-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NoQP0HOYm2dC26I2FtwlgbcMCrg942czINquXVumGUAj/s/nTZwVrfiiLDoqsff8 cxlWJjEUxM311gwo7JLu1Q== /in/edgar/work/20000821/0000891836-00-000584/0000891836-00-000584.txt : 20000922 0000891836-00-000584.hdr.sgml : 20000922 ACCESSION NUMBER: 0000891836-00-000584 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 20000821 GROUP MEMBERS: HOWARD S. JONAS GROUP MEMBERS: IDT CORP GROUP MEMBERS: IDT INVESTMENTS INC. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: NET2PHONE INC CENTRAL INDEX KEY: 0001086472 STANDARD INDUSTRIAL CLASSIFICATION: [4813 ] IRS NUMBER: 223559037 STATE OF INCORPORATION: DE FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-56655 FILM NUMBER: 707229 BUSINESS ADDRESS: STREET 1: 171 MAIN STREET CITY: HACKENSACK STATE: NJ ZIP: 07601 BUSINESS PHONE: 2019282990 MAIL ADDRESS: STREET 1: 17 MAIN STREET CITY: HACKENSACK STATE: NJ ZIP: 07601 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: IDT CORP CENTRAL INDEX KEY: 0001005731 STANDARD INDUSTRIAL CLASSIFICATION: [7373 ] IRS NUMBER: 223415036 STATE OF INCORPORATION: DE FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 190 MAIN ST CITY: HACKENSACK STATE: NJ ZIP: 07601 BUSINESS PHONE: 2019281000 MAIL ADDRESS: STREET 1: 294 STATE STREET CITY: HACKENSACK STATE: NJ ZIP: 07601 SC 13D 1 0001.txt SCHEDULE 13D ----------------------------- OMB APPROVAL ----------------------------- OMB Number: 3235-0145 Expires: October 31, 2002 Estimated average burden hours per response....14.90 ----------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 NET2PHONE, INC. - -------------------------------------------------------------------------------- (Name of Issuer) COMMON STOCK, PAR VALUE $0.01 PER SHARE - -------------------------------------------------------------------------------- (Title of Class of Securities) 64108N10 ------------------------------------------------------------- (CUSIP Number) JOYCE J. MASON, ESQ. GENERAL COUNSEL AND SECRETARY IDT CORPORATION 520 BROAD STREET NEWARK, NEW JERSEY 07102 (201) 928-4484 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) AUGUST 11, 2000 ------------------------------------------------------------- (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 ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d- 1(g), check the following box [x]. NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See ss. 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. - ------------------ ------------------ CUSIP No. 64108N10 Page 2 of 11 Pages - ------------------ ------------------ ________________________________________________________________________________ 1 NAME OF REPORTING PERSONS. IDT INVESTMENTS INC. I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY). 88-0469107 ________________________________________________________________________________ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) (a) [_] (b) [x] ________________________________________________________________________________ 3 SEC USE ONLY ________________________________________________________________________________ 4 SOURCE OF FUNDS (SEE INSTRUCTIONS) N/A ________________________________________________________________________________ 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [_] ________________________________________________________________________________ 6 CITIZENSHIP OR PLACE OF ORGANIZATION Nevada ________________________________________________________________________________ 7 SOLE VOTING POWER 9,996,750 NUMBER OF SHARES _________________________________________________________________ BENEFICIALLY 8 SHARED VOTING POWER 28,896,750* OWNED BY See Items 4 and 6 EACH _________________________________________________________________ REPORTING 9 SOLE DISPOSITIVE POWER 9,996,750 PERSON WITH _________________________________________________________________ 10 SHARED DISPOSITIVE POWER 28,896,750* See Items 4 and 6 ________________________________________________________________________________ 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 28,896,750* ________________________________________________________________________________ 12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) [_] ________________________________________________________________________________ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 76.8%** ________________________________________________________________________________ 14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) CO ________________________________________________________________________________ * All of the subject shares, including such shares beneficially owned by ITelTech, LLC may be deemed to be beneficially owned, for the purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), by IDT Investments Inc. by virtue of the Voting Agreement (as defined herein) referred to in this statement on Schedule 13D. The filing of this Statement on Schedule 13D shall not be construed as an admission by IDT Investments Inc. that it is, for the purposes of Section 13(d) of the Exchange Act, the beneficial owner of the subject shares as to which it does not have sole voting and dispositive power. ** All the shares beneficially held by the Reporting Person are shares of Class A Common Stock, par value $0.01 per share, of the Issuer ("Class A Stock"). Each share of Class A Stock is convertible into one share of Common Stock, par value $0.01 per share, of the Issuer ("Common Stock") without consideration being paid therefor. Each share of Class A Stock has two votes per share and each share of Common Stock has one vote per share. - ------------------ ------------------ CUSIP No. 64108N10 Page 3 of 11 Pages - ------------------ ------------------ ________________________________________________________________________________ 1 NAME OF REPORTING PERSONS. IDT CORPORATION I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY). 22-3415036 ________________________________________________________________________________ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) (a) [_] (b) [x] ________________________________________________________________________________ 3 SEC USE ONLY ________________________________________________________________________________ 4 SOURCE OF FUNDS (SEE INSTRUCTIONS) N/A ________________________________________________________________________________ 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [_] ________________________________________________________________________________ 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware ________________________________________________________________________________ 7 SOLE VOTING POWER 9,996,750 NUMBER OF SHARES _________________________________________________________________ BENEFICIALLY 8 SHARED VOTING POWER 28,896,750* OWNED BY See Items 4 and 6 EACH _________________________________________________________________ REPORTING 9 SOLE DISPOSITIVE POWER 9,996,750 PERSON WITH _________________________________________________________________ 10 SHARED DISPOSITIVE POWER 28,896,750* See Items 4 and 6 ________________________________________________________________________________ 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 28,896,750* ________________________________________________________________________________ 12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) [_] ________________________________________________________________________________ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 76.8%** ________________________________________________________________________________ 14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) CO ________________________________________________________________________________ * All of the subject shares, including such shares beneficially owned by ITelTech, LLC may be deemed to be beneficially owned, for the purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), by IDT Corporation by virtue of the Voting Agreement (as defined herein) referred to in this statement on Schedule 13D. The filing of this Statement on Schedule 13D shall not be construed as an admission by IDT Corporation that it is, for the purposes of Section 13(d) of the Exchange Act, the beneficial owner of the subject shares as to which it does not have sole voting and dispositive power. ** All the shares beneficially held by the Reporting Person are shares of Class A Stock. Each share of Class A Stock is convertible into one share of Common Stock without consideration being paid therefor. Each share of Class A Stock has two votes per share and each share of Common Stock has one vote per share. - ------------------ ------------------ CUSIP No. 64108N10 Page 4 of 11 Pages - ------------------ ------------------ ________________________________________________________________________________ 1 NAME OF REPORTING PERSONS. HOWARD S. JONAS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY). ________________________________________________________________________________ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) (a) [_] (b) [x] ________________________________________________________________________________ 3 SEC USE ONLY ________________________________________________________________________________ 4 SOURCE OF FUNDS (SEE INSTRUCTIONS) N/A ________________________________________________________________________________ 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [_] ________________________________________________________________________________ 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States ________________________________________________________________________________ 7 SOLE VOTING POWER 9,996,750 NUMBER OF SHARES _________________________________________________________________ BENEFICIALLY 8 SHARED VOTING POWER 28,896,750* OWNED BY See Items 4 and 6 EACH _________________________________________________________________ REPORTING 9 SOLE DISPOSITIVE POWER 9,996,750 PERSON WITH _________________________________________________________________ 10 SHARED DISPOSITIVE POWER 28,896,750* See Items 4 and 6 ________________________________________________________________________________ 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 28,896,750* ________________________________________________________________________________ 12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) [_] ________________________________________________________________________________ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 76.8%** ________________________________________________________________________________ 14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) IN ________________________________________________________________________________ * All of the subject shares, including such shares beneficially owned by ITelTech, LLC may be deemed to be beneficially owned, for the purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), by Howard S. Jonas by virtue of the Voting Agreement (as defined herein) referred to in this statement on Schedule 13D. The filing of this Statement on Schedule 13D shall not be construed as an admission by Howard S. Jonas that he is, for the purposes of Section 13(d) of the Exchange Act, the beneficial owner of the subject shares as to which he does not have sole voting and dispositive power. ** All the shares beneficially held by the Reporting Person are shares of Class A Stock. Each share of Class A Stock is convertible into one share of Common Stock without consideration being paid therefor. Each share of Class A Stock has two votes per share and each share of Common Stock has one vote per share. ITEM 1. SECURITY AND ISSUER This statement relates to shares of Common Stock, par value $0.01 per share ("Common Stock"), of Net2Phone, Inc., a Delaware corporation ("Net2Phone"). The principal executive offices of Net2Phone are located at 171 Main Street, Hackensack, New Jersey 07601. ITEM 2. IDENTITY AND BACKGROUND (a)-(b) IDT Investments Inc. is a Nevada corporation ("IDT Investments"). IDT Investments is a holding company and a wholly owned subsidiary of IDT. The address of its principal office and principal place of business is 2325B Renaissance Drive, Las Vegas, Nevada 89119. IDT Corporation is a Delaware corporation ("IDT"), which provides telecommunications and Internet services to wholesale and retail customers. The address of its principal office and principal place of business is 520 Broad Street, Newark, New Jersey 07102. Howard S. Jonas is the Chief Executive Officer, Chairman of the Board of Directors and Treasurer of IDT. The address of his principal office and principal place of business is 520 Broad Street, Newark, New Jersey 07102. (c) The name, business address, and principal occupation of each executive officer and director of IDT Investments and IDT is set forth in Exhibits 1 and 2 hereto and incorporated herein by reference. (d) During the last five years, neither of the Reporting Persons, nor to the best of IDT Investments's knowledge, any of IDT Investments' directors or executive officers, nor to the best of IDT's knowledge, any of IDT's directors or executive officers has been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors). (e) During the last five years, neither of the Reporting Persons, nor to the best of IDT Investments' knowledge, any of IDT Investments' directors or executive officers, nor to the best of IDT's knowledge, any of IDT's directors or executive officers has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction resulting in a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws, or finding any violation with respect to such laws, and which judgment, decree or final order was not subsequently vacated. (f) To the best of IDT Investments' knowledge, each of the executive officers and directors of IDT Investments named in Exhibit 1 is a United States citizen. To the best of IDT's knowledge, each of the executive officers and directors of IDT named in Exhibit 2 is a United States citizen. Howard S. Jonas is a United States citizen. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION Not applicable. ITEM 4. PURPOSE OF TRANSACTION IDT Investments currently holds its interest in Net2Phone for investment purposes. Page 5 of 11 STOCK PURCHASE AGREEMENT AND SUBSCRIPTION AGREEMENT. On August 11, 2000, AT&T Corp. ("AT&T"), through a newly formed business entity, ITelTech, LLC, a Delaware limited liability Company ("ITelTech"), purchased (i) from Net2Phone four million newly-issued shares of Class A Stock at a price of $75 per share and (ii) from IDT Investments 14.9 million shares of Class A Stock at a price of $75 per share. Pursuant to the stock purchase agreement between AT&T, IDT and IDT Investments (the "Stock Purchase Agreement") and the subscription agreement between Net2Phone and AT&T (the "Subscription Agreement"), (i) Howard S. Jonas resigned from Net2Phone's Board of Directors and instead was appointed as an observer to Net2Phone's Board of Directors and (ii) two designees of AT&T, John Petrillo and Rick Roscitt, were elected to serve on Net2Phone's Board of Directors. AT&T has the right to designate one more member to serve on Net2Phone's Board of Directors. IDT Investments also granted ITelTech a right of first refusal to purchase its remaining shares of Class A Stock and an option to convert them into shares of Common Stock. Shares of Class A Stock have two votes per share, while shares of Common Stock have one vote per share. In addition, for a period of 18 months, if ITelTech buys shares of Class A Stock from another holder of shares of Class A Stock, IDT Investments has the option to cause ITelTech to purchase up to 5 million additional shares of its Class A Stock on the same terms and conditions. VOTING AGREEMENT. On August 11, 2000, in connection with the sale of shares of Class A Stock to ITelTech, IDT Investments and ITelTech entered into a voting agreement (the "Voting Agreement") pursuant to which IDT Investments and ITelTech agreed that until August 1, 2003 or such earlier time as IDT Investments ceases to own two million or more shares of Class A Stock or Common Stock, they will vote or cause to be voted all of their shares in favor of nominees to the Board of Directors of Net2Phone who are mutually acceptable to IDT Investments and ITelTech. The parties further agreed to vote or cause to be voted all of their shares consistent with the result of having two designees from IDT Investments reasonably acceptable to ITelTech on the Board of Directors of Net2Phone and three designees from ITelTech reasonably acceptable to IDT Investments on the Board of Directors of Net2Phone. In the event that they are unable to agree on acceptable nominees, they agreed to abstain from voting on such nominees as to which they are unable to agree. The parties also agreed to use their reasonable best efforts to assure that at least five members of the Board of Directors of Net2Phone will be members not employed by, providing material services for compensation to or otherwise affiliated with, IDT, IDT Investments, ITelTech or AT&T or any of their respective affiliates. This obligation terminates at such time as IDT Investments or ITelTech, as the case may be, becomes the beneficial owner of more than 85% or less than 15% of the voting power of Net2Phone. STOCKHOLDERS AGREEMENT. Pursuant to a stockholders agreement, dated May 13, 1999 (the "Stockholders Agreement"), IDT agreed to vote all of its shares of capital stock in Net2Phone in favor of the election of, and take all other actions necessary to cause the election of, a director nominated by SOFTBANK Technology Ventures IV, L.P. and a director nominated by GE Capital Equity Investments, Inc., in each case for as long as either entity holds a majority of the shares of Series A convertible preferred stock of Net2Phone originally purchased by them or the Class A Stock into which they were converted in August 1999. The descriptions of the Stock Purchase Agreement, Subscription Agreement, Voting Agreement and Stockholders Agreement throughout this Schedule 13D are qualified by reference to such Stock Purchase Agreement, Subscription Agreement, Voting Agreement and Stockholders Agreement, copies of which are filed as Exhibits 3, 4, 5 and 6 hereto and are incorporated herein by reference. Each of the Reporting Persons intends to continuously review their investment in Net2Phone, and may in the future determine, either alone or as part of a group (i) to acquire additional securities of Net2Phone, through open market purchases, private agreements or otherwise, (ii) to dispose of all or a portion of the securities of Net2Phone owned by it or (iii) to take any other available course of action, which could involve one or more of the types of transactions or have one or more of the results described in paragraphs (a) - (j) of Item 4 of Schedule Page 6 of 11 13D. Notwithstanding anything contained herein, each of the Reporting Persons specifically reserves the right to change its intention with respect to any or all of such matters. In reaching any decision as to its course of action (as well as to the specific elements thereof), each of the Reporting Persons currently expects that it would take into consideration a variety of factors, including, but not limited to, Net2Phone's business and prospects, other developments concerning Net2Phone and its businesses generally, other business opportunities available to the reporting Persons, developments with respect to the business of IDT, changes in law and government regulations, general economic conditions and money and stock market conditions, including the market price of the securities of Net2Phone. Other than the transactions described above, the Reporting Persons have no plans or proposals with respect to Net2Phone or its securities that relate to, or would result in, any of the transactions described in paragraphs (a) - (j) of Item 4 of Schedule 13D. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER (a) IDT Investments directly beneficially owns 9,996,750 shares of Class A Stock representing approximately 26.4% of the outstanding shares of the Class A Stock, approximately 16.8% of the total outstanding shares of Net2Phone and approximately 20.6% of the combined voting power of Net2Phone. Each share of Class A Stock is convertible into one share of Common Stock without consideration being paid therefor. IDT does not directly beneficially own any shares of Net2Phone. IDT Investments is a wholly- owned subsidiary of IDT. Howard S. Jonas does not directly beneficially own any shares of Net2Phone. As of August 18, 2000, Mr. Jonas beneficially owned 951,605 shares of Common Stock, par value $0.01 per share, of IDT and 9,934,692 shares of Class A Common Stock, par value $0.01 per share, of IDT, representing approximately 31.6% of the outstanding shares of IDT and approximately 54.3% of the combined voting power of IDT. The filing of this 13D shall not be construed as an admission by the Reporting Persons that they are, for purposes of Section 13(d) of the Exchange Act, the beneficial owner of shares of Net2Phone owned by other parties. (b) Subject to the Voting Agreement and the Stockholders Agreement, the Reporting Persons and ITelTech, LLC may be deemed to share the power to vote, or dispose of, the 9,996,750 shares of Class A Stock owned by IDT Investments as well as the 18,900,000 shares of Class A Stock owned by ITelTech, LLC, equaling an aggregate amount of 28,896,750 shares of Class A Stock and representing approximately 76.8% of the total outstanding shares of Class A stock, approximately 48.7% of the total outstanding shares of Net2Phone and approximately 59.4%% of the combined voting power of Net2Phone. By virtue of his ownership of shares of IDT, representing approximately 54.3% of the combined voting power of IDT, Mr. Jonas has the power to direct IDT's and IDT Investments' power to vote, or dispose of, the shares of Net2Phone owned by IDT Investments. (c) On June 7, 2000, IDT transferred 7,500 shares of Class A Stock to Jewish Communal Fund, without consideration being paid therefor. Page 7 of 11 On August 9, 2000, IDT transferred 24,896,750 shares of Class A Stock to IDT Investments in consideration for the issuance to IDT of 1,000 shares of Common Stock, par value $0.01 per share, of IDT Investments, representing all the outstanding capital stock of IDT Investments as of such date. On June 14, 2000, Steve Brown, Chief Financial Officer of IDT, sold 5,000 shares of Common Stock at a price of $36.795 per share, in the open market. Other than the transactions described in the preceding sentences, no transactions in the shares of Common Stock or Class A Stock have been effected by the Reporting Persons or, to the best of IDT Investments' knowledge, by any of the executive officers and directors of IDT Investments named in Exhibit 1, or, to the best of IDT's knowledge, by any of the executive officers and directors of IDT named in Exhibit 2 during the past 60 days. (d) None. (e) Not Applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER Except as described in this Item and in Item 4, none of the Reporting Persons has any contracts, arrangements, understandings, or relationship (legal or otherwise) with respect to any securities of Net2Phone. Pursuant to the Stock Purchase Agreement and Subscription Agreement, (i) Howard S. Jonas resigned from Net2Phone's Board of Directors and was appointed as an observer to Net2Phone's Board of Directors and (ii) two designees of AT&T, John Petrillo and Rick Roscitt, were elected to serve on Net2Phone's Board of Directors. AT&T has the right to designate one more member to serve on Net2Phone's Board of Directors. IDT Investments also granted to ITelTech a right of first refusal to purchase its remaining shares of Class A Stock and an option to require IDT to convert such remaining shares into shares of Common Stock. In addition, for a period of 18 months, if ITelTech buys shares of Class A Stock from another holder of shares of Class A Stock, IDT Investments has the option to cause ITelTech to purchase up to 5 million additional shares of its Class A Stock on the same terms and conditions. Pursuant to the Voting Agreement, IDT Investments and ITelTech agreed that until August 1, 2003 or such earlier time as IDT Investments ceases to own two million or more shares of Class A Stock or Common Stock, they will vote or cause to be voted all of their shares in favor of nominees to the Board of Directors of Net2Phone who are mutually acceptable to IDT Investments and ITelTech. The parties further agreed to vote or cause to be voted all of their shares consistent with the result of having two designees from IDT Investments reasonably acceptable to ITelTech on the Board of Directors of Net2Phone and three designees from ITelTech reasonably acceptable to IDT Investments on the Board of Directors of Net2Phone. In the event that they are unable to agree on acceptable nominees, they agreed to abstain from voting on such nominees as to which they are unable to agree. The parties also agreed to use their reasonable best efforts to assure that at least five members of the Board of Directors of Net2Phone will be members not employed by, providing material services for compensation to or otherwise affiliated with IDT, IDT Investments, ITelTech or AT&T or any of their respective affiliates. This obligation terminates at such time as IDT Investments or ITelTech, as the case may be, becomes the beneficial owner of more than 85% or less than 15% of the voting power of Net2Phone. Pursuant to a Stockholders Agreement, IDT agreed to vote all of its shares of Net2Phone in favor of the election of a director nominated by SOFTBANK Technology Ventures IV, L.P. and a director nominated by GE Capital Equity Investments, Inc., in each case for as long as either entity holds a majority of the shares of Series Page 8 of 11 A convertible preferred stock of Net2Phone originally purchased by them or Class A Stock into which they were converted. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS Exhibit 1 Name, business address and principal occupation of each executive officer and director of IDT Investments. Exhibit 2 Name, business address and principal occupation of each executive officer and director of IDT. Exhibit 3 Stock Purchase Agreement, dated as of August 11, 2000, by and between AT&T, IDT and IDT Investments. Exhibit 4 Subscription Agreement, dated as of August 11, 2000, by and between Net2Phone, Inc., a Delaware corporation, and AT&T Corp., a New York corporation. Exhibit 5 Voting Agreement, dated as of August 11, 2000, by and between ITelTech and IDT Investments. Exhibit 6 Stockholders Agreement, dated as of May 13, 1999, by and among IDT, Clifford M. Sobel, Net2Phone and the additional investors listed on Schedule A thereto. (Incorporated by reference to Form S-1/A of Net2Phone filed June 20, 1999.) Exhibit 7 Letter Agreement, dated as of March 28, 2000, between IDT and AT&T. (Incorporated by reference to Form 8-K of IDT filed March 31, 2000.) Exhibit 8 Letter Agreement, dated as of March 30, 2000, between IDT, AT&T and Net2Phone. (Incorporated by reference to Form 8-K of IDT filed March 31, 2000.) Exhibit 9 Joint Filing Agreement, dated as of August 21, 2000, between IDT Investments, IDT and Howard S. Jonas. Page 9 of 11 SIGNATURES 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: August 21, 2000 IDT INVESTMENTS INC. By: /s/ Howard Millendorf -------------------------------- Howard Millendorf President IDT CORPORATION By: /s/ Howard S. Jonas -------------------------------- Howard S. Jonas Chief Executive Officer and Chairman of the Board of Directors /s/ Howard S. Jonas ----------------------------------- Howard S. Jonas Page 10 of 11 EXHIBIT INDEX Exhibit No. Description Exhibit 1 Name, business address and principal occupation of each executive officer and director of IDT Investments. Exhibit 2 Name, business address and principal occupation of each executive officer and director of IDT. Exhibit 3 Stock Purchase Agreement, dated as of August 11, 2000, by and between AT&T, IDT and IDT Investments. Exhibit 4 Subscription Agreement, dated as of August 11, 2000, by and between Net2Phone, Inc., a Delaware corporation, and AT&T Corp., a New York corporation. Exhibit 5 Voting Agreement, dated as of August 11, 2000, by and between ITelTech and IDT Investments. Exhibit 6 Stockholders Agreement, dated as of May 13, 1999, by and among IDT, Clifford M. Sobel, Net2Phone and the additional investors listed on Schedule A thereto. (Incorporated by reference to Form S-1/A of Net2Phone filed June 20, 1999.) Exhibit 7 Letter Agreement, dated as of March 28, 2000, between IDT and AT&T. (Incorporated by reference to Form 8-K of IDT filed March 31, 2000.) Exhibit 8 Letter Agreement, dated as of March 30, 2000, between IDT, AT&T and Net2Phone. (Incorporated by reference to Form 8-K of IDT filed March 31, 2000.) Exhibit 9 Joint Filing Agreement, dated as of August 21, 2000, between IDT Investments, IDT and Howard S. Jonas. Page 11 of 11 EX-99.1 2 0002.txt DIRECTORS AND EXECUTIVE OFFICERS EXHIBIT 1 DIRECTORS AND EXECUTIVE OFFICERS OF IDT INVESTMENTS INC. AS OF AUGUST 18, 2000 The name, position, principal occupation and business address of each executive officer and director of IDT Investments is set forth below. Unless otherwise indicated, each occupation set forth opposite an executive officer's name refers to employment with IDT Investments.
Name Position Principal Occupation Business Address - ---- -------- -------------------- ---------------- Howard Millendorf President, Assistant President, Assistant c/o IDT Investments Inc. Secretary and Director Secretary and Director 2325B Renaissance Drive Las Vegas, Nevada 89119 Jonathan Levy Secretary, Treasurer and Secretary, Treasurer and c/o IDT Investments Inc. Director Director 2325B Renaissance Drive Las Vegas, Nevada 89119
EX-99.2 3 0003.txt DIRECTORS AND EXECUTIVE OFFICERS EXHIBIT 2 DIRECTORS AND EXECUTIVE OFFICERS OF IDT CORPORATION AS OF AUGUST 18, 2000 The name, position, principal occupation and business address of each executive officer and director of IDT is set forth below. Unless otherwise indicated, each occupation set forth opposite an executive officer's name refers to employment with IDT.
Name Position Principal Occupation Business Address - ---- -------- -------------------- ---------------- Howard S. Jonas Chief Executive Officer, Chief Executive Officer, c/o IDT Corporation Chairman of the Board Chairman of the Board 520 Broad Street and Treasurer and Treasurer Newark, NJ 07102 Hal Brecher Chief Operating Officer Chief Operating Officer c/o IDT Corporation and Director and Director 520 Broad Street Newark, NJ 07102 James A. Courter President and Vice President and Vice c/o IDT Corporation Chairman of the Board Chairman of the Board 520 Broad Street Newark, NJ 07102 Stephen R. Brown Chief Financial Officer Chief Financial Officer c/o IDT Corporation and Director and Director 520 Broad Street Newark, NJ 07102 Joyce J. Mason General Counsel, Senior General Counsel, Senior c/o IDT Corporation Vice President, Secretary Vice President, Secretary 520 Broad Street and Director and Director Newark, NJ 07102 Marc E. Knoller Senior Vice President and Senior Vice President and c/o IDT Corporation Director Director 520 Broad Street Newark, NJ 07102 Moshe Kaganoff Executive Vice President Executive Vice President c/o IDT Corporation of Strategic Planning and of Strategic Planning and 520 Broad Street Director Director Newark, NJ 07102 Geoffrey Rochwarger Executive Vice President Executive Vice President c/o IDT Corporation of Telecommunications of Telecommunications 520 Broad Street and Director and Director Newark, NJ 07102 Michael Fischberger Executive Vice President Executive Vice President c/o IDT Corporation of Domestic of Domestic 520 Broad Street Telecommunications and Telecommunications and Newark, NJ 07102 Internet Internet Morris Lichtenstein Executive Vice President Executive Vice President c/o IDT Corporation of Business Development of Business Development 520 Broad Street Newark, NJ 07102
Name Position Principal Occupation Business Address - ---- -------- -------------------- ---------------- Meyer A. Berman Director Sole Proprietor M.A. Berman Company 433 Plaza Real Suite 355 Boca Raton, FL 33432 J. Warren Blaker Director Professor of Physics Fairleigh Dickinson University 1000 River Road Teaneck, NJ 07666 Denis A. Bovin Director Vice Chairman - Bear Stearns Investment Banking 245 Park Avenue 28th Floor New York, NY 10017 Saul K. Fenster Director President of New Jersey New Jersey Institute of Institute of Technology Technology University Heights 323 Martin Luther King Blvd. Newark, NJ 07102 William A. Owens Director Vice Chairman and CEO Teledesic LLC 1445 120th NE Bellevue, WA 98005 William F. Weld Director Partner at McDermott, McDermott, Will & Will & Emery Emery 50 Rockefeller Plaza New York, NY 10020
EX-99.3 4 0004.txt STOCK PURCHASE AGREEMENT EXHIBIT 3 STOCK PURCHASE AGREEMENT by and between AT&T CORP., IDT CORPORATION and IDT INVESTMENTS INC. dated as of August 11, 2000 TABLE OF CONTENTS ----------------- Page ARTICLE I -- DEFINITIONS......................................................1 1.1 Definitions.........................................................1 ARTICLE II -- BUYER; SALE OF CLASS A STOCK; CLOSING...........................4 2.1 Buyer...............................................................4 2.2 Purchase and Sale...................................................4 2.3 Closing.............................................................4 ARTICLE III -- REPRESENTATIONS AND WARRANTIES OF IDT.........................................................4 3.1 Organization........................................................4 3.2 Authorization; No Conflicts.........................................5 3.3 Ownership of Stock..................................................5 3.4 Brokers or Finders..................................................6 3.5 HSR Act.............................................................6 ARTICLE IV -- REPRESENTATIONS AND WARRANTIES OF AT&T..........................6 4.1 Organization........................................................6 4.2 Authorization; No Conflicts.........................................6 4.3 Brokers or Finders..................................................7 4.4 HSR Act.............................................................7 4.5 No Registration of Shares...........................................7 4.6 Suitability of Investment...........................................7 ARTICLE V -- COVENANTS........................................................8 5.1 Governmental Inquiries..............................................8 5.2 Public Announcements................................................9 5.3 Taking of Necessary Action..........................................9 ARTICLE VI -- CERTAIN ADDITIONAL COVENANTS....................................9 6.1 Interests in Buyer..................................................9 6.2 Support of the Primary Issuance.....................................9 6.3 Right of First Refusal..............................................9 6.4 Conversion of Remaining Shares......................................10 6.5 Company Headquarters................................................11 6.6 Joint Venture.......................................................11 6.7 Tag-along Provisions................................................11 6.8 IDT Director........................................................11 6.9 Voting Agreement....................................................11 ARTICLE VII -- CONDITIONS.....................................................11 7.1 Conditions of Purchase..............................................11 7.2 Conditions of Sale..................................................13 -i- Page ---- ARTICLE VIII -- TERMINATION...................................................13 8.1 Termination.........................................................13 8.2 Effect of Termination...............................................14 ARTICLE IX -- MISCELLANEOUS...................................................14 9.1 Survival of Representations and Warranties..........................14 9.2 Notices.............................................................14 9.3 Entire Agreement; Amendment.........................................16 9.4 Counterparts........................................................16 9.5 Governing Law.......................................................16 9.6 Consent to Jurisdiction; Venue......................................16 9.7 Expenses............................................................17 9.8 Third-Party Beneficiaries...........................................17 9.9 Successors and Assigns..............................................17 9.10 Headings............................................................17 9.11 Interpretation; Absence of Presumption..............................17 9.12 Severability........................................................18 9.13 Specific Performance................................................18 9.14 No Consequential Damages............................................18 SCHEDULES: Schedule 3.2 Consents of IDT and IDT Investments Schedule 4.2 Consents of AT&T EXHIBITS: Exhibit A Form of Voting Agreement -ii- STOCK PURCHASE AGREEMENT This STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of August 11, 2000, by and among AT&T Corp., a New York corporation ("AT&T"), IDT Corporation, a Delaware corporation ("IDT") and IDT Investments Inc., a Nevada corporation and a wholly-owned subsidiary of IDT ("IDT Investments"). W I T N E S S E T H: WHEREAS, IDT Investments owns 24,896,750 shares of Class A Common Stock, par value $.01 ("Class A Stock"), of Net2Phone, Inc., a Delaware corporation (the "Company"); WHEREAS, the parties desire that IDT Investments sell and transfer to Buyer (as defined below) and Buyer purchase from IDT Investments 14,900,000 shares of Class A Stock (the "Purchase"); WHEREAS, AT&T, IDT and IDT Investments are entering into this Agreement to provide for the Purchase and to establish various rights and obligations in connection therewith; NOW, THEREFORE, in consideration of the premises and the representations, warranties, covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto hereby agree as follows: ARTICLE I DEFINITIONS 1.1 Definitions. As used in this Agreement, the following terms shall have the meanings set forth below: "Aggregate Purchase Price" shall have the meaning set forth in Section 6.3. "Amendments" shall mean the amendments to the Company's Amended and Restated Certificate of Incorporation (i) increasing the number of authorized shares of Class A Stock by 4,000,000 and (ii) increasing the maximum number of directors who may serve on the Board of Directors of the Company from 11 to 13. "Antitrust Division" shall have the meaning set forth in Section 5.1. "AT&T" shall have the meaning set forth in the preamble. "Business Day" shall mean any day other than a Saturday, Sunday or a legal holiday under the laws of the State of New York. "Buyer" shall have the meaning set forth in Section 2.1. "Closing" shall have the meaning set forth in Section 2.3(a). "Closing Date" shall have the meaning set forth in Section 2.3(b). "Class A Stock" shall have the meaning set forth in the recitals. "Common Shares" shall have the meaning set forth in Article Fourth of the Company's Amended and Restated Certificate of Incorporation. "Common Stock" shall mean the common stock, par value $.01 per share, of the Company. "Company" shall have the meaning set forth in the recitals. "Concert" shall mean Concert Communications Company, an unlimited liability company incorporated in England and Wales (a joint venture between AT&T and British Telecommunications, plc). "contract" shall mean any contract, agreement, indenture, note, bond, loan, instrument, lease, conditional sale agreement, purchase order, mortgage, deed of trust, license, permit, concession, grant, franchise, commitment, guarantee, other evidence of indebtedness or other binding arrangement, understanding or agreement, whether or not written. "damages" shall mean costs, losses, liabilities, damages, lawsuits, deficiencies, claims, taxes and expenses (whether or not arising out of third-party actions or governmental examinations, inspections or audits) actually suffered or sustained by the relevant party, including, without limitation, interest, penalties, reasonable attorneys' fees and all amounts paid in investigation, defense or settlement of any of the foregoing. "Dollars" shall mean dollars constituting legal tender for the payment of public and private debts in the United States of America. "FCC" shall mean the U.S. Federal Communications Commission. "FTC" shall mean the meaning set forth in Section 5.1. "Governmental Authority" shall mean any supranational, national, state, municipal or local government or any agency, authority, bureau, commission, department or similar body or instrumentality thereof, or any governmental court or tribunal, or any entity involved in international governance having jurisdiction over the Company, the Company's businesses or operations, IDT, IDT Investments, AT&T, Buyer and/or the Transactions. "Holder" shall mean any holder of (i) Class A Stock or (ii) a proxy to vote shares of Class A Stock (as set forth in Article Fourth, Section 3(e)(2) of the Company's Amended and Restated Certificate of Incorporation). "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder. -2- "IDT" shall have the meaning set forth in the preamble. "IDT Investments" shall have the meaning set forth in the preamble. "Laws" shall mean common law or other laws, statutes, rules, regulations, decrees, ordinances, orders and codes. "Liberty Media Group" shall mean the assets, liabilities and businesses of AT&T as represented collectively by the Series A Liberty Media Group Common Stock, par value $1.00 per share, of AT&T and the Series B Liberty Media Group Common Stock, par value $1.00 per share, of AT&T. "Notice Period" shall have the meaning set forth in Section 6.3. "Person" or "person" shall mean an individual, corporation, association, partnership, limited liability company, group (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended), joint venture, trust or unincorporated organization, other form of business or legal entity or a Governmental Entity. "Primary Issuance" shall mean the Company's issuance to Buyer of four million shares of Class A Stock for a price of $75 per share immediately prior to the Closing. "Purchase" shall have the meaning set forth in the recitals. "Purchase Price" shall mean $75 per share of Class A Stock or an aggregate of US$1,117,500,000. "Purchased Shares" shall have the meaning set forth in Section 2.3(a). "Remaining Shares" shall have the meaning set forth in Section 6.3. "Right of First Refusal" shall have the meaning set forth in Section 6.3. "Right of First Refusal Period" shall have the meaning set forth in Section 6.3. "SEC" shall mean the Securities and Exchange Commission. "Securities Act" shall mean the Securities Act of 1933, as amended. "Subscription Agreement" shall mean the Subscription Agreement, dated as of August 11, 2000, by and between AT&T and the Company. "Three-Party Letter Agreement" shall mean the Letter Agreement, dated March 30, 2000, by and among AT&T, IDT and the Company. "Transactions" shall have the meaning set forth in Section 3.2. "Two-Party Letter Agreement" shall mean the Letter Agreement, dated March 28, 2000, between AT&T and IDT. -3- "Voting Agreement" shall mean the Voting Agreement to be entered into prior to the Closing between Buyer and IDT Investments substantially in the form attached as Exhibit A to this Agreement. ARTICLE II BUYER; SALE OF CLASS A STOCK; CLOSING 2.1 Buyer. Pursuant to the terms of Section 9.9, AT&T may assign to a directly or indirectly majority-owned subsidiary its rights and obligations under this Agreement. Until such an assignment is effected, AT&T is the "Buyer" for all purposes of this Agreement. At the time of such assignment, such subsidiary shall become the "Buyer" for all purposes of this Agreement, it being understood that AT&T shall cause Buyer to perform all of Buyer's obligations under this Agreement and that AT&T is intended to be directly and fully liable for any breach of Buyer's obligations hereunder. 2.2 Purchase and Sale. At the Closing and subject to the terms and conditions set forth herein, IDT agrees to cause IDT Investments, and IDT Investments agrees, to sell, convey, assign, transfer and deliver to Buyer, and Buyer agrees to purchase and acquire from IDT and IDT Investments, 14,900,000 shares of Class A Stock in exchange for the Purchase Price as set forth in Section 2.3. At least two Business Days prior to the Closing Date, IDT Investments shall deliver to Buyer written wire transfer instructions designating the account or accounts to which the Purchase Price payable to IDT Investments at Closing shall be paid by Buyer. 2.3 Closing. (a) Payment and Delivery. On the terms and conditions of this Agreement, and in reliance upon the representations and warranties hereinafter set forth, at the closing of the Transactions (the "Closing"): (i) IDT Investments will deliver to Buyer a certificate representing 14,900,000 shares of Class A Stock to be purchased and sold (the "Purchased Shares"), duly endorsed in blank or accompanied by appropriate stock powers duly executed in blank, in proper form for transfer and (ii) Buyer will pay to IDT Investments the Purchase Price by wire transfer to the account or accounts designated by IDT Investments. (b) Location. Subject to the terms and conditions hereof, the Closing is being held simultaneously herewith (the "Closing Date") at the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, NY, 10019. ARTICLE III REPRESENTATIONS AND WARRANTIES OF IDT IDT represents and warrants to, and agrees with, AT&T as follows: 3.1 Organization. IDT is a corporation duly organized and validly existing and in good standing under the laws of Delaware. IDT has full power and authority to enter into this Agreement. IDT Investments is a corporation duly organized and validly existing and in -4- good standing under the laws of Nevada. IDT Investments has full power and authority to enter into this Agreement. 3.2 Authorization; No Conflicts. This Agreement has been duly authorized, executed and delivered by each of IDT and IDT Investments and constitutes a valid and binding obligation of each of IDT and IDT Investments, enforceable against each of IDT and IDT Investments in accordance with its terms subject to bankruptcy, insolvency, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. The execution and delivery of this Agreement by IDT and IDT Investments, and the performance of this Agreement and the covenants contained in this Agreement, and the consummation of the other transactions contemplated hereby (all of the actions, events and transactions set forth in this sentence and any of the agreements in connection with such actions, events and transactions being referred to herein collectively as the "Transactions") by IDT and IDT Investments will not (with or without the lapse of time or the giving of notice or both) conflict with, breach, violate or result in a breach or violation of, or cause any vesting, modification or acceleration of rights or obligations under, or constitute a default under, (i) any provision of the restated certificate of incorporation or by-laws of IDT, (ii) any provision of the articles of incorporation or by-laws of IDT Investments or (iii) any contract or any judgment, order, decree, statute, rule, regulation, arbitration award, or any other restriction of any kind or character, applicable to IDT or its, to IDT Investments or its, or to IDT's knowledge, based on information publicly available, the Company or its, respective properties other than any conflicts, violations, breaches, vestings, modifications, accelerations or defaults under this clause (iii) which, individually or in the aggregate, could not be reasonably likely to have a material adverse effect on the Company or the consummation of the Transactions. Each of IDT and IDT Investments has used its best efforts to obtain, or at the Closing Date will have used its best efforts to obtain, all consents from banks and other lenders in respect of indebtedness for borrowed money or on account of capital leases and other long-term indebtedness, and guarantees in respect thereof, of IDT and IDT Investments, and any other consents or waivers of third parties with respect to any contracts or other arrangements, required in connection with the execution and delivery of this Agreement by IDT and IDT Investments, and the performance of this Agreement by IDT and IDT Investments and the consummation of the Transactions. All such consents are set forth on Schedule 3.2. 3.3 Ownership of Stock. All of the shares of Class A Stock owned by IDT Investments are owned by IDT Investments free and clear of all liens, claims, charges, pledges, security interests, options or other encumbrances, other than the restrictions imposed by federal and state securities laws. Upon the consummation of the Transactions, Buyer will acquire title to such shares free and clear of all liens, claims, charges, pledges, security interests, options or other encumbrances (except for encumbrances for the benefit of the Buyer provided in accordance with this Agreement), other than the restrictions imposed by federal and state securities laws. The sale and purchase of the shares of Class A Stock owned by IDT Investments or the pledge, conveyance or transfer of Class A Stock owned by IDT Investments will not give rise to any preemptive rights, rights of first refusal, or similar rights on behalf of any person under any provision of any contract to which IDT or IDT Investments is party or by which any property of IDT or IDT Investments is bound other than the rights granted to IDT and IDT Investments pursuant to this Agreement and the Voting Agreement. -5- 3.4 Brokers or Finders. No agent, broker, finder, investment banker or other firm or person retained by IDT or IDT Investments is or will be entitled to any broker's or finder's fee or any other commission or similar fee in connection with the Transactions for which AT&T or any of its affiliates or the Company or any of its affiliates will be responsible. 3.5 HSR Act. IDT has completed and filed, or caused to be completed and filed, at its own cost and expense, any notification and report required to be filed under the HSR Act with respect to the transactions contemplated by this Agreement, has requested early termination of the waiting period imposed by the HSR Act and the waiting period has been terminated. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF AT&T AT&T represents and warrants to, and agrees with, IDT and IDT Investments as follows: 4.1 Organization. AT&T is a corporation duly organized and validly existing and in good standing under the laws of New York. AT&T has full power and authority to enter into this Agreement. AT&T has full power and authority to cause Buyer to (i) purchase the Purchased Shares and (ii) consummate the Transactions. On the Closing Date, Buyer shall (i) be duly organized and validly existing and in good standing under the laws of its state of formation and (ii) have the power and authority to enter into and perform this Agreement. 4.2 Authorization; No Conflicts. This Agreement has been duly authorized, executed, and delivered by AT&T and constitutes a valid and binding obligation of AT&T, enforceable against AT&T in accordance with its terms subject to bankruptcy, insolvency, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. The performance of the Transactions by AT&T will not (with or without the lapse of time or the giving of notice or both) conflict with, breach, violate or result in a breach or violation of, or cause any vesting, modification or acceleration of rights or obligations under, or constitute a default under, (i) any provision of the certificate of incorporation or bylaws of AT&T or (ii) any contract or any judgment, order, decree, statute, rule, regulation, arbitration award, or any other restriction of any kind or character, applicable to AT&T or its properties other than any conflicts, violations, breaches or defaults under this clause (ii) which, individually or in the aggregate, could not be reasonably likely to have a material adverse effect on the consummation of the Transactions. The performance of the Transactions by Buyer will not (with or without the lapse of time or the giving of notice or both) conflict with, breach, violate or result in a breach or violation of, or cause any vesting, modification or acceleration of rights or obligations under, or constitute a default under, (i) any provision of the limited liability company agreement or certificate of incorporation or bylaws of Buyer, as applicable, or (ii) any contract or any judgment, order, decree, statute, rule, regulation, arbitration award, or any other restriction of any kind or character, applicable to Buyer or its properties other than any conflicts, violations, breaches or defaults under this clause (ii) which, individually or in the aggregate, could not be reasonably likely to have a material adverse effect on the consummation of the Transactions. Each of AT&T and Buyer has used its best efforts to obtain, -6- or at the Closing Date will have used its best efforts to obtain, all consents from banks and other lenders in respect of indebtedness for borrowed money or on account of capital leases and other long-term indebtedness, and guarantees in respect thereof, of AT&T and Buyer, and any other consents or waivers of third parties with respect to any contracts or other arrangements, required in connection with the execution and delivery of this Agreement by AT&T and Buyer, and the performance of this Agreement by AT&T and Buyer and the consummation of the Transactions. All such consents are set forth on Schedule 4.2. 4.3 Brokers or Finders. No agent, broker, investment banker or other firm or person retained by AT&T or Buyer is or will be entitled to any broker's or finder's fee or any other commission or similar fee in connection with the Transactions for which IDT, IDT Investments or the Company or any of their affiliates will be responsible. 4.4 HSR Act. AT&T has completed or filed, or caused to be completed or filed, at its own cost and expense, any notification and report required to be filed under the HSR Act with respect to the transactions contemplated by this Agreement, has requested early termination of the waiting period imposed by the HSR Act and the waiting period has been terminated. 4.5 No Registration of Shares. AT&T is aware that the Purchased Shares have not been registered under the Securities Act, that such offer and sale are intended to be exempt from registration under the Securities Act and the rules promulgated thereunder by the SEC and that the Purchased Shares cannot be sold, assigned, transferred, or otherwise disposed of unless they are subsequently registered under the Securities Act or an exemption from such registration is available. AT&T is also aware that sales or transfers of the Purchased Shares are further restricted by state securities laws and the provisions of this Agreement and that the certificates for the Purchased Shares will bear appropriate legends restricting their transfer pursuant to applicable laws, and this Agreement. 4.6 Suitability of Investment. (a) Buyer is acquiring the Purchased Shares for its own account, for investment purposes only and not with a view to the resale or distribution thereof; (b) Buyer has not and will not, directly or indirectly, offer, sell, transfer, assign, exchange or otherwise dispose of all or any part of the Purchased Shares, except in accordance with applicable federal and state securities laws; (c) AT&T has such knowledge and experience in financial, business and tax matters that AT&T is capable, on Buyer's behalf, of evaluating the merits and risks relating to Buyer's investment in the Purchased Shares and making an investment decision with respect to the Company; (d) To the full satisfaction of AT&T, AT&T, on Buyer's behalf, has been given the opportunity to obtain information and documents relating to the Company and to ask questions of and receive answers from representatives of the Company concerning the Company and the investment in the Purchased Shares; -7- (e) Neither AT&T nor any of its affiliates has engaged in any activity that would be deemed a "general solicitation" under the provisions of Regulation D as promulgated under the Act; (f) AT&T has such knowledge and experience in financial or business matters that it can, and it has, on Buyer's behalf, adequately analyzed the risks of an investment in the Purchased Shares and it has determined the Purchased Shares are a suitable investment for Buyer and that Buyer is able at this time, and in the foreseeable future, to bear the economic risk of a total loss of its investment in the Company; (g) AT&T is aware that there are substantial risks incident to an investment in the Purchased Shares; and (h) Buyer will be an "accredited investor" within the meaning of Rule 501 of Regulation D promulgated under the Act as presently in effect and is either purchasing for its own account or for the account of another "accredited investor," and any accounts for which Buyer is acting are each able to bear the economic risks of this investment. If Buyer is subject to the Employee Retirement Income Security Act of 1974, as amended, and the regulations thereunder, and is acquiring the Purchased Shares as a fiduciary or agent for another investor's account, Buyer will have sole investment and voting discretion with respect to such account and will have full power to make the acknowledgments, representations and agreements contained herein on behalf of such account. ARTICLE V COVENANTS 5.1 Governmental Inquiries. AT&T, IDT and IDT Investments shall use their respective commercially reasonable efforts to respond, as promptly as reasonably practicable, to any inquiries received from the Federal Trade Commission (the "FTC") and the Antitrust Division of the Department of Justice (the "Antitrust Division") for additional information or documentation, and to respond, as promptly as reasonably practicable, to all inquiries and requests received from any other Governmental Authority in connection with antitrust matters. AT&T, IDT and IDT Investments shall use their respective commercially reasonable efforts to overcome any objections which may be raised by the FTC, the Antitrust Division or any other Governmental Authority having jurisdiction over antitrust matters. AT&T, IDT and IDT Investments shall (i) promptly notify the other party of any communication to that party from the FTC, the Antitrust Division, any state attorney general or any other Governmental Authority and, subject to applicable law, permit the other party to review in advance any proposed written communication to any of the foregoing; (ii) not agree to participate in any substantive meeting or discussion with any Governmental Authority in respect of any filings, investigation or inquiry concerning this Agreement or the transactions contemplated hereby unless it consults with the other party in advance and, to the extent permitted by such Governmental Authority, gives the other party the opportunity to attend and participate thereat; and (iii) furnish the other party with copies of all correspondence, filings, and communications (and memoranda setting forth the substance thereof) between them and their affiliates and their respective representatives on the one hand, and any Government Authority or members or their respective staffs on the other -8- hand, with respect to this Agreement and the transactions contemplated hereby. Notwithstanding the foregoing, no party shall be required to make any significant change in the operations or activities of the business (or any material assets employed therein) of such party or any of its affiliates if a party determines in good faith that such change would be materially adverse to the operations or activities of the business (or any material assets employed therein) of such party or any of its affiliates having significant assets, net worth or revenue. 5.2 Public Announcements. Subject to each party's disclosure obligations imposed by law, IDT, IDT Investments, AT&T and Buyer will cooperate with each other in the development and distribution of all news releases and other public information disclosures with respect to this Agreement and any of the Transactions. All notices to third parties, press releases and other publicity concerning the Transactions shall be jointly planned and coordinated by IDT, IDT Investments and AT&T. Neither of the parties hereto shall act unilaterally in this regard, except as may be required by law, without the prior written approval of the other party, which approval will not be unreasonably withheld. 5.3 Taking of Necessary Action. Each of the parties hereto agrees to use its best efforts promptly to take or cause to be taken all action and promptly to do or cause to be done all things necessary, proper or advisable under applicable Laws to consummate and make effective the Transactions. Without limiting the foregoing, AT&T, IDT and IDT Investments will, and AT&T will cause Buyer to, use their respective best efforts to make or cause to be made all filings and obtain all approvals and consents of Governmental Authorities necessary or, in the opinion of AT&T and IDT, advisable in order to permit the consummation of the Transactions. ARTICLE VI CERTAIN ADDITIONAL COVENANTS 6.1 Interests in Buyer. (a) Until August 1, 2003, provided that IDT Investments, directly or through any affiliate controlled by IDT, owns not less than one million Common Shares, Buyer shall not sell or transfer without IDT Investments' consent all or any portion of its shares of Class A Stock or Common Stock purchased pursuant to this Agreement. (b) AT&T shall retain, either directly or indirectly through their respective controlled affiliates and Liberty Media Group, a majority of the ownership and voting interests in Buyer, for a period of three years from the Closing Date. 6.2 Support of the Primary Issuance. Each of IDT and IDT Investments shall use its best efforts to cause the Primary Issuance to occur. 6.3 Right of First Refusal. The shares of Class A Stock currently owned by IDT Investments other than the Purchased Shares (the "Remaining Shares") shall be subject to a right of first refusal in favor of Buyer (the "Right of First Refusal") until August 1, 2003 (the "Right of First Refusal Period"). IDT Investments shall not transfer any of the Remaining Shares other than to an affiliate controlled by IDT during the Right of First Refusal Period unless -9- it shall have provided Buyer with notice in writing stating (1) that it has received a firm offer to purchase such shares, (2) the fair market value of the consideration proposed to be paid to IDT Investments in such transfer (the "Aggregate Purchase Price") (or, in the case of a proposed sale of shares in a transaction registered under the Securities Act or in accordance with Rule 144(f) thereunder, the Aggregate Purchase Price per share shall be equal to the lower of (i) the average daily closing price per share of the Company for the ten trading days prior to the date on which IDT Investments notifies Buyer in writing that it proposes to enter into a binding agreement within five days for the sale of such shares and (ii) such other purchase price as determined by IDT Investments), as well as the other terms thereof and (3) in the case of a proposed buyer who is also a Holder, the identity of the proposed buyer. In the event that the Aggregate Purchase Price of the Remaining Shares proposed to be sold by IDT Investments to a third party purchaser determined in accordance with clause (2) in the preceding sentence equals or exceeds $100,000,000, Buyer shall have 21 days from the date of such written notice (the "Notice Period") to advise IDT Investments whether it wishes to exercise the Right of First Refusal. If Buyer advises IDT Investments in writing that it wishes to exercise the Right of First Refusal, thereupon IDT Investments and Buyer will be deemed to have agreed to the sale to Buyer of such shares upon financial terms and conditions no less favorable to IDT Investments than those set forth in the notice, the closing thereon to occur as promptly as practicable following the receipt of all necessary regulatory approvals; provided, however, that if all necessary regulatory approvals are not obtained within 90 days from the date of the notice, the provisions in this Section 6.3 shall automatically terminate. If Buyer notifies IDT Investments in writing that it does not wish to purchase such shares, or such 21 day period elapses without any written notification by Buyer, then IDT Investments shall be free to dispose, or contract to dispose, of such shares upon terms and conditions no more favorable to a third party than those set forth in the notice for a period of 60 days; provided, however, (i) that if IDT Investments identified a Holder as the proposed buyer in its notice to Buyer, such shares shall only be sold to such Holder and (ii) that in the case of a proposed sale of shares in a transaction registered under the Securities Act or in accordance with Rule 144(f) thereunder, the sale of such shares for a price equal to the prevailing market price of such shares at the time of such sale shall not be considered a price, term or condition more favorable than the Aggregate Purchase Price set forth in the notice. If the aggregate purchase price of the Remaining Shares proposed to be sold by IDT Investments to a third party purchaser determined in accordance with clause (2) of the second sentence of this Section 6.3 is less than $100,000,000, the Notice Period shall be seven days from the date of written notice. Notwithstanding the foregoing, provided that the Closing has occurred, individual sales of not more than 100,000 shares of Class A Stock by IDT Investments, up to an aggregate of 2,000,000 shares of Class A Stock during the Right of First Refusal Period, shall not be subject to the provisions of this Section 6.3. 6.4 Conversion of Remaining Shares. IDT Investments shall convert such number of the Remaining Shares, which have not been previously sold by IDT Investments, into shares of Common Stock as requested by Buyer by written notice delivered not less than eight days prior to the date the shares are to be converted into shares of Common Stock upon the payment in cash to IDT Investments of an amount equal to 10% of the average daily closing price per share of Common Stock for the 20-trading day period ending on the day prior to the date of such notice of conversion in respect of each of the Remaining Shares requested to be converted, if so requested by Buyer, during the period ending August 1, 2003. -10- 6.5 Company Headquarters. AT&T, IDT and IDT Investments agree that they will support moving the headquarters of the Company to 520 Broad Street in Newark, New Jersey and the continued presence of the headquarters at such location for no less than 10 years, unless otherwise mutually agreed. 6.6 Joint Venture. AT&T and Buyer will support the formation of a joint venture between the Company and IDT for the development and sale of Internet telephony network equipment using the Company's Voice over Internet Protocol technology. 6.7 Tag-along Provisions. If at any time, and from time to time, prior to September 28, 2001 Buyer consummates an acquisition of shares of Class A Stock from other current Holders, Buyer will so notify IDT Investments in writing not later than two days after such acquisition, such notice to contain information regarding number of shares, price and other material terms of the transaction. IDT Investments then will have the option, exercisable within 30 days of its having received such written notice of such purchase, of notifying Buyer that it wishes to cause Buyer to purchase up to 5,000,000 shares of Class A Stock (or if Buyer has exercised its conversion rights under Section 6.4, then Common Stock) from it on the same terms and conditions as Buyer purchased shares of Class A Stock from such other Holder whereupon such purchase will be consummated as promptly as practicable following receipt of all required regulatory approvals. 6.8 IDT Director. Promptly after the Closing, IDT shall cause one of its designated members of the Board of Directors of the Company to resign, and AT&T shall nominate the replacement designee. 6.9 Voting Agreement. On or before the Closing Date, Buyer and IDT Investments shall enter into the Voting Agreement. AT&T shall cause Buyer to perform all of its obligations under the Voting Agreement and IDT shall cause IDT Investments to perform all of its obligations under the Voting Agreement. ARTICLE VII CONDITIONS 7.1 Conditions of Purchase. The obligation of Buyer to purchase and pay for the Purchased Shares at the Closing is subject to satisfaction or waiver of each of the following conditions precedent: (a) Representations and Warranties; Covenants. Each of the representations and warranties of IDT set forth in this Agreement that is qualified as to materiality or material adverse effect shall have been true and correct when made and shall be true and correct on and as of the Closing Date as if made on and as of such date (other than representations and warranties which address matters only as of a certain date which shall be true and correct as of such certain date), and each of the representations and warranties of IDT that is not so qualified shall have been true and correct in all material respects when made and shall be true and correct in all material respects on and as of the Closing Date as if made on and as of such date (other than representations and warranties which address matters only as of a certain date which shall be true -11- and correct in all material respects as of such certain date). Each of IDT and IDT Investments shall have performed in all material respects all obligations and complied with all agreements, undertakings, covenants and conditions required hereunder to be performed by IDT or IDT Investments at or prior to the Closing. IDT shall deliver to AT&T at the Closing a certificate in form and substance satisfactory to AT&T dated the Closing Date and signed by the president or a vice-president of IDT to the effects set forth above. (b) Primary Issuance. The Primary Issuance shall have occurred. (c) Board of Directors. The amendment to the Company's Amended and Restated Certificate of Incorporation increasing the maximum number of directors who may serve on the Board of Directors of the Company from 11 to 13 shall have become effective and the Board of Directors of the Company shall have elected two designees of Buyer to fill the vacancies created thereby, and one designee of Buyer to fill the vacancy created by the resignation of an IDT designee as contemplated by Section 6.8. (d) Injunctions. There shall be no injunctions making illegal or otherwise prohibiting the consummation of the Transactions. There shall be no suits, hearings, claims, actions or proceedings pending initiated by a Governmental Authority with respect to the Transactions. (e) Compliance with Applicable Laws. The purchase of and payment for the Purchased Shares on the terms and conditions herein shall not violate any applicable Law. (f) Regulatory Consents. All material consents, authorizations, orders and approvals of, and filings and registrations with, any Governmental Authority, required for or in connection with the execution and delivery of this Agreement and the consummation of the Transactions shall have been obtained or made. All filings required under the HSR Act shall have been made and the applicable waiting period shall have expired or been earlier terminated. (g) No Material Adverse Change. Since April 30, 2000, there shall not have been any material adverse change in the operations or business of the Company resulting from actions or inactions of the management of the Company; provided, however, that a change in the operations or business of the Company resulting from (i) actions or decisions not to act by management of the Company taken in good faith and with the appropriate degree of care, (ii) changes in general economic conditions, (iii) general changes in the industry in which the Company is engaged and (iv) general changes in technology shall not constitute a material adverse change for purposes of this Section 7.1(g). (h) Voting Agreement. The Voting Agreement shall have been executed. (i) SEC Filings. All reports and materials filed by the Company since April 30, 2000 with the SEC shall have been accurate and true in all material respects when made. (j) Intellectual Property. There are no infringements by the Company of any intellectual property rights of third parties that, individually or in the aggregate, have or could reasonably be expected to have a material adverse effect on the business of the Company. -12- 7.2 Conditions of Sale. The obligations of IDT and IDT Investments to sell the Purchased Shares at the Closing is subject to satisfaction or waiver of each of the following conditions precedent: (a) Representations and Warranties; Covenants. Each of the representations and warranties of AT&T set forth in this Agreement that is qualified as to materiality or material adverse effect shall have been true and correct when made and shall be true and correct on and as of the Closing Date as if made on and as of such date (other than representations and warranties which address matters only as of a certain date which shall be true and correct as of such certain date), and each of the representations and warranties of AT&T that is not so qualified shall have been true and correct in all material respects when made and shall be true and correct in all material respects on and as of the Closing Date as if made on and as of such date (other than representations and warranties which address matters only as of a certain date which shall be true and correct in all material respects as of such certain date). AT&T shall have performed, and caused Buyer to perform, in all material respects all obligations and complied with all agreements, undertakings, covenants and conditions required hereunder to be performed by AT&T at or prior to the Closing. AT&T shall deliver to IDT and IDT Investments at the Closing a certificate in form and substance satisfactory to IDT and IDT Investments dated the Closing Date and signed by the president or a vice-president of AT&T to the effects set forth above. (b) Injunctions. There shall be no injunctions making illegal or otherwise prohibiting the consummation of the Transactions. There shall be no suits, hearings, claims, actions or proceedings pending initiated by a Governmental Authority with respect to the Transactions. (c) Compliance with Applicable Laws. The sale of the Purchased Shares on the terms and conditions herein shall not violate any applicable Law. (d) Regulatory Consents. All material consents, authorizations, orders and approvals of, and filings and registrations with, any Governmental Authority, required for or in connection with the execution and delivery of this Agreement and the consummation of the Transactions shall have been obtained or made. All filings required under the HSR Act shall have been made and the applicable waiting period shall have expired or been earlier terminated. (e) Voting Agreement. The Voting Agreement shall have been executed. ARTICLE VIII TERMINATION 8.1 Termination. This Agreement may be terminated at any time prior to the Closing: (a) by mutual written consent of the parties hereto; (b) by IDT or AT&T in the event any Governmental Authority of competent jurisdiction shall have issued an order, decree, injunction, judgment or ruling or taken any other -13- action restraining, enjoining or otherwise prohibiting the Transactions and such order, decree, injunction, judgment or ruling or other action shall have become final and nonappealable; or (c) by AT&T, if IDT or IDT Investments breaches their obligation contained in Section 6.2; provided, that AT&T terminates the Agreement within five Business Days of such action. 8.2 Effect of Termination. In the event of the termination of this Agreement as provided in Section 8.1, this Agreement shall forthwith become void, and there shall be no liability or obligation on the part of the parties hereto, except for the obligations set forth in Sections 9.2, 9.3, 9.5, 9.6, 9.7, 9.8, 9.9, 9.13 and 9.14 and this Section 8.2; provided, however, that the foregoing shall not relieve any party of any liability for damages incurred as a result of any breach of this Agreement; and provided, further, that, in the absence of actual fraud, neither party shall be liable to the other for the inaccuracy of any representation made in this Agreement in the event of a termination. ARTICLE IX MISCELLANEOUS 9.1 Survival of Representations and Warranties. The representations and warranties contained herein shall expire at the Closing. 9.2 Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given, if delivered personally, by telecopier or sent by certified mail, return receipt requested, postage prepaid, or by a recognized air courier service, as follows: -14- If to IDT, to: IDT Corporation 520 Broad Street Newark, New Jersey 07102 Attention: Morris Lichtenstein, Executive Vice President, Business Development Fax Number: (201) 928-2885 With a copy to: Sullivan & Cromwell 125 Broad Street New York, New York 10004 Attention: Robert S. Risoleo, Esq. Fax number: (212) 558-3588 If to IDT Investments, to: IDT Investments Inc. 2325 B Renaissance Drive Las Vegas, Nevada 89119 Attention: Jonathan Levy, Secretary Fax Number: (702) 966-4247 With a copy to: Sullivan & Cromwell 125 Broad Street New York, New York 10004 Attention: Robert S. Risoleo, Esq. Fax number: (212) 558-3588 If to AT&T, to: AT&T Corp. 295 North Maple Avenue Basking Ridge, New Jersey 07920 Attention: Marilyn J. Wasser, Vice President-Law and Secretary Fax number: (908) 221-6618 -15- With a copy to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Attention: Seth A. Kaplan, Esq. Fax number: (212) 403-2000 or to such other address or addresses as shall be designated in writing. All notices shall be effective when received. 9.3 Entire Agreement; Amendment. Except for Sections 11, 11(a), 11(b) and 12 of the Two-Party Letter Agreement (and agreements effecting the provisions thereof), Sections 7 and 8 of the Three-Party Letter Agreement (and agreements effecting the provisions thereof), and the Option Agreement, dated as of March 3, 2000, between IDT and AT&T, this Agreement and the documents described herein or attached or delivered pursuant hereto set forth the entire agreement by the parties hereto with respect to the Transactions and supersedes all prior agreements, understandings and discussions between them and all documents delivered by or on behalf of the Company, AT&T, IDT or IDT Investments and their agents and representatives, with respect to such matter. Any provision of this Agreement may be amended or modified in whole or in part at any time by an agreement in writing by the parties hereto executed in the same manner as this Agreement. No failure on the part of any party to exercise, and no delay in exercising, any right shall operate as waiver thereof, nor shall any single or partial exercise by either party of any right preclude any other or future exercise thereof or the exercise of any other right. 9.4 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to constitute an original, but all of which together shall constitute one and the same document. 9.5 Governing Law. This Agreement shall be governed by, and interpreted in accordance with, the laws of the State of New York applicable to contracts made and to be performed in that State without regard to conflict of laws provisions thereof. 9.6 Consent to Jurisdiction; Venue. (a) Each party hereto hereby irrevocably submits to the exclusive jurisdiction of any state or federal court sitting in the City of New York in any action or proceeding arising out of or relating to this Agreement or any of the Transactions and hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such state court or, to the extent permitted by law, in such federal court. Each of the parties hereby irrevocably consents to the service of process in any such action or proceeding by the mailing by certified mail of copies of any service or copies of the summons and complaint and any other process to such party at the address specified in Section 9.2. -16- (b) The parties agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. (c) Nothing in this Section 9.6 shall affect the right of a party to serve legal process in any other manner permitted by law. 9.7 Expenses. Unless otherwise indicated herein and whether or not the Transactions are consummated, each of the parties hereto shall bear its own expenses in connection with the negotiation of this Agreement and consummation of the Transactions, including but not limited to, legal and accounting fees. 9.8 Third-Party Beneficiaries. Nothing in this Agreement, express or implied, is intended or shall be construed to create any third-party beneficiaries. AT&T agrees that the Company has no liability with respect to or which may arise out of the transactions contemplated in this Agreement. 9.9 Successors and Assigns. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other parties, which consent shall not be unreasonably withheld, and the attempted or purported assignment shall be void; provided, however, that AT&T may transfer its rights under this Agreement to a directly or indirectly majority-owned subsidiary without the consent of IDT or IDT Investments and IDT Investments may transfer its rights under this Agreement to a directly wholly-owned subsidiary of IDT without the consent of AT&T. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns. 9.10 Headings. The Section, Article and other headings contained in this Agreement are inserted for convenience of reference only and will not affect the meaning or interpretation of this Agreement. All references to Sections or Articles contained herein mean Sections or Articles of this Agreement unless otherwise stated. 9.11 Interpretation; Absence of Presumption. (a) For the purposes hereof, (i) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other gender as the context requires, (ii) the terms "hereof", "herein", and "herewith" and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, and Article, Section and paragraph references are to the Articles, Sections and paragraphs to this Agreement unless otherwise specified, (iii) the word "including" and words of similar import when used in this Agreement shall mean "including, without limitation," unless the context otherwise requires or unless otherwise specified and (iv) the word "or" shall not be exclusive. (b) This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted. -17- 9.12 Severability. Any provision hereof which is invalid or unenforceable shall be ineffective to the extent of such invalidity or unenforceability, without affecting in any way the remaining provisions hereof. 9.13 Specific Performance. The parties hereto each acknowledge that, in view of the uniqueness of arrangements contemplated by this Agreement, the parties hereto would not have an adequate remedy at law for money damages in the event that this Agreement were not performed in accordance with its terms, and therefore agree that the parties hereto shall be entitled to specific enforcement of the terms hereof in addition to any other remedy to which the parties hereto may be entitled at law or in equity. 9.14 No Consequential Damages. Except as prohibited by Law, each party waives any right it may have to claim or recover any special, exemplary, punitive or consequential damages, or any damages other than, or in addition to, actual damages. -18- IN WITNESS WHEREOF, this Agreement has been executed on behalf of the parties hereto by their respective duly authorized officers, all as of the date first above written. AT&T CORP. By: --------------------------------- Name: Title: IDT CORPORATION By: --------------------------------- Name: Title: IDT INVESTMENTS INC. By: --------------------------------- Name: Title: -19- EX-99.4 5 0005.txt SUBSCRIPTION AGREEMENT EXHIBIT 4 SUBSCRIPTION AGREEMENT ---------------------- SUBSCRIPTION AGREEMENT (this "Agreement"), dated as of August 11, 2000, among Net2Phone, Inc., a Delaware corporation (the "Company") and AT&T Corp., a New York corporation ("AT&T"). WHEREAS, AT&T has agreed to purchase (the "Purchase") 14,900,000 shares of Class A common stock, par value $.01, of the Company ("Class A Stock") pursuant to a Stock Purchase Agreement (the "Stock Purchase Agreement") by and between AT&T, IDT Corporation ("IDT") and IDT Investments Inc. ("IDT Investments"); WHEREAS, upon the terms and subject to the conditions of this Agreement, Buyer desires to purchase 4,000,000 shares of Class A Stock and the Company desires to sell 4,000,000 shares of Class A Stock to Buyer; NOW, THEREFORE, the Company and AT&T hereby agree as follows: 1. Subscription. ------------ 1.1. Subscription for Class A Stock. Upon the terms and subject to the conditions of this Agreement, the Company shall issue and sell and AT&T shall purchase from the Company 4,000,000 shares of Class A Stock (the "Buyer Shares") at a price of $75.00 per share. 1.2. Buyer. Pursuant to the terms of Section 9.2 hereof, AT&T may assign to a directly or indirectly majority-owned subsidiary its rights under this Agreement. Until such an assignment is effected, AT&T is the "Buyer" for all purposes of this Agreement. At the time of such assignment, such subsidiary shall become the "Buyer" for all purposes of this Agreement, it being understood that AT&T shall cause Buyer to perform all of Buyer's obligations under this Agreement and that AT&T is intended to be directly and fully liable for any breach of Buyer's obligations hereunder. 1.3. Issuance of Class A Stock; Execution of Additional Agreements. At the Closing: (a) Buyer will pay or tender to the Company cash in immediately available funds in the amount of $300,000,000 (the "Purchase Price"). (b) The Company shall issue and deliver to Buyer a share certificate or certificates representing the Buyer Shares acquired hereunder by Buyer, which certificate or certificates shall be registered in Buyer's name in the form of other certificates representing Class A Stock. (c) The Company and Buyer shall execute and deliver the Registration Rights Agreement relating to the Buyer Shares and any Class A Stock purchased from IDT Investments, substantially in the form attached as Exhibit A hereto (the "Registration Rights Agreement"). 1.4. Closing. The issuance and delivery of the Buyer Shares by the Company to Buyer and the delivery of the Purchase Price to the Company (the "Closing") is taking place simultaneously herewith at the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, NY 10019. 2. Representations, Warranties and Acknowledgments of AT&T. ------------------------------------------------------- AT&T hereby represents, warrants and acknowledges to the Company as follows: 2.1. No Registration of Shares. AT&T is aware that the Buyer Shares have not been registered under the Securities Act of 1933, as amended (the "Act"), that such offer and sale are intended to be exempt from registration under the Act and the rules promulgated thereunder by the Securities and Exchange Commission (the "SEC"), and that the Buyer Shares cannot be sold, assigned, transferred, or otherwise disposed of unless they are subsequently registered under the Act or an exemption from such registration is available. AT&T is also aware that sales or transfers of the Buyer Shares are further restricted by state securities laws and the provisions of this Agreement and that the certificates for the Buyer Shares will bear appropriate legends restricting their transfer pursuant to applicable laws, and this Agreement. 2.2. Suitability of Investment. (a) Buyer is acquiring the Buyer Shares for its own account, for investment purposes only and not with a view to the resale or distribution thereof; (b) Buyer has not and will not, directly or indirectly, offer, sell, transfer, assign, exchange or otherwise dispose of all or any part of the Buyer Shares, except in accordance with applicable federal and state securities laws; (c) AT&T has such knowledge and experience in financial, business and tax matters that AT&T is capable, on Buyer's behalf, of evaluating the merits and risks relating to Buyer's investment in the Buyer Shares and making an investment decision with respect to the Company; (d) To the full satisfaction of AT&T, AT&T, on Buyer's behalf, has been given the opportunity to obtain information and documents relating to the Company and to ask questions of and receive answers from representatives of the Company concerning the Company and the investment in the Buyer Shares; (e) Neither AT&T nor any of its affiliates has engaged in any activity that would be deemed a "general solicitation" under the provisions of Regulation D as promulgated under the Act; (f) AT&T has such knowledge and experience in financial or business matters that it can, and it has, on Buyer's behalf, adequately analyzed the risks of an investment in the Buyer Shares and it has determined the Buyer Shares are a suitable investment for Buyer and that Buyer is able at this time, and in the foreseeable future, to bear the economic risk of a total loss of its investment in the Company; -2- (g) AT&T is aware that there are substantial risks incident to an investment in the Buyer Shares; and (h) Buyer will be an "accredited investor" within the meaning of Rule 501 of Regulation D promulgated under the Act as presently in effect and is either purchasing for its own account or for the account of another "accredited investor," and any accounts for which Buyer is acting are each able to bear the economic risks of this investment. If Buyer is subject to ERISA, and is acquiring the Buyer Shares as a fiduciary or agent for another investor's account, Buyer will have sole investment and voting discretion with respect to such account and will have full power to make the acknowledgments, representations and agreements contained herein on behalf of such account. 2.3. Organization, Good Standing and Qualification. AT&T is a corporation duly organized, validly existing and in good standing under the laws of the State of New York. AT&T has the corporate power and authority to (i) enter into and perform this Agreement and (ii) cause Buyer to perform this Agreement. At or before the Closing, Buyer shall (i) be duly organized and validly existing and in good standing under the laws of its state of formation and (ii) have the power and authority to enter into and perform this Agreement. 2.4. Authorization. All action on the part of AT&T necessary for the authorization, execution and delivery of this Agreement and for the performance of all obligations of AT&T hereunder (other than formation of Buyer) has been taken. This Agreement has been duly executed and delivered by AT&T and constitutes a valid and legally binding obligation of AT&T, enforceable in accordance with its respective terms, subject to (i) the laws of bankruptcy and the laws affecting creditors' rights generally and (ii) the availability of equitable remedies. At or before the Closing, all actions on the part of Buyer necessary for the authorization and delivery of this Agreement and for the performance of all obligations of Buyer hereunder shall have been taken. 2.5. Compliance with Other Instruments. AT&T is not in violation of any provision of its Certificate of Incorporation or Bylaws, each as amended to date, or, to AT&T's knowledge, in violation or default of any provision of any instrument, judgment, order, writ, decree or contract to which it is a party or by which it is bound or any provision of federal or state statute, rule or regulation applicable to AT&T, which violation or default would have a material adverse effect on AT&T's ability to consummate the transactions contemplated hereby. As of the Closing, Buyer shall not be in violation of any provision of the limited liability company agreement of Buyer, or, to Buyer's knowledge, in violation or default of any provision of any instrument, judgment, order, writ, decree or contract to which it is a party or by which it is bound or any provision of federal or state statute, rule or regulation applicable to Buyer, which violation or default would have a material adverse effect on Buyer. The execution, delivery, and performance of and compliance with this Agreement and the purchase of the Class A Stock pursuant hereto will not, with or without the passage of time or giving of notice, result in any such material violation, or be in conflict with or constitute a default under any such term, or result in the creation of any mortgage, pledge, lien, encumbrance or charge upon any of the properties or assets of AT&T or Buyer or the suspension, revocation, impairment, forfeiture or nonrenewal of any permit, license, authorization or approval applicable to AT&T or Buyer, its business or operations or any of its assets or properties. -3- 2.6. No Other Agreements. Except for this Agreement, the Stock Purchase Agreement, the Voting Agreement, the letter agreement, dated March 28, 2000, between AT&T and IDT, the letter agreement dated March 30, 2000, by and among AT&T, IDT and the Company (the "Three Party Letter Agreement"), the Option Agreement, dated as of April 30, 2000, between IDT and AT&T, and any agreement or understanding specifically contemplated by those agreements and this Agreement, there is no other agreement or understanding by and between IDT and AT&T or their respective affiliates. Without limiting the generality of the foregoing, as of the date hereof AT&T has not entered into any agreement with any other direct shareholder (other than IDT and Buyer) of the Company. 2.7. HSR Act. AT&T has completed and filed, or caused to be completed and filed, at its own cost and expense, any notification and report required to be filed under the HSR Act with respect to the transactions contemplated by this Agreement, has requested early termination of the waiting period imposed by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act") and the waiting period has been terminated. 2.8. Capitalization. If AT&T assigns its rights hereunder to a new entity, the authorized and issued capital of Buyer shall be as set forth in the Limited Liability Company Agreement of Buyer. 2.9. Consents. Except as disclosed on Schedule 2.9 or as would not have a material adverse effect on AT&T or prevent or materially delay the consummation of the transactions described herein, to AT&T's knowledge, no consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, regional, state or local governmental authority or any third party on the part of AT&T is required in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby. 3. Representations, Warranties and Acknowledgments of the Company. Except as set forth on the Schedule of Exceptions attached hereto as Exhibit A, the Company hereby represents, warrants and acknowledges to AT&T as follows: 3.1. Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own and operate its assets and properties, to carry on its Internet telephony business and such other businesses as conducted by the Company (the "Business"), to execute and deliver this Agreement and to issue and sell the Buyer Shares pursuant to this Agreement. To the Company's knowledge, as of the date hereof the Company possesses all governmental and other permits, licenses and other authorizations to own its properties as now owned and to conduct its Business, except where the failure to possess such governmental and other permits, licenses and other authorizations would not have a material adverse effect on the business, assets, financial condition, results of operations or properties of the Company (a "Material Adverse Effect"). To the Company's knowledge, the Company is duly qualified to transact business and is in good standing in each jurisdiction wherein the properties owned or leased or the business transacted by the Company makes such qualification to do business as a foreign corporation necessary, except for such jurisdictions in which the failure to so qualify would not have a Material Adverse Effect. The Company has -4- duly caused to be elected John C. Petrillo and Richard R. Roscitt as members of the Board of Directors of the Company, effective as of the Closing. Howard S. Jonas has submitted his resignation from the Board of Directors of the Company, effective as of the Closing. 3.2. Capitalization. The authorized capital of the Company consists of: (a) Stock. As of August 9, 2000, (i) 6,850,000 shares of preferred stock, par value $.01 per share, none of which are validly issued and outstanding, (b) 200,000,000 shares of common stock, par value $.01 per share ("Common Stock"), of which 22,396,889 shares are validly issued and outstanding and (c) 33,916,750 shares of Class A Stock shares of which are authorized and validly issued and outstanding. (b) Options. Except as set forth on Schedule 3.2(b), as of July 31, 2000 there are not outstanding any options, warrants, subscriptions, rights (including conversion or preemptive rights or first refusal rights) or agreements for the purchase or acquisition from the Company of any shares of the Company's capital stock or securities convertible into its capital stock. Except as set forth on Schedule 3.2(b) hereof, no stock plan, stock purchase, stock option or other agreement or understanding between the Company and any holder of any equity securities or rights to purchase equity securities provides for acceleration or other changes in the vesting provisions or other terms of such agreement or understanding as the result of any merger, consolidated sale of stock or assets, change in control or any other transaction(s) by the Company. The Company is not a party or subject to any agreement or understanding, and, to the Company's knowledge, there is no agreement or understanding between any persons and/or entities, which affects or relates to the voting or giving of written consents with respect to any security or by a director of the Company. (c) Treasury Stock. The Company does not hold any shares of its capital stock in its treasury. 3.3. Subsidiaries. Except as set forth on Schedule 3.3, the Company does not own or control, directly or indirectly, any equity security or other interest of any other corporation, limited partnership or other business entity. 3.4. Authorization. All corporate action on the part of the Company and its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement and transactions contemplated hereby the performance of all obligations of the Company hereunder and the authorization, issuance and delivery of the Class A Stock being sold hereunder, have been taken or will be taken prior to the Closing, and this Agreement will be duly executed by the Company, and will constitute a valid and legally binding obligation of the Company, enforceable in accordance with its terms, subject to (i) the laws of bankruptcy and the laws affecting creditors' rights generally, and (ii) the availability of equitable remedies. 3.5. Valid Issuance of Class A Stock. (a) The Class A Stock, when issued, sold and delivered in accordance with the terms hereof for the consideration herein, will be duly and validly issued, fully paid and nonassessable and free of any liens or encumbrances, except such as may be created or -5- suffered by Buyer, will be in compliance with all applicable state and federal securities laws and will have the rights, preferences, privileges and limitations described in the Amended and Restated Certificate of Incorporation of the Company, attached as Exhibit B. As a result of the issuance contemplated herein, Buyer will become a "Holder" within the meaning of Article Fourth, Section (3)(e)(2) of the Company's Amended and Restated Certificate of Incorporation, with the effect that the shares of Class A Stock sold by IDT Investments under the Stock Purchase Agreement will not be converted by their terms into Common Stock, par value $.01 per share, of the Company. (b) Subject to the accuracy of and in reliance upon the representations in Section 2 hereof and the compliance with all applicable restrictions on transferability, the offer, sale and issuance of the Class A Stock by the Company in conformity with the terms of this Agreement constitute a transaction exempt from the registration requirements of Section 5 of the Act. Neither the Company nor any authorized agent acting on its behalf will take any action hereafter that would cause the loss of such exemptions. (c) The sole stock option and incentive plan of the Company is the Net2Phone, Inc. 1999 Amended and Restated Stock Option and Incentive Plan. 3.6. Consents. (a) Except as disclosed on Schedule 3.6(a) or as would not have a Material Adverse Effect or prevent or materially delay the consummation of the transactions described herein, to the Company's knowledge, no consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, regional, state or local governmental authority or any third party on the part of the Company is required in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby. (b) To the Company's knowledge, the Company is not in violation of any applicable statute, rule, regulation, order or restriction of any domestic or foreign government or any instrumentality or agency thereof in respect of the conduct of its Business or the ownership of its properties which violation would have a Material Adverse Effect. 3.7. Litigation. Except as set forth on Schedule 3.7 or as would not have a Material Adverse Effect or prevent or materially delay the consummation of the transactions described herein, to the Company's knowledge, there is no action, suit, claim, arbitration, proceeding or investigation pending or currently threatened against the Company or the Business, or against any officer, director or employee of the Company in connection with such officer's, director's or employee's relationship with, or actions taken on behalf of, the Company, nor is the Company aware of any event or circumstances that it expects to form the basis for such an action, suit, claim, proceeding or investigation. The Company is not a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality that would have a Material Adverse Effect or prevent or materially delay the consummation of the transactions described herein. -6- 3.8. Intellectual Property. (a) The Company hereby refers AT&T to Schedule 3.8(a) and the risk factors referenced in Schedule 3.8(a), which Schedule modifies all representations made in this Section 3.8. Except as set forth on Schedule 3.8(a), as of the date hereof the Company has no knowledge of any infringement by it of any third-party patents, trademarks, service marks, trade names, copyrights, trade secrets, information and other proprietary rights and processes necessary for the Business (collectively, the "Intellectual Property Rights"). Except as set forth on Schedule 3.8(a), as of the date hereof the Company has no knowledge of any obligation to make any payments by way of royalties, fees or otherwise to any owner or licensor of, or other claimant to, any patent, trademark, service mark, trade name, copyright, trade secret, information or other proprietary right, with respect to the use thereof, or in connection with the conduct of the Business or otherwise other than royalties, fees or other payments (i) that would not have a Material Adverse Effect, (ii) arising from the purchase of "off the shelf" or standard products, or (iii) that are paid or payable in connection with strategic relationships, partnering agreements, bundling agreements, web linking agreements, agency agreements, affiliation agreements or other similar business arrangements in the ordinary course of the Business (excluding any such arrangements or agreements entered into as part of the settlement of any potential or actual dispute or claim against the Company). Except as set forth on Schedule 3.8(a), the Company has no knowledge of any third party that is infringing upon or violating any of the Company's Intellectual Property Rights. The Company has no knowledge that it is necessary to utilize any inventions or trade secrets of any of its employees made prior to their employment by the Company, except for patented inventions or trade secrets that have been assigned to the Company. Since the Company's organization, reasonable security measures have been taken to protect the secrecy, confidentiality and value of the Company's trade secrets (except where the failure to do so would not have a Material Adverse Effect). The Company has a valuable body of trade secrets, including know-how, concepts, computer programs and other technical data (the "Proprietary Information") for the development, manufacture and sale of its products. To its knowledge, the Company has the right to use the Proprietary Information free and clear of any rights, liens, encumbrances or claims of others, except that the possibility exists that other persons may have independently developed trade secrets or technical information similar or identical to those of the Company. The Company has no knowledge of any misappropriation of its Proprietary Information. The Company has no knowledge that any of its employees is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would interfere with the use of his or her best efforts to promote the interests of the Company or that would conflict with the Company's business. (b) The Company has registered the URL addresses of the "net2phone.com" and "EZSurf.com" web sites (the "Web Sites") with the appropriate organizations, in accordance with customary industry practice. 3.9. Compliance with Other Instruments. The Company is not in violation of any provision of its Amended and Restated Certificate of Incorporation or Bylaws, each as -7- amended to date, or, to the Company's knowledge, in violation or default of any provision of any instrument, judgment, order, writ, decree or contract to which it is a party or by which it is bound, which violation or default would have a Material Adverse Effect. To the Company's knowledge and except as would not have a Material Adverse Effect or prevent or materially delay the consummation of the transactions described herein, the execution, delivery, and performance of and compliance with this Agreement and the issuance and sale of the Class A Stock pursuant hereto will not, with or without the passage of time or giving of notice, result in any such violation, or be in conflict with or constitute a default under any such term, or result in the creation of any material mortgage, pledge, lien, encumbrance or charge upon any of the properties or assets of the Company or the suspension, revocation, impairment, forfeiture or nonrenewal of any material permit, license, authorization or approval applicable to the Company, its business or operations or any of its assets or properties. 3.10. SEC Filings. All reports and materials filed by the Company with the SEC were accurate and true in all material respects as of the date such reports and materials were filed. 3.11. Financial Statements. The Company has delivered to AT&T its audited consolidated financial statements (balance sheet, statement of operations, statement of stockholders' deficit and statement of cash flows) for the fiscal years ended July 31, 1998 and July 31, 1999 (the "Balance Sheet Date"), its unaudited balance sheet as at April 30, 2000 and unaudited statements of income, cash flow and stockholders' equity for the six-month period ending on April 30, 2000 (the "Statement Date") (together, the "Financial Statements"). The Financial Statements are complete and correct in all material respects and have been prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods indicated. The balance sheets included in the Financial Statements accurately set forth and fairly present the financial condition and operating results of the Company as of the dates thereof and reflect all material liabilities, contingent or otherwise, of the Company as of such dates, and the statements of operations included in the Financial Statements accurately present the operating results of the Company during the periods indicated therein. Except as set forth in the Financial Statements, the Company has no material liabilities, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business subsequent to the Statement Date and (ii) obligations under contracts and commitments incurred in the ordinary course of business and not required under generally accepted accounting principles to be reflected in the Financial Statements, which, in both cases, individually or in the aggregate, are not material to the financial condition or operating results of the Company. Except as disclosed in the Financial Statements, the Company is not a guarantor or indemnitor of any indebtedness of any other person, firm or corporation. The Company maintains and will continue to maintain a standard system of accounting established and administered in accordance with generally accepted accounting principles. 3.12. Labor Agreements and Actions; Employees. The Company is not bound by or subject to any agreement with any labor union, and no labor union has requested or, to the Company's knowledge, has sought to represent any of the employees of the Company. There is no strike or other labor dispute involving the Company or the Business pending or, to the Company's knowledge, threatened, that would have a Material Adverse Effect. The Company is not aware of any labor organization activity involving the employees of the Company or -8- otherwise affecting the Business. To the Company's knowledge, no employee, officer or consultant of the Company is in violation of any material term of employment contract, patent disclosure agreement or any other contract or agreement, or any material judgment, decree or order of any court or administrative agency, relating to the relationship of any such employee, officer or consultant with the Company or any other party because of the nature of the Business; nor, to the Company's knowledge, has any such employee, officer, or consultant received written notice or communication of such a violation. Except as set forth on Schedule 3.12, the Company has no knowledge that any officer or Key Employee, or that any group of Key Employees, intends to terminate their employment with the Company or its Subsidiaries, nor does the Company have a present intention to terminate the employment of any of the foregoing. Subject to general principles related to wrongful termination of employees or other applicable laws, the employment of each officer and employee of the Company is terminable at the will of the Company. The carrying on of the Business by the employees of the Company will not, to the best of the Company's knowledge, conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any material contract, covenant or instrument under which any such employees are now obligated. No employee of the Company has been granted the right to continued employment by the Company or to any material compensation following termination of employment with the Company. For purposes of this Agreement, "Key Employee" shall mean each of Clifford M. Sobel, Howard S. Balter, Ilan Slasky and Glenn J. Williams. 3.13. Interested Party Transactions; Obligations to Related Parties. Except as disclosed on Schedule 3.13 hereto, to the Company's knowledge, there are no transactions required to be disclosed in the Company's Form 10-K for the year ended July 31, 2000 pursuant to Item 404 of the Regulation S-K promulgated under the Act. To the Company's knowledge, there are no obligations of the Company to officers, directors, stockholders, or employees of the Company other than for indemnification, payment of salary for services rendered, reimbursement for reasonable expenses incurred on behalf of the Company and for other standard employee benefits made generally available to all employees. 3.14. Tax Returns and Payments. The Company has timely filed all tax returns (federal, state and local) required to be filed by it the failure to file which would not have a Material Adverse Effect. All taxes shown to be due and payable on such returns, any assessments imposed, and to the Company's knowledge all other taxes due and payable by the Company on or before the Closing have been paid or will be paid prior to the time they become delinquent. The Company has not been advised (i) that any of its returns, federal, state or other, have been or are being audited as of the date hereof, or (ii) of any material deficiency in assessment or proposed judgment to its federal, state or other taxes. The Company has no knowledge of any material liability of any tax to be imposed upon its properties or assets that is not adequately provided for. The Company has not executed any waiver of any statute of limitations on the assessment or calculation of any tax or governmental charge. Except as would not have a Material Adverse Effect, the Company has withheld or collected from each payment made to each of its employees the amount of all taxes required to be withheld or collected therefrom. 3.15. Registration Rights. Except as set forth in Schedule 3.15, the Company is presently not under any obligation, and has not granted any rights, to register under the Act any -9- of the Company's presently outstanding securities or any of its securities that may hereafter be issued. 3.16. Changes. Except as (i) set forth in Schedule 3.16 or as disclosed in the reports and materials filed by the Company with the SEC or (ii) otherwise expressly contemplated by this Agreement, since the Balance Sheet Date, there has not been: (a) Any material adverse change in the Business or operations of the Company resulting from the actions or inactions of the management of the Company, excluding actions or decisions not to act taken in good faith and with the appropriate degree of care, and excluding changes in general economic conditions, general changes in the industry in which the Company is engaged and general changes in technology; (b) Any material change, except in the ordinary course of business, in the contingent obligations of the Company by way of guaranty, endorsement, indemnity, warranty or otherwise; (c) Any cancellation, compromise or waiver by the Company of a financial right or of a material debt owed to it; (d) Any satisfaction or discharge of any lien, claim or encumbrance or payment of any obligation by the Company, other than in the ordinary course of business and that individually or in the aggregate has had or is reasonably expected to have a Material Adverse Effect; (e) Any material change or amendment to a material contract or arrangement by which the Company or any of its assets or properties is bound or subject; (f) Any direct or indirect loans made by the Company to any stockholder, employee, officer or director of the Company, other than advances made in the ordinary course of business; (g) Any material change in any compensation arrangement or agreement with any employee, officer, director or stockholder; (h) Any declaration or payment of any dividend or other distribution of the assets of the Company or any purchase or redemption of any of its outstanding capital stock; (i) Any material sale, transfer or lease of the assets of the Company, except in the ordinary course of business; (j) Any physical damage, destruction or loss (whether or not covered by insurance) which individually or in the aggregate has had or is reasonably expected to have a Material Adverse Effect; (k) Any issuance or sale of any shares of the capital stock or other securities of the Company or grant of any options with respect thereto, or any modification of any -10- of the capital stock of the Company other than pursuant to the transactions contemplated hereby, the engagement letter with the Placement Agreement and the Sobel Agreement; (l) Any mortgage, pledge or lien incurred with respect to any of the assets of the Company having a value in excess of $50,000; (m) Any material agreement or commitment by the Company to do any of the things described in this Section 3.16. 3.17. D&O Insurance. The Company has obtained directors' and officers' liability insurance and such other policies of insurance approved from time to time by the Board of Directors, issued by insurers of recognized standing and responsibility, with such coverage and in such amounts as are customary in the case of companies of established reputation engaged in the same or similar business and similarly situated. 3.18. Material Agreements. (a) Set forth on Schedule 3.19(a) and in the reports and materials filed by the Company with SEC is a complete list of all agreements, contracts, leases, licenses, instruments and commitments (oral or written) to which the Company is a party or is bound that would be required to be filed with or incorporated by reference into the Company's Annual Report on Form 10-K for the year ended July 31, 2000 pursuant to Item 601 of Regulation S-K promulgated under the Act ("Material Agreements"). (b) To the Company's knowledge, the Company has not materially breached, nor does the Company have any knowledge of any claim that the Company has breached, any term or condition of (i) any Material Agreement, or (ii) any other agreement, contract, lease, license, instrument or commitment that, individually or in the aggregate, would have a Material Adverse Effect. Each Material Agreement is in full force and effect, and, to the Company's knowledge, no other party to such Material Agreement is in default thereunder. Except as set forth on Schedule 3.19(b), the Company is not a party to any agreement that materially restricts its ability to market or sell any of its products (whether by territorial restriction or otherwise). 3.19. Actions by the Board of Directors of the Company. The Board of Directors of the Company has adopted an amendment to the Company's Amended and Restated Certificate of Incorporation (i) increasing the number of authorized shares of Class A Stock by 4,000,000 and (ii) increasing the maximum number of directors that may serve on the Board of Directors of the Company from 11 to 13 (the "Amendment"). The Board of Directors of the Company has also (i) resolved to nominate AT&T's designees to the additional two seats on the Board of Directors and (ii) confirmed that the restrictions contained in Section 203 of the Delaware General Corporation Law shall not apply to any business combination between the Company and AT&T or Buyer. 4. Covenants. The Company and AT&T hereby covenant and agree as follows: --------- 4.1. Legal Fees and Expenses. Each of the Company and AT&T shall bear the fees and expenses of its counsel incurred in connection with the review and negotiation of this -11- Agreement, and all other documentation necessary to consummate the transactions contemplated hereby, and all fees and expenses of such counsel incurred in connection with its legal due diligence investigation of the Company and its business prospects, whether or not the transactions contemplated hereby are consummated. 4.2. Governmental Inquiries. AT&T and the Company shall use their respective commercially reasonable efforts to respond, as promptly as reasonably practicable, to any inquiries received from the Federal Trade Commission (the "FTC") and the Antitrust Division of the Department of Justice (the "Antitrust Division") for additional information or documentation, and to respond, as promptly as reasonably practicable, to all inquiries and requests received from any supranational, national, state, municipal or local government, any instrumentality, subdivision, court, administrative agency or commission or authority thereof, or any quasi-governmental or private body exercising any regulatory, taxing, importing or other governmental or quasi-governmental authority (a "Governmental Authority") in connection with antitrust matters. AT&T and the Company shall use their respective commercially reasonable efforts to overcome any objections which may be raised by the FTC, the Antitrust Division or any other Governmental Authority having jurisdiction over antitrust matters. AT&T and the Company shall (i) promptly notify the other party of any communication to that party from the FTC, the Antitrust Division, any state attorney general or any other Governmental Authority and, subject to applicable law, permit the other party to review in advance any proposed written communication to any of the foregoing; (ii) not agree to participate in any substantive meeting or discussion with any Governmental Authority in respect of any filings, investigation or inquiry concerning this Agreement or the transactions contemplated hereby unless it consults with the other party in advance and, to the extent permitted by such Governmental Authority, gives the other party the opportunity to attend and participate thereat; and (iii) furnish the other party with copies of all correspondence, filings, and communications (and memoranda setting forth the substance thereof) between them and their affiliates and their respective representatives on the one hand, and any Government Authority or members or their respective staffs on the other hand, with respect to this Agreement and the transactions contemplated hereby. Notwithstanding the foregoing, no party shall be required to make any significant change in the operations or activities of the business (or any material assets employed therein) of such party or any of its affiliates if a party determines in good faith that such change would be materially adverse to the operations or activities of the business (or any material assets employed therein) of such party or any of its affiliates having significant assets, net worth or revenue. 4.3. Transactions Between AT&T and the Company. Any contract or transaction, including a license, between AT&T or any of its affiliates and the Company involving the potential payment to or from the Company of more than $500,000, or any business combination between the Company, on the one hand, and IDT, AT&T or Buyer or any of its affiliates, on the other hand, shall be subject to the approval of a majority of the directors of the Company who are not employed by, providing material services for compensation to or otherwise affiliated with AT&T, IDT, Buyer or any member of Buyer or their affiliates (the "Independent Directors"); provided that the requirement for such approval shall cease to apply at such time as Buyer becomes the beneficial owner of more than 85% or less than 15% of the voting power of the Company; and provided further that the majority approval requirement of the Independent Directors shall not be required with respect to the granting of a license by the Company to AT&T which does not contain terms, conditions and pricing that are more favorable -12- to the licensee than those contained in a license granted to any other person, which license has been approved or ratified by a majority of the Independent Directors. 4.4. Taking of Necessary Action. Each of the parties hereto agrees to use its best efforts promptly to take or cause to be taken all action and promptly to do or cause to be done all things necessary, proper or advisable under applicable laws consummate and make effective the transactions contemplated hereby. Without limit the foregoing, AT&T and the Company will, and AT&T will cause Buyer to, use their respective best efforts to make or cause to be made all filings and obtain all approvals and consents of governmental authorities necessary or, in the opinion of AT&T and the Company, advisable in order to permit the consummation of the transactions contemplated hereunder. 4.5. Third Director. After the Closing, the Company shall duly cause to be elected to the Board of Directors of the Company a designee, as named by AT&T, as soon as reasonably practicable after such designee is named by AT&T. 5. Conditions of Buyer's Obligations at Closing. The obligations of Buyer to purchase and pay for the Buyer Shares at Closing are subject to satisfaction or waiver of each of the following conditions precedent: 5.1. Representations and Warranties; Covenants. Each of the representations and warranties of the Company set forth in this Agreement that is qualified as to materiality or Material Adverse Effect shall have been true and correct when made and shall be true and correct on and as of the Closing as if made on and as of such date (other than representations and warranties which address matters only as of a certain date which shall be true and correct as of such certain date), and each of the representations and warranties of the Company that is not so qualified shall have been true and correct in all material respects when made and shall be true and correct in all material respects on and as of the Closing as if made on and as of the such date (other than representations and warranties which address matters only as of a certain date which shall be true and correct in all material respects as of such certain date). The Company shall have performed in all material respects all obligations and complied with all agreements, undertakings, covenants and conditions required hereunder to be performed by the Company at or prior to the Closing. 5.2. Resolutions. The Company shall have delivered to AT&T a certified copy of the resolutions of the Board of Directors of the Company authorizing the transactions contemplated hereby. 5.3. Certificate. AT&T shall have received a certificate, dated as of the Closing, executed by an executive of the Company and stating that the conditions set forth in Section 5.1 above have been satisfied. 5.4. Force Majeure. Subsequent to the execution and delivery of this Agreement, there shall not have occurred any of the following: (i) a suspension of trading in securities generally on the Nasdaq National Market by the SEC, by such exchange or by any other regulatory body or governmental authority having jurisdiction, (ii) a declaration of a banking moratorium by federal or state authorities of the United States or (iii) an escalation of a -13- national emergency or war by the United States which, in any such case, would have a Material Adverse Effect. 5.5. Consents, Permits and Waivers. The Company shall have obtained any and all consents, permits and waivers necessary or appropriate for consummation of the transactions contemplated by the Agreement except for any such consents, permits or waivers that would not have a Material Adverse Effect or would prevent or materially delay the consummation of the transactions described herein. 5.6. Shareholder Approval of the Amendment. The Amendment shall have been filed with the Secretary of State of Delaware. 5.7. The Purchase. AT&T, IDT and IDT Investments shall be ready, willing and able to consummate the Purchase, it being understood that this condition will be deemed to have been satisfied if IDT did not consent in writing to the failure to consummate the Purchase and the failure to consummate the Purchase constituted a breach by AT&T of its obligations under the Stock Purchase Agreement without reference to Section 7.1(b) of the Stock Purchase Agreement. 6. Conditions of the Company's Obligations at Closing. The obligations of the Company to issue and sell the Buyer Shares to Buyer at the Closing are subject to satisfaction or waiver of each of the following conditions precedent: 6.1. Representations and Warranties; Covenants. Each of the representations and warranties of AT&T set forth in this Agreement that is qualified as to materiality or material adverse effect shall have been true and correct when made and shall be true and correct on and as of the Closing as if made on and as of such date (other than representations and warranties which address matters only as of a certain date which shall be true and correct as of such certain date), and each of the representations and warranties of AT&T that is not so qualified shall have been true and correct in all material respects when made and shall be true and correct in all material respects on and as of the Closing as if made on and as of the such date (other than representations and warranties which address matters only as of a certain date which shall be true and correct in all material respects as of such certain date). AT&T shall have performed in all material respects all obligations and complied with all agreements, undertakings, covenants and conditions required hereunder to be performed by AT&T at or prior to the Closing. 6.2. Other Agreements. The Registration Rights Agreement has been executed and delivered by the parties thereto. 6.3. Shareholder Approval of the Amendment. The Amendment shall have been filed with the Secretary of State of Delaware. 7. Transfer Limitations: 1933 Act Legend. Unless sold pursuant to an effective registration statement, each certificate representing Buyer Shares shall bear a legend substantially in the following form: "The shares represented by this certificate have not been registered under the United States Securities Act of 1933, as amended (the "Act"), and may not be offered, sold or -14- 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 the Company is obtained to the effect that such registration is not required and are subject to transfer restrictions as set forth in a Subscription Agreement, dated August 11, 2000, copies of which may be obtained from the Company." The foregoing legend, if necessary, shall be removed from the certificates representing any Class A Stock, at the request of the holder thereof, at such time as (i) they are sold pursuant to an effective registration statement, (ii) they become eligible for resale pursuant to Rule 144(k) under the Act or another provision of Rule 144 of the Act pursuant to which all or a portion of such underlying Common Shares could be sold in a single transaction, or (iii) an opinion of counsel reasonably satisfactory to the Company is obtained to the effect that the proposed transfer is exempt from the Act. The transfer agent for Common Shares will issue new Common Shares without the legend upon receipt of a certificate from AT&T or its affiliate stating that the Common Shares have been registered or transferred pursuant to an effective registration statement under the Act or can be sold in reliance upon Rule 144 or the Company has received an opinion of counsel reasonably satisfactory to the Company to the effect that the proposed transfer is exempt from the Act. 8. Term. ---- 8.1. Termination by AT&T or the Company. The Company or AT&T may terminate this Agreement if IDT, IDT Investments or AT&T terminates the Stock Purchase Agreement. 8.2. Effect of Termination. In the event of the termination of this Agreement as provided in Section 8.1 above, this Agreement shall forthwith become void and there shall be no liability or obligation on the part of the parties hereto, except for the obligations set forth in Sections 9.3, 9.6, 9.7, 9.9, 9.12 and 9.13; provided, however, that, subject to Section 9.12, the foregoing shall not relieve any party of any liability for damages incurred as a result of any breach of this Agreement; and provided further, that, in the absence of actual fraud, neither party shall be liable to the other for the inaccuracy of any representation made in this Agreement in the event of a termination. 9. Miscellaneous. ------------- 9.1. Survival of Covenants. The representations and warranties contained in Sections 2 and 3 hereof and all claims with respect thereto shall survive for one year from the date hereof and the covenants contained in Section 4 hereof shall survive indefinitely. 9.2. Successors and Assigns. This Agreement may not be assigned by AT&T or the Company without the prior written consent of the other party hereto; provided, however, that AT&T may transfer its rights under this Agreement to one majority-owned subsidiary without the consent of the Company. 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. -15- 9.3. Governing Law; Submission to Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflict of law provisions thereof. Each of the Company and AT&T hereby submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York State court sitting in New York City for purposes of all legal proceedings arising out of or relating to this Agreement and the transactions contemplated hereby. Each of the Company and AT&T irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. 9.4. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which together shall be deemed to constitute one and the same instrument. 9.5. 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. 9.6. Notices. Unless otherwise provided, any notice or other communication required or permitted to be given or effected under this Agreement shall be in writing and shall be deemed effective upon personal or facsimile delivery to the party to be notified or three business days after deposit with an internationally recognized courier service, delivery fees prepaid, and addressed to the party to be notified at the following respective addresses, or at such other addresses as may be designated by written notice; provided that any notice of change of address shall be deemed effective only upon receipt: If to the Company: Net2Phone, Inc. 171 Main Street Hackensack, NJ 07601 Attn: Glenn F. Williams, General Counsel Fax: (201) 530-4159 with a copy to: Kirkland & Ellis AON Center 200 East Randolph Drive Chicago, Illinois 60601 Attn: Richard W. Porter Fax: (312) 861-2200 If to AT&T: AT&T Corp. 295 North Maple Avenue Basking Ridge, New Jersey 07920 Attn: Marilyn J. Wasser, Vice President-Law and Secretary Fax: (908) 221-6618 -16- with a copy to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Attn: Seth A. Kaplan Fax: (212) 403-2000 9.7. Finder's Fee. Each of the Company, on the one hand, and AT&T, on the other hand, severally represents and warrants to the other party hereto that neither it nor any of its officers, directors, general partners, agents, employees or affiliates, has engaged or authorized any broker or finder to act, directly or indirectly, on its behalf, in connection with the transactions contemplated by this Agreement, or has consented to or acquiesced in anyone so acting, and it knows of no claim by any person for compensation from it for so acting or of any basis for such a claim. The provisions of this Section 9.7 shall survive any termination of this Agreement. Each party hereto further agrees to indemnify each other party for any claims, losses or expenses incurred by such other party as a result of the representation in this Section 9.7 being untrue. 9.8. Amendments and Waivers. Except as provided in Section 9.13, any term of this Agreement may be amended, and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of each of the Company and AT&T. Any amendment or waiver effected in accordance with this Section 9.8 shall be binding upon each holder of any Common Shares (as defined in Article Fourth of the Company's Amended and Restated Certificate of Incorporation) purchased under this Agreement at the time outstanding, each future holder of all such Common Shares (as defined in Article Fourth of the Company's Amended and Restated Certificate of Incorporation), and the other parties to this Agreement. 9.9. 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. 9.10. Entire Agreement. Except for Sections 7 and 8 of the Three-Party Letter Agreement (and the agreements entered into pursuant thereto), this Agreement (and the Exhibits hereto) constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements, understandings and discussions between them, and all documents delivered by or on behalf of the Company to AT&T and its agents and representatives, with respect to such subject matter. 9.11. Publicity. The parties hereto shall not issue, publish or disseminate or cause to be issued, published or disseminated any press release or public communication relating to this Agreement or any of the transactions contemplated herein or therein using the name or any trademark, logo, tradename, trade dress or other intellectual property or otherwise referring to AT&T or the Company or any affiliate or beneficial owner of AT&T or the Company as the case may be, without the prior written consent of such other party (which consent shall not be unreasonably withheld); provided, however, that either party may make, after reasonable -17- consultation with the other party, any disclosure or announcement of information it is obligated to make pursuant to applicable law or regulation, including any applicable law or regulation of the SEC, the New York Stock Exchange, the Nasdaq National Market, or any other national securities exchange or self-regulatory organization, as applicable. 9.12. Third-Party Beneficiaries. Nothing in this Agreement, express or implied, is intended or shall be construed to create any third-party beneficiaries. AT&T agrees that the Company has no liability with respect to or which may arise out of the Stock Purchase Agreement. 9.13. 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. 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 9.13 HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS SHALL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, SUPPLEMENTS OR MODIFICATIONS TO (OR ASSIGNMENTS OF) THIS AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL (WITHOUT A JURY) BY THE COURT. 9.14. Definition of "knowledge." For purposes of this Agreement, "knowledge" with respect to the Company or "the Company's knowledge" means the actual knowledge (after performing due inquiry) of the Key Employees as of the date hereof. -18- IN WITNESS WHEREOF, AT&T and the Company have executed this Agreement on the day and year first above written. NET2PHONE, INC. By: --------------------------------- Name: Title: AT&T CORP. --------------------------------- Name: Title: -19- EX-99.5 6 0006.txt VOTING AGREEMENT EXHIBIT 5 VOTING AGREEMENT This VOTING AGREEMENT (the "Agreement"), dated as of August 11, 2000, by and between ITelTech, LLC, a Delaware limited liability company ("Holdco"), and IDT Investments Inc., a Nevada corporation ("IDT Investments" and together with Holdco, the "Stockholders"). WHEREAS, AT&T Corp., a New York corporation ("AT&T"), IDT Corporation, a Delaware corporation ("IDT") and IDT Investments have entered into a Stock Purchase Agreement, dated as of August 11, 2000 (the "Stock Purchase Agreement"); WHEREAS, AT&T and Net2Phone, Inc., a Delaware corporation (the "Company") have entered into a Subscription Agreement, dated as of August 11, 2000 (the "Subscription Agreement"); WHEREAS, the Stockholders wish to enter into an agreement for the voting of all of the Common Shares (as defined below) of the Company "beneficially owned" (as such term is defined in the Securities Exchange Act of 1934, as amended) by each of them with respect to certain matters; NOW, THEREFORE, for good and valuable consideration, the receipt, sufficiency and adequacy of which is hereby acknowledged, the parties hereto agree as follows: 1. Representations of Stockholder. Each Stockholder represents that such Stockholder: (a) is the owner of that number of shares of Common Stock, par value $.01 per share of the Company (the "Common Stock") and that number of shares of Class A common stock, par value $.01 per share, of the Company (the "Class A Stock", and together with the Common Stock, the "Common Shares") set forth opposite such Stockholder's name on Exhibit A (such amount, the "Shares"); and (b) has the right, power and authority to execute and deliver this Agreement and to perform its obligations under this Agreement, and this Agreement has been duly executed and delivered by such Stockholder and constitutes a valid and legally binding agreement of such Stockholder, enforceable in accordance with its terms except as such validity, enforceability and binding effect may be limited by bankruptcy, insolvency, moratorium and other laws affecting creditors' rights generally and by equitable principles; and such execution, delivery and performance by such Stockholder of this Agreement will not (i) conflict with, require a consent, waiver or approval under, or result in a breach of or default under, any of the terms of any material contract, commitment or other obligation (written or oral) to which such Stockholder is a party or by which such Stockholder is bound; (ii) violate any order, writ, injunction, decree or statute, or any rule or regulation, applicable to Stockholder or any of the properties or assets of Stockholder the violation of which would reasonably be expected to have a material adverse effect upon the consummation of the transactions contemplated hereby; or (iii) result in the creation of, or impose any obligation on such Stockholder to create, any lien, charge or other encumbrance of any nature whatsoever upon the Shares. 2. Agreement to Vote Shares. (a) Until August 1, 2003 or such earlier time as IDT Investments ceases to own two million or more Common Shares, the Stockholders agree that they will vote or cause to be voted all of their Shares in favor of nominees to the Board of Directors of the Company who are mutually acceptable to both Stockholders, at every meeting of the stockholders at which such matters are considered and at every adjournment thereof, it being further agreed that the Stockholders will vote or cause to be voted all of their Shares consistent with the result of having two designees from IDT Investments reasonably acceptable to Holdco on the Board of Directors of the Company and three designees from Holdco reasonably acceptable to IDT Investments on the Board of Directors of the Company. In the event that the Stockholders are unable to agree on acceptable nominees, the Stockholders and the Company agree that the Stockholders will be duly counted, and will take such action as necessary to be duly counted, as present for purposes of determining that a quorum is present at the stockholders meeting and the Stockholders agree that they will abstain from voting on such nominees as to which the Stockholders are unable to agree. (b) The Stockholders agree that they shall use their reasonable best efforts to assure that at least five members of the Board of Directors of the Company will be members not employed by, providing material services for compensation to or otherwise affiliated with the Stockholders or AT&T or any of their respective affiliates. The obligations of IDT Investments or Holdco, as the case may be, under this Section 2(b) shall terminate at such time as IDT Investments or Holdco, as the case may be, becomes the beneficial owner of more than 85% or less than 15% of the voting power of the Company. 3. Termination. This Agreement shall terminate with respect to the parties upon the earlier to occur of (i) the mutual consent of all of the parties or (ii) with respect to each provision of this Agreement, in accordance with its terms. 4. Additional Purchases. Each Stockholder agrees that in the event (a) of any stock dividend, stock split, recapitalization, reclassification, combination or exchange of shares of capital stock of the Company on, of or affecting the Shares of such Stockholder, (b) such Stockholder purchases or otherwise acquires after the execution of this Agreement (including by conversion) beneficial ownership of any shares of Common Stock or Class A Stock after the execution of this Agreement (including by conversion), or (c) such Stockholder voluntarily acquires the right to vote or share in the voting of any shares of Common Stock or Class A Stock other than the Shares, any additional Common Shares acquired or purchased by him shall be subject to the terms of this Agreement and shall constitute Shares to the same extent as if they were owned by such Stockholder on the date hereof. Each Stockholder agrees to promptly notify the other Stockholder upon any change in beneficial ownership of any shares of Common Stock or Class A Stock as provided above. 5. Specific Performance. The parties hereto each acknowledge that, in view of the uniqueness of arrangements contemplated by this Agreement, the parties hereto would not -2- have an adequate remedy at law for money damages in the event that this Agreement were not performed in accordance with its terms, and therefore agree that the parties hereto shall be entitled to specific performance of the terms hereof in addition to any other remedy to which the parties hereto may be entitled at law or in equity. 6. Heirs, Successors and Assigns. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other parties, which consent shall not be unreasonably withheld, and the attempted or purported assignment shall be void. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns. 7. Entire Agreement; Amendment; Waiver; Third Party Beneficiaries. This Agreement supersedes all prior agreements, written or oral, among the parties hereto with respect to the subject matter hereof and contains the entire agreement among the parties with respect to the subject matter hereof. This Agreement may not be amended, supplemented or modified, and no provisions hereof may be modified or waived, except by an instrument in writing signed by all the parties hereto. No waiver of any provisions hereof by any party shall be deemed a waiver of any other provisions hereof by any such party, nor shall any such waiver be deemed a continuing waiver of any provision hereof by such party. This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by any reason of this Agreement, other than Sections 2(a) and (b) (which are intended also to be for the benefit of the Company, may be enforced by the Company in accordance with the terms and conditions of this Agreement and which may not be amended without the Company's consent). 8. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given, if delivered personally, by telecopier or sent by certified mail, return receipt requested, postage prepaid, or by a recognized air courier service, as follows: If to IDT Investments, to: IDT Investments Inc. 2325 B Renaissance Drive Las Vegas, Nevada 89119 Attention: Jonathan Levy, Treasurer Fax Number: (702) 966-4247 With a copy to: Sullivan & Cromwell 125 Broad Street New York, New York 10004 Attention: Robert S. Risoleo, Esq. Fax number: (212) 558-3588 -3- If to Holdco, to: Attention: Fax number: With a copy to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Attention: Seth A. Kaplan, Esq. Fax number: (212) 403-2000 or to such other address or addresses as shall be designated in writing. All notices shall be effective when received. 9. Miscellaneous. (a) This Agreement may be executed in two counterparts, each of which shall be deemed to constitute an original, but all of which together shall constitute one and the same document. (b) This Agreement shall be governed by, and interpreted in accordance with, the laws of the State of New York applicable to contracts made and to be performed in that State without regard to conflict of laws provisions thereof. (c) (i) Each party hereto hereby irrevocably submits to the exclusive jurisdiction of any state of federal court sitting in the City of New York in any action or proceeding arising out of or relating to this Agreement and hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such state court or, to the extent permitted by law, in such federal court. Each of the parties hereby irrevocably consents to the service of process in any such action or proceeding by the mailing by certified mail of copies of any service or copies of the summons and complaint and any other process to such party at the address specified in Section 9. (ii) The parties agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. (iii) Nothing in this Section 9(c) shall affect the right of a party to serve legal process in any other manner permitted by law. (d) Unless otherwise indicated herein, each of the parties hereto shall bear its own expenses in connection with the negotiation of this Agreement, including but not limited to, legal and accounting fees. -4- (e) The Section and other headings contained in this Agreement are inserted for convenience of reference only and will not affect the meaning or interpretation of this Agreement. All references to Sections contained herein mean Sections of this Agreement unless otherwise stated. (f) (i) For the purposes hereof, (v) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other gender as the context requires, (w) the terms "hereof", "herein", and "herewith" and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement unless otherwise specified, (x) the word "including" and words of similar import when used in this Agreement shall mean "including, without limitation," unless the context otherwise requires or unless otherwise specified, (y) the word "or" shall not be exclusive and (z) provisions shall apply, when appropriate, to successive events and transactions. (ii) This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted. (g) Any provision hereof which is invalid or unenforceable shall be ineffective to the extent of such invalidity or unenforceability, without affecting in any way the remaining provisions hereof. (h) Except as prohibited by law, each party waives any right it may have to claim or recover any special, exemplary, punitive or consequential damages, or any damages other than, or in addition to, actual damages. -5- IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first written above. ITELTECH, LLC By: --------------------------------- Name: Title: IDT INVESTMENTS INC. By: --------------------------------- Name: Title: Exhibit A STOCK OWNERSHIP Number of Number of Shares of Shares of Type of Name Common Stock Class A Stock Ownership - ---- ------------ ------------- --------- IDT Investments Inc. --- 9,996,750 Direct [ITelTech, LLC] --- 14,900,000 Direct EX-99.9 7 0007.txt JOINT FILING AGREEMENT EXHIBIT 9 JOINT FILING AGREEMENT, DATED AS OF AUGUST 21, 2000 In accordance with Rule 13d-1(k)(1) under the Securities Exchange Act of 1934, as amended, the undersigned hereby agree to the joint filing of IDT Investments Inc., IDT Corporation and Howard S. Jonas on behalf of each of them of a statement on Schedule 13D (including amendments thereto) with respect to shares of Common Stock, par value $0.01 per share, of Net2Phone, Inc., and that this Agreement be included as an Exhibit to such joint filing. This Agreement may be executed in any number of counterparts all of which taken together shall constitute one and the same instrument. IN WITNESS WHEREOF, the undersigned hereby execute this Agreement this 21st day of August 2000. IDT INVESTMENTS INC. By: /s/ Howard Millendorf -------------------------------- Howard Millendorf President IDT CORPORATION By: /s/ Howard S. Jonas -------------------------------- Howard S. Jonas Chief Executive Officer and Chairman of the Board of Directors /s/ Howard S. Jonas ------------------------------------ Howard S. Jonas -----END PRIVACY-ENHANCED MESSAGE-----