ITXC CORP, S-4, 2000-08-22

ITXC CORP
S-4, 2000-08-22
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE)

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<PAGE>

As filed with the Securities and Exchange Commission on August 22, 2000
Registration No. 333-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

---------------
Form S-4
Registration Statement
under
the Securities Act of 1933

---------------
ITXC CORP.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
Delaware 4813 22-3531960
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification No.)
</TABLE>

600 College Road East
Princeton, New Jersey 08540
(address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)

---------------

Edward B. Jordan
Executive Vice President and Chief Financial Officer
ITXC Corp.
600 College Road East
Princeton, New Jersey 08540
(609) 750-3300
(name, address, including zip code, and telephone number,
including area code, of agent for service)

---------------
copies to:

<TABLE>
<S> <C>
Peter H. Ehrenberg, Esq. Barry Taylor, Esq.
Anthony O. Pergola, Esq. Craig Norris, Esq.
Lowenstein Sandler PC Steven Liu, Esq.
65 Livingston Avenue Tracy Donsky, Esq.
Roseland, New Jersey 07068-1791 Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
</TABLE>

Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of the Registration Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

---------------
CALCULATION OF REGISTRATION FEE

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--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Proposed maximum
Title of each class of Proposed maximum aggregate Amount of
securities to be Amount to be offering offering registration
registered registered price per unit price(2) fee
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$0.001 per share...... 6,030,535 shares(1) Not applicable $50,273,000 $13,273
</TABLE>

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--------------------------------------------------------------------------------
(1) Represents the maximum number of shares of the Common Stock of the
Registrant which may be issued to stockholders of eFusion, Inc., an Oregon
corporation, pursuant to the merger described herein.
(2) Pursuant to Rule 457(f)(1) under the Securities Act of 1933, as amended,
and estimated solely for the purposes of calculating the registration fee,
the maximum aggregate offering price has been calculated based on the
original issuance price of eFusion's issued and outstanding capital stock
at July 31, 2000, which capital stock will be exchanged in the merger
described herein for shares of ITXC Corp. common stock.

---------------
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this registration statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED AUGUST 22, 2000

<TABLE>
<S> <C>
[ITXC logo] [eFusion logo]
</TABLE>

As we previously announced, the boards of directors of ITXC Corp. and
eFusion, Inc. have agreed on a merger subject to approval by you, the
stockholders of both companies. We believe that the deployment of eFusion-
developed voice applications on ITXC.net--the world's largest Internet
telephony network--will result in significantly greater market leadership,
higher revenues, and wider margins than the companies would achieve separately.
We believe that the technical excellence of eFusion applications like Push-to-
Talk and Internet call waiting combined with the global reach and high voice
quality of ITXC.net will benefit our customers, our customers' customers, and
our stockholders.

We believe that, within ten years, all remote voice communication will be on
the Internet just as all email is on the Internet today. Just as email is both
less expensive and much more capable than snail mail, ecalling is both less
expensive and better than traditional phone calling. ITXC has demonstrated how
effectively the Internet can be used to lower the cost of traditional telephony
and has extended its network to over 60 countries in two years. eFusion's Push-
to-Talk application shows how adding voice to a traditional web application
like browsing improves service, increases sales, and provides capability that
neither the web or the telephone network alone could provide.

We believe that the combination of our two companies will be extremely well
positioned to lead the way in the transition of voice communication from the
traditional telephone network to the Internet. We believe that leading this
transition will build value for you, our combined stockholders. This is a huge
potential market in which each of the companies, on its own, is already a
leader. Combining our strengths is a strategy for growing faster and assuring
leadership.

ITXC operates the world's largest Internet telephony network, ITXC.net, which
as of July 31, 2000 had 258 points of presence in over 151 cities and 60
countries. ITXC WWeXchange service provides phone-to-phone wholesale call
completion for carriers and resellers. Thirteen out of the top fourteen U.S.
facilities-based international carriers, leading European competitive carriers,
and twelve incumbent national carriers worldwide have contracted to send
traffic over ITXC.net. ITXC webtalkNOW! service enables portals, Internet
service providers, and communications web sites to offer personal computer-to-
phone calling to their customers under their own brands. Both services provide
high quality over the Internet by using ITXC's patent-pending BestValue Routing
technology.

eFusion provides a suite of value-added Internet applications and services
that seamlessly integrate web interaction with real-time voice communication.
The company's services allow on-line enterprises and network providers to
differentiate their services to businesses and consumers, enable businesses to
better interact with their customers, and give consumers the opportunity to
combine voice calling and call management with their other on-line activities.
eFusion also has an extensive patent portfolio covering these services and
other aspects of voice on the Internet and voice-enhanced e-commerce and has
been selling products to major companies. Some of those that have been
announced are US West; Duro Communications, a major Internet service provider
in the South Eastern US; and Cameraworld.com, a major on-line reseller of
camera equipment.

In the proposed merger, eFusion will become a wholly owned subsidiary of ITXC
and eFusion stock will convert to ITXC common stock. In order to complete the
merger, we must obtain regulatory approval and the stockholders of each of our
companies must grant certain approvals. We are sending you this document to ask
you to grant these approvals.

The merger is an all stock transaction. 5,658,986 shares of ITXC will be
issued in exchange for all eFusion stock outstanding. Additional shares will be
issued for the cash eFusion has on hand at the closing, less certain fees of
professional advisors. ITXC shares will be valued at $34.9886 for this purpose
regardless of their trading price at the closing. Assuming that eFusion has
$9.5 million cash on hand, approximately 271,517 additional shares of ITXC will
be issued to eFusion stockholders. After the closing, former eFusion
stockholders will own approximately 12% of the combined company.
<PAGE>

The ITXC shares will be distributed in different ratios to different classes
of eFusion holders :

. each outstanding share of eFusion's Series A preferred stock will be
converted into the right to receive 0.2897198 of a share of ITXC common
stock;

. each outstanding share of eFusion's Series B preferred stock will be
converted into the right to receive 0.3877517 of a share of ITXC common
stock;

. each outstanding share of eFusion's Series C preferred stock will be
converted into the right to receive 0.4612042 of a share of ITXC common
stock;

. each outstanding share of eFusion's Series D preferred stock will be
converted into the right to receive 0.4897850 of a share of ITXC common
stock; and

. each outstanding share of eFusion's common stock will be converted into
the right to receive 0.2611391 of a share of ITXC common stock.

Stockholders of eFusion have the right to dissent from the merger and
receive the fair value for their shares, provided that they comply with the
statutory procedures that we have described in this proxy statement and
prospectus.

Each of our companies will hold a meeting of its stockholders to consider
the merger. Your vote is very important. Whether or not you plan to attend your
stockholder meeting, please take the time to vote by completing and mailing the
enclosed proxy card to us.

The dates, times and places of the meetings are as follows:

<TABLE>
<S> <C>
For ITXC
stockholders: For eFusion stockholders:
, , 2000, 9:00 a.m. local time
2000, 10:00 14600 NW Greenbrier Parkway
a.m. local Beaverton, Oregon
time
Princeton
Marriott,
Forrestal
Village
201 Village
Boulevard
Princeton,
New Jersey
</TABLE>

This document serves as a prospectus of ITXC relating to the issuance of
approximately 5,930,503 shares of ITXC's common stock in connection with the
proposed merger and a joint proxy statement for both ITXC and eFusion in
connection with the solicitation of proxies by their boards of directors for
use at their stockholder meetings. This document gives you detailed information
about the proposed merger, and it includes our Amended and Restated Agreement
and Plan of Merger as Annex I. You can get more information about ITXC from
publicly available documents that ITXC has filed with the Securities and
Exchange Commission. We encourage you to read this entire document carefully,
including all its annexes. We suggest that you pay special attention to the
section entitled "Risk Factors" beginning on page 16.

We strongly support this combination of our two companies, and we join with
the other members of our boards of directors in recommending that you vote in
favor of the proposed merger and the related matters requiring your approval.

<TABLE>
<S> <C>
Tom Evslin Ajit Pendse
Chairman of the Board and Chairman of the Board and
Chief Executive Officer Chief Executive Officer
ITXC Corp. eFusion, Inc.
</TABLE>

ITXC's common stock is quoted on the Nasdaq National Market, under the
symbol "ITXC."

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this joint proxy statement/prospectus. Any
representation to the contrary is a criminal offense.

This joint proxy statement/prospectus is dated , 2000, and is first
being mailed to stockholders on or about , 2000.
<PAGE>

[eFUSION LOGO]

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

TO BE HELD ON , 2000

A special meeting of shareholders of eFusion, Inc. will be held at 14600 NW
Greenbrier Parkway, Beaverton, Oregon, on , 2000 at 9:00 a.m. local
time, to consider and vote on the following matters described in the attached
joint proxy statement/prospectus:

1. To approve and adopt an amendment and restatement of eFusion's Fourth
Amended and Restated Articles of Incorporation which will contain an
amendment contemplated by the merger agreement described below.

2. To approve and adopt an Amended and Restated Agreement and Plan of
Merger, dated as of July 25, 2000, among ITXC Corp., eFusion, Inc. and Eye
Merger Corp., a subsidiary of ITXC, which approval shall constitute
approval of:

. the merger contemplated by that agreement;

. the escrow agreement contemplated by that agreement; and

. the appointment of Luis Machuca, Chief Operating Officer of eFusion,
as representative of the eFusion shareholders under the escrow
agreement.

3. To transact other business that may properly come before the special
meeting.

Please note that in the event that the shareholders of eFusion do not
approve the proposal to amend and restate eFusion's Fourth Amended and Restated
Articles of Incorporation, eFusion will not have the corporate power to
consummate the Amended and Restated Agreement and Plan of Merger. Accordingly,
failure to approve that amendment and restatement will preclude consummation of
the merger.

The board of directors of eFusion has fixed the close of business on August
25, 2000 as the record date for the determination of shareholders entitled to
receive notice of and to vote at the special meeting.

By Order of the Board of Directors

Brenda L. Meltebeke
Secretary

, 2000
Beaverton, Oregon

Shareholders of eFusion are or may be entitled to assert dissenters' rights
under Oregon Revised Statutes Sections 60.551 to 60.594 with respect to the
proposed merger. A copy of such provisions is attached as Annex IV.
<PAGE>

[ITXC LOGO]

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON , 2000

A special meeting of stockholders of ITXC Corp. will be held at the
Princeton Marriott, Forrestal Village, 201 Village Boulevard, Princeton, New
Jersey, on , 2000 at 10:00 a.m. local time, to consider and vote on the
following matters described in the attached joint proxy statement/prospectus:

1. To approve the issuance of the shares of ITXC common stock issuable
under the Amended and Restated Agreement and Plan of Merger, dated as of
July 25, 2000, among ITXC Corp., eFusion, Inc. and Eye Merger Corp., a
subsidiary of ITXC.

2. To approve an amendment to ITXC's Third Restated Certificate of
Incorporation which authorizes, as to the shares issuable under the merger
agreement, the transfer restrictions set forth in Section 2.13 of the
merger agreement.

3. To transact other business that may properly come before the special
meeting.

The board of directors of ITXC has fixed the close of business on August 25,
2000 as the record date for the determination of stockholders entitled to
receive notice of and to vote at the special meeting.

By Order of the Board of Directors

Edward B. Jordan
Secretary

, 2000
Princeton, New Jersey
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
A WARNING ABOUT FORWARD-LOOKING STATEMENTS................................. iv
QUESTIONS AND ANSWERS ABOUT THE MERGER..................................... 1
SUMMARY:
The Companies............................................................ 4
The Special Meetings..................................................... 5
Votes Required........................................................... 5
Share Ownership of Management and Others................................. 6
Recommendations of the Boards of Directors............................... 6
The Merger............................................................... 7
Consideration to be Received in the Merger............................... 7
Reasons for the Merger................................................... 7
Conditions to the Merger................................................. 8
Termination of the Merger Agreement...................................... 8
Certain United States Federal Income Tax Consequences.................... 9
Accounting Treatment..................................................... 9
Interests of Certain Persons in the Merger............................... 9
Escrow Agreement......................................................... 10
Stockholder Representative............................................... 10
Dissenters' Rights....................................................... 10
Comparison of Stockholder Rights......................................... 10
Regulatory Approval...................................................... 10
Market Price Data........................................................ 11
Dividend Policy.......................................................... 12
Summary Historical and Unaudited Pro Forma Financial Information......... 12
Comparative Per Share Data............................................... 15
RISK FACTORS:
Risks Relating to the Merger and the Combination of our Two Companies.... 16
Risks Applicable to Both ITXC and eFusion................................ 19
Risk Relating to ITXC.................................................... 20
Risks Relating to eFusion................................................ 27
THE MEETINGS:
General.................................................................. 31
Matters to be Considered at the Meetings................................. 31
Record Date; Vote Required; Voting at the Meetings....................... 31
Voting of Proxies........................................................ 33
Solicitation of Proxies.................................................. 34
Principal Stockholders................................................... 35
THE MERGER:
Background of the Merger................................................. 36
Reasons for the Merger................................................... 39
Recommendations of the Boards of Directors............................... 41
Interests of Certain Persons in the Merger............................... 41
Accounting Treatment of the Merger....................................... 42
Regulatory Approvals..................................................... 43
Federal Securities Law Consequences...................................... 43
Dissenters' Rights....................................................... 43
</TABLE>

i
<PAGE>

<TABLE>
<CAPTION>
Page
----
<S> <C>
THE MERGER AGREEMENT:
The Merger; Closing; Effective Time.................................... 44
Merger Consideration; Conversion of Shares............................. 44
Treatment of Stock Options............................................. 46
Exchange Procedures.................................................... 46
Fractional Shares...................................................... 47
Escrow Agreement; Indemnification...................................... 47
Restrictions on Transferability........................................ 48
Representations and Warranties......................................... 49
Covenants.............................................................. 50
Conditions to Closing.................................................. 51
eFusion Benefit Plans; Other Arrangements.............................. 53
Termination of the Merger Agreement.................................... 53
Effect of Termination.................................................. 53
Expenses............................................................... 54
Amendment.............................................................. 54
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER.................... 55
PRO FORMA FINANCIAL INFORMATION.......................................... 57
THE COMPANIES:
ITXC:
Selected Financial Data Regarding ITXC............................... 63
Management's Discussion and Analysis of ITXC's Financial Condition
and Results of Operations........................................... 65
Description of ITXC's Business....................................... 72
Management........................................................... 88
Executive Compensation............................................... 91
Related Party Transactions........................................... 97
ITXC's Principal Stockholders........................................ 99
eFUSION:
Selected Financial Data Regarding eFusion............................ 102
Management's Discussion and Analysis of eFusion's Financial Condition
and
Results of Operations............................................... 103
Description of eFusion's Business.................................... 109
Certain Executive Officers........................................... 114
Executive Compensation............................................... 114
eFusion's Principal Stockholders..................................... 115
EYE MERGER CORP. ...................................................... 117
COMPARISON OF RIGHTS OF HOLDERS OF eFUSION COMMON STOCK BEFORE AND AFTER
MERGER:
Cumulative Voting...................................................... 118
Power to Call Special Meetings of Stockholders......................... 118
Stockholder Action Without a Meeting................................... 118
Size of the Board of Directors......................................... 119
Classification of the Board of Directors............................... 119
Special Meetings of the Board of Directors............................. 119
</TABLE>

ii
<PAGE>

<TABLE>
<CAPTION>
Page
----
<S> <C>
Removal of Directors..................................................... 119
Transactions Involving Officers and Directors............................ 120
Limitation of Liability of Directors; Indemnification.................... 120
Dividends and Repurchases of Shares...................................... 121
Approval of Certain Corporate Transactions............................... 122
Class Voting in Certain Corporate Transactions........................... 122
Business Combinations/Mergers............................................ 122
Dissenters' and Appraisal Rights......................................... 123
Inspection of Stockholder List........................................... 123
Bylaws................................................................... 124
Control Share Act........................................................ 124
Dissolution.............................................................. 124
DESCRIPTION OF ITXC'S CAPITAL STOCK........................................ 124
RIGHTS OF DISSENTING STOCKHOLDERS.......................................... 126
OTHER ACTION TO BE TAKEN AT THE ITXC SPECIAL MEETING....................... 127
OTHER ACTION TO BE TAKEN AT THE eFUSION SPECIAL MEETING.................... 128
LEGAL MATTERS.............................................................. 129
EXPERTS.................................................................... 129
OTHER MATTERS.............................................................. 130
WHERE YOU CAN FIND MORE INFORMATION........................................ 130
</TABLE>

<TABLE>
<S> <C>
ANNEXES:
Amended and Restated Agreement and Plan of Merger.................. Annex I
Proposed Amendment to ITXC's Third Restated Certificate of
Incorporation..................................................... Annex II
Proposed Amendment and Restatement of eFusion's Fourth
Amended and Restated Articles of Incorporation.................... Annex III
Oregon Dissenters' Rights Statute.................................. Annex IV
</TABLE>

<TABLE>
<S> <C>
INDEX TO FINANCIAL STATEMENTS............................................... F-1
</TABLE>

iii
<PAGE>

A WARNING ABOUT FORWARD-LOOKING STATEMENTS

ITXC and eFusion make forward-looking statements in this document. These
forward-looking statements are subject to risks and uncertainties, and there
can be no assurance that such statements will prove to be correct. Forward
looking statements include:

. statements relating to the cost savings anticipated to result from the
proposed merger;

. statements relating to synergies anticipated to result from the proposed
merger;

. statements relating to integration and other costs estimated to be
incurred in connection with the proposed merger; and

. statements anticipating future performance in the sections entitled "The
Merger--Reasons for the Merger", "Management's Discussion and Analysis
of ITXC's Financial Condition and Results of Operations" and
"Management's Discussion and Analysis of eFusion's Financial Condition
and Results of Operations."

Also, when we use words such as "believes," "expects," "anticipates,"
"estimates", "plans", "intends", "objectives", "goals", "aims" or "projects" or
similar words or expressions, we are making forward-looking statements.

Many possible events or factors could affect the future financial results
and performance of our combined companies after the proposed merger is
completed. This could cause actual results or performance to differ materially
from those expressed in our forward-looking statements. We have described the
risks and uncertainties that could materially impact our respective businesses
in the section entitled "Risk Factors" beginning on page 16.

Stockholders of ITXC and eFusion are cautioned not to place undue reliance
on our forward-looking statements, which speak only as of the date of this
document. Neither ITXC nor eFusion undertakes any obligation to update publicly
any forward-looking statements to reflect events, circumstances or new
information after the date of this document or to reflect the occurrence of
unanticipated events.

We have not authorized anyone to give you any information or to make any
representation about the proposed merger, ITXC or eFusion that differs from or
adds to the information contained in this document. Therefore, if anyone gives
you any different or additional information, you should not rely on it.

If you live in a jurisdiction where it is unlawful to offer to exchange or
sell, or to ask for offers to exchange or buy, the securities offered by this
document, or to ask for proxies, or if you are a person to whom it is unlawful
to direct such activities, then the offer presented by this document does not
extend to you.

The information contained in this document speaks only as of the date
indicated on the cover of this document unless the information specifically
indicates that another date applies.

Information in this document regarding ITXC has been supplied by ITXC and
information in this document regarding eFusion has been supplied by eFusion.

iv
<PAGE>

QUESTIONS AND ANSWERS ABOUT THE MERGER

Q: WHAT AM I BEING ASKED TO VOTE UPON?

A: ITXC stockholders: You are being asked to approve the issuance of shares
to the stockholders of eFusion as part of the merger. You are also being asked
to vote upon a proposed amendment to ITXC's certificate of incorporation. The
proposed amendment would incorporate the transfer restrictions set forth in
Section 2.13 of the Amended and Restated Agreement and Plan of Merger, dated as
of July 25, 2000, by and among ITXC, Eye Merger Corp., a wholly owned
subsidiary of ITXC, and eFusion. Whenever we refer to the merger agreement in
this document, we are referring to that Amended and Restated Agreement and Plan
of Merger.

eFusion stockholders: You are being asked to approve the merger and the
merger agreement, which provides that eFusion will become a wholly owned
subsidiary of ITXC, as well as the related escrow agreement and the appointment
of eFusion's chief operating officer, Luis Machuca, to represent the eFusion
stockholders under the escrow agreement. You are also being asked to vote upon
a proposed amendment and restatement of eFusion's articles of incorporation.
The proposed amendment and restatement authorizes the allocation of ITXC common
stock among eFusion stockholders as contemplated by the merger agreement.

Q: WHAT ARE THE BENEFITS OF THE MERGER?

A: We believe that the merger will benefit both eFusion and ITXC
stockholders. After the merger, stockholders of the combined company will own
an equity interest in a more technologically advanced company with substantial
financial, human and technical resources. As a result, we believe that the
merger should increase stockholder value to you.

Q: WHAT DO I NEED TO DO NOW?

A: After you read and consider the information in this document, just mail
your signed proxy card in the enclosed return envelope as soon as possible, so
that your shares may be represented at the applicable stockholder meeting. You
should return your proxy card whether or not you plan to attend your
stockholder meeting. If you attend your stockholder meeting, you may revoke
your proxy at any time before it is voted and vote in person if you wish.

Q: IF MY SHARES ARE HELD IN STREET NAME BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?

A: Your broker will vote your shares only if you provide instructions on how
to vote. You should follow the directions provided by your broker regarding how
to instruct your broker to vote your shares.

Q: WHAT DO I DO IF I WANT TO CHANGE MY VOTE AFTER I HAVE MAILED IN MY SIGNED
PROXY CARD?

A. You can change your vote at any time before your proxy is voted at the
meetings. You can do this in one of three ways. First, you can send a written
notice stating that you would like to revoke your proxy. Second, you can
complete and submit a new proxy card. If you choose either of these methods,
you must timely submit your notice of revocation or your new proxy card to ITXC
or eFusion, as the case may be. Third, you can attend your meeting and vote in
person. Simply attending a meeting, however, will not revoke your proxy. If you
have instructed a broker to vote your shares, you must follow directions
received from your broker to change your vote.

1
<PAGE>

Q: IF I AM AN eFUSION STOCKHOLDER, SHOULD I SEND IN MY STOCK CERTIFICATES NOW?

A: No. After the transaction is completed, the exchange agent for the
transaction will send eFusion stockholders written instructions for exchanging
their share certificates. ITXC stockholders will keep their existing
certificates.

Q: WHEN DO YOU EXPECT TO COMPLETE THE MERGER?

A: We are working toward completing the merger as promptly as possible and
expect to close the transaction promptly after the special meetings are
completed.

Q: PLEASE EXPLAIN WHAT eFUSION STOCKHOLDERS WILL RECEIVE FOR THEIR eFUSION
SHARES.

A: You will receive shares of ITXC common stock in exchange for your eFusion
shares. The number of shares of ITXC common stock that will be issued, and the
number of shares that you will receive cannot be finally determined until
shortly before the closing. We do know this much: ITXC will issue, in total, at
least 5,658,986 shares of its common stock. In addition, ITXC will issue
additional shares at closing for the cash that eFusion has on hand at the
closing, less any future commitments that eFusion will have to its professional
advisers. The merger agreement provides for the allocation of the aggregate
number of shares among eFusion's various series and classes of capital stock.
We describe the applicable formulas in greater detail elsewhere in this
document. On the front cover, we have presented the exchange ratios that will
apply in the event that eFusion has approximately $9.5 million in cash at
closing, net of unpaid professional advisor fees, none of eFusion's outstanding
warrants are exercised and there are no changes in the outstanding shares of
eFusion's preferred or common stock. We will issue a press release on the
closing date indicating the precise exchange ratios for each series and class
of eFusion's capital stock.

Q: WILL eFUSION STOCKHOLDERS RECEIVE ALL OF THEIR ITXC SHARES PROMPTLY AFTER
THE CLOSING?

A: No. Promptly after the closing, you will receive a letter of transmittal.
When you return that letter, together with your eFusion stock certificates, to
ITXC's exchange agent, Continental Stock Transfer & Trust Company, you will
receive stock certificates representing 90% of the shares of ITXC common stock
to which you are entitled. Your other 10% will be held in escrow, and
ultimately released from escrow, in accordance with the escrow agreement that
we have described in this document.

Q: WHAT RESTRICTIONS WILL EXIST ON THE ITXC SHARES ISSUED IN THE MERGER?

A: Subject to certain special rules that will apply for eFusion's
affiliates, 10% of the shares that eFusion stockholders are entitled to receive
in the merger will be freely transferable upon receipt, another 10% will become
transferable on November 10, 2000 and the balance will become transferable six
months after the closing, subject to the provisions of the escrow agreement.

Q: WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO STOCKHOLDERS?

A: The merger is intended to qualify as a reorganization under the Internal
Revenue Code. Accordingly, eFusion stockholders generally will not recognize
any gain or loss on the exchange of their shares for ITXC common stock, except
with respect to cash, if any, received instead of fractional share interests of
ITXC common stock or cash received by eFusion stockholders who exercise
dissenters' rights. The merger will not have any tax consequences for ITXC
stockholders.

2
<PAGE>

Q: WHAT WILL eFUSION STOCKHOLDERS' TAX BASIS BE IN THE ITXC SHARES THAT THEY
RECEIVE IN THE MERGER?

A: In general, your tax basis in your shares of ITXC common stock received
in the merger will equal your aggregate tax basis in your eFusion stock
surrendered or exchanged for the ITXC common stock, reduced by the amount of
basis allocable to fractional shares for which you receive a cash payment.

Q: DO eFUSION STOCKHOLDERS HAVE THE RIGHT TO DISSENT FROM THE MERGER?

A: Yes. Under Oregon law, you have the right to dissent, provided that you
follow the procedures described in this document. However, if more than 4% of
the outstanding eFusion shares dissent, ITXC will not be obligated to
consummate the merger.

Q: WHOM SHOULD I CALL WITH QUESTIONS?

A: If you are an ITXC stockholder, call ITXC's Investor Relations Department
at (609) 750-3302. If you are an eFusion stockholder, call Jack Carveth,
eFusion's chief financial officer, at (503) 207-6504.

3
<PAGE>

SUMMARY

This brief summary highlights selected information described more fully
elsewhere in this document. It does not contain all of the information that is
important to you. You should carefully read this entire document, the annexes
and the other documents to which this document refers in order to fully
understand the merger agreement and the transactions contemplated by the merger
agreement. See "Where You Can Find More Information" on page 130.

The Companies (See Page 63)

ITXC CORP.
600 College Road East
Princeton, New Jersey 08540
(609) 750-3333

ITXC is a leading service provider for voice on the Internet. ITXC's
WWeXchange(R) service provides phone-to-phone wholesale call completion for
carriers and resellers. Thirteen out of the top fourteen U.S. facilities-based
international carriers, leading European competitive carriers and twelve
incumbent national carriers worldwide have contracted to send traffic over
ITXC's network, ITXC.net. ITXC's webtalkNOW!SM service enables portals,
Internet service providers, and communications web sites to offer personal
computer-to-phone calling to their customers under their own brands. Both
services provide high quality over the Internet through use of ITXC's BestValue
RoutingSM techniques on ITXC.net, which, as of July 31, 2000, had 258 points of
presence in over 151 cities and 60 countries. Announced carrier affiliates
include the Ameritech division of SBC, Verizon Communications, China Telecom,
Gambia Telecommunications Company, Interoute, Justice, Korea Telecom, and
Telstra.

The information contained on ITXC's website is not incorporated by reference
in this document.

eFUSION, INC.
14600 NW Greenbrier Parkway
Beaverton, Oregon 97006
(503) 207-6300

eFusion provides market-ready Internet voice services that help online
businesses and Internet service providers deliver eSatisfactionSM--a richer,
more fulfilling online experience, to their customers. eFusion's services add
value for online shoppers, web surfers, or anyone who wants to be accessible
while online. e-commerce companies can implement eFusion's Push to Talk
(PtT)(TM) service to facilitate live interaction for browsing consumers, which
helps build online revenues, decrease shopping cart abandonment rates and
differentiate their brands on the Internet. With eFusion's Suite AdelineSM
Internet call assistant service, Internet service providers can enable their
subscribers to take incoming calls while on the Internet, thereby giving
providers a competitive edge and increasing customer retention rates.

The information contained on eFusion's website is not incorporated by
reference in this document.

EYE MERGER CORP.
1211 Southwest Fifth Avenue, Suite 1500
Portland, Oregon 97204-3715
(503) 727-2000

Eye Merger Corp. is a wholly owned subsidiary of ITXC that was organized
solely for purposes of completing the merger.

4
<PAGE>

The Special Meetings (See Page 31)

Date, Time and Place. The special meeting of ITXC's stockholders will be
held at 10:00 a.m. local time, on , 2000 at the Princeton Marriott,
Forrestal Village, 201 Village Boulevard, Princeton, New Jersey. The special
meeting of eFusion's stockholders will be held at 9:00 a.m. local time, on
, 2000 at 14600 NW Greenbrier Parkway, Beaverton, Oregon.

Matters to be Considered at the ITXC Special Meeting. At the ITXC special
meeting, we will ask ITXC stockholders to authorize the issuance of ITXC common
stock issuable under the merger agreement and to approve an amendment to ITXC's
certificate of incorporation authorizing, for the shares issuable in the
merger, the transfer restrictions set forth in Section 2.13 of the merger
agreement.

Matters to be Considered at the eFusion Special Meeting. At the eFusion
special meeting, we will ask holders of eFusion's preferred stock and common
stock to approve the merger agreement. Such approval will constitute approval
of the merger, the escrow agreement contemplated by the merger agreement and
the appointment of Luis Machuca as the representative of eFusion's stockholders
for matters that may arise under the escrow agreement. We will also ask
eFusion's stockholders to approve an amendment and restatement of eFusion's
articles of incorporation authorizing the allocation of ITXC common stock among
eFusion stockholders as contemplated by the merger agreement.

ITXC Record Date; Stock Entitled to Vote; Quorum. The close of business in
Princeton, New Jersey on August 25, 2000 is the record date for determining
which holders of ITXC common stock are entitled to vote at the ITXC special
meeting. At the record date, there were shares of ITXC common stock
entitled to vote at the special meeting. A majority of the shares outstanding
on the record date will constitute a quorum.

eFusion Record Date; Stock Entitled to Vote; Quorum. The close of business
in Beaverton, Oregon on August 25, 2000 is the record date for determining
which holders of eFusion common stock and eFusion preferred stock are entitled
to vote at the special meeting. On the record date, the following number of
shares of eFusion stock were entitled to vote at the eFusion special meeting:

. shares of eFusion common stock;

. shares of eFusion Series A preferred stock;

. shares of eFusion Series B preferred stock;

. shares of eFusion Series C preferred stock; and

. shares of eFusion Series D preferred stock.

For purposes of the eFusion special meeting, a quorum consists of a majority
of the shares of each voting group entitled to vote at the special meeting.

Holders of ITXC common stock, eFusion common stock and eFusion preferred
stock as of the applicable record dates are entitled to one vote per share on
each matter to be voted on at the special meetings.

Votes Required (See Page 31)

ITXC. The proposal to approve the issuance of ITXC common stock under the
merger agreement will require the affirmative vote of a majority of the votes
cast at the ITXC meeting, as long as a quorum is present at the special
meeting. The proposal to approve the amendment to ITXC's certificate of
incorporation will require the affirmative vote of the holders of a majority of
the shares of ITXC common stock outstanding on the record date.

5
<PAGE>

eFusion. The proposals to approve the merger agreement and the amendment and
restatement of eFusion's articles of incorporation require the affirmative vote
of the following:

. holders of at least a majority of the outstanding shares of common stock,
voting as a single voting group;

. holders of at least a majority of the outstanding shares of eFusion
common stock and eFusion preferred stock, voting together as a single
voting group on an as-converted basis;

. holders of at least a majority of the outstanding shares of eFusion
Series C preferred stock, voting as a single voting group;

. holders of at least a majority of the outstanding shares of eFusion
Series D preferred stock, voting as a single voting group; and

. holders of at least a majority of the outstanding shares of eFusion
preferred stock, voting together as a single voting group.

Share Ownership of Management and Others (See Page 41)

ITXC. As of July 31, 2000, directors and executive officers of ITXC and
their affiliates beneficially owned and were entitled to vote 18,530,824 shares
of ITXC common stock, representing approximately 45.68% of the common stock
outstanding on the record date.

eFusion. As of the record date, August 25, 2000, directors and executive
officers of eFusion and their affiliates beneficially owned and were entitled
to vote shares of eFusion stock, representing approximately:

. % of the shares of eFusion common stock outstanding on the record date;

. % of the combined shares of eFusion common stock and eFusion preferred
stock outstanding on the record date;

. % of the shares of eFusion Series C preferred stock outstanding on the
record date;

. % of the shares of eFusion Series D preferred stock outstanding on the
record date; and

. % of the shares of eFusion preferred stock outstanding on the record
date.

Recommendations of the Boards of Directors (See Page 41)

ITXC. The ITXC board of directors believes that the merger agreement is in
the best interests of ITXC and its stockholders and has approved and declared
advisable the merger agreement and the proposed amendment to ITXC's certificate
of incorporation. The ITXC board of directors recommends that ITXC stockholders
vote FOR the proposal to issue the shares of ITXC common stock issuable under
the merger agreement and FOR the proposal to amend ITXC's certificate of
incorporation to authorize, as to the shares issuable under the merger
agreement, the transfer restrictions set forth in Section 2.13 of the merger
agreement.

eFusion. The eFusion board of directors believes that the merger agreement,
the merger and the form of escrow agreement are fair to and in the best
interests of eFusion and its stockholders and has approved and declared
advisable the merger agreement, the merger, the form of escrow agreement and
the appointment of Luis Machuca as stockholder representative, as well as the
proposed amendment to eFusion's articles of incorporation. The eFusion board of
directors unanimously, including all disinterested directors, recommends that
eFusion stockholders vote FOR the approval and adoption of the merger
agreement, which also constitutes approval of the merger, the form of escrow
agreement and the appointment of Luis Machuca as stockholder representative
under the escrow agreement, and FOR the proposed amendment and restatement of
eFusion's articles of incorporation authorizing the allocation of ITXC common
stock among eFusion stockholders as contemplated by the merger agreement.

6
<PAGE>

The Merger (See Page 44)

The merger agreement provides for the acquisition by ITXC of eFusion.
eFusion will merge with Eye Merger Corp. and become a wholly owned subsidiary
of ITXC.

The merger agreement is attached as Annex I to this prospectus. We encourage
you to read the merger agreement carefully because it is the legal document
that governs the merger.

Consideration to Be Received in the Merger (See Page 44)

As a result of the merger, each share of eFusion common stock and preferred
stock will be converted into the right to receive a fraction of a share of ITXC
common stock. The fraction, which we refer to in this document as an exchange
ratio, will be different for each series of eFusion's preferred stock and for
eFusion's common stock. The exchange ratios cannot be finally determined until
shortly before the closing, since the applicable formulas require us to
determine the cash that eFusion has on hand at the closing, less any future
commitments that eFusion will have to its professional advisers. We have
described the applicable formulas in greater detail elsewhere in this document.
On the front cover, we have presented the exchange ratios that will apply in
the event that eFusion has $9.5 million in cash at closing, after the payment
of unpaid professional advisor fees. We will issue a press release on the
closing date indicating the precise exchange ratios for each series and class
of eFusion's capital stock.

ITXC will not issue fractional shares in the merger. As a result, the total
number of shares of ITXC common stock that eFusion stockholders will receive in
the merger will be rounded down to the nearest whole number, and eFusion
stockholders will receive a cash payment for the value of the fraction of a
share of ITXC common stock that they would otherwise receive.

Reasons for the Merger (See Page 39)

The combination of eFusion and ITXC is expected to provide many potential
advantages, including, among others:

. ITXC's business model contemplates the development of enhanced Internet
voice services to compliment its WWeXchange service. ITXC has identified
ecalling--the Internet successor to telephone calling--as a top priority
enhanced service. Although ITXC has introduced ecalling capabilities with
its webtalkNOW! service, the merger substantially accelerates ITXC's
ability to develop and deploy an integrated suite of ecalling services,
by including eFusion's Push to Talk service, which voice enables Internet
web sites, and Suite Adeline service, which provides Internet call
waiting, voice mail, and limited follow-me services as part of personal
computer-based call management. We believe that these eFusion's services
represent the best of many such services available for deployment over
ITXC.net.

. ITXC will be in a position to offer eFusion's ecalling services to ITXC's
customers over ITXC.net, a wholesale Internet telephony network which, as
of July 31, 2000, had 258 points of presence in over 151 cities and 60
countries. The introduction of eFusion's applications over ITXC.net
substantially reduces the cost of deploying those services. ITXC's broad
customer base and marketing capabilities provide greater opportunities to
commercially develop eFusion's applications than eFusion would have as a
stand alone applications service provider.

. eFusion has developed a strong technical team, headed by chief executive
officer Ajit Pendse and chief operating officer Luis Machuca, which will
be available to ITXC both for the further development of ecalling
applications and the development of other enhanced services.

. We believe that our sales and marketing organizations will complement
each other. After the closing, we expect that Luis Machuca will be
responsible for a product group that will be charged with the growth and
development of eFusion's Push to Talk services.

7
<PAGE>

. eFusion has developed a diverse portfolio of issued patents and patent
applications. This intellectual property provides the combined companies
with some protection from claims of competitors.

Conditions to the Merger (See Page 51)

The completion of the merger depends upon the satisfaction of a number of
conditions, including the following:

. ITXC stockholder approval of the issuance of the shares of ITXC common
stock under the merger agreement and of the proposed amendment to ITXC's
certificate of incorporation authorizing, solely as to the shares
issuable under the merger agreement, the transfer restrictions set forth
in Section 2.13 of the merger agreement;

. eFusion stockholder approval of the merger agreement, which will
constitute their approval of the merger, the form of escrow agreement and
appointment of a stockholder representative, and of the proposed
amendment to eFusion's articles of incorporation authorizing the
allocation of ITXC's common stock as contemplated by the merger
agreement;

. the absence of any injunction or restraint that prohibits the merger;

. clearance of the merger under the antitrust laws;

. execution of the escrow agreement;

. the material accuracy as of the closing of each party's representations
and warranties contained in the merger agreement;

. the performance by each party of its material obligations under the
merger agreement;

. the absence of litigation which seeks to prohibit the merger or limit
ITXC's operation of eFusion;

. holders of no more than 4% of eFusion's outstanding capital stock shall
have exercised dissenters' rights as of the later of the date of
eFusion's special meeting or the date on which regulatory approval of the
merger is received;

. the approval of the shares of ITXC common stock issuable under the merger
agreement for quotation by the Nasdaq National Market; and

. the absence of certain material adverse events impacting eFusion or ITXC.

Termination of the Merger Agreement (See Page 53)

Right to Terminate. We may mutually agree to terminate the merger agreement
at any time. In addition, either ITXC or eFusion may terminate the merger
agreement if specified events do or do not occur. These include:

. if a court or government regulator permanently prohibits the merger;

. if the merger is not completed by December 30, 2000; or

. if the conditions to a party's obligations to consummate the merger are
not satisfied.

The merger agreement may also be terminated by either party if the eFusion
stockholders fail to approve the merger agreement or the proposed amendment to
eFusion's articles of incorporation or if ITXC's stockholders fail to approve
the issuance of the shares of common stock issuable under the merger. ITXC may
terminate the merger agreement if ITXC's stockholders fail to approve the
proposed amendment to ITXC's certificate of incorporation.

8
<PAGE>

Effect of Termination. eFusion has agreed to grant a license of some of its
technology to ITXC if the merger agreement is terminated. ITXC has agreed to
lend $10 million to eFusion, convertible into eFusion preferred stock, in the
event that the merger is terminated due to the failure of ITXC's stockholders
to approve the issuance of the ITXC common stock issuable under the merger
agreement. In the event that eFusion's stockholders fail to approve the merger
or the proposed amendment to eFusion's articles of incorporation at a time when
eFusion has received a proposal from a third party to acquire eFusion, eFusion
may be required to pay ITXC a $5 million fee if eFusion is acquired by a third
party within a specified time period after the merger agreement with ITXC is
terminated.

Certain United States Federal Income Tax Consequences (See Page 55)

We have structured the merger so that neither ITXC nor eFusion will
recognize any gain or loss for United States federal income tax purposes as a
result of the merger. We have conditioned the merger on our receipt of a legal
opinion to the effect that the merger will constitute a tax-free reorganization
within the meaning of the Internal Revenue Code and that ITXC, Eye Merger Corp.
and eFusion will each be a party to the reorganization.

ITXC stockholders will not recognize any gain or loss for United States
federal income tax purposes as a result of the merger. Generally, for United
States federal income tax purposes eFusion stockholders will not recognize gain
or loss as a result of the merger except with respect to cash received for
dissenting or fractional shares. However, the specific tax consequences of the
merger to an eFusion stockholder will depend on the particular facts of that
eFusion stockholder's own situation. Therefore, each eFusion stockholder should
consult his or her own tax advisor for a full understanding of the merger's tax
consequences.

Accounting Treatment (See Page 42)

We will treat the merger as a purchase transaction for accounting and
financial reporting purposes. As a result, ITXC will allocate its costs in
connection with the merger to the assets of eFusion acquired and the
liabilities of eFusion assumed according to their fair market values at the
merger's completion. ITXC expects to amortize over a maximum of five years the
excess, if any, of costs over the fair market value of the net assets.

Interests of Certain Persons in the Merger (See Page 41)

As eFusion stockholders consider the merger, you should be aware that
certain officers and other employees have interests regarding the merger that
are different from, or in addition to, your interests, including the following:

. as a result of the merger, certain unvested stock options held by two
executive officers and one other employee will automatically accelerate
upon the closing of the merger;

. at the closing, ITXC will grant stock options covering 560,000 shares of
common stock to eFusion employees, including certain eFusion executive
officers, to encourage retention;

. ITXC has agreed to pay severance, and to permit additional stock option
accelerations, in the event that eFusion employees are terminated without
cause within six months after the closing or, within that period, eFusion
employees terminate their employment as a result of a forced relocation
or a material reduction in base salary; and

. certain executive officers of eFusion are expected to become executive
officers of ITXC.

9
<PAGE>

Escrow Agreement (See Page 47)

Before the effective time of the merger, ITXC, Luis Machuca, as
representative for the eFusion stockholders, and an escrow agent will enter
into an escrow agreement providing for 10% of the total ITXC common stock
issued as merger consideration for eFusion common stock and eFusion preferred
stock in the merger to be delivered to the escrow agent upon the closing of the
merger. These shares will be held in an escrow account established as the
exclusive source of indemnification to ITXC for, among other things, any losses
arising from any breach by eFusion of its representations and warranties in the
merger agreement, any damages resulting from certain patent infringement claims
or any failure by eFusion to perform its obligations under the merger
agreement. The escrow agreement is an integral part of the merger agreement.

The form of escrow agreement is attached as Appendix 2.10 to the merger
agreement. We encourage you to read the form of escrow agreement carefully.

Stockholder Representative (See Page 47)

Luis Machuca, eFusion's chief operating officer, has been recommended by the
eFusion board of directors to serve as the eFusion stockholder representative
under the escrow agreement. As stockholder representative, Mr. Machuca would
act on behalf of the eFusion stockholders on all matters under the escrow
agreement. The eFusion's stockholder approval of the merger agreement will
constitute their approval of the selection of Mr. Machuca for this role.

Dissenters' Rights (See Page 126)

Under the Oregon Business Corporation Act, eFusion stockholders may dissent
from the merger and demand the fair value of their shares in cash. To exercise
this right, eFusion stockholders may not vote their shares in favor of the
merger and must take certain other actions that the Oregon Business Corporation
Act requires. A copy of the provisions of the Oregon Business Corporation Act
applicable to the exercise of dissenters' rights is attached to this document
as Annex IV. The preservation and exercise of dissenters' rights require strict
adherence to the applicable provisions of the statute. eFusion stockholders are
urged to read it carefully.

Comparison of Stockholder Rights (See Page 118)

eFusion is an Oregon corporation and, therefore, the rights of stockholders
of eFusion currently are determined by reference to the Oregon Business
Corporation Act and eFusion's articles of incorporation and bylaws. At the
effective time of the merger, stockholders of eFusion will become stockholders
of ITXC, which is a Delaware corporation. As a result, their rights as
stockholders will then be determined by reference to the Delaware General
Corporation Law and ITXC's certificate of incorporation and bylaws. The laws of
these jurisdictions vary. There are also various differences between eFusion's
articles of incorporation and bylaws and ITXC's certificate of incorporation
and bylaws.

Regulatory Approval (See Page 43)

The Hart-Scott-Rodino Antitrust Improvements Act of 1976 prohibits ITXC and
eFusion from completing the merger until they have furnished certain
information and materials to the Antitrust Division of the Department of
Justice and the Federal Trade Commission and the required waiting period has
ended. The parties filed their applications on August 9, 2000 and, as of the
date of filing of this document, had not received any substantive response from
those regulators.

10
<PAGE>

Market Price Data

ITXC's common stock has traded on the Nasdaq National Market under the
symbol ITXC since September 28, 1999. The following table sets forth the per
share range of high and low closing sales prices of ITXC's common stock for the
periods indicated:

<TABLE>
<CAPTION>
High($) Low($)
------- ------
<S> <C> <C>
Year ended December 31, 1999:
Third quarter (September 28-30 only).......................... 32.25 28.25
Fourth quarter................................................ 49.00 27.00
Year ending December 31, 2000:
First quarter................................................. 119.75 36.94
Second quarter................................................ 65.94 25.88
Third quarter (through August 21, 2000)....................... 38.32 17.81
</TABLE>

On July 25, 2000, the last full trading day prior to our signing and
announcing the merger agreement, the closing sales price of ITXC common stock
on the Nasdaq National Market was $29.25 per share. Based on the assumed
exchange ratios set forth on the cover page of this document, the equivalent
value of eFusion capital stock on July 25, 2000 was as follows:

<TABLE>
<CAPTION>
Assumed Per Share
Exchange Equivalent
Class or Series Ratio Value
--------------- --------- ----------
<S> <C> <C>
Common.................................................. 0.2611391 $ 7.64
Series A Preferred...................................... 0.2897198 $ 8.47
Series B Preferred...................................... 0.3877517 $11.34
Series C Preferred...................................... 0.4612042 $13.49
Series D Preferred...................................... 0.4897850 $14.33
</TABLE>

On , 2000, the most recent practicable date prior to the mailing of
this document to you, the closing sales price of ITXC common stock on the
Nasdaq National Market was $ per share. Based on the assumed exchange ratios
set forth on the cover page of this document, the equivalent value of eFusion
capital stock on , 2000 was as follows:

<TABLE>
<CAPTION>
Assumed Per Share
Exchange Equivalent
Class or Series Ratio Value
--------------- --------- ----------
<S> <C> <C>
Common.................................................. 0.2611391
Series A Preferred...................................... 0.2897198
Series B Preferred...................................... 0.3877517
Series C Preferred...................................... 0.4612042
Series D Preferred...................................... 0.4897850
</TABLE>

We encourage you to obtain current market quotations for ITXC common stock.
The market price for ITXC's stock is highly volatile and fluctuates in response
to a wide variety of factors. See "Risk Factors--The stock prices of Internet-
related companies such as ITXC are highly volatile and could drop unexpectedly
resulting in costly litigation and harm to ITXC's business."

ITXC has filed an application with the Nasdaq National Market to list the
ITXC common stock that eFusion stockholders will receive in the merger.

11
<PAGE>

Dividend Policy

ITXC has never declared or paid any dividends on its common stock and does
not anticipate paying any cash dividends in the foreseeable future. ITXC
currently intends to retain future earnings, if any, to finance operations and
the expansion of its business. Any future determination to pay cash dividends
will be at the discretion of ITXC's board of directors and will depend upon
ITXC's financial condition, operating results, capital requirements and other
factors the board of directors deems relevant. In addition, ITXC's credit
agreement restricts its ability to declare and pay dividends without the
consent of the lender.

Summary Historical and Unaudited Pro Forma Financial Information

Summary Historical Financial Information

ITXC Summary Historical Financial Information. We have derived the summary
historical financial information of ITXC set forth below from ITXC's year-end
and interim financial statements that are presented elsewhere in this document.
You should read this financial information in conjunction with these financial
statements and the other financial information regarding ITXC presented in this
document. See also "Where You Can Find More Information."

<TABLE>
<CAPTION>
As of As of
December 31, 1999 June 30, 2000
----------------- -------------
(in thousands)
<S> <C> <C>
Balance Sheet Data:
Cash, cash equivalents and marketable
securities................................... $74,396 $211,195
Total assets.................................. 99,862 259,411
Long-term obligations, including current
portion...................................... 5,493 6,353
Working capital............................... 65,810 209,662
Total stockholders' equity.................... 80,366 240,381
</TABLE>

12
<PAGE>

eFusion Summary Historical Financial Information. We have derived the
summary historical financial information of eFusion for the years ended
December 31, 1998 and 1999, and for the six months ended June 30, 1999 and
2000, set forth below from eFusion's year-end and interim financial statements
that are presented elsewhere in this document. You should read this summary
financial information in conjunction with these financial statements and the
other financial information regarding eFusion presented in this document. The
summary historical financial information of eFusion for the period from April
5, 1996, date of inception, to December 31, 1996, and the year ended December
31, 1997, were subject to audit procedures and were derived from audited
financial statements that are not included elsewhere in this document.

<TABLE>
<CAPTION>
Period from
April 5, 1996
(date of
inception) to Six Months
December 31, Year ended December 31, ended June 30,
------------- ------------------------- ----------------
1996 1997 1998 1999 1999 2000
------------- ------- ------- ------- ------- -------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Revenues................ $ -- $ 764 $ 3,427 $ 3,517 $ 1,924 $ 308
Total operating
expenses............... (984) (8,811) 11,854 12,796 5,903 9,407
Net loss................ (918) (7,879) (8,455) (9,138) (3,991) (8,890)
Basic and diluted net
loss per share
applicable to common
stockholders........... $(0.38) $ (2.60) $ (2.15) $ (2.00) $ (0.92) $ (1.81)
Weighted average shares
used in computing net
loss per common share-
basic and diluted...... 2,443 3,030 3,930 4,566 4,357 5,175
</TABLE>

<TABLE>
<CAPTION>
As of As of
December 31, 1999 June 30, 2000
----------------- -------------
(in thousands)
<S> <C> <C>
Balance Sheet Data:
Cash, cash equivalents and investments........ $ 4,247 $ 13,711
Total assets.................................. 7,188 16,693
Long-term obligations, including current
portion...................................... 1,368 254
Working capital............................... 3,167 13,534
Redeemable convertible preferred stock........ 17,191 37,547
Total stockholders' equity (deficit).......... (12,750) (21,965)
</TABLE>

13
<PAGE>

Unaudited Pro Forma Condensed Consolidated Summary Financial Information

The following table summarizes, under the purchase method of accounting, pro
forma condensed consolidated statement of operations data for the year ended
December 31, 1999 and the six months ended June 30, 2000 as if the merger
between ITXC and eFusion had been completed on the first day of such periods
and condensed consolidated balance sheet data as of June 30, 2000 as if the
merger had been completed on that date. We have included this unaudited pro
forma condensed consolidated summary information only for the purposes of
illustration, and it does not necessarily indicate what the operating results
or financial position would have been if the merger between ITXC and eFusion
had been completed at the dates indicated. Moreover, this information does not
necessarily indicate what the future operating results or financial position of
the combined company will be. You should read this unaudited pro forma
condensed consolidated summary financial information in conjunction with the
"Unaudited Pro Forma Condensed Consolidated Financial Information" included
elsewhere in this document. This unaudited pro forma condensed consolidated
summary financial information does not reflect any adjustments to conform
accounting practices or to reflect any cost savings or other synergies
anticipated as a result of the merger or any future merger-related expenses.

<TABLE>
<CAPTION>
Six months
Year ended ended
December 31, June 30,
1999 2000
------------ ----------
(in thousands, except
per share data)
<S> <C> <C>
Statement of Operations Data:
Revenue............................................... $ 28,928 $ 33,993
Total costs and expenses.............................. 93,279 78,041
Net loss.............................................. (62,921) (47,440)
Basic and diluted net loss per share applicable to
common stockholders.................................. $ (2.88) $ (1.09)
Shares used in computing net loss per common share-
basic and diluted.................................... 21,816 43,476
</TABLE>

<TABLE>
<CAPTION>
As of
June 30,
2000
--------
<S> <C>
Balance Sheet Data:
Cash, cash equivalents and marketable securities...................... $223,906
Total assets.......................................................... 436,319
Long-term obligations, including current portion...................... 6,606
Working capital....................................................... 222,195
Total stockholders' equity............................................ 416,178
</TABLE>

14
<PAGE>

Comparative Per Share Data

We have summarized below the per share information for ITXC and eFusion on
an historical basis and consolidated per share data on an unaudited pro forma
basis. The consolidated data gives effect to the merger on a purchase method
basis of accounting as described in "Unaudited Pro Forma Condensed Consolidated
Financial Statements." ITXC and eFusion did not pay any dividends on their
common stock during the periods below.

This information is only a summary and you should read it in conjunction
with the selected historical financial information, the pro forma condensed
consolidated financial statements and the separate historical financial
statements of ITXC and eFusion and related notes included in this document. The
table below reflects the exchange ratios set forth on the cover page of this
document, which ratios assume that eFusion will hold approximately $9.5 million
of net cash as of the closing.

<TABLE>
<CAPTION>
Six Months
Year Ended Ended
December 31, June 30,
1999 2000
------------ ----------
<S> <C> <C>
Net loss per share:
ITXC Historical....................................... $(1.29) $(0.57)
eFusion Historical.................................... (2.00) (1.81)
ITXC/eFusion Pro Forma................................ (2.88) (1.09)
Pro Forma Equivalent:
Common Stock(1)..................................... (0.75) (0.28)
Series A Preferred(2)............................... (0.83) (0.32)
Series B Preferred(3)............................... (1.12) (0.42)
Series C Preferred(4)............................... (1.33) (0.50)
Series D Preferred(5)............................... (1.41) (0.53)
Book value per share:
ITXC Historical....................................... 2.24 6.24
eFusion Historical.................................... (2.45) (4.04)
ITXC/eFusion Pro Forma................................ 6.14 9.36
Pro Forma Equivalent:
Common Stock(1)..................................... 1.60 2.44
Series A Preferred(2)............................... 1.78 2.71
Series B Preferred(3)............................... 2.38 3.63
Series A Preferred(4)............................... 2.83 4.32
Series D Preferred(5)............................... 3.01 4.58
</TABLE>
--------
(1) Represents the pro forma per share amount multiplied by 0.2611391.
(2) Represents the pro forma per share amount multiplied by 0.2897198.
(3) Represents the pro forma per share amount multiplied by 0.3877517.
(4) Represents the pro forma per share amount multiplied by 0.4612042.
(5) Represents the pro forma per share amount multiplied by 0.4897850.

15
<PAGE>

RISK FACTORS

You should carefully consider the following factors and other information
contained in this document before deciding to invest in shares of ITXC common
stock or consent to the merger, the merger agreement, the amendment and
restatement of eFusion's articles of incorporation or the amendment to the
certificate of incorporation of ITXC described in this document.

Risks Relating to the Merger and the Combination of Our Two Companies

There are several uncertainties that arise from integrating our two companies.

In deciding that the merger is in the best interests of our respective
stockholders, the ITXC board of directors and the eFusion board of directors
considered the potential complementary effects of combining our companies.
However, the process of integrating separate businesses, especially when they
are as geographically separated as ITXC, located in New Jersey, and eFusion,
located in Oregon, involves a number of special risks, including:

. the possibility that the business cultures of our two companies may not
mesh;

. the possibility that management may be distracted from regular business
concerns by the need to integrate operations;

. unforeseen difficulties in integrating operations and systems;

. problems in retaining the employees of the acquired company;

. challenges in retaining customers; and

. potential adverse effects on operating results.

This transaction involves the combination of two significantly different
businesses. As a result, management may be required to respond to business
issues that differ from the types of business issues that they have typically
confronted.

ITXC does not have experience in making acquisitions; its inexperience may
result in mistakes that more experienced acquirors would not make.

ITXC was formed in July 1997 and commenced commercial operations in April
1998. During its brief operating history, it has not acquired any other
companies. The ITXC management team has never collaborated on an acquisition
prior to the pending eFusion merger. In order to effect a successful merger, it
is important for management to plan effectively and to anticipate potential
pitfalls before they arise. ITXC's inexperience in business acquisitions may
limit ITXC's ability to plan for, and manage, the integration of the two
companies.

ITXC may incur substantial costs in integrating eFusion.

ITXC expects to incur restructuring and integration costs from combining
eFusion's operations with those of ITXC. These costs may be substantial and may
include costs for employee severance, relocation and disposition of excess
equipment and other merger-related costs. We have not yet determined the total
amount of these costs.

You will have a reduced ownership and voting interest after the merger.

After the merger's completion, you will own a smaller percentage of the
combined company and its voting stock than you currently own of ITXC or
eFusion. Consequently, you may be able to exercise less influence over the
management and policies of the combined company than you currently exercise
over ITXC or eFusion.

16
<PAGE>

No investment banking firm has passed upon the fairness of the consideration
being delivered pursuant to the merger agreement.

Neither ITXC nor eFusion has received an opinion of an outside financial
advisor on the fairness of the merger from a financial point of view. As a
result, stockholders must make their own evaluations regarding the
consideration to be received by eFusion's stockholders.

If ITXC and eFusion do not integrate their technology and operations quickly
and effectively, the potential benefits of the merger may not occur.

ITXC and eFusion cannot assure you that they will be able to integrate their
technology and operations quickly and smoothly. In order to obtain the benefits
of the merger, the companies must make eFusion's technology and services
operate together with ITXC's technology, the other components of ITXC's
ecalling suite of services and ITXC.net. ITXC may be required to spend
additional time or money on integration which would otherwise be spent on
developing its business and services or expanding ITXC.net. The combined
companies' business, financial condition and prospects will be harmed if ITXC
and eFusion do not integrate their operations and technology smoothly or if
management spends too much time on integration issues.

The merger may result in a loss of eFusion employees.

The success of the combined company may depend upon the retention of eFusion
executives and other key employees who are critical to the continued design,
development and support of eFusion's products and services. Despite ITXC's
efforts to hire and retain quality employees, ITXC might lose some of eFusion's
key employees following the merger. Competition for qualified management,
engineering and technical employees in the Internet industry is intense. There
are a relatively small number of individuals in close proximity to eFusion's
Oregon headquarters who possess the specialized technical skills that the
combined companies will require. ITXC and eFusion have different corporate
cultures. eFusion employees may be unwilling to work for a larger, publicly-
traded company instead of a smaller, start-up company. In addition, competitors
may recruit employees prior to the merger and during integration, as is common
in high technology mergers. As a result, employees of eFusion or the combined
companies could leave with little or no prior notice. We cannot assure you that
the combined companies will be able to attract, retain and integrate employees
to develop and use the eFusion technology following the merger.

The merger may also result in the loss of ITXC employees.

ITXC may also lose key employees as a result of the merger. The combination
of our two companies may provoke job security concerns among ITXC's employees
who may perceive a threat to their status or position within the combined
company. Those employees may be more likely to respond to inquiries from
competitors than they would be if ITXC were not acquiring eFusion.

Since the number of shares of ITXC common stock to be issued in the merger is
essentially fixed, eFusion stockholders are at risk with respect to declines in
the market price of ITXC's common stock.

The merger agreement specifies a formula for determining the number of
shares of ITXC common stock issuable in the merger. That formula is not
impacted by declines in the market price of ITXC's common stock. As a result,
declines in the market price of ITXC's common stock will reduce the aggregate
value of the consideration to be received by eFusion's stockholders. Neither
eFusion nor ITXC has the right to terminate its obligations to complete the
merger solely because of changes in the market price of ITXC's common stock.
ITXC's market price has been extremely volatile since ITXC's initial public
offering in September 1999. eFusion's stockholders are at risk with respect to
any declines that may occur in ITXC's market price between the date of this
document and the closing date. eFusion stockholders should consult a stock
price listing to determine the value of the ITXC common stock to be issued in
the merger.

17
<PAGE>

eFusion's articles of incorporation entitle the holders of eFusion preferred
stock to receive a greater proportion of the overall merger consideration than
they would have received had they converted their preferred stock to common
stock prior to the merger.

Under eFusion's articles of incorporation, as proposed to be amended and
restated, the exchange ratios for eFusion's preferred stock reflect two types
of return. First, the exchange ratios ensure that such holders will receive a
number of shares of ITXC common stock equal to the capital initially
contributed by such holders to eFusion divided by $34.9886. Second, after that
allocation is made, the remaining shares of ITXC common stock to be issued in
the merger will be allocated pro rata among all holders of capital stock and
optionees.

The merger agreement provides for restrictions on the transferability of the
shares of ITXC common stock issuable in the merger. Such restrictions may
adversely impact eFusion's stockholders.

Under the merger agreement, only 10% of the shares of ITXC common stock
issuable in the merger will be freely transferable upon receipt by eFusion's
stockholders. With the exception of an additional 10% of the merger
consideration which will become freely transferable on November 10, 2000, the
balance of the merger consideration cannot be transferred until six months
after the closing date. These restrictions will preclude eFusion stockholders
from taking advantage of any increases in the market price of ITXC's common
stock during the restriction period and will preclude such stockholders from
protecting themselves in the event of declines in market price during the first
six months after the closing.

If eFusion's stockholders fail to approve the merger, eFusion will likely be
required to seek a capital infusion in order to pursue its objectives; such
capital may not be available on attractive terms or at all.

eFusion is not cashflow positive. Prior to the commencement of negotiations
with ITXC, the management of eFusion concluded that in order to enable eFusion
to pursue its business objectives, it would be necessary for eFusion to raise
additional capital during the third or fourth quarter of the current calendar
year. While ITXC has agreed to loan $10 million to eFusion in the event that
the merger agreement is terminated as a result of the failure of ITXC's
stockholders to approve the merger, termination of the merger agreement for any
other reason would excuse ITXC from that obligation. eFusion cannot assure its
stockholders that such financing would be available from other sources on terms
acceptable to eFusion or at all. If obtained in the form of equity, such
financing could be dilutive to eFusion's current stockholders. If obtained as
debt, such financing could result in the imposition of negative covenants that
would restrict eFusion's flexibility and performance.

We could lose customers as a result of uncertainty regarding the merger.

Uncertainty regarding the merger and the ability of ITXC and eFusion to
effectively integrate their operations without a significant reduction in
quality of service could lead some customers to select other vendors. The loss
of business from significant customers could have a negative effect on the
combined companies' business.

Officers and directors of eFusion have potential conflicts of interest in the
merger.

eFusion stockholders should be aware of potential conflicts of interest and
the benefits available to certain eFusion directors when considering eFusion's
board of directors' recommendation to approve the merger. Certain eFusion
officers and directors have benefit arrangements that provide them with
interests in the merger that are different from, or in addition to, interests
of eFusion stockholders. See "THE MERGER--Interests of Certain Persons in the
Merger."

eFusion stockholders cannot determine now the number of shares of ITXC common
stock that they will receive for their eFusion common stock in the merger.

The number of shares of ITXC common stock issuable in the merger is based on
certain factors that cannot be determined precisely until shortly before the
merger's completion. These factors consist of:

. the dollar amount of cash and cash equivalents that eFusion will have on
hand as of the closing; and

. the dollar amount of unpaid fees and disbursements payable to eFusion's
professional advisors as of the closing.

18
<PAGE>

Although we have made assumptions in this document regarding these criteria
in order to enable eFusion stockholders to evaluate the merger agreement, we
cannot predict the actual numbers at this time.

Risks Applicable to Both ITXC and eFusion

The growth of ITXC.net and the growth of eFusion's business depend upon the
growth of the Internet, which may not continue.

The growth of ITXC.net depends on continued growth in the use of the
Internet generally and on the growth in the use of the Internet through
telephones and other devices, in addition to personal computers. The growth of
eFusion's business also depends on the continued growth in use of the Internet,
especially the growth of electronic commerce.

Growth of the Internet may be inhibited by a number of factors, such as:

. quality of Internet and global telecommunications infrastructure;

. security concerns;

. technological failures, such as viruses;

. inconsistent quality of service; and

. lack of availability of cost-effective, high-speed service.

Even if Internet usage grows, the Internet infrastructure may not be able to
support the demands placed on it by this growth, or its performance or
reliability may decline.

Our businesses may be harmed because we rely on third-party communications
infrastructure over which we have no control.

Our services could be disrupted, our reputations could be hurt and we could
lose customers, if the quality and maintenance of the third-party
communications infrastructure on which we rely suffers. This infrastructure,
including the Internet, is used to carry voice traffic between ITXC's customers
and its affiliates. eFusion uses the Internet and the traditional telephone
network, as well as network switches owned and operated by a third party, to
provide its services. We have no control over whether the infrastructure on
which we rely will be adequately maintained by third parties or whether these
third parties are able to upgrade or improve their equipment and prevent it
from becoming obsolete. If these third parties fail to maintain, upgrade or
improve this equipment, our businesses may be materially harmed.

Our networks and equipment may not be able to handle increased traffic and a
large number of simultaneous calls, which could hurt our reputations and result
in a loss of customers.

ITXC's network relies on hardware and software that ITXC or the unrelated
third parties that complete voice and fax calls over ITXC's network, its
affiliates, have developed or acquired. ITXC expects that its network traffic
and volume of simultaneous calls will increase significantly. If the hardware
and software used in its network cannot accommodate this additional volume,
ITXC's reputation could be damaged and it could lose customers.

Similarly, eFusion relies on hardware and software that it has developed or
acquired to provide its Push to Talk and Internet call waiting services. As
eFusion deploys its Push to Talk and Internet call waiting services, if its
data center cannot accommodate the additional volume of simultaneous Push to
Talk and Internet call waiting calls, eFusion's reputation could be damaged and
it could lose customers.

19
<PAGE>

If we are unable to keep up with rapid technological changes in the voice over
Internet industry in a cost-effective manner, our revenues will decrease.

The markets that we serve, the markets for voice services over the Internet,
are characterized by rapid technological developments, evolving industry
standards and customer demands, and frequent new services announcements, such
as new hardware and software entrants and releases. In order for our companies
to remain competitive and continue positive growth of our businesses and
increase the use of our services, we must respond to these developments quickly
and in a cost-effective manner. If we fail to respond in this manner, our
technology could become obsolete, our customers will choose other alternatives
to our services and our revenues will decrease.

Damage to our systems and networks could interrupt our services and result in
reduced revenue and harm to our reputations.

ITXC's operations are dependent on its ability to maintain the components of
ITXC.net and its other computer and telecommunications systems in effective
working order. eFusion's operations are dependent on its ability to maintain
its equipment at its data center in effective working order. Our systems may be
damaged by natural disasters, equipment failure or intentional acts of
vandalism. If we fail to safeguard our systems and networks and experience
frequent or long system delays or interruptions, we may not be able to provide
our services in a consistent and cost-effective manner--which will result in
reduced revenue and harm to our reputations.

Risks Relating to ITXC

As a company with a limited operating history in a new and rapidly changing
industry, it is difficult to predict ITXC's future growth and operating
results.

ITXC's limited operating history makes predicting its future growth and
operating results difficult. ITXC's management team and other employees have
worked at ITXC for only a short period of time. Stockholders and potential
stockholders should consider the risks and uncertainties that an early stage
company like ITXC faces in the new and rapidly evolving market for Internet-
based voice services. Stockholders and potential stockholders should consider
that ITXC has not proven that it can:

. maintain its current, and develop new relationships with its affiliates
as well as with its customers;

. respond effectively to competitive pressures; and

. continue to develop and upgrade ITXC's network and technology.

If ITXC cannot accomplish these goals, its business may not succeed.

ITXC has not been profitable and expects future losses.

To date, ITXC has not been profitable. ITXC may never be profitable and, if
it becomes profitable, it may be unable to sustain profitability. ITXC has
incurred significant losses since inception. ITXC reported net losses of $0.6
million for the inception period from July 21, 1997 through December 31, 1997,
$7.2 million for the year ended December 31, 1998, $19.7 million for the year
ended December 31, 1999 and $21.5 million for the six months ended June 30,
2000. ITXC expects to continue to incur significant losses for the foreseeable
future. As of June 30, 2000, ITXC's accumulated deficit was $49.0 million.

After 1999, ITXC expects to recognize non-cash charges of approximately
$10.2 million relating to non-cash compensation in connection with stock
options that ITXC granted prior to its initial public offering. Those charges
will be expensed, generally over the next three to seven years, in connection
with the underlying vesting periods of the options that were granted.

20
<PAGE>

ITXC is growing rapidly and effectively managing its growth may be difficult.

ITXC's business has grown rapidly in terms of customers, employees and the
size of ITXC.net since its inception. This growth has placed a significant
strain on ITXC's resources and systems which has resulted in fluctuations in
ITXC's network expenses. ITXC's business model depends on continued rapid
growth which will put a further strain on its resources, systems and
management. If ITXC is not able to effectively manage growth by implementing
systems, expanding ITXC.net and hiring, training and managing employees, ITXC's
ability to offer its services will be materially harmed.

If ITXC cannot maintain relationships with the few vendors of gateway equipment
and software upon which ITXC.net depends, ITXC's network expenses could rise
significantly.

ITXC.net is currently configured to use gateway equipment and software which
are primarily manufactured by Cisco Systems, Clarent and VocalTec
Communications. A gateway is a computer server that translates voice and voice-
related signaling back and forth between a traditional telephone network and a
data network. Gateways provided by some of these vendors are not currently
interoperable with each other. If ITXC or its affiliates are unable to maintain
current purchasing terms with these vendors, ITXC will have to make significant
technological modifications to ITXC.net which could raise its network expenses
significantly and have a material adverse affect on its business, financial
condition, operating results and future prospects.

Failure to attract and retain affiliates and customers will harm ITXC's
business.

If ITXC is unable to attract and retain affiliates and customers, the
traffic on ITXC.net may not increase and ITXC may not be able to increase its
global reach. ITXC's ability to attract and retain affiliates and customers
depends on a number of factors, including:

. ITXC's ability to reach agreement with telecommunications companies,
telephony resellers and Internet service providers regarding the terms
and conditions applicable to their business relationship;

. ITXC's success in marketing its services to potential new and existing
affiliates and customers;

. pricing by traditional carriers;

. the rate at which ITXC is able to deploy its network and services;

. ITXC's ability to locate qualified foreign affiliates and call
termination providers;

. consolidation in the telecommunications industry; and

. the quality of the customer and technical support that ITXC provides.

ITXC's quarterly operating results may fluctuate and could fall below
expectations of investors and industry analysts, resulting in a decline in
stock price.

ITXC's quarterly operating results have varied widely in the past and could
fluctuate significantly in the future. Therefore, you should not rely on
quarter-to-quarter comparisons for indications of future performance. Certain
factors may influence ITXC's quarterly operating results, including:

. the amount and timing of capital expenditures and other costs relating to
the expansion of ITXC.net;

. the introduction of new or enhanced services, such as ecalling, or
changes in pricing policies by ITXC or its competitors; and

. economic conditions specific to the Internet or all or a portion of the
technology sector.

If ITXC cannot successfully address these factors, its operating results may
fall below analyst and investor expectations and the price of its common stock
could decline.

21
<PAGE>

ITXC's financial results and operations could be materially adversely affected
if it becomes necessary for ITXC to discontinue relationships with customers
who become unable to meet their payment obligations.

From time to time, ITXC has discontinued service to companies that had
originated calls over ITXC.net because of their failure to meet their payment
obligations. ITXC's financial results and operations could be materially
adversely affected if other comparably situated customers experience similar
difficulties in the future.

ITXC's marketing efforts could be adversely affected if it does not lead the
development of new interoperability standards.

If ITXC does not play a leadership role in the development of new
interoperability standards, the perception of ITXC as an industry leader could
be jeopardized. ITXC achieved that perception, in part, by leading the effort
to develop the iNOW! initiative. A standard for the interoperability of
Internet voice services and products other than iNOW! could emerge without
ITXC's participation. If that happens, ITXC's marketing efforts could be
adversely affected and it could take longer for ITXC to deploy its network
technology.

The lack of interoperability among hardware produced by different vendors may
limit ITXC's ability to grow a worldwide, fully interoperable network.

Unless an interoperability standard is widely adopted and used by
manufacturers of gateways and other hardware, ITXC.net's growth will be
limited. ITXC's business model depends on the continued growth of ITXC.net.
Without a widely adopted interoperability standard, terminators of voice
traffic over the Internet will continue to be required to only accept voice
traffic which was originated on gateways made by the same manufacturer as their
terminating gateway.

If the iNOW! interoperability initiative or another similar initiative is
not widely adopted and implemented, ITXC.net may not grow and ITXC's business
could be adversely affected.

Intense price competition and the nature of the calls placed over ITXC.net may
limit ITXC's revenues.

ITXC's revenues are not solely tied to the number of minutes of calls that
are placed over ITXC.net. Intense competition could reduce the prices that ITXC
charges for its services. In addition, ITXC's revenues are affected by the
types of calls placed over ITXC.net. Calls placed over certain routes or to
certain termination points may generate less revenue than calls of a similar
duration made over different routes or to different termination points.

Intense price competition could reduce the demand for ITXC's service.

ITXC may not be able to continue to compete successfully in the developing
Internet telephony market. Many of ITXC's competitors are larger than ITXC and
have substantially greater financial resources than ITXC does. The market for
ITXC's services has been extremely competitive and is expected to be so for the
foreseeable future. Internet protocol and Internet telephony service providers
such as AT&T Global Clearinghouse, iBasis, Genuity and GRIC and the wholesale
divisions of Net2Phone and deltathree.com route traffic to destinations
worldwide and compete directly with ITXC. Other Internet telephony service
providers focus on a retail customer base and may in the future compete with
ITXC. In addition, major telecommunications companies, such as AT&T, Deutsche
Telekom, MCI WorldCom and Qwest Communications, have entered or plan to enter
the Internet telephony market. See "THE COMPANIES--ITXC--Description of ITXC's
Business--Competition."

22
<PAGE>

ITXC may need additional capital in the future to expand ITXC.net and deploy
enhanced services, which financing may not be available on acceptable terms or
at all, which could force ITXC to curtail or cease its operations.

The development of ITXC's business depends on its ability to expand the
global reach of ITXC.net and to deploy enhanced services over ITXC.net. The net
proceeds from ITXC's stock offerings and ITXC's cash flow from operations could
be insufficient to expand ITXC.net to meet future customer demands. To date,
cash flow from operations has been insufficient to cover ITXC's expenses and
capital needs. ITXC may require significant additional capital in the future
which may not be available on terms acceptable to ITXC or at all. If ITXC
cannot raise adequate capital on acceptable terms, ITXC may be forced to
restrict the growth of ITXC.net and deployment of enhanced services, ITXC may
not be able to attract new affiliates and it may have to curtail or cease
operations. See "THE COMPANIES--ITXC--Management's Discussion and Analysis of
ITXC's Financial Condition and Results of Operations--Liquidity and Capital
Resources."

Foreign political and economic instability could harm ITXC's ability to
maintain a global presence.

A key component of ITXC's business plan is its global network of affiliates.
ITXC's ability to maintain and expand its global reach may be harmed by foreign
political and economic instability. The following factors may inhibit ITXC's
ability to maintain and expand its global presence:

. potentially longer payment cycles outside of the U.S.;

. difficulty in collecting accounts receivable from foreign affiliates;

. weaknesses in particular foreign economies;

. changes in diplomatic and trade relationships;

. foreign taxes; and

. the economic and administrative burdens of complying with a variety of
foreign laws, trade standards, tariffs and trade barriers.

ITXC's proprietary rights may be difficult to protect or maintain.

ITXC's efforts to protect its intellectual property rights through patent,
copyright, trademark and trade secret laws in the U.S. and in other countries
may not prevent misappropriation, and ITXC's failure to protect its proprietary
rights could materially adversely affect its business, financial condition,
operating results and future prospects.

A third party could, without authorization, copy or otherwise appropriate
ITXC's proprietary network information. ITXC's agreements with employees and
others who participate in development activities could be breached, ITXC may
not have adequate remedies for any breach, and ITXC's trade secrets may
otherwise become known or independently developed by competitors.

ITXC relies upon license agreements with respect to its use of the software
and hardware provided to ITXC by its vendors. Those license agreements may not
continue to be available to ITXC on acceptable terms or at all. See "THE
COMPANIES--ITXC--Description of ITXC's Business--Proprietary Rights."

Additional acquisitions may disrupt ITXC's business, divert the attention of
ITXC's management and require significant capital infusions.

ITXC's industry is characterized by growth through acquisitions. To compete
effectively, ITXC expects to make additional investments in complementary
companies, technologies or assets and may consider a number of acquisitions,
significant and otherwise, at any one time. Additional acquisitions could
disrupt ITXC's ongoing business, distract the attention of its small number of
senior managers, make it difficult to maintain its

23
<PAGE>

network and operational standards, controls and procedures and subject ITXC to
risks that are different, in nature and magnitude, than the risks that ITXC
currently faces.

ITXC also may not be able to successfully integrate the services, products
and personnel of additional acquisitions into its operations. ITXC may be
required to incur a significant amount of debt or issue a significant number of
equity securities, which may dilute stockholders' equity interest
substantially, to pay for acquisitions and may be required to invest a
substantial amount of cash to support the further development of any companies
that ITXC may acquire. ITXC's acquisitions may not result in any return, or a
sufficient return on its investment and ITXC may lose all or a substantial
portion of its investment.

ITXC's success is dependent on the continued service of key management and
technical personnel.

ITXC's future success depends, in part, on the continued service of its key
management and technical personnel, including Tom I. Evslin, Edward B. Jordan,
John G. Musci and Thomas J. Shoemaker, four of ITXC's senior executive
officers. If any of those individuals were unable or unwilling to continue in
their present positions, ITXC's business, financial condition, operating
results and future prospects could be materially adversely affected. ITXC does
not carry key person life insurance on its personnel.

ITXC may have difficulty attracting and retaining the skilled employees that it
needs to execute its growth plan.

From time to time ITXC has experienced, and expects to continue to
experience in the future, difficulty in hiring and retaining highly skilled
employees. ITXC's future success depends on its ability to attract, retain and
motivate highly skilled employees, particularly engineering and technical
personnel. Competition for employees in ITXC's industry is intense. ITXC may
not be able to retain key employees or attract, assimilate or retain other
highly qualified employees in the future.

Future government regulation and legal uncertainties could affect ITXC's
ability to provide its services.

ITXC's business, financial condition, operating results and future prospects
could be materially adversely affected if Congress, the Federal Communications
Commission, state regulatory authorities, foreign governments or other bodies
begin to actively regulate or, in the case of certain foreign governments,
prohibit Internet telephony.

United States. Although ITXC's services are not currently actively regulated
by the FCC, aspects of its operations may be subject to state or federal
regulation in the future. Increased regulation of the Internet may slow its
growth, and impact ITXC's cost of providing its service over the Internet. In
addition, the FCC may in the future impose surcharges or other regulations upon
ITXC which could materially adversely affect its business, financial condition,
operating results and future prospects.

International. Increased regulation of the Internet and/or Internet
telephony providers or the prohibition of Internet telephony in one or more
foreign countries could materially adversely affect ITXC's business, financial
condition, operating results and future prospects. ITXC's failure to qualify to
do business in a foreign jurisdiction in which it is required to do so or to
comply with foreign laws and regulations could harm ITXC's ability to conduct
international operations.

ITXC's customers and affiliates may also currently be, or in the future may
become, subject to requirements to qualify to do business in a particular
foreign country, to otherwise comply with regulations, including requirements
to obtain authorization, or to cease from conducting its business as conducted
in that foreign country. ITXC cannot be certain that its customers and
affiliates either are currently in compliance with any such requirements, will
be able to comply with any such requirements, and/or will continue in
compliance with any such requirements. The failure of ITXC's customers and
affiliates to comply with such requirements could materially adversely affect
its business, financial condition, operating results and future prospects.

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Additionally, it is possible that laws--new or already in existence--may be
applied by the U.S. and/or other countries to transport services provided over
the Internet, including laws governing:

. sales and other taxes;

. user privacy;

. pricing controls;

. characteristics and quality of products and services;

. consumer protection;

. cross-border commerce, including laws that would impose tariffs, duties
and other import restrictions; and

. other claims based on the nature and content of Internet materials,
including claims of defamation, negligence and the failure to meet
necessary obligations.

If such laws are applied to ITXC's services, its ability to conduct its
business could be materially adversely affected.

The beneficial ownership of a significant amount of ITXC common stock by ITXC's
directors and officers could delay or prevent a change in control of ITXC.

The concentrated beneficial ownership of ITXC common stock could delay or
prevent a change in control of ITXC that might otherwise be beneficial to
ITXC's stockholders. As of July 31, 2000, ITXC executive officers and directors
and their respective affiliates beneficially owned approximately 45.68% of
ITXC's outstanding common stock. Accordingly, these stockholders will be able
to exert significant influence over matters requiring approval by ITXC's
stockholders, including the election of directors and the approval of mergers
or other business combinations.

ITXC's management has broad discretion in the use of the proceeds that it
received from the prior public offerings of its common stock.

ITXC's management will continue to have broad discretion in the application
of proceeds and the timing of the expenditure of all of the net proceeds that
ITXC received from the two prior public offerings of its common stock. If
ITXC's management fails to apply those proceeds effectively, ITXC may not be
successful in expanding ITXC.net and growing its business and revenues.

ITXC's certificate of incorporation and bylaws and Delaware law contain
provisions that could discourage a takeover.

Provisions of ITXC's certificate of incorporation and by-laws and Delaware
law may discourage, delay or prevent a merger or acquisition that you may
consider favorable. These provisions of ITXC's certificate of incorporation and
by-laws:

. establish a classified board of directors in which only a portion of the
total number of directors will be elected at each annual meeting;

. authorize the board to issue preferred stock;

. prohibit cumulative voting in the election of directors;

. limit the persons who may call special meetings of stockholders;

. prohibit stockholder action by written consent; and

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. establish advance notice requirements for nominations for the election of
the board of directors or for proposing matters that can be acted on by
stockholders at stockholder meetings.

The sale of a substantial number of shares of ITXC common stock in the public
market may adversely affect its stock price.

A substantial amount of ITXC common stock is held by a stockholder who has
agreed not to sell those shares until at least November 2, 2000. After the
closing of the merger, a substantial amount of ITXC common stock will be held
by former eFusion stockholders who cannot sell 80% of those shares until six
months after the closing. After these restrictions expire or if these
restrictions are waived, those holders could decide to sell some or all of
their shares.

The market price of ITXC common stock could decline as a result of sales of
substantial amounts of common stock in the public market or the perception that
substantial sales could occur. These sales also might make it difficult for
ITXC to sell equity securities in the future at a time when, and at a price
which, ITXC deems appropriate.

ITXC's stockholders will experience dilution when ITXC issues the additional
shares of common stock that it is permitted or required to issue under options,
warrants and ITXC's employee stock purchase plan.

Stockholders should be aware that ITXC is permitted, and in some cases
obligated, to issue shares of common stock. If and when ITXC issues these
shares, the percentage of the common stock that existing stockholders own will
be diluted. The following is a summary of additional shares of common stock
that ITXC has currently reserved for issuance as of July 31, 2000:

. 7,618,911 shares are issuable upon the exercise of options or other
benefits under ITXC's stock incentive plan, consisting of:

. outstanding options to purchase 6,059,945 shares at a weighted
average exercise price of $9.08 per share, of which options covering
1,627,903 shares were exercisable as of July 31, 2000; and

. 1,558,966 shares available for future awards after July 31, 2000;

. 879,766 shares are issuable upon the exercise of outstanding warrants at
a weighted average exercise price of $.85 per share; and

. 794,749 shares are issuable under ITXC's employee stock purchase plan.

In addition, at the closing of the merger ITXC will issue options to replace
the options held by eFusion employees and others under the eFusion stock
incentive plan. At July 25, 2000, 2,319,638 shares of eFusion common stock were
issuable upon the exercise of stock options.

The stock prices of Internet-related companies such as ITXC are highly volatile
and could drop unexpectedly resulting in costly litigation and harm to ITXC's
business.

The market price of ITXC's common stock is subject to significant
fluctuations. Many companies have been the subject of class action litigation
by investors following periods of volatility in the price of their publicly
traded securities. If the market value of ITXC's common stock experiences
adverse fluctuations, and ITXC becomes the subject of this type of litigation,
regardless of the outcome, ITXC will incur substantial legal costs. In
addition, this type of litigation may strain ITXC's resources and divert
management attention, causing ITXC's business to suffer.

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Risks Relating to eFusion

eFusion's limited history, especially its extremely limited history as an
applications service provider, makes it difficult to predict its future growth
and operating results.

eFusion's limited operating history makes predicting its future growth and
operating results difficult. eFusion was incorporated in Oregon in 1996 and
only began operating as an applications service provider in 2000. Through the
end of 1999, eFusion sold its Push to Talk and Internet call waiting services
by selling equipment consisting of bundled hardware and software to carriers,
Internet service providers and large enterprise customers. eFusion's chief
operating officer has been with the company for less than one year and almost
all of its sales management and staff have only been with the company for a
short period of time. eFusion has not proven that it can:

. effectively and economically sell its Push to Talk and Internet call
waiting services as an applications service provider;

. protect and enforce its registered patents against competitors that may
be using its patented technology;

. respond effectively to competitive pressures; and

. continue to develop and upgrade eFusion's services and technology.

If eFusion cannot accomplish these goals, its business may not succeed.

eFusion has not been profitable and expects future losses.

eFusion has incurred significant losses since inception. To date, eFusion
has not been profitable. eFusion may never be profitable and, if it becomes
profitable, it may be unable to sustain profitability. eFusion has a limited
operating history as an applications service provider. This limited operating
history makes it difficult to budget or predict future results. eFusion has
incurred significant net losses since it began business. eFusion expects it
will continue to have net losses in 2000 and in later periods. As of June 30,
2000, eFusion had an accumulated deficit of approximately $35.7 million.

eFusion will need additional capital in the future to continue its operations,
which financing may not be available on acceptable terms or at all.

The continued development of eFusion's business depends on its ability to
increase usage of its Internet voice services by carriers, Internet service
providers and e-commerce companies, as well as developing new service
offerings. To date, cash flow from operations has been insufficient to cover
eFusion's expenses and capital needs. eFusion will likely require significant
additional capital in the near future which may not be available on terms
acceptable to it or at all. If the merger does not occur and eFusion cannot
raise adequate capital on acceptable terms, eFusion may be forced to restrict
its sales and marketing efforts and limit its development of new services and
it may have to curtail or cease operations. See "THE COMPANIES--eFUSION--
Management's Discussion and Analysis of eFusion's Financial Condition and
Results of Operations--Liquidity and Capital Resources."

eFusion's services may not achieve a sufficient level of market acceptance for
eFusion to grow its revenues.

The markets for eFusion's technology and services have only recently begun
to develop and are rapidly evolving. In addition, eFusion's services are new
and based on emerging technologies. As is typical in the case of new and
rapidly evolving industries, demand and market acceptance for recently
introduced technology and services are subject to a high level of uncertainty.
Broad acceptance of eFusion's technology and services is critical to its
success and ability to generate revenues. Acceptance of eFusion's services will
be highly dependent on the functionality and performance of those services.
Further, eFusion's services may not be

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accepted if eFusion does not successfully integrate those services with one
another to provide a single-source Internet voice services solution. eFusion
cannot assure you that it will be successful in obtaining market acceptance of
its technology and services.

eFusion's marketing efforts rely heavily on resellers and distributors, whose
efforts may not be sufficient to effectively market and distribute eFusion's
services.

To date, eFusion's marketing efforts as an applications service provider
primarily have been limited to establishing strategic alliances and, to a
lesser extent, commencement of in-house marketing efforts to end-users and
distributors. eFusion believes that it will be dependent in the near term upon
its reseller and distributor relationships, and its Korean joint venture, to
generate revenues from the sales of Suite Adeline and Push to Talk services.
eFusion cannot assure you that any reseller or distributor will actively
distribute eFusion's services or, if they do so, that their efforts will be
successful or generate significant revenues for eFusion. See "THE COMPANIES--
eFusion--Description of eFusion's Business--Sales and Distribution."

eFusion must attract customers outside of the United States in order to be
successful.

Use of e-commerce websites and ecalling is expanding rapidly worldwide. In
order to be successful, eFusion must attract customers outside of the United
States as well as maintain its domestic presence. eFusion must execute a global
strategy to adapt its services to appeal to customers outside of the United
States.

Failure to attract and retain distributors will harm eFusion's business.

eFusion must attract and retain service distributors and resellers in order
to build a sufficiently large customer base to provide its services
economically. eFusion's ability to attract and retain distributors depends on a
number of factors, including:

. eFusion's ability to reach agreement with distributors regarding the
terms and conditions applicable to their business relationship;

. eFusion's success in creating awareness of its brands and promoting the
usage of its services by end-users;

. the rate at which eFusion is able to deploy its services;

. the speed at which eFusion is able to install new equipment at its data
center to allow for increased service usage; and

. the quality of the customer and technical support that eFusion provides.

eFusion's issued and pending patents may not adequately protect its technology.

eFusion's success will depend in part on its ability to continue to obtain
patent protection for its technology, preserve its trade secrets and operate
without infringing upon the proprietary rights of other parties. eFusion cannot
assure you that the patent applications to which eFusion holds rights will
result in the issuance of patents, or that any of its issued patents will
provide commercially significant protection to eFusion's technology. In
addition, eFusion cannot assure you that others will not independently develop
substantially equivalent proprietary information not covered by patents to
which eFusion owns rights or obtain access to eFusion's know-how, or that
others will not claim to have or will not be issued patents which may prevent
the sale of one or more of eFusion's services.

eFusion may not be able to use its intellectual property to further develop
its business because third parties may:

. bring claims of intellectual property infringement against eFusion;

. obtain patents or other intellectual property rights which may limit
eFusion's ability to do business, require eFusion to redesign products or
require it to obtain a license;

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. claim eFusion has misappropriated their creative ideas or formats or
otherwise infringed upon their proprietary rights;

. bring costly, time consuming lawsuits; or

. prevent or delay eFusion from using important technologies.

eFusion has received notices alleging infringement claims. Claims of
infringement, whether successful or not, could seriously harm eFusion's
business, results of operations or prospects. See "THE COMPANIES--eFusion--
Description of eFusion's Business--Proprietary Rights."

eFusion's proprietary rights may be difficult to protect or maintain.

eFusion's efforts to protect its intellectual property rights through
patent, copyright, trademark and trade secret laws in the U.S. and in other
countries may not prevent misappropriation, and eFusion's failure to protect
its proprietary rights could materially adversely affect its business,
financial condition, operating results and future prospects.

A third party could, without authorization, copy or otherwise appropriate
eFusion's proprietary services information. eFusion's agreements with employees
and others who participate in development activities could be breached, eFusion
may not have adequate remedies for any breach, and its trade secrets may
otherwise become known or independently developed by competitors.

eFusion relies upon license agreements with respect to its use of software
and hardware provided to eFusion by its vendors. Those license agreements may
not continue to be available to eFusion on acceptable terms or at all. See "THE
COMPANIES--eFusion--Description of eFusion's Business--Proprietary Rights."

eFusion's success is dependent on the continued service of key management and
technical personnel.

eFusion's future success depends, in part, on the continued service of its
key management and technical personnel, including Ajit Pendse and Luis Machuca,
its chief executive officer and chief operating officer, respectively. If any
of those individuals were unable or unwilling to continue in their present
positions, eFusion's business, financial condition, operating results and
future prospects could be materially adversely affected. eFusion only carries
key person life insurance on Mr. Pendse.

eFusion may have difficulty attracting and retaining the skilled employees that
it needs to execute its business plan as an applications service provider.

eFusion has experienced, and expects to continue to experience in the
future, difficulty in hiring and retaining highly skilled employees. eFusion's
future success depends on its ability to attract, retain and motivate highly
skilled employees, particularly engineering and technical personnel.
Competition for engineering and technical personnel in the Portland, Oregon
area is intense and there are a large number of technology companies competing
for a limited workforce. For example, Intel Corporation recently announced that
it planned to open a research and development facility close to eFusion's
headquarters, in addition to the large presence that Intel already has in the
Portland, Oregon area. eFusion may not be able to retain key employees or
attract, assimilate or retain other highly qualified employees in the future.

Intense competition could reduce the demand for eFusion's services.

eFusion may not be able to compete successfully in the developing Internet
telephony applications market. Many of eFusion's competitors have substantially
greater financial resources than eFusion does. eFusion operates in a relatively
new marketplace in which the barriers to entry are low enough that new
competitors are entering the market at an accelerating pace. There are many
companies that compete with different aspects of eFusion's business, including
Net2Phone, VocalTec, WebLine/Cisco, Nortel Networks, InfoInteractive, and
Pagoo.com.

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eFusion may not develop new services in time to meet changing technologies and
customer demands.

eFusion cannot assure you that its existing services will be accepted by the
market, that it will improve its services, or that it will be able to bring its
services to market in advance of competitors. The market for enhanced Internet
voice services is new and rapidly changing. Several companies have recently
introduced enhanced Internet voice services and other companies are expected to
introduce such services in the future. To be successful, eFusion must continue
to develop its services and add new features and functions to improve its
service offerings. This development could be expensive and time-consuming. If
eFusion does not continue to offer services that are satisfactory to its
customers and end users, it could suffer serious harm to its business,
financial condition, results of operations or future prospects.

In order to succeed, eFusion must:

. quickly complete service offerings currently in development;

. design and use new technologies;

. keep pace with changes in external technology and standards on which
eFusion depends; and

. develop and install enough features to serve its customers.

If eFusion fails to do any of these things, eFusion may suffer serious harm to
its business, financial condition, results of operations or future prospects.

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THE MEETINGS

General

This joint proxy statement/prospectus is being furnished to ITXC
stockholders in connection with the solicitation of proxies by the ITXC's board
of directors for use at a special meeting of ITXC stockholders to be held on
, 2000, at the Princeton Marriott, Forrestal Village, 201 Village
Boulevard, Princeton, New Jersey, commencing at 10:00, a.m., local time, and at
any adjournment or postponement thereof.

This document is also being furnished to eFusion stockholders in connection
with the solicitation of proxies by eFusion's board of directors for use at a
special meeting of eFusion stockholders to be held on , 2000, at 14600
NW Greenbrier Parkway, Beaverton, Oregon, commencing at 9:00 a.m., local time,
and at any adjournment or postponement thereof.

This document and an attached form of proxy for use at the special meetings
of ITXC's and eFusion's stockholders are first being mailed to stockholders on
or about , 2000.

Matters to be Considered at the Meetings

ITXC. At ITXC's special meeting, stockholders will consider and vote on:

. A proposal to authorize the issuance of the shares of ITXC common stock
issuable under the Amended and Restated Merger Agreement, dated as of
July 25, 2000, by and among ITXC, eFusion and ITXC's wholly owned
subsidiary Eye Merger Corp.

. A proposal to amend ITXC's certificate of incorporation to authorize,
with respect to the shares of ITXC common stock issuable in the merger,
the transfer restrictions set forth in Section 2.13 of the merger
agreement.

. Such other business as may properly come before the ITXC special meeting.

eFusion. At eFusion's special meeting, stockholders will consider and vote
on:

. A proposal to approve the Amended and Restated Merger Agreement, which
approval shall constitute approval of:

. the merger contemplated by that agreement;

. the escrow agreement contemplated by that agreement; and

. the appointment of Luis Machuca, chief operating officer of eFusion, as
representative of the eFusion stockholders under the escrow agreement.

. A proposal to adopt an amendment and restatement of eFusion's articles of
incorporation, which will authorize the allocation of ITXC common stock
among eFusion stockholders as contemplated by the merger agreement.

. Such other business as may properly come before the eFusion special
meeting.

While the two proposals are presented and voted on separately, the failure
by any voting group to adopt the amendment and restatement of eFusion's
articles of incorporation will preclude the consummation of the merger.

Record Date; Vote Required; Voting at the Meetings

ITXC. ITXC's board of directors has fixed August 25, 2000 as the record date
for determination of the stockholders entitled to notice of and to vote at
ITXC's special meeting. Accordingly, only holders of record of

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ITXC common stock at the close of business in Princeton, New Jersey on that
date will be entitled to notice of and to vote at the special meeting. Each
holder of record of ITXC common stock on that date is entitled to cast one vote
per share, exercisable in person or by a properly executed proxy, at the
meeting. As of the record date, there were shares of ITXC's common stock
outstanding and entitled to vote.

Assuming that a quorum is present, the affirmative vote of a majority of the
votes cast by the holders of ITXC's common stock voting at the special meeting
will be required in order to approve the proposal authorizing the issuance of
ITXC common stock under the merger agreement. Under Delaware law, the
affirmative vote of holders of a majority of the outstanding shares of ITXC
common stock will be required to approve the proposed amendment to ITXC's
certificate of incorporation. As of July 31, 2000, the directors and executive
officers of ITXC may be deemed to be beneficial owners of approximately 45.68%
of the outstanding shares of ITXC's common stock.

ITXC and eFusion will have the right, but not the obligation, to terminate
the merger agreement in the event that ITXC's stockholders do not approve the
proposal to amend ITXC's certificate of incorporation. ITXC and eFusion will
have the right to terminate the merger agreement in the event that ITXC's
stockholders do not approve the proposal to authorize the issuance of ITXC
common stock under the merger agreement. IN THE EVENT THAT THE STOCKHOLDERS OF
ITXC DO NOT APPROVE THE PROPOSAL TO AUTHORIZE THE ISSUANCE OF ITXC COMMON STOCK
UNDER THE MERGER AGREEMENT, ITXC WILL NOT BE ABLE TO ISSUE THE SHARES REQUIRED
UNDER THE MERGER AGREEMENT. ACCORDINGLY, FAILURE TO APPROVE THAT ISSUANCE WILL
PRECLUDE CONSUMMATION OF THE MERGER.

eFusion. eFusion's board of directors has fixed August 25, 2000 as the
record date for determination of the stockholders entitled to notice of and to
vote at the eFusion's special meeting. Accordingly, only holders of record of
eFusion preferred and common stock at the close of business in Beaverton,
Oregon on that date will be entitled to notice of and to vote at the special
meeting. Each holder of record of preferred and common stock on that date is
entitled to cast one vote per share, exercisable in person or by a properly
executed proxy, at the meeting. As of the record date, the following shares
were outstanding and entitled to vote:

. shares of Series A preferred stock;

. shares of Series B preferred stock;

. shares of Series C preferred stock;

. shares of Series D preferred stock; and

. shares of common stock.

The proposals to approve the merger agreement and the amendment and
restatement of eFusion's articles of incorporation require the affirmative vote
of the following:

. holders of at least a majority of the outstanding shares of eFusion
common stock, voting as a single voting group;

. holders of at least a majority of the outstanding shares of eFusion
common stock and eFusion preferred stock, voting together as a single
voting group;

. holders of at least a majority of the outstanding shares of eFusion
Series C preferred stock, voting as a single voting group;

. holders of at least a majority of the outstanding shares of eFusion
Series D preferred stock, voting as a single voting group; and

. holders of at least a majority of the outstanding shares of eFusion
preferred stock, voting as a single voting group.

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ITXC and eFusion will have the right to terminate the merger agreement in
the event that any voting group of eFusion's stockholders does not approve the
proposal to amend and restate eFusion's articles of incorporation. IN THE EVENT
THAT THE STOCKHOLDERS OF eFUSION DO NOT APPROVE THE PROPOSAL TO AMEND AND
RESTATE eFUSION'S ARTICLES OF INCORPORATION, eFUSION WILL NOT HAVE THE
CORPORATE POWER TO CONSUMMATE THE MERGER AGREEMENT. ACCORDINGLY, FAILURE TO
APPROVE THAT AMENDMENT AND RESTATEMENT WILL PRECLUDE CONSUMMATION OF THE
MERGER.

On the record date, the directors and executive officers of eFusion and
certain of their affiliates may be deemed to be the beneficial owners of
shares of eFusion's Series A preferred stock, shares of eFusion's Series B
preferred stock, shares of eFusion's Series C preferred stock, shares
of eFusion's Series D preferred stock and shares of eFusion's common stock.

Voting of Proxies

All ITXC and eFusion stockholders who are entitled to vote and are
represented at the special meetings by properly executed proxies received prior
to or at such meetings and not duly and timely revoked will be voted at such
meetings in accordance with the instructions indicated in such proxies. If no
instructions are indicated, such proxies will be voted as follows:

. in the case of ITXC's stockholders, "FOR" the proposal to authorize the
issuance of the shares of ITXC common stock under the merger agreement
and "FOR" the proposal to amend ITXC's certificate of incorporation to
authorize, with respect to the shares of ITXC common stock issuable in
the merger, the transfer restrictions set forth in Section 2.13 of the
merger agreement; and

. in the case of eFusion's stockholders, "FOR" the proposal to approve the
merger agreement and "FOR" the proposal to amend and restate eFusion's
articles of incorporation to authorize the allocation of ITXC common
stock among eFusion stockholders as contemplated by the merger agreement.

If any other matters are properly presented at the special meetings for
consideration, the persons named in the enclosed form of proxy, and acting
thereunder, will have discretion to vote on such matters in accordance with
their best judgment. We are not aware of any matters expected to be presented
at the meetings other than the matters that we have described in this document.

You may revoke any proxy that you give in response to this solicitation at
any time before it is voted. You may revoke your proxy by:

. delivering to the Secretary of ITXC or the Secretary of eFusion, as the
case may be, before the taking of the vote at the applicable meeting, a
written notice of revocation bearing a later date than the date of the
proxy;

. submitting a later-dated proxy relating to the same shares before the
taking of the vote at the applicable meeting; or

. attending the meeting and voting in person.

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In order to vote in person at either meeting, stockholders must attend the
meeting and cast their votes in accordance with the voting procedures
established for the meeting. Your attendance at the meeting will not in and of
itself constitute a revocation of a proxy. Unless you are going to vote in
person, you must send any written notice of revocation or subsequent proxy so
as to be delivered at or before the taking of the vote at the meeting as
follows:

FOR ITXC STOCKHOLDERS: FOR eFUSION STOCKHOLDERS:
ITXC Corp. eFusion, Inc.
600 College Road East 14600 NW Greenbrier Parkway
Princeton, New Jersey 08540 Beaverton, Oregon 97006
Attn: Edward B. Jordan, Secretary Attn: Brenda L. Meltebeke, Secretary

At the ITXC special meeting, abstentions and broker non-votes:

. will be counted for purposes of determining whether or not a quorum is
present;

. will, assuming that a quorum is present, have no impact on the
determination of whether ITXC's stockholders have approved the issuance
of ITXC's common stock under the merger agreement; and

. will have the same effect as a negative vote for purposes of determining
whether ITXC's stockholders have approved the proposed amendment to
ITXC's certificate of incorporation.

At the eFusion special meeting, abstentions and broker non-votes:

. will be counted for purposes of determining whether a quorum is present;

. will, assuming that a quorum is present, have the same effect as a
negative vote for purposes of determining whether the holders of
eFusion's common stock, voting as a single voting group, have approved
the merger agreement and the proposed amendment and restatement of
eFusion's articles of incorporation;

. will, assuming that a quorum is present, have the same effect as a
negative vote for purposes of determining whether the holders of
eFusion's common stock and preferred stock, voting together as a single
voting group, have approved the merger agreement and the proposed
amendment and restatement of eFusion's articles of incorporation; and

. will, assuming that the respective quorums are present, have the same
effect as a negative vote for purposes of determining whether the holders
of eFusion's Series C preferred stock, voting as a single voting group,
Series D preferred stock, voting as a single voting group, and preferred
stock, voting as a single voting group, have approved the merger
agreement and the proposed amendment and restatement of eFusion's
articles of incorporation.

Solicitation of Proxies

Each of ITXC and eFusion is responsible for the cost of soliciting proxies
for the their special meetings, subject to the parties' obligations to share
the costs of filing, printing and mailing this document. In addition to
solicitation by mail, our respective directors, officers and employees may
solicit proxies in person or by telephone, telegram or other means. We will not
pay these persons any additional compensation for solicitation of proxies, but
we may reimburse them for reasonable out-of-pocket expenses in connection with
such solicitation. ITXC has retained Morrow & Co., Inc., at an estimated cost
of $7,500, plus reimbursement of expenses, to assist in its solicitation of
proxies from brokers, nominees, institutions and individuals. We will also make
arrangements with custodians, nominees and fiduciaries for forwarding proxy
solicitation materials to beneficial owners of shares held of record by such
custodians, nominees and fiduciaries, and we will reimburse such entities for
reasonable expenses incurred in connection with this activity.

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Principal Stockholders

Please refer to "THE COMPANIES--ITXC--ITXC's Principal Stockholders" and
"THE COMPANIES--eFusion--eFusion's Principal Stockholders" for information
regarding the stockholdings of our directors, executive officers and five
percent stockholders.

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<PAGE>

THE MERGER

Background of the Merger

The chief executive officers of ITXC and eFusion, Tom Evslin and Ajit
Pendse, have known each other for many years. In June 2000, our two chief
executive officers agreed to meet together to explore common objectives. At a
meeting in New York City attended only by our chief executive officers, Tom
Evslin described his view of ITXC's plans for the development of enhanced
technologies that will expand upon ITXC's current services and operate on
ITXC.net. Ajit Pendse, in turn, described eFusion's services and technology and
the need for both a network and additional capital to widen its commercial
deployment of those services. Our chief executive officers recognized that
ITXC's acquisition of eFusion would rapidly accelerate ITXC's ability to deploy
ecalling over ITXC's network and would provide eFusion with a source of capital
and an established platform for deploying ecalling worldwide.

On June 19, 2000, Tom Evslin visited eFusion's headquarters in Beaverton,
Oregon and met with key members of eFusion's management. The principal purpose
of that visit was to enable Tom Evslin to better understand eFusion's
technology and to assess the working culture of eFusion's management. The chief
executive officers of our two companies, together with eFusion's chief
operating officer, Luis Machuca, and outside eFusion board member Frank Gill,
met separately on June 19, 2000 to further explore each company's visions and
the benefits which might be obtainable through a combination of our two
companies. In connection with this visit by Tom Evslin to eFusion's
headquarters, we executed an agreement to protect the proprietary and
confidential information that we expected to share with each other about our
respective businesses. As a result of these meetings, it was agreed that the
parties would consider the feasibility of a merger of our two companies.

During the period between June 19, 2000 and July 25, 2000, ITXC performed
due diligence in Oregon with respect to:

. eFusion's financial condition and results of operations;

. eFusion's cash resources and projected cash needs;

. eFusion's portfolio of existing patents and patent applications;

. eFusion's business history and background;

. eFusion's current and prior business models; and

. other customary areas of due diligence.

In addition to its own employees, ITXC involved outside financial advisors,
accountants and attorneys in this due diligence process.

On June , 2000, ITXC's executive committee met to discuss the possibility
of ITXC's acquiring eFusion. Edward Jordan, ITXC's chief financial officer and
a member of ITXC's board of directors, also attended the meeting. He and Tom
Evslin explained to the executive committee the course of discussions held to
date and the results of ITXC's preliminary due diligence. The executive
committee members reviewed the potential benefits that could arise from the
combination of our two companies and explored potential risks arising from the
merger. The ITXC executive committee authorized ITXC's management to pursue
negotiations with eFusion and considered a price range at which the transaction
would be attractive to ITXC. During the period between that meeting and July
20, 2000, ITXC's management met with ITXC's executive committee on several
other occasions to brief the executive committee on the status of negotiations.

Beginning immediately after the initial June 19, 2000 meeting and continuing
throughout the negotiation process, Ajit Pendse and Luis Machuca discussed the
details of the negotiations with outside board members of eFusion individually
and proceeded on the basis of their conversations.

36
<PAGE>

On June 28, 2000, Ajit Pendse, Luis Machuca, and eFusion's chief financial
officer, Jack Carveth, and other members of eFusion's management visited ITXC's
headquarters in Princeton, New Jersey, principally to meet other key executives
of ITXC whom they had not met in Oregon and to expand their understanding of
ITXC and its business.

Subsequent to the meeting of the managements of our two companies in
Princeton, the parties began discussing specific aspects of the structure of a
business combination. We developed a consensus that, if the parties could agree
upon a price and could agree upon the specific terms of a definitive written
agreement, the business combination would be structured as a merger in which
eFusion would become a wholly owned subsidiary of ITXC and eFusion's
stockholders would receive ITXC's common stock in exchange for their common and
preferred stock.

During the period between June 28, 2000 and July 10, 2000, the parties
communicated frequently to resolve specific aspects of the proposed
transaction. We agreed that, if we were able to agree upon a purchase price for
eFusion, we would price ITXC's common stock on the basis of a weighted average
market price during a period of 10 days prior to the date on which the merger
agreement was to be executed. At that juncture, we had not yet reached
agreement upon the purchase price for eFusion, although we had discussed the
factors that ITXC would consider in establishing a proposed price. Those
factors included analyses of the following:

. revenue, gross profit and operating profit projections;

. eFusion's patent portfolio;

. the incentives that ITXC would be required to implement to retain
eFusion's workforce;

. eFusion's existing customers and contracts; and

. eFusion's potential new products and services.

On July 11, 2000, ITXC's counsel circulated an initial draft of the proposed
merger agreement to eFusion and its representatives. During the period between
July 13, 2000 and July 25, 2000, we and our counsel negotiated various aspects
of the merger agreement at meetings in Beaverton, Oregon and Palo Alto,
California and by telephone conferences.

On July 20, 2000, ITXC's board of directors met to review the proposed
merger. With the exception of John Musci, ITXC's chief operating officer, and
Elon Ganor, each of the members of ITXC's board of directors had participated
in each of the meetings in which ITXC's executive committee had considered the
proposed transaction. The discussions conducted during the executive committee
meetings were summarized for the full board, as were the terms of the
transaction. ITXC's board of directors authorized ITXC's executive officers to
execute the merger agreement, subject to satisfactory resolution of the matters
then open for discussion.

On July 21, 2000, eFusion's board of directors met to review the proposed
merger. The terms of the transaction were discussed with the board and the
board authorized eFusion's executive officers to sign the merger agreement.
Outside legal counsel was present at that meeting.

The parties continued to discuss the merger and negotiate the merger
agreement between July 21 and July 25, 2000.

On July 25, 2000, after the close of regular trading on the Nasdaq National
Market, we executed the merger agreement and immediately distributed a press
release describing the merger agreement.

The merger agreement fixed the total number of shares of ITXC common stock
to be issued to eFusion stockholders at 5,658,986, based on the enterprise
value attributed to eFusion, divided by $34.9886, which was the weighted
average of the trading price of ITXC common stock during the 10 days prior to
the date we signed the agreement.

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<PAGE>

During the period between July 26, 2000 and August 8, 2000, the trading
price of ITXC common stock declined. ITXC and eFusion then considered the
impact that changes to the trading price of ITXC common stock would have on the
stockholders of eFusion. Because the total number of merger shares was
essentially fixed, and the trading price of ITXC common stock fluctuates, it
would be impossible for an eFusion stockholder to determine with any degree of
certainty the number of shares of ITXC common stock that the stockholder would
receive at the closing.

Seeking to allocate the total merger shares consistently among all classes
of eFusion stockholders, rather than having the allocation fluctuate based on
the trading price of ITXC common stock, during that period eFusion explored the
possibility of amending eFusion's articles of incorporation to allocate the
shares of ITXC common stock to be received by eFusion's common and preferred
stockholders based on a fixed value of $34.9886 per share, the weighted average
trading price of ITXC common stock during the 10 days prior to signing the
merger agreement, rather than on an average market price calculation with a
board of directors-determined discount based on the restrictions on
transferability of the merger shares. The parties recognized that the merger
agreement would also need to be amended to condition the effectiveness of the
merger upon eFusion's obtaining stockholder approval to the amendment and
restatement of eFusion's articles of incorporation to effectuate the proposed
change in allocating the merger shares.

On August 8, 2000, eFusion's board of directors met at a special meeting to
consider the amendment and restatement of eFusion's articles of incorporation
and the amendment and restatement of the merger agreement. After discussion,
the board voted unanimously, including all disinterested directors, to approve
an amendment and restatement to eFusion's articles of incorporation and to
authorize eFusion's officers to enter into an amended and restated merger
agreement.

On August 9, 2000, ITXC's board of directors met at a special meeting and,
after discussion, authorized ITXC's officers to enter into an amended and
restated merger agreement that would allocate the merger shares consistent with
the proposed amendment to eFusion's articles of incorporation and would
condition the effectiveness of the merger upon eFusion obtaining stockholder
approval of the amendment and restatement of its articles of incorporation.
ITXC determined that the change would not cause ITXC to issue any additional
shares in the merger and considered it to be a matter solely between eFusion
and its stockholders.

On August 11, 2000, we amended and restated the merger agreement to provide
for eFusion's amendment and restatement of its articles of incorporation. The
amendment to the eFusion articles of incorporation, described in more detail
under "Other Action to be Taken at the eFusion Special Meeting", eliminates the
need to calculate the 30 day average or for eFusion's board to consider
discounting the value of the consideration to be received due to the
restrictions on transferability of the merger shares. The effect of the
amendment to eFusion's articles of incorporation is to fix the allocation of
ITXC stock among the classes of eFusion's stockholders regardless of changes to
the trading price of ITXC common stock prior to the closing. If that trading
price remains, on average, below $34.9886 during the 30 days' prior to the
third before the closing, the holders of eFusion's common stock would benefit
from these changes. However, if that trading price rises above $34.9886 for a
sustained period, these changes could benefit the holders of eFusion's
preferred stock. There is no way to determine what the trading price of ITXC
common stock will be at the closing, or during the 30 days' prior to the third
day before the closing. The market price for ITXC's stock is highly volatile
and fluctuates in response to a wide variety of factors. See "Risk Factors--The
stock prices of Internet-related companies such as ITXC are highly volatile and
could drop unexpectedly resulting in costly litigation and harm to ITXC's
business."

The copy of the merger agreement attached to this document as Annex I
reflects the amendment signed by our companies on August 11, 2000.

38
<PAGE>

Reasons for the Merger

The boards of directors of ITXC and eFusion, in the course of reaching their
respective decisions to approve the merger agreement, consulted with their
respective managements and advisors, and considered a number of factors,
including the following material factors, the order of which does not
necessarily reflect their relative significance:

Factors Considered by ITXC's Board of Directors

. eFusion's technology has been proven through limited deployment. The
merger provides the opportunity to deploy eFusion's Push to Talk and
Suite Adeline services over ITXC.net, a wholesale Internet telephony
network which, as of July 31, 2000, had 258 points of presence in over
151 cities and 60 countries. The introduction of eFusion's applications
over ITXC.net substantially reduces the cost of deploying those services.
ITXC's broad customer base and marketing capabilities provide greater
opportunities to commercially develop eFusion's applications than eFusion
would have as a stand alone applications service provider;

. ITXC's business model contemplates the development of enhanced Internet
voice services to compliment its WWeXchange service. ITXC has identified
ecalling--the Internet successor to telephone calling--as a top priority
enhanced service. Although ITXC has introduced ecalling capabilities with
its webtalkNOW! service, the merger substantially accelerates ITXC's
ability to develop and deploy an integrated suite of ecalling services,
by including eFusion's Push to Talk services, which voice enables
Internet web sites, and Suite Adeline services, which provides Internet
call waiting, voice mail, and limited follow-me services as part of
personal computer-based call management. We believe that these eFusion's
services represent the best of many such services available for
deployment over ITXC.net;

. the opportunity to add eFusion's strong technical team to ITXC's strong
technical team;

. the opportunity to add certain members of eFusion's management team,
including eFusion chief executive officer Ajit Pendse and eFusion chief
operating officer Luis Machuca;

. the opportunity to deploy eFusion's value-added services technology over
ITXC.net, which technology is protected by a diverse portfolio of issued
patents and patent applications;

. the belief that the terms of the merger agreement, including the parties'
representations, warranties and covenants, and the conditions to their
respective obligations, are reasonable; and

. reports from management and from legal and financial advisors as to the
results of their due diligence investigation of eFusion.

Factors Considered by eFusion's Board of Directors

. historical information concerning eFusion's prospects, financial
performance and condition, operations, technology, management and
competitive position;

. the financial condition, results of operations, businesses and prospects
of eFusion after giving effect to the merger;

. current financial market conditions and historical market prices,
volatility and trading information with respect to the common stock of
ITXC;

. the consideration to be received by eFusion's stockholders in the merger;

. the prospects of eFusion as an independent company;

. the potential for other third parties to enter into strategic
relationships with, invest in or acquire eFusion;

. the belief that the terms of the merger agreement, including the parties'
representations, warranties and covenants, and the conditions to their
respective obligations, are reasonable; and

39
<PAGE>

. reports from management and from legal and financial advisors as to the
results of their due diligence investigation of ITXC.

Each board of directors has determined that the merger is fair, is in the
best interests of its corporation and is in the best interests of its
stockholders. However, all business combinations, including the merger, also
include certain risks and disadvantages. The material potential risks and
disadvantages to ITXC stockholders identified by the ITXC's board and
management, and the material potential risks and disadvantages to eFusion's
stockholders identified by eFusion's board and management, include the
following material matters, the order of which does not necessarily reflect
their relative significance:

Risks and Disadvantages Considered by ITXC's Board of Directors

. the difficulties and expenses associated with integrating our two
companies;

. the risk that the potential benefits sought in the merger might not be
realized;

. the risk that existing stockholders may be concerned by the number of
shares of ITXC common stock to be issued under the merger agreement;

. the risk that the combined company may not be able to retain the existing
employees of ITXC and eFusion or attract the professional expertise
necessary for the combined company to prosper;

. the extent to which ITXC's capital resources must be devoted to the
development of eFusion;

. the risk that management will be required to spend a disproportionate
amount of its time and attention on issues pertaining to the integration
of our two companies; and

. other applicable risks described in this document.

Risks and Disadvantages Considered by eFusion's Board of Directors

. the risk that the potential benefits sought in the merger might not be
fully realized;

. the possibility that the merger might not be consummated and the effect
of the public announcement of the merger on eFusion's business and
valuation;

. the risk that, despite the efforts of the combined company, key
management, creative, strategic and technical personnel might not remain
employed by the combined company;

. risks associated with fluctuations in ITXC's stock price prior to closing
of the merger and prior to the expiration of the six-month lock-up
period; and

. other applicable risks described in this document.

Other than these disadvantages, our boards did not identify any other
particular material risks to or material adverse effects on their respective
corporations or stockholders. Both of our boards of directors believe, and
continue to believe, that these potential risks and disadvantages are
outweighed by the potential benefits anticipated from the merger.

The foregoing discussion of the material factors considered by our boards of
directors is not intended to be exhaustive. In view of the wide variety of
factors, risks and disadvantages considered in connection with their evaluation
of the merger, our boards of directors did not find it practicable to, and did
not, quantify or assign any relative or specific weights to the foregoing
matters, and individual directors may have deemed different matters more
significant than others.

40
<PAGE>

Recommendations of the Boards of Directors

For the reasons discussed above, ITXC's board of directors has determined
that the terms of the merger agreement and the transactions contemplated
thereby are fair to, and in the best interests of, ITXC and its stockholders.
Accordingly, the ITXC board recommends that ITXC's stockholders vote for the
proposal to approve the issuance of the shares of ITXC common stock issuable
under the merger agreement and in favor of the proposal to amend ITXC's
certificate of incorporation to authorize, with respect to the shares issuable
under the merger agreement, the transfer restrictions set forth in Section 2.13
of the merger agreement.

Similarly, for the reasons discussed above, eFusion's board of directors has
determined that the terms of the merger agreement and the transactions
contemplated thereby are fair to, and in the best interests of, eFusion and its
stockholders. Accordingly, the eFusion board unanimously, including all
disinterested directors, recommends that eFusion's stockholders vote for the
proposal to approve the merger agreement, thereby approving the merger
agreement, the escrow agreement and the appointment of Luis Machuca as the
representative of eFusion's stockholders, and for the proposal to amend
eFusion's articles of incorporation to authorize the allocation of ITXC common
stock among eFusion stockholders as contemplated by the merger agreement.

Interests of Certain Persons in the Merger

As you consider the recommendations of the ITXC and eFusion boards of
directors, you should be aware that directors, officers and employees of
eFusion have interests in the merger that are different from, or in addition
to, the interests of eFusion stockholders and ITXC stockholders generally.
These other interests include the benefits described below.

. ITXC has agreed that at closing it will grant to eFusion's employees
stock options covering a total of 560,000 shares of ITXC common stock.
These options are in addition to the stock options to be granted to
eFusion's optionees in exchange for their eFusion stock options. With
respect to these 560,000 shares, ITXC intends to grant options covering
the following number of shares of ITXC common stock to the following
executive officers of eFusion:

<TABLE>
<CAPTION>
Shares of ITXC
Common Stock
Covered by the
Name of Executive Officer Stock Option
------------------------- --------------
<S> <C>
Luis Machuca................................................ 99,000
Mary Del Balzo.............................................. 10,000
</TABLE>

All such options will be granted at an exercise price equal to the
closing sales price of ITXC's common stock on the Nasdaq National Market on
the closing date. ITXC may also grant additional stock options after the
consummation of the merger to executive officers and other employees of
eFusion who assume additional management responsibilities within ITXC.
Although no binding commitments have been made with respect to such
additional stock options, ITXC anticipates that one or more of Ajit Pendse,
Luis Machuca and other executive officers of eFusion may receive such stock
options.

. With ITXC's permission, prior to the closing, eFusion will amend the
terms of its outstanding stock options to provide for partial or full
acceleration of these options if, within six months after the closing,
the optionee:

. is terminated without cause by eFusion or ITXC;

. terminates employment with eFusion or ITXC after being required to
relocate more than 50 miles from his or her current residence; or

. terminates employment with eFusion or ITXC after his or her salary is
materially reduced.

Such acceleration will apply to either 25%, 50% or all of the optionee's
unvested options, as determined by eFusion and ITXC prior to the closing. These
acceleration terms will apply to the ITXC stock options

41
<PAGE>

granted in exchange for eFusion stock options in accordance with the merger
agreement. The following table shows, for each of eFusion's executive officers
and directors who own stock options, the number of eFusion options which will
be subject to 25%, 50% or 100% acceleration under the circumstances described
above.

<TABLE>
<CAPTION>
Number of Unvested eFusion
Stock Options Expected to
be Held at the Closing Percentage
Executive Officer Date Acceleration
----------------- -------------------------- ------------
<S> <C> <C>
Luis Machuca....................... 196,875 25%
Mary Del Balzo..................... 24,072 100%
</TABLE>

. Two of eFusion's executive officers--chief operating officer Luis Machuca
and chief financial officer Jack Carveth--and one other eFusion employee
have stock options which, by their terms, accelerate in part or in whole
upon the consummation of a change in control. The merger will constitute
a change in control for purposes of each of these options. As a result of
these arrangements, it is anticipated that 25% of Mr. Machuca's 262,500
unvested options immediately prior to the closing, and 100% of Mr.
Carveth's 46,332 unvested options immediately prior to the closing, will
vest as of the closing date and thus will represent vested options when
exchanged for ITXC stock options in accordance with the merger agreement.

. ITXC has agreed to pay four months' salary, in accordance with a
severance plan to be implemented as of the closing, to each eFusion
employee who, within six months after the closing:

. is terminated without cause by eFusion or ITXC;

. terminates employment with eFusion or ITXC after being required to
relocate more than 50 miles from his or her current residence; or

. terminates employment with eFusion or ITXC after his or her salary is
materially reduced.

All eFusion employees, including employees who are executive officers or
directors of eFusion, will be eligible for such severance payments.

. ITXC has agreed to treat each eFusion employee's years of service with
eFusion prior to the closing as years of service with ITXC for purposes
of ITXC's benefit plans, except where such an arrangement would result in
a duplicative accrual under ITXC's benefit plans. In addition, ITXC has
agreed to provide eFusion's employees with certain customary waivers and
assurances with respect to insurance benefits.

It is anticipated that after the closing, Ajit Pendse, eFusion's chief
executive officer, and Luis Machuca, eFusion's chief operating officer, will
become executive officers of ITXC at least during a transitional period.

Three of eFusion's directors, Ajit Pendse, Luis Machuca and Frank Gill, are
beneficial owners of eFusion common stock. The proposed amendment and
restatement to the eFusion articles of incorporation, if the 30 day average
closing price of ITXC common stock three days prior to the closing of the
merger is less than $34.9886, will result in more of the merger shares being
allocated to holders of the common stock than they would have been entitled to
if the merger occurred and the proposed amendment and restatement to the
eFusion articles of incorporation did not occur. Please note, however, that in
the event that the stockholders of eFusion do not approve the proposed
amendment and restatement to the eFusion articles of incorporation, the merger
will not occur. The amendment and restatement to eFusion's articles of
incorporation was approved by all of the members of eFusion's board of
directors, including all disinterested directors.

Accounting Treatment of the Merger

ITXC will account for the merger as a purchase for accounting and financial
reporting purposes. Accordingly, ITXC will allocate its costs in connection
with the merger to the assets of eFusion acquired and the liabilities of
eFusion assumed according to their fair market values at the merger's
completion. ITXC expects to amortize over a maximum of five years the excess,
if any, of costs over fair market value of net assets.

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<PAGE>

Regulatory Approvals

The merger cannot proceed without the expiration or early termination of the
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. We filed
our applications under that Act with the Federal Trade Commission and the
Antitrust Division of the Department of Justice on August 9, 2000. To date, we
have not received any substantive response from those regulators.

ITXC common stock is currently quoted on the Nasdaq National Market under
the trading symbol "ITXC." ITXC has applied to Nasdaq for approval to list on
the Nasdaq National Market the shares of ITXC common stock issuable under the
merger agreement. Our merger is conditioned upon receipt of this approval.

We cannot provide you with any assurance as to whether such approvals will
be given.

Federal Securities Law Consequences

ITXC has registered under the Securities Act of 1933 the shares of ITXC
common stock that it will issue to eFusion stockholders in the merger.
Consequently, subject to the six month transfer restrictions imposed upon all
former eFusion stockholders under Section 2.13 of the merger agreement and
subject to the terms of the escrow agreement, these shares may be traded freely
without restrictions by those stockholders not deemed to be affiliates of
eFusion or ITXC, as the term affiliate is defined under the Securities Act. An
affiliate of a corporation is a person who, directly or indirectly through one
or more intermediaries, controls, is controlled by, or is under common control
with, that corporation. Any post-merger sale of shares received in the merger
by an affiliate of eFusion must be effected in accordance with the resale
provisions of Rule 145 under the Securities Act or as otherwise permitted under
that Act. These restrictions are expected to apply to eFusion's directors and
officers, as well as to certain principal stockholders of eFusion. In the case
of eFusion stockholders who become affiliates of ITXC, subsequent sales must be
effected in accordance with the resale provisions of Rule 144 under the
Securities Act.

In connection with entering into the merger agreement, eFusion has delivered
to ITXC for each of its affiliates a letter confirming that the affiliate will
not dispose of any ITXC common stock in violation of the Securities Act or the
rules and regulations thereunder and except:

. under an effective registration statement;

. in conformity with the volume and other limitations of Rule 145; or

. in a transaction that is not required to be registered under the
Securities Act.

Dissenters' Rights

ITXC stockholders will not be entitled to any dissenters' rights under the
Delaware General Corporation Law or any other applicable law in connection with
the merger agreement.

Under Oregon law, each eFusion stockholder has the right to dissent from the
merger and, if the merger is completed, to receive fair value for his, her or
its shares in cash by complying with the provisions of the Oregon Business
Corporation Act Dissenters' Right Statute. The dissenting stockholder must
deliver to eFusion, before the vote on the merger at the special meeting, a
written notice of such stockholder's intent to demand payment of fair value for
the stockholder's shares of eFusion capital stock if the merger is effected and
must not vote in favor of the merger. Any stockholder voting in favor of the
merger or failing to provide such notice at or prior to the eFusion special
meeting will have effectively waived any available dissenters' rights under
Oregon law.

THE PRESERVATION AND EXERCISE OF DISSENTERS' RIGHTS REQUIRE STRICT ADHERENCE
TO THE APPLICABLE PROVISIONS OF OREGON LAW. eFUSION STOCKHOLDERS ARE URGED TO
READ ANNEX IV CAREFULLY. A MORE DETAILED DISCUSSION OF THE STATUTE CAN BE FOUND
ON PAGE 126.

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<PAGE>

THE MERGER AGREEMENT

The following is a summary of the material terms of the merger agreement.
This summary is qualified in its entirety by reference to the merger agreement,
which is incorporated herein by reference. You may read the actual provisions
of the merger agreement by referring to Annex I, and stockholders of ITXC and
eFusion are urged to read the merger agreement in its entirety for a more
complete description of the terms and conditions of the merger.

The Merger; Closing; Effective Time

Before execution of the merger agreement, ITXC formed Eye Merger Corp. as an
Oregon corporation and a wholly owned subsidiary of ITXC to effectuate the
merger. The closing of the merger will take place on the closing date, which
will be within five business days after satisfaction or waiver of the
substantive conditions set forth in the merger agreement, unless ITXC and
eFusion agree upon another time. We expect to conduct the closing shortly after
the special meetings are held, since we anticipate that all other conditions to
the merger will be satisfied or waived by that time. Subject to the provisions
of the merger agreement, ITXC and eFusion will file on the closing date
articles of merger with the Secretary of State of the State of Oregon in
accordance with the relevant provisions of Oregon law. As a result, Eye Merger
Corp. will merge with and into eFusion, and eFusion will become a wholly owned
subsidiary of ITXC. The merger will be completed, and the effective time of the
merger is, when the articles of merger are duly filed with the Secretary of
State of the State of Oregon, or at such later time as ITXC and eFusion agree
upon and specify in the articles of merger.

Merger Consideration; Conversion of Shares

At the effective time, by virtue of the merger and without any action on the
part of any eFusion stockholder, each issued and outstanding share of eFusion
common stock and eFusion preferred stock will be exchanged into the right to
receive a fraction of a share of ITXC common stock. We refer to that fraction
as an exchange ratio. As a result of the provisions of eFusion's articles of
incorporation and the terms of the merger agreement, each class and series of
eFusion's capital stock will have a separate exchange ratio, which we refer to
as the Series A preferred exchange ratio, the Series B preferred exchange
ratio, the Series C preferred exchange ratio, the Series D preferred exchange
ratio and the common exchange ratios.

The exchange ratios cannot be determined until immediately prior to the
consummation of the merger. The exchange ratios will be determined as follows:

. Determination of the Number of Shares of ITXC Common Stock Issuable in
the Merger. Initially, it will be necessary to determine the aggregate
number of shares of ITXC common stock to be issued to eFusion's
stockholders upon consummation of the merger and to cover the stock
options to be granted by ITXC in exchange for eFusion's existing options.
Under the terms of the merger agreement, the aggregate number of shares
of common stock that ITXC will issue will equal 5,658,986 shares plus a
number of additional shares calculated pursuant to a formula. We will
calculate the additional shares by determining eFusion's cash assets as
of the closing, subtracting out certain unpaid professional fees, and
then dividing that amount by $34.9886. While we cannot be certain as to
the precise amount of cash that eFusion will have on hand at closing and
we cannot be certain as to the dollar amount of unpaid professional fees,
we estimate that eFusion will have approximately $9.5 million in cash and
cash equivalents after the payment of unpaid professional fees as of the
closing and, as a result of the formula, ITXC will be required to issue
approximately 271,517 additional shares of ITXC common stock. As of July
31, 2000, eFusion had cash and cash equivalents of $12.42 million. In
this document, we refer to the total number of shares of ITXC common
stock to be issued by ITXC as the total ITXC consideration and, after
rounding, we assume that the total ITXC consideration will equal
5,930,503 shares. Stockholders should bear in mind that the actual total
ITXC consideration may vary from this assumed amount, depending upon
eFusion's cash balance and obligations to professional advisors.

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<PAGE>

. Determination of the Preference Shares and Preference Share Ratios. Under
the terms of eFusion's articles of incorporation, the holders of each
series of eFusion's preferred stock are entitled to receive a certain
number of shares of ITXC common stock in preference to the holders of
eFusion's common stock. Assuming that eFusion's stockholders approve the
proposed amendment to eFusion's articles of incorporation, for each
series of eFusion's preferred stock the number of preference shares will
equal a preference share ratio specified in the merger agreement
multiplied by the number of shares of such series outstanding immediately
prior to the effective time of the merger. The preference share ratio for
each series equals the initial issuance price for that series divided by
$34.9886. Assuming no change in the number of outstanding shares of
preferred stock between the date of this document and the effective date
of the closing, and assuming that our estimate of eFusion's cash and cash
equivalents as of the closing date of the merger is correct, the
preference share ratios and aggregate preference shares would be as
follows:

<TABLE>
<CAPTION>
Preference
Shares Share Preference
Series Outstanding Ratio Shares
------ ----------- ---------- ----------
<S> <C> <C> <C>
A.......................................... 2,510,000 0.0285807 71,737
B.......................................... 1,918,736 0.1266126 242,936
C.......................................... 2,589,013 0.2000651 517,971
D.......................................... 2,491,102 0.2286459 569,580
---------
Total...................................... 1,402,224
</TABLE>

Stockholders should bear in mind that the aggregate preference shares will
vary from these assumed calculations in the event that shares of preferred
stock are converted to common stock prior to the effective time of the merger.

. Determination of the Balance Shares. The remaining shares of ITXC's
common stock to be issued in the merger will be allocated equally among
the outstanding shares of eFusion's common stock, preferred stock and
stock options. Such shares, referred to in this document as the aggregate
common equivalent shares, will equal the total ITXC consideration minus
the sum of the preference shares for each of the series of eFusion's
preferred stock. Thus, assuming that the total ITXC consideration equals
5,930,503 shares, none of eFusion's outstanding warrants are exercised
and there is no change in the number of shares of preferred stock
outstanding, the aggregate common equivalent shares will equal 4,528,279
shares.

. Determination of the Common Ratio. Once the number of aggregate common
equivalent shares is determined, we will determine the common ratio. The
common ratio will equal the aggregate common equivalent shares divided by
the number of shares of eFusion common stock that would be outstanding
immediately prior to the closing if all options, vested and unvested,
were exercised and all shares of preferred stock were converted into
common stock. Thus, assuming that there are 4,528,279 common equivalent
shares, the common ratio would equal 0.2611391 of a share.

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<PAGE>

. Determination of the Exchange Ratios. Once each of the calculations
described above has been performed, we will be able to calculate the
exchange ratios for each series of eFusion preferred stock and for
eFusion's common stock. The following table describes the exchange ratios
and, using the assumptions described above, presents a calculation of the
exchange ratios:

<TABLE>
<CAPTION>
Which, based on the assumptions
Will be converted into a described above, will equal the
fraction of a shares of ITXC following fraction of a share
Each share of: common stock equal to: of ITXC common stock:
-------------- ---------------------------- -------------------------------
<S> <C> <C>
Series A the sum of the Series A 0.2897198
preferred stock preference ratio (0.0285807)
and the common ratio
(0.2611391)
Series B the sum of the Series B 0.3877517
preferred stock preference ratio (0.1266126)
and the common ratio
(0.2611391)
Series C the sum of the Series C 0.4612042
preferred stock preference ratio (0.2000651)
and the common ratio
(0.2611391)
Series D the sum of the Series D 0.4897850
preferred stock preference ratio (0.2286459)
and the common ratio
(0.2611391)
common stock the common ratio (0.2611391) 0.2611391
</TABLE>

Stockholders are reminded that the calculations set forth above are based
upon assumptions regarding eFusion's cash balances as of the closing, eFusion's
unpaid professional advisor fees as of the closing and the number of shares of
each series and class of eFusion's capital stock outstanding as of the closing.
Variations in any of these assumptions may significantly alter the calculations
set forth above.

Treatment of Stock Options

Each eFusion stock option outstanding at the effective time will be
automatically converted into an option to purchase ITXC's common stock. The
ITXC option will be identical to the corresponding eFusion stock option in all
respects, except that:

. upon exercise, the optionee will receive ITXC common stock and not
eFusion common stock;

. the stock option will be administered by ITXC's compensation committee or
CEO committee, and not by eFusion's directors;

. the number of shares covered by the ITXC option will equal the number of
shares covered by the eFusion stock option multiplied by the common
ratio; and

. the exercise price of the ITXC option will equal the exercise price of
the eFusion stock option divided by the common ratio.

ITXC has agreed to register under the Securities Act all shares issuable
upon exercise of the options converted in the manner described above.

Exchange Procedures

Continental Stock Transfer & Trust Company, in its capacity as exchange
agent, will handle the exchange of eFusion stock certificates for stock
certificates of ITXC common stock and the payment of cash for fractional
shares. Soon after the closing of the merger, the exchange agent will send a
letter of transmittal, which is to be used to exchange eFusion stock
certificates for stock certificates of ITXC common stock, to each former
eFusion stockholder. The letter of transmittal will contain instructions
explaining the procedures for surrendering eFusion stock certificates. eFUSION
STOCKHOLDERS SHOULD NOT RETURN THEIR STOCK CERTIFICATES WITH THE ENCLOSED PROXY
CARD.

46
<PAGE>

eFusion stockholders who surrender their stock certificates, together with a
properly completed letter of transmittal, will receive stock certificates
representing 90% of the shares of ITXC common stock into which the shares of
eFusion common stock or eFusion preferred stock were converted in the merger.
Stock certificates representing the other 10% of the shares of ITXC common
stock will be withheld from the exchange amount and delivered to the escrow
agent under the escrow agreement. See "Escrow Agreement" on page .

After the merger, each certificate that previously represented shares of
eFusion common stock or eFusion preferred stock will only represent the right
to receive the shares of ITXC common stock into which those shares of eFusion
common stock or eFusion preferred stock have been converted.

ITXC will not pay dividends to holders of any eFusion stock certificates
until the eFusion stock certificates are surrendered. However, once those
certificates are surrendered, ITXC will pay to the holder, without interest,
any dividends that have been declared after the effective time of the merger on
the shares into which those eFusion shares have been converted.

After the effective time of the merger, eFusion will not register any
transfers of shares of eFusion common stock or eFusion preferred stock.

Neither ITXC, eFusion nor any other person will be liable to any former
holder of eFusion common stock or preferred stock for any property properly
delivered to a public official according to applicable abandoned property,
escheat or similar laws.

If a certificate representing eFusion common stock or preferred stock has
been lost, stolen or destroyed, the exchange agent will deliver ITXC shares
upon receipt of appropriate evidence as to such loss, theft or destruction,
appropriate evidence as to ownership of the certificate by the claimant, and
appropriate and customary indemnification.

Fractional Shares

No fractional shares of ITXC common stock will be issued in the merger.
Instead, ITXC will pay each of those eFusion stockholders who would have
otherwise been entitled to a fractional share of ITXC common stock an amount of
cash determined by multiplying the fractional share interest to which such
holder would otherwise be entitled by the closing sales price of one share of
ITXC common stock on the last full trading day immediately prior to the closing
date.

Escrow Agreement; Indemnification

A total of 10% of the shares issuable to each eFusion stockholder in the
merger will be delivered to , as the escrow agent, to be held in escrow
under the terms of the escrow agreement. A copy of the escrow agreement is
annexed to the merger agreement as Appendix 2.10 to the merger agreement. We
have drafted the escrow agreement to correspond with, and expand upon, Article
VIII of the merger agreement. Stockholders of ITXC and eFusion are urged to
read the escrow agreement and Article VIII of the merger agreement in their
entirety for a more complete description of the terms and conditions of the
escrow arrangements.

The escrowed shares will be subject to the following claims:

. eFusion has made numerous representations and warranties in the merger
agreement. In the event that any such representations and warranties turn
out to be inaccurate and ITXC suffers damages as a result of this
inaccuracy, ITXC will be entitled to a return of shares equal to the
dollar amount of such damages divided by the closing sale price of ITXC's
common stock on the Nasdaq National Market on the closing date.

. Similarly, should eFusion fail to perform any covenants described in the
merger agreement required to be performed prior to the closing and should
ITXC suffer damages as a result of such non-performance,

47
<PAGE>

ITXC will be entitled to a return of shares equal to the dollar amount of
such damages divided by the closing sale price of ITXC's common stock on
the Nasdaq National Market on the closing date.

. At the closing, eFusion will estimate the amount of cash and cash
equivalents that eFusion will have as of the closing date, after
deduction of certain professional advisory fees payable by eFusion after
the closing. ITXC will issue a number of additional shares of its common
stock in the merger equal to the amount of this estimate, divided by
$34.9886. If it is ultimately determined that eFusion over-estimated the
amount of such net cash and cash equivalents, the escrow agent will
return to ITXC the shares that would not have been issued had the
estimate been correct. Likewise, if eFusion under-estimates the amount of
its net cash and cash equivalents, ITXC will issue to the former eFusion
stockholders additional shares of ITXC common stock, calculated by
dividing the amount of the under-estimate by $34.9886. In that instance,
ITXC will issue 90% of such shares directly to the former eFusion
stockholders and will deliver 10% of such shares to the escrow agent to
be held in accordance with the escrow agreement.

. Prior to the execution of the merger agreement, eFusion received
correspondence from certain patent holders asserting that eFusion may
have infringed such entities' patent rights. eFusion has denied such
assertions. In the event that ITXC suffers damages as a result of the
enforcement of such claims, ITXC will be entitled to a return of shares
equal to the dollar amount of such damages divided by the closing sale
price of ITXC's common stock on the Nasdaq National Market on the closing
date.

In the absence of fraud, ITXC will have no indemnification rights beyond the
shares held in escrow. Furthermore, with respect to damages described in the
first two of the clauses set forth above, ITXC will not be entitled to assert a
claim except to the extent that such damages exceed $250,000 in the aggregate.

If no claims are asserted against the escrowed shares and no further
assertions of the patent claims described above are made during the first year
after the closing, other than claims which shall be resolved by that time, the
shares remaining in escrow at the one year anniversary of the closing date will
be delivered to the former eFusion stockholders. Such deliveries will be in
proportion to each such stockholder's percentage ownership of the shares
initially deposited in escrow on such stockholder's behalf. If substantive
assertions are made with respect to the patent claims prior to the one year
anniversary of the closing, a number of shares of ITXC common stock sufficient
to cover such claims will be retained in the escrow account until such claims
are resolved. If ITXC and Luis Machuca, as representative of the eFusion
stockholders, are unable to agree upon a reasonable reserve in this instance,
the amount of shares to be held in such reserve will be determined by a third
party acceptable to ITXC and Mr. Machuca. Similarly, if claims relating to
matters other than such patent matters are pending on the one year anniversary
of the closing, the escrow agent will retain in escrow a number of shares
sufficient to cover ITXC's alleged damages.

Restrictions on Transferability

Section 2.13 of the merger agreement provides for certain restrictions on
the transferability of the shares of ITXC common stock that will be issued
under the merger agreement. Of the shares so issued, 10% of each eFusion
stockholder's shares will be free of transfer restrictions, a second 10% of
such shares will become free of such restrictions on November 10, 2000 or, if
the closing occurs after November 9, 2000, on the 30th day after the closing.
All remaining shares will become free of such restrictions 180 days after the
closing, subject to the operation of the escrow agreement.

The restrictions on transferability, to the extent that they apply, will
preclude a former eFusion stockholder from:

. offering to sell such shares;

. selling such shares or agreeing to sell such shares;

. pledging such shares;

48
<PAGE>

. selling such shares short;

. selling any option or contract to purchase such shares or granting any
option, warrant or right to purchase such shares;

. purchasing any option or contract to sell such shares;

. giving any such shares; or

. otherwise transferring or disposing of such shares.

The stock certificates representing the shares of ITXC common stock issuable
to the former eFusion stockholders will bear legends reflecting these
restrictions. eFusion stockholders will have the right to have such legends
removed when the restrictions become inapplicable.

Representations and Warranties

eFusion. The merger agreement contains representations and warranties by
eFusion relating to, among other things:

. corporate organization, structure and power, authority relating to the
merger agreement and enforceability of the merger agreement;

. capitalization, funded debt and required stockholder approval in
connection with the merger;

. subsidiaries, acquisitions and dispositions;

. business and trade names;

. real property leases;

. tangible personal property and eFusion's title to its assets;

. proprietary information and intellectual property matters;

. accounts receivable;

. material contracts, performance under such contracts and defaults under
such contracts;

. principal customers and vendors and the status of eFusion's relationship
with such entities;

. labor and employee benefit matters and issues arising under the Employee
Retirement Income Security Act of 1974;

. insurance;

. licenses, permits, compliance with laws, including environmental laws;

. consents, approvals and actions required from third parties in order to
complete the merger;

. eFusion's financial statements and tax returns and related accounting and
tax matters;

. legal proceedings;

. certain transactions with affiliates;

. the accuracy of information supplied by eFusion in connection with this
document; and

. the absence, over certain specified periods, of certain adverse business
changes and certain material adverse events, excluding, for purposes of
analyzing material adverse events, matters that result from the public
announcement of the merger, actions required to be taken by the merger
agreement, changes impacting Internet telephony generally and matters
affecting the United States economy generally.

49
<PAGE>

ITXC. The merger agreement contains representations and warranties by ITXC
relating to, among other things:

. corporate organization, structure and power, authority relating to the
merger agreement and enforceability of the merger agreement;

. capitalization, funded debt and required stockholder approval in
connection with the merger;

. consents, approvals and actions required from third parties in order to
complete the merger;

. the absence of certain material adverse events since December 31, 1999,
excluding matters that result from the public announcement of the merger,
actions required to be taken by the merger agreement, changes impacting
Internet telephony generally, matters affecting the United States economy
generally and declines in the market price of ITXC's common stock;

. documents filed by ITXC with the SEC and the accuracy of the information
contained in those documents; and

. the accuracy of information supplied by ITXC in connection with this
document.

Covenants

We have each undertaken certain covenants in the merger agreement, including
the following:

Conduct of Business by eFusion Pending the Closing. eFusion has made
covenants that place restrictions on the conduct of its business until either
the effective time of the merger or the termination of the merger agreement. In
general, eFusion is required to carry on its business in the ordinary course of
business consistent with past practice and use reasonable commercial efforts to
retain its employees, maintain its intellectual property, obtain all consents
necessary to complete the merger and preserve its present relationships with
customers, vendors, contractors, distributors and employees. eFusion has agreed
to seek waivers or consents from certain stockholders with respect to
agreements previously executed by such stockholders and to seek commitments
from certain stockholders with respect to the public resale of a portion of the
shares of ITXC common stock that they will receive under the merger agreement.

eFusion has also agreed to certain specific restrictions, including
restrictions that prohibit it from:

. soliciting proposals from third parties to acquire eFusion or
substantially all of its assets or negotiating any such proposals with
any third parties;

. incurring any trade accounts payable outside of the ordinary course of
business;

. increasing any of its indebtedness for borrowed money except in the
ordinary course of business;

. guaranteeing third party obligations;

. merging or consolidating with, purchasing substantially all of the assets
of, or otherwise acquiring any entity;

. increasing or decreasing the rate of compensation of or paying any
unusual compensation to any officer, employee or consultant, other than
regularly scheduled increases in base salary and annual bonuses
consistent with prior practice;

. entering into or amending any collective bargaining agreement, or
creating or modifying any employee benefit plan, or increasing the level
of benefits under employee benefit plan, or, except as otherwise
described in this document, extending or accelerating the exercisability
of any outstanding stock option or increasing or decreasing any severance
or termination pay benefit or any other fringe benefit;

. making any representation to anyone indicating any intention of ITXC to
retain, institute, or provide any employee benefit plans;

50
<PAGE>

. declaring or paying any dividend or making any distribution with respect
to, or purchasing or redeeming, any shares of eFusion's preferred or
common stock;

. making any capital expenditures other than those disclosed writing to
ITXC prior to the execution of the merger agreement;

. issuing any shares of eFusion capital, other than upon the exercise of
stock options or warrants outstanding on July 25, 2000 or upon the
conversion of shares of eFusion's preferred stock;

. granting or issuing any option, warrant or other right to purchase any
shares of eFusion's capital stock, other than with the prior consent of
ITXC;

. taking any action inconsistent with prior practices for the primary
purpose of increasing eFusion's cash balances as of the closing date;

. changing any method or principle of accounting in a manner that is
inconsistent with past practice, except to the extent required by
generally accepted accounting principles;

. taking any action that would likely result in eFusion's representations
and warranties set forth in the merger agreement, other than
representations made as of a particular date, becoming false or
inaccurate;

. incurring any liens or encumbrances outside of the ordinary course of
business; or

. taking or omitting to be taken any action which would reasonably be
expected to materially adversely impact eFusion or which would be outside
of eFusion's ordinary course of business.

Conduct of Business by ITXC Pending the Closing. ITXC has also made
covenants that place restrictions on the conduct of its business until either
the effective time of the merger or the termination of the merger agreement. In
general, ITXC is required to use reasonable commercial efforts to retain its
employees, obtain all consents necessary to complete the merger and preserve
its present relationships with customers, vendors, contractors, distributors
and employees. ITXC has agreed to certain specific restrictions, including
restrictions that prohibit it from:

. changing any method or principle of accounting in a manner that is
inconsistent with past practice, except to the extent required by
generally accepted accounting principles;

. taking any action that would likely result in ITXC's representations and
warranties set forth in the merger agreement, other than representations
made as of a particular date, becoming false or inaccurate;

. taking or omitting to be taken any action which would reasonably be
expected to materially adversely impact ITXC; or

. consummating, prior to the closing of the eFusion merger, the acquisition
of any other entity if such acquisition would require ITXC to modify this
document in a manner that would materially delay the date on which
eFusion's special meeting will be held.

Conditions to Closing

Conditions to the Obligations of eFusion and ITXC. eFusion's and ITXC's
obligations to complete the merger are subject to the satisfaction or waiver on
or before the effective time of various conditions, including the following:

. approval by eFusion's stockholders of:

. the merger agreement; and

. the adoption of an amendment to eFusion's articles of incorporation
authorizing the allocation of ITXC common stock as contemplated by
the merger agreement;

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<PAGE>

. approval by ITXC's stockholders of the issuance of the shares of ITXC
common stock to be issued under the merger agreement;

. the lack of any pending or completed action by a governmental authority
or other third party which would prohibit the merger's completion or
which would materially adversely impact our combined business after the
closing;

. the waiting period imposed under the Hart-Scott-Rodino Antitrust
Improvements Act shall have expired or been terminated by the applicable
governmental authorities;

. a declaration by the SEC that the registration statement on Form S-4, of
which this document is a part, is effective, and it is not the subject of
any stop order or proceedings seeking a stop order;

. authorization of the ITXC common stock issuable in the merger for
quotation on the Nasdaq National Market upon official notice of issuance;
and

. the escrow agent shall have executed the escrow agreement.

Conditions to the Obligations of ITXC. ITXC's obligation to complete the
merger is further subject to the satisfaction or waiver on or before the
effective time of various conditions, including the following:

. the representations and warranties of eFusion shall be accurate in all
material respects as of the closing date, except to the extent expressly
made as of an earlier date, in which case as of such date;

. eFusion shall have performed and complied with its covenants under the
merger agreement in all material respects through the closing date;

. no act or omission shall have occurred since July 25, 2000, and eFusion
shall not have incurred any liability outside of the ordinary course of
business, that in either case materially adversely affects eFusion,
excluding matters that result from the public announcement of the merger,
actions required to be taken by the merger agreement, changes impacting
Internet telephony generally or matters affecting the United States
economy generally;

. all material consents and approvals required by eFusion and ITXC to
complete the merger shall have been obtained;

. eFusion shall not be subject to any legal proceedings which have a
reasonable likelihood of being determined adversely to eFusion and, if so
determined, would be reasonably likely to materially adversely affect
ITXC after the closing;

. the adoption of an amendment to ITXC's certificate of incorporation
authorizing, solely for the shares of ITXC common stock issuable under
the merger agreement, the restrictions on transferability described in
Section 2.13 of the merger agreement;
. eFusion and certain eFusion stockholders shall have agreed to terminate
certain agreements entered into at the time that eFusion's preferred
stock was issued; and

. eFusion stockholders owning more than four percent of eFusion's
outstanding stock as of the date of eFusion's special meeting shall not
have provided notice of their intention to exercise dissenters' rights
under Oregon law.

Conditions to the Obligations of eFusion. eFusion's obligation to complete
the merger is further subject to the satisfaction or waiver on or before the
effective time of various conditions, including the following:

. the representations and warranties of ITXC shall be accurate in all
material respects as of the closing date, except to the extent expressly
made as of an earlier date, in which case as of such date; and

. ITXC shall have performed and complied with its covenants under the
merger agreement in all material respects through the closing date.

52
<PAGE>

eFusion Benefit Plans; Other Arrangements

For information regarding agreements that ITXC has made with respect to
employment arrangements applicable to periods after the closing, see "THE
MERGER--Interests of Certain Persons in the Merger."

Termination of the Merger Agreement

The merger agreement may be terminated before the merger's completion:

. by mutual written consent of eFusion and ITXC;

. by either ITXC or eFusion if:

. any law or regulation prohibits the completion of the merger or if a
final and nonappealable injunction, order or decree has been entered
prohibiting the completion of the merger;

. the merger is not completed on or before December 30, 2000, provided
that the failure to complete the merger by that date did not result
from the terminating party's breach of any material obligation under
the merger agreement;

. eFusion's stockholders shall fail to approve the merger agreement or
the proposed amendment to eFusion's articles of incorporation;

. ITXC's stockholders shall fail to approve the issuance of the shares of
ITXC common stock to be issued under the merger agreement;

. if the non-terminating party materially breaches any of its
representations warranties, covenants or agreements in the merger
agreement, subject to certain cure rights set forth in the merger
agreement; or

. if the conditions to such party's obligation to complete the merger are
not satisfied by December 30, 2000 or cannot possibly be satisfied by
that date; or

. by ITXC if:

. ITXC's stockholders fail to approve the adoption of an amendment to
ITXC's restated certificate of incorporation authorizing, solely for
the shares of ITXC common stock issuable under the merger agreement,
the restrictions on transferability described in Section 2.13 of the
merger agreement; or

. any consent or approval relating to the merger requires the divestiture
or cessation of any of the present businesses of ITXC or eFusion or
imposes any other condition which, in either case, would materially
adversely affect our combined business after the merger is completed.

Effect of Termination

Termination of the merger agreement by the parties will void the agreement
without any liability or obligation, except as follows:

. Each party will be liable for any material breach of the merger
agreement.

. If a court determines that termination was caused by an intentional
breach of the merger agreement, the breaching party will be responsible
for the fees and expenses of the other party's attorneys, accountants and
financial advisors and other expenses incident to the negotiation and
execution of the merger agreement, the filing of materials under the
Hart-Scott-Rodino Antitrust Improvements Act and the filing and mailing
of this document and the related registration statement.

. eFusion will be required to pay a $5 million termination fee to ITXC if:

. eFusion's stockholders fail to approve the merger agreement or the
proposed amendment to eFusion's articles of incorporation or eFusion's
board of directors withdraws its recommendations in favor of the merger
and the proposed amendment to eFusion's articles of incorporation;

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<PAGE>

. at the time of the eFusion special meeting, a third party has proposed
to acquire eFusion in a competing transaction;

. within 12 months after the merger agreement is terminated, a third
party enters into or consummates an agreement providing for the
acquisition of eFusion; and

. eFusion is acquired by a third party.

. Prior to executing the merger agreement, eFusion and ITXC entered into a
letter agreement which was amended concurrently with the execution of the
merger agreement. The letter agreement contains certain provisions which
would apply in the event of the termination of the merger agreement. If
the merger agreement terminates for any reason, eFusion will be obligated
to provide ITXC with a long-term, non-exclusive license under eFusion's
routing patents. The provisions of such license must be commercially
reasonable and must assure ITXC terms no less favorable than terms
afforded by eFusion to any other licensees. The letter agreement also
provides that if the merger agreement is terminated as a result of the
failure of ITXC's stockholders to approve the merger, ITXC will, at
eFusion's request, loan to eFusion $10 million for a period of one year.
Such loan will bear interest at a prime interest rate and will be
convertible into eFusion preferred stock on terms substantially similar
to the terms of eFusion's Series D preferred stock.

Expenses
Whether or not the merger is completed, all fees and expenses incurred in
connection with the merger, the merger agreement and the transactions
contemplated by it will be paid by the party incurring such fees and expenses,
except as follows:

. if the merger agreement is terminated, ITXC and eFusion will share
equally the cost of filing, printing and mailing this document and the
related registration statement; and

. if eFusion is required to make the $5 million payment described above,
that payment will include reimbursement of expenses.

Amendment

The parties may amend the merger agreement before approval by ITXC's and
eFusion's respective stockholders. The parties may not do so after such
approval if the amendment or waiver requires further stockholder approval under
law, without first obtaining approval from the affected stockholders. Any
amendment to the merger agreement must be in writing and signed by the parties.

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<PAGE>

CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

The following summary describes the material United States federal income
tax consequences of the merger that are generally applicable to eFusion
stockholders who exchange their eFusion stock for ITXC common stock. This
discussion is based on provisions of the Internal Revenue Code of 1986, federal
income tax regulations and administrative and judicial interpretations of the
code and those regulations, all as in effect as of the date of this document
and all of which are subject to change, possibly with retroactive effect. This
discussion does not address all aspects of United States federal income
taxation that may be applicable to eFusion stockholders in light of their
particular circumstances or to eFusion stockholders subject to special
treatment under United States federal income tax law, including, without
limitation:

. partnerships and other pass-through entities;

. foreign persons who may be subject to tax under the provisions of the
Foreign Investment in Real Property Tax Act of 1980;

. certain financial institutions;

. insurance companies;

. tax-exempt entities;

. dealers in securities;

. traders in securities that elect to apply a mark-to-market method of
accounting;

. certain United States expatriates;

. persons that hold eFusion stock as part of a straddle, hedge, conversion
transaction or other integrated investment;

. eFusion stockholders whose functional currency is not the United States
dollar; and

. eFusion stockholders who acquired eFusion stock through the exercise of
employee stock options or otherwise as compensation.

Furthermore, this summary does not discuss any aspect of state, local or
foreign taxation, or any aspect of United States federal tax laws other than
the United States federal income tax.

This discussion is limited to eFusion stockholders that hold their eFusion
stock as capital assets. An eFusion stockholder holds shares of eFusion stock
as a capital asset unless that stockholder holds the stock as stock in trade,
or other property of a kind which would properly be included in the
stockholder's inventory if on hand at the close of the stockholder's taxable
year, or primarily for sale to customers in the ordinary course of the
stockholder's trade or business.

ITXC's and eFusion's obligations to complete the merger are conditioned upon
their receipt of an opinion from Lowenstein Sandler PC, ITXC's counsel, that
the merger will constitute a tax-free reorganization within the meaning of
Section 368(a) of the Internal Revenue Code. That opinion will be based upon
then-existing law and will rely on certain facts, assumptions, limitations,
representations and covenants including those contained in representation
letters executed by officers of ITXC and eFusion that, if incorrect in certain
material respects, would jeopardize the conclusions reached by Lowenstein
Sandler PC in its opinion. The tax opinion will not bind the Internal Revenue
Service, nor will it prevent the Internal Revenue Service from successfully
asserting a contrary opinion. Neither ITXC nor eFusion will request a ruling
from the Internal Revenue Service in connection with the merger.

The following material United States federal income tax consequences will
result from the merger's qualification as a reorganization within the meaning
of Section 368(a) of the Internal Revenue Code, subject to the limitations and
qualifications described above:

. You will not recognize any gain or loss upon your receipt of ITXC common
stock in the merger, except with respect to cash received instead of a
fractional share of ITXC common stock.

55
<PAGE>

. The aggregate tax basis of the ITXC common stock received by you as a
result of the merger, treating fractional share interests in ITXC common
stock as having been issued in the merger and then redeemed for cash,
will be the same as the aggregate tax basis of the eFusion stock you
surrender in the merger.

. The holding period of the ITXC common stock received by you in the merger
will include the period during which you held the eFusion stock exchanged
therefor.

. If you receive cash in the merger instead of a fractional share interest
in eFusion stock, you will be treated as having received the cash in
redemption of the fractional share interest. Assuming that, immediately
after the merger, you hold a minimal interest in ITXC, you exercise no
control over ITXC and, as a result of the deemed redemption and after
giving effect to certain constructive ownership rules, you experience an
actual reduction in your interest in ITXC, you will recognize capital
gain or loss on the deemed redemption in an amount equal to the
difference between the amount of cash received and your adjusted tax
basis allocable to such fractional share. Otherwise, the cash payment may
be taxable to you as a dividend.

. eFusion stockholders who exercise dissenters' rights and receive payment
for eFusion stock in cash should generally recognize gain or loss for
federal income tax purposes, measured by the difference, if any, between
the amount of cash received and their basis in such shares, provided that
the payment is not treated as a dividend for tax purposes. An appraisal
rights payment to an eFusion stockholder should not be treated as a
dividend distribution if, after the payment, the eFusion stockholder owns
no shares of ITXC or eFusion stock, actually or constructively.

. None of ITXC, Eye Merger Corp., nor eFusion will recognize gain or loss
solely as a result of the merger.

For federal income tax purposes, eFusion stockholders should be treated as
having received the escrowed shares upon the consummation of the merger.
Accordingly, until the escrowed shares are released, the interim basis of the
ITXC common stock received by the eFusion stockholders should be determined as
though the maximum number of shares of ITXC common stock were received by
eFusion stockholders. eFusion stockholders should not recognize gain or loss
upon the release of the escrowed shares to satisfy indemnity claims. The basis
of such released shares, if any, should be added to the adjusted basis of the
remaining shares of ITXC common stock received in the merger by the eFusion
stockholders. No gain or loss will be recognized and no amount should be
included in the income of the eFusion stockholders by reason of the release of
escrowed shares to the eFusion stockholders.

If the Internal Revenue Service were successful in challenging the status of
the merger as a tax-free reorganization, the tax consequences to you described
above would not, in general, apply and you would be required to recognize gain
or loss as a result of the merger in an amount equal to the difference between
your basis in your eFusion stock and the fair market value, as of the effective
time of the merger, of the shares of ITXC common stock and any other
consideration that you receive. In such event, your aggregate basis in the ITXC
common stock that you receive would equal its fair market value, and your
holding period for that stock would begin the day after the merger.

This discussion is not intended to be a complete analysis or description of
all potential United States federal income tax consequences of the merger. In
particular, this discussion does not address tax consequences which may vary
with your individual circumstances. Also, this discussion does not address any
non-income tax
or any foreign, state or local tax consequences of the merger. Accordingly, we
strongly urge you to consult your own tax advisor as to the specific United
States federal, state, local or foreign income or other tax consequences of the
merger to you.

56
<PAGE>

PRO FORMA FINANCIAL INFORMATION

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

The following unaudited pro forma condensed consolidated financial
information gives effect to the merger under the purchase method of accounting.
These pro forma statements are presented for illustrative purposes only. The
pro forma adjustments are based upon available information and assumptions that
we believe are reasonable. The pro forma condensed consolidated financial
statements do not purport to represent what the consolidated results of
operations or financial position of ITXC would actually have been if the merger
had in fact occurred on the dates that we refer to below, nor do they purport
to project the results of operations or financial position of ITXC for any
future period or as of any date, respectively.

Under the purchase method of accounting, tangible and identifiable
intangible assets acquired and liabilities assumed are recorded at their
estimated fair market values. The excess of the purchase price, including
estimated fees and expenses related to the merger, over the net assets acquired
is classified as goodwill on the accompanying unaudited pro forma condensed
consolidated balance sheet. The estimated fair values and useful lives of
assets acquired and liabilities assumed are based on a preliminary valuation
and are subject to final valuation adjustments which may cause some of the
intangibles to be amortized over a shorter life than the goodwill amortization
period of five years. ITXC intends to undertake a study to determine the
allocation of the total purchase price to the various assets acquired,
including in-process research and development, and the liabilities assumed and
to determine the amortization period of intangible assets, including goodwill.
ITXC currently believes that amounts allocated to goodwill will be amortized
over a life not to exceed five years while other intangibles may be amortized
over shorter periods.

The unaudited pro forma condensed consolidated balance sheet as of June 30,
2000, was prepared by combining the historical cost balance sheet at June 30,
2000, for ITXC with the historical cost balance sheet at June 30, 2000, for
eFusion, giving effect to the merger as though it had been completed on June
30, 2000.

The unaudited pro forma condensed consolidated statements of operations for
the periods presented were prepared by combining ITXC's statements of
operations for the year ended December 31, 1999, and the six months ended June
30, 2000, with eFusion's statements of operations for the year ended December
31, 1999, and the six months ended June 30, 2000, respectively, giving effect
to the merger as though it had occurred on January 1, 1999. These unaudited pro
forma condensed consolidated financial data do not give effect to any
restructuring costs or to any potential cost savings or other operating
efficiencies that could result from the merger.

The historical financial statements of ITXC and eFusion for the year ended
December 31, 1999, are derived from audited consolidated financial statements
presented elsewhere in this document. The condensed consolidated historical
financial statements of ITXC and eFusion for the six months ended June 30,
2000, are derived from unaudited condensed consolidated financial statements
presented elsewhere in this document.

You should read the financial information in this section along with ITXC's
and eFusion's historical consolidated financial statements and accompanying
notes presented elsewhere in this document.

57
<PAGE>

Unaudited Pro Forma Condensed Consolidated Balance Sheet

As of June 30, 2000

<TABLE>
<CAPTION>
Pro Forma
Adjustments ITXC Pro
ITXC eFusion ------------------- Forma
Historical Historical Debits Credits Consolidated
---------- ---------- ------- -------- ------------
(in thousands)
<S> <C> <C> <C> <C> <C>
Cash, cash equivalents
and marketable
securities............. $211,195 $13,711 $ 1,000(3) $223,906
Accounts receivable,
net.................... 10,576 297 10,873
Inventory, net.......... -- 308 308
Prepaid expenses and
other current assets... 2,403 237 2,640
-------- ------- ------- -------- --------
Total current assets.. 224,174 14,553 -- 1,000 237,727
Property and equipment,
net.................... 24,773 2,140 26,913
Deposits and other
assets................. 81 -- 81
Long-term investment.... 7,924 -- 7,924
Service contract rights,
net of amortization.... 2,459 -- 2,459
Goodwill, net of
amortization........... -- -- 161,215(3) 161,215
-------- ------- ------- -------- --------
Total assets.......... 259,411 16,693 161,215 1,000 436,319
======== ======= ======= ======== ========
Accounts payable and
accrued liabilities.... 11,812 693 12,505
Customer deposits....... 866 -- 866
Current portion of
capital lease
obligations............ 1,834 162 1,996
Deferred revenue........ -- 164 164
-------- ------- --------
Total current
liabilities.......... 14,512 1,019 15,531
Equipment note payable
and long term debt..... 1,723 92 1,815
Capital lease
obligation, less
current portion........ 2,795 -- 2,795
Redeemable convertible
preferrerd stock....... -- 37,547 37,547(1) --
Preferred stock......... -- 4 4(1) --
Common stock............ 39 4 4(1) 6(2) 45
Additional paid in
capital................ 297,366 12,209 12,209(1) 180,608(2) 477,974
Deferred employee
compensation........... (8,120) -- 4,817(4) (12,937)
Warrants................ -- 1,564 1,564(1) --
Accumulated other
comprehensive income... 89 -- 89
Accumulated deficit..... (48,993) (35,746) 35,746(1) (48,993)
-------- ------- ------- -------- --------
Total stockholders'
equity............... 240,381 (21,965) 18,598 216,360 416,178
-------- ------- ------- -------- --------
Total liabilities and
stockholders' equity... $259,411 $16,693 $56,145 $216,360 $436,319
======== ======= ======= ======== ========
</TABLE>

See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial
Information.

58
<PAGE>

Unaudited Pro Forma Condensed Consolidated Statement of Operations

Year ended December 31, 1999

<TABLE>
<CAPTION>
ITXC
ITXC eFusion Pro Forma Pro Forma
Historical Historical Adjustments Consolidated
---------- ---------- ----------- ------------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Telecommunications revenue.. $ 24,423 $ 3,517 $ 27,940
Consulting revenue.......... 988 -- 988
-------- ------- --------
Total revenue............... 25,411 3,517 28,928
Data communications and
telecommunications......... 23,095 1,452 24,547
Network operations.......... 3,219 -- 3,219
Selling, general and
administrative............. 14,778 10,766 25,544
Depreciation and
amortization............... 2,556 578 $ 32,243 (3) 35,377
Non-cash employee
compensation............... 2,716 -- 1,875 (4) 4,591
-------- ------- -------- --------
Total costs and expenses.... 46,365 12,796 34,118 93,279
Loss from operations........ (20,953) (9,279) (34,118) (64,350)
Interest income, net........ 1,289 141 1,430
-------- ------- -------- --------
Net loss.................... (19,665) (9,138) (34,118) (62,921)
Accretion of redemption
value of mandatorily
redeemable convertible
preferred stock............ (773) -- 773
-------- ------- -------- --------
Net loss applicable to
common stockholders........ $(20,438) $(9,138) $(33,345) $(62,921)
======== ======= ======== ========
Basic and diluted net loss
per share applicable to
common stockholders........ $ (1.29) $ (2.00) $ (2.88)(5)
======== ======= ========
Weighted average shares used
in computation of basic and
diluted net loss per share
applicable to common
stockholders............... 15,886 4,566 21,816 (5)
</TABLE>

See accompanying Notes to Unaudited Pro Forma Condensed Consolidated
Financial Information.

59
<PAGE>

Six Months Ended June 30, 2000

<TABLE>
<CAPTION>
ITXC
ITXC eFusion Pro Forma Pro Forma
Historical Historical Adjustments Consolidated
---------- ---------- ----------- ------------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Telecommunications revenue.. $ 33,685 $ 308 $ 33,993
Consulting revenue.......... -- -- --
-------- ------- --------
Total Revenue............... 33,685 308 33,993
Costs and expenses:
Data communications and
telecommunications......... 30,196 66 30,261
Network operations.......... 2,423 942 3,365
Selling, general and
administrative............. 12,466 7,949 20,415
Depreciation and
amortization............... 4,353 450 $ 16,121 (3) 20,924
Non-cash employee
compensation............... 2,121 -- 954 (4) 3,075
-------- ------- -------- --------
Total costs and expenses.... 51,559 9,407 17,076 78,041
Loss from operations........ (17,874) (9,099) (17,076) (44,048)
Loss relating to joint
venture.................... (8,195) -- (8,195)
Interest income, net........ 4,594 209 4,803
-------- ------- -------- --------
Net loss.................... (21,475) (8,890) (17,076) (47,440)
Accretion of redemption
value of mandatorily
redeemable convertible
preferred stock............ -- (467) 467 (1) --
-------- ------- -------- --------
Net loss applicable to
common stockholders........ $(21,475) $(9,357) $(16,609) $(47,440)
======== ======= ======== ========
Basic and diluted net loss
per share applicable to
common stockholders........ $ (0.57) $ (1.81) $ (1.09)(5)
======== ======= ========
Weighted average shares used
in computation of basic and
diluted net loss per share
applicable to common
stockholders............... 37,546 5,175 43,476 (5)
</TABLE>

See accompanying Notes to Unaudited Pro Forma Condensed Consolidated
Financial Information.

60
<PAGE>

Notes to Unaudited Pro Forma Condensed Consolidated Financial Information

(1) Reflects the elimination of eFusion's stockholders' equity accounts and
eFusion's redeemable convertible preferred stock, and the related preferred
stock accretion. We have assumed that all eFusion warrants outstanding will
not be exercised prior to the completion of the merger. Those warrants will
not be exercisable after the merger occurs.

(2) Reflects the issuance of 5,930,503 shares of ITXC common stock in
connection with the merger, which are valued at an average price based on
the closing price of ITXC common stock two days before, the day of and two
days after the merger was announced on July 25, 2000. The number of shares
of ITXC common stock to be issued may vary based on the actual eFusion cash
at the date of closing (see Note 3).

(3) Reflects the excess consideration over the net assets acquired, goodwill,
and the related amortization expense. The preliminary goodwill is
calculated as follows, in thousands:

<TABLE>
<S> <C>
Fair value of ITXC shares issued to eFusion stockholders......... $170,354
Fair value of eFusion stock options (less intrinsic value of
unvested options of $4,817)..................................... 5,442
Estimated ITXC transaction costs................................. 1,000
--------
Estimated total consideration.................................... 176,796
Historical net tangible asset value of eFusion at June 30, 2000.. 15,581
--------
Preliminary goodwill............................................. $161,215
========
</TABLE>

The above assumes that ITXC will issue 5,930,503 shares of common stock,
including 5,658,986 shares in exchange of all of the outstanding common and
preferred stock of eFusion and an additional 271,517 shares of common stock
for eFusion's estimated cash and cash equivalents on the date of closing.
The actual shares issued may vary based on the actual eFusion cash and cash
equivalents at the date of closing. ITXC has tentatively considered the
carrying value of the acquired assets to approximate fair value, with all
excess consideration being preliminarily allocated to goodwill. Goodwill
associated with the transaction is currently anticipated to be amortized
over an estimated 5-year life. A final allocation of the purchase price to
the assets acquired and liabilities assumed of eFusion and final
determination of the goodwill amortization period are dependent upon
valuations and studies that have not yet been completed. A portion of the
purchase price may be allocated to in-process research and development. To
the extent that a portion of the purchase price is allocated to in-process
research and development projects for which technological feasibility has
not yet been established, a charge would be recognized in the period in
which the acquisition is completed. To the extent amounts are allocated to
in-process research and development projects, pro forma amortization
expense would be ratably reduced.

(4) Reflects deferred compensation related to the intrinsic value of stock
options issued by ITXC in exchange for unvested outstanding options of
eFusion and the related non-cash compensation expense over the remaining
vesting periods, as if the merger was completed as of the earliest date
presented, in accordance with Financial Accounting Standards Board
Interpretation No. 44 of APB Opinion No. 25. To calculate the intrinsic
value, ITXC assumed a market price of $18.125 per share of common stock on
the date of grant of the options, which represents the closing price of
ITXC common stock as of July 31, 2000. The actual amount of deferred
compensation and non-cash compensation will vary based on the actual market
price of ITXC common stock on the date the merger is consummated.

(5) Pro forma per share data are based on the number of ITXC common shares that
would have been outstanding had the merger occurred on January 1, 1999. In
addition, ITXC completed its initial public offering of common stock on
October 1, 1999, which resulted in the automatic conversion of ITXC's
Series B and Series C redeemable convertible preferred stock into shares of
common stock. Accordingly, the capital structure of ITXC prior to such
conversion is not indicative of its ongoing capital structure. The table
below presents additional pro forma per share data for the year ended
December 31, 1999, had the

61
<PAGE>

conversion of the Series B convertible preferred stock occurred at January
1, 1999 and the Series C convertible preferred stock occurred at February
24, 1999, date of issuance:

<TABLE>
<CAPTION>
Conversion
of ITXC
Redeemable Adjusted Pro
Pro Forma Preferred Forma
Consolidated Stock Consolidated
------------ ---------- ------------
<S> <C> <C> <C>
Basic and diluted net loss per
share.............................. $(2.88) -- $ (1.83)
Weighted average shares
outstanding........................ 21,816 12,640 34,456
</TABLE>

62
<PAGE>

THE COMPANIES

ITXC

Selected Financial Data Regarding ITXC

The following selected financial data for the period from July 21, 1997,
ITXC's date of inception, to December 31, 1997 and for the years ended December
31, 1998 and December 31, 1999 are derived from ITXC's audited consolidated
financial statements. The following selected financial data for the six months
ended June 30, 1999 and 2000 are derived from ITXC's unaudited financial
statements. The unaudited financial statements include all adjustments,
consisting of normal recurring accruals, which ITXC considers necessary for a
fair presentation of its financial position and results of operations for the
interim periods. ITXC's operating results for the six months ended June 30,
2000 are not necessarily a reliable indicator of the results that may be
expected for the entire year ending December 31, 2000. The pro forma line items
in the operating data presented below give effect to the conversion of all
outstanding shares of ITXC's preferred stock into common stock upon the
consummation of its initial public offering, as if such conversion had occurred
at the dates of issuance. You should read the information that we have
presented below in conjunction with ITXC's consolidated financial statements,
related notes and other financial information included elsewhere in this
document.

<TABLE>
<CAPTION>
Period from
July 21,
1997 (date
of
inception)
to Year ended Six Months ended
December 31, December 31, June 30,
------------ ----------------- -----------------
1997 1998 1999 1999 2000
------------ ------- -------- ------- --------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Operating Data:
Revenue:
Telecommunications
revenue.................. $ -- $ 1,238 $ 24,423 $ 6,764 $ 33,685
Consulting revenue........ 59 653 988 988 --
------ ------- -------- ------- --------
Total revenue........... 59 1,891 25,411 7,753 33,685
Cost and expenses:
Data communications and
telecommunications....... -- 2,017 23,095 6,890 30,196
Cost of consulting
revenue.................. -- 192 -- -- --
Network operations........ -- 1,321 3,219 1,283 2,423
Selling, general and
administrative........... 701 5,120 14,778 5,675 12,466
Depreciation and
amortization............. 5 345 2,556 699 4,353
Non-cash employee
compensation............. -- 194 2,716 688 2,121
------ ------- -------- ------- --------
Total costs and
expenses............... 706 9,189 46,365 15,235 51,559
------ ------- -------- ------- --------
Loss from operations........ (647) (7,298) (20,953) (7,482) (17,874)
Loss relating to joint
venture.................... -- -- -- -- (8,195)
Interest income, net........ 1 91 1,289 156 4,594
------ ------- -------- ------- --------
Net loss.................... (646) (7,207) (19,665) (7,326) (21,474)
Accretion of redemption
value of mandatorily
redeemable convertible
preferred stock............ -- (14) (773) (443) --
------ ------- -------- ------- --------
Net loss applicable to
common stockholders........ $ (646) $(7,222) $(20,438) $(7,769) $(21,474)
====== ======= ======== ======= ========
Basic and diluted net loss
per share applicable to
common stockholders........ $(0.09) $ (0.88) $ (1.29) $ (0.90) $ (0.57)
====== ======= ======== ======= ========
Weighted average shares used
in computation of basic and
diluted net loss per share
applicable to common
stockholders............... 7,005 8,185 15,886 8,603 37,546
Pro forma basic and diluted
net loss per share......... $ (0.45) $ (0.69) $ (0.29) $ (0.57)
======= ======== ======= ========
Weighted average shares used
in computation of pro forma
basic and diluted net loss
per share.................. 16,155 28,526 24,841 37,546
</TABLE>

63
<PAGE>

When ITXC completed its initial public offering on October 1, 1999, all of
its outstanding preferred stock converted into common stock. The pro forma line
items in the operating statement data presented above give effect to that
conversion as if that conversion had occurred at the dates of issuance.
<TABLE>
<CAPTION>
As of
As of December 31, June 30,
----------------------- --------
1997 1998 1999 2000
----- ------- ------- --------
<S> <C> <C> <C> <C>
Balance Sheet Data:
Cash, cash equivalents and marketable
securities.................................. $ 498 $ 4,171 $74,396 $211,195
Total assets................................. 795 7,834 99,862 259,411
Long-term obligations, including current
portion..................................... -- 1,437 5,493 6,353
Working capital.............................. (227) 2,069 65,810 209,662
Redeemable preferred stock................... -- 9,867 -- --
Total stockholders' equity (deficit)......... 52 (6,118) 80,366 240,381
</TABLE>

64
<PAGE>

Management's Discussion and Analysis of ITXC's Financial Condition and Results
of Operations

Overview

ITXC is a leading global provider of Internet-based voice and fax services.
From its inception in July 1997 through April 1998, ITXC's operating activities
were focused primarily on:

. developing monitoring and analysis software to enable ITXC to efficiently
and cost effectively route voice over the Internet, which ITXC refers to
as BestValue Routing(TM);

. developing relationships with affiliates throughout the world to increase
the global reach of ITXC.net;

. developing additional business strategies to supplement ITXC's affiliate
network; and

. hiring an initial employee group.

In April 1998, ITXC launched its first service delivered over ITXC.net--
ITXC's WWeXchange service. ITXC's operations since that time have included:

. increasing ITXC's voice traffic, from 2,746 minutes during April 1998 to
approximately 157.2 million minutes carried thorough its WWeXchange
service during the quarter ended June 30, 2000;

. refining ITXC's monitoring and analysis software in order to achieve
BestValue Routing;

. expanding ITXC's affiliate network to 139 affiliates at July 31, 2000 and
increasing the global reach of ITXC.net; and

. increasing ITXC's employee headcount, from 29 employees on April 1, 1998
to 164 employees on July 31, 2000.

ITXC's primary sources of revenue have been the fees that it receives from
customers for terminating calls over ITXC.net.

To date, ITXC's revenue for terminating calls over ITXC.net has depended
primarily upon the following factors:

. the volume of voice traffic carried over ITXC.net, which is measured in
terms of minutes of voice traffic;

. the mix of voice traffic carried over ITXC.net, which reflects the fact
that calls made over certain routes will generate greater revenues than
calls of a similar duration made over other routes; and

. pricing pressures resulting from competitive conditions in ITXC's
markets.

Increased competition from other providers of Internet telephony services
and traditional telephony services could materially adversely affect revenue in
future periods.

ITXC has also received consulting revenue derived from a market trial
agreement that it entered into with a third-party shortly after ITXC's
inception in order to generate funds to sustain operations. Under that
agreement, ITXC earned a portion of the revenue ratably over the term of the
agreement and the remainder of the revenue as it met specific milestones. ITXC
does not consider it likely that consulting revenue will continue beyond the
year ended December 31, 1999.

To date, ITXC has derived a significant portion of its revenue from a small
number of customers. The loss of a major customer could have a material adverse
effect on ITXC's business, financial condition, operating results and future
prospects.

ITXC's operating expenses have been primarily:

. Data Communications and Telecommunications Expenses. Internet-related
expenses, consisting primarily of:

. costs associated with sending voice traffic over the Internet,
primarily fees that ITXC pays to its affiliates to terminate or assist
ITXC in terminating calls, fees that ITXC pays when it finds it

65
<PAGE>

necessary to utilize the traditional telephone network or private data
networks to terminate calls and expenses incurred in connecting ITXC's
customers to its network; these expenses are largely proportional to the
volume of voice traffic carried over ITXC's network; and

. costs associated with buying Internet access at ITXC-operated
locations; these costs are largely proportional to the bandwidth of
access acquired and do not typically vary based upon volume of voice
traffic until additional bandwidth would need to be acquired.

. Network Operations Expenses. Expenses associated with operating the
network, consisting primarily of the salaries, payroll taxes and benefits
that ITXC pays for those employees directly involved in the operation of
ITXC.net and related expenses.

. Selling, General and Administrative Expenses. There are three components
of selling, general and administrative expenses, consisting of the
following:

. Sales and Marketing Expenses. Expenses relating to the salaries,
payroll taxes, benefits and commissions that ITXC pays for sales
personnel and expenses associated with the development and
implementation of its promotion and marketing campaigns. ITXC
anticipates that sales and marketing expenses will increase in the
future as ITXC expands its internal sales force, hires additional
marketing personnel and increases expenditures for promotion and
marketing. ITXC expects that such expenses will also increase as
telecommunications revenue increases.

. Development Expenses. Salary, payroll tax and benefit expenses that ITXC
pays for employees and consultants who work on the development of its
network management approaches and future applications of its technology.
ITXC believes that investing in the enhancement of its technology is
critical to its future success. ITXC expects that its development
expenses will increase in future periods, based upon various factors,
including:

. the importance to ITXC of BestValue Routing;

. the pace of technological change in ITXC's industry; and

. ITXC's goal of expanding the applications of its technology.

. General and Administrative Expenses. Salary, payroll tax and benefit
expenses and related costs for general corporate functions, including
executive management, administration, facilities, information technology
and human resources. ITXC expects that general and administrative
expenses will increase in the future as it hires additional personnel and
incurs additional costs related to the growth of its business and
operations. In addition, ITXC expects to expand its facilities and incur
associated expenses to support its anticipated growth.

. Non-cash Employee Compensation Expenses. Non-cash employee compensation
represents compensation expense incurred in connection with the grant of
certain stock options to ITXC employees with exercise prices less than
the fair value of ITXC's common stock at the respective dates of grant.
During 1999, but prior to ITXC's initial public offering, ITXC granted
options to purchase 3,413,500 shares of its common stock at exercise
prices equal to or less than fair value, resulting in non-cash charges of
approximately $12.4 million. Such charges will be expensed, generally
over the next three to seven years, in connection with the underlying
vesting periods of the options granted.

ITXC believes that the services that it provides over the Internet are not
currently actively regulated in the U.S. Several efforts have been made,
however, to enact federal legislation that would regulate certain aspects of
the Internet. If adopted, such legislation could increase its costs
significantly and could materially adversely affect ITXC's business, operating
results, financial condition and future prospects. See "--Description of
ITXC's Business--Government Regulation."

ITXC anticipates that from time to time its operating expenses may increase
on a per minute basis as a result of decisions to route additional traffic
over the traditional telephone network or private data networks in order to
maintain quality transmissions during relatively short periods of time as ITXC
transitions its network

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to increased levels of capacity. During these periods, ITXC occasionally
experiences reductions in volume from certain customers. Historically, ITXC has
satisfactorily resolved these transition issues. However, ITXC anticipates that
in the future other anticipated or unanticipated operating problems associated
with the growth of ITXC.net may develop.

Since its inception in July 1997, ITXC has experienced operating losses in
each quarterly and annual period and negative cash flows from operations in
each quarter since ITXC commenced offering services over ITXC.net in April
1998. As of June 30, 2000, ITXC had an accumulated deficit of $49.0 million.
The profit potential of ITXC's business is unproven, and its limited operating
history makes an evaluation of ITXC and its prospects difficult. ITXC may not
achieve profitability or, if ITXC achieves profitability, it might not sustain
profitability.

In February 2000, ITXC recast its relationship with its partner in its South
American joint venture. ITXC issued 150,000 shares of its common stock for:
equity in a private affiliate of our joint venture partner; a termination of
the puts and calls which previously could have required substantial cash or
equity outlays by ITXC; and certain contractual commitments by the parties. As
part of that transaction, ITXC terminated its joint venture agreement and the
license agreement that ITXC previously furnished to the joint venture. However,
there has not been a material change in ITXC's service to the carriers in the
territory previously serviced by the joint venture, since the new arrangement
contemplates the continuation of service to those carriers.

From an accounting perspective, during the six months ended June 30, 2000,
ITXC recorded a charge of $8.2 million, representing the difference between the
value of the 150,000 shares issued by ITXC and the value of the equity received
by ITXC, valued as of the time of the transaction.

Results of Operations--Comparison of the Six Months Ended June 30, 1999 and
2000

Revenues

ITXC's telecommunications revenues of $33.7 million during the six months
ended June 30, 2000 represented an increase of 398% from the comparable period
in 1999. ITXC carried 332 million minutes of traffic over ITXC.net in the first
six months of 2000, as compared with 35.6 million minutes during the comparable
1999 period. Of the 332 million minutes, 279 million minutes were carried
through ITXC's WWeXchange service, which provides international call completion
to ITXC's customers and enables them to offer their own customers phone-to-
phone global voice service. The remaining 53 million minutes were provided
through ITXC's recently initiated webtalkNOW! service, a PC-to-telephone
service which allows Internet portals, Internet service providers and web sites
to offer web-to-phone calling to their customers under their own brands. During
the six months ended June 30, 2000, ITXC's average revenues per minute were
11.6 cents per minute for WWeXchange and 2.0 cents per minute for webtalkNOW!.

ITXC recorded consulting revenues of $988,000 during the first six months of
1999. As of June 30, 1999, ITXC had satisfied all of the performance
requirements under its market trial agreement and had received all consulting
payments required by that agreement. Accordingly, ITXC did not recognize any
such revenues during the first six months of 2000. ITXC does not expect to earn
significant consulting revenue in subsequent periods.

Operating Expenses

Data Communications and Telecommunications Expenses. During the six months
ended June 30, 1999 and 2000, data communication expenses amounted to $6.9
million and $30.2 million, respectively, or 102% and 90% of telecommunications
revenues, respectively. The increase in the dollar amount of such costs
primarily reflected the increased traffic during 2000, as well as costs
associated with establishing a new network hub in Jersey City, New Jersey
during the first quarter of 2000, a new network hub in London, England during
the second quarter of 2000, and establishing and increasing capacity at ITXC's
other hubs in anticipation of future growth in traffic.

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Network Operations Expenses. Network operations expenses increased from $1.3
million during the six months ended June 30, 1999 to $2.4 million during the
six months ended June 30, 2000. Such expenses primarily reflected the cost of
operating ITXC's 24-hours-a-day, 7 days-a-week network operations center, as
well as start-up costs associated with the Jersey City, New Jersey and London
hubs. Such costs represented 19% and 7% of telecommunications revenues during
the six months ended June 30, 1999 and 2000, respectively.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased from $5.7 million during the six months ended
June 30, 1999 to $12.5 million during the six months ended June 30, 2000. These
increases were due primarily to the hiring of additional sales and marketing,
development and administrative personnel, commissions paid on ITXC's increased
telecommunications revenue, expanded sales and marketing campaigns and
increased facilities expenses associated with ITXC's growth. Such increase
reflected not only the expansion of ITXC's core business, but also the
development and deployment of the webtalkNOW! service. As a percentage of
revenues, selling, general and administrative expenses decreased from 73% to
37% over the comparable six month periods, reflecting the leveraging of such
expenses over ITXC's significantly increased revenue base. As ITXC's revenues
continue to grow, ITXC expects selling, general and administrative expenses to
decrease as a percentage of revenues. Such expectation represents a forward-
looking statement under the Private Securities Litigation Reform Act of 1995.
Actual results could differ from such expectation as a result of a number of
factors, including the extent to which ITXC incurs unanticipated expenses
associated with revenue growth and other factors referred to under "Risk
Factors" elsewhere in this document.

Depreciation and Amortization Expenses. Depreciation and amortization
expenses increased from $0.7 million during the six months ended June 30, 1999
to $4.4 million during the six months ended June 30, 2000. This increase
reflects the expansion of ITXC's network and hubs and the addition of new
technologies deployed throughout ITXC's network. In addition, amortization in
the current year includes charges for ITXC's acquisition of contractual rights
and software of OzEmail, which acquisition occurred during the fourth quarter
of 1999.

Non-cash Employee Compensation Expenses. Non-cash employee compensation
expense increased from $0.7 million during the six months ended June 30, 1999
to $2.1 million during the six months ended June 30, 2000, representing
amortization of deferred compensation incurred in connection with the grant of
options at exercise prices less than fair value.

Loss From Operations

ITXC incurred operating losses of $7.5 million and $17.9 million,
respectively, during the six months ended June 30, 1999 and 2000, respectively.
ITXC anticipates that it will incur additional operating and net losses for the
foreseeable future. The amount of these losses may exceed the amount of the
losses that ITXC has incurred in prior periods.

Loss Relating to Joint Venture. During the quarter ended March 31, 2000,
ITXC incurred a one-time non-cash charge of $8.2 million relation to the
modifications made in ITXC's South America joint venture. See Note 2 of the
Notes to ITXC's Unaudited Condensed Consolidated Financial Statements presented
elsewhere in this document.

Interest Income, Net

ITXC's interest income, net principally represents income from cash and
investments which, in turn, were derived from capital contributions made by
ITXC's investors. In addition to the capital invested near the inception of its
business, ITXC raised (a) net proceeds of $9.9 million and $14.9 million from a
group of investors in private transactions completed during April 1998 and
February 1999, (b) net proceeds of $78.4 million from ITXC's initial public
offering completed on October 1, 1999 and (c) net proceeds of $161.3

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million from ITXC's follow-on offering completed on March 15, 2000. The
interest generated from these capital contributions exceeded the interest that
ITXC paid on its line of credit by $0.2 million and $4.6 million, respectively,
during the six months ended June 30, 1999 and 2000, respectively.

Results of Operations--Comparison of the Inception Period from July 21, 1997 to
December 31, 1997 and the Years Ended December 31, 1998 and 1999

Revenue

ITXC did not receive any revenue for terminating calls during its inception
period from July 21, 1997 through December 31, 1997 or during the quarter ended
March 31, 1998. ITXC's telecommunications revenue for the years ended December
31, 1998 and 1999 was $1.2 million and $24.4 million, respectively. ITXC was
able to achieve this increase despite its decision to terminate services to
certain customers. See "Operating Expenses--Selling, General and Administrative
Expenses."

ITXC's consulting revenue increased from $59,000 during the inception period
to $653,000 and $988,000 during the years ended December 31, 1998 and 1999,
respectively. ITXC's periodic receipt of consulting revenues reflected the
accomplishment of various performance requirements under its market trial
agreement. ITXC does not expect to earn substantial consulting revenue in
subsequent periods.

Operating Expenses

Data Communications and Telecommunications Expenses. ITXC did not incur data
communications and telecommunications expenses until it began providing service
over ITXC.net in April 1998. During the year ended December 31, 1998, such
expenses amounted to $2.0 million, as compared to telecommunications revenue of
$1.2 million during that period. During the initial period of operations, it
was necessary for ITXC to rely upon the traditional telephone network and
private data networks more than it currently does, since ITXC had fewer
affiliates at that time. ITXC also had not reached a point where significant
economies of scale could be realized. During the year ended December 31, 1999,
such expenses amounted to $23.1 million, compared to telecommunications revenue
of $24.4 million.

Cost of Consulting Revenue. ITXC did not incur any expenses under its market
trial agreement during any of the periods described in this document other than
the year ended December 31, 1998. During that period, the cost of consulting
revenue amounted to $192,000, representing 29% of consulting revenue. During
1999, ITXC was only required to present an update report.

Network Operations Expenses. ITXC did not incur any network operations
expenses during the inception period. Network operations expenses increased
from $1.3 million during the year ended December 31, 1998 to $3.2 million
during the year ended December 31, 1999. Expenses during the earlier period,
representing 107% of ITXC's telecommunications revenue, were incurred in
preparing for the implementation of ITXC's WWeXchange service in April 1998 and
in the initial delivery of that service. During the latter period, such
expenses primarily reflected the cost of operating ITXC's 24-hours-a-day, 7-
days-a-week network operations center and represented 13% of telecommunications
revenue. In general, network operations expenses are not proportional to the
volume of ITXC's traffic; regardless of the volume of traffic, ITXC is required
to pay the salaries and related costs associated with operating its network
operations center.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased from $701,000 during the inception period to
$5.1 million during the year ended December 31, 1998 and $14.8 million during
the year ended December 31, 1999. The increase from the inception period to the
following year reflected enhanced sales and marketing efforts that ITXC
undertook once our network was operating, growth in ITXC's sales and marketing
staffs, commissions paid on the telecommunications revenue that ITXC generated
during the year ended December 31, 1998, ITXC's hiring of employees and
engaging of consultants for development tasks during the year ended December
31, 1998 and a substantial increase in the number of

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general and administrative personnel hired to support ITXC's growth. The 1999
increase reflected further expansion in ITXC's sales and marketing efforts,
commissions paid on increased revenue levels, expanded development efforts and
a further increase in general and administrative staff in response to ITXC's
continued growth.

The increase in selling, general and administrative expenses during 1999
also included charges of $2.6 million representing additional accounts
receivable reserves and write-offs. These charges reflect general industry
trends and the discontinuance of service to certain significant customers
because of their failure to meet their payment obligations. ITXC does not
expect any material revenue impact from these actions. Such expectation
represents a forward-looking statement under the Private Securities Litigation
Reform Act of 1995. Actual results could differ from such expectation as a
result of a number of factors, including the extent to which ITXC is able to
attract new customers to ITXC.net, the extent to which ITXC is able to expand
the utilization of ITXC.net by other existing customers, ITXC's capacity
constraints and the mix of traffic that ITXC carries in future periods.

Non-cash Employee Compensation Expenses. Non-cash employee compensation
expense increased from $194,000 during the year ended December 31, 1998 to $2.7
million during the year ended December 31, 1999, representing amortization of
deferred compensation incurred in connection with the grant of options at
exercise prices less than fair value. There was no non-cash employee
compensation expense during the inception period.

Interest Income, Net

ITXC's interest income, net principally represents income from cash and
investments which, in turn, were derived from capital contributions made by its
investors. In addition to the capital invested near the inception of its
business, ITXC raised net proceeds of $9.9 million and $14.9 million from a
group of investors in private transactions completed during April 1998 and
February 1999, respectively, raised net proceeds of $78.4 million from its
initial public offering completed on October 1, 1999 and raised net proceeds of
$161.3 from its second public offering completed on March 15, 2000. Interest
was not generated on this last public offering until the quarter ended March
31, 2000. During the year ended December 31, 1998, interest generated from
capital contributions exceeded by $91,000 the interest that ITXC paid on its
line of credit and non-cash interest related to the issuance of common stock
warrants in connection with bridge financing provided by two officers. During
the year ended December 31, 1999, the interest on ITXC's marketable securities,
including the interest earned on the proceeds from ITXC's initial public
offering, exceeded the interest that ITXC paid on its line of credit by $1.3
million. Interest income, net is expected to increase as a result of ITXC's
initial public offering and its March 2000 public offering.

Loss From Operations

ITXC incurred operating losses of $647,000, $7.3 million and $21.0 million
during the inception period and the years ended December 31, 1998 and 1999,
respectively. ITXC does not consider these amounts to be comparable, since the
first amount reflected operations prior to the introduction of services over
ITXC's network, the second amount reflected ITXC's active operation of its
network during its initial period of operations and only the third amount
represented a full year of operations. ITXC anticipates that it will incur
additional operating and net losses in the future. The amount of these losses
may exceed the amount of the losses that ITXC has incurred in prior periods.

Liquidity and Capital Resources

Prior to ITXC's initial public offering, ITXC financed its operations
primarily through the private placement of its capital stock and, to a lesser
extent, through equipment financing, and for the period after June 30, 1999,
through capital leases. Net proceeds from ITXC's initial public offering,
including proceeds resulting from the exercise by the underwriters of their
over-allotment option, were $78.4 million. This capital was supplemented by net
proceeds of $161.3 million raised upon consummation of ITXC's March 2000
follow-on offering of common stock.

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Net cash provided by financing activities amounted to $162.2 million for the
six months ended June 30, 2000 and was primarily attributable to net proceeds
from ITXC's follow-on offering.

Net cash used in operating activities amounted to $15.4 million for the six
months ended June 30, 2000. Cash used in operating activities was primarily the
result of net operating losses, increased accounts receivable and decreased
accounts payable and accrued liabilities, partially offset by the one-time
charge of $8.2 million relating to the modification of ITXC's joint venture
arrangement in South America and deprecation and amortization.

Net cash used in investing activities amounted to $107.9 million for the six
months ended June 30, 2000. Cash used in investing activities was primarily
related to the purchases of property and equipment and purchases of investments
with the proceeds of ITXC's public offerings.

As of June 30, 2000, ITXC's principal commitments consisted of obligations
outstanding under operating and capital leases. At that date, future minimum
payments for non-cancelable leases includes required payments of $3.2 million
during 2000 and $8.4 million for years after 2000 under all leases. ITXC
anticipates a substantial increase in capital expenditures and lease
commitments consistent with the anticipated growth in operations,
infrastructure and personnel, including the deployment of additional networks
hubs and SNARCs, a proprietary device which allows customers to access ITXC's
network directly from their premises, eliminating the costs of special
traditional telephone connections dedicated to connecting with network hubs and
improving the economics of ITXC's services to them. As ITXC matures and
improvements in technology impact ITXC's equipment base, ITXC expects that it
will also be required to fund the replacement of obsolescent equipment.

ITXC maintains a credit agreement that provides a committed line of credit
from a financial institution in the aggregate amount of $10.0 million. ITXC is
permitted to use any portion of that commitment under a revolving line of
credit for working capital or under an equipment sub-line for the purchase of
certain capital equipment and related software. This credit agreement is
collateralized by substantially all of ITXC's assets. ITXC is permitted to
borrow under the credit agreement until February 2001. At that time, ITXC must
repay the outstanding working capital loans unless that revolving line is
extended. Loans outstanding under the equipment sub-line are due and payable 36
months after the final draw under the equipment sub-line. Interest accrues at a
floating rate per annum equal to the higher of the lender's published prime
rate and the weighted average federal funds rate available to ITXC's lender
plus 0.5%. The credit agreement contains customary financial and other
covenants and may be terminated by the lender 45 days after the occurrence of
certain mergers, acquisitions and investments.

ITXC has also arranged for vendor financing in the ordinary course for
gateway equipment, switching equipment and general office equipment.

ITXC's capital requirements depend on numerous factors, including market
acceptance of ITXC's services, the responses of its competitors, the resources
allocated to ITXC.net and the development of future applications of ITXC's
technology, ITXC's success in marketing and selling its services, and other
factors. ITXC has experienced substantial increases in its capital expenditures
since its inception, consistent with growth in its operations and staffing, and
anticipates that its capital expenditures will continue to increase in the
future. In addition to its pending acquisition of eFusion, ITXC will evaluate
possible acquisitions of, or investments in, complementary businesses,
technologies or services and plan to expand its sales and marketing programs.
Any such possible acquisition may be material and may require ITXC to incur a
significant amount of debt or issue a significant number of equity securities.
Further, any businesses that ITXC acquires will likely have their own capital
needs, which may be significant, which ITXC would be called upon to satisfy
independent of the acquisition price. ITXC currently believes that its
available cash and cash equivalents will be sufficient to meet its anticipated
needs for working capital and capital expenditures for at least the next 12
months. This statement represents a forward-looking statement under the Private
Securities Litigation Reform Act of 1995. Actual results could differ
materially from ITXC's expectations. ITXC may need to raise

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additional funds in order to fund more rapid expansion, to develop new or
enhance existing services, to respond to competitive pressures or to acquire or
invest in complementary business, technologies or services. Additional funding
may not be available on favorable terms or at all.

Quantitative and Qualitative Disclosure About Market Risk

ITXC had investments of $209.1 million as of June 30, 2000 in certain
marketable securities, which primarily consist of short-term fixed income
investments. Due to the short-term nature of ITXC's investments, ITXC believes
that the effects of changes in interest rates are limited and would not have a
material impact on ITXC's financial condition or operating results.

Recent Accounting Pronouncement

In June 1998, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 133, "Accounting for Derivatives and Hedging
Activities." SFAS No. 133 establishes accounting and reporting standards for
derivative instruments, including derivative instruments embedded in other
contracts, and for hedging activities. SFAS No. 133 is effective for all fiscal
quarters of fiscal years beginning after June 15, 2000. As ITXC does not
currently engage in derivatives or hedging transactions, ITXC believes that
there will be no current impact to its results of operations, financial
position or cash flows upon the adoption of SFAS No. 133.

In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements," and
further amended it to defer the effective date. ITXC is required to adopt the
provisions of this staff bulletin in the fourth quarter of 2000, and does not
expect the adoption will have a material impact on its financial statements.

Description of ITXC's Business

Introduction

ITXC was incorporated in Delaware in 1997. On October 1, 1999, ITXC
consummated its initial public offering and on March 15, 2000 it consummated a
follow-on public offering. Its principal executive offices are located at 600
College Road East, Princeton, New Jersey 08540, and its telephone number is
(609) 750-3333.

ITXC, WWeXchange, BestValue Routing and webtalkNOW!, and many of ITXC's
product/service names referred to herein, are trademarks or trade names of ITXC
or its subsidiaries. This document also includes references to trademarks and
trade names of other companies.

Overview

ITXC is a leading global provider of high quality Internet-based voice and
fax services. Its services allow communications users and service providers,
such as traditional telephone companies, Internet service providers, Internet
portals, web sites and data network providers, to capitalize on the convergence
of the public Internet and the traditional telephone network. ITXC believes
that its scale, reputation for high quality and ability to rapidly implement
new services addresses the substantial opportunities that are resulting from
this convergence.

ITXC has developed and deployed ITXC.net, an actively-managed network
overlaid on the public Internet, to deliver high quality voice communications
while providing its customers with the cost savings and global reach of the
Internet. ITXC believes that the rapid growth of commercial traffic on ITXC.net
demonstrates that ITXC has successfully used its proprietary BestValue Routing
to address the quality problems which early attempts at Internet telephony have
encountered.

To date, ITXC has concentrated its efforts on rapidly deploying ITXC.net
worldwide. ITXC has established ITXC-owned facilities in the U.S. and overseas
and has arranged call termination and origination

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services with affiliates throughout the world. ITXC has used its affiliate
structure to achieve what ITXC believes is the broadest global network in the
Internet telephony marketplace. As of July 31, 2000, ITXC had affiliates in 151
international cities operating 258 ITXC.net points of presence. On a typical
day, ITXC carries traffic from over 30 countries to more than 60 countries. By
using the Internet for transport and its affiliates' local infrastructure for
terminating voice traffic, ITXC has developed a reliable network, which it is
expanding rapidly, at a substantially lower capital expense than traditional
carrier networks.

In April 1998, ITXC introduced its WWeXchange service, the first application
enabled by ITXC.net. This service provides international call completion to its
customers and enables them to offer their own customers phone-to-phone global
voice service. ITXC has achieved a high network usage growth rate since
commencing its WWeXchange service. The following table sets forth the number of
minutes of traffic carried over ITXC.net during the past nine quarters:

<TABLE>
<CAPTION>
Quarter ended Minutes
------------- -------------
(in millions)
<S> <C>
June 30, 1998.................................................. .1
September 30, 1998............................................. .6
December 31, 1998.............................................. 4.1
March 31, 1999................................................. 11.1
June 30, 1999.................................................. 24.5
September 30, 1999............................................. 42.5
December 31, 1999.............................................. 72.0
March 31, 2000................................................. 131.0
June 30, 2000.................................................. 201.0
</TABLE>

In April 1999, ITXC introduced a new ITXC-owned proprietary device called a
SNARC, which ITXC believes will facilitate the use of its network by its
customers. In addition, since December 1999 ITXC has been installing ITXC-owned
proprietary devices called CRANS on selected affiliates' premises to connect
them directly to the Internet for the purpose of terminating calls originated
by ITXC.net affiliates. ITXC generally uses CRANS to rapidly add incumbent
national carriers as affiliates and extend ITXC.net to their premises. Both of
these devices allow access to ITXC's network directly from customer or
affiliate premises, avoiding the costs of dedicated connections to network hubs
and improving the economics of ITXC's services to them. ITXC believes that
SNARCs and CRANS strengthen its customers' and affiliates' relationships with
it and position it to deploy additional enhanced services, such as ecalling,
over ITXC.net.

In December 1999, ITXC commenced its first service offering as a voice
application service provider. Its webtalkNOW! service allows Internet portals,
Internet service providers and web sites to offer web-to-phone calling to its
customers under their own brands. ITXC believes that it offers an outsourced
voice solution for these customers which capitalizes on the global reach and
quality of ITXC.net as a platform for enhanced Internet-based voice services.
MediaRing.com, its first webtalkNOW! service customer, began using the
webtalkNOW! service to offer web-to-phone calling to its customers in December
1999.

In September 1999, ITXC introduced its Borderless800 service. The first
phase of this service allows ITXC's carrier and reseller customers located
outside of the U.S. to offer to their subscribers no-charge or low-charge
access to 800, 888 and 877 telephone numbers in the U.S. Such numbers often are
not accessible from outside the U.S. using the traditional telephone network
or, if accessible, often result in charges that cost as much or more than
international calls to U.S. toll numbers.

In addition to ITXC's current services, ITXC intends to introduce more
advanced communications applications enabled by ITXC.net. ITXC expects that
these services will allow its customers to offer additional Internet-based
voice products and services to their customers. Examples of services ITXC may
introduce include:

. enhanced phone-to-phone services;

. phone-to-PC services;

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. other device-to-phone services and phone-to-device services, including
devices such as personal digital assistants;

. voice-enhanced e-commerce;

. integrated messaging, combining voice, fax and e-mail communications; and

. single telephone number service, in which a single billing and reach me
number follows the subscriber.

Industry Overview

Convergence of Global Telecommunications and Data Services

The global telecommunications industry has grown at a rapid rate over the
last decade, driven by domestic and international deregulation, technological
development, network deployment and the globalization of business. The number
of communications service providers has also been increasing as a result of
competition fostered by domestic and international deregulation. These factors
have contributed to a substantial decrease in the cost of telephony services
delivered over the traditional telephone network. This decrease in price,
however, has been offset by an increase in total revenue driven by the growth
in demand that low prices have created. Based on country-by-country information
and other data provided by the International Telecommunications Union, total
telecommunications services revenue was approximately $700 billion in 1997.
According to Insight Research Corporation, an industry research firm, this
market is projected to grow to approximately $1.3 trillion by 2003. According
to TeleGeography, a market research firm, the total market for international
long-distance services in 1997 totaled approximately $65.9 billion.
TeleGeography also expects international long-distance traffic to grow from
94.1 billion minutes in 1998 to 143.2 billion minutes in 2001.

In addition, over the last decade, the volume of traffic on data networks
has grown at an even faster rate. According to TeleGeography, in 1998 data
surpassed voice as the dominant traffic for the U.S. long-distance market. This
growth has been driven by several factors, including technological innovation,
high penetration of personal computers and, in particular, by the rapid
expansion of the Internet as a global medium for communications, information
and commerce. International Data Corporation, a market research firm, estimates
that the number of Internet users worldwide will grow from approximately 142
million in 1998 to approximately 399 million in 2002. This increase in data
traffic has necessitated additional data network capacity and quality. As a
result, businesses have invested billions of dollars in order to meet this
need.

ITXC believes that the combination of increasing demand on the traditional
telephone network and the proliferation of data networks, with their enhanced
functionality and efficiency, is driving the convergence of voice traffic and
data networks, including the Internet. ITXC expects this transfer of traffic to
accelerate as corporations and network infrastructure providers attach
increasing value to data networks and as the functionality of computers and
computing devices, such as personal digital assistants, is enhanced by voice
capability.

Network Infrastructure

The basic technology of traditional telecommunications is designed for slow
mechanical switches. Communications over the traditional telephone network are
routed through circuits which must dedicate resources to each call until the
call ends, regardless of whether anyone is actually talking on the circuit.
This circuit-switching technology incurs a significant cost per call and does
not efficiently support the integration of voice with data services.

Data networks, however, were designed for electronic switching. They break
the data stream into small, individually addressed packages of data which are
routed independently of each other from the origin to the destination.
Therefore, they do not require a fixed amount of bandwidth to be reserved
between the origin and destination of each call. This allows multiple voice or
voice and data calls to be pooled, resulting in these networks being able to
carry more calls with an equal amount of bandwidth.

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The Emergence of Voice on Data Networks

Internet telephony consists of both traditional and enhanced voice and fax
services, including the addition of interactive voice capability to web sites,
among others. Internet telephony serves both the extensive market of existing
phone users and the expanding market of computer users. ITXC believes data
networks provide lower cost than the traditional telephone network and are
better suited to deliver future enhanced services to both phone users and
computer users.

Telephony based on Internet protocols emerged in 1995, with the invention of
a personal computer program that allowed the transport of voice communications
over the Internet via a microphone connected to a personal computer. Initial
sound quality was poor and the service required that both parties to the
conversation use personal computers instead of telephones. In 1996, the advent
of the gateway for the first time offered anyone with access to a telephone the
ability to complete calls on the Internet. A gateway facilitates Internet
transport of telephone services traditionally carried over the traditional
telephone network.

The Economics of Internet Telephony

Long-distance telephone calls transported over the Internet are less
expensive than similar calls carried over the traditional telephone network
primarily because the cost of using the Internet is not determined by the
distance those calls need to travel. Also, routing calls over the Internet is
more cost-effective than routing calls over the traditional telephone network
because the technology that enables Internet telephony is more efficient than
traditional telephone network technology. The greater efficiency of data
networks creates cost savings that can be passed on to the consumer in the form
of lower long-distance rates.

Beyond cost benefits, innovation in the provision of enhanced services is
expected to yield increased functionality as well. ITXC believes such enhanced
functionality will expand the addressable market for Internet services to
include anyone with a telephone. ITXC believes this market is potentially
larger than the market for any other existing Internet service which requires a
computer for access. Moreover, computer users will benefit from interactive
voice being an option in web browsing and other computer-based communications.

Limitations of Existing Internet Telephony Solutions

The growth of Internet telephony has been limited in the past due to
perceived poor sound quality caused by technical issues such as delays in
packet transmission and bandwidth limitations related to Internet network
capacity and local access constraints. However, the continuing addition of data
network infrastructure, recent improvements in packet-switching and compression
technology, new software algorithms and improved hardware have substantially
reduced delays in packet transmissions and the effect of these delays.
International Data Corporation projects that Internet protocol telephony
revenue will grow rapidly to over $23.4 billion in 2003.

Several large long-distance carriers, including AT&T and Sprint, have
announced Internet telephony service offerings. Smaller Internet telephony
service providers have also begun to offer free or low-cost Internet telephony
services from personal computers to telephones and from telephones to
telephones. Traditional carriers have substantial investments in traditional
telephone network technology, and therefore have been slow to embrace Internet
technology. ITXC believes that these service offerings by large long-distance
carriers and smaller providers can only complete calls to a limited number of
locations.

ITXC believes that the infrastructure required for a global network is too
expensive for most companies to deploy on its own. This mandates that the
network be a combination of gateways owned by different operators. For a
network to achieve optimal functionality, however, the gateways need to be
interoperable, or able to communicate with one another. As a result, uniform
standards for vendors and manufacturers of Internet telephony equipment and
software need to be developed.

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In recent years, commercial web sites have grown in popularity. Certain
efforts to enhance these web sites with voice enabled e-commerce features such
as click-and-call contact with a customer service agent were hampered by the
early quality problems with voice on the Internet described above.

Increasing Trend Toward Outsourcing Telephony Solutions

ITXC believes that the global reach and functionality of the Internet makes
it especially suited for enhanced voice services. These services, which may
include web-to-phone, phone-to-PC and integrated messaging, could be a
significant source of additional revenues to Internet portals, Internet service
providers and web sites that are seeking to expand their service offerings.
Such voice services require considerable expertise and capital to deploy and
may involve execution risk for any Internet portal, Internet service provider
or web site lacking this expertise. ITXC expects that Internet portals,
Internet service providers and web sites will increasingly outsource their
communications services to companies, like ITXC, that provide the network and
expertise necessary to facilitate those services, rather than incurring the
risk and delay of developing and deploying an array of communications services
themselves.

The ITXC Solution

ITXC believes that the rapid growth of commercial traffic on ITXC.net
demonstrates that ITXC delivers high quality, low cost voice and fax
communications over the Internet and are well positioned to deliver web-to-
phone and other Internet-based enhanced voice services. The key advantages of
ITXC's solution include:

. Quality. ITXC believes that it delivers to its customers high quality
voice communications over the Internet at competitive pricing. ITXC
maintains high quality primarily through its proprietary BestValue
Routing technology and techniques which include ITXC-developed monitoring
and analysis software and rapid human response from ITXC's 24-hours-a-
day, 7-days-a-week network operations center. In addition, ITXC blends
the redundancy of the public Internet with its use of multiple
termination affiliates in many cities to help assure the reliability and
quality of its network. ITXC uses dedicated data networks and even the
traditional telephone network when data networks are not available to
further assure consistent quality.

. Lower Costs. By using the public Internet, ITXC is able to reach and
rapidly deploy many affiliates throughout the world at a substantially
lower capital expense than building the dedicated connections that a
traditional telephony carrier would require. Also, as a result of its
ability to use the public Internet, ITXC believes that ITXC has
significantly lower marginal costs than the traditional telephone network
or a private data network.

. Interoperability. ITXC has led an effort called iNOW! resulting in an
industry standard for interoperability. More than 45 Internet telephony
vendors have agreed to comply with the iNOW! initiative. The VocalTec and
Cisco equipment installed on ITXC.net are already interoperable for voice
under a version of iNOW!. ITXC believes that as a result, ITXC and its
affiliates have the only multi-vendor interoperable network in the
Internet protocol telephony industry. Although ITXC has transferred the
iNOW! web site to an industry standards body, ITXC intends to continue to
provide leadership in interoperability of voice over the Internet
services.

. Global Scale. ITXC's network is overlaid on the public Internet to
provide a global communications medium to voice service providers.
ITXC.net is scalable--by using the public Internet and its global network
of affiliates, ITXC is able to rapidly and easily add capacity when
needed. Many of the ITXC- supplied components of ITXC's network, such as
routers and gateways, are relatively inexpensive, allowing ITXC to add
additional capacity without significant capital expenditures. In
addition, ITXC believes that it is able to connect new affiliates to
ITXC.net in significantly less time than it would take for a traditional
telephony carrier or dedicated data network to establish a dedicated
connection. For example, ITXC connected 16 cities in China to ITXC.net
within three weeks after ITXC signed an agreement with China Telecom.
Moreover, ITXC has a business model of purchasing terminating

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minutes directly from affiliates and selling call completion to customers
and affiliates. This model eliminates the need for complex settlement
between carriers which had previously slowed the deployment of a global
network.

. Easy Access. ITXC offers its customers two ways to connect from their
switches to ITXC.net: through normal dedicated connections and through
SNARCs. SNARCs are specially built devices, which ITXC owns and installs
on its customers' premises in order to eliminate the cost of dedicated
connections from their switches to its network hubs. SNARCs allow ITXC's
customers to benefit from the global termination capabilities of ITXC.net
by bringing the advantages of voice over the Internet to the customer's
premises. In addition, ITXC's affiliates can terminate calls directly
from ITXC.net using CRANS equipment that ITXC installs on its premises.

. Enhancement of E-commerce Services. Because ITXC.net can deliver high
quality voice on the Internet globally, ITXC believes that ITXC.net can
become a preferred network for a variety of voice-enhanced web sites and
enable ITXC to offer services to e-commerce providers who want to provide
their customers with the ability to talk over the Internet while browsing
a web site. ITXC believes that its acquisition of eFusion will accelerate
its service offerings in this market.

. Attractive Platform for New Services. Because of ITXC's leadership
position in establishing interoperability standards and the breadth of
its deployed network, developers of new services are bringing products to
ITXC for evaluation and possible deployment on ITXC.net. ITXC believes
that its operation as a voice application service provider opens its
network to new categories of customers including Internet portals and web
sites.

ITXC's Strategy

ITXC's goal is to remain the leading wholesale provider of Internet-based
voice and fax services as measured by revenue and network size. In order to
achieve this goal ITXC intends to:

. Exploit its Early Entrant Status and Worldwide Network

As of July 31, 2000, ITXC had aggressively deployed ITXC.net in 151
international cities. ITXC believes that with the increasing use of this
network, it has developed a reputation in the communications industry for
providing high quality voice and fax services over the Internet. In
addition, ITXC believes its experience as one of the first providers of
Internet-based voice services has placed ITXC at the forefront of
developing the proprietary tools and techniques which enable ITXC to
offer its service. ITXC intends to continue to enhance and capitalize
upon its reputation and experience in the communications industry as ITXC
provides existing and new voice and fax services.

. Rapidly Expand ITXC.net by Adding Additional Affiliates Worldwide

ITXC has used its affiliate structure to quickly achieve a global reach
for ITXC.net. ITXC believes that this approach allows it to quickly
expand and develop a broader network than its competitors. ITXC's
acquisition of the contract rights associated with the operations of the
OzEmail Internet telephony business enabled ITXC to add certain of
OzEmail's affiliates to ITXC.net. ITXC intends to continue to rapidly add
new affiliates worldwide in order to provide its customers with
additional termination points.

. Capitalize on the Cost Advantages of the Internet

By overlaying ITXC.net on the public Internet, ITXC believes that ITXC is
able to capture significant cost and capital savings. Instead of
incurring the capital expense to deploy a global physical network, ITXC
is able to carry a substantial portion of its customers' traffic using
the existing Internet infrastructure together with its affiliate network.
ITXC believes that it would require significantly more capital for a
carrier using traditional methods of network deployment to implement a
network with the same capacity and global reach as ITXC.net.
Additionally, the cost of transporting ITXC's traffic over

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the Internet is largely not distance sensitive, since ITXC only pays for
its bandwidth use. ITXC believes these factors enable it to benefit from
significant cost savings that are not available to operators of the
traditional telephone network or private data networks.

. Expand Its Role as a Voice Application Service Provider

With its webtalkNOW! service, ITXC has positioned itself as a voice
application service provider, capable of providing an outsourced solution
for web-to-phone services for Internet portals, Internet service
providers and web sites. ITXC's first application of the webtalkNOW!
service enables MediaRing.com to provide web-to-phone services to its
end-users. ITXC believes that its webtalkNOW! service extends the
benefits of the consistent quality, global reach and cost-effectiveness
of ITXC.net to new categories of customers beyond ITXC's original
customer base.

. Establish ITXC.net as the Standard for Quality in Its Industry

By combining its BestValue Routing approach with its knowledge of gateway
and Internet technology, ITXC believes that it has demonstrated that the
Internet can be an effective medium for two-way voice and fax
communication. By continuing to provide reliable high quality voice and
fax service with a global reach, ITXC's goal is to be the network of
choice for new enhanced services that incorporate voice.

. Provide its Customers and Affiliates with Direct Access to ITXC.net

ITXC is committed to providing its customers with high quality, low cost
voice service. SNARCs provide ITXC's customers with a voice
communications solution that minimizes reliance on the traditional
telephone network. By installing SNARCs on customer premises, ITXC can
provide its customers with direct access to all of the ITXC.net
termination points worldwide without the need for a direct, dedicated
connection to one of ITXC's network hubs. ITXC believes that, in the
future, an extension of its SNARC program will connect its customers'
customers directly to the Internet. CRANS provide selected affiliates
with direct access to voice traffic sent over ITXC.net for termination
without the need for a direct, dedicated connection to one of ITXC's
network hubs and improve the economics of ITXC's services to them. ITXC
believes that SNARCs and CRANS will strengthen its customers' and
affiliates' relationships with ITXC and position them to deploy
additional Internet-based enhanced voice services over ITXC.net.

. Continue to Provide Leadership in the Development of Industry Standards

ITXC is a founder of the iNOW! initiative. This initiative began as a
collaboration with Lucent and VocalTec to establish industry standards
for interoperability among Internet voice products and services. ITXC
believes that its leadership of the iNOW! initiative may further
strengthen its position in the industry.

ITXC believes that the iNOW! initiative has already set the industry
standard for gateway interoperability. As a result of the iNOW!
initiative, Cisco and VocalTec gateways are already interoperable for
voice traffic on ITXC.net. This provides ITXC and its affiliates with a
choice of vendors which other service providers do not have. More than 45
other vendors of gateways, IP telephony components and other equipment
and software have agreed to comply with the iNOW! initiative. Such
vendors include 3Com, Alcatel, Ascend, Cisco, Intel, through its
subsidiary, Dialogic, ECI Telecom, Motorola, Netrix, Samsung Electronics
and Siemens. By leading these efforts among suppliers, manufacturers,
software vendors and carriers, ITXC believes ITXC.net will be positioned
to exploit new opportunities in Internet voice services.

. Deliver Additional Internet Voice Services Over ITXC.net

ITXC believes that Internet telephony represents only the beginning of
the evolution of the Internet as a medium for voice and fax services and
that its Borderless800 and web-to-phone services are only the early
stages of this evolution. Through enhancements to ITXC.net, ITXC can
position itself to provide

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the network for wide commercial deployment of new voice and fax services
from traditional telephony technology suppliers like Lucent, new entrants
like Cisco, Internet telephony companies like VocalTec and a number of
start-ups. ITXC believes that, in the future, the Internet will serve as
a platform for existing and enhanced voice and fax services that may be
accessed from traditional phones, personal computers and a variety of
devices that span the range between telephones and personal computers.

ITXC.net

ITXC.net allows ITXC to deliver reliable, high quality voice and fax service
through an actively-managed network overlaid on the public Internet.

ITXC has implemented a global communications network by using the public
Internet to connect ITXC-owned network hubs in the U.S. and London with its
affiliates around the world. ITXC uses ITXC-developed software and skilled
network management personnel to help assure the reliability and quality of
voice transmission over the Internet. To further enhance the reliability of
ITXC.net, ITXC is also able to route and terminate voice traffic through
alternate channels.

The key components of ITXC.net include:

. The Public Internet

ITXC.net routes voice traffic over the public Internet, which allows
traditional telephone users to benefit from its cost savings. By using
the Internet, ITXC is able to reach and rapidly deploy many affiliates
throughout the world at what ITXC believes to be significantly lower
capital costs than that of building the dedicated connections that a
traditional telephony carrier or dedicated data network would require. In
addition, use of the public Internet as a component of ITXC.net supports
the merging of voice with other Internet services, facilitating the
development of services such as ecalling.

. Global Network of Affiliates

ITXC has a global network of independent affiliates that own their own
gateways and originate and/or terminate voice traffic over ITXC.net. ITXC
has used its affiliate structure to rapidly achieve what ITXC believes to
be the broadest global network in the Internet telephony marketplace. As
of July 31, 2000, ITXC had affiliates in 151 international cities
operating 258 ITXC.net points of presence. Its affiliates range from
small Internet service providers to traditional telephone companies.

. Multiple Access Points

As of July 31, 2000, ITXC had four network hubs, one in New York, one in
New Jersey, one in California and one in London, each consisting of a
switch and multiple gateways. ITXC's customers access ITXC.net through
dedicated connections from their switches to these network hubs or by
using SNARCs located on their premises. SNARCs connect ITXC's carrier
customers' switches to the Internet and ITXC.net and thereby avoid
costly, distance-based dedicated line charges associated with connecting
customer switches to ITXC's network hubs. Selected affiliates connect
directly to the Internet to terminate calls using ITXC's CRANS equipment.
As of July 31, 2000, ITXC had installed over 72 origination SNARCs at 37
carrier customer sites and 20 termination SNARCs at 17 affiliate
locations.

. BestValue Routing

ITXC's BestValue Routing approach employs ITXC-developed software and
techniques to efficiently and cost-effectively route voice traffic over
ITXC.net. ITXC believes that its ability to develop and deploy
intelligent routing methods represents a significant competitive
advantage. ITXC believes that this approach enables it to provide
consistent, reliable quality since ITXC is able to avoid the majority of
Internet congestion points and minimize packet loss and delay.

ITXC implemented its BestValue Routing approach from its 24-hours-a-day,
7-days-a-week network operations center where ITXC polls its affiliates'
gateways periodically to assure their stability, tests the

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quality of Internet connections to the gateways and collects call detail
records in near real-time to monitor the quality of calls placed over its
network. ITXC uses network analysis software to compare monitoring data
to predetermined parameters from its database of call detail records.
This software generates reports on a per route basis when the measured
parameters fail to meet predetermined standards. Frequent analysis of
this information allows ITXC to rapidly correct network problems such as
congestion or inoperative gateways.

ITXC's monitoring and analysis software helps its staff to manage a
routing scheme across multiple switches and gateways around the world.
Its routing technicians establish predetermined percentages of traffic to
be sent to each provider, based both on price and quality. If a
particular Internet route or termination provider is not meeting its
standards, ITXC's staff switches to a better quality route and then
resolves the problem. For example, if transport through the public
Internet proves to be unreliable on a particular route, ITXC reroutes the
traffic through dedicated data networks or the traditional telephone
network to terminate the call in a traditional manner. The use of
multiple termination affiliates in many cities in which ITXC operates
provides numerous termination possibilities to help ensure completed
calls with consistent quality.

ITXC's Strategic Carrier and Technology Partners

ITXC believes that its strategic relationships with carrier affiliates are
important because they allow extended geographic reach of ITXC.net. ITXC
believes that these relationships will lead to a broader
origination/termination presence in key areas and allow ITXC to provide service
over its own network for more of its customers. ITXC also expects that these
relationships will continue to assist it in focusing its development of new
Internet-based voice services. ITXC currently has strategic relationships with
carriers including:

. China Telecom

. Interoute

. Korea Telecom

. the Ameritech division of SBC

. Verizon Communications

These carriers provide expanded global reach for ITXC.net and termination
points in locations which are significant for its customers.

Because gateways are critical to the infrastructure of ITXC.net, ITXC has
strategic relationships with Cisco, Clarent and VocalTec, each of which is a
leading gateway manufacturer. Lucent and Cisco have also provided ITXC with
vendor financing in connection with the purchase of equipment. VocalTec is an
equity investor in ITXC. Additionally, ITXC has worked closely with each of
these companies to develop gateway interoperability standards through its iNOW!
initiative.

ITXC expects its strategic relationships to continue and that its
relationships with these and other technology partners will continue to help
drive the development of new voice, fax and voice-enabled services over
ITXC.net.

ITXC's Services

WWeXchange Service

In April 1998, ITXC introduced its WWeXchange service, the first application
enabled by ITXC.net. This service provides international call completion to
ITXC's customers and enables them to offer their own customers phone-to-phone
global voice and fax service. ITXC's WWeXchange service relies upon Internet

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telephony technology. Such technology permits calls originated by a telephone
to be transmitted over the Internet. ITXC believes that Internet telephony is
the first technology that allows non-computer users to access the Internet.

ITXC's WWeXchange service provides its customers with high quality, low cost
global long-distance service without their having to understand or deploy
Internet telephony technology themselves. ITXC believes that the high quality
of calls completed using its WWeXchange service allows its customers to use
ITXC.net as an alternative to traditional voice traffic networks.

ITXC believes that its affiliates benefit from its WWeXchange service
because they:

. rapidly obtain a flow of international traffic without incurring
significant sales or marketing costs;

. obtain high quality international long-distance for their originated
calls at lower rates than through traditional telephony;

. connect directly to other affiliates while having a single billing
relationship with ITXC; and

. have a global reach without incurring the incremental costs of building
and operating multiple facilities.

SNARCs and CRANS

SNARCs are specially built gateways that ITXC placed on selected customer
premises to eliminate the cost of backhaul from customer switches to ITXC's
switches. Until ITXC launched its SNARC program in April 1999, customers bore
the expense of running dedicated circuits from their facilities to their
suppliers. This is known as backhaul. ITXC's customers also typically ran
circuits from their facilities to ITXC's network hubs. However, the
introduction of ITXC's SNARC program reduced the expense of backhaul by
transporting traffic directly to the Internet and ITXC.net in whatever city the
customer is located. ITXC believes that this use of Internet capability to
eliminate the expense of backhaul will make it more attractive to customers
located away from major telephony hubs. As of July 31, 2000, ITXC had installed
over 72 origination SNARCs at 37 customer sites and 20 termination SNARCs at 17
locations. In addition, since December 1999 ITXC has been installing equipment
similar to SNARCs, called CRANS, on selected affiliates' premises to connect
them directly to the Internet for the purpose of their terminating calls
originated over ITXC.net.

webtalkNOW! Service

ITXC believes that ITXC.net has the same advantages of consistent quality,
global coverage and competitive prices for web-to-phone calls as it does for
phone-to-phone calls. ITXC first publicly announced the broad availability of
its webtalkNOW! service in February 2000, although ITXC has been providing web-
to-phone calling on a limited basis since December 1999. ITXC's webtalkNOW!
service provides an outsourced solution to Internet portals, Internet service
providers and web sites allowing them to offer self-branded web-to-phone
service to their users. ITXC can provide its customers with high quality,
global call completion over ITXC.net for its end-users' web-to-phone calling
and the dialing software necessary for their users to actually place calls over
ITXC.net from their PCs. ITXC believes that its webtalkNOW! service will assist
its customers in building their own brands and in retaining their end-users.

Borderless800

ITXC's Borderless800 service allows its carrier and reseller customers
located outside the U.S. to offer to their subscribers no-charge or low-charge
access to 800, 888 and 877 telephone numbers in the U.S. ITXC believes that its
service will promote the convergence of toll-free numbers and web sites used in
e-commerce. Just as web sites can be accessed over the Internet from anywhere
in the world, companies that advertise U.S.-based national 1-800 numbers can
now be accessed globally. Further, ITXC has enabled its affiliates to offer
toll-free calling into their own countries. As its affiliates make this service
available in their own countries, carriers and resellers on ITXC.net will be
able to reach toll-free numbers in these additional countries as well.

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Future Enhanced Voice Services

ITXC intends to make significant investments to develop and market
additional services for use over ITXC.net. ITXC believes that as a result of
the convergence of the data and communications networks and the capabilities
and size of ITXC.net, ITXC will be able to offer next-generation, enhanced
voice services to both new and existing customers. In addition, ITXC believes
that ITXC.net's open architecture, combined with the strength and size of its
customers, affiliates and strategic relationships, will attract developers of
voice services to ITXC's network.

ITXC may introduce the following enhanced voice services in the future and
ITXC may introduce other services not listed. However, ITXC cannot provide
assurances that ITXC will be able to successfully develop or implement these or
other services in the future.

. Enhanced Phone-to-Phone Service: Planned enhancements to ITXC's existing
WWeXchange service include:

. enhanced 800 and 900 service;

. number portability;

. subscriber authentication;

. conferencing services; and

. subscriber identification through voice prints and voice commands.

. Phone-to-PC Service: ITXC believes that subscribers will be able to
specify that they want to receive ordinary telephone calls on a PC rather
than a standard telephone and that ITXC.net will be able to complete
these calls.

. Device-to-Phone Service and Phone-to-Device Service: There are Internet
phone devices available on the market today that allow owners to make
calls over the Internet. While there is no incremental cost for these
calls over the cost of Internet access, calls can only be made to others
who have Internet phones. ITXC may use ITXC.net to enable the completion
of inexpensive calls from these devices to any telephone. ITXC already
offers a device-to-phone service through webtalkNOW! In addition, ITXC
believes that other devices, such as personal digital assistants, will
become voice-enabled.

. Integrated Messaging Service: ITXC may be able to offer a service over
ITXC.net that its customers can use to provide their customers with
telephone access to voice messages, e-mail and faxes. In addition, ITXC's
customers may be able to provide to their customers access to voice mail
from personal computers.

. Voice-enhanced E-commerce: Internet web sites used both for sales and for
customer service are being enhanced by the addition of services which
allow the viewer to talk through his or her personal computer to an
agent, who sees what the user sees, can answer questions and take orders.
As with other Internet telephony applications, voice quality has been an
obstacle to the wide-spread deployment of click-and-call services. ITXC
believes that ITXC can use ITXC.net and its capabilities to add
consistent quality to voice-enhanced e-commerce, including eFusion's Push
to Talk service.

. Single Number Service: ITXC believes that ITXC.net will be able to
support a service enabling subscribers to maintain a single, permanent
telephone number for all calls regardless of their location. This single
number would serve as a billing number when the subscriber is placing
calls and as a reach-me number for receiving calls. The number could be
reassigned to any phone or personal computer. This type of call-
forwarding would take advantage of Internet-addressing and ITXC.net to
eliminate most of the costs and technical obstacles which have prevented
the widespread deployment of such services on the traditional telephone
network.

Sales, Marketing and Distribution

ITXC's sales and marketing goals are to:

. expand the use of its WWeXchange service by ITXC's existing call
origination customers and affiliates and further expand ITXC's call
origination customer base;

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. expand the use of ITXC's voice application services by Internet portals,
Internet service providers and web sites;

. expand its terminating affiliate base;

. increase the number of carriers that are ITXC affiliates; and

. maintain and expand its market leadership position among providers of
voice and fax services over the Internet.

ITXC uses the reputations and industry relationships cultivated by its
senior management and its status as an early entrant to attract affiliates to
ITXC.net. ITXC typically meets potential affiliates at Internet voice trade
shows and seminars ITXC conducts on Internet telephony. ITXC often meets
potential customers through directed sales calls by its sales personnel and at
telephony trade shows. ITXC also targets strategic affiliates internationally
and has made joint sales calls with Cisco, Clarent, Lucent and VocalTec.

ITXC has a dedicated sales force that is supplemented by members of its
executive management team. Its salespeople are based regionally within the U.S.
and in Singapore and London, as well as in its corporate office. ITXC also has
sales agents located in China and Venezuela. Its senior management focuses on
maintaining and cultivating relationships with ITXC's customers. ITXC assigns
its sales representatives specific accounts based on their level of experience,
location and the quality of the relationship between the representative and the
customer. ITXC compensates its sales staff, based in large part, on incentive-
based goals and measurements. In addition to its marketing and sales staff,
ITXC relies on its executive and operations personnel, including the staff of
its 24-hours-a-day, 7-days-a-week network operations center, to identify sales
opportunities within existing customer accounts and to provide quality customer
service.

ITXC also maintains an Internet web site which, among other things, provides
information to prospective customers and affiliates concerning the technical
and other requirements for becoming a part of ITXC.net.

ITXC's primary marketing and sales support is centralized and directed from
its headquarters office in Princeton, New Jersey. ITXC has a full-time staff
dedicated to its marketing efforts. The marketing and sales support staff are
charged with implementing ITXC's marketing strategies, prospecting and
producing sales presentation materials and proposals.

New Services Development and Implementation

ITXC's development team is dedicated to the improvement and enhancement of
the monitoring and analysis software tools and Internet management systems ITXC
uses to achieve BestValue Routing, the enhancement of its management systems,
including its billing and customer care software, and the development and
implementation of new Internet-based voice services, such as its new wholesale
web-to-phone services. ITXC's future success will depend, in part, on its
ability to improve existing technology and develop and/or implement new voice
services that incorporate leading technology.

Competition

The long distance telephony market and the Internet telephony market are
highly competitive. There are several large and numerous small competitors, and
ITXC expects to face continuing competition for its services based on price and
service offerings from existing competitors and new market entrants in the
future. The principal competitive factors in ITXC's market include price,
quality of service, breadth of geographic presence, customer service,
reliability, network size and capacity and the availability of enhanced
communications services. ITXC's competitors include major and emerging
telecommunications carriers in the U.S. and foreign telecommunications
carriers.

. Internet Protocol and Internet Telephony Service Providers. During the
past several years, a number of companies have introduced services that
make Internet telephony or voice services over the Internet available to
businesses and consumers. AT&T Global Clearinghouse, Genuity, GRIC
Communications

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<PAGE>

and iBasis and the wholesale divisions of Net2Phone and deltathree.com
route traffic to destinations worldwide and compete directly with ITXC.
Other Internet telephony service providers focus on a retail customer base
and may in the future compete with ITXC. These companies may offer the
kinds of enhanced Internet voice services that ITXC provides now and that
ITXC intends to offer in the future. In addition, companies currently in
related markets have begun to provide voice over the Internet services or
adapt their products to enable voice over the Internet services. These
related companies may potentially migrate into the Internet telephony
market as direct competitors.

. Telecommunications Companies and Long Distance Providers. A number of
telecommunications companies, including AT&T, Deutsche Telekom, Level
Three, MCI WorldCom and Qwest Communications, currently maintain, or plan
to maintain, data networks to route the voice traffic of other
telecommunications companies. These companies, which tend to be large
entities with substantial resources, generally have large budgets
available for research and development, and therefore may further enhance
the quality and acceptance of the transmission of voice over the
Internet.

Many of ITXC's competitors have substantially greater financial, technical
and marketing resources, larger customer bases, longer operating histories,
greater name recognition and more established relationships in the industry
than ITXC has. As a result, certain of these competitors may be able to adopt
more aggressive pricing policies which could hinder ITXC's ability to market
its Internet-based voice services. ITXC believes that its key competitive
advantages are its ability to deliver reliable, high quality voice service over
the Internet in a cost-effective manner and the size and rapid growth of its
network. ITXC cannot assure you, however, that this advantage will enable it to
succeed against comparable service offerings from its competitors.

Government Regulation

Regulation of Internet Telephony

The use of the Internet to provide telephone service is a recent market
development. At present, ITXC is not aware of any domestic, and is only aware
of a few foreign, laws or regulations that prohibit voice communications over
the Internet.

United States. ITXC believes that, under U.S. law, the Internet-related
services that ITXC provides constitute information services, as opposed to
regulated telecommunications services, and, as such, are not currently actively
regulated by the FCC or any state agencies charged with regulating
telecommunications carriers. Nevertheless, aspects of ITXC's operations may be
subject to state or federal regulation, including regulation governing
universal service funding, disclosure of confidential communications, copyright
and excise tax issues. ITXC cannot provide assurances that Internet-related
services will not be actively regulated in the future. Several efforts have
been made in the U.S. to enact federal legislation that would either regulate
or exempt from regulation services provided over the Internet. Increased
regulation of the Internet may slow its growth, particularly if other countries
also impose regulations. Such regulation may negatively impact the cost of
doing business over the Internet and materially adversely affect ITXC's
business, operating results, financial condition and future prospects.

The FCC has considered whether to impose surcharges or other common carrier
regulations upon certain providers of Internet telephony, primarily those
which, unlike ITXC, provide Internet telephony services directly to end users.
While the FCC has presently refrained from such regulation, the regulatory
classification of Internet telephony remains unresolved.

Specifically, the FCC has expressed an intention to further examine the
question of whether certain forms of phone-to-phone Internet telephony are
information services or telecommunications services. The two are treated
differently in several respects, with certain information services being
regulated to a lesser degree. The FCC has noted that certain forms of phone-to-
phone Internet telephony bear many of the same characteristics as more
traditional voice telecommunications services and lack the characteristics that
would render them information services.

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<PAGE>

If the FCC were to determine that certain Internet-related services
including Internet telephony services are subject to FCC regulations as
telecommunications services, the FCC could subject providers of such services
to traditional common carrier regulation, including requirements to make
universal service contributions, and pay access charges to local telephone
companies. It is also possible that the FCC may adopt a regulatory framework
other than traditional common carrier regulation that would apply to Internet
telephony providers. Any such determinations could materially adversely affect
ITXC's business, financial condition, operating results and future prospects to
the extent that any such determinations negatively affect the cost of doing
business over the Internet or otherwise slow the growth of the Internet.
Congressional dissatisfaction with FCC conclusions could result in requirements
that the FCC impose greater or lesser regulation, which in turn could
materially adversely affect ITXC's business, financial condition, operating
results and future prospects.

State regulatory authorities may also retain jurisdiction to regulate
certain aspects of the provision of intrastate Internet telephony services.
Several state regulatory authorities have initiated proceedings to examine the
regulation of such services. Others could initiate proceedings to do so.

One of ITXC's subsidiaries is subject to regulation by the FCC and the New
York Public Service Commission as a result of having been granted
authorizations to provide telecommunications services by these entities.

International. The regulatory treatment of Internet telephony outside of the
U.S. varies widely from country to country. A number of countries that
currently prohibit competition in the provision of voice telephony also
prohibit Internet telephony. Other countries permit but regulate Internet
telephony. Some countries will evaluate proposed Internet telephony service on
a case-by-case basis and determine whether it should be regulated as a voice
service or as another telecommunications service. Finally, in many countries,
Internet telephony has not yet been addressed by legislation. Increased
regulation of the Internet and/or Internet telephony providers or the
prohibition of Internet telephony in one or more countries could materially
adversely affect our business, financial condition, operating results and
future prospects. The European Commission regulatory regime, for example,
distinguishes between voice telephony services and other telecommunications
services.

In January 1998, the Commission issued a communication addressing whether
Internet telephony was voice telephony and thus subject to regulation by the
member states of the European Union. Consistent with its earlier directives,
the Commission concluded that no form of Internet telephony currently meets the
definition of voice telephony subject to regulation by the member states of the
European Union. The European Commission stated that only phone-to-phone
communications reasonably could be considered voice telephony and that, at
present, even phone-to-phone Internet telephony does not meet all elements of
its voice telephony definition. Therefore, the European Commission concluded
that, at the present time, voice over Internet services cannot be classified as
voice telephony.

As a result of the European Commission's conclusion, providers of Internet
telephony should be subjected to no more than a general authorization or
declaration requirement by European Union member countries. However, ITXC
cannot provide assurances that more stringent regulatory requirements will not
be imposed by individual member countries of the European Union, since
Commission communications, unlike directives, are not binding on the member
states. The member countries therefore are not obligated to reach the same
conclusions as the Commission on this subject so long as they adhere to the
definition of voice telephony in the Services Directive. Moreover, in its
January 1998 IP Telephony Communication, the European Commission stated that
providers of Internet telephony whose services satisfy all elements of the
voice telephony definition and whose users can dial out to any telephone number
can be considered providers of voice telephony and may be regulated as such by
the member states of the European Union. ITXC cannot provide assurances that
the services provided over ITXC.net will not be deemed voice telephony subject
to heightened regulation by one or more member states. Moreover, ITXC cannot
provide assurances that the failure of ITXC or any of its customers or
affiliates to obtain any necessary authorizations will not have a material
adverse effect on ITXC's business, financial condition, operating results and
future prospects.

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<PAGE>

One of ITXC's subsidiaries, ITXC, Ltd., is subject to regulation in the
United Kingdom as a result of having been granted authorization to provide
telecommunications services by the Department of Trade and Industry. Given that
ITXC, Ltd. has commenced providing services, it must comply with all applicable
regulations imposed on telecommunications carriers in the U.K.

ITXC is also providing service in countries where regulation of Internet
telephony is far more restrictive than in the European Union. Specifically,
ITXC has a strategic affiliate relationship with China Telecom to provide
Internet telephony services in the People's Republic of China. See "ITXC's
Strategic Carrier and Technology Partners." China currently prohibits foreign
ownership of telecommunications companies and strictly limits competition in
the telecommunications sector. However, a recent yet to be implemented trade
agreement between the U.S. and China enables China's entry into the World Trade
Organization and may open up the Chinese Internet market to foreign investment.
In the event that this agreement is implemented, U.S. firms would be permitted
to invest in Chinese-based Internet ventures. Internet telephony is now being
provided on an experimental basis in China by China Telecom, Unicom, and Jitong
Communications in three non-competing geographic regions. It remains uncertain
how Internet telephony will be treated in China once the trial period ends and
specifically, whether China Telecom and/or others will be granted more
permanent authorization to provide Internet telephony in China.

Certain Other Regulation Affecting the Internet

United States. Congress has recently adopted legislation that regulates
certain aspects of the Internet, including online content, user privacy and
taxation. In addition, Congress and other federal entities are considering
other legislative and regulatory proposals that would further regulate the
Internet. Congress has, for example, considered legislation on a wide range of
issues including Internet spamming, database privacy, gambling, pornography and
child protection, Internet fraud, privacy and digital signatures. Various
states have adopted and are considering Internet-related legislation. Increased
U.S. regulation of the Internet may slow its growth, particularly if other
governments follow suit, which may negatively impact the cost of doing business
over the Internet and materially adversely affect our business, financial
condition, results of operations and future prospects.

International. The European Union has also enacted several directives
relating to the Internet. The European Union has, for example, adopted a
directive that imposes restrictions on the collection and use of personal data.
Under the directive, citizens of the European Union are guaranteed rights to
access their data, rights to know where the data originated, rights to have
inaccurate data rectified, rights to recourse in the event of unlawful
processing and rights to withhold permission to use their data for direct
marketing. The directive could, among other things, affect U.S. companies that
collect or transmit information over the Internet from individuals in European
Union member states, and will impose restrictions that are more stringent than
current Internet privacy standards in the U.S. In particular, companies with
offices located in European Union countries will not be allowed to send
personal information to countries that do not maintain adequate standards of
privacy. Although ITXC does not engage in the collection of data for purposes
other than routing its services and billing for its services, the directive is
quite broad and the European Union privacy standards are stringent.
Accordingly, the potential effect on the development of ITXC in this area is
uncertain.

Proprietary Rights

Proprietary rights are important to ITXC's success and its competitive
position. As of July 31, 2000, ITXC has registered three trademarks in the
U.S., and has twelve registered trademarks and ten pending applications for
trademarks in other parts of the world. ITXC has also applied for one patent in
the U.S. for its network monitoring and management techniques. The laws of some
foreign countries do not protect proprietary rights to the same extent as do
the laws of the U.S., and effective copyright, trademark and trade secret
protection may not be available in such jurisdictions. In general, ITXC's
efforts to protect its intellectual property rights through copyright,
trademark and trade secret laws may not be effective to prevent
misappropriation of its content, and ITXC's failure to protect its proprietary
rights could materially adversely affect its business,

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<PAGE>

financial condition, operating results and future prospects. Despite such
protection, a third party could, without authorization, copy or otherwise
appropriate ITXC's proprietary network information. ITXC's agreements with
employees and others who participate in development activities could be
breached, ITXC may not have adequate remedies for any breach, and ITXC's trade
secrets may otherwise become known or independently developed by competitors.

ITXC relies upon license agreements with respect to its use of the software
and hardware provided to it by its vendors. Those license agreements may not
continue to be available to ITXC on acceptable terms, or at all.

Employees

As of July 31, 2000, ITXC employed 164 people. None of ITXC's employees is
subject to any collective-bargaining arrangements, and ITXC considered its
relations with its employees to be good.

Properties

ITXC's principal executive office is located in Princeton, New Jersey, where
ITXC leases approximately 27,000 square feet. ITXC has network hubs in New York
City, Jersey City, New Jersey, Los Angeles and London, under co-location
arrangements. ITXC has sales offices in Singapore and London. In June 2000,
ITXC signed a lease for approximately 60,000 additional square feet of space
near its present location in Princeton, New Jersey. ITXC expects to be able to
begin using that new space before the end of 2001. ITXC believes that it will
be able to obtain additional space on commercially reasonable terms to meet
future requirements.

Legal Proceedings

From time to time, ITXC is involved in various legal proceedings relating to
claims arising in the ordinary course of business.

On May 23, 2000, Connectel, LLC, filed suit against ITXC in the United
States Federal District Court for the Eastern District of Pennsylvania.
Connectel alleges in its complaint that ITXC is infringing on the claims of a
patent owned by Connectel by, acting alone or with others, assembling, offering
to sell or selling "communications networks or switching systems" within the
United States and for export worldwide without license from Connectel. ITXC
believes that the Connectel claims are without merit and intends to defend the
lawsuit vigorously. However, should a judge issue an injunction against ITXC,
such action could have a material adverse effect on ITXC's operations.

ITXC is not a party to any other legal proceeding, the adverse outcome of
which is expected to have a material adverse effect on its business, financial
condition, operating results or future prospects.

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<PAGE>

Management

Executive Officers and Directors

ITXC's executive officers and directors are as follows:

<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Tom I. Evslin.................... 57 Chairman of the Board, Chief Executive Officer
and President(1)

Edward B. Jordan................. 39 Executive Vice President, Chief Financial
Officer, Treasurer, Secretary and Director

John G. Musci.................... 44 Executive Vice President, Chief Operating
Officer and Director

Thomas J. Shoemaker.............. 44 Executive Vice President, Business Development

William Diaz..................... 32 Vice President, Operations

Mary A. Evslin................... 52 Vice President, Marketing and Customer Success

Bradley E. Miller................ 34 Vice President of Network Development and
Engineering

Steven J. Ott.................... 40 Vice President, Global Sales

Eric G. Weiss.................... 33 Vice President and Business Unit Manager,
WWeXchange Service

William P. Collatos.............. 46 Director(1)(2)(3)

Elon A. Ganor.................... 50 Director(2)(3)

Frederick R. Wilson.............. 39 Director(1)(2)(3)
</TABLE>
--------
(1) Member of the executive committee.
(2) Member of the audit committee.
(3) Member of the compensation committee.

Tom I. Evslin, ITXC's founder, has been Chairman of the Board, Chief
Executive Officer and President since ITXC's inception in July 1997. From
December 1994 until July 1997, Mr. Evslin was employed by AT&T, where he
designed its Internet strategy and launched and ran its Internet service
provider, AT&T WorldNet Service. From December 1991 until December 1994, he
worked for Microsoft, where he last served as General Manager, Server
Applications Division from May 1993. From 1969 to 1991, he was Chairman and
Chief Executive Officer of Solutions, Inc., a communications software
development company. He is the Chairman of the Policy Committee and a member of
the Board of the Voice On The Net Coalition. Mr. Evslin served on the board of
directors of VocalTec from 1997 until his resignation on June 10, 1999. He is
Mary A. Evslin's husband.

Edward B. Jordan has been an Executive Vice President since February 1999,
has served as ITXC's Chief Financial Officer, Secretary and Treasurer since he
joined ITXC in September 1997 and has served as a Director since April 1998.
From September 1997 until February 1999, he was ITXC's Vice President,
Administration. For ten years prior to joining ITXC, Mr. Jordan was employed by
Dialogic Corporation, a manufacturer of computer telephony products, serving
first as Controller and then as Chief Financial Officer, Treasurer and Vice
President. Prior to joining Dialogic, Mr. Jordan served in the Audit Department
of Deloitte & Touche from 1982 to 1986. Mr. Jordan is a certified public
accountant.

John G. Musci joined ITXC in February 1999 as Executive Vice President and
Chief Operating Officer and as a Director. From June 1998 until February 1999,
Mr. Musci served as Senior Vice President of Wholesale Switched Services at
Qwest Communications International, an Internet communications company. He held
various positions at LCI International, a long-distance telecommunications
company, including Senior Vice President--Wholesale Switched Services, from
1985 until June 1998, when LCI was acquired by Qwest. Prior to 1985, Mr. Musci
held various positions at AT&T Information Systems and Ohio Bell.

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<PAGE>

Thomas J. Shoemaker joined ITXC in January 2000 as its Executive Vice
President of Business Development, responsible for both new service development
and mergers and acquisitions. Prior to joining ITXC, from August 1998 to
December 1999, he was President and Chief Executive Officer of Electric
Schoolhouse, an Internet education company providing application and
information services to parents, teachers, students and schools for use at home
and in the classroom. From August 1997 to August 1998, Mr. Shoemaker was the
Vice President responsible for AT&T's WorldNet Service. Prior to that role, he
held a number of business, technical, and marketing positions in AT&T Business
Services, Bell Laboratories, and Bell Communications Research from September
1979 to August 1997.

William Diaz joined ITXC in May 2000 as its Vice President of Operations,
responsible for daily network switch operations, maintenance, deployment,
technical support and customer service for the ITXC.net Internet protocol
infrastructure. Before joining ITXC, Mr. Diaz served as the Director of Network
Engineering & Operations at Omnipoint Communication Inc.'s Corporate
Headquarters Group from August 1996 to May 2000. Prior to his position at
Omnipoint, Mr. Diaz held the position of Manager of Network Engineering at AT&T
Wireless PCS Services from December 1995 to August 1996. From August 1993 to
December 1995 he served as a Network Operations Manager at Nextel
Communications and as a technical engineer at NYNEX Mobile Communications.

Mary A. Evslin has been ITXC's Vice President, Marketing and Customer
Success since July 1997. From 1993 through July 1997, Ms. Evslin served as a
volunteer for The American Red Cross and for various charitable organizations.
From 1992 to 1993, Ms. Evslin was employed by Attachmate Corporation, a
provider of mainframe connectivity software to businesses, as Manager of
Service Marketing. From 1986 to 1992, she served as President of Solutions
International, a software marketing company. From 1978 to 1986, Ms. Evslin
served as Vice President of Marketing and Sales at Solutions, Inc., a
communications software development company. She is Tom I. Evslin's wife.

Bradley E. Miller has been ITXC's Vice President of Network Development and
Engineering since May 2000. Prior to that time, he served as ITXC's Vice
President, Operations since he joined ITXC in November 1997. From June 1996 to
November 1997, Mr. Miller was Director of Operations at CGX Telecom/CAIS
Internet, a tier 1 Internet service provider. From May 1995 until June 1996,
Mr. Miller was a Management Information Systems Manager at US Assist, an
international travel assistance company. From June 1987 until May 1995, he was
the Director of Operations at Donohoe Constructions Company, a construction
firm.

Steven J. Ott has been ITXC's Vice President, Global Sales since January
1998. From August 1994 to January 1998, Mr. Ott served as Vice President of
Global Sales and Support at Voxware, Inc., a software company providing core
audio compression algorithms and applications to technology companies. Prior to
August 1994, Mr. Ott served first as a Director and then as Vice President of
Corporate Development at Legent Corporation, a software development company.

Eric G. Weiss joined ITXC in October 1997 as its Business Unit Manager,
WWeXchange Service and served in that capacity until May 1998. From May 1998 to
present, Mr. Weiss has served as Vice President and Business Unit Manager,
WWeXchange Service. From May 1995 to October 1997, he was employed by Dialogic
Corporation as a Product Line Manager. From September 1994 until May 1995, Mr.
Weiss was a Manager with BCE Ventures, Bell Canada Enterprises (BCE) Inc., a
telecommunications firm. From 1991 until September 1994, he held various
management positions with Hewlett Packard Company, a manufacturer of electronic
equipment.

William P. Collatos has been a Director of ITXC since April 1998. Mr.
Collatos is a founder of Spectrum Equity Investors, L.P., a private equity
investment firm which invests in telecommunications, information and media
companies. Prior to co-founding Spectrum in 1994, Mr. Collatos was a founding
General Partner of Media/Communications Partners and a General Partner of TA
Associates. Mr. Collatos currently serves on the boards of directors of
Jazztel, plc, and Pegasus Communications.

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<PAGE>

Elon A. Ganor has been a Director of ITXC since October 1997. He has served
as the Chairman of the Board of VocalTec since 1993. He has served as
VocalTec's CEO since November 1999, and also from 1993 to 1998.

Frederick R. Wilson has served as a Director since April 1998. He founded
Flatiron Partners, a venture capital firm which primarily invests in Internet-
oriented companies, in August 1996. For ten years prior to August 1996, Mr.
Wilson worked for Euclid Partners, an early-stage venture capital firm. Mr.
Wilson is the Chairman of the Board of TheStreet.com and a director of
StarMedia Network.

Officers who do not have an employment agreement with ITXC serve at the
discretion of ITXC's board of directors and hold office until their successors
are elected and qualified or until their earlier resignation or removal.

ITXC's board of directors is divided into three classes. Each class
consists, as nearly as possible, of one-third of the whole number of the board
of directors. Directors for each class are elected at the annual meeting of
stockholders held in the year in which the term for such class expires. Upon
election, directors serve for three years, and hold office until their
successors are elected and qualified. There are currently six members of ITXC's
board of directors. Tom I. Evslin and Frederick R. Wilson are in class I; their
terms will expire in 2003. John G. Musci and Elon A. Ganor are in class II;
their terms will expire in 2001. Edward B. Jordan and William P. Collatos are
in class III; their terms will expire in 2002. ITXC intends to add an
additional independent director prior to its next annual meeting of
stockholders.

Board Committees

ITXC's board of directors has four standing committees: an audit committee,
a compensation committee, an executive committee and a CEO committee.

The audit committee consists of Messrs. Collatos, Wilson and Ganor, with Mr.
Collatos serving as Chairman. The audit committee recommends the firm to be
appointed as independent accountants to audit ITXC's financial statements and
to perform services related to the audit; reviews the scope and results of the
audit with the independent accountants; reviews ITXC's year-end operating
results with its management and the independent accountants; considers the
adequacy of ITXC's internal accounting and control procedures; reviews the non-
audit services to be performed by the independent accountants, if any; and
evaluates the accountants' independence.

The compensation committee consists of Messrs. Collatos, Wilson and Ganor,
with Mr. Wilson serving as Chairman. The compensation committee reviews,
recommends and approves compensation arrangements for executive officers and
other senior level employees, and administers certain benefit and compensation
plans and arrangements.

The executive committee consists of Messrs. Collatos, Evslin and Wilson,
with Mr. Evslin serving as Chairman. Except as limited by Delaware law, the
executive committee can perform each of the responsibilities of ITXC's full
board, providing ITXC with added flexibility in situations when full board
meetings cannot be convened.

The CEO committee is composed solely of Mr. Evslin. The CEO committee grants
stock options and determines the basic terms of option grants to certain
employees under ITXC's stock incentive plan in accordance with the terms set
for that plan by the compensation committee. ITXC's stock incentive plan grants
the CEO committee this authority with respect to persons other than directors,
specified executive officers, consultants and other individuals identified by
the compensation committee.

Outside Director Compensation

ITXC has not yet paid any compensation to non-employee directors. ITXC
anticipates that in the future, non-employee directors may receive annual fees,
meeting fees and periodic option grants.

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<PAGE>

Executive Compensation

The following table sets forth the total cash and non-cash compensation that
ITXC paid or accrued during the years ended December 31, 1999 and 1998 with
respect to its Chief Executive Officer and the individuals who, during 1999,
were the four other most highly compensated executive officers of ITXC. The
principal components of these individuals' current cash compensation are the
annual base salary and bonus included in the Summary Compensation Table. We
have also described below other compensation these individuals receive under
employment agreements and ITXC's stock incentive plan. Thomas J. Shoemaker,
ITXC's Executive Vice President in charge of business development, joined ITXC
in January 2000. His base salary for 2000 is $180,000. William Diaz, ITXC's
Vice President of Operations, joined ITXC in May 2000. His base salary is
$118,000.

Summary Compensation Table

<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
------------------------ --------------------
Number of
Securities
Name and Principal Underlying
Position Year Salary ($) Bonus($) Options/SARS (#)
------------------ ---- ---------- -------- ----------------
<S> <C> <C> <C> <C> <C>
Tom I. Evslin............. 1999 250,769 153,672(1) 30,000
Chairman of the Board,
President and
Chief Executive Officer 1998 232,308 150,000(1) --

Edward B. Jordan.......... 1999 148,269 102,339(1) 400,000
Executive Vice President
and
Chief Financial Officer 1998 120,192 -- --

John G. Musci............. 1999 176,923 172,350(1)(3) 1,500,000
Executive Vice President
and
and Chief Operating Offi-
cer (2)

Steven J. Ott............. 1999 101,014 135,242(4) 80,000
Vice President, Global
Sales 1998 96,153 32,924(4) 350,000

Eric G. Weiss............. 1999 121,359 58,181(1) 50,000
Vice President and Busi-
ness Unit Manager,
WWeXchange Service 1998 93,654 -- 50,000
</TABLE>
--------
(1) Bonuses for 1999 include some bonuses that were earned in 1999 but were not
paid until 2000. Bonuses for 1998 were earned in 1998 but were not paid
until 1999.
(2) Mr. Musci joined ITXC in February 1999.
(3) Excludes reimbursement for relocation expenses.
(4) Consists of commissions earned by Mr. Ott in 1998 and 1999.

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<PAGE>

The following table presents certain information regarding stock options
granted to the named executive officers during 1999 under ITXC's stock
incentive plan.
<TABLE>
<CAPTION>
Individual Grants
--------------------------------------------------------
Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation for Option
Term
-----------------------------
Number of Fair
Securities % of Total Exercise Market
Underlying Options Price Value on
Options Granted to Per Share Grant Date Expiration
Name Granted(#) Employees ($/Sh) ($/Sh) Date 0%($) 5%($) 10%($)
---- ---------- ---------- --------- ---------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Tom I. Evslin........... 30,000 * 4.00 12.00 6/8/09 240,000 466,402 813,747
Edward B. Jordan........ 200,000 5.73 1.16 2.32 2/25/09 232,000 523,807 971,497
200,000 5.73 4.00 12.00 6/8/09 1,600,000 3,109,347 5,424,982
John G. Musci........... 1,500,000 43.01 .63 2.32 2/1/09 2,542,500 4,731,053 8,088,724
Steven J. Ott........... 50,000(1) 1.43 .63 2.32 1/7/09 84,750 157,702 269,624
30,000 * 4.00 12.00 6/8/09 240,000 466,402 813,747
Eric G. Weiss........... 50,000 1.43 4.00 12.00 6/8/09 400,000 777,337 1,356,425
</TABLE>

--------
(1) These options were granted under the terms of Mr. Ott's offer of
employment.
* Less than one percent.

The following table presents information regarding stock option exercises by
the named executive officers during 1999 and the number and value of stock
options held by the named executive officers at December 31, 1999. The
calculation of the value of unexercised options is based upon a market price of
$33.625 per share, representing the closing sale price of one share of ITXC's
common stock on December 31, 1999.

<TABLE>
<CAPTION>
Number of Shares
Underlying Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options
Number of Value Year-end (#) at Fiscal Year-end ($)
Shares Acquired Realized ------------------------- -------------------------
Name on Exercise (#) (1)($) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Tom I. Evslin .......... 30,000 240,000 -- -- -- --
Edward B. Jordan........ 200,000 2,399,000 400,000 400,000 13,217,000 12,649,000
John G. Musci........... -- -- 333,334 1,166,666 11,000,022 38,499,978
Steven J. Ott........... 116,668 1,365,016 -- 313,332 -- 10,314,539
Eric G. Weiss........... 50,000 596,050 50,000 133,332 1,677,300 4,265,172
16,668 192,932
</TABLE>
--------
(1) Each of the options exercised by the named executive officers was exercised
prior to ITXC's initial public offering. The amount realized on exercise
represents the number of shares acquired multiplied by the difference
between the public offering price in ITXC's initial public offering and the
option exercise price.

Employment Agreements

Tom I. Evslin. ITXC has entered into an amended employment agreement with
Tom I. Evslin, ITXC's Chairman, President and Chief Executive Officer. The
agreement expires on March 31, 2001. Under his agreement, Mr. Evslin is
entitled to receive a base salary in 2000 of not less than $300,000 and annual
bonuses which could amount to 100% or more of base salary. The actual amount of
bonuses paid or to be paid is determined by the compensation committee before
the start of the year in which the bonus is to be paid and is contingent upon
ITXC's achieving certain performance objectives. Mr. Evslin is eligible to
receive an additional bonus under ITXC's cash incentive plan.

If Mr. Evslin's employment with ITXC is terminated by ITXC without cause, or
by Mr. Evslin for good reason, Mr. Evslin is entitled to receive his salary and
other benefits for a period of six months, as well as his annual bonus for the
year in which the termination occurs and for the severance period. If Mr.
Evslin's employment is terminated for any other reason, ITXC's obligation to
pay any further compensation or benefits

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<PAGE>

ends. Mr. Evslin's employment agreement also prohibits him from being employed
by a competing business for a period of six months after his employment is
terminated by ITXC without cause or by him with or without good reason. ITXC
can extend this restriction against competition for up to an additional 18
months, provided that ITXC pays Mr. Evslin additional proportionate severance
amounts. If ITXC terminates Mr. Evslin's employment for cause, this restriction
will apply for a period of two years.

Under his employment agreement, Mr. Evslin is also bound to keep certain
information confidential and to assign to ITXC any intellectual property
developed by him during the term of his employment.

John G. Musci. ITXC entered into an employment agreement with John G. Musci,
ITXC's Executive Vice President and Chief Operating Officer. The term of Mr.
Musci's employment agreement began on February 8, 1999 and expires on February
7, 2001. Under his employment agreement, Mr. Musci is entitled to receive an
annual base salary of not less than $200,000 and he is eligible to receive a
cash bonus under ITXC's cash incentive plan. Mr. Musci was also entitled to
receive up to $100,000 in relocation expenses.

Under his employment agreement, Mr. Musci received non-qualified options
covering 1,500,000 shares of ITXC common stock at an exercise price of $0.625
per share under ITXC's stock incentive plan. A total of 1,000,000 of Mr.
Musci's options vested or will vest and become exercisable at the rate of 33
1/3% per year on December 21, 1999, 2000 and 2001. The remaining 500,000 will
vest and become exercisable on December 21, 2005. These options could, however,
vest and become exercisable under certain circumstances, prior to December 21,
2005.

Under his employment agreement, if Mr. Musci is terminated for cause or any
reason other than constructive termination or wrongful termination, he is
entitled to receive accrued but unpaid base salary, bonus and other benefits
and forfeits any unvested options. If Mr. Musci is terminated by reason of a
constructive termination or wrongful termination, in addition to any accrued
but unpaid base salary, bonus and other benefits, Mr. Musci is entitled to
receive as severance a lump sum payment in cash equal to his current salary as
of the date of termination for a period equal to the greater of the remainder
of the then current term or six months, certain additional benefits and an
acceleration of the vesting period for any of his options that have not vested
as of the date of the termination. Upon expiration of the term of his
employment, Mr. Musci is entitled to receive as severance his base salary
compensation in effect at the time of the termination for a period of six
months, any accrued but unpaid base salary, bonus and other benefits and
forfeits any unvested options.

Mr. Musci's employment agreement prohibits him from becoming associated with
any competing business for the applicable severance period in the case of a
wrongful termination or expiration of his term of employment or for six months
in the case of his termination for any other reason.

Under his employment agreement, Mr. Musci is also bound to keep certain
information confidential and to assign to ITXC any intellectual property
developed by him during the term of his employment.

Thomas J. Shoemaker. ITXC entered into an employment agreement with Thomas
J. Shoemaker, ITXC's Executive Vice President of Business Development,
effective as of January 2, 2000. The term of Mr. Shoemaker's employment
agreement expires on January 2, 2001, after which his employment with ITXC will
be on an at-will basis unless the term of the employment agreement is extended
by ITXC and Mr. Shoemaker. Under his employment agreement, Mr. Shoemaker is
entitled to receive an annual base salary of not less than $180,000. In
addition, for the calendar year 2000 and thereafter, Mr. Shoemaker is eligible
to receive a cash bonus under ITXC's cash incentive plan.

Under his employment agreement, Mr. Shoemaker received options covering
300,000 shares of ITXC's common stock at an exercise price of $40.00 per share
under ITXC's stock incentive plan. A total of 250,000 of Mr. Shoemaker's
options will vest and become exercisable at the rate of 33 1/3% per year on
January 2, 2001, 2002 and 2003. The remaining 50,000 options will vest and
become exercisable on January 2, 2003. Those 50,000 options could, however,
vest and become exercisable under certain circumstances, on January 2, 2001.

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<PAGE>

Under his employment agreement, if Mr. Shoemaker is terminated for cause or
any reason other than constructive termination or wrongful termination, he is
entitled to receive accrued but unpaid base salary, bonus and other benefits,
in accordance with ITXC's employee benefits plans, and forfeits any unvested
options. If Mr. Shoemaker is terminated by reason of a constructive termination
or wrongful termination, in addition to any accrued but unpaid base salary,
bonus and other benefits, Mr. Shoemaker is entitled to receive, as severance,
payments through January 2, 2001 of his current salary as of the date of
termination, less his income from other employment, and his options will
continue to vest for the remainder of that year.

Mr. Shoemaker's employment agreement prohibits him from becoming associated
with any competing business for six months after the date of his termination.

Under his employment agreement, Mr. Shoemaker is also bound to keep certain
information confidential and to assign to ITXC any intellectual property
developed by him during the term of his employment.

1998 Incentive Stock Option Plan

Under ITXC's stock incentive plan, incentive stock options and non-qualified
stock options to purchase shares of ITXC's common stock may be granted to
directors, officers, employees and consultants. As of July 31, 2000, stock
options covering 1,558,966 shares were available for grant under the plan and
stock options to purchase 6,059,945 shares were outstanding with a weighted
average exercise price of $9.08 per share. On January 1 of each subsequent
year, the number of shares of common stock available for issuance under the
plan will be increased by the least of:

. 2,000,000 shares;

. 3% of the outstanding shares; or

. a number of shares determined by our board of directors.

The per share exercise price for incentive stock options granted under the
plan will equal the fair market value of the underlying common stock on the
date of grant. The option price for shares purchased through the exercise of an
option is payable in cash or, at the discretion of ITXC's chief executive
officer or compensation committee, in common stock or a combination of both.

ITXC's chief executive officer or compensation committee determines the
initial vesting period and the expiration date(s) of each option at the time
that it is granted. As of July 31, 2000, ITXC had not granted any incentive
stock options.

Under the plan, ITXC may also issue stock appreciation rights, either alone
or in connection with options, restricted stock awards and performance awards.
As of July 31, 2000, ITXC had not issued any such stock appreciation rights,
restricted stock awards or performance awards.

The plan provides that in the event of a change in control, all options
outstanding on that date will be immediately and fully exercisable upon
termination of an option holder's employment or service for certain specified
reasons within twelve months following the change in control. In addition,
under certain circumstances upon such specified termination, an option holder
may be permitted to exchange any unexercised options for a cash payment.

The plan provides for options to terminate within specified periods of time
after employment is terminated, depending upon the reason for termination. If
an option holder's employment is terminated for cause, his or her options will
terminate immediately upon termination of employment. Unless otherwise provided
by the compensation committee or ITXC's board of directors, options are not
transferable by the option holder and can be exercised only by the option
holder during his or her lifetime or upon the option holder's death only by

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<PAGE>

the personal representative of his or her estate. The plan may be amended or
terminated by the board of directors at any time; provided, that no such action
may adversely affect any outstanding options without the consent of the
applicable option holder.

The grant of a non-qualified option has no tax consequences to ITXC or to
the option holder. Upon exercise of a non-qualified option, the option holder
will recognize taxable ordinary income equal to the excess of the fair market
value on the date of the exercise of the shares of common stock acquired over
the exercise price of the non-qualified option, and that amount will be
deductible by ITXC for federal income tax purposes. The option holder will,
upon a later sale of shares, recognize short term or long term capital gain or
loss, depending on the holding period of the shares, but ITXC will not be
entitled to an additional tax deduction.

Employee Stock Purchase Plan

ITXC has an employee stock purchase plan intended to meet the qualifications
for such a plan under applicable federal income tax laws. The plan is
administered by the compensation committee of ITXC's board of directors. The
number of shares available for purchase under the plan consists, as of July 31,
2000, of 794,749 shares of common stock and will increase on January 1 of each
subsequent year in an amount equal to the least of:

. 600,000 shares of common stock;

. 1% of the common stock outstanding on January 1; or

. a number of shares of common stock specified by ITXC's board.

Shares of ITXC's common stock will be offered to ITXC's employees under the
plan through a series of successive offering periods, not to exceed 24 months,
until either the maximum number of shares available for issuance under the plan
has been purchased or the plan has been otherwise terminated. Each offering
period is of a duration determined by the compensation committee of ITXC's
board of directors. The initial offering period terminates on the last business
day in July 2001. The next offering period will commence on the first business
day in August 2001, and subsequent periods will commence as determined by the
compensation committee.

In order to be eligible to participate in the plan, an employee must be
engaged, on a regularly scheduled basis of more than 20 hours per week of work
for ITXC for more than five months per calendar year, in the rendition of
personal services to ITXC. Non-employee directors and non-employee officers are
not eligible to participate.

Each employee who meets the employment criteria on the start date of the
initial offering period will be eligible to enter that offering period or any
subsequent offering period on the start date of any purchase period during
which he or she remains employed by ITXC. Employees who met the eligibility
criteria after the start date of the initial offering period will be eligible
to enter that offering period or any subsequent offering period on the start
date of any purchase period within the applicable offering period on which he
or she meets the eligibility criteria with at least three months of service
with ITXC or one of ITXC's corporate affiliates. The date on which an employee
enters an offering period is his or her entry date for the purposes of that
offering period.

Employees who would, immediately after the grant, own or hold outstanding
options or other rights to purchase stock possessing 5% or more of the total
combined voting power or value of all classes of ITXC's stock may not be
granted any rights to purchase stock under this plan. Employees whose rights to
purchase stock under this plan or any other qualifying plan would exceed
$25,000 worth of stock in any calendar year are also prohibited from
participating.

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<PAGE>

Employees who participate in the plan will authorize ITXC to deduct any
multiple of one percent of their total cash compensation during each purchase
period up to a maximum of 10% of their total cash compensation, which includes:

. regular base salary;

. pre-tax contributions made by the employee to certain benefits plans; and

. overtime payments, bonuses, commissions, profit-sharing distributions and
other incentive-type payments.

The maximum number of shares of common stock that an employee may purchase
during any purchase period is 3,000 shares.

During periods when employees are permitted to make purchases, the purchase
price of the shares of common stock will be equal to 85% of the lesser of:

. the fair market value of the common stock on the employee's entry date
into the applicable offering period; or

. the fair market value of the common stock on the date of purchase.

However, the purchase price for any employee whose entry date is other than
the start date of the offering period shall not be less than 85% of the fair
market value of the common stock on the start date of that offering period.

Employees may end their participation in the plan at any time during an
offering period. An employee's participation ends automatically upon
termination of an employee's employment. In general, any payroll deductions for
the purchase period in which the purchase right terminates will be refunded
without interest.

In the event of a stockholder-approved merger or consolidation in which
securities possessing more than 50% of the total combined voting power of
ITXC's outstanding securities are transferred to a person or persons different
from the persons holding those securities immediately prior to the transaction,
or in the event of a stockholder-approved sale, transfer or other disposition
of all or substantially all of our assets in complete liquidation or
dissolution of ITXC, each outstanding purchase right shall automatically be
exercised. ITXC will use its best efforts to provide written notice in advance
of the occurrence of any of these transaction. Upon receipt of such notice,
employees may terminate their outstanding purchase rights. Purchase rights
granted under the plan are not assignable by the employee other than by will or
the laws of descent.

The plan will terminate upon the earliest of:

. the last business day in August 2009;

. the date on which all shares available for issuance under the plan have
been sold under purchase rights exercised under the plan; or

. the date on which all purchase rights are exercised in connection with
any corporate transaction described above.

Cash Incentive Plan

ITXC designed its cash incentive plan to encourage and reward its employees
for their contributions to ITXC's performance. All of ITXC's employees, except
salespeople, are eligible to participate in this plan. Employees who are
eligible receive bonuses calculated according to a formula which takes into
account an individual performance factor and a company performance factor.

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<PAGE>

Compensation Committee Interlocks and Insider Participation

During 1999, Messrs. Ganor, Collatos and Wilson participated on ITXC's
compensation committee. Mr. Ganor is the chairman of the board and chief
executive officer of VocalTec. Tom I. Evslin, ITXC's chairman of the board,
president and chief executive officer, served on the board of directors and
compensation committee of VocalTec until June 1999, when he resigned from
VocalTec's board. None of the members of ITXC's compensation committee served
as an officer or employee of ITXC or any of its subsidiaries during 1999.

In October 1997, ITXC entered into an agreement with VocalTec under which:

. ITXC issued to VocalTec:

. 1,800,000 shares of common stock;

. 278,000 shares of Series A convertible preferred stock;

. warrants to purchase 122,000 shares of Series A convertible preferred
stock; and

. warrants to purchase 1,200,000 shares of common stock, the exercisability
of which was conditioned, in part, upon ITXC's use of the credit
described below;

. ITXC received from VocalTec $500,000 in cash and the rights to certain
information regarding VocalTec's business; and

. ITXC received a credit entitling ITXC to purchase $1.0 million of
VocalTec's equipment.

In April 1998:

. VocalTec Communication's shares of Series A convertible preferred stock
were converted into a total of 556,000 shares of common stock; and

. VocalTec Communication's preferred stock warrant was converted into a
warrant to purchase a total of 244,000 shares of common stock.

In June 1999, VocalTec exercised its outstanding warrants, acquiring
1,444,000 shares of common stock upon payment of $722.

VocalTec also acquired 668,622 shares of ITXC's Series B convertible
preferred stock and 215,332 shares of ITXC's Series C convertible preferred
stock as part of ITXC's April 1998 and February 1999 private placements. Each
of those shares of preferred stock was converted into two shares of Common
Stock when ITXC completed its initial public offering. See "Related Party
Transactions--ITXC Equity Financings."

ITXC also has an ongoing business relationship with VocalTec. From inception
through June 30, 2000, ITXC purchased $4,493,000 of hardware and software from
VocalTec. ITXC offset the first $1.0 million of purchase price of these
products against the $1.0 million credit that ITXC received in connection with
its 1997 agreement with VocalTec.

Related Party Transactions

For a description of ITXC's relationship with VocalTec, see "Executive
Compensation--Compensation Committee Interlocks and Insider Participation."

Loans from Senior Management

Between February 9, 1998 and April 22, 1998, ITXC borrowed an aggregate of
$550,000 from Tom I. Evslin, ITXC's chairman of the board, chief executive
officer and president, and $200,000 from Edward B. Jordan, ITXC's executive
vice president and chief financial officer, and delivered a series of demand
notes to

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<PAGE>

these officers. The notes bore interest at a rate of 10% per year. On April 27,
1998, each of those notes was canceled and ITXC paid accrued interest to Mr.
Evslin and Mr. Jordan in the amounts of $5,762 and $932, respectively. In
consideration for canceling those notes, Mr. Evslin and Mr. Jordan received
322,581 and 117,302 shares of ITXC's Series B convertible preferred stock,
respectively, and warrants to purchase 645,162 and 234,604 shares of ITXC's
common stock, respectively, at an exercise price of $0.8525 per share. ITXC
valued the Series B convertible preferred stock issued to Mr. Evslin and Mr.
Jordan at the same $1.705 per share price paid by all other purchasers of the
Series B convertible stock. Thus, Mr. Evslin's shares and Mr. Jordan's shares
had an aggregate value of $550,000 and $200,000, respectively. ITXC concluded
that the fair value of the warrants granted to Mr. Evslin and Mr. Jordan was
$90,000, which was included in ITXC's interest expense during 1998.

ITXC Equity Financings

In April 1998, ITXC sold to a limited group of investors a total of
5,865,104 shares of its Series B convertible preferred stock at a purchase
price of $1.705 per share. The following table sets forth the names of those
investors who, either directly or through an affiliate, are presently
directors, officers or five percent stockholders of ITXC, the number of shares
of Series B convertible preferred stock that such investors acquired, the
aggregate purchase price paid by such investors and the aggregate number of
shares of ITXC's common stock that were issued upon conversion of the preferred
shares when ITXC completed its initial public offering. Each share of Series B
convertible preferred stock was converted into two shares of ITXC's common
stock upon completion of the public offering.
<TABLE>
<CAPTION>
Shares of Shares of
Preferred Common
Principal Relationship to Stock Total Stock
Investor ITXC Purchased Price ($) Issued
-------- ---------------------------- --------- --------- ---------
<S> <C> <C> <C> <C>
Chase Venture Capital
Associates, L.P ....... Principal stockholder 1,361,290 2,321,000 2,722,580
Intel Corporation....... Principal stockholder 1,173,021 2,000,000 2,346,042
Spectrum Equity
Investors II, L.P. and Principal stockholders;
SEA 1998 II, L.P....... furthermore, William P.
Collatos, an affiliate of
these stockholders, is a
director of ITXC. 1,173,021 2,000,000 2,346,042
DS Polaris, Ltd.,
Polaris Fund II (Tax
Exempt Investors), LLC,
Polaris Fund II, LLC,
Polaris Fund II, L.P.,
DS Polaris Trust
Company (foreign
residents) (1997), Ltd.
and Canada--Israel
Opportunity Fund LP.... Principal stockholder 753,079 1,284,000 1,506,158
VocalTec Principal stockholder. Elon
Communications......... A. Ganor, the Chairman of
the Board and CEO of
VocalTec, is a director of
ITXC. 668,622 1,140,000 1,337,244
Tom I. Evslin and Mary Chairman of the Board, Chief
A. Evslin.............. Executive Officer and
President, and Vice
President, Marketing and
Customer Success 322,581 550,000 645,162
The fl@tiron Fund LLC... Frederick R. Wilson, the
manager of The fl@tiron Fund
LLC, is a director of ITXC. 296,188 505,000 592,376
Edward B. Jordan........ Executive Vice President and
Chief Financial Officer 117,302 200,000 234,604
</TABLE>

As part of the Series B financing, ITXC entered into various agreements with
the investors, including a stockholders' agreement, the principal terms of
which terminated upon the closing of ITXC's initial public offering, and a
registration rights agreement.

In February 1999, ITXC sold to a limited group of investors a total of
3,229,975 shares of ITXC's Series C convertible preferred stock at a purchase
price of $4.644 per share. The following table sets forth the names of those
investors who, either directly or through an affiliate, are presently
directors, officers or five percent stockholders of ITXC, the number of shares
of Series C convertible preferred stock that such investors acquired, the
aggregate purchase price paid by such investors and the aggregate number of
shares of common stock that were issued upon conversion of the preferred shares
when ITXC completed it initial public offering.

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<PAGE>

Each share of Series C convertible preferred stock was converted into two
shares of common stock upon completion of the public offering.

<TABLE>
<CAPTION>
Shares of Shares of
Preferred Common
Principal Relationship to Stock Total Stock
Investor ITXC Purchased Price ($) Issued
-------- ---------------------------- --------- --------- ---------
<S> <C> <C> <C> <C>
Spectrum Equity
Investors II, L.P. and
SEA 1998 II, L.P. ..... See table above 1,173,559 5,450,008 2,347,118
Chase Venture Capital
Associates, L.P ....... See table above 870,138 4,040,921 1,740,276
Intel Corporation....... See table above 484,496 2,249,999 968,992
DS Polaris, Ltd.,
Polaris Fund II (Tax
Exempt Investors), LLC,
Polaris Fund II, LLC,
Polaris Fund II, L.P.,
Polaris, Ltd., DS
Polaris Trust Company
(foreign residents)
(1997), Ltd. and
Canada--Israel
Opportunity Fund
L.P. .................. See table above 263,194 1,222,273 526,388
The Flatiron Fund
1998/99, LLC and
Flatiron Associates,
LLC.................... See table above 223,256 1,036,801 446,512
VocalTec
Communications......... See table above 215,332 1,000,002 430,664
</TABLE>

As part of the Series C financing, ITXC entered into various agreements with
its investors, including a stockholders' agreement, the principal terms of
which terminated upon the closing of ITXC's initial public offering, and a
registration rights agreement.

Third Amended Registration Rights Agreement

Each of the purchasers of ITXC's Series B and Series C convertible preferred
stock, including Mr. and Mrs. Evslin and Mr. Jordan, and ITXC entered into an
amended registration rights agreement whereby each purchaser has the right,
under certain circumstances and subject to certain conditions, to cause ITXC to
register under the federal securities laws shares of ITXC's common stock held
by them. Subject to certain conditions and exceptions, those purchasers also
have the right to require that shares of ITXC's common stock held by them be
included in any registration under the federal securities laws commenced by
ITXC.

Stock Option Exercises

From ITXC's inception through June 30, 2000, certain of ITXC's executive
officers exercised stock options, resulting in the issuance of a total of
704,694 shares of ITXC's common stock.

ITXC's Principal Stockholders

The following table sets forth certain information with respect to the
beneficial ownership of ITXC's common stock, as of July 31, 2000, by:

. each person known by ITXC to beneficially own more than five percent of
ITXC's outstanding common stock;

. each of ITXC's directors;

. each executive officer named in the Summary Compensation Table; and

. all of ITXC's executive officers and directors as a group.

Unless otherwise indicated, the person or persons named have sole voting and
investment power. In determining the number and percentage of shares
beneficially owned by each person, shares that may be acquired by such person
under options or warrants exercisable within 60 days of July 31, 2000 are
deemed beneficially owned by such person and are deemed outstanding for
purposes of determining the total number of outstanding shares for such person
and are not deemed outstanding for such purpose for all other stockholders.

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<PAGE>

<TABLE>
<CAPTION>
Shares Beneficially
Owned
---------------------------
Name Number Percentage
---- ---------- ----------
<S> <C> <C>
Tom I. Evslin..................................... 7,015,097(1)(2) 17.84%
Edward B. Jordan.................................. 1,094,915(1)(3) 2.79%
John G. Musci..................................... 258,460(1)(3) *
Steven J. Ott..................................... 197,343(1) *
Bradley E. Miller................................. 113,990(1) *
Eric G. Weiss..................................... 151,487(1) *
Elon A. Ganor..................................... 4,788,165(4) 12.43%
William P. Collatos............................... 4,457,243(5) 11.57%
Frederick R. Wilson............................... 454,125(6) *
All executive officers and directors as a group
(12 persons)..................................... 18,530,824 45.68%
Other Beneficial Owners of 5% or More of ITXC's
Common Stock
VocalTec Communications........................... 4,788,165(7) 12.43%
Spectrum Equity Investors II, L.P................. 4,457,243(8) 11.57%
Intel Corporation................................. 3,315,034(9) 8.60%
Chase Venture Capital Associates, LLC............. 2,888,895(10) 7.50%
Essex Investment Management Company............... 2,096,445(11) 5.44%
</TABLE>
--------
* Represents less than one percent.
(1) The table above includes the following number of shares which the
following persons may acquire under options and warrants held as of July
31, 2000 and exercisable within 60 days of such date:

<TABLE>
<S> <C>
Tom I. Evslin......................................................... 795,162
Edward B. Jordan...................................................... 751,271
John G. Musci......................................................... 210,644
Steven J. Ott......................................................... 78,832
Bradley E. Miller..................................................... 112,500
Eric G. Weiss......................................................... 83,332
All executive officers and directors as a group....................... 1,151,975
</TABLE>

The 150,000 shares referenced above for Mr. Evslin include options granted
to Mary A. Evslin, his wife.

The table above excludes options covering 500,000 shares of common stock
granted to Mr. Musci in February 1999 which will vest on the earliest of the
date on which a change in control of his former employer, Qwest Communications
International, occurs, the seventh anniversary of the date on which the
options were granted and such other date as is provided for in our stock
incentive plan.

The table above includes 2,531, 2,816, 1,843, 1,490 and 1,487 shares
purchased by Mr. Jordan, Mr. Musci, Mr. Ott, Mr. Miller and Mr. Weiss,
respectively, under ITXC's employee stock purchase plan.

(2) Includes shares beneficially owned by Mary A. Evslin, who is Mr.
Evslin's wife and an executive officer of ITXC. With the exception of shares
held with Mary A. Evslin as joint tenants, Tom I. Evslin disclaims beneficial
ownership of the shares owned beneficially by Ms. Evslin. Mr. Evslin's
principal business address is 600 College Road East, Princeton, New Jersey
08540.

(3) Mr. Jordan's shares include 24,700 shares owned by his children, who
are minors. Mr. Musci's shares include 2,700 shares owned by his children, who
are minors. Messrs. Jordan and Musci disclaim beneficial ownership of the
shares owned by their children.

(4) This number represents 4,788,165 shares of common stock beneficially
owned by VocalTec Communications. Mr. Ganor is the Chairman of the Board and
CEO of VocalTec Communications. Mr. Ganor disclaims beneficial ownership of
these shares.

(5) This number represents 4,415,784 shares of common stock beneficially
owned by Spectrum Equity Investors II, L.P. and 41,459 shares of common stock
beneficially owned by SEA 1998 II, L.P. Mr. Collatos is a managing general
partner of Spectrum Equity Investors II, L.P. and an affiliate of SEA 1998 II,
L.P. Mr. Collatos disclaims beneficial ownership of these shares, except to
the extent of his pecuniary interest therein.

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<PAGE>

(6) This number represents 123,914 shares owned by Frederick R. Wilson and
330,211 owned by FJ Wilson Partners LP, a partnership of which Mr. Wilson is a
general partner. Mr. Wilson's principal business address is 257 Park Avenue
South, 15th Floor, New York, New York 10010.

(7) The principal business address of VocalTec is 1 Executive Drive, Suite
320, Fort Lee, New Jersey 07024.

(8) The principal business address of Spectrum Equity Investors II, L.P. is
One International Place, Boston, Massachusetts 02110.

(9) The principal business address of Intel Corporation is 2200 Mission
College Boulevard, Santa Clara, California 95052.

(10) Based on information provided by Chase Venture Capital Associates, LLC
in its Form 4 filed on July 7, 2000. The principal business address of Chase
Venture Capital Associates, LLC is 380 Madison Avenue, New York, New York
10017.

(11) Based on information provided by Essex Capital Management Company in
its Schedule 13G filed on February 2, 2000. The principal business address of
Essex Capital Management Company is 125 High Street, Boston, Massachusetts
02110.

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eFUSION

Selected Financial Data Regarding eFusion

The following selected financial data for the period from April 5, 1996,
eFusion's date of inception, to December 31, 1996 and for the years ended
December 31, 1997, 1998 and 1999 are derived from eFusion's audited financial
statements. The following selected financial data for the six months ended June
30, 1999 and 2000 are derived from eFusion's unaudited financial statements.
The unaudited financial statements include all adjustments, consisting of
normal recurring accruals, which eFusion considers necessary for a fair
presentation of its financial position and results of operations for the
interim periods. eFusion's operating results for the six months ended June 30,
2000 are not necessarily a reliable indicator of the results that may be
expected for the entire year ending December 31, 2000. You should read the
information that we have presented below in conjunction with eFusion's
financial statements, related notes and other financial information included
elsewhere in this document.

<TABLE>
<CAPTION>
Period from April
5, 1996
(date of inception) Six Months
to December 31, Year ended December 31, ended June 30,
------------------- ------------------------- ----------------
1996 1997 1998 1999 1999 2000
------------------- ------- ------- ------- ------- -------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C>
Operating Data:
Revenues, net:
Product and other
revenue.............. $ -- $ 764 $ 3,427 $ 3,517 $ 1,924 $ 236
Application service
revenue.............. -- -- -- -- -- 72
------ ------- ------- ------- ------- -------
Total revenues.......... -- 764 3,427 3,517 1,924 308
Operating expenses:
Cost of sales-product
and other............ -- 237 1,203 1,466 823 66
Network operations.... -- -- -- -- -- 1,088
Research and
development.......... 524 2,781 4,032 3,690 1,726 2,589
Sales and marketing... 266 4,925 5,306 5,699 2,654 3,911
General and
administrative....... 194 868 1,313 1,941 700 1,753
Total operating
expenses............... 984 8,811 11,854 12,796 5,903 9,407
Loss from operations.... (984) (8,047) (8,427) (9,279) (3,979) (9,099)
Other income (expense):
Interest income....... 74 233 111 249 73 230
Interest expense...... (8) (65) (139) (108) (85) (21)
------ ------- ------- ------- ------- -------
Total other income
(expense).............. 66 168 (28) 141 (12) 209
Net loss................ (918) (7,879) (8,455) (9,138) (3,991) (8,890)
Accretion of preferred
stock redemption....... -- -- -- -- -- (467)
------ ------- ------- ------- ------- -------
Net loss attributable to
common stockholders.... $ (918) $(7,879) $(8,455) $(9,138) $(3,991) $(9,357)
====== ======= ======= ======= ======= =======
Basic and diluted net
loss per share
attributable to common
stockholders........... $(0.38) $ (2.60) $ (2.15) $ (2.00) $ (0.92) $ (1.81)
====== ======= ======= ======= ======= =======
Weighted average shares
used in computation of
basic and diluted net
loss per share
attributable to common
stockholders........... 2,443 3,030 3,930 4,566 4,357 5,175
</TABLE>

<TABLE>
<CAPTION>
As of
As of December 31, June 30,
------------------------------- --------
1996 1997 1998 1999 2000
------ ------ ------- -------- --------
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash, cash equivalents and
investments....................... $3,581 $4,835 $ 903 $ 4,247 $ 13,711
Total assets....................... 4,024 6,632 5,547 7,188 16,693
Long-term obligations, including
current portion................... 1,505 1,673 1,368 254
Working capital.................... 3,238 5,069 (224) 3,167 13,534
Redeemable convertible preferred
stock............................. -- -- 3,000 17,191 37,547
Total stockholders' equity
(deficit)......................... 3,595 4,743 (3,696) (12,750) (21,965)
</TABLE>

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Management's Discussion and Analysis of eFusion's Financial Condition and
Results of Operations

You should read the following discussion in conjunction with eFusion's
financial statements and the related notes and other financial information
included in this document. In addition to historical information, the following
discussion and other parts of this document contain forward-looking statements
which are subject to risks and uncertainties, and there can be no assurance
that such statements will prove to be correct. eFusion's actual results could
differ materially from those anticipated by forward-looking information due to
factors described in the section entitled "Risk Factors" beginning on page .

Overview

eFusion is an applications service provider of Internet voice services to
assist carriers, Internet service providers and e-commerce enterprises to
provide their end-users with a richer, more fulfilling online experience.
eFusion currently offers two categories of Internet voice services:

. e-commerce Solutions. An e-commerce enterprise can implement eFusion's
Push to Talk service to facilitate live interaction between consumers
browsing its e-commerce Internet web site and customer service
representatives.

. Internet Subscriber Services. Using eFusion's Suite Adeline service,
Internet service providers can enable their subscribers to take incoming
telephone calls while connected to the Internet over a single telephone
line, or, if a customer chooses, to forward a call to another telephone
or a voice mailbox.

eFusion currently markets its products through its sales force, supplemented
by members of its executive management team. eFusion anticipates that once the
initial market deployment phase for Push to Talk is complete, its sales force
will increasingly focus on developing and maintaining resale and distribution
channels, rather than marketing directly to enterprise customers.

Through the end of 1999, eFusion sold a wide range of information processing
applications that bridged the telephone network and the Internet. eFusion's
call-completing bundled hardware and software, which was located on the
customer's premises, was sold to carriers, network service providers, Internet
service providers and e-commerce call centers. In late 1999, eFusion changed
its business and launched an application service provider business model, under
which it began to sell a set of market-ready online voice services for e-
commerce companies and Internet service providers. The shift away from
providing bundled hardware and software located on the customer's premises was
made by eFusion in response to growing market demand for applications and
services on a subscription or pay-per-use basis. The new application service
provider business model provides enhanced Internet telephony services to e-
commerce companies and Internet service providers without requiring large up-
front investments in hardware and software. In addition, it eliminates many of
the difficulties associated with the implementation of online communications
services, such as network integration, systems implementation and the need for
information technology personnel.

As a result of the transition to the new business model in 2000, results of
operations for 2000 are not necessarily comparable to 1999. In particular, in
2000, revenues are lower and operating expenses are higher as eFusion builds
the network and infrastructure required to support the application service
provider business, establishes the sales and marketing organization to sell the
new services, hires the necessary personnel and completes the administrative
tasks necessary to bring about the transition and manage the new business
model.

License fees were generally recognized when a non-cancelable license
agreement had been signed, the software was shipped, there were no
uncertainties surrounding product acceptance, the fees were fixed and
determinable and collection was probable. Revenue from the sale of products and
software licenses was recognized at the time of shipment, except for those that
had significant post-delivery obligations, in which case, revenue was deferred
until no such significant obligations remained. eFusion's post-delivery
obligations were for installation and/or acceptance. System rental revenue
primarily represented income earned from product evaluations, which typically
lasted approximately six months. Service and maintenance revenue consisted
primarily of installation, training, engineering support and maintenance
revenues. These revenues are

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recognized ratably over the term of the agreements. In late 1999, eFusion
implemented its application service provider business model. Application
service provider revenues are recognized when the customer uses the product.

To date, eFusion's operating expenses have been primarily:

. Cost of Sales. These expenses primarily consist of costs of hardware and
related compensation, benefits and overhead associated with products and
related service and maintenance sold under eFusion's previous business
model, which are not expected to be material in future periods.

. Network Operations Expenses. These expenses primarily consist of
compensation, benefits and related costs that eFusion pays for employees
and consultants for the development and maintenance of the network and
infrastructure required to operate as an application service provider,
and depreciation of the capital equipment used in the network.

. Research and Development Expenses. These expenses primarily consist of
compensation, benefits and related costs that eFusion pays for employees
and consultants who work on the development of its services and an
allocation of facilities and systems support costs, including
depreciation of capital equipment used in research and development.
eFusion expects that its research and development expenses will increase
in future periods, as eFusion continues to enhance its core technology
and the services associated with it.

. Sales and Marketing Expenses. These expenses primarily consist of
compensation, benefits and related costs of sales and marketing
personnel, as well as recruiting, travel, trade shows, public relations,
new product launches and an allocation of facilities and systems support
costs, including depreciation of capital equipment used in sales and
marketing. eFusion expects that sales and marketing expenses will
increase in future periods as eFusion works toward expanding the market
for the usage of its Internet voice services by Internet service
providers and e-commerce companies.

. General and Administrative Expenses. These expenses primarily consist of
compensation, benefits and related costs of general corporate functions,
including executive management, administration, facilities, information
technology and human resources. eFusion expects that general and
administrative expense will increase in the future as it hires additional
personnel and incurs additional costs related to the growth of its
business and operations.

Joint Venture in the Republic of Korea

In May 2000, eFusion entered into a joint venture agreement to form
TriFusion, a stock corporation in the Republic of Korea, to market and sell
eFusion's services in the Republic of Korea. eFusion will contribute hardware
and software with a fair value up to $3.6 million and $160,000 of cash in
exchange for a 47% ownership interest in TriFusion. eFusion will account for
its investment in TriFusion under the equity method of accounting and will
record its percentage share of the net income or loss of the joint venture. No
capital contributions have been made as of June 30, 2000. See Note 11 of Notes
to eFusion's Financial Statements.

Results of Operations--Comparison of the Six Months Ended June 30, 1999 and
2000

Revenues, net

eFusion's revenues decreased from $1.9 million in the six months ended June
30, 1999 to $308,000 in the six months ended June 30, 2000, as a result of the
transition to operating as an application service provider which began in late
1999. Revenues in the six months ended June 30, 1999 consisted of sales of
products, licenses, system rentals and service and maintenance agreements. In
late 1999, eFusion changed its business model and began operating as an
application service provider in 2000. Revenues in the six months ended June 30,
2000 included product and license sales and maintenance revenue from eFusion's
previous business model of $236,000, which is not expected to be material in
future periods, and $72,000 of revenue from the initial period of application
service usage and subscriptions.

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Operating Expenses

Cost of Sales-Product and Other

eFusion's cost of sales decreased from $823,000 in the six months ended June
30, 1999 to $66,000 in the six months ended June 30, 2000. Cost of sales
included the cost of products and related service and maintenance sold under
the previous business model. These costs are not expected to be material in
future periods, since in late 1999, eFusion changed its business model and
begin operating as an application service provider in 2000.

Network Operations Expenses

eFusion's network operations expenses increased from $0 in the six months
ended June 30, 1999 to $1.1 million in the six months ended June 30, 2000,
reflecting the costs associated with building the network and infrastructure
required to support eFusion's application service provider business, which
began in 2000.

Research and Development Expenses

eFusion's research and development expenses increased from $1.7 million in
the six months ended June 30, 1999 to $2.6 million in the six months ended June
30, 2000, principally reflecting an increase in the number of research and
development employees and consultants. During the six months ended June 30,
1999, the number of employees and consultants decreased due to general
attrition. Subsequent to June 1999, eFusion hired additional research and
development employees and consultants.

Sales and Marketing Expenses

eFusion's sales and marketing expenses increased from $2.7 million in the
six months ended June 30, 1999 to $3.9 million in the six months ended June 30,
2000, principally reflecting an increase in the number of sales and marketing
employees in 2000. In late 1999 and during the six months ended June 30, 2000,
eFusion hired additional sales and marketing personnel to promote and sell its
Push to Talk and Suite Adeline services, under its new application service
provider business model.

General and Administrative Expenses

eFusion's general and administrative expenses increased from $700,000 in the
six months ended June 30, 1999 to $1.8 million in the six months ended June 30,
2000. The increase in the six months ended June 30, 2000 reflects the hiring of
additional general and administrative personnel, including a president and a
chief financial officer late in 1999. Additionally, expenses rose beginning in
late 1999 as a result of increased legal and administrative costs associated
with the transition to operating as an application service provider and patent
activity related to new technology and proprietary information.

Loss from Operations

eFusion incurred losses from operations of $4.0 million in the six months
ended June 30, 1999 and $9.1 million in the six months ended June 30, 2000. The
loss from operations in the six months ended June 30, 1999 reflected operations
prior to eFusion's operating as an application service provider. The loss from
operations in the six months ended June 30, 2000 reflected operations during an
initial period of operations as an application service provider, legal and
administrative costs associated with the transition and development of the
network and infrastructure to support this new business model.

Interest Income

eFusion's interest income increased from $73,000 in the six months ended
June 30, 1999 to $230,000 in the six months ended June 30, 2000, reflecting the
increase in cash and cash equivalents in the six months ended June 30, 2000,
principally as a result of net proceeds of $19.5 million from the sale of
preferred stock in March 2000 to a group of private investors.

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Interest Expense

eFusion's interest expense decreased from $85,000 in the six months ended
June 30, 1999 to $21,000 in the six months ended June 30, 2000, reflecting the
decrease in outstanding debt in 2000, compared to 1999.

Accretion of Preferred Stock Redemption

On March 15, 2000, eFusion sold approximately 2.5 million shares of Series D
preferred stock. eFusion is required to redeem the Series D preferred stock at
the option of the holders on or after March 15, 2004, at a redemption price per
share equal to the issuance price plus an 8% annual accrued dividend on the
original investment. The carrying amount of the Series D preferred stock is
being increased by accretions, based on the deemed fair value of the preferred
stock using the interest method. See Note 11 of Notes to eFusion's Financial
Statements.

Results of Operations--Comparison of the Years Ended December 31, 1998 and
1999

Revenues, net

eFusion's revenues were comparatively flat at $3.4 million in 1998 compared
to $3.5 million in 1999. Revenues throughout 1998 and through late 1999
consisted of sales of products, licenses, system rentals and service and
maintenance agreements. In late 1999, eFusion began to focus its efforts on
building the network to support its new application service provider business,
and reduced its focus on the sale of products, licenses, system rentals and
service and maintenance agreements. In 1998, two customers accounted for
approximately 36% and 16% of eFusion's revenues. In 1999, two customers
accounted for approximately 55% and 28% of eFusion's revenues.

Operating Expenses

Cost of Sales-Product and Other

eFusion's cost of sales increased from $1.2 million in 1998 to $1.5 million
in 1999. Cost of sales included the cost of products sold under the previous
business model and the costs of related service and maintenance. In late 1999,
eFusion began to focus its efforts on building the network to support its new
application service provider business, and reduced its focus on the sale of
products, licenses, system rentals and service and maintenance agreements.

Research and Development Expenses

eFusion's research and development expenses decreased from $4.0 million in
1998 to $3.7 million in 1999, primarily reflecting a decrease in the number of
research and development employees and consultants. During a portion of 1999,
the number of research and development employees and consultants decreased, due
to general attrition. In late 1999, eFusion hired additional research and
development employees and consultants, however, research and development
expense remained lower in 1999 than in 1998.

Sales and Marketing Expenses

eFusion's sales and marketing expenses increased from $5.3 million in 1998
to $5.7 million in 1999, principally reflecting an increase in the number of
sales and marketing employees. In late 1999, eFusion began to hire sales and
marketing personnel to promote and sell its new Push to Talk and Suite Adeline
services, under its new application service provider business model, which was
launched in 2000.

General and Administrative Expenses

eFusion's general and administrative expenses increased from $1.3 million in
1998 to $1.9 million in 1999. The increase in 1999 reflects the hiring of
additional general and administrative personnel, including a president and a
chief financial officer late in 1999. Additionally, expenses rose beginning in
late 1999 as a result of increased legal and administrative costs associated
with the transition to operating as an application service provider and patent
activity related to new technology and proprietary information.

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Loss from Operations

eFusion incurred losses from operations of $8.4 million in 1998 and $9.3
million in 1999.

Interest Income

eFusion's interest income increased from $111,000 in 1998 to $249,000 in
1999, reflecting the increase in cash and cash equivalents in 1999, principally
as a result of net proceeds of $14.2 million from the sale of preferred stock
to a group of private investors.

Interest Expense

eFusion's interest expense decreased from $139,000 in 1998 to $108,000 in
1999, reflecting the decrease in outstanding debt in 1999, compared to 1998.

Provision for Income Taxes

eFusion has recognized operating losses since inception and as such has not
incurred income tax expense. As of December 31, 1999, eFusion had federal and
state net operating loss carryforwards of approximately $24.5 million and
research and experimentation tax credit carryforwards of approximately
$613,000, which expire through 2019 if not used to reduce income taxes payable
in future periods. A provision of the Internal Revenue Code specifies that the
amounts of and benefits from net operating loss and research and
experimentation credit carryforwards may be limited when a change of more than
50% in ownership of a company occurs. Such a change occurred with the sale of
preferred stock by eFusion in May 1999. Accordingly, the utilization of net
operating loss and research and experimentation tax credit carryforwards
generated from periods prior to May 1999 is limited.

Liquidity and Capital Resources

eFusion has financed its operations primarily through the private placement
of its capital stock, and through capital leases and amounts borrowed under
notes payable.

Net cash used in operating activities in the six months ended June 30, 2000
was $8.2 million, which primarily resulted from a net loss of $8.9 million and
a decrease in accounts payable and accrued expenses of $600,000, offset by
depreciation and amortization of $450,000 and a decrease in accounts receivable
of $535,000. The decrease in accounts payable and accrued expenses reflected
the timing of purchases and payment. The decrease in accounts receivable was as
a result of decreased revenues in the six months ended June 30, 2000.

Net cash used in investing activities in the six months ended June 30, 2000
was $849,000, which consisted of the purchase of property and equipment of $1.2
million principally related to the building of eFusion's application service
provider network, and the maturity of $317,000 of short-term investments.

Net cash provided by financing activities in the six months ended June 30,
2000 was $18.8 million, which principally consisted of net proceeds of $19.5
million from the sale of preferred stock and $500,000 from the conversion of
short-term debt to preferred stock, offset by payments of long-term debt and
capital lease obligations of $1.1 million.

Net cash used in operating activities in 1999 was $7.6 million, which
primarily resulted from the net loss of $9.1 million and a decrease in deferred
revenue of $1.7 million, offset by depreciation and amortization of $579,000
and increase in accounts receivable of $1.9 million. In 1998, deferred revenue
included revenue from the sale of products, licenses, system rentals and
service and maintenance agreements. The increase in accounts receivable
reflects revenue from sales previously included in deferred revenue.

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Net cash used in investing activities in 1999 was $1.4 million, which
consisted of the purchase of property and equipment of $1.1 million largely
related to the building of eFusion's application service provider network, and
the net purchase of $317,000 of short-term investments.

Net cash provided by financing activities in 1999 was $12.0 million, which
consisted of net proceeds from the sale of preferred and common stock of $12.3
million, offset by payments of long term debt and capital lease obligations of
$305,000.

eFusion's principal commitments consisted of a note payable to a bank with
$249,000 outstanding at June 30, 2000 and a capital lease line of credit with
$5,000 outstanding at June 30, 2000. See Note 4 of Notes to eFusion's Financial
Statements.

Since its inception in August 1996, eFusion has experienced operating losses
in each quarterly and annual period. In late 1999, eFusion changed its business
and began operating as an application service provider. eFusion has a limited
operating history as an applications service provider, which makes it difficult
to predict future results. eFusion expects it will continue to have net losses
in 2000 and in later periods. As of June 30, 2000, eFusion had an accumulated
deficit of $35.7 million.

As of June 30, 2000, eFusion had cash and cash equivalents of $13.7 million.
To date, cash flow from operations has been insufficient to cover eFusion's
expenses and capital needs. eFusion expects that it will require additional
funding, although it is unable to predict the precise amount or date that such
funding may be required. However, eFusion believes additional funding may be
needed as soon as during the second quarter of fiscal year 2001. Additional
funding may not be available on terms acceptable to eFusion or at all. If the
merger with ITXC does not occur and eFusion cannot raise adequate capital on
acceptable terms, eFusion may be forced to restrict its sales and marketing
efforts and limit its development of new services and it may have to curtail or
cease operations.

Recent Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities," which establishes accounting and reporting standards
requiring every derivative instrument to be recorded in the balance sheet as
either an asset or liability measured at its fair value. This statement also
requires changes in a derivative's fair value to be recognized currently in
results of operations unless specific hedge accounting criteria are met. This
statement, as amended by Statement of Financial Accounting Standards No. 137,
is effective for fiscal years beginning after June 15, 2000. eFusion does not
expect that the adoption of this statement will have a material impact on its
financial statements.

In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements," and
further amended it to defer the effective date. eFusion is required to adopt
the provisions of this staff accounting bulletin in the fourth quarter of 2000,
and does not expect the adoption will have a material impact on its financial
statements.

In March 2000, the Financial Accounting Standards Board issued
Interpretation No. 44, which provides interpretive guidance on several
implementation issues related to Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees." eFusion is required to adopt the
provisions of this interpretation in the third quarter of 2000, and does not
expect the adoption will have a material impact on its financial statements.

Quantitative and Qualitative Disclosure About Market Risk

As of June 30, 2000, eFusion's cash equivalents primarily consisted of
short-term fixed income investments. eFusion does not use derivative financial
instruments for speculative purposes which expose

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eFusion to market risk. Due to the short duration and conservative nature of
its cash equivalents, eFusion believes that the effects of changes in interest
rates are limited and would not have a material impact on its investment
portfolio.

Description of eFusion's Business

Introduction

eFusion was incorporated in Oregon in 1996. Its principal executive offices
are located at 14600 NW Greenbrier Parkway, Beaverton, Oregon 97006 and its
telephone number is (503) 207-6300.

eFusion, Push to Talk (PtT) and Suite Adeline and other terms used in this
document are trademarks or trade names of eFusion.

Overview

eFusion is an applications service provider that can rapidly deploy Internet
voice services to assist carriers, Internet service providers and e-commerce
enterprises to provide their end-users with a richer, more fulfilling online
experience. By combining the power and economy of the Internet with the
features and benefits of the traditional telephone network, eFusion brings
voice to the Internet and delivers a range of applications that bridge the two
networks. eFusion currently offers two categories of Internet voice services:

. e-commerce Solutions. An e-commerce enterprise can implement eFusion's
Push to Talk service to facilitate live interaction between Internet web
site users and web site representatives or customer service personnel.

. Internet Subscriber Services. Using eFusion's Suite Adeline Internet call
assistant service, Internet service providers can enable their
subscribers to take incoming telephone calls while connected to the
Internet over a single telephone line, or, if a customer chooses, to
forward a call to another telephone or a voice mailbox.

eFusion believes that its Push to Talk service helps e-commerce enterprises
improve the level of customer satisfaction, leading to increased online
revenues and consumer loyalty. eFusion believes that enterprises that offer
Push to Talk service to their customers will differentiate their brands from
other e-commerce web sites that do not have the low cost, enhanced customer
service abilities that Push to Talk service provides.

eFusion believes that its Suite Adeline service gives Internet service
providers a competitive edge in the fragmented market for telephone-based
residential and small-business Internet access.

Services and Technology

Push to Talk

eFusion's Push to Talk service adds voice to e-commerce web sites, bridging
the gap between the customer-service levels of traditional consumer sales
models and the scope and reach of the Internet. e-commerce enterprises that use
Push to Talk service on their web sites can allow consumers to talk in real
time with a merchant or call center agent while still logged onto the Internet.
Consumers can receive immediate assistance and information on items such as
products and services, site navigation and security.

The Push to Talk service allows a web site to offer enhanced customer
service at the point of sale, which eFusion believes is an important part of
getting a customer to complete a transaction.

eFusion believes that e-commerce web sites that incorporate the Push to Talk
service to respond promptly to consumer needs will experience increased
customer satisfaction and repeat business. Companies that have

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traditional sales channels and e-commerce web sites will be able to provide
comparable levels of interactive customer service across sales channels.

Because the Push to Talk service is operated on eFusion equipment at its
own locations, eFusion believes that Push to Talk is a low cost option for e-
commerce enterprises of all sizes. The Push to Talk service can be rapidly
deployed.

The Push to Talk service features three methods of consumer to call center
interaction:

. Call-back. The consumer can speak with the merchant or call center agent
by telephone, using either the traditional telephone network or a data
network. Consumers that have a telephone line that is not being used to
access the Internet can provide their telephone number to eFusion and
receive an immediate telephone call from a call center agent or other
representative. eFusion places a call to the consumer, and a call to the
agent or representative, and then connects both calls together.
Currently, most Push to Talk calls are carried over the traditional
telephone network. eFusion believes, however, that data networks,
including ITXC.net, will increasingly be used to carry Push to Talk
calls.

. Direct Connection. The consumer can connect directly to the enterprise's
call center or other representative through a PC-to-telephone call, by-
passing a portion of the traditional telephone network.

. Text Chat. If the call center is connected to the Internet, a consumer
can choose to enter a live text chat session with a call center agent.

The Push to Talk service offers different levels of service features, based
on customer choice, including:

. Real-time Voice Interaction. The foundation of the Push to Talk service
is the integration of real-time voice interaction between a consumer and
a web site representative, whether by telephone call or PC-to-phone call.
To increase flexibility, eFusion also offers the ability to interact with
a consumer through a live text chat.

. Multihold. Once a consumer initiates a call through the Push to Talk
service, the consumer may be placed on hold due to call center capacity
constraints or to allow a representative to ask a call center manager or
support personnel for specialized assistance. The Multihold component of
the Push to Talk service allows a call center to deliver specific
multimedia content directly to a consumer's web browser while that
consumer is on hold. The type of content can be based on the consumer's
profile or where the consumer was on the e-commerce web site when the
consumer initiated the Push to Talk call.

. Team Browsing. An anticipated enhancement to the Push to Talk service is
team browsing, which will allow a customer service representative, during
a Push to Talk call, to send web pages to the consumer's browser and the
consumer to send pages back to the customer service agent, so that the
consumer and the agent are viewing the same pages and can better share
information with one another.

. Variable Placement of the Push to Talk Button. eFusion can write
customized instructions that place different Push to Talk buttons on a
web site, depending on the profile of the consumer viewing the page, the
time of day, or other variables. Also, the Push to Talk buttons can
appear on different pages within a web site, and on different parts of a
particular web page, depending on the way that a consumer is using the
web site.

The Push to Talk service is used in a variety of applications besides e-
commerce web sites, including directed electronic mail, Internet service
directories and in advertising banners. As of July 31, 2000, the Push to Talk
service had been deployed on 28 web sites and 21 additional customers had
signed contracts for the service but had not yet deployed Push to Talk buttons
on their web sites.

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Suite Adeline

The Suite Adeline Internet call assistant is a service being developed by
eFusion which a consumer will be able to purchase through an Internet service
provider in order to maximize the usefulness of a single telephone line used to
connect to the Internet. The Suite Adeline service will enable individuals to
make and receive telephone calls over a single circuit while connected to the
Internet. This application will offer telecommunications carriers and Internet
service providers the ability to increase call completion rates and the
associated revenue without customers having to install a second telephone line
in their home. eFusion believes that the Suite Adeline service will be a
flexible application with comprehensive call-control features.

Once registered with eFusion, an Internet service provider customer can
forward telephone calls to eFusion's equipment while the customer's telephone
line is in use and connected to the Internet. eFusion will provide Internet
call assistant software that can be installed on its own or as part of the
Internet service provider's software installation. When an incoming call is
detected, eFusion will notify the user over the Internet of the call and, if
available, the identity of the caller. The user then will have four options:

. ignore the call, in which case the call is connected to a voice mailbox.
The user can later retrieve the message over the Internet. eFusion can
deliver the message to the user's email address as a digital voice file;

. accept the call over the Internet, in which case the call is completed
over the Internet, by-passing portions of the traditional telephone
network and allowing the user to continue to use the Internet to view web
sites;

. accept the call on the incoming telephone line, in which case eFusion
equipment terminates the user's Internet session and delivers the call to
that telephone line, using the traditional telephone network. The user
can reconnect to the Internet with one mouse click; or

. forward the call to another telephone, such as a cellular phone, in which
case eFusion sends the call to that telephone using the traditional
telephone network;

As of July 31, 2000, 16 Internet service providers had signed contracts to
distribute the Suite Adeline service and approximately 255 subscribers had
registered for the service.

Joint Venture in the Republic of Korea

In May 2000, eFusion entered into an agreement with TriGem Infocomm, a
Korean company, to form a joint venture to exclusively market eFusion's
services in the Republic of Korea. eFusion will own 47% of the equity interests
of the joint venture, which is called TriFusion. TriGem will own 40% of the
equity interests of the joint venture; the remaining 13% will be owned by
employees of TriGem and TriFusion. In addition to capital contributions already
made, eFusion must make capital contributions to the joint venture consisting
of equipment, hardware and software, with a fair value of $3.2 million and
$140,000 in cash.

eFusion has the right to appoint two of the five members of TriFusion's
board of directors.

During the term of, and for a period of two years after the expiration or
termination of, the joint venture, eFusion cannot compete with the business
operated by TriFusion in Korea.

No party can transfer its interest in TriFusion without the written consent
of holders of at least 75% of the outstanding equity interests in TriFusion.
TriFusion and the other equity holders have a right of first refusal on sales
of equity interests. The joint venture can be terminated as a result of a
material breach by one of the parties of the joint venture agreement, so long
as 30 days has elapsed since notice of that breach was given by the terminating
party. The joint venture can also be terminated after a six-month deadlock of
the board of directors.

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Sales and Distribution

eFusion's sales and marketing goals are to:

. continue to develop alliances and reseller relationships with carriers,
interactive agencies, such as web site designers, direct marketing firms,
software resellers and wholesalers, and web site hosting agencies to
resell the Push to Talk service to e-commerce enterprises;

. expand the use of the Push to Talk service by high volume e-commerce
enterprises and to further expand its customer base;

. promote the use of its Suite Adeline service by Internet service
providers; and

. expand eFusion's position among providers of enhanced voice services over
the Internet.

Since the beginning of this year, eFusion's sales force has been targeting
medium and large e-commerce enterprises as potential users of its Push to Talk
service. eFusion anticipates that once the initial market deployment phase for
Push to Talk is complete, its sales force will increasingly focus on developing
and maintaining resale and distribution channels, rather than marketing
directly to enterprise customers and telecommunications carriers, and will
market the Suite Adeline service to leading Internet service providers. eFusion
has entered into distribution agreements with a number of companies to resell
and market eFusion's services internationally.

eFusion has a dedicated sales force that is supplemented by members of its
executive management and business development teams. eFusion's salespeople are
based regionally within the U.S., and in Europe, as well as in eFusion's
corporate office. Few of the salespersons that worked for eFusion to sell
bundled hardware and software solutions were retained once eFusion switched to
an applications service provider business model at the beginning of this year.

eFusion has a joint venture in the Republic of Korea and relationships with
resellers and software distributors in the U.S. and internationally. eFusion's
senior management focuses on maintaining and cultivating relationships with its
customers. eFusion assigns to its sales representatives specific accounts based
on the salespersons' level of experience, location and the quality of the
relationship between the representative and the customer. eFusion compensates
its sales staff based in large part on incentive-based goals and measurements.
In addition to eFusion's marketing and sales staff, eFusion relies on its
executive and operations personnel, including its product development staff, to
identify sales opportunities within existing customer accounts and to provide
quality customer service.

eFusion maintains an Internet web site which, among other things, provides
information to prospective customers and affiliates concerning the benefits of
its Push to Talk and Suite Adeline services, as well as the technical and other
requirements for using those services on a wholesale and retail basis. eFusion
maintains a separate website devoted to marketing and supporting its Suite
Adeline service to Internet service providers and their end-users.

eFusion's primary marketing and sales support is centralized and directed
from its headquarters office in Beaverton, Oregon. eFusion has a full-time
staff dedicated to its marketing efforts. eFusion's marketing and sales support
staff are charged with implementing eFusion's marketing strategies, prospecting
and producing sales presentation materials and proposals.

New Services Development and Implementation

eFusion's development team is dedicated to the improvement and enhancement
of the Push to Talk and Suite Adeline services and the development and
implementation of new features for those services as well as entirely new
Internet-based voice services. eFusion believes that its future success is
highly dependent upon its ability to quickly adapt to changes in the
marketplace and to continue enhancing the functionality of its

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services. eFusion currently conducts the majority of its service development
efforts in-house. On occasion, eFusion employs independent contractors to
assist with product development and testing activities.

Intellectual Property and Proprietary Rights

Proprietary rights are important to eFusion's success and competitive
position. As of July 31, 2000, eFusion had three issued patents, one allowed
pending issuance, and had applied for eight additional patents. As of July 31,
2000, eFusion had eight registered trademarks and six pending trademark and
service mark applications in the United States.

The laws of some foreign countries do not protect eFusion's proprietary
rights to the same extent as do the laws of the U.S., and effective copyright,
trademark and trade secret protection may not be available in such
jurisdictions. In general, eFusion's efforts to protect its intellectual
property rights through copyright, trademark and trade secret laws may not be
effective to prevent misappropriation of its content, and eFusion's failure to
protect its proprietary rights could materially adversely affect its business,
financial condition, operating results and future prospects. Despite such
protection, a third party could, without authorization, copy or otherwise
appropriate proprietary information about eFusion's services and technology.
eFusion's agreements with employees, consultants and others who participate in
development activities could be breached, eFusion may not have adequate
remedies for any breach, and its trade secrets may otherwise become known or
independently developed by competitors.

eFusion relies upon license agreements with respect to its use of the
software and hardware provided to eFusion by its vendors. Those license
agreements may not continue to be available to eFusion on acceptable terms, or
at all.

Enforcing eFusion's patent rights could result in costly litigation.
eFusion's patents could be invalidated in litigation. Should this happen,
eFusion will lose a significant competitive advantage. Additionally, eFusion's
competitors could be awarded patents on technologies and business processes
that could cause eFusion to significantly alter its technology, change its
business processes or to pay license and royalty fees. In addition, eFusion
has, from time to time, received notices alleging patent infringement claims.
Claims of infringement, whether successful or not, could seriously harm
eFusion's business, results of operations or prospects.

Competition

The Internet telephony applications market is emerging and competitors are
entering the market at an accelerating pace. eFusion's competition includes
companies offering to sell equipment, as well as delivering services via the
application service provider business model. eFusion expects that continually
increasing competition will cause price erosion over the next few years. While
this price erosion will cause the overall market to expand and will promote
usage, it is expected that gross profit margins will decrease significantly
during this time.

Regarding eFusion's Push to Talk offering, competitors' offerings range from
basic web-enabled interaction via text chat to fully integrated customer
relationship management solutions. During the past year, a number of vendors in
the web-enabled call center market have formed alliances with other vendors to
help round out their service offerings, making it more difficult for eFusion to
compete against them. In addition, competitor alliances with established
systems integrators or with integrated customer relationship management vendors
may make the stand-alone Push to Talk service a less competitive solution.
eFusion's most direct competitors generally offer several call connection
options, including text chat, call back and voice over the Internet with some
form of collaboration. eFusion's primary competitors include VocalTec; WebEx;
WebCenter; WebLine, recently purchased by Cisco; Net2Phone; PakNetX, recently
purchased by Aspect; CosmoCom; Genesys; LivePerson and Quintus.

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eFusion's Suite Adeline service has a number of large and small competitors,
as well as potential competitors who have announced plans to launch competitive
services. It is likely that additional competitors will appear as network
service providers look for ways to expand market share and offer enhanced
services. These competitors include regional telephone companies, established
network equipment providers, major Internet service providers selling services
to their subscribers, and several free or inexpensive web-based offerings
provided or sold directly to consumers. Primary competitors to eFusion's Suite
Adeline service include Nortel Networks, Optimal Communications,
InfoInteractive and Pagoo.com.

Employees

As of July 31, 2000, eFusion employed 100 people. None of eFusion's
employees is subject to any collective-bargaining arrangements, and eFusion
considers its relations with its employees to be good.

Litigation

From time to time, eFusion has been involved in various legal proceedings
relating to claims arising in the ordinary course of business. eFusion is not a
party to any legal proceeding, the adverse outcome of which is expected to have
a material adverse effect on its business, financial condition, operating
results or future prospects.

Certain Executive Officers

Ajit B. Pendse, 41, is eFusion's founder and has been a member of its board
of directors and Chief Executive Officer since its inception in April 1996. Mr.
Pendse was elected chairman of the eFusion board of directors in October 1999.
From July 1993 until August 1996, he worked as Director of Strategic Alliances
for Intel Corporation, where he formulated the market development and channel
strategy for Intel's Video/Data Conferencing product line. From June 1991 until
June 1993, Mr. Pendse was Director of Business Development at Atlas Telecom.

Luis Machuca, 42, joined eFusion in September 1999 as President and Chief
Operating Officer. From December 1998 until September 1999, Mr. Machuca was on
sabbatical and served on advisory boards and was active in a number of
nonprofit organizations. From September 1996 until December 1998, Mr. Machuca
was Executive Vice President of the Commercial Division of Packard Bell NEC.
From August 1981 until September 1996, Mr. Machuca worked at Intel Corporation
in a variety of roles, including General Manager, Contract Manufacturing
Operations; Director of Operations, PC Enhancement Division; Co-General
Manager, OEM Products and Services Division; and Director of Marketing, Desktop
Products Group.

Executive Compensation

The following table sets forth the total cash and non-cash compensation that
eFusion paid or accrued during 1999 with respect to each person who may serve
as an executive officer of ITXC after the merger. These individuals' current
cash compensation consists of their base salary only. eFusion did not award
bonuses to the individuals listed below in 1999.

Summary Compensation Table

<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
-------------------- ----------------------
Number of Securities
Name and Principal Position Year Salary ($) Bonus ($) Underlying Options (#)
--------------------------- ---- ---------- --------- ----------------------
<S> <C> <C> <C> <C>
Ajit B. Pendse................ 1999 150,000 -- --
Chairman and Chief
Executive Officer

Luis Machuca.................. 1999 150,000 -- 360,000
Chief Operating Officer
</TABLE>

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Option Grants in Last Fiscal Year

The following table sets forth certain information regarding stock options
granted during 1999 under eFusion's stock incentive plan to the executive
officers and directors of eFusion who may serve as executive officers of ITXC
after the merger.

<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------------------
Potential Realizable Value
Number Percent at Assumed Annual Rates
Of Securities Of Total Exercise Fair Market Of Stock Price Appreciation
Underlying Options Price Value On for Option Term
Options Granted To Per Share Grant Date Expiration ---------------------------
Name Granted Employees ($/Share) ($/Share) Date 5% ($) 10% ($)
---- ------------- ---------- --------- ----------- ---------- ---------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ajit B. Pendse.......... -- -- -- -- -- -- --
Chairman and Chief
Executive Officer

Luis Machuca............ 360,000 24.69% 1.75 1.75 10/07/09 396,204 1,004,058
Chief Operating Officer
</TABLE>

eFusion Principal Stockholders

The following table sets forth certain information with respect to the
beneficial ownership of eFusion's common and preferred stock as of July 31,
2000, by:

. each person known by eFusion to beneficially own more than five percent
of eFusion's outstanding common stock or preferred stock;

. each of eFusion's executive officers and directors; and

. all of eFusion's executive officers and directors as a group.

Unless otherwise indicated, the address for each stockholder listed below is
c/o eFusion, Inc., 14600 NW Greenbrier Parkway, Beaverton, Oregon 97006. Except
as otherwise noted, and subject to applicable community property laws, to the
best of our knowledge, the persons named in this table have sole voting and
investing power for all of the shares of stock held by them.

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<TABLE>
<CAPTION>
Number of Number of Percent Percent
Shares of Shares of Ownership of Ownership of
Beneficial Owner Common Stock Preferred Stock Common Stock(1) Preferred Stock
---------------- ------------ --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Ajit Pendse............. 1,250,000 3,334 23.00% *
Jack Carveth(2)......... 36,394 *
Luis F. Machuca(3)...... 90,000 1.63%
Neal Douglas(4)......... 1,977,366 20.80%
Frank Gill(5)........... 7,500 14,636 * *
Aymerik Renard(6)....... 302,531 3.18%
All executive officers
and directors as a
group (6 persons)(7)... 1,383,894 2,297,867 24.89% 24.16%
Marie Corbin(8)......... 425,000 1,666 7.81% *
17013 NW Johnson Road
Hillsboro, OR 97124
Intel Corporation....... 1,100,000 1,301,646 20.22% 13.69%
2000 Mission College
Boulevard
RN6-46
Santa Clara, CA 05052
Kenneth Keeler(8)....... 566,667 1,667 10.41% *
1003 SW Palatine Street
Portland, OR 97219
Lucent Technologies, 1,000,000 18.38%
Inc....................
200 Laurel Ave. South
Rm 2P524
Middletown, NJ 07748
Harry M. Schadel........ 464,852 3,333 8.5% *
16070 SW Waxwing Way
Beaverton, OR 07007
Entities affiliated with
AT&T Ventures(9)....... 1,977,366 20.79%
333 Middlefield Rd.
Suite 200
Menlo Park, CA 04025
Microsoft 1,136,857 11.36%
Corporation(10)........
One Microsoft Way
Bldg. #85/2
Redmond, WA 98052
The Velocity Technology
and 678,570 7.14%
Communications Fund
Trust C................
261 Hamilton Ave., Ste.
212
Palo Alto, CA 94301
Entities Affiliated with 500,000 5.26%
Baystar(11)............
425 Market Street
San Francisco, CA 94105
</TABLE>
--------
*Represents less than one percent.
(1) Based on 5,441,280 shares of common stock and 9,508,851 shares of preferred
stock outstanding as of July 31, 2000. Beneficial ownership is determined
in accordance with the rules of the Securities and Exchange Commission. In
computing the number of shares beneficially owned by a person and the
percentage ownership of that person, shares of common stock subject to
options or warrants held by that person that are currently exercisable or
exercisable within 60 days of July 31, 2000 are deemed outstanding. Such
shares, however, are not deemed outstanding for the purposes of computing
the percentage ownership of each other person.

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(2) Includes 20,294 shares of common stock issuable pursuant to options
exercisable within 60 days of July 31, 2000.
(3) Represents 90,000 shares of common stock issuable pursuant to options
exercisable within 60 days of July 31, 2000.
(4) Includes:

. 1,789,088 shares of preferred stock beneficially owned by AT&T Venture
Fund II, L.P.; and

. 188,278 shares of preferred stock beneficially owned by Venture Fund I,
L.P.

Mr. Douglas is a managing general partner of Spectrum IV Fund and general
partner of AT&T Venture Fund II, L.P. and of Venture Fund I, L.P. Mr.
Douglas disclaims beneficial ownership of the shares held by AT&T Venture
Fund II, L.P., and Venture Fund I, L.P., except to the extent of his
pecuniary interest therein.
(5) Represents 7,500 shares of common stock issuable pursuant to options
exercisable within 60 days of July 31, 2000.
(6) Includes 302,531 shares of preferred stock beneficially owned by Innovacom
Venture Capital (France Telecom), of which Mr. Renard is U.S. Investment
Manager. Mr. Renard disclaims beneficial ownership of the shares held by
Innovacom Venture Capital (France Telecom), except to the extent of his
pecuniary interest therein.
(7) Includes 117,794 shares of common stock issuable pursuant to options
exercisable within 60 days of July 31, 2000.
(8) Includes 141,667 shares of common stock held in a constructive trust for
which Mr. Keeler is the trustee and Ms. Corbin is the beneficiary. The
trust terminates on August 31, 2000, at which time the 141,667 shares of
common stock in the trust become beneficially and solely owned by Ms.
Corbin.
(9) Include 1,789,088 shares of preferred stock beneficially owned by AT&T
Venture Fund II, L.P., and 188,278 shares of preferred stock beneficially
owned by Venture Fund I, L.P.
(10) Includes 500,000 shares of Series B preferred stock issuable pursuant to a
warrant exercisable within 60 days of July 31, 2000.
(11) Includes 300,000 shares of preferred stock beneficially owned by Baystar
Capital, LP and 200,000 shares of preferred stock beneficially owned by
Baystar International.

EYE MERGER CORP.

Eye Merger Corp. is a wholly owned subsidiary of ITXC which was incorporated
in Oregon for the sole purpose of effecting the merger by merging with and into
eFusion. It engages in no other business. Its principal executive offices are
presently located at 1211 Southwest Fifth Avenue, Suite 1500, Portland, Oregon
97204 and its telephone number is (503) 727-2000.

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COMPARISON OF RIGHTS OF HOLDERS OF eFUSION
COMMON STOCK BEFORE AND AFTER MERGER

ITXC has 415,000,000 authorized shares of capital stock, consisting of
400,000,000 shares of common stock and 15,000,000 shares of preferred stock.
eFusion has 45,000,000 authorized shares of capital stock, consisting of
30,000,000 shares of common stock and 15,000,000 shares of preferred stock.

ITXC is incorporated in the State of Delaware and eFusion is incorporated in
the State of Oregon. Following the merger with ITXC, eFusion stockholders will
hold ITXC common stock rather than eFusion common stock and the rights of the
former eFusion stockholders will be governed by Delaware law rather than Oregon
law. The rights of the former eFusion stockholders will also be governed by the
ITXC amended and restated certificate of incorporation and the ITXC bylaws,
rather than the eFusion articles of incorporation and the eFusion bylaws. The
following is a summary comparison of certain provisions of Oregon law and
Delaware law and the charters and bylaws of the respective corporations. This
summary does not purport to be complete and is qualified in its entirety by
reference to the corporate statutes of those states and the corporate charters
and bylaws of ITXC and eFusion.

Cumulative Voting

In an election of directors under cumulative voting, each share of stock
normally having one vote is entitled to a number of votes equal to the number
of directors to be elected. A stockholder may then cast all such votes for a
single candidate or may allocate them among as many candidates as the
stockholder may choose. Without cumulative voting, the holders of a majority of
the shares present at an annual meeting or any special meeting held to elect
directors would have the power to elect all the directors to be elected at that
meeting, and no person could be elected without the support of holders of a
majority of the shares voting at such meeting. Under Delaware law, cumulative
voting in the election of directors is not mandatory but is a permitted option.
The ITXC bylaws do not permit cumulative voting. Under Oregon law, stockholders
do not have a right to cumulative voting unless the articles of incorporation
provide otherwise. The eFusion articles and bylaws do not provide for
cumulative voting.

Power to Call Special Meetings of Stockholders

Under Delaware law, a special meeting of stockholders may be called by the
board of directors or any other person as may be provided in the certificate of
incorporation or bylaws. The ITXC bylaws provide that special meetings of the
stockholders may be called at any time by the President and shall be called by
the President or Secretary at the request of a majority of the board of
directors. Under Oregon law, a special meeting of stockholders may be called by
the board of directors or by any other person authorized to do so in the
articles of incorporation or the bylaws or by written demand by the holders of
at least ten percent of all votes entitled to be cast on any issue proposed to
be considered at any such meeting. The eFusion bylaws provide that a special
meeting of stockholders may be called at any time by the President, the board
of directors or by the holders of not less than ten percent of the outstanding
shares entitled to vote at the meeting.

Stockholder Action Without a Meeting

Under Delaware law, unless otherwise provided in the certificate of
incorporation, any action which may be taken at a meeting of the stockholders
may be taken without a meeting and without prior notice if a consent in writing
is signed by the holders of outstanding shares having at least the minimum
number of votes that would be necessary to take such action at a meeting at
which all shares entitled to vote thereon were present and voted. However, the
ITXC certificate specifically denies stockholders the power to vote by written
consent without a meeting. Under Oregon law and the eFusion bylaws, any action
required or permitted to be taken at a meeting of the stockholders may be taken
without a meeting if the action is taken by all stockholders entitled to vote
on the action.

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Size of the Board of Directors

Under Delaware law, the number of directors is fixed by, or in the manner
provided in, the bylaws, unless the certificate of incorporation fixes the
number of directors. The ITXC certificate does not specify the number of
directors, other than to require that the number of directors be not less than
three, and the ITXC certificate allows ITXC's board to set the exact number of
directors from time to time by resolution adopted by a majority of the board of
directors. ITXC currently has six directors. Under Oregon law, the number of
directors may be fixed in either the articles of incorporation or bylaws. The
board of directors or the stockholders of an Oregon corporation may change the
authorized number of directors within the minimum and maximum range if the
articles of incorporation or bylaws establish a variable range for the size of
the board of directors. If the articles of incorporation establish a fixed or
variable range, then, after shares are issued, only the stockholders may change
the range for the size of the board or change from a fixed or variable-ranged
size board by amendment to the corporation's articles of incorporation. If the
bylaws establish a fixed or variable range, then either the board of directors
or the stockholders may change the range for the size of the board or change
from a fixed or variable range size board by amendment to the corporation's
bylaws in the manner provided in the bylaws unless the number of directors is
fixed in the corporation's articles of incorporation, in which case a change in
the number of directors may be made only by amendment to the articles of
incorporation. The eFusion articles of incorporation currently provide that
eFusion will have five directors with the eFusion board of directors having the
right to increase this number up to eight directors by unanimous vote on each
additional director.

Classification of the Board of Directors

A classified board is one with respect to which a certain number of
directors, but not necessarily all, are elected on a rotating basis each year.
Delaware law permits, but does not require, a classified board of directors, in
which the directors can be divided into as many as three classes with staggered
terms of office, with only one class of directors standing for election each
year. The ITXC certificate provides for a classified board and staggered terms.
If there are six or more directors, Oregon law permits, but does not require,
an Oregon corporation to provide in its articles of incorporation or bylaws for
a classified board of directors, in which the directors can be divided into up
to two or three classes of directors with staggered terms of office, with only
one class of directors to stand for election each year. The eFusion articles
and bylaws do not provide for a classified board or for staggered terms.

Special Meetings of the Board of Directors

Under the ITXC bylaws, meetings of ITXC's board of directors may be called
by the President or at the request of two directors upon two days' notice.
Oregon law provides that unless the articles of incorporation or bylaws set
forth a longer or shorter period, special meetings of a company's board of
directors must be preceded by at least two days' notice of the date, time and
place of the meeting. The eFusion bylaws stipulate that special meetings of the
board of directors may be called by the President or by any director upon three
days' notice.

Removal of Directors

Under Delaware law, any director or the entire board of directors of a
corporation may be removed, with or without cause, with the approval of a
majority of the outstanding shares entitled to vote at an election of
directors. The ITXC certificate provides that a director of ITXC may be removed
only for cause by the stockholders. Under Oregon law, any director of an Oregon
corporation may be removed with or without cause by the stockholders unless the
articles of incorporation provide that directors may only be removed for cause.
If a director is elected by a voting group of stockholders, only the
stockholders of that voting group may participate in the vote to remove the
director. If cumulative voting is authorized, a director may not be removed if
the number of votes cast against such a removal would be sufficient to elect
the director under cumulative voting. If cumulative voting is not authorized, a
director may be removed only if the number of votes cast to remove the director
exceed the votes cast not to remove the director. Furthermore, a director may
be removed

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by the stockholders only at a meeting called for the purpose of removing the
director. The eFusion bylaws provide that any director may be removed, with or
without cause, at a meeting expressly called for such purpose by those
stockholders entitled to vote. A director elected by a voting group of
stockholders can only be removed by an affirmative vote of the members of the
voting group that elected that director.

Transactions Involving Officers or Directors

An Oregon corporation may loan money to, or guarantee any obligation
incurred by, its directors only if either:

. the loan or guarantee is approved by a majority of the votes represented
by the outstanding voting shares of all classes, voting as a single
voting group, excluding the vote of voting shares owned by or voted under
the control of the benefited director; or

. the board of directors determines such loan or guarantee benefits the
corporation and the board of directors either approves the loan or
guarantee or a general plan authorizing the loans and guarantees.

With respect to any other contract or transaction between the corporation
and one or more of its directors, such transactions are neither void nor
voidable if either:

. the material facts of the transaction and the director's interest is made
known to the board of directors, a committee of the board of directors or
the stockholders of the corporation entitled to vote, who thereafter
approve the transaction; or

. the contract or transaction is fair to the corporation.

Oregon law does not specifically regulate loans to officers or employees.

Under Delaware law, any corporation may lend money to, or guarantee any
obligation of, or otherwise assist any officer or other employee of the
corporation, including any officer or employee who is also a director of the
corporation, whenever, in the judgment of the directors, such loan, guaranty or
assistance may reasonably be expected to benefit the corporation. Furthermore,
under Delaware law, contracts or transactions between a corporation and either
any of its directors or a second corporation of which a director is also a
director, are not void or voidable if either:

. the material facts as to the transaction and as to the director's
interest are fully disclosed, and either the disinterested directors or a
majority of the disinterested stockholders approve or ratify the
transaction in good faith; or

. the person asserting the validity of the contract or transaction sustains
the burden of proving that the contract or transaction was just and
reasonable as to the corporation at the time it was authorized, approved
or ratified.

Limitation of Liability of Directors; Indemnification

Under Oregon law, a corporation's articles of incorporation may set forth a
provision eliminating or limiting the personal liability of a director to the
corporation or its stockholders for monetary damages for conduct as a director.
However, such provisions may not eliminate or limit a director's liability for:

. any act or omission occurring prior to the date when such provision
becomes effective;

. breaches of the director's duty of loyalty to the corporation or its
stockholders;

. acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of the law;

. the payment of unlawful distributions; or

. any transaction from which the director derived an improper personal
benefit.

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Under Oregon law, a corporation may, subject to the limitations described
below, indemnify a director against liability incurred if the conduct was in
good faith, the individual reasonably believed the individual's conduct was in
the best interests of the corporation and, in the case of a criminal
proceeding, the individual had no reasonable cause to believe the conduct was
unlawful. Under Oregon law, a director may not be indemnified in connection
with a proceeding by or in the right of the corporation in which the director
was found liable to the corporation or in connection with any other proceeding
charging improper personal benefit to the director in which the director was
found liable on the basis that personal benefit was improperly received. The
eFusion articles contain provisions limiting a director's or officer's
liability to the fullest extent permitted by Oregon law. Oregon law provides
for mandatory indemnification of directors when the indemnified party is wholly
successful on the merits or otherwise in the defense of any proceeding to which
the director was a party because of being a director. Officers are entitled to
the same mandatory indemnification as are directors under the Oregon Business
Corporation Act unless a corporation's articles of incorporation provide
otherwise. eFusion's articles of incorporation do not limit officers' rights to
indemnification.

The ITXC certificate eliminates the liability of directors to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director to the fullest extent permissible under Delaware law. Under
Delaware law, such provision may not eliminate or limit director monetary
liability for:

. breaches of the director's duty of loyalty to the corporation or its
stockholders;

. acts or omissions not in good faith or involving intentional misconduct
or knowing violations of law;

. the payment of unlawful dividends or unlawful stock repurchases or
redemptions; or

. transactions in which the director received an improper personal benefit.

Such limitation of liability provisions also may not limit a director's
liability for violation of, or otherwise relieve the company or its directors
from the necessity of complying with federal or state securities laws, or
affect the availability of nonmonetary remedies such as injunctive relief or
rescission.

Delaware law generally permits indemnification of expenses, including
attorneys' fees, actually and reasonably incurred in the defense or settlement
of a derivative or third-party action, provided there is a determination by a
majority vote of a disinterested quorum of the directors, by independent legal
counsel or by a majority vote of a quorum of the stockholders that the person
seeking indemnification acted in good faith and in a manner reasonably believed
to be in best interests of the corporation. Without court approval, however, no
indemnification may be made in respect of any derivative action in which such
person is adjudged liable for negligence or misconduct in the performance of
his or her duty to the corporation. Delaware law requires indemnification of
expenses to the extent the individual being indemnified has successfully
defended any action, claim, issue or matter therein, on the merits or
otherwise.

Expenses incurred by an officer or director in defending any action may be
paid in advance, under Delaware law, if such director or officer undertakes to
repay such amounts if it is ultimately determined that he or she is not
entitled to indemnification. In addition, Delaware law authorizes a
corporation's purchase of indemnity insurance for the benefit of its officers,
directors, employees and agents whether or not the corporation would have the
power to indemnify against the liability covered by the policy.

Delaware law also permits a Delaware corporation to provide indemnification
in excess of that provided by statute. Delaware law does not require
authorizing provisions in the certificate of incorporation. Limitations on
indemnification may be imposed by a court based on principles of public policy.

Dividends and Repurchases of Shares

Oregon law permits a corporation, unless otherwise restricted by its
articles of incorporation, to make distributions to its stockholders, including
by repurchase, redemption or other acquisition of shares, if both of the
following factors are, in the judgment of the directors, satisfied:

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. the corporation would be able to pay its debts as they come due in the
usual course of business; and

. the corporation's total assets would at least equal the sum of its total
liabilities plus, unless the articles of incorporation permit otherwise,
the amount that would be needed if the corporation were dissolved at the
time of the distribution, to satisfy the preferential rights upon
dissolution of stockholders whose preferential rights are superior to
those receiving the distribution.

Delaware law permits a corporation to declare and pay dividends out of
surplus or, if there is no surplus, out of net profits for the fiscal year in
which the dividend is declared and/or for the preceding fiscal year. However,
if the amount of capital of the corporation following the declaration and
payment of the dividend is less than the aggregate amount of the capital
represented by the issued and outstanding stock of all classes having a
preference upon the distribution of assets, the directors may not declare and
pay out a dividend from the corporation's net profits. In addition, Delaware
law generally provides that a corporation may redeem or repurchase its shares
only if the capital of the corporation is not impaired and such redemption or
repurchase would not impair the capital of the corporation.

Approval of Certain Corporate Transactions

Under both Oregon law and Delaware law, with certain exceptions, any merger,
consolidation or sale of all or substantially all the assets of a corporation
must be approved by the corporation's board of directors and a majority of the
outstanding shares entitled to vote. eFusion's articles of incorporation
further require that any merger, consolidation, or sale of all or substantially
all the assets of eFusion be approved by a majority of the outstanding shares
of preferred stock, voting together as a separate voting group.

Class Voting in Certain Corporate Transactions

Under Delaware law, certain amendments of a corporation's certificate of
incorporation must be approved by a majority of the outstanding shares of each
class of stock, without regard to limitations on voting rights. With certain
exceptions, any merger or sale of all or substantially all of the assets of a
corporation must be approved by the holders of a majority of the outstanding
stock of the corporation. Oregon law does not generally require separate class
votes of all voting classes in order to approve charter amendments and sales of
substantially all the corporate assets. Oregon law, however, provides that all
classes of stock vote separately on charter amendments, mergers and share
exchanges that affect the rights of holders of such class of stock.

Business Combinations/Mergers

Under Section 203 of the Delaware General Corporation Law, a Delaware
corporation is prohibited from engaging in a business combination with an
interested stockholder, as defined below, for three years following the date
that such person or entity becomes an interested stockholder. With certain
exceptions, an interested stockholder is a person or entity who or which owns,
individually or with or through certain other persons or entities, 15% or more
of the corporation's outstanding voting stock, including any rights to acquire
stock under an option, warrant, agreement, arrangement or understanding, or
upon the exercise of conversion or exchange rights, and stock with respect to
which the person has voting rights only. The three-year moratorium imposed by
Section 203 on business combinations of Section 203 does not apply if one or
more of the following applies:

. prior to the date on which such stockholder becomes an interested
stockholder, the board of directors of the subject corporation approves
either the business combination or the transaction that resulted in the
person or entity becoming an interested stockholder;

. upon consummation of the transaction that made him or her an interested
stockholder, the interested stockholder owns at least 85% of the
corporation's voting stock outstanding at the time the transaction
commenced, excluding from the 85% calculation shares owned by directors
who are also officers of the

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subject corporation and shares held by employee stock plans that do not
give employee participants the right to decide confidentially whether to
accept a tender or exchange offer; or

. on or after the date such person or entity becomes an interested
stockholder, the board of directors approves the business combination and
it is also approved at a stockholder meeting, and not by written consent,
by 66 2/3% of the outstanding voting stock not owned by the interested
stockholder.

Although a Delaware corporation to which Section 203 applies may elect not
to be governed by Section 203, ITXC has not made any such election.

Oregon law contains business combination provisions that are essentially
the same as Section 203 of the Delaware law. Although an Oregon corporation to
which these sections apply may elect not to be governed by them, eFusion has
not made such election and is therefore subject to these provisions.

Dissenters' and Appraisal Rights

Under Oregon law and Delaware law, a stockholder of a corporation
participating in certain major corporate transactions may, under varying
circumstances, be entitled to dissenters' rights or to appraisal rights
pursuant to which such stockholder may receive cash in the amount of the fair
value of the shares held by such stockholder, as determined by a court or by
agreement of the corporation and the stockholder, in lieu of the consideration
such stockholder would otherwise receive in the transaction. The limitations
on the availability of dissenters' rights under Oregon law are different from
those available for appraisal rights under Delaware law. Under Delaware law,
such fair value is determined exclusive of any element of value arising from
the accomplishment or expectation of the merger or consolidation, and such
appraisal rights are not available in the following situations:

. with respect to the sale, lease or exchange of all or substantially all
of the assets of a corporation;

. with respect to a merger or consolidation by a corporation the shares of
which are either listed on a national securities exchange or are held of
record by more than 2,000 holders if such stockholders receive only
shares of the surviving corporation or shares of any other corporation
that are either listed on a national securities exchange or held of
record by more than 2,000 holders, plus cash in lieu of fractional shares
of such corporations; or

. to stockholders of a corporation surviving a merger if no vote of the
stockholders of the surviving corporation is required to approve the
merger under Delaware law.

Under Oregon law, unless a corporation's articles of incorporation provide
otherwise, dissenters' rights are generally not available to holders of shares
of any class or series of stock in connection with a merger if the shares of
the class or series were registered on a national securities exchange or
quoted on Nasdaq as a National Market System security on the record date for
the meeting at which the merger is to be approved or on the date a copy or
summary of the plan of merger is mailed to the stockholders. eFusion's
articles of incorporation do not provide otherwise.

Dissenters' rights are available to the stockholders of eFusion with
respect to the merger. See "RIGHTS OF DISSENTING STOCKHOLDERS".

Inspection of Stockholder List

Delaware law allows any stockholder to inspect the stockholder list for a
purpose reasonably related to such person's interest as a stockholder.
Delaware law also provides for inspection rights as to a list of stockholders
entitled to vote at a meeting within a ten day period preceding a
stockholders' meeting for any purpose germane to the meeting. Oregon law
allows any stockholder to inspect the stockholder list beginning two business
days after notice of a meeting is given for which the list was prepared and
continuing through the meeting.

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Bylaws

Under Delaware law, the corporation's bylaws may be adopted, amended or
repealed by the stockholders of the corporation. However, under Delaware law, a
corporation may, in its certificate of incorporation, confer the power to
adopt, amend, or repeal the bylaws upon the directors, subject to the
stockholders' right to do the same. The ITXC certificate provides that the
board of directors has the right to make, alter, amend, or repeal the bylaws.
Under Oregon law, a corporation's bylaws may be amended or repealed either by
the board of directors or the stockholders of the corporation, unless the
corporation's articles provide that the stockholders solely have the power to
amend or repeal the bylaws, or the stockholders, in amending or repealing a
particular bylaw, provide expressly that the board of directors may not amend
or repeal that bylaw. The eFusion articles do not grant the stockholders sole
power to alter, amend or repeal any bylaws, rather the eFusion bylaws grant the
right to alter, amend, repeal and adopt bylaws to the board of directors,
subject to repeal or change by action of the stockholders.

Control Share Act

The Oregon Control Share Act generally provides that a person who acquires
control shares cannot vote the shares unless voting rights are approved by both
a majority of all the votes entitled to be cast by holders of voting shares and
a majority of all votes other than votes of "interested stockholders" entitled
to be cast by holders of voting shares. Delaware law does not contain an
equivalent to the Control Share Act.

Dissolution

Under Oregon law, a dissolution must either be approved by written consent
of all stockholders or be initiated by the board of directors and, unless the
articles of incorporation or the board requires a greater vote or a vote by
voting groups, approved by a majority of the votes entitled to be cast on the
proposal for dissolution. The eFusion articles do not contain any such
supermajority or voting group requirement. Under Delaware law, unless the board
of directors approves the proposal to dissolve, the dissolution must be
unanimously approved by all the stockholders entitled to vote thereon. Only if
the dissolution is initially approved by the board of directors may the
dissolution be approved by a simply majority of the outstanding shares of the
corporation's stock entitled to vote. In the event of such a board-initiated
dissolution, Delaware law allows a Delaware corporation to include in its
certificate of incorporation a supermajority voting requirement in connection
with dissolutions. The ITXC certificate does not contain a supermajority voting
requirement.

DESCRIPTION OF ITXC'S CAPITAL STOCK

This is a summary of the material terms and provisions of ITXC's capital
stock and we refer you to ITXC's third restated certificate of incorporation,
which has been incorporated by reference as an exhibit to the registration
statement of which this document is a part.

ITXC's authorized capital stock consists of 400,000,000 shares of common
stock, par value $.001 per share, and 15,000,000 shares of preferred stock, par
value $.001 per share. As of July 31, 2000, ITXC's outstanding capital stock
consisted of 38,534,067 shares of common stock. No other shares of any class or
series were issued or outstanding as of July 31, 2000. In addition, the
following shares of common stock were reserved for issuance as of July 31,
2000:

. 879,766 shares were reserved for issuance upon the exercise of warrants
held by Tom I. Evslin and Edward B. Jordan at an exercise price of
$0.8525 per share;

. 6,059,945 shares were reserved for issuance upon exercise of outstanding
stock options granted under ITXC's stock incentive plan;

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. 1,558,966 shares were reserved for issuance upon the exercise of stock
options or other benefits which may be granted under ITXC's stock
incentive plan; and

. 794,749 shares were reserved for issuance under ITXC's employee stock
purchase plan.

Common Stock

Voting Rights. Each holder of shares of ITXC common stock is entitled to one
vote per share on all matters to be voted on by stockholders. Holders of common
stock are not entitled to cumulate votes in the election of directors.

Dividend Rights. The holders of common stock are entitled to dividends and
other distributions if, as and when declared by ITXC's board of directors out
of assets legally available therefor, subject to the rights of any holder of
preferred stock.

Other Rights. Upon the liquidation, dissolution or winding up of ITXC, the
holders of shares of ITXC common stock would be entitled to share pro rata in
the distribution of all of ITXC's assets remaining available for distribution
after satisfaction of all of ITXC's liabilities and the payment of the
liquidation preference of any outstanding preferred stock. The holders of
ITXC's common stock have no preemptive or other subscription rights to purchase
shares of ITXC. No share of ITXC's common stock issued in connection with or
outstanding prior to the date of this document is subject to any assessment.

Preferred Stock

ITXC's board of directors has the authority, without further action by the
stockholders, to issue ITXC's authorized and unissued shares of preferred stock
in one or more series and to fix the number of shares, designations, voting
powers, preferences, optional and other special rights and the restrictions or
qualifications relating to each such series. The rights, preferences,
privileges and powers of each series of preferred stock may differ with respect
to dividend rates, amounts payable on liquidation, voting rights, conversion
rights, redemption provisions, sinking fund provisions and other matters. The
issuance of shares of preferred stock could decrease the amount of earnings and
assets available for distribution to holders of shares of ITXC common stock and
could adversely affect the rights and powers, including voting rights, of
holders of shares of ITXC common stock. The existence of authorized and
undesignated shares of preferred stock may also have an adverse effect on the
market price of the ITXC common stock. While ITXC has no present intention to
issue shares of preferred stock, any such issuance of preferred stock could
have the effect of delaying, deferring or preventing a change of control of
ITXC.

Registration Rights

Under a registration rights agreement, certain of ITXC's stockholders have
the right, under certain circumstances and subject to certain conditions, to
require ITXC to register under federal law shares of ITXC's common stock held
by them. Subject to certain conditions and exceptions, such investors also have
the right to require that shares of common stock held by them be included in
any registration under federal law commenced by ITXC. The registration rights
agreement provides that ITXC will pay all expenses in connection with the
registrations requested by such stockholders. The registration rights agreement
also provides that ITXC will indemnify the stockholders for certain liabilities
they may incur under the securities laws.

Certain Change of Control Provisions

ITXC is a Delaware corporation and is subject to Section 203 of the Delaware
General Corporation Law, an anti-takeover law. In general, Section 203
prohibits a publicly held Delaware corporation from engaging in certain
business combinations with a 15% stockholder for a period of three years
following the date the person became a 15% stockholder, unless, with certain
exceptions, the business combination or the transaction in

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which the person became a 15% stockholder is approved in a prescribed manner.
Generally, the business combinations covered by this statute include a merger,
asset or stock sale, or other transaction resulting in a financial benefit to
the 15% stockholder. In determining whether a stockholder is a 15% stockholder,
the Delaware statute generally includes the voting shares owned by the
stockholder and the stockholder's affiliates and associates.

The authorization of undesignated preferred stock makes it possible for
ITXC's board of directors to issue preferred stock with voting or other rights
or preferences that could impede the success of any attempt to change control
of ITXC.

ITXC's third restated certificate of incorporation provides for staggered
terms for members of ITXC's board of directors and eliminates the right of
stockholders to act without a meeting. Additionally, ITXC's bylaws establish an
advance notice procedure for stockholder proposals and for nominating
candidates for election as directors. The amendment of any of these provisions
requires approval of at least two-thirds of ITXC's outstanding common stock.

The above-mentioned provisions of Delaware law and of ITXC's third restated
certificate of incorporation and bylaws may have the effect of delaying,
deterring or preventing a change in control of ITXC, may discourage bids for
the common stock at a premium over the prevailing market price, and may
adversely affect the market price, and the voting and other rights of the
holders, of the common stock.

Transfer Agent and Registrar

The Transfer Agent and Registrar for ITXC's common stock is Continental
Stock Transfer and Trust Company.

RIGHTS OF DISSENTING STOCKHOLDERS

eFusion's stockholders have the right to dissent from the merger and to
receive payment for their shares in accordance with the Oregon dissenters'
rights statute, Sections 60.551 through 60.594 of the Oregon Business
Corporation Act. The following discussion is a summary of the dissenters'
rights provisions of that Act. We have reprinted such provisions in their
entirety in Annex IV to this document. Any eFusion stockholder who wishes to
exercise dissenters' rights or preserve the right to do so should review the
dissenters' rights statute carefully. If you do not comply with the procedures
of the statute, you will lose your dissenters' rights.

An eFusion stockholder who wishes to dissent from the merger must satisfy
the following conditions, among others:

Written Objection. The stockholder must deliver a written notice of such
stockholder's intent to demand payment for such stockholder's shares if the
merger is effectuated with eFusion to eFusion at 14600 NW Greenbrier Parkway,
Beaverton, Oregon 97006, Attention: Secretary, before the approval of the
merger is submitted to a vote at the , 2000 eFusion stockholder meeting.

No Vote In Favor. The stockholder must not vote in favor of the merger. A
negative vote alone will not constitute the written objection required before
the meeting.

If the stockholders approve the merger, eFusion will send written notice
along with a copy of the statute no later than 10 days after the merger is
effectuated to each dissenting stockholder from whom eFusion received the
dissenter's notice described above and who did not vote in favor of the merger.
The notice will:

. state where the stockholder must send such stockholder's written payment
demand;

. state where and when the stockholder must deposit such stockholder
certificates representing eFusion common stock;

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. inform holders of uncertificated shares to what extent the transfer of
shares will be restricted after payment demand is received;

. contain a form for demanding payment, which requires the dissenting
stockholder to certify whether or not such stockholder acquired
beneficial ownership before the first public announcement of the merger;
and

. set a date by which such written payment demand must be received, which
date shall not be fewer than 30 nor more than 60 days after the date the
notice was delivered to the dissenting stockholder.

If you are an eFusion dissenting stockholder and you do not demand payment,
certify that you acquired the shares before the first public announcement of
the merger, deposit your shares within the time provided by such notice, and
otherwise comply with the provisions of Oregon Revised Statutes Sections 60.551
through 60.594, you will not be entitled to dissenters' rights.

If the merger is consummated, eFusion will pay to each dissenting
stockholder who follows the required procedure the amount that eFusion
estimates to be the fair value of the dissenting stockholder's shares, plus
accrued interest. The term "fair value" means the value of the eFusion shares
immediately before the merger, and excludes any appreciation or depreciation in
anticipation of the merger unless exclusion would be inequitable. eFusion will
provide, along with payment, its balance sheet, income statement and statement
of changes in stockholders' equity for its last fiscal year and any available
interim financial statements since the end of the last fiscal year, an
explanation of how it estimates the fair value of the shares and how the
accrued interest was calculated and other information.

eFusion may elect to withhold payment from a dissenting stockholder if the
dissenting stockholder was not the beneficial owner of the shares before the
date that the merger was first publicly announced. In that event, eFusion may
force the dissenting stockholder to pursue judicial determination of the value
of the shares unless the dissenting stockholder agrees to accept the amount
specified by eFusion as the fair value in full satisfaction of the dissenting
stockholder's rights.

If you are an eFusion dissenting stockholder and you are dissatisfied with
the payment or offer for payment you may, within 30 days of the payment or
offer for payment, notify eFusion in writing of your estimate of the fair value
of your shares and the amount of interest due.

If any eFusion dissenting stockholder's demand for payment is not settled
within 60 days after eFusion's receipt of the demand, the Oregon law requires
that eFusion commence a proceeding in the Circuit Court of Washington County,
Oregon to determine the fair value of the shares. eFusion must name all
dissenting stockholders whose demands remain unsettled as parties to the
proceeding. The court may appoint one or more persons as appraisers to receive
evidence and recommend the fair value of the shares. Court costs and appraisal
fees would be assessed against eFusion, except that the court may assess such
costs against some or all of the dissenting stockholders to the extent that the
court finds the dissenting stockholders acted arbitrarily, vexatiously or not
in good faith in demanding payment or to the extent the court finds equitable.

OTHER ACTION TO BE TAKEN AT THE ITXC SPECIAL MEETING

At the ITXC special meeting, ITXC's stockholders will be asked to approve a
proposed amendment to ITXC's certificate of incorporation. If approved, such
amendment will confirm, solely as to the shares of ITXC common stock issuable
in connection with the merger, the restrictions described above under the
caption "THE MERGER AGREEMENT--Restrictions on Transferability" and set forth
in Section 2.13 of the merger agreement.

The specific resolution that ITXC will propose for adoption at the special
meeting will be as follows:

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RESOLVED, that there be added a new Article Twelfth of this Corporation's
third amended and restated certificate of incorporation, which Article shall
provide as follows:

"TWELFTH: All shares of the common stock of this Corporation issuable upon
consummation of the merger (the "eFusion Merger") provided for pursuant to the
agreement, dated as of July 25, 2000, by and among this corporation, eFusion,
Inc. and Eye Merger Corp., as such agreement may be amended from time to time
(such shares, the "eFusion Merger Shares", and such merger agreement, the
"eFusion Merger Agreement"), shall be subject to the restrictions set forth in
Appendix A to this certificate of incorporation."

We have set forth the text of Appendix A to this resolution in Annex II to
this document. You should read Annex II carefully.

The restrictions described above shall not apply to any shares of ITXC's
capital stock other than the shares of ITXC common stock issuable upon
conversion of shares of the common stock and preferred stock of eFusion under
the merger agreement.

The purpose of this amendment is to assure the enforceability of the
transfer restrictions described in Section 2.13 of the merger agreement. Under
Delaware law, transfer restrictions may be imposed in several ways, one of
which is for the transfer restrictions to be set forth in ITXC's certificate of
incorporation prior to the consummation of the merger. Management of ITXC
considered such transfer restrictions to be a critical aspect of the
negotiations that resulted in the execution of the merger agreement.

ITXC's obligation to consummate the merger is conditioned upon the adoption
of the above-mentioned amendment by ITXC's stockholders at the ITXC special
meeting.

The board of directors of ITXC recommends that ITXC's stockholders approve
this proposed amendment to ITXC's certificate of incorporation.

OTHER ACTION TO BE TAKEN AT THE eFUSION SPECIAL MEETING

eFusion's articles of incorporation provide for the holders of eFusion's
preferred stock to receive a preferred allocation in a transaction such as the
ITXC merger. The preferred allocation represents the aggregate dollar amount of
capital contributed to eFusion upon the issuance of the eFusion preferred
stock, or $49.1 million. Once the preferred allocation is segregated for the
holders of the Preferred Stock, the holders of the Preferred Stock are entitled
to share pro rata in the remaining shares issuable pursuant to the merger.

As presently in effect, eFusion's articles of incorporation contain two
provisions relating to the calculation of the preference allocation:

. In order to determine the number of shares of ITXC common stock to be set
aside for the preferred allocation, the existing articles of
incorporation provide for ITXC's shares of common stock to be valued at
the average closing sale price of ITXC's common stock during the 30 day
period ending three days prior to the closing.

. The eFusion board of directors is obligated to apply a discount to the
above-mentioned valuation in the event that certain restrictions on
transferability exist.

eFusion's board has adopted amended and restated articles of incorporation
which, subject to the approval of eFusion's stockholders, suspend the
application of the two provisions described immediately above in the context of
the ITXC merger. Rather than follow the procedures described above, the
proposed amended and restated articles of incorporation would value ITXC's
common stock at a price of $34.9886 and would not provide for any discount in
determining the preference allocation for purposes of the ITXC merger.

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As a result of the changes made in the amended and restated articles of
incorporation, if the average closing price of ITXC common stock for the 30
days ending on the third day before the closing of the merger is less than
$34.9886, the holders of eFusion common stock will receive a greater percentage
of the merger shares, and the holders of eFusion preferred stock will receive a
lesser percentage, than they would receive if no changes were made to the
eFusion articles of incorporation. If the 30 day average closing price is
greater than $34.9886, the result would be reversed.

Please note that in the event that the stockholders of eFusion do not
approve the proposal to amend and restate eFusion's articles of incorporation,
eFusion will not have the corporate power to consummate the merger agreement.
Accordingly, failure to approve the amendment and restatement to the articles
of incorporation will preclude consummation of the merger.

The text of eFusion's amended and restated articles of incorporation is set
forth in Annex III to this document. The substantive change in Annex III
consists of the following language inserted as Section 2(d)(iii) of the
articles of incorporation:

"...[F]or purposes of the securities received pursuant to the Amended and
Restated Agreement and Plan of Merger, dated as of July 25, 2000, by and
among ITXC Corp., Eye Merger Corp. and the Corporation, each share of ITXC
Common Stock shall be valued at $34.9886.''

The board of directors of eFusion unanimously, including all disinterested
directors, approved this amendment in response to the significant decline in
the market price of ITXC's common stock during the first two weeks after the
merger was announced. The board concluded that this amendment was fair to all
of the stockholders of eFusion by reducing the impact on the holders of common
stock of declines in the market price of the ITXC common stock prior to the
consummation of the merger.

eFusion's board of directors unanimously, including all disinterested
directors, recommends that eFusion's stockholders approve the adoption of the
proposed fifth amended and restated articles of incorporation, as set forth in
Annex III to this document.

LEGAL MATTERS

The validity of the ITXC common stock to be issued in connection with the
merger will be passed upon for ITXC by Lowenstein Sandler PC, Roseland, New
Jersey.

EXPERTS

Ernst & Young LLP, independent auditors, have audited ITXC's consolidated
financial statements as of December 31, 1998 and 1999, and for the years then
ended and for the period from the July 21, 1997 date of inception to December
31, 1997, as set forth in their report. We have included these financial
statements in this document in reliance on Ernst & Young LLP's report, given on
their authority as experts in accounting and auditing.

The financial statements of eFusion as of December 31, 1998 and 1999, and
for each of the years ended December 31, 1998 and 1999 included in this
document have been included herein in reliance upon the report of KPMG LLP,
independent certified public accountants, and upon the authority of KPMG LLP as
experts in accounting and auditing.

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OTHER MATTERS

Representatives of Ernst & Young LLP are expected to be present at ITXC's
special meeting with the opportunity to make statements if they so desire.
Representatives of KPMG LLP are expected to be present at eFusion's special
meeting with the opportunity to make statements if they so desire. In each
case, such representatives are also expected to be available to respond to
appropriate questions.

We know of no matters to be presented at the special meetings other than the
matters described in this document. However, if any other matters do come
before the meetings, it is intended that the holders of the proxies will vote
on such matters in their discretion.

WHERE YOU CAN FIND MORE INFORMATION

ITXC has filed with the SEC a registration statement under the Securities
Act that registers the offer and sale to eFusion's stockholders of the shares
of ITXC common stock to be issued in connection with the merger. The
registration statement, including any attached exhibits and schedules, contains
additional relevant information about ITXC. The rules and regulations of the
SEC allow us to omit certain information included in the registration statement
from this document.

In addition, ITXC files reports, proxy statements and other information with
the SEC under the Securities Exchange Act of 1934. Please call the SEC at l-
800-SEC-0330 for further information on the public reference rooms. You may
read and copy this information at the following locations of the SEC:

Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. New York, New York 10048 Suite 1400
20539 Chicago, Illinois
60661-2511

You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates. The SEC also maintains an Internet world wide
web site that contains reports, proxy statements and other information about
issuers, like ITXC, who file electronically with the SEC. The address of that
site is http://www.sec.gov.

130
<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
ITXC:
Audited Year-End Financial Statements:
Report of Independent Auditors.......................................... F-2
Consolidated Balance Sheets as of December 31, 1998 and 1999............ F-3
Consolidated Statements of Operations for the Period from July 21, 1997
(date of inception) to December 31, 1997 and the Years Ended December
31, 1998 and 1999...................................................... F-4
Consolidated Statements of Stockholders' Equity for the Period from July
21, 1997 (date of inception) to December 31, 1997 and the Years Ended
December 31, 1998 and 1999............................................. F-5
Consolidated Statements of Cash Flows for the Period from July 21, 1997
(date of inception) to December 31, 1997 and the Years Ended December
31, 1998 and 1999...................................................... F-6
Notes to Consolidated Financial Statements.............................. F-7
Unaudited Interim Financial Statements
Condensed Consolidated Balance Sheets as of December 31, 1999 (audited)
and June 30, 2000...................................................... F-19
Condensed Consolidated Statements of Operations for the Six Months Ended
June 30, 1999 and 2000................................................. F-20
Condensed Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 1999 and 2000................................................. F-21
Notes to Unaudited Condensed Consolidated Financial Statements.......... F-22
eFUSION:
Independent Auditors' Report............................................ F-24
Balance Sheets as of December 31, 1998 (audited), December 31, 1999
(audited) and June 30, 2000 (unaudited)................................ F-25
Statements of Operations for the Years Ended December 31, 1998 and 1999
(audited) and for the Six Months Ended June 30, 1999 and 2000
(unaudited)............................................................ F-26
Statements of Redeemable Convertible Preferred Stock and Stockholders'
Equity (Deficit) for the Years Ended December 31, 1998 and 1999
(audited) and for the Six Months Ended June 30, 1999 and 2000
(unaudited)............................................................ F-27
Statements of Cash Flows for the Years Ended December 31, 1998 and 1999
(audited) and for the Six Months Ended June 30, 1999 and 2000
(unaudited)............................................................ F-28
Notes to Financial Statements........................................... F-29
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholders
ITXC Corp. and subsidiaries

We have audited the accompanying consolidated balance sheets of ITXC Corp.
and subsidiaries as of December 31, 1999 and 1998, and the related consolidated
statements of operations, stockholders' equity and cash flows for the years
ended December 31, 1999 and 1998 and the period from July 21, 1997 (date of
inception) to December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of ITXC Corp. and
subsidiaries at December 31, 1999 and 1998, and the results of their operations
and their cash flows for the years ended December 31, 1999 and 1998 and the
period from July 21, 1997 (date of inception) to December 31, 1997 in
conformity with accounting principles generally accepted in the United States.

/s/ Ernst & Young LLP

MetroPark, New Jersey
February 7, 2000, except for
Note 16, as to which the date is
March 15, 2000

F-2
<PAGE>

ITXC CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
December 31,
-------------------------
1998 1999
----------- ------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents......................... $ 3,971,237 $ 49,017,768
Marketable securities............................. 200,000 25,378,297
Accounts receivable, net of allowance of $172,000
in 1998 and $1,284,000 in 1999................... 500,739 5,738,804
Prepaid expenses and other current assets......... 121,459 1,298,102
----------- ------------
Total current assets.............................. 4,793,435 81,432,971
Property and equipment, net....................... 3,015,529 15,411,656
Deposits and other assets......................... 24,833 66,232
Service contract rights, net of amortization of
$84,000.......................................... -- 2,950,750
----------- ------------
Total assets...................................... $ 7,833,797 $ 99,861,609
=========== ============
Liabilities, mandatorily redeemable convertible
preferred stock and stockholders' equity
(deficit)
Current liabilities:
Accounts payable.................................. $ 831,275 $ 10,403,227
Accrued liabilities and other current
liabilities...................................... 786,043 3,157,229
Deferred revenue.................................. 888,232 --
Customer deposits................................. 142,500 442,240
Current portion of capital lease obligations...... 76,705 1,620,317
----------- ------------
Total current liabilities......................... 2,724,755 15,623,013
Equipment note payable............................ 1,200,000 1,723,191
Capital lease obligations, less current portion... 160,368 2,149,177
Commitments and contingencies.
Series B Redeemable Convertible Preferred Stock,
$.001 par value, issued and outstanding,
5,865,104 shares in 1998 and none in 1999........ 9,866,723 --
Series C Redeemable Convertible Preferred Stock,
$.001 par value, issued and outstanding, none in
1998 and 1999.................................... -- --
Stockholders' equity (deficit):
Preferred Stock, $.001 par value, authorized
10,000,000 shares in 1998 and 15,000,000 shares
in 1999.......................................... -- --
Common Stock, $.001 par value, authorized
67,500,000 shares; issued and outstanding,
8,381,000 shares in 1998; and 35,816,401 shares
in 1999.......................................... 8,381 35,816
Additional paid-in capital........................ 2,293,516 118,089,750
Deferred employee compensation.................... (566,201) (10,240,858)
Accumulated deficit............................... (7,853,745) (27,518,480)
----------- ------------
Total stockholders' equity (deficit).............. (6,118,049) 80,366,228
----------- ------------
Total liabilities, mandatorily redeemable
convertible preferred stock and stockholders'
equity (deficit)................................. $ 7,833,797 $ 99,861,609
=========== ============
</TABLE>

See accompanying notes.

F-3
<PAGE>

ITXC CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
Period from
July 21, 1997
(date of
inception) to Year ended December 31,
December 31, -------------------------
1997 1998 1999
------------- ----------- ------------
<S> <C> <C> <C>
Revenue:
Telecommunications revenue............ $ -- $ 1,238,008 $ 24,423,162
Consulting revenue.................... 58,824 652,944 988,232
--------- ----------- ------------
Total revenue......................... 58,824 1,890,952 25,411,394
Costs and expenses:
Data communications and
telecommunications................... -- 2,016,757 23,095,225
Cost of consulting revenue............ -- 192,203 --
Network operations.................... -- 1,320,587 3,219,039
Selling, general and administrative... 700,874 5,120,944 14,778,207
Depreciation and amortization......... 5,000 344,587 2,556,436
Non-cash employee compensation........ -- 194,288 2,715,862
--------- ----------- ------------
Total costs and expenses.............. 705,874 9,189,366 46,364,769
--------- ----------- ------------
Loss from operations.................. (647,050) (7,298,414) (20,953,375)
Interest income....................... 756 230,538 1,495,800
Interest expense...................... -- (139,575) (207,160)
--------- ----------- ------------
Net loss.............................. (646,294) (7,207,451) (19,664,735)
Accretion of redemption value of
mandatorily redeemable convertible
preferred stock...................... -- (14,217) (772,795)
--------- ----------- ------------
Net loss applicable to common
stockholders......................... $(646,294) $(7,221,668) $(20,437,530)
========= =========== ============
Basic and diluted net loss per share
applicable to common stockholders.... $ (0.09) $ (0.88) $ (1.29)
========= =========== ============
Weighted average shares used in
computation of basic and diluted net
loss per share applicable to common
stockholders......................... 7,004,908 8,184,556 15,885,883
Pro forma basic and diluted net loss
per share (unaudited)................ $ (0.45) $ (0.69)
=========== ============
Weighted average shares used in
computation of pro forma basic and
diluted net loss per share
(unaudited).......................... 16,154,670 28,525,619
</TABLE>

See accompanying notes.

F-4
<PAGE>

ITXC CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Period from July 21, 1997 (date of inception) to December 31, 1999

<TABLE>
<CAPTION>
Series A
Convertible
Preferred Stock Common Stock Additional Software Deferred
---------------- ------------------ Paid-in Credit Employee Subscription Accumulated
Shares Amount Shares Amount Capital Subscription Compensation Receivable Deficit
-------- ------ ---------- ------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of
Common Stock... -- -- 7,800,000 $ 7,800 $ 23,100 $ -- -- $(900) --
Issuance of
Series A Stock
and Preferred
Warrant........ 278,000 $ 278 -- -- 424,722 -- -- -- --
Issuance of
Common Warrants
for software
credit......... -- -- -- -- 1,000,000 (1,000,000) -- -- --
Utilization of
software
credit......... -- -- -- -- -- 243,000 -- -- --
Net loss........ -- -- -- -- -- -- -- -- $ (646,294)
-------- ----- ---------- ------- ------------ ---------- ------------ ----- ------------
Balance,
December 31,
1997........... 278,000 278 7,800,000 7,800 1,447,822 (757,000) -- (900) (646,294)
Conversion of
Series A Stock
and Preferred
Warrant to
Common Stock... (278,000) (278) 556,000 556 (278) -- -- -- --
Repayment of
subscription
receivable..... -- -- -- -- (900) -- -- 900 --
Issuance of
Common Stock
for services... -- -- 25,000 25 10,600 -- -- -- --
Utilization of
software
credit......... -- -- -- -- -- 757,000 -- -- --
Accretion of
redemption
value of
mandatorily
redeemable
convertible
preferred
stock.......... -- -- -- -- (14,217) -- -- -- --
Deferred non-
cash employee
compensation... -- -- -- -- 760,489 -- (760,489) -- --
Amortization of
non-cash
deferred
employee
compensation... -- -- -- -- -- -- 194,288 -- --
Non-cash
interest
expense........ -- -- -- -- 90,000 -- -- -- --
Net loss........ -- -- -- -- -- -- -- -- (7,207,451)
-------- ----- ---------- ------- ------------ ---------- ------------ ----- ------------
Balance,
December 31,
1998........... -- -- 8,381,000 8,381 2,293,516 -- (566,201) -- (7,853,745)
Accretion of
redemption
value of
mandatorily
redeemable
convertible
preferred
stock.......... -- -- -- -- (772,795) -- -- -- --
Deferred non-
cash employee
compensation... -- -- -- -- 12,390,519 -- (12,390,519) -- --
Amortization of
non-cash
deferred
employee
compensation... -- -- -- -- -- -- 2,715,862 -- --
Issuance of
common stock
for exercise of
warrants....... -- -- 1,444,000 1,444 (722) -- -- -- --
Issuance of
common stock
for exercise of
options........ -- -- 613,743 614 219,285 -- -- -- --
Issuance of
common stock
for initial
public
offering....... -- -- 7,187,500 7,187 78,407,034 -- -- -- --
Conversion of
mandatorily
redeemable
convertible
preferred stock
to common
stock.......... -- -- 18,190,158 18,190 25,552,913 -- -- -- --
Net loss........ -- -- -- -- -- -- -- -- (19,664,735)
-------- ----- ---------- ------- ------------ ---------- ------------ ----- ------------
Balance,
December 31,
1999........... -- $ -- 35,816,401 $35,816 $118,089,750 -- $(10,240,858) -- $(27,518,480)
======== ===== ========== ======= ============ ========== ============ ===== ============
<CAPTION>
Total
-------------
<S> <C>
Issuance of
Common Stock... $ 30,000
Issuance of
Series A Stock
and Preferred
Warrant........ 425,000
Issuance of
Common Warrants
for software
credit......... --
Utilization of
software
credit......... 243,000
Net loss........ (646,294)
-------------
Balance,
December 31,
1997........... 51,706
Conversion of
Series A Stock
and Preferred
Warrant to
Common Stock... --
Repayment of
subscription
receivable..... --
Issuance of
Common Stock
for services... 10,625
Utilization of
software
credit......... 757,000
Accretion of
redemption
value of
mandatorily
redeemable
convertible
preferred
stock.......... (14,217)
Deferred non-
cash employee
compensation... --
Amortization of
non-cash
deferred
employee
compensation... 194,288
Non-cash
interest
expense........ 90,000
Net loss........ (7,207,451)
-------------
Balance,
December 31,
1998........... (6,118,049)
Accretion of
redemption
value of
mandatorily
redeemable
convertible
preferred
stock.......... (772,795)
Deferred non-
cash employee
compensation... --
Amortization of
non-cash
deferred
employee
compensation... 2,715,862
Issuance of
common stock
for exercise of
warrants....... 722
Issuance of
common stock
for exercise of
options........ 219,899
Issuance of
common stock
for initial
public
offering....... 78,414,221
Conversion of
mandatorily
redeemable
convertible
preferred stock
to common
stock.......... 25,571,103
Net loss........ (19,664,735)
-------------
Balance,
December 31,
1999........... $ 80,366,228
=============
</TABLE>

See accompanying notes.

F-5
<PAGE>

ITXC CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
Period from
July 21, 1997
(date of
inception) to Year ended December 31,
December 31, -------------------------
1997 1998 1999
------------- ----------- ------------
<S> <C> <C> <C>
Operating activities
Net loss............................. $(646,294) $(7,207,451) $(19,664,735)
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities:
Depreciation and amortization...... 5,000 344,587 2,556,436
Provision for doubtful accounts.... -- 172,475 2,600,554
Amortization of non-cash deferred
employee compensation............. -- 194,288 2,715,862
Issuance of common stock for
services.......................... -- 10,625 --
Non-cash interest expense.......... -- 90,000 --
Amortization of original issue
discounts......................... -- -- (510,582)
Changes in operating assets and
liabilities
Increase in accounts receivable.. -- (673,214) (7,838,619)
Increase in prepaid expenses and
other assets.................... (18,846) (127,446) (1,218,042)
Increase in accounts payable and
accrued expenses................ 302,261 1,315,057 5,801,871
Increase (decrease) in customer
deposits and deferred revenue... 441,176 589,556 (588,492)
--------- ----------- ------------
Net cash provided by (used in)
operating activities................ 83,297 (5,291,523) (16,145,747)
Investing activities
Purchase of property and equipment... (40,420) (2,073,696) (4,714,757)
Purchase of service contract rights.. -- -- (3,035,057)
Purchase of available for sale
securities.......................... -- (200,000) (64,367,815)
Maturities of available for sale
securities.......................... -- -- 39,700,000
--------- ----------- ------------
Net cash used in investing
activities.......................... (40,420) (2,273,696) (32,417,629)

Financing activities
Proceeds from equipment line of
credit.............................. -- 1,200,000 523,191
Proceeds from stockholder note....... -- 750,000 --
Repayment of capital lease
obligations......................... -- (13,927) (479,710)
Issuance of common stock............. 30,000 900 220,621
Issuance of convertible preferred
stock............................... 425,000 9,101,606 14,931,584
Proceeds from initial public
offering............................ -- -- 78,414,221
--------- ----------- ------------
Net cash provided by financing
activities.......................... 455,000 11,038,579 93,609,907
--------- ----------- ------------
Increase in cash..................... 497,877 3,473,360 45,046,531
Cash and cash equivalents at
beginning of period................. -- 497,877 3,971,237
--------- ----------- ------------
Cash and cash equivalents at end of
period.............................. $ 497,877 $ 3,971,237 $ 49,017,768
========= =========== ============

Supplemental disclosures of cash flow
information
Cash paid for interest............... -- $ 36,446 $ 223,834
========= =========== ============
</TABLE>

See accompanying notes.

F-6
<PAGE>

ITXC CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999

1. Organization and Nature of Business

ITXC Corp. (the "Company") is a Delaware corporation, incorporated on July
21, 1997. The Company was founded for the purpose of providing Internet voice,
fax and voice-enabled services primarily to traditional telephone companies,
Internet service providers and telecommunications resellers, under the brand
name WWeXchange for which revenues commenced in 1998. During 1997, the Company
was in the development stage and was primarily developing and constructing its
network, and provided consulting services under a market trial agreement with a
company in the telecommunications industry (see Note 11). During 1998 the
Company exited the development stage. The Company operates in one business
segment.

Initial Public Offering

On October 1, 1999, the Company completed an initial public offering (IPO)
of 7.2 million shares of common stock at a price of $12.00 per share,
generating net proceeds of approximately $78.4 million. Under the Company's
Certificate of Incorporation, all outstanding shares of Series B Redeemable
Convertible Preferred Stock and Series C Redeemable Convertible Preferred Stock
were converted into shares of Common Stock on a two-for-one basis (reflecting
the stock split described in Note 11), effective upon the closing of the
Company's IPO, resulting in the issuance of an additional 18.2 million shares
of common stock.

Subsidiaries and Joint Venture

In March 1998, ITXC Data Transport Services LLC ("Data Transport"), a wholly
owned subsidiary, was formed for the purpose of holding licenses and agreements
with certain carriers and re-sellers and to acquire and operate switching
equipment for the Company.

In July 1998, ITXC Asia PTE Ltd, a wholly-owned subsidiary (Singapore
company), was formed for the purpose of selling and marketing the Company's
services in Asia.

In July 1998, the Company obtained a 49% interest in ITXC Comunicacoes Ltda
("ITXC Ltda"), a newly formed Brazilian joint venture, in consideration of
rights to certain technology, which will provide exchange carrier long-
distance services in Brazil. The Company's ownership interest in ITXC Ltda is
accounted for under the equity method of accounting. No investment has been
recorded by the Company as no consideration has been paid.

The ITXC Ltda joint venture agreement, as amended, provided for an exit
clause triggered by an acquisition of the Company, certain business
combinations, failure of the Company or ITXC Ltda to meet certain performance
thresholds or the occurrence of certain other events. If any of these events
occurred, the clause provided the Company a call option and provided TeleNova
Communicacoes Ltda and its assignee (collectively, "TeleNova") a put option
which required the Company to acquire TeleNova's interest in ITXC Ltda.

In February 2000, the Company agreed to issue 150,000 shares of its common
stock to affiliates of TeleNova in exchange for: (i) equity in TeleNova, having
a value of at least $6 million, (ii) termination of the call and put options
and (iii) certain contractual commitments by each party. As part of this
agreement, the parties also terminated the joint venture agreement and related
license agreement.

In June 1999, the Company formed ITXC, Ltd., a United Kingdom company, to
conduct certain United Kingdom operations.

F-7
<PAGE>

ITXC CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999

Basis of Consolidation

The consolidated financial statements include the accounts of ITXC Corp. and
its wholly-owned subsidiaries, Data Transport, ITXC, Ltd. and ITXC Asia PTE,
Ltd. All significant intercompany balances and transactions have been
eliminated in consolidation.

2. Significant Accounting Policies

Cash Equivalents

The Company considers all highly-liquid investments with a maturity of three
months or less when purchased to be cash equivalents.

Marketable Securities

Marketable securities consist of fixed income investments which can be
readily purchased or sold using established markets. In accordance with SFAS
115, Accounting for Certain Investments in Debt and Equity Securities,
management determines the appropriate classification of debt securities at the
time of purchase and reevaluates such designations as of each balance sheet
date. Such investments are classified as available-for-sale and, accordingly,
are carried at fair value which approximates amortized cost at December 31,
1998 and 1999. The amortized cost of debt securities is adjusted for
amortization of premiums and accretion of discounts to maturity. Such
amortization and accretion, as well as interest, are included in interest
income. Realized gains and losses and declines in value judged to be other than
temporary are included in investment income. The cost of securities sold is
based on the specific identification method.

Concentration of Credit Risk

The Company transacts a significant volume of business with several
customers. Four customers represented 35%, 20%, 13% and 11%, respectively, of
1998 total revenue and three customers represented 12%, 12% and 11%,
respectively, of 1999 total revenue. Accounts receivable from these customers
were approximately $417,800 and $3,090,900 at December 31, 1998 and 1999,
respectively. The Company performs a credit evaluation of all new customers and
requires certain customers to provide collateral in the form of a cash deposit.
For the period from July 21, 1997 to December 31, 1997, one customer accounted
for 100% of consulting revenue under the market trial agreement referred to in
the first paragraph of Note 1.

Depreciation and Amortization

Property and equipment are recorded at cost and are depreciated over the
estimated useful lives and leasehold improvements are depreciated over the term
of the lease or over the estimated useful lives, whichever is shorter,
utilizing the straight-line method as follows:

<TABLE>
<CAPTION>
Estimated
Useful Life
-----------
<S> <C>
Network equipment and software............. 2-3
Furniture, fixtures and office equipment... 3-7
Leasehold improvements..................... 2
</TABLE>

Revenue Recognition

The Company recognizes telecommunications revenue and the related costs at
the time the services are rendered. Telecommunications revenue is derived from
fees charged to terminate Internet based voice and fax services over the
Company's network.

F-8
<PAGE>

ITXC CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999

In 1997, the Company entered into a market trial agreement with a third
party. Under that agreement, the Company conducted a market trial to determine
the market opportunity, operational requirements and business arrangements with
respect to offering wholesale switching, transport, billing and settlement
services relating to Internet protocol telephony services. While the agreement
was in effect, the Company conducted a market trial of its wholesale switching,
transport, billing and settlement services and provided periodic reports
according to an agreed upon schedule. These reports provided marketing
analyses, service descriptions, operations analyses and business structure and
competitive analyses. The Company recognized consulting revenue under the
market trial agreement as certain milestones were attained and cash collections
were assured, as specified in the contract, and in accordance with Statement of
Financial Accounting Standards, No. 68, Research and Development Arrangements.
This agreement required certain research reports to be delivered by the Company
and accepted by the customer, for payments under the contract to become due and
payable. At December 31, 1998, $888,232, of revenue was deferred in connection
with this market trial agreement for payments received in advance of delivery
and acceptance of certain reports, which was fully earned during 1999.

Advertising

Advertising costs are expensed as incurred. During 1997, 1998 and 1999, the
Company expensed approximately $14,000, $119,000, and $198,000, respectively,
of such costs.

Research and Development

Development costs are expensed as incurred. Development costs of
approximately $0, $594,000 and $1,509,000 were expensed in 1997, 1998 and 1999,
respectively, and are included in selling, general and administrative costs.

Income Tax

Deferred income taxes are determined using the liability method in
accordance with Statement of Financial Accounting Standards No. 109, Accounting
for Income Taxes. Under this method, deferred tax assets and liabilities are
determined based on differences between financial reporting and tax bases of
assets and liabilities (i.e. temporary differences) and are measured using the
enacted tax rates and laws that will be in effect when the differences are
expected to reverse.

Stock-Based Compensation

The Company accounts for employee stock-based compensation in accordance
with Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock
Issued to Employees," using an intrinsic value approach to measure compensation
expense, if any. Appropriate disclosures using a fair value based method, as
provided by Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation" ("SFAS 123"), are also reflected in the
accompanying notes to the financial statements. Options issued to non-
employees are accounted for in accordance with SFAS 123, using a fair value
approach. The Company has not issued any options to non-employees.

Recent Accounting Pronouncement

In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 133, Accounting for Derivatives
and Hedging Activities (SFAS 133), which establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts (collectively referred to as derivatives) and for
hedging activities. SFAS 133 is effective for all fiscal quarters of fiscal
years beginning after June 15, 2000. As the Company does not currently engage
in derivatives or hedging transactions, there will be no current impact to the
Company's results of operations, financial position or cash flows upon the
adoption of SFAS 133.

F-9
<PAGE>

ITXC CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.

3. Available for Sale Investments

The Company's available for sale investments which are included in cash
equivalents ($47,715,977 at December 31, 1999) and marketable securities are as
follows:

<TABLE>
<CAPTION>
December 31,
--------------------
1998 1999
-------- -----------
<S> <C> <C>
Money market funds................................... -- $ 9,409,553
Commercial paper..................................... -- 48,676,937
Certificates of deposits............................. $200,000 7,000,296
Asset-backed securities.............................. -- 8,007,508
-------- -----------
Total.............................................. $200,000 $73,094,294
======== ===========
</TABLE>

Gross realized gains and losses for the years ended December 31, 1998 and
1999 were immaterial.

The Company's available for sale securities have the following maturities at
December 31, 1999:

<TABLE>
<S> <C>
Due in one year or less....................................... $65,086,786
Due after one year through five years......................... 8,007,508
</TABLE>

4. Accounts Receivable

The Company estimates the amount of the allowance for doubtful accounts
required to reduce accounts receivable to expected net realizable value by
reviewing the status of significant past-due receivables and analyzing
historical bad debt trends.

The Company did not write-off any accounts receivable during 1997 and 1998.
The Company wrote-off approximately $1,490,000 of accounts receivable during
1999.

5. Property and Equipment

Property and equipment is comprised of the following:

<TABLE>
<CAPTION>
December 31,
----------------------
1998 1999
---------- -----------
<S> <C> <C>
Network equipment and software..................... $1,955,887 $13,494,034
Furniture, fixtures and office equipment........... 1,147,946 4,126,859
Leasehold improvements............................. 261,283 612,479
---------- -----------
3,365,116 18,233,372
Less accumulated depreciation and amortization..... 349,587 2,821,716
---------- -----------
$3,015,529 $15,411,656
========== ===========
</TABLE>

F-10
<PAGE>

ITXC CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999

Equipment under capital leases totaled approximately $251,000 and $4,265,000
at December 31, 1998 and 1999, respectively. Included in accumulated
depreciation is approximately $14,000 and $609,000 related to such assets at
December 31, 1998 and 1999, respectively.

At December 31, 1998 and 1999, network equipment and software includes $1
million of software which is used in Internet gateways and switches. This
software was purchased from a stockholder, who was paid by issuance of common
stock warrants (see Note 11). By December 31, 1999 all such software was
deployed into operations and is being depreciated over a three-year life.

6. Purchase of Contractual Rights

On November 30, 1999, the Company purchased the contractual rights to
certain terminator and reseller agreements and intellectual property, for a
cash purchase price of $3 million, which is being amortized over a three year
period.

7. Accrued Expenses

Accrued liabilities and other current liabilities are comprised of the
following:

<TABLE>
<CAPTION>
December 31,
-------------------------
1998 1999
----------- ------------
<S> <C> <C>
Compensation.................................. $ 262,807 $ 1,367,120
Payroll tax withholding liability............. -- 644,954
Accrued contract costs........................ 300,000 --
Employee relocation costs..................... 100,000 --
Other......................................... 123,236 1,145,155
----------- ------------
$ 786,043 $ 3,157,229
=========== ============

Accrued contract costs represent the remaining minimum payments due under a
contract with a telecommunication vendor, which the Company terminated in
December 1998.

8. Income Taxes

Due to operating losses, the Company has no income tax liability for 1997,
1998 or 1999. Significant components of the Company's deferred tax assets and
liabilities at December 31, 1998 and 1999 are as follows:

<CAPTION>
December 31,
-------------------------
1998 1999
----------- ------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforward............... $ 2,977,041 $ 9,400,502
Allowance for doubtful accounts............... 68,990 513,600
Amortization of non-cash employee
compensation................................. -- 1,085,658
Other......................................... 120,764 207,599
----------- ------------
3,166,795 11,207,359
Less valuation allowance...................... (3,108,838) (10,870,050)
----------- ------------
Deferred tax asset............................ 57,957 337,309
Deferred tax liabilities:
Fixed assets.................................. (57,957) (337,309)
----------- ------------
Net deferred tax asset........................ $ -- $ --
=========== ============
</TABLE>

F-11
<PAGE>

ITXC CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999

A reconciliation setting forth the differences between the effective tax
rate of the Company and the U.S. statutory rate is as follows:

<TABLE>
<CAPTION>
December 31,
--------------------------------------------------------
1997 1998 1999
---------------- ------------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
Statutory federal income
tax (benefit) at 34%... $(219,740) 34.0% $(2,450,533) 34.0% $(6,389,893) 34.0%
State income tax
(benefit), net of
federal benefit........ (38,389) 5.9 (404,338) 5.6 (1,116,352) 5.9
Nondeductible
expenses............... -- -- 7,750 (0.1) 21,269 (0.1)
Other................... 1,321 (0.2) (4,909) 0.1 74,077 (0.4)
Increase in valuation
allowance.............. 256,808 (39.7) 2,852,030 (39.6) 7,410,899 (39.4)
--------- ----- ----------- ----- ----------- -----
Total................. $ -- -- $ -- -- $ -- --
========= ===== =========== ===== =========== =====
</TABLE>

At December 31, 1999, the Company has a federal and state net operating loss
("NOL") carryforward of approximately $22.5 million. The federal NOL
carryforwards expire from 2012 to 2019. The state NOL carryforwards expire from
2004 to 2006. The Company has not performed a detailed analysis to determine
whether an ownership change under Section 382 of the Internal Revenue Code
occurred, but believes that it is likely that such a change occurred during
either 1998 or 1999. The effect of an ownership change would be the imposition
of an annual limitation on the use of NOL carryforwards attributable to periods
before the change. The Company has not determined the amount of the potential
limitation, but believes that all of the NOL will be available for use within
the carryforward periods.

The Company's existing deferred tax assets at December 31, 1997, 1998 and
1999 have been reduced by a valuation allowance of $256,808, $3,108,838, and
$10,870,050, respectively, due to the uncertainty regarding the realization of
such deferred tax assets. A portion of the deferred tax asset arising during
1999 relates to the exercise of non-qualified stock options by employees.

9. Debt

The Company has a revolving credit agreement with a bank, which, through
February 1, 2000, provided for maximum borrowings of $5 million, of which $4
million may be borrowed under an equipment line of credit for the purchase of
certain capital equipment. Available borrowings under the revolving line were
determined based on a formula including accounts receivable. Available
borrowings under the equipment line were determined based on a formula
including billable minutes. At December 31, 1999, the maximum available
borrowings were $2.3 million, of which $1.7 million is outstanding.

The Company is contractually required to make an annual payment based on the
previous years' excess cash flow, as defined.

The revolving line bore interest at the greater of (i) the bank's prime rate
plus 0.5%, or (ii) the federal funds rate plus 1.5%. The equipment line bore
interest at the greater of (i) the bank's prime rate plus 0.75%, or (ii) the
federal funds rate plus 2.0%. The rate in effect at December 31, 1999 under the
equipment line was 8.75%, representing the bank's prime rate plus 0.75%.

On February 1, 2000, the credit agreement was amended and restated to
increase the available borrowings to $10 million, which may be used either
under the revolving line or the equipment line. The Company is

F-12
<PAGE>

ITXC CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999

permitted to make borrowings through February 1, 2001, with any amount
outstanding under the equipment line to be converted to a term loan due three
years from the final draw down. Each portion of the loan will bear interest at
the greater of (i) the bank's prime rate, or (ii) the federal funds rate plus
.5%.

Borrowings under the credit agreement are collateralized by substantially
all of the Company's assets and the Company was required to maintain a
restricted cash balance of $200,000 through December 31, 1998. In addition, the
Company is required to maintain compliance with certain financial covenants. As
of December 31, 1999 the Company was in violation of one financial covenant and
has obtained a letter from the bank waiving the violation at that date. The
amended and restated agreement made such covenant less restrictive. As a
result, the Company believes that it will maintain compliance with such
covenant throughout 2000.

The fair value of the Company's debt approximates its carrying value.

10. Commitments and Contingencies

The Company leases an office facility under a non-cancelable operating lease
which commenced June 15, 1998, has a term of five years and provides for
minimal annual base rental payments of $656,000. The Company may, at its
option, terminate the lease after 18 months or 36 months. The lease contains
one five year renewal option at the then applicable fair market rental rate. In
addition, the lease requires the Company to pay increases in real estate taxes
and other operating costs of the properties above base year amounts. During
1998 and 1999, the Company also entered into capital lease agreements for
furniture and equipment.

Future minimum lease payments for noncancelable operating and capital leases
having initial or remaining terms in excess of one year are as follows:

<TABLE>
<CAPTION>
Operating Capital
---------- ----------
<S> <C> <C>
2000................................................ $1,070,000 $1,763,965
2001................................................ 1,043,000 1,507,211
2002................................................ 1,004,000 675,593
2003................................................ 819,000 157,752
2004................................................ 819,000 87,357
----------
4,191,878
Less amounts representing interest.................. 422,384
----------
Present value of net minimum lease payments......... $3,769,494
==========
</TABLE>

Rental expense for all operating leases was approximately $15,000, $217,000,
and $530,000 in 1997, 1998 and 1999, respectively.

Legal Matters

The Company is involved in certain claims and legal actions arising in the
normal course of business. Management does not expect that the outcome of these
cases will have a material effect on the Company's financial position or
results of operations.

F-13
<PAGE>

ITXC CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999

11. Capital Stock

On August 25, 1999, the Company's Board of Directors approved a 2 for 1
stock split of its Common Stock which became effective on September 20, 1999.
All Common Stock share amounts and preferred stock conversion ratios included
in the financial statements reflect the stock split for all periods presented.

On September 20, 1999, the Company's stockholders approved an increase in
the authorized Common Stock to 67,500,000 shares which became effective on
September 20, 1999.

On July 21, 1997, the Company issued 6,000,000 shares of Common Stock to its
founder and president for $30,000.

On October 1, 1997, the Company issued 1,800,000 shares of Common Stock to
an investor for $900, which was paid subsequent to December 31, 1997. On
October 1, 1997, the Company issued ten warrants to purchase an aggregate of
1,200,000 shares of Common Stock at par value to an investor in exchange for a
software credit in the amount of $1 million to be used within three years
against the purchase of products from the investor. Each warrant became
exercisable for each $100,000 of the software credit utilized by the Company.
At December 31, 1998, $1 million of the software credit had been utilized by
the Company for the purchase of software, and, accordingly, all warrants were
exercisable. Also, on October 1, 1997, the Company sold to the same investor
278,000 shares of Series A Convertible Preferred Stock (the "Series A Stock"),
and a warrant to purchase an additional 122,000 shares of Series A Stock (the
"Preferred Warrant") with an exercise price of par value, for aggregate
proceeds of $500,000.

On April 27, 1998, in connection with the sale of the Series B Redeemable
Convertible Preferred Stock, all of the outstanding shares of Series A Stock
were converted into 556,000 shares of Common Stock and the Preferred Warrant
was converted into a warrant to purchase 244,000 shares of Common Stock. Such
warrants and the warrant to purchase 1,200,000 shares of common stock were
exercisable at any time prior to the earlier of October 1, 2004 or the
consummation of an initial public offering of the Company's common stock. All
1,444,000 warrants were exercised during 1999 for an aggregate exercise price
of $722.

On November 18, 1997, the Company issued a warrant to purchase up to
3,800,000 shares of Common Stock, with an exercise price of $1.32 per share, to
a customer to whom the Company provided consulting services (see Note 1). The
fair value of the warrant was determined to be de minimis on the date of grant.
The warrant was not exercised, and, on April 6, 1998, was canceled.

Series B Mandatorily Redeemable Convertible Preferred Stock

On April 27, 1998, the Company issued 5,865,104 shares of Series B
Mandatorily Redeemable Convertible Preferred Stock ("Series B Stock") to
various investors at a purchase price of $1.705 per share, resulting in net
proceeds of $9,852,000. In this private placement, 439,883 shares were sold to
two officers of the Company and 668,622 shares were sold to the holders of the
Series A Stock and the Preferred Warrant.

Each share of Series B Stock was convertible into two shares of Common
Stock, subject to anti-dilution provisions, as defined. The Series B Stock
automatically converted into Common Stock upon the completion of the initial
public offering of the Company's Common Stock discussed in Note 1, resulting in
the issuance of an additional 11,730,208 shares of Common Stock.

F-14
<PAGE>

ITXC CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999

In connection with the Series B Stock private placement, the two officers
of the Company who participated in the offering provided the Company with
bridge financing of $750,000 which was converted into Series B Stock. In
addition, the Company issued the two officers warrants to purchase an
aggregate of 879,766 shares of Common Stock with an exercise price of $.8525
per share. The warrants are exercisable at any time prior to April 30, 2008.
The fair value of these warrants was determined to be $90,000 at the date of
the grant, which is included in 1998 interest expense.

Series C Mandatorily Redeemable Convertible Preferred Stock

On February 24, 1999, the Company issued 3,229,975 shares of Series C
Mandatorily Redeemable Convertible Preferred Stock (the "Series C Stock") to
various investors at a purchase price of $4.644 per share, resulting in net
proceeds of $14,932,000. The Series C Stock had conversion and redemption
features identical to the Series B Stock, and accordingly, also automatically
converted into Common Stock upon the completion of the initial public offering
of the Company's Common Stock discussed in Note 1, resulting in the issuance
of an additional 6,459,950 shares of Common Stock.

Also, on February 24, 1999 the Board of Directors increased the total
authorized preferred stock from 10,000,000 shares to 15,000,000 shares.

Registration Rights

Certain of the common and preferred stockholders have registration rights
under an agreement which, as amended on February 24, 1999, provides for the
registration of Common Stock held by such stockholders, on or after one year
from the completion of the initial public offering of the Company's Common
Stock.

Common Shares Reserved

As of December 31, 1999, the Company had reserved shares of Common Stock
for issuance as follows:

<TABLE>
<CAPTION>
Number of
Shares
---------
<S> <C>
Exercise of common stock options............................... 7,086,257
Exercise of common stock warrants.............................. 879,766
Employee stock purchase plan................................... 500,000
</TABLE>

Stock Option Plan

On February 17, 1998, the Company adopted the 1998 Stock Incentive Plan
(the "Plan"). The Plan, as amended, provides for the granting of awards to
purchase up to 7,700,000 shares of common stock, subject to annual increases
in the number of shares covered by the Plan. The Plan provides for award
grants in the form of incentive stock options, non-qualified stock options,
stock appreciation rights, restricted stock, performance units and performance
shares.

Under the terms of the Plan, a committee of the Company's Board of
Directors may grant options to purchase shares of the Company's Common Stock
to employees, directors and consultants of the Company at such prices as may
be determined by the committee, principally equal to or greater than fair
value at the date of grant. Options granted under the Plan generally vest over
three years and expire after ten years.

F-15
<PAGE>

ITXC CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999

The Company's stock option activity is as follows:

<TABLE>
<CAPTION>
1997 1998 1999
------------------ ------------------- -------------------
Weighted Weighted Weighted
Average Average Average
Number Of Exercise Number Of Exercise Number Of Exercise
Shares Price Shares Price Shares Price
--------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Options outstanding,
beginning of year...... -- -- 1,598,340 $ 0.05 2,641,250 $ 0.21
Options granted......... 1,598,340 $0.05 1,517,910 0.35 3,487,500 2.82
Options exercised....... -- -- -- -- (613,743) (0.44)
Options cancelled....... -- -- (475,000) (0.15) (176,083) (1.95)
--------- ----- --------- ------ --------- ------
Options outstanding, end
of year................ 1,598,340 $0.05 2,641,250 $ 0.21 5,338,924 $ 1.83
========= ===== ========= ====== ========= ======
</TABLE>

The weighted-average fair value of options granted in 1997, 1998 and 1999
was $.015, $1.16 and $11.75, respectively.

The following table summarizes information about fixed price stock options
outstanding at December 31, 1999:

<TABLE>
<CAPTION>
Outstanding Exercisable
--------------------------------- -------------------------------
Number
Range of Weighted-Average Exercisable at
Exercise Number of Remaining Weighted-Average December 31, Weighted-Average
Prices Shares Contractual Life Exercise Price 1999 Exercise Price
-------- --------- ---------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C> <C>
$ 0.01-
$ 0.08 833,332 7.7 years $ 0.03 449,998 $0.04
0.26-
0.43 1,141,592 8.1 years 0.34 251,949 0.33
0.63-
0.81 1,801,250 8.5 years 0.65 -- --
1.16-
2.50 540,000 9.2 years 1.59 -- --
4.00-
12.00 949,500 9.5 years 4.69 -- --
27.00-
49.00 73,250 9.8 years 40.69 -- --
--------- ------ ------- -----
$ 0.01-
$49.00 5,338,924 $ 1.85 701,947 $0.14
========= ====== ======= =====
</TABLE>

Had the Company been accounting for its employee stock options under the
fair value method of SFAS No. 123, there would not have been a material impact
on the Company's net loss or basic and diluted net loss per share available to
common stockholders during 1999, 1998 or 1997.

During 1998 and 1999, prior to the IPO, the Company granted options to
employees to purchase an aggregate of 1,517,910 and 3,319,750 shares,
respectively, of common stock at exercise prices ranging from $.30 to $4.00.
The exercise price of each of these option grants was below the fair value of
the Company's common stock at the respective dates of grant, resulting in
aggregate non-cash compensation of approximately $760,000 and $12.4 million in
1998 and 1999, respectively, which is being amortized to expense over the
option vesting periods, generally three to seven years.

12. Stock Purchase Plan

During 1999, the Company's Board of Directors adopted the ITXC Corp.
Employee Stock Purchase Plan, intended to qualify under Section 423 of the
Internal Revenue Code. The Purchase Plan enables eligible employees to purchase
shares of the Company's Common Stock through payroll deductions, ranging from
1%

F-16
<PAGE>

ITXC CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999

to 10% of gross pay. The purchase price for Common Stock purchased under the
Purchase Plan is 85% of the lesser of the fair market value of the shares on
the first or last day of the offering period. The first offering period
commenced on October 1, 1999. The Company has initially reserved 500,000 shares
of common stock for issuance under the plan, subject to annual increases in the
number of shares covered by the Purchase Plan.

13. Earnings (Loss) Per Share

The Company computes net loss per share under the provisions of SFAS No.
128, "Earnings per Share" (SFAS 128), and SEC Staff Accounting Bulletin No. 98
(SAB 98).

Under the provisions of SFAS 128 and SAB 98, basic and diluted net loss per
share is computed by dividing the net loss available to common stockholders for
the period by the weighted average number of shares of Common Stock outstanding
during the period. The calculation of diluted net loss per share excludes
potential common shares if the effect is antidilutive. Basic earnings per share
is computed by dividing income or loss applicable to common stockholders by the
weighted average number of shares of Common Stock outstanding during this
period. The increase in the weighted average shares outstanding from 1998 to
1999 is largely attributable to the completion of the Company's IPO and
conversion of preferred stock to Common Stock, which both occurred on October
1, 1999.

Diluted earnings per share is determined in the same manner as basic
earnings per share except that the number of shares is increased assuming
exercise of dilutive stock options and warrants using the treasury stock
method. The diluted earnings per share amount equals basic earnings per share
because the Company had a net loss and the impact of the assumed exercise of
the stock options and warrants is not dilutive.

14. Geographic Data

During 1999, the Company generated approximately 7% of its revenue from
customers domiciled in countries other than the United States, primarily in
Asia. For the period from inception to December 31, 1997 and the year ended
December 31, 1998, substantially all of the Company's revenue was derived from
domestic operations.

15. Unaudited Pro Forma Information

The Company's historical capital structure prior to the completion of the
IPO is not indicative of its ongoing structure due to the automatic conversion
of all Series B and Series C Stock upon closing of the IPO on October 1, 1999.

Accordingly, the unaudited pro forma net loss per share assumes the
conversion of the Series B and Series C Stock to Common Stock as if it had been
converted at the date of issuance, even though the result is antidilutive.

F-17
<PAGE>

ITXC CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999

The following table presents the calculation of basic and diluted net loss
per share and pro forma net loss per share:

<TABLE>
<CAPTION>
December 31, 1998 December 31, 1999
------------------------------ --------------------------------
Denominator Denominator
(Weighted (Weighted
Numerator Average Per Numerator Average Per
(Net Loss) Shares) Share (Net Loss) Shares) Share
----------- ----------- ----- ------------ ----------- ------
<S> <C> <C> <C> <C> <C> <C>
Basic and diluted net
loss per common share.. $(7,221,668) 8,184,556 $(.88) $(20,437,530) 15,885,883 $(1.29)
Accretion of redemption
value of mandatorily
redeemable convertible
preferred stock........ 14,217 -- -- 772,795 -- --
Assumed conversion of
shares of mandatorily
redeemable convertible
preferred stock into
shares of common stock
at issuance............ -- 7,970,114 -- -- 12,639,736 --
----------- ---------- ----- ------------ ---------- ------
Pro forma basic and
diluted net loss per
common share........... $(7,207,451) 16,154,670 $(.45) $(19,664,735) 28,525,619 $ (.69)
=========== ========== ===== ============ ========== ======
</TABLE>

16. Subsequent Event

On March 15, 2000, the Company completed a public offering of common stock
at a price of $85 per share. The Company sold 2 million shares, generating net
proceeds to the Company of approximately $161.3 million, while certain
stockholders sold 2 million previously unregistered shares.

F-18
<PAGE>

ITXC CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
December 31, June 30,
1999 2000
------------ ------------
(Unaudited)
<S> <C> <C>
Cash and cash equivalents.......................... $ 49,017,768 $ 87,893,850
Short term investments............................. 25,378,297 123,301,086
Accounts receivable, net........................... 5,738,804 10,575,744
Prepaid expenses and other current assets.......... 1,298,102 2,403,218
------------ ------------
Total current assets............................. 81,432,971 224,173,898
Property and equipment, net........................ 15,411,656 24,773,316
Deposits and other assets.......................... 66,232 80,930
Long-term investment............................... -- 7,924,000
Service contract rights, net of amortization....... 2,950,750 2,458,860
------------ ------------
Total assets..................................... $ 99,861,609 $259,411,004
============ ============
Accounts payable and accrued liabilities........... $ 13,560,456 $ 11,811,970
Customer deposits.................................. 442,240 865,928
Current portion of capital lease obligations....... 1,620,317 1,834,332
------------ ------------
Total current liabilities........................ 15,623,013 14,512,230
Equipment note payable............................. 1,723,191 1,723,191
Capital lease obligation, less current portion..... 2,149,177 2,795,062

Commitments and contingencies
Preferred Stock.................................... -- --
Common Stock....................................... 35,816 38,532
Additional paid in capital......................... 118,089,750 297,366,043
Deferred employee compensation..................... (10,240,858) (8,120,225)
Accumulated other comprehensive income............. -- 89,059
Accumulated deficit................................ (27,518,480) (48,992,888)
------------ ------------
Total stockholders' equity....................... 80,366,228 240,380,521
Total liabilities and stockholders' equity......... $ 99,861,609 $259,411,004
============ ============
</TABLE>

See accompanying notes.

F-19
<PAGE>

ITXC CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

<TABLE>
<CAPTION>
Six Months ended June
30,
-------------------------
1999 2000
----------- ------------
<S> <C> <C>
Revenue:
Telecommunications revenue........................ $ 6,764,428 $ 33,685,300
Consulting revenue................................ 988,232 --
----------- ------------
Total revenue....................................... 7,752,660 33,685,300
Costs and expenses:
Data communications and telecommunications........ 6,890,476 30,196,332
Network operations................................ 1,282,738 2,422,938
Selling, general and administrative............... 5,674,648 12,466,098
Depreciation and amortization..................... 699,069 4,352,911
Non-cash employee compensation.................... 687,592 2,120,633
----------- ------------
Total costs and expenses............................ 15,234,523 51,558,912
Loss from operations................................ (7,481,863) (17,873,612)
Loss relating to joint venture...................... -- (8,195,000)
Interest income, net................................ 155,513 4,594,203
----------- ------------
Net loss............................................ (7,326,350) (21,474,409)
Accretion of redemption value of mandatorily
redeemable convertible preferred stock............. (443,120) --
----------- ------------
Net loss applicable to common stockholders.......... $(7,769,470) $(21,474,409)
=========== ============
Basic and diluted net loss per share applicable to
common stockholders................................ $ (0.90) $ (0.57)
=========== ============
Weighted average shares used in computation of basic
and diluted net loss per share applicable to common
stockholders....................................... 8,602,658 37,545,618
Pro forma basic and diluted net loss per share...... $ (0.29) $ (0.57)
=========== ============
Weighted average shares used in computation of pro
forma basic and diluted net loss per share......... 24,840,634 37,545,618
</TABLE>

See accompanying notes.

F-20
<PAGE>

ITXC CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

<TABLE>
<CAPTION>
Six Months ended June 30,
--------------------------
1999 2000
----------- -------------
<S> <C> <C>
Operating activities
Net loss.......................................... $(7,326,350) $ (21,474,409)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization................... 699,070 4,352,911
Provision for doubtful accounts................. 719,528 1,437,854
Loss relating to joint venture.................. -- 8,195,000
Amortization for non-cash deferred employee
compensation................................... 687,592 2,120,633
Amortization of original issue discounts on
marketable securities.......................... -- (1,359,686)
Changes in operating assets and liabilities:
Increase in accounts receivable............... (2,660,207) (6,274,794)
Increase in prepaid expenses and other
assets....................................... (346,242) (1,119,814)
Increase (decrease) in accounts payable and
accrued expenses 3,576,832 (1,748,486)
Increase (decrease) in customer deposits and
deferred revenue................................. (769,240) 423,688
----------- -------------
Net cash used in operating activities............. (5,419,017) (15,447,103)
Investing activities
Purchase of property and equipment................ (3,938,447) (11,404,667)
Purchase of service contract rights............... -- (8,110)
Purchase of available for sale securities......... (7,434) (272,412,372)
Maturities of available for sale securities....... -- 175,938,019
----------- -------------
Net cash used in investing activities............. (3,945,881) (107,887,130)
Financing activities
Proceeds from equipment line of credit............ 523,191 --
Repayment of capital lease obligations............ (37,469) (949,695)
Issuance of convertible preferred stock........... 14,931,584 --
Proceeds from issuance of common stock in second
public offering.................................. -- 161,296,000
Proceeds from short swing sale.................... -- 1,208,777
Proceeds from exercise of stock options........... 50,813 260,717
Proceeds from issuance of common stock relating to
employee stock purchase plan..................... -- 394,516
Deferred costs of initial public offering......... (244,530) --
----------- -------------
Net cash provided by financing activities......... 15,223,589 162,210,315
----------- -------------
Increase in cash.................................. 5,858,691 38,876,082
Cash and cash equivalents at beginning of period.. 3,971,237 49,017,768
----------- -------------
Cash and cash equivalents at end of period........ $ 9,829,928 $ 87,893,850
=========== =============
</TABLE>

See accompanying notes.

F-21
<PAGE>

ITXC CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. Basis of Presentation

The June 30, 1999 and 2000 financial statements have been prepared by ITXC
Corp. (the "Company" or "ITXC") and are unaudited. In the opinion of the
Company's management, all adjustments (consisting solely of normal recurring
adjustments) necessary to present fairly the Company's consolidated financial
position, results of operations and cash flows for the interim periods have
been made. Certain information and footnote disclosures required under
generally accepted accounting principles have been condensed or omitted from
the consolidated financial statements and notes thereto presented herein
pursuant to the rules and regulations of the Securities and Exchange
Commission. The condensed consolidated financial statements and notes thereto
presented herein should be read in conjunction with the Company's audited
consolidated financial statements for the year ended December 31, 1999 and
notes thereto included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1999 filed with the Securities and Exchange Commission. The
results of operations for the three and six months ended June 30, 2000 are not
necessarily indicative of the results to be expected for any other interim
period or the entire fiscal year.

2. Joint Venture

In July 1998, the Company obtained a 49% interest in ITXC Comunicacoes Ltda
("ITXC Ltda"), a newly formed joint venture, in consideration of rights to
certain technology, which provided exchange carrier long-distance services in
certain countries in South America. The Company's ownership interest in ITXC
Ltda. was accounted for under the equity method of accounting. No investment
was recorded as no consideration was paid.

The ITXC Ltda joint venture agreement, as amended, provided the Company a
call option and provided TeleNova Communicacoes Ltda and its assignee
(collectively, "TeleNova") a put option which required the Company to acquire
TeleNova's interest in ITXC Ltda which option would be triggered upon the
occurrence of certain events, at a price based either on a formula, as defined
in the agreement, or an appraisal of ITXC Ltda's fair value.

In February 2000, the Company recast this relationship. The Company issued
150,000 shares of its common stock to TeleNova and its affiliates in exchange
for: (1) equity in a private affiliate of TeleNova; (2) termination of the puts
and calls which previously could have required substantial cash or equity
outlays by the Company; and (3) certain contractual commitments by the parties.
As part of this transaction, the parties terminated the joint venture agreement
and a license agreement that the Company previously furnished to the joint
venture. During the three months ended March 31, 2000, the Company recorded a
charge of $8.2 million, representing the difference between the value of the
Company's 150,000 shares issued by the Company and the value of the equity
received by the Company, valued as of the time of the transaction.

3. Public Offering

On March 15, 2000, the Company completed a public offering of its common
stock, selling 2 million shares at a price of $85.00 per share, generating net
proceeds to the Company of approximately $161.3 million. In addition, certain
stockholders sold 2 million previously unregistered shares. Certain of these
shares were sold by an executive officer of the Company within six months after
his minor children had acquired shares of the Company's common stock. In
accordance with SEC rules, the officer remitted $1.2 million to the Company in
April 2000. Such amount is included in additional paid in capital.

4. Earnings Per Share

The Company's historical capital structure prior to the completion of its
initial public offering ("IPO") on October 1, 1999, is not indicative of its
ongoing structure due to the automatic conversion of all shares of the

F-22
<PAGE>

ITXC CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Unaudited)

Company's Series B and Series C Convertible Preferred Stock (the "Series B and
Series C Stock") upon closing of the IPO on October 1, 1999.

Accordingly, the unaudited pro forma net loss per share for the six months
ended June 30, 1999 assumes the conversion of the Series B and Series C Stock
to Common Stock as if it had been converted at the date of issuance, even
though the result is antidilutive.

The following table presents the calculation of basic and diluted net loss
per share and pro forma net loss per share:

<TABLE>
<CAPTION>
Six Months Ended June 30,
-----------------------------------------------------------------
1999 2000
------------------------------- --------------------------------
Denominator Denominator
(Weighted (Weighted
Numerator Average Per Numerator Average Per
(Net Loss) Shares) Share (Net Loss) Per Share Share
----------- ----------- ------ ------------ ----------- ------
<S> <C> <C> <C> <C> <C> <C>
Basic and diluted net
loss per common share.. $(7,769,470) 8,602,658 $(0.90) ($21,474,409) 37,545,618 $(0.57)
Accretion of redemption
value of mandatorily
redeemable convertible
preferred stock........ 443,120 -- -- -- -- --
Assumed conversion of
shares of mandatorily
redeemable convertible
preferred stock into
shares of common stock
at issuance............ -- 16,237,976 -- -- -- --
----------- ---------- ------ ------------ ---------- ------
Pro forma basic and
diluted net loss per
common share........... $(7,326,350) 24,840,634 $(0.29) $(21,474,409) 37,545,618 $(0.57)
=========== ========== ====== ============ ========== ======
</TABLE>

5. Capital Stock

On May 3, 2000, the Company's stockholders approved an increase in the
authorized Common Stock to 400,000,000 shares.

6. Subsequent Event

On July 25, 2000, the Company entered into a definitive merger agreement
with eFusion, Inc. ("eFusion"), a provider of voice-enabled applications to
service providers, e-commerce companies, and call centers to acquire its
outstanding common stock in exchange for 5,658,986 shares of the Company's
common stock, plus additional shares to cover eFusion's cash on hand at the
closing. The closing is expected to be completed before December 31, 2000, and
is subject to regulatory approval, approvals by both companies' shareholders,
and other customary closing conditions. The Company will account for this
transaction under the purchase method of accounting.

F-23
<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors
eFusion, Inc.

We have audited the accompanying balance sheets of eFusion, Inc. as of
December 31, 1998 and 1999, and the related statements of operations,
redeemable convertible preferred stock and stockholders' equity (deficit), and
cash flows for the years ended December 31, 1998 and 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of eFusion, Inc. as of
December 31, 1998 and 1999, and the results of its operations and its cash
flows for the years ended December 31, 1998 and 1999 in conformity with
accounting principles generally accepted in the United States of America.

/s/ KPMG LLP

Portland, Oregon
March 31, 2000

F-24
<PAGE>

EFUSION, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
December 31,
-------------------------- June 30,
1998 1999 2000
------------ ------------ ------------
(Unaudited)
<S> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents............ $ 902,815 $ 3,929,394 $ 13,710,878
Investments.......................... -- 317,427 --
Accounts receivable, net............. 2,699,666 832,447 297,439
Inventory, net....................... 930,532 523,414 308,454
Prepaid and other assets............. 92,562 140,525 236,830
------------ ------------ ------------
Total current assets................. 4,625,575 5,743,207 14,553,601
Property and equipment, net........... 908,982 1,444,566 2,139,721
Other assets, net..................... 12,796 -- --
------------ ------------ ------------
Total assets......................... $ 5,547,353 $ 7,187,773 $ 16,693,322
============ ============ ============
Liabilities, Redeemable Convertible
Preferred Stock
and Stockholders' Deficit
Current liabilities:
Accounts payable and accrued
expenses............................ $ 815,954 $ 1,294,142 $ 694,246
Accrued compensation and related
party payable....................... 66,515 24 --
Short-term debt...................... 1,899,980 -- --
Current portion of long-term debt.... 167,893 1,157,303 157,303
Current portion of capital lease
obligations......................... 111,087 40,455 5,025
Deferred revenue..................... 1,788,374 84,733 163,399
------------ ------------ ------------
Total current liabilities............ 4,849,803 2,576,657 1,019,973
Long-term debt, less current portion.. 1,353,932 170,411 91,760
Capital lease obligations, less
current portion...................... 40,063 -- --
------------ ------------ ------------
Total liabilities.................... 6,243,798 2,747,068 1,111,733
------------ ------------ ------------
Commitments and contingencies
Redeemable convertible preferred
stock:
Convertible preferred stock, Series
C, $.001 par value. Authorized
2,589,013 shares; issued and
outstanding 352,941, 2,589,013 and
2,589,013 (unaudited) shares at
December 31, 1998 and 1999 and June
30, 2000, respectively (liquidation
preference $18,123,091)............. 2,999,999 17,190,599 17,190,599
Convertible preferred stock, Series
D, $.001 par value. Authorized
2,500,000 shares; issued and
outstanding -0-, -0- and 2,491,102
(unaudited) shares at December 31,
1998 and 1999 and June 30, 2000,
respectively (liquidation preference
$19,928,816 (unaudited))............ -- -- 20,356,391
------------ ------------ ------------
Total redeemable convertible
preferred stock..................... 2,999,999 17,190,599 37,546,990
------------ ------------ ------------
Stockholders' deficit:
Convertible preferred stock,
authorized 15,000,000 shares
convertible preferred stock, Series
A and B, $.001 par value. Authorized
4,928,736 shares; issued and
outstanding 4,428,736, 4,428,736 and
4,428,736 (unaudited) shares at
December 31, 1998 and 1999 and June
30, 2000, respectively (liquidation
preference $11,010,000)............. 4,429 4,429 4,429
Common stock, $.001 par value.
Authorized 30,000,000 shares; issued
and outstanding 4,959,405, 5,214,532
and 5,441,280 (unaudited) shares at
December 31, 1998 and 1999 and June
30, 2000, respectively.............. 3,859 4,114 4,341
Additional paid-in capital........... 12,020,201 12,104,562 12,208,778
Stock warrants....................... 1,526,824 1,526,824 1,564,010
Accumulated deficit.................. (17,251,757) (26,389,823) (35,746,959)
------------ ------------ ------------
Total stockholders' deficit.......... (3,696,444) (12,749,894) (21,965,401)
------------ ------------ ------------
Total liabilities, redeemable
convertible preferred stock and
stockholders' deficit............... $ 5,547,353 $ 7,187,773 $ 16,693,322
============ ============ ============
</TABLE>

See accompanying notes to financial statements.

F-25
<PAGE>

EFUSION, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
For the years ended For the six months
December 31, ended June 30,
------------------------ ------------------------
1998 1999 1999 2000
----------- ----------- ----------- -----------
(Unaudited)
<S> <C> <C> <C> <C>
Revenues, net:
Product and other
revenue................ $ 3,427,110 $ 3,517,433 $ 1,924,274 $ 236,045
Application service
revenue................ -- -- -- 71,530
----------- ----------- ----------- -----------
Total revenues........ 3,427,110 3,517,433 1,924,274 307,575
----------- ----------- ----------- -----------
Operating expenses:
Cost of sales--product
and other.............. 1,203,271 1,465,843 823,441 65,449
Network operations...... -- -- -- 1,087,897
Research and
development............ 4,032,203 3,689,632 1,726,122 2,588,830
Sales and marketing..... 5,306,407 5,699,515 2,654,139 3,911,034
General and
administrative......... 1,312,666 1,941,216 700,021 1,753,019
----------- ----------- ----------- -----------
Total operating
expenses............. 11,854,547 12,796,206 5,903,723 9,406,229
----------- ----------- ----------- -----------
Loss from operations.. (8,427,437) (9,278,773) (3,979,449) (9,098,654)
Other income (expense):
Interest income......... 111,978 248,815 73,491 229,648
Interest expense........ (139,250) (108,108) (85,249) (20,758)
----------- ----------- ----------- -----------
Loss before provision
for income taxes..... (8,454,709) (9,138,066) (3,991,207) (8,889,764)
Provision for income
taxes.................... -- -- -- --
----------- ----------- ----------- -----------
Net loss.............. (8,454,709) (9,138,066) (3,991,207) (8,889,764)
----------- ----------- ----------- -----------
Accretion of preferred
stock redemption......... -- -- -- 467,372
----------- ----------- ----------- -----------
Net loss attributed to
common stockholders.. $(8,454,709) $(9,138,066) $(3,991,207) $(9,357,136)
=========== =========== =========== ===========
Net loss per common
share--basic and
diluted.................. $ (2.15) $ (2.00) $ (0.92) $ (1.81)
=========== =========== =========== ===========
Shares used in computing
net loss per common
share--basic and
diluted.................. 3,930,224 4,565,573 4,356,843 5,174,626
=========== =========== =========== ===========
</TABLE>

See accompanying notes to financial statements.

F-26
<PAGE>

EFUSION, INC.

STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK
AND STOCKHOLDERS' EQUITY (DEFICIT)

For the years ended December 31, 1998 and 1999
and the six months ended June 30, 2000 (unaudited)

<TABLE>
<CAPTION>
Redeemable convertible Convertible Total
preferred stock preferred stock Common stock Additional stockholders'
----------------------- ---------------- ----------------- paid-in Stock Accumulated equity
Shares Amount Shares Amount Shares Amount capital warrants deficit (deficit)
----------------------- --------- ------ --------- ------ ----------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
December 31,
1997............ -- $ -- 4,428,736 $4,429 5,250,000 $4,150 $12,004,571 $1,526,824 $ (8,797,048) $ 4,742,926
Issuance of
preferred
stock........... 352,941 2,999,999 -- -- -- -- -- -- -- --
Repurchase of
common stock.... -- -- -- -- (385,148) (385) (1,541) -- -- (1,926)
Exercise of
stock options... -- -- -- -- 94,553 94 17,171 -- -- 17,265
Net loss........ -- -- -- -- -- -- -- -- (8,454,709) (8,454,709)
---------- ------------ --------- ------ --------- ------ ----------- ---------- ------------ ------------
Balance at
December 31,
1998............ 352,941 2,999,999 4,428,736 4,429 4,959,405 3,859 12,020,201 1,526,824 (17,251,757) (3,696,444)
Issuance of
preferred
stock........... 2,236,072 14,190,600 -- -- -- -- -- -- -- --
Repurchase of
common stock.... -- -- -- -- (31,250) (31) (125) -- -- (156)
Exercise of
stock options... -- -- -- -- 286,377 286 51,112 -- -- 51,398
Issuance of
options to
nonemployees.... -- -- -- -- -- -- 33,374 -- -- 33,374
Net loss........ -- -- -- -- -- -- -- -- (9,138,066) (9,138,066)
---------- ------------ --------- ------ --------- ------ ----------- ---------- ------------ ------------
Balance at
December 31,
1999............ 2,589,013 17,190,599 4,428,736 4,429 5,214,532 4,114 12,104,562 1,526,824 (26,389,823) (12,749,894)
Issuance of
preferred stock
(unaudited)..... 2,491,102 19,889,019 -- -- -- -- -- -- -- --
Exercise of
stock options
(unaudited)..... -- -- -- -- 226,748 227 96,196 -- -- 96,423
Issuance of
options to
nonemployees
(unaudited)..... -- -- -- -- -- -- 8,020 -- -- 8,020
Issuance of
stock warrants
(unaudited)..... -- -- -- -- -- -- -- 37,186 -- 37,186
Accretion of
preferred stock
redemption
preference
(unaudited)..... -- 467,372 -- -- -- -- -- -- (467,372) (467,372)
Net loss
(unaudited)..... -- -- -- -- -- -- -- -- (8,889,764) (8,889,764)
---------- ------------ --------- ------ --------- ------ ----------- ---------- ------------ ------------
Balance at June
30, 2000
(unaudited)..... 5,080,115 $ 37,546,990 4,428,736 $4,429 5,441,280 $4,341 $12,208,778 $1,564,010 $(35,746,959) $(21,965,401)
========== ============ ========= ====== ========= ====== =========== ========== ============ ============
</TABLE>

See accompanying notes to financial statements.

F-27
<PAGE>

EFUSION, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
For the years ended For the six months
December 31, ended June 30,
------------------------ ------------------------
1998 1999 1999 2000
----------- ----------- ----------- -----------
(Unaudited)
<S> <C> <C> <C> <C>
Cash flows form operating
activities:
Net loss.................. $(8,454,709) $(9,138,066) $(3,991,207) $(8,889,764)
Adjustments to reconcile
net loss to net cash used
in operating activities:
Noncash compensation
expense.................. -- 33,374 30,040 45,206
Depreciation and
amortization............. 445,497 578,891 275,407 449,581
Loss on disposal of
property and equipment... 68,204 17,136 -- 22,436
Change in certain assets
and liabilities:
Accounts receivable...... (2,482,495) 1,867,219 2,593,210 535,008
Inventory................ (350,845) 407,118 724,917 214,960
Prepaid expenses and
other assets............ 32,751 (47,963) (24,194) (96,305)
Accounts payable and
accrued expenses........ 586,056 411,697 (499,264) (599,920)
Deferred revenue......... 1,700,149 (1,703,641) (1,728,967) 78,666
----------- ----------- ----------- -----------
Net cash used in
operating activities... (8,455,392) (7,574,235) (2,620,058) (8,240,132)
----------- ----------- ----------- -----------
Cash used in investing
activities:
Purchase of property and
equipment................ (617,341) (1,118,815) (245,455) (1,167,172)
Purchase of investments... (1,178,952) (8,459,397) (7,866,694) --
Sale/maturity of
investments.............. 4,439,702 8,141,970 -- 317,427
Increase in other assets.. (655) -- -- --
----------- ----------- ----------- -----------
Net cash provided by
(used in) investing
activities............. 2,642,754 (1,436,242) (8,112,149) (849,745)
----------- ----------- ----------- -----------
Cash flows from financing
activities:
Borrowings of short-term
debt..................... 1,899,980 -- -- 500,000
Payments of long-term
debt..................... 272,668 (194,111) (115,459) (1,078,651)
Principal payments under
capital lease
obligations.............. (104,493) (110,695) (58,120) (35,430)
Proceeds from issuance of
preferred and common
stock.................... 3,017,264 12,342,018 12,318,722 19,485,442
Repurchase of common
stock.................... (1,926) (156) -- --
----------- ----------- ----------- -----------
Net cash provided by
financing activities... 5,083,493 12,037,056 12,145,143 18,871,361
----------- ----------- ----------- -----------
Net increase (decrease)
in cash and cash
equivalents............ (729,145) 3,026,579 1,412,936 9,781,484
Cash and cash equivalents
at beginning of period.... 1,631,960 902,815 902,815 3,929,394
----------- ----------- ----------- -----------
Cash and cash equivalents
at end of period.......... $ 902,815 $ 3,929,394 $ 2,315,751 $13,710,878
=========== =========== =========== ===========
Supplemental disclosure of
cash flow information:
Cash paid during the
period for:
Interest.................. $ 130,250 $ 108,108 $ 26,261 $ 8,537
Supplemental disclosure of
noncash activities:
Conversion of short-term
debt to preferred stock.. $ -- $ 1,899,980 $ 1,899,980 $ 500,000
</TABLE>

See accompanying notes to financial statements.

F-28
<PAGE>

EFUSION, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 1998 and 1999

(1) Summary of Significant Accounting Policies

(a) Company Background

eFusion, Inc. (eFusion) provides a suite of value-added Internet
applications and services that seamlessly integrate Web interaction with real-
time communication. eFusion's application service provider business model
allows network providers and eCommerce companies to differentiate their
services to businesses and consumers and allows businesses to better interact
with their customers through enhanced communication. eFusion was incorporated
in Oregon on April 5, 1996 and began operations on August 12, 1996.

(b) Unaudited Quarterly Information

The financial information included herein for the six-month periods ended
June 30, 1999 and 2000 is unaudited; however, such information reflects all
adjustments consisting only of normal recurring adjustments which are, in the
opinion of management, necessary for a fair presentation of the financial
position, results of operations and cash flows for the interim periods. The
interim financial statements should be read in conjunction with the financial
statements and the notes included in the financial statements. The results of
operations for the interim period presented are not necessarily indicative of
the results to be expected for the full year.

eFusion classifies all highly liquid investments purchased with an original
maturity of three months or less to be cash and cash equivalents. Cash
equivalents of $707,214, $1,986,163 and $12,905,758 (unaudited) at December 31,
1998 and 1999 and June 30, 2000, respectively, consist of short-term bonds with
original maturities of three months or less.

(d) Investments

Investments consist of commercial paper which have maturities greater than
three months at the time of purchase by eFusion. These investments are
classified as held-to-maturity and are recorded at amortized cost which
approximates fair value.

(e) Accounts Receivable

Credit is extended to customers as deemed necessary and generally does not
require collateral. Management evaluates customer information and historical
statistics in providing for an allowance of doubtful accounts. Historically,
eFusion has incurred no write-offs of accounts receivable. At December 31, 1998
and 1999, the allowance for doubtful accounts was $-0-.

(f) Inventory

Inventory is stated at the lower of cost or market (net realizable value).

(g) Property and Equipment

Property and equipment is recorded at cost. Property and equipment recorded
under capital lease arrangements are stated at the lower of the present value
of the minimum lease payments at the beginning of the lease term or the fair
value of the leased assets at the inception of the lease.

F-29
<PAGE>

EFUSION, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

December 31, 1998 and 1999

Depreciation and amortization are calculated by using the straight-line
method over the assets' estimated useful lives, generally three years.
Property and equipment acquired under capital leases are amortized using the
straight-line method over the shorter of the lease term or the estimated
useful life of the assets. Maintenance and repairs are expensed as incurred.

(h) Other Assets

At December 31, 1998, other noncurrent assets primarily consisted of
organizational costs. In accordance with SOP 98-5, Reporting on the Cost of
Start-up Activities, these costs were written off as of January 1, 1999.

(i) Income Taxes

eFusion accounts for income taxes under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences of events that have been included in the financial statements and
tax returns. Under this method, deferred tax assets and liabilities are
determined based on the difference between the financial statement and tax
bases of assets and liabilities using enacted tax rates in effect for the year
in which the differences are expected to be recovered or settled.

Valuation allowances are established to reduce deferred tax assets to the
amount expected to be realized.

(j) Revenue Recognition

eFusion generates revenue from the sale of products, licenses, system
rentals, service and maintenance agreements, and Application Service Provider
(ASP) usage or subscriptions.

License fees are generally recognized when a non-cancelable license
agreement has been signed, the software has been shipped, there are no
uncertainties surrounding product acceptance, the fees are fixed and
determinable and collection is probable.

Revenue from the sale of products and software licenses are recognized at
the time of shipment, except for those that have significant post-delivery
obligations. When significant post-delivery obligations exist, revenue is
deferred until no such significant obligations remain. Typically eFusion's
post-delivery obligations are for installation and/or acceptance.

System rental revenue primarily represents income earned from product
evaluations, which typically last approximately six months. Service and
maintenance revenue consist primarily of installation, training, engineer
support and maintenance revenues. Service and maintenance agreements typically
last twelve months. These revenues are recognized ratably over the term of the
agreement.

In November 1999, eFusion implemented its ASP business model. ASP revenue
is generated through actual use by customers of eFusion provided application
services. Revenues are recognized when the customer uses the product.

(k) Warranty

eFusion warrants its hardware products against defects. Estimated future
warranty obligations are charged to operations ratably over the warranty
period, typically twelve months. eFusion has a warranty reserve of $77,413 and
$44,665 at December 31, 1998 and 1999, respectively.

F-30
<PAGE>

EFUSION, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

December 31, 1998 and 1999

(l) Research and Development

Expenditures for research and development are expensed as incurred.

(m) Fair Value of Financial Instruments

The carrying amounts reported in the balance sheet for cash and cash
equivalents, investments, accounts receivable, accounts payable, accrued
liabilities and deferred revenue approximate fair values due to the short-term
maturities of those instruments. The carrying amount of capital leases and debt
approximate fair value as the stated interest rates reflect current market
rates. Fair value estimates are made at a specific point in time, based on
relevant market information about the financial instruments when available.
These estimates are subjective in nature and involve uncertainties and matters
of significant judgment and, therefore, cannot be determined with precision.

(n) Concentrations of Credit Risk

During 1998 and 1999, 29% and 43%, respectively, of total revenue was from
products sold outside the United States. Operations and substantially all
assets reside in the United States. For the year ended December 31, 1998, two
customers accounted for 36% and 16%, respectively, of eFusion's total revenues.
For the year ended December 31, 1999, two customers accounted for 55% and 28%,
respectively, of eFusion's total revenues.

At December 31, 1998 and 1999, eFusion had accounts receivable from one
customer, each year, representing approximately 79% and 83%, respectively, of
trade accounts receivable. Loss or non-performance by this significant customer
could adversely affect eFusion's financial position, liquidity or results of
operations.

eFusion is subject to concentrations of credit risk from its cash and cash
equivalents, investments and trade receivables. eFusion limits its exposure to
credit risk associated with cash and cash equivalents and investments by
placing its cash and cash equivalents with a major financial institution and by
investing in investment-grade securities.

(o) Software Development Costs

eFusion accounts for software development costs in accordance with Statement
of Financial Accounting Standards No. 86, Accounting for the Costs of Computer
Software to be Sold, Leased or Otherwise Marketed. Software development costs
are to be capitalized beginning when a product's technological feasibility has
been established and ending when a product is made available for general
release to customers. To date, the establishment of technological feasibility
of eFusion's products has occurred shortly before general release and,
accordingly, no costs have been capitalized.

Internal use software development costs are accounted for in accordance with
SOP 98-1, Accounting for the Costs of Computer Software Developed or Obtained
for Internal Use. Costs incurred in the preliminary project stage are expensed
as incurred and costs incurred in the application and development stage, which
meet the capitalization criteria, are capitalized and amortized on a straight-
line basis over the estimated useful life of the asset. To date, no costs have
been capitalized.

(p) Advertising Cost

The cost of advertising is expensed as incurred. Advertising costs were not
significant for the years ended December 31, 1998 and 1999.

F-31
<PAGE>

EFUSION, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

December 31, 1998 and 1999

(q) Net Loss Per Share

eFusion follows the provisions of Statement of Financial Accounting
Standards No. 128, Earnings Per Share, (SFAS 128) and SEC Staff Accounting
Bulletin No. 98 (SAB No. 98). Under the provisions of SFAS 128) and SAB No. 98,
basic and diluted net loss per share is computed by dividing net loss available
to common shareholders by the weighted-average number of common shares
outstanding during the period. Diluted net loss per share has not been
presented as the effect of the assumed exercise of stock options, restricted
stock warrants for preferred stock and convertible securities is antidilutive
due to eFusion's net loss.

The following table sets forth the periods indicated the weighted-average
potential shares of common stock issuable under stock options, warrants and
restricted stock using the treasury method, convertible preferred stock on an
if-converted basis, which are not included in calculating net loss per share
due to their antidilutive effect:

<TABLE>
<CAPTION>
Years ended Six months ended
December 31, June 30,
------------------- -------------------
1998 1999 1999 2000
--------- --------- --------- ---------
(Unaudited)
<S> <C> <C> <C> <C>
Shares issuable under stock options.... 1,070,796 852,231 510,048 286,242
Warrants............................... -- -- -- 7,494
Restricted stock....................... 1,341,786 913,343 1,022,761 284,358
Weighted-average shares of common stock
issuable upon conversion of preferred
stock................................. 4,551,540 6,222,546 5,444,241 8,529,162
--------- --------- --------- ---------
6,964,122 7,988,120 6,977,050 9,107,256
========= ========= ========= =========
</TABLE>

(r) Segment Reporting

Effective January 1, 1998, eFusion adopted the provisions of SFAS No. 131,
Disclosures About Segments of an Enterprise and Related Information. eFusion
identifies its operating segment based on business activities, management
responsibilities and geographic location. During all years presented, eFusion
operated in one business segment providing internet service solutions.

(s) Stock-Based Compensation

eFusion accounts for stock-based compensation using the Financial Accounting
Standard Board's (FASB) Statement of Financial Accounting Standards No. 123
(SFAS No. 123), Accounting for Stock-Based Compensation. This statement permits
a company to choose either a fair value based method of accounting for its
stock-based compensation arrangements or to comply with the current Accounting
Principles Board Opinion 25 (APB 25) intrinsic value-based method adding pro
forma disclosures of net loss computed as if the fair value-based method had
been applied in the financial statements. eFusion applies SFAS No. 123 by
retaining the APB 25 (and interpretations) method of accounting for stock-based
compensation for employees with annual pro forma disclosure of net loss eFusion
accounts for stock and stock options issued to non-employees in accordance with
the provisions of SFAS No. 123 and Emerging Issues Task Force (EITF) consensus
on Issue No. 96-18, Accounting for Equity Instruments that are Issued to Other
than Employees for Acquiring, or in Conjunction with Selling, Goods or
Services.

F-32
<PAGE>

EFUSION, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

December 31, 1998 and 1999

(t) Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, as well as revenues and expenses reported for the periods
presented. Actual results could differ from those estimates.

(u) Risk of Technological Change

A substantial portion of eFusion's revenues each year are generated from the
development software for use over the Internet. In the extremely competitive
industry environment in which eFusion operates, such product generation,
development and marketing processes are uncertain and complex, requiring
accurate prediction of demand as well as successful management of various
development risks inherent to the Internet. In light of these dependencies, it
is possible that failure to successfully manage future changes in technology
with respect to the Internet could have long-term impact on eFusion's growth
and results of operations.

(v) Effect of Recent Accounting Pronouncements

The Financial Accounting Standards Board issued Statement No. 133,
Accounting for Derivative Instruments and Hedging Activities, (SFAS No. 133) in
June 1998. This statement establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the balance sheet
and measure those instruments at fair value. If certain conditions are met, a
derivative may be specifically designated as a hedge. The accounting for
changes in the fair value of a derivative depends on the intended use of the
derivative and the resulting designation. SFAS No. 133, as amended by SFAS No.
137, is effective for all fiscal quarters of fiscal years beginning after June
15, 2000. The adoption of this statement is not expected to have a material
impact on eFusion's financial statements.

In December 31, 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 (SAB 101). SAB 101 summarizes certain areas of the
Staff's views in applying generally accepted accounting principles to revenue
recognition in financial statements. In June 2000, SAB 101B was issued which
defers the implementation date of SAB 101 until October 1, 2000. eFusion does
not expect that this statement will have a significant impact on its financial
condition or results of operations.

In March 2000, the Financial Accounting Standards Board, or FASB, issued
Interpretation No. 44, Accounting for Certain Transactions Involving Stock
Compensation--an Interpretation of APB Opinion No. 25, (FIN 44). FIN 44 applies
prospectively to new awards, exchanges of awards in a business combination,
modifications to outstanding awards, and changes in grantee status that occur
on or after July 1, 2000, except for the provisions related to repricings and
the definition of an employee, which apply to awards issued after December 15,
1998. The provisions related to modifications to fixed stock options awards to
add a reload feature are effective for awards modified after January 12, 2000.
eFusion does not expect that this statement will have a significant impact on
our financial condition or results of operations.

F-33
<PAGE>

EFUSION, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

December 31, 1998 and 1999

(2) Balance Sheet Components

(a) Inventory

Inventory, net of reserves, consists of the following:
<TABLE>
<CAPTION>
December 31,
----------------- June 30,
1998 1999 2000
-------- -------- -----------
(Unaudited)
<S> <C> <C> <C>
Raw materials.................................. $183,017 $319,275 $267,536
Work in progress............................... 27,493 127,803 6,229
Finished goods................................. 720,022 76,336 34,689
-------- -------- --------
$930,532 $523,414 $308,454
======== ======== ========
</TABLE>

(b) Property and Equipment

Property and equipment consist of the following:

<TABLE>
<CAPTION>
December 31,
--------------------- June 30,
1998 1999 2000
---------- ---------- -----------
(Unaudited)
<S> <C> <C> <C>
Property and equipment under capital
leases.................................. $ 305,330 $ 266,000 $ 266,000
Furniture and fixtures................... 302,539 336,547 377,684
Equipment................................ 911,216 1,990,044 2,954,831
Software................................. 28,061 -- 134,080
---------- ---------- ----------
1,547,146 2,592,591 3,732,595

Less accumulated depreciation and
amortization............................ 638,164 1,148,025 1,592,874
---------- ---------- ----------
$ 908,982 $1,444,566 $2,139,721
========== ========== ==========
</TABLE>

Accumulated amortization for property and equipment under capital leases was
$169,421, $231,335 and $255,991 (unaudited) as of December 31, 1998 and 1999
and June 30, 2000, respectively.

Accounts payable and accrued liabilities consist of the following:

<TABLE>
<CAPTION>
December 31,
------------------- June 30,
1998 1999 2000
-------- ---------- -----------
(Unaudited)
<S> <C> <C> <C>
Accounts payable............................. $476,972 $ 644,997 $317,431
Accrued liabilities.......................... 338,982 649,145 376,815
-------- ---------- --------
$815,954 $1,294,142 $694,246
======== ========== ========
</TABLE>

(3) Short-term Debt

There is no short-term debt at December 31, 1999. During 1999, the bridge
loans entered into in 1998 were converted to preferred stock in accordance with
their original terms. The bridge loans were considered related party
agreements, which were convertible to preferred stock after the Series C
financing was complete. The bridge loans represented money provided to eFusion
from key investors, and were recorded as short-term debt at December 31, 1998.

F-34
<PAGE>

EFUSION, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

December 31, 1998 and 1999

(4) Long-term Debt

Notes payable consist of the following:

<TABLE>
<CAPTION>
December 31,
--------------------- June 30,
1998 1999 2000
---------- ---------- -----------
(Unaudited)
<S> <C> <C> <C>
Note payable to a bank due in monthly
installments of $17,088, plus interest at
prime plus 2% (10.5% at December 31, 1999),
maturing on March 30, 1999, secured by the
assets purchased with the borrowings....... $ 49,916 $ -- $ --
Note payable to a bank due in monthly
installments of $13,108, plus interest at
prime plus 1.5% (10.0% at December 31,
1999), maturing on March 30, 2002, secured
by the assets purchased with the
borrowings................................. 471,909 327,714 249,063
Note payable to a shareholder due in full on
May 1, 2000, noninterest bearing........... 1,000,000 1,000,000 --
---------- ---------- --------

1,521,825 1,327,714 249,063
Less current portion........................ 167,893 1,157,303 157,303
---------- ---------- --------
$1,353,932 $ 170,411 $ 91,760
========== ========== ========
</TABLE>

The note payable maturing on March 30, 2002 was originally a $1,000,000 line
of credit, which converted to a note payable on February 17, 1999. Due to the
conversion, the outstanding balance has been included in the accompanying
financial statements as long-term debt at December 31, 1998 and 1999. eFusion's
notes payable to the bank contain certain financial covenants. eFusion is in
compliance with the covenants at December 31, 1999.

eFusion's notes payable to the bank contain certain financial covenants.
eFusion is in compliance with the covenants at December 31, 1999.

The schedule of future principal payments on long-term debt is as follows:

<TABLE>
<S> <C>
Year ending December 31:
2000........................................................ $1,157,303
2001........................................................ 157,303
2002........................................................ 13,108
----------
$1,327,714
==========
</TABLE>

(5) Leases

eFusion has leased property and equipment under a $350,000 lease line of
credit. Each lease balance is payable over a three year period at an interest
rate of approximately 15.4% beginning on the date the lease is finalized. The
leases are accounted for as capital leases. At December 31, 1998 and 1999,
eFusion had an outstanding balance of $151,150 and $40,455, respectively,
against its lease line of credit.

F-35
<PAGE>

EFUSION, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

December 31, 1998 and 1999

Future minimum lease payments under capital leases as of December 31, 1999
is as follows:

<TABLE>
<CAPTION>
Capital
leases
-------
<S> <C>
Year ending December 31:
2000........................................................... $42,593
-------
Total minimum lease payments.................................. 42,593
Less amount representing interest............................... 2,138
-------
Present value of net minimum capital lease payments........... 40,455
Less current portion of capital lease obligations............... 40,455
-------
$ --
=======
</TABLE>

(6) Stockholders' Equity

eFusion has authorized 2,510,000 shares of Series A preferred stock with
2,510,000 shares issued and outstanding as of December 31, 1998 and 1999 and
June 30, 2000 (unaudited), respectively. eFusion has authorized 2,418,736
shares of Series B preferred stock with 1,918,736 shares issued and outstanding
as of December 31, 1998 and 1999 and June 30, 2000 (unaudited), respectively.

(a) Series A, B and C Preferred Stock

The terms of the Series A, B and C preferred stock are:

. The holders of preferred stock are entitled to exclusive voting rights
whereby they receive the number of votes equal to the number of shares
of common stock which the shares of preferred stock could be converted.

. Upon declaration of the Board of Directors, preferred stockholders are
entitled to receive dividends at a rate of 8% per share of the original
issue price of each series of preferred shares per annum. The right to
receive dividends on preferred stock is noncumulative. No dividends may
be paid to holders of common stock until all declared dividends on
preferred stock have been paid.

. Upon dissolution, liquidation, or winding-up of the affairs of eFusion,
the holders of Series A, B and C preferred stock shall receive
preference over the common stockholders. The liquidation value per
share is equal to the applicable original purchase price of each series
of preferred shares for outstanding shares of Series A, B and C
preferred stock, adjusted for any stock dividends, stock splits, or
dividends declared but unpaid.

. Each share of preferred stock is voluntarily convertible into common
stock at any time after the date of issuance at an initial rate of 1-
to-1, subject to eFusion's restated Articles of Incorporation. For
Series A and B preferred stock, conversion is automatic upon the
closing of a public offering of eFusion's common stock which results in
aggregate proceeds of at least $10,000,000 and at a public offering
price of at least $5.00 per share. For Series C preferred stock,
conversion is automatic upon closing of a public offering of eFusion's
common stock which results in aggregate proceeds of at least
$40,000,000 and at a public offering price of at least $12.00 per
share.

. The holders of Series C preferred stock may at any time after the fifth
anniversary of the initial purchase date request eFusion to redeem the
outstanding Series C preferred stock. The redemption price shall equal
the original issue price per share, as adjusted for any stock split,
combination or similar recapitalization, plus any declared and unpaid
dividends on the Series C preferred stock.

F-36
<PAGE>

EFUSION, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

December 31, 1998 and 1999

As of December 31, 1998 and 1999, eFusion had reserved 5,281,677 and
7,517,479 shares, respectively, of its common stock pursuant to the conversion
privileges of the Series A, B and C preferred stock and the preferred stock
warrants.

(b) Warrants

As part of a Marketing Agreement, on June 24, 1997, eFusion agreed to grant
a fully vested warrant to purchase up to 500,000 shares of Series B preferred
stock at an exercise and weighted average price of $7.00 per share to a product
marketer, who is also a shareholder. The warrant is exercisable at the earlier
of June 24, 2007, the closing of a firm commitment underwritten public offering
of not less than $10,000,000 or upon the sale of eFusion. The fair value of the
warrant was calculated using the Black-Scholes model with the following
assumptions: expected dividends, zero; risk-free interest rate, 6.49%;
volatility, 60%; and contractual term of ten years. The fair value of the
warrant was $1,526,824.

eFusion has a Stock Option Plan (the Plan) under which it has reserved
3,700,000 shares of common stock for grants. As of December 31, 1999, 3,527,448
shares have been granted pursuant to the Plan. Options granted under the Plan
may be designated as incentive or nonqualified at the discretion of the Plan
administrator.

Option prices for incentive stock options are set at not less than the
deemed fair market value of the common stock at the date of the grant. Options
granted to new employees vest 25% after the first year of employment and in an
equal amount over the following 36 months of employment. Options granted to
existing employees vest in equal amounts over 48 months. Options are contingent
on continued employment with eFusion and expire ten years from the date of
grant.

The per share weighted-average fair value of stock options granted during
1998 and 1999 was $0.35 and $0.45, respectively, on the date of grant using the
minimum value option pricing model with the following weighted-average
assumptions: 1998 and 1999--expected dividend yield 0%, risk-free interest rate
of 6.0%, and an expected life of 5 years.

eFusion applies APB Opinion No. 25 in accounting for its Plan and,
accordingly, no compensation cost has been recognized for its stock options to
employees in the financial statements. Had eFusion determined compensation cost
based on the fair value at the grant date for its stock options under SFAS No.
123, eFusion's net loss would have been increased to the pro forma amounts
indicated below:

<TABLE>
<CAPTION>
December 31,
------------------------ June 30,
1998 1999 2000
----------- ----------- -----------
(Unaudited)
<S> <C> <C> <C>
Net loss attributed to common
stockholders:
As reported...................... $(8,454,709) $(9,138,066) $(9,357,136)
Pro forma........................ (8,554,630) (9,444,161) (9,485,375)
Net loss per share:
As reported...................... (2.15) (2.00) (1.81)
Pro forma........................ (2.18) (2.07) (1.83)
</TABLE>

F-37
<PAGE>

EFUSION, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

December 31, 1998 and 1999

Activity under the Plan is as follows:

<TABLE>
<CAPTION>
Weighted-
average
Number exercise
of shares price
--------- ---------
<S> <C> <C>
Options outstanding at December 31, 1997............. 1,352,950 $0.19
Granted............................................ 701,248 1.35
Exercised.......................................... (94,553) 0.18
Canceled........................................... (160,861) 0.52
---------
Options outstanding at December 31, 1998............. 1,798,784 0.61
Granted............................................ 1,473,250 1.75
Exercised.......................................... (286,377) 1.64
Canceled........................................... (570,897) 0.69
---------
Options outstanding at December 31, 1999............. 2,414,760 1.33
Granted (unaudited)................................ 472,930 1.86
Exercised (unaudited).............................. (226,748) .42
Canceled (unaudited)............................... (273,669) 1.61
---------
Options outstanding at June 30, 2000 (unaudited)..... 2,387,273 $1.48
=========
</TABLE>

The following table summarizes information regarding stock options
outstanding and exercisable as of December 31, 1999:

<TABLE>
<CAPTION>
Options outstanding Options exercisable
---------------------------------------------------- -------------------------
Number Weighted- Number
outstanding average Weighted- exercisable Weighted-
Range of as of remaining average as of average
exercise December 31, contractual exercise December 31, exercise
prices 1999 life price 1999 price
-------- ------------ ----------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C>
$ 0.10 413,263 8 $0.10 317,093 $ 0.10
0.44 134,896 8 0.44 80,204 0.44
0.75 44,400 9 0.75 20,119 0.75
1.00 132,250 9 1.00 57,613 1.00
1.75 1,689,951 10 1.75 133,156 1.75
--------- -------
$ 0.10-1.75 2,414,760 9 $1.33 608,185 $ 0.61
========= =======
</TABLE>

(d) Stock Repurchase Agreement

As of December 31, 1996, eFusion had sold 3,150,000 shares of common stock
for $0.001 to senior management of eFusion under agreements which allow
eFusion, at its option, to repurchase shares of common stock at $0.005 per
share. Under the repurchase agreements, 25% of the shares vested immediately
and the remaining 75% subject to repurchase are reduced in equal increments
over the following 48 months. During 1998 and 1999, 385,148 and 31,250 common
shares, respectively, were repurchased by eFusion at $0.005 per share.

Under the terms of the repurchase agreements, if eFusion is acquired by
merger, consolidation or sale of assets, the repurchase agreements will cease
to apply.

F-38
<PAGE>

EFUSION, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

December 31, 1998 and 1999

(7) Income Taxes

eFusion incurred a loss for both financial reporting and tax return purposes
and, as such, there was no current or deferred tax provision for the year 1999.
The reconciliation of the statutory federal income tax rate to eFusion's
effective income tax rate is as follows:

<TABLE>
<CAPTION>
1998 1999
---- ----
<S> <C> <C>
Federal statutory rate....................................... (34)% (34)%
Increases (decreases) resulting from:
State income taxes, net of federal tax benefit............. (4) (4)
Change in valuation allowance.............................. 40 40
Federal and state research credits......................... (2) (2)
--- ---
--% --%
=== ===
</TABLE>

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The tax effects of
significant items comprising eFusion's deferred tax assets and deferred tax
liabilities as of December 31 are as follows:

<TABLE>
<CAPTION>
1998 1999
---------- -----------
<S> <C> <C>
Deferred tax assets:
Research and experimentation credit
carryforwards.................................... $ 273,000 $ 529,000
Net operating loss carryforwards.................. 5,930,000 9,407,000
Inventory and warranty reserves................... 52,000 37,000
Other............................................. 28,329 43,000
---------- -----------
Total gross deferred tax assets................. 6,283,329 10,016,000
Less valuation allowance.......................... 6,283,329 10,016,000
---------- -----------
Net deferred tax assets......................... $ -- $ --
========== ===========
</TABLE>
At December 31, 1999, eFusion has federal and state net operating loss and
research and experimentation credit carryforwards of approximately $24,525,000
and $613,000, respectively. These carryforwards will expire through 2019 if not
used by eFusion to reduce income taxes payable in future periods.

A provision of the Internal Revenue Code requires the utilization of net
operating losses and research and experimentation credits be limited when there
is a change of more than 50% in ownership of eFusion. Such a change occurred
with the sale of preferred stock in May of 1999. Accordingly, the utilization
of the net operating loss carryforwards generated from periods prior to May of
1999 is limited.

(8) Retirement Benefit Plan

eFusion sponsors a defined contribution 401(k) plan (the Plan). Employees in
the United States who are at least 18 years old and have 30 days of service are
eligible to participate in the Plan. Participants may defer up to 20% of
eligible compensation. Currently, eFusion does not provide matching
contributions for the Plan.

(9) Transactions with Related Parties

Included in accounts receivable are receivables from investors for sales in
the ordinary course of business of $26,914 and $608,668 at December 31, 1998
and 1999, respectively.

F-39
<PAGE>

EFUSION, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

December 31, 1998 and 1999

Also included in revenue are sales to investors in the ordinary course of
business of $269,509 and $1,003,920 at December 31, 1998 and 1999,
respectively.

(10) Commitments and Contingencies

(a) Operating leases

eFusion leases office space under a non-cancelable operating lease
through 2005. Future minimum lease payments under the non-cancelable
operating lease as of December 31, 1999 was as follows:

<TABLE>
<S> <C>
Year ending December 31:
2000........................................................ $ 538,410
2001........................................................ 558,853
2002........................................................ 580,114
2003........................................................ 602,226
2004........................................................ 625,222
Thereafter.................................................. 649,138
----------
$3,553,963
==========
</TABLE>

Rent expense under the operating lease was $614,215 and $686,389 for the
years ended December 31, 1998 and 1999, respectively.

(b) Royalties

eFusion has contractually entered into various agreements with certain
technology developers to pay royalties based on the number of ports that are
sold with the technology in place. Royalty payments were not significant for
the years ended December 31, 1998 and 1999.

(11) Unaudited Subsequent Events

(a) Series D Offering

On March 15, 2000, eFusion sold 2,491,102 shares of Series D preferred stock
for $8.00 per share, or an aggregate of $19,889,017, net of offering costs. The
Series D preferred rights of liquidation preference and conversion are similar
to those of Series A, B and C preferred stock. eFusion shall redeem the Series
D preferred stock at the option of the holders of the Series D preferred stock
on or after March 15, 2004. The holders of the Series D preferred stock shall
be entitled to a redemption price per share equal to the original issuance
price plus an 8% annual accrued dividend on the original investment. The
carrying amount of Series D has been increased by periodic accretions, based on
the deemed fair value of the preferred stock at the balance sheet date and
using the interest method.

(b) Joint Venture

On May 15, 2000, eFusion entered into an Joint Venture Agreement to form
TriFusion, a stock corporation in the Republic of Korea. TriFusion will
incorporate the eFusion Push to Talk (PtT) technology with the Public Switched
Telephone Network and maximize ongoing IP/Telco connectivity in the Republic of
Korea. Pursuant to the terms of the Joint Venture Agreement, eFusion will
contribute hardware and software with a fair value up to $3,600,000 and
$160,000 of cash in exchange for a 47% ownership interest in

F-40
<PAGE>

EFUSION, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

December 31, 1998 and 1999

TriFusion. eFusion will account for its investment in TriFusion under the
equity method of accounting. eFusion will record its percentage share of the
net income or loss of the joint venture. The difference, if any, between the
cost of the eFusion investment and the amount of the underlying equity in the
net assets of the joint venture would result in an adjustment to the net income
or loss of the joint venture on eFusion's financial statements. No capital
contributions have been made as of June 30, 2000.

(c)Sale of Business

On July 25, 2000, eFusion entered into an Agreement and Plan of Merger (the
Agreement) with ITXC Corp. (ITXC). Pursuant to the Agreement, among other
things, all the issued and outstanding shares of eFusion shall be converted
into the right to receive shares of the common stock of ITXC. Commensurate with
the closing, all outstanding preferred stock will be converted in accordance
with the respective preferred stock conversion ratios. Additionally, all
outstanding options under eFusion's 1996 stock option plan, whether vested or
invested, will be assumed by ITXC.

F-41
<PAGE>

ANNEX I

AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER

This Amended and Restated Agreement and Plan of Merger (this "Agreement") is
made and entered into as of the 25th day of July, 2000, by and among ITXC
Corp., a Delaware corporation ("ITXC"), Eye Merger Corp., an Oregon corporation
and a wholly owned subsidiary of ITXC ("Subcorp"), and eFusion, Inc., an Oregon
corporation ("eFusion").

PRELIMINARY STATEMENTS

A. ITXC desires to combine its business with the business operated by
eFusion through the merger of Subcorp with and into eFusion, with eFusion as
the surviving corporation (the "Merger"). Pursuant to the Merger, each share of
eFusion's capital stock outstanding at the Effective Time will be converted
into the right to receive ITXC Common Stock and cash in lieu of fractional
shares, and eFusion will become a wholly owned subsidiary of ITXC, all as more
fully provided herein.

B. The Board of Directors of eFusion has determined that the Merger is
consistent with and in furtherance of the long-term business strategy of
eFusion and that it is in the best interests of the holders of shares of
eFusion's capital stock to have a continuing equity interest in the combined
businesses of ITXC and eFusion through the ownership of ITXC Common Stock.

C. The respective Boards of Directors of ITXC, Subcorp and eFusion have
determined that the Merger, structured in the manner contemplated herein, is
desirable and in the best interests of their respective shareholders and, by
resolutions duly adopted, have approved and adopted this Agreement.

D. The Parties intend that the Merger constitute a "reorganization" within
the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "Code").

E. The Parties entered into an agreement and plan of merger dated as of July
25, 2000 (the "Prior Agreement"). This Agreement amends and restates the Prior
Agreement in its entirety and supersedes the Prior Agreement in all respects.

NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto (the "Parties") hereby adopt this Agreement as and for a
Plan of Merger (the "Plan") under Section 368(a) of the Code, and in order to
implement the Plan, the Parties hereby represent, warrant, covenant and agree
as follows:

ARTICLE I

Definitions

1.1 Specific Definitions. For purposes of this Agreement, the following
terms shall have the following meanings:

"Affiliate" shall mean, with respect to any entity (the "Subject Entity"),
any Person or other entity which controls, is controlled by, or is under common
control with, the Subject Entity.

"Approval Number" shall mean four percent (4%) of the aggregate number of
shares of eFusion Capital Stock outstanding on the later of the date on which
the condition set forth in Section 6.1.1 is satisfied and the date on which the
condition set forth in Section 6.1.3 is satisfied. For purposes of this
definition, each share of Preferred Stock and each share of eFusion Common
Stock shall be deemed to represent one share of eFusion Capital Stock.

"Articles Amendment" shall mean the amendment to the Articles of
Incorporation of eFusion annexed hereto as Appendix I.

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"Cash Amount" shall mean the Cash/Cash Equivalent divided by the Historical
Price.

"Cash/Cash Equivalent" shall mean eFusion's cash and cash equivalents as of
the Closing Date, determined in accordance with GAAP, minus the Professional
Advisor Fees. Cash/Cash Equivalent shall be determined in accordance with the
procedures described in Sections 2.7.13 and 2.11.

"Closing Market Price", on a particular Trading Day, shall mean the closing
sale price of one share of ITXC Common Stock on the Nasdaq National Market on
such Trading Day.

"Combined Material Adverse Effect" shall mean a material adverse effect, at
or after the Effective Time, on the business, operations, assets or financial
condition of ITXC and its Subsidiaries (including the Surviving Corporation),
taken as a whole.

"CPA" shall mean Ernst & Young LLP.

"eFusion Capital Stock" shall mean the eFusion Common Stock and the
Preferred Stock.

"eFusion Common Stock" shall mean the common stock, par value $0.001 per
share, of eFusion.

"eFusion Material Adverse Effect" shall mean a material adverse effect on
the business, operations, assets or financial condition of eFusion, provided,
however, that in no event shall any effect that results from (a) the public
announcement or pendency of the transactions contemplated hereby or any actions
taken in compliance with this Agreement, (b) changes affecting the Internet
telephony sector generally or (c) changes affecting the United States economy
generally constitute an eFusion Material Adverse Effect.

"eFusion Options" shall mean stock options which both (a) have been granted
by eFusion prior to the date hereof and (b) are outstanding immediately prior
to the Effective Time.

"eFusion Representative" shall mean the Chief Operating Officer of eFusion
prior to the Closing and shall mean Luis Machuca after the Closing, or if Luis
Machuca shall cease to serve as the eFusion Representative, such Person as
shall be designated by the Shareholders pursuant to the Escrow Agreement.

"eFusion Special Meeting" shall mean a special meeting of eFusion's
shareholders called to vote upon the Merger and the Articles Amendment.

"Escrow Agent" shall mean a financial institution or transfer agent
designated by ITXC and acceptable to eFusion, such acceptance not to be
unreasonably withheld.

"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

"Exchange Agent" shall mean Continental Stock Transfer and Trust Company or
such other Person or entity as ITXC shall designate to serve as the Exchange
Agent hereunder.

"Financing Agreements" shall mean the agreements listed in Section 1.1 of
the eFusion Disclosure Schedule which were executed in connection with the
issuance by eFusion of the Preferred Stock.

"GAAP" shall mean United States generally accepted accounting principles,
consistently applied.

"Historical Price" shall mean $34.9886.

"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.

"ITXC Common Stock" shall mean the common stock, par value $0.001 per share,
of ITXC.

"ITXC Material Adverse Effect" shall mean a material adverse effect on the
business, operations, assets or financial condition of ITXC and its
Subsidiaries, taken as a whole, provided, however, that (x) in no event shall
any effect that results from (a) the public announcement or pendency of the
transactions contemplated hereby or any actions taken in compliance with this
Agreement, (b) changes affecting the Internet telephony sector generally or (c)
changes affecting the United States economy generally constitute an ITXC
Material

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Adverse Effect and (y) a decrease in the market price of ITXC Common Stock will
not constitute an ITXC Material Adverse Effect (except with respect to an
effect which, independent of such decrease, would constitute an ITXC Material
Adverse Effect).

"ITXC Special Meeting" shall mean a special meeting of ITXC's stockholders
which will be called to vote upon (i) an amendment to ITXC's Certificate of
Incorporation imposing upon the ITXC Merger Shares the restrictions on
transferability contained in Section 2.13 hereof; and (ii) the issuance of ITXC
Common Stock pursuant to this Agreement if applicable Nasdaq rules or
regulations require such issuance to be approved by ITXC's stockholders.

"Liens" shall mean liens, encumbrances, security interests, pledges, title
restrictions and other limitations on use, other than restrictions on transfer
imposed by federal or state securities laws.

"Person" means any individual, corporation, partnership, limited liability
company, business trust, sole proprietorship or other entity.

"Preferred Stock" shall mean the Series A Preferred Stock, the Series B
Preferred Stock, the Series C Preferred Stock and the Series D Preferred Stock,
collectively.

"Professional Advisor Fees" shall mean (x) all unpaid fees and disbursements
which eFusion shall be obligated to pay on or after the Closing Date to
attorneys, accountants and investment bankers with respect to services rendered
to eFusion, regardless of whether such services are performed before, during or
after the Closing, to the extent that such unpaid fees and disbursements are
not consistent (in nature and amount) with prior fees and disbursements
typically paid by eFusion to such service providers, and (y) all unpaid fees
and disbursements which eFusion shall be obligated to pay on or after the
Closing Date to attorneys, accountants, investment bankers other advisors with
respect to services rendered to eFusion in connection with the negotiation,
execution and performance of this Agreement, regardless of whether such
services are performed before, during or after the Closing.

"SEC" shall mean the Securities and Exchange Commission.

"Securities Act" shall mean the Securities Act of 1933, as amended.

"Series A Preferred Stock" shall mean the Series A Preferred Stock, par
value $0.001 per share, of eFusion.

"Series B Preferred Stock" shall mean the Series B Preferred Stock, par
value $0.001 per share, of eFusion.

"Series C Preferred Stock" shall mean the Series C Preferred Stock, par
value $0.001 per share, of eFusion.

"Series D Preferred Stock" shall mean the Series D Preferred Stock, par
value $0.001 per share, of eFusion.

"Shareholder" shall mean a holder of record of the eFusion Capital Stock
immediately prior to the Effective Time. "Shareholders" shall mean all such
holders.

"Subsidiary" when used with reference to a Person, shall mean any entity (i)
the accounts of which would be consolidated with those of such Person in such
Person's financial statements if such financial statements were prepared in
accordance with GAAP or (ii) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary
voting power or, in the case of a partnership, more than 50% of the general
partnership interests or more than 50% of the profits or losses are owned,
controlled or held by such Person and/or one or more subsidiaries of such
Person.

"Trading Day" shall mean each day for which the trading of securities is
reported on the Nasdaq National Market.

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1.2 Additional Definitions. The following terms are defined in the
following sections of this Agreement:

<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Agreement Opening Paragraph
Aggregate Common Equivalent Shares 2.7.2.2.2
Aggregate Common Number 2.7.2.2.3.1(A)
Aggregate Preference Shares 2.7.2.2.1.5
Allocation 2.7.2
Antitrust Division 6.1.3
Antitrust Laws 5.7
Articles Recommendation 3.2.8
Articles of Merger 2.2
Benefit Plan 3.18.1
Business 3.1.1
Business Combination 7.2.2
Cash/Cash Equivalent Certificate 2.7.13
Cash/Cash Equivalent Estimate 2.11
Certificates 2.8.1
Claimants 2.2
Closing 8.2.1
Closing Date 2.2
Code Preliminary Statement D
Common Fraction 2.7.2.2.3.6
Common Warrant 3.2.7
Common Warrant Holder 3.2.7
Common Warrant Notice 3.2.7
Competing Transaction 5.16
Copyrights 3.10.1
Costs 7.2.1
Current Balance Sheet 3.1.1
Damages 8.2.1
Dissenting Stock 2.7.11
Effective Time 2.2
eFusion Opening Paragraph
eFusion Affiliate's Letter 5.17
eFusion Calculation 2.7.2.4
eFusion Disclosure Schedule 3.1.1
eFusion Employees 5.15
eFusion Intellectual Property 3.10.1
eFusion Option Number 2.7.2.2.3.1(B)
eFusion Registered Intellectual Property 3.10.2
Enforcement Notice 3.24.1.2
Environmental Law 3.24.1.4
ERISA 3.18.1
Escrow Agreement 2.10
Exchange Fund 2.9
Exchange Ratio 2.7.2.2.3.1(C)
Final Accountant's Report 2.11
Final Allocation 2.7.2.5.4
Financial Statements 3.25.1
Firm 2.11
FTC 6.1.3
</TABLE>

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<PAGE>

<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Historical Price Definition of Cash Amount
Indemnified Party 8.2.3
Indemnifying Party 8.2.3
Initial Accountant's Report 2.11
Initial Period 2.13.4.1
Intellectual Property 3.10.1
ITXC Opening Paragraph
ITXC Exchange Option 2.12
ITXC Merger Shares 2.13.1
ITXC Reaction Notice 2.7.2.5
ITXC Preferred Stock 4.4
ITXC SEC Documents 4.6
Law Firm 2.7.2.5.2
Laws 3.23.1
Maskworks 3.10.1
Merger Preliminary Statement A
Merger Recommendation 7.1.4
Notice of Intention to Pursue a Claim 8.2.1
OBCA 2.1
Oregon Secretary of State 2.2
Outside Date 7.1.3
Parties Lead-in
Patent Reserve 8.2.1
Patents 3.10.1
Pension Plan 3.18.2
Plan Lead-in
Preference Share Ratio 2.7.2.2.1
Premises 5.18
Prior Agreement Preliminary Statement E
Projections 3.11
Prospectus/Proxy Statement 5.12.1
Real Property Leases 3.7.1
Referenced Patents 8.2.1
Registered Intellectual Property 3.10.1
Registration Statement 5.12.1
Regulated Substance 3.24.1.1
Related Patents 8.2.1
Releasing 3.24.1.3
Second Period 2.13.4.2
Series A Fraction 2.7.2.2.3.2
Series A Preference Share Ratio 2.7.2.2.1.1
Series A Preference Shares 2.7.2.2.1.1
Series B Fraction 2.7.2.2.3.3
Series B Preference Share Ratio 2.7.2.2.1.2
Series B Preference Shares 2.7.2.2.1.2
Series B Warrant 3.2.7
Series B Warrant Holder 3.2.7
Series B Warrant Notice 3.2.7
Series C Fraction 2.7.2.2.3.4
Series C Preference Share Ratio 2.7.2.2.1.3
Series C Preference Shares 2.7.2.2.1.3
</TABLE>

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<PAGE>

<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Series D Fraction 2.7.2.2.3.5
Series D Preference Share Ratio 2.7.2.2.1.4
Series D Preference Shares 2.7.2.2.1.4
Statement Date 3.28.3
Subcorp Opening Paragraph
Subject Entity Definition of Affiliate
Subject Patents 8.2.1
Survival Period 8.1
Surviving Corporation 2.1
Tax; Taxes 3.26.9
Tax Counsel 5.20
Tax Returns 3.26.1
Third Party Claim 8.3
Total ITXC Stock Consideration 2.7.2
Trademarks 3.10.1
Worksheet 2.7.2.3
</TABLE>

1.3 Interpretation. Unless otherwise indicated to the contrary herein by the
context or use thereof: (i) the words, "herein," "hereto," "hereof" and words
of similar import refer to this Agreement as a whole and not to any particular
Section or paragraph hereof; (ii) words importing the masculine gender shall
also include the feminine and neutral genders, and vice versa; (iii) words
importing the singular shall also include the plural, and vice versa; and (iv)
the word "including" means "including without limitation." All references to
"the date hereof" shall constitute references to July 25, 2000. All references
to the "Agreement" herein or in any of the agreements, certificates or
worksheets annexed hereto or delivered in connection herewith shall constitute
references to this Amended and Restated Agreement and Plan of Merger.

ARTICLE II

The Merger

2.1. The Merger. Upon the terms and subject to the conditions hereof, and in
accordance with the provisions of the Oregon Business Corporation Act (the
"OBCA"), Subcorp shall be merged with and into eFusion at the Effective Time.
As a result of the Merger, the separate corporate existence of Subcorp shall
cease and eFusion shall continue its existence under the laws of the State of
Oregon. eFusion, in its capacity as the corporation surviving the Merger, is
hereinafter sometimes referred to as the "Surviving Corporation."

2.2. Effective Time. Upon completion of the Closing on the Closing Date, the
Parties shall cause the Merger to be consummated by filing with the Secretary
of State of the State of Oregon (the "Oregon Secretary of State") articles of
merger (the "Articles of Merger") in such form as is required by and executed
in accordance with Section 60.494 of the OBCA. The Merger shall become
effective (the "Effective Time") at 12:01 a.m. on the date when the Articles of
Merger are filed with the Oregon Secretary of State or at such later time and
date as shall be agreed upon by ITXC and eFusion and specified in the Articles
of Merger. Prior to the filing referred to in this Section 2.2, a closing (the
"Closing") shall be held at the offices of Lowenstein Sandler PC, 65 Livingston
Avenue, Roseland, New Jersey 07068 or such other place as the Parties may
agree, on a date specified by ITXC (provided that such date is, absent
eFusion's concurrence, no more than five business days following the first date
upon which all conditions set forth in Article VI (other than the conditions
which may be satisfied solely by the delivery of documentation within the
control of the Party required to deliver such documentation) have been
satisfied or waived), or at such other date as ITXC and eFusion may agree,
provided that the conditions set forth in Article VI have been satisfied or
waived at or prior to such date. The date on which the Closing takes place is
referred to herein as the "Closing Date."

2.3. Effects of the Merger. From and after the Effective Time, the Merger
shall have the effects set forth in Section 60.497 of the OBCA.

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2.4. Articles of Incorporation and Bylaws. At the Effective Time, (i) the
Fourth Amended and Restated Articles of Incorporation of the Surviving
Corporation as in effect immediately prior to the Effective Time shall be
amended so as to contain the provisions, and only the provisions, contained
immediately prior thereto in the Articles of Incorporation of Subcorp, except
for Article I thereof which shall continue to read "The name of the corporation
is eFusion, Inc.", and (ii) the Bylaws of Subcorp in effect immediately prior
to the Effective Time shall be the Bylaws of the Surviving Corporation, in each
case until amended in accordance with applicable law.

2.5. Directors and Officers of the Surviving Corporation. From and after the
Effective Time, individuals designated by ITXC prior to the Effective Time
shall be the officers of the Surviving Corporation and the directors of Subcorp
shall be the directors of the Surviving Corporation, in each case until their
respective successors are duly elected and qualified. On or prior to the
Closing Date, eFusion shall deliver to ITXC a written resignation, in form and
substance satisfactory to ITXC, from each officer and director of eFusion,
effective as of the Effective Time.

2.6. Additional Actions. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any further deeds,
assignments or assurances in law or any other acts are necessary or desirable
to (a) vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of eFusion, or (b) otherwise carry out the provisions of
this Agreement, eFusion and its officers and directors shall be deemed to have
granted to the Surviving Corporation an irrevocable power of attorney to
execute and deliver all such deeds, assignments or assurances in law and to
take all acts necessary, proper or desirable to vest, perfect or confirm title
to and possession of such rights, properties or assets in the Surviving
Corporation and otherwise to carry out the provisions of this Agreement, and
the officers and directors of the Surviving Corporation are authorized in the
name of eFusion or otherwise to take any and all such actions.

2.7 Conversion of Securities. At the Effective Time, by virtue of the
Merger, and without any action on the part of any of the Parties, the
securities of the constituent corporations shall be converted as follows:

2.7.1 Subcorp's Stock. Each share of common stock, no par value, of
Subcorp issued and outstanding immediately prior to the Effective Time
shall be converted into one share of common stock, par value $0.0001 per
share, of the Surviving Corporation. Such newly issued shares shall
thereafter constitute all of the issued and outstanding capital stock of
the Surviving Corporation, and shall be owned by ITXC.

2.7.2 Shares of ITXC Common Stock Issuable Pursuant to the Merger. The
aggregate number of shares of ITXC Common Stock issuable at the Effective
Time pursuant to the Merger (including the shares of ITXC Common Stock
issuable upon exercise of the ITXC Exchange Options) shall equal the sum of
(x) 5,658,986 plus (y) the Cash Amount (such sum, the "Total ITXC Stock
Consideration"). The allocation of the Total ITXC Stock Consideration among
the holders of the eFusion Common Stock, the Series A Preferred Stock, the
Series B Preferred Stock, the Series C Preferred Stock, the Series D
Preferred Stock and the eFusion Options to be converted into ITXC Exchange
Options (the "Allocation") shall be governed by the following provisions of
this Section 2.7.2.

2.7.2.1 The Parties acknowledge that the Allocation is dependent
upon (a) the value of the Total ITXC Stock Consideration, which
calculation cannot be determined until shortly before the Closing Date,
(b) the terms of eFusion's Fourth Amended and Restated Articles of
Incorporation, as proposed to be amended by the Articles Amendment,
which documents provide for an allocation of the proceeds of certain
transactions, including the Merger, and (c) the terms of the eFusion
Options.

The Parties shall determine the Allocation as follows:

2.7.2.2.1 First, the Parties shall determine the portion of the
Total ITXC Stock Consideration allocable to the holders of the
Preferred Stock by virtue of the liquidation preferences established
for each series of Preferred Stock pursuant to eFusion's Fourth
Amended

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<PAGE>

and Restated Articles of Incorporation. For each such series, the
fraction of a share of ITXC Common Stock so allocated per share of
Preferred Stock shall be referred to herein as the "Preference Share
Ratio." eFusion has represented to ITXC herein that as of the date
hereof, there are no declared and unpaid dividends on any shares of
its capital stock and eFusion has covenanted to ITXC that it will
not declare any dividends on any shares of its capital stock on or
before the Closing Date. Accordingly, no account shall be given to
declared and unpaid dividends in determining the Preference Share
Ratios hereunder. Furthermore, eFusion has represented to ITXC
herein that no event has occurred which would require the Conversion
Price (as such term is defined in eFusion's Fourth Amended and
Restated Articles of Incorporation) for any series of Preferred
Stock to be adjusted since the initial date of issuance for each
such series of Preferred Stock. The Preference Share Ratio for each
series of Preferred Stock shall be calculated as follows:

2.7.2.2.1.1 Each share of Series A Preferred Stock
outstanding immediately prior to the Effective Time shall be
entitled to 0.0285807 of a share of ITXC Common Stock (the
"Series A Preference Share Ratio"), which amount was calculated
by dividing (a) $1.00 by (b) the Historical Price, rounded down
to seven decimal places. For purposes of this Agreement, the
term "Series A Preference Shares" shall mean the Series A
Preference Share Ratio multiplied by the number of shares of
Series A Preferred Stock outstanding immediately prior to the
Effective Time, rounded down to the nearest whole number.

2.7.2.2.1.2 Each share of Series B Preferred Stock
outstanding immediately prior to the Effective Time shall be
entitled to 0.1266126 of a share of ITXC Common Stock (the
"Series B Preference Share Ratio"), which amount was calculated
by dividing (a) $4.43 by (b) the Historical Price, rounded down
to seven decimal places. For purposes of this Agreement, the
term "Series B Preference Shares" shall mean the Series B
Preference Share Ratio multiplied by the number of shares of
Series B Preferred Stock outstanding immediately prior to the
Effective Time, rounded down to the nearest whole number.

2.7.2.2.1.3 Each share of Series C Preferred Stock
outstanding immediately prior to the Effective Time shall be
entitled to 0.2000651 of a share of ITXC Common Stock (the
"Series C Preference Share Ratio"), which amount was calculated
by dividing (a) $7.00 by (b) the Historical Price, rounded down
to seven decimal places. For purposes of this Agreement, the
term "Series C Preference Shares" shall mean the Series C
Preference Share Ratio multiplied by the number of shares of
Series C Preferred Stock outstanding immediately prior to the
Effective Time, rounded down to the nearest whole number.

2.7.2.2.1.4 Each share of Series D Preferred Stock
outstanding immediately prior to the Effective Time shall be
entitled to 0.2286459 of a share of ITXC Common Stock (the
"Series D Preference Share Ratio"), which amount was calculated
by dividing (a) $8.00 by (b) the Historical Price, rounded down
to seven decimal places. For purposes of this Agreement, the
term "Series D Preference Shares" shall mean the Series D
Preference Share Ratio multiplied by the number of shares of
Series D Preferred Stock outstanding immediately prior to the
Effective Time, rounded down to the nearest whole number.

2.7.2.2.1.5 The sum of the Series A Preference Shares, the
Series B Preference Shares, the Series C Preference Shares and
the Series D Preference Shares is referred to herein as the
"Aggregate Preference Shares".

2.7.2.2.2 Second, the Parties shall determine the portion of the
Total ITXC Stock Consideration allocable to the holders of the
Preferred Stock, the eFusion Common Stock and the eFusion Options
after giving effect to the allocation of the Aggregate Preference
Shares (such portion, in the aggregate, is referred to as the
"Aggregate Common Equivalent Shares"). The number of Aggregate
Common Equivalent Shares shall equal the Total ITXC Stock
Consideration minus the Aggregate Preference Shares.

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2.7.2.2.3 Third, the Parties shall determine the fraction of a
share of ITXC Common Stock into which each share of Preferred Stock
and eFusion Common Stock shall be converted pursuant to the Merger
and the number of shares of ITXC Common Stock to be covered by each
ITXC Exchange Option, which fraction and number shall be determined
as follows:

2.7.2.2.3.1 For purposes of this Agreement, the following
terms shall have the following meanings:

(A) The "Aggregate Common Number" shall mean the sum of (i)
the aggregate number of shares of eFusion Common Stock
outstanding immediately prior to the Effective Time and (ii) the
aggregate number of shares of Preferred Stock outstanding
immediately prior to the Effective Time.

(B) The "eFusion Option Number" shall mean the aggregate
number of shares of eFusion Common Stock issuable upon exercise
of all options and warrants to acquire shares of eFusion Common
Stock outstanding immediately prior to the Effective Time,
assuming that all such options and warrants are then fully
exercisable.

(C) The "Exchange Ratio" shall mean the quotient (rounded
down to seven decimal places) obtained by dividing (x) the
Aggregate Common Equivalent Shares by (y) the sum of (i) the
Aggregate Common Number and (ii) the eFusion Option Number.

2.7.2.2.3.2 Upon consummation of the Merger, each share of
Series A Preferred Stock outstanding immediately prior to the
Effective Time shall be converted into a fraction of a share of
ITXC Common Stock (the "Series A Fraction") equal to the sum of
(x) the Series A Preference Share Ratio and (y) the Exchange
Ratio.

2.7.2.2.3.3 Upon consummation of the Merger, each share of
Series B Preferred Stock outstanding immediately prior to the
Effective Time shall be converted into a fraction of a share of
ITXC Common Stock (the "Series B Fraction") equal to the sum of
(x) the Series B Preference Share Ratio and (y) the Exchange
Ratio.

2.7.2.2.3.4 Upon consummation of the Merger, each share of
Series C Preferred Stock outstanding immediately prior to the
Effective Time shall be converted into a fraction of a share of
ITXC Common Stock (the "Series C Fraction") equal to the sum of
(x) the Series C Preference Share Ratio and (y) the Exchange
Ratio.

2.7.2.2.3.5 Upon consummation of the Merger, each share of
Series D Preferred Stock outstanding immediately prior to the
Effective Time shall be converted into a fraction of a share of
ITXC Common Stock (the "Series D Fraction") equal to the sum of
(x) the Series D Preference Share Ratio and (y) the Exchange
Ratio.

2.7.2.2.3.6 Upon consummation of the Merger, each share of
eFusion Common Stock outstanding immediately prior to the
Effective Time shall be converted into a fraction of a share of
ITXC Common Stock (the "Common Fraction") equal to the Exchange
Ratio.

2.7.2.2.3.7 Upon consummation of the Merger, each eFusion
Option outstanding immediately prior to the Effective Time shall
be converted into an ITXC Exchange Option pursuant to the
provisions of Section 2.12.

2.7.2.3 Annexed hereto as Appendix 2.7.2.3 is a worksheet setting
forth a description of the Allocation that would be in effect if the
Total ITXC Stock Consideration were to equal 6,000,000 shares of ITXC
Common Stock, and there were outstanding the number of shares of
eFusion Capital Stock and the number of eFusion Options set forth in
the first paragraph of such worksheet (the "Worksheet").

2.7.2.4 Promptly (and in all events at least forty eight hours prior
to the time set for the Closing) after the Cash/Cash Equivalent is
determined pursuant to Section 2.7.13, eFusion shall deliver to

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<PAGE>

ITXC eFusion's calculation of the Allocation (the "eFusion
Calculation"), which shall (a) be prepared in accordance with the
provisions of Sections 2.7.2.1 and 2.7.2.2, (b) be reflected in the
form of the Worksheet, (c) confirm that there are no warrants to
purchase eFusion Capital Stock outstanding and (d) set forth (i) the
calculation of the Total ITXC Stock Consideration, (ii) the number of
shares of Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock and eFusion Common Stock
outstanding as of the date of such calculation and the number of shares
of eFusion Common Stock issuable upon the exercise of eFusion Options
outstanding as of the date of such calculation and (iii) each of the
calculations contemplated by Section 2.7.2.2.

2.7.2.5 Promptly (and in all events at least 24 hours prior to the
time set for the Closing), ITXC shall deliver to eFusion a notice (the
"ITXC Reaction Notice") specifying whether ITXC concurs with the
eFusion Calculation or disputes any aspect of the eFusion Calculation.
In the event that the ITXC Reaction Notice indicates that ITXC concurs
with the eFusion Calculation, the eFusion Calculation shall be
determinative for purposes of determining the Allocation. In the event
that the ITXC Reaction Notice indicates that ITXC disputes any aspect
of the eFusion Calculation, the following provisions shall apply:

2.7.2.5.1 ITXC and eFusion shall use reasonable efforts to
promptly resolve any such disputes. In the event that such disputes
cannot be resolved prior to the date set for the Closing, the date
set for the Closing shall be deferred until such disputes can be
resolved, it being understood that any such delay will require a new
calculation of the Total ITXC Stock Consideration. In the event that
ITXC and eFusion are able to resolve such disputes within five
business days after the ITXC Reaction Notice is delivered to
eFusion, the agreement reached by ITXC and eFusion shall be
determinative for purposes of determining the Allocation.

2.7.2.5.2 In the event that ITXC and eFusion are unable to
resolve such disputes within five business days after the ITXC
Reaction Notice is delivered to eFusion, the calculation of the
Allocation shall be referred to a law firm mutually acceptable to
ITXC and eFusion (the "Law Firm") for resolution. The determination
of the Law Firm with respect to the calculation of the Allocation
shall be determinative. ITXC and eFusion shall use reasonable
efforts to cooperate with the Law Firm in enabling the Law Firm to
make any such determination contemplated by this Section 2.7.2.5.2.
In the event that any such dispute is referred to such Law Firm, the
fees and disbursements of such Law Firm shall be borne one-half by
ITXC and one-half by eFusion, with eFusion's share to be taken into
account in determining the Cash/Cash Equivalent.

2.7.2.5.3 Notwithstanding any provision herein to the contrary,
(a) the Closing Date shall be held as soon as practicable after the
Allocation is resolved pursuant to this Section 2.7.2.5 and (b) the
Outside Date shall be extended by the number of days that elapse
from the date of the ITXC Reaction Notice to the date on which the
Allocation is resolved pursuant to this Section 2.7.2.5.

2.7.2.5.4 For purposes of this Agreement, the term "Final
Allocation" shall mean the Allocation which is either agreed upon by
the Parties or, if the Parties are unable to agree upon the
Allocation, the Allocation determined by the Law Firm. Once the
Final Allocation is determined, ITXC and eFusion shall complete
Exhibit A to the Escrow Agreement in accordance with the provisions
of this Agreement and the Escrow Agreement.

2.7.3 eFusion Common Stock. Each share of eFusion Common Stock (other
than Dissenting Stock) issued and outstanding immediately prior to the
Effective Time shall, upon consummation of the Merger, be converted into
and represent a fraction of a validly issued, fully paid and non-assessable
share of ITXC Common Stock equal to the Common Fraction, determined in
accordance with the Final Allocation.

2.7.4 Series A Preferred Stock. Each share of Series A Preferred Stock
(other than Dissenting Stock) issued and outstanding immediately prior to
the Effective Time shall, upon consummation of the

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Merger, be converted into and represent a fraction of a validly issued,
fully paid and non-assessable share of ITXC Common Stock equal to the
Series A Fraction, determined in accordance with the Final Allocation.

2.7.5 Series B Preferred Stock. Each share of Series B Preferred Stock
(other than Dissenting Stock) issued and outstanding immediately prior to
the Effective Time shall, upon consummation of the Merger, be converted
into and represent a fraction of a validly issued, fully paid and non-
assessable share of ITXC Common Stock equal to the Series B Fraction,
determined in accordance with the Final Allocation.

2.7.6 Series C Preferred Stock. Each share of Series C Preferred Stock
(other than Dissenting Stock) issued and outstanding immediately prior to
the Effective Time shall, upon consummation of the Merger, be converted
into and represent a fraction of a validly issued, fully paid and non-
assessable share of ITXC Common Stock equal to the Series C Fraction,
determined in accordance with the Final Allocation.

2.7.7 Series D Preferred Stock. Each share of Series D Preferred Stock
(other than Dissenting Stock) issued and outstanding immediately prior to
the Effective Time shall, upon consummation of the Merger, be converted
into and represent a fraction of a validly issued, fully paid and non-
assessable share of ITXC Common Stock equal to the Series D Fraction,
determined in accordance with the Final Allocation.

2.7.8 Intentionally omitted.

2.7.9 No Fractional Shares. No certificates for fractional shares of
ITXC Common Stock shall be issued as a result of any conversion provided
for in this Section 2.7. To the extent that a former holder of eFusion
Capital Stock would otherwise have become entitled to a fractional share of
ITXC Common Stock but for the rounding provisions of Section 2.9 (as a
result of which Section each Shareholder will be entitled to receive, from
the Exchange Agent, ninety percent (90%) of the shares of ITXC Common Stock
issuable with respect to such Shareholder upon consummation of the Merger,
rounded down to the nearest whole number), such holder, upon presentation
of such fractional interest represented by a certificate for eFusion
Capital Stock to the Exchange Agent pursuant to Sections 2.7.3, 2.7.4,
2.7.5, 2.7.6 or 2.7.7, shall be entitled to receive a cash payment therefor
in an amount equal to the value of such fractional interest, determined by
multiplying such fractional interest by the Closing Market Price on the
last full Trading Day immediately prior to the Closing Date. To the extent
that the shares placed in escrow for a former holder of eFusion Capital
Stock would otherwise have included a fractional share of ITXC Common Stock
but for the rounding provisions of Section 2.10 (as a result of which
Section ITXC will deposit with the Escrow Agent, on behalf of each
Shareholder, ten percent (10%) of the shares of ITXC Common Stock issuable
with respect to such Shareholder upon consummation of the Merger, rounded
down to the nearest whole number), ITXC shall pay to the Escrow Agent, in
lieu of such fractional interest for each Shareholder, a cash payment
therefor in an amount equal to the value of such fractional interest,
determined by multiplying such fractional interest by the Closing Market
Price on the last full Trading Day immediately prior to the Closing Date.
Such payments with respect to fractional shares are merely intended to
provide a mechanical rounding off of, and are not a separately bargained
for, consideration. If more than one certificate representing shares of
eFusion Capital Stock shall be surrendered for the account of the same
holder, the number of shares of ITXC Common Stock for which certificates
have been surrendered shall be computed on the basis of the aggregate
number of shares represented by the certificates so surrendered.

2.7.10 Anti-Dilution Protection. In the event that, prior to the
Effective Time, ITXC shall declare a stock dividend or other distribution
payable in shares of ITXC Common Stock or securities convertible into
shares of ITXC Common Stock, or effect a stock split, reclassification,
recapitalization, combination or any other comparable change with respect
to ITXC Common Stock, the Total ITXC Stock Consideration and the Allocation
shall be correspondingly adjusted to reflect such dividend, distribution,
stock split, reclassification, recapitalization, combination or other
comparable change.

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2.7.11 Dissenting Stock. Any holder of shares of eFusion Capital Stock
shall have the right to dissent in the manner provided in Sections 60.551
to 60.594 of the OBCA, and if all necessary requirements of the OBCA are
met, such shares shall be entitled to payment of the fair value of such
shares in accordance with the provisions of the OBCA ("Dissenting Stock");
provided, however, that (i) if any holder of Dissenting Stock shall
subsequently withdraw such holder's demand for appraisal of such shares
within seventy (70) days of the Effective Time, or, with the written
consent of the Surviving Corporation, any time thereafter, or (ii) if any
holders fail to follow the procedures for establishing such holder's
entitlement to appraisal rights as provided in the OBCA, the right to
appraisal of such shares shall be forfeited and such shares shall thereupon
be deemed to have been converted into the right to receive and to have
become exchangeable for, as of the Effective Time, the shares of ITXC
Common Stock (and cash in lieu of fractional shares of ITXC Common Stock,
if any) such holder would have been entitled to receive had such holder not
exercised dissenters' rights.

2.7.12 Tax Consequences. It is intended that the Merger shall constitute
a "reorganization" within the meaning of Section 368(a) of the Code, and
that this Agreement shall constitute a "plan of reorganization" for the
purposes of the Code.

2.7.13 Cash/Cash Equivalent. Three days prior to the date set for the
Closing, eFusion shall deliver to ITXC a certificate, in the form of the
certificate annexed hereto as Appendix 2.7.13, executed by eFusion's chief
financial officer and setting forth eFusion's good faith estimate of the
Cash/Cash Equivalent (the "Cash/Cash Equivalent Certificate"). eFusion
shall annex to such certificate reasonable evidence of the cash balances
maintained by eFusion in depository and investment accounts maintained by
eFusion with financial institutions and a listing of outstanding checks
drawn against any such balances. For purposes of determining the number of
shares of ITXC Common Stock to be issued as of the Effective Time, the good
faith estimate reflected in the Cash/Cash Equivalent Certificate shall be
presumed to accurately state the Cash/Cash Equivalent, subject to Section
2.11.

2.8 Exchange of Certificates. The following provisions shall apply with
respect to the exchange of certificates pursuant to the Merger:

2.8.1 Procedures. Prior to the Closing, ITXC shall enter into an
exchange agency agreement with the Exchange Agent, in form and substance
satisfactory to ITXC, pursuant to which the Exchange Agent shall perform
the obligations of the Exchange Agent described in this Agreement. As soon
as practicable after the Effective Time, ITXC shall mail, or shall cause
the Exchange Agent to mail, to each holder of record of a certificate or
certificates (the "Certificates") which immediately prior to the Effective
Time represented outstanding shares of eFusion Capital Stock which were
converted into shares of ITXC Common Stock pursuant to Section 2.7, a
letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to ITXC and shall be in such form and have
such other provisions as ITXC may reasonably specify, including customary
waivers and releases of liability and which shall contain instructions for
effecting the surrender of the Certificates in exchange for certificates
representing shares of ITXC Common Stock). Upon surrender of a Certificate
for cancellation to the Exchange Agent, together with a duly executed
letter of transmittal, the holder of such Certificate shall be entitled to
receive in exchange therefor (and ITXC shall cause the Exchange Agent to
promptly deliver) (x) a certificate representing ninety percent (90%) of
that number of shares of ITXC Common Stock which such holder has the right
to receive pursuant to Section 2.7, rounded down to the nearest whole
number, and (y) a check representing the amount of cash in lieu of
fractional shares, if any, and unpaid dividends and distributions with
respect to such shares of ITXC Common Stock, if any, which such holder has
the right to receive pursuant to the provisions of this Article II, after
giving effect to any required withholding tax, and the shares represented
by the Certificate so surrendered shall forthwith be canceled. No interest
will be paid or accrued on the cash payable in lieu of the issuance of
fractional shares, if any, or on any unpaid dividends and distributions
with respect to such shares of ITXC Common Stock, if any, payable to
holders of shares of eFusion Capital Stock. In the event of a transfer of
ownership of shares of eFusion Capital Stock which is

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not registered on the transfer records of eFusion, a certificate
representing the proper number of shares of ITXC Common Stock, together
with a check for the cash to be paid in lieu of fractional shares, if any,
and unpaid dividends and distributions with respect to such shares of ITXC
Common Stock, if any, may be issued to such transferee if the Certificate
representing such shares of eFusion Capital Stock held by such transferee
is presented to the Exchange Agent, accompanied by all documents required
to evidence and effect such transfer and to evidence that any applicable
stock transfer taxes have been paid. Until surrendered as contemplated by
this Section 2.8, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon surrender a
certificate representing shares of ITXC Common Stock and cash in lieu of
fractional shares, if any, and unpaid dividends and distributions with
respect to such shares of ITXC Common Stock, if any, as provided in this
Article II.

2.8.2. Unsurrendered Shares. Notwithstanding any other provisions of
this Agreement, no dividends or other distributions declared or made after
the Effective Time with respect to shares of ITXC Common Stock having a
record date after the Effective Time shall be paid to the holder of any
unsurrendered Certificate, and no cash payment in lieu of fractional shares
shall be paid to any such holder, until such holder shall surrender such
Certificate as provided in this Section 2.8. Until any such Certificate has
been surrendered as provided in this Section 2.8, ITXC shall deposit the
amount of any dividends or other distributions thereon with the Exchange
Agent. Subject to the effect of all applicable laws, following surrender of
any such Certificate, the Exchange Agent shall pay to the holder of the
certificates representing whole shares of ITXC Common Stock issued in
exchange therefor, without interest, (i) at the time of such surrender, the
amount of dividends or other distributions with a record date after the
Effective Time theretofore payable with respect to such whole shares of
ITXC Common Stock and not paid, less the amount of any withholding taxes
which may be required thereon, and (ii) at the appropriate payment date
subsequent to surrender, the amount of dividends or other distributions
with a record date after the Effective Time but prior to surrender and a
payment date subsequent to surrender payable with respect to such whole
shares of ITXC Common Stock, less the amount of any withholding taxes which
may be required thereon.

2.8.3 Stock Transfer Books; Extinction of Shareholder Rights. At the
Effective Time, the stock transfer books of eFusion shall be closed with
respect to the shares of eFusion Capital Stock outstanding immediately
prior to the Effective Time. All shares of ITXC Common Stock issued upon
surrender of Certificates in accordance with the terms hereof (including
any cash paid pursuant to this Article II) shall be deemed to have been
issued in full satisfaction of all rights pertaining to such shares of
eFusion Capital Stock represented thereby, and there shall be no further
registration of transfers on the stock transfer books of eFusion of shares
of eFusion Capital Stock outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be canceled and exchanged
as provided in this Article II.

2.8.4 Lost Certificates. In the event that any Certificate shall have
been lost, stolen or destroyed, upon the Exchange Agent's receipt of
appropriate evidence as to such loss, theft or destruction and as to the
ownership of such Certificate by the Person claiming such Certificate to be
lost, stolen or destroyed, and the receipt by ITXC and the Exchange Agent
of reasonably appropriate and customary indemnification (which may include
the posting of a bond or similar security), ITXC shall cause the Exchange
Agent to deliver, in exchange for such lost, stolen or destroyed
Certificate, shares of ITXC Common Stock and the fractional share payment,
if any, deliverable in respect thereof as determined in accordance with the
provisions of this Agreement.

2.8.5 Undistributed Portion of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to shareholders of eFusion for
one year after the Effective Time shall be delivered to ITXC, upon demand
therefor, and holders of shares of eFusion Common Stock who have not
theretofore complied with this Section 2.8 shall thereafter look only to
ITXC for payment of any claim to shares of ITXC Common Stock, cash in lieu
of fractional shares thereof, if any, or dividends or distributions, if
any, in respect thereof.

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2.8.6 Escheat Provisions. None of ITXC, the Surviving Corporation or the
Exchange Agent shall be liable to any Person in respect of any shares of
stock (or dividends or distributions with respect thereto) or cash from the
Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificate shall not
have been surrendered prior to seven years after the Effective Time (or
immediately prior to such earlier date on which any stock, any cash in lieu
of fractional shares or any dividends or distributions with respect to
whole shares of ITXC Common Stock in respect of such Certificate would
otherwise escheat to or become the property of any governmental authority),
any such stock, cash, dividends or distributions in respect of such
Certificate shall, to the extent permitted by applicable laws, become the
property of ITXC, free and clear of all claims or interest of any Person
previously entitled thereto.

2.8.7 Investment of Exchange Fund. The Exchange Agent shall invest any
cash included in the Exchange Fund, as directed by ITXC, on a daily basis.
Any interest and other income resulting from such investments shall be paid
to ITXC upon termination of the Exchange Fund.

2.9 Delivery of ITXC Common Stock and Cash to Exchange Agent. At or prior to
the Effective Time, ITXC shall deposit with the Exchange Agent, for the benefit
of each Shareholder, for exchange in accordance with this Article II,
certificates representing ninety percent (90%) of the shares of ITXC Common
Stock issuable to such Shareholder pursuant to Section 2.7 upon conversion of
outstanding shares of eFusion Capital Stock, rounded down to the nearest whole
number. At or prior to the Effective Time, ITXC shall deposit with the Exchange
Agent cash in an amount reasonably expected to be paid pursuant to Section 2.7.
The shares of ITXC Common Stock and cash to be deposited with the Exchange
Agent pursuant to this Section 2.9, together with any dividends or
distributions with respect thereto, are hereinafter referred to as the
"Exchange Fund". The fees and expenses of the Exchange Agent will be paid by
ITXC.

2.10 Delivery of ITXC Common Stock to Escrow Agent. Promptly following the
Effective Time, ITXC shall deposit with the Escrow Agent, with respect to each
Shareholder, certificates representing ten percent (10%) of the shares of ITXC
Common Stock issuable to such Shareholder pursuant to Section 2.7 upon
conversion of outstanding shares of eFusion Capital Stock (rounded down to the
nearest whole number). Such shares of ITXC Common Stock shall be held by the
Escrow Agent in a separate escrow and ultimately shall be distributed from such
escrow pursuant to an escrow agreement in the form of the escrow agreement
annexed hereto as Appendix 2.10, subject to such changes as the Escrow Agent
shall reasonably request (as so changed, the "Escrow Agreement"). The fees and
expenses of the Escrow Agent will be paid by ITXC, except as otherwise provided
in the Escrow Agreement.

2.11 Adjustment. In the event that ITXC determines that the estimate of the
Cash/Cash Equivalent set forth in the Cash/Cash Equivalent Certificate (the
"Cash/Cash Equivalent Estimate") overstated the amount of the Cash/Cash
Equivalent, ITXC shall, if it so elects, cause the CPA to calculate the
Cash/Cash Equivalent in accordance with GAAP. In such instance, ITXC shall
cause the CPA to render a special accountant's report (the "Initial
Accountant's Report") to the eFusion Representative setting forth the CPA's
calculation of the Cash/Cash Equivalent. After the CPA shall have furnished the
Initial Accountant's Report to the eFusion Representative, if the eFusion
Representative should object to that report on the grounds that it has not been
prepared in accordance with this Agreement, the eFusion Representative may give
written notice of the eFusion Representative's objection to ITXC within twenty
(20) days after the eFusion Representative's receipt of that report. If no such
objection is made within such twenty (20) day period, or if ITXC and the
eFusion Representative agree upon all matters in dispute, that Initial
Accountant's Report, as adjusted to reflect any such agreements, shall be final
and binding on all Parties for the purpose of determining the Cash/Cash
Equivalent and shall be referred to as the "Final Accountant's Report." If ITXC
and the eFusion Representative are unable to resolve all items in dispute
within fifteen (15) days after ITXC's receipt of the eFusion Representative's
written objections to the Initial Accountant's Report, then those items in
dispute shall be submitted for resolution to a firm of independent certified
public accountants jointly selected by the eFusion Representative and ITXC (the
"Firm"). The determination of the Firm with respect to those items in dispute,
together with the determinations of ITXC and the eFusion Representative with
respect to those items not in

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dispute, shall become the "Final Accountant's Report" and shall be final and
binding upon all Parties to this Agreement for the purpose of determining the
Cash/Cash Equivalent. ITXC shall pay the fees and disbursements of the CPA in
connection with the preparation and review of the Initial Accountant's Report
and the Final Accountant's Report. The fees and disbursements of any Firm
employed pursuant to this Section 2.11 shall be borne fully either by ITXC or
by the Shareholders pursuant to the terms of the Escrow Agreement. If ITXC's
final calculation, as reported to the Firm, of the amount of the Cash/Cash
Equivalent is closer to the amount of the Cash/Cash Equivalent ultimately
determined by the Firm than the eFusion Representative's final calculation, as
reported to the Firm, of the amount of the Cash/Cash Equivalent, then the
Shareholders shall be responsible for the Firm's fees and disbursements;
otherwise, ITXC shall be responsible for such fees and disbursements. Pursuant
to the terms of the Escrow Agreement, if the Cash/Cash Equivalent Estimate
exceeds the Cash/Cash Equivalent reflected in the Final Accountant's Report,
the Escrow Agent shall return to ITXC, from the shares of ITXC Common Stock
held in escrow, a number of shares equal to the amount of such excess divided
by the Historical Price. If the Cash/Cash Equivalent reflected in the Final
Accountant's Report exceeds the Cash/Cash Equivalent Estimate, ITXC shall issue
a number of shares of ITXC Common Stock equal to the amount of such excess
divided by the Historical Price (the "Additional Cash/Cash Equivalent Shares"),
ten percent (10%) of which Additional Cash/Cash Equivalent Shares shall be
delivered to the Escrow Agent to be held and disbursed pursuant to the Escrow
Agreement and ninety percent (90%) of which Additional Cash/Cash Equivalent
Shares shall be delivered to the Exchange Agent to be delivered to Shareholders
in the same manner as the shares of ITXC Common Stock are exchanged pursuant to
Section 2.8.

2.12. Treatment of Stock Options. Prior to the Effective Time, ITXC and
eFusion shall take all such actions as may be necessary such that at the
Effective Time each unexpired and unexercised eFusion Option under all stock
option plans of eFusion in effect on the date hereof which has been granted by
eFusion to current or former directors, officers, employees, consultants or
representatives of eFusion or to other persons with relationships to eFusion
shall be automatically assumed by ITXC and converted at the Effective Time into
an option (an "ITXC Exchange Option") to purchase that number of shares of ITXC
Common Stock equal to the number of shares of eFusion Common Stock covered by
such eFusion Option multiplied by the Exchange Ratio. Each ITXC Exchange Option
shall have an exercise price equal to the exercise price which existed under
the corresponding eFusion Option divided by the Exchange Ratio. With the
exception of the adjustments set forth above and the fact that the ITXC
Exchange Options shall be administered by the Compensation Committee of ITXC's
Board of Directors or such other committee as shall be designated from time to
time by such Board, the terms and conditions of each ITXC Exchange Option shall
be identical to the terms and conditions to which the corresponding eFusion
Option was subject immediately prior to the Effective Time; provided that with
respect to any eFusion Option that is an "incentive stock option" within the
meaning of Section 422 of the Code, the foregoing conversion shall be carried
out in a manner satisfying the requirements of Section 424(a) of the Code. In
connection with the issuance of ITXC Exchange Options, ITXC shall (i) reserve
for issuance the number of shares of ITXC Common Stock that will become subject
to ITXC Exchange Options pursuant to this Section 2.12 and (ii) register the
shares of ITXC Common Stock subject to the ITXC Exchange Options on a
registration statement on Form S-8 to the extent that such shares are so
registerable.

2.13. Restrictions on Sales and Other Transfers.

2.13.1 General Restrictions. Except as otherwise provided in Section
2.13.2 or as otherwise consented to in writing by ITXC in its absolute
discretion, until the one hundred and eightieth (180th) day after the
Closing Date, the Shareholders shall not (x) effect an offer, pledge, sale,
contract of sale, short sale, sale of any option or contract to purchase,
purchase of any option or contract to sell, grant of any option, right or
warrant to purchase, gift or other transfer or disposition of, directly or
indirectly, any of the shares of ITXC Common Stock issued to them upon
consummation of the Merger pursuant to the terms of this Agreement (such
shares, including the shares transferred to the Escrow Agent pursuant to
the Escrow Agreement, the "ITXC Merger Shares") or (y) enter into any swap
or other arrangement that transfers all or a portion of the economic
consequences associated with the ownership of any ITXC

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Merger Shares (regardless of whether any of the transactions described in
clause (x) or (y) (each, a "Disposition") are to be settled by the delivery
of ITXC Merger Shares, or such other securities, in cash or otherwise).
ITXC shall be authorized to cause its transfer agent to decline to transfer
and/or to note stop transfer restrictions on the transfer books and records
of ITXC with respect to any of the ITXC Merger Shares.

2.13.2 Sequential Lapse of Restrictions. During the Initial Period, each
Shareholder shall have the right to make a Disposition of up to ten percent
(10%) of the ITXC Merger Shares issuable to such Shareholder upon
consummation of the Merger or subsequent thereto pursuant to the terms of
the Escrow Agreement. During the Second Period, each Shareholder shall have
the right to make a Disposition of up to an additional ten percent (10%) of
the ITXC Merger Shares issuable to such Shareholder upon consummation of
the Merger or subsequent thereto pursuant to the terms of the Escrow
Agreement, together with any ITXC Merger Shares which such Shareholder had
the right to subject to a Disposition, but did not subject to a
Disposition, during the Initial Period. The restrictions set forth in
Section 2.13.1 shall cease to apply on the one hundred and eightieth
(180th) day after the Closing Date.

2.13.3 Certificates. The certificates representing the ITXC Merger
Shares shall bear a legend, in addition to any other legend required
hereunder, referring to the restrictions set forth in this Section 2.13;
provided, however, at ITXC's discretion, ITXC may issue without legend
certificates representing the ITXC Merger Shares which may be subject to a
Disposition during the Initial Period. At a Shareholder's written request,
ITXC will remove the legends required by this Section 2.13 at any time
after the applicable restrictive period has lapsed.

2.13.4 Certain Definitions. For purposes of this Section 2.13, the
following terms shall have the following meanings:

2.13.4.1 "Initial Period" shall mean the period commencing at the
Effective Time and expiring on November 9, 2000; provided, however, if
the Effective Time occurs after November 9, 2000, the term "Initial
Period" shall mean the first thirty days after the Effective Time.

2.13.4.2 "Second Period" shall mean the period commencing on the
first day after the last day of the Initial Period and expiring on the
one hundred and eightieth (180th) day after the Closing Date.

2.13.5 Approval. By virtue of the approval of the Merger and this
Agreement by the requisite vote of eFusion's shareholders, the Shareholders
shall be deemed to have agreed to each of the restrictions set forth in
this Section 2.13.

ARTICLE III

Representations and Warranties of eFusion

eFusion represents and warrants to ITXC and Subcorp as follows:

3.1 Organization.

3.1.1 eFusion is a corporation duly organized, validly existing and in
good standing under the laws of the State of Oregon and has the power and
authority to own, lease and operate its properties and to conduct its
business as presently conducted (the "Business"). eFusion is duly qualified
to transact business as a foreign corporation and is in good standing in
each jurisdiction in which the conduct of its business or the ownership,
leasing or operation of its property requires such qualification, except
for failures to be so qualified or in good standing which would not, singly
or in the aggregate with all such other failures, have an eFusion Material
Adverse Effect. eFusion does not have any liability or obligation relating
to any failure in the past to qualify to do business in any jurisdiction
other than liabilities and obligations reflected in eFusion's balance sheet
as of June 30, 2000 (the "Current Balance Sheet"), a copy of which is set
forth in Section 3.25.1 of the disclosure schedule delivered by eFusion to
ITXC

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contemporaneously with the execution of this Agreement (the "eFusion
Disclosure Schedule"). eFusion is not in violation of any of the provisions
of its articles of incorporation, as amended, or by-laws, as amended. True
and complete copies of such articles of incorporation and by-laws, as
currently in effect, have previously been delivered to ITXC's counsel (it
being understood that for purposes of this Agreement, a document shall be
deemed to have been delivered to ITXC's counsel if such document has been
delivered in hard copy or in electronic format).

3.1.2 True and complete copies of eFusion's stock transfer records have
been delivered to ITXC's counsel prior to the date hereof. Prior to the
date hereof, ITXC's counsel has been given access to true and complete
copies of all of eFusion's minute books (covering all meetings of the board
of directors, committees thereof and shareholders of eFusion since its
inception).

3.1.3 Section 3.1.3 of the eFusion Disclosure Schedule lists each stock
purchase agreement, registration rights agreement, shareholders' agreement,
voting rights agreement, investor agreement and other agreement entered
into by eFusion in connection with the issuance of any shares of its
Preferred Stock and, to eFusion's knowledge, all other agreements among the
shareholders of eFusion, in their capacities as such. True and complete
copies of each of the agreements listed in such Section 3.1.3 have been
delivered to ITXC's counsel prior to the date hereof.

3.2 Capitalization; Funded Debt.

3.2.1 Section 3.2.1 of the eFusion Disclosure Schedule sets forth the
number of shares of each class and series of capital stock of eFusion which
are authorized for issuance and, as of the date hereof, the number of such
shares that are outstanding. Such Section 3.2.1 also sets forth the names
and addresses of the record and, to the extent known by eFusion, beneficial
owners of such outstanding shares (showing, for each such owner, the number
of such shares owned of record and beneficially) as of the date hereof. All
of such outstanding shares are fully paid and non-assessable, have been
validly issued and were issued in compliance with all applicable laws and
agreements to which eFusion is or was a party. No outstanding shares of
eFusion's capital stock are subject to preemptive rights or rights of first
refusal other than rights described in the agreements listed in Section
3.1.3 of the eFusion Disclosure Schedule, which rights have been waived or
satisfied in all applicable instances. No shares of eFusion Capital Stock
were issued in violation of statutory or contractual preemptive rights or
rights of first refusal. No shares of eFusion Capital Stock are held in
eFusion's treasury.

3.2.2 Section 3.2.2 of the eFusion Disclosure Schedule lists, for each
Person who owns any warrants, options or rights (other than the warrants
referred to in Section 3.2.7 and the right to convert the Preferred Stock)
to purchase any shares of the capital stock of eFusion, the class and
series of shares issuable upon exercise of such warrants, options or
rights, the number of shares subject to such warrants, options or rights,
the grant date of such warrants, options or rights, the vesting date or
dates of such warrants, options or rights and the plans and agreement (true
and complete copies of which have been delivered to ITXC's counsel)
pursuant to which such warrants, options or rights have been granted.
Except for the Preferred Stock and the warrants referred to in Section
3.2.7 and except as set forth in Section 3.2.2 of the eFusion Disclosure
Schedule, eFusion does not have outstanding any subscriptions, options,
rights, warrants, convertible securities or other agreements or commitments
to issue, or contracts or any other agreements obligating eFusion to issue,
or to transfer from treasury, any shares of capital stock of any class or
kind, or securities convertible into such capital stock. Each warrant,
option or right granted by eFusion has been granted in accordance with all
applicable laws and regulations, including all applicable federal and state
securities laws and regulations.

3.2.3 Except as set forth in Section 3.2.3 of the eFusion Disclosure
Schedule, eFusion has no term or funded debt, debt to banks or debt to
Affiliates. Such Section 3.2.3 lists each loan agreement, credit agreement,
mortgage, indenture, promissory note, security agreement or other agreement
or instrument to which eFusion is a party evidencing term or funded debt,
debt to banks or debt to Affiliates, true and complete copies of which have
been delivered to ITXC's counsel prior to the date hereof. Except as set

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forth in such Section 3.2.3, no event has occurred which (whether with or
without notice, lapse of time or the happening or occurrence of any other
event) would constitute a default by eFusion which has not been cured or
waived under any agreement or other instrument relating to any funded debt,
bank loan or debt to Affiliates listed in such Section 3.2.3 (true and
complete copies of which waivers are set forth in such Section 3.2.3).

3.2.4 Except as set forth in Section 3.2.4 of the eFusion Disclosure
Schedule, eFusion has not guaranteed the obligations of any third party,
including any joint venture, any officer, director or shareholder of
eFusion or any entity affiliated with any such officer, director or
shareholder.

3.2.5 There are no declared and unpaid dividends on any shares of
eFusion's capital stock.

3.2.6 No event has occurred which would require the Conversion Price (as
such term is defined in eFusion's Fourth Amended and Restated Articles of
Incorporation) for any series of Preferred Stock to be adjusted since the
initial date of issuance for each such series of Preferred Stock.
Accordingly, each share of Preferred Stock is convertible into one share of
eFusion Common Stock.

3.2.7 In June 1997, eFusion issued to a third party a warrant to
purchase 500,000 shares of Series B Preferred Stock (the "Series B
Warrant"). The Series B Warrant will expire to the extent that it is not
exercised prior to the expiration of the notice period specified in Section
7.1(e) of the Series B Warrant. To the extent that the holder of the Series
B Warrant (the "Series B Warrant Holder") exercises the Series B Warrant
before the Effective Time and before eFusion has given the notice described
in Section 7.1(e) of the Series B Warrant (the "Series B Warrant Notice"),
the Series B Holder shall receive shares of Series B Preferred Stock upon
such exercise. To the extent that the Series B Warrant Holder exercises the
Series B Warrant before the Effective Time and before the Series B Warrant
expires but after eFusion has given the Series B Warrant Notice, the Series
B Holder shall receive, upon such exercise, the number of shares of eFusion
Common Stock which the Series B Holder would have then received had the
Series B Holder been entitled to receive Series B Preferred Stock upon such
exercise and then immediately converted such shares of Series B Preferred
Stock into eFusion Common Stock. On April 20, 2000, eFusion issued to a
third party a warrant to purchase 50,000 shares of eFusion Common Stock
(the "Common Warrant"). The Common Warrant will expire to the extent that
it is not exercised by the holder of the Common Warrant (the "Common
Warrant Holder") prior to the expiration of the notice period specified in
Section 7.1(e) of the Common Warrant. Section 7.1(e) of the Common Warrant
provides for the notice to be delivered to the Common Warrant Holder with
respect to the Merger (the "Common Warrant Notice"). By virtue of the
operation of the Series B Warrant, the Common Warrant and the provisions of
this Agreement, immediately prior to the Effective Time there will not be
outstanding any warrants, options or rights to purchase any shares of the
capital stock of eFusion other than the Preferred Stock and the eFusion
Options.

On August 8, 2000, the Board of Directors of eFusion approved the
Articles Amendment and has recommended that the shareholders of eFusion
adopt the Articles Amendment (the "Articles Recommendation").

3.3 Subsidiaries; Acquisitions; Dispositions.

3.3.1 Except as set forth in Section 3.3.1 of the eFusion Disclosure
Schedule, eFusion does not directly or indirectly own or control, and has
never directly owned or controlled, any Subsidiary. The Subsidiary
referenced in Section 3.3.1 of the eFusion Disclosure Schedule is inactive,
has never commenced business and has no assets, liabilities or obligations
of any nature.

3.3.2 Except as set forth in Section 3.3.2 of the eFusion Disclosure
Schedule, eFusion does not, directly or indirectly, (i) own of record or
beneficially (A) any shares of capital stock or securities convertible into
capital stock of any other corporation or (B) any equity interest in any
partnership, joint venture, limited liability company or other business
enterprise or (ii) own or control any other entity. Except as set forth in
Section 3.3.2 of the eFusion Disclosure Schedule, since eFusion's
formation, eFusion has not acquired the capital stock or assets of any
business entity, or invested in any partnership, limited partnership,
limited liability company, joint venture or other business entity.

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3.3.3 Except as set forth in Section 3.3.3 of the eFusion Disclosure
Schedule, there are no agreements between eFusion and any third party
relating to the operation, governance, ownership or other material aspect
of any joint venture.

3.3.4 eFusion has not, since its formation, purchased, sold or otherwise
disposed of any material assets or any entity otherwise than in the
ordinary course of business.

3.4 Tax Returns. Section 3.4 of the eFusion Disclosure Schedule lists each
jurisdiction with respect to which eFusion is required to file Tax Returns.

3.5 Other Business Names. Section 3.5 of the eFusion Disclosure Schedule
lists each business name or registered trade name used in connection with
eFusion's business by eFusion or its predecessors or by any companies acquired
by or merged into such entities subsequent to January 1, 1996, and each
jurisdiction in which any such trade name is registered.

3.6 Owned Real Property. eFusion does not own any real property.

3.7 Leased Real Property.

3.7.1 Section 3.7.1 of the eFusion Disclosure Schedule sets forth all
leases pursuant to which eFusion leases any real estate (the "Real Property
Leases"). True and complete copies of the Real Property Leases have been
delivered to counsel for ITXC prior to the date hereof.

3.7.2 eFusion is not in default in any material respect under the Real
Property Leases. eFusion is not aware of any facts which, with notice
and/or the passage of time, would constitute such a default. The possession
of the applicable real property by eFusion under the Real Property Leases
has not been disturbed and, to eFusion's knowledge, no claim has been
asserted against eFusion which is materially adverse to its rights in such
leasehold interests.

3.7.3 To eFusion's knowledge, the portions of the buildings leased by
eFusion pursuant to the Real Property Leases comply in all material
respects with all applicable statutes, ordinances, rules and regulations
relating to the construction of such buildings and their current use. The
roof, exterior walls, and all other structural components of such buildings
are in good condition, ordinary wear and tear excepted. eFusion has
performed all periodic maintenance which it has been required to perform
under applicable lease provisions, and has not deferred any such
maintenance. The heating, air conditioning, plumbing, fire sprinkler
system, lighting and loading doors, if any, and electrical systems of such
buildings are in good operating condition, ordinary wear and tear excepted.
Except as set forth in Section 3.7.3 of the eFusion Disclosure Schedule,
eFusion has not sublet such buildings or any part thereof.

3.7.4 eFusion, as a tenant, has never assigned a lease to a third party.

3.7.5 Except as set forth in Section 3.7.5 of the eFusion Disclosure
Schedule, consummation of the Merger will not constitute an assignment,
sublease or default under the Real Property Leases.

3.7.6 All of the Real Property Leases (i) are valid and subsisting and
in full force and effect with respect to eFusion and, to eFusion's
knowledge, with respect to any other party thereto and (ii) were entered
into as a result of bona fide arm's length negotiations with the other
party or parties thereto. eFusion has valid leasehold interests in all
properties leased thereunder free and clear of all Liens.

3.8 Tangible Personal Property.

3.8.1 Section 3.8.1 of the eFusion Disclosure Schedule identifies all
items of tangible personal property owned and used by eFusion in connection
with the Business on the date hereof which had a book value of more than
$25,000 as of the date of the Current Balance Sheet, including machinery,
motor vehicles, computer equipment, furniture, fixtures and leasehold
improvements.

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3.8.2 Section 3.8.2 of the eFusion Disclosure Schedule contains a true
and complete list of all machinery, motor vehicles, computer equipment,
other equipment, furniture, fixtures, and all other tangible personal
property leased by eFusion for the Business on the date hereof pursuant to
leases which involve monthly payments of more than $5,000 on account of any
such lease. True and complete copies of all leases pursuant to which such
items are leased to eFusion have been furnished to ITXC's counsel prior to
the date hereof. eFusion is not in default in any material respect under
any of such leases and is not aware of any fact which, with notice and/or
passage of time, would constitute such a default. All of the leases so
listed (i) are valid and subsisting and in full force and effect with
respect to eFusion, and, to eFusion's knowledge, with respect to any other
party thereto and (ii) were entered into as a result of bona fide arm's
length negotiations with the other party or parties thereto. eFusion has
valid leasehold interests in all personal property leased thereunder free
and clear of all Liens.

3.8.3 All personal property owned by eFusion or leased and used by
eFusion in the Business is in good condition, normal wear and tear
excepted, and is in good operating order.

3.9 Proprietary Information. To eFusion's knowledge, no third party has
claimed or has a reasonable basis to claim that eFusion or any officer,
director, or other Person engaged now or since eFusion's inception by, or
affiliated now or since eFusion's inception with, eFusion has (i) violated or
may be violating any of the terms or conditions of his or her employment, non-
competition or non-disclosure agreement with such third party, (ii) disclosed
or may be disclosing or utilized or may be utilizing any trade secret or other
proprietary information or documentation of such third party or (iii)
interfered or may be interfering in the employment relationship between such
third party and any of its present or former employees. No third party has
requested information from eFusion which suggests that such third party is
reasonably contemplating such a claim. To eFusion's knowledge, no officer,
director, or other Person engaged now or since eFusion's inception by, or
affiliated now or since eFusion's inception with, eFusion has employed or
proposes to employ any trade secret or any information or documentation
proprietary to any former employer, and no officer, director, or other Person
engaged now or since eFusion's formation by, or affiliated now or since
eFusion's formation with, eFusion has violated any confidential relationship
which such Person may have had with any third party, in connection with the
development or sale of any product, service or proposed product or service of
eFusion. To eFusion's knowledge, neither the consummation of the transactions
contemplated by this Agreement nor the carrying on of the Business as officers,
employees or agents by any officer, director or key employee of eFusion, or the
conduct or proposed conduct of the business of eFusion, will conflict with or
result in a breach of the terms, conditions or provisions of or constitute a
default under any contract, covenant or instrument under which any such
officer, director or key employee is obligated. For the past three years, each
employee and consultant of eFusion who has been afforded access to proprietary
information of eFusion has executed a confidentiality and non-disclosure
agreement. Section 3.9 or Section 3.10.15 of the eFusion Disclosure Schedule
sets forth copies of the current template confidentiality and non-disclosure
agreements that eFusion uses in its Business.

3.10 Intellectual Property.

3.10.1 For the purposes of this Section 3.10.1, the following terms
shall have the following definitions:

"eFusion Intellectual Property" means any Intellectual Property that
is owned by or licensed to eFusion.

"Intellectual Property" means any or all of the following and all
rights in, arising out of, or associated therewith: (i) all United
States and foreign patents and applications therefor and all reissues,
divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof, and equivalent or similar rights
anywhere in the world in inventions and discoveries ("Patents");
(ii) all inventions (whether patentable or not), invention disclosures,
improvements, trade secrets, proprietary information, know how,
technology, technical data and customer lists, and all documentation
embodying or evidencing any of the foregoing; (iii) all copyrights,
copyright

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registrations and applications therefor and all other rights
corresponding thereto throughout the world ("Copyrights"); (iv) all
mask works, mask work registrations and applications therefor, and any
equivalent or similar rights in semiconductor masks, layouts,
architectures or topology ("Maskworks"); (v) all industrial designs and
any registrations and applications therefor throughout the world; (vi)
all trade names, logos, common law trademarks and service marks,
trademark and service mark registrations and applications therefor and
all goodwill associated therewith throughout the world ("Trademarks");
(vii) all databases and database collections and all rights therein
throughout the world; (viii) all computer software including all source
code, object code, firmware, development code, files, records and data,
and any medium on which any of the foregoing is recorded; (ix) all
World Wide Web addresses, sites and domain names; and (x) any similar,
corresponding or equivalent rights to any of the foregoing anywhere in
the world.

"Registered Intellectual Property" means all United States,
international and foreign: (i) Patents, including applications
therefor; (ii) registered Trademarks, applications to register
Trademarks, including intent-to-use applications, or other
registrations or applications related to Trademarks; (iii) Copyright
registrations and applications to register Copyrights; (iv) Maskwork
registrations and applications to register Maskworks; and (v) any other
eFusion Intellectual Property owned by eFusion that is the subject of
an application, certificate, filing, registration or other document
issued by, filed with, or recorded by, any state, government or other
public legal authority at any time.

3.10.2 Section 3.10.2 of the eFusion Disclosure Schedule lists all
Registered Intellectual Property, in whole or in part owned by or filed in
the name of eFusion ("eFusion Registered Intellectual Property").

3.10.3 Each item of eFusion Intellectual Property owned by eFusion,
including all eFusion Registered Intellectual Property listed in Section
3.10.2 of the eFusion Disclosure Schedule, is free and clear of all Liens,
other than licenses granted by eFusion to end-user customers, re-sellers or
distributors in the ordinary course of business.

3.10.4 eFusion owns exclusively, and has good title to, all eFusion
Intellectual Property, including all copyrighted works that are software
products of eFusion or other works of authorship that eFusion otherwise
purports to own, except for eFusion Intellectual Property licensed to
eFusion and those items described in Section 3.10.4 of the eFusion
Disclosure Schedule and except for freeware (which freeware is not required
to be disclosed in such Section 3.10.4).

3.10.5 Except as otherwise indicated in Section 3.10.5 of the eFusion
Disclosure Schedule and except for licenses granted by eFusion to end-user
customers, re-sellers or distributors in the ordinary course of business,
eFusion has not transferred ownership of, or granted any license or right
to use, any Intellectual Property that is, or was, eFusion Intellectual
Property to any other Person or knowingly permitted eFusion's rights in
such eFusion Intellectual Property to lapse or enter into the public
domain.

3.10.6 The eFusion Intellectual Property constitutes all the
Intellectual Property used in and/or necessary to the conduct of the
Business as currently conducted including (i) the making, using, selling,
marketing or importing of any product or device, (ii) the practice of any
process, (iii) the offering or performance of any service, or (iv) the
copying, display, performance, distribution, creation of derivative works
of, or the exploitation of any device or work.

3.10.7 Section 3.10.7 of the eFusion Disclosure Schedule contains a list
of all contracts, licenses and agreements (other than licenses available to
the general public) pursuant to which any Person, including any Affiliate
of eFusion, has licensed any Intellectual Property to eFusion. True and
correct copies of such documents have been provided to ITXC's counsel prior
to the date hereof.

3.10.8 Section 3.10.8 of the eFusion Disclosure Schedule contains a list
of all contracts, licenses and agreements pursuant to which eFusion has
licensed or transferred to any third Person or any Affiliate of eFusion any
material eFusion Intellectual Property (other than end-user, reseller and
distributor licenses granted by eFusion in the ordinary course of
business).

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3.10.9 The consummation of the transactions contemplated by this
Agreement will not cause or obligate eFusion (i) to grant to any third
party any rights or licenses with respect to any eFusion Intellectual
Property or (ii) pay any royalties or other amounts in excess of those
being paid by eFusion prior to the date hereof.

3.10.10 Section 3.10.10 of the eFusion Disclosure Schedule lists all
agreements, licenses and contracts pursuant to which eFusion has agreed to
indemnify, hold harmless, or otherwise agree to be liable for any losses,
costs or damages of a third party with respect to any Intellectual Property
or product or service of eFusion. True and complete copies of all such
agreements, licenses and contracts have been provided to ITXC's counsel
prior to the date hereof.

3.10.11 As of the Closing Date, all material eFusion Intellectual
Property (other than eFusion Intellectual Property licensed by eFusion)
will be fully transferable, alienable or licensable by eFusion without
restriction and without payment of any kind to any third party.

3.10.12 The consummation of the transactions contemplated by this
Agreement will not result in the loss of, or otherwise adversely affect,
any ownership rights of eFusion in any eFusion Intellectual Property (other
than licenses available to the general public) or result in the breach or
termination of any license (other than licenses available to the general
public), contract or agreement to which eFusion is a party respecting any
material eFusion Intellectual Property.

3.10.13 To eFusion's knowledge, the operation of its business, including
(i) the making, using, selling, marketing or importing of any product or
device, (ii) the practice of any process, (iii) the offering or performance
of any service, or (iv) the copying, display, performance, distribution,
creation of derivative works of, or the exploitation of any device or work
has not infringed or misappropriated the Intellectual Property of any
Person, violated the rights of any Person, or constituted unfair
competition or unfair trade practices under the laws of any jurisdiction,
and, except as set forth in Section 3.10.13 of the eFusion Disclosure
Schedule, eFusion has not received written notice from any Person claiming
that such operation or any act, product, technology or service of eFusion
infringes or misappropriates the Intellectual Property of any Person or
constitutes unfair competition or trade practices under the laws of any
jurisdiction (nor does eFusion have any knowledge of any reasonable basis
therefor). To eFusion's knowledge, (i) the making, using, selling,
marketing or importing of any product or device currently under development
by eFusion, (ii) the practice of any process currently under development by
eFusion, (iii) the offering or performance of any service currently under
development by eFusion and (iv) the copying, display, performance,
distribution, creation of derivative works of, or the exploitation of any
device or work currently under development by, eFusion, does not, and will
not when done in connection with the Business as conducted in substantially
the same manner following the Closing by ITXC, infringe or misappropriate
the Intellectual Property of any Person, violate the rights of any Person,
or constitute unfair competition or unfair trade practices under the laws
of any jurisdiction, and, except as set forth in Section 3.10.13 of the
eFusion Disclosure Schedule, eFusion has not received written notice from
any Person claiming that such operation or any act, product, technology or
service misappropriates the Intellectual Property of any Person or
constitutes unfair competition or unfair trade practices under the laws of
any jurisdiction (nor does eFusion have any knowledge of any reasonable
basis therefor).

3.10.14 There are no contracts, licenses or agreements between eFusion
and any other Person with respect to eFusion Intellectual Property under
which there is any litigation or other legal proceeding known to eFusion
regarding the scope of such agreement or performance under such contract,
license or agreement including with respect to any payments to be made or
received by eFusion thereunder.

3.10.15 All employees of eFusion who have contributed to the development
of any of the eFusion Intellectual Property owned by eFusion have entered
into valid and binding agreements with eFusion sufficient to vest title in
eFusion to all Intellectual Property created by such employee in the scope
of his or her employment with eFusion. Section 3.9 of the eFusion
Disclosure Schedule sets forth copies of the current template proprietary
rights agreement that eFusion uses in its Business.

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3.10.16 Each material item of eFusion Registered Intellectual Property
is valid and subsisting, all necessary registration, maintenance and
renewal fees currently due in connection with such eFusion Registered
Intellectual Property have been paid and all necessary documents,
recordations and certificates in connection with such eFusion Registered
Intellectual Property have been filed with the relevant patent, copyright,
trademark or other authorities in the United States or foreign
jurisdictions, as the case may be, for the purposes of maintaining such
eFusion Registered Intellectual Property.

3.10.17 eFusion has not claimed small business status, or other
particular status in the application for any Registered eFusion
Intellectual Property which claim of status was false at the time made or
which has since become inaccurate or false or that will no longer be true
and accurate as a result of the Closing.

3.10.18 Except for those items owned by third parties and licensed to
eFusion either pursuant to an agreement listed in Section 3.10.7 of the
eFusion Disclosure Schedule or pursuant to a license available to the
general public, all software products of eFusion were written and created
solely by either (i) employees of eFusion acting within the scope of their
employment, or (ii) by third parties who have validly assigned all of their
rights, including Intellectual Property rights, in such products to
eFusion, and no third party owns any Intellectual Property rights to such
software products.

3.10.19 eFusion has no knowledge of any facts or circumstances that
provide a reasonable basis for rendering any eFusion Intellectual Property
owned by eFusion invalid or unenforceable. Without limiting the foregoing,
eFusion knows of no information, materials, facts, or circumstances,
including any information or fact that would constitute prior art, that
would provide a reasonable basis for rendering any of the eFusion
Registered Intellectual Property invalid or unenforceable or would
adversely effect any pending application for any eFusion Registered
Intellectual Property, and eFusion has not misrepresented or failed to
disclose, and is not aware of any misrepresentation or failure to disclose,
any facts or circumstances in any application for any eFusion Registered
Intellectual Property that would constitute fraud or a material
misrepresentation with respect to such application or that would otherwise
effect the validity or enforceability of any eFusion Registered
Intellectual Property.

3.10.20 eFusion has taken all steps reasonable and customary under the
circumstances to protect the confidentiality and trade secret status of any
material confidential information of eFusion, and eFusion knows of no
instance in which a third party has had access to the material confidential
information of eFusion for which it could be reasonably claimed that
eFusion has failed to protect the confidentiality of any material
confidential information of eFusion.

3.11 Brokerage. No broker or finder has rendered services to eFusion or, to
eFusion's knowledge, to any shareholder of eFusion in connection with this
Agreement or the transactions contemplated hereby. Section 3.11 of the eFusion
Disclosure Schedule identifies any other agreement executed by eFusion which
will obligate eFusion or any of its successors or Affiliates to pay any
brokerage or finder's fee in the future with respect to any type of commercial,
corporate, financial, acquisition, banking, borrowing or other business
transaction.

3.12 Accounts Receivable.

3.12.1 Except as set forth in Section 3.12 of the eFusion Disclosure
Schedule, all of the accounts receivable of eFusion have originated in the
ordinary course of business of eFusion, are valid and fully collectible
(subject to reserves reflected in the Current Balance Sheet) and are not
subject to any defense, counterclaim or setoff, except to the extent of any
such reserve. Except as set forth in such Section 3.12, no such account
receivable has been factored.

3.12.2 Such Section 3.12 lists each account receivable of eFusion which
is collateralized, the nature and amount of that collateral and the
priority of the Lien held by eFusion in that collateral.

3.12.3 eFusion has delivered to ITXC's counsel prior to the date hereof
a schedule setting forth a true and complete aging of its accounts
receivable as of June 30, 2000.

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3.13 Title to Assets. eFusion has good and marketable title in and to all of
the assets and property of its business reflected in the Current Balance Sheet
plus all assets and property purchased by eFusion since the date of the Current
Balance Sheet, less all assets and property which eFusion has disposed of in
the ordinary course of business since the date of the Current Balance Sheet,
which assets and property are free and clear of any Liens except as otherwise
disclosed in the next sentence. The only Liens which exist and, at the Closing,
will exist on the assets and property of the Surviving Corporation at the
Effective Time are Liens which either (a) secure liabilities disclosed in the
Current Balance Sheet, (b) secure the ownership interests of lessors of
equipment used in the Business and disclosed on other exhibits annexed hereto,
(c) are Liens for current taxes or assessments or governmental charges not yet
due and payable or (d) are disclosed on Section 3.13 of the eFusion Disclosure
Schedule.

3.14 Material Contracts.

3.14.1 Section 3.14.1 of the eFusion Disclosure Schedule identifies the
following contracts, agreements, leases and other obligations
(collectively, "Contracts") to which eFusion is a party or by which eFusion
is bound: (a) Contracts (other than non-disclosure agreements, proprietary
rights agreements, employment offer letters, stock option grant agreements
and any agreements referenced in any other Section of the eFusion
Disclosure Schedule) with any of the shareholders, employees, agents,
consultants, advisors (other than agreements providing for accountants or
attorneys to be paid at standard hourly rates), salesmen, distributors or
sales representatives of eFusion; (b) powers of attorney given by or to
eFusion; (c) agency Contracts given by or to eFusion; (d) membership
Contracts held by eFusion in any trade association; (e) Contracts providing
for secured or unsecured loans or lines of credit; (f) Contracts
restricting eFusion or, to eFusion's knowledge, any of the employees or
affiliates of eFusion from doing business in any areas or in any way
limiting competition; (g) Contracts calling for aggregate payments by
eFusion in excess of $50,000 on an annual basis and which will not be
terminable without cost or liability within 60 days after the Closing Date;
(h) Contracts providing for the installation or maintenance of equipment
purchased or leased by eFusion and requiring payment by eFusion of more
than $1,000 per month; (i) Contracts obligating eFusion to provide
maintenance in the future other than maintenance obligations that terminate
at the same time that eFusion's service obligations terminate thereunder;
(j) Contracts under which eFusion has granted any Person any registration
rights; (k) Contracts affecting the voting of any securities of eFusion;
(l) any other Contract which might reasonably be expected to have a
material impact on the business, operations, assets or financial condition
of eFusion; (m) any other Contract entered into by eFusion outside the
ordinary course of business; and (n) all commitments to enter into any such
Contracts described in clauses (a) through (m) above. Except as disclosed
in such Section 3.14.1, eFusion has performed all material obligations
required on its part to be performed under each of such Contracts to which
eFusion is a party or otherwise bound and no default has occurred
thereunder on the part of eFusion, whether waived or not waived, which
could have a material adverse effect upon the results of operations or
financial condition of, or impose a material liability upon, eFusion. To
eFusion's knowledge, all parties to such Contracts with eFusion are in
substantial compliance therewith and no event has occurred which, through
the giving of notice or the passage of time or both, would cause or
constitute a material default under any such Contracts or would cause the
acceleration of any obligation of any party thereto.

3.14.2 Except as set forth in Section 3.14.2 of the eFusion Disclosure
Schedule, eFusion does not have any outstanding loans or advances to any
Person or entity and is not obligated to make any such loans or advances,
except for advances to its employees in respect of reimbursable business
expenses anticipated to be incurred by them in connection with their
performance of services for eFusion.

3.14.3 eFusion has not assumed, guaranteed, endorsed or otherwise become
directly or contingently liable on any indebtedness of any other Person or
entity (including liability by way of agreement, contingent or otherwise,
to purchase, to provide funds for payment, to supply funds to or otherwise
invest in the debt of another Person or entity, or otherwise to assure the
creditor against loss), except for guarantees by endorsement of negotiable
instruments for collection in the ordinary course of business.

3.14.4 Copies of the contracts listed or referred to in Section 3.14.1
of the eFusion Disclosure Schedule have been delivered to ITXC's counsel
prior to the date hereof.

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3.15 Customers and Suppliers.

3.15.1 Section 3.15.1 of the eFusion Disclosure Schedule lists the top
16 customers, or groups of related customers, of the Business (based on the
aggregate revenues paid by such customers, or groups of related customers,
to eFusion and the aggregate revenues received by eFusion, during the 12
months ended March 31, 2000), the aggregate revenues paid by such customers
to eFusion during such period, the general nature of the products sold
and/or services provided to such customers and, if applicable, the reasons
such contracts were terminated or are no longer in effect. True and correct
copies of all contracts (other than purchase orders entered into in the
ordinary course of business) with the customers referred to in Section
3.15.1 of the eFusion Disclosure Schedule have been delivered to ITXC's
counsel prior to the date hereof.

3.15.2 Section 3.15.2 of the eFusion Disclosure Schedule lists the top
ten vendors to the Business (based on the aggregate amounts paid by eFusion
to such vendors and the aggregate amounts paid by eFusion to all vendors
during the 12 months ended March 31, 2000). True and correct copies of all
contracts (other than purchase orders entered into in the ordinary course
of business) with the vendors referred to in Section 3.15.2 of the eFusion
Disclosure Schedule have been delivered to ITXC's counsel prior to the date
hereof.

3.15.3 To eFusion's knowledge, none of the customers listed in Section
3.15.1 of the eFusion Disclosure Schedule and none of the vendors listed in
Section 3.15.2 of the eFusion Disclosure Schedule intends to terminate or
materially change its relationship with eFusion (as such or as the
Surviving Corporation after the Merger has been consummated) prior to, on
or after the Closing Date, except (x) as disclosed in either or both of
such sections of the eFusion Disclosure Schedule or (y) as otherwise
specifically contemplated by the contracts between eFusion and such
customers or vendors (correct copies of which have been delivered to ITXC's
counsel).

3.16 Transactions with Related Parties. Except for such transactions as
are described in Section 3.16 of the eFusion Disclosure Schedule, there
have been no transactions during the last three years between eFusion and
any director, officer, employee, shareholder or Affiliate of eFusion other
than transactions relating to the employment or shareholdings of any such
Person. With respect to each transaction listed in such Section 3.16 of the
eFusion Disclosure Schedule, each such transaction has been on terms no
less favorable to eFusion than those which could have been obtained at the
time from bona fide third parties. Since January 1, 1996, none of the
officers, directors or employees of eFusion or any spouse or relative of
any of such persons, has been a director or officer of, or has had any
direct or indirect interest in, any firm, corporation, association of
business enterprise which during such period has been a supplier, customer
or sales agent of the Business or has competed with the Business, except
for ownership of less than 5% of the outstanding stock of a publicly traded
corporation.

3.17 Labor Matters.

3.17.1 eFusion is not a party to any collective bargaining agreements.

3.17.2 Since January 1, 1999, eFusion has not had any strike, slowdown,
picketing, work stoppage, material labor dispute or threat of a material
labor dispute or any attempt or threat of an attempt by a labor union to
organize its employees; nor, to eFusion's knowledge, has any application or
complaint about eFusion been filed by any employee or any union with any
governmental authority.

3.17.3 Section 3.17.3 of the eFusion Disclosure Schedule contains a list
of all current employment or consulting contracts with, and covenants
against competition by, any Person employed by eFusion presently or within
the last two (2) years. Correct copies of all such agreements have been
delivered to ITXC's counsel prior to the date hereof.

3.17.4 Section 3.17.4 of the eFusion Disclosure Schedule is a current
list showing the names of all current employees of eFusion, their original
dates of employment, their job titles, their current annual rate of pay for
salaried employees, their current hourly rates for hourly employees and
their bonuses, if any.

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3.17.5 Except as set forth in Section 3.17.5 of the eFusion Disclosure
Schedule, all employees of eFusion are employees at will who, subject to
applicable laws, may be terminated by eFusion at any time with no
obligation to make any payment except wages to the date of termination,
accrued vacation and sick leave benefits.

3.17.6 Except as set forth in Section 3.17.6 of the eFusion Disclosure
Schedule, eFusion is in material compliance with all applicable laws
regarding employment, wages and hours. eFusion is not engaged in any
discriminatory hiring or employment practices or any unfair labor practices
nor have any employment discrimination or unfair labor practice complaints
been filed against eFusion, or, to eFusion's knowledge, been threatened to
be filed against eFusion, with any governmental authority having
jurisdiction over the labor matters of eFusion. eFusion has not been
threatened by any former employee with any suit alleging wrongful
termination and eFusion does not have knowledge of facts which might
reasonably be expected to form a basis for such a suit.

3.17.7 Section 3.17.7 of the eFusion Disclosure Schedule lists all
former employees who left eFusion voluntarily or were terminated from
January 1, 1998 through the date hereof.

3.18 Benefit Plans; ERISA.

3.18.1 Section 3.18.1 of the eFusion Disclosure Schedule contains a true
and complete list of all funded or unfunded, written or oral, employee
benefit plans, contracts, agreements, incentives, or salary, wage or other
compensation plans or arrangements, including all pension and profit
sharing plans, savings plans, bonus plans, deferred compensation plans,
incentive compensation plans, stock purchase plans, supplemental retirement
plans, severance plans, termination pay plans, stock option plans,
hospitalization plans, medical insurance plans, life insurance plans,
dental insurance plans, disability insurance plans, salary continuation
plans, vacation plans, supplemental unemployment benefit plans, retiree
benefit plans and, in each such case, comparable agreements, and each other
employee benefit program, plan, policy or arrangement (each a "Benefit
Plan") maintained, contributed to, or required to be contributed to, by
eFusion for the benefit of the former or current employees, directors,
agents or consultants of eFusion, whether or not subject to the Employee
Retirement Income Security Act of 1974 ("ERISA") and whether legally
binding or not. For purposes of this Section 3.18, any reference to the
term "eFusion" shall be deemed to also refer to any entity which is under
common control or affiliated with eFusion within the meaning of Section
4001 of ERISA, and the rules and regulations promulgated thereunder, and/or
Sections 414(b), (c), (m) or (o) of the Code and the rules and regulations
promulgated thereunder.

3.18.2 eFusion has delivered to ITXC's counsel prior to the date hereof
true and complete copies of the Benefit Plans and all related trust
documents and other related agreements. Each of the Benefit Plans listed in
Section 3.18.1 of the eFusion Disclosure Schedule is and has at all times
been in material compliance with the provisions of law applicable to such
plans. No event has occurred, is threatened or is about to occur which
would constitute a reportable event (for which the notice requirement has
not been waived) within the meaning of (S)4043(b) of ERISA with respect to
any "employee pension benefit plan" (as defined in (S)3(2) of ERISA) of
eFusion (each a "Pension Plan") if such plan were subject to ERISA.

3.18.3 To eFusion's knowledge, nothing has occurred to any of the
Benefit Plans that are subject to the requirements of Section 401(a) of the
Code that would adversely affect the qualified status of any such Benefit
Plans under Section 401(a) of the Code.

3.18.4 Each fiduciary and every plan official of each Benefit Plan is
bonded to the extent required by applicable law. No steps have been taken
to terminate any Benefit Plan and no liability has been incurred by eFusion
with respect to the Benefit Plans that has not been satisfied in full; to
eFusion's knowledge no condition exists that could reasonably be expected
to result in eFusion's incurring a material liability under applicable law
with respect to the Benefit Plans other than the payment of benefits in
accordance with the terms of such Benefit Plans, and no proceeding has been
initiated to terminate, or to appoint a trustee to administer, any Pension
Plan. eFusion has not withdrawn from any Pension Plan or ceased operations
at any facility. In the event that any Benefit Plan was required to file
annual reports with any governmental

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authority, those sections of any such annual reports heretofore filed with
any governmental authority by or on behalf of such Benefit Plan which were
required to be certified were certified without qualification by the
accountants or actuaries of such Benefit Plan. By their terms, each of the
Benefit Plans can be amended, terminated or otherwise discontinued after
the Closing Date without liability to eFusion.

3.18.5 Except as specifically set forth in Section 3.18.5 of the eFusion
Disclosure Schedule, the execution and performance of the transactions
contemplated by this Agreement will not (either alone or upon the
occurrence of any additional or subsequent event) constitute an event under
any Benefit Plan or individual agreement relating thereto that will or may
reasonably be expected to result in any payment (whether of severance pay
or otherwise), acceleration, vesting or increase in benefits with respect
to any current or former employee, consultant, agent or director of
eFusion.

3.18.6 No Benefit Plan is (a) a multiemployer plan as defined in Section
3(37) of ERISA, (b) a defined benefit plan as defined in Section 3(35) of
ERISA or (c) subject to the funding standards of Section 412 of the Code.

3.18.7 eFusion has made all contributions required to be made to each
Benefit Plan under the terms of such plan and applicable law.

3.18.8 No transaction prohibited by any applicable law has occurred with
respect to any Benefit Plan listed in Section 3.18.5 of the eFusion
Disclosure Schedule which could subject any Benefit Plan or any related
trust, eFusion or any affiliate of eFusion, or any director or employee of
eFusion, to any material tax or penalty imposed by any applicable law,
either directly or indirectly, and whether by way of indemnity or
otherwise.

3.18.9 eFusion or the applicable plan administrator has timely filed all
required reporting and disclosure forms for each Benefit Plan with the
appropriate governmental authorities.

3.18.10 Each group health plan (as defined in Section 5000(b)(1) of the
Code) maintained by eFusion has been administered in material compliance
with applicable laws. eFusion does not now and has never maintained,
sponsored or contributed to any plan or program or arrangement providing
post-termination employment, health, dental, disability or life insurance
benefits with respect to employees or former employees and their spouses
and dependents other than COBRA continuation coverage pursuant to Sections
601 through 609 of ERISA.

3.19 Insurance. Section 3.19 of the eFusion Disclosure Schedule lists all
insurance policies which eFusion currently has in effect and the status of any
claims made thereunder. Except as otherwise noted in Section 3.19 of the
eFusion Disclosure Schedule, all such insurance policies provide occurrence
coverage. Accurate summaries of said policies, including all endorsements, have
been delivered to ITXC's counsel prior to the date hereof. Complete and true
copies of said policies, including all endorsements, shall be delivered to ITXC
within a reasonable period of time after the date hereof. All premiums due and
payable under all such policies have been paid, and eFusion is otherwise in
compliance in all material respects with the terms and conditions of all such
policies. The reserves established by eFusion in respect of all matters as to
which eFusion self-insures or carries retentions and/or deductibles, including
product and intellectual property infringement liability, workers' medical
coverage and workers' compensation, are adequate and appropriate in light of
eFusion's experience, and eFusion is not aware of any facts or circumstances
existing as of the date hereof that would reasonably be expected to cause such
reserves to be inadequate or inappropriate. eFusion has not been subject to any
product liability claim or any claim asserting that services provided by
eFusion have been provided negligently, other than claims described in Section
3.19 of the eFusion Disclosure Schedule. eFusion is not in violation of any
covenant in any agreement requiring it to maintain insurance.

3.20 Licenses and Permits. eFusion and its employees have all licenses,
permits, orders, approvals and authorizations required for the conduct of the
Business as presently conducted and as contemplated to be conducted. A list of
such licenses, permits, orders, approvals and authorizations, to the extent
material to eFusion, is set forth in Section 3.20 of the eFusion Disclosure
Schedule. In all material respects, eFusion is

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acting within the terms of such licenses, permits, orders, approvals and
authorizations. eFusion has not received any notice of investigation,
evaluation or suspension of any such licenses, permits, orders, approvals or
authorizations. To eFusion's knowledge, no suspension or cancellation of any
such licenses, permits, orders, approvals or authorizations has been threatened
or is contemplated.

3.21 Authority Relative to this Agreement; Enforceability. Subject to the
receipt of any governmental approvals and approval of the Merger and the
Articles Amendment by eFusion's shareholders, the execution, delivery and
performance of this Agreement are within the corporate power and authority of
eFusion and have been duly authorized by all requisite corporate action on the
part of eFusion. This Agreement is a legal, valid and binding obligation of
eFusion, enforceable against eFusion in accordance with its terms, except
insofar as its enforcement may be limited by (a) bankruptcy, insolvency,
moratorium or similar laws affecting the enforcement of creditors' rights
generally and (b) equitable principles limiting the availability of equitable
remedies. All persons who executed this Agreement on behalf of eFusion have
been duly authorized to do so. Section 3.21 of the eFusion Disclosure Schedule
sets forth all applicable voting requirements relating to the submission of
this Agreement and the Merger to the shareholders of eFusion for their
approval.

3.22 Compliance with Other Instruments; Consents. Assuming approval of the
Articles Amendment by eFusion's shareholders and filing of the Articles
Amendment with the Oregon Secretary of the State, all steps taken and to be
taken by eFusion, its Board of Directors and its shareholders in connection
with the Merger, including the manner in which the Allocation is to be
determined, is and shall be in accordance with all applicable provisions of
eFusion's Fourth Amended and Restated Articles of Incorporation (as amended by
the Articles Amendment), by-laws and other plans and agreements to which
eFusion is subject. Except as set forth in Section 3.22 of the eFusion
Disclosure Schedule, neither the execution and delivery of this Agreement by
eFusion nor the consummation of the transactions contemplated hereby will:

3.22.1 conflict with, or result in a breach of any provision of,
eFusion's Fourth Amended and Restated Articles of Incorporation or by-laws;

3.22.2 violate, or conflict with, or result in a breach of any provision
of, or constitute a default (or an event which, with the giving of notice,
the passage of time or otherwise, would constitute a default) under, or
entitle any party (with the giving of notice, the passage of time or
otherwise) to terminate, accelerate, modify or call a default under, or
result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of eFusion under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
deed of trust, license, contract, undertaking, agreement, lease or other
instrument or obligation to which eFusion is a party;

3.22.3 violate any order, writ, injunction, decree, statute, rule or
regulation applicable to eFusion, its properties or its assets; or

3.22.4 require any action or consent or approval of, or review by, or
registration or filing by eFusion or any of its Affiliates with, any third
party or any governmental authority, other than (i) registrations or other
actions required under federal and state securities laws as are
contemplated by this Agreement, or (ii) as required by the HSR Act or the
OBCA,

except, in the case of Sections 3.22.2, 3.22.3 and 3.22.4, for any of the
foregoing that, individually or in the aggregate, is or are not material to
eFusion or ITXC and would not materially and adversely affect the ability of
the parties hereto to consummate the transactions contemplated hereby.

3.23 Compliance with Applicable Laws. eFusion is in compliance in all
material respects with all statutes, laws, rules, regulations, orders and
ordinances relating to eFusion (collectively, "Laws") and eFusion has not
received any notice or advice to the contrary. All reports relating to eFusion
required to be filed with any governmental authority, including any
governmental authority issuing licenses or qualifications to acquire, import,
export, manufacture, assemble or sell various classes and types of products or
services sold by eFusion, have been timely filed and all information contained
therein is true and correct in all material respects.

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Specifically, but without limitation, eFusion has maintained all records, if
any, required to be maintained pursuant to the Laws of any governmental
authority or by any jurisdiction where eFusion is licensed. eFusion has filed
all escheat returns that it is required to file and such returns were, when
filed, accurate in all material respects. eFusion has no material escheat
liabilities.

3.24 Environmental Compliance.

3.24.1 For purposes of this Agreement:

3.24.1.1 "Regulated Substance" means any pollutant, chemical
substance, hazardous waste, hazardous substance or contaminant
regulated under any Environmental Law.

3.24.1.2 "Enforcement Notice" means a summons, notice, notice of
violation, citation, directive, order, claim, litigation,
investigation, judgment, letter or other communication, written or
oral, from any governmental authority or other Person or entity,
concerning the Releasing of a Regulated Substance into the air, water
or land.

3.24.1.3 "Releasing" means releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing or dumping.

3.24.1.4 "Environmental Law" means all applicable Laws relating to
pollution control and environmental contamination, including, but not
limited to, all Laws governing the generation, use, collection,
treatment, storage, transportation, recovery, removal, discharge, or
disposal of Regulated Substances and all laws and regulations with
regard to record-keeping, notification and reporting requirements
respecting Regulated Substances.

3.24.2 eFusion is in compliance in all material respects with all
Environmental Laws. To eFusion's knowledge, eFusion has not been alleged to
be in violation of, nor has eFusion been subject to any administrative or
judicial proceeding pursuant to, any Environmental Laws at any time during
the past three years.

3.24.3 There are no facts or circumstances known to eFusion that could
reasonably form the basis for the assertion of any claim against eFusion
pursuant to any Environmental Laws, including any claim arising from
eFusion's past or present practices.

3.24.4 eFusion has all material permits, approvals and consents under
all applicable Environmental Laws to operate its businesses lawfully.

3.24.5 None of the real estate leased by eFusion has ever been used by
eFusion to generate, manufacture, refine, transport, treat, store, handle,
dispose, transfer or process Regulated Substances except in the ordinary
course of business in accordance with Environmental Laws.

3.24.6 There have been no Regulated Substances generated, transported or
disposed of by eFusion during the past three years except in the ordinary
course of business in accordance with Environmental Laws.

3.24.7 To eFusion's knowledge, there are no Enforcement Notices in
effect, and eFusion is not aware of any facts which might reasonably be
expected to result in the issuance of any Enforcement Notice with respect
to eFusion or, to eFusion's knowledge, any predecessor in use, occupancy,
interest or title to the real property leased or the personal property
owned by eFusion.

3.24.8 To eFusion's knowledge, there are no underground storage tanks on
or in the real property leased by eFusion.

3.25 Financial Statements.

3.25.1 Attached to Section 3.25.1 of the eFusion Disclosure Schedule are
the following annual and interim financial statements of eFusion: the
audited balance sheets of eFusion as of December 31, 1998 and 1999, the
related audited statements of income, changes in shareholders' equity and
cash flows of

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eFusion for the years ended December 31, 1997, 1998 and 1999, the Current
Balance Sheet and the unaudited statements of income and cash flows of
eFusion for the six months ended June 30, 1999 and 2000 (the "Financial
Statements"). The Financial Statements fairly present the financial
condition of eFusion and the results of eFusion's operations and cash flows
as at the dates and for the periods to which they apply, as the case may
be, and such statements have been prepared in conformity with GAAP.

3.25.2 Except as listed in Section 3.25.2 of the eFusion Disclosure
Schedule, no value has been assigned in the Financial Statements to (a) any
intangible items, including good will, trademarks, trade names, contract
rights, patents, copyrights, customer lists, books and records, restrictive
covenants, deferred charges, or prepaid expenses for any item other than
taxes, rent, health and medical benefits or insurance; (b) office supplies,
advertising or promotional material; (c) any asset previously charged to
expense; or (d) any other asset which it has been eFusion's practice to
write off as an expense. Section 3.25.2 of the eFusion Disclosure Schedule
sets forth eFusion's policy with respect to the capitalization and
expensing of software, which policy is in accordance with GAAP and has been
adhered to in all material respects by eFusion since its inception.

3.25.3 Section 3.25.3 of the eFusion Disclosure Schedule lists all non-
recurring disbursements in excess of $200,000 incurred by eFusion outside
of the ordinary course of business from the date of its inception through
the date hereof.

3.25.4 No unrecorded funds or assets of eFusion have been established
for any purpose; no accumulation or use of eFusion's funds has been made
without being properly accounted for in eFusion's books and records; all
payments by or on behalf of eFusion have been duly and properly recorded
and accounted for in its books and records; no false or artificial entry
has been made in eFusion's books and records for any reason; no payment has
been made by or on behalf of eFusion with the understanding that any part
of such payment is to be used for any purpose other than that described in
the documents supporting such payment; and eFusion has not made, directly
or indirectly, any illegal contributions to any political party or
candidate, either domestic or foreign, or any contribution, gift, bribe,
rebate, payoff, influence payment or kickback, whether in cash, property or
services, to any individual, corporation, partnership or other entity, to
secure business or to pay for business secured by eFusion.

3.25.5 Except as set forth in Section 3.25.5 of the eFusion Disclosure
Schedule, no operations have been discontinued by eFusion since its
inception.

3.25.6 Except as set forth in Section 3.25.6 of the eFusion Disclosure
Schedule, the Current Balance Sheet includes accruals for all amounts due
but not paid as of the date thereof under all taxation laws (other than
current year applicable franchise taxes), in accordance with GAAP, and
accruals for vested vacation entitlement and for holiday and sick pay in
accordance with GAAP.

3.25.7 eFusion does not have any outstanding binding commitments with
respect to capital expenditures other than the commitments described in
Section 3.25.7 of the eFusion Disclosure Schedule.

3.26 Taxes.

3.26.1 All of eFusion's Taxes have been paid in full to the appropriate
governmental authorities or fully accrued or provided for with respect to
fiscal periods covered by the Financial Statements, other than any
liability for unpaid Taxes that may have accrued since June 30, 2000 in
connection with the operation of the Business by eFusion in the ordinary
course. eFusion has prepared and timely filed or will prepare and timely
file with the appropriate governmental authorities all returns and reports
with respect to franchise, income and all other Taxes (hereinafter
collectively referred to as "Tax Returns") required to be filed by eFusion
at or before the Effective Time, taking into account any extension of time
to file granted to or obtained on behalf of eFusion (copies of federal and
state income Tax Returns since eFusion's inception and sales Tax Returns
since 1999 have been delivered to ITXC) and such Tax Returns were (or in
the case of Tax Returns to be filed subsequent to the date hereof, will be)
correct and complete in all material respects when filed.

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3.26.2 Section 3.26.2 of the eFusion Disclosure Schedule sets forth the
extent to which eFusion's Tax Returns have been examined, audited or
investigated by any governmental authority and the results of any such
examination, audit or investigation. No assessments or additional Taxes
have been proposed or threatened against eFusion or any of its assets.
eFusion has not waived any statute of limitations in respect of Taxes or
agreed to any extension of time with respect to a Tax assessment or
deficiency. No issue has been raised in any such examination, audit or
investigation which can reasonably be expected to result in a deficiency in
any years not covered by that examination, audit or investigation.
Adjustments, if any, to all such Tax Returns have been agreed upon and paid
by eFusion or are being contested as indicated in Section 3.26.2 of the
eFusion Disclosure Schedule.

3.26.3 To the best of eFusion's knowledge, there are no pending
investigations of eFusion or its Tax Returns by any taxing authority, and
there are no Tax Liens on any of eFusion's assets other than Liens for
Taxes not yet due and payable.

3.26.4 eFusion is not now and has never been a "United States real
property holding corporation", as defined in Section 897(c)(2) of the Code
and Section 1.897-2(b) of the regulations promulgated by the Internal
Revenue Service.

3.26.5 eFusion (i) has complied in all respects with all applicable
laws, rules and regulations relating to the payment and withholding of
Taxes from the wages or salaries of employees and independent contractors,
(ii) has paid over to the proper governmental authorities all amounts
required to be so withheld and (iii) is not liable for any Taxes for
failure to comply with such laws, rules and regulations.

3.26.6 eFusion has not filed any consent under Section 341(f) of the
Code concerning collapsible corporations.

3.26.7 eFusion is not a party to any agreement that provides for the
payment of any amount that, if paid, would be nondeductible (in whole or in
part) pursuant to Section 280G of the Code in connection with the
consummation of the Merger or otherwise.

3.26.8 eFusion is not now, and has never been, a member of any group
filing Tax Returns on an affiliated, combined, consolidated, unitary or
similar basis. eFusion is not a party to any Tax allocation or Tax sharing
agreement, nor does eFusion have any liability for any Taxes for any Person
or entity other than eFusion as a transferee or successor, by contract, or
otherwise.

3.26.9 For purposes of this Agreement, the terms "Tax" or "Taxes" shall
include any of the following imposed by or payable to any governmental
authority: any income, gross receipts, license, payroll, employment,
excise, severance, stamp, business, occupation, premium, windfall profits,
environmental (including taxes under Section 59A of the Code), capital
stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, or value added tax, any alternative or add-on
minimum tax, any estimated tax, and any levy, impost, duty, assessment,
withholding or any other governmental charge of any kind whatsoever, in
each case including any interest, penalty, or addition thereto, whether
disputed or not.

3.27 Litigation. Except as set forth in Section 3.27 of the eFusion
Disclosure Schedule, there are no legal, administrative, arbitration or other
proceedings or claims pending or, to eFusion's knowledge, threatened, against
eFusion, nor is eFusion subject to any existing judgment which might reasonably
be expected to materially adversely affect eFusion's financial condition,
results of operations, business or property; nor has eFusion received any
inquiry from any governmental authority about the transactions contemplated by
this Agreement, or about any violation or possible violation of any Law. Prior
to the date hereof, eFusion has provided to ITXC's counsel a copy of all
letters received by eFusion's accountants from counsel to eFusion since its
formation with respect to pending or threatened legal, administrative,
arbitration or other proceedings.

3.28 Adverse Business Changes. Except as set forth in Section 3.28 of the
eFusion Disclosure Schedule, there has not been:

3.28.1 Any material adverse change in the working capital, financial
condition, assets, liabilities (whether absolute, accrued, contingent or
otherwise), reserves, operating profits, or business of eFusion, other than
changes in the ordinary course of business, since December 31, 1999;

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3.28.2 Any damage, destruction or loss to eFusion or its properties
(whether or not covered by insurance) materially and adversely affecting
eFusion since December 31, 1999;

3.28.3 Any disposition, mortgage, pledge, or subjection to any Lien,
claim, charge or option of any property or asset of eFusion, any commitment
made or liability incurred by eFusion, or any cancellation or compromise of
any debt or claim of eFusion, otherwise than in the ordinary course of
business, since the date of the Current Balance Sheet (the "Statement
Date");

3.28.4 Any dividend or distribution declared, set aside or paid in
respect of eFusion's capital stock or any repurchase by eFusion of shares
of its capital stock since the Statement Date;

3.28.5 Any employment contract entered into by eFusion since the
Statement Date; or any increase or decrease in the rates of compensation
payable by eFusion to any of its officers, directors, employees or agents
over or under the rates in effect during the 12 months ended on the
Statement Date, other than general increases to personnel made in
accordance with past practices; or, since the Statement Date, any
declaration, payment, commitment, or obligation of any kind for the payment
by eFusion of any bonus, other than bonuses paid in the ordinary course of
business, or any implementation, modification, amendment or termination of
any retirement, termination, severance or other benefits to officers,
directors, employees or agents of eFusion;

3.28.6 Any amendment, termination or threatened termination of any
material contract, agreement, insurance policy, plan, lease, or license to
which eFusion is a party or by which eFusion may be bound, otherwise than
in the ordinary course of business, at any time since January 1, 1990;

3.28.7 Any material change in eFusion's methods of doing business, at
any time since the Statement Date;

3.28.8 Any distribution or disposition of assets other than in the
ordinary course of business, at any time since January 1, 1999;

3.28.9 Any loss or, to eFusion's knowledge, any threatened loss of a
customer which is designated as a "large customer" on Section 3.15.1 of the
eFusion Disclosure Schedule;

3.28.10 Any termination after January 1, 1999 of any permit or license
issued to eFusion or to any of its employees or agents upon which a
material portion of the Business is dependent; or

3.28.11 Since January 1, 1999, any statute, order, judgment, writ,
injunction, decree, permit, rule or regulation of any court or any
governmental or regulatory body adopted or entered or proposed to be
adopted or entered which may reasonably be expected to materially and
adversely affect eFusion's property or business.

3.29 eFusion Disclosure Schedule. All of the facts recited in the eFusion
Disclosure Schedule shall be deemed to be representations of fact as though
recited in this Article III.

3.30 Full Disclosure. No representation or warranty made in this Article
III, and no certification furnished or to be furnished by eFusion pursuant to
this Agreement, contains or will contain any untrue statement of a material
fact or omits, or will omit, to state a material fact necessary to make the
statements contained herein or therein not misleading.

ARTICLE IV

Representations and Warranties of IXTC and Subcorp

ITXC and Subcorp represent and warrant to eFusion as follows:

4.1 Organization and Qualification. Each of ITXC and its Subsidiaries (as
hereinafter defined) is an entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
power and authority to own, lease and operate its properties and to conduct its

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business as described in the ITXC SEC Reports. Each of ITXC and its
Subsidiaries is duly qualified to transact business as a foreign corporation or
other foreign entity and is in good standing in each jurisdiction in which the
conduct of its business or the ownership, leasing or operation of its property
requires such qualification, except for failures to be so qualified or in good
standing which would not, singly or in the aggregate with all such other
failures, have an ITXC Material Adverse Effect.

4.2 Authority Relative to this Agreement; Enforceability. Subject to the
receipt of any governmental approvals and, in the case of ITXC, approval of
ITXC's shareholders, the execution, delivery and performance of this Agreement
are within the corporate power and authority of ITXC and Subcorp and have been
duly authorized by all requisite corporate action on the part of ITXC and
Subcorp. This Agreement is a legal, valid and binding obligation of ITXC and
Subcorp, enforceable against ITXC and Subcorp in accordance with its terms,
except insofar as its enforcement may be limited by (a) bankruptcy, insolvency,
moratorium or similar laws affecting the enforcement of creditors' rights
generally and (b) equitable principles limiting the availability of equitable
remedies. All persons who executed this Agreement on behalf of ITXC and Subcorp
have been duly authorized to do so.

4.3 Conflicts; Consents and Approvals. Neither the execution and delivery of
this Agreement by ITXC nor the consummation of the transactions contemplated
hereby will:

4.3.1 conflict with, or result in a breach of any provision of, ITXC's
certificate of incorporation or by-laws;

4.3.2 violate, or conflict with, or result in a breach of any provision
of, or constitute a default (or an event which, with the giving of notice,
the passage of time or otherwise, would constitute a default) under, or
entitle any party (with the giving of notice, the passage of time or
otherwise) to terminate, accelerate, modify or call a default under, or
result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of ITXC or any of its
Subsidiaries under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, contract, undertaking,
agreement, lease or other instrument or obligation to which ITXC or any of
its Subsidiaries is a party;

4.3.3 violate any order, writ, injunction, decree, statute, rule or
regulation applicable to ITXC or any of its Subsidiaries or their
respective properties or assets; or

4.3.4 require any action or consent or approval of, or review by, or
registration or filing by ITXC or any of its Affiliates with, any third
party or any governmental authority, other than (i) registrations or other
actions required under federal and state securities laws as are
contemplated by this Agreement, (ii) as required by the HSR Act or the OBCA
or (iii) as required in order to assure that the shares of ITXC Common
Stock issuable hereunder are approved for quotation on the Nasdaq National
Market,

except, in the case of Sections 4.3.2, 4.3.3 and 4.3.4, for any of the
foregoing that would not, individually or in the aggregate, have an ITXC
Material Adverse Effect or materially and adversely affect the ability of
the Parties to consummate the transactions contemplated hereby.

4.4 Capitalization. As of the date hereof, the authorized capital stock of
ITXC consists solely of 400,000,000 shares of ITXC Common Stock and 15,000,000
shares of preferred stock, par value $0.001 per share (the "ITXC Preferred
Stock"). As of June 30, 2000, there were 38,533,567 shares of ITXC Common Stock
and no shares of ITXC Preferred Stock outstanding, no shares of ITXC Common
Stock were held in ITXC's treasury and no shares of ITXC Preferred Stock were
held in ITXC's treasury. As of June 30, 2000, 5,515,370 shares of ITXC Common
Stock were subject to outstanding stock options. Each outstanding share of ITXC
Common Stock is, and all shares of ITXC Common Stock to be issued in connection
with the transactions contemplated hereby will be, duly authorized and validly
issued, fully paid and nonassessable, with no personal liability attaching to
the ownership thereof, and each outstanding share of ITXC Common Stock has not
been, and all shares of ITXC Common Stock to be issued in connection with the
transactions contemplated hereby will not be, issued in violation of any
preemptive or similar rights. As of the date hereof,

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except for (a) stock options issued or issuable pursuant to stock option plans
adopted or assumed by ITXC, (b) matters disclosed in ITXC SEC Reports, (c)
shares issuable pursuant to other benefit plans adopted by ITXC and (d) shares
issuable pursuant to this Agreement, ITXC did not have, and was not bound by,
any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any shares
of ITXC Common Stock or ITXC Preferred Stock or any other equity securities of
ITXC or any securities representing the right to purchase or otherwise receive
any shares of ITXC Common Stock or ITXC Preferred Stock.

4.5 ITXC Material Adverse Event. Since December 31, 1999, except for events
publicly disclosed by ITXC prior to the date hereof or disclosed in writing to
eFusion, there has been no change in the assets, liabilities, results of
operations or financial condition of the Purchaser and its Subsidiaries which
would constitute an ITXC Material Adverse Effect.

4.6 ITXC SEC Documents and Other Public Disclosures. ITXC has timely filed
with the SEC all forms, reports, schedules, statements and other documents
required to be filed by it since September 27, 1999 under the Exchange Act
(such documents, as supplemented and amended since the time of filing,
collectively, the "ITXC SEC Documents"). The ITXC SEC Documents, including any
financial statements or schedules included therein, at the time filed (a) did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and (b) complied in all material respects with the applicable
requirements of the Exchange Act. ITXC has previously provided to eFusion's
counsel true and complete copies of the ITXC SEC Documents. The financial
statements of ITXC included in the ITXC SEC Documents at the time filed
complied as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, were prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto or, in the case of unaudited statements,
as permitted by Form 10-Q of the SEC), and fairly present (subject, in the case
of unaudited statements, to normal, recurring audit adjustments) the
consolidated financial position of ITXC and its consolidated subsidiaries as at
the dates thereof and the consolidated results of their operations and cash
flows for the periods then ended.

4.7 Full Disclosure. No representation or warranty made in this Article IV,
and no certification furnished or to be furnished by ITXC or Subcorp pursuant
to this Agreement contains or will contain any untrue statement of a material
fact or omits, or will omit, to state a material fact necessary to make the
statements contained herein or therein not misleading.

ARTICLE V

Covenants of the Parties

5.1 Access and Information. Prior to the Closing, ITXC shall (with personnel
acceptable to eFusion, which acceptance shall not be unreasonably withheld) be
entitled to make or cause to be made such reasonable investigation of eFusion,
and the financial and legal condition thereof, as ITXC reasonably deems
necessary or advisable, and eFusion shall cooperate with any such
investigation. In furtherance of the foregoing, but not in limitation thereof,
eFusion shall (a) permit ITXC (with personnel acceptable to eFusion, which
acceptance shall not be unreasonably withheld) and its agents and
representatives to have reasonable access to the premises, operating systems,
computer systems (hardware and software), computer equipment and books and
records of eFusion upon reasonable notice during regular business hours, (b)
furnish or cause to be furnished to ITXC such financial and operating data,
forecasts, business plans, strategic plans and other data relating to eFusion
and its businesses as ITXC shall reasonably request from time to time and (c)
cause its accountants to furnish to ITXC and its accountants access to all work
papers relating to any of the periods covered by financial statements provided
by eFusion to ITXC hereunder, subject to the execution by ITXC of such
reasonable and customary documentation as eFusion's accountants shall request
to be executed. Prior to the Closing, neither

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ITXC nor its representatives shall use any information provided to it in
confidence by eFusion for any purpose unrelated to this Agreement, and in no
event shall such persons use the information provided by eFusion competitively
prior to the Effective Time. Neither eFusion nor its representatives shall use
any information provided to it in confidence by ITXC for any purposes unrelated
to this Agreement, and in no event shall such persons use the information
provided by ITXC competitively. Except with respect to publicly available
documents, in the event that this Agreement is terminated, (a) ITXC will
deliver to eFusion all documents obtained by it from eFusion in confidence and
any copies thereof in the possession of ITXC or its agents and representatives
or, at the option of ITXC, ITXC shall cause all of such documents and all of
such copies to be destroyed and shall certify the destruction thereof to
eFusion and (b) eFusion will deliver to ITXC all documents obtained by it from
ITXC in confidence and any copies thereof in the possession of eFusion or its
agents and representatives or, at the option of eFusion, eFusion shall cause
all of such documents and all of such copies to be destroyed and shall certify
the destruction thereof to ITXC. No investigation by ITXC or eFusion heretofore
or hereafter made shall modify or otherwise affect the conditions to the
obligations of ITXC and eFusion to consummate the transactions contemplated
hereby.

5.2 eFusion's Affirmative Covenants. Prior to the Closing, except as
otherwise expressly provided herein, eFusion shall:

5.2.1 conduct its business only in the ordinary and regular course of
business consistent with past practices;

5.2.2 use reasonable commercial efforts to keep in full force and effect
its corporate existence and all material rights, franchises, Intellectual
Property rights and goodwill relating or obtaining to the Business;

5.2.3 use reasonable commercial efforts to retain its employees and
preserve its present relationships with customers, suppliers, contractors,
distributors and employees, and continue to compensate its employees
consistent with past practices;

5.2.4 use reasonable commercial efforts to maintain its Intellectual
Property so as not to affect adversely the validity or enforcement thereof;
maintain its other assets in customary repair, order and condition and
maintain insurance reasonably comparable to that in effect on the date of
this Agreement; and in the event of any casualty, loss or damage to any of
its assets, repair or replace such assets with assets of comparable
quality;

5.2.5 maintain its books, accounts and records in accordance with GAAP;

5.2.6 use reasonable commercial efforts to obtain all authorizations,
consents, waivers, approvals or other actions and to make all filings and
applications necessary or desirable to consummate the transactions
contemplated hereby and to cause the other conditions to ITXC's obligation
to close to be satisfied; and

5.2.7 promptly notify ITXC in writing if, prior to the consummation of
the Closing, to its knowledge (a) any of the representations and warranties
contained in Article III cease to be accurate and complete in all material
respects (except for any representation and warranty which is qualified
hereunder as to materiality, as to which such notification shall be given
if eFusion obtains knowledge that such representation and warranty is
inaccurate in any respect) or (b) eFusion fails to comply with or satisfy
any material covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided, however, that the delivery of any
notice pursuant to this Section 5.2.7 shall not limit or otherwise affect
the remedies available hereunder to ITXC.

5.3 ITXC's Affirmative Covenants. Prior to the Closing, except as otherwise
expressly provided herein or except as would not result in an ITXC Material
Adverse Effect, ITXC shall (and ITXC shall cause each of its Subsidiaries to):

5.3.1 use reasonable commercial efforts to keep in full force and effect
its corporate existence and all material rights, franchises, intellectual
property rights and goodwill relating or obtaining to its businesses;

5.3.2 use reasonable commercial efforts to retain its employees and
preserve its present relationships with customers, suppliers, contractors,
distributors and employees;

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5.3.3 maintain its books, accounts and records in accordance with GAAP;

5.3.4 use reasonable commercial efforts to obtain all authorizations,
consents, waivers, approvals or other actions and to make all filings and
applications necessary or desirable to consummate the transactions
contemplated hereby and to cause the other conditions to eFusion's
obligation to close to be satisfied; and

5.3.5 promptly notify eFusion in writing if, prior to the consummation
of the Closing, to its knowledge (a) any of the representations and
warranties contained in Article IV cease to be accurate and complete in all
material respects (except for any representation and warranty which is
qualified hereunder as to materiality, as to which such notification shall
be given if ITXC obtains knowledge that such representation and warranty is
inaccurate in any respect) or (b) ITXC fails to comply with or satisfy any
material covenant, condition or agreement to be complied with or satisfied
by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 5.3.5 shall not limit or otherwise affect the
remedies available hereunder to ITXC.

5.4 eFusion's Negative Covenants. Prior to the Closing, without the prior
written consent of ITXC or as otherwise expressly provided herein, eFusion will
not:

5.4.1 take any action or omit to take any action which would result in
eFusion's (a) incurring any trade accounts payable outside of the ordinary
course of business or making any commitment to purchase quantities of any
item of inventory in excess of quantities normally purchased in the
ordinary course of business; (b) increasing any of its indebtedness for
borrowed money except in the ordinary course of business; (c) guaranteeing
the obligations of any entity; (d) making any purchases of products other
than from entities authorized to sell or distribute such products; (e)
merging or consolidating with, purchasing substantially all of the assets
of, or otherwise acquiring any business or any proprietorship, firm,
association, limited liability company, corporation or other business
organization; (f) increasing or decreasing the rate of compensation of or
paying any unusual compensation to any officer, employee or consultant
(other than regularly scheduled increases in base salary and annual bonuses
consistent with prior practice); (g) entering into or amending any
collective bargaining agreement, or creating or modifying any pension or
profit-sharing plan, bonus, deferred compensation, death benefit, or
retirement plan, or any other employee benefit plan, or increasing the
level of benefits under any such plan, or extending or accelerating the
exercisability of any outstanding stock option or increasing or decreasing
any severance or termination pay benefit or any other fringe benefit; (h)
making any representation to anyone indicating any intention of ITXC to
retain, institute, or provide any employee benefit plans; (i) declaring or
paying any dividend or making any distribution with respect to, or
purchasing or redeeming, shares of eFusion Capital Stock; (j) selling,
licensing or disposing of any assets otherwise than in the ordinary course
of business; (k) making any capital expenditures other than those disclosed
in Section 5.4.1 of the eFusion Disclosure Schedule; (l) issuing any shares
of eFusion Capital Stock, other than upon the exercise of stock options or
warrants outstanding on the date hereof (to the extent that such options
and warrants have been disclosed in the eFusion Disclosure Schedule) or
upon the conversion of shares of Preferred Stock; (m) granting or issuing
any option, warrant or other right to purchase any shares of eFusion
Capital Stock; (n) taking any action inconsistent with prior practices for
the primary purpose of increasing the Cash/Cash Equivalent; (o) taking any
other action, or omitting to take any action, to the extent that such
action or omission is outside of the ordinary course of business; or (p)
organizing any subsidiary;

5.4.2 change any method or principle of accounting in a manner that is
inconsistent with past practice, except to the extent required by GAAP as
advised by eFusion's regular independent accountants;

5.4.3 take any action that would likely result in the representations
and warranties set forth in Article III (other than representations made as
of a particular date) becoming false or inaccurate in any material respect
(or, as to representations and warranties, which, by their terms, are
qualified as to materiality, becoming false or inaccurate in any respect);

5.4.4 incur or create any Liens on any of its assets other than Liens
which are incurred in the ordinary course of business;

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5.4.5 except as contemplated herein, take any action or omit to take any
action which would prejudice ITXC's rights to consummate each of the
transactions contemplated by this Agreement or to compel performance of
each of the obligations of eFusion under this Agreement;

5.4.6 take or omit to be taken any action, or permit any of its
Affiliates to take or to omit to take any action, which would reasonably be
expected to result in an eFusion Material Adverse Effect; or

5.4.7 agree or commit to take any action precluded by this Section 5.4.

5.5 ITXC's Negative Covenants. Prior to the Closing, without the prior
written consent of eFusion or as otherwise expressly provided herein, ITXC will
not and ITXC will cause its Subsidiaries not to:

5.5.1 change any method or principle of accounting in a manner that is
inconsistent with past practice, except to the extent required by GAAP as
advised by ITXC's regular independent accountants;

5.5.2 take any action that would likely result in the representations
and warranties set forth in Article IV (other than representations made as
of a particular date) becoming false or inaccurate in any material respect
(or, as to representations and warranties, which, by their terms, are
qualified as to materiality, becoming false or inaccurate in any respect);

5.5.3 except as contemplated herein, take any action or omit to take any
action which would prejudice eFusion's rights to consummate each of the
transactions contemplated by this Agreement or to compel performance of
each of the obligations of ITXC under this Agreement;

5.5.4 take or omit to be taken any action, or permit any of its
Affiliates to take or to omit to take any action, which would reasonably be
expected to result in an ITXC Material Adverse Effect;

5.5.5 consummate the acquisition of any entity (by merger, combination,
purchase of more than two thirds of the equity of such entity or purchase
of all or substantially all of the assets of such entity) if such
transaction will require ITXC to modify the Proxy Statement/Prospectus in a
manner that will require a material delay in the date on which the eFusion
Special Meeting shall be held; or

5.5.6 agree or commit to take any action precluded by this Section 5.5.

5.6 Closing Documents. eFusion shall, prior to or on the Closing Date,
execute and deliver, or cause to be executed and delivered, to ITXC the
documents or instruments described in Section 6.2. ITXC shall, prior to or on
the Closing Date, execute and deliver, or cause to be executed and delivered,
to eFusion the documents or instruments described in Section 6.3.

5.7 HSR Act.

5.7.1 Each of ITXC and eFusion shall (A) make or cause to be made the
filings required of such Party or any of its subsidiaries or affiliates
under the HSR Act with respect to the transactions contemplated hereby as
promptly as practicable and in any event on or before August 11, 2000,
(B) comply at the earliest practicable date with any request under the HSR
Act for additional information, documents, or other materials received by
such Party or any of its subsidiaries from the Federal Trade Commission or
the Department of Justice or any other governmental authority in respect of
such filings or such transactions, and (C) cooperate with the other Party
in connection with any such filing (including the exchange between the
Parties, or where prudent, between the outside counsel of the Parties, of
relevant materials prior to the filing of such materials, provided that
nothing herein shall obligate a Party to waive attorney-client protections
or similar protections, and, if requested, to accept all reasonable
additions, deletions or changes suggested in connection therewith) and in
connection with resolving any investigation or other inquiry of any such
agency or other governmental authority under any Antitrust Laws (as
hereinafter defined) with respect to any such filing or any such
transaction. Each Party shall use all reasonable efforts to furnish to each
other all information required for any application or other filing to be
made pursuant to any applicable law in connection with the Merger and the
other transactions contemplated by this Agreement.

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5.7.2 Each of ITXC and eFusion shall use all reasonable efforts to
resolve such objections, if any, as may be asserted by any governmental
authority with respect to the transactions contemplated by this Agreement
under the HSR Act, the Clayton Act, as amended, the Sherman Antitrust Act,
as amended, the Federal Trade Commission Act, as amended, and any other
federal, state or foreign statutes, rules, regulations, orders, decrees,
guidelines, administrative or judicial doctrines or other laws that are
designed to prohibit, restrict or regulate actions having the purpose or
effect of monopolization or restraint of trade or competition
(collectively, "Antitrust Laws"). Each of ITXC and eFusion shall use all
reasonable efforts to take such action as may be required to cause the
expiration of the notice periods under the HSR Act or other Antitrust Laws
with respect to the Merger as promptly as possible after the execution of
this Agreement; provided, however, that no Party shall be obligated to
divest any properties without its consent.

5.8 Further Actions. Each of the Parties agrees to use all reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other Parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable under the circumstances (after taking into
effect all such factors as shall reasonably effect timing hereunder), the
Merger and the other transactions contemplated by this Agreement, including (A)
the obtaining of all other necessary actions or non-actions, waivers, consents,
licenses, permits, authorizations, orders and approvals from governmental
authorities and the making of all other necessary registrations and filings,
(B) the obtaining of all consents, approvals or waivers from third parties
related to or required in connection with the Merger that are necessary to
consummate the Merger and the transactions contemplated by this Agreement or
required to prevent an ITXC Material Adverse Effect or an eFusion Material
Adverse Effect from occurring prior to or after the Effective Time, (C) the
preparation of the Prospectus/Proxy Statement and the Registration Statement,
(D) the taking of all action necessary to ensure that the Merger constitutes a
reorganization within the meaning of Section 368(a)(1)(A) of the Code, and (E)
the execution and delivery of any additional instruments necessary to
consummate the transactions contemplated by, and to fully carry out the
purposes of, this Agreement.

5.9 Indebtedness of Employees and Shareholders. eFusion will cause any
indebtedness owing to it by any of its employees (other than salespersons'
normal draw) or by eFusion's Shareholders to be paid in full at or before the
Closing. eFusion will not make any loans to employees or shareholders prior to
the Closing.

5.10 Public Announcements. Unless otherwise required by applicable law,
eFusion shall not make any press release or other public announcement regarding
the Merger or this Agreement without the prior written consent of ITXC.

5.11. Shareholders' Meetings.

5.11.1 eFusion shall take all action in accordance with the federal
securities laws, the OBCA, eFusion's Fourth Amended and Restated Articles
of Incorporation and eFusion's by-laws necessary to convene the eFusion
Special Meeting, which shall be held on the earliest practicable date
approved by ITXC, and to obtain the consent and approval of eFusion's
shareholders with respect to the Articles Amendment, this Agreement and the
transactions contemplated hereby, including its Board's recommending
approval of the Articles Amendment, the Merger and the transactions
contemplated by this Agreement to eFusion's shareholders.

5.11.2 ITXC shall take all action in accordance with the federal
securities laws, the Delaware General Corporation Law, ITXC's Restated
Certificate of Incorporation and ITXC's by-laws necessary to convene the
ITXC Special Meeting to approve an amendment to ITXC's Certificate of
Incorporation imposing upon ITXC Merger Shares the restrictions on
transferability set forth in Section 2.13 hereof and, if applicable Nasdaq
rules or regulations require ITXC's stockholders to approve the issuance of
ITXC Common Stock pursuant to this Agreement, to obtain the consent and
approval of ITXC's stockholders with respect to such issuance, including
its Board's recommending approval such amendment and of the issuance of
ITXC Common Stock pursuant to this Agreement to ITXC's shareholders. The
ITXC Special Meeting shall be held on or about the date of the eFusion
Special Meeting.

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5.12 Preparation of the Registration Statement.

5.12.1 ITXC shall, as soon as is reasonably practicable, prepare a
prospectus/joint proxy statement (the "Prospectus/Proxy Statement") to be
included in a registration statement on Form S-4 as promulgated by the SEC
(the "Registration Statement"). Once both Parties consent to the filing of
the Registration Statement with the SEC (which consent shall not be
unreasonably withheld), ITXC shall file the Registration Statement with the
SEC. eFusion and ITXC shall use all reasonable efforts to have the
Registration Statement declared effective by the SEC as promptly as
practicable thereafter and to maintain the effectiveness of the
Registration Statement through the Effective Time. If, at any time prior to
the Effective Time, ITXC or eFusion shall obtain knowledge of any
information contained in or omitted from the Registration Statement that
would require an amendment or supplement to the Registration Statement or
the Prospectus/Proxy Statement, the Party obtaining such knowledge will so
advise the other Party in writing and both eFusion and ITXC will promptly
take such action as shall be required to amend or supplement the
Registration Statement and/or the Prospectus/Proxy Statement. eFusion shall
promptly furnish to ITXC all information concerning it as may be required
for the Prospectus/Proxy Statement and any supplements or amendments
thereto. ITXC and eFusion shall cooperate in the preparation of the
Prospectus/Proxy Statement in a timely fashion and shall use all reasonable
efforts to clear the Registration Statement with the Staff of the SEC.
Promptly after the Registration Statement is declared effective by the SEC,
eFusion shall use all reasonable efforts to mail at the earliest
practicable date to its shareholders the Prospectus/Proxy Statement, which
shall include all information required under applicable law to be furnished
to eFusion's shareholders in connection with the Merger and the
transactions contemplated thereby. Promptly after the Registration
Statement is declared effective by the SEC, ITXC shall use all reasonable
efforts to mail at the earliest practicable date to its stockholders the
Prospectus/Proxy Statement, which shall include all information required
under applicable law to be furnished to ITXC's stockholders in connection
with the Merger and the transactions contemplated thereby.

5.12.2 None of the information to be supplied by eFusion for inclusion
or incorporation by reference in the Registration Statement or the
Prospectus/Proxy Statement, including all amendments and supplements
thereto, shall, in the case of the Registration Statement, at (i) the time
the Registration Statement becomes effective, (ii) the Closing and (iii)
the Effective Time, and, in the case of the Prospectus/Proxy Statement,
(iv) on the date or dates the Prospectus/Proxy Statement is first mailed to
eFusion's shareholders, (v) at the date or dates of the eFusion Special
Meeting, (vi) at the Closing, and (vii) at the Effective Time contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading. eFusion agrees that the Registration Statement and
the Prospectus/Proxy Statement will (with respect to eFusion) comply as to
form in all material respects with the applicable provisions of the
Securities Act and the Exchange Act, as the case may be.

5.12.3 None of the information supplied by ITXC for inclusion or
incorporation by reference in the Registration Statement or in the
Prospectus/Proxy Statement, including all amendments and supplements
thereto, shall, in the case of the Registration Statement, at (i) the time
the Registration Statement becomes effective, (ii) the Closing and (iii)
the Effective Time, and, in the case of the Prospectus/Proxy Statement,
(iv) on the date or dates the Prospectus/Proxy Statement is first mailed to
eFusion's shareholders, (v) at the date or dates of the eFusion Special
Meeting, (vi) at the Closing, and (vii) at the Effective Time, contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading. ITXC agrees that the Registration Statement and the
Prospectus/Proxy Statement will (with respect to ITXC and its Subsidiaries)
comply as to form in all material respects with the applicable provisions
of the Securities Act and the Exchange Act, as the case may be.

5.13 Merger Subsidiary. Prior to the Effective Time, Subcorp shall not
conduct any business or make any investments other than as specifically
contemplated by this Agreement and will not have any assets (other than a de
minimis amount of cash paid to Subcorp for the issuance of its stock to ITXC)
or any material liabilities.

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5.14 Nasdaq Listing. ITXC shall use its reasonable efforts to cause the ITXC
Common Stock issuable pursuant to the Merger (including the ITXC Common Stock
issuable upon the exercise of the ITXC Exchange Options) to be approved for
quotation on the Nasdaq National Market, subject to official notice of
issuance, prior to the Effective Time.

5.15 Employees and Employee Benefits.

5.15.1 From and after the Effective Time, ITXC shall treat all service
by eFusion Employees with eFusion prior to the Effective Time for all
purposes as service with ITXC (except to the extent such treatment would
result in duplicative accrual on or after the Closing Date of benefits for
the same period of service), and, with respect to any medical or dental
benefit plan in which eFusion Employees participate after the Effective
Time, ITXC shall waive or cause to be waived any pre-existing condition
exclusions and actively-at-work requirements (provided, however, that no
such waiver shall apply to a pre-existing condition of any eFusion Employee
who was, as of the Effective Time, excluded from participation in a benefit
plan by virtue of such pre-existing condition), and shall provide that any
covered expenses incurred on or before the Effective Time by an eFusion
Employee or an eFusion Employee's covered dependent shall be taken into
account for purposes of satisfying applicable deductible, coinsurance and
maximum out-of-pocket provisions after the Effective Time to the same
extent as such expenses are taken into account for the benefit of similarly
situated employees of ITXC and Subsidiaries of ITXC. For purposes of this
Section 5.15, "eFusion Employees" shall mean persons who are, immediately
prior to the Effective Time, employees of eFusion.

5.15.2 Promptly after the Closing, ITXC shall grant to eFusion Employees
stock options covering a total of 560,000 shares of ITXC Common Stock under
ITXC's 1998 Stock Incentive Plan. The determination of the particular
optionees to receive such stock options, the number of shares of ITXC
Common Stock to be covered by each such stock option grant and the terms of
such options shall be made by the applicable committee of ITXC's Board of
Directors in such committee's discretion after consultation with the senior
executive officers of eFusion shortly before the Closing Date.

5.15.3 Prior to the Closing, eFusion shall (pursuant to agreements in
form and substance satisfactory to ITXC) amend each of the eFusion Options
to provide for the acceleration of the vesting of the corresponding ITXC
Exchange Options in the event that (a) the applicable optionee's employment
with the Surviving Corporation and/or ITXC is terminated within six months
after the Closing by the Surviving Corporation and/or ITXC without cause or
(b) the applicable optionee terminates employment with the Surviving
Corporation and/or ITXC within six months after the Closing and after
either (i) being required by the Surviving Corporation or ITXC to relocate
more than fifty (50) miles from such optionee's current residence or (ii)
being required by the Surviving Corporation or ITXC to accept a material
reduction in base salary. Such acceleration may relate to all of the
optionee's unvested options, 50% of the optionee's unvested options or 25%
of the optionee's unvested options. The determination of which optionees
receive full acceleration, which employees receive 50% acceleration and
which optionees receive 25% acceleration shall be made by ITXC after
consultation with the senior executive officers of eFusion.

5.15.4 Pursuant to a benefit plan to be implemented by ITXC and to
contain standard conditions (e.g., an employee release), ITXC shall provide
a severance payment, in an amount equal to four month's salary, less
applicable withholding taxes, to any eFusion Employee in the event that (a)
the applicable eFusion Employee 's employment with the Surviving
Corporation and/or ITXC is terminated within six months after the Closing
by the Surviving Corporation and/or ITXC without cause or (b) the
applicable eFusion Employee terminates employment with the Surviving
Corporation and/or ITXC within six months after the Closing and after
either (i)being required by the Surviving Corporation or ITXC to relocate
more than fifty (50) miles from such eFusion Employee's current residence
or (ii) being required by the Surviving Corporation or ITXC to accept a
material reduction in base salary.

5.16 No Solicitation. eFusion agrees that, during the term of this
Agreement, it shall not, and it shall cause its directors, officers, employees,
agents or representatives, not to, directly or indirectly, solicit, initiate,

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encourage or facilitate, or furnish or disclose non-public information in
furtherance of, any inquiries or the making of any proposal with respect to any
recapitalization, merger, consolidation or other business combination involving
eFusion, or acquisition of any capital stock of eFusion (other than upon
exercise of options or warrants heretofore disclosed to ITXC by eFusion) or 15%
or more of the assets of eFusion in a single transaction or a series of related
transactions, or any acquisition by eFusion of any material assets or capital
stock of any other Person, or any combination of the foregoing (a "Competing
Transaction"), or negotiate, explore or otherwise engage in discussions with
any Person (other than ITXC, Subcorp or their respective directors, officers,
employees, agents and representatives) with respect to any Competing
Transaction or enter into any agreement, arrangement or understanding requiring
it to abandon, terminate or fail to consummate the Merger or any other
transactions contemplated by this Agreement. eFusion will immediately cease all
existing activities, discussions and negotiations with any parties conducted
heretofore with respect to any proposal for a Competing Transaction.

5.17 Affiliates of eFusion. Within ten days of the date hereof, eFusion
shall cause each Person who may be at the Effective Time, or was on the date
hereof, an "affiliate" of eFusion for purposes of Rule 145 under the Securities
Act to execute and deliver to ITXC a letter in the form and substance of the
letter annexed hereto as Appendix 5.17 (the "eFusion Affiliate's Letter").
eFusion has provided ITXC with a letter specifying all of the persons or
entities who, in eFusion's opinion, may be deemed to be "affiliates" of eFusion
under the preceding sentence. The foregoing notwithstanding, ITXC shall be
entitled to place legends as specified in the eFusion Affiliate's Letter on the
certificates evidencing any shares of the ITXC Common Stock to be received by
(i) any such "affiliate" of eFusion specified in such letter or (ii) any Person
ITXC reasonably identifies (by written notice to eFusion) as being a Person who
may be deemed an "affiliate" for purposes of Rule 145 under the Securities Act,
and to issue appropriate stop transfer instructions to the transfer agent for
the ITXC Common Stock, consistent with the terms of the eFusion Affiliate's
Letter, regardless of whether such Person has executed the eFusion Affiliate's
Letter and regardless of whether such Person's name appears on the letter to be
delivered pursuant to the preceding sentence.

5.18 Environmental Matters. Prior to the Closing, ITXC shall have the right,
at its expense, to make such environmental studies of each of the premises at
which eFusion conducts business (the "Premises"), including reviewing records,
inspecting the properties and testing the air, subsoil, groundwater and
building materials at the Premises, as it shall deem necessary to determine
whether the Premises are in compliance with all applicable Environmental Laws
and whether any Regulated Substances are present at the Premises, but shall
indemnify and hold eFusion and its Subsidiaries harmless from any loss, cost or
damage proximately caused by such inspection. Such inspection shall be
scheduled and performed so as not to unreasonably interfere with eFusion's
business.

5.19 Financial Statements for a Current Report on Form 8-K.

5.19.1 Prior to the Closing, if requested by ITXC, eFusion shall provide
to ITXC (a) an audited balance sheet of eFusion as of December 31, 1998 and
1999, (b) an unaudited balance sheet of eFusion as of the last day of the
most recently completed fiscal quarter of eFusion, (c) audited statements
of income, cash flows and changes in shareholders' equity of eFusion for
the years ended December 31, 1997, 1998 and 1999, (d) unaudited statements
of income, cash flows and changes in shareholders' equity of eFusion for
the period from January 1, 2000 through the last day of the most recently
completed fiscal quarter of eFusion and for the comparable period in 1999
and (e) an unqualified report with respect to such audited financial
statements by KPMG LLP, which report shall be in form and substance
satisfactory to ITXC. Such financial statements shall be prepared in
accordance with GAAP and shall conform to all provisions of the SEC's
Regulation S-X, such that such financial statements are suitable for filing
by ITXC with the SEC in response to Items 2 and 7 of the SEC's Current
Report on Form 8-K.

5.19.2 If requested by ITXC, at the Closing, eFusion shall cause KPMG
LLP to deliver to ITXC an executed consent, in form and substance
satisfactory to ITXC and suitable for filing by ITXC with the SEC, which
consent shall authorize ITXC to file with the SEC the report referred to in
Section 5.19.1. If

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ITXC makes such request, ITXC shall provide to KPMG LLP a draft copy of the
filing which ITXC proposes to make with the SEC and ITXC and eFusion shall
provide to KPMG LLP such customary certificates as KPMG LLP shall
reasonably request.

5.19.3 Upon ITXC's request, contemporaneous with the delivery of the
financial statements pursuant to Section 5.19.1, eFusion shall cause KPMG
LLP to make available to ITXC and its representatives the work papers
generated in connection with such accounting firm's audit of the audited
financial statements delivered pursuant to Section 5.19.1, subject to the
execution by ITXC of such reasonable and customary documentation as KPMG
LLP shall request to be executed.

5.19.4 Prior to the Closing, eFusion shall cooperate with ITXC in
providing to ITXC such financial statements, financial data and
accountants' reports and letters as ITXC shall reasonably request with
respect to any filing that ITXC shall make under the Securities Act or the
Exchange Act.

5.20 Reorganization Treatment. Each of the Parties shall use its best
efforts to cause the Merger to qualify as a "reorganization" under Section
368(a) of the Code and to cooperate with one another in obtaining an opinion
from Lowenstein Sandler PC (in such capacity, "Tax Counsel"), as provided for
in Section 6.1.6. In connection therewith, each of ITXC and eFusion shall
deliver to Tax Counsel representation letters, in each case in form and
substance reasonably satisfactory to Tax Counsel. No Party shall take any
action inconsistent with the treatment of the Merger as a "reorganization"
under Section 368(a) of the Code.

5.21 Escrow Agreement. Prior to the Closing, ITXC shall submit an escrow
agreement, in the form of the escrow agreement annexed hereto as Appendix 2.10,
to the Escrow Agent. To the extent that the Escrow Agent requires changes in
such document prior to executing such agreement, ITXC shall communicate such
changes to eFusion's counsel. Provided that any such changes are acceptable to
eFusion and ITXC (such acceptance not to be unreasonably withheld), eFusion and
ITXC shall execute the Escrow Agreement, and eFusion shall cause the eFusion
Representative to execute the Escrow Agreement, at or before the Closing.

5.22 Warrant Notices. eFusion shall provide the Series B Warrant Notice to
the Series B Warrant Holder and the Common Warrant Notice to the Common Warrant
Holder in accordance with the applicable provisions of the applicable warrants
no later than the date on which the Registration Statement is declared
effective by the SEC.

5.23 Support Agreements. eFusion shall use its reasonable commercial efforts
to arrange for each eFusion shareholder designated by ITXC under this Section
5.23 to execute a support agreement in the form and substance of the agreement
included in Section 5.23 of the eFusion Disclosure Schedule.

5.24 Registration Participation Agreements. If requested by ITXC, eFusion
shall use its reasonable commercial efforts to arrange for each eFusion
shareholder designated by ITXC under this Section 5.24 to execute a
registration participation agreement in the form and substance of the agreement
included in Section 5.24 of the eFusion Disclosure Schedule.

5.25 Articles Amendment. If eFusion's shareholders approve the Articles
Amendment at the eFusion's Special Meeting, promptly after the eFusion Special
Meeting eFusion shall file with the Oregon Secretary of State the
documentation, in form and substance satisfactory to ITXC, necessary to amend
eFusion's Articles of Incorporation to reflect the Articles Amendment.

ARTICLE VI

Conditions

6.1. Conditions to the Obligations of Each Party. The obligations of
eFusion, ITXC and Subcorp to consummate the Merger shall be subject to the
satisfaction of the following conditions:

6.1.1 The Articles Amendment, this Agreement, the Merger and the
transactions contemplated hereby shall have been approved and adopted by
eFusion's shareholders in the manner required by any applicable law.

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6.1.2 No governmental authority of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, judgment, decree, injunction or other order which is in effect,
which would prohibit consummation of the transactions contemplated by this
Agreement or would result in a Combined Material Adverse Effect upon
consummation of such transactions.

6.1.3 The waiting period required by the HSR Act, and any extensions
thereof obtained by request or other action of the Federal Trade Commission
(the "FTC") and/or the Antitrust Division of the United States Department
of Justice (the "Antitrust Division"), shall have expired or been
terminated by the FTC and the Antitrust Division.

6.1.4 The SEC shall have declared the Registration Statement effective
under the Securities Act, and no stop order or similar restraining order
suspending the effectiveness of the Registration Statement shall be in
effect and no proceedings for such purpose shall be pending before or
threatened by the SEC or any state securities administrator.

6.1.5 The shares of ITXC Common Stock required to be issued pursuant to
the Merger (including the ITXC Common Stock issuable upon the exercise of
the ITXC Exchange Options) shall have been approved for quotation on the
Nasdaq National Market, subject to official notice of issuance.

6.1.6 eFusion and ITXC shall have received the opinion of Tax Counsel,
dated on or prior to the effective date of the Registration Statement and
based on the representations referred to in Section 5.20, to the effect
that (i) the Merger will constitute a reorganization under section 368(a)
of the Code and (ii) eFusion, ITXC and Subcorp will each be a party to that
reorganization, and in the form and substance of the opinion annexed hereto
as Appendix 6.1.6.

6.1.7 The Escrow Agent shall have executed and delivered the Escrow
Agreement to ITXC. Any modifications to the form of escrow agreement set
forth in Appendix 2.10 made subsequent to the date hereof in response to
the Escrow Agent's requests shall be acceptable to ITXC and eFusion, such
acceptance not to be unreasonably withheld.

6.1.8 At least thirty-three (33) days shall have transpired between the
date that eFusion has delivered the Series B Warrant Notice to the Series B
Warrant Holder and the date on which the Closing is held. At least twenty-
three (23) days shall have transpired between the date that eFusion has
delivered the Common Warrant Notice to the Common Warrant Holder and the
date on which the Closing is held.

6.1.9 There shall not be pending any legal proceeding by any
governmental authority or other third party (i) challenging or seeking to
restrain or prohibit the consummation of the Merger or any of the other
transactions contemplated by this Agreement, (ii) seeking to prohibit or
limit the ownership or operation by eFusion, ITXC or any Subsidiary of ITXC
of, or to compel eFusion, ITXC or any Subsidiary of ITXC to dispose of or
hold separate, any material portion of the business or assets of eFusion,
ITXC or any Subsidiary of ITXC, as a result of the Merger or any of the
other transactions contemplated by this Agreement, (iii) seeking to impose
limitations on the ability of ITXC to acquire or hold, or exercise full
rights of ownership of, any shares of capital stock of the Surviving
Corporation, including the right to vote such capital stock on all matters
properly presented to the shareholders of the Surviving Corporation,
(iv) seeking to prohibit ITXC or any Subsidiary of ITXC from effectively
controlling in any material respect the business or operations of ITXC or
the Subsidiaries of ITXC or (v) threatening the imposition of any action
which would result in a Combined Material Adverse Effect upon consummation
of the transactions contemplated by this Agreement.

6.1.10 If required by applicable Nasdaq rules or regulations, the
issuance of ITXC Common Stock pursuant to this Agreement shall have been
approved by ITXC's stockholders.

6.2 Conditions to ITXC's and Subcorp's Obligations. The obligations of ITXC
and Subcorp to consummate the transactions contemplated by this Agreement shall
be subject to the fulfillment prior to or at Closing of each of the following
conditions:

6.2.1 The representations and warranties of eFusion set forth in Article
III shall be true and correct in all material respects (other than
representations and warranties which are qualified as to materiality, which

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representations and warranties shall be true in all respects) on the date
hereof and on and as of the Closing Date as though made on and as of the
Closing Date (except for representations and warranties made as of a
specified date, which shall be measured only as of such specified date).

6.2.2 eFusion shall have performed in all material respects each
obligation and agreement and shall have complied in all material respects
with each covenant to be performed and complied with by it under this
Agreement at or prior to the Closing.

6.2.3 During the period from the date hereof through the Closing Date,
there shall not have occurred any act, event or omission resulting in an
eFusion Material Adverse Effect, nor any loss or damage to the assets of
eFusion, whether or not insured, which materially affects the ability of
eFusion to conduct it businesses. ITXC shall have received a certificate
(executed by the chief executive officer, chief financial officer and chief
operating officer of eFusion to each such officer's best knowledge), dated
the Closing Date, to the foregoing effect and to the further effect that
any liabilities of eFusion at the Closing Date which were not reflected on
the Current Balance Sheet are either (a) liabilities or obligations
incurred in the ordinary course of business and consistent with past
practice since the date of the Current Balance Sheet that would not, singly
or in the aggregate, be reasonably expected to have an eFusion Material
Adverse Effect or (b) liabilities contemplated by this Agreement.

6.2.4 All material authorizations, consents, waivers, approvals or other
actions required in connection with the execution, delivery and performance
of this Agreement by eFusion and ITXC and the consummation by eFusion and
ITXC of the transactions contemplated hereby shall have been obtained and
shall be in full force and effect. eFusion and ITXC shall have obtained any
authorizations, consents, waivers, approvals or other actions required to
prevent a material breach or default by eFusion, ITXC or any Subsidiary of
ITXC under any material contract to which eFusion, ITXC or any Subsidiary
of ITXC is a party or for the continuation of any material agreement to
which eFusion, ITXC or any Subsidiary of ITXC is a party.

6.2.5 Prior to or at the Closing, to the extent requested by ITXC,
eFusion shall have received the written resignations (in form and substance
reasonably satisfactory to ITXC) of each of its directors and officers,
effective as of the Closing.

6.2.6 There shall not be pending any legal proceedings relating to
eFusion which have a reasonable likelihood of being determined adversely to
the Surviving Corporation and, if so determined, would be reasonably likely
to have an ITXC Material Adverse Effect after the Closing.

6.2.7 Each of the Financing Agreements shall have been amended to
provide that such agreement shall terminate as of the Effective Time.

6.2.8 eFusion shall not have received notice from Persons holding, in
the aggregate, more than the Approval Number of shares of eFusion Capital
Stock that such Persons intend to exercise their dissenters' rights under
Sections 60.551 to 60.594 of the OCBA.

6.2.9 ITXC shall have received from KPMG LLP an "agreed upon procedures"
letter, dated the date of the mailing of the Prospectus/Proxy Statement to
eFusion's shareholders, with respect to financial information regarding
eFusion included therein, such letter to be in the form customarily issued
by public accounting firms at such time in transactions of the type
described herein.

6.2.10 Prior to or at the Closing, eFusion shall have delivered such
other closing documents as shall be reasonably requested by ITXC in form
and substance acceptable to ITXC (which acceptance shall not be
unreasonably withheld), including the following:

6.2.10.1 a certificate of the chief executive officer, chief
financial officer and chief operating officer of eFusion, dated the
Closing Date, to the effect that (1) the persons signing such
certificate are familiar with this Agreement and (2) to the best of
each such person's knowledge, the conditions specified in Section 6.2.1
and 6.2.2 have been satisfied;

6.2.10.2 a certificate of the Secretary or Assistant Secretary of
eFusion, dated the Closing Date, as to the incumbency of any officer of
such entity executing this Agreement;

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6.2.10.3 a certified copy of (1) the Articles of Incorporation and
by-laws of eFusion and all amendments thereto, (2) the resolutions of
eFusion's Board of Directors authorizing the execution, delivery and
consummation of this Agreement and the transactions contemplated hereby
and (3) the resolutions of eFusion's shareholders approving the Merger,
this Agreement and the transactions contemplated hereby; and

6.2.10.4 good standing certificates with respect to eFusion from
such jurisdictions as ITXC shall reasonably designate.

6.2.11 An amendment to ITXC's Certificate of Incorporation imposing upon
the ITXC Merger Shares the restriction on transferability contained in
Section 2.13 hereof shall have been approved by ITXC's stockholders and
filed with the Secretary of State of the State of Delaware.

6.3 Conditions to eFusion's Obligations. The obligations of eFusion to
consummate the transactions contemplated by this Agreement shall be subject to
the fulfillment at or prior to the Closing of each of the following conditions:

6.3.1 The representations and warranties of ITXC and Subcorp set forth
in Article IV shall be true and correct in all material respects (other
than representations and warranties which are qualified as to materiality,
which representations and warranties shall be true in all respects) on the
date hereof and on and as of the Closing Date as though made on and as of
the Closing Date (except for representations and warranties made as of a
specified date, which shall be measured only as of such specified date).

6.3.2 ITXC and Subcorp shall have performed in all material respects
each obligation and agreement and shall have complied in all material
respects with each covenant to be performed and complied with by ITXC and
Subcorp under this Agreement at or prior to the Closing.

6.3.3 Prior to or at the Closing, ITXC and Subcorp shall have delivered
such other closing documents as shall be reasonably requested by eFusion in
form and substance acceptable to eFusion (which acceptance shall not be
unreasonably withheld), including the following:

6.3.3.1 a certificate of the President or a Vice President of ITXC,
dated the Closing Date, to the effect that (1) the Person signing such
certificate is familiar with this Agreement and (2) to the best of such
person's knowledge, the conditions specified in Sections 6.3.1 and
6.3.2 have been satisfied;

6.3.3.2 a certificate of the Secretary or Assistant Secretary of
each of ITXC and Subcorp, dated the Closing Date, as to the incumbency
of any officer of ITXC and Subcorp executing this Agreement;

6.3.3.3 a certified copy of (1) the Restated Certificate of
Incorporation and by-laws of ITXC and all amendments thereto, (2) the
resolutions of ITXC's Board of Directors (or Executive Committee
thereof) authorizing the execution, delivery and consummation of this
Agreement and the transactions contemplated hereby and (3) if ITXC is
required to conduct the ITXC Special Meeting, resolutions of ITXC's
stockholders approving the issuance of ITXC Common Stock pursuant to
this Agreement; and

6.3.3.4 a certified copy of (1) the Certificate of Incorporation and
by-laws of Subcorp and all amendments thereto and (2) the resolutions
of Subcorp's Board of Directors authorizing the execution, delivery and
consummation of this Agreement and the transactions contemplated
hereby.

ARTICLE VII

Termination and Amendment

7.1. Termination. This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time (notwithstanding any approval
of this Agreement by eFusion's shareholders):

7.1.1 by mutual written consent of ITXC and eFusion;

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7.1.2 by either ITXC or eFusion if there shall be any law or regulation
that, as supported by the written opinion of legal counsel, makes
consummation of the Merger illegal or otherwise prohibited, or if any
judgment, injunction, order or decree of a court or other competent
governmental authority enjoining ITXC or eFusion from consummating the
Merger shall have been entered and such judgment, injunction, order or
decree shall have become final and nonappealable;

7.1.3 by either ITXC or eFusion if the Merger shall not have been
consummated before December 30, 2000 (the "Outside Date"), provided,
however, that the right to terminate this Agreement under this Section
7.1.3 shall not be available to any Party whose failure or whose
Affiliate's failure to perform any material covenant or obligation under
this Agreement has been the cause of or resulted in the failure of the
Merger to occur on or before such date;

7.1.4 by ITXC or eFusion if at the eFusion Special Meeting (including
any adjournment or postponement thereof) the requisite vote of eFusion's
shareholders to approve the Articles Amendment, the Merger, this Agreement
and the transactions contemplated hereby shall not have been obtained or by
ITXC if the Board of Directors of eFusion withdraws the Articles
Recommendation or its recommendation that the shareholders of eFusion
approve the Merger, this Agreement and the transactions contemplated hereby
(the "Merger Recommendation");

7.1.5 by ITXC or eFusion if, at or before the completion of the Closing,
it shall have discovered that any representation or warranty made in this
Agreement for its benefit, or in any certificate, exhibit or document
furnished to it pursuant to this Agreement, is untrue in any material
respect (other than representations and warranties which are qualified as
to materiality, which representations and warranties will give rise to
termination if untrue in any respect); provided, however, that in order to
terminate this Agreement under this Section 7.1.5, the terminating Party
shall, upon discovery of such a breach or default, give written notice
thereof to the breaching or defaulting Party and the latter shall fail to
cure the breach or default by the earlier of thirty (30) calendar days
after receipt of such notice or the day immediately prior to the Outside
Date;

7.1.6 by ITXC if eFusion shall have defaulted in the performance of any
material obligation under this Agreement; provided, however, that in order
to terminate this Agreement under this Section 7.1.6, ITXC shall, upon
discovery of such a breach or default, give written notice thereof to
eFusion and eFusion shall fail to cure the breach or default by the earlier
of thirty (30) calendar days after receipt of such notice or the day
immediately prior to the Outside Date;

7.1.7 by eFusion if ITXC shall have defaulted in the performance of any
material obligation under this Agreement; provided, however, that in order
to terminate this Agreement under this Section 7.1.7, eFusion shall, upon
discovery of such a breach or default, give written notice thereof to ITXC
and ITXC shall fail to cure the breach or default by the earlier of thirty
(30) calendar days after receipt of such notice or the day immediately
prior to the Outside Date;

7.1.8 by ITXC if any authorization, consent, waiver or approval required
for the consummation of the transactions contemplated hereby shall require
the divestiture or cessation of any of the present business or operations
conducted by ITXC, its Subsidiaries or eFusion or shall impose any other
condition or requirement, which divestiture, cessation, condition or
requirement would constitute a Combined Material Adverse Effect upon
consummation of the transactions contemplated by this Agreement;

7.1.9 by ITXC, in the event that any of the conditions to its
obligations set forth in Article VI have not been satisfied or waived by
the Outside Date or in the event that any such condition cannot possibly be
satisfied prior to the Outside Date;

7.1.10 by eFusion, in the event that any of the conditions to its
obligations set forth in Article VI have not been satisfied or waived by
the Outside Date or in the event that any such condition cannot possibly be
satisfied prior to the Outside Date; or

7.1.11 by ITXC if at the ITXC Special Meeting (including any adjournment
or postponement thereof) the requisite vote of ITXC's stockholders
reflecting approval of an amendment to ITXC's

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Certificate of Incorporation imposing upon the ITXC Merger Shares the
restrictions on transferability set forth in Section 2.13 hereof shall not
have been obtained.

7.1.12 by ITXC or eFusion if (a) applicable Nasdaq rules or regulations
require the issuance of ITXC Common Stock pursuant to this Agreement to be
approved by ITXC's stockholders and (b) at the ITXC Special Meeting
(including any adjournment or postponement thereof) the requisite vote of
ITXC's stockholders to effect such approval shall not have been obtained.

7.2. Effect of Termination.

7.2.1 In the event of the termination of this Agreement pursuant to
Section 7.1, this Agreement, except for any provisions relating to the
confidentiality obligations of the Parties to each other and the provisions
of this Sections 7.2 and Section 9.10, shall become void and have no
effect, without any liability on the part of any Party or its directors,
officers or shareholders. Notwithstanding the foregoing, nothing in this
Section 7.2 shall relieve any Party to this Agreement of liability for a
material breach of any provision of this Agreement and provided, further,
however, that if it shall be judicially determined that termination of this
Agreement was caused by an intentional breach of this Agreement, then, in
addition to other remedies at law or equity for breach of this Agreement,
the Party so found to have intentionally breached this Agreement shall
indemnify and hold harmless the other Parties for their respective fees and
expenses of their counsel, accountants, financial advisors and other
expenses incident to the negotiation, preparation and execution of this
Agreement, the filing of materials under the HSR Act and the preparation,
filing and mailing of the Registration Statement and Prospectus/Proxy
Statement ("Costs").

7.2.2 eFusion agrees that, if (A) ITXC or eFusion terminates this
Agreement pursuant to Section 7.1.4, (B) at the time of the failure by
eFusion's shareholders to approve this Agreement or the Articles Amendment
or at the time of the withdrawal of the Articles Recommendation or the
Merger Recommendation a proposal for a Business Combination has been made
to eFusion by a third party, and (C) within 12 months after such
termination, eFusion shall enter into an agreement to consummate a Business
Combination or shall consummate a Business Combination; then,
contemporaneously with the consummation of such Business Combination,
eFusion will pay to ITXC in cash by wire transfer in immediately available
funds to an account designated by ITXC (i) in reimbursement for ITXC's
expenses, an amount equal to the aggregate amount of ITXC's Costs incurred
in connection with pursuing the transactions contemplated by this
Agreement, including legal, accounting and investment banking fees, up to
but not in excess of $5,000,000 in the aggregate and (ii) a termination fee
in an amount equal to $5,000,000 minus the amount of such Costs. For
purposes of this Section 7.2.2, "Business Combination" means (i) a merger,
consolidation, share exchange, business combination or similar transaction
involving eFusion as a result of which eFusion's shareholders prior to such
transaction in the aggregate cease to own at least two thirds of the voting
securities of the entity surviving or resulting from such transaction (or
the ultimate parent entity thereof), (ii) a sale, lease, exchange, transfer
or other disposition of more than 20% of eFusion's assets in a single
transaction or a series of related transactions, or (iii) the acquisition,
by a Person (other than ITXC or any affiliate thereof) or group (as such
term is defined under Section 13(d) of the Exchange Act and the rules and
regulations thereunder) of beneficial ownership (as defined in Rule 13d-3
under the Exchange Act) of more than 20% of the outstanding shares of
eFusion Capital Stock whether by tender or exchange offer or otherwise. For
purposes of determining whether the 20% threshold in clause (iii) above has
been reached, each share of Preferred Stock shall be deemed to be the
number of shares of eFusion Common Stock into which it is convertible.

7.3. Amendment. This Agreement may be amended by the Parties, by action
taken or authorized by their respective Boards of Directors (or Executive
Committees thereof), at any time before or after adoption of this Agreement by
eFusion's shareholders, but after any such approval, no amendment shall be made
which by law requires further approval or authorization by eFusion's
shareholders without such further approval or authorization. Notwithstanding
the foregoing, this Agreement may not be amended except by an instrument in
writing signed on behalf of each of the Parties.

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7.4. Extension; Waiver. At any time prior to the Effective Time, ITXC (with
respect to eFusion) and eFusion (with respect to ITXC and Subcorp) by action
taken or authorized by their respective Boards of Directors (or Executive
Committees thereof), may, to the extent legally allowed, (a) extend the time
for the performance of any of the obligations or other acts of such Party, (b)
waive any inaccuracies in the representations and warranties contained herein
or in any document delivered pursuant hereto and (c) waive compliance with any
of the agreements or conditions contained herein. Any agreement on the part of
a Party to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such Party.

ARTICLE VIII

Survival of Representations and Warranties; Indemnification

8.1 Survival of Representations and Warranties. The representations and
warranties provided for in this Agreement shall survive the Closing and remain
in full force and effect for a period of one year from the Closing Date for the
benefit of the Parties and their successors and assigns (the "Survival
Period").

8.2 Indemnification.

8.2.1 (a) Subject to the limitations provided for in this Article VIII,
by virtue of the approval of the Merger and this Agreement by the requisite
vote of eFusion's shareholders, the Shareholders agree, severally in
proportion to the relative number of shares of ITXC Common Stock
deliverable to them pursuant to the Escrow Agreement, that after the
Closing they shall indemnify and hold harmless ITXC, its Affiliates,
officers, directors, employees, agents and representatives, the Surviving
Corporation, and any Person or entity claiming by or through any of the
foregoing, against and in respect of any and all claims, costs, expenses,
damages, liabilities, losses or deficiencies (including attorneys' fees and
other costs and expenses incident to any suit, action or proceeding) (the
"Damages") arising out of, resulting from or incurred in connection with
(i) any inaccuracy in any representation or the breach of any warranty made
by eFusion in this Agreement for the Survival Period, (ii) the adjustment
contemplated by Section 2.11 in the event that the Cash/Cash Equivalent
Estimate overstates the amount of the Cash/Cash Equivalent, (iii) any
failure by eFusion to perform any agreement, obligation or covenant
required to be performed by eFusion pursuant to this Agreement prior to the
Effective Time, or (iv) the allegations of infringement or misappropriation
with respect to patents (the "Referenced Patents") referenced in written
communications to eFusion, prior to the date hereof, from any of the
entities identified in Section 8.2.1 of the eFusion Disclosure Schedule
("Claimants") and Related Patents (such Referenced Patents and Related
Patents, the "Subject Patents"). ITXC shall be deemed to have suffered
Damages arising out of or resulting from the matters referred to in this
Section 8.2.1 if the same shall be suffered by ITXC or any Subsidiary or
Affiliate of ITXC, including the Surviving Corporation after the Effective
Time.

(b) The indemnification provided by eFusion pursuant to subsection
(a)(iv) of this Section 8.2.1 shall survive for one year from the Closing
Date unless, after the Closing Date and prior to the first anniversary of
the Closing Date, eFusion, ITXC or the Surviving Corporation receives a
Notice of Intention to Pursue a Claim, in which case such indemnification
shall survive until all claims described in such Notice of Intention to
Pursue a Claim have been fully and finally resolved.

(c) If a Notice of Intention to Pursue a Claim is received by eFusion,
ITXC or the Surviving Corporation prior to the first anniversary of the
Closing Date, at such first anniversary there shall be retained in escrow
pursuant to this Article VIII and the Escrow Agreement, in addition to any
other amount to be retained in escrow pursuant to this Article VIII and the
Escrow Agreement, an amount equal to the Patent Reserve for each claim
subject to any such Notice of Intention to Pursue a Claim.

(d) The term "Notice of Intention to Pursue a Claim" shall mean written
indication from any Claimant that can reasonably be read to indicate an
intention on the part of such Claimant to pursue a claim of patent
infringement or misappropriation against eFusion, ITXC or the Surviving
Corporation with respect to the Subject Patents.

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(e) The term "Related Patents" shall mean, with respect to a patent,
patents related, as divisions, reissues, reexaminations, continuations,
continuations in part, corresponding foreign patents and/or any other
patent rights, domestic or foreign, entitled to a claim of priority under
35 USC 119, 120, 365 or under any international treaty providing for a
right of priority, whether or not such priority is claimed.

(f) The term "Patent Reserve" shall mean, for each claim subject to a
Notice of Intention to Pursue a Claim, (i) the amount of damages requested
by a Claimant, if such amount is specifically and unambiguously asserted in
such Notice of Intention to Pursue a Claim, (ii) if no such amount is
asserted, the amount that the eFusion Representative and ITXC agree
represents the maximum reasonable amount to be reserved for such claim, or
(iii) if the eFusion Representative and ITXC cannot come to such agreement,
the amount, determined by a mutually acceptable third-party, that
represents the maximum reasonable amount to be reserved for such claim. For
the purposes of making the evaluation of Patent Reserve required by this
subsection (f), special, consequential, punitive, statutory, treble, lost
profits and any and all other possible damage formulations shall be taken
into account.

8.2.2 Subject to the limitations provided for in this Article VIII,
after the Closing, ITXC shall indemnify and hold harmless the Shareholders
and their respective agents and representatives, and any Person claiming by
or through any of them, against and in respect of any and all Damages
arising out of, resulting from or incurred in connection with (i) any
inaccuracy in any representation or the breach of any warranty made by ITXC
in this Agreement for the Survival Period and (ii) any failure by ITXC to
perform any agreement, obligation or covenant required to be performed by
ITXC pursuant to this Agreement prior to the Effective Time.

8.2.3 Any Person or entity providing indemnification pursuant to the
provisions of this Section 8.2 is hereinafter referred to as an
"Indemnifying Party" and any Person or entity entitled to be indemnified
pursuant to the provisions of this Section 8.2 is hereinafter referred to
as an "Indemnified Party."

8.2.4 The Shareholders' indemnification obligations referenced in
Sections 8.2.1(i) and 8.2.1(iii) shall not apply to any claim for Damages
until the aggregate of all such claims have been determined in accordance
with the Escrow Agreement to exceed $250,000, in which event the
Shareholders' indemnity obligation referenced in Sections 8.2.1(i) and
8.2.1(iii) shall apply to the total amount in excess of such amount,
subject to a maximum liability to ITXC of all shares of ITXC Common Stock
placed in escrow pursuant to the Escrow Agreement for all claims under
Sections 8.2.1(i) and 8.2.1(iii). ITXC's indemnification obligations
referenced in Section 8.2.2 shall not apply to any claim for Damages until
the aggregate of all such claims exceed $250,000, in which event ITXC's
indemnity obligation referenced in Section 8.2.2 shall apply to the total
amount in excess of such amount, subject to a maximum liability to the
Shareholders of $21 million for all claims under Section 8.2.2. All such
claims made during the relevant Survival Period shall be counted in
determining whether the thresholds specified above have been achieved.

8.2.5 In the absence of fraud, ITXC's sole recourse for Damages under
this Article VIII shall be to make a claim under the Escrow Agreement. In
the absence of fraud, no claim shall be made by ITXC for indemnification
directly against any of the Shareholders.

8.2.6 In the absence of fraud, the provisions of Article VIII shall
constitute the sole and exclusive remedy of any Indemnified Party for
Damages arising out of, resulting from or incurred in connection with any
inaccuracy in any representation herein or the breach of any warranty
herein or the breach of any covenant or obligation to be performed
hereunder prior to the Effective Time.

8.3 Procedures for Third Party Claims. In the case of any claim for
indemnification arising from a claim of a third party (a "Third Party Claim"),
an Indemnified Party shall give prompt written notice to the Indemnifying Party
of any claim or demand of which such Indemnified Party has knowledge and as to
which it may request indemnification hereunder; provided, however, that the
failure to provide prompt notice shall not excuse the Indemnifying Party from
its indemnification obligations hereunder except to the extent that the
Indemnifying Party is prejudiced thereby. The Indemnifying Party shall have the
right to defend and to direct

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the defense against any such Third Party Claim, in its name or in the name of
the Indemnified Party, as the case may be, at the expense of the Indemnifying
Party, and with counsel selected by the Indemnifying Party unless (i) such
Third Party Claim seeks an order, injunction or other equitable relief against
the Indemnified Party, (ii) the Indemnifying Party fails to appoint counsel
within twenty days after receiving such notice from the Indemnified Party or
(iii) the Indemnified Party shall have reasonably concluded that (x) there is a
conflict of interest between the Indemnified Party and the Indemnifying Party
in the conduct of the defense of such Third Party Claim or (y) the Indemnified
Party has one or more defenses not available to the Indemnifying Party.
Notwithstanding anything in this Agreement to the contrary, the Indemnified
Party shall, at the expense of the Indemnifying Party, cooperate with the
Indemnifying Party, and keep the Indemnifying Party fully informed, in the
defense of such Third Party Claim. The Indemnified Party shall have the right
to participate in the defense of any Third Party Claim with counsel employed at
its own expense; provided, however, that, in the case of any Third Party Claim
described in clause (i), (ii) or (iii) of the second preceding sentence, the
reasonable fees and disbursements of such counsel shall be at the expense of
the Indemnifying Party. The Indemnifying Party shall have no indemnification
obligations with respect to any Third Party Claim which shall be settled by the
Indemnified Party without the prior written consent of the Indemnifying Party,
which consent shall not be unreasonably withheld or delayed.

8.4 Procedures for Inter-Party Claims. In the event that an Indemnified
Party determines that it has a claim for Damages against an Indemnifying Party
hereunder (other than as a result of a Third Party Claim), the Indemnified
Party shall give prompt written notice thereof to the Indemnifying Party,
specifying the amount of such claim and any relevant facts and circumstances
relating thereto; provided, however, that the failure to provide prompt notice
shall not excuse the Indemnifying Party from its indemnification obligations
hereunder except to the extent that the Indemnifying Party is prejudiced
thereby. The Indemnified Party shall provide the Indemnifying Party with
reasonable access to its books and records for the purpose of allowing the
Indemnifying Party a reasonable opportunity to verify any such claim for
Damages. The Indemnified Party and the Indemnifying Party shall negotiate in
good faith regarding the resolution of any disputed claims for Damages.
Promptly following the final determination of the amount of any Damages claimed
by the Indemnified Party, the Indemnifying Party shall cause the Indemnified
Party to receive the relief contemplated hereby. In the event that the
Shareholders are the Indemnifying Party, such relief shall be effected pursuant
to the Escrow Agreement. In the event that the Indemnified Party is required to
institute legal proceedings in order to recover Damages hereunder, the cost of
such proceedings (including costs of investigation and reasonable attorneys'
fees and disbursements) shall be added to the amount of Damages payable to the
Indemnified Party.

8.5 The Representative.

8.5.1 By virtue of the approval of the Merger and this Agreement by the
requisite vote of eFusion's shareholders, each of the Shareholders shall be
deemed to have appointed the eFusion Representative to act on behalf of the
Shareholders with respect to all matters relating to this Article VIII and
the Escrow Agreement, including in considering and certifying the amount of
any indemnification hereunder, in communicating with the Shareholders, in
appointing a successor Escrow Agent under the Escrow Agreement, in
considering and acting with respect to any amendment or termination of this
Agreement, in taking any action on behalf of the Shareholders as an
Indemnified Party or as an Indemnifying Party, and generally in performing
all acts expressly required or permitted to be performed by the eFusion
Representative pursuant hereto and pursuant to the Escrow Agreement;
provided, however, that the eFusion Representative shall have no obligation
to act on behalf of the Shareholders except as expressly provided herein.
ITXC and the Escrow Agent shall have the right to deal exclusively with the
eFusion Representative with respect to all matters under this Article VIII
and the Escrow Agreement and neither ITXC or the Escrow Agent shall have
any liability to any Shareholder for any acts or omissions of the eFusion
Representative, or any acts or omissions taken or not taken by ITXC or the
Escrow Agent at the direction of the eFusion Representative, including, but
not limited to (i) any acts or omissions relating to the voting of any
shares of ITXC Common Stock held in escrow or (ii) the transferring or the
failure to transfer any shares or funds released from escrow. Upon any
distribution of ITXC Common Stock or other funds to the eFusion
Representative (or to one or more of the Shareholders upon written
instruction of the

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eFusion Representative) in accordance with this Agreement or the Escrow
Agreement, the Escrow Agent and ITXC shall be deemed to have fully
satisfied any and all obligations to the Shareholders under this Agreement
and the Escrow Agreement with respect to the amount of such distribution.

8.5.2 The eFusion Representative will have no liability to the
Shareholders with respect to actions taken or omitted to be taken in the
eFusion Representative's capacity as the eFusion Representative, except
with respect to any liability resulting from the eFusion Representative's
gross negligence or willful misconduct. The eFusion Representative shall be
entitled to rely upon any directions received from holders of a majority of
the ITXC Common Stock received in the Merger; provided, however, that the
eFusion Representative shall not be required to follow any such direction,
and shall be under no obligation to take any action in its capacity as the
eFusion Representative, unless the eFusion Representative has been provided
with funds, security or indemnities from the Shareholders which, in the
sole determination of the eFusion Representative, are sufficient to protect
the eFusion Representative against the costs, expenses and liabilities
which may be incurred by the eFusion Representative in responding to such
direction or taking such action. The eFusion Representative shall be
entitled to engage such counsel, experts and other agents and consultants
as the eFusion Representative shall deem necessary in connection with
exercising the eFusion Representative's powers and performing the eFusion
Representative's function hereunder and under the Escrow Agreement and (in
the absence of bad faith on the part of the eFusion Representative) shall
be entitled to conclusively rely on the opinions and advice of such
persons. The eFusion Representative shall be entitled to reimbursement by
the Shareholders, from (i) the shares of ITXC Common Stock held in escrow
pursuant to the Escrow Agreement (but only to the extent available for such
reimbursement under the terms of the Escrow Agreement), and (ii) any other
funds or security otherwise received by the eFusion Representative in the
eFusion Representative's capacity as the eFusion Representative pursuant to
or in accordance with this Agreement, for all reasonable expenses,
disbursements and advances (including fees and disbursements of the eFusion
Representative's counsel, experts and other agents and consultants)
incurred by the eFusion Representative in such capacity, and for
indemnification, by the Shareholders, against any loss, liability or
expenses arising out of actions taken or omitted to be taken in the eFusion
Representative's capacity as the eFusion Representative (except for those
arising out of the eFusion Representative's gross negligence or willful
misconduct), including the costs and expenses of investigation and defense
of claims.

8.6 Termination of eFusion's Warranties. All representations, warranties and
covenants made by eFusion in this Agreement shall terminate as to eFusion (but
only as to eFusion, and not as to the Shareholders) as of the Closing. After
the Closing, eFusion (as the Surviving Corporation) shall not have any
obligation or liability to any Shareholder as a direct or indirect result of
any misrepresentation, breach of covenant or other occurrence or circumstance
for which the Shareholders have or may have liability to ITXC under this
Agreement.

8.7 Indemnification Obligations of ITXC. In the event that ITXC shall be
required to provide indemnification pursuant to this Article VIII, ITXC shall
deliver to the Shareholders, in ITXC's discretion, either (a) cash in the
amount of the applicable Damages, (b) shares of ITXC Common Stock, valued at a
per share amount equal to the Closing Market Price on the Closing Date, in the
amount of the applicable Damages or (c) a combination of cash and such shares
so valued, in the amount of the applicable Damages.

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ARTICLE IX

Miscellaneous

9.1. Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be delivered personally, by telecopy,
by overnight courier or sent by certified or registered mail, postage prepaid,
and shall be deemed given when so delivered personally, or when so received by
facsimile or courier, or if mailed, three calendar days after the date of
mailing, as follows (or at such other address for a Party as shall be specified
by like notice):

9.1.1 if to ITXC or Subcorp:

ITXC Corp.
600 College Road East
Princeton, New Jersey 08540
Telephone: 609-750-3300
Telecopy: 609-750-3400
Attention: Chief Financial Officer

with a copy (which shall not constitute notice) to :

Peter H. Ehrenberg
Lowenstein Sandler PC
65 Livingston Avenue
Roseland, New Jersey 07068
Telephone: 973-597-2350
Telecopy: 973-597-2351

9.1.2 if to eFusion:

eFusion, Inc.
14600 NW Greenbrier Parkway
Beaverton, OR 97006
Telephone: 503-207-6300
Telecopy: 503-207-6500

with a copy (which shall not constitute notice) to :

Barry Taylor
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Telephone: 650-354-4107
Telecopy: 650-493-6811

9.2. Interpretation. When a reference is made in this Agreement to an
Article or Section, such reference shall be to an Article or Section of this
Agreement unless otherwise indicated. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

9.3. Counterparts; Telecopied Signatures. This Agreement may be executed in
counterparts, which together shall constitute one and the same Agreement. The
Parties may execute more than one copy of the Agreement, each of which shall
constitute an original. A signed signature page telecopied by one Party to
another Party shall be deemed to constitute an original.

9.4. Entire Agreement. This Agreement (including the appendices, documents
and other instruments referred to herein), the standstill agreement between
ITXC and eFusion dated July 25, 2000 and the

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non-disclosure and restricted use agreements between eFusion and ITXC
previously delivered by the Parties constitute the entire agreement among the
Parties and supersede all prior agreements and understandings, arrangements or
representations by or among the Parties, written and oral, with respect to the
subject matter hereof and thereof.

9.5. No Third Party Beneficiaries. Nothing in this Agreement, express or
implied, is intended or shall be construed to create any third party
beneficiaries, other than the Shareholders with respect to their interests
under the Escrow Agreement.

9.6. Governing Law. Except to the extent that the laws of the jurisdiction
of organization of any Party, or any other jurisdiction, are mandatorily
applicable to the Merger or to matters arising under or in connection with this
Agreement, this Agreement shall be governed by the laws of the State of
Delaware without regard to conflicts of laws principles. All actions and
proceedings arising out of or relating to this Agreement shall be heard and
determined in any state or federal court sitting in the State of Delaware,
except as otherwise provided in the Escrow Agreement.

9.7. Consent to Jurisdiction; Venue; No Trial by Jury.

9.7.1 Except as otherwise provided in the Escrow Agreement, each of the
Parties irrevocably submits to the exclusive jurisdiction of the state and
federal courts located in the State of Delaware, for the purpose of any
action or proceeding arising out of or relating to this Agreement and each
of the Parties irrevocably agrees that all claims in respect to such action
or proceeding shall be heard and determined exclusively in any Delaware
state or federal court. Each of Parties agrees that a final judgment in any
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.

9.7.2 Each of the Parties irrevocably consents to the service of any
summons and complaint and any other process in any action or proceeding
relating to the Merger, on behalf of itself or its property, by the
delivery of copies of such process to such Party in the same manner as
notice is to be provided pursuant to Section 9.1. Nothing in this Section
9.7.2 shall affect the right of any Party hereto to serve legal process in
any other manner permitted by law.

9.7.3 Each Party acknowledges and agrees that any controversy which may
arise under this Agreement is likely to involve complicated and difficult
issues, and therefore each Party hereby irrevocably and unconditionally
waives any right such Party may have to a trial by jury in respect to any
litigation directly or indirectly arising out of or relating to this
Agreement or the transactions contemplated by this Agreement. Each Party
certifies and acknowledges that (i) no representative, agent or attorney of
any other Party has represented, expressly or otherwise, that such other
Party would not, in the event of litigation, seek to enforce the foregoing
waiver, (ii) each such Party understands and has considered the
implications of this waiver, (iii) each such Party makes this waiver
voluntarily, and (iv) each such Party has been induced to enter into this
Agreement by, among other things, the waivers and certifications in this
Section 9.7.3.

9.8. Specific Performance. The Parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that, in addition to any other remedy to which they
are entitled at law or in equity, the Parties will be entitled to an injunction
or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof.

9.9. Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the Parties (whether by
operation of law or otherwise) without the prior written consent of the other
Parties. 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.

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9.10. Expenses. Subject to the provisions of Section 7.2, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby and thereby shall be paid by the Party incurring such
expenses, except that those expenses incurred in connection with filing,
printing and mailing the Registration Statement and the Prospectus/Proxy
Statement (including filing fees related thereto) will be shared equally by
ITXC and eFusion in the event that this Agreement is terminated.

9.11 Severability. The invalidity of any portion hereof shall not affect the
validity, force or effect of the remaining portions hereof. If it is ever held
that any restriction hereunder is too broad to permit enforcement of such
restriction to its fullest extent, such restriction shall be enforced to the
maximum extent permitted by law.

9.12 No Strict Construction. Each of ITXC, Subcorp and eFusion acknowledges
that this Agreement has been prepared jointly by the Parties and that there
shall not be a presumption that ambiguities shall be construed against any
Party.

9.13 Knowledge. Any representation made herein which is qualified by the
knowledge of, or notice given to, eFusion shall refer to the actual knowledge
of, or notice actually given to, any of the executive officers of eFusion,
after reasonable inquiry by such executive officers. Any representation made
herein which is qualified by the knowledge of, or notice given to, ITXC shall
refer to the actual knowledge of, or notice actually given to, any of the
executive officers of ITXC, after reasonable inquiry by such executive
officers.

9.14 Prior Agreement. The Prior Agreement is superseded in all respects.

IN WITNESS WHEREOF, ITXC, Subcorp and eFusion have signed this Agreement and
Plan of Merger as of the date first written above.

ITXC CORP.

/s/ Edward B. Jordan
By: _________________________________
Name: Edward B. Jordan
Title: Executive Vice President

EYE MERGER CORP.

/s/ Edward B. Jordan
By: _________________________________
Name: Edward B. Jordan
Title: Vice President

eFUSION, INC.

/s/ Luis Machuca
By: _________________________________
Name: Luis Machuca
Title: President and Chief
Operating Officer

A-54
<PAGE>

LIST OF APPENDICES

<TABLE>
<S> <C>
Articles Amendment........................................ Appendix 1

Worksheet................................................. Appendix 2.7.2.3

Cash/Cash Equivalent Certificate.......................... Appendix 2.7.13

Escrow Agreement.......................................... Appendix 2.10

eFusion Affiliate's Letter................................ Appendix 5.17

Tax Opinion............................................... Appendix 6.1.6
</TABLE>

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<PAGE>

APPENDIX 2.7.2.3

ALLOCATION WORKSHEET

as of July 25, 2000

The allocation of Total ITXC Stock Consideration below assumes the
following:

<TABLE>
<S> <C>
Historical Price (defined in
Agreement): $34.9886

Total ITXC Stock Consideration: 5,930,503 shares of ITXC Common Stock(1)

Series A Preferred Stock
outstanding: 2,510,000 shares

Series B Preferred Stock
outstanding: 1,918,736 shares

Series C Preferred Stock
outstanding: 2,589,013 shares

Series D Preferred Stock
outstanding: 2,491,102 shares

eFusion Common Stock outstanding: 5,441,280 shares(2)

eFusion Common Stock issuable upon
exercise of outstanding eFusion
Options: 2,390,353 shares
</TABLE>

(1) Assumes $9.5 million of Cash/Cash Equivalents (less professional fees)
at Closing.
(2) Assumes that no warrants will be exercised.

A-56
<PAGE>

Preference Shares Calculation:

<TABLE>
<CAPTION>
Class Preference Share Ratio Preference Shares
----- ---------------------- -----------------
<S> <C> <C>
Series A Preferred Stock 0.0285807 71,737

Series B Preferred Stock 0.1266126 242,936

Series C Preferred Stock 0.2000651 517,971

Series D Preferred Stock 0.2286459 569,580

Aggregate Preference Shares: 1,402,224
</TABLE>

Aggregate Common Equivalent Shares Calculation:

4,528,279 = 5,930,503 - 1,402,224
Aggregate Common Total ITXC Stock Aggregate Preference
Equivalent Shares Consideration Shares

Exchange Ratio Calculation:

14,950,131 = 5,441,280 + 9,508,851
Aggregate Common aggregate number of aggregate number of
Number shares shares of
of eFusion Common Stock Preferred Stock

eFusion Option Number = 2,390,353

0.2611391 = 4,528,279 / (14,950,131 + 2,390,353)
Exchange Ratio Aggregate Common Aggregate Common eFusion
Equivalent Shares Number Option
Number

Preferred Stock and Common Stock per share Allocation Calculation:

0.2897198 = 0.0285807 + 0.2611391
Series A Fraction Series A Preference Share Exchange Ratio
Ratio

0.3877517 = 0.1266126 + 0.2611391
Series B Fraction Series B Preference Share Exchange Ratio
Ratio

0.4612042 = 0.2000651 + 0.2611391
Series C Fraction Series C Preference Share Exchange Ratio
Ratio

0.4897850 = 0.2286459 + 0.2611391
Series D Fraction Series D Preference Share Exchange Ratio
Ratio

0.2611391 = 0.2611391
Common Fraction Exchange Ratio

A-57
<PAGE>

Aggregate Allocation Calculation:

727,196 = 2,510,000 x 0.2897198
Aggregate Allocation Shares of Series A Series A Fraction
to Preferred Stock
Series A Preferred
Stock

743,993 = 1,918,736 x 0.3877517
Aggregate Allocation Shares of Series B Series B Fraction
to Preferred Stock
Series B Preferred
Stock

1,194,063 = 2,589,013 x 0.4612042
Aggregate Allocation Shares of Series C Series C Fraction
to Preferred Stock
Series C Preferred
Stock

1,220,104 = 2,491,102 x 0.4897850
Aggregate Allocation Shares of Series D Series D Fraction
to Preferred Stock
Series D Preferred
Stock

1,420,930 = 5,441,280 x 0.2611391
Aggregate Allocation aggregate number of Common Fraction
to Common Stock shares of eFusion
Common Stock

624,214 = 2,390,353 x 0.2611391
Aggregate Allocation eFusionOptions Exchange Ratio
to Option Holders Outstanding

A-58
<PAGE>

APPENDIX 2.7.13

Certificate of Chief Financial Officer

I, Jack Carveth, do hereby certify on behalf of eFusion, Inc., an Oregon
corporation ("eFusion"), as follows:

1. I am the Chief Financial Officer of eFusion.

2. I have reviewed the definition of "Cash/Cash Equivalent" and Sections
2.7.13 and 2.11 of the Agreement and Plan of Merger, dated as of July 25,
2000, by and among eFusion, ITXC Corp. ("ITXC") and a wholly-owned
subsidiary of ITXC (the "Agreement"), and I am delivering this Certificate
on behalf of eFusion pursuant to Section 2.7.13 of the Agreement three days
prior to the date anticipated to be the Closing Date. All capitalized terms
herein that are defined in the Agreement shall have the definitions set
forth in the Agreement.

3. eFusion's good faith estimate of the Cash/Cash Equivalent as of the
Closing Date is $ . Such amount represents the difference between the
amount of cash and cash equivalents, determined in accordance with GAAP,
that eFusion estimates will be reflected on eFusion's balance sheet as of
the Closing Date ($ ) and eFusion's estimate of the amount of unpaid
Professional Advisor Fees that eFusion and/or the Surviving Corporation
will be required to pay after the Closing Date ($ ).

4. Annexed hereto is a true, correct and complete list of the depository
and investment accounts maintained by eFusion with financial institutions,
the balance as of the date hereof maintained by eFusion in each such
account, and a list of all outstanding checks drawn against any such
balance.

IN WITNESS WHEREOF, the undersigned has executed this certificate as of the
day of , 2000.

________________________
Jack Carveth
Chief Financial Officer

A-59
<PAGE>

APPENDIX 2.10

ESCROW AGREEMENT

This ESCROW AGREEMENT ("Escrow Agreement") is made and entered into as of
, 2000 by and among ITXC Corp., a Delaware corporation ("ITXC"),
eFusion, Inc., an Oregon corporation ("eFusion"), Luis Machuca (the "eFusion
Representative"), as the representative of each person or entity that was a
shareholder of eFusion immediately prior to the consummation of the Merger
described in the Merger Agreement (the "Shareholders") and
(the "Escrow Agent").

RECITALS

A. eFusion, ITXC and a wholly owned subsidiary of ITXC ("Subcorp") have
entered into an Amended and Restated Agreement and Plan of Merger, dated as of
July 25, 2000 (the "Merger Agreement"), pursuant to which Subcorp shall merge
with and into eFusion, with eFusion surviving the Merger. Capitalized terms
used in this Escrow Agreement and not otherwise defined herein will have the
meanings given them in the Merger Agreement.

B. This Agreement has been executed pursuant to the terms of the Merger
Agreement.

C. In accordance with the Merger Agreement, approximately shares of
ITXC Common Stock are to be issued to all of the Shareholders (excluding shares
of ITXC Common Stock subject to ITXC Exchange Options). The Merger Agreement
provides for ten percent of the shares of ITXC Common Stock issuable to each
Shareholder in the Merger to be placed in an escrow account (the "Escrow
Account") pursuant to this Escrow Agreement in order to secure the
indemnification obligations of the Shareholders to ITXC set forth in Article
VIII of the Merger Agreement. The shares of ITXC Common Stock to be placed in
escrow as a result of such provisions are hereinafter referred to as the
"Retained Shares."

D. The parties hereto desire to confirm the terms and conditions pursuant to
which the Retained Shares will be deposited to, held in and disbursed from the
Escrow Account.

NOW, THEREFORE, the parties hereto hereby agree as follows:

1. eFusion Representative; Consent. By virtue of the approval of the Merger
and the Merger Agreement by the requisite vote of eFusion's shareholders, the
Shareholders have, without any further act of any Shareholder, approved: (i)
the use of the Retained Shares in connection with the Shareholders'
indemnification obligations under Article VIII of the Merger Agreement in the
manner set forth herein, (ii) the appointment of the eFusion Representative as
their representative for purposes of this Escrow Agreement and the Merger
Agreement and as the attorney-in-fact and agent for and on behalf of each
Shareholder (other than holders of Dissenting Stock), (iii) the taking by the
eFusion Representative of any and all actions and the making of any decisions
required or permitted to be taken by the eFusion Representative under this
Escrow Agreement and the Merger Agreement and (iv) all of the other terms,
conditions and limitations in this Escrow Agreement and the Merger Agreement.
Accordingly, the eFusion Representative has full authority and power to act on
behalf of each Shareholder with respect to this Escrow Agreement and the Merger
Agreement and the disposition, settlement or other handling of all claims,
rights or obligations arising hereunder and under the Merger Agreement. The
Shareholders will be bound by all actions taken by the eFusion Representative
in connection with this Escrow Agreement and the Merger Agreement. The Escrow
Agent and ITXC shall be entitled to rely on any action or decision of the
eFusion Representative with respect to the Retained Shares.

2. Escrow and Indemnification; Article VIII of the Merger Agreement.

(a) Escrow of Shares. The number of shares of ITXC Common Stock set
forth beside each Shareholder's name on Exhibit A hereto, representing ten
percent (10%) of the number of shares of ITXC

A-60
<PAGE>

Common Stock issuable to such Shareholder in connection with the Merger
(rounded down to the nearest whole number of shares to be issued to each
Shareholder), will be held in escrow by the Escrow Agent pursuant to this
Escrow Agreement during the escrow period, which period (the "Escrow
Period") commences at the Effective Time of the Merger and expires at 12:01
a.m. (East Coast Time) on the one year anniversary of the Closing Date (the
"Release Date"); provided, that, the Release Date and the Escrow Period
shall be extended, with respect to claims for which a Notice of Intention
to Pursue a Claim has been received prior to the one year anniversary of
the Closing Date, until all claims described in such Notice have been fully
and finally resolved. The Escrow Agent will be notified in writing of the
Effective Time of the Merger and of the Release Date. The Retained Shares
will include "Additional Retained Shares" as that term is defined in
Section 3(b) of this Escrow Agreement and "Additional Cash/Cash Equivalent
Shares" as that term is defined in Section 2(d) of this Escrow Agreement.
ITXC shall reflect the Retained Shares as issued and outstanding shares of
ITXC Common Stock on its balance sheet after the Effective Time (and
thereafter unless and until such shares are reacquired by ITXC pursuant to
this Escrow Agreement or otherwise cease to be issued and outstanding in
accordance with applicable laws). The Retained Shares have been duly
authorized and, upon issuance pursuant to the Merger Agreement, will be
validly issued under Delaware law.

(b) Retained Shares. The Retained Shares will be security for the
indemnity obligations of the Shareholders in the manner provided for in
Article VIII of the Merger Agreement and this Escrow Agreement.

(c) Incorporation of Article VIII of the Merger Agreement. Each of the
provisions of Article VIII of the Merger Agreement are incorporated herein
by reference as if expressly stated herein. In the event of any
inconsistency between the provisions of this Escrow Agreement and the
provisions of Article VIII of the Merger Agreement, the provisions of
Article VIII of the Merger Agreement shall govern, provided, however, that
the provisions of Section 6 hereof shall not be superseded by any provision
in the Merger Agreement.

(d) Additional Cash/Cash Equivalent Shares. Pursuant to Section 2.11 of
the Merger Agreement, if the Cash/Cash Equivalent reflected in the Final
Accountant's Report exceeds the Cash/Cash Equivalent Estimate, ITXC will be
obligated to deliver to the Escrow Agent a number of shares of ITXC Common
Stock equal to ten percent (10%) of the amount of such excess divided by
$34.9886 (the "Historical Price"). Any shares so delivered by ITXC to the
Escrow Agent are referred to herein as "Additional Cash/Cash Equivalent
Shares" and shall be held and disposed of by the Escrow Agent in the same
manner as each of the other Retained Shares. Each Shareholder shall be
deemed to have a pro rata interest in such Additional Cash/Cash Equivalent
Shares in the same proportion as the number of shares shown opposite such
Shareholder's name on Appendix A annexed hereto bears to the aggregate
number of shares allocated on Appendix A annexed hereto.

(e) Patent Reserve. Notwithstanding anything to the contrary contained
herein, if a Notice of Intention to Pursue a Claim is received by eFusion,
ITXC or the Surviving Corporation prior to the one year anniversary of the
Closing, at such anniversary there shall be retained in escrow pursuant to
Article VIII of the Merger Agreement, in addition to any other amount to be
retained in escrow pursuant to Article VIII of the Merger Agreement or this
Escrow Agreement, an amount equal to the Patent Reserve for each claim
subject to any such Notice of Intention to Pursue a Claim.

3. Deposit of Retained Shares: Release from Escrow.

(a) At the Effective Time of the Merger, the Retained Shares will be
registered in the name of the Escrow Agent and will be delivered by ITXC to
the Escrow Agent in the form of a duly authorized stock certificate or
certificates issued in the name of the Escrow Agent representing the number
of shares of ITXC Common Stock that are to be deposited in the Escrow
Account pursuant to Section 2(a) of this Escrow Agreement. In the event
that ITXC issues any Additional Retained Shares or Additional Cash/Cash
Equivalent Shares, such shares will be issued in the name of the Escrow
Agent and delivered to the Escrow Agent in the same manner as the Retained
Shares delivered at the Effective Time of the

A-61
<PAGE>

Merger. The Escrow Agent agrees to accept delivery of the Retained Shares,
the Additional Retained Shares and the Additional Cash/Cash Equivalent
Shares and to hold such Retained Shares, Additional Retained Shares and
Additional Cash/Cash Equivalent Shares in escrow subject to the terms and
conditions of this Escrow Agreement.

(b) Except for tax-free dividends payable in stock declared with respect
to the Retained Shares pursuant to Section 305(a) of the Internal Revenue
Code of 1986, as amended ("Additional Retained Shares"), any cash
dividends, dividends payable in securities or other distributions of any
kind made in respect of the Retained Shares will be distributed currently
to each Shareholder in accordance with each Shareholder's respective
proportionate interest in the Retained Shares. Each Shareholder will have
voting rights with respect to the Retained Shares deemed deposited in the
Escrow Account with respect to such Shareholder so long as such Retained
Shares are held in escrow, such rights to be exercisable by delivery of
voting instructions to the Escrow Agent. While the Retained Shares remain
in the Escrow Agent's possession pursuant to this Escrow Agreement, the
Shareholders will retain and will be able to exercise all other incidents
of ownership of said Retained Shares which are not inconsistent with the
terms and conditions of this Escrow Agreement.

(c) Subject to Section 2(e) hereof, the Retained Shares will be held by
the Escrow Agent during the Escrow Period. Within five (5) business days
after the Release Date, the Escrow Agent will transfer to the Exchange
Agent for re-delivery to the Shareholders (provided that the Shareholders
have delivered their old eFusion certificates to the Exchange Agent in
accordance with Article II of the Merger Agreement) the Retained Shares
held in escrow, unless an ITXC Indemnified Party (as hereinafter defined)
has asserted a claim for indemnification (an "Indemnification Claim") in
writing as provided in this Escrow Agreement, in which event the Escrow
Agent will continue to hold the number of Retained Shares required to be
held by it under Section 4 or 5 hereof until such Indemnification Claim is
settled in the manner provided for therein or as provided in Section 5(f)
hereof. ITXC shall cause the Exchange Agent to assure that any Retained
Shares remaining in the Escrow Account and not subject to any pending
claims will, upon transfer from the Escrow Agent to the Exchange Agent, be
delivered by the Exchange Agent to the Shareholders in the form of stock
certificates issued in the names of the respective Shareholders for the
number of shares that represents such Shareholder's interest in the
Retained Shares, such certificates to be legended (with respect to matters
covered by Rule 145 of the Securities and Exchange Commission) in the same
manner as the certificates directly issued to the Shareholders upon the
consummation of the Merger. Cash will be paid by ITXC in lieu of fractions
of Retained Shares in an amount equal to the product determined by
multiplying such fraction by the "Base Price" (as hereinafter defined)
(subject to equitable adjustment for stock splits, reclassifications,
combinations, reorganizations or other similar changes). The term "Base
Price" shall mean the closing sale price of ITXC's Common Stock on the
Nasdaq National Market on the Closing Date. To the extent that cash is paid
in lieu of fractional shares, such fractional shares shall be returned by
the Exchange Agent to ITXC.

(d) Except as contemplated hereunder, no Retained Shares or any
beneficial interest therein may be pledged, sold, assigned or transferred,
including by operation of law, by any Shareholder or be taken or reached by
any legal or equitable process in satisfaction of any debt or other
liability of such Shareholder, prior to the delivery to such Shareholder of
the Retained Shares by the Exchange Agent.

4. Notice of Claim.

(a) If, during the Escrow Period (as extended herein), ITXC (on its own
behalf or on behalf of anyone claiming indemnification by virtue of such
Person's relationship to ITXC, it being understood that ITXC and any such
person entitled to such indemnification are referred to herein as an "ITXC
Indemnified Party"), delivers to the eFusion Representative written notice
of a claim for indemnification pursuant to Article VIII of the Merger
Agreement (such claim, an "Indemnification Claim" and such notice, a
"Notice of Claim"), ITXC shall deliver a copy of such Notice of Claim to
the Escrow Agent. Notwithstanding the foregoing, ITXC shall not deliver a
Notice of Claim with respect to the indemnification provided by eFusion in
Section 8.2.1(i), (ii) or (iii) of Article VIII of the Merger

A-62
<PAGE>

Agreement after 12:01 a.m. (East Coast Time) on the one year anniversary of
the Closing Date. Upon receipt of any such Notice of Claim, the Escrow
Agent will, notwithstanding the subsequent expiration of the Escrow Period,
continue to hold any remaining Retained Shares with a value (determined
pursuant to Section 5(c) hereof) equal to the aggregate dollar amount of
Indemnification Claims referred to in such Notice of Claim and any other
unresolved Notice or Notices of Claims (or if the amount referred to in
such Notice(s) of Claim is greater than the amount held in the Escrow
Account, then the Escrow Agent will continue to hold all Retained Shares in
the Escrow Account) until such Indemnification Claims are resolved pursuant
to Section 5 hereof.

(b) The Escrow Agent will not transfer any of the Retained Shares held
in the Escrow Account to ITXC pursuant to a Notice of Claim until such
Notice of Claim has been resolved in accordance with Section 5 below.

5. Resolution of Notice of Claim and Transfer of Retained Shares. Any Notice
of Claim received by the Escrow Agent pursuant to Section 4 above will be
resolved as follows:

(a) Cash/Cash Equivalent Claims and Third-Party Claims.

(I) Pursuant to Section 2.11 of the Merger Agreement, if ITXC
delivers to the Escrow Agent a Notice of Claim stating that the
Cash/Cash Equivalent Estimate exceeded the Cash/Cash Equivalent
reflected in the Final Accountant's Report, the Escrow Agent shall
return to ITXC, from the shares of ITXC Common Stock held in the Escrow
Account, a number of shares equal to the amount of such excess (as
reflected in such Notice of Claim) divided by the Historical Price.

(II) If an ITXC Indemnified Party seeks indemnification during the
Escrow Period pursuant to Section 8.3 of the Merger Agreement, ITXC and
the eFusion Representative shall notify the Escrow Agent in a written
notice, signed by each of ITXC and the eFusion Representative, at such
time as the applicable Indemnification Claim is resolved, as to whether
such resolution has resulted in an ITXC Indemnified Party's suffering
any Damages and the amount of such Damages. In the event that such
resolution has resulted in an ITXC Indemnified Party's having suffered
Damages, the Escrow Agent will immediately transfer to such ITXC
Indemnified Party that number of Retained Shares having a value
(determined pursuant to Section 5(c) hereof) equal to the amount of
Damages specified in the above-described written notice.

(b) Non-Third-Party Claims. ITXC shall deliver to the Escrow Agent a
copy of any Notice of Claim made by an ITXC Indemnified Party in connection
with an Indemnification Claim under Section 8.4 of the Merger Agreement.
The following provisions shall apply in the event that an ITXC Indemnified
Party seeks indemnification during the Escrow Period pursuant to Section
8.4 of the Merger Agreement:

(I) Uncontested Claims. In the event that the eFusion
Representative, within twenty (20) business days after receipt of the
Notice of Claim from the ITXC Indemnified Party, has not given written
notice to the ITXC Indemnified Party and the Escrow Agent announcing
its intent to contest the assertion by the ITXC Indemnified Party of an
Indemnification Claim, the Escrow Agent will immediately transfer to
the ITXC Indemnified Party that number of Retained Shares having a
value (determined pursuant to Section 5(c) hereof) equal to the amount
specified in the applicable Notice of Claim and will notify the eFusion
Representative of such transfer.

(II) Contested Claims. In the event that the eFusion Representative,
within twenty (20) business days after receipt of such Notice of Claim
from the ITXC Indemnified Party, gives written notice to the Escrow
Agent announcing its intent to contest the assertion by the ITXC
Indemnified Party of an Indemnification Claim, the Escrow Agent will
continue to hold Retained Shares with a value (determined pursuant to
Section 5(c) hereof) equal to the aggregate dollar amount of
Indemnification Claims referred to in the applicable Notice of Claim
(notwithstanding any subsequent expiration of the Escrow Period) until
(i) receipt of a copy of a settlement agreement executed by ITXC and
the eFusion Representative setting forth a resolution of such
Indemnification Claims, or (ii) receipt of a certificate executed by
either the eFusion Representative or the ITXC Indemnified

A-63
<PAGE>

Party setting forth a final determination by an arbitrator (selected in
accordance with Section 15) with respect to the alleged Indemnification
Claim and setting forth a final determination by an arbitrator
(selected in accordance with Section 15) as to the amount of Damages,
if any, suffered by the ITXC Indemnified Party. In the event that such
settlement agreement or such arbitration determination concludes that
an ITXC Indemnified Party has suffered Damages, the Escrow Agent will
immediately transfer to such ITXC Indemnified Party that number of
Retained Shares having a value (determined pursuant to Section 5(c)
hereof) equal to the amount of Damages specified in such settlement
agreement or such arbitration determination. In the case of an
arbitration determination, such Damages shall include the costs
incurred by the ITXC Indemnified Party in connection with such
proceedings (including costs of investigation and reasonable attorneys'
fees and disbursements).

(c) Determination of Amount of Claims. Any amount owed to an ITXC
Indemnified Party hereunder that is determined pursuant to Sections
5(a)(II), 5(b) or 9 will be immediately payable to such ITXC Indemnified
Party out of the Retained Shares then held by the Escrow Agent at a per
share value equal to the Base Price. Any amount owed to an ITXC Indemnified
Party hereunder that is determined pursuant to Section 5(a)(I) will be
immediately payable to such ITXC Indemnified Party out of the Retained
Shares then held by the Escrow Agent at a per share value equal to the
Historical Price. Notwithstanding any provision herein to the contrary, the
Escrow Agent shall not have any obligation to deliver any property to ITXC
or any Shareholder other than the Retained Shares.

(d) Claims to be Paid Pro Rata. Any Retained Shares delivered to an ITXC
Indemnified Party hereunder will be deducted from the Retained Shares of
each Shareholder pro rata, based on each Shareholder's percentage interest
in the Retained Shares.

(e) No Election of Remedies. An ITXC Indemnified Party may institute
claims against the Retained Shares and in satisfaction thereof may retake
Retained Shares without making any claims directly against eFusion or any
Shareholder and without rescinding or attempting to rescind the
transactions consummated pursuant to the Merger Agreement. The assertion of
any single Indemnification Claim for indemnification hereunder will not bar
an ITXC Indemnified Party from asserting other Indemnification Claims
hereunder. An ITXC Indemnified Party need not exhaust any other remedies
that may be available to it but may proceed directly in accordance with the
provisions of this Escrow Agreement. Notwithstanding the above, nothing in
this Escrow Agreement shall be read to expand or in any way increase the
liability of any Shareholder, or the remedies of any Indemnified Party, as
limited by Article VIII of the Merger Agreement.

(f) Resolution of Indemnification Claims. Upon the delivery of a Notice
of Claim during the Escrow Period, ITXC and the eFusion Representative
shall diligently pursue an amicable resolution of such Indemnification
Claim. If no such resolution to the Indemnification Claim is reached within
six months following the expiration of the Escrow Period, the party seeking
indemnification must commence arbitration in accordance with Section 15
hereof within 10 business days after the last day of such six month period
in order for the Retained Shares to remain in escrow. If no such
arbitration proceeding is commenced within such 10-day period and the
Indemnification Claim is not resolved, ITXC and the eFusion Representative
shall instruct the Escrow Agent to release all remaining Retained Shares to
the Exchange Agent for redelivery to the Shareholders (provided that the
Shareholders have delivered their old certificates to the Exchange Agent in
accordance with Article II of the Merger Agreement).

6. Limitation of Escrow Agent's Liability.

(a) Limitations. The Escrow Agent will incur no liability with respect
to any action taken or suffered by it in reliance upon any notice,
direction, instruction, consent, statement or other documents believed by
it to be genuine and duly authorized, nor for other action or inaction
except its own willful misconduct or gross negligence. ITXC will indemnify
the Escrow Agent and its officers, directors and employees against any and
all claims, costs, expenses, damages, liabilities or losses (collectively,
"Losses") arising from any action or inaction in connection with the Escrow
Agent's performance of its duties pursuant to this Escrow Agreement,
provided that ITXC will not so indemnify the Escrow Agent or

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<PAGE>

its officers, directors or employees if any such Losses are the result of
the Escrow Agent's willful misconduct or gross negligence. The Escrow Agent
will not be responsible for the validity or sufficiency of this Escrow
Agreement. In all questions arising under this Escrow Agreement, the Escrow
Agent may rely on the advice of counsel, and for anything done, omitted or
suffered in good faith by the Escrow Agent based on such advice the Escrow
Agent will not be liable to anyone. The Escrow Agent will not be required
to take any action hereunder involving any expense unless the payment of
such expense is made or provided for in a manner satisfactory to it.

(b) Interpleader. In the event conflicting demands are made or notices
served upon the Escrow Agent with respect to the Escrow Account, the Escrow
Agent will have the absolute right, at the Escrow Agent's election, to do
either or both of the following: withhold and stop all further proceedings
pursuant to, and performance under, this Escrow Agreement, or file a suit
in interpleader and obtain an order from any court of competent
jurisdiction requiring the parties to interplead and litigate in such court
their several claims and rights among themselves. In the event such
interpleader suit is brought, the Escrow Agent will thereby be fully
released and discharged from all further obligations imposed upon it under
this Escrow Agreement, and ITXC will pay the Escrow Agent all costs,
expenses and reasonable attorneys fees expended or incurred by the Escrow
Agent pursuant to the exercise of the Escrow Agent's rights under this
Section 6.

(c) Liability and Authority of the eFusion Representative. The liability
and authority of the eFusion Representative shall be as set forth in
Article VIII of the Merger Agreement.

7. Notices. All notices, requests, demands or other communications hereunder
shall be in writing and will be conclusively deemed to have been received by
the party to whom addressed if delivered by hand, by telecopier or by courier
or if mailed, postage prepaid, certified mail, return receipt requested, to the
following addresses:

If to the Escrow Agent:

Attention:
Telephone:
Fax:

If to ITXC: to the addresses specified in the Merger Agreement

If to the eFusion Representative:

Mr. Luis Machuca
Telephone:
Fax:

with a copy (which shall not constitute notice) to :

Barry Taylor
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Telephone: 650-354-4107
Telecopy: 650-493-6811

or to such other address as any party may select by notice to the other parties
in accordance with this Section 7. Notice delivered as provided herein will be
deemed given on the third business day following the date mailed or on the date
of actual receipt, whichever is earlier.

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<PAGE>

8. General.

(a) Governing Law, Assigns. This Escrow Agreement will be governed by
and construed in accordance with the internal laws of the State of Delaware
without regard to conflicts of law principles and will be binding upon, and
inure to the benefit of, the parties hereto and their respective successors
and assigns.

(b) Counterparts. This Escrow Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument. A signed signature
page telecopied by any party hereto to another party hereto shall be deemed
to constitute an original.

(c) Entire Agreement. The Merger Agreement and this Escrow Agreement
constitute the entire understanding and agreement of the eFusion
Representative and ITXC with respect to the subject matter of this Escrow
Agreement and supersede all prior agreements or understandings, written or
oral, among the parties with respect to the subject matter hereof. This
Escrow Agreement and Article VIII of the Merger Agreement constitute the
entire understanding and agreement of the Escrow Agent, ITXC and the
eFusion Representative with respect to the escrow arrangements that are the
subject matter of this Escrow Agreement and supersede all prior agreements
or understandings, written or oral, among the parties with respect to such
escrow arrangements.

(d) Waivers. No waiver by any party hereto of any condition or of any
breach of any provision of this Escrow Agreement shall be effective unless
in writing. No waiver by any party of any such condition or breach, in any
one instance, shall be deemed to be a further or continuing waiver of any
such condition or breach or a waiver of any other condition or breach of
any other provision contained herein.

9. Expenses. All fees and expenses of the Escrow Agent incurred in the
ordinary course of performing its responsibilities hereunder will be paid by
ITXC. In the event that (i) a matter hereunder is submitted by an ITXC
Indemnified Party or the eFusion Representative for arbitration, (ii) such
matter is not settled prior to the receipt of a final determination by the
arbitrator and (iii) such determination concludes that either such ITXC
Indemnified Party or the eFusion Representative has prevailed in such matter,
then ITXC shall pay 100% of the Escrow Agent's fees and expenses relating to
such dispute ("Escrow Agent Costs") if the eFusion Representative is the
prevailing party and the Shareholders (pro rata based on their percentage
interests in the Retained Shares) will pay 100% of the Escrow Agent Costs if
such ITXC Indemnified Party is the prevailing party (which liability of the
Shareholders shall be satisfied out of the Retained Shares). In the latter
case, if ITXC has paid the Shareholders' portion of the Escrow Agent Costs in
advance pursuant to Section 6(b) or otherwise, then the Escrow Agent will, upon
demand by ITXC, transfer to ITXC a number of Retained Shares having a value
equal to such portion of such Escrow Agent Costs, such value to be determined
in accordance with Section 5(c).

10. Successor eFusion Representative. In the event that the eFusion
Representative becomes unavailable or unwilling to continue in its capacity as
eFusion Representative hereunder, the beneficial owners of a majority of the
Retained Shares will designate a successor eFusion Representative from among
the Shareholders by written notice to ITXC and the Escrow Agent.

11. Successor Escrow Agent. In the event that the Escrow Agent becomes
unavailable or unwilling to continue in its capacity herewith, the Escrow Agent
may resign and be discharged from its duties or obligations hereunder by giving
a resignation to the parties to this Escrow Agreement, specifying not less than
sixty (60) days prior written notice of a date when such resignation will take
effect. ITXC may appoint a successor Escrow Agent without the consent of the
eFusion Representative so long as such successor is a bank with assets of at
least $1 billion, and may appoint any other successor Escrow Agent with the
consent of the eFusion Representative, which consent will not be unreasonably
withheld. If, within such notice period, ITXC provides to the Escrow Agent
written instructions with respect to the appointment of a successor Escrow
Agent and directions for the transfer of any Retained Shares then held by the
Escrow Agent to such successor, the Escrow

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<PAGE>

Agent will act in accordance with such instructions and promptly transfer such
Retained Shares to such designated successor. If no such instructions are
provided, the Escrow Agent may, by filing an action for interpleader in any
state or federal court of competent jurisdiction and by depositing any Retained
Shares then held by it with such court, be released and discharged from any
further or continuing liability under this Escrow Agreement.

12. Amendment. This Escrow Agreement may be amended with the written consent
of ITXC, the Escrow Agent, the eFusion Representative and the beneficial owners
of 75% or more of the Retained Shares.

13. Headings. The headings of the Sections of this Escrow Agreement are
inserted for convenience of reference only and do not form a part or affect the
meaning hereof.

14. Termination. This Escrow Agreement shall be terminated when the Retained
Shares have been finally disbursed as provided herein and may be terminated
prior thereto by written instruction signed by ITXC and the eFusion
Representative.

15. Arbitration. Subject to Section 6(b), any controversy or claim between
the eFusion Representative and ITXC arising out of or relating to this
Agreement, or the breach thereof, shall be settled by arbitration administered
by the American Arbitration Association in accordance with its applicable
rules. Judgment upon the award rendered by the arbitrator may be entered in any
court having jurisdiction thereof. Any such arbitration shall be conducted in
the State of Delaware before a single arbitrator approved by the eFusion
Representative and ITXC.

IN WITNESS WHEREOF, the parties have duly executed and delivered this Escrow
Agreement as of the day and year first above written.

ITXC CORP.

By: _________________________________

ESCROW AGENT:

By: _________________________________
Authorized Signatory

eFusion REPRESENTATIVE (on behalf of
the Shareholders):

_____________________________________
Luis Machuca

A-67
<PAGE>

EXHIBIT A

The following table sets forth, for each Shareholder, the number of Retained
Shares initially deposited with the Escrow Agent on behalf of such Shareholder:

<TABLE>
<CAPTION>
Number of
Name Retained Shares
---- ---------------
<S> <C>

</TABLE>

A-68
<PAGE>

APPENDIX 5.17

AFFILIATE'S LETTER

As of July , 2000

ITXC Corp.
600 College Road East
Princeton, New Jersey 08540

Gentlemen:

The undersigned is delivering this letter to you in connection with the
proposed acquisition (the "Merger") of eFusion, Inc., an Oregon corporation
("eFusion"), by ITXC Corp., a Delaware corporation ("ITXC"), pursuant to the
Agreement and Plan of Merger dated as of July 25, 2000 (the "Agreement") among
eFusion, ITXC and a wholly owned subsidiary of ITXC. The undersigned currently
own shares of eFusion's common stock, par value $.001 per share (the "eFusion
Common Stock"), and/or shares of eFusion's Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock and/or Series D Preferred Stock, each
par value $.001 per share (collectively, "eFusion Preferred Stock" and,
collectively with the eFusion Common Stock, the "eFusion Stock"). As a result
of the Merger, the undersigned will receive shares of ITXC's common stock, par
value $.001 per share ("ITXC Common Stock"), in exchange for the undersigned's
eFusion Stock.

The undersigned has been advised that as of the date of this letter, the
undersigned may be deemed to be an "affiliate" of eFusion, as the term
"affiliate" is defined for purposes of paragraphs (c) and (d) of Rule 145 of
the rules and regulations promulgated under the Securities Act of 1933, as
amended (the "1933 Act"), by the Securities and Exchange Commission ("SEC").

The undersigned represents to, and agrees with, ITXC that:

A. Compliance with Rule 145. The undersigned has been advised that the
issuance of ITXC Common Stock to the undersigned pursuant to the Merger
will be registered with the SEC under the 1933 Act on a Registration
Statement on Form S-4. However, the undersigned has also been advised that,
since the undersigned may be deemed to be an affiliate of eFusion at the
time the Merger is submitted for a vote of eFusion's stockholders, any
transfer by the undersigned of ITXC Common Stock may be restricted under
Rule 145 promulgated by the SEC under the 1933 Act. The undersigned agrees
not to transfer the ITXC Common Stock received by the undersigned or any of
the undersigned's affiliates in the Merger unless (i) in the opinion of
ITXC's counsel or counsel reasonably acceptable to ITXC, such transfer is
made in conformity with the volume and other limitations of Rule 145
promulgated by the SEC under the 1933 Act, (ii) in the opinion of ITXC's
counsel or counsel reasonably acceptable to ITXC, such transfer is
otherwise exempt from registration under the 1933 Act or (iii) such
transfer is registered under the 1933 Act.

B. Stop Transfer Instructions; Legend on Certificates. The undersigned
also understands and agrees that stop transfer instructions will be given
to ITXC's transfer agents with respect to the ITXC Common Stock to be
received by the undersigned and any of the undersigned's affiliates and
that there will be placed on the certificates of the ITXC Common Stock
issued to the undersigned and any of the undersigned' affiliates, or any
substitutions therefor, a legend stating in substance:

"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A TRANSACTION
TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933 APPLIES. THE
SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE TRANSFERRED IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED AS OF JULY 25, 2000 BETWEEN
THE REGISTERED HOLDER HEREOF AND THE ISSUER, A COPY OF WHICH AGREEMENT IS
ON FILE AT THE PRINCIPAL OFFICES OF THE ISSUER."

A-69
<PAGE>

Execution of this letter is not an admission on the undersigned's part that
the undersigned is an "affiliate" of ITXC as described in the second paragraph
of this letter, or a waiver of any rights the undersigned may have to object to
any claim that the undersigned is such an affiliate on or after the date of
this letter. This letter shall terminate concurrently with any termination of
the Agreement in accordance with its terms.

Very truly yours,

_____________________________
Name:

Accepted this day of
, 2000 by

ITXC Corp.

By: _____________________________
Name:
Title:

A-70
<PAGE>

APPENDIX 6.1.6

TAX OPINION

, 2000

eFusion, Inc.
ITXC Corp.

Attn:
Attn:

Ladies and Gentlemen:

We have acted as counsel to ITXC Corp., a Delaware corporation ("ITXC"), in
connection with the merger of Eye Merger Corp., an Oregon corporation and a
wholly owned subsidiary of ITXC ("Subcorp"), with and into eFusion, Inc., an
Oregon corporation ("eFusion"), pursuant to the Agreement and Plan of Merger
dated as of July 25, 2000 (the "Merger Agreement"), by and among ITXC, Subcorp
and eFusion. The transactions contemplated pursuant to the Merger Agreement
hereinafter are referred to as the "Merger".

This opinion concerning certain United States federal income tax
consequences of the Merger is being rendered to you pursuant to Section 6.1.6
of the Merger Agreement. Except as otherwise defined herein, capitalized terms
used herein shall have the meanings assigned to them in the Merger Agreement.

In rendering our opinion, we have examined and, with your consent, have
relied, without independent investigation or verification, upon the accuracy
and completeness of the facts, information, covenants and representations
contained in originals or copies, certified or otherwise identified to our
satisfaction, of the Merger Agreement, the Registration Statement on Form S-4
filed with the Securities and Exchange Commission with respect to the Merger
(the "Registration Statement") and such other documents as we have deemed
necessary or appropriate as a basis for the opinion set forth below. In
addition, we have relied, without independent investigation or verification,
upon certain statements, representations and covenants made by eFusion, ITXC
and Subcorp, including representations and covenants set forth in certificates
from eFusion and ITXC of even date herewith (the "Tax Certificates").

In rendering our opinion, we have assumed that (i) the Merger will be
consummated in accordance with the terms of the Merger Agreement and as
described in the Registration Statement and that none of the terms and
conditions contained therein will be waived or modified in any respect prior to
the Effective Time and (ii) the Registration Statement, the Merger Agreement
and the Tax Certificates reflect all the material facts relating to the Merger,
eFusion, ITXC and Subcorp. Our opinion is conditioned on, among other things,
the initial and continuing fulfillment, accuracy and completeness of the
covenants and representations made by eFusion, ITXC and Subcorp (including
those set forth in the Tax Certificates). Any material change or inaccuracy in
the facts referred to, set forth or assumed herein, in the Registration
Statement, the Merger Agreement or the Tax Certificates (giving effect to all
events occurring after the Effective Time) may affect our conclusions stated
herein.

We also have assumed the genuineness of all signatures, the legal capacity
of all natural persons, the authenticity of all documents submitted to us as
originals, the conformity to original documents of all documents submitted to
us as certified or photostatic copies and the authenticity of the originals of
such documents.

In rendering our opinion, we have considered applicable provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), Treasury regulations
promulgated thereunder (the "Regulations"), pertinent judicial authorities,
rulings of the Internal Revenue Service and such other authorities as we have
considered relevant. With respect to those issues as to which there is no law
directly on point, we have reached our conclusions based on analogy to and
reasoning from certain relevant provisions of the Code and Regulations,
authorities and interpretations. It should be noted that the Code, Regulations,
judicial decisions and administrative

A-71
<PAGE>

interpretations are subject to change at any time, possibly with retroactive
effect. A material change in any of the authorities upon which our opinion is
based could affect our conclusions stated herein.

Based solely upon and subject to the foregoing, it is our opinion that under
current law, for United States federal income tax purposes, the Merger will
constitute a reorganization under Section 368(a) of the Code and eFusion, ITXC
and Subcorp each will be a party to that reorganization within the meaning of
Section 368(b) of the Code.

Except as expressly set forth herein, we express no other opinion,
including, without limitation, any opinion as to whether any event occurring
after the Effective Time will be viewed as part of the plan of reorganization
for United States federal income tax purposes and the effect, if any, of any
such event on our conclusions stated herein.

We disclaim any undertaking to advise you of any subsequent changes of the
facts stated or assumed herein or any subsequent changes in applicable law.
This opinion is for your benefit and is not to be used, circulated, quoted or
otherwise referred to for any purpose; provided, however, that this opinion may
be referred to in the section of the Registration Statement entitled "Certain
Federal Income Tax Consequences of the Merger".

Very truly yours,

A-72
<PAGE>

ANNEX II

The following resolution will be submitted to the ITXC stockholders in
connection with the proposed amendment to ITXC's certificate of incorporation:

RESOLVED, that there be added a new Article Twelfth of this Corporation's
third amended and restated certificate of incorporation, which Article shall
provide as follows:

"TWELFTH: All shares of the common stock of this Corporation issuable upon
consummation of the merger (the "eFusion Merger") provided for pursuant to
the agreement, dated as of July 25, 2000, by and among this corporation,
eFusion, Inc. and Eye Merger Corp., as such agreement may be amended from
time to time (such shares, the "eFusion Merger Shares", and such merger
agreement, the "eFusion Merger Agreement"), shall be subject to the
restrictions set forth in Appendix A to this certificate of incorporation."

Appendix A to such resolution provides as follows:

APPENDIX A

1. General Restrictions. Except as otherwise provided in Section 2 of
this Appendix A or as otherwise consented to in writing by this Corporation
in its absolute discretion, until the one hundred and eightieth (180th) day
after the Closing Date, the Shareholders shall not (x) effect an offer,
pledge, sale, contract of sale, short sale, sale of any option or contract
to purchase, purchase of any option or contract to sell, grant of any
option, right or warrant to purchase, gift or other transfer or disposition
of, directly or indirectly, any eFusion Merger Shares (as such term is
defined in Article Twelfth of this certificate of incorporation) or (y)
enter into any swap or other arrangement that transfers all or a portion of
the economic consequences associated with the ownership of any eFusion
Merger Shares (regardless of whether any of the transactions described in
clause (x) or (y) (each, a "Disposition") are to be settled by the delivery
of eFusion Merger Shares, or such other securities, in cash or otherwise).
This Corporation shall be authorized to cause its transfer agent to decline
to transfer and/or to note stop transfer restrictions on the transfer books
and records of this Corporation with respect to any of the eFusion Merger
Shares.

2. Sequential Lapse of Restrictions. During the Initial Period, each
Shareholder shall have the right to make a Disposition of up to ten percent
(10%) of the eFusion Merger Shares issuable to such Shareholder upon
consummation of the eFusion Merger or subsequent thereto pursuant to the
terms of the Escrow Agreement. During the Second Period, each Shareholder
shall have the right to make a Disposition of up to an additional ten
percent (10%) of the eFusion Merger Shares issuable to such Shareholder
upon consummation of the Merger or subsequent thereto pursuant to the terms
of the Escrow Agreement, together with any eFusion Merger Shares which such
Shareholder had the right to subject to a Disposition, but did not subject
to a Disposition, during the Initial Period. The restrictions set forth in
Section 1 above shall cease to apply on the one hundred and eightieth
(180th) day after the Closing Date.

3. Certificates. The certificates representing the eFusion Merger Shares
shall bear a conspicuous legend, in addition to any other legend required
by the eFusion Merger Agreement, referring to the restrictions set forth in
this Appendix A; provided, however, at this Corporation's discretion, this
Corporation may issue without legend certificates representing the eFusion
Merger Shares which may be subject to a Disposition during the Initial
Period. At a Shareholder's written request, this Corporation will remove
the legends required by this Appendix A at any time after the applicable
restrictive period has lapsed.

4. Certain Definitions. For purposes of this Appendix A, the following
terms shall have the following meanings:

"Closing" shall mean the closing provided for by the eFusion Merger
Agreement.

B-1
<PAGE>

"Closing Date" shall mean the date of the Closing.

"Escrow Agreement" shall mean an escrow agreement, executed pursuant
to the eFusion Merger Agreement, providing for the escrow of certain of
the eFusion Merger Shares.

"Effective Time" shall mean the time at which the eFusion Merger
becomes effective under the laws of the State of Oregon.

"Initial Period" shall mean the period commencing at the Effective
Time and expiring on November 9, 2000; provided, however, if the
Effective Time occurs after November 9, 2000, the term "Initial Period"
shall mean the first thirty days after the Effective Time.

"Second Period" shall mean the period commencing on the first day
after the last day of the Initial Period and expiring on the one
hundred and eightieth (180th) day after the Closing Date.

"Shareholders" shall mean each person or entity that is a
shareholder of eFusion, Inc., an Oregon corporation, immediately prior
to the consummation of the eFusion Merger (as such term is defined in
Article Twelfth of this certificate of incorporation).

B-2
<PAGE>

ANNEX III

FOURTH FIFTH AMENDED AND RESTATED
-----
-----
ARTICLES OF INCORPORATION
OF EFUSION, INC.

These Fourth Fifth Amended and Restated Articles of Incorporation supersede
the existing Third Fourth
--- ----
--- ----
Amended and Restated Articles of Incorporation and all previous amendments or
restatements thereof.

ARTICLE I.

The name of the Corporation is eFusion, Inc.

ARTICLE II.

A. The aggregate number of shares which the Corporation shall have
authority to issue is 30,000,000 shares of common stock ("Common Stock") with
a par value of $0.001 per share, and 15,000,000 shares of preferred stock
("Preferred Stock") with a par value of $0.001 per share.

B. The Preferred Stock authorized by these Articles of Incorporation may be
issued from time to time in one or more series. The first such series shall be
designated "Series A Preferred Stock" ("Series A Preferred"), and shall
consist of 2,510,000 shares. The second series shall be designated "Series B
Preferred Stock" ("Series B Preferred"), and shall consist of 2,418,736
shares. The third series shall be designated "Series C Preferred Stock"
("Series C Preferred"), and shall consist of 2,589,013 shares. The fourth
series shall be designated "Series D Preferred Stock" ("Series D Preferred"),
and shall consist of 2,500,000 shares The Series A Preferred, the Series B
Preferred, the Series C Preferred and the Series D Preferred are collectively
referred to herein as the "Series Preferred." The rights, preferences,
privileges and restrictions granted to and imposed on the Series Preferred are
as set forth below in this Part B of Article II.

1. Dividend Provisions. The holders of Series Preferred shall be entitled
to receive dividends, out of any assets legally available therefor, prior and
in preference to any declaration or payment of any dividend on Common Stock of
the Corporation (payable other than in Common Stock of the Corporation or
other securities and rights convertible into or entitling the holder thereof
to receive, directly or indirectly, additional shares of Common Stock of the
Corporation), at the rate of eight percent (8%) of the "Original Issue Price"
(as hereinafter defined) per share per annum, payable when, as and if declared
by the Board of Directors. The Original Issue Price of the (a) Series A
Preferred shall be One Dollar ($1.00), (b) Series B Preferred shall be Four
Dollars and Forty-Three Cents ($4.43), (c) Series C Preferred shall be Seven
Dollars ($7.00), and (d) Series D Preferred shall be Eight Dollars ($8.00). In
the event that the amount of the dividends declared by the Board of Directors
shall be insufficient to permit payment of the full preferential dividend,
such dividend will be paid ratably to each holder of the Series Preferred in
proportion to the dividend amounts to which each such holder is entitled.
After payment of a full preferential dividend, any additional dividends shall
be distributed among the holders of Series Preferred and the holders of Common
Stock in proportion to the number of shares of Common Stock which would be
held by each such holder if all shares of Series Preferred were converted into
Common Stock at the then effective Conversion Price (as defined in Section 3
below). The right to such dividends on the Series Preferred and Common Stock
shall not be cumulative, and no right shall accrue to holders of the Series
Preferred and Common Stock by reason of the fact that dividends on such shares
are not declared or paid in any prior year.

2. Liquidation Preference.

(a) In the event of any liquidation, dissolution or winding up of the
Corporation, either voluntary or involuntary, the holders of the Series
Preferred shall be entitled to receive, prior and in preference to any
distribution of any of the assets of the Corporation to the holders of
Common Stock, by reason of their

C-1
<PAGE>

ownership thereof, an amount per share equal to the sum of (i) the Original
Issue Price and (ii) all declared and unpaid dividends on such shares of
Series Preferred (as adjusted for any stock dividends, combinations,
splits, recapitalizations and the like with respect to such shares) for
each share of Series Preferred held by them. If, upon the occurrence of
such an event, the assets thus distributed among the holders of the Series
Preferred shall be insufficient to permit the payment to such holders of
the full preferential amount, then the assets of the Corporation legally
available for distribution shall be distributed ratably among the holders
of the Series Preferred in proportion to the aggregate preferential amounts
owed such holders upon a liquidation, dissolution or winding up of the
Corporation.

(b) After the distributions described in Section 2(a) above have been
paid in full, the remaining assets of the Corporation available for
distribution to shareholders shall be distributed among the holders of
Series Preferred and the holders of Common Stock in proportion to the
number of shares of Common Stock which would be held by each such holder if
all shares of Series Preferred were converted into Common Stock at the then
effective Conversion Price (as defined in Section 3 below).

(c) For purposes of this Section 2, (i) any acquisition of the
Corporation or outstanding shares of the Corporation by means of merger,
tender offer or other form of corporate reorganization in which the
shareholders of the Corporation do not own a majority of the outstanding
shares of the surviving corporation, or (ii) any sale of all or
substantially all of the assets of the Corporation, shall each be treated
as a liquidation, dissolution or winding up of the Corporation (each, a
"Section 2(c) transaction") and shall entitle the holders of Series
Preferred and Common Stock to receive at the closing of such merger,
reorganization or sale of assets (in exchange for their capital stock)
cash, securities or other property as specified in this Section 2.

(d) Any securities to be delivered to the holders of the Series
Preferred and/or Common Stock pursuant to this Section 2 shall be valued as
follows:

(i) Securities not subject to investment letter or other similar
restrictions on free marketability:

(A) If traded on a national securities exchange or The Nasdaq
National Market, the value shall be deemed to be the average of the
closing prices of the securities on such exchange over the 30-day
period ending three (3) days prior to the closing referenced in
Section 2(c) above);

(B) If actively traded over-the-counter, the value shall be
deemed to be the average of the closing bid prices over the 30-day
period ending three (3) days prior to the closing referenced in
Section 2(c) above; and

(C) If there is no active public market, the value shall be the
fair market value thereof, as determined as soon as practicable in
good faith by the Board of Directors of the Corporation.

(ii) The method of valuation of securities subject to investment
letter or other restrictions on free marketability shall be to make an
appropriate discount from the market value determined as above in
subsections (i)(A), (B) or (C), as applicable, to reflect the
approximate fair market value thereof, as determined as soon as
practicable in good faith by the Board of Directors of the Corporation.

(iii) Notwithstanding the foregoing, for purposes of the Securities
received pursuant to the
---------------------------------------------------------------
Amended and Restated Agreement and Plan of Merger, dated as of July 25,
2000, by and among
-------------------------------------------------------------------
ITXC Corp., Eye Merger Corp. and the Corporation, each share of ITXC
Common Stock shall be
--------------------------------------------------------------------
valued at $34.9886.
-------------

(e) In the event the requirements of this Section 2 are not complied
with, the Corporation shall forthwith either:

(i) cause such closing to be postponed until such time as the
requirements of this Section 2 have been complied with; or

(ii) cancel such transaction, in which event the rights, preferences,
privileges and restrictions of the holders of Series Preferred shall
revert to and be the same as such rights, preferences, privileges and
restrictions existing immediately prior to the date of the first notice
referred to in Section 2(f) hereof.

C-2
<PAGE>

(f) The Corporation shall give each holder of record of the Series
Preferred written notice of a Section 2(c) transaction not later than
twenty (20) days prior to the shareholders' meeting called to approve such
transaction, or twenty (20) days prior to the closing of such transaction,
whichever is earlier, and shall also notify such holders in writing of the
final approval of such transaction. The first of such notices shall
describe the material terms and conditions of the pending transaction, and
the Corporation shall thereafter give such holders prompt notice of any
material changes. The transaction shall in no event take place sooner than
twenty (20) days after the Corporation has given the first notice provided
for herein or sooner than ten (10) days after the Corporation has given
notice of any material changes provided for herein; provided, however, that
such periods may be shortened upon the written consent of the holders of
two-thirds of the Series Preferred then outstanding.

3. Conversion. The holders of the Series Preferred shall have conversion
rights as follows (the "Conversion Rights"):

(a) Right to Convert; Automatic Conversion.

(i) Subject to Section 3(c) below, each share of Series Preferred
shall be convertible, at the option of the holder thereof, at any time
after the date of issuance of such share, at the office of the
Corporation or any transfer agent for the Series Preferred, into such
number of fully paid and nonassessable shares of Common Stock as is
determined by dividing the Original Issue Price by the Conversion Price
at the time in effect for such shares. The initial Conversion Price for
shares of Series Preferred shall be equal to the Original Issue Price
per share; provided, however, that such Conversion Price shall be
subject to adjustment as set forth in Section 3(c) below.

(ii) Each share of Series Preferred shall automatically be converted
into shares of Common Stock at the Conversion Price at the time in
effect for the Series Preferred immediately upon (A) the closing of the
Corporation's sale of its Common Stock in a firm commitment
underwritten public offering pursuant to a registration statement filed
with the Securities and Exchange Commission under the Securities Act of
1933, as amended (the "Act") at a price of not less than Sixteen
Dollars ($16.00) per share (subject to adjustment for any stock split,
stock dividend, recapitalization or other similar event) and an
aggregate offering price to the public of not less than $40,000,000;
(B) the affirmative vote of the holders of at least 75% of the
outstanding Series Preferred voting together as a class; or (C) for
each of the Series A Preferred, Series B Preferred, Series C Preferred
and Series D Preferred, the date on which less than ten percent (10%)
of the shares of such series of Series Preferred issued by the
Corporation remain outstanding.

(b) Mechanics of Conversion. Before any holder of Series Preferred shall
be entitled to convert any shares of the same into shares of Common Stock,
such holder shall surrender the certificate or certificates therefor, duly
endorsed, at the office of the Corporation or of any transfer agent for the
Series Preferred, and shall give written notice by mail, postage prepaid,
to the Corporation at its principal corporate office, of the election to
convert the same and shall state therein the name or names in which the
certificate or certificates for shares of Common Stock are to be issued.
The Corporation shall, as soon as practicable thereafter, issue and deliver
at such office to such holder of Series Preferred, a certificate or
certificates for the number of shares of Common Stock to which such holder
shall be entitled as aforesaid, together with a certificate or certificates
for the number of shares of Preferred Stock not so converted, if any. Such
conversion shall be deemed to have been made immediately prior to the close
of business on the date of such surrender of the shares of Series Preferred
to be converted, and the person or persons entitled to receive the shares
of Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such shares of Common Stock as
of such date. If the conversion is in connection with an underwritten
public offering of securities registered pursuant to the Act, the
conversion will be conditioned upon the closing of the sale of securities
pursuant to such offering, unless otherwise designated in writing by the
holders of the Series Preferred, so that the person(s) entitled to receive
the Common Stock issuable upon such conversion of the Series Preferred
shall not be deemed to have converted such Preferred Stock until
immediately prior to the closing of such sale of securities in such public
offering.

C-3
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(c) Conversion Price Adjustments of Preferred Stock. The Conversion
Price of the Series Preferred shall be subject to adjustment from time to
time as follows:

(i) (A) If the Corporation shall issue any Additional Stock (as
defined below) without consideration or for a consideration per share
less than the applicable Conversion Price for any series of the Series
Preferred in effect immediately prior to the issuance of such
Additional Stock (a "Discounted Issuance"), the Conversion Price for
the holders of any applicable Series Preferred subject to a Discounted
Issuance in effect immediately prior to each such issuance shall
forthwith be adjusted to a price determined by multiplying such
Conversion Price by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding immediately prior to such
issuance plus the number of shares of Common Stock which the aggregate
consideration received by the Corporation for the total number of
shares of Additional Stock so issued would purchase at such Conversion
Price, and the denominator of which shall be the number of shares of
Common Stock outstanding immediately prior to such issuance plus the
number of such shares of Additional Stock so issued; provided that for
the purposes of this Section 3(c), all shares of Common Stock issuable
upon conversion of outstanding Preferred Stock shall be deemed to be
outstanding.

(B) No adjustment of the Conversion Price for a Series Preferred
shall be made in an amount less than one cent per share, provided that
any adjustments which are not required to be made by reason of this
sentence shall be carried forward and shall be either taken into
account in any subsequent adjustment made prior to three years from the
date of the event giving rise to the adjustment being carried forward,
or shall be made at the end of three years from the date of the event
giving rise to the adjustment being carried forward. Except to the
limited extent provided for in Sections 3(c)(i)(E)(3) and 3(c)(i)(E)(4)
below, no adjustment of such Conversion Price pursuant to this Section
3(c)(i) shall have the effect of increasing the Conversion Price above
the Conversion Price in effect immediately prior to such adjustment.

(C) In the case of the issuance of Common Stock for cash, the
consideration shall be deemed to be the amount of cash paid therefor
before deducting any reasonable discounts, commissions or other
expenses allowed, paid or incurred by the Corporation for any
underwriting or otherwise in connection with the issuance and sale
thereof.

(D) In the case of the issuance of the Common Stock for a
consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair value thereof as
determined by the Board of Directors in good faith irrespective of any
accounting treatment.

(E) In the case of the issuance, whether before, on or after the
initial issuance of Series Preferred (the "Initial Purchase Date"), of
options to purchase or rights to subscribe for Common Stock, securities
by their terms convertible into or exchangeable for Common Stock or
options to purchase or rights to subscribe for such convertible or
exchangeable securities (which are not excluded from the definition of
Additional Stock), the following provisions shall apply:

(1) The aggregate maximum number of shares of Common Stock
deliverable upon exercise of such options to purchase or rights to
subscribe for Common Stock shall be deemed to have been issued at
the time such options or rights were issued and for a consideration
equal to the consideration (determined in the manner provided in
Sections 3(c)(i)(C) and 3(c)(i)(D) above), if any, received by the
Corporation upon the issuance of such options or rights plus the
minimum purchase price provided in such options or rights for the
Common Stock covered thereby.

(2) The aggregate maximum number of shares of Common Stock
deliverable upon conversion of or in exchange for any such
convertible or exchangeable securities or upon the exercise of
options to purchase or rights to subscribe for such convertible or
exchangeable securities and subsequent conversion or exchange
thereof shall be deemed to have been issued at

C-4
<PAGE>

the time such securities were issued or such options or rights were
issued and for a consideration equal to the consideration, if any,
received by the Corporation for any such securities and related
options or rights (excluding any cash received on account of accrued
interest or accrued dividends), plus the additional consideration,
if any, to be received by the Corporation upon the conversion or
exchange of such securities or the exercise of any related options
or rights (the consideration in each case to be determined in the
manner provided in Sections 3(c)(i)(C) and 3(c)(i)(D) above).

(3) In the event of any change in the number of shares of Common
Stock deliverable or any increase in the consideration payable to
the Corporation upon exercise of such options or rights or upon
conversion of or in exchange for such convertible or exchangeable
securities, including, but not limited to, a change resulting from
the antidilution provisions thereof, the Conversion Price of the
Series Preferred obtained as result of the adjustment which was made
upon the issuance of such options, rights or securities, and any
subsequent adjustments based thereon, shall be recomputed to reflect
such change, but no further adjustment shall be made for the actual
issuance of Common Stock or any payment of such consideration upon
the exercise of any such options or rights or the conversion or
exchange of such securities.

(4) Upon the expiration of any such options or rights, the
termination of any such rights to convert or exchange or the
expiration of any options or rights related to such convertible or
exchangeable securities, the Conversion Price of the Series
Preferred obtained as a result of the adjustment which was made upon
the issuance of such options, rights or securities or options or
rights related to such securities, and any subsequent adjustments
based thereon, shall be recomputed to reflect the issuance of only
the number of shares of Common Stock actually issued upon the
exercise of such options or rights, upon the conversion or exchange
of such securities or upon the exercise of the options or rights
related to such securities. Upon the expiration of any such options
or rights, the termination of any such rights to convert or exchange
or the expiration of any options or rights related to such
convertible or exchangeable securities, only the number of shares of
Common Stock actually issued upon the exercise of such options or
rights, upon the conversion or exchange of such securities or upon
the exercise of the options or rights related to such securities
shall continue to be deemed to be issued.

(5) All Common Stock deemed issued pursuant to this Section
3(c)(i)(E) shall be considered issued only at the time of its deemed
issuance and any actual issuance of such stock shall not be an
actual issuance or a deemed issuance of the Corporation's Common
Stock under the provisions of this Section 3.

(ii) "Additional Stock" shall mean any shares of Common Stock, or
any security which is exercisable for or convertible into Common Stock,
issued (or deemed to have been issued pursuant to Section 3(c)(i)(E))
by the Corporation after the Initial Purchase Date other than shares of
Common Stock issued or issuable:

(A) pursuant to a transaction described in Section 3(c)(iii)
below,

(B) to officers, directors, employees and consultants of the
Corporation directly or pursuant to benefit plans approved by the
directors and shareholders of the Corporation and in an amount not
to exceed 3,700,000 shares,

(D) upon exercise or conversion of options or warrants,
respectively, outstanding on the Initial Purchase Date of the Series
D Preferred, or

(E) securities issuable or issued upon exercise of warrants
issued to banks or equipment lessors in connection with a commercial
lease or credit financing approved by the Board of Directors, in an
amount not to exceed 1,500,000 shares.

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<PAGE>

(iii) In the event the Corporation should at any time or from time
to time after the Initial Purchase Date fix a record date for the
effectuation of a split or subdivision of the outstanding shares of
Common Stock or the determination of holders of Common Stock entitled
to receive a dividend or other distribution payable in additional
shares of Common Stock or other securities or rights convertible into,
or entitling the holder thereof to receive directly or indirectly,
additional shares of Common Stock (hereinafter referred to as "Common
Stock Equivalents") without payment of any consideration by such holder
for the additional shares of Common Stock or the Common Stock
Equivalents (including the additional shares of Common Stock issuable
upon conversion or exercise thereof), then, as of such record date (or
the date of such dividend distribution, split or subdivision if no
record date is fixed), the Conversion Price of the Series Preferred
shall be appropriately decreased so that the number of shares of Common
Stock issuable on conversion of each share of such series shall be
increased in proportion to such increase of outstanding shares
determined in accordance with Section 3(c)(i)(E).

(iv) If the number of shares of Common Stock outstanding at any time
after the Initial Purchase Date is decreased by a combination of the
outstanding shares of Common Stock, then, following the record date of
such combination, the Conversion Price for the Series Preferred shall
be appropriately increased so that the number of shares of Common Stock
issuable on conversion of each share of such series shall be decreased
in proportion to such decrease in outstanding shares.

(d) Other Distributions. In the event the Corporation shall declare a
distribution payable in securities of other persons, evidences of
indebtedness issued by the Corporation or other persons, assets (excluding
cash dividends) or options or rights not referred to in Sections 3(c)(i)(E)
or 3(c)(iii), then, in each such case for the purpose of this Section 3(d),
the holders of Series Preferred shall be entitled to a proportionate share
of any such distribution as though they were the holders of the number of
shares of Common Stock of the Corporation into which their shares of Series
Preferred are convertible as of the record date fixed for the determination
of the holders of Common Stock of the Corporation entitled to receive such
distribution.

(e) Recapitalizations. If at any time or from time to time there shall
be a recapitalization of the Common Stock (other than a subdivision,
combination or merger or sale of assets transaction provided for elsewhere
in Section 2 or this Section 3) provision shall be made so that the holders
of Series Preferred shall thereafter be entitled to receive upon conversion
of the Series Preferred the number of shares of stock or other securities
or property of the Corporation or otherwise, to which a holder of Common
Stock deliverable upon conversion would have been entitled on such
recapitalization. In any such case, appropriate adjustment shall be made in
the application of the provisions of this Section 3 with respect to the
rights of the holders of Series Preferred after the recapitalization to the
end that the provisions of this Section 3 (including adjustment of the
Conversion Price then in effect and the number of shares purchasable upon
conversion of the Series Preferred) shall be applicable after that event as
nearly equivalent as may be practicable.

(f) No Impairment. The Corporation will not, by amendment of its
Articles of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Corporation, but will at all times in good faith assist in
the carrying out of all the provisions of this Section 3 and in the taking
of all such action as may be necessary or appropriate in order to protect
the Conversion Rights of the holders of the Series Preferred against
impairment.

(g) No Fractional Shares and Certificate as to Adjustments.

(i) No fractional shares shall be issued upon conversion of the
Series Preferred, and the number of shares of Common Stock to be issued
shall be rounded down to the nearest whole share with the balance, if
any, being paid in cash. Whether or not fractional shares are issuable
upon such conversion shall be determined on the basis of the total
number of shares of Series Preferred the

C-6
<PAGE>

holder is at the time converting into Common Stock and the number of
shares of Common Stock issuable upon such aggregate conversion.

(ii) Upon the occurrence of each adjustment or readjustment of any
Conversion Price of the Series Preferred pursuant to this Section 3,
the Corporation, at its expense, shall promptly compute such adjustment
or readjustment in accordance with the terms hereof and prepare and
furnish to each holder of Series Preferred a certificate setting forth
such adjustment or readjustment and showing in detail the facts upon
which such adjustment or readjustment is based. The Corporation shall,
upon the written request at any time of any holder of Series Preferred,
furnish or cause to be furnished to such holder a like certificate
setting forth (A) such adjustment and readjustment, (B) the Conversion
Price at the time in effect, and (C) the number of shares of Common
Stock and the amount, if any, of other property which at the time would
be received upon the conversion of a share of Series Preferred.

(h) Notices of Record Date. In the event of any taking by the
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any
class or any other securities or property, or to receive any other right,
the Corporation shall mail to each holder of Series Preferred, at least
twenty (20) days prior to the date specified therein, a notice specifying
the date on which any such record is to be taken for the purpose of such
dividend, distribution or right, and the amount and character of such
dividend, distribution or right.

(i) Reservation of Stock Issuable Upon Conversion. The Corporation shall
at all times reserve and keep available out of its authorized but unissued
shares of Common Stock solely for the purpose of effecting the conversion
of the shares of Series Preferred such number of its shares of Common Stock
as shall from time to time be sufficient to effect the conversion of all
outstanding shares of Series Preferred; and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of all then outstanding shares of Series Preferred,
the Corporation will take such corporate action as may, in the opinion of
its counsel, be necessary to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient for such
purposes.

4. Voting Rights.

(a) The holder of each share of Series Preferred shall have the right to
one vote for each share of Common Stock into which such Series Preferred
could then be converted (with fractional shares determined as set forth in
Section 3(g) hereof), provided that no cash shall be due under this Section
4(a), and with respect to such vote, such holder shall have full voting
rights and powers equal to the voting rights and powers of the holders of
Common Stock, and shall be entitled, notwithstanding any provision hereof,
to notice of any shareholders' meeting in accordance with the Bylaws of the
Corporation, and shall be entitled to vote, together with holders of Common
Stock, with respect to any question upon which holders of Common Stock have
the right to vote.

(b) The Board of Directors of the Corporation shall consist of five (5)
members; provided, however, that the Board of Directors may include up to
three (3) additional members if the Board of Directors shall unanimously
approve the addition of each such additional member(s). In voting for
directors, (i) the holders of Series A Preferred, voting separately as a
class, shall have the right to elect one (1) member of the Board of
Directors of this Corporation (the "Series A Preferred Director"), (ii) the
holders of Series B Preferred, voting separately as a class, shall have the
right to elect one (1) member of the Board of Directors of this Corporation
(the "Series B Preferred Director"), (iii) the holders of the Common Stock,
voting separately as a class, shall have the right to elect two (2) members
of the Board of Directors of this Corporation (the "Common Directors") and
(iv) the remaining member(s) of the Board of Directors of this Corporation
(the "Other Director(s)") shall be elected by the holders of the Series
Preferred, voting separately as a class on an as-converted basis, and the
holders of the Common Stock voting separately as a class. A Series A
Preferred Director may be removed from the Board of Directors only by the
affirmative vote of the holders of a majority of the Series A Preferred,
voting separately as a class; a Series B

C-7
<PAGE>

Preferred Director may be removed from the Board of Directors only by the
affirmative vote of the holders of a majority of the Series B Preferred,
voting separately as a class, a Common Director may be removed from the
Board of Directors only by the affirmative vote of the holders of a
majority of the Common Stock, voting separately as a class; and the Other
Director(s) may be removed from the Board of Directors only by the
affirmative vote of the holders of a majority of the Series Preferred,
voting separately as a class, on an as-converted basis and the Common
Stock, voting separately as a class. If a vacancy on the Board of Directors
is to be filled by the Board of Directors, only a director or directors
elected by the same class or classes of shareholders as those who would be
entitled to vote to fill such a vacancy, if any, shall vote to fill such
vacancy.

5. Redemption Right of Holders.

(a) If at any time after the fifth anniversary of the Initial Purchase
Date of the Series C Preferred, the holders of a majority of the
outstanding shares of the Series C Preferred so request in writing (a
"Series C Qualifying Request"), the Corporation shall redeem from any
sources of funds legally available therefor, at the applicable Series C
Redemption Price (as determined below) all shares of the Series C Preferred
held by such holders and submitted for redemption on a Series C Redemption
Date (as defined below) as determined in accordance with the terms and
provisions set forth below. Upon receipt of a Series C Qualifying Request,
the Corporation shall give notice pursuant to this Section 5 to all holders
of the then outstanding Series C Preferred and Series D Preferred at the
address of each such holder appearing on the books of the Corporation or
given by such holder to the Corporation for the purpose of notice. Any
holder of Series C Preferred shall be entitled to submit any or all shares
of Series C Preferred held by such holder in response to a Series C
Redemption Notice (as defined below). Subject to the foregoing, in the
event the Corporation receives a Series C Qualifying Request, the
Corporation shall redeem on each Series C Redemption Date all of the shares
of Series C Preferred submitted for redemption on such Series C Redemption
Date. No redemption obligation shall arise, however, if and to the extent
that the Corporation, at such Series C Redemption Date, shall be prohibited
by applicable law from effecting such redemption. If the funds of the
Corporation legally available for redemption of shares of Series C
Preferred on any Series C Redemption Date are insufficient to redeem the
total number of shares of Series C Preferred submitted for redemption on
such Series C Redemption Date, those funds which are legally available will
be used to first redeem as many shares of Series C Preferred, on a pro rata
basis, as may be lawfully redeemed and that were submitted for redemption
by holders thereof who also submitted the Series C Qualifying Request. The
shares of Series C Preferred that were submitted for redemption but not so
redeemed shall remain outstanding and entitled to all the rights and
preferences provided herein. At any time thereafter when additional funds
of the Corporation are legally available for the redemption of shares of
Series C Preferred, such funds will immediately be used to redeem the
balance of the shares which the Corporation has become obliged to redeem on
any Series C Redemption Date (or such lesser maximum amount that shall be
lawful at such time), but which it has not redeemed.

(b) If at any time on or after the fourth anniversary of the Initial
Purchase Date of the Series D Preferred, the holders of a majority of the
outstanding shares of the Series D Preferred so request in writing (a
"Series D Qualifying Request"), the Corporation shall redeem from any
sources of funds legally available therefor, at the applicable Series D
Redemption Price (as determined below) all shares of the Series D Preferred
held by such holders and submitted for redemption on a Series D Redemption
Date (as defined below) as determined in accordance with the terms and
provisions set forth below. Upon receipt of a Series D Qualifying Request,
the Corporation shall give notice pursuant to this Section 5 to all holders
of the then outstanding Series D Preferred and Series C Preferred at the
address of each such holder appearing on the books of the Corporation or
given by such holder to the Corporation for the purpose of notice. Any
holder of Series D Preferred shall be entitled to submit any or all shares
of Series D Preferred held by such holder in response to a Series D
Redemption Notice (as defined below). Subject to the foregoing, in the
event the Corporation receives a Series D Qualifying Request, the
Corporation shall redeem on each Series D Redemption Date all of the shares
of Series D Preferred submitted for redemption on such Series D Redemption
Date. No redemption obligation shall arise, however, if and to

C-8
<PAGE>

the extent that the Corporation, at such Series D Redemption Date, shall be
prohibited by applicable law from effecting such redemption. If the funds
of the Corporation legally available for redemption of shares of Series D
Preferred on any Series D Redemption Date are insufficient to redeem the
total number of shares of Series D Preferred submitted for redemption on
such Series D Redemption Date, those funds which are legally available will
be used to first redeem as many shares of Series D Preferred, on a pro rata
basis, as may be lawfully redeemed and that were submitted for redemption
by holders thereof who also submitted the Series D Qualifying Request. The
shares of Series D Preferred that were submitted for redemption but not so
redeemed shall remain outstanding and entitled to all the rights and
preferences provided herein. At any time thereafter when additional funds
of the Corporation are legally available for the redemption of shares of
Series D Preferred, such funds will immediately be used to redeem the
balance of the shares which the Corporation has become obliged to redeem on
any Series D Redemption Date (or such lesser maximum amount that shall be
lawful at such time), but which it has not redeemed.

(c) Notice. Upon receipt of a Series C Qualifying Request or a Series D
Qualifying Request, the Corporation shall give, not less than 60 days prior
to the Series C Redemption Date or the Series D Redemption Date, as
applicable, written notice (the "Series C Redemption Notice" or the "Series
D Redemption Notice," respectively) to all holders of the then outstanding
Series C Preferred and Series D Preferred allowing them to elect to have
their shares redeemed as well on the Series C Redemption Date or Series D
Redemption Date specified in such notice. Subject to the possible
restrictions contained in either subsection (a) or subsection (b) hereof,
all of the Series C Preferred or Series D Preferred, respectively, entitled
to and submitted for redemption either pursuant to a Series C Qualifying
Request or Series D Qualifying Request or in response to a Series C
Redemption Notice or a Series D Redemption Notice shall be redeemed on the
date specified in the Series C Redemption Notice (the "Series C Redemption
Date") or the Series D Redemption Notice (the "Series D Redemption Date"),
respectively, at the applicable Series C Redemption Price or Series D
Redemption Price, respectively. The Series C Redemption Price (the "Series
C Redemption Price") shall equal the Original Issue Price per share, as
adjusted for any stock split, combination or similar recapitalization with
respect to such shares, plus any declared and unpaid dividends on the
Series C Preferred. The Series D Redemption Price (the "Series D Redemption
Price") shall equal the Original Issue Price per share, as adjusted for any
stock split, combination or similar recapitalization with respect to such
shares, plus an eight percent (8%) annual accrued yield on the Series D
Preferred On or prior to the Series C Redemption Date or Series D
Redemption Date, as applicable, each holder of shares of Series C Preferred
or Series D Preferred, respectively, entitled to and submitted for
redemption shall surrender the certificate or certificates evidencing such
shares to the Corporation, at the place designated in the Series C
Redemption Notice or Series D Redemption Notice, respectively, and shall
thereupon be entitled to receive payment of the appropriate Series C
Redemption Price or Series D Redemption Price, respectively. The
Corporation shall be under no obligation to redeem shares of Series C
Preferred or Series D Preferred (i) for which no stock certificate or
affidavit of lost stock certificate is surrendered on or prior to such
Series C Redemption Date or Series D Redemption Date, respectively, or (ii)
to the extent that any such redemption would be in violation of applicable
law.

(d) Combined Pro Rata Redemption. If any Series C Redemption Date and
Series D Redemption Date fall on the same date (the "Combined Redemption
Date"), and if the funds of the Corporation legally available for
redemption of shares of Series C Preferred and Series D Preferred on such
Combined Redemption Date are insufficient to redeem the total number of
shares of Series C Preferred and Series D Preferred submitted for
redemption on such Combined Redemption Date, those funds which are legally
available will be used to first redeem as many shares of Series C Preferred
and Series D Preferred, on a pro rata basis, as may be lawfully redeemed
and that were submitted for redemption by holders thereof who also
submitted the Series C Qualifying Request and the Series D Qualifying
Request, as applicable. The shares of Series C Preferred and Series D
Preferred that were submitted for redemption but not so redeemed shall
remain outstanding and entitled to all the rights and preferences provided
herein. At any time thereafter when additional funds of the Corporation are
legally available for the redemption of shares of Series C Preferred and
Series D Preferred, such funds will immediately be used to redeem the
balance

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<PAGE>

of the shares which the Corporation has become obliged to redeem on any
Combined Redemption Date (or such lesser maximum amount that shall be
lawful at such time), but which it has not redeemed.

(e) Cessation of Rights. Subject to the last sentence of subsection (a)
or subsection (b) hereof, from and after the applicable Series C Redemption
Date, Series D Redemption Date or Combined Redemption Date, as applicable,
all rights of the holders of shares of the Series C Preferred or Series D
Preferred, respectively, entitled to and submitted for redemption in
response to a Series C Redemption Notice or Series D Redemption Notice,
respectively, shall cease with respect to such shares, and such shares
shall not thereafter be outstanding for any purpose whatsoever, unless the
Corporation shall have failed to pay the appropriate Series C Redemption
Price or Series D Redemption Price, respectively, with respect to such
shares. The shares of Series C Preferred or Series D Preferred,
respectively, not submitted for redemption shall remain outstanding and
entitled to all rights and preferences provided herein.

(f) Deposit of Series C or Series D Redemption Price. Two days prior to
each Series C Redemption Date, Series D Redemption Date or Combined
Redemption Date, as applicable, the Corporation shall deposit in cash the
Series C Redemption Price or Series D Redemption Price, respectively, of
all outstanding shares of the Series C Preferred or Series D Preferred,
respectively, entitled to and submitted for redemption in response to the
Series C Redemption Notice or Series D Redemption Notice, respectively, and
not yet redeemed or converted, with a bank or trust corporation having
aggregate capital and surplus in excess of $50,000,000 as a trust fund for
the benefit of the respective holders of the shares designated for
redemption and not yet redeemed. Simultaneously, the Corporation shall
deposit irrevocable instructions and authority to such bank or trust
corporation to pay, on and after the Series C Redemption Date, Series D
Redemption Date or Combined Redemption Date, as applicable, the Series C
Redemption Price to the holders of Series C Preferred upon surrender of
their certificates, or the Series D Redemption Price to the holders of the
Series D Preferred upon surrender of their certificates. Any monies
deposited by the Corporation pursuant to this Section 5(f) for the
redemption of shares that are thereafter converted into shares of Common
Stock pursuant to Section 3 above no later than the close of business on
the Series C Redemption Date, Series D Redemption Date or Combined
Redemption Date, as applicable, shall be returned to the Corporation
forthwith upon such conversion. The balance of any monies deposited by the
Corporation pursuant to this Section 5(f) remaining unclaimed at the
expiration of six (6) months following the applicable Series C Redemption
Date, Series D Redemption Date or Combined Redemption Date, as applicable,
shall thereafter be returned to the Corporation, provided that the
shareholder to which such monies would be payable hereunder shall be
entitled, upon proof of its ownership of the Series C Preferred or Series D
Preferred, respectively, and payment of any bond requested by the
Corporation, to receive such monies but without interest from the
applicable Series C Redemption Date, Series D Redemption Date or Combined
Redemption Date.

6. Protective Provisions.

(a) The Corporation shall not, without first obtaining the approval (by
vote or written consent) of the holders of at least a majority of the then
outstanding shares of Series Preferred, voting separately as a class, and
with respect to section (ii) below, at least a majority of the then
outstanding shares of Series C Preferred, voting separately as a class, and
at least a majority of the then outstanding shares of Series D Preferred,
voting separately as a class:

(i) authorize or create any new class or series of stock or any
other securities convertible into equity securities of the Corporation
having a preference over or on parity with the Series Preferred;

(ii) amend the Corporation's Articles of Incorporation or Bylaws in
a manner that adversely affects the rights, preferences, privileges or
powers of, or the restrictions provided for the benefit of, any of the
Series Preferred or otherwise (including, without limitation, any
amendment to increase the authorized number of shares of Series A
Preferred, Series B Preferred, Series C Preferred or Series D
Preferred);

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<PAGE>

(iii) reclassify any outstanding shares into shares having
preferences or parity as to dividends or assets senior to or on parity
with the preference of the Series Preferred;

(iv) sell, convey, or otherwise dispose of or encumber all or
substantially all of its property or business or merge into or
consolidate with any other corporation (other than a wholly owned
subsidiary corporation) or effect any transaction or series of related
transactions in which more than 50% of the voting power of the
Corporation is disposed of;

(v) amend the Corporation's Articles of Incorporation to increase
the size of the Board of Directors of the Corporation beyond eight (8)
members;

(vi) issue indebtedness convertible into equity securities of the
Corporation in an aggregate principal amount at any one time
outstanding of more than $1,000,000; or

(vii) take any other action which under applicable law requires the
approval of the shareholders of the Corporation.

7. Status of Converted Stock. In the event any shares of Preferred Stock
shall be converted pursuant to Section 3 hereof, the shares so converted shall
be canceled and shall not be reissuable by the Corporation.

C. Common Stock.

1. Dividend Rights. The dividend rights of the Common Stock shall be as set
forth in Section 1 of Part B of this Article II.

2. Liquidation Rights. Upon the liquidation, dissolution or winding up of
the Corporation, the assets of the Corporation shall be distributed as provided
in Section 2 of Part B
of this Article II.

3. Voting Rights. The holder of each share of Common Stock shall have the
right to one vote, and shall be entitled to notice of any shareholders meeting
in accordance with the Bylaws of the Corporation, and shall be entitled to vote
upon such matters and in such manner as may be provided by law.

ARTICLE III.

No director of the Corporation shall be personally liable to the Corporation
or its shareholders for monetary damages for conduct as a director; provided
that this Article III shall not eliminate the liability of a director for any
act or omission for which such elimination of liability is not permitted under
the Oregon Business Corporation Act. No amendment to the Oregon Business
Corporation Act that further limits the acts or omission for which elimination
of liability is permitted shall affect the liability of a director for any act
or omission that occurs prior to the effective date of such amendment.

ARTICLE IV.

A. Indemnification. The Corporation shall indemnify to the fullest extent
not prohibited by law any person who was or is a party or is threatened to be
made a party to any Proceeding against all expenses (including attorney fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by the person in connection with such Proceeding.

B. Advancement of Expenses. Expenses incurred by a director or officer of
the Corporation in defending a Proceeding shall in all cases be paid by the
Corporation in advance of the final disposition of such Proceeding at the
written request of such person, if the person:

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<PAGE>

1. furnishes the Corporation a written affirmation of the person's good
faith belief that such person has met the standard of conduct described in
the Oregon Business Corporation Act or is entitled to be indemnified by the
Corporation under any other indemnification rights granted by the
Corporation to such person; and

2. furnishes the Corporation a written undertaking to repay such advance
to the extent it is ultimately determined by a court that such person is
not entitled to be indemnified by the Corporation under this Article or
under any other indemnification rights granted by the Corporation to such
person.

Such advances shall be made without regard to the person's ability to repay
such advances and without regard to the person's ultimate entitlement to
indemnification under this Article or otherwise.

C. Definition of Proceeding. The term "Proceeding" shall include any
threatened, pending, or completed action, suit, or proceeding, whether brought
in the right of the Corporation or otherwise and whether of a civil, criminal,
administrative, or investigative nature, in which a person may be or may have
been involved as a party or otherwise by reason of the fact that the person is
or was a director or officer of the Corporation or a fiduciary within the
meaning of Employee Retirement Income Security Act of 1974 with respect to any
employee benefit plan of the Corporation, or is or was serving at the request
of the Corporation as a director, officer, or fiduciary of an employee benefit
plan of another corporation, partnership, joint venture, trust, or other
enterprise, whether or not serving in such capacity at the time any liability
or expense is incurred for which indemnification or advancement of expenses can
be provided under this Article.

D. Non-Exclusivity and Continuity of Rights. This Article IV: (1) shall not
be deemed exclusive of any other rights to which those indemnified may be
entitled under any statute, agreement, general or specific action of the board
of directors, vote of shareholders or otherwise, both as the action in the
official capacity of the person indemnified and as to action in another
capacity while holding office, (2) shall continue as to a person who has ceased
to be a director or officer, (3) shall inure to the benefit of heirs,
executors, and administrators of such person, and (4) shall extend to all
claims for indemnification or advancement of expenses made after the adoption
of this Article IV.

E. Amendments. Any repeal of this Article IV shall only be prospective and
no repeal or modification hereof shall adversely affect the rights under this
Article IV in effect at the time of the alleged occurrence of any action or
omission to act that is the cause of any Proceeding.

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<PAGE>

ANNEX IV

1999 OREGON REVISED STATUTES
TITLE 7. CORPORATIONS AND PARTNERSHIPS
CHAPTER 60. PRIVATE CORPORATIONS
DISSENTERS' RIGHTS
(SECTIONS 60.551 THROUGH 60.594 OF THE
OREGON REVISED STATUTES ("ORS"))
(RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES)

60.551. Definitions for 60.551 to 60.594.

As used in ORS 60.551 to 60.594:

(1) "Beneficial shareholder" means the person who is a beneficial owner of
shares held in a voting trust or by a nominee as the record shareholder.

(2) "Corporation" means the issuer of the shares held by a dissenter before
the corporate action, or the surviving or acquiring corporation by merger or
share exchange of that issuer.

(3) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under ORS 60.554 and who exercises that right when and in the
manner required by ORS 60.561 to 60.587.

(4) "Fair value," with respect to a dissenter's shares, means the value of
the shares immediately before the effectuation of the corporate action to which
the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action unless exclusion would be inequitable.

(5) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at a rate that is fair and
equitable under all the circumstances.

(6) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares to
the extent of the rights granted by a nominee certificate on file with a
corporation.

(7) "Shareholder" means the record shareholder or the beneficial
shareholder.

60.554. Right to dissent.

(1) Subject to subsection (2) of this section, a shareholder is entitled to
dissent from, and obtain payment of the fair value of the shareholder's shares
in the event of, any of the following corporate acts:

(a) Consummation of a plan of merger to which the corporation is a party
if shareholder approval is required for the merger by ORS 60.487 or the
articles of incorporation and the shareholder is entitled to vote on the
merger or if the corporation is a subsidiary that is merged with its parent
under ORS 60.491;

(b) Consummation of a plan of share exchange to which the corporation is
a party as the corporation whose shares will be acquired, if the
shareholder is entitled to vote on the plan;

(c) Consummation of a sale or exchange of all or substantially all of
the property of the corporation other than in the usual and regular course
of business, if the shareholder is entitled to vote on the sale or
exchange, including a sale in dissolution, but not including a sale
pursuant to court order or a sale for cash pursuant to a plan by which all
or substantially all of the net proceeds of the sale will be distributed to
the shareholders within one year after the date of sale;

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<PAGE>

(d) An amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it:

(A) Alters or abolishes a preemptive right of the holder of the
shares to acquire shares or other securities; or

(B) Reduces the number of shares owned by the shareholder to a
fraction of a share if the fractional share so created is to be
acquired for cash under ORS 60.141;

(e) Any corporate action taken pursuant to a shareholder vote to the
extent the articles of incorporation, bylaws or a resolution of the board
of directors provides that voting or nonvoting shareholders are entitled to
dissent and obtain payment for their shares; or

(f) Conversion to a noncorporate business entity pursuant to ORS 60.472.

(2) A shareholder entitled to dissent and obtain payment for the
shareholder's shares under ORS 60.551 to 60.594 may not challenge the corporate
action creating the shareholder's entitlement unless the action is unlawful or
fraudulent with respect to the shareholder or the corporation.

(3) Dissenters' rights shall not apply to the holders of shares of any class
or series if the shares of the class or series were registered on a national
securities exchange or quoted on the National Association of Securities
Dealers, Inc. Automated Quotation System as a National Market System issue on
the record date for the meeting of shareholders at which the corporate action
described in subsection (1) of this section is to be approved or on the date a
copy or summary of the plan of merger is mailed to shareholders under ORS
60.491, unless the articles of incorporation otherwise provide.

60.557. Dissent by nominees and beneficial owners.

(1) A record shareholder may assert dissenters' rights as to fewer than all
the shares registered in the shareholder's name only if the shareholder
dissents with respect to all shares beneficially owned by any one person and
notifies the corporation in writing of the name and address of each person on
whose behalf the shareholder asserts dissenters' rights. The rights of a
partial dissenter under this subsection are determined as if the shares
regarding which the shareholder dissents and the shareholder's other shares
were registered in the names of different shareholders.

(2) A beneficial shareholder may assert dissenters' rights as to shares held
on the beneficial shareholder's behalf only if:

(a) The beneficial shareholder submits to the corporation the record
shareholder's written consent to the dissent not later than the time the
beneficial shareholder asserts dissenters' rights; and

(b) The beneficial shareholder does so with respect to all shares of
which such shareholder is the beneficial shareholder or over which such
shareholder has power to direct the vote.

60.561. Notice of dissenters' rights.

(1) If proposed corporate action creating dissenters' rights under ORS
60.554 is submitted to a vote at a shareholders' meeting, the meeting notice
must state that shareholders are or may be entitled to assert dissenters'
rights under ORS 60.551 to 60.594 and be accompanied by a copy of ORS 60.551 to
60.594.

(2) If corporate action creating dissenters' rights under ORS 60.554 is
taken without a vote of shareholders, the corporation shall notify in writing
all shareholders entitled to assert dissenters' rights that the action was
taken and send the shareholders entitled to assert dissenters' rights the
dissenters' notice described in ORS 60.567.

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<PAGE>

60.564. Notice of intent to demand payment.

(1) If proposed corporate action creating dissenters' rights under ORS
60.554 is submitted to a vote at a shareholders' meeting, a shareholder who
wishes to assert dissenters' rights shall deliver to the corporation before the
vote is taken written notice of the shareholder's intent to demand payment for
the shareholder's shares if the proposed action is effectuated and shall not
vote such shares in favor of the proposed action.

(2) A shareholder who does not satisfy the requirements of subsection (1) of
this section is not entitled to payment for the shareholder's shares under this
chapter.

60.567. Dissenters' notice.

(1) If proposed corporate action creating dissenters' rights under ORS
60.554 is authorized at a shareholders' meeting, the corporation shall deliver
a written dissenters' notice to all shareholders who satisfied the requirements
of ORS 60.564.

(2) The dissenters' notice shall be sent no later than 10 days after the
corporate action was taken, and shall:

(a) State where the payment demand shall be sent and where and when
certificates for certificated shares shall be deposited;

(b) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;

(c) Supply a form for demanding payment that includes the date of the
first announcement of the terms of the proposed corporate action to news
media or to shareholders and requires that the person asserting dissenters'
rights certify whether or not the person acquired beneficial ownership of
the shares before that date;

(d) Set a date by which the corporation must receive the payment demand.
This date may not be fewer than 30 nor more than 60 days after the date the
subsection (1) of this section notice is delivered; and

(e) Be accompanied by a copy of ORS 60.551 to 60.594.

60.571. Duty to demand payment.

(1) A shareholder sent a dissenters' notice described in ORS 60.567 must
demand payment, certify whether the shareholder acquired beneficial ownership
of the shares before the date required to be set forth in the dissenters'
notice pursuant to ORS 60.567(2)(c), and deposit the shareholder's certificates
in accordance with the terms of the notice.

(2) The shareholder who demands payment and deposits the shareholder's
shares under subsection (1) of this section retains all other rights of a
shareholder until these rights are canceled or modified by the taking of the
proposed corporate action.

(3) A shareholder who does not demand payment or deposit the shareholder's
share certificates where required, each by the date set in the dissenters'
notice, is not entitled to payment for the shareholder's shares under this
chapter.

60.574. Share restrictions.

(1) The corporation may restrict the transfer of uncertificated shares from
the date the demand for their payment is received until the proposed corporate
action is taken or the restrictions released under ORS 60.581.

(2) The person for whom dissenters' rights are asserted as to uncertificated
shares retains all other rights of a shareholder until these rights are
canceled or modified by the taking of the proposed corporate action.

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<PAGE>

60.577. Payment.

(1) Except as provided in ORS 60.584, as soon as the proposed corporate
action is taken, or upon receipt of a payment demand, the corporation shall pay
each dissenter who complied with ORS 60.571, the amount the corporation
estimates to be the fair value of the shareholder's shares, plus accrued
interest.

(2) The payment must be accompanied by:

(a) The corporation's balance sheet as of the end of a fiscal year
ending not more than 16 months before the date of payment, an income
statement for that year and the latest available interim financial
statements, if any;

(b) A statement of the corporation's estimate of the fair value of the
shares;

(d) A statement of the dissenter's right to demand payment under ORS
60.587; and

(e) A copy of ORS 60.551 to 60.594.

60.581. Failure to take action.

(1) If the corporation does not take the proposed action within 60 days
after the date set for demanding payment and depositing share certificates, the
corporation shall return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares.

(2) If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under ORS 60.567 and repeat the payment demand procedure.

60.584. After-acquired shares.

(1) A corporation may elect to withhold payment required by ORS 60.577 from
a dissenter unless the dissenter was the beneficial owner of the shares before
the date set forth in the dissenters' notice as the date of the first
announcement to news media or to shareholders of the terms of the proposed
corporate action.

(2) To the extent the corporation elects to withhold payment under
subsection (1) of this section, after taking the proposed corporate action, it
shall estimate the fair value of the shares plus accrued interest and shall pay
this amount to each dissenter who agrees to accept it in full satisfaction of
such demand. The corporation shall send with its offer a statement of its
estimate of the fair value of the shares an explanation of how the interest was
calculated and a statement of the dissenter's right to demand payment under ORS
60.587.

60.587. Procedure if shareholder dissatisfied with payment or offer.

(1) A dissenter may notify the corporation in writing of the dissenter's own
estimate of the fair value of the dissenter's shares and amount of interest
due, and demand payment of the dissenter's estimate, less any payment under ORS
60.577 or reject the corporation's offer under ORS 60.584 and demand payment of
the dissenter's estimate of the fair value of the dissenter's shares and
interest due, if:

(a) The dissenter believes that the amount paid under ORS 60.577 or
offered under ORS 60.584 is less than the fair value of the dissenter's
shares or that the interest due is incorrectly calculated;

(b) The corporation fails to make payment under ORS 60.577 within 60
days after the date set for demanding payment; or

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<PAGE>

(c) The corporation, having failed to take the proposed action, does not
return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within 60 days after the date set for
demanding payment.

(2) A dissenter waives the right to demand payment under this section unless
the dissenter notifies the corporation of the dissenter's demand in writing
under subsection (1) of this section within 30 days after the corporation made
or offered payment for the dissenter's shares.

60.591. Court action.

(1) If a demand for payment under ORS 60.587 remains unsettled, the
corporation shall commence a proceeding within 60 days after receiving the
payment demand under ORS 60.587 and petition the court under subsection (2) of
this section to determine the fair value of the shares and accrued interest. If
the corporation does not commence the proceeding within the 60-day period, it
shall pay each dissenter whose demand remains unsettled the amount demanded.

(2) The corporation shall commence the proceeding in the circuit court of
the county where a corporation's principal office is located, or if the
principal office is not in this state, where the corporation's registered
office is located. If the corporation is a foreign corporation without a
registered office in this state, it shall commence the proceeding in the county
in this state where the registered office of the domestic corporation merged
with or whose shares were acquired by the foreign corporation was located.

(3) The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unsettled parties to the proceeding as in an
action against their shares. All parties must be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.

(4) The jurisdiction of the circuit court in which the proceeding is
commenced under subsection (2) of this section is plenary and exclusive. The
court may appoint one or more persons as appraisers to receive evidence and
recommend decision on the question of fair value. The appraisers have the
powers described in the court order appointing them, or in any amendment to the
order. The dissenters are entitled to the same discovery rights as parties in
other civil proceedings.

(5) Each dissenter made a party to the proceeding is entitled to judgment
for:

(a) The amount, if any, by which the court finds the fair value of the
dissenter's shares, plus interest, exceeds the amount paid by the
corporation; or

(b) The fair value, plus accrued interest, of the dissenter's after-
acquired shares for which the corporation elected to withhold payment under
ORS 60.584.

60.594. Court costs and counsel fees.

(1) The court in an appraisal proceeding commenced under ORS 60.591 shall
determine all costs of the proceeding, including the reasonable compensation
and expenses of appraisers appointed by the court. The court shall assess the
costs against the corporation, except that the court may assess costs against
all or some of the dissenters, in amounts the court finds equitable, to the
extent the court finds the dissenters acted arbitrarily, vexatiously, or not in
good faith in demanding payment under ORS 60.587.

(2) The court may also assess the fees and expenses of counsel and experts
of the respective parties in amounts the court finds equitable:

(a) Against the corporation and in favor of any or all dissenters if the
court finds the corporation did not substantially comply with the
requirements of ORS 60.561 to 60.587; or

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<PAGE>

(b) Against either the corporation or a dissenter, in favor of any other
party, if the court finds that the party against whom the fees and expenses
are assessed acted arbitrarily, vexatiously or not in good faith with
respect to the rights provided by this chapter.

(3) If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the
fees for those services should not be assessed against the corporation, the
court may award to counsel reasonable fees to be paid out of the amount awarded
the dissenters who were benefited.

D-6
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 20. Indemnification of Directors and Officers.

Under Section 145 of the Delaware General Corporation Law (DGCL), a
corporation has the power to indemnify directors and officers under certain
prescribed circumstances and subject to certain limitations against certain
costs and expenses, including attorneys' fees actually and reasonably incurred
in connection with any action, suit or proceeding, whether civil, criminal,
administrative or investigative, to which any of them is a party by reason of
his being a director or officer of the corporation if it is determined that he
acted in good faith and in a manner he believed to be in (or not opposed to)
the interests of the corporation, and, in the case of a criminal proceeding, he
had no reason to believe his conduct was unlawful. Our certificate of
incorporation provides that we will indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding by reason of the fact that he is or was a director
or officer of ITXC, or is or was serving at our request as a director, officer,
employee, manager or agent of another entity, against certain liabilities,
costs and expenses. It further permits us to maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of ITXC, or is
or was serving at our request as a director, officer, employee or agent of
another entity against any liability asserted against such person and incurred
by such person in any such capacity or arising out of his status as such,
whether or not we would have the power to indemnify such person against such
liability under the DGCL.

Section 102(b)(7) of the DGCL permits a corporation, in its certificate of
incorporation, to limit or eliminate, subject to certain statutory limitations,
the personal liability of directors to the corporation or its stockholders for
monetary damages for breaches of fiduciary duty, as a director except for
liability (a) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (b) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (c) under
Section 174 of the DGCL, or (d) for any transaction from which the director
derived an improper personal benefit. Article NINTH of our Certificate of
Incorporation contains the following provision regarding limitation of
liability of our directors and officers:

"No director of the Corporation shall be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the General Corporation Law of
the State of Delaware, or (iv) for any transaction from which the director
derived an improper personal benefit."

Item 21. Exhibits and Financial Statement Schedules.

(a) Exhibits

<TABLE>
<C> <S>
2.1 Amended and Restated Agreement and Plan of Merger, dated as of July 25,
2000, by and among the registrant, eFusion, Inc. and Eye Merger Corp.
(1)
3.1 Proposed Amendment to Third Restated Certificate of Incorporation of
the registrant (and Third Restated Certificate of Incorporation of the
registrant, previously amended and as currently in effect) (2)
3.2 Bylaws of the registrant (3)
4.1 Form of certificate representing shares of common stock (4)
5.1 Opinion of Lowenstein Sandler PC*
8.1 Tax Opinion of Lowenstein Sandler PC*
10.1 Second Amended and Restated Employment Agreement between the registrant
and Tom Evslin (5)
10.2 Employment Agreement between the registrant and John Musci (6)
10.3 1998 Stock Incentive Plan, as amended (7)
</TABLE>

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<PAGE>

<TABLE>
<C> <S>
10.4 Employee Cash Incentive Plan, as amended (5)
10.5 Employee Stock Purchase Plan (8)
10.9 Lease Agreement, dated February 2, 1998 by and between the registrant
and Peregrine Investment Partners--I (6)
10.10 First Amendment to Lease dated April 16, 1999, by and between the
registrant and Peregrine Investment Partners--I (6)
10.11 Employment Agreement between the registrant and Thomas Shoemaker (5)
10.12 Second Amendment to Lease, dated December 6, 1999, by and between the
registrant and Peregrine Investment Partners--I (5)
10.13 Amended and Restated Loan Agreement, dated February 7, 2000, between
the registrant and PNC Bank (5)
10.14 Lease Agreement, dated June 30, 2000 by and between the registrant and
750 College Road Associates, L.P.*
21.1 Subsidiaries of the registrant
23.1 Consent of Lowenstein Sandler PC (to be included in Exhibit 5.1)
23.2 Consent of Ernst & Young LLP
23.3 Consent of KPMG LLP
24.1 Power of Attorney with respect to the registrant
27.1 Financial Data Schedule for ITXC Corp. (years ended December 31, 1998
and 1999).
27.2 Financial Data Schedule for ITXC Corp. (six months ended June 30,
2000).
27.3 Financial Data Schedule for eFusion, Inc. (years ended December 31,
1998 and 1999).
27.4 Financial Data Schedule for eFusion, Inc. (six months ended June 30,
2000).
</TABLE>
(1) Set forth as Annex I to the prospectus.
(2) Proposed Amendment set forth as Annex II to the prospectus.
(3) Incorporated by reference to similarly numbered Exhibit of the
registrant's Quarterly Report on Form 10-Q for the quarter ended
March 31, 2000.
(4) Incorporated by reference to Exhibit 4.2 of the registrant's
Registration Statement on Form S-1 (No. 333-80411).
(5) Incorporated by reference to the similarly numbered Exhibit of the
registrant's Registration Statement on Form S-1 (No. 333-96343).
(6) Incorporated by reference to the similarly numbered Exhibit of the
registrant's Registration Statement on Form S-1 (No. 333-80411).
(7) Incorporated by reference to Exhibit 10.1 of the registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31, 2000.
(8) Incorporated by reference to similarly numbered Exhibit of the
registrant's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1999.
--------
* To be filed by amendment.
(b) Financial Statement Schedules

None

The Registrant hereby agrees to furnish to the Commission supplementally a
copy of any omitted schedule or exhibit upon request.

Item 22. Undertakings.

(1) The undersigned registrant hereby undertakes as follows: that prior to
any public offering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
undersigned registrant undertakes that such offering prospectus will contain
the information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other Items of the applicable form.

(2) The registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet
the requirements of section 10(a)(3) of the Act and is used in connection

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<PAGE>

with an offering of securities subject to Rule 415, will be filed as a part of
an amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

(3) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

(4) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.

(5) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.

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<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended,
ITXC, Inc. has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Princeton, State of New Jersey, on the 22nd day of August, 2000.

ITXC CORP.

By: /s/ Edward B. Jordan
----------------------------------

Edward B. Jordan,
Executive Vice President

Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities indicated on this 22nd day of August, 2000.

Signature Title

/s/ Tom Evslin* Chairman, President
----------------------------------- and Chief Executive
Tom Evslin Officer

/s/ John G. Musci* Director
-----------------------------------
John G. Musci

/s/ Edward B. Jordan Chief Financial
----------------------------------- Officer and
Edward B. Jordan Accounting Officer
and Director

/s/ William P. Collatos* Director
-----------------------------------
William P. Collatos

/s/ Elon A. Ganor* Director
-----------------------------------
Elon A. Ganor

/s/ Frederick R. Wilson* Director
-----------------------------------
Frederick R. Wilson

*By: /s/ Edward B. Jordan
-------------------------------------
Edward B. Jordan, Attorney-in-Fact

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<PAGE>

ITXC CORP.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Tom Evslin, Edward B. Jordan and John G. Musci,
and each of them, as Proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote as designated below all the
shares of common stock of ITXC Corp. held of record by the undersigned on August
25, 2000, at the special meeting of stockholders to be held on ,
2000, and at any postponements or adjournments thereof. The proposals referred
to below are described in the joint proxy statement/prospectus dated
, 2000. Without otherwise limiting the general authorization given hereby, said
Proxies are instructed to vote as follows:

1. Proposal to issue ITXC common stock to the stockholders and option holders
of eFusion, Inc., up to a maximum of ___________ shares, pursuant to the Amended
and Restated Agreement and Plan of Merger, dated as of July 25, 2000, by and
among ITXC Corp., Eye Merger Corp. and eFusion, Inc.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

2. Proposal to amend ITXC's Third Restated Certificate of Incorporation to
authorize, as to the shares issuable under the merger agreement described above,
the transfer restrictions set forth in Section 2.13 of such merger agreement.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

3. Upon all such other matters as may properly come before the special meeting
and/or any adjournments thereof, as they in their discretion may determine. The
board of directors is not aware of any such other matters.

(IMPORTANT -- PLEASE SIGN ON OTHER SIDE)
<PAGE>

(CONTINUED FROM OTHER SIDE)

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2.

Dated:
(Signature)
(Signature)

PLEASE MARK, SIGN, DATE
AND RETURN THIS PROXY
CARD PROMPTLY USING THE
ENCLOSED ENVELOPE
WHETHER OR NOT YOU
EXPECT TO ATTEND THE
MEETING.

Please sign your name
exactly as it appears
hereon. When shares are
held by joint tenants,
both should sign, or if one
signs, he should attach evidence
of his authority. When
signing as Attorney,
Executor, Administrator,
Trustee or Guardian, etc.,
please give full title
as such. If a
corporation, please sign
in full corporate name
by President or other
authorized officer. If a
partnership, please sign
in full partnership name
by authorized person.
<PAGE>

eFUSION, INC.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Ajit Pendse, Luis Machuca and Jack Carveth, and
each of them, as Proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote as designated below all the
shares of stock of eFusion, Inc. held of record by the undersigned on August 25,
2000, at the special meeting of shareholders to be held on , 2000, and at
any postponements or adjournments thereof. The proposals referred to below are
described in the joint proxy statement/prospectus dated ,
2000. Without otherwise limiting the general authorization given hereby, said
Proxies are instructed to vote as follows:

1. Proposal to approve the Amended and Restated Agreement and Plan of Merger
dated as of July 25, 2000, among ITXC Corp., eFusion, Inc. and Eye Merger Corp.,
thereby:

(a) Approving the merger contemplated in such merger
agreement;
(b) Approving the escrow agreement contemplated by such
merger agreement; and
(c) Appointing Luis Machuca, the Chief Operating Officer of eFusion,
as representative of the eFusion shareholders under the escrow
agreement.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

2. Proposal to amend and restate eFusion's Fourth Amended and Restated
Articles of Incorporation to authorize the allocation of ITXC Corp. common stock
among eFusion shareholders as contemplated by the merger agreement described
above.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

PLEASE NOTE THAT IN THE EVENT THAT THE SHAREHOLDERS OF eFUSION DO NOT
APPROVE PROPOSAL 2, eFUSION WILL NOT HAVE THE CORPORATE POWER TO CONSUMMATE THE
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER AS PROPOSED IN PROPOSAL 1.
ACCORDINGLY, FAILURE TO APPROVE PROPOSAL 2 WILL PRECLUDE THE CONSUMMATION OF
THE MERGER.

(IMPORTANT -- PLEASE SIGN ON OTHER SIDE)
<PAGE>

(CONTINUED FROM OTHER SIDE)

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2.

Dated:
(Signature)
(Signature)

PLEASE MARK, SIGN, DATE
AND RETURN THIS PROXY
CARD PROMPTLY USING THE
ENCLOSED ENVELOPE
WHETHER OR NOT YOU
EXPECT TO ATTEND THE
MEETING.