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EXHIBIT 4.1
NEITHER THIS DEBENTURE NOR THE COMMON STOCK INTO WHICH IT IS CONVERTIBLE HAS
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED, ASSIGNED OR
TRANSFERRED EXCEPT (i) PURSUANT TO A REGISTRATION STATEMENT UNDER THE SECURITIES
ACT WHICH HAS BECOME EFFECTIVE AND IS CURRENT WITH RESPECT TO THESE SECURITIES,
OR (ii) PURSUANT TO A SPECIFIC EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT BUT ONLY UPON A HOLDER HEREOF FIRST HAVING OBTAINED THE WRITTEN OPINION OF
COUNSEL TO THE CORPORATION, OR OTHER COUNSEL REASONABLY ACCEPTABLE TO THE
CORPORATION, THAT THE PROPOSED DISPOSITION IS CONSISTENT WITH ALL APPLICABLE
PROVISIONS OF THE SECURITIES ACT AS WELL AS ANY APPLICABLE "BLUE SKY" OR SIMILAR
SECURITIES LAWS.
TERREMARK WORLDWIDE, INC.
13% SUBORDINATED CONVERTIBLE DEBENTURE DUE DECEMBER 31, 2005
This 13% SUBORDINATED CONVERTIBLE DEBENTURE (the "Debenture"), is made
and entered into as of the later of the dates set forth on the execution page
below, by and between Terremark Worldwide, Inc., a Delaware corporation (the
"Company") and the investor or investors as set forth on the execution page
below, or their registered assigns as recorded in the Company's books (the
"Investor").
R E C I T A L S:
A. The Company desires to obtain financing for its capital needs
through the issue and sale of debentures convertible into shares of the
Company's common stock, par value $.001 (the "Common Stock").
B. The Company desires to sell and the Investor desires to buy this
Debenture.
NOW, THEREFORE, in consideration of the above recitals and the mutual
covenants, representations, warranties and agreements set forth herein, and for
the purpose of defining the terms and provisions of this Debenture, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto intending to be legally bound do hereby
agree as follows:
1. OFFERING; EQUAL RANK. This Debenture is one of a duly authorized
issue of debentures of the Company being offered as a part of an offering
consisting of the sale of debentures in an aggregate principal amount of not
less than $5 million and not greater than $100 million (with the right of the
Company to increase to $150 million), and individually in uneven denominations,
all of which are of like date and maturity, except as to those variations as are
necessary to express the number, principal amount and payee of each debenture
(the "Offering"). All debentures of this issue rank equally and ratably without
priority over one another.
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2. PRINCIPAL AND INTEREST. The Company will pay the principal amount
set forth on the execution page below (the "Principal") on December 31, 2005
(the "Principal Payment Date") to the Investor registered on the books of the
Company as of the close of business on (i) the date immediately preceding the
Principal Payment Date or, in the alternative, (ii) the date immediately
preceding the Principal Payment Date which in the State of Florida is not a
holiday and a day on which banks are authorized to close (the "Principal Record
Date").
The Debentures will bear interest at the rate of 13% per annum (the
"Interest"), which will be paid quarterly, beginning March 31, 2001, and
thereafter on each June 30, September 30, December 31, and March 31 until the
outstanding principal amount of this Debenture has been paid in full
(individually, an "Interest Payment Date," collectively, the "Interest Payment
Dates," and the Interest Payment Dates together with the Principal Payment Date,
the "Payment Dates") to the Investor registered on the books of the Company (the
"Holder") as of the close of business on (i) the date immediately preceding the
Interest Payment Date, or, in the alternative, (ii) the date immediately
preceding the Interest Payment Date which in the State of Florida is a Business
Day (as hereafter defined) if the date specified in (i) is not a Business Day
(collectively, the "Interest Record Dates"). Interest shall be computed on the
basis of a 360-day year of twelve 30-day months. For the purposes hereof, the
term "Business Day" shall mean any day which is not a Saturday, Sunday or day on
which banks in the State of Florida are authorized or obligated by law,
executive order or governmental decree to be closed.
3. METHOD OF PAYMENT. The Company will pay Principal and Interest (i)
in money of the United States that at the time of payment is legal tender for
payment of public and private debts or (ii) by its check payable in such money
mailed to the Investor's registered address as reflected in the Company's books.
If the Payment Dates are other than Business Days, payment may be made on the
next succeeding day that is a Business Day and no interest shall accrue for the
intervening period.
4. CONVERSION.
(a) The Holder shall have the right, from time to time at any
time prior to the payment of the outstanding principal of this Debenture, or
redemption of this Debenture, to convert the entire unpaid principal amount of
this Debenture together with accrued but unpaid interest (or any portion of such
amounts which is $50,000 or an integral multiple thereof), into that number of
fully paid and non-assessable shares of Common Stock equal to the aggregate
principal amount of (and accrued but unpaid interest on) this Debenture being
converted, as of the Date of Conversion (as defined below), divided by the
Conversion Price set forth below. Upon any such conversion, the Company shall
pay to the Holder all accrued and unpaid interest on the principal amount of
this Debenture so converted to the extent such interest is not converted.
(b) In order to convert this Debenture, the accrued but unpaid
interest hereon or a portion thereof, into shares of Common Stock, the Holder
must telecopy or otherwise deliver prior to 5:00 p.m., Eastern Time, on any
Business Day, a copy of the fully executed notice of conversion in the form
attached hereto as Exhibit A (the "Notice of Conversion") to the
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Company at its principal office, which notice shall specify the amount to be
converted on the date the Notice of Conversion is delivered to the Company (the
"Date of Conversion") together with a copy of the Schedule of Conversion in the
form attached hereto as Exhibit B, duly completed as appropriate. No fractional
shares of Common Stock shall be issued upon conversion. In lieu of any
fractional share to which the Holder would otherwise be entitled, the Company
shall pay cash to such Holder based on the closing price of the Common Stock on
the last trading day prior to the Date of Conversion.
(c) The Company shall issue and deliver, within 15 Business
Days after delivery to the Company of the Notice of Conversion, to the Holder or
to the nominee of such Holder, at the address of the Holder on the books of the
Company or as otherwise directed by such Holder, a certificate or certificates
for the number of shares of Common Stock to which the Holder shall be entitled
as aforesaid. The person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock on the Date of
Conversion.
(d) The Company shall at all times reserve and keep available
out of its authorized but unissued shares of Common Stock such number of shares
of Common Stock as shall from time to time be sufficient to effect the
conversion of the principal amount of this Debenture and all interest which
would accrue thereon through the Principal Payment Date; and if at any time the
number of authorized but unissued shares of Common Stock shall not be sufficient
to effect such conversion, the Company will take such corporate action as may be
necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purpose.
(e) Following any conversion, the principal amount of this
Debenture shall be reduced in an amount equal to the portion so converted.
Appropriate adjustments shall be made on the records of the Company.
(f) The conversion price (the "Conversion Price") per share of
Common Stock shall be equal to 120% of the average Market Price of the Common
Stock for the twenty trading days preceding the date of the closing with respect
to this Debenture and is agreed to be the amount set forth on the signature page
of this Debenture, subject to adjustment from time to time, pursuant to the
provisions set forth below. For the purposes of this Section 4(f), "Market
Price" shall mean (i) if the shares of Common Stock are listed or admitted for
trading on a national securities exchange, the last reported sales price regular
way, or, in the case no such reported sale takes place on such day or days, the
average of the reported closing bid and asked prices regular way, in either case
on the principal national securities exchange on which the shares of the Common
Stock are listed or admitted for trading, or (ii) if the shares of Common Stock
are not listed or admitted for trading on a national securities exchange (A) the
last transaction price for the Common Stock on The Nasdaq Stock Market
("Nasdaq") or, in the case no such reported transaction takes place on such day
or days, the average of the reported closing bid and asked prices thereof quoted
on Nasdaq, or (B) if the shares of Common Stock are not quoted on Nasdaq, the
average of the closing bid and asked prices of the Common Stock as quoted on the
Over-The-Counter Bulletin Board maintained by the National Association of
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Securities Dealers, Inc. (the "Bulletin Board"), or (C) if the shares of Common
Stock are not quoted on Nasdaq or on the Bulletin Board, the average of the
closing bid and asked prices of the Common Stock in the over-the-counter market,
as reported by The National Quotation Bureau, Inc., or an equivalent generally
accepted reporting service, or (iii) if on any such trading day or days the
shares of Common Stock are not quoted by any such organization, the fair market
value of the shares of Common Stock on such day or days, as determined in good
faith by the Board of Directors of the Company.
In case (i) the outstanding shares of the Common Stock shall
be subdivided into a greater number of shares, (ii) a dividend or other
distribution in Common Stock shall be paid in respect of Common Stock, (iii) the
outstanding shares of Common Stock shall be combined into a smaller number of
shares thereof, or (iv) any shares of the Company's capital stock are issued by
reclassification of the Common Stock (including any reclassification upon a
consolidation or merger in which the Company is the continuing corporation), the
Conversion Price in effect immediately prior to such subdivision, combination or
reclassification or at the record date of such dividend or distribution shall,
simultaneously with the effectiveness of such subdivision, combination or
reclassification or immediately after the record date of such dividend or
distribution, be proportionately adjusted to equal the product obtained by
multiplying the Conversion Price by a fraction, the numerator of which is the
number of outstanding shares of Common Stock (on a fully diluted basis) prior to
such combination, subdivision, reclassification or dividend, and the denominator
of which is that number of outstanding shares of Common Stock (on a fully
diluted basis) after giving effect to such combination, subdivision,
reclassification or dividend.
For purposes of this Debenture, "on a fully diluted basis"
means that all outstanding options or rights to subscribe for shares of Common
Stock and all securities convertible into or exchangeable for shares of Common
Stock (such options, rights and securities are collectively referred to herein
as "Convertible Securities") and all options or rights to acquire Convertible
Securities have been exercised, converted or exchanged.
(g) If, prior to the conversion of the entire principal amount
of this Debenture, there shall be any merger, consolidation, exchange of shares,
recapitalization, reorganization, sale of all or substantially all of the
Company's assets, or other similar event, as a result of which shares of Common
Stock of the Company shall be changed into the same or a different number of
shares of the same or another class or classes of stock or securities of the
Company or another entity, or other property, then the Holder shall thereafter
have the right to purchase and receive upon conversion of this Debenture (or the
conversion of the accrued and unpaid interest hereon), upon the basis and upon
the terms and conditions specified herein and in lieu of the shares of Common
Stock immediately theretofore issuable upon conversion, such shares of stock,
securities and/or other property as may be issued or payable with respect to or
in exchange for the number of shares of Common Stock immediately theretofore
purchasable and receivable upon the conversion of this Debenture held by such
Holder had such merger, consolidation, exchange of shares, recapitalization,
sale of all or substantially all of the assets or reorganization not taken
place, and in any such case appropriate provisions shall be made with respect to
the rights and interests of the Holder to the end that the provisions hereof
(including, without limitation,
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provisions for adjustment of the Conversion Price and of the number of shares
issuable upon conversion) shall thereafter be applicable, as nearly as may be
practicable in relation to any shares of stock or securities thereafter
deliverable upon the exercise hereof.
(h) No adjustment of the Conversion Price shall be made in an
amount less than $.05 per share. Upon any adjustment of the Conversion Price,
then and in each case the Company shall give written notice thereof, by first
class mail, addressed to the Holder at the address of such Holder as shown on
the books of the Company, which notice shall state the Conversion Price
resulting from such adjustment, setting forth in reasonable detail the methods
of calculation and the facts upon which such calculation is based.
(i) The Company will use its commercially reasonable efforts
to register and list the shares of Common Stock issued upon conversion as more
fully set forth in the Subscription Agreement pursuant to which this Debenture
was issued. Notwithstanding the foregoing, no transfer of the Common Stock
issuable upon conversion pursuant to this Section 4 shall be permitted prior to
December 31, 2001. For the purposes of this Debenture, the term "Transfer" shall
include any direct or indirect sale, assignment, pledge, encumbrance or other
granting of an interest in the shares of Common Stock.
5. PAYING AGENT AND REGISTRAR. The Company, or a subsidiary or
affiliate thereof, shall act as authenticating agent, paying agent, and
registrar. The Company may engage a third party to act as authenticating agent,
paying agent, or registrar without notice.
6. SUBSCRIPTION AGREEMENT. The Company issued the Debenture in
connection with that certain Subscription Agreement dated as of the later of the
dates set forth on the execution page below between the Company and the Investor
(the "Subscription Agreement"). The Debenture is subject to all the terms of the
Subscription Agreement. To the extent permitted by applicable law, in the event
of any inconsistency between the terms of Subscription Agreement and the
Debenture, the terms of the Subscription Agreement shall control.
7. SUBORDINATION.
(a) The indebtedness evidenced hereby and any and all
modifications, restatements, refinancings and renewals thereof, together with
any and all interest accrued or to accrue hereon is hereby subordinated to the
payment of the Senior Indebtedness (as hereafter defined). Upon any distribution
of any assets of the Company, whether by reason of sale, reorganization,
liquidation, dissolution, arrangement, bankruptcy, receivership, assignment for
the benefit of creditors, foreclosure or otherwise, the Senior Indebtedness
shall be entitled to receive a payment in full prior to the payment of all or
any part of the indebtedness evidenced hereby. To enable the holders of the
Senior Indebtedness to assert and enforce their rights in any such proceeding or
upon the happening of any such event, the holders of the Senior Indebtedness or
any persons whom the holders of the Senior Indebtedness may designate are hereby
irrevocably appointed attorney in fact for the undersigned with full power to
act in the place and stead of the undersigned, including the right to make,
present, file and vote such proofs of claim against the Company on account of
all or any part of the indebtedness evidenced hereby as the holders of the
Senior Indebtedness may deem advisable and to receive and collect any and all
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dividends or other payments made thereon and to apply the same on account of the
Senior Indebtedness.
(b) Notwithstanding the foregoing, so long as the Company is
not in default under any of its obligations of payment or performance under the
Senior Indebtedness, the Holder of this Debenture shall not be prohibited from
receiving payments of interest and payment of principal as provided herein.
(c) In the event any payments are made by the Company to the
Holder of this Debenture or any amounts are received by the Holders of this
Debenture contrary to the provisions of this Debenture, the Holders of this
Debenture will promptly remit said payments or amounts to the holders of the
Senior Debt.
(d) For the purposes of this Section, the term "Senior
Indebtedness" shall mean trade credit, project and equipment financing and any
financing provided by a commercial bank.
8. DEMAND FOR EARLY PAYMENT. By notice given no earlier than January 1,
2003 and no later than January 31, 2003, the Holder shall have the right to
demand repayment of this Debenture, together with all accrued but unpaid
interest, on March 31, 2003. All rights to convert this Debenture pursuant to
Section 4 shall cease upon the giving of such notice. In the event that the
Company elects to redeem this Debenture after the date of notice by the Holder
pursuant to this Section 8, the provisions of Section 9 shall not be applicable
to this Debenture.
9. REDEMPTION.
(a) This Debenture will be redeemable, at the Company's
option, in whole but not in part, at any time or from time to time (the
"Redemption Date") by giving not less than 15 nor more than 60 days' prior
notice mailed by first-class mail to the Holder's last address as it appears the
books of the Company, and by delivering accrued and unpaid Interest, if any,
calculated on a pro rata basis up to the Redemption Date on the Redemption Date,
plus the amount of Principal the Company wishes to redeem, in the manner
described in Paragraph 3 -- Method of Payment. On and after the Redemption Date,
interest shall cease to accrue on the Principal, unless the Company defaults in
the payment of the Redemption Price.
(b) In the event that the Company exercises its right to
redeem this Debenture, the Holder shall have the option to either receive (i)
the redemption price (expressed as percentages of principal amount) if redeemed
during the indicated calendar years or (ii) the unpaid principal balance of this
Debenture at par and a Warrant, on the terms and subject to the conditions
described below. The Holder must advise the Company of its election not later
than 10 days prior to the Redemption Date.
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(c) If the Holder elects a cash payment, it shall receive the
following redemption prices:
Year Redemption Price
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2001 105%
2002 104%
2003 103%
2004 102%
2005 100%
(d) If the Holder elects to receive a Warrant, the Company
shall cause to be issued a Warrant, substantially in the form attached to the
Warrant Agreement attached hereto as Exhibit C (which the Company will execute
at the time of issuance of the Warrants), to the Holder. The Warrant will
entitle the holder of the Warrant to purchase such number of shares of Common
Stock as shall be equal to ten percent (10%) of the principal amount of the
Debenture redeemed. The Warrant shall be exercisable at any time prior to 5:00
p.m. Miami, Florida time on December 31, 2005 and shall be exercisable at a
price per share of Common Stock equal to the Conversion Price (subject to
adjustment in the same manner as the Conversion Price).
(e) In order to receive a Warrant, the Holder shall be
required to represent and warrant to the Company that the Holder's receipt of a
Warrant does not require registration of such transaction under any applicable
securities laws and to further agree that it will take no action which would
require such registration with respect to the Warrants or the shares of common
stock issuable upon its exercise.
(f) The Company shall use commercially reasonable efforts to
cause to be effective, as soon as reasonably possible, a registration statement
under the Securities Act, to permit the resale of the shares of Common Stock
issuable upon exercise of the Warrant, as more fully set forth in the Warrant
Agreement.
(g) Notwithstanding the provisions of (f) above, no Transfer
of the Common Stock issuable upon exercise of the Warrants shall be permitted
prior to December 31, 2001.
10. DENOMINATIONS; TRANSFER; EXCHANGE. The Investor may register the
transfer or exchange of the Debenture by submitting to the registrar of the
Company (the "Registrar") the following completed documents: (i) the Assignment
Form attached as EXHIBIT D and (ii) the Letter Regarding Transfer to Accredited
Investor attached as EXHIBIT E. The Registrar may require the Investor, among
other things, to furnish appropriate endorsements and transfer documents and to
pay any taxes and fees required by law or permitted by the Subscription
Agreement. The Registrar need not register the transfer, or exchange the
Debenture, if the Debenture is selected for redemption.
11. PERSONS DEEMED OWNERS. The Investor shall be treated as the owner
of the Debenture for all purposes.
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12. AMENDMENT; SUPPLEMENT; WAIVER. The Debenture may be amended or
supplemented with the consent of the investors of at least a majority in
aggregate principal amount of the Offering, such aggregate principal amount to
be equal to the sum of the value at maturity of all the debentures of the
Offering then outstanding, and any existing default or compliance with any
provision may be waived with the consent of the Investors of at least a majority
in principal amount at maturity of the debentures then outstanding (the "Quorum
Investors"). Without notice to or the consent of any Investor, the Company may
amend or supplement the Subscription Agreement or the Debenture to, among other
things, cure any ambiguity, defect or inconsistency and make any change that
does not materially and adversely affect the rights of any Investor.
13. SUCCESSOR PERSONS. Generally, when a successor person or other
entity assumes all the obligations of its predecessor under the Subscription
Agreement and the Debenture the predecessor person will be released from those
obligations.
14. DEFAULTS AND REMEDIES. The following events constitute "Events of
Default": (a) the Company's default, which continues for a period of at least
ten (10) days, in the payment of Principal under, or Interest on, this Debenture
when the same becomes due and payable upon redemption or otherwise, whether or
not such payment is prohibited by the subordination provisions herein; (b) the
Company's default in the performance of any covenant set forth in Section 7 of
the Subscription Agreement and which default continues for a period of 15
consecutive days after written notice by the Quorum Investors; (c) the Company's
default in the performance of, or other breach of any covenant or agreement of
the Company in, the Subscription Agreement or the Debenture, and such default or
breach continues for a period of 30 consecutive days after written notice by the
Quorum Investors; (d) any final judgment or order against the Company (not
covered by insurance) for the payment of money in excess of $1,000,000 in the
aggregate for all such final judgments or orders (treating any deductibles,
self-insurance or retention as not so covered) and which is not paid or
discharged, or if there shall be any period of 60 consecutive days following the
entry of a final judgment or order that causes the aggregate amount for all such
final judgments or orders outstanding and not paid or discharged against the
Company to exceed $1,000,000, and which a stay of enforcement of such final
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect; (e) a court having jurisdiction in the premises enters a decree or order
for (i) relief in respect of the Company in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, (ii) appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of the Company for all or
substantially all of the property and assets of the Company or (iii) the winding
up or liquidation of the affairs of the Company and, in each case, such decree
or order shall remain unstayed and in effect for a period of 60 consecutive
days; or (f) the Company (i) commences a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
consents to the entry of an order of relief in an involuntary case under any
such law, (ii) consents to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official of the Company or for all or substantially all of the property and
assets of the Company or (iii) effects any general assignment for the benefit of
creditors.
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If an Event of Default occurs and is continuing, the Quorum Investors,
by written notice to the Company may declare the accreted Interest, if any, on
the debentures, including the Debenture, to be immediately due and payable. If a
bankruptcy or insolvency default with respect to the Company occurs and is
continuing, the accreted Interest automatically becomes due and payable. The
Quorum Investors may not enforce the Subscription Agreement or the Debenture,
except as provided in said documents.
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IN WITNESS WHEREOF, the undersigned has executed this Debenture in the
principal amount and on the date set forth below:
ISSUER:
TERREMARK WORLDWIDE, INC.
By:
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Print Name:
--------------------------
Title:
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NAME AND ADDRESS OF INVESTOR:
Debenture No.__
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- ---------------------------------------
- ---------------------------------------
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Debenture Principal Amount $
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Date of Issuance: , 2001
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Conversion Price: $
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EXHIBIT A
NOTICE OF CONVERSION
The undersigned irrevocably elects to convert $[___________] of the
principal amount of, and accrued but unpaid interest on, the 13% Subordinated
Convertible Debenture due December 31, 2005 (the "Debenture") into [_________]
shares of Common Stock (the "Common Stock") of Terremark Worldwide, Inc. (the
"Company") according to the conditions set forth in the Debenture as of the date
written below. If shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto. No fee will be charged to the Holder for any conversion, except for
transfer taxes, if any.
The undersigned represents and warrants that all offers and sales by
the undersigned of the shares of Common Stock issuable upon conversion shall be
made pursuant to the registration of such shares of Common Stock under the
Securities Act of 1933, as amended, or pursuant to an exemption from
registration under such Act.
Date of conversion:
Signature:
Name:
Address:
Exhibit A-1
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EXHIBIT B
SCHEDULE OF CONVERSION
The following exchanges of a part of this Debenture for shares of
Common Stock have been made:
Amount of
Decrease Principal Amount
in Principal of this Debenture Accrued but
Date of Amount Following Unpaid Interest Signature of
Conversion of this Debenture such Conversion Converted Holder
- ---------- ----------------- --------------- --------------- --------------
Exhibit B-1
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TERREMARK WORLDWIDE, INC.
WARRANT AGREEMENT
THIS WARRANT AGREEMENT (the "Warrant Agreement") is made and entered
into as of the date set forth on the execution page below, by and between
Terremark Worldwide, Inc., a Delaware corporation (the "Company"), the investor
or investors as set forth on the execution page(s) below, or their registered
assigns as recorded in the Company's books (the "Investor"), and the Warrant
Agent, in the event the Company designates a warrant agent pursuant to Section
13 hereof (the "Warrant Agent").
R E C I T A L S :
A. The Company has issued its 13% Subordinated Convertible Debentures
due December 31, 2005 (the "Debentures").
B. The Company has redeemed the Debentures prior to their stated
maturity and has agreed to issue warrants for the purchase of shares of the
Company's common stock, par value $.001 (the "Common Stock") in connection with
such redemption in an amount as is equal to 10% of the principal amount of the
Debentures redeemed, each as set forth in the Warrant Certificate, attached
hereto as EXHIBIT I (the "Warrants") pursuant to this Warrant Agreement.
C. The Company will act, or in the event it designates a Warrant Agent,
the Warrant Agent will act on behalf of the Company, in connection with the
issuance, registration, transfer, exchange and redemption of the Warrants, the
issuance of certificates representing the Warrants, the exercise of the
Warrants, and the rights of the holders thereof.
NOW, THEREFORE, in consideration of the above recitals and the mutual
covenants, representations, warranties and agreements set forth herein, and for
the purpose of defining the terms and provisions of the Warrants and the
certificates representing the Warrants and the respective rights and obligations
thereunder of the Company, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
intending to be legally bound do hereby agree as follows:
SECTION 1. DEFINITIONS. As used herein, the following terms shall have
the following meanings, unless the context shall otherwise require:
(a) "Corporate Office" shall mean the office at which at any
particular time the Company's principal business shall be administered, or in
the case a Warrant Agent is designated, the office of the Warrant Agent (or its
successor) at which at any particular time its principal business shall be
administered.
(b) "Exercise Date" shall mean, as to any Warrant, the date on
which the Company, or the Warrant Agent, as the case may be, shall have received
both (i) the Warrant Certificate representing such Warrant, with the exercise
form thereon duly executed
Exhibit C-1
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by the Investor or his attorney duly authorized in writing, and (ii) payment in
cash, or by official bank or certified check made payable to the Company, of an
amount in lawful money of the United States of America equal to the applicable
Purchase Price.
(c) "Initial Warrant Exercise Date" shall mean the date of
redemption of the Debenture to which the Warrant relates.
(d) "Market Price" shall mean (i) if the shares of Common
Stock are listed or admitted for trading on a national securities exchange, the
last reported sales price regular way, or, in the case no such reported sale
takes place on such day or days, the average of the reported closing bid and
asked prices regular way, in either case on the principal national securities
exchange on which the shares of the Common Stock are listed or admitted for
trading, or (ii) if the shares of Common Stock are not listed or admitted for
trading on a national securities exchange (A) the last transaction price for the
Common Stock on The Nasdaq Stock Market ("Nasdaq") or, in the case no such
reported transaction takes place on such day or days, the average of the
reported closing bid and asked prices thereof quoted on Nasdaq, or (B) if the
shares of Common Stock are not quoted on Nasdaq, the average of the closing bid
and asked prices of the Common Stock as quoted on the Over-The-Counter Bulletin
Board maintained by the National Association of Securities Dealers, Inc. (the
"Bulletin Board"), or (C) if the shares of Common Stock are not quoted on Nasdaq
or on the Bulletin Board, the average of the closing bid and asked prices of the
Common Stock in the over-the-counter market, as reported by The National
Quotation Bureau, Inc., or an equivalent generally accepted reporting service,
or (iii) if on any such trading day or days the shares of Common Stock are not
quoted by any such organization, the fair market value of the shares of Common
Stock on such day or days, as determined in good faith by the Board of Directors
of the Company.
(e) "Purchase Price" shall mean the Conversion Price of the
Debenture to which the Warrant relates, which is agreed to be the amount set
forth on the signature page of the Warrant Certificate, subject to adjustment
from time to time pursuant to the provisions of Section 8 hereof.
(f) "Investor" shall mean the person or entity listed on
EXHIBIT I hereto or in whose name any certificate representing Warrants shall be
registered on the books maintained by the Company or the Warrant Agent pursuant
to Section 6.
(g) "Offering" shall mean the purchase and sale of the
Debentures in an aggregate principal amount not less than $10 million and not
greater than $100 million with the right to increase the Offering to $150
million.
(h) "Underlying Share(s)" means the Common Stock which may
be purchased upon exercise of the Warrants.
(i) "Warrant Expiration Date" shall mean 5:00 P.M. (Miami
time) on December 31, 2005. Upon notice to all warrantholders, the Company shall
have the right to extend the Warrant Expiration Date.
Exhibit C-2
15
SECTION 2. WARRANTS AND ISSUANCE OF WARRANT CERTIFICATES.
(a) The Company hereby confirms that the Warrants entitle the
Investor to purchase a number of shares of the Common Stock of the Company equal
to ten percent (10%) of the principal dollar amount of the Debenture redeemed,
and any right to fractional shares shall be governed by Section 9 herein. A
Warrant shall initially entitle the Investor to purchase one share of Common
Stock upon the exercise thereof, in accordance with the terms hereof, subject to
modification and adjustment as provided in Section 8.
(b) From time to time, up to the Warrant Expiration Date, the
Company or the Warrant Agent, as the case may be, shall execute and deliver
Warrant Certificates in required whole number denominations to the persons
entitled thereto in connection with any transfer or exchange permitted under
this Warrant Agreement; provided that no Warrant Certificates shall be issued
except (i) those initially issued hereunder; (ii) those issued on or after the
Initial Warrant Exercise Date, upon the exercise of fewer than all Warrants
represented by any Warrant Certificate, to evidence any unexercised Warrants
held by the exercising Investor; (iii) those issued upon any transfer or
exchange pursuant to Section 6; (iv) those issued in replacement of lost,
stolen, destroyed or mutilated Warrant Certificates pursuant to Section 7; and
(v) at the option of the Company, in such form as may be approved by its Board
of Directors, to reflect (A) any adjustment or change in the Purchase Price or
the number of shares of Common Stock purchasable upon exercise of the Warrants,
made pursuant to Section 8 hereof and (B) other modifications approved by the
Investor in accordance with Section 14 hereof.
SECTION 3. FORM AND EXECUTION OF WARRANT CERTIFICATES.
(a) The Warrant Certificates shall be substantially in the
form annexed hereto as EXHIBIT I (the provisions of which are hereby
incorporated herein) and may have such letters, numbers or other marks of
identification or designation and such legends, summaries or endorsements
printed, lithographed, engraved or typed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Warrant
Agreement, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Warrants may be listed, or to conform to usage.
(b) Warrant Certificates shall be executed on behalf of the
Company by its Chairman of the Board, President or any Vice President, by manual
signatures or by facsimile signatures printed thereon, and shall have imprinted
thereon a facsimile of the Company's seal.
(c) The Warrant Certificates will carry the following legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE `SECURITIES ACT'), AND
MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED, ASSIGNED OR
TRANSFERRED EXCEPT (i) PURSUANT TO A REGISTRATION STATEMENT
UNDER THE SECURITIES ACT WHICH HAS BECOME EFFECTIVE AND IS
CURRENT WITH RESPECT TO THESE SECURITIES, OR (ii) PURSUANT TO
A SPECIFIC EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
Exhibit C-3
16
ACT BUT ONLY UPON A HOLDER HEREOF FIRST HAVING OBTAINED THE
WRITTEN OPINION OF COUNSEL TO THE CORPORATION, OR OTHER
COUNSEL REASONABLY ACCEPTABLE TO THE CORPORATION, THAT THE
PROPOSED DISPOSITION IS CONSISTENT WITH ALL APPLICABLE
PROVISIONS OF THE SECURITIES ACT AS WELL AS ANY APPLICABLE
`BLUE SKY' OR SIMILAR SECURITIES LAWS."
SECTION 4. EXERCISE.
(a) Upon the terms and subject to the conditions set forth
herein and in the Warrant Certificate, the Warrants may be exercised by the
Investor at the time provided, however, that any shares of Common Stock issued
may not be transferred prior to December 31, 2001. A Warrant shall be deemed to
have been exercised immediately prior to the close of business on the Exercise
Date and the person entitled to receive the securities deliverable upon such
exercise shall be treated for all purposes as the holder upon exercise thereof
as of the close of business on the Exercise Date.
(b) In order to exercise this Warrant, in whole or in part,
the Investor shall deliver to the Company the Warrants for the number of
Underlying Shares being purchased and:
(i) cash or a check in an amount equal to the then
aggregate Purchase Price at the Corporate Office; or
(ii) at the election of the Investor, Warrants may be
exercised through a cashless exercise, by the Investor delivering
notice of such election to the Company together with the Warrants being
exercised and an additional number of Warrants or shares of outstanding
Common Stock constituting payment for such exercise (as the case may
be, "Payment Warrants" or "Payment Stock"). The cash equivalent of the
Payment Warrants and/or Payment Stock being delivered shall be computed
by subtracting the Purchase Price of an Underlying Share from the
Market Price of Common Stock.
(c) As soon as practicable on or after the Exercise Date, the
Company, or the Warrant Agent, as the case may be, shall deposit the proceeds
received from the exercise of a Warrant, and promptly after clearance of checks
received in payment of the Purchase Price pursuant to such Warrants, cause to be
issued and delivered to the person or persons entitled to receive the same, a
certificate or certificates for the securities deliverable upon such exercise,
(plus a certificate for any remaining unexercised Warrants of the Investor).
Exhibit C-4
17
SECTION 5. RESERVATION OF SHARES; PAYMENT OF TAXES; ETC.
(a) The Company covenants that it will at all times reserve
and keep available out of its authorized Common Stock, solely for the purpose of
issue upon exercise of Warrants, such number of shares of Common Stock as shall
then be issuable upon the exercise of all outstanding Warrants. The Company
covenants that all shares of Common Stock which shall be issuable upon exercise
of the Warrants and payment of the Purchase Price shall, at the time of
delivery, be duly and validly issued, fully paid, nonassessable and free from
all taxes, liens and charges with respect to the issue hereof (other than those
which the Company shall promptly pay or discharge).
(b) The Company will use commercially reasonable efforts to
obtain appropriate approvals or registrations under state "blue sky" securities
laws with respect to the exercise of the Warrants; PROVIDED, HOWEVER, that the
Company shall not be obligated to file any general consent to service of process
or qualify as a foreign corporation in any jurisdiction. With respect to any
such securities laws, however, Warrants may not be exercised by, or shares of
Common Stock issued to, any Investor in any state in which such exercise would
be unlawful.
(c) The Company shall pay all documentary, stamp or similar
taxes and other governmental charges that may be imposed with respect to the
issuance of Warrants, or the issuance, or delivery of any shares upon exercise
of the Warrants; PROVIDED, HOWEVER, that if the shares of Common Stock are to be
delivered in a name other than the name of the Investor representing any Warrant
being exercised, then no such delivery shall be made unless the person
requesting the same has paid to the Company or the Warrant Agent the amount of
transfer taxes or charges incident thereof, if any.
SECTION 6. EXCHANGE AND REGISTRATION OF TRANSFER.
(a) Subject to the restrictions on transfer contained in the
Warrant Certificates, Warrant Certificates may be exchanged for other Warrant
Certificates representing an equal aggregate number of Warrants of the same
class or may be transferred in whole or in part. Warrant Certificates to be
exchanged shall be surrendered to the Company, or the Warrant Agent, as the case
may be, at its Corporate Office, and upon satisfaction of the terms and
provisions hereof, the Company shall execute, and the Warrant Agent shall
countersign, issue and deliver in exchange therefor the Warrant Certificate or
Certificates which the Investor making the exchange shall be entitled to
receive.
(b) The Company, or the Warrant Agent, as the case may be,
shall keep at its office books in which it shall register Warrant Certificates
and the transfer thereof in accordance with its regular practice.
(c) The Company may require payment by such Investor of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith.
(d) Prior to due presentment for registration of transfer
thereof, the Company and the Warrant Agent, if one shall be serving, may deem
and treat the Investor as the absolute
Exhibit C-5
18
owner thereof and of each Warrant represented thereby (notwithstanding any
notations of ownership or writing thereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for all purposes and
shall not be affected by any notice to the contrary.
SECTION 7. LOSS OR MUTILATION. Upon receipt by the Company and the
Warrant Agent, if one shall be serving, of evidence satisfactory to them of the
ownership of and loss, theft, destruction or mutilation of any Warrant
Certificate and (in case of loss, theft or destruction) of indemnity
satisfactory to them, and (in the case of mutilation) upon surrender and
cancellation thereof, the Company shall execute and the Warrant Agent, if one
shall be serving, shall (in the absence of notice to the Company and/or Warrant
Agent that the Warrant Certificate has been acquired by a bona fide purchaser)
countersign and deliver to the Investor in lieu thereof a new Warrant
Certificate of like tenor representing an equal aggregate number of Warrants.
Applicants for a substitute Warrant Certificate shall comply with such other
reasonable regulations and pay such other reasonable charges as the Company or
the Warrant Agent may prescribe.
SECTION 8. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES OF COMMON
STOCK OR WARRANTS. The type and number of securities of the Company issuable
upon exercise of this Warrant and the Purchase Price are subject to adjustment
as set forth below:
(a) The Purchase Price and the number and type of securities
and/or other property issuable upon exercise of this Warrant shall be
appropriately and proportionately adjusted to reflect any stock dividend, stock
split, combination of shares, reclassification, recapitalization or other
similar event affecting the number or character of outstanding shares of the
Common Stock.
(b) In case of any consolidation or merger of the Company with
or into any other corporation, entity or person, or any other corporate
reorganization, in which the Company shall not be the continuing or surviving
entity of such consolidation, merger or reorganization (any such transaction
being hereinafter referred to as a "Reorganization"), then, in each case, the
holder of this Warrant, on exercise hereof at any time after the consummation or
effective date of such Reorganization shall receive, in lieu of the Common Stock
issuable upon exercise of the Warrants, prior to the date of such
Reorganization, the stock and other securities and property (including cash) to
which such holder would have been entitled upon the date of such Reorganization
if such holder had exercised this Warrant immediately prior thereto.
(c) In case of any adjustment in the Purchase Price or number
and type of securities issuable on the exercise of this Warrant, the Company
will promptly give written notice thereof to the holder of this Warrant in the
form of a certificate, certified and confirmed by an officer of the Company,
setting forth such adjustment and showing in reasonable detail the facts upon
which such adjustment is based.
SECTION 9. FRACTIONAL WARRANTS AND FRACTIONAL SHARES. If the number of
shares of Common Stock purchasable upon the exercise of each Warrant is adjusted
pursuant to Section 8 hereof, the Company shall nevertheless not be required to
issue fractions of shares, upon exercise
Exhibit C-6
19
of the Warrants or otherwise, or to distribute certificates that evidence
fractional shares. With respect to any fraction of a share called for upon any
exercise hereof, the Company shall pay to the Investor an amount in cash equal
to such fraction multiplied by the current Market Price of such fractional
share.
SECTION 10. REGISTRATION RIGHTS AND LISTING.
(a) The Company shall use its commercially reasonable efforts
to cause to be effective prior to December 31, 2001, a registration statement
under the Securities Act, to permit the resale of the Underlying Shares by a
holder thereof. The Company shall use its commercially reasonable efforts to
cause such registration statement to remain effective until the earlier to occur
of (i) the expiration of the time period referred to in Rule 144(k) under the
Securities Act with respect to all beneficial holders of the Underlying Shares
other than affiliates of the Company and (ii) such time as all the restricted
Underlying Shares covered by any registration statement have been sold or are
otherwise freely tradable without registration under the Securities Act.
(b) In connection with the foregoing, the Company will:
(i) Prepare and file with the Securities and Exchange
Commission (the "Commission") a registration statement with respect to
such securities and use its commercially reasonable efforts to cause
such registration statement to become and remain effective.
(ii) Prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep
such registration statement effective and to comply with the provisions
of the Securities Act with respect to the sale or other disposition of
all securities covered by such registration statement whenever the
holder of such securities shall desire to sell the same.
(iii) Furnish to holder such number of copies of a
summary prospectus or other prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act,
and such other documents as holder may reasonably request in order to
facilitate the sale of the Underlying Shares owned by holder.
(iv) Use its commercially reasonable efforts to
register or qualify the securities covered by such registration
statement under such other securities or blue sky laws of such
jurisdictions within the United States and Puerto Rico as the holder
shall reasonably request, and do such reasonable acts and things as may
be required in such jurisdiction; PROVIDED, HOWEVER, that the Company
shall not be obligated to file any general consent to service of
process or qualify as a foreign corporation in any jurisdiction.
(v) Furnish at the request of holder, on the date
that such Underlying Shares are delivered to the underwriters for sale
pursuant to an underwritten registration
Exhibit C-7
20
or, if such Underlying Shares are not being sold through underwriters,
on the date that the registration statement with respect to such
Underlying Shares becomes effective, an opinion, dated such date, of
the independent counsel representing the Company for the purposes of
such registration, addressed to the underwriters, if any, and if the
Underlying Shares are not being sold through underwriters, then to the
holder, stating that such registration statement has become effective
under the Securities Act and that (a) to the best knowledge of such
counsel, no stop order suspending the effectiveness thereof has been
issued and no proceedings for that purpose have been instituted or are
pending or contemplated under the Securities Act, (b) the registration
statement, the related prospectus and each amendment or supplement
thereto, comply as to form in all material respects with the
requirements of the Securities Act and the applicable rules and
regulations of the Commission thereunder (except that such counsel need
express no opinion as to financial statements contained therein), (c)
such counsel has no reason to believe that either the registration
statement or the prospectus, or any amendment or supplement thereof,
contains any untrue statement of a material fact required to be stated
therein or necessary to make the statements therein not misleading, (d)
the descriptions in the registration statement or the prospectus, or
any amendment or supplement thereto, of all legal matters and contracts
and other legal documents or instruments are accurate and fairly
present the information required to be shown, and (e) such counsel does
not know of any legal or governmental proceedings, pending or
contemplated, required to be described in the registration statement or
prospectus, or any amendment or supplement thereto, which are not
described as required, nor of any contracts or documents or instruments
or a character required to be described in the registration statement
or prospectus, or any amendment or supplement thereto, or to be filed
as exhibits to the registration statement which are not described and
filed or incorporated by reference as required. Such opinion of counsel
shall additionally cover such other legal matters with respect to the
registration in respect of which such opinion is being given as holder
may reasonably request.
(c) All of the expenses incurred in complying with the
foregoing, including, without limitation, all registration and filing fees
(including all expenses incident to filing with the NASD), printing expenses,
fees and disbursements of counsel for the Company, expenses of any special
audits incident to or required by any such registration and expenses of
complying with the securities or blue sky laws or any jurisdictions shall be
paid by the Company.
(d) The Company shall also use its commercially reasonable
efforts to cause such Underlying Shares to be listed on the American Stock
Exchange or such other principal national securities exchange on which the
shares of Common Stock are then listed or if the shares are not so listed, on
The Nasdaq Stock Market, if the shares are then listed on such market prior to
December 31, 2001.
SECTION 11. WARRANT HOLDERS NOT DEEMED STOCKHOLDERS. No holder of
Warrants, shall, as such, be entitled to vote or to receive dividends or be
deemed the holder of Common Stock that may at any time be issuable upon exercise
of such Warrants for any purpose whatsoever, nor shall anything contained herein
be construed to confer upon the holder of
Exhibit C-8
21
Warrants, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action (whether upon any recapitalization, issue or reclassification
of stock, change of par value or change of stock to no par value, consolidation,
merger or conveyance or otherwise), or to receive notice of meetings, or to
receive dividends or subscription rights, until such holder shall have exercised
such Warrants and been issued shares of Common Stock in accordance with the
provisions hereof.
SECTION 12. RIGHTS OF ACTION. All rights of action with respect to this
Warrant Agreement are vested in the respective Investor in the Warrants, and the
Investor, without consent of the Warrant Agent or the holder of any other
Warrant, may, on his or her own behalf and for his or her own benefit, enforce
against the Company his right to exercise his or her Warrants for the purchase
of shares of Common Stock in the manner provided in the Warrant Certificate and
the Warrant Agreement.
SECTION 13. CONCERNING THE WARRANT AGENT. The Company reserves the
right to designate a Warrant Agent.
The Warrant Agent acts hereunder as agent and in a ministerial capacity
for the Company, and its duties shall be determined solely by the provisions
hereof. The Warrant Agent shall not, by issuing and delivering Warrant
Certificates or by any other act hereunder be deemed to make any representations
as to the validity, value or authorization of the Warrant Certificates or the
Warrants represented thereby or of any securities or other property delivered
upon exercise of any Warrant or whether any stock issued upon exercise of any
Warrant is fully paid and nonassessable.
The Warrant Agent shall account promptly to the Company with respect to
Warrants exercised and concurrently pay the Company, as provided in Section 4,
all moneys received by the Warrant Agent upon the exercise of such Warrants. The
Warrant Agent shall, upon request of the Company from time to time, deliver to
the Company such complete reports of registered ownership of the Warrants and
such complete records of transactions with respect to the Warrants and the
shares of Common Stock as the Company may request. The Warrant Agent shall also
make available to the Company for inspection by their agents or employees, from
time to time as either of them may request, such original books of accounts and
records (including original Warrant Certificates surrendered to the Warrant
Agent upon exercise of Warrants) as may be maintained by the Warrant Agent in
connection with the issuance and exercise of Warrants hereunder, such
inspections to occur at the Warrant Agent's office during normal business hours.
The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of Warrant Certificates to make or cause to be made
any adjustment of the Purchase Price provided in this Warrant Agreement, or to
determine whether any fact exists which may require any such adjustments, or
with respect to the nature or extent of any such adjustment, when made, or with
respect to the method employed in making the same. It shall not (i) be liable
for any recital or statement of facts contained herein or for any action taken,
suffered or omitted by it in
Exhibit C-9
22
reliance on any Warrant Certificate or other document or instrument believed by
it in good faith to be genuine and to have been signed or presented by the
proper party or parties, (ii) be responsible for any failure on the part of the
Company to comply with any of its covenants and obligations contained in this
Warrant Agreement or in any Warrant Certificate, or (iii) be liable for any act
or omission in connection with this Warrant Agreement except for its own
negligence or willful misconduct.
The Warrant Agent may at any time consult with counsel satisfactory to
it (who may be counsel for the Company) and shall incur no liability or
responsibility for any action taken, suffered or omitted by it in good faith in
accordance with the opinion or advice of such counsel.
Any notice, statement, instruction, request, direction, order or demand
of the Company shall be sufficiently evidenced by an instrument signed by the
Chairman of the Board, President, any Vice President, its Secretary, or
Assistant Secretary, (unless other evidence in respect thereof is herein
specifically prescribed). The Warrant Agent shall not be liable for any action
taken, suffered or omitted by it in accordance with such notice, statement
instruction, request, direction, order or demand believed by it to be genuine.
The Warrant Agent may resign its duties and be discharged from all
further duties and liabilities hereunder (except liabilities arising as a result
of the Warrant Agent's own negligence or willful misconduct), after giving 30
days prior written notice to the Company. At least 15 days prior to the date
such resignation is to become effective, the Warrant Agent shall cause a copy of
such notice of resignation to be mailed to the Investor at the Company's
expense. Upon such resignation, or any inability of the Warrant Agent to act as
such hereunder, the Company may choose to perform the duties of the Warrant
Agent itself or can appoint a new warrant agent. After acceptance in writing of
such appointment by the new warrant agent is received by the Company, such new
warrant agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein as the Warrant Agent,
without any further assurance, conveyance, act or deed; but if for any reason it
shall be necessary or expedient to execute and deliver any further assurance,
conveyance, act or deed, the same shall be done at the expense of the Company
and shall be legally and validly executed and delivered by the resigning Warrant
Agent. Not later than the effective date of any such appointment the Company
shall file notice thereof with the resigning Warrant Agent and shall forthwith
cause a copy of such notice to be mailed to the Investor.
Any corporation into which the Warrant Agent or any new warrant agent
may be converted or merged or any corporation resulting from any consolidation
to which the Warrant Agent or any new warrant agent shall be a party or any
corporation succeeding to the trust business of the Warrant Agent shall be a
successor warrant agent under this Warrant Agreement without any further act,
provided that such corporation is eligible for appointment as successor to the
Warrant Agent under the provisions of the preceding paragraph. Any such
successor warrant agent shall promptly cause notice of its succession as warrant
agent to be mailed to the Company and to the Investor.
Exhibit C-10
23
The Warrant Agent, its subsidiaries and affiliates, and any of its or
their officers or directors, may buy and hold or sell Warrants or other
securities of the Company and otherwise deal with the Company in the same manner
and to the same extent and with like effects as though it were not Warrant
Agent. Nothing herein shall preclude the Warrant Agent from acting in any other
capacity for the Company or for any other legal entity.
SECTION 14. MODIFICATION OF AGREEMENT. The parties hereto may by
supplemental agreement make any changes or corrections in this Warrant Agreement
(i) that they shall deem appropriate to cure any ambiguity or to correct any
defective or inconsistent provision or manifest mistake or error herein
contained; (ii) to reflect an increase in the number of Warrants which are to be
governed by this Warrant Agreement resulting from an increase in the size of the
Offering; and (iii) that it may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Warrant Certificates; and
provided, further, that no change in the number or nature of the securities
purchasable upon the exercise of any Warrant, or the Purchase Price therefor, or
the acceleration of the Warrant Expiration Date, shall be made without the
consent in writing of the Investor, other than such changes as are specifically
prescribed by this Warrant Agreement as originally executed.
SECTION 15. NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have been
made when delivered or mailed first class registered or certified mail, postage
prepaid as follows: if to the Investor, at the address of such holder as shown
on the registry books maintained by the Warrant Agent; if to the Company, at
2601 S. Bayshore Drive, Miami, Florida, 33133, Attention: Brian Goodkind,
Executive Vice President and Chief Operating Officer; and if to the Warrant
Agent, at its corporate office.
SECTION 16. GOVERNING LAW. This Warrant Agreement shall be governed by
and construed in accordance with the laws of the State of Florida, without
reference to principles of conflict of laws.
SECTION 17. BINDING EFFECT. This Warrant Agreement shall be binding
upon and inure to the benefit of the Company, the Investor and the Warrant Agent
(and their respective successors and assigns) and the holders from time to time
of Warrant Certificates. Nothing in this Warrant Agreement is intended or shall
be construed to confer upon any other person any right, remedy or claim, in
equity or at law, or to impose upon any other person any duty, liability or
obligation.
SECTION 18. TERMINATION. This Warrant Agreement shall terminate on the
earlier to occur of (i) the close of business on the Expiration Date of the
Warrants; or (ii) the date upon which all Warrants have been exercised.
SECTION 19. COUNTERPARTS. This Warrant Agreement may be executed in
several counterparts, which taken together shall constitute a single document.
Exhibit C-11
24
IN WITNESS WHEREOF, the undersigned have executed this Warrant
Agreement on the dates set forth below:
THE COMPANY: INVESTOR:
TERREMARK WORLDWIDE, INC. IF THE INVESTOR IS MORE THAN ONE
INDIVIDUAL, THEN ALL INDIVIDUALS
MUST SIGN:
------------------------------------------
(Type or print name of beneficial owner)
By:
---------------------------- -----------------------------------------
Print Name: ___________________ Signature of prospective purchaser
Title:_________________________
-----------------------------------------
Social Security Number
Date: , 200_ -----------------------------------------
------------------- (Type or print name of additional
purchaser)
----------------------------------------
Signature of spouse, joint tenant, tenant
in common or other signature, if required
-----------------------------------------
Social Security Number
IF THE PURCHASER IS A CORPORATION,
PARTNERSHIP OR OTHER ENTITY:
-----------------------------------------
(Name of Entity - Please Print)
-----------------------------------------
Taxpayer Identification Number
-----------------------------------------
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Exhibit C-12
25
EXHIBIT I TO WARRANT AGREEMENT
WARRANT CERTIFICATE WARRANT NO. _____
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED,
HYPOTHECATED, ASSIGNED OR TRANSFERRED EXCEPT (i) PURSUANT TO A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT WHICH HAS BECOME EFFECTIVE AND IS CURRENT
WITH RESPECT TO THESE SECURITIES, OR (ii) PURSUANT TO A SPECIFIC EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT BUT ONLY UPON A HOLDER HEREOF FIRST HAVING
OBTAINED THE WRITTEN OPINION OF COUNSEL TO THE CORPORATION, OR OTHER COUNSEL
REASONABLY ACCEPTABLE TO THE CORPORATION, THAT THE PROPOSED DISPOSITION IS
CONSISTENT WITH ALL APPLICABLE PROVISIONS OF THE SECURITIES ACT AS WELL AS ANY
APPLICABLE "BLUE SKY" OR SIMILAR SECURITIES LAWS.
TERREMARK WORLDWIDE, INC.
WARRANT CERTIFICATE
This certifies that FOR VALUE RECEIVED the investor or investors as set
forth below, or their registered assigns as recorded in the Company's books (the
"Investor") is the owner of the number of Warrants ("Warrants") specified below.
Each Warrant initially entitles the Investor to purchase, subject to the terms
and conditions set forth in this Certificate and the Warrant Agreement (as
hereinafter defined), one fully paid and nonassessable share of Common Stock,
$.001 par value per share ("Common Stock"), of Terremark Worldwide, Inc., a
Delaware corporation (the "Company") at any time commencing as of the dates set
forth in the Warrant Agreement and ending at 5:00 p.m., Miami time, on the
Warrant Expiration Date as defined in the Warrant Agreement (the "Expiration
Date"), upon the presentation and surrender of this Warrant Certificate with the
Subscription Form, attached hereto as SCHEDULE A, duly executed, at the
corporate office of the Company or warrant agent appointed by the Company or any
successor to such warrant agent (the "Warrant Agent"), accompanied by payment as
required pursuant to the Warrant Agreement (the "Warrant Agreement") between the
Company and the Investor.
This Warrant Certificate and each Warrant represented hereby are issued
pursuant to and are subject in all respects to the terms and conditions set
forth in the Warrant Agreement, which Warrant Agreement is hereby incorporated
herein by reference and made a part hereof and to which Warrant Agreement
reference is hereby made for a full description of the rights, limitations of
rights, duties and immunities hereunder of the Company and the holders of the
warrant Certificates. Copies of the Warrant Agreement are on file at the
principal office of the Company. In the event that the Company designates a
Warrant Agent, the Investor hereof consents to any amendment to the Warrant
Agreement made in connection with such appointment.
I-1
26
In the event of certain contingencies provided for in the Warrant
Agreement, the Purchase Price or the number of shares of Common Stock subject to
purchase upon the exercise of each Warrant represented hereby are subject to
modification or adjustment.
Each Warrant represented hereby is exercisable at the option of the
Investor, but no fractional shares of Common Stock will be issued. In the case
of the exercise of less than all the Warrants represented hereby, the Company
shall cancel this Warrant Certificate upon the surrender hereof and shall
execute and deliver a new Warrant Certificate or Warrant Certificates of like
tenor, which the Company or the Warrant Agent shall countersign, for the balance
of such Warrants.
If the Expiration Date shall, in the State of Florida, be a holiday or
a day on which the banks are authorized to close, then the Expiration Date shall
mean 5:00 P.M. (Miami time) the next following day which in the State of Florida
is not a holiday or a day on which banks are authorized to close. The Company
may at its election, extend the Expiration Date.
This Warrant Certificate is exchangeable upon the surrender hereof by
the Investor at the corporate office of the Company or the Warrant Agent, for a
new Warrant Certificate or Warrant Certificates of like tenor representing an
equal aggregate number of Warrants, each of such new Warrant Certificates to
represent such number of Warrants as shall be designated by such Investor at the
time of such surrender. This Warrant Certificate is transferable upon the
Investor's due presentment of (i) completed SCHEDULE B and (ii) payment for any
tax or other governmental charge imposed for registration or transfer of this
Warrant Certificate, at which time the Company shall issue a new Warrant
Certificate or Warrant Certificates representing an aggregate number of Warrants
equal to the number previously registered in the name of the Investor, subject
to the limitations provided in the Warrant Agreement.
Prior to the exercise of any Warrant represented hereby, the Investor
shall not be entitled to the right to vote or to receive dividends or other
distributions, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided in the Warrant Agreement.
Prior to due presentment for registration of transfer hereof, the
Company may deem and treat the Investor as the absolute owner hereof and of each
Warrant represented hereby (notwithstanding any notations of ownership or
writing hereon made by anyone other than a duly authorized officer of the
Company) for all purposes and shall not be affected by any notice to the
contrary.
I-2
27
This Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of Florida.
_________ Warrants INVESTOR:
Purchase Price $ IF THE INVESTOR IS MORE THAN ONE
------------ INDIVIDUAL, THEN ALL INDIVIDUALS
MUST SIGN:
Date: ----------------------
----------------------------------------
(Type or print name of beneficial owner)
----------------------------------------
Signature of prospective purchaser
----------------------------------------
ISSUER: Social Security Number
----------------------------------------
TERREMARK WORLDWIDE, INC. (Type or print name of additional
purchaser)
----------------------------------------
By:________________________________ Signature of spouse, joint tenant,
tenant in common or other signature, if
Print Name: _______________________ required
Title:_____________________________ ________________________________________
Social Security Number
IF THE PURCHASER IS A CORPORATION,
PARTNERSHIP OR OTHER ENTITY:
----------------------------------------
(Name of Entity - Please Print)
----------------------------------------
Taxpayer Identification Number
----------------------------------------
By: ___________________________________
Name: __________________________________
Title: _________________________________
I-3
28
SCHEDULE A TO WARRANT CERTIFICATE
SUBSCRIPTION FORM
TO BE EXECUTED BY THE INVESTOR
IN ORDER TO EXERCISE WARRANTS
The undersigned Investor hereby irrevocably elects to exercise ______
Warrants represented by this Warrant Certificate, and to purchase the securities
issuable upon the exercise of such Warrants, and requests that certificates for
such securities shall be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
------------------------------
------------------------------
------------------------------
------------------------------
[Please print or type name and address.]
and delivered to
------------------------------
------------------------------
------------------------------
------------------------------
[Please print or type name and address.]
and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Investor at the
address stated below.
The undersigned either tenders payment in full or, pursuant to the terms of the
attached Warrant, exercises its right to convert the right to acquire shares
into _______, duly and validly authorized and issued, fully-paid and
non-assessable shares of the Company without further payment. The fair market
value used for purposes of this calculation was $_______ (determined in
accordance with the procedures specified in Section 4(b)(ii) of the Warrant
Agreement).
Taxpayer Identification Number
- --------------------------------------------
Signature Guaranteed
Schedule A-1
29
SCHEDULE B TO WARRANT CERTIFICATE
ASSIGNMENT
TO BE EXECUTED BY THE INVESTOR
IN ORDER TO ASSIGN WARRANTS
FOR VALUE RECEIVED __________________________ hereby sells, assigns and
transfers unto:
----------------------------------
----------------------------------
----------------------------------
----------------------------------
[Please print or type name and address and social security or other
identifying number.]
________________________________ of the Warrants represented by this Warrant
Certificate, and hereby irrevocably constitutes and appoints
_________________________________ ____________________________________ Attorney
to transfer this Warrant Certificate on the books of the Company, with full
power of substitution in the premises.
Dated:___________________
X_______________________
Signature Guaranteed
- -------------------------
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO THE
NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE
GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE
AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE OR
MIDWEST STOCK EXCHANGE.
Schedule B-1
30
EXHIBIT D
Assignment Form
To assign the Debenture, fill in the form below: (I) or (We) assign and
transfer the Debenture to:
- --------------------------------------------------------------------------------
(Insert Assignee's Soc. Sec. Or Tax I.D. No.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
--------------------------------------------------------
to transfer the Debenture on the books of the Company. The agent may substitute
another to act for him.
Date: Your Signature:
----------------------------- ----------------------------
(Sign exactly as your name appears
on the other side of the Debenture)
Signature Guarantee:
-----------------------------------------------------------
Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor program
reasonably acceptable to the Registrar).
Exhibit D-1
31
EXHIBIT E
Letter Regarding Transfers to Accredited Investors
---------------, -----
Terremark Worldwide, Inc.
2601 S. Bayshore Drive
Miami Beach, FL 33133
Attention: ___________
Re: TERREMARK WORLDWIDE, INC.
13% SUBORDINATED CONVERTIBLE DEBENTURE DUE DECEMBER 31, 2005
Ladies and Gentlemen:
In connection with our proposed purchase of the 13% Subordinated
Convertible Debenture due December 31, 2005 dated as of the later of the dates
set forth on the execution page between Terremark Worldwide, Inc. (the
"Company") and the investor named on the execution page of the Debenture (the
"Investor") (the "Debenture"), we confirm that:
1. We understand that any subsequent transfer of the Debenture is
subject to certain restrictions and conditions set forth in the Subscription
Agreement dated as of the later of the dates set forth on the execution page of
the Debenture between the Company and the Investor (the "Subscription
Agreement") and the undersigned agrees to be bound by, and not to resell, pledge
or otherwise transfer the Debenture except in compliance with, such restrictions
and conditions and the Securities Act of 1933, as amended (the "Securities
Act").
2. We understand that the offer and sale of the Debenture has not been
registered under the Securities Act, and that the Debenture may not be offered
or sold except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that we will not, within the time period referred to in Rule 144(k)
under the Securities Act as in effect on the date of transfer of the Debenture,
resell or otherwise transfer the Debenture except pursuant to an exemption from,
or in a transaction not subject to, the registration requirements of the
Securities Act and we further agree to provide to any person to whom the
Debenture is transferred a notice advising such transferee that resales of the
Debenture are restricted as stated herein.
3. We understand that, on any proposed resale of the Debenture, we will
be required to furnish to the Company, such certifications, legal opinions and
other information as the Company may reasonably require to confirm that the
proposed sale complies with the foregoing restrictions. We acknowledge that the
Company will rely upon the truth and accuracy of such
Exhibit E-1
32
information. We further understand that the Debenture purchased by us will bear
a legend to the foregoing effect.
4. We are an "accredited investor" as defined in Rule 501 of Regulation
D under the Securities Act) and have such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of our
investment in the Securities, and we and any accounts for which we are acting
are each able to bear the economic risk of our or their investment, as the case
may be.
5. We are acquiring the Debenture purchased by us for our account or
for one or more accounts (each of which is an "accredited investor") as to each
of which we exercise sole investment discretion. We are not acquiring the
Debenture with a view toward distribution thereof in a transaction that would
violate the Securities Act or the securities laws of any State of the United
States or any other applicable jurisdiction.
The Company is entitled to rely upon this letter and is irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.
Very truly yours,
By:
------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Exhibit E-2