This excerpt taken from the IDT 8-K filed Feb 21, 2006.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub as follows, except as otherwise set forth in the disclosure schedules hereto delivered by the Company to Parent and Merger Sub (a) on the date hereof (the Initial Schedules) or (b) on or prior to February 24, 2006, pursuant to Section 5.9(a)(i) (the Supplemental Schedules), as such Initial Schedules and Supplemental Schedules may be amended or supplemented pursuant to Section 5.9(a)(ii) and Section 5.9(b), respectively (collectively, the Schedules):
Section 3.1 Organization and Qualification. Each of the Company and each of its material subsidiaries (the Subsidiaries) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the requisite corporate power and authority necessary to own, lease and operate the properties it purports to own, operate or lease and to carry on its business as it is now being conducted, except where the failure to be so organized, existing and in good standing or to have such power and authority would not reasonably be expected to have a material adverse effect on the business, assets, financial condition or results of operations of the Company and its subsidiaries taken as a whole or on the ability of the Company to perform its obligations under this Agreement (a Material Adverse Effect). Each of the Company and each of its Subsidiaries is duly qualified or licensed
as a foreign corporation to do business, and is in good standing, in each jurisdiction where the character of its properties owned, leased or operated by it or the nature of its activities makes such qualification or licensing necessary, except for such failures to be so duly qualified or licensed and in good standing that would not reasonably be expected to have a Material Adverse Effect.
Section 3.2 Certificate of Incorporation and Bylaws. The Company has heretofore furnished to Parent a complete and correct copy of its Certificate of Incorporation and Bylaws as most recently restated and subsequently amended to date, and has furnished or made available to Parent the Certificate of Incorporation and Bylaws (or equivalent organizational documents) of each of its Subsidiaries (the Subsidiary Documents). Such Certificate of Incorporation, Bylaws and Subsidiary Documents are in full force and effect as of the date hereof. To the Knowledge of the Company, neither the Company nor any of its Subsidiaries is in violation of any of the provisions of its Certificate of Incorporation or Bylaws or Subsidiary Documents, except for such violations of the Subsidiary Documents as would not have a Material Adverse Effect.
As used in this Agreement, Knowledge of the Company shall mean the knowledge, after reasonable inquiry, of the following employees of the Company: the Chief Executive Officer, the Chief Financial Officer, the General Counsel, the President of NCT and the Chief Executive Officer of NGS.
Section 3.3 Capitalization. The authorized capital stock of the Company consists of 200,000,000 shares of Common Stock and 37,924,250 shares of Class A common stock, par value $.01 per share (Class A Common Stock). As of January 31, 2006:
(a) 52,546,367 shares of Common Stock were issued, of which all are validly issued, fully paid and nonassessable, 49,651,045 shares were outstanding and 2,895,322 shares were held in treasury;
(b) 28,909,500 shares of Class A Common Stock were issued and outstanding, all of which are validly issued, fully paid and nonassessable, and no shares were held in treasury;
(c) no shares of Common Stock or Class A Common Stock were held by subsidiaries of the Company;
(d) 9,370,887 shares of Common Stock were reserved for future issuance pursuant to outstanding stock options granted under the Option Plan and 1,658,634 shares were reserved for future grants under such plan;
(e) 3,072,486 shares of Common Stock reserved for future issuance pursuant to outstanding warrants (the Warrants);
(f) 33,333 stock appreciation rights were issued and outstanding under the Option Plan;
(g) 6,900,000 shares of Class A Common Stock were authorized for future issuance upon the execution of definitive agreements pursuant to the Memorandum of Understanding, dated October 29, 2003, by and between IDT Corporation, Winstar Communications, LLC and the Company, and 6,900,000 shares of Common Stock were reserved for issuance upon conversion of said shares; and
(h) 585,325 shares of Common Stock were subject to repurchase obligations pursuant to the Amended and Restated Settlement Agreement, dated May 7, 2003, between the Company and Deutsche Bank AG London.
Except as set forth in this Section 3.3, Supplemental Schedule 3.3, or the forms, reports and documents (the SEC Reports) required to be filed by the Company with the SEC, to the Knowledge of the Company, since January 31, 2006, the Company has not issued any options, warrants or other rights, agreements, arrangements or commitments of any character relating to the issued or unissued capital stock of the Company or any of its subsidiaries or obligating the Company or any of its subsidiaries to issue or sell any shares of capital stock of, or other equity interests in, the Company or any of its subsidiaries; provided, however, that in no event shall Supplemental Schedule 3.3 set forth any of the foregoing to the extent that the shares of capital stock contemplated thereby, individually or in the aggregate, represent more than one percent (1%) of the outstanding shares of Common Stock as set forth in Section 3.3(a). All shares of Common Stock subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, shall be duly authorized, validly issued, fully paid and nonassessable.
Except as disclosed in Supplemental Schedule 3.3 or the SEC Reports, to the Knowledge of the Company, there are no obligations, contingent or otherwise, of the Company or any of its subsidiaries to repurchase, redeem or otherwise acquire any shares of Common Stock or the capital stock of any subsidiary or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any such subsidiary or any other entity other than guarantees of bank obligations of subsidiaries entered into in the ordinary course of business. Except as disclosed in Supplemental Schedule 3.3 or the SEC Reports, to the Knowledge of the Company, all of the outstanding shares of capital stock (other than directors qualifying shares) of each of the Companys subsidiaries is duly authorized, validly issued, fully paid and nonassessable, and all such shares (other than directors qualifying shares and a de minimis number of shares owned by employees of such subsidiaries) are owned by the Company or another subsidiary free and clear of all security interests, liens, claims, pledges, agreements, limitations in the Companys voting rights, charges or other encumbrances of any nature whatsoever.
Section 3.4 Authority Relative to this Agreement; Company Approvals. The Company has all necessary corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action, and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or to consummate the transactions so contemplated (other than the adoption of this Agreement by the holders of at least a majority of the voting
power of Common Stock and Class A Common Stock entitled to vote in accordance with the DGCL and the Companys Certificate of Incorporation and Bylaws). The Board of Directors of the Company and the Independent Committee have determined that it is advisable and in the best interest of the Companys stockholders (other than Parent and its subsidiaries) for the Company to enter into this Agreement and to consummate, upon the terms and subject to the conditions of this Agreement, the transaction contemplated hereby, and the Board of Directors of the Company has determined to recommend that the stockholders of the Company consent to this Agreement and the Merger. This Agreement has been duly and validly executed and delivered by the Company and, assuming the due authorization, execution and delivery by Parent and Merger Sub, as applicable, constitutes a legal, valid and binding obligation of the Company in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors rights and to general equity principles.
Section 3.5 No Conflict; Required Filings and Consents.
(a) Except as set forth in Supplemental Schedule 3.5(a) (as such Supplemental Schedule 3.5(a) may be amended or supplemented pursuant to Section 5.9 below), to the Knowledge of the Company (except with respect to clause (i) as to which this qualification does not apply), the execution and delivery of this Agreement by the Company does not, and the performance of this Agreement by the Company does not and will not, (i) conflict with or violate the Certificate of Incorporation or Bylaws of the Company, (ii) conflict with or violate any law, rule, regulation, order, judgment or decree applicable to the Company or any of its Subsidiaries or by which its or any of their respective properties is bound or affected, or (iii) result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default), or materially and adversely affect the Companys or any of its Subsidiaries rights or alter the rights or obligations of any third party under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a lien or encumbrance on any of the properties or assets of the Company or any of its Subsidiaries pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries or its or any of their respective properties is bound or affected, except for any such conflicts, violations, breaches, defaults or other occurrences that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(b) To the Knowledge of the Company, the execution and delivery of this Agreement by the Company does not, and the performance of this Agreement by the Company will not, require any consent, approval, authorization or permit of, or filing with or notification to, any governmental or regulatory authority, domestic or foreign, except (i) for filing with the SEC of the Consent Statement and the Schedule 13E-3 and for other applicable requirements, if any, of the Exchange Act and the filing and recordation of appropriate merger or other documents as required by the DGCL, and (ii) where the failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, would not reasonably be expected to prevent or delay consummation of the Merger, or otherwise prevent or delay the Company from performing its obligations under
this Agreement, or would not otherwise reasonably be expected to have a Material Adverse Effect.
Section 3.6 Absence of Certain Changes or Events. Except as set forth in Supplemental Schedule 3.6 or the SEC Reports filed and publicly available prior to the date hereof, since November 1, 2005, the Company has conducted its business in the ordinary course and, to the Knowledge of the Company, there has not occurred any action or event that would have required the consent of Parent pursuant to Section 4.1 had such action or event occurred after the date of this Agreement.
Section 3.7 Opinion of Financial Advisor. The Independent Committee has been advised by The Blackstone Group L.P. (the Financial Advisor) that, in its opinion, as of the date hereof, the Merger Consideration is fair, from a financial point of view, to the holders of the Common Stock and Class A Common Stock, other than the Parent and its subsidiaries as to which the Financial Advisor expresses no opinion.
Section 3.8 Brokers Etc. Except for the Financial Advisor, no broker, finder or investment banker is entitled to any brokerage, finders or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company.