Exhibit 10.3
TERREMARK WORLDWIDE, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
FOR
XXXXX X. XXXXXXXX
AGREEMENT
1. GRANT OF OPTION. Terremark Worldwide, Inc. (the "Company") hereby
grants, as of July 10, 2003, to Xxxxx X. Xxxxxxxx (the "Optionee") an option
(the "Option") to purchase up to 1,406,795 shares of the Company's Common Stock,
$0.001 par value per share (the "Stock"), at an exercise price per share equal
to $.62. The Option shall be subject to the terms and conditions set forth
herein. The Option was issued pursuant to the Company's 1996 Stock Option Plan,
amended and restated as of January 1, 1999 (the "Plan"), which is incorporated
herein for all purposes. The Option is a nonqualified stock option, and not an
Incentive Stock Option. The Optionee hereby acknowledges receipt of a copy of
the Plan and agrees to be bound by all of the terms and conditions hereof and
thereof and all applicable laws and regulations.
2. DEFINITIONS. Unless otherwise provided herein, terms used herein
that are defined in the Plan and not defined herein shall have the meanings
attributed thereto in the Plan.
3. EXERCISE SCHEDULE. The Option shall be exercisable in whole or in
part immediately upon the Date of Grant.
4. METHOD OF EXERCISE. The vested portion of this Option shall be
exercisable in whole or in part in accordance with the exercise schedule set
forth in Section 3 hereof by written notice which shall state the election to
exercise the Option, the number of Stock in respect of which the Option is being
exercised, and such other representations and agreements as to the holder's
investment intent with respect to such Stock as may be required by the Company
pursuant to the provisions of the Plan. Such written notice shall be signed by
the Optionee and shall be delivered in person or by certified mail to the
Secretary of the Company. The written notice shall be accompanied by payment of
the exercise price. This Option shall be deemed to be exercised after both (a)
receipt by the Company of such written notice accompanied by the exercise price
and (b) to the extent required by law, arrangements that are reasonably
satisfactory to the Committee have been made for Optionee's payment to the
Company of the amount that is necessary to be withheld in accordance with
applicable Federal or state withholding requirements. No Stock will be issued
pursuant to the Option unless and until such issuance and such exercise shall
comply with all relevant provisions of applicable law, including the
requirements of any stock exchange upon which the Stock then may be traded.
5. METHOD OF PAYMENT. Payment of the exercise price shall be by any of
the following, or a combination thereof, at the election of the Optionee: (a)
cash; (b) with Stock that have been held by the Optionee for at least six (6)
months (or such other Stock as the Company determines will not cause the Company
to recognize for financial accounting purposes a charge for compensation
expense), (c) pursuant to a "cashless exercise" procedure, by delivery of a
properly executed exercise notice together with such other documentation, and
subject to such guidelines, as the Board or Committee shall reasonably require
to effect an exercise of the Option, and delivery to the Company by a licensed
broker reasonably acceptable to the Company
of proceeds from the sale of Stock or a margin loan sufficient to pay the
exercise price and any applicable income or employment taxes, or (d) such other
consideration or in such other manner as may be determined by the Board or the
Committee in its sole discretion.
6. TERMINATION OF OPTION. Any unexercised portion of the Option shall
automatically and without notice terminate and become null and void on the tenth
anniversary of the Date of Grant.
7. TRANSFERABILITY. The Option granted hereby is not transferable
otherwise than by will or under the applicable laws of descent and distribution,
and during the lifetime of the Optionee the Option shall be exercisable only by
the Optionee, or the Optionee's guardian or legal representative. In addition,
the Option shall not be assigned, negotiated, pledged or hypothecated in any way
(whether by operation of law or otherwise), and the Option shall not be subject
to execution, attachment or similar process. Upon any attempt to transfer,
assign, negotiate, pledge or hypothecate the Option, or in the event of any levy
upon the Option by reason of any execution, attachment or similar process
contrary to the provisions hereof, the Option shall immediately become null and
void.
8. RESTRICTIONS AS TO SALE OF STOCK
(a) RESTRICTED SHARES. Any shares of Stock acquired upon
exercise of the Option specified in Section 1 and (i) all shares of the
Company's capital stock received as a dividend or other distribution upon such
shares, and (ii) all shares of capital stock or other securities of the Company
into which such shares may be changed or for which such shares shall be
exchanged, whether through reorganization, recapitalization, stock split-ups or
the like, shall be subject to the provisions of this Section 8, and shall
hereinafter referred to as "Restricted Shares."
(b) NO SALE OR PLEDGE OF RESTRICTED SHARES. Optionee agrees
and covenants that during the twenty-four (24) month period commencing on the
Date of Grant (the "Restricted Period"), he will not sell or otherwise transfer
or dispose of (including but not limited to allowing the foreclosure of a lien
interest), and will not permit to be sold or otherwise disposed of or
transferred in any manner, either voluntarily or by operation of law (all
hereinafter collectively referred to as "Transfers"), all or any portion of the
Restricted Shares or any interest therein, except in accordance with and subject
to the terms of Section 8(d) hereof. Transfers to a spouse, lineal descendents,
a trust for the benefit of a spouse and/or lineal descendents, or other entity
of which the transferor and/or his spouse and/or lineal descendents are one
hundred percent owners for purposes of estate planning are excluded from the
definition of "Transfer" as used in this Agreement and, therefore, are not
restricted.
(c) TRANSFER AFTER END OF RESTRICTED PERIOD. After the end of
the Restricted Period, Optionee shall be entitled to transfer, on a daily basis,
the greatest of (i) 15,000 Restricted Shares, (ii) 3.3% of the trading volume of
the shares of Common Stock of the Company for the day immediately preceding the
day of the Transfer, or (iii) such number of shares of Common Stock as Xxxxxx X.
Xxxxxx Transfers on a daily basis.
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(d) CHANGE IN CONTROL. Notwithstanding the foregoing, all
provisions of this Section 8 shall immediately terminate, and any legends on the
Restricted Shares then held by the Optionee pursuant to Section 8(f) hereof
shall immediately be removed, in the event of a Change in Control of the
Company. For purposes of this Agreement, the term "Change in Control" shall
mean:
(i) Approval by the shareholders of the Company of
(x) a reorganization, merger, consolidation or other form of corporate
transaction or series of transactions, in each case, with respect to which
persons who were the shareholders of the Company immediately prior to such
reorganization, merger or consolidation or other transaction do not, immediately
thereafter, own more than 50% of the combined voting power entitled to vote
generally in the election of directors of the reorganized, merged or
consolidated company's then outstanding voting securities, in substantially the
same proportions as their ownership immediately prior to such reorganization,
merger, consolidation or other transaction, or (y) a liquidation or dissolution
of the Company or (z) the sale of all or substantially all of the assets of the
Company (unless such reorganization, merger, consolidation or other corporate
transaction, liquidation, dissolution or sale is subsequently abandoned);
(ii) the acquisition (other than from the Company) by
any person, entity or "group", within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act, of more than 30% of either the then
outstanding shares of the Company's Common Stock or the combined voting power of
the Company's then outstanding voting securities entitled to vote generally in
the election of directors (hereinafter referred to as the ownership of a
"Controlling Interest") excluding, for this purpose, any acquisitions by (1) the
Company or its Subsidiaries, (2) any person, entity or "group" that as of the
Commencement Date of this Agreement owns beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Securities Exchange Act) of a
Controlling Interest or (3) any employee benefit plan of the Company or its
Subsidiaries. (iii) The resignation of Xxxxxx X. Xxxxxx as both Chairman and CEO
of the Company, his death, or his absence from the day to day business affairs
of the Company for more than 90 consecutive days due to disability or
incapacity.
(e) PERMISSIBLE TRANSFERS. Notwithstanding Sections (a), (b)
and (c) above, if, at any time during the Restricted Period, Xxxxxx X. Xxxxxx
makes a Transfer of all or a portion of his shares of Common Stock of the
Company, then Optionee shall have the right to make a Transfer of that portion
of his Restricted Shares equal to (or less than) the amount of shares of Common
Stock of the Company that Xxxxxx X. Xxxxxx had transferred during that
Restricted Period.
(f) LEGENDS. If the Optionee exercises the Option within the
Restricted Period, the Company shall issue the certificate or certificates
representing the shares of Stock subject to the Option being exercised with a
legend or legends that the Board or the Committee reasonably deem appropriate
and necessary to reflect those restrictions that such shares of Stock are
subject to pursuant to Section 8 hereof.
9. NO RIGHTS OF STOCKHOLDERS. Neither the Optionee nor any personal
representative (or beneficiary) shall be, or shall have any of the rights and
privileges of, a stockholder of the
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Company with respect to any shares of Stock
purchasable or issuable upon the exercise of the Option, in whole or in part,
prior to the date of exercise of the Option.
10. NO RIGHT TO CONTINUED EMPLOYMENT. Neither the Option nor this
Agreement shall confer upon the Optionee any right to continued employment or
service with the Company.
11. LAW GOVERNING. This Agreement shall be governed in accordance with
and governed by the internal laws of the State of Florida.
12. INTERPRETATION / PROVISIONS OF PLAN CONTROL. This Agreement is
subject to all the terms, conditions and provisions of the Plan, including,
without limitation, the amendment provisions thereof, and to such rules,
regulations and interpretations relating to the Plan adopted by the Plan
Committee or the Board as may be in effect from time to time. If and to the
extent that this Agreement conflicts or is inconsistent with the terms,
conditions and provisions of the Plan, the Plan shall control, and this
Agreement shall be deemed to be modified accordingly. The Optionee accepts the
Option subject to all the terms and provisions of the Plan and this Agreement.
The undersigned Optionee hereby accepts as binding, conclusive, and final all
decisions or interpretations of the Plan Committee or the Board upon any
questions arising under the Plan and this Agreement.
13. NOTICES. Any notice under this Agreement shall be in writing and
shall be deemed to have been duly given when delivered personally or when
deposited in the United States mail, registered, postage prepaid, and addressed,
in the case of the Company, to the Chairman of the Plan Committee of the Board
of Directors of the Company at the principal office of the Company at Terremark
Centre, 2601 South Bayshore Drive, Coconut Grove, Xxxxx, Xxxxxxx 00000, or if
the Company should move its principal office, to such principal office, and, in
the case of the Optionee, to the Optionee's last permanent address as shown on
the Company's records, subject to the right of either party to designate some
other address at any time hereafter in a notice satisfying the requirements of
this Section.
14. TAX CONSEQUENCES. Set forth below is a brief summary as of the date
of this Option of some of the federal tax consequences of exercise of this
Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE,
AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD
CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
(a) EXERCISE OF OPTION. There may be a regular federal income
tax liability upon the exercise of the Option. The Optionee will be treated as
having received compensation income (taxable at ordinary income tax rates) equal
to the excess, if any, of the fair market value of the Stock on the date of
exercise over the exercise price. If Optionee is an employee, the Company will
be required to withhold from Optionee's compensation or collect from Optionee
and pay to the applicable taxing authorities an amount equal to a percentage of
this compensation income at the time of exercise.
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(b) DISPOSITION OF STOCK. If Stock are held for at least one
year, any gain realized on disposition of the Stock will be treated as long-term
capital gain for federal income tax purposes.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the 22nd day of July, 2003. COMPANY:
TERREMARK WORLDWIDE, INC.
By: /s/ Xxxx X. Xxxxxxx
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Name: Xxxx X. Xxxxxxx
Title: Executive Vice President and
Chief Financial Officer
Optionee acknowledges receipt of a copy of the Plan and represents that
he or she is familiar with the terms and provisions thereof, and hereby accepts
this Option subject to all of the terms and provisions thereof. Optionee has
reviewed the Plan and this Option in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option, and fully
understands all provisions of the Option.
Dated: July 29, 2003 OPTIONEE:
By: /s/ Xxxxx X. Xxxxxxxx
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XXXXX X. XXXXXXXX
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