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EXHIBIT 10.31
[FORM OF WARRANT CERTIFICATE]
PPN: [
]
WARRANT
CERTIFICATE
THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND MAY NOT
BE OFFERED, SOLD, PLEDGED,
HYPOTHECATED, ASSIGNED OR TRANSFERRED
EXCEPT (i) PURSUANT TO A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT WHICH
HAS BECOME EFFECTIVE AND IS CURRENT
WITH RESPECT TO THESE SECURITIES, OR (ii)
PURSUANT TO A SPECIFIC EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT BUT
ONLY UPON A HOLDER HEREOF FIRST HAVING
OBTAINED THE WRITTEN OPINION OF COUNSEL TO
THE COMPANY, OR OTHER COUNSEL
REASONABLY ACCEPTABLE TO THE COMPANY, THAT
THE PROPOSED DISPOSITION IS
CONSISTENT WITH ALL APPLICABLE PROVISIONS
OF THE SECURITIES ACT AS WELL AS ANY
APPLICABLE STATE SECURITIES LAWS
DATED DECEMBER 30, 2004
TERREMARK WORLDWIDE, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
WARRANT CERTIFICATE
To Purchase Shares of Common Stock of
[
]
No. [ ]
[ ] Warrants
THIS CERTIFIES THAT, for good and valuable
consideration, the receipt and
sufficiency of which is hereby
acknowledged, [INSERT NAME AND ADDRESS OF WARRANT
HOLDER] or its registered assigns (the
"Holder"), is the registered owner of the
number of warrants specified above
(collectively, the "Warrants"), each of which
warrants entitles the holder, subject to
the adjustment provisions and the
conditions and limitations hereinafter set
forth, to purchase from TERREMARK
WORLDWIDE, INC. (together with its
successor and assignee, the "Company"), a
corporation organized and existing under
the laws of the State of Delaware, one
(1) share, as adjusted pursuant to Section
4 hereof, of the Company's Common
Stock at a
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purchase price of $[ ] per share, as
adjusted pursuant to Section 4 hereof, (the
"Exercise Price"). The Warrants shall not
be terminable by the Company prior to
the Expiration Date (as defined in Section
10 hereof). The shares of Common
Stock issuable upon exercise of the
Warrants (and any other or additional
shares, securities or property that may
hereafter be issuable upon exercise of
the Warrants) are sometimes referred to
herein as the "Warrant Shares," and the
maximum number of shares so issuable under
this Warrant Certificate is sometimes
referred to as the "Aggregate Number" (as
such number may be increased or
decreased, as more fully set forth
herein).
The Warrants shall be void and all rights represented hereby
shall cease after 5:00 p.m. Eastern Time on
the Expiration Date.
The Warrants are part of an authorized issue of warrants (the
"Authorized Warrants") initially
exercisable for an aggregate of 15,000,000
shares of Common Stock issued on the date
hereof pursuant to the terms of the
Purchase Agreement.
Certain terms used in this Warrant Certificate are defined in
Section 10 hereof.
The Warrants are subject to the following provisions, terms
and conditions:
1. EXERCISE; ISSUE OF CERTIFICATES; PAYMENT FOR SHARES. (a)
The Warrants represented by this Warrant
Certificate may be exercised by the
Holder, in whole or in part (but not as to
fractional shares of Common Stock),
to purchase the Aggregate Number of shares
(initially equal to [ ] shares) of
Common Stock at all times on or prior to
5:00 p.m. Eastern Time on the
Expiration Date hereof.
(b) The Warrants shall be exercisable in whole at any time or
in part from time to time by surrendering
this Warrant Certificate on any
Business Day (with the Exercise Form
annexed hereto as SCHEDULE 1 properly
completed and executed) to the Company at
its principal office specified in
Section 15, or its then current address,
and upon payment to the Company of the
Exercise Price for the Warrant Shares being
purchased.
(c) Payment of the aggregate Exercise Price with respect to an
exercise in whole or in part of any
Warrants may be made, in the sole discretion
of the Holder, in the form of any of the
following: (a) by cash or a check or
bank draft in New York Clearing House
funds, (b) by the surrender of the
applicable Warrant or Warrants, and without
the payment of the Exercise Price in
cash, for such number of Warrant Shares
equal to the product of (1) the number
of Warrant Shares for which such Warrant or
Warrants are exercisable with
payment in cash of the Exercise Price as of
the date of exercise and (2) the
Cashless Exercise Ratio, (c) by tendering
Notes having an aggregate principal
amount, plus accrued and unpaid interest,
if any, thereon to the date of
exercise, equal to the Exercise Price or
(d) by any combination of (a), (b) and
(c) above. Such certificate or certificates
shall be deemed to have been issued
and any Person so designated to be named
therein shall be deemed for all
purposes to have become a holder of
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record of such Warrant Shares as of the
close of business on the Business Day of
the surrender of this Warrant Certificate
and payment of the Exercise Price as
aforesaid.
(d) Certificates for the shares so purchased shall be
delivered to the Holder within a reasonable
time, not exceeding five (5)
Business Days, after this Warrant
Certificate shall have been so exercised, and
unless the Warrants represented by this
Warrant Certificate have expired or been
fully exercised, a new Warrant Certificate
representing the number of shares
with respect to which this Warrant
Certificate shall not then have been
exercised shall also be delivered to the
Holder within such time.
2. SHARES TO BE FULLY PAID; RESERVATION OF SHARES; LISTING.
The Company covenants and agrees that: (a)
all Warrant Shares will, upon
issuance, be original-issue shares (and not
treasury stock) fully paid and
nonassessable and free from all taxes,
claims, liens, charges and other
encumbrances with respect to the issue
thereof; (b) without limiting the
generality of the foregoing, it will from
time to time take all such action as
may be required to assure that the par
value per share of Common Stock shall at
all times be less than or equal to the
Exercise Price; (c) during the period
within which the Warrants represented by
this Warrant Certificate may be
exercised, the Company will at all times
have authorized and reserved for the
purpose of issue or transfer upon exercise
of the Warrants represented by this
Warrant Certificate a sufficient number of
original-issue shares of its Common
Stock to provide for the exercise of all
the Warrants represented by this
Warrant Certificate; and (d) upon the
exercise of the Warrants represented by
this Warrant Certificate, it will, at its
expense, promptly notify each
securities exchange on which any Common
Stock is at the time listed of such
issuance, and use its best efforts to
maintain a listing of all shares of Common
Stock from time to time issuable upon the
exercise of the Warrants represented
by this Warrant Certificate to the extent
such shares can be listed.
3. REGISTRATION RIGHTS AGREEMENT. The Holder shall be entitled
to all of the benefits, and subject to all
of the obligations, of the
Registration Rights Agreement, in
connection with the Warrants and the Warrant
Shares, if issued.
4. ADJUSTMENTS TO EXERCISE PRICE AND AGGREGATE NUMBER. The
Exercise Price and the Aggregate Number of
shares of Common Stock issuable upon
the exercise of each Warrant (the "Exercise
Rate") is subject to adjustment from
time to time upon the occurrence of the
events enumerated in this Section 4.
(a) ADJUSTMENT FOR CHANGE IN CAPITAL STOCK. If the Company:
(1) pays a dividend or makes any other distribution on its
Common Stock in shares of its Common Stock or in other capital
stock of
the Company; or
(2) subdivides, combines or reclassifies its outstanding
shares of Common Stock,
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then, in each case, the Exercise Rate and
the Exercise Price in effect
immediately prior to such action shall be
proportionately adjusted so that the
Holder may upon payment of the same
aggregate Exercise Price payable immediately
prior to such action receive the Aggregate
Number and kind of shares of capital
stock of the Company which the Holder would
have owned immediately following
such action if such Warrants had been
exercised immediately prior to such
action.
Any such adjustment shall become effective immediately after
the record date of such dividend or
distribution or the effective date of such
subdivision, combination or
reclassification.
If after an adjustment the Holder upon exercise of any
Warrants may receive shares of two or more
classes of capital stock of the
Company, the board of directors of the
Company shall determine the allocation of
the adjusted Exercise Price between the
classes of capital stock. After such
allocation, the exercise privilege and the
Exercise Price of each class of
capital stock shall thereafter be subject
to adjustment on terms comparable to
those applicable to Common Stock in this
Section 4.
Such adjustment shall be made successively whenever any event
listed above shall occur.
(b) ADJUSTMENT FOR CERTAIN ISSUANCES OF COMMON STOCK. If the
Company issues or sells to any Person
shares of its Common Stock or distributes
any rights, options or warrants entitling
any Person to purchase shares of
Common Stock, or any rights, warrants or
options or other securities convertible
into or exchangeable for Common Stock, in
each case, at a price per share less
than the Current Market Value on the record
date for determining entitlements to
participate in such issuance, sale or
distribution (the "Time of
Determination"), the Exercise Rate shall be
adjusted in accordance with the
formula:
E' = E x O
+ N
----------
O + N x P
-----
M
and the Exercise Price shall be adjusted in
accordance with the following
formula:
EP' = EP x E
--
E'
where:
E' = the adjusted
Exercise Rate.
E = the Exercise
Rate immediately prior to the Time of
Determination for any such issuance, sale or
distribution.
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EP' = the Adjusted
Exercise Price.
EP = the Exercise
Price immediately prior to the Time
of Determination for any such issuance, sale or
distribution.
O = the number of
Fully Diluted Shares (as defined
below) outstanding immediately prior to the Time of
Determination for any such issuance, sale or
distribution.
N = the number of
additional shares of Common Stock
issued, sold or issuable upon exercise of such
rights, options or warrants or other convertible or
exchangeable securities.
P = the per share
price received and receivable by the
Company in the case of any issuance or sale of
Common Stock or rights, options or warrants or other
convertible or exchangeable securities inclusive of
the exercise price per share of Common Stock payable
upon exercise of such rights, options or warrants or
other convertible or exchangeable securities.
M = the Current
Market Value per share of Common Stock
on the Time of Determination for any such issuance,
sale or distribution.
For purposes of this Section 4 the term "Fully Diluted Shares"
shall mean (i) the shares of Common Stock
outstanding as of a specified date,
and (ii) the shares of Common Stock into or
for which rights, options, warrants
or other convertible or exchangeable
securities outstanding as of such date are
exercisable, convertible or exchangeable
(other than the Warrants or any of the
other Authorized Warrants).
The adjustments shall be made successively whenever any such
rights, options or warrants or other
convertible or exchangeable securities are
issued and shall become effective
immediately after the relevant Time of
Determination. Notwithstanding the
foregoing, the Exercise Rate and the Exercise
Price shall not be subject to adjustment in
connection with (i) the issuance of
any shares of Common Stock upon exercise of
any such rights, options or warrants
or other convertible or exchangeable
securities which have previously been the
subject of an adjustment under this
Agreement for which the required adjustment
has been made; (ii) Common Stock
Equivalents or Shares of Common Stock issued
upon exercise of any Common Stock
Equivalents issued to employees, officers or
directors of, or consultants or advisors to
the Company or any of its
subsidiaries, pursuant to stock purchase or
stock option plans or other
arrangements that are approved by the board
of directors of the Company for the
purpose of compensation or similar payment
in connection with employment or
services rendered to the Company or its
Subsidiaries; (iii) Shares of Common
Stock issued upon exercise of any Common
Stock Equivalents outstanding on the
date hereof; and (iv) any exercise of the
Warrants or any of the other
Authorized Warrants. If at the end of the
period during which any such rights,
options or warrants or other convertible or
exchangeable securities are
exercisable, not all
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rights, options or warrants or other
convertible or exchangeable securities
shall have been exercised, the Warrants
shall be immediately readjusted to what
it would have been if "N" in each of the
above formulas had been the number of
shares actually issued.
(c) ADJUSTMENT FOR OTHER DISTRIBUTIONS. If the Company
distributes to holders of its Common Stock
(i) any evidences of indebtedness of
the Company or any of its subsidiaries,
(ii) any assets of the Company or any of
its subsidiaries (whether in cash, property
or otherwise), or (iii) any rights,
options or warrants to acquire any of the
foregoing or to acquire any other
securities of the Company, the Exercise
Rate shall be adjusted in accordance
with the formula:
E' = E x M
-----
M - F
and the Exercise Price shall be decreased
(but not increased) in accordance with
the following formula:
EP' = EP x E
-
E'
where:
E' = the adjusted Exercise
Rate.
E = the current Exercise
Rate on the record date referred
to in this paragraph (c) below.
EP' = the
Adjusted Exercise Price.
EP = the current Exercise
Price on the record date
referred to in this paragraph (c) below.
M = the Current
Market Value per share of Common Stock
on the record date referred to in this paragraph (c)
below.
F = the fair market
value (as determined in good faith
by the Company's board of directors) on the record
date referred to in this paragraph (c) below of the
indebtedness, assets, rights, options or warrants
distributable in respect of one share of Common
Stock.
The adjustments shall be made successively whenever any such
distribution is made and shall become
effective immediately after the record
date for the determination of stockholders
entitled to receive the distribution.
If any adjustment is made pursuant to
clause (iii) above of this subsection (c)
as a result of the issuance of rights,
options or warrants and at the end of the
period during which any such rights,
options or warrants are exercisable,
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not all such rights, options or warrants
shall have been exercised, the Warrants
shall be immediately readjusted as if "F"
in the above formula was the fair
market value on the record date of the
indebtedness or assets actually
distributed upon exercise of such rights,
options or warrants divided by the
number of shares of Common Stock
outstanding on the record date. Notwithstanding
anything to the contrary contained in this
subsection (c), if "M-F" in the above
formula is less than $1.00 (or is a
negative number) then in lieu of the
adjustment otherwise required by this
subsection (c), the Company may elect to
distribute to the Holder, upon exercise of
any Warrants, the evidences of
indebtedness, assets, rights, options or
warrants which would have been
distributed to such Holder had such
Warrants been exercised immediately prior to
the record date for such distribution.
This subsection does not apply to rights, options or warrants
referred to in subsection (b) of this
Section 4.
(d) The following provisions shall be applicable to the making
of adjustments of the Exercise Price and
Exercise Rate herein before provided
for in this Section 4:
(i) The sale or other disposition of any issued shares of
Common Stock owned or held by or for the account of the Company
shall
be deemed an issuance thereof for the purposes of this Section
4.
(ii) The adjustments required by the preceding paragraphs of
this Section 4 shall be made whenever and as often as any
specified
event requiring an adjustment shall occur, except as expressly
provided
herein. For the purpose of any adjustment, any specified event
shall be
deemed to have occurred at the close of business on the date of
its
occurrence.
(iii) In computing adjustments under this Section 4 fractional
interests in Common Stock shall be taken into account to the
nearest
one-thousandth (.001) of a share and shall be aggregated until
they
equal one whole share.
(iv) If the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive any
item
described in Sections 4(a) through 4(c) hereof, but abandon its
plan to
pay or deliver such item, then no adjustment shall be required
by
reason of the taking of such record and any such adjustment
previously
made in respect thereof shall be rescinded and annulled.
(v) The consideration for any additional shares of Common
Stock issuable pursuant to any options, warrants or other rights
to
subscribe for or purchase the same shall be the consideration
received
or receivable by the Company for issuing such options, warrants
or
other rights, plus the additional consideration payable to the
Company
upon the exercise of such options, warrants or other rights.
The
consideration for any additional shares of Common Stock
issuable
pursuant to the terms of any convertible or exchangeable
securities
shall be the consideration received or receivable by the Company
for
issuing any options, warrants or other rights to subscribe for
or
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purchase such convertible or exchangeable securities, plus the
consideration paid or payable to the Company in respect of the
subscription for or purchase of such convertible or
exchangeable
securities, plus the additional consideration, if any, payable to
the
Company upon the exercise of the right of conversion, exercise
or
exchange of such convertible or exchangeable securities. In case of
the
issuance at any time of any additional shares of Common Stock
or
convertible or exchangeable securities in payment or satisfaction
of
any dividend upon any class of stock other than Common Stock,
the
Company shall be deemed to have received for such additional shares
of
Common Stock or convertible or exchangeable securities a
consideration
equal to the amount of such dividend so paid or satisfied.
(e) (i) If any event occurs as to which the other provisions
of this Section 4 are not strictly
applicable but the lack of any provision for
the exercise of the rights of the Holder
would not fairly protect the purchase
rights of such Holder in accordance with
the essential intent and principles of
such provisions, or, if strictly
applicable, would not fairly protect the
conversion rights of such Holder in
accordance with the essential intent and
principles of such provisions, then the
Company shall appoint a firm of
independent certified public accountants in
the United States (which may be the
regular auditors of the Company) of
recognized national standing in the United
States reasonably satisfactory to the
Required Holders, which shall give their
opinion as to the adjustments, if any,
necessary to preserve, without dilution,
on a basis consistent with the essential
intent and principles established in
the other provisions of this Section 4, the
exercise rights of such Holder. Upon
receipt of such opinion, the Company shall
forthwith make the adjustments
described therein.
(ii) In case of any capital reorganization, other than in the
cases referred to in Section 4(a), (b) or
(c) hereof and other than any capital
reorganization that does not result in any
reclassification of the outstanding
shares of Common Stock into shares of other
stock or other securities or
property, or the consolidation or merger of
the Company with or into another
corporation (other than a merger or
consolidation in which the Company is the
continuing corporation and which does not
result in any reclassification of the
outstanding shares of Common Stock into
shares of other stock or other
securities or property), or the sale of all
or substantially all of the assets
of the Company (collectively such actions
being hereinafter referred to as
"Reorganizations"), there shall thereafter
be deliverable upon exercise of any
Warrant (in lieu of the number of shares of
Common Stock theretofore
deliverable) the number of shares of stock
or other securities or property to
which a holder of the number of shares of
Common Stock that would otherwise have
been deliverable upon the exercise of such
Warrant would have been entitled upon
such Reorganization if such Warrant had
been exercised in full immediately prior
to such Reorganization. In case of any
Reorganization, appropriate adjustment,
as determined in good faith by the board of
directors of the Company, whose
determination shall be described in a duly
adopted resolution certified by the
Company's Secretary or Assistant Secretary,
shall be made in the application of
the provisions herein set forth with
respect to the rights and interests of the
Holder so that the provisions set forth
herein shall
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thereafter be applicable, as nearly as
possible, in relation to any such shares
or other securities or property thereafter
deliverable upon exercise of
Warrants.
The Company shall not effect any such Reorganization unless
prior to or simultaneously with the
consummation thereof the successor
corporation (if other than the Company)
resulting from such Reorganization or
the corporation or other entity purchasing
such assets shall (i) expressly
assume, by a supplemental warrant or other
acknowledgment executed and delivered
to the Holder the obligation to deliver to
the Holder such shares of stock,
securities or assets as, in accordance with
the foregoing provisions, such
Holder may be entitled to purchase, and the
due and punctual performance and
observance of each and every covenant,
condition, obligation and liability under
this Warrant Certificate to be performed
and observed by the Company in the
manner prescribed herein and (ii) if such
Reorganization takes place prior to
consummation by the Company of all of its
registration obligations under the
Stockholders Agreement, enter into an
agreement providing to the Holder rights
and benefits substantially similar to those
enjoyed by the Holder hereof under
the Stockholders Agreement.
The foregoing provisions of this Section 4(e)(ii) shall apply
to successive Reorganization
transactions.
(f) (i) In case:
(A) the Company shall authorize the issuance to holders of
shares of Common Stock of rights, options or warrants to subscribe
for
or purchase shares of Common Stock or of any other subscription
rights
or warrants; or
(B) the Company shall authorize the distribution to holders of
shares of Common Stock of evidences of its indebtedness or assets
or of
rights, options or warrants to subscribe for or purchase any of
the
foregoing; or
(C) of any consolidation or merger to which the Company is a
party and for which
