UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 19, 2002
IFX Corporation
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(Exact name of Registrant as Specified in Its Charter)
Delaware 0-15187 36-3399452
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(State or Other Jurisdiction of (Commission file number) (I.R.S. Employer
Incorporation or Organization) Identification No.)
IFX Corporation
15050 NW 79/th/ Court
Miami Lakes, Florida 33016
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(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
(305) 512-1100
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(Registrant's Telephone Number, Including Area Code)
707 Skokie Blvd., 5/th/ Floor
Northbrook, Illinois 60062
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(Former name or former address, if changed since last report)
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
(a) As previously reported on Registrant's Report on Form 8-K dated October 11,
2001, Registrant had secured a commitment from UBS Capital Americas III, L.P.
and UBS Capital LLC (collectively, "UBS Capital") to invest an additional $7
million of cash and surrender 1.5 million shares of Registrant's Common Stock
currently held by UBS Capital in exchange for newly issued Series C Convertible
Preferred Stock of Registrant. On February 19, 2002, the Purchasers purchased
3,876,241 shares of Series C Preferred Stock. The source of the cash portion of
the purchase price was UBS Capital's working capital.
Under the terms of the Certificates of Designation for Registrant's Convertible
Preferred Stock and the Third Amended and Restated Stockholders Agreement dated
as of February 19, 2002, among Registrant, UBS Capital, International Technology
Investments, LC, ("ITI"), Joel Eidelstein, Michael Shalom and Lee S. Casty
("Casty") (the "Third Stockholders Agreement"), Registrant's Board of Directors
has been reduced to seven members from eight (George Myers has resigned as a
member of the Board of Directors) and UBS Capital is entitled to appoint four
out of seven members of the Board of Directors. UBS also has the right to
jointly designate a fifth director in conjunction with ITI and Casty. Casty and
ITI each have the right to appoint one director. Prior to the issuance of the
Series C Preferred Stock and the execution of the Third Stockholders Agreement,
UBS had the right to appoint three members of an eight member Board of Director
and to jointly designate a fourth director in conjunction with ITI and Casty.
After the purchase of the Series C Preferred Stock, UBS capital owns
approximately 57% of the voting shares of Registrant (assuming conversion of all
Registrant convertible preferred stock into Common Stock) The foregoing
transactions could be deemed a "change in control" of Registrant.
Each share of Series C Preferred Stock is initially convertible into one share
of Common Stock. The Series C Preferred Stock carries a liquidation preference
such that, upon a bankruptcy, liquidation, dissolution or winding up of
Registrant, each holder of Series C Preferred Stock will be entitled to receive
a Stated Preference of $3.00 per share plus 10% of such amount per annum from
the date of issuance and will also participate with the holders of Common Stock
after such holder receives its liquidation preference and accrued dividends,
provided that the maximum amount which can be received with respect to the
Series C Preferred Stock after taking into account the participation feature is
limited to 3-1/2 times the Stated Preference. Registrant's Series A and Series B
Preferred Stock have similar rights and privileges. As part of this transaction,
Registrant has also provided UBS Capital with the ability to exchange its equity
investment in Tutopia.com, Inc. (in which Registrant holds a minority
investment) for additional shares of Registrant preferred stock within one year
of closing.
(b) Registrant is not aware of any arrangements, the operation of which may at a
subsequent date result in a change in control of Registrant.
ITEM 5. OTHER EVENTS.
Pursuant to a Stock Purchase Agreement dated as of February 19, 2002, UBS
Capital, ITI, LSC, LLC ("LSC"), and Jak Bursztyn ("Bursztyn") (collectively
with UBS Capital, the "Purchasers") have agreed to invest a total of $5 million
and surrender shares of Registrant's preferred stock and Common Stock in
exchange for Registrant's newly-issued Series D Convertible Preferred Stock
("Series D Preferred Stock"). LSC is an affiliate of Casty and ITI is an
affiliate of Michael Shalom. Each share of Series D Preferred Stock will
initially be convertible into two shares of Registrant's Common Stock. The
Series D Preferred Stock carries a liquidation preference such that, upon a
bankruptcy, liquidation, dissolution or winding up of Registrant, each holder of
Series D Preferred Stock will be entitled to receive a Stated Preference of
$6.00 per share plus 10% of such amount per annum from the date of issuance and
will also participate with the holders of Common
Stock after the Purchasers receive their liquidation preference and accrued
dividends, provided that the maximum amount which can be received with respect
to the Series C Preferred Stock after taking into account the participation
feature is limited to 3-1/2 times the Stated Preference.
In this transaction, UBS Capital will invest approximately $3.33 million in cash
and surrender 750,000 shares of Series C Preferred Stock in exchange for
approximately 4.6 million shares of newly issued Series D Preferred Stock. Each
of ITI and LSC will invest approximately $0.8 million in cash and surrender
approximately 333,000 shares of Common Stock in exchange for approximately
844,000 shares of Series D Preferred Stock. Bursztyn will invest approximately
$40,000 in cash and surrender approximately 17,000 shares of Common Stock in
exchange for approximately 43,000 shares of Series D Preferred Stock.
Closing of the Series D Preferred Stock financing is subject to customary
closing conditions.
The Purchasers may, but are not required to, advance funds to Registrant prior
to the closing of the transaction. At closing, any outstanding principal will be
applied to the Series D Preferred Stock purchase price and any outstanding
interest will be applied to purchase additional shares of the Series D Preferred
Stock at a price of $1.20 per share.
After the close of this investment, Registrant would have approximately 41.5
million shares of Common Stock outstanding if all of Registrant's convertible
preferred stock were converted into Common Stock. As a result of the Series D
Preferred Stock transaction, Registrant will increase the number of shares of
Common Stock authorized from 60 million to 110 million and increase the number
of shares of preferred stock authorized from 20 million to 40 million.
Shares of Registrant's Common Stock are currently listed on the Nasdaq SmallCap
Market. Due to the decline in the price of Common Stock, trading of such shares
could be suspended or Registrant's shares could be delisted from the Nasdaq due
to their minimum trading requirements, particularly if Registrant's stock price
is below $1.00 per share for a prolonged period or certain financial
requirements imposed by Nasdaq are not met. On February 14, 2002, Nasdaq
notified Registrant that for the prior 30 consecutive trading days, the price of
Registrant's Common Stock closed below the minimum $1.00 per share requirement
for continued inclusion under Marketplace Rule 4310(c)(4). Therefore, in
accordance with Marketplace Rule 4310(c)(8)(D), Registrant was provided 180
calendar days, or until August 13, 2002, to regain compliance.
On February 21, 2002, Nasdaq notified Registrant that Registrant is not in
compliance with Marketplace Rule 4310(c)(2)(B), which requires Registrant to
have a minimum of $2,000,000 in net tangible assets or $2,500,000 in
stockholders' equity or a market capitalization of $35,000,000 or $500,000 of
net income for the most recently completed fiscal year or two of the three most
recently completed fiscal years. Nasdaq staff is reviewing Registrant's
eligibility for continued listing on the Nasdaq SmallCap Market and has
requested Registrant to provide by March 7, 2002, Registrant's specific plan to
achieve compliance with the listing requirements.
If trading of Registrant's Common Stock were to be suspended or Registrant's
shares were delisted from the Nasdaq system, it would be much more difficult to
dispose of Common Stock or obtain accurate quotations as to the price of the
securities. This in turn could make it more difficult to make future convertible
debt or equity offerings.
ITEM 7. FINANCIAL STATEMENT AND EXHIBITS
Exhibit Number Description of Exhibit
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3.1 Amendment to Restated Certificate of Incorporation of
Registrant
4.1 Second Amended Certificate of Designation, Powers,
Preferences and Rights of Series A Convertible
Preferred Stock of Registrant
4.2 Amended Certificate of Designation, Powers,
Preferences and Rights of Series B Convertible
Preferred Stock of Registrant
4.3 Certificate of Designation, Powers, Preferences and
Rights of Series C Convertible Preferred Stock of
Registrant
10.1 Third Amended and Restated Stockholders Agreement
dated as of February 19, 2002, among Registrant, UBS
Capital Americas III, L.P., UBS Capital LLC,
International Technology Investments, LC, Joel
Eidelstein, Michael Shalom and Lee S. Casty
10.2 Second Amended and Restated Registration Rights
Agreement dated as of February 19, 2002, among
Registrant, UBS Capital Americas III, L.P., UBS
Capital LLC, International Technology Investments,
LC, and Lee S. Casty
10.3 Put Agreement dated as of February 19, 2002, among
Registrant, UBS Capital Americas III, L.P. and UBS
Capital LLC
10.4 Series D Convertible Preferred Stock Purchase
Agreement dated as of February 19, 2002, among
Registrant, UBS Capital Americas III, L.P., UBS
Capital LLC, International Technology Investment LC,
LSC, LLC, and Jak Bursztyn
99.1 Press Release dated February 25, 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
IFX Corporation
By: /s/ Joel Eidelstein
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Joel Eidelstein,
President
Date: February 27, 2002
IFX CORPORATION
EXHIBIT INDEX
Exhibit Number Description of Exhibit
3.1 Amendment to Restated Certificate of Incorporation of
Registrant
4.1 Second Amended Certificate of Designation, Powers,
Preferences and Rights of Series A Convertible
Preferred Stock of Registrant
4.2 Amended Certificate of Designation, Powers,
Preferences and Rights of Series B Convertible
Preferred Stock of Registrant
4.3 Certificate of Designation, Powers, Preferences and
Rights of Series C Convertible Preferred Stock of
Registrant
10.1 Third Amended and Restated Stockholders Agreement
dated as of February 19, 2002, among Registrant, UBS
Capital Americas III, L.P., UBS Capital LLC,
International Technology Investments, LC, Joel
Eidelstein, Michael Shalom and Lee S. Casty
10.2 Second Amended and Restated Registration Rights
Agreement dated as of February 19, 2002, among
Registrant, UBS Capital Americas III, L.P., UBS
Capital LLC, International Technology Investments,
LC, and Lee S. Casty
10.3 Put Agreement dated as of February 19, 2002, among
Registrant, UBS Capital Americas III, L.P. and UBS
Capital LLC
10.4 Series D Convertible Preferred Stock Purchase
Agreement dated as of February 19, 2002, among
Registrant, UBS Capital Americas III, L.P., UBS
Capital LLC, International Technology Investment LC,
LSC, LLC, and Jak Bursztyn
99.1 Press Release dated February 25, 2002
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