1
EXHIBIT B
IFX CORPORATION
PURCHASE AGREEMENT
SERIES A CONVERTIBLE PREFERRED STOCK
DATED AS OF JUNE 15, 2000
2
TABLE OF CONTENTS
1. Authorization of the Securities; Nature of Agreement ............................... 1
(a) Series A Preferred Stock ........................................................ 1
(b) Nature of Agreement ............................................................. 2
2. Initial Sale and Purchase of Series A Preferred Stock .............................. 2
3. Subsequent Sale and Purchase of Preferred Stock .................................... 2
4. Representations and Warranties of the Company ...................................... 4
(a) Organization and Good Standing .................................................. 4
(b) Authorization ................................................................... 4
(c) Capital Stock ................................................................... 5
(d) Subsidiaries .................................................................... 6
(e) Compliance With Material Instruments ............................................ 6
(f) Good Title ...................................................................... 7
(g) Litigation ...................................................................... 7
(h) Tax Matters ..................................................................... 8
(i) Registration Rights ............................................................. 8
(j) Offering ........................................................................ 8
(k) Insurance ....................................................................... 8
(l) Certain Transactions ............................................................ 9
(m) Contracts ....................................................................... 9
(n) Governmental Consents ........................................................... 12
(o) Officers, Employees and Labor ................................................... 12
(p) Compliance with Laws ............................................................ 14
(q) Intellectual Property ........................................................... 14
(r) Environmental Matters ........................................................... 15
(s) Certain Practices ............................................................... 15
(t) Brokers ......................................................................... 16
(u) No Undisclosed Liabilities ...................................................... 16
(v) Disclosure ...................................................................... 16
(w) SEC Filings ..................................................................... 17
i
3
(x) Financial Statements ............................................................ 17
(y) Availability and Transfer of Foreign Currency ................................... 17
(z) Absence of Changes .............................................................. 17
(aa) Real Property Holding Company ................................................... 19
(bb) Investment Company Act .......................................................... 19
(cc) Subchapter S .................................................................... 19
(dd) State Takeover Statutes ......................................................... 19
5. Representations and Warranties of the Purchasers ................................... 19
(a) Investment Intent ............................................................... 19
(b) Sophistication .................................................................. 19
(c) Illiquidity ..................................................................... 20
(d) Accredited Investor ............................................................. 20
(e) Brokers ......................................................................... 20
(f) Requisite Power and Authority ................................................... 20
(g) No Conflict ..................................................................... 20
6. Covenants .......................................................................... 20
(a) Pre-Closing Actions ............................................................. 21
(b) Compliance with the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 ........ 21
(c) Covenants Pending Subsequent Closing ............................................ 21
(d) No Solicitation ................................................................. 22
(e) Books and Records ............................................................... 22
(f) Post-Closing Covenants .......................................................... 22
(g) Inspection Rights ............................................................... 23
7. Conditions to Obligations of the Purchasers ........................................ 24
(a) Representations and Warranties .................................................. 24
(b) Performance ..................................................................... 24
(c) Absence of Litigation ........................................................... 24
(d) Opinion of Counsel to the Company and Subsidiaries .............................. 24
(e) Consents ........................................................................ 24
(f) Assignment of Intellectual Property ............................................. 25
(g) Contemporaneous Transactions .................................................... 25
ii
4
(h) Closing Papers .................................................................. 26
(i) Absence of Material Adverse Effect .............................................. 26
(j) Proceedings ..................................................................... 26
(k) Legends ......................................................................... 26
(l) Private Equity Fee .............................................................. 27
(m) HSR Approval .................................................................... 27
8. Conditions to the Obligations of the Company ....................................... 27
(a) Representations and Warranties .................................................. 27
(b) Performance ..................................................................... 27
(c) HSR Approval .................................................................... 27
9. Survival ........................................................................... 27
10. Termination ........................................................................ 27
11. Effect of Termination .............................................................. 28
12. Miscellaneous Provisions ........................................................... 28
(a) Acknowledgment .................................................................. 28
(b) Notices ......................................................................... 28
(c) Severability .................................................................... 29
(d) Governing Law ................................................................... 29
(e) Publicity ....................................................................... 30
(f) Captions and Section Headings ................................................... 30
(g) Amendments and Waivers .......................................................... 30
(h) Successors and Assigns .......................................................... 30
(i) Expenses ........................................................................ 30
(j) Entire Agreement ................................................................ 31
(k) Exhibits ........................................................................ 31
(l) Further Assurances .............................................................. 31
(m) Condition to Effectiveness ...................................................... 31
(n) Counterparts .................................................................... 31
(o) Attorneys' Fees ................................................................. 31
(p) Disclosure Generally ............................................................ 31
13. Definitions ........................................................................ 31
iii
5
(a) Definitions ..................................................................... 31
(b) Other Definitional Provisions ................................................... 37
EXHIBITS
EXHIBIT A SCHEDULE OF PURCHASERS ............................................. A-1
EXHIBIT B CERTIFICATE OF DESIGNATION,
PREFERENCES AND RIGHTS OF SERIES
A 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 STOCKHOLDERS AGREEMENT ..................................... E-1
EXHIBIT F FORM OF REGISTRATION RIGHTS AGREEMENT .............................. F-1
EXHIBIT G FORM OF COMMITMENT LETTER .......................................... G-1
iv
6
IFX CORPORATION
PURCHASE AGREEMENT
This Purchase Agreement is made and entered into as of the 15 day of June,
2000, by and among IFX Corporation, a Delaware corporation (the "Company"), and
each Person listed on the Schedule of Purchasers attached as Exhibit A hereto
(the "Schedule of Purchasers") who executes this Agreement as a Purchaser (such
Persons are referred to in this Agreement, collectively, as the "Purchasers" and
individually, as a "Purchaser"). Unless defined elsewhere herein, capitalized
and other defined terms shall have the meanings specified in Section 13.
RECITALS
The Company desires to sell to the Purchasers, and the Purchasers desire to
purchase from the Company such number of shares of the Series A Convertible
Preferred Stock determined in accordance with Section 2 and 3 hereof for a total
aggregate purchase price for all shares of Series A Preferred Stock purchased
hereunder equal to Twenty Five Million Dollars ($25,000,000) to be purchased in
two installments consisting of an initial investment of $14,900,000 (the
"Initial Share Aggregate Purchase Price") at the Initial Closing (as defined
below) and, subject to the terms and conditions herein, an additional investment
of $10,100,000 (the "Additional Share Aggregate Purchase Price") at the
Subsequent Closing (as defined below). The shares will constitute one hundred
percent (100%) of all the issued and outstanding shares of the Series A
Preferred Stock of the Company as of the date of the final closing thereof, all
on the terms and conditions set forth herein.
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.
(a) Series A Preferred Stock. The Company has authorized the issuance
and sale pursuant to the terms and conditions of this Agreement of up to
2,030,869 shares of its Preferred Stock, $1.00 par value per share, to be
designated as Class I Series A Convertible Preferred Stock ("Class I Preferred")
or Class II Series A Preferred Stock ("Class II Preferred" and together with the
Class I Preferred, the "Series A Preferred Stock"), as provided herein. The
shares of Series A 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
7
Other Rights of Series A Convertible Preferred Stock of IFX Corporation (the
"Certificate"), a copy of which, in the form to be filed with the Secretary of
State of the State of Delaware, is attached hereto as Exhibit B hereto. Upon
issuance, Shares of Series A Preferred Stock shall be designated either Class I
Preferred or Class II Preferred as provided in this Agreement.
(b) Nature of Agreement. This Agreement insofar as it relates to the
purchase of a particular number of the Series A 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. Initial Sale and Purchase of Series A Preferred Stock. Subject to the
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 Class I Preferred indicated
as the Initial Shares opposite such Purchaser's name on the Schedule of
Purchasers (the "Initial Shares") for a purchase price of Twelve and 31/00
Dollars ($12.31) per share (the "Initial Per Share Price"). The initial sale and
purchase of the Series A Preferred Stock shall take place at the offices of
Xxxx, Scholer, Fierman, Xxxx & Handler, LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, at 10:00 a.m., New York City time, at a closing (the "Initial Closing")
on the date hereof. At the Initial Closing, the Company will deliver to each
Purchaser the Series A Preferred Stock to be purchased by such Purchasers 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
the Initial Closing and registered in such Purchaser's name (or in the name of
such Purchaser's nominee(s)), against delivery by such Purchaser to the Company
or its order of immediately available funds in the amount of the purchase price
for such shares of Series A Preferred Stock. If at the Initial Closing, the
Company shall fail to tender to any Purchaser the Series A Preferred Stock to be
purchased by such Purchasers, 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. Subsequent Sale and Purchase of Preferred Stock. Subject to the terms
and conditions set forth in this Agreement, including, among other things,
receipt of HSR Approval, the Company agrees to sell to the Purchasers, and each
of the Purchasers severally and not jointly agrees to purchase from the Company,
such Purchaser's pro rata portion (based on the number of Initial Shares
purchased) of the number of shares of Class II Preferred (the "Additional
Shares") and for a per share price (the "Closing Per Share Price") determined as
follows:
-2-
8
(a) If the Average Closing Price (as defined below) is less than or
equal to the Initial Per Share Price, then (i) the Closing Per Share Price shall
equal the Initial Per Share Price and (ii) the total number of Additional Shares
shall equal the Additional Share Aggregate Purchase Price divided by such
Closing Per Share Price.
(b) If the Average Closing Price is greater than the Initial Per Share
Price but less than $14.29, then (i) the Closing Per Share Price shall equal the
Average Closing Price and (ii) the total number of Additional Shares shall equal
the Additional Share Aggregate Purchase Price divided by such Closing Per Share
Price.
(c) If the Average Closing Price is greater than or equal to $14.29,
then (i) the Closing Per Share Price shall equal $18.74 and (ii) the total
number of Additional Shares shall equal 539,077 such that the weighted average
price per share of all shares purchased of the Initial Closing and the
Subsequent Closing shall be $14.29.
(d) The "Average Closing Price" shall mean the average of the closing
prices per share of the Common Stock as reported on the NASDAQ Small Cap Market
and published in The Wall Street Journal for the period of five (5) consecutive
trading days ending with (and including) the trading day immediately preceding
the Subsequent Closing.
The purchase and sale of such Additional Shares shall take place at the
offices of Xxxx, Scholer, Fierman, Xxxx & Handler, LLP, 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, at 10:00 a.m. New York City time, at a closing (the
"Subsequent Closing" and together with the Initial Closing, each a "Closing") to
be held as soon as practicable, but not more than ten (10) business days,
following receipt of HSR Approval. At the Subsequent Closing, the Company will
deliver to each Purchaser the Series A Preferred Stock to be purchased by such
Purchasers 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 the Subsequent Closing and registered in such Purchaser's name (or
in the name of such Purchaser's nominee(s)), against delivery by such Purchaser
to the Company or its order of immediately available funds in the amount of the
purchase price for such shares of Series A Preferred Stock. If at the Subsequent
Closing, the Company shall fail to tender to any Purchaser the Series A
Preferred Stock to be purchased by such Purchasers, 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 be reason of such failure or such nonfulfillment.
-3-
9
4. Representations and Warranties of the Company. Subject to the exceptions
set forth in the Schedule of Exceptions attached as Exhibit C hereto (the
"Schedule of Exceptions"), the Company represents and warrants to each of the
Purchasers that:
(a) Organization and Good Standing.
(i) The Company and each of its 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 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.
(ii) 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. The Company has all requisite right, 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 the Certificate) in connection with
the consummation of the transactions contemplated by this Agreement (the "Other
Agreements") and to perform its obligations and consummate all of the
transactions contemplated hereunder and thereunder, including the sale and
issuance of the shares of Series A Preferred Stock to be purchased by each
Purchaser at the Initial Closing and Subsequent 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.
(i) 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.
-4-
10
(ii) The shares of the Series A Preferred Stock to be purchased by
each Purchaser at the Initial Closing and Subsequent 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 A Preferred Stock (the
"Conversion Shares") (i) has been duly authorized, (ii) has been reserved for
issuance upon conversion of the Series A 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) (A) On the date hereof, the authorized capital stock of the
Company consists of (1) 50,000,000 shares of Common Stock, par value $.02 per
share (the "Common Stock"), of which 13,296,455 shares of Common Stock are
issued and outstanding, and (2) 10,000,000 shares of Preferred Stock, par value
$1.00 per share (the "Preferred Stock"), of which 2,030,869 shares of Preferred
Stock will have been designated Series A Preferred Stock and none of which
shares of Preferred Stock are issued and outstanding; and (B) immediately after
the Initial Closing, the authorized capital of the Company will consist of (1)
50,000,000 shares of Common Stock, of which 13,296,455 shares of Common Stock
will be issued and outstanding, and (2) 10,000,000 shares of Preferred Stock, of
which 2,030,869 shares of Preferred Stock will have been designated Series A
Preferred Stock and of which 1,210,398 shares of Series A Preferred Stock will
be issued and outstanding.
(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 or the Series A Preferred
Stock, or any other security of the Company or any of its Subsidiaries. Neither
the Company nor any of its 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
-5-
11
connection with the issuance of the shares of Series A 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 Closings, the Registration
Rights Agreement, the Stockholders Agreement or the 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, 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 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 on the
Schedule of Exceptions, the Company and each Subsidiary is not in violation of
(i) any
-6-
12
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 (collectively, the
"Material Instruments"). The execution and delivery by the Company of this
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 and sale of
the Series A 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 materially adversely affect 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 holder of any
indebtedness of the Company or any of its Subsidiaries to accelerate the
maturity of any such indebtedness or to increase the rate of interest presently
in effect with respect to such indebtedness, or (iii) result in the 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 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 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 knowledge of the Company, any basis
therefor or threat thereof).
-7-
13
(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 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
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 amended (the "Securities Act"), or any other
securities law of any jurisdiction, 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'
representations in Section 5 of this Agreement, the offer, issuance and sale of
the Series A Preferred Stock and the Conversion Shares 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 or issuance
of securities.
(k) Insurance. The Schedule of Exceptions contains a true, complete and
correct list of all insurance policies covering the Business and the respective
material
-8-
14
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
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 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"):
(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;
-9-
15
(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 this
Transaction;
(J) any joint venture, partnership and similar contracts
involving a sharing of profits or expenses (including joint
development and joint marketing contracts);
-10-
16
(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;
(L) any material sales agency, marketing or distributorship
agreements;
(M) any contracts which contain "take or pay" provisions;
(N) [Intentionally omitted];
(O) 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;
(P) 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
(Q) 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
-11-
17
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.
(n) Governmental Consents. Except with respect to HSR Approval, no
Governmental Approvals or 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 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
-12-
18
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 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 Closing
Date, will not
-13-
19
exceed the fair market value of the assets of each such Benefit Plan as of the
Closing Date.
(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" and "Tutopia" (including the
word "Unete" or "Tutopia" in combination with any non-military extension,
including Xxxxx.xxx, Xxxxx.xxx, Xxxxx.xxx, Xxxxxxx.xxx, Xxxxxxx.xxx and
Xxxxxxx.xxx). The domain names Xxxxx.xxx and Xxxxxxx.xxx, do 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, 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
-14-
20
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 compiled 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 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
-15-
21
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 A 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).
-16-
22
(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
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 A 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
A Preferred Stock or the Common Stock.
(z) Absence of Changes. Except as set forth in the Schedule of
Exceptions, since June 30, 1999, neither the Company nor any Subsidiary has:
(i) suffered any Material Adverse Effect;
-17-
23
(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 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
-18-
24
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.
(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 A Preferred Stock to be
purchased 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 A Preferred Stock to be purchased by it
pursuant to this Agreement and can afford to sustain a total loss of such
investment, and has such
-19-
25
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 A Preferred Stock.
(c) Illiquidity. Such Purchaser understands that there is no public
market for the shares of Series A Preferred Stock to be purchased 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 purchase its
respective shares of Series A 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) 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 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.
(g) 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.
-20-
26
(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 respective 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 A 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) Compliance with the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976. As promptly as practicable after the execution of this Agreement, the
Company and the Purchasers shall file notifications requesting early termination
of the waiting period under and in accordance with the Xxxx-Xxxxx-Xxxxxx Act of
1976, as amended (the "HSR Act") in connection with the consummation of the sale
of the Additional Shares contemplated herein and the acquisition by UBS of
preferred stock of Xxxxxxx.xxx, Inc. The parties shall promptly respond to any
inquiries received from the Federal Trade Commission or the Antitrust Division
of the Department of Justice in connection with such filings and shall cooperate
and use their reasonable best efforts to cause the expiration or early
termination of the waiting period in connection therewith ("HSR Approval"). The
parties acknowledge that such filings and the HSR Approval pursuant thereto
shall be deemed a condition precedent to the consummation of the sale of the
Additional Shares in addition to the conditions precedent applicable thereto set
forth in Section 7 and elsewhere in this Agreement. The costs and expenses
thereof (including filing fees) shall be borne by the Company.
(c) Covenants Pending Subsequent Closing. Pending the Subsequent
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 advise 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.
-21-
27
(d) No Solicitation. Except as otherwise expressly authorized in this
Agreement, from the date hereof to the Subsequent Closing, the Company and its
Subsidiaries shall (and shall cause their respective employees, directors,
agents 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.
(f) Post-Closing Covenants. Until the consummation of a Qualified
Public Offering, the Company will deliver to each holder of at least 100,000
shares of Series A Preferred Stock and/or Conversion Shares:
(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;
-22-
28
(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 Chief Operating Officer of the Company detailing the activities,
business developments, operating results and marketing efforts of the 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
Offer, each holder of at least 100,000 shares of Series A Preferred Stock and/or
Conversion shares 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.
-23-
29
(h) Post-Closing Covenant of Purchaser. Each Purchaser shall vote all
of the Series A Preferred Stock or any Conversion owned by it in favor of the
increase in the number of shares of Common Stock issuable under the 1998 Stock
Option and Incentive Plan, as amended from 1,800,000 to 2,400,000 at the next
meeting of the stockholders of the Company following the date hereof or by
written consent, as the case may be.
7. Conditions to Obligations of the Purchasers. The obligation of each of
the Purchasers to purchase and pay for the Series A Preferred Stock which it has
agreed to purchase at any Closing and the other obligations of each of the
Purchasers under this Agreement are subject to the fulfillment at or prior to
the respective 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 respective
Closing each of the representations and warranties of the Company set forth in
this Agreement that is qualified as to materiality 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 respective Closing with the same effect
as though such representations and warranties had been made at and as of the
date of the respective 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 respective 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.
(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 applicable 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
-24-
30
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 respective Closing:
(i) Each of the Stockholders Agreement and Registration Rights
Agreement shall have been executed and delivered by each party named on the
signature pages thereof;
(ii) (A) The Company shall have sold to each Purchaser, and each of
the Purchasers shall have purchased, the shares of Series A Preferred Stock to
be purchased at such Closing by such Purchaser under this Agreement, and (B) the
Company shall have delivered to each Purchaser certificates representing such
shares of Series A Preferred Stock, each registered in the name of such
Purchaser or the name of its nominee(s).
(iii) The Certificate in the form attached hereto as Exhibit B
hereto shall have been duly filed with the Secretary of State of the State of
Delaware. The Certificate shall be in full force and effect as of the Initial
Closing and shall not have been amended or modified.
(iv) Each of the Company and Xxxxxxx.xxx, Inc. shall have executed
and delivered to the Purchasers the Commitment Letter.
(v) The Subscription and Joint Venture Agreement, dated as of
November 23, 1998, among the Company, Emerging Networks, Inc., International
Technology Investments, LLC and Xxx X. Xxxxx, as amended by the First Amendment
to Subscription and Joint Venture Agreement dated as of March 22, 2000 shall
have been terminated and be of no further force or effect.
(vi) With respect to the Subsequent Closing, the acquisition by UBS
of preferred stock of Xxxxxxx.xxx, Inc. contemplated by the Commitment Letter
shall have been consummated on substantially the same terms as those outlined in
the Commitment Letter.
-25-
31
(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 respective 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 of the Company authorizing the adoption of the 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 Initial 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 respective
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 Agreements to be consummated at the respective Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to each Purchaser.
(k) Legends. (i) 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 respective 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.
-26-
32
(l) Private Equity Fee. At the time of each of the Initial Closing and
the Subsequent Closing, the Company shall have paid UBS Capital Americas III,
L.P., a private equity fee of 3% of the purchase price of the Shares purchased
in such Closing.
(m) HSR Approval. In connection with the Subsequent Closing, the HSR
Approval with respect to the sale of the Additional Shares shall have been
obtained.
8. Conditions to the Obligations of the Company. The obligations of the
Company under this Agreement are subject to the fulfillment on or prior to the
date of the respective 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 respective
Closing, each of the representations and warranties of the Purchasers 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 respective Closing with the same effect as
though such representations and warranties had been made at and as of the date
of the respective Closing.
(b) Performance. The Purchasers 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 them prior to the respective
Closing.
(c) HSR Approval. In connection with the Subsequent Closing, the HSR
Approval with respect to the sale of the Additional Shares shall have been
obtained.
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) and shall survive the Closings indefinitely. All other representations and
warranties of the Company contained herein shall expire at the second
anniversary of the Subsequent Closing. The representations and warranties of the
Purchasers contained herein shall survive the Subsequent Closing for a period of
two years. All covenants and agreements contained herein shall survive the
Closings indefinitely.
10. Termination. The obligations to purchase and sell Additional Shares
pursuant to Section 3 may be terminated:
(a) by mutual written consent of all of the parties hereto;
(b) by any of the Purchasers by written notice to the Company if any of
the conditions to the Subsequent Closing set forth in Section 7 shall not have
been fulfilled by 5:00 p.m. New York time on August 15, 2000, 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 Subsequent Closing; or
-27-
33
(c) by the Company or any of the Purchasers, by written notice to the
other parties, if the HSR Approval with respect to the sale of the Additional
Shares shall not have been obtained by 5:00 p.m. New York time on August 15,
2000, unless such failure shall be due in part to the failure of such party to
perform or comply with its obligations under Section 6(b).
11. Effect of Termination. If the obligations to purchase and sell
Additional Shares pursuant to Section 3 are terminated pursuant to the
provisions of Section 10, then Sections 3, 6(c), 6(d) and 6(e) of 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 purchase the Series A Preferred Stock to be purchased
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 purchase of the shares of Series A 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:
-28-
34
IFX Corporation
000 Xxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
Telephone Number: 000-000-0000
Telecopy Number: 000-000-0000
With a copy to:
Xxxx, Gerber & 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
-29-
35
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.
(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 A 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 the Purchasers, 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
-30-
36
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.
(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.
13. Definitions.
(a) Definitions. For the purposes of this Agreement, the following
terms shall have the meanings specified below:
-31-
37
"Action" has the meaning set forth in Section 4(g)(i).
"Additional Share Aggregate Purchase Price" has the meaning set forth
the Recitals.
"Additional Shares" has the meaning set forth in Section 3.
"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 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.
"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.
"Average Closing Price" has the meaning set forth in Section 3.
"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.
-32-
38
"Certificate" has the meaning set forth in Section 1(a).
"Closing(s)" has the meaning set forth in Section 3.
"Closing Per Share Price" has the meaning set forth in Section 3.
"Common Stock" has the meaning set in Section 4(c)(i).
"Commitment Letter" shall mean the commitment letter and attached term
sheet relating to UBS' acquisition of preferred stock of Xxxxxxx.xxx, Inc. in
form and substance identical to Exhibit G hereto.
"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.
"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)(iv).
"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 A
Preferred Stock to be issued hereunder, and (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.
"$" or "dollars" shall mean lawful money of the United States of
America.
"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.
-33-
39
"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").
"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.
"HSR Approval" has the meaning set forth in Section 6(b).
-34-
40
"include", "includes", "included" and "including" shall be construed as
if followed by the phrase "without being limited to".
"Initial Share Aggregate Purchase Price" has the meaning set forth in
the Recitals
"Initial Shares" has the meaning set forth in Section 2.
"Initial Per Share Price" has the meaning set forth in Section 2.
"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.
"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 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).
-35-
41
"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).
"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 $75 million of Common Stock and in
which the Company receives gross proceeds from the sale of Common Stock to the
public of at least $56.25 million (before deduction of underwriter's discounts
and commissions), and which values the equity of the Company at no less than
$400 million pre-offering.
"Registration Rights Agreement" means the 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.
"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.
"Securities Act" has the meaning set forth in Section 4(i).
"Series A Preferred Stock" has the meaning set forth in Section 1(a).
"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(y).
-36-
42
"Stock Option Plan" means the IFX Corporation Directors Stock Option
Plan and the 1998 IFX Corporation Stock Option and Incentive Plan.
"Stockholders Agreement" means the 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, 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).
"UBS" shall mean (i) UBS Capital Americas III, L.P., a Delaware 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
-37-
43
such individual's office or capacity and given industry standards or given
reasonable due inquiry by such individual.
-38-
44
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
IFX CORPORATION
/s/ Xxxx Xxxxxxxxxx
By: Xxxx Xxxxxxxxxx
Title: President
X-0
00
Xxxxxxxxx:
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 Initial Shares at the Initial Closing
and the Additional Shares at a Subsequent Closing.
UBS CAPITAL AMERICAS III, L.P.
By: UBS Capital Americas (LA-Advisors), LLC
By: /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
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
(LA - Advisors), LLC
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
S-2
46
With a copy
of Notices to: Xxxx, Scholer, Fierman, Xxxx & Handler, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
X-0
00
Xxxxxxxxx:
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 Initial Shares at the Initial Closing
and the Subsequent Shares at a Subsequent Closing.
UBS CAPITAL LLC
By: /s/ G.A. Xxxxxx
Name: Xxxxxx Xxxxxx
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, Scholer, Fierman, Xxxx & Handler, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
S-1
