Exhibit 10.24
EXECUTION VERSION
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THAT ACT
OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
IFX CORPORATION
CONVERTIBLE PROMISSORY NOTE
$1,100,000.00 Dated: September 9, 2002
FOR VALUE RECEIVED IFX CORPORATION, a Delaware corporation (the
"Company"), hereby promises to pay to ROF/IFX, LLC, a Delaware limited liability
company (the "Payee"), or its registered assigns, the principal amount of One
Million One Hundred Thousand and 00/100 Dollars ($1,100,000.00) together with
interest thereon calculated from the date hereof in accordance with the
provisions of this Convertible Note.
Certain capitalized terms are defined in Section 8 hereof.
1. Payment of Interest. Interest shall accrue at a rate equal to ten
percent (10%) per annum (the "Interest Rate") on the unpaid principal amount of
this Convertible Note outstanding from time to time; provided that so long as
any Event of Default has occurred and is continuing, interest shall accrue to
the extent permitted by law at the rate of the Interest Rate plus two percent
(2%) per annum on the unpaid principal amount of this Convertible Note
outstanding from time to time for the period beginning on the date on which such
Event of Default occurs and ending on the date on which such Event of Default
ceases to exist. Interest shall be computed on the basis of the actual number of
days elapsed and a 360-day year.
2. Maturity Date. Unless previously converted in accordance with
Section 3 below, all of the principal amount of this Convertible Note plus
accrued and unpaid interest thereon shall automatically be converted into shares
of the Series D Preferred Stock at a conversion price equal to $1.20 per share
of Series D Preferred Stock (the "Series D Conversion Price") on June 30, 2003
(the "Maturity Date"). The Series D Preferred Stock to be issued upon any such
conversion shall have the same rights, preferences and privileges as the shares
of the Series D Preferred Stock issued in the Series D Financing. The Payee,
upon making such conversion, and as a condition thereof, shall enter into a
registration rights agreement and shareholders agreement substantially in the
form of the Third Amended and Restated Registration Rights Agreement and the
Fourth Amended and Restated Stockholders Agreement among the Company and the
holders of the Series D Preferred Stock. No fractional shares shall be issued
upon a conversion into Series D Preferred Stock. In lieu of any fractional
shares to which Payee would otherwise be entitled, the Company shall pay cash
equal to such fraction multiplied by the Series D Conversion Price.
3. Conversion. (i) In the event that the Company enters into a
Qualified Financing Purchase Agreement prior to the Maturity Date (the date
thereof being the "Qualified Financing Date"), then at the election of the Payee
(the "Payee Election"), this Convertible Note plus accrued and unpaid interest
thereon may be converted, in whole and not in part, into Qualified Financing
Securities at a conversion price equal to the purchase price per Qualified
Financing Security set forth in the Qualified Financing Purchase Agreement (the
"Qualified Financing Conversion Price"). The Company shall provide Payee timely
notice of the Qualified Financing Date, and Payee shall make the Payee Election
within ten (10) business days of receiving such notice. The Payee, upon making
such conversion, and as a condition thereof, shall enter into any registration
rights agreement, shareholders agreement or other material agreements entered
into by other investors in the Qualified Financing. In the absence of a timely
election by Payee, or if Payee elects to convert to Series D Preferred Stock,
the Convertible Note shall be converted, in whole and not in part, into the
Series D Preferred Stock in accordance with the provisions of Section 2, but
within thirty (30) days of the Qualified Financing Date.
(ii) At such time as such conversion or a conversion under Section 2
has been effected, the rights of the holder of this Convertible Note as the
holder of such note shall cease, and the Person or Persons in whose name or
names any certificate or certificates for shares of the Series D Preferred Stock
or Qualified Financing Securities, as the case may be, are to be issued upon
such conversion shall be deemed to have become the holder or holders of record
of the shares of such Series D Preferred Stock or Qualified Financing Securities
represented thereby.
(iii) The Company shall deliver to the converting holder a certificate
or certificates representing the number of shares of Series D Preferred Stock or
Qualified Financing Securities, as the case may be, issuable by reason of such
conversion in such name or names and such denomination or denominations as the
converting holder has specified.
(iv) The issuance of certificates for shares of Series D Preferred
Stock or Qualified Financing Securities, as the case may be, upon conversion of
this Convertible Note shall be made without charge to the holder hereof for any
issuance tax in respect thereof or other cost incurred by the Company in
connection with such conversion and the related issuance of shares of Series D
Preferred Stock or Qualified Financing Securities, provided that such holder
shall pay any transfer taxes associated therewith.
(v) The Company shall at all times reserve and keep available out of
its authorized but unissued shares of Series D Preferred Stock or Qualified
Financing Securities, as the case may be, solely for the purpose of issuance
upon conversion hereunder, such number of shares of Series D Preferred Stock or
Qualified Financing Securities issuable upon conversion. All such securities
which are so issuable shall, when issued, be duly and validly issued, fully paid
and nonassessable and free from all taxes, liens and charges (other than the
applicable shareholders agreement and securities laws). The Company shall take
all such actions as may be necessary to assure that all such securities may be
so issued without violation of any applicable law or governmental regulation or
any requirements of any domestic securities exchange upon which such shares of
capital stock may be listed; provided, that in no event will the Company be
obligated to register Series D Preferred Stock or Qualified Financing Securities
under the Securities Act of 1933.
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(vi) In addition to the conversion provisions under paragraphs 5(i)
through 5(v) above, the Company shall provide Payee the opportunity to convert 1
(one) share of IFX common stock in exchange for 0.16667 shares of such class of
Company preferred stock as described in paragraph 3(a) of the Amended And
Restated Put Agreement among the Company, UBS Capital Americas III, L.P. and UBS
Capital LLC, up to a maximum of 400,000 (Four Hundred Thousand) shares of IFX
common stock. Within 10 days of the funding of this Convertible Note by Payee,
Payee must provide the Company notice of its intension to convert and the number
of IFX common shares that will be tendered for conversion.
4. Method of Payments.
(a) Payment. Except with respect to an Event of Default,
notwithstanding anything contained elsewhere in this Convertible Note to the
contrary, the Company will pay all sums for principal, interest, premiums,
dividends or otherwise becoming due on this Convertible Note not later than 5:00
p.m. New York time, on the Maturity Date, in Series D Preferred Stock or
Qualified Financing Securities, as the case may be, in accordance with the
payment instructions that the Payee may designate in writing. Any payment made
after 5:00 p.m. New York time, on a Business Day will be deemed made on the next
following Business Day. If the Maturity Date falls on a day that is not a
Business Day, such due date shall be extended to the next succeeding Business
Day, and interest shall be payable on any principal so extended for the period
of such extension. All amounts payable under this Convertible Note shall be paid
free and clear of, and without reduction by reason of, any deduction, set-off or
counterclaim. The Company will afford the benefits of this Section to the Payee
and to each other Person holding this Convertible Note.
(b) Transfer and Exchange. Upon surrender of any Convertible Note for
registration of transfer or for exchange to the Company at its principal office,
the Company at its sole expense will execute and deliver in exchange therefor a
new Convertible Note or Convertible Notes, as the case may be, as requested by
the holder or transferee, which aggregate the unpaid principal amount of such
Convertible Note, registered as such holder or transferee may request, dated so
that there will be no loss of interest on the Convertible Note and otherwise of
like tenor. The issuance of new Convertible Notes shall be made without charge
to the holder(s) of the surrendered Convertible Note for any issuance tax in
respect thereof or other cost incurred by the Company in connection with such
issuance, provided that each Convertible Noteholder shall pay any transfer taxes
associated therewith. The Company shall be entitled to regard the registered
holder of this Convertible Note as the holder of the Convertible Note so
registered for all purposes until the Company or its agent, as applicable, is
required to record a transfer of this Convertible Note on its register.
(c) Replacement. Upon receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of any Convertible
Note and, in the case of any such loss, theft or destruction of any Convertible
Note, upon receipt of an indemnity reasonably satisfactory to the Company or, in
the case of any such mutilation, upon the surrender and cancellation of such
Convertible Note, the Company, at its expense, will execute and deliver, in lieu
thereof, a new Convertible Note of like tenor and dated the date of such lost,
stolen, destroyed or mutilated Convertible Note.
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5. Representations and Warranties of Payee. Payee represents and
warrants to Company that:
(a) Investment Purpose. Payee is acquiring this Convertible Note and
any and all securities into which this Convertible Note is convertible solely
for its own account for the purpose of investment and not with a view to or for
sale in connection with any distribution thereof, and has no present intention
or plan to effect any distribution thereof. The securities issuable upon
conversion hereof will bear a legend to the following effect:
"The securities represented by this certificate
have not been registered under the Securities
Act of 1933, as amended (the "Act"), or the laws
of any state and may not be sold or transferred
except in compliance with the Act and such laws."
(b) Information. Payee has had the opportunity to conduct and complete
customary business, financial, and operational due diligence investigations and
Payee is satisfied with the results of the due diligence investigations
conducted by Payee. Payee has been furnished with all materials relating to the
business, finances and operations of the Company that has been requested by
Payee, including but not limited to those documents specified in Attachment A
hereto. In addition, Payee has reviewed the public filings made by the Company
with the SEC. Payee understands and acknowledges that its investment in this
Convertible Note involves a high degree of risk.
(c) Sophistication. Payee is able to bear the economic risk of an
investment in the Convertible Note and can afford to sustain a total loss of
such investment, and has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of the proposed
investment and therefore has the capacity to protect its own interests in
connection with the purchase of such Convertible Note.
(d) Illiquidity. Payee understands that there is no public market for
the Convertible Note to be acquired by it and that there may never be a public
market for such Convertible Note or the preferred stock or other security to be
issued at conversion on the Maturity Date, and that such Purchaser may have to
bear the risk of its investment in such securities for a substantial period of
time.
(e) Accredited Investor. Payee is an "accredited investor" within the
meaning of Regulation D promulgated under the Securities Act. In addition, Payee
has received such information as it considers necessary or appropriate for
deciding whether to acquire the Convertible Note.
(f) Requisite Power and Authority. Payee has all necessary power and
authority to execute this Convertible Note. This Convertible Note has been duly
executed and
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delivered by Payee, and when executed by Payee will constitute the legal, valid
and binding obligations of Payee, enforceable in accordance with their terms,
subject to applicable bankruptcy, insolvency, or other similar laws affecting
the enforceability of creditors' rights generally and court decisions with
respect thereto, and the discretion of courts in granting equitable remedies.
(g) No Conflict. The execution by Payee of this Convertible Note and
the consummation of the transactions contemplated hereby by Payee will not
result in any violation of or default under, any provision of the organizational
documents of Payee, any contract to which Payee is a party or any applicable
law, rule or regulation, which violation or default could reasonably be expected
to (i) affect the validity of this Convertible Note, (ii) affect in any material
respect any action taken or to be taken by Payee pursuant to this Convertible
Note, or (iii) have a material adverse effect on the properties, assets,
business or operations of such Payee.
(h) Confidentiality. The terms and conditions of the Mutual
Non-Disclosure Agreement ("NDA") previously entered into by Payee and the
Company, shall govern the exchange of all confidential information between the
parties. The NDA shall survive execution of this Convertible Note.
6. Representations and Warranties of the Company. The Company
represents and warrants to Payee that:
(a) Organization and Qualification. The Company and each of its
subsidiaries is an entity duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization, with power and authority to
conduct its business as it is now being conducted, to own or use its properties
and assets that it purports to own or use and, in the case of the Company, to
perform its obligations under this Convertible Note. The Company and each of its
subsidiaries is duly qualified to do business as a foreign company and is in
good standing under the laws of each state or other jurisdiction in which either
the ownership or use of the properties owned or used by it, or the nature of the
activities conducted by it, requires such qualification.
(b) Absence of Conflicts. Neither the execution, delivery and
performance of this Convertible Note by the Company, nor the consummation of the
transactions contemplated hereby, nor compliance by the Company with any of the
provisions hereof, will (a) violate, conflict with, or result in a breach of any
provision of, constitute a default under, or permit or result in the termination
of, acceleration of any obligation under, or creation of a lien under any of the
terms, conditions or provisions of, (i) the certificate of incorporation, bylaws
or stockholders agreements of the Company, or (ii) any note, mortgage,
indenture, contract, agreement or license by which the Company or any of the
properties or assets thereof may be bound, or to which the Company or any
subsidiary thereof or any of the properties or assets thereof may be subject, or
(b) violate or conflict with any law, rule, regulation, judgment, ruling, order,
writ, injunction or decree applicable to the Company or any subsidiary thereof
or any of the properties or assets thereof.
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(c) Authorization of Agreements, Etc. Each of (i) the execution and
delivery by the Company of this Convertible Note, (ii) the performance by the
Company of its obligations hereunder, and (iii) the issuance, sale and delivery
by the Company of this Convertible Note and the shares of Series D Preferred
Stock or other security issuable upon conversion thereof has been duly
authorized by all necessary corporate action of the Company.
(d) Validity. This Convertible Note has been duly executed and
delivered by the Company and constitutes the legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms.
7. Events of Default. If any of the following events takes place
before the Maturity Date (each, an "Event of Default"), Payee at its option may
declare all principal and accrued and unpaid interest thereon and all other
amounts payable under this Convertible Note immediately due and payable in
immediately available cash funds; provided, however, that this Convertible Note
shall automatically become due and payable without any declaration in the case
of an Event of Default specified in clause 3 or 5, below:
(1) The Company fails to make payment of the full amount due under
this Convertible Note by the issuance of Series D Preferred Stock
or Qualified Financing Securities, as the case may be; or
(2) A receiver, liquidator or trustee is appointed by a court order
(i) of the Company or (ii) for any substantial part of the
Company's assets or properties; or
(3) The Company is adjudicated bankrupt or insolvent; or
(4) A substantial part of the Company's property is sequestered by or
in consequence of a court order and such order remains in effect
for more than 30 days; or
(5) The Company files a petition in voluntary bankruptcy or requests
reorganization under any provision of any bankruptcy,
reorganization or insolvency law or consents to the filing of any
petition against it under such law, or
(6) Any petition against the Company is filed under bankruptcy,
receivership or insolvency law; or
(7) The Company makes a formal or informal general assignment for the
benefit of its creditors, or admits in writing its inability to
pay debts generally when they become due, or consents to the
appointment of a receiver, liquidator or trustee of the Company
or for all or any part of its property; or
(8) An attachment or execution is levied against any substantial part
of the Company's assets that is not released within 30 days; or
(9) The Company dissolves, liquidates or ceases business activity, or
transfers the majority of its assets other than in the ordinary
course of business; or
(10) The Company breaches any material covenant or agreement on its
part contained in this Convertible Note;
(11) There exists any material inaccuracy or untruthfulness of any
representation or warranty of the Company set forth in this
Convertible Note; or
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(12) The Company shall default under any promissory note, credit
agreement, loan agreement, conditional sales contract, guarantee,
lease, indenture, bond, debenture or other material obligation to
which it is a party whatsoever having an aggregate outstanding
amount greater than $1,000,000 and a party thereto or a holder
thereof is entitled to accelerate the obligations of the Company.
8. Definitions.
"Business Day" means a day (other than a Saturday or Sunday) on which
banks generally are open in New York, New York for the conduct of substantially
all of their activities.
"Convertible Note" shall mean this Convertible Promissory Note,
together with any other convertible notes in the form hereof issued upon
transfer or exchange hereof, in whole or in part.
"Convertible Noteholder" with respect to any Convertible Note, means
at any time each Person then the record owner of such Convertible Note and
"Convertible Noteholders" means all of such Convertible Noteholders
collectively.
"Person" means any person or entity of any nature whatsoever,
specifically including an individual, a firm, a company, a corporation, a
partnership, a limited liability company, a trust or other entity.
"Series D Preferred Stock" means the series of convertible preferred
stock of the Company issued in the Series D Financing.
"Series D Financing" means the issuance of convertible preferred stock
of the Company to one or more investors for cash pursuant to the Series D Stock
Purchase Agreement.
"Series D Stock Purchase Agreement" means the IFX Corporation Series D
Convertible Preferred Stock Purchase Agreement dated as of February 19, 2002,
among the Company and the other parties named therein.
"Qualified Financing" means the future issuance of Qualified Financing
Securities to one or more investors following the date of issuance of this
Convertible Note pursuant to a Qualified Financing Purchase Agreement, if any.
"Qualified Financing Securities" means a new series of convertible
preferred stock or debt, any common stock or any convertible debentures of the
Company to be issued pursuant to a Qualified Financing Purchase Agreement, if
any.
"Qualified Financing Purchase Agreement" means an agreement executed
by the Company after the date hereof which provides the Company with debt or
equity financing in the minimum amount of $2.5 million in connection with the
issuance of securities by the Company that are convertible, exercisable, or
exchangeable into shares of IFX common stock.
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9. Expenses of Enforcement, etc. The Company agrees to pay all
reasonable fees and expenses incurred by the Payee in connection with the
negotiation, execution and delivery of this Convertible Note. The Company agrees
to pay all reasonable fees and expenses incurred by the Payee in connection with
any amendments, modifications, waivers, extensions, renewals, renegotiations or
"workouts" of the provisions hereof or incurred by the Payee in connection with
the enforcement or protection of the Payee's rights in connection with this
Convertible Note, or in connection with any pending or threatened action,
proceeding, or investigation relating to the foregoing, including but not
limited to the reasonable fees and expenses of counsel for the Payee. The
Company indemnifies the Payee and its directors, managers, affiliates, partners,
members, officers, employees and agents against, and agrees to hold the Payee
and each such person and/or entity harmless from, any and all losses, claims,
damages, liabilities and related expenses, including reasonable counsel fees and
expenses, incurred by or asserted against the Payee or any such person or entity
arising out of, in any way connected with, or as a result of (i) the
consummation of the loan evidenced by this Convertible Note and the use of the
proceeds thereof or (ii) any claim, litigation, investigation or proceedings
relating to any of the foregoing, whether or not the Payee or any such person or
entity is a party thereto.
10. Amendment and Waiver. The provisions of this Convertible Note may
not be modified, amended or waived, and the Company may not take any action
herein prohibited, or omit to perform any act herein required to be performed by
it without the written consent of the Payee.
11. Remedies Cumulative. No remedy herein conferred upon the Payee is
intended to be exclusive of any other remedy and each and every such remedy
shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or
otherwise.
12. Remedies Not Waived. No course of dealing between the Company and
the Payee or any delay on the part of the Payee in exercising any rights
hereunder shall operate as a waiver of any right of the Payee.
13. Assignments. The Payee may assign, participate, transfer or
otherwise convey this Convertible Note and any of its rights or obligations
hereunder or interest herein to any Person, and this Convertible Note shall
inure to the benefit of the Payee's successors and assigns. The Company shall
not assign or delegate this Convertible Note or any of its liabilities or
obligations hereunder.
14. Headings. The headings of the sections and paragraphs of this
Convertible Note are inserted for convenience only and do not constitute a part
of this Convertible Note.
15. Severability. If any provision of this Convertible Note is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Convertible Note will remain in full force and effect. Any
provision of this Convertible Note held invalid or unenforceable only in part or
degree will remain in full force and effect to the extent not held invalid or
unenforceable.
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16. Cancellation. After all principal, premiums (if any) and accrued
interest at any time owed on this Convertible Note have been paid in full, or
this Convertible Note has been converted in accordance with its terms, this
Convertible Note will be surrendered to the Company for cancellation and will
not be reissued.
17. Maximum Legal Rate. If at any time an interest rate applicable
hereunder exceeds the maximum rate permitted by law, such rate shall be reduced
to the maximum rate so permitted by law.
18. Place of Payment and Notices. Subject to Section 4(a) above,
payments of principal and interest and notices deliverable to the Payee
hereunder are to be delivered to the Payee at the address as the Payee has
specified by prior written notice to the Company. No notice shall be deemed to
have been delivered until the first Business Day following actual receipt
thereof at the foregoing address.
19. Waiver of Jury Trial. The Payee and the Company each hereby waives
any right it may have to a trial by jury in respect of any litigation directly
or indirectly arising out of, under or in connection with this Convertible Note
or the transactions contemplated hereunder.
20. Submission to Jurisdiction. (a) Any legal action or proceeding
with respect to this Convertible Note may be brought in the courts of the State
of New York or of the United States of America for the Southern District of New
York, and, by execution and delivery of this Convertible Note, the Company
hereby accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts.
(b) The Company hereby irrevocably waives, in connection with any such
action or proceeding, any objection, including, without limitation, any
objection to the laying of venue or based on the grounds of forum non
conveniens, which they may now or hereafter have to the bringing of any such
action or proceeding in such respective jurisdictions.
(c) Nothing herein shall affect the right of the Payee to serve
process in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against the Company in any other jurisdiction.
21. GOVERNING LAW. ALL ISSUES AND QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS CONVERTIBLE NOTE
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW RULES OR
PROVISIONS (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT
WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE
OF FLORIDA.
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IN WITNESS WHEREOF, the Company has executed and delivered this
Convertible Promissory Note on the date first written above.
IFX CORPORATION
By: /s/ Joel Eidelstein
-------------------------
Name: Joel Eidelstein
Title: President
Agreed to and accepted:
PAYEE:
ROF/IFX, LLC
By: /s/ Mark Rice
-----------------------
Name: Mark Rice
Title: Manager
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