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TeleNova / ITXC - Brazil Joint Venture Exit Agreement
EXHIBIT 10.14
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 Agreement");
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 Ltda;
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.
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(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 Agreement.
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.
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(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 jurisdiction.
(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 securities.
(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 ...
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