EXHIBIT 1
SUBSCRIPTION AND JOINT VENTURE AGREEMENT
THIS SUBSCRIPTION AND JOINT VENTURE AGREEMENT (this "AGREEMENT") is
dated as of November 23, 1998 by and among IFX CORPORATION, a Delaware
corporation ("IFX"), EMERGING NETWORKS, INC., a corporation organized under the
laws of the British Virgin Islands (the "COMPANY"), and INTERNATIONAL TECHNOLOGY
INVESTMENTS, LC, a Florida limited liability company ("ITI"). IFX and ITI are
referred to herein collectively as the "INVESTORS." Xxx Xxxxx is a party to this
Agreement solely with respect to and for purposes of enforcing the obligations
set forth in Sections 3.3, 6.2 and 7.3.
W I T N E S E T H:
WHEREAS, the Company is a wholly-owned subsidiary of IFX/EN and, prior
to this Agreement, has 500,000 shares of no par value common stock ("COMPANY
COMMON STOCK") outstanding, all of which is owned by IFX/EN;
WHEREAS, IFX and ITI desire to create a joint venture, through the
Company, to provide Internet services in South America and other non-U.S.
jurisdictions and to pursue the acquisition of existing Internet service
providers and related businesses;
WHEREAS, the parties desire to fund the joint venture through (a)
contributions made to the Company by IFX, through IFX/EN, and (b) proceeds from
purchases made by ITI from IFX of shares of IFX common stock, par value $.02 per
share ("IFX COMMON STOCK"), which proceeds IFX will agree to contribute to the
capital of the Company, through IFX/EN, for and on behalf of ITI; and
WHEREAS, the parties hereto desire to set forth the terms and
conditions under which ITI may be entitled to purchase a significant ownership
interest in IFX and to set forth certain understandings with respect to
management of the affairs of the joint venture and the Company.
NOW, THEREFORE, in consideration of the foregoing, of the mutual
covenants and agreements herein contained and of other good and valuable
consideration, the receipt, adequacy and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Except as otherwise herein expressly provided, the following terms and
phrases shall have the meanings set forth below:
"AFFILIATE" means (a) in the case of an entity, any Person who
or which, directly or indirectly, through one or more intermediaries, controls
or is controlled by, or is under common control with, any specified Person or
(b) in the case of an individual, such individual's spouse, children,
grandchildren or parents or a trust primarily for the benefit of any of the
foregoing.
"AVERAGE STOCK PRICE" means the average of the closing sale
price of IFX Common Stock as reported by the Nasdaq SmallCap Market, or any
other stock exchange upon which IFX Common Stock may then be listed, on each of
the 20-consecutive trading days ending on and including the third trading day
immediately preceding a specified date.
"BONA FIDE PURCHASER" means any Person (other than an
Affiliate of any Investor or the Company) who or which (a) has delivered a good
faith written offer to purchase (i) all of an Investor's shares of Covered Stock
for cash, or (ii) all or substantially all of the capital stock, business or
assets of the Company, for cash or for capital stock that is listed on a
national stock exchange or on Nasdaq, (b) has assumed, in writing, the Disposing
Investor's rights and obligations hereunder (including the right to exercise the
Purchase Right, if applicable and still in effect), if applicable, and (c) has
the requisite financial resources necessary, in the reasonable opinion of the
Investors, to effect and fulfill the foregoing.
"BUSINESS DAY" means any day that is not a Saturday or a
Sunday or other day on which banks in Chicago, Illinois or Miami, Florida are
required or authorized by law to be closed.
"COMPLEMENTARY BUSINESS" means any business that operates in
the same industry as, has the same Standard Industry Classification as, or that
is complementary to or otherwise enhances the core business of, the Company,
including without limitation the business of providing Internet services.
"COVERED STOCK" means, with respect to ITI, all shares of IFX
Common Stock and, with respect to IFX, all shares of Company Common Stock, that
are (a) owned by an Investor as of the date of this Agreement, (b) acquired by
an Investor pursuant to the terms of this Agreement, including, without
limitation, any shares issued to any Investor pursuant to Section 2.1 and
Article IV, and (c) acquired by an Investor pursuant to any stock dividend,
stock split or other distribution effected by IFX or the Company, as applicable,
with respect to the foregoing shares.
"DISPOSE" or "DISPOSITION" (and any derivatives thereof) means
a voluntary or involuntary sale, pledge, assignment, transfer, conveyance or
other disposition of an Investor's Covered Stock, or any agreement, contract,
option or commitment to do any of the foregoing.
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"DGCL" means the General Corporation Law of the State of
Delaware, as in effect on the relevant date.
"EFFECTIVE DATE" means the date upon which this Agreement
becomes binding and enforceable against the parties hereto in accordance with
Article VI.
"NET CASH FLOW" means, with respect to any specified period,
the excess, if any, of (a) the sum of all cash receipts of the Company, on a
consolidated basis, from all sources during such period, including receipts from
operations, contributions of capital by the Investors, proceeds of borrowing or
from the issuance of securities by the Company, deposits and all other Company
cash sources, net sale proceeds and net financing proceeds, and all Company cash
reserves on hand, OVER (b) the sum of all cash expenses and capital expenditures
of the Company, on a consolidated basis, for such period, all payments of
principal and interest on account of any indebtedness of the Company, and such
reasonable cash reserves as of the last day of such period as the directors of
the Company deem necessary for the needs and operation of the Company and its
business (it being agreed that such needs shall include but are not limited to
amounts necessary to fund (i) known and contingent liabilities of the Company
and (ii) the planned and/or anticipated expansion of the Company and its
business).
"PERSON" means any individual, partnership, corporation,
limited liability company, joint venture, trust, firm, association,
unincorporated organization or other entity.
"PROPORTIONATE SHARE" means, with respect to any Investor, a
fraction, the numerator of which equals the sum of such Investor's Initial
Contribution (as defined in Section 4.1) plus any Additional Contributions (as
defined in Section 4.2) made by or for the benefit of such Investor as of the
applicable date and the denominator of which equals the sum of the Initial
Contributions of both Investors plus all Additional Contributions made by or on
behalf of the Investors as of the applicable date.
ARTICLE II
SUBSCRIPTION FOR IFX COMMON STOCK
II.1 SUBSCRIPTION. ITI hereby irrevocably subscribes for 500,000 shares
of IFX Common Stock for an aggregate purchase price of one million dollars
($1,000,000) (the "SUBSCRIPTION PRICE"). Concurrently with execution of this
Agreement and upon receipt from and against the payment by ITI of the
Subscription Price, IFX will deliver to ITI certificates representing 500,000
shares of IFX Common Stock.
II.2 INVESTMENT REPRESENTATIONS.
(a) ITI represents that it (i) is acquiring the IFX Common
Stock subscribed by and to be issued to it hereunder for its own account, for
investment only and not with a view to the resale or distribution thereof in
violation of the Securities Act of 1933, as amended (the "SECURITIES ACT"),
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(ii) is an "Accredited Investor," as defined in and within the meaning of
Regulation D promulgated under the Securities Act, (iii) is a sophisticated
investor whose officers and/or other representatives have such knowledge and
experience in financial and business matters, and are accustomed to handling
sophisticated financial matters independently, particularly business
investments, that they are able to evaluate the merits and risks associated with
investing in the IFX Common Stock and protecting ITI's interests in connection
with the transactions contemplated in this Agreement. ITI is able to bear the
substantial economic risks associated with ownership of IFX Common Stock,
including the risk of losing its entire investment, and can afford to hold the
IFX Common Stock to be acquired by it hereunder for an indefinite period of
time.
(b) ITI acknowledges receipt of copies of the following
filings made by IFX with the Securities and Exchange Commission (the
"COMMISSION"): IFX's annual report on Form 10-K and its annual report to
stockholders for the fiscal year ended June 30, 1998; and IFX's quarterly report
on Form 10-Q for its fiscal quarter ended September 30, 1998. ITI represents
that it (i) has reviewed such reports and statements, and (ii) has been afforded
the opportunity to ask questions and receive answers from personnel of IFX or of
others acting on its behalf concerning IFX and the IFX Common Stock and to
obtain any additional information that IFX possesses or can acquire without
unreasonable effort or expense that is necessary to verify any of the
information contained in any such filings.
(c) ITI understands and acknowledges that (i) the IFX Common
Stock to be issued hereunder has not been registered under the Securities Act or
any applicable securities laws and will be issued pursuant to an exemption from
such registration in reliance upon the representations and warranties of ITI
contained herein, (ii) the IFX Common Stock to be issued hereunder may not be
sold, transferred or otherwise disposed of unless subsequently registered under
the Securities Act and applicable securities laws or unless an exemption from
such registration is available, and (iii) each certificate representing the IFX
Common Stock to be acquired by ITI hereunder will be imprinted with a legend in
substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE FEDERAL SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
ANY STATE LAWS OF ANY JURISDICTION. NO SALE, OFFER TO SELL, ASSIGNMENT,
PLEDGE, HYPOTHECATION, GIFT, TRANSFER OR OTHER DISPOSITION OF THE
SHARES REPRESENTED BY THIS CERTIFICATE MAY BE MADE UNLESS A
REGISTRATION STATEMENT WITH RESPECT TO SUCH SHARES IS THEN IN EFFECT
UNDER THE ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
ACT IS AVAILABLE WITH RESPECT TO SAID TRANSFER AND THE REQUIREMENTS OF
APPLICABLE STATE LAWS ARE SATISFIED.
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ARTICLE III
DIRECTORS; LIMITATIONS ON ACTIVITIES
III.1 ELECTION OF DIRECTORS OF THE COMPANY.
(a) The Investors shall take or cause to be taken all actions
necessary to ensure the election to the Board of Directors of the Company of:
(i) two individuals nominated by IFX (the "IFX
DIRECTORS"); and
(ii) two individuals nominated by ITI (the "ITI
DIRECTORS").
(b) If any IFX Director or ITI Director shall be unable or
unwilling to serve or to continue serving as a director of the Company, then IFX
or ITI, respectively, shall be entitled to nominate a replacement to be elected
or appointed in the manner set forth in Section 3.1(a). Any Investor may cause
any person nominated by it to be removed from the Company's Board of Directors,
with or without cause, and would be entitled to nominate a replacement, in the
manner set forth in Section 3.1(a), to fill the vacancy so created; PROVIDED,
HOWEVER, that nothing herein shall be deemed to restrict or prohibit the rights
of the Board of Directors or stockholders of the Company from seeking the
removal of any IFX Director or ITI Director for cause or in the event such
removal is deemed to be in the best interests of the Company.
(c) To the extent feasible and consistent with the best
interests of the Company and the fiduciary duties of its directors and officers,
the parties hereto will endeavor to ensure that as few meetings of the Board of
Directors as possible will be called during any period in which a vacancy exists
on the Board of Directors that either Investor is entitled to fill pursuant to
this Section 3.1.
III.2 APPROVAL OF CERTAIN ACTIVITIES. The Company may not take any of
the following actions unless at least one IFX Director and at least one ITI
Director have voted to take all actions necessary to approve, authorize, adopt
or ratify the same:
(a) acquire the assets, voting securities or other equity
interests of, or other investment or ownership interest in, any Person, whether
effected as a stock purchase, asset purchase, merger or consolidation, other
than acquisitions of Complementary Businesses;
(b) effect a sale of all or substantially all of the business,
capital stock or assets of the Company, whether by sale, merger, consolidation
or otherwise, other than pursuant to Section 5.2 or 5.3;
(c) issue any shares of Company Common Stock or other capital
stock of the Company to any Person, other than (i) to IFX (or a designated
Affiliate of IFX) pursuant to this Agreement, (ii) in connection with the
acquisition of Complementary Businesses, and (iii) pursuant
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to options to purchase Company Common Stock that may be granted to employees,
officers and/or directors of the Company under any compensation or option plan
approved by the Board;
(d) alter or amend the Articles of Incorporation or By-laws of
the Company, as the same are in effect on the date hereof; or
(e) enter into any contract, agreement, arrangement or
understanding to do or effect any of the foregoing.
III.3 REPRESENTATION ON IFX BOARD OF DIRECTORS.
(a) For so long as the Purchase Right (as defined in Section
4.3) remains in effect and is exercisable, each of IFX, Xxx Xxxxx and ITI agree
to use its or his reasonable best efforts to take or cause to be taken all
actions necessary (including to vote all of his/its shares of IFX Common Stock
at any annual or special meeting of the stockholders of IFX at which directors
are to be elected or vacancies on the Board of Directors are to be filled) to:
(i) elect to the Board of Directors of IFX one
individual nominated by ITI (the "ITI REPRESENTATIVE") and one
individual nominated by Xxx Xxxxx (the "CASTY REPRESENTATIVE"); and
(ii) ensure that IFX does not effect any consolidation,
merger or amalgamation with, or acquire any interest in, any other
Person, or enter into any contract, agreement or arrangement with
respect to the same, unless the ITI Representative and the Casty
Representative has voted in favor of IFX taking all actions necessary
to approve, authorize, adopt or ratify the same; PROVIDED, HOWEVER,
that the foregoing shall not prohibit any such actions taken (A)
pursuant to Section 5.3, (B) in the ordinary course of IFX's or its
subsidiaries business, (C) with respect to the Company's potential
investment in Xxxxxx.Xxx, L.P., or (D) with respect to Complementary
Businesses; PROVIDED, FURTHER, that the foregoing shall not prohibit or
restrict IFX, during any period in which there is no ITI Representative
or Casty Representative serving on the IFX Board of Directors, from
taking any action that IFX's Board of Directors deems to be in IFX's
best interest or is necessitated by the fiduciary responsibilities of
IFX's directors or officers.
(b) The initial Casty Representative is Xxxx Xxxxxxxxxx and
the initial ITI Representative is Xxxxxx X. Xxxxxxx, who shall be nominated for
election to the IFX Board of Directors as soon as practicable as of the
Effective Date of this Agreement. At any time, ITI may cause the Person serving
as the ITI Representative and Xxx Xxxxx may cause the Person serving as the
Casty Representative to be removed, with or without cause, and nominate another
Person for election pursuant to Section 3.3(a) as the ITI Representative or
Casty Representative, as appropriate; PROVIDED, HOWEVER, that nothing herein
shall be deemed to restrict or prohibit the rights of the Board of Directors or
stockholders of IFX from seeking the removal of the ITI Representative or the
Casty Representative for cause or in the event such removal is deemed to be in
the best interests of IFX.
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III.4 ARTICLES OF INCORPORATION; BY-LAWS. From and after the date
hereof each Investor shall take or cause to be taken all actions necessary to
ensure that the Articles of Incorporation and By-Laws of the Company or such
Investor, as applicable, do not, at any time, conflict with the provisions of
this Agreement.
ARTICLE IV
CAPITAL CONTRIBUTIONS; PURCHASE RIGHT
IV.1 INITIAL CONTRIBUTIONS. Upon receipt of and in consideration for
the Subscription Price, IFX shall cause to be contributed to the capital of the
Company the sum of two million dollars ($2,000,000) (the "INITIAL
CONTRIBUTIONS"), of which one million dollars ($1,000,000) shall represent the
Initial Contribution of IFX and one million dollars ($1,000,000) shall represent
the Initial Contribution of ITI. In consideration for IFX's Initial
Contribution, the Company shall issue to IFX (or a designated Affiliate of IFX)
500,000 shares of Company Common Stock.
IV.2 ADDITIONAL CAPITAL CONTRIBUTIONS.
(a) In the event that the Company requires capital to finance
the development or operation of its business, in excess of the Initial
Contributions and funds otherwise available to the Company (including loans
available on economically favorable terms from third parties), the Company may
seek additional capital contributions from the Investors in accordance with this
Section 4.2 (any and all amounts contributed to the capital of the Company,
directly or indirectly, by or on behalf of IFX or ITI pursuant to this Section
4.2 shall constitute "ADDITIONAL CONTRIBUTIONS" of such Investor); PROVIDED,
HOWEVER, that no Investor shall be obligated to make Additional Contributions;
PROVIDED, FURTHER that no Investor shall be entitled to make aggregate
Additional Contributions in excess of three million dollars ($3,000,000) unless
and until it receives a Capital Request (as defined herein). In determining an
Investor's Additional Contributions, all amounts contributed by IFX (through
IFX/EN) to the capital of the Company on behalf of ITI that consist of proceeds
from purchases made hereunder by ITI of shares of IFX Common Stock shall
constitute Additional Contributions of ITI, and not of IFX.
(b) The Company may request Additional Contributions by
delivering to the Investors a written request specifying, in reasonable detail,
the facts supporting the request for Additional Contributions, the amount of
Additional Contribution requested and the date by which an Investor desiring to
make such Additional Contribution must respond (any such request shall
constitute a "CAPITAL REQUEST"). Each Additional Contribution shall be funded on
a date (the "FUNDING DATE") mutually agreed by the Company and the Investor
making such Additional Contribution. In the event that both Investors deliver
written notice to the Company, within 10 Business Days after delivery of any
Capital Request, agreeing to make a requested Additional Contribution, each
Investor shall be entitled to fund it Proportionate Share of the requested
Additional Contribution.
(c) In the event that IFX agrees to make any Additional
Contributions, the
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Company shall issue to IFX (or to a designated Affiliate of IFX) one additional
share of Company Common Stock for each $2.00 of Additional Contributions made by
IFX. In the event that ITI agrees to make any Additional Contributions, (i) ITI
shall be deemed to have subscribed to purchase from IFX such number of shares of
IFX Common Stock that is equal to the amount of such Additional Contribution
divided by $2.00, and (ii) IFX shall cause to be contributed to the capital of
the Company, for and on behalf of ITI, such aggregate subscription price.
Notwithstanding the foregoing, ITI's right to make Additional Contributions and
to receive additional shares of IFX Common Stock therefor shall terminate upon
the closing of ITI's exercise of the Purchase Right. Certificates representing
shares of Company Common Stock or IFX Common Stock issuable in connection with
any Additional Contributions shall be issued and delivered to the applicable
Investor on the Funding Date of such Additional Contribution. Upon payment of
any Additional Contributions, ITI shall be deemed to represent and warrant to
IFX that the "Investment Representations" set forth in Section 2.2 are accurate
and complete as of the Funding Date and, upon the request of IFX, ITI shall
execute and deliver to IFX an officer's certificate confirming the same.
IV.3 PURCHASE RIGHT.
(a) At any time during the Option Period (as defined herein),
ITI shall be entitled to purchase from IFX, and IFX shall be obligated to sell
to ITI, an aggregate of 6,000,000 shares of IFX Common Stock, less the number of
shares of IFX Common Stock issued to ITI in consideration for the Initial
Contribution and any Additional Contributions previously made by or on behalf
ITI, for a purchase price equal to twelve million dollars ($12,000,000), less
the sum of the Initial Contribution and any Additional Contributions previously
made by or on behalf of ITI (the "PURCHASE RIGHT"). The "OPTION PERIOD" means
the three-year period commencing with the first calendar month beginning after
the Effective Date of this Agreement. Unless previously exercised, the Purchase
Right will expire on the last day of the Option Period; PROVIDED, HOWEVER, that
if ITI makes Additional Contributions equal to three million dollars
($3,000,000) or more prior to the last day of the Option Period, then the
exercisability of the Purchase Right automatically shall be extended for an
additional 24-month period, commencing with the first calendar month beginning
after the last day of the initial Option Period.
(b) To exercise the Purchase Right, ITI must deliver to IFX
written notice of exercise (the "EXERCISE NOTICE"), signed by ITI and specifying
a proposed closing date, which shall occur no sooner than 20 Business Days and
no later than 30 Business Days following the date of delivery of the Exercise
Notice. To be effective, ITI must exercise the Purchase Right in full; no
partial or pro rata exercise of the Purchase Right shall be valid. Upon
delivery, such notice shall be irrevocable. The closing of the Purchase Right
shall be held at the offices of IFX or of counsel to IFX.
ARTICLE V
RESTRICTIONS ON TRANSFER
V.1 GENERAL TRANSFER RESTRICTION. Each Investor covenants and agrees
that it will not, and
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it will not permit its Affiliates to, Dispose or cause the Disposition of such
Investor's shares of Covered Stock or any interest therein for a period of three
years after the Effective Date of this Agreement, except in accordance with the
terms and conditions of this Article V; PROVIDED THAT, except for the 500,000
shares of IFX Common Stock acquired by ITI pursuant to Section 2.1 (which shares
remain subject to the foregoing restrictions notwithstanding Section 7.3), ITI
also may Dispose of any other shares of its Covered Stock pursuant to Section
7.3. Any attempted Disposition not in accordance with the terms and conditions
of this Agreement shall be null and void and of no force or effect.
V.2 FORCED DISPOSITION OF IFX COMMON STOCK.
(a) In the event that, prior to expiration of the Option
Period, ITI fails to either (i) make Additional Contributions equal to at least
three million dollars ($3,000,000), or (ii) exercise the Purchase Right, and the
Average Stock Price as of the date the Purchase Right expires is less than $2.00
per share, then ITI shall be entitled, for 60 days thereafter, to effect the
sale of all but not less than all of its shares of Covered Stock to a Bona Fide
Purchaser; PROVIDED THAT if, prior to expiration of the Option Period, IFX has
made Additional Contributions equal to at least three million dollars
($3,000,000), then in connection with the purchase of all of ITI's shares of
Covered Stock such Bona Fide Purchaser also must make Additional Contributions
equal to at least three million dollars ($3,000,000), less any Additional
Contributions made by ITI prior to expiration of the Option Period. ITI promptly
shall deliver to IFX and the Company a copy of each purchase offer it receives
from a Bona Fide Purchaser, if any.
(b) If ITI fails to consummate a Disposition of its shares of
Covered Stock within the 60-day period set forth in Section 5.2(a), then:
(i) IFX shall use its commercially reasonable efforts to
cause the sale of all or substantially all of the capital stock,
business or assets of the Company to a Bona Fide Purchaser; and
(ii) following such sale and subject to ITI's surrender
to IFX of certificates evidencing all of ITI's shares of Covered Stock,
together with duly executed stock powers in favor of IFX, remit to ITI
its Proportionate Share of the proceeds of the sale of the Company, net
of reasonable expenses incurred by IFX or the Company in connection
with such sale.
V.3 FORCED DISPOSITION OF COMPANY COMMON STOCK.
(a) In the event that, prior to expiration of the Option
Period, IFX fails to make Additional Contributions equal to at least three
million dollars ($3,000,000), then ITI shall be entitled to require IFX to
purchase all of ITI's shares of IFX Common Stock and, as consideration therefor,
to transfer to ITI all of IFX's shares of Company Common Stock. To effect the
transaction set forth in this Section 5.3, ITI shall deliver to IFX, no later
than 90 days after expiration of the
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Option Period, an irrevocable written notice of exercise, which notice shall
specify a transfer date no earlier than 30 days after IFX's receipt of such
notice.
V.4 TERMS OF DISPOSITIONS. All dispositions of Covered Stock made
pursuant to this Article V shall be subject to the following terms:
(a) the Investor Disposing of its shares shall deliver to the
transferee certificates evidencing the shares being Disposed, together with duly
executed stock transfer powers in favor of the transferee and such other
documents, including evidence of ownership and authority, as the transferee may
reasonably request;
(b) the Investor Disposing of its shares shall not be required
to make any representations or warranties to the transferee in connection
therewith, except as to (i) good title and the absence of Encumbrances with
respect to the shares being Disposed, (ii) such Investor's valid existence and
good standing (if applicable), (iv) the legal capacity and authority for, and
validity and binding effect of (as against such Investor) any agreement entered
into by such Investor in connection with such Disposition, (v) all required
material consents, approvals and authorization to such Investor's Disposition
having been obtained and (vi) the fact that no broker's commission is payable by
or on behalf of such Investor as a result of its participation in the
Disposition;
(c) the Investor that is Disposing of its shares shall not be
required to indemnify any Person in connection with such Disposition except with
respect to breach of the representations and warranties specified in Section
5.4(b); and
(d) if any Disposition does not occur as a result of the
breach of this Agreement by the Disposing Investor, then the non-breaching
Investor shall be entitled to cause IFX or the Company, as applicable, to (i)
cause a notation to be made on the books and records of IFX or the Company,
respectively, to reflect the Disposition of the breaching Investor's shares of
Covered Stock in accordance with this Agreement without the necessity of
obtaining such breaching Investor's consent or surrender of certificates
representing its Covered Stock, and (ii) hold back the proceeds of the transfer
otherwise payable to such breaching Investor, in a non-interest bearing account,
pending compliance by such breaching Investor with its obligations hereunder.
V.5 EQUITABLE REMEDIES. Each Investor acknowledges and agrees that
money damages alone would not be an adequate remedy for any breach of this
Article V. Each Investor agrees that, in the event of a breach or threatened
breach by any Investor of any provision of this Article V, the non-breaching
Investor (a) may seek specific performance of the provisions thereof, and the
breaching Investor shall be estopped from asserting adequacy of a remedy at law
as a defense to an action for specific performance hereunder, and/or (b) shall
be entitled to an injunction restraining the breaching Investor from taking any
action, or omitting to take any action, that could constitute such a breach.
Each Investor agrees not to oppose the granting of such equitable relief and
agrees to waive any requirement for the non-breaching Investor to secure or post
a bond in connection with such remedy.
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ARTICLE VI
EFFECTIVENESS OF THIS AGREEMENT
VI.1 CONDITIONS PRECEDENT. The effectiveness of this Agreement is
subject to, and this Agreement shall become effective and legally binding upon
the parties hereto on the first Business Day immediately after, the satisfaction
of all of the following conditions (the "EFFECTIVE DATE"):
(a) IFX shall have obtained from its stockholders, the
Commission, the Nasdaq Stock Market, Inc. and other applicable governmental,
regulatory or administrative authorities, if any, all approvals, consents and
other authorizations necessary for the grant to ITI and future consummation of
the Purchase Right;
(b) each of the Investors shall have paid its Initial
Contributions to the Company or to IFX, as applicable, and ITI shall have
received a certificate(s) representing 500,000 shares of IFX Common Stock and
IFX (or its designated Affiliate) shall have received a certificate(s)
representing 500,000 shares of Company Common Stock; and
(c) no action, claim, suit or proceeding shall be pending, or,
to the knowledge of the parties hereto, threatened, by or before any
governmental, regulatory or administrative authority against the Company or
either Investor, which seeks to delay or prevent the grant or consummation of,
or could materially adversely affect the ability of ITI to consummate, the
Purchase Right.
VI.2 COOPERATION. Each of Xxx Xxxxx and ITI agrees to use his/its
reasonable best efforts to take or cause to be taken all actions necessary or
advisable to consummate the transaction contemplated hereby, including to vote,
or to cause the vote of, all of his/its shares of IFX Common Stock at any annual
or special meeting of the stockholders of IFX in favor of the approval by the
stockholders of IFX of the transactions contemplated herein and of IFX's
execution of this Agreement.
ARTICLE VII
ADDITIONAL AGREEMENTS
VII.1 RESERVATION OF IFX COMMON STOCK. At all times from the Effective
Date until the exercise of the Purchase Right or expiration of Option Period
(including any extensions thereof), IFX agrees to reserve a sufficient number of
authorized but unissued shares of IFX Common Stock to enable it to fulfill the
Purchase Right. IFX shall take all steps required by applicable law and
regulation and required under its certificate of incorporation to enable IFX to
issue such IFX Common Stock to ITI on the closing date of the Purchase Right, if
exercised.
VII.2 INTERESTED INVESTOR STATUS. IFX will cause its Board of Directors
to adopt a resolution approving all of the transactions contemplated by this
Agreement that could be deemed to be a "business combination" as defined in
Section 203 of DGCL between IFX and ITI that causes ITI to be considered an
"interested stockholder" of IFX as defined in Section 203 of the DGCL,
including,
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without limitation, additional issuances of IFX Common Stock to ITI upon
exercise of the Purchase Right. IFX also shall cause its Board of Directors to
adopt a resolution authorizing ITI, if it becomes an "interested stockholder" of
IFX as defined in Section 203 of the DGCL, to vote, for all purposes, all shares
of IFX Common Stock ITI receives.
VII.3 REGISTRATION OF IFX COMMON STOCK.
(a) During the Registration Period (as defined herein) and
subject to Section 5.1, each of ITI and Xxx Xxxxx (for purposes of this Section
7.3, the "STOCKHOLDERS") shall be entitled to require IFX, on three separate
occasions, to register under the Securities Act all or any portion of the shares
of IFX Common Stock owned by such Stockholder (each, a "DEMAND REGISTRATION").
The "REGISTRATION PERIOD" will commence on the date one year after the Effective
Date and will end on the date one year after the date on which the Purchase
Right expires. To be effective, a request for a Demand Registration must be in a
writing, signed by the requesting Stockholder and specify the number of shares
of IFX Common Stock that such Stockholder desires to register.
(b) IFX promptly shall deliver a copy of each Demand
Registration request to the other Stockholder. Such other Stockholder shall be
entitled to require IFX to include, in the registration statement to be filed in
connection with such Demand Registration request, such number of his/its shares
of IFX Common Stock as such Stockholder may specify in a writing delivered to
IFX no later than 15 days after such Stockholder's receipt of the Demand
Registration request. The exercise by a Stockholder of its "piggyback"
registration rights under this Section 7.3(b) shall not constitute such
Stockholder's exercise of a Demand Registration.
(c) If a Demand Registration is requested, IFX shall use its
reasonable best efforts to file with the Commission, within 60 days after
receipt of such written request, and to cause to become effective under the
Securities Act, a registration statement on Form S-3 (or any successor or
replacement form) covering the resale of the IFX Common Stock owned by the
requesting Stockholder. If effectiveness during any period is not permitted by
regulations promulgated or policies enunciated by the Commission, or would
preclude reliance upon the exemption from registration relied upon by IFX in
connection with the issuance of IFX Common Stock pursuant to this Agreement,
then IFX will use its reasonable best efforts to cause such registration
statement to become effective as soon as practicable thereafter.
(d) If at any time during the Registration Period IFX proposes
to file with the Commission a registration statement to register the public sale
under the Securities Act of shares of IFX Common Stock for IFX's own account on
a form of registration statement and in a manner that would permit registration
of all or any portion of the shares of IFX Common Stock owned by the
Stockholders (other than a registration statement on Form S-8 or S-4) (any such
registration statement and any registration statement filed in response to a
Demand Registration, as the same may be amended or supplemented, the
"REGISTRATION STATEMENT"), then IFX will give written notice of such proposed
filing to the Stockholders at least 30 days before IFX's anticipated filing
date. Such notice shall constitute an offer to each of the Stockholders to
include in such Registration Statement
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such shares of IFX Common Stock owned by any Stockholder as such Stockholder may
request in writing within 15 days after receipt of IFX's notice. IFX shall
include in any such Registration Statement all such shares of IFX Common Stock
requested to be included. Notwithstanding the foregoing, if the managing
underwriter or underwriters of any such offering advise IFX in writing that the
total number of shares of IFX Common Stock that the Company, the Stockholders
and any other Person intend to include in such offering is sufficiently large to
affect materially and adversely the success of such offering, then the number of
shares of IFX Common Stock to be offered for the account of the Stockholders and
other holders of shares of IFX Common Stock may be reduced and there shall be
excluded from such registration and underwriting, to the extent necessary in the
underwriters' sole discretion, first shares held by Persons holding shares of
IFX Common Stock requesting registration (other then the Stockholders), and
second shares of IFX Common Stock held by the Stockholders, PRO RATA among them.
(e) For the lesser of two years following the effective date
of each Registration Statement filed in connection with a Demand Registration,
or until the shares of IFX Common Stock covered thereby are eligible for resale
in reliance on Rule 144(k) promulgated under the Securities Act, IFX will use
its reasonable best efforts to (i) keep such Registration Statement current,
effective and available for the resale of the IFX Common Stock covered thereby,
and (ii) take such other actions as may be reasonably required to enable the
disposition of the shares of IFX Common Stock as contemplated by such
Registration Statement, including the listing of such shares on the Nasdaq Stock
Market or any national securities exchange on which the IFX Common Stock is then
traded. During the time period when any Registration Statement filed in
connection with a Demand Registration is required to be current, effective and
available under this Section 7.3, IFX shall:
(i) furnish to each Stockholder whose shares are
registered thereby such reasonable number of copies of the prospectus
contained in such Registration Statement (as the same may be amended or
supplemented, the "PROSPECTUS"), and any amendments or supplements to
the Prospectus, in conformity with the requirements of the Securities
Act, to enable such Stockholder to publicly sell his/its shares of IFX
Common Stock;
(ii) promptly notify each Stockholder whose shares are
covered by such Prospectus (A) when any such Registration Statement has
become effective and when any post-effective amendments and supplements
thereto become effective, (B) of any request by the Commission or any
state securities authority for amendments and supplements to such
Registration Statement and the Prospectus or for additional
information, (C) of the issuance by the Commission or any state
securities authority of any stop order suspending the effectiveness of
any such Registration Statement or the initiation of any proceedings
for the purpose, and (D) of the happening of any event during the
period such Registration Statement is effective that, in the judgment
of IFX, makes any statement made in such Registration Statement or the
Prospectus untrue in any material respect or which requires the making
of any changes in such Registration Statement or the Prospectus in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
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(iii) use its reasonable best efforts to obtain, at the
earliest practicable time, the withdrawal of any order suspending the
effectiveness of such Registration Statement; and
(iv) as soon as practicable upon the occurrence of any
event contemplated by Section 7.3(e)(ii)(B), (C) or (D), prepare and
file a supplement or post-effective amendment to such Registration
Statement or the Prospectus, or any document incorporated therein by
reference, or file any other required document so that, as thereafter
delivered to the purchasers of the shares of IFX Common Stock covered
thereby, the Prospectus will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; PROVIDED, HOWEVER, that the obligation to
prepare and file any such supplement, post-effective amendment or other
document shall be suspended if IFX, relying upon advice of counsel,
determines that disclosure of any material non-public information
required to be included therein would be materially adverse to its
interests; PROVIDED FURTHER, that any such suspension will be lifted by
IFX as soon as practicable and will not, in any event, extend for more
than 60 days with respect to any such specified event.
(f) Upon receipt of any notice from IFX of any event of the
kind described in Section 7.3(e)(ii)(C) or (D), such Stockholder (i) promptly
will discontinue disposition of any shares of IFX Common Stock pursuant to such
Registration Statement until such Stockholder has received copies of the
supplemented or amended Prospectus contemplated by Section 7.3(e)(iv), (ii)
thereafter, will utilize and distribute only such supplemented Prospectus, and
(iii) if so directed by IFX, will deliver to IFX all copies of the Prospectus
covering such shares of IFX Common Stock in such Stockholder's possession at the
time of receipt of such suspension notice.
(g) Each Stockholder whose shares of IFX Common Stock are
covered by a Registration Statement shall (i) furnish to IFX information
regarding such Stockholder, the manner in which such Stockholder intends to
dispose of his/its shares of IFX Common Stock and any other information
reasonably requested by IFX in connection with the Registration Statement and
(ii) notify IFX promptly upon the happening of any event during the period any
Registration Statement is effective that makes any statement regarding such
Stockholder made in the Registration Statement or the Prospectus untrue in any
material respect or which requires the making of any changes in the Registration
Statement or the Prospectus in order to make the Statements therein regarding
such Stockholder, in light of circumstances under which they were made, not
misleading.
(h) IFX hereby agrees to indemnify and hold harmless the
Stockholders against all losses, claims, damages and liabilities to which any
Stockholder becomes subject that arise out of or are based upon any untrue
statement of a material fact contained in any Registration Statement or
Prospectus, or that arise out of or are based upon any omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein (in the case of the Prospectus, in the light of the
circumstances under which they were made) not misleading; PROVIDED, HOWEVER,
that IFX shall not be liable to the extent any such loss, claim, damage or
liability arises out
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of or is based upon any untrue statement contained in or omission from the
Registration Statement or Prospectus in reliance upon or in conformity with
written information furnished to IFX by any Stockholder specifically for use
therein. Each Stockholder severally agrees to indemnify and hold harmless IFX
and each of its officers and employees who signs such Registration Statement and
each of its directors with respect to losses, claims, damages or liabilities
that arise out of or are based upon any untrue statement or omission contained
in or omission from the Registration Statement or Prospectus in reliance upon or
in conformity with written information furnished to IFX by such Stockholder
specifically for use therein.
(i) IFX agrees to pay all fees, costs and expenses in
connection with the registration contemplated by this Section 7.3, including
without limitation, all registration fees, blue sky and Nasdaq qualification and
filing fees, printing and duplicating expenses and fees, expenses and
disbursements of counsel retained by IFX (but not counsel retained by any
Stockholder) and the independent certified public accountants of IFX.
(j) Notwithstanding anything contained in this Section 7.3 to
the contrary, no Stockholder shall be entitled to request a Demand Registration
(i) during the 60 days following the effective date of any other Registration
Statement, or (ii) for the period commencing on the date IFX delivers a notice
to the Stockholders pursuant to Section 7.3(d) and ending on the date 90 days
after the effective date of such Registration Statement.
VII.4 CORPORATE OPPORTUNITY. If at any time during the term of this
Agreement any Investor becomes aware of Complementary Businesses or other
business opportunities related to or in the same line of any business in which
the Company is engaged, it is the intent of the parties that such Investor will
(a) provide the Company with such information (to the extent available to such
Investor) to enable the Company to determine whether it wishes to pursue such
opportunity and (b) if the Company pursues such opportunity, to refrain from
pursuing such opportunity on its own behalf.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
VIII.1 TERMINATION. This Agreement shall terminate upon the earliest to
occur of the following events:
(a) the Company makes a general assignment or composition for
the benefit of creditors or the commencement of a bankruptcy, reorganization,
debt arrangement or other case or proceeding under any bankruptcy or insolvency
law in respect of the Company or a substantial portion of the Company's property
or assets;
(b) the Investors voluntarily agree, in writing, to terminate
this Agreement; or
(c) IFX exercises its rights to force a disposition pursuant
to and in accordance
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with Section 5.2.
VIII.2 ENDORSEMENT ON STOCK CERTIFICATES. Each and every certificate
evidencing shares of Covered Stock shall contain upon its face, or on the
reverse side thereof, the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER CONTAINED IN AGREEMENTS TO WHICH THE COMPANY
IS A PARTY, AND NO SHARES REPRESENTED BY THIS CERTIFICATE MAY BE SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN VIOLATION OF SUCH
RESTRICTIONS. COPIES OF THE ABOVE REFERENCED DOCUMENTS ARE AVAILABLE TO
THE HOLDER HEREOF AT THE PRINCIPAL OFFICES OF THE COMPANY.
No shares of Covered Stock shall be issued without the legend set forth above.
Upon termination of this Agreement and/or deletion of the restrictions on
transfer contained herein, the Company or IFX, as applicable, shall issue new
certificates representing shares of Company Common Stock or IFX Common Stock
that do not contain the foregoing legend, upon surrender to the Company or IFX,
as applicable, of the certificates containing the foregoing legend in exchange
therefor.
VIII.3 COOPERATION; GOOD FAITH. The Investors agree to cooperate with
each other, in good faith, and to use their respective reasonable best efforts,
to operate and manage the business of the Company in a manner that is
commercially profitable and in the best interests of the Investors. Such
cooperation shall extend to matters including, but not limited to, establishing
annual operating budgets for the Company, determining if, when and in what
amounts Additional Contributions are required and which Complementary Businesses
the Company should acquire, if any.
VIII.4 NOTICES. Any and all notices or other communications provided
for herein shall be in writing and shall be considered duly delivered to and
received by the addressee thereof upon the earliest to occur of (a) personal
delivery, (b) two Business Days after being delivered to a nationally recognized
overnight courier or service, (c) three Business Days after being mailed by
registered or certified mail, return receipt requested, postage prepaid or (d)
the delivering parties' receipt of a written confirmation of a facsimile
transmission. All notices shall be addressed to the Company at its principal
office and to the other parties hereto at their respective addresses set forth
below:
if to IFX CORPORATION, EMERGING NETWORKS, INC., and/or Xxx Xxxxx (who
is a party to this Agreement solely with respect to and for purposes of
enforceability of Sections 3.3, 6.2 and 7.3), to:
IFX Corporation
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxxx
telephone: (000) 000-0000
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facsimile: (000) 000-0000
in each of the foregoing cases, with a copy to:
Xxxx, Gerber & Xxxxxxxxx
Two North LaSalle Street, Suite 2200
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
telephone: (000) 000-0000
facsimile: (000) 000-0000
if to INTERNATIONAL TECHNOLOGY INVESTMENTS, LC, to:
c/x Xxxxxx & Xxxxx
0000 X. Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxx
telephone: (000) 000-0000
facsimile: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxx
0000 X. Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxx
telephone: (000) 000-0000
facsimile: (000) 000-0000
Any party hereto may change his or its address by giving notice to the other
parties hereto as provided herein.
VIII.5 SEVERABILITY. If any provision of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal or unenforceable, such
provision shall be severed and the remaining provisions hereof shall be enforced
to the extent possible or modified in such a way as to make it enforceable, and
the invalidity, illegality or unenforceability thereof shall not affect the
validity, legality or enforceability of the remaining provisions of this
Agreement.
VIII.6 MODIFICATION; AMENDMENT. No modification or amendment of this
Agreement shall be valid unless the same shall be in writing executed by all of
the parties hereto.
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VIII.7 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Delaware, without regard to
the conflict of laws provisions thereof.
VIII.8 ARBITRATION.
(a) Except as otherwise provided in Article V, all claims,
disputes or controversies between or among the parties hereto arising out of or
relating to this Agreement shall be submitted to binding arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association, as then in effect. Any party hereto may make a demand for
arbitration pursuant to this Section 8.8 by a writing (an "ARBITRATION DEMAND"),
delivered in accordance with the notice provisions of Section 8.4, which shall
describe the matter in dispute, the provisions of this Agreement relied upon for
such party's position and the relief sought. Within 20 days after delivery of
any Arbitration Demand, the parties jointly shall select one arbitrator to hear
the dispute, who shall be reasonably satisfactory to such parties; PROVIDED
THAT, if such parties are unable mutually to agree upon one arbitrator within
such 20-day period, each party (assuming there are only two parties in dispute)
shall select one arbitrator, and the arbitrators so chosen will select a third
arbitrator.
(b) Any arbitration shall be conducted in a neutral location
in Chicago, Illinois or Miami, Florida. The arbitration hearing shall be
conducted to conclusion on consecutive business days, unless otherwise ordered
by the arbitrator(s), and the award thereon shall be made within 10 Business
Days after the close of the submission of evidence.
(c) An Arbitration Demand shall be made as soon as practicable
after the initiating party becomes aware that the claim, dispute or controversy
has arisen. In no event shall an Arbitration Demand be delivered after the date
on which institution of legal or equitable proceedings based on such claim,
dispute or controversy would be barred by this Agreement or by applicable
statutes of limitations.
(d) Any award rendered by the arbitration shall be final,
binding upon and non-appealable by all parties to the proceeding, and judgment
on such award may be entered by any party in any court having jurisdiction;
PROVIDED, HOWEVER, that the arbitrator shall make written findings of act and
conclusion of law which accompany and support such award.
(e) Each party shall pay their respective fees and costs;
PROVIDED, HOWEVER, the arbitrator may award such fees and costs to the
prevailing party as such arbitrator(s) determine are appropriate.
(f) Each party hereto reserves the right to seek a judicial
temporary restraining order, preliminary injunction, or other similar short-term
equitable relief prior to the appointment of the arbitrator(s). The
arbitrator(s) will have the right to make a final determination of the parties'
rights hereunder including, without limitation, whether to make permanent,
modify or dissolve the judicial order.
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(g) Nothing herein contained shall be deemed to give the
arbitrator(s) any authority, power, or right to alter, change, amend, modify,
add to, or subtract from any of the provisions of this Agreement.
VIII.9 BINDING EFFECT; COMPLETE AGREEMENT. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors and assigns. This
Agreement constitutes the entire agreement among the parties hereto and
supersedes all prior agreements and understandings, oral or written, among the
parties hereto with respect to the subject matter hereof.
VIII.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
VIII.11 ATTORNEYS' FEES. If any legal action, including an action for
declaratory relief, is brought to enforce any provision of this Agreement, the
prevailing party or parties, as the case may be, shall be entitled to recover
his, its or their respective reasonable attorneys' fees from non-prevailing
party or parties, as the case may be. These fees, which may be set by the court
in the same action or in a separate action brought for that purpose, are in
addition to any other relief to which any prevailing party may be entitled.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
EMERGING NETWORKS, INC.
By: /S/ XXXX XXXXXXXXXX
--------------------------------------
Name: Xxxx Xxxxxxxxxx
Title: Vice President
IFX CORPORATION
By: /S/ XXXX XXXXXXXXXX
--------------------------------------
Name: Xxxx Xxxxxxxxxx
Title: President
INTERNATIONAL TECHNOLOGY INVESTMENTS, LC,
By: /S/ XXXXXX XXXXXXX
--------------------------------------
Name: Xxxxxx Xxxxxxx
Title:
/S/ XXX X. XXXXX
--------------------------------------
Xxx Xxxxx, who is a party to this
Agreement solely with respect to and for
purposes of enforceability of
Sections 3.3, 6.2 and 7.3
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