Registration Rights Agreement - Net2Phone Inc. and ITelTech LLC
Registration Rights Agreement
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of August 11,
2000, by and between Net2Phone, Inc., a Delaware corporation (the "Company"),
and ITelTech, LLC, a Delaware limited liability company (the "Investor").
WHEREAS, the Company will issue and sell to the Investors 4,000,000 shares
of Class A Common Stock of the Company, par value $0.01 per share (the "Class A
Stock"), pursuant to the Subscription Agreement (the "Subscription Agreement"),
dated as of August 11, 2000, between the Company and AT&T Corp., a New York
corporation;
WHEREAS, IDT Investors Inc., a Nevada corporation ("IDT Investments") has
agreed to sell to the Investor 14,900,000 shares of Class A Stock, pursuant to
the Purchase Agreement, dated as of August 11, 2000, between IDT Corporation, a
Delaware corporation, IDT Investments and AT&T (the "Purchase Agreement");
WHEREAS, the Company has agreed to grant the registration rights set forth
herein.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Definitions. For the purposes of this Agreement:
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(a) The term "Affiliate" means, with respect to any person or entity, any
other person or entity directly or indirectly controlling, controlled by or
under common control with the first such person or entity.
(b) The term "current market value" means the average closing sale price
per share of Common Stock, par value $0.01 per share, of the Company ("Common
Stock"), on the NASDAQ National Market over the 10 trading days prior to the
date of determination.
(c) The term "Holder" means a holder of Registrable Securities.
(d) The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act of 1933, as amended (the "Act"), and the
declaration or ordering of effectiveness of such registration statement.
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(e) The term "Registrable Securities" means the shares of Class A Common
Stock issued to the Investor pursuant to the Subscription Agreement and the
shares of Class A Stock purchased by the Investor pursuant to the Purchase
Agreement (collectively, the "Securities") as the same may exist, from time to
time; provided, however, that such Securities shall cease to be Registrable
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Securities when and to the extent that (i) such Securities have been sold
pursuant to an effective registration statement under the Act, (ii) such
Securities have become eligible for resale pursuant to Rule 144(k) of the Act
(or any similar provision then in force) or another provision of Rule 144 of the
Act pursuant to which all of such Securities are immediately eligible for resale
or (iii) such Securities have ceased to be outstanding.
Section 2. Registration Rights.
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2.1. (a) Registration Upon Demand.
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(i) For a period of three years after August 1, 2003, one or more Holders
that in the aggregate beneficially own at least 50% of the Registrable
Securities may make a demand that the Company effect the registration of all or
part of such Holders' Registrable Securities (a "Demand Registration"). Upon
receipt of a valid request for a Demand Registration, the Company shall
promptly, and in any event no later than 15 days after such receipt, notify all
other Holders of the making of such demand and shall use its best efforts to
register under the Act as expeditiously as may be practicable the Registrable
Securities that Holders have requested the Company to register in accordance
with this Section 2.1. Notwithstanding the foregoing, the Company shall not be
required to effect any registration if the Registrable Securities that the
Company shall have been requested to register shall, in the aggregate, have a
current market value of less than $5,000,000. The Holders shall have the right
to one Demand Registration pursuant to this Section 2.1(a)(i). Notwithstanding
Section 2.1(a)(ii), if any registration demand is made by Holders beneficially
owning 50% or more of the Registrable Securities, and no Demand Registration has
been made prior to such time, then such registration demand shall be treated for
purposes of this Agreement as a Demand Registration, regardless of the
registration form used (including Form S-3).
(ii) Notwithstanding Section 2.1(a)(i) hereof, and in addition to the
rights granted under Section 2.1(a)(i) hereof, at any time after the Company
becomes eligible to register its securities on Form S-3 (or any successor form),
one or more holders that in the aggregate beneficially own at least 20% of the
Registrable Securities may make a demand that the Company effect the
registration of all or part of such Holders' Registrable Securities
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(an "S-3 Demand Registration"). Upon receipt of a valid request for an S-3
Demand Registration, the Company shall promptly, and in any event no later than
15 days after such receipt, notify all other Holders of the making of such
demand and shall use its best efforts to register under the Act as expeditiously
as may be practicable the Registrable Securities which Holders have requested
the Company to register in accordance with this Section 2.1. Notwithstanding the
foregoing, the Company shall not be required to effect any registration if the
Registrable Securities that the Company shall have been requested to register
shall, in the aggregate, have a current market value of less than $1,000,000.
The Holders shall have the right to two S-3 Demand Registrations pursuant to
this Section 2.1(a)(ii).
(b) Effective Registration Statement. A registration requested pursuant
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to Section 2.1(a) hereof shall not be deemed to have been effected (i) if a
registration statement with respect thereto has not been declared effective by
the Securities and Exchange Commission ("SEC"), (ii) if after it has become
effective, such registration is materially interfered with by any stop order,
injunction or similar order or requirement of the SEC or other governmental
agency or court for any reason not attributable to any of the Holders and has
not thereafter become effective, or (iii) the conditions to closing specified in
the underwriting agreement, if any, entered into in connection with such
registration are not satisfied or waived, other than by reason of a failure on
the part of a Holder.
2.2. "Piggy-Back" Registration.
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(a) If the Company proposes to register any securities under the Act in
connection with any offering of its securities (other than a registration
statement on Form S-8 or Form S-4, or their successors, or any other form for a
similar limited purpose, or any registration statement covering only securities
proposed to be issued in exchange for securities or assets of another
corporation), whether or not for its own account, the Company shall furnish
promptly, and in any event not less than 15 days in advance, written notice to
the Holders of its intention to effect such registration and the intended method
of distribution in connection therewith. Upon the written request of a Holder
made to the Company within 15 days after the receipt of such notice by the
Company, the Company shall include in such registration the requested number of
the Holder's Registrable Securities (a "Piggy-Back Registration"). If a Holder
decides not to include all of its Registrable Securities in any registration
statement thereafter filed by the Company, the Holder shall nevertheless
continue to have the right to include any Registrable Securities in any
subsequent registration statement or registration statements as may be filed by
the Company with respect to offerings of its Common Stock and any other
securities, all upon the terms and conditions set forth herein.
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(b) Nothing in this Section 2.2 shall create any liability on the part of
the Company or any other person to the Holders if the Company, for any reason,
decides not to file a registration statement proposed to be filed pursuant to
Section 2.2(a) or to withdraw such registration statement subsequent to its
filing (except for the Company's obligation to pay the expenses in connection
therewith as provided in Section 2.6), regardless of any action whatsoever that
a Holder may have taken, whether as a result of the issuance by the Company of
any notice under Section 2.2(a) or otherwise.
2.3. Blackout Periods for Holders. If the board of directors of the
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Company determines in good faith that the registration and distribution of
Registrable Securities (or the use of a registration statement or related
prospectus) would be materially detrimental to the Company or its shareholders
and therefore the board of directors determines that it is in the Company's best
interest to defer the filing, and promptly gives the Holders written notice of
such determination in the form of a certificate signed by an executive officer
of the Company following their request to register any Registrable Securities
pursuant to Section 2.1, the Company shall be entitled to postpone the filing of
the registration statement otherwise required to be prepared and filed by the
Company pursuant to Section 2.1 hereof for a reasonable period of time, but not
to exceed 90 days (a "Demand Blackout Period") after the date of such request.
The Company shall promptly notify each holder of the expiration or earlier
termination of any Demand Blackout Period.
2.4. Obligations of the Company. Whenever the Company is required to
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effect the registration of any Registrable Securities under this Section 2, the
Company shall, at its expense and as expeditiously as may be practicable:
(a) Prepare and file with the SEC a registration statement with respect
to such Registrable Securities and use its best efforts to cause such
registration statement to become effective and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, use
reasonable efforts to keep such registration statement effective for ninety (90)
days.
(b) Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of
applicable law with respect to the disposition of all of the Registrable
Securities covered by such registration statement.
(c) Furnish to the Holders of Registrable Securities registering such
securities such numbers of copies of a prospectus, including a preliminary
prospectus (in the event
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of an underwritten offering), in conformity with the requirements of applicable
law, and such other documents as each such Holder may reasonably request in
order to facilitate the disposition of Registrable Securities owned by it.
(d) Use best efforts to register and qualify the securities covered by
such registration statement under state blue sky laws in any U.S. jurisdictions
in which such registration and qualification is reasonably requested by any
Holder; provided, that the Company shall not be required in connection therewith
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or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such jurisdictions.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form and substance as agreed to by the Company and the managing underwriter of
such offering.
(f) Promptly notify the Holders in writing:
(i) when the registration statement, the prospectus or any
prospectus supplement related thereto or post-effective amendment to the
registration statement has been filed, and, with respect to the registration
statement or any post-effective amendment thereto, when the same has become
effective;
(ii) of any request by the SEC for amendments or supplements to the
registration statement or related prospectus or any written request by the SEC
for additional information;
(iii) of the issuance by the SEC of any stop order suspending the
effectiveness of the registration statement or prospectus or any amendment or
supplement thereto or the initiation of any proceedings by any person for that
purpose, and promptly use its best efforts to prevent the issuance of any stop
order or to obtain its withdrawal if such stop order should be issued; and
(iv) of the receipt by the Company of any written notification with
respect to the suspension of the qualification of any Registrable Securities for
sale in any jurisdiction or the initiation or overt threat of any proceeding for
such purpose.
(g) Notify the Holders in writing on a timely basis, at any time when a
prospectus relating to such Registrable Securities is required to be delivered
under applicable law, of the happening of any event as a result of which the
prospectus included in such
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registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing and at the request of any such Holder promptly
prepare and furnish to such Holder a reasonable number of copies of a supplement
to or an amendment of such prospectus as may be necessary so that, as thereafter
delivered to the offerees of such securities, such prospectus shall not include
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
in the light of the circumstances then existing.
(h) Furnish, at the request of any Holder participating in the
registration, on the date that such Registrable Securities are delivered to the
underwriters for sale, if such securities are being sold through underwriters,
or, if such securities are not being sold through underwriters, on the date that
the registration statement with respect to such securities becomes effective,
(i) an opinion, dated as of such date, of the counsel representing the Company
for the purposes of such registration, in form and substance as if customarily
given to underwriters in an underwritten public offering and reasonably
satisfactory to a majority in interest of the Holders participating in the
registration, addressed to the underwriters, if any, and to the Holders
participating in the registration of Registrable Securities and (ii) a "Cold
Comfort" letter dated as of such date, from the independent certified public
accountants to the underwriters in an underwritten public offering and
reasonably satisfactory to a majority in interest of the Holders participating
in the registration, addressed to the underwriters, if any, and if permitted by
applicable accounting standards, to the Holders participating in the
registration of Registrable Securities.
(i) Use best efforts to cause the transfer agent to remove restrictive
legends on certificates representing the securities covered by such registration
statement, as the Company determines to be appropriate, upon advice of counsel.
(j) Use best efforts to list such Registrable Securities on any national
securities exchange on which any shares of the Common Stock are listed.
(k) Prepare and file with the SEC, promptly upon the request of any such
Holders, any amendments or supplements to such registration statement or
prospectus which, in the opinion of counsel for such Holders, is required under
the Act or the rules and regulations thereunder in connection with the
distribution of the Registrable Securities by such Holders.
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(l) Make available for inspection by any Holder of such Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other agent retained by
any such seller or underwriter (collectively, the "Inspectors"), all pertinent
financial and other records, pertinent corporate documents and properties of the
Company (collectively, the "Records"), as shall be reasonably necessary to
enable them to exercise their due diligence responsibility, and cause the
Company's officers, directors and employees to supply all information (together
with the Records, the "Information") reasonably requested by any such Inspector
in connection with such registration statement. Any of the Information that the
Company determines in good faith to be confidential, and of which determination
the Inspectors are so notified, shall not be disclosed by the Inspectors unless
(i) the release of such Information is ordered pursuant to a subpoena or other
order from a court of competent jurisdiction or (ii) such Information has been
made generally available to the public or (iii) as necessary to enforce a
Holder's rights under this Agreement. The Holder of Registrable Securities,
agrees that it will, upon learning that disclosure of such Information is sought
in a court of competent jurisdiction, give notice to the Company and allow the
Company, at the Company's expense, to undertake appropriate action to prevent
disclosure of the Information deemed confidential and the Inspectors shall not
disclose such Information until such action is determined.
(m) Provide a transfer agent and registrar (which may be the same entity
and which may be the Company) for such Registrable Securities.
(n) Use its best efforts to take all other steps necessary to effect the
registration of such Registrable Securities pursuant to the terms contemplated
hereby.
2.5. Furnish Information.
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(a) It shall be a condition precedent to the obligation of the Company to
include any Registrable Securities of any Holder in a registration statement
pursuant to this Section 2 that the Holder shall furnish to the Company such
information regarding itself, the Registrable Securities held by it, any other
securities of the Company held by it, and the intended method of disposition of
such Registrable Securities as shall be required to effect the registration of
the Registrable Securities held by such Holder. Any such information shall be
provided to the Company within any reasonable time period requested by the
Company.
(b) Each Holder shall notify the Company, at any time when a prospectus is
required to be delivered under applicable law, of the happening of any event as
a result of
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which the prospectus included in the applicable registration statement, as then
in effect, in each case only with respect to information provided by such
Holder, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing. Such Holder
shall immediately upon the happening of any such event cease using such
prospectus. Any other Holders shall cease using such prospectus immediately upon
receipt of notice from the Company to that effect. If so requested by the
Company, each Holder shall promptly return to the Company any copies of any
prospectus in its possession (other than one permanent file copy) that contains
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing.
2.6. Expenses of Registration. The Company shall bear and pay all
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reasonable expenses incurred in connection with any registration, filing or
qualification of Registrable Securities pursuant to Section 2.1 or Section 2.2
including (without limitation) all registration, filing and qualification fees,
printers' and accounting fees, but excluding underwriting discounts and
commissions relating to the Registrable Securities. The Company also shall be
required to pay and bear the legal fees of one counsel for the Holders in an
amount not to exceed $25,000 in connection with any registration.
2.7. Underwriting Requirements. In connection with any underwritten
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offering of a Holder's Registrable Securities, the Company shall not be required
under Section 2.4 to register any of such Registrable Securities in connection
with such underwritten offering unless the Holder accepts the underwriters
selected by the Company and then only in such quantity as the lead managing
underwriter determines, in its good faith discretion, will not jeopardize the
success of the offering by the Company. To the extent that the lead managing
underwriter will not permit the registration of all of the Registrable
Securities sought to be registered, in the case of a registration pursuant to
Section 2.1 or 2.2, the Registrable Securities to be included shall be
apportioned among the Holders on a pro rata basis (based on the number of
Securities proposed to be registered by each), first among the Holders of
Registrable Securities to be registered pursuant to Section 2.1, and thereafter
among the Holders of Registrable Securities to be registered pursuant to Section
2.2; provided, however, that the right of the underwriters to exclude
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Registrable Securities from the registration and underwriting as described above
shall be restricted such that all shares that are not Registrable Securities and
all shares that are held by persons who are employees or directors of the
Company (or any subsidiary of the Company) shall first be excluded from such
registration and underwriting before any Registrable Securities are so excluded.
Notwithstanding the foregoing, the Holders' Registrable Securities
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shall in no event be reduced to less than one-third of the total number of
shares of Common Stock to be registered in connection with a Piggyback
Registration. Those Registrable Securities and other securities that are
excluded from the underwriting by reason of the managing underwriter's marketing
limitation and all other Registrable Securities not originally requested to be
so included shall not be included in such registration and shall be withheld
from the market by the Holders thereof for a period, not to exceed 90 days,
which the managing underwriter reasonably determines necessary to effect the
underwritten public offering. No Holder of Registrable Securities shall be
entitled to participate in an underwritten offering unless such Holder enters
into, and performs its obligations under, one or more underwriting agreements
and any related agreements and documents (including an escrow agreement and/or a
power of attorney with respect to the disposition of the Registrable
Securities), in the form that such Holder shall agree to with the lead managing
underwriter of the transaction. If any Holder disapproves of the terms of any
underwriting, it may elect, prior to the execution of any underwriting
agreement, to withdraw therefrom by written notice to the Company and the lead
managing underwriter. Any Registrable Securities so withdrawn from an
underwriting by such Holder shall be withdrawn from such registration and shall
not be transferred in a public distribution prior to 180 days following the
effective date of the registration statement relating thereto.
2.8. Delay of Registration. No Holder shall have any right to obtain or
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seek an injunction restraining or otherwise delaying any registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Section 2.
2.9. Indemnification. In the event any Registrable Securities are
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included in a registration statement under this Section 2:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each Holder and each person, if any, who controls such Holder within
the meaning of the Act and the Securities Exchange Act of 1934, as amended (the
"1934 Act"), and their respective directors, officers, partners, employees,
legal counsel and affiliates (each, an "Indemnified Person"), against any
losses, claims, damages, or liabilities joint or several) to which they may
become subject insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (collectively, a
"Violation") (i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any final prospectus
contained therein or any amendments or supplements thereto or (ii) the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the
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statements therein not misleading; or (iii) any violation by the Company of the
Act, the 1934 Act, any state securities law or any rule or regulation
promulgated under the Act, the 1934 Act or any state securities law in
connection with the offering covered by any registration statement; and the
Company will pay to each Indemnified Person any reasonable legal or other
expenses incurred by it in connection with investigating or defending any such
loss, claim, damage, liability or action; provided that the indemnity agreement
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contained in this Section 2.9(a) shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability or action if such settlement is
effected without the consent of the Company (which consent shall not be
unreasonably withheld), nor shall the Company be liable in any such case for any
such loss, claim, damage, liability or action to the extent that it arises out
of or is based upon a Violation which occurs in reliance upon and in strict
conformity with written information furnished by a Holder expressly for use in
connection with such registration or is caused by any failure by the Holder to
deliver a prospectus or preliminary prospectus (or amendment or supplement
thereto) as and when required under the Act after such prospectus has been
timely furnished by the Company.
(b) To the extent permitted by law, each Holder will indemnify and hold
harmless the Company, each of its directors, each of its officers who has signed
the registration statement, and 8 each person, if any, who controls the Company
within the meaning of the Act or the 1934 Act (each, an "Indemnified Person"),
against any losses, claims, damages or liabilities (joint or several) to which
any of the foregoing persons may become subject, insofar as such losses, claims,
damages or liabilities (or actions in respect thereto) arise out of or are based
upon any Violation, in each case to the extent (and only to the extent) that
such Violation is caused by (x) any untrue statement or alleged untrue statement
contained in, or by any omission or alleged omission from, information furnished
in writing to the Company by the Holder specifically and expressly for use in
any such registration statement or prospectus but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission was
so made in reliance upon and in strict conformity with written information
furnished by such Holder specifically for use in the preparation thereof or (y)
any failure by the Holder to deliver a prospectus or preliminary prospectus (or
amendment or supplement thereto) as and when required under the Securities Act
after such prospectus has been timely filed by the Company. Such Holder will
pay any reasonable legal or other expenses incurred by any Indemnified Person
pursuant to this Section 2.9(b) in connection with investigating or defending
any such loss, claim, damage, liability or action; provided that the indemnity
agreement contained in this Section 2.9(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld; provided, further, that in no event shall any
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indemnity under this Section 2.9(b) exceed the net pro-
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ceeds from the offering received by such Holder upon its sale of Registrable
Securities included in the registration statement.
(c) Promptly after receipt by an Indemnified Person under this Section 2.9
of notice of the commencement of any action (including any governmental
action),such Indemnified Person will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 2.9, deliver to the
indemnifying party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the indemnifying parties; provided that an Indemnified Person
(together with all other indemnified parties that may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the reasonable fees and expenses to be paid by the indemnifying party, if
representation of such Indemnified Person by the counsel retained by the
indemnifying party would be inappropriate (in the opinion of the Indemnified
Person) due to actual or potential differing interests between such Indemnified
Person and any other party represented by such counsel in such proceeding. The
failure to deliver written notice to the indemnifying party within a reasonable
time of the commencement of any such action, if materially prejudicial to its
ability to defend such action, shall relieve such indemnifying party of any
liability to the Indemnified Person under this Section 2.9, but the omission so
to deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any Indemnified Person otherwise than under this
Section 2.9; provided, that in no event shall any indemnity under this Section
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2.9(b) exceed the net proceeds from the offering received by such Holder upon
its sale of Registrable Securities included in the registration statement.
(d) If the indemnification provided for in this Section 2.9 is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any losses, claims, damages or liabilities referred to herein, the
indemnifying party, in lieu of indemnifying such Indemnified Person thereunder,
agrees to contribute to the amount paid or payable by such Indemnified Person as
a result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the Indemnified Person on the other in connection with the
Violation(s) that resulted in such loss, claim, damage or liability, as well as
any other relevant equitable considerations. The relative fault of the
indemnifying party and of the Indemnified Person shall be determined by a court
of law by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the Indemnified Person and
the parties' relative intent, knowledge, access to information and
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opportunity to correct or prevent such statement or omission. No person found
guilty of fraudulent misrepresentation (within the meaning of the Section 11(f)
of the Act) shall be entitled to contribution hereunder from any person who was
not guilty of such fraudulent misrepresentation.
(e) The obligations of the Company and the Holders under this Section 2.9
shall survive the completion of any offering of Registrable Securities under a
registration statement pursuant to this Section 2.
2.10. Assignment of Registration Rights. Subject to the provisions of the
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Purchase Agreement and the Subscription Agreement, the rights to cause the
Company to register Registrable Securities pursuant to this Section 2 may be
assigned by a Holder to a permitted transferee or assignee of Registrable
Securities which (a) is a subsidiary, parent, general partner, limited partner,
retired partner, affiliate, beneficial owner, member or retired member of a
Holder, or (b) is a Holder's family member or trust for the benefit of an
individual Holder; provided, however, (i) the transferor shall, within ten (10)
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days after such transfer, furnish to the Company written notice of the name and
address of such transferee or assignee and the securities with respect to which
such registration rights are being assigned and (ii) such transferee shall agree
to be subject to all restrictions set forth in this Agreement.
2.11. Parity of Rights. The registration rights granted to the Holders
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under this Agreement are not intended by the parties to be senior to any of the
registration rights granted to holders of the Company's capital stock under that
certain Series A Preferred Shareholder Registration Rights Agreement, dated as
of May 13, 1999, but rather to rank on a pari passu basis with such rights. The
parties agree to interpret the terms of this Agreement in a manner consistent
with the foregoing intention.
2.12. Rule 144 Reporting. With a view to making available to the Holders
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the benefits of certain rules and regulations of the SEC that permit the sale of
the Registrable Securities to the public without registration, the Company
agrees to use its best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in SEC Rule 144 or any similar or analogous rule
promulgated under the Act, at all times after the effective date of the first
registration filed by the Company for an offering of its securities to the
general public;
(b) File with the SEC, in a timely manner, all reports and other
documents required of the Company under the 1934 Act; and
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(c) So long as a Holder owns any Registrable Securities, furnish such
Holder forthwith upon request: a written statement by the Company as to its
compliance with the reporting requirements of said Rule 144 of the Act, and of
the 1934 Act (at any time after it has become subject to such reporting
requirements); a copy of the most recent annual or quarterly report of the
Company; and such other reports and documents as a Holder may reasonably request
in availing itself of any rule or regulation of the SEC allowing it to sell any
such securities without registration.
Section 3. Miscellaneous.
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3.1. Successors and Assigns. The provisions of this Agreement shall inure
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to the benefit of and be binding upon the respective successors and permitted
assigns of the parties hereto, except that the Company may not assign any of its
obligations hereunder without the consent of Holders owning in the aggregate 66-
2/3% of the outstanding Registrable Securities. Nothing in this Agreement,
express or implied, is intended to confer upon any party, other than the parties
hereto or their respective successors and permitted assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
Nothing contained herein shall be construed as permitting any transfer of any
securities of the Company in violation of any applicable law or agreement.
3.2. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of New York without giving effect to the
conflict of laws provisions thereof. The Investor and the Company hereby submit
to the nonexclusive jurisdiction of the United States District Court for the
Southern District of New York and of any New York State court sitting in New
York City for purposes of all legal proceedings arising out of or relating to
this Agreement and the transactions contemplated hereby. Each of the Investor
and the Company 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.
3.3. Counterparts. This Agreement may be executed in counterparts, each
------------
of which shall be deemed an original, and all of which together shall constitute
one and the same instrument.
3.4. Captions and Headings. The captions and headings used in this
---------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
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<PAGE>
3.5. Notices. Unless otherwise provided, any notice or other
-------
communication required or permitted to be given or effected under this Agreement
shall be in writing and shall be deemed effective upon (i) personal or facsimile
delivery to the party to be notified, (ii) one business day after deposit with
an internationally recognized courier service, delivery fees prepaid, or (iii)
three business days after deposit with the U.S. mail, return-receipt requested,
postage prepaid, and in each case, addressed to the party to be notified at the
following respective addresses, or at such other addresses as may be designated
by written notice; provided that any notice of change of address shall be deemed
--------
effective only upon receipt.
If to the Company:
Net2Phone, Inc.
171 Main Street
Hackensack, New Jersey 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 the Investor:
.
.
.
Attn: .
Fax: .
with a copy to:
Wachtell, Lipton, Rosen & Katz
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<PAGE>
51 West 52/nd/ Street
New York, New York 10019
Attn: Seth A. Kaplan, Esq.
Fax: (212) 403-2000
3.6. Amendments and Waivers. The provisions of this Agreement, including
----------------------
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless the Company has obtained written consent of Holders owning in the
aggregate 66-2/3% of the outstanding Registrable Securities affected by such
amendment, modification, supplement, waiver or departure; provided, however,
-------- -------
that no amendment, modification, supplement, waiver or consent to the departure
with respect to the provisions of Section 2 hereof shall be effective as against
any person unless consented to in writing by such person.
3.7. Severability. If one or more provisions of this Agreement are held
------------
to be unenforceable under applicable law, such provisions shall be excluded from
this Agreement and the balance of this Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
3.8. Entire Agreement. This Agreement (including the Schedule attached
----------------
hereto) contains the entire understanding of the parties hereto with respect to
the subject matter contained herein, and supersedes and cancels all prior
agreements, negotiations, correspondence, undertakings and communications of the
parties, oral or written, respecting such subject matter. There are no
restrictions, promises, representations, warranties, agreements or undertakings
of any party hereto with respect to the matters contemplated hereby, other than
those set forth herein or made hereunder.
3.9. 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 OR THE SUBJECT MATTER HEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO
BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND
THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT
LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW AND STATUTORY CLAIMS. THIS SECTION 3.9 HAS BEEN FULLY DISCUSSED BY
EACH OF THE PARTIES HERETO AND THESE PROVISIONS SHALL NOT BE SUBJECT TO ANY
EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER
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<PAGE>
WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL
COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, SUPPLEMENTS OR MODIFICATIONS TO (OR
ASSIGNMENTS OF) THIS AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY
BE FILED AS A WRITTEN CONSENT TO A TRIAL (WITHOUT A JURY) BY THE COURT.
[Signatures on the following page.]
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first above written.
NET2PHONE, INC.
By:_______________________
Name:
Title:
ITELTECH, LLC
By:_______________________
Name:
Title:
17