EXHIBIT 10.27
WARRANT CERTIFICATE
NEITHER THE WARRANTS REPRESENTED BY THIS CERTIFICATE NOR ANY OF THE SECURITIES
ISSUABLE UPON EXERCISE THEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"). ACCORDINGLY, NEITHER THE WARRANTS
REPRESENTED BY THIS CERTIFICATE NOR ANY OF THE SECURITIES ISSUABLE UPON EXERCISE
THEREOF MAY 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, (II)
PURSUANT TO RULE 144 OR RULE 144A UNDER THE SECURITIES ACT ONLY UPON A HOLDER
HEREOF FIRST HAVING DELIVERED TO THE COMPANY A CERTIFICATE SETTING FORTH THE
BASIS FOR APPLYING SUCH RULE TO THE PROPOSED DISPOSITION OR (III) PURSUANT TO
ANOTHER SPECIFIC EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT BUT ONLY
UPON A HOLDER HEREOF FIRST HAVING OBTAINED THE WRITTEN OPINION OF COUNSEL TO THE
COMPANY, OR OTHER COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY (WHO MAY BE AN
EMPLOYEE OF THE HOLDER), TO THE EFFECT THAT THE PROPOSED DISPOSITION IS EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
DATED DECEMBER 31, 2004
TERREMARK WORLDWIDE, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
WARRANT CERTIFICATE
To Purchase Shares of Common Stock of
TERREMARK WORLDWIDE, INC
[ ] Warrants
THIS CERTIFIES THAT, for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, CITIGROUP GLOBAL
MARKETS REALTY CORP. or its registered assigns (the "HOLDER"), is the registered
owner of the number of warrants specified above (collectively, the "WARRANTS"),
each of which warrants entitles the holder, subject to the adjustment provisions
and the conditions and limitations hereinafter set forth, to purchase from
TERREMARK WORLDWIDE, INC., a corporation organized and existing under the laws
of the State of Delaware (together with its successors and assigns, the
"COMPANY"), one (1) share (as adjusted pursuant to Section 4 hereof) of the
Company's Common Stock at a purchase price of $[ ] per share (as such purchase
price is adjusted pursuant to Section 4 hereof, the "EXERCISE PRICE"). Certain
capitalized terms used in this Warrant Certificate are defined in Section 10
hereof.
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The Warrants represented by this certificate are part of an
authorized issue of Warrants (the "AUTHORIZED WARRANTS") initially exercisable
for an aggregate of 5,000,000 shares of Common Stock issued on the date hereof
pursuant to the terms of the Loan Agreement.
The Warrants shall be void and all rights represented hereby
shall cease after 5:00 p.m. Eastern Time on the Expiration Date. The Warrants
shall not be terminable by the Company prior to the Expiration Date.
The shares of Common Stock issuable upon exercise of the
Warrants (and any other or additional shares, securities or property that may
hereafter be issuable upon exercise of the Warrants) are sometimes referred to
herein as the "WARRANT SHARES," and the maximum number of shares so issuable
under this Warrant Certificate is sometimes referred to as the "AGGREGATE
NUMBER" as such number may be increased or decreased, as more fully set forth
herein.
The Warrants are subject to the following provisions, terms
and conditions:
1. EXERCISE; ISSUE OF CERTIFICATES; PAYMENT FOR SHARES. (a)
The Warrants represented by this Warrant Certificate may be exercised by the
Holder, in whole at any time or in part (but not as to fractional shares of
Common Stock) from time to time, to purchase the Aggregate Number of shares
(initially equal to [ ] shares) of Common Stock at all times on or prior to 5:00
p.m. Eastern Time on the Expiration Date.
(b) The Warrants shall be exercisable in whole at any time or
in part from time to time by surrendering this Warrant Certificate on any
Business Day (with the Exercise Form annexed hereto as SCHEDULE 1 properly
completed and executed) to the Company at its principal office specified in
Section 15, or its then current address, and upon payment to the Company of the
Exercise Price for the Warrant Shares being purchased.
(c) Payment of the aggregate Exercise Price with respect to an
exercise in whole or in part of any Warrants may be made, in the sole discretion
of the Holder, in the form of any of the following: (i) by cash or a check or
bank draft in New York Clearing House funds; (ii) by the surrender of the
applicable Warrant or Warrants, and without the payment of the Exercise Price in
cash, for such number of Warrant Shares equal to the product of (1) the number
of Warrant Shares for which such Warrant or Warrants are exercisable with
payment in cash of the Exercise Price as of the date of exercise and (2) the
Cashless Exercise Ratio; (iii) by tendering Notes having an aggregate principal
amount, plus accrued and unpaid interest, if any, thereon to the date of
exercise, equal to the Exercise Price; or (iv) by any combination of (i), (ii)
and (iii) above. Such certificate or certificates shall be deemed to have been
issued and any Person so designated to be named therein shall be deemed for all
purposes to have become a holder of record of such Warrant Shares as of the
close of business on the Business Day of the surrender of this Warrant
Certificate and payment of the Exercise Price as aforesaid.
(d) Certificates for the shares so purchased and cash in lieu
of any fractional shares shall be delivered to the Holder as promptly as
practicable, not exceeding five (5) Business Days, after this Warrant
Certificate shall have been so exercised, and unless the Warrants represented by
this Warrant Certificate have expired or been fully exercised, a new
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Warrant Certificate representing the number of shares with respect to which this
Warrant Certificate shall not then have been exercised shall also be delivered
to the Holder within such time.
2. SHARES TO BE FULLY PAID; RESERVATION OF SHARES; LISTING.
The Company covenants and agrees that: (a) all Warrant Shares will, upon
issuance, be original-issue shares (and not treasury stock) fully paid and
nonassessable and free from all taxes, claims, liens, charges and other
encumbrances with respect to the issue thereof; (b) without limiting the
generality of the foregoing, it will from time to time take all such action as
may be required to assure that the par value per share of Common Stock shall at
all times be less than or equal to the Exercise Price; (c) during the period
within which the Warrants represented by this Warrant Certificate may be
exercised, the Company will at all times have authorized and reserved for the
purpose of issue or transfer upon exercise of the Warrants represented by this
Warrant Certificate a sufficient number of original-issue shares of its Common
Stock to provide for the exercise of all the Warrants represented by this
Warrant Certificate; and (d) upon the exercise of the Warrants represented by
this Warrant Certificate, it will, at its expense, promptly notify each
securities exchange on which any Common Stock is at the time listed of such
issuance, and use its best efforts to maintain a listing of all shares of Common
Stock from time to time issuable upon the exercise of the Warrants represented
by this Warrant Certificate to the extent such shares can be listed.
3. [Intentionally Omitted.]
4. ADJUSTMENTS TO EXERCISE PRICE AND AGGREGATE NUMBER. The
Exercise Price and the Aggregate Number of shares of Common Stock issuable upon
the exercise of each Warrant (the "EXERCISE RATE") are subject to adjustment
from time to time upon the occurrence of the events enumerated in this Section
4.
(a) ADJUSTMENT FOR CHANGE IN CAPITAL STOCK. If the Company:
(1) pays a dividend or makes any other distribution on its
Common Stock in shares of its Common Stock or in other capital stock of
the Company; or
(2) subdivides, combines or reclassifies its outstanding
shares of Common Stock,
then, in each case, the Exercise Rate and the Exercise Price in effect
immediately prior to such action shall be proportionately adjusted so that the
Holder may, upon payment of the same aggregate Exercise Price payable
immediately prior to such action, receive the Aggregate Number and kind of
shares of capital stock of the Company which the Holder would have owned
immediately following such action if such Warrants had been exercised
immediately prior to such action.
Any such adjustment shall become effective immediately after
the record date of such dividend or distribution or the effective date of such
subdivision, combination or reclassification, as applicable.
If after an adjustment the Holder upon exercise of a Warrant
may receive shares of two or more classes of capital stock of the Company, the
board of directors of the
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Company shall determine the allocation of the adjusted Exercise Price between
the classes of capital stock. After such allocation, the exercise privilege and
the Exercise Price of each class of capital stock shall thereafter be subject to
adjustment on terms comparable to those applicable to Common Stock in this
Section 4.
Such adjustment shall be made successively whenever any event
listed above shall occur.
(b) ADJUSTMENT FOR CERTAIN ISSUANCES OF COMMON STOCK. If the
Company issues, sells or distributes to any Person (i) shares of its Common
Stock, (ii) any rights, options or warrants entitling any Person to purchase
shares of Common Stock or (iii) any rights, warrants or options or other
securities convertible into or exchangeable for Common Stock, in each case, at a
price per share less than the Current Market Value on the record date for
determining entitlements to participate in such issuance, sale or distribution
(the "TIME OF DETERMINATION"), the Exercise Rate shall be adjusted in accordance
with the formula:
E' = E x O + N
---------
O + N x P
-----
M
and the Exercise Price shall be adjusted in accordance with the following
formula:
EP' = EP x E
--
E'
where:
E' = the adjusted Exercise Rate.
E = the Exercise Rate immediately prior to the Time of
Determination for any such issuance, sale or
distribution.
EP' = the Adjusted Exercise Price.
EP = the Exercise Price immediately prior to the Time
of Determination for any such issuance, sale or
distribution.
O = the number of Fully Diluted Shares (as defined
below) outstanding immediately prior to the Time of
Determination for any such issuance, sale or
distribution.
N = the number of additional shares of Common Stock
issued, sold or issuable upon exercise of such
rights, options or warrants or other convertible or
exchangeable securities.
P = the per share price received and receivable by the
Company in the case of any issuance or sale of
Common Stock or rights, options or warrants or other
convertible or exchangeable securities (inclusive of
the exercise
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price per share of Common Stock payable upon
exercise of such rights, options or warrants or
other convertible or exchangeable securities).
M = the Current Market Value per share of Common Stock
on the Time of Determination for any such issuance,
sale or distribution.
For purposes of this Section 4 the term "FULLY DILUTED SHARES"
shall mean (i) the shares of Common Stock outstanding as of a specified time,
and (ii) the shares of Common Stock into or for which rights, options, warrants
or other convertible or exchangeable securities outstanding as of such date are
exercisable, convertible or exchangeable (other than the Warrants or any of the
other Authorized Warrants).
The adjustments shall be made successively whenever any such
shares, rights, options or warrants or other convertible or exchangeable
securities are issued and shall become effective immediately after the relevant
Time of Determination. Notwithstanding the foregoing, the Exercise Rate and the
Exercise Price shall not be subject to adjustment pursuant to this subsection
(b) in connection with (i) the issuance of any shares of Common Stock upon
exercise of any such rights, options or warrants or other convertible or
exchangeable securities which have previously been the subject of an adjustment
under this Agreement for which the required adjustment has been made, (ii)
Common Stock Equivalents or shares of Common Stock issued upon exercise of any
Common Stock Equivalents issued to employees, officers or directors of, or
consultants or advisors to the Company or any of its subsidiaries, pursuant to
stock purchase or stock option plans or other arrangements that are approved by
the board of directors of the Company for the purpose of compensation or similar
payment in connection with employment or services rendered to the Company or its
Subsidiaries, (iii) shares of Common Stock issued upon exercise of any Common
Stock Equivalents outstanding on the date hereof and (iv) any exercise of the
Warrants or any of the other Authorized Warrants. If at the end of the period
during which any such rights, options or warrants or other convertible or
exchangeable securities are exercisable, not all rights, options or warrants or
other convertible or exchangeable securities shall have been exercised, the
Warrants shall be immediately readjusted to what it would have been if "N" in
each of the above formulas had been the number of shares actually issued.
(c) ADJUSTMENT FOR OTHER DISTRIBUTIONS. If the Company distributes to holders of
its Common Stock (i) any evidences of indebtedness of the Company or any of its
subsidiaries, (ii) any assets of the Company or any of its subsidiaries (whether
in cash, property or otherwise), or (iii) any rights, options or warrants to
acquire any of the foregoing or to acquire any other securities of the Company,
the Exercise Rate shall be adjusted in accordance with the formula:
E' = E x M
-----
M - F
and the Exercise Price shall be decreased (but not increased) in accordance with
the following formula:
EP' = EP x E
-
E'
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where:
E' = the adjusted Exercise Rate.
E = the current Exercise Rate on the record date
referred to in this subsection (c) below.
EP' = the Adjusted Exercise Price.
EP = the current Exercise Price on the record date
referred to in this subsection (c) below.
M = the Current Market Value per share of Common Stock
on the record date referred to in this subsection
(c) below.
F = the fair market value (as determined in good faith
by the Company's board of directors) on the record
date referred to in this subsection (c) below of the
indebtedness, assets, rights, options or warrants
distributable in respect of one share of Common
Stock.
The adjustments shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the distribution.
If any adjustment is made pursuant to clause (iii) above of this subsection (c)
as a result of the issuance of rights, options or warrants and at the end of the
period during which any such rights, options or warrants are exercisable, not
all such rights, options or warrants shall have been exercised, the Warrants
shall be immediately readjusted as if "F" in the above formula was the fair
market value on the record date of the indebtedness or assets actually
distributed upon exercise of such rights, options or warrants divided by the
number of shares of Common Stock outstanding on the record date. Notwithstanding
anything to the contrary contained in this subsection (c), if "M-F" in the above
formula is less than $1.00 (or is a negative number) then in lieu of the
adjustment otherwise required by this subsection (c), the Company may elect to
distribute to the Holder, upon exercise of any Warrants, the evidences of
indebtedness, assets, rights, options or warrants which would have been
distributed to such Holder had such Warrants been exercised immediately prior to
the record date for such distribution.
This subsection does not apply to rights, options or warrants
referred to in subsection (b) of this Section 4.
(d) The following provisions shall be applicable to the making
of adjustments of the Exercise Price and Exercise Rate herein before provided
for in this Section 4:
(i) The sale or other disposition of any issued shares of
Common Stock owned or held by or for the account of the Company shall
be deemed an issuance thereof for the purposes of this Section 4.
(ii) The adjustments required by the preceding subsections of
this Section 4 shall be made whenever and as often as any specified
event requiring an adjustment shall
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occur, except as expressly provided herein. For the purpose of any
adjustment, any specified event shall be deemed to have occurred at the
close of business on the date of its occurrence.
(iii) In computing adjustments under this Section 4 fractional
interests in Common Stock shall be taken into account to the nearest
one-thousandth (.001) of a share and shall be aggregated until they
equal one whole share.
(iv) If the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive any item
described in Sections 4(a) through 4(c) hereof, but abandon its plan to
pay or deliver such item, then no adjustment shall be required by
reason of the taking of such record and any such adjustment previously
made in respect thereof shall be rescinded and annulled.
(v) The consideration for any additional shares of Common
Stock issuable pursuant to any options, warrants or other rights to
subscribe for or purchase the same shall be the consideration received
or receivable by the Company for issuing such options, warrants or
other rights, plus the additional consideration payable to the Company
upon the exercise of such options, warrants or other rights. The
consideration for any additional shares of Common Stock issuable
pursuant to the terms of any convertible or exchangeable securities
shall be the consideration received or receivable by the Company for
issuing any options, warrants or other rights to subscribe for or
purchase such convertible or exchangeable securities, plus the
consideration paid or payable to the Company in respect of the
subscription for or purchase of such convertible or exchangeable
securities, plus the additional consideration, if any, payable to the
Company upon the exercise of the right of conversion, exercise or
exchange of such convertible or exchangeable securities. In case of the
issuance at any time of any additional shares of Common Stock or
convertible or exchangeable securities in payment or satisfaction of
any dividend upon any class of stock other than Common Stock, the
Company shall be deemed to have received for such additional shares of
Common Stock or convertible or exchangeable securities a consideration
equal to the amount of such dividend so paid or satisfied.
(e) (i) If any event occurs as to which the other provisions
of this Section 4 are not strictly applicable but the lack of any provision for
the exercise of the rights of the Holder would not fairly protect the purchase
rights of such Holder in accordance with the essential intent and principles of
such provisions, or, if strictly applicable, would not fairly protect the
conversion rights of such Holder in accordance with the essential intent and
principles of such provisions, then the Company shall appoint a firm of
independent certified public accountants in the United States (which may be the
regular auditors of the Company) of recognized national standing in the United
States reasonably satisfactory to the Required Holders, which shall give their
opinion as to the adjustments, if any, necessary to preserve, without dilution,
on a basis consistent with the essential intent and principles established in
the other provisions of this Section 4, the exercise rights of such Holder. Upon
receipt of such opinion, the Company shall forthwith make the adjustments
described therein.
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(ii) In case of any capital reorganization, other than in the
cases referred to in Section 4(a), (b) or (c) hereof and other than any capital
reorganization that does not result in any reclassification of the outstanding
shares of Common Stock into shares of other stock or other securities or
property, or the consolidation or merger of the Company with or into another
corporation (other than a merger or consolidation in which the Company is the
continuing corporation and which does not result in any reclassification of the
outstanding shares of Common Stock into shares of other stock or other
securities or property), or the sale of all or substantially all of the assets
of the Company (collectively such actions being hereinafter referred to as
"Reorganizations"), there shall thereafter be deliverable upon exercise of any
Warrant (in lieu of the number of shares of Common Stock theretofore
deliverable) the number of shares of stock or other securities or property to
which a holder of the number of shares of Common Stock that would otherwise have
been deliverable upon the exercise of such Warrant would have been entitled upon
such Reorganization if such Warrant had been exercised in full immediately prior
to such Reorganization. In case of any Reorganization, appropriate adjustment,
as determined in good faith by the board of directors of the Company, whose
determination shall be described in a duly adopted resolution certified by the
Company's Secretary or Assistant Secretary, shall be made in the application of
the provisions herein set forth with respect to the rights and interests of the
Holder so that the provisions set forth herein shall thereafter be applicable,
as nearly as possible, in relation to any such shares or other securities or
property thereafter deliverable upon exercise of Warrants.
The Company shall not effect any such Reorganization unless
prior to or simultaneously with the consummation thereof the successor
corporation (if other than the Company) resulting from such Reorganization or
the corporation or other entity purchasing such assets shall (i) expressly
assume, by a supplemental warrant or other acknowledgment executed and delivered
to the Holder the obligation to deliver to the Holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
Holder may be entitled to purchase, and the due and punctual performance and
observance of each and every covenant, condition, obligation and liability under
this Warrant Certificate to be performed and observed by the Company in the
manner prescribed herein and (ii) if such Reorganization takes place prior to
consummation by the Company of all of its registration obligations under the
Stockholders Agreement, enter into an agreement providing to the Holder rights
and benefits substantially similar to those enjoyed by the Holder hereof under
the Stockholders Agreement.
The foregoing provisions of this Section 4(e)(ii) shall apply
to successive Reorganization transactions.
(f) (i) In case:
(A) the Company shall authorize the issuance to
holders of shares of Common Stock of rights, options or warrants to
subscribe for or purchase shares of Common Stock or of any other
subscription rights or warrants; or
(B) the Company shall authorize the distribution to
holders of shares of Common Stock of evidences of its indebtedness or
assets or of rights, options or warrants to subscribe for or purchase
any of the foregoing; or
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(C) of any consolidation or merger to which the
Company is a party and for which approval of any stockholders of the
Company is required, or of the sale of all or substantially all of the
assets of the Company, or of any reclassification or change of Common
Stock issuable upon exercise of the Warrants, or a tender offer or
exchange offer for shares of Common Stock; or
(D) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company; or
(E) the Company proposes to take any action that
would require an adjustment to the Exercise Rate or Exercise Price
pursuant to this Section 4;
then the Company shall give prompt written notice to the Holder at least fifteen
(15) days prior to the applicable record date hereinafter specified, or the date
of the event in the case of events for which there is no record date, by
first-class mail, postage prepaid, a written notice stating (i) the date as of
which the holders of record of shares of Common Stock to be entitled to receive
any such shares, rights, options, warrants or distribution are to be determined,
or (ii) the initial expiration date set forth in any tender offer or exchange
offer for shares of Common Stock, or (iii) the date on which any such
consolidation, merger, sale, dissolution, liquidation or winding up is expected
to become effective or consummated, and the date as of which it is expected that
holders of record of shares of Common Stock shall be entitled to exchange such
shares for securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up. The failure by the Company to give such notice or any defect therein
shall not affect the legality or validity of any distribution, right, option,
warrant, consolidation, merger, conveyance, dissolution, liquidation or winding
up, or the vote upon any action.
(ii) Within five (5) days after the occurrence of an event
resulting in an adjustment pursuant to this Section 4, the Company shall cause
to be promptly mailed to the Holder (and upon the exercise hereof, to the
exercising Holder) by first-class mail, postage prepaid, notice of each
adjustment or adjustments to the Exercise Price and Exercise Rate effected since
the date of the last such notice and a certificate of the Company's Chief
Financial Officer or Chief Accounting Officer, setting forth the Exercise Price
and Exercise Rate after such adjustment(s), a brief statement of the facts
requiring such adjustment(s) and the computation by which such adjustment(s) was
made.
(g) The occurrence of a single event shall not trigger an
adjustment of the Exercise Price and Exercise Rate under more than one
subsection of this Section 4.
5. TAXES ON CONVERSION. The issuance of certificates for
Warrant Shares upon the exercise of the Warrants shall be made without charge to
the Holder exercising the Warrants for any issue or stamp tax in respect of the
issuance of such certificates, and such certificates shall be issued in the
respective names of, or in such names as may be directed by, the Holder;
PROVIDED, HOWEVER, that the Company shall not be required to pay any tax that
may be payable in respect of any transfer involved in the issuance and delivery
of any such certificate in a name other than that of the Holder, and the Company
shall not be required to issue or deliver such certificates unless or until the
Person or Persons requesting the issuance thereof shall have
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paid to the Company the amount of such tax or shall have established to the
reasonable satisfaction of the Company that such tax has been paid.
6. LIMITATION OF LIABILITY. No provision hereof in the absence
of the exercise of the Warrants by the Holder and no enumeration herein of the
rights or privileges of the Holder shall give rise to any liability on the part
of the Holder for the Exercise Price of the Warrant Shares or as a stockholder
of the Company, whether such liability is asserted by the Company or by any
creditor of the Company. Upon exercise of Warrants the Holder will have the
right to vote the Common Stock received upon such exercise. No Holder shall be
entitled to vote or be deemed the holder of Common Stock (or any other
securities as may be issuable upon the exercise of the Warrants) nor shall
anything contained herein be construed to confer upon the Holder the rights of a
stockholder of the Company or the right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or give or
withhold consent to any corporate action or to receive notice of meetings or
other actions affecting stockholders or to receive dividends, distributions or
subscription rights or otherwise (except as provided herein), until the Warrants
shall have been exercised in accordance with the terms and conditions of the
Warrants.
7. CLOSING OF BOOKS. The Company will at no time close its
transfer books against the transfer of the Warrants or any Warrant Shares that
have been issued or are issuable upon the exercise of the Warrants in any manner
that interferes with the timely exercise hereof. The Company shall deem and
treat the Holder as the absolute owner thereof for all purposes, including
without limitation for the purpose of exercise thereof. The Company agrees that,
upon exercise of the Warrants in accordance with the terms hereof (including
receipt by the Company of payment of the aggregate Exercise Price), the shares
so purchased shall be deemed to be issued to such holder as the record owner of
such shares as of the close of business on the date on which the Warrants shall
have been exercised and the Holder shall be deemed for all purposes a
stockholder of the Company with respect to such shares as though the certificate
for such shares had been issued on the date of such exercise.
8. RESTRICTIONS ON TRANSFER.
(a) Each certificate for any Warrant Shares issued upon the
exercise of the Warrants, and each stock certificate issued upon the transfer of
any such Warrant Shares (except as otherwise permitted by this Section 8) shall
be stamped or otherwise imprinted with a legend in substantially the following
form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE 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, (II) PURSUANT TO RULE 144 OR RULE 144A UNDER THE
SECURITIES ACT ONLY UPON A HOLDER HEREOF FIRST HAVING DELIVERED TO THE
COMPANY A CERTIFICATE SETTING FORTH THE BASIS FOR APPLYING SUCH RULE TO
THE PROPOSED DISPOSITION OR (III) PURSUANT TO ANOTHER
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SPECIFIC EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT BUT ONLY
UPON A HOLDER HEREOF FIRST HAVING OBTAINED THE WRITTEN OPINION OF
COUNSEL TO THE COMPANY, OR OTHER COUNSEL REASONABLY ACCEPTABLE TO THE
COMPANY (WHO MAY BE AN EMPLOYEE OF THE HOLDER), TO THE EFFECT THAT THE
PROPOSED DISPOSITION IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT.
(b) Each Warrant Certificate issued in substitution for any Warrant Certificate
pursuant to Section 11, 12 or 13 hereof and each Warrant Certificate issued upon
the transfer of any Warrant (except as otherwise permitted by this Section 8)
shall be stamped or otherwise imprinted with a legend in substantially the
following form:
NEITHER THE WARRANTS REPRESENTED BY THIS CERTIFICATE NOR ANY OF THE
SECURITIES ISSUABLE UPON EXERCISE THEREOF HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT").
ACCORDINGLY, NEITHER THE WARRANTS REPRESENTED BY THIS CERTIFICATE NOR
ANY OF THE SECURITIES ISSUABLE UPON EXERCISE THEREOF MAY 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, (II)
PURSUANT TO RULE 144 OR RULE 144A UNDER THE SECURITIES ACT ONLY UPON A
HOLDER HEREOF FIRST HAVING DELIVERED TO THE COMPANY A CERTIFICATE
SETTING FORTH THE BASIS FOR APPLYING SUCH RULE TO THE PROPOSED
DISPOSITION OR (III) PURSUANT TO ANOTHER SPECIFIC EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT BUT ONLY UPON A HOLDER HEREOF
FIRST HAVING OBTAINED THE WRITTEN OPINION OF COUNSEL TO THE COMPANY, OR
OTHER COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY (WHO MAY BE AN
EMPLOYEE OF THE HOLDER), TO THE EFFECT THAT THE PROPOSED DISPOSITION IS
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
(c) The restrictions imposed by this Section 8 upon the
transferability of Warrants and Warrant Shares shall apply as to the Warrants
and any Warrant Shares until (i) such securities shall have been effectively
registered under the Securities Act and disposed of in accordance with the
registration statement covering such securities, or (ii) such time as, in the
reasonable opinion of counsel for the Company, or upon the written opinion of
counsel for the Holder thereof reasonably acceptable to the Company, such
restrictions are not required in order to comply with the Securities Act.
Whenever such restrictions shall terminate as to any Warrants or Warrant Shares,
the Holder shall be entitled to receive from the Company, without expense, new
certificates of like tenor not bearing the restrictive legends set forth in
Section 8(a) or 8(b), as applicable.
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9. PREEMPTIVE RIGHTS. In the event that the Company seeks to
sell newly issued Common Stock Equivalents ("NEW ISSUANCE SECURITIES"), each
holder of Warrants shall be entitled to acquire, at the proposed offering price
of such New Issuance Securities, that number of New Issuance Securities equal to
the aggregate number of New Issuance Securities proposed to be so offered
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock into which the Warrants held by such holder shall yield upon
exercise if such Warrants were exercised on the issue date of such New Issuance
Securities and the denominator of which shall be the aggregate number of Fully
Diluted Shares of Common Stock issued and outstanding of the Company on the
issue date of such New Issuance Securities. In connection with any proposed
issuance of such New Issuance Securities, the Company shall give to each holder
of Warrants the same information about the Company, its business and such
issuance and the same notice of its intention to effect such issuance (but in no
event less than 10 Business Days notice) as given to the other prospective
purchasers in such transaction specifying in such notice the number of New
Issuance Securities to be sold, and the proposed offering price per New Issuance
Securities. Each holder shall have the right, exercisable concurrently with
purchases by other purchasers, to elect to purchase up to the maximum number of
New Issuance Securities to which such holder is entitled to acquire hereunder
with such purchase being effected by such holder's payment to the Company by
wire transfer of immediately available funds, an amount equal to the number of
New Issuance Securities to be purchased by such holder, multiplied by the
offering price per New Issuance Security against delivery of certificates
evidencing the number of New Issuance Securities so acquired, which will be
issued in the name of such holder. To the extent any New Issuance Securities
proposed to be sold shall not have been subscribed to by an existing holder, the
Company shall be free thereafter to sell such New Issuance Securities by way of
a private placement, or similar offering, at an offering price per New Issuance
Security not less than that set forth in the notice to the holders. The
preemptive rights established by this Section 9 shall have no application to any
of the following New Issuance Securities: (i) Common Stock Equivalents or shares
of Common Stock issued upon exercise of any Common Stock Equivalents issued to
employees, officers or directors of, or consultants or advisors to the Company
or any of its subsidiaries, pursuant to stock purchase or stock option plans or
other arrangements that are approved by the board of directors of the Company
for the purpose of compensation or similar payment in connection with employment
or services rendered to the Company or its Subsidiaries; (ii) Shares of Common
Stock issued upon exercise of any Common Stock Equivalents outstanding on the
date hereof; (iii) any New Issuance Securities issued for consideration other
than cash pursuant to a merger, consolidation, acquisition or similar business
combination approved by the board of directors of the Company; (iv) Common Stock
or Common Stock Equivalents issued in connection with any stock split, stock
dividend or recapitalization by the Company; (v) any New Issuance Securities
that are issued by the Company pursuant to an underwritten public offering; and
(vi) any New Issuance Securities sold or granted to any Person other than for
money or for any purpose other than the raising of capital for the Company and
its Subsidiaries.
10. DEFINITIONS. As used in this Warrant Certificate, unless
the context otherwise requires, the following terms have the following
respective meanings:
AFFILIATE: shall mean with respect to any specified Person:
(i) any other Person directly or indirectly controlling or controlled
by or under direct or indirect common control with such specified
Person; (ii) any other Person that owns, directly or indirectly,
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5% or more of such specified Person's capital stock or any officer or
director of any such specified Person or other Person or, with respect
to any natural Person, any person having a relationship with such
Person by blood, marriage or adoption no more remote than first cousin;
or (iii) any other Person 5% or more of the voting stock of which is
beneficially owned or held directly or indirectly by such specified
Person. For the purposes of this definition, "control" when used with
respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly, whether
through ownership of voting securities, by contract or otherwise; and
the terms "controlling" and "controlled" have meanings correlative to
the foregoing.
AGGREGATE NUMBER: shall have the meaning as set forth in the
fourth paragraph of this Warrant Certificate.
AUTHORIZED WARRANT SHARES: shall mean the Warrant Shares and
all shares of Common Stock (and any other or additional shares,
securities or property issued upon exercise of any other Authorized
Warrants) issued upon exercise of any other Authorized Warrants.
AUTHORIZED WARRANTS: shall have the meaning as set forth in
the second paragraph of this Warrant Certificate.
BUSINESS DAY: shall mean any day other than a Legal Holiday.
CAPITAL STOCK: shall mean, (i) with respect to any Person that
is a corporation, any and all shares, interests, participations or
other equivalents (however designated and whether or not voting) of
corporate stock, including each class of common stock and preferred
stock of such Person; (ii) with respect to any Person that is not a
corporation, any and all partnership, membership or other equity
interests of such Person; and (iii) any rights, warrants or options
exchangeable for or convertible into any of the foregoing.
CASHLESS EXERCISE RATIO: shall mean an amount equal a
fraction, the numerator of which is the excess of the Current Market
Value of one share of Common Stock on the date of exercise over the
Exercise Price per share as of the date of exercise and the denominator
of which is the Current Market Value of one share of Common Stock on
the date of exercise.
CLOSING BID PRICE: shall mean for any Security on each trading
day (A) if such Security is listed or admitted to trading on any
securities exchange, the closing price, regular way, on such day on the
principal exchange on which such Security is traded, or if no sale
takes place on such day, the average of the closing bid and asked
prices on such day, (B) if such Security is not then listed or admitted
to trading on any securities exchange, the last reported sale price on
such day, or if there is no such last reported sale price on such day,
the average of the closing bid and the asked prices on such day, as
reported by a reputable quotation source designated by the Company or
(C) if neither clause (A) nor (B) is applicable, the average of the
reported high bid and low asked prices on such day, as reported by a
reputable quotation service, or a newspaper of general circulation in
the Borough of Manhattan, City of New York, customarily published on
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each trading day designated by the Company. If there are no such prices
on a trading day, then the market price shall not be determinable for
such trading day.
CLOSING DATE: shall mean December 31, 2004.
COMMISSION: shall mean the United States Securities and
Exchange Commission and any other similar or successor agency of the
United States federal government administering the Securities Act or
the Exchange Act.
COMMON STOCK: shall mean the shares of Common Stock, par value
$.001 per share, of the Company, currently provided for in the
Certificate of Incorporation of the Company, and including, for all
purposes hereunder, any other capital stock of the Company into which
such shares of Common Stock may be converted or reclassified or that
may be issued in respect of, in exchange for, or in substitution of,
such Common Stock by reason of any stock splits, stock dividends,
distributions, mergers, consolidations or like events.
COMMON STOCK EQUIVALENTS: shall mean (a) an outstanding share
of Common Stock, which shall be deemed to equal one Common Stock
Equivalent, (b) an outstanding security that is, at the time in
question, convertible by its terms into Common Stock, with such
security to be deemed to equal to number of Common Stock Equivalents
that equal the amount of shares of Common Stock into which it is then
so convertible, (c) an outstanding option, warrant or right to acquire
Common Stock that is, at the time in question, exercisable by its terms
for Common Stock, with such option, warrant or right to be deemed to be
equal to the number of Common Stock Equivalents that equals the number
of shares of common stock for which it is then so exercisable and (d)
an outstanding option, warrant or right that is, at the time in
question, exercisable by its terms for a security that, at the time in
question, is convertible by its terms in to Common Stock, with such
option, warrant or right to be deemed to be equal to the number of
Common Stock Equivalents that equals the number of shares of Common
Stock for which the convertible securities for which they are then
exercisable would then be convertible.
COMPANY: shall have the meaning as set forth in the first
paragraph of this Warrant Certificate.
COMPUTATION AMOUNT: shall have the meaning as set forth in
Section 14(i).
CURRENT MARKET VALUE: per share of Common Stock or of any
other security (herein collectively referred to as a "SECURITY") at any
date shall be:
(1) if the Security is not registered under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), the value of the Security determined by an Independent
Financial Expert, or
(2) if the Security is registered under the Exchange
Act, the average of the daily closing bid prices of such
Security for the 20 consecutive trading days preceding such
date, but only if such Security shall have been listed on a
national
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securities exchange or the Nasdaq National Market or traded
through an automated quotation system during such entire 20
trading day period. If such Security shall have not been so
listed or traded for such entire 20 trading day period, the
Current Market Value of such Security shall be determined as
if the Security was not registered under the Exchange Act.
EFFECTIVENESS DEADLINE: shall have the meaning as set forth in
Section 14(a).
EFFECTIVENESS PERIOD: shall have the meaning as set forth in
Section 14(b).
EXERCISE PRICE: shall have the meaning as set forth in the
first paragraph of this Warrant Certificate.
EXERCISE RATE: shall have the meaning as set forth in Section
4(a).
EXCHANGE ACT: shall mean the Securities Exchange Act of 1934,
as amended.
EXPIRATION DATE: shall mean the later of (i) December 31, 2011
and (ii) the date that the Company's obligations under the Loan
Agreement are paid in full and the Loan Agreement is terminated.
FULLY DILUTED SHARES: shall have the meaning as set forth in
Section 4(b).
HOLDER: shall have the meaning as set forth in the first
paragraph of this Warrant Certificate.
INDEPENDENT: shall mean any Person who (i) is in fact
independent, (ii) does not have any direct financial interest or any
material indirect financial interest in the Company or any of its
subsidiaries, or in any Affiliate of the Company or any of its
subsidiaries (other than as a result of holding securities of the
Company in trading accounts) and (iii) is not an officer, employee,
promoter, trustee, partner, director or Person performing similar
functions for the Company or any of its subsidiaries or any Affiliate
of the Company or any of its subsidiaries.
INDEPENDENT FINANCIAL EXPERT: shall mean a reputable
accounting, appraisal or investment banking firm that is, in the
reasonable judgment of the board of directors of the Company, qualified
to perform the task for which such firm has been engaged hereunder, is
nationally recognized and disinterested and Independent with respect to
the Company and its Affiliates and is reasonably acceptable to the
Required Holders.
LOAN AGREEMENT: shall mean the Loan Agreement dated December
31, 2004 among the Company and lenders named therein pursuant to which
the Authorized Warrants were issued.
NEW ISSUANCE SECURITIES: shall have the meaning as set forth
in Section 9.
NONEFFECTIVE PERIOD: shall have the meaning as set forth in
Section 14(i).
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NOTES: shall mean the notes of the Company issued pursuant to
the Loan Agreement.
PERIODIC AMOUNT: shall have the meaning as set forth in
Section 14(i).
PERSON: shall mean any individual, corporation, limited
liability company, partnership, joint venture, association, joint-stock
company, trust, unincorporated organization or government or any agency
or political subdivision thereof.
REGISTRATION STATEMENT: shall have the meaning as set forth in
Section 14(a).
REORGANIZATION: shall have the meaning as set forth in Section
4(e).
REQUIRED HOLDERS: shall mean any registered holder or holders
holding in the aggregate more than 50% of the outstanding Authorized
Warrants (including the Warrants) and Authorized Warrant Shares.
SECURITIES ACT: shall mean the Securities Act of 1933, as
amended.
SELLING HOLDERS: shall mean, with respect to a specified
registration under Section 14 hereof, holders of Authorized Warrants
(including the Warrants) and the holders of Authorized Warrant Shares
(including the Warrant Shares) whose securities are included in such
registration.
TIME OF DETERMINATION: shall have the meaning as set forth in
Section 4(b).
WARRANTS: shall have the meaning as set forth in the first
paragraph of this Warrant Certificate.
WARRANT SHARES: shall have the meaning as set forth in the
first paragraph of this Warrant Certificate.
11. WARRANTS TRANSFERABLE. This Warrant Certificate is issued
as a Warrant Certificate for which there is a register maintained by the
Company. Subject to the provisions of Section 8, the transfer of the Warrants
represented by this Warrant Certificate and all rights hereunder, in whole or in
part, is registerable at the office or agency of the Company referred to in
Section 1 hereof by the Holder in person or by duly authorized attorney, upon
surrender of this Warrant Certificate with a properly completed Form of
Assignment in the form annexed hereto as SCHEDULE 2. The Holder, by taking or
holding the same, consents and agrees that this Warrant Certificate, when
endorsed in blank, shall be deemed negotiable, and that the holder hereof, when
this Warrant Certificate shall have been so endorsed, may be treated by the
Company and all other persons dealing with this Warrant Certificate as the
absolute owner hereof for any purpose and as the person entitled to exercise the
rights of a "Holder" represented by this Warrant Certificate, or to the
registration of transfer hereof on the books of the Company; and until due
presentment for registration of transfer on such books, the Company may treat
the Holder thereof as the owner for all purposes, and the Company shall not be
affected by notice to the contrary. Any transfer tax relating to a transfer of
this Warrant Certificate shall be paid by the Holder who transfers such Warrant
Certificate.
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12. WARRANT CERTIFICATES EXCHANGEABLE FOR DIFFERENT
DENOMINATIONS. Subject to the provisions of Section 8, this Warrant Certificate
is exchangeable, upon the surrender hereof by the Holder hereof at such office
or agency of the Company, for new Warrant Certificates of like tenor
representing in the aggregate the number of Warrants represented hereby, each of
such new Warrant Certificates to represent the number of Warrants as shall be
designated by said Holder at the time of such surrender.
13. REPLACEMENT OF WARRANT CERTIFICATES. Upon receipt of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant Certificate and, in the case of any such loss,
theft or destruction, upon delivery of an indemnity bond (or, in the case of the
original Holder hereof or any substantial financial institution to which any
Warrants represented by this Warrant Certificate may be transferred, an
unsecured indemnity agreement) reasonably satisfactory in form and amount to the
Company or, in the case of any such mutilation, upon surrender and cancellation
of such Warrant Certificate, the Company will execute and deliver, subject to
the provisions of Section 8, in lieu thereof, a new Warrant Certificate of like
tenor to the Holder of such Warrant, at such Holder's expense.
14. REGISTRATION RIGHTS. The Company hereby agrees with the
Selling Holders that:
(a) The Company shall use its commercially reasonable efforts
to file or cause to be filed a registration statement (the "REGISTRATION
STATEMENT") under the Securities Act, to permit the resale from time to time by
the holders of the Authorized Warrants and the Authorized Warrant Shares and to
have such registration statement declared effective no later than 180 days
following the Closing Date (the "EFFECTIVENESS DEADLINE").
(b) The Company shall use its commercially reasonable efforts
to cause such Registration Statement to remain effective until the earlier to
occur of (A) the expiration of the time period referred to in Rule 144(k) under
the Securities Act (provided that all Authorized Warrants and Authorized Warrant
Shares are then available for immediate sale to the public under such rule) and
(B) such time as all Authorized Warrants and Authorized Warrant Shares covered
by the Registration Statement have been sold or are otherwise freely tradable
without registration under the Securities Act (the "EFFECTIVENESS PERIOD").
(c) In connection with the foregoing, the Company will:
(1) Prepare and file with the Commission a Registration
Statement with respect to the Authorized Warrants and the Authorized
Warrant Shares and use its commercially reasonable efforts to cause
such Registration Statement to become effective.
(2) 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 and rules thereunder 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.
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(3) Furnish to the Selling Holders, without charge, such
number of copies of the Registration Statement, any pre-effective or
post-effective amendment thereto, the prospectus (including a
preliminary prospectus), and any amendment or supplement thereof, in
each case in conformity with the requirements of the Securities Act,
and such other documents, as the Selling Holders may reasonably request
in order to facilitate the sale of securities covered by such
Registration Statement owned by the Selling Holders.
(4) Use its commercially reasonable efforts (i) to register
and qualify, or qualify for exemption from registration for, the
securities covered by such Registration Statement under applicable blue
sky laws, and do such other reasonable acts and things as may be
required in jurisdictions to which such blue sky laws apply and (ii) to
obtain the withdrawal of any order suspending the effectiveness of the
Registration Statement or the lifting of any suspension from
qualification (or exemption from qualification) of the offer and
transfer of any such securities in any jurisdiction, at the earliest
possible time; 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.
(5) Promptly notify the Selling Holders of any stop order
issued or threatened to be issued by the Commission in connection
therewith and take all reasonable actions required to prevent the entry
of such stop order or to remove it if entered.
(6) Provide and cause to be maintained a transfer agent and
registrar for all Authorized Warrant Shares covered by such
Registration Statement from and after a date not later than the
effective date of such Registration Statement.
(7) Use its commercially reasonable efforts to cause the
Authorized Warrant 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.
(8) Furnish at the request of the Selling Holders, on the date
that the Registration Statement with respect to the Authorized Warrants
and the Authorized Warrant Shares becomes effective, an opinion, dated
as of such date, of the independent counsel representing the Company
for the purposes of such registration, addressed to the Selling Holders
and in customary form and covering such matters of the type customarily
covered by such letter and stating, among other things, that such
Registration Statement has become effective under the Securities Act
and that 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.
(d) All of the expenses incurred in complying with the
foregoing, including, without limitation, all registration, filing and
qualification fees (including all expenses incident to filing with the NASD),
printing expenses, fees and disbursements of counsel and accountants for the
Company, expenses of any special audits incident to or required by any such
registration,
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expenses of complying with the securities or blue sky laws or any jurisdictions
shall be paid by the Company.
(e) The Selling Holders shall furnish to the Company such
information regarding itself, the Authorized Warrants and the Authorized Warrant
Shares beneficially owned by it and the intended method of disposition of the
Authorized Warrants and the Authorized Warrant Shares beneficially owned by it
as shall be reasonably required to effect the registration of the Authorized
Warrants and the Authorized Warrant Shares and shall execute such documents in
connection with such registration as the Company may reasonably request.
(f) In the event of any offer of the Authorized Warrants or
the Authorized Warrant Shares pursuant to the Registration Statement or any
amendment thereof hereof, the Company agrees to indemnify and hold harmless the
Selling Holders, each underwriter, if any, of the Authorized Warrants and the
Authorized Warrant Shares, and each other person, if any, who controls any
Selling Holder or any such underwriter within the meaning of the Securities Act,
from and against any and all losses, claims, damages or liabilities (or actions
in respect thereof) which arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement under which the Authorized Warrants and the Authorized Warrant Shares
were registered and offered under the Securities Act or any prospectus contained
therein, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse the Selling Holders,
each such underwriter, and each such controlling person for any legal or any
other expenses reasonably incurred by the Selling Holders, such underwriter or
controlling person in connection with the investigation or defense of any such
loss, claim, damage, liability or action, PROVIDED, HOWEVER, that the Company
will not be liable in any such case to the extent that any such loss, claim,
damage, or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
Registration Statement or such prospectus in reliance upon, and in conformity
with, written information furnished to the Company by the Selling Holders, such
underwriter or such controlling person, specifically for use in preparation
thereof, provided further, that the Company shall not file any such Registration
Statement or prospectus containing information relating to the Selling Holders
without providing the Selling Holders with an opportunity to review and, to the
extent incorrect, correct such information.
(g) In the event of any offer of the Authorized Warrants and
the Authorized Warrant Shares pursuant to the Registration Statement or any
amendment thereof, and to the extent permitted by applicable law, the Selling
Holders and each other person, if any, who controls any Selling Holder within
the meaning of the Securities Act, severally but not jointly, agrees to
indemnify and hold harmless the Company, each person who controls the Company
within the meaning of the Securities Act, and each officer and director of the
Company from and against any losses, claims, damages or liabilities, joint or
several, to which the Company, such controlling person or any such officer or
director may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in such post-effective amendment or other
Registration Statement under which the Authorized Warrants and the Authorized
Warrant Shares were offered or any prospectus contained therein, or arise out of
or are based upon the omission or alleged omission to state
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therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, which untrue statement or alleged untrue
statement or omission or alleged omission was made therein in reliance upon, and
in conformity with, written information furnished to the Company by such Selling
Holder or such controlling person specifically for use in connection with the
preparation thereof (provided that the Company shall have afforded such Selling
Holder with an opportunity to review, and to the extent incorrect, correct such
information prior to the filing thereof), and to reimburse the Company, each
such controlling person and each such officer or director for any legal or any
other expenses reasonably incurred by them in connection with investigating, or
defending any such loss, claim, damage, liability or action; provided, however,
that any such indemnification obligation shall be limited to an aggregate
maximum dollar amount not to exceed the aggregate dollar amount of the proceeds
received by such Selling Holder in any such offering.
(h) Promptly after receipt by an indemnified party of notice
of the commencement of any action or the assertion of a claim that may be
subject to indemnification hereunder, such indemnified party, if a claim in
respect thereof is to be made against an indemnifying party, will give written
notice to such indemnifying party of the commencement or assertion thereof.
Indemnification provided for under this Section 6 shall not be available to the
indemnified party if it shall fail to give such notice to the indemnifying party
(if the indemnifying party was not aware of the action) to the extent the
indemnifying party was prejudiced by failure to receive such notice, but the
omission to give such notice shall not relieve the indemnifying party from any
liability it otherwise may have to the indemnified party. In case any such
action is brought or such assertion is made against any indemnified party, and
it notifies any indemnifying party of such commencement or assertion, the
indemnifying party will be entitled to participate in and, to the extent that it
may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party for any legal
expenses subsequently incurred by such indemnified party in connection with the
defense thereof, other than the reasonable cost of investigation.
(i) If the Registration Statement covering the securities
required to be filed by the Company pursuant to Section 14 hereof is not
declared effective by the Commission by the Effectiveness Deadline, or the
Registration Statement shall cease to be effective at any time after the
Effectiveness Deadline but prior to the termination of the Effectiveness Period
(a "NONEFFECTIVE PERIOD"), then the Company shall make the payments to the
Selling Holders as provided in the next sentence as additional damages and not
as a penalty; PROVIDED HOWEVER, that if after a Registration Statement is
declared effective the Board of Directors of the Company reasonably determines
in good faith that the continued effectiveness of the filing of such
Registration Statement at such time would be materially detrimental to the
Company and it is therefore necessary to suspend the filing of such Registration
Statement the Company may suspend the effectiveness of such Registration
Statement for a period of time not to exceed 90 days in any 12 month period
without incurring any payments pursuant to this subsection (i) for such
Noneffective Period. The amount to be paid by the Company to the Selling Holders
shall be determined as of each Computation Date (as defined below), and such
amount shall be equal to $7,500 for the period from the Effectiveness Deadline
or the commencement of a Noneffective Period, as applicable, to the first
Computation Date, and for each 30-day period of
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any subsequent Computation Dates thereafter, calculated on a pro rata basis to
the date on which the Registration Statement is declared effective by the
Commission (the "PERIODIC AMOUNT"). The full Periodic Amount shall be paid by
the Company to the Holder by wire transfer of immediately available funds within
three days after each Computation Date. As used in this subsection (i),
"COMPUTATION DATE" means the date which is 30 days after the Effectiveness
Deadline or the commencement of a Noneffective Period, as applicable, and, if
the Registration Statement to be filed by the Company pursuant to this Section
14 has not theretofore been declared effective by the Commission, each date
which is 30 days after the previous Computation Date until such Registration
Statement is so declared effective.
(j) The Company covenants that it will file the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the Commission thereunder (or, if it ceases to
be required to file such reports, it will, upon the request of the Holder, make
publicly available other information that fulfills the information requirements
set forth in Rule 144 (c) (2)), and it will take such further action as the
Holder may reasonably request, all to the extent required from time to time to
enable the Holder to sell the Warrants and the Warrant Shares without
registration under the Securities Act within the limitation of the exemptions
provided by (i) Rule 144 under the Securities Act, as such rule may be amended
from time to time, or (ii) any similar rule or regulation hereafter adopted by
the Commission. Upon the request of the Holder, the Company will deliver to it a
written statement as to whether the Company has complied with such information
disclosure and other requirements.
15. CERTIFICATE RIGHTS AND OBLIGATIONS SURVIVE EXERCISE OF
WARRANTS. The rights and obligations of the Company contained in this Warrant
Certificate shall survive the exercise or repurchase of the Warrants represented
by this Warrant Certificate to the extent that such survival is necessary to
give effect to a provision hereof.
16. NOTICES. All notices, requests and other communications
required or permitted to be given or delivered to the Holder of this Warrant
Certificate shall be in writing, and shall be delivered, or shall be sent by
first-class mail, postage prepaid, and addressed, to such Holder at the address
shown on this Warrant Certificate, or at such other address as shall have been
furnished to the Company by notice from such Holder. All notices, requests and
other communications required or permitted to be given or delivered to the
Company shall be in writing, and shall be delivered, or shall be sent by
first-class mail, postage prepaid, and addressed to the office of the Company
(return receipt requested) at 2601 S. Bayshore Drive, Miami, FL 33133,
Attention: Chief Financial Officer, with a copy to: Greenberg Traurig at 1221
Brickell Avenue, 21st Floor, Miami, FL 33133, Attention: Paul Berkowitz. Any
such notice, request or other communication may be sent by facsimile, but shall
in such case be subsequently confirmed by a writing delivered or sent by
first-class mail, postage prepaid, as provided above. All notices shall be
deemed to have been given either at the time of the delivery thereof to (or the
transmission thereof, in the case of a facsimile) any officer or employee of the
person entitled to receive such notice at the address of such person for
purposes of this Section 16, or, if mailed, at the completion of the third full
day following the time of such mailing thereof to such address, as the case may
be, in each case addressed and given as aforesaid.
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17. AMENDMENTS. Neither this Warrant Certificate nor any term
or provision hereof may be amended, supplemented, changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the Company
and the Holder.
18. REMEDIES. The Holder may seek to enforce the terms of this
Warrant Certificate by seeking a decree for the specific performance of any
agreement contained herein or by an injunction against a violation of any of the
terms hereof or otherwise. If any default under the terms of this Warrant
Certificate shall occur and be continuing, the Holder may proceed to protect and
enforce its rights under this Warrant Certificate by exercising such remedies as
are available to such Holder in respect thereof under applicable law, either by
suit in equity or by action at law, or both, whether for specific performance of
any covenant or other agreement contained in this Warrant Certificate or in aid
of the exercise of any power granted in this Warrant Certificate. No remedy
conferred in this Warrant Certificate upon the Holder is intended to be
exclusive of any other remedy available to such Holder, and each and every such
remedy shall be cumulative and shall be in addition to every other remedy
conferred herein or now or hereafter existing at law or in equity or by statute
or otherwise.
19. GOVERNING LAW. THIS WARRANT CERTIFICATE HAS BEEN EXECUTED
AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN NEW YORK, NEW YORK.
THIS WARRANT CERTIFICATE AND THE RIGHTS GRANTED HEREIN SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED UNDER THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING
EFFECT TO ANY CONFLICTS OF LAW RULES OR PRINCIPLES). ANY JUDICIAL PROCEEDING
BROUGHT BY OR AGAINST THE COMPANY WITH RESPECT TO THIS WARRANT CERTIFICATE OR
ANY RELATED AGREEMENT SHALL BE BROUGHT IN ANY COURT OF COMPETENT JURISDICTION IN
THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY
EXECUTION AND DELIVERY OF THIS WARRANT CERTIFICATE, THE COMPANY ACCEPTS THE
EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND IRREVOCABLY AGREES TO BE
BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS WARRANT. IF ANY
ACTION IS COMMENCED IN ANY OTHER JURISDICTION THE PARTIES HERETO HEREBY CONSENT
TO THE REMOVAL OF SUCH ACTION TO THE SOUTHERN DISTRICT OF NEW YORK. THE COMPANY
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE COMPANY AT ITS
ADDRESS, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF THE HOLDERS OF THIS WARRANT OR THE WARRANT
SHARES TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR COMMENCE LEGAL
PROCEEDINGS IN OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER
JURISDICTION.
20. WAIVER OF JURY TRIAL. THE COMPANY AND THE HOLDER OF THIS
WARRANT CERTIFICATE HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS WARRANT CERTIFICATE
OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS WARRANT
CERTIFICATE AND THE TRANSACTIONS
-23-
CONTEMPLATED HEREBY AND THE RELATIONSHIP THAT IS BEING ESTABLISHED HEREUNDER.
THE COMPANY AND THE HOLDER OF THIS WARRANT CERTIFICATE ALSO WAIVE ANY BOND OR
SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED
OF THE OTHER PARTIES. THE SCOPE OF THIS WAIVER IS INTENDED TO BE
ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT
RELATE TO THE SUBJECT MATTER OF THIS WARRANT CERTIFICATE, INCLUDING, WITHOUT
LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW AND STATUTORY CLAIMS. THE COMPANY AND THE HOLDER OF THIS WARRANT
CERTIFICATE ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO
A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING
INTO THIS WARRANT CERTIFICATE AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER
IN THEIR RELATED FUTURE DEALINGS. THE COMPANY AND THE HOLDER OF THIS WARRANT
CERTIFICATE FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS WARRANT CERTIFICATE OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
[signature page follows]
-24-
IN WITNESS HEREOF, the Company has caused this Warrant to be
signed on its behalf, in its corporate name, by its duly authorized officer, all
as of the day and year first above written.
TERREMARK WORLDWIDE, INC.
By:
-------------------------------------
Name:
Title:
-25-
SCHEDULE 1
EXERCISE FORM
[TO BE EXECUTED ONLY UPON EXERCISE OF WARRANTS]
To: [ ]
The undersigned irrevocably exercises _______________ of the
Warrants for the purchase of one share (subject to adjustment) of Common Stock,
par value $.001 per share, of TERREMARK WORLDWIDE, INC. (the "Company") for each
Warrant represented by the within Warrant Certificate and herewith makes payment
of $____ (such payment being (a) in cash or by check or bank draft in New York
Clearing House funds payable to the order of the Company, (b) by the surrender
of the applicable Warrant or Warrants, and without the payment of the Exercise
Price in cash, for such number of Warrant Shares equal to the product of (1) the
number of Warrants Shares for which such Warrant or Warrants are exercisable
with payment in cash of the Exercise Price as of the date of exercise and (2)
the Cashless Exercise Ratio, (c) by tendering Notes having an aggregate
principal amount, plus accrued and unpaid interest, if any, thereon to the date
of exercise, equal to the Exercise Price or (d) by any combination of (a), (b)
and (c) above, all at the exercise price and on the terms and conditions
specified in the within Warrant Certificate, surrenders the within Warrant
Certificate and all right, title and interest therein (except as to any
unexercised Warrants) to the Company and directs that the Warrant Shares
deliverable upon the exercise of such Warrants be registered or placed in the
name and at the address specified below and delivered thereto.
Date: ___________________ ____________________________
-26-
SCHEDULE 2
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned registered holder of the
within Warrant Certificate hereby sells, assigns and transfers unto the
Assignee(s) named below (including the undersigned with respect to any Warrants
constituting a part of the Warrants evidenced by the within Warrant Certificate
not being assigned hereby) all of the rights of the undersigned under the within
Warrant Certificate with respect to the number of Warrants set forth below:
<Table>
<Caption>
Social Security or Other
Names of Identifying Number of Number of
Assignees Address Assignee(s) Warrants
--------- ------- ------------------------ --------
</Table>
and does hereby irrevocably constitute and appoint ___________ the undersigned's
attorney to make such transfer on the books of [ ] maintained for that purpose,
with full power of substitution in the premises.
Dated: ___________________
_____________________________________1
(Signature of Owner)
--------------------------------------
(Street Address)
--------------------------------------
(City) (State) (Zip Code)
- -------------------
1 The signature must correspond with the name as written upon the face of
the within Warrant Certificate in every particular, without alteration
or enlargement or any change whatever.