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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXCHANGE ACT OF 1934
o | No fee required. |
þ | Fee computed on table below per Exchange ActRules 14a-6(i)(1) and 0-11. |
(1) | Title of each class of securities to which the transaction applies: |
(2) | Aggregate number of securities to which the transaction applies: |
(3) | Per unit price or other underlying value of the transaction computed pursuant to Exchange ActRule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
(4) | Proposed maximum aggregate value of the transaction: $1,514,272,412.00 |
(5) | Total fee paid: $175,807.03 |
þ | Check box if any part of the fee is offset as provided by Exchange ActRule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
(1) | Amount Previously Paid: $175,807.03 |
(2) | Form, Schedule or Registration Statement No.: Schedule TO |
(3) | Filing Party: Verizon Communications Inc. and Verizon Holdings Inc. |
(4) | Date Filed: February 10, 2011 |
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![(TERREMARK WORLDWIDE, INC LOGO)](https://capedge.com/proxy/PREM14A/0000950123-11-015859/g26094pg2609401.jpg)
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Chairman of the Board & Chief Executive Officer
MAILED TO STOCKHOLDERS ON OR ABOUT MARCH [ • ], 2011.
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One Biscayne Tower
2 South Biscayne Blvd., Suite 2800
Miami, Florida 33131
To Be Held on March [ • ], 2011
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Special Meeting to be Held on March [ • ], 2011
[ • ]
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One Biscayne Tower
2 South Biscayne Blvd., Suite 2800
Miami, Florida 33131
(305) 961-3200
140 West Street
New York, New York 10007
(212) 395-1000
140 West Street
New York, New York 10007
(212) 395-1000
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• | delivering written notice to our Corporate Secretary at Terremark Worldwide, Inc., One Biscayne Tower, 2 South Biscayne Boulevard, Suite 2800, Miami, Florida 33131; |
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• | executing and delivering to our Corporate Secretary at the address above a proxy bearing a later date; | |
• | attending the special meeting in person, at which time the powers of the proxy holders will be suspended if you so request; or | |
• | submitting a vote by telephone or via the Internet with a later date. |
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• | accelerated vesting of all Options held by our employees, including our Named Executive Officers, at the Effective Time, and the conversion of such Options into the right to receive cash; | |
• | accelerated vesting of all Restricted Stock held by our employees, including our Named Executive Officers, at the Effective Time, and the conversion of such Restricted Stock into the right to receive the Merger Consideration of $19.00 in cash, less any required withholding taxes; |
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• | payment of annual bonuses for the fiscal year ending March 31, 2011 that have been accrued and unpaid prior to the Effective Time for all bonus-eligible employees, including our Name Executive Officers; and | |
• | each of our Named Executive Officers will receive payments and benefits under their employment agreements upon certain types of termination of employment following the Effective Time. |
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• | Common Stock. Each Share issued and outstanding immediately prior to the Effective Time (other than Appraisal Shares and Shares owned by us as treasury stock or owned by Parent or Merger Sub immediately prior to the Effective Time, which will be automatically cancelled in accordance with the terms of the Merger Agreement) automatically will be converted into the right to receive the Merger Consideration of $19.00 in cash, without interest thereon and less any required withholding taxes. | |
• | Options. Immediately prior to the Effective Time, (i) each Option with an exercise price per Share that is greater than or equal to the Offer Price, without regard to the identity of the holder, will be cancelled and terminated, and (iii) each Option with an exercise price per Share that is less than the Offer Price, without regard to the identity of the holder, will be deemed exercised and, at the Effective Time, will be terminated and converted into the right to receive an amount (subject to any applicable withholding or other taxes required by applicable law), without interest thereon, equal to the product of (A) the total number of Shares deemed to be issued upon the deemed exercise of such Option and (B) the excess of the Merger Consideration over the exercise price per Share previously subject to such Option. | |
• | Restricted Stock. Immediately prior to the Effective Time, the vesting of all Restricted Shares that are then unvested and unawarded under the Stock Plans (as defined below under the heading “The Merger Agreement — Terms of the Merger Agreement — Options”) will be fully accelerated, and at the Effective Time each then outstanding Restricted Share automatically will be converted into the right to receive the Merger Consideration, without interest thereon and less any applicable withholding taxes. | |
• | Warrants. At the Effective Time, each warrant to purchase Shares that is issued, unexpired and unexercised immediately prior to the Effective Time and not terminated pursuant to its terms in connection with the Merger will entitle the holder to receive upon the exercise of such warrant a payment in cash (without interest thereon and less any applicable withholding taxes) of an amount equal to the product of the total number of Shares previously subject to such warrant and the excess, if any, of the Merger Consideration over the exercise price per Share previously subject to such warrant. |
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• | if (i) the Merger Agreement is terminated by Parent pursuant to paragraph (j) under “Termination” above or (ii)(A) a Takeover Proposal will have been made known to us and publicly disclosed or will have been made directly to our stockholders and not withdrawn or any person will have publicly announced an intention to make a Takeover Proposal and thereafter (B) the Merger Agreement is terminated by us or Parent pursuant to paragraphs (c), (d) or (e) under “Termination” above, then we will reimburse Parent for all documented expenses not later than two business days after delivery to us of an itemization setting forth in reasonable detail all expenses of Parent and Merger Sub; | |
• | if (i) a Takeover Proposal will have been made known to us and publicly disclosed or will have been made directly to our stockholders and not withdrawn or any person will have publicly announced an intention to make a Takeover Proposal and thereafter, (ii) the Merger Agreement is terminated by us or Parent pursuant to paragraphs (c), (d), (e) or by Parent pursuant to paragraph (j) under “Termination” above and (iii) we enter into an acquisition agreement or consummate any Takeover Proposal within 12 months after the date that the Merger Agreement is terminated, then we will pay to Parent $52,500,000 (the “Termination Fee”) promptly following the consummation of any transaction contemplated by a Takeover Proposal (and in any event not later than two business days after delivery to us of notice of demand for payment); |
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• | if the Merger Agreement is terminated by Parent pursuant to paragraph (i) under “Termination” above, then we will pay to Parent the Termination Fee promptly following such termination (and in any event not later than two business days after delivery to us of notice of demand for payment); and | |
• | if the Merger Agreement is terminated by us pursuant to paragraph (g) under “Termination” above, then we will pay to Parent the Termination Fee simultaneously with (and as a condition of the effectiveness of) such termination; provided, however, that if the definitive Acquisition Agreement providing for a Superior Proposal is entered into and publicly announced, all of which occurs on or prior to February 26, 2011, then the Termination Fee due and payable to Parent pursuant to this paragraph will be $37,500,000. |
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Q. | What is the proposed transaction and what effects will it have on the Company? | |
A. | The proposed transaction is the acquisition of all of the outstanding Common Stock of the Company by Parent pursuant to the Merger Agreement. If the proposal to adopt the Merger Agreement is approved by our stockholders and the other closing conditions under the Merger Agreement have been satisfied or, to the extent permitted by the Merger Agreement and applicable law, waived, Merger Sub will merge with and into the Company. Upon completion of the Merger, the Company will be the surviving corporation in the Merger and will continue to exist and conduct business following the Merger. As a result of the Merger, we will become a wholly-owned subsidiary of Parent and will no longer be a publicly-held corporation, and you will no longer have any interest in our future earnings or growth. In addition, our Common Stock will be delisted from the Nasdaq Global Market and deregistered under the Exchange Act, and we will no longer file periodic reports with the SEC on account of our Common Stock. | |
Q. | Did Merger Sub commence a tender offer for Shares? | |
A. | Yes. On February 10, 2011, Merger Sub commenced the Offer for all of the outstanding Shares at a price of $19.00 per share net to the seller in cash, without interest thereon and less any required withholding taxes. The Offer was commenced in accordance with the terms and subject to the conditions of the Merger Agreement. | |
Under the terms of the Merger Agreement, if the Offer is not completed, the parties agreed that the Merger could only be completed after the receipt of Stockholder Approval of the adoption of the Merger Agreement that will be considered at the special meeting. | ||
We are soliciting proxies for the special meeting to obtain Stockholder Approval of the adoption of the Merger Agreement to be able to consummate the Merger to the extent that, following completion of the Offer, consummation of any “subsequent offering period” (if conducted by Merger Sub), and any exercise by Merger Sub of theTop-Up Option, Parent, Merger Sub and any of their respective affiliates do not then own more than 90% of our outstanding Shares, in which case the Merger cannot be completed without a meeting of our stockholders because a short-form merger is not possible. Because we have a limited number of Shares available for issuance under our Charter, it is estimated that Merger Sub would need to acquire in the Offer approximately 88% of the outstanding Shares in order to exercise theTop-Up Option.Regardless of whether you tendered your Shares in the Offer, you may nevertheless vote your Shares at the special meeting so long as you were a stockholder as of the Record Date of the special meeting. | ||
Q. | What will I receive if the Merger is completed? | |
A. | Upon completion of the Merger, you will be entitled to receive the Merger Consideration of $19.00 in cash, without interest thereon and less any required withholding taxes, for each share of our Common Stock that you own, unless you have properly exercised and not withdrawn your appraisal rights under the DGCL with respect to such Shares. For example, if you own 100 Shares, you will receive $1,900 in cash in exchange for your Shares, less any required withholding taxes. You will not own any shares of the capital stock in the surviving corporation. |
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Q. | When do you expect the Merger to be completed? | |
A. | We are working towards completing the Merger as soon as possible. If the Merger is approved at the special meeting then, assuming timely satisfaction or, to the extent permitted by the Merger Agreement and applicable law, waiver of the other necessary closing conditions, we anticipate that the Merger will be completed promptly thereafter. | |
Q. | What happens if the Merger is not completed? | |
A. | If the Merger Agreement is not adopted by our stockholders or if the Merger is not completed for any other reason, you will not receive any payment for your Shares. Instead, we will remain an independent public company, and our Common Stock will continue to be listed and traded on the Nasdaq Global Market. Under specified circumstances, we may be required to pay to Parent a fee with respect to the termination of the Merger Agreement and reimburse certain of Parent’s and Merger Sub’sout-of-pocket expenses, as described under “The Merger Agreement — Terms of the Merger Agreement — Termination Fees” beginning on page 82. | |
Q. | Is the Merger expected to be taxable to me? | |
A. | Yes. The exchange of Shares for cash in the Merger will be a taxable transaction to U.S. Holders for U.S. federal income tax purposes. In general, a U.S. Holder whose Shares are converted into the right to receive cash in the Merger will recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference, if any, between the amount of cash received with respect to such Shares (determined before the deduction of any required withholding taxes) and its adjusted tax basis in such Shares. Backup withholding may also apply to the cash payments made pursuant to the Merger unless the U.S. Holder or other payee provides a taxpayer identification number, certifies that such number is correct and otherwise complies with the backup withholding rules. | |
Payments made to aNon-U.S. Holder with respect to Shares exchanged for cash pursuant to the Merger will generally be exempt from U.S. federal income tax. ANon-U.S. Holder may, however, be subject to backup withholding with respect to the cash payments made pursuant to the Merger, unless the holder certifies that it is not a U.S. person or otherwise establishes a valid exemption from backup withholding tax. | ||
You should read “The Merger — Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 60 for definitions of “U.S. Holder” and“Non-U.S. Holder,” and for a more detailed discussion of the U.S. federal income tax consequences of the Merger. | ||
You should consult your own tax advisor regarding the particular tax consequences (including the state, local ornon-U.S. tax consequences) of the Merger to you in light of your own particular circumstances. | ||
Q. | Do any of our directors or officers have interests in the Merger that may differ from or be in addition to my interests as a stockholder? | |
A. | Yes. In considering the recommendation of the Board of Directors that you vote to approve the proposal to adopt the Merger Agreement, you should be aware that certain of our directors and Named Executive Officers have certain interests in the Merger that may be different from, or in addition to, your interests as a stockholder generally. The Board was aware of these interests, considered them and took them into account, together with other factors, in determining whether to approve the Merger Agreement and recommending that our stockholders vote for adoption of the Merger Agreement. See “The Merger — Interests of Certain Persons in the Merger” beginning on page 52. | |
Q. | Why am I receiving this proxy statement and proxy card or voting instruction form? | |
A. | You are receiving this proxy statement and proxy card or voting instruction form because you own Shares. This proxy statement describes matters on which we urge you to vote and is intended to assist you in deciding how to vote your Shares with respect to such matters. |
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Q. | When and where is the special meeting? | |
A. | The special meeting will be held on [ • ], March [ • ], 2011, starting at 10:00 a.m., local time, at the NAP of the Americas, located at 50 Northeast 9th Street, Miami, Florida 33132. This proxy statement for the special meeting will be mailed to stockholders on or about March [ • ], 2011. | |
Q. | Who may attend the special meeting? | |
A. | All stockholders of record at the close of business on March [ • ], 2011 (the Record Date), or their duly appointed proxies, and our invited guests may attend the special meeting. Seating is limited and is on a first-come, first-served basis. Please note that you will be asked to present evidence that you are a stockholder of the Company as well as valid picture identification, such as a current driver’s license or passport, in order to attend the special meeting. | |
If you hold Shares in “street name” (that is, in a brokerage account or through a bank or other nominee) and you plan to vote in person at the special meeting, you will need to bring a valid picture identification and evidence of your stock ownership, such as your most recent brokerage statement reflecting your stock ownership as of the Record Date, or a legal proxy from your broker or nominee. | ||
Stockholders of record will be verified against an official list available in the registration area at the meeting. We reserve the right to deny admittance to anyone who cannot adequately show proof of share ownership as of the Record Date. | ||
Q. | When will the stockholders’ list be available for examination? | |
A. | A complete list of the stockholders entitled to vote at the special meeting will be available for examination by any stockholder of record, during ordinary business hours, at our offices for a period of 10 days immediately prior to the special meeting and at the special meeting itself. | |
Q. | Who may vote at the special meeting? | |
A. | You may vote if you were a record holder of our Common Stock at the close of business on the Record Date. As of the Record Date, there were [ • ] Shares issued and outstanding, and entitled to vote at the special meeting. | |
Q. | How many votes do I have? | |
A. | You will have one vote for each Share that you owned on the Record Date. | |
Q. | What will I be voting on? | |
A. | You will be voting on the following: | |
• The adoption of the Merger Agreement, which provides for Parent’s acquisition of all of the outstanding Common Stock of the Company not currently owned by us as treasury stock or owned by Parent or Merger Sub; and | ||
• The approval to adjourn the special meeting, if necessary or appropriate, for, among other reasons, the solicitation of additional proxies in the event that there are insufficient votes at the time of the special meeting to approve the proposal to adopt the Merger Agreement. | ||
Q. | What are the voting recommendations of the Board of Directors? | |
A. | The Board of Directors has unanimously approved the Merger Agreement and the Merger and determined that the Merger Agreement and the Merger are advisable and fair to, and in the best interests of, the Company and its stockholders.The Board of Directors unanimously recommends that you vote your Shares |
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“FOR” the proposal to adopt the Merger Agreement and “FOR” the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies. | ||
Q. | How do I vote? | |
A. | If you are a stockholder of record (that is, if your Shares are registered in your name with American Stock Transfer & Trust Company, our transfer agent), there are four ways to vote: | |
Telephone Voting: You may vote by calling the toll-free telephone number indicated on your proxy card. Please follow the voice prompts that allow you to vote your Shares and confirm that your instructions have been properly recorded. | ||
Internet Voting: You may vote by logging on to the website indicated on your proxy card. Please follow the website prompts that allow you to vote your Shares and confirm that your instructions have been properly recorded. | ||
Return Your Proxy Card by Mail: You may vote by completing, signing and returning the proxy card in the postage-paid envelope provided with this proxy statement. The proxy holders will vote your Shares according to your directions. If you sign and return your proxy card without specifying choices, your Shares will be voted by the persons named in the proxy in accordance with the recommendations of the Board of Directors as set forth in this proxy statement. | ||
Vote at the Meeting: You may cast your vote in person at the special meeting. Written ballots will be passed out to stockholders or legal proxies who want to vote in person at the meeting. | ||
Telephone and Internet voting for stockholders of record will be available 24 hours a day and will close at 11:59 p.m. Eastern Time on [ • ], 2011. Telephone and Internet voting is convenient, provides postage and mailing cost savings and is recorded immediately, minimizing the risk that postal delays may cause votes to arrive late and therefore not be counted. | ||
Even if you plan to attend the special meeting, you are encouraged to vote your Shares by proxy. You may still vote your Shares in person at the meeting even if you have previously voted by proxy. If you are present at the meeting and desire to vote in person, your previous vote by proxy will not be counted. | ||
Q. | What if I hold my Shares in “street name”? | |
A. | You should follow the voting directions provided by your bank, brokerage firm or other nominee. You may complete and mail a voting instruction card to your bank, brokerage firm or other nominee or, in most cases, submit voting instructions by telephone or the Internet to your bank, brokerage firm or other nominee. If you provide specific voting instructions by mail, telephone or the Internet, your bank, brokerage firm or other nominee will vote your Shares as you have directed. Please note that if you wish to vote in person at the special meeting, you must provide a legal proxy from your bank, brokerage firm or other nominee at the special meeting. | |
If you do not instruct your bank, brokerage firm or other nominee to vote your Shares, your Shares will not be voted and the effect will be the same as a vote“AGAINST”the proposal to adopt the Merger Agreement, and your Shares will not have an effect on the proposal to adjourn the special meeting. | ||
Q. | Can I change my mind after I vote? | |
A. | Yes. If you are a stockholder of record, you may change your vote or revoke your proxy at any time before it is voted at the special meeting by: | |
• delivering written notice to our Corporate Secretary at Terremark Worldwide, Inc., One Biscayne Tower, 2 South Biscayne Boulevard, Suite 2800, Miami, Florida 33131; | ||
• executing and delivering to our Corporate Secretary at the address above a proxy bearing a later date; |
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• attending the special meeting in person, at which time the powers of the proxy holders will be suspended if you so request; or | ||
• submitting a vote by telephone or via the Internet with a later date. | ||
Your attendance at the special meeting will not by itself revoke a previously granted proxy. | ||
If you hold your Shares in street name, you may submit new voting instructions by contacting your bank, brokerage firm or other nominee. You may also vote in person at the special meeting if you obtain a legal proxy from your bank, brokerage firm or other nominee. | ||
Q. | Who will count the votes? | |
A. | A representative of [ • ] will count the votes and will serve as the independent inspector of elections. | |
Q. | What does it mean if I receive more than one proxy card? | |
A. | It means that you have multiple accounts with brokers or our transfer agent. Please vote all of these Shares. We encourage you to register all of your Shares in the same name and address. You may do this by contacting your broker or our transfer agent. Our transfer agent may be reached at1-800-937-5449 or at the following address: | |
American Stock Transfer & Trust Company 59 Maiden Lane New York, NY 10038 | ||
Q. | Will my Shares be voted if I do not provide my proxy? | |
A. | If you are the stockholder of record and you do not vote or provide a proxy, your Shares will not be voted. | |
If your Shares are held in street name, they may not be voted if you do not provide the bank, brokerage firm or other nominee with voting instructions. Currently, banks, brokerage firms or other nominees have the authority under the Nasdaq Global Market rules to vote Shares for which their customers do not provide voting instructions on certain “routine” matters. | ||
However, banks, brokerage firms or other nominees are precluded from exercising their voting discretion with respect to approving non-routine matters, such as the proposal to adopt the Merger Agreement and the proposal to approve the adjournment of the special meeting, if necessary or appropriate, and, as a result, absent specific instructions from the beneficial owner of such Shares, banks, brokerage firms or other nominees are not empowered to vote those Shares on non-routine matters, which we refer to generally as broker non-votes. | ||
Q. | How is the meeting conducted? | |
A. | The Chairman has broad authority to conduct the special meeting in an orderly and timely manner. This authority includes establishing rules for stockholders who wish to address the special meeting. The Chairman may also exercise broad discretion in recognizing stockholders who wish to speak and in determining the extent of discussion on each item of business. The Chairman may also rely on applicable law regarding disruptions or disorderly conduct to ensure that the special meeting is conducted in a manner that is fair to all stockholders. Stockholders making comments following the special meeting must do so in English so that the majority of stockholders present can understand what is being said. | |
The use of cameras, recording devices and other electronic devices will be prohibited at the special meeting. | ||
Q. | May stockholders ask questions? | |
A. | Yes. Our representatives will answer stockholders’ questions of general interest following the special meeting consistent with the rules distributed at the special meeting. |
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Q. | How many votes must be present to hold the meeting? | |
A. | A majority of the outstanding Shares entitled to vote at the special meeting, represented in person or by proxy, will constitute a quorum. On the Record Date, there were [ • ] Shares outstanding and entitled to vote. Shares of our Common Stock represented in person or by proxy, including abstentions and broker non-votes, will be counted for purposes of determining whether a quorum is present. | |
Q. | What vote is required to approve each proposal? | |
A. | The adoption of the Merger Agreement requires the affirmative vote of holders (in person or by proxy) of a majority of the outstanding Shares entitled to vote thereon at the special meeting. Because the affirmative vote required to approve the proposal to adopt the Merger Agreement is based upon the total number of outstanding Shares, if you fail to submit a proxy or vote in person at the special meeting, or abstain, or you do not provide your bank, brokerage firm or other nominee with voting instructions, as applicable, this will have the same effect as a vote“AGAINST”the proposal to adopt the Merger Agreement. | |
Approval of the proposal to adjourn the special meeting, if necessary or appropriate, for the purpose of soliciting additional proxies requires the affirmative vote of the holders of a majority of the Shares present in person or represented by proxy and entitled to vote on the matter at the special meeting. Abstaining will have the same effect as a vote“AGAINST”the proposal to adjourn the special meeting, if necessary or appropriate. If you fail to submit a proxy or to vote in person at the special meeting or if your Shares are held through a bank, brokerage firm or other nominee and you do not instruct your bank, brokerage firm or other nominee on how to vote your Shares, your Shares will not be voted, but this will not have an effect on the proposal to adjourn the special meeting. | ||
Q. | How are votes counted? | |
A. | For the proposal to adopt the Merger Agreement, you may vote“FOR,” “AGAINST”or“ABSTAIN.” Abstentions and broker non-votes will have the same effect as votes “AGAINST” the proposal to adopt the Merger Agreement. | |
For the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies, you may vote“FOR,” “AGAINST”or“ABSTAIN.”Abstentions will have the same effect as if you voted “AGAINST” the proposal, but broker non-votes will not have an effect on the proposal. | ||
Q. | Have any stockholders already agreed to vote “FOR” approval of the proposal to adopt the Merger Agreement? | |
A. | Yes. Concurrently with the execution of the Merger Agreement, the Tendering Stockholders entered into Tender and Support Agreements pursuant to which such stockholders have agreed to, among other things, vote their Shares in favor of the adoption of the Merger Agreement to approve the Merger (if necessary) to the extent they have not previously tendered their Shares in the Offer. The Shares subject to the Tender and Support Agreements comprise approximately 27.6% of the outstanding Shares. The Tender and Support Agreements will terminate upon certain circumstances, including upon termination of the Merger Agreement. | |
All of our Named Executive Officers and directors who own Shares have notified us, strictly in their capacity as stockholders, that to the extent they have not previously tendered their Shares in the Offer, they intend to vote their respective Shares (other than Shares as to which such holder does not have discretionary authority)“FOR”the proposal to adopt the Merger Agreement; however, they are under no contractual or other legal obligation to do so. As of March [ • ], 2011, the Record Date, our directors and Named Executive Officers together owned [ • ] Shares, or approximately [ • ]% of the issued and outstanding Shares as of such date (excluding Shares issuable upon exercise of Options). | ||
Q. | Who will pay for this proxy solicitation? | |
A. | We will pay the cost of preparing, assembling and mailing this proxy statement, the notice of meeting and the enclosed proxy card. Our directors, officers and employees may solicit proxies in person or by telephone, mail,e-mail or facsimile. These persons will not be paid additional remuneration for their efforts. |
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We may request banks, brokers and other custodians, nominees and fiduciaries to forward copies of the proxy materials to the beneficial owners of our Common Stock and to request authority for the execution of proxies, and we may reimburse such persons for their expenses incurred in connection with these activities. | ||
In addition, we have retained [ • ] to assist in the solicitation. We will pay [ • ] approximately $[ • ], plusout-of-pocket expenses for their assistance. We will indemnify [ • ] against any losses arising out of its proxy soliciting services on our behalf. | ||
Q. | Will any other matters be voted on at the special meeting? | |
A. | As of the date of this proxy statement, our management knows of no other matter that will be presented for consideration at the special meeting other than those matters discussed in this proxy statement. | |
Q. | What is the Company’s website address? | |
A. | Our website address is www.terremark.com. We make this proxy statement, our annual reports onForm 10-K, quarterly reports onForm 10-Q, current reports onForm 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act available on our website in the Investor Relations-SEC Filings section, as soon as reasonably practicable after electronically filing such material with the SEC. | |
This information is also available free of charge at www.sec.gov, an Internet site maintained by the SEC that contains reports, proxy and information statements, and other information regarding issuers that is filed electronically with the SEC. Stockholders may also read and copy any reports, statements and other information filed by us with the SEC at the SEC public reference room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at1-800-SEC-0330 or visit the SEC’s website for further information on its public reference room. In addition, stockholders may obtain free copies of the documents filed with the SEC by contacting our Investor Relations department at(305) 961-3200 or by sending a written request to our Vice President of Investor Relations at Terremark Worldwide, Inc., One Biscayne Tower, 2 South Biscayne Boulevard, Suite 2800, Miami, Florida 33131. | ||
The references to our website address and the SEC’s website address do not constitute incorporation by reference of the information contained in these websites and should not be considered part of this document. | ||
Our SEC filings are available in print to any stockholder who requests a copy at the phone number or address listed above. | ||
Q. | What happens if I sell my Shares before the special meeting? | |
A. | The Record Date for stockholders entitled to vote at the special meeting is earlier than both the date of the special meeting and the consummation of the Merger. If you transfer your Shares after the Record Date but before the special meeting, unless special arrangements (such as provision of a proxy) are made between you and the person to whom you transfer your Shares and each of you notifies us in writing of such special arrangements, you will retain your right to vote such Shares at the special meeting but will transfer the right to receive the Merger Consideration to the person to whom you transfer your Shares. | |
Q. | What will happen to my employee stock options in the Merger? | |
A. | The Merger Agreement provides that, immediately prior to the Effective Time, (i) the vesting and exercisability of each then outstanding Option granted under any stock option plan of the Company will be fully accelerated, (ii) each Option with an exercise price per Share that is greater than or equal to the Merger Consideration, without regard to the identity of the holder, will be cancelled and terminated with no payment made thereon, and (iii) each Option with an exercise price per Share that is less than the Merger Consideration, without regard to the identity of the holder, will be deemed exercised and, at the Effective Time, will be terminated and converted into the right to receive an amount (subject to any required withholding or other taxes required by applicable law), without interest thereon, equal to the product of (A) the total number of Shares deemed to be issued upon the deemed exercise of such Option and (B) the excess |
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of the Merger Consideration over the exercise price per Share previously subject to such Option (such amounts payable, the “Option Consideration”). | ||
Q. | What will happen to my restricted stock in the Merger? | |
A. | All issued and outstanding shares of Restricted Stock will vest immediately prior to the Effective Time, and each such share of Restricted Stock will be converted into the right to receive cash in an amount equal to the Merger Consideration, without interest thereon and less any required withholding taxes. | |
Q. | What will happen to my warrants in the Merger? | |
A. | The Merger Agreement provides that each warrant to purchase Shares that is issued, unexpired and unexercised immediately prior to the Effective Time and not terminated pursuant to its terms in connection with the Merger will entitle the holder to receive upon the exercise of such warrant a payment in cash (without interest thereon and less any required withholding taxes), of an amount equal to the product of the total number of Shares previously subject to such warrant and the excess, if any, of the Merger Consideration over the exercise price per Share previously subject to such warrant. | |
Q. | What do I need to do now? | |
A. | Even if you plan to attend the special meeting, after carefully reading and considering the information contained in this proxy statement, please vote promptly to ensure that your Shares are represented at the special meeting. If you hold your Shares in your own name as the stockholder of record, please vote your Shares by (i) completing, signing, dating and returning the enclosed proxy card in the accompanying prepaid reply envelope, (ii) using the telephone number printed on your proxy card or (iii) using the Internet voting instructions printed on your proxy card. If you decide to attend the special meeting and vote in person, your vote by ballot will revoke any proxy previously submitted. If you are a beneficial owner, please refer to the instructions provided by your bank, brokerage firm or other nominee to see which of the above choices are available to you. | |
Q. | Should I send in my stock certificates now? | |
A. | No. You will be sent a letter of transmittal promptly after the completion of the Merger, describing how you may exchange your Shares for the Merger Consideration. If your Shares are held in “street name” by your bank, brokerage firm or other nominee, you will receive instructions from your bank, brokerage firm or other nominee as to how to effect the surrender of your “street name” Shares in exchange for the Merger Consideration. Please do NOT return your stock certificate(s) with your proxy. | |
Q. | Am I entitled to exercise appraisal rights under the DGCL instead of receiving the Merger Consideration for my Shares? | |
A. | Yes. As a holder of our Common Stock, you are entitled to exercise appraisal rights under the DGCL in connection with the Merger if you take certain actions and meet certain conditions. See “Appraisal Rights” beginning on page 87. | |
Q. | Who can help answer my other questions? | |
A. | If you have additional questions about the Merger, need assistance in submitting your proxy or voting your Shares, or need additional copies of the proxy statement or the enclosed proxy card, please call [ • ]toll-free at [ • ]. |
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• | the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement, including a termination under circumstances that could require us to pay a termination fee; | |
• | the inability to complete the Merger due to the failure to obtain Stockholder Approval or the failure to satisfy other conditions to completion of the Merger, including required regulatory approvals; | |
• | the failure of the Merger to close for any other reason; | |
• | risks that the proposed transaction disrupts current plans and operations and the potential difficulties in employee retention as a result of the Merger; | |
• | the outcome of any legal proceedings that have been or may be instituted against the Companyand/or others relating to the Merger Agreement; | |
• | diversion of management’s attention from ongoing business concerns; | |
• | the effect of the announcement of the Merger on our business relationships, operating results and business generally; and | |
• | the amount of the costs, fees, expenses and charges related to the Merger. |
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One Biscayne Tower
2 South Biscayne Boulevard
Miami, Florida 33131
(305) 961-3200
140 West Street
New York, New York 10007
(212) 395-1000
140 West Street
New York, New York 10007
(212) 395-1000
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• | delivering written notice to our Corporate Secretary at Terremark Worldwide, Inc., One Biscayne Tower, 2 South Biscayne Boulevard, Suite 2800, Miami, Florida 33131; | |
• | executing and delivering to our Corporate Secretary at the address above a proxy bearing a later date; | |
• | attending the special meeting in person, at which time the powers of the proxy holders will be suspended if you so request; or | |
• | submitting a vote by telephone or via the Internet with a later date. |
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• | determined that (A) the Merger Agreement and the “agreement of merger” (as such term is used in Section 251 of the DGCL) contained in the Merger Agreement are advisable and (B) the Merger Agreement and the transactions contemplated thereby, including the Offer, theTop-Up Option and the Merger, taken together, are fair to and in the best interests of the Company and our stockholders; | |
• | approved the Merger Agreement and the “agreement of merger” contained therein in accordance with the DGCL; | |
• | directed that the “agreement of merger” contained in the Merger Agreement be submitted to stockholders for their consideration and adoption, unless the Merger contemplated thereby is consummated in accordance with Section 253 of the DGCL; | |
• | authorized the grant of theTop-Up Option and the issuance of theTop-Up Option Shares upon the exercise thereof to the extent contemplated by the Merger Agreement; | |
• | elected, to the extent permitted by applicable law, to make inapplicable to the execution, delivery, performance and consummation of the Merger Agreement and the transactions contemplated thereby, including the Offer, theTop-Up Option, the Merger and the transactions contemplated by the Tender and Support Agreements, the provisions of Section 203; and | |
• | recommended that stockholders accept the Offer and tender their Shares to Merger Sub pursuant to the Offer and, if required under applicable Delaware law to consummate the Merger, adopt and approve the Merger Agreement and the Merger. |
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• | Prospects as an Independent Company. Our financial outlook and prospects if we were to remain an independent company, including the risks associated with successfully executing our business plan and strategy, the impact of general economic conditions, market trends and competition on our operations and the general risks of market conditions that could reduce the trading price of the Shares, as well as the other risks and uncertainties discussed in our public filings with the SEC. | |
• | Need for External Capital. Our highly capital intensive business requires a recurring need to supplement operating cash flows with external debt and equity financing, which, depending on prevailing capital markets conditions, may not necessarily be available to us on commercially acceptable terms, and that this need has intensified given the rapid increase in demand for our products and services, particularly with respect to cloud computing. | |
• | Impact of Current Capital Structure. The terms of our existing indebtedness restricts us from incurring additional indebtedness (including indebtedness rankingpari passuwith our existing senior secured notes) and from issuing redeemable preferred stock, making certain investments, paying dividends and redeeming or repurchasing our equity securities and that, consequently, we likely would be required to seek to raise private or public equity capital, which could cause significant dilution to our stockholders. | |
• | Need to Grow Organically. The limited strategic alternatives available to us to accelerate realization of our strategic cloud computing emphasis and enhancement of stockholder value requires that we grow organically, which also increases the need for external financing to supplement operating cash flows. | |
• | Uncertainty of Achieving Projected Results. Management’s internal financial projections, including management’s discussion thereof and management’s statements regarding the reasonableness and reliability of its assumptions underlying such projections and management’s qualifications thereof and management’s statements with respect to the inherent uncertainty of, and risks in achieving, such projections and the fact that the actual financial results for us in future periods could differ materially from management’s forecasted results. | |
• | Best Available Price. Management’s belief that Offer Price is the best price that we could obtain under all prevailing and reasonably anticipated circumstances. |
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• | Relationship of Offer Price to Market Price of the Shares. The relationship of the Offer Price to the current and historical market prices of the Shares, including that the Offer Price represented a substantial premium of approximately 35% over the closing price per Share on the Nasdaq Global Market on January 27, 2011, which was the date on which we entered into the Merger Agreement. | |
• | Immediate Liquidity for Stockholders. The fact that the Offer Price would be paid in cash, thereby providing stockholders with the opportunity for immediate liquidity in addition to a substantial premium over the current and historic market prices of the Shares. | |
• | Opinion of Our Financial Advisor. The opinion of Credit Suisse, dated January 27, 2011, to the effect that, as of such date, and based upon and subject to the assumptions and qualifications set forth in the opinion, the Offer Price and the Merger Consideration to be paid to stockholders was fair, from a financial point of view, to such stockholders. (The full text of Credit Suisse’s written opinion to the Board, setting forth the assumptions made, the procedures followed, the matters considered, and the limitations on the review undertaken by Credit Suisse, is attached asAnnex B hereto and is incorporated by reference herein.Stockholders are encouraged to read the Credit Suisse opinion in its entirety.) | |
• | Identity of Parent; Certainty of Value. That Parent is a long-standing and well-known commercial partner of ours with substantial resources and the financial ability to consummate the Offer and the Merger promptly, without any financing contingency and with a high degree of closing certainty. | |
• | Negotiations with Parent. The course of arms’-length discussions and negotiations between the Company and Parent which ensued over an approximately two-month period, including multiple drafts and negotiating sessions in respect of the Merger Agreement. | |
• | Ability of Third Parties to Submit Unsolicited Acquisition Proposals and Fiduciary Provisions of the Merger Agreement. The Merger Agreement contains provisions that the Board believed provided us, in their totality, the ability to conduct a meaningful post-sign market check without jeopardizing the $19.00 per Share that Parent was willing to pay to stockholders in the Offer and the Merger, including, among other things, provisions which (i) permit us to respond to, furnish information (pursuant to a confidentiality agreement which need not contain standstill agreement) to, and enter into discussions and negotiations with, third-party suitors who submit, on an unsolicited basis, takeover proposals to acquire us which the Board, in good faith, after consultation with its legal and financial advisors, determines are reasonably likely to lead to a superior proposal; (ii) permit the Board to withdraw its recommendation of the Offer and the Merger, both in the case of a superior proposal and in circumstances not involving a superior proposal; (iii) (x) permit the Board to waive the provisions of any existing standstill agreement with third parties who seek to submit an unsolicited, consensual takeover proposal to the Board and (y) restrict Parent’s ability to purchase Shares and engage in certain other market activities prior to the Offer Closing; (iv) establish a two-tierbreak-up fee of (x) 2.75% of the fully diluted equity deal value (payable to Parent in the case of any fiduciary termination of the Merger Agreement in conjunction with our execution of a definitive acquisition agreement with a third-party suitor providing for a superior proposal occurring on or prior to the 30th day immediately following the initial public announcement of the Merger Agreement (i.e., on or prior to February 26, 2011)) and (y) 3.50% of the fully diluted equity deal value (payable to Parent in the case of any such fiduciary termination of the Merger Agreement occurring subsequent to such30-day period and prior to the earlier of the Offer Closing and the Effective Time), crediting against the amount of any suchbreak-up fee otherwise payable to Parent any reimbursement of Parent’sout-of-pocket expenses (not to exceed in any event $7,500,000) incurred by it in connection with the Offer and the Merger; (v) reasonably limit the events and circumstances under which abreak-up fee or expense reimbursement could be payable to Parent and the timing of the payment thereof; (vi) require a minimum 10-business-day delay of the commencement of the Offer (after the initial public announcement of the Merger Agreement) to afford additional time to potential third-party suitors to submit unsolicited takeover proposals to us which could lead to a superior proposal; and (vii) limit the period of time in which |
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Parent is permitted to exercise its “matching” (or “topping”) rights in respect of a superior proposal received by us on an unsolicited basis from a third-party suitor. |
• | Extension of Offer Period. If at any scheduled expiration of the Offer, any condition set forth in the Merger Agreement (each an “Offer Condition”) is not then satisfied or, to the extent permitted by the Merger Agreement and applicable law, waived, then Merger Sub must extend the Offer on one or more occasions for consecutive periods of at least five, but no more than 10, business days, each as determined by Parent (or for such longer period(s) as Parent and we may otherwise agree) to permit such Offer Conditions to be satisfied. | |
• | Top-Up Option and Subsequent Offering Period. That the Merger Agreement provides that after the Offer Closing, Parent can elect to conduct a subsequent offering period to purchase additional Shares, on a daily as-tendered basis in accordance withRule 14d-11 under the Exchange Act, and exercise (in whole but not in part) theTop-Up Option to purchase a sufficient number of outstanding Shares to be able to consummate a “short-form,” second-step merger (i.e., without the requirement to conduct a special meeting of stockholders to vote on the adoption of the Merger Agreement). | |
• | Tender and Support Agreements. That Parent required as a condition to and as an inducement for entering the Merger Agreement that the Tendering Stockholders together holding approximately 27.6% of the outstanding Shares, would be required to enter into separate Tender and Support Agreements, pursuant to which the Tendering Stockholders would agree, solely in their capacities as stockholders, to tender their respective Shares in the Offer, vote in favor of the Merger and, subject to certain exceptions, refrain from disposing of their respective Shares. | |
• | Minimum Condition. Consummation of the Offer is conditioned on a majority of the Shares on a fully-diluted basis being validly tendered in the Offer and not withdrawn, and that such condition is not waivable. | |
• | Other Conditions to the Offer and the Merger. That there are no conditions to the Offer and the Merger that make consummation of either transaction highly or unusually conditional, including that Parent and Merger Sub would be required to consummate the Offer irrespective of any pending or threatened third-party litigation (unless a court of competent jurisdiction had actually enjoined consummation of the Offer or the Merger), and that neither consummation of the Offer nor the Merger is conditioned on Parent obtaining external financing for the transaction or obtaining any non-governmental third party approvals or consents. | |
• | Promptness of Closing Post-Offer Closing. That once the Offer Closing occurs, there are few conditions to the consummation of the Merger and that the Independent Directors (as defined below under the heading “The Merger Agreement — Terms of the Merger Agreement — Directors and Officers”) will administer the Merger Agreement on behalf of the non-affiliate stockholders. | |
• | Timing of Completion. That the anticipated timing of the consummation of the transactions contemplated by the Merger Agreement, and the structure of the transaction as a two-step acquisition (consisting of an all-cash tender offer for all outstanding Shares followed by a second-step long or short-form merger), would allow stockholders to receive the Offer Price in a relatively short time frame, followed by the Merger in which stockholders (other than the Company, Parent and Merger Sub) who do not validly exercise appraisal rights, would receive the same consideration as received by those stockholders whose Shares are purchased in the Offer. | |
• | Terms of the Merger Agreement. That the individual and collective provisions of the Merger Agreement, including the respective representations, warranties, covenants and termination rights of the parties, and the deal protections, fiduciary provisions, remedial provisions and the conditions to the Offer and the Merger as described above and elsewhere in this proxy statement, were negotiated at |
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arms-length through multiple drafts and negotiating sessions and that we sought to obtain the best overall deal terms and conditions reasonably attainable under the circumstances. |
• | Availability of Appraisal Rights. That stockholders who do not tender their Shares in the Offer, who do not vote for the adoption of the Merger Agreement and otherwise comply with all the required procedures under Section 262 will be entitled to demand statutory appraisal of the fair value of their Shares as determined by the Delaware Court of Chancery. |
• | Impact on Stockholders. That, subsequent to the completion of the Merger, we would no longer exist as an independent public company and that the all-cash nature of the transaction would permanently foreclose stockholders from participating in any future earnings or growth of the Company and from benefiting from any appreciation in value of the combined company following the Effective Time. | |
• | Effect of Public Announcement. The effect of a public announcement of the Merger Agreement on our operations, stock price, customers and employees, and on our ability to attract and retain key management, research and sales personnel. | |
• | Operating Covenants. The potential limitations on our pursuit of business opportunities due to pre-closing covenants in the Merger Agreement whereby we agreed to conduct our business in the ordinary course, consistent with past practice, and not to take various actions without the prior written consent of Parent. | |
• | Effect of Disruption or Failure to Complete Transaction. The amount of time it could take to complete the Offer and the Merger, including the risk that a third-party suitor could seek to disrupt the transaction without a bona fide intention of proposing a superior transaction or that a dispute might arise regarding the terms of the Merger Agreement, and the possibility that the transactions contemplated by the Merger Agreement, including the Offer and Merger, might not be consummated, and that if the Offer and Merger are not consummated, our directors, senior management and other employees will have expended extensive time and effort and will have experienced significant distraction from their work during the pendency of the transactions, we will have incurred significant transaction costs that cannot be amortized or capitalized and that we will have disclosed confidential and proprietary information to a potential competitor, and that the negative perception of a failed transaction could have an adverse effect on our continuing business and could potentially result in a loss of business partners and employees and a reduced market price for the Shares. | |
• | Change in Prospects Pending Closing. The risk that our prospects could change materially and in a manner unforeseen at the time the Merger Agreement was entered into, including in ways beneficial to us, and that the Offer Price and the Merger Consideration are fixed at $19.00 per Share, regardless of such changes, and the Merger Agreement does not permit us to terminate the Merger Agreement by reason of circumstances not involving a superior proposal, although, subject to the exercise of its fiduciary duties, the Board may effect a change in recommendation in such circumstances. | |
• | Taxation. That, because the consideration payable to stockholders in the Offer and the Merger is all cash, any gain from the sale of Shares in either the Offer or the Merger would be taxable to U.S. stockholders for U.S. federal income tax purposes. | |
• | Potential Conflicts of Interest. The potential conflicts of interest between us, on the one hand, and certain of our executive officers and directors, on the other hand, as a result of the transactions contemplated by the Offer and Merger, as described in the section entitled “The Merger — Interests of Certain Persons in the Merger” beginning on page 52. |
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• | reviewed the Merger Agreement, certain related agreements, as well as certain publicly-available business and financial information relating to the Company; | |
• | reviewed certain other information relating to the Company, including certain financial forecasts that were provided to or discussed with Credit Suisse by the Company; |
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• | met with the Company’s management to discuss the business and prospects of the Company; | |
• | considered certain financial and stock market data of the Company, and compared that data with similar data for other publicly-held companies in businesses Credit Suisse deemed similar to that of the Company; | |
• | considered, to the extent publicly available, the financial terms of certain other business combinations which have recently been effected or announced; and | |
• | considered such other information, financial studies, analyses and investigations and financial, economic and market criteria, which Credit Suisse deemed relevant. |
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• | Equinix Inc. | |
• | Internap Network Services | |
• | Rackspace Hosting Inc. | |
• | SAVVIS Inc. | |
• | Telecity Group PLC |
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Enterprise Value/ | Enterprise Value/ | |||||||||||||||||||||||
Stock Price | Enterprise Value | Adjusted EBITDA | Growth Adjusted EBITDA | |||||||||||||||||||||
Company | (1/25/11) | ($ and £ in millions) | CY 2011E | CY 2012E | CY 2010 | CY 2011E | ||||||||||||||||||
Equinix Inc. | $ | 87.94 | $ | 5,758 | 8.5 | x | 7.4 | x | 0.53 | x | 0.80 | x | ||||||||||||
Internap Network Services | $ | 6.69 | $ | 325 | 7.3 | x | 7.2 | x | 1.04 | x | 2.37 | x | ||||||||||||
Rackspace | $ | 30.94 | $ | 4,377 | 13.4 | x | 10.8 | x | 0.68 | x | 0.61 | x | ||||||||||||
Hosting Inc. | ||||||||||||||||||||||||
SAVVIS Inc. | $ | 26.43 | $ | 2,271 | 8.1 | x | 7.0 | x | 0.54 | x | 0.55 | x | ||||||||||||
Telecity Group PLC | £4.54 | £955 | 9.5 | x | 8.2 | x | 0.60 | x | 0.78 | x |
Implied per Share Equity | ||
Reference Range for the Company | Per Share Consideration | |
$11.00 — $16.35 | $19.00 |
Announcement | Aggregate | Enterprise Value/EBITDA | ||||||||||||||
Date | Target | Acquiror | Value | LTM | NTM | |||||||||||
($ in millions) | ||||||||||||||||
November 2010 | Hosted Solutions Acquisition, LLC | Windstream Corp | $ | 310 | 10.0 | x | N/A | |||||||||
September 2010 | Peak 10 Inc. | Welsh, Carson, Anderson & Stowe | $ | 400 | N/A | 11.6 | x | |||||||||
June 2010 | Fusepoint Inc. | SAVVIS Inc. | $ | 125 | 10.4 | x | N/A | |||||||||
May 2010 | CyrusOne | Cincinnati Bell Inc. | $ | 525 | 12.5 | x | 11.8 | x | ||||||||
October 2009 | Switch & Data Facilities Company, Inc. | Equinix, Inc. | $ | 869 | 11.4 | x | 9.4 | x | ||||||||
August 2008 | Q9 Networks Inc. | ABRY Partners | C$ | 330 | 18.8 | x | 14.4 | x | ||||||||
April 2008 | Hosted Solutions | ABRY Partners | $ | 140 | N/A | N/A | ||||||||||
June 2007 | IXEurope PLC | Equinix, Inc. | $ | 518 | 30.6 | x | 15.0 | x | ||||||||
May 2007 | Data Return LLC | Terremark Worldwide Inc. | $ | 85 | 19.3 | x | 11.3x |
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Implied per Share Equity | ||
Reference Range for the Company | Per Share Consideration | |
$12.65 — $18.00 | $19.00 |
Calendar Year Ended December 31 | Projected UFCF | |||
($ in millions) | ||||
2011E | $ | (6 | ) | |
2012E | $ | 62 | ||
2013E | $ | 67 | ||
2014E | $ | 115 | ||
2015E | $ | 125 |
Implied per Share Equity | ||
Reference Range for the Company | Per Share Consideration | |
$14.51 — $22.97 | $19.00 |
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• | Publicly-available equity research analysts’ price targets for the Company; and | |
• | The high and low trading prices of the Shares during the 52-week period ended January 25, 2011. |
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Year Ending December 31, | ||||||||||||||||||||
2011P | 2012P | 2013P | 2014P | 2015P | ||||||||||||||||
(Dollars in Millions) | ||||||||||||||||||||
Net Income (loss) | $ | (11 | ) | $ | 28 | $ | 72 | $ | 109 | $ | 141 | |||||||||
EBITDA | $ | 125 | $ | 175 | $ | 224 | $ | 266 | $ | 304 |
Year Ending December 31, | ||||||||||||||||||||
2011P | 2012P | 2013P | 2014P | 2015P | ||||||||||||||||
(Dollars in Millions) | ||||||||||||||||||||
EBITDA | $ | 125 | $ | 175 | $ | 224 | $ | 266 | $ | 304 | ||||||||||
Depreciation and Amortization | (63 | ) | (72 | ) | (78 | ) | (86 | ) | (92 | ) | ||||||||||
Net Interest Income/(Expense) | (70 | ) | (72 | ) | (71 | ) | (68 | ) | (68 | ) | ||||||||||
Taxes | (3 | ) | (3 | ) | (3 | ) | (3 | ) | (3 | ) | ||||||||||
Net Income (loss) | $ | (11 | ) | $ | 28 | $ | 72 | $ | 109 | $ | 141 | |||||||||
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• | accelerated vesting of all Options held by our employees, including our Named Executive Officers, at the Effective Time, and the conversion of such Options into the right to receive cash (as described below); | |
• | accelerated vesting of all Restricted Stock held by our employees, including our Named Executive Officers, at the Effective Time, and the conversion of such Restricted Stock into the right to receive the Merger Consideration, less any required withholding taxes; | |
• | payment of annual bonuses for the fiscal year ending March 31, 2011 that have been accrued and unpaid prior to the Effective Time for all bonus-eligible employees, including our Name Executive Officers; and | |
• | each of our Named Executive Officers will receive payments and benefits under their employment agreements upon certain types of termination of employment following the Effective Time. |
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Aggregate Offer | ||||||||||
Number of | Price Payable for | |||||||||
Name | Position | Shares | Shares | |||||||
Manuel D. Medina | Chairman of the Board, President and Chief Executive Officer | 4,010,168 | (1) | $ | 76,193,192 | |||||
Joseph R. Wright, Jr. | Vice Chairman of the Board | 310,068 | 5,891,292 | |||||||
Guillermo Amore | Director | 285,168 | 5,418,192 | |||||||
Timothy Elwes | Director | 217,000 | 4,123,000 | |||||||
Jose A. Segrera | Chief Financial Officer | 148,641 | 2,824,179 | |||||||
Nelson Fonseca | Chief Operating Officer | 58,669 | 1,114,711 | |||||||
Marvin Wheeler | Chief Strategy Officer | 134,503 | 2,555,557 | |||||||
Jaime Dos Santos | Chief Executive Officer of Terremark Federal Group, Inc. | 13,334 | 253,346 | |||||||
Antonio S. Fernandez | Director | 79,987 | 1,519,753 | |||||||
Adam T. Smith | Chief Legal Officer | 84,416 | 1,603,904 | |||||||
Arthur L. Money | Director | 32,500 | 617,500 | |||||||
Marvin S. Rosen | Director | 108,633 | 2,064,027 | |||||||
Rodolfo A. Ruiz | Director | 27,500 | 522,500 | |||||||
Frank Botman | Director | — | — | |||||||
Melissa Hathaway | Director | — | — | |||||||
Total | 5,510,587 | $ | 104,701,153 | |||||||
(1) | Includes the entirety of the 500,000 Shares held by MD Medina Investments, LLC, an entity in which Mr. Medina holds a controlling, but non-exclusive, interest. |
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Weighted | ||||||||||||||||||||||
Number | Average | Payment in | ||||||||||||||||||||
of Shares | Exercise | Payment in | Number of | Respect of | ||||||||||||||||||
Subject to | Price per | Respect of | Shares of | Restricted | ||||||||||||||||||
Options | Share | Options | Restricted | Stock | ||||||||||||||||||
Name | Position | (#) | ($) | ($) | Stock | ($) | ||||||||||||||||
Manuel D. Medina | Chairman of the Board, President and Chief Executive Officer | 213,165 | 5.69 | 2,836,998 | 375,000 | 7,125,000 | ||||||||||||||||
Joseph R. Wright, Jr. | Vice Chairman of the Board | 63,165 | 5.98 | 822,498 | — | — | ||||||||||||||||
Guillermo Amore | Director | 63,165 | 5.98 | 822,498 | — | — | ||||||||||||||||
Timothy Elwes | Director | 63,165 | 5.98 | 822,498 | — | — | ||||||||||||||||
Jose A. Segrera | Chief Financial Officer | 135,000 | 6.25 | 1,721,850 | 188,332 | 3,578,308 | ||||||||||||||||
Nelson Fonseca | Chief Operating Officer | 87,600 | 7.32 | 1,023,280 | 188,332 | 3,578,308 | ||||||||||||||||
Marvin Wheeler | Chief Strategy Officer | 140,500 | 5.75 | 1,861,450 | 133,332 | 2,533,308 | ||||||||||||||||
Jaime Dos Santos | Chief Executive Officer of Terremark Federal Group, Inc. | 102,500 | 6.81 | 1,249,850 | 36,666 | 696,654 | ||||||||||||||||
Antonio S. Fernandez | Director | 63,165 | 6.17 | 810,498 | — | — | ||||||||||||||||
Adam T. Smith | Chief Legal Officer | 58,000 | 5.82 | 764,280 | 133,332 | 2,533,308 | ||||||||||||||||
Arthur L. Money | Director | 63,165 | 5.87 | 829,498 | — | — | ||||||||||||||||
Marvin S. Rosen | Director | 63,165 | 5.98 | 822,498 | — | — | ||||||||||||||||
Rodolfo A. Ruiz | Director | 63,165 | 6.04 | 818,498 | — | — | ||||||||||||||||
Frank Botman | Director | 31,665 | 7.12 | 376,198 | — | — | ||||||||||||||||
Melissa Hathaway | Director | 31,665 | 7.74 | 356,598 | — | — | ||||||||||||||||
Total Payments For Options and Restricted Stock: | 15,938,990 | 20,044,886 | ||||||||||||||||||||
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• | cash severance pay equal to 200% of the sum of (A) such person’s annual base salary in effect immediately prior to the termination date and (B) such person’s target bonus for the bonus period in which termination occurs, except for Mr. Medina the multiple for whom equals 300% of such payments and Ms. Dos Santos who would receive 280% of her base salary; | |
• | pro-rata portion of the target bonus for the year in which termination occurs (except in the case of Ms. Dos Santos); | |
• | benefit continuation until the earlier of twelve months or the date such person becomes eligible for such coverage through another entity; | |
• | vesting of all equity awards that had not previously vested; and | |
• | in the event that any payments described above are considered “excess parachute payments” under Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), such person would be entitled to agross-up payment to make such person whole for any excise tax imposed under Section 4999 of the Code to the extent such payments exceed the parachute threshold by 10% or more. |
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• | the assignment of the Named Executive Officer to duties inconsistent in any material respect with the Named Executive Officer’s position, or, in the case of Mr. Medina, the withdrawal of any authority granted to him under his employment agreement; | |
• | any failure by us (or, following the Effective Time, the surviving corporation) to compensate the Named Executive Officer as required under the employment agreement; | |
• | any requirement that the Named Executive Officer be based at any office or location outside of Miami, Florida, except for travel reasonably required in the performance of such Named Executive Officer’s responsibilities; or | |
• | such Named Executive Officer is requested by us to engage in conduct that is reasonably likely to result in a violation of law. |
• | a conviction of such Named Executive Officer, or a plea ofnolo contendere, to a felony involving dishonesty or a breach of trust; | |
• | willful misconduct or gross negligence by such Named Executive Officer resulting, in either case, in material economic harm to us (or, following the Effective Time, the surviving corporation); | |
• | a willful continued failure by such Named Executive Officer to carry out the reasonable and lawful directions of the Board or, in the case of any Named Executive Officer other than Mr. Medina, the Chief Executive Officer of the Company (or, following the Effective Time, the surviving corporation); | |
• | fraud, embezzlement, theft or dishonesty of a material nature by such Named Executive Officer against us (or, following the Effective Time, the surviving corporation), or a willful material violation by such Named Executive Officer of a policy or procedure of the Company (or, following the Effective Time, the surviving corporation), resulting, in any case, in material economic harm to us; or | |
• | a willful material breach by such Named Executive Officer of his or her employment agreement. |
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Accelerated Vesting | ||||||||||||||||||||
of Equity Value | ||||||||||||||||||||
Benefit | Restricted | |||||||||||||||||||
Severance Pay | Continuation | Options | Stock | Total | ||||||||||||||||
Name | ($)(1)(2) | ($)(3) | ($)(4) | ($) | ($) | |||||||||||||||
Manuel D. Medina | 3,325,000 | 15,000 | 2,836,998 | 7,125,000 | 13,301,998 | |||||||||||||||
Jose A. Segrera | 1,140,000 | 22,000 | 1,721,850 | 3,578,308 | 6,462,158 | |||||||||||||||
Jaime Dos Santos | 700,000 | 12,000 | 1,249,850 | 696,654 | 2,658,504 | |||||||||||||||
Nelson Fonseca | 1,140,000 | 25,000 | 1,023,280 | 3,578,308 | 5,766,588 | |||||||||||||||
Marvin Wheeler | 880,000 | 28,000 | 1,861,450 | 2,533,308 | 5,302,758 | |||||||||||||||
Adam T. Smith | 1,045,000 | 25,000 | 764,280 | 2,533,308 | 4,367,588 |
(1) | The annual base salaries and incentive compensation used in the computation were based on the Named Executive Officers’ respective employment agreements in effect at the date of the filing. | |
(2) | In calculating the incentive compensation for the year in which the change in control occurs, we assumed that we would pay the incentive compensation for a full year. The actual incentive compensation payout amount would be a pro-rated amount through the termination date for the relevant fiscal year. | |
(3) | Benefit amounts include payments for medical, dental, vision, life and long-term disability insurance. Amounts represent the projected costs for one year based on current benefit elections. | |
(4) | The Named Executive Officers have Options with exercise prices ranging from $3.30 to $15.00. Amounts represent payment of an amount equal to the product of (A) the total number of Shares issuable upon exercise of such Options and (B) the excess of the Merger Consideration per Share over the respective exercise price per Share subject to such Options. |
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• | suchNon-U.S. Holder is an individual who was present in the United States for 183 days or more in the taxable year of the Merger and certain other conditions are satisfied; | |
• | the gain with respect to the Shares is effectively connected with suchNon-U.S. Holder’s conduct of a trade or business in the United States (and, if an income tax treaty applies and so requires, is attributable to such stockholder’s permanent establishment or fixed base in the United States); or | |
• | we are or have been a “United States real property holding corporation” (a “USRPHC”) for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of the Merger and the period that suchNon-U.S. Holder held such Shares. The determination of whether we are a USRPHC depends on the fair market value of our U.S. real property interests relative to the fair market value of our other trade or business assets and our foreign real property interests. |
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• | there will be in effect any Law, injunction, judgment or ruling enacted, promulgated, issued, entered, amended or enforced by any Governmental Authority that (i) restrains, enjoins, prevents, prohibits or makes illegal the acceptance for payment, payment for or purchase of some or all of the Shares by Merger Sub or Parent pursuant to the Offer, or the consummation of the Transactions, (ii) imposes limitations on the ability of Merger Sub, Parent or any of their Affiliates effectively to exercise full rights of ownership of the Shares, including the right to vote the Shares purchased by them on all matters properly presented to our stockholders on an equal basis with all other stockholders (including the adoption of the Merger Agreement), (iii) restrains, enjoins, prevents, prohibits or makes illegal, or imposes material limitations on, Parent’s, Merger Sub’s or any of their Affiliates’ ownership or operation of all or any material portion of the businesses and assets of the Company and our |
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Subsidiaries, taken as a whole, or, as a result of consummating the Offer or the Merger, of Parent and its Affiliates, taken as a whole, (iv) compels Parent, Merger Sub or any of their Affiliates to dispose of any Shares or, as a result of the Transactions, compels Parent, Merger Sub or any of their Affiliates to dispose of or hold separate any material portion of the businesses or assets of the Company and our Subsidiaries, taken as a whole, or of Parent and its Affiliates, taken as a whole, or (v) imposes material damages on Parent, the Company or any of their respective Subsidiaries as a result of the Transactions; |
• | there will be any Law enacted, issued, promulgated, amended or enforced by any Governmental Authority applicable to (i) Parent, the Company or any of their respective Affiliates or (ii) the Transactions (other than the routine application of the waiting period provisions of the HSR Act) that results or is reasonably likely to result, directly or indirectly, in any of the consequences referred to in the immediately preceding bullet point; | |
• | (i) there will have occurred since the date of the Merger Agreement any events or changes that, individually or in the aggregate, have had or would reasonably be expected to have a “Company Material Adverse Effect” (as defined below) or (ii)(A) the representations and warranties of the Company contained in Section 3.3(a) of the Merger Agreement (Authority), Section 3.3(d) of the Merger Agreement (Required Vote), Section 3.6(a) of the Merger Agreement (Absence of Certain Changes or Events), Section 3.23 of the Merger Agreement (Indebtedness), Section 3.24 of the Merger Agreement (Opinion of Financial Advisor), Section 3.25 of the Merger Agreement (Brokers and Other Advisors) and Section 3.26 of the Merger Agreement (Anti-Takeover Provisions) will not be true and correct in all respects, in each case both when made and at and as of the Expiration Date, as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case as of such date), (B) the representations and warranties of the Company contained in Section 3.2 of the Merger Agreement (Capitalization) will not be true and correct in all respects, other than immaterial deviations, both when made and at and as of the Expiration Date, as if made at and as of such time and (C) all other representations and warranties of the Company set forth in the Merger Agreement will not be true and correct both when made and at and as of the Expiration Date, as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case as of such date), except where the failure of such representations and warranties to be so true and correct (without giving effect to any limitation as to “materiality” or “Company Material Adverse Effect” set forth therein) does not have, and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect; | |
• | the Company will not have performed or complied in all material respects with its obligations, agreements or covenants required to be performed or complied with under the Merger Agreement at or prior to the Expiration Date; | |
• | an Adverse Recommendation Change (as defined below under the heading “The Merger Agreement — Terms of the Merger Agreement — Change of Recommendation”) will have occurred; or | |
• | the Merger Agreement will have been terminated in accordance with its terms or the Offer will have been terminated in accordance with the terms of the Merger Agreement. |
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• | our organization and qualification; | |
• | the organization, existence and good standing of our subsidiaries; | |
• | our capitalization; | |
• | authorization with respect to the Merger Agreement; | |
• | no conflicts with or consents required in connection with the Merger Agreement; | |
• | the required vote; | |
• | required filings and consents; | |
• | our SEC filings and financial statements; | |
• | our internal controls; | |
• | absence of undisclosed liabilities; | |
• | absence of a Company Material Adverse Effect or certain changes or events; | |
• | legal proceedings; | |
• | our compliance with laws; | |
• | information supplied; | |
• | tax matters; | |
• | employee benefit and employment matters; | |
• | labor matters; |
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• | environmental matters; | |
• | material contracts, including government contracts; | |
• | certain business practices; | |
• | real property; | |
• | personal property; | |
• | facilities and operations; | |
• | intellectual property; | |
• | insurance; | |
• | product liability and service level agreements; | |
• | partners, customers and vendors; | |
• | indebtedness; | |
• | opinion of financial advisors; | |
• | brokers; | |
• | anti-takeover provisions; and | |
• | related party transactions. |
• | any change generally affecting the economy, financial markets or political, economic or regulatory conditions in the United States or any other geographic region in which we and our subsidiaries conduct business (except, in each case, to the extent that we or such subsidiary is disproportionately adversely affected relative to other participants in the industries in which we or such subsidiary participates); | |
• | general financial, credit or capital market conditions, including interest rates or exchange rates, or any changes therein; | |
• | conditions (or changes therein) in any industry or industries in which we operate (including seasonal fluctuations) to the extent that such conditions do not disproportionately have a greater adverse impact on us and our subsidiaries, taken as a whole, relative to other companies operating in such industry or industries; | |
• | the announcement or pendency of the Merger Agreement and the Offer and the merger (other than in respect of the representations and warranties relating to (i) the absence of conflicts or violations under the Company Charter Documents, contracts, instruments or law, and required consents and approvals and (ii) our receipt of all required governmental approvals, including any actions, challenges or investigations to the extent relating to the Merger Agreement or the Offer or the Merger made or brought by any of our current or former stockholders (on their own behalf or on behalf of us) and any impact on vendors, customers and suppliers of and to us; | |
• | changes in applicable law or GAAP (or, in each case, any interpretations thereof); |
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• | a decline in the price of our Common Stock on the Nasdaq Global Market or any other market in which such securities are quoted for purchase and sale (it being understood that the facts and circumstances giving rise to such decline may be deemed to constitute, and may be taken into account in determining whether there has been, or would reasonably be expected to be, a Company Material Adverse Effect if such facts and circumstances are not otherwise described in this bullet or the immediately preceding five bullet points); | |
• | any acts of terrorism or war or any escalation thereof; | |
• | any action, investigation, review or examination undertaken by a governmental authority, or any sanction, fine, operating restriction or other similar penalty arising as a result thereof that is currently pending or arises after the date of the Merger Agreement in respect of certain scheduled matters; | |
• | the identity of Parent or any of its affiliates as the acquiror of the Company or any facts or circumstances concerning Parent or any of its affiliates; | |
• | compliance with the terms of, the taking of any action required or the failure to take any action prohibited by, the Merger Agreement or the taking of any action consented to in writing or requested in writing by Parent or Merger Sub; or | |
• | any failure by us to meet internal or published projections, forecasts, performance measures, operating statistics or revenue or earnings predictions for any period (it being understood that the facts and circumstances giving rise to such failure may be deemed to constitute, and may be taken into account in determining whether there has been, or would reasonably be expected to be, a Company Material Adverse Effect if such facts and circumstances are not otherwise described any of the immediately preceding bullets). |
• | organization and qualification; | |
• | authorization with respect to the Merger Agreement; | |
• | no conflicts with or consents required in connection with the Merger Agreement; | |
• | required filings and consents; | |
• | information supplied; | |
• | ownership of shares and operations of Merger Sub; | |
• | brokers; | |
• | sufficiency of funds; | |
• | ownership of Shares; | |
• | litigation; and | |
• | required approval. |
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• | “Takeover Proposal” means any inquiry, proposal or offer from any person or “group” (as defined in Section 13(d) of the Exchange Act), other than Parent and its subsidiaries, relating to any (i) direct or indirect acquisition (whether in a single transaction or a series of related transactions) of assets of the |
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Company and our subsidiaries (including securities of subsidiaries) equal to 20% or more of our consolidated assets or to which 20% or more of our revenues or earnings on a consolidated basis are attributable, (ii) direct or indirect acquisition (whether in a single transaction or a series of related transactions) of 20% or more of any class of our equity securities, (iii) tender offer or exchange offer that if consummated would result in any person or “group” (as defined in Section 13(d) of the Exchange Act) beneficially owning 20% or more of any class of our equity securities or (iv) merger, consolidation, share exchange, business combination, recapitalization, liquidation, dissolution or similar transaction involving us or any of our subsidiaries, in each case, other than the Transactions. |
• | “Superior Proposal” means a bona fide written Takeover Proposal that was made in circumstances not involving a breach of the non-solicitation restrictions in the Merger Agreement (provided, that for purposes of this definition all reference to 20% contained in the definition of Takeover Proposal will be deemed to be references to 75%) which the Board determines in good faith, after consultation with our financial and legal advisors, as required by the Merger Agreement, to be more favorable to our stockholders, from a financial point of view, than the Offer and the Merger, in each case taking into account all financial, legal, financing, regulatory and other aspects of such Takeover Proposal that are reasonably relevant to a determination of the likelihood of consummation of such Takeover Proposal (including the reputation of the person or group making the Takeover Proposal) and further taking into account at any time of determination any changes to the terms and conditions of the Merger Agreement that are then offered in writing by Parent pursuant to the terms of the Merger Agreement. |
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• | (i)(A) the representations and warranties of the Company contained in Section 3.3(a) of the Merger Agreement (Authority), Section 3.3(d) of the Merger Agreement (Required Vote), Section 3.6(a) of the Merger Agreement (Absence of Certain Changes or Events), Section 3.23 of the Merger Agreement (Indebtedness), Section 3.24 of the Merger Agreement (Opinion of Financial Advisor), Section 3.25 of the Merger Agreement (Brokers and Other Advisors) and Section 3.26 of the Merger Agreement (Anti-Takeover Provisions) will be true and correct in all respects, in each case both when made and at and as of the Closing Date, as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case as of such date), (B) the representations and warranties of the Company contained in Section 3.2 of the Merger Agreement (Capitalization) will be true and correct in all respects, other than immaterial deviations, both when made and at and as of the Closing Date, as if made at and as of such time and (C) all other representations and warranties of the Company set forth in the Merger Agreement will be true and correct both when made and at and as of the Closing Date, |
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as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case as of such date), except where the failure of such representations and warranties to be so true and correct (without giving effect to any limitation as to “materiality” or “Company Material Adverse Effect” set forth therein) does not have, and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect; |
• | we will have performed or complied in all material respects with its obligations, agreements or covenants required to be performed or complied with under the Merger Agreement at or prior to the Closing Date; and | |
• | since the date of the Merger Agreement, there will have occurred no events or changes that, individually or in the aggregate, have had or would reasonably be expected to have a Company Material Adverse Effect. |
• | (i)(A) the representations and warranties of Parent will be true and correct (disregarding all qualifications or limitations as to “materiality,” “Parent Material Adverse Effect” and words of similar import set forth therein) as of the date of the Merger Agreement and as of the Closing Date as though made on the Closing Date (except to the extent such representations and warranties expressly relate to an earlier date, in which case as of such date), except where the failure of such representations and warranties to be so true and correct would not, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect; and | |
• | Parent and Merger Sub will have performed in all material respects all obligations required to be performed by them under the Merger Agreement at or prior to the Closing Date. |
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• | if (i) the Merger Agreement is terminated by Parent pursuant to paragraph (j) under “Termination” above or (ii)(A) a Takeover Proposal will have been made known to us and publicly disclosed or will have been made directly to our stockholders and not withdrawn or any person will have publicly announced an intention to make a Takeover Proposal and thereafter (B) the Merger Agreement is terminated by us or Parent pursuant to paragraphs (c), (d) or (e) under “Termination” above, then we will reimburse Parent for all documented expenses not later than two business days after delivery to us of an itemization setting forth in reasonable detail all expenses of Parent and Merger Sub; | |
• | if (i) a Takeover Proposal will have been made known to us and publicly disclosed or will have been made directly to our stockholders and not withdrawn or any person will have publicly announced an intention to make a Takeover Proposal and thereafter, (ii) the Merger Agreement is terminated by us or Parent pursuant to paragraphs (c), (d), (e) or by Parent pursuant to paragraph (j) under “Termination” above and (iii) we enter into an acquisition agreement or consummate any Takeover Proposal within 12 months after the date that the Merger Agreement is terminated, then we will pay to Parent the Termination Fee promptly following the consummation of any transaction contemplated by a Takeover Proposal (and in any event not later than two business days after delivery to us of notice of demand for payment); |
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• | if the Merger Agreement is terminated by Parent pursuant to paragraph (i) under “Termination” above, then we will pay to Parent the Termination Fee promptly following such termination (and in any event not later than two business days after delivery to us of notice of demand for payment); and | |
• | if the Merger Agreement is terminated by us pursuant to paragraph (g) under “Termination” above, then we will pay to Parent the Termination Fee simultaneously with (and as a condition of the effectiveness of) such termination; provided, however, that if the definitive Acquisition Agreement providing for a Superior Proposal is entered into and publicly announced, all of which occurs on or prior to February 26, 2011, then the Termination Fee due and payable to Parent pursuant to this paragraph will be $37,500,000. |
• | tender their respective Shares in the Offer; | |
• | vote in favor of the Merger; and | |
• | subject to certain exceptions, refrain from disposing of their respective Shares. |
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Prices | ||||||||
Fiscal Year 2011 Quarter Ended | High | Low | ||||||
June 30, 2010 | $ | 8.68 | $ | 6.74 | ||||
September 30, 2010 | 10.72 | 7.39 | ||||||
December 31, 2010 | 13.61 | 9.30 | ||||||
March 31, 2011 (through February 17, 2011) | 19.00 | 12.03 |
Prices | ||||||||
Fiscal Year 2010 Quarter Ended | High | Low | ||||||
June 30, 2009 | $ | 5.97 | $ | 2.51 | ||||
September 30, 2009 | 6.50 | 4.34 | ||||||
December 31, 2009 | 7.25 | 5.70 | ||||||
March 31, 2010 | 8.98 | 6.17 |
Prices | ||||||||
Fiscal Year 2009 Quarter Ended | High | Low | ||||||
March 31, 2009 | $ | 4.25 | $ | 1.85 |
• | each of our directors; | |
• | each of our executive officers; | |
• | all of our directors and executive officers as a group; and | |
• | each person known by us to beneficially own more than 5% of our outstanding Common Stock. |
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Common Stock Beneficially Owned | ||||||||
Percentage of | ||||||||
Common Stock | ||||||||
Number of Shares | Outstanding | |||||||
Cyrte Investments GP I BV | 10,074,845 | (1) | 14.9 | % | ||||
Sun Equity Assets Limited | 4,545,732 | (2) | 6.7 | % | ||||
Manuel D. Medina | 4,586,668 | (3) | 6.8 | % | ||||
Chairman of the Board of Directors, President and Chief Executive Officer | ||||||||
VMware Bermuda Limited | 4,000,000 | (4) | 5.9 | % | ||||
Ashford Capital Management, Inc. | 3,201,000 | (5) | 4.7 | % | ||||
Joseph R. Wright, Jr. | 361,568 | (6) | * | |||||
Vice Chairman of the Board of Directors | ||||||||
Guillermo Amore | 336,668 | (7) | * | |||||
Director | ||||||||
Timothy Elwes | 268,500 | (8) | * | |||||
Director | ||||||||
Jose A. Segrera | 471,973 | (9) | * | |||||
Chief Financial Officer | ||||||||
Nelson Fonseca | 334,601 | (10) | * | |||||
Chief Operating Officer | ||||||||
Marvin Wheeler | 408,835 | (11) | * | |||||
Chief Strategy Officer | ||||||||
Jamie Dos Santos | 152,500 | (12) | * | |||||
Chief Executive Officer of Terremark Federal Group, Inc. | ||||||||
Antonio S. Fernandez | 131,487 | (13) | * | |||||
Director | ||||||||
Adam T. Smith | 275,748 | (14) | * | |||||
Chief Legal Officer | ||||||||
Arthur L. Money | 84,000 | (15) | * | |||||
Director | ||||||||
Marvin S. Rosen | 160,133 | (16) | * | |||||
Director | ||||||||
Rodolfo A. Ruiz | 79,000 | (17) | * | |||||
Director | ||||||||
Frank Botman | 20,000 | (18) | * | |||||
Director | ||||||||
Melissa Hathaway | 20,000 | (19) | * | |||||
Director | ||||||||
All current executive officers and directors as a group (15 persons) | 7,691,681 | 11.4 | % |
* | Less than 1% | |
(1) | Based solely on information contained in Amendment No. 9 to Schedule 13D filed by the holder with the SEC on February 1, 2011. Each of Aviva plc, Aviva Group Holdings Limited, Aviva International |
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Insurance Limited, Aviva Insurance Limited, Aviva International Holdings Limited, CGU International Holdings BV, Delta Lloyd NV, Cyrte Investments BV and CF I Invest CV (f/k/a Cyrte Fund I CV) may be deemed to be beneficial owners, as well as share the power to vote and dispose, of the Shares directly owned by Cyrte Investments GP by virtue of the fact that: Aviva plc owns all of the outstanding share capital of Aviva Group Holdings Limited; Aviva Group Holdings Limited owns all of the outstanding share capital of Aviva International Insurance Limited; Aviva International Insurance Limited owns all of the outstanding share capital of Aviva Insurance Limited; Aviva Insurance Limited owns all of the outstanding share capital of Aviva International Holdings Limited; Aviva International Holdings Limited owns all of the outstanding share capital of CGU International Holdings BV; CGU International Holdings BV owns 53.9% of the outstanding share capital of Delta Lloyd NV; Delta Lloyd NV owns 85% of the share capital of Cyrte Investments BV; Cyrte Investments BV is the manager of the investment portfolio held by CF I Invest CV and owner of all of the outstanding capital stock of Cyrte Investments GP; Cyrte Investments GP is the general partner of CF I Invest CV. Each of Aviva plc, Aviva Group Holdings Limited, Aviva International Insurance Limited, Aviva Insurance Limited, Aviva International Holdings Limited, CGU International Holdings BV, Delta Lloyd NV, Cyrte Investments BV and CF I Invest CV disclaims beneficial ownership of such Shares for all other purposes. The address of the beneficial owner is Flevolaan 41A, 4111 KC Naarden, P.O. Box 5081,1410 AB Naarden, The Netherlands. | ||
(2) | Based solely on information contained in Form 4 filed by Francis Lee, the controlling shareholder of Sun Equity Assets Limited, with the SEC on April 9, 2007 and as represented to us by representatives of Sun Equity Assets Limited. The address of the beneficial owner is P.O. Box N-65, Charlotte House, Nassau C5. | |
(3) | Includes 201,500 Shares issuable upon exercise of options and 375,000 Shares of nonvested stock. Includes 500,000 Shares which are held of record by MD Medina Investments, LLC, an entity in which Mr. Medina is a partner and holds a controlling interest. | |
(4) | VMware Bermuda Limited’s address isc/o VMware, Inc., 3401 Hillview Ave, Palo Alto, California 94304. | |
(5) | Based solely on information contained in Amendment No. 3 to Schedule 13G filed by the holder with the SEC on March 9, 2010. Ashford Capital Management, Inc. is a registered investment advisor, and the reported Shares are held in separate individual client accounts, two separate limited partnerships and six commingled funds. Ashford Capital Management, Inc.’s address is 2601 South Bayshore Drive, Miami, Florida 33133. | |
(6) | Includes 51,500 Shares issuable upon exercise of options. Does not include 10,000 Shares held in trust for the benefit of Mr. Wright’s grandchildren and 1,000 Shares held by his sister with respect to which Mr. Wright disclaims beneficial ownership. | |
(7) | Includes 51,500 Shares issuable upon exercise of options. | |
(8) | Includes 51,500 Shares issuable upon exercise of options. | |
(9) | Includes 135,000 Shares issuable upon exercise of options and 188,332 Shares of nonvested stock. | |
(10) | Includes 87,600 Shares issuable upon exercise of options and 188,332 Shares of nonvested stock. | |
(11) | Includes 140,500 Shares issuable upon exercise of options, 133,332 Shares of nonvested stock and 500 Shares owned by Mr. Wheeler’s daughter. | |
(12) | Includes 102,500 Shares issuable upon exercise of options and 36,666 Shares of nonvested stock. | |
(13) | Includes 51,500 Shares issuable upon exercise of options. | |
(14) | Includes 58,000 Shares issuable upon exercise of options and 133,332 Shares of nonvested stock. | |
(15) | Includes 51,500 Shares issuable upon exercise of options. | |
(16) | Includes 51,500 Shares issuable upon exercise of options. | |
(17) | Includes 51,500 Shares issuable upon exercise of options. | |
(18) | Includes 20,000 Shares issuable upon exercise of options. | |
(19) | Includes 20,000 Shares issuable upon exercise of options. |
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• | Annual Report onForm 10-K for the fiscal year ended March 31, 2010 (filed with the SEC on June 14, 2010); | |
• | Quarterly Reports onForm 10-Q (filed with the SEC on August 12, 2010, November 2, 2010 and February 7, 2011); and | |
• | Current Reports onForm 8-K (filed with the SEC on July 22, 2010; August 5, 2010; November 2, 2010; November 9, 2010; November 12, 2010; November 16, 2010; November 22, 2010; and January 27, 2011). |
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ARTICLE I THE OFFER | A-1 | |||||
Section 1.1 | The Offer | A-1 | ||||
Section 1.2 | Company Actions | A-4 | ||||
Section 1.3 | Directors of the Company | A-4 | ||||
Section 1.4 | Top-Up Option | A-6 | ||||
Section 1.5 | Offer Documents;Schedule 14D-9; Proxy Statement | A-7 | ||||
ARTICLE II THE MERGER | A-8 | |||||
Section 2.1 | The Merger | A-8 | ||||
Section 2.2 | Closing | A-8 | ||||
Section 2.3 | Effective Time | A-8 | ||||
Section 2.4 | Effects of the Merger | A-8 | ||||
Section 2.5 | Certificate of Incorporation and By-laws of the Surviving Corporation | A-8 | ||||
Section 2.6 | Directors and Officers of the Surviving Corporation | A-8 | ||||
Section 2.7 | Conversion of Securities | A-8 | ||||
Section 2.8 | Exchange of Certificates | A-9 | ||||
Section 2.9 | Appraisal Rights | A-10 | ||||
Section 2.10 | Treatment of Stock Options, Restricted Shares and Stock Plans | A-11 | ||||
Section 2.11 | Company Warrants | A-12 | ||||
Section 2.12 | Payment for Options and Company Warrants | A-12 | ||||
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY | A-12 | |||||
Section 3.1 | Organization, Standing and Corporate Power | A-13 | ||||
Section 3.2 | Capitalization | A-13 | ||||
Section 3.3 | Authority; Noncontravention; Voting Requirements | A-14 | ||||
Section 3.4 | Governmental Approvals | A-16 | ||||
Section 3.5 | Company SEC Documents; Undisclosed Liabilities | A-16 | ||||
Section 3.6 | Absence of Certain Changes or Events | A-17 | ||||
Section 3.7 | Legal Proceedings | A-17 | ||||
Section 3.8 | Compliance With Laws; Permits | A-18 | ||||
Section 3.9 | Information Supplied | A-18 | ||||
Section 3.10 | Tax Matters | A-18 | ||||
Section 3.11 | Employee Benefits and Labor Matters | A-20 | ||||
Section 3.12 | Environmental Matters | A-22 | ||||
Section 3.13 | Contracts | A-22 | ||||
Section 3.14 | Government Contracts | A-24 | ||||
Section 3.15 | Certain Business Practices | A-26 | ||||
Section 3.16 | Real Property | A-26 | ||||
Section 3.17 | Personal Property | A-27 | ||||
Section 3.18 | Facilities and Operations | A-27 | ||||
Section 3.19 | Intellectual Property | A-28 | ||||
Section 3.20 | Insurance | A-30 | ||||
Section 3.21 | Product Liability; Service Level Agreements | A-31 | ||||
Section 3.22 | Top Channel Partners; Top Public Sector Customers; Top Private Sector Customers; Top Vendors | A-31 | ||||
Section 3.23 | Indebtedness | A-31 | ||||
Section 3.24 | Opinion of Financial Advisor | A-31 | ||||
Section 3.25 | Brokers and Other Advisors | A-31 | ||||
Section 3.26 | Anti-Takeover Provisions | A-31 | ||||
Section 3.27 | Related Party Transactions | A-31 | ||||
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER | A-32 | |||||
Section 4.1 | Organization | A-32 | ||||
Section 4.2 | Authority; Noncontravention | A-32 | ||||
Section 4.3 | Governmental Approvals | A-32 | ||||
Section 4.4 | Information Supplied | A-33 |
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Section 4.5 | Ownership and Operations of Purchaser | A-33 | ||||
Section 4.6 | Brokers and Other Advisors | A-33 | ||||
Section 4.7 | Sufficient Funds | A-33 | ||||
Section 4.8 | Ownership of Shares | A-33 | ||||
Section 4.9 | Litigation | A-33 | ||||
Section 4.10 | No Vote of Parent Stockholders; Required Approval | A-34 | ||||
ARTICLE V ADDITIONAL COVENANTS AND AGREEMENTS | A-34 | |||||
Section 5.1 | Conduct of Business | A-34 | ||||
Section 5.2 | No Solicitation by the Company; Company Recommendation; Etc | A-37 | ||||
Section 5.3 | Reasonable Best Efforts | A-39 | ||||
Section 5.4 | Preparation of Proxy Statement; Stockholders’ Meeting | A-40 | ||||
Section 5.5 | Public Announcements | A-42 | ||||
Section 5.6 | Access to Information; Confidentiality; Standstill | A-43 | ||||
Section 5.7 | Notification of Certain Matters | A-43 | ||||
Section 5.8 | Indemnification and Insurance | A-43 | ||||
Section 5.9 | Securityholder Litigation | A-45 | ||||
Section 5.10 | Fees and Expenses | A-45 | ||||
Section 5.11 | Rule 16b-3 | A-45 | ||||
Section 5.12 | Indebtedness | A-46 | ||||
Section 5.13 | Employee Benefits | A-46 | ||||
Section 5.14 | Rule 14d-10 | A-48 | ||||
Section 5.15 | Tax Matters | A-48 | ||||
ARTICLE VI CONDITIONS TO THE MERGER | A-48 | |||||
Section 6.1 | Conditions to Each Party’s Obligation to Effect the Merger | A-48 | ||||
Section 6.2 | Conditions to Obligations of Parent and Purchaser | A-49 | ||||
Section 6.3 | Conditions to Obligation of the Company to Effect the Merger | A-49 | ||||
Section 6.4 | Frustration of Closing Conditions | A-50 | ||||
ARTICLE VII TERMINATION | A-50 | |||||
Section 7.1 | Termination | A-50 | ||||
Section 7.2 | Effect of Termination | A-51 | ||||
Section 7.3 | Termination Fee and Expenses | A-52 | ||||
ARTICLE VIII MISCELLANEOUS | A-53 | |||||
Section 8.1 | No Survival, Etc | A-53 | ||||
Section 8.2 | Amendment or Supplement | A-53 | ||||
Section 8.3 | Extension of Time, Waiver, Etc | A-54 | ||||
Section 8.4 | Assignment | A-54 | ||||
Section 8.5 | Counterparts; Scanned Signatures | A-54 | ||||
Section 8.6 | Entire Agreement; No Third-Party Beneficiaries; Representations; Disclosure | A-54 | ||||
Section 8.7 | Governing Law; Jurisdiction; Waiver of Jury Trial | A-55 | ||||
Section 8.8 | Specific Enforcement | A-55 | ||||
Section 8.9 | Notices | A-55 | ||||
Section 8.10 | Severability | A-56 | ||||
Section 8.11 | Definitions | A-57 | ||||
Section 8.12 | Interpretation | A-66 | ||||
Annex A — Conditions to the Offer | ||||||
Exhibit A — Form of Certificate of Incorporation for the Surviving Corporation | ||||||
Exhibit B — Form of Bylaws for the Surviving Corporation |
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By: | /s/ John W. Diercksen |
Title: | Executive Vice President of Strategy, Development and Planning |
By: | /s/ John W. Diercksen |
Title: | Executive Vice President of Strategy, Development and Planning |
By: | /s/ Manuel D. Medina |
Title: | Chief Executive Officer |
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FINAL FORM
CERTIFICATE OF INCORPORATION
OF
TERREMARK WORLDWIDE, INC.
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FINAL FORM
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(a Delaware corporation)
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Terremark Worldwide, Inc.
One Biscayne Tower
2 S. Biscayne Blvd., Suite 2900
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SPECIAL MEETING OF TERREMARK WORLDWIDE, INC. Date:April [•], 2011Time:10 A.M. Eastern TimePlace:50 Northeast 9th Street, Miami, Florida 33132 Please make your marks like this:Use dark black pencil or pen only Board of Directors Recommends a VoteFORthe Following Proposal 1 and 2. 1: Adoption of the Agreement and Plan of Merger, dated as of January 27, 2011, as it may be amended from time to time, among the Company, Verizon Communications Inc. and Verizon Holdings Inc. (the “Merger Agreement”).For Against Abstain Directors Recommend#«For 2. Adjournment of the Special Meeting, if necessary or appropriate, for, among other reasons, the solicitation of additional proxies in the event that there are insufficient votes at the time of the Special Meeting to approve the proposal to adopt the Merger Agreement.For3. To transact any other business as may properly be presented at the Special Meeting or any adjournment or postponement thereof. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the Special Meeting. This proxy when properly executed will be voted as directed herein by the undersigned stockholder. If no direction is made, this proxy will be voted FOR Proposals 1 and 2.Please indicate if you plan to attend this meeting: Authorized Signatures — This section must be completed for your Instructions to be executed.Please Sign Here Please Date Above Please Sign Here Please Date Above NOTE: Your signature should appear exactly the same as your name appears hereon. If signing as partner, attorney, executor, administrator, trustee or guardian, please indicate the capacity in which signing. When signing as joint tenants, all parties in the joint tenancy must sign. When a proxy is given by a corporation, it should be signed by an authorized officer and the corporate seal affixed. No postage is required if mailed within the United States.Special Meeting of TERREMARK WORLDWIDE, INC. to be held on [•], April [•], 2011 This proxy is being solicited on behalf of the Board of DirectorsVOTED BY:INTERNET TELEPHONEGo To[•] [•]•Cast your vote online.OR•Use any touch-tone telephone.•View Meeting Documents.• Have your Voting Instruction Form/ProxyCard ready.•Follow the simple recorded instructions.MAIL OR•Mark, sign and date your Voting Instruction Form/ProxyCard.• Detach your Voting Instruction Form/ProxyCard.•Return your Voting Instruction Form/ProxyCard in the postage-paid envelope provided. The undersigned hereby appoints Adam T. Smith and Jose A. Segrera, and each of them individually, as attorneys and proxies of the undersigned, with full power of substitution, for and in the name, place and stead of the undersigned, to vote all of the shares of common stock, par value $0.001 per share, of Terremark Worldwide, Inc. (the “Company”), which the undersigned may be entitled to vote at the Special Meeting of Stockholders to be held at 10:00 a.m. on [•], April [•], 2011, at NAP of the Americas, located at 50 Northeast 9th Street, Miami, Florida 33132, and at any and all postponements, continuations and adjournments thereof, with all powers that the undersigned would possess if personally present, upon and in respect of the following matters and in accordance with the following instructions, with discretionary authority as to any and all other matters that may properly come before the meeting. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED “FOR” PROPOSALS 1 AND 2; AND IN THE DISCRETION OF THE PROXIES, “FOR” OR “AGAINST” ALL OTHER MATTERS AS MAY PROPERLY COME BEFORE THE SPECIAL MEETING.All votes must be received by 11:59 P.M., Eastern Time, [•], 2011. PROXY TABULATOR FOR TERREMARK WORLDWIDE, INC. [•] [•] [•] |
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Revocable Proxy — TERREMARK WORLDWIDE, INC. Special Meeting of Stockholders March [•], 2011, 10:00 a.m. (Eastern Time) This Proxy is Solicited on Behalf of the Board of DirectorsThe undersigned hereby revokes any proxy or proxies heretofore given, and ratifies and confirms that the proxies appointed hereby, or any of them, or their substitute or substitutes, may lawfully do or cause to be done by virtue thereof. The undersigned hereby acknowledges receipt of a copy of the Notice of Special Meeting of Stockholders and the Proxy Statement, both dated March [•], 2011 This proxy is revocable and will be voted as directed, but if no instructions are specified, this proxy will be voted:FOR Proposals 1 and 2.(CONTINUED AND TO BE SIGNED ON REVERSE SIDE) |