-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DucLOIXKML2DiKwHLC5gYYUCOdX071i4XJ9IUbUUZokxRRumzRCT+lEegv2d9cMG 67VpqIZTuojP3ZGCqgvuFQ== 0001021408-02-002914.txt : 20020414 0001021408-02-002914.hdr.sgml : 20020414 ACCESSION NUMBER: 0001021408-02-002914 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20020219 ITEM INFORMATION: Changes in control of registrant ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20020227 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IFX CORP CENTRAL INDEX KEY: 0000792861 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370] IRS NUMBER: 363399452 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-15187 FILM NUMBER: 02560571 BUSINESS ADDRESS: STREET 1: 707 SKOKIE BLVD 5TH FLOOR CITY: NORTHBROOK STATE: IL ZIP: 60062 BUSINESS PHONE: 8474129411 MAIL ADDRESS: STREET 1: 707 SKOKIE BLVD 5TH FLOOR CITY: NORTHBROOK STATE: IL ZIP: 60062 FORMER COMPANY: FORMER CONFORMED NAME: 312 FUTURES INC DATE OF NAME CHANGE: 19860916 FORMER COMPANY: FORMER CONFORMED NAME: CARL JACK 312 FUTURES INC DATE OF NAME CHANGE: 19920703 8-K 1 d8k.txt FORM 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): February 19, 2002 IFX Corporation --------------- (Exact name of Registrant as Specified in Its Charter) Delaware 0-15187 36-3399452 -------- ------- ---------- (State or Other Jurisdiction of (Commission file number) (I.R.S. Employer Incorporation or Organization) Identification No.) IFX Corporation 15050 NW 79/th/ Court Miami Lakes, Florida 33016 -------------------------- (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) (305) 512-1100 -------------- (Registrant's Telephone Number, Including Area Code) 707 Skokie Blvd., 5/th/ Floor Northbrook, Illinois 60062 ------------------------------------------------------- (Former name or former address, if changed since last report) ITEM 1. CHANGES IN CONTROL OF REGISTRANT. (a) As previously reported on Registrant's Report on Form 8-K dated October 11, 2001, Registrant had secured a commitment from UBS Capital Americas III, L.P. and UBS Capital LLC (collectively, "UBS Capital") to invest an additional $7 million of cash and surrender 1.5 million shares of Registrant's Common Stock currently held by UBS Capital in exchange for newly issued Series C Convertible Preferred Stock of Registrant. On February 19, 2002, the Purchasers purchased 3,876,241 shares of Series C Preferred Stock. The source of the cash portion of the purchase price was UBS Capital's working capital. Under the terms of the Certificates of Designation for Registrant's Convertible Preferred Stock and the Third Amended and Restated Stockholders Agreement dated as of February 19, 2002, among Registrant, UBS Capital, International Technology Investments, LC, ("ITI"), Joel Eidelstein, Michael Shalom and Lee S. Casty ("Casty") (the "Third Stockholders Agreement"), Registrant's Board of Directors has been reduced to seven members from eight (George Myers has resigned as a member of the Board of Directors) and UBS Capital is entitled to appoint four out of seven members of the Board of Directors. UBS also has the right to jointly designate a fifth director in conjunction with ITI and Casty. Casty and ITI each have the right to appoint one director. Prior to the issuance of the Series C Preferred Stock and the execution of the Third Stockholders Agreement, UBS had the right to appoint three members of an eight member Board of Director and to jointly designate a fourth director in conjunction with ITI and Casty. After the purchase of the Series C Preferred Stock, UBS capital owns approximately 57% of the voting shares of Registrant (assuming conversion of all Registrant convertible preferred stock into Common Stock) The foregoing transactions could be deemed a "change in control" of Registrant. Each share of Series C Preferred Stock is initially convertible into one share of Common Stock. The Series C Preferred Stock carries a liquidation preference such that, upon a bankruptcy, liquidation, dissolution or winding up of Registrant, each holder of Series C Preferred Stock will be entitled to receive a Stated Preference of $3.00 per share plus 10% of such amount per annum from the date of issuance and will also participate with the holders of Common Stock after such holder receives its liquidation preference and accrued dividends, provided that the maximum amount which can be received with respect to the Series C Preferred Stock after taking into account the participation feature is limited to 3-1/2 times the Stated Preference. Registrant's Series A and Series B Preferred Stock have similar rights and privileges. As part of this transaction, Registrant has also provided UBS Capital with the ability to exchange its equity investment in Tutopia.com, Inc. (in which Registrant holds a minority investment) for additional shares of Registrant preferred stock within one year of closing. (b) Registrant is not aware of any arrangements, the operation of which may at a subsequent date result in a change in control of Registrant. ITEM 5. OTHER EVENTS. Pursuant to a Stock Purchase Agreement dated as of February 19, 2002, UBS Capital, ITI, LSC, LLC ("LSC"), and Jak Bursztyn ("Bursztyn") (collectively with UBS Capital, the "Purchasers") have agreed to invest a total of $5 million and surrender shares of Registrant's preferred stock and Common Stock in exchange for Registrant's newly-issued Series D Convertible Preferred Stock ("Series D Preferred Stock"). LSC is an affiliate of Casty and ITI is an affiliate of Michael Shalom. Each share of Series D Preferred Stock will initially be convertible into two shares of Registrant's Common Stock. The Series D Preferred Stock carries a liquidation preference such that, upon a bankruptcy, liquidation, dissolution or winding up of Registrant, each holder of Series D Preferred Stock will be entitled to receive a Stated Preference of $6.00 per share plus 10% of such amount per annum from the date of issuance and will also participate with the holders of Common Stock after the Purchasers receive their liquidation preference and accrued dividends, provided that the maximum amount which can be received with respect to the Series C Preferred Stock after taking into account the participation feature is limited to 3-1/2 times the Stated Preference. In this transaction, UBS Capital will invest approximately $3.33 million in cash and surrender 750,000 shares of Series C Preferred Stock in exchange for approximately 4.6 million shares of newly issued Series D Preferred Stock. Each of ITI and LSC will invest approximately $0.8 million in cash and surrender approximately 333,000 shares of Common Stock in exchange for approximately 844,000 shares of Series D Preferred Stock. Bursztyn will invest approximately $40,000 in cash and surrender approximately 17,000 shares of Common Stock in exchange for approximately 43,000 shares of Series D Preferred Stock. Closing of the Series D Preferred Stock financing is subject to customary closing conditions. The Purchasers may, but are not required to, advance funds to Registrant prior to the closing of the transaction. At closing, any outstanding principal will be applied to the Series D Preferred Stock purchase price and any outstanding interest will be applied to purchase additional shares of the Series D Preferred Stock at a price of $1.20 per share. After the close of this investment, Registrant would have approximately 41.5 million shares of Common Stock outstanding if all of Registrant's convertible preferred stock were converted into Common Stock. As a result of the Series D Preferred Stock transaction, Registrant will increase the number of shares of Common Stock authorized from 60 million to 110 million and increase the number of shares of preferred stock authorized from 20 million to 40 million. Shares of Registrant's Common Stock are currently listed on the Nasdaq SmallCap Market. Due to the decline in the price of Common Stock, trading of such shares could be suspended or Registrant's shares could be delisted from the Nasdaq due to their minimum trading requirements, particularly if Registrant's stock price is below $1.00 per share for a prolonged period or certain financial requirements imposed by Nasdaq are not met. On February 14, 2002, Nasdaq notified Registrant that for the prior 30 consecutive trading days, the price of Registrant's Common Stock closed below the minimum $1.00 per share requirement for continued inclusion under Marketplace Rule 4310(c)(4). Therefore, in accordance with Marketplace Rule 4310(c)(8)(D), Registrant was provided 180 calendar days, or until August 13, 2002, to regain compliance. On February 21, 2002, Nasdaq notified Registrant that Registrant is not in compliance with Marketplace Rule 4310(c)(2)(B), which requires Registrant to have a minimum of $2,000,000 in net tangible assets or $2,500,000 in stockholders' equity or a market capitalization of $35,000,000 or $500,000 of net income for the most recently completed fiscal year or two of the three most recently completed fiscal years. Nasdaq staff is reviewing Registrant's eligibility for continued listing on the Nasdaq SmallCap Market and has requested Registrant to provide by March 7, 2002, Registrant's specific plan to achieve compliance with the listing requirements. If trading of Registrant's Common Stock were to be suspended or Registrant's shares were delisted from the Nasdaq system, it would be much more difficult to dispose of Common Stock or obtain accurate quotations as to the price of the securities. This in turn could make it more difficult to make future convertible debt or equity offerings. ITEM 7. FINANCIAL STATEMENT AND EXHIBITS Exhibit Number Description of Exhibit -------------- ---------------------- 3.1 Amendment to Restated Certificate of Incorporation of Registrant 4.1 Second Amended Certificate of Designation, Powers, Preferences and Rights of Series A Convertible Preferred Stock of Registrant 4.2 Amended Certificate of Designation, Powers, Preferences and Rights of Series B Convertible Preferred Stock of Registrant 4.3 Certificate of Designation, Powers, Preferences and Rights of Series C Convertible Preferred Stock of Registrant 10.1 Third Amended and Restated Stockholders Agreement dated as of February 19, 2002, among Registrant, UBS Capital Americas III, L.P., UBS Capital LLC, International Technology Investments, LC, Joel Eidelstein, Michael Shalom and Lee S. Casty 10.2 Second Amended and Restated Registration Rights Agreement dated as of February 19, 2002, among Registrant, UBS Capital Americas III, L.P., UBS Capital LLC, International Technology Investments, LC, and Lee S. Casty 10.3 Put Agreement dated as of February 19, 2002, among Registrant, UBS Capital Americas III, L.P. and UBS Capital LLC 10.4 Series D Convertible Preferred Stock Purchase Agreement dated as of February 19, 2002, among Registrant, UBS Capital Americas III, L.P., UBS Capital LLC, International Technology Investment LC, LSC, LLC, and Jak Bursztyn 99.1 Press Release dated February 25, 2002 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. IFX Corporation By: /s/ Joel Eidelstein ------------------------ Joel Eidelstein, President Date: February 27, 2002 IFX CORPORATION EXHIBIT INDEX Exhibit Number Description of Exhibit 3.1 Amendment to Restated Certificate of Incorporation of Registrant 4.1 Second Amended Certificate of Designation, Powers, Preferences and Rights of Series A Convertible Preferred Stock of Registrant 4.2 Amended Certificate of Designation, Powers, Preferences and Rights of Series B Convertible Preferred Stock of Registrant 4.3 Certificate of Designation, Powers, Preferences and Rights of Series C Convertible Preferred Stock of Registrant 10.1 Third Amended and Restated Stockholders Agreement dated as of February 19, 2002, among Registrant, UBS Capital Americas III, L.P., UBS Capital LLC, International Technology Investments, LC, Joel Eidelstein, Michael Shalom and Lee S. Casty 10.2 Second Amended and Restated Registration Rights Agreement dated as of February 19, 2002, among Registrant, UBS Capital Americas III, L.P., UBS Capital LLC, International Technology Investments, LC, and Lee S. Casty 10.3 Put Agreement dated as of February 19, 2002, among Registrant, UBS Capital Americas III, L.P. and UBS Capital LLC 10.4 Series D Convertible Preferred Stock Purchase Agreement dated as of February 19, 2002, among Registrant, UBS Capital Americas III, L.P., UBS Capital LLC, International Technology Investment LC, LSC, LLC, and Jak Bursztyn 99.1 Press Release dated February 25, 2002 ---------------------- EX-3.1 3 dex31.txt CERTIFICATE OF INCORPORATION EXHIBIT 3.1 CERTIFICATE OF AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION OF IFX CORPORATION It is hereby certified that: 1. The name of the Corporation is IFX Corporation (the "Corporation"). 2. The amendment to the Restated Certificate of Incorporation effected by this Certificate is as follows: Article Fourth is hereby deleted in its entirety and the following is hereby substituted therefor: FOURTH: The authorized capital stock of the Corporation is 1. Class Par Value Number of Shares Authorized ----- --------- --------------------------- Common $0.02 60,000,000 Preferred $1.00 20,000,000 2. The preferences, qualifications, limitations, restrictions and the special or relative rights of the shares of each class are: A. Preferred Stock. The Preferred Stock may be issued from time to time --------------- in one or more series. The Board of Directors is hereby authorized to provide for the issuance of shares of Preferred Stock as a class or in series and, by filing a statement pursuant to the General Corporation Law of the State of Delaware (hereinafter referred to as a "Preferred Stock Designation"), to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations and restrictions thereof. The authority of the Board of Directors with respect to each series shall include, but not be limited to, determination of the following: (i) The designation of the series, which may be by distinguishing number, letter or title: (ii) The number of shares of the series, which number the Board of Directors may thereafter (except where otherwise provided in the Preferred Stock Designation) increase or decrease; (iii) The dividend rate on the shares of the class or of any series, whether dividends shall be cumulative, and, if so, from which date or dates, and the relative rights of priority, if any, of payment of dividends on shares of the class or of that series; (iv) Dates at which dividends, if any, shall be payable; (v) Whether or not the shares of the class or of any series shall be redeemable, and, if so, the terms and conditions of such redemption, including the date or date upon or after which they shall be redeemable and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates; (vi) The terms and amounts of a sinking fund, if any, provided for the purchase or redemption of shares of the class or any series; (vii) The rights of the shares of the class or of any series in the event of voluntary or involuntary dissolution or winding up of the Corporation, and the relative rights of priority, if any, of payment of shares of the class or of that series; (viii) Whether the shares of the series shall be convertible into shares of any other class or series, or any other security, of the Corporation or any other corporation, and, if so, the rate or rates, any adjustments thereof, the date or dates of which such shares shall be convertible and all other terms and conditions upon which such conversion may be made; (ix) Restrictions on the issuance of shares of the same series or of any other class or series; (x) The voting rights, if any, of the holders of shares of the series; and (xi) Any other powers, preferences, rights, qualifications, limitations, and restrictions of the class or of any series. B. Common Stock. ------------ -2- (i) The Common Stock shall be subject to the express terms of the Preferred Stock and any series thereof. (ii) Except as may be provided in this Restated Certificate of Incorporation or in a Preferred Stock Designation, the holders of shares of the Common Stock shall have the exclusive right to vote on all matters (for which a common stockholder shall be entitled to vote thereon) at all meeting of the stockholders of the Corporation, and shall be entitled to one vote for each share of the Common Stock entitled to vote at such meeting. There shall be no cumulative voting rights with respect to any shares of the Corporation's stock. 3. The aforesaid amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, the Corporation has caused this certificate to be executed by its duly authorized representative this 19th day of February, 2002. IFX CORPORATION. By: /s/ Michael Shalom -------------------------- Its: CEO ---------------------- -3- EX-4.1 4 dex41.txt SERIES A CONVERTIBLE PREFERRED STOCK OF REGISTRANT EXHIBIT 4.1 NGE-02/21/02 SECOND AMENDED CERTIFICATE OF DESIGNATION, NUMBER, POWERS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL AND OTHER RIGHTS OF SERIES A CONVERTIBLE PREFERRED STOCK OF IFX CORPORATION IFX Corporation (the "Corporation"), a corporation organized and existing under the General Corporation Law of the State of Delaware, hereby certifies that, pursuant to the provisions of Section 151 of the General Corporation Law of the State of Delaware, its Board of Directors, at a meeting duly held on October 11, 2001 adopted the following resolution: WHEREAS, the Board of Directors of the Corporation is authorized by the Restated Certificate of Incorporation to issue up to 20,000,000 shares of preferred stock ("Preferred Stock") in one or more series and, in connection with the creation of any series, to fix by the resolutions providing for the issuance of shares the powers, designations, preferences and relative, participating, optional or other rights of the series and the qualifications, limitations or restrictions thereof; and WHEREAS, the Board of Directors authorized and fixed the terms and provisions of the Class I and Class II Series A Convertible Preferred Stock of the Corporation pursuant to resolutions dated March 8 and May 2, 2001 and by filing with the Secretary of State of the State of Delaware an Amended Certificate of Designation, Number, Powers, Preferences and Relative, Participating, Optional and other Rights of Series A Convertible Preferred Stock on May 3, 2001 (the "Original Certificate"); and WHEREAS, it is the desire of the Board of Directors of the Corporation, pursuant to such authority and the requisite vote of the holders of the Series A Convertible Preferred Stock pursuant to the Original Certificate and the requisite vote of the holders of the common stock pursuant to the General Corporation Law of the State of Delaware, to amend and restate the Original Certificate in its entirety. NOW, THEREFORE, BE IT RESOLVED, that the Series A Convertible Preferred Stock of the Corporation shall have the terms and provisions herein set forth on Annex A attached to this resolution. /s/ Joel Eidelstein ---------------------------------------- Name: Joel Eidelstein Title: President ATTEST: /s/ Jose Leiman - --------------------------------- Name: Jose Leiman Title: Chief Financial Officer ANNEX A SERIES A CONVERTIBLE PREFERRED STOCK The powers, designations, preferences and relative, participating, optional or other rights of the Series A Convertible Preferred Stock of IFX Corporation (the "Corporation") are as follows: 1. DESIGNATION AND AMOUNT. This series of preferred stock shall be designated as "Series A Convertible Preferred Stock" and shall be divided into two classes: Class I Series A Convertible Preferred Stock ("Class I Preferred") and Class II Series A Convertible Preferred Stock ("Class II Preferred," and together with the Class I Preferred, the "Series A Convertible Preferred Stock"). The Series A Convertible Preferred Stock shall have $1.00 par value per share. The number of authorized shares constituting the Class I Preferred shall be 1,210,398 shares. The number of authorized shares constituting the Class II Preferred shall be 820,471 shares. Shares of the Class I Preferred and Class II Preferred each have a stated value of Twelve and 31/100 Dollars ($12.31) (the "Stated Value") per share. The Corporation has also previously authorized 4,842,397 shares of its Series B Convertible Preferred Stock, par value $1.00 per share, consisting of 4,418,262 shares of Class I Series B Convertible Preferred Stock ("Class I Series B Preferred") and 424,135 shares of Class II Series B Convertible Preferred Stock ("Class II Series B Preferred" and, collectively, the "Series B Convertible Preferred Stock") having the number, powers, preferences and relative, participating, optional and other rights as set forth in the Amended Certificate of Designation filed with the Secretary of State of the State of Delaware on the date of the filing hereof (the "Series B Certificate"). The Corporation has also authorized 3,876,241 shares of its Series C Convertible Preferred Stock, par value $1.00 per share (the "Series C Convertible Preferred Stock") having the number, powers, preferences and relative, participating, optional and other rights as set forth in the Certificate of Designation filed with the Secretary of State of the State of Delaware on the date of the filing hereof (the "Series C Certificate"). The Series A Convertible Preferred Stock, the Series B Convertible Preferred Stock, the Series C Convertible Preferred Stock and shares of any other class or series of preferred stock of the Corporation which is convertible, directly or indirectly, into Common Stock, whether at the time of issuance or upon passage of time or the occurrence of some future event, are collectively referred to herein as "Convertible Preferred Stock." 2. DIVIDENDS. (a) Right to Receive Dividends. Holders of Series A Convertible Preferred Stock shall be entitled to receive dividends when, as and if declared by the Board of Directors of the Corporation (the "Board of Directors"). (b) Participation with Common Stock. In the event the Board of Directors shall elect to pay or declare and set apart for payment any dividend on any shares of common stock, par value $.02 per share, of the Corporation (the "Common Stock") in cash out of funds legally available therefor or in stock or other consideration, the holders of the Series A Convertible Preferred Stock shall be entitled to receive, before any dividend shall be declared -2- and paid or set aside for the Common Stock, dividends payable in the form and in an amount per share equal to the per share amount that would have been payable to such holders had such holders converted their Series A Convertible Preferred Stock into Common Stock and had all other holders of Convertible Preferred Stock converted such shares into Common Stock. (c) Dividend Preference. Dividends on the Series A Convertible Preferred Stock shall be payable before any dividends or distributions or other payments shall be paid or set aside for payment upon the Common Stock or any other stock ranking on liquidation or as to dividends or distributions junior to the Series A Convertible Preferred Stock (any such stock, together with the Common Stock, being referred to hereinafter as "Junior Stock"). If there shall be outstanding shares of any class or series of capital stock which is entitled to share ratably with the Series A Convertible Preferred Stock in the payment of dividends or distributions or upon liquidation ("Parity Securities"), no full dividends shall be declared or paid or set apart for payment on any such securities unless dividends have been or contemporaneously are ratably declared and paid or declared and a sum sufficient for the payment thereof set apart for such payment on the Series A Convertible Preferred Stock. 3. LIQUIDATION PREFERENCE. (a) In the event of any bankruptcy, liquidation, dissolution or winding up of the Corporation, either voluntary or involuntary (a "Liquidation"), each holder of Series A Convertible Preferred Stock at the time thereof shall be entitled to receive, prior and in preference to any distribution of any of the assets or funds of the Corporation to the holders of the Common Stock or other Junior Stock by reason of their ownership of such stock, an amount per share of Series A Convertible Preferred Stock equal to the sum of (i) (x) the applicable Stated Value plus any declared and unpaid dividends to the date of liquidation, plus (y) 10% of such Stated Value per annum, calculated from the date of issuance of such share through date of payment of the Liquidation Preference as set forth in this Section 3 ((x) and (y), collectively, the "Stated Preference"); plus (ii) an amount equal to such amount per share of Series A Preferred Stock as would have been payable had each share of Series A Preferred Stock and all outstanding shares of other Convertible Preferred Stock (to the extent such shares of other Convertible Preferred Stock are actually converted into Common Stock at such time or if such shares of other Convertible Preferred Stock contain a participation feature which allows them to receive amounts in excess of their Stated Preference in the event of a Liquidation even if not actually converted) been converted into Common Stock immediately prior to such Liquidation of the Corporation after giving effect to the full payment of the Stated Preference under the preceding paragraph (i) and the stated preference of the other Preferred Stock (unless such other Preferred Stock has actually been converted into Common Stock); provided, that if the amount payable per share of Series A Convertible Preferred Stock pursuant to the foregoing paragraphs (i) and (ii) exceeds three and one- half (3-1/2) multiplied by the Stated Preference (the "Maximum Amount"), each holder of Series A Convertible Preferred Stock shall only be entitled to receive such Maximum Amount. The sum of the amounts in (i) and (ii) above is referred to herein as the "Liquidation Preference". -3- After the payment of the full Liquidation Preference on account of all shares of Series A Convertible Preferred Stock as set forth in this Section 3 and any preferential amounts to which the holders of Parity Securities are entitled, the remaining assets of the Corporation legally available for distribution, if any, shall be distributed ratably to the holders of the Common Stock. If the assets and funds legally available for distribution among the holders of Series A Convertible Preferred Stock shall be insufficient to permit the payment to the holders of the full aforesaid Liquidation Preference, then the assets and funds shall be distributed ratably among holders of Series A Convertible Preferred Stock in proportion to the number of shares of Series A Convertible Preferred Stock owned by each holder. If the assets and funds of the Corporation available for distribution to stockholders upon any Liquidation of the affairs of the Corporation, whether voluntary or involuntary, shall be insufficient to permit the payment to holders of the full aforesaid Liquidation Preference and amounts payable to holders of outstanding Parity Securities, the holders of Series A Convertible Preferred Stock and the holders of such other Parity Securities shall share ratably (and ratably as to cash, in-kind or other distributions) in any distribution of assets of the Corporation in proportion to the full respective preferential amounts to which they are entitled. (b) Except as described in the following sentence, a merger, recapitalization, reorganization, sale of voting control to a single buyer or a group of related buyers in one or a series of related transactions, or other business combination transaction involving the Corporation in which the shareholders of the Corporation immediately prior to the consummation of such transaction do not own at least a majority of the outstanding shares of the surviving corporation or the Corporation (as applicable) immediately following the consummation of such transaction or sale of all or substantially all of the assets of the Corporation (collectively, a "Liquidation Event") shall be deemed to be a Liquidation of the Corporation. Notwithstanding the foregoing, the following shall not be deemed to be a Liquidation Event: (i) a merger, recapitalization, sale of voting control or other business combination transaction with an Affiliate (as such term is defined in Section 12b-2 of the Rules and Regulations under the Securities Exchange Act of 1934, as amended) of UBS Capital Americas III, L.P. or UBS Capital LLC (together with any such Affiliate, "UBS"), or (ii) a merger of the Corporation with a public company (A) in which the merger consideration to be received by the holders of the Series B Convertible Preferred Stock is fully registered marketable securities (the "Merger Shares") which are not subject to any restrictions on transfer, (B) in which the value of such merger consideration for each share of Series A Convertible Preferred Stock, valued at the average closing price of the Merger Shares for the 30 days prior to the consummation of the merger, or such lesser period which follows the public announcement of the merger, is greater than 110% of the Liquidation Preference per share as of the date of consummation of the merger, and (C) with aggregate trading volume for the 30 calendar days prior to the merger date of at least 10 times the aggregate number of Merger Shares received by all holders of Convertible Preferred Stock. (c) In any Liquidation Event, if the consideration received by the Corporation is other than cash, its value will be deemed its fair market value as determined in good faith by the Board of Directors. Any securities shall be valued as follows: (i) Securities not subject to investment letter or other similar restrictions on free marketability covered by subsection (ii) below: -4- (A) If traded on a securities exchange or through The Nasdaq National Market or Small Cap Market, the value shall be deemed to be the average of the closing prices of the securities on such quotation system over the thirty (30) day period ending three (3) days prior to the closing of the Liquidation Event; (B) If actively traded over-the-counter, the value shall be deemed to be the average of the closing bid or sale prices (whichever is applicable) over the thirty (30) day period ending three (3) days prior to the closing of the Liquidation Event; and (C) If there is no active public market, the value shall be the fair market value thereof, as mutually determined by the Board of Directors and the holders of at least a majority of the voting power of all then outstanding shares of Convertible Preferred Stock, voting as a single class. (ii) The method of valuation of securities subject to investment letter or other restrictions on free marketability (other than restrictions arising solely by virtue of a shareholder's status as an affiliate or former affiliate) shall be to make an appropriate discount from the market value determined as above in subsections (i)(A), (B) or (C) to reflect the approximate fair market value thereof, as mutually determined by the Board of Directors and the holders of at least a majority of the voting power of all then outstanding shares of Convertible Preferred Stock, voting as a single class. 4. VOTING RIGHTS. In addition to any voting rights provided elsewhere herein or in the Corporation's Certificate of Incorporation, as it may be amended or restated from time to time (the "Certificate of Incorporation"), and any voting rights provided by law, the holders of shares of Series A Convertible Preferred Stock shall have the following voting rights: (a) Election of Directors. (i) Subject to the terms hereof, the holders of the Series A Preferred Stock, together with the holders of any other class or series of Convertible Preferred Stock, the terms of which expressly entitle the holder thereof to vote in the election of directors designated by holders of Convertible Preferred Stock (collectively, "Voting Preferred Stock") shall have the right to elect four (4) directors, one (1) of which shall be an Independent Director (as defined below). Such directors shall be elected by the holders of at least a majority of the voting power of all then outstanding shares of Voting Preferred Stock, voting as a single class. "Independent Director" has the meaning specified in Rule 4200(a)(14) of the NASD listing standards, as in effect on the date hereof and as the same may be amended or supplemented, or in any successor rule or regulation. (ii) Any director elected by the holders of Voting Preferred Stock shall be referred to herein as a "Preferred Director." Subject to Section 4(a)(v), the initial term of any director to be appointed pursuant to Section 4(a)(i) will commence upon his/her election by the holders of Voting Preferred Stock and shall expire at the first annual meeting of stockholders of the Corporation following his/her election. Upon expiration of the initial term of -5- such Preferred Director, so long as the Voting Preferred Stock is outstanding, the holders of such Voting Preferred Stock shall have the right to elect a Preferred Director to replace such director in the same manner described above in Section 4(a)(i). Subject to Section 4(a)(v), a Preferred Director so elected shall hold office for a term expiring at the annual meeting of stockholders in the year following the election of such director. Notwithstanding the foregoing, but subject to Section 4(a)(v), a Preferred Director elected under Section 4(a)(i) shall serve until such Preferred Director's successor is duly elected and qualified or until such director's earlier removal as provided in Section 4(a)(iii) or death or resignation and, in the event a vacancy occurs, a replacement Preferred Director shall be selected as provided in Section 4(a)(i). (iii) A Preferred Director may be removed by, and shall not be removed except by, the vote of at least a majority of the voting power of all then outstanding shares of Voting Preferred Stock, voting as a single class. (iv) The Corporation shall at all times reserve and keep available sufficient vacant seats on the Board of Directors solely for the purpose of enabling the holders of the Voting Preferred Stock to designate Preferred Directors as provided in this Section 4(a). (v) This Section 4(a) shall survive a Qualified Public Offering (as defined in Section 5(b) below) and until such time thereafter as less than an aggregate of 25% of the authorized Convertible Preferred Stock remains outstanding. (b) Certain Corporate Actions. Until a Qualified Public Offering or until such time as less than an aggregate of 25% of the authorized Convertible Preferred Stock remains outstanding, the Corporation shall not, and shall not permit any of its subsidiaries to, without first obtaining the affirmative vote or written consent of the holders of at least a majority of the voting power of all then outstanding shares of Convertible Preferred Stock, voting as a single class: (A) amend, repeal, modify or supplement any provision of the Certificate of Incorporation (including any certificate of designation forming a part thereof), the Bylaws of the Corporation, or any successor certificate of incorporation or bylaws or this Amended Certificate of Designation, Number, Powers, Preferences and Relative, Participating, Optional and Other Rights of Series A Convertible Preferred Stock (the "Certificate of Designation"); (B) authorize or permit the Corporation or any subsidiary of the Corporation to issue any capital stock or any options, warrants or other rights exchangeable or exercisable therefor, other than (i) shares of Series C Convertible Preferred Stock pursuant to the Preferred Stock Purchase Agreement, dated as of October 11, 2001, among the Corporation and UBS (the "Preferred Stock Purchase Agreement"), (ii) Common Stock upon conversion of Convertible Preferred Stock, or upon the exercise of stock options to purchase up to 4,243,037 shares of Common Stock, (iii) shares of Class I Series B Preferred Stock issued upon conversion of Class II Series B Preferred Stock, (iv) securities issued as consideration for any acquisition approved by a majority of the Board of Directors (including the affirmative vote of the Preferred Directors), (v) up to $15 million of Common Stock, issued as consideration for any acquisition -6- approved by a majority of the Board of Directors (without the affirmative vote of the Preferred Directors), provided such Common Stock is valued at no less than the greater of (1) the Stated Value (as adjusted for stock splits, combinations, stock dividends and the like) and (2) the average of the closing price for the Common Stock for the 30 days prior to the issuance, (vi) a warrant to purchase 210,000 shares of Common Stock to Spinway, Inc. (the "Spinway Warrant"), (vii) 210,000 shares of Common Stock upon exercise of the Spinway Warrant, (viii) shares of Common Stock in exchange for shares of common stock, par value $.001 per share ("Tutopia Stock"), of Tutopia.com, Inc. ("Tutopia"), upon a change-in-control of the Corporation pursuant to the Stockholders Agreement, dated as of April 24, 2000, by and among the Corporation, Tutopia and the other parties signatory thereto (the "Tutopia Stockholders Agreement"); (ix) shares of Common Stock and/or Convertible Preferred Stock issued pursuant to that certain Put Agreement, dated December 10, 2001 among the Corporation, UBS and the other parties named therein (the "Tutopia Put Agreement") or (x) a warrant for 500,000 shares dated February 19, 2002, issued to Lucent Technologies Inc. and any Common Stock issued on exercise of such warrant; (C) reclassify any class or series of any Common Stock into shares having any preference or priority as to dividends or liquidation superior to or on a parity with any such preference or priority of Convertible Preferred Stock; (D) authorize or effect, in a single transaction or through a series of related transactions, (1) a liquidation, winding up or dissolution of the Corporation or adoption of any plan for the same; (2) a Liquidation Event; or (3) any direct or indirect purchase or other acquisition by the Corporation or any of its subsidiaries of any capital stock (other than the Convertible Preferred Stock pursuant to its terms); (E) enter into or otherwise become a party to any agreement whereby any shareholder or shareholders of the Corporation shall transfer capital stock of the Corporation to an independent third party or a group of independent third parties pursuant to which such parties acquire capital stock of the Corporation possessing the voting power to elect a majority of the Board of Directors; (F) declare or pay or set aside for payment any dividend or distribution or other payment upon the Common Stock or upon any other Junior Stock, nor redeem, purchase or otherwise acquire any Common Stock or other Junior Stock for any consideration (or pay or make available any moneys, whether by means of a sinking fund or otherwise, for the redemption of or other distribution or payment with respect to any shares of any Common Stock or other Junior Stock), except for the repurchase of shares of Common Stock from directors, consultants or employees of the Corporation or any subsidiary pursuant to agreements approved by the disinterested directors on the Board of Directors, under which the Corporation has the right to repurchase such shares upon the occurrence of certain events, including but not limited to, termination of employment or services; -7- (G) approve the annual budget of the Corporation and its subsidiaries (the "Annual Budget"); (H) enter into any financial commitment over and above those approved in the annual budget in excess of $15 million in the aggregate (for the Corporation and its subsidiaries, taken together), except as prescribed in the Annual Budget; (I) dismiss or hire or modify or enter into any employment agreement, non-competition agreement, bonus or stock issuance arrangements or other compensation (including, without limitation, fringe benefit) arrangements with its President, Chief Executive Officer or Chief Financial Officer, or other equivalent or senior level officer; (J) permit the creation or existence of any lien, mortgage, pledge, hypothecation, assignment, security interest, charge or encumbrance, or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever on any of the Corporation's or any of its subsidiaries' assets with an aggregate value in excess of $15 million, except as part of any financing in the ordinary course of business; (K) make any capital expenditure in any fiscal year in excess of $15 million in the aggregate (for the Corporation and its subsidiaries, taken together), except as prescribed in the Annual Budget; (L) acquire any assets or equity or other interest in any other entity with a value in excess of $15 million in the aggregate (for the Corporation and its subsidiaries, taken together), except as prescribed in the Annual Budget; (M) incur indebtedness for borrowed money (including, without limitation, any capitalized lease obligations, accounts receivable financing or other asset-backed financing), any guarantee or other similar contingent obligation or any lease financing (whether a capitalized lease, operating lease, pursuant to a sale leaseback arrangement or otherwise), in excess of $15 million in the aggregate (for the Corporation and its subsidiaries, taken together), except as prescribed in the Annual Budget; (N) amend, supplement, restate, revise, waive or otherwise modify any stock option plan, agreement or other arrangement of the Corporation (each, a "Stock Option Plan"), as in effect on October 11, 2001; (O) create or adopt any stock option plan, stock appreciation rights plan, bonus plan or similar plan that was not in existence on October 11, 2001, except as approved by the Compensation Committee of the Board of Directors; (P) dispose of or acquire assets with a value in excess of $15 million other than in the normal course of business; -8- (Q) liquidate, dissolve or voluntarily elect to commence bankruptcy or insolvency proceedings under applicable laws; (R) change in any material respect the nature of the business of the Corporation and its subsidiaries taken as a whole; (S) enter into any transaction, or any agreement or understanding with any affiliate of the Corporation or any subsidiary thereof, other than a wholly-owned subsidiary of the Corporation; (T) (i) solicit or negotiate any inquiries or proposals with respect to (x) any direct or indirect issuance, sale, disposition or redemption of any securities of Latin Guide, Inc. ("LGI"), Tutopia or any of Tutopia's subsidiaries, (y) the direct or indirect sale or disposition of all or any material portion of the assets or business of LGI, Tutopia or any of Tutopia's subsidiaries, or (z) any merger, reorganization, consolidation or recapitalization or other similar transaction involving LGI, Tutopia or any of Tutopia's subsidiaries; or (ii) discuss with or provide to any person or entity information of LGI, Tutopia or any of Tutopia's subsidiaries with respect to or in contemplation of any of the foregoing; or (U) agree to do any of the foregoing. (c) Additional Voting Rights. Except as required by law, the holders of Series A Convertible Preferred Stock shall be entitled to notice of any stockholders' meeting and to vote together as a single class with the holders of Common Stock (and any other capital stock of the Corporation entitled to vote), upon any matter submitted to the stockholders for a vote as follows: (i) the holders of the Series A Convertible Preferred Stock shall have one (1) vote per share of Series A Convertible Preferred Stock; (ii) the holders of Common Stock shall have one (1) vote per share of Common Stock and (iii) the holders of any other series of Convertible Preferred Stock shall be entitled to the number of votes specified in the Certificate of Designation creating that series of Convertible Preferred Stock. (d) Manner of Voting. Whenever a vote of the holders of Series A Convertible Preferred Stock, Series B Convertible Preferred Stock, Series C Convertible Preferred Stock and/or other shares of Convertible Preferred Stock shall be taken as a class pursuant to the provisions of this Certificate of Designation or otherwise, the holders of Series A Convertible Preferred Stock shall have one (1) vote per share and the holders of the other Convertible Preferred Stock shall be entitled to the number of votes specified in the Certificate of Designation creating that series of Convertible Preferred Stock (whether or not convertible on such date). 5. CONVERSION. Shares of Series A Convertible Preferred Stock may be converted into shares of Common Stock, on the terms and conditions set forth in this Section 5. (a) Optional Conversion. -9- (i) At any time and from time to time, each holder of shares of Series A Preferred Stock may, upon written notice to the Corporation, convert all or any portion of such shares held by such holder into the number of shares of Common Stock determined by dividing (x) the applicable Stated Preference multiplied by the number of shares surrendered for conversion plus any declared but unpaid dividends on such shares, by (y) the Conversion Price on the date of conversion determined in accordance with Section 5(c). (ii) References in this Section 5 to "Common Stock" shall include all stock or other securities or property (including cash) into which Common Stock is converted following any merger, reorganization or reclassification of the capital stock of the Corporation. (b) Mandatory Conversion. Each share of Series A Convertible Preferred Stock shall automatically be converted into such number of shares of Common Stock as is determined by dividing (x) the Stated Preference multiplied by the number of shares surrendered for conversion plus any declared but unpaid dividends on such shares, by (y) the Conversion Price on the date of conversion determined in accordance with Section 5(c), without further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent, upon the closing of an underwritten public offering of shares of Common Stock for which the Corporation has obtained a firm commitment from one or more underwriter(s) for at least: $60 million of Common Stock and in which the Corporation receives gross proceeds from the sale of Common Stock to the public of at least $45 million (before deduction of underwriter's discounts and commissions), and which values the equity of the Corporation at no less than $200 million pre-offering (a "Qualified Public Offering"). Except for the purposes of the calculation in the immediately preceding sentence, in the event of a Qualified Public Offering, the person(s) entitled to receive the Common Stock issuable upon conversion of Series A Convertible Preferred Stock shall not be deemed to have converted such Series A Convertible Preferred Stock until the closing of such offering. (c) Conversion Price. The Conversion Price per share for the Series A Convertible Preferred Stock shall be Three and 00/100 Dollars ($3.00), subject to adjustment as provided in Section 6 hereof. (d) Common Stock. The Common Stock to be issued upon conversion hereunder shall be fully paid and nonassessable. (e) Procedures for Conversion. (i) In order to convert shares of Series A Convertible Preferred Stock into shares of Common Stock pursuant to Section 5(a) (or, in the case of an automatic conversion of Series A Preferred Stock pursuant to Section 5(b), to receive a certificate for such holder's shares of Common Stock outstanding as a result of such conversion), the holder shall surrender the certificate or certificates therefore, duly endorsed for transfer, at any time during normal business hours, to the Corporation at its principal or at such other office or agency then maintained by it for such purpose (the "Payment Office"), accompanied, in the case of a conversion pursuant to Section 5(a), by written notice to the Corporation of such holder's -10- election to convert and (if so required by the Corporation or any conversion agent) by an instrument of transfer, in form reasonably satisfactory to the Corporation and to any conversion agent, duly executed by the registered holder or by his duly authorized attorney, and any taxes required pursuant to Section 5(e)(iii). As promptly as practicable after the surrender for conversion of any share of Series A Convertible Preferred Stock in the manner provided in the preceding sentence, and the payment in cash of any amount required by the provisions of Section 5(e)(iii), but in any event within five Trading Days of such surrender for payment, the Corporation will deliver or cause to be delivered at the Payment Office to or upon the written order of the holder of such shares, certificates representing the number of full shares of Common Stock issuable upon such conversion, issued in such name or names as such holder may direct. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the shares in proper order for conversion, and all rights of the holder of such shares as a holder of such shares shall cease at such time and the person or persons in whose name or names the certificates for such shares of Common Stock are to be issued shall be treated for all purposes as having become the record holder or holders thereof at such time; provided, however, that any such surrender and payment on any date when the stock transfer books of the Corporation shall be closed shall constitute the person or persons in whose name or names the certificates for such shares of Common Stock are to be issued as the record holder or holders thereof for all purposes immediately prior to the close of business on the next succeeding day on which such stock transfer books are opened and such conversion shall be at the Conversion Price in effect at such time on such succeeding day. For purposes hereof, "Trading Day" shall mean (i) any day on which stock is traded on the principal stock exchange on which the Common Stock is listed or admitted to trading, (ii) if the Common Stock is not then listed or admitted to trading on any stock exchange but is traded on the Nasdaq Stock Market, any day on which stock is traded on the Nasdaq Stock Market, or (iii) if the Common Stock is not then traded on the Nasdaq Stock Market, any day on which stock is traded in the over-the-counter market, as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding to its functions of reporting prices). (ii) The Corporation shall not be required to issue fractional shares of Common Stock upon conversion of shares of Series A Convertible Preferred Stock. At the Corporation's discretion, in the event the Corporation determines not to issue fractional shares, in lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the closing price of the Common Stock on the date of conversion. (iii) The issuance of certificates for shares of Common Stock upon conversion shall be made without charge for any issue, stamp or other similar tax in respect of such issuance. However, if any such certificate is to be issued in a name other than that of the holder of record of the shares converted, the person or persons requesting the issuance thereof shall pay to the Corporation the amount of any tax which may be payable in respect of any transfer involved in such issuance or shall establish to the satisfaction of the Corporation that such tax has been paid or is not payable. -11- (f) Reservation of Stock Issuable Upon Conversion. The Corporation shall reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Series A Convertible Preferred Stock, 8,333,332 shares of Common Stock. If at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Series A Convertible Preferred Stock without regard to whether the holders of Series A Convertible Preferred Stock are then entitled to convert, the Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose, including, without limitation, taking appropriate board action, recommending such an increase to the holders of Common Stock, holding shareholders meetings, soliciting votes and proxies in favor of such increase to obtain the requisite stockholder approval and upon such approval, the Corporation shall reserve and keep available such additional shares solely for the purpose of effecting the conversion of the shares of the Series A Convertible Preferred Stock. (g) Merger, Etc. (i) Notwithstanding any other provision hereof, in case of any merger or other business combination transaction involving the Corporation which does not constitute a Liquidation Event, then, concurrently with the consummation of such transaction, provision shall be made so that each share of Series A Convertible Preferred Stock shall thereafter be convertible into the number of shares of stock or other securities or property (including cash) to which a holder of the number of shares of Common Stock deliverable upon conversion of such share of Series A Convertible Preferred Stock would have been entitled assuming conversion immediately prior to the closing of the transaction. (ii) In case of any merger or other business combination transaction involving the Corporation which does not constitute a Liquidation Event, in which the Corporation is not the surviving entity, and the Corporation or the holders do not otherwise convert all outstanding shares of Series A Convertible Preferred Stock, the Series A Convertible Preferred Stock shall be converted into or exchanged for and shall become shares of the surviving corporation having, in respect of the surviving corporation, substantially the same powers, preferences and relative participating, optional or other special rights, and the qualifications, limitations or restrictions thereon, that the Series A Convertible Preferred Stock had immediately prior to such transaction. 6. ADJUSTMENTS. The Conversion Price shall be subject to adjustment from time to time as set forth in this Section 6. The Corporation shall give holders of Series A Convertible Preferred Stock notice of any event described below which requires an adjustment pursuant to this Section 6 at the time of such event. (a) Definitions. As used in this Section 6, the following terms have the respective meanings set forth below: -12- "Additional Shares of Common Stock" shall mean all shares of Common Stock issued by the Corporation after the Closing (as defined in the Preferred Stock Purchase Agreement). "Convertible Securities" shall mean evidences of indebtedness, shares of stock of other securities which are convertible into or exchangeable, with or without payment of additional consideration in cash or property, for Additional Shares of Common Stock, either immediately or upon the occurrence of a specified date or a specified event. "Fully Diluted Outstanding" shall mean, when used with reference to Common Stock, at any date as of which the number of shares thereof is to be determined, all shares of Common Stock Outstanding at such date and all shares of Common Stock issuable in respect of Series C Convertible Preferred Stock outstanding on such date and other securities convertible into, or options or warrants to purchase, shares of Common Stock outstanding on such date, whether or not such options, warrants or other securities are presently convertible or exercisable. "Other Property" shall have the meaning set forth in Section 6(i). "Outstanding" shall mean, when used with reference to Common Stock, at any date as of which the number of shares thereof is to be determined, all issued shares of Common Stock, except shares then owned or held by or for the account of the Corporation or any subsidiary of the Corporation, and shall include all shares issuable in respect of outstanding scrip or any certificates representing fractional interests in shares of Common Stock. "Overage" shall mean the total number of shares of Common Stock issued in connection with the Subject Transactions above the Share Allowance. "Permitted Issuances" shall mean (i) the issuance of up to 4,243,037 shares of Common Stock issuable pursuant to options to purchase Common Stock under the Stock Option Plan, (ii) shares of Common Stock issued or issuable in connection with a Qualified Public Offering, (iii) shares of Common Stock issued in connection with the Subject Transactions or upon conversion of Convertible Preferred Stock, (iv) shares of Class I Series B Preferred Stock issued upon conversion of the Class II Series B Preferred Stock, (v) securities issued as consideration for any acquisition approved by a majority of the Board of Directors (including the affirmative vote of the Preferred Directors) (vi) the issuance of an aggregate of up to 100,000 additional shares of Common Stock (as adjusted for stock splits, combinations, stock dividends and the like) in transactions approved by a majority of the Board of Directors, (vii) the issuance of an aggregate of up to another 100,000 additional shares of Common Stock (as adjusted for stock splits, combinations, stock dividends and the like) in transactions approved by a majority of the Board of Directors (including the affirmative vote of the Preferred Directors), (viii) the Spinway Warrant, (ix) 210,000 shares of Common Stock upon exercise of the Spinway Warrant, (x) shares of Common Stock and/or Convertible Preferred Stock issued pursuant to the Tutopia Put Agreement, (xi) such other issuances as shall be approved in advance by the holders of at least a majority of the voting power of all then outstanding shares of Convertible Preferred Stock, voting as a single class, or (xi) a warrant for 500,000 shares dated February 19, 2002, issued to Lucent Technologies Inc. and any Common Stock issued on exercise of such warrant; -13- "Qualified Private Offering" shall mean a private equity offering to investors other than UBS resulting in gross proceeds to the Corporation of at least $30 million, in which the securities issued contain anti-dilution provisions no more favorable to the investor than the anti-dilution provisions of the Series A Convertible Preferred Stock which take effect following the consummation of a Qualified Private Offering. "Share Allowance" shall mean 428,571 shares of Common Stock. "Stock Option Plan" shall mean the IFX Corporation Directors Stock Option Plan, the 1998 IFX Corporation Stock Option and Incentive Plan, as amended, and the IFX Corporation 2001 Stock Option Plan. "Subject Transactions" shall mean (i) any acquisition consummated prior to the filing hereof, including, without limitation, the acquisitions of Mr. Help Informatica S/C Ltda., Zupernet Ltda. and Redescape, L.L.C., (ii) the Consulting Agreement, dated as of May 27, 1999 by and between the Corporation and Brian Reale and (iii) the conversion of Tutopia Stock into Common Stock pursuant to the Tutopia Stockholders Agreement. (b) Stock Dividends, Subdivisions and Combinations. If at any time the Corporation shall: (i) take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend payable in, or other distribution of, Additional Shares of Common Stock, (ii) subdivide its outstanding shares of Common Stock into a larger number of shares of Common Stock, or (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, then the applicable Conversion Price immediately after the occurrence of any such event shall be adjusted to equal the product of (A) the Conversion Price immediately prior to the occurrence of such event and (B) a fraction, the numerator of which shall be the number of Fully Diluted Outstanding shares of Common Stock immediately prior to the occurrence of such event and the denominator of which shall be the number of Fully Diluted Outstanding shares of Common Stock immediately after the occurrence of such event. (c) Issuance of Additional Shares of Common Stock. (i) In the event that prior to the consummation of or in connection with a Qualified Private Offering, the Corporation shall issue or sell any Additional Shares of Common Stock, other than Permitted Issuances, for a consideration per Additional Share of Common Stock less than the applicable Conversion Price, then the applicable Conversion Price shall be reduced to the consideration per Additional Share of Common Stock paid for such Additional Shares of Common Stock. -14- (ii) In the event that following the consummation of a Qualified Private Offering, the Corporation shall issue or sell any Additional Shares of Common Stock, other than Permitted Issuances, for a consideration per Additional Share of Common Stock less than the applicable Conversion Price, then the applicable Conversion Price shall be reduced to a price determined by dividing (A) an amount equal to the sum of (x) the number of Fully Diluted Outstanding shares of Common Stock immediately prior to such issue or sale multiplied by the then existing Conversion Price plus (y) the aggregate consideration, if any, received by the Corporation upon such issue or sale, by (B) the total number of Fully Diluted Outstanding shares of Common Stock outstanding immediately after such issue or sale. (iii) The provisions of this Section 6(c) shall not apply to any issuance of Additional Shares of Common Stock for which an adjustment is provided under Section 6(b). No adjustment shall be made under this Section 6(c) upon the issuance of any Additional Shares of Common Stock which are issued pursuant to the exercise of any warrants or other subscription or purchase rights or pursuant to the exercise of any conversion or exchange rights in any Convertible Securities, if any such adjustment shall previously have been made upon the issuance of such warrants or other rights or upon the issuance of such Convertible Securities (or upon the issuance of any warrant or other rights therefor) pursuant to Section 6(d) or Section 6(e). (d) Issuance of Warrants or Other Rights. Except with respect to Permitted Issuances, if at any time the Corporation shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a distribution of, or shall in any manner (whether directly or by assumption in a merger in which the Corporation is the surviving corporation) issue or sell, any warrants or other rights to subscribe for or purchase any Additional Shares of Common Stock or any Convertible Securities, whether or not the rights to exchange or convert thereunder are immediately exercisable, and the price per share for which Common Stock is issuable upon the exercise of such warrants or other rights or upon conversion or exchange of such Convertible Securities shall be less than the applicable Conversion Price in effect immediately prior to the time of such distribution, issue or sale, then the applicable Conversion Price shall be adjusted as provided in Section 6(c)(i) or (ii), as applicable, on the basis that (i) the maximum number of Additional Shares of Common Stock issuable pursuant to all such warrants or other rights or necessary to effect the conversion or exchange of all such Convertible Securities shall be deemed to have been issued and outstanding, (ii) the price per share for such Additional Shares of Common Stock shall be deemed to be the lowest price per share at which such Additional Shares of Common Stock are issuable to such holders, and (iii) the Corporation shall have received all of the consideration, if any, payable for such warrants or other rights as of the date of the actual issuance thereof. No further adjustments of the Conversion Price shall be made upon the actual issue of such Common Stock or of such Convertible Securities upon exercise of such warrants or other rights or upon the actual issue of such Common Stock upon such conversion or exchange of such Convertible Securities. (e) Issuance of Convertible Securities. Except with respect to Permitted Issuances, if at any time the Corporation shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a distribution of, or shall in any manner (whether directly or by assumption in a merger in which the Corporation is the surviving corporation) issue or sell, any Convertible Securities, whether or not the rights to exchange or convert -15- thereunder are immediately exercisable, and the price per share for which Common Stock is issuable upon such conversion or exchange shall be less than the applicable Conversion Price in effect immediately prior to the time of such issue or sale, then the applicable Conversion Price shall be adjusted as provided in Section 6(c)(i) or (ii), as applicable, on the basis that (i) the maximum number of Additional Shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities shall be deemed to have been issued and outstanding, (ii) the price per share of such Additional Shares of Common Stock shall be deemed to be the lowest possible price in any range of prices at which such Additional Shares of Common Stock are available to such holders, and (iii) the Corporation shall have received all of the consideration payable therefor, if any, as of the date of actual issuance of such Convertible Securities. No further adjustment of the Conversion Price shall be made under this Section 6(e) upon the issuance of any Convertible Securities which are issued pursuant to the exercise of any warrants or other subscription or purchase rights therefor, if any such adjustment shall previously have been made upon the issuance of such warrants or other rights pursuant to Section 6(d). No further adjustments of the Conversion Price shall be made upon the actual issue of such Common Stock upon conversion or exchange of such Convertible Securities and, if any issue or sale of such Convertible Securities is made upon exercise of any warrant or other right to subscribe for or to purchase or any warrant or other right to purchase any such Convertible Securities for which adjustments thereof have been or are to be made pursuant to other provisions of this Section 6, no further adjustments shall be made by reason of such issue or sale. (f) Superseding Adjustment. If, at any time after any adjustment of the applicable Conversion Price shall have been made pursuant to Section 6(d) or 6(e) as the result of any issuance of warrants, rights or Convertible Securities, and either (i) such warrants or rights, or the right of conversion or exchange in such other Convertible Securities, shall expire, and all or a portion of such warrants or rights, or the right of conversion or exchange with respect to all or a portion of such other Convertible Securities, as the case may be, shall not have been exercised, or (ii) the consideration per share for which shares of Common Stock are issuable pursuant to such warrants or rights, or such other Convertible Securities, shall be increased or decreased by virtue of provisions therein contained, then such previous adjustment shall be rescinded and annulled and the Additional Shares of Common Stock which were deemed to have been issued by virtue of the computation made in connection with the adjustment so rescinded and annulled shall no longer be deemed to have been issued by virtue of such computation. Thereupon, a recomputation shall be made of the effect of such rights or options or other Convertible Securities on the applicable Conversion Price, on the basis of (iii) treating the number of Additional Shares of Common Stock or other property, if any, theretofore actually issued or issuable pursuant to the previous exercise of any such warrants or rights or any such right of conversion or exchange, as having been issued on the date or dates of any such exercise and for the consideration actually received and receivable therefor, and -16- (iv) treating any such warrants or rights or any such other Convertible Securities which then remain outstanding as having been granted or issued immediately after the time of such increase or decrease of the consideration per share for which shares of Common Stock or other property are issuable under such warrants or rights or other Convertible Securities. (g) Subject Transactions Adjustment. If the Corporation issues a number of shares of Common Stock greater than the Share Allowance in connection with the Subject Transactions, the Conversion Price shall be adjusted to a dollar resulting from the following: $40,464,918 ------------------------------------------ 1.010948(12,919,702 + Overage) - 1,500,000 Notwithstanding the foregoing, an adjustment under this subsection (g) shall only be made to the extent such adjustment results in a reduction of the then current Conversion Price. (h) Other Provisions Applicable to Adjustments Under This Section. The following provisions shall be applicable to the making of adjustments provided for in this Section 6: (i) Computation of Consideration. To the extent that any Additional Shares of Common Stock or any Convertible Securities or any warrants or other rights to subscribe for or purchase any Additional Shares of Common Stock or any Convertible Securities shall be issued for cash consideration, the consideration received by the Corporation therefor shall be the amount of the cash received by the Corporation therefor, or, if such Additional Shares of Common Stock or Convertible Securities are offered by the Corporation for subscription, the subscription price, or, if such Additional Shares of Common Stock or Convertible Securities are sold to underwriters or dealers for public offering without a subscription offering, the public offering price (in any such case subtracting any amounts paid or receivable for accrued interest or accrued dividends, but not subtracting any compensation, discounts or expenses paid or incurred by the Corporation for and in the underwriting of, or otherwise in connection with, the issuance thereof). To the extent that such issuance shall be for a consideration other than cash, then, except as herein otherwise expressly provided, the amount of such consideration shall be deemed to be the fair value of such consideration at the time of such issuance as determined in good faith by the Board of Directors. In case any Additional Shares of Common Stock or any Convertible Securities or any warrants or other rights to subscribe for or purchase such Additional Shares of Common Stock or Convertible Securities shall be issued in connection with any merger in which the Corporation issues any securities, the amount of consideration therefor shall be deemed to be the fair value, as determined in good faith by the Board of Directors, of such portion of the assets and business of the nonsurviving corporation as the Board of Directors in good faith shall determine to be attributable to such Additional Shares of Common Stock, Convertible Securities, warrants or other rights, as the case may be. The consideration for any Additional Shares of Common Stock issuable pursuant to any warrants or other rights to subscribe for or purchase the same shall be the consideration received by the Corporation for issuing such warrants or other rights plus the additional consideration payable to the Corporation upon exercise of such warrants or other rights. The consideration for any Additional Shares of Common Stock issuable pursuant to the terms of any Convertible -17- Securities shall be the consideration, if any, received by the Corporation for issuing warrants or other rights to subscribe for or purchase such Convertible Securities, plus the consideration paid or payable to the Corporation in respect of the subscription for or purchase of such Convertible Securities, plus the additional consideration, if any, payable to the Corporation upon the exercise of the right of conversion or exchange in such Convertible Securities. In case of the issuance at any time of any Additional Shares of Common Stock or Convertible Securities in payment or satisfaction of any dividends upon any class of stock other than Common Stock, the Corporation shall be deemed to have received for such Additional Shares of Common Stock or Convertible Securities a consideration equal to the amount of such dividend so paid or satisfied. (ii) When Adjustments to Be Made. The adjustments required by this Section 6 shall be made whenever and as often as any specified event requiring an adjustment shall occur. For the purpose of any adjustment, any specified event shall be deemed to have occurred at the close of business on the date of its occurrence. (iii) When Adjustment Not Required. If the Corporation shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or distribution or subscription or purchase rights and shall, thereafter and before the distribution to stockholders thereof, legally abandon its plan to pay or deliver such dividend, distribution, subscription or purchase rights, then thereafter no adjustment shall be required by reason of the taking of such record and any such adjustment previously made in respect thereof shall be rescinded and annulled. (iv) Escrow of Common Stock. If after any property becomes distributable as a result of the provisions of this Section 6 by reason of the taking of any record of the holders of Common Stock, but prior to the occurrence of the event for which such record is taken, a holder of shares of Series A Convertible Preferred Stock exercises its conversion rights pursuant to Section 5, any Additional Shares of Common Stock issuable and other property distributable upon exercise by reason of such adjustment shall be held in escrow for such holder by the Corporation to be issued to such holder upon and to the extent that the event actually takes place. Notwithstanding any other provision to the contrary herein, if the event for which such record was taken fails to occur or is rescinded, then such escrowed shares shall be canceled by the Corporation and escrowed property returned. (v) Challenge to Good Faith Determination. Whenever the Board of Directors shall be required to make a determination in good faith of the fair value of any item under this Section 6, such determination may be challenged in good faith by holders of a majority of the outstanding shares of Convertible Preferred Stock, and any dispute shall be resolved by an investment banking firm of recognized national standing selected by the Corporation and acceptable to such holder. (i) Other Action Affecting Common Stock. In case at any time or from time to time the Corporation shall take any action in respect of its Common Stock, other than any action described in this Section 6 for which a specific adjustment is provided, then, unless such action will not have a materially adverse effect upon the rights of the holders of shares of Series C Convertible Preferred Stock, the number of shares of Common Stock or other stock into -18- which such shares of Series A Convertible Preferred Stock are convertible and/or the applicable Conversion Price shall be adjusted in such manner as may be equitable in the circumstances. (j) Certain Limitations. Notwithstanding anything herein to the contrary, the Corporation shall not enter into any transaction which, by reason of any adjustment hereunder, would cause the applicable Conversion Price to be less than the par value per share of Common Stock. (k) Notice of Adjustments. Whenever the number of shares of Common Stock into which shares of Series A Convertible Preferred Stock are convertible or whenever the applicable Conversion Price shall be adjusted pursuant to this Section 6, the Corporation shall forthwith prepare a certificate to be executed by the chief financial officer of the Corporation setting forth, in reasonable detail, the event requiring the adjustment and the method by which such adjustment was calculated (including a description of the basis on which the Board of Directors determined the fair value of any consideration referred to in Section 6(h)(i)), specifying any change in the applicable Conversion Price or the number of shares of Common Stock into which shares of Series A Convertible Preferred Stock are convertible and (if such adjustment was made pursuant to Section 5(g)(i) or 6(h)) describing the number and kind of any other shares of stock or Other Property into which shares of Series A Convertible Preferred Stock are convertible, and any change in the applicable Conversion Price or prices thereof, after giving effect to such adjustment or change. The Corporation shall promptly cause a signed copy of such certificate to be delivered to the holders of Series A Convertible Preferred Stock. The Corporation shall keep at the Payment Office copies of all such certificates and cause the same to be available for inspection at said office during normal business hours by the holders of Series A Convertible Preferred Stock or any prospective purchaser of shares of Series A Convertible Preferred Stock designated by such holders. 7. TRIGGERING EVENTS. Any of the following actions or events shall constitute a "Triggering Event" for purposes hereof: (a) Failure to Pay Dividends. The Corporation shall fail to pay any dividend on any Series A Convertible Preferred Stock which it is required to pay in accordance with Section 2 for any reason, including but not limited to, that such payment is prohibited by applicable law or the Board of Directors elect not to pay such dividend, or shall otherwise violate any term of Section 2 and such failure shall not be cured within a period of 30 days after such violation (which cure shall be effected in a manner ensuring the holders the same yield as if such violation had not occurred). (b) Failure of Voting Rights. The Corporation shall enter into any transaction or take any action required to be approved by holders of Series A Convertible Preferred Stock without obtaining the requisite approval of the holders of the Series A Convertible Preferred Stock. (c) Failure to Convert. The Corporation shall fail for any reason to issue Common Stock as required under Section 5 upon the request of any holder of Series A -19- Convertible Preferred Stock as provided in Section 5 or shall fail for any reason to comply in any material respect with any term of Section 5(f) or any other term of Section 5 hereof. (d) Registration Rights Agreement. The Corporation shall fail in any material respect to comply with the rights of the holders of Series A Convertible Preferred Stock pursuant to the Second Amended and Restated Registration Rights Agreement, dated as of December 10, 2001, among the Corporation, UBS and certain other stockholders of the Corporation, and such failure shall continue for a period of 30 days after notice from any such holder. (e) Preferred Stock Purchase Agreement. The Corporation shall fail to comply with Section 6(f) or 6(g) of the Preferred Stock Purchase Agreement and such failure shall continue for a period of 30 days after notice from the Purchasers or the representations made under Section 4(c) or 4(u) of the Preferred Stock Purchase Agreement shall prove to have been incorrect or misleading in any material respect when made pursuant thereto or any other material representation made under the Preferred Stock Purchase Agreement shall prove to have been incorrect or misleading in any substantial material respect when made. (f) There shall have occurred and be continuing a "Triggering Event" pursuant to the terms of any other class or series of Convertible Preferred Stock. (g) Notwithstanding the foregoing, if a majority of the Preferred Directors directors affirmatively vote in favor of a transaction or other action by the Corporation which would constitute a Triggering Event under Section 7(b) or 7(d), such action or event shall not be considered a Triggering Event. 8. REMEDIES. (a) In the event that a Triggering Event described in Section 7 shall occur and be continuing, each holder of Series A Convertible Preferred Stock shall be entitled to receive all cash and other dividends, distributions and other payments which would be paid or payable to a holder of a number of shares of Common Stock into which the shares of Series A Convertible Preferred Stock held by such holder are convertible at such time (without regard to the number of shares of Common Stock which are authorized or reserved for issuance at such time). (b) Upon the occurrence and during the continuance of any Triggering Event, to the extent the Preferred Directors do not already constitute a majority of the Board of Directors, the size of the Board of Directors shall immediately be increased by the minimum number of directors which, if all of such additional directors were deemed "Preferred Directors," would result in such Preferred Directors constituting a majority of the Board of Directors, and the holders of Voting Preferred Stock shall be entitled to appoint such newly created directors by vote of the holders of at least a majority of the voting power of all then outstanding shares of Voting Preferred Stock, voting as a single class. (c) Upon the occurrence and during the continuance of any Triggering Event, any holder of shares of Series A Convertible Preferred Stock, at its election, may, by notice to the Corporation (the "Put Notice"), demand repurchase of all or any portion of such holder's shares of Series A Convertible Preferred Stock for a cash purchase price in an amount per share -20- equal to the Liquidation Preference. The Corporation shall, on the date (not less than 10 business days after the date of the Put Notice) designated in such Put Notice, repurchase from the holder such holder's shares of Series A Convertible Preferred Stock specified in the Notice. On the date of any repurchase of shares of Series A Convertible Preferred Stock pursuant to this Section 8(c), the holder thereof shall surrender for redemption a certificate for the number of shares of Series A Convertible Preferred Stock being redeemed, without any representation or warranty (other than that the holder has good and marketable title thereto, free and clear of liens, encumbrances and restrictions of any kind), against payment therefor of the repurchase price by, at the option of the holder, (i) wire transfer to an account designated by the holder for such purpose or (ii) a certified or official bank check payable to the order of the holder. If less than all of the holder's shares of Series A Convertible Preferred Stock represented by a single certificate are being redeemed, the Corporation shall cancel such certificate and issue in the name of, and deliver to, the holder a new certificate for the portion not being redeemed. At any time following delivery of a Put Notice but prior to the date of repurchase, any holder of Series A Convertible Preferred Stock may, by notice to the Corporation, withdraw the repurchase demand contained in the Put Notice. Notwithstanding the foregoing, the holders of Series A Preferred Stock shall not be entitled to exercise their repurchase rights hereunder unless the holders of Convertible Preferred Stock elect to exercise such repurchase rights by vote of the holders of at least a majority of the voting power of all then outstanding shares of Convertible Preferred Stock, voting as a single class. (d) The Corporation stipulates that the remedies at law of each holder of Series A Convertible Preferred Stock in the event of any Triggering Event or threatened Triggering Event or otherwise or other failure in the performance of or compliance with any of the terms hereof are not and will not be adequate and that, to the fullest extent permitted by law, such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise without requiring any holder to post a bond or other security except to the extent required by applicable law. (e) Any holder of Series A Convertible Preferred Stock shall be entitled to recover from the Corporation the reasonable attorneys' fees and expenses incurred by such holder in connection with any Triggering Event or enforcement by such holder of any obligation of the Corporation hereunder. (f) No failure or delay on the part of any holder of Series A Convertible Preferred Stock in exercising any right, power or remedy hereunder or under applicable law or otherwise shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy hereunder or thereunder. The remedies herein provided are cumulative and not exclusive of any remedies provided by law or otherwise. 9. PREEMPTIVE RIGHT. (a) Each holder of Series A Convertible Preferred Stock or Common Stock issued upon conversion of Series A Convertible Preferred Stock, shall have a right of first refusal (the "Preemptive Right") to purchase its pro rata share, based on such holder's percentage -21- ownership interest in the Corporation, of New Securities (as defined below) which the Corporation, from time to time, proposes to sell and issue (subject to such requirements and restrictions imposed by the Securities Act of 1933, as amended, and state securities laws and to the actual issuance of the New Securities). The pro rata shares of any holder of Series A Convertible Preferred Stock or Common Stock issued upon conversion of Series A Convertible Preferred Stock, for purposes of this Preemptive Right, shall be the ratio of (i) the number of shares of Common Stock owned, of record or beneficially, by such holder (including all shares issuable upon conversion of the Series A Convertible Preferred Stock, whether or not then currently convertible, or the exercise or conversion of any other option, warrant or convertible security held by such holder) immediately prior to the issuance of the New Securities, to (ii) the total number of shares of Common Stock issued and outstanding immediately prior to the issuance of the New Securities, determined on a fully diluted basis after giving effect to the exercise in full of then outstanding options and warrants and the conversion of all securities convertible into shares of Common Stock; provided, however, that if any holder of Series A Convertible Preferred -------- ------- Stock or Common Stock issued upon conversion of Series A Convertible Preferred Stock does not elect to purchase its entire pro rata share of such New Securities, then each other holder that has elected to purchase its entire pro rata share shall have the right to purchase up to a number of such unpurchased portion, in addition to its own, in the proportion that (1) the number of shares of Common Stock owned, of record or beneficially, by such holder (including all shares issuable upon conversion of the Series A Convertible Preferred Stock, whether or not then currently convertible, or the exercise or conversion of any other option, warrant or convertible security held by such holder) immediately prior to the issuance of the New Securities bears to (2) the number of shares of Common Stock owned, of record or beneficially, by all holders of Series A Convertible Preferred Stock or Common Stock issued upon conversion of Series A Convertible Preferred Stock (including all shares issuable upon conversion of the Series A Convertible Preferred Stock, whether or not then currently convertible, or the exercise or conversion of any other option, warrant or convertible security held by such holders) immediately prior to the issuance of the New Securities. The overallotment mechanism set forth in this paragraph shall be repeatedly applied until all New Securities available for purchase by holders of Series A Convertible Preferred Stock or Common Stock issued upon conversion of Series A Convertible Preferred Stock have been purchased or no holders remain who have indicated a desire to purchase any unsubscribed for portion in their notice to the Corporation. (b) "New Securities" shall mean (a) any capital stock of the Corporation, rights, options or warrants to purchase capital stock and securities of any type whatsoever that are, or may become convertible into or exchangeable for capital stock and (b) so-called "high yield" bonds, debt instruments with equity like features or other similar debt instruments, which bear a rating lower than investment-grade or are unrated, issued by the Corporation; provided, however, that the term "New Securities" does not include -------- ------- (i) the issuance of up to 4,243,037 shares of Common Stock issuable pursuant to options to purchase Common Stock under the Stock Option Plan, (ii) shares of Common Stock issued or issuable in connection with a Qualified Public Offering, (iii) shares of Common Stock issued upon conversion of Convertible Preferred Stock, (iv) shares of Class I Series B Preferred Stock issued upon conversion of Class II Series B Preferred Stock, (v) securities issued as consideration for any acquisition approved by a majority of the Board of Directors (including the affirmative vote of the Preferred Directors), (vi) the Spinway Warrant, (vii) 210,000 shares of Common Stock upon exercise of the Spinway -22- Warrant, (viii) shares of Common Stock in exchange for shares of Tutopia Stock upon a change-in-control of the Corporation pursuant to the Tutopia Stockholders Agreement, (ix) shares of Common Stock and/or Convertible Preferred Stock issued pursuant to the Tutopia Put Agreement, (x) any shares of capital stock of the Corporation, rights, options or warrants to purchase capital stock and securities of any type whatsoever that are, or may become convertible into or exchangeable for capital stock that have been approved in advance by the holders of at least a majority of the voting power of all then outstanding shares of Convertible Preferred Stock, voting as a single class, or (xi) a warrant for 500,000 shares dated February 19, 2002, issued to Lucent Technologies Inc. and any Common Stock issued on exercise of such warrant. (c) In the event the Corporation proposes to undertake an issuance of New Securities, it shall give each holder of Series A Convertible Preferred Stock or Common Stock issued upon conversion of Series A Convertible Preferred Stock written notice of its intention, describing the type of New Securities and the price and the terms upon which the Corporation proposes to issue the same. Each such holder shall have twenty (20) days from the date of receipt of any such notice to agree to purchase its pro rata share of such New Securities for the price and upon the terms specified in the notice by giving written notice to the Corporation and stating therein the quantity of New Securities to be purchased. (d) The Corporation shall have ninety (90) days after expiration of the twenty (20) day period described in Section 9(c) to sell any New Securities with respect to which a Preemptive Right was not exercised, at a price not less than and upon terms no more favorable in the aggregate to the purchasers thereof than specified in the Corporation's notice. To the extent the Corporation does not sell all the New Securities offered within said ninety (90) day period, the Corporation shall not thereafter issue or sell such New Securities without first again offering such securities to each holder of Series A Convertible Preferred Stock or Common Stock issued upon conversion of Series A Convertible Preferred Stock in the manner provided above. (e) The rights granted under this Section 9 shall expire upon the earlier of (i) the closing of a Qualified Public Offering and (ii) such time as less than an aggregate of 25% of the authorized Convertible Preferred Stock remains outstanding. 10. RANKING. The Series A Convertible Preferred Stock shall rank pari passu with the Series B Convertible Preferred Stock and Series C Convertible Preferred Stock of the Corporation (which shall constitute Parity Securities for purposes hereof) and any other Parity Securities with respect to amounts receivable upon a Liquidation Event, dividends, rights and remedies upon Triggering Events or for any other purpose. 11. AMENDMENTS. This Certificate of Designation may not be amended without first obtaining the affirmative vote or written consent of the holders of at least a majority of the voting power of all then outstanding shares of Convertible Preferred Stock, voting together as a single class, including the affirmative vote or written consent of the holders of a majority of the shares of Series A Convertible Preferred Stock. -23- -24- EX-4.2 5 dex42.txt SERIES B CONVERTIBLE PREFERRED STOCK EXHIBIT 4.2 NGE - 02/21/02 AMENDED CERTIFICATE OF DESIGNATION, NUMBER, POWERS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL AND OTHER RIGHTS OF SERIES B CONVERTIBLE PREFERRED STOCK OF IFX CORPORATION IFX Corporation (the "Corporation"), a corporation organized and existing under the General Corporation Law of the State of Delaware, hereby certifies that, pursuant to the provisions of Section 151 of the General Corporation Law of the State of Delaware, its Board of Directors, at a meeting duly held on October 11, 2001 adopted the following resolution: WHEREAS, the Board of Directors of the Corporation is authorized by the Restated Certificate of Incorporation to issue up to 20,000,000 shares of preferred stock ("Preferred Stock") in one or more series and, in connection with the creation of any series, to fix by the resolutions providing for the issuance of shares the powers, designations, preferences and relative, participating, optional or other rights of the series and the qualifications, limitations or restrictions thereof; and WHEREAS, the Board of Directors authorized and fixed the terms and provisions of the Class I and Class II Series B Convertible Preferred Stock of the Corporation pursuant to resolutions dated March 8 and May 2, 2001 and by filing with the Secretary of State of the State of Delaware a Certificate of Designation, Number, Powers, Preferences and Relative, Participating, Optional and other Rights of Series B Convertible Preferred Stock on May 3, 2001 (the "Original Certificate"); and WHEREAS, it is the desire of the Board of Directors of the Corporation, pursuant to such authority and the requisite vote of the holders of the Series B Convertible Preferred Stock pursuant to the Original Certificate and the requisite vote of the holders of the common stock pursuant to the General Corporation Law of the State of Delaware, to amend and restate the Original Certificate in its entirety. NOW, THEREFORE, BE IT RESOLVED, that there is hereby authorized a series of preferred stock on the terms and with the provisions herein set forth on Annex A attached to this resolution. /s/ Joel Eidelstein ---------------------------------- Name: Joel Eidelstein Title: President ATTEST: /s/ Jose Leiman - ----------------------------------- Name: Jose Leiman Title: Chief Financial Officer ANNEX A SERIES B CONVERTIBLE PREFERRED STOCK The powers, designations, preferences and relative, participating, optional or other rights of the Series B Convertible Preferred Stock of IFX Corporation (the "Corporation") are as follows: 1. DESIGNATION AND AMOUNT. This series of preferred stock shall be designated as "Series B Convertible Preferred Stock" and shall be divided into two classes: Class I Series B Convertible Preferred Stock ("Class I Series B Preferred Stock") and Class II Series B Convertible Preferred Stock ("Class II Series B Preferred Stock", and together with the Class I Series B Preferred Stock, the "Series B Convertible Preferred Stock"). The Series B Convertible Preferred Stock shall have $1.00 par value per share. The number of authorized shares of the Class I Series B Preferred Stock shall be 4,418,262 shares. The number of authorized shares of the Class II Series B Preferred Stock shall be 424,135 shares. Shares of the Series B Convertible Preferred Stock shall have a stated value of Three and 50/100 Dollars ($3.50) per share (the "Stated Value"). The Corporation has previously authorized and issued 2,030,869 shares of its Series A Convertible Preferred Stock, par value $1.00 per share (the "Series A Convertible Preferred Stock") having the number, powers, preferences and relative, participating, optional and other rights as set forth in the Second Amended Certificate of Designation filed with the Secretary of State of the State of Delaware on the date of the filing hereof (the "Series A Certificate"). The Corporation has also authorized 3,876,241 shares of its Series C Convertible Preferred Stock, par value $1.00 per share, (the "Series C Convertible Preferred Stock") having the number, powers, preferences and relative, participating, optional and other rights as set forth in the Certificate of Designation filed with the Secretary of State of the State of Delaware on the date of the filing hereof (the "Series C Certificate"). The Series A Convertible Preferred Stock, the Series B Convertible Preferred Stock, the Series C Convertible Preferred Stock and shares of any other class or series of preferred stock of the Corporation which is convertible, directly or indirectly, into Common Stock, whether at the time of issuance or upon passage of time or the occurrence of some future event, are collectively referred to herein as "Convertible Preferred Stock." 2. DIVIDENDS. (a) Right to Receive Dividends. Holders of Series B Convertible Preferred Stock shall be entitled to receive dividends when, as and if declared by the Board of Directors of the Corporation (the "Board of Directors"). (b) Participation with Common Stock. In the event the Board of Directors shall elect to pay or declare and set apart for payment any dividend on any shares of common stock, par value $.02 per share, of the Corporation (the "Common Stock") in cash out of funds legally available therefor or in stock or other consideration, the holders of the Series B Convertible Preferred Stock shall be entitled to receive, before any dividend shall be declared and paid or set aside for the Common Stock, dividends payable in the form and in an amount per share equal to the per share amount that would have been payable to such holders had such -2- holders converted their Series B Convertible Preferred Stock into Common Stock and had all other holders of Convertible Preferred Stock converted such shares into Common Stock. (c) Dividend Preference. Dividends on the Series B Convertible Preferred Stock shall be payable before any dividends or distributions or other payments shall be paid or set aside for payment upon the Common Stock or any other stock ranking on liquidation or as to dividends or distributions junior to the Series B Convertible Preferred Stock (any such stock, together with the Common Stock, being referred to hereinafter as "Junior Stock"). If there shall be outstanding shares of any class or series of capital stock which is entitled to share ratably with the Series B Convertible Preferred Stock in the payment of dividends or distributions or upon liquidation ("Parity Securities"), no full dividends shall be declared or paid or set apart for payment on any such securities unless dividends have been or contemporaneously are ratably declared and paid or declared and a sum sufficient for the payment thereof set apart for such payment on the Series B Convertible Preferred Stock. 3. LIQUIDATION PREFERENCE. (a) In the event of any bankruptcy, liquidation, dissolution or winding up of the Corporation, either voluntary or involuntary (a "Liquidation"), each holder of Series B Convertible Preferred Stock at the time thereof shall be entitled to receive, prior and in preference to any distribution of any of the assets or funds of the Corporation to the holders of the Common Stock or other Junior Stock by reason of their ownership of such stock, an amount per share of Series B Convertible Preferred Stock equal to the sum of (i) (x) the applicable Stated Value plus any declared and unpaid dividends to the date of liquidation, plus (y) 10% of such Stated Value per annum, calculated from the date of issuance of such share through date of payment of the Liquidation Preference as set forth in this Section 3 ((x) and (y), collectively, the "Stated Preference"); plus (ii) an amount equal to such amount per share of Series B Preferred Stock as would have been payable had each share of Series B Preferred Stock and all outstanding shares of other Convertible Preferred Stock (to the extent such shares of other Convertible Preferred Stock are actually converted into Common Stock at such time or if such shares of other Convertible Preferred Stock contain a participation feature which allows them to receive amounts in excess of their Stated Preference in the event of a Liquidation without actually being converted) been converted into Common Stock immediately prior to such bankruptcy, liquidation, dissolution or winding up of the Corporation after giving effect to the full payment of the Stated Preference under the preceding paragraph (i) and the stated preference of the other Preferred Stock (unless such other Preferred Stock has actually been converted into Common Stock); provided, that if the amount payable per share of Series B Convertible Preferred Stock pursuant to the foregoing paragraphs (i) and (ii) exceeds three and one- half (3-1/2) multiplied by the Stated Preference (the "Maximum Amount"), each holder of Series B Convertible Preferred Stock shall only be entitled to receive such Maximum Amount. The sum of the amounts in (i) and (ii) above is referred to herein as the "Liquidation Preference". For purposes of the foregoing, shares of Class I Series B Preferred Stock issued upon conversion of the Class II -3- Series B Preferred Stock shall be deemed to have been issued at the time such shares of Class II Series B Preferred Stock were issued. After the payment of the full Liquidation Preference on account of all shares of Series B Convertible Preferred Stock as set forth in this Section 3 and any preferential amounts to which the holders of Parity Securities are entitled, the remaining assets of the Corporation legally available for distribution, if any, shall be distributed ratably to the holders of the Common Stock. If the assets and funds legally available for distribution among the holders of Series B Convertible Preferred Stock shall be insufficient to permit the payment to the holders of the full aforesaid Liquidation Preference, then the assets and funds shall be distributed ratably among holders of Series B Convertible Preferred Stock in proportion to the number of shares of Series B Convertible Preferred Stock owned by each holder. If the assets and funds of the Corporation available for distribution to stockholders upon any Liquidation of the Corporation, whether voluntary or involuntary, shall be insufficient to permit the payment to holders of the full aforesaid Liquidation Preference and amounts payable to holders of outstanding Parity Securities, the holders of Series B Convertible Preferred Stock and the holders of such other Parity Securities shall share ratably (and ratably as to cash, in-kind or other distributions) in any distribution of assets of the Corporation in proportion to the full respective preferential amounts to which they are entitled. (b) Except as described in the following sentence, a merger, recapitalization, reorganization, sale of voting control to a single buyer or a group of related buyers in one or a series of related transactions, or other business combination transaction involving the Corporation in which the shareholders of the Corporation immediately prior to the consummation of such transaction do not own at least a majority of the outstanding shares of the surviving corporation or the Corporation (as applicable) immediately following the consummation of such transaction or sale of all or substantially all of the assets of the Corporation (collectively, a "Liquidation Event") shall be deemed to be a Liquidation of the Corporation. Notwithstanding the foregoing, the following shall not be deemed to be a Liquidation Event: (i) a merger, recapitalization, sale of voting control or other business combination transaction with an Affiliate (as such term is defined in Section 12b-2 of the Rules and Regulations under the Securities Exchange Act of 1934, as amended) of UBS Capital Americas III, L.P. or UBS Capital LLC (together with any such Affiliate, "UBS"), or (ii) a merger of the Corporation with a public company (A) in which the merger consideration to be received by the holders of the Series B Convertible Preferred Stock is fully registered marketable securities (the "Merger Shares") which are not subject to any restrictions on transfer, (B) in which the value of such merger consideration for each share of Series B Convertible Preferred Stock, valued at the average closing price of the Merger Shares for the 30 days prior to the consummation of the merger, or such lesser period which follows the public announcement of the merger, is greater than 110% of the Liquidation Preference per share as of the date of consummation of the merger, and (C) with aggregate trading volume for the 30 calendar days prior to the merger date of at least 10 times the aggregate number of Merger Shares received by all holders of Convertible Preferred Stock. (c) In any Liquidation Event, if the consideration received by the Corporation is other than cash, its value will be deemed its fair market value as determined in good faith by the Board of Directors. Any securities shall be valued as follows: -4- (i) Securities not subject to investment letter or other similar restrictions on free marketability covered by subsection (ii) below: (A) If traded on a securities exchange or through The Nasdaq National Market or Small Cap Market, the value shall be deemed to be the average of the closing prices of the securities on such quotation system over the thirty (30) day period ending three (3) days prior to the closing of the Liquidation Event; (B) If actively traded over-the-counter, the value shall be deemed to be the average of the closing bid or sale prices (whichever is applicable) over the thirty (30) day period ending three (3) days prior to the closing of the Liquidation Event; and (C) If there is no active public market, the value shall be the fair market value thereof, as mutually determined by the Board of Directors and the holders of at least a majority of the voting power of all then outstanding shares of Convertible Preferred Stock, voting as a single class. (ii) The method of valuation of securities subject to investment letter or other restrictions on free marketability (other than restrictions arising solely by virtue of a shareholder's status as an affiliate or former affiliate) shall be to make an appropriate discount from the market value determined as above in subsections (i)(A), (B) or (C) to reflect the approximate fair market value thereof, as mutually determined by the Board of Directors and the holders of at least a majority of the voting power of all then outstanding shares of Convertible Preferred Stock, voting as a single class. 4. VOTING RIGHTS. In addition to any voting rights provided elsewhere herein or in the Corporation's Certificate of Incorporation, as it may be amended or restated from time to time (the "Certificate of Incorporation"), and any voting rights provided by law, the holders of shares of Series B Convertible Preferred Stock shall have the following voting rights: (a) Election of Directors. (i) Subject to the terms hereof, the holders of the Class I Series B Preferred Stock, together with the holders of any other class or series of Convertible Preferred Stock, the terms of which expressly entitle the holder thereof to vote in the election of directors designated by holders of Convertible Preferred Stock (collectively, "Voting Preferred Stock") shall have the right to elect four (4) directors, one (1) of which shall be an Independent Director (as defined below). Such directors shall be elected by the holders of at least a majority of the voting power of all then outstanding shares of Voting Preferred Stock, voting as a single class. "Independent Director" has the meaning specified in Rule 4200(a)(14) of the NASD listing standards, as in effect on the date hereof and as the same may be amended or supplemented, or in any successor rule or regulation. (ii) Any director elected by the holders of Voting Preferred Stock shall be referred to herein as a "Preferred Director." Subject to Section 4(a)(v), the initial -5- term of any director to be appointed pursuant to Section 4(a)(i) will commence upon his/her election by the holders of Voting Preferred Stock and shall expire at the first annual meeting of stockholders of the Corporation following his/her election. Upon expiration of the initial term of such Preferred Director, so long as the Voting Preferred Stock is outstanding, the holders of such Voting Preferred Stock shall have the right to elect a Preferred Director to replace such director in the same manner described above in Section 4(a)(i). Subject to Section 4(a)(v), a Preferred Director so elected shall hold office for a term expiring at the annual meeting of stockholders in the year following the election of such director. Notwithstanding the foregoing, but subject to Section 4(a)(v), a Preferred Director elected under Section 4(a)(i) shall serve until such Preferred Director's successor is duly elected and qualified or until such director's earlier removal as provided in Section 4(a)(iii) or death or resignation and, in the event a vacancy occurs, a replacement Preferred Director shall be selected as provided in Section 4(a)(i). (iii) A Preferred Director may be removed by, and shall not be removed except by, the vote of at least a majority of the voting power of all then outstanding shares of Voting Preferred Stock, voting as a single class. (iv) The Corporation shall at all times reserve and keep available sufficient vacant seats on the Board of Directors solely for the purpose of enabling the holders of the Voting Preferred Stock to designate Preferred Directors as provided in this Section 4(a). (v) This Section 4(a) shall survive a Qualified Public Offering (as defined in Section 5(b) below) and until such time thereafter as less than an aggregate of 25% of the authorized Convertible Preferred Stock remains outstanding. (vi) The holders of shares of Class II Series B Preferred Stock shall not be entitled to vote in elections of directors. (b) Certain Corporate Actions. Until a Qualified Public Offering or until such time as less than an aggregate of 25% of the authorized Convertible Preferred Stock remains outstanding, the Corporation shall not, and shall not permit any of its subsidiaries to, without first obtaining the affirmative vote or written consent of the holders of at least a majority of the voting power of all then outstanding shares of Convertible Preferred Stock, voting as a single class: (A) amend, repeal, modify or supplement any provision of the Certificate of Incorporation (including any certificate of designation forming a part thereof), the Bylaws of the Corporation, or any successor certificate of incorporation or bylaws or this Amended Certificate of Designation, Number, Powers, Preferences and Relative, Participating, Optional and Other Rights of Series B Convertible Preferred Stock (the "Certificate of Designation"); (B) authorize or permit the Corporation or any subsidiary of the Corporation to issue any capital stock or any options, warrants or other rights exchangeable or exercisable therefor, other than (i) shares of Series C Convertible Preferred Stock pursuant to the Series C Convertible Preferred Stock Purchase Agreement, dated as of October 11, 2001, among the Corporation and UBS (the -6- "Preferred Stock Purchase Agreement"), (ii) Common Stock upon conversion of Convertible Preferred Stock, or upon the exercise of stock options to purchase up to 4,243,037 shares of Common Stock, (iii) shares of Class I Series B Preferred Stock issued upon conversion of Class II Series B Preferred Stock, (iv) securities issued as consideration for any acquisition approved by a majority of the Board of Directors (including the affirmative vote of the Preferred Directors), (v) up to $15 million of Common Stock, issued as consideration for any acquisition approved by a majority of the Board of Directors (without the affirmative vote of the Preferred Directors), provided such Common Stock is valued at no less than the greater of (1) the Stated Value (as adjusted for stock splits, combinations, stock dividends and the like) and (2) the average of the closing price for the Common Stock for the 30 days prior to the issuance, (vi) a warrant to purchase 210,000 shares of Common Stock to Spinway, Inc. (the "Spinway Warrant"), (vii) 210,000 shares of Common Stock upon exercise of the Spinway Warrant, (viii) shares of Common Stock in exchange for shares of common stock, par value $.001 per share ("Tutopia Stock"), of Tutopia.com, Inc. ("Tutopia"), upon a change-in-control of the Corporation pursuant to the Stockholders Agreement, dated as of April 24, 2000, by and among the Corporation, Tutopia and the other parties signatory thereto (the "Tutopia Stockholders Agreement"); (ix) shares of Common Stock and/or Convertible Preferred Stock issued pursuant to that certain Put Agreement, dated December 10, 2001 among the Corporation, UBS and the other parties named therein (the "Tutopia Put Agreement") or (x) a warrant for 500,000 shares dated February 19, 2002, issued to Lucent Technologies Inc. and any Common Stock issued on exercise of such warrant; (C) reclassify any class or series of any Common Stock into shares having any preference or priority as to dividends or liquidation superior to or on a parity with any such preference or priority of Convertible Preferred Stock; (D) authorize or effect, in a single transaction or through a series of related transactions, (1) a liquidation, winding up or dissolution of the Corporation or adoption of any plan for the same; (2) a Liquidation Event; or (3) any direct or indirect purchase or other acquisition by the Corporation or any of its subsidiaries of any capital stock (other than the Convertible Preferred Stock pursuant to its terms); (E) enter into or otherwise become a party to any agreement whereby any shareholder or shareholders of the Corporation shall transfer capital stock of the Corporation to an independent third party or a group of independent third parties pursuant to which such parties acquire capital stock of the Corporation possessing the voting power to elect a majority of the Board of Directors; (F) declare or pay or set aside for payment any dividend or distribution or other payment upon the Common Stock or upon any other Junior Stock, nor redeem, purchase or otherwise acquire any Common Stock or other Junior Stock for any consideration (or pay or make available any moneys, whether by means of a sinking fund or otherwise, for the redemption of or other distribution or payment with respect to any shares of any Common Stock or other Junior Stock), except for the repurchase of shares of Common Stock from directors, consultants or employees of the Corporation or -7- any subsidiary pursuant to agreements approved by the disinterested directors on the Board of Directors, under which the Corporation has the right to repurchase such shares upon the occurrence of certain events, including but not limited to, termination of employment or services; (G) approve the annual budget of the Corporation and its subsidiaries (the "Annual Budget"); (H) enter into any financial commitment over and above those approved in the annual budget in excess of $15 million in the aggregate (for the Corporation and its subsidiaries, taken together), except as prescribed in the Annual Budget; (I) dismiss or hire or modify or enter into any employment agreement, non-competition agreement, bonus or stock issuance arrangements or other compensation (including, without limitation, fringe benefit) arrangements with its President, Chief Executive Officer or Chief Financial Officer, or other equivalent or senior level officer; (J) permit the creation or existence of any lien, mortgage, pledge, hypothecation, assignment, security interest, charge or encumbrance, or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever on any of the Corporation's or any of its subsidiaries' assets with an aggregate value in excess of $15 million, except as part of any financing in the ordinary course of business; (K) make any capital expenditure in any fiscal year in excess of $15 million in the aggregate (for the Corporation and its subsidiaries, taken together), except as prescribed in the Annual Budget; (L) acquire any assets or equity or other interest in any other entity with a value in excess of $15 million in the aggregate (for the Corporation and its subsidiaries, taken together), except as prescribed in the Annual Budget; (M) incur indebtedness for borrowed money (including, without limitation, any capitalized lease obligations, accounts receivable financing or other asset-backed financing), any guarantee or other similar contingent obligation or any lease financing (whether a capitalized lease, operating lease, pursuant to a sale leaseback arrangement or otherwise), in excess of $15 million in the aggregate (for the Corporation and its subsidiaries, taken together), except as prescribed in the Annual Budget; (N) amend, supplement, restate, revise, waive or otherwise modify any stock option plan, agreement or other arrangement of the Corporation (each, a "Stock Option Plan"), as in effect on October 11, 2001; (O) create or adopt any stock option plan, stock appreciation rights plan, bonus plan or similar plan that was not in existence on October 11, 2001, except as approved by the Compensation Committee of the Board of Directors; -8- (P) dispose of or acquire assets with a value in excess of $15 million other than in the normal course of business; (Q) liquidate, dissolve or voluntarily elect to commence bankruptcy or insolvency proceedings under applicable laws; (R) change in any material respect the nature of the business of the Corporation and its subsidiaries taken as a whole; (S) enter into any transaction, or any agreement or understanding with any affiliate of the Corporation or any subsidiary thereof, other than a wholly-owned subsidiary of the Corporation; (T) (i) solicit or negotiate any inquiries or proposals with respect to (x) any direct or indirect issuance, sale, disposition or redemption of any securities of Latin Guide, Inc. ("LGI"), Tutopia or any of Tutopia's subsidiaries, (y) the direct or indirect sale or disposition of all or any material portion of the assets or business of LGI, Tutopia or any of Tutopia's subsidiaries, or (z) any merger, reorganization, consolidation or recapitalization or other similar transaction involving LGI, Tutopia or any of Tutopia's subsidiaries; or (ii) discuss with or provide to any person or entity information of LGI, Tutopia or any of Tutopia's subsidiaries with respect to or in contemplation of any of the foregoing; or (U) agree to do any of the foregoing. (c) Additional Voting Rights. Except as required by law, the holders of Series B Convertible Preferred Stock shall be entitled to notice of any stockholders' meeting and to vote together as a single class with the holders of Common Stock (and any other capital stock of the Corporation entitled to vote), upon any matter submitted to the stockholders for a vote as follows: (i) the holders of the Series B Convertible Preferred Stock shall have 1.4344 votes per share of Series B Convertible Preferred Stock; (ii) the holders of Common Stock shall have one (1) vote per share of Common Stock and (iii) the holders of any other series of Convertible Preferred Stock shall be entitled to the number of votes specified in the Certificate of Designation creating that series of Convertible Preferred Stock. Notwithstanding the foregoing, Series B Class II Preferred Stock shall not be entitled to vote in elections of directors. (d) Manner of Voting. Whenever a vote of the holders of Series A Convertible Preferred Stock, Series B Convertible Preferred Stock, Series C Convertible Preferred Stock and/or other shares of Convertible Preferred Stock shall be taken as a class pursuant to the provisions of this Certificate of Designation or otherwise, the holders of Series B Convertible Preferred Stock shall have 1.4344 votes per share and the holders of the other Convertible Preferred Stock shall be entitled to the number of votes specified in the Certificate of Designation creating that series of Convertible Preferred Stock (whether or not convertible on such date). -9- 5. CONVERSION. Shares of Series B Convertible Preferred Stock may be converted into shares of Common Stock, on the terms and conditions set forth in this Section 5. (a) Optional Conversion. (i) At any time and from time to time, each holder of shares of Class I Series B Preferred Stock may, upon written notice to the Corporation, convert all or any portion of such shares held by such holder into the number of shares of Common Stock determined by dividing (x) the applicable Stated Preference multiplied by the number of shares surrendered for conversion plus any declared but unpaid dividends on such shares, by (y) the Conversion Price on the date of conversion determined in accordance with Section 5(c). (ii) References in this Section 5 to "Common Stock" shall include all stock or other securities or property (including cash) into which Common Stock is converted following any merger, reorganization or reclassification of the capital stock of the Corporation. (b) Mandatory Conversion. Each share of Series B Convertible Preferred Stock shall automatically be converted into such number of shares of Common Stock as is determined by dividing (x) the Stated Preference multiplied by the number of shares surrendered for conversion plus any declared but unpaid dividends on such shares, by (y) the Conversion Price on the date of conversion determined in accordance with Section 5(c), without further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent, upon the closing of an underwritten public offering of shares of Common Stock for which the Corporation has obtained a firm commitment from one or more underwriter(s) for at least: $60 million of Common Stock and in which the Corporation receives gross proceeds from the sale of Common Stock to the public of at least $45 million (before deduction of underwriter's discounts and commissions), and which values the equity of the Corporation at no less than $200 million pre-offering (a "Qualified Public Offering"). Except for the purposes of the calculation in the immediately preceding sentence, in the event of a Qualified Public Offering, the person(s) entitled to receive the Common Stock issuable upon conversion of Series B Convertible Preferred Stock shall not be deemed to have converted such Series B Convertible Preferred Stock until the closing of such offering. (c) Conversion Price. The Conversion Price per share for the Series B Convertible Preferred Stock shall be Three and 00/100 Dollars ($3.00), subject to adjustment as provided in Section 6 hereof. (d) Common Stock. The Common Stock to be issued upon conversion hereunder shall be fully paid and nonassessable. (e) Procedures for Conversion. (i) In order to convert shares of Class I Series B Preferred Stock into shares of Common Stock pursuant to Section 5(a) (or, in the case of an automatic -10- conversion of Class I Series B Preferred Stock and Class II Series B Preferred Stock pursuant to Section 5(b), to receive a certificate for such holder's shares of Common Stock outstanding as a result of such conversion), the holder shall surrender the certificate or certificates therefore, duly endorsed for transfer, at any time during normal business hours, to the Corporation at its principal or at such other office or agency then maintained by it for such purpose (the "Payment Office"), accompanied, in the case of a conversion pursuant to Section 5(a), by written notice to the Corporation of such holder's election to convert and (if so required by the Corporation or any conversion agent) by an instrument of transfer, in form reasonably satisfactory to the Corporation and to any conversion agent, duly executed by the registered holder or by his duly authorized attorney, and any taxes required pursuant to Section 5(e)(iii). As promptly as practicable after the surrender for conversion of any share of Series B Convertible Preferred Stock in the manner provided in the preceding sentence, and the payment in cash of any amount required by the provisions of Section 5(e)(iii), but in any event within five Trading Days of such surrender for payment, the Corporation will deliver or cause to be delivered at the Payment Office to or upon the written order of the holder of such shares, certificates representing the number of full shares of Common Stock issuable upon such conversion, issued in such name or names as such holder may direct. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the shares in proper order for conversion, and all rights of the holder of such shares as a holder of such shares shall cease at such time and the person or persons in whose name or names the certificates for such shares of Common Stock are to be issued shall be treated for all purposes as having become the record holder or holders thereof at such time; provided, however, that any such surrender and payment on any date when the stock transfer books of the Corporation shall be closed shall constitute the person or persons in whose name or names the certificates for such shares of Common Stock are to be issued as the record holder or holders thereof for all purposes immediately prior to the close of business on the next succeeding day on which such stock transfer books are opened and such conversion shall be at the Conversion Price in effect at such time on such succeeding day. For purposes hereof, "Trading Day" shall mean (i) any day on which stock is traded on the principal stock exchange on which the Common Stock is listed or admitted to trading, (ii) if the Common Stock is not then listed or admitted to trading on any stock exchange but is traded on the Nasdaq Stock Market, any day on which stock is traded on the Nasdaq Stock Market, or (iii) if the Common Stock is not then traded on the Nasdaq Stock Market, any day on which stock is traded in the over-the-counter market, as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding to its functions of reporting prices). (ii) The Corporation shall not be required to issue fractional shares of Common Stock upon conversion of shares of Series B Convertible Preferred Stock. At the Corporation's discretion, in the event the Corporation determines not to issue fractional shares, in lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the closing price of the Common Stock on the date of conversion. (iii) The issuance of certificates for shares of Common Stock upon conversion shall be made without charge for any issue, stamp or other similar tax in respect of such issuance. However, if any such certificate is to be issued in a name other than that of the -11- holder of record of the shares converted, the person or persons requesting the issuance thereof shall pay to the Corporation the amount of any tax which may be payable in respect of any transfer involved in such issuance or shall establish to the satisfaction of the Corporation that such tax has been paid or is not payable. (f) Reservation of Stock Issuable Upon Conversion. The Corporation shall reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Series B Convertible Preferred Stock, 5,154,639 shares of Common Stock. If at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Series B Convertible Preferred Stock without regard to whether the holders of Series B Convertible Preferred Stock are then entitled to convert, the Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose, including, without limitation, taking appropriate board action, recommending such an increase to the holders of Common Stock, holding shareholders meetings, soliciting votes and proxies in favor of such increase to obtain the requisite stockholder approval and upon such approval, the Corporation shall reserve and keep available such additional shares solely for the purpose of effecting the conversion of the shares of the Series B Convertible Preferred Stock. (g) Merger, Etc. (i) Notwithstanding any other provision hereof, in case of any merger or other business combination transaction involving the Corporation which does not constitute a Liquidation Event, then, concurrently with the consummation of such transaction, provision shall be made so that each share of Series B Convertible Preferred Stock shall thereafter be convertible into the number of shares of stock or other securities or property (including cash) to which a holder of the number of shares of Common Stock deliverable upon conversion of such share of Series B Convertible Preferred Stock would have been entitled assuming conversion immediately prior to the closing of the transaction. (ii) In case of any merger or other business combination transaction involving the Corporation which does not constitute a Liquidation Event, in which the Corporation is not the surviving entity, and the Corporation or the holders do not otherwise convert all outstanding shares of Series B Convertible Preferred Stock, the Series B Convertible Preferred Stock shall be converted into or exchanged for and shall become shares of the surviving corporation having, in respect of the surviving corporation, substantially the same powers, preferences and relative participating, optional or other special rights, and the qualifications, limitations or restrictions thereon, that the Series B Convertible Preferred Stock had immediately prior to such transaction. (h) Conversion of Class II Series B Preferred Stock. (i) Each holder of shares of Class II Series B Preferred Stock may at any time convert all or any portion of such shares held by such holder into one share of Class I Series B Preferred Stock for each share of Class II Series B Preferred Stock surrendered for conversion. The holder of each share of Class II Series B Preferred Stock to be converted -12- shall surrender the certificate or certificates therefor, duly endorsed for transfer, at any time during normal business hours, to Payment Office, accompanied by written notice to the Corporation of such holder's election to convert. Within 5 Trading Days of such surrender the Corporation will deliver or cause to be delivered at the Payment Office, certificates representing the number of shares of Class I Series B Preferred Stock issuable upon such conversion, issued in such name or names as such holder may direct. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the shares. (ii) The Corporation shall reserve and keep available out of its authorized but unissued shares of Class I Series B Preferred Stock, solely for the purpose of effecting the conversion of the shares of the Class II Series B Preferred Stock, 424,135 shares of Class I Series B Preferred Stock. If at any time the number of authorized but unissued shares of Class I Series B Preferred Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Class II Series B Preferred Stock without regard to whether the holders of Class II Series B Preferred Stock are then entitled to convert, the Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Class I Series B Preferred Stock to such number of shares as shall be sufficient for such purpose, including, without limitation, taking appropriate board action, recommending such an increase to the stockholders, holding stockholders meetings, soliciting votes and proxies in favor of such increase to obtain the requisite stockholder approval and upon such approval, the Corporation shall reserve and keep available such additional shares solely for the purpose of effecting the conversion of the shares of the Class II Series B Preferred Stock. 6. ADJUSTMENTS. The Conversion Price shall be subject to adjustment from time to time as set forth in this Section 6. The Corporation shall give holders of Series B Convertible Preferred Stock notice of any event described below which requires an adjustment pursuant to this Section 6 at the time of such event. (a) Definitions. As used in this Section 6, the following terms have the respective meanings set forth below: "Additional Shares of Common Stock" shall mean all shares of Common Stock issued by the Corporation after the Closing (as defined in the Preferred Stock Purchase Agreement). "Convertible Securities" shall mean evidences of indebtedness, shares of stock of other securities which are convertible into or exchangeable, with or without payment of additional consideration in cash or property, for Additional Shares of Common Stock, either immediately or upon the occurrence of a specified date or a specified event. "Fully Diluted Outstanding" shall mean, when used with reference to Common Stock, at any date as of which the number of shares thereof is to be determined, all shares of Common Stock Outstanding at such date and all shares of Common Stock issuable in respect of Series C Convertible Preferred Stock outstanding on such date and other securities convertible -13- into, or options or warrants to purchase, shares of Common Stock outstanding on such date, whether or not such options, warrants or other securities are presently convertible or exercisable. "Other Property" shall have the meaning set forth in Section 6(i). "Outstanding" shall mean, when used with reference to Common Stock, at any date as of which the number of shares thereof is to be determined, all issued shares of Common Stock, except shares then owned or held by or for the account of the Corporation or any subsidiary of the Corporation, and shall include all shares issuable in respect of outstanding scrip or any certificates representing fractional interests in shares of Common Stock. "Overage" shall mean the total number of shares of Common Stock issued in connection with the Subject Transactions above the Share Allowance. "Permitted Issuances" shall mean (i) the issuance of up to 4,243,037 shares of Common Stock issuable pursuant to options to purchase Common Stock under the Stock Option Plan, (ii) shares of Common Stock issued or issuable in connection with a Qualified Public Offering, (iii) shares of Common Stock issued in connection with the Subject Transactions or upon conversion of Convertible Preferred Stock, (iv) shares of Class I Series B Preferred Stock issued upon conversion of the Class II Series B Preferred Stock, (v) securities issued as consideration for any acquisition approved by a majority of the Board of Directors (including the affirmative vote of the Preferred Directors), (vi) the issuance of an aggregate of up to 100,000 additional shares of Common Stock (as adjusted for stock splits, combinations, stock dividends and the like) in transactions approved by a majority of the Board of Directors, (vii) the issuance of an aggregate of up to another 100,000 additional shares of Common Stock (as adjusted for stock splits, combinations, stock dividends and the like) in transactions approved by a majority of the Board of Directors (including the affirmative vote of the Preferred Directors), (viii) the Spinway Warrant, (x) 210,000 shares of Common Stock upon exercise of the Spinway Warrant, (x) shares of Common Stock and/or Convertible Preferred Stock issued pursuant to the Tutopia Put Agreement, (xi) such other issuances as shall be approved in advance by the holders of at least a majority of the voting power of all then outstanding shares of Convertible Preferred Stock, voting as a single class, or (xii) a warrant for 500,000 shares dated February 19, 2002, issued to Lucent Technologies Inc. and any Common Stock issued on exercise of such warrant;. "Qualified Private Offering" shall mean a private equity offering to investors other than UBS resulting in gross proceeds to the Corporation of at least $30 million, in which the securities issued contain anti-dilution provisions no more favorable to the investor than the anti-dilution provisions of the Series B Convertible Preferred Stock which take effect following the consummation of a Qualified Private Offering. "Share Allowance" shall mean 428,571 shares of Common Stock. "Stock Option Plan" shall mean the IFX Corporation Directors Stock Option Plan, the 1998 IFX Corporation Stock Option and Incentive Plan, as amended, and the IFX Corporation 2001 Stock Option Plan. "Subject Transactions" shall mean (i) any acquisition consummated prior to the filing hereof, including, without limitation, the acquisitions of Mr. Help Informatica S/C Ltda., -14- Zupernet Ltda. and Redescape, L.L.C., (ii) the Consulting Agreement, dated as of May 27, 1999 by and between the Corporation and Brian Reale and (iii) the conversion of Tutopia Stock into Common Stock pursuant to the Tutopia Stockholders Agreement. (b) Stock Dividends, Subdivisions and Combinations. If at any time the Corporation shall: (i) take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend payable in, or other distribution of, Additional Shares of Common Stock, (ii) subdivide its outstanding shares of Common Stock into a larger number of shares of Common Stock, or (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, then the applicable Conversion Price immediately after the occurrence of any such event shall be adjusted to equal the product of (A) the Conversion Price immediately prior to the occurrence of such event and (B) a fraction, the numerator of which shall be the number of Fully Diluted Outstanding shares of Common Stock immediately prior to the occurrence of such event and the denominator of which shall be the number of Fully Diluted Outstanding shares of Common Stock immediately after the occurrence of such event. (c) Issuance of Additional Shares of Common Stock. (i) In the event that prior to the consummation of or in connection with a Qualified Private Offering, the Corporation shall issue or sell any Additional Shares of Common Stock, other than Permitted Issuances, for a consideration per Additional Share of Common Stock less than the applicable Conversion Price, then the applicable Conversion Price shall be reduced to the consideration per Additional Share of Common Stock paid for such Additional Shares of Common Stock. (ii) In the event that following the consummation of a Qualified Private Offering, the Corporation shall issue or sell any Additional Shares of Common Stock, other than Permitted Issuances, for a consideration per Additional Share of Common Stock less than the applicable Conversion Price, then the applicable Conversion Price shall be reduced to a price determined by dividing (A) an amount equal to the sum of (x) the number of Fully Diluted Outstanding shares of Common Stock immediately prior to such issue or sale multiplied by the then existing Conversion Price plus (y) the aggregate consideration, if any, received by the Corporation upon such issue or sale, by (B) the total number of Fully Diluted Outstanding shares of Common Stock outstanding immediately after such issue or sale. (iii) The provisions of this Section 6(c) shall not apply to any issuance of Additional Shares of Common Stock for which an adjustment is provided under Section 6(b). No adjustment shall be made under this Section 6(c) upon the issuance of any Additional Shares of Common Stock which are issued pursuant to the exercise of any warrants or other subscription or purchase rights or pursuant to the exercise of any conversion or exchange -15- rights in any Convertible Securities, if any such adjustment shall previously have been made upon the issuance of such warrants or other rights or upon the issuance of such Convertible Securities (or upon the issuance of any warrant or other rights therefor) pursuant to Section 6(d) or Section 6(e). (d) Issuance of Warrants or Other Rights. Except with respect to Permitted Issuances, if at any time the Corporation shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a distribution of, or shall in any manner (whether directly or by assumption in a merger in which the Corporation is the surviving corporation) issue or sell, any warrants or other rights to subscribe for or purchase any Additional Shares of Common Stock or any Convertible Securities, whether or not the rights to exchange or convert thereunder are immediately exercisable, and the price per share for which Common Stock is issuable upon the exercise of such warrants or other rights or upon conversion or exchange of such Convertible Securities shall be less than the applicable Conversion Price in effect immediately prior to the time of such distribution, issue or sale, then the applicable Conversion Price shall be adjusted as provided in Section 6(c)(i) or (ii), as applicable, on the basis that (i) the maximum number of Additional Shares of Common Stock issuable pursuant to all such warrants or other rights or necessary to effect the conversion or exchange of all such Convertible Securities shall be deemed to have been issued and outstanding, (ii) the price per share for such Additional Shares of Common Stock shall be deemed to be the lowest price per share at which such Additional Shares of Common Stock are issuable to such holders, and (iii) the Corporation shall have received all of the consideration, if any, payable for such warrants or other rights as of the date of the actual issuance thereof. No further adjustments of the Conversion Price shall be made upon the actual issue of such Common Stock or of such Convertible Securities upon exercise of such warrants or other rights or upon the actual issue of such Common Stock upon such conversion or exchange of such Convertible Securities. (e) Issuance of Convertible Securities. Except with respect to Permitted Issuances, if at any time the Corporation shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a distribution of, or shall in any manner (whether directly or by assumption in a merger in which the Corporation is the surviving corporation) issue or sell, any Convertible Securities, whether or not the rights to exchange or convert thereunder are immediately exercisable, and the price per share for which Common Stock is issuable upon such conversion or exchange shall be less than the applicable Conversion Price in effect immediately prior to the time of such issue or sale, then the applicable Conversion Price shall be adjusted as provided in Section 6(c)(i) or (ii), as applicable, on the basis that (i) the maximum number of Additional Shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities shall be deemed to have been issued and outstanding, (ii) the price per share of such Additional Shares of Common Stock shall be deemed to be the lowest possible price in any range of prices at which such Additional Shares of Common Stock are available to such holders, and (iii) the Corporation shall have received all of the consideration payable therefor, if any, as of the date of actual issuance of such Convertible Securities. No further adjustment of the Conversion Price shall be made under this Section 6(e) upon the issuance of any Convertible Securities which are issued pursuant to the exercise of any warrants or other subscription or purchase rights therefor, if any such adjustment shall previously have been made upon the issuance of such warrants or other rights pursuant to Section 6(d). No further adjustments of the Conversion Price shall be made upon the actual issue of such Common -16- Stock upon conversion or exchange of such Convertible Securities and, if any issue or sale of such Convertible Securities is made upon exercise of any warrant or other right to subscribe for or to purchase or any warrant or other right to purchase any such Convertible Securities for which adjustments thereof have been or are to be made pursuant to other provisions of this Section 6, no further adjustments shall be made by reason of such issue or sale. (f) Superseding Adjustment. If, at any time after any adjustment of the applicable Conversion Price shall have been made pursuant to Section 6(d) or 6(e) as the result of any issuance of warrants, rights or Convertible Securities, and either (i) such warrants or rights, or the right of conversion or exchange in such other Convertible Securities, shall expire, and all or a portion of such warrants or rights, or the right of conversion or exchange with respect to all or a portion of such other Convertible Securities, as the case may be, shall not have been exercised, or (ii) the consideration per share for which shares of Common Stock are issuable pursuant to such warrants or rights, or such other Convertible Securities, shall be increased or decreased by virtue of provisions therein contained, then such previous adjustment shall be rescinded and annulled and the Additional Shares of Common Stock which were deemed to have been issued by virtue of the computation made in connection with the adjustment so rescinded and annulled shall no longer be deemed to have been issued by virtue of such computation. Thereupon, a recomputation shall be made of the effect of such rights or options or other Convertible Securities on the applicable Conversion Price, on the basis of (iii) treating the number of Additional Shares of Common Stock or other property, if any, theretofore actually issued or issuable pursuant to the previous exercise of any such warrants or rights or any such right of conversion or exchange, as having been issued on the date or dates of any such exercise and for the consideration actually received and receivable therefor, and (iv) treating any such warrants or rights or any such other Convertible Securities which then remain outstanding as having been granted or issued immediately after the time of such increase or decrease of the consideration per share for which shares of Common Stock or other property are issuable under such warrants or rights or other Convertible Securities. (g) Subject Transactions Adjustment. If the Corporation issues a number of shares of Common Stock greater than the Share Allowance in connection with the Subject Transactions, the Conversion Price shall be adjusted to a dollar resulting from the following: $40,464,918 ------------------------------------------ 1.010948(12,919,702 + Overage) - 1,500,000 Notwithstanding the foregoing, an adjustment under this subsection (g) shall only be made to the extent such adjustment results in a reduction of the then current Conversion Price. -17- (h) Other Provisions Applicable to Adjustments Under This Section. The following provisions shall be applicable to the making of adjustments provided for in this Section 6: (i) Computation of Consideration. To the extent that any Additional Shares of Common Stock or any Convertible Securities or any warrants or other rights to subscribe for or purchase any Additional Shares of Common Stock or any Convertible Securities shall be issued for cash consideration, the consideration received by the Corporation therefor shall be the amount of the cash received by the Corporation therefor, or, if such Additional Shares of Common Stock or Convertible Securities are offered by the Corporation for subscription, the subscription price, or, if such Additional Shares of Common Stock or Convertible Securities are sold to underwriters or dealers for public offering without a subscription offering, the public offering price (in any such case subtracting any amounts paid or receivable for accrued interest or accrued dividends, but not subtracting any compensation, discounts or expenses paid or incurred by the Corporation for and in the underwriting of, or otherwise in connection with, the issuance thereof). To the extent that such issuance shall be for a consideration other than cash, then, except as herein otherwise expressly provided, the amount of such consideration shall be deemed to be the fair value of such consideration at the time of such issuance as determined in good faith by the Board of Directors. In case any Additional Shares of Common Stock or any Convertible Securities or any warrants or other rights to subscribe for or purchase such Additional Shares of Common Stock or Convertible Securities shall be issued in connection with any merger in which the Corporation issues any securities, the amount of consideration therefor shall be deemed to be the fair value, as determined in good faith by the Board of Directors, of such portion of the assets and business of the nonsurviving corporation as the Board of Directors in good faith shall determine to be attributable to such Additional Shares of Common Stock, Convertible Securities, warrants or other rights, as the case may be. The consideration for any Additional Shares of Common Stock issuable pursuant to any warrants or other rights to subscribe for or purchase the same shall be the consideration received by the Corporation for issuing such warrants or other rights plus the additional consideration payable to the Corporation upon exercise of such warrants or other rights. The consideration for any Additional Shares of Common Stock issuable pursuant to the terms of any Convertible Securities shall be the consideration, if any, received by the Corporation for issuing warrants or other rights to subscribe for or purchase such Convertible Securities, plus the consideration paid or payable to the Corporation in respect of the subscription for or purchase of such Convertible Securities, plus the additional consideration, if any, payable to the Corporation upon the exercise of the right of conversion or exchange in such Convertible Securities. In case of the issuance at any time of any Additional Shares of Common Stock or Convertible Securities in payment or satisfaction of any dividends upon any class of stock other than Common Stock, the Corporation shall be deemed to have received for such Additional Shares of Common Stock or Convertible Securities a consideration equal to the amount of such dividend so paid or satisfied. (ii) When Adjustments to Be Made; Class II Series B Preferred Stock Adjustments. The adjustments required by this Section 6 shall be made whenever and as often as any specified event requiring an adjustment shall occur. For the purpose of any adjustment, any specified event shall be deemed to have occurred at the close of business on the date of its occurrence. For the avoidance of doubt, shares of Class I Series B Preferred Stock issued upon conversion of Class II Series B Preferred Stock shall be entitled to the same -18- adjustments to the Conversion Price, the number of shares of Common Stock issuable upon conversion thereof or otherwise under this Section 6, as if such shares of Class I Series B Preferred Stock had been issued at the time such shares of Class II Series B Preferred Stock were issued. (iii) When Adjustment Not Required. If the Corporation shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or distribution or subscription or purchase rights and shall, thereafter and before the distribution to stockholders thereof, legally abandon its plan to pay or deliver such dividend, distribution, subscription or purchase rights, then thereafter no adjustment shall be required by reason of the taking of such record and any such adjustment previously made in respect thereof shall be rescinded and annulled. (iv) Escrow of Common Stock. If after any property becomes distributable as a result of the provisions of this Section 6 by reason of the taking of any record of the holders of Common Stock, but prior to the occurrence of the event for which such record is taken, a holder of shares of Series B Convertible Preferred Stock exercises its conversion rights pursuant to Section 5, any Additional Shares of Common Stock issuable and other property distributable upon exercise by reason of such adjustment shall be held in escrow for such holder by the Corporation to be issued to such holder upon and to the extent that the event actually takes place. Notwithstanding any other provision to the contrary herein, if the event for which such record was taken fails to occur or is rescinded, then such escrowed shares shall be canceled by the Corporation and escrowed property returned. (v) Challenge to Good Faith Determination. Whenever the Board of Directors shall be required to make a determination in good faith of the fair value of any item under this Section 6, such determination may be challenged in good faith by holders of a majority of the outstanding shares of Convertible Preferred Stock, and any dispute shall be resolved by an investment banking firm of recognized national standing selected by the Corporation and acceptable to such holder. (i) Other Action Affecting Common Stock. In case at any time or from time to time the Corporation shall take any action in respect of its Common Stock, other than any action described in this Section 6 for which a specific adjustment is provided, then, unless such action will not have a materially adverse effect upon the rights of the holders of shares of Series B Convertible Preferred Stock, the number of shares of Common Stock or other stock into which such shares of Series B Convertible Preferred Stock are convertible and/or the applicable Conversion Price shall be adjusted in such manner as may be equitable in the circumstances. (j) Certain Limitations. Notwithstanding anything herein to the contrary, the Corporation shall not enter into any transaction which, by reason of any adjustment hereunder, would cause the applicable Conversion Price to be less than the par value per share of Common Stock. (k) Notice of Adjustments. Whenever the number of shares of Common Stock into which shares of Series B Convertible Preferred Stock are convertible or whenever the applicable Conversion Price shall be adjusted pursuant to this Section 6, the Corporation shall -19- forthwith prepare a certificate to be executed by the chief financial officer of the Corporation setting forth, in reasonable detail, the event requiring the adjustment and the method by which such adjustment was calculated (including a description of the basis on which the Board of Directors determined the fair value of any consideration referred to in Section 6(h)(i)), specifying any change in the applicable Conversion Price or the number of shares of Common Stock into which shares of Series B Convertible Preferred Stock are convertible and (if such adjustment was made pursuant to Section 5(g)(i) or 6(h)) describing the number and kind of any other shares of stock or Other Property into which shares of Series B Convertible Preferred Stock are convertible, and any change in the applicable Conversion Price or prices thereof, after giving effect to such adjustment or change. The Corporation shall promptly cause a signed copy of such certificate to be delivered to the holders of Series B Convertible Preferred Stock. The Corporation shall keep at the Payment Office copies of all such certificates and cause the same to be available for inspection at said office during normal business hours by the holders of Series B Convertible Preferred Stock or any prospective purchaser of shares of Series B Convertible Preferred Stock designated by such holders. 7. TRIGGERING EVENTS. Any of the following actions or events shall constitute a "Triggering Event" for purposes hereof: (a) Failure to Pay Dividends. The Corporation shall fail to pay any dividend on any Series B Convertible Preferred Stock which it is required to pay in accordance with Section 2 for any reason, including but not limited to, that such payment is prohibited by applicable law or the Board of Directors elect not to pay such dividend, or shall otherwise violate any term of Section 2 and such failure shall not be cured within a period of 30 days after such violation (which cure shall be effected in a manner ensuring the holders the same yield as if such violation had not occurred). (b) Failure of Voting Rights. The Corporation shall enter into any transaction or take any action required to be approved by holders of Series B Convertible Preferred Stock without obtaining the requisite approval of the holders of the Series B Convertible Preferred Stock. (c) Failure to Convert. The Corporation shall fail for any reason to issue Common Stock or Class I Series B Preferred Stock, as applicable, as required under Section 5 upon the request of any holder of Class I Series B Preferred Stock or Class II Series B Preferred Stock, as the case may be, as provided in Section 5 or shall fail for any reason to comply in any material respect with any term of Section 5(f) or any other term of Section 5 hereof. (d) Registration Rights Agreement. The Corporation shall fail in any material respect to comply with the rights of the holders of Series B Convertible Preferred Stock pursuant to the Second Amended and Restated Registration Rights Agreement, dated as of December 10, 2001, among the Corporation, UBS and certain other stockholders of the Corporation, and such failure shall continue for a period of 30 days after notice from any such holder. -20- (e) Preferred Stock Purchase Agreement. The Corporation shall fail to comply with Section 6(f) or 6(g) of the Preferred Stock Purchase Agreement and such failure shall continue for a period of 30 days after notice from the Purchasers or the representations made under Section 4(c) or 4(u) of the Preferred Stock Purchase Agreement shall prove to have been incorrect or misleading in any material respect when made pursuant thereto or any other material representation made under the Preferred Stock Purchase Agreement shall prove to have been incorrect or misleading in any substantial material respect when made. (f) There shall have occurred and be continuing a "Triggering Event" pursuant to the terms of any other class or series of Convertible Preferred Stock. (g) Notwithstanding the foregoing, if a majority of the Preferred Directors directors affirmatively vote in favor of a transaction or other action by the Corporation which would constitute a Triggering Event under Section 7(b) or 7(d), such action or event shall not be considered a Triggering Event. 8. REMEDIES. (a) In the event that a Triggering Event described in Section 7 shall occur and be continuing, each holder of Series B Convertible Preferred Stock shall be entitled to receive all cash and other dividends, distributions and other payments which would be paid or payable to a holder of a number of shares of Common Stock into which the shares of Series B Convertible Preferred Stock held by such holder are convertible at such time (without regard to the number of shares of Common Stock which are authorized or reserved for issuance at such time and without regard to whether such shares of Series B Convertible Preferred Stock are then currently convertible into Common Stock at the option of the holder). (b) Upon the occurrence and during the continuance of any Triggering Event, to the extent the Preferred Directors do not already constitute a majority of the Board of Directors, the size of the Board of Directors shall immediately be increased by the minimum number of directors which, if all of such additional directors were deemed "Preferred Directors," would result in such Preferred Directors constituting a majority of the Board of Directors, and the holders of Voting Preferred Stock shall be entitled to appoint such newly created directors by vote of the holders of at least a majority of the voting power of all then outstanding shares of Voting Preferred Stock, voting as a single class. (c) Upon the occurrence and during the continuance of any Triggering Event, any holder of shares of Series B Convertible Preferred Stock, at its election, may, by notice to the Corporation (the "Put Notice"), demand repurchase of all or any portion of such holder's shares of Series B Convertible Preferred Stock for a cash purchase price in an amount per share equal to the Liquidation Preference. The Corporation shall, on the date (not less than 10 business days after the date of the Put Notice) designated in such Put Notice, repurchase from the holder such holder's shares of Series B Convertible Preferred Stock specified in the Notice. On the date of any repurchase of shares of Series B Convertible Preferred Stock pursuant to this Section 8(c), the holder thereof shall surrender for redemption a certificate for the number of shares of Series B Convertible Preferred Stock being redeemed, without any representation or warranty (other than that the holder has good and marketable title thereto, free and clear of liens, encumbrances -21- and restrictions of any kind), against payment therefor of the repurchase price by, at the option of the holder, (i) wire transfer to an account designated by the holder for such purpose or (ii) a certified or official bank check payable to the order of the holder. If less than all of the holder's shares of Series B Convertible Preferred Stock represented by a single certificate are being redeemed, the Corporation shall cancel such certificate and issue in the name of, and deliver to, the holder a new certificate for the portion not being redeemed. At any time following delivery of a Put Notice but prior to the date of repurchase, any holder of Series B Convertible Preferred Stock may, by notice to the Corporation, withdraw the repurchase demand contained in the Put Notice. Notwithstanding the foregoing, the holders of Series B Preferred Stock shall not be entitled to exercise their repurchase rights hereunder unless the holders of Convertible Preferred Stock elect to exercise such repurchase rights by vote of the holders of at least a majority of the voting power of all then outstanding shares of Convertible Preferred Stock, voting as a single class. (d) The Corporation stipulates that the remedies at law of each holder of Series B Convertible Preferred Stock in the event of any Triggering Event or threatened Triggering Event or otherwise or other failure in the performance of or compliance with any of the terms hereof are not and will not be adequate and that, to the fullest extent permitted by law, such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise without requiring any holder to post a bond or other security except to the extent required by applicable law. (e) Any holder of Series B Convertible Preferred Stock shall be entitled to recover from the Corporation the reasonable attorneys' fees and expenses incurred by such holder in connection with any Triggering Event or enforcement by such holder of any obligation of the Corporation hereunder. (f) No failure or delay on the part of any holder of Series B Convertible Preferred Stock in exercising any right, power or remedy hereunder or under applicable law or otherwise shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy hereunder or thereunder. The remedies herein provided are cumulative and not exclusive of any remedies provided by law or otherwise. 9. PREEMPTIVE RIGHT. (a) Each holder of Series B Convertible Preferred Stock or Common Stock issued upon conversion of Series B Convertible Preferred Stock, shall have a right of first refusal (the "Preemptive Right") to purchase its pro rata share, based on such holder's percentage ownership interest in the Corporation, of New Securities (as defined below) which the Corporation, from time to time, proposes to sell and issue (subject to such requirements and restrictions imposed by the Securities Act of 1933, as amended, and state securities laws and to the actual issuance of the New Securities). The pro rata shares of any holder of Series B Convertible Preferred Stock or Common Stock issued upon conversion of Series B Convertible Preferred Stock, for purposes of this Preemptive Right, shall be the ratio of (i) the number of shares of Common Stock owned, of record or beneficially, by such holder (including all shares -22- issuable upon conversion of the Series B Convertible Preferred Stock, whether or not then currently convertible, or the exercise or conversion of any other option, warrant or convertible security held by such holder) immediately prior to the issuance of the New Securities, to (ii) the total number of shares of Common Stock issued and outstanding immediately prior to the issuance of the New Securities, determined on a fully diluted basis after giving effect to the exercise in full of then outstanding options and warrants and the conversion of all securities convertible into shares of Common Stock; provided, however, that -------- ------- if any holder of Series B Convertible Preferred Stock or Common Stock issued upon conversion of Series B Convertible Preferred Stock does not elect to purchase its entire pro rata share of such New Securities, then each other holder that has elected to purchase its entire pro rata share shall have the right to purchase up to a number of such unpurchased portion, in addition to its own, in the proportion that (1) the number of shares of Common Stock owned, of record or beneficially, by such holder (including all shares issuable upon conversion of the Series B Convertible Preferred Stock, whether or not then currently convertible, or the exercise or conversion of any other option, warrant or convertible security held by such holder) immediately prior to the issuance of the New Securities bears to (2) the number of shares of Common Stock owned, of record or beneficially, by all holders of Series B Convertible Preferred Stock or Common Stock issued upon conversion of Series B Convertible Preferred Stock (including all shares issuable upon conversion of the Series B Convertible Preferred Stock, whether or not then currently convertible, or the exercise or conversion of any other option, warrant or convertible security held by such holders) immediately prior to the issuance of the New Securities. The overallotment mechanism set forth in this paragraph shall be repeatedly applied until all New Securities available for purchase by holders of Series B Convertible Preferred Stock or Common Stock issued upon conversion of Series B Convertible Preferred Stock have been purchased or no holders remain who have indicated a desire to purchase any unsubscribed for portion in their notice to the Corporation. (b) "New Securities" shall mean (a) any capital stock of the Corporation, rights, options or warrants to purchase capital stock and securities of any type whatsoever that are, or may become convertible into or exchangeable for capital stock and (b) so-called "high yield" bonds, debt instruments with equity like features or other similar debt instruments, which bear a rating lower than investment-grade or are unrated, issued by the Corporation; provided, however, that the term "New Securities" does not include -------- ------- (i) the issuance of up to 4,243,037 shares of Common Stock issuable pursuant to options to purchase Common Stock under the Stock Option Plan, (ii) shares of Common Stock issued or issuable in connection with a Qualified Public Offering, (iii) shares of Common Stock issued upon conversion of Convertible Preferred Stock, (iv) shares of Class I Series B Preferred Stock issued upon conversion of Class II Series B Preferred Stock, (v) securities issued as consideration for any acquisition approved by a majority of the Board of Directors (including the affirmative vote of the Preferred Directors), (vi) the Spinway Warrant, (vii) 210,000 shares of Common Stock upon exercise of the Spinway Warrant, (viii) shares of Common Stock in exchange for shares of Tutopia Stock upon a change-in- control of the Corporation pursuant to the Tutopia Stockholders Agreement, (ix) shares of Common Stock and/or Convertible Preferred Stock issued pursuant to the Tutopia Put Agreement, (xi) any shares of capital stock of the Corporation, rights, options or warrants to purchase capital stock and securities of any type whatsoever that are, or may become convertible into or exchangeable for capital stock that have been approved in advance by the holders of at least a majority of the voting power of all then outstanding shares of Convertible Preferred -23- Stock, voting as a single class, or (xii) a warrant for 500,000 shares dated February 19, 2002, issued to Lucent Technologies Inc. and any Common Stock issued on exercise of such warrant. (c) In the event the Corporation proposes to undertake an issuance of New Securities, it shall give each holder of Series B Convertible Preferred Stock or Common Stock issued upon conversion of Series B Convertible Preferred Stock written notice of its intention, describing the type of New Securities and the price and the terms upon which the Corporation proposes to issue the same. Each such holder shall have twenty (20) days from the date of receipt of any such notice to agree to purchase its pro rata share of such New Securities for the price and upon the terms specified in the notice by giving written notice to the Corporation and stating therein the quantity of New Securities to be purchased. (d) The Corporation shall have ninety (90) days after expiration of the twenty (20) day period described in Section 9(c) to sell any New Securities with respect to which a Preemptive Right was not exercised, at a price not less than and upon terms no more favorable in the aggregate to the purchasers thereof than specified in the Corporation's notice. To the extent the Corporation does not sell all the New Securities offered within said ninety (90) day period, the Corporation shall not thereafter issue or sell such New Securities without first again offering such securities to each holder of Series B Convertible Preferred Stock or Common Stock issued upon conversion of Series B Convertible Preferred Stock in the manner provided above. (e) The rights granted under this Section 9 shall expire upon the earlier of (i) the closing of a Qualified Public Offering and (ii) such time as less than an aggregate of 25% of the authorized Convertible Preferred Stock remains outstanding. 10. RANKING. The Series B Convertible Preferred Stock shall rank pari passu with the Series A Convertible Preferred Stock and Series C Convertible Preferred Stock of the Corporation (which shall constitute Parity Securities for purposes hereof) and any other Parity Securities with respect to amounts receivable upon a Liquidation Event, dividends, rights and remedies upon Triggering Events or for any other purpose. 11. AMENDMENTS. This Certificate of Designation may not be amended without first obtaining the affirmative vote or written consent of the holders of at least a majority of the voting power of all then outstanding shares of Convertible Preferred Stock, voting together as a single class, including the affirmative vote or written consent of the holders of a majority of the shares of Series B Convertible Preferred Stock. -24- EX-4.3 6 dex43.txt SERIES C CONVERTIBLE PREFERRED STOCK EXHIBIT 4.3 CERTIFICATE OF DESIGNATION, NUMBER, POWERS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL AND OTHER RIGHTS OF SERIES C CONVERTIBLE PREFERRED STOCK OF IFX CORPORATION IFX Corporation (the "Corporation"), a corporation organized and existing under the General Corporation Law of the State of Delaware, hereby certifies that, pursuant to the provisions of Section 151 of the General Corporation Law of the State of Delaware, its Board of Directors, at a meeting duly held on October 11, 2001 adopted the following resolution: WHEREAS, the Board of Directors of the Corporation is authorized by the Restated Certificate of Incorporation to issue up to 20,000,000 shares of preferred stock ("Preferred Stock") in one or more series and, in connection with the creation of any series, to fix by the resolutions providing for the issuance of shares the powers, designations, preferences and relative, participating, optional or other rights of the series and the qualifications, limitations or restrictions thereof; and WHEREAS, it is the desire of the Board of Directors of the Corporation, pursuant to such authority, to authorize and fix terms and provisions of a series of preferred stock, and the number of shares constituting such series. NOW, THEREFORE, BE IT RESOLVED, that there is hereby authorized a series of preferred stock on the terms and with the provisions herein set forth on Annex A attached to this resolution. /s/ Joel Eidelstein --------------------------- Name: Joel Eidelstein Title: President ATTEST: /s/ Jose Leiman - --------------------------------- Name: Jose Leiman Title: Chief Financial Officer ANNEX A SERIES C CONVERTIBLE PREFERRED STOCK The powers, designations, preferences and relative, participating, optional or other rights of the Series C Convertible Preferred Stock of IFX Corporation (the "Corporation") are as follows: 1. DESIGNATION AND AMOUNT. This series of preferred stock shall be designated as "Series C Convertible Preferred Stock" (the "Series C Convertible Preferred Stock"). The Series C Convertible Preferred Stock shall have $1.00 par value per share. The number of authorized shares of the Series C Convertible Preferred Stock shall be 3,876,241 shares. Shares of the Series C Convertible Preferred Stock shall have a stated value of Three and 00/100 Dollars ($3.00) per share (the "Stated Value"). The Corporation has previously authorized (i) 2,030,869 shares of its Series A Convertible Preferred Stock, par value $1.00 per share (the "Series A Convertible Preferred Stock") having the number, powers, preferences and relative, participating, optional and other rights as set forth in the Amended Certificate of Designation filed with the Secretary of State of the State of Delaware on the date of the filing hereof (the "Series A Certificate") and (ii) 4,482,397 shares of its Series B Convertible Preferred Stock, par value $1.00 per share, consisting of 4,418,262 shares of Class I Series B Convertible Preferred Stock ("Class I Series B Preferred") and 424,135 shares of Class II Series B Convertible Preferred Stock ("Class II Series B Preferred" and, collectively, the "Series B Convertible Preferred Stock") having the number, powers, preferences and relative, participating, optional and other rights as set forth in the Amended Certificate of Designation filed with the Secretary of State of the State of Delaware on the date of the filing hereof (the "Series B Certificate"). The Series A Convertible Preferred Stock, the Series B Convertible Preferred Stock, the Series C Convertible Preferred Stock and shares of any other class or series of preferred stock of the Corporation which is convertible, directly or indirectly, into Common Stock, whether at the time of issuance or upon passage of time or the occurrence of some future event, are collectively referred to herein as "Convertible Preferred Stock." 2. DIVIDENDS. (a) Right to Receive Dividends. Holders of Series C Convertible Preferred Stock shall be entitled to receive dividends when, as and if declared by the Board of Directors of the Corporation (the "Board of Directors"). (b) Participation with Common Stock. In the event the Board of Directors shall elect to pay or declare and set apart for payment any dividend on any shares of common stock, par value $.02 per share, of the Corporation (the "Common Stock") in cash out of funds legally available therefor or in stock or other consideration, the holders of the Series C Convertible Preferred Stock shall be entitled to receive, before any dividend shall be declared and paid or set aside for the Common Stock, dividends payable in the form and in an amount per share equal to the per share amount that would have been payable to such holders had such -2- holders converted their Series C Convertible Preferred Stock into Common Stock and had all other holders of Convertible Preferred Stock converted such shares into Common Stock. (c) Dividend Preference. Dividends on the Series C Convertible Preferred Stock shall be payable before any dividends or distributions or other payments shall be paid or set aside for payment upon the Common Stock or any other stock ranking on liquidation or as to dividends or distributions junior to the Series C Convertible Preferred Stock (any such stock, together with the Common Stock, being referred to hereinafter as "Junior Stock"). If there shall be outstanding shares of any class or series of capital stock which is entitled to share ratably with the Series C Convertible Preferred Stock in the payment of dividends or distributions or upon liquidation ("Parity Securities"), no full dividends shall be declared or paid or set apart for payment on any such securities unless dividends have been or contemporaneously are ratably declared and paid or declared and a sum sufficient for the payment thereof set apart for such payment on the Series C Convertible Preferred Stock. 3. LIQUIDATION PREFERENCE. (a) In the event of any bankruptcy, liquidation, dissolution or winding up of the Corporation (a "Liquidation"), either voluntary or involuntary, each holder of Series C Convertible Preferred Stock at the time thereof shall be entitled to receive, prior and in preference to any distribution of any of the assets or funds of the Corporation to the holders of the Common Stock or other Junior Stock by reason of their ownership of such stock, an amount per share of Series C Convertible Preferred Stock equal to the sum of (i) (x) the applicable Stated Value plus any declared and unpaid dividends to the date of liquidation, plus (y) 10% of such Stated Value per annum, calculated from the date of issuance of such share through date of payment of the Liquidation Preference as set forth in this Section 3 ((x) and (y), collectively, the "Stated Preference"); plus (ii) an amount equal to such amount per share of Series C Convertible Preferred Stock as would have been payable had each share of Series C Convertible Preferred Stock and all outstanding shares of other Convertible Preferred Stock (to the extent such shares of other Convertible Preferred Stock are actually converted into Common Stock at such time or if such shares of Convertible Preferred Stock contain a participation feature which allows them to receive amounts in excess of their Stated Preference in the event of a Liquidation without actually being converted) been converted into Common Stock immediately prior to such Liquidation of the Corporation after giving effect to the full payment of the Stated Preference under the preceding paragraph (i) and the stated preference of the other Preferred Stock (unless such other Preferred Stock has actually been converted into Common Stock); provided, that if the amount payable per share of Series C Convertible Preferred Stock pursuant to the foregoing paragraphs (i) and (ii) exceeds three and one- half (3-1/2) multiplied by the Stated Preference (the "Maximum Amount"), each holder of Series C Convertible Preferred Stock shall only be entitled to receive such Maximum Amount. The sum of the amounts in (i) and (ii) above is referred to herein as the "Liquidation Preference". -3- After the payment of the full Liquidation Preference on account of all shares of Series C Convertible Preferred Stock as set forth in this Section 3 and any preferential amounts to which the holders of Parity Securities are entitled, the remaining assets of the Corporation legally available for distribution, if any, shall be distributed ratably to the holders of the Common Stock. If the assets and funds legally available for distribution among the holders of Series C Convertible Preferred Stock shall be insufficient to permit the payment to the holders of the full aforesaid Liquidation Preference, then the assets and funds shall be distributed ratably among holders of Series C Convertible Preferred Stock in proportion to the number of shares of Series C Convertible Preferred Stock owned by each holder. If the assets and funds of the Corporation available for distribution to stockholders upon any Liquidation of the Corporation, whether voluntary or involuntary, shall be insufficient to permit the payment to holders of the full aforesaid Liquidation Preference and amounts payable to holders of outstanding Parity Securities, the holders of Series C Convertible Preferred Stock and the holders of such other Parity Securities shall share ratably (and ratably as to cash, in-kind or other distributions) in any distribution of assets of the Corporation in proportion to the full respective preferential amounts to which they are entitled. (b) Except as described in the following sentence, a merger, recapitalization, reorganization, sale of voting control to a single buyer or a group of related buyers in one or a series of related transactions, or other business combination transaction involving the Corporation in which the shareholders of the Corporation immediately prior to the consummation of such transaction do not own at least a majority of the outstanding shares of the surviving corporation or the Corporation (as applicable) immediately following the consummation of such transaction or sale of all or substantially all of the assets of the Corporation (collectively, a "Liquidation Event") shall be deemed to be a Liquidation of the Corporation. Notwithstanding the foregoing, the following shall not be deemed to be a Liquidation Event: (i) a merger, recapitalization, sale of voting control or other business combination transaction with an Affiliate (as such term is defined in Section 12b-2 of the Rules and Regulations under the Securities Exchange Act of 1934, as amended) of UBS Capital Americas III, L.P. or UBS Capital LLC (together with any such Affiliate, "UBS"), or (ii) a merger of the Corporation with a public company (A) in which the merger consideration to be received by the holders of the Series C Convertible Preferred Stock is fully registered marketable securities (the "Merger Shares") which are not subject to any restrictions on transfer, (B) in which the value of such merger consideration for each share of Series C Convertible Preferred Stock, valued at the average closing price of the Merger Shares for the 30 days prior to the consummation of the merger, or such lesser period which follows the public announcement of the merger, is greater than 110% of the Liquidation Preference per share as of the date of consummation of the merger, and (C) with aggregate trading volume for the 30 calendar days prior to the merger date of at least 10 times the aggregate number of Merger Shares received by all holders of Convertible Preferred Stock. (c) In any Liquidation Event, if the consideration received by the Corporation is other than cash, its value will be deemed its fair market value as determined in good faith by the Board of Directors. Any securities shall be valued as follows: (i) Securities not subject to investment letter or other similar restrictions on free marketability covered by subsection (ii) below: -4- (A) If traded on a securities exchange or through The Nasdaq National Market or Small Cap Market, the value shall be deemed to be the average of the closing prices of the securities on such quotation system over the thirty (30) day period ending three (3) days prior to the closing of the Liquidation Event; (B) If actively traded over-the-counter, the value shall be deemed to be the average of the closing bid or sale prices (whichever is applicable) over the thirty (30) day period ending three (3) days prior to the closing of the Liquidation Event; and (C) If there is no active public market, the value shall be the fair market value thereof, as mutually determined by the Board of Directors and the holders of at least a majority of the voting power of all then outstanding shares of Convertible Preferred Stock, voting as a single class. (ii) The method of valuation of securities subject to investment letter or other restrictions on free marketability (other than restrictions arising solely by virtue of a shareholder's status as an affiliate or former affiliate) shall be to make an appropriate discount from the market value determined as above in subsections (i)(A), (B) or (C) to reflect the approximate fair market value thereof, as mutually determined by the Board of Directors and the holders of at least a majority of the voting power of all then outstanding shares of Convertible Preferred Stock, voting as a single class. 4. VOTING RIGHTS. In addition to any voting rights provided elsewhere herein or in the Corporation's Certificate of Incorporation, as it may be amended or restated from time to time (the "Certificate of Incorporation"), and any voting rights provided by law, the holders of shares of Series C Convertible Preferred Stock shall have the following voting rights: (a) Election of Directors. (i) Subject to the terms hereof, the holders of the Series C Convertible Preferred Stock, together with the holders of any other class or series of Convertible Preferred Stock, the terms of which expressly entitle the holder thereof to vote in the election of directors designated by holders of Convertible Preferred Stock (collectively, "Voting Preferred Stock") shall have the right to elect four (4) directors, one (1) of which shall be an Independent Director (as defined below). Such directors shall be elected by the holders of at least a majority of the voting power of all then outstanding shares of Voting Preferred Stock, voting as a single class. "Independent Director" has the meaning specified in Rule 4200(a)(14) of the NASD listing standards, as in effect on the date hereof and as the same may be amended or supplemented, or in any successor rule or regulation. (ii) Any director elected by the holders of Voting Preferred Stock shall be referred to herein as a "Preferred Director." Subject to Section 4(a)(v), the initial term of any director to be appointed pursuant to Section 4(a)(i) will commence upon his/her election by the holders of Voting Preferred Stock and shall expire at the first annual meeting of stockholders of the Corporation following his/her election. Upon expiration of the initial term of -5- such Preferred Director, so long as the Voting Preferred Stock is outstanding, the holders of such Voting Preferred Stock shall have the right to elect a Preferred Director to replace such director in the same manner described above in Section 4(a)(i). Subject to Section 4(a)(v), a Preferred Director so elected shall hold office for a term expiring at the annual meeting of stockholders in the year following the election of such director. Notwithstanding the foregoing, but subject to Section 4(a)(v), a Preferred Director elected under Section 4(a)(i) shall serve until such Preferred Director's successor is duly elected and qualified or until such director's earlier removal as provided in Section 4(a)(iii) or death or resignation and, in the event a vacancy occurs, a replacement Preferred Director shall be selected as provided in Section 4(a)(i). (iii) A Preferred Director may be removed by, and shall not be removed except by, the vote of at least a majority of the voting power of all then outstanding shares of Voting Preferred Stock, voting as a single class. (iv) The Corporation shall at all times reserve and keep available sufficient vacant seats on the Board of Directors solely for the purpose of enabling the holders of the Voting Preferred Stock to designate Preferred Directors as provided in this Section 4(a). (v) This Section 4(a) shall survive a Qualified Public Offering (as defined in Section 5(b) below) and until such time thereafter as less than an aggregate of 25% of the authorized Convertible Preferred Stock remains outstanding. (b) Certain Corporate Actions. Until a Qualified Public Offering or until such time as less than an aggregate of 25% of the authorized Convertible Preferred Stock remains outstanding, the Corporation shall not, and shall not permit any of its subsidiaries to, without first obtaining the affirmative vote or written consent of the holders of at least a majority of the voting power of all then outstanding shares of Convertible Preferred Stock, voting as a single class: (A) amend, repeal, modify or supplement any provision of the Certificate of Incorporation (including any certificate of designation forming a part thereof), the Bylaws of the Corporation, or any successor certificate of incorporation or bylaws or this Certificate of Designation, Number, Powers, Preferences and Relative, Participating, Optional and Other Rights of Series C Convertible Preferred Stock (the "Certificate of Designation"); (B) authorize or permit the Corporation or any subsidiary of the Corporation to issue any capital stock or any options, warrants or other rights exchangeable or exercisable therefor, other than (i) shares of Series C Convertible Preferred Stock pursuant to the Preferred Stock Purchase Agreement, dated as of October 11, 2001, among the Corporation and UBS (the "Preferred Stock Purchase Agreement"), (ii) Common Stock upon conversion of Convertible Preferred Stock, or upon the exercise of stock options to purchase up to 4,243,037 shares of Common Stock, (iii) shares of Class I Series B Preferred Stock issued upon conversion of Class II Series B Preferred Stock, (iv) securities issued as consideration for any acquisition approved by a majority of the Board of Directors (including the affirmative vote of the Preferred Directors), (v) up to $15 million of Common Stock, issued as consideration for any acquisition -6- approved by a majority of the Board of Directors (without the affirmative vote of the Preferred Directors), provided such Common Stock is valued at no less than the greater of (1) the Stated Value (as adjusted for stock splits, combinations, stock dividends and the like) and (2) the average of the closing price for the Common Stock for the 30 days prior to the issuance, (vi) a warrant to purchase 210,000 shares of Common Stock to Spinway, Inc. (the "Spinway Warrant"), (vii) 210,000 shares of Common Stock upon exercise of the Spinway Warrant, (viii) shares of Common Stock in exchange for shares of common stock, par value $.001 per share ("Tutopia Stock"), of Tutopia.com, Inc. ("Tutopia"), upon a change-in-control of the Corporation pursuant to the Stockholders Agreement, dated as of April 24, 2000, by and among the Corporation, Tutopia and the other parties signatory thereto (the "Tutopia Stockholders Agreement"); (ix) shares of Common Stock and/or Convertible Preferred Stock issued pursuant to that certain Put Agreement, dated October 11, 2001 among the Corporation, UBS and the other parties named therein (the "Tutopia Put Agreement"); or (x) a warrant for 500,000 shares dated February 19, 2002, issued to Lucent Technologies Inc. and any Common Stock issued on exercise of such warrant; (C) reclassify any class or series of any Common Stock into shares having any preference or priority as to dividends or liquidation superior to or on a parity with any such preference or priority of Convertible Preferred Stock; (D) authorize or effect, in a single transaction or through a series of related transactions, (1) a liquidation, winding up or dissolution of the Corporation or adoption of any plan for the same; (2) a Liquidation Event; or (3) any direct or indirect purchase or other acquisition by the Corporation or any of its subsidiaries of any capital stock (other than the Convertible Preferred Stock pursuant to its terms); (E) enter into or otherwise become a party to any agreement whereby any shareholder or shareholders of the Corporation shall transfer capital stock of the Corporation to an independent third party or a group of independent third parties pursuant to which such parties acquire capital stock of the Corporation possessing the voting power to elect a majority of the Board of Directors; (F) declare or pay or set aside for payment any dividend or distribution or other payment upon the Common Stock or upon any other Junior Stock, nor redeem, purchase or otherwise acquire any Common Stock or other Junior Stock for any consideration (or pay or make available any moneys, whether by means of a sinking fund or otherwise, for the redemption of or other distribution or payment with respect to any shares of any Common Stock or other Junior Stock), except for the repurchase of shares of Common Stock from directors, consultants or employees of the Corporation or any subsidiary pursuant to agreements approved by the disinterested directors on the Board of Directors, under which the Corporation has the right to repurchase such shares upon the occurrence of certain events, including but not limited to, termination of employment or services; -7- (G) approve the annual budget of the Corporation and its subsidiaries (the "Annual Budget"); (H) enter into any financial commitment over and above those approved in the annual budget in excess of $15 million in the aggregate (for the Corporation and its subsidiaries, taken together), except as prescribed in the Annual Budget; (I) dismiss or hire or modify or enter into any employment agreement, non-competition agreement, bonus or stock issuance arrangements or other compensation (including, without limitation, fringe benefit) arrangements with its President, Chief Executive Officer or Chief Financial Officer, or other equivalent or senior level officer; (J) permit the creation or existence of any lien, mortgage, pledge, hypothecation, assignment, security interest, charge or encumbrance, or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever on any of the Corporation's or any of its subsidiaries' assets with an aggregate value in excess of $15 million, except as part of any financing in the ordinary course of business; (K) make any capital expenditure in any fiscal year in excess of $15 million in the aggregate (for the Corporation and its subsidiaries, taken together), except as prescribed in the Annual Budget; (L) acquire any assets or equity or other interest in any other entity with a value in excess of $15 million in the aggregate (for the Corporation and its subsidiaries, taken together), except as prescribed in the Annual Budget; (M) incur indebtedness for borrowed money (including, without limitation, any capitalized lease obligations, accounts receivable financing or other asset-backed financing), any guarantee or other similar contingent obligation or any lease financing (whether a capitalized lease, operating lease, pursuant to a sale leaseback arrangement or otherwise), in excess of $15 million in the aggregate (for the Corporation and its subsidiaries, taken together), except as prescribed in the Annual Budget; (N) amend, supplement, restate, revise, waive or otherwise modify any stock option plan, agreement or other arrangement of the Corporation (each, a "Stock Option Plan"), as in effect on October 11, 2001; (O) create or adopt any stock option plan, stock appreciation rights plan, bonus plan or similar plan that was not in existence on October 11, 2001, except as approved by the Compensation Committee of the Board of Directors; (P) dispose of or acquire assets with a value in excess of $15 million other than in the normal course of business; -8- (Q) liquidate, dissolve or voluntarily elect to commence bankruptcy or insolvency proceedings under applicable laws; (R) change in any material respect the nature of the business of the Corporation and its subsidiaries taken as a whole; (S) enter into any transaction, or any agreement or understanding with any affiliate of the Corporation or any subsidiary thereof, other than a wholly-owned subsidiary of the Corporation; (T) (i) solicit or negotiate any inquiries or proposals with respect to (x) any direct or indirect issuance, sale, disposition or redemption of any securities of Latin Guide, Inc. ("LGI"), Tutopia or any of Tutopia's subsidiaries, (y) the direct or indirect sale or disposition of all or any material portion of the assets or business of LGI, Tutopia or any of Tutopia's subsidiaries, or (z) any merger, reorganization, consolidation or recapitalization or other similar transaction involving LGI, Tutopia or any of Tutopia's subsidiaries; or (ii) discuss with or provide to any person or entity information of LGI, Tutopia or any of Tutopia's subsidiaries with respect to or in contemplation of any of the foregoing; or (U) agree to do any of the foregoing. (c) Additional Voting Rights. Except as required by law, the holders of Series C Convertible Preferred Stock shall be entitled to notice of any stockholders' meeting and to vote together as a single class with the holders of Common Stock (and any other capital stock of the Corporation entitled to vote), upon any matter submitted to the stockholders for a vote as follows: (i) the holders of the Series C Convertible Preferred Stock shall have 2.3356 votes per share of Series C Convertible Preferred Stock; (ii) the holders of Common Stock shall have one (1) vote per share of Common Stock and (iii) the holders of any other series of Convertible Preferred Stock shall be entitled to the number of votes specified in the Certificate of Designation creating that series of Convertible Preferred Stock. (d) Manner of Voting. Whenever a vote of the holders of Series A Convertible Preferred Stock, Series B Convertible Preferred Stock, Series C Convertible Preferred Stock and/or other shares of Convertible Preferred Stock shall be taken as a class pursuant to the provisions of this Certificate of Designation or otherwise, the holders of Series C Convertible Preferred Stock shall have 2.3356 votes per share and the holders of the other Convertible Preferred Stock shall be entitled to the number of votes specified in the Certificate of Designation creating that series of Convertible Preferred Stock (whether or not convertible on such date). 5. CONVERSION. Shares of Series C Convertible Preferred Stock may be converted into shares of Common Stock, on the terms and conditions set forth in this Section 5. (a) Optional Conversion. -9- (i) At any time and from time to time, each holder of shares of Series C Convertible Preferred Stock may, upon written notice to the Corporation, convert all or any portion of such shares held by such holder into the number of shares of Common Stock determined by dividing (x) the applicable Stated Preference multiplied by the number of shares surrendered for conversion plus any declared but unpaid dividends on such shares, by (y) the Conversion Price on the date of conversion determined in accordance with Section 5(c). (ii) References in this Section 5 to "Common Stock" shall include all stock or other securities or property (including cash) into which Common Stock is converted following any merger, reorganization or reclassification of the capital stock of the Corporation. (b) Mandatory Conversion. Each share of Series C Convertible Preferred Stock shall automatically be converted into such number of shares of Common Stock as is determined by dividing (x) the Stated Preference multiplied by the number of shares surrendered for conversion plus any declared but unpaid dividends on such shares, by (y) the Conversion Price on the date of conversion determined in accordance with Section 5(c), without further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent, upon the closing of an underwritten public offering of shares of Common Stock for which the Corporation has obtained a firm commitment from one or more underwriter(s) for at least: $60 million of Common Stock and in which the Corporation receives gross proceeds from the sale of Common Stock to the public of at least $45 million (before deduction of underwriter's discounts and commissions), and which values the equity of the Corporation at no less than $200 million pre-offering (a "Qualified Public Offering"). Except for the purposes of the calculation in the immediately preceding sentence, in the event of a Qualified Public Offering, the person(s) entitled to receive the Common Stock issuable upon conversion of Series C Convertible Preferred Stock shall not be deemed to have converted such Series C Convertible Preferred Stock until the closing of such offering. (c) Conversion Price. The Conversion Price per share for the Series C Convertible Preferred Stock shall be Three and 00/100 Dollars ($3.00), subject to adjustment as provided in Section 6 hereof. (d) Common Stock. The Common Stock to be issued upon conversion hereunder shall be fully paid and nonassessable. (e) Procedures for Conversion. (i) In order to convert shares of Series C Convertible Preferred Stock into shares of Common Stock pursuant to Section 5(a) (or, in the case of an automatic conversion of Series C Convertible Preferred Stock pursuant to Section 5(b), to receive a certificate for such holder's shares of Common Stock outstanding as a result of such conversion), the holder shall surrender the certificate or certificates therefore, duly endorsed for transfer, at any time during normal business hours, to the Corporation at its principal or at such other office or agency then maintained by it for such purpose (the "Payment Office"), accompanied, in the case of a conversion pursuant to Section 5(a), by written notice to the Corporation of such -10- holder's election to convert and (if so required by the Corporation or any conversion agent) by an instrument of transfer, in form reasonably satisfactory to the Corporation and to any conversion agent, duly executed by the registered holder or by his duly authorized attorney, and any taxes required pursuant to Section 5(e)(iii). As promptly as practicable after the surrender for conversion of any share of Series C Convertible Preferred Stock in the manner provided in the preceding sentence, and the payment in cash of any amount required by the provisions of Section 5(e)(iii), but in any event within five Trading Days of such surrender for payment, the Corporation will deliver or cause to be delivered at the Payment Office to or upon the written order of the holder of such shares, certificates representing the number of full shares of Common Stock issuable upon such conversion, issued in such name or names as such holder may direct. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the shares in proper order for conversion, and all rights of the holder of such shares as a holder of such shares shall cease at such time and the person or persons in whose name or names the certificates for such shares of Common Stock are to be issued shall be treated for all purposes as having become the record holder or holders thereof at such time; provided, however, that any such surrender and payment on any date when the stock transfer books of the Corporation shall be closed shall constitute the person or persons in whose name or names the certificates for such shares of Common Stock are to be issued as the record holder or holders thereof for all purposes immediately prior to the close of business on the next succeeding day on which such stock transfer books are opened and such conversion shall be at the Conversion Price in effect at such time on such succeeding day. For purposes hereof, "Trading Day" shall mean (i) any day on which stock is traded on the principal stock exchange on which the Common Stock is listed or admitted to trading, (ii) if the Common Stock is not then listed or admitted to trading on any stock exchange but is traded on the Nasdaq Stock Market, any day on which stock is traded on the Nasdaq Stock Market, or (iii) if the Common Stock is not then traded on the Nasdaq Stock Market, any day on which stock is traded in the over-the-counter market, as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding to its functions of reporting prices). (ii) The Corporation shall not be required to issue fractional shares of Common Stock upon conversion of shares of Series C Convertible Preferred Stock. At the Corporation's discretion, in the event the Corporation determines not to issue fractional shares, in lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the closing price of the Common Stock on the date of conversion. (iii) The issuance of certificates for shares of Common Stock upon conversion shall be made without charge for any issue, stamp or other similar tax in respect of such issuance. However, if any such certificate is to be issued in a name other than that of the holder of record of the shares converted, the person or persons requesting the issuance thereof shall pay to the Corporation the amount of any tax which may be payable in respect of any transfer involved in such issuance or shall establish to the satisfaction of the Corporation that such tax has been paid or is not payable. -11- (f) Reservation of Stock Issuable Upon Conversion. The Corporation shall reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Series C Convertible Preferred Stock, 3,876,241 shares of Common Stock. If at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Series C Convertible Preferred Stock without regard to whether the holders of Series C Convertible Preferred Stock are then entitled to convert, the Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose, including, without limitation, taking appropriate board action, recommending such an increase to the holders of Common Stock, holding shareholders meetings, soliciting votes and proxies in favor of such increase to obtain the requisite stockholder approval and upon such approval, the Corporation shall reserve and keep available such additional shares solely for the purpose of effecting the conversion of the shares of the Series C Convertible Preferred Stock. (g) Merger, Etc. (i) Notwithstanding any other provision hereof, in case of any merger or other business combination transaction involving the Corporation which does not constitute a Liquidation Event, then, concurrently with the consummation of such transaction, provision shall be made so that each share of Series C Convertible Preferred Stock shall thereafter be convertible into the number of shares of stock or other securities or property (including cash) to which a holder of the number of shares of Common Stock deliverable upon conversion of such share of Series C Convertible Preferred Stock would have been entitled assuming conversion immediately prior to the closing of the transaction. (ii) In case of any merger or other business combination transaction involving the Corporation which does not constitute a Liquidation Event, in which the Corporation is not the surviving entity, and the Corporation or the holders do not otherwise convert all outstanding shares of Series C Convertible Preferred Stock, the Series C Convertible Preferred Stock shall be converted into or exchanged for and shall become shares of the surviving corporation having, in respect of the surviving corporation, substantially the same powers, preferences and relative participating, optional or other special rights, and the qualifications, limitations or restrictions thereon, that the Series C Convertible Preferred Stock had immediately prior to such transaction. 6. ADJUSTMENTS. The Conversion Price shall be subject to adjustment from time to time as set forth in this Section 6. The Corporation shall give holders of Series C Convertible Preferred Stock notice of any event described below which requires an adjustment pursuant to this Section 6 at the time of such event. (a) Definitions. As used in this Section 6, the following terms have the respective meanings set forth below: -12- "Additional Shares of Common Stock" shall mean all shares of Common Stock issued by the Corporation after the Closing (as defined in the Preferred Stock Purchase Agreement). "Convertible Securities" shall mean evidences of indebtedness, shares of stock of other securities which are convertible into or exchangeable, with or without payment of additional consideration in cash or property, for Additional Shares of Common Stock, either immediately or upon the occurrence of a specified date or a specified event. "Fully Diluted Outstanding" shall mean, when used with reference to Common Stock, at any date as of which the number of shares thereof is to be determined, all shares of Common Stock Outstanding at such date and all shares of Common Stock issuable in respect of Series C Convertible Preferred Stock outstanding on such date and other securities convertible into, or options or warrants to purchase, shares of Common Stock outstanding on such date, whether or not such options, warrants or other securities are presently convertible or exercisable. "Other Property" shall have the meaning set forth in Section 6(i). "Outstanding" shall mean, when used with reference to Common Stock, at any date as of which the number of shares thereof is to be determined, all issued shares of Common Stock, except shares then owned or held by or for the account of the Corporation or any subsidiary of the Corporation, and shall include all shares issuable in respect of outstanding scrip or any certificates representing fractional interests in shares of Common Stock. "Overage" shall mean the total number of shares of Common Stock issued in connection with the Subject Transactions above the Share Allowance. "Permitted Issuances" shall mean (i) the issuance of up to 4,243,037 shares of Common Stock issuable pursuant to options to purchase Common Stock under the Stock Option Plan, (ii) shares of Common Stock issued or issuable in connection with a Qualified Public Offering, (iii) shares of Common Stock issued in connection with the Subject Transactions or upon conversion of Convertible Preferred Stock, (iv) shares of Class I Series B Preferred Stock issued upon conversion of the Class II Series B Preferred Stock, (v) securities issued as consideration for any acquisition approved by a majority of the Board of Directors (including the affirmative vote of the Preferred Directors), (vi) the issuance of an aggregate of up to 100,000 additional shares of Common Stock (as adjusted for stock splits, combinations, stock dividends and the like) in transactions approved by a majority of the Board of Directors, (vii) the issuance of an aggregate of up to another 100,000 additional shares of Common Stock (as adjusted for stock splits, combinations, stock dividends and the like) in transactions approved by a majority of the Board of Directors (including the affirmative vote of the Preferred Directors), (viii) the Spinway Warrant, (ix) 210,000 shares of Common Stock upon exercise of the Spinway Warrant, (x) shares of Common Stock and/or Convertible Preferred Stock issued pursuant to the Tutopia Put Agreement, (xi) such other issuances as shall be approved in advance by the holders of at least a majority of the voting power of all then outstanding shares of Convertible Preferred Stock, voting as a single class, and (xii) a warrant for 500,000 shares dated February 19, 2002, issued to Lucent Technologies Inc. and Shares of Common Stock issued on exercise of such warrant. -13- "Qualified Private Offering" shall mean a private equity offering to investors other than UBS resulting in gross proceeds to the Corporation of at least $30 million, in which the securities issued contain anti-dilution provisions no more favorable to the investor than the anti-dilution provisions of the Series C Convertible Preferred Stock which take effect following the consummation of a Qualified Private Offering. "Share Allowance" shall mean 428,571 shares of Common Stock. "Stock Option Plan" shall mean the IFX Corporation Directors Stock Option Plan, the 1998 IFX Corporation Stock Option and Incentive Plan, as amended, and the IFX Corporation 2001 Stock Option Plan. "Subject Transactions" shall mean (i) any acquisition consummated prior to the filing hereof, including, without limitation, the acquisitions of Mr. Help Informatica S/C Ltda., Zupernet Ltda. and Redescape, L.L.C., (ii) the Consulting Agreement, dated as of May 27, 1999 by and between the Corporation and Brian Reale and (iii) the conversion of Tutopia Stock into Common Stock pursuant to the Tutopia Stockholders Agreement. (b) Stock Dividends, Subdivisions and Combinations. If at any time the Corporation shall: (i) take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend payable in, or other distribution of, Additional Shares of Common Stock, (ii) subdivide its outstanding shares of Common Stock into a larger number of shares of Common Stock, or (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, then the applicable Conversion Price immediately after the occurrence of any such event shall be adjusted to equal the product of (A) the Conversion Price immediately prior to the occurrence of such event and (B) a fraction, the numerator of which shall be the number of Fully Diluted Outstanding shares of Common Stock immediately prior to the occurrence of such event and the denominator of which shall be the number of Fully Diluted Outstanding shares of Common Stock immediately after the occurrence of such event. (c) Issuance of Additional Shares of Common Stock. (i) In the event that prior to the consummation of or in connection with a Qualified Private Offering, the Corporation shall issue or sell any Additional Shares of Common Stock, other than Permitted Issuances, for a consideration per Additional Share of Common Stock less than the applicable Conversion Price, then the applicable Conversion Price shall be reduced to the consideration per Additional Share of Common Stock paid for such Additional Shares of Common Stock. -14- (ii) In the event that following the consummation of a Qualified Private Offering, the Corporation shall issue or sell any Additional Shares of Common Stock, other than Permitted Issuances, for a consideration per Additional Share of Common Stock less than the applicable Conversion Price, then the applicable Conversion Price shall be reduced to a price determined by dividing (A) an amount equal to the sum of (x) the number of Fully Diluted Outstanding shares of Common Stock immediately prior to such issue or sale multiplied by the then existing Conversion Price plus (y) the aggregate consideration, if any, received by the Corporation upon such issue or sale, by (B) the total number of Fully Diluted Outstanding shares of Common Stock outstanding immediately after such issue or sale. (iii) The provisions of this Section 6(c) shall not apply to any issuance of Additional Shares of Common Stock for which an adjustment is provided under Section 6(b). No adjustment shall be made under this Section 6(c) upon the issuance of any Additional Shares of Common Stock which are issued pursuant to the exercise of any warrants or other subscription or purchase rights or pursuant to the exercise of any conversion or exchange rights in any Convertible Securities, if any such adjustment shall previously have been made upon the issuance of such warrants or other rights or upon the issuance of such Convertible Securities (or upon the issuance of any warrant or other rights therefor) pursuant to Section 6(d) or Section 6(e). (d) Issuance of Warrants or Other Rights. Except with respect to Permitted Issuances, if at any time the Corporation shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a distribution of, or shall in any manner (whether directly or by assumption in a merger in which the Corporation is the surviving corporation) issue or sell, any warrants or other rights to subscribe for or purchase any Additional Shares of Common Stock or any Convertible Securities, whether or not the rights to exchange or convert thereunder are immediately exercisable, and the price per share for which Common Stock is issuable upon the exercise of such warrants or other rights or upon conversion or exchange of such Convertible Securities shall be less than the applicable Conversion Price in effect immediately prior to the time of such distribution, issue or sale, then the applicable Conversion Price shall be adjusted as provided in Section 6(c)(i) or (ii), as applicable, on the basis that (i) the maximum number of Additional Shares of Common Stock issuable pursuant to all such warrants or other rights or necessary to effect the conversion or exchange of all such Convertible Securities shall be deemed to have been issued and outstanding, (ii) the price per share for such Additional Shares of Common Stock shall be deemed to be the lowest price per share at which such Additional Shares of Common Stock are issuable to such holders, and (iii) the Corporation shall have received all of the consideration, if any, payable for such warrants or other rights as of the date of the actual issuance thereof. No further adjustments of the Conversion Price shall be made upon the actual issue of such Common Stock or of such Convertible Securities upon exercise of such warrants or other rights or upon the actual issue of such Common Stock upon such conversion or exchange of such Convertible Securities. (e) Issuance of Convertible Securities. Except with respect to Permitted Issuances, if at any time the Corporation shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a distribution of, or shall in any manner (whether directly or by assumption in a merger in which the Corporation is the surviving corporation) issue or sell, any Convertible Securities, whether or not the rights to exchange or convert -15- thereunder are immediately exercisable, and the price per share for which Common Stock is issuable upon such conversion or exchange shall be less than the applicable Conversion Price in effect immediately prior to the time of such issue or sale, then the applicable Conversion Price shall be adjusted as provided in Section 6(c)(i) or (ii), as applicable, on the basis that (i) the maximum number of Additional Shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities shall be deemed to have been issued and outstanding, (ii) the price per share of such Additional Shares of Common Stock shall be deemed to be the lowest possible price in any range of prices at which such Additional Shares of Common Stock are available to such holders, and (iii) the Corporation shall have received all of the consideration payable therefor, if any, as of the date of actual issuance of such Convertible Securities. No further adjustment of the Conversion Price shall be made under this Section 6(e) upon the issuance of any Convertible Securities which are issued pursuant to the exercise of any warrants or other subscription or purchase rights therefor, if any such adjustment shall previously have been made upon the issuance of such warrants or other rights pursuant to Section 6(d). No further adjustments of the Conversion Price shall be made upon the actual issue of such Common Stock upon conversion or exchange of such Convertible Securities and, if any issue or sale of such Convertible Securities is made upon exercise of any warrant or other right to subscribe for or to purchase or any warrant or other right to purchase any such Convertible Securities for which adjustments thereof have been or are to be made pursuant to other provisions of this Section 6, no further adjustments shall be made by reason of such issue or sale. (f) Superseding Adjustment. If, at any time after any adjustment of the applicable Conversion Price shall have been made pursuant to Section 6(d) or 6(e) as the result of any issuance of warrants, rights or Convertible Securities, and either (i) such warrants or rights, or the right of conversion or exchange in such other Convertible Securities, shall expire, and all or a portion of such warrants or rights, or the right of conversion or exchange with respect to all or a portion of such other Convertible Securities, as the case may be, shall not have been exercised, or (ii) the consideration per share for which shares of Common Stock are issuable pursuant to such warrants or rights, or such other Convertible Securities, shall be increased or decreased by virtue of provisions therein contained, then such previous adjustment shall be rescinded and annulled and the Additional Shares of Common Stock which were deemed to have been issued by virtue of the computation made in connection with the adjustment so rescinded and annulled shall no longer be deemed to have been issued by virtue of such computation. Thereupon, a recomputation shall be made of the effect of such rights or options or other Convertible Securities on the applicable Conversion Price, on the basis of (iii) treating the number of Additional Shares of Common Stock or other property, if any, theretofore actually issued or issuable pursuant to the previous exercise of any such warrants or rights or any such right of conversion or exchange, as having been issued on the date or dates of any such exercise and for the consideration actually received and receivable therefor, and -16- (iv) treating any such warrants or rights or any such other Convertible Securities which then remain outstanding as having been granted or issued immediately after the time of such increase or decrease of the consideration per share for which shares of Common Stock or other property are issuable under such warrants or rights or other Convertible Securities. (g) Subject Transactions Adjustment. If the Corporation issues a number of shares of Common Stock greater than the Share Allowance in connection with the Subject Transactions, the Conversion Price shall be adjusted to a dollar resulting from the following: $40,464,918 ------------------------------------------ 1.010948(12,919,702 + Overage) - 1,500,000 Notwithstanding the foregoing, an adjustment under this subsection (g) shall only be made to the extent such adjustment results in a reduction of the then current Conversion Price. (h) Other Provisions Applicable to Adjustments Under This Section. The following provisions shall be applicable to the making of adjustments provided for in this Section 6: (i) Computation of Consideration. To the extent that any Additional Shares of Common Stock or any Convertible Securities or any warrants or other rights to subscribe for or purchase any Additional Shares of Common Stock or any Convertible Securities shall be issued for cash consideration, the consideration received by the Corporation therefor shall be the amount of the cash received by the Corporation therefor, or, if such Additional Shares of Common Stock or Convertible Securities are offered by the Corporation for subscription, the subscription price, or, if such Additional Shares of Common Stock or Convertible Securities are sold to underwriters or dealers for public offering without a subscription offering, the public offering price (in any such case subtracting any amounts paid or receivable for accrued interest or accrued dividends, but not subtracting any compensation, discounts or expenses paid or incurred by the Corporation for and in the underwriting of, or otherwise in connection with, the issuance thereof). To the extent that such issuance shall be for a consideration other than cash, then, except as herein otherwise expressly provided, the amount of such consideration shall be deemed to be the fair value of such consideration at the time of such issuance as determined in good faith by the Board of Directors. In case any Additional Shares of Common Stock or any Convertible Securities or any warrants or other rights to subscribe for or purchase such Additional Shares of Common Stock or Convertible Securities shall be issued in connection with any merger in which the Corporation issues any securities, the amount of consideration therefor shall be deemed to be the fair value, as determined in good faith by the Board of Directors, of such portion of the assets and business of the nonsurviving corporation as the Board of Directors in good faith shall determine to be attributable to such Additional Shares of Common Stock, Convertible Securities, warrants or other rights, as the case may be. The consideration for any Additional Shares of Common Stock issuable pursuant to any warrants or other rights to subscribe for or purchase the same shall be the consideration received by the Corporation for issuing such warrants or other rights plus the additional consideration payable to the Corporation upon exercise of such warrants or other rights. The consideration for any Additional Shares of Common Stock issuable pursuant to the terms of any Convertible -17- Securities shall be the consideration, if any, received by the Corporation for issuing warrants or other rights to subscribe for or purchase such Convertible Securities, plus the consideration paid or payable to the Corporation in respect of the subscription for or purchase of such Convertible Securities, plus the additional consideration, if any, payable to the Corporation upon the exercise of the right of conversion or exchange in such Convertible Securities. In case of the issuance at any time of any Additional Shares of Common Stock or Convertible Securities in payment or satisfaction of any dividends upon any class of stock other than Common Stock, the Corporation shall be deemed to have received for such Additional Shares of Common Stock or Convertible Securities a consideration equal to the amount of such dividend so paid or satisfied. (ii) When Adjustments to Be Made. The adjustments required by this Section 6 shall be made whenever and as often as any specified event requiring an adjustment shall occur. For the purpose of any adjustment, any specified event shall be deemed to have occurred at the close of business on the date of its occurrence. (iii) When Adjustment Not Required. If the Corporation shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or distribution or subscription or purchase rights and shall, thereafter and before the distribution to stockholders thereof, legally abandon its plan to pay or deliver such dividend, distribution, subscription or purchase rights, then thereafter no adjustment shall be required by reason of the taking of such record and any such adjustment previously made in respect thereof shall be rescinded and annulled. (iv) Escrow of Common Stock. If after any property becomes distributable as a result of the provisions of this Section 6 by reason of the taking of any record of the holders of Common Stock, but prior to the occurrence of the event for which such record is taken, a holder of shares of Series C Convertible Preferred Stock exercises its conversion rights pursuant to Section 5, any Additional Shares of Common Stock issuable and other property distributable upon exercise by reason of such adjustment shall be held in escrow for such holder by the Corporation to be issued to such holder upon and to the extent that the event actually takes place. Notwithstanding any other provision to the contrary herein, if the event for which such record was taken fails to occur or is rescinded, then such escrowed shares shall be canceled by the Corporation and escrowed property returned. (v) Challenge to Good Faith Determination. Whenever the Board of Directors shall be required to make a determination in good faith of the fair value of any item under this Section 6, such determination may be challenged in good faith by holders of a majority of the outstanding shares of Convertible Preferred Stock, and any dispute shall be resolved by an investment banking firm of recognized national standing selected by the Corporation and acceptable to such holder. (i) Other Action Affecting Common Stock. In case at any time or from time to time the Corporation shall take any action in respect of its Common Stock, other than any action described in this Section 6 for which a specific adjustment is provided, then, unless such action will not have a materially adverse effect upon the rights of the holders of shares of Series C Convertible Preferred Stock, the number of shares of Common Stock or other stock into -18- which such shares of Series C Convertible Preferred Stock are convertible and/or the applicable Conversion Price shall be adjusted in such manner as may be equitable in the circumstances. (j) Certain Limitations. Notwithstanding anything herein to the contrary, the Corporation shall not enter into any transaction which, by reason of any adjustment hereunder, would cause the applicable Conversion Price to be less than the par value per share of Common Stock. (k) Notice of Adjustments. Whenever the number of shares of Common Stock into which shares of Series C Convertible Preferred Stock are convertible or whenever the applicable Conversion Price shall be adjusted pursuant to this Section 6, the Corporation shall forthwith prepare a certificate to be executed by the chief financial officer of the Corporation setting forth, in reasonable detail, the event requiring the adjustment and the method by which such adjustment was calculated (including a description of the basis on which the Board of Directors determined the fair value of any consideration referred to in Section 6(h)(i)), specifying any change in the applicable Conversion Price or the number of shares of Common Stock into which shares of Series C Convertible Preferred Stock are convertible and (if such adjustment was made pursuant to Section 5(g)(i) or 6(h)) describing the number and kind of any other shares of stock or Other Property into which shares of Series C Convertible Preferred Stock are convertible, and any change in the applicable Conversion Price or prices thereof, after giving effect to such adjustment or change. The Corporation shall promptly cause a signed copy of such certificate to be delivered to the holders of Series C Convertible Preferred Stock. The Corporation shall keep at the Payment Office copies of all such certificates and cause the same to be available for inspection at said office during normal business hours by the holders of Series C Convertible Preferred Stock or any prospective purchaser of shares of Series C Convertible Preferred Stock designated by such holders. 7. TRIGGERING EVENTS. Any of the following actions or events shall constitute a "Triggering Event" for purposes hereof: (a) Failure to Pay Dividends. The Corporation shall fail to pay any dividend on any Series C Convertible Preferred Stock which it is required to pay in accordance with Section 2 for any reason, including but not limited to, that such payment is prohibited by applicable law or the Board of Directors elect not to pay such dividend, or shall otherwise violate any term of Section 2 and such failure shall not be cured within a period of 30 days after such violation (which cure shall be effected in a manner ensuring the holders the same yield as if such violation had not occurred). (b) Failure of Voting Rights. The Corporation shall enter into any transaction or take any action required to be approved by holders of Series C Convertible Preferred Stock without obtaining the requisite approval of the holders of the Series C Convertible Preferred Stock. (c) Failure to Convert. The Corporation shall fail for any reason to issue Common Stock as required under Section 5 upon the request of any holder of Series C -19- Convertible Preferred Stock, as provided in Section 5 or shall fail for any reason to comply in any material respect with any term of Section 5(f) or any other term of Section 5 hereof. (d) Registration Rights Agreement. The Corporation shall fail in any material respect to comply with the rights of the holders of Series C Convertible Preferred Stock pursuant to the Second Amended and Restated Registration Rights Agreement, dated as of October 11, 2001, among the Corporation, UBS and certain other stockholders of the Corporation, and such failure shall continue for a period of 30 days after notice from any such holder. (e) Preferred Stock Purchase Agreement. The Corporation shall fail to comply with Section 6(f) or 6(g) of the Preferred Stock Purchase Agreement and such failure shall continue for a period of 30 days after notice from the Purchasers or the representations made under Section 4(c) or 4(u) of the Preferred Stock Purchase Agreement shall prove to have been incorrect or misleading in any material respect when made pursuant thereto or any other material representation made under the Preferred Stock Purchase Agreement shall prove to have been incorrect or misleading in any substantial material respect when made. (f) There shall have occurred and be continuing a "Triggering Event" pursuant to the terms of any other class or series of Convertible Preferred Stock. (g) Notwithstanding the foregoing, if a majority of the Preferred Directors directors affirmatively vote in favor of a transaction or other action by the Corporation which would constitute a Triggering Event under Section 7(b) or 7(d), such action or event shall not be considered a Triggering Event. 8. REMEDIES. (a) In the event that a Triggering Event described in Section 7 shall occur and be continuing, each holder of Series C Convertible Preferred Stock shall be entitled to receive all cash and other dividends, distributions and other payments which would be paid or payable to a holder of a number of shares of Common Stock into which the shares of Series C Convertible Preferred Stock held by such holder are convertible at such time (without regard to the number of shares of Common Stock which are authorized or reserved for issuance at such time and without regard to whether such shares of Series C Convertible Preferred Stock are then currently convertible into Common Stock at the option of the holder). (b) Upon the occurrence and during the continuance of any Triggering Event, to the extent the Preferred Directors do not already constitute a majority of the Board of Directors, the size of the Board of Directors shall immediately be increased by the minimum number of directors which, if all of such additional directors were deemed "Preferred Directors," would result in such Preferred Directors constituting a majority of the Board of Directors, and the holders of Voting Preferred Stock shall be entitled to appoint such newly created directors by vote of the holders of at least a majority of the voting power of all then outstanding shares of Voting Preferred Stock, voting as a single class. (c) Upon the occurrence and during the continuance of any Triggering Event, any holder of shares of Series C Convertible Preferred Stock, at its election, may, by notice to the -20- Corporation (the "Put Notice"), demand repurchase of all or any portion of such holder's shares of Series C Convertible Preferred Stock for a cash purchase price in an amount per share equal to the Liquidation Preference. The Corporation shall, on the date (not less than 10 business days after the date of the Put Notice) designated in such Put Notice, repurchase from the holder such holder's shares of Series C Convertible Preferred Stock specified in the Notice. On the date of any repurchase of shares of Series C Convertible Preferred Stock pursuant to this Section 8(c), the holder thereof shall surrender for redemption a certificate for the number of shares of Series C Convertible Preferred Stock being redeemed, without any representation or warranty (other than that the holder has good and marketable title thereto, free and clear of liens, encumbrances and restrictions of any kind), against payment therefor of the repurchase price by, at the option of the holder, (i) wire transfer to an account designated by the holder for such purpose or (ii) a certified or official bank check payable to the order of the holder. If less than all of the holder's shares of Series C Convertible Preferred Stock represented by a single certificate are being redeemed, the Corporation shall cancel such certificate and issue in the name of, and deliver to, the holder a new certificate for the portion not being redeemed. At any time following delivery of a Put Notice but prior to the date of repurchase, any holder of Series C Convertible Preferred Stock may, by notice to the Corporation, withdraw the repurchase demand contained in the Put Notice. Notwithstanding the foregoing, the holders of Series C Convertible Preferred Stock shall not be entitled to exercise their repurchase rights hereunder unless the holders of Convertible Preferred Stock elect to exercise such repurchase rights by vote of the holders of at least a majority of the voting power of all then outstanding shares of Convertible Preferred Stock, voting as a single class. (d) The Corporation stipulates that the remedies at law of each holder of Series C Convertible Preferred Stock in the event of any Triggering Event or threatened Triggering Event or otherwise or other failure in the performance of or compliance with any of the terms hereof are not and will not be adequate and that, to the fullest extent permitted by law, such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise without requiring any holder to post a bond or other security except to the extent required by applicable law. (e) Any holder of Series C Convertible Preferred Stock shall be entitled to recover from the Corporation the reasonable attorneys' fees and expenses incurred by such holder in connection with any Triggering Event or enforcement by such holder of any obligation of the Corporation hereunder. (f) No failure or delay on the part of any holder of Series C Convertible Preferred Stock in exercising any right, power or remedy hereunder or under applicable law or otherwise shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy hereunder or thereunder. The remedies herein provided are cumulative and not exclusive of any remedies provided by law or otherwise. -21- 9. PREEMPTIVE RIGHT. (a) Each holder of 210,000 shares of Series C Convertible Preferred Stock or Common Stock issued upon conversion of Series C Convertible Preferred Stock (including shares held by such person's affiliates), shall have a right of first refusal (the "Preemptive Right") to purchase its pro rata share, based on such holder's percentage ownership interest in the Corporation, of New Securities (as defined below) which the Corporation, from time to time, proposes to sell and issue (subject to such requirements and restrictions imposed by the Securities Act of 1933, as amended, and state securities laws and to the actual issuance of the New Securities). The pro rata shares of any holder of Series C Convertible Preferred Stock or Common Stock issued upon conversion of Series C Convertible Preferred Stock, for purposes of this Preemptive Right, shall be the ratio of (i) the number of shares of Common Stock owned, of record or beneficially, by such holder (including all shares issuable upon conversion of the Series C Convertible Preferred Stock, whether or not then currently convertible, or the exercise or conversion of any other option, warrant or convertible security held by such holder) immediately prior to the issuance of the New Securities, to (ii) the total number of shares of Common Stock issued and outstanding immediately prior to the issuance of the New Securities, determined on a fully diluted basis after giving effect to the exercise in full of then outstanding options and warrants and the conversion of all securities convertible into shares of Common Stock; provided, however, that if any holder -------- ------- of Series C Convertible Preferred Stock or Common Stock issued upon conversion of Series C Convertible Preferred Stock does not elect to purchase its entire pro rata share of such New Securities, then each other holder that has elected to purchase its entire pro rata share shall have the right to purchase up to a number of such unpurchased portion, in addition to its own, in the proportion that (1) the number of shares of Common Stock owned, of record or beneficially, by such holder (including all shares issuable upon conversion of the Series C Convertible Preferred Stock, whether or not then currently convertible, or the exercise or conversion of any other option, warrant or convertible security held by such holder) immediately prior to the issuance of the New Securities bears to (2) the number of shares of Common Stock owned, of record or beneficially, by all holders of Series C Convertible Preferred Stock or Common Stock issued upon conversion of Series C Convertible Preferred Stock (including all shares issuable upon conversion of the Series C Convertible Preferred Stock, whether or not then currently convertible, or the exercise or conversion of any other option, warrant or convertible security held by such holders) immediately prior to the issuance of the New Securities. The overallotment mechanism set forth in this paragraph shall be repeatedly applied until all New Securities available for purchase by holders of Series C Convertible Preferred Stock or Common Stock issued upon conversion of Series C Convertible Preferred Stock have been purchased or no holders remain who have indicated a desire to purchase any unsubscribed for portion in their notice to the Corporation. (b) "New Securities" shall mean (a) any capital stock of the Corporation, rights, options or warrants to purchase capital stock and securities of any type whatsoever that are, or may become convertible into or exchangeable for capital stock and (b) so-called "high yield" bonds, debt instruments with equity like features or other similar debt instruments, which bear a rating lower than investment-grade or are unrated, issued by the Corporation; provided, however, that the term "New Securities" does not include -------- ------- (i) the issuance of up to 4,243,037 shares of Common Stock issuable pursuant to options to purchase Common Stock under the Stock Option Plan, (ii) shares of Common Stock issued or issuable in connection with a -22- Qualified Public Offering, (iii) shares of Common Stock issued upon conversion of Convertible Preferred Stock, (iv) shares of Class I Series B Preferred Stock issued upon conversion of Class II Series B Preferred Stock, (v) securities issued as consideration for any acquisition approved by a majority of the Board of Directors (including the affirmative vote of the Preferred Directors), (vi) the Spinway Warrant, (vii) 210,000 shares of Common Stock upon exercise of the Spinway Warrant, (viii) shares of Common Stock in exchange for shares of Tutopia Stock upon a change-in-control of the Corporation pursuant to the Tutopia Stockholders Agreement, (ix) shares of Common Stock and/or Convertible Preferred Stock issued pursuant to the Tutopia Put Agreement, (x) any shares of capital stock of the Corporation, rights, options or warrants to purchase capital stock and securities of any type whatsoever that are, or may become convertible into or exchangeable for capital stock that have been approved in advance by the holders of at least a majority of the voting power of all then outstanding shares of Convertible Preferred Stock, voting as a single class, or (xi) a warrant for 500,000 shares dated February 19, 2002, issued to Lucent Technologies Inc. and Shares of Common Stock issued on exercise of such warrant. (c) In the event the Corporation proposes to undertake an issuance of New Securities, it shall give each holder of Series C Convertible Preferred Stock or Common Stock issued upon conversion of Series C Convertible Preferred Stock written notice of its intention, describing the type of New Securities and the price and the terms upon which the Corporation proposes to issue the same. Each such holder shall have twenty (20) days from the date of receipt of any such notice to agree to purchase its pro rata share of such New Securities for the price and upon the terms specified in the notice by giving written notice to the Corporation and stating therein the quantity of New Securities to be purchased. (d) The Corporation shall have ninety (90) days after expiration of the twenty (20) day period described in Section 9(c) to sell any New Securities with respect to which a Preemptive Right was not exercised, at a price not less than and upon terms no more favorable in the aggregate to the purchasers thereof than specified in the Corporation's notice. To the extent the Corporation does not sell all the New Securities offered within said ninety (90) day period, the Corporation shall not thereafter issue or sell such New Securities without first again offering such securities to each holder of Series C Convertible Preferred Stock or Common Stock issued upon conversion of Series C Convertible Preferred Stock in the manner provided above. (e) The rights granted under this Section 9 shall expire upon the earlier of (i) the closing of a Qualified Public Offering and (ii) such time as less than an aggregate of 25% of the authorized Convertible Preferred Stock remains outstanding. 10. RANKING. The Series C Convertible Preferred Stock shall rank pari passu with the Series A Convertible Preferred Stock and Series B Convertible Preferred Stock of the Corporation (which shall constitute Parity Securities for purposes hereof) and any other Parity Securities with respect to amounts receivable upon a Liquidation Event, dividends, rights and remedies upon Triggering Events or for any other purpose. -23- 11. AMENDMENTS. This Certificate of Designation may not be amended without first obtaining the affirmative vote or written consent of the holders of at least a majority of the voting power of all then outstanding shares of Convertible Preferred Stock, voting together as a single class, including the affirmative vote or written consent of the holders of a majority of the shares of Series C Convertible Preferred Stock. -24- EX-10.1 7 dex101.txt 3RD AMENDED & RESTATED STOCKHOLDERS AGREEMENT EXHIBIT 10.1 THIRD AMENDED AND RESTATED STOCKHOLDERS AGREEMENT among IFX CORPORATION, UBS CAPITAL AMERICAS III, L.P., UBS CAPITAL LLC, INTERNATIONAL TECHNOLOGY INVESTMENTS, LC, JOEL EIDELSTEIN, MICHAEL SHALOM, and LEE S. CASTY dated as of February 19, 2002 IFX CORPORATION THIRD AMENDED AND RESTATED STOCKHOLDERS AGREEMENT THIS THIRD AMENDED AND RESTATED STOCKHOLDERS AGREEMENT (this "Agreement") is entered as of February 19, 2002, among IFX CORPORATION, a Delaware corporation (the "Company"), UBS CAPITAL AMERICAS III, L.P., a Jersey, Channel Islands limited partnership, and UBS CAPITAL LLC, a Delaware limited liability company (collectively, "UBS" and together with successors and assigns, the "Investor Stockholders"), INTERNATIONAL TECHNOLOGY INVESTMENTS, LC, a Nevada limited liability company ("ITI"), JOEL EIDELSTEIN, individually ("Eidelstein"), MICHEAL SHALOM, individually ("Shalom"), and LEE S. CASTY, successor in interest to Casty Grantor Subtrust ("Casty"; ITI, Shalom, Eidelstein, Casty and any other Person who becomes a party to this Agreement pursuant to the last sentence of Section 5.2, individually, a "Stockholder," and collectively, the "Stockholders"). RECITALS -------- WHEREAS, the Company and the Investor Stockholders entered into that certain IFX Corporation Preferred Stock Purchase Agreement, dated as of June 15, 2000, pursuant to which the Investor Stockholders purchased 2,030,869 shares of Series A Preferred Stock; and WHEREAS, as a condition to and in consideration of the Investor Stockholders' purchase of Series A Preferred Stock, the Company, the Investor Stockholders and the Stockholders entered into that certain Amended and Restated Stockholders Agreement dated as of June 15, 2000; and WHEREAS, the Company and the Investor Stockholders entered into that certain IFX Corporation Preferred Stock Purchase Agreement, dated March 13, 2001, pursuant to which the Investor Stockholders purchased 4,418,262 shares of Series B Preferred Stock; and WHEREAS, as a condition to and in consideration of the Investor Stockholders' purchase of Series B Preferred Stock, the Company, the Investor Stockholders, Casty Grantor Subtrust and the Stockholders (except Casty) entered into that certain Second Amended and Restated Stockholders Agreement dated as of May 7, 2001 (the "Existing Agreement"); and WHEREAS, the Company and the Investor Stockholders have entered into the IFX Corporation Series C Convertible Preferred Stock Purchase Agreement, dated October 11, 2001 (the "Stock Purchase Agreement"), pursuant to which the Investor Stockholders will acquire shares of newly issued Series C Preferred Stock; and WHEREAS, as a condition to and in consideration of the Investor Stockholders' purchase of Series C Preferred Stock, the Company, the Investor Stockholders and the 1 Stockholders have agreed to amend and restate the Existing Agreement in the manner set forth below. NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in this Agreement and for other valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I DEFINITIONS SECTION 1.1 Certain Defined Terms. As used herein, the following terms --------------------- shall have the following meanings: "Affiliate" of a specified Person shall mean (a) any Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person, (b) in the case of a natural Person, such Person's spouse, parent or lineal descendant (whether by blood or adoption and including stepchildren), a trust primarily for the benefit of such Person and the foregoing, (c) in the case of a trust any Person with whom the beneficiaries of the Trust are Affiliates, or (d) in the case of UBS, (i) any company under the direct or indirect control of UBS AG (a "UBS Group Company") and/or any partnership or unincorporated association under the direct or indirect control of any UBS Group Company which includes, without limiting the generality of the foregoing, any limited partnership the general partner of which is a UBS Group Company and any limited liability company the managing member of which is a UBS Group Company, and (ii) any alternative investment vehicle formed by either of the foregoing, or any other entity (x) in which UBS AG directly or indirectly owns at least 20% of the equity interests and (y) is advised or managed (whether pursuant to contract, as general partner, managing member or otherwise) by an entity in which UBS AG has a direct or indirect equity interest. "Agent" has the meaning assigned to such term in Section 5.13. "as converted" has the meaning assigned to such term in Section 2.3. "beneficial owner" or "beneficially own" has the meaning given such term in Rule 13d-3 under the Exchange Act and a Person's beneficial ownership of Common Stock, Preferred Stock or other Voting Securities of the Company shall be calculated in accordance with the provisions of such Rule; provided, however, that for purposes of determining beneficial ownership, (i) a Person shall be deemed to be the beneficial owner of any security which may be acquired by such Person whether within 60 days or thereafter, upon the conversion, exchange or exercise of any warrants, options, rights or other securities and (ii) no Person shall be deemed to beneficially own any security solely as a result of such Person's execution of this Agreement. "Board" means the Board of Directors of the Company. 2 "Bona Fide Purchaser" means, with respect to a proposed Transfer of Equity Securities, any transferee of Equity Securities who or which (a) is not an Affiliate of the Investor Stockholders and (b) has delivered a good faith written offer to purchase Equity Securities. "Business Day" means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by law to be closed in New York City on the city of Miami, Florida. "Buyer" has the meaning assigned to such term in Section 3.6. "Bylaws" means the Bylaws of the Company, as in effect on the date hereof and as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof, the terms of the Certificate and the terms of this Agreement. "Capital Stock" means, with respect to any Person at any time, any and all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) of capital stock, partnership interests (whether general or limited) or equivalent ownership interests in or issued by such Person, and includes, in the case of the Company without limitation, any and all shares of Common Stock and Preferred Stock. "Casty" has the meaning assigned to such term in the preamble. "Certificate" means the Certificate of Incorporation of the Company, as in effect on the date hereof and as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof. "Certificates of Designation" means, collectively, the Series A Certificate of Designation, the Series B Certificate of Designation and the Series C Certificate of Designation. "Closing" has the meaning assigned to such term in the Stock Purchase Agreement. "Common Stock" means the common stock, par value $0.02 per share, of the Company and any securities issued in respect thereof, or in substitution therefor, in connection with any stock split, dividend or combination, or any reclassification, recapitalization, merger, consolidation, exchange or other similar reorganization. "control" (including the terms "controlled by" and "under common control with"), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly, of the power to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise. "Director" means any member of the Board. "Eidelstein" has the meaning assigned to such term in the preamble. 3 "Equity Securities" means any and all shares of Capital Stock of the Company, securities of the Company convertible into, or exchangeable or exercisable for, such shares, and options, warrants or other rights to acquire such shares. "Exchange Act" means the Securities Exchange Act of 1934, as amended, or any similar federal statute and the rules and regulations promulgated thereunder. "Family" means any spouse, lineal ancestor or descendant, brother or sister "Holder" means an Investor Stockholder and any other holder of Equity Securities who or which is a permitted transferee of an Investor Stockholders pursuant to Section 3.1(c). "Independent Director" has the meaning specified in Rule 4200(a)(14) of the NASD listing standards, as in effect on the date hereof and as the same may be amended or supplemented, or in any successor rule or regulation. "Independent Representative" has the meaning assigned to such term in Section 2.1(a). "Investor Representative" has the meaning assigned to such term in Section 2.1(a). "ITI" has the meaning assigned to such term in the preamble. "NASD" means the National Association of Securities Dealers, Inc. "Offer" has the meaning assigned to such term in Section 3.5(a). "Offered Shares" has the meaning assigned to such term in Section 3.5(a). "Permitted Sales" means (i) in the case of ITI and Shalom the Transfers permitted in the first sentence of Section 3.3(a), (ii) in the case of Eidelstein, the Transfers permitted in the second sentence of Section 3.3(a), (iii) in the case of Casty, the Transfers permitted in the first sentence of Section 3.4(a) and (iv) in the case of any other Stockholder, Transfers to or among such Stockholder's Affiliates. "Person" means any individual, corporation, limited liability company, limited or general partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivisions thereof or any other entity. "Preferred Stock" means the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and any other class or series of preferred stock of the Company which is convertible, directly or indirectly, into Common Stock, whether at the time of issuance or upon passage of time or the occurrence of some future event. "Proposed Transferee" has the meaning assigned to such term in Section 3.5(a). "Pro Rata Fraction" has the meaning assigned to such term in Section 3.5(c). 4 "Qualified Public Offering" has the meaning assigned to such term in the Stock Purchase Agreement. "Registration Rights Agreement" has the meaning assigned to such term in the Stock Purchase Agreement. "Representatives" has the meaning assigned to such term in Section 2.1(b). "SEC" means the U.S. Securities and Exchange Commission or any other federal agency then administering the federal securities laws. "Securities Act" has the meaning assigned to such term in Section 3.1. "Seller" has the meaning assigned to such term in Section 3.5(a). "Series A Certificate of Designation" means the Amended Certificate of Designation, Number, Powers, Preferences and Relative, Participating and Other Rights of Series A Convertible Preferred Stock of the Company in the form filed with the Secretary of State of the State of Delaware, as amended from time to time. "Series B Certificate of Designation" means the Amended Certificate of Designation, Number, Powers, Preferences and Relative, Participating and Other Rights of Series B Convertible Preferred Stock of the Company in the form filed with the Secretary of State of the State of Delaware, as amended from time to time. "Series C Certificate of Designation" means the Certificate of Designation, Number, Powers, Preferences and Relative, Participating and Other Rights of Series C Convertible Preferred Stock of the Company in the form filed with the Secretary of State of the State of Delaware, as amended from time to time. "Series A Preferred Stock" means the Series A Convertible Preferred Stock, par value $1.00 per share, of the Company. "Series B Preferred Stock" means the Series B Convertible Preferred Stock, par value $1.00 per share, of the Company. "Series C Preferred Stock" means the Series C Convertible Preferred Stock, par value $1.00 per share, of the Company. "Shalom" has the meaning assigned to such term in the preamble. "Stockholders" has the meaning assigned to such term in the preamble. "Stock Purchase Agreement" has the meaning assigned to such term in the recitals. "Transfer" means, directly or indirectly, to sell, transfer, assign, pledge, encumber, hypothecate or similarly dispose of, either voluntarily or involuntarily, or to enter into any contract, option or other arrangement or understanding with respect to the sale, transfer, assignment, pledge, encumbrance, hypothecation or similar disposition of, 5 any shares of Equity Securities beneficially owned by a Person or any interest in any shares of Equity Securities beneficially owned by a Person. "UBS" means (i) UBS Capital Americas III, L.P., a Jersey, Channel Islands limited partnership, (ii) UBS Capital LLC, a Delaware limited liability Company, and (iii) any Affiliate of UBS, individually and collectively. "Voting Securities" means, at any time, shares of any class of Equity Securities of the Company which are then entitled to vote generally in the election of Directors. SECTION 1.2 Other Definitional Provisions. ----------------------------- (a) The words "hereof", "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Article and Section references are to this Agreement unless otherwise specified. (b) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. ARTICLE II CORPORATE GOVERNANCE SECTION 2.1 Board Representation. -------------------- (a) Effective on the date hereof, the Board shall be comprised of seven (7) Directors of whom: (i) three (3) shall be designees of the Investor Stockholders (the "Investor Representatives"), (ii) one (1) shall be the designee of ITI (the "ITI Representative"), (iii) one (1) shall be the designee of Casty (the "Casty Representative"), (iv) one (1) shall be an Independent Director designated by the Investor Stockholders (the "Investor Independent Representative") and (v) one (1) shall be an Independent Director acceptable to the Investor Stockholders, Casty and ITI (with such consents not to be unreasonably withheld or delayed) (the "Independent Representative"). The initial Investor Representatives shall be Charles W. Moore, Mark O. Lama and Charles Delaney, the initial ITI Representative shall be Shalom, the initial Casty Representative shall be Eidelstein, the initial Investor Independent Representative shall be Patrick Delhougne and the initial Independent Representative shall be Burton Meyer. For purposes hereof, each of the three Investor Representatives and the Investor Independent Representative shall count as one of the four Preferred Directors (as defined in the Certificates of Designation). (b) The Company shall take such action as may be required under applicable law (i) to cause the Board to consist of the number of Directors specified in clause (a), (ii) to include in the slate of nominees recommended by the Board the Investor Representatives, the ITI Representative, the Casty Representative, the Investor Independent Representative and the Independent Representative 6 (collectively, the "Representatives"), and (iii) to cause the Representatives to be duly appointed in accordance with the foregoing and, in the case of the Investor Representatives, in accordance with the Certificates of Designation. The Company agrees to use its reasonable best efforts to cause the election of the Representatives to the Board, including nominating such individuals to be elected as Directors as provided herein. (c) Each of the Investor Stockholders and the Stockholders agrees to vote, or act by written consent with respect to any Voting Securities beneficially owned by him or it, at each annual or special meeting of the stockholders of the Company at which Directors are to be elected or to take all actions by written consent in lieu of any such meeting as are necessary to cause the Representatives designated by the others in accordance with the terms of this Agreement to be elected to the Board and agrees to use his or its reasonable best efforts to cause the election of each such designee to the Board, including nominating such individuals to be elected as Directors. (d) In the event that a vacancy is created at any time by the death, disability, retirement, resignation or removal (with or without cause) of any Representative, the remaining Directors and the Company shall cause the vacancy created thereby to be filled by a new designee of the party or parties that designated such Director as soon as possible, who is designated in the manner specified in this Section 2.1. Each of the Company, Investor Stockholders and the Stockholders hereby agrees to take, at any time and from time to time, all actions necessary to accomplish the same. Upon the written request of any party who is entitled to designate a Representative, each of the Investor Stockholders and Stockholders shall vote, or act by written consent with respect to all Voting Securities beneficially owned by him or it and otherwise take or cause to be taken all actions necessary to remove any Director designated by such party. Unless, any party who is entitled to designated a Representative shall otherwise request in writing, none of the others shall take any action to cause the removal of any Director designated by the former. (e) Each of the Company, the Investor Stockholders and the Stockholders agrees not to take any action that would cause the number of Directors constituting the entire Board to be other than the number provided in Section 2.1(a) without the written consent of each other party entitled to designate a Representative. (f) The covenants and agreements set forth herein shall be subject to the fiduciary obligations of the Representatives now or hereafter serving on the Board and shall not prevent the Representatives now or hereafter serving on the Board from taking any action or refraining to take any action while acting in the capacity as a Director of the Company. The foregoing shall not limit the rights or obligations of the Investor Stockholders, ITI and Casty in their capacity as stockholders of the Company hereunder. SECTION 2.2 Committees. The Company shall, except as provided below, by ---------- amending its Bylaws or otherwise, establish and maintain a Compensation Committee and an Audit Committee of the Board which satisfies the requirements of this Section. The Compensation Committee shall consist of three (3) Directors, one (1) of whom shall 7 be an Investor Representative and two (2) of whom shall be Independent Representatives. The Audit Committee shall consist of three (3) Directors, one (1) of whom shall be an Investor Representative and two (2) of whom shall be Independent Representatives. The Compensation Committee shall have responsibility for compensation matters customarily addressed by compensation committees of similarly situated companies and shall have the full power and authority of the Board with respect thereto, except as limited by applicable law. The Audit Committee shall have responsibility for matters customarily addressed by audit committees of similarly situated companies and shall have the full power and authority of the Board with respect thereto, except as limited by applicable law. Notwithstanding anything to the contrary herein, the Investor Stockholders and the Stockholders acknowledge and agree that the composition of the Compensation and Audit Committees must satisfy any applicable rules and regulations of the SEC and the NASD as in effect from time to time. SECTION 2.3 Termination of Rights. --------------------- (a) Except with respect to the rights of the Investor Stockholders as provided in subparagraph (b) below, Sections 2.1 and 2.2 shall terminate upon a Qualified Public Offering. Prior to a Qualified Public Offering, the rights of the Investor Stockholders and any Stockholder under Sections 2.1 and 2.2 (and the corresponding obligation of the Stockholders) shall terminate at such time as such Investor Stockholder or Stockholders, as the case may be, ceases to own at least 25% of the number of shares of Common Stock on an as converted basis that such Investor Stockholder or Stockholders held as of Closing. (b) The rights of the Investor Stockholders under Sections 2.1 and 2.2 (and the corresponding obligations of the Stockholders) shall survive a Qualified Public Offering, provided that, at such time as the Investor Stockholders and their Affiliates shall cease to own in the aggregate at least 25% of the number of shares of Common Stock (determined with respect to the Preferred Stock and any other Equity Securities owned by the Investor Stockholders and their Affiliates that are convertible into (whether or not, in the case of the Preferred Stock, such Preferred Stock is then currently convertible at the option of the holder into Common Stock), or exchangeable or exercisable for Common Stock, on an as-converted, exchanged or exercised basis (any determination made in accordance with the foregoing shall hereinafter be referred to as "as converted")) that the Investor Stockholders and such Affiliates held as of the Closing (adjusted for stock splits, combinations, stock dividends and the like), the Investor Stockholders shall cease to have the right to designate Directors pursuant to Section 2.1 and members of the Compensation Committee and Audit Committee pursuant to Section 2.2 and all other rights of the Investor Stockholders under this Article II shall terminate. ARTICLE III TRANSFERS SECTION 3.1 Investor Stockholder Transfers. Each Investor Stockholder ------------------------------ hereby agrees that it shall not Transfer any shares of its Equity Securities, unless such 8 Transfer is effected through (a) a public offering registered under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the "Securities Act"), (b) sales made pursuant to Rule 144 under the Securities Act, or any successor provisions or (c) a Transfer otherwise permitted hereunder and in compliance herewith. Any Equity Securities Transferred pursuant to clause (a) or (b) shall no longer be subject to this Agreement. Each transferee Holder under clause (c) shall agree in writing as a condition to such Transfer, to be bound by all of the provisions of this Agreement to the same extent as if such transferee were the transferring Investor Stockholder, and all stock certificates representing shares transferred to such transferee shall bear a legend providing notice of the restrictions contained in this Agreement. SECTION 3.2 Stockholder Transfers. Each Stockholder hereby agrees that --------------------- it shall not Transfer any shares of its Equity Securities, unless such Transfer is effected through (a) a public offering registered under the Securities Act, (b) sales made pursuant to Rule 144 under the Securities Act or any successor provisions or (c) a Transfer otherwise permitted hereunder and in compliance herewith. Any Equity Securities Transferred pursuant to clauses (a) or (b) shall no longer be subject to this Agreement, except as provided herein. Each transferee under clause (c) shall agree in writing as a condition to such Transfer, to be bound by all of the provisions of this Agreement to the same extent as if such transferee were the transferring Stockholder, and all stock certificates representing shares transferred to such transferee shall bear a legend providing notice of the restrictions contained in this Agreement. SECTION 3.3 Transfers by Eidelstein, ITI and Shalom. --------------------------------------- (a) ITI and Shalom agree that neither such Stockholder nor any of its Affiliates shall Transfer more than 25,000 shares of Common Stock during any calendar quarter, in each case, without the written consent of the Investor Stockholders, which consent shall not be unreasonably withheld or delayed, or without compliance with Sections 3.5 and 3.6; provided that Transfers by ITI and Shalom shall be aggregated for purposes of the foregoing. Eidelstein hereby agrees that neither he nor any of his Affiliates shall Transfer more than 25,000 shares of Common Stock during any calendar quarter without the written consent of the Investor Stockholders, which consent shall not be unreasonably withheld or delayed, or without compliance with Sections 3.5 and 3.6. Notwithstanding the foregoing, Eidelstein, ITI or Shalom may Transfer all or any of their Equity Securities (x) to any member of such Stockholder's Family or to any trust for the benefit of any such Family member of such Stockholder or to any other Affiliate (including, without limitation, the members of ITI), provided that any such transferee shall agree in writing with the Company and the Investor Stockholders as a condition to such Transfer, to be bound by all of the provisions of this Agreement to the same extent as if such transferee were such Stockholder, or (y) by will or the laws of descent and distribution; provided, however, in such event each such transferee shall be bound by all of the provisions of this Agreement to the same extent as if such transferee were such Stockholder; and provided, further, that each such transferee shall execute an irrevocable proxy appointing _____________________ as proxy to vote all such shares so transferred, such appointment shall be coupled with an interest, and all 9 stock certificates representing such shares shall bear a legend providing notice of such appointment of proxy and the restrictions contained in this Agreement. (b) The Transfer restrictions contained in Section 3.3(a) shall terminate upon the earlier of: (i) a Qualified Public Offering and (ii) the time at which the Investor Stockholders and the other Holders own less than 20% of the Common Stock (on an as converted basis) that the Investor Stockholders owned as of the Closing. SECTION 3.4 Transfers by Casty. ------------------ (a) Casty agrees that neither it nor any of its Affiliates shall Transfer, during any calendar quarter, more than the number of Shares of Common Stock permitted under Rule 144(e) of the Securities Act measured as of the last day of such calendar quarter plus 50% of the number of Shares of Common Stock which were eligible for sale (but not sold under this Section 3.4(a)) during the preceding calendar quarters (beginning with the calendar quarter ending March 31, 2001), without the written consent of the Investor Stockholders, which consent shall not be unreasonably withheld or delayed, or without compliance with Sections 3.5 and 3.6. Notwithstanding the foregoing, Casty may Transfer all or any of his Equity Securities (x) to any member of such Stockholder's Family, to any trust for the benefit of any such Family member of such Stockholder or to any other Affiliate, provided that any such transferee shall agree in writing as a condition to such Transfer, to be bound by all of the provisions of this Agreement to the same extent as if such transferee were such Stockholder, or (y) by will or the laws of descent and distribution; provided, however, in such event each such transferee shall be bound by all of the provisions of this Agreement to the same extent as if such transferee were such Stockholder; and provided, further, that each such transferee shall execute an irrevocable proxy appointing Joel Eidelstein as proxy to vote all such shares so transferred, such appointment shall be coupled with an interest, and all stock certificates representing such shares shall bear a legend providing notice of such appointment of proxy and the restrictions contained in this Agreement. (b) The Transfer restrictions contained in Section 3.4(a) shall terminate upon the earlier of: (i) a Qualified Public Offering and (ii) the time at which the Investor Stockholders and the other Holders own less than 20% of the Common Stock (on an as converted basis) that the Investor Stockholders owned as of the Closing. SECTION 3.5 Right of First Refusal on Certain Transfers. ------------------------------------------- (a) If at any time a Stockholder or any of his/its Affiliates, other than the Company, desires to Transfer all or any part of their Equity Securities (other than pursuant to Permitted Sales) to any Person (the "Proposed Transferee"), such Stockholder (the "Seller") shall, except as provided below, submit a written offer (the "Offer") to sell such Equity Securities (the "Offered Shares"), first to the Company, and second to the Holders, on the same terms and conditions on which the Seller proposes to sell such Offered Shares to the Proposed Transferee. The parties acknowledge and agree that any Transfer described in the last sentence of Sections 3.3(a) and 3.4(a) shall not be subject to 10 the terms of this Section. The Offer shall disclose the identity of the Proposed Transferee, the Offered Shares proposed to be sold, the terms and conditions, including price, of the proposed sale, and any other material facts relating to the proposed sale. The Offer shall further state that the Company and the Holders may acquire, in accordance with the provisions of this Agreement, all or any portion of the Offered Shares for the price and upon the other terms and conditions, including deferred payment (if applicable), set forth therein. (b) Upon receipt of the Offer, if the Company desires to purchase all or any part of the Offered Shares, the Company shall communicate in writing its election to purchase to the Seller, which communication shall state the number of Offered Shares the Company desires to purchase and shall be given to the Seller in accordance with Section 5.4 below within thirty (30) days of the date the Offer was made. Such notice shall, when taken in conjunction with the Offer, be deemed to constitute a valid, legally binding and enforceable agreement for the sale to, and purchase by, the Company of the number of Offered Shares specified by the Company in such notice and on the terms of the Offer. Sales of the Offered Shares to be sold to the Company pursuant to this Section 3.5(b) shall be made at the offices of the Company on the 45th day following the date the Offer was made (or if such 45th day is not a Business Day, then on the next succeeding Business Day). Such sales shall be effected by the Seller's delivery to the Company of a certificate or certificates evidencing the Offered Shares to be purchased by it, duly endorsed for transfer to the Company, against payment to the Seller of the purchase price therefor by the Company. (c) Each Holder shall, subject to the prior purchase right of the Company, have the absolute right to purchase that number of Offered Shares not purchased by the Company as shall be equal to the number of Offered Shares not purchased by the Company multiplied by a fraction, the numerator of which shall be the number of shares of Common Stock (determined on an as converted basis) then owned by such Holder and the denominator of which shall be the aggregate number of shares of Common Stock (determined on an as converted basis) then owned by all of the Holders. The amount of Offered Shares that each Holder is entitled to purchase under this Section 3.5(c) shall be referred to as its "Pro Rata Fraction." The Holders shall have a right of oversubscription such that if any Holder fails to accept the Offer as to its Pro Rata Fraction, the other Holders shall, among them, have the right to purchase up to the balance of the Offered Shares not so purchased. Such right of oversubscription may be exercised by a Holder by accepting the Offer as to more than its Pro Rata Fraction. If, as a result thereof, such oversubscriptions exceed the total number of Offered Shares available in respect of such oversubscription privilege, the oversubscribing Holders shall be cut back with respect to their oversubscriptions on a pro rata basis in accordance with their respective Pro Rata Fractions or as they may otherwise agree among themselves. If a Holder desires to purchase all or any portion of the Offered Shares, said Holder shall communicate in writing its election to purchase to the Seller and the Company, which communication shall state the number of Offered Shares said Holder desires to purchase and shall be given to the Seller in accordance with Section 5.4 below within thirty (30) days of the date the Offer was made. Such communication shall, when taken in conjunction with the Offer, be deemed to constitute a valid, legally binding and enforceable agreement for the sale and purchase of such Offered Shares (subject to the 11 aforesaid limitations as to a Holder's right to purchase more than its Pro Rata Fraction) and on the terms of the Offer. Sales of the Offered Shares to be sold to purchasing Holders pursuant to this Section 3.5(c) shall be made at the offices of the Company on the later of (i) the 45th day following the date the Offer was made (or if such later of (i) the 45th day is not a Business Day, then on the next succeeding Business Day) and (ii) the third Business Day following receipt of all material governmental or other consents in connection with such sale. Such sales shall be effected by the Seller's delivery to each purchasing Holder of a certificate or certificates evidencing the Offered Shares to be purchased by it, duly endorsed for transfer to such purchasing Holder, against payment to the Seller of the purchase price therefor by such purchasing Holder. (d) If the Holders and the Company do not purchase in the aggregate all of the Offered Shares, the Offered Shares not so purchased may be sold by the Seller at any time within 90 days after the date the Offer was made, subject to the provisions of Section 3.6 hereof. Any such sale shall be to the Proposed Transferee, at the price and upon the other terms and conditions specified in the Offer. Any Offered Shares not sold within such 90-day period shall continue to be subject to the requirements of a prior offer pursuant to this Section 3.5. If Offered Shares are sold pursuant to this Section 3.5 to any purchaser who is not a party to this Agreement, the Offered Shares so sold shall no longer be subject to this Agreement. (e) The provisions of this Section 3.5 shall terminate upon the earlier of: (i) a Qualified Public Offering and (ii) the time at which the Investor Stockholders and the other Holders own less than 20% of the Common Stock (on an as converted basis) that the Investor Stockholders owned as of the Closing. SECTION 3.6 Right of Participation in Sales by Stockholders. ----------------------------------------------- (a) If at any time any of the Stockholders (the "Tag-Along Seller") desires to Transfer all or any part of the Equity Securities (other than pursuant to Permitted Sales) owned by such Tag-Along Seller to any Person other than Investor Stockholders (including the other Holders) (the "Buyer"), the Investor Stockholders shall, except as provided below, have the right to sell to the Buyer, as a condition to such sale by Tag-Along Seller, at the same price per share and on the same terms and conditions as involved in such sale by the Tag-Along Seller, a number of shares of Common Stock (on an as converted basis) equal to the number derived from multiplying the total number of shares of Common Stock (on an as converted basis) proposed to be sold by the Tag-Along Seller by a fraction, the numerator of which is the total number of shares of Common Stock (on an as converted basis) held by the Investor Stockholders and the denominator of which is the total number of shares of Common Stock (on an as converted basis) held by the Tag-Along Seller and the Investor Stockholders (including the other Holders). The parties acknowledge and agree that any Transfer described in the last sentence of Sections 3.3(a) and 3.4 (a) shall not be subject to the terms of this Section. (b) Each Investor Stockholder wishing to so participate in any sale under this Section 3.6 shall notify the Tag-Along Seller in writing of such intention within twenty (20) days after the date of their receipt of the Offer. 12 (c) The Tag-Along Seller and each participating Investor Stockholder shall sell to the Buyer all, or at the option of the Buyer any part, of the Equity Securities proposed to be sold by them at the price and upon other terms and conditions contained in the Offer provided by the Tag-Along Seller under Section 3.5 above; provided, however, that any purchase of less than all of such Equity Securities by the Buyer shall be made from the Tag-Along Seller and each participating Investor Stockholder pro rata based upon the relative amount of the Equity Securities that the Tag-Along Seller and each participating Investor Stockholder is otherwise entitled to sell pursuant to Section 3.6(a). (d) The provisions of this Section 3.6 shall terminate upon a Qualified Public Offering. SECTION 3.7 Right of Participation in Sales by Investor Stockholders. -------------------------------------------------------- (a) If at any time the Investor Stockholders desire to Transfer at least 40% of the Equity Securities owned in the aggregate by them and their Affiliates to any Person other than an Affiliate of the Investor Stockholders (the "Tag-Along Purchaser"), each of the other Stockholders, shall have the right to sell to the Tag-Along Purchaser, as a condition to such sale by the Investor Stockholders, at the price per share and on the terms and conditions applicable to the Common Stock set forth in the Tag-Along Purchaser's offer to the Investor Stockholders (the "Tag-Along Purchase Offer"), a number of shares of Common Stock equal to the number derived from multiplying the total number of shares of Common Stock (on an as converted basis) proposed to be sold by the Investor Stockholders by a fraction, the numerator of which is the total number of shares of Common Stock (on an as converted basis) held by such Stockholder and the denominator of which is the total number of shares of Common Stock (on an as converted basis) held by all Stockholders and the Investor Stockholders. (b) Each Stockholder wishing to so participate in any sale under this Section 3.7 shall notify the Agent in writing of such intention within twenty (20) days after the date such Stockholder's receipt of the Tag-Along Purchase Offer. (c) The Investor Stockholders and each participating Stockholder shall sell to the Tag-Along Purchaser all, or at the option of the Tag-Along Purchaser any part, of the Equity Securities proposed to be sold by them at the price per share and on the terms and conditions as set forth with respect to each class and series of Capital Stock in the Tag-Along Purchaser Offer; provided, however, that any purchase of less than all of such Equity Securities by the Tag-Along Purchaser shall be made from the Investor Stockholders and each participating Stockholder pro rata based upon the relative amount of the Equity Securities that the Investor Stockholder (including the other Holders) and each participating Stockholder is otherwise entitled to sell pursuant to Section 3.7(a). (d) The provisions of this Section 3.7 shall terminate upon a Qualified Public Offering. SECTION 3.8 Drag-Along Rights. ----------------- 13 (a) Subject to Section 3.8(c) hereof, if the Investor Stockholders(collectively, the "Drag-Along Transferor") approve a sale of (i) a majority of the outstanding shares of Common Stock on an as converted basis to a Bona Fide Purchaser or (ii) all or substantially all of the assets of the Company to a Bona Fide Purchaser (each an "Approved Sale"), whether by way of merger, consolidation, sale of stock or assets, or otherwise, all Stockholders shall consent to and raise no objections against the Approved Sale, and if the Approved Sale is structured as (A) a merger or consolidation of the Company or a subsidiary, or a sale of all or substantially all of the assets of the Company or a subsidiary, each Stockholder shall waive any dissenters rights, appraisal rights or similar rights in connection with such merger, consolidation or asset sale, or (B) a sale of a majority of the outstanding shares of Common Stock on an as converted basis the Stockholders shall agree to sell their respective proportionate percentages of the Common Stock on an as converted basis which are the subject of the Approved Sale, on the same terms and conditions as applicable to the Common Stock of the Drag-Along Transferor. The Stockholders shall take all actions reasonably requested by the Drag Along Transferor in connection with the consummation of the Approved Sale, including the execution of all agreements and such instruments and other actions requested by the Drag Along Transferor to provide the representations, warranties, indemnities, covenants, conditions, agreements, escrow agreements and other provisions and agreements relating to such Approved Sale; provided, -------- however, that each participating Stockholder's liability under any such ------- agreement or instrument shall be limited to his/her/its proportionate percentage of such liability (based on the number of shares of Common Stock on an as converted basis held by such Stockholder which are subject to the Approved Sale) and shall not exceed the proceeds received by such Stockholder. The Stockholders shall be permitted to sell their Equity Securities pursuant to an Approved Sale without complying with the provisions of Sections 3.1, 3.2, 3.3, 3.4, 3.5, 3.6 and 3.7 of this Agreement. (b) If the Company and/or the Drag-Along Transferor or their representatives, enter into any negotiation or transaction for which Regulation D under the Securities Act (or any similar rule or regulation then in effect) may be available with respect to such negotiation or transaction (including a merger, consolidation or other reorganization), each Stockholder who is not an accredited investor (as such term is defined in Rule 501 under the Securities Act) will, at the request of the Company or the Drag Along Transferor, appoint a purchaser representative (as such term is defined in Rule 501 under the Securities Act) reasonably acceptable to the Company and such Drag Along Transferor. (c) At the closing of the Approved Sale, each of the Stockholders shall (a) execute any documents or instruments reasonably requested by the Bona Fide Purchaser, and (b) deliver to the Bona Fide Purchaser certificates for the Equity Securities, duly endorsed or accompanied by duly executed stock assignments separate from certificate, free and clear of all encumbrances (other than those created pursuant to this Agreement), against delivery by the Bona Fide Purchaser of the consideration (including a certified check for the cash portion of such consideration) for the total sales price of the Equity Securities being sold by such Stockholder. 14 (d) The provisions of this Section 3.8 shall terminate upon consummation of a Qualified Public Offering. ARTICLE IV APPROVAL RIGHTS OF STOCKHOLDERS SECTION 4.1 Stockholder Approval Rights. The Company shall not (and the --------------------------- Investor Stockholders shall not take any action to cause the Company to) take any action to (i) enter into any transaction, or any agreement or understanding with the Investor Stockholders or any Affiliate of the Investor Stockholders (other than with respect to a Transfer of Equity Securities or as contemplated by this Agreement, the Stock Purchase Agreement or the Transaction Documents (as defined in the Stock Purchase Agreement)) or (ii) amend, modify, change or alter the Company's Certificate of Incorporation or By-Laws or the Certificates of Designation in a manner adverse to the Company or holders of Common Stock, without the written consent of the Stockholders holding a majority of the Common Stock, on an as converted basis, held by all Stockholders which consent shall not be unreasonably withheld or delayed. ARTICLE V MISCELLANEOUS SECTION 5.1 Termination. Except as otherwise provided herein, the ----------- provisions of this Agreement shall terminate: (a) upon the agreement of all of the parties hereto, (b) with respect to ITI and Shalom and their respective permitted transferees referred to in the last sentence of Section 3.3(a) and Casty and its permitted transferees referred to in the last sentence of Section 3.4(a), as the case may be, when such Stockholder together with such permitted transferees owns less than 1.25% of the outstanding Common Stock (on an as converted basis), (c) with respect to Eidelstein and his permitted transferees referred to in the last sentence of Section 3.3(a), when Eidelstein's employment with the Company is terminated, (d) with respect to any other Stockholder, when such Stockholder together with its Affiliates owns less than 1.25% of the outstanding Common Stock (on an as-converted basis), and (e) with respect to all Investor Stockholders and Stockholders, except as expressly provided herein, upon a Qualified Public Offering. SECTION 5.2 Amendments and Waivers. Except as otherwise provided herein, no ---------------------- modification, amendment or waiver of any provision of this Agreement shall be effective against the Company or any other party unless such modification, amendment or waiver is approved in writing by the Company, the Agent, acting on behalf of the Investor Stockholders, and the Stockholders holding a majority of the Common Stock on an as converted basis held by all Stockholders. The failure of any party to enforce any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms. The parties hereby consent to any amendment to this Agreement solely to add as a party hereto any Person acquiring 15 shares of Preferred Stock or Common Stock after the date hereof pursuant to the Tutopia Put Agreement (as defined in the Stock Purchase Agreement). SECTION 5.3 Successors, Assigns and Transferees. This Agreement shall bind ----------------------------------- and inure to the benefit of and be enforceable by the parties hereto and their respective heirs, personal representatives, successors and permitted assigns. This Agreement may not be assigned by any party hereto without the prior written consent of the other parties, except as otherwise provided herein. SECTION 5.4 Notices. All notices required or permitted hereunder shall be ------- in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified; (b) when sent by confirmed facsimile if sent during normal business hours of the recipient, if not, then on the next business day; (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) one (1) business day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent, with respect to the Company and the Investor Stockholders, to their respective addresses specified in the Stock Purchase Agreement (or at such other address as any such party may specify by like notice) and, with respect to any other party, to the address of such party as shown in the stock record books of the Company (or at such other address as any such party may specify to all of the above by like notice). SECTION 5.5 Further Assurances. At any time or from time to time after the ------------------ date hereof, the parties agree to cooperate with each other, and at the request of any other party, to execute and deliver any further instruments or documents and to take all such further action as the other party may reasonably request in order to evidence or effectuate the consummation of the transactions contemplated hereby and otherwise to carry out the intent of the parties hereunder. SECTION 5.6 Entire Agreement. Except as otherwise expressly set forth ---------------- herein, this document, the Stock Purchase Agreement and the Registration Rights Agreement embody the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, that may have related to the subject matter hereof in any way. SECTION 5.7 Delays or Omissions. It is agreed that no delay or omission to ------------------- exercise any right, power or remedy accruing to any party, upon any breach, default or noncompliance by another party under this Agreement, shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of or in any similar breach, default or noncompliance thereafter occurring. It is further agreed that any waiver, permit, consent or approval of any kind or character on the part of any party hereto of any breach, default or noncompliance under this Agreement or any waiver on such party's part of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, by law, or otherwise afforded to any party, shall be cumulative and not alternative. 16 SECTION 5.8 Governing Law; Jurisdiction; Waiver of Jury Trial. 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) of the Stock Purchase Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY. SECTION 5.9 Severability. Whenever possible, each provision of this ------------ Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. SECTION 5.10 Enforcement. Each party hereto acknowledges that money damages ----------- would not be an adequate remedy in the event that any of the covenants or agreements in this Agreement are not performed in accordance with its terms, and it is therefore agreed that in addition to and without limiting any other remedy or right it may have, the non-breaching party will have the right to an injunction, temporary restraining order or other equitable relief in any court of competent jurisdiction enjoining any such breach and enforcing specifically the terms and provisions hereof. SECTION 5.11 Titles and Subtitles. The titles of the sections and -------------------- subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement SECTION 5.12 Legend. Each certificate evidencing any of the shares of ------ Equity Securities held by the parties hereto shall bear a legend substantially as follows: 17 "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS OF THE THIRD AMENDED AND RESTATED STOCKHOLDERS AGREEMENT, DATED AS OF FEBRUARY 19, 2002, AS THE SAME MAY BE AMENDED, A COPY OF WHICH THE COMPANY WILL FURNISH TO THE HOLDER OF THIS CERTIFICATE UPON REQUEST AND WITHOUT CHARGE." SECTION 5.13 Appointment of Agent. Each of the Investor Stockholders hereby -------------------- irrevocably appoints UBS (the "Agent") to act as its true and lawful agent and attorney-in-fact and representative with full power and authority in its name, place and stead to act on its behalf for all purposes under this Agreement. The foregoing power of attorney is hereby declared to be irrevocable and coupled with an interest, and such appointment includes, among other powers, the power and authority to exercise all rights and privileges, and to discharge all obligations, of the Investor Stockholders under this Agreement, including: (a) designating and removing the Investor Representatives and otherwise taking all actions required to be taken by the Investor Stockholders under Article II, including providing consents; (b) providing consents to Transfers under Section 3.3; (c) giving and receiving notices hereunder and service of process in any legal action or other proceedings arising out of or related to this Agreement and the transactions hereby; and (d) amending or waiving the provisions of this Agreement. Any instructions given by the Agent hereunder shall be validly given on behalf of each of the Investor Stockholders, and the Company shall have the right to rely thereon. UBS hereby accepts the appointment provided for in this Agreement and agrees to be bound by the provisions of this Agreement. All decisions and actions by the Agent shall be binding upon each of the Investor Stockholders and no Investor Stockholders shall have the right to object, dissent, protest or otherwise contest the same. The Company may conclusively rely upon any action taken by the Agent hereunder. SECTION 5.14 Termination of Joint Venture Agreement. By its execution -------------------------------------- hereof, each of the Company, ITI, Emerging Networks, Inc. and Casty confirms that the Subscription and Joint Venture Agreement, dated as of November 23, 1998, as amended, by and among the Company, Emerging Networks, Inc., ITI and Casty was terminated as of June 15, 2000. SECTION 5.15 Stockholder's Representation. ---------------------------- (a) Each of the Stockholders severally (and not jointly) represents and warrants that all of the Equity Securities owned by it/him and any of its/his Affiliates is set forth on Exhibit A hereto and that each such --------- Stockholder or it/his Affiliate owns 18 such Equity Securities listed opposite its/his/their name free and clear of all Encumbrances (as defined in the Stock Purchase Agreement). (b) Each of Shalom and ITI severally (and not jointly) represents and warrants that Shalom controls the voting and disposition rights on all shares of Equity Securities owned by ITI or any of ITI's Affiliates. SECTION 5.16 Counterparts; Facsimile Signatures. This Agreement may be ---------------------------------- executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. This Agreement may be executed by facsimile signature(s). [Remainder of Page Intentionally Left Blank] 19 IN WITNESS WHEREOF, the parties hereto have executed the THIRD AMENDED AND RESTATED STOCKHOLDERS AGREEMENT as of the date set forth in the first paragraph hereof. IFX CORPORATION By: /s/ Joel Eidelstein --------------------------------- Name: Joel Eidelstein Title: President UBS CAPITAL AMERICAS III, L.P. By: UBS Capital Americas III, LLC By: /s/ Mark Lama --------------------------- Name: Mark Lama Title: Principal By: /s/ Marc Unger --------------------------- Name: Marc Unger Title: Chief Financial Officer UBS CAPITAL LLC By: /s/ Mark Lama --------------------------------- Name: Mark Lama Title: Attorney-in-Fact By: /s/ Marc Unger --------------------------------- Name: Marc Unger Title: Attorney-in-Fact INTERNATIONAL TECHNOLOGY INVESTMENTS, LC By: /s/ Michael Shalom --------------------------------- Name: Michael Shalom Title: Manager 20 /s/ Joel Eidelstein ------------------------------------- Joel Eidelstein /s/ Michael Shalom ------------------------------------- Michael Shalom /s/ Lee S. Casty ------------------------------------- Lee S. Casty The provisions of Section 5.14 of this Agreement are hereby acknowledged and agreed to. EMERGING NETWORKS, INC. By: /s/ Joel Eidelstein --------------------------------------- Name: Joel Eidelstein Title: President 21 EXHIBIT A --------- Equity Securities Ownership by Stockholders and their Affiliates Michael Shalom 10,201 /(1)/ Joel Eidelstein 383,245 /(2)/ Lee S. Casty 2,960,282 International Technology Investments, LC 4,500,000 (1) Includes 10,201 shares subject to a currently exercisable option to purchase held by ITI (2) Includes 351,750 shares of Common Stock subject to an option granted to Eidelstein pursuant to the IFX 1998 Stock Option and Incentive Plan, which option currently is exercisable 22 EX-10.2 8 dex102.txt 2ND AMENDED & RESTATED REGISTRATION RIGHTS AGREEME EXHIBIT 10.2 SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT among IFX CORPORATION, UBS CAPITAL AMERICAS III, L.P., UBS CAPITAL LLC, INTERNATIONAL TECHNOLOGY INVESTMENTS, LLC, and LEE S. CASTY dated as of February 19, 2002 SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT --------------------------------------------------------- THIS SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into as of February 19, 2002, among IFX Corporation, a Delaware corporation (the "Company"), UBS Capital Americas III, L.P., a limited partnership formed under the laws of Jersey, Channel Islands, and UBS Capital LLC, a Delaware limited liability company (together with their successors and assigns, collectively, "UBS"), INTERNATIONAL TECHNOLOGY INVESTMENTS, LC, a Nevada limited liability company ("ITI"), and LEE S. CASTY, as successor in interest to the Casty Grantor Subtrust ("Casty"). RECITALS -------- WHEREAS, the Company and UBS entered into that certain IFX Corporation Preferred Stock Purchase Agreement, dated as of June 15, 2000, pursuant to which UBS purchased 2,030,869 shares of Series A Convertible Preferred Stock, par value $1.00 per share, of the Company (the "Series A Preferred Stock"); WHEREAS, as a condition to and in consideration of UBS's purchase of Series A Preferred Stock, the Company, UBS, ITI and Casty Grantor Subtrust entered into that certain Registration Rights Agreement dated as of June 15, 2000; WHEREAS, the Company and UBS entered into that certain IFX Corporation Preferred Stock Purchase Agreement, dated as of March 13, 2001, pursuant to which UBS purchased 4,418,262 shares of Series B Convertible Preferred Stock, par value $1.00 per share, of the Company (the "Series B Preferred Stock"); WHEREAS, as a condition to and in consideration of UBS's purchase of Series B Preferred Stock, the Company, UBS, ITI and Casty Grantor Subtrust entered into that certain Amended and Restated Registration Rights Agreement, dated May 7, 2001 (the "Existing Agreement"); WHEREAS, the Company and UBS have entered into the IFX Corporation Series C Convertible Preferred Stock Purchase Agreement, dated October 11, 2001 (the "Stock Purchase Agreement"), pursuant to which UBS will acquire shares of newly issued Series C Convertible Preferred Stock, par value $1.00 per share, of the Company (the "Series C Preferred Stock"); and WHEREAS, as a condition to and in consideration of UBS entering into the Stock Purchase Agreement, the Company, UBS, ITI and Casty (as successor in interest to the Casty Grantor Subtrust) have agreed to amend and restate the Existing Agreement in the manner set forth below. NOW THEREFORE, in consideration of the mutual covenants and agreements contained in this Agreement and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Certain Definitions. As used herein, the following terms shall have ------------------- the following meanings: "Closing" has the meaning assigned to such term in the Stock Purchase Agreement. "Commission" means the Securities and Exchange Commission or any other federal agency then administering the federal securities laws. "Common Shares" means shares of Common Stock held by (i) ITI and Casty and their permitted assigns under Section 13(b), (ii) the Investor Stockholders or (iii) any other persons who acquire shares of Common Stock and become parties to this Agreement pursuant to the last sentence of Section 13(a). "Common Stock" means the common stock, par value $0.02 per share, of the Company and any securities issued in respect thereof, or in substitution therefor, in connection with any stock split, dividend or combination, or any reclassification, recapitalization, merger, consolidation exchange or other similar reorganization. "Conversion Shares" means (i) shares of Common Stock issued or issuable upon conversion of the Preferred Shares or (ii) any other Convertible Securities held by the Investor Stockholders. "Convertible Securities" shall mean (i) any rights, options or warrants to acquire Common Stock or any capital stock of the Company or any Subsidiary, including the Preferred Shares, and (ii) any notes, debentures, shares of preferred stock or other securities, options, warrants or rights, which are convertible or exercisable into, or exchangeable for, Common Stock or any capital stock of the Company or any Subsidiary. "Exchange Act" means the Securities Exchange Act of 1934, as amended, or any similar federal statute, and the rules and regulations promulgated thereunder. "Investor Stockholders" shall mean UBS and any other persons who acquire Preferred Shares and become parties to this Agreement pursuant to the last sentence of Section 13(a). "Preferred Shares" shall mean the Company's Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and any other class or series of preferred stock of the Company which is convertible, directly or indirectly, into Common Stock, whether at the time of issuance or upon passage of time or the occurrence of some future event. "Registration Expenses" means the expenses so described in Section 8. "Restricted Stock" means the Conversion Shares and Common Shares, excluding Conversion Shares and Common Shares which have been (a) registered under the Securities Act pursuant to an effective registration statement filed thereunder and disposed of in accordance with the registration statement covering them or (b) publicly sold pursuant to Rule 144 under the Securities Act. "Securities Act" means the Securities Act of 1933, as amended, or any similar federal statute, and the rules and regulations promulgated thereunder. "Selling Expenses" shall mean the expenses so described in Section 8. 2 "Tutopia Put Agreement" has the meaning assigned to such term in the Stock Purchase Agreement. 2. Restrictive Legend. Each certificate representing Preferred Shares, ------------------ Conversion Shares or Common Shares shall, except as otherwise provided in this Section 2 or in Section 3, be stamped or otherwise imprinted with a legend substantially in the following form: "THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER SUCH ACT AND ALL SUCH APPLICABLE LAWS OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE." A certificate shall not bear such legend if in the opinion of counsel satisfactory to the Company (it being agreed that each of Neal, Gerber & Eisenberg and Kaye Scholer LLP shall be satisfactory) the securities represented thereby may be publicly sold without registration under the Securities Act and any applicable state securities laws. 3. Removal of Legend. Each certificate for Preferred Shares, Conversion ----------------- Shares or Common Shares transferred shall bear the legend set forth in Section 2, except that such certificate shall not bear such legend if (i) such transfer is in accordance with the provisions of Rule 144 (or any other rule permitting public sale without registration under the Securities Act) or (ii) in the opinion of counsel satisfactory to the Company (it being agreed that either of Neal, Gerber & Eisenberg or Kaye Scholer LLP shall be satisfactory) the transferee and any subsequent transferee would be entitled to transfer such securities in a public sale without registration under the Securities Act. 4. Required Registration. (a) At any time, UBS, ITI or Casty may --------------------- request the Company to register under the Securities Act all or any portion of the shares of Restricted Stock held by such requesting holder or holders for sale in the manner specified in such notice, provided that the shares of -------- Restricted Stock for which registration has been requested shall have a reasonably anticipated aggregate price to the public which is at least $15,000,000 (the "Minimum Offering Price"); provided further that neither ITI -------- ------- nor Casty shall request such registration prior to a Qualified Public Offering without the consent of UBS. The only securities which the Company shall be required to register pursuant hereto shall be shares of Common Stock, provided, -------- however, that, in any underwritten public offering contemplated by this Section - ------- 4 or Sections 5 and 6, the holders of Preferred Shares shall be entitled to sell such Preferred Shares to the underwriters for conversion and sale of the shares of Common Stock issued upon conversion thereof. Notwithstanding anything to the contrary contained herein, the Company shall not be required to file any registration statement under this Section 4, within such period of time after the effective date of any earlier registration statement relating to an underwritten public offering (other than a registration statement on Form S-3 or any successor thereto relating to the resale of securities of the Company acquired in connection with an acquisition or similar transaction (each, an "Acquisition Registration Statement")) as shall be determined in good faith by the managing underwriter of an underwritten public offering, provided that such time period shall not exceed 180 days. 3 (b) Following receipt of any notice under this Section 4, the Company shall immediately notify all holders of Restricted Stock from whom notice has not been received and shall use its reasonable best efforts to register under the Securities Act, for public sale in accordance with the method of disposition specified in such notice from requesting holders, the number of shares of Restricted Stock specified in such notice (and in all notices received by the Company from other holders within 30 days after the giving of such notice by the Company). If such method of disposition shall be an underwritten public offering, the Company shall designate the underwriter(s) of such offering, subject to the approval by the holders of a majority of the shares of Restricted Stock proposed to be sold in such offering, including the approval of UBS (such approval not to be unreasonably withheld or delayed). If the managing underwriter advises the Company in writing that in such underwriter's good faith determination the marketing factors require a limitation of the amount of Restricted Stock to be underwritten in such registration, the Company shall (to the extent that the managing underwriter believes that such securities can be sold in such offering without having an adverse effect upon the marketing of such offering) register in such registration (i) first, the Restricted Stock ----- proposed to be sold by the parties participating in the demand registration of Restricted Stock under this Section 4, pro rata based upon the number of shares --- ---- of Restricted Stock proposed to be sold by such holders; and (ii) second ------ securities held by the Company. The Company shall be obligated to register Restricted Stock pursuant to this Section 4, in the case of registrations requested by each of UBS, ITI and Casty on three occasions only, provided, -------- however, that such obligation shall be deemed satisfied only when a registration - ------- statement covering all shares of Restricted Stock specified in demand notices delivered pursuant to Section 4(a), for sale in accordance with the method of disposition specified by the requesting holders, shall have become effective and, if such method of disposition is a firm commitment underwritten public offering, all such shares designated in the notice shall have been sold pursuant thereto. (c) The Company shall, subject to Section 4(b), be entitled to include in any registration statement referred to in this Section 4 for sale in accordance with the method of disposition specified by the requesting holders, shares of Common Stock to be sold by the Company for its own account. 5. Incidental Registration. If the Company at any time (other than ----------------------- pursuant to Section 4 or Section 6) proposes to register any of its securities under the Securities Act for sale to the public, whether for its own account or for the account of other security holders or both (except with respect to registration statements on Forms S-4, S-8 or another form not available for registering the Restricted Stock for sale to the public), each such time it will give written notice to all holders of outstanding Restricted Stock of its intention so to do. Upon the written request of any such holder, received by the Company within 30 days after the giving of any such notice by the Company, to register any of its Restricted Stock, the Company will use its reasonable best efforts to cause the Restricted Stock as to which registration shall have been so requested to be included in the securities to be covered by the registration statement proposed to be filed by the Company, all to the extent requisite to permit the sale or other disposition by the holder of such Restricted Stock so registered. In the event that any registration pursuant to this Section 5 shall be, in whole or in part, an underwritten public offering of Common Stock, and the managing underwriter advises the Company in writing that in such underwriter's good faith determination the marketing factors require a limitation of the amount of Restricted Stock to be underwritten in such registration then (a) if such registration is a primary registration on behalf of the Company, the Company shall (to the extent that the managing underwriter believes that 4 such securities can be sold in such offering without having an adverse effect upon the marketing of such offering) register in such registration (i) first, ----- the Company securities which the Company proposes to sell in such registration, (ii) second, the Restricted Stock held by Investor Stockholders which they ------ propose to sell in such registration on a pro rata basis based upon the number --- ---- of shares of Restricted Stock owned by such holders, (iii) third, Restricted ----- Stock held by ITI and Casty and any other holders of Restricted Stock which they propose to sell in such registration on a pro rata basis based upon the number --- ---- of shares of Restricted Stock owned by such holders and (iv) fourth, securities ------ held by other parties eligible for inclusion in such registration statement on a pro rata basis based upon the amount of securities held by them, and (b) if such - --- --- registration is a secondary registration, the Company shall (to the extent that the managing underwriter believes that such securities can be sold in such offering without having an adverse effect upon the marketing of such offering) register in such registration (i) first, the Restricted Stock held by Investor ----- Stockholders which they propose to sell in such registration on a pro rata basis --- ---- based upon the number of shares of Restricted Stock owned by such holders, (ii) second, the Restricted Stock held by ITI and Casty and any other holders of - ------ Restricted Stock which they propose to sell in such registration on a pro rata --- ---- basis based upon the number of shares of Restricted Stock owned by such holders and (iii) third, the securities held by other parties eligible for inclusion in ----- such registration on a pro rata basis based upon the amount of securities held --- ---- by them. Notwithstanding the foregoing provisions, the Company may withdraw any registration statement referred to in this Section 5, without thereby incurring any liability to the holders of Restricted Stock other than for the payment of Registration Expenses in accordance with Section 8. 6. Registration on Form S-3. (a) Subject to the restrictions on ------------------------ transfer set forth in Section 3.3 and 3.4 of the Stockholders Agreement (as defined in the Stock Purchase Agreement), if at any time (i) UBS, ITI or Casty requests that the Company file a registration statement on Form S-3 or any successor thereto for a public offering of all or any portion of the shares of Restricted Stock held by such requesting holder or holders, the reasonably anticipated aggregate price to the public of which would exceed $2,500,000, provided that the Restricted Stock for which registration has been requested constitutes at least 10% of the total shares of Restricted Stock then outstanding held by UBS, if such registration is requested by UBS, or at least 10% of the total shares of Restricted Stock then outstanding held by ITI or Casty, as the case may be, if such registration is requested by ITI or Casty, and (ii) the Company is a registrant entitled to use Form S-3 or any successor thereto to register such shares, then the Company shall use its reasonable best efforts to register under the Securities Act on Form S-3 or any successor thereto, for public sale in accordance with the method of disposition specified in such notice, the number of shares of Restricted Stock specified in such notice. Whenever the Company is required by this Section 6(a) to use its reasonable best efforts to effect the registration of Restricted Stock, each of the procedures and requirements of Section 4 (including but not limited to the requirement that the Company notify all holders of Restricted Stock from whom notice has not been received and provide them with the opportunity to participate in the offering) shall apply to such registration, provided, -------- however, that UBS, ITI and Casty may only request and obtain two registrations - ------- on Form S-3 under this Section in any calendar year, provided, further, that no -------- ------- request may be made by a party under this Section 6(a) within 180 days after the effective date of any other registration statement filed by the Company pursuant to this Section on behalf of such party. 5 (b) Notwithstanding Section 6(a) above, Casty may request, by written notice, that the Company file a registration statement on Form S-3 or any successor thereto for a public offering of all or any portion of the Restricted Stock held by Casty (or any Affiliate thereof) and eligible for transfer pursuant to the restrictions on transfer contained in the first sentence of Section 3.4 of the Stockholders Agreement (the "Eligible Shares") and if the Company is a registrant entitled to use Form S-3 or any successor thereto to register such shares, then the Company shall use its reasonable best efforts to register under the Securities Act on Form S-3 or any successor thereto, for public sale the number of shares of Restricted Stock specified in such written notice to the Company (not to exceed the number of Eligible Shares); provided, however, that (i) any registration under this Section 6(b) shall be a non- underwritten offering; (ii) Casty shall only be entitled to request two registrations under this Section 6(b); (iii) the Company shall only be obligated to effect one such registration during any calendar year (which shall count as one of the two permitted in such calendar year pursuant to Section 6(a)); and (iv) the Company shall not be required to maintain the effectiveness of any such registration statement for more than 60 days. Notwithstanding anything to the contrary contained herein, the Company shall not be required to file any registration statement under this Section 6(b): (x) within such period of time after the effective date of any earlier registration statement relating to an underwritten public offering (other than an Acquisition Registration Statement) as shall be determined in good faith by the managing underwriter of an underwritten public offering, provided that such time period shall not exceed 180 days or (y) if the Company shall furnish to Casty a certificate signed by the President of the Company stating that in the good faith judgment of the Board of Directors of the Company, it would be seriously detrimental to the Company and its stockholders for such registration to be effected at such time due to any pending material financing, acquisition or corporate reorganization or other material corporate development involving the Company or any of its subsidiaries. 7. Registration Procedures. If and whenever the Company is required by ----------------------- the provisions of Sections 4, 5 or 6 to use its reasonable best efforts to effect the registration of any shares of Restricted Stock under the Securities Act, the Company will, as expeditiously as possible: (a) prepare and file with the Commission a registration statement (which, other than in the case of an underwritten public offering pursuant to Section 4, may be on Form S-3 or any successor thereto if the Company is a registrant entitled to use such Form) with respect to such securities and use its reasonable best efforts to cause such registration statement to become and remain effective for the period of the distribution contemplated thereby (determined as hereinafter provided); (b) prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for the period specified in paragraph (a) above and comply with the provisions of the Securities Act with respect to the disposition of all Restricted Stock covered by such registration statement in accordance with the sellers' intended method of disposition set forth in such registration statement for such period; (c) furnish to each seller of Restricted Stock and to each underwriter such number of copies of the registration statement and the prospectus included therein (including each 6 preliminary prospectus) as such persons reasonably may request in order to facilitate the public sale or other disposition of the Restricted Stock covered by such registration statement; (d) use its reasonable best efforts to register or qualify the Restricted Stock covered by such registration statement under the securities or "blue sky" laws of such jurisdictions as the sellers of Restricted Stock or, in the case of an underwritten public offering, the managing underwriter reasonably shall request, provided, however, that the Company shall not for any such purpose be -------- ------- required to qualify generally to transact business as a foreign corporation in any jurisdiction where it is not so qualified or to consent to general service of process in any such jurisdiction; (e) list the Restricted Stock covered by such registration statement with any securities exchange on which the Common Stock of the Company is then listed; (f) immediately notify each seller of Restricted Stock and each underwriter under such registration statement, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event of which the Company has knowledge as a result of which the prospectus contained in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; (g) as soon as practicable upon the occurrence of any event contemplated by Section 7(f), prepare and file a supplement or post-effective amendment to such registration statement or the prospectus contained in such registration statement, 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 Restricted Stock covered thereby, the prospectus contained in such registration statement 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 (a "Suspension") if the Company shall furnish to the holders a certificate signed by the President of the Company stating that in the good faith judgment of the Board of Directors of the Company, it would be seriously detrimental to the Company and its stockholders for such registration to be effected at such time due to any pending material financing, acquisition or corporate reorganization or other material corporate development involving the Company or any of its subsidiaries; provided further, that the Company shall only be permitted to effectuate one (1) - -------- ------- Suspension in any twelve (12) month period and any such suspension will be lifted by the Company as soon as practicable and will not, in any event, extend for more than 60 days with respect to any such specified event; (h) if the offering is underwritten and at the request of any seller of Restricted Stock, use its reasonable best efforts to furnish on the date that Restricted Stock is delivered to the underwriters for sale pursuant to such registration: (i) an opinion dated such date of counsel representing the Company for the purposes of such registration, addressed to the underwriters and to such seller, stating that such registration statement has become effective under the Securities Act and that (A) to the best knowledge of such counsel, no stop order suspending the effectiveness thereof has been issued and no proceedings for that purpose have been instituted or are pending or contemplated under the Securities Act, (B) the registration statement, the related 7 prospectus and each amendment or supplement thereof comply as to form in all material respects with the requirements of the Securities Act (except that such counsel need not express any opinion as to financial statements contained therein) and (C) to such other effects as reasonably may be requested by counsel for the underwriters or by such seller or its counsel and (ii) a letter dated such date from the independent public accountants retained by the Company, addressed to the underwriters and to such seller, stating that they are independent public accountants within the meaning of the Securities Act and that, in the opinion of such accountants, the financial statements of the Company included in the registration statement or the prospectus, or any amendment or supplement thereof, comply as to form in all material respects with the applicable accounting requirements of the Securities Act, and such letter shall additionally cover such other financial matters (including information as to the period ending no more than five business days prior to the date of such letter) with respect to such registration as such underwriters reasonably may request; and (i) make available for inspection by each seller of Restricted Stock, any underwriter participating in any distribution pursuant to such registration statement, and any attorney, accountant or other agent retained by such seller or underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company's officers, directors and employees to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement. Upon receipt of any notice from the Company of any event of the kind described in Section 7.3(f), each seller of Restricted Stock (x) promptly will discontinue disposition of any shares of Restricted Stock pursuant to such registration statement until such seller of Restricted Stock has received copies of the supplemented or amended prospectus contemplated by Section 7(g) (it being understood that such discontinuance shall be deemed a Suspension subject to the limitations on Suspensions set forth in Section 7(g)), (y) thereafter, will utilize and distribute only such supplemented or amended prospectus, and (z) if so directed by the Company, will deliver to the Company all copies of the prospectus covering such shares of Restricted Stock in such party's possession at the time of receipt of such suspension notice. For purposes of Section 7(a) and 7(b), the period of distribution of Restricted Stock in a firm commitment underwritten public offering shall be deemed to extend until each underwriter has completed the distribution of all securities purchased by it, and the period of distribution of Restricted Stock in any other registration shall be deemed to extend until the earlier of the sale of all Restricted Stock covered thereby and 180 days following effectiveness of registration. In connection with each registration hereunder, each seller of Restricted Stock will furnish to the Company in writing such information with respect to itself and the proposed distribution by it as reasonably shall be necessary in order to assure compliance with federal and applicable state securities laws, and will notify the Company promptly upon the happening of any event during the period any registration statement is effective that makes any statement regarding such seller made in a registration statement or the prospectus contained therein untrue in any material respect or which requires the making of any changes in a registration statement or the prospectus contained therein in order to make the statements therein regarding such seller, in light of circumstances under which they were made, not misleading. 8 In connection with each registration pursuant to Sections 4, 5 or 6 covering an underwritten public offering, the Company and each seller agree to enter into a written agreement with the managing underwriter selected in the manner herein provided in such form and containing such provisions as are customary in the securities business for such an arrangement between such underwriter and companies of the Company's size and investment stature. 8. Expenses. All expenses incurred by the Company in complying with -------- Sections 4, 5 and 6, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel and independent public accountants for the Company, fees and expenses (including counsel fees) incurred in connection with complying with state securities or "blue sky" laws, fees of the National Association of Securities Dealers, Inc., transfer taxes, fees of transfer agents and registrars, costs of insurance and reasonable fees and disbursements of one counsel for the sellers of Restricted Stock, but excluding any Selling Expenses, are called "Registration Expenses". If ITI and/or Casty are the only parties (other than the Company) selling Restricted Stock pursuant to a registration statement described herein, "Registration Expenses" shall not include the fees and disbursements of counsel for such sellers of Restricted Stock. All underwriting discounts and selling commissions applicable to the sale of Restricted Stock are called "Selling Expenses". The Company will pay all Registration Expenses in connection with each registration statement under Sections 4, 5 or 6. 9. Indemnification and Contribution. (a) In the event of a registration -------------------------------- of any of the Restricted Stock under the Securities Act pursuant to Sections 4, 5 or 6, the Company will indemnify and hold harmless each seller of such Restricted Stock thereunder, each underwriter of such Restricted Stock thereunder and each of their respective officers, directors, employees, partners, agents or other person, if any, who controls such seller or underwriter within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which such seller, underwriter or controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such Restricted Stock was registered under the Securities Act pursuant to Sections 4, 5 or 6, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each such seller, each such underwriter and each such controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action, provided, however, that the Company will not be liable in -------- ------- any such case if and to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by any such seller, any such underwriter or any such controlling person in writing specifically for use in such registration statement or prospectus and, provided further, however, that the Company will not be liable -------- ------- ------- to any such person or entity with respect to any such untrue statement or omission or alleged untrue statement or omission made in any preliminary prospectus that is corrected in the final prospectus filed with the Commission pursuant to Rule 424(b) promulgated under the Securities 9 Act (or any amendment or supplement to such prospectus) if the person asserting any such loss, claim, damage or liability purchased securities but was not given a copy of the final prospectus (as amended or supplemented) at or prior to the written confirmation of the sale of such securities to such person in any case where such delivery of the final prospectus (as amended or supplemented) is required by the Securities Act, unless such failure to deliver the final prospectus (as amended or supplemented) was a result of the Company's failure to provide such prospectus (as amended or supplemented). (b) In the event of a registration of any of the Restricted Stock under the Securities Act pursuant to Sections 4, 5 or 6, each seller of such Restricted Stock thereunder, severally and not jointly, will indemnify and hold harmless the Company, each person, if any, who controls the Company within the meaning of the Securities Act, each officer of the Company who signs the registration statement, each director of the Company, each underwriter and each person who controls any underwriter within the meaning of the Securities Act, against all losses, claims, damages or liabilities, joint or several, to which the Company or such officer, director, underwriter or controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement under which such Restricted Stock was registered under the Securities Act pursuant to Sections 4, 5 or 6, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company and each such officer, director, underwriter and controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action, provided, however, that such seller will be liable hereunder in any such case if - -------- ------- and only to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with information pertaining to such seller, as such, furnished in writing to the Company by such seller specifically for use in such registration statement or prospectus, and provided, further, however, that the liability of each seller hereunder shall be - -------- ------- ------- limited to the proportion of any such loss, claim, damage, liability or expense which is equal to the proportion that the public offering price of the shares sold by such seller under such registration statement bears to the total public offering price of all securities sold thereunder, but not in any event to exceed the net proceeds received by such seller from the sale of Restricted Stock covered by such registration statement. (c) Promptly after receipt by an indemnified party hereunder of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party in writing thereof, but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to such indemnified party other than under this Section 9 and shall only relieve it from any liability which it may have to such indemnified party under this Section 9 if and to the extent the indemnifying party is prejudiced by such omission. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate in and, to the extent it shall wish, to assume and undertake the defense thereof with counsel satisfactory to such indemnified party, and, after notice from the indemnifying party to such indemnified party 10 of its election so to assume and undertake the defense thereof, the indemnifying party shall not be liable to such indemnified party under this Section 9 for any legal expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation and of liaison with counsel so selected, provided, however, that, if the defendants in -------- ------- any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded, based on advice of counsel, that there may be reasonable defenses available to it which are different from or additional to those available to the indemnifying party or if the interests of the indemnified party reasonably may be deemed to conflict with the interests of the indemnifying party, the indemnified party shall have the right to select a separate counsel and to assume such legal defenses and otherwise to participate in the defense of such action, with the reasonable expenses and fees of such separate counsel and other reasonable expenses related to such participation to be reimbursed by the indemnifying party as incurred. (d) In order to provide for just and equitable contribution in circumstances in which the indemnity agreement provided for in Sections 9(a) and 9(b) above is for any reason held to be unenforceable by the indemnified party although applicable in accordance with its terms, the Company and each holder of Restricted Stock exercising rights under this Agreement shall contribute to the aggregate losses, claims, damages and liabilities of the nature contemplated by such indemnity agreement incurred by the Company and such holder, (i) in such proportion as is appropriate to reflect the relative fault of the Company on the one hand and such holder on the other, in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative fault of, but also the relative benefits to, the Company on the one hand and such holder on the other, in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits to the indemnifying party and indemnified party shall be determined by reference to, among other things, the gross proceeds received by the indemnifying party and indemnified party in connection with the offering to which such losses, claims, damages or liabilities relate. The relative fault of the indemnifying party and indemnified party shall be determined by reference to, among other things, whether the action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, the indemnifying party or the indemnified party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action. The parties hereto agree that it would not be just or equitable if contribution pursuant to this Section 9(d) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding sentence. Notwithstanding the provisions of this Section 9(d), each holder of Restricted Stock exercising rights under this Agreement shall not be required to contribute any amount in excess of the amount of the gross proceeds to such holder from sales of the Restricted Stock of such holder under a registration statement. Notwithstanding the foregoing, no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 9(d), each person, if any, who controls a holder of Restricted Stock within the meaning of Section 15 of the Securities Act shall have the same rights to contribution as such holder, and 11 each director of the Company, each officer of the Company who signed a registration statement and each person, if any, who controls the Company within the meaning of Section 15 of the Act shall have the same rights to contribution as the Company. 10. Changes in Common Stock or Preferred Shares. If, and as often as, ------------------------------------------- there is any change in the Common Stock or the Preferred Shares by way of a stock split, stock dividend, combination or reclassification, or through a merger, consolidation, reorganization or recapitalization, or by any other means, appropriate adjustment shall be made in the provisions hereof so that the rights and privileges granted hereby shall continue with respect to the Common Stock or the Preferred Shares as so changed. 11. Rule 144 Reporting. With a view to making available the benefits of ------------------ certain rules and regulations of the Commission which may at any time permit the sale of the Restricted Stock to the public without registration, the Company agrees to: (a) make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act; (b) use its reasonable best efforts to file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and (c) furnish to each holder of Restricted Stock forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of such Rule 144 and of the Securities Act and the Exchange Act, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed by the Company as such holder may reasonably request in availing itself of any rule or regulation of the Commission allowing such holder to sell any Restricted Stock without registration. 12. Representations and Warranties of the Company. The Company represents --------------------------------------------- and warrants to UBS, ITI and Casty as follows: (a) The execution, delivery and performance of this Agreement by the Company have been duly authorized by all requisite corporate action on its part and will not violate any provision of law, any order of any court or other agency of government, the Certificate of Incorporation or By-laws each, as amended, of the Company or any provision of any indenture, agreement or other instrument to which it or any or its properties or assets is bound, conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any such indenture, agreement or other instrument or result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any of the properties or assets of the Company, except where the foregoing would not reasonably be expected to have a material adverse effect on the Company or its business. (b) This Agreement has been duly executed and delivered by the Company and constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms. 13. Miscellaneous. (a) Except as otherwise provided herein, no ------------- modification, amendment or waiver of any provision of this Agreement shall be effective against the Company 12 or any other party unless such modification, amendment or waiver is approved in writing by the Company and the holders of at least 66 2/3% of the outstanding shares of Restricted Stock held by each of (i) the Investor Stockholders, (ii) ITI and (iii) Casty, provided that any modification, amendment or waiver which -------- would adversely affect any party hereto in a manner which is different from the manner the other parties hereto are affected shall also require the approval of such party. The failure of any party to enforce any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms. The parties hereby consent to any amendment to this Agreement solely to add as a party hereto any person acquiring Preferred Shares or Common Shares after the date hereof pursuant to the Tutopia Put Agreement. (b) This Agreement shall bind and inure to the benefit of and be enforceable by the parties hereto and their respective heirs, personal representatives, successors and permitted assigns. This Agreement and the rights of the parties hereunder may not be assigned by any party hereto without the prior written consent of the other parties, except as otherwise provided herein. The Investor Stockholders may assign all or any portion of their rights and obligations hereunder to a transferee of Restricted Stock, provided that such transferee agrees in writing to be bound by the provisions of this Agreement. ITI and Casty may assign all or any portion of their rights and obligations hereunder to a transferee of Restricted Stock, provided that each -------- such transferee of ITI and Casty and any subsequent transferee shall, together with ITI or Casty, as the case may be, be deemed one person for purposes of this Agreement, and any right or notice hereunder on behalf of such person may only be delivered by ITI or by Casty and, provided, further, that ITI or Casty, as -------- ------- the case may be, shall provide notice of any such assignment to the other parties hereto, and any such transferee must agree in writing to be bound by the provisions of this Agreement. (c) All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified; (ii) when sent by confirmed facsimile if sent during normal business hours of the recipient, if not, then on the next business day; (iii) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (iv) one business day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent, with respect to the Company and the Investor Stockholders, to their respective addresses specified in the Stock Purchase Agreement (or at such other address as any such party may specify by like notice) and, with respect to any other party, to the address of such party as shown in the stock record books of the Company (or at such other address as any such party may specify to all of the above by like notice). (d) Except as otherwise expressly set forth herein, this document, the Stock Purchase Agreement and the documents executed in connection with the closing of the Stock Purchase Agreement embody the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, that may have related to the subject matter hereof in any way. (e) 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 13 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) of the Stock Purchase Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY. (f) The obligations of the Company to register shares of Restricted Stock under Section 4, 5 or 6 shall terminate at the time at which all Restricted Securities are eligible for resale pursuant to Rule 144(k) under the Securities Act. (g) If requested in writing by the Company and the underwriters for an underwritten public offering of securities of the Company, each holder of Restricted Stock who is a party to this Agreement shall agree not to sell publicly any shares of Restricted Stock or any other shares of Common Stock (other than shares of Restricted Stock or other shares of Common Stock being registered in such offering), without the consent of the Company and such underwriters, for such period requested by the underwriters (not to exceed 180 days) following the effective date of the registration statement relating to the Qualified Public Offering (as defined in the Stock Purchase Agreement) or 90 days following the effective date of a registration statement relating to any other offering; provided, however, that all persons entitled to registration -------- ------- rights with respect to shares of Common Stock who are not parties to this Agreement, all persons holding 5% or more of the capital stock of the Company on a fully diluted basis and all executive officers and directors of the Company shall also have agreed not to sell publicly their Common Stock under the circumstances and pursuant to the terms set forth in this Section 13(g). (h) Notwithstanding the provisions of Section 7(a), the Company's obligation to file a registration statement, or cause such registration statement to become and remain effective, shall be suspended for a period not to exceed 90 days in any 12-month period if the Company shall furnish to the holders a certificate signed by the President of the Company stating that in the good faith judgment of the Board of Directors of the Company, it would be seriously detrimental to the Company and its stockholders for such registration to be effected at such time due to any pending material financing, acquisition or corporate reorganization or other material corporate development involving the Company or any of its subsidiaries; provided, however, that any suspension -------- ------- effectuated by the Company under this Section 13(h) shall be deemed a Suspension 14 subject to the limitation on the number of Suspensions permitted in any twelve month period under Section 7(g) hereof. (i) The Company shall not grant to any third party any registration rights more favorable than or inconsistent with any of those contained herein, so long as any of the registration rights under this Agreement remains in effect. (j) Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. (k) The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement. (l) This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. This Agreement may be executed by facsimile signature(s). [Signatures on Next Page] 15 IN WITNESS WHEREOF, the parties have executed this SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof. IFX CORPORATION By: /s/ Joel Eidelstein: ---------------------- Name: Joel Eidelstein Title: President UBS CAPITAL AMERICAS III, L.P By: UBS Capital Americas III, LLC By: /s/ Mark O. Lama ---------------- Name: Mark O. Lama Title: Principal By: /s/ Marc A. Unger ----------------- Name: Marc A. Unger Title: Chief Financial Officer UBS CAPITAL LLC By: /s/ Mark O. Lama ---------------- Name: Mark O. Lama Title: Attorney-in-fact By: /s/ Marc A. Unger ----------------- Name: Marc A. Unger Title: Attorney-in-fact INTERNATIONAL TECHNOLOGIES INVESTMENTS, LC By: /s/ Michael Shalom ------------------ Name: Michael Shalom Title: President /s/ Lee S. Casty ---------------- LEE S. CASTY 16 EX-10.3 9 dex103.txt PUT AGREEMENT EXHIBIT 10.3 PUT AGREEMENT PUT AGREEMENT, dated as of February 19, 2002 among IFX CORPORATION, a Delaware corporation (the "Company"), UBS CAPITAL AMERICAS III, L.P., a limited partnership formed under the laws of Jersey, Channel Islands ("UBS LP"), and UBS CAPITAL LLC, a Delaware limited liability company (collectively with UBS LP and their respective successors and assigns, "UBS"). Certain capitalized terms used but not otherwise defined herein are defined in Section 1. WHEREAS, the Company and UBS have entered into that certain IFX Corporation Series C Convertible Preferred Stock Purchase Agreement, dated October 11, 2001 (the "Preferred Stock Purchase Agreement"); and WHEREAS, one of the conditions to consummation of the transactions contemplated by the Preferred Stock Purchase Agreement is the execution and delivery of this Agreement. NOW, THEREFORE, the parties hereto agree as follows: 1. Definitions. For the purposes of this Agreement, the following terms shall ----------- have the meanings specified below: (a) "Exchange Ratio" shall mean (i) with respect to each share of Tutopia -------------- Preferred Stock which is put to the Company hereunder, 0.700833 share of IFX Preferred Stock and (ii) with respect to each share of Tutopia Common Stock which is put to the Company hereunder, 0.700833 share of IFX Common Stock. (b) "IFX Common Stock" shall mean the common stock, par value $.02 per ---------------- share, of the Company. (c) "IFX Preferred Stock" shall have the meaning set forth in Section ------------------- 3(a). (d) "Pro Rata Portion" shall mean a percentage of the total number of ---------------- Tutopia Shares owned by a given holder thereof equal to the percentage of the total number of Tutopia Shares owned by UBS which UBS elects to sell to the Company pursuant to a Put Option. (e) "Tutopia" shall mean Tutopia.com, Inc., a Delaware corporation. ------- (f) "Tutopia Common Stock" shall mean the common stock, par value $.001 -------------------- per share, of Tutopia. (g) "Tutopia Preferred Stock" shall mean the Series A Convertible ----------------------- Preferred Stock, $.001 par value per share, of Tutopia. (h) "Tutopia Shares" shall mean, collectively, shares of Tutopia Common -------------- Stock and Tutopia Preferred Stock. (i) "Tutopia Stockholders Agreement" shall mean the Amended and Restated ------------------------------- Stockholders Agreement dated as of August 31, 2000 by and among Tutopia, Latin Guide, Inc., UBS, LSC, LLC and the other parties named therein, as amended. 2. Put Option. ---------- (a) From and after the date hereof until the first (1st) anniversary of the date hereof (the "Expiration Date"), UBS shall have the right from time to time, upon written notice thereof, specifying the Tutopia Shares to be put (the "UBS Put Notice"), to put to the Company all or any portion of its Tutopia Shares (the "Put Option") at a price per share equal to the Exchange Ratio. (b) Within ten (10) days after each receipt of a UBS Put Notice, the Company shall promptly make an offer to all other holders of Tutopia Shares who are parties to the Tutopia Stockholders Agreement (except Latin Guide, Inc.), by written notice thereof, to purchase a Pro Rata Portion of the Tutopia Shares held by each such holder thereof at a price per share equal to the Exchange Ratio and on the other terms and conditions set forth herein. UBS and all such other holders of Tutopia Shares who deliver a put notice (collectively with the UBS Put Notice, the "Put Notices") to the Company within fifteen (15) days after receipt of a notice from the Company pursuant to this Section 2(b), shall be considered to have exercised the Put Option simultaneously as of the date the Company received the UBS Put Notice for purposes of this Agreement. (c) Within thirty (30) days following the date of a UBS Put Notice, the Company shall purchase or cause one or more of its subsidiaries to purchase and each Seller (as defined below) shall sell to the Company the Tutopia Shares put pursuant to the Put Notices (subject to the Sellers' complying with any rights of first refusal or other restrictions on transfer of such Tutopia Shares). (d) At the closing of a purchase of Tutopia Shares pursuant this Agreement (a "Closing"), UBS and each of the other holders of Tutopia Shares which accepted the offer to purchase made pursuant to Section 2(b) (collectively with UBS, the "Sellers") shall deliver the certificate or certificates representing the Tutopia Shares owned by such Seller to be sold to the Company, free and clear of all liens and encumbrances (other than pursuant to the Tutopia Stockholders Agreement), and the Company, as payment therefor, will issue and deliver to such Seller the appropriate number of shares of IFX Preferred Stock or IFX Common Stock, as the case may be, in the form of a single certificate (or such greater number of certificates representing such shares as such Seller may request), each dated the date of Closing and registered in such Seller's name (or in the name of such Seller's nominee(s)). Each Seller which is to be issued shares of IFX Preferred Stock as payment for its Tutopia Shares shall be issued such shares of IFX Preferred Stock in such proportions between shares of voting and non-voting IFX Preferred Stock as each such Seller shall determine. (e) At each Closing, each Seller which is not then a party to the Stockholders Agreement or the Registration Rights Agreement (as such terms are defined in the Preferred -2- Stock Purchase Agreement) shall become a party to each such agreement by executing and delivering to the Company a counterpart signature page thereof. In addition, at each Closing, each Seller shall represent and warrant to the Company that it is acquiring the shares of IFX Preferred Stock or IFX Common Stock, as the case may be, for its own account, for investment purposes only, and with no present intention of distributing, selling or otherwise disposing of them, and each other holder of Tutopia Shares shall waive any further rights under the Tutopia Stockholders Agreement as a condition to participating in the Put Option. In the event that any Seller refuses or fails to become a party to such agreements or make such representation and warranty or otherwise fails to comply with all of the obligations of a Seller hereunder, then such Seller shall be deemed to have revoked the exercise of its Put Option and shall not be entitled to have its Pro Rata Portion of Tutopia Shares purchased by the Company at the Closing. 3. Covenants of the Company. The Company hereby covenants to UBS as follows: ------------------------ (a) As soon as practicable following receipt of the UBS Put Notice, but in any event no later than twenty (20) days thereafter, the Company shall file with the Secretary of State of the State of Delaware a Certificate of Designation, Number, Powers, Preferences and Relative, Participating and Other Rights (the "IFX Preferred Certificate") authorizing a new series of preferred stock of the Company (the "IFX Preferred Stock") substantially in the form of the Series C Certificate (as defined below). The IFX Preferred Stock shall have all of the rights, preferences, privileges and restrictions of the Company's Series C Convertible Preferred Stock (the "Series C Preferred Stock") set forth in the Certificate of Designation, Number, Powers, Preferences and Relative, Participating, Optional and Other Rights of Series C Convertible Preferred Stock of the Company filed with the Secretary of State of the State of Delaware on February 19, 2002, as amended from time to time (the "Series C Certificate"); provided, however, that upon a bankruptcy, liquidation, dissolution or winding up of the Company, the holders of IFX Preferred Stock shall not be entitled to receive out of the assets or funds of the Company by reason of their ownership of such IFX Preferred Stock amounts in excess of the Stated Preference as is provided with respect to the Series C Preferred Stock in Section 3(a)(i) of the Series C Certificate. (b) At each Closing, (i) the shares of IFX Preferred Stock and/or IFX Common Stock to be issued and sold to each Seller at such Closing shall 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 (as defined in the Preferred Stock Purchase Agreement), other than the Stockholders Agreement, (ii) the IFX Common Stock issuable upon conversion of the IFX Preferred Stock will have been duly authorized, will have been reserved for issuance upon conversion of the IFX Preferred Stock, and, when issued, will be duly and validly issued and outstanding, fully paid and nonassessable and will be free of Encumbrances, other than pursuant to the Stockholders Agreement, and (iii) the shares of Common Stock issuable upon conversion of the IFX Preferred Stock to be issued and sold to such Seller at the Closing and any shares of IFX Common Stock to be issued and sold to each Seller at such Closing shall have been duly listed or admitted for trading on the Nasdaq National Market or such other stock exchange or listing service as the IFX Common Stock is then listed or admitted for trading. 4. Conditions to Obligations of the Sellers. The obligation of each of the ---------------------------------------- Sellers to sell its Tutopia Shares which it has agreed to sell at the Closing pursuant to its Put Option, and the other -3- obligations of each of the Sellers under this Agreement, are subject to the fulfillment at or prior to the Closing of the following conditions, any of which may be waived in writing in whole or in part by such Seller: (a) Performance. The Company and each of its subsidiaries shall have ----------- performed and complied in all material respects with all agreements, conditions and covenants contained herein required to be performed or complied with by it prior to or at the Closing, including without limitation the covenants set forth in Section 3. (b) 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 proceeding with respect to the application of any such applicable law to such effect shall be pending or threatened; and (iii) no proceeding shall be pending or shall have been threatened which seeks to impose liability upon any of the Sellers by reason of the consummation of the transactions contemplated by this Agreement. (c) Consents. Such Seller and the Company shall have obtained any and all -------- necessary consents and governmental approvals, and shall have made any and all filings and declarations necessary or appropriate for the consummation of the transactions contemplated by this Agreement. In furtherance and not in limitation of the foregoing, the requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or any foreign anti-competition, antitrust or pre-merger notification rules and regulations, if applicable, shall have been complied with. (d) Filing of Certificate. Prior to or contemporaneously with the Closing --------------------- the IFX Preferred Certificate shall have been duly filed with the Secretary of State of the State of Delaware and shall be in full force and effect as of the Closing and shall not have been amended or modified without the consent of UBS. (e) Other Documents. The Company shall have delivered to each of the --------------- Sellers such other documents and completed such other proceedings relating to the transactions contemplated by this Agreement as any Seller may reasonably request. 5. Conditions to Obligations of the Company. The obligation of the Company to ---------------------------------------- purchase each Seller's Tutopia Shares which such Seller has agreed to sell at the Closing pursuant to the Put Option, and the other obligations of the Company under this Agreement with respect to such Seller, are subject to the fulfillment at or prior to the Closing of the following conditions, any of which may be waived in writing in whole or in part by the Company: (a) Performance. Such Seller shall have performed and complied in all ----------- material respects with all agreements, conditions and covenants contained herein required to be performed or complied with by it prior to or at the Closing. (b) Absence of Litigation. (i) The consummation of the transactions --------------------- contemplated hereby shall not have been restrained, enjoined or otherwise prohibited by any applicable law, -4- 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 proceeding with respect to the application of any such applicable law to such effect shall be pending or threatened; and (iii) no proceeding shall be pending or shall have been threatened which seeks to impose liability upon the Company or any of its subsidiaries by reason of the consummation of the transactions contemplated by this Agreement. (c) Consents. The Company shall have obtained any and all material -------- necessary consents and governmental approvals, and shall have made any and all material filings and declarations necessary or appropriate for the consummation of the transactions contemplated by this Agreement. In furtherance and not in limitation of the foregoing, the requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or any foreign anti-competition, antitrust or pre-merger notification rules and regulations, if applicable, shall have been complied with. 6. General. ------- (a) Transfer; Assignment. UBS may transfer or assign its rights under this -------------------- Agreement, in whole or in part. (b) Notices. All notices, requests and demands to or upon the respective ------- parties hereto to be effective shall be in the manner provided in the Preferred Stock Purchase Agreement (c) Amendments. This Agreement may not be modified, changed, amended, ---------- terminated or abandoned except in a writing signed by UBS and the Company. (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 6(b) and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER -5- 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 text of the announcement shall be provided 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) Entire Agreement. This Agreement 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. (g) 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 transactions contemplated hereby and thereby. (h) 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. (i) Termination. This Agreement shall terminate upon the later to occur of ----------- (i) the Expiration Date or (ii) the date of the last Closing of any Put Options that were exercised pursuant to Put Notices that were sent prior to the Expiration Date. (j) No Third Party Rights. This Agreement is not intended and shall not be --------------------- construed to create any rights in any persons other than the parties listed on the signature page hereto, and no person shall be entitled to assert any rights as third party beneficiary hereunder. [Signatures on Next Page] -6- IN WITNESS WHEREOF, the parties have executed this PUT AGREEMENT as of the date set forth in the first paragraph hereof. IFX CORPORATION By: /s/ Michael Shalom Name: Michael Shalom ------------------ Title: Chief Executive Officer UBS CAPITAL AMERICAS III, L.P.By: UBS Capital Americas III, LLC By: /s/ Mark O. Lama ---------------- Name: Mark O. Lama Title: Principal By: /s/ Marc A. Unger ------------------ Name: Marc A Unger Title: Chief Financial Officer UBS CAPITAL LLC By: /s/ Mark O. Lama ---------------- Name: Mark O. Lama Title: Attorney-in-fact By:/s/ Marc A. Unger ------------------ Name: Marc A Unger Title: Attorney-in-fact -7- EX-10.4 10 dex104.txt SERIES D CONVERTIBLE PREFERRED STOCK PURCHASE AGRE EXHIBIT 10.4 IFX CORPORATION SERIES D CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT Dated as of February 19, 2002 IFX CORPORATION SERIES D CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT This Purchase Agreement is made and entered into as of the 19th day of February, 2002, by and among IFX Corporation, a Delaware corporation (the "Company") and each Person listed on the Schedule of Purchasers attached as ------- 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") and Michael Shalom, ---------- --------- individually ("Shalom"), Joel Eidelstein, individually ("Eidelstein"), and Lee S. Casty ("Casty") only with respect to Section 12(q) hereof. Unless defined elsewhere herein, capitalized and other defined terms shall have the meanings specified in Section 13. ---------- RECITALS The Company desires to sell to the Purchasers, and the Purchasers desire to purchase from the Company such number of shares of Series D Convertible Preferred Stock set forth in Section 2 hereof, all on the terms and conditions set forth herein. Simultaneously with the execution and delivery of this Agreement, the Requisite Stockholders have consented to certain of the transactions contemplated hereby. AGREEMENT In consideration of the premises and the mutual covenants, agreements, hereinafter set forth, the parties to this Agreement agree as follows: 1. Authorization of the Securities; Nature of Agreement. ---------------------------------------------------- (a) Series D Preferred Stock. The Company has authorized the ------------------------ issuance pursuant to the terms and conditions of this Agreement of shares of its Preferred Stock, $1.00 par value per share, to be designated as Series D Convertible Preferred Stock (the "Series D Preferred Stock"), as provided ------------------------ herein. The shares of Series D Preferred Stock have all of the rights, preferences, privileges and restrictions set forth in the Certificate of Designation, Number, Powers, Preferences and Relative, Participating, Optional and Other Rights of Series D Convertible Preferred Stock of IFX Corporation (the "Series D Certificate"), a copy of which, in the form to be filed with the -------------------- Secretary of State of the State of Delaware, is attached as Exhibit B hereto. --------- (b) Nature of Agreement. This Agreement insofar as it relates to ------------------- the acquisition of a particular number of shares of the Series D Preferred Stock by any Purchaser is a separate agreement between that Purchaser and the Company. But this Agreement insofar as it relates to the rights, duties and remedies of the Company and the Purchasers, from and after the Closing, shall be deemed to be one Agreement. 2. Sale and Purchase of Series D Preferred Stock. (a) Subject to the --------------------------------------------- terms and conditions set forth in this Agreement, the Company agrees to sell to the Purchasers, and each of the Purchasers severally and not jointly agrees to purchase from the Company, the number of shares of Series D Preferred Stock indicated opposite such Purchaser"s name on the Schedule of Purchasers (the "Shares"), for a purchase price set forth in Section 3. The sale and purchase ------ of the Series D Preferred Stock shall take place at the offices of Kaye Scholer LLP, 425 Park Avenue, New York, New York 10022, at 10:00 a.m., New York City time, at a closing (the "Closing") to occur as soon as practicable after -------- satisfaction or waiver of the conditions to Closing set forth in Sections 7 and 8. At the Closing, the Company will deliver to each Purchaser the Series D Preferred Stock to be purchased by such Purchaser in the form of a single certificate (or such greater number of certificates representing such shares as such Purchaser may request), each dated the date of Closing and registered in such Purchaser"s name (or in the name of such Purchaser"s nominee(s)), against delivery by such Purchaser of the purchase price set forth in Section 3. If at the Closing, the Company shall fail to tender to any Purchaser the Series D Preferred Stock to be purchased by such Purchaser, or any of the conditions specified in Section 7 shall not have been fulfilled to the satisfaction of such Purchaser, such Purchaser shall, at its election, be relieved of all further obligations under this Agreement, without thereby waiving any other rights such Purchaser may have by reason of such failure or such nonfulfillment. 3. Purchase Price. At the Closing, each Purchaser shall pay a purchase -------------- price for the Shares to be purchased by it hereunder in an amount equal to the sum of (a) the cash consideration indicated opposite such Purchaser"s name on the Schedule of Purchasers plus (b) the transfer and assignment to the Company of the shares of Series C Preferred Stock or Common Stock, as the case may be, owned by such Purchaser indicated opposite such Purchaser"s name on the Schedule of Purchasers. The cash portion of the purchase price shall be payable by the payment to the Company or its order of immediately available funds and/or conversion of indebtedness (subject to the following sentence) in the aggregate amount of such cash portion of the purchase price. In the event that a portion of such cash consideration is paid by a Purchaser in the form of conversion of indebtedness, then (i) the principal amount of such converted indebtedness shall be applied toward the payment of such cash portion of the purchase price, and (ii) any accrued interest on such converted indebtedness shall be applied to the purchase, at a purchase price equal to One Dollar and Twenty Cents ($1.20) per share of shares of Series D Preferred Stock, in addition to the number of Shares to be purchased by such Purchaser as set forth on the Schedule of Purchasers. In addition, at the Closing, each Purchaser shall surrender the certificate or certificates representing the shares of Series C Preferred Stock or Common Stock owned by such Purchaser indicated opposite such Purchaser"s name, as the case may be, to be assigned to the Company as part of the purchase price for the Shares, which certificates shall be accompanied by appropriate stock powers. 4. Representations and Warranties of the Company. Subject to the --------------------------------------------- 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. 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 -2- concept of good standing is recognized under the laws of such jurisdictions). The Company and each of its Subsidiaries is qualified, licensed or domesticated as a foreign corporation in all jurisdictions where the failure to be so qualified, licensed or domesticated would have a Material Adverse Effect. The Company and each of its Subsidiaries has full power and authority (corporate and other) to own, lease and operate its properties and assets and to operate the Business as currently being operated. (i) Except as set forth on the Schedule of Exceptions, the minute books of the Company and each of its Subsidiaries, as previously made available to the Purchasers, contain accurate records of all meetings of and resolutions of, or written consents by, its shareholders and its board of directors (or committees thereof) since the date of its incorporation. (b) Authorization. (i) The Company has all requisite right, ------------- power and authority (corporate or otherwise) to execute and deliver this Agreement and each of the other agreements and instruments referred to herein to be entered into by the Company at or prior to a Closing (including without limitation the Certificate) in connection with the consummation of the transactions contemplated by this Agreement (the "Other Agreements") and to ---------------- perform its obligations and consummate all of the transactions contemplated hereunder and thereunder, including the issuance of the shares of Series D Preferred Stock to be acquired by each Purchaser at the Closing. All corporate proceedings have been taken and all corporate authorizations have been secured which are necessary on the part of the Company and each of its Subsidiaries to authorize the execution, delivery and performance of this Agreement and each of the Other Agreements. (ii) This Agreement has been duly executed and delivered and constitutes, and each of the Other Agreements when executed and delivered by the Company, will constitute, legal, valid and binding obligations of the Company, enforceable in accordance with their respective terms, subject to applicable bankruptcy, insolvency or other similar laws affecting the enforceability of creditors" rights generally and court decisions with respect thereto, and the discretion of courts in granting equitable remedies. (iii) The shares of the Series D Preferred Stock to be acquired by each Purchaser at the Closing have been duly authorized and, when delivered, will be duly and validly issued and outstanding, fully paid and nonassessable, and will be free of Encumbrances. The Common Stock of the Company issuable upon conversion of the Series D Preferred Stock (the "Conversion Shares") (i) has ----------------- been duly authorized, (ii) has been reserved for issuance upon conversion of the Series D Preferred Stock, and (iii) when issued, will be duly and validly issued and outstanding, fully paid and nonassessable and will be free of Encumbrances. (c) Capital Stock. (i) On the date hereof, the authorized ------------- capital stock of the Company consists of (1) 60,000,000 shares of Common Stock, par value $.02 per share (the "Common Stock"), of which 12,776,495 shares of ------------ Common Stock are issued and outstanding, and (2) 20,000,000 shares of Preferred Stock, par value $1.00 per share (the "Preferred Stock"), of which 2,030,869 --------------- shares of Preferred Stock have been designated Series A Preferred Stock, all of which shares of Series A Preferred Stock are issued and outstanding ("Series A -------- Preferred Stock"), of which 4,418,262 shares of Preferred Stock have been - --------------- designated -3- Class I Series B Preferred Stock, 3,994,127 of which shares of Class I Series B Preferred Stock are issued and outstanding, and of which 424,135 shares of Preferred Stock have been designated Class II Series B Preferred Stock, all of which shares of Class II Series B Preferred Stock are issued and outstanding (together with the Class I Series B Preferred Stock, "Series B Preferred Stock") ------------------------ and 3,876,241 shares of Series C Preferred Stock, all of which are issued and outstanding (the "Series C Preferred Stock"); and (B) immediately after the Closing, the authorized capital of the Company will consist of (1) 110,000,000 shares of Common Stock, of which 12,092,495 shares of Common Stock will be issued and outstanding, and (2) 40,000,000 shares of Preferred Stock, of which (w) 2,030,869 shares of Preferred Stock will have been designated as Series A Preferred Stock, all of which shares will be issued and outstanding; (x) 4,842,397 shares of Preferred Stock will have been designated Series B Preferred Stock, 4,418,262 of which shares will be issued and outstanding; (y) 3,876,241 shares of Preferred Stock will have been designated as Series C Preferred Stock, of which 3,126,241 shares will be issued and outstanding, and (z) a number of shares of Preferred Stock will be designated Series D Preferred Stock which is equal to the sum of 6,383,666 plus the total number of additional shares, if any, purchased by the Purchaser, at the Closing by reason of accrued interest on converted indebtedness as provided in Section 2. (ii) Except as set forth in the Schedule of Exceptions, the Company has not (A) issued or granted, (B) agreed to issue or grant, or (C) caused or permitted any of its Subsidiaries to issue or grant, any option, warrant, right or other Convertible Security which affords any Person the right to purchase or otherwise acquire any shares of the Common Stock, the Series A Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock or the Series D Preferred Stock, or any other security of the Company or any of its Subsidiaries ("Capital Stock Agreements"). Neither the Company nor any of its ------------------------ Subsidiaries is subject to any obligation (contingent or otherwise) to purchase or otherwise acquire or retire any shares of its securities. (iii) All of the issued and outstanding securities of the Company and its Subsidiaries have been duly authorized and validly issued, are fully paid, nonassessable and free of preemptive rights (other than those preemptive rights set forth in the Schedule of Exceptions) and other Encumbrances, and were issued in compliance with all Applicable Laws, including those regulating the offer, sale or issuance of securities. (iv) Except as set forth in the Schedule of Exceptions, no Person has any rights of first refusal or similar rights or any preemptive rights in connection with the issuance of the shares of Series D Preferred Stock or Conversion Shares, or with respect to any future offer, sale or issuance of securities by the Company, any of its Subsidiaries or any of its stockholders, other than as provided in this Agreement or after the Closing, the Registration Rights Agreement, the Stockholders Agreement, the Series A Certificate, the Series B Certificate, the Series C Certificates or the Series D Certificate. (v) The Schedule of Exceptions sets forth a true and correct list of (1) to the knowledge of the Company, each of the Company"s shareholders who owns, of record or beneficially, more than 5% of the Common Stock on a Fully Diluted Basis, indicating the number and class of shares owned by each shareholder, and such shareholder"s percentage interest in the Company and percentage interest in the Common Stock on a Fully Diluted Basis, -4- 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 Applicable Law, (ii) any term of its Certificate of Incorporation or Bylaws (or equivalent documents in its jurisdiction of organization), or (iii) any Contract to which it is subject and which is material to the Business, including any Capital Stock Agreement (collectively, the "Material Instruments"). The execution and delivery by the Company of this -------------------- Agreement and the Other Agreements, the performance by the Company of its obligations hereunder and thereunder and the consummation by the Company of the transactions contemplated hereby and thereby, including the issuance of the Series D Preferred Stock, the issuance of the Conversion Shares and the taking of any other action contemplated by this Agreement or the Other Agreements, will not (i) result in (A) any violation of any Applicable Law, or (B) any violation of any term of the Company"s or any of its Subsidiaries" Certificate of Incorporation or Bylaws (or equivalent documents), or (C) any violation of or any conflict with or a default (with or without notice, lapse of time or both) under any of the Material Instruments, which violation, conflict or default might reasonably be expected to have a Material Adverse Affect on the ability of the Company or any of its Subsidiaries to satisfy its obligations under this Agreement, any of the Other Agreements or any of the Material Instruments, (ii) accelerate or constitute an event entitling the other party to any Material Instrument to accelerate the obligations of such Material Instrument, or to increase the rate of interest presently in effect or to entitle the other party to such Material Instrument to any other right resulting from a change-in- control or otherwise, or (iii) result in the -5- 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). (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 -6- 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 D Preferred Stock hereunder constitute, and will constitute, transactions exempt from the registration and prospectus delivery requirements of Section 5 of the Securities Act and analogous provisions of the Applicable Laws of all other jurisdictions, and the Company has obtained (or is exempt from the requirement to obtain) all qualifications, permits and other consents required by all Applicable Laws governing the offer, sale, issuance or conversion of securities. (k) Insurance. The Schedule of Exceptions contains a true, --------- complete and correct list of all insurance policies covering the Business and the respective material assets of the Company and each Subsidiary. The Company and each Subsidiary maintains in full force and effect such insurance policies. Neither the Company nor any Subsidiary is in default with respect to any provision contained in any insurance policy. Neither the Company nor any Subsidiary has failed to give any notice under any insurance policy in due time. (l) Certain Transactions. Except as set forth in the Schedule of -------------------- 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; -7- (B) any contract for the employment or personal services of any officer, individual employee or other person or entity on a full-time, part-time, consulting, advisory or other basis providing annual compensation in excess of $125,000 or which, in any way, restricts or limits the right of the Company or any Subsidiary to terminate such contract at will; (C) any loan agreement, indenture, letter of credit, security agreement, mortgage, pledge agreement, deed of trust, bond, note, or other agreement relating to the borrowing of money in excess of $125,000 or to the mortgaging, pledging, transferring of a security interest, or otherwise placing an Encumbrance on any material asset or material group of assets (whether tangible or intangible) of the Company or any Subsidiary; (D) any guarantee of the payment or performance of any Person in excess of $125,000; any agreement to indemnify any Person or act as a surety for an amount in excess of $125,000; any other agreement to be contingently or secondarily liable for the obligations of any Person; or any "keep well" or similar credit support arrangements; (E) any lease or agreement under which it is the lessee of or holds or operates any property, real or personal, owned by any other party requiring annual payments in excess of $125,000; (F) any contract or agreement or group of related agreements with the same party or any group of affiliated parties which requires or may in the future require an aggregate payment by or to the Company or any Subsidiary in excess of $125,000; (G) any contract or agreement prohibiting it from freely engaging in any business or competing anywhere in the world; (H) any material licenses, licensing arrangements and other similar contracts providing in whole or in part for the use by a third party of, or limiting the use by the Company or any Subsidiary of, any Intellectual Property; (I) any brokerage or finder"s agreements relating to the transactions contemplated herein; (J) any joint venture, partnership and similar contracts involving a sharing of profits or expenses (including joint development and joint marketing contracts); (K) any asset purchase agreements, stock purchase agreements and other acquisition or divestiture agreements, including any agreements relating to the sale, lease or disposal of any assets of the Company or any of its Subsidiaries for consideration in excess of $50,000 or involving continuing indemnity or other obligations; -8- (L) any material sales agency, marketing or distributorship agreements; (M) any contracts which contain "take or pay" provisions; (N) any contracts, agreements or arrangements regarding pre-emptive rights, rights of first refusal, put or call rights or obligations, anti-dilution rights or other restrictions on or with respect to the issuance, sale or redemption of the capital stock of the Company or any of its Subsidiaries; (O) any contracts, agreements or arrangements regarding the rights, obligations, restrictions on or with respect to the voting of any of the capital stock of the Company or any of its Subsidiaries or the registration of such stock for offering to the public pursuant to the Securities Act; and/or (P) any other contract, agreement or commitment not the subject matter of clauses (A) through (P) above which is or could be reasonably expected to be material to the Company, any Subsidiary or the Business. (ii) The Company and each of its Subsidiaries has performed all obligations required to be performed by it to date and is not in material default under, or in material breach of, or in receipt of any claim of material default under or material breach of, any agreement to which it is a party or to which any of its assets is subject; the Company has no present expectation or intention of not fully performing, or of permitting any of its Subsidiaries not to perform fully, all such obligations; and the Company does not have any knowledge of any material breach or anticipated material breach by the other parties to any contract or commitment to which it or any of its Subsidiaries is a party or to which any of its or their assets is subject. (iii) To the knowledge of the Company, none of the officers of the Company or any Subsidiary is a party to any oral or written contract which prohibits, restricts or limits his or her performance of his or her duties or the fulfillment of his or her obligations as an employee and an officer of the Company or any Subsidiary. (iv) Each Contract is a legal, valid, binding and enforceable obligation of the Company or a Subsidiary, and to the knowledge of the Company, the other parties thereto, subject to applicable bankruptcy, insolvency, or other similar laws affecting the enforceability of creditors" rights generally and court decisions with respect thereto, and the discretion of courts in granting equitable remedies. Except as set forth in the Schedule of Exceptions, no Consent of any Person is required under any Contract as a result of or in connection with the execution and delivery by the Company or any of its Subsidiaries or the performance by the Company or any of its Subsidiaries of its obligations hereunder or under any of the Other Agreements or the consummation by the Company or any of its Subsidiaries of the transactions contemplated hereby or thereby. -9- (n) Governmental Consents. 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 Subsidiaries, has notified the Company or such Subsidiary that such Person will cancel or otherwise terminate such Person's relationship with the Company or such Subsidiary, or is being terminated by the Company or such Subsidiary. (iii) To the Company's knowledge, none of the officers or employees of the Company or any of its Subsidiaries is in breach of any covenant or agreement with any previous employer or other Person with regard to (A) restrictions on competition with the business of such previous employer or other Person, (B) solicitation of the employees of such previous employer or other Persons, or (C) non-disclosure of the confidential or proprietary information of such previous employer or other Person. (iv) Except as set forth on the Schedule of Exceptions, the Company and its Subsidiaries do not have any Benefit Plans. The Company has delivered to the Purchasers true, correct and complete copies of all documents, summary plan descriptions, insurance contracts, third party administration contracts and all other documentation created to embody all Benefit Plans, plus descriptions of any Benefit Plans that have not been reduced to writing. (v) Except as set forth on the Schedule of Exceptions and for required contributions or benefit accruals for the current plan year, no material liability has been or is expected to be incurred by the Company under or pursuant to any Applicable Law relating to Benefit Plans and, to the best knowledge of the Company, no event, transaction or condition has -10- occurred or exists that could result in any such liability to the Company or any of its Subsidiaries or, following the Closing, the Company, its Subsidiaries, the Purchasers or any such Benefit Plan. (vi) Except as set forth on the Schedule of Exceptions, each of the Benefit Plans listed in the Schedule of Exceptions is and has at all times been in compliance in all material respects with all applicable provisions of Applicable Laws. (vii) Except as specifically set forth in the Schedule of Exceptions, the execution and performance of the transactions contemplated by this Agreement will not (either alone or upon the occurrence of any currently planned additional or subsequent event) constitute an event under any Benefit Plan or individual agreement that will or may result in any payment (whether of severance pay or otherwise), acceleration, vesting or increase in material benefits with respect to any employee, former employee, consultant, agent or director of the Company or any Subsidiary. (viii) With respect to all Benefit Plans which are funded, or are required by Applicable Law to be funded, the present value of all accrued benefits (vested and non-vested) of each such Benefit Plan as of the date of Closing, will not exceed the fair market value of the assets of each such Benefit Plan as of the date of Closing. (p) Compliance with Laws. Except as set forth on the -------------------- Schedule of Exceptions, the Company and each of its Subsidiaries is not, in any material respects, in violation of any Applicable Laws and has not received notice of any such violation. (q) Intellectual Property. Except as set forth in the --------------------- Schedule of Exceptions, the Company owns free and clear of all Encumbrances, or possesses and is validly licensed under, all Intellectual Property material to the operation of the Business, as conducted in the past, as presently conducted and as contemplated to be conducted. Any such licenses are in full force and effect. No past, current, or planned activity, service or product of the Company or any Subsidiary infringes or conflicts with the Intellectual Property of any third party. The Company and its Subsidiaries have taken appropriate steps and measures to establish and preserve ownership of or right to use all Intellectual Property material to the operation of the Business. The Company owns all rights in and to any and all Intellectual Property used or planned to be used by the Company or any Subsidiary, or covering or embodied in any past, current or planned activity, service or product of the Company or any Subsidiary, which Intellectual Property was made, developed, conceived, created or written by any consultant retained, or any employee employed, by the Company or any Subsidiary. To the Company's knowledge, no former or current employee, and no former or current consultant, of the Company or any Subsidiary has any rights in any Intellectual Property made, developed, conceived, created or written by the aforesaid employee or consultant during the period of his retention by the Company or the Subsidiary which can be asserted against the Company or any Subsidiary. The Company owns, or has full and unrestricted rights to use, any and all domain names containing the word "Unete" (including the word "Unete" in combination with any non-military extension, including Unete.com, Unete.net and Unete.org). The domain name Unete.com does not and will not receive an amount of Internet traffic intended for any website or webpage of the Company that would have a Material Adverse Effect. Except as set forth on the Schedule of Exceptions, -11- neither the Company nor any Subsidiary has knowledge of any Intellectual Property owned by the Company or any Subsidiary and material to the operation of the Business which is the subject of any Encumbrance or other agreement granting rights therein to any third party. Except as set forth on the Schedule of Exceptions, neither the Company nor any Subsidiary is obligated or under any liability whatsoever to make any payments by way of royalties, fees or otherwise to any owner, licensor of, or other claimant to, any Intellectual Property, with respect to the use thereof or in connection with the conduct of the Business, or otherwise. The Company and each of its Subsidiaries has taken reasonable steps to protect, maintain and safeguard the Intellectual Property material to the Business, including any Intellectual Property for which improper or unauthorized disclosure would impair its value or validity, and has executed and has had executed appropriate nondisclosure and confidentiality agreements and made all appropriate filings and registrations in connection with the foregoing. Neither the Company nor any Subsidiary has knowledge of any infringement by any third party of any Intellectual Property of the Company or any Subsidiary. There has been no judgment, decree, injunction, rule, or order rendered by any Governmental Authority, and no claim made against the Company or any Subsidiary, asserting the invalidity, abuse, misuse or unenforceability of any Intellectual Property material to the operation of the Business, or that would limit, cancel, or question the validity of, or the rights of the Company or any Subsidiary in, any Intellectual Property material to the operation of the Business. (r) Environmental Matters. (i) The Company has complied in --------------------- all material respects with all applicable Environmental Laws. There is no pending or, to the knowledge of the Company, threatened civil or criminal litigation, written notice of violation, formal administrative proceeding, or investigation, inquiry or information request by any Governmental Authority, relating to any Environmental Law involving the Company or any of its Subsidiaries. (ii) Neither the Company, nor to the knowledge of the Company, any third party has released any Materials of Environmental Concern into the environment at any parcel of real property or any facility formerly or currently owned, leased, operated or controlled by the Company. The Company is not aware of any releases of Materials of Environmental Concern at parcels of real property or facilities other than those owned, leased, operated or controlled by the Company that could reasonably be expected to have an impact on the real property or facilities owned, leased, operated or controlled by the Company. (iii) Set forth in the Schedule of Exceptions is a list of all environmental reports, investigations and audits of which the Company is aware (whether conducted by or on behalf of the Company or a third party, and whether done at the initiative of the Company or directed by a Governmental Authority or other third party) issued or conducted during the five years preceding the date hereof relating to premises currently or previously owned, leased or operated by the Company or any of its Subsidiaries. Complete and accurate copies of each such report, or the results of each such investigation or audit, have been provided to the Purchasers. (s) Certain Practices. Neither the Company nor any ----------------- Subsidiary (nor any constituent corporation of any merger of which the Company or any Subsidiary is a surviving corporation, or other Person of which the Company or any Subsidiary is the surviving -12- corporation) nor any of their respective officers, employees, directors, representatives or agents has, since the inception of the Business by the Company or any of its Subsidiaries (or their predecessors): (i) taken any action in furtherance of any boycott not sanctioned by the United States; (ii) entered into any contract or agreement to conduct any transaction with any Governmental Authority, agent, representative or resident of, or any Person based or resident in, any of the following countries: Angola (UNITA); Burma (Myanmar); Cuba; Iran; Iraq; Libya; North Korea; Sudan; Syria; and the Federal Republic of Yugoslavia (Serbia and Montenegro); or (iii) knowingly offered, promised, authorized or made, directly or indirectly, (A) any unlawful payments under Applicable Laws, or (B) any payments or other inducements (whether or not unlawful), to any government official, including any official of an entity owned or controlled by a government, political party or official thereof or any candidate for political office, with the intent or purpose of: (1) influencing any act or decision of such official in his official capacity; (2) inducing such official to do or omit to do any act in violation of the lawful duty of such official; (3) receiving an improper advantage; or (4) inducing such official to use his influence with a Governmental Authority to affect or influence any act or decision of such Governmental Authority; in order to assist the Company or any Subsidiary in obtaining or retaining business for or with, or directing business to, any person. (t) Brokers. No finder, broker, agent, financial advisor ------- or other intermediary has acted on behalf of the Company or any of its Affiliates in connection with the offering of the Series D Preferred Stock or the negotiation or consummation of this Agreement or the Other Agreements or any of the transactions contemplated hereby or thereby. All such negotiations or the consummation of this Agreement or the Other Agreements or any of the transactions contemplated hereby or thereby will not give rise to any valid claim against the Company, any Subsidiary or any of the Purchasers for any brokerage or finder's commission, fee or similar compensation. (u) No Undisclosed Liabilities. Except as set forth on the -------------------------- Schedule of Exceptions or in the SEC Reports, neither the Company nor any Subsidiary has any liabilities, obligations, claims, commitments or debts of any nature, whether known or unknown, whether due or becoming due, or asserted or unasserted (whether fixed, accrued, absolute, contingent, secured or otherwise). The Schedule of Exceptions sets forth a true and complete schedule of accrued liabilities and future payments due with respect to any acquisitions by the Company or any Subsidiary of any equity securities or assets of any Person. (v) Disclosure. This Agreement (including the Schedules ---------- and Exhibits hereto) does not contain any untrue statement of any material fact or omits to state a material fact necessary in order to make the statements contained herein or therein, in light of the circumstances under which they were made, not misleading. To the Company's knowledge, there are no facts that, individually or in the aggregate, would have a Material Adverse Effect that have not been set forth in this Agreement (including the Schedule of Exceptions). (w) SEC Filings. Since January 1, 1997, the Company has ----------- timely filed all forms, reports and documents with the SEC required to be filed by it pursuant to the Federal securities laws and the rules and regulations of the SEC thereunder, all of which complied in all material respects with all applicable requirements of the Securities Act and the Exchange Act and the rules and regulations of the SEC thereunder. The above referenced forms, reports and -13- documents of the Company are sometimes collectively referred to herein as the "SEC Reports." A true and complete list of the SEC Reports is set forth in the Schedule of Exceptions. All documents required to be filed as exhibits to the SEC Reports have been timely filed. None of the SEC Reports, including without limitation any financial statements or schedules included therein, at the time filed contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. (x) Financial Statements. The consolidated balance sheets -------------------- and the related consolidated statements of income, stockholders' equity and cash flows (including the related notes thereto) of the Company and its Subsidiaries included in the SEC Reports complied as to form in all material respects with the applicable accounting requirements and published rules and regulations of the SEC with respect thereto, have been prepared in accordance with GAAP, applied on a basis consistent with prior periods except as otherwise noted therein, present fairly the consolidated financial position of the Company and its Subsidiaries as of their respective dates, and the consolidated results of their operations and their cash flows for the periods presented therein, and reflect all adjustments necessary for the fair presentation of results for the periods presented except as set forth on the Schedule of Exceptions. (y) Availability and Transfer of Foreign Currency. All --------------------------------------------- requisite foreign exchange control approvals and other authorizations, if any, by any Governmental Authority have been validly obtained and are in full force and effect to assure: (a) the ability of the Company and its Subsidiaries to make any and all payments necessary to (i) each Purchaser for dividend payments on the Common Stock and the Series D Preferred Stock, or (ii) any other party in order to conduct the Business; (b) the ability of the Company's Subsidiaries to make any and all payments of dividends and other distributions to the Company and any and all other intercompany payments to or from the Company; and (c) the availability of dollars to enable each Purchaser to convert its investment to dollars, if necessary, if such Purchaser liquidates its investment in the Series D Preferred Stock or the Common Stock. (z) Absence of Changes. Except as set forth in the ------------------ Schedule of Exceptions, since June 30, 2001, neither the Company nor any Subsidiary has: (i) suffered any Material Adverse Effect; (ii) incurred, assumed, guaranteed or discharged any debt, claim, commitment, obligation or liability, absolute, accrued, contingent or otherwise, whether due or to become due (including any indebtedness for borrowed money), in excess of $100,000, individually or in the aggregate; (iii) mortgaged, pledged or subjected to any other Encumbrance, any material piece of property, business or assets, tangible or intangible; (iv) sold, transferred, leased to others or otherwise disposed of any of the assets of the Business, in excess of $100,000, individually or in the aggregate, or canceled or compromised any debt, claim, commitment, liability or obligation, or waived or released any -14- right of substantial value, involving an amount in excess of $100,000, individually or in the aggregate; (v) received any written notice of termination of any Contract with required payments thereunder in excess of $100,000; (vi) suffered any damage, destruction or loss (whether or not covered by insurance) to property, in excess of $100,000, individually or in the aggregate; (vii) transferred or granted any rights under, or entered into any settlement regarding the breach, misappropriation, infringement or violation of, any Intellectual Property, or modified any existing rights with respect thereto in a manner involving payments by or to the Business in excess of $100,000, individually or $100,000 in the aggregate; (viii) with respect to amounts in excess of $25,000 per year, made any change in the rate of compensation, commission, bonus or other direct or indirect remuneration payable, or paid or agreed or made any enforceable oral promise to pay, conditionally or otherwise, any bonus, incentive, retention or other compensation, retirement, welfare, fringe or severance benefit or vacation pay, to or in respect of any employee, distributor or agent; (ix) made any change in its accounting, auditing or tax methods, practices or principles; (x) encountered any labor union organizing activity, had any actual or threatened employee strikes, work stoppages, slowdowns or lockouts, or had any material and adverse change in its relations with its employees, distributors, agents, customers or suppliers; (xi) entered into any Contract, involving an amount per year in excess of $100,000, individually or in the aggregate, or paid or agreed to pay any brokerage or finder's fee, or incurred any severance pay obligations by reason of, this Agreement or any of the transactions contemplated hereby; (xii) made any grant of credit to any customer or distributor on terms or in amounts materially more favorable than had been extended to that customer or distributor in the past; or (xiii) taken any action or omitted to take any action that has resulted or could reasonably be expected to result in the occurrence of any of the foregoing. (aa) Real Property Holding Company. The Company is not a ----------------------------- real property holding company within the meaning of Section 897(c)(2) of the United States Internal Revenue Code of 1986, as amended. (bb) Investment Company Act. The Company is not, nor is it ---------------------- directly or indirectly controlled by or acting on behalf of, any Person that is an "investment company" within the meaning of the United States Investment Company Act of 1940, as amended. -15- (cc) Subchapter S. The Company has not elected to be treated as a ------------ Subchapter S corporation or a collapsible corporation pursuant to Section 1362(a) or Section 341(f) of the United States Internal Revenue Code of 1986, as amended. (dd) State Takeover Statutes. The Board of Directors of the Company ----------------------- has approved this Agreement, the Other Agreements and the transactions contemplated hereby and thereby and the provisions of any "fair price," "moratorium," "control share," "interested stockholders," "affiliated transaction" or other anti-takeover statute or regulation, and any antitakeover or other restrictive provisions of the Company's Certificate of Incorporation are not applicable to the transactions contemplated by this Agreement or the Other Agreements. 5. Representations and Warranties of the Purchasers. Each Purchaser ------------------------------------------------ severally (and not jointly) represents and warrants to the Company that: (a) Investment Intent. The shares of Series D Preferred Stock to be ----------------- acquired by and issued to the Purchaser pursuant to this Agreement are being acquired by the Purchaser solely for its own account, for investment purposes only, and with no present intention of distributing, selling or otherwise disposing of them. (b) Sophistication. Such Purchaser is able to bear the economic -------------- risk of an investment in shares of the Series D Preferred Stock to be acquired by it pursuant to this Agreement and can afford to sustain a total loss of such investment, and has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the proposed investment and therefore has the capacity to protect its own interests in connection with the purchase of its respective shares of Series D Preferred Stock. (c) Illiquidity. Such Purchaser understands that there is no public ----------- market for the shares of Series D Preferred Stock to be acquired by it and that there may never be a public market for such stock, and that even if a market develops for such stock such Purchaser may have to bear the risk of its investment in such stock for a substantial period of time. (d) Accredited Investor. Such Purchaser is an "accredited investor" ------------------- within the meaning of Regulation D promulgated under the Securities Act. In addition (but without limiting the effect of the Company's representations and warranties contained herein), such Purchaser has received such information as it considers necessary or appropriate for deciding whether to acquire its respective shares of Series D Preferred Stock. (e) Brokers. No finder, broker, agent, financial advisor or other ------- intermediary has acted on behalf of such Purchaser in connection with the transactions contemplated by this Agreement or the Other Agreements. (f) Investment Company Act. No Purchaser is an "investment company" ---------------------- within the meaning of the United States Investment Company Act of 1940, as amended. (g) Requisite Power and Authority. Each Purchaser has all necessary ----------------------------- power and authority to execute and deliver this Agreement and the Other Agreements to which it is a party and to carry out their provisions. This Agreement has been duly executed and delivered -16- by each Purchaser, and each of the Other Agreements when executed and delivered by each Purchaser who is a party thereto, will constitute the legal, valid and binding obligations of such Purchaser, enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency, or other similar laws affecting the enforceability of creditors rights generally and court decisions with respect thereto, and the discretion of courts in granting equitable remedies. (h) No Conflict. The execution and delivery by each Purchaser of ----------- this Agreement and the consummation of the transactions contemplated hereby by each Purchaser will not result in any violation of or default under, any provision of the organizational documents of such Purchaser, any contract to which such Purchaser is a party or any applicable law, rule or regulation, which violation or default could reasonably be expected to (i) affect the validity of this Agreement or any agreement entered into pursuant hereto, (ii) affect in any material respect any action taken or to be taken by such Purchaser pursuant to this Agreement or any agreement entered into pursuant hereto or (iii) have a material adverse effect on the properties, assets, business or operations of such Purchaser. 6. Covenants. --------- (a) Pre-Closing Actions. As promptly as practicable, each of the ------------------- parties to this Agreement will (i) use commercially reasonable efforts to take all actions required of such party to do all other things reasonably necessary, proper or advisable to consummate the transactions contemplated hereby by the date of the Closing, (ii) file or supply, or cause to be filed or supplied, all applications, notifications and information required to be filed or supplied by such party pursuant to Applicable Law in connection with this Agreement, the issuance of the shares of Series D Preferred Stock pursuant hereto and the consummation of the other transactions contemplated hereby and by the Other Agreements; (iii) use all reasonable efforts to obtain, or cause to be obtained, all Consents (including all Governmental Approvals and any Consents required under any contract) necessary to be obtained by such party in order to consummate the transactions contemplated pursuant to this Agreement and the Other Agreements; and (iv) coordinate and cooperate with the other parties in exchanging such information and supplying such assistance as may be reasonably requested by the other parties in connection with any filings and other actions to be made or taken in order to consummate the transactions contemplated pursuant to this Agreement and by the Other Agreements. (b) Covenants Pending Closing. Pending the Closing, neither the ------------------------- Company nor any Subsidiary will, without the Purchasers' prior written consent, take any action which would result in any of the representations or warranties made by the Company in this Agreement not being true in any material respect at and as of the time immediately after such action, or in any of the covenants contained in this Agreement becoming incapable of performance. The Company will promptly notify the Purchasers of any action or event of which it becomes aware which has the effect of making incorrect any of such representations or warranties in any material respect or which has the effect of rendering any of such covenants incapable of performance. The giving of such notice shall not relieve the Company of any liability or the failure of any condition to the obligations of the Purchasers hereunder. -17- (c) Stockholder Approval; Information Statement. ------------------------------------------- (i) As promptly as possible after the execution and delivery of this Agreement, the Company shall prepare and file with the SEC, and use its reasonable best efforts to have cleared by the SEC and will thereafter mail to its stockholders as promptly as practicable an information statement meeting the requirements of Regulation 14C promulgated under the Securities Exchange Act of 1934, as amended (the "Information Statement") shall otherwise comply with ---------------------- Applicable Law in connection with obtaining the approval of the Company's stockholders in connection with the transactions contemplated hereby. The Company will provide the Purchasers with a copy of the preliminary Information Statement and all modifications thereto prior to filing or delivery to the SEC and will consult with the Purchasers in connection therewith. The Company will notify the Purchasers promptly of any receipt of any comments from the SEC or its staff and of any request by the SEC or its staff for amendments or supplements to the Information Statement or for additional information and will supply the Purchasers with copies of all correspondence between the Company or any of its representatives, on the one hand, and the SEC or its staff, on the other hand, with respect to the Information Statement. If at any time after the mailing of the Information Statement to the Company's stockholders there shall occur any event that should be set forth in an amendment or supplement to the Information Statement, the Company will promptly prepare and mail to its stockholders such an amendment or supplement. The Company will not mail any Information Statement, or any amendment or supplement thereto, to which the Purchasers reasonably object. Except with respect to information provided in writing by UBS, LSC or ITI, the Company covenants that the Information Statement, including any amendment or supplement thereto shall not contain any untrue statement of a material fact or omission of a material fact required to be stated therein or necessary to make the statements therein not misleading. (ii) UBS, LSC and ITI, separately and not jointly, covenant that any information regarding themselves furnished by each of them in writing to the Company, specifically for inclusion in the Information Statement (including any amendment or supplement thereto) will not contain any untrue statement of a material fact or omission of a material fact required to be stated in the Proxy Statement or any amendment or supplement thereto necessary to make the statements therein not misleading. (d) No Solicitation. Except as otherwise expressly authorized in --------------- this Agreement, from the date hereof to the Closing, the Company and its Subsidiaries shall (and shall cause their respective employees, directors, agent and Affiliates to) immediately suspend any existing negotiations or discussions relating to any sale or other transfer of actual or beneficial ownership of the Company, any shares of capital stock of the Company or any Subsidiary, the business or any of the Company's or any Subsidiary's assets (other than in the ordinary course of business) (collectively, a "Transaction"), and the Company ------------ and its Subsidiaries shall not, and shall cause their respective employees, directors, agents and Affiliates to not, (a) solicit any proposals or offers relating to a Transaction, or (b) negotiate or discuss with any third party concerning any proposal or offer for a Transaction. (e) Books and Records. The Company shall, and shall cause each ----------------- Subsidiary to, maintain books and records accurately disclosing all payments made. -18- (f) Post-Closing Covenants. Until the consummation of a ---------------------- Qualified Public Offering, the Company will deliver to each holder of at least 833,333 shares of Common Stock on an as-converted basis: (i) as soon as available, but in any event within ninety (90) days after the end of each fiscal year of the Company, a copy of the audited consolidated balance sheet of the Company and its Subsidiaries as at the end of such fiscal year and the related audited statements of consolidated income, stockholders equity and changes in financial position of the Company and its Subsidiaries for such fiscal year, setting forth in each case (after the first full fiscal year of the Company) in comparative form the figures for the previous year which shall be prepared in accordance with GAAP applied consistently throughout the periods reflected therein and reported on without any qualification as to the scope of the audit by independent certified public accountants of nationally recognized standing; (ii) as soon as available but in any event within thirty (30) days after the end of each calendar month of the Company such monthly reports as are presented to management of the Company or any of its Subsidiaries. (iii) No later than thirty (30) days prior to the start of each fiscal year, an annual business plan setting forth the anticipated strategic business activities and goals of the Company and its Subsidiaries, including an expected annual budget and operating plan (containing projections of operating results) for the Company and its Subsidiaries. (iv) As soon as available, but in any event within forty-five (45) days after the end of each semi-annual fiscal period of the Company, an update to the monthly projections contained in the annual budget, operating plan and business plan furnished by the Company to the Purchasers pursuant to subsection (iii) above; (v) promptly upon receipt thereof, copies of all final reports submitted to the Company or any of its Subsidiaries by independent certified public accountants in connection with each annual, interim or special audit of the books of the Company or of any of its Subsidiaries made by such accountants, including, without limitation, any final comment letter submitted by such accountants to management in connection with their annual audit; (vi) promptly upon their becoming available, copies of all financial statements, reports, notices and proxy statements sent or made available generally by the Company to all of its security holders in their capacity as such or by any Subsidiary of the Company to its security holders, other than the Company, and of all regular and periodic reports and all final registration statements and final prospectuses, if any, filed by the Company or any of its Subsidiaries with any securities exchange or with the SEC or any Governmental Authority succeeding to any of its functions; (vii) as soon as available, but in any event within thirty (30) days after the end of each month and within ten (10) days prior to each regularly scheduled meeting of the Board of Directors of the Company, a narrative report prepared by the President of the Company detailing the activities, business developments, operating results and marketing efforts of the -19- Company and its Subsidiaries since the date of the previous such report delivered by the Company pursuant to this subsection (vii); and (viii) such other information reasonably requested by such Purchaser. (g) Inspection Rights. Until the consummation of a Qualified ----------------- Public Offering, each holder of at least 833,333 shares of common stock on an as-converted basis shall have the right, upon reasonable notice, to visit and inspect any of the properties of the Company or any of its Subsidiaries, and to discuss the affairs, finances and accounts of the Company or any of its Subsidiaries with its directors, officers and employees, all at such reasonable times and as often as may be reasonably requested; provided, however, that the -------- ------- Company shall not be obligated to provide access to any information which it reasonably considers to be a trade secret or similar confidential information unless the recipient of such information executes a nondisclosure agreement in a form reasonably acceptable to the Company. (h) Listing Application. As soon as possible as of the date ------------------- hereof the Company shall file with Nasdaq a listing application with respect to the Conversion Shares and use its reasonable best efforts to cause such application to become effective. 7. Conditions to Obligations of the Purchasers. The obligation of each of ------------------------------------------- the Purchasers to purchase and pay for the Series D Preferred Stock which it has agreed to purchase at the Closing and the other obligations of each of the Purchasers under this Agreement are subject to the fulfillment at or prior to the Closing of the following conditions, any of which may be waived in writing in whole or in part by such Purchaser: (a) Representations and Warranties. On the date of the Closing ------------------------------ each of the representations and warranties of the Company set forth in this Agreement that is qualified as to materiality and each of the representations and warranties set forth in Section 4(c) shall be true and correct in all respects and each such representation and warranty that is not so qualified shall be true and correct in all material respects in each case on the date hereof and at and as of the date of the Closing with the same effect as though such representations and warranties had been made at and as of the date of the Closing. (b) Performance. The Company and each of its Subsidiaries ----------- shall have performed and complied in all material respects with all agreements and conditions contained herein required to be performed or complied with by it prior to or at the Closing. (c) Absence of Litigation. (i) The consummation of the --------------------- transactions contemplated hereby shall not have been restrained, enjoined or otherwise prohibited by any Applicable Law, including any order, injunction, decree or judgment of any court or other Governmental Authority; (ii) no court or other Governmental Authority shall have determined that any Applicable Law makes illegal the consummation of the transactions contemplated hereby and no Action with respect to the application of any such Applicable Law to such effect shall be pending or threatened; and (iii) no Action shall be pending or shall have been threatened which seeks to impose liability upon any of the Purchasers by reason of the consummation of the transactions contemplated by this Agreement. -20- (d) Opinion of Counsel to the Company and Subsidiaries. The -------------------------------------------------- Purchasers shall each have received the written opinion of counsel for the Company, in form and substance satisfactory to the Purchasers dated and delivered as of the date of the Closing, substantially identical in form and substance to Exhibit D hereto. --------- (e) Consents. The Company shall have obtained any and all -------- Consents and Governmental Approvals set forth in the Schedule of Exceptions, and shall have made any and all filings and declarations necessary or appropriate (A) for the consummation of the transactions contemplated by this Agreement and the Other Agreements, (B) pursuant to Applicable Law, and (C) pursuant to Contracts applicable to the Company in connection with the transactions contemplated by this Agreement and the Other Agreements. (f) Assignment of Intellectual Property. All the Intellectual ----------------------------------- Property set forth in the Schedule of Exceptions shall have been assigned or licensed, as applicable, to the Company pursuant to instruments in form and substance satisfactory to the Purchasers, and the written Consent of any third party necessary for any such assignment or license shall have been obtained. (g) Contemporaneous Transactions. Prior to or ---------------------------- contemporaneously with the Closing: (i) Each of the Stockholders Agreement, Registration Rights Agreement, and the Tutopia Put Agreement shall have been executed and delivered by each party named on the signature pages thereof. (ii) (A) The Company shall have issued to each Purchaser, and each of the Purchasers shall have acquired, the shares of Series D Preferred Stock to be acquired at the Closing by such Purchaser under this Agreement, and (B) the Company shall have delivered to each Purchaser certificates representing such shares of Series D Preferred Stock acquired hereunder, each registered in the name of such Purchaser or the name of its nominee(s). (iii) The Amendment to the Certificate shall have been duly filed with the Secretary of State of Delaware. The Amendment to the Certificate shall be in full force and effect as of the Closing and shall not have been amended or modified. (iv) The Series D Certificate shall have been duly filed with the Secretary of State of the State of Delaware. The Series D Certificate shall be in full force and effect as of the Closing and shall not have been amended or modified. (v) [deleted] (vi) [deleted] (vii) The Company shall have obtained the approval of its stockholders in accordance with Applicable Law and Nasdaq rules and regulations necessary to consummate the transactions contemplated hereby. -21- (viii) The composition of the Board shall be in compliance with the terms of the Stockholders Agreement. (ix) A Nasdaq listing application with respect to the Conversion Shares shall have been filed and become effective. (x) The requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or any foreign anti-competition, antitrust or pre-merger notification rules and regulations, if applicable, shall have been complied with. (xi) The Company shall have received waivers from its senior management, optionholders and the other parties to the Material Instruments, in form and substance satisfactory to the Purchasers, of the change-in-control provisions contained in their respective employment agreements, option agreements and/or Material Instruments with respect to the transactions contemplated hereby. (h) Closing Papers. The Company shall have delivered to each -------------- of the Purchasers all of the following: (i) a certificate signed by the President and Chief Executive Officer of the Company, dated as of the date of the Closing, stating that (A) the person signing such certificate has made or has caused to be made such investigations as are necessary to permit him to certify the accuracy of the information set forth therein, (B) such certificate does not misstate any material fact and does not omit to state any fact necessary to make the certificate not misleading, and (C) the other conditions specified in this Section 7 have been satisfied; - --------- (ii) copies (certified by the President, Secretary or Assistant Secretary of the Company or, if required under Applicable Law, the applicable Governmental Authority) of the resolutions duly adopted by the Board of Directors and Stockholders of the Company authorizing the adoption of the Series D Certificate and authorizing the execution, delivery and performance of this Agreement, the Other Agreements and all other agreements referred to in this Agreement as being executed at or prior to the Closing; (iii) copies (certified by the Secretary or Assistant Secretary of the Company) of the Certificate of Incorporation and Bylaws (or equivalent documents) of the Company and, each of the Subsidiaries listed on Schedule -------- 7(h)(iii) hereto, in each case as amended through the date of the Closing; and - --------- (iv) such other documents relating to the transactions contemplated by this Agreement as any Purchaser may reasonably request. (i) Absence of Material Adverse Effect. No event or series of ---------------------------------- events shall have occurred which has had or could reasonably be expected to have a Material Adverse Effect. (j) Proceedings. All corporate and other proceedings of the ----------- Company taken or to be taken in connection with the transactions contemplated hereby and by the Other -22- Agreements to be consummated at the Closing and all documents incident thereto shall be reasonably satisfactory in form and substance to each Purchaser. (k) Legends. Each stock certificate issued by the Company to ------- stockholders party to the Stockholder Agreement or Registration Rights Agreement on or prior to the date of the Closing shall have been stamped or otherwise imprinted with a legend in substantially the form provided in Section 5.12 of the Stockholders Agreement and Section 2 of the Registration Rights Agreement. 8. Conditions to the Obligations of the Company. The obligations of the -------------------------------------------- Company with respect to each Purchaser under this Agreement are subject to the fulfillment on or prior to the date of the Closing of the following conditions, any of which may be waived in writing, in whole or in part, by the Company: (a) Representations and Warranties. On the date of the ------------------------------ Closing, each of the representations and warranties of such Purchaser set forth in this Agreement shall be true and correct in all respects on the date hereof and at and as of the date of the Closing with the same effect as though such representations and warranties had been made at and as of the date of the Closing. (b) Performance. Such Purchaser shall have performed and ----------- complied in all material respects with all agreements and conditions contained herein required to be performed by or complied with by it prior to the Closing. (c) Absence of Litigation. (i) The consummation of the --------------------- transactions contemplated hereby shall not have been restrained, enjoined or otherwise prohibited by any Applicable Law, including any order, injunction, decree or judgment of any court or other Governmental Authority; (ii) no court or other Governmental Authority shall have determined that any Applicable Law makes illegal the consummation of the transactions contemplated hereby and no Action with respect to the application of any such Applicable Law to such effect shall be pending or threatened; and (iii) no Action shall be pending or shall have been threatened which seeks to impose liability upon any Company by reason of the consummation of the transactions contemplated by this Agreement. (d) The requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or any foreign anti-competition, antitrust or pre-merger notification rules and regulations, if applicable, shall have been complied with. 9. Survival. The representations and warranties of the Company set forth -------- in Sections 4(a), 4(b), 4(c), 4(d), 4(e), 4(h), 4(j), 4(o), 4(q), 4(t), 4(u) and 4(y) shall survive the Closing indefinitely. All other representations and warranties of the Company contained herein shall expire at the second anniversary of the Closing. The representations and warranties of the Purchasers contained herein shall survive the Closing for a period of two years. All covenants and agreements contained herein shall survive the Closing indefinitely. 10. Termination. This Agreement may be terminated: ----------- (a) by mutual written consent of all of the parties hereto; or -23- (b) by any of the Purchasers (with respect to such Purchaser only) by written notice to the Company if any of the conditions to the Closing set forth in Section 7 shall not have been fulfilled by 5:00 p.m. New York time on the date which is 60 days from the date hereof, unless such failure shall be due to the failure of such Purchaser to perform or comply with any of the covenants, agreements or conditions hereof to be performed or complied with by it prior to the Closing. 11. Effect of Termination. If this Agreement is terminated pursuant to the --------------------- provisions of Section 10, then this Agreement shall become void and have no effect, without any liability to any person in respect hereof or of the transactions contemplated hereby on the part of any party hereto, or any of its directors, officers, employees, consultants, agents, representatives, advisers, stockholders or Affiliates except for any liability resulting from such party's breach or default under this Agreement. 12. Miscellaneous Provisions. ------------------------ (a) Acknowledgment. Each Purchaser acknowledges and agrees -------------- that it has, independently and without reliance upon any other Purchaser, made its own evaluation and decision to acquire the Series D Preferred Stock to be acquired by it pursuant to this Agreement. Each Purchaser further acknowledges that no other Purchaser has acted as an agent for such Purchaser or the Company in connection with the acquisition of the shares of Series D Preferred Stock hereunder and will not be acting as an agent for such Purchaser in connection with monitoring its investment hereunder. (b) Notices. All notices, requests, demands, approvals, ------- consents, waivers or other communications required or permitted to be given hereunder (each, a Notice") shall be in writing and shall be (a) personally ------ delivered, (b) transmitted by telecopy facsimile, provided that the original copy thereof also is sent by pre-paid, first class, registered or certified mail (return receipt requested) or by next-day or overnight mail (to any United States address), or by an internationally recognized express delivery service (to any foreign address), (c) sent by first class, registered or certified mail (return receipt requested) or by next-day or overnight mail (to any United States address), postage and charges prepaid, or (d) delivered by an internationally recognized express delivery service (to any foreign address), postage and charges prepaid: (i) if to any Purchaser, at the address and numbers set forth at the end of this Agreement, marked for attention as therein indicated; (ii) if to the Company, to: IFX Corporation 15050 N.W. 79 Court Suite 200 Miami Lakes, FL 33016 Attention: Chief Executive Officer Telephone Number: 305-512-1102 Telecopy Number: 305-574-7867 -24- With a copy to: Neal, Gerber & Eisenberg Two North LaSalle Street Chicago, Illinois 60602 Attention: Scott J. Bakal, Esq. Telephone Number: 312-269-8000 Telecopy Number: 312-269-1747 or, in each case, at such other address and numbers as may have been furnished in a Notice by such Person to the other parties. Any Notice shall be deemed effective or given upon receipt (or refusal of receipt). (c) Severability. Should any Section or any part of a Section ------------ within this Agreement be rendered void, invalid or unenforceable by any court of law for any reason, such invalidity or unenforceability shall not void or render invalid or unenforceable any other Section or part of a Section in this Agreement. (d) Governing Law. This Agreement shall be governed by and ------------- construed and enforced in accordance with the internal laws of the State of New York without regard to the principles of conflicts of law thereof. Each party hereto hereby irrevocably submits to the nonexclusive jurisdiction of the courts of the State of New York and of the United States of America sitting in the City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that the venue thereof may not be appropriate, that such suit, action or proceeding is improper or that this Agreement or any of the documents referred to in this Agreement may not be enforced in or by said courts, and each party hereto irrevocably agrees that all claims with respect to such suit, action or proceeding may be heard and determined in such a New York state or federal court. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party in the manner provided in Section 12(b) and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY. (e) Publicity. Except as required by Applicable Law or the --------- requirements of any securities exchange or market (in which case the nature of the announcement shall be described to the other parties (and the other parties shall be allowed reasonable time to comment) prior to dissemination to the public), no party shall make any public announcement in respect of this Agreement or the transactions contemplated hereby without the prior written consent of the other parties. -25- (f) Captions and Section Headings. Captions or section headings ----------------------------- contained in this Agreement are inserted as a matter of convenience and for reference purposes only, and in no way define, limit, extend or describe the scope of this Agreement or the intent of any provision hereof. (g) Amendments and Waivers. Neither this Agreement nor any term ---------------------- hereof, may be changed, waived, discharged or terminated orally or in writing, except that any term of this Agreement may be amended and the observance of any such term may be waived (either generally or in a particular instance and either retroactively or prospectively) with (but only with) the prior written consent of the Company and all the Purchasers; provided, however, that no such amendment -------- ------- or waiver shall extend to or affect any obligation not expressly waived or impair any right consequent therein. (h) Successors and Assigns. All rights, covenants and agreements of ---------------------- the parties contained in this Agreement shall, except as otherwise provided herein, be binding upon and inure to the benefit of their respective successors and assigns. This Agreement may not be assigned (by operation of law, contract or otherwise) by any party hereto; provided, however, that each Purchaser may -------- ------- assign or otherwise transfer its rights and obligations hereunder to: (i) any Person who acquires shares of Series D Preferred Stock from any Purchaser or any successor or assign of any Purchaser; or (ii) any successor-in-interest to substantially all of such Purchaser's or successor's or assign's business (whether by stock sale, asset sale or otherwise). (i) Expenses. The Company agrees to pay the reasonable fees and -------- reimburse the reasonable out-of-pocket expenses, including legal and accounting fees and expenses, of UBS, upon receipt of the bill therefor, in connection with the transactions contemplated by this Agreement and the Other Agreements. The Company agrees to reimburse reasonable travel and lodging expenses of the Purchasers in connection with attendance of the Purchasers' representatives at meetings of the Board of Directors of the Company and other visits to the Company associated with exercising or fulfilling any of its rights or obligations under this Agreement or the Other Agreements. (j) Entire Agreement. This Agreement (including the attached Exhibits ---------------- and Schedules) contains the entire agreement and understanding of the parties and there are no further or other agreements or understandings, written or oral, in effect between the parties relating to the subject matter hereof. (k) Exhibits. The Exhibits and Schedules attached to this Agreement -------- hereby are incorporated into and made a part of this Agreement. (l) Further Assurances. Each party shall cooperate and take such ------------------ actions as may be reasonably requested by another party in order to carry out the provisions and purposes of this Agreement and the Other Agreements and the transactions contemplated hereby and thereby. (m) Condition to Effectiveness. This Agreement shall become effective -------------------------- only upon its execution and delivery by the Company and each Purchaser. -26- (n) Counterparts. This Agreement may be executed (including by ------------ facsimile transmission) with counterpart signature pages or in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. (o) Attorneys' Fees. If any party initiates any legal action arising --------------- out of or in connection with this Agreement or any of the Other Agreements, the prevailing party in such legal action shall be entitled to recover from the other party all reasonable attorneys' fees, expert witness fees and expenses incurred by the prevailing party in connection therewith. (p) Disclosure Generally. The Schedule of Exceptions shall be -------------------- arranged in sections corresponding to the Sections contained in this Agreement, and the disclosures in any section of the Schedule of Exceptions shall qualify only (a) the corresponding section of this Agreement, and (b) other sections of Section 4 to the extent it is clear (notwithstanding the absence of a specific cross-reference) from a reading of the exception that such exception is applicable to such other sections. The inclusion of any information in the Schedules shall not be deemed to be an admission or acknowledgment, in and of itself, that such information is material or has or would have a Material Adverse Effect, or is outside the ordinary course of business. (q) Covenant of Stockholders. At the Closing, (i) each of Shalom, ------------------------ Eidelstein and Casty will execute and deliver the Stockholders Agreement, and (ii) and Casty will execute and deliver the Registration Rights Agreement. Each of such parties shall cause their Affiliates owning shares of Common Stock or Preferred Stock to also execute such agreements. Each of such parties also will enter into any necessary documents to consent to the transactions contemplated hereby. (r) Consent of UBS Capital. Pursuant to Section 4(b) of the Series A ---------------------- Certificate, Section 4(b) of the Series B Certificate, and Section 4(c) of the Series C Certificate, UBS Capital, as holder of one hundred percent (100%) of the outstanding Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, hereby (i) consents to the issuance of the Series D Preferred Stock, (ii) waives any anti-dilution adjustments arising from the issuance of the Series D Preferred Stock pursuant to the Agreement or the issuance of any Conversion Shares upon conversion of Series D Preferred Stock in accordance with the Series D Certificate and (iii) consents to the filing of the Amended Certificate of Incorporation. 13. Definitions. ----------- (a) Definitions. For the purposes of this Agreement, the following ----------- terms shall have the meanings specified below: "Action" has the meaning set forth in Section 4(g)(i). ------ --------------- "Additional Shares" has the meaning set forth in Section 2(b). ----------------- ------------ "Affiliate" of a specified Person means (i) any Person that directly --------- or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person, or (ii) in the case of a natural Person, such Person's spouse, parent or -27- lineal descendant (whether by blood or adoption and including stepchildren). "Control" (including the terms "controlled by" and "under common control with") ------- ------------- ------------------------- means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of a Person, whether through the ownership of voting securities, by contract or credit arrangement, as trustee or executor, or otherwise. "Agreement" shall mean this Agreement (including the Schedules and --------- Exhibits hereto), as amended, supplemented or modified from time to time in accordance with the provisions hereof. "Amendment to the Certificate" means the Amendment to the Certificate ---------------------------- of Incorporation of the Company in form and substance identical to Exhibit G --------- attached hereto. "Applicable Law" shall mean, with respect to any Person, any and all -------------- provisions of any constitution, treaty, statute, law, regulation, ordinance, code, rule, judgment, rule of common law, order, decree, award, injunction, Governmental Approval, concession, grant, franchise, license, agreement, directive, guideline, policy, requirement, or other governmental restriction or any similar form of decision of, or determination by, or any interpretation or administration of any of the foregoing by, any Governmental Authority, whether in effect as of the date hereof or thereafter and in each case as amended, applicable to such Person or its subsidiaries or their respective assets. "Benefit Plan" shall mean any plan, agreement or arrangement, formal ------------ or informal, whether oral or written, whereby the Company or any Subsidiary provides any benefit to any present or former officer, director or employee, or dependent or beneficiary thereof, including any profit sharing, deferred compensation, stock option performance stock, pension, death benefit or other fringe benefit, employee stock purchase, bonus, severance, retirement, health or insurance plan. "Board" shall mean the Board of Directors of the Company. ----- "Business" shall mean the business of the Company and each of its --------- Subsidiaries. "Capital Stock Agreements" shall have the meaning set forth in Section ------------------------ 4(c)(ii). "Casty" has the meaning set forth in the first paragraph hereof. ----- "Closing" has the meaning set forth in Section 2. ------- --------- "Common Stock" has the meaning set in Section 4(c)(i). ------------ "Company" has the meaning set forth in the first paragraph hereof. ------- "Consent" shall mean any consent, approval, authorization, waiver, ------- permit, grant, franchise, concession, agreement, license, exemption or order of, registration, certificate, declaration or filing with, or report or notice to, any Person, including any Governmental Authority. -28- "Contracts" has the meaning set forth in Section 4(m)(i). --------- --------------- "Contracts Schedule" has the meaning set forth in Section 4(m)(i). ------------------ "Conversion Shares" has the meaning set forth in Section 4(c)(iii). ----------------- "Convertible Securities" shall mean (i) any rights, options or ---------------------- warrants issued by the Company or any of its Subsidiaries to acquire Common Stock or any capital stock of the Company or any Subsidiary, including the shares of Series D Preferred Stock to be issued hereunder, (ii) any notes, debentures, shares of preferred stock or other securities, options, warrants or rights issued by the Company or any of its Subsidiaries, which are convertible or exercisable into, or exchangeable for, Common Stock or any capital stock of the Company or any Subsidiary and (iii) any contractual or other obligation (whether fixed, contingent or otherwise) to issue shares of capital stock or other securities of the Company or any Subsidiary in connection with the acquisition of any securities, business or enterprise (including any Internet Service Provider). "$" or "dollars" shall mean lawful money of the United States of - ------- America. "Eidelstein" has the meaning set forth in the first paragraph hereof. ---------- "Encumbrance" shall mean any lien, encumbrance, hypothecation, right ----------- of others, proxy, voting trust or similar arrangement, pledge, security interest, collateral security agreement, limitations on voting rights, limitations on rights of ownership filed with any Governmental Authority, claim, charge, equities, mortgage, pledge, objection, title defect, title retention agreement, option, restrictive covenant, restriction on transfer, right of first refusal, right of first offer, statutory or contractual preemptive right or any comparable interest or right created by or arising under Applicable Law, of any nature whatsoever. "Environmental Law" means any United States federal, state, local or ----------------- foreign law, statute, rule or regulation or the common law relating to the protection of human health or the environment, including, without limitation, CERCLA (as defined below), the United States federal Resource Conservation and Recovery Act of 1976 as amended (the "Recovery Act"), any statute, regulation or ------------ order pertaining to (i) treatment, storage, disposal, generation and transportation of industrial, toxic or hazardous materials or substances or solid or hazardous waste; (ii) air, water and noise pollution; (iii) groundwater and soil contamination; (iv) the release or threatened release into the environment of industrial, toxic or hazardous materials or substances, or solid or hazardous waste, including, without limitation, emissions, discharges, injections, spills, escapes or dumping of pollutants, contaminants, or chemicals; (v) the protection of wild life, marine life and wetlands, including, without limitation, all endangered and threatened species; (vi) storage tanks, vessels, abandoned or discarded barrels, containers and other closed receptacles; (vii) health and safety of employees and other persons; and (viii) manufacture, processing, use, distribution, treatment, storage, disposal, transportation or handling of pollutants, contaminants, toxic or hazardous materials or substances or oil or petroleum products or solid or hazardous waste. As used herein, the terms "release" and "environment" has the meaning set forth in the United States federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended ("CERCLA"). ------ -29- "Fully Diluted Basis" shall mean, when used with respect to ------------------- outstanding shares of Common Stock, all shares of Common Stock which would be outstanding after giving effect to the transactions contemplated by this Agreement and assuming the exercise, conversion or exchange of all Convertible Securities. "GAAP" shall mean United States generally accepted accounting ---- principles consistently applied. "Governmental Approvals" shall mean any action, order, authorization, ---------------------- consent, approval, license, lease, waiver, franchise, concession, agreement, license, ruling, permit, tariff, rate, certification, exemption of, filing or registration by or with, or report or notice to, any Governmental Authority. "Governmental Authority" shall mean any nation or foreign or domestic ---------------------- government, any state or other political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government (including, without limitation, any government authority, agency, department, board, commission or instrumentality of the United States, any State of the United States or any political subdivision thereof), or any tribunal or arbitrator(s) of competent jurisdiction, or any self-regulatory organization. "include", "includes", "included" and "including" shall be construed ------- -------- -------- --------- as if followed by the phrase "without being limited to". "Intellectual Property" shall mean any and all worldwide, --------------------- international, U.S. and/or foreign, patents, all applications therefor and all reissues, reexaminations, continuations, continuations-in-part, divisions, and patent term extensions thereof, inventions (whether patentable or not), discoveries, improvements, concepts, innovations, industrial models, registered and unregistered copyrights, copyright registrations and applications, author's rights, works of authorship (including any text or artwork of any kind, and software of all types in whatever medium, inclusive of computer programs, source code, object code and executable code, and related documentation), URLs, web sites, web pages and any part thereof, technical information, know-how, trade secrets, drawings, designs, design protocols, specifications for parts and devices, quality assurance and control procedures, design tools, manuals, research data concerning historic and current research and development efforts, including the results of successful and unsuccessful designs, databases and proprietary data, proprietary processes, technology, engineering, discoveries, formulae, algorithms, operational procedures, trade names, trade dress, trademarks, domain names, and service marks, and registrations and applications therefor, the goodwill of the business symbolized or represented by the foregoing, customer lists and other proprietary information and common-law rights. "ITI" means International Technology Investments, LC, a Nevada limited --- liability company. "Material Adverse Effect" shall mean any event, circumstance, ----------------------- occurrence, fact, condition, change or effect that is materially adverse to (i) the Business, operations, results of operations, financial condition, prospects, properties, assets or liabilities of the Company and its -30- Subsidiaries, taken as a whole, or (ii) the ability of the Company to perform fully its obligations hereunder and under the Other Agreements and to consummate the transactions contemplated hereby and thereby. For the purposes of this Agreement, a currency devaluation or foreign exchange restriction or other actions by any Governmental Authority limiting repatriation of capital or any other material change in the governmental or political climate of the countries in which the Company or its Subsidiaries carry out the Business shall be deemed to have a Material Adverse Effect. "Material Instruments" has the meaning set forth in Section 4(e). -------------------- ------------ "Materials of Environmental Concern" means any chemicals, pollutants ---------------------------------- or contaminants, hazardous substances (as such term is defined under CERCLA), solid wastes and hazardous wastes (as such terms are defined under the Recovery Act), toxic materials, oil or petroleum and petroleum products, or any other material subject to regulation under any Environmental Law. "Notice" has the meaning set forth in Section 12(b). ------ ------------- "Other Agreements" has the meaning set forth in Section 4(b)(i). ---------------- --------------- "Per Share Price" has the meaning set forth in Section 2. --------------- --------- "Person" or "person" shall mean any natural person, company, ------ ------ corporation, association, partnership, organization, business, firm, joint venture, trust, unincorporated organization or any other entity or organization, and shall include any Governmental Authority. "Preferred Stock" has the meaning set forth in Section 4(c)(i). --------------- --------------- "Proxy Statement" shall have the meaning set forth in Section 6(c)(i). --------------- --------------- "Qualified Public Offering" shall mean an underwritten public offering ------------------------- of shares of Common Stock for which the Company has obtained a firm commitment from one or more underwriter(s) for at least $60 million of Common Stock and in which the Company receives gross proceeds from the sale of Common Stock to the public of at least $45 million (before deduction of underwriter's discounts and commissions), and which values the equity of the Company at no less than $200 million pre-offering. "Registration Rights Agreement" means the Third Amended and Restated ----------------------------- Registration Rights Agreement to be entered into among the Company and the stockholders of the Company, in form and substance identical to Exhibit F --------- hereto. "Requisite Stockholders" means UBS, Casty, Shalom, ITI and Eidelstein ---------------------- and their respective Affiliates holding voting stock of the Company. "Schedule of Exceptions" has the meaning set forth in the first ---------------------- paragraph of Section 4. --------- "Schedule of Purchasers" has the meaning set forth in the first ---------------------- paragraph hereof. -31- "SEC" shall mean the U.S. Securities and Exchange Commission or any --- successor agency thereto. "SEC Reports" has the meaning set forth in Section 4(w). ----------- ------------ "Securities Act" has the meaning set forth in Section 4(i). -------------- ------------ "Series A Certificate" means the Amended Certificate of Designation, --------------------- Numbers, Powers, Preferences and Relative, Participating, Optional and Other Rights of Series A Preferred Stock in the form filed with the Secretary of State of the State of Delaware. "Series A Preferred Stock" has the meaning set forth in Section ------------------------ 4(c)(i). "Series B Certificate" means the Amended Certificate of Designation, -------------------- Numbers, Powers, Preferences and Relative, Participating, Optional and Other Rights of Series B Preferred Stock in the form filed with the Secretary of State of the State of Delaware. "Series B Preferred Stock" has the meaning set forth in Section ------------------------ 4(c)(i). "Series C Certificate" means the Amended Certificate of Designation, -------------------- Numbers, Powers, Preferences and Relative, Participating, Optional and Other Rights of Series C Preferred Stock in the form filed with the Secretary of State of the State of Delaware. "Series C Preferred Stock" has the meaning set forth in Section ------------------------ 4(c)(i). "Series D Certificate" has the meaning set forth in Section 1(a). -------------------- "Shalom" has the meaning set forth in the first paragraph hereof. ------ "Shares" shall have the meaning set forth in Section 2. ------ --------- "Stock Option Plan" means, collectively, the IFX Corporation Directors ----------------- Stock Option Plan, the 1998 IFX Corporation Stock Option and Incentive Plan and the IFX Corporation 2001 Stock Option Plan. "Stockholders Agreement" means the Fourth Amended and Restated ---------------------- Stockholders Agreement to be entered into among the Company and the stockholders of the Company, in form and substance identical to Exhibit E hereto. --------- "Subsidiary" means any Person of which equity securities possessing a ----------- majority of (i) the ordinary voting power in electing the board of directors, or (ii) the outstanding capital stock or other equity interests, are, at the time as of which such determination is being made, owned by the Company either directly or indirectly through one or more Subsidiaries. "Taxes" shall mean any domestic or foreign taxes, charges, feed, ----- levies or other assessments, including any income, alternative, minimum, accumulated earnings, personal holding company, franchise, capital stock, net worth, capital, profits, windfall profits, gross receipts, value added, sales, use, goods and services, excise, customs duties, transfer, -32- conveyance, mortgage, registration, stamp, documentary, recording, premium, severance, environmental, real property, personal property, ad valorem, intangibles, rent, occupancy, license, occupational, employment, unemployment insurance, social security, disability, worker's compensation, payroll, health care, withholding, estimated or other taxes, charges, fees, levies or other assessments, and including any interest, penalties or additions relating thereto, imposed by any Governmental Authority or other taxing authority. "Transaction" has the meaning set forth in Section 6(d). ------------ ------------ "Tutopia Put Agreement" means the Amended and Restated Put Agreement to be ---------------------- entered into among the Company, UBS and the other parties named therein, in form and substance identical to Exhibit G hereto. --------- "Tutopia Stockholders Agreement" means that certain Amended and Restated ------------------------------- Stockholders Agreement dated August 31, 2000, by and among Tutopia.com, Inc., Latin Guide, Inc., UBS, LSC, LLC and the other holders of capital stock of Tutopia.com, Inc. named therein, as amended. "UBS" shall mean (i) UBS Capital Americas III, L.P., a Jersey, Channel ---- Islands limited partnership, (ii) UBS Capital LLC, a Delaware limited liability company and (iii) any Affiliate of either of the foregoing entities, individually and collectively. (b) Other Definitional Provisions. The words "hereof", "herein", and ----------------------------- ------- ------- "hereunder" and words of similar import shall refer to this Agreement as a whole - ----------- and not to any particular provision of this Agreement. Terms defined in the singular shall have a comparable meaning when used in the plural and vice versa. Whenever a representation or warranty made by a Person herein refers to the knowledge of such Person, such knowledge shall be deemed to consist of the actual knowledge of such Person or the knowledge which would have been present after reasonable due inquiry by such Person. A Person (other than an individual) will be deemed to have "knowledge" of a particular fact or other ---------- matter if any individual who is serving, or who has at any time served, as a director, executive officer, member, partner, executor or trustee of such Person (or a Person acting in any similar capacity) has, or any time had, actual knowledge of such fact or other matter, or should have had knowledge thereof given such individual's office or capacity and given industry standards or given reasonable due inquiry by such individual. [Remainder of Page Intentionally Left Blank] -33- IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written. IFX CORPORATION By: /s/ Joel Eidelstein ----------------------- Name: Joel Eidelstein Title: President Agreed and Accepted only as to Section 12(q) hereof: /s/ Lee S. Casty - ------------------------------------ Lee S. Casty /s/ Michael Shalom - ------------------------------------ Michael Shalom /s/ Joel Eidelstein - ------------------------------------ Joel Eidelstein -34- Purchaser: - --------- The undersigned hereby executes and delivers this Agreement as of the date first above written as one of the Purchasers referred to therein for the purpose of purchasing from the Company the applicable Shares at the Closing. UBS CAPITAL AMERICAS III, L.P. By: UBS Capital Americas III, LLC By: /s/ Mark Lama --------------------------------- Name: Mark Lama Title: Principal By: /s/ Marc Unger ---------------------------------- Name: Marc Unger Title: Chief Financial Officer Address: UBS Capital Americas III, L.P. c/o UBS Capital Americas III, LLC 299 Park Avenue New York, NY 10171 Attention: Charles W. Moore Telephone No.: (212) 821-6330 Telecopy No.: (212) 821-6333 With a copy of Notices to: Kaye Scholer LLP 425 Park Avenue New York, New York 10022 Attention: Nancy Fuchs, Esq. Telephone No.: (212) 836-8565 Telecopy No.: (212) 826-7246 -35- Purchaser: - --------- The undersigned hereby executes and delivers this Agreement as of the date first above written as one of the Purchasers referred to therein for the purpose of purchasing from the Company the applicable Shares at the Closing. UBS CAPITAL LLC By: /s/ Mark Lama ------------------------------ Name: Mark Lama Title: Attorney-in-Fact By: /s/ Marc Unger ------------------------------- Name: Marc Unger Title: Attorney-in-Fact Address: UBS Capital LLC 299 Park Avenue New York, NY 10171 Attention: Charles W. Moore Telephone No. (212) 821-6330 Telecopy No.: (212) 821-6333 With a copy of Notices to: Kaye Scholer LLP 425 Park Avenue New York, New York 10022 Attention: Nancy Fuchs, Esq. Telephone No. (212) 836-8565 Telecopy No.: (212) 826-7246 -36- Purchaser: - --------- The undersigned hereby executes and delivers this Agreement as of the date first above written as one of the Purchasers referred to therein for the purpose of purchasing from the Company the applicable Shares at the Closing. INTERNATIONAL TECHNOLOGY INVESTMENTS, LC By: /s/ Michael Shalom ------------------------------- Michael Shalom, Manager Address: ___________________ ___________________ ___________________ Attention:_________ Telephone No.: ___________________ Telecopy No.: ___________________ With a copy of Notices to: Adorno & Zeder ___________________ ___________________ Attention:_________ Telephone No.: ___________________ Telecopy No.: ___________________ -37- Purchaser: - --------- The undersigned hereby executes and delivers this Agreement as of the date first above written as one of the Purchasers referred to therein for the purpose of purchasing from the Company the applicable Shares at the Closing. By: /s/ Jack Bursztyn ---------------------------- Name: Jack Bursztyn Address: ______________________ ______________________ ______________________ ______________________ Telephone No.: ______________________ Telecopy No.: ______________________ With a copy -38- EXHIBIT A SCHEDULE OF PURCHASERS IFX Corporation Series D Preferred Stock
- ------------------------------------------------------------------------------------------------------------------------------------ Number of Shares of Cash Portion of Number of Shares to be ------------------- --------------- ---------------------- Series D Preferred Purchase Price be Assigned as Part ------------------ ----------------- ------------------- Purchaser Stock to be Purchased of Purchase Price --------- --------------------- ----------------- - ------------------------------------------------------------------------------------------------------------------------------------ UBS Capital Americas III, L.P. 4,420,139 $3,166,666.80 712,500 shares of Series C Preferred Stock - ------------------------------------------------------------------------------------------------------------------------------------ UBS Capital LLC 232,639 $ 166,666.80 37,500 shares of Series C Preferred Stock - ------------------------------------------------------------------------------------------------------------------------------------ International 843,808 $ 812,499.60 333,450 shares of Technology Common Stock Investment LC - ------------------------------------------------------------------------------------------------------------------------------------ LSC, LLC 843,808 $ 812,499.60 333,450 shares of Common Stock - ------------------------------------------------------------------------------------------------------------------------------------ Jack Bursztyn 43,272 $ 41,666.40 17,100 shares of Common Stock - ------------------------------------------------------------------------------------------------------------------------------------
A-1 EXHIBIT B FORM OF CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF SERIES D PREFERRED STOCK OF IFX CORPORATION See attachment hereto. B-1 EXHIBIT C SCHEDULE OF EXCEPTIONS See attachment hereto. C-1 EXHIBIT D FORM OF OPINION OF COMPANY COUNSEL See attachment hereto. D-1 EXHIBIT E FORM OF FOURTH AMENDED AND RESTATED STOCKHOLDERS AGREEMENT See attachment hereto. E-1 EXHIBIT F FORM OF THIRD AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT See attachment hereto. F-1 EXHIBIT G FORM OF AMENDED AND RESTATED TUTOPIA PUT AGREEMENT See attachment hereto. G-1 EXHIBIT H FORM OF AMENDMENT OF CERTIFICATE OF INCORPORATION H-1
EXHIBITS EXHIBIT A SCHEDULE OF PURCHASERS............................................. A-1 EXHIBIT B FORM OF CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF SERIES D PREFERRED STOCK OF IFX CORPORATION........................ B-1 EXHIBIT C SCHEDULE OF EXCEPTIONS............................................. C-1 EXHIBIT D FORM OF OPINION OF COMPANY COUNSEL................................. D-1 EXHIBIT E FORM OF THIRD AMENDED AND RESTATED STOCKHOLDERS AGREEMENT.......... E-1 EXHIBIT F FORM OF SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT.. F-1 EXHIBIT G FORM OF TUTOPIA PUT AGREEMENT...................................... G-1 EXHIBIT H FORM OF AMENDMENT TO CERTIFICATE OF INCORPORATION.................. H-1
-ii- TABLE OF CONTENTS
Page 1. Authorization of the Securities; Nature of Agreement................. 1 (a) Series D Preferred Stock............................................. 1 (b) Nature of Agreement.................................................. 1 2. Sale and Purchase of Series D Preferred Stock........................ 2 3. Purchase Price....................................................... 2 4. Representations and Warranties of the Company........................ 2 (a) Organization and Good Standing....................................... 2 (b) Authorization........................................................ 3 (c) Capital Stock........................................................ 3 (d) Subsidiaries......................................................... 5 (e) Compliance With Material Instruments................................. 5 (f) Good Title........................................................... 6 (g) Litigation........................................................... 6 (h) Tax Matters.......................................................... 6 (i) Registration Rights.................................................. 6 (j) Offering............................................................. 7 (k) Insurance............................................................ 7 (l) Certain Transactions................................................. 7 (m) Contracts............................................................ 7 (n) Governmental Consents................................................ 10 (o) Officers, Employees and Labor........................................ 10 (p) Compliance with Laws................................................. 11 (q) Intellectual Property................................................ 11 (r) Environmental Matters................................................ 12 (s) Certain Practices.................................................... 12 (t) Brokers.............................................................. 13 (u) No Undisclosed Liabilities........................................... 13 (v) Disclosure........................................................... 13 (w) SEC Filings.......................................................... 13 (x) Financial Statements................................................. 14 (y) Availability and Transfer of Foreign Currency........................ 14
-i- TABLE OF CONTENTS (continued)
Page (z) Absence of Changes................................................... 14 (aa) Real Property Holding Company........................................ 15 (bb) Investment Company Act............................................... 15 (cc) Subchapter S......................................................... 16 (dd) State Takeover Statutes.............................................. 16 5. Representations and Warranties of the Purchasers..................... 16 (a) Investment Intent.................................................... 16 (b) Sophistication....................................................... 16 (c) Illiquidity.......................................................... 16 (d) Accredited Investor.................................................. 16 (e) Brokers.............................................................. 16 (g) Requisite Power and Authority........................................ 16 (h) No Conflict.......................................................... 17 6. Covenants............................................................ 17 (a) Pre-Closing Actions.................................................. 17 (b) Covenants Pending Closing............................................ 17 (c) Stockholder Approval; Information Statement.......................... 17 (d) No Solicitation...................................................... 18 (e) Books and Records.................................................... 18 (f) Post-Closing Covenants............................................... 19 (g) Inspection Rights.................................................... 20 (h) Listing Application.................................................. 20 7. Conditions to Obligations of the Purchasers.......................... 20 (a) Representations and Warranties....................................... 20 (b) Performance.......................................................... 20 (c) Absence of Litigation................................................ 20 (d) Opinion of Counsel to the Company and Subsidiaries................... 21 (e) Consents............................................................. 21 (f) Assignment of Intellectual Property.................................. 21 (g) Contemporaneous Transactions......................................... 21 (h) Closing Papers....................................................... 22
-ii- TABLE OF CONTENTS (continued)
Page (i) Absence of Material Adverse Effect................................... 22 (j) Proceedings.......................................................... 22 (k) Legends.............................................................. 23 8. Conditions to the Obligations of the Company......................... 23 (a) Representations and Warranties....................................... 23 (b) Performance.......................................................... 23 9. Survival............................................................. 23 10. Termination.......................................................... 23 11. Effect of Termination................................................ 24 12. Miscellaneous Provisions............................................. 24 (a) Acknowledgment....................................................... 24 (b) Notices.............................................................. 24 (c) Severability......................................................... 25 (d) Governing Law........................................................ 25 (e) Publicity............................................................ 25 (f) Captions and Section Headings........................................ 25 (g) Amendments and Waivers............................................... 26 (h) Successors and Assigns............................................... 26 (i) Expenses............................................................. 26 (j) Entire Agreement..................................................... 26 (k) Exhibits............................................................. 26 (l) Further Assurances................................................... 26 (m) Condition to Effectiveness........................................... 26 (n) Counterparts......................................................... 26 (o) Attorneys' Fees...................................................... 27 (p) Disclosure Generally................................................. 27 13. Definitions.......................................................... 27 (a) Definitions.......................................................... 27 (b) Other Definitional Provisions........................................ 33
-iii- WARNING: This section retains the original formatting, including headers and footers, of the main document. If you delete the section break above this message (which is visible ONLY in Normal View), any special formatting, including headers and footers for the Table of Contents/Authorities section will be lost. If you delete the section break above the Table of Contents/Authorities, you will overwrite the headers and footers of the main document with Table of Contents/Authorities headers and footers. To delete the Table of Contents/Authorities, begin your selection at the section break above the TOC/TOA section and continue through the end of this message. EX-99.1 11 dex991.txt PRESS RELEASE IFX Corp. Completes $7 Million Funding From UBS Capital Americas, And Secures Additional Funding Of $5 Million Led By UBS Capital Americas MIAMI, Feb. 26 /PRNewswire-FirstCall/ -- IFX Corporation (Nasdaq: FUTR - news; ---- ---- www.ifxcorp.com) announced today that UBS Capital Americas III, L.P. and UBS - --------------- Capital LLC ("UBS Capital Americas") completed their previously announced agreement to purchase IFX Series C Convertible Preferred Stock. In exchange for $7 million and 1.5 million shares of IFX Common Stock, UBS Capital Americas received approximately 3.9 million Series C preferred shares. Each share of Series C Preferred Stock has a liquidation preference of $3.00 and is initially convertible into one share of IFX common stock. Following this investment, UBS Capital Americas will be entitled to appoint four out of IFX's seven directors, and will have the right to jointly designate a fifth director in conjunction with certain of IFX's other principal shareholders. In addition to the completion of the Series C round, UBS Capital Americas, International Technology Investments LC ("ITI") and LSC LLC ("LSC") have agreed to invest additional amounts in the Company. LSC is affiliated with Mr. Lee Casty, a current shareholder of IFX, and ITI is affiliated with Michael Shalom, the CEO of IFX. These investors will invest a total of $5 million and surrender IFX stock in exchange for IFX Series D convertible Preferred Stock priced at $1.20 per share and initially convertible into two shares of IFX common stock for each share of Series D preferred stock. Each share of Series D preferred stock will have a liquidation preference of $6.00 and will also participate with the holders of common stock after IFX's preferred holders receive their liquidation preference and accrued dividends, provided that the maximum amount which can be received with respect to the Series D preferred stock after taking into account the participation feature is limited to 3-1/2 times the stated preference. In this transaction, UBS will contribute approximately $3.3 million in cash and surrender 750,000 shares of its Series C preferred stock in exchange for approximately 4.6 million shares of newly issued Series D preferred stock. In addition, ITI and Mr. Casty will each contribute approximately $840,000 in cash and each surrender approximately 340,000 IFX common shares in exchange for the receipt by each of them of approximately 844,000 of newly issued shares of Series D preferred stock. Closing of the Series D preferred stock financing is subject to customary closing conditions. After the close of this transaction, IFX would have approximately 41.5 million shares of common stock outstanding if all of IFX's convertible preferred stock were converted into common stock. About IFX Corporation IFX Corporation ("IFX") (Nasdaq: FUTR - news; www.ifxcorp.com) is a continent- ---- ---- wide Network Service Provider (NSP). Under the IFX Networks (www.ifxnetworks.com) brand name, IFX provides network connectivity and a broad ------------------- range of value-added services to corporate customers in Latin America. Based in Miami, IFX Networks -- a wholly owned subsidiary of IFX, provides full-service, tailored turnkey network access solutions. Its complete Product Services Portfolio features IFX Dedicated Connectivity, IFX Dial-up Services, IFX Co- location, IFX Web Hosting, and Value Added Services (including VPN, IFX Professional Consulting Services, and IFX Managed Network Services), all with 24x7 technical assistance*. Its expansive pan-regional network, advanced technology, and superior quality of service from experienced regional and local management teams in 12 Latin American countries and the United States, make IFX the ideal choice of demanding international and local customers. *Not available in all markets. About UBS Capital Americas UBS Capital Americas is an independent private equity investment firm with in excess of $2.5 billion of capital under management. It currently manages UBS Capital Americas II, a $1.0 billion fund dedicated to North America, and UBS Capital Americas III, a $500 million fund dedicated to Latin America. Both funds focus on emerging growth companies in a variety of industries including telecommunications, Internet and technology. UBS Capital Americas is headquartered in New York City, with offices in Buenos Aires, Argentina and Sao Paulo, Brazil. This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which reflect IFX's current views with respect to future events and financial performance. Such statements are subject to certain risks and uncertainties that could cause actual events or results to differ materially from those indicated from such forward-looking statements. The potential risk factors include IFX's limited operating history and experience in the Internet network business, IFX's ability to attract significant additional financing and incur operational losses and negative cash flow, and risks associated with international expansion. Additional risk factors are set forth in IFX's reports and documents filed with the Securities and Exchange Commission. . For more information: . IFX Corporation . Marisa Weinstock . Director, Marketing & Public Relations . Tel: (305) 512-1108 . Fax: (305) 512-4220 . E mail: mweinstock@ifxcorp.com ---------------------- -----END PRIVACY-ENHANCED MESSAGE-----