JOINT VENTURE EXIT AGREEMENT
THIS JOINT VENTURE EXIT AGREEMENT ("Agreement") is made as of this 7th day
of February, 2000, by and among TeleNova Comunicacoes Ltda., a limited liability
quota company, duly organized and existing under the laws of the Federative
Republic of Brazil ("Brazil"), having a place of business at Alameda Araguaia,
933, conj. 46, Alphaville, Barueri, State of Sao Paulo, Brazil, registered with
the C.G.C./M.F. under No. 02.519.780/0001-06 ("TeleNova"), TeleNova Overseas
Ltd., a British Virgin Islands corporation and a wholly-owned indirect
subsidiary of TeleNova ("TeleNova Overseas"), Telesisa Sistemas
emTelecomunicacoes S.A., a company duly organized and existing under the laws of
Brazil, having a place of business at R. Luigi Galvani, 200, 11.A, Sao Paulo,
Brazil ("Telesisa"), ITXC Comunicacoes Ltda., a limited liability quota company
duly organized and existing under the laws of Brazil, having a principal place
of business at Alameda Araguaia, 933, conj. 46, sub-conj. 1, Alphaville, Barueri
State of Sao Paulo, Brazil, registered with the C.G.C./M.F. under No.
02.691.621/0001-94 ("Ltda"), and ITXC Corp., a corporation duly organized and
existing under the laws of the State of Delaware, USA, having a principal place
of business at 600 College Road East, Princeton, New Jersey, USA 08540 ("ITXC").
Each of TeleNova, Telesisa, Overseas, Ltda and ITXC are also referred to
individually as a "Party" and collectively as the "Parties."
WHEREAS, effective as of July 19, 1998, TeleNova, Ltda and ITXC entered
into that certain Joint Venture and Quotaholders Agreement (as amended, the "JV
Agreement") pursuant to which such Parties organized Ltda as a limited liability
quota company according to the laws of Brazil;
WHEREAS, also effective as of July 19, 1998, the Parties entered into that
certain Trademark, Service and Technology License Agreement pursuant to which
ITXC licensed certain identified intellectual property to Ltda (the "License
WHEREAS, pursuant to the JV Agreement, TeleNova initially owned a fifty-one
percent (51%) interest in Ltda and ITXC initially owned the remaining forty-nine
percent (49%) interest in Ltda, such interests represented by quotas issued by
WHEREAS, TeleNova has assigned to Telesisa a ten percent (10%) portion of
its interest in Ltda;
WHEREAS, each of the Parties, for their respective mutual benefit and in
accordance with the terms and conditions contained herein, desire to terminate
the joint venture relationship and license relationship created between them
pursuant to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound,
the Parties hereto hereby agree as follows:
1. Sale to TeleNova of ITXC's 49% Interest in Ltda.
(a) Contemporaneously with the execution of this Agreement, ITXC hereby
transfers to TeleNova ITXC's forty-nine percent (49%) ownership interest in
Ltda. To effect such transfer, ITXC hereby delivers to TeleNova all of its
interest in one million four hundred seventy thousand (1,470,000) quotas of
Ltda, representing ITXC's entire ownership interest in Ltda. Telesisa expressly
waives its right to purchase its pro rata share of ITXC's 49% ownership interest
in Ltda. TeleNova shall take all actions required to modify and amend Ltda's
organizational documents to reflect the fact that ITXC no longer has any
ownership interest in Ltda; provided that, to the extent necessary, ITXC (or its
representative in Brazil), as the former owner of such forty-nine percent (49%)
ownership interest, shall execute such documents as shall be necessary to
reflect the fact that ITXC no longer has any ownership interest in Ltda.
(b) TeleNova or any of its affiliates intends to commence a private placement
of TeleNova's quotas or any of its affiliates' equity securities ("TeleNova
Quotas") (such private placement, the "Proposed Private Placement"). In
connection with the Proposed Private Placement, TeleNova shall receive from Bank
of America, within seven days from the date hereof, a written valuation report
setting forth the valuation of the issuer of the TeleNova Quotas immediately
prior to the Proposed Private Placement (the "Valuation Report"). Within seven
days of the date hereof, TeleNova shall (provided that ITXC complies with
Section 4 hereof) transfer to ITXC a number of TeleNova Quotas equal to Six
Million Dollars U.S. ($6,000,000) divided by the "Per Quota Price" (as
hereinafter defined). For purposes of this Agreement, the term "Per Quota
Price" shall mean a fraction, the numerator of which is the aggregate valuation
of the issuer of the TeleNova Quotas, as set forth in the Valuation Report,
expressed in U.S. dollars, and the denominator of which is the number of quotas
or other equity interests, as the case may be, of such issuer outstanding on the
date hereof. It is understood that such TeleNova Quotas will not be registered
under the securities laws of any jurisdiction. The Parties shall not take any
action, such as a stock split, stock dividend or other recapitalization, which
will prejudice ITXC's rights under this Section 1(b) unless a reasonable
adjustment is made under this Section 1(b) such that ITXC shall not be adversely
affected by such action.
2. Termination of JV Agreement. The JV Agreement is hereby terminated. None
of the Parties shall have any remaining obligations under the JV Agreement,
except with respect to (a) liabilities that have accrued thereunder prior to the
date hereof and (b) obligations expressly described in the JV Agreement as
obligations that survive termination of the JV Agreement.
3. Termination of the License Agreement. The License Agreement is hereby
terminated. None of the Parties shall have any remaining obligations under the
JV Agreement, except with respect to (a) liabilities that have accrued
thereunder prior to the date hereof and (b) obligations expressly described in
the License Agreement as obligations that survive termination of the License
4. Issuance of Shares. Within seven days from the date hereof, ITXC shall
(provided that TeleNova complies with Section 1(b) hereof) issue and transmit to
TeleNova Overseas a stock certificate, in TeleNova Overseas' name, representing
one hundred and thirty-
five thousand (135,000) shares of ITXC's common stock (the "TeleNova Shares")
and shall issue and transmit to Telesisa a stock certificate, in Telesisa's
name, representing fifteen thousand (15,000) shares of ITXC's common stock (the
"Telesisa Shares" and, collectively with the TeleNova Shares, the "Shares").
5. Representations and Agreements of the TeleNova Parties.
(a) TeleNova, TeleNova Overseas and Telesisa (collectively, the "TeleNova
Parties") acknowledge that the Shares have not been registered under the United
States Securities Act of 1933 (the "Act") or under the laws of any other
(b) The TeleNova Parties acknowledge that they are acquiring the Shares for
investment purposes and not for purposes of distributing the Shares in violation
of the provisions of the Act or any other laws.
(c) The TeleNova Parties agree that they will not transfer the Shares unless
(i) such transfer is registered under the Act and all other laws requiring
registration prior to such transfer, (ii) ITXC receives an opinion of counsel,
in form and substance satisfactory to ITXC, to the effect that such transfer is
exempt from registration under the Act and all other applicable laws or (iii)
the Securities and Exchange Commission (the "SEC") issues a letter, in form and
substance reasonably satisfactory to ITXC, to the effect that the SEC will not
take any enforcement action under the Act in connection with such transfer and
counsel reasonably satisfactory to ITXC provides an opinion to ITXC that no
other law requires such transfer to be registered. The opinion of counsel
referred to in clause (ii) may be based on (a) the conclusion (if applicable)
that the transfer is made outside the United States in compliance with the
requirements of Rule 904 of Regulation S of the SEC and in compliance with
applicable local laws and regulations, (b) the conclusion (if applicable) that
the transfer is made pursuant to an exemption from registration under the Act
provided by Rule 144 thereunder or (c) the conclusion that the Shares are
otherwise transferred in a transaction that does not require registration under
the Act or any applicable laws and regulations governing the offer and sale of
(d) The TeleNova Parties acknowledge that until, in the reasonable opinion of
ITXC's counsel, such time as a legend is no longer required under applicable
requirements of law, the certificates representing the Shares will bear a
restrictive legend stating as follows:
"The Shares represented by this Certificate have not been registered
under the Securities Act of 1933 (the "Act") and may not be transferred
unless (i) such transfer is registered under the Act and all other laws
requiring registration prior to such transfer, (ii) ITXC receives an opinion
of counsel satisfactory to ITXC to the effect that such transfer is exempt
from registration under the Act and all other applicable laws or (iii) the
Securities and Exchange Commission (the "SEC") issues a letter, in form and
substance reasonably satisfactory to ITXC, to the effect that the SEC will
not take any enforcement action under the Act in connection with such
transfer and counsel reasonably satisfactory to ITXC provides an opinion to
ITXC that no other law requires such transfer to be registered. The
opinion of counsel referred to in clause (ii) may be based on (a) the
conclusion (if applicable) that the transfer is made outside the United
States in compliance with the requirements of Rule 904 of Regulation S of
the SEC and in compliance with applicable local laws and regulations, (b)
the conclusion (if applicable) that the transfer is made pursuant to an
exemption from registration under the Act provided by Rule 144 thereunder or
(c) the conclusion that the Shares are otherwise transferred in a
transaction that does not require registration under the Act or any
applicable laws and regulations governing the offer and sale of securities."
(e) The TeleNova Parties acknowledge that they have been advised that ITXC
intends to instruct its transfer agent to impose stop transfer restrictions in
its records with respect to the Shares.
(f) The TeleNova Parties acknowledge that they have received a copy of ITXC's
final prospectus with respect to its September 1999 initial public offering (the
"Prospectus") and have received a copy of ITXC's quarterly report on Form 10-Q
with respect to the quarter ended September 30, 1999.
6. Name Change of Ltda. Within 30 days after the date hereof, the parties
hereto other than ITXC shall change the name of Ltda to a name that does not
include or make reference to the name ITXC and that is not confusingly similar
to the name ITXC and shall provide evidence thereof in a form reasonably
satisfactory to ITXC.
7. Ltda Agreements. All agreements, other than (a) the JV Agreement, (b) the
License Agreement and (c) any other agreement between Ltda and ITXC or any
subsidiary or affiliate of ITXC, shall remain in full force and effect in
accordance with their terms.
8. ITXC/TeleNova Affiliation. Within seven days from the date hereof,
TeleNova and ITXC shall execute ITXC's standard WWeXchange Network Services
Origination/Termination Agreement, in the form and substance of the agreement
annexed hereto and incorporated herein as Exhibit A, and ITXC's standard Agent
Agreement, in the form and substance of the agreement annexed hereto and
incorporated herein as Exhibit B.
9. Non-Compete. Set forth in Exhibit C annexed hereto and incorporated
herein is a list of certain agreements or prospective agreements between Ltda
and customers of Ltda which survive the expiration of the JV Agreement and the
License Agreement (each a "Ltda Contract" and, collectively, the "Ltda
Contracts"). Notwithstanding the foregoing, a prospective agreement described
in such Exhibit C shall cease to be a "Ltda Contract" if such agreement is not
executed within three (3) months from the date hereof. With respect to each
customer that is a party to a Ltda Contract a ("Ltda Contract Customer"), ITXC
shall not compete with TeleNova for the business of such customer within the
"Territory" (as hereinafter defined) until the soonest of (i) four (4) years
following the date hereof, (ii) such contract ceases to be a Ltda Contract in
accordance with the immediately preceding sentence or (iii) the date on which
TeleNova no longer provides IP telephony services to such customer within the
such Ltda Contract (with respect to each Ltda Contract Customer, the "Non-
Compete Period"). TeleNova acknowledges and agrees that upon the termination of
any Ltda Contract (or upon the cessation of any treatment of such contract as a
Ltda Contract) or in the event that a Ltda Contract Customer is no longer
obtaining services from TeleNova within the Territory, ITXC's non-competition
obligation with respect to the applicable Ltda Contract Customer expires and
ITXC may solicit the business of such Ltda Contract Customer in the Territory
(as well as outside the Territory). During the Non-Compete Period for each Ltda
Contract Customer, TeleNova shall exclusively route through ITXC, at competitive
market prices, or shall cause Ltda to exclusively route through ITXC, all IP
telephony traffic from or to such Ltda Contract Customer inside or outside the
Territory, including without limitation all traffic which (x) originates within
any of the countries of Brazil, Argentina, Uruguay, Paraguay and Chile (the
"Territory") and terminates outside the Territory, (y) originates from outside
the Territory and terminates in the Territory or (z) originates and terminates
outside the Territory; provided, however, that traffic which both originates and
terminates within the Territory shall not be subject to such exclusivity
10. Publicity Announcement. At the appropriate time, ITXC shall issue a
public announcement identifying TeleNova as the first international distributor
for corporate SNARCs (as described in the Prospectus) to Spanish and Portuguese
speaking markets (the "SNARC Announcement") and, if applicable, that ITXC is a
shareholder of TeleNova. The timing of the SNARC Announcement shall be at the
sole discretion of ITXC and is dependent on a successful pilot test by ITXC of
the corporate SNARC product.
11. Compliance with Laws. Each Party agrees to comply in all material
respects with all applicable laws, rules and regulations of any jurisdiction
required for the purpose of fulfilling its obligations under this Agreement.
12. Expenses. Except as otherwise expressly provided herein, all expenses
incurred by the Parties in connection with this Agreement will be borne wholly
by the Party incurring such expenses.
13. Publicity. Except as set forth in Section 10 hereof or as required by
law or as disclosed in documents filed by ITXC with the SEC or by TeleNova with
any comparable agency, no Party shall create, publish, distribute or permit any
written material making reference to the other Party or Parties, without first
submitting such material to the other Party and/or Parties and obtaining such
Party's prior written consent, such consent not to be unreasonably delayed or
14. Intellectual Property. Except as expressly set forth herein, this
Agreement shall not be construed as a license for any Party to use any
trademark, service mark or other intellectual property right of any other Party.
Any inventions or other intellectual property developed by a Party hereto shall
be the property of that Party.
15. Assignment and Subcontracting; Successors and Assigns. This Agreement
may not be assigned by any Party without the consent of each other Party, which
consent shall not be
unreasonably withheld or delayed, provided, however, that this Agreement may be
assigned without prior consent to a third party that acquires substantially all
of the stock or assets of a Party. The Parties acknowledge that any Party may
contract or subcontract any of its rights, duties or obligations under this
Agreement to a third party, but that such contracting or subcontracting shall
not relieve a Party from its obligations hereunder. This Agreement shall be
binding upon and inure to the benefit of the Parties hereto and their respective
successors, heirs, permitted assigns and legal representatives.
16. Construction of Agreement. Each of the Parties have participated fully
in the preparation and revision of this Agreement. Any rule of construction to
the effect that ambiguities are to be resolved against the drafting Party shall
not apply to the interpretation of this Agreement.
17. No Partnership. The Parties hereto are independent contractors, and
nothing in this Agreement will create any partnership, joint venture, agency,
franchise, sales representative, or employment relationship between or among the
Parties. No Party has authority to make or accept any offers or representations
on behalf of any other Party hereto.
18. Further Assurances. Each Party will do such further acts, including
executing and delivering additional agreements or instruments as the other may
reasonably require, to consummate, evidence, confirm or give effect to the
agreements contained in this Agreement.
19. Governing Law. This Agreement, the performance thereof and any and all
matters arising directly or indirectly herefrom and/or therefrom shall be
construed, interpreted, applied and governed in all respects in accordance with
the laws of the State of New Jersey, USA, without regard to such State's
conflicts or choice of laws provisions.
20. Notices. Any notice or other communication required or permitted to be
given hereunder shall be in writing and given by hand delivery or by confirmed
facsimile, or sent, postage prepaid, by registered, certified (return receipt
requested) or express mail or reputable overnight courier service and shall be
deemed given when so delivered by hand or confirmed facsimile or if mailed, five
calendar days after mailing (three days in the case of express mail or overnight
courier service), addressed as follows:
If to ITXC: With a Copy to:
ITXC Corp. LOWENSTEIN SANDLER PC
600 College Road East 65 Livingston Avenue
Princeton, NJ USA 08540 Roseland, NJ USA 07068
Facsimile: 609-419-1511 Facsimile: 973-597-2400
Attn: Mr. Thomas Evslin Attn: Peter H. Ehrenberg, Esq.
If to TeleNova, TeleNova Overseas and With a Copy to:
TeleNova Comunicacoes Ltda. TeleNova Communications Corp.
R. Arandu, 281 9.A 100 N. Biscayne Blvd. Suite 2905
04562-030 Sao Paulo, SP Brazil Miami, Florida 33152
Facsimile:(+5511) 5506-4525 x.120 Facsimile: 305-357-2508
Attn: Mr. Ulrich Kuhn Attn: Mr. Hiran Marques
If to Ltda: With a Copy to:
ITXC Comunicacoes Ltda. TeleNova Communications Corp.
Alameda Araguaia, 100 N. Biscayne Blvd. Suite 2905
933, conj. 46,sc 1, Miami, Florida 33152
Alphaville, Barueri, Facsimile: 305-357-2508
Sao Paulo, Brazil Attn: Mr. Hiran Marques
Attn: Mr. Claudio Collado
or to such other address as a Party may designate in writing to another Party.
21. Partial Invalidity. If any term or provision of this Agreement is held to
be invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provision of this Agreement, but
such provision or provisions shall be ineffective only to the extent of such
invalidity, illegality or unenforceability and shall be enforced to the fullest
extent permitted by applicable law, without invalidating the remainder of such
provision or provisions or the remaining provisions of this Agreement.
22. Successors and Assigns. The rights and obligations of the Parties
shall be binding upon and inure to the benefit of the Parties and their
respective heirs, representatives, successors and permitted assigns.
23. Waiver. The failure to enforce or the delay in enforcement of any
provision, right or option of this Agreement by any Party hereto shall in no way
be construed to be a waiver of such provision, right or option, nor shall such
action be deemed a waiver of any other right which that Party may otherwise have
at law or in equity.
24. Headings. The titles and headings contained in this Agreement are for
reference purposes only and shall not in any manner limit the construction of
25. Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
26. Entire Agreement; Amendment. This Agreement sets forth the entire
agreement and understanding among the Parties with respect to its subject matter
and merges and supersedes all previous communications, negotiations,
representations, understandings and agreements, either oral or written, between
or among the Parties with respect to the subject matter hereof. No amendment or
modification of this Agreement shall be binding on either Party hereto, unless
reduced to writing and duly executed by an authorized representative of each of
the Parties hereto.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
TeleNova Comunicacoes Ltda. Telesisa Sistemas emTelecomunicacoes S.A.
By: /s/ Ulrich Kuhn By: /s/ Antonio M. Moracci
Name: Ulrich Kuhn Name: Antonio M. Moracci
Title: Chief Operating Officer Title: President
ITXC Comunicacoes Ltda. ITXC Corp.
By: /s/ Claudio Collado By: /s/ Tom Evslin
Name: Claudio Collado Name: Tome Evslin
Title: General Manager Title: Chairman and Chief Executive
TeleNova Overseas Ltd.
By: /s/ Hiran Marques
Name: Hiran Marques