EXHIBIT 10.4
IFX CORPORATION
SERIES D CONVERTIBLE PREFERRED STOCK
PURCHASE AGREEMENT
Dated as of February 19, 2002
IFX CORPORATION
SERIES D CONVERTIBLE PREFERRED STOCK
PURCHASE AGREEMENT
This Purchase Agreement is made and entered into as of the 19th day of
February, 2002, by and among IFX Corporation, a Delaware corporation (the
"Company") and each Person listed on the Schedule of Purchasers attached as
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Exhibit A hereto (the "Schedule of Purchasers") who executes this Agreement as a
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Purchaser (such Persons are referred to in this Agreement, collectively, as the
"Purchasers" and individually, as a "Purchaser") and Xxxxxxx Xxxxxx,
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individually ("Shalom"), Xxxx Xxxxxxxxxx, individually ("Eidelstein"), and Xxx
X. Xxxxx ("Xxxxx") only with respect to Section 12(q) hereof. Unless defined
elsewhere herein, capitalized and other defined terms shall have the meanings
specified in Section 13.
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RECITALS
The Company desires to sell to the Purchasers, and the Purchasers desire to
purchase from the Company such number of shares of Series D Convertible
Preferred Stock set forth in Section 2 hereof, all on the terms and conditions
set forth herein.
Simultaneously with the execution and delivery of this Agreement, the
Requisite Stockholders have consented to certain of the transactions
contemplated hereby.
AGREEMENT
In consideration of the premises and the mutual covenants, agreements,
hereinafter set forth, the parties to this Agreement agree as follows:
1. Authorization of the Securities; Nature of Agreement.
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(a) Series D Preferred Stock. The Company has authorized the
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issuance pursuant to the terms and conditions of this Agreement of shares of its
Preferred Stock, $1.00 par value per share, to be designated as Series D
Convertible Preferred Stock (the "Series D Preferred Stock"), as provided
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herein. The shares of Series D Preferred Stock have all of the rights,
preferences, privileges and restrictions set forth in the Certificate of
Designation, Number, Powers, Preferences and Relative, Participating, Optional
and Other Rights of Series D Convertible Preferred Stock of IFX Corporation (the
"Series D Certificate"), a copy of which, in the form to be filed with the
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Secretary of State of the State of Delaware, is attached as Exhibit B hereto.
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(b) Nature of Agreement. This Agreement insofar as it relates to
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the acquisition of a particular number of shares of the Series D Preferred Stock
by any Purchaser is a separate agreement between that Purchaser and the Company.
But this Agreement insofar as it relates to the rights, duties and remedies of
the Company and the Purchasers, from and after the Closing, shall be deemed to
be one Agreement.
2. Sale and Purchase of Series D Preferred Stock. (a) Subject to the
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terms and conditions set forth in this Agreement, the Company agrees to sell to
the Purchasers, and each of the Purchasers severally and not jointly agrees to
purchase from the Company, the number of shares of Series D Preferred Stock
indicated opposite such Purchaser"s name on the Schedule of Purchasers (the
"Shares"), for a purchase price set forth in Section 3. The sale and purchase
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of the Series D Preferred Stock shall take place at the offices of Xxxx Xxxxxxx
LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., New York City
time, at a closing (the "Closing") to occur as soon as practicable after
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satisfaction or waiver of the conditions to Closing set forth in Sections 7 and
8. At the Closing, the Company will deliver to each Purchaser the Series D
Preferred Stock to be purchased by such Purchaser in the form of a single
certificate (or such greater number of certificates representing such shares as
such Purchaser may request), each dated the date of Closing and registered in
such Purchaser"s name (or in the name of such Purchaser"s nominee(s)), against
delivery by such Purchaser of the purchase price set forth in Section 3. If at
the Closing, the Company shall fail to tender to any Purchaser the Series D
Preferred Stock to be purchased by such Purchaser, or any of the conditions
specified in Section 7 shall not have been fulfilled to the satisfaction of such
Purchaser, such Purchaser shall, at its election, be relieved of all further
obligations under this Agreement, without thereby waiving any other rights such
Purchaser may have by reason of such failure or such nonfulfillment.
3. Purchase Price. At the Closing, each Purchaser shall pay a purchase
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price for the Shares to be purchased by it hereunder in an amount equal to the
sum of (a) the cash consideration indicated opposite such Purchaser"s name on
the Schedule of Purchasers plus (b) the transfer and assignment to the Company
of the shares of Series C Preferred Stock or Common Stock, as the case may be,
owned by such Purchaser indicated opposite such Purchaser"s name on the Schedule
of Purchasers. The cash portion of the purchase price shall be payable by the
payment to the Company or its order of immediately available funds and/or
conversion of indebtedness (subject to the following sentence) in the aggregate
amount of such cash portion of the purchase price. In the event that a portion
of such cash consideration is paid by a Purchaser in the form of conversion of
indebtedness, then (i) the principal amount of such converted indebtedness shall
be applied toward the payment of such cash portion of the purchase price, and
(ii) any accrued interest on such converted indebtedness shall be applied to the
purchase, at a purchase price equal to One Dollar and Twenty Cents ($1.20) per
share of shares of Series D Preferred Stock, in addition to the number of Shares
to be purchased by such Purchaser as set forth on the Schedule of Purchasers. In
addition, at the Closing, each Purchaser shall surrender the certificate or
certificates representing the shares of Series C Preferred Stock or Common Stock
owned by such Purchaser indicated opposite such Purchaser"s name, as the case
may be, to be assigned to the Company as part of the purchase price for the
Shares, which certificates shall be accompanied by appropriate stock powers.
4. Representations and Warranties of the Company. Subject to the
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exceptions set forth in the Schedule of Exceptions attached as Exhibit C hereto
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(the "Schedule of Exceptions"), the Company represents and warrants to each of
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the Purchasers that:
(a) Organization and Good Standing. The Company and each of its
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Subsidiaries is an entity duly organized and validly existing under and by
virtue of the laws of its state or country of incorporation and is in good
standing under such laws (to the extent the
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concept of good standing is recognized under the laws of such jurisdictions).
The Company and each of its Subsidiaries is qualified, licensed or domesticated
as a foreign corporation in all jurisdictions where the failure to be so
qualified, licensed or domesticated would have a Material Adverse Effect. The
Company and each of its Subsidiaries has full power and authority (corporate and
other) to own, lease and operate its properties and assets and to operate the
Business as currently being operated.
(i) Except as set forth on the Schedule of Exceptions, the
minute books of the Company and each of its Subsidiaries, as previously made
available to the Purchasers, contain accurate records of all meetings of and
resolutions of, or written consents by, its shareholders and its board of
directors (or committees thereof) since the date of its incorporation.
(b) Authorization. (i) The Company has all requisite right,
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power and authority (corporate or otherwise) to execute and deliver this
Agreement and each of the other agreements and instruments referred to herein to
be entered into by the Company at or prior to a Closing (including without
limitation the Certificate) in connection with the consummation of the
transactions contemplated by this Agreement (the "Other Agreements") and to
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perform its obligations and consummate all of the transactions contemplated
hereunder and thereunder, including the issuance of the shares of Series D
Preferred Stock to be acquired by each Purchaser at the Closing. All corporate
proceedings have been taken and all corporate authorizations have been secured
which are necessary on the part of the Company and each of its Subsidiaries to
authorize the execution, delivery and performance of this Agreement and each of
the Other Agreements.
(ii) This Agreement has been duly executed and delivered
and constitutes, and each of the Other Agreements when executed and delivered by
the Company, will constitute, legal, valid and binding obligations of the
Company, enforceable in accordance with their respective terms, subject to
applicable bankruptcy, insolvency or other similar laws affecting the
enforceability of creditors" rights generally and court decisions with respect
thereto, and the discretion of courts in granting equitable remedies.
(iii) The shares of the Series D Preferred Stock to be acquired
by each Purchaser at the Closing have been duly authorized and, when delivered,
will be duly and validly issued and outstanding, fully paid and nonassessable,
and will be free of Encumbrances. The Common Stock of the Company issuable upon
conversion of the Series D Preferred Stock (the "Conversion Shares") (i) has
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been duly authorized, (ii) has been reserved for issuance upon conversion of the
Series D Preferred Stock, and (iii) when issued, will be duly and validly issued
and outstanding, fully paid and nonassessable and will be free of Encumbrances.
(c) Capital Stock. (i) On the date hereof, the authorized
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capital stock of the Company consists of (1) 60,000,000 shares of Common Stock,
par value $.02 per share (the "Common Stock"), of which 12,776,495 shares of
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Common Stock are issued and outstanding, and (2) 20,000,000 shares of Preferred
Stock, par value $1.00 per share (the "Preferred Stock"), of which 2,030,869
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shares of Preferred Stock have been designated Series A Preferred Stock, all of
which shares of Series A Preferred Stock are issued and outstanding ("Series A
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Preferred Stock"), of which 4,418,262 shares of Preferred Stock have been
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designated
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Class I Series B Preferred Stock, 3,994,127 of which shares of Class I Series B
Preferred Stock are issued and outstanding, and of which 424,135 shares of
Preferred Stock have been designated Class II Series B Preferred Stock, all of
which shares of Class II Series B Preferred Stock are issued and outstanding
(together with the Class I Series B Preferred Stock, "Series B Preferred Stock")
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and 3,876,241 shares of Series C Preferred Stock, all of which are issued and
outstanding (the "Series C Preferred Stock"); and (B) immediately after the
Closing, the authorized capital of the Company will consist of (1) 110,000,000
shares of Common Stock, of which 12,092,495 shares of Common Stock will be
issued and outstanding, and (2) 40,000,000 shares of Preferred Stock, of which
(w) 2,030,869 shares of Preferred Stock will have been designated as Series A
Preferred Stock, all of which shares will be issued and outstanding; (x)
4,842,397 shares of Preferred Stock will have been designated Series B Preferred
Stock, 4,418,262 of which shares will be issued and outstanding; (y) 3,876,241
shares of Preferred Stock will have been designated as Series C Preferred Stock,
of which 3,126,241 shares will be issued and outstanding, and (z) a number of
shares of Preferred Stock will be designated Series D Preferred Stock which is
equal to the sum of 6,383,666 plus the total number of additional shares, if
any, purchased by the Purchaser, at the Closing by reason of accrued interest on
converted indebtedness as provided in Section 2.
(ii) Except as set forth in the Schedule of Exceptions, the
Company has not (A) issued or granted, (B) agreed to issue or grant, or (C)
caused or permitted any of its Subsidiaries to issue or grant, any option,
warrant, right or other Convertible Security which affords any Person the right
to purchase or otherwise acquire any shares of the Common Stock, the Series A
Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock or
the Series D Preferred Stock, or any other security of the Company or any of its
Subsidiaries ("Capital Stock Agreements"). Neither the Company nor any of its
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Subsidiaries is subject to any obligation (contingent or otherwise) to purchase
or otherwise acquire or retire any shares of its securities.
(iii) All of the issued and outstanding securities of the
Company and its Subsidiaries have been duly authorized and validly issued, are
fully paid, nonassessable and free of preemptive rights (other than those
preemptive rights set forth in the Schedule of Exceptions) and other
Encumbrances, and were issued in compliance with all Applicable Laws, including
those regulating the offer, sale or issuance of securities.
(iv) Except as set forth in the Schedule of Exceptions, no
Person has any rights of first refusal or similar rights or any preemptive
rights in connection with the issuance of the shares of Series D Preferred Stock
or Conversion Shares, or with respect to any future offer, sale or issuance of
securities by the Company, any of its Subsidiaries or any of its stockholders,
other than as provided in this Agreement or after the Closing, the Registration
Rights Agreement, the Stockholders Agreement, the Series A Certificate, the
Series B Certificate, the Series C Certificates or the Series D Certificate.
(v) The Schedule of Exceptions sets forth a true and correct
list of (1) to the knowledge of the Company, each of the Company"s shareholders
who owns, of record or beneficially, more than 5% of the Common Stock on a Fully
Diluted Basis, indicating the number and class of shares owned by each
shareholder, and such shareholder"s percentage interest in the Company and
percentage interest in the Common Stock on a Fully Diluted Basis,
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and (2) each of the holders of Convertible Securities, the number and type of
Convertible Securities owned by such holder and to the knowledge of the Company,
such holder"s percentage interest in the Company and percentage interest in the
Common Stock on a Fully Diluted Basis.
(vi) True and correct copies of all documents relating to the
issuance and terms of all outstanding shares of capital stock and other equity
securities of the Company and all Convertible Securities of the Company issued
after November 10, 1998 have been provided to the Purchasers. Except as set
forth in the Schedule of Exceptions, each option issued to purchase capital
stock or other equity securities of the Company granted under the Stock Option
Plan or otherwise was granted pursuant to an option agreement in substantially
the form provided to the Purchasers.
(d) Subsidiaries. (i) The name of each Subsidiary of the
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Company, the jurisdiction of its incorporation and the ownership of capital
stock of its shareholders are listed in the Schedule of Exceptions. Except as
set forth on the Schedule of Exceptions, all of the issued and outstanding
shares of capital stock of each Subsidiary are 100% owned, beneficially and of
record, by the Company (other than a single share (if any) of such Subsidiary
held by a nominee of the Company in order to comply with Applicable Law), are
validly issued, fully paid and nonassessable, and free from Encumbrances.
(ii) Except for the capital stock or other securities of the
Subsidiaries listed on the Schedule of Exceptions, the Company does not own,
directly or indirectly, beneficially or of record, or have any obligations to
purchase or otherwise acquire, any capital stock or other securities of any
Person. Except as set forth on the Schedule of Exceptions, none of the
Subsidiaries owns, directly or indirectly, beneficially or of record, or has any
obligation to acquire any capital stock or other securities of any Person.
(e) Compliance With Material Instruments. Except as set forth
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on the Schedule of Exceptions, the Company and each Subsidiary is not in
violation of (i) any Applicable Law, (ii) any term of its Certificate of
Incorporation or Bylaws (or equivalent documents in its jurisdiction of
organization), or (iii) any Contract to which it is subject and which is
material to the Business, including any Capital Stock Agreement (collectively,
the "Material Instruments"). The execution and delivery by the Company of this
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Agreement and the Other Agreements, the performance by the Company of its
obligations hereunder and thereunder and the consummation by the Company of the
transactions contemplated hereby and thereby, including the issuance of the
Series D Preferred Stock, the issuance of the Conversion Shares and the taking
of any other action contemplated by this Agreement or the Other Agreements, will
not (i) result in (A) any violation of any Applicable Law, or (B) any violation
of any term of the Company"s or any of its Subsidiaries" Certificate of
Incorporation or Bylaws (or equivalent documents), or (C) any violation of or
any conflict with or a default (with or without notice, lapse of time or both)
under any of the Material Instruments, which violation, conflict or default
might reasonably be expected to have a Material Adverse Affect on the ability of
the Company or any of its Subsidiaries to satisfy its obligations under this
Agreement, any of the Other Agreements or any of the Material Instruments, (ii)
accelerate or constitute an event entitling the other party to any Material
Instrument to accelerate the obligations of such Material Instrument, or to
increase the rate of interest presently in effect or to entitle the other party
to such Material Instrument to any other right resulting from a change-in-
control or otherwise, or (iii) result in the
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creation of any Encumbrance upon any of the material properties or assets of the
Company or any of its Subsidiaries. The performance by the Company or any of its
Subsidiaries of its obligations and the enforcement of its rights under the
Material Instruments will not have a Material Adverse Effect.
(f) Good Title. Except as set forth on the Schedule of
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Exceptions, the Company and each of its Subsidiaries has good title to, a valid
license to, or a valid leasehold interest in, the properties and assets used by
it, in each case free and clear of all Encumbrances, except liens for current
property taxes not yet due and payable and any immaterial workmen"s,
repairmen"s, warehouseman"s and carriers" liens arising in the ordinary course
of business. The buildings, equipment and other tangible assets of the Company
and each of its Subsidiaries are in all material respects in good operating
condition and repair, free from any known defects and are usable in the ordinary
course of the Business; and the Company and each of its Subsidiaries owns, or
has a valid leasehold interest in or license to use, all assets necessary for
the conduct of the Business as presently conducted.
(g) Litigation. (i) Except as set forth on the Schedule of
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Exceptions, there are no actions, proceedings, investigations (civil, criminal,
regulatory or otherwise), arbitrations, claims, demands or grievances
("Actions") pending against the Company or any Subsidiary (or, to the best
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knowledge of the Company, any basis therefor or threat thereof).
(ii) There are no judgments unsatisfied against the Company or
any Subsidiary or consent decrees or injunctions to which the Company, any
Subsidiary or any assets of the Business are subject.
(h) Tax Matters. Except as set forth in the Schedule of
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Exceptions, the Company and each of its Subsidiaries (i) has timely filed
(including extensions) all Tax returns that are required to have been filed by
it with all appropriate Governmental Authorities (and all such Tax returns are
true, complete and correct in all material respects), (ii) has timely paid all
Taxes owed by it or withheld and remitted to the appropriate Governmental
Authority all Taxes which it is obligated to withhold and remit from amounts
owing to any employee (including social security taxes), creditor, customer or
third party, and (iii) has not waived any statute of limitations with respect to
Taxes or agreed to any extension of time with respect to a Tax assessment or
deficiency. The assessment of any additional Taxes for periods for which returns
have been filed is not expected to exceed the recorded liability therefor, and
there are no material unresolved questions or claims concerning the Tax
liability of the Company or any Subsidiary. There is no pending dispute with, or
notice from, any taxing authority relating to any of the Tax returns which, if
determined adversely to the Company or any Subsidiary, would result in the
assertion by any taxing authority of any valid deficiency in a material amount
for Taxes, and to the knowledge of the Company, there is no proposed liability
for a deficiency in any Tax to be imposed upon the properties or assets of the
Company, the Business or any Subsidiary. There are no federal, state, local or
foreign Tax Encumbrances on any asset of the Company, the Business or any
Subsidiary (other than Encumbrances for Taxes not yet due and payable).
(i) Registration Rights. Except as set forth in the Schedule of
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Exceptions and the Registration Rights Agreement, the Company is not a party to
any agreement or commitment which obligates the Company to register under the
Securities Act of 1933, as
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amended (the "Securities Act"), or any other securities law of any jurisdiction,
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any of its presently outstanding securities or any of its securities which may
hereafter be issued.
(j) Offering. Subject to the accuracy of the Purchasers"
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representations in Section 5 of this Agreement, the offer, issuance and sale of
the Series D Preferred Stock hereunder constitute, and will constitute,
transactions exempt from the registration and prospectus delivery requirements
of Section 5 of the Securities Act and analogous provisions of the Applicable
Laws of all other jurisdictions, and the Company has obtained (or is exempt from
the requirement to obtain) all qualifications, permits and other consents
required by all Applicable Laws governing the offer, sale, issuance or
conversion of securities.
(k) Insurance. The Schedule of Exceptions contains a true,
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complete and correct list of all insurance policies covering the Business and
the respective material assets of the Company and each Subsidiary. The Company
and each Subsidiary maintains in full force and effect such insurance policies.
Neither the Company nor any Subsidiary is in default with respect to any
provision contained in any insurance policy. Neither the Company nor any
Subsidiary has failed to give any notice under any insurance policy in due time.
(l) Certain Transactions. Except as set forth in the Schedule of
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Exceptions, neither the Company nor any of its Subsidiaries is indebted, either
directly or indirectly, to any of the officers, directors, advisory board
members or stockholders of the Company or any Subsidiary, or to any Affiliates
of the foregoing, in any amount whatsoever, other than for payment of salary for
services rendered and reasonable expenses; except as set forth on the Schedule
of Exceptions, none of said officers, directors, advisory board members,
stockholders and their respective Affiliates are indebted to the Company or any
Subsidiary or, to the knowledge of the Company, have any direct or indirect
ownership interest in, or any contractual relationship with, any Affiliates of
the Company or any Subsidiary or with any Person with which the Company or any
Subsidiary has a business relationship, or any Person which, directly or
indirectly, competes with the Company or any Subsidiary. Except as set forth in
the Schedule of Exceptions, no such officer, director, advisory board member or
stockholder, nor any of their respective Affiliates, is, directly or indirectly,
a party to or otherwise an interested party with respect to any contract,
agreement, arrangement or understanding with the Company or any Subsidiary other
than agreements for the issuance of stock options to any such Person under the
Stock Option Plan.
(m) Contracts. (i) Except as expressly contemplated by this
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Agreement, or as set forth in the Schedule of Exceptions, the Company and each
of its Subsidiaries is not, and as of each of the Closings the Company and each
of its Subsidiaries will not be, a party to, or bound by, and none of their
respective assets is or will be subject to, any written or oral agreement,
contract, commitment, order, license, lease or other instrument and arrangement
of the types described below (the "Contracts"):
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(A) any pension, profit sharing, stock option, employee
stock purchase or other plan providing for deferred, incentive or
other compensation to employees, any other employee benefit plan, or
any contract with any labor union;
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(B) any contract for the employment or personal services of
any officer, individual employee or other person or entity on a full-time,
part-time, consulting, advisory or other basis providing annual
compensation in excess of $125,000 or which, in any way, restricts or
limits the right of the Company or any Subsidiary to terminate such
contract at will;
(C) any loan agreement, indenture, letter of credit,
security agreement, mortgage, pledge agreement, deed of trust, bond, note,
or other agreement relating to the borrowing of money in excess of $125,000
or to the mortgaging, pledging, transferring of a security interest, or
otherwise placing an Encumbrance on any material asset or material group of
assets (whether tangible or intangible) of the Company or any Subsidiary;
(D) any guarantee of the payment or performance of any
Person in excess of $125,000; any agreement to indemnify any Person or act
as a surety for an amount in excess of $125,000; any other agreement to be
contingently or secondarily liable for the obligations of any Person; or
any "keep well" or similar credit support arrangements;
(E) any lease or agreement under which it is the lessee of
or holds or operates any property, real or personal, owned by any other
party requiring annual payments in excess of $125,000;
(F) any contract or agreement or group of related
agreements with the same party or any group of affiliated parties which
requires or may in the future require an aggregate payment by or to the
Company or any Subsidiary in excess of $125,000;
(G) any contract or agreement prohibiting it from freely
engaging in any business or competing anywhere in the world;
(H) any material licenses, licensing arrangements and other
similar contracts providing in whole or in part for the use by a third
party of, or limiting the use by the Company or any Subsidiary of, any
Intellectual Property;
(I) any brokerage or finder"s agreements relating to the
transactions contemplated herein;
(J) any joint venture, partnership and similar contracts
involving a sharing of profits or expenses (including joint development and
joint marketing contracts);
(K) any asset purchase agreements, stock purchase
agreements and other acquisition or divestiture agreements, including any
agreements relating to the sale, lease or disposal of any assets of the
Company or any of its Subsidiaries for consideration in excess of $50,000
or involving continuing indemnity or other obligations;
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(L) any material sales agency, marketing or
distributorship agreements;
(M) any contracts which contain "take or pay"
provisions;
(N) any contracts, agreements or arrangements
regarding pre-emptive rights, rights of first refusal, put or call
rights or obligations, anti-dilution rights or other restrictions on
or with respect to the issuance, sale or redemption of the capital
stock of the Company or any of its Subsidiaries;
(O) any contracts, agreements or arrangements
regarding the rights, obligations, restrictions on or with respect to
the voting of any of the capital stock of the Company or any of its
Subsidiaries or the registration of such stock for offering to the
public pursuant to the Securities Act; and/or
(P) any other contract, agreement or commitment not
the subject matter of clauses (A) through (P) above which is or could
be reasonably expected to be material to the Company, any Subsidiary
or the Business.
(ii) The Company and each of its Subsidiaries has performed
all obligations required to be performed by it to date and is not in material
default under, or in material breach of, or in receipt of any claim of material
default under or material breach of, any agreement to which it is a party or to
which any of its assets is subject; the Company has no present expectation or
intention of not fully performing, or of permitting any of its Subsidiaries not
to perform fully, all such obligations; and the Company does not have any
knowledge of any material breach or anticipated material breach by the other
parties to any contract or commitment to which it or any of its Subsidiaries is
a party or to which any of its or their assets is subject.
(iii) To the knowledge of the Company, none of the officers
of the Company or any Subsidiary is a party to any oral or written contract
which prohibits, restricts or limits his or her performance of his or her duties
or the fulfillment of his or her obligations as an employee and an officer of
the Company or any Subsidiary.
(iv) Each Contract is a legal, valid, binding and
enforceable obligation of the Company or a Subsidiary, and to the knowledge of
the Company, the other parties thereto, subject to applicable bankruptcy,
insolvency, or other similar laws affecting the enforceability of creditors"
rights generally and court decisions with respect thereto, and the discretion of
courts in granting equitable remedies. Except as set forth in the Schedule of
Exceptions, no Consent of any Person is required under any Contract as a result
of or in connection with the execution and delivery by the Company or any of its
Subsidiaries or the performance by the Company or any of its Subsidiaries of its
obligations hereunder or under any of the Other Agreements or the consummation
by the Company or any of its Subsidiaries of the transactions contemplated
hereby or thereby.
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(n) Governmental Consents. No Governmental Approvals or
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Consents are required to be obtained under Applicable Law or the Certificate of
Incorporation and By-Laws of the Company in connection with (i) the execution,
delivery or performance by the Company of this Agreement or any of the Other
Agreements or the consummation of any transaction contemplated hereby or
thereby, and (ii) the carrying on of the Business as it is presently carried on
and is contemplated to be carried on, except as have been obtained or
accomplished and except for immaterial Governmental Approvals or Consents,
except as set forth on the Schedule of Exceptions. All such Governmental
Approvals and Consents have been duly obtained or accomplished and are in full
force and effect and the Company and its Subsidiaries are in compliance in all
material respects with each such Governmental Approval and Consent.
(o) Officers, Employees and Labor. (i) Except as set
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forth in the Schedule of Exceptions, the Company and each of its Subsidiaries
has complied in all material respects with all Applicable Laws relating to the
employment of labor, including provisions thereof relating to wages, hours,
social welfare, equal opportunity and collective bargaining. The Company does
not have any material labor relations problems. All the employment agreements
entered into between the Company or any Subsidiary, on the one hand, and their
respective employees, on the other hand, are in full force and effect.
(ii) The Schedule of Exceptions contains a list of all
officers of the Company and each of its Subsidiaries and all other current
employees and consultants whose current annual salary or rate of compensation
(including bonuses, commissions and inventive compensation) is $125,000 or more,
together with their current job titles or relationship to the Company or its
Subsidiaries. None of the Persons referred to above, nor any other employee or
consultant of the Company and its Subsidiaries, has notified the Company or such
Subsidiary that such Person will cancel or otherwise terminate such Person's
relationship with the Company or such Subsidiary, or is being terminated by the
Company or such Subsidiary.
(iii) To the Company's knowledge, none of the officers or
employees of the Company or any of its Subsidiaries is in breach of any covenant
or agreement with any previous employer or other Person with regard to (A)
restrictions on competition with the business of such previous employer or other
Person, (B) solicitation of the employees of such previous employer or other
Persons, or (C) non-disclosure of the confidential or proprietary information of
such previous employer or other Person.
(iv) Except as set forth on the Schedule of Exceptions, the
Company and its Subsidiaries do not have any Benefit Plans. The Company has
delivered to the Purchasers true, correct and complete copies of all documents,
summary plan descriptions, insurance contracts, third party administration
contracts and all other documentation created to embody all Benefit Plans, plus
descriptions of any Benefit Plans that have not been reduced to writing.
(v) Except as set forth on the Schedule of Exceptions and
for required contributions or benefit accruals for the current plan year, no
material liability has been or is expected to be incurred by the Company under
or pursuant to any Applicable Law relating to Benefit Plans and, to the best
knowledge of the Company, no event, transaction or condition has
-10-
occurred or exists that could result in any such liability to the Company or any
of its Subsidiaries or, following the Closing, the Company, its Subsidiaries,
the Purchasers or any such Benefit Plan.
(vi) Except as set forth on the Schedule of Exceptions, each
of the Benefit Plans listed in the Schedule of Exceptions is and has at all
times been in compliance in all material respects with all applicable provisions
of Applicable Laws.
(vii) Except as specifically set forth in the Schedule of
Exceptions, the execution and performance of the transactions contemplated by
this Agreement will not (either alone or upon the occurrence of any currently
planned additional or subsequent event) constitute an event under any Benefit
Plan or individual agreement that will or may result in any payment (whether of
severance pay or otherwise), acceleration, vesting or increase in material
benefits with respect to any employee, former employee, consultant, agent or
director of the Company or any Subsidiary.
(viii) With respect to all Benefit Plans which are funded, or
are required by Applicable Law to be funded, the present value of all accrued
benefits (vested and non-vested) of each such Benefit Plan as of the date of
Closing, will not exceed the fair market value of the assets of each such
Benefit Plan as of the date of Closing.
(p) Compliance with Laws. Except as set forth on the
--------------------
Schedule of Exceptions, the Company and each of its Subsidiaries is not, in any
material respects, in violation of any Applicable Laws and has not received
notice of any such violation.
(q) Intellectual Property. Except as set forth in the
---------------------
Schedule of Exceptions, the Company owns free and clear of all Encumbrances, or
possesses and is validly licensed under, all Intellectual Property material to
the operation of the Business, as conducted in the past, as presently conducted
and as contemplated to be conducted. Any such licenses are in full force and
effect. No past, current, or planned activity, service or product of the Company
or any Subsidiary infringes or conflicts with the Intellectual Property of any
third party. The Company and its Subsidiaries have taken appropriate steps and
measures to establish and preserve ownership of or right to use all Intellectual
Property material to the operation of the Business. The Company owns all rights
in and to any and all Intellectual Property used or planned to be used by the
Company or any Subsidiary, or covering or embodied in any past, current or
planned activity, service or product of the Company or any Subsidiary, which
Intellectual Property was made, developed, conceived, created or written by any
consultant retained, or any employee employed, by the Company or any Subsidiary.
To the Company's knowledge, no former or current employee, and no former or
current consultant, of the Company or any Subsidiary has any rights in any
Intellectual Property made, developed, conceived, created or written by the
aforesaid employee or consultant during the period of his retention by the
Company or the Subsidiary which can be asserted against the Company or any
Subsidiary. The Company owns, or has full and unrestricted rights to use, any
and all domain names containing the word "Unete" (including the word "Unete" in
combination with any non-military extension, including Xxxxx.xxx, Xxxxx.xxx and
Xxxxx.xxx). The domain name Xxxxx.xxx does not and will not receive an amount of
Internet traffic intended for any website or webpage of the Company that would
have a Material Adverse Effect. Except as set forth on the Schedule of
Exceptions,
-11-
neither the Company nor any Subsidiary has knowledge of any Intellectual
Property owned by the Company or any Subsidiary and material to the operation of
the Business which is the subject of any Encumbrance or other agreement granting
rights therein to any third party. Except as set forth on the Schedule of
Exceptions, neither the Company nor any Subsidiary is obligated or under any
liability whatsoever to make any payments by way of royalties, fees or otherwise
to any owner, licensor of, or other claimant to, any Intellectual Property, with
respect to the use thereof or in connection with the conduct of the Business, or
otherwise. The Company and each of its Subsidiaries has taken reasonable steps
to protect, maintain and safeguard the Intellectual Property material to the
Business, including any Intellectual Property for which improper or unauthorized
disclosure would impair its value or validity, and has executed and has had
executed appropriate nondisclosure and confidentiality agreements and made all
appropriate filings and registrations in connection with the foregoing. Neither
the Company nor any Subsidiary has knowledge of any infringement by any third
party of any Intellectual Property of the Company or any Subsidiary. There has
been no judgment, decree, injunction, rule, or order rendered by any
Governmental Authority, and no claim made against the Company or any Subsidiary,
asserting the invalidity, abuse, misuse or unenforceability of any Intellectual
Property material to the operation of the Business, or that would limit, cancel,
or question the validity of, or the rights of the Company or any Subsidiary in,
any Intellectual Property material to the operation of the Business.
(r) Environmental Matters. (i) The Company has complied in
---------------------
all material respects with all applicable Environmental Laws. There is no
pending or, to the knowledge of the Company, threatened civil or criminal
litigation, written notice of violation, formal administrative proceeding, or
investigation, inquiry or information request by any Governmental Authority,
relating to any Environmental Law involving the Company or any of its
Subsidiaries.
(ii) Neither the Company, nor to the knowledge of the
Company, any third party has released any Materials of Environmental Concern
into the environment at any parcel of real property or any facility formerly or
currently owned, leased, operated or controlled by the Company. The Company is
not aware of any releases of Materials of Environmental Concern at parcels of
real property or facilities other than those owned, leased, operated or
controlled by the Company that could reasonably be expected to have an impact on
the real property or facilities owned, leased, operated or controlled by the
Company.
(iii) Set forth in the Schedule of Exceptions is a list of
all environmental reports, investigations and audits of which the Company is
aware (whether conducted by or on behalf of the Company or a third party, and
whether done at the initiative of the Company or directed by a Governmental
Authority or other third party) issued or conducted during the five years
preceding the date hereof relating to premises currently or previously owned,
leased or operated by the Company or any of its Subsidiaries. Complete and
accurate copies of each such report, or the results of each such investigation
or audit, have been provided to the Purchasers.
(s) Certain Practices. Neither the Company nor any
-----------------
Subsidiary (nor any constituent corporation of any merger of which the Company
or any Subsidiary is a surviving corporation, or other Person of which the
Company or any Subsidiary is the surviving
-12-
corporation) nor any of their respective officers, employees, directors,
representatives or agents has, since the inception of the Business by the
Company or any of its Subsidiaries (or their predecessors): (i) taken any action
in furtherance of any boycott not sanctioned by the United States; (ii) entered
into any contract or agreement to conduct any transaction with any Governmental
Authority, agent, representative or resident of, or any Person based or resident
in, any of the following countries: Angola (UNITA); Burma (Myanmar); Cuba; Iran;
Iraq; Libya; North Korea; Sudan; Syria; and the Federal Republic of Yugoslavia
(Serbia and Montenegro); or (iii) knowingly offered, promised, authorized or
made, directly or indirectly, (A) any unlawful payments under Applicable Laws,
or (B) any payments or other inducements (whether or not unlawful), to any
government official, including any official of an entity owned or controlled by
a government, political party or official thereof or any candidate for political
office, with the intent or purpose of: (1) influencing any act or decision of
such official in his official capacity; (2) inducing such official to do or omit
to do any act in violation of the lawful duty of such official; (3) receiving an
improper advantage; or (4) inducing such official to use his influence with a
Governmental Authority to affect or influence any act or decision of such
Governmental Authority; in order to assist the Company or any Subsidiary in
obtaining or retaining business for or with, or directing business to, any
person.
(t) Brokers. No finder, broker, agent, financial advisor
-------
or other intermediary has acted on behalf of the Company or any of its
Affiliates in connection with the offering of the Series D Preferred Stock or
the negotiation or consummation of this Agreement or the Other Agreements or any
of the transactions contemplated hereby or thereby. All such negotiations or the
consummation of this Agreement or the Other Agreements or any of the
transactions contemplated hereby or thereby will not give rise to any valid
claim against the Company, any Subsidiary or any of the Purchasers for any
brokerage or finder's commission, fee or similar compensation.
(u) No Undisclosed Liabilities. Except as set forth on the
--------------------------
Schedule of Exceptions or in the SEC Reports, neither the Company nor any
Subsidiary has any liabilities, obligations, claims, commitments or debts of any
nature, whether known or unknown, whether due or becoming due, or asserted or
unasserted (whether fixed, accrued, absolute, contingent, secured or otherwise).
The Schedule of Exceptions sets forth a true and complete schedule of accrued
liabilities and future payments due with respect to any acquisitions by the
Company or any Subsidiary of any equity securities or assets of any Person.
(v) Disclosure. This Agreement (including the Schedules
----------
and Exhibits hereto) does not contain any untrue statement of any material fact
or omits to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which they were
made, not misleading. To the Company's knowledge, there are no facts that,
individually or in the aggregate, would have a Material Adverse Effect that have
not been set forth in this Agreement (including the Schedule of Exceptions).
(w) SEC Filings. Since January 1, 1997, the Company has
-----------
timely filed all forms, reports and documents with the SEC required to be filed
by it pursuant to the Federal securities laws and the rules and regulations of
the SEC thereunder, all of which complied in all material respects with all
applicable requirements of the Securities Act and the Exchange Act and the rules
and regulations of the SEC thereunder. The above referenced forms, reports and
-13-
documents of the Company are sometimes collectively referred to herein as the
"SEC Reports." A true and complete list of the SEC Reports is set forth in the
Schedule of Exceptions. All documents required to be filed as exhibits to the
SEC Reports have been timely filed. None of the SEC Reports, including without
limitation any financial statements or schedules included therein, at the time
filed contained any untrue statement of a material fact or omitted 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.
(x) Financial Statements. The consolidated balance sheets
--------------------
and the related consolidated statements of income, stockholders' equity and cash
flows (including the related notes thereto) of the Company and its Subsidiaries
included in the SEC Reports complied as to form in all material respects with
the applicable accounting requirements and published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with GAAP,
applied on a basis consistent with prior periods except as otherwise noted
therein, present fairly the consolidated financial position of the Company and
its Subsidiaries as of their respective dates, and the consolidated results of
their operations and their cash flows for the periods presented therein, and
reflect all adjustments necessary for the fair presentation of results for the
periods presented except as set forth on the Schedule of Exceptions.
(y) Availability and Transfer of Foreign Currency. All
---------------------------------------------
requisite foreign exchange control approvals and other authorizations, if any,
by any Governmental Authority have been validly obtained and are in full force
and effect to assure: (a) the ability of the Company and its Subsidiaries to
make any and all payments necessary to (i) each Purchaser for dividend payments
on the Common Stock and the Series D Preferred Stock, or (ii) any other party in
order to conduct the Business; (b) the ability of the Company's Subsidiaries to
make any and all payments of dividends and other distributions to the Company
and any and all other intercompany payments to or from the Company; and (c) the
availability of dollars to enable each Purchaser to convert its investment to
dollars, if necessary, if such Purchaser liquidates its investment in the Series
D Preferred Stock or the Common Stock.
(z) Absence of Changes. Except as set forth in the
------------------
Schedule of Exceptions, since June 30, 2001, neither the Company nor any
Subsidiary has:
(i) suffered any Material Adverse Effect;
(ii) incurred, assumed, guaranteed or discharged any debt,
claim, commitment, obligation or liability, absolute, accrued, contingent or
otherwise, whether due or to become due (including any indebtedness for borrowed
money), in excess of $100,000, individually or in the aggregate;
(iii) mortgaged, pledged or subjected to any other
Encumbrance, any material piece of property, business or assets, tangible or
intangible;
(iv) sold, transferred, leased to others or otherwise
disposed of any of the assets of the Business, in excess of $100,000,
individually or in the aggregate, or canceled or compromised any debt, claim,
commitment, liability or obligation, or waived or released any
-14-
right of substantial value, involving an amount in excess of $100,000,
individually or in the aggregate;
(v) received any written notice of termination of any
Contract with required payments thereunder in excess of $100,000;
(vi) suffered any damage, destruction or loss (whether or
not covered by insurance) to property, in excess of $100,000, individually or in
the aggregate;
(vii) transferred or granted any rights under, or entered
into any settlement regarding the breach, misappropriation, infringement or
violation of, any Intellectual Property, or modified any existing rights with
respect thereto in a manner involving payments by or to the Business in excess
of $100,000, individually or $100,000 in the aggregate;
(viii) with respect to amounts in excess of $25,000 per year,
made any change in the rate of compensation, commission, bonus or other direct
or indirect remuneration payable, or paid or agreed or made any enforceable oral
promise to pay, conditionally or otherwise, any bonus, incentive, retention or
other compensation, retirement, welfare, fringe or severance benefit or vacation
pay, to or in respect of any employee, distributor or agent;
(ix) made any change in its accounting, auditing or tax
methods, practices or principles;
(x) encountered any labor union organizing activity, had
any actual or threatened employee strikes, work stoppages, slowdowns or
lockouts, or had any material and adverse change in its relations with its
employees, distributors, agents, customers or suppliers;
(xi) entered into any Contract, involving an amount per year
in excess of $100,000, individually or in the aggregate, or paid or agreed to
pay any brokerage or finder's fee, or incurred any severance pay obligations by
reason of, this Agreement or any of the transactions contemplated hereby;
(xii) made any grant of credit to any customer or distributor
on terms or in amounts materially more favorable than had been extended to that
customer or distributor in the past; or
(xiii) taken any action or omitted to take any action that has
resulted or could reasonably be expected to result in the occurrence of any of
the foregoing.
(aa) Real Property Holding Company. The Company is not a
-----------------------------
real property holding company within the meaning of Section 897(c)(2) of the
United States Internal Revenue Code of 1986, as amended.
(bb) Investment Company Act. The Company is not, nor is it
----------------------
directly or indirectly controlled by or acting on behalf of, any Person that is
an "investment company" within the meaning of the United States Investment
Company Act of 1940, as amended.
-15-
(cc) Subchapter S. The Company has not elected to be treated as a
------------
Subchapter S corporation or a collapsible corporation pursuant to Section
1362(a) or Section 341(f) of the United States Internal Revenue Code of 1986, as
amended.
(dd) State Takeover Statutes. The Board of Directors of the Company
-----------------------
has approved this Agreement, the Other Agreements and the transactions
contemplated hereby and thereby and the provisions of any "fair price,"
"moratorium," "control share," "interested stockholders," "affiliated
transaction" or other anti-takeover statute or regulation, and any antitakeover
or other restrictive provisions of the Company's Certificate of Incorporation
are not applicable to the transactions contemplated by this Agreement or the
Other Agreements.
5. Representations and Warranties of the Purchasers. Each Purchaser
------------------------------------------------
severally (and not jointly) represents and warrants to the Company that:
(a) Investment Intent. The shares of Series D Preferred Stock to be
-----------------
acquired by and issued to the Purchaser pursuant to this Agreement are being
acquired by the Purchaser solely for its own account, for investment purposes
only, and with no present intention of distributing, selling or otherwise
disposing of them.
(b) Sophistication. Such Purchaser is able to bear the economic
--------------
risk of an investment in shares of the Series D Preferred Stock to be acquired
by it pursuant to this Agreement and can afford to sustain a total loss of such
investment, and has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of the proposed
investment and therefore has the capacity to protect its own interests in
connection with the purchase of its respective shares of Series D Preferred
Stock.
(c) Illiquidity. Such Purchaser understands that there is no public
-----------
market for the shares of Series D Preferred Stock to be acquired by it and that
there may never be a public market for such stock, and that even if a market
develops for such stock such Purchaser may have to bear the risk of its
investment in such stock for a substantial period of time.
(d) Accredited Investor. Such Purchaser is an "accredited investor"
-------------------
within the meaning of Regulation D promulgated under the Securities Act. In
addition (but without limiting the effect of the Company's representations and
warranties contained herein), such Purchaser has received such information as it
considers necessary or appropriate for deciding whether to acquire its
respective shares of Series D Preferred Stock.
(e) Brokers. No finder, broker, agent, financial advisor or other
-------
intermediary has acted on behalf of such Purchaser in connection with the
transactions contemplated by this Agreement or the Other Agreements.
(f) Investment Company Act. No Purchaser is an "investment company"
----------------------
within the meaning of the United States Investment Company Act of 1940, as
amended.
(g) Requisite Power and Authority. Each Purchaser has all necessary
-----------------------------
power and authority to execute and deliver this Agreement and the Other
Agreements to which it is a party and to carry out their provisions. This
Agreement has been duly executed and delivered
-16-
by each Purchaser, and each of the Other Agreements when executed and delivered
by each Purchaser who is a party thereto, will constitute the legal, valid and
binding obligations of such Purchaser, enforceable in accordance with their
terms, subject to applicable bankruptcy, insolvency, or other similar laws
affecting the enforceability of creditors rights generally and court decisions
with respect thereto, and the discretion of courts in granting equitable
remedies.
(h) No Conflict. The execution and delivery by each Purchaser of
-----------
this Agreement and the consummation of the transactions contemplated hereby by
each Purchaser will not result in any violation of or default under, any
provision of the organizational documents of such Purchaser, any contract to
which such Purchaser is a party or any applicable law, rule or regulation, which
violation or default could reasonably be expected to (i) affect the validity of
this Agreement or any agreement entered into pursuant hereto, (ii) affect in any
material respect any action taken or to be taken by such Purchaser pursuant to
this Agreement or any agreement entered into pursuant hereto or (iii) have a
material adverse effect on the properties, assets, business or operations of
such Purchaser.
6. Covenants.
---------
(a) Pre-Closing Actions. As promptly as practicable, each of the
-------------------
parties to this Agreement will (i) use commercially reasonable efforts to take
all actions required of such party to do all other things reasonably necessary,
proper or advisable to consummate the transactions contemplated hereby by the
date of the Closing, (ii) file or supply, or cause to be filed or supplied, all
applications, notifications and information required to be filed or supplied by
such party pursuant to Applicable Law in connection with this Agreement, the
issuance of the shares of Series D Preferred Stock pursuant hereto and the
consummation of the other transactions contemplated hereby and by the Other
Agreements; (iii) use all reasonable efforts to obtain, or cause to be obtained,
all Consents (including all Governmental Approvals and any Consents required
under any contract) necessary to be obtained by such party in order to
consummate the transactions contemplated pursuant to this Agreement and the
Other Agreements; and (iv) coordinate and cooperate with the other parties in
exchanging such information and supplying such assistance as may be reasonably
requested by the other parties in connection with any filings and other actions
to be made or taken in order to consummate the transactions contemplated
pursuant to this Agreement and by the Other Agreements.
(b) Covenants Pending Closing. Pending the Closing, neither the
-------------------------
Company nor any Subsidiary will, without the Purchasers' prior written consent,
take any action which would result in any of the representations or warranties
made by the Company in this Agreement not being true in any material respect at
and as of the time immediately after such action, or in any of the covenants
contained in this Agreement becoming incapable of performance. The Company will
promptly notify the Purchasers of any action or event of which it becomes aware
which has the effect of making incorrect any of such representations or
warranties in any material respect or which has the effect of rendering any of
such covenants incapable of performance. The giving of such notice shall not
relieve the Company of any liability or the failure of any condition to the
obligations of the Purchasers hereunder.
-17-
(c) Stockholder Approval; Information Statement.
-------------------------------------------
(i) As promptly as possible after the execution and delivery of
this Agreement, the Company shall prepare and file with the SEC, and use its
reasonable best efforts to have cleared by the SEC and will thereafter mail to
its stockholders as promptly as practicable an information statement meeting the
requirements of Regulation 14C promulgated under the Securities Exchange Act of
1934, as amended (the "Information Statement") shall otherwise comply with
----------------------
Applicable Law in connection with obtaining the approval of the Company's
stockholders in connection with the transactions contemplated hereby. The
Company will provide the Purchasers with a copy of the preliminary Information
Statement and all modifications thereto prior to filing or delivery to the SEC
and will consult with the Purchasers in connection therewith. The Company will
notify the Purchasers promptly of any receipt of any comments from the SEC or
its staff and of any request by the SEC or its staff for amendments or
supplements to the Information Statement or for additional information and will
supply the Purchasers with copies of all correspondence between the Company or
any of its representatives, on the one hand, and the SEC or its staff, on the
other hand, with respect to the Information Statement. If at any time after the
mailing of the Information Statement to the Company's stockholders there shall
occur any event that should be set forth in an amendment or supplement to the
Information Statement, the Company will promptly prepare and mail to its
stockholders such an amendment or supplement. The Company will not mail any
Information Statement, or any amendment or supplement thereto, to which the
Purchasers reasonably object. Except with respect to information provided in
writing by UBS, LSC or ITI, the Company covenants that the Information
Statement, including any amendment or supplement thereto shall not contain any
untrue statement of a material fact or omission of a material fact required to
be stated therein or necessary to make the statements therein not misleading.
(ii) UBS, LSC and ITI, separately and not jointly, covenant that
any information regarding themselves furnished by each of them in writing to the
Company, specifically for inclusion in the Information Statement (including any
amendment or supplement thereto) will not contain any untrue statement of a
material fact or omission of a material fact required to be stated in the Proxy
Statement or any amendment or supplement thereto necessary to make the
statements therein not misleading.
(d) No Solicitation. Except as otherwise expressly authorized in
---------------
this Agreement, from the date hereof to the Closing, the Company and its
Subsidiaries shall (and shall cause their respective employees, directors, agent
and Affiliates to) immediately suspend any existing negotiations or discussions
relating to any sale or other transfer of actual or beneficial ownership of the
Company, any shares of capital stock of the Company or any Subsidiary, the
business or any of the Company's or any Subsidiary's assets (other than in the
ordinary course of business) (collectively, a "Transaction"), and the Company
------------
and its Subsidiaries shall not, and shall cause their respective employees,
directors, agents and Affiliates to not, (a) solicit any proposals or offers
relating to a Transaction, or (b) negotiate or discuss with any third party
concerning any proposal or offer for a Transaction.
(e) Books and Records. The Company shall, and shall cause each
-----------------
Subsidiary to, maintain books and records accurately disclosing all payments
made.
-18-
(f) Post-Closing Covenants. Until the consummation of a
----------------------
Qualified Public Offering, the Company will deliver to each holder of at least
833,333 shares of Common Stock on an as-converted basis:
(i) as soon as available, but in any event within ninety (90)
days after the end of each fiscal year of the Company, a copy of the audited
consolidated balance sheet of the Company and its Subsidiaries as at the end of
such fiscal year and the related audited statements of consolidated income,
stockholders equity and changes in financial position of the Company and its
Subsidiaries for such fiscal year, setting forth in each case (after the first
full fiscal year of the Company) in comparative form the figures for the
previous year which shall be prepared in accordance with GAAP applied
consistently throughout the periods reflected therein and reported on without
any qualification as to the scope of the audit by independent certified public
accountants of nationally recognized standing;
(ii) as soon as available but in any event within thirty (30)
days after the end of each calendar month of the Company such monthly reports as
are presented to management of the Company or any of its Subsidiaries.
(iii) No later than thirty (30) days prior to the start of each
fiscal year, an annual business plan setting forth the anticipated strategic
business activities and goals of the Company and its Subsidiaries, including an
expected annual budget and operating plan (containing projections of operating
results) for the Company and its Subsidiaries.
(iv) As soon as available, but in any event within forty-five
(45) days after the end of each semi-annual fiscal period of the Company, an
update to the monthly projections contained in the annual budget, operating plan
and business plan furnished by the Company to the Purchasers pursuant to
subsection (iii) above;
(v) promptly upon receipt thereof, copies of all final reports
submitted to the Company or any of its Subsidiaries by independent certified
public accountants in connection with each annual, interim or special audit of
the books of the Company or of any of its Subsidiaries made by such accountants,
including, without limitation, any final comment letter submitted by such
accountants to management in connection with their annual audit;
(vi) promptly upon their becoming available, copies of all
financial statements, reports, notices and proxy statements sent or made
available generally by the Company to all of its security holders in their
capacity as such or by any Subsidiary of the Company to its security holders,
other than the Company, and of all regular and periodic reports and all final
registration statements and final prospectuses, if any, filed by the Company or
any of its Subsidiaries with any securities exchange or with the SEC or any
Governmental Authority succeeding to any of its functions;
(vii) as soon as available, but in any event within thirty (30)
days after the end of each month and within ten (10) days prior to each
regularly scheduled meeting of the Board of Directors of the Company, a
narrative report prepared by the President of the Company detailing the
activities, business developments, operating results and marketing efforts of
the
-19-
Company and its Subsidiaries since the date of the previous such report
delivered by the Company pursuant to this subsection (vii); and
(viii) such other information reasonably requested by such
Purchaser.
(g) Inspection Rights. Until the consummation of a Qualified
-----------------
Public Offering, each holder of at least 833,333 shares of common stock on an
as-converted basis shall have the right, upon reasonable notice, to visit and
inspect any of the properties of the Company or any of its Subsidiaries, and to
discuss the affairs, finances and accounts of the Company or any of its
Subsidiaries with its directors, officers and employees, all at such reasonable
times and as often as may be reasonably requested; provided, however, that the
-------- -------
Company shall not be obligated to provide access to any information which it
reasonably considers to be a trade secret or similar confidential information
unless the recipient of such information executes a nondisclosure agreement in a
form reasonably acceptable to the Company.
(h) Listing Application. As soon as possible as of the date
-------------------
hereof the Company shall file with Nasdaq a listing application with respect to
the Conversion Shares and use its reasonable best efforts to cause such
application to become effective.
7. Conditions to Obligations of the Purchasers. The obligation of each of
-------------------------------------------
the Purchasers to purchase and pay for the Series D Preferred Stock which it has
agreed to purchase at the Closing and the other obligations of each of the
Purchasers under this Agreement are subject to the fulfillment at or prior to
the Closing of the following conditions, any of which may be waived in writing
in whole or in part by such Purchaser:
(a) Representations and Warranties. On the date of the Closing
------------------------------
each of the representations and warranties of the Company set forth in this
Agreement that is qualified as to materiality and each of the representations
and warranties set forth in Section 4(c) shall be true and correct in all
respects and each such representation and warranty that is not so qualified
shall be true and correct in all material respects in each case on the date
hereof and at and as of the date of the Closing with the same effect as though
such representations and warranties had been made at and as of the date of the
Closing.
(b) Performance. The Company and each of its Subsidiaries
-----------
shall have performed and complied in all material respects with all agreements
and conditions contained herein required to be performed or complied with by it
prior to or at the Closing.
(c) Absence of Litigation. (i) The consummation of the
---------------------
transactions contemplated hereby shall not have been restrained, enjoined or
otherwise prohibited by any Applicable Law, including any order, injunction,
decree or judgment of any court or other Governmental Authority; (ii) no court
or other Governmental Authority shall have determined that any Applicable Law
makes illegal the consummation of the transactions contemplated hereby and no
Action with respect to the application of any such Applicable Law to such effect
shall be pending or threatened; and (iii) no Action shall be pending or shall
have been threatened which seeks to impose liability upon any of the Purchasers
by reason of the consummation of the transactions contemplated by this
Agreement.
-20-
(d) Opinion of Counsel to the Company and Subsidiaries. The
--------------------------------------------------
Purchasers shall each have received the written opinion of counsel for the
Company, in form and substance satisfactory to the Purchasers dated and
delivered as of the date of the Closing, substantially identical in form and
substance to Exhibit D hereto.
---------
(e) Consents. The Company shall have obtained any and all
--------
Consents and Governmental Approvals set forth in the Schedule of Exceptions, and
shall have made any and all filings and declarations necessary or appropriate
(A) for the consummation of the transactions contemplated by this Agreement and
the Other Agreements, (B) pursuant to Applicable Law, and (C) pursuant to
Contracts applicable to the Company in connection with the transactions
contemplated by this Agreement and the Other Agreements.
(f) Assignment of Intellectual Property. All the Intellectual
-----------------------------------
Property set forth in the Schedule of Exceptions shall have been assigned or
licensed, as applicable, to the Company pursuant to instruments in form and
substance satisfactory to the Purchasers, and the written Consent of any third
party necessary for any such assignment or license shall have been obtained.
(g) Contemporaneous Transactions. Prior to or
----------------------------
contemporaneously with the Closing:
(i) Each of the Stockholders Agreement, Registration Rights
Agreement, and the Tutopia Put Agreement shall have been executed and delivered
by each party named on the signature pages thereof.
(ii) (A) The Company shall have issued to each Purchaser, and
each of the Purchasers shall have acquired, the shares of Series D Preferred
Stock to be acquired at the Closing by such Purchaser under this Agreement, and
(B) the Company shall have delivered to each Purchaser certificates representing
such shares of Series D Preferred Stock acquired hereunder, each registered in
the name of such Purchaser or the name of its nominee(s).
(iii) The Amendment to the Certificate shall have been duly
filed with the Secretary of State of Delaware. The Amendment to the Certificate
shall be in full force and effect as of the Closing and shall not have been
amended or modified.
(iv) The Series D Certificate shall have been duly filed with
the Secretary of State of the State of Delaware. The Series D Certificate shall
be in full force and effect as of the Closing and shall not have been amended or
modified.
(v) [deleted]
(vi) [deleted]
(vii) The Company shall have obtained the approval of its
stockholders in accordance with Applicable Law and Nasdaq rules and regulations
necessary to consummate the transactions contemplated hereby.
-21-
(viii) The composition of the Board shall be in compliance with
the terms of the Stockholders Agreement.
(ix) A Nasdaq listing application with respect to the
Conversion Shares shall have been filed and become effective.
(x) The requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, or any foreign anti-competition, antitrust
or pre-merger notification rules and regulations, if applicable, shall have been
complied with.
(xi) The Company shall have received waivers from its senior
management, optionholders and the other parties to the Material Instruments, in
form and substance satisfactory to the Purchasers, of the change-in-control
provisions contained in their respective employment agreements, option
agreements and/or Material Instruments with respect to the transactions
contemplated hereby.
(h) Closing Papers. The Company shall have delivered to each
--------------
of the Purchasers all of the following:
(i) a certificate signed by the President and Chief Executive
Officer of the Company, dated as of the date of the Closing, stating that (A)
the person signing such certificate has made or has caused to be made such
investigations as are necessary to permit him to certify the accuracy of the
information set forth therein, (B) such certificate does not misstate any
material fact and does not omit to state any fact necessary to make the
certificate not misleading, and (C) the other conditions specified in this
Section 7 have been satisfied;
---------
(ii) copies (certified by the President, Secretary or Assistant
Secretary of the Company or, if required under Applicable Law, the applicable
Governmental Authority) of the resolutions duly adopted by the Board of
Directors and Stockholders of the Company authorizing the adoption of the Series
D Certificate and authorizing the execution, delivery and performance of this
Agreement, the Other Agreements and all other agreements referred to in this
Agreement as being executed at or prior to the Closing;
(iii) copies (certified by the Secretary or Assistant Secretary
of the Company) of the Certificate of Incorporation and Bylaws (or equivalent
documents) of the Company and, each of the Subsidiaries listed on Schedule
--------
7(h)(iii) hereto, in each case as amended through the date of the Closing; and
---------
(iv) such other documents relating to the transactions
contemplated by this Agreement as any Purchaser may reasonably request.
(i) Absence of Material Adverse Effect. No event or series of
----------------------------------
events shall have occurred which has had or could reasonably be expected to have
a Material Adverse Effect.
(j) Proceedings. All corporate and other proceedings of the
-----------
Company taken or to be taken in connection with the transactions contemplated
hereby and by the Other
-22-
Agreements to be consummated at the Closing and all documents incident thereto
shall be reasonably satisfactory in form and substance to each Purchaser.
(k) Legends. Each stock certificate issued by the Company to
-------
stockholders party to the Stockholder Agreement or Registration Rights Agreement
on or prior to the date of the Closing shall have been stamped or otherwise
imprinted with a legend in substantially the form provided in Section 5.12 of
the Stockholders Agreement and Section 2 of the Registration Rights Agreement.
8. Conditions to the Obligations of the Company. The obligations of the
--------------------------------------------
Company with respect to each Purchaser under this Agreement are subject to the
fulfillment on or prior to the date of the Closing of the following conditions,
any of which may be waived in writing, in whole or in part, by the Company:
(a) Representations and Warranties. On the date of the
------------------------------
Closing, each of the representations and warranties of such Purchaser set forth
in this Agreement shall be true and correct in all respects on the date hereof
and at and as of the date of the Closing with the same effect as though such
representations and warranties had been made at and as of the date of the
Closing.
(b) Performance. Such Purchaser shall have performed and
-----------
complied in all material respects with all agreements and conditions contained
herein required to be performed by or complied with by it prior to the Closing.
(c) Absence of Litigation. (i) The consummation of the
---------------------
transactions contemplated hereby shall not have been restrained, enjoined or
otherwise prohibited by any Applicable Law, including any order, injunction,
decree or judgment of any court or other Governmental Authority; (ii) no court
or other Governmental Authority shall have determined that any Applicable Law
makes illegal the consummation of the transactions contemplated hereby and no
Action with respect to the application of any such Applicable Law to such effect
shall be pending or threatened; and (iii) no Action shall be pending or shall
have been threatened which seeks to impose liability upon any Company by reason
of the consummation of the transactions contemplated by this Agreement.
(d) The requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, or any foreign anti-competition, antitrust
or pre-merger notification rules and regulations, if applicable, shall have been
complied with.
9. Survival. The representations and warranties of the Company set forth
--------
in Sections 4(a), 4(b), 4(c), 4(d), 4(e), 4(h), 4(j), 4(o), 4(q), 4(t), 4(u) and
4(y) shall survive the Closing indefinitely. All other representations and
warranties of the Company contained herein shall expire at the second
anniversary of the Closing. The representations and warranties of the Purchasers
contained herein shall survive the Closing for a period of two years. All
covenants and agreements contained herein shall survive the Closing
indefinitely.
10. Termination. This Agreement may be terminated:
-----------
(a) by mutual written consent of all of the parties hereto; or
-23-
(b) by any of the Purchasers (with respect to such Purchaser
only) by written notice to the Company if any of the conditions to the Closing
set forth in Section 7 shall not have been fulfilled by 5:00 p.m. New York time
on the date which is 60 days from the date hereof, unless such failure shall be
due to the failure of such Purchaser to perform or comply with any of the
covenants, agreements or conditions hereof to be performed or complied with by
it prior to the Closing.
11. Effect of Termination. If this Agreement is terminated pursuant to the
---------------------
provisions of Section 10, then this Agreement shall become void and have no
effect, without any liability to any person in respect hereof or of the
transactions contemplated hereby on the part of any party hereto, or any of its
directors, officers, employees, consultants, agents, representatives, advisers,
stockholders or Affiliates except for any liability resulting from such party's
breach or default under this Agreement.
12. Miscellaneous Provisions.
------------------------
(a) Acknowledgment. Each Purchaser acknowledges and agrees
--------------
that it has, independently and without reliance upon any other Purchaser, made
its own evaluation and decision to acquire the Series D Preferred Stock to be
acquired by it pursuant to this Agreement. Each Purchaser further acknowledges
that no other Purchaser has acted as an agent for such Purchaser or the Company
in connection with the acquisition of the shares of Series D Preferred Stock
hereunder and will not be acting as an agent for such Purchaser in connection
with monitoring its investment hereunder.
(b) Notices. All notices, requests, demands, approvals,
-------
consents, waivers or other communications required or permitted to be given
hereunder (each, a Notice") shall be in writing and shall be (a) personally
------
delivered, (b) transmitted by telecopy facsimile, provided that the original
copy thereof also is sent by pre-paid, first class, registered or certified mail
(return receipt requested) or by next-day or overnight mail (to any United
States address), or by an internationally recognized express delivery service
(to any foreign address), (c) sent by first class, registered or certified mail
(return receipt requested) or by next-day or overnight mail (to any United
States address), postage and charges prepaid, or (d) delivered by an
internationally recognized express delivery service (to any foreign address),
postage and charges prepaid:
(i) if to any Purchaser, at the address and numbers set forth
at the end of this Agreement, marked for attention as therein indicated;
(ii) if to the Company, to:
IFX Corporation
00000 X.X. 00 Xxxxx
Xxxxx 000
Xxxxx Xxxxx, XX 00000
Attention: Chief Executive Officer
Telephone Number: 000-000-0000
Telecopy Number: 000-000-0000
-24-
With a copy to:
Xxxx, Xxxxxx & Xxxxxxxxx
Xxx Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Telephone Number: 000-000-0000
Telecopy Number: 000-000-0000
or, in each case, at such other address and numbers as may have been furnished
in a Notice by such Person to the other parties. Any Notice shall be deemed
effective or given upon receipt (or refusal of receipt).
(c) Severability. Should any Section or any part of a Section
------------
within this Agreement be rendered void, invalid or unenforceable by any court of
law for any reason, such invalidity or unenforceability shall not void or render
invalid or unenforceable any other Section or part of a Section in this
Agreement.
(d) Governing Law. This Agreement shall be governed by and
-------------
construed and enforced in accordance with the internal laws of the State of New
York without regard to the principles of conflicts of law thereof. Each party
hereto hereby irrevocably submits to the nonexclusive jurisdiction of the courts
of the State of New York and of the United States of America sitting in the City
of New York, Borough of Manhattan, for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that the venue thereof may not be appropriate,
that such suit, action or proceeding is improper or that this Agreement or any
of the documents referred to in this Agreement may not be enforced in or by said
courts, and each party hereto irrevocably agrees that all claims with respect to
such suit, action or proceeding may be heard and determined in such a New York
state or federal court. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party in the manner provided in
Section 12(b) and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
(e) Publicity. Except as required by Applicable Law or the
---------
requirements of any securities exchange or market (in which case the nature of
the announcement shall be described to the other parties (and the other parties
shall be allowed reasonable time to comment) prior to dissemination to the
public), no party shall make any public announcement in respect of this
Agreement or the transactions contemplated hereby without the prior written
consent of the other parties.
-25-
(f) Captions and Section Headings. Captions or section headings
-----------------------------
contained in this Agreement are inserted as a matter of convenience and for
reference purposes only, and in no way define, limit, extend or describe the
scope of this Agreement or the intent of any provision hereof.
(g) Amendments and Waivers. Neither this Agreement nor any term
----------------------
hereof, may be changed, waived, discharged or terminated orally or in writing,
except that any term of this Agreement may be amended and the observance of any
such term may be waived (either generally or in a particular instance and either
retroactively or prospectively) with (but only with) the prior written consent
of the Company and all the Purchasers; provided, however, that no such amendment
-------- -------
or waiver shall extend to or affect any obligation not expressly waived or
impair any right consequent therein.
(h) Successors and Assigns. All rights, covenants and agreements of
----------------------
the parties contained in this Agreement shall, except as otherwise provided
herein, be binding upon and inure to the benefit of their respective successors
and assigns. This Agreement may not be assigned (by operation of law, contract
or otherwise) by any party hereto; provided, however, that each Purchaser may
-------- -------
assign or otherwise transfer its rights and obligations hereunder to: (i) any
Person who acquires shares of Series D Preferred Stock from any Purchaser or any
successor or assign of any Purchaser; or (ii) any successor-in-interest to
substantially all of such Purchaser's or successor's or assign's business
(whether by stock sale, asset sale or otherwise).
(i) Expenses. The Company agrees to pay the reasonable fees and
--------
reimburse the reasonable out-of-pocket expenses, including legal and accounting
fees and expenses, of UBS, upon receipt of the xxxx therefor, in connection with
the transactions contemplated by this Agreement and the Other Agreements. The
Company agrees to reimburse reasonable travel and lodging expenses of the
Purchasers in connection with attendance of the Purchasers' representatives at
meetings of the Board of Directors of the Company and other visits to the
Company associated with exercising or fulfilling any of its rights or
obligations under this Agreement or the Other Agreements.
(j) Entire Agreement. This Agreement (including the attached Exhibits
----------------
and Schedules) contains the entire agreement and understanding of the parties
and there are no further or other agreements or understandings, written or oral,
in effect between the parties relating to the subject matter hereof.
(k) Exhibits. The Exhibits and Schedules attached to this Agreement
--------
hereby are incorporated into and made a part of this Agreement.
(l) Further Assurances. Each party shall cooperate and take such
------------------
actions as may be reasonably requested by another party in order to carry out
the provisions and purposes of this Agreement and the Other Agreements and the
transactions contemplated hereby and thereby.
(m) Condition to Effectiveness. This Agreement shall become effective
--------------------------
only upon its execution and delivery by the Company and each Purchaser.
-26-
(n) Counterparts. This Agreement may be executed (including by
------------
facsimile transmission) with counterpart signature pages or in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(o) Attorneys' Fees. If any party initiates any legal action arising
---------------
out of or in connection with this Agreement or any of the Other Agreements, the
prevailing party in such legal action shall be entitled to recover from the
other party all reasonable attorneys' fees, expert witness fees and expenses
incurred by the prevailing party in connection therewith.
(p) Disclosure Generally. The Schedule of Exceptions shall be
--------------------
arranged in sections corresponding to the Sections contained in this Agreement,
and the disclosures in any section of the Schedule of Exceptions shall qualify
only (a) the corresponding section of this Agreement, and (b) other sections of
Section 4 to the extent it is clear (notwithstanding the absence of a specific
cross-reference) from a reading of the exception that such exception is
applicable to such other sections. The inclusion of any information in the
Schedules shall not be deemed to be an admission or acknowledgment, in and of
itself, that such information is material or has or would have a Material
Adverse Effect, or is outside the ordinary course of business.
(q) Covenant of Stockholders. At the Closing, (i) each of Shalom,
------------------------
Eidelstein and Casty will execute and deliver the Stockholders Agreement, and
(ii) and Casty will execute and deliver the Registration Rights Agreement. Each
of such parties shall cause their Affiliates owning shares of Common Stock or
Preferred Stock to also execute such agreements. Each of such parties also will
enter into any necessary documents to consent to the transactions contemplated
hereby.
(r) Consent of UBS Capital. Pursuant to Section 4(b) of the Series A
----------------------
Certificate, Section 4(b) of the Series B Certificate, and Section 4(c) of the
Series C Certificate, UBS Capital, as holder of one hundred percent (100%) of
the outstanding Series A Preferred Stock, Series B Preferred Stock and Series C
Preferred Stock, hereby (i) consents to the issuance of the Series D Preferred
Stock, (ii) waives any anti-dilution adjustments arising from the issuance of
the Series D Preferred Stock pursuant to the Agreement or the issuance of any
Conversion Shares upon conversion of Series D Preferred Stock in accordance with
the Series D Certificate and (iii) consents to the filing of the Amended
Certificate of Incorporation.
13. Definitions.
-----------
(a) Definitions. For the purposes of this Agreement, the following
-----------
terms shall have the meanings specified below:
"Action" has the meaning set forth in Section 4(g)(i).
------ ---------------
"Additional Shares" has the meaning set forth in Section 2(b).
----------------- ------------
"Affiliate" of a specified Person means (i) any Person that directly
---------
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such specified Person, or (ii) in the case of a
natural Person, such Person's spouse, parent or
-27-
lineal descendant (whether by blood or adoption and including stepchildren).
"Control" (including the terms "controlled by" and "under common control with")
------- ------------- -------------------------
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management policies of a Person, whether through the
ownership of voting securities, by contract or credit arrangement, as trustee or
executor, or otherwise.
"Agreement" shall mean this Agreement (including the Schedules and
---------
Exhibits hereto), as amended, supplemented or modified from time to time in
accordance with the provisions hereof.
"Amendment to the Certificate" means the Amendment to the Certificate
----------------------------
of Incorporation of the Company in form and substance identical to Exhibit G
---------
attached hereto.
"Applicable Law" shall mean, with respect to any Person, any and all
--------------
provisions of any constitution, treaty, statute, law, regulation, ordinance,
code, rule, judgment, rule of common law, order, decree, award, injunction,
Governmental Approval, concession, grant, franchise, license, agreement,
directive, guideline, policy, requirement, or other governmental restriction or
any similar form of decision of, or determination by, or any interpretation or
administration of any of the foregoing by, any Governmental Authority, whether
in effect as of the date hereof or thereafter and in each case as amended,
applicable to such Person or its subsidiaries or their respective assets.
"Benefit Plan" shall mean any plan, agreement or arrangement, formal
------------
or informal, whether oral or written, whereby the Company or any Subsidiary
provides any benefit to any present or former officer, director or employee, or
dependent or beneficiary thereof, including any profit sharing, deferred
compensation, stock option performance stock, pension, death benefit or other
fringe benefit, employee stock purchase, bonus, severance, retirement, health or
insurance plan.
"Board" shall mean the Board of Directors of the Company.
-----
"Business" shall mean the business of the Company and each of its
---------
Subsidiaries.
"Capital Stock Agreements" shall have the meaning set forth in Section
------------------------
4(c)(ii).
"Casty" has the meaning set forth in the first paragraph hereof.
-----
"Closing" has the meaning set forth in Section 2.
------- ---------
"Common Stock" has the meaning set in Section 4(c)(i).
------------
"Company" has the meaning set forth in the first paragraph hereof.
-------
"Consent" shall mean any consent, approval, authorization, waiver,
-------
permit, grant, franchise, concession, agreement, license, exemption or order of,
registration, certificate, declaration or filing with, or report or notice to,
any Person, including any Governmental Authority.
-28-
"Contracts" has the meaning set forth in Section 4(m)(i).
--------- ---------------
"Contracts Schedule" has the meaning set forth in Section 4(m)(i).
------------------
"Conversion Shares" has the meaning set forth in Section 4(c)(iii).
-----------------
"Convertible Securities" shall mean (i) any rights, options or
----------------------
warrants issued by the Company or any of its Subsidiaries to acquire Common
Stock or any capital stock of the Company or any Subsidiary, including the
shares of Series D Preferred Stock to be issued hereunder, (ii) any notes,
debentures, shares of preferred stock or other securities, options, warrants or
rights issued by the Company or any of its Subsidiaries, which are convertible
or exercisable into, or exchangeable for, Common Stock or any capital stock of
the Company or any Subsidiary and (iii) any contractual or other obligation
(whether fixed, contingent or otherwise) to issue shares of capital stock or
other securities of the Company or any Subsidiary in connection with the
acquisition of any securities, business or enterprise (including any Internet
Service Provider).
"$" or "dollars" shall mean lawful money of the United States of
- -------
America.
"Eidelstein" has the meaning set forth in the first paragraph hereof.
----------
"Encumbrance" shall mean any lien, encumbrance, hypothecation, right
-----------
of others, proxy, voting trust or similar arrangement, pledge, security
interest, collateral security agreement, limitations on voting rights,
limitations on rights of ownership filed with any Governmental Authority, claim,
charge, equities, mortgage, pledge, objection, title defect, title retention
agreement, option, restrictive covenant, restriction on transfer, right of first
refusal, right of first offer, statutory or contractual preemptive right or any
comparable interest or right created by or arising under Applicable Law, of any
nature whatsoever.
"Environmental Law" means any United States federal, state, local or
-----------------
foreign law, statute, rule or regulation or the common law relating to the
protection of human health or the environment, including, without limitation,
CERCLA (as defined below), the United States federal Resource Conservation and
Recovery Act of 1976 as amended (the "Recovery Act"), any statute, regulation or
------------
order pertaining to (i) treatment, storage, disposal, generation and
transportation of industrial, toxic or hazardous materials or substances or
solid or hazardous waste; (ii) air, water and noise pollution; (iii) groundwater
and soil contamination; (iv) the release or threatened release into the
environment of industrial, toxic or hazardous materials or substances, or solid
or hazardous waste, including, without limitation, emissions, discharges,
injections, spills, escapes or dumping of pollutants, contaminants, or
chemicals; (v) the protection of wild life, marine life and wetlands, including,
without limitation, all endangered and threatened species; (vi) storage tanks,
vessels, abandoned or discarded barrels, containers and other closed
receptacles; (vii) health and safety of employees and other persons; and (viii)
manufacture, processing, use, distribution, treatment, storage, disposal,
transportation or handling of pollutants, contaminants, toxic or hazardous
materials or substances or oil or petroleum products or solid or hazardous
waste. As used herein, the terms "release" and "environment" has the meaning
set forth in the United States federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA").
------
-29-
"Fully Diluted Basis" shall mean, when used with respect to
-------------------
outstanding shares of Common Stock, all shares of Common Stock which would be
outstanding after giving effect to the transactions contemplated by this
Agreement and assuming the exercise, conversion or exchange of all Convertible
Securities.
"GAAP" shall mean United States generally accepted accounting
----
principles consistently applied.
"Governmental Approvals" shall mean any action, order, authorization,
----------------------
consent, approval, license, lease, waiver, franchise, concession, agreement,
license, ruling, permit, tariff, rate, certification, exemption of, filing or
registration by or with, or report or notice to, any Governmental Authority.
"Governmental Authority" shall mean any nation or foreign or domestic
----------------------
government, any state or other political subdivision thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government (including, without limitation, any
government authority, agency, department, board, commission or instrumentality
of the United States, any State of the United States or any political
subdivision thereof), or any tribunal or arbitrator(s) of competent
jurisdiction, or any self-regulatory organization.
"include", "includes", "included" and "including" shall be construed
------- -------- -------- ---------
as if followed by the phrase "without being limited to".
"Intellectual Property" shall mean any and all worldwide,
---------------------
international, U.S. and/or foreign, patents, all applications therefor and all
reissues, reexaminations, continuations, continuations-in-part, divisions, and
patent term extensions thereof, inventions (whether patentable or not),
discoveries, improvements, concepts, innovations, industrial models, registered
and unregistered copyrights, copyright registrations and applications, author's
rights, works of authorship (including any text or artwork of any kind, and
software of all types in whatever medium, inclusive of computer programs, source
code, object code and executable code, and related documentation), URLs, web
sites, web pages and any part thereof, technical information, know-how, trade
secrets, drawings, designs, design protocols, specifications for parts and
devices, quality assurance and control procedures, design tools, manuals,
research data concerning historic and current research and development efforts,
including the results of successful and unsuccessful designs, databases and
proprietary data, proprietary processes, technology, engineering, discoveries,
formulae, algorithms, operational procedures, trade names, trade dress,
trademarks, domain names, and service marks, and registrations and applications
therefor, the goodwill of the business symbolized or represented by the
foregoing, customer lists and other proprietary information and common-law
rights.
"ITI" means International Technology Investments, LC, a Nevada limited
---
liability company.
"Material Adverse Effect" shall mean any event, circumstance,
-----------------------
occurrence, fact, condition, change or effect that is materially adverse to (i)
the Business, operations, results of operations, financial condition, prospects,
properties, assets or liabilities of the Company and its
-30-
Subsidiaries, taken as a whole, or (ii) the ability of the Company to perform
fully its obligations hereunder and under the Other Agreements and to consummate
the transactions contemplated hereby and thereby. For the purposes of this
Agreement, a currency devaluation or foreign exchange restriction or other
actions by any Governmental Authority limiting repatriation of capital or any
other material change in the governmental or political climate of the countries
in which the Company or its Subsidiaries carry out the Business shall be deemed
to have a Material Adverse Effect.
"Material Instruments" has the meaning set forth in Section 4(e).
-------------------- ------------
"Materials of Environmental Concern" means any chemicals, pollutants
----------------------------------
or contaminants, hazardous substances (as such term is defined under CERCLA),
solid wastes and hazardous wastes (as such terms are defined under the Recovery
Act), toxic materials, oil or petroleum and petroleum products, or any other
material subject to regulation under any Environmental Law.
"Notice" has the meaning set forth in Section 12(b).
------ -------------
"Other Agreements" has the meaning set forth in Section 4(b)(i).
---------------- ---------------
"Per Share Price" has the meaning set forth in Section 2.
--------------- ---------
"Person" or "person" shall mean any natural person, company,
------ ------
corporation, association, partnership, organization, business, firm, joint
venture, trust, unincorporated organization or any other entity or organization,
and shall include any Governmental Authority.
"Preferred Stock" has the meaning set forth in Section 4(c)(i).
--------------- ---------------
"Proxy Statement" shall have the meaning set forth in Section 6(c)(i).
--------------- ---------------
"Qualified Public Offering" shall mean an underwritten public offering
-------------------------
of shares of Common Stock for which the Company has obtained a firm commitment
from one or more underwriter(s) for at least $60 million of Common Stock and in
which the Company receives gross proceeds from the sale of Common Stock to the
public of at least $45 million (before deduction of underwriter's discounts and
commissions), and which values the equity of the Company at no less than $200
million pre-offering.
"Registration Rights Agreement" means the Third Amended and Restated
-----------------------------
Registration Rights Agreement to be entered into among the Company and the
stockholders of the Company, in form and substance identical to Exhibit F
---------
hereto.
"Requisite Stockholders" means UBS, Xxxxx, Xxxxxx, ITI and Eidelstein
----------------------
and their respective Affiliates holding voting stock of the Company.
"Schedule of Exceptions" has the meaning set forth in the first
----------------------
paragraph of Section 4.
---------
"Schedule of Purchasers" has the meaning set forth in the first
----------------------
paragraph hereof.
-31-
"SEC" shall mean the U.S. Securities and Exchange Commission or any
---
successor agency thereto.
"SEC Reports" has the meaning set forth in Section 4(w).
----------- ------------
"Securities Act" has the meaning set forth in Section 4(i).
-------------- ------------
"Series A Certificate" means the Amended Certificate of Designation,
---------------------
Numbers, Powers, Preferences and Relative, Participating, Optional and Other
Rights of Series A Preferred Stock in the form filed with the Secretary of State
of the State of Delaware.
"Series A Preferred Stock" has the meaning set forth in Section
------------------------
4(c)(i).
"Series B Certificate" means the Amended Certificate of Designation,
--------------------
Numbers, Powers, Preferences and Relative, Participating, Optional and Other
Rights of Series B Preferred Stock in the form filed with the Secretary of State
of the State of Delaware.
"Series B Preferred Stock" has the meaning set forth in Section
------------------------
4(c)(i).
"Series C Certificate" means the Amended Certificate of Designation,
--------------------
Numbers, Powers, Preferences and Relative, Participating, Optional and Other
Rights of Series C Preferred Stock in the form filed with the Secretary of State
of the State of Delaware.
"Series C Preferred Stock" has the meaning set forth in Section
------------------------
4(c)(i).
"Series D Certificate" has the meaning set forth in Section 1(a).
--------------------
"Shalom" has the meaning set forth in the first paragraph hereof.
------
"Shares" shall have the meaning set forth in Section 2.
------ ---------
"Stock Option Plan" means, collectively, the IFX Corporation Directors
-----------------
Stock Option Plan, the 1998 IFX Corporation Stock Option and Incentive Plan and
the IFX Corporation 2001 Stock Option Plan.
"Stockholders Agreement" means the Fourth Amended and Restated
----------------------
Stockholders Agreement to be entered into among the Company and the stockholders
of the Company, in form and substance identical to Exhibit E hereto.
---------
"Subsidiary" means any Person of which equity securities possessing a
-----------
majority of (i) the ordinary voting power in electing the board of directors, or
(ii) the outstanding capital stock or other equity interests, are, at the time
as of which such determination is being made, owned by the Company either
directly or indirectly through one or more Subsidiaries.
"Taxes" shall mean any domestic or foreign taxes, charges, feed,
-----
levies or other assessments, including any income, alternative, minimum,
accumulated earnings, personal holding company, franchise, capital stock, net
worth, capital, profits, windfall profits, gross receipts, value added, sales,
use, goods and services, excise, customs duties, transfer,
-32-
conveyance, mortgage, registration, stamp, documentary, recording, premium,
severance, environmental, real property, personal property, ad valorem,
intangibles, rent, occupancy, license, occupational, employment, unemployment
insurance, social security, disability, worker's compensation, payroll, health
care, withholding, estimated or other taxes, charges, fees, levies or other
assessments, and including any interest, penalties or additions relating
thereto, imposed by any Governmental Authority or other taxing authority.
"Transaction" has the meaning set forth in Section 6(d).
------------ ------------
"Tutopia Put Agreement" means the Amended and Restated Put Agreement to be
----------------------
entered into among the Company, UBS and the other parties named therein, in form
and substance identical to Exhibit G hereto.
---------
"Tutopia Stockholders Agreement" means that certain Amended and Restated
-------------------------------
Stockholders Agreement dated August 31, 2000, by and among Xxxxxxx.xxx, Inc.,
Latin Guide, Inc., UBS, LSC, LLC and the other holders of capital stock of
Xxxxxxx.xxx, Inc. named therein, as amended.
"UBS" shall mean (i) UBS Capital Americas III, L.P., a Jersey, Channel
----
Islands limited partnership, (ii) UBS Capital LLC, a Delaware limited liability
company and (iii) any Affiliate of either of the foregoing entities,
individually and collectively.
(b) Other Definitional Provisions. The words "hereof", "herein", and
----------------------------- ------- -------
"hereunder" and words of similar import shall refer to this Agreement as a whole
-----------
and not to any particular provision of this Agreement. Terms defined in the
singular shall have a comparable meaning when used in the plural and vice versa.
Whenever a representation or warranty made by a Person herein refers to the
knowledge of such Person, such knowledge shall be deemed to consist of the
actual knowledge of such Person or the knowledge which would have been present
after reasonable due inquiry by such Person. A Person (other than an
individual) will be deemed to have "knowledge" of a particular fact or other
----------
matter if any individual who is serving, or who has at any time served, as a
director, executive officer, member, partner, executor or trustee of such Person
(or a Person acting in any similar capacity) has, or any time had, actual
knowledge of such fact or other matter, or should have had knowledge thereof
given such individual's office or capacity and given industry standards or given
reasonable due inquiry by such individual.
[Remainder of Page Intentionally Left Blank]
-33-
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
IFX CORPORATION
By: /s/ Xxxx Xxxxxxxxxx
-----------------------
Name: Xxxx Xxxxxxxxxx
Title: President
Agreed and Accepted only as to
Section 12(q) hereof:
/s/ Xxx X. Xxxxx
------------------------------------
Xxx X. Xxxxx
/s/ Xxxxxxx Xxxxxx
------------------------------------
Xxxxxxx Xxxxxx
/s/ Xxxx Xxxxxxxxxx
------------------------------------
Xxxx Xxxxxxxxxx
-34-
Purchaser:
---------
The undersigned hereby executes and delivers this Agreement as of the
date first above written as one of the Purchasers referred to therein for the
purpose of purchasing from the Company the applicable Shares at the Closing.
UBS CAPITAL AMERICAS III, L.P.
By: UBS Capital Americas III, LLC
By: /s/ Xxxx Xxxx
---------------------------------
Name: Xxxx Xxxx
Title: Principal
By: /s/ Xxxx Xxxxx
----------------------------------
Name: Xxxx Xxxxx
Title: Chief Financial Officer
Address: UBS Capital Americas III, L.P.
c/o UBS Capital Americas III, LLC
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
With a copy
of Notices to: Xxxx Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
-35-
Purchaser:
---------
The undersigned hereby executes and delivers this Agreement as of the
date first above written as one of the Purchasers referred to therein for the
purpose of purchasing from the Company the applicable Shares at the Closing.
UBS CAPITAL LLC
By: /s/ Xxxx Xxxx
------------------------------
Name: Xxxx Xxxx
Title: Attorney-in-Fact
By: /s/ Xxxx Xxxxx
-------------------------------
Name: Xxxx Xxxxx
Title: Attorney-in-Fact
Address: UBS Capital LLC
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
Telephone No. (000) 000-0000
Telecopy No.: (000) 000-0000
With a copy
of Notices to: Xxxx Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxx, Esq.
Telephone No. (000) 000-0000
Telecopy No.: (000) 000-0000
-36-
Purchaser:
---------
The undersigned hereby executes and delivers this Agreement as of the
date first above written as one of the Purchasers referred to therein for the
purpose of purchasing from the Company the applicable Shares at the Closing.
INTERNATIONAL TECHNOLOGY INVESTMENTS, LC
By: /s/ Xxxxxxx Xxxxxx
-------------------------------
Xxxxxxx Xxxxxx, Manager
Address: ___________________
___________________
___________________
Attention:_________
Telephone No.: ___________________
Telecopy No.: ___________________
With a copy
of Notices to: Xxxxxx & Xxxxx
___________________
___________________
Attention:_________
Telephone No.: ___________________
Telecopy No.: ___________________
-37-
Purchaser:
---------
The undersigned hereby executes and delivers this Agreement as of the date
first above written as one of the Purchasers referred to therein for the purpose
of purchasing from the Company the applicable Shares at the Closing.
By: /s/ Xxxx Xxxxxxxx
----------------------------
Name: Xxxx Xxxxxxxx
Address: ______________________
______________________
______________________
______________________
Telephone No.: ______________________
Telecopy No.: ______________________
With a copy
-38-
EXHIBIT A
SCHEDULE OF PURCHASERS
IFX Corporation
Series D Preferred Stock
------------------------------------------------------------------------------------------------------------------------------------
Number of Shares of Cash Portion of Number of Shares to be
------------------- --------------- ----------------------
Series D Preferred Purchase Price be Assigned as Part
------------------ ----------------- -------------------
Purchaser Stock to be Purchased of Purchase Price
--------- --------------------- -----------------
------------------------------------------------------------------------------------------------------------------------------------
UBS Capital Americas III, L.P. 4,420,139 $3,166,666.80 712,500 shares of
Series C Preferred Stock
------------------------------------------------------------------------------------------------------------------------------------
UBS Capital LLC 232,639 $ 166,666.80 37,500 shares of Series
C Preferred Stock
------------------------------------------------------------------------------------------------------------------------------------
International 843,808 $ 812,499.60 333,450 shares of
Technology Common Stock
Investment LC
------------------------------------------------------------------------------------------------------------------------------------
LSC, LLC 843,808 $ 812,499.60 333,450 shares of
Common Stock
------------------------------------------------------------------------------------------------------------------------------------
Xxxx Xxxxxxxx 43,272 $ 41,666.40 17,100 shares of
Common Stock
------------------------------------------------------------------------------------------------------------------------------------
A-1
EXHIBIT B
FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF
SERIES D PREFERRED STOCK
OF
IFX CORPORATION
See attachment hereto.
B-1
EXHIBIT C
SCHEDULE OF EXCEPTIONS
See attachment hereto.
C-1
EXHIBIT D
FORM OF OPINION OF COMPANY COUNSEL
See attachment hereto.
D-1
EXHIBIT E
FORM OF FOURTH AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
See attachment hereto.
E-1
EXHIBIT F
FORM OF THIRD AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
See attachment hereto.
F-1
EXHIBIT G
FORM OF AMENDED AND RESTATED TUTOPIA PUT AGREEMENT
See attachment hereto.
G-1
EXHIBIT H
FORM OF AMENDMENT OF CERTIFICATE OF INCORPORATION
H-1
EXHIBITS
EXHIBIT A SCHEDULE OF PURCHASERS............................................. A-1
EXHIBIT B FORM OF CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF
SERIES D PREFERRED STOCK OF IFX CORPORATION........................ B-1
EXHIBIT C SCHEDULE OF EXCEPTIONS............................................. C-1
EXHIBIT D FORM OF OPINION OF COMPANY COUNSEL................................. D-1
EXHIBIT E FORM OF THIRD AMENDED AND RESTATED STOCKHOLDERS AGREEMENT.......... E-1
EXHIBIT F FORM OF SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT.. F-1
EXHIBIT G FORM OF TUTOPIA PUT AGREEMENT...................................... G-1
EXHIBIT H FORM OF AMENDMENT TO CERTIFICATE OF INCORPORATION.................. H-1
-ii-
TABLE OF CONTENTS
Page
1. Authorization of the Securities; Nature of Agreement................. 1
(a) Series D Preferred Stock............................................. 1
(b) Nature of Agreement.................................................. 1
2. Sale and Purchase of Series D Preferred Stock........................ 2
3. Purchase Price....................................................... 2
4. Representations and Warranties of the Company........................ 2
(a) Organization and Good Standing....................................... 2
(b) Authorization........................................................ 3
(c) Capital Stock........................................................ 3
(d) Subsidiaries......................................................... 5
(e) Compliance With Material Instruments................................. 5
(f) Good Title........................................................... 6
(g) Litigation........................................................... 6
(h) Tax Matters.......................................................... 6
(i) Registration Rights.................................................. 6
(j) Offering............................................................. 7
(k) Insurance............................................................ 7
(l) Certain Transactions................................................. 7
(m) Contracts............................................................ 7
(n) Governmental Consents................................................ 10
(o) Officers, Employees and Labor........................................ 10
(p) Compliance with Laws................................................. 11
(q) Intellectual Property................................................ 11
(r) Environmental Matters................................................ 12
(s) Certain Practices.................................................... 12
(t) Brokers.............................................................. 13
(u) No Undisclosed Liabilities........................................... 13
(v) Disclosure........................................................... 13
(w) SEC Filings.......................................................... 13
(x) Financial Statements................................................. 14
(y) Availability and Transfer of Foreign Currency........................ 14
-i-
TABLE OF CONTENTS
(continued)
Page
(z) Absence of Changes................................................... 14
(aa) Real Property Holding Company........................................ 15
(bb) Investment Company Act............................................... 15
(cc) Subchapter S......................................................... 16
(dd) State Takeover Statutes.............................................. 16
5. Representations and Warranties of the Purchasers..................... 16
(a) Investment Intent.................................................... 16
(b) Sophistication....................................................... 16
(c) Illiquidity.......................................................... 16
(d) Accredited Investor.................................................. 16
(e) Brokers.............................................................. 16
(g) Requisite Power and Authority........................................ 16
(h) No Conflict.......................................................... 17
6. Covenants............................................................ 17
(a) Pre-Closing Actions.................................................. 17
(b) Covenants Pending Closing............................................ 17
(c) Stockholder Approval; Information Statement.......................... 17
(d) No Solicitation...................................................... 18
(e) Books and Records.................................................... 18
(f) Post-Closing Covenants............................................... 19
(g) Inspection Rights.................................................... 20
(h) Listing Application.................................................. 20
7. Conditions to Obligations of the Purchasers.......................... 20
(a) Representations and Warranties....................................... 20
(b) Performance.......................................................... 20
(c) Absence of Litigation................................................ 20
(d) Opinion of Counsel to the Company and Subsidiaries................... 21
(e) Consents............................................................. 21
(f) Assignment of Intellectual Property.................................. 21
(g) Contemporaneous Transactions......................................... 21
(h) Closing Papers....................................................... 22
-ii-
TABLE OF CONTENTS
(continued)
Page
(i) Absence of Material Adverse Effect................................... 22
(j) Proceedings.......................................................... 22
(k) Legends.............................................................. 23
8. Conditions to the Obligations of the Company......................... 23
(a) Representations and Warranties....................................... 23
(b) Performance.......................................................... 23
9. Survival............................................................. 23
10. Termination.......................................................... 23
11. Effect of Termination................................................ 24
12. Miscellaneous Provisions............................................. 24
(a) Acknowledgment....................................................... 24
(b) Notices.............................................................. 24
(c) Severability......................................................... 25
(d) Governing Law........................................................ 25
(e) Publicity............................................................ 25
(f) Captions and Section Headings........................................ 25
(g) Amendments and Waivers............................................... 26
(h) Successors and Assigns............................................... 26
(i) Expenses............................................................. 26
(j) Entire Agreement..................................................... 26
(k) Exhibits............................................................. 26
(l) Further Assurances................................................... 26
(m) Condition to Effectiveness........................................... 26
(n) Counterparts......................................................... 26
(o) Attorneys' Fees...................................................... 27
(p) Disclosure Generally................................................. 27
13. Definitions.......................................................... 27
(a) Definitions.......................................................... 27
(b) Other Definitional Provisions........................................ 33
-iii-
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