UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D/A
(Amendment No. 3)
Under the Securities Exchange Act of 1934
IFX CORPORATION
--------------------------
(Name of Issuer)
COMMON STOCK
--------------------------
(Title of Class of Securities)
449518-20-8
--------------------------
(CUSIP Number)
Dennis J. Olle
Adorno & Zeder, P.A.
2601 South Bayshore Drive
Suite 1600
Miami, Florida 33133
(305) 858-5555
--------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
March 24, 2000
--------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Note: Schedules filed in paper format shall included signed original and five
copies of the schedule, including all exhibits. See Rule 13d-1(a) for other
parties to whom copies are to be sent.
The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of the section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D/A
CUSIP No. 449518-20-8 Page 2 of 10
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<S> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
International Technology Investments, L.C.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [ ]
(b) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS (See Instructions)
WC, BK
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR
2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION - Nevada, U.S.A.
7 SOLE VOTING POWER
-0-
NUMBER OF
SHARES 8 SHARE VOTING POWER
BENEFICIALLY
OWNED BY 6,000,000 shares of Common Stock
EACH
REPORTING
PERSON 9 SOLE DISPOSITIVE POWER
WITH
-0-
10 SHARED DISPOSITIVE POWER
6,000,000 shares of Common Stock
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,000,000 shares of Common Stock
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions)
[ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
48.2%
14 TYPE OF REPORTING PERSON (See Instructions)
OO (International Technology Investments, L.C. is a limited liability company organized
under the laws of the State of Nevada)
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SCHEDULE 13D/A
CUSIP No. 449518-20-8 Page 3 of 10
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<S> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Michael Shalom
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [ ]
(b) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS (See Instructions)
WC, BK
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
[ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION - U.S.A.
7 SOLE VOTING POWER
6,425
NUMBER OF
SHARES 8 SHARE VOTING POWER
BENEFICIALLY
OWNED BY 6,000,000 shares of Common Stock
EACH
REPORTING
PERSON 9 SOLE DISPOSITIVE POWER
WITH
6,425
10 SHARED DISPOSITIVE POWER
6,000,000 shares of Common Stock
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,006,425 shares of Common Stock
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions)
[ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
48.2%
14 TYPE OF REPORTING PERSON (See Instructions)
IN
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CUSIP NO. 449518-20-8 PAGE 4 OF 8
RIDER TO SCHEDULE 13D/A OF
INTERNATIONAL TECHNOLOGY INVESTMENTS, L.C.
ITEM 1. SECURITY AND ISSUER
Common Stock
IFX Corporation
707 Skokie Boulevard
5th Floor
Northbrook, IL 60062
ITEM 2. IDENTITY BACKGROUND
(a)-(c), (f) The names of the persons filing this Schedule
13D/A are (i) International Technology Investments, L.C., a Nevada limited
liability company ("ITI"); (ii) Philistar Ltd., a Cayman Islands corporation
("Philistar"); (iii) Michael Shalom ("Shalom"); and (vii) Joseph Matalon
("Matalon") (collectively, ITI and Shalom shall sometimes be referred to as
"Reporting Persons"). Philistar is the holder of a controlling interest in ITI.
The directors of Philistar are Director Services Ltd., a Cayman Islands
corporation and International Corporation Services Ltd., a Cayman Islands
corporation. Pursuant to an amendment of the Operating Agreement of ITI, Michael
Shalom is the manager of ITI. In September 1999, Mr. Shalom, a U.S. citizen, was
elected as the Chief Executive Officer of IFX Corporation. Joseph Matalon, a
citizen of Jamaica, is a principal and director of Philistar Ltd. and is also a
director of IFX Corporation.
Pursuant to Articles of Merger dated December 27, 1999 and
filed with the Secretary of State of Nevada, International Technologies
Investments, L.C., a Florida limited liability ("ITI Florida") company merged
into International Technologies Investments, L.C., a Nevada limited liability
company. ITI is the surviving entity of the merger and the separate corporate
existence of ITI Florida has ceased. The members, manager and ownership of ITI
are identical to that of ITI Florida.
The principal business of ITI is the investment in IFX
Corporation and similar investment opportunities. The principal business of
Philistar is its investment in ITI and similar investment opportunities. The
principal business of Shalom is as Chief Executive Officer of IFX Corporation.
The principal business of Matalon is as director of Philistar and other business
ventures. The business address of ITI is 2601 South Bayshore Drive, Suite 1600,
Miami, Florida 33133. The business address of Philistar is One Regis Place,
Midland Bank Trust Building, P.O. Box 472G, George Town, Grand Cayman, Cayman
Islands, British West Indies. The business address for Shalom is 15050 N.W. 79
Ct., Suite 200, Miami Lakes, FL 33016. The business address of Matalon is 7-9
Harbour Street, Kingston, Jamaica, West Indies.
(d) and (e) During the last five years, none of the Reporting
Persons has (i) been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) been a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction and as a result
of such proceeding was or is subject to a judgment, decree or final order
enjoining
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CUSIP NO. 449518-20-8 PAGE 5 OF 8
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The Reporting Persons have acquired an aggregate of 6,000,000
shares of Common Stock of the Issuer pursuant to a Subscription and Joint
Venture Agreement dated November 23, 1998 (the "Agreement"), attached hereto as
Exhibit A. Pursuant to the Agreement, on November 23, 1998, ITI irrevocably
subscribed to purchase 500,000 shares of Common Stock of the Issuer for an
aggregate purchase price of $1,000,000 and was granted an option to purchase an
additional 5,500,000 shares of the Common Stock of the Issuer for an aggregate
purchase price of $11,000,000. Pursuant to the Agreement ITI also has the right
to appoint one director to the Issuer's Board of Directors. On August 2, 1999,
ITI exercised its option to purchase additional shares of the Common Stock of
the Issuer and paid the Issuer $1,500,000 to purchase 750,000 shares of the
Common Stock of the Issuer. Additionally, on September 24, 1999, ITI exercised
its option to purchase additional shares of the Common Stock of the Issuer and
paid the Issuer $1,500,000 to purchase 750,000 shares of the Common Stock of the
Issuer. Additionally, on December 31, 1999, ITI exercised its option to purchase
additional shares of the Common Stock of the Issuer and paid the Issuer
$5,000,000 to purchase 2,500,000 shares of the Common Stock of the Issuer.
Additionally, on March 24, 2000, ITI exercised its option to purchase additional
shares of the Common Stock of the Issuer and paid the Issuer $3,000,000 to
purchase 1,500,000 shares of the Common Stock of the Issuer.
Working capital of ITI (including contributions of members)
was used to purchase the initial 500,000 shares of Common Stock of the Issuer
and the 750,000 shares of Common Stock of the Issuer purchased on August 2,
1999. A bank loan in the amount of $1,500,000 was used by ITI to exercise the
option to purchase an additional 750,000 shares of Common Stock of the Issuer on
September 24, 1999. The bank loan was obtained from Scotia Bank. A purchase
money promissory note made to the order of the Issuer in the amount of
$4,950,000 was executed by ITI, along with a capital contribution to ITI from
Michael Shalom in the amount of $50,000, to exercise the option to purchase an
additional 2,500,000 shares of Common Stock of the Issuer on December 31, 1999.
Working capital in the amount of $3,000,000 was used by ITI to exercise the
option to purchase an additional 1,500,000 shares of Common Stock of the Issuer
on March 24, 2000. The Working Capital was obtained from Cranshire Capital,
L.P., Keyway Investments Ltd., and The dotCom Fund, LLC (collectively, the
"Class B Unit Holders") in return for their interests in a new class, the class
"B" units, of membership interests in ITI.
ITEM 4. PURPOSE OF TRANSACTION
All shares of Common Stock acquired by the Reporting Persons
have been acquired for investment purposes only. The shares were not acquired
for the purpose of changing or influencing the control of the Issuer; however,
exercises of the option and the appointment of a director of the issuer by ITI
may have the effect of changing or influencing the control of the Issuer.
Additionally, there are no restrictions on the Reporting Persons to buy or sell
shares of Common Stock in response to changed market conditions.
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CUSIP NO. 449518-20-8 PAGE 6 OF 8
On March 24, 2000, ITI entered into a set of agreements
(attached hereto as Exhibit A) with the Class B Unit Holders admitting them as a
new class of membership interests of ITI. In return, the Class B Unit Holders
contributed $6,000,000 to ITI for the purpose of exercising the remaining
1,500,000 options granted pursuant to the Subscription and Joint Venture
Agreement dated November 23, 1998 for $3,000,000 and to repay certain
indebtedness owed by ITI to the Issuer. As a result of the aforementioned
transaction, the 1,500,000 shares of Common Stock purchased with the Class B
Unit Holders contribution have been pledged as collateral to the Class B Unit
Holder's and are subject to various transfer provisions in the agreements
between the two parties.
Other than as described above, the Reporting Persons have no
present plans or proposals which relate to or would result in: (i) the
acquisition by any person of any additional securities of the Issuer, or the
disposition of securities of the Issuer; (ii) any extraordinary corporate
transaction, such as a merger, reorganization or liquidation, involving the
Issuer or any of its subsidiaries; (iii) a sale or transfer of a material amount
of assets of the Issuer or any of its subsidiaries; (iv) any change in the
present board of directors or management of the Issuer, including any plans or
proposals to change the number or term of directors or to fill any existing
vacancies on the board; (v) any material change in the present capitalization or
dividend policy of the Issuer; (vi) any other material change in the Issuer's
business or corporate structure including but not limited to, if the Issuer is a
registered closed-end investment company, any plans or proposals to make any
changes in its investment policy for which a vote is required by section 13 of
the Investment Company Act of 1940; (vii) changes in the Issuer's charter,
bylaws or instruments corresponding thereto or other actions which may impede
the acquisition of control of the Issuer by any person; (viii) causing a class
of securities of the Issuer to be delisted from a national securities exchange
or to cease to be authorized to be quoted in an inter-dealer quotation system of
a registered national securities association; (ix) a class of equity securities
of the Issuer becoming eligible for termination of registration pursuant to
section 12(g)(4) of the Securities and Exchange Act of 1934, as amended; or (x)
any action similar to any of those enumerated above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) ITI is the record owner of 6,000,000 shares of the Common
Stock of the Issuer, which represents 48.2% of the issued and outstanding shares
of the Common Stock of the Issuer.
(b) Michael Shalom and ITI are the beneficial owners of
6,000,000 shares of the Common Stock of the Issuer, which represents 48.2% of
the issued and outstanding shares of the Common Stock of the Issuer. ITI is
deemed to share beneficial ownership of all such shares with Philistar (by
reason of Philistar's status as the holder of a controlling interest in, ITI),
Shalom (as ITI's manager) and Matalon (as principal and director of Philistar).
Collectively, ITI, Shalom, Matalon and Philistar share voting and dispositive
power with respect to these shares.
(c) On March 24, 2000, ITI entered into a set of agreements
(attached hereto as Exhibit A) with the Class B Unit Holders admitting them as a
new class of membership interests of ITI. In return, the Class B Unit Holders
contributed $6,000,000 to ITI for the purpose of
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CUSIP NO. 449518-20-8 PAGE 7 OF 8
exercising the remaining option to purchase 1,500,000 shares of Common Stock
granted pursuant to the Subscription and Joint Venture Agreement dated November
23, 1998, which shares were purchased on March 24, 2000. The transaction was
effected through a preferred unit purchase agreement and was executed in the
Commonwealth of Puerto Rico, City of San Juan.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO THE SECURITIES OF THE ISSUER
Pursuant to the Agreement entered into by ITI and the Issuer,
effective November 23, 1998, the Issuer granted ITI an option to purchase up to
an additional 5,500,000 shares of the Common Stock of the Issuer for an
aggregate purchase price of $11,000,000. On March 24, 2000, ITI entered into a
set of agreements (attached hereto as Exhibit A) with the Class B Unit Holders
admitting them as a new class of membership interests of ITI. In return, the
Class B Unit Holders contributed $6,000,000 to ITI for the purpose of exercising
the remaining 1,500,000 options granted pursuant to the Subscription and Joint
Venture Agreement dated November 23, 1998 for $3,000,000 and to repay certain
indebtedness owed by ITI to the Issuer. As a result of the aforementioned
transaction, the 1,500,000 shares purchased with the Class B Unit Holder's
contribution have been pledged to and are being held as collateral by the Class
B Unit Holders. The agreements entered into with the Class B Unit Holders,
however, restrict ITI and Michael Shalom from purchasing, selling, or
transferring any of the Issuer's securities (including common stock or options).
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS
Exhibit A: Subscription and Joint Venture Agreement,
incorporated by reference to the Issuer's
Schedule 13D, as filed with the Securities
and Exchange Commission on December 3, 1998.
Power of Attorney appointing Michael Shalom
as attorney-in-fact for all members of ITI
for any or all amendments to this Schedule
13D, incorporated by reference to the
Issuer's Schedule 13D/A, as filed with the
Securities and Exchange Commission on
September 30, 1999.
Preferred Unit Purchase Agreement,
incorporated by reference to the Issuer's
Schedule 13D, attached hereto
Second Amended and Restated Operating
Agreement, incorporated by reference to the
Issuer's Schedule 13D, attached hereto.
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CUSIP NO. 449518-20-8 PAGE 8 OF 8
First Amendment to Subscription and Joint
Venture Agreement, incorporated by reference
to the Issuer's Schedule 13D, attached
hereto.
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
INTERNATIONAL TECHNOLOGY INVESTMENTS,
L.C., a Nevada limited liability company
Dated: March 31, 2000 BY: /s/ Michael Shalom
Michael Shalom, Manager
<PAGE>
FIRST AMENDMENT TO
SUBSCRIPTION AND JOINT VENTURE AGREEMENT
This First Amendment (the "AMENDMENT") to the Subscription and Joint
Venture Agreement (the "JOINT VENTURE AGREEMENT"), entered into on November 23,
1998 by and among IFX Corporation, a Delaware corporation (AIFX@), Emerging
Networks, Inc., a corporation organized under the laws of the British Virgin
Islands (the "COMPANY"), and International Technology Investments, LC, a Nevada
limited liability company, the successor to International Technology
Investments, LC, a Florida limited liability company (AITI@), is made and
entered into as of the 24th day of March, 2000, by and among IFX, the Company
and ITI. All terms not otherwise defined herein shall have their respective
meanings as set forth in the Joint Venture agreement.
WHEREAS, the parties hereto desire to amend the terms and conditions of
the Joint Venture Agreement, as and to the extent set forth herein.
NOW, THEREFORE, in consideration of the foregoing, of the mutual
covenants and agreements herein contained and of other good and valuable
consideration, the receipt, adequacy and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Section 4.3(b) of the Joint Venture Agreement is amended by
deleting the second sentence of Section 4.3(b).
2. Section 5.1 is amended by deleting the text of such section
and replacing it with the following: "The parties acknowledge
and agree that each Investor (or its Affiliates) may Dispose
or cause the Disposition of such Investor's shares of Covered
Stock, provided that such Disposition is made pursuant to an
effective registration statement then in effect under the
Securities Act of 1933, as amended (the "SECURITIES ACT") with
respect to such Covered Stock or such Disposition is exempt
from registration under the Securities Act and such Investor
(or Affiliate) has delivered to IFX an opinion of counsel, in
a reasonably acceptable form, to the effect that such
Disposition may be effectuated pursuant to an exemption from
registration under the Securities Act."
3. Section 5.4 is amended by deleting the text of such section
and replacing it with the words A[intentionally omitted]@.
4. Section 7.3(e)(iv) is amended by deleting A60 days:" and
replacing such text with A30 days".
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5. Section 7.3 is amended by adding a new Section 7.3(k) as
follows:
A(k) The rights of each Stockholder to cause IFX to register
Covered Stock pursuant to this Section 7.3 shall be
automatically assigned to any transferee who acquires Covered
Stock from a Stockholder pursuant to a Disposition; PROVIDED,
HOWEVER, each Stockholder and each transferee (and any
subsequent transferee) who acquires Covered Stock from, or
that previously was owned by, such Stockholder (each such
transferee, a "TRANSFEREE") shall be deemed one Person with
respect to any Demand Registration and, as a result, such
Stockholder and all such Transferees collectively shall be
limited to three Demand Registrations, as provided in Section
7.3(a)."
6. Section 7.3 is amended by adding a new Section 7.3(l) as
follows:
"Each Stockholder hereby irrevocably waives and agrees not to
exercise any rights such Stockholder may have under Section
7.3(d) of the Joint Venture Agreement (as the same may be
amended by this Amendment) to include shares of such
Stockholder's Covered Stock in any registration statement
filed under the Securities Act by IFX, on or prior to
September 1, 2000, relating to the underwritten public
offering and sale of shares of IFX Common Stock (the "IFX
OFFERING"). Each Stockholder agrees, and agrees to cause any
Transferee from such Stockholder to agree, not to request a
Demand Registration, pursuant to Section 7.3(a) of the Joint
Venture Agreement, prior to the earlier of (i) the completion
of the IFX Offering or (2) September 1, 2000.
Notwithstanding anything in Section 8.2 of the Joint Venture Agreement
to the contrary, IFX shall issue to ITI new certificates representing shares of
IFX Common Stock that do not contain the legend specified by Section 8.2 of the
Joint Venture Agreement concerning contractual transfer limitations upon
surrender to IFX of the certificates containing such contractual transfer
limitations in exchange therefor.
If any provision of this Amendment is held by a court of competent
jurisdiction to be invalid, illegal or unenforceable, such provision shall be
severed and the remaining provisions hereof shall be enforced to the extent
possible or modified in such a way as to make it enforceable, and the
invalidity, illegality or unenforceability thereof shall not affect the
validity, legality or enforceability of the remaining provisions of this
Amendment.
No modification or amendment of this Amendment, and no further
modification or amendment of the Joint Venture Agreement, shall be valid unless
the same shall be in writing executed by all of the parties hereto and thereto.
This Amendment shall be governed by and construed in accordance with
the internal laws of the State of Delaware, without regard to the conflict of
laws provisions thereof;
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This Amendment shall be binding upon and shall inure to the benefit of
the parties hereto and their respective heirs, personal representatives,
successors and assigns. This Amendment constitutes the entire agreement among
the parties hereto and supersedes all prior agreements and understandings, oral
or written, among the parties hereto with respect to the subject matter hereof.
This Amendment may be executed in one or more counterparts, each of
which shall be deemed an original, and all of which together shall constitute
one and the same instrument; provided that a facsimile signature shall be
considered due execution and shall be binding upon the signatory thereto with
the same force and effect as if the signatory were an original, not a facsimile
signature.
[Signature Page Follows]
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IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the date first written above.
EMERGING NETWORKS, INC.
By: /s/ Joel Eidelstein
Name: Joel Eidelstein
Title: Vice President
IFX CORPORATION
By: /s/ Joel Eidelstein
Name: Joel Eidelstein
Title: President
INTERNATIONAL TECHNOLOGY INVESTMENTS, LC
By: /s/ Michael Shalom
Name: Michael Shalom
Title: Manager
Acknowledged and Agreed to by
/s/ Lee S. Casty
Lee S. Casty
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PREFERRED UNIT PURCHASE AGREEMENT
This PREFERRED UNIT PURCHASE AGREEMENT (the "AGREEMENT"), dated as of
March 24, 2000, is entered into by and among International Technology
Investments, L.C., a Nevada corporation, with headquarters located at 1135
Terminal Way, Suite 106, Reno, Nevada 89502 (the "COMPANY"), and the investors
listed on SCHEDULE 1 attached hereto (individually, a "BUYER" and collectively,
the "BUYERS").
WHEREAS:
A. The Company and the Buyers are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 of Regulation D ("REGULATION D") as promulgated by the United States
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "1933 ACT");
B. The Company has authorized the following new series of units: the
Company's Class B Units (the "PREFERRED UNITS"), in accordance with the terms of
the Company's Second Amended and Restated Operating Agreement, in the form
attached hereto as EXHIBIT A (the "OPERATING AGREEMENT");
C. The Buyers wish to purchase, upon the terms and conditions stated in
this Agreement, an aggregate of 60,000 Preferred Units, in the respective
amounts set forth opposite each Buyer's name on SCHEDULE 1; and
D. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering the Operating Agreement.
NOW THEREFORE, the Company and the Buyers hereby agree as follows:
1. PURCHASE AND SALE OF PREFERRED UNITS.
a. PURCHASE OF PREFERRED UNITS. In connection with the offering (the
"OFFERING") by the Company of the Preferred Units to the Buyers, and subject to
the satisfaction (or waiver) of the conditions set forth in Sections 5 and 6
below, the Company shall issue and sell to each Buyer and each Buyer severally
agrees to purchase from the Company the respective number of Preferred Units set
forth opposite such Buyer's name on SCHEDULE 1 (the "CLOSING"). The purchase
price (the "PURCHASE PRICE") of the Preferred Units at the Closing shall be
$6,000,000.
b. CLOSING DATE. The date and time of the Closing (the "CLOSING
DATE") shall be 10:00 a.m. Central Time, within three (3) Business Days defined
below following the date hereof, subject to notification of satisfaction (or
waiver) of the conditions to the Closing set forth in Sections 5 and 6 below (or
such later date as is mutually agreed to by the Company and the Buyers). The
Closing shall occur on the Closing Date at the offices of Katten Muchin & Zavis,
525 West Monroe Street, Suite 1600, Chicago, Illinois 60661-3693, unless
otherwise agreed by the parties. For purposes of this Agreement, "BUSINESS DAYS"
means any day on which the New York Stock Exchange or the National Nasdaq Market
is open for business.
<PAGE>
c. FORM OF PAYMENT. On the Closing Date, (i) subject to the
satisfaction (or waiver) of the conditions set forth in Section 6 below, each
Buyer shall pay their appropriate portion of the Purchase Price to the Company,
for the Preferred Units to be issued and sold to such Buyer at the Closing, by
wire transfer of immediately available funds in accordance with the Company's
written wire instructions, and (ii) subject to the satisfaction (or waiver) of
the conditions set forth in Section 5 below, the Company shall deliver to Katten
Muchin Zavis, c/o Anthony J. Ribaudo, located at 525 West Monroe St., Suite
1600, Chicago, Illinois 60661-3693, as the escrow agent (the "ESCROW AGENT"), on
behalf of each Buyer, three (3) originally executed copies of the Operating
Agreement which shall represent the Preferred Units which such Buyer is then
purchasing (as indicated opposite such Buyer's name on SCHEDULE 1). Upon the
completion of the conditions contained in Sections 5 and 6 of this Agreement,
the Escrow Agent shall deliver such originally executed copies of the Operating
Agreement representing the Preferred Units to the Buyers via overnight courier
after the Buyers have wired the Purchase Price to the Company.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants with respect to only itself that:
a. INVESTMENT PURPOSE. Such Buyer is acquiring the Preferred Units
for its own account for investment only and not with a view towards, or for
resale in connection with, the resale, public sale or distribution of any part
thereof, except pursuant to sales registered or exempted under the 1933 Act and
that such investor has no present intention of selling, granting any
participation in, or otherwise distributing the same; PROVIDED, HOWEVER, that by
making the representations herein, such Buyer does not agree to hold any of the
Preferred Units for any minimum or other specific term and reserves the right to
dispose of the Preferred Units at any time in accordance with or pursuant to a
registration statement or an exemption under the 1933 Act.
b. ACCREDITED INVESTOR STATUS. Such Buyer is an "accredited
investor" as that term is defined in Rule 501(a)(3) of Regulation D.
c. RELIANCE ON EXEMPTIONS. Such Buyer understands that the Preferred
Units are being offered and sold to it in reliance on specific exemptions from
the registration requirements of United States federal and state securities laws
and that the Company is relying in part upon the truth and accuracy of, and such
Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of such Buyer
to acquire such Preferred Units.
d. INFORMATION. Such Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Preferred
Units which have been requested by such Buyer. Such Buyer and its advisors, if
any, have been afforded the opportunity to ask questions of the Company. Neither
such inquiries nor any other due diligence investigations conducted by such
Buyer or its advisors, if any, or its representatives shall modify, amend or
affect such Buyer's right to rely on the Company's representations and
warranties contained in Section 3 below. Such Buyer understands
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<PAGE>
that its investment in the Preferred Units involves a high degree of risk. Such
Buyer has sought such accounting, legal and tax advice as it has considered
necessary to make an informed investment decision with respect to its
acquisition of the Preferred Units.
e. NO GOVERNMENTAL REVIEW. Such Buyer understands that no United
States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Preferred Units
or the fairness or suitability of the investment in the Preferred Units nor have
such authorities passed upon or endorsed the merits of the offering of the
Preferred Units.
f. TRANSFER OR RESALE. Such Buyer understands that: (i) the
Preferred Units have not been and are not being registered under the 1933 Act or
any state securities laws, and may not be offered for sale, sold, assigned or
transferred unless (A) subsequently registered thereunder, (B) such Buyer shall
have delivered to the Company an opinion of counsel, in a generally acceptable
form, to the effect that such Preferred Units to be sold, assigned or
transferred may be sold, assigned or transferred pursuant to an exemption from
such registration, or (C) such Buyer provides the Company with reasonable
assurance that such Preferred Units can be sold, assigned or transferred
pursuant to Rule 144 promulgated under the 1933 Act, as amended, (or a successor
rule thereto) ("RULE 144"); and (ii) any sale of the Preferred Units made in
reliance on Rule 144 may be made only in accordance with the terms of Rule 144
and further, and if Buyer intends to utilize Rule 144 but Rule 144 is not
applicable to such resale, any resale of the Preferred Units under circumstances
in which the Buyer (or the person through whom the sale is made) may be deemed
to be an underwriter (as that term is defined in the 1933 Act) may require
compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder.
g. VALIDITY; ENFORCEMENT. This Agreement has been duly and validly
authorized, executed and delivered on behalf of such Buyer and is a valid and
binding agreement of such Buyer enforceable against such Buyer in accordance
with its terms, subject as to enforceability to general principles of equity and
to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
and other similar laws relating to, or affecting generally, the enforcement of
applicable creditors' rights and remedies.
h. RESIDENCY. Such Buyer is a resident of that country and state, if
applicable, specified in its address on SCHEDULE 1.
i. INVESTMENT EXPERIENCE. Such Buyer is an investor in securities of
companies and acknowledges that it is able to fend for itself, can bear the
economic risk of its investment, and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment in the Preferred Units for the purpose of acquiring the
Preferred Units.
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3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyers that:
a. ORGANIZATION AND QUALIFICATION. The Company and its
"SUBSIDIARIES" (which for purposes of this Agreement means any entity in which
the Company, directly or indirectly, owns a controlling position of capital
stock or holds a controlling position of an equity or similar interest), are
either a limited liability company or corporation duly organized and validly
existing in good standing under the laws of the jurisdiction in which they are
organized or incorporated, as applicable, and have the requisite limited
liability company or corporate power, as applicable, and authorization to own
their properties and to carry on their business as now being conducted. Each of
the Company and its Subsidiaries is duly qualified as a foreign limited
liability company or corporation, as applicable, to do business and is in good
standing in every jurisdiction in which its ownership of property or the nature
of the business conducted by it makes such qualification necessary, except to
the extent that the failure to be so qualified or be in good standing would not
have a Material Adverse Effect. As used in this Agreement, "MATERIAL ADVERSE
EFFECT" means any material adverse effect on the business, properties, assets,
operations, results or operations, financial condition or prospects of the
Company and its Subsidiaries, if any, taken as a whole, or on the transactions
contemplated hereby or by the agreements and instruments to be entered into in
connection herewith, or on the authority or ability of the Company to perform
its obligations under the Transaction Documents (as defined below in Section
3(b)).
b. AUTHORIZATION; ENFORCEMENT; VALIDITY. (i) The Company has the
requisite limited liability company power and authority to enter into and
perform this Agreement, the Operating Agreement and the First Amendment (the
"AMENDMENT") to the Subscription and Joint Venture Agreement (the "JOINT VENTURE
AGREEMENT", and as amended by the Amendment, the "AMENDED JOINT VENTURE
AGREEMENT") entered into as of March 24, 2000 by and among the Company, IFX
Corporation, a Delaware corporation ("IFX") and Emerging Networks, Inc., a
corporation organized under the laws of the British Virgin Islands ("ENI"),
attached hereto in the form of EXHIBIT B, and each of the other agreements
entered into by the parties hereto in connection with the transactions
contemplated by this Agreement (collectively, the "TRANSACTION DOCUMENTS"), and
to issue the Preferred Units in accordance with the terms hereof and thereof,
(ii) the execution and delivery of the Transaction Documents by the Company and
the consummation by it of the transactions contemplated hereby and thereby,
including without limitation the issuance of the Preferred Units have been duly
authorized by the Company's members and no further consent or authorization is
required by the Company, its manager or its members, (iii) the Transaction
Documents have been duly executed and delivered by the Company, and (iv) the
Transaction Documents constitute the valid and binding obligations of the
Company enforceable against the Company in accordance with their terms, except
as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of creditors'
rights and remedies.
c. ISSUANCE OF PREFERRED UNITS. The Preferred Units are duly
authorized and, upon issuance in accordance with the terms hereof, shall be (i)
validly issued, fully paid and non-
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assessable and (ii) free from all taxes, liens and charges with respect to the
issue thereof. The Preferred Units shall be entitled to the rights and
preferences set forth in the Operating Agreement. The issuance by the Company of
the Preferred Units is exempt from registration under the 1933 Act.
d. NO CONFLICTS. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the
Company's issuance of the Preferred Units) will not (i) result in a violation of
the Company's Articles of Organization, as amended and as in effect on the date
hereof (the "ARTICLES OF ORGANIZATION") or the Company's Operating Agreement, or
(ii) conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company is a party, or result in
a violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws and regulations and the rules and regulations
of the Principal Market (as defined in Section 4(d) below)) applicable to the
Company or by which any property or asset of the Company is bound or affected.
The Company is not in violation of any term of or in default under its Articles
of Organization or Operating Agreement. The Company is not in violation of any
term of or in default under any contract, agreement, mortgage, indebtedness,
indenture, instrument, judgment, decree or order or any statute, rule or
regulation applicable to the Company. The business of the Company is not being
conducted, and shall not be conducted, in violation of any law, ordinance,
regulation of any governmental entity. Except as specifically contemplated by
the Transaction Documents, the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency or any regulatory or self-regulatory agency in order for it
to execute, deliver or perform any of its obligations under or contemplated by
the Transaction Documents in accordance with the terms hereof or thereof. All
consents, authorizations, orders, filings and registrations which the Company is
required to obtain prior to Closing pursuant to the preceding sentence have been
obtained or effected on or prior to the date hereof. The Company is unaware of
any facts or circumstances which might give rise to any of the foregoing. IFX is
not in violation of the listing requirements of the Principal Market.
e. SEC DOCUMENTS; FINANCIAL STATEMENTS. As of the Closing, if
required, the Company and IFX have filed all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC pursuant
to the reporting requirements of the Securities Exchange Act of 1934, as amended
(the "1934 ACT") (all of the foregoing filed prior to the date hereof and all
exhibits included therein and financial statements and schedules thereto and
documents incorporated by reference therein being hereinafter referred to as the
"SEC DOCUMENTS"). As of their respective dates, the SEC DOCUMENTS, if any,
complied in all material respects with the requirements of the 1934 Act and the
rules and regulations of the SEC promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, if any, at the time they were filed
with the SEC, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. As of their respective dates, to the best of the Company's
knowledge (i) the financial statements of IFX included in the SEC Documents, if
any, complied as to form in all material respects with applicable accounting
requirements and the
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published rules and regulations of the SEC with respect thereto. To the best of
the Company's knowledge, such financial statements, if any, have been prepared
in accordance with generally accepted accounting principles, consistently
applied, during the periods involved (except (A) as may be otherwise indicated
in such financial statements or the notes thereto, or (B) in the case of
unaudited interim statements, to the extent they may exclude footnotes or may be
condensed or summary statements) and fairly present in all material respects the
financial position of IFX as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments), and (ii) no other
information provided by or on behalf of the Company to the Buyers which is not
included in the SEC Documents, contains any untrue statement of a material fact
or omits to state any material fact necessary in order to make the statements
therein, in the light of the circumstance under which they are or were made, not
misleading. Neither the Company nor any of its officers, managers, employees or
agents, nor any of its Subsidiaries, have provided the Buyers with any material,
nonpublic information.
f. ABSENCE OF CERTAIN CHANGES. Since December 1, 1999, there has
been no Material Adverse Effect concerning the Company or its Subsidiaries. The
Company and its Subsidiaries have not taken any steps, and do not currently
expect to take any steps, to seek protection pursuant to any bankruptcy law nor
does the Company or any of its Subsidiaries have any knowledge or reason to
believe that its creditors intend to initiate involuntary bankruptcy
proceedings.
g. ABSENCE OF LITIGATION. Except as set forth in the SEC Documents,
there is no action, suit, proceeding, inquiry or investigation before or by any
court, public board, government agency, self-regulatory organization or body
pending or, to the knowledge of the Company or any of its Subsidiaries,
threatened against or affecting the Company or any of its Subsidiaries, the
Company's Preferred Units or other membership units, the common stock of IFX,
par value $.02 per share (the "IFX COMMON STOCK") or any of the Company's or the
Company's Subsidiaries' officers or directors or managers, as applicable, in
their capacities as such which would have a Material Adverse Effect.
h. NO UNDISCLOSED EVENTS, LIABILITIES, DEVELOPMENTS OR
CIRCUMSTANCES. No event, liability, development or circumstance has occurred or
exists, or is contemplated to occur, with respect to the Company or its
Subsidiaries or their respective business, properties, prospects, operations or
financial condition, that would be required to be disclosed by the Company or
its Subsidiaries under applicable securities laws or anti-fraud provisions and
which has not been previously disclosed to the Buyers.
i. NO GENERAL SOLICITATION. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the 1933 Act) in connection with the offer or sale of the
Preferred Units.
j. NO INTEGRATED OFFERING. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any
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security or solicited any offers to buy any security, under circumstances that
would require registration of any of the Preferred Units under the 1933 Act or
cause this offering of the Preferred Units to be integrated with prior offerings
by the Company for purposes of the 1933 Act or any applicable stockholder
approval provisions, nor will the Company or any of its Subsidiaries take any
action or steps that would require registration of any of the Preferred Units
under the 1933 Act or cause the offering of the Preferred Units to be integrated
with other offerings.
k. EMPLOYEE RELATIONS. Neither the Company nor any of its
Subsidiaries is involved in any union labor dispute nor, to the knowledge of the
Company or any of its Subsidiaries, is any such dispute threatened.
l. INTELLECTUAL PROPERTY RIGHTS. The Company and its Subsidiaries
own or possess adequate rights or licenses to use all trademarks, trade names,
service marks, service mark registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights necessary to conduct their respective
businesses as now conducted. None of the Company's or Subsidiaries' trademarks,
trade names, service marks, service mark registrations, service names, patents,
patent rights, copyrights, inventions, licenses, approvals, government
authorizations, trade secrets or other intellectual property rights have expired
or terminated, or are expected to expire or terminate within two years from the
date of this Agreement. The Company and its Subsidiaries do not have any
knowledge of any infringement by the Company or its Subsidiaries of trademark,
trade name rights, patents, patent rights, copyrights, inventions, licenses,
service names, service marks, service mark registrations, trade secret or other
similar rights of others, or of any such development of similar or identical
trade secrets or technical information by others and the Company and its
Subsidiaries are unaware of any facts or circumstances which might give rise to
any of the foregoing. The Company and its Subsidiaries have taken reasonable
security measures to protect the secrecy, confidentiality and value of all of
their intellectual properties.
m. ENVIRONMENTAL LAWS. The Company and its Subsidiaries (i) are in
compliance with any and all applicable foreign, federal, state and local laws
and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval.
n. TITLE. The Company and its Subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of the Company
and its Subsidiaries, in each case free and clear of all liens, encumbrances and
defects except such as are described in the SEC Documents or such as do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company and any of its
Subsidiaries. Any real property and facilities held under lease by the Company
and any of its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not
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interfere with the use made and proposed to be made of such property and
buildings by the Company and its Subsidiaries.
o. INSURANCE. The Company and each of its Subsidiaries are insured
by insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged and the Company and Subsidiaries do not have any reason to believe they
will not be able to renew its existing insurance coverage under substantially
similar terms for the next two (2) years.
p. REGULATORY PERMITS. The Company and its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses, and neither the Company nor any such Subsidiary has received any
notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit.
q. TRANSACTIONS WITH AFFILIATES. Except as set forth in the
Transaction Documents and the SEC Documents, none of the officers, control
parties, control entities, managers, members or employees of the Company is
presently a party to any transaction with the Company or any of its Subsidiaries
(other than for services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or from,
or otherwise requiring payments to or from any officer, director or such
employee or, to the knowledge of the Company, any corporation, partnership,
trust or other entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner.
r. ELIGIBILITY. IFX is currently eligible to register the resale by
its shareholders of its common stock on a registration statement on Form S-3
under the 1933 Act.
s. TAX FILING AND STATUS.
(i) The Company and each of its Subsidiaries has made or filed
all federal and state income and all other tax returns, reports and declarations
required by any jurisdiction to which it is subject (unless and only to the
extent that the Company and each of its Subsidiaries has set aside on its books
provisions reasonably adequate for the payment of all unpaid and unreported
taxes) and has paid all taxes and other governmental assessments and charges
that are material in amount, shown or determined to be due on such returns,
reports and declarations, except those being contested in good faith and has set
aside on its books provision reasonably adequate for the payment of all taxes
for periods subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material amount claimed to
be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim.
(ii) For purposes of the Internal Revenue Code of 1986, as
amended (the "CODE"), the Company and all of its predecessors have never been
engaged in any trade or business, as the term is used in Section 731 of the
Code.
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(iii) For purposes of the Code, the Company and all of its
predecessors have always only held as assets the following: cash, IFX Common
Stock, the Joint Venture Agreement and the Amended Joint Venture Agreement.
t. LIENS; AUDITS. Except as listed on the attached LIENS SCHEDULE,
there are no liens, tax liens, judgments, pledges, charges, security interests,
community property or similar rights, encumbrances or other adverse claims of
any kind (each "LIEN") on any of the assets of the Company. There are no
unexpired waivers by the Company of any statutes of limitations with respect to
any taxes, and the Company is not a party to any action or proceedings by any
governmental authority regarding the collection or assessment of any taxes.
u. CAPITALIZATION.
(i) The attached CAPITALIZATION SCHEDULE accurately sets forth
the following information with respect to the Company's capitalization as of the
Closing and immediately thereafter: (1) the authorized membership interests of
the Company, (2) the number of each class of membership interests issued and
outstanding, (3) the number of each class of membership interests reserved for
issuance upon exercise of options, warrants, convertible securities, etc., (4)
the name of each holder of membership interests and the amount of membership
interests and percentage interest owned by each such holder and (5) with respect
to all outstanding options and rights to acquire the Company's membership
interests: the holder, the number of units covered, the exercise price and the
expiration date. As of the Closing, the Company shall not have outstanding any
membership interests or securities convertible or exchangeable for any
membership interests or containing any profit participation features, nor shall
it have outstanding any rights or options to subscribe for or to purchase its
membership interests or any membership interests or securities convertible into
or exchangeable for its membership interests or any equity appreciation rights
or phantom equity plans, except as set forth on the CAPITALIZATION SCHEDULE. As
of the Closing, the Company shall not be subject to any obligation (contingent
or otherwise) to repurchase or otherwise acquire or retire any of its membership
interests or any warrants, options or other rights to acquire its membership
interests, except as set forth on the CAPITALIZATION SCHEDULE and except
pursuant to the terms of the Operating Agreement. As of the Closing, all of the
outstanding membership interests of the Company shall be validly issued and duly
authorized.
(ii) There are no statutory or contractual members preemptive
rights or rights of refusal with respect to the issuance of the Preferred Units
hereunder. There are no agreements between the Company's members with respect to
the voting or transfer of the Company's membership interests or with respect to
any other aspect of the Company's affairs, except as set forth in the Operating
Agreement.
v. JOINT VENTURE AGREEMENT. As of the Closing, the Company and all
other applicable parties have entered into the Amendment. Attached hereto as
EXHIBIT B, is the current form, as of the Closing, of the Amended Joint Venture
Agreement.
w. MERGER OF THE COMPANY. On December 23, 1999, International
Technology Investments, L.C., a Florida limited liability company (the
"PREDECESSOR COMPANY") merged with
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and into the Company (the "MERGER") and pursuant to such Merger, the Company
acquired all right, title and interest to and in all of the assets and
liabilities of the Predecessor Company.
4. COVENANTS.
a. BEST EFFORTS. Each party shall use its best efforts timely to
satisfy each of the conditions to be satisfied by it as provided in Sections 5
and 6 of this Agreement.
b. FORM D AND BLUE SKY. The Company agrees to file a Form D with
respect to the Preferred Units as required under Regulation D and to provide a
copy thereof to each Buyer promptly after such filing. The Company shall, on or
before the Closing Date, take such action as the Company shall reasonably
determine is necessary in order to obtain an exemption for or to qualify the
Preferred Units for sale to the Buyers at the Closing pursuant to this Agreement
under applicable securities or "Blue Sky" laws of the states of the United
States, and shall provide evidence of any such action so taken to the Buyers on
or prior to the Closing Date. The Company shall make all filings and reports
relating the offer and sale of the Preferred Units required under applicable
securities or "Blue Sky" laws of the states of the United States following the
Closing Date.
c. REPORTING STATUS. Until the earlier of (i) the date which is one
year after the date as of which the Buyers may sell all of the IFX Common Stock
received due to any redemption of the Preferred Units (the "REDEMPTION SHARES")
pursuant to the Operating Agreement, without restriction pursuant to Rule 144(k)
promulgated under the 1933 Act (or successor thereto), or (ii) the date on which
(A) the Buyers shall have sold all the Redemption Shares (the "REGISTRATION
PERIOD") and (B) none of the Preferred Units are outstanding, Michael Shalom, as
manager (the "MANAGER") of the Company shall cause IFX to file all reports
required to be filed with the SEC pursuant to the 1934 Act, and the Manager
shall cause IFX not to terminate its status as an issuer required to file
reports under the 1934 Act , even if the 1934 Act or the rules and regulations
thereunder would otherwise permit such termination.
d. LISTING. The Manager shall use his best efforts to cause IFX to
promptly secure the listing of all of the Redemption Shares upon each national
securities exchange, automated quotation system or bulletin board system, if
any, upon which shares of IFX Common Stock are then listed (subject to official
notice of issuance) and shall use his best efforts to maintain, so long as any
other shares of IFX Common Stock shall be so listed, such listing of all
Redemption Shares. The Manager shall use his best efforts to cause IFX to
maintain the authorization of IFX Common Stock for quotation on the Nasdaq
National Market, Nasdaq Small-Cap Market, Nasdaq Bulletin Board System, The New
York Stock Exchange, Inc. or The American Stock Exchange, Inc., as applicable
(the "PRINCIPAL MARKET"). The Company shall not take any action which would be
reasonably expected to result in the delisting or suspension of IFX Common Stock
on the Principal Market. The Company shall promptly, and in no event later than
the following Business Day, provide to each Buyer copies of any notices it or
its Subsidiaries receives from the Principal Market regarding the continued
eligibility of IFX Common Stock for listing on such automated quotation system
or securities exchange. The Manager shall use his best efforts to cause IFX to
pay all fees and expenses in connection with satisfying the obligations under
this Section 4(d).
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e. ISSUANCE OF REDEMPTION SHARES. In the event that the Company
transfers to any Buyer, pursuant to the Operating Agreement, Redemption Shares,
such Redemption Shares shall be duly authorized, and validly issued, fully paid
and non-assessable and free of all taxes, liens, charges and preemptive rights
with respect to the issue thereof.
f. INVOCATION OF REGISTRATION RIGHTS. The Company shall not invoke
or exercise any of its registration rights set forth in the Amended Joint
Venture Agreement without the prior written consent of holders of at least
two-thirds (2/3) of the Preferred Units then outstanding.
g. INDEPENDENT AUDITORS. The Manager shall use his best efforts to
cause IFX, until at least three (3) years after the Closing Date, to maintain as
its independent auditors an accounting firm authorized to practice before the
SEC.
h. CORPORATE EXISTENCE AND TAXES. The Manager shall use his best
efforts to cause IFX, until at least the later of (i) the date that is three (3)
years after the Closing Date or (ii) the redemption of all Preferred Units and
the sale by the Buyers of all Redemption Shares, if applicable, to maintain the
corporate existence of IFX in good standing (provided, however, that the
foregoing covenant shall not prevent IFX from entering into any merger or
corporate reorganization as long as the surviving entity in such transaction, if
not IFX, has common stock listed for trading on the Principal Market and shall
pay all its taxes when due except for taxes which the Company or IFX disputes).
i. OPERATING AGREEMENT. The Company shall timely satisfy each of the
covenants and agreements set forth in the Operating Agreement.
j. NEGATIVE COVENANT. So long as any of the Preferred Units remain
outstanding, the Company shall not, without the prior written consent of the
holders of two-thirds (2/3) of the Preferred Units, enter into, become subject
to, amend, modify or waive, or permit any of its Subsidiaries to enter into,
become subject to, amend, modify or waive, any agreement or instrument which by
its terms would (under any circumstances) restrict the Company's right to
perform any of the provisions of any of the Transaction Documents.
k. COMPLIANCE WITH AGREEMENTS. The Company shall perform and observe
all of its material obligations to each holder of the Preferred Units set forth
in the Transaction Documents.
l. [Reserved.]
m. ISSUANCE OF DEBT OBLIGATIONS OR SIMILAR LIABILITIES. So long as
any of the Preferred Units remain outstanding, the Company shall not issue any
debt obligation or similar instrument or incur any indebtedness or similar
liability except as set forth in the Operating Agreement.
n. DISTRIBUTIONS. The Company shall not make any distributions of
cash or any other property to any person, member or entity except as set forth
in the Operating Agreement.
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o. [Reserved.]
p. PROCEEDS. The Company shall promptly use the Purchase Price for
only the following purposes: (i) to exercise the Company's option and right as
set forth in Section 4.3 of the Amended Joint Venture Agreement to purchase (the
"OPTION EXERCISE") 1,500,000 shares of common stock of IFX, par value $.02 per
share ("IFX COMMON STOCK"), (ii) to completely repay the Company's obligations
to IFX pursuant to that certain promissory note entered into by and between IFX
and the Predecessor Company on December 31, 1999, (iii) to pay reasonable
Company expenses, and (iv) to pay any interest or similar payments required
pursuant to the indebtedness incurred by the Company or the Florida L.C. in
favor of Scotiabank (Cayman Islands) Ltd. The Company shall utilize the Purchase
Price in the manner described in this Section 4(p) promptly, but in no event
later than the third (3rd) business day following the date of this Agreement;
PROVIDED, HOWEVER, that the Company shall utilize that portion allocable to its
obligations under Section 4(p)(iii) and (iv) above promptly when such
obligations become due.
q. CONTROL OF IFX SHARES AND AMENDED JOINT VENTURE AGREEMENT. The
Company shall promptly, but in no event later than the third (3rd) Business Day
following the Option Exercise, forward by overnight bonded courier to the
designee of the holders of the Preferred Units the certificates representing the
1,500,000 shares of IFX Common Stock issued in the name of the Company as a
result of the Option Exercise and the original Joint Venture Agreement and the
original Amendment. While any Preferred Unit is outstanding, the Company shall
take no action whatsoever with respect to such IFX Common Stock and the Joint
Venture Agreement and the original Amendment unless the Company has received the
prior written consent of holders with at least two-thirds (2/3) of the Preferred
Units.
5. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell the
Preferred Units to each Buyer at the Closing is subject to the satisfaction, at
or before the Closing Date, of each of the following conditions, provided that
these conditions are for the Company's sole benefit and may be waived by the
Company at any time in its sole discretion by providing each Buyer with prior
written notice thereof:
a. TRANSACTION DOCUMENTS. Such Buyer shall have executed each of the
Transaction Documents, where appropriate, to which it is a party and delivered
the same to the Escrow Agent for the transactions contemplated by this
Agreement;
b. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of such Buyer shall be true and correct in all material respects as
of the date when made and as of the Closing Date as though made at that time
(except for representations and warranties that speak as of a specific date),
and such Buyer shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by such Buyer at or prior
to the Closing Date; and
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c. ADDITIONAL DOCUMENTS. Such Buyer shall have delivered to the Escrow
Agent such other documents relating to the transactions contemplated by this
Agreement as the Escrow Agent may reasonable request.
6. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
The obligation of each Buyer hereunder to purchase the Preferred Units
at the Closing is subject to the satisfaction, at or before the Closing Date, of
each of the following conditions, provided that these conditions are for each
Buyer's sole benefit and may be waived by such Buyer at any time in its sole
discretion by providing the Company with prior written notice thereof:
a. TRANSACTION DOCUMENTS. The Company shall have executed each of the
Transaction Documents and delivered the same to the Escrow Agent;
b. IFX COMMON STOCK. IFX Common Stock shall be authorized for quotation
on the Principal Market and trading in IFX Common Stock shall not have been
suspended by the SEC or the Principal Market;
c. REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Company shall be true and correct as of the date when made and as of the
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date) and the Company shall have
performed, satisfied and complied with the covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied
with by the Company at or prior to the Closing Date;
d. LEGAL OPINION. The Company shall have delivered to the Escrow Agent
the opinion of the Company's counsel dated as of the Closing Date, in form,
scope and substance reasonably satisfactory to such Buyer and in substantially
the form of EXHIBIT C attached hereto;
e. OPERATING AGREEMENT. The Company shall have executed and delivered
to the Escrow Agent that number of originally executed copies of the Operating
Agreement as requested by the Buyers at the Closing and the Operating Agreement
shall be effective as of the Closing Date;
f. FILINGS. The Company shall have made all filings under all
applicable federal and state securities laws necessary to consummate the
issuance of the Preferred Units pursuant to this Agreement in compliance with
such laws;
g. ADDITIONAL DOCUMENTS. The Company shall have delivered to the Escrow
Agent such other documents relating to the transactions contemplated by this
Agreement as the Escrow Agent may reasonably request; and
h. FEES. Subject to Section 9(k) below, at Closing, the Company shall
reimburse the Buyers for the Buyers' attorneys' fees and expenses (in an amount
not to exceed $75,000.00) incurred by the Buyers concerning the due diligence
review of the contemplated transactions and the
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<PAGE>
Company, and the negotiation and preparation of the Transaction Documents and
the consummation of the transactions contemplated thereby.
i. AMENDED JOINT VENTURE AGREEMENT. The Company shall have delivered to
the Escrow Agent a copy of the Amended Joint Venture Agreement executed and
delivered by the Company, IFX and ENI.
j. GOOD STANDING CERTIFICATE. The Company shall have delivered to the
Escrow Agent a certificate of good standing of the Company, dated not more than
five (5) days prior to the Closing Date, issued by the State of Nevada.
k. MANAGER'S CERTIFICATE; ARTICLES OF ORGANIZATION; RESOLUTIONS. The
Company shall have delivered to the Escrow Agent (i) a certificate of the
Manager, dated as of the Closing Date, stating that the conditions contained in
this Section 6 have been fully satisfied, (ii) certified copies of the Company's
Articles of Organization, as in effect at the Closing and (iii) certified copies
of the resolutions duly adopted by the Company authorizing the execution,
delivery and performance of the Transaction Documents, the issuance and sale of
the Preferred Units, and the consummation of all other transactions contemplated
by this Agreement.
l. COMPANY ACTION. All Company action taken or required to be taken by
the Company in connection with the transactions contemplated hereby to be
consummated at or prior to the Closing shall have been consummated.
m. NO MATERIAL ADVERSE CHANGE. Since December 1, 1999, there shall have
been no material adverse change in the financial condition, operating results,
assets, liabilities, operations, employee relations or customer or supplier
relations of the Company and its Subsidiaries taken as a whole.
n. COMPLIANCE WITH APPLICABLE LAWS. The purchase of the Preferred Units
by the Buyers hereunder shall not be prohibited by any applicable law or
governmental rule or regulation and shall not subject the Buyers to any penalty,
liability or, in the Buyers' reasonable judgment, other onerous condition under
or pursuant to any applicable law or governmental rule or regulation, and the
purchase of the Preferred Units by the Buyers hereunder shall be permitted by
laws, rules and regulations of the jurisdictions and governmental authorities
and agencies to which the Buyers are subject.
o. TAX RETURNS. The Company shall have delivered to the Escrow Agent
all state and federal tax returns of the Company filed for fiscal years 1998 and
1999.
7. INDEMNIFICATION.
In consideration of each Buyer's execution and delivery of the
Transaction Documents and acquiring the Preferred Units thereunder and in
addition to all of the Company's other obligations under the Transaction
Documents, the Company shall defend, protect, indemnify and hold harmless each
Buyer and each other holder of the Preferred Units and all of their
stockholders,
14
<PAGE>
officers, directors, partners, employees and direct or indirect investors and
any of the foregoing person's agents or other representatives (including,
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the "INDEMNITEES") from and
against any and all actions, causes of action, suits (whether instituted or
defended or otherwise), claims, losses, costs, penalties, fees, liabilities and
damages, and expenses in connection therewith (irrespective of whether any such
Indemnitee is a party to the action for which indemnification hereunder is
sought), and including reasonable attorneys' fees and disbursements (the
"INDEMNIFIED LIABILITIES"), incurred by any Indemnitee as a result of, or
arising out of, or relating to (a) any misrepresentation or breach of any
representation or warranty made by the Company in the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby,
(b) any breach of any covenant, agreement or obligation of the Company contained
in the Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby, (c) any cause of action, suit or claim brought
or made against such Indemnitee and arising out of or resulting from the
execution, delivery, performance or enforcement of the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby or
(d) any transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Preferred Units; PROVIDED,
HOWEVER, no indemnification shall be paid hereunder to any Indemnitee on account
of any Indemnified Liabilities arising substantially due to the gross negligence
or willful misconduct of such Indemnitee. To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities which is permissible under applicable law.
8. LIQUIDATED DAMAGES.
The Company agrees that Buyers will suffer damages if the Company
violates any provision of or fails to fulfill any of its obligations or duties
pursuant to the Transaction Documents (a "COMPANY VIOLATION"), and that it would
not be possible to ascertain the extent of such damages. Accordingly, in the
event of such Company Violation, the Company hereby agrees to pay liquidated
damages ("LIQUIDATED DAMAGES") to each Buyer following the occurrence of such
Company Violation in an amount determined by multiplying (i) $2.00 per Preferred
Unit then held by such Buyer by (ii) the percentage derived by dividing (A) the
actual number of days elapsed from the last day of the date of the Company
Violation or the prior 30-day period, as applicable, to the day such Company
Violation has been completely cured by (B) 30, in cash or at the Buyer's option,
in the number of shares of IFX Common Stock equal to the quotient of (v) the
dollar amount of the Liquidated Damages on the Payment Date (as defined below)
divided by (w) the closing bid price of IFX Common Stock as of the date of the
Company Violation (as quoted in the Principal Market or the market or exchange
where IFX Common Stock is then traded). The Liquidated Damages payable pursuant
hereto shall be payable within five (5) business days from the end of the
calendar month commencing on the first calendar month in which the Company
Violation occurs (each, a "PAYMENT DATE"). In the event the Buyer elects to
receive the Liquidated Damages amount in shares of IFX Common Stock, such shares
shall also be considered Redemption Shares and shall have the registration
rights set forth in Article 17 of the Operating Agreement and Section 7.3 of the
Amended Joint Venture Agreement.
15
<PAGE>
9. GOVERNING LAW; MISCELLANEOUS.
a. GOVERNING LAW; JURISDICTION; JURY TRIAL. This Agreement shall be
governed by and construed in all respects by the internal laws of the State of
Nevada (except for the proper application of the United States federal
securities laws), without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Nevada or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of Nevada. Each party hereby irrevocably submits to the non-exclusive
jurisdiction of the state and federal courts sitting in the City of Las Vegas.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
b. COUNTERPARTS. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.
c. HEADINGS. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
d. SEVERABILITY. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.
e. ENTIRE AGREEMENT; AMENDMENTS. This Agreement supersedes all other
prior oral or written agreements between the Buyers, the Company, their
affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor any Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. No provision of this
Agreement may be amended other than by an instrument in writing signed by the
Company and holders of at least two-thirds (2/3) of the Preferred Units then
outstanding, and no provision hereof may be waived other than by an instrument
in writing signed by the party against whom enforcement is sought.
f. NOTICES. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party); or (iii) one business day after deposit with a nationally
recognized overnight
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<PAGE>
delivery service, in each case properly addressed to the party to receive the
same. The addresses and facsimile numbers for such communications shall be:
If to the Company:
International Technology Investments, L.C.
1135 Terminal Way, Suite 106
Reno, Nevada 89502
Telephone: (775) 329-1842
Attention: Michael Shalom, Manager
With a copy to:
Dennis Olle, Esq./Michael Ford, Esq.
Adorno & Zeder, P.A.
2601 S. Bayshore Dr., Ste. 1600
Miami, Florida 33133
Telephone: (305) 860-7044 or (305) 860-7070
Facsimile: (305) 858-4777
If to a Buyer, to it at the address and facsimile number set forth on SCHEDULE 1
with copies to such Buyer's representatives as set forth on SCHEDULE 1, or at
such other address and/or facsimile number and/or to the attention of such other
person as the recipient party has specified by written notice given to each
other party five days prior to the effectiveness of such change.
g. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns,
including any purchasers of the Preferred Units. The Company shall not assign
this Agreement or any rights or obligations hereunder without the prior written
consent of holders of at least two-thirds (2/3) of the Preferred Units then
outstanding. A Buyer may assign some or all of its rights hereunder without the
consent of the Company, provided, however, that any such assignment shall not
release such Buyer from its obligations hereunder unless such obligations are
assumed by such assignee and the Company has consented to such assignment and
assumption (such consent not to be unreasonably withheld).
h. NO THIRD PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
i. SURVIVAL. Unless this Agreement is terminated under Section 9(k),
the agreements and covenants set forth in Sections 4 and 9, the indemnification
provisions set forth in Section 7 and the liquidated damages provisions set
forth in Section 8 shall survive the Closing. Each Buyer shall be responsible
only for its own representations, warranties, agreements and covenants
hereunder.
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<PAGE>
j. FURTHER ASSURANCES. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
k. TERMINATION. In the event that the Closing shall not have
occurred with respect to a Buyer on or before three (3) Business Days from the
date hereof due to the Company's or such Buyer's failure to satisfy the
conditions set forth in Sections 5 and 6 above (and the nonbreaching party's
failure to waive such unsatisfied condition(s)), the nonbreaching party shall
have the option to terminate this Agreement with respect to such breaching party
at the close of business on such date without liability of any party to any
other party; provided, however, that if this Agreement is terminated pursuant to
this Section 9(k), the Company shall remain obligated to reimburse the
nonbreaching Buyers for the expenses described in Section 6(h) above.
l. PLACEMENT AGENT. The Company acknowledges that it has not engaged
any placement agent or broker in connection with the sale of the Preferred
Units. The Company shall be responsible for the payment of any placement agent's
fees or broker's commissions relating to or arising out of the transactions
contemplated hereby. The Company shall pay, and hold each Buyer harmless
against, any liability, loss or expense (including, without limitation,
attorneys' fees and out of pocket expenses) arising in connection with any such
claim.
m. NO STRICT CONSTRUCTION. The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.
n. REMEDIES. Each Buyer and each holder of the Preferred Units shall
have all rights and remedies set forth in the Transaction Documents and all
rights and remedies which such holders have been granted at any time under any
other agreement or contract and all of the rights which such holders have under
any law. Any person or entity having any rights under any provision of this
Agreement shall be entitled to enforce such rights specifically (without posting
a bond or other security), to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights granted by law.
o. PAYMENT SET ASIDE. To the extent that the Company makes a payment
or payments to the Buyers hereunder or pursuant to the Transaction Documents or
the Buyers enforce or exercise their rights hereunder or thereunder, and such
payment or payments or the proceeds of such enforcement or exercise or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside, recovered from, disgorged by or are required to be refunded, repaid
or otherwise restored to the Company, a trustee, receiver or any other person
under any law (including, without limitation, any bankruptcy law, state or
federal law, common law or equitable cause of action), then to the extent of any
such restoration the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred.
18
<PAGE>
[Signature Page Follows]
19
<PAGE>
IN WITNESS WHEREOF, the Buyers and the Company have caused this
Preferred Unit Purchase Agreement to be duly executed as of the date first
written above.
COMPANY: BUYERS:
INTERNATIONAL TECHNOLOGY CRANSHIRE CAPITAL, L.P.
INVESTMENTS, L.C. By: Downsview Capital, Incorporated,
the General Partner
By: /s/ Michael Shalom
Name: Michael Shalom By: /s/ Mitchell Kopin
Title: Manager Name: Mitchell Kopin
Title: President
KEYWAY INVESTMENTS, LTD.
By: /s/ Pamela Ann Young
Name: Pamela Ann Young
Title: Director
THE DOTCOM FUND, LLC
By: /s/ Mark Rice
Name: Mark Rice
Title: Managing Member
<PAGE>
LIST OF EXHIBITS
Exhibit A Form of Operating Agreement
Exhibit B Form of Amended Joint Venture Agreement
Exhibit C Form of Company Counsel Opinion
<PAGE>
LIST OF SCHEDULES
Schedule 1: List of Buyers
Capitalization Schedule
Liens Schedule
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 1: LIST OF BUYERS
--------------------------
BUYER'S LEGAL
REPRESENTATIVES'
BUYER ADDRESS PURCHASE NUMBER OF ADDRESS AND FACSIMILE
BUYER'S NAME AND FACSIMILE NUMBER PRICE PREFERRED UNITS NUMBER
- --------------------- ------------------------------ ---------------- --------------- ---------------------------
<S> <C> <C> <C> <C>
Cranshire Capital, 666 Dundee Rd., Ste. 1901 $2,750,000.00 27,500 Katten Muchin & Zavis
L.P. Northbrook, IL 60062 525 W. Monroe Street
Attn: Mitchell Kopin Chicago, Illinois
(p) 847/562-9030 60661-3693
(f) 847/562-9031 Attention: Anthony J.
Ribaudo, Esq.
(p) 312/ 902-5521
(f) 312/ 577-8763
Keyway Investments 19 Mount Havelock
Ltd. Douglas, Isle of Man $1,000,000.00 10,000
United Kingdom
1M1 2QG
(p) 011-44-171-323-2131
(f) 011-44-171-323-0773
Attention: Martin Peters
The dotCom Fund, LLC 666 Dundee Rd., Ste. 1901
Northbrook, IL 60062 $2,250,000.00 22,500
Attention: Mark Rice
(p) 847/509-2290
(f) 847/509-2295
</TABLE>
<PAGE>
CAPITALIZATION SCHEDULE
As of the date of the Agreement, set forth below is the capitalization of the
Company:
I. Authorized membership interests of the Company:
a) Class A Units
II. Number of each class of membership interests issued and outstanding:
a) Class A Units:
1. Philistar Ltd. (30,000 units)
2. MITS Investment Corp. (10,000 units)
III. Number of each class of membership interests reserved for issuance upon
exercise of options, Warrants, convertible securities, etc:
None.
IV. Name of each holder of membership interests and the amount of membership
interests and percentage interest owned by each such holder:
a) Class A Units:
1. Philistar Ltd. (75%)
2. MITS Investment Corporation (25%)
V. With respect to all outstanding options and rights to acquire the Company's
membership interests: the holder, the number of units covered, the
exercise price, and the expiration date.
Not Applicable.
<PAGE>
LIENS SCHEDULE
As of the date of the Agreement, set forth below is all of the Liens of the
Company:
(1) 3,750,000 shares of IFX Common Stock pledged to Donaldson Lufkin &
Jenrette; and
(2) 750,000 shares of IFX Common Stock pledged to Scotiabank (Cayman
Islands) Ltd.
<PAGE>
SECOND AMENDED AND RESTATED OPERATING AGREEMENT OF
INTERNATIONAL TECHNOLOGY INVESTMENTS, L.C.
DATED AS OF MARCH 24, 2000
THE MEMBERSHIP INTERESTS REPRESENTED BY THIS SECOND AMENDED AND RESTATED
OPERATING AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED, OR UNDER ANY OTHER APPLICABLE SECURITIES LAWS. SUCH
INTERESTS MAY NOT BE SOLD, ASSIGNED, PLEDGED OR OTHERWISE DISPOSED OF AT ANY
TIME WITHOUT EFFECTIVE REGISTRATION UNDER SUCH ACT AND LAWS OR EXEMPTION
THEREFROM, AND COMPLIANCE WITH THE OTHER RESTRICTIONS ON TRANSFERABILITY SET
FORTH HEREIN
<PAGE>
SECOND AMENDED AND RESTATED
OPERATING AGREEMENT OF
INTERNATIONAL TECHNOLOGY INVESTMENTS, L.C.
This Second Amended and Restated Operating Agreement, dated as of March 24, 2000
(the "AGREEMENT"), is entered into by and among the persons identified as the
members (each a "MEMBER", and collectively the "MEMBERS") on the signature pages
attached hereto.
W I T N E S S E T H:
WHEREAS, MITS Investments Corp., a Nevada corporation ("MITS") and
Philistar Ltd., a Cayman Islands corporation ("PHILISTAR") formed International
Technology Investments, L.C. under the Limited Liability Company Act of the
State of Florida (the "FLORIDA L.C.") pursuant to that certain Operating
Agreement (the "FIRST OPERATING AGREEMENT"), dated December 4, 1998;
WHEREAS, the Florida L.C. merged (the "MERGER") with and into
International Technology Investments, L.C., a Nevada limited liability company
(the "COMPANY") on December 22, 1999, whereby the Company was the surviving
entity and acquired all right, interest and title in and to the assets and
assumed all of the liabilities of the Florida L.C.;
WHEREAS, due to the Merger, MITS and Philistar amended and restated the
First Operating Agreement with that certain Amended and Restated Operating
Agreement, dated December 31, 1999 (the "SECOND OPERATING AGREEMENT");
WHEREAS, prior to the date hereof, the Company had one class of
membership interests, with MITS and Philistar owning all such membership
interests;
WHEREAS, on the date hereof, the Company will have two classes of
membership interests: Class A Units (the "CLASS A UNITS") and Class B Units (the
"CLASS B UNITS" together with the Class A Units, the "UNITS").
WHEREAS, EXHIBIT A sets forth as of the date hereof, the holders of
Class A Units (each a "CLASS A UNIT HOLDER") and the holders of Class B Units
(each a "CLASS B UNIT HOLDER", and together with the Class A Unit Holders, the
"MEMBERS"), and the number of Units held by each such Member.
WHEREAS, the parties hereto are entering into this Agreement in order
to amend and restate the Second Operating Agreement.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, the Members hereby amend and restate the Second Operating Agreement in
its entirety to read as follows:
<PAGE>
ARTICLE 1
TERMS AND CONDITIONS
The parties, intending to be legally bound, agree as follows:
1.1 EFFECTIVE DATE OF AGREEMENT; ENFORCEABILITY. The effective date of this
Agreement (the "EFFECTIVE DATE") shall be March 24, 2000.
1.2 FORMATION OF COMPANY. On December 22, 1999, the Company was organized
under the laws of the State of Nevada due to filing by Michael Ford with the
Secretary of State of Nevada the Company's Articles of Organization (the
"ARTICLES") in the form attached as EXHIBIT B.
Upon its formation, the Company shall be a legal entity separate and
distinct from the Members and the Manager (as defined below).
1.3 COMPANY'S NAME, PURPOSE, ETC. The Company's name, registered agent,
registered office, duration and form of management shall be as set forth in the
Articles. Notwithstanding anything to the contrary in the Articles, the purpose
of the Company and sole business activities shall be to invest in common stock
of IFX Corporation and enforce its rights under the Amended Joint Venture
Agreement (as defined in Article 2.2).
1.4 MEMBERS OF COMPANY. Upon the Effective Date of this Agreement, each
Class A Unit Holder and each Class B Unit Holder listed on EXHIBIT A shall be a
Member of the Company. Additional members shall be admitted to the Company in
accordance with Article 5.
1.5 PRINCIPAL PLACE OF BUSINESS. Upon the Effective Date of this Agreement,
the Company's place of business shall be c/o CSC Services of Nevada, Inc., 502
East John Street, Carson City, Nevada 89706. The Manager of the Company, as
herein defined, has been delegated the authority to find, maintain and/or change
the principal place of business of the Company. No business of the Company shall
be conducted in the State of Nevada prior to the establishment of such principal
place of business.
1.6 LIMITED LIABILITY OF MEMBERS. No Member or Manager shall be personally
obligated to any third party for any debt, obligation or liability of the
Company solely by reason of being a Member or acting as the Manager,
respectively. Members and the Manager shall be liable for their personal conduct
as provided by law and by this Agreement.
1.7 RESERVATION OF COMPANY MANAGEMENT TO A MANAGER; APPOINTMENT OF MANAGER.
Except as otherwise expressly provided in this Agreement, the management of the
business and internal affairs of the Company shall be reserved to a Manager. The
manager (the "MANAGER") of the Company as of the Effective Date shall be Michael
Shalom.
2
<PAGE>
1.8 TAXATION OF COMPANY AND MEMBERS. Under federal tax law and to the
maximum extent possible under the tax laws of each state and the District of
Columbia, the Company and its Members shall be taxable as a partnership and as
partners.
1.9 ANNUAL ACCOUNT PERIOD OF COMPANY. The Company's annual accounting
period for financial and tax purposes shall be the calendar year.
1.10 COMPANY METHOD OF ACCOUNTING. The Company shall use the cash method of
accounting to compute its taxable income.
1.11 ADDITION OF COMPANY AS PARTY TO AGREEMENT. Promptly after the
formation of the Company, Michael Shalom shall sign this Agreement on behalf of
the Company, and the Company shall become a party to the Agreement.
1.12 EFFECT OF LIMITED LIABILITY COMPANY ACT. Except as otherwise provided
in this Agreement, the business and internal affairs of the Company shall be
governed by Chapter 86 of the Nevada Revised Statutes as in effect on the
Effective Date.
1.13 RELATION OF AGREEMENT TO ARTICLES. If there is any conflict between
the provisions of this Agreement and those of the Articles, the provisions of
this Agreement shall prevail.
1.14 AMENDMENT OF AGREEMENT AND ARTICLES. No amendment of this Agreement
(including without limitation, any exhibit or schedule to this Agreement) or of
the Articles shall be valid except upon the affirmative vote of all Class A
Units and at least two-thirds (2/3) of the Class B Units.
1.15 CERTAIN PROVISIONS LIMITED IN APPLICATION. Notwithstanding anything to
the contrary (other than Article 10.4(b)), to the extent that any provision,
exhibit, or schedule of this Agreement provides that (i) the approval, consent
or vote of at least two-thirds (2/3) of the Class B Units is required, or (ii) a
particular term of this Agreement shall be operative or inoperative, as the case
may be, so long as any Class B Unit is outstanding, then any such provisions
shall apply only during that period of time when (x) the number of shares of IFX
Common Stock delivered to and held by the Class B Unit Holders (or their
designee), as required pursuant to Article 10.4(b), is less than 1.5 million
shares or (y) the aggregate value of all of the assets of the Company is less
than the amount determined by multiplying (A) five (5) by (B) the value of all
of the Company's aggregate liabilities, which for the purposes of this Article
1.15 shall include the aggregate Redemption Amount of all outstanding Class B
Units (determined as if all Class B Units were being redeemed pursuant to
Article 17.1 on such date of determination) (the "Asset Test").
ARTICLE 2
CLASSES OF MEMBERS; MEMBER UNITS;
MEMBER CONTRIBUTIONS AND LOANS
3
<PAGE>
2.1 CLASSES OF MEMBERS. The Company shall have two classes of membership
interests: Class A Units and Class B Units. Class A Unit Holders have the
rights, preferences and obligations specified in this Agreement with respect to
Class A Units, and Class B Unit Holders have the rights, preferences and
obligations specified in this Agreement with respect to Class B Units.
2.2 CONTRIBUTIONS.
a. Prior to or on the Effective Date, the Members shall, in
exchange for Class A Units or Class B Units, make
contributions to the Company of cash, non-cash property and
services and the promises of cash, non-cash property and
services set forth in the attached EXHIBIT A. Members admitted
to the Company after its formation shall make contributions in
exchange for their memberships as set forth in amendments to
EXHIBIT A.
b. The Company shall promptly use the contributions (the "CLASS B
CONTRIBUTION") made by the Class B Unit Holders (as set forth
on EXHIBIT A) for only the following purposes: (i) to exercise
the Company's option and right (as set forth in Section 4.3 of
the Subscription and Joint Venture Agreement (the "JOINT
VENTURE AGREEMENT") entered into as of November 23, 1998 by
and among the Florida L.C., IFX Corporation, a Delaware
corporation ("IFX") and Emerging Networks, Inc., a corporation
organized under the laws of the British Virgin Islands ("ENI")
and amended by that certain First Amendment (the "AMENDMENT")
to the Joint Venture Agreement (as amended, the "AMENDED JOINT
VENTURE AGREEMENT") entered into as of March 24, 2000 by and
among the Company, IFX and ENI) under the Amended Joint
Venture Agreement to purchase (the "OPTION EXERCISE")
1,500,000 shares of common stock of IFX, par value $.02 per
share ("IFX COMMON STOCK"), (ii) to completely repay the
Company's obligations to IFX pursuant to that certain
promissory note entered into by and between IFX and the
Florida L.C. on December 31, 1999, (iii) to pay reasonable
Company expenses, and (iv) to pay any interest or similar
payments required pursuant to the indebtedness incurred by the
Company or the Florida L.C. in favor of Scotiabank (Cayman
Islands) Ltd. The Company shall utilize the Class B
Contribution made by the Class B Unit Holders in the manner
described in this Article 2.2(b) promptly, but in no event
later than the third (3rd) Business Day (as defined in Article
3.4) following the Effective Date; PROVIDED, HOWEVER, that the
Company shall utilize that portion allocable to its
obligations under Article 2.2(b)(iii) and (iv) above promptly
when such obligations become due.
2.3 VALUATION OF NON-CASH CONTRIBUTIONS. Before any Member makes a
contribution or an additional contribution to the Company in a form other than
money, the Manager shall determine the value of that contribution. In the
absence of fraud, the Manager's determination shall be conclusive as to that
value.
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2.4 PROMISES TO MAKE CONTRIBUTIONS SHALL BE IN WRITING. No promise by a
Member to make a contribution to the Company shall be enforceable unless set
forth in a writing signed by the Member and the Company.
2.5 ENFORCEABILITY AND COMPROMISE OF PROMISES TO MAKE CONTRIBUTIONS.
Members or their representatives shall be obligated to perform written promises
to make contributions to the Company even if the Members are unable to do so
because of death, disability or otherwise. No such promise shall be compromised
except upon the affirmative vote of all Class A Units and at least two-thirds
(2/3) of the Class B Units.
2.6 NO INTEREST ON CONTRIBUTIONS. The Members shall earn no interest on
their contributions under this Article 2, provided, however, that the Class B
Units shall be entitled to preferred yield payments as set forth in Article 4.3.
2.7 NO REQUIREMENT OF CONTRIBUTIONS EXCEPT AS IN EXHIBIT A. No Member shall
have a duty to make a contribution to the Company except as provided in EXHIBIT
A.
2.8 MEMBERS LOANS TO COMPANY. As of the Effective Date, the Members shall
have made loans to the Company as provided in the attached EXHIBIT C. Members
admitted to the Company after its formation shall make loans to the Company as
provided in amendments to that exhibit.
2.9 UNCERTIFICATED FORM OF UNITS. The Company's Units shall be
uncertificated securities; provided that this Agreement sets forth all the
rights, preferences and obligations concerning such Units.
ARTICLE 3
MEMBER VOTING AND AGENCY RIGHTS; CERTAIN
OTHER NON-ECONOMIC RIGHTS OF MEMBERS
3.1 MATTERS ON WHICH MEMBERS MAY VOTE. Each Class A Unit Holder shall be
entitled to one vote per Class A Unit owned by such holder and each Class B Unit
Holder shall be entitled to one vote per Class B Unit owned by such holder, in
their capacity as Members on all matters on which this Agreement expressly
provides them with a right to vote and any matters identified in EXHIBIT D
("MEMBER MATTERS").
3.2 NUMBER OF VOTES NECESSARY TO DECIDE MEMBER MATTERS. Except as otherwise
expressly provided in this Agreement, each Member Matter shall be decided by the
affirmative vote of a majority of Class A Units and at least two-thirds (2/3) of
the Class B Units.
3.3 MEMBERS HAVE NO AGENCY RIGHT. No Member as a member shall have the
right to bind the Company in dealings with third parties.
3.4 RIGHT OF MEMBERS TO OBTAIN INFORMATION IN COMPANY'S POSSESSION OR
CONTROL. During normal business hours and after prior notice of at least three
(3) Business Days (as
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defined below), each Member shall be entitled for any purpose reasonably related
to their membership:
a. To obtain any information in the Company's possession or
control; and
b. To inspect and, at the Member's expense, copy any document and
other medium in the Company's possession or control.
For purposes of this Agreement, "BUSINESS DAY" means any day on which the
New York Stock Exchange or the National Nasdaq Market is open for business.
ARTICLE 4
DISTRIBUTIONS; ALLOCATION OF COMPANY PROFITS AND LOSSES TO
MEMBERS; INTERIM DISTRIBUTIONS; GUARANTEED PAYMENTS, ETC.
4.1 DISTRIBUTIONS GENERALLY. Distributions shall be made at the direction
of the Manager pursuant to the terms set forth in this Article 4.
4.2 DISTRIBUTIONS WHILE ANY CLASS B UNIT IS OUTSTANDING.
a. Except as provided in Article 4.2(b), 4.3 or with the prior
written consent of holders with at least two-thirds (2/3) of
the Class B Units, the Company shall not make any
distributions of cash or other property to Class A Unit
Holders or any other Person (as defined in Article 19.9) while
any Class B Units are outstanding.
b. In the event that any Class B Unit Holder incurs any tax
liability or obligation due to such holder's ownership of
Class B Units (other than any redemption of Class B Units at
the option of Class B Unit Holders pursuant to Article 17.1,
or redemption of Class B Units at the option of the Company
pursuant to Article 17.2 and such redemption pursuant to
Article 17.2 is effectuated only in cash, or any event
described in Article 4.3 below) such Class B Unit Holder shall
direct the Manager, and the Manager shall cause the Company
immediately, to distribute cash to such holder in an amount so
that such Class B Unit Holder shall be able to fully satisfy
such tax liability or obligation.
4.3 CLASS B UNITS PREFERRED YIELD. The Manager shall cause the Company to
pay to each Class B Unit Holder on each September 24 and March 24, commencing
September 24, 2000, a preferred yield (the "PREFERRED YIELD") payment at a rate
of eight percent (8%) per annum, computed on the basis of $100 per Class B Unit.
Such Preferred Yield payment shall be cumulative from (and including) the
Effective Date and shall accrue daily, whether or not earned or declared,
thereafter until paid and shall be calculated on an actual/360 basis. Any
Preferred Yield shall be payable only in cash.
4.4 ALLOCATION OF PROFITS AND LOSSES. Notwithstanding anything to the
contrary in this Agreement, the Company shall allocate all profits and losses of
the Company to the Class A Unit Holders in proportion to the contribution made
by such Members (as set forth in EXHIBIT A);
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PROVIDED, HOWEVER, that only in the event of (i) a redemption of Class B Units
at the option of Class B Unit Holders pursuant to Article 17.1 or (ii) the
redemption of Class B Units at the option of the Company pursuant to Article
17.2 and such redemption is effectuated only in cash, then the Company shall
allocate any profits or losses of the Company, arising solely from the
liquidation or disposition of the then longest held IFX Common Stock of the
Company, in connection with the redemption of the applicable Class B Unit
Holder's Class B Units, to each such redeeming Class B Unit Holder up to an
amount equal to the difference (the "Class B Allocation Amount") of (A) the cash
proceeds received by such Class B Unit Holders due to the redemption of the
applicable Class B Unit Holder's Class B Units less (B) such redeeming Class B
Unit Holder's tax capital account (as determined pursuant to Section 704(b) of
the Code). Any profit or loss of the Company in excess of the Class B Allocation
Amount shall be allocated to the Class A Unit Holders in proportion to the
contribution made by such Members.
4.5 ALLOCATIONS OF INTERIM DISTRIBUTIONS. Except while any Class B Unit is
outstanding, the Company shall allocate to each Class A Unit Holder Interim
Distributions (as defined in Article 4.6) on the same basis on which it
allocates it profits and losses.
4.6 DEFINITION OF INTERIM DISTRIBUTION. For purposes of this Article 4, the
term "INTERIM DISTRIBUTION" shall mean any distribution by the Company of its
assets to any Class A Unit Holder as the Class A Unit Holder's share of Company
profits except:
a. Distributions to Class A Unit Holders in connection with the
liquidation of the Class A Unit Holder's interests (as defined
in Article 4.7); and
b. Distributions to Class A Unit Holders in connection with the
liquidation of the Company.
4.7 DEFINITION OF CLASS A UNIT HOLDER INTEREST. For purposes of this
Agreement, a Class A Unit Holder interest means the Class A Unit Holder's share
of the Company's profits and losses and the Class A Unit Holder's right to
receive distributions of the Company's assets.
4.8 DISTRIBUTIONS IN KIND. If the Company is required to make an Interim
Distribution to any Class A Unit Holder pursuant to Article 4.5, the Class A
Unit Holder may not require the Company to make this distribution except in the
form of cash. No Member may be compelled to accept an Interim Distribution
except in the form of cash.
4.9 NO COMPANY DUTY TO MAKE INTERIM DISTRIBUTIONS. The Company shall have
no duty to make Interim Distributions except as expressly provided in this
Agreement (including without limitation, Article 4.5) or as determined from time
to time by the Manager.
4.10 LIQUIDATION DISTRIBUTIONS. Except while any Class B Unit is
outstanding, the Company shall make distributions to Class A Unit Holders in
connection with the liquidation of the Class A Unit Holder's interests in
accordance with Article 5. Except while any Class B Unit is outstanding, the
Company shall make distributions to Class A Unit Holders in connection with the
liquidation of the Company in accordance with Article 14.
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4.11 UNLAWFUL DISTRIBUTIONS. The Company shall make no "UNLAWFUL
DISTRIBUTION" of its assets to any Member. For purposes of this Article 4.11, a
distribution is an Unlawful Distribution:
a. If, immediately after the distribution, the aggregate value of
the Company's liabilities would exceed the aggregate value of
its assets, provided that any distribution on the Class B
Units shall not be an Unlawful Distribution;
b. If, as a result of the distribution, the Company would be
unable to pay its reasonably foreseeable obligations as they
become due, provided that any distribution on the Class B
Units shall not be an Unlawful Distribution; or
c. If the distribution is unlawful under Nevada law or any other
applicable law.
4.12 RETURN OF UNLAWFUL DISTRIBUTIONS. If any Member receives an Unlawful
Distribution, the Member shall promptly return it to the Company.
4.13 GUARANTEED PAYMENTS AND OTHER PAYMENTS TO MEMBERS FOR SERVICES, LOANS,
ETC. Except while any Class B Unit is outstanding, each Class A Unit Holder
shall receive from the Company guaranteed payments and other payments for
services, for loans and for other benefits provided by the Class A Unit Holder
to the Company in accordance with the attached EXHIBIT E. No such payment shall
affect the right of the Class A Unit Holder to allocations of Company profits
and losses or to allocations of Company Interim Distributions.
4.14 DRAWS. Except while any Class B Unit is outstanding, during any fiscal
year of the Company, Class A Unit Holders shall be entitled to draw on their
shares, projected Company profits for that year in accordance with the attached
EXHIBIT F.
4.15 REIMBURSEMENT OF EXPENSES.Except while any Class B Unit is
outstanding, if any Class A Unit Holder incurs a reasonable expense on behalf of
the Company and reasonably documents this expense to the Company, the Company
shall reimburse such Class A Unit Holder for this expense as promptly as
reasonably possible after receiving this documentation.
ARTICLE 5
TRANSFERS AND PLEDGES OF MEMBERSHIP RIGHTS, ETC.
5.1 RESTRICTIONS ON RIGHT OF MEMBERS TO TRANSFER AND PLEDGE THEIR
MEMBERSHIP RIGHTS. No Class A Unit Holder shall transfer or pledge to any Person
all or any of such Class A Unit Holder's rights as a Member (whether an economic
right or a non-economic right) except upon the affirmative vote of a majority of
Class A Units (exclusive of Class A Units held by the Class A Unit Holder
wishing to make the transfer or pledge in question) and at least two-thirds
(2/3) of Class B Units. Each Class B Unit Holder shall have the right to
transfer or pledge to any Person all or any of such holder's Class B Units after
five (5) Business Days prior notice to the Company, provided that such transfer
or pledge is exempt from registration under applicable securities laws.
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5. 2 DEFINITION OF TRANSFER. For purposes of this Article 5, "TRANSFER"
includes, without limitation:
a. Transfers by sale, gift or assignment;
b. Transfers (whether by will, trust or otherwise) taking effect
on the death of the transferor; and
c. Involuntary transfers, including transfers by operation of law
and pursuant to divorce decrees.
Transfers and pledges in breach of the terms of this Article 5 shall be
void and of no effect.
5.3 ISSUANCE OF ADDITIONAL UNITS AND INTERESTS, ADMISSION OF ADDITIONAL
MEMBERS. So long as no right or preference of any Class B Units shall be
subordinated to or rank pari passu with any other Person as a result of such
issuance, the Company may issue, upon the vote of a majority of the Class A
Units and at least two-thirds (2/3) of Class B Units, additional Class A Units
or other interests in the Company; PROVIDED that at any time following the date
hereof, the Company shall not issue Class A Units or any other interest to any
Person unless such Person shall have executed a counterpart to this Agreement
and EXHIBIT A has been appropriately amended. Upon execution of any such
counterpart, such Person shall become a member under this Agreement. Any
additional Units or interests in the Company will be subject to the same
transfer and pledge restrictions as set forth in Article 5.1 for Class A Units.
5.4 RIGHT OF COMPANY AND OTHER MEMBERS TO ACQUIRE CERTAIN MEMBERS' COMPANY
INTERESTS. Except while any Class B Unit is outstanding, the Company may require
a Class A Unit Holder, to promptly sell all or any part of the Class A Unit
Holder's interest to the Company or to the other Class A Unit Holders for its
fair value and upon other reasonable purchase terms if:
a. The Class A Unit Holder is dissociated (as defined in Article
6) from the Company for any reason;
b. The Class A Unit Holder becomes a party to a divorce
proceeding and the other Class A Unit Holders determine
reasonably and in good faith that it is likely that as a
result of that proceeding, all or any of the Class A Unit
Holder's membership rights will be awarded to the Class A Unit
Holder's spouse; or
c. An arbitrator orders such a sale under Article 16 on the
ground that it is fair and reasonable in the circumstances.
5.5 RIGHT OF CERTAIN DISSENTING MEMBERS TO REQUIRE COMPANY OR OTHER CLASS A
UNIT HOLDERS TO PURCHASE THEIR COMPANY INTEREST. Except while any Class B Unit
is outstanding, if a Class A Unit Holder dissents to the affirmative vote of the
holders a majority of Class A Units on a "BUY-OUT MATTER" (as defined in Article
5.6) and if, in connection with this dissent, the Class A Unit Holder resigns
from the Company, the Company or the other Class A Unit Holders shall
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purchase the Class A Unit Holder's interest for its fair value and on other
reasonable purchase terms.
5.6 DEFINITION OF BUY-OUT MATTER. For purposes of Article 5.5, Buy-Out
Matter means:
a. Whether the Company shall sell more than 50% of its assets (by
current fair market value) in a single transaction or in a
series of related transactions; or
b. Whether the Company shall participate in a conversion or
merger.
ARTICLE 6
MEMBER DISSOCIATIONS BY DEATH, RESIGNATION
OR OTHERWISE; CONSEQUENCES OF DISSOCIATION
6.1 INAPPLICABILITY OF ARTICLE 6 TO CLASS B UNIT HOLDERS. Notwithstanding
anything to the contrary in this Article 6, this Article 6 shall not apply to
any Class B Unit Holder. Any reference to Members shall not apply to any Class B
Unit Holder or the Class B Units.
6.2 DEFINITION OF MEMBER DISSOCIATION. The dissociation of a Class A Unit
Holder means the termination of the Class A Unit Holder's right to participate
in the Company's business and internal affairs by voting on Company Matters, by
acting as an agent for the Company or otherwise.
6.3 EVENTS OF DISSOCIATION. A Class A Unit Holder shall be dissociated only
upon the occurrence of one of the following events:
a. The Class A Unit Holder dies (or, if the Class A Unit Holder
is an entity, it incurs a dissolution or equivalent event);
b. The Class A Unit Holder incurs a "TOTAL DISABILITY" (as
defined in Article 6.6);
c. The Class A Unit Holder becomes bankrupt or insolvent;
d. The Class A Unit Holder resigns in accordance with Article
6.9;
e. The Class A Unit Holder transfers or pledges the Class A Unit
Holder's entire membership interest to another Person,
provided that such transfer or pledge is approved pursuant to
the terms of Article 5.1; and
f. The Class A Unit Holder is expelled from membership in the
Company in accordance with Article 6.10.
6.4 DISSOCIATED CLASS A UNIT HOLDER'S RETENTION OF CERTAIN MEMBERSHIP
RIGHTS AFTER DISSOCIATION. Except as otherwise provided in this Agreement, the
dissociation of a Class A Unit
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Holder shall not affect any right of the Class A Unit Holder (or, in the event
of the Class A Unit Holder's death or disability, of the Class A Unit Holder's
personal representative):
a. To share in the profits and losses of the Company as set forth
in this Agreement; or
b. To receive distributions of the Company's profits and other
assets as set forth in this Agreement.
6.5 NO DISTRIBUTIONS, ETC. TO DISSOCIATED CLASS A UNIT HOLDERS. Except as
otherwise provided in this Agreement, a Class A Unit Holder's dissociation shall
not entitle the Class A Unit Holder to receive any distribution of Company
assets or to receive any payment for the Class A Unit Holder's interest in the
Company. Further, notwithstanding anything to the contrary in this Agreement,
there shall be no distributions to a dissociated Class A Unit Holder while any
Class B Unit is outstanding.
6.6 DEFINITION OF TOTAL DISABILITY. A Class A Unit Holder shall be deemed
to have incurred a Total Disability within the meaning of Article 6.3(b) if, by
reason of any physical or mental disability, the Class A Unit Holder is unable
to participate significantly the business and internal affairs of the Company
for 180 consecutive days.
6.7 DETERMINATION OF TOTAL DISABILITY. Whether a Class A Unit Holder has
incurred a Total Disability and the date on which the Class A Unit Holder has
incurred a Total Disability shall be determined by the vote of a majority of
Class A Units (except the Class A Units of the Member whose disability is being
voted upon). All such determinations shall be subject to review in arbitration
under Article 16.
6.8 DEFINITION AND EFFECTIVE DATE OF RESIGNATION. For purposes of this
Article 6, the resignation of a Class A Unit Holder means the Class A Unit
Holder's voluntary renunciation of the Class A Unit Holder's right to
participate in the business and internal affairs of the Company. A Class A Unit
Holder shall be deemed to have resigned from the Company within the meaning of
this Article 6 on the effective date of the notice of resignation described in
Article 6.9.
6.9 RIGHT OF CLASS A UNIT HOLDERS TO RESIGN FROM COMPANY; NOTICE OF
RESIGNATION. A Class A Unit Holder may without liability resign as a Member of
the Company upon giving written notice of resignation to the other Members. The
resignation shall be effective 60 days after the other Members have received the
notice.
6.10 MEMBER EXPULSIONS. A Class A Unit Holder may be expelled from the
Company:
a. If the Class A Unit Holder materially breaches this Agreement
and fails to cure the breach within a reasonable time after
receiving notice of it;
b. If the Class A Unit Holder is convicted of a felony; or
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c. If the Class A Unit Holder engages in fraudulent or illegal
actions relating to the business or internal affairs of the
Company,
6.11 VOTING REQUIREMENT FOR EXPELLING A CLASS A UNIT HOLDER. The voting
requirement for expelling a Class A Unit Holder shall be as follows:
a. COMPANY HAS AT LEAST THREE CLASS A UNIT HOLDERS. If the
Company has at least three Class A Unit Holders, a Class A
Unit Holder may be expelled by the affirmative vote of other
Class A Unit Holders holding at least two-thirds (2/3) of the
Class A Units (excluding the Class A Units of the Class A Unit
Holder sought to be removed).
b. COMPANY HAS TWO CLASS A UNIT HOLDERS. If the Company has only
two Class A Unit Holders, either Class A Unit Holder may
petition an arbitrator to order the expulsion of the other.
6.12 PURCHASE OF EXPELLED CLASS A UNIT HOLDER'S MEMBERSHIP INTEREST. If the
Company or the other Class A Unit Holders properly exercise their right under
Article 5 to purchase the Units of an expelled Class A Unit Holder and if the
Company and the other Members cannot agree with the expelled Class A Unit Holder
on the purchase price or on the other terms of this purchase, these matters
shall be decided by arbitration under Article 16. In deciding any such
arbitration, the arbitrator shall consider all relevant factors, including the
conduct of the expelled Class A Unit Holder resulting in the expulsion.
ARTICLE 7
MEMBERS' DUTY OF CARE, ETC.
7.1 DUTY OF CARE. In participating in any matter, if so requested by the
Manager and accepted by such Member, relating to the business and internal
affairs of the Company (a "COMPANY MATTER"), the Manager in his capacity as
Manager and all Members in their capacity as Members shall use their best
efforts to further the interests of the Company;
PROVIDED, that the Manager and the Members shall be liable for
violations of their duty of care only as provided in Article
7.2.
7.2 PERSONAL LIABILITY OF MEMBERS FOR FAILURE TO USE ORDINARY PRUDENCE.
Members and the Manager shall be personally liable to the Company for money
damages and other relief if, in participating in any Company Matter as a Member
or Manager:
a. The Member or Manager fails to exercise the care that an
ordinarily prudent person would exercise under similar
circumstances; and
b. The Member or Manager is unable to rely on the defenses to
liability set forth in Articles 7.4 and 7.5.
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7.3 DUTY TO OBTAIN INFORMATION. Before making any judgment or taking any
action in a Company Matter, Members in their capacity as Members and the Manager
in his capacity as Manager shall use best efforts to obtain all relevant
information.
7.4 NO MEMBER LIABILITY IF A MEMBER RELIES ON COMPANY INFORMATION, ANOTHER
COMPANY MEMBER, ETC. No Member or Manager in the capacity as a Member or as a
Manager shall be personally liable to the Company or to other Members for any
claim of violation of the Member's or Manager's duties under this Article 7 to
the extent that, with respect to the matter in question, the Member or Manager
acted in reasonable reliance on:
a. Company records;
b. Other Company Members, employees or officers or other persons
whom, at the time of the action, the Members reasonably
believed to be competent in the matters in question; or
c. Any provision of this Agreement.
7.5 NO MEMBER LIABILITY FOR ACTION TAKEN IN GOOD FAITH, ETC. No Member or
Manager in the capacity as a Member or as a Manager shall be personally liable
for a breach of any duty of the Member or Manager under this Article 7 if, with
respect to the matter in question, the Member or Manager acted:
a. In good faith;
b. In the reasonable belief that the action was in the best
interest of the Company; and
c. On the basis of reasonably adequate information.
7.6 WHO MAY CLAIM BREACH OF THIS ARTICLE; MEMBER VOTE NECESSARY TO MAKE
CLAIM. Only the Company or holders of at least two-thirds (2/3) of Class B Units
may make a claim against a Member or the Manager for a breach of a duty of the
Member or Manager under this Article 7. The Company shall make no such claim
except upon the affirmative vote of a majority of Class A Units and at least
two-thirds (2/3) of Class B Units (exclusive of the Class A Units of the Class A
Unit Holder subject to the claim).
7.7 INDEMNIFICATION OF MEMBERS FOR CLAIMS OF BREACH OF THEIR DUTY OF CARE.
If any Person makes a claim against a Member or the Manager for a violation of a
duty of the Member or the Manager under this Article 7, the Company shall
indemnify the Member or the Manager for reasonable expenses and for damages or
settlement amounts reasonably incurred by the Member or the Manager in respect
of the claim if disinterested Members holding a majority of Class A Units and at
least two-thirds (2/3) of the Class B Units (exclusive of the Class A Units or
Class B Units of the Member or Manager who is the subject of the claim)
determine that in respect of the matter in question:
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a. The Member or Manager has exercised the care that an
ordinarily prudent person would exercise under similar
circumstances; or
b. The Member is protected from liability under Articles 7.4 or
7.5.
7.8 ADVANCEMENT OF LITIGATION EXPENSES. The Company shall advance
litigation expenses to a Member for the defense of claims against the Member or
Manager for breaches of the Member's or Manager's duty under this Article 7:
a. If disinterested Members holding a majority of Class A Units
and at least two-thirds (2/3) of Class B Units (excluding the
votes of the Member who is the subject of the claim) determine
that in respect of the relevant matter, it is probable that
the Member has exercised the care that an ordinarily prudent
person would exercise under similar circumstances or is
protected from liability under Articles 7.4 or 7.5; AND
b. The Member or Manager promises to return all such advances to
the Company if the court, arbitrator or other tribunal
deciding the claim finds otherwise.
7.9 LIABILITY INSURANCE FOR MEMBERS. Whether the Company shall maintain an
insurance policy to cover Member and Manager liabilities arising under this
Article 7 shall be determined by the affirmative vote of a majority of Class A
Units and at least two-thirds (2/3) of the Class B Units.
7.10 CURE PERIOD FOR CLASS A OR B UNIT HOLDERS. Prior to the commencement
of any legal action by the Manager, the Company or any Member against any Class
A Unit Holder, as applicable, for a breach of this Agreement, the Manager, the
Company or the Member shall (i) provide the Class A Unit Holder with 30 day
prior written notice of such alleged breach, and (ii) allow the Class A Unit
Holder 30 days to cure any such alleged breach.
ARTICLE 8
DUTY OF LOYALTY, ETC.
8.1 DUTY OF LOYALTY. In matters relating to the business and affairs of the
Company (including any rights described in this Agreement), Class B Unit Holders
do not have a duty of loyalty to the Company. The Manager in its/his capacity as
Manager shall act solely for the benefit of the Company and not for personal
benefit.
8.2 DUTY TO TRANSFER CERTAIN BENEFITS TO THE COMPANY. Any Class A Unit
Holder or Manager, who directly or indirectly receives from any Person a
monetarily significant benefit, including cash, in connection with the Class a
Unit Holder's or the Manager's participation in Company Matters, shall transfer
such benefit or its monetary equivalent to the Company;
PROVIDED, that the Class A Unit Holder or Manager may retain
the benefit if authorized to do so:
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a. By this Agreement; or
b. By the advance consent of disinterested Class A Unit Holders
holding a majority of Class A Units (exclusive of the votes of
the Class A Unit Holder in question) and upon the affirmative
vote of at least two-thirds (2/3) of the Class B Units.
8.3 DUTIES IN DOING BUSINESS WITH COMPANY. Members may engage directly or
indirectly in any transactions with the Company on their own behalf or on behalf
of third parties only with the advance consent of disinterested Members holding
a majority of Class A Units (exclusive of the votes of the Member wishing to
engage in such transaction with the Company). The terms of any business
arrangement permitted under this Article 8.3 shall be arm's-length terms.
8.4 DUTIES OF GOOD FAITH AND FAIR DEALING. In all Company Matters, Members
and the Manager in their capacity as Members or Manager shall act in good faith
and shall deal fairly with the Company and with the other Members.
8.5 DUTY OF MAJORITY MEMBERS TOWARD MINORITY MEMBERS. Members who, alone or
in combination with other Members, take action on any Company Matter as a
majority shall act fairly and in good faith toward minority Members.
8.6 WHO MAY CLAIM BREACH OF THIS ARTICLE; MEMBER VOTE NECESSARY TO MAKE
CLAIM. Only the Company or a Class B Unit Holder may make a claim against a
Class A Unit Holder or Manager for a breach of such Member's or Manager's duty
under this Article 8. The Company shall make no such claim except upon the
affirmative vote of Members holding a majority of Class A Units (exclusive of
the votes of the Class A Units of the Class A Unit Holder subject to the claim).
No Class B Unit Holder shall make such a claim except upon the affirmative vote
of at least two-thirds (2/3) of the Class B Units.
8.7 INDEMNIFICATION OF MEMBERS FOR CLAIMS OF BREACH OF ARTICLE 8. No Member
shall be entitled to indemnification for expenses or damages incurred by the
Member as a result of the Member's breach of any provision of this Article 8.
8.8 ADVANCEMENT OF LITIGATION EXPENSES. Except while any Class B Unit is
outstanding, the Company shall advance litigation expenses to a Member for the
defense of a claim against the Member for breach of such Member's duties under
this Article 8 if disinterested Members holding a majority of Units (excluding
the Units of the Member who is the subject of the claim) determine that in the
matter in question, it is probable that the Member has complied with these
duties.
ARTICLE 9
MEMBERS' DUTY OF CONFIDENTIALITY
9.1 MEMBERS' DUTY TO MAINTAIN CONFIDENTIALITY OF COMPANY INFORMATION. Each
Member and the Manager:
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a. Shall maintain the confidentiality of Confidential Information
(as defined in Article 9.2);
b. Except as required in conducting the business and internal
affairs of the Company, shall not disclose Confidential
Information to any third party without the affirmative vote of
Members holding a majority of the Class A Units (exclusive of
the Member votes of the Member desiring to make the
disclosure) and at least two-thirds (2/3) of the Class B
Units;
c. Shall make copies of documents and other media containing
Confidential Information only for the benefit of the Company;
d. Shall use Confidential Information only for the benefit of the
Company; and
e. Promptly after ceasing to be a Member or a Manager, shall
return to the Company all documents and other media containing
Confidential Information.
9.2 DEFINITION OF CONFIDENTIAL INFORMATION. For purposes of this Agreement,
"CONFIDENTIAL INFORMATION" means:
a. The terms of this Agreement; provided, that a Member or the
Manager may disclose these terms on a confidential basis to
his or her spouse, professional advisers;
b. Information that the Company maintains in confidence and that
has actual or potential economic value to the Company because
it is not generally known to others and is not readily
ascertainable by them, which information shall include:
(1) financial information relating to the Company and to
the Members;
(2) information in Company personnel files and similar
files relating to Company Members and employees;
c. Information entrusted to the Company in confidence by third
parties and communicated to the Members;
d. Information reasonably designated by the Members as
Confidential Information; and
e. Information disclosed by a Member under Article 10.
9.3 EXCEPTIONS TO DUTY OF CONFIDENTIALITY. Article 9.1 shall not apply to
information:
a. Which enters the public domain through no fault of a Member or
a Manager;
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b. The disclosure of which is required by final order of a court
of competent jurisdiction; and
c. The disclosure of which is made on a confidential basis to an
arbitrator in an arbitration under Article 16.
9.4 BINDING EFFECT; TERMINATION. This Article 9 shall bind each Member and
a Manager even after such Member and Manager ceases to be a Member or Manager.
Subject to any contrary arrangement with a third party, this Article 9 shall
terminate upon the termination of the legal existence of the Company.
ARTICLE 10
REPRESENTATIONS AND WARRANTIES BY MEMBERS; DUTY TO UPDATE;
AFFIRMATIVE COVENANTS OF COMPANY
10.1 REPRESENTATIONS AND WARRANTIES. Each Member in the Member's capacity
as a Member represents and warrants as follows:
a. FREEDOM OF MEMBER TO ENTER INTO AGREEMENT. ETC. The Member:
(1) Is legally free to enter into this Agreement and to
perform the Member's obligations under the Agreement
in accordance with its terms; and
(2) Is not prevented from doing so by order of any court
or other governmental authority, by any agreement
with a third party (including an employment
agreement, non-competition agreement or nondisclosure
agreement) or by any other cause.
b. GOOD FAITH, DISCLOSURE, ETC., IN NEGOTIATING TERMS OF
AGREEMENT. In negotiating and entering into this Agreement,
the Member has disclosed to the other Members all information
reasonably likely to be relevant to them in determining
whether to enter into the Agreement and to perform its
obligations in accordance with its terms.
c. ACCESS TO LEGAL ADVICE. Before signing this Agreement and
accepting its terms, the Member has had every reasonable
opportunity to consider these terms and to review them with
the Member's attorney.
d. FREE ACCEPTANCE OF TERMS, ETC. The Member has accepted the
terms of this Agreement knowingly and freely.
e. ORGANIZATION. The Member (if an entity) is duly formed,
organized and existing under the laws of its jurisdiction.
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f. AUTHORITY. The Member (if an entity) is duly authorized and
has acquired all necessary authorization to enter into this
Agreement and to perform its duties hereunder in accordance
with the terms of the Agreement.
10.2 COMPANY STATUS FOR TAX PURPOSES. The Manager, MITS, Philistar and the
Company each represent and warrant as follows:
a. ACTIVITIES OF COMPANY. For purposes of the Internal Revenue
Code of 1986, as amended (the "CODE"), the Company, the
Florida L.C. and any and all of their predecessors have never
been engaged in any trade or business, as the term is used in
Code Section 731.
b. ASSETS OF COMPANY. For purposes of the Code, the Company, the
Florida L.C. and any and all of their predecessors have always
only held as assets the following: cash, IFX Common Stock, the
Joint Venture Agreement and the Amended Joint Venture
Agreement. As of the date hereof, all of the current assets of
the Company are listed on EXHIBIT G.
c. LIENS ON ASSETS OF COMPANY. Except as listed on EXHIBIT N,
there are no liens, tax liens, judgments, pledges, charges,
security interests, community property or similar rights,
encumbrances or other adverse claims of any kind (each "LIEN")
on any of the assets of the Company.
d. INDEBTEDNESS OF COMPANY. Except as listed on Exhibit O, there
is Indebtedness (as defined under Article 11.17(h) of the
Company.
10.3 DUTY TO UPDATE. If, after a Member or Manager enters this Agreement,
the Member or Manager discovers that any of the above representations were
erroneous when made or have become erroneous, the Member or Manager shall
immediately so advise all other Members.
10.4 COVENANTS.
a. USE OF CLASS B UNIT HOLDER'S CONTRIBUTION. The Company shall
use the contributions made by the Class B Unit Holders as
described in Article 2.2(b).
b. CONTROL OF IFX SHARES AND AMENDED JOINT VENTURE AGREEMENT.
Notwithstanding anything to the contrary contained in Article
1.15, the Company shall promptly, but in no event later than
the third (3rd) Business Day following the Option Exercise,
forward by overnight bonded courier to the designee of the
Class B Unit Holders the certificates representing the
1,500,000 shares of IFX Common Stock issued in the name of the
Company as a result of the Option Exercise and the original
Joint Venture Agreement and the original Amendment. While any
Class B Unit is outstanding, the Company shall take no action
whatsoever with respect to such IFX Common Stock and the Joint
Venture Agreement and the
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Amendment unless the Company has received the prior written
consent of holders with at least two-thirds (2/3) of the Class
B Units.
c. NOTIFICATION COVENANT OF THE COMPANY, MITS, PHILISTAR, THE
MANAGER AND MICHAEL SHALOM. If the Company, MITS, Philistar,
the Manager or Michael Shalom have knowledge of the occurrence
of any of the events listed in Article 17.1(b) through (i),
such Person shall immediately notify each Class B Unit Holder.
ARTICLE 11
MANAGEMENT OF THE COMPANY; NEGATIVE COVENANTS
11.1 THE MANAGER. The initial Manager of the Company shall be Michael
Shalom.
11.2 DUTIES OF MANAGER. The Manager shall have general and active
management power of the business and affairs of the Company and shall preside at
all meetings of the Members. The Manager shall also be responsible for all
decisions with respect to distributions of the Company to its Members. The
Manager shall have custody of the and maintain all of the Company's records. The
Manager shall have custody of all the Company's funds and financial records,
shall keep full and accurate accounts of receipts and disbursements and render
accounts thereof upon request. The Manager shall be permitted to delegate the
responsibilities listed in this Article 11.2 to legal counsel, accounting
professionals or other qualified persons as deemed necessary. The Manager shall
have any additional functions which are set forth in this Agreement or which may
be determined from time to time by affirmative vote of the holders of a majority
of the Class A Units and at least two-thirds (2/3) of the Class B Units.
11.3 MANAGERS DUTIES OF CARE, LOYALTY, CONFIDENTIALITY, ETC. Except as
otherwise expressly provided in this Agreement, the Manager as such shall be
subject to the provisions of Article 7 (duty of care, etc.), Article 8 (duty of
loyalty, etc.), Article 9 (confidentiality) and Article 10 (representations and
warranties).
11.4 MANAGER'S TITLE. In performing management functions for the Company,
the Manager may use the title "MANAGER" or such other title or titles
(including, without limitation, the title "PRESIDENT" or "CHIEF EXECUTIVE
OFFICER") as may be determined from time to time by affirmative vote of a
majority of the Class A Units.
11.5 MANAGER'S TERM. The term of the initial Manager and of each
subsequent Manager shall be indefinite, but shall terminate upon the earliest of
the date of the Manager's (a) death, (b) resignation, (c) disability (as
determined upon affirmative vote of a majority of Class A Units and at least
two-thirds (2/3) of Class B Units) or (d) dismissal as Manager.
11.6 MANAGER RESIGNATIONS. The Manager may resign as Manager upon giving
60 days' written notice to each Member; PROVIDED, HOWEVER, that Michael Shalom
shall not resign as Manager as long as any Class B Unit is outstanding. Except
as otherwise provided in this Agreement, the Manager shall have no liability to
the Company or to the other Members for any such resignation;
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PROVIDED, that the resignation shall not absolve the Manager
from any liabilities arising before such resignation.
11.7 MANAGER DISMISSALS. The Members may, without liability, dismiss a
Manager at any time with or without cause by affirmative vote of a majority of
the Class A Units and at least two-thirds (2/3) of the Class B Units.
11.8. REMOVAL OF MANAGER. The Manager may be removed by the Members, at any
time, with or without cause. The Manager may be removed only by a majority vote
of the Class A Units and at least two-thirds (2/3) of the Class B Units. In such
a case, the Members shall vote to elect an interim Manager who shall serve until
the next election of Managers at an Annual Meeting of Members, and until such
replacement has been qualified, or until such Manager's earlier resignation,
death or removal from office.
11.9 METHOD OF APPOINTING NEW MANAGERS. All Managers after Michael Shalom
shall be appointed by the affirmative vote of Members holding a majority of the
Class A Units, subject to the consent of the Members holding at least two-thirds
(2/3) of the Class B Units, which consent shall not be unreasonably withheld.
11.10 NO MANAGER LIABILITY FOR CLAIMS AGAINST COMPANY BY THIRD PARTIES. No
Manager as such shall have personal liability for a claim against the Company by
any third party.
11.11 MANAGER EXCLUSIVE RIGHT, ETC. TO BIND COMPANY AND TO DECIDE COMPANY
MATTERS. The Manager shall have the following exclusive rights:
a. CONTRACTS. The Manager shall have the exclusive right to bind
the Company in dealings with third parties;
PROVIDED, that except with the advance approval of a majority
of the Class A Units and at least two-thirds (2/3) of the
Class B Units, the Manager shall not bind the Company under
any contract or related series of contracts involving an
aggregate financial exposure to the Company exceeding
$100,000. Provided further, that the Manager shall obtain an
affirmative vote of at least two-thirds (2/3) of Class B Units
prior to entering into any contracts which alone or in
aggregate with all other contracts entered into by the Company
will require payments exceeding $100,000 prior to the one year
and three month anniversary of the Effective Date.
b. STATEMENTS ABOUT THE COMPANY. The Manager shall have the
exclusive right to bind the Company in statements to third
parties concerning the Company;
PROVIDED, that except with the advance approval of a majority
of Class A Units and at least two-thirds (2/3) of the Class B
Units, the Manager shall make no statement or related series
of
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statements to any government official or other Person
concerning the Company involving an aggregate financial
exposure to the Company exceeding $100,000. Provided further,
that the Manager shall obtain an affirmative vote of at least
two-thirds (2/3) of Class B Units prior to entering making any
such statements which alone or in aggregate with all other
statements of the Company will require payments exceeding
$100,000 prior to the one year and three month anniversary of
Effective Date.
c. COMPANY DECISIONS. The Manager shall have the exclusive right
to decide all Company Matters except those which this
Agreement expressly reserves to the Members.
11.12 DUTY OF MANAGER TO INFORM MEMBERS. The Manager shall immediately
notify all Members of any adverse material change in the financial condition of
the Company.
11.13 DUTY OF MANAGER TO PROTECT LIMITED LIABILITY OF MEMBERS AND MANAGER.
The Manager shall use his best efforts to protect the limited liability of the
Members in their capacity as Members. These measures shall include the
following:
a. USE OF "L.C." WITH COMPANY NAME. The Manager shall ensure that
the abbreviation "L.C." appears after the name of the Company
in all Company stationery, checks, business cards, invoices,
advertisements and other media containing the name of the
Company and likely to be read, seen or heard by third parties.
b. SEPARATE BOOKS AND ACCOUNTS; NO COMMINGLING. The Manager shall
ensure:
(1) That the books and accounts of the Company are
maintained separately from those of any Member or
Manager;
(2) That there is no commingling of the assets of the
Company with those of any Member or Manager; and
(3) That no Member borrow money or other assets from the
Company or lends money or other assets to it except
on the basis of reasonable documentation and
arm's-length terms (provided further, that no Member
may borrow money or other assets from the Company
while any Class B Unit is outstanding).
c. ADEQUATE CAPITALIZATION. The Manager shall use his or her best
efforts to ensure that the Company's cash and other assets,
cash flow, insurance and other financial resources are
sufficient to enable it to meet its reasonably foreseeable
liabilities when due, including without limitation, its
liabilities under Article 4 and Article 17.
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d. SIGNING OF AGREEMENTS, ETC. In signing any agreement or other
document on behalf of the Company, the Manager shall expressly
identify that he or she is acting as Manager on behalf of the
Company.
e. NO MISLEADING OF THIRD PARTIES. The Manager shall use best
efforts to ensure that no third party is misled into believing
that any Member or the Manager is personally liable for any
Company obligation.
11.14 MANAGER'S VALUATION OF CONTRIBUTIONS, ETC. Whenever, after the
formation of the Company, the Company admits a Person as a new Member of the
Company, the Manager (and not the Members):
a. Shall promptly determine in dollars a value for the
contribution of that Person in exchange for the Person's
membership or that there was no contribution;
b. Shall record this determination in the records of the Company;
and
c. Shall promptly notify all Members concerning the
determination.
Thereafter, in the absence of fraud, the determination shall be conclusive
as to the value of the contribution or as to whether there was a contribution.
11.15 MANAGER COMPENSATION. The Manager shall be compensated for the
Manager's services as Manager in accordance with EXHIBIT H.
11.16 MANAGER INDEMNIFICATION. The Manager shall be entitled to
indemnification, advancement of litigation expenses and liability insurance as
provided in Article 7, provided that there shall be no payment of such
indemnification or advancement of litigation expenses without the affirmative
vote of at least two-thirds (2/3) of Class B Units.
11.17 NEGATIVE COVENANTS OF COMPANY. So long as any Class B Units are
outstanding, the Company shall not, without the prior consent of at least
two-thirds (2/3) of the Class B Units:
a. merge or consolidate with any Person;
b. sell, lease or otherwise dispose of any assets of the Company;
c. liquidate, dissolve or effect a recapitalization or
reorganization in any form of transaction;
d. acquire any interest in any Company or business other than
through the Amended Joint Venture Agreement (whether by a
purchase of assets, purchase of stock, merger or otherwise),
or enter into any joint venture;
e. with respect to the Company, enter into, amend, modify or
supplement any agreement, transaction, commitment or
arrangement with any of its officers,
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directors, managers, members, employees, stockholders,
partners or affiliates or with any individual related by
blood, marriage or adoption to any such individual or with any
entity in which any such Person or individual owns a
beneficial interest;
f. make any amendment to the Articles or this Agreement, or file
any resolution of the Manager or Members with the Nevada
Secretary of State containing any provisions, which would
adversely affect or otherwise impair in any respect any rights
or remedies of any Class B Unit Holder;
g. make any capital expenditures;
h. create, incur or assume any "INDEBTEDNESS", whereby, for
purposes of this Agreement, Indebtedness means at a particular
time, without duplication, (i) any indebtedness for borrowed
money or issued in substitution for or exchange of
indebtedness for borrowed money, (ii) any indebtedness
evidenced by any note, bond, debenture or other debt
instrument and (iii) any indebtedness for the deferred
purchase price of property or services with respect to which a
Person is liable, contingently or otherwise, as obligor or
otherwise;
i. engage in any trade or business, as the term is used in Code
Section 731, for a period commencing on the Effective Date and
ending on the second (2nd) anniversary of the Effective Date;
j. directly or indirectly declare or pay a dividend or make any
distribution or other payment on its Class A Units, redeem or
otherwise acquire or retire for value any of the Class A
Units, or prepay, purchase, repurchase or retire any
indebtedness (or part thereof);
k. become an "investment company" or under the "control" of an
"investment Company" as such terms are defined in the United
States Investment Company Act of 1940, as amended;
l. have any subsidiaries or any employees other than the Manager;
m. invoke any registration rights or similar rights set forth in
the Amended Joint Venture Agreement;
n. hold any assets other than cash, IFX Common Stock and the
Amended Joint Venture Agreement for purpose of the Code for a
period commencing on the Effective Date and ending on the
second (2nd) anniversary of the Effective Date; or
o. pledge, hypothecate or create any lien or similar encumbrance
on any assets of the Company.
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11.18 NEGATIVE COVENANTS OF THE COMPANY, MICHAEL SHALOM AND THE CLASS A
UNIT HOLDERS.
a. RESTRICTIONS ON PURCHASE AND SALE OF IFX SECURITIES. Unless
expressly provided for in this Agreement, neither the Company,
Michael Shalom nor any Class A Unit Holder, directly or
indirectly, shall purchase, sell or transfer any IFX (or any
successor thereto) securities (including common stock or
options), provided, however, that the Company, Michael Shalom
or any Class A Unit Holder may sell or transfer IFX Common
Stock in connection with Articles 4, 10 and 17 or with the
affirmative vote of holders of at least two-thirds (2/3) of
Class B Units.
b. NON-PETITION. The Company, each Class A Unit Holder, and
Michael Shalom agree that for a period of one year and one
month from the Effective Date, such Person will not petition
for, institute against, or join any other Person in
instituting against, the Company, or a Class A Unit Holder,
any bankruptcy, reorganization, insolvency or liquidation
proceeding or similar proceeding under any law.
ARTICLE 12
COMPANY RECORDS, BOOKS OF ACCOUNTS, REPORTS TO MEMBERS, ETC.
12.1 RECORDS TO BE MAINTAINED BY COMPANY. The Company shall maintain at its
principal place of business:
a. A copy of its Articles and operating agreement and all
amendments of these documents;
b. Copies of all of its federal and state tax returns;
c. A current list of names and last known business, residence or
mailing address of each of its Members;
d. True and complete information concerning:
(1) The amount of cash and a description and statement of
the value of any other property or services which
each Member has contributed to the Company or which
any Member has agreed to contribute to it; and
(2) Any return by the Company to a Member of cash or
other property contributed by the Member; and
e. A record stating the date on which each Member became a Member
(unless this date is evident from the content of the
Agreement).
12.2 BOOKS OF ACCOUNT. The Company shall maintain on a current basis
accurate books of account. It shall maintain these books of account in a manner
that complies with financial
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standards normally applicable to organizations generally similar to the Company
in size and activities.
12.3 REPORTS TO MEMBERS, ETC. Through the provision of written financial
reports or other appropriate measures, the Company shall advise the Members on a
regular basis, but no less than quarterly, concerning the financial and business
condition of the Company.
ARTICLE 13
TAX PLANNING AND COMPLIANCE
13.1 IMPORTANCE TO COMPANY OF TAX MANAGEMENT AND COMPLIANCE. The parties
acknowledge the Importance to the Company and the Members of:
a. Competent tax planning for the Company and for the Members as
Members; and
b. Full compliance by the Company and by the Members with federal
and state tax requirements.
13.2 APPOINTMENT OF COMPANY TAX ADVISER. In connection with its formation
and on a continuing basis thereafter, the Members hereby appoint as the
Company's tax adviser the individual or firm identified in the attached EXHIBIT
I.
The parties shall cooperate with the Company's tax adviser to the maximum
reasonable extent to ensure adequate Company tax planning and compliance.
13.3 COMPANY TAX RETURNS. The Company shall prepare its federal tax return
and all applicable state returns by January 15 of each year, and provide such
returns to the Class B Unit Holders for review. Upon receiving the prior consent
of at least two-thirds (2/3) of the Class B Units, which consent shall not be
unreasonably withheld, the Company shall promptly file such returns.
13.4 COMPANY PROVISION OF TAX INFORMATION TO MEMBERS. As soon as reasonably
possible after the close of each of its taxable years, the Company shall provide
each Member with completed federal and state tax forms and with all other
documents and information relevant to the federal and state tax liabilities of
the Member as a Member of the Company;
PROVIDED, that each Member shall have sole responsibility for
preparing and timely filing the Member's federal and state tax
returns and for paying the Member's taxes, and the Company
shall have no responsibility or liability with respect to
these matters.
13.5 COMPANY COMPUTATION AND RECORDING OF MEMBERS' CONTRIBUTIONS, CAPITAL
ACCOUNTS AND ADJUSTED TAX BASIS. The Company shall compute on a current basis
and in accordance with applicable Treasury department regulations the
contributions and capital accounts of the Members and their adjusted tax basis
in their Company interests.
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The Company shall maintain current and accurate records concerning Members'
contributions, capital accounts and adjusted tax basis and, promptly after the
request of any Member, shall make these records available to the Member.
13.6 PLANNING OF INDIVIDUAL TRANSACTIONS. Before undertaking any major
transaction involving the Company or any Member in the Member's capacity as a
Member:
a. The Company and each affected Member shall consult with one or
more partnership tax experts concerning the tax implications
of the transaction; and
b. The Company and affected Members shall make any tax elections
and shall take any other actions necessary or appropriate in
the circumstances to ensure tax compliance and maximum lawful
tax avoidance.
13.7 TAX MATTERS MEMBER.
a. The Manager is hereby appointed the "TAX MATTERS MEMBER" of
the Company for all purposes pursuant to sections 6221-6231 of
the Code. As Tax Matters Member, the Manager will (i) furnish
to each Member or assignee affected by an audit of the Company
income tax returns a copy of each notice or other
communication received from the Internal Revenue Service or
applicable state authority, (ii) keep each such Member and
assignee informed of any administrative or judicial
proceeding, as required by section 6223(g) of the Code, (iii)
allow each such Member and assignee an opportunity to
participate in all such administrative and judicial
proceedings, and (iv) take any action necessary to cause each
Member to be entitled to all notices specified in section
6223(a) of the Code.
b. The Tax Matters Member has the authority to do all or any of
the following:
(1) File a petition as contemplated in section 6226(a) or
6228 of the Code;
(2) Intervene in any action as contemplated in section
6226(b) of the Code;
(3) File any request contemplated in section 6227(b) of
the Code; and
(4) With the consent of all the Members, enter into an
agreement extending the period of limitations as
contemplated in section 6229(b)(1)(B) of the Code.
The Tax Matters Member may not litigate any federal income tax controversy in a
forum other than the U.S. Tax Court without obtaining the consent of all
Members.
c. The Company is not obligated to pay any fees or other
compensation to the Tax Matters Member in its capacity as
such. However, except while any Class B Unit Holder is
outstanding, the Company will reimburse the Tax Matters Member
for
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any and all out-of-pocket costs and expenses (including
attorneys' and other professional fees) reasonably incurred by
it in its capacity as Tax Matters Member. Each Member who
elects to participate in Member administrative tax proceedings
will be responsible for its own expenses incurred in
connection with such participation. In addition, the cost of
any adjustments to a Member and the cost of any resulting
audits or adjustments of a Member's tax return will be borne
solely by the affected Member. The Tax Matters Member shall be
entitled to rely on the advice of legal counsel as to the
nature and scope of its responsibilities and authority as Tax
Matters Member, and any act or omission of the Tax Matters
Member pursuant to such advice shall in no event subject the
Tax Matters Member to liability to the Company or any Member.
ARTICLE 14
COMPANY DISSOLUTION, WINDING-UP AND LIQUIDATION;
LIQUIDATION DISTRIBUTIONS
14.1 DEFINITION OF COMPANY DISSOLUTION, ETC. For purposes of this
Agreement, the following terms shall have the following meanings:
a. DISSOLUTION. The dissolution of the Company shall mean the
cessation of its normal business activities and the beginning
of the process of winding up its business and internal affairs
and of liquidating it.
b. WINDING-UP. The winding-up of the Company shall mean the
process of concluding its existing business activities and
preparing for its liquidation.
c. LIQUIDATION. The liquidation of the Company shall mean the
sale or other disposition of its assets and the distribution
of its assets (or the distribution of the proceeds of the sale
or other disposition of its assets) to its creditors and to
the Members.
14.2 EVENTS CAUSING DISSOLUTION. The Company shall be dissolved:
a. Upon the affirmative vote of a majority of Class A Units and
at least two-thirds (2/3) of Class B Units,
b. Upon the issuance of an order of dissolution by court or by
the Secretary of State; or
c. Upon the issuance of an order of dissolution by an arbitrator
under Article 16.
14.3 EFFECTIVE DATE OF DISSOLUTION OF COMPANY BY VOTE OF MEMBERS. The
dissolution of the Company by majority vote of Class A Units and at least
two-thirds (2/3) of the Class B Units shall be effective on the date specified
in that vote or, if the Class A Unit Holders and Class B Unit Holders do not
specify a date, then on the date of completion of the vote.
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14.4 DETERMINATION OF DATE FOR DELIVERY OF CERTIFICATE OF CANCELLATION AND
FOR EFFECTIVE DATE OF CERTIFICATE. The date on which the Company shall deliver a
certificate of cancellation to the Secretary of State for filing and the
effective date of this certificate shall be determined by the affirmative vote
of a majority of Class A Units and at least two-thirds (2/3) of the Class B
Units.
14.5 CESSATION OF COMPANY'S LEGAL EXISTENCE. Unless a court or
administrative authority duly and finally determines otherwise, the Company
shall cease to exist as a legal entity on the effective date set forth in the
certificate of cancellation.
14.6 DISSOLUTION BY ARBITRATOR. Upon petition by a majority of Class A
Units and at least two-thirds (2/3) of the Class B Units, an arbitrator under
Article 16 may issue an order dissolving the Company on one or more of the
following grounds:
a. The Company has exceeded or abused the authority conferred
upon it by law;
b. The Company has acted in a persistently fraudulent or illegal
manner;
c. The Company has abused its power contrary to the public policy
of the State of Nevada;
d. There is a deadlock in Company management which the Members
are unable to resolve and which is causing or which threatens
to cause irreparable injury to the Company or which prevents
it from conducting its business or affairs to its advantage
provided that this shall not provide grounds for dissolution
in the event any Class B Unit is outstanding; or
e. The dissolution of the Company is reasonable and fair in the
circumstances.
14.7 EXCLUSION OF MANAGER FROM PARTICIPATION IN WIND-UP PROCESS, ETC. Any
Member may petition an arbitrator under Article 16 to exclude the Manager from
participating in the process of winding-up and liquidating the Company on the
ground that, because of past wrongful conduct by the Manager, the Manager's
participation would be likely to affect that process adversely.
14.8 WINDING-UP OF COMPANY. After the Company is dissolved, the Person or
Persons responsible for winding it up shall as expeditiously as reasonably
possible:
a. Wind-up its business and internal affairs; and
b. Cause its liquidation.
14.9 COMPLIANCE WITH THE LAWS OF NEVADA APPLICABLE TO ENTITY DISSOLUTIONS
AND LIQUIDATIONS. The Company shall make no distribution to Members or others in
connection with its liquidation until it has complied with all applicable laws
and regulations of Nevada (including tax laws and regulations) relating to its
dissolution and liquidation.
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14.10 DISPOSITION OF KNOWN AND UNKNOWN CLAIMS AGAINST COMPANY. Promptly
after the dissolution of the Company, the Company shall take all reasonable
measures under the laws of Nevada to dispose of (and, to the extent reasonable,
to bar) known and unknown claims against the Company.
14.11 DISTRIBUTION UPON COMPANY LIQUIDATION. Upon completion of the
Company's winding-up but, if reasonably possible, on or before the date of
termination of the Company's legal existence, the Company shall distribute its
assets in the following order:
a. First, the Company shall pay (or make adequate provisions to
pay) its creditors other than any Class A Unit Holder.
b. Secondly, the Company shall distribute its assets to pay any
and all amounts due and owing to the Class B Unit Holders as
set forth in this Agreement, including such Class B Unit
Holder's Capital Contribution, the Preferred Yield and the
Redemption Amount, as if all Class B Units were redeemed prior
to the dissolution of the Company.
c. Third, after all the payments have been made as required by
Article 14.11(b) above, the Company shall distribute its
assets to Class A Unit Holders in satisfaction of its
liabilities for distributions to them under Article 4, and
amounts due to Class A Unit Holders.
d. Fourth, the Company shall distribute its assets to Class A
Unit Holders for the return of their contributions.
e. Fifth, the Company shall distribute its assets to Class A Unit
Holders in accordance with their right to share in
distributions of its assets under Article 4.
14.12 DUTY TO CONSULT TAX ADVISER IN CONNECTION WITH COMPANY DISSOLUTION,
ETC. Before the Members begin the wind-up and liquidation of the Company, the
Company and the Members shall consult with their respective tax advisers and
shall structure and implement the liquidation in a manner that is as fair as
possible to each Member from a tax viewpoint.
ARTICLE 15
TERM OF AGREEMENT; TERMINATION;
SURVIVAL OF CERTAIN RIGHTS AND DUTIES, ETC.
15.1 TERM. The term of this Company, which began on December 22, 1999, is
perpetual, unless earlier dissolved as set forth in Article 14.
15.2 SURVIVAL OF ACCRUED RIGHTS, ETC. Rights, duties and liabilities
accrued by the parties under this Agreement before its termination shall
continue in full force and effect after its termination.
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ARTICLE 16
ARBITRATION OF COMPANY DISPUTES
16.1 MANDATORY ARBITRATION OF CERTAIN DISPUTED MATTERS. Any dispute between
or among the Class A Unit Holders relating to Arbitrable Matters (as defined in
Article 16.2) shall be exclusively and finally resolved by arbitration by a
single arbitrator (the "ARBITRATOR").
16.2 DEFINITION OF ARBITRABLE MATTER. "ARBITRABLE MATTERS" shall include
only the following types of matters:
a. How to construe and enforce the provisions of this Article 16
(including any issue concerning the scope of these
provisions);
b. Whether the purchase price or the other terms of purchase of a
Class A Unit Holder's membership interest pursuant to the
terms of this Agreement is fair to the Company and to the
Members;
c. Any claim by a Class A Unit Holder in the Class A Unit
Holder's capacity as a Member against any other Class A Unit
Holder in that other Class A Unit Holder's capacity as a
Member;
d. Whether any action by the Company or by a Class A Unit Holder
is (a) contrary to this Agreement or (b) seriously unfair to
any Class A Unit Holder (provided that in no event shall an
Arbitrator deem an action instituted by or for the benefit of
any Class B Unit Holder under this Article as unfair to any
Class A Unit Holder);
e. Whether the expulsion of a Class A Unit Holder under Article
6.10 is fair;
f. Whether a vote by majority Members concerning the Company's
dissolution is fair to minority Members; and
g. Any other matter that, in the Arbitrator's view, is
appropriate for decision under Article 16.
16.3 EXCLUSIONS FROM DEFINITION. Arbitrable Matters shall not include:
a. Routine business matters of the Company;
b. Matters requiring urgent judicial relief;
c. Matters involving the enforcement of orders under this Article
16; and
d. Matters raised by or against or involving any rights of the
Class B Unit Holders, unless holders of at least two-thirds
(2/3) of the Class B Units have consented to arbitration.
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Class B Unit Holders shall have the right to seek relief pursuant to arbitration
as set forth herein or judicial relief in any court of competent jurisdiction to
enforce any of their rights under this Agreement. Unless holders of at least
two-thirds (2/3) of Class B Units have consented to arbitration, the Class B
Unit Holders shall not be subject to any decisions or orders resulting from any
arbitration under this Agreement.
16.4 RULES GOVERNING ARBITRATION. Except as otherwise provided in this
Article 16, any arbitration (an "ARBITRATION") under this Article 16 shall be
governed by the Rules of Commercial Arbitration of the American Arbitration
Association ("AAA").
16.5 NOTICE OF ARBITRATION. Any Member may initiate an Arbitration of any
Arbitrable Matter. The initiating Member shall do so by providing written notice
of the Arbitration to each Class A Unit Holder and each Class B Unit Holder. The
notice shall bear a current date, shall state the name of the initiating Member
and shall briefly state the matter to be arbitrated.
16.6 SELECTION OF ARBITRATOR. If, within 15 business days after all the
parties entitled to notice of an Arbitration have received that notice, the
Members have not agreed among themselves as to the identity of the Arbitrator or
the site of the Arbitration, the Company shall immediately refer these matters
for resolution by the AAA office located in the city of Miami, Florida. That
office may resolve these matters without liability and in its sole discretion.
16.7 NO APPEAL, ETC. No participating Member shall appeal to any court an
order of an Arbitrator under this Article 16. The Company or any participating
Member may enter any such order in any court of competent jurisdiction.
The Arbitrator may allocate among the participating Members the costs, fees and
other expenses relating to an Arbitration in any manner that the Arbitrator
shall determine to be appropriate in his or her absolute discretion;
PROVIDED, that if the Arbitrator determines that a party has
initiated an Arbitration without a reasonable basis for doing
so, the Arbitrator shall assess against that party the costs
of the other parties relating to the Arbitration, including
the reasonable attorneys' fees of these parties.
16.9 AWARDING OF LITIGATION COSTS TO PREVAILING PARTY. If, in a suit in law
or equity, any party seeks judicial review of any issue arising in an
arbitration under this Article 16, an Arbitrator under this Article may allocate
to the losing party in that suit all costs reasonably incurred by the prevailing
party.
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ARTICLE 17
PROVISIONS SPECIFICALLY CONCERNING CLASS B UNITS
17.1 REDEMPTION OF CLASS B UNITS AT OPTION OF CLASS B UNIT HOLDERS. Each
Class B Unit Holder shall have the right to redeem in full or in part, upon
written notice to the Company, the Class B Units owned by such Class B Unit
Holder at any time after the earlier to occur of:
a. the one year anniversary of the Effective Date;
b. the occurrence of a "BANKRUPTCY EVENT" with respect to the
Company, a Class A Unit Holder, the Manager or Michael Shalom.
For purposes of this Agreement, a Bankruptcy Event shall be
deemed to have occurred if the applicable Person (i) has any
dissolution or winding-up procedure initiated against such
Person, (ii) is dissolved or wound-up, (iii) becomes insolvent
or is unable to pay its debts or fails or admits in writing
its inability generally to pay its debts as they become due,
(iv) makes an assignment, arrangement or composition with or
for the benefit of creditors or (v) institutes or has
instituted against it a proceeding seeking a judgment of
insolvency or bankruptcy or any other relief under any
bankruptcy or insolvency law or other similar law affecting
creditors' rights, or a petition is presented for its
winding-up or liquidation, and in the case of any such
proceeding or petition instituted or presented against it,
such proceeding or petition is not dismissed within 30 days of
the institution or presentation thereof;
c. there is a judgment, order, decree or similar decision issued
against the Company, a Class A Unit Holder, the Manager or
Michael Shalom in excess of $1,000,000;
d. there is a Lien imposed after the Effective Date on any of the
assets of the Company, a Class A Unit Holder, the Manager or
Michael Shalom which when aggregated with all other Liens
imposed on the Company, a Class A Unit Holder, the Manager or
Michael Shalom, respectively exceeds $1,000,000;
e. there is a change in control of the Company. For purposes of
this Article 17.1(e), a "change in control of the Company"
shall be deemed to have occurred upon (i) a merger or the
execution of an agreement of merger involving the Company
(except when the Company is the survivor of the merger and the
equity holders of the Company before the merger own at least
51% of the equity interests of the Company following the
merger), (ii) a consolidation of the Company (except when the
equity holders of the Company before the consolidation own at
least 51% of the consolidated entity), (iii) the sale or the
execution of an agreement to sell all or substantially all of
the assets of the Company, or (iv) if Michael Shalom is no
longer the Manager of the Company.
f. there is any change of control of IFX. For purposes of this
Article 17.1(f), a "change in control of IFX" shall be deemed
to occur upon (i) a merger or the execution of an agreement of
merger involving IFX (except when IFX is the survivor of the
merger and the equity holders of IFX before the merger own at
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least 51% of the equity interests of IFX following the
merger), (ii) a consolidation of IFX (except when the equity
holders of IFX before the consolidation own at least 51% of
the consolidated entity), (iii) the sale or the execution of
an agreement to sell all or substantially all of the assets of
IFX, or (iv) ownership by a Person (excluding Michael Shalom,
Lee Casty, or their respective affiliates) of more than
thirty-three percent (33%) of IFX Common Stock and such
Person, on the Effective Date, held less than thirty-three
percent (33%) of IFX Common Stock;
g. the Company breaches, fails to perform or observe any
provision contained in (i) any contract or Indebtedness under
which the Company is a party or is obligated, (ii) this
Agreement or the Preferred Unit Purchase Agreement entered
into as of March 24, 2000 by and among the Company and the
original purchasers of Class B Units (the "PURCHASE
AGREEMENT"), (iii) the Amended Joint Venture Agreement or such
agreement is amended, modified or terminated without the
consent of the holders of at least two-thirds (2/3) of Class B
Units;
h. Michael Shalom, MITS or Philistar breaches fails to perform or
observe any provision contained in Article 10.2, 10.3 or
Article 11.18 of this Agreement;
i. (i) the commission by Michael Shalom of a felony or other
crime involving moral turpitude which has a material adverse
effect on the Company or IFX , (ii) the breach of any duty of
care or loyalty to the Company or IFX by Michael Shalom, (iii)
the commission by Michael Shalom of any fraud with respect to
the Company or IFX, (iv) continued failure of Michael Shalom
to perform his duties as set forth in this Agreement or as
reasonably directed by the board of directors of IFX, or (v)
any other material breach of this Agreement, which has not
been cured by Michael Shalom within ten (10) days after notice
of the occurrence thereof; or
j. the Asset Test (as defined in Article 1.15) has been violated
and the Company has not cured such violation within ten (10)
Business Days following such violation.
If a Class B Unit Holder redeems any or all of such Class B Unit Holder's Class
B Units pursuant to this Article 17.1, the Company shall within five (5)
Business Days of the "EFFECTIVE DATE OF REDEMPTION" (as defined in Article 17.7)
pay such Class B Unit Holder the Redemption Amount (as defined in Article 17.3)
in cash.
17.2 REDEMPTION OF CLASS B UNITS AT OPTION OF COMPANY. The Company, upon
the affirmative vote of the holders of a majority of Class A Units, may redeem
all Class B Units in full (but not in part) at any time after the Effective Date
by paying to the Class B Unit Holders the Redemption Amount (as defined in
Article 17.3), provided that the Company provide the Class B Unit Holders with
ten (10) days prior written notice of its intention to redeem the Class B Units
in the form of EXHIBIT K.
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17.3 REDEMPTION AMOUNT. For purposes of this Agreement, the "REDEMPTION
AMOUNT" for each Class B Unit being redeemed pursuant to Article 17.1 or 17.2,
shall be an amount equal to the sum of:
(i) $100 (which amount represents the initial capital contribution
attributable to each Class B Unit);
(ii) Any accrued but unpaid Preferred Yield as set forth in Article 4.3 for
such Class B Unit; and
(iii) An amount equal to the greater of (a) $30 or (b) the product derived
by multiplying: (A) the quotient derived by dividing (1) $100, by (2) the Fixed
Price (as defined below), by (B) the amount derived by subtracting (1) the Fixed
Price from (2) the Market Value (as defined below) on the Effective Date of
Redemption.
The Redemption Amount payable under Article 17.1 shall be payable
only in cash pursuant to Article 17.5, and the Redemption Amount payable under
Article 17.2 shall be paid pursuant to the terms of Article 17.5.
For purposes of this Article 17,"FIXED PRICE" means $20, subject to
adjustment as provided in Article 17.4.
17.4 ADJUSTMENT OF FIXED PRICE. If IFX at any time subdivides (by any stock
split, stock dividend, recapitalization or otherwise) one or more classes of its
outstanding shares of IFX Common Stock into a greater number of shares, the
Fixed Price in effect immediately prior to such subdivision will be
proportionately reduced. If IFX at any time combines (by combination, reverse
stock split or otherwise) one or more classes of its outstanding shares of IFX
Common Stock into a smaller number of shares, the Fixed Price in effect
immediately prior to such combination will be proportionately increased.
Immediately upon any adjustment of the Fixed Price, the Manager will give
written notice thereof to each Class B Unit Holder, setting forth in reasonable
detail, and certifying, the calculation of such adjustment. The Company will
also give written notice to each Class B Unit Holder at least twenty (20) days
prior to the date on which any Organic Change, dissolution or liquidation will
take place with respect to IFX, provided that such information shall be made
known to the public prior to or in conjunction with such notice being provided
to such Holder. "ORGANIC CHANGE" shall mean, with respect to IFX, any
recapitalization, reorganization, reclassification, consolidation, merger, sale
of all or substantially all of IFX's assets to another Person or other
transaction which is effected in such a way the holders of Common Stock are
entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for IFX Common Stock.
17.5 MANNER OF REDEMPTION.
a. Upon redemption of any Class B Unit pursuant to this Article
17, the Company shall promptly pay to the applicable Class B
Unit Holder for each Class B Unit being redeemed the
Redemption Amount as set forth in Article 17.3, but no later
than five (5) Business Days following the applicable Effective
Date of
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Redemption (a "PAYMENT DATE"). If the redemption of Class B
Units is made pursuant to Article 17.1, the Company shall pay
the Redemption Amount in cash to the applicable Class B Unit
Holder on the Payment Date. If the redemption of all Class B
Units is made at the option of the Company pursuant to Article
17.2, and such Effective Date of Redemption is on or before
December 22, 2000, the Company shall promptly pay to all the
Class B Unit Holders, but no later than the Payment Date, for
all Class B Units the Redemption Amount by (i) transferring to
the applicable Class B Unit Holder that amount of shares of
IFX Common Stock with an aggregate Market Value (defined
below) on the Effective Date of Redemption equal to the
Redemption Amount, provided that all the conditions set forth
in Article 17.6 are fully satisfied (a "REDEMPTION IN KIND")
or (ii) paying to the applicable Class B Unit Holder in cash
the Redemption Amount. If the redemption of all Class B Units
is made pursuant to Article 17.2 and such Effective Date of
Redemption is after December 22, 2000, the Company shall
promptly pay to all the Class B Unit Holders, but no later
than the Payment Date, for all Class B Units the Redemption
Amount in cash. For purposes of this Article 17, "MARKET
VALUE" means, for any security on any date, the last closing
ask price for such security on the Principal Market (as
defined below), as reported by Bloomberg, or if a Principal
Market is not the principal securities exchange or trading
market for such security, the last closing ask price of such
security on the principal securities exchange or trading
market where such security is listed or traded as reported by
Bloomberg, or if the foregoing do not apply, the last closing
ask price of such security in the over-the-counter market on
the electronic bulletin board for such security as reported by
Bloomberg, or, if no last closing ask price is reported for
such security by Bloomberg, the last closing trade price as
reported for such security by Bloomberg, or if no such quote
is available, the average of the trade prices of any market
makers for such security as reported in the "pink sheets" by
the National Quotation Bureau, Inc. If the Market Value cannot
be calculated for such security on such date on any of the
foregoing bases, the Market Value of such security on such
date shall be the fair market value as mutually determined by
the Company and the holders of Class B Units. For purposes of
this Agreement, "PRINCIPAL MARKET" means the Nasdaq National
Market, the Nasdaq Small Cap Market, the Nasdaq Bulletin Board
System, The New York Stock Exchange, Inc. or The American
Stock Exchange, Inc.
b. In the case of a dispute as to the determination of the Market
Value or the arithmetic calculation of the Redemption Amount,
the Company shall pay, or transfer IFX Common Stock (as the
case may be), to the Class B Unit Holder(s) the dollar amount
or number of shares of IFX Common Stock, as applicable, that
is not disputed. Then, if after two (2) Business Days, such
Class B Unit Holder(s) and the Company are unable to agree
upon the determination of the Market Value or arithmetic
calculation of the Redemption Amount within one (1) Business
Day, then the Company shall within one (1) Business Day submit
via facsimile (A) the disputed determination of the Market
Value to an independent, reputable investment bank selected by
the affected Class B Unit Holder(s) and approved by the
Company or (B) if an election under (A) is not possible, the
disputed
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arithmetic calculation of the Redemption Amount to the
Company's independent, outside accountant. The Company shall
cause the investment bank or the accountant, as the case may
be, to perform the determinations or calculations and notify
the Company and the Class B Unit Holder(s) of the results no
later than forty-eight (48) hours from the time it receives
the disputed determinations or calculations. Such investment
bank's or accountant's determination or calculation, as the
case may be, shall be binding upon all parties absent manifest
error and the Company shall be liable for the costs and
expenses related to such determination or calculation.
17.6 CONDITIONS TO REDEMPTION IN KIND. Prior to a Redemption In Kind
pursuant to Articles 17.2 and 17.5, the following conditions must be satisfied
prior to or on the Payment Date (provided that Article 17.6(e) shall be
satisfied from and including the Effective Date of Redemption through and
including the Payment Date).
a. The IFX Common Stock transferred to the Class B Unit Holders
shall be validly issued, fully paid and nonassessable and free
and clear of all liens and charges with respect to the issue
thereof, with the holders being entitled to all rights
accorded to a holder of IFX Common Stock;
b. IFX Common Stock transferred to the Class B Unit Holders shall
be authorized for quote on the Principal Market and trading on
such market and there shall be no suspension of trading by the
Securities and Exchange Commission or the Principal Market of
IFX Common Stock;
c. The IFX Common Stock transferred to the Class B Unit Holders
shall be issued in the names and denominations designated by
the Class B Unit Holders;
d. IFX shall have acknowledged in writing that the IFX Common
Stock transferred to the Class B Unit Holders shall have the
exact same registration rights contained in the Amended Joint
Venture Agreement;
e. Neither the Manager, Michael Shalom, a Member nor the Company
shall be in possession of any material non-public information
with respect to IFX that would have an adverse effect on the
Market Value of IFX Common Stock if such information were
publicly disseminated; and
f. No Class B Unit Holder is unable to exercise any of its
"demand" or "piggy-back" registration rights (as set forth in
the Amended Joint Venture Agreement) with respect to IFX
Common Stock due to Section 7.3(j) or Section 7.3(l) of the
Amended Joint Venture Agreement.
17.7 EFFECTIVE DATE OF REDEMPTION. For purposes of this Article 17, the
"EFFECTIVE DATE OF REDEMPTION" shall be the date notice in the form of EXHIBIT J
is delivered to the Company by the electing Class B Unit Holder (if the
redemption is pursuant to Article 17.1) or
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ten (10) days after the date the notice in the form of EXHIBIT K is delivered to
any Class B Unit Holder by the Company (if the redemption is pursuant to Article
17.2).
17.8 TIMING OF PAYMENT OF REDEMPTION AMOUNT. The payment of any Redemption
Amount, whether in cash or in IFX Common Stock shall be made to the Class B Unit
Holders entitled to such redemption promptly after the Effective Date of
Redemption, but in no event later than the Payment Date. If payment of any such
Redemption Amount is not fully paid on the Payment Date, the Company shall pay
Liquidated Damages pursuant to Article 17.10 to the Class B Unit Holders
entitled to payment of such Redemption Amount.
17.9 REGISTRATION OF IFX COMMON STOCK USED TO REDEEM CLASS B UNITS. If (a)
the Company transfers shares of IFX Common Stock to Class B Unit Holders to
redeem all outstanding Class B Units pursuant to Article 17.2, (b) the former
Class B Unit Holder duly elects (the "REGISTRATION ELECTION") to have such IFX
Common Stock shares registered for resale pursuant to the Amended Joint Venture
Agreement and (c) such Shares of IFX Common Stock have not been registered under
the Securities Act of 1933, as amended, prior to the earlier of (i) the one year
anniversary of the Effective Date or (ii) three (3) months after the
Registration Election has been made, then the Company shall pay Liquidated
Damages pursuant to Article 17.10 to such Class B Unit Holders.
17.10 LIQUIDATED DAMAGES. The Company agrees that the Class B Unit Holders
will suffer damages if the Company violates any provision of or fails to fulfill
its obligations pursuant to this Article 17 or if the events described in
Article 17.9 occur (a "TRIGGER EVENT"), and that it would not be possible to
ascertain the extent of such damages. Accordingly, in the event of such Trigger
Event, the Company hereby agrees to pay liquidated damages ("LIQUIDATED
DAMAGES") to each Class B Unit Holder following the occurrence of such Trigger
Event in an amount determined by multiplying (i) two percent (2%) of the
Redemption Amount owed to such Class B Unit Holder under this Agreement by (ii)
the percentage derived by dividing (A) the actual number of days elapsed from
the last day of the date of the Trigger Event or the prior 30-day period, as
applicable, to the day such Trigger Event has been completely cured by (B) 30,
in cash, or at the Class B Unit Holder's option, in the number of shares of IFX
Common Stock equal to the quotient of (v) the dollar amount of the Liquidated
Damages on the Damages Payment Date (as defined below) divided by (w) the
closing bid price of IFX's Common Stock as of the date of the Trigger Event (as
quoted in the Principal Market or the market or exchange where IFX's Common
Stock is then traded). The Liquidated Damages payable pursuant hereto shall be
payable within five (5) Business Days from the end of the calendar month
commencing on the first calendar month in which the Trigger Event occurs (each,
a "DAMAGES PAYMENT DATE"). In the event the Class B Unit Holder elects to
receive the Liquidated Damages amount in shares of IFX Common Stock, the Company
shall satisfy the conditions set forth in Article 17.6 concerning such IFX
Common Stock.
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17.11 COVENANTS OF CLASS B UNIT HOLDERS AND THE COMPANY.
a. Upon receipt of notice that the Company will redeem the Class
B Units pursuant to Article 17.2 by transferring IFX Common
Stock, each Unit B Holder will promptly execute a
representation letter in the form of EXHIBIT L.
b. The Company covenants that in order to pay any Redemption
Amount to any Class B Unit Holder, whether in cash or in IFX
Common Stock or to pay any Liquidated Damages to the Class B
Unit Holder, the Company shall either liquidate or transfer to
the Class B Unit Holder, as the case may be, those shares of
IFX Common Stock which, for purposes of the Code, have been
held by the Company for the longest period of time.
17.12 INTENT OF PARTIES. Notwithstanding anything to the contrary herein,
it is the intent of the parties that (i) the Class B Unit Holders will receive
long term capital gains tax treatment upon cash redemption of any Class B Units
pursuant to Articles 17.1 and 17.2, and as such, the parties hereto agree that
they will use good faith and best efforts to ensure that the redemption of Class
B Units results in long term capital gains tax treatment to the Class B Unit
Holders, and (ii) any Redemption In Kind will not result in a taxable event to
the Class B Unit Holders and, as such, the parties hereto agree that they will
use good faith and best efforts to ensure that any Redemption In Kind will not
result in a taxable event to the Class B Unit Holders.
ARTICLE 18
INDEMNIFICATION
In consideration of each Class B Unit Holder's execution and delivery of
this Agreement, the Company shall defend, protect, indemnify and hold harmless
each Class B Unit Holder and all of their stockholders, officers, directors,
partners, employees, agents, representatives and direct or indirect investors
and any of the foregoing Person's agents or other representatives (including,
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the "INDEMNITEES") from and
against any and all actions, causes of action, suits (whether instituted or
defended or otherwise), claims, losses, costs, penalties, fees, liabilities and
damages, and expenses in connection therewith (irrespective of whether any such
Indemnitee is a party to the action for which indemnification hereunder is
sought), and including reasonable attorneys' fees and disbursements (the
"INDEMNIFIED LIABILITIES"), incurred by any Indemnitee as a result of, or
arising out of, or relating to (a) any misrepresentation or breach of any
representation or warranty made by the Company, a Class A Unit Holder or Michael
Shalom in the Agreement, (b) any breach of any covenant, agreement or obligation
of the Company, a Class A Unit Holder or Michael Shalom contained in the
Agreement, (c) any cause of action, suit or claim brought or made against such
Indemnitee and arising out of or resulting from the execution, delivery,
performance or enforcement of the Agreement or (d) any transaction financed or
to be financed in whole or in part, directly or indirectly, with the proceeds of
the issuance of the Class B Units; PROVIDED, HOWEVER, no indemnification shall
be paid hereunder to any Indemnitee on account of any Indemnified Liabilities
arising substantially due to the gross negligence or willful misconduct of such
Indemnitee. To the extent that the foregoing undertaking by the Company, a Class
A Unit Holder or Michael Shalom may be
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unenforceable for any reason, the Company shall make the maximum contribution to
the payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law.
ARTICLE 19
GENERAL PROVISIONS
19.1 ENTIRE AGREEMENT. This Agreement contains the entire agreement among
the Members concerning its subject matter, and it replaces all earlier
agreements among them, whether written or oral, concerning its subject matter.
19.2 INCORPORATION OF EXHIBITS. All documents identified in this Agreement
as exhibits or schedules to the Agreement are hereby incorporated in the
Agreement and made an integral part of it.
19.3 GOVERNING LAW. This Agreement shall be governed exclusively by the
laws of the State of Nevada (exclusive of its laws governing conflicts of law).
19.4 NOTICES. All notices under this Agreement shall be in writing. They
shall be sent by fax or by overnight delivery service, to the Members at their
respective fax numbers or addresses as stated on EXHIBIT M. A Member may change
the Member's fax number or address for purposes of this Article 19.4 at any time
upon notice to the other Members. Notices under this Article 19.4 shall be
deemed delivered upon receipt of a fax confirmation or one Business Day after
deposit with a nationally recognized overnight delivery service.
19.5 HEADINGS. Headings in this Agreement are for convenience only and
shall be deemed irrelevant in construing the provisions of the Agreement.
19.6 FREEDOM AND ENFORCEABILITY OF CONTRACT. The parties intend and desire
that, in construing and enforcing the provisions of the Agreement, arbitrators
and judges shall give maximum effect to the principles of contractual freedom
and contractual enforceability. No rule of strict construction against the
drafter of this Agreement shall be applicable to this Agreement.
19.7 SEVERABILITY. If any arbitrator or court finds any provision of this
Agreement to be invalid or unenforceable:
a. The arbitrator or court shall enforce the provision to the
maximum lawful extent; and
b. The arbitrator's or court's fixing of invalidity or
unenforceability shall not affect the validity or
enforceability of any other provision of this Agreement.
19.8 WAIVER. No express or implied waiver by any party of any right of the
party under this Agreement in any specific circumstance shall be considered to
waive any right of the party in any other circumstance.
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19.9 DEFINITION OF PERSON. The term "PERSON" shall mean a natural person
and any kind of entity.
19.10 COUNTERPARTS. This Agreement may be signed in one or more
counterparts, each of which shall be deemed to be an original copy of this
Agreement and all of which shall be deemed to constitute one and the same
agreement; provided that a facsimile signature shall be considered due execution
and shall be binding upon the signatory thereto with the same force and effect
as if the signatory were an original, not a facsimile signature.
19.11 RECITALS PORTION. The recitals portion of this Agreement is expressly
incorporated into and made a part of this Agreement.
*SIGNATURE PAGE FOLLOWS*
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In witness of their acceptance of the above terms and conditions, the
parties, in their capacities as Members and as Manager, by themselves or by
their duly authorized representatives, have duly signed and dated this Agreement
as of the Effective Date as follows:
MEMBERS HOLDING CLASS A UNITS: MEMBERS HOLDING CLASS B UNITS:
MITS INVESTMENTS CORP., CRANSHIRE CAPITAL, L.P.
a Nevada corporation,
By: /s/ Mitchell Kopin
/s/ Michael Shalom Name: Mitchell Kopin
Michael Shalom, President Title: President- Downsview Capital
The General Partner
PHILISTAR LTD., a Cayman Island Company KEYWAY INVESTMENTS LTD.
By: Director Services, Ltd., Director By: /s/ Pam Young
Name: Pamela Ann Young
By: /s/ Darryl Myers Title: Director
Darryl Myers, Director
THE DOTCOM FUND, LLC
By: /s/ Mark Rice
Name: Mark Rice
Title: Managing Member
*SIGNATURE PAGE CONTINUES*
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This Agreement is acknowledged and agreed to as of the
Effective Date by the Company, its Manager, and
Michael Shalom in his individual capacity.
INTERNATIONAL TECHNOLOGY
INVESTMENTS, a Nevada limited liability company
/s/ Michael Shalom
Michael Shalom, Manager
MICHAEL SHALOM, AS MANAGER OF
INTERNATIONAL TECHNOLOGY
INVESTMENTS, L.C.
/s/ Michael Shalom
Michael Shalom
MICHAEL SHALOM, IN HIS INDIVIDUAL
CAPACITY
/s/ Michael Shalom
Michael Shalom
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<TABLE>
<CAPTION>
EXHIBIT A
MEMBERS
- ------------------------------------ ----------------- --------------------- ---------------------- ----------------------
CLASS A CLASS B TOTAL
MEMBERS CONTRIBUTION UNITS UNITS UNITS
- ------------------------------------ ----------------- --------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
MITS Investment Corp. $275,0001 10,000 0 10,000
- ------------------------------------ ----------------- --------------------- ---------------------- ----------------------
Philistar Ltd. $2,329,0002 30,000 0 30,000
- ------------------------------------ ----------------- --------------------- ---------------------- ----------------------
Cranshire Capital, L.P. $2,750,000 0 27,500 27,500
- ------------------------------------ ----------------- --------------------- ---------------------- ----------------------
Keyway Investments Ltd. $1,000,000 0 10,000 10,000
- ------------------------------------ ----------------- --------------------- ---------------------- ----------------------
The dotCom Fund, LLC $2,250,000 0 22,500 22,500
- ------------------------------------ ----------------- --------------------- ---------------------- ----------------------
- ------------------------------------ ----------------- --------------------- ---------------------- ----------------------
TOTAL
- ------------------------------------ ----------------- --------------------- ---------------------- ----------------------
$8,604,000 40,000 60,000 100,000
- ------------------------------------ ----------------- --------------------- ---------------------- ----------------------
</TABLE>
- -------------------------
1 A balance in the amount of $787,500 remains to be paid as an additional
capital contribution on behalf of MITS Investment Corp. to the Company.
2 A balance in the amount of $858,500 remains to be paid as an additional
capital contribution on behalf of Philistar Ltd. to the Company.
A - 1
<PAGE>
EXHIBIT B
ARTICLES OF ORGANIZATION
B - 1
<PAGE>
EXHIBIT C
COMMITMENTS OF MEMBERS TO LOAN MONEY TO COMPANY
None
C - 1
<PAGE>
EXHIBIT D
ADDITIONAL MATTERS ON WHICH MEMBERS MAY VOTE
None
D - 1
<PAGE>
EXHIBIT E
GUARANTEED PAYMENTS TO CLASS A UNIT HOLDERS
None
E - 1
<PAGE>
EXHIBIT F
DRAWS
None
F - 1
<PAGE>
EXHIBIT G
ASSETS OF COMPANY
Set forth below are all the assets of the Company as of March 24, 2000:
(1) $6,000,000 in cash
(2) 4,500,000 shares of IFX Common Stock
(3) Amended Joint Venture Agreement
G - 1
<PAGE>
EXHIBIT H
MANAGER'S COMPENSATION
The Manager shall not receive compensation without the affirmative vote of
all Class B Units.
In the event no Class B Units are outstanding, the Manager's compensation
shall be $100,000 per year, as may be adjusted from time to time.
H - 1
<PAGE>
EXHIBIT I
APPOINTMENT OF TAX ADVISOR
Subject to the replacement or removal by a majority vote of the Class A
Units and at least two-thirds (2/3) of the Class B Units, from time to time, the
Manager shall select the Company's tax advisor.
I-1
<PAGE>
EXHIBIT J
REDEMPTION NOTICE BY CLASS B UNIT HOLDER
Reference is made to the Second Amended and Restated Operating
Agreement of International Technology Investments, L.C., (the "AGREEMENT"). In
accordance with and pursuant to Article 17.1 of the Agreement, the undersigned
hereby elects on this ______day of ________ to redeem the number of Class B
Units indicated below into cash equal to $__________. Capitalized terms not
otherwise defined herein shall have the meaning set forth in the Agreement.
Effective Date of Redemption:______________________________________
Payment Date:______________________________________________________
Number of Class B Units to be redeemed:____________________________
Redemption Amount:__________________________________
[INSERT WIRE INSTRUCTIONS]
Holder:
[NAME OF HOLDER]
By:_________________________
Name:_______________________
Title:______________________
J-1
<PAGE>
EXHIBIT K
REDEMPTION NOTICE BY COMPANY
Reference is made to the Second Amended and Restated Operating
Agreement of International Technology Investments, L.C., International
Technology Investments, L.C. (the "AGREEMENT"). In accordance with Article 17.2
of the Agreement, International Technology Investments, L.C. hereby elects as of
this __________ day of ___________ to redeem all outstanding Class B Units by
[paying the Redemption Amount of $__________ per Class B Unit] [exchanging _____
shares of IFX Common Stock for each Class B Unit.] Capitalized terms not
otherwise defined herein shall have the meanings set forth in the Agreement.
Effective Date of Redemption:______________________________________
Payment Date:______________________________________________________
Redemption Amount:_________________________________________________
Method of Payment:
[ ] In Cash; or
[ ] In IFX Common Stock;
If IFX Common Stock, ______shares of IFX
Common Stock will be exchanged for each
Class B Unit.
INTERNATION TECHNOLOGY
INVESTMENTS, L.C.
By:_____________________________
Name:___________________________
Title:__________________________
K-1
<PAGE>
EXHIBIT L
HOLDER'S REPRESENTATIONS AND WARRANTIES
In connection with the redemption of the Class B Units held by [NAME OF HOLDER]
(the "HOLDER") pursuant to Article17.11 of Second Amended and Restated Operating
Agreement of International Technology Investments, L.C. (the "AGREEMENT"), the
Holder represents and warrants that as of [INSERT PAYMENT DATE]:
a. INVESTMENT PURPOSE. The Holder is acquiring the IFX Common Stock
(the "SECURITIES") for its own account for investment only and not with a view
toward, or for resale in connection with, the public sale or distribution
thereof, except pursuant to sales registered or exempted under the Securities
Act of 1933, as amended (the "1933 ACT"); provided, however, that by making the
representations herein, the Holder does not agree to hold any of the Securities
for any minimum or other specific term and reserves the right to dispose of the
Securities at any time in accordance with or pursuant to a registration
statement or an exemption under the 1933 Act.
b. ACCREDITED INVESTOR STATUS. The Holder is an "ACCREDITED INVESTOR"
as that term is defined in Rule 501(a)(3) of Regulation D.
c. RELIANCE ON EXEMPTIONS. The Holder understands that the Securities
are being transferred to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and
that International Technology Investments, L.C. (the "COMPANY") is relying in
part upon the truth and accuracy of, and the Holder compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
the Holder set forth herein in order to determine the availability of such
exemptions and the eligibility of the Holder to acquire such Securities.
d. NO GOVERNMENT REVIEW. The Holder understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.
e. TRANSFER OR RESALE. The Holder understands that except as provided
in the Amended Joint Venture Agreement: (i) the Securities have not been and are
not being registered under the 1933 Act or any state securities laws, and may
not be offered for sale, sold, assigned or transferred unless (A) subsequently
registered thereunder, (B) the Company shall have delivered to IFX an opinion of
counsel, in a generally acceptable form, to the effect that such Securities to
be sold, assigned or transferred may be sold, assigned or transferred pursuant
to an exemption from such registration, or (C) the Company provides IFX with
reasonable assurance that such Securities can be sold, assigned or transferred
pursuant to Rule 144 promulgated under the 1933 Act, as amended, (or a successor
rule thereto) ("RULE 144").
L-1
<PAGE>
f. Capitalized terms not otherwise defined herein shall have the
meaning set forth in the Agreement.
Holder:
[Name Of Holder]
By:___________________________
Name:_________________________
Title:________________________
Agreed and Acknowledged this
______ day of ________, 2000
INTERNATIONAL TECHNOLOGY INVESTMENTS, L.C.
By:_________________
Name:_______________
Title:______________
L-2
<PAGE>
EXHIBIT M
NOTICE INFORMATION
CRANSHIRE CAPITAL, L.P. INTERNATIONAL TECHNOLOGY
666 Dundee Rd., Ste. 1901 INVESTMENTS, L.C.
Northbrook, IL 60062
Attn: Mitchell Kopin 1135 Terminal Way, Suite 106
(p) 847/562-9030 Reno, Nevada 89502
(f) 847/562-9031 (p) 775/329-1842
with a copy to: MITS INVESTMENT CORP.
Katten Muchin Zavis 1135 Terminal Way, Suite 106
525 W. Monroe Street Reno, Nevada 89502
Chicago, Illinois 60661-3693 (p) 775/329-1842
Attention: Anthony J. Ribaudo, Esq.
(p) 312/ 902-5521
(f) 312/ 577-8763
PHILISTAR, LTD.
THE DOTCOM FUND, LLC
666 Dundee Rd., Ste. 1901 1135 Terminal Way, Suite 106
Northbrook, IL 60062 Reno, Nevada 89502
Attention: Mark Rice (p) 775/329-1842
(p) 847/509-2290
(f) 847/509-2295
KEYWAY INVESTMENTS LTD. MICHAEL SHALOM
19 Mount Havelock
Douglas, Isle of Man 1135 Terminal Way, Suite 106
United Kingdom Reno, Nevada 89502
1M1 2QG (p) 775/329-1842
(p) 011-44-171-323-2131
(f) 011-44-171-323-0773
Attention: Martin Peters with a copy to:
Dennis Olle, Esq.
Adorno & Zeder, P.A.
2601 S. Bayshore Dr., Ste. 1600
Miami, Florida 33133
(p) 305/860-7044
(f) 305/858-4777
M-1
<PAGE>
EXHIBIT N
LIENS
As of March 24, 2000, set forth below is all of the Liens of the Company:
(1) 3,750,000 shares of IFX Common Stock pledged to Donaldson Lufkin &
Jenrette; and,
(2) 750,000 shares of IFX Common Stock pledged to Scotiabank (Cayman
Islands) Ltd.
N-1
<PAGE>
EXHIBIT O
O-1
INDEBTEDNESS
As of March 24, 2000, set forth below is all of the Indebtedness of the Company:
(1) Margin Loan of approximately $2,905,497.83 provided by Donaldson
Lufkin & Jenrette;
(2) Secured Promissory Note of approximately $1,500,000 issued to
Scotiabank (Cayman Islands) Ltd.; and
(3) Unsecured Promissory Note of $2,000,000 issued to IFX.
O-1
