IFX CORP. (1)
THE PARK TRUST (2)
IFX LIMITED (3)
_____________________________________________________________
STOCKHOLDERS AGREEMENT
RELATING TO
IFX LIMITED
_____________________________________________________________
THIS AGREEMENT is made as of June 30, 1997, to be effective as of April 1, 1997,
and is made AMONG:
(1) IFX CORP., formerly Jack Carl/312 Futures Inc., of 200 West Adams, Suite
1500, Chicago, Illinois 60606, USA ("IFX Corp.");
(2) THE PARK TRUST, a trust established in Jersey by trust deed dated April 29,
1997, with [ ] as trustee ("Park Trust"); and
(3) IFX LIMITED, a company incorporated under the laws of England and Wales
whose registered office is at America House, 2 America Square, London EC3N
2LU.
WHEREAS
(A) The Company is a private company limited by shares incorporated in England
with No. 02876284 under the Companies Act 1985 on 30 November 1993 and at
the date hereof has an authorized and issued share capital of US$4,896,929,
divided into 2,448,465 ordinary "A" shares of US$1 each and 2,448,464
ordinary "B" shares of US$1 each. All of the "A" shares have been fully
paid and are owned as to the "A" shares by IFX Corp. Only $100,000 of the
"B" shares has been paid up by Park Trust and $2,348,464 is still due and
owing; and
(B) This is an agreement to regulate the operation and management of the
Company and the relationship between its shareholders.
NOW IT IS HEREBY AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
------------------------------
1.1 In this Agreement unless the context otherwise requires:
(a) the following expressions have the following meanings:
Expression Meaning
---------- -------
"A Directors the Directors of the Company appointed by IFX
Corp., being initially Colleen Ruggio, Barrie
Swift and Charles Romilly
"Articles" the Articles of Association of the Company at the
date hereof.
"A Shareholder" IFX Corp.
"A Shares" the 2,448,465 ordinary "A" shares of US$1 each.
"Affiliate" means, with respect to a Shareholder, an
immediate family
member, or another person that directly or
indirectly, controls, is controlled by, or is
under common control with, such first person.
Notwithstanding the above definition, Mr. Lee S.
Casty and any of his Affiliates shall be treated
as an Affiliate of the "A" Shareholder, and each
of Lord Garrett Graham Wellesley Junior Viscount
Dangan ("Mr. Wellesley") and Lorenzo Naldini ("Mr
Naldini") (and each of their respective
Affiliates) shall be treated as an Affiliate of
the "B" Shareholder.
"B Directors" the Directors of the Company appointed by The Park
Trust, being initially Messrs. Wellesley and Mr.
Naldini.
"Board" the Board of Directors of the Company from time to
time.
"B Shareholder" The Park Trust.
"B Shares" the 2,448,464 ordinary "B" shares of US$1 each.
"Business Day" a day on which banks are open for business in
London. "Business Days" shall be construed
accordingly.
"Director" a director of the Company, including an "A"
Director or a "B" Director, as the context may
require.
"Event of Default" all or any of the matters set out in clause 8.2.1.
"Initial Period" the period of time beginning on the date hereof
and ending on the first to occur: a) the "B"
shares being fully paid up, b) neither the "A"
Shareholder nor any of its Affiliates owning any
shares of the Company, or c) the "B" Shareholder
having made a "Capital Loan" to the "A"
Shareholder (as described in
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Section 7.3) equal to the full value of the shares
retained by the "A" Shareholder.
"Parties" the parties to this Agreement.
"Relevant
Percentage" in respect of each Shareholder, the percentage of
the total equity share capital of the Company held
by that Shareholder from time to time.
"Shareholders" The "A" Shareholder and the "B" Shareholder
together.
"Shares" "A" Shares or "B" Shares.
(6) references:
(i) to statutory provisions shall be construed as references to
those provisions as respectively replaced, amended or re-
enacted (whether before or after the date hereof) from time
to time and shall include any provisions of which they are
re-enactments (whether with or without modification) and any
subordinate legislation made under such provisions so far
as such modification or re-enactment applies or is capable
of applying to any transactions entered into prior to the
date of this Agreement and (so far as liability thereunder
may exist or can arise) shall include also any past
statutory provisions or regulations (as from time to time
modified or re-enacted) which such provisions or regulations
have directly or indirectly replaced; and
(ii) to any English legal term for any action, remedy, method of
judicial proceeding, legal document, legal status, Court
official or any legal concept or thing shall in respect of
any jurisdiction other than England be deemed to include
what most nearly approximates in that jurisdiction to the
English legal term.
(c) words importing the singular include the plural and vice versa, words
importing a gender include every gender and references to persons
include bodies corporate or unincorporate;
(d) the headings to the clauses are for convenience only and shall not
affect the construction or interpretation of
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this Agreement; and
(e) the Interpretation Act 1978 shall apply in the same way as it applies
to an enactment.
2. The Board
---------
2.1 During the Initial Period, the Board shall be composed of three "A"
Directors and two "B" Directors. Following the end of the Initial
Period, the "A" Shareholder shall cause one of the "A" Directors to
resign and the Board shall thereafter be composed of two "A" Directors
and two "B" Directors.
2.2 The "A" Shareholder shall have the right to remove and appoint the A
Directors nominated by it for so long as it is a holder of the A
Shares and the "B" Shareholder shall have the right to remove and
appoint the B Directors nominated by it for so long as it is a holder
of the B Shares, in each case by giving notice in writing to the
registered office of the Company.
2.3 All matters relating to the frequency of board meetings, the quorum
for such meetings and agendas shall be left to the discretion of the
Directors.
3. Deadlock
--------
In the event that the Directors of the Company are unable to reach
agreement on any matter(s) as a result of a "deadlock" occurring after the
close of the Initial Period, such unresolved matter(s) shall be put to a
vote of the Shareholders and decided by the vote of those Shareholder(s)
holding a majority of the Shares of the Company.
4. [Intentionally Deleted]
-----------------------
5. Initial Distribution
--------------------
Prior to the distribution to the Shareholders of: i) any dividends pursuant
to Section 6, or ii) any amounts in liquidation of the Company, the Company
shall first be required to distribute $1,035,019 (U.S.) to the "A"
Shareholder. Such initial distribution shall be in addition to and shall
not be charged against any amounts which would otherwise be distributable
to the "A" Shareholder.
6. Dividend policy
---------------
Unless otherwise agreed and subject to regulatory requirements, but only
after the required amounts have been distributed to the "A" Shareholder
pursuant to Section 5 above and after the
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end of the Initial Period, all profits of the Company will be distributed
or accrued to Shareholders in their respective Relevant Percentages.
However, during the Initial Period, in the case of the "B" Shareholder
only, the Directors may in their sole discretion elect to: i) declare no
dividends on the "B" shares notwithstanding that dividends have been
declared and paid on the "A" shares, ii) capitalize any dividends which
would otherwise be payable on the "B" shares, or iii) postpone the
entitlement of the "B" shareholder to receive any declared dividend,
provided such election is not unlawful and that if such action has an
adverse tax consequence for the Company, then the cash value of his
entitlement shall be adjusted to ensure equitable treatment between all
Shareholders. Any settlement which is so postponed shall, however, be noted
in the Company's books and shall be held on the trust by the Company for
the B Shareholder; provided, however, that the preceding clause will not
grant the "B" shareholder any rights to amounts which are not declared with
respect to the "B" shares.
7. Restriction on Transfers of shares
----------------------------------
7.1 The "B" Shareholder agrees that it will not transfer any of its shares
to a Party who is not an Affiliate of such Shareholder subject to the
consent of the "A" Shareholder, which consent may not be unreasonably
withheld. However, the "B" Shareholder may transfer its shares to an
Affiliate of the "B" Shareholder, subject to the consent of the "A"
Shareholder, which consent shall not be unreasonably withheld.
7.2 The "A" Shareholder may transfer its shares to an Affiliate of the "A"
Shareholder, subject to the consent of the "B" Shareholder, which
consent shall not be unreasonably withheld. In addition, if the "A"
Shareholder desires to transfer its shares to a person who is not an
affiliate of the "A" Shareholder, the "B" Shareholder will have the
right, but not the obligation, to participate in the sale to the third
party for the same consideration and on the same terms as the "A"
Shareholder. The "B" Shareholder will have the right
to participate solely on a pro-rata basis in the sale to the third
party (i.e., if the "A" Shareholder receives an offer to sell 40% of
its shares, the "B" Shareholder's rights exists as to 20% of its
holdings and the "A" Shareholder may not be able to sell more than 20%
of its holdings). The "A" Shareholder agrees not to transfer to a
third party which is not an Affiliate of the "A" Shareholders unless
such third party is willing to purchase shares from the "B"
Shareholder as set forth above.
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7.3 Capital Loan:
------------
(i) If the transfer of shares to an unrelated third party causes the "A"
Shareholder to end up with a minority interest in the Company (i.e.,
fewer than 50% of the outstanding issued shares in the Company, even
if the "A" Shareholder still holds more shares than any of the other
Shareholders), and if the "B" Shareholder also transferred any shares
to the third party pursuant to Section 7.2, then the "B" Shareholder
shall make a loan (the "Loan") to the Company equal to the sum of: a)
the amount of paid-up share capital that the "A" Shareholder retains
in the Company, and ii) the amount of any retained earnings of the
Company which have accrued but have not been paid to the "A"
Shareholder (such sum being the "Loan Amount"). The principal amount
of Loan from the "B" Shareholder to the Company will be due and
payable when the loan from the "A" Shareholder to the Company is
repaid. Interest will accrue on the Loan on a daily basis to the "B"
Shareholder at the "Prime Rate" of interest charged by the Harris
Trust & Savings Bank, Chicago, Illinois, plus 3%, and will be
calculated monthly. Interest on the Loan will be capitalized as it
accrues and treated as additional paid-in capital of the "B"
Shareholder to the company until the "B" Shares are fully paid up.
Thereafter, any excess interest will be paid to the "B" Shareholder.
(ii) The Company shall lend the Loan Amount to the "A" Shareholder on an
interest-free basis. The loan shall be without recourse to the "A"
Shareholder. The loan to the "A" Shareholder will be due and payable
if and only if: i) the "A" Shareholder transfers all of his remaining
shares to an unrelated third party; or ii) the Company is liquidated.
The "A" shareholder will pledge his shares to the Company to secure
the Loan Amount.
7.4 Change of Owner "A" Shares.
---------------------------
If the "A" Shareholder sells all of its shares of the Company or if Mr. Lee
S. Casty or his Affiliates cease to own more than 33-1/3% of the "A"
Shareholder, then: i) the "B" shares will automatically be converted into
"A" shares; ii) the "B" Shareholder will be issued 1 share of the "A" stock
of the Company without payment of further consideration; and iii)
thereafter, the Company will be required to distribute at least 80% of its
available cash flow, after providing for reasonable reserves, to the
shareholders of the Company, unless the "B" Shareholder
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consents in writing to take a smaller amount.
8. Duration, termination and consequences of termination
-----------------------------------------------------
8.1 Except as otherwise provided herein, this Agreement shall continue in
full force and effect without limit in point of time unless and until
the earlier of:
(i) the Shareholders agreeing in writing to terminate this
Agreement;
(ii) an effective resolution is passed or a binding order is made
for the winding up of the Company, whichever is the earlier;
or
(iii) one of the Parties hereto ceases to be a Shareholder and no
new shareholder has become a party hereto.
8.2 If either of Messrs. Wellesley or Naldini commences employment with or
becomes an officer, director or the owner of 5% or more of the equity
of an organization that is engaged in the same business activities as
the Company (in which case the "B" Shareholder shall be deemed to be
the "Defaulting Shareholder") or if either Shareholder or its
affiliates (in such case, the "Defaulting Shareholder") shall:
(i) commit a material breach or shall commit persistent breaches
of this Agreement which are not capable of remedy, or if
capable of remedy, have not been so remedied within 21
Business Days of the other Shareholder (the "Other
Shareholder") serving notice on the Defaulting Shareholder
requiring such remedy;
(ii) cease to trade or have a receiver, administrative receiver,
administrator or manager appointed over its affairs, become
insolvent or go into liquidation (unless such liquidation is
for the purposes of a solvent reconstruction or
amalgamation) compound with its creditors generally or be
otherwise unable to meet its debts as they fall due;
(iii) fail to comply with any resolution of the Company taken at a
properly constituted meeting of Shareholders or Directors,
then the Other Shareholder may (but shall not be obligated to),
without prejudice to any other rights and remedies which the Other
Shareholder may have, serve a written
8
notice on the Defaulting Shareholder (a "Default Notice") at any time
during the period of 60 Business Days following an Event of Default
coming to the notice of the Other Shareholder.
8.3 The Default Notice shall specify a date (being not less than 5
Business Days nor more than 15 Business Days after the date of service
of the Default Notice), time and place for completion of the sale and
purchase of the Defaulting Shareholders' Shares. The purchase price
for such shares shall equal the book value of the shares held by the
Defaulting Shareholder (reduced, in the case of the "B" shares by the
amount for which the "B" shares have not been fully paid up).
8.4 Any Shares sold pursuant to this Clause 8 shall be transferred free
from any claims, equities, liens and encumbrances whatsoever and with
all rights attaching to the relevant Shares as at the date of service
of the Default Notice, but without the benefit of any other warranties
or representations whatsoever.
8.5 If neither Shareholder serves a Default Notice in accordance with the
foregoing provisions following one of the events specified in (i) -
(iii) of Clause 8.2.1, then the Other Shareholder shall have the
unilateral right to cause the Board, at the earliest practicable date,
to:
(a) make or concur in the making of a statutory declaration in the
terms mentioned in section 89 if the Insolvency Act 1986 of the
state of the Company's affairs admits to the making of such
declaration);
(b) subsequently convene an extraordinary general meeting for the
purpose of passing (and each Shareholder will vote in favor of)
an extraordinary resolution to place the Company in members'
voluntary liquidation (if such a declaration as is mentioned in
clause 8.5(a) above has been made) or (in any other case) in
creditors' voluntary liquidation such meeting or meetings to be
held within 5 weeks after the making of any declaration made in
pursuance of clause 8.5(a) above; and
(c) where the state of the Company's affairs does not admit the
making of such a declaration as is mentioned in clause 8.5(a)
above, convene a meeting of the Company's creditors in accordance
with section 98 of the Insolvency Act 1986.
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8.6 Each of the Shareholders appoints the other (or any Director nominated
by that other) irrevocably, and by way of security for the performance
of its obligations under this Clause 8, as its attorney, to execute
any necessary document, including, without limitation, any transfer of
Shares.
8.7 Upon a transfer of the Shares held by a Shareholder in accordance with
this clause:
(a) the transferring Shareholder shall pay up any unpaid share
capital (whether previously called or not) and repay all loans,
loan capital, borrowings and indebtedness in the nature of
borrowings outstanding to the Company from that Shareholder
(together with any accrued interest thereon);
(b) the Company or the other Shareholder shall repay all loans, loan
capital, borrowings and interest in the nature of borrowings
outstanding to the transferring Shareholder from the Company
(together with any accrued interest thereon);
(c) the transferring Shareholder shall procure the removal of any
Directors or Secretary of the Company appointed by it; and
(d) the transferring Shareholder shall co-operate by doing all such
things and executing all such documents as the purchasing
Shareholder may reasonably require to procure that the Company
shall adopt new Articles of Association in such form as the
purchasing Shareholder may require.
8.8 The rights of the Parties under this Clause 8 shall be without
prejudice to any claim any party may have against any other for
damages for breach of contract.
9. Rights to information and confidentiality
-----------------------------------------
9.1 Notwithstanding the duties owed by each of the Directors to the
Company, any Director or any person designated for the purpose in
writing by a Shareholder shall be permitted to disclose any
information and provide relevant documents and materials about the
Company and discuss its affairs, finances and accounts with
appropriate officers and senior employees of the Shareholder in
question. Each of the Shareholders shall, in addition, be entitled to
disclose details of the Company's affairs, finances and accounts to
that Shareholder's professional and financial advisers who are
required to know the same to carry out their duties. Any information,
documents and materials supplied
10
to or by a Shareholder in accordance with this clause shall, subject
to clause 9.3, be kept strictly confidential.
9.2 Subject to clause 9.3 and save as required by law or by any relevant
national or supranational regulatory authority or self regulatory
authority, each of the Parties to this Agreement shall safeguard,
treat as confidential and not use for the purposes of its own business
all information, documents and materials which it acquires in
connection with this Agreement and which relate to the business of the
Company or to any of the other parties to this Agreement.
9.3 The obligations of confidentiality contained in this clause 9 shall
survive the termination of this Agreement and shall continue unless
and until any of the relevant confidential information enters the
public domain through no fault of the relevant party or any other
person owing a duty of confidentiality to the Company.
9.4 A Shareholder, on ceasing to be a Shareholder, shall hand over to the
Company all confidential information, documents and correspondence
belonging to or relating to the business of the Company and shall, if
so required by the Company, certify that it has not kept any records
or copies thereof.
9.5 Notwithstanding any provision contained in this Article 9 to the
contrary, information relating to the customers of the Company shall
not be considered confidential information.
10. Distributions on liquidation of the Company.
-------------------------------------------
No amounts will be distributed to the "B" Shareholder on liquidation of the
Company until the "A" Shareholder has received its priority distribution
set forth in Section 5 and the "B" shares are fully paid up.
11. Parties bound
-------------
11.1 The Company undertakes with each of the Shareholders to be bound by
and comply with the terms and conditions of this Agreement insofar as
the same relate to the Company and to act in all respects as
contemplated by this Agreement.
11.2 The Shareholders undertake with each other to exercise their powers in
relation to the Company so as to ensure that the Company fully and
promptly observes, performs and complies with its obligations under
this Agreement and to
11
exercise their rights as Shareholders in a manner consistent with this
Agreement.
11.3 Each Shareholder undertakes with each of the other Parties hereto that
whilst it remains a party to this Agreement it will not (except as
expressly provided for in this Agreement) agree to cast any of the
voting rights exercisable in respect of any of the shares held by it
in accordance with the directions, or subject to the consent of, any
other person (including another Shareholder).
12. Assignability
-------------
Except as otherwise expressly provided in Section 7 hereof, none of the
Parties may, without the written consent of the other, assign any of their
respective rights or obligations under this Agreement.
13. Not a partnership
-----------------
Nothing in this Agreement shall create a partnership or establish a
relationship of principal and agent or any other fiduciary relationship
between or among any of the Parties. Notwithstanding the foregoing, the
parties hereto acknowledge and agree that the Company shall be treated as a
partnership for United States income tax purposes.
14. This Amendment to prevail
-------------------------
14.1 In the event of any conflict, ambiguity or discrepancy between the
provisions of this Agreement and the Articles, the Shareholders shall
procure that the Articles are altered to accord with the provisions of
this Agreement which shall prevail.
14.2 The Parties agree that they will respectively exercise all Voting and
other rights and powers vested in or available to them respectively to
procure the convening of all meetings, the passing of all resolutions
and the taking of all steps necessary or desirable to give effect to
this Agreement.
14.3 The Parties agree that they will not exercise any rights conferred on
them by the Articles which are or may be inconsistent with their
rights under this Agreement.
15. Remedies to be cumulative
-------------------------
No remedy conferred by any of the provisions of this Agreement is intended
to be exclusive of any other remedy available at law, in equity, by statute
or otherwise, and each and every other remedy shall be cumulative and shall
be in addition to
12
every other remedy given hereunder or now or hereafter existing at law in
equity, by statute or otherwise. The election of any Party to pursue one or
more of such remedies shall not constitute a waiver by such Party of the
right to pursue any other available remedy.
16. Further assurance
-----------------
Each of the Parties hereto shall execute and deliver to the other Parties
such other instruments and documents and take such other action as may be
required to carry out, evidence and confirm the provisions of this
Agreement and the Articles.
17. Announcements
-------------
Except as required by law or by any relevant self regulatory, national or
supra national regulatory authorities, all publicity by or on behalf of any
of the Parties and relating to the subject matter of this Agreement shall
be in terms to be agreed between the Parties in advance of issue.
18. Entire agreement
----------------
18.1 This Agreement sets forth the entire agreement and understanding
between the Parties or any of them in connection with the arrangements
described herein.
18.2 No purported variation of this Agreement shall be effective unless
made in writing.
19. Miscellaneous
-------------
19.1 If any term or provision in this Agreement shall be held to be illegal
or unenforceable, in whole or in part, under any enactment or rule of
law, such term or provision or part shall to that extent be deemed not
to form part of this Agreement but the enforceability of the remainder
of this Agreement shall not be affected.
19.2 A Shareholder's failure to insist upon strict performance of any
provision of this Agreement shall not be deemed to be a waiver thereof
or of any right or remedy for breach of a like or different nature.
Subject as aforesaid, no waiver shall be effective unless specifically
made in writing and signed, where applicable, by a duly authorized
officer of the Shareholder granting such waiver.
19.3 This Agreement may be entered into in any number of counterparts and
by the Parties to it on separate counterparts, each of which when
executed and delivered shall be on original, but all the counterparts
shall together constitute one and the same instrument.
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19.4 This Agreement shall cease to have effect in relation to a Shareholder
which ceases to hold any Shares save in respect of:
(a) any provisions of this Agreement which is expressed to continue
after such cessation; and
(b) any liability which at the time of such cessation has accrued to
another party or which may accrue in respect of any act or
omission occurring prior to such cessation.
20. Notices
-------
20.1 Any notice required to be given under this Agreement shall be deemed
duly served if left at or sent by facsimile, registered or recorded
delivery post to any Party at its registered office or in the case of
an individual his last address notified to the other(s). Any such
notice shall be deemed to be served at the time when it is handed to
or left at the address of the Party to be served and if served by post
on the day (not being a Saturday, Sunday or public holiday) seven days
following the day of posting, PROVIDED that any notice served by
facsimile shall be followed immediately by a letter sent by recorded
or registered delivery by post.
20.2 In proving the serving of a notice it shall be sufficient to prove
that the notice was left or that the envelope containing such notice
was properly addressed and posted or that the applicable means of
telecommunications was properly addressed and dispatched (as the case
may be).
20.3 The Company undertakes with each of the Shareholders that it will
forthwith supply to each of such Shareholders a copy of any notice
which may be given to or served on it under this Agreement.
21. Choice of law, submission to jurisdiction and address for service
-----------------------------------------------------------------
21.1 This Agreement shall be governed by and interpreted in accordance with
English law.
21.2 The Parties hereby submit to the non-exclusive jurisdiction of the
High Court of Justice in England.
IN WITNESS whereof this Agreement signed on August 1, 1997, to reflect Agreement
made on June 30, 1997, effective as of April 1, 1997.
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EXECUTED as a deed for and on behalf of )
IFX CORP. )
by: /s/ Joel Eidelstein )
)
in the presence of: /s/ Lynn Galvan )
EXECUTED as a deed for and on behalf of ) /s/ E. F. Hurley
THE PARK TRUST ) ----------------------------
by: Croy Trust Limited as Trustees ) E. F. Hurley (Director)
)
in the presence of: /s/ J.S. Moss (Secretary) /s/ M. Moss
-----------------------------
Mrs. M. Moss (Director)
EXECUTED as a deed for and on behalf of )
IFX LIMITED ) /s/ Charles Romilly
by: /s/ Charles Romilly )
)
in the presence of: /s/ Rachel Easson )
15