-----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, RWcbj17EcE163IJvvaXJJQ+K7kXp1VVYlLD78PECUfHNWxBzHDzT3rk2O4sjmrMc 48LAfAuy0Smr507mGIkUUw== 0001021408-02-013502.txt : 20021108 0001021408-02-013502.hdr.sgml : 20021108 20021108170448 ACCESSION NUMBER: 0001021408-02-013502 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20021031 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20021108 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: 02814666 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 CURRENT REPORT DATED OCTOBER 31,2002 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): October 31, 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) _______________________________________________________________ (Former name or former address, if changed since last report) ITEM 5. OTHER EVENTS. (a) Convertible Promissory Notes. On October 31, 2002, the Registrant issued to each of UBS Capital Americas III, L.P. and UBS Capital LLC (collectively, the "Purchasers") a Convertible Promissory Note in the amounts of $2,755,000 and $145,000, respectively (together, the "Notes"). Copies of the Notes are attached hereto as Exhibits 10.1 and 10.2 and are incorporated herein by reference. The Notes mature on September 30, 2007 (the "Maturity Date"), and carry an interest rate of ten percent per annum. At any time prior to the Maturity Date, the Purchasers can convert the principal amount of the Notes plus accrued and unpaid interest into shares of the Registrant's Series D Convertible Preferred Stock (or, if necessary under Delaware law, a new class of preferred stock having the same rights, preferences, and privileges as the Series D Convertible Preferred Stock) at a conversion price equal to $1.20 per share (as adjusted for stock splits, combinations, stock dividends and the like) of Series D Convertible Preferred Stock. The Series D Convertible Preferred Stock to be issued upon any such conversion shall have the same rights, preferences and privileges as the shares of the Series D Convertible Preferred Stock issued in the Registrant's Series D financing. In the event that the Purchasers do not own Registrant common stock at the time of the conversion to Series D Convertible Preferred Stock pursuant to the Notes, then in lieu of the "common to preferred" conversion right provided under the terms of the Series D financing, and in addition to the shares of Series D Convertible Preferred Stock issuable as stated above, the Purchasers shall receive 0.0342 shares of Series D Convertible Preferred Stock for each dollar of the Notes plus accrued and unpaid interest converted. Alternatively, in the event that the Registrant enters into an agreement to issue "Qualified Financing Securities" prior to the Maturity Date, then the Purchasers can convert the principal amount of the Notes plus accrued and unpaid interest into Qualified Financing Securities at a conversion price equal to the purchase price per Qualified Financing Security. A "Qualified Financing Security" means a security issued by Registrant pursuant to an agreement executed after October 31, 2002 that provides the Registrant debt or equity financing in connection with the issuance of securities by the Registrant consisting of common stock or other securities that are convertible, exercisable, or exchangeable into shares of the Registrant's common stock. (b) Employment Agreements. On October 31, 2002, the Registrant entered into revised employment agreements (collectively, the "Agreements," which are attached hereto as Exhibits 10.3, 10.4 and 10.5, and are incorporated herein by reference) with Michael Shalom (to serve as Chief Executive Officer), Joel Eidelstein (to serve as President), and Jose Leiman (to serve as General Counsel) (each an "Employee" or collectively, the "Employees"). The employment agreements provide for an annual salary of $175,000 for each of Mr. Shalom and Mr. Eidelstein and $182,000 for Mr. Leiman. In addition, the agreement with Mr. Eidelstein provides for the payment of a $35,000 cash bonus upon signing of the agreement. The Agreements have a term of one year subject to automatic rolling extensions to maintain the one year term, unless notified otherwise by either the Registrant or the Employee. The Agreements provide that if the Employee is involuntarily terminated during the term of the employment agreement (except for cause) ("Involuntary Termination") (i) he receives a lump sum amount of accrued but unpaid salary, (ii) he receives an amount equal to one-third of the Employee's annualized salary for the current year payable semi-monthly over four (4) months, (iii) he is entitled to the continuation of benefits for six months or, at the option of the Employee, the right to receive the cash value thereof payable semi-monthly over four (4) months, (iv) all options held by the Employee under the Registrant's 1998 Stock Option and Incentive Plan, as amended, vest immediately, and (v) Messrs. Shalom and Eidelstein are granted the vested right to receive 24,300 shares and Mr. Leiman is granted the vested right to receive 25,300 shares of a new class of the Registrants' Convertible Preferred Stock, with such stock to have the terms set forth in the Amended and Restated Put Agreement dated as of August 15, 2002, by and among Registrant, UBS Capital Americas III, L.P. and UBS Capital LLC ("Series E Preferred Stock"), less applicable withholding. If an Involuntary Termination occurs within one year after a "Change in Control" of the Registrant, then the Employees shall receive the payments described above, except that the Employee in lieu of an amount equal to one-third of the Employee's annualized salary shall receive seventy-five percent of Employee's annualized salary in the year of the Liquidity Event payable semi-monthly over nine months. Messrs. Shalom and Eidelstein were also granted the vested right to receive 23,333 and 11,667 shares, respectively, of Series E Preferred Stock, less applicable withholding. With respect to such right (as well as the right to receive shares of Series E Preferred Stock upon an Involuntary Termination, as described above), the Employee shall have no right to receive such shares until immediately prior to the first to occur of: a) a Change of Control of Registrant, b) a Liquidity Event of Registrant, or c) a Liquidation of Registrant, as determined under the Certificate of Designation creating the Series E Preferred Stock of Registrant. In addition, the Agreements provide that if Employee is employed by Registrant at the time of a Liquidity Event or if Employee was involuntarily terminated within 90 days prior to the commencement of or during the process leading to such Liquidity Event, Registrant shall pay a bonus to Employee (a "Targeted Bonus") if the Equity Value (as defined in the Agreements) of the Registrant paid with respect to such Liquidity Event is at least $30 million. The amount of the Targeted Bonus to be paid to Employee will equal 24.75% for Messrs. Shalom and Eidelstein, and 25.75 % for Mr. Leiman, of the "Total Senior Management Bonus Pool". The "Total Senior Management Bonus Pool" with respect to a Liquidity Event shall equal 2.5% of the Equity Value paid with respect to such Liquidity Event, prior to the determination of the Total Senior Management Bonus Pool. However, if the Equity Value equals or exceeds $100 million prior to the determination of any Total Senior Management Bonus Pool, then the Total Senior Management Bonus Pool shall equal $2.5 million plus 5% of that portion of the Equity Value in excess of $100 million. If stockholders of Registrant receive non-cash consideration in connection with a Liquidity Event, then an allocable portion of the Targeted Bonus shall be paid to Employee in the form of such non-cash consideration, with the amount of such non-cash consideration to be paid to Employee in the same ratio that the Purchasers receive cash and non-cash consideration. A "Liquidity Event" is a consummation of a transaction whereby an independent third party agrees to acquire more than 50% of the outstanding stock of Registrant or substantially all of Registrant's assets. Effective as of the date of the Agreements, Messrs. Shalom and Eidelstein were each granted an option to purchase 125,000 shares, and Mr. Leiman 130,000 shares, of Registrant's Series D Convertible Preferred Stock. The exercise price for the option is equal to $1.20 per share of Series D Convertible Preferred Stock (as adjusted for stock splits, combinations, stock dividends and the like). The option will vest monthly over 24 months starting three months from the date of the Agreements, but will vest immediately in connection with an Involuntary Termination. The options have a term ending ten (10) years from the date of the Agreements. Options that are vested may be exercised for ninety (90) days following Employee's death, disability or an Involuntary Termination. If the Employee is terminated for cause or terminates employment other than as a result of death, disability or an Involuntary Termination, the option will cease to be exercisable effective as of the effective date of termination. Unvested options will terminate immediately as of termination of Employee's employment with Registrant. ITEM 7. FINANCIAL STATEMENT AND EXHIBITS Exhibit Number Description of Exhibit -------------- ---------------------- 10.1 Convertible Promissory Note dated October 31, 2002, issued by the Registrant to UBS Capital Americas III, L.P. 10.2 Convertible Promissory Note dated October 31, 2002, issued by the Registrant to UBS Capital LLC 10.3 Employment Agreement dated as of October 31, 2002, between Michael Shalom and the Registrant 10.4 Employment Agreement dated as of October 31, 2002, between Joel Eidelstein and the Registrant 10.5 Employment Agreement dated as of October 31, 2002, between Jose Leiman and the Registrant 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: November 8, 2002 IFX CORPORATION EXHIBIT INDEX Exhibit Number Description of Exhibit - -------------- ---------------------- 10.1 Convertible Promissory Note dated October 31, 2002, issued by the Registrant to UBS Capital Americas III, L.P. 10.2 Convertible Promissory Note dated October 31, 2002, issued by the Registrant to UBS Capital LLC 10.3 Employment Agreement dated as of October 31, 2002, between Michael Shalom and the Registrant 10.4 Employment Agreement dated as of October 31, 2002, between Joel Eidelstein and the Registrant 10.5 Employment Agreement dated as of October 31, 2002, between Jose Leiman and the Registrant EX-10.1 3 dex101.txt CONV. PROMISSORY NOTE-UBS CAPITAL AMERICAS III Exhibit 10.1 THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THAT ACT OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE. IFX CORPORATION CONVERTIBLE PROMISSORY NOTE $2,755,000.00 Dated: October 31, 2002 FOR VALUE RECEIVED IFX CORPORATION, a Delaware corporation (the "Company"), hereby promises to pay to UBS Capital Americas III, L.P., a limited partnership formed under the laws of Jersey, Channel Islands (the "Payee"), or its registered assigns, the principal amount of Two Million Seven Hundred Fifty-five Thousand and 00/100 Dollars ($2,755,000.00 ) together with interest thereon calculated from the date hereof in accordance with the provisions of this Convertible Promissory Note (the "Convertible Note"). Certain capitalized terms are defined in Section 8 hereof. 1. Interest Rate. Interest shall accrue at a rate equal to ten percent (10%) per annum (the "Interest Rate") on the unpaid principal amount of this Convertible Note outstanding from time to time; provided that so long as any Event of Default has occurred and is continuing, interest shall accrue to the extent permitted by law at the rate of the Interest Rate plus two percent (2%) per annum on the unpaid principal amount of this Convertible Note outstanding from time to time for the period beginning on the date on which such Event of Default occurs and ending on the date on which such Event of Default ceases to exist. Interest shall be computed on the basis of the actual number of days elapsed and a 360-day year. 2. Maturity Date. Notwithstanding Section 3 below, the entire principal amount of this Convertible Note and all accrued but unpaid interest thereon shall be due and payable in full in cash in immediately available funds on September 30, 2007 (the "Maturity Date"). Any overdue principal and overdue interest together with any interest thereon, shall be due and payable upon demand. 3. Conversion. (a) Subject to a Forced Payee D Election described below, at the election of the Payee (the "Payee D Election") at any time prior to the Maturity Date, all of the principal amount of this Convertible Note plus accrued and unpaid interest thereon may be converted into shares of the Series D Preferred Stock at a conversion price equal to $1.20 per share (as adjusted for stock splits, combinations, stock dividends and the like) of Series D Preferred Stock (the "Series D Conversion Price"). The Series D Preferred Stock to be issued upon any such conversion shall have the same rights, preferences and privileges as the shares of the Series D Preferred Stock issued in the Series D Financing. The Payee, upon making such conversion, and as a condition thereof, shall enter into a registration rights agreement and shareholders agreement substantially in the form of the Third Amended and Restated Registration Rights Agreement and the Fourth Amended and Restated Stockholders Agreement among the Company and the holders of the Series D Preferred Stock, if the Payee is not already a party to any of such agreements. No fractional shares shall be issued upon a conversion into Series D Preferred Stock. In lieu of any fractional shares to which Payee would otherwise be entitled, the Company shall pay cash equal to such fraction multiplied by the Series D Conversion Price. In the event that the Payee does not own Company Common Stock at the time of the conversion to Series D Preferred Stock pursuant to this section, then in lieu of the "common to preferred" conversion right provided under the terms of the Series D Financing, and in addition to the shares of Series D Preferred Stock issuable as provided above, Payee shall receive 0.0342 shares of Series D Preferred Stock for each dollar of Convertible Note plus accrued and unpaid interest converted pursuant hereto. In the event that Convertible Noteholders holding a majority of the outstanding principal amount of the Convertible Notes elect to make a Payee D Election, then all of the Convertible Noteholders who have not otherwise voluntarily made a Payee D Election shall be deemed to have automatically made a Payee D Election on the first date that a majority of Convertible Noteholders holding a majority of the Convertible Notes shall have made a Payee D Election (the "Forced Payee D Election"). (b) In the event that the Company enters into a Qualified Financing Purchase Agreement prior to the Maturity Date (the date thereof being the "Qualified Financing Date"), then, subject to a Forced Payee F Election described below, at the election of the Payee (the "Payee F Election"), this Convertible Note plus accrued and unpaid interest thereon may be converted, in whole and not in part, into Qualified Financing Securities at a conversion price equal to the purchase price per Qualified Financing Security set forth in the Qualified Financing Purchase Agreement (the "Qualified Financing Conversion Price"). The Company shall provide Payee timely notice of the Qualified Financing Date, and Payee shall make the Payee F Election within ten (10) business days of receiving such notice. The Payee, upon making such conversion, and as a condition thereof, shall enter into any registration rights agreement, shareholders agreement or other material agreements entered into by other investors in the Qualified Financing. In the event that Convertible Noteholders holding a majority of the outstanding principal amount of the Convertible Notes elect to make a Payee F Election, then all of the Convertible Noteholders who have not otherwise voluntarily made a Payee F Election shall be deemed to have automatically made a Payee F Election on the first date that a majority of Convertible Noteholders holding a majority of the Convertible Notes shall have made a Payee F Election (the "Forced Payee F Election"). (c) At such time as a conversion under this Section 3 has been effected, the rights of the holder of this Convertible Note as the holder of such note shall cease, and the Person or Persons in whose name or names any certificate or certificates for shares of the Series D Preferred Stock or Qualified Financing Securities, as the case may be, are to be issued upon such conversion shall be deemed to have become the holder or holders of record of the shares of such Series D Preferred Stock or Qualified Financing Securities represented thereby. Page 2 of 11 (d) The Company shall deliver to the converting holder a certificate or certificates representing the number of shares of Series D Preferred Stock or Qualified Financing Securities, as the case may be, issuable by reason of such conversion in such name or names and such denomination or denominations as the converting holder has specified. (e) The issuance of certificates for shares of Series D Preferred Stock or Qualified Financing Securities, as the case may be, upon conversion of this Convertible Note shall be made without charge to the holder hereof for any issuance tax in respect thereof or other cost incurred by the Company in connection with such conversion and the related issuance of shares of Series D Preferred Stock or Qualified Financing Securities, provided that such holder shall pay any transfer taxes associated therewith. (f) The Company shall at all times reserve and keep available out of its authorized but unissued shares of Series D Preferred Stock or Qualified Financing Securities, as the case may be, solely for the purpose of issuance upon conversion hereunder, such number of shares of Series D Preferred Stock or Qualified Financing Securities issuable upon conversion, or, if an adequate number of shares of Series D Preferred Stock or Qualified Financing Securities have not previously been authorized, the Company shall authorize additional shares of Series D Preferred Stock or Qualified Financing Securities The Company shall not designate or authorize any additional classes of Preferred Stock if such authorization or designation would preclude the Company from authorizing and issuing the Series D Preferred Stock or the Qualified Financing Securities. All such securities which are so issuable shall, when issued, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens and charges (other than the applicable shareholders agreement and securities laws). The Company shall take all such actions as may be necessary to assure that all such securities may be so issued without violation of any applicable law or governmental regulation or any requirements of any domestic securities exchange upon which such shares of capital stock may be listed; provided, that in no event will the Company be obligated to register Series D Preferred Stock or Qualified Financing Securities under the Securities Act of 1933. (g) Capital Stock (i) On the date hereof, the authorized capital stock of the Company consists of (1) 110,000,000 shares of Common Stock, of which 11,963,399 shares of Common Stock are issued and outstanding, and (2) 40,000,000 shares of Preferred Stock, of which (w) 2,030,869 shares of Preferred Stock have been designated as Series A Convertible Preferred Stock, all of which shares are issued and outstanding; (x) 4,842,397 shares of Preferred Stock have been designated Series B Convertible Preferred Stock, 4,418,262 of which shares are issued and outstanding; (y) 3,126,241 shares of Preferred Stock have been designated as Series C Preferred Stock, all of which shares are issued and outstanding, and (z) 8,509,675 shares of Series D Preferred Stock, of which 6,432,608 are issued and outstanding. (ii) On the date hereof, 43,639,400 shares of Common Stock are reserved for issuance upon the exercise of options, warrants and convertible preferred stock. 4. Method of Payments. Page 3 of 11 (a) Payment. Except in the event of an earlier conversion pursuant to Section 3 hereof or an acceleration pursuant to Section 7 hereof, notwithstanding anything contained elsewhere in this Convertible Note to the contrary, the Company will pay all sums for principal, interest, premiums, dividends or otherwise becoming due on this Convertible Note not later than 5:00 p.m. New York time, on the Maturity Date, in immediately available funds, in accordance with the payment instructions that the Payee may designate in writing, without the presentation or surrender of such Convertible Note or the making of any notation thereon. Any payment made after 5:00 p.m. New York time, on a Business Day will be deemed made on the next following Business Day. If the Maturity Date falls on a day that is not a Business Day, such due date shall be extended to the next succeeding Business Day, and interest shall be payable on any principal so extended for the period of such extension. All amounts payable under this Convertible Note shall be paid free and clear of, and without reduction by reason of, any deduction, set-off or counterclaim. The Company will afford the benefits of this Section to the Payee and to each other Person holding this Convertible Note. (b) Transfer and Exchange. Upon surrender of any Convertible Note for registration of transfer or for exchange to the Company at its principal office, the Company at its sole expense will execute and deliver in exchange therefor a new Convertible Note or Convertible Notes, as the case may be, as requested by the holder or transferee, which aggregate the unpaid principal amount of such Convertible Note, registered as such holder or transferee may request, dated so that there will be no loss of interest on the Convertible Note and otherwise of like tenor. The issuance of new Convertible Notes shall be made without charge to the holder(s) of the surrendered Convertible Note for any issuance tax in respect thereof or other cost incurred by the Company in connection with such issuance, provided that each Convertible Noteholder shall pay any transfer taxes associated therewith. The Company shall be entitled to regard the registered holder of this Convertible Note as the holder of the Convertible Note so registered for all purposes until the Company or its agent, as applicable, is required to record a transfer of this Convertible Note on its register. (c) Replacement. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of any Convertible Note and, in the case of any such loss, theft or destruction of any Convertible Note, upon receipt of an indemnity reasonably satisfactory to the Company or, in the case of any such mutilation, upon the surrender and cancellation of such Convertible Note, the Company, at its expense, will execute and deliver, in lieu thereof, a new Convertible Note of like tenor and dated the date of such lost, stolen, destroyed or mutilated Convertible Note. 5. Representations and Warranties of Payee. Payee represents and warrants to Company that: (a) Investment Purpose. Payee is acquiring this Convertible Note and any and all securities into which this Convertible Note is convertible solely for its own account for the purpose of investment and not with a view to or for sale in connection with any distribution thereof, and has no present intention or plan to effect any distribution thereof. The securities issuable upon conversion hereof will bear a legend to the following effect: Page 4 of 11 "The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended (the "Act"), or the laws of any state and may not be sold or transferred except in compliance with the Act and such laws." (b) Information. Payee has had the opportunity to conduct and complete customary business, financial, and operational due diligence investigations and Payee is satisfied with the results of the due diligence investigations conducted by Payee. Payee has been furnished with all materials relating to the business, finances and operations of the Company that has been requested by Payee. In addition, Payee has reviewed the public filings made by the Company with the SEC. Payee understands and acknowledges that its investment in this Convertible Note involves a high degree of risk. (c) Sophistication. Payee is able to bear the economic risk of an investment in the Convertible Note 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 such Convertible Note. (d) Illiquidity. Payee understands that there is no public market for the Convertible Note to be acquired by it and that there may never be a public market for such Convertible Note or the preferred stock or other security to be issued at conversion, and that such Purchaser may have to bear the risk of its investment in such securities for a substantial period of time. (e) Accredited Investor. Payee is an "accredited investor" within the meaning of Regulation D promulgated under the Securities Act. In addition, Payee has received such information as it considers necessary or appropriate for deciding whether to acquire the Convertible Note. (f) Requisite Power and Authority. Payee has all necessary power and authority to execute this Convertible Note. This Convertible Note has been duly executed and delivered by Payee, and when executed by Payee will constitute the legal, valid and binding obligation of Payee, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, or other similar laws affecting the enforceability of creditors' rights generally and court decisions with respect thereto, and the discretion of courts in granting equitable remedies. (g) No Conflict. The execution by Payee of this Convertible Note and the consummation of the transactions contemplated hereby by Payee will not result in any violation of or default under, any provision of the organizational documents of Payee, any contract to which Payee is a party or any applicable law, rule or regulation, which violation or default could Page 5 of 11 reasonably be expected to (i) affect the validity of this Convertible Note, (ii) affect in any material respect any action taken or to be taken by Payee pursuant to this Convertible Note, or (iii) have a material adverse effect on the properties, assets, business or operations of such Payee. (h) Confidentiality. The terms and conditions of the Mutual Non-Disclosure Agreement ("NDA"), if any, previously entered into by Payee and the Company, shall govern the exchange of all confidential information between the parties. The NDA shall survive execution of this Convertible Note. 6. Representations and Warranties of the Company. The Company represents and warrants to Payee that: (a) Organization and Qualification. The Company and each of its subsidiaries is an entity duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, with power and authority to conduct its business as it is now being conducted, to own or use its properties and assets that it purports to own or use and, in the case of the Company, to perform its obligations under this Convertible Note. The Company and each of its subsidiaries is duly qualified to do business as a foreign company and is in good standing under the laws of each state or other jurisdiction in which either the ownership or use of the properties owned or used by it, or the nature of the activities conducted by it, requires such qualification. (b) Absence of Conflicts. Neither the execution, delivery and performance of this Convertible Note by the Company, nor the consummation of the transactions contemplated hereby, nor compliance by the Company with any of the provisions hereof, will (a) violate, conflict with, or result in a breach of any provision of, constitute a default under, or permit or result in the termination of, acceleration of any obligation under, or creation of a lien under any of the terms, conditions or provisions of, (i) the certificate of incorporation, bylaws or stockholders agreements of the Company, or (ii) any note, mortgage, indenture, contract, agreement or license by which the Company or any of the properties or assets thereof may be bound, or to which the Company or any subsidiary thereof or any of the properties or assets thereof may be subject, or (b) violate or conflict with any law, rule, regulation, judgment, ruling, order, writ, injunction or decree applicable to the Company or any subsidiary thereof or any of the properties or assets thereof. (c) Authorization of Agreements, Etc. Each of (i) the execution and delivery by the Company of this Convertible Note, (ii) the performance by the Company of its obligations hereunder, and (iii) the issuance, sale and delivery by the Company of this Convertible Note and the shares of Series D Preferred Stock or other security issuable upon conversion thereof has been duly authorized by all necessary corporate action of the Company. (d) Validity. This Convertible Note 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. Page 6 of 11 7. Events of Default. If any of the following events takes place before the Maturity Date (each, an "Event of Default"), Payee at its option may declare all principal and accrued and unpaid interest thereon and all other amounts payable under this Convertible Note immediately due and payable in immediately available cash funds; provided, however, that this Convertible Note shall automatically become due and payable without any declaration in the case of an Event of Default specified in clause 2, 3, 4, 5, 6 or 7, below: (1) The Company fails to make payment of the full amount due under this Convertible Note (including, without limitation, principal, interest, premiums and other amounts) on demand at the Maturity Date or by the issuance of Series D Preferred Stock or Qualified Financing Securities, as the case may be following a valid Payee D Election or Payee F Election by Payee; or (2) A receiver, liquidator or trustee is appointed by a court order (i) of the Company or (ii) for any substantial part of the Company's assets or properties; or (3) The Company is adjudicated bankrupt or insolvent; or (4) A substantial part of the Company's property is sequestered by or in consequence of a court order and such order remains in effect for more than 30 days; or (5) The Company files a petition in voluntary bankruptcy or requests reorganization under any provision of any bankruptcy, reorganization or insolvency law or consents to the filing of any petition against it under such law, or (6) Any petition against the Company is filed under bankruptcy, receivership or insolvency law; or (7) The Company makes a formal or informal general assignment for the benefit of its creditors, or admits in writing its inability to pay debts generally when they become due, or consents to the appointment of a receiver, liquidator or trustee of the Company or for all or any part of its property; or (8) An attachment or execution is levied against any substantial part of the Company's assets that is not released within 30 days; or (9) The Company dissolves, liquidates or ceases business activity, or transfers the majority of its assets other than in the ordinary course of business; or (10) The Company breaches any material covenant or agreement on its part contained in this Convertible Note; (11) There exists any material inaccuracy or untruthfulness of any representation or warranty of the Company set forth in this Convertible Note; or (12) Except as with respect to defaults existing on the date hereof under those promissory notes, credit agreements, loan agreements, conditional sales contracts, guarantees, leases, indentures, bonds, debentures or other contract or material obligations set forth on Attachment A, the Company shall default under any promissory note, credit agreement, loan agreement, conditional sales contract, guarantee, lease, indenture, bond, debenture or other contract or material obligation to which it is a party whatsoever Page 7 of 11 having an aggregate outstanding amount greater than $100,000 and a party thereto or a holder thereof is entitled to accelerate the obligations of the Company. 8. Definitions. "Business Day" means a day (other than a Saturday or Sunday) on which banks generally are open in New York, New York for the conduct of substantially all of their activities. "Convertible Note" shall mean this Convertible Promissory Note. "Convertible Notes" shall mean this Convertible Promissory Note along with (i) any convertible notes substantially in the form of this Convertible Note issued to UBS Capital LLC, (ii) any convertible note to be issued to ROF/IFX, LLC if ROF/IFX, LLC has elected to receive a convertible note substantially similar to the form of this Convertible Note pursuant to the terms of the convertible note dated September 9, 2002 between ROF/IFX, LLC and the Company and (iii) any other convertible notes in the form hereof issued upon transfer or exchange hereof, in whole or in part. "Convertible Noteholder" with respect to any Convertible Note, means at any time each Person then the record owner of such Convertible Note and "Convertible Noteholders" means all of such Convertible Noteholders collectively. "Person" means any person or entity of any nature whatsoever, specifically including an individual, a firm, a company, a corporation, a partnership, a limited liability company, a trust or other entity. "Series D Preferred Stock" means the series of convertible preferred stock of the Company issued in the Series D Financing or, if necessary under Delaware law, a new class of preferred stock having the same rights, preferences, and privileges as the Series D Preferred Stock. "Series D Financing" means the issuance of convertible preferred stock of the Company to one or more investors for cash pursuant to the Series D Stock Purchase Agreement. "Series D Stock Purchase Agreement" means the IFX Corporation Series D Convertible Preferred Stock Purchase Agreement dated as of February 19, 2002, among the Company and the other parties named therein. "Qualified Financing" means the future issuance of Qualified Financing Securities to one or more investors following the date of issuance of this Convertible Note pursuant to a Qualified Financing Purchase Agreement, if any. "Qualified Financing Securities" means a new series of convertible preferred stock, any common stock or any convertible debt of the Company to be issued pursuant to a Qualified Financing Purchase Agreement, if any. Page 8 of 11 "Qualified Financing Purchase Agreement" means an agreement executed by the Company after the date hereof which provides the Company with debt or equity financing in connection with the issuance of securities by the Company consisting of IFX common stock or other securities that are convertible, exercisable, or exchangeable into shares of IFX common stock. 9. Expenses of Enforcement, etc. The Company agrees to pay all reasonable fees and expenses incurred by the Payee in connection with the negotiation, execution and delivery of this Convertible Note. The Company agrees to pay all reasonable fees and expenses incurred by the Payee in connection with any amendments, modifications, waivers, extensions, renewals, renegotiations or "workouts" of the provisions hereof or incurred by the Payee in connection with the enforcement or protection of the Payee's rights in connection with this Convertible Note, or in connection with any pending or threatened action, proceeding, or investigation relating to the foregoing, including but not limited to the reasonable fees and expenses of counsel for the Payee. The Company indemnifies the Payee and its directors, managers, affiliates, partners, members, officers, employees and agents against, and agrees to hold the Payee and each such person and/or entity harmless from, any and all losses, claims, damages, liabilities and related expenses, including reasonable counsel fees and expenses, incurred by or asserted against the Payee or any such person or entity arising out of, in any way connected with, or as a result of (i) the consummation of the loan evidenced by this Convertible Note and the use of the proceeds thereof or (ii) any claim, litigation, investigation or proceedings relating to any of the foregoing, whether or not the Payee or any such person or entity is a party thereto. 10. Amendment and Waiver. The provisions of this Convertible Note may not be modified, amended or waived, and the Company may not take any action herein prohibited, or omit to perform any act herein required to be performed by it without the written consent of the Payee. 11. Remedies Cumulative. No remedy herein conferred upon the Payee is intended to be exclusive of any other remedy and each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise. 12. Remedies Not Waived. No course of dealing between the Company and the Payee or any delay on the part of the Payee in exercising any rights hereunder shall operate as a waiver of any right of the Payee. 13. Assignments. The Payee may assign, participate, transfer or otherwise convey this Convertible Note and any of its rights or obligations hereunder or interest herein to any Person, and this Convertible Note shall inure to the benefit of the Payee's successors and assigns. The Company shall not assign or delegate this Convertible Note or any of its liabilities or obligations hereunder. 14. Headings. The headings of the sections and paragraphs of this Convertible Note are inserted for convenience only and do not constitute a part of this Convertible Note. Page 9 of 11 15. Severability. If any provision of this Convertible Note is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Convertible Note will remain in full force and effect. Any provision of this Convertible Note held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable. 16. Cancellation. After all principal, premiums (if any), accrued interest and all other amounts at any time owed under or in connection with this Convertible Note have been paid in full in immediately available funds, or this Convertible Note has been converted in accordance with its terms, this Convertible Note will be surrendered to the Company for cancellation and will not be reissued. 17. Maximum Legal Rate. If at any time an interest rate applicable hereunder exceeds the maximum rate permitted by law, such rate shall be reduced to the maximum rate so permitted by law. 18. Place of Payment and Notices. Subject to Section 4(a) above, payments of principal and interest and notices deliverable to the Payee hereunder are to be delivered to the Payee at the address as the Payee has specified by prior written notice to the Company. No notice shall be deemed to have been delivered until the first Business Day following actual receipt thereof at the foregoing address. 19. Waiver of Jury Trial. The Payee and the Company each hereby waives any right it may have to a trial by jury in respect of any litigation directly or indirectly arising out of, under or in connection with this Convertible Note or the transactions contemplated hereunder. 20. Submission to Jurisdiction. (a) Any legal action or proceeding with respect to this Convertible Note may be brought in the courts of the State of New York or of the United States of America for the Southern District of New York, and, by execution and delivery of this Convertible Note, the Company hereby accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts. (b) The Company hereby irrevocably waives, in connection with any such action or proceeding, any objection, including, without limitation, any objection to the laying of venue or based on the grounds of forum non conveniens, which they may now or hereafter have to the bringing of any such action or proceeding in such respective jurisdictions. (c) Nothing herein shall affect the right of the Payee to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against the Company in any other jurisdiction. 21. GOVERNING LAW. ALL ISSUES AND QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS CONVERTIBLE NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] Page 10 of 11 IN WITNESS WHEREOF, the Company has executed and delivered this Convertible Promissory Note on the date first written above. IFX CORPORATION By: /s/ Joel Eidelstein ---------------------- Name: Joel Eidelstein Title: President Agreed to and accepted: PAYEE: UBS CAPITAL AMERICAS III, L.P. By: UBS Capital Americas III, LLC By: /s/ George A. Duarte -------------------------- Name: George A. Duarte Title: Partner 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: George Duarte Telephone No.: (212) 821-6330 Telecopy No.: (212) 821-6333 Page 11 of 11 EX-10.2 4 dex102.txt CONV. PROMISSORY NOTE UBS CAPITAL LLC Exhibit 10.2 THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THAT ACT OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE. IFX CORPORATION CONVERTIBLE PROMISSORY NOTE $145,000.00 Dated: October 31, 2002 FOR VALUE RECEIVED IFX CORPORATION, a Delaware corporation (the "Company"), hereby promises to pay to UBS Capital LLC, a Delaware limited liability company, (the "Payee"), or its registered assigns, the principal amount of One Hundred Forty-five Thousand and 00/100 Dollars ($145,000.00 ) together with interest thereon calculated from the date hereof in accordance with the provisions of this Convertible Promissory Note (the "Convertible Note"). Certain capitalized terms are defined in Section 8 hereof. 1. Interest Rate. Interest shall accrue at a rate equal to ten percent (10%) per annum (the "Interest Rate") on the unpaid principal amount of this Convertible Note outstanding from time to time; provided that so long as any Event of Default has occurred and is continuing, interest shall accrue to the extent permitted by law at the rate of the Interest Rate plus two percent (2%) per annum on the unpaid principal amount of this Convertible Note outstanding from time to time for the period beginning on the date on which such Event of Default occurs and ending on the date on which such Event of Default ceases to exist. Interest shall be computed on the basis of the actual number of days elapsed and a 360-day year. 2. Maturity Date. Notwithstanding Section 3 below, the entire principal amount of this Convertible Note and all accrued but unpaid interest thereon shall be due and payable in full in cash in immediately available funds on September 30, 2007 (the "Maturity Date"). Any overdue principal and overdue interest together with any interest thereon, shall be due and payable upon demand. 3. Conversion. (a) Subject to a Forced Payee D Election described below, at the election of the Payee (the "Payee D Election") at any time prior to the Maturity Date, all of the principal amount of this Convertible Note plus accrued and unpaid interest thereon may be converted into shares of the Series D Preferred Stock at a conversion price equal to $1.20 per share (as adjusted for stock splits, combinations, stock dividends and the like) of Series D Preferred Stock (the "Series D Conversion Price"). The Series D Preferred Stock to be issued upon any such conversion shall have the same rights, preferences and privileges as the shares of the Series D Preferred Stock issued in the Series D Financing. The Payee, upon making such conversion, and as a condition thereof, shall enter into a registration rights agreement and shareholders agreement substantially in the form of the Third Amended and Restated Registration Rights Agreement and the Fourth Amended and Restated Stockholders Agreement among the Company and the holders of the Series D Preferred Stock, if the Payee is not already a party to any of such agreements. No fractional shares shall be issued upon a conversion into Series D Preferred Stock. In lieu of any fractional shares to which Payee would otherwise be entitled, the Company shall pay cash equal to such fraction multiplied by the Series D Conversion Price. In the event that the Payee does not own Company Common Stock at the time of the conversion to Series D Preferred Stock pursuant to this section, then in lieu of the "common to preferred" conversion right provided under the terms of the Series D Financing, and in addition to the shares of Series D Preferred Stock issuable as provided above, Payee shall receive 0.0342 shares of Series D Preferred Stock for each dollar of Convertible Note plus accrued and unpaid interest converted pursuant hereto. In the event that Convertible Noteholders holding a majority of the outstanding principal amount of the Convertible Notes elect to make a Payee D Election, then all of the Convertible Noteholders who have not otherwise voluntarily made a Payee D Election shall be deemed to have automatically made a Payee D Election on the first date that a majority of Convertible Noteholders holding a majority of the Convertible Notes shall have made a Payee D Election (the "Forced Payee D Election"). (b) In the event that the Company enters into a Qualified Financing Purchase Agreement prior to the Maturity Date (the date thereof being the "Qualified Financing Date"), then, subject to a Forced Payee F Election described below, at the election of the Payee (the "Payee F Election"), this Convertible Note plus accrued and unpaid interest thereon may be converted, in whole and not in part, into Qualified Financing Securities at a conversion price equal to the purchase price per Qualified Financing Security set forth in the Qualified Financing Purchase Agreement (the "Qualified Financing Conversion Price"). The Company shall provide Payee timely notice of the Qualified Financing Date, and Payee shall make the Payee F Election within ten (10) business days of receiving such notice. The Payee, upon making such conversion, and as a condition thereof, shall enter into any registration rights agreement, shareholders agreement or other material agreements entered into by other investors in the Qualified Financing. In the event that Convertible Noteholders holding a majority of the outstanding principal amount of the Convertible Notes elect to make a Payee F Election, then all of the Convertible Noteholders who have not otherwise voluntarily made a Payee F Election shall be deemed to have automatically made a Payee F Election on the first date that a majority of Convertible Noteholders holding a majority of the Convertible Notes shall have made a Payee F Election (the "Forced Payee F Election"). (c) At such time as a conversion under this Section 3 has been effected, the rights of the holder of this Convertible Note as the holder of such note shall cease, and the Person or Persons in whose name or names any certificate or certificates for shares of the Series D Preferred Stock or Qualified Financing Securities, as the case may be, are to be issued upon such conversion shall be deemed to have become the holder or holders of record of the shares of such Series D Preferred Stock or Qualified Financing Securities represented thereby. Page 2 of 11 (d) The Company shall deliver to the converting holder a certificate or certificates representing the number of shares of Series D Preferred Stock or Qualified Financing Securities, as the case may be, issuable by reason of such conversion in such name or names and such denomination or denominations as the converting holder has specified. (e) The issuance of certificates for shares of Series D Preferred Stock or Qualified Financing Securities, as the case may be, upon conversion of this Convertible Note shall be made without charge to the holder hereof for any issuance tax in respect thereof or other cost incurred by the Company in connection with such conversion and the related issuance of shares of Series D Preferred Stock or Qualified Financing Securities, provided that such holder shall pay any transfer taxes associated therewith. (f) The Company shall at all times reserve and keep available out of its authorized but unissued shares of Series D Preferred Stock or Qualified Financing Securities, as the case may be, solely for the purpose of issuance upon conversion hereunder, such number of shares of Series D Preferred Stock or Qualified Financing Securities issuable upon conversion, or, if an adequate number of shares of Series D Preferred Stock or Qualified Financing Securities have not previously been authorized, the Company shall authorize additional shares of Series D Preferred Stock or Qualified Financing Securities The Company shall not designate or authorize any additional classes of Preferred Stock if such authorization or designation would preclude the Company from authorizing and issuing the Series D Preferred Stock or the Qualified Financing Securities. All such securities which are so issuable shall, when issued, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens and charges (other than the applicable shareholders agreement and securities laws). The Company shall take all such actions as may be necessary to assure that all such securities may be so issued without violation of any applicable law or governmental regulation or any requirements of any domestic securities exchange upon which such shares of capital stock may be listed; provided, that in no event will the Company be obligated to register Series D Preferred Stock or Qualified Financing Securities under the Securities Act of 1933. (g) Capital Stock (i) On the date hereof, the authorized capital stock of the Company consists of (1) 110,000,000 shares of Common Stock, of which 11,963,399 shares of Common Stock are issued and outstanding, and (2) 40,000,000 shares of Preferred Stock, of which (w) 2,030,869 shares of Preferred Stock have been designated as Series A Convertible Preferred Stock, all of which shares are issued and outstanding; (x) 4,842,397 shares of Preferred Stock have been designated Series B Convertible Preferred Stock, 4,418,262 of which shares are issued and outstanding; (y) 3,126,241 shares of Preferred Stock have been designated as Series C Preferred Stock, all of which shares are issued and outstanding, and (z) 8,509,675 shares of Series D Preferred Stock, of which 6,432,608 are issued and outstanding. (ii) On the date hereof, 43,639,400 shares of Common Stock are reserved for issuance upon the exercise of options, warrants and convertible preferred stock. 4. Method of Payments. Page 3 of 11 (a) Payment. Except in the event of an earlier conversion pursuant to Section 3 hereof or an acceleration pursuant to Section 7 hereof, notwithstanding anything contained elsewhere in this Convertible Note to the contrary, the Company will pay all sums for principal, interest, premiums, dividends or otherwise becoming due on this Convertible Note not later than 5:00 p.m. New York time, on the Maturity Date, in immediately available funds, in accordance with the payment instructions that the Payee may designate in writing, without the presentation or surrender of such Convertible Note or the making of any notation thereon. Any payment made after 5:00 p.m. New York time, on a Business Day will be deemed made on the next following Business Day. If the Maturity Date falls on a day that is not a Business Day, such due date shall be extended to the next succeeding Business Day, and interest shall be payable on any principal so extended for the period of such extension. All amounts payable under this Convertible Note shall be paid free and clear of, and without reduction by reason of, any deduction, set-off or counterclaim. The Company will afford the benefits of this Section to the Payee and to each other Person holding this Convertible Note. (b) Transfer and Exchange. Upon surrender of any Convertible Note for registration of transfer or for exchange to the Company at its principal office, the Company at its sole expense will execute and deliver in exchange therefor a new Convertible Note or Convertible Notes, as the case may be, as requested by the holder or transferee, which aggregate the unpaid principal amount of such Convertible Note, registered as such holder or transferee may request, dated so that there will be no loss of interest on the Convertible Note and otherwise of like tenor. The issuance of new Convertible Notes shall be made without charge to the holder(s) of the surrendered Convertible Note for any issuance tax in respect thereof or other cost incurred by the Company in connection with such issuance, provided that each Convertible Noteholder shall pay any transfer taxes associated therewith. The Company shall be entitled to regard the registered holder of this Convertible Note as the holder of the Convertible Note so registered for all purposes until the Company or its agent, as applicable, is required to record a transfer of this Convertible Note on its register. (c) Replacement. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of any Convertible Note and, in the case of any such loss, theft or destruction of any Convertible Note, upon receipt of an indemnity reasonably satisfactory to the Company or, in the case of any such mutilation, upon the surrender and cancellation of such Convertible Note, the Company, at its expense, will execute and deliver, in lieu thereof, a new Convertible Note of like tenor and dated the date of such lost, stolen, destroyed or mutilated Convertible Note. 5. Representations and Warranties of Payee. Payee represents and warrants to Company that: (a) Investment Purpose. Payee is acquiring this Convertible Note and any and all securities into which this Convertible Note is convertible solely for its own account for the purpose of investment and not with a view to or for sale in connection with any distribution thereof, and has no present intention or plan to effect any distribution thereof. The securities issuable upon conversion hereof will bear a legend to the following effect: Page 4 of 11 "The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended (the "Act"), or the laws of any state and may not be sold or transferred except in compliance with the Act and such laws." (b) Information. Payee has had the opportunity to conduct and complete customary business, financial, and operational due diligence investigations and Payee is satisfied with the results of the due diligence investigations conducted by Payee. Payee has been furnished with all materials relating to the business, finances and operations of the Company that has been requested by Payee. In addition, Payee has reviewed the public filings made by the Company with the SEC. Payee understands and acknowledges that its investment in this Convertible Note involves a high degree of risk. (c) Sophistication. Payee is able to bear the economic risk of an investment in the Convertible Note 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 such Convertible Note. (d) Illiquidity. Payee understands that there is no public market for the Convertible Note to be acquired by it and that there may never be a public market for such Convertible Note or the preferred stock or other security to be issued at conversion, and that such Purchaser may have to bear the risk of its investment in such securities for a substantial period of time. (e) Accredited Investor. Payee is an "accredited investor" within the meaning of Regulation D promulgated under the Securities Act. In addition, Payee has received such information as it considers necessary or appropriate for deciding whether to acquire the Convertible Note. (f) Requisite Power and Authority. Payee has all necessary power and authority to execute this Convertible Note. This Convertible Note has been duly executed and delivered by Payee, and when executed by Payee will constitute the legal, valid and binding obligation of Payee, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, or other similar laws affecting the enforceability of creditors' rights generally and court decisions with respect thereto, and the discretion of courts in granting equitable remedies. (g) No Conflict. The execution by Payee of this Convertible Note and the consummation of the transactions contemplated hereby by Payee will not result in any violation of or default under, any provision of the organizational documents of Payee, any contract to which Payee is a party or any applicable law, rule or regulation, which violation or default could Page 5 of 11 reasonably be expected to (i) affect the validity of this Convertible Note, (ii) affect in any material respect any action taken or to be taken by Payee pursuant to this Convertible Note, or (iii) have a material adverse effect on the properties, assets, business or operations of such Payee. (h) Confidentiality. The terms and conditions of the Mutual Non-Disclosure Agreement ("NDA"), if any, previously entered into by Payee and the Company, shall govern the exchange of all confidential information between the parties. The NDA shall survive execution of this Convertible Note. 6. Representations and Warranties of the Company. The Company represents and warrants to Payee that: (a) Organization and Qualification. The Company and each of its subsidiaries is an entity duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, with power and authority to conduct its business as it is now being conducted, to own or use its properties and assets that it purports to own or use and, in the case of the Company, to perform its obligations under this Convertible Note. The Company and each of its subsidiaries is duly qualified to do business as a foreign company and is in good standing under the laws of each state or other jurisdiction in which either the ownership or use of the properties owned or used by it, or the nature of the activities conducted by it, requires such qualification. (b) Absence of Conflicts. Neither the execution, delivery and performance of this Convertible Note by the Company, nor the consummation of the transactions contemplated hereby, nor compliance by the Company with any of the provisions hereof, will (a) violate, conflict with, or result in a breach of any provision of, constitute a default under, or permit or result in the termination of, acceleration of any obligation under, or creation of a lien under any of the terms, conditions or provisions of, (i) the certificate of incorporation, bylaws or stockholders agreements of the Company, or (ii) any note, mortgage, indenture, contract, agreement or license by which the Company or any of the properties or assets thereof may be bound, or to which the Company or any subsidiary thereof or any of the properties or assets thereof may be subject, or (b) violate or conflict with any law, rule, regulation, judgment, ruling, order, writ, injunction or decree applicable to the Company or any subsidiary thereof or any of the properties or assets thereof. (c) Authorization of Agreements, Etc. Each of (i) the execution and delivery by the Company of this Convertible Note, (ii) the performance by the Company of its obligations hereunder, and (iii) the issuance, sale and delivery by the Company of this Convertible Note and the shares of Series D Preferred Stock or other security issuable upon conversion thereof has been duly authorized by all necessary corporate action of the Company. (d) Validity. This Convertible Note 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. Page 6 of 11 7. Events of Default. If any of the following events takes place before the Maturity Date (each, an "Event of Default"), Payee at its option may declare all principal and accrued and unpaid interest thereon and all other amounts payable under this Convertible Note immediately due and payable in immediately available cash funds; provided, however, that this Convertible Note shall automatically become due and payable without any declaration in the case of an Event of Default specified in clause 2, 3, 4, 5, 6 or 7, below: (1) The Company fails to make payment of the full amount due under this Convertible Note (including, without limitation, principal, interest, premiums and other amounts) on demand at the Maturity Date or by the issuance of Series D Preferred Stock or Qualified Financing Securities, as the case may be following a valid Payee D Election or Payee F Election by Payee; or (2) A receiver, liquidator or trustee is appointed by a court order (i) of the Company or (ii) for any substantial part of the Company's assets or properties; or (3) The Company is adjudicated bankrupt or insolvent; or (4) A substantial part of the Company's property is sequestered by or in consequence of a court order and such order remains in effect for more than 30 days; or (5) The Company files a petition in voluntary bankruptcy or requests reorganization under any provision of any bankruptcy, reorganization or insolvency law or consents to the filing of any petition against it under such law, or (6) Any petition against the Company is filed under bankruptcy, receivership or insolvency law; or (7) The Company makes a formal or informal general assignment for the benefit of its creditors, or admits in writing its inability to pay debts generally when they become due, or consents to the appointment of a receiver, liquidator or trustee of the Company or for all or any part of its property; or (8) An attachment or execution is levied against any substantial part of the Company's assets that is not released within 30 days; or (9) The Company dissolves, liquidates or ceases business activity, or transfers the majority of its assets other than in the ordinary course of business; or (10) The Company breaches any material covenant or agreement on its part contained in this Convertible Note; (11) There exists any material inaccuracy or untruthfulness of any representation or warranty of the Company set forth in this Convertible Note; or (12) Except as with respect to defaults existing on the date hereof under those promissory notes, credit agreements, loan agreements, conditional sales contracts, guarantees, leases, indentures, bonds, debentures or other contract or material obligations set forth on Attachment A, the Company shall default under any promissory note, credit agreement, loan agreement, conditional sales contract, guarantee, lease, indenture, bond, debenture or other contract or material obligation to which it is a party whatsoever Page 7 of 11 having an aggregate outstanding amount greater than $100,000 and a party thereto or a holder thereof is entitled to accelerate the obligations of the Company. 8. Definitions. "Business Day" means a day (other than a Saturday or Sunday) on which banks generally are open in New York, New York for the conduct of substantially all of their activities. "Convertible Note" shall mean this Convertible Promissory Note. "Convertible Notes" shall mean this Convertible Promissory Note along with (i) any convertible notes substantially in the form of this Convertible Note issued to UBS Capital LLC, (ii) any convertible note to be issued to ROF/IFX, LLC if ROF/IFX, LLC has elected to receive a convertible note substantially similar to the form of this Convertible Note pursuant to the terms of the convertible note dated September 9, 2002 between ROF/IFX, LLC and the Company and (iii) any other convertible notes in the form hereof issued upon transfer or exchange hereof, in whole or in part. "Convertible Noteholder" with respect to any Convertible Note, means at any time each Person then the record owner of such Convertible Note and "Convertible Noteholders" means all of such Convertible Noteholders collectively. "Person" means any person or entity of any nature whatsoever, specifically including an individual, a firm, a company, a corporation, a partnership, a limited liability company, a trust or other entity. "Series D Preferred Stock" means the series of convertible preferred stock of the Company issued in the Series D Financing or, if necessary under Delaware law, a new class of preferred stock having the same rights, preferences, and privileges as the Series D Preferred Stock. "Series D Financing" means the issuance of convertible preferred stock of the Company to one or more investors for cash pursuant to the Series D Stock Purchase Agreement. "Series D Stock Purchase Agreement" means the IFX Corporation Series D Convertible Preferred Stock Purchase Agreement dated as of February 19, 2002, among the Company and the other parties named therein. "Qualified Financing" means the future issuance of Qualified Financing Securities to one or more investors following the date of issuance of this Convertible Note pursuant to a Qualified Financing Purchase Agreement, if any. "Qualified Financing Securities" means a new series of convertible preferred stock, any common stock or any convertible debt of the Company to be issued pursuant to a Qualified Financing Purchase Agreement, if any. Page 8 of 11 "Qualified Financing Purchase Agreement" means an agreement executed by the Company after the date hereof which provides the Company with debt or equity financing in connection with the issuance of securities by the Company consisting of IFX common stock or other securities that are convertible, exercisable, or exchangeable into shares of IFX common stock. 9. Expenses of Enforcement, etc. The Company agrees to pay all reasonable fees and expenses incurred by the Payee in connection with the negotiation, execution and delivery of this Convertible Note. The Company agrees to pay all reasonable fees and expenses incurred by the Payee in connection with any amendments, modifications, waivers, extensions, renewals, renegotiations or "workouts" of the provisions hereof or incurred by the Payee in connection with the enforcement or protection of the Payee's rights in connection with this Convertible Note, or in connection with any pending or threatened action, proceeding, or investigation relating to the foregoing, including but not limited to the reasonable fees and expenses of counsel for the Payee. The Company indemnifies the Payee and its directors, managers, affiliates, partners, members, officers, employees and agents against, and agrees to hold the Payee and each such person and/or entity harmless from, any and all losses, claims, damages, liabilities and related expenses, including reasonable counsel fees and expenses, incurred by or asserted against the Payee or any such person or entity arising out of, in any way connected with, or as a result of (i) the consummation of the loan evidenced by this Convertible Note and the use of the proceeds thereof or (ii) any claim, litigation, investigation or proceedings relating to any of the foregoing, whether or not the Payee or any such person or entity is a party thereto. 10. Amendment and Waiver. The provisions of this Convertible Note may not be modified, amended or waived, and the Company may not take any action herein prohibited, or omit to perform any act herein required to be performed by it without the written consent of the Payee. 11. Remedies Cumulative. No remedy herein conferred upon the Payee is intended to be exclusive of any other remedy and each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise. 12. Remedies Not Waived. No course of dealing between the Company and the Payee or any delay on the part of the Payee in exercising any rights hereunder shall operate as a waiver of any right of the Payee. 13. Assignments. The Payee may assign, participate, transfer or otherwise convey this Convertible Note and any of its rights or obligations hereunder or interest herein to any Person, and this Convertible Note shall inure to the benefit of the Payee's successors and assigns. The Company shall not assign or delegate this Convertible Note or any of its liabilities or obligations hereunder. 14. Headings. The headings of the sections and paragraphs of this Convertible Note are inserted for convenience only and do not constitute a part of this Convertible Note. Page 9 of 11 15. Severability. If any provision of this Convertible Note is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Convertible Note will remain in full force and effect. Any provision of this Convertible Note held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable. 16. Cancellation. After all principal, premiums (if any), accrued interest and all other amounts at any time owed under or in connection with this Convertible Note have been paid in full in immediately available funds, or this Convertible Note has been converted in accordance with its terms, this Convertible Note will be surrendered to the Company for cancellation and will not be reissued. 17. Maximum Legal Rate. If at any time an interest rate applicable hereunder exceeds the maximum rate permitted by law, such rate shall be reduced to the maximum rate so permitted by law. 18. Place of Payment and Notices. Subject to Section 4(a) above, payments of principal and interest and notices deliverable to the Payee hereunder are to be delivered to the Payee at the address as the Payee has specified by prior written notice to the Company. No notice shall be deemed to have been delivered until the first Business Day following actual receipt thereof at the foregoing address. 19. Waiver of Jury Trial. The Payee and the Company each hereby waives any right it may have to a trial by jury in respect of any litigation directly or indirectly arising out of, under or in connection with this Convertible Note or the transactions contemplated hereunder. 20. Submission to Jurisdiction. (a) Any legal action or proceeding with respect to this Convertible Note may be brought in the courts of the State of New York or of the United States of America for the Southern District of New York, and, by execution and delivery of this Convertible Note, the Company hereby accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts. (b) The Company hereby irrevocably waives, in connection with any such action or proceeding, any objection, including, without limitation, any objection to the laying of venue or based on the grounds of forum non conveniens, which they may now or hereafter have to the bringing of any such action or proceeding in such respective jurisdictions. (c) Nothing herein shall affect the right of the Payee to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against the Company in any other jurisdiction. 21. GOVERNING LAW. ALL ISSUES AND QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS CONVERTIBLE NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] Page 10 of 11 IN WITNESS WHEREOF, the Company has executed and delivered this Convertible Promissory Note on the date first written above. IFX CORPORATION By: /s/ Joel Eidelstein --------------------- Name: Joel Eidelstein Title: President Agreed to and accepted: PAYEE: UBS CAPITAL LLC By: George A. Duarte ------------------- Name: George A. Duarte Title: Attorney in Fact By: Marc Unger ------------------- Name: Marc Unger Title: Attorney in Fact Address: UBS Capital LLC. c/o UBS Capital Americas III, LLC 299 Park Avenue New York, NY 10171 Attention: George Duarte Telephone No.: (212) 821-6330 Telecopy No.: (212) 821-6333 Page 11 of 11 EX-10.3 5 dex103.txt EMPLOYMENT AGREEMENT-MICHAEL SHALOM Exhibit 10.3 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of October , 2002, by and between IFX CORPORATION, a Delaware corporation ("IFX" and, - --- collectively with its subsidiaries, "Employer"), and MICHAEL SHALOM ("Employee"). W I T N E S S E T H: WHEREAS, Employer is in the business of acquiring, developing and maintaining Internet access and related services in Latin America and other non-U.S. jurisdictions (the "Business"); WHEREAS, Employer desires to continue to employ Employee to serve as Chief Executive Officer and/or Chief Operating Officer of Employer, and Employee desires to continue such employment, on the terms and subject to the conditions set forth herein; WHEREAS, Employee's existing Employment Agreement (the "Prior Agreement") is dated as of May 7, 2001, and both Employee and Employer believe it would be in the best interests of both Employee and Employer to amend and restate the Prior Agreement by entering into this Agreement; WHEREAS, Employee has had an opportunity to review the terms and conditions of this Agreement, to negotiate the terms hereof and to engage legal counsel on his behalf if he so desires. NOW THEREFORE, in consideration of Employer's continued employment of Employee, the terms, conditions and covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Employee and Employer, intending to be legally bound, hereby agree as follows: ARTICLE I DEFINITIONS 1.1 Terms Defined Herein. Except as otherwise herein expressly provided, the following terms and phrases shall have the meanings set forth below: "Affiliate" means (a) in the case of an entity, any Person who or which, directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, any specified Person or (b) in the case of an individual, such individual's spouse, children, grandchildren or parents or a trust primarily for the benefit of any of the foregoing. "Cause" means (a) the willful and continued failure by Employee to substantially perform his duties under this Agreement (other than any failure resulting from Employee's death or incapacity due to physical or mental illness) for five days after written demand for substantial performance is delivered by Employer which specifically identifies the manner in which Employer believes Employee has not substantially performed his duties and which notice is specifically identified as being issued pursuant to this paragraph, (b) the commission by Employee of theft, embezzlement, fraud or misappropriation of funds against Employer or the willful engaging by Employee in other misconduct which is materially injurious to Employer, (c) the willful violation by Employee of Section 3.1, 3.2, 3.3 or 3.4 of this Agreement or (d) the conviction of Employee of a felony involving fraud, dishonesty or moral turpitude. Notwithstanding anything to the contrary contained herein, none of the following events shall be treated as "cause": (i) bad judgment, (ii) negligence, or any act or omission that Employee believed in good faith to have been in or not opposed to the interests of the Company. "Change in Control" means the occurrence of any one of the following events: (a) any consolidation, merger or other similar transaction involving IFX, following which the stockholders of IFX immediately prior to such transaction fail to hold more than 50% of the outstanding voting securities of the continuing or succeeding corporation in substantially the same proportions, or which contemplates that all or substantially all of the business and/or assets of IFX will be controlled by another corporation; (b) any sale, lease, exchange or transfer (in one transaction or series of related transactions) of all or substantially all of the assets of IFX; (c) approval by the stockholders of IFX of any plan or proposal for the liquidation or dissolution of IFX, unless such plan or proposal is abandoned within 60 days following such approval; (d) the acquisition by any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934), or two or more Persons acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the outstanding shares of voting stock of IFX; provided, however, that for purposes of the foregoing, "person" excludes UBS Capital Americas III, L.P., UBS Capital, LLC, Lee S. Casty, the Casty Grantor Subtrust, International Technology Investments, LC or any of their Affiliates, and any underwriter purchasing shares of IFX with the intent of reselling them, or (e) if, during any period of 24 consecutive calendar months commencing on the date of this Agreement, those individuals (the "Continuing Directors") who either (i) were directors of IFX on the first day of each such period, or (ii) subsequently became directors of IFX and whose actual election or initial nomination for election subsequent to that date was approved by a majority of the Continuing Directors then on the board of directors of IFX, cease to constitute a majority of the board of directors of IFX. "Common Stock" means shares of common stock, par value $.02 per share, of IFX. "Disability" means disability as defined in Employer's disability insurance plan then in effect. "Equity Value" shall mean (i) in the case of the sale, exchange or purchase of equity securities of Employer, the total net consideration paid for such securities; and (ii) in the case of a sale or disposition of assets of Employer and its subsidiaries, the total net consideration paid for such assets. 2 "Involuntary Termination" means if Employer terminates Employee for any reason other than Cause or if Employee terminates his employment with Employer (a) within 30 days after Employer materially reduces Employee's duties and responsibilities hereunder; (b) upon material breach of this Agreement by Employer which remains uncured for 30 days following notice thereof from Employee to Employer, provided that Employee gives notice of termination within 5 days of expiration of such thirty day period; (c) the failure to nominate or elect Employee as Chief Executive or Chief Operating Officer of IFX; (d) causing or requiring Employee to report to anyone other than the Board of Employer; (e) assignment of duties materially inconsistent with his position and duties described in this Agreement; (f) the failure of IFX to assign this Agreement to a successor to IFX or the failure of a successor to IFX to explicitly assume and agree to be bound by this Agreement; (g) requiring Employee to be principally located at any office or location more than 50 miles from IFX's current office in Miami Lakes, Florida; or (h) diminution of Employee's compensation package without Employee's express written consent; provided, however, that in the event such breach is curable but Employer is unable to cure such breach within such five-day period, then any such breach shall not be deemed to justify Employee's "Involuntary Termination" hereunder so long as Employer is diligently and in good faith pursuing a cure and such breach is cured no later than 30 days following receipt of the foregoing written notice from Employee. "Liquidity Event" means the consummation of a transaction for consideration consisting of cash or Unrestricted Marketable Securities, whether in a single transaction or in a series of related transactions, that are consummated contemporaneously (or consummated pursuant to contemporaneous agreements), with an independent third party or a group of independent third parties pursuant to which such party or parties (a) acquire more than 50% of the outstanding voting stock of the Employer determined on a fully diluted basis, or (b) acquire assets constituting all or substantially all of the assets of the Employer and its subsidiaries on a consolidated basis (which shall be deemed the equivalent of the acquisition of 100% of the voting stock of the Employer on a fully diluted basis for the purposes hereof); provided, however, that if the consideration for such transaction consists of restricted securities, a Liquidity Event shall be deemed to be consummated at such time as at least 75% of such restricted securities become Unrestricted Marketable Securities. "Person" means any individual, partnership, corporation, limited liability company, joint venture, trust, firm, association, unincorporated organization or other entity. "Senior Managers" shall mean Joel Edelstein, Michael Shalom, Jose Leiman and Daniel Salama. "Unrestricted Marketable Securities" means securities which are listed on a national securities exchange or quoted on the NASDAQ National Market System and which are freely tradable by the holder thereof without restriction pursuant to an effective registration statement under the Securities Act or Rule 144(k) thereunder. "1998 Plan" means the IFX Corporation 1998 Stock Option and Incentive Plan, as amended, together with any successor thereto. 3 "2001 Plan" means the IFX Corporation 2001 Stock Option Plan, as amended, together with any successor thereto. ARTICLE II TERMS OF EMPLOYMENT 2.1 Employment; Scope of Duties. (a) Employer hereby continues to employ Employee as Chief Executive Officer and/or Chief Operating Officer of Employer, and Employee hereby accepts such employment with Employer. In performing his duties hereunder, Employee shall report solely to, and shall be subject to the supervision of, the Board of Directors of Employer. Employee shall help to prepare an updated rolling financial forecast of Employer to be submitted to a committee of the Board of Directors within 30 days after the close of each month. The updated rolling financial forecast will include estimates of the previous month's performance and represent Employee's best view of forecasted results for the current month. The information to be provided by Employee in the financial forecast must be reasonably accurate and represent a good faith effort on the part of Employee to represent the true actual performance of the Employer. (b) Employee shall devote his best efforts and full business time and attention to the performance of services for Employer in accordance with the terms hereof. During the Term (as defined in Section 2.4), Employee shall not engage in any other business or professional activities, either on a full-time or part-time basis, as an employee, consultant or in any other capacity, whether or not he receives any compensation therefor, without the prior written consent of Employer's Board of Directors; provided, however, that nothing herein shall prevent Employee from (i) making and managing personal investments consistent with Section 3.3 of this Agreement, (ii) from engaging in community and/or charitable activities, so long as such activities, either singly or in the aggregate, do not interfere with the proper performance of Employee's responsibilities to Employer, or (iii) being involved as an officer, director, employee or consultant of ePagos, Inc., Software Brokers of America, Inc. a/k/a INTCOMEX and or its Affiliates, and International Technology Investment, LC, or any subsidiary or Affiliate of Employer (including but not limited to Tutopia.com, Inc.). 2.2 Compensation. (a) As compensation for Employee's services hereunder during the Term, Employer shall pay to Employee from and after the date hereof an annual salary of $175,000 (the "Salary"), less applicable income tax withholdings. The Salary shall be payable in equal semi-monthly installments in accordance with Employer's customary compensation policies. If, during the term of this Agreement, the Employee should be prevented from performing his duties by reason of Disability, amounts payable by Employer hereunder shall be reduced by the amounts payable under the Employer's disability insurance policy. 4 (b) [Reserved.] (c) In addition to the above payments, in the event of a Liquidity Event, provided that Employee is employed by Employer at the time of such Liquidity Event or if Employee was Involuntarily Terminated within 90 days prior to the commencement of or during the process leading to such Liquidity Event, Employer shall pay a bonus to Employee (a "Targeted Bonus") if the Equity Value paid with respect to such Liquidity Event, without regard to any payment of a Targeted Bonus to Employee or any other Senior Manager is at least $30 million, as determined in conjunction with the Liquidity Event. The amount of the Targeted Bonus to be paid to Employee will equal 24.75 % of the Total Senior Management Bonus Pool (as defined below). The "Total Senior Management Bonus Pool" with respect to a Liquidity Event shall equal 2.5% of the Equity Value paid with respect to such Liquidity Event, prior to the determination of the Total Senior Management Bonus Pool; provided, however, that if the Equity Value equals or exceeds $100 million prior to the determination of any Total Senior Management Bonus Pool, then the Total Senior Management Bonus Pool shall equal $2.5 million plus 5% of that portion of the Equity Value in excess of $100 million. If stockholders of Employer receive non-cash consideration in connection with a Liquidity Event, then an allocable portion of the Targeted Bonus shall be paid to Employee in the form of such non-cash consideration, with the amount of such non-cash consideration to be paid to Employee in the same ratio that UBS Capital Americas III, L.P. and UBS Capital LLC receive cash and non-cash consideration (i.e., if the consideration to be received by such holders is half cash and half stock, then the Targeted Bonus will be paid in the form of half cash and half stock). In connection with a Liquidity Event in which non-cash consideration is paid, the Employer shall cause the acquiring entity to expressly assume the obligation to pay such non-cash consideration as provided above. For the purposes of this Section 2.2(c), "commencement" shall mean (i) in the event that a Liquidity Event constitutes an asset sale or statutory merger, the adoption by Employer's Board of Directors of a resolution to pursue either the sale of Employer's assets or the statutory merger, as the case may be, and (ii) in the event that a Liquidity Event constitutes a sale of stock of the Employer, the taking of affirmative steps by the controlling stockholder(s) of Employer to sell stock of Employer in a transaction that would constitute a Liquidity Event. (d) UBS Capital Americas III, L.P. and UBS Capital LLC covenant that, in connection with the sale of their shares of Employer in a transaction in which the sale of such shares would constitute a Liquidity Event and in which non-cash consideration is paid, they will cause the acquiring entity to agree to pay the non-cash portion of the Targeted Bonus as provided above. (e) In addition to the Salary and bonuses, Employee shall be granted Options as shown on Exhibit A hereto. The Options shall be evidenced by a standard option agreement between Employer and Employee in a form approved by the Compensation Committee or the Board of Directors of Employer and are in addition to options previously granted to Employee under any prior employment agreement between Employer and Employee. 5 (f) Employee may be entitled to receive an annual cash bonus based on recommendations of Employer's Chief Executive Officer and Employer's Compensation Committee, and based on Employer's performance as it relates to the proposed budget for the fiscal year. Within 30 days after the start of each subsequent fiscal year, Employer shall transmit to Employee a copy of the proposed budget for such fiscal year, as approved by Employer's Board of Directors. Whether or not to award a cash bonus in any year and the amount thereof shall be in the sole discretion of the Board of Directors. (g) In addition to all other payments hereunder, Employee is hereby granted the vested right to receive 23,333 shares of Employer's Series E Preferred Stock (as defined below), less applicable withholding; provided, however, that such shares shall not actually be issued to Employee and Employee shall have no right to receive such shares until immediately prior to the first to occur of: a) a Change of Control of Employer, b) a Liquidity Event of Employer, or c) a Liquidation of Employer, as determined under the Certificate of Designation creating the Series E Preferred Stock of Employer. Prior to the first to occur of any such events, Employer shall file a Certificate of Designation for the Series E Preferred Stock if same has not already been done. 2.3 Employee Benefits. (a) Employee shall be entitled to such paid holidays and vacation time as is consistent with Employer's standard holiday and vacation policy for executive employees of Employer. (b) Subject to Employer's rules, policies and regulations as in effect from time to time (and subject to applicable eligibility requirements, including a minimum employment period), Employee shall be entitled to (i) group life insurance, disability or accident, death or dismemberment insurance, (ii) medical and/or dental insurance program; provided that regardless of the payment for other employees, Employee's premiums for himself and his family shall be paid in full by Employer and shall be for a preferred provider plan or similar plan, (iii) 401(k) benefit plan, if and when Employer establishes such a plan, (iv) other employee benefits that Employer may, in its sole discretion, make generally available to employees of Employer of the same level and responsibility as Employee, (v) all cell phone bills (provided that substantially all calls are made for business related to the Employer), (vi) a car allowance of $750 per month, (vii) high-speed internet access from Employee's principal residence. 2.4 Term. Employee's employment pursuant to the Prior Agreement commenced on May 7, 2001, and shall continue in effect for one (1) year from the date hereof unless otherwise terminated in accordance with Section 2.5. Commencing on the date hereof, the Term shall continue to automatically be extended each day by one day, until a date which is one (1) year following the first date, if any, that Employer delivers to Employee or Employee delivers to Employer, as the case may be, written notice that the Term will not be automatically extended. The period of time during which Employee remains employed by Employer pursuant to this Section 2.4 is referred to herein as the "Term." 2.5 Termination of Employment. 6 (a) Disability. (i) If during the term of this Agreement, the Employee should be prevented from performing his duties by reason of Disability for a continuous period greater than 180 days, Employer may terminate the Employee's employment hereunder by giving written notice thereof to the Employee, effective on the date set forth in the notice (which date shall be not less than 15 business days after the notice is given). For purposes hereof, a continuous period of Disability shall not be deemed interrupted until the Employee returns to substantially full time work for a period of at least 30 days. (ii) If termination of employment results or occurs due to Disability under this Section 2.5(a), Employee shall receive no other compensation hereunder; provided, however, that until Employee receives disability insurance payments under Employer's disability insurance coverage, Employee shall receive his Salary. All Options held by Employee under the 1998 Plan shall vest immediately upon the date of termination for Disability. (b) Death. (i) In the event of the Employee's death during the term of this Agreement, the Employee's employment hereunder shall be deemed terminated as of the date of the Employee's death. Employee's family shall be entitled to receive fully paid health and dental insurance coverage for one year after Employee's death and all Options held by Employee under the 1998 Plan shall vest immediately. (c) Cause. (i) This Agreement and the Employee's employment hereunder may be terminated at any time by the Company for Cause. (ii) If the Employee's employment is terminated by the Company for Cause or Employee terminates his employment other than by reason of death, Disability or an Involuntary Termination, Employee shall be entitled to no additional payments hereunder and Employee's Options shall be treated as required under the 1998 Plan and the 2001 Plan. (d) Involuntary Termination. In the event of an Involuntary Termination, Employee shall receive the following: (i) immediately after the date of termination, a lump-sum amount in immediately available funds equal to the sum of Executive's accrued but unpaid Salary; 7 (ii) an amount equal to one-third (1/3) of Employee's annualized Salary for the current year of the Term payable semi-monthly over four (4) months; (iii) the continuation of the benefits (or, if such benefits are not available, the after-tax economic equivalent thereof) specified in Section 2.3(b) to which Employee is entitled as of the date of termination for six (6) months after the date of the Involuntary Termination, or, at the election of Employee, cash payment equal to the value of such benefits payable semi-monthly over four (4) months; provided that with respect to any benefit to be provided on an insured basis, such value shall be the present value of the premiums expected to be paid for such coverage, and with respect to other benefits, such value shall be the present value of the expected net cost to the Company of providing such benefits; (iv) all options held by Employee under the 1998 Plan shall vest immediately; (v) all contractual restrictions on the transfer, sale or pledge of the common stock held by the Employee will be immediately extinguished and released with respect to an aggregate of 4,500 shares of common stock held directly by the Employee, his wife and his children; and (vi) the vested right to receive 24,300 shares of Employers' Series E Convertible Preferred Stock, with such stock to have the terms set forth in the Amended and Restated Put Agreement dated as of August 15, 2002, by and among Employer, UBS Capital Americas III, L.P. and UBS Capital LLC ("Series E Preferred Stock"), less applicable withholding; provided, however, that such shares shall not actually be issued to Employee and Employee shall have no right to receive such shares until immediately prior to the first to occur of: a) a Change of Control of Employer, b) a Liquidity Event of Employer, or c) a Liquidation of Employer, as determined under the Certificate of Designation creating the Series E Preferred Stock of Employer. Prior to the first to occur of any such events, Employer shall file a Certificate of Designation for the Series E Preferred Stock if same has not already been done. (e) Termination After a Change of Control. If an Involuntary Termination occurs within one (1) year after a Change of Control, then Executive shall receive the payments required by Section 2.5(d), except that for purposes of Section 2.5(d)(ii), Executive shall receive seventy-five percent (75%) of Employee's annualized Salary in the year of the Change of Control payable semi-monthly over nine (9) months. (f) Other Termination Benefits. Other than any amounts or benefits payable upon a Termination of Employment hereunder, Executive shall, except as otherwise specifically provided herein, not be entitled to any payments or benefits provided 8 hereunder or under the terms of any plan, policy or program of the Company or as otherwise required by applicable law. ARTICLE III COVENANTS AND AGREEMENTS 3.1 Records and Confidential Data. (a) Employee acknowledges that, in connection with the performance of his duties hereunder, Employer and its Affiliates will make available to Employee, and/or Employee will have access to, certain Confidential Information (as defined below) of Employer and its Affiliates. Employee acknowledges and agrees that any and all Confidential Information learned or obtained by Employee during the course of his employment by Employer or otherwise, whether developed by Employee alone or in conjunction with others or otherwise, shall be and is the property of Employer and its Affiliates. Employee shall keep all Confidential Information confidential and shall not use any Confidential Information in any manner other than in connection with Employee's discharge of his duties hereunder. (b) Following the first to occur of the termination of Employee's employment hereunder, or as soon as reasonably possible after Employer's written request, Employee shall return to Employer all written Confidential Information which has been provided to Employee and Employee shall destroy all copies of any analyses, compilations, studies or other documents prepared by Employee or for Employee's use containing or reflecting any Confidential Information. Within five business days after receipt of such request by Employee, Employee shall, upon written request of Employer, deliver to Employer a notarized document certifying that such written Confidential Information has been returned or destroyed in accordance with this Section 3.1(b). (c) For purposes of this Agreement, "Confidential Information" shall mean all confidential and proprietary information of Employer and/or its Affiliates, including, without limitation, confidential and proprietary information that is derived from or regarding reports, investigations, experiments, research, trade secrets, work in progress, web site drawing, designs, plans, proposals, requests for proposals, bids, codes, marketing and sales programs, acquisition targets or strategies, information regarding subscribers or web site viewers, client lists, client mailing lists, supplier lists, financial projections, cost summaries, payor information, pricing formulae, marketing studies relating to prospective business opportunities and all other confidential and proprietary materials or information prepared for or by Employer and/or any of its Affiliates. For purposes of this Agreement, Confidential Information shall not include and Employee's obligations under this Section 3.1 shall not extend to (i) information which is generally available to the public, (ii) information obtained by Employee from Persons not under agreement to maintain the confidentiality of the same, and (iii) information which is required to be disclosed by law or legal process (after giving Employer prior written notice thereof and an opportunity to contest such disclosure). 9 3.2 Inventions and Other Matters. (a) Employee agrees that all, inventions, discoveries or improvements made during the period of Employee's employment with Employer, including, without limitation, computer software (including source code, operating systems and specifications, data, data bases, files documentation and other materials related thereto), HTML or other scripts, web site designs, art work, visual images, programming code and programs, processes, uses, apparatuses, specialized information relating in any way to or that is useful in the business or products of Employer or Employer's actual or demonstrably anticipated research or development, designs or compositions of any kind that Employee, individually or with others, may originate or develop while employed by Employer (collectively, "Inventions"), belong to and shall be the sole property of Employer and constitute and shall constitute works specially ordered or commissioned as "works made for hire" under the United States Copyright Act and other applicable law. Without limiting the foregoing, Employee hereby assigns and transfers to Employer all rights of whatever nature that Employee may have, including, without limitation, any patent, trade secret, trademark or service mark rights (and any goodwill appurtenant thereto), any rights of publicity and any right, title and interest in any copyright and any right that may affix under any copyright law now or hereinafter in force and effect in the United States of America or in any other country or countries, in and to any Invention. Employee acknowledges and agrees that Employer shall have the royalty-free right to use in its businesses, and to make and sell products, processes, programs, systems designs, methods, formulas, apparatus, techniques, and services derived from any Inventions (whether or not patentable or copyrightable), as well as all improvements thereof or know-how related thereto. The provisions of this Section 3.2 shall survive termination of this Agreement for any reason. (b) For purposes of this Agreement, an Invention shall be deemed to have been "made during the period of Employee's employment" if, during such period, the Invention was conceived, in part or in whole, or first actually reduced to practice. Employee agrees that any patent, copyright or trade mark application (i) covering intellectual property that relates to services performed by Employee hereunder or that is applicable to those products or services of Employer that were within the scope of Employee's responsibilities hereunder, and (ii) that is filed by or for the benefit of Employee or any of his Affiliates within one (1) year after termination of Employee's employment shall be presumed to relate to an Invention made during the term of his employment and Employee shall have the burden of proof to prove otherwise. (c) This Section 3.2 shall not apply to an Invention for which no equipment, supplies, facilities or Confidential Information (as defined below) of Employer was used and that was developed entirely on Employee's own time, unless (i) the invention relates or is applicable to the services performed by Employee hereunder or that is applicable to those services or products of Employer that were within the scope of Employee's responsibilities hereunder, or (ii) results from any work relating to the Business that was performed, caused to be performed, or supervised by Employee for or on behalf of Employer. 10 (d) Employee agrees, without further consideration, to (i) promptly disclose each such Invention to Employer, to Employee's immediate supervisor and to such other individuals as Employer may direct, (ii) execute and to join others in executing such applications, assignments and other documents as may be necessary or convenient to vest in Employer, or its designee, full title to each such Invention and as may be necessary or convenient to obtain United States and foreign patents and copyrights thereon, to the extent Employer may so choose in its sole discretion, (iii) testify in any legal proceeding relative to such Invention whenever requested to do so by Employer, and (iv) furnish all facts relating to such Inventions or the history thereof. (e) Employee agrees that he will not at any time, except as authorized or directed by Employer, publish or disclose any information or knowledge concerning any Inventions. 3.3 Non-Competition. (a) Employer and Employee recognize that Employee has been retained to occupy a position of trust that constitutes part of the professional, management and executive staff of Employer. Employee, for and in consideration of the payments, rights and benefits provided herein, agrees that so long as he is employed by Employer and, if Employer terminates Employee's employment for Cause, in the event of an Involuntary Termination or if Employee terminates his employment with Employer for any reason other than pursuant to an Involuntary Termination, then during the period of time that Employee is receiving cash severance payments under Section 2.5(d)(ii) or 2.5(e), Employee shall not (i) work or act as an officer or director of or compensated consultant to, (ii) assist, (iii) own, directly or through any Affiliate or joint venture, a 10% or greater interest in, or (iv) make a financial investment (other than a passive, economic investment), whether in the form of equity or debt, in any business that is directly competitive with the Business in the United States, Latin America or in any other market in which Employer is conducting the Business at the time Employee's employment with Employer is terminated. (b) Notwithstanding the foregoing, nothing herein shall prohibit Employee from holding ten percent (10%) or less of any class of voting securities of any entity whose equity securities are listed on a national securities exchange or regularly traded in the over-the-counter market and for which quotations are readily available on the National Association of Securities Dealers Automated Quotation system. (c) If Employer terminates Employee's employment for Cause or if Employee terminates his employment with Employer for any reason other than pursuant to an Involuntary Termination, then for a period of one (1) year thereafter, Employee shall promptly notify Employer of each employment or agency relationship entered into by Employee, and each corporation, proprietorship or other entity formed or used by Employee, the business of which is directly competitive with the Business. The provisions of this Section 3.3 shall survive termination of this Agreement for any reason. 11 3.4 Non-Solicitation and Non-Interference. (a) Employee acknowledges that Employer has invested substantial time and effort in assembling its present staff of personnel. Employee agrees that so long as he is employed by Employer and then for a period of one (1) year thereafter, Employee shall not, directly or indirectly, employ, solicit for employment, or advise or recommend to any other Person that such other Person employ or solicit for employment, any of Employer's employees or recommend to any employee of Employer that he/she cease to be employed by Employer; provided that the restrictions set forth in the immediately preceding sentence shall not apply to any solicitation directed at the public in general e.g., advertisements in publications of general circulation, etc. or to inquiries for employment that were unsolicited, directly or indirectly, by Employee. (b) Employee acknowledges that all customers of Employer, which Employee has serviced or hereafter services during Employee's employment by Employer and all prospective customers from whom Employee has solicited or may solicit business while in the employ of Employer, shall be solely the customers of Employer. Employee agrees that so long as he is employed by Employer and for a period of one (1) year thereafter, Employee shall not either directly or indirectly solicit business, as to products or services competitive with the Business, from any of Employer's customers with whom Employee had contact during his employment with Employer. (c) Employee agrees that so long as he is employed by Employer and for a period of one (1) year thereafter, Employee shall not, directly or indirectly, (i) intentionally disrupt or attempt to disrupt or terminate any relationship between Employer and any of its Business suppliers, clients or employees, or (ii) disparage, malign or discredit the name or reputation of Employer to any customers, clients or suppliers of the Business. Employee agrees that for so long as he is employed by Employer and for a period of one (1) year thereafter, he will not influence or attempt to influence any of the customers or clients of Employer to cease doing business with Employer. 3.5 Restrictions Reasonable. Employee agrees that the restrictions contained in Sections 3.3 and 3.4 are reasonable as to time and geographic scope because of the nature of the Business and Employee agrees, in particular, that the geographic scope of this restriction is reasonable because companies in the same industry as the Business compete on an international basis. Employee acknowledges that Employer is in direct competition with all other companies that provide services and products similar to the Business products and services throughout the United States and Latin America and, because of the nature of the Business, Employee expressly agrees that the covenants contained in Sections 3.3 and 3.4 cannot reasonably be limited to any smaller geographic area. The provisions of Sections 3.3 and 3.4 shall survive termination of this Agreement for any reason. 3.6 Prior Obligations. Employee represents and warrants that (a) Employee has no obligation of confidence or other commitments to any previous employer or any others that conflict with this Agreement or restrict Employee's field of activities, and (b) no other agreement 12 to which Employee is subject will conflict with, prevent, be breached by, interfere with or in any manner affect the terms and conditions of this Agreement. 3.7 Injunctive Relief. Employee acknowledge that damages would be an inadequate remedy for Employee's breach of any of the provisions of Sections 3.1, 3.2, 3.3 and/or 3.4 of this Agreement, and that breach of any of such provisions will result in immeasurable and irreparable harm to Employer. Therefore, in addition to any other remedy to which Employer may be entitled by reason of Employee's breach or threatened breach of any such provision, Employer shall be entitled to seek and obtain a temporary restraining order, a preliminary and/or permanent injunction, or any other form of equitable relief from any court of competent jurisdiction restraining Employee from committing or continuing any breach of such Section, without the necessity of posting a bond. It is further agreed that the existence of any claim or cause of action on the part of Employee against Employer, whether arising from this Agreement or otherwise, shall in no way constitute a defense to the enforcement of the provisions of Sections 3.1, 3.2, 3.3 and/or 3.4 of this Agreement. 3.8 Subordination. (a) If a Bankruptcy Event (as defined below) shall occur, then Employee agrees that all payments due to or claims (the "Subordinated Claims") of Employee arising from or in connection with the termination of Employee's employment with Employer for any reason, including without limitation the right to receive payments under Section 2.5(d)(ii), Section 2.5(d)(iii) or Section 2.5(e), whether accrued or arising in the future, shall be subordinated in payment and priority to all payments due or to become due under the Convertible Notes (as defined below) to the Holders (as defined below). For purposes of this Agreement, a "Bankruptcy Event" shall mean any dissolution, winding up, liquidation, readjustment, reorganization, or other similar proceeding relating to Employer or its assets, whether voluntary or involuntary, partial or complete, and whether in bankruptcy, insolvency or receivership, or upon an assignment for the benefit of creditors, or any other marshalling of the assets and liabilities of Employer. (b) "Convertible Notes" shall mean those certain Convertible Promissory Notes issued on the date hereof to UBS (or, with respect to ROF/IFX, LLC, a convertible promissory note issued as Qualified Financing Securities with respect to that Convertible Promissory Note issued to ROF/IFX, LLC on September 9, 2002), including any amendments, extensions, modifications or consolidations of such Convertible Promissory Notes and including convertible notes evidencing up to an additional $3.1 million in principal amount of convertible indebtedness which may be issued with the consent of UBS on substantially the same terms as such Convertible Promissory Notes on or before September 1, 2003 (holders of Convertible Notes to be referred to herein as the "Holders"). The Holders shall not be prejudiced in their rights under this Section 3.8 by any act or failure to act of the Holders or delay in the exercise of any right or remedy, and no such failure to act or delay shall preclude any further exercise of such rights by Holders, nor shall any modification of this Section 3.8 by Employer and Employee be binding upon the Holders except as expressly set forth in a writing signed and delivered on behalf of those Holders holding a majority of the outstanding principal amount of the 13 Convertible Notes.This Section 3.8 shall inure to the benefit of the Holders and their respective successors and assigns who shall be third party beneficiaries hereof. (c) Without limiting the foregoing or any other provision hereof, if a Bankruptcy Event shall occur then: (a) Employer may not make and Employee may not receive, directly or indirectly, make any payment, whether in cash, property, securities or otherwise, in respect of any Subordinated Claims unless and until all amounts owing to the Holders under or pursuant to the Convertible Notes have been indefeasibly paid in full in immediately available funds and (b) upon any subsequent distribution of assets of Employer: (i) the Holders shall first be entitled to receive indefeasible payment in full in immediately available funds of all amounts owing to the Holders under or pursuant to the Convertible Notes (including, without limitation, interest accruing after the occurrence of any Bankruptcy Event, whether or not such interest is an allowed claim against Employer) before Employee is entitled to receive any payment, whether in cash, property or securities, in respect of any amount owing under or pursuant to the Subordinated Claims, and (ii) any payment or distributions of assets of Employer of any kind or character, whether in cash, property or securities, to which Employee would be entitled in respect of the Subordinated Claims except for the provisions hereof, shall be paid by the liquidating trustee or agent or other person or entity making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or other trustee or agent, directly to the Holders (in such manner as a majority in principal amount shall so direct) for application to amounts owing to the Holders under or pursuant to the Convertible Notes until indefeasibly paid in full in immediately available funds. In the event that notwithstanding the foregoing Employer shall make any payment to Employee in respect of Subordinated Claims or Employee shall receive any payment in respect of Subordinated Claims at a time when such payment is not permitted pursuant to the foregoing, such payment shall be held by Employee in trust for the benefit of, and shall be paid forthwith over and delivered to, the Holders (in such manner as a majority in principal amount shall so direct) for application to amounts owing to the Holders under or pursuant to the Convertible Notes until indefeasibly paid in full in immediately available funds. In any bankruptcy, insolvency or similar proceeding with respect to Employer after the occurrence of a Bankruptcy Event, Employee irrevocably authorizes the Holders (acting with the consent of Holders holding a majority in principal amount of the Convertible Notes): (i) to prove and enforce any claims of Employee in respect of obligations owed by Employer to Employee which are Subordinated Claims either in the name of the Holders or in the name of Employee as the attorney-in-fact of Employee; (ii) to vote claims comprising obligations owed by Employer to Employee which are Subordinated Claims and to accept or reject on behalf of Employee any plan proposed in connection with such proceeding; (iii) to accept and execute receipts for any payment or distribution made with respect to any and all obligations owed by Employer to Employee which are Subordinated Claims; (iv) to take action and to execute any instruments necessary to effectuate the foregoing either in the name of the Holders or in the name of Employee as its attorney-in-fact. Notwithstanding the rights and remedies available to Employee under this Agreement, at law, in equity or otherwise, Employee agrees that following the occurrence of a Bankruptcy Event Employee will not, and will not be entitled to, exercise any Remedy (as defined below) against Employer in respect of Subordinated Claims. "Remedy" shall mean and include the taking of any action by 14 Employee to enforce the obligations of Employer in respect of the Subordinated Claims or to collect payment of any amount owing in respect of the Subordinated Claims, including, without limitation, the commencement of any judicial, arbitral or other action or proceeding (including, without limitation, any bankruptcy, insolvency or similar proceeding) against Employer or the joining in any such action or proceeding. 3.9 Directors and Officers Insurance. Employer agrees to use reasonable commercial efforts to modify its existing directors and officers insurance policies (the "Policies") to provide that reimbursement of expenses or other payments to be made by the insurer under the applicable Policy to or for the benefit of directors or officers is paid directly to the applicable officer or director and not to Employer and shall further provide that Employer shall not be a named insured under such Policies. In addition, the Employer agrees to use commercially reasonable efforts to maintain officers and directors insurance policies on terms substantially similar to those of the Policies during the period during which the Employee is a director or officer of the Employer and for a period of no less than two (2) years thereafter. Notwithstanding the foregoing, the obligations set forth in this Section 3.9 shall be subject to the condition that compliance therewith does not substantially increase the aggregate cost of directors and officers insurance above the current aggregate cost of the Policies or reduce the scope of coverage below the current scope covered under the Policies. In the event that the Employer is no longer a public company, then, notwithstanding the foregoing, the Employer shall be entitled to terminate and/or reduce the scope of director and officer insurance coverage to that which is customary for similarly situated private companies that previously were public companies. ARTICLE IV MISCELLANEOUS 4.1 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given (a) when made, if delivered personally, (b) three business days after being mailed by certified or registered mail, postage prepaid, return receipt requested, or (c) two business days after delivery to a reputable overnight courier service, to the parties, their successors in interest or their assignees at the following addresses, or at such other addresses as the parties may designate by written notice in the manner aforesaid: To Employer: IFX Corporation c/o IFX Communications Ventures Inc. 15050 N.W. 79 Court - Suite 200 Miami Lakes, Florida 33016 Attention: President To Employee, to his home address as recorded in the payroll records of Employer from time to time. 15 4.2 Governing Law. This Agreement shall be governed as to its validity and effect by the internal laws of the State of Florida, without regard to its rules regarding conflicts of law. 4.3 Agreement To Arbitrate. (a) Employer and Employee agree that any disputes that arise between Employee and Employer (or any of Employer's officers, directors, stockholders, supervisors, employees, agents, Affiliates or successors), excluding disputes arising out of Section 3.1, 3.2, 3.3 or 3.4, that cannot be resolved informally shall be decided by submission of the dispute to binding arbitration before a sole neutral arbitrator who is a retired federal judge pursuant to the American Arbitration Association Commercial Arbitration Rules governing such proceedings, and not by a lawsuit or by resort to court process, except as specifically set forth below. Both parties acknowledge and agree that they are giving up their respective constitutional rights to have any such dispute decided in a court of law before a jury, and instead are accepting the use of the arbitration process. This Section 4.3(a) applies to any and all disputes, including, by way of example only and not limited to, disputes regarding termination of Employee's employment; discrimination and unlawful harassment of any kind (including, without limitation, claims arising under Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. (S)2000(e) et seq. and the Civil Rights Act of 1991; the Age Discrimination in Employment Act, as amended, 29 U.S.C. (S)621, et seq.; the Americans with Disabilities Act of 1990, 42 U.S.C. (S)12101 et seq.; the Family and Medical Leave Act of 1993, 29 U.S.C. (S)2612 et seq.; and all applicable state and local anti-discrimination laws and constitutional provisions); disputes arising under any other applicable federal, state or local labor statutes, regulations or orders; disputes regarding assault and battery; negligent supervision; defamation; invasion of privacy; wages and overtime; and disputes regarding the formation and enforceability of this Section 4.3(a). The following types of disputes are excluded from the scope of coverage of this Section 4.3(a): (i) workers' compensation claims by Employee for on-the-job injuries; and (ii) any and all claims by Employer against Employee, including claims for injunctive relief, arising out of Employee's breach or threatened breach of Section 3.1, 3.2, 3.3 or 3.4 of this Agreement. (b) General Rules of Arbitration. Either party shall have the right to have counsel represent him/it at the arbitration hearing and in pre-arbitration proceedings. Pre-arbitration discovery shall be permitted in accordance with the Federal Rules of Civil Procedure, except that (i) there shall be no limit on the number of depositions that may be noticed by either party, and (ii) in connection with any pre-arbitration disclosure of expert testimony in accordance with Rule 26(a)(2), the timing of the expert disclosure shall be set by the arbitrator. (c) Authority of Arbitrator. The arbitrator shall have the authority to (i) resolve any discovery disputes that arise between the parties; (ii) resolve any dispute relating to the interpretation, applicability or enforceability of this Section 4.3; and (iii) entertain a motion to dismiss and a motion for summary judgment, applying the standards governing such motions under Federal Rule Of Civil Procedure 12(b)(6) and Rule 56. The arbitrator is required to render his decision in writing, with an opinion stating the 16 bases of his decision. Either party has the right to file a post-arbitration brief, which shall be considered by the arbitrator (d) Payment of Costs and Fees. Each party shall bear its own costs and attorneys' fees incurred in connection with the arbitration. The arbitrator shall have the discretion to award costs to the prevailing party. The arbitrator's fees shall be borne equally by the parties. Each party shall post his or its portion of the arbitrator's anticipated fee prior to the commencement of the arbitration. (e) Appeals. Either side shall have the right to appeal the arbitrator's decision by applying to a Court (as defined in Section 4.4) for an order vacating the award for any of the reasons set forth in 9 U.S.C. (S)10, or on the basis that the arbitrator has made a mistake of law or fact. The arbitration decision shall stand if it is supported by substantial evidence. 4.4 Jurisdiction; Service of Process. Each of the parties hereto agrees that any action or proceeding initiated or otherwise brought to judicial proceedings by either Employee or Employer concerning the subject matter of this Agreement that is not subject to Section 4.3, shall be litigated in the United States District Court for Dade County, Florida or, in the event such court cannot or will not exercise jurisdiction, in the state courts of the State of Florida covering Miami, Dade County, Florida (the "Courts"). Each of the parties hereto expressly submits to the jurisdiction and venue of the Courts. Each party hereto waives any claim that the Courts are an inconvenient forum or an improper forum based on lack of venue or jurisdiction. Each party shall bear its own costs and attorneys' fees incurred in connection with any such actions or proceedings. 4.5 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of (a) the heirs, executors and legal representatives of Employee, upon Employee's death or incapacity, and (b) any successor of Employer, and any such successor shall be deemed substituted for Employee or Employer, as the case may be, under the terms hereof for all purposes; provided, however, that any such assignment shall not relieve Employer from its obligations hereunder. As used in this Agreement, "successor" shall include any Person that at any time, whether by purchase, merger, consolidation or otherwise, directly or indirectly acquires a majority of the assets, business or stock of Employer; provided, however, that no acquisition of the stock of Employer by UBS Capital Americas III, L.P., UBS Capital LLC or any of their respective Affiliates (collectively, "UBS") shall cause UBS to be treated as a "successor" hereunder. 4.6 Integration. This Agreement, the Plan and any option agreement Employee will be required to execute, constitute the entire agreement between the parties with respect to all matters covered herein, including but not limited to the parties' employment relationship and Employee's entitlement to compensation, commissions and benefits from Employer or any of its Affiliated companies and/or the termination of Employee's employment. This Agreement supersedes all prior oral or written understandings and agreements relating to its subject matter and all other business relationships between Employer and/or its Affiliated companies. 17 4.7 No Representations. No Person has made or has the authority to make any representations or promises on behalf of any of the parties which are inconsistent with the representations or promises contained in this Agreement, and this Agreement has not been executed in reliance on any representations or promises not set forth herein. 4.8 Amendments. This Agreement may be modified only by a written instrument executed by the parties that is designated as an amendment to this Agreement. 4.9 Counterparts. This Agreement is being executed 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. 4.10 Severability and Non-Waiver. Any provision of this Agreement (or portion thereof) which is deemed invalid, illegal or unenforceable in any jurisdiction shall, as to that jurisdiction and subject to this Section, be ineffective to the extent of such invalidity, illegality or unenforceability, without affecting in any way the remaining provisions thereof in such jurisdiction or rendering that or any other provisions of this Agreement invalid, illegal, or unenforceable in any other jurisdiction. If any covenant should be deemed invalid, illegal or unenforceable because its scope is considered excessive, such covenant shall be modified so that the scope of the covenant is reduced only to the minimum extent necessary to render the modified covenant valid, legal and enforceable. 4.11 Voluntary and Knowledgeable Act. Employee represents and warrants that he has been represented by independent legal counsel of his own choosing and that he has read and understands each and every provision of this Agreement and has freely and voluntarily entered into this Agreement. 4.12 Late Payments. If the Employer fails to pay any amount provided under this Agreement or any other plan or program sponsored by Employer when due, the Employer shall pay interest on such amount at a rate equal to (i) the highest rate of interest charged by the Employer's principal lender plus 200 basis points, or (ii) in the absence of such a lender, 300 basis points over the prime commercial lending rate announced by Harris Trust and Savings Bank on the date such amount is due or, if no such rate shall be announced on such date, the immediately prior date on which Harris Trust and Savings Bank announced such a rate; provided, however, that if the interest rate determined in accordance with this Section exceeds the highest legally-permissible interest rate, then the interest rate shall be the highest legally-permissible interest rate. 4.13 Shares Not Yet Authorized. Employer shall authorize such shares of Series D Preferred Stock or Series E Preferred Stock as shall be necessary to issue shares to be received by Employee on any exercise of options to be issued hereunder, or if sufficient authorized shares do not exist, Employer shall designate one or more new series of preferred stock (as may be required) having terms and conditions identical to the Series D Preferred Stock or Series E Preferred Stock, as the case may be, so that such new series of preferred stock may be issued in connection with the exercise of the options to purchase Series D Preferred Stock options or Series E Preferred Stock, as the case may be. 18 4.14 Stockholder Approval. Until such time as stockholder approval for the issuance to Employee of the options to purchase Series D Preferred Stock is no longer required under NASDAQ rules and regulations or under any applicable law, the effectiveness of the provisions to issue to Employee the options to purchase Series D Preferred Stock (or any successor series of preferred stock, as provided in Section 4.13 hereof) shall be contingent on the approval of shareholders of Employer having a majority of the voting power of Employer. Employer covenants to seek stockholder approval for the issuance of the Series D Preferred at the next annual meeting of Employer. The Board of Directors of Employer shall recommend that the shareholders of Employer vote in favor of and approve the issuance of the options to Employee hereunder. Each of UBS Capital LLC and UBS Capital Americas III, L.P. agrees to vote in favor of the issuance of the options to be issued hereunder to Employee. 19 IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement as of the date first above written. EMPLOYER: IFX CORPORATION By: /s/ Joel Eidelstein ------------------------------ Name: Joel Eidelstein Title: President Date: October 31, 2002 EMPLOYEE: /s/ Michael Shalom --------------------------------- Michael Shalom Date: October 31, 2002 Solely with respect to Sections 2.2(d) and 4.14. UBS CAPITAL LLC By: /s/ George A. Duarte ---------------------- Name: George A. Duarte Its: Attorney-in-fact By: /s/ Marc Unger ---------------------- Name: Marc Unger Its: Attorney-in-fact UBS CAPITAL AMERICAS III, L.P. By: UBS Capital Americas III, LLC By: /s/ George A. Duarte ----------------------------- Name: George A. Duarte Its: Partner By: /s/ Marc Unger ----------------------------- Name: Marc Unger Its: Chief Financial Officer EXHIBIT A 1. Effective as of the date hereof, Employee shall be granted an option to purchase 125,000 shares of Employer's Series D Preferred Stock. The exercise price for the option is equal to $1.20 per share of Series D Convertible Preferred Stock, subject to such adjustments for stock splits, dividends, recapitalizations as are contained in the Convertible Promissory Notes issued to UBS Capital Americas III, L.P. and UBS Capital LLC dated as of the date hereof (each a "Convertible Promissory Note"). The option will vest monthly over 24 months starting three (3) months from the date hereof, but will vest immediately in connection with an Involuntary Termination. The option will be non-transferable and non-assignable. The options will have a term ending ten (10) years from the date hereof. Options which are vested may be exercised for ninety (90) days following Employee's death, Disability or an Involuntary Termination. If Employee is terminated for Cause or terminates employment other than as a result of death, Disability or an Involuntary Termination, the option will cease to be exercisable effective as of the effective date of termination. Unvested options will terminate immediately as of termination of Employee's employment with Employer. EX-10.4 6 dex104.txt EMPLOYMENT AGREEMENT-JOEL EIDELSTEIN Exhibit 10.4 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of October 31, 2002, by and between IFX CORPORATION, a Delaware corporation ("IFX" and, collectively with its subsidiaries, "Employer"), and JOEL EIDELSTEIN ("Employee"). W I T N E S S E T H: WHEREAS, Employer is in the business of acquiring, developing and maintaining Internet access and related services in Latin America and other non-U.S. jurisdictions (the "Business"); WHEREAS, Employer desires to continue to employ Employee to oversee all management and day-to-day operations as President of Employer, and Employee desires to continue such employment, on the terms and subject to the conditions set forth herein; WHEREAS, Employee's existing Employment Agreement (the "Prior Agreement") is dated as of May 7, 2001, and both Employee and Employer believe it would be in the best interests of both Employee and Employer to amend and restate the Prior Agreement by entering into this Agreement; WHEREAS, Employee has had an opportunity to review the terms and conditions of this Agreement, to negotiate the terms hereof and to engage legal counsel on his behalf if he so desires. NOW THEREFORE, in consideration of Employer's continued employment of Employee, the terms, conditions and covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Employee and Employer, intending to be legally bound, hereby agree as follows: ARTICLE I DEFINITIONS 1.1 Terms Defined Herein. Except as otherwise herein expressly provided, the following terms and phrases shall have the meanings set forth below: "Affiliate" means (a) in the case of an entity, any Person who or which, directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, any specified Person or (b) in the case of an individual, such individual's spouse, children, grandchildren or parents or a trust primarily for the benefit of any of the foregoing. "Cause" means (a) the willful and continued failure by Employee to substantially perform his duties under this Agreement (other than any failure resulting from Employee's death or incapacity due to physical or mental illness) for five days after written demand for substantial performance is delivered by Employer which specifically identifies the manner in which Employer believes Employee has not substantially performed his duties and which notice is specifically identified as being issued pursuant to this paragraph, (b) the commission by Employee of theft, embezzlement, fraud or misappropriation of funds against Employer or the willful engaging by Employee in other misconduct which is materially injurious to Employer, (c) the willful violation by Employee of Section 3.1, 3.2, 3.3 or 3.4 of this Agreement or (d) the conviction of Employee of a felony involving fraud, dishonesty or moral turpitude. Notwithstanding anything to the contrary contained herein, none of the following events shall be treated as "cause": (i) bad judgment, (ii) negligence, or any act or omission that Employee believed in good faith to have been in or not opposed to the interests of the Company. "Change in Control" means the occurrence of any one of the following events: (a) any consolidation, merger or other similar transaction involving IFX, following which the stockholders of IFX immediately prior to such transaction fail to hold more than 50% of the outstanding voting securities of the continuing or succeeding corporation in substantially the same proportions, or which contemplates that all or substantially all of the business and/or assets of IFX will be controlled by another corporation; (b) any sale, lease, exchange or transfer (in one transaction or series of related transactions) of all or substantially all of the assets of IFX; (c) approval by the stockholders of IFX of any plan or proposal for the liquidation or dissolution of IFX, unless such plan or proposal is abandoned within 60 days following such approval; (d) the acquisition by any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934), or two or more Persons acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the outstanding shares of voting stock of IFX; provided, however, that for purposes of the foregoing, "person" excludes UBS Capital Americas III, L.P., UBS Capital, LLC, Lee S. Casty, the Casty Grantor Subtrust, International Technology Investments, LC or any of their Affiliates, and any underwriter purchasing shares of IFX with the intent of reselling them, or (e) if, during any period of 24 consecutive calendar months commencing on the date of this Agreement, those individuals (the "Continuing Directors") who either (i) were directors of IFX on the first day of each such period, or (ii) subsequently became directors of IFX and whose actual election or initial nomination for election subsequent to that date was approved by a majority of the Continuing Directors then on the board of directors of IFX, cease to constitute a majority of the board of directors of IFX. "Common Stock" means shares of common stock, par value $.02 per share, of IFX. "Disability" means disability as defined in Employer's disability insurance plan then in effect. "Equity Value" shall mean (i) in the case of the sale, exchange or purchase of equity securities of Employer, the total net consideration paid for such securities; and (ii) in the case of a sale or disposition of assets of Employer and its subsidiaries, the total net consideration paid for such assets. 2 "Involuntary Termination" means if Employer terminates Employee for any reason other than Cause or if Employee terminates his employment with Employer (a) within 30 days after Employer materially reduces Employee's duties and responsibilities hereunder; (b) upon material breach of this Agreement by Employer which remains uncured for 30 days following notice thereof from Employee to Employer, provided that Employee gives notice of termination within 5 days of expiration of such thirty day period; (c) the failure to nominate or elect Employee as President, Chief Executive Officer or Chief Operating Officer of IFX; (d) causing or requiring Employee to report to anyone other than the Board or any Chief Executive Officer of Employer appointed from time to time by the Board; (e) assignment of duties materially inconsistent with his position and duties described in this Agreement; (f) the failure of IFX to assign this Agreement to a successor to IFX or the failure of a successor to IFX to explicitly assume and agree to be bound by this Agreement; (g) requiring Employee to be principally located at any office or location more than 50 miles from IFX's current office in Miami Lakes, Florida; or (h) diminution of Employee's compensation package without Employee's express written consent; provided, however, that in the event such breach is curable but Employer is unable to cure such breach within such five-day period, then any such breach shall not be deemed to justify Employee's "Involuntary Termination" hereunder so long as Employer is diligently and in good faith pursuing a cure and such breach is cured no later than 30 days following receipt of the foregoing written notice from Employee. "Liquidity Event" means the consummation of a transaction for consideration consisting of cash or Unrestricted Marketable Securities, whether in a single transaction or in a series of related transactions, that are consummated contemporaneously (or consummated pursuant to contemporaneous agreements), with an independent third party or a group of independent third parties pursuant to which such party or parties (a) acquire more than 50% of the outstanding voting stock of the Employer determined on a fully diluted basis, or (b) acquire assets constituting all or substantially all of the assets of the Employer and its subsidiaries on a consolidated basis (which shall be deemed the equivalent of the acquisition of 100% of the voting stock of the Employer on a fully diluted basis for the purposes hereof); provided, however, that if the consideration for such transaction consists of restricted securities, a Liquidity Event shall be deemed to be consummated at such time as at least 75% of such restricted securities become Unrestricted Marketable Securities. "Person" means any individual, partnership, corporation, limited liability company, joint venture, trust, firm, association, unincorporated organization or other entity. "Senior Managers" shall mean Joel Edelstein, Michael Shalom, Jose Leiman and Daniel Salama. "Unrestricted Marketable Securities" means securities which are listed on a national securities exchange or quoted on the NASDAQ National Market System and which are freely tradable by the holder thereof without restriction pursuant to an effective registration statement under the Securities Act or Rule 144(k) thereunder. "1998 Plan" means the IFX Corporation 1998 Stock Option and Incentive Plan, as amended, together with any successor thereto. 3 "2001 Plan" means the IFX Corporation 2001 Stock Option Plan, as amended, together with any successor thereto. ARTICLE II TERMS OF EMPLOYMENT 2.1 Employment; Scope of Duties. (a) Employer hereby continues to employ Employee as President of Employer to act as chief operating officer of Employer and to manage and oversee all day-to-day operations of Employer, and Employee hereby accepts such employment with Employer. In performing his duties hereunder, Employee shall report solely to, and shall be subject to the supervision of, the Board of Directors, or any Chief Executive Officer of Employer designated from time-to-time by the Board of Directors. If requested by the Employer, Employee shall also serve as interim chief financial officer of the Employer. Employee shall help to prepare an updated rolling financial forecast of Employer to be submitted to a committee of the Board of Directors within 30 days after the close of each month. The updated rolling financial forecast will include estimates of the previous month's performance and represent Employee's best view of forecasted results for the current month. The information to be provided by Employee in the financial forecast must be reasonably accurate and represent a good faith effort on the part of Employee to represent the true actual performance of the Employer. (b) Employee shall devote his best efforts and full business time and attention to the performance of services for Employer in accordance with the terms hereof. During the Term (as defined in Section 2.4), Employee shall not engage in any other business or professional activities, either on a full-time or part-time basis, as an employee, consultant or in any other capacity, whether or not he receives any compensation therefor, without the prior written consent of Employer's Board of Directors; provided, however, that nothing herein shall prevent Employee from (i) making and managing personal investments consistent with Section 3.3 of this Agreement, (ii) from engaging in community and/or charitable activities, so long as such activities, either singly or in the aggregate, do not interfere with the proper performance of Employee's responsibilities to Employer, or (iii) being involved as an officer, director, employee or consultant of ePagos, Inc., or any subsidiary or Affiliate of Employer (including but not limited to Tutopia.com, Inc.). 2.2 Compensation. (a) As compensation for Employee's services hereunder during the Term, Employer shall pay to Employee from and after the date hereof an annual salary of $175,000 (the "Salary"), less applicable income tax withholdings. The Salary shall be payable in equal semi-monthly installments in accordance with Employer's customary compensation policies. If, during the term of this Agreement, the Employee should be prevented from performing his duties by reason of Disability, amounts payable by 4 Employer hereunder shall be reduced by the amounts payable under the Employer's disability insurance policy. (b) In addition to the Salary, effective with the entering into of this Agreement, Employer will pay a cash bonus to Employee of $35,000. (c) In addition to the above payments, in the event of a Liquidity Event, provided that Employee is employed by Employer at the time of such Liquidity Event or if Employee was Involuntarily Terminated within 90 days prior to the commencement of or during the process leading to such Liquidity Event, Employer shall pay a bonus to Employee (a "Targeted Bonus") if the Equity Value paid with respect to such Liquidity Event, without regard to any payment of a Targeted Bonus to Employee or any other Senior Manager is at least $30 million, as determined in conjunction with the Liquidity Event. The amount of the Targeted Bonus to be paid to Employee will equal 24.75 % of the Total Senior Management Bonus Pool (as defined below). The "Total Senior Management Bonus Pool" with respect to a Liquidity Event shall equal 2.5% of the Equity Value paid with respect to such Liquidity Event, prior to the determination of the Total Senior Management Bonus Pool; provided, however, that if the Equity Value equals or exceeds $100 million prior to the determination of any Total Senior Management Bonus Pool, then the Total Senior Management Bonus Pool shall equal $2.5 million plus 5% of that portion of the Equity Value in excess of $100 million. If stockholders of Employer receive non-cash consideration in connection with a Liquidity Event, then an allocable portion of the Targeted Bonus shall be paid to Employee in the form of such non-cash consideration, with the amount of such non-cash consideration to be paid to Employee in the same ratio that UBS Capital Americas III, L.P. and UBS Capital LLC receive cash and non-cash consideration (i.e., if the consideration to be received by such holders is half cash and half stock, then the Targeted Bonus will be paid in the form of half cash and half stock). In connection with a Liquidity Event in which non-cash consideration is paid, the Employer shall cause the acquiring entity to expressly assume the obligation to pay such non-cash consideration as provided above. For the purposes of this Section 2.2(c), "commencement" shall mean (i) in the event that a Liquidity Event constitutes an asset sale or statutory merger, the adoption by Employer's Board of Directors of a resolution to pursue either the sale of Employer's assets or the statutory merger, as the case may be, and (ii) in the event that a Liquidity Event constitutes a sale of stock of the Employer, the taking of affirmative steps by the controlling stockholder(s) of Employer to sell stock of Employer in a transaction that would constitute a Liquidity Event. (d) UBS Capital Americas III, L.P. and UBS Capital LLC covenant that, in connection with the sale of their shares of Employer in a transaction in which the sale of such shares would constitute a Liquidity Event and in which non-cash consideration is paid, they will cause the acquiring entity to agree to pay the non-cash portion of the Targeted Bonus as provided above. (e) In addition to the Salary and bonuses, Employee shall be granted Options as shown on Exhibit A hereto. The Options shall be evidenced by a standard option agreement between Employer and Employee in a form approved by the Compensation 5 Committee or the Board of Directors of Employer and are in addition to options previously granted to Employee under any prior employment agreement between Employer and Employee. (f) Employee may be entitled to receive an annual cash bonus based on recommendations of Employer's Chief Executive Officer and Employer's Compensation Committee, and based on Employer's performance as it relates to the proposed budget for the fiscal year. Within 30 days after the start of each subsequent fiscal year, Employer shall transmit to Employee a copy of the proposed budget for such fiscal year, as approved by Employer's Board of Directors. Whether or not to award a cash bonus in any year and the amount thereof shall be in the sole discretion of the Board of Directors. (g) In addition to all other payments hereunder, Employee is hereby granted the vested right to receive 11,667 shares of Employer's Series E Preferred Stock (as defined below), less applicable withholding; provided, however, that such shares shall not actually be issued to Employee and Employee shall have no right to receive such shares until immediately prior to the first to occur of: a) a Change of Control of Employer, b) a Liquidity Event of Employer, or c) a Liquidation of Employer, as determined under the Certificate of Designation creating the Series E Preferred Stock of Employer. Prior to the first to occur of any such events, Employer shall file a Certificate of Designation for the Series E Preferred Stock if same has not already been done. 2.3 Employee Benefits. (a) Employee shall be entitled to such paid holidays and vacation time as is consistent with Employer's standard holiday and vacation policy for executive employees of Employer. (b) Subject to Employer's rules, policies and regulations as in effect from time to time (and subject to applicable eligibility requirements, including a minimum employment period), Employee shall be entitled to (i) group life insurance, disability or accident, death or dismemberment insurance, (ii) medical and/or dental insurance program; provided that regardless of the payment for other employees, Employee's premiums for himself and his family shall be paid in full by Employer and shall be for a preferred provider plan or similar plan, (iii) 401(k) benefit plan, if and when Employer establishes such a plan, (iv) other employee benefits that Employer may, in its sole discretion, make generally available to employees of Employer of the same level and responsibility as Employee, (v) all cell phone bills (provided that substantially all calls are made for business related to the Employer), (vi) a car allowance of $750 per month, (vii) high-speed internet access from Employee's principal residence. 2.4 Term. Employee's employment pursuant to the Prior Agreement commenced on May 7, 2001, and shall continue in effect for one (1) year from the date hereof unless otherwise terminated in accordance with Section 2.5. Commencing on the date hereof, the Term shall continue to automatically be extended each day by one day, until a date which is one (1) year following the first date, if any, that Employer delivers to Employee or Employee delivers to Employer, as the case may be, written notice that the Term will not be automatically extended. 6 The period of time during which Employee remains employed by Employer pursuant to this Section 2.4 is referred to herein as the "Term." 2.5 Termination of Employment. (a) Disability. (i) If during the term of this Agreement, the Employee should be prevented from performing his duties by reason of Disability for a continuous period greater than 180 days, Employer may terminate the Employee's employment hereunder by giving written notice thereof to the Employee, effective on the date set forth in the notice (which date shall be not less than 15 business days after the notice is given). For purposes hereof, a continuous period of Disability shall not be deemed interrupted until the Employee returns to substantially full time work for a period of at least 30 days. (ii) If termination of employment results or occurs due to Disability under this Section 2.5(a), Employee shall receive no other compensation hereunder; provided, however, that until Employee receives disability insurance payments under Employer's disability insurance coverage, Employee shall receive his Salary. All Options held by Employee under the 1998 Plan shall vest immediately upon the date of termination for Disability. (b) Death. (i) In the event of the Employee's death during the term of this Agreement, the Employee's employment hereunder shall be deemed terminated as of the date of the Employee's death. Employee's family shall be entitled to receive fully paid health and dental insurance coverage for one year after Employee's death and all Options held by Employee under the 1998 Plan shall vest immediately. (c) Cause. (i) This Agreement and the Employee's employment hereunder may be terminated at any time by the Company for Cause. (ii) If the Employee's employment is terminated by the Company for Cause or Employee terminates his employment other than by reason of death, Disability or an Involuntary Termination, Employee shall be entitled to no additional payments hereunder and Employee's Options shall be treated as required under the 1998 Plan and the 2001 Plan. (d) Involuntary Termination. In the event of an Involuntary Termination, Employee shall receive the following: 7 (i) immediately after the date of termination, a lump-sum amount in immediately available funds equal to the sum of Executive's accrued but unpaid Salary; (ii) an amount equal to one-third (1/3) of Employee's annualized Salary for the current year of the Term payable semi-monthly over four (4) months; (iii) the continuation of the benefits (or, if such benefits are not available, the after-tax economic equivalent thereof) specified in Section 2.3(b) to which Employee is entitled as of the date of termination for six (6) months after the date of the Involuntary Termination, or, at the election of Employee, cash payment equal to the value of such benefits payable semi-monthly over four (4) months; provided that with respect to any benefit to be provided on an insured basis, such value shall be the present value of the premiums expected to be paid for such coverage, and with respect to other benefits, such value shall be the present value of the expected net cost to the Company of providing such benefits; (iv) all options held by Employee under the 1998 Plan shall vest immediately; (v) all contractual restrictions on the transfer, sale or pledge of the common stock held by the Employee will be immediately extinguished and released; and (vi) the vested right to receive 24,300 shares of Employers' Series E Convertible Preferred Stock, with such stock to have the terms set forth in the Amended and Restated Put Agreement dated as of August 15, 2002, by and among Employer, UBS Capital Americas III, L.P. and UBS Capital LLC ("Series E Preferred Stock"), less applicable withholding; provided, however, that such shares shall not actually be issued to Employee and Employee shall have no right to receive such shares until immediately prior to the first to occur of: a) a Change of Control of Employer, b) a Liquidity Event of Employer, or c) a Liquidation of Employer, as determined under the Certificate of Designation creating the Series E Preferred Stock of Employer. Prior to the first to occur of any such events, Employer shall file a Certificate of Designation for the Series E Preferred Stock if same has not already been done. (e) Termination After a Change of Control. If an Involuntary Termination occurs within one (1) year after a Change of Control, then Executive shall receive the payments required by Section 2.5(d), except that for purposes of Section 2.5(d)(ii), Executive shall receive seventy-five percent (75%) of Employee's annualized Salary in the year of the Change of Control payable semi-monthly over nine (9) months. 8 (f) Other Termination Benefits. Other than any amounts or benefits payable upon a Termination of Employment hereunder, Executive shall, except as otherwise specifically provided herein, not be entitled to any payments or benefits provided hereunder or under the terms of any plan, policy or program of the Company or as otherwise required by applicable law. ARTICLE III COVENANTS AND AGREEMENTS 3.1 Records and Confidential Data. (a) Employee acknowledges that, in connection with the performance of his duties hereunder, Employer and its Affiliates will make available to Employee, and/or Employee will have access to, certain Confidential Information (as defined below) of Employer and its Affiliates. Employee acknowledges and agrees that any and all Confidential Information learned or obtained by Employee during the course of his employment by Employer or otherwise, whether developed by Employee alone or in conjunction with others or otherwise, shall be and is the property of Employer and its Affiliates. Employee shall keep all Confidential Information confidential and shall not use any Confidential Information in any manner other than in connection with Employee's discharge of his duties hereunder. (b) Following the first to occur of the termination of Employee's employment hereunder, or as soon as reasonably possible after Employer's written request, Employee shall return to Employer all written Confidential Information which has been provided to Employee and Employee shall destroy all copies of any analyses, compilations, studies or other documents prepared by Employee or for Employee's use containing or reflecting any Confidential Information. Within five business days after receipt of such request by Employee, Employee shall, upon written request of Employer, deliver to Employer a notarized document certifying that such written Confidential Information has been returned or destroyed in accordance with this Section 3.1(b). (c) For purposes of this Agreement, "Confidential Information" shall mean all confidential and proprietary information of Employer and/or its Affiliates, including, without limitation, confidential and proprietary information that is derived from or regarding reports, investigations, experiments, research, trade secrets, work in progress, web site drawing, designs, plans, proposals, requests for proposals, bids, codes, marketing and sales programs, acquisition targets or strategies, information regarding subscribers or web site viewers, client lists, client mailing lists, supplier lists, financial projections, cost summaries, payor information, pricing formulae, marketing studies relating to prospective business opportunities and all other confidential and proprietary materials or information prepared for or by Employer and/or any of its Affiliates. For purposes of this Agreement, Confidential Information shall not include and Employee's obligations under this Section 3.1 shall not extend to (i) information which is generally available to the public, (ii) information obtained by Employee from Persons not under 9 agreement to maintain the confidentiality of the same, and (iii) information which is required to be disclosed by law or legal process (after giving Employer prior written notice thereof and an opportunity to contest such disclosure). 3.2 Inventions and Other Matters. (a) Employee agrees that all, inventions, discoveries or improvements made during the period of Employee's employment with Employer, including, without limitation, computer software (including source code, operating systems and specifications, data, data bases, files documentation and other materials related thereto), HTML or other scripts, web site designs, art work, visual images, programming code and programs, processes, uses, apparatuses, specialized information relating in any way to or that is useful in the business or products of Employer or Employer's actual or demonstrably anticipated research or development, designs or compositions of any kind that Employee, individually or with others, may originate or develop while employed by Employer (collectively, "Inventions"), belong to and shall be the sole property of Employer and constitute ---------- and shall constitute works specially ordered or commissioned as "works made for hire" under the United States Copyright Act and other applicable law. Without limiting the foregoing, Employee hereby assigns and transfers to Employer all rights of whatever nature that Employee may have, including, without limitation, any patent, trade secret, trademark or service mark rights (and any goodwill appurtenant thereto), any rights of publicity and any right, title and interest in any copyright and any right that may affix under any copyright law now or hereinafter in force and effect in the United States of America or in any other country or countries, in and to any Invention. Employee acknowledges and agrees that Employer shall have the royalty-free right to use in its businesses, and to make and sell products, processes, programs, systems designs, methods, formulas, apparatus, techniques, and services derived from any Inventions (whether or not patentable or copyrightable), as well as all improvements thereof or know-how related thereto. The provisions of this Section 3.2 shall survive termination of this Agreement for any reason. (b) For purposes of this Agreement, an Invention shall be deemed to have been "made during the period of Employee's employment" if, during such period, the Invention was conceived, in part or in whole, or first actually reduced to practice. Employee agrees that any patent, copyright or trade mark application (i) covering intellectual property that relates to services performed by Employee hereunder or that is applicable to those products or services of Employer that were within the scope of Employee's responsibilities hereunder, and (ii) that is filed by or for the benefit of Employee or any of his Affiliates within one (1) year after termination of Employee's employment shall be presumed to relate to an Invention made during the term of his employment and Employee shall have the burden of proof to prove otherwise. (c) This Section 3.2 shall not apply to an Invention for which no equipment, supplies, facilities or Confidential Information (as defined below) of Employer was used and that was developed entirely on Employee's own time, unless (i) the invention relates or is applicable to the services performed by Employee hereunder or that is applicable to those services or products of Employer that were within the scope of Employee's 10 responsibilities hereunder, or (ii) results from any work relating to the Business that was performed, caused to be performed, or supervised by Employee for or on behalf of Employer. (d) Employee agrees, without further consideration, to (i) promptly disclose each such Invention to Employer, to Employee's immediate supervisor and to such other individuals as Employer may direct, (ii) execute and to join others in executing such applications, assignments and other documents as may be necessary or convenient to vest in Employer, or its designee, full title to each such Invention and as may be necessary or convenient to obtain United States and foreign patents and copyrights thereon, to the extent Employer may so choose in its sole discretion, (iii) testify in any legal proceeding relative to such Invention whenever requested to do so by Employer, and (iv) furnish all facts relating to such Inventions or the history thereof. (e) Employee agrees that he will not at any time, except as authorized or directed by Employer, publish or disclose any information or knowledge concerning any Inventions. 3.3 Non-Competition. (a) Employer and Employee recognize that Employee has been retained to occupy a position of trust that constitutes part of the professional, management and executive staff of Employer. Employee, for and in consideration of the payments, rights and benefits provided herein, agrees that so long as he is employed by Employer and, if Employer terminates Employee's employment for Cause, in the event of an Involuntary Termination or if Employee terminates his employment with Employer for any reason other than pursuant to an Involuntary Termination, then during the period of time that Employee is receiving cash severance payments under Section 2.5(d)(ii) or 2.5(e), Employee shall not (i) work or act as an officer or director of or compensated consultant to, (ii) assist, (iii) own, directly or through any Affiliate or joint venture, a 10% or greater interest in, or (iv) make a financial investment (other than a passive, economic investment), whether in the form of equity or debt, in any business that is directly competitive with the Business in the United States, Latin America or in any other market in which Employer is conducting the Business at the time Employee's employment with Employer is terminated. (b) Notwithstanding the foregoing, nothing herein shall prohibit Employee from holding ten percent (10%) or less of any class of voting securities of any entity whose equity securities are listed on a national securities exchange or regularly traded in the over-the-counter market and for which quotations are readily available on the National Association of Securities Dealers Automated Quotation system. (c) If Employer terminates Employee's employment for Cause or if Employee terminates his employment with Employer for any reason other than pursuant to an Involuntary Termination, then for a period of one (1) year thereafter, Employee shall promptly notify Employer of each employment or agency relationship entered into by Employee, and each corporation, proprietorship or other entity formed or used by 11 Employee, the business of which is directly competitive with the Business. The provisions of this Section 3.3 shall survive termination of this Agreement for any reason. 3.4 Non-Solicitation and Non-Interference. (a) Employee acknowledges that Employer has invested substantial time and effort in assembling its present staff of personnel. Employee agrees that so long as he is employed by Employer and then for a period of one (1) year thereafter, Employee shall not, directly or indirectly, employ, solicit for employment, or advise or recommend to any other Person that such other Person employ or solicit for employment, any of Employer's employees or recommend to any employee of Employer that he/she cease to be employed by Employer; provided that the restrictions set forth in the immediately preceding sentence shall not apply to any solicitation directed at the public in general e.g., advertisements in publications of general circulation, etc. or to inquiries for employment that were unsolicited, directly or indirectly, by Employee. (b) Employee acknowledges that all customers of Employer, which Employee has serviced or hereafter services during Employee's employment by Employer and all prospective customers from whom Employee has solicited or may solicit business while in the employ of Employer, shall be solely the customers of Employer. Employee agrees that so long as he is employed by Employer and for a period of one (1) year thereafter, Employee shall not either directly or indirectly solicit business, as to products or services competitive with the Business, from any of Employer's customers with whom Employee had contact during his employment with Employer. (c) Employee agrees that so long as he is employed by Employer and for a period of one (1) year thereafter, Employee shall not, directly or indirectly, (i) intentionally disrupt or attempt to disrupt or terminate any relationship between Employer and any of its Business suppliers, clients or employees, or (ii) disparage, malign or discredit the name or reputation of Employer to any customers, clients or suppliers of the Business. Employee agrees that for so long as he is employed by Employer and for a period of one (1) year thereafter, he will not influence or attempt to influence any of the customers or clients of Employer to cease doing business with Employer. 3.5 Restrictions Reasonable. Employee agrees that the restrictions contained in Sections 3.3 and 3.4 are reasonable as to time and geographic scope because of the nature of the Business and Employee agrees, in particular, that the geographic scope of this restriction is reasonable because companies in the same industry as the Business compete on an international basis. Employee acknowledges that Employer is in direct competition with all other companies that provide services and products similar to the Business products and services throughout the United States and Latin America and, because of the nature of the Business, Employee expressly agrees that the covenants contained in Sections 3.3 and 3.4 cannot reasonably be limited to any smaller geographic area. The provisions of Sections 3.3 and 3.4 shall survive termination of this Agreement for any reason. 12 3.6 Prior Obligations. Employee represents and warrants that (a) Employee has no obligation of confidence or other commitments to any previous employer or any others that conflict with this Agreement or restrict Employee's field of activities, and (b) no other agreement to which Employee is subject will conflict with, prevent, be breached by, interfere with or in any manner affect the terms and conditions of this Agreement. 3.7 Injunctive Relief. Employee acknowledge that damages would be an inadequate remedy for Employee's breach of any of the provisions of Sections 3.1, 3.2, 3.3 and/or 3.4 of this Agreement, and that breach of any of such provisions will result in immeasurable and irreparable harm to Employer. Therefore, in addition to any other remedy to which Employer may be entitled by reason of Employee's breach or threatened breach of any such provision, Employer shall be entitled to seek and obtain a temporary restraining order, a preliminary and/or permanent injunction, or any other form of equitable relief from any court of competent jurisdiction restraining Employee from committing or continuing any breach of such Section, without the necessity of posting a bond. It is further agreed that the existence of any claim or cause of action on the part of Employee against Employer, whether arising from this Agreement or otherwise, shall in no way constitute a defense to the enforcement of the provisions of Sections 3.1, 3.2, 3.3 and/or 3.4 of this Agreement. 3.8 Subordination. (a) If a Bankruptcy Event (as defined below) shall occur, then Employee agrees that all payments due to or claims (the "Subordinated Claims") of Employee arising from or in connection with the termination of Employee's employment with Employer for any reason, including without limitation the right to receive payments under Section 2.5(d)(ii), Section 2.5(d)(iii) or Section 2.5(e), whether accrued or arising in the future, shall be subordinated in payment and priority to all payments due or to become due under the Convertible Notes (as defined below) to the Holders (as defined below). For purposes of this Agreement, a "Bankruptcy Event" shall mean any dissolution, winding up, liquidation, readjustment, reorganization, or other similar proceeding relating to Employer or its assets, whether voluntary or involuntary, partial or complete, and whether in bankruptcy, insolvency or receivership, or upon an assignment for the benefit of creditors, or any other marshalling of the assets and liabilities of Employer. (b) "Convertible Notes" shall mean those certain Convertible Promissory Notes issued on the date hereof to UBS (or, with respect to ROF/IFX, LLC, a convertible promissory note issued as Qualified Financing Securities with respect to that Convertible Promissory Note issued to ROF/IFX, LLC on September 9, 2002), including any amendments, extensions, modifications or consolidations of such Convertible Promissory Notes and including convertible notes evidencing up to an additional $3.1 million in principal amount of convertible indebtedness which may be issued with the consent of UBS on substantially the same terms as such Convertible Promissory Notes on or before September 1, 2003 (holders of Convertible Notes to be referred to herein as the "Holders"). The Holders shall not be prejudiced in their rights under this Section 3.8 by any act or failure to act of the Holders or delay in the exercise of any right or remedy, and no such failure to act or delay shall preclude any further exercise of such rights by 13 Holders, nor shall any modification of this Section 3.8 by Employer and Employee be binding upon the Holders except as expressly set forth in a writing signed and delivered on behalf of those Holders holding a majority of the outstanding principal amount of the Convertible Notes. This Section 3.8 shall inure to the benefit of the Holders and their respective successors and assigns who shall be third party beneficiaries hereof. (c) Without limiting the foregoing or any other provision hereof, if a Bankruptcy Event shall occur then: (a) Employer may not make and Employee may not receive, directly or indirectly, make any payment, whether in cash, property, securities or otherwise, in respect of any Subordinated Claims unless and until all amounts owing to the Holders under or pursuant to the Convertible Notes have been indefeasibly paid in full in immediately available funds and (b) upon any subsequent distribution of assets of Employer: (i) the Holders shall first be entitled to receive indefeasible payment in full in immediately available funds of all amounts owing to the Holders under or pursuant to the Convertible Notes (including, without limitation, interest accruing after the occurrence of any Bankruptcy Event, whether or not such interest is an allowed claim against Employer) before Employee is entitled to receive any payment, whether in cash, property or securities, in respect of any amount owing under or pursuant to the Subordinated Claims, and (ii) any payment or distributions of assets of Employer of any kind or character, whether in cash, property or securities, to which Employee would be entitled in respect of the Subordinated Claims except for the provisions hereof, shall be paid by the liquidating trustee or agent or other person or entity making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or other trustee or agent, directly to the Holders (in such manner as a majority in principal amount shall so direct) for application to amounts owing to the Holders under or pursuant to the Convertible Notes until indefeasibly paid in full in immediately available funds. In the event that notwithstanding the foregoing Employer shall make any payment to Employee in respect of Subordinated Claims or Employee shall receive any payment in respect of Subordinated Claims at a time when such payment is not permitted pursuant to the foregoing, such payment shall be held by Employee in trust for the benefit of, and shall be paid forthwith over and delivered to, the Holders (in such manner as a majority in principal amount shall so direct) for application to amounts owing to the Holders under or pursuant to the Convertible Notes until indefeasibly paid in full in immediately available funds. In any bankruptcy, insolvency or similar proceeding with respect to Employer after the occurrence of a Bankruptcy Event, Employee irrevocably authorizes the Holders (acting with the consent of Holders holding a majority in principal amount of the Convertible Notes): (i) to prove and enforce any claims of Employee in respect of obligations owed by Employer to Employee which are Subordinated Claims either in the name of the Holders or in the name of Employee as the attorney-in-fact of Employee; (ii) to vote claims comprising obligations owed by Employer to Employee which are Subordinated Claims and to accept or reject on behalf of Employee any plan proposed in connection with such proceeding; (iii) to accept and execute receipts for any payment or distribution made with respect to any and all obligations owed by Employer to Employee which are Subordinated Claims; (iv) to take action and to execute any instruments necessary to effectuate the foregoing either in the name of the Holders or in the name of Employee as its attorney-in-fact. Notwithstanding the rights and remedies available to Employee under this Agreement, at law, in equity or otherwise, Employee agrees that 14 following the occurrence of a Bankruptcy Event Employee will not, and will not be entitled to, exercise any Remedy (as defined below) against Employer in respect of Subordinated Claims. "Remedy" shall mean and include the taking of any action by Employee to enforce the obligations of Employer in respect of the Subordinated Claims or to collect payment of any amount owing in respect of the Subordinated Claims, including, without limitation, the commencement of any judicial, arbitral or other action or proceeding (including, without limitation, any bankruptcy, insolvency or similar proceeding) against Employer or the joining in any such action or proceeding. 3.9 Directors and Officers Insurance. Employer agrees to use reasonable commercial efforts to modify its existing directors and officers insurance policies (the "Policies") to provide that reimbursement of expenses or other payments to be made by the insurer under the applicable Policy to or for the benefit of directors or officers is paid directly to the applicable officer or director and not to Employer and shall further provide that Employer shall not be a named insured under such Policies. In addition, the Employer agrees to use commercially reasonable efforts to maintain officers and directors insurance policies on terms substantially similar to those of the Policies during the period during which the Employee is a director or officer of the Employer and for a period of no less than two (2) years thereafter. Notwithstanding the foregoing, the obligations set forth in this Section 3.9 shall be subject to the condition that compliance therewith does not substantially increase the aggregate cost of directors and officers insurance above the current aggregate cost of the Policies or reduce the scope of coverage below the current scope covered under the Policies. In the event that the Employer is no longer a public company, then, notwithstanding the foregoing, the Employer shall be entitled to terminate and/or reduce the scope of director and officer insurance coverage to that which is customary for similarly situated private companies that previously were public companies. ARTICLE IV MISCELLANEOUS 4.1 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given (a) when made, if delivered personally, (b) three business days after being mailed by certified or registered mail, postage prepaid, return receipt requested, or (c) two business days after delivery to a reputable overnight courier service, to the parties, their successors in interest or their assignees at the following addresses, or at such other addresses as the parties may designate by written notice in the manner aforesaid: To Employer: IFX Corporation c/o IFX Communications Ventures Inc. 15050 N.W. 79 Court - Suite 200 Miami Lakes, Florida 33016 Attention: President 15 To Employee, to his home address as recorded in the payroll records of Employer from time to time. 4.2 Governing Law. This Agreement shall be governed as to its validity and effect by the internal laws of the State of Florida, without regard to its rules regarding conflicts of law. 4.3 Agreement To Arbitrate. (a) Employer and Employee agree that any disputes that arise between Employee and Employer (or any of Employer's officers, directors, stockholders, supervisors, employees, agents, Affiliates or successors), excluding disputes arising out of Section 3.1, 3.2, 3.3 or 3.4, that cannot be resolved informally shall be decided by submission of the dispute to binding arbitration before a sole neutral arbitrator who is a retired federal judge pursuant to the American Arbitration Association Commercial Arbitration Rules governing such proceedings, and not by a lawsuit or by resort to court process, except as specifically set forth below. Both parties acknowledge and agree that they are giving up their respective constitutional rights to have any such dispute decided in a court of law before a jury, and instead are accepting the use of the arbitration process. This Section 4.3(a) applies to any and all disputes, including, by way of example only and not limited to, disputes regarding termination of Employee's employment; discrimination and unlawful harassment of any kind (including, without limitation, claims arising under Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. (S)2000(e) et seq. and the Civil Rights Act of 1991; the Age Discrimination in Employment Act, as amended, 29 U.S.C. (S)621, et seq.; the Americans with Disabilities Act of 1990, 42 U.S.C. (S)12101 et seq.; the Family and Medical Leave Act of 1993, 29 U.S.C. (S)2612 et seq.; and all applicable state and local anti-discrimination laws and constitutional provisions); disputes arising under any other applicable federal, state or local labor statutes, regulations or orders; disputes regarding assault and battery; negligent supervision; defamation; invasion of privacy; wages and overtime; and disputes regarding the formation and enforceability of this Section 4.3(a). The following types of disputes are excluded from the scope of coverage of this Section 4.3(a): (i) workers' compensation claims by Employee for on-the-job injuries; and (ii) any and all claims by Employer against Employee, including claims for injunctive relief, arising out of Employee's breach or threatened breach of Section 3.1, 3.2, 3.3 or 3.4 of this Agreement. (b) General Rules of Arbitration. Either party shall have the right to have counsel represent him/it at the arbitration hearing and in pre-arbitration proceedings. Pre-arbitration discovery shall be permitted in accordance with the Federal Rules of Civil Procedure, except that (i) there shall be no limit on the number of depositions that may be noticed by either party, and (ii) in connection with any pre-arbitration disclosure of expert testimony in accordance with Rule 26(a)(2), the timing of the expert disclosure shall be set by the arbitrator. (c) Authority of Arbitrator. The arbitrator shall have the authority to (i) resolve any discovery disputes that arise between the parties; (ii) resolve any dispute relating to the interpretation, applicability or enforceability of this Section 4.3; and (iii) entertain a motion to dismiss and a motion for summary judgment, applying the standards 16 governing such motions under Federal Rule Of Civil Procedure 12(b)(6) and Rule 56. The arbitrator is required to render his decision in writing, with an opinion stating the bases of his decision. Either party has the right to file a post-arbitration brief, which shall be considered by the arbitrator (d) Payment of Costs and Fees. Each party shall bear its own costs and attorneys' fees incurred in connection with the arbitration. The arbitrator shall have the discretion to award costs to the prevailing party. The arbitrator's fees shall be borne equally by the parties. Each party shall post his or its portion of the arbitrator's anticipated fee prior to the commencement of the arbitration. (e) Appeals. Either side shall have the right to appeal the arbitrator's decision by applying to a Court (as defined in Section 4.4) for an order vacating the award for any of the reasons set forth in 9 U.S.C. (S)10, or on the basis that the arbitrator has made a mistake of law or fact. The arbitration decision shall stand if it is supported by substantial evidence. 4.4 Jurisdiction; Service of Process. Each of the parties hereto agrees that any action or proceeding initiated or otherwise brought to judicial proceedings by either Employee or Employer concerning the subject matter of this Agreement that is not subject to Section 4.3, shall be litigated in the United States District Court for Dade County, Florida or, in the event such court cannot or will not exercise jurisdiction, in the state courts of the State of Florida covering Miami, Dade County, Florida (the "Courts"). Each of the parties hereto expressly submits to the jurisdiction and venue of the Courts. Each party hereto waives any claim that the Courts are an inconvenient forum or an improper forum based on lack of venue or jurisdiction. Each party shall bear its own costs and attorneys' fees incurred in connection with any such actions or proceedings. 4.5 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of (a) the heirs, executors and legal representatives of Employee, upon Employee's death or incapacity, and (b) any successor of Employer, and any such successor shall be deemed substituted for Employee or Employer, as the case may be, under the terms hereof for all purposes; provided, however, that any such assignment shall not relieve Employer from its obligations hereunder. As used in this Agreement, "successor" shall include any Person that at any time, whether by purchase, merger, consolidation or otherwise, directly or indirectly acquires a majority of the assets, business or stock of Employer; provided, however, that no acquisition of the stock of Employer by UBS Capital Americas III, L.P., UBS Capital LLC or any of their respective Affiliates (collectively, "UBS") shall cause UBS to be treated as a "successor" hereunder. 4.6 Integration. This Agreement, the Plan and any option agreement Employee will be required to execute, constitute the entire agreement between the parties with respect to all matters covered herein, including but not limited to the parties' employment relationship and Employee's entitlement to compensation, commissions and benefits from Employer or any of its Affiliated companies and/or the termination of Employee's employment. This Agreement supersedes all prior oral or written understandings and agreements relating to its subject matter and all other business relationships between Employer and/or its Affiliated companies. 17 4.7 No Representations. No Person has made or has the authority to make any representations or promises on behalf of any of the parties which are inconsistent with the representations or promises contained in this Agreement, and this Agreement has not been executed in reliance on any representations or promises not set forth herein. 4.8 Amendments. This Agreement may be modified only by a written instrument executed by the parties that is designated as an amendment to this Agreement. 4.9 Counterparts. This Agreement is being executed 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. 4.10 Severability and Non-Waiver. Any provision of this Agreement (or portion thereof) which is deemed invalid, illegal or unenforceable in any jurisdiction shall, as to that jurisdiction and subject to this Section, be ineffective to the extent of such invalidity, illegality or unenforceability, without affecting in any way the remaining provisions thereof in such jurisdiction or rendering that or any other provisions of this Agreement invalid, illegal, or unenforceable in any other jurisdiction. If any covenant should be deemed invalid, illegal or unenforceable because its scope is considered excessive, such covenant shall be modified so that the scope of the covenant is reduced only to the minimum extent necessary to render the modified covenant valid, legal and enforceable. 4.11 Voluntary and Knowledgeable Act. Employee represents and warrants that he has been represented by independent legal counsel of his own choosing and that he has read and understands each and every provision of this Agreement and has freely and voluntarily entered into this Agreement. 4.12 Late Payments. If the Employer fails to pay any amount provided under this Agreement or any other plan or program sponsored by Employer when due, the Employer shall pay interest on such amount at a rate equal to (i) the highest rate of interest charged by the Employer's principal lender plus 200 basis points, or (ii) in the absence of such a lender, 300 basis points over the prime commercial lending rate announced by Harris Trust and Savings Bank on the date such amount is due or, if no such rate shall be announced on such date, the immediately prior date on which Harris Trust and Savings Bank announced such a rate; provided, however, that if the interest rate determined in accordance with this Section exceeds the highest legally-permissible interest rate, then the interest rate shall be the highest legally-permissible interest rate. 4.13 Shares Not Yet Authorized. Employer shall authorize such shares of Series D Preferred Stock or Series E Preferred Stock as shall be necessary to issue shares to be received by Employee on any exercise of options to be issued hereunder, or if sufficient authorized shares do not exist, Employer shall designate one or more new series of preferred stock (as may be required) having terms and conditions identical to the Series D Preferred Stock or Series E Preferred Stock, as the case may be, so that such new series of preferred stock may be issued in connection with the exercise of the options to purchase Series D Preferred Stock options or Series E Preferred Stock, as the case may be. 18 4.14 Stockholder Approval. Until such time as stockholder approval for the issuance to Employee of the options to purchase Series D Preferred Stock is no longer required under NASDAQ rules and regulations or under any applicable law, the effectiveness of the provisions to issue to Employee the options to purchase Series D Preferred Stock (or any successor series of preferred stock, as provided in Section 4.13 hereof) shall be contingent on the approval of shareholders of Employer having a majority of the voting power of Employer. Employer covenants to seek stockholder approval for the issuance of the Series D Preferred at the next annual meeting of Employer. The Board of Directors of Employer shall recommend that the shareholders of Employer vote in favor of and approve the issuance of the options to Employee hereunder. Each of UBS Capital LLC and UBS Capital Americas III, L.P. agrees to vote in favor of the issuance of the options to be issued hereunder to Employee. 19 IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement as of the date first above written. EMPLOYER: IFX CORPORATION By: /s/ Michael Shalom ----------------------- Name: Michael Shalom Title: CEO Date: October 31, 2002 EMPLOYEE: /s/ Joel Eidelstein --------------------------- Joel Eidelstein Date: October 31, 2002 Solely with respect to Sections 2.2(d) and 4.14. UBS CAPITAL LLC By: /s/ George A. Duarte ----------------------------- Name: George A. Duarte Its: Attorney-in-fact By: /s/ Marc Unger ----------------------------- Name: Marc Unger Its: Attorney-in-fact UBS CAPITAL AMERICAS III, L.P. By: UBS Capital Americas III, LLC By: /s/ George A. Duarte ----------------------------- Name: George A. Duarte Its: Partner By: /s/ Marc Unger ----------------------------- Name: Marc Unger Its: Chief Financial Officer 20 EXHIBIT A 1. Effective as of the date hereof, Employee shall be granted an option to purchase 125,000 shares of Employer's Series D Preferred Stock. The exercise price for the option is equal to $1.20 per share of Series D Convertible Preferred Stock, subject to such adjustments for stock splits, dividends, recapitalizations as are contained in the Convertible Promissory Notes issued to UBS Capital Americas III, L.P. and UBS Capital LLC dated as of the date hereof (each a "Convertible Promissory Note"). The option will vest monthly over 24 months starting three (3) months from the date hereof, but will vest immediately in connection with an Involuntary Termination. The option will be non-transferable and non-assignable. The options will have a term ending ten (10) years from the date hereof. Options which are vested may be exercised for ninety (90) days following Employee's death, Disability or an Involuntary Termination. If Employee is terminated for Cause or terminates employment other than as a result of death, Disability or an Involuntary Termination, the option will cease to be exercisable effective as of the effective date of termination. Unvested options will terminate immediately as of termination of Employee's employment with Employer. EX-10.5 7 dex105.txt EMPLOYMENT AGREEMENT-JOSE LEIMAN Exhibit 10.5 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of October 2002, by and between IFX CORPORATION, a Delaware corporation ("IFX" and, - ---, collectively with its subsidiaries, "Employer"), and JOSE LEIMAN ("Employee"). W I T N E S S E T H: WHEREAS, Employer is in the business of acquiring, developing and maintaining Internet access and related services in Latin America and other non-U.S. jurisdictions (the "Business"); WHEREAS, Employer desires to continue to employ Employee to serve as General Counsel and/or Chief Administrative Officer of Employer, and Employee desires to continue such employment, on the terms and subject to the conditions set forth herein; WHEREAS, Employee's existing Employment Agreement (the "Prior Agreement") is dated as of May 7, 2001, and both Employee and Employer believe it would be in the best interests of both Employee and Employer to amend and restate the Prior Agreement by entering into this Agreement; WHEREAS, Employee has had an opportunity to review the terms and conditions of this Agreement, to negotiate the terms hereof and to engage legal counsel on his behalf if he so desires. NOW THEREFORE, in consideration of Employer's continued employment of Employee, the terms, conditions and covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Employee and Employer, intending to be legally bound, hereby agree as follows: ARTICLE I DEFINITIONS 1.1 Terms Defined Herein. Except as otherwise herein expressly provided, the following terms and phrases shall have the meanings set forth below: "Affiliate" means (a) in the case of an entity, any Person who or which, directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, any specified Person or (b) in the case of an individual, such individual's spouse, children, grandchildren or parents or a trust primarily for the benefit of any of the foregoing. "Cause" means (a) the willful and continued failure by Employee to substantially perform his duties under this Agreement (other than any failure resulting from Employee's death or incapacity due to physical or mental illness) for five days after written demand for substantial performance is delivered by Employer which specifically identifies the manner in which Employer believes Employee has not substantially performed his duties and which notice is specifically identified as being issued pursuant to this paragraph, (b) the commission by Employee of theft, embezzlement, fraud or misappropriation of funds against Employer or the willful engaging by Employee in other misconduct which is materially injurious to Employer, (c) the willful violation by Employee of Section 3.1, 3.2, 3.3 or 3.4 of this Agreement or (d) the conviction of Employee of a felony involving fraud, dishonesty or moral turpitude. Notwithstanding anything to the contrary contained herein, none of the following events shall be treated as "cause": (i) bad judgment, (ii) negligence, or any act or omission that Employee believed in good faith to have been in or not opposed to the interests of the Company. "Change in Control" means the occurrence of any one of the following events: (a) any consolidation, merger or other similar transaction involving IFX, following which the stockholders of IFX immediately prior to such transaction fail to hold more than 50% of the outstanding voting securities of the continuing or succeeding corporation in substantially the same proportions, or which contemplates that all or substantially all of the business and/or assets of IFX will be controlled by another corporation; (b) any sale, lease, exchange or transfer (in one transaction or series of related transactions) of all or substantially all of the assets of IFX; (c) approval by the stockholders of IFX of any plan or proposal for the liquidation or dissolution of IFX, unless such plan or proposal is abandoned within 60 days following such approval; (d) the acquisition by any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934), or two or more Persons acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the outstanding shares of voting stock of IFX; provided, however, that for purposes of the foregoing, "person" excludes UBS Capital Americas III, L.P., UBS Capital, LLC, Lee S. Casty, the Casty Grantor Subtrust, International Technology Investments, LC or any of their Affiliates, and any underwriter purchasing shares of IFX with the intent of reselling them, or (e) if, during any period of 24 consecutive calendar months commencing on the date of this Agreement, those individuals (the "Continuing Directors") who either (i) were directors of IFX on the first day of each such period, or (ii) subsequently became directors of IFX and whose actual election or initial nomination for election subsequent to that date was approved by a majority of the Continuing Directors then on the board of directors of IFX, cease to constitute a majority of the board of directors of IFX. "Common Stock" means shares of common stock, par value $.02 per share, of IFX. "Disability" means disability as defined in Employer's disability insurance plan then in effect. "Equity Value" shall mean (i) in the case of the sale, exchange or purchase of equity securities of Employer, the total net consideration paid for such securities; and (ii) in the case of a sale or disposition of assets of Employer and its subsidiaries, the total net consideration paid for such assets. 2 "Involuntary Termination" means if Employer terminates Employee for any reason other than Cause or if Employee terminates his employment with Employer (a) within 30 days after Employer materially reduces Employee's duties and responsibilities hereunder; (b) upon material breach of this Agreement by Employer which remains uncured for 30 days following notice thereof from Employee to Employer, provided that Employee gives notice of termination within 5 days of expiration of such thirty day period; (c) the failure to nominate or elect Employee as General Counsel or Chief Administrative Officer of IFX; (d) causing or requiring Employee to report to anyone other than the Board or any President or Chief Executive Officer of Employer appointed from time to time by the Board; (e) assignment of duties materially inconsistent with his position and duties described in this Agreement; (f) the failure of IFX to assign this Agreement to a successor to IFX or the failure of a successor to IFX to explicitly assume and agree to be bound by this Agreement; (g) requiring Employee to be principally located at any office or location more than 50 miles from IFX's current office in Miami Lakes, Florida; or (h) diminution of Employee's compensation package without Employee's express written consent; provided, however, that in the event such breach is curable but Employer is unable to cure such breach within such five-day period, then any such breach shall not be deemed to justify Employee's "Involuntary Termination" hereunder so long as Employer is diligently and in good faith pursuing a cure and such breach is cured no later than 30 days following receipt of the foregoing written notice from Employee. "Liquidity Event" means the consummation of a transaction for consideration consisting of cash or Unrestricted Marketable Securities, whether in a single transaction or in a series of related transactions, that are consummated contemporaneously (or consummated pursuant to contemporaneous agreements), with an independent third party or a group of independent third parties pursuant to which such party or parties (a) acquire more than 50% of the outstanding voting stock of the Employer determined on a fully diluted basis, or (b) acquire assets constituting all or substantially all of the assets of the Employer and its subsidiaries on a consolidated basis (which shall be deemed the equivalent of the acquisition of 100% of the voting stock of the Employer on a fully diluted basis for the purposes hereof); provided, however, that if the consideration for such transaction consists of restricted securities, a Liquidity Event shall be deemed to be consummated at such time as at least 75% of such restricted securities become Unrestricted Marketable Securities. "Person" means any individual, partnership, corporation, limited liability company, joint venture, trust, firm, association, unincorporated organization or other entity. "Senior Managers" shall mean Joel Edelstein, Michael Shalom, Jose Leiman and Daniel Salama. "Unrestricted Marketable Securities" means securities which are listed on a national securities exchange or quoted on the NASDAQ National Market System and which are freely tradable by the holder thereof without restriction pursuant to an effective registration statement under the Securities Act or Rule 144(k) thereunder. "1998 Plan" means the IFX Corporation 1998 Stock Option and Incentive Plan, as amended, together with any successor thereto. 3 "2001 Plan" means the IFX Corporation 2001 Stock Option Plan, as amended, together with any successor thereto. ARTICLE II TERMS OF EMPLOYMENT 2.1 Employment; Scope of Duties. (a) Employer hereby continues to employ Employee as General Counsel and/or Chief Administrative Officer of Employer, and Employee hereby accepts such employment with Employer. In performing his duties hereunder, Employee shall report solely to, and shall be subject to the supervision of, the Board of Directors, or any President or Chief Executive Officer of Employer designated from time-to-time by the Board of Directors. Employee shall help to prepare an updated rolling financial forecast of Employer to be submitted to a committee of the Board of Directors within 30 days after the close of each month. The updated rolling financial forecast will include estimates of the previous month's performance and represent Employee's best view of forecasted results for the current month. The information to be provided by Employee in the financial forecast must be reasonably accurate and represent a good faith effort on the part of Employee to represent the true actual performance of the Employer. (b) Employee shall devote his best efforts and full business time and attention to the performance of services for Employer in accordance with the terms hereof. During the Term (as defined in Section 2.4), Employee shall not engage in any other business or professional activities, either on a full-time or part-time basis, as an employee, consultant or in any other capacity, whether or not he receives any compensation therefor, without the prior written consent of Employer's Board of Directors; provided, however, that nothing herein shall prevent Employee from (i) making and managing personal investments consistent with Section 3.3 of this Agreement, (ii) from engaging in community and/or charitable activities, so long as such activities, either singly or in the aggregate, do not interfere with the proper performance of Employee's responsibilities to Employer, or (iii) being involved as an officer, director, employee or consultant of any subsidiary or Affiliate of Employer, including, for these purposes, Tutopia.com, Inc. 2.2 Compensation. (a) As compensation for Employee's services hereunder during the Term, Employer shall pay to Employee from and after the date hereof an annual salary of $182,000 (the "Salary"), less applicable income tax withholdings. The Salary shall be payable in equal semi-monthly installments in accordance with Employer's customary compensation policies. If, during the term of this Agreement, the Employee should be prevented from performing his duties by reason of Disability, amounts payable by Employer hereunder shall be reduced by the amounts payable under the Employer's disability insurance policy. (b) [Reserved]. 4 (c) In addition to the above payments, in the event of a Liquidity Event, provided that Employee is employed by Employer at the time of such Liquidity Event or if Employee was Involuntarily Terminated within 90 days prior to the commencement of or during the process leading to such Liquidity Event, Employer shall pay a bonus to Employee (a "Targeted Bonus") if the Equity Value paid with respect to such Liquidity Event, without regard to any payment of a Targeted Bonus to Employee or any other Senior Manager is at least $30 million, as determined in conjunction with the Liquidity Event. The amount of the Targeted Bonus to be paid to Employee will equal 25.75 % of the Total Senior Management Bonus Pool (as defined below). The "Total Senior Management Bonus Pool" with respect to a Liquidity Event shall equal 2.5% of the Equity Value paid with respect to such Liquidity Event, prior to the determination of the Total Senior Management Bonus Pool; provided, however, that if the Equity Value equals or exceeds $100 million prior to the determination of any Total Senior Management Bonus Pool, then the Total Senior Management Bonus Pool shall equal $2.5 million plus 5% of that portion of the Equity Value in excess of $100 million. If stockholders of Employer receive non-cash consideration in connection with a Liquidity Event, then an allocable portion of the Targeted Bonus shall be paid to Employee in the form of such non-cash consideration, with the amount of such non-cash consideration to be paid to Employee in the same ratio that UBS Capital Americas III, L.P. and UBS Capital LLC receive cash and non-cash consideration (i.e., if the consideration to be received by such holders is half cash and half stock, then the Targeted Bonus will be paid in the form of half cash and half stock). In connection with a Liquidity Event in which non-cash consideration is paid, the Employer shall cause the acquiring entity to expressly assume the obligation to pay such non-cash consideration as provided above. For the purposes of this Section 2.2(c), "commencement" shall mean (i) in the event that a Liquidity Event constitutes an asset sale or statutory merger, the adoption by Employer's Board of Directors of a resolution to pursue either the sale of Employer's assets or the statutory merger, as the case may be, and (ii) in the event that a Liquidity Event constitutes a sale of stock of the Employer, the taking of affirmative steps by the controlling stockholder(s) of Employer to sell stock of Employer in a transaction that would constitute a Liquidity Event. (d) UBS Capital Americas III, L.P. and UBS Capital LLC covenant that, in connection with the sale of their shares of Employer in a transaction in which the sale of such shares would constitute a Liquidity Event and in which non-cash consideration is paid, they will cause the acquiring entity to agree to pay the non-cash portion of the Targeted Bonus as provided above. (e) In addition to the Salary and bonuses, Employee shall be granted Options as shown on Exhibit A hereto. The Options shall be evidenced by a standard option agreement between Employer and Employee in a form approved by the Compensation Committee or the Board of Directors of Employer and are in addition to options previously granted to Employee under any prior employment agreement between Employer and Employee. (f) Employee may be entitled to receive an annual cash bonus based on recommendations of Employer's Chief Executive Officer and Employer's Compensation 5 Committee, and based on Employer's performance as it relates to the proposed budget for the fiscal year. Within 30 days after the start of each subsequent fiscal year, Employer shall transmit to Employee a copy of the proposed budget for such fiscal year, as approved by Employer's Board of Directors. Whether or not to award a cash bonus in any year and the amount thereof shall be in the sole discretion of the Board of Directors. (g) [Reserved]. 2.3 Employee Benefits. (a) Employee shall be entitled to such paid holidays and vacation time as is consistent with Employer's standard holiday and vacation policy for executive employees of Employer. (b) Subject to Employer's rules, policies and regulations as in effect from time to time (and subject to applicable eligibility requirements, including a minimum employment period), Employee shall be entitled to (i) group life insurance, disability or accident, death or dismemberment insurance, (ii) medical and/or dental insurance program; provided that regardless of the payment for other employees, Employee's premiums for himself and his family shall be paid in full by Employer and shall be for a preferred provider plan or similar plan, (iii) 401(k) benefit plan, if and when Employer establishes such a plan, (iv) other employee benefits that Employer may, in its sole discretion, make generally available to employees of Employer of the same level and responsibility as Employee, (v) all cell phone bills (provided that substantially all calls are made for business related to the Employer), (vi) a car allowance of $750 per month, (vii) high-speed internet access from Employee's principal residence. 2.4 Term. Employee's employment pursuant to the Prior Agreement commenced on May 7, 2001, and shall continue in effect for one (1) year from the date hereof unless otherwise terminated in accordance with Section 2.5. Commencing on the date hereof, the Term shall continue to automatically be extended each day by one day, until a date which is one (1) year following the first date, if any, that Employer delivers to Employee or Employee delivers to Employer, as the case may be, written notice that the Term will not be automatically extended. The period of time during which Employee remains employed by Employer pursuant to this Section 2.4 is referred to herein as the "Term." 2.5 Termination of Employment. (a) Disability. (i) If during the term of this Agreement, the Employee should be prevented from performing his duties by reason of Disability for a continuous period greater than 180 days, Employer may terminate the Employee's employment hereunder by giving written notice thereof to the Employee, effective on the date set forth in the notice (which date shall be not less than 15 business days after the notice is given). For purposes hereof, a continuous period of Disability shall not be deemed interrupted 6 until the Employee returns to substantially full time work for a period of at least 30 days. (ii) If termination of employment results or occurs due to Disability under this Section 2.5(a), Employee shall receive no other compensation hereunder; provided, however, that until Employee receives disability insurance payments under Employer's disability insurance coverage, Employee shall receive his Salary. All Options held by Employee under the 1998 Plan shall vest immediately upon the date of termination for Disability. (b) Death. (i) In the event of the Employee's death during the term of this Agreement, the Employee's employment hereunder shall be deemed terminated as of the date of the Employee's death. Employee's family shall be entitled to receive fully paid health and dental insurance coverage for one year after Employee's death and all Options held by Employee under the 1998 Plan shall vest immediately. (c) Cause. (i) This Agreement and the Employee's employment hereunder may be terminated at any time by the Company for Cause. (ii) If the Employee's employment is terminated by the Company for Cause or Employee terminates his employment other than by reason of death, Disability or an Involuntary Termination, Employee shall be entitled to no additional payments hereunder and Employee's Options shall be treated as required under the 1998 Plan and the 2001 Plan. (d) Involuntary Termination. In the event of an Involuntary Termination, Employee shall receive the following: (i) immediately after the date of termination, a lump-sum amount in immediately available funds equal to the sum of Executive's accrued but unpaid Salary; (ii) an amount equal to one-third (1/3) of Employee's annualized Salary for the current year of the Term payable semi-monthly over four (4) months; (iii) the continuation of the benefits (or, if such benefits are not available, the after-tax economic equivalent thereof) specified in Section 2.3(b) to which Employee is entitled as of the date of termination for six (6) months after the date of the Involuntary Termination, or, at the election of Employee, cash payment equal to the value of such benefits payable semi-monthly over four (4) months; provided that with respect to any 7 benefit to be provided on an insured basis, such value shall be the present value of the premiums expected to be paid for such coverage, and with respect to other benefits, such value shall be the present value of the expected net cost to the Company of providing such benefits; (iv) all options held by Employee under the 1998 Plan shall vest immediately; (v) all contractual restrictions on the transfer, sale or pledge of the common stock held by the Employee (or his Affiliates) will be immediately extinguished and released; and (vi) the vested right to receive 25,300 shares of Employers' Series E Convertible Preferred Stock, with such stock to have the terms set forth in the Amended and Restated Put Agreement dated as of August 15, 2002, by and among Employer, UBS Capital Americas III, L.P. and UBS Capital LLC ("Series E Preferred Stock"), less applicable withholding; provided, however, that such shares shall not actually be issued to Employee and Employee shall have no right to receive such shares until immediately prior to the first to occur of: a) a Change of Control of Employer, b) a Liquidity Event of Employer, or c) a Liquidation of Employer, as determined under the Certificate of Designation creating the Series E Preferred Stock of Employer. Prior to the first to occur of any such events, Employer shall file a Certificate of Designation for the Series E Preferred Stock if same has not already been done. (e) Termination After a Change of Control. If an Involuntary Termination occurs within one (1) year after a Change of Control, then Executive shall receive the payments required by Section 2.5(d), except that for purposes of Section 2.5(d)(ii), Executive shall receive seventy-five percent (75%) of Employee's annualized Salary in the year of the Change of Control payable semi-monthly over nine (9) months. (f) Other Termination Benefits. Other than any amounts or benefits payable upon a Termination of Employment hereunder, Executive shall, except as otherwise specifically provided herein, not be entitled to any payments or benefits provided hereunder or under the terms of any plan, policy or program of the Company or as otherwise required by applicable law. ARTICLE III COVENANTS AND AGREEMENTS 3.1 Records and Confidential Data. (a) Employee acknowledges that, in connection with the performance of his duties hereunder, Employer and its Affiliates will make available to Employee, and/or Employee will have access to, certain Confidential Information (as defined below) of 8 Employer and its Affiliates. Employee acknowledges and agrees that any and all Confidential Information learned or obtained by Employee during the course of his employment by Employer or otherwise, whether developed by Employee alone or in conjunction with others or otherwise, shall be and is the property of Employer and its Affiliates. Employee shall keep all Confidential Information confidential and shall not use any Confidential Information in any manner other than in connection with Employee's discharge of his duties hereunder. (b) Following the first to occur of the termination of Employee's employment hereunder, or as soon as reasonably possible after Employer's written request, Employee shall return to Employer all written Confidential Information which has been provided to Employee and Employee shall destroy all copies of any analyses, compilations, studies or other documents prepared by Employee or for Employee's use containing or reflecting any Confidential Information. Within five business days after receipt of such request by Employee, Employee shall, upon written request of Employer, deliver to Employer a notarized document certifying that such written Confidential Information has been returned or destroyed in accordance with this Section 3.1(b). (c) For purposes of this Agreement, "Confidential Information" shall mean all confidential and proprietary information of Employer and/or its Affiliates, including, without limitation, confidential and proprietary information that is derived from or regarding reports, investigations, experiments, research, trade secrets, work in progress, web site drawing, designs, plans, proposals, requests for proposals, bids, codes, marketing and sales programs, acquisition targets or strategies, information regarding subscribers or web site viewers, client lists, client mailing lists, supplier lists, financial projections, cost summaries, payor information, pricing formulae, marketing studies relating to prospective business opportunities and all other confidential and proprietary materials or information prepared for or by Employer and/or any of its Affiliates. For purposes of this Agreement, Confidential Information shall not include and Employee's obligations under this Section 3.1 shall not extend to (i) information which is generally available to the public, (ii) information obtained by Employee from Persons not under agreement to maintain the confidentiality of the same, and (iii) information which is required to be disclosed by law or legal process (after giving Employer prior written notice thereof and an opportunity to contest such disclosure). 3.2 Inventions and Other Matters. (a) Employee agrees that all, inventions, discoveries or improvements made during the period of Employee's employment with Employer, including, without limitation, computer software (including source code, operating systems and specifications, data, data bases, files documentation and other materials related thereto), HTML or other scripts, web site designs, art work, visual images, programming code and programs, processes, uses, apparatuses, specialized information relating in any way to or that is useful in the business or products of Employer or Employer's actual or demonstrably anticipated research or development, designs or compositions of any kind that Employee, individually or with others, may originate or develop while employed by Employer (collectively, "Inventions"), belong to and shall be the sole property of 9 Employer and constitute and shall constitute works specially ordered or commissioned as "works made for hire" under the United States Copyright Act and other applicable law. Without limiting the foregoing, Employee hereby assigns and transfers to Employer all rights of whatever nature that Employee may have, including, without limitation, any patent, trade secret, trademark or service mark rights (and any goodwill appurtenant thereto), any rights of publicity and any right, title and interest in any copyright and any right that may affix under any copyright law now or hereinafter in force and effect in the United States of America or in any other country or countries, in and to any Invention. Employee acknowledges and agrees that Employer shall have the royalty-free right to use in its businesses, and to make and sell products, processes, programs, systems designs, methods, formulas, apparatus, techniques, and services derived from any Inventions (whether or not patentable or copyrightable), as well as all improvements thereof or know-how related thereto. The provisions of this Section 3.2 shall survive termination of this Agreement for any reason. (b) For purposes of this Agreement, an Invention shall be deemed to have been "made during the period of Employee's employment" if, during such period, the Invention was conceived, in part or in whole, or first actually reduced to practice. Employee agrees that any patent, copyright or trade mark application (i) covering intellectual property that relates to services performed by Employee hereunder or that is applicable to those products or services of Employer that were within the scope of Employee's responsibilities hereunder, and (ii) that is filed by or for the benefit of Employee or any of his Affiliates within one (1) year after termination of Employee's employment shall be presumed to relate to an Invention made during the term of his employment and Employee shall have the burden of proof to prove otherwise. (c) This Section 3.2 shall not apply to an Invention for which no equipment, supplies, facilities or Confidential Information (as defined below) of Employer was used and that was developed entirely on Employee's own time, unless (i) the invention relates or is applicable to the services performed by Employee hereunder or that is applicable to those services or products of Employer that were within the scope of Employee's responsibilities hereunder, or (ii) results from any work relating to the Business that was performed, caused to be performed, or supervised by Employee for or on behalf of Employer. (d) Employee agrees, without further consideration, to (i) promptly disclose each such Invention to Employer, to Employee's immediate supervisor and to such other individuals as Employer may direct, (ii) execute and to join others in executing such applications, assignments and other documents as may be necessary or convenient to vest in Employer, or its designee, full title to each such Invention and as may be necessary or convenient to obtain United States and foreign patents and copyrights thereon, to the extent Employer may so choose in its sole discretion, (iii) testify in any legal proceeding relative to such Invention whenever requested to do so by Employer, and (iv) furnish all facts relating to such Inventions or the history thereof. 10 (e) Employee agrees that he will not at any time, except as authorized or directed by Employer, publish or disclose any information or knowledge concerning any Inventions. 3.3 Non-Competition. (a) Employer and Employee recognize that Employee has been retained to occupy a position of trust that constitutes part of the professional, management and executive staff of Employer. Employee, for and in consideration of the payments, rights and benefits provided herein, agrees that so long as he is employed by Employer and, if Employer terminates Employee's employment for Cause, in the event of an Involuntary Termination or if Employee terminates his employment with Employer for any reason other than pursuant to an Involuntary Termination, then during the period of time that Employee is receiving cash severance payments under Section 2.5(d)(ii) or 2.5(e), Employee shall not (i) work or act as an officer or director of or compensated consultant to, (ii) assist, (iii) own, directly or through any Affiliate or joint venture, a 10% or greater interest in, or (iv) make a financial investment (other than a passive, economic investment), whether in the form of equity or debt, in any business that is directly competitive with the Business in the United States, Latin America or in any other market in which Employer is conducting the Business at the time Employee's employment with Employer is terminated. (b) Notwithstanding the foregoing, nothing herein shall prohibit Employee from holding ten percent (10%) or less of any class of voting securities of any entity whose equity securities are listed on a national securities exchange or regularly traded in the over-the-counter market and for which quotations are readily available on the National Association of Securities Dealers Automated Quotation system. (c) If Employer terminates Employee's employment for Cause or if Employee terminates his employment with Employer for any reason other than pursuant to an Involuntary Termination, then for a period of one (1) year thereafter, Employee shall promptly notify Employer of each employment or agency relationship entered into by Employee, and each corporation, proprietorship or other entity formed or used by Employee, the business of which is directly competitive with the Business. The provisions of this Section 3.3 shall survive termination of this Agreement for any reason. 3.4 Non-Solicitation and Non-Interference. (a) Employee acknowledges that Employer has invested substantial time and effort in assembling its present staff of personnel. Employee agrees that so long as he is employed by Employer and then for a period of one (1) year thereafter, Employee shall not, directly or indirectly, employ, solicit for employment, or advise or recommend to any other Person that such other Person employ or solicit for employment, any of Employer's employees or recommend to any employee of Employer that he/she cease to be employed by Employer; provided that the restrictions set forth in the immediately preceding sentence shall not apply to any solicitation directed at the public in general 11 e.g., advertisements in publications of general circulation, etc. or to inquiries for employment that were unsolicited, directly or indirectly, by Employee. (b) Employee acknowledges that all customers of Employer, which Employee has serviced or hereafter services during Employee's employment by Employer and all prospective customers from whom Employee has solicited or may solicit business while in the employ of Employer, shall be solely the customers of Employer. Employee agrees that so long as he is employed by Employer and for a period of one (1) year thereafter, Employee shall not either directly or indirectly solicit business, as to products or services competitive with the Business, from any of Employer's customers with whom Employee had contact during his employment with Employer. (c) Employee agrees that so long as he is employed by Employer and for a period of one (1) year thereafter, Employee shall not, directly or indirectly, (i) intentionally disrupt or attempt to disrupt or terminate any relationship between Employer and any of its Business suppliers, clients or employees, or (ii) disparage, malign or discredit the name or reputation of Employer to any customers, clients or suppliers of the Business. Employee agrees that for so long as he is employed by Employer and for a period of one (1) year thereafter, he will not influence or attempt to influence any of the customers or clients of Employer to cease doing business with Employer. 3.5 Restrictions Reasonable. Employee agrees that the restrictions contained in Sections 3.3 and 3.4 are reasonable as to time and geographic scope because of the nature of the Business and Employee agrees, in particular, that the geographic scope of this restriction is reasonable because companies in the same industry as the Business compete on an international basis. Employee acknowledges that Employer is in direct competition with all other companies that provide services and products similar to the Business products and services throughout the United States and Latin America and, because of the nature of the Business, Employee expressly agrees that the covenants contained in Sections 3.3 and 3.4 cannot reasonably be limited to any smaller geographic area. The provisions of Sections 3.3 and 3.4 shall survive termination of this Agreement for any reason. 3.6 Prior Obligations. Employee represents and warrants that (a) Employee has no obligation of confidence or other commitments to any previous employer or any others that conflict with this Agreement or restrict Employee's field of activities, and (b) no other agreement to which Employee is subject will conflict with, prevent, be breached by, interfere with or in any manner affect the terms and conditions of this Agreement. 3.7 Injunctive Relief. Employee acknowledge that damages would be an inadequate remedy for Employee's breach of any of the provisions of Sections 3.1, 3.2, 3.3 and/or 3.4 of this Agreement, and that breach of any of such provisions will result in immeasurable and irreparable harm to Employer. Therefore, in addition to any other remedy to which Employer may be entitled by reason of Employee's breach or threatened breach of any such provision, Employer shall be entitled to seek and obtain a temporary restraining order, a preliminary and/or permanent injunction, or any other form of equitable relief from any court of competent jurisdiction restraining Employee from committing or continuing any breach of such Section, without the 12 necessity of posting a bond. It is further agreed that the existence of any claim or cause of action on the part of Employee against Employer, whether arising from this Agreement or otherwise, shall in no way constitute a defense to the enforcement of the provisions of Sections 3.1, 3.2, 3.3 and/or 3.4 of this Agreement. 3.8 Subordination. (a) If a Bankruptcy Event (as defined below) shall occur, then Employee agrees that all payments due to or claims (the "Subordinated Claims") of Employee arising from or in connection with the termination of Employee's employment with Employer for any reason, including without limitation the right to receive payments under Section 2.5(d)(ii), Section 2.5(d)(iii) or Section 2.5(e), whether accrued or arising in the future, shall be subordinated in payment and priority to all payments due or to become due under the Convertible Notes (as defined below) to the Holders (as defined below). For purposes of this Agreement, a "Bankruptcy Event" shall mean any dissolution, winding up, liquidation, readjustment, reorganization, or other similar proceeding relating to Employer or its assets, whether voluntary or involuntary, partial or complete, and whether in bankruptcy, insolvency or receivership, or upon an assignment for the benefit of creditors, or any other marshalling of the assets and liabilities of Employer. (b) "Convertible Notes" shall mean those certain Convertible Promissory Notes issued on the date hereof to UBS (or, with respect to ROF/IFX, LLC, a convertible promissory note issued as Qualified Financing Securities with respect to that Convertible Promissory Note issued to ROF/IFX, LLC on September 9, 2002), including any amendments, extensions, modifications or consolidations of such Convertible Promissory Notes and including convertible notes evidencing up to an additional $3.1 million in principal amount of convertible indebtedness which may be issued with the consent of UBS on substantially the same terms as such Convertible Promissory Notes on or before September 1, 2003 (holders of Convertible Notes to be referred to herein as the "Holders"). The Holders shall not be prejudiced in their rights under this Section 3.8 by any act or failure to act of the Holders or delay in the exercise of any right or remedy, and no such failure to act or delay shall preclude any further exercise of such rights by Holders, nor shall any modification of this Section 3.8 by Employer and Employee be binding upon the Holders except as expressly set forth in a writing signed and delivered on behalf of those Holders holding a majority of the outstanding principal amount of the Convertible Notes. This Section 3.8 shall inure to the benefit of the Holders and their respective successors and assigns who shall be third party beneficiaries hereof. (c) Without limiting the foregoing or any other provision hereof, if a Bankruptcy Event shall occur then: (a) Employer may not make and Employee may not receive, directly or indirectly, make any payment, whether in cash, property, securities or otherwise, in respect of any Subordinated Claims unless and until all amounts owing to the Holders under or pursuant to the Convertible Notes have been indefeasibly paid in full in immediately available funds and (b) upon any subsequent distribution of assets of Employer: (i) the Holders shall first be entitled to receive indefeasible payment in full in immediately available funds of all amounts owing to the Holders under or pursuant to the 13 Convertible Notes (including, without limitation, interest accruing after the occurrence of any Bankruptcy Event, whether or not such interest is an allowed claim against Employer) before Employee is entitled to receive any payment, whether in cash, property or securities, in respect of any amount owing under or pursuant to the Subordinated Claims, and (ii) any payment or distributions of assets of Employer of any kind or character, whether in cash, property or securities, to which Employee would be entitled in respect of the Subordinated Claims except for the provisions hereof, shall be paid by the liquidating trustee or agent or other person or entity making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or other trustee or agent, directly to the Holders (in such manner as a majority in principal amount shall so direct) for application to amounts owing to the Holders under or pursuant to the Convertible Notes until indefeasibly paid in full in immediately available funds. In the event that notwithstanding the foregoing Employer shall make any payment to Employee in respect of Subordinated Claims or Employee shall receive any payment in respect of Subordinated Claims at a time when such payment is not permitted pursuant to the foregoing, such payment shall be held by Employee in trust for the benefit of, and shall be paid forthwith over and delivered to, the Holders (in such manner as a majority in principal amount shall so direct) for application to amounts owing to the Holders under or pursuant to the Convertible Notes until indefeasibly paid in full in immediately available funds. In any bankruptcy, insolvency or similar proceeding with respect to Employer after the occurrence of a Bankruptcy Event, Employee irrevocably authorizes the Holders (acting with the consent of Holders holding a majority in principal amount of the Convertible Notes): (i) to prove and enforce any claims of Employee in respect of obligations owed by Employer to Employee which are Subordinated Claims either in the name of the Holders or in the name of Employee as the attorney-in-fact of Employee; (ii) to vote claims comprising obligations owed by Employer to Employee which are Subordinated Claims and to accept or reject on behalf of Employee any plan proposed in connection with such proceeding; (iii) to accept and execute receipts for any payment or distribution made with respect to any and all obligations owed by Employer to Employee which are Subordinated Claims; (iv) to take action and to execute any instruments necessary to effectuate the foregoing either in the name of the Holders or in the name of Employee as its attorney-in-fact. Notwithstanding the rights and remedies available to Employee under this Agreement, at law, in equity or otherwise, Employee agrees that following the occurrence of a Bankruptcy Event Employee will not, and will not be entitled to, exercise any Remedy (as defined below) against Employer in respect of Subordinated Claims. "Remedy" shall mean and include the taking of any action by Employee to enforce the obligations of Employer in respect of the Subordinated Claims or to collect payment of any amount owing in respect of the Subordinated Claims, including, without limitation, the commencement of any judicial, arbitral or other action or proceeding (including, without limitation, any bankruptcy, insolvency or similar proceeding) against Employer or the joining in any such action or proceeding. 3.9 Directors and Officers Insurance. Employer agrees to use reasonable commercial efforts to modify its existing directors and officers insurance policies (the "Policies") to provide that reimbursement of expenses or other payments to be made by the insurer under the applicable Policy to or for the benefit of directors or officers is paid directly to the applicable officer or director and not to Employer and shall further provide that Employer shall not be a 14 named insured under such Policies. In addition, the Employer agrees to use commercially reasonable efforts to maintain officers and directors insurance policies on terms substantially similar to those of the Policies during the period during which the Employee is a director or officer of the Employer and for a period of no less than two (2) years thereafter. Notwithstanding the foregoing, the obligations set forth in this Section 3.9 shall be subject to the condition that compliance therewith does not substantially increase the aggregate cost of directors and officers insurance above the current aggregate cost of the Policies or reduce the scope of coverage below the current scope covered under the Policies. In the event that the Employer is no longer a public company, then, notwithstanding the foregoing, the Employer shall be entitled to terminate and/or reduce the scope of director and officer insurance coverage to that which is customary for similarly situated private companies that previously were public companies. ARTICLE IV MISCELLANEOUS 4.1 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given (a) when made, if delivered personally, (b) three business days after being mailed by certified or registered mail, postage prepaid, return receipt requested, or (c) two business days after delivery to a reputable overnight courier service, to the parties, their successors in interest or their assignees at the following addresses, or at such other addresses as the parties may designate by written notice in the manner aforesaid: To Employer: IFX Corporation c/o IFX Communications Ventures Inc. 15050 N.W. 79 Court - Suite 200 Miami Lakes, Florida 33016 Attention: President To Employee, to his home address as recorded in the payroll records of Employer from time to time. 4.2 Governing Law. This Agreement shall be governed as to its validity and effect by the internal laws of the State of Florida, without regard to its rules regarding conflicts of law. 4.3 Agreement To Arbitrate. (a) Employer and Employee agree that any disputes that arise between Employee and Employer (or any of Employer's officers, directors, stockholders, supervisors, employees, agents, Affiliates or successors), excluding disputes arising out of Section 3.1, 3.2, 3.3 or 3.4, that cannot be resolved informally shall be decided by submission of the dispute to binding arbitration before a sole neutral arbitrator who is a retired federal judge pursuant to the American Arbitration Association Commercial Arbitration Rules governing such proceedings, and not by a lawsuit or by resort to court process, except as specifically set forth below. Both parties acknowledge and agree that 15 they are giving up their respective constitutional rights to have any such dispute decided in a court of law before a jury, and instead are accepting the use of the arbitration process. This Section 4.3(a) applies to any and all disputes, including, by way of example only and not limited to, disputes regarding termination of Employee's employment; discrimination and unlawful harassment of any kind (including, without limitation, claims arising under Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. (S)2000(e) et seq. and the Civil Rights Act of 1991; the Age Discrimination in Employment Act, as amended, 29 U.S.C. (S)621, et seq.; the Americans with Disabilities Act of 1990, 42 U.S.C. (S)12101 et seq.; the Family and Medical Leave Act of 1993, 29 U.S.C. (S)2612 et seq.; and all applicable state and local anti-discrimination laws and constitutional provisions); disputes arising under any other applicable federal, state or local labor statutes, regulations or orders; disputes regarding assault and battery; negligent supervision; defamation; invasion of privacy; wages and overtime; and disputes regarding the formation and enforceability of this Section 4.3(a). The following types of disputes are excluded from the scope of coverage of this Section 4.3(a): (i) workers' compensation claims by Employee for on-the-job injuries; and (ii) any and all claims by Employer against Employee, including claims for injunctive relief, arising out of Employee's breach or threatened breach of Section 3.1, 3.2, 3.3 or 3.4 of this Agreement. (b) General Rules of Arbitration. Either party shall have the right to have counsel represent him/it at the arbitration hearing and in pre-arbitration proceedings. Pre-arbitration discovery shall be permitted in accordance with the Federal Rules of Civil Procedure, except that (i) there shall be no limit on the number of depositions that may be noticed by either party, and (ii) in connection with any pre-arbitration disclosure of expert testimony in accordance with Rule 26(a)(2), the timing of the expert disclosure shall be set by the arbitrator. (c) Authority of Arbitrator. The arbitrator shall have the authority to (i) resolve any discovery disputes that arise between the parties; (ii) resolve any dispute relating to the interpretation, applicability or enforceability of this Section 4.3; and (iii) entertain a motion to dismiss and a motion for summary judgment, applying the standards governing such motions under Federal Rule Of Civil Procedure 12(b)(6) and Rule 56. The arbitrator is required to render his decision in writing, with an opinion stating the bases of his decision. Either party has the right to file a post-arbitration brief, which shall be considered by the arbitrator (d) Payment of Costs and Fees. Each party shall bear its own costs and attorneys' fees incurred in connection with the arbitration. The arbitrator shall have the discretion to award costs to the prevailing party. The arbitrator's fees shall be borne equally by the parties. Each party shall post his or its portion of the arbitrator's anticipated fee prior to the commencement of the arbitration. (e) Appeals. Either side shall have the right to appeal the arbitrator's decision by applying to a Court (as defined in Section 4.4) for an order vacating the award for any of the reasons set forth in 9 U.S.C. (S)10, or on the basis that the arbitrator has made a mistake of law or fact. The arbitration decision shall stand if it is supported by substantial evidence. 16 4.4 Jurisdiction; Service of Process. Each of the parties hereto agrees that any action or proceeding initiated or otherwise brought to judicial proceedings by either Employee or Employer concerning the subject matter of this Agreement that is not subject to Section 4.3, shall be litigated in the United States District Court for Dade County, Florida or, in the event such court cannot or will not exercise jurisdiction, in the state courts of the State of Florida covering Miami, Dade County, Florida (the "Courts"). Each of the parties hereto expressly submits to the jurisdiction and venue of the Courts. Each party hereto waives any claim that the Courts are an inconvenient forum or an improper forum based on lack of venue or jurisdiction. Each party shall bear its own costs and attorneys' fees incurred in connection with any such actions or proceedings. 4.5 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of (a) the heirs, executors and legal representatives of Employee, upon Employee's death or incapacity, and (b) any successor of Employer, and any such successor shall be deemed substituted for Employee or Employer, as the case may be, under the terms hereof for all purposes; provided, however, that any such assignment shall not relieve Employer from its obligations hereunder. As used in this Agreement, "successor" shall include any Person that at any time, whether by purchase, merger, consolidation or otherwise, directly or indirectly acquires a majority of the assets, business or stock of Employer; provided, however, that no acquisition of the stock of Employer by UBS Capital Americas III, L.P., UBS Capital LLC or any of their respective Affiliates (collectively, "UBS") shall cause UBS to be treated as a "successor" hereunder. 4.6 Integration. This Agreement, the Plan and any option agreement Employee will be required to execute, constitute the entire agreement between the parties with respect to all matters covered herein, including but not limited to the parties' employment relationship and Employee's entitlement to compensation, commissions and benefits from Employer or any of its Affiliated companies and/or the termination of Employee's employment. This Agreement supersedes all prior oral or written understandings and agreements relating to its subject matter and all other business relationships between Employer and/or its Affiliated companies. 4.7 No Representations. No Person has made or has the authority to make any representations or promises on behalf of any of the parties which are inconsistent with the representations or promises contained in this Agreement, and this Agreement has not been executed in reliance on any representations or promises not set forth herein. 4.8 Amendments. This Agreement may be modified only by a written instrument executed by the parties that is designated as an amendment to this Agreement. 4.9 Counterparts. This Agreement is being executed 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. 4.10 Severability and Non-Waiver. Any provision of this Agreement (or portion thereof) which is deemed invalid, illegal or unenforceable in any jurisdiction shall, as to that jurisdiction and subject to this Section, be ineffective to the extent of such invalidity, illegality or unenforceability, without affecting in any way the remaining provisions thereof in such 17 jurisdiction or rendering that or any other provisions of this Agreement invalid, illegal, or unenforceable in any other jurisdiction. If any covenant should be deemed invalid, illegal or unenforceable because its scope is considered excessive, such covenant shall be modified so that the scope of the covenant is reduced only to the minimum extent necessary to render the modified covenant valid, legal and enforceable. 4.11 Voluntary and Knowledgeable Act. Employee represents and warrants that he has been represented by independent legal counsel of his own choosing and that he has read and understands each and every provision of this Agreement and has freely and voluntarily entered into this Agreement. 4.12 Late Payments. If the Employer fails to pay any amount provided under this Agreement or any other plan or program sponsored by Employer when due, the Employer shall pay interest on such amount at a rate equal to (i) the highest rate of interest charged by the Employer's principal lender plus 200 basis points, or (ii) in the absence of such a lender, 300 basis points over the prime commercial lending rate announced by Harris Trust and Savings Bank on the date such amount is due or, if no such rate shall be announced on such date, the immediately prior date on which Harris Trust and Savings Bank announced such a rate; provided, however, that if the interest rate determined in accordance with this Section exceeds the highest legally-permissible interest rate, then the interest rate shall be the highest legally-permissible interest rate. 4.13 Shares Not Yet Authorized. Employer shall authorize such shares of Series D Preferred Stock or Series E Preferred Stock as shall be necessary to issue shares to be received by Employee on any exercise of options to be issued hereunder, or if sufficient authorized shares do not exist, Employer shall designate one or more new series of preferred stock (as may be required) having terms and conditions identical to the Series D Preferred Stock or Series E Preferred Stock, as the case may be, so that such new series of preferred stock may be issued in connection with the exercise of the options to purchase Series D Preferred Stock options or Series E Preferred Stock, as the case may be. 4.14 Stockholder Approval. Until such time as stockholder approval for the issuance to Employee of the options to purchase Series D Preferred Stock is no longer required under NASDAQ rules and regulations or under any applicable law, the effectiveness of the provisions to issue to Employee the options to purchase Series D Preferred Stock (or any successor series of preferred stock, as provided in Section 4.13 hereof) shall be contingent on the approval of shareholders of Employer having a majority of the voting power of Employer. Employer covenants to seek stockholder approval for the issuance of the Series D Preferred at the next annual meeting of Employer. The Board of Directors of Employer shall recommend that the shareholders of Employer vote in favor of and approve the issuance of the options to Employee hereunder. Each of UBS Capital LLC and UBS Capital Americas III, L.P. agrees to vote in favor of the issuance of the options to be issued hereunder to Employee. 18 IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement as of the date first above written. EMPLOYER: IFX CORPORATION By: /s/ Michael Shalom ----------------------------- Name: Michael Shalom Title: CEO Date: October 31, 2002 EMPLOYEE: /s/ Jose Leiman --------------------------------- Jose Leiman Date: October 31, 2002 Solely with respect to Sections 2.2(d) and 4.14. UBS CAPITAL LLC By: /s/ George A. Duarte ----------------------------- Name: George A. Duarte Its: Attorney-in-fact By: /s/ Marc Unger ----------------------------- Name: Marc Unger Its: Attorney-in-fact UBS CAPITAL AMERICAS III, L.P. By: UBS Capital Americas III, LLC By: /s/ George A. Duarte ----------------------------- Name: George A. Duarte Its: Partner By: /s/ Marc Unger ----------------------------- Name: Marc Unger Its: Chief Financial Officer 19 EXHIBIT A 1. Effective as of the date hereof, Employee shall be granted an option to purchase 130,000 shares of Employer's Series D Preferred Stock. The exercise price for the option is equal to $1.20 per share of Series D Convertible Preferred Stock, subject to such adjustments for stock splits, dividends, recapitalizations as are contained in the Convertible Promissory Notes issued to UBS Capital Americas III, L.P. and UBS Capital LLC dated as of the date hereof (each a "Convertible Promissory Note"). The option will vest monthly over 24 months starting three (3) months from the date hereof, but will vest immediately in connection with an Involuntary Termination. The option will be non-transferable and non-assignable. The options will have a term ending ten (10) years from the date hereof. Options which are vested may be exercised for ninety (90) days following Employee's death, Disability or an Involuntary Termination. If Employee is terminated for Cause or terminates employment other than as a result of death, Disability or an Involuntary Termination, the option will cease to be exercisable effective as of the effective date of termination. Unvested options will terminate immediately as of termination of Employee's employment with Employer. -----END PRIVACY-ENHANCED MESSAGE-----