, 12300 Liberty Boulevard, Englewood, Colorado 80112.  All executive officers and directors listed are United States citizens, except for David J.A. Flowers, who is a citizen of Canada.

 

Name and Business Address (if applicable)		Principal Occupation and Principal Business (if applicable)
John C. Malone		Chairman of the Board and Director of Liberty
Robert R. Bennett		President, Chief Executive Officer and Director of Liberty
Donne F. Fisher 9781 Meridian Blvd., #200 Englewood, Colorado 80112		Director of Liberty; President of Fisher Capital Partners, Ltd.
Paul A. Gould 711 5th Avenue, 8th Floor New York, New York 10022		Director of Liberty; Managing Director of Allen & Company Incorporated
David E. Rapley		Director of Liberty
M. LaVoy Robison 1727 Tremont Place Denver, Colorado 80202		Director of Liberty; Executive Director and a Board Member of the Anschutz Foundation
Larry E. Romrell		Director of Liberty
David J.A. Flowers		Senior Vice President and Treasurer of Liberty
Albert E. Rosenthaler		Senior Vice President of Liberty
Christopher W. Shean		Senior Vice President and Controller of Liberty
Charles Y. Tanabe		Senior Vice President, General Counsel and Secretary of Liberty

 

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Exhibit Index

 

Exhibit No.		Description
7(r)		Agreement and Plan of Merger, dated as of December 15, 2004, among LMC Animal Planet, Inc., Liberty N2P, Inc., Liberty N2P II, Inc., Liberty N2P III, Inc., IDT Corporation, IDT-LMC Acquisition I, Inc., IDT-LMC Acquisition II, Inc., and IDT-LMC Acquisition III, Inc.
7(s)		Registration Rights Agreement, dated as of March 8, 2005, between IDT Corporation and LMC Animal Planet, Inc.

 

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Exhibit 7(r)

 

AGREEMENT AND PLAN OF MERGER

 

dated as of

 

December 15, 2004

 

among

 

LMC ANIMAL PLANET, INC.,

 

LIBERTY N2P, INC.,

 

LIBERTY N2P II, INC., and

 

LIBERTY N2P III, INC.

 

and

 

IDT CORPORATION,

 

IDT LMC-N2P ACQUISITION I, INC.,

 

IDT LMC-N2P ACQUISITION II, INC., and

 

IDT LMC-N2P ACQUISITION III, INC.

and

 

solely with respect to Section 6.07,

the other signatories listed on the signature pages hereto

 

 

TABLE OF CONTENTS

 

ARTICLE I THE MERGERS
Section 1.01	The Mergers
Section 1.02	Conversion of Shares
Section 1.03	No Fractional Shares
Section 1.04	Stock Transfer Books; Extinction of Stockholder Rights
Section 1.05	Tax Effect
ARTICLE II THE SURVIVING ENTITIES; CLOSING
Section 2.01	Certificate of Incorporation
Section 2.02	Bylaws
Section 2.03	Officers
Section 2.04	Closing
ARTICLE III CONDITIONS TO CLOSING
Section 3.01	Conditions to Each Party’s Obligation to Effect the Mergers
Section 3.02	Conditions of LMC Animal Planet and the Seller Subsidiaries to Effect the Mergers
Section 3.03	Conditions of IDT Parent and each IDT Subsidiary to Effect the Mergers
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF LMC ANIMAL PLANET
Section 4.01	Organization, Good Standing and Qualification
Section 4.02	Capitalization; No Liens
Section 4.03	Assets of Seller Subsidiaries
Section 4.04	Corporate Authority
Section 4.05	No Violation; Consents
Section 4.06	Litigation
Section 4.07	Unregistered Consideration Shares
Section 4.08	Suitability of Investment
ARTICLE V REPRESENTATIONS AND WARRANTIES OF IDT PARENT AND IDT SUBSIDIARIES
Section 5.01	Organization, Good Standing and Qualification
Section 5.02	Capitalization; No Liens
Section 5.03	Corporate Authority
Section 5.04	No Violation; Consents
Section 5.05	IDT Reports; Financial Statements; Information Statement
Section 5.06	Absence of Certain Changes
Section 5.07	Litigation
Section 5.08	Compliance with Laws
Section 5.09	Permits and Licenses
Section 5.10	Intellectual Property, etc
Section 5.11	Private Offering

 

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Section 5.12	Business Combination Statutes
Section 5.13	Conducted Own Diligence
ARTICLE VI COVENANTS
Section 6.01	NYSE Listing
Section 6.02	Commercially Reasonable Efforts to Close; Preparation and Mailing of Information Statement
Section 6.03	Confidentiality
Section 6.04	Transfer Limitations; 1933 Act Legend
Section 6.05	Confidentiality of Agreement
Section 6.06	Notification of Certain Matters
Section 6.07	NTOP
Section 6.08	Rule 144
Section 6.09	Asset Maintenance
ARTICLE VII TAX MATTERS
Section 7.01	Tax Definitions
Section 7.02	Tax Representations
Section 7.03	Covenants
Section 7.04	Tax Sharing
Section 7.05	Cooperation On Tax Matters
Section 7.06	Tax Indemnification
Section 7.07	Purchase Price Adjustment
Section 7.08	IDT Parent Representations, Warranties and Covenants
Section 7.09	Transfer Taxes
Section 7.10	Survival
ARTICLE VIII EMPLOYEE BENEFIT PLANS
Section 8.01	Employee Benefit Plans Representations
ARTICLE IX INDEMNIFICATION
Section 9.01	Indemnification by each of IDT Parent and each IDT Subsidiary
Section 9.02	Indemnification by LMC Animal Planet
Section 9.03	Procedure
Section 9.04	Exclusivity of Remedy
Section 9.05	Certain Limitations
Section 9.06	Method of Payment for Certain Indemnification Payments
ARTICLE X TERMINATION
Section 10.01	Termination
ARTICLE XI MISCELLANEOUS
Section 11.01	Successors and Assigns
Section 11.02	Survival
Section 11.03	Governing Law
Section 11.04	Counterparts; Effectiveness
Section 11.05	Captions and Headings
Section 11.06	Notices
Section 11.07	Amendments and Waivers
Section 11.08	Severability
Section 11.09	Entire Agreement
Section 11.10	Specific Enforcement

 

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Section 11.11	Expenses
Section 11.12	Further Assurances
Section 11.13	Waiver of Jury Trial
Section 11.14	Third Party Beneficiaries

 

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AGREEMENT AND PLAN OF MERGER

 

AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of December 15, 2004, by and among LMC Animal Planet, Inc., a Colorado corporation (“LMC Animal Planet”), Liberty N2P, Inc., a Delaware corporation (“Liberty N2P”), Liberty N2P II, Inc., a Delaware corporation (“Liberty N2P II”), Liberty N2P III, Inc., a Delaware corporation (“Liberty N2P III,” and together with Liberty N2P and Liberty N2P II, the “Seller Subsidiaries”), IDT Corporation, a Delaware corporation (“IDT Parent”), IDT LMC-N2P Acquisition I, Inc., a Delaware corporation (“IDT Sub 1”), IDT LMC-N2P Acquisition II, Inc., a Delaware corporation (“IDT Sub 2”), and IDT LMC-N2P Acquisition III, Inc., a Delaware corporation (“IDT Sub 3,” and together with IDT Sub 1 and IDT Sub 2, the “IDT Subsidiaries”), and, solely with respect to Section 6.07, the other signatories listed on the signature pages to this Agreement.

 

R E C I T A L S:

 

WHEREAS, each Seller Subsidiary is a direct, wholly owned subsidiary of LMC Animal Planet, which is an indirect majority owned subsidiary of Liberty Media Corporation, a Delaware corporation (“Liberty Parent”);

 

WHEREAS, each IDT Subsidiary is a direct wholly owned subsidiary of IDT Parent;

 

WHEREAS, the sole assets of Liberty N2P and Liberty N2P II consist of membership interests in NTOP Holdings, LLC, a Delaware limited liability company (“NTOP”);

 

WHEREAS, the sole assets of NTOP consist of shares of Class A common stock, par value $.01 per share (“Net2Phone Class A Common Stock”), of Net2Phone, Inc., a Delaware corporation (“Net2Phone”), and membership interests in IT Stock, LLC, a Delaware limited liability company, the sole assets of which consist of shares of Net2Phone Class A Common Stock;

 

WHEREAS, the sole assets of Liberty N2P III consist of shares of common stock, par value $.01 per share (“Net2Phone Common Stock”), of Net2Phone;

 

WHEREAS, IDT Parent desires to acquire each Seller Subsidiary by means of a merger, and LMC Animal Planet desires to effect such mergers; and

 

WHEREAS, it is intended that, for U.S. federal income tax purposes, each such merger shall qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”).

 

NOW THEREFORE, the parties hereto agree as follows:

 

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ARTICLE I
THE MERGERS

 

Section 1.01                                The Mergers.

 

(a)                                  At the Closing (as defined in Section 2.04(a) below), (i) IDT Sub 1 shall be merged with and into Liberty N2P (“Merger 1”), (ii) IDT Sub 2 shall be merged with and into Liberty N2P II (“Merger 2”) and (iii) IDT Sub 3 shall be merged with and into Liberty N2P III (“Merger 3,” and each, a “Merger,” and collectively, the “Mergers”), in each case in accordance with Section 251 of the General Corporation Law of the State of Delaware (the “DGCL”) and in accordance with the terms and conditions hereof, whereupon the separate existence of each IDT Subsidiary shall cease in accordance with the DGCL, and (A) Liberty N2P shall be the surviving entity of Merger 1 (“Surviving Entity 1”), (B) Liberty N2P II shall be the surviving entity of Merger 2 (“Surviving Entity 2”) and (C) Liberty N2P III shall be the surviving entity of Merger 3 (“Surviving Entity 3;” and each, a “Surviving Entity,” and collectively, the “Surviving Entities”), in each case in accordance with the DGCL.

 

(b)                                 On the Closing Date (as defined in Section 2.04(a) below), each Seller Subsidiary shall file a certificate of merger with the Secretary of State of Delaware and make all other filings or recordings required by the DGCL in connection with the Merger to which it is a party.  Each Merger shall become effective at such time (the “Effective Time”) as the corresponding certificate of merger is duly filed with the Secretary of State of Delaware or at such later time as is specified in such certificate of merger.

 

(c)                                  From and after the Effective Time of each Merger, the Surviving Entity of such Merger shall possess all the rights, powers, privileges and franchises and be subject to all of the obligations, liabilities, restrictions and disabilities of the Seller Subsidiary party to such Merger and the IDT Subsidiary party to such Merger, all as provided under the DGCL, and thereafter neither LMC Animal Planet nor any of its Affiliates (as defined in Section 7.01 below) shall have any right, obligation or liability with respect to any Seller Subsidiary other than as expressly set forth in this Agreement.

 

Section 1.02                                Conversion of Shares.

 

(a)                                  At the Effective Time of the Merger of Liberty N2P and IDT Sub 1, by virtue of such Merger and without any action on the part of any of the parties hereto or any holder of any securities of Liberty N2P or IDT Sub 1, (i) each share of common stock of Liberty N2P outstanding immediately prior to such Effective Time shall automatically be converted into the right to receive 3,268.9719 shares of Class B Common Stock, par value $.01 per share, of IDT Parent (“IDT Parent Class B Common Stock”), and (ii) each share of common stock of IDT Sub 1 outstanding immediately prior to such Effective Time shall automatically be converted into one share of common stock of Surviving Entity 1.

 

(b)                                 At the Effective Time of the Merger of Liberty N2P II and IDT Sub 2, by virtue of such Merger and without any action on the part of any of the parties hereto or

 

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any holder of any securities of Liberty N2P II or IDT Sub 2, (i) each share of common stock of Liberty N2P II outstanding immediately prior to such Effective Time shall automatically be converted into the right to receive 236.3762 shares of IDT Parent Class B Common Stock, and (ii) each share of common stock of IDT Sub 2 outstanding immediately prior to such Effective Time shall automatically be converted into one share of common stock of Surviving Entity 2.

 

(c)                                  At the Effective Time of the Merger of Liberty N2P III and IDT Sub 3, by virtue of such Merger and without any action on the part of any of the parties hereto or any holder of any securities of Liberty N2P III or IDT Sub 3, (i) each share of common stock of Liberty N2P III outstanding immediately prior to such Effective Time shall automatically be converted into the right to receive 249.1313 shares of IDT Parent Class B Common Stock, and (ii) each share of common stock of IDT Sub 3 outstanding immediately prior to such Effective Time shall automatically be converted into one share of common stock of Surviving Entity 3.  The shares of IDT Parent Class B Common Stock issuable in the Mergers, as may be adjusted pursuant to Section 1.02(d), are referred to herein as the “Consideration Shares.”

 

(d)                                 In the event of any dividend, distribution, recapitalization, stock split or combination, or similar event with respect to or affecting the IDT Parent Class B Common Stock after the date hereof and prior to the Effective Time of the Mergers, the foregoing exchange ratios shall be appropriately adjusted.

 

(e)                                  At the Effective Time of each Merger, all shares of common stock of Liberty N2P, Liberty N2P II and Liberty N2P III, as applicable, that have been converted into the right to receive shares of IDT Parent Class B Common Stock shall be automatically canceled and shall cease to exist, and the holder of the common stock of Liberty N2P, Liberty N2P II and Liberty N2P III shall cease to have any rights with respect to such shares, other than the right to receive certificates representing the Consideration Shares exchangeable therefor.

 

Section 1.03                                No Fractional Shares.  No certificates or scrip representing fractional shares of IDT Parent Class B Common Stock shall be issued as a result of any conversion provided for in Section 1.02.  In lieu of the issuance of fractional shares, in the event a holder of Seller Subsidiary capital stock would be entitled to receive any fraction of a share of IDT Parent Class B Common Stock pursuant to Section 1.02, such fraction shall be rounded up to the nearest whole number, so that such holder will receive a whole number of shares of IDT Parent Class B Common Stock; provided, however, that if more than one certificate representing shares of any Seller Subsidiary capital stock shall be surrendered for the account of the same holder, the number of shares of IDT Parent Class B Common Stock for which certificates have been surrendered shall be computed on the basis of the aggregate number of shares represented by the certificates so surrendered with respect to such Seller Subsidiary.

 

Section 1.04                                Stock Transfer Books; Extinction of Stockholder Rights.  At the Effective Time of each Merger, the stock transfer books of the Seller Subsidiary party to such Merger shall be closed with respect to the shares of common stock of such Seller

 

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Subsidiary outstanding immediately prior to such Effective Time.  All Consideration Shares issued upon surrender of a certificate representing shares of common stock of any Seller Subsidiary in accordance with the terms hereof shall be deemed to have been issued in full satisfaction of all rights pertaining to that certificate and the shares of Seller Subsidiary common stock represented thereby, and there shall be no further registration of transfers on the stock transfer books of any Seller Subsidiary of shares of common stock of such Seller Subsidiary outstanding immediately prior to the Effective Time of the Merger to which such Seller Subsidiary is party.

 

Section 1.05                                Tax Effect.  The parties intend that each of the Mergers shall qualify as a tax-free reorganization within the meaning of Section 368(a) of the Code and that this Agreement shall be and hereby is adopted by each of the parties as a plan of reorganization for purposes of Section 368 of the Code and the Treasury Regulations (as defined in Section 7.01 below) thereunder.

 

ARTICLE II
THE SURVIVING ENTITIES; CLOSING

 

Section 2.01                                Certificate of Incorporation.  The certificate of incorporation of each IDT Subsidiary in effect at the Effective Time of the Merger to which such IDT Subsidiary is party shall be the certificate of incorporation of the Surviving Entity of such Merger, until amended in accordance with the DGCL.

 

Section 2.02                                Bylaws.  The bylaws of each IDT Subsidiary in effect at the Effective Time of the Merger to which such IDT Subsidiary is party shall be the bylaws of the Surviving Entity of such Merger, until amended in accordance with the DGCL.

 

Section 2.03                                Officers and Directors.  From and after the Effective Time of each Merger, the officers and directors of each IDT Subsidiary immediately prior to such Effective Time shall be the officers and directors of the corresponding Surviving Entity, each to hold office in accordance with the bylaws of such Surviving Entity or until his or her successor is designated in accordance therewith.

 

Section 2.04                                Closing.

 

(a)                                  Time and Place.  The consummation of the Mergers and the issuance and delivery of the Consideration Shares by IDT Parent to LMC Animal Planet, in its capacity as the sole stockholder of the Seller Subsidiaries (the “Closing”), will take place at the offices of Baker Botts L.L.P., 30 Rockefeller Plaza, New York, New York, at 5:00 p.m. on the Business Day that is three (3) Business Days after the date on which the conditions set forth in Article 3 have been fulfilled or, where permissible, waived, or at such other time and place as IDT Parent and LMC Animal Planet may agree orally or in writing (the “Closing Date”).  For purposes of this Agreement, “Business Day” means a day other than a Saturday, Sunday or day on which banks in the City of New York are authorized to close.

 

(b)                                 Deliveries.  At the Closing:

 

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(i)                                     LMC Animal Planet shall deliver to IDT Parent:

 

(1)                                  a certificate of the secretary of LMC Animal Planet, dated the Closing Date, certifying (A) the signature and incumbency of each officer of LMC Animal Planet who signed this Agreement or the Registration Rights Agreement and (B) that all necessary corporate and shareholder action required to be taken by the board of directors and shareholders of LMC Animal Planet in connection with the execution, delivery and performance of this Agreement and the Registration Rights Agreement and the consummation of the transactions contemplated hereby and thereby has been taken;

 

(2)                                  a certificate of the secretary of each Seller Subsidiary, dated the Closing Date, certifying (A) the signature and incumbency of each officer of such company who signed this Agreement and (B) that all necessary corporate and shareholder action required to be taken by the board of directors and shareholders of such company in connection with the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby (including, without limitation, the Mergers) has been taken;

 

(3)                                  a long form certificate of good standing of LMC Animal Planet from the Colorado Secretary of State, as of a date not more than 3 days prior to the Closing Date;

 

(4)                                  a long form certificate of good standing of each Seller Subsidiary from the Delaware Secretary of State, each as of a date not more than 3 days prior to the Closing Date;

 

(5)                                  the certificate of LMC Animal Planet described in Section 3.03(b);

 

(6)                                  certificates representing all of the issued and outstanding shares of common stock of each Seller Subsidiary;

 

(7)                                  the stock transfer book of each Seller Subsidiary, if any;

 

(8)                                  resignations from the directors and officers of each Seller Subsidiary; and

 

(9)                                  a Registration Rights Agreement, in the form attached hereto as Annex A (the “Registration Rights Agreement”), executed by LMC Animal Planet.

 

(ii)                                  IDT Parent and the IDT Subsidiaries shall deliver to LMC Animal Planet:

 

(1)                                  a certificate of the secretary of (A) each of IDT Parent and each IDT Subsidiary, dated the Closing Date, certifying the signature and incumbency of each officer of such company who signed this Agreement or the Registration Rights Agreement and that all necessary corporate and shareholder action required to be taken

 

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by the board of directors and shareholders of each of IDT Parent and each IDT Subsidiary in connection with the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby (including, without limitation, the Mergers) has been taken; and (B) IDT Parent, dated the Closing Date, certifying that all necessary corporate and shareholder action required to be taken by IDT Parent in connection with the execution, delivery and performance of the Registration Rights Agreement and the consummation of the transactions contemplated thereby has been taken;

 

(2)                                  a long form certificate of good standing of each of IDT Parent and each IDT Subsidiary from the Delaware Secretary of State, each as of a date not more than 3 days prior to the Closing Date;

 

(3)                                  the certificates described in Section 3.02(d);

 

(4)                                  duly executed stock certificates representing 3,754,479 Consideration Shares (subject to adjustment as provided in Section 1.02(d)), duly executed and in proper form, registered in the name of LMC Animal Planet in such denominations as shall be provided by LMC Animal Planet to IDT Parent not less than 3 Business Days prior to the Closing Date;

 

(5)                                  the Registration Rights Agreement executed by IDT Parent; and

 

(6)                                  a fully executed listing application authorizing the Consideration Shares for listing on the New York Stock Exchange, Inc. (“NYSE”), subject only to official notice of issuance.

 

ARTICLE III
CONDITIONS TO CLOSING

 

Section 3.01                                Conditions to Each Party’s Obligation to Effect the Mergers.  The respective obligations of each party to consummate the Mergers are subject to and conditioned on the satisfaction (or, to the extent permitted by Applicable Law (as defined in Section 4.05(d) below), waiver) prior to or at the Closing, of the following condition(s):

 

(a)                                  No Restraints.  No provision of Applicable Law shall be in effect which has the effect of making the Mergers or any of the other transactions contemplated hereby or by the Registration Rights Agreement illegal or shall otherwise restrain or prohibit the consummation of the transactions contemplated hereby (including, without limitation, the Mergers) and thereby.

 

(b)                                 No Litigation.  No court, governmental or other proceedings shall be pending or, to the knowledge of the executive officers of any party hereto, threatened against or affecting any party hereto that, if resolved adversely to any party hereto, would have, individually or in the aggregate, the effect of preventing or materially burdening or

 

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materially impairing the ability of any party hereto to consummate the transactions contemplated hereby (including, without limitation, the Mergers).

 

(c)                                  Shareholder Consent; Expiration of Waiting Period.  The Shareholder Consent (as defined in Section 5.02(e)) shall have been obtained and be in full force and effect, and the twenty (20)-calendar waiting period (the “Waiting Period”) prescribed by Rule 14c-2 under the Securities Act of 1933, as amended (the “Securities Act”), with respect to the distribution of the related Information Statement (as defined in Section 6.02(b) below) shall have expired, and no action, suit, proceeding or investigations by the Securities and Exchange Commission (the “SEC”) or the NYSE shall have been initiated and be continuing or have been threatened and resolved adverse to IDT Parent, in respect of such Shareholder Consent or Information Statement.

 

(d)                                 HSR.  Any waiting period (and any extension thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), applicable to the transactions contemplated hereby shall have expired or shall have been terminated.

 

Section 3.02                                Conditions of LMC Animal Planet and the Seller Subsidiaries to Effect the Mergers.  The respective obligations of LMC Animal Planet and the Seller Subsidiaries, or any of them, to consummate the Mergers are subject to and conditioned upon the satisfaction (or, to the extent permitted by Applicable Law, waiver by LMC Animal Planet) prior to or at the Closing, of each of the following conditions:

 

(a)                                  Representations and Warranties; Covenants.  The representations and warranties of each of IDT Parent and each IDT Subsidiary contained in this Agreement shall, if specifically qualified by materiality, be true and correct in all respects and, if not so qualified, be true and correct in all material respects, in each case as of the Closing Date, except to the extent such representations and warranties are expressly made as of only an earlier date (in which case such representations and warranties qualified as to materiality shall be true and correct in all respects, and those not so qualified shall be true and correct in all material respects, on and as of such earlier date), and all covenants and agreements of each of IDT Parent and each IDT Subsidiary contained in this Agreement to be performed on or prior to the Closing Date shall have been performed or complied with, as applicable, in all material respects on or prior to the Closing Date.

 

(b)                                 Registration Rights Agreement.  IDT Parent shall have executed and delivered the Registration Rights Agreement for execution by LMC Animal Planet.

 

(c)                                  NYSE Listing.  The Consideration Shares issuable in the Mergers shall have been authorized for listing on the NYSE, subject only to official notice of issuance, and the shareholder approval requirements of Section 312.03 of the NYSE Listed Company Manual shall have been complied with.

 

(d)                                 Compliance Certificate.  LMC Animal Planet shall have received a certificate from each of IDT Parent and each IDT Subsidiary, dated as of the Closing Date, executed by an executive officer of IDT Parent and by an executive officer of each

 

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IDT Subsidiary, respectively, stating that, to the knowledge of such person, the conditions set forth in Sections 3.01(c) and 3.02(a), (b), (c) and (e) have been satisfied.

 

(e)                                  No Material Adverse Effect.  Since the date of this Agreement, there shall have been no event, occurrence or circumstance which has had, or would reasonably be expected to have, a Material Adverse Effect (as defined in Section 5.01 below).

 

Section 3.03                                Conditions of IDT Parent and each IDT Subsidiary to Effect the Mergers.  The respective obligations of IDT Parent and the IDT Subsidiaries, or any of them, to consummate the Mergers are subject to and conditioned upon the satisfaction (or, to the extent permitted by Applicable Law, waiver by IDT Parent) prior to or at the Closing, of the following conditions:

 

(a)                                  Representations and Warranties; Covenants.  The representations and warranties of LMC Animal Planet contained in this Agreement shall, if specifically qualified by materiality, be true and correct in all respects and, if not so qualified, be true and correct in all material respects, in each case as of the Closing Date, except to the extent such representations and warranties are expressly made as of only an earlier date (in which case such representations and warranties qualified as to materiality shall be true and correct in all respects, and those not so qualified shall be true and correct in all material respects, on and as of such earlier date), and all covenants and agreements of each of LMC Animal Planet and each Seller Subsidiary contained in this Agreement to be performed on or prior to the Closing Date shall have been performed or complied with, as applicable, in all material respects on or prior to the Closing Date.

 

(b)                                 Compliance Certificate of LMC Animal Planet.  IDT Parent shall have received a certificate from LMC Animal Planet, dated as of the Closing Date, executed by an executive officer of LMC Animal Planet stating that, to the knowledge of such executive officer, the condition set forth in Section 3.03(a) has been satisfied.

 

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF LMC ANIMAL PLANET

 

LMC Animal Planet represents and warrants to each of IDT Parent and each IDT Subsidiary that:

 

Section 4.01                                Organization, Good Standing and Qualification.  Each of LMC Animal Planet and each Seller Subsidiary is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority to own, lease and operate its properties and assets and to carry on its business as currently conducted.  No Seller Subsidiary is required to be qualified to do business as a foreign corporation in any jurisdiction.

 

Section 4.02                                Capitalization; No Liens.

 

(a)                                  The authorized capital stock of each of Liberty N2P, Liberty N2P II and Liberty N2P III consists solely of 10,000 shares of common stock, par value $.01 per share, 1,000 shares of which are issued and outstanding in the case of each of Liberty

 

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N2P, Liberty N2P II and Liberty N2P III (collectively, the “Seller Subsidiaries Stock”).  LMC Animal Planet owns all of the issued and outstanding shares of Seller Subsidiaries Stock.

 

(b)                                 Other than this Agreement, there are (i) no outstanding options, warrants, agreements, conversion rights, exchange rights, preemptive rights or other rights (whether contingent or not) to subscribe for, purchase or acquire any issued or unissued shares of common stock of any of the Seller Subsidiaries, (ii) no outstanding stock appreciation, phantom stock, profit participation, or similar rights with respect to any of the Seller Subsidiaries, (iii) no rights, contracts, commitments or arrangements (contingent or otherwise) obligating any Seller Subsidiary to either (A) redeem, purchase or otherwise acquire, or offer to purchase, redeem or otherwise acquire, any outstanding shares of, or any outstanding warrants or rights of any kind to acquire any shares of, or any outstanding securities that are convertible into or exchangeable for any shares of, common stock of such Seller Subsidiary, or (B) pay any dividend or make any distribution in respect of any shares of, or any outstanding securities that are convertible or exchangeable for any shares of, common stock of such Seller Subsidiary, (iv) no agreements or arrangements under which any Seller Subsidiary is obligated to register the sale of any of its securities under the Securities Act, and (v) except as described on Schedule 4.02(b) of the Seller Disclosure Schedules, no restrictions upon, or Contracts (as defined below) or understandings of any Seller Subsidiary, or to the knowledge of the executive officers of each of LMC Animal Planet and each Seller Subsidiary, Contracts or understandings of any other person, with respect to, the voting or transfer of any shares of common stock of such Seller Subsidiary.  Except as described on Schedule 4.02(b) of the Seller Disclosure Schedules, no party has any right of first refusal, right of first offer, right of co-sale or other similar right regarding the securities of any Seller Subsidiary.  For purposes of this Agreement, “Contract” means any written or oral agreement, lease, license, contract, note, mortgage, indenture, arrangement or other obligation.

 

(c)                                  LMC Animal Planet has delivered to IDT Parent true and complete copies of the Certificate of Incorporation and Bylaws of each Seller Subsidiary, as in effect on the date hereof and as will be in effect on the Closing Date.

 

(d)                                 Except as described on Schedule 4.02(d) of the Seller Disclosure Schedules, all shares of the Seller Subsidiaries Stock have been duly authorized and validly issued and are fully paid and nonassessable and are owned free and clear of any mortgage, pledge, lien, security interest, purchase option, call, claim, restriction on transfer, voting restriction, charge or encumbrance of any kind (each, a “Lien”).

 

Section 4.03                                Assets of Seller Subsidiaries.

 

(a)                                  Liberty N2P is the record owner of 33 Class A Membership Interests of NTOP (“NTOP Class A Units”) and 97 Class B Membership Interests of NTOP (“NTOP Class B Units”).  Liberty N2P II is the record owner of 23 NTOP Class A Units. Liberty N2P III is the record owner of 1,250,000 shares of Net2Phone Common Stock.  Except as described on Schedule 4.03(a) of the Seller Disclosure Schedule, the Seller Subsidiaries own the foregoing securities (collectively, the “Securities”) free and

 

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clear of any Lien.  Other than the Securities, no Seller Subsidiary owns any other asset, and, except for Taxes (as defined in Article 7 below), its obligations under this Agreement and the obligations described on Schedule 4.03(a) of the Seller Disclosure Schedules, no Seller Subsidiary has any liabilities.  No Seller Subsidiary is a party to any Contract other than this Agreement and the agreements listed on Schedule 4.03(a) of the Seller Disclosure Schedules.  No Seller Subsidiary has any employees or conducts any business other than owning its respective Securities.

 

(b)                                 Except as expressly set forth in Section 4.03(a), LMC Animal Planet makes no representation or warranty with respect to the business, assets, capital structure, results or operations, financial condition or prospects of, or any other matter concerning, NTOP or Net2Phone.

 

Section 4.04                                Corporate Authority. 

 

(a)                                  Each of LMC Animal Planet and each Seller Subsidiary has all requisite corporate power and authority necessary in order to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby (including, without limitation, the Mergers).  LMC Animal Planet has all requisite corporate power and authority necessary to execute, deliver and perform its obligations under the Registration Rights Agreement and to consummate the transactions contemplated thereby.

 

(b)                                 The execution, delivery and performance by each of LMC Animal Planet and each Seller Subsidiary of this Agreement and the consummation of the transactions contemplated hereby (including, without limitation, the Mergers) have been duly authorized by all necessary corporate and shareholder action on the part of each of LMC Animal Planet and each Seller Subsidiary.  The execution, delivery and performance by LMC Animal Planet of the Registration Rights Agreement and the consummation of the transactions contemplated thereby have been duly authorized by all necessary corporate action on the part of LMC Animal Planet.

 

(c)                                  Each of LMC Animal Planet and each Seller Subsidiary has duly executed and delivered this Agreement. This Agreement is a valid and binding agreement of each of LMC Animal Planet and each Seller Subsidiary, enforceable against it 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 general equity principles.

 

(d)                                 The Registration Rights Agreement, when executed and delivered by LMC Animal Planet in accordance with this Agreement, will be duly executed and delivered by LMC Animal Planet and will constitute a valid and binding agreement of LMC Animal Planet, enforceable against it 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 general equity principles.

 

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Section 4.05                                No Violation; Consents.

 

(a)                                  The execution, delivery and performance by each of LMC Animal Planet and each Seller Subsidiary of this Agreement and the consummation of the transactions contemplated hereby (including, without limitation, the Mergers) by each of LMC Animal Planet and each Seller Subsidiary, and the execution, delivery and performance by LMC Animal Planet of the Registration Rights Agreement and the consummation of the transactions contemplated thereby by LMC Animal Planet, do not and will not contravene any Applicable Law (assuming the expiration or termination of any applicable waiting period under the HSR Act), except for any such contravention that would not, individually or in the aggregate, reasonably be expected (i) as to any Seller Subsidiary, to have a material adverse effect on its assets, (ii) as to each of LMC Animal Planet and each Seller Subsidiary, to prevent or materially burden or materially impair its ability to perform its obligations hereunder, or (iii) as to LMC Animal Planet, to prevent or materially burden or materially impair its ability to perform its obligations under the Registration Rights Agreement.

 

(b)                                 The execution, delivery and performance of this Agreement by each of LMC Animal Planet and each Seller Subsidiary (i) will not violate, result in a breach of or constitute (with or without due notice or lapse of time or both) a material default (or give rise to any right of termination, cancellation or acceleration) under any Contract to which LMC Animal Planet or such Seller Subsidiary is a party or by which its assets is subject (assuming that the waiver and consent contemplated by Section 6.07(a) is valid, binding and enforceable against each of IDT Parent and each IDT Member), and (ii) will not conflict with or violate any provision of the Certificate of Incorporation or Bylaws of LMC Animal Planet or such Seller Subsidiary, as in effect on the date hereof and as will be in effect on the Closing Date.

 

(c)                                  Except for (i) the waiver and consent contemplated by Section 6.07(a), (ii) the making of any applicable filings under the HSR Act, (iii) the expiration or termination of any applicable waiting periods under the HSR Act and (iv) the filing of the certificates of merger contemplated by Section 1.01(b), no consent, authorization or order of, or filing or registration with, any Governmental Entity (as defined below) or other person is required to be obtained or made by LMC Animal Planet or any Seller Subsidiary for the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby (including, without limitation, the Mergers) by LMC Animal Planet and the Seller Subsidiaries, or by LMC Animal Planet for the execution, delivery and performance of the Registration Rights Agreement or the consummation of the transactions contemplated thereby, except where the failure to obtain such consents, authorizations or orders, or make such filings or registrations, would not, individually or in the aggregate, reasonably be expected (A) as to any Seller Subsidiary, to have a material adverse effect on its assets, (B) as to each of LMC Animal Planet and each Seller Subsidiary, to prevent or materially burden or materially impair its ability to perform its obligations hereunder, or (C) as to LMC Animal Planet, to prevent or materially burden or materially impair its ability to perform its obligations under the Registration Rights Agreement.

 

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(d)                                 The term “Applicable Law” for purposes of this Agreement means (i) any foreign, United States federal, state or local law, statute, rule, regulation, order, writ, injunction, judgment, decree, arbitration award, agency requirement, license or permit of any Governmental Entity, and (ii) any rule or listing requirement of the NYSE.  The term “Governmental Entity” for purposes of this Agreement means any governmental or regulatory authority, agency, commission, body or other governmental entity or court.

 

Section 4.06                                Litigation.  There are no outstanding judgments against or affecting any of the Seller Subsidiaries, or proceedings pending or, to the knowledge of the executive officers of each of LMC Animal Planet and each Seller Subsidiary, threatened against or affecting any of the Seller Subsidiaries or any of their respective assets.

 

Section 4.07                                Unregistered Consideration Shares.  LMC Animal Planet represents and warrants that it is aware that (i) the offer and sale of the Consideration Shares have not been registered under the Securities Act, (ii) the issuance of the Consideration Shares pursuant to the Mergers is intended to be exempt from registration under the Securities Act and the rules promulgated thereunder by the SEC, (iii) the Consideration Shares cannot be offered, sold, assigned, transferred or otherwise disposed of, other than pursuant to an effective registration statement or an available exemption from registration, (iv) sales or transfers of the Consideration Shares are further restricted by state securities laws, and (v) the certificates for the Consideration Shares will bear the legend referred to in Section 6.04.

 

Section 4.08                                Suitability of Investment.  LMC Animal Planet represents and warrants that it:

 

(a)                                  is an “accredited investor” within the meaning of Rule 501 of Regulation D of the Securities Act as presently in effect and is acquiring the Consideration Shares for its own account for investment purposes only and not with a view to the resale or distribution thereof;

 

(b)                                 will not, directly or indirectly, offer, sell, transfer, assign, exchange or otherwise dispose of all or any part of the Consideration Shares, except in accordance with applicable federal and state securities laws;

 

(c)                                  has such knowledge and experience in financial, business and tax matters that it is capable of evaluating the merits and risks relating to investment in the Consideration Shares and making an investment decision with respect to IDT Parent;

 

(d)                                 has been given the opportunity to obtain information and documents relating to IDT Parent and to ask questions of and receive answers from representatives of IDT Parent concerning IDT Parent and the investment in Consideration Shares;

 

(e)                                  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 Consideration Shares and it has determined the Consideration Shares are a suitable investment for it and

 

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that it is able at this time, and in the foreseeable future, to bear the economic risk of a total loss of its investment in the Consideration Shares; and

 

(f)                                    is aware that there are substantial risks incident to an investment in the Consideration Shares.

 

ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
IDT PARENT AND IDT SUBSIDIARIES

 

Each of IDT Parent and each IDT Subsidiary jointly and severally represents and warrants to each of LMC Animal Planet and each Seller Subsidiary that:

 

Section 5.01                                Organization, Good Standing and Qualification.  Each of IDT Parent and each IDT Subsidiary is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate or similar power and authority to own, lease and operate its properties and assets and to carry on its business as currently conducted.  IDT Parent is the sole stockholder of each IDT Subsidiary.  Each of IDT Parent and each IDT Subsidiary is qualified to do business and is in good standing as a foreign corporation in each jurisdiction where the ownership, lease or operation of its assets or properties or conduct of its business requires such qualification, except where the failure to be so qualified or in good standing, when taken together with all other such failure, is not reasonably likely to have a Material Adverse Effect.  For purposes of this Agreement, “Material Adverse Effect” means (i) a material adverse effect on the financial condition, prospects, properties, assets, business or results of operations of IDT Parent and its subsidiaries taken as a whole; provided, however, that any such effect resulting from any change that affects companies in the telecommunications, Internet or Internet telephony industries generally shall not be considered to be a Material Adverse Effect; or (ii) the effect of preventing or materially burdening or materially impairing the ability of IDT Parent or any IDT Subsidiary to perform its obligations under this Agreement or, in the case of IDT Parent alone, to perform its obligations under the Registration Rights Agreement.

 

Section 5.02                                Capitalization; No Liens.

 

(a)                                  The authorized capital stock of IDT Parent consists solely of (i) 100,000,000 shares of common stock, par value $.01 per share (“IDT Parent Common Stock”), of which 18,845,933  shares are issued and outstanding and 6,228,927 shares are held in treasury, (ii) 35,000,000 shares of Class A common stock, par value $.01 per share (“IDT Parent Class A Common Stock”), of which 9,816,988 shares are issued and outstanding and none are held in treasury, (iii) 100,000,000 shares of IDT Parent Class B Common Stock, of which 67,554,116 shares are issued and outstanding and 1,608,290 shares are held in treasury, and 10,000,000 shares of preferred stock, par value $.01 per share, none of which are issued and outstanding and none are held in treasury.

 

(b)                                 Equity Rights and Other Equity-Related Agreements.

 

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(i)                                     Except as set forth on Schedule 5.02(b)(i) to the Purchaser Disclosure Schedules or as specifically disclosed in the Current IDT Reports (as defined below), there are no:

 

(1)                                  outstanding options, warrants, agreements, conversion rights, exchange rights, preemptive rights or other rights (whether contingent or not) (collectively, “Equity Rights”) to subscribe for, purchase or acquire any issued or unissued shares of capital stock of IDT Parent or any Significant Subsidiary (as defined below);

 

(2)                                  authorized or outstanding stock appreciation, phantom stock, profit participation or similar rights with respect to IDT Parent or any Significant Subsidiary (collectively, “Equity-Based Awards”); or

 

(3)                                  securities or instruments containing antidilution or similar provisions that will be triggered by the consummation of the Mergers (collectively, “Antidilution Rights”);

 

provided, however, that the representations and warranties of IDT Parent and the IDT Subsidiaries set forth in this Section 5.02(b)(i) shall not be breached by the existence of any Equity Rights, Equity-Based Awards or Antidilution Rights, the existence of which would otherwise constitute a breach of this Section 5.02(b)(i) (collectively, “Undisclosed Rights”), if the exercise of all such Undisclosed Rights as of immediately prior to the Effective Time of each Merger (whether or not then immediately exercisable) could not, in the aggregate, result in (x) the issuance of capital stock (or payment of other consideration based on the value of capital stock) representing more than 3% (by value or voting power) of the capital stock of IDT Parent then outstanding, or (y) the issuance of capital stock (or payment of other consideration based on the value of capital stock) representing more than 1% (by value or voting power) of the capital stock of any Significant Subsidiary then outstanding.

 

(ii)                                  Except as set forth on Schedule 5.02(b)(ii) to the Purchaser Disclosure Schedules or as specifically disclosed in the Current IDT Reports, there are no:

 

(1)                                  rights, contracts, commitments or arrangements (contingent or otherwise) obligating IDT Parent or any Significant Subsidiary to either (x) redeem, purchase or otherwise acquire, or offer to purchase, redeem or otherwise acquire, any outstanding shares of, or any outstanding warrants or rights of any kind to acquire any shares of, or any outstanding securities that are convertible into or exchangeable for any shares of, capital stock of IDT Parent or any Significant Subsidiary, or (y) pay any dividend or make any distribution in respect of any shares of, or any outstanding securities that are convertible or exchangeable for any shares of, capital stock of IDT Parent or any Significant Subsidiary;

 

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(2)                                  agreements or arrangements under which IDT Parent or any Significant Subsidiary is obligated to register the sale of any of its securities under the Securities Act;

 

(3)                                  restrictions upon, or Contracts or understandings of IDT Parent or any Significant Subsidiary, or to the knowledge of the executive officers of each of IDT Parent and each Significant Subsidiary, Contracts or understandings of any other person, with respect to the voting or transfer of any shares of capital stock of IDT Parent or any Significant Subsidiary;

 

(4)                                  provisions of the Certificate of Incorporation or Bylaws of IDT Parent as currently in effect, and no agreement to which IDT Parent or any subsidiary of IDT Parent is a party or by which IDT Parent or any subsidiary of IDT Parent is bound, that would (x) require the vote of the holders of more than a majority of the voting power of the shares of IDT Parent’s issued and outstanding IDT Parent Common Stock, IDT Parent Class A Common Stock and IDT Parent Class B Common Stock, voting together as a single class, to take or prevent any corporate action, other than those matters requiring a class vote under the DGCL, or (y) entitle any party to nominate or elect any director of IDT Parent or require any of IDT Parent’s stockholders to vote for any such nominee or other person as a director of IDT Parent; or

 

(5)                                  rights of first refusal, rights of first offer, rights of co-sale or other similar rights regarding the securities of IDT Parent.

 

(iii)                               For purposes of this Agreement:  (A) the term “Current IDT Reports” means the report of IDT Parent on Form 10-K, as filed with the SEC on October 14, 2004, the definitive proxy statement of IDT Parent on Schedule 14A, as filed with the SEC on November 3, 2004, and any reports of IDT Parent on Form 10-Q and Form 8-K as filed with the SEC from the period commencing October 14, 2004 and ending on the date of this Agreement; (B) the term “person” means any individual, partnership, corporation, limited liability company, joint venture, association, joint-stock company trust, unincorporated organization, government or agency or political subdivision thereof or other entity; and (C) the term “Significant Subsidiary” means each of IDT Telecom, Inc., IDT Media, Inc. and IDT Entertainment, Inc.

 

(c)                                  IDT Parent has delivered to LMC Animal Planet true and complete copies of the Certificate of Incorporation and Bylaws of each of IDT Parent and each IDT Subsidiary, as in effect on the date hereof and as will be in effect on the Closing Date.

 

(d)                                 All of the issued and outstanding shares of IDT Parent capital stock are duly authorized, validly issued, fully paid and nonassessable.  All outstanding shares of the capital stock of each subsidiary of IDT Parent beneficially owned by IDT Parent have been validly issued and are fully paid and nonassessable.

 

(e)                                  The issuance of the Consideration Shares has been approved by a written consent in lieu of a meeting of IDT Parent shareholders holding a majority of the outstanding voting power of IDT Parent (the “Shareholder Consent”) in accordance

 

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with Section 228 of the DGCL.  The Shareholder Consent meets the shareholder approval requirements of Section 312.03 of the NYSE Listed Company Manual.

 

(f)                                    Upon delivery in accordance with the terms of this Agreement and the Mergers, the Consideration Shares will be issued by IDT Parent from its authorized but unissued shares of IDT Parent Class B Common Stock and will be validly issued, fully paid and nonassessable and free of all Liens, other than those created by this Agreement and the Registration Rights Agreement.  Upon delivery of the Consideration Shares in accordance with the terms of this Agreement and the Mergers, LMC Animal Planet will receive good title to all of the Consideration Shares, free and clear of any preemptive or similar rights.  Each of the Consideration Shares, when issued, will be issued in compliance with the requirements of the Securities Act (subject to the accuracy of the representations and warranties of LMC Animal Planet set forth in Sections 4.07 and 4.08), the NYSE and applicable state securities laws or exemptions therefrom.

 

Section 5.03                                Corporate Authority.

 

(a)                                  Each of IDT Parent and each IDT Subsidiary has all requisite corporate power and authority necessary in order to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby (including, without limitation, the Mergers).  IDT Parent has all requisite corporate power and authority necessary to execute, deliver and perform its obligations under the Registration Rights Agreement and to consummate the transactions contemplated thereby.

 

(b)                                 The execution, delivery and performance by each of IDT Parent and each IDT Subsidiary of this Agreement and the consummation of the transactions contemplated hereby (including, without limitation, the Mergers) have been duly authorized by all necessary corporate and shareholder action on the part of each of IDT Parent and each IDT Subsidiary.  The execution, delivery and performance by IDT Parent of the Registration Rights Agreement and the consummation of the transactions contemplated thereby have been duly authorized by all necessary corporate action on the part of IDT Parent.

 

(c)                                  Each of IDT Parent and each IDT Subsidiary has duly executed and delivered this Agreement. This Agreement is a valid and binding agreement of each of IDT Parent and each IDT Subsidiary, enforceable against it 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 general equity principles.

 

(d)                                 The Registration Rights Agreement, when executed and delivered by IDT Parent in accordance with this Agreement, will be duly executed and delivered by IDT Parent and will constitute a valid and binding agreement of IDT Parent, enforceable against it 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 general equity principles.

 

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Section 5.04                                No Violation; Consents.

 

(a)                                  The execution, delivery and performance by each of IDT Parent and each IDT Subsidiary of this Agreement and the consummation of the transactions contemplated hereby (including, without limitation, the Mergers) by each of IDT Parent and each IDT Subsidiary, and the execution, delivery and performance by IDT Parent of the Registration Rights Agreement and the consummation of the transactions contemplated thereby by IDT Parent, do not and will not contravene any Applicable Law (subject to the expiration of the Waiting Period and the expiration or termination of any applicable waiting period under the HSR Act), except for any such contravention that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  The execution, delivery and performance by each of IDT Parent and each IDT Subsidiary of this Agreement and the consummation of the transactions contemplated hereby (including, without limitation, the Mergers) by each of IDT Parent and each IDT Subsidiary, and the execution, delivery and performance by IDT Parent of the Registration Rights Agreement and the consummation of the transactions contemplated thereby by IDT Parent, (i) will not (A) violate, result in a breach of or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under any Contract to which IDT Parent or any IDT Subsidiary is a party or by which its respective assets is subject, or (B) result in the creation or imposition of any Lien upon any of the assets of IDT Parent or any IDT Subsidiary, and (ii) will not conflict with or violate any provision of the Certificate of Incorporation or Bylaws of IDT Parent or any IDT Subsidiary, each as in effect on the date hereof and as will be in effect on the Closing Date.

 

(b)                                 Except for (i) filings with the NYSE to list the Consideration Shares, (ii) filings of the Information Statement with the SEC, (iii) filings and approvals contemplated by the terms of the Registration Rights Agreement, (iv) the making of any applicable filings under the HSR Act, (v) the expiration or termination of any applicable waiting periods under the HSR Act and (vi) the filing of the certificates of merger contemplated by Section 1.01(b), no consent, authorization or order of, or filing or registration with, any Governmental Entity or other person is required to be obtained or made by IDT Parent or any IDT Subsidiary for the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby (including, without limitation, the Mergers) by IDT Parent or the IDT Subsidiaries, or by IDT Parent for the execution, delivery and performance of the Registration Rights Agreement or the consummation of the transactions contemplated thereby by IDT Parent, except where the failure to obtain such consents, authorizations or orders, or make such filings or registrations, would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

Section 5.05                                IDT Reports; Financial Statements; Information Statement.

 

(a)                                  IDT Parent has timely filed all reports, registration statements and other filings, together with any amendments or supplements required to be made with respect thereto, that it has been required to file with the SEC under the Securities Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  As of the

 

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respective dates of their filing with the SEC, the IDT Reports complied in all material respects with the applicable provisions of the Securities Act and the Exchange Act and did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading.  For purposes of this Agreement, “IDT Reports” means all reports, registration statements and other filings made by IDT Parent with the SEC since January 1, 2000 (including any amendments thereto, exhibits and documents incorporated by reference therein).

 

(b)                                 Each of the consolidated balance sheets included in or incorporated by reference into the IDT Reports (including the related notes and schedules) fairly presents, or will fairly present, the consolidated financial position of IDT Parent and its subsidiaries as of the date of such balance sheet, and each of the consolidated statements of income, changes in stockholders’ equity, and cash flows included in or incorporated by reference into the IDT Reports (including any related notes and schedules) fairly presents, or will fairly present, the results of operations, cash flows, and changes in stockholders’ equity, as the case may be, of IDT Parent and its subsidiaries for the periods set forth in such statements (subject, in the case of unaudited statements, to notes and normal year-end audit adjustments that will not be material in amount or effect), and in each case has been prepared in accordance with generally accepted accounting principles (“GAAP”), consistently applied during the periods involved, except as may be noted therein, and in compliance in all material respects with the rules and regulations of the SEC.

 

(c)                                  The Information Statement will be prepared in compliance with the requirements of Regulation 14C promulgated under the Exchange Act and, when filed with the SEC, when mailed to shareholders of IDT Parent and on the Closing Date will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading.

 

Section 5.06                                Absence of Certain Changes.  Except as otherwise expressly disclosed in the Current IDT Reports, since October 14, 2004 there has not been any event or occurrence or any change in the financial condition, properties, business or results of operations of IDT Parent that has caused or could reasonably be expected to have a Material Adverse Effect.

 

Section 5.07                                Litigation.  Except as otherwise expressly disclosed in the Current IDT Reports or as otherwise set forth on Schedule 5.07 to the Purchaser Disclosure Schedules, there are not any (a) outstanding judgments against or affecting IDT Parent or any of its subsidiaries, or (b) proceedings pending or, to the knowledge of the executive officers of each of IDT Parent and each IDT Subsidiary, threatened against or affecting IDT Parent or any of its subsidiaries that, if resolved adversely to IDT Parent or any of its subsidiaries, would have, individually or in the aggregate, a Material Adverse Effect.

 

Section 5.08                                Compliance with Laws.  Except as otherwise expressly disclosed in the Current IDT Reports, the business of IDT Parent has not been, and is not being,

 

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conducted in violation of any Applicable Law, except for violations or possible violations that, individually or in the aggregate, would not be reasonably expected to have a Material Adverse Effect.  Except as otherwise expressly disclosed in the Current IDT Reports, no investigation or review by any Governmental Entity with respect to IDT Parent or any of its subsidiaries is pending or, to the knowledge of the executive officers of each of IDT Parent and each IDT Subsidiary, 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 Material Adverse Effect.

 

Section 5.09                                Permits and Licenses.  IDT Parent and its subsidiaries have obtained all governmental permits, licenses, franchises and authorizations required for IDT Parent and its subsidiaries to conduct their respective businesses as currently conducted, except as otherwise expressly disclosed in the Current IDT Reports and except for those the failure of which to be obtained would not have a Material Adverse Effect.

 

Section 5.10                                Intellectual Property, etc.  Except as otherwise expressly disclosed in the Current IDT Reports, IDT Parent and its subsidiaries have taken all reasonable efforts to ensure that they have, and have no reason to believe that they do not have, all right, title and interest in, or a valid and binding license to use, all IDT Intellectual Property (as hereinafter defined).  IDT Parent and its subsidiaries (i) have not defaulted in any material respect under any license to use any IDT Intellectual Property, (ii) are not the subject of any proceeding or litigation for infringement of any third party intellectual property, except for the proceedings disclosed in IDT Reports filed and publicly available prior to the date hereof, which proceedings IDT Parent believes are without merit, and (iii) have no knowledge of circumstances that would be reasonably expected to cause the loss or impairment of any IDT Intellectual Property, other than a default, proceeding, litigation, loss or impairment that is not having or would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.  IDT Parent and its subsidiaries have from time to time received correspondence from third parties alleging that intellectual property rights purportedly owned by said third parties have been violated by IDT Parent or its subsidiaries.  IDT Parent and its subsidiaries have also received correspondence asserting that a license may be necessary to avoid alleged violation of third party rights, none of which assertions or allegations has had or would be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect, except as otherwise expressly disclosed in the Current IDT Reports.  For purposes of this Agreement, “IDT Intellectual Property” means patents and patent rights, trademark and trademark rights, tradenames and tradename rights, service marks and service mark rights, copyrights and copyright rights, trade secret and trade secret rights, and other intellectual property rights, and all pending applications for and registration of any of the foregoing that are used in the conduct of the business of IDT Parent or its subsidiaries as presently conducted.

 

Section 5.11                                Private Offering.  Based, in part, on LMC Animal Planet’s representations in Sections 4.07 and 4.08, the offer and sale of the Consideration Shares is exempt from the registration and prospectus delivery requirements of the Securities

 

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Act.  Neither IDT Parent, nor anyone acting on its behalf, has offered or sold or will offer or sell any securities, or has taken or will take any other action (including, without limitation, any offering of any securities of IDT Parent) under circumstances that would require, under the Securities Act, the integration of such offering with the offering and sale of the Consideration Shares, that would subject the issuance of the Consideration Shares to the registration provisions of the Securities Act.

 

Section 5.12                                Business Combination Statutes.  None of LMC Animal Planet, IDT Parent or any of their respective “affiliates” and “associates” (as such terms are defined in Section 203 of the DGCL or any comparable business combination statute of any applicable jurisdiction) shall as a result of the execution of this Agreement or consummation of the Mergers, be subject to any of the restrictions of Section 203 of the DGCL, or any similar provisions of Applicable Law with respect to IDT Parent or any of IDT Parent’s direct or indirect subsidiaries, any of the shares of which are publicly traded.

 

Section 5.13                                Conducted Own Diligence.  Each of IDT Parent and each IDT Subsidiary represents, warrants, acknowledges and agrees that it has conducted its own investigation and due diligence of each of NTOP and Net2Phone and their respective businesses, assets, capital structure, results or operations, financial condition and prospects and in entering into this Agreement has not relied on any statements or information, whether oral or written, made or furnished by LMC Animal Planet or any of its Affiliates to IDT Parent or any of its directors, officers, employees or other Representatives (as such term is defined in Section 6.03) with respect to NTOP or Net2Phone (other than the representations and warranties made by LMC Animal Planet in Section 4.03(a)).

 

ARTICLE VI
COVENANTS

 

Section 6.01                                NYSE Listing.  IDT Parent will use its commercially reasonable efforts to cause the Consideration Shares to be listed on the NYSE upon the issuance of such shares pursuant to the Mergers.

 

Section 6.02                                Commercially Reasonable Efforts to Close; Preparation and Mailing of Information Statement. 

 

(a)                                  (i)                                     Upon the terms and subject to the conditions of this Agreement, the parties will in good faith use all commercially reasonably efforts to take, or cause to be taken, all action, and to do, or cause to be done, all things necessary, proper or advisable consistent with Applicable Law to consummate and make effective in the most expeditious manner practicable the Mergers in accordance with the terms of this Agreement, including, without limitation, preparing and filing as promptly as practicable an appropriate Filing of a Notification and Report Form (each, an “HSR Filing”) pursuant to the HSR Act and taking all other actions necessary, proper or advisable to cause any applicable waiting period under the HSR Act to expire or be terminated as soon as practicable.  The parties hereby agree to cooperate in all respects with each other

 

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in connection with the preparation and submission of any HSR Filing, and, if any objections are asserted with respect to the Mergers under the HSR Act, each of the parties agrees to use its reasonable best efforts to resolve any such objection; provided, however, that no party shall be required to take any action requiring, or enter into any settlement, undertaking or other agreement with a Governmental Authority that requires, such party to hold separate (including by establishing a trust or otherwise) or sell or otherwise dispose of any of its assets, businesses or interests.

 

(b)                                 Without limiting the generality of the foregoing, as promptly as practicable after the execution of this Agreement IDT Parent shall prepare and file with the SEC a preliminary information statement on Schedule 14C relating to the Shareholder Consent (together with any amendments thereof or supplements thereto, the “Information Statement”).  IDT Parent will notify LMC Animal Planet promptly of the receipt of any comments from the SEC or its staff and of any request by the SEC or its staff for amendments of or supplements to the Information Statement and will supply LMC Animal Planet with any correspondence between IDT Parent or its Representatives and the SEC or its staff with respect to the Information Statement.  IDT Parent shall cause the Information Statement to comply in all material respects with all Applicable Law.  IDT Parent promptly will advise LMC Animal Planet when the Information Statement has been cleared for distribution by the SEC (or the 10-calendar day waiting period prescribed by Rule 14c-5(a) has expired without comment from the SEC or its staff).  As promptly as practicable after receipt of such clearance (or the expiration of such waiting period), IDT Parent will mail the Information Statement to its shareholders.

 

(c)                                  If at any time following the mailing of the Information Statement to IDT Parent’s shareholders, IDT Parent determines that any amendment or supplement is necessary to prevent the Information Statement from containing any untrue statement of a material fact or omitting to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading, IDT Parent shall take such action as may be necessary to cure such untrue statement or omission and ensure that the requirements of Regulation 14C and other Applicable Law are complied with in order for the Shareholder Consent to be valid and effective as of the Closing Date and for the Consideration Shares to be validly issued in compliance with Applicable Law.

 

Section 6.03                                Confidentiality.  Unless otherwise agreed to in writing by the parties hereto, each party hereto will, and will cause its Affiliates, directors, officers, managers, employees and agents (such Affiliates and other persons being collectively referred to as “Representatives”), to (i) keep all Confidential Information of the other parties hereto confidential and not disclose or reveal any such Confidential Information to any person other than those Representatives who are participating in effecting the Mergers or who otherwise need to know such Confidential Information, (ii) use such Confidential Information only in connection with consummating the transactions contemplated hereby and enforcing their respective rights hereunder, and (iii) not use Confidential Information in any manner detrimental to the other parties hereto. In the event that a party hereto (the “Disclosing Party”) is requested pursuant to, or required by, Applicable Law or by legal process to disclose any Confidential Information of

 

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another party hereto (a “Protected Party”), such Disclosing Party shall provide the Protected Party with prompt notice of such request(s) so that the Protected Party may seek an appropriate protective order.  The obligations of the parties hereunder with respect to Confidential Information that (a) is disclosed to a third party with the Protected Party’s written approval, (b) is required to be produced under order of a court of competent jurisdiction or other similar requirements of a Governmental Entity, or (c) is required to be disclosed by Applicable Law, will, subject in the case of clauses (b) and (c) above to the disclosing party’s compliance with the preceding sentence, cease to the extent of the disclosure so consented to or required, except to the extent otherwise provided by the terms of such consent or covered by a protective order.  If a Disclosing Party uses a degree of care to prevent disclosure of the Confidential Information that is at least as great as the care it normally takes to preserve its own information of a similar nature, it will not be liable for any disclosure that occurs despite the exercise of that degree of care, and in no event will such Disclosing Party be liable for any indirect, punitive, special, consequential or incidental damages unless such disclosure resulted from its willful misconduct or gross negligence, in which event it will be liable in damages for the lost profits of the Protected Party resulting directly and solely from such disclosure.  In the event this Agreement is terminated, each party will, if so requested by another party hereto, promptly return or destroy all of the Confidential Information of the requesting party, including all copies, reproductions, summaries, analyses or extracts thereof or based thereon in the possession of its Representatives; provided, however, that no party will be required to return or cause to be returned summaries, analyses or extracts prepared by it or its Representatives, but will destroy (or cause to be destroyed) the same upon request of another party hereto.  The confidentiality obligations of the parties contained in this Section 6.03 shall survive until the third anniversary of the date of this Agreement.  For purposes of this Section 6.03, “Confidential Information” with respect any party hereto means all confidential and proprietary information about such party and its subsidiaries that is furnished by it or its Representatives to another party hereto or its Representatives, regardless of the manner in which it is furnished, in connection with the transactions contemplated hereby.  “Confidential Information” does not include, however, information which (1) has been or in the future is published or is now or in the future is otherwise in the public domain through no fault of any party hereto or its Representatives, (2) was available to any other party hereto or its Representatives on a non-confidential basis prior to its disclosure by the disclosing party, (3) becomes available to another party hereto or its Representatives on a non-confidential basis from a person other than a party hereto or its Representatives, who is not otherwise bound by a confidentiality agreement with the party to which the information relates, or such party’s Representatives, or is not otherwise prohibited from transmitting the information to another party or its Representatives, (4) is independently developed by another party hereto or its Representatives through persons who have not had, either directly or indirectly, access to or knowledge of such information or (5) is required to be publicly disclosed by a party or its Representatives pursuant to Applicable Laws.

 

Section 6.04                                Transfer Limitations; 1933 Act Legend.

 

(a)                                  Each certificate representing Consideration Shares shall bear a legend substantially in the following form:

 

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“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 EXEMPTION FROM REGISTRATION UNDER THE ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IDT CORPORATION IS OBTAINED TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.”

 

(b)                                 The foregoing legend shall be removed from the certificates representing any Consideration Shares, at the request of the holder thereof, at such time as (i) such shares are sold pursuant to an effective registration statement or pursuant to Rule 144 under the Securities Act, (ii) such shares become eligible for resale pursuant to Rule 144(k), or (iii) an opinion of counsel reasonably satisfactory to IDT Parent is obtained to the effect that such legend is not required.

 

Section 6.05                                Confidentiality of Agreement.  Unless otherwise required by Applicable Law or as may be required in connection with the defense of a lawsuit or other legal proceeding against a party, each party shall not disclose to any other person (other than its Representatives) the existence or terms of this Agreement. 

 

Section 6.06                                Notification of Certain Matters.  Between the date hereof and the Closing Date, each party will give prompt notice in writing to the other parties of:  (i) any information that indicates that any of its representations or warranties contained herein was not true and correct as of the date hereof or will not be true and correct as of the Closing Date, (ii) the occurrence of any event which will result, or has a reasonable prospect of resulting in, the failure of any condition specified in Article 3, and (iii) any notice or other communication from any third party alleging that the consent of such third party is or may be required in connection with the transactions contemplated by this Agreement or by the Registration Rights Agreement or that such transactions otherwise may violate the rights of or confer remedies upon such third party.

 

Section 6.07                                NTOP. 

 

(a)                                  Each of IDT Parent, IDT Domestic-Union, LLC, a Delaware limited liability company and a subsidiary of IDT Parent (“IDT D-U”), and IDT Investments, Inc., a Nevada corporation and a subsidiary of IDT Parent (“IDT Investments” and together with IDT D-U, the “IDT Members”), hereby consents to and waives any and all rights it may have with respect to the transfer of Seller Subsidiaries Stock in the Mergers and the resultant transfer of all of the indirect interests of Liberty Parent and LMC Animal Planet in NTOP and Net2Phone, pursuant to (i) the Second Amended and Restated Limited Liability Company Agreement of NTOP Holdings, LLC, dated as of October 19, 2001 (the “NTOP LLC Agreement”), including, without limitation, pursuant to Section 9.2 thereof, and (ii) the NTOP Holdings, LLC Right of First Offer

 

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Agreement, dated as of January 6, 2003, as amended by Amendment No. 1 thereto, dated as of December 1, 2004, by and among IDT Parent, the IDT Members, Liberty Parent, Liberty N2P, Liberty N2P II and NTOP (the “NTOP ROFR Agreement”), including, without limitation, pursuant to Section 2.1(a) thereof.

 

(b)                                 Each of the parties to the NTOP LLC Agreement agrees to forebear from exercising any rights such party may have pursuant to Section 10.1(a)(i) of NTOP LLC Agreement and/or pursuant to the NTOP ROFR Agreement, in each case, until the earlier of the consummation of the transactions contemplated hereby or the termination of this Agreement.

 

Section 6.08                                Rule 144 .  IDT Parent agrees to file all reports and any definitive proxy or information statements required to be filed by it with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, for so long as any shares of IDT Parent Class B Common Stock received by LMC Animal Planet pursuant to the terms of this Agreement (including, without limitation, pursuant to Section 9.06) constitute “restricted securities” within the meaning of Rule 144 under the Securities Act.

 

Section 6.09                                Asset Maintenance. 

 

(a)                                  LMC Animal Planet hereby agrees that, from the Closing through the earlier to occur of (i) the third anniversary of the Closing Date or (ii) the assumption by Liberty Parent of LMC Animal Planet’s indemnification obligations under Section 9.02 with respect to the representations and warranties of LMC Animal Planet contained in Section 4.02 and the first four sentences of Section 4.03(a) (such period, the “Maintenance Period”), LMC Animal Planet will hold assets having a fair market value at least equal to the lesser of (A) the then-fair market value of the Consideration Shares (as the same shall be appropriately adjusted to reflect any dividend, distribution, recapitalization, stock split or combination, or similar event with respect to or affecting the IDT Parent Class B Common Stock following the Closing Date), and (B) the product of $15.83 multiplied by the number of Consideration Shares received at the Closing.

 

(b)                                 For purposes of this Section 6.09, the fair market value of an asset (other than cash) means the price at which a willing seller would sell, and a willing buyer would buy, such asset in an arms’-length auction transaction, having full knowledge of the facts (including any liabilities relating to such asset); provided, however, that the fair market value of any asset that consists of marketable securities which are listed on the NYSE or quoted on the Nasdaq National Market shall be equal to the product of (x) the number of such marketable securities multiplied by (y) the weighted average (based on trading volume) of the daily closing prices (as of 4:00 p.m. eastern time) per share or unit of such marketable securities as reported on the NYSE or quoted on the Nasdaq National Market, as applicable (and in either case, as published in the Wall Street Journal, or if not published therein or incorrectly published therein, in another authoritative source selected by LMC Animal Planet), for the twenty consecutive trading days ending on the second trading day prior to the date on which such fair market value determination is made.

 

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ARTICLE VII
TAX MATTERS

 

Section 7.01                                Tax Definitions.  The following terms, as used in this Article 7, have the following meanings:

 

 “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.

 

“Combined Tax” means any income or franchise Tax payable to any state, local or foreign taxing jurisdiction with respect to any Return that includes any of the Seller Subsidiaries and is filed on, or will be filed on, an affiliated, consolidated, combined or unitary basis.

 

“Control” means the ownership of stock possessing at least 80% of the total combined voting power of all classes of stock entitled to vote and at least 80% of the total number of shares of each other class of stock of the corporation.

 

“Federal Tax” means any Tax with respect to any Return that includes any of the Seller Subsidiaries and is filed on, or will be filed on, a consolidated basis pursuant to Section 1501 of the Code.

 

“Final Determination” means (i) any final determination of liability in respect of a Tax that, under Applicable Law, is not subject to further appeal, review or modification through proceedings or otherwise (including the expiration of a statute of limitations or a period for the filing of claims for refunds, amended Returns or appeals from adverse determinations), including a “determination” as defined in Section 1313(a) of the Code or execution of an Internal Revenue Service Form 870AD or (ii) the payment of Tax by IDT Parent, LMC Animal Planet or any of their respective Affiliates, whichever is responsible for payment of such Tax under Applicable Law, with respect to any item disallowed or adjusted by a Taxing Authority (as defined below), provided that such responsible party determines that no action should be taken to recoup such payment and the other party agrees.

 

“Pre-Closing Tax Period” means any Tax period ending on or before the Closing Date; and, with respect to a Tax period that begins on or before the Closing Date and ends thereafter, the portion of such Tax period ending on the Closing Date.

 

“Returns” means all returns, statements, reports, and forms (including estimated tax or information returns and reports) relating to, or required to be filed in connection with, any Taxes.

 

“Tax” means (i) any tax, governmental fee or other like assessment or charge of any kind whatsoever (including, but not limited to, withholding on amounts paid to or by any person), together with any interest, penalty, addition to tax or additional amount imposed by any Governmental Entity (a “Taxing Authority”) responsible for the imposition of any such tax (domestic or foreign), and any liability for any of the

 

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foregoing as transferee, (ii) in the case of any of the Seller Subsidiaries, liability for the payment of any amount of the type described in clause (i) as a result of having been before the Closing Date a member of an affiliated, consolidated, combined or unitary group, and (iii) liability of any of the Seller Subsidiaries for the payment of any amount as a result of being a party to any Tax Sharing Agreement (other than this Agreement) before the Closing Date.

 

“Tax Sharing Agreements” means all existing agreements or arrangements (whether or not written) binding any of the Seller Subsidiaries that provide for the allocation, apportionment, sharing or assignment of any Tax liability or benefit.

 

“Treasury Regulations” means the regulations promulgated under the Code in effect on the date hereof and the corresponding sections of any regulations subsequently issued that amend or supersede such regulations.

 

Section 7.02                                Tax Representations.  LMC Animal Planet represents and warrants to IDT Parent that:

 

(a)                                  Filing and Payment.  All material Returns required to be filed with any Taxing Authority with respect to any Pre-Closing Tax Period by or on behalf of any of the Seller Subsidiaries have, to the extent required to be filed on or before the date hereof (taking into account any extension of time within which to file), been filed when due in accordance with all Applicable Laws, and such Returns were true and complete in all material respects.  All material Taxes due and payable by any of the Seller Subsidiaries have been timely paid, or withheld and remitted to the appropriate Taxing Authority.  There are no Liens on any of the assets of any of the Seller Subsidiaries that arose in connection with any failure (or alleged failure) to pay any Tax (except for Liens that arise by operation of law for Taxes not yet due and payable).

 

(b)                                 Procedure and Compliance.  There is no claim, audit, action, suit, proceeding or investigation now pending or threatened against or with respect to any of the Seller Subsidiaries in respect of any Tax.  All deficiencies or assessments asserted against any of the Seller Subsidiaries by any Taxing Authority have been paid or fully and finally settled.

 

(c)                                  Consolidation and Similar Arrangements.  None of the Seller Subsidiaries has been a member of an affiliated, consolidated, combined or unitary group other than one of which Liberty Parent was the common parent.  None of the Seller Subsidiaries has entered into any agreement or arrangement with any Taxing Authority with regard to the Tax liability of any of the Seller Subsidiaries affecting any Tax period for which the applicable statute of limitations, after giving effect to extensions or waivers, has not expired.

 

(d)                                 Statute of Limitations.  None of the Seller Subsidiaries has waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency.

 

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(e)                                  Section 355 Matters.  None of the Seller Subsidiaries has constituted either a “distributing corporation” or a “controlled corporation” in a distribution of stock qualifying for tax-free treatment under Section 355 of the Code (x) in the two years prior to the date of this Agreement or (y) in a distribution which could otherwise constitute part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) in conjunction with the transactions contemplated by this Agreement.

 

Section 7.03                                Covenants.

 

(a)                                  All Returns required to be filed by LMC Animal Planet or any of its Affiliates on or after the Closing Date with respect to each of the Seller Subsidiaries with respect to any Pre-Closing Tax Period (i) will be filed when due in accordance with all Applicable Laws and (ii) will be true and complete in all material respects.

 

(b)                                 LMC Animal Planet shall cause Liberty Parent to include each of the Seller Subsidiaries in its consolidated Federal Tax Return and in any Combined Tax Return through the close of business on the Closing Date.

 

(c)                                  Neither LMC Animal Planet nor any of its Affiliates will take any position on any federal, state, local or foreign income or franchise Return, or take any other Tax reporting position that is inconsistent with the treatment of each of the Mergers as a reorganization within the meaning of Section 368(a) of the Code, unless otherwise required by a Final Determination.

 

Section 7.04                                Tax Sharing.  Any and all existing Tax Sharing Agreements (other than this Agreement) shall be terminated with respect to each of the Seller Subsidiaries as of the Closing Date, and after the Closing Date, none of the Seller Subsidiaries shall have any further rights or liabilities thereunder. 

 

Section 7.05                                Cooperation On Tax Matters. 

 

(a)                                  IDT Parent and LMC Animal Planet shall cooperate fully, as and to the extent reasonably requested by the other party, in connection with the preparation and filing of any Return, and any audit, litigation or other proceeding with respect to Taxes.  Such cooperation shall include the retention and (upon the other party’s request) the provision of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder.  IDT Parent and LMC Animal Planet agree (i) to retain all books and records with respect to Tax matters pertinent to each of the Seller Subsidiaries relating to any Pre-Closing Tax Period, and to abide by all record retention agreements entered into with any Taxing Authority, and (ii) to give the other party reasonable written notice prior to destroying or discarding any such books and records and, if the other party so requests, IDT Parent or LMC Animal Planet, as the case may be, shall allow the other party to take possession of such books and records.

 

(b)                                 IDT Parent and LMC Animal Planet further agree, upon request, to use all reasonable efforts to obtain any certificate or other document from any Governmental

 

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Entity or any other person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including but not limited to with respect to the transactions contemplated hereby).

 

Section 7.06                                Tax Indemnification. 

 

(a)                                  LMC Animal Planet hereby indemnifies IDT Parent and its Affiliates (each a “Purchaser Indemnitee”) against and agrees to hold each Purchaser Indemnitee harmless from any (w) Tax of any of the Seller Subsidiaries described in clause (i) of the definition of Tax related to a Pre-Closing Tax Period, (x) Tax described in clause (ii) or (iii) of the definition of Tax, (y) Tax of any of the Seller Subsidiaries resulting from a breach of the provisions of Section 7.02, Section 7.03 or Section 7.04 and (z) liabilities, costs, expenses (including, without limitation, reasonable expenses of investigation and attorneys’ fees and expenses), losses, damages, assessments, settlements or judgments arising out of or incident to the imposition, assessment or assertion of any Tax described in clause (w), (x) or (y) above, (the sum of clauses (w), (x), (y) and (z) being referred to herein as a “Purchaser Loss”); provided, however, that LMC Animal Planet shall not have any indemnity obligation under this Section 7.06(a) in the event such Purchaser Loss results from a breach by IDT Parent or any of its Affiliates of any of the representations and warranties contained in Section 7.08(a) or the covenants contained in Section 7.08(b).

 

(b)                                 For purposes of this Section 7.06, in the case of any Taxes that are imposed on a periodic basis and are payable for a Tax period that includes (but does not end on) the Closing Date, the portion of such Tax related to the portion of such Tax period ending on and including the Closing Date shall (x) in the case of any Taxes other than gross receipts, sales or use Taxes and Taxes based upon or related to income, be deemed to be the amount of such Tax for the entire Tax period multiplied by a fraction the numerator of which is the number of days in the Tax period ending on and including the Closing Date and the denominator of which is the number of days in the entire Tax period, and (y) in the case of any Tax based upon or related to income and any gross receipts, sales or use Tax, be deemed equal to the amount which would be payable if the relevant Tax period ended on and included the Closing Date.  All determinations necessary to give effect to the allocation set forth in the foregoing clause (y) shall be made in a manner consistent with prior practice of LMC Animal Planet.

 

(c)                                  Not later than 5 days after receipt by LMC Animal Planet of written notice from Purchaser Indemnitee stating that any Purchaser Loss has been incurred by a Purchaser Indemnitee and the amount thereof and of the indemnity payment requested, LMC Animal Planet shall discharge its obligation to indemnify the Purchaser Indemnitee against such Purchaser Loss by paying to Purchaser Indemnitee an amount equal to the amount of such Purchaser Loss.  The payment by a Purchaser Indemnitee of any Purchaser Loss shall not relieve LMC Animal Planet of its obligations under this Section 7.06.

 

(d)                                 Purchaser Indemnitee shall give prompt notice to LMC Animal Planet of any Purchaser Loss or the assertion of any claim, or the commencement of any suit,

 

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action or proceeding in respect of which indemnity may be sought under this Section 7.06 which Purchaser Indemnitee deems to be within the ambit of this Section 7.06 (specifying with reasonable particularity the basis therefor) and will give LMC Animal Planet such information with respect thereto as LMC Animal Planet may reasonably request.  LMC Animal Planet may, at its own expense, participate in and upon notice to Purchaser Indemnitee, assume the defense of any such suit, action or proceeding (including any Tax audit) in so far as it relates to the Purchaser Loss; provided that (x) counsel for LMC Animal Planet is reasonably satisfactory to Purchaser Indemnitee, (y) LMC Animal Planet shall thereafter consult with Purchaser Indemnitee upon Purchaser Indemnitee’s reasonable request for such consultation from time to time with respect to such suit, action or proceeding (including any Tax audit) and (z) LMC Animal Planet shall not, without Purchaser Indemnitee’s consent, agree to any settlement with respect to any Purchaser Loss if such settlement could adversely affect the Tax liability of Purchaser Indemnitee or any of its Affiliates.  If LMC Animal Planet assumes such defense, (i) Purchaser Indemnitee shall have the right (but not the duty) to participate in the defense thereof and to employ counsel, at its own expense, separate from the counsel employed by LMC Animal Planet and (ii) LMC Animal Planet shall not assert that the Purchaser Loss, or any portion thereof, with respect to which Purchaser Indemnitee seeks indemnification is not within the ambit of this Section 7.06.  If LMC Animal Planet elects not to assume such defense, Purchaser Indemnitee may pay, compromise or contest the Purchaser Loss at issue.  LMC Animal Planet shall be liable for the reasonable fees and expenses of counsel employed by Purchaser Indemnitee for any period during which LMC Animal Planet has not assumed the defense thereof.  Whether or not LMC Animal Planet chooses to defend or prosecute any claim, all of the parties hereto shall cooperate in the defense or prosecution thereof.

 

(e)                                  LMC Animal Planet shall not be liable under this Section 7.06 with respect to any Purchaser Loss resulting from a claim or demand the defense of which LMC Animal Planet was not offered the opportunity to assume as provided under Section 7.06(d) to the extent LMC Animal Planet’s liability under this Section 7.06 is materially adversely affected as a result thereof.  No investigation by IDT Parent or any of its Affiliates at or prior to the Closing Date shall relieve LMC Animal Planet of any liability hereunder.

 

(f)                                    Any claim of any Purchaser Indemnitee under this Section 7.06 may be made and enforced by IDT Parent on behalf of such Purchaser Indemnitee.

 

Section 7.07                                Purchase Price Adjustment.  Any amount paid by LMC Animal Planet or IDT Parent under this Article 7 or 9 will be treated as an adjustment to the consideration delivered in the Mergers unless a Final Determination or change in Applicable Law (including a revenue ruling or other similar pronouncement) causes any such amount not to constitute an adjustment to the consideration delivered in the Mergers for any applicable Tax purposes.

 

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Section 7.08                                IDT Parent Representations, Warranties and Covenants.

 

(a)                                  Representations and Warranties.  IDT Parent represents and warrants to LMC Animal Planet that:

 

(i)                                     Each of the IDT Subsidiaries is a corporation for U.S. federal income tax purposes and is wholly owned directly by IDT Parent.

 

(ii)                                  IDT Parent and its Affiliates have no plan or intention to cause any of the Surviving Entities to issue additional shares of their capital stock that would result in IDT Parent losing Control of any of the Surviving Entities.

 

(iii)                               Each of the IDT Subsidiaries is a newly formed corporation formed solely for the purpose of engaging in its respective Merger and has engaged in no business activity or operations of any kind other than in connection with its formation and this Agreement.  At no time prior to the Effective Time of its respective Merger will any IDT Subsidiary have had any assets (other than nominal assets contributed upon its formation, which assets will be transferred to the Surviving Entity in its respective Merger).  Except for obligations or liabilities incurred in connection with the transactions contemplated by this Agreement, none of the IDT Subsidiaries has incurred, directly or indirectly, any obligations or liabilities.

 

(iv)                              Neither IDT Parent, nor any person related to IDT Parent within the meaning of Section 1.368-1(e)(3) of the Treasury Regulations, has any plan or intention to redeem, purchase, exchange or otherwise acquire any of the Consideration Shares issued in the Mergers, either directly or through any partnership or other transaction, agreement or arrangement with any other person, other than pursuant to open market purchases as part of a general stock buy back program in which the sellers are anonymous.

 

(v)                                 As part of the same plan as the Mergers, IDT Parent or a member of IDT Parent’s qualified group of corporations (as defined in Treasury Regulations Section 1.368-1(d)(4)(ii)) will continue each of the Seller Subsidiaries’ “historic business” or use a “significant portion” of each of the Seller Subsidiaries’ “historic business assets” in a business, as such terms are defined in Treasury Regulations Section 1.368-1(d)(2) and (3).

 

(vi)                              IDT Parent and its Affiliates have no plan or intention to cause any of the Surviving Entities to:  (A) liquidate; (B) merge with or into another corporation or entity; or (C) sell, exchange or otherwise dispose of any of its assets, except for transfers of assets described in Treasury Regulations Section 1.368-2(k).

 

(vii)                           IDT Parent and its Affiliates have no plan or intention to sell, exchange or otherwise dispose of any of the capital stock of any of the Surviving Entities, except for transfers of capital stock described in Treasury Regulations
Section 1.368-2(k).

 

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(viii)                        IDT Parent has no plan or intention to:  (A) liquidate; (B) merge with or into another corporation or entity; or (C) sell or otherwise dispose of all or substantially all of its assets.

 

(ix)                                Each of IDT Parent and each IDT Subsidiary will pay its expenses, if any, incurred in connection with the Mergers.

 

(x)                                   There is no intercorporate indebtedness existing between IDT Parent (or any of its Affiliates) and any of the Seller Subsidiaries that was issued, acquired or will be settled at a discount.

 

(xi)                                Neither IDT Parent nor any of the IDT Subsidiaries is an investment company as defined in Section 368(a)(2)(F)(iii) and (iv) of the Code.

 

(xii)                             Neither IDT Parent nor any of the IDT Subsidiaries is under the jurisdiction of a court in a case under Title 11 of the United States Code, or a receivership, foreclosure, or similar proceeding in a federal or state court.

 

(b)                                 Covenants.

 

(i)                                     IDT Parent and its Affiliates will comply with all record-keeping and reporting requirements applicable to the Mergers set forth in Treasury Regulation Section 1.368-3.

 

(ii)                                  Neither IDT Parent nor any of its Affiliates will take any position on any federal, state, local or foreign income or franchise Return, or take any other Tax reporting position that is inconsistent with the treatment of each of the Mergers as a reorganization within the meaning of Section 368(a) of the Code, unless otherwise required by a Final Determination.

 

(iii)                               Neither IDT Parent nor any of its Affiliates will take or cause to be taken any action as part of the same plan as the Mergers that would reasonably be expected to cause any of the Mergers to fail to qualify as a reorganization within the meaning of Section 368(a) of the Code.

 

(iv)                              Neither IDT Parent nor any of its Affiliates (including, after the Closing, the Surviving Entities) shall effect or engage in any transactions or other actions (other than the actions contemplated by this Agreement) relating to any Surviving Entity out of the ordinary course of business on the Closing Date.

 

Section 7.09                                Transfer Taxes.  One-half of all transfer Taxes and fees (including any penalties and interest) incurred in connection with transactions contemplated by this Agreement shall be paid by LMC Animal Planet, and one-half of all transfer Taxes and fees (including any penalties and interest) incurred in connection with transactions contemplated by this Agreement shall be paid by IDT Parent, in each case, when due. LMC Animal Planet will, at its own expense, file (or cause its Affiliates to file) all necessary Returns and other documentation with respect to all such Taxes and fees, and,

 

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if required by Applicable Law, IDT Parent will, and will cause its Affiliates to, join in the execution of any such Returns and other documentation.

 

Section 7.10                                Survival.  Notwithstanding anything in this Agreement to the contrary, (a) the representations and warranties of the parties contained in this Article 7 shall survive for the full period of all applicable statutes of limitations (giving effect to any waiver, mitigation or extension thereof), and (b) the covenants and agreements of the parties in this Article 7 will survive the Closing without limitation unless otherwise contemplated by their terms.

 

ARTICLE VIII
EMPLOYEE BENEFIT PLANS

 

Section 8.01                                Employee Benefit Plans Representations.  LMC Animal Planet represents and warrants to IDT Parent that the transactions contemplated by this Agreement are not transactions described in Section 4063 or 4069 of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and none of the Surviving Entities nor any of their respective Affiliates will have or be subject to any liability under Title IV of ERISA with respect to any plan sponsored, maintained or contributed to by any person under “common control” with any Seller Subsidiary prior to the Effective Time of the Merger to which such Seller Subsidiary is party, within the meaning of Section 4001(a)(14) of ERISA.

 

ARTICLE IX
INDEMNIFICATION

 

Section 9.01                                Indemnification by each of IDT Parent and each IDT Subsidiary.  Each of IDT Parent and each IDT Subsidiary covenants and agrees, jointly and severally, to defend, indemnify and save and hold harmless LMC Animal Planet, together with its shareholders, partners, trustees, 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 LMC Animal Planet or a Seller Subsidiary, or a third party claim) arising out of or resulting from (i) any inaccuracy in or breach of any representation or warranty made by IDT Parent or any IDT Subsidiary in this Agreement or in any writing delivered pursuant to this Agreement (other than in respect of any representation or warranty made pursuant to Article 7, as to which this Section 9.01 shall not apply), and (ii) the failure of IDT Parent or any IDT Subsidiary to perform or observe fully any covenant, agreement or provisions to be performed or observed by it pursuant to this Agreement (other than any covenant, agreement or provision made pursuant to Article 7 of this Agreement, as to which this Section 9.01 shall not apply); provided, that the indemnity agreement contained in this Section 9.01 shall not apply to amounts paid in settlement of any such loss, claims, damage, liability or action if such settlement is effected without the consent of IDT Parent (which consent shall not be unreasonably withheld).  Notwithstanding anything to the contrary contained herein, IDT Parent and the IDT Subsidiaries shall not be liable for

 

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any indemnification payments pursuant to this Section 9.01 in the aggregate in excess of $60 million; provided, however, that there shall be no limitation on indemnification amounts payable by IDT Parent or any IDT Subsidiary pursuant to this Section 9.01 for any breach of the representations and warranties contained in Sections 5.02 (c), (d) and (f).

 

Section 9.02                                Indemnification by LMC Animal Planet.  LMC Animal Planet covenants and agrees to defend, indemnify and save and hold harmless IDT Parent and each IDT Subsidiary, together with their respective shareholders, partners, trustees, 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 IDT Parent or an IDT Subsidiary, or a third party claim), arising out of or resulting from (i) any inaccuracy in or breach of any representation or warranty made by LMC Animal Planet in this Agreement or in any writing delivered pursuant to this Agreement (other than in respect of any representation, warranty made pursuant to Article 7, as to which this Section 9.02 shall not apply), and (ii) the failure of LMC Animal Planet to perform or observe fully any covenant, agreement or provisions to be performed or observed by it pursuant to this Agreement (other than any covenant, agreement or provision made pursuant to Article 7 of this Agreement, as to which this Section 9.02 shall not apply); provided, that the indemnity agreement contained in this Section 9.02 shall not apply to amounts paid in settlement of any such loss, claims, damage, liability or action if such settlement is effected without the consent of LMC Animal Planet (which consent shall not be unreasonably withheld).  Notwithstanding anything to the contrary contained herein, LMC Animal Planet shall not be liable for any indemnification payments pursuant to this Section 9.02 in the aggregate in excess of $60 million; provided, however, that there shall be no limitation on indemnification amounts payable by LMC Animal Planet pursuant to this Section 9.02 for any breach of the representations and warranties contained in Section 4.02, the first four sentences of Section 4.03(a) and Article 8.

 

Section 9.03                                Procedure.  Each party or person entitled to be indemnified pursuant to this Article 9 (each, an “Indemnified Person”) shall notify each other party to this Agreement in writing of any action against such Indemnified Person in respect of which such other party (each, an “Indemnifying Person”) is or may be obligated to provide indemnification on account of this Article 9, promptly after the receipt of notice of such action.  The failure of any Indemnified Person so to notify an Indemnifying Person of any such action shall not relieve such Indemnifying Person from any liability which it may have to such Indemnified Person, except to the extent such Indemnifying Person shall have been materially prejudiced by the failure of such Indemnified Person so to notify it, pursuant to this Section 9.03.  In case any such action shall be brought against any Indemnified Person and it shall notify the Indemnifying Persons of the commencement thereof, the Indemnifying Persons shall be entitled to participate in the defense thereof and, to the extent that the Indemnifying Persons may wish to assume the defense thereof, with counsel reasonably satisfactory to such Indemnified Person, and after notice to such Indemnified Person of their election so to assume the defense thereof,

 

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the Indemnifying Persons will not be liable to such Indemnified Person under this Article 9 for any legal or other expense subsequently incurred by such Indemnified Person in connection with the defense thereof; provided, however, that (i) if the Indemnifying Persons shall elect not to assume the defense of such claim or action or (ii) if the Indemnified Person reasonably determines (x) that there may be a conflict between the positions of the Indemnifying Persons and of the Indemnified Person in defending such claim or action or (y) that there may be legal defenses available to such Indemnified Person different from or in addition to those available to the Indemnifying Persons, then separate counsel for the Indemnified Person 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 Indemnifying Persons shall be liable for any reasonable legal or other expenses incurred by the Indemnified Person in connection therewith.

 

Section 9.04                                Exclusivity of Remedy.  The indemnification provisions set forth in Articles 7 and 9 are the sole and exclusive remedy for breach of any and all representations and warranties contained in this Agreement; provided, however, that 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 any and all covenants and agreements contained in this Agreement.  Notwithstanding anything in this Agreement to the contrary, neither LMC Animal Planet or any Seller Subsidiary, on the one hand, nor IDT Parent or any IDT Subsidiary, on the other hand, shall be liable to the other for any indirect, punitive, special, consequential or incidental damages under any provision of this Agreement or for any indirect, punitive, special, consequential or incidental damages arising out of any act or failure to act hereunder, even if such party has been advised of or has foreseen the possibility of such damages.

 

Section 9.05                                Certain Limitations.  The indemnification obligations of the parties hereto with respect to claims asserted for any breach of a representation or warranty set forth in Article 4 or 5 prior to expiration of the survival period applicable to such representation or warranty shall survive until such claims are finally adjudicated or otherwise resolved.

 

Section 9.06                                Method of Payment for Certain Indemnification Payments.  Any indemnification payments to be made by IDT Parent or an IDT Subsidiary pursuant to Article 9 shall be made by delivering shares of IDT Parent Class B Common Stock.  Any shares of IDT Parent Class B Common Stock to be delivered pursuant to this Section 9.06 shall be valued based on the weighted average (based on trading volume) of the daily closing prices (as of 4:00 p.m. eastern time) per share of IDT Parent Class B Common Stock as reported on the NYSE (as published in the Wall Street Journal, or if not published therein or incorrectly published therein, in another authoritative source mutually selected by IDT Parent and LMC Animal Planet) for the twenty consecutive trading days ending on the second trading day prior to the date on which such indemnification payment is made by IDT Parent or an IDT Subsidiary.  All such shares of IDT Parent Class B Common Stock so delivered pursuant to this Section 9.06 shall be duly authorized, fully paid, and non-assessable, shall be issued in compliance with all Applicable Law and not be subject to any Liens and shall be treated as Registrable

 

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Securities (as defined in the Registration Rights Agreement) for all purposes under the Registration Rights Agreement.

 

ARTICLE X
TERMINATION

 

Section 10.01                          Termination.

 

(a)                                  This Agreement may be terminated and the Mergers may be abandoned at any time prior to the Effective Time of the Mergers:  (i) by mutual written agreement of LMC Animal Planet and IDT Parent, at any time prior to the Closing Date, or (ii) by LMC Animal Planet or IDT Parent if the Closing has not occurred on or prior to February 28, 2005 (the “Outside Date”), or if any Governmental Entity shall have issued a nonappealable final order, decree or ruling or taken any other action having the effect of permanently restraining, enjoining or otherwise prohibiting the Mergers; provided, that the right to terminate this Agreement pursuant to the foregoing clause (ii) shall not be available to any party whose breach of a representation or warranty or failure to fulfill any agreement or obligation under this Agreement was the cause of or resulted in the failure of the Closing to occur by the Outside Date.  Any party desiring to terminate this Agreement pursuant to this Section 10.01(a) shall promptly give notice of such termination to the other parties hereto.

 

(b)                                 If this Agreement is terminated as permitted by Section 10.01(a), such termination shall be without liability of any party to this Agreement (or its Representatives) to any other party to this Agreement (or its Representatives), except with respect to any losses (excluding consequential, indirect, special or incidental damages) that a party (or its Representatives) may incur or suffer as a result of another party’s breach of this Agreement, including, without limitation, (i) any willful failure of the breaching party to fulfill a condition to the performance of the obligations of the non-breaching party, (ii) any failure by the breaching party to perform a covenant made by it in this Agreement or (iii) any breach by the breaching party of any of its representations or warranties contained herein.  The provisions of Sections 6.03, 6.05, 11.03 and 11.13 and this Article 10 shall survive any termination of this Agreement.

 

ARTICLE XI
MISCELLANEOUS

 

Section 11.01                          Successors and Assigns.  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.  This Agreement may not be assigned by any party hereto without the prior written consent of the other parties hereto and the attempted or purported assignment shall be void.  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.

 

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Section 11.02                          Survival.  Except as expressly provided otherwise herein, and subject to Section 7.10, (i) the representations and warranties of the parties set forth in this Agreement, other than the representations and warranties set forth in Section 5.02(f) which shall survive the Closing indefinitely, shall survive the Closing for a period of three years after the Closing Date, and (ii) the covenants and agreements of the parties set forth in this Agreement shall survive the Closing indefinitely.

 

Section 11.03                          Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of law thereof.

 

Section 11.04                          Counterparts; Effectiveness.  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.  Signature pages from separate identical counterparts may be combined with the same effect as if the parties signing such signature page had signed the same counterpart. This Agreement shall become effective when each party hereto shall have received counterparts hereof signed by all of the other parties hereto.

 

Section 11.05                          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.

 

Section 11.06                          Notices.  Unless otherwise provided herein, 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 one Business Day after deposit with an internationally recognized courier service, delivery fees prepaid, or 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 or to such other parties as may be designated by written notice by the parties hereto, provided that any notice of change of address shall be deemed effective only upon receipt:

 

If to IDT Parent or any IDT Subsidiary, to:

 

IDT Corporation
520 Broad Street
Newark, New Jersey  07102
Attn:  Ely Tendler, Esq.
Telephone:  (973) 438-3616
Fax:  (973) 438-1616

 

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[Name of applicable IDT Subsidiary]
c/o IDT Corporation
520 Broad Street
Newark, New Jersey  07102
Attn:  Ely Tendler, Esq.
Telephone:  (973) 438-3616
Fax:  (973) 438-1616

 

with a copy to:

 

Mound, Cotton, Wollan & Greengrass
One Battery Park Plaza
New York, New York 1004
Attn:  Thomas R. Weinberger
Telephone:  (212) 804-4260
Fax:  (212) 344-8066

 

If to LMC Animal Planet, to:

 

LMC Animal Planet, Inc.
c/o Liberty Media Corporation
12300 Liberty Boulevard
Englewood, Colorado 80112
Attn: Charles Y. Tanabe
Telephone: (720) 875-5400
Fax: (720) 875-5858

 

with a copy to:

 

Baker Botts, L.L.P.
30 Rockefeller Plaza
New York, New York 10112-4998
Attn: Robert W. Murray Jr.
Telephone: (212) 408-2500
Fax: (212) 408-2501

 

If to any Seller Subsidiary, to:

 

[Name of applicable Seller Subsidiary]
c/o Liberty Media Corporation
12300 Liberty Boulevard
Englewood, Colorado 80112
Attn: Charles Y. Tanabe
Telephone: (720) 875-5400
Fax: (720) 875-5858

 

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with a copy to:

 

Baker Botts, L.L.P.
30 Rockefeller Plaza
New York, New York 10112-4998
Attn: Robert W. Murray Jr.
Telephone: (212) 408-2500
Fax: (212) 408-2501

 

Section 11.07                          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 or either retroactively or prospectively), only with the written consent of each of LMC Animal Planet and IDT Parent.  Any amendment or waiver effected in accordance with this Section 11.07 shall be binding upon each party to this Agreement.

 

Section 11.08                          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.

 

Section 11.09                          Entire Agreement.  This Agreement (and the Exhibits and Schedules hereto) and the Registration Rights Agreement constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements, understanding and discussions among the parties with respect thereto.

 

Section 11.10                          Specific Enforcement.  The parties hereto agree that irreparable harm would occur in the event that any provision of this Agreement were not performed in accordance with its specific terms or were otherwise breached.  It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof, this being in addition to any other remedy to which the parties are entitled at law or in equity.

 

Section 11.11                          Expenses.  Except as otherwise expressly set forth in this Agreement, all costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense.

 

Section 11.12                          Further Assurances.  At and after the Effective Time of each Merger, the officers of the Surviving Entity of such Merger will be authorized to execute and deliver, in the name and on behalf of the Seller Subsidiary party to such Merger or the IDT Subsidiary party to such Merger, any deeds, bills of sale, assignments or assurances and to take and do, in the name and on behalf of such Seller Subsidiary or such IDT Subsidiary, any other actions and things to vest, perfect or confirm of record or otherwise in such Surviving Entity any and all right, title and interest in, to and under any of the rights, properties or assets of such Seller Subsidiary or such IDT Subsidiary acquired or to be acquired by such Surviving Entity as a result of, or in connection with, such Merger.

 

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Section 11.13                          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 ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.  THIS SECTION 11.13 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 MODIFICATION 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.

 

Section 11.14                          Third Party Beneficiaries.  Except as otherwise expressly set forth in this Agreement, this Agreement is not intended to confer any rights or remedies upon any person other than the parties hereto.

 

 

[Signature page immediately follows.]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed.

 

LMC ANIMAL PLANET, INC.				IDT CORPORATION
By:	/s/ Albert Rosenthaler			By:	/s/ Ira A. Greenstein
Name: Albert Rosenthaler				Name: Ira A. Greenstein
Title: Senior Vice President				Title: President
LIBERTY N2P, INC.				IDT LMC-N2P ACQUISITION I, INC.
By:	/s/ Albert Rosenthaler			By:	/s/ Ira A. Greenstein
Name: Albert Rosenthaler				Name: Ira A. Greenstein
Title: Senior Vice President				Title: Authorized Signatory
LIBERTY N2P II, INC.				IDT LMC-N2P ACQUISITION II, INC.
By:	/s/ Albert Rosenthaler			By:	/s/ Ira A. Greenstein
Name: Albert Rosenthaler				Name: Ira A. Greenstein
Title: Senior Vice President				Title: Authorized Signatory
LIBERTY N2P III, INC.				IDT LMC-N2P ACQUISITION III, INC.
By:	/s/ Albert Rosenthaler			By:	/s/ Ira A. Greenstein
Name: Albert Rosenthaler				Name: Ira A. Greenstein
Title: Senior Vice President				Title: Authorized Signatory

 

 

(continues on next page)

 

40

 

And solely for purposes of Section 6.07:

 

 

LIBERTY MEDIA CORPORATION
By:	/s/ Albert Rosenthaler
Name: Albert Rosenthaler
Title: Senior Vice President
IDT DOMESTIC-UNION, LLC
By: IDT Domestic Telecom, Inc., Managing Member
By:	/s/ Norman Rosenberg
Name: Norman Rosenberg
Title: Chief Financial Officer
IDT INVESTMENTS, INC.
By:	/s/ Gil Boosidan
Name: Gil Boosidan
Title: Treasurer
NTOP HOLDINGS, LLC
By:	/s/ Anthony S. Davidson
Name: Anthony S. Davidson
Title: Manager

 

41

Exhibit 7(s)

 

REGISTRATION RIGHTS AGREEMENT

 

REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of March 8, 2005, by and between IDT Corporation, a Delaware corporation (the “Company”), and LMC Animal Planet, Inc., a Colorado corporation (the “Stockholder”).

 

WHEREAS, the Company and the Stockholder are party to an Agreement and Plan of Merger, dated as of December 15, 2004 (the “Merger Agreement”), pursuant to which the Stockholder will receive, in the aggregate, 3,754,479 shares of the Company’s Class B common stock, par value $.01 per share (the “Class B Common Stock”), in a transaction exempt from the registration requirements of the Securities Act of 1933, as amended (the “Act”); and

 

WHEREAS, to induce the Stockholder to enter into the Merger Agreement, the Company is entering into this Agreement with the Stockholder.

 

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:

 

“1934 Act” means the Securities Exchange Act of 1934, as amended.

 

“Affiliate” means, with respect to any person, any other person directly or indirectly controlling, controlled by or under common control with the first such person.

 

“Closing” has the meaning ascribed thereto in the Merger Agreement.

 

“Financial Institution” means a broker-dealer registered under Section 15(b) of the 1934 Act or an Affiliate thereof or any other financial institution or third party.

 

“Holder” means a holder of Registrable Securities.

 

“Initial Number” means the number of shares of Class B Common Stock initially issued by the Company to the Stockholder pursuant to the Merger Agreement (appropriately adjusted for stock splits, stock dividends, reverse stock splits and other similar events affecting the Class B Common Stock).

 

“person” means any individual, partnership, corporation, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or agency or political subdivision thereof, or other entity.

 

“register,” “registered” and “registration” refer to a registration effected by preparing and filing a registration statement (including a shelf registration statement pursuant to

 

 

Rule 415 promulgated under the Act (“Rule 415”)) in compliance with the Act, and the declaration or ordering of effectiveness of such registration statement.

 

“Registrable Securities” means the shares of Class B Common Stock issued to the Stockholder pursuant to the Merger Agreement, including, without limitation, any shares of Class B Common Stock issued subsequent to the Closing pursuant to Section 9.06 of the Merger Agreement, and pursuant to Section 2.8 of this Agreement, as adjusted for stock splits, stock dividends, reverse stock splits and other similar events affecting the Class B Common Stock, or securities of the Company that are of the same class and series as the Registrable Securities and are sold short or otherwise transferred in connection with a hedging or monetization transaction effected by a Holder in respect of the Registrable Securities and in an amount not in excess thereof; 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) promulgated under the Act (or any similar provision then in force) or (iii) such securities have ceased to be outstanding.  For the avoidance of doubt a hedging or monetization transaction shall include, without limitation, those listed in Annex A hereto, as well as forward contracts, equity swaps, collars, puts or calls, exchangeable securities, non-recourse loans or similar transactions which transfer the economic risk of ownership of Registrable Securities.

 

SECTION 2.

REGISTRATION RIGHTS.

 

2.1                                 Registration Upon Demand.  (a)  At any time after the date hereof, one or more Holders that in the aggregate beneficially own at least 20% of the Registrable Securities then outstanding may make a demand that the Company effect the registration of all or part of such Holders’ Registrable Securities (a “Demand Registration”), which Demand Registration may include, at the option of such Holder(s), a registration for an offering of Registrable Securities to be made on a continuous or delayed basis pursuant to Rule 415.  Upon receipt of a valid request for a Demand Registration, the Company shall promptly, and in any event no later than 15 days after such receipt, notify each other Holder of the making of such demand, and each such other Holder shall have 5 business days after receipt of such notice to notify the Company as to whether it wishes to participate in such Demand Registration (and such notice shall not be deemed a request for a Demand Registration), and the Company 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 only be required to effect a registration if the number of Registrable Securities that the Company shall have been requested to register shall, in the aggregate, (i) represent at least 20% of the Initial Number or (ii) represent all of the Registrable Securities then held by all Holders.  The Holders shall together have the right to two (2) Demand Registrations pursuant to this Section 2.1(a); provided, however, that a Demand Registration shall not be deemed to have occurred if a registration has not been effected in accordance with Section 2.1(b) below or if more than 25% of the Registrable Securities sought to be included by Holders in a Demand Registration are excluded from such registration pursuant to Section 2.6 below.

 

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(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 the fault of any of the Holders, 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 to perform its obligations under such underwriting agreement.

 

(c)                                  Piggyback Registration.  If the Company proposes to file a registration statement under the Act with respect to an offering of its equity securities for its own account or for the account of another person or entity (other than a registration statement on Form S-4 or S-8 (or any substitute forms that may be adopted by the SEC)), the Company shall give written notice of such proposed filing to the Holders at the address set forth in the share register of the Company as soon as reasonably practicable (but in no event less than 7 business days before the anticipated filing date), undertaking to provide each Holder the opportunity to register on the same terms and conditions such amount of Registrable Securities as such Holder may request (a “Piggyback Registration”).  Each Holder will have 5 business days after receipt of any such notice to notify the Company as to whether it wishes to participate in a Piggyback Registration (which notice shall not be deemed to be a request for a Demand Registration).  If the registration statement is filed on behalf of a person other than the Company, the Company will use its reasonable best efforts to have the Registrable Securities that the Holders wish to sell included in the registration statement.  If the Company or the person for whose account such offering is being made shall determine in its sole discretion not to register or to delay the proposed offering, the Company may, at its election, provide written notice of such determination to the Holders and (i) in the case of a determination not to effect the proposed offering, shall thereupon be relieved of the obligation to register such Registrable Securities in connection therewith and (ii) in the case of a determination to delay a proposed offering, shall thereupon be permitted to delay registering such Registrable Securities for the same period as the delay in respect of the proposed offering.  If the Registrable Securities requested to be included in the Piggyback Registration by any Holder differ from the type of securities proposed to be registered by the Company and the managing underwriter for such offering advises the Company that due to such differences the inclusion of such Registrable Securities would cause a material adverse effect on the price of the offering (a “Material Adverse Effect”), then (x) the number of such Holders’ Registrable Securities to be included in the Piggyback Registration shall be reduced to an amount which, in the opinion of the managing underwriter, would eliminate such Material Adverse Effect or (y) if no such reduction would, in the opinion of the managing underwriter, eliminate such Material Adverse Effect, then the Company shall have the right to exclude all such Registrable Securities from such Piggyback Registration, provided, that no other securities of such type are included and offered for the account of any other person in such Piggyback Registration. Any partial reduction in number of Registrable Securities of any Holder to be included in the Piggyback Registration pursuant to clause (x) of the immediately preceding sentence shall be effected pro rata based on the ratio which such Holder’s requested securities bears to the total number of securities requested to be included in such Piggyback Registration by all persons other than the Company who have the contractual right to request that their

 

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securities be included in such registration statement and who have requested that their securities be included. If the Registrable Securities requested to be included in the registration statement are of the same type as the securities being registered by the Company and the managing underwriter advises the Company that the inclusion of such Registrable Securities would cause a Material Adverse Effect, the Company will be obligated to include in such registration statement, as to each Holder, only a portion of the Registrable Securities such Holder has requested be registered equal to the ratio which such Holder’s requested securities bears to the total number of securities requested to be included in such registration statement by all persons (other than any persons initiating such registration request) who have the contractual right to request that their securities be included in such registration statement and who have requested their securities be included. If the Company initiated the registration, then the Company may include all of its securities in such registration statement before any such Holder’s requested securities are included. If another securityholder initiated the registration, then the Company may not include any of its securities in such registration statement unless all Registrable Securities requested to be included in the registration statement by all Holders are included in such registration statement. If as a result of the provisions of this Section 2.1(c) any Holder shall not be entitled to include all Registrable Securities in a registration that such Holder has requested to be so included, such Holder may withdraw such Holder’s request to include Registrable Securities in such registration statement prior to its effectiveness.

 

2.2                                 Blackout Periods for Holders.  If the board of directors of the Company determines in good faith that the registration of Registrable Securities pursuant to Section 2.1(a) hereof (or the use of a registration statement or related prospectus) would be materially detrimental to the Company or its shareholders because such filing would require disclosure of material non-public information or would materially 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 of the registration statement, 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(a), the Company shall be entitled to postpone the filing of the registration statement otherwise required to be prepared and filed by the Company pursuant to Section 2.1(a) hereof for a reasonable period of time, but not to exceed 60 days (a “Demand Blackout Period”) after the date of such request, provided that the Company’s exercise of its rights under this Section 2.2 (i) shall not result in Demand Blackout Periods for more than 180 days in any 365 day period, (ii) shall not result in Demand Blackout Periods that are separated by less than 45 days and (iii) shall only be effective when and for so long as the executive officers and directors of the Company and other holders, if any, of registration rights with respect to the Company’s securities are similarly restricted from buying or selling securities of the Company and/or exercising their registration rights, as applicable. The Company shall promptly notify each Holder of the expiration or earlier termination of any Demand Blackout Period.

 

2.3                                 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

 

4

 

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 120 days, unless all Registrable Securities included therein are earlier sold; provided, however, that (i) before filing any registration statement or any amendments or supplements thereto the Company will provide to the Holders whose Registrable Securities are included therein and their counsel a reasonable opportunity to review and comment thereon before the filing thereof and (ii) the Company will not file any such registration statement, amendments or supplements thereto to which any such Holder or its counsel shall reasonably object on a timely basis.  The parties agree that the “Plan of Distribution” section of any registration statement and related prospectus covering an offering of Registrable Securities to be made on a continuous or delayed basis pursuant to Rule 415 shall be substantially in the form of Annex A hereto or as otherwise advised by the Holders.

 

(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 provided, however, that (i) before filing any such amendment or supplement the Company will provide to the Holders whose Registrable Securities are included therein and their counsel a reasonable opportunity to review and comment thereon before the filing thereof and (ii) the Company will not file any such amendment or supplement to which any such Holder or its counsel shall reasonably object on a timely basis (unless counsel to the Company opines to the Company that the Company is required to file such amendment or supplement pursuant to applicable law).

 

(c)                                  Use its best efforts to have such Registrable Securities approved for listing on the New York Stock Exchange, Inc. (to the extent that any such Registrable Securities have not previously been approved for listing thereon).

 

(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.

 

(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

 

5

 

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 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. Upon receipt of any notice of the occurrence of any event of the kind described in the preceding sentence, each Holder will cease using such prospectus until receipt by the Holders of the copies of such supplemented or amended prospectus. If so requested by the Company, each Holder will deliver to the Company any copies of such prospectus then in its possession (other than one permanent file copy). If the Company shall give such notice, the Company shall extend the period during which such registration statement shall be maintained effective as provided in Section 2.3(a) hereof by the number of days during the period from and including the date of the giving of such notice to the date when the Company shall make available to the Holders such supplemented or amended prospectus.

 

(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 is 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 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.

 

6

 

(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 Holder 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, (ii) such Information has been made generally available to the public, (iii) as necessary to enforce a Holder’s rights under this Agreement or (iv) such Holder of Registrable Securities requiring such information agrees to enter into a confidentiality agreement in customary form and subject to customary exceptions. 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. Each 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.

 

(m)                               Provide a CUSIP number for the Registrable Securities included in any registration statement not later than the effective date of such registration statement.

 

(n)                                 Cooperate with each selling Holder and each underwriter participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with the National Association of Securities Dealers, Inc.

 

(o)                                 During the period when the prospectus is required to be delivered under the Act, promptly file all documents required to be filed with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the 1934 Act.

 

(p)                                 Make generally available to its securityholders, as soon as reasonably practicable, an earnings statement covering a period of 12 months, beginning within three months after the effective date of the registration statement, which earnings statement shall

 

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satisfy the provisions of Section 11(a) of the Act and the rules and regulations of the SEC thereunder.

 

(q)                                 Provide a transfer agent and registrar (which may be the same entity) for such Registrable Securities.

 

(r)                                    Use its reasonable efforts to take all other steps necessary to effect the registration of such Registrable Securities pursuant to the terms contemplated hereby.

 

2.4                                 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 (to the extent not set forth on Annex A hereto) 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. 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 such prospectus in its possession (other than one permanent file copy). The Company shall promptly prepare and furnish to each 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.

 

2.5                                 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 this Section 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.  Subject to Section 2.8 hereof, the Company also shall be required to pay and bear the reasonable legal fees of not more than one counsel for the Holders in an amount not to exceed $50,000 in connection with any registration, which counsel shall be selected by Holders owning in the aggregate at least 51% of the Registrable Securities to be included in such registration.

 

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2.6                                 Underwriting Requirements.  In connection with any underwritten offering of a Holder’s Registrable Securities, the Company shall not be required under Section 2.3 to register any of such Registrable Securities in connection with such underwritten offering unless the Company consents to the underwriters selected by the Holders participating in the registration (which consent shall not be unreasonably withheld) and 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.  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(a), the Registrable Securities to be included shall be apportioned among the Holders on a pro rata basis (based on the number of Registrable Securities proposed to be registered by each); 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 securities that are not Registrable Securities and all securities 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.  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 (which may include 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 therefrom by written notice to the Company and the lead managing underwriter.

 

2.7                                 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 1934 Act and their respective directors, officers, partners, stockholders, members, employees, agents and representatives, including, without limitation, brokers, dealers or other financial institutions who may sell Registrable Securities short or in connection with a hedging or monetization transaction effected by a Holder in which a prospectus covering Registrable Securities is delivered to the purchaser thereof (each, a “Company-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, are based upon or relate to (collectively, a “Violation”) (x) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary or 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 Company-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

 

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indemnity agreement contained in this Section 2.7(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.  The indemnification provided in this Section 2.7(a) shall apply regardless of whether the loss, claim, damage, liability or legal or other expense is incurred in a third party action or in a claim by a Holder against the Company hereunder.

 

(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, a “Holder-Indemnified Person” and, together with the Company-Indemnified Persons, as the context requires, the “Indemnified Persons”), against any losses, 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 such 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 Act after such prospectus has been timely filed by the Company. Such Holder will pay any reasonable legal or other expenses incurred by any Holder-Indemnified Person pursuant to this Section 2.7(b) in connection with investigating or defending any such loss, claim, damage, liability or action; provided that the indemnity agreement contained in this Section 2.7(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 2.7(b) exceed the net proceeds from the offering received by such Holder upon its sale of Registrable Securities included in the registration statement.  The indemnification provided in this Section 2.7(b) shall apply regardless of whether the loss, claim, damage, liability or legal or other expense is incurred in a third party action or in a claim by the Company against any Holder hereunder.

 

(c)                                  Promptly after receipt by an Indemnified Person under this Section 2.7 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 2.7, 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

 

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noticed, to assume the defense thereof with counsel mutually satisfactory to the indemnifying parties; provided that an Indemnified Person shall have the right to retain separate counsel, and the reasonable fees and expenses of such counsel shall 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, provided that the indemnifying party in such event shall not be responsible for the fees of more than one separate firm of attorneys (in addition to any local counsel) for all Indemnified Persons that may be represented without conflict by one counsel. 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 2.7 to the extent of such material prejudice, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any Indemnified Person otherwise than under this Section 2.7.

 

(d)                                 If the indemnification provided for in this Section 2.7 is held by a court of competent jurisdiction to be unavailable to an Indemnified Person with respect to any losses, claims, damages or liabilities referred to herein, the indemnifying party, in lieu of indemnifying such Indemnified Person hereunder, 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. In no event shall a Holder’s obligation to contribute pursuant to this Section 2.7(d) exceed the net proceeds from the offering received by such Holder upon its sale of Registrable Securities included in the registration statement.

 

(e)                                  The obligations of the Company and the Holders under this Section 2.7 shall survive the completion of any offering of Registrable Securities under a registration statement pursuant to this Section 2.

 

2.8                                 Method of Payment for Certain Expenses of Registration and Indemnification Payments.  Any legal fees of counsel for the Holders to be paid by the Company to the Holders pursuant to Section 2.5 of this Agreement and any indemnification payments to be made by the Company pursuant to Section 2.7 of this Agreement shall be made by delivering shares of Class B Common Stock.  Any shares of Class B Common Stock to be delivered pursuant to this Section 2.8 shall be valued based on the average of the daily closing prices (as of 4:00 p.m. eastern time) per share of Class B Common Stock as reported on the New York Stock Exchange (as published in the Wall Street Journal, or if not published therein or incorrectly

 

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published therein, in another authoritative source mutually selected by the Company and Holders owning in the aggregate at least 51% of the outstanding Registrable Securities) for the ten consecutive trading days ending on the second trading day prior to the date on which such legal fees payment or indemnification payment, as the case may be, is made by the Company.  All such shares of Class B Common Stock so delivered pursuant to this Section 2.8 shall be duly authorized, fully paid and non-assessable, and free and clear of any mortgage, pledge, lien, security interest, purchase option, call, claim, restriction on transfer, voting restriction, charge or encumbrance of any kind.

 

2.9                                 Assignment of Registration Rights.  A Holder may transfer and assign it rights and obligations hereunder to a transferee of Registrable Securities, which transferee may include, without limitation, a Financial Institution, but which shall not include a competitor of the Company or any of its material subsidiaries; provided that (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 and the securities with respect to which such transfer has been effected, and (ii) such transferee shall agree with the Company in writing to be subject to the terms and conditions of this Agreement to the extent then applicable.

 

2.10                           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 best efforts to:

 

(a)                                  Make and keep available adequate current public information at all times, as contemplated by Rule 144 promulgated under the Act (“Rule 144”) or any similar or analogous rule promulgated under the Act;

 

(b)                                 File with the SEC, in a timely manner, all reports and other documents required to be filed by the Company under the Act and the 1934 Act; and

 

(c)                                  So long as a Holder owns any Registrable Securities, furnish such Holder upon request (i) a written statement by the Company that (A) it has made available adequate current public information as contemplated by Rule 144 or any similar or analogous rule promulgated under the Act, and (B) it is in compliance with its reporting obligations under the 1934 Act, (ii) a copy of the most recent annual or quarterly report of the Company and (iii) 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.

 

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

 

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herein shall be construed as permitting any transfer of any securities of the Company in violation of any applicable law or agreement.

 

3.2                                 Governing Law.  This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York.  The Holders 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 the Borough of Manhattan, The City of New York, for purposes of all legal proceedings arising out of or relating to this Agreement and the transactions contemplated hereby. The Holders 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
520 Broad Street
Newark, New Jersey  07102
Attn:  Ely Tendler, Esq.
Telephone:  (973) 438-3616
Fax:  (973) 438-1616

 

with a copy to:

 

Mound, Cotton, Wollan & Greengrass
One Battery Park Plaza
New York, New York 1004
Attn:  Thomas R. Weinberger
Telephone:  (212) 804-4260

Fax:  (212) 344-8066

 

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If to the Stockholder:

 

LMC Animal Planet, Inc.
c/o Liberty Media Corporation
12300 Liberty Boulevard
Englewood, Colorado 80112
Attn:  Charles Y. Tanabe
Telephone:  (720) 875-5400
Fax:  (720) 875-5382

 

with a copy to:

 

Baker Botts L.L.P.
30 Rockefeller Plaza
New York, New York 10112-4498
Attn:  Robert W. Murray Jr.
Telephone:  (212) 408-2540
Fax:  (212) 259-2540

 

3.6                                 Amendments and Waivers.  This Agreement 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 at least 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 (together with the agreements referenced herein) 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 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                                 No Inconsistent Agreements.  The Company represents, warrants and covenants to the Stockholder that the Company has not entered into, and after the date of this Agreement will not enter into, any agreement which is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof.

 

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3.10                           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 SECURITIES 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 3.10 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.]

 

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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first above written.

 

	COMPANY:
	IDT CORPORATION
	By:	/s/ Joyce J. Mason
		Name: Joyce J. Mason
		Title: Senior Vice President
	STOCKHOLDER:
	LMC ANIMAL PLANET, INC.
	By:	/s/ Albert E. Rosenthaler
		Name: Albert E. Rosenthaler
		Title: Senior Vice President

 

 

ANNEX A

 

PLAN OF DISTRIBUTION

 

The selling securityholder, including some of its transferees who may later hold its interests in the securities covered by this prospectus and who are otherwise entitled to resell the securities using this prospectus, may sell the securities covered by this prospectus from time to time in any legal manner selected by the selling securityholder, including directly to purchasers or through underwriters, broker-dealers or agents, who may receive compensation in the form of discounts, concessions or commissions from the selling securityholder or the purchasers.  These discounts, concessions or commissions as to any particular underwriter, broker-dealer or agent may be in excess of those customary in the types of transactions involved.  The selling securityholder will act independently of us in making decisions with respect to the timing, manner and size of each sale of the securities covered by this prospectus.

 

The selling securityholder has advised us that the securities may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market prices, at varying prices determined at the time of sale and/or at negotiated prices.  These sales may be effected in one or more transactions, including:

 

•                  on the New York Stock Exchange;

 

•                  in the over-the-counter market;

 

•                  in transactions otherwise than on the New York Stock Exchange or in the over-the-counter market; or

 

•                  any combination of the foregoing.

 

In addition, the selling securityholder may also enter into hedging and/or monetization transactions.  For example, the selling securityholder may:

 

•                  enter into transactions with a broker-dealer or affiliate of a broker-dealer or other third party in connection with which that other party will become a selling securityholder and engage in short sales of securities under this prospectus, in which case the other party may use securities received from a selling securityholder to close out any short positions;

 

•                  sell short the securities under this prospectus and use the securities held by it to close out any short position;

 

•                  enter into options, forwards or other transactions that require the applicable selling securityholder to deliver, in a transaction exempt from registration under the Act, the securities to a broker-dealer or an affiliate of a broker-dealer or other third party who may then become a selling securityholder and publicly resell or otherwise transfer the securities under this prospectus; or

 

•                  loan or pledge the securities to a broker-dealer or an affiliate of a broker-dealer or other third party who may then become a selling securityholder and sell the loaned securities or, upon an event of default in the case of a pledge,

 

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become a selling securityholder and sell the pledged securities, under this prospectus.

 

The selling securityholder has advised us that it has not entered into any agreements, arrangements or understandings with any underwriter, broker-dealer or agent regarding the sale of their securities.  However, we are required, under the registration rights agreement relating to the securities being sold under this prospectus, to enter into customary underwriting and other agreements in connection with the distribution of the securities under this prospectus, subject to some limitations.  For more information regarding the registration rights agreement, see the section of this prospectus entitled “Selling Securityholder—Relationships with the Selling Securityholder.”  The specific terms of any such underwriting or other agreement will be disclosed in a supplement to this prospectus filed with the SEC under Rule 424(b) promulgated under the Act, or, if appropriate, a post-effective amendment to the registration statement of which this prospectus forms a part.

 

The selling securityholder may sell any or all of the securities pursuant to this prospectus.  In addition, there can be no assurance that the selling securityholder will not transfer, devise or gift the securities by other means not described in this prospectus.

 

The aggregate proceeds to the selling securityholder from the sale of the securities offered by it will be the purchase price of the securities less discounts and commissions, if any.  If the securities are sold through underwriters or broker-dealers, the selling securityholder will be responsible for underwriting discounts and commissions and/or agent’s commissions.  We will not receive any of the proceeds from the sale of the securities covered by this prospectus.

 

In order to comply with the securities laws of some states, if applicable, the securities may be sold in these jurisdictions only through registered or licensed brokers or dealers.  In addition, in some states the securities may not be sold unless they have been registered or qualified for sale or any exemption from registration or qualification requirements is available and is complied with.

 

Any underwriters, broker-dealers or agents that participate in the sale of the securities may be deemed to be “underwriters” within the meaning of Section 2(11) of the Act.  As a result, any profits on the sale of the securities by the selling securityholder and any discounts, commissions or concessions received by any such broker-dealers or agents may be deemed to be underwriting discounts and commissions under the Act.

 

To the extent required, the securities to be sold, the name of the selling securityholder, the respective purchase prices and public offering prices, the names of any agent, broker-dealer or underwriter, and any applicable commissions or discounts with respect to a particular offer will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement of which this prospectus is a part.

 

We have agreed to indemnify the selling securityholder and its directors, officers, controlling persons and representatives against certain liabilities, including specified liabilities under the Act, or to contribute with respect to payments which the selling securityholder may be required to make in respect of such liabilities.  Any such obligations would be satisfied by the

 

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delivery of shares of our Class B common stock.  The selling securityholder has agreed to indemnify us for liabilities arising under the Act with respect to written information furnished to us by it or to contribute with respect to payments in connection with such liabilities.

 

We have agreed to pay all of the costs, fees and expenses incident to our registration of the resale of the selling securityholder’s securities, excluding any legal fees of the selling securityholder in excess of $50,000 and commissions, fees and discounts of underwriters, brokers-dealers and agents.

 

Under our registration rights agreement with the selling securityholder, we will use reasonable efforts to keep the registration statement of which this prospectus is a part continuously effective for not less than 120 days unless all securities registered under the registration statement of which this prospectus forms a part are earlier sold or unless the securities are no longer subject to the registration rights agreement.  This obligation is subject to customary suspension periods and other specified, permitted exceptions.  In these cases, we may suspend offers and sales of the securities pursuant to the registration statement of which this prospectus forms a part.

 

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