Exhibit 10.40
TERREMARK WORLDWIDE, INC.
RESTRICTED STOCK AGREEMENT
FOR
[EMPLOYEE NAME]
1. Award of Restricted Stock. The Committee hereby grants, as of _______________
(the “Date of Grant”), to [EMPLOYEE NAME] restricted shares of the Company’s
Common Stock, par value $.001 per share (collectively the “Restricted Stock”).
The Restricted Stock shall be subject to the terms, provisions and restrictions
set forth in this Agreement and the Company’s 2005 Executive Incentive
Compensation Plan (the “Plan”), which is incorporated herein for all purposes.
As a condition to entering into this Agreement, and as a condition to the
issuance of any Shares (or any other securities of the Company), the Recipient
agrees to be bound by all of the terms and conditions herein and in the Plan.
Unless otherwise provided herein, terms used herein that are defined in the Plan
and not defined herein shall have the meanings attributable thereto in the Plan.
2. Vesting of Restricted Stock.
     (a) Except as otherwise provided in Sections 2(b), [2(c),] 2(d), and 4
hereof, the shares of Restricted Stock shall become vested in the following
amounts, at the following times and upon the following conditions, provided that
the Continuous Service of the Recipient continues through and on the applicable
Vesting Date:

                      Number of Shares of Restricted Stock   Vesting Date
[
  XXX   ]   [   DATE   ]
[
  XXX   ]   [   DATE   ]
[
  XXX   ]   [   DATE   ]

     There shall be no proportionate or partial vesting of shares of Restricted
Stock in or during the months, days or periods prior to each Vesting Date, and
all vesting of shares of Restricted Stock shall occur only on the applicable
Vesting Date.
     (b) In the event that a Change in Control of the Company occurs during the
Recipient’s Continuous Service, the shares of Restricted Stock subject to this
Agreement shall become immediately vested as of the date of the Change in
Control.
     (c) In the event that the Recipient’s Continuous Service terminates by
reason of the Recipient’s Disability or death, all of the shares of Restricted
Stock subject to this Agreement shall be immediately vested as of the date of
such Disability or death, whichever is applicable, and shall be delivered,
subject to any requirements under this Agreement, to the Recipient, in the event
of his or her Disability, or in the event of the Recipient’s death, to the
beneficiary or beneficiaries designated by the Recipient, or if the Recipient
has not so designated any beneficiary(ies), or no designated beneficiary
survives the Recipient, such shares shall be delivered to the personal
representative of the Recipient’s estate.

 

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     (d) Notwithstanding any other term or provision of this Agreement, the
Board or the Committee shall be authorized, in its sole discretion, based upon
its review and evaluation of the performance of the Recipient and of the
Company, to accelerate the vesting of any shares of Restricted Stock under this
Agreement, at such times and upon such terms and conditions as the Board or the
Committee shall deem advisable.
     (e) For purposes of this Agreement, the following terms shall have the
meanings indicated:
          (i) “Non-Vested Shares” means any portion of the Restricted Stock
subject to this Agreement that has not become vested pursuant to this Section 2.
          (ii) “Vested Shares” means any portion of the Restricted Stock subject
to this Agreement that is and has become vested pursuant to this Section 2.
3. Delivery of Restricted Stock.
     (a) One or more stock certificates evidencing the Restricted Stock shall be
issued in the name of the Recipient but shall be held and retained by the
Records Administrator of the Company until the date (the “Applicable Date”) on
which the shares (or a portion thereof) subject to this Restricted Stock award
become Vested Shares pursuant to Section 2 hereof, subject to the provisions of
Section 4 hereof. All such stock certificates shall bear the following legends,
along with such other legends that the Board or the Committee shall deem
necessary and appropriate or which are otherwise required or indicated pursuant
to any applicable stockholders agreement:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO SUBSTANTIAL VESTING
AND OTHER RESTRICTIONS AS SET FORTH IN THE RESTRICTED STOCK AGREEMENT BETWEEN
THE ISSUER AND THE ORIGINAL HOLDER OF THE SHARES, A COPY OF WHICH MAY BE
OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH RESTRICTIONS ARE BINDING ON
TRANSFEREES OF THESE SHARES, AND INCLUDE VESTING CONDITIONS WHICH MAY RESULT IN
THE COMPLETE FORFEITURE OF THE SHARES.
     (b) The Recipient shall deposit with the Company stock powers or other
instruments of transfer or assignment, duly endorsed in blank with signature(s)
guaranteed, corresponding to each certificate representing shares of Restricted
Stock until such shares become Vested Shares. If the Recipient shall fail to
provide the Company with any such stock power or other instrument of transfer or
assignment, the Recipient hereby irrevocably appoints the Secretary of the
Company as his attorney-in-fact, with full power of appointment and
substitution, to execute and deliver any such power or other instrument which
may be necessary to effectuate the transfer of the Restricted Stock (or
assignment of distributions thereon) on the books and records of the Company.

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     (c) On or after each Applicable Date, upon written request to the Company
by the Recipient, the Company shall promptly cause a new certificate or
certificates to be issued for and with respect to all shares that become Vested
Shares on that Applicable Date, which certificate(s) shall be delivered to the
Recipient as soon as administratively practicable after the date of receipt by
the Company of the Recipient’s written request. The new certificate or
certificates shall continue to bear those legends and endorsements that the
Company shall deem necessary or appropriate (including those relating to
restrictions on transferability and/or obligations and restrictions under the
Securities Laws).
4. Forfeiture of Non-Vested Shares. If the Recipient’s Continuous Service with
the Company and the Related Entities is terminated for any reason, any Shares of
Restricted Stock that are not Vested Shares, and that do not become Vested
Shares pursuant to Section 2 hereof as a result of such termination, shall be
forfeited immediately upon such termination of Continuous Service and revert
back to the Company without any payment to the Recipient. The Committee shall
have the power and authority to enforce on behalf of the Company any rights of
the Company under this Agreement in the event of the Recipient’s forfeiture of
Non-Vested Shares pursuant to this Section 4.
5. Rights with Respect to Restricted Stock.
     (a) Except as otherwise provided in this Agreement, the Recipient shall
have, with respect to all of the shares of Restricted Stock, whether Vested
Shares or Non-Vested Shares, all of the rights of a holder of shares of common
stock of the Company, including without limitation (i) the right to vote such
Restricted Stock, (ii) the right to receive dividends, if any, as may be
declared on the Restricted Stock from time to time, and (iii) the rights
available to all holders of shares of common stock of the Company upon any
merger, consolidation, reorganization, liquidation or dissolution, stock
split-up, stock dividend or recapitalization undertaken by the Company;
provided, however, that all of such rights shall be subject to the terms,
provisions, conditions and restrictions set forth in this Agreement (including
without limitation conditions under which all such rights shall be forfeited).
Any Shares issued to the Recipient as a dividend with respect to shares of
Restricted Stock shall have the same status and bear the same legend as the
shares of Restricted Stock and shall be held by the Company, if the shares of
Restricted Stock that such dividend is attributed to is being so held, unless
otherwise determined by the Committee. In addition, notwithstanding any
provision to the contrary herein, any cash dividends declared with respect to
shares of Restricted Stock subject to this Agreement shall be held in escrow by
the Committee until such time as the shares of Restricted Stock that such cash
dividends are attributed to shall become Vested Shares, and in the event that
such shares of Restricted Stock are subsequently forfeited, the cash dividends
attributable to such portion shall be forfeited as well.

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     (b) If at any time while this Agreement is in effect (or shares granted
hereunder shall be or remain unvested while Recipient’s Continuous Service
continues and has not yet terminated or ceased for any reason), there shall be
any increase or decrease in the number of issued and outstanding Shares of the
Company through the declaration of a stock dividend or through any
recapitalization resulting in a stock split-up, combination or exchange of such
Shares, then and in that event, the Board or the Committee shall make any
adjustments in a fair and appropriate, in view of such change, in the number of
shares of Restricted Stock then subject to this Agreement. If any such
adjustment shall result in a fractional share, such fraction shall be
disregarded.
     (c) Notwithstanding any term or provision of this Agreement to the
contrary, the existence of this Agreement, or of any outstanding Restricted
Stock awarded hereunder, shall not affect in any manner the right, power or
authority of the Company to make, authorize or consummate: (i) any or all
adjustments, recapitalizations, reorganizations or other changes in the
Company’s capital structure or its business; (ii) any merger, consolidation or
similar transaction by or of the Company; (iii) any offer, issue or sale by the
Company of any capital stock of the Company, including any equity or debt
securities, or preferred or preference stock that would rank prior to or on
parity with the Restricted Stock and/or that would include, have or possess
other rights, benefits and/or preferences superior to those that the Restricted
Stock includes, has or possesses, or any warrants, options or rights with
respect to any of the foregoing; (iv) the dissolution or liquidation of the
Company; (v) any sale, transfer or assignment of all or any part of the stock,
assets or business of the Company; or (vi) any other corporate transaction, act
or proceeding (whether of a similar character or otherwise).
6. Transferability. Unless otherwise determined by the Committee, the shares of
Restricted Stock are not transferable unless and until they become Vested Shares
in accordance with this Agreement, otherwise than by will or under the
applicable laws of descent and distribution. The terms of this Agreement shall
be binding upon the executors, administrators, heirs, successors and assigns of
the Recipient. Except as otherwise permitted pursuant to the first sentence of
this Section, any attempt to effect a Transfer of any shares of Restricted Stock
prior to the date on which the shares become Vested Shares shall be void ab
initio. For purposes of this Agreement, “Transfer” shall mean any sale,
transfer, encumbrance, gift, donation, assignment, pledge, hypothecation, or
other disposition, whether similar or dissimilar to those previously enumerated,
whether voluntary or involuntary, and including, but not limited to, any
disposition by operation of law, by court order, by judicial process, or by
foreclosure, levy or attachment.
7. Tax Matters; Section 83(b) Election.
     (a) If the Recipient properly elects, within thirty (30) days of the Date
of Grant, to include in gross income for federal income tax purposes an amount
equal to the fair market value (as of the Date of Grant) of the Restricted Stock
pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended (the
“Code”), the Recipient shall make arrangements satisfactory to the Company to
pay to the Company any federal, state or local income taxes required to be
withheld with respect to the Restricted Stock. If the Recipient shall fail to
make such tax payments as are required, the Company shall, to the extent
permitted by law, have the right to deduct from any payment of any kind
(including without limitation, the withholding of any Shares that otherwise
would be issued to the Recipient under this Agreement) otherwise due to the
Recipient any federal, state or local taxes of any kind required by law to be
withheld with respect to the Restricted Stock.

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     (b) If the Recipient does not properly make the election described in
paragraph 7(a) above, the Recipient shall, no later than the date or dates as of
which the restrictions referred to in this Agreement hereof shall lapse, pay to
the Company, or make arrangements satisfactory to the Committee for payment of,
any federal, state or local taxes of any kind required by law to be withheld
with respect to the Restricted Stock (including without limitation the vesting
thereof), and the Company shall, to the extent permitted by law, have the right
to deduct from any payment of any kind (including without limitation, the
withholding of any Shares that otherwise would be distributed to the Recipient
under this Agreement) otherwise due to Recipient any federal, state, or local
taxes of any kind required by law to be withheld with respect to the Restricted
Stock.
     (c) The Recipient may satisfy the withholding requirements with respect to
the Restricted Stock pursuant to any one or combination of the following
methods:
          (i) payment in cash; or
          (ii) if and to the extent permitted by the Committee, payment by
surrendering Shares which have a value equal to the required withholding amount
or the withholding of Shares that otherwise would be deliverable to the
Recipient pursuant to this Award. The Recipient may surrender Shares either by
attestation or by delivery of a certificate or certificates for shares duly
endorsed for transfer to the Company, and if required with medallion level
signature guarantee by a member firm of a national stock exchange, by a national
or state bank (or guaranteed or notarized in such other manner as the Committee
may require).
     (d) Tax consequences on the Recipient (including without limitation
federal, state, local and foreign income tax consequences) with respect to the
Restricted Stock (including without limitation the grant, vesting and/or
forfeiture thereof) are the sole responsibility of the Recipient. The Recipient
shall consult with his or her own personal accountant(s) and/or tax advisor(s)
regarding these matters, the making of a Section 83(b) election, and the
Recipient’s filing, withholding and payment (or tax liability) obligations.
8. Amendment, Modification & Assignment; Non-Transferability. This Agreement may
only be modified or amended in a writing signed by the parties hereto. No
promises, assurances, commitments, agreements, undertakings or representations,
whether oral, written, electronic or otherwise, and whether express or implied,
with respect to the subject matter hereof, have been made by either party which
are not set forth expressly in this Agreement. Unless otherwise consented to in
writing by the Company, in its sole discretion, this Agreement (and Recipient’s
rights hereunder) may not be assigned, and the obligations of Recipient
hereunder may not be delegated, in whole or in part. The rights and obligations
created hereunder shall be binding on the Recipient and his heirs and legal
representatives and on the successors and assigns of the Company.

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9. Complete Agreement. This Agreement (together with those agreements and
documents expressly referred to herein, for the purposes referred to herein)
embody the complete and entire agreement and understanding between the parties
with respect to the subject matter hereof, and supersede any and all prior
promises, assurances, commitments, agreements, undertakings or representations,
whether oral, written, electronic or otherwise, and whether express or implied,
which may relate to the subject matter hereof in any way.
10. Miscellaneous.
     (a) No Right to (Continued) Employment or Service. This Agreement and the
grant of Restricted Stock hereunder shall not confer, or be construed to confer,
upon the Recipient any right to employment or service, or continued employment
or service, with the Company or any Related Entity.
     (b) No Limit on Other Compensation Arrangements. Nothing contained in this
Agreement shall preclude the Company or any Related Entity from adopting or
continuing in effect other or additional compensation plans, agreements or
arrangements, and any such plans, agreements and arrangements may be either
generally applicable or applicable only in specific cases or to specific
persons.
     (c) Severability. If any term or provision of this Agreement is or becomes
or is deemed to be invalid, illegal or unenforceable in any jurisdiction or
under any applicable law, rule or regulation, then such provision shall be
construed or deemed amended to conform to applicable law (or if such provision
cannot be so construed or deemed amended without materially altering the purpose
or intent of this Agreement and the grant of Restricted Stock hereunder, such
provision shall be stricken as to such jurisdiction and the remainder of this
Agreement and the award hereunder shall remain in full force and effect).
     (d) No Trust or Fund Created. Neither this Agreement nor the grant of
Restricted Stock hereunder shall create or be construed to create a trust or
separate fund of any kind or a fiduciary relationship between the Company or any
Related Entity and the Recipient or any other person. To the extent that the
Recipient or any other person acquires a right to receive payments from the
Company or any Related Entity pursuant to this Agreement, such right shall be no
greater than the right of any unsecured general creditor of the Company.
     (e) Law Governing. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of Florida (without
reference to the conflict of laws rules or principles thereof).(h)
     (m) Interpretation. The Recipient accepts the Restricted Stock subject to
all of the terms, provisions and restrictions of this Agreement and the Plan.
The undersigned Recipient hereby accepts as binding, conclusive and final all
decisions or interpretations of the Board or the Committee upon any questions
arising under this Agreement or the Plan.
     (n) Headings. Section, paragraph and other headings and captions are
provided solely as a convenience to facilitate reference. Such headings and
captions shall not be deemed in any way material or relevant to the
construction, meaning or interpretation of this Agreement or any term or
provision hereof.

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     (o) 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 Company’s President at 2 S. Biscayne Blvd., Suite 2900,
Miami, Florida 33131, or if the Company should move its principal office, to
such principal office, and, in the case of the Recipient, to the Recipient’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.
     (p) Non-Waiver of Breach. The waiver by any party hereto of the other
party’s prompt and complete performance, or breach or violation, of any term or
provision of this Agreement shall be effected solely in a writing signed by such
party, and shall not operate nor be construed as a waiver of any subsequent
breach or violation, and the waiver by any party hereto to exercise any right or
remedy which he or it may possess shall not operate nor be construed as the
waiver of such right or remedy by such party, or as a bar to the exercise of
such right or remedy by such party, upon the occurrence of any subsequent breach
or violation.
     (q) Counterparts. This Agreement may be executed in two or more separate
counterparts, each of which shall be an original, and all of which together
shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have
executed this Agreement as of the date first written above.

            TERREMARK WORLDWIDE, INC.
      By:           Name:           Title:        

            AGREED AND ACCEPTED:
      By:                        

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